Archive for June, 2008

The only three questions that count

June 28, 2008

I’ve listened to the audio version of Ken Fischer’s wonderful book, The Only Three Questions That Count: Investing by Knowing What Others Don’t. He explains simply, insightfully, with a good deal of wit and a healthy dose of cynicism how to think about investing. He points out that most people learn investing as a blacksmith learns their craft — at the foot of a great master. Although there is little wrong with this, investing is only partly craft and the rest is cannot be learnt but must be discovered. (What he seems to omit is that the process of discovery is another sort of craft). It is this process of discovery that he teaches in the book. Fischer calls the results of the discovery Capital Markets Technologies. You can think of them as tools, inventions or as technology, but Fischer warns against the dangers of considering them immutable laws. Markets change and so do the tools that work.

The only way to make money in the markets, according to modern financial theory, is to know something that others don’t. In trading, this is typically called an ‘edge’. Initially this smacks of insider trading, but this does not have to relate to knowledge about a company, but could more plausibly be discovering a technology that few else understand. The best secrets are those that are hidden in plain view. Many investors acquire beliefs about trading by reading financial media, talking to other investors or at the foot of the master of their craft. Some of these beliefs are indeed powerful technologies but many are either false or false when taken out of context. The first step is to get a good handle on the root assumptions that lie beneath many beliefs.

In The Only Three Questions That Count Mr Fischer looks at three ways to get an edge on your fellow investor: find things that are false that others think are true, work out things that others can’t or work out ways to work with the market more rationally. These three imperatives are three questions of the title.

The essence of many of the ‘things’ are correlations between commonly occuring financial instruments: do high oil prices mean low stock prices? Does the VIX, the investor’s volatility thermometer drive prices down? Is a weak dollar bad for US stocks? Is a strong dollar bad for European stocks? Mr Fischer shows how to do the investigative work yourself using freely available data. What is fascinating about this is that even when you discover that a new rule (e.g. oil is not actually correlated with stock returns), people keep on believing the opposite (e.g. high oil prices mean low stock prices) giving you an edge that will keep on paying out, until the majority understand what you understand and the market prices it in before you.


Save the environment by not adding lines to your signature

June 23, 2008

In the good old days (or bad old days depending on your point of view) when Usenet was the internet, the rule of thumb that I was taught (or netiquette as it was called in those days) was that your .sig should not be longing the mail your typically sent. So, if you sometimes sent mini-missives of a couple of lines, your .sig should only have been a couple of lines. Here is one of mine from 1991 (yes, I really am that old)
| Robin Allenson | “If you find a fork in the road |
| | Take it. ” |
| robina at | “I’ll do my .signature file tomorrow. |
| | No, really. ” |
A good few never made it past two lines.

Nowadays, signatures seem to have gotten a lot longer. One of the things I find particularly annoying is a couple of lines saying “Think of the environment before printing this email”. Oftentimes this is accompanied by a ‘P’ (for print, I guess) or a little picture of a tree or two.

Now say that 1% of the population actually does not print the mail as a result of this, it seems like we have saved a few trees. But no-one seems to consider the fact that as a result of this line or two, we make mails longer. Each mail then has a greater chance of needing two pages rather than one to be printed, or three pages rather than two. So, by adding those extra lines to your .sig you actually kill more trees.

By far the more effective approach is simply to try to minimise the length of mails that you send and to minimise the total number of lines needed to communicate a concept. i.e. it is not enough to send one or two line mails (à la Blackberry) but need a huge number of question-answer ping-pong matches to get to an understanding. This still means a high number of lines to get your point across (or to understand someone else’s point). Instead, you would like effective mails. Some useful hints:

  • Write from the reader’s point of view
  • Start with the headline and then continue with the detail. For the bold amongst you, just put the headline and leave it up to others to enquire for more detail
  • Consider using headings
  • Consider italicising certain points or marking actions in bold

The idea is to minimise the time that reader needs to invest in getting the message. Often you will find that you have simultaneously reduced the number of lines need to communicate.

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Skydeck founder presents to congress — and presents brilliantly

June 20, 2008

i have not been blogging for the last little while because I’ve been a bit busy with a particularly interesting, fun and complex project at work whilst spending my remaining time playing using my newly arrived invite for and munging photos of my son’s school trip (mostly instead of other activites that I would normally do in my spare time, like sleeping). Instead of blogging about Twine, which will have to wait until a later post, I thought I’d send a quick post on the founder of Skydeck. Skydeck, in case you had not heard of it is one of the fastest growing companies monetising the social graph. With the tagline “Your true social network is hidden in your cell phone records.”, it shows you who you communicate most with on your mobile and who they talk to.

Founder Jason Devitt is one smart cookie. He has presented a short and powerful presentation to Congress which covers exactly why they should change the regulations around the mobile phone spectrum. If you think that (along with net neutrality) is just another boring geek topic, watch this and then pick your jaw off of the floor. For those of us trying to get innovative applications in the hands of mobile users through the walled gardens of handset manufacturers and networks, Mr Devitt’s talk is a like a breath of fresh air.

It sounds like sour grapes when yellow pages companies complain about monopolies, so luckily we have Mr Devitt to do it for us. Although he does not let anyone else get a word in edgewise, you have to wonder why anyone would want to.

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How not service customers — by the Rabobank

June 11, 2008

My Rabobank credit card was rejected (and apparently had been rejected before, but I only just noticed it). Here is the value stream mapping of my customer experience with the Rabobank customer service group. Total value time: 2 minutes. Total wasted time: 29 minutes. Efficiency ratio: 6.9%.

First I searched for the number of my account manager. This was given as +31 71 565 9393 — the same number as the main service desk, so:

1. Call the Rabobank service desk +31 71 565 9393. Takes a few minutes to get someone on the line. Explain the issue (card rejected). Nice man asks me to hold which I do for a minute before he disconnects me. Wasted time: 7 minutes.

2. Call the Rabobank service desk again. Takes a few minutes to get someone on the line. Explain the issue and that I already called. Take a note of her name. Nice lady asks me to hold. I hold. She connects through to someone else. Wasted time: 7 minutes.

3. My account manager. Explain the issue to him. He asks me to hold, then after a couple of minutes of doing this, he explains that it will take a little to find out what’s going on and he will call me back. I reiterate that I don’t want to know what’s wrong, I want to be able to use the card that I pay them for. Wasted time: 4 minutes.

4. 5 minutes later he calls me back. He explains that I need to call another department (i.e. they’ve outsourced their services). When I ask why he can’t fix the issue, he says he’s not authorised. When I ask the name of the department, he can’t tell me but says they can fix Gold card problems. I didn’t even know that I had a Gold card. I call the mystery number +31 88 722 6777 (interestingly 088 722 6777 seems to also be the number of a property in Bulgaria — If only the Netherlands allowed reverse look-up). Wasted time: 5 minutes.

5. I call the number and talk to the nice lady. She says that to solve the problem I’ll need to talk to someone else. So she puts me through. Wasted time: 3 minutes.

6. The lady asks me some security questions, explains the card is blocked, because of strange activity. She can’t tell me what the activity is, but having seen that I’ve looked at and approved all my statements, she unblocks the card. Result!

I asked why no-one from the Rabobank contacted me. She says that a letter was sent and our house number was called. When I say we never got a letter, she laughs like “sure, sure, that’s what they all say, eh?”. She does say that the strange transaction occurred in Japan. When I point out that I’ve been through this before and that the Rabobank knows I travel, she says it’s not that the amount was high or that the transaction occurred in Japan, it’s that “the computer” spotted something strange, but she can’t tell me what that is.

Then I ask why the Rabobank chose to contact me with my home phone when they knew I was in Japan. She said because the transaction was fraudulent (it wasn’t), they might expect to find me at home or someone who could confirm that I was in Japan (apart from the other five or six transactions in Japan in the days before that is). The conversation was getting more bizarre by the minute. I asked why they couldn’t contact me in some other way. After all my Rabobank account manager has my full contact details: mobile phone, house number and email addresses. The nice lady (who was steadily getting more irate) explained that if I could give her these contact details and give her permission to use them, she would next time, but due to security concerns my Rabobank account manager could not contact her about this issue, or pass on my contact details!

When I ask how come the Rabobank has assigned me a special account manager who is supposed to my one stop shop and has to pass me through to the Gold card department to get these kinds of things fixed, she asks me what I’m talking about. “Gold card? Gold card? I have no idea what you are talking about!” It turns out that her department has nothing to do with Gold card. Go figure. Value time: 2 minutes. Wasted time: 6 minutes.

Total value time: 2 minutes. Total wasted time: 29 minutes. Efficiency ratio: 6.9%.

10.5.4, .mac and MobileMe

June 8, 2008

More WWDC rumours (which are pretty pointless given that there’s less that 24 hours to wait) and facts that might point to something and might not:

  • .mac has had some significant and continuing outage
  • 10.5.4 is supposed to be hot on the heels of 10.5.3, with beta testers out there already
  • Apple has been buying up .me domains, apparently in order to re-brand .mac

Top bets for new iPhone hardware:

  • 3G and built in GPS, à la Nokia N95 and numerous Blackberries now out and about
  • Bigger screen moving to something between a Mac Book Air and an iPhone (I think this is a likely Apple move, but I don’t know if it’ll come on June 9 2008)
  • Smaller version of the iPhone
  • Much lower price points from carriers

Time will tell.

(disclosure: I am long Apple calls of different maturities).

iPhone and 10.5.3

June 8, 2008

I am among the millions eagerly awaiting a new iPhone. One of the other suggestions that I heard was that a new version of Mac OS X may be coming out, i.e. a 10.6 (with the lovely suggestion of Snow Leopard). However, what folks seem to have missed is that 10.5.3 has just been released, a few short days before something magically is expected to happen. Looking into the list of changes does not reveal anything magical, but surely there is a clue in there somewhere?

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June 7, 2008

On a whim, I asked my wife to buy us a lobster from the market today. Leiden market is a big and bustling affair, and the fish stalls are excellent: fresh from the day’s catch from Scheveningen, near The Hague, with every sort of fish and shellfish you could want. We often eat lobster in restaurants. Indeed, I have a bit of reputation for ordering it every time I go on a company dinner, where €40 would not be uncommon. At the market, 470g sets you back just €11.

The problem is, lobster needs to be cooked and it needs to be cooked alive, alive-oh. I think everyone is squeamish about their first kill, but I think it hypocrisy of the highest order not to be willing to kill the meat you eat. If you find it too hard to kill, you should go vegetarian. If you enjoy the taste of meat, you should be happy to do your own dirty work.

Theory is great in theory but rarely seems to work out in practice. The lobster stares up at me. “C’mon, you think you can take me on? Gimme a fair fight and take these cuffs off o’ me” It’s true, he’s bound and gagged. It may be that I can get over my squeamishness, but I remain a coward and I’m proud of it. He is very much alive. Vague hopes that he would have popped a couple of suicide pills upon realisation of the inevitability of his demise are dashed when he makes a break for it, clambering off the plate and heading for 4-ft precipice to the kitchen floor.

Looking in my treasure trove of cookery lore for how exactly to kill and prepare him turns up very little. The inaptly named “Complete Cookbook” has no mention. Nothing from Jamie and not a mention from the River Cafe book. The inimitable Mr Slater says in his wonderful Real Cooking “…Under the table there is a box of black and blue lobsters, straitjacketed with green rubber bands. I feel sorry for them and look away”. That’s it. Luckily, there is an encyclopedia of possibilities in my Good Housekeeping tome: a) soak in vigourously boiled, water for 30 minutes to make unconscious b) dunk screaming head-first into boiling water c) plunge a cleaver into the cross-shaped mark behind his head with one sharp blow. Obviously Darwinism is alive and well (and possibly evolving as we speak) because lobsters with cross-shaped marks behind their heads are about as common as deer with bulleyes on the backs.

So I choose the coward’s way out and decide to drown the poor wretch. The question is: what is so special about boiled cold water, that it will render a water-dwelling animal inert? Or is this actually merely a devious plan to render an overly-pensive potential lobster-murderer inert?

In the mean time, my son has been petting and stroking the lobster and they are suddenly old friends. Lobsters should not be eaten, he declares, they make good pets. Indeed we should take the cuddly crustacean back to the sea and release it into freedom once again.

I perservere against feelings of guilt and plenty of persuasive points from my progeny and the business at hand is short and easily completed. Lobster in, leave for a half hour, boil for a few minutes (silently), crack him open and feast on the sweet flesh.