It might take a bit to get to my point, but follow along here.....
The other day I played golf at a local course that, like many courses in my area, had some flooding damage. In this case, large portions of several fairways were comprised of compacted dirt that remained after the floodwaters receded. In the end, this meant that hitting from some fairway lies was like hitting from a mixture of dirt/sand.
This made me think of this year's PGA Championship at Whisting Straits in Wisconsin, where one of the leaders was assessed a two-stroke penalty on the final hole for grounding his club in a sand trap, which neither looked like nor was maintained as a bunker.
This made me think of a fantastic column by ESPN.com writer Rick Reilly, on what a dumb rule that was, along with many other dumb rules of golf. (Read it at this link:
http://sports.espn.go.com/espn/news/story?id=5470940)
This made me think - now to the point - of a few other dumb rules (laws?) in life. To wit:
*Motorcycle helmet laws. If someone wants to crack their skull open and die - the primary outcome of a helmet-less motorcycle accident - and no one else is hurt, why should we care? It isn't like a seat belt law, because people in cars who don't wear those restraits will often still survive accidents, but then are permanently disabled, which puts on cost on society. Speaking of death and dying.....
*Bans on 'assisted' suicide. Again, if someone wants to end their own life, in this case with dignity, who else is harmed by that?
*No instant replay in baseball or soccer. We have the power of technology, but not the will to apply it. (Kind of like 'assisted' suicide.) If you have to defend something using the old 'integrity of the game' argument, consider yourself on the losing side of the argument.
*Criminalizing the possession of marijuana. Just go to the keyword 'marijuana' for this blog to find out all you'll ever need to know about why this is in the dumb rules Hall-of-Fame.
*Continued extension of unfunded unemployment benefits. Paying people to not work is not a viable or sustainable national economic policy.
*24/7 'citizenship' policies in schools. Schools have a hard enough time policing kids at school / school activities, why do they think they should also police the kids' behavior outside of school? Regardless, they don't have my permission to do it, so they need not bother.
Friday, August 27, 2010
Tuesday, August 24, 2010
Women Are Better Than Men.....At Investing
Here's a controversial thought: Men and women are different.....in terms of how they invest.
A variety of studies have been done on gender-based financial behavior. The 2007 Sharebuilder Women and Investing Survey finds that women tend to be more involved in the family balance sheet. Just over 60% of women manage the household checkbook; 58% pay the bills; 44% (versus only 23% of men) oversee the budget.
Yet only 15% of married women take primary care of the family investments. This in spite of the finding that, when it comes to choosing investments, women tend to be more diligent, spending almost twice as much time researching mutual funds before investing. This could be due to greater caution on the part of women, or, depending how you look at it, greater confidence on the part of men. Whatever the cause, it pays off for the ladies. Finance professors Brad Barber and Terrance Odean find that—though women hold less risky portfolios than men, pursuing (and expecting) lower returns—after adjusting for differences in risk, women achieve better returns.
Before women take a victory lap, note that there is a larger, gender-neutral point: Overconfident investors trade too much. Barber and Odean take pains to assure us that gender is but a convenient statistical tool for the real factor at work – overconfidence. Psychology researchers have long held that men are more prone to overconfidence, so we'd expect them to trade more aggressively. We'd also expect this trading to increase costs, which in turn will reduce performance. To test this, the authors set out to determine if the population that is naturally overconfident earns lower average returns than the population that isn't. (See? It's not about men and women at all!)
The professors analyze a huge database of brokerage accounts from the 1990s. They find that married men trade 45% more than married women and earn annual risk-adjusted net returns that are 1.4% lower. Moreover, the differences widen when the sample isn't married people: Single men trade 67% more than single women and earn annual risk-adjusted net returns that are a full 2.3% lower. Worse still, the men have average turnover (a measure of trading frequency) of 77% per year, while the women have average turnover around 53% per year. (Both of those percentages are high – maybe both groups need advisors instead of commission-paid brokers!)
If you believe the stereotypes, these results shouldn't surprise you. Men are supposedly brought up to embrace competition and risk. This translates into winning short-term sprints, not waiting out marathons in broadly diversified strategies. Sure, research is great, but guys don't like to ask for directions. Women, on the other hand, are more likely to avoid knife-fights, or take a flyer on some dicey investment. The research shows they're also more likely to seek out data and expert help, and to take their time – perhaps too much time – before committing assets.
In the final analysis, it’s best for both genders to avoid the pitfalls of emotional investing, the symptoms of which are frequent trading and/or improper asset allocation. Successful investing requires a mixture of confidence and caution, along with a healthy dose of objectivity, patience, and knowledge. These traits will make better investors of both men and women.....and there’s nothing controversial about that.
A variety of studies have been done on gender-based financial behavior. The 2007 Sharebuilder Women and Investing Survey finds that women tend to be more involved in the family balance sheet. Just over 60% of women manage the household checkbook; 58% pay the bills; 44% (versus only 23% of men) oversee the budget.
Yet only 15% of married women take primary care of the family investments. This in spite of the finding that, when it comes to choosing investments, women tend to be more diligent, spending almost twice as much time researching mutual funds before investing. This could be due to greater caution on the part of women, or, depending how you look at it, greater confidence on the part of men. Whatever the cause, it pays off for the ladies. Finance professors Brad Barber and Terrance Odean find that—though women hold less risky portfolios than men, pursuing (and expecting) lower returns—after adjusting for differences in risk, women achieve better returns.
Before women take a victory lap, note that there is a larger, gender-neutral point: Overconfident investors trade too much. Barber and Odean take pains to assure us that gender is but a convenient statistical tool for the real factor at work – overconfidence. Psychology researchers have long held that men are more prone to overconfidence, so we'd expect them to trade more aggressively. We'd also expect this trading to increase costs, which in turn will reduce performance. To test this, the authors set out to determine if the population that is naturally overconfident earns lower average returns than the population that isn't. (See? It's not about men and women at all!)
The professors analyze a huge database of brokerage accounts from the 1990s. They find that married men trade 45% more than married women and earn annual risk-adjusted net returns that are 1.4% lower. Moreover, the differences widen when the sample isn't married people: Single men trade 67% more than single women and earn annual risk-adjusted net returns that are a full 2.3% lower. Worse still, the men have average turnover (a measure of trading frequency) of 77% per year, while the women have average turnover around 53% per year. (Both of those percentages are high – maybe both groups need advisors instead of commission-paid brokers!)
If you believe the stereotypes, these results shouldn't surprise you. Men are supposedly brought up to embrace competition and risk. This translates into winning short-term sprints, not waiting out marathons in broadly diversified strategies. Sure, research is great, but guys don't like to ask for directions. Women, on the other hand, are more likely to avoid knife-fights, or take a flyer on some dicey investment. The research shows they're also more likely to seek out data and expert help, and to take their time – perhaps too much time – before committing assets.
In the final analysis, it’s best for both genders to avoid the pitfalls of emotional investing, the symptoms of which are frequent trading and/or improper asset allocation. Successful investing requires a mixture of confidence and caution, along with a healthy dose of objectivity, patience, and knowledge. These traits will make better investors of both men and women.....and there’s nothing controversial about that.
Tuesday, August 17, 2010
More Observations From The Iowa State Fair
A year ago I blogged about seeing way too many overweight people at the Iowa State Fair. I also went on to suggest a tax that might help stem the tide of obesity in Iowa/America.
http://streffblog.blogspot.com/2009/08/tax-on-fat-people.html
During my annual visit to the fair this year, I made a few more observations:
*Tattoos are everywhere, and I'm not talking about the little guy from Fantasy Island. I'd estimate 1 out of every 10 people at the fair had a tattoo, but increase that to 1 out of every 5 people under the age of 40, and 1 out of every 3 between the ages of 20-35. And that only counts the visible tattoos; it might be 50% or more under age 35. It's just part of being young now, similar to ear piercing in my generation.
*If you want to surpress your appetite, closely watch what's happening in most of the temporary food stands. They're often dirty and smelly, meaning both the stands and some of the people working in them. And the food is, um, greasy. One image I still can't get out of my head was the guy who turned over the french fries basket to dump the latest load in a pan - only to have it fall out of the basket still molded in the rectangular shape of the basket! Perhaps this is actually a new fair food item: French Fry Loaf.
*Free entertainment at the fair still kicks butt. There's a variety of live music, demonstrations, and contests to watch. This year I caught a glimpse of the Mr. Legs Contest. As I tweeted at the time, I chose not to participate because I didn't want to demoralize the competition, and because I don't think it's right for pros like me to compete with amatuers. Regardless, the price of admission buys you a lot of value at the Iowa State Fair.
*Generally speaking, people are still fat.
http://streffblog.blogspot.com/2009/08/tax-on-fat-people.html
During my annual visit to the fair this year, I made a few more observations:
*Tattoos are everywhere, and I'm not talking about the little guy from Fantasy Island. I'd estimate 1 out of every 10 people at the fair had a tattoo, but increase that to 1 out of every 5 people under the age of 40, and 1 out of every 3 between the ages of 20-35. And that only counts the visible tattoos; it might be 50% or more under age 35. It's just part of being young now, similar to ear piercing in my generation.
*If you want to surpress your appetite, closely watch what's happening in most of the temporary food stands. They're often dirty and smelly, meaning both the stands and some of the people working in them. And the food is, um, greasy. One image I still can't get out of my head was the guy who turned over the french fries basket to dump the latest load in a pan - only to have it fall out of the basket still molded in the rectangular shape of the basket! Perhaps this is actually a new fair food item: French Fry Loaf.
*Free entertainment at the fair still kicks butt. There's a variety of live music, demonstrations, and contests to watch. This year I caught a glimpse of the Mr. Legs Contest. As I tweeted at the time, I chose not to participate because I didn't want to demoralize the competition, and because I don't think it's right for pros like me to compete with amatuers. Regardless, the price of admission buys you a lot of value at the Iowa State Fair.
*Generally speaking, people are still fat.
Thursday, August 5, 2010
A Solution In Search Of A Problem
When taxpayer money is used for so-called community betterment, I tend to want to put my hand over my wallet. Most of these projects are don't solve anything, and actually make matters worse by taking funds from more worthwhile things (like my bank account).
In the span of a couple of hours today I came across two seemingly unrelated items that, upon further review, are completely related. They are both items of community betterment, and they are both publicized as something we citizens should be proud of, but they are also both a waste of taxpayer time and money.
First the more obvious one - middle-of-the-road bicycle lanes. Even though I'm a biker, this has got to be one of the dumbest ideas since new Coke (maybe the best example ever of fixing something that wasn't broken). There is nothing wrong with staying on the right side of the street and sharing the road, or even better, bike lanes along the curb side of the street. But down the middle? One of my favorite bike routes recently added these lanes, as have other parts of Des Moines, and believe me, it does not make biking safer, it makes it more dangerous. Aside from the lack of need, don't forget, taxpayers paid for this lane remarking too! WTF!
Now the less obvious one - new school construction and/or remodeling. I'm all for good physical school facilities, but reading about the summer projects being completed in our suburban school district should make taxpayers cringe. It isn't just the multi-million dollars being spent on over-the-top common rooms and equipment, it's how the district brags about it. "Hey, look at all of this taxpayer money of yours we're spending! It must have been growing on trees because there it was, so we spent it!" I've yet to see any study that directly correlates school building spending with better student-citizens. If the district cares about that, wouldn't they (also wrongly) hire more teachers, or at least keep the ones they have? (Shhhhhh.....don't say anything about school districts here are laying off teachers because the state is running out of money thank you very much worst governor ever Chester Culver.)
When a lot of time and money gets wasted on things that don't do any good, that's a solution in search of a problem. Funny how it usually happens in the governmental, not-for-profit world.
In the span of a couple of hours today I came across two seemingly unrelated items that, upon further review, are completely related. They are both items of community betterment, and they are both publicized as something we citizens should be proud of, but they are also both a waste of taxpayer time and money.
First the more obvious one - middle-of-the-road bicycle lanes. Even though I'm a biker, this has got to be one of the dumbest ideas since new Coke (maybe the best example ever of fixing something that wasn't broken). There is nothing wrong with staying on the right side of the street and sharing the road, or even better, bike lanes along the curb side of the street. But down the middle? One of my favorite bike routes recently added these lanes, as have other parts of Des Moines, and believe me, it does not make biking safer, it makes it more dangerous. Aside from the lack of need, don't forget, taxpayers paid for this lane remarking too! WTF!
Now the less obvious one - new school construction and/or remodeling. I'm all for good physical school facilities, but reading about the summer projects being completed in our suburban school district should make taxpayers cringe. It isn't just the multi-million dollars being spent on over-the-top common rooms and equipment, it's how the district brags about it. "Hey, look at all of this taxpayer money of yours we're spending! It must have been growing on trees because there it was, so we spent it!" I've yet to see any study that directly correlates school building spending with better student-citizens. If the district cares about that, wouldn't they (also wrongly) hire more teachers, or at least keep the ones they have? (Shhhhhh.....don't say anything about school districts here are laying off teachers because the state is running out of money thank you very much worst governor ever Chester Culver.)
When a lot of time and money gets wasted on things that don't do any good, that's a solution in search of a problem. Funny how it usually happens in the governmental, not-for-profit world.
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