Jack’s Links

All economics this week, though I’ve got some financial planning posts lined up for the near future.

  • Alex Tabarrok links to the 80,000 hours career guide: I started watching the videos, I’m predisposed to liking them since I think earning to give is one of the best ideas to come to charitableness in a while. Love these graphs that Alex included:

Follow-your-passion-1024x749

Passion-vs-jobs

The simple fact that we got gasoline last week gave us no inherent advantage over others in getting it this week. We had to line up yet again. But, with rent control, the fact that we had a rent-controlled apartment last year gave us a huge advantage over those looking for apartments this year.

  • Timothy Taylor with a post reflecting on the state of fossil fuels: paints a picture that suggests we might not be running out of fossil fuels as fast as everyone always assumes. We seem to be finding new oil at least as fast as we use it up. I wonder if that’s good or bad.

  • Scott Sumner on Fed President James Bullard: they really do need to figure out that whole reconciling dot plots vs. market expected inflation thing, though. As a side-note, it seems more and more smart people outside of economics are buying the story that NIRP is just an extension of ZIRP and LIRP (is that a thing?).

“Look, monetary policy is not about interest rates, it’s about hitting the dual mandate.  There is no evidence that we need to dramatically adjust interest rates going forward to hit the dual mandate, so don’t pretend there is.  The Fed should not be trying to ‘normalize’ interest rates, it should be trying to maintain high employment and 2% PCE inflation.”

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Jack’s Links

Trump said: “I just left Los Angeles, thousands of cars, millions of cars coming in [from Japan]. We get nothing. We get cars. They get . . . We want to send rice, we want to send corn. . . . The imbalance of these things. They send a car. We send corn.”

So which is it? Do we send corn or don’t we send corn? And are cars “nothing”? And, if we do send corn, what’s wrong with that? Objecting to producing corn in the United States, where it’s cheaper to produce than in Japan, in return for cars that are cheaper to produce there than here—if they weren’t cheaper, we wouldn’t buy them—is to object to trade per se.

exhibit2

But in the realm of macroeconomic stabilization, I view “nothing” as something that–to a reasonable approximation–has been tried and has failed. Anything one does has consequences. There is no true “inaction.” There is only “Do A” or “Do B.”

Since 1900, has the American economy had massive inflation or massive deflation?  If you are spending fifty cents, it is massive inflation, as today that sum hardly buys you anything, but earlier you could have received a nice white shirt.  If you are spending 100k a year, there has been radical deflation.

most estimates cluster around zero and developmental effects on things like IQ can be rejected (“In all eight subsamples, we can rule out wealth effects on GPA smaller than 0.01 standard deviations”).

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Consuming Content – A Personal Take

I consume content in a variety of ways. However, I think about consuming content in a way that is much different from most people I know.

What content don’t I consume?

For anything that could broadly be called “news”, I spend exactly 0 seconds per day actively seeking it out. I trust that when something big happens, it’s going to bleed over into the other places where I am actively looking. If someone at work tells me something big happened, I check the uk.reuters website (note, I’m in America) and see if it made the front page. If it didn’t, I usually ignore it.

Where am I looking?

I primarily consume content through reading, same as your grandpa. However, unlike grandpa, I don’t thumb through the Wall Street Journal and the Times every morning. I have subscriptions to those places so that when I see a link I can get through the paywall, but papers are throwing a broad net and I want a specific subset of their content.

Okay, so how do I know what to read? Easy. I follow the blogs and websites of smart people. I read their posts, and as luck (just kidding) would have it, they are paying attention to the same kinds of things that I want to know about. I kill two birds with one stone, I get a take on the hot issues, and I get a link to the original source material, which I can decide to read (or not).

How do I know what to read?

Building my repository of smart websites is an ongoing process, and has certainly taken time and thought. I started with a list from someone I respected (the list was absolutely enormous) and after a few weeks started cutting the fat and adding my own flavor. I’m sure the list would be totally unrecognizable to the person who gave it to me now, but having a starting point was really nice. As a sidenote – there is a great trend of good bloggers (especially in economics) banding together under one website, making the process even easier.

I break my list into categories: financial planning, economics, investing, tax, miscellaneous, and a temporary area for blogs on probation before they get promoted to the big leagues (or sadly, as is usually the case, deleted). I also have a section for people I know in real life and (shoutout) Benedict Evans has his own category called ‘tech’ which will hopefully someday not be so lonely.

I keep the lists small enough that about half of the time I can read everything that looks interesting within a week of it being posted. Sometimes if life gets in the way I end up behind, in which case I read all of the posts from my favorite authors then mark everything else as read and start fresh. I do that at least once a month. Having a huge backlog is daunting.

So, I read a lot. I have no idea how to quantify it, but I probably spend an hour or two per day (~630AM and 930PM are pretty typical times) reading plus whatever I end up reading that’s related to my work. I’m a fast reader (400-500 wpm?) so I purposefully consume a lot of written word because it’s efficient for me.

Okay, where else?

My other major time commitment for taking in content is through podcasts (see bottom half of this post). Podcasts have been great resources for a long time, I think we’re really hitting a critical mass where there’s not enough time in the day to listen to all the podcasts for a given topic.

I recently (to my embarrassment) learned that I can listen to podcasts at 2x speed. I’m pretty sure I’m not losing much comprehension, but I guess we’ll see.

I listen to podcasts in basically the same areas as I read, but given the increased time commitment (one post takes 30s-10 minutes to read while a podcast always takes 30-60 minutes [half now, I guess]), I keep my rotation tight, 5-10 podcasts at any given time. Virtually all of the podcasts I listen to are of the ‘host interviews guest’ variety. If the guest is interesting enough, I’ll add their website to my reading rotation or look for other podcasts that they’ve been on.

Anywhere else?

I also follow most of the people I read (and some others) on twitter. Regardless of what a person normally tweets about, if something big happens (e.g., Prince dies, RIP) I’m going to see it. However, I just think it’s pretty fun to reply at people who are talking about things where I consider myself to have a pretty informed opinion. It’s a great outlet for opinions that my friends on facebook certainly couldn’t care less about.

I watch television mainly for sports and specific shows, but certainly don’t consider it a primary source. I have watched shows like Jon Stewart’s, Colbert’s, and Oliver’s, but typically find that they are just another funny take on things that the blogs/pods/twitter have been talking about for a week already.

What else is different?

  • I read a lot.
  • If it’s important, I will always try to find the source material.
  • If it doesn’t have available source material (say, a study an article is based on is behind a $35 paywall [hilarious, by the way]), I give it close to 0 weight in my own personal Bayesian math.
  • My bar for somebody who I want to follow is extremely high. Like 30 people in the world, and most people haven’t heard of more than 2 of them.
  • The people I do follow, I read almost everything they put out.
  • I skim a few ‘linkfest’ type posts, but only click about 10% and then close another 50% of those after the first paragraph.
  • I read a lot.
  • Most of the people I follow are deep into their specialty. I don’t follow a lot of expert-turned-commentators whose only recent contributions to thought are op-eds and often venture into areas where their expertise is outweighed by the fact that they are out of their depth.

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Jack’s Links

And it is unauditable to boot. If you believe that another financial crisis is just a question of time, there will be a generation of auditors that will once again have to answer for turning a blind eye to market indicators of deteriorating economic conditions.

Though the bridge took only 11 months to build in 1912, it will take close to five years to repair today at a huge cost in dollars and mass delays.

First, it’s often the case that buildings of little historical worth are preserved by rules and regulations that are used as a pretext to slow competitors, maintain monopoly rents, and keep neighborhoods in a kind of aesthetic stasis that benefits a small number of people at the expense of many others.

Second, a confident nation builds so that future people may look back and marvel at their ancestor’s ingenuity and aesthetic vision. A nation in decline looks to the past in a vain attempt to “preserve” what was once great. Preservation is what you do to dead butterflies.

New Jersey … to make cursive writing mandatory in the state curriculum. “So that students are able to read our most valued historical documents in their original form … this bill requires that cursive be included in the public school curriculum.”

Oh, and for books, I finished the third Dune book, Children of Dune. Much more like the first, and much less of a grind than reading the second book.

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Jack’s Links

  • James Osborne at Bason Asset with a post about the (lack of?) scaling of AUM fees: While I agree that we’ll see some people seize the opportunity to be different (either by scaling down costs aggressively after some AUM mark or by being “flat fee”), I think there is an alternative thesis that is along the lines of: people with much more money (5-10 million+) are willing to pay more for higher-end service, more contact, more support, etc.

if they go [and] interview 5 advisors they will see 5 fee schedules that are practically indistinguishable.

With a jointly owned annuity, the death of the FIRST owner triggers RMDs!

Based on the latest NASRA survey data, just 5% or so of these pensions assume returns will come in below 7% annually.

  • More Kitces, this time on Empty Nesters saving for retirement to make up for lost ground during the child-rearing years: I absolutely love posts like this that line up more with real life — there’s nothing wrong with telling people to target 15% savings rates, but nobody is going to be able to hit that target every single year with all of the ways that life changes.

Reducing Household Expenses During Child-Rearing Phase To Save More For Retirement

We’d be better off passing a law sun-setting all regs, and the entire Federal tax code, in 2025. Then give Congress the next 9 years to set about re-passing all the regs and taxes that actually make sense.

 

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Jack’s Links

  • Measurements of ‘hot hand’ effects or lack thereof are always interesting, this time, golf.

Our results seem to agree with most of the related work on hot hand effects in basketball, golf, and other sports; namely that it does not exist over the course of a season. We do, however, see that golfers may get hot in a tournament and go on what is commonly referred to in the golf parlance as a “birdie barrage”.

when asked by the pollsters what they had eaten in the last 24 hours, 60% of the self-described “vegetarians” admitted that that had consumed red meat, poultry or fish the previous day

bearded men were considered better-looking (not to mention more masculine, mature, dominant, self-confident, courageous, liberal, nonconforming, industrious, and older)

Do you see it as your duty to expose scientific bullshit?

On reflection, no—because if I have such a duty, then presumably my colleagues do too, but I wouldn’t want to impose such a duty on my colleagues!

  • A throwback link to a 2012 post from Tom Brakke – no doubt he tapped into the zeitgeist with his blog about cash and the changing tides of how we view it in the context of portfolios.

To limit a manager’s use of cash is to fail to understand the nature of the decision-making process. In any case, if a manager generates good returns with a load of cash that seems heavier than it should be, who cares? The presence of that cash may be one of the key reasons for the outperformance.