re: Born Suckers – The greatest Wall Street danger of all: you by Henry Blodget.
Henry Blodget mentions two profoundly (though simple) important factors that lead to poor investment decisions: Prospect Theory and Outcome Bias. He lists 7 factors, I find two profound.
Prospect Theory (more details) essentially states people are eager to “lock in gains” (sell positions with profits to realize gains) and hold losses (deffer selling positions in which they have losses so as not to “realize” the loss). Like many profound ideas the simplicity of the idea undermines the importance. This factor can make a huge difference in investment results. Many of the most successful investors understand the importance of this idea. And they repeat the importance of taking action to avoid falling into the patterns prospect theory predicts.
William O’Neil (founder of Investors Business Daily) – “Remember, 7% to 8% is your absolute loss limit. You must sell without hesitation – no waiting a few days to see what might happen or hoping the stock rallies back; no need to wait for the day’s market close” page 90, How to Make Money in Stocks: a winning system in good times or bad, 3rd Edition, 2002. Continue reading →
I am a big fan of Google, the search engine, and the company. Google bought Picasa, digital photo management software, a few months ago and decided to give the software away as freeware. I just got around to downloading Picasa. My initial reaction is that this is a wonderful product. I suggest you give it a try. It can automatically inventory all the images on your computer and it does a great job of organizing the photos for you.
The only Google service I would not recommend at this time is their desktop search software. It is amazing powerful and seems like it could be a great help. But it seems to me to the possible security issues warrant holding off using it until they improve the software, which I am confident they will do.
This Blog, is run on Blogger, another Google purchase. Blogger is good but I sure hope they offer some enhancements fairly soon, especially the ability to assign topics to individual posts (like the labels they use in Gmail).
One one final Google not, if you would like an invitation to get a free Gmail account (Google’s email service), just let me know and I can send you an invitation (until I run out of invitations).
I recently read two books that offered perspectives I found worthwhile and were enjoyable to read.
Adventure Capitalist by Jim Rogers tracked his trip around the world by car. Previously he had documented his around the world motorcycle journey in Investment Biker. His views offer a worthwhile perspective that is often missed, in my opinion. That said I wouldn’t accept his views as the final truth they are valuable as one perspective to shed light on areas that are often overlooked.
China Wakes, by Nicholas Kristof and Sheryl Wudunn documents their time as Journalists in China (1988-1993) and again offers valuable insight into China. Obviously even gaining an incredibly oversimplified view of China would take a great deal more than one, or even ten books. Still the authors provide viewpoints that I found added, in a small way, to a picture of what China, was, is and may become. I plan to read their book: Thunder from the East: Portrait of a Rising Asia.
I found a recent Washington Post article interesting: Mountain Lions Move East, Breeding Fear on the Prairie. Many new realities are suprising. Some are historically important worldwide like the fall of the Berlin Wall. Others are not as significant but still something I would have thought extremely unlikely such as the return of Cougars to a wide range of the United States. I would have thought big cats would be found only in Zoos and in the remote West and in East Africa, of course.
I suppose I shouldn’t be so suprised since for years I have heard we have far more deer today than ever before. Still I would not have predicted the wide spread return of big cats we seem to have experienced in the last few decades. I don’t recall hearing about this before this year, when I started to read and hear about the increased human and big cat interactions resulting from the increased population of cougars (also known as pumas or mountain lions).
I would imagine we will have people overact when the inevitable problems are covered by the news media. “It is exceedingly rare for a mountain lion to kill a human being. In the past 110 years, the cats have attacked 66 people and killed 18 in the United States and Canada, according to figures compiled by Iowa’s Department of Natural Resources. Fatal attacks are far less common than fatal bee stings or lightning strikes.”
The articles added to our library this month are especially good, in my opinion. Recent additions to the Curious Cat Online Management Improvement Library include:
* A Brief Guide to Interactive Planning and Idealized Design by Russell L. Ackoff
* Improving Problem Solving by Ian Bradbury and Gipsie Ranney
* How To Compare Six Sigma, Lean and the Theory of Constraints by Dave Nave
* In the Beginning by A. Blanton Godfrey
* A Holistic View of Six Sigma by Roger Hoerl and Ronald Snee (this is a chapter from there excellent new book: Six Sigma Beyond the Factory Floor.
In Shaking up Trade Theory Aaron Bernstein explores: “The fact that programming, engineering, and other high-skilled jobs are jumping to places such as China and India seems to conflict head-on with the 200-year-old doctrine of comparative advantage.” Over the last few years the white collar job losses in tech US have seemed to cause quite a bit more concern than the manufacturing and other job losses of the 1980s and 1990s. His article does a good job of exploring this issue within the limits of a short magazine article.
He captures the surprise economist (in the US) see because “Conversely, India, where just a fraction of its 400 million-plus workers have gone to college, should grab the low-skilled work and leave higher-end products to the U.S.” That conflicts with the data that many high skilled jobs are going to India (and elsewhere). The US Economists don’t seem to realize India is producing as many college educated engineers as the US. So India also has hundreds of millions of low skill workers that doesn’t mean they don’t also have plenty of high skilled worked (that speak English, which is, of course a huge benefit that is less true of Chinese high skilled workers).
I thought this post, from 43 folders, on writer’s block, had some good ideas. If you are suppose to be witting something and instead are reading this blog perhaps you should take a look at the ideas offered and see if they help you get back on track.
* Race for Quality Knows No Finishing Line by Venkatachari Jagannathan
* Business Needs Determine What Black Belts Need to Know by Ronald D. Snee
* Opportunities and Challenges for Industrial Statisticians in the 21st Century by Gerald J. Hahn
* Innovation as a Deep Capability by Gary Hamel
Amazon.com has released their A9 toolbar for the new Firefox 1.0 browser. The A9 toolbar has a number of handy features. I am most glad to see the increasing support (which will only encourage more use of the great, free, open source Firefox browser. The Google toolbar should provide such support soon, I would hope.
Some people don’t like all the information Amazon gathers by tracking your use of the toolbar. Luckily, you can chose not to use it if that worries you. The toolbar has some nice tools, but it certainly does not contain anything that is tough to live without.