Monday, November 27, 2006
Sunday, November 26, 2006
Review: Smallville Season Four
I have to say that I really dislike the way story arcs are handled in Smallville. This season's big story arc revolves around three MacGuffins that are meant to be gathered by Clark Kent. Unfortunately, there are only a small handful of episodes that advance the plot --- most of the time, the plot is advanced by little side shows that don't even include Clark Kent. This makes the primary story arc feel more like something thrown in there so there's a little bit of continuity, rather than a coherent storyline that you frequently see in Buffy The Vampire Slayer, for instance.
There's also a major plot hole around those MacGuffins. If there had been prior Kryptonian visits to Earth, why isn't Earth a Krypton colony, instead of having only one survivor of Krypton? This is such a major plot hole that it ruins the credibility of the rest of the season.
Lois Lane makes an appearance in this season, really demonstrating that Smallville does not intend to stick to Superman canon. I really enjoy the portrayal of Lois Lane, however. She does not fit the damsel in distress stereotype, and frequently does kick ass. Her cousin, Smallville's star reporter Chloe Sullivan also finally discover Clark's secret, and Luthor, while being played as a sympathetic hero in previous seasons finally becomes the villain, but not before he gives Clark many chances to be honest and come clean with him.
I do miss what they did in previous seasons, where the music being played in the background is more often than not part of the character's foreground, so whenever Lex gets out of his car, for instance, the music that he's listening to stops. The mode of dressing Clark in red and blue continues, and it's kinda neat to see them do that. There is also a very well done reworking of Myxlplyx, a Superman villain that I thought would have been tough to do on TV. Sarah Carter also does a great comeback as Alicia Baker the teleporting girl in a touching two-parter.
The DVD does include a peek into the writer's room, where you see why Smallville's overall story arcs are so incoherent. The main drivers for the TV series aren't even in the room most of the time. When seeing the corresponding footage in Buffy, you'll see Joss in there all the time bashing out stories together with his writers.
All in all, worth watching, but not worth buying.
There's also a major plot hole around those MacGuffins. If there had been prior Kryptonian visits to Earth, why isn't Earth a Krypton colony, instead of having only one survivor of Krypton? This is such a major plot hole that it ruins the credibility of the rest of the season.
Lois Lane makes an appearance in this season, really demonstrating that Smallville does not intend to stick to Superman canon. I really enjoy the portrayal of Lois Lane, however. She does not fit the damsel in distress stereotype, and frequently does kick ass. Her cousin, Smallville's star reporter Chloe Sullivan also finally discover Clark's secret, and Luthor, while being played as a sympathetic hero in previous seasons finally becomes the villain, but not before he gives Clark many chances to be honest and come clean with him.
I do miss what they did in previous seasons, where the music being played in the background is more often than not part of the character's foreground, so whenever Lex gets out of his car, for instance, the music that he's listening to stops. The mode of dressing Clark in red and blue continues, and it's kinda neat to see them do that. There is also a very well done reworking of Myxlplyx, a Superman villain that I thought would have been tough to do on TV. Sarah Carter also does a great comeback as Alicia Baker the teleporting girl in a touching two-parter.
The DVD does include a peek into the writer's room, where you see why Smallville's overall story arcs are so incoherent. The main drivers for the TV series aren't even in the room most of the time. When seeing the corresponding footage in Buffy, you'll see Joss in there all the time bashing out stories together with his writers.
All in all, worth watching, but not worth buying.
Saturday, November 25, 2006
Review: Making Globalization Work
I met Josepth Stiglitz when he visited Google on his book tour. His intelligence, grasp of the issues, and obvious concern about important issues like global warming impressed me, and I looked forward to reading the book.
This is an important book, and may very well be the best book I've read all year. It answers several questions:
As an investor, I have substantial assets in US companies that will be hurt by many of his proposals. As a humanist and an environmentalist, nothing would make me happier than to see his proposals be implemented. As a cynical person, I'm willing to bet that his ideas will not be implemented --- our pharmaceutical lobbies as well as our energy companies are too powerful to overcome, and our democratic process not transparent enough. And I don't expect the general electorate to read this book, understand it, or vote on issues other than Gay Marriage or the National Pledge. If it were, the last 2 presidential elections wouldn't have been even close.
Nevertheless, for an understanding of how a Nobel-prize winning Economist can apply his intellect and the tools Economics provides to solve major world problems without inventing new bureaucracies, this book is a breath of fresh air. Highly recommended and worth paying full price for if your library has a long wait for this book.
The globalizers of the past twenty years may have thought that the economic doctrines they pushed for through the international institutions would by now have succeeded so well in enhancing the well-being of everyone that all would be forgiven. Perhaps they hoped that even if there were growing inequality, so long as there was money trickling down the poor could be placated. Even if a few were denied access to lifesaving medicines, if overall enough people saw their health improve they might be satisfied. As we have seen, for too many the promised benefits did not materialize...
This is an important book, and may very well be the best book I've read all year. It answers several questions:
- Why did the IMF and World Bank prescriptions for the Asian crisis fail?
- What precipitated Argentina's default of its debts?
- Why does the U.S. run persistent trade deficits, no matter what its budget situation is?
- Why do Asian countries insist on continually buying American debt despite the fact that the money they spend doing so is better plowed back into their own countries with better returns than U.S. Treasury bonds?
- Why do the most successful developing economies have high savings rate? Conventional wisdom says that those countries are best off borrowing money and building out infrastructure with debt.
As an investor, I have substantial assets in US companies that will be hurt by many of his proposals. As a humanist and an environmentalist, nothing would make me happier than to see his proposals be implemented. As a cynical person, I'm willing to bet that his ideas will not be implemented --- our pharmaceutical lobbies as well as our energy companies are too powerful to overcome, and our democratic process not transparent enough. And I don't expect the general electorate to read this book, understand it, or vote on issues other than Gay Marriage or the National Pledge. If it were, the last 2 presidential elections wouldn't have been even close.
Nevertheless, for an understanding of how a Nobel-prize winning Economist can apply his intellect and the tools Economics provides to solve major world problems without inventing new bureaucracies, this book is a breath of fresh air. Highly recommended and worth paying full price for if your library has a long wait for this book.
The globalizers of the past twenty years may have thought that the economic doctrines they pushed for through the international institutions would by now have succeeded so well in enhancing the well-being of everyone that all would be forgiven. Perhaps they hoped that even if there were growing inequality, so long as there was money trickling down the poor could be placated. Even if a few were denied access to lifesaving medicines, if overall enough people saw their health improve they might be satisfied. As we have seen, for too many the promised benefits did not materialize...
Tuesday, November 14, 2006
Edward Scissorhands Musical Review
I watched this musical this past Sunday. The review will be from someone who's never seen the film version of Edwards Scissorhands, so please take that into account when reading it.
First of all, the musical is not really a musical in the sense of something like The Sound of Music or Chicago. Its a dance musical, which I'll say does not really appeal to me much. As I'm really more a fan of the word, be it spoken or written, art through music and dance alone just did not appeal very much to me.
The musical was about 2 hours long, with one intermission halfway through, and takes us through the story that most will find familiar if they've watched the movie. Even though I've never seen the movie, and there were no words, I had no problems following the story and the moods and progressions that the musical takes.
The sets were very well constructed, and the play makes judicious use of special effects and layering of sets to get its intended effects. Its one of the most special effect heavy musical I've seen, and part of that is due to the lack of dialouge I believe.
The music was very well done. Its nothing new if you've seen the movie, but even then, to hear it live and competently performed would make it new to any fans of the original Danny Elfman tracks.
The dancers and cheography was also quite competent. The fluidity and movements of both individuals and groups were quite good to my unpracticed eye, but neither was it particularly joyful to behold I thought. Again, I'm not a fan of dance musicals, so I can't really compare it to anything else.
All in all, I beleived it was quite a competently done dance musical. It doesn't break any new ground and it really is mostly a fan-service to fans of the movie. Anyone who's never seen it won't be lost, but they probably would not appreciate it as much either. Definitely people who don't appreciate dance musicals should stay away.
Overall, a 6.5 in my books. I wouldn't pay full price to see it, but at half price, it wasn't a terrible deal.
First of all, the musical is not really a musical in the sense of something like The Sound of Music or Chicago. Its a dance musical, which I'll say does not really appeal to me much. As I'm really more a fan of the word, be it spoken or written, art through music and dance alone just did not appeal very much to me.
The musical was about 2 hours long, with one intermission halfway through, and takes us through the story that most will find familiar if they've watched the movie. Even though I've never seen the movie, and there were no words, I had no problems following the story and the moods and progressions that the musical takes.
The sets were very well constructed, and the play makes judicious use of special effects and layering of sets to get its intended effects. Its one of the most special effect heavy musical I've seen, and part of that is due to the lack of dialouge I believe.
The music was very well done. Its nothing new if you've seen the movie, but even then, to hear it live and competently performed would make it new to any fans of the original Danny Elfman tracks.
The dancers and cheography was also quite competent. The fluidity and movements of both individuals and groups were quite good to my unpracticed eye, but neither was it particularly joyful to behold I thought. Again, I'm not a fan of dance musicals, so I can't really compare it to anything else.
All in all, I beleived it was quite a competently done dance musical. It doesn't break any new ground and it really is mostly a fan-service to fans of the movie. Anyone who's never seen it won't be lost, but they probably would not appreciate it as much either. Definitely people who don't appreciate dance musicals should stay away.
Overall, a 6.5 in my books. I wouldn't pay full price to see it, but at half price, it wasn't a terrible deal.
Sunday, November 12, 2006
Review: Castle Waiting
This is a comic described as feminist fantasy, and it does live up to the name. There aren't too many men as characters in the book, and all the primary characters are women. There are lots of little fantasy touches, including a courtier who's a stork, a knight who's a horse, and some cute little demons. The art is quite well done, and the stories are frequently episodic and in many ways deeply domestic in nature. There's a quiet tone all throughout the book which is consistent.
It's quite clear, however, that this is merely the first volume of a multi-part work, and I'm following quite enough series as it is, so I cannot say I'm eagerly awaiting the next volume. As a quick read and good entertainment it's worth picking up, but I would not pay full price for it.
It's quite clear, however, that this is merely the first volume of a multi-part work, and I'm following quite enough series as it is, so I cannot say I'm eagerly awaiting the next volume. As a quick read and good entertainment it's worth picking up, but I would not pay full price for it.
Saturday, November 11, 2006
Greg Mankiw loses credibility
Greg Mankiw tries to pretend that it wasn't Bush's tax cuts that causes the swing from budget surplus to budget deficits. Fortunately, it looks like his readers (in the comments on his blog) catch him on this attempt to weasel out of this Republican responsibility. I have to say, I used to have respect for some of the more academic conservative types, but my meetings with both Larry Summers and now this recent series of mendacious posts by Greg have really brought them down in my eyes. In contrast, my encounter with Joe Stiglitz, Brad De Long, and of course my reading of Paul Krugman's well-written, well-analyzed articles give me confidence that the type of economic advisors Democrats consult really are in a different class of human beings and professionals than the type of person the Republicans hire.
Considering that the best software engineers are more than 100 times as productive as the median, it is no surprise that the economy does tend to do significantly better when the Democrats are in power, just based on the quality of the hired help. Not only that, while the Democrats tend to have leadership that actually pays attention to its hired help, the Republicans have had a tendency to ignore its economists as well as to do things like dismantle the Congressional Office of Science and Research, which served an incredibly important role in helping shape science and technology policy. Like David Brin says, this is one of the many good things the Democratic Congress should be able to do without any possibility of veto from the moron in the White House.
Considering that the best software engineers are more than 100 times as productive as the median, it is no surprise that the economy does tend to do significantly better when the Democrats are in power, just based on the quality of the hired help. Not only that, while the Democrats tend to have leadership that actually pays attention to its hired help, the Republicans have had a tendency to ignore its economists as well as to do things like dismantle the Congressional Office of Science and Research, which served an incredibly important role in helping shape science and technology policy. Like David Brin says, this is one of the many good things the Democratic Congress should be able to do without any possibility of veto from the moron in the White House.
Wednesday, November 08, 2006
A satisfying election...
As someone who got naturalized around 1996, after Clinton got elected for a second time, it's been a frustrating 10 years to be a Democratic voter. To see this sweep (I'd never thought Montana would vote Democratic) is satisfying. Some have expressed that the Democrats won without an agenda, but to be honest, the Democrats don't need one. They proved themselves (from 1992 to 2000) to be great policy makers (compare Clinton/Gore against Bush/Cheney), able to hold down deficits while reduce inequality. I look forward to the next generation of people like Gene Sperling to bring forward and propose better ways for society as a whole to help each other and raise all boats, not just those of the wealthy and already fortunate.
There's been a lot of hand-wringing from folks like Greg Mankiw about the fate of free trade. I think Greg forgets that it was Clinton/Gore who signed NAFTA, not Bush/Cheney. Furthermore, the existing trade agreements are already done deals. Congress cannot get out of it. And to sign further trade agreements under the current trade philosophy, as Joe Stiglitz has pointed out, would be a big mistake.
Ultimately, given the choices involved, I'll trade free trade for more stem cell research, a reduction in the deficit, a re-instatement of Paygo, and the chance (however remote) of seeing universal healthcare. All these latter issues are far more important than an additional 0.5% or so GDP growth additional trade will get us anyway, especially if all such trade does is to bring pain to the lowest income workers amongst us.
There's been a lot of hand-wringing from folks like Greg Mankiw about the fate of free trade. I think Greg forgets that it was Clinton/Gore who signed NAFTA, not Bush/Cheney. Furthermore, the existing trade agreements are already done deals. Congress cannot get out of it. And to sign further trade agreements under the current trade philosophy, as Joe Stiglitz has pointed out, would be a big mistake.
Ultimately, given the choices involved, I'll trade free trade for more stem cell research, a reduction in the deficit, a re-instatement of Paygo, and the chance (however remote) of seeing universal healthcare. All these latter issues are far more important than an additional 0.5% or so GDP growth additional trade will get us anyway, especially if all such trade does is to bring pain to the lowest income workers amongst us.
Tuesday, November 07, 2006
Turning off full site feed
It's come to my attention that some guy's been syndicating my blog feed to feed his own advertising driven site (I'd link to the guy but that would be giving him some undeserved pagerank). Not cool --- he didn't even ask for permission, and he provides no links back to my blog, so folks who want to see the original have no way of finding out where his content is coming from, unless I embed links to my own blog entries from my posts! I hate to do this, but I'm hoping that my friends won't mind coming to my blog in person once in a while when I have long posts.
Monday, November 06, 2006
Review: Smallville Season 3
This isn't a very good season in the sense that in many ways, it feels like a setup for seasons to come. There's too much emphasis placed on Lana and Clark's relationship, which is too much like a turn-around-chase-me story for me. At some point you want to shake the people involve and say, "quit your whining and behave like a real human being." As a matter of practicality, there's only so much back-and-forthing an audience is willing to put up with before quitting a show, and the show's writers are definitely running out of tricks to play.
The highlight is that Michael Rosenbaum's Lex Luthor really comes into his own in this series --- in many ways he is the hero of the story. By turns sympathetic, decisive, capable, and most importantly he seems to be the only truly unselfish and unself-centered character in the entire season. Certainly, to watch him is to wish that the Lex Luthor in Superman Returns was written with as much sensitivity and intelligence. I can only imagine what Kevin Spacey could have done with that character.
In any case, at this point it's quite obvious that the show does not want to adhere to canon, so I'll keep watching to see how it all turns out. Hopefully, the next season's episodes resolves more mysteries.
Oh yes, there is an obligatory cliff-hanger at the end of the series. But does anyone seriously doubt that all involved will return next season?
The highlight is that Michael Rosenbaum's Lex Luthor really comes into his own in this series --- in many ways he is the hero of the story. By turns sympathetic, decisive, capable, and most importantly he seems to be the only truly unselfish and unself-centered character in the entire season. Certainly, to watch him is to wish that the Lex Luthor in Superman Returns was written with as much sensitivity and intelligence. I can only imagine what Kevin Spacey could have done with that character.
In any case, at this point it's quite obvious that the show does not want to adhere to canon, so I'll keep watching to see how it all turns out. Hopefully, the next season's episodes resolves more mysteries.
Oh yes, there is an obligatory cliff-hanger at the end of the series. But does anyone seriously doubt that all involved will return next season?
Diversifying Away from Company Stock
Occasionally, someone will ask me for financial advice. Dan, however, turns out to have a brother, Brian, who's quite a bit of a financial maven, and after several e-mail exchanges, I decided that this exchange is worth posting on my blog for all to share.
The problem Dan has is similar to that of many other employees at companies that have succeeded financially: the stock price of company stock goes up, and pretty soon you have a lot of your net worth sitting in one stock. This isn't a desirable situation, for all sorts of reasons, but how would you transition from that situation into a balanced portfolio? I faced this problem myself a few years ago. In the following dialogue, italics are Brian's comments, and the regular text is mine.
Also, I Bonds do not appeal to me at all. Even if they are inflation-protected and tax-deferred, their rates aren't appealing (find the 'Composite Earnings Rates' table at the bottom). Going with my gut here, I would want a 4.5-5% return on this sort of thing, and it's only been in that range once in the last 8 years. Maybe I am missing something here.
We've seen as high as 6.52% rates during the 6 months after Katrina when inflation was as high as 5%. My take on I bonds is that with the tax deferral and the inflation adjustment, you'll have a hard time beating it with conventional bonds. Using the Vanguard after-tax yield calculator , for instance, you'll find that even the 3.75% California IT Tax Exempt yield after taxes grants you a 5.98% yield!
So for the years when you can take advantage of the tax deferral, the current 4.52% yield is even more impressive. Since you can control essentially when you withdraw the money after 5 years, you can for instance, time it to be on a year where you have low income, perhaps during an unpaid leave. On top of that, if the interest income gets used to cover educational expenses, such as school fees for your kids, or graduate school tuition, the entire interest income is tax free. Note that I bonds are always exempt from state taxes, so if you plan on living in California or some other high state tax state, they're a pretty good deal.
Please clarify one thing for me: I first thought you were advising AGAINST the 3.75% California IT Tax Exempt fund, but then it appears you were championing the fund. Which is it?
My take on it is that it's a good bond fund for people who live in California and are in high income tax brackets (i.e., me and Dan). But it's not as good as I bonds. So it's only for people who need more than $30000 of bonds a year in their asset allocation.
For someone your (and my) age, I strongly recommend a 90+% indexed equity portfolio with an over-weighting of small-cap and an over-weighting of value. (Really, 95% equities is where you should be, I think.) I also think you want to have at least 20% (probably 25-30%) of your portfolio in international markets (with an over-weighting of emerging markets). I am beginning to believe in REITs as a good non-stock-market-correlated diversifier as well. I think 10% of your portfolio in REITs is a good idea.
It depends on where you are. All the studies I've seen show that the optimal stock allocation for maximum withdrawal rates lie somewhere in the 82-85% range for a 60 year payout. Obviously, Dan might not be in a state where the goal is maximal withdrawal rate, but rather aggressive growth (Note that a 60 year payout period requires rather aggressive growth type portfolios). That's a decision for him to make. I'm at the point where each additional percentage of growth is less interesting to me than incremental risk is worth, hence I have an incredibly diversified portfolio (though with the equal weighting to international equities, you'll find that I'm already more aggressive than most would advocate).
I think you should rebalance your holdings every 12-18 months.
Depending on how Dan is planning to diversify out of company stock, he actually has an opportunity to incrementally rebalance his portfolio every time he diversifies away from company stock. In addition, he also has potentially substantial tax loss harvesting in the first few years that he can manage, if he was so inclined, raising his total return further.
The studies I've read show that if you can minimize that tax and transactional costs, rebalancing as frequently as every month can be beneficial. David Swensen at the Yale endowment management team rebalanced as frequently as every day! Now, the Yale endowment's structured as a non-profit, so there are no tax implications and transactional costs are very low for such large sums of money. Hence my belief in a simple portfolio. If it's simple enough, you can rebalance every quarter as you diversify out of company stock stock, and you will do it because it's easy. Anything that's too complex and involving lots of tiny sums, and you're going to not bother.
If I was in Dan's situation, I would be like to be allocated as such:
% Asset Class (Example Vanguard Fund)
17 Domestic Large-Cap Value Stock (VIVAX)
11 Domestic Large-Cap Growth Stock (VIGRX)
10 Domestic Mid-Cap Value Stock (VMVIX)
7 Domestic Mid-Cap Growth Stock (VMGIX)
10 Domestic Small-Cap Value Stock (VISVX)
5 Domestic Small-Cap Growth Stock (VISGX)
16 International Developed Markets Stock (VDMIX)
9 International Emerging Markets Stock (VEIEX)
10 REIT (VGSIX)
5 Bond (VBMFX)
Using the example Vanguard funds, that puts Dan in all passive-management funds with a portfolio-wide average of .26% expense ratio. If you have not seen it yet, Morningstar has a very handy and very simple portfolio analyzer tool. Several minutes after you enter your data and get to the 'X-Ray Overview' page, the page will auto-redirect to a page requesting you join Morningstar, but you can hit the 'Back' button as often as you want.
That's not a bad allocation. I understand the overweighting of value stocks, though I don't like having lots of small funds, since that makes the portfolio tough to manage. I also don't believe you have sufficient amounts of international stocks. I'd go for 30% at a minimum, maybe as high as 40%, but these are minor tweaks. Your general approach is correct.
I'm very cost conscious, so I have a tendency to use big positions in the appropriate aggregate fund in order to hit the $100k admiral shares hurdle and get even lower costs. I'm also a big believer in simplicity, as you can see from my critique of Bernstein's book. I'm also a big fan of having substantial portfolios in health care and energy, both as hedges against these big cost components of your cost of living, as well as the fact that they are good investments in an of themselves.
My take on the situation is that Dan will have plenty of risk as it is in his holdings of company stock. I wouldn't advocate a higher level of risk for someone who will likely still have at least 70% of his assets in one company stock. If you look at the dot com bubble days, you'll see that a portfolio with at least a 20% bond component would save folks from the massive stock market melt down and put them in a good position to invest in the stock market when it was weak. A 5% component isn't enough of a cushion to make a difference.
I have been thinking about his diversification away from company stock in a different way. Basically, I do not consider company stock as part of his allocation. He has Asset Stack A, which is full of company stock and Asset Stack B, which is his various retirement and non-retirement investment accounts. I am trying to push him to (1) find the ideal way to get as much from Asset Stack A into Asset Stack B and (2) get Asset Stack B properly allocated. Perhaps this is a horrid way of looking at his company stock holdings.
It is not horrible, since if it's the majority of his assets, then considering company stock to be part of his allocation might have you sticking a majority of the resulting funds into bonds, which isn't a great situation. But you do want to take some of that into account, because I wouldn't advise someone who had a majority of his assets in one stock to then take 95% equity in the rest of his positions either. It seems excessively risky, because the company stock is at least partially correlated with the rest of the stock market, so if the general economy did something bad then both his company stock and his 95% allocation in the equity market is going to do very badly. Now, most likely that won't happen, but if it did happen then I'm pretty sure Dan would rather be only 80% wiped out than 95% wiped out. That 15% additional cushion is very significant when you're just starting out, and the additional gain from having extra 15% allocated to stocks just isn't that much. In other words that additional bond allocation of 15% is cheap insurance.
By your statement, I gather that you think he should essentially consider company stock to be his Domestic Large-Cap Stock holdings for the foreseeable future. Therefore his best course is to basically diversify around that with his first diversifying investments going into Bonds. That would certainly be a good way to handle any drastic correction in the stock markets (which are likely to have a proportionally larger affect on a speculative stock like company stock.
Yes, or while his divesting himself out of company stock. And in fact, that's what I did when I first diversified out of company stock.
I have one concern about Dan buying I Bonds: the five-year holding time (though I know he could get out any time after 12 months with a reasonable penalty). Otherwise, I think they are wonderful investments, especially for someone in your situation. If Dan diversifies out of company stock into a more stable asset like bonds (or a CD or a savings account), I would want him to be in an asset which he could quickly and easily sell if there was a significant stock market correction; I don't think I Bonds are the right asset for that. I would prefer he be in something like the 3.75% California IT Tax Exempt fund.
This is correct analysis, but I think the difference is in the margins and it's a judgment call one way or the other. My analysis goes the other way: if inflation went up dramatically (say oil prices hit $120 a barrel or more), then the stock market would drop (or at least lose value in real terms but not nominal terms) but the value of the I bonds would go way up, so I bonds are the right thing to hold in that case. The CA Tax Exempt IT bonds, however, would find their value dropping in periods of high inflation, so they're not as good a hedge in that scenario. That's why my ideal portfolio allocation includes both inflation-protected bonds and normal bonds to cover multiple scenarios. Regular bonds do better when inflation is low, but the stock market is also low for other reasons (e.g. deflation, the 2001 terror attacks, etc).
In fact, David Swenson considers inflation protected bonds and regular bonds to be two completely different asset classes, as described in his book, Unconventional Success. Note that TIPS and I bonds are similar, with TIPS having extremely poor tax characteristics, which is why I prefer I bonds. If taxes were not an issue (say, in an IRA or 401k), then TIPS have a higher yield.
I clearly need to give bonds in general more consideration. How would you be using your bonds if the stock market dumped 30% of its value? Would you liquidate half of your bond holdings and dump them into your various stock funds? Would you liquidate ALL of your bond holdings?
I'd do my standard asset allocation thing: rebalance until my asset allocation matches what my intention was. In my case, that would be 14% bonds. So if stocks dropped by 30%, and bonds rose by 10%, I'd sell enough bonds to drop bonds back down to 14% and buy stocks to bring it up to 82%. It's psychologically very difficult to do this, by the way, since at that point you're selling winners to buy losers, but that's what accounts for the rebalancing bonus.
It would take a huge fit of greed for me to liquidate all of my bond holdings. My hope is that I'll never succumb and have the discipline to stick to my asset allocation.
I don't like more than 35% of his portfolio being in international stocks (especially with the weak US Dollar). But you are definitely swaying me towards a larger bond fund allocation for Dan.
You think the dollar's weak? You ain't seen nothing yet. The economists I've talked to (including Brad DeLong from Berkeley) think that the dollar has to drop another 30% before equilibrium is really reached. Hence for the long term, I'm bearish on the dollar. Here's Paul Krugman (a Princeton Economist) on the issue:
Trade Deficit. We finance our deficit by borrowing. This cannot go on indefinitely. Stein's law – re: Herbert Stein – "if something cannot go on forever it will stop." If this happens then any kind of scenario will have to involve a substantial fall in the dollar. And the markets are not taking this into account. Inflation adjusted bond rates seem incorrectly priced, compared to the EU or Japan. Some bonds are being bought by foreign based banks for non-market reasons. But many are not. So the market, if it took the dollar decline into account, would price this in. There will be a Wily Coyote moment. When? I would have said the answer was two years ago, so I've been wrong before. But it will happen at some point.
As for the number of funds, I don't think it is difficult to manage 10 funds, but then again I don't have to manage these... Dan does He could reduce complexity at the risk of missing out on some of the overweightings I allocated, but I feel very strongly about overweighting value and somewhat strongly about overweighting small-cap.
I'm sure that over the long run the overweightings you describe are true, but in the short run while building up a portfolio, I'm not positive the increased cost of having to rebalance all these and ending up with lots of small accounts doesn't swamp any benefit you get from the proportionate overweighting. My impression was that the relative gain is small, but maybe you're seeing better numbers than I am.
While Dan is doing the transitioning allocation thing, it probably is easiest for him to reduce the number of funds he holds. After a cursory examination, I like this allocation for his first round of diversifying out of company stock:
40% I Bonds
30% International Index (VGTSX)
15% Domestic Small-Cap Value (VISVX)
15% REIT (VGSIX)
This certainly diversifies all the money away from domestic large-cap growth stocks. It gives him a relatively liquid non-S&P 500 correlated holding (REIT). It gives him tax-deferred inflation-protected bonds to sell and put in the market if there is a major correction (though he would need to wait 12 months to dump his I Bonds into anything else... but this is good way to keep someone from a knee-jerk reaction to a correction that hasn't finished correcting yet).
Next round, we add some Domestic Small-Cap Growth. Next round, some regular bonds. Next round, some Domestic Mid-Cap Value. Next, some Domestic Large-Cap Value. Eventually, we'll get him to a widely diversified asset allocation (with more bonds and a larger International holding on your sage advice).
I have pushed Dan to talk to a CPA specifically because I want him to protect as much of his assets from tax loss as possible.
Ah. I didn't make myself clear. Tax loss harvesting has nothing to do with tax planning. Let me give you an example. Suppose you bought the Vanguard Total International Index Fund. This composes of something like 50% Vanguard Europe Index fund, 30% Vanguard Pacific Index Fund, and 20% Vanguard Emerging Markets Index fund. Suppose the first year you bought the Total International Fund it went down by say, $2000. What you do is you sell the fund and buy its underlying components. This lets you take advantage of the $2000 tax loss to offset other capital gains (from say, selling more company stock), while preserving your underlying asset allocation. You can rinse and repeat in subsequent years. Of course, sooner or later (hopefully sooner rather than later) you run out of tax losses to harvest, but it's a useful technique in the first few years, when you're diversifying out of company stock.
I actually didn't know this was called 'tax-loss harvesting'.
Indeed. It is the basis of several financial companies, including Parametric and Burton Malkiel's latest company, Active Investment Advisors.
I am familiar with the concept and actually recently talked to Dan about using it if a very specific set of circumstances arose with his company stock. I am assuming whichever tax advisor Dan talks to will bring this strategy to his attention.
It'll be a rare advisor in my experience that's with it enough to mention it. This is the kind of stuff you have to figure out for yourself. (Yep, advisors are pretty worthless) It is a myth that wealthy people can easily find good advisors. It's not easy, and it's far too easy to find people just willing to take your money instead.
I gather that you also do not see much point in paying someone to tell you how to invest your money. Are you in agreement with me that Dan probably shouldn't bother spending money on a CFP/CFA?
I haven't found any worth paying for, though if you had $250k sitting around in Vanguard funds (or were willing to put $100k into various Vanguard funds), they'll draw up a financial plan for free. I had that one a few years ago, and it's a competent plan, but too conservative. It became very obvious to me that I knew significantly more than the advisor I spoke with. Ultimately, the best use of the money is to buy a copy of Burton Malkiel's A Random Walk Down Wall Street, and then use the rest of the money to buy yourself a day of vacation and use that day to explore John Greaney's Retire Early Home Page.
[Brian notes: Much of my thinking has been altered during this (lengthy) conversation. For example, after reading THE REBALANCING BONUS: Theory and Practice, I now think rebalancing quarterly is a more advantageous strategy. Additionally, I have been swayed to believing that a bond holding larger than 5% can definitely be appropriate for people in their twenties who aren't expecting to retire any time soon. And I Bonds very much appeal to me after Piaw's description. I don't really consider myself a 'financial maven' at this point, but I think I am well ahead of the game for most people my age (even compared to the few people I know in the financial industry). I have much more reading to do, and Piaw's recommendations are quickly moving to the top of my reading list.
To anyone reading this post, I want to say this: Retirement seems very far away when you are in your twenties. If you have a high income and have had a windfall from stock, you may think to yourself that you can put off financial planning for even longer. This really is backwards thinking because the more money you can put away now, the less you will need to save in the future (though once you start saving, you will find future saving to be almost automatic). Spend a weekend afternoon familiarizing yourself with basic investment concepts. Then spend another weekend afternoon learning about the importance of low-cost diversified passive asset allocation (aka diversified indexing). Then talk to a CPA about how best to manage the tax ramifications of your wealth. Once you've gotten that far, you are in good shape to start managing your own finances for years to come. Why do you want to manage your own finances? Because the person you can most trust with your money is you.
And a note on balance: While saving is very important while you are young, do not forget to enjoy your wealth to a moderated degree. You have studied hard. You work hard. You don't have to play hard, but you should play SOME. I highly recommend travel, but that's a personal preference.]
Thanks Brian! It behooves me to remind anyone who's read this far that you shouldn't take financial advice from a couple of strangers on the internet. This exchange is provided for informational purposes, and not to recommend any action or any financial products. No one involved was a financial professional.
The problem Dan has is similar to that of many other employees at companies that have succeeded financially: the stock price of company stock goes up, and pretty soon you have a lot of your net worth sitting in one stock. This isn't a desirable situation, for all sorts of reasons, but how would you transition from that situation into a balanced portfolio? I faced this problem myself a few years ago. In the following dialogue, italics are Brian's comments, and the regular text is mine.
Also, I Bonds do not appeal to me at all. Even if they are inflation-protected and tax-deferred, their rates aren't appealing (find the 'Composite Earnings Rates' table at the bottom). Going with my gut here, I would want a 4.5-5% return on this sort of thing, and it's only been in that range once in the last 8 years. Maybe I am missing something here.
We've seen as high as 6.52% rates during the 6 months after Katrina when inflation was as high as 5%. My take on I bonds is that with the tax deferral and the inflation adjustment, you'll have a hard time beating it with conventional bonds. Using the Vanguard after-tax yield calculator , for instance, you'll find that even the 3.75% California IT Tax Exempt yield after taxes grants you a 5.98% yield!
So for the years when you can take advantage of the tax deferral, the current 4.52% yield is even more impressive. Since you can control essentially when you withdraw the money after 5 years, you can for instance, time it to be on a year where you have low income, perhaps during an unpaid leave. On top of that, if the interest income gets used to cover educational expenses, such as school fees for your kids, or graduate school tuition, the entire interest income is tax free. Note that I bonds are always exempt from state taxes, so if you plan on living in California or some other high state tax state, they're a pretty good deal.
Please clarify one thing for me: I first thought you were advising AGAINST the 3.75% California IT Tax Exempt fund, but then it appears you were championing the fund. Which is it?
My take on it is that it's a good bond fund for people who live in California and are in high income tax brackets (i.e., me and Dan). But it's not as good as I bonds. So it's only for people who need more than $30000 of bonds a year in their asset allocation.
For someone your (and my) age, I strongly recommend a 90+% indexed equity portfolio with an over-weighting of small-cap and an over-weighting of value. (Really, 95% equities is where you should be, I think.) I also think you want to have at least 20% (probably 25-30%) of your portfolio in international markets (with an over-weighting of emerging markets). I am beginning to believe in REITs as a good non-stock-market-correlated diversifier as well. I think 10% of your portfolio in REITs is a good idea.
It depends on where you are. All the studies I've seen show that the optimal stock allocation for maximum withdrawal rates lie somewhere in the 82-85% range for a 60 year payout. Obviously, Dan might not be in a state where the goal is maximal withdrawal rate, but rather aggressive growth (Note that a 60 year payout period requires rather aggressive growth type portfolios). That's a decision for him to make. I'm at the point where each additional percentage of growth is less interesting to me than incremental risk is worth, hence I have an incredibly diversified portfolio (though with the equal weighting to international equities, you'll find that I'm already more aggressive than most would advocate).
I think you should rebalance your holdings every 12-18 months.
Depending on how Dan is planning to diversify out of company stock, he actually has an opportunity to incrementally rebalance his portfolio every time he diversifies away from company stock. In addition, he also has potentially substantial tax loss harvesting in the first few years that he can manage, if he was so inclined, raising his total return further.
The studies I've read show that if you can minimize that tax and transactional costs, rebalancing as frequently as every month can be beneficial. David Swensen at the Yale endowment management team rebalanced as frequently as every day! Now, the Yale endowment's structured as a non-profit, so there are no tax implications and transactional costs are very low for such large sums of money. Hence my belief in a simple portfolio. If it's simple enough, you can rebalance every quarter as you diversify out of company stock stock, and you will do it because it's easy. Anything that's too complex and involving lots of tiny sums, and you're going to not bother.
If I was in Dan's situation, I would be like to be allocated as such:
% Asset Class (Example Vanguard Fund)
17 Domestic Large-Cap Value Stock (VIVAX)
11 Domestic Large-Cap Growth Stock (VIGRX)
10 Domestic Mid-Cap Value Stock (VMVIX)
7 Domestic Mid-Cap Growth Stock (VMGIX)
10 Domestic Small-Cap Value Stock (VISVX)
5 Domestic Small-Cap Growth Stock (VISGX)
16 International Developed Markets Stock (VDMIX)
9 International Emerging Markets Stock (VEIEX)
10 REIT (VGSIX)
5 Bond (VBMFX)
Using the example Vanguard funds, that puts Dan in all passive-management funds with a portfolio-wide average of .26% expense ratio. If you have not seen it yet, Morningstar has a very handy and very simple portfolio analyzer tool. Several minutes after you enter your data and get to the 'X-Ray Overview' page, the page will auto-redirect to a page requesting you join Morningstar, but you can hit the 'Back' button as often as you want.
That's not a bad allocation. I understand the overweighting of value stocks, though I don't like having lots of small funds, since that makes the portfolio tough to manage. I also don't believe you have sufficient amounts of international stocks. I'd go for 30% at a minimum, maybe as high as 40%, but these are minor tweaks. Your general approach is correct.
I'm very cost conscious, so I have a tendency to use big positions in the appropriate aggregate fund in order to hit the $100k admiral shares hurdle and get even lower costs. I'm also a big believer in simplicity, as you can see from my critique of Bernstein's book. I'm also a big fan of having substantial portfolios in health care and energy, both as hedges against these big cost components of your cost of living, as well as the fact that they are good investments in an of themselves.
My take on the situation is that Dan will have plenty of risk as it is in his holdings of company stock. I wouldn't advocate a higher level of risk for someone who will likely still have at least 70% of his assets in one company stock. If you look at the dot com bubble days, you'll see that a portfolio with at least a 20% bond component would save folks from the massive stock market melt down and put them in a good position to invest in the stock market when it was weak. A 5% component isn't enough of a cushion to make a difference.
I have been thinking about his diversification away from company stock in a different way. Basically, I do not consider company stock as part of his allocation. He has Asset Stack A, which is full of company stock and Asset Stack B, which is his various retirement and non-retirement investment accounts. I am trying to push him to (1) find the ideal way to get as much from Asset Stack A into Asset Stack B and (2) get Asset Stack B properly allocated. Perhaps this is a horrid way of looking at his company stock holdings.
It is not horrible, since if it's the majority of his assets, then considering company stock to be part of his allocation might have you sticking a majority of the resulting funds into bonds, which isn't a great situation. But you do want to take some of that into account, because I wouldn't advise someone who had a majority of his assets in one stock to then take 95% equity in the rest of his positions either. It seems excessively risky, because the company stock is at least partially correlated with the rest of the stock market, so if the general economy did something bad then both his company stock and his 95% allocation in the equity market is going to do very badly. Now, most likely that won't happen, but if it did happen then I'm pretty sure Dan would rather be only 80% wiped out than 95% wiped out. That 15% additional cushion is very significant when you're just starting out, and the additional gain from having extra 15% allocated to stocks just isn't that much. In other words that additional bond allocation of 15% is cheap insurance.
By your statement, I gather that you think he should essentially consider company stock to be his Domestic Large-Cap Stock holdings for the foreseeable future. Therefore his best course is to basically diversify around that with his first diversifying investments going into Bonds. That would certainly be a good way to handle any drastic correction in the stock markets (which are likely to have a proportionally larger affect on a speculative stock like company stock.
Yes, or while his divesting himself out of company stock. And in fact, that's what I did when I first diversified out of company stock.
I have one concern about Dan buying I Bonds: the five-year holding time (though I know he could get out any time after 12 months with a reasonable penalty). Otherwise, I think they are wonderful investments, especially for someone in your situation. If Dan diversifies out of company stock into a more stable asset like bonds (or a CD or a savings account), I would want him to be in an asset which he could quickly and easily sell if there was a significant stock market correction; I don't think I Bonds are the right asset for that. I would prefer he be in something like the 3.75% California IT Tax Exempt fund.
This is correct analysis, but I think the difference is in the margins and it's a judgment call one way or the other. My analysis goes the other way: if inflation went up dramatically (say oil prices hit $120 a barrel or more), then the stock market would drop (or at least lose value in real terms but not nominal terms) but the value of the I bonds would go way up, so I bonds are the right thing to hold in that case. The CA Tax Exempt IT bonds, however, would find their value dropping in periods of high inflation, so they're not as good a hedge in that scenario. That's why my ideal portfolio allocation includes both inflation-protected bonds and normal bonds to cover multiple scenarios. Regular bonds do better when inflation is low, but the stock market is also low for other reasons (e.g. deflation, the 2001 terror attacks, etc).
In fact, David Swenson considers inflation protected bonds and regular bonds to be two completely different asset classes, as described in his book, Unconventional Success. Note that TIPS and I bonds are similar, with TIPS having extremely poor tax characteristics, which is why I prefer I bonds. If taxes were not an issue (say, in an IRA or 401k), then TIPS have a higher yield.
I clearly need to give bonds in general more consideration. How would you be using your bonds if the stock market dumped 30% of its value? Would you liquidate half of your bond holdings and dump them into your various stock funds? Would you liquidate ALL of your bond holdings?
I'd do my standard asset allocation thing: rebalance until my asset allocation matches what my intention was. In my case, that would be 14% bonds. So if stocks dropped by 30%, and bonds rose by 10%, I'd sell enough bonds to drop bonds back down to 14% and buy stocks to bring it up to 82%. It's psychologically very difficult to do this, by the way, since at that point you're selling winners to buy losers, but that's what accounts for the rebalancing bonus.
It would take a huge fit of greed for me to liquidate all of my bond holdings. My hope is that I'll never succumb and have the discipline to stick to my asset allocation.
I don't like more than 35% of his portfolio being in international stocks (especially with the weak US Dollar). But you are definitely swaying me towards a larger bond fund allocation for Dan.
You think the dollar's weak? You ain't seen nothing yet. The economists I've talked to (including Brad DeLong from Berkeley) think that the dollar has to drop another 30% before equilibrium is really reached. Hence for the long term, I'm bearish on the dollar. Here's Paul Krugman (a Princeton Economist) on the issue:
Trade Deficit. We finance our deficit by borrowing. This cannot go on indefinitely. Stein's law – re: Herbert Stein – "if something cannot go on forever it will stop." If this happens then any kind of scenario will have to involve a substantial fall in the dollar. And the markets are not taking this into account. Inflation adjusted bond rates seem incorrectly priced, compared to the EU or Japan. Some bonds are being bought by foreign based banks for non-market reasons. But many are not. So the market, if it took the dollar decline into account, would price this in. There will be a Wily Coyote moment. When? I would have said the answer was two years ago, so I've been wrong before. But it will happen at some point.
As for the number of funds, I don't think it is difficult to manage 10 funds, but then again I don't have to manage these... Dan does He could reduce complexity at the risk of missing out on some of the overweightings I allocated, but I feel very strongly about overweighting value and somewhat strongly about overweighting small-cap.
I'm sure that over the long run the overweightings you describe are true, but in the short run while building up a portfolio, I'm not positive the increased cost of having to rebalance all these and ending up with lots of small accounts doesn't swamp any benefit you get from the proportionate overweighting. My impression was that the relative gain is small, but maybe you're seeing better numbers than I am.
While Dan is doing the transitioning allocation thing, it probably is easiest for him to reduce the number of funds he holds. After a cursory examination, I like this allocation for his first round of diversifying out of company stock:
40% I Bonds
30% International Index (VGTSX)
15% Domestic Small-Cap Value (VISVX)
15% REIT (VGSIX)
This certainly diversifies all the money away from domestic large-cap growth stocks. It gives him a relatively liquid non-S&P 500 correlated holding (REIT). It gives him tax-deferred inflation-protected bonds to sell and put in the market if there is a major correction (though he would need to wait 12 months to dump his I Bonds into anything else... but this is good way to keep someone from a knee-jerk reaction to a correction that hasn't finished correcting yet).
Next round, we add some Domestic Small-Cap Growth. Next round, some regular bonds. Next round, some Domestic Mid-Cap Value. Next, some Domestic Large-Cap Value. Eventually, we'll get him to a widely diversified asset allocation (with more bonds and a larger International holding on your sage advice).
I have pushed Dan to talk to a CPA specifically because I want him to protect as much of his assets from tax loss as possible.
Ah. I didn't make myself clear. Tax loss harvesting has nothing to do with tax planning. Let me give you an example. Suppose you bought the Vanguard Total International Index Fund. This composes of something like 50% Vanguard Europe Index fund, 30% Vanguard Pacific Index Fund, and 20% Vanguard Emerging Markets Index fund. Suppose the first year you bought the Total International Fund it went down by say, $2000. What you do is you sell the fund and buy its underlying components. This lets you take advantage of the $2000 tax loss to offset other capital gains (from say, selling more company stock), while preserving your underlying asset allocation. You can rinse and repeat in subsequent years. Of course, sooner or later (hopefully sooner rather than later) you run out of tax losses to harvest, but it's a useful technique in the first few years, when you're diversifying out of company stock.
I actually didn't know this was called 'tax-loss harvesting'.
Indeed. It is the basis of several financial companies, including Parametric and Burton Malkiel's latest company, Active Investment Advisors.
I am familiar with the concept and actually recently talked to Dan about using it if a very specific set of circumstances arose with his company stock. I am assuming whichever tax advisor Dan talks to will bring this strategy to his attention.
It'll be a rare advisor in my experience that's with it enough to mention it. This is the kind of stuff you have to figure out for yourself. (Yep, advisors are pretty worthless) It is a myth that wealthy people can easily find good advisors. It's not easy, and it's far too easy to find people just willing to take your money instead.
I gather that you also do not see much point in paying someone to tell you how to invest your money. Are you in agreement with me that Dan probably shouldn't bother spending money on a CFP/CFA?
I haven't found any worth paying for, though if you had $250k sitting around in Vanguard funds (or were willing to put $100k into various Vanguard funds), they'll draw up a financial plan for free. I had that one a few years ago, and it's a competent plan, but too conservative. It became very obvious to me that I knew significantly more than the advisor I spoke with. Ultimately, the best use of the money is to buy a copy of Burton Malkiel's A Random Walk Down Wall Street, and then use the rest of the money to buy yourself a day of vacation and use that day to explore John Greaney's Retire Early Home Page.
[Brian notes: Much of my thinking has been altered during this (lengthy) conversation. For example, after reading THE REBALANCING BONUS: Theory and Practice, I now think rebalancing quarterly is a more advantageous strategy. Additionally, I have been swayed to believing that a bond holding larger than 5% can definitely be appropriate for people in their twenties who aren't expecting to retire any time soon. And I Bonds very much appeal to me after Piaw's description. I don't really consider myself a 'financial maven' at this point, but I think I am well ahead of the game for most people my age (even compared to the few people I know in the financial industry). I have much more reading to do, and Piaw's recommendations are quickly moving to the top of my reading list.
To anyone reading this post, I want to say this: Retirement seems very far away when you are in your twenties. If you have a high income and have had a windfall from stock, you may think to yourself that you can put off financial planning for even longer. This really is backwards thinking because the more money you can put away now, the less you will need to save in the future (though once you start saving, you will find future saving to be almost automatic). Spend a weekend afternoon familiarizing yourself with basic investment concepts. Then spend another weekend afternoon learning about the importance of low-cost diversified passive asset allocation (aka diversified indexing). Then talk to a CPA about how best to manage the tax ramifications of your wealth. Once you've gotten that far, you are in good shape to start managing your own finances for years to come. Why do you want to manage your own finances? Because the person you can most trust with your money is you.
And a note on balance: While saving is very important while you are young, do not forget to enjoy your wealth to a moderated degree. You have studied hard. You work hard. You don't have to play hard, but you should play SOME. I highly recommend travel, but that's a personal preference.]
Thanks Brian! It behooves me to remind anyone who's read this far that you shouldn't take financial advice from a couple of strangers on the internet. This exchange is provided for informational purposes, and not to recommend any action or any financial products. No one involved was a financial professional.
Sunday, October 29, 2006
Anecdotal data is very misleading
Lots of people travel to Europe and then come back and rave about how good the drivers are in other countries and how politely they treat cyclists. I'm in fact one of them. However, I've had extremely poor experiences in Italy, where the only time I got buzzed in all of Europe was down the Italian side of Tenda pass, with the other lane completely clear and free. Even in
California this doesn't happen to me. In an effort to understand the statistics, I took a look at a few web-sites.
An examination of european cycling statistics shows that the Italians are by far the most dangerous to cyclists in all of Europe, followed by the British and the Austrians.
By contrast, the US is at 0.2 fatalities per million mile (source here). Translating that into the kilometer chart provided in the Europen statistics link, that would be 12 fatalities per 100 million kilometers, which isn't a whole lot worse than the Italians (who are at 11 fatalities per 100 million kilometers).
According to the California Highway Patrol Integrated Statistics, cycling in California is no worse than cycling in other parts of the USA, after correcting for the fact that more cycling happens in California than in many other states. In fact, the statistics point out that it's probably considerably better.
All in all, my suspicions are confirmed: the two worst countries to ride a bike in are the US and Italy.
California this doesn't happen to me. In an effort to understand the statistics, I took a look at a few web-sites.
An examination of european cycling statistics shows that the Italians are by far the most dangerous to cyclists in all of Europe, followed by the British and the Austrians.
By contrast, the US is at 0.2 fatalities per million mile (source here). Translating that into the kilometer chart provided in the Europen statistics link, that would be 12 fatalities per 100 million kilometers, which isn't a whole lot worse than the Italians (who are at 11 fatalities per 100 million kilometers).
According to the California Highway Patrol Integrated Statistics, cycling in California is no worse than cycling in other parts of the USA, after correcting for the fact that more cycling happens in California than in many other states. In fact, the statistics point out that it's probably considerably better.
All in all, my suspicions are confirmed: the two worst countries to ride a bike in are the US and Italy.
Monday, October 23, 2006
Review of Prima Taste
So I went to Prima Taste on Friday with a friend. We're both from Singy/M'sia.
Summary:
Food is not very good. Far below par of either Singaporean/Malaysain Restaurant in San Francisco or Layang Layang in Cupertino.
Details:
We ordered the following dishes:
Nasi Lemak with Rendang Chicken
Mee Goreng
Roti Canai
Rojak
Kang Kong Belachan
Nasi Lemak
The Nasi Lemak came on a big plate with about one bowl of rice, the sambal on the side, and the rendang chicken in a bowl. The ikan bilis was spread all around and there was one hard boiled egg sliced also on the plate.
The rice was the best part of this nasi lemak plate as the sambal was very weak on spice and flavor and the rendang chicken not tasting anything like rendang chicken. More like slightly spiced up chicken in a red tasteless sauce.
Mee Goreng
This was passable. It falls far below the standard at Layang Layang though. The flavoring and the spice level was all off and they didn't fry it quite long enough. So rather than a super dry fried noodle dish, it came off as slightly damp, as if all the water used to boil the noodles wasn't quite gone yet. I forgot what the mee goreng came with, but i think it was egg and chicken and some sprouts. Very forgettable.
Roti Canai
This was bad. The roti canai was very rubbery. the curry had the flavor but no spice. We did let the roti go cold a little bit becuase we were eating other stuff, but still, disappointing. No fragrance in the roti or the curry.
Rojak
Probably the best dish we had. The sauce was just about right, the ingredients was right too (though my friend who's from penang commented that in penang they don't put sprouts on the rojak), with ample amounts of pineapple, cucumbers and chinese donuts, tau pok.
Kang Kong Belachan
This was the worst dish. No belachan at all! they only cooked it with garlic and oil
So in summary, I have to say, avoid Prima Taste with your life! Go to layang layang, or even that place in Milpitas square! Better food! Primataste is cheap though, but its not worth it in my opinion!
-Sy
Summary:
Food is not very good. Far below par of either Singaporean/Malaysain Restaurant in San Francisco or Layang Layang in Cupertino.
Details:
We ordered the following dishes:
Nasi Lemak with Rendang Chicken
Mee Goreng
Roti Canai
Rojak
Kang Kong Belachan
Nasi Lemak
The Nasi Lemak came on a big plate with about one bowl of rice, the sambal on the side, and the rendang chicken in a bowl. The ikan bilis was spread all around and there was one hard boiled egg sliced also on the plate.
The rice was the best part of this nasi lemak plate as the sambal was very weak on spice and flavor and the rendang chicken not tasting anything like rendang chicken. More like slightly spiced up chicken in a red tasteless sauce.
Mee Goreng
This was passable. It falls far below the standard at Layang Layang though. The flavoring and the spice level was all off and they didn't fry it quite long enough. So rather than a super dry fried noodle dish, it came off as slightly damp, as if all the water used to boil the noodles wasn't quite gone yet. I forgot what the mee goreng came with, but i think it was egg and chicken and some sprouts. Very forgettable.
Roti Canai
This was bad. The roti canai was very rubbery. the curry had the flavor but no spice. We did let the roti go cold a little bit becuase we were eating other stuff, but still, disappointing. No fragrance in the roti or the curry.
Rojak
Probably the best dish we had. The sauce was just about right, the ingredients was right too (though my friend who's from penang commented that in penang they don't put sprouts on the rojak), with ample amounts of pineapple, cucumbers and chinese donuts, tau pok.
Kang Kong Belachan
This was the worst dish. No belachan at all! they only cooked it with garlic and oil
So in summary, I have to say, avoid Prima Taste with your life! Go to layang layang, or even that place in Milpitas square! Better food! Primataste is cheap though, but its not worth it in my opinion!
-Sy
Sunday, October 22, 2006
Review: Kingdom Coming, by Michelle Goldberg
I have to admit that Salon Magazine is one of my favorite on-line magazines. It's unabashedly liberal, thoughtful, and has impeccable taste. Michelle Goldberg is a senior editor there, and writes some of the more interesting political articles.
Her book is about the rise of the religious conservatism and Christian Nationalism, whose goal it is to turn the United States into a Christian Nation, with One Nation Under God. That this is a burgeoning grass-roots movement there is no doubt, from both the anti-evolutionary movements, the anti-abortion movements, the anti-gay marriage movements, as well as the christianization of today's politics, where every politician has to at least pay lip-service to Christianity.
There's a lot of fear-mongering in this book, drawing many parallels between the the totalitarian movements (fascism among others) and the goals of the Christian Nationalistic movements. What is stunning though is the pessimism she has, as well as the lack of any intelligent political strategy that she thinks is effective. Off the top of my head I can think of many effective ones relying on the factionalization of the Christian religion. Seriously, Anglicanism, Southern Baptism, Presbytarianism, and many other Christian factions can be considered separate religions with little in common. Many of them, for instance, would be horrified to think of a federal government that's controlled by the Mormons, for instance. This could easily be used to promote a stricter separation of Church and State.
Nonetheless, I do intend to keep an up to date passport in case things do turn out for the worst and I have to flee the country. In any case, foreign investments look more and more appealing --- a country gripped by fundamentalism is likely to become one in which technology and science is neglected, leaving an opportunity for non-Americans to thrive and leave U.S. corporations behind in competitive markets.
Whenever I talk about the growing power of the evangelical right with friends and acquaintances, they always ask the same question: What can we do? Usually I reply with a joke: Keep a bag packed and your passport current. I don't really mean it, but my underlying anxiety is genuine... In the coming months and years, we will probably see the curtailment of the civil rights that gay people, women, and religious minorities have won in the last few decades... From what I've witnessed while researching this book, I'm convinced that Christian nationalist symbolism and ideology will increasingly pervade public life.
Her book is about the rise of the religious conservatism and Christian Nationalism, whose goal it is to turn the United States into a Christian Nation, with One Nation Under God. That this is a burgeoning grass-roots movement there is no doubt, from both the anti-evolutionary movements, the anti-abortion movements, the anti-gay marriage movements, as well as the christianization of today's politics, where every politician has to at least pay lip-service to Christianity.
There's a lot of fear-mongering in this book, drawing many parallels between the the totalitarian movements (fascism among others) and the goals of the Christian Nationalistic movements. What is stunning though is the pessimism she has, as well as the lack of any intelligent political strategy that she thinks is effective. Off the top of my head I can think of many effective ones relying on the factionalization of the Christian religion. Seriously, Anglicanism, Southern Baptism, Presbytarianism, and many other Christian factions can be considered separate religions with little in common. Many of them, for instance, would be horrified to think of a federal government that's controlled by the Mormons, for instance. This could easily be used to promote a stricter separation of Church and State.
Nonetheless, I do intend to keep an up to date passport in case things do turn out for the worst and I have to flee the country. In any case, foreign investments look more and more appealing --- a country gripped by fundamentalism is likely to become one in which technology and science is neglected, leaving an opportunity for non-Americans to thrive and leave U.S. corporations behind in competitive markets.
Whenever I talk about the growing power of the evangelical right with friends and acquaintances, they always ask the same question: What can we do? Usually I reply with a joke: Keep a bag packed and your passport current. I don't really mean it, but my underlying anxiety is genuine... In the coming months and years, we will probably see the curtailment of the civil rights that gay people, women, and religious minorities have won in the last few decades... From what I've witnessed while researching this book, I'm convinced that Christian nationalist symbolism and ideology will increasingly pervade public life.
Friday, October 20, 2006
Dan Gilbert on Happiness
(Link requires flash)
An excellent talk on Happiness by Harvard psychology professor. Very much worth the 22 minutes it takes to watch it. (Thanks to Greg Mankiw for the pointer) There's also a recent wall street journal article that's worth reading that follows up with interesting titbits like:
And for those of you who are wealthy (you know who you are), here's a pointer on how to spend that money to maximize happiness.
An excellent talk on Happiness by Harvard psychology professor. Very much worth the 22 minutes it takes to watch it. (Thanks to Greg Mankiw for the pointer) There's also a recent wall street journal article that's worth reading that follows up with interesting titbits like:
- The one piece of unhappiness that people never get used to is a bad commute. You can't get used to it because a bad commute is a different kind of hell every day. So the worst thing you can do is to buy a bigger house in the suburbs and get a bad commute out of it. The happiness from having a bigger house dissipates really quickly, but the bad commute's unhappiness stays around forever.
- People under-estimate the pleasures of socializing, chatting with friends, and otherwise goofing off.
And for those of you who are wealthy (you know who you are), here's a pointer on how to spend that money to maximize happiness.
The Omnivore's Dilemna
The Omnivore's Dilemna should be familiar to most of us: since us humans can pretty much eat anything, how do we figure out what's good for us to eat? In the modern age, our instincts (which lean heavily towards the sweet and the savory) can easily lead us wrong.
Michael Pollan explores this in four meals: the industrial meal, as typified by the fast food industry, the industrial organic meal, as typified by the Whole Foods culture, the beyond organic meal, with grass-fed, management intensive farming produce, and finally the hunter/gatherer meal, where he hunted and foraged for his own food.
While he does not measure up to the platonic ideals of some of these meals, he does manage to cover a lot of the issues involved in food. After reading this book, you will probably never look at corn fed beef the same way again. But Whole Foods doesn't come across very well either --- its aisles come in for intense scrutiny, and the fact is that a large scale operation like Whole Foods cannot live up to the ideals as espoused by the original organic farming credo, which means that the organic label is now as much marketing as it is an indication of how the food is made.
I am of two minds about the attitudes behind a book like this. On one hand, how do you account for the fact that modern humans have the longest lifespans today, compared to humans living in the past? When farmers did not have fossil fuels and petroleum based fertilizers, crop failures were common, and people did starve! While industrialized agriculture indeed is fossil-fuel intensive and undesirable in many ways, cheap food has in many ways benefited the poorest among us, and I for one wouldn't go back to the days when a crop failure could doom thousands to starvation.
On the other hand, after reading a book like this, I become more sensitized to how the food is grown. There are techniques (such as those being used by Polyface Farms, as described in the book) where the farming isn't just good for profits, but also does good things for the land the animals graze on, and keeps the animals happy as well. The resulting food is also much better for you, nutritionally. It won't be cheap, but that's why we have good jobs, right? So selfishly, what I want is for this type of farming to take over, pay more for the food, and in the mean time reduce global warming emissions and pollution. That's worth the price to me.
Focus in for a moment on just the relationship between Budger and the tuft of fescue she's tearing from its crown. Those blades of grass have spent this long June day turning sunlight into sugars... To feed the photosynthetic process the grass's roots have drawn water and minerals up from deep in the soil (some grasses can sink their roots as much as six feet down), minerals that soon will become part of this cow. Chances are Budger has also chosen exactly which grasses to eat first, depending on whatever minerals her body craves that day; some species supply her more magnesium, others more potassiuml. (If she's feeling ill she might go for the plantain, a forb whose leaves contain antibiotic compounds; grazing cattle instinctively use the diversity of the salad bar to medicate themselves.)
Michael Pollan explores this in four meals: the industrial meal, as typified by the fast food industry, the industrial organic meal, as typified by the Whole Foods culture, the beyond organic meal, with grass-fed, management intensive farming produce, and finally the hunter/gatherer meal, where he hunted and foraged for his own food.
While he does not measure up to the platonic ideals of some of these meals, he does manage to cover a lot of the issues involved in food. After reading this book, you will probably never look at corn fed beef the same way again. But Whole Foods doesn't come across very well either --- its aisles come in for intense scrutiny, and the fact is that a large scale operation like Whole Foods cannot live up to the ideals as espoused by the original organic farming credo, which means that the organic label is now as much marketing as it is an indication of how the food is made.
I am of two minds about the attitudes behind a book like this. On one hand, how do you account for the fact that modern humans have the longest lifespans today, compared to humans living in the past? When farmers did not have fossil fuels and petroleum based fertilizers, crop failures were common, and people did starve! While industrialized agriculture indeed is fossil-fuel intensive and undesirable in many ways, cheap food has in many ways benefited the poorest among us, and I for one wouldn't go back to the days when a crop failure could doom thousands to starvation.
On the other hand, after reading a book like this, I become more sensitized to how the food is grown. There are techniques (such as those being used by Polyface Farms, as described in the book) where the farming isn't just good for profits, but also does good things for the land the animals graze on, and keeps the animals happy as well. The resulting food is also much better for you, nutritionally. It won't be cheap, but that's why we have good jobs, right? So selfishly, what I want is for this type of farming to take over, pay more for the food, and in the mean time reduce global warming emissions and pollution. That's worth the price to me.
Focus in for a moment on just the relationship between Budger and the tuft of fescue she's tearing from its crown. Those blades of grass have spent this long June day turning sunlight into sugars... To feed the photosynthetic process the grass's roots have drawn water and minerals up from deep in the soil (some grasses can sink their roots as much as six feet down), minerals that soon will become part of this cow. Chances are Budger has also chosen exactly which grasses to eat first, depending on whatever minerals her body craves that day; some species supply her more magnesium, others more potassiuml. (If she's feeling ill she might go for the plantain, a forb whose leaves contain antibiotic compounds; grazing cattle instinctively use the diversity of the salad bar to medicate themselves.)
Friday, October 13, 2006
Joseph Stiglitz @ Google
One of the best perks of working at Google is the series of authors and excellent speakers talking at Google. Today, we had Nobel Prize winner Joseph Stiglitz visiting to discuss his book, Making Globalization Work. As an economics junkie, I usually go to these talks not really expecting to learn much, since anything that's comprehensible to the general audience would usually have showed up in my prior reading.
In this case, though I was wrong. There were a lot of surprising facts I learnt during the talk that I didn't know before:
The Uruguay round of trade talks actually made poor countries poorer. What had happened was that the cold war ended. While the USA had a major interest in being nice to the poorer countries while the cold war was going on, once the cold war had ended, trade representatives sent to WTO talks essentially changed gears to try to get the best deals they could. Examples included the intellectual property agreements which essentially prohibited cheap generic drug copies of Pharmaceutical medicines. These essentially wrote the death sentences of many many people in poor countries.
Many pro globalization apologists stated that economic theory means that free trade is a win-win situation for the countries as a hold. "The rising tide lifts all boats." What really happened was that "The riptide wrecks the smallest boats." All Economic theory predicts is that free trade provides sufficient gains such that the winners can compensate the losers and still come out ahead (hence the "win-win" part). What it does not say is that the winners will compensate the losers, and in most cases what has happened is that the winners do not. In fact, in many poorer countries what has happened is that the winners try to create a perpetual monopoly of many key resources such that most of the benefits of trade go to them, leaving the rest of the country in poverty. In Venezuela, for instance, most of the oil profits until Chavez came along went to a tiny portion of society leaving the rest of the society poor. Remember that this was oil in the ground --- the wealthy people of Venezuela did not put the oil there. They just controlled access to the resource and used it to their benefits.
(I've heard over and over again the arguments for trade, but to hear a Nobel prize winner provide the clear arguments that trade without spreading the benefits of trade around society will eventually lead to a backlash against trade is a wonderful thing to my ears)
He went on to discuss intellectual property rights, stating that if you don't get the laws governing IP rights correct, you get all the disadvantages of restricting knowledge, without any of the incentives that you were trying to get by having IP property. For example, the Wright brothers got a patent on airplane after Kitty Hawk, but so did Curtiss, and no private company making planes could afford to pay both parties the patent fees, so it wasn't until World War I when the government set in and said that this was too important for you to hold up development that the aircraft industry got its real start.
Another example: In the race to decode the human genome, we already had a plan as to how to go about doing it and a schedule. However, private companies wanted to pick out the valuable genes to get a patent on the gene, so they raced ahead on the decoding. The social value: it was decoded slightly earlier, a small benefit if it is indeed one. The social cost: someone got a patent on the gene related to breast cancer. Another company wanted to provide a free test for breast cancer, but the patent holder wanted money. Result: large numbers of people will die unnecessarily. Canada decided not to honor this patent, but the US still honors it.
The big drug companies have not decided to use their money for more research on drugs that would save more people, but instead spent its money on marketing, advertising, and lifestyle drugs for people in rich countries. This is rational economic behavior, but it means that we've gotten our incentive system wrong. There's a proposal in his book where he discusses using a prize system rather than a monopoly system to disseminate knowledge as widely as possible. When the incentives are not working in the right direction, and we should redesign the incentives correctly to improve both economic efficiency and equity.
He finished off with a discussion of Global Warming, which to him exemplified the failure of globalization --- even if we solve the problem of economic globalization, if we don't solve our environmental problems, it might not matter. He said Kyoto had several failures, chiefest of which was the US not being a signatory, and protection of forests not being put into place. (i.e., Countries got more credit for cutting down their trees and then planting new trees, rather than for protecting the ones they had)
He ended the talk by saying that he was still optimistic that we could still make globalization work, and that things were still in a fluid stage. All I can say is that I hope he's right.
While getting my copy of his book signed, I made a statement that globalization's ill effects have only started hitting the media only when the white collar workers were affected --- when all it affected was workers in Detroit, nobody paid attention. He laughed and said "Yes. It's only a story when the reporter's next door neighbour's job gets outsourced to India. And it's a problem for free trade supporters. When Ross Perot said in the 1992 election words like 'Giant Sucking Sound', we could say, 'We didn't want those jobs anyway. We want good jobs, high wage jobs like programmers, etc.' When it's programmer jobs getting outsourced to India, we can't say that anymore."
In this case, though I was wrong. There were a lot of surprising facts I learnt during the talk that I didn't know before:
The Uruguay round of trade talks actually made poor countries poorer. What had happened was that the cold war ended. While the USA had a major interest in being nice to the poorer countries while the cold war was going on, once the cold war had ended, trade representatives sent to WTO talks essentially changed gears to try to get the best deals they could. Examples included the intellectual property agreements which essentially prohibited cheap generic drug copies of Pharmaceutical medicines. These essentially wrote the death sentences of many many people in poor countries.
Many pro globalization apologists stated that economic theory means that free trade is a win-win situation for the countries as a hold. "The rising tide lifts all boats." What really happened was that "The riptide wrecks the smallest boats." All Economic theory predicts is that free trade provides sufficient gains such that the winners can compensate the losers and still come out ahead (hence the "win-win" part). What it does not say is that the winners will compensate the losers, and in most cases what has happened is that the winners do not. In fact, in many poorer countries what has happened is that the winners try to create a perpetual monopoly of many key resources such that most of the benefits of trade go to them, leaving the rest of the country in poverty. In Venezuela, for instance, most of the oil profits until Chavez came along went to a tiny portion of society leaving the rest of the society poor. Remember that this was oil in the ground --- the wealthy people of Venezuela did not put the oil there. They just controlled access to the resource and used it to their benefits.
(I've heard over and over again the arguments for trade, but to hear a Nobel prize winner provide the clear arguments that trade without spreading the benefits of trade around society will eventually lead to a backlash against trade is a wonderful thing to my ears)
He went on to discuss intellectual property rights, stating that if you don't get the laws governing IP rights correct, you get all the disadvantages of restricting knowledge, without any of the incentives that you were trying to get by having IP property. For example, the Wright brothers got a patent on airplane after Kitty Hawk, but so did Curtiss, and no private company making planes could afford to pay both parties the patent fees, so it wasn't until World War I when the government set in and said that this was too important for you to hold up development that the aircraft industry got its real start.
Another example: In the race to decode the human genome, we already had a plan as to how to go about doing it and a schedule. However, private companies wanted to pick out the valuable genes to get a patent on the gene, so they raced ahead on the decoding. The social value: it was decoded slightly earlier, a small benefit if it is indeed one. The social cost: someone got a patent on the gene related to breast cancer. Another company wanted to provide a free test for breast cancer, but the patent holder wanted money. Result: large numbers of people will die unnecessarily. Canada decided not to honor this patent, but the US still honors it.
The big drug companies have not decided to use their money for more research on drugs that would save more people, but instead spent its money on marketing, advertising, and lifestyle drugs for people in rich countries. This is rational economic behavior, but it means that we've gotten our incentive system wrong. There's a proposal in his book where he discusses using a prize system rather than a monopoly system to disseminate knowledge as widely as possible. When the incentives are not working in the right direction, and we should redesign the incentives correctly to improve both economic efficiency and equity.
He finished off with a discussion of Global Warming, which to him exemplified the failure of globalization --- even if we solve the problem of economic globalization, if we don't solve our environmental problems, it might not matter. He said Kyoto had several failures, chiefest of which was the US not being a signatory, and protection of forests not being put into place. (i.e., Countries got more credit for cutting down their trees and then planting new trees, rather than for protecting the ones they had)
He ended the talk by saying that he was still optimistic that we could still make globalization work, and that things were still in a fluid stage. All I can say is that I hope he's right.
While getting my copy of his book signed, I made a statement that globalization's ill effects have only started hitting the media only when the white collar workers were affected --- when all it affected was workers in Detroit, nobody paid attention. He laughed and said "Yes. It's only a story when the reporter's next door neighbour's job gets outsourced to India. And it's a problem for free trade supporters. When Ross Perot said in the 1992 election words like 'Giant Sucking Sound', we could say, 'We didn't want those jobs anyway. We want good jobs, high wage jobs like programmers, etc.' When it's programmer jobs getting outsourced to India, we can't say that anymore."
Sunday, October 08, 2006
Movie Review: MirrorMask
Written by Neil Gaiman, and directed and created by artist Dave McKean, this is the story of Helena Campbell, a girl whose parents run a circus but who would love to run away to join the real world, inverting the fictional convention of children who want to run away to join the circus. The night Helena and her mom has an argument, her mom falls sick and has to be taken away to the hospital. Helena then enters a fantasy world where she has to find out why she's there, what's happening, and how to rescue herself and her mother.
Visually, the film looks very pretty, though there's quite a lot of computer generated graphics that obviously look out of place, the effects aren't at all crude and the actors are OK. The story is full of little things that I'm stealing for my next game of Grimm.
The DVD has a great making of feature that's worth watching (especially since I've never met Dave McKean). Be warned though, if you don't enjoy Dave McKean's art, the entire movie is going to look horrid to you. I'm not the world's greatest fan of Dave McKean, but I found the look tolerable.
While not the most earthshaking work I've seen, it's worth viewing on DVD if you get a chance. (I checked my copy out of the Mountain View library)
[Update: Googler Tom Galloway can be heard in the DVD asking the question, "How did the two of you meet?"]
Visually, the film looks very pretty, though there's quite a lot of computer generated graphics that obviously look out of place, the effects aren't at all crude and the actors are OK. The story is full of little things that I'm stealing for my next game of Grimm.
The DVD has a great making of feature that's worth watching (especially since I've never met Dave McKean). Be warned though, if you don't enjoy Dave McKean's art, the entire movie is going to look horrid to you. I'm not the world's greatest fan of Dave McKean, but I found the look tolerable.
While not the most earthshaking work I've seen, it's worth viewing on DVD if you get a chance. (I checked my copy out of the Mountain View library)
[Update: Googler Tom Galloway can be heard in the DVD asking the question, "How did the two of you meet?"]
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