Investing — Not Losing Money

Some statistics from Jim Stack, author of the InvesTech monthly letter. It turns out that, measuring from 1928 to 2002, if you started with $10 and you followed the famous buy-and-hold strategy, that $10 would become $10,957. If you missed the 30 best months, your $10 would only be $154.

However, if you missed the 30 worst months, your $10 would be $1,317,803. One can see from these numbers that missing the worst periods is very important to long-run compounding.

Interestingly enough, if you missed the 30 best months and the 30 worst months, your $10 would still be worth $18,558, which is 80% higher than the buy-and-hold strategy. This all comes about because stock prices tend to go down faster than they tend to go up, and tend to do so in compressed periods. Wall Street and most people tend to overlook the value of not losing money.

Educational Differences

Now a Berkeley anthropologist, John Ogbu, has published Black American Students in an Affluent Suburb: A Study of Academic Disengagement. It’s the result of a nine-month ethnographic study in Shaker Heights, an affluent Cleveland suburb where one third of the population and half the public school students are black. Black parents invited Ogbu to explain why whites average a 3.45 Grade Point Average; blacks average a 1.9.

Ogbu, who grew up in Nigeria, says suburban black kids aren’t working very hard. He discussed Low Effort Syndrome with the East Bay Express: [Ogbu] concluded that there was a culture among black students to reject behaviors perceived to be "white," which included making good grades, speaking Standard English, being overly involved in class, and enrolling in honors or advanced-placement courses.

The students told Ogbu that engaging in these behaviors suggested one was renouncing his or her black identity. Ogbu concluded that the African-American peer culture, by and large, put pressure on students not to do well in school, as if it were an affront to blackness.

Middle-class and upper-class black parents didn’t combat this culture, Ogbu found. Parents had an odd doublethink about their children’s success: They saw the schools as white institutions that can’t be trusted to respect black students. Yet black parents delegated responsibility for their children’s success to the schools, assuming that they’d fulfilled their role by moving to Shaker Heights. Black parents care about their children’s grades, but are less likely than others to keep track of their children’s homework or participate in school activities, Ogbu found. In their view, if Jamal goofs off, it’s his teacher’s fault for not nurturing him and motivating him to work harder. Ogbu found Shaker Heights teachers expect less of black students. But he told the Express that was natural. "Week after week the kids don’t turn in their homework. What do you expect teachers to do?"

Thomas Friedman Shoots Straight … Again

Excerpt from “Hummers Here, Hummers There“, NY Times, May 25, 2003

We never talk straight to Saudi Arabia, because we are addicted to its oil. Addicts never tell the truth to their pushers.

If we were telling the Saudis the truth, we would tell them that their antimodern and antipluralist brand of Islam — known as Wahhabism — combined with their oil wealth has become a destabilizing force in the world. By financing mosques and schools that foster the least tolerant version of Islam, they are breeding the very extremists who are trying to burn down their house and ours.

But we also need to tell ourselves the truth. We constantly complain about the blank checks the Saudis write to buy off their extremists. But who writes the blank checks to the Saudis? We do — with our gluttonous energy habits, renewed addiction to big cars, and our president who has made “conservation” a dirty word.

In the wake of the Iraq war, the E.P.A. announced that the average fuel economy of America’s cars and trucks fell to its lowest level in 22 years, with the 2002 model year. That is a travesty. No wonder foreigners think we sent our U.S. Army Humvees to control Iraq, just so we could drive more G.M. Hummers over here. When our president insists that we can have it all ? big cars, big oil, lower taxes, with no sacrifices or conservation ? why shouldn’t the world believe that all we are about is protecting our right to binge?

And so the circle is complete: President Bush won’t tell Americans the truth, so we won’t tell Saudis the truth, so they won’t tell their extremists the truth, so they can go on pumping intolerance and we can go on guzzling gas. Someday, our kids will condemn us for all of this.

Are suicide bombers stupid?

Here are the Five Laws of Stupidity according to Carlo Cipolla:

1 – Always and inevitably everyone underestimates the number of stupid individuals in circulation.
2 – The probability that a certain person be stupid is independent of any other characteristic of that person.
3 – A stupid person is a person who causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses.
4 – Non-stupid people always underestimate the damaging power of stupid individuals. In particular non-stupid people constantly forget that at all times and places and under any circumstances to deal and/or associate with stupid people always turns out to be a costly mistake.
5 – A stupid person is the most dangerous type of person.

Types of Human Actions
Hapless: Someone whose actions tend to generate self-damage, but also to create advantage for someone else.
Intelligent: Someone whose actions tend to generate self-advantage, as well as advantage for others.
Bandit: Someone whose actions tend to generate self-advantage while causing damage to others.
Stupid: A stupid person causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses.

The Battle Within

An old Cherokee is teaching his grandson about life. "A fight is going on inside me," he said to the boy. "It is a terrible fight, and it is between two wolves. One is evil–he is anger, envy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego. The other is good–he is joy, peace, love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth, compassion, and faith. This same fight is going on inside you, and inside every other person too." The grandson thought about it for a minute and then asked his grandfather, "Which wolf will win?" The old Cherokee simply replied, "The one you feed." Anonymous

I Hate Fire Ants

Phorid Flies as Biocontrol Agents

Research is focusing on the use of phorid decapitating flies in the genus Pseudacteon as biocontrol agents for imported fire ants. One species (Pseudacteon tricuspis) has been released in Florida and several other states. This fly is permanently established at more than a dozen sites and populations are beginning to expand rapidly out of several release sites. As of fall 2001, P. tricuspis was expanding out of the release sites around Gainesville, FL at the rate of 10-20 miles a year. By fall 2002 these flies should be coast to coast in Florida and moving into Georgia. During spring 2000, we released a second species of decapitating fly. This fly is much smaller than the first and may do better in cooler climates. It is now permanently established in hybrid populations in Alabama and perhaps Mississippi. Both species of flies were extensively tested for environmental safety prior to applying for release. To determine the impacts of these flies on fire ant populations, an extensive field monitoring program is being funded by a USDA-NRI research grant. Results from this research program are expected in the next 2-3 years.

Additional species and biotypes of decapitating flies will be evaluated and released.

Other projects include studies of polygyne fire ant populations and potential range limits of imported fire ant populations along the northern edges of their range.

Phorid flies, click to enlarge


I saw an episode of Gunsmoke where Leonard Nimoy played an Indian. He actually looked authentic — until he spoke. His English was perfect and was not very believable in that role. I did some research on the web and found that Nimoy had guest starred in four episodes of Gunsmoke. Gunsmoke – John Walking Fox – Treasure of John Walking Fox (1966)
Gunsmoke – Holt – I Call Him Wonder (1963)
Gunsmoke – Arnie – The Search (1962)
Gunsmoke – Elias Grace – A Man a Day (1961) If you like classic Westerns, watch early Gunsmokes. They are consistently excellent.


We had an earthquake this morning! It woke me up at 5:01am. It sounded like a football team running across the roof of the house. The lamp shade on my bedside lamp vibrated for 3-4 minutes.

News summary:

A moderate earthquake has shaken the southeastern United States, which is a rare occurrence for that region.

Officials at the National Earthquake Information Center say the quake measured 4.9 on the Richter scale. It was centered near the border between Alabama and Georgia.

Media reports indicate the quake was felt as far away as North Carolina and Kentucky. There were no reports of significant damage or injuries.