Month: December 2011

Continuing my tradition of December election predictions (2007), let me note that I am not listening to any news about the 2012 Presidential election. I believe that Barack Obama will win the general election by a slim margin, e.g., 51/49 percent of the popular vote. Here are my reasons:

• people are afraid of change and will favor an incumbent if one is available
• Obama ended the Iraq war
• Americans know in their hearts that Obama is not responsible for the stagnant economy

The last point is the one that may need elaboration. If the economy isn’t growing, wouldn’t voters be enthusiastic about replacing the President? My belief is that Americans are smart enough to recognize that one hard-working high-achieving person such as Obama cannot compensate for 313 million Americans who, on average, don’t work all that hard and haven’t achieved very much. Furthermore, as evidenced by the lack of politicians at all levels who are willing to admit that we can’t pay for all of the stuff that we want, Americans aren’t in the mood to confront reality.

We know that a country of people who earn a median wage of $16.27 per hour (source) cannot afford to pay $100,000-200,000/year pensions to policemen and firefighters who retire at 42 or 50. We know that we can’t afford our massive military or unlimited payments to Medicare providers. We know that we can’t afford to pay working-age people to sit at home and collect 99 weeks of unemployment benefits. We know that China is growing 10 percent per year because businesses find employees there who have a better education and work ethic. We know that countries like Singapore now enjoy a higher per capita income than the U.S. does partly because they’ve figured out how to deliver basic government services as a tiny fraction of the cost (as a percentage of GDP). We know that our public schools are set up to benefit employees rather than students and therefore the outlook for competitiveness is not improving.

We don’t want to do anything about these issues, however, which is why reelecting our current crop of politicians, including Obama, is the most sensible thing to do.

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My end-of-year email from Vanguard noted that the S&P 500 index had a total return (dividends plus price changes) of about 2 percent. This money market-like return confirms my friend Tom’s hypothesis that investors should expect roughly the same return from any asset class. Bonds, stocks, cash, whatever. There will be volatility but you won’t get any risk premium. The consumer price index was up about 3.4 percent Nov 2010-November 2011 (source), so in real terms an investor in U.S. stocks lost about 1.4 percent.

[Foreign stocks did even worse, according to this article. Developed markets lost 12 percent; emerging markets were down 18.6 percent (these numbers may be only for price changes, so with dividends the picture would be slightly brighter).]

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A friend sent this this screed from Forbes about the folly of modern management practices, e.g., trying to maximize shareholder value and paying managers for pumping up the stock price rather than getting customers and profits. The article includes some interesting statistics, e.g.,

Meanwhile [despite higher CEO compensation per dollar of net earnings] real performance was declining. From 1933 to 1976, real compound annual return on the S&P 500 was 7.5 percent. Since 1976, Martin writes, the total real return on the S&P 500 was 6.5 percent (compound annual). The situation is even starker if we look at the rate of return on assets, or the rate of return on invested capital, which according to a comprehensive study by Deloitte’s Center For The Edge are today only one quarter of what they were in 1965.

The article concludes by relating an argument against stock-based compensation for managers: “For the last 35 years, stock-based compensation has been tried. It had the opposite effect of what was intended. We should learn from experience and discontinue it.”

Managers do seem to be doing great while shareholders continue to take a beating. I wonder if it is completely fair, though, to blame the managers for helping themselves to unearned stock options and grants. Capital is cheap now, thanks to the rapidly growing wealth and high savings rates in China, India, and other rising economies. Even if managers weren’t looting from the shareholders it isn’t clear why the returns on investment should be high. Money isn’t as scarce as it once was.

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At a dinner party last night (officially a “Hanukkah party” but suspiciously held on Christmas Eve), a 26-year-old guy was talking about how effective online dating has become and, in his opinion, is dramatically more acceptable to people than it was just 3-4 years ago. I pointed out that Internet access is nearly universal in the U.S. (at the very least, a person can use the Web at the local library), online dating goes back at least to 1995, and yet there are plenty of single people who say that they want to be married. Ergo, online dating is a failure.

Obviously there are a lot of people who have met future spouses online, but perhaps those folks would have managed somehow prior to Internet dating. http://www.cdc.gov/nchs/nvss/marriage_divorce_tables.htm shows that the rate of marriage has been falling since 2000 and, according to http://www.cdc.gov/nchs/data/mvsr/supp/mv43_12s.pdf , has fallen even more dramatically compared to 1990.

[One obvious flaw in online dating/personal ads is that people should not be allowed to describe themselves. What difference does it make what a person thinks of himself if others don’t share that view? That’s why I wrote a personal ad for a friend (see http://philip.greenspun.com/romance/clarissa/ ) a few years ago. The ad worked and she celebrated her first wedding anniversary last summer.]

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From a Facebook friend (i.e., someone I barely know!): “Spending the day migrating sites off of a very sick server. Do I have no life because I am a sysadmin, or am I a sysadmin because I have no life?”

Separately, I was at the airport this morning and watched two charter pilots get into an airplane headed to Florida. They’ll be calling their kids from mobile phones tonight and returning home some time tomorrow.

Perhaps we should should all take a moment to thank those who work on holidays so that the rest of us can enjoy. (That said, of course I am working, at least until 5 pm when I shut down from a Christmas lights helicopter tour.)

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Here’s a story about a guy who was paid more than $30,000 per day by Massachusetts and federal taxpayers ($360,000/year salary plus sick and vacation pay divided by 15 days of actual work; his pension obligation may yet add significantly to a total compensation that is already higher than the President of the U.S.). His time sheets and other records were shredded by a friendly coworker, but his lack of attendance in the office was revealed by checking mobile phone records. An interesting unforeseen implication of technology.

http://www.chelseaha.org/About_Us.html still shows the guy as executive director of this agency that manages 910 apartments for the worthy poor. His compensation was approximately $600 per unit per year. Given that the minimum rent for a public housing unit in the U.S. is anywhere between $25 and $50 per month, this one guy potentially earned between 100% and 200% of the total rents received.

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A friend brought over his new Galaxy Nexus phone, running Android 4.0.2 (“Ice Cream Sandwich”) and I spent a little time sending email from it with the virtual keyboard and voice recognition. The keyboard and auto-correction is comparable to the iPhone 4S, maybe slightly better/faster. Like the iPhone, by default there is a visual pop-up after every key press. Unlike with the iPhone, this popping up can be disabled easily (Apple experts: is it possible at all? What do epileptics do?)

Voice recognition works much faster than with the iPhone, with words appearing in near real-time as one dictates. Is it also much easier to correct an individual word or type over some mis-recognized words due to the fact that Android includes a pop-up cursor that can be moved to any part of the text.

As with iPhone/Siri, Android voice recognition is available only when connected to a data network.

We did a comparison of some photo-heavy pages on the two displays. The Galaxy Nexus screen is so much larger and higher resolution (1280×720 pixels compared to 960×640) that many more thumbnails can be evaluated simultaneously and much more of a picture can be displayed at 100 percent resolution. Photos on the Samsung display can look very different depending on the overall screen brightness selected.

Battery life with 4G LTE enabled, 30 minutes of talk time, and light-to-normal usage of email and Web browser was approximately 17 hours (no use of Youtube or Netflix).

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Newspapers are excited because Congress has voted to continue a feel-good payroll tax rate for another couple of months and then start sort of paying for Social Security just after New Year’s. The failed Super Committee’s goal was to figure out a way to cut federal spending… starting in the year 2013.

I wonder if this shows Congress’s all-too-human side. I might have three slices of pecan pie every day between Thanksgiving and Christmas, promising myself that I would start dieting just after the New Year. Actually that sounds like such a good idea that I think I will get up from my computer and walk into the kitchen…

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Folks:

I’ve posted a guest article by a friend who is a trained emergency room doctor. She is explains why she chose to give up medicine. See http://philip.greenspun.com/careers/why-i-gave-up-practicing-medicine

Comments would be welcome.

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I’ve been playing around with a Kindle Fire. The touchscreen isn’t like any that I have used recently. It works very well when swiping or stroking sideways, e.g., to turn a page. But poking the screen to launch an app works so poorly and inconsistently that I haven’t yet figured out if one or two clicks is necessary (it takes me about 6 or 8 to get an app launched). Anyone reading this a touchscreen technology expert who can explain why this device is not like any other Android?

Separately, I am very impressed with the standby battery life on the Kindle Fire. I got one in the middle of last month, promptly lost it (one of the joys of moving to a five bedroom house from a two-bedroom apartment is that now I have six of everything and can never find even one), and finally found it a couple of days ago. Unlike any sleeping laptop that I have used, the device still had plenty of charge.

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