Pseudo Random News and Comment

Nurse Ratched isn’t going to like this – U.S. program targets antipsychotic drug use in nursing homes

Zhang Ziyi hits back at claims she slept with Bo Xilai for money  In related news, Heidi Fleiss renounces her citizenship and is moving to China. The numbers in this rumor mill piece are stunning but perhaps not unreasonable, all things considered.

Thiel on Unique Investing  I have no problem understanding the unique, where I fall down is understanding the commonplace. Facebook still mystifies me.

If this holds up on appeal(s) it could make software development much less of a lawsuit minefield. Judge Delivers Thorough And Complete Smackdown Of Oracle’s Copyright Claims

Michael Crimmins: Jamie Dimon’s Illegal “Cookie Jar”  Smells a bit like MF Global.

Uncle Sam Admits Monitoring You For These 377 Words  The false positive rate must be vanishingly close to 100% (even without people deliberately adding more chaff after reading the list), which is why they’re working on more intelligent, context-sensitive AI to filter the flood.

Rolling Stone Highlights FBI’s Fascination With Staging Its Own Terrorist Plots… While Ignoring Real Threats  You don’t expect a [security] theater troupe to actually try to stop a real criminal do you? They’re only actors for christsake.

Interesting point about restricting the supply of housing. Housing bottlenecks do not support prices

Giving the government free use of your money for the year is a terrible trade, but if you need more motivation here’s another reason it’s better to owe the IRS in April.  Tax Return Identity Theft

Mentalizing Deficits Constrain Belief in a Personal God  Atheists are autistic!!!  Have to beat the fundamentalists to the sensational headline.

An Individual-Oriented Model on the Emergence of Support in Fights, Its Reciprocation and Exchange  I always like things that provide simple explanations for apparently complex behavior.

A fabulously funny list of all the housing bottom calls, year by year. Yeah! The Housing Bottom Is Here! (PWBC™)  But someday they will be right.

Can an adult be held responsible for a parent’s nursing home costs?  Society has already conceded this point on forcing total strangers to pay for it, so how is forcing relatives to pay any more intrusive or burdensome? Unless a lot of politicians have parents living under bridges this has wings, if only as a cost cutting measure for cash strapped governments.

Eating faces, mailing body parts and now this – Lady Gaga hits 25 million follower mark on Twitter  Forget the latest Mayan calendar discoveries, the world is ending. Most likely in a zombie apocalypse.

Fantasizing about your dream vacation could lead to poor decision-making  …and fantasizing about the great trade you are going to make to allow the dream vacation will be equally problematic.

Do Dogs Feel Guilty?  No, but they definitely should.

Feds Want Warrantless Spying Loss Overturned, Saying the Law Can’t Touch Them  Why? Because they said so.

Beware Of The Obvious Trade  Too good, too easy, too obvious. Greed blinds us to them all.

Good news for us exercise addicts. High levels of activity aid arterial functioning, might help women more than men

Adverse Metabolic Response to Regular Exercise: Is It a Rare or Common Occurrence?  Hadn’t heard of this response before. Seems rather maladaptive in primitive society so may be on the rise now.

Intravenous kidney cell transplant experiments raise hope for future human kidney failure treatments  Interesting the cells found their way to the kidneys. Now I’m curious how they did that.


Rebranding Group Selection

Nice post over on Falkenblog, Evolutionary Self Interest is Relative, which links to an excellent video on misunderstandings about the current iteration of group selection.

The video make it quite clear that much of the debate over group selection, like many other arguments, boils down to semantics. Both sides are essentially in agreement but due to terminology are unable to recognize it. Obviously some rebranding is in order. Multilevel selection is a far less loaded term, even if it sounds too much like multilevel marketing to be appealing to me.

The discussion of isolation and the success of psychopathic males among water striders leads to an obvious parallel with closed and restricted borders in human society. The option to flee is limited so the success of antisocial behaviors is enhanced. It’s hard not to think of N. Korea in that regard, but any border restrictions will have similar effects. The rising xenophobia in China is a very worrisome sign, as well as the increasing US measures against expatriation and immigration.

There is also an excellent point made about the size of the pie when talking about relative fitness that applies equally well to economics and economic policy. People prefer to be a destitute king of shit mountain rather than a wealthy poor person just because they have more than the next guy. Redistribution is based on the idea that the pie won’t change size, yet there is no basis for this assumption, and unfortunately, absent inter-group competition, little evolutionary reason for it to matter until extinction.

The video is about an hour long but worth the time for the human implications alone.

Pseudo Random News and Comment

Dumb, dumber…DMCA Notices So Stupid It Hurts

I had assumed all the PIIGS had to go but had assumed Greece would be the first. This makes a good case for Spain crossing the line first. Spexit Before Grexit? Six Reasons Spain Will Leave the Euro First

Even non-sexual social contact can raise body temperature  So the next time a guy approaches you and says how hot you look cut him some slack, he may be speaking literally.

The Smell of Age: Perception and Discrimination of Body Odors of Different Ages  That old people smell is real and readily detected. Even if this could be used as a diagnostic tool I don’t think it would catch on since it would be too much like the unglamorous days of urine tasting and getting paid with chickens.

Another way of looking under the hood. Variance and Autocorrelation of the Spontaneous Slow Brain Activity  Hope it works better than in the stock market.

Exercise and a healthy diet of fruits and vegetables extends life expectancy in women in their 70s  Doesn’t really address cause and effect so it could mean it’s never to late or that it’s always too late.

Nice chart showing why Spain is too big to bail out (and Italy). How Big Are the PIIGS? (Bigger than your may realize!)

I was never good at this level of hypocrisy. Apple CEO: When Others Violate Our Patents, They’re Copying Our Hard Work; When We Violate Patents, The System Is Broken  Far more important than a degree for CEO success.

Quite a surprising result, even in the same state that keeps electing Ron Paul. Drug Warrior and Pro-Drone Democratic Congressman Silvestres Reyes Goes Down Hard

Medical profession must open doors to poor students, says Alan Milburn  The minute “poor” expands to include incoming grades, as it does here, it’s a very dangerous precedent. Next grades in med school will be similarly adjusted. It’s extremely difficult for most patients to determine the quality of care they receive so decreasing the quality of the graduates is especially dangerous.

Citrulline a More Suitable Substrate than Arginine to Restore NO Production and the Microcirculation during Endotoxemia

Pseudo Random News and Comment

True Out-of-Sample Test of “Best” Technical Trading Rules  Seems like a strategy mean reversion is in order. It’s probably headed back for the unprofitable middle ground where the signals aren’t much use in either direction.

Computer worm that hit Iran oil terminals ‘is most complex yet’  And apparently been out there for a few years already.

China links  A lot of crime and punishment today.

Facebook and the sad case of ethical investment bankers  Great reminder of the long-lost concept of fiduciary duty.

Number of Cities with Increasing House Prices I haven’t presented enough of the bullish case on housing prices so here is an antidote.

Gold vs Bonds: At What Point Should Gold Believers Lose Faith?  Very good points about how gold and bonds are behaving. It’s rather striking that the former reserve currency in waiting is teetering on the edge of the dustbin of history and the best gold can do is basically nothing.

Blueberries hasten muscle recovery: study  All the hallmarks of sloppy science but what the hell, it’s a great excuse for some blueberry scones.

Antidepressants — not depression — increase risk of preterm birth, study shows  How many nails have to be put in this coffin?

Antiretroviral treatment for preventing HIV infection: an evidence review for physicians  This seems to be a repeat of the antibiotic experience. Overuse promotes resistance. Pre-exposure prophylaxis seems a bit over the top in that regard.

‘Vatileaks’ scandal widens as pope’s butler vows to help investigators

Bleaching away what ails you  I don’t think appalling is quite strong enough for this.

Focus on China, not Europe  Great analysis and charts on the elephant in the room. China is one place the Domino Theory would actually apply.

Top U.S. Government Officials Admit that Our Government Has Repeatedly Protected Drug Smugglers  Old news to me but there may be kids in the room who haven’t heard.

Statistical Methods Used to Test for Agreement of Medical Instruments Measuring Continuous Variables in Method Comparison Studies: A Systematic Review  Interesting. Always wondered how they handled this issue but never read much about it because thinking about the inherent circularity of it makes my head hurt.

Robert Mugabe asked to be UN ‘leader for tourism’  An absolute travesty. I had to check the calendar to make sure it wasn’t April 1st. Things are bad when the “real” news is more outlandish than The Onion or Sasha Baron Cohen.

Tuna contaminated with Fukushima radiation found in California  Now you can have your mercury sandwich with cesium too.

Very interesting. How memories disappear. Why Is Memory So Good and So Bad?

Occupy the Neolithic: Social Immobility in the Stone Age  With all the downsides I always wonder why people ever started farming. This may be the answer: “…males tended to stay put in one place while females moved in from other areas to mate with them.”

Mate-Finding as an Overlooked Critical Determinant of Dispersal Variation in Sexually-Reproducing Animals  Certainly has had a lot to do with my movements over time.

I Will Kill Myself If Apple Doesn’t Go Up Tomorrow – Tales From A Margin Clerk.  Some good rules for avoiding an unhappy end.

Real House Prices and Price-to-Rent Ratio at late ’90s Levels  Whether it’s a bottom or not depends on how far it overshoots and how much of the housing gimmickry is unwound.

50-year cholera mystery solved: Answers may help clear the way for a new class of antibiotics Rather than directly killing the bacteria, convincing them to drop their defenses.

Meet ‘Flame,’ The Massive Spy Malware Infiltrating Iranian Computers  More detail on the flame virus.

NSA Teams Up With Colleges to Train Students for Secret Cyber-Ops Jobs  May be time to resurrect Nancy Reagan’s Just Say No campaign.

Backdoor Found in Chinese-Made Military Silicon Chips  I’m guessing sales may fall off a bit after this.

Pseudo Random News and Comment

Ireland’s small-town solution to euro uncertainty: bringing back the punt  Nice marketing ploy by the merchants but hold on to those punts! Without a central bank continually creating more they are very likely to increase in value.

T cells ‘hunt’ parasites like animal predators seek prey, study shows  Is this convergent evolution or scaling up of a good method (from cells to animals)?

15 Great Investor Quotes  I’ve never paid much any attention to the net worth of these guys. Templeton really hit the sweet spot in when he was born and what he did with the opportunities that presented.

Manufacturing genes to attack flu virus This won’t be a magic bullet. Targeting sites specifically for their critical role in viral function makes it much more difficult to evolve a defense, but not impossible, and there’s always the risk that the target will also be critical in some part of human physiology too.

Analytical Framework for Identifying and Differentiating Recent Hitchhiking and Severe Bottleneck Effects from Multi-Locus DNA Sequence Data Interesting results. I still have doubts about regions of low or high recombination being stable over longer periods of time. Currently non-coding regions could be thought of as a library and when things change a previously ignored shelf might move to the best seller section, or vice versa.

Paradoxical Effects of Rapamycin on Experimental House Dust Mite-Induced Asthma  I need to take a closer look at this. Seems to explain the early vs late conversion results with Rapa in organ transplant.

It’s official: China will miss lending targets  As I understand it, owing money in the shadow banking system in China is similar to owing money to a loan shark. People are lining up to repay debts because they fear for their lives, not because they fear a late night phone call.

Reddit’s Alexis Ohanian And Activists Aim To Build A ‘Bat-Signal For The Internet’ Sign me up. Who gets to be the dark knight?

Damn, It Feels Good To Be A…Loser

There is a good post on Abnormal Returns, Rapidly learning the lessons of risk and return, on bear markets as learning opportunities. The subject of learning opportunities got me thinking about all the interviews with traders I’ve read over the years. A theme with many is the often disastrous consequences of starting out early in your trading career with a string of winners. Beginning with a series of winning trades makes it all too easy to conclude you’re a born trading genius because it’s so clearly easy for you. Naturally, rationality then demands you lever up and start making trading history.

The inevitable soon happens and your account is blown up, and maybe even your house and marriage are gone. But if your initial success was long and large enough even that might not stop you. Armed with a Teflon-coated brain from your early success, new knowledge is prevented from intruding on your fantasy and in short order only a few minor tweaks are deemed sufficient to guarantee success. Then the second blow up happens.

I long ago concluded the absolute worst thing that can happen to a trader starting out is an unbroken string of success. In that regard I was very lucky. The first mutual fund I ever bought ended up a $5000 loss. The first individual stock trade I made was a loser. The second futures trade was a loser. Seven of the first eight options trades I ever made were losers. In fact as I see it now the single best trade I ever made was a loss. The largest loss I’ve ever had in fact.

It happened not long after I started trading stock index futures, in the good old days before pint-sized e-mini contracts. Though I would have been horrified to think so, I was executing my version of the forex trading ads, “When properly positioned, $1.57 can become $27,000,000,000 – in two weeks!”  For reasons which now elude me I decided to make a big increase from my usual position size, to roughly $2 million in S&P contracts – on a very modest account…on a Fed day. Of course the market immediately went against me, blew right past my mental stop, and then briefly paused at an inflection point. I felt 90% sure it would turn around and blast off, but then I thought of that 10% chance it could go the other way. The losses would be huge and very hard to come back from, both financially and mentally. After 3 seconds I got on the phone and pulled the plug – right at the low of the day. I lost 20% of my account in 10 minutes, but strangely enough I felt pretty good about it. Despite being blinded by greed and my near certainty it would end up a winning trade, I had done the most important thing: I prevented disaster.

Many are probably thinking how horrible it was that I missed out on such a great trade. If only I had stuck with it! But if I had stayed in that trade I shudder to think how things would have turned out later. That one trade would have been monstrously profitable on my small account, but I also would have been richly rewarded for doing nearly everything wrong [1]. Being over-leveraged, having a hazy trading business plan, not having stop orders in place, ignoring a high risk situation, and best of all really having no f-ing clue what I was doing. At some not too distant point in the future there would have been a blow-up for the ages patiently waiting for me to stumble through the door. Because of that painful loss I was spared that fate, so to me it remains my best trade ever.

The next time you take a loss thank your lucky stars it happened. Celebrate it. You did what you needed to do. Smile, secure in the knowledge that you have been spared the curse of the Teflon brain and been given the chance to learn something very valuable before it’s too late. Over time the returns could well be enormous.


[1] Insert unflattering comparison to Wall St here.

Pseudo Random News and Comment

Parsimonious, Big Picture Behavioral Bias  If you look at the list of 107 cognitive biases linked to in the post, the most obvious explanation is they are being taken out of context to make a mountain out of a molehill. In the situations in which humans evolved they weren’t a problem or conferred a benefit, otherwise we’d be extinct. An argument I always think of when someone starts talking about needing salt tablets or electrolyte replacements when running a marathon.

Harsh Language from Lagarde: “IMF Has No Intention of Softening Terms”; From Head of Deutsche Bank: “Greece is a Failed Corrupt State”; Purposely Inflammatory Statements to Force Greece Exit  Maybe this useless debate will finally be over, but after all this time and all the nonsense being spouted it’s hard to believe they won’t manage of few more rounds of the charade.

Germany Walks Away From Greece  Another view of the Greek thingy. The most interesting bit in this is that many Greeks have stopped paying taxes, hoping to be able to pay them in plummeting drachma rather than Euros and come out enough ahead to cover any penalties. I think it’s a good bet. Penalties are likely to be waived or reduced to encourage payment if enough keep holding out post conversion and the government gets more desperate for cash.

Illegal File-Sharing Chips Away At North Korean Propaganda  What don’t they understand the West’s demonstration that it’s better to allow enough latitude to give the illusion of freedom?

JPMorgan’s debacle, and its parallels to AIG Not too surprising since they are in fact doing what they are paid to do, with a bailout waiting when the inevitable occurs (except in Iceland).

Old and New Neurons Trade Roles to Aid Memory Another way to jam more complexity into a small space. I think the biggest problem with the Connectome project isn’t the huge number of connections involved but that in the brain they are analog, not digital, and vary on multiple parameters in a single neuron – not to mention the discoveries of more active roles for glial cells and others previously assumed to be only structural.

SkyNet Wars: Presenting The Rogue Algo Responsible For FaceBook’s Downfall  Always fascinating to see the details of bots in action in the stock market. Still surprises me how dull-witted they remain. Speed and simplicity have their niche but when so much of the market is dominated by essentially a single strategy the outcome eventually isn’t going to be good.

I have a fetish for complex outcomes from simple processes. Host Plant Use by Competing Acacia-Ants: Mutualists Monopolize While Parasites Share Hosts  Ants are pretty simple but so far they’re still much more complex than the HFT bots.

Presenting The Greatest ROI Opportunity Ever  I think The Big Picture had a piece on this a few months ago but it’s still incredible what a great investment lobbying is. I think the only reason there isn’t even more investment in lobbying is that not everyone can win in the process so there are sharply diminishing returns.