communication. community. cognition.
Archive for July, 2008
Dirty Gold
Jul 31st
“Do you have any gold jewelry just lying around the house collecting dust? Then you can convert it to cash!”
I can’t remember if that’s the exact phrasing for sure, but it’s close. It’s hard for my Forebrain to etch the words into memory when my Primitive Monkey Brain is suppressing the gag reflex. And it’s all because my Simple Economics Brain can’t fathom how far we’ve slipped such that an ad like this would be effective. Do we really know so little about how investments work?
Maybe it’s the culture. Speed kills. Life in the Fast Lane. Get rich quick. Yet anyone with a lick of financial success (i.e. people with money) will tell you that you don’t slay the market dragons with by being clever — you bore them to death. Bulls and bears are the real fictional beasts, and you beat them with a lullabye.
The way to win is make periodic investments and let them sit. Leave them alone. ADHD-fueled day-trading and stock-flipping is a great investment… if you’re a stockbroker paid by the transaction. Regular schmoes get rich by picking smart stocks and watching them gather dust. In fact, you don’t have to pick anything at all. Just invest in a broad index fund and keep tossing in a few bucks along the way.
Creating a golden market
The idea that “gold that collects dust is worthless” is… well… worthless. Worse, it’s dangerous. It reinforces an ill-informed stereotype that money is made by “doing something.” That notion is half right. You might be sitting back doing nothing with it, but the entity you’ve invested in is putting that money through its paces. Investment is simply a way of making your money work so you don’t have to. And I have a pretty glum sense that the same people who would smelt down Gran-Gran’s old dusty golden necklace are the same ones that would flip stocks like burgers, assuming they were forward-thinking enough to invest in the first place.
Of course, I am not forgetting the motive here. There are some who believe we’re on the brink of an economic collapse of civilization-ending proportions. They feel strongly that we’re headed back to gold as currency, although I’m not so sure why it’s in their best interests to create more competition for the neo-Gold Rush. Certainly there is a segment that wants to profit from the expected rise in relative gold prices, so it makes sense to scare the bejeesus out of seniors to get them to sell that “dusty old gold” at a low price, and sell it later at a markup.
At some point, one wonders if we’re digging ourselves a greater economic hole by acting in direct opposition to our best interests. Andrew Wright summed it up yesterday:
“As the economy gets worse, so does economic literacy. There’s gotta be a curve in there somewhere.”
No if you’ll excuse me, I have some silver to polish. I’d hate for it to tarnish and get dusty, then I’d have to sell it…
[tags]Ike Pigott, Occam’s RazR, investments, economics, marketing[/tags]
Fit to be Tide
Jul 30th
A month from now, the University of Alabama will square off against Clemson in the Chick-fil-A College Kickoff. It’s being hyped as a Bowl Game to start the season, taking place at the neutral Georgia Dome in Atlanta.
There had been a fair amount of criticism in both Tuscaloosa and Clemson from fans who think a home-and-home series would do more for the local economies. Yet, there is also a case to be made that playing in Atlanta guarantees more national exposure, and cements inroads into recruiting players from the state of Georgia.
Still, one would have to think that if the game were being promoted by the in-house staff at each respective institution, one wouldn’t encounter a graphics gaffe like this:
Look at the left margin of each graphic. In purple script, there is an invitation to the Clemson fans to come to a Tiger Tailgate. And in white letters on the Alabama graphic, an invitation to come to the Tiger Tailgate.
I wonder who proofed that? And I wonder how long until it is fixed?
[tags]Ike Pigott, Occam’s RazR, college football, marketing, Alabama, Clemson, Chik-fil-a[/tags]
Losing Face with Cuil
Jul 28th
A few former Google guys just rolled out a brand-spanking-new search engine called Cuil. They claim it indexes the web deeper and smarter than any other algorithm.
So, what do you get when you put in my name? A search for Ike Pigott does indeed pull up things written about me, but very little written by me. The Cuil team claims:
Rather than rely on superficial popularity metrics, Cuil searches for and ranks pages based on their content and relevance.
I have a problem with this claim, as you can go through the top fifty results and barely find a single website that I actually run. Instead, you find several Tweets with my name in them, or even worse, Jaiku messages that were nothing more than a re-post of my Twitter feed. It seems as though the more-traffic-more-authority model is still at work here.
Even worse, I seem to have lost my face. Look at these results:
Someone who is not me
this guy is popular
So, in the first fifty results for my name, a person who does not know me would logically assume that is my picture. To make things even more strange, the picture that’s linked to the ZoomInfo result does not appear on the Ike Pigott ZoomInfo page.
So… this is a search engine that claims not to be influenced so much by popularity, yet it draws from websites like Twitter with insane amounts of traffic. It also claims to pull information in a more contextual way, yet misses the bulk of my input and gives me a complete facial makeover.
Yes, I’ll give these folks some time. After all, in the minutes it’s taken me to write this, the resultant buzz about this new shiny toy has already overwhelmed the server. It does make one wonder, however, just how many other search engines are out there popping up strange results. Google is well on its way to being a permanent verb, yet there’s still a significant amount of search traffic on those fringes. Most people can’t name more than two engines.
[tags]Ike Pigott, Occam’s RazR, cuil, search, search engine optimization[/tags]
Base Assumptions
Jul 16th
Conventional wisdom can be a good guide, but why elevate it to canon and law? How often do we go with the prevailing thought instead of challenging it?
This came to mind in the 11th inning of Tuesday night’s All-Star game. Baseball is a sport that is steeped in tradition, and it’s hard — even when you have the statistical evidence in front of you — to challenge a base assumption. Here’s the situation:
With two outs in the bottom of the 11th, Carlos Quentin is at the plate. Dioner Navarro is on third base, Michael Young is on second. Conventional wisdom tells us that with two outs, the runners should always be running. Sure enough, Young charged forth the moment the pitch was delivered — and as the ball bounced to the shortstop, Young almost waltzed right into a tag for the third out! I’m here to say that conventional baseball wisdom is stupid, and here’s why:
- Young was no longer a factor in the game.
- With two outs in extra innings, either Navarro scores or he doesn’t.
- Young cannot be forced out at third base.
Michael Young should have parked his butt on second, and started drawing stick figures in the dirt just like my son did on his tee-ball adventures! The only thing that could have happened that would have mattered is if he had been tagged out! But hey – after 30 years of being yelled at to run with two outs, who can blame a guy. Unless that guy is making $6,174,974 this season alone! Think for yourself, Michael! Don’t cost your team a game by blindly following rote!
Sports Smarts
Baseball used to be filled with examples of managerial decisions that were based on hunch instead of science. That’s not as true anymore, as the geeks and nerds have compiled massive quantities of data that indicate a different strategy than gut instinct offer. Earl Weaver, the late manager of the Baltimore Orioles was obsessive about his charts, and would choose his lineups and pinch hitters based on leveraging the smallest of advantages. Then he’d ditch the charts entirely and follow the old safe rules, because no one faults you for playing it safe.
Now a whole generation of stats-minded people are running major league teams. I highly recommend the book Moneyball, which looks at how the Oakland A’s used statistics and smarts to outwin and underspend everyone else. You don’t have to be a sports fan to find it fascinating. There are many examples of how the value of stolen bases is over-inflated, how defense is under appreciated, and how the scouts really have no idea what they are looking for!
Extra Points
Baseball isn’t the only sport that confuses tradition with reality. Gregg Easterbrook has taken football coaches to task for clinging to the punt when the numbers clearly indicate that punting is a losing bargain. It’s a thoroughly-researched piece of athlethic academia, as is his ongoing explanation of how teams kill themselves by blitzing too often. The former is a case of coaches playing it safe, and avoiding criticism in case they don’t convert. The latter is an issue of playing to the fans, or placing too much credence on “momentum” instead of just following your averages.
You’ll find a lot of this sort of non-analytical thinking in places other than dugouts and sidelines. It happens anywhere there is a management structure that is “inbred.” Baseball managers are former players, and as such learn the subtlties of the game from other managers. Football coaches typically come from within the offensive line, the position that rates the highest on intelligence tests. Offensive linemen are certainly in a position to appreciate the battles in the trenches, but it’s hard for innovation to take root when everyone in the coaching fraternity pledged the same script.
Game Theory
In a truly free market, innovation is rewarded with success. Adam Smith’s so-called “invisible hand” was merely the recognition that when a bunch of people act in their own self interests, they optimize their activity to follow the rules in place. In economic terms, this means higher efficiency, lower prices, and better service. Those who can’t compete lose out. Monopolies are dangerous to free markets because if there is no reward for innovation, there is no investment in innovation. That’s why they are either regulated or disintegrated.
However, what about those occasions where the game (and those playing) has stabilized at a level that is NOT really the optimum? We’ve highlighted several examples in sports, but what about other industries and professions? Do we not see newspapers and broadcasters clinging to their business models even though the game has changed around them? Are we not living in a political age where it’s now entirely imaginable that a candidate can raise a previously unimaginable sum? Not to mention the generational flip-flops that occur with regards to health and nutrition.
Hold ‘Em
How easy would it be to win at Poker if you had the luxury of looking at your own cards and your opponents’? Information is king, and traditionally those who had access to the information had the advantage. Much of the speculation markets are built on the concept (or rather the wager) that one person knows something the other doesn’t. In this present age, the prevalence of information and the ability to quickly find it has shaved away most of that imbalance. Someone on the other side of the world has access to much of the same data you do — and maybe more. (And being on the other side of the internet is the perfect poker face – you never see the cards either.)
This isn’t a disintegration of markets – it is just a more rapid approach to equilibrium. (Equilibrium is never truly reached, but we get closer much faster.) Want to know exactly how much a Wii Fit is worth? Click on eBay and look at the sales about to close out. Want to know how much your life is worth? Compare insurance quotes, instantly. The closer we get to real-time information in a universal format, the more the rough edges disappear.
Swing for the Fences
The above would be sobering news, but human nature always affords us opportunities to find an imbalance to create a new market. The trick is to not get sucked down the rabbit hole, chasing a never-ending stream of decimal points in search of an advantage. There are still many instances where the collective wisdom of a particular group has calcified and become stagnant. They compete with each other using a set of assumptions and measurements that no longer reflect reality, if they ever truly did. Don’t quibble about inches when there are yards to be gained. The key is to question the assumptions that lock everyone else into patterns of behavior. Challenge enough of those, and you’ll find an answer no one 
else would have expected.
There are more than enough base assumptions waiting to be called out, if you only have the guts to sit your butt on second.
Postscript: Michael Young, who nearly made a foolish out in the 11th inning, won the game with an out in the 15th. He hit a sacrifice fly to bring home the winning run.
[tags]Ike Pigott, Occam’s RazR, baseball, football, economics, statistics, moneyball, TMQ, Gregg Easterbrook[/tags]
Napoleon Simplex
Jul 15th
“There are two kinds of children: the devious, conniving, heathen tyrants — and the devious, conniving, heathen tyrants who have their parents fooled.”
Price of Peace
Jul 14th
“He who mistakes Conflict Avoidance with Conflict Resolution shall enjoy all the freedoms his conquerors allow.”
Fear of Flying
Jul 9th
“People aren’t afraid to fly, they’re afraid to fall. Give them enough security so they’ll take off, but not so much they crave the ground.”
