Jack’s Links

Back at it again with the fresh links:

• John Hempton (whose status has absolutely blown up over the past several months/years, maybe thanks to HLF?) on investment philosophy: A really interesting take on Buffett’s famous ‘punch card’ framework, which I find really useful outside of investing as well.

A twenty punch card investment portfolio is – by its nature – a concentrated investment portfolio. If I had run my portfolio like that I would have come out of the crisis with maybe six stocks, turfed one or two by now and added a single stock in 2012.

• Scott Sumner on whether central banks are out of ammo: If you know anything about Scott you already know the answer.

1.   The Fed raised rates last December, and just a week ago indicated that it is likely to raise rates again later this year.  Is that doing your best to inflate?

2.  The ECB and the BOJ have mostly disappointed markets this year, offering up one announcement after another that was less expansionary than markets expected.

So no, they are not doing their best.  If at some point they do in fact do their best, and still come up short, then by all means given them help.

• Another pop-psychology phenom bites the dust. This time it is “power poses”: If it has a Ted talk devoted to it, it’s probably over-hyped. Huge props to Carney for putting this out there, lends credibility like nothing else he could do.

I continue to be a reviewer on failed replications and re-analyses of the data — signing my reviews as I did in the Ranehill et al. (2015) case — almost always in favor of publication (I was strongly in favor in the Ranehill case). More failed replications are making their way through the publication process. We will see them soon. The evidence against the existence of power poses is undeniable.

• Double dose of Sumner, this time on Trump’s economic plan: This is easily the most embarrassing set of economic proposals a Republican candidate has had in memory for me.

A poster child for this problem is China and its narrowly pegged currency. In a world of freely floating currencies, the US dollar would weaken and the Chinese yuan would strengthen because the US runs a large trade deficit with China and the rest of the world.

Where does one start? No, China is not intervening to lower the value of the yuan; they are intervening to raise its value. And no, textbook theory does not say that exchange rates should adjust in the long run to balance trade in goods and services, unless long run means 1,000,000,000 years, in present value terms. But in that case the current US deficit presents no puzzle; it hasn’t lasted for a billion years.

• David Henderson on the presidential debates is worth it for this quote alone:

Notice the schoolmarmy “And Trump still has not apologized to the president of the United States for an effort that many African-Americans saw as an effort to delegitimize the first black president.” As if that is relevant to a fact check.

• Tyler Cowen with a couple of links:

Our findings provide empirical evidence that ride-sharing services such as Uber significantly decrease the traffic congestion after entering an urban area.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2838043

• David Henderson again, this time on the weak “arguments” from the Boston Globe’s Renee Loth against legalization of marijuana: calling out poor reasoning is a public service.

In other words, she would prefer to purposely make some other people worse off with higher taxes on what they buy (sales taxes) or earn (income taxes) than to raise the same amount of revenue by raising no taxes but instead legalizing a good so that the revenues are taken from people who are better off paying the revenues than buying in an illegal world.

That’s either ignorant or cruel, or both.

Books: I read a bunch of these little time sinks recently:

Get A Grip: One of a seemingly endless stream of fable-centric business management books. This one is about the “Entrepreneurial Operating System” that comes from an eponymous consulting group. Seems to be in the zeitgeist. More concrete than most other fabley books, and interesting take on the really popular notion of getting the right people on the bus then finding their seat later — basically defines seats on the bus first and then goes to fill them.

Antifragile:  Classic Taleb book, I’m thinking of doing a new kind of post on this one.

The Ideal Team Player: Another business fable, this one from the Table Group, all about their three ‘virtues’, being humble, hungry, and smart. It may be because I haven’t read any of the other books in the series for a while, but I was more impressed than I thought I would be with their definitions of the virtues.

Humble is about not being arrogant, but also not being over-modest. Subtle distinction that I was surprised they made.

Hungry is pretty straight forward, and I liked that they mentioned that a candidate mentioning ‘work-life balance’ too many times is a red flag. All businesses want to think they let their employees find balance, but hiring someone who is focused on how much they won’t have to work is questionable.

Smart is focused on being people-smart, and people who can’t take social cues are undesirable as teammates.

As per usual for Lencioni, there were about a dozen awkward references to prayer, completely unrelated to the story, which I could have done without.

Like the links? Get them straight at yo face as soon as they are published:

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