Is Mandantory Financial Education A Solution?

Earlier in our conversation, Buddha Mouse suggested that a mandantory program of financial lessons might be implemented in school for most folks.

While I won't oppose such an idea, I think that this will not have as great an effect on poverty as she might hope becaues:

1. To be able to save, you must have enough money to eat, pay rent, and pay for clothing. If you're making below the national poverty level, it's quite likely that you'll have trouble saving.
2. Most people are surprisingly bad investors. Many folks I know either aren't interested in the subject of financial planning (in which case, they'll get Cs or Ds) in the class, or even when they know what the right thing to do is, they're not emotionally capable of doing it. I have a very smart and intelligent friend who can't bring himself to buy I-bonds, because the electronic product is too intangible.
3. Financial planning is suprisingly hard! Even people like me take more than an hour to rebalance a relatively simple portfolio. If you're short on time, or don't enjoy it, you're simply not likely to do it.

I think the best chance of getting people to save is to have a national savings plan that's matched at lower to middle income levels, and professionally managed (in a balanced portfolio) in a low cost manner (similar to what federal employees get). The economies of scale by doing this nationally is huge, and the progressive savings matching will get more people to save, regardless of them knowing what they're doing. By setting up the investment plan automatically, people have a harder time making poor decisions. The fact that lower incomes are matched also means that younger workers develop the habit of saving while they are relatively early in their careers, when their investments have the most opportunity to grow.

This idea was proposed in Gene Sperling's book , and I think it has a lot of merit. The chances of it happening in our pro-wealthy Republican Congress, Senate, and White House are effectively nil. But the reason I'm pissed at Democrats as well is that not one of the forty-something senators in the Senate have had the guts to even propose something like this. If the Democrats continue not proposing and trying to get through such good ideas, they're going to keep losing elections.

New Computer

After my last computer died, I bought a Mac Mini. The computer took about a week to get to me: 2 days for the customization (I ordered 2GB of RAM), and another 3 days in shipping, and then 1 day while it got misdirected.

After having it for a few days, here are my first impressions:

1. I thought that 2GB might be overkill. Turns out that this is not true. My typical working set under Mac OS X appears to be about 1.2GB, just enough to cause my machine to swap if I had bought a 1GB machine.
2. A few things aren't as intuitive as you might imagine. For instance, I had to edit a Samba mount to share an external (USB) drive.
3. Mac OS X is a bit of a disk hog. The 80GB that came with the machine are going to go really fast, especially if you intend to dual boot the machine into Windows.
4. If your favorite environment is Emacs, you're going to have to use special instructions for building GNU Emacs v22 for Mac.
5. A few things still feel a bit sluggish. I think the extra special effects contribute to the feel. Things fade in and out instead of just snapping in and out like I'm used to.
6. Having UNIX interface underneath is really really nice.
7. The text edit fields in the web browsers seem really slow. I'm running the Universal Binary version of firefox, so it's got nothing to do with the binary.
8. The machine is much louder than expected. When it's in sleep mode or when not much is happening, it's dead silent. But rip a CD or two, compile Emacs, and the fan kicks up and you can hear it from across the room. Fortunately, like most engineers, I spend most of my time editing text and reading.
9. Despite the much vaunted UI that's not supposed to go wrong, I already managed to screw up the registry equivalent once by installing two versions of Microsoft Office.
10. 2 CPU cores are really nice too. Even when compiling, using web browsers or other apps don't bog down at all.
11. Now I have a more powerful machine at home than I have at work (my work machine is about 3 years old).

I'm still slowly warming up to the UI, so we'll see how I feel a bit later. In particular, I'm going to start running Windows XP (both as a bootcamp'd partition for games, and as a virtualized machine for quicken and possibly photoshop, which isn't going to have a universal binary version for awhile).

It's easier to rig an election than to fool a slot machine

Is it likely that the Republicans rigged the 2004 elections? Probably not. Is it likely that the companies which produced the voting machines (most of which were owned by Republicans) rigged the machines? That's not out of the question. What surprises me is that the press hasn't covered this story at all. But then again, a glance at Delong's blog will convince you that our press corps are know-nothings. English and Journalism majors are simply too incompetent at complex issues to do a proper job of covering our world today.

California Poppies at Morro Bay State Park

 

My next desktop....

Yes, I've picked the Intel Mac Mini. The runner up was the Lenovo Thinkpad X60s, which is two generations later than my work laptop, which is an X31. The Thinkpad X series have absolutely amazing battery life, fantastic keyboards (much better than the Mac laptop keyboards, which I find detestable),and very good performance and has proven very reliable.

The Mac Mini with 2GB of RAM, however, with a suitable discount (thanks to a good friend who works at Apple), was a good $1000 cheaper than an equivalently tricked out X60s, which only has 1GB of RAM, but a much faster processor, and of course, comes with its own screen. A surprisingly big contributor to the cost is the cost of the MiniDock, since the laptop does not come with a DVI connector, and obviously doesn't have slots so I could install one.

Of course, I've heard horror stories about the Mac's reliability (one of my office mates had a broken Powerbook screen, and another colleague had a bad hard drive soon after he bought a new Powerbook as well), and lack of Intel-native software is a liability (especially stuff like Photoshop, which is the only reason you'd want to trick out a Mac Mini with 2GB of RAM). Fortunately, with Boot Camp, I can turn it into a Windows XP box and run my 5 year old copy of Photoshop 6 (and it'll still run circles around MacBooks or Intel iMacs running MacOS photoshops), as well as any of my old software.

A suitably tricked out Dell, by the way, cost about the same as the Intel Mac Mini, but came with a much larger form factor (and admittedly, more expandability). I've avoided Apple products in the past mostly because of their insanely high cost, but with the iPod and the Mac Mini, they've proven themselves capable of competing with commodity products.

My Home Computer is Dead

Hard and fast on the heels of last month's data disaster, my home computer today refused to power on. It's about 5 years old (an AMD 1.8GHz machine with 512MB of RAM), so it was about time, but...

If you've been sending me e-mail or otherwise corresponding with me, I might be as fast as you're used to on the response. But I'll use this opportunity to poll my friends: What should I get as a replacement? An Intel Mac Mini (fully loaded, of course) that dual boots Windows XP? Or an IBM Thinkpad X60 laptop? The laptop is much more portable, and I definitely love my X31 which is my work machine, but the Mac Mini has a delicious S-Video out, so I can plug it into my receiver for video playback.

Good thing my old machine was backed up this time...

Marooned in Realtime

This was the book that introduced the Vingian Singularity. Being the kind of writer he is, Vinge manages to side-step the topic and deals with a group of survivors who "bobbled" through the Singularity event (which is described as something way to similar to the "rapture" event in Christian literature) struggling to gather enough of humanity to rebuild a civilization (and hopefully not miss the next singularity).

The story focuses around W.W. Bierson, who was an apparently well accomplished policeman and detective. Bierson was the victim of a stasis attack which caused him to lose his family and most of human civilization. While in stasis, his surviving son writes a series of detective novels starring him, which causes the rest of his compatriots to regard him with awe.

So when a murder of one of the co-founders of the remaining civilization occurs, who else would be called in to investigate but Bierson? However, during this investigation, Bierson uncovers not only the perpetrator of his own stasis, but also a plot to subjugate the remnants of humanity.

The mystery is well-done, with sufficient clues that the reader doesn't feel cheated. The characterization is also very well done, and the motives and people quite believable. I'm not a believer of the Vingian singularity (as previous posts show, and the bobble technology seems really questionable to me, but other than that, the book comes highly recommended.

The apology is for the unrealistically slow rate of technological growth predicted... I show artificial intelligence and inteligence amplification proceeding at what I suspect is a snail's pace...
From the Author's afterword, 1985

Being ill...

I recovered from a strep infection two weeks ago, but am still coughing, which annoys me to no end and still keeps me from my bike. It's also partly why I haven't been posting much and have actually watched some TV.

The other reason I haven't been posting much is that I've been carrying on a conversation in one of the post pages with BhuddhaMouse, whose questions and comments are well-informed, interesting, and very much worth reading and responding to. Anyone who lists one of her favorite books as Zen And The Art of Motorcycle Maintenance clearly has taste! Please feel free to add to that conversation if you have the time to think and write in.

Review: Metropolitan Transportation Commission

This is a great book, and it's free! Did you know that there were 7 fatal car-bike collisions in Santa Clara County in 2004? Did you know that there were 650 injury crashes there? And that despite there being fewer pedestrain injuries (504), there were 3 times more pedestrain fatalities (21)?

OK, you're a dyed-in-the-wool driver and refuse to walk or ride a bicycle: Did you know that the commuting time from San Mateo to Ellis street in Santa Clara county could be redued by 14 minutes if you car-pooled?

All these statistics and more, including the state of the Bay Area's roads are free, either for download or if you send them e-mail asking for a copy. It's great reading, and worth learning about.

Review: Alan Moore's Writing for Comics

Make no mistake: I'm a big Alan Moore fanboy. I consider him the best comic book writer ever, dead or alive. Better than Neil Gaiman, better than Frank Miller, Warren Ellis, Miyazaki, etc.

This book, which is really an essay on writing, was written by Moore in 1985, back when Moore was still writing The Swamp Thing for DC. His V for Vendetta
was still being serialized, and comics were starting to become respectable again, largely because of his efforts.

It is of no surprise, then, that Moore's words on writing in a few short pages are much more succint, entertaining, and relevant than any of the big books about writing I have read. His dissection of movies versus comics and their relative strengths are cogent and more insightful than Scott McCloud's Understanding Comics. Moore emphasizes ideas, story-telling, and pacing over plot, but it is very clear early on that he also did far more research and worked harder on world-building than most other writiers did. He was capable of taking an idea, and working through all of its consequences and taking the story to the ultimate end, as in
The Watchmen.

This edition of the book has an afterword by Alan Moore 15 years after he wrote the essay, disparaging it by calling it, "not that bad." It's an entertaining read to see how Moore says his approach has changed in 15 years (and for me at least, it's not always been for the better), and how maturity has made him a better human being, if not a better writer.

My only complaint about this edition is that the art in the book is completely irrelevant to Moore's essay, and it's quite obvious that the illustrator just drew random pictures as opposed to reading Moore's essay to see what might complement his work.

Finally, if you want to be a truly great writer, it is perhaps worth remembering that even in this, it is more important to be a good human being than it is to be a good writer. The artists...writers, painters, musicians...whose voices speak loudest to us across the centuries are those that turned out to have the most profound souls, those who turned out to actually have somtehing to say that was of lasting human value.

Head to Head: Montebell Trekking Umbrella versus Go-Lite Dome Umbrella

It was raining today, so Lisa & I got a chance to test the GoLite Dome Umbrella head-to-head against the Montbell UL Trekking Umbrella in real weather conditions.

The Go-Lite is the heavier of the two (by almost 50%), and does not pack down to a small handy size. However, it is by far the less finicky to shut and open. The design is simple, and the canopy is sufficiently large for one person, though not sufficient for a person with a decently sized backpack --- the backpack will get wet. The canopy material is made of nylon and seems thick enough to be sturdy under normal wear.

The Montbell packs into a little 6 inch stick (about the length of a toothbrush), and hence packs away very nicely (it comes with a tight little stuff sack), but the mechanical construction led me to be really wary, and the ballistic nylon material seems a bit thin. With a bit of practice, however, I found that I could open up the umbrella without undue worries, though stowing is still a bit of a tricky business and required a bit of care.

In practice, the 4 oz weight difference between the umbrellas is not really noticeable, even under heavy rain. The Go-Lite feels a little more solid, but the Montbell held up really well as well. The longer carrying stick of the Go-Lite makes it easy for you to rest the umbrella against your shoulder, but the light weight of the Mont-bell makes vertical carrying over a 3 hour hike a minor problem at worst, but I never did shake my feeling about how fragile the Montbell was.

My conclusion is that for a trip where lightweight is a premium, the Montbell is worth the extra $15 it costs, and for a trip where resupply is potentially a problem, the sturdier Go-Lite will provide better piece of mind. For our Coast-To-Coast walk, Lisa will carry the Go-Lite and I'll carry the Montbell. I'll try to remember to post the results when we come back from the trip.

Rainbow over San Antonio Park

Photo Credit: Lisa Wong 

The Ownership Society is not a good deal

Republicans like to talk a lot about the ownership society, one in which every person is responsiible for his fate and his ultimate outcomes. What most of them really mean is that they think they're smarter than everyone else and won't get hit by bad luck, poor choice of parents, or a lying, cheating CEO who took all the money and ran. What they forget is that we live in a country where most of the folks can barely be trusted to drive like a decent human being, and trusting those sorts of people to make financial decisions is like trusting me to know how to dress for a wedding: the outcome will not be good.

Now, the New York Times has reported a study that shows even top-achieving students in MBA programs cannot be trusted to make good decisions when it comes to allocating money to a selection of index funds! They chose on average, higher fee funds (i.e., got themselves cheated), and were easily fooled by carefully selected data. This is why privatizing social security is a bad idea, and why typical investors do extremely badly in their 401(k) plans, even assuming that they aren't just getting the shaft by their plan administrator.

The rational response, the professors argue, would have been to allocate all the money to the fund with the lowest fees. Yet fewer than 20 percent of either group of students did so. As a result, the hypothetical portfolios built by most of the students paid much higher fees than were necessary: 1.22 percentage points more, on average, among the undergraduates and 1.12 points higher among the M.B.A. students...

...if a sampling of elite students can't separate the wheat from the chaff in assessing mutual fund reports, most investors probably can't do so, either. (All the study participants were high academic achievers who had scored above average on a financial literacy test administered by the professors.)

In the other additional test, another group of 114 students was given a one-page sheet that, instead of reporting returns since inception, specifically compared the funds' fees. Students in this final group did, on average, construct portfolios with lower fees. Nevertheless, even this group came nowhere close to allocating its entire portfolio to the low-cost fund. More than half of these students, in fact, continued to allocate some money to the higher-cost index funds.

WHAT conclusions emerge from all these tests? Over all, the study said, the results do "not inspire optimism about the financial choices made by most households."

Book Review: The Man Who Folded Himself

David Gerrold, of course, wrote one of the most beloved Trek episodes ever: The Trouble with Tribbles. My recent bout of strep throat left me with sufficient time in bed to spend reading various books (and watching way too much TV).

This is a short novel about time travel. The protagonist is given a time-belt which enables him to travel back and forth in time at will, and soon figures out how to get fabulously rich, how to meet himself, and how to change time. Unfortunately, he soon discovers that every time he changes the timestream he hops to a different, alternate version of the universe.

The story ends with the story looping back to itself, which unfortunately, was highly predictable. A quick read, but not recommended. However, as a piece of juvenile fiction, it might very well be fun.

Gladwell on Nassim Taleb

Sanjay pointed me to this article, which is a great read, and a good expose on how Taleb works. Taleb of course, was the guy who wrote Fooled by Randomness, which I reviewed last year. Gladwell's article is even more insightful than Taleb's book.

Empirica has done nothing but lose money since last April. "We cannot blow up, we can only bleed to death," Taleb says, and bleeding to death, absorbing the pain of steady losses, is precisely what human beings are hardwired to avoid. "Say you've got a guy who is long on Russian bonds," Savery says. "He's making money every day. One day, lightning strikes and he loses five times what he made. Still, on three hundred and sixty-four out of three hundred and sixty-five days he was very happily making money. It's much harder to be the other guy, the guy losing money three hundred and sixty-four days out of three hundred and sixty-five, because you start questioning yourself. Am I ever going to make it back? Am I really right? What if it takes ten years? Will I even be sane ten years from now?"

Al Gore on the Climate Crisis

Al Gore came to Google yesterday to give his slideshow/movie preview on the climate crisis. I notice that both Vinod Khosla and Gore are now referring to global warming as the Climate Crisis rather than Climate Change, which is accurate. His presentation of the problems facing us is scientifically accurate, according to the work I've done myself. His presentation is impressive and entertaining and I really like it, though apparently less scientifically inclined sources find it devoid of hope. Then again, I'm very much an engineer and think the challenges that climate change presents are things we can do something about.

The problem is convincing the same majority of Americans who believe in intelligent design that the climate crisis is real, and solving it is essential. Getting rich off oil won't do anyone any good if there's no planet left to enjoy. Our science education in this country is so mediocre and our media is so irresponsible about reporting scientific theories that basic facts like evolution are considered controversial.

Movie Review: Howl's Moving Castle

I don't think anyone watches a Miyazaki film without knowing what they're in for: a quirky, unique view of the world, a well-defined message telling you what the film is about, and gorgeous animation.

Howl's Moving Castle definitely delivers on all three, but where does it rank in the pantheon of Miyazaki's movies? While it's much better than the over-bearing Princess Momonoke, and more comprehensible than the enigmatic Spirited Away, it's nowhere close to the top 3 of his great works:

1. Nausicaa of the Valley of the Wind
2. Kiki's Delivery Service
3. Tonari no Totoro

In terms of the quality of the English translation, it's quite obvious that Cindy & Donald Hewitt aren't Neil Gaiman. The language is stilted and stiff, and lacks the flow and lyricis of Gaiman's adaptation. (Or the Burgess translation of Cyrano de Bergerac)

It's worth watching, but probably worth finding the original Japanese version with English subtitles.

My Endorsement: John Forester

I endorse John Forester as League of American Bicyclists director for region 6. I know both John Forester and Amanda Eichstaedt (née Jones) quite well. I interviewed Forester in 1992 for my Bike Path and Bike Lanes article, and Amanda Eichstaedt was in my LCI certification class. While I very much like Amanda as a person and she's done great work in the past organizing BikeEd courses here in the Bay Area, there is no doubt in my mind that there is no one as qualified as John Forester to represent the needs of cyclists at the National level.

Forester (yes, he's one of C. S. Forester's sons) wrote the essential cyclists' reference: Effective Cycling, was a previous League president, and developed most of the theory and practice behind vehicular cycling, and fought most of the battles against the highway establishment for cyclist's rights to belong on the road. The fact that Foothill Expressway, Central Expressway, and many of the roads we ride on in the Bay Area today are available to cyclists is due to his work as an advocate for cyclists' rights in the country.

Conventional financial planning might be bad for your financial health

Professor Laurence J. Kotilikoff analyzes conventional financial tools and finds them wanting:
Although mathematicians, economists, and engineers are well versed in dynamic programming, the architects of traditional financial planning software are not. Or, if they are, they are constrained by their superiors to keep things simple, which, in this context, means failing to elicit much of the information...

...None of us would go to a doctor for a 60 second checkup. Nor would we elect surgery by meat cleaver over surgery with a scalpel. And any doctor who provided such services would be quickly drummed out of the medical profession. Financial planning, like brain surgery, is an extraordinarily precise business. Small mistakes and the wrong tools can just as easily undermine as improve financial health.

Yet is the fault really with the financial planner? Or is it really with the typical consumer? Very few folks enjoy playing with spreadsheets and doing the tedious work of say, rebalancing your portfolio. It's also amazing how much resistance people have towards managing money --- one engineer I spoke with a few years ago told me that tax planning meant that he was working for money, and that if he just worked hard, the money would come and he wouldn't have to "work for money." So it's not surprising that financial planners give such customers exactly what they want: a painless 60 second questionnaire that doesn't do any one much good.

Ultimately, perhaps it's no coincidence that the best site for financial planning I've seen was done by an engineer. It's very much do-it-yourself, but it has one thing that no other financial planner will give you: research backed by someone who's staking his own retirement on the results!

(Note: a tip of the hat to Scott Burns who pointed me at this study)

The Redwoods on Steep Ravine

This was a fantastic time on Steep Ravine. So much water that the creeks and streams were gushing like jets, and the roar of the water was so loud we couldn't hear each other and had to shout!