In honor of golf season, I bring you more quotes from greenskeeper Carl Spackler:
"I have to laugh, because I've outfinessed myself. My foe, my enemy, is an animal. And in order to conquer an animal, I have to think like an animal, and, whenever possible, to look like one."
"This [grass] is a hybrid. This is a cross, ah, of Bluegrass, Kentucky Bluegrass, Featherbed Bent, and Northern California Sensemilia. The amazing stuff about this is, that you can play 36 holes on it in the afternoon, take it home and just get stoned to the bejeezus belt that night on this stuff."
Thursday, May 20, 2010
Friday, May 14, 2010
Dear Graduating Class of 2010
Among the great mysteries of our day is, how come I've never been invited to give a commencement address? I think I'd be very good at it.
Alas, it appears this will remain on my bucket list for another year. In the meantime, what follows is an excerpt from a commencement speech given by Stephen Colbert to Knox College in 2006. I couldn't have said it better myself, and besides, I didn't need to:
Today is about you — you who have worked so hard to pack your heads with learning until your skulls are all plump like a sausage of knowledge. It's an apt metaphor, don't question it. But now your time at college is at an end. Now you are leaving here. And this leads me to a question that just isn't asked enough at commencements. Why are you leaving here?
This seems like a very nice place. Besides, have you seen the world outside lately? They are playing for KEEPS out there, folks. My God, I couldn't wait to get here today just so I could take a breather from the real world. I don't know if they told you what's happened while you've matriculated here for the past four years. The world is waiting for you people with a club.
There are so many challenges facing this next generation, and I don't know if you're tough enough to handle this. You are the most coddled generation in history. I belong to the last generation that did not have to be in a car seat. You had to be in car seats. I did not have to wear a helmet when I rode my bike. You do. You have to wear helmets when you go swimming, right? In case you bump your head against the side of the pool?
But you seem nice enough, so I'll try to give you some advice. First of all, when you go to apply for your first job, don't wear those robes. Medieval garb does not instill confidence in future employers — unless you're applying to be a scrivener.
And if someone does offer you a job, say yes. You can always quit later. Then at least you'll be one of the unemployed as opposed to one of the never-employed. Nothing looks worse on a resume than nothing.
Alas, it appears this will remain on my bucket list for another year. In the meantime, what follows is an excerpt from a commencement speech given by Stephen Colbert to Knox College in 2006. I couldn't have said it better myself, and besides, I didn't need to:
Today is about you — you who have worked so hard to pack your heads with learning until your skulls are all plump like a sausage of knowledge. It's an apt metaphor, don't question it. But now your time at college is at an end. Now you are leaving here. And this leads me to a question that just isn't asked enough at commencements. Why are you leaving here?
This seems like a very nice place. Besides, have you seen the world outside lately? They are playing for KEEPS out there, folks. My God, I couldn't wait to get here today just so I could take a breather from the real world. I don't know if they told you what's happened while you've matriculated here for the past four years. The world is waiting for you people with a club.
There are so many challenges facing this next generation, and I don't know if you're tough enough to handle this. You are the most coddled generation in history. I belong to the last generation that did not have to be in a car seat. You had to be in car seats. I did not have to wear a helmet when I rode my bike. You do. You have to wear helmets when you go swimming, right? In case you bump your head against the side of the pool?
But you seem nice enough, so I'll try to give you some advice. First of all, when you go to apply for your first job, don't wear those robes. Medieval garb does not instill confidence in future employers — unless you're applying to be a scrivener.
And if someone does offer you a job, say yes. You can always quit later. Then at least you'll be one of the unemployed as opposed to one of the never-employed. Nothing looks worse on a resume than nothing.
Uncompensated Risk In Investing
With the market gyrating like it's 2008 again, now seems like a good time to re-visit the unbreakable relationship of risk and reward.
While market returns can be defined in many ways, most media outlets and investment shops have come to use the S&P 500 as their benchmark for return. Unfortunately, comparing the return of the 500 largest U.S. stocks against a diversified portfolio is a very poor, even unacceptable measurement of performance. After all, most portfolios are comprised of both U.S. and foreign stocks, plus corporate and government bonds, real estate or other commodities, and cash equivalents.
When discussing investment returns, you’ll typically hear me refer to “risk-adjusted return” as a measure of how well a fund or portfolio did over a specific time period. Simply put, if two different funds/portfolios had a 10% return, the less risky one – perhaps one that owns more bonds than stocks – would have a much better risk-adjusted return
So to fairly and accurately measure a diversified portfolio, it must be adjusted for style and risk. For example, a portfolio that has been established for an investor may have a target allocation of 60% stocks and 40% bonds. In that case, the stocks and bonds should be broken down by type, (e.g. U.S. or foreign, small or large, etc.) and the returns for each then compared to their applicable benchmark. In this light, no one would reasonably compare such a 60/40 portfolio’s returns with the S&P 500, much less draw rational conclusions from it.
One method to adjust for risk is through a fund’s standard deviation, which measures its volatility. A stock fund, which is more likely to have returns that yo-yo, will have a high standard deviation. In contrast, the standard deviation of a fixed income or bond fund will be lower, or more likely to be in line with its expected historical returns in any given period of time.
Generally speaking, the returns of more stock-based models come with higher standard deviations, and therefore, higher risk. In the 12-15 months ending in April 2010, investors were compensated for this risk through higher returns. As you might guess, however, risk was not so well compensated throughout the past decade (or even the past month), when much safer fixed income investments performed as well as – or even better than – stocks.
Understanding the basics of risk-adjusted return will make you a more successful investor. It follows, then, that successful investors - and successful people - avoid uncompensated risk.
While market returns can be defined in many ways, most media outlets and investment shops have come to use the S&P 500 as their benchmark for return. Unfortunately, comparing the return of the 500 largest U.S. stocks against a diversified portfolio is a very poor, even unacceptable measurement of performance. After all, most portfolios are comprised of both U.S. and foreign stocks, plus corporate and government bonds, real estate or other commodities, and cash equivalents.
When discussing investment returns, you’ll typically hear me refer to “risk-adjusted return” as a measure of how well a fund or portfolio did over a specific time period. Simply put, if two different funds/portfolios had a 10% return, the less risky one – perhaps one that owns more bonds than stocks – would have a much better risk-adjusted return
So to fairly and accurately measure a diversified portfolio, it must be adjusted for style and risk. For example, a portfolio that has been established for an investor may have a target allocation of 60% stocks and 40% bonds. In that case, the stocks and bonds should be broken down by type, (e.g. U.S. or foreign, small or large, etc.) and the returns for each then compared to their applicable benchmark. In this light, no one would reasonably compare such a 60/40 portfolio’s returns with the S&P 500, much less draw rational conclusions from it.
One method to adjust for risk is through a fund’s standard deviation, which measures its volatility. A stock fund, which is more likely to have returns that yo-yo, will have a high standard deviation. In contrast, the standard deviation of a fixed income or bond fund will be lower, or more likely to be in line with its expected historical returns in any given period of time.
Generally speaking, the returns of more stock-based models come with higher standard deviations, and therefore, higher risk. In the 12-15 months ending in April 2010, investors were compensated for this risk through higher returns. As you might guess, however, risk was not so well compensated throughout the past decade (or even the past month), when much safer fixed income investments performed as well as – or even better than – stocks.
Understanding the basics of risk-adjusted return will make you a more successful investor. It follows, then, that successful investors - and successful people - avoid uncompensated risk.
Tuesday, May 4, 2010
Cartoons Can Never Hurt Us
It's long been a fact that some of the best satire on TV doesn't even involve human interaction. Of course I'm talking about The Simpsons and South Park.
Not only do these long-running cartoons provide a visual entertainment that can't be done with people, and not only are they funny, but they are brilliantly written in a way that makes fun of society's ills.
I prefer The Simpsons and its lesser shock-value way of doing things, but today I'm focusing on South Park in light of the recent threats to its producers for their depictions of the prophet Muhammad. In short, for the second time in recent years, South Park has been edited to pander to Muslim extremists who think their prophet cannot be viewed, much less parodied. (To read more about this, simply type the words 'South Park Muhammad' into any search engine.)
Anyone who watches South Park knows that for years they've made fun of any and all things, including religions and religious leaders. There is no favoritism, they draw everyone, and all are potential targets. The only difference is, Muslim extremists apparently think depicting Muhammad in a cartoon today is a death sentence for those who dare do it.
It's worth noting that while the majority of Muslims might be insulted by South Park, they’re not calling for death to the show's creators. But it's also worth noting that this is a country that looks down on censorship. It’s not a crime to parody religion in America, but it is a crime to allow freedom of speech to be impacted by extremists who threaten death in the name of religion or politics.
Here's an idea for those extremists: Stop watching South Park. How do you get TV reception in that cave, anyway?
Not only do these long-running cartoons provide a visual entertainment that can't be done with people, and not only are they funny, but they are brilliantly written in a way that makes fun of society's ills.
I prefer The Simpsons and its lesser shock-value way of doing things, but today I'm focusing on South Park in light of the recent threats to its producers for their depictions of the prophet Muhammad. In short, for the second time in recent years, South Park has been edited to pander to Muslim extremists who think their prophet cannot be viewed, much less parodied. (To read more about this, simply type the words 'South Park Muhammad' into any search engine.)
Anyone who watches South Park knows that for years they've made fun of any and all things, including religions and religious leaders. There is no favoritism, they draw everyone, and all are potential targets. The only difference is, Muslim extremists apparently think depicting Muhammad in a cartoon today is a death sentence for those who dare do it.
It's worth noting that while the majority of Muslims might be insulted by South Park, they’re not calling for death to the show's creators. But it's also worth noting that this is a country that looks down on censorship. It’s not a crime to parody religion in America, but it is a crime to allow freedom of speech to be impacted by extremists who threaten death in the name of religion or politics.
Here's an idea for those extremists: Stop watching South Park. How do you get TV reception in that cave, anyway?
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