Chip’s blog

I have a confession to make.  I was really looking forward to reading this book and taking advantage of all of the great ideas David Allen presents here.  I bought the book last year at about this time and...well...I never finished.

So much for that idea.  Not only that, but life has been anything but stress-free since then, too.

I can't wait to get started on this (again) and hopefully make it to the end this time around.

Still one of the best ever Electronica albums of all time, in my humble opinion, The Prodigy's The Fat of the Land never ceases to blow me away. 

Consider the time when this seminal effort was produced and the originality of the sound versus The Prodigy's peers, Fat stands clearly on its own versus other contributors who arrived on the scene at about the same time and in similar fashion (The Crystal Method, The Chemical Brothers, Leftfield).

The each produced similarly phenomenal efforts but, at least this morning as I'm letting my eyes glaze over while looking at spreadsheets full of numbers in very small font, I am quite happy to be cranking this wonderful collection of aggressive, kick-ass thump through my headphones.

Firestarter, indeed.

I have been listening to a lot of robot rock and other stuff that mixes real instruments in with electronica-esque sounds and this band ended up in my iTunes window shopping cart.

These guys get respect from me for opening up and writing a song called "Drunk Emails".  I'm sure there is another band with a song entitled "Drunk Dials," but those days are so clearly ancient history, like, 1980's...or since whenever AOL started spamming the world via the US Postal Service.  You have to stay with the times.  You hear that, AOL?!  You are SO '80's!

Anyway, I am still trying to decide if I should actually pay a good $9.99, or S$13,00 or so for this.  I still haven't worn out my MP3's of We Are Pilots yet, which have helped me become a caffeinated nervous wreck for the last month, all 30 days straight.  ("Don't Cry Out. Cease Fire!") AWESOME music, though.

Five Stars!  There are, in fact, references in this post (although sometimes vague and not entirely relevant) to all of the tags used in marking this item. Trust me, I used to be an investment professional.

This is a book which I had the opportunity to read in business school but clearly did not pay much attention to.  I was too busy being enthralled by my Finance professors and trying so very hard to be a good boy and do my Valuation and Financial Accounting homework.  ("Yeah...I lost that report card, too, Mom...")

Since then I have tried a few different flavors of technical analysis, and have always mixed those efforts with a substantial amount of high-end speculation,  divining inspiration from the raft of economic data and news items that make it to my desktop from the WSJ, Economist, Fidelity, and many other sources.

That and some good old intuition (luckily no one's gotten hurt with that, as far as I know) coupled with a voodoo doll, and possibly some alchemy, and I can report that it looks like I've managed to take a little more than market returns out of my portfolio over the last few years.  But not enough to make up for the hours I've wasted trying to make my picks.

If I had actually read the book more carefully, with the curious and interested eye that I am applying to it now (lots of bus rides to and from work gives me precious time for reading), I would have more thoroughly digested and gained a few ounces of brain weight by taking Malkiel's pronouncements to heart.

His thesis is that no technical analyst / trader can accurately and consistently identify trading strategies which allow them to beat the market over the long term, nor is it possible for an investor, analyst or portfolio manager (including professionals) to use fundamental analysis to correctly identify, on a consistent and long-term basis, those stocks or other investments which will result on higher than market returns.

Instead, he believes that most small investors are likely better off in the long run by simply buying and holding an index fund. There are long-term upward trends in the market, and in most cases it is very difficult to consistently outperform the market basket of securities.  So why not simply buy that basket and sit tight / shut up?  Don't worry, be happy!

There may be periods where one strategy or another seems to work, and there are periods where some strategies show evidence of providing excess returns.  For example, the contrarian approach of buying apparently beaten down stocks that have had poor returns over several recent periods in the hope that they will have some better-than-average returns asn they return to the norm in the near future - but as Malkiel notes, some companies look like dogs for good reason.

In short, you might fool the market some of the time, and investors the rest of the time, but you cannot fool the market and investors all of the time...or in fact even some of the time, in most cases...Or something like that.

This is just a great book to read if you want perspective on different types of investment strategies and if, like me, you are tired of looking at your portfolio and wondering how you'll ever get through the next portfolio review and reallocation exercise when you already have 60+ hours of work to do this week, and you have two kids and a spouse to participate in life with, once in a while.

While it takes a while for this to sink in to thicker heads like mine, Malkiel systematically presents the good, the bad, and the ugly arguments for technical analysis, fundamental analysis, MPT, and so on, in an extremely competent, balanced, and even interesting way (some great stories).

I know I will likely never pick up my copy of Bodie Kane & Miller, ever again (and not just because it's heavier than **** and after lugging it back and forth to campus every day for ten weeks and moving it to Singapore with all of my other business school books it has just sat on my bookcase doing nothing, just like my broker.  Well, at least my broker calls every so often. I don't even have any money with him anymore.  Once again, the answer is "NO! I don't want to buy any more shares of MSFT, you idiot!  I work at this little going concern called...um...what is it? Oh yeah! Yahoo!  Now get back on that shelf!"

So, upon Malkiel's orders, I suggest we all just call Vanguard or Fidelity (or Janus, or whoever...) and order up a nice helping of low-fee, load-free, broadly diversified market index fund, and then go back to doing what we all do best, which is something other than stock-picking.

My favorite story from the book has to do with the fact that we often make decisions in the present that seem like great ideas, but which sometimes end up being something else, especially when we have to revisit them in light of new information.  In fact, this blog post might be one of those things...at any rate, the story goes something like this (Note: This has been highly embellished by me...):

    An old woman was sitting on the porch of her house in a rocking chair.  For years she had been wondering how she would survive her retirement, and she pondered her predicament with some frustration and bitterness as she sat rocking back and forth on an early fall evening, heading into what everyone suspected would be a long cold winter.
    At a particular moment when she was feeling particularly depressed and worried, a genie popped into view in front of her and said, "My name's Jean, and I'm a genie! I'm here to offer you three wishes!"
    "No way!' announced the old woman.
    "Yes way!" laughed the genie. "Give me a chance and I'll prove that I am here to serve you and you get three wishes for whatever you want."
    The old woman rocked back and forth a few more times, looked down at her feet, and then spoke loudly.  "Okay, Jean Genie!  I want you to turn my rocking chair into pure, 24 carat gold!"
    In response, the genie crossed his arms, furrowed his brow, closed his eyes, nodded once and there was a giant "CRAAACK" from somewhere in the fifth dimension.  The old lady's rocking chair shimmered and within an instant she realized she was sitting on a beautiful golden throne,
    "Wow," she thought, "my heating bills are going to be no problem, now! And I will have enough money for my bus trips to Atlantic City and Mohecan Sun, for years to come!  Maybe this guy IS for real." With that, she spoke again, "Okay, genie, I believe you...I think!  Just to be sure, I want you to turn me into a beautiful young woman.  I sure miss my youth!"
    The genie went through his routine one more time and this time there was a "SWOOSH!" which sounded like it came from within the old lady herself.  A mirror appeared in the genie's hands, and he held it up in front of the woman for her to look at.
    What she saw amazed her.  She was beautiful and young. Her teeth were perfectly aligned and white like pearls.  Her hair was full, silky, and curled just right at her shoulders.  She was dressed in a stunning little black number from Armani and her breasts had returned to their full, upright position.  Her legs were worthy of appearing in a ZZ Top video, and between her eyes, lips, and skin tone (alas, no tattoos), she would give Brad Pitt something to think about instead of AJ.
    "Holy Cow! Mr. Genie. You sure know how to make a girl happy!" With that she had thought, "I could really use a fling right now, but I don't want to go out and meet just anyone.  You never know what could happen then. Until I get my bearings I had better make this easy for myself."
    She made her last request. "Genie, I want you to turn my cat into a kindly and handsome prince."
    "PRRRRAAAAAACK"  In front of the old lady stood a handsome prince with a warm smile on his face.  His well-trimmed clothes looked vaguely similar to the coat of fur that he used to have permanently attached to his skin, but now he was tanned and well-muscled in an "all-natural" body builder sort of way. As he slowly stretched himself out while flexing his incredible new homo sapiens biceps, she felt herself drawn to him like a bear to honey.
    She reached out to touch her new beau.  "Genie, this is truly wonderful.  I don't know how I can possibly thank you!"
    "C'est mon plaisir, m'aam.  I did want to ask you, though, if you wished that perhaps you hadn't gotten the poor boy fixed when he was younger?" 

Nothing like some raucous Latin big band to keep me poppin' through a long night of working on personal projects.  My feet are dancing under the desk and I'm trying not to wake the kids, and it's rather difficult to focus on work when I'd rather work on my conga chops.

I put this album on in the office the other day - that place where everyone sits behind half-height walls and nothing is secret.  Everything is shared, from chocolate to gossip to the wave of illnesses that seems to leap from one end of the floor to the other like California wildfires.  And music.

For the past four hours I'd been listening to our IT support and engineering guys' collection of random rock, rap, pop metal...from Linkin Park to the Black Eyed Peas, and even Britney Spears ringtones.

"That's it!" I said. "t's almost time to knock off for the day, so how 'bout this?"

"Aprovecha" poured out of my laptop like marching martinis. The worthless beast's speakers make everything sound like a 50's era radio show playing through the first wireless set ever made.  In this case the tin-can EQ served to emphasize the horns and cowbells enough so that I could reinterpret the ever present ambiance of aggressive fingers pounding through lines of code to a swinging tap-tap-tap tap-tap-tap tap-tap-tap, tap-tap, tap-tap-tap tap-tap-tap tap-Dah! Dah!

Funny that this is the first thing that would show up in my laptop's "burn" folder tonight, but I'm moving a bunch of stuff off of it and over to our household server...funky latin groove stuff is happening right here, right now.  Unfortunately, I now have to make a decision about whether Huey Lewis and the News' "Time Flies...The Best of Huey Lewis and the News" deserves a new life or will end up deserted on the island of my laptop, not unlike his character in...what was that video?  "Stuck with you"?  I don't know, and I probably shouldn't try too hard to remember.  That was so high school...