The Dumbest Idea In The World

The Dumbest Idea In The World: Maximizing Shareholder Value is a much-discussed article about a much-discussed book (Peter Drucker's "The Practice of Management"). Here's a taste (I hope you'll read it all, though):

CEOs and their top managers have massive incentives to focus most of their attentions on the expectations market, rather than the real job of running the company producing real products and services.

The “real market,” Martin explains, is the world in which factories are built, products are designed and produced, real products and services are bought and sold, revenues are earned, expenses are paid, and real dollars of profit show up on the bottom line. That is the world that executives control—at least to some extent.

The expectations market is the world in which shares in companies are traded between investors—in other words, the stock market. In this market, investors assess the real market activities of a company today and, on the basis of that assessment, form expectations as to how the company is likely to perform in the future. The consensus view of all investors and potential investors as to expectations of future performance shapes the stock price of the company.

“What would lead [a CEO],” asks Martin, “to do the hard, long-term work of substantially improving real-market performance when she can choose to work on simply raising expectations instead? Even if she has a performance bonus tied to real-market metrics, the size of that bonus now typically pales in comparison with the size of her stock-based incentives. Expectations are where the money is. And of course, improving real-market performance is the hardest and slowest way to increase expectations from the existing level.”

Interesting stuff. Sometimes somebody has to state the obvious to make us really see deep changes. And this sheds light on a vexing economic mystery: why are the folks at the top of the economy so eager to suppress the middle class, when that's the worst possible move for commerce and economic growth? Harming commerce and growth ought to harm the rich. After all, a thriving middle class was the engine that enriched America's upper class in the first place.

But commerce, I suppose, is just so very last millennium. At this point it's all about the side bets: a few thousand tycoons betting against each other in an arena as untethered from the real economy as those junk mortgage derivatives they so love to swap around.

Hand me my hacky sack; I'm heading down to Wall Street....

GarageBand Sketches

Fooling around with the iPad version of GarageBand.

The title of the first one speaks for itself: "Merry Drunken GarageBand Christmas"

Merry Drunken GarageBand Christmas

Here's a tribute to some incredible blueberry pierogi I ate this summer:

Blueberry Pierogi

The Burden of a Perpetually Clean Slate

I've figured out what's been bugging me. Many thanks to niece Laura, who helped piece this together.

Meet the niece

I have, in my lifetime, walked into countless Ecuadorian joints, provoking reactions ranging from mild bewilderment to thinly-veiled hostility. Waiters take a deep breath before approaching my table in halting English, dreading the prospect of trying to accommodate the imperious clueless gringo.

But, in spite of appearances, I speak Spanish, I'm friendly, and I understand the cuisine and the culture. More than that, I actually fit in - if you'll give me a chance. I'm not just some anglo foodie who knows to order guatita; I am 1% Ecuadorian under the hood, and by the time I leave the restaurant, the waiter will be my pal and the other customers will nod amiably and ask whether I have an Ecuadorian grandparent or two (my usual reply: "¡ojalá sea cierto!", i.e. "if only it were true!").

The problem is that whenever I enter a new Ecuadorian restaurant, I always start from scratch. Ecuadorians can't detect the cumulative approval of previous paisanos. And while it's fun to pull off this magic trick, it is, after decades, starting to get tedious. I feel as if I'm caught in a loop, and am developing an irrational expectation that all these experiences ought to afford me some tailwind.

Restaurants aside, the same issue applies in the myriad other circumstances where I must strain to overcome initial impression because I simply don't look like everything I am.

Most people avoid such issues by not meeting many new people or going to many new places. They segregate into tribes and retract into routines. They fit themselves more or less comfortably into narrow circles from which they seldom emerge.

To reject all that and maintain a thirst for adventure requires, alas, locking into a perpetual Groundhog Day loop. Unless you're skillful at making yourself seem special or at projecting a shticky image (ala Tom Wolfe's white suit), you've got no choice but to play each and every new hand without chips.

Mind-Boggling Distance

If you think you can come anywhere near to grasping the immensity of cosmic distances: no. You really can't.

Consider: the Voyager 1 spacecraft, launched in 1977, has been travelling really really fast. Hurtling away from the sun at 38,200 mph, it's expected to cross over into interstellar space shortly (here's the latest update from NASA). It's now just over 11 billion miles away - so distant that light takes 16 hours to travel from Earth.

A light year, as you know, is the distance light travels in a year. And traveling 38,200 mph for 35 years brings you just these puny 16 light hours. So now just try to imagine a light year (Voyager will go that far in 14,000 years). And remember that the nearest star (aside from the Sun) is over four light years away.

But the mind blower is that there are galaxies billions of light years away (here's one 13 billion light years away).

Here, FWIW, is a particularly pretty one a "mere" 10 million light years away, courtesy of the wonderful Astronomy Picture of the Day site.


Previous astronomy posts:

Good Galactic News (when galaxies collide, stars don't actually crash into each other)

The Andromeda Galaxy and You (The Andromeda Galaxy occupies much more sky real estate than the moon)

Tap Dancing on Saturn (hear the sound of the Cassini-Huygens spacecraft passing through Saturn's ring dust)

The Photopic Sky Survey (sort of like Google Maps for the Milky Way)

My Nonexistent Upstairs Neighbors

Here is a recording of my upstairs neighbors. The only problem is that I have no upstairs neighbors. Above me is an (empty) attic, and, above that, the roof.

I don't think it's a woodpecker. It's more of an intermittent clunking than a woodpecker's relentless hammering. It actually sounds a lot like Jacob Marley trudging around (God bless us, every one). Or could it be my old biz partner, Bob Okumura...?


My Nonexistent Upstairs Neighbors

Does anyone have a theory?

Cathy Whimsically Chooses to be Unhappy

I was driving with a very young friend named Cathy. We hit a red light, and she groaned with exasperation. "I hate red lights!" she grumbled, being at the stage where kids begin to define themselves by their turn-ons and turn-offs.

I proposed an experiment: just for laughs, let's pretend we love red lights. Red lights make us happy. Red lights are like candy. See if we can make ourselves really believe it!

And so we had riotous fun for the rest of the ride, cheering wildly for each red light we hit. Red lights became like old friends. The way a baseball fan feels when his team wins a big game, that's how we'd feel each time a light turned red. We slowed ahead of green lights, madly hoping to see red. And when we did, we'd coo with delight.

"Cathy," I said, "the only reason you hated red lights before is because at some point you just decided to. Or else you imitated someone else who decided to. But you can re-decide anything you want to! So...would you like to know the secret to a happy life?"

"Uh-huh," she nodded.

"Take everything you dislike and make it something you love. That way nothing can ever bug you or make you unhappy."

Cathy thought about it for a moment, and then narrowed her eyes and grinned slyly. "I hate lots of things!" she proclaimed brightly, completely understanding that she was being ridiculous and arbitrary. End of conversation!

And there it is, the precise hinge of human unhappiness, right there. An early ballasting choice. It's nothing more than locking into whimsical, defiant preferences as we swiftly forget how childishly arbitrary they were to begin with. We split the world into what we want more of and what we want less of, and it's all a never-ending, pointless, painful game of whack-a-mole from there on out.

Watch this:


Also see: An Adult View on Preference

Christopher Hitchins

The recently deceased Christopher Hitchins once said "Being a writer is what I am, rather than what I do".

That being the case, I feel somewhat released from the duty to distinguish man from work, and may celebrate the writing's demise without straining too hard to regret the writer's.

PamFax: Cheap Online Faxing

I don't own a fax machine. Or a landline phone. So faxing's a problem. I'd previously used eFax to fax online, but they stole several hundred dollars from me (I asked not to renew, they pretended not to hear, they renewed me, then promised, twice, to refund but didn't, and my credit card refused to reverse the hideously inflated charge....and this is, Google reveals, not an unusual story with them).

For the past year, I've been running to the drug store to fax, which has a certain Leave it to Beaverish charm, up to a point. Having passed that point, I signed up for Pamfax and loved it. No contract, no obligation. You just pay about 12 cents/page domestically, and international rates are reasonable. You also get a free fax number.

I convert my documents into PDFs, and send via their web interface. Easy peasy.

Note: I'm not earning any commission via that link, though PamFax does offer a scheme for that. But if I did (under guise of offering a helpful tip), then the muffin would have been refused in vain!

Time Magazine Blew It

Time magazine has once again fuzzed up it's person of the year feature by choosing not to select an actual person (remember when the wince-worthy Person of the Year was "You"?). This year, the honor went to "The Protester".

Really, a person deserved the honor: Mohamed Bouazizi, the Tunisian peddler whose self-immolation launched the Arab Spring.

I understand that Time's point was that protests on a number of fronts shaped the world this year. But why not name Bouazizi, and let Kurt Anderson, in his cover essay, explain how the spirit of protest extended across the Arab world and to our own Tea Party and Occupy Wall Street movements? The point of the "Person of the Year" is to put a human face on a global trend. So it seems inane to spotlight the trend, rather than let Bouazizi - who certainly deserves it - serve as its face?

SIGA Gets $36 Million

Note to readers bored senseless by all the SIGA talk: this will be the last such posting for a while. News has been particularly eventful, so I felt obliged to update, but this will be my last until anything dramatic happens. On the other hand, this would be a good point to buy a few dozen/hundred shares for yourself (it won't budge the stock price, so I'm not being self-serving!). There's an excellent chance this stock will septuple within a year or two or three, and having "skin in the game" will make my SIGA postings a lot more interesting for you! But only invest money you can afford to lose...

The first $36M payment is in from the government. So despite all the misinformation, the contract's on, and the company won't need to dilute the stock to remain fully operational.

Someone obviously leaked this news on Friday, hence the stock's mild drive-up. It should have been sharper, but, as I keep saying, don't expect news or "prospects" to do much at this point. Nothing great will happen until the company confirms revenue from multiple sources (and the lawsuit's resolved) a year or two or three from now. The good news is that, short of bankruptcy, it's very difficult to imagine how SIGA would fail to attract multiple revenue sources...even if the bad judicial decision stands on appeal, and even if Chimerix loosens up the primate rule and manages to get a piece of the pie for their inferior drug.

What may happen, however, is another round of propaganda and huffy political nonsense. But that's all about short term shorting, not long term reality. This is the only completely safe and effective drug for pox, including weaponized varieties. Foreign orders (Israel? EU? India? WHO?) await a step or two from FDA. And even assuming Chimerix has their hooks into that agency, eventually we'll emerge from that process, and anyone worried about terrorism will be ready to buy.

Again, it will take time (so your investment may be "dead money" for a while). And the bad guys may drop more shoes. And "stuff happens". But it's been years since I screamed "BUY!" at you. And now's the time. If smart investing means finding extremely undervalued gems poorly understood by the market (stock-hounding!), with known, surmountable downsides, then this is really as good as it gets. This should be a $10 stock right now under the most pessimistic of assessments. And it seems destined for $20 and well beyond.

You're on your own for a while re: SIGA news. If it cycles down, don't panic. If it gears up, don't exult. Give it a couple years for best results. That's my outlook until further notice!