Flight 93 Election (analysis)

A couple weeks ago, when I first came across the now famous ‘Flight 93‘ article, I skimmed the first few paragraphs without giving it much further consideration…the crux of the article is that America is doomed if Hillary becomes president, but with Trump there is at least a fighting chance, even if the odds are long. We can either ‘charge the cockpit’ to have a shot at living (or in the case of America, saving the country), or do nothing and certainly die.

But people kept talking about it, so I decided to investigate further, reading the article thoroughly, as well as its follow-up. Judging by the conversational tone, verbosity, attention to detail, sesquipedalian sentences, and rich punctuation, the the article sounded similar to a very popular reactionary blogger who recently went on hiatus, and my hunch was confirmed in the follow-up, in which he writes: Everything I said in “The Flight 93 Election” was derivative of things I had already said, with (I thought) more vim and vigor, in a now-defunct blog.

The first thing that struck me is how much faith he has in the system….possibly even more than I do, and some say I’m ‘too optimistic’. When I began bogging about NRx, I took a different approach, advocating incrementalism (rolling back democratic values and institutions) and possible minarchism, in contrast to monarchy or secession, and the last paragraph of Restatement, as well as overall both essays, seems to echo this theme, focusing on policy (like welfare, taxes and other policy reform) within the current constitutional republic framework, versus more far-fetched or drastic measures such as eschatology, deracination, ‘exit’, or monarchy:

One can point to a few enduring successes: Tax rates haven’t approached their former stratosphere highs. On the other hand, the Left is busy undoing welfare and policing reform. Beyond that, we’ve not been able to implement our agenda even when we win elections—which we do less and less. Conservatism had a project for national renewal that it failed to implement, while the Left made—and still makes—gain after gain after gain. Consider conservatism’s aims: “civic renewal,” “federalism,” “originalism,” “morality and family values,” “small government,” “limited government,” “Judeo-Christian values,” “strong national defense,” “respect among nations,” “economic freedom,” “an expanding pie,” “the American dream.” I support all of that. And all of it has been in retreat for 30 years. At least. But conservatism cannot admit as much, not even to itself, in the middle of the night with the door closed, the lights out and no one listening.

However, many reactionaries believe the ‘system’ is irreparable, advocating ‘accelerationism’, in which America’s decline is deliberately hastened so it collapses and from the ruins can be ‘restored’. Others advocate pacifism, because fighting democracy with democracy is, ultimately, only a win for democracy. And that Trump, despite his best efforts and good intentions, is merely a cog of a broken machinery. This is probably why there was some push-back in response to Flight 93.

But still…I’m surprised by what seems like somewhat of an about-face on his part. ‘American dream’? It sounds cheesy, and few who are alive still believe it. The ‘American dream’ is more a construct, really (the phrase was originally a marketing slogan by Federal National Mortgage Association). Also the ‘small government’ stuff reads too similar to libertarianism, which the author repudiated on many occasions. But I agree that I would rather have the government focus less on the lives of individuals, and instead pay more attention to not wasting public resources on ineffective programs and or entitlement spending.

From Flight 93:

Ever-higher taxes and ever-deteriorating services and infrastructure. Inability to win wars against tribal, sub-Third-World foes. A disastrously awful educational system that churns out kids who don’t know anything and, at the primary and secondary levels, can’t (or won’t) discipline disruptive punks, and at the higher levels saddles students with six figure debts for the privilege. And so on and drearily on. Like that portion of the mass where the priest asks for your private intentions, fill in any dismal fact about American decline that you want and I’ll stipulate it.

Yeah all of this is true. Part of the reason why America is unable to ‘win’ any wars it because it’s not allowed to win in the traditional sense of total annihilation of the enemy (which if pressed America is capable of doing). Instead, America has to engage in ‘nation building’ , which is much harder. The higher educational system need reform to a large extent, as millions of millennials are graduating with debt and no good job prospects to show for it.

In the followup, I was also surprised he considers Churchill an example of ‘good leadership’, considering Churchill [1] seems antithetical to a lot of what NRx stands for. Although his essay was intended to be an endorsement for Trump, and any obvious allusions to NRx were avoided, a better example could have been chosen. Of course, I could be wrong, and a Google search for NRx writings on Churchill didn’t yield much.

But overall, the author raises a valid point about how mainstream conservatives (akin to the Washington Generals) ‘always lose’ and how Trump departs from this trend. It’s not really a new message, and it didn’t need 3,000 words to convey, but interesting nonetheless.

[1] got his butt handed to him in the battle of Gallipoli, pulled Britain int multiple wars, and acted on personal vendettas at great loss of civilian life (bombing of Dresden), all of which contributed to the decline and demise of the British Empire and the softening of the already weak monarch

Amazon, Google, and Facebook: Bigger is Better

Why giants thrive
The power of technology, globalisation and regulation

This is why a simple investing strategy that goes ‘long’ equal weight the three biggest, fastest growing, and most successful tech companies (AMZN FB and GOOG) has done so well. Is past performance indicative of future results? No, but as far as strategies go, it’s hard to beat.

If someone says an investment strategy is ‘fail safe’ usually that’s an indication that it’s time to run to the exits, but Facebook, Amazon, and Google are exceptions, just by virtue of their immensely strong fundamentals and the fact that after a decade or longer no one has been able to come up with viable alternatives to compete with them. I remember in 2004 during the Google IPO, pundits said that anyone could come up with a ‘Google alternative’…lol 12 years later and we’re still waiting. Or in 2008-2012, predictions of a ‘Facebook alternative’, which of course has yet to happen and likely never will.

In capitalism 2.0, Bigger is better.

Just because Myspace lost to Facebook doesn’t mean Facebook will suffer a similar fate.

Airbnb, Uber, and Snapchat…all more valuable than ever, with no viable competitors on the horizon, and their valuations and market growth just keep rising, year after year, to no end, despite endless predictions by pundits of a bubble.

Contrary to popular belief, predictions of collapse are actually as common, if not more so, than predictions of a continuation of a trend. During the 80′s – 2000′s housing boom, predictions of a housing bubble were commonplace. Predicting the 2006 housing crash does not make one a contrarian, because such bearish predictions were actually as common as predictions of the housing market rising. If that seems backward, it’s because the media as of 2008 has given more attention those those who predicted a bubble. For example, Michael Lewis’ bestseller The Big Short, about how some canny traders made a fortune betting against the mortgage market. But the media also ignores all the forecasters were wrong all the way up, only to be right purely by chance in 2008. Likewise, during the 90′s dotcom bubble the media gave more attention to those who were predicting higher prices, but there were still roughly the same number of people who were predicting lower prices, but it’s just that they were mostly ignored, creating a false consensus that everyone was euphoric.

From a market perspective, the number of sellers (pessimists) has to roughly equal the number of buyers (optimists). For prices to keep rising, you need people to sell to the buyers.

These huge tech companies companies don’t need to innovate that much, rather they have market dominance and effortlessly print money through their ad platforms and other services. As the Economist article mentions, they tend to be very well insulated from global economic events (unlike the energy sector or financial sector), and these huge tech companies are also especially well suited to take advantage of global markets. Google, Facebook, and Amazon derive a significant chunk of their revenue overseas. And they can use foreign markets, loopholes, and other accounting schemes to dodge regulations and taxes that are unavoidable for smaller companies.

Up until the late 2000′s, major tech companies seem to have a about a decade of solid growth and stock price appreciation, before tapering and contracting or even collapsing (Cisco, Oracle, Sega, Sony, Atari, 3com, Research in Motion, etc.), but nowadays, as of 2004 or so, major tech companies seem to do a much better job at retaining their growth, market share, and share price appreciation.

Also, the stock market has done a much better job of quickly punishing losers (gopro, fitbit, etc.) but also rewarding winners. The investing landscape is much more choosy and selective, which could explain why active management is having such a hard time in an otherwise very strong bull market. It’s not like the late 90′s when all tech stocks were indiscriminately bid higher. You have the pick the cream of the crop or you will fail. You have all these experts who manage millions or even billions of dollars and they are just as clueless as average investors.

Millennials and Misconceptions

This is going viral: College Advice from a 75-Year-Old Who Went to School for 55 Years and Got 30 Degrees

Note how a comment that was critical was heavily down-voted and subsequently deleted, while comments praising the man were up-voted:

The story went viral because Millennials believe that, despite high student loan debt and weak job prospects for many graduates, the accumulation of knowledge is and of itself is a noble goal, but they also believe in wealth (as measured by wealth in a bank account, a brokerage account statement, or in real estate, instead of ostentatious displays of wealth in the form of rapidly depreciating positional goods and services (sports cars, nightclub VIP service, etc.)). Warren Buffet, Mark Zuckerberg, Larry Page, and Elon Musk epitomize the latter, all being extremely wealthy and smart but also living a minimalist lifestyle, in contrast to Donald Trump (who isn’t as smart and has a much more extravagant lifestyle), who I support for president, but he’s not as respected by millennials as much as Musk or the founders of Google. Speaking of minimalism and intellectualism (both which are valued by millennials), Warren Buffett drinks coke (not fancy imported spirits), drives an old car, and still lives in the same home he bought decades ago in the quiet suburbs of Omaha, avoiding the commotion and extravaganza of New York despite arguably being the most important person in finance alive.

This is why I’m not so quick to beat-up millennials who accumulate debt, because even if the job prospects are poor, having the degree is part of a ‘bonding experience’ or camaraderie between other millennials who also have degrees and find themselves in similar predicaments. The degree also signals intellect. A STEM degree is preferable, but that doesn’t make the liberal arts useless in the eyes of millennials, provided the degree has some degree of intellectual rigor and are not completely useless or commercialized (like degrees ‘child development’ or ‘search engine marketing’).

Also, many have grown weary of the constant hectoring about how you ‘have to major in STEM’. Given all the recent media coverage about STEM, there is almost no one alive who doesn’t know that STEM pays more, and such reminders have become repetitious and patronizing. Even parents know STEM pays more, as well graduates and prospective students who choose to go to college for reasons besides making money (although they may later regret their major).

…and from that same discussion, a highly up-voted comment that defends religiosity:

Part of the reason why I have written so many posts about millennials is because there are so many misconceptions perpetuated by the media, as well pundits, who are all too inclined to overgeneralize millennials to fit a preexisting political bias, agenda, or belief. A common misconception is that millennials subscribe to the same form of ‘militant atheism’ as Richard Dawkins and Sam Harris, but although millennials lean atheist more so than other generations, as shown in the screenshot above they are refreshingly tolerant of Christianity, understanding even if one chooses to not believe in god, that religion still has a useful function at both the personal and societal level in terms of fostering well-being and community. As part of the post-2013 backlash against ‘low information’, demagoguery and zealotry (by believers and non-believers alike) is frowned upon. Same for the post-2013 backlash against SJWs and rise of centrism and rationalism: many people, especially the well-informed and educated and even liberals, are tired of a shill, vocal minority that uses ‘low information’ tactics to try to impose their poorly researched beliefs and values on others.

Another myth: that millennials are spendthrift and or ignorant about finance. Quite the opposite, as I expound on here and here. Millennials on Reddit are not representative of all millennials, but it’s a pretty big sample.

Whereas older generations embraced activism and action ‘you must save the whales’ ‘you must get a job’ ‘you must fight the man, man’ ‘you must must start a family and buy a home’, millennials want to stay at home and ‘chill’, embrace pacifism, procrastinate, indulge in intellectual endeavors, or be ‘boring‘. But also millennials seek wealth, but on their own terms, and don’t wish to fritter their money on rapidly depreciating positional goods. ‘Careerism’ is a post-ww2 phenomenon that locks people into a rat maze where a big home or a fancy car, not cheese, is waiting at the exit. Millennials, generally, want none of that, and who can blame them. Rather, they are choosing MGTOW, Red Pill, minimalism, etc. as alternatives. For millennials, wealth is measured not just by how much money you have but also how much you know, too, which is why they value higher education (even if the degrees may not pay much and or require a lot of debt).

If it seems like I’m picking on the ‘right’ here, I’m only trying to help by correcting some of the persistent misconceptions of millennials that may impede the ability of Republicans to connect with this very large and influential voting block. Another common misconception is that all millennials are radicalized liberals. Although SJWs and BLM are mostly millennials and have gotten a lot of media attention for their antics and tantrums, they are not representative of all millennials, and many millennials, including even liberals, are tired of how WSJs suppress free speech or any idea that may deem ‘racist’ (a word which has been redefined to mean anyone who holds views that the far-left finds offensive), as part of the post-2013 SJW backlash. Consider the alt-right surge, which is mainly led by millennials and has been so immensely successful and influential that even Hillary Clinton and the MSM (such as CNBC) are talking it. Trump owes some of his success to the alt-right.

How I Rewired My Brain to Become Fluent in Math (response)

How I Rewired My Brain to Become Fluent in Math

They should just call it nauseo.us magazine because some of these articles are so wrong as to induce vomiting.

There is no disagreement about the absurdity that playing basketball will make you taller but many people willingly believe ‘brain puzzles’ or ‘rewiring’ will make them smarter. [1] Many want to hold on to the cherished belief instilled by culture that they have ‘free will’, and that their potential, particularly as it pertains to intellectual endeavors such as math or coding, is not limited by genes.

Interestingly though, intelligence is treated as malleable whereas physical traits less so. We’re more apt to believe we can ‘rewire our brains’ to become good at math, than become a marathoner. Part of this has to do with how society has evolved economically, from an economy and society that prized physical labor, to presently, the ‘information age’, where intellectualism is more important than physical strength. A couple hundred years it would have been the opposite: people believing that physical ability and traits are malleable but intelligence less so. High intelligence confers with a greater self-worth, as well as being a more valuable person to society in terms of economic value and creative output.

Nowadays it’s not as politically incorrect (or at least not as much as it was decades ago) to point out that perhaps some groups, due to certain biological traits, are better at basketball or sprinting than others. But to suggest that some groups are less intelligent? Well then it’s off to the unemployment line for you.

I was a wayward kid who grew up on the literary side of life, treating math and science as if they were pustules from the plague. So it’s a little strange how I’ve ended up now—someone who dances daily with triple integrals, Fourier transforms, and that crown jewel of mathematics, Euler’s equation. It’s hard to believe I’ve flipped from a virtually congenital math-phobe to a professor of engineering.

One day, one of my students asked me how I did it—how I changed my brain. I wanted to answer Hell—with lots of difficulty! After all, I’d flunked my way through elementary, middle, and high school math and science. In fact, I didn’t start studying remedial math until I left the Army at age 26. If there were a textbook example of the potential for adult neural plasticity, I’d be Exhibit A

We’ll it’s fairly obvious the author has a high IQ, and this helped her make the transition from a ‘mathphobe’ to a ‘numerophile’. HBD explains what others attribute to ‘magic’, ‘rewiring’, or ‘tons of practice’. This also douses water on the multiple intelligences theory, as opposed to the Spearman ‘general g’ theory of intelligence. The creation of these multiples types of ‘intelligence’ (‘street smarts’, EQ, ‘multiple intelligences’) seems to be part of a trend in political correctness in not wanting to face the unpleasant reality that some people are perhaps smarter than others, so by creating many types of intelligences, everyone can be smart at ‘something’. As it turns out, people who are smart at writing can often make the transition to other high-IQ endeavors such as math or coding, whereas those who are less intelligent tend to not be very good at anything intellectual-related.

[1] A refutation is that exercise can improve physical ability, and that if people improve at basketball by practicing then one can become smarter by doing ‘brain puzzles’ and ‘rewiring’. In general, physical ability tends more plastic than mental ability, but improvement in ability should not be confused for modification of ‘traits’. People know that height is a fixed trait, which (after the bones stop growing) is correct, but they are also inclined to believe intelligence is malleable, but this is just as absurd as thinking you can modify your height (short of surgery). As for ‘brain training’, brain puzzles do not boost IQ to any high degree of significance.

But how about studying? Don’t people who study math become better at it. To some extent, yes, but improvement at a task should not be conflated with modification of an underlying trait (like height, IQ, etc.). Studying is like doing a single Sudoku puzzle over and over and being really good at the one Sudoku configuration. IQ is what allows you to be good at any puzzle, and to master puzzles quickly. IQ involves making inferences, separating noise from signal. It’s the reason why ‘plug and chug’ is much easier for students than word problems; the latter requires making inferences. It’s more mentally demanding. As for learning, smarter people get better faster (which is also why IQ is strongly correlated with job performance). The less intelligent may see improvement, but they may never make the fundamental connections necessary for mastery (it never ‘clicks’), and they are less adept at filtering noise. IQ is analogous to the hardware on a computer whereas ‘brain boosters’ and ‘studying’ are like the ‘software’…no matter how good the software is, it will run against the physical limitations imposed by the number of transistors on the chip, as well as the RAM.

Tooleb becomes self-aware, part 2

It looks like Nassim Nicholas Tooleb is becoming self-aware again in a recent Medium post appropriately titled The Intellectual Yet Idiot (in which he expands on his original Facebook post). Just replace all instances of ‘IYI’ with ‘Tooleb’ and it’s a perfect description of him.

For those who think Tooleb is part of the alt-right, he’s not. He’s not even a conservative but rather a liberal pretending to be a libertarian, who frequently attacks the rich and corporations:

What we generally call participation in the political process, he calls by two distinct designations: “democracy” when it fits the IYI, and “populism” when the plebeians dare voting in a way that contradicts his preferences. While rich people believe in one tax dollar one vote, more humanistic ones in one man one vote, Monsanto in one lobbyist one vote, the IYI believes in one Ivy League degree one-vote, with some equivalence for foreign elite schools, and PhDs as these are needed in the club.

Tooleb doesn’t oppose democracy and populism; rather he believes it’s been corrupted by the rich and corporations, as well as ivy tower elites. He still holds on to the romanticism of the democratic political process.

Here is Tooleb praising India’s democracy while calling Saudia Arabia a ‘very fragile country’:

I know that Saudi Arabia is a very, very fragile country, probably the one that’s most fragile for a lot of reasons. They are more robust to oil revenue to Iran and other countries but not other things. They say oil is x percent of GDP, around 50% but the rest is also linked to oil. It is untenable. You see here in India you do not have governance problems, it is a democracy and that makes you a lot more robust than other countries, definitely more robust than China.

In waging class warfare, pitting the makers against the takers, Tooleb is no different than Bernie ‘wealth spreader’ Sanders.

Tooleb writes:

The IYI has been wrong, historically, on Stalinism, Maoism, GMOs, Iraq, Libya, Syria, lobotomies, urban planning, carbohydrates, gym machines, linear regression, Gaussianism, Salafism, housing projects, and p-values. But he is convinced that his current position is right.

But then he drags Pinker again through the mud as an ‘IYI’:

The IYI is member of a club to get traveling privileges; if social scientist he uses statistics without knowing how they are derived (like Steven Pinker and psycholophasters in general);

This continues in Tooleb’s tradition of attacking experts who are smarter than him (Pinker, Dawkins, etc.).

Tooleb is so blinded by his dislike of Pinker that he fails to see that Pinker, despite being an ‘IYI’, is actually very critical of communism, writing in his book The Better Angels of Our Nature that “…communism was a major force for violence for more than 100 years, because it was built into its ideology.”

As Pinker astutely points out, communism is violent because violence is required in order to achieve and enforce ‘equal outcomes’, in agreement with the blank slate worldview of humanity that mandates equal outcomes, as well as the nationalization of private property. But equality goes against human nature (rich, successful people, including even Hollywood liberals who vote democratic, don’t voluntarily want to forfeit the fruits of their labor to the state) and the ‘natural order’ (productive, intelligent economically rising above the less intelligent, unproductive), necessitating violence to get it.

Here is something else that’s pretty funny, from Nassim Taleb Talks Antifragile, Libertarianism, and Capitalism’s Genius for Failure, in which he says:

Taleb has called New York Times columnist Thomas Friedman “vile and harmful” and coined the phrase the “Stiglitz Syndrome” after Nobel-prize winning economist Joseph Stiglitz, which refers to the phenomenon of public intellectuals being held utterly unaccountable for their bad predictions. Paul Krugman and Paul Samuelson are among Taleb’s other Nobel laureate bête noires.

Hmmm…speaking of unaccountably, why hasn’t Tooleb owned up to his own wrong 2009 predictions of hyperinflation?

Unlike last year’s sudden market implosion, inflation isn’t an unimaginable event that few currently anticipate. In fact, many fear inflation right now amid government efforts to goose the economy. Universa’s bet, however, is that inflation will reach levels few expect.

What a spert he is. I was one of the few bloggers who was correct about almost everything since 2011, correctly predicting a continuation of the bull market and low inflation.

If you raise this issue on Tooleb’s Twitter, or question any of his beliefs, he will block you.

Behavioral Psychology and Influence

I’m skeptical that this persuasion stuff works on anyone who is remotely competent, such as gatekeepers and employers. It’s all flimsy social pop pseudoscience, much like Daniel Kahneman and Dan Ariely books that tell a message that people want to read despite the actual science being lacking, fabricated, or nonexistent.

Of the six items on the list, authority, consistency, and social proof are the ones that matter, but obtaining those requires a lot of competence. Or you can use shills, but that’s dishonest. Reciprocation often does not work in situations where there is a great disparity of power between both parties.

Yes, these persuasion techniques may work on people with room temperature IQs, or if you want to be a used car salesman, but to persuade and influence people who actually matter (gatekeepers, employers for good-paying jobs, journal editors, etc.), you have to demonstrate extreme competence. There are no shortcuts or ‘life hacks’. Persuasion, as well as influencing important people, ultimately requires proving your worth, by being competent, as I explain in more detail in Why Dale Carnegie is Wrong.

Suspicions of the social sciences being flimsy (with the exceptions of certain quantitative fields of finance, as well as the study of IQ) were affirmed in recent misconduct scandals (Diederik Stapel, Marc Hauser), as part of the ‘replication crisis‘ that is rippling through the field of behavioral psychology right now:

This isn’t the first time that an idea in psychology has been challenged—not by a long shot. A “reproducibility crisis” in psychology, and in many other fields, has now been well-established. A study out last summer tried to replicate 100 psychology experiments one-for-one and found that just 40 percent of those replications were successful. A critique of that study just appeared last week, claiming that the original authors made statistical errors—but that critique has itself been attacked for misconstruing facts, ignoring evidence, and indulging in some wishful thinking.

Bad ideas are infectious because they often tell people want they want to believe, not what is true.

Post-Pundit Era

Perhaps we’re kinda in a post-pundit era. Pundits used to have a lot of influence, but since 2013 or so, not as much. Through much of the 80′s and 90′s, pundits dominated the newspapers, radio, and TVs, their opinions broadcast to a Zingiest that eagerly spread the word, as well as influencing policy. Thomas Sowell, through his widely read books and columns, played a role in creating Reganomics, but nowadays one would be hard-pressed to find a pundit that influenced Obama as much as Reagan was influenced by by Sowell and Laffer.

One could argue that the first shoe to drop was the decline of talk radio and newspaper circulations and subscriptions, as a consequence of the internet era. As information became more disseminated and fragmented, the influence of the handful of so-called ‘mega pundits’ became diluted as thousands of smaller pundit such as bloggers and podcasters competed for people’s attention. Suddenly, the opinion pages of the WSJ and NYTs were read by fewer people, and fewer people care what Paul Krugman or Thomas Friedman have to say, unlike in the early 2000′s when those mega-pundits had much more influence on the ‘national debate’.

Online, on major communities like Reddit and Hacker News, I can hardly recall anyone referencing anything written or said by a major pundit. For the ‘right’, no mentions of anything by Rush Limbaugh, Sean Hannity, or Bill O’Reilly. Likewise, no mentions of Paul Krugman, Maureen O’Dowd, Thomas Friedman, or Thomas Blow, all of whom write for the biggest newspaper in the world, The New York Times. Ross Douthat is a notable exception, because he taps into these ‘shared narratives’ probably better than any other pundit.

The second shoe to drop, and a much more recent development, is the post-2013 rise of ‘intellectualism culture‘, as I alluded to in Alt-Right and Internet Journalism, consequentially lessening the viralness and influence of 80′s and 90′s-era partisan punditry, which has given way to ‘shared narratives’ and a more introspective or nuanced writing style. Although Ann Coulter articles are shared among conservative communities and websites, her articles almost never go viral on major social bookmarking sites. This is because her articles (as well as the same for leftist pundits like Krugman) are perhaps perceived as too opinionated and shrill, not intellectual or nuanced enough. Rather than tapping into a ‘shared narrative’ or using data visualizations, these pundits are just preaching to the choir, which was an effective strategy as recently as a decade ago, but will fail to expand the underlying message that the pundit is trying to convey to a savvier audience that has become deaf or repulsed by demagoguery.

Let’s say you want to ‘raise awareness’ (which is a hackneyed expression, but raising awareness is what pundits try to do) about America’s immigration problem. The pre-2013 approach would be to write a divisive opinion piece, replete with hyperbole and metaphors (such has referring to immigrants as ‘hordes of invaders’), and such an article would be widely read and well received by those already in your ‘tribe’, but it be very hard to get the article to go viral elsewhere. The post-2013 approach would be to ditch the hyperbole and opinions and instead create an article full of data visualizations that shows many immigrants are coming to America and how the native population is being displaced, and so on. The latter has a greater likelihood of going viral and, ultimately, raising awareness about immigration.

James Altucher’s Top 1% Advisory Report (Analysis and Review)

There has been some recent discussion about ‘James Altucher’s Top 1% Advisory Report’, which purportedly grants its subscribers access to the same lucrative investments ‘elite’ investors use.

Top 1% Advisory, a hugely
popular new research letter

Each month, multimillionaire investor James Altucher shows you how to make 100% to 500% gains… on the best ideas in the hedge fund and venture capital world.

Dear Reader,

The Top 1% Advisory – is a first-of-its-kind release by Stansberry colleague James Altucher, a multimillionaire entrepreneur.

My name is Jared Kelly, by the way. I’m a Director at Stansberry Research.

Normally – the Top 1% Advisory costs $2,500 for one year. Demand for this new letter has skyrocketed since its release last month… and has caused a major ripple throughout our industry.

I don’t need to part with $2,500 to know it’s bunkum. These sales gimmicks prey on the unsophisticated who have no clue about investing or how private markets work.

If demand is skyrocketing, that would make the investments in the letter overcrowded and hence less profitable for future investors. If these investments are so wonderful, why tell anyone? If a single startup or stock pick can make 10-100x your money, just do that over and over until you have a billion dollars or something. Even $25,000 is not enough if these purported returns are feasible. Thus it would seem more money is made selling newsletters than than actually investing.

Investing in start-ups has a lot of risk, and the top start-ups like Uber and Snapchat, which have yielded huge returns for venture capitalists, are inaccessible to the general public to invest. Only a handful of start-ups are successful (as in completing an ‘exit’ strategy), and you need a lot of money to bankroll the many companies that don’t exit and or shut-down, in the hope of finding a few diamonds in the rough. According to data compiled on Ycombinator companies, the success rate is only 12%:

Excluding startups who have only received funding and have not yet exited, as per Paul’s strict definition, we are left with a rate of success between roughly 56/468 ≈ 0.12 and 56/404 ≈ 0.14 or 12-14%.

“Success for a startup approximately equals getting bought. You need some kind of exit strategy, because you can’t get the smartest people to work for you without giving them options likely to be worth something. Which means you either have to get bought or go public, and the number of startups that go public is very small.”

Unless the company exists, your cash will remain tied up. Venture capital is a profitable endeavor but out of reach of anyone doesn’t have millions of of dollars. Investing in private markets require special accreditation that is only obtainable for the top 1% of income earners, and carries a high risk.

On the website he lists stocks that he invested in using his ‘system’, all of which have risen a lot, but fails to disclose the stock picks which have done poorly, and most importantly, these picks were purchased at the beginning of the current bull market, which is now in its 7th year and counting, and there is no guarantee the next seven years will be as prosperous as the prior seven.

Like James Altucher, I am bullish on the stock market and the economy, but his approach is wrong, particularity because some James’ stock picks (which he has disclosed to the public, not his newslettew) have tended to not do well. Two notable examples that come to mind are Vringo (VRNG), which he recommended in 2012 and has since lost some 95% of its value as of 9/13/2016 (it did a 10-1 reverse split though), and, in 2013, Corporate Resources (CRRS), which is effectively bankrupt due to accounting fraud. This is despite the S&P 500 rising 40%, so if you had invested in those two companies you would have lost all your money…pretty bad for a bull market. I know there are some picks that may have done better, but the overall average is strongly negative, which underscores the inherent difficulty of stock picking.

Besides my favorite stocks – Google (GOOG), Amazon (AMZN), Tesla (TSLA), Microsoft (MSFT), and Facebook (FB) – I recommend large cap tech (QQQ), retail (XLY), and healthcare (XLV), all which have outperformed the market on a risk adjusted basis.

…Which brings me to a yet-to-be-disclosed service James Altucher is offering, which for the aforementioned reasons I am highly skeptical of.

Here is a link to the sales pitch, and while the story of his dad is a nice sentimental touch, the premise is inherently flawed. And here is the video, which I have embedded below:

Essentially, what James is offering is some sort of ‘insider’ system, based on James’ connections within the financial industry, that will allow you to trade stocks like the ‘pros’ do.

From the sales pitch:

look at a site like U.S. Securities and Exchange Commission and I look every month at all of my favorite investors and see what stocks they are quietly beginning to buy.

They don’t go on CNBC talking about these stocks. They don’t go to the newspapers. But they have to report their holdings to the SEC in obscure filings labeled “13-D” or “13-G” or sometimes “13-F”.

They don’t talk to anyone.

Well, that’s not true. They all talk to each other. They talk to me. The information and analysis gets passed from one to the other and that’s how ultimately the stocks go up.

The major problem here is two fold: First, if the information is publicly accessible, such as on the SEC’s website, then in accordance with the EMH (efficient market hypothesis) the information will be instantly priced into the stock. Thus, the stock will likely rise of fall based on the disclosed information before you can react. James makes it sound like the ‘Securities and Exchange Commission’ website is some clandestine organization – that someone how he has stumbled upon something new, when, in reality, hedge funds have algorithms that automatically scan these databases for updates.

Second, and probably more importantly, active management has actually done quite poorly, as indicated by falling ‘alpha’. Fund mangers, especially in recent years, have failed to beat their benchmarks. It’s incontrovertible: everyone, including the experts, sucks at picking stocks:

Why Active Management Fell Off a Cliff – Perhaps Permanently

Whack-a-mole fund managers can’t beat index funds

‘Scale and Skill’: Why It’s Hard for Managed Funds to Beat the Indexers

Poor performance catching up with active stock fund managers

Investment: Loser’s game

86% of investment managers stunk in 2014

To say active management is bad is an understatement – it’s downright awful.

It’s hard enough picking the right sectors in this schizophrenic bull market, but picking individuals stocks is many magnitudes harder. Even Warren Buffett is having some difficulty, with major holdings such as Coke, IBM, and American Express lagging the S&P 500 since 2012. The main reason why Berkshire Hathaway stock (BRK) has done so well in spite of mediocre stock picks is because of its large private holdings like Geico. Emerging market have done poorly since 2011, and small and medium caps have also lagged since 2014. As part of the winner-take-all theme, the stock market and economy has become much more myopic, with lots of losers and fewer winners.

To exploit the tendency of overcrowded investments to lag the broader indexes, a good strategy could be to find which stocks and sectors are the most widely held by funds and then short these stocks, with 50% allocation also going long the S&P 500.

So even if these experts are feeding James information, very little, if any, will be of any good. Essentially, the data shows that the funds are as clueless at stock picking as retail investors – the only difference being they collect commission fees, which is really how the money is made, not stock picking. I believe there are some individuals and firms that do have genuine stock picking and market timing ability, but they seldom accept outside money, and they sure as hell will never disclose their secrets to James, or anyone else for that matter.

In Defense Of A Boring, Comfortable Life (analysis)

An article on Dose.com, In Defense Of A Boring, Comfortable Life, is going viral:

There is nothing wrong with living a comfortable and unadventurous life.

I know. This is the internet. The odds are good you just spent five minutes watching someone do something incredible. After watching that video, you probably thought to yourself, “Wow. I should totally go and punch a giant shark in the face.” Or maybe, “Sure. I can take that zip line over a volcano. Why not?” Then you realized, like most people, that you’d rather go hiking instead. But then you find hiking is super boring and nature kind of sucks. Especially if you’re like me, and insects make you the main course every time you enter the woods.

It’s then you begin to realize, as I did when I turned 33, that maybe the adventurous life isn’t all it’s cracked up to be. It just looks fun, and because we’re regularly exposed to other people’s allegedly fun lives, that makes us imagine doing the same things with our own.

If you want to live in a beautiful, comfortable apartment, and chill out and watch Netflix on the weekends? (And I mean really watch Netflix, which is why I put the “chill” first there), there’s nothing wrong with that. It’s your life. You should do what makes you happy. Honestly, I read a lot of books. If I can spend my weekends working on my comic and reading a good book? I’m as happy as a clam.

This article echoes many themes of this blog and post-2013 society and culture, such as millennials choosing to be alone, at home being introspective, reading, or watching Netflix instead of engaging in ‘adventuresome’ activities such as traveling or going to nightclubs, as part of embracing a ‘spartan’ or ‘boring’ lifestyle of frugality, minimalism, and intellectualism, not excess, materialism, or extravaganza.

Part of this economics: a perpetually weak job market, as well as too much student loan debt, means less money to spend on traveling or going out, but intergenerational cultural factors may also play a role.

Millennials are sorta like 20-something curmudgeons. It’s not the 70-something yelling ‘Get off my lawn!’ – it’s the 20-something saying ‘I want to watch Netflix or read a book at home alone. No, I don’t want to go to a social event such as a club, a baby shower, or your wedding’.

The ‘boomers’ when they were young embraced escapism (such as through psychedelic music, cross-country motorcycle trips, and recreational drug use) and rebellion (against ‘the system’, ‘the establishment’, and ‘the man’).

Gen-x, while there was less rebellion, had escapism in the form of alternative and grunge music, MTV, ‘dumb’ sitcoms (such as Seinfeld, Friends, etc.), as well as drug use. There wasn’t as much intellectualism back then, and consumerism was everywhere. But at the same time, for much of the 80′s and 90′s, living standard for many Americans still weren’t that great, corporate profits & earnings were much weaker than they are now, and interest rates were too high.

By contrast, as mentioned in Intellectualism, Individualism, and Wealth, Part 4 (philosophy of millennials), millennials (with some exception of SJWs) generally don’t seek to rebel or escape, but rather adapt and be in the ‘preset’, engaging in studies and online debates on philosophy, finance, and economics, all to better understand ‘the system’ instead of fighting it. Escapism for millennials is generally constructive and intellectual, such as watching documentaries and high-production shows on Netflix, posting or blogging online, or reading (such as in the case of the author of the Dose.com article, B.J. Mendelson), not binge-watching Friends or zoning-out on music videos. Although millennials created OWS, it quickly fizzled out, and they soon realized that it’s more productive to learn to emulate the rich and to understand how the economy works than rebel against it (which is counterproductive).

There is also less drug and alcohol use than earlier generations (although marijuana may be an exception):

As a result of this saturation of information, the media latches onto millennial drug use. However, according to the National Institute on Drug Abuse (NIDA), millennials actually use fewer drugs and less alcohol than their parents’ peers did. Tempting though it may be to point fingers, teenage drug use declined by more than 34% between 1993 and 2013, a crucial time period that encompasses the teenage years of almost all millennials.

By all accounts, alcohol use is also less common for millennials. According to the same NIDA report, teen drinking has decreased by 42% since 2003 alone, and by more than 60% since 1995. Now that most millennials are in their 20′s or 30′s, this demographic is also leaning away from hard liquor, preferring craft beer and wine. In fact, millennials drink twice as much wine as their parents did at the same age.

This article also relates to ‘advice culture’, borne out of Millennials learning how to adapt, not rebel, to a challenging economy, which seems to reward individualism and lavishes heaps of praise upon an exalted few, with mediocre job prospects and student debt for everyone else. Edgy, contrarian articles (such as In Defense Of A Boring, Comfortable Life) that offer ‘advice’ on navigating post-2013 society and culture often go viral, as millions of people (not just millennials) are coping with ‘how to be average’ if you cannot be the next Zuckerberg, Musk, or Theil (not that everyone wants to be like them, but they are portryed by the media as paragons of success and accomplishment).

And from Wealth, Intellectualism, and Individualism, Part 2 (the obsession with finance):

But at the same time, an article about ‘being average‘ also went viral. This ties into post-2008 ‘authenticity culture’, of how it’s better to be authentically ‘true to yourself’, even if it means being average, than being deluded and afflicted by Dunning Kruger. Biological determinism again rears its head, with genes limiting the potential of people who aspire to more than their biology will allow. This is related to ‘share narratives’, as millions of people are seeking answers to existential questions like, ‘Can someone who is only average find meaning in life in an economy and culture that seems to rewards individual success and talent, and how so?’ Not everyone can be a day trading genius, a web 2.0 billionaire, or a top physicist or mathematician, so learning or coping with being ‘average’ is a useful skill.

Although job prospects may not be as good, the good news is many millennials are rejecting the corporate ‘rat race’, preferring a lifestyle of minimalism over consumerism, as a way of not only adapting to a more difficult economy but as part of a culture that has become more intellectualized. Millennials would rather code and stay home and read, sometimes in the case of the former becoming suddenly very wealthy, but in spite of the wealth still living a minimalist lifestyle.