The problem with index funds

The New York Times > Business > Media & Advertising > While Shares Fell, Viacom Paid Three $160 Million

I've long been an index fund investor. Historically, that's where the smart money has gone. But are times changing?

The top three executives at Viacom Inc. received total compensation last year valued at about $52 million to $56 million each in salary, bonus and stock options, the company disclosed yesterday.

And then there's AIG, a company that threatens to make Enron look good and send Warren Buffett into retirement.

The power of index funds is that they benefit from low operating costs and the distributed "intelligence" of the market. But what if corruption is rampant in the economy, and more than a few companies are making a transition from symbiotic to parasitic relationships? If that's true, then index fund investors are simply feeding funds to corrupt organizations. But where are the index fund managers? Vanguard and Fidelity, large index fund managers, had their chance 4 years ago to help clean the mess, but they chose to stand aside.

Perhaps we'll discover that index funds work best in a relatively honest and transparent marketplace. Maybe we'll learn that funds like Calvert will become more effective in a relatively corrupt marketplace. Perhaps and maybe are great weasel words, but we'll be accelerating moves into Calvert (though I hate adding complexity to my investment world).

Introduction to blogs and bloglines

tecosystems: How to Get Into Blogs, 101

This tutorial focuses on my preferred blog reader: the bloglines web client. I'll be pointing quite a few people here.

Amazon.com Most Wished For: iPod madness

Amazon has a new feature -- a summary of the the 'most wished for' items across their customer base. A ridiculous percentage of the top 25 electronics items are iPod related. The full iPod lineup is in the top 10, accessories populate much of the rest of the top 25.

Clearly, the iPod craze has reached a kind of lunatic level. It has nowhere to go but down now ...

BTW, I do like my iPod.

Tours open now for the virtual world: Google maps and eyeballs

Notes: Interesting Google Satellite Maps

This page will likely be slashdotted soon, but it will return eventually. A number of people are discovering interesting things in Google's satellite images. It's the spying equivalent of open source -- many eyes means much discovery.

In 10/01 I proposed the DOD outsource satellite imagery of Afghanistan to US desktops. Let millions of eyes spy the terrain and analyze the data. I also suggested using large numbers of automated drones circulating in controlled areas, and allowing thousands or millions to view the data on their desktop. There are obvious risks to such a strategy, but I think they might be manageable (ex. mix fake data with real data to confuse spies, etc -- only the DOD knows what's real) ...

This phenomena is the merest beginning of the brave new world of mass surveillance and virtual tourism -- tourism that will mix the real world with the virtual. Imagine hundreds of 'avatars' "flying" and exploring the imaged terrain of the grand canyon -- with older and new images seamlessly mixed together.

PS. Of course Verner (singularity, fast times at fairmount high) Vinge and David (transparent society) Brin have already described all of the above and more. It is amazing to see it all starting however.

Update: I'm so slow in my old age. Way behind the curve. I think Google needs to post a sign on their lab page: Danger, singularity ahead.

Data Lock: Money cannot convert my Quicken file

This is the computer equivalent of a metal door slamming shut: "Your Quicken file could not be converted."

I've given up on Intuit & Quicken. The alternatives are:

1. Abandon this category of software. Revert to a mixture of web apps and spreadsheets (back to the 70s, more or less).
2. Switch to Microsoft Money (update -- this was awful. Passport mania)
3. Try Moneydance (update -- this didn't work)
4. Try QuickBooks Pro (still considering, see Update 4/15/05)

Microsoft has a trial download of Money 2005. I took it for a spin. Whizzy install -- it's gone .NET (for better and worse). When I tried to convert my Quicken files, however, I got this helpful message: "Your Quicken file could not be converted." (Now that's a helpful error message!) My complex Quicken database evidently caused Money to keel over.

Researching this error message led me to a description of what someone with a dataset comparable to mine went through to convert: A User's Experience of Intuit Quicken to Microsoft Money Conversion. Brrrrr. I don't have time for all of that!

So the bottom line is that Microsoft Money's conversion capabilities are pretty limited. I guess they only work for the simplest setup. It's probably better for me to start over in Money and forget about what's in Quicken; I may generate a few reports as PDF files

PS. There are similarities between this experience and a vastly more complex and expensive worldwide problem -- but that starts to get into my work life.

Update 4/13/05: I decided I really didn't want to go with Microsoft Money. It wasn't the silly error message or the cutesy UI that got to me, it was all the 'Passport' stuff and the hardcore ties to Microsoft's online services. Like Intuit, Microsoft is trying to bind customers to a range of services -- rather than focusing on delivering profitable value.

Which led me to Moneydance ($30). Moneydance is a small company product (Java app) that runs on Linux, Mac and Windows. It doesn't have 1/10th the features of Quicken or Money, but I really liked this language:

Compatible, standards-based reliability
Moneydance uses industry standard technologies such as OFX, QIF, SSL/TLS, Java, and XML to ensure compatibility with other software and services. In addition, with our open API and Extension Developer Kit you can be sure that third parties will always be able to integrate their services with Moneydance.

I think I can live with this. I'll give it a try. If it works reliably it may be all I need for now. Quicken was never any good at tracking stock transactions anyway. There's a free demo version that can handle 100 transactions.

And yes, MoneyDance is actually pretty ugly. Compared to Quicken or Money, however, it's a joy to look at.

Update 4/14/05: I uninstalled Money and gave MoneyDance a light test with an OFX import. It failed miserably. Once again proof that I'm death on software. Despite the many glowing reviews on the net I ran into 2 significant bugs within 3 minutes and a bizarre usability issue. (Import 400 credit card transactions -- and find I have to approve them one at time.) I uninstalled MoneyDance.

Update 4/15/05: I have a copy of QuickBooks Pro 5.0 or so. I think it's mid-90s. It was a crummy accounting package, but as a personal finance product I thought it had some advantages over Quicken. It doesn't handle investments, but Quicken doesn't do well with those anyway.

A serious use for a Pentium III - Linspire

Linspire 5-0: Surprisingly capable Linux desktop OS - Tech News & Reviews - MSNBC.com

Most of the Linux installs I work around are major server projects. I figured Linux on old software was history. This credible reviewer, however, had a good experience with Linspire on a PIII. Hmm. I was planning to toss the 486 running Win98, but it sure sounds like it would run Linspire ...

... it took me a grand total of 21 minutes to boot my old Pentium III laptop, put in the Linspire CD, reboot, install 5-0, reboot again, adjust the time, date and sound level, and then start computing...

...The digital version of 5-0 sells for $49.95 or $89.95 with a one year CNR subscription.  The boxed version of Linspire will sells for ten dollars more ($59.95/$99.95) at more than a thousand retailers nationwide later this month.

The National Day of Reason: Thur May 5, 2005

National Day of Reason: Home Page

Sign the petition!

Unitarian Jihad

SF Chronicle, Jon Carroll

The following is the first communique from a group calling itself Unitarian Jihad. It was sent to me at The Chronicle via an anonymous spam remailer ...

We are not alone. (via metafilter)

There really are TWO swiss army knife manufacturers

Slashdot | New Mac System Specs

Amidst a Slashdot discussion of rumored apple systems, the answer to a longstanding mystery. There really are two different "authentic" swiss army knives.

The Compromise of 1908

The company from which Wenger emerged had been a supplier to the Swiss Army as early as 1893, and its competitor, Victorinox, since 1890. Wenger is in the French-speaking Jura region, and its competitor is in the German-speaking canton of Schwyz. To avoid friction between the two cantons, the Swiss government decided in 1908 to use each supplier for half of its requirements. So while Victorinox can lay claim to be the 'original', Wenger can state that its Swiss Army Knives are the 'genuine'. In any case, both have been manufacturing Swiss Army Knives for over 100 years and both must meet identical specifications laid down by the army.

How to select the right seat on an airplane

SeatGuru.com - Your Enlightened Guide to Airplane Seating

I need to add this to my business travel links page.

The neocon view of Iraq: Hong Kong with oil

Harper's Magazine: Baghdad year zero: pillaging Iraq in pursuit of a neocon utopia

Sigh.

Tracing one's deep ancestry: interest for adoptees?

Boing Boing: Trace your genetic ancestry back to Africa for $100 with National Geographic

National Geographic has developed a five-year genographic study where participants can join in and track their genetic lineage to a common African ancestor. The $100 test will tell you the route that your ancestors took and when, and both the DNA and genographic results will be made available to individual participants on the net...

.. You'll receive a personalized genetic analysis, including an online overview of your deep ancestral history. The analysis reveals where and when your haplogroup originated and how they lived. You'll also receive a dynamic map, specific to your lineage, on which to trace your relatives' journeys across the planet.

I believe this is part of a research program as well; selling personalized views of the data is a brilliant way to fund the research. I wonder if future versions of this data would eventually be of particular interest to adoptees who cannot identify their birth families. Something to display on those hideous 'family tree' days in addition to the family tree of one's adoptive family.

BTW, The National Geographic Atlas of the Human Journey is already quite fascinating.

Christian Reconstructionism and the American congress

Remember the good old days, when Clinton used to drive some very whacky people over the edge? Sigh. I now regret the wicked delights of watching the lunatics go rabid. They're still crazy, they're still rabid, but now they have power. We need to watch the politicians named in this article. [emphases and links are mine, by way of background, review this and this and this]

Salon.com News | In theocracy they trust
By Michelle Goldberg

April 11, 2005 | According to David Gibbs, the attorney for Terri Schiavo's parents, Terri sobbed in her mother's arms after the courts condemned her to death. "Terri Schiavo was as alive as any person sitting here," he said. "Anything you saw on the videos, multiply times two hundred. I mean completely animated, completely responsive...

Gibbs was speaking to a banquet of religious right activists and conservative operatives last Thursday, the first night of the Confronting the Judicial War on Faith conference in Washington. The 100 or so people in the audience had converged on the Washington Marriott from 25 states...

... The event was remarkable in bringing together lawmakers and Capitol Hill staffers with unabashed theocrats. Rep. Todd Akin, R-Mo., shared the stage with prominent adherents of Christian Reconstructionism, a Calvinist doctrine that calls for the subordination of American civil law to biblical law.

Other strains of the religious right were represented as well -- Alveda King, Martin Luther King Jr.'s conservative niece, was there, as was Catholic anti-feminist Phyllis Schlafly. Roy Moore, the former Alabama Supreme Court Justice who lost his job after he refused to remove a two-ton granite Ten Commandments monument from his courthouse, received an adulatory welcome. There was Tom Jipping, a counselor to Utah Sen. Orrin Hatch who used to work at Concerned Women for America, and Tony Perkins, head of the Family Research Council. All were united by a frantic sense of crisis symbolized by Schiavo, who has become a mythical figure, martyred and quasi-divine, in the stories that percolate through America's evangelical subculture.

... ideas offered at the conference ranged from ending the filibuster and impeaching all but the most right-wing judges to abolishing all federal courts below the Supreme Court altogether. At least one panelist dropped coy hints about murder.

House Majority Leader Tom DeLay, originally scheduled as the keynote speaker, was called away to Pope John Paul II's funeral, but he delivered a laudatory welcome via video. DeLay accused the judiciary of having "run amok," and said that to rein it in, it would be necessary to "reassert Congress' constitutional authority over the courts." His endorsement was one of many signs that this intense conclave, with all its apocalyptic despair and exhilarated calls for national renewal, represented something more than a frustrated eruption by the febrile fringe. However odd the ideas emanating from the conference seemed to a secularist, they are taken seriously by people with real power in our nation. Indeed, they're taken more seriously than such oft-derided relics as "separation of church and state," which the conferees treated as a devilish heresy.

The Judeo-Christian Council for Constitutional Restoration [jf: by which they mean establishment of a theocratic state] is a new coalition whose membership includes major figures in the religious right. Jerry Falwell, Schlafly and Ray Flynn, the former U.S. ambassador to the Vatican, are among those on its executive committee...

... The sense that America is on the cusp of chaos was nearly universal at the conference, leading to calls for a radical restructuring of American government. On panel after panel, speakers -- including Michael Schwartz, Oklahoma Sen. Tom Coburn's chief of staff -- demanded the impeachment of judges who disagree with the doctrine of Antonin Scalia-style strict constructionism. Several asserted the right of the president and Congress to disregard court decisions they think are unconstitutional. Supreme Court Justice Anthony Kennedy was excoriated with the kind of venom the right once reserved for Hillary Clinton.

On a Friday panel titled "Remedies to Judicial Tyranny," a constitutional lawyer named Edwin Vieira discussed Kennedy's majority opinion in Lawrence vs. Texas, which struck down that state's anti-sodomy law. Vieira accused Kennedy of relying on "Marxist, Leninist, Satanic principals drawn from foreign law" in his jurisprudence.

What to do about communist judges in thrall to Beelzebub? Vieira said, "Here again I draw on the wisdom of Stalin. We're talking about the greatest political figure of the 20th century … He had a slogan, and it worked very well for him whenever he ran into difficulty. 'No man, no problem.'"

...The affair finished with a rousing speech by recent Republican senatorial candidate Alan Keyes, who drew enthusiastic applause when he said, "I believe that in our country today the judiciary is the focus of evil."

... With each new lunacy perpetrated by religious fundamentalists, progressives tell each other that any second the pendulum will swing the other way and some equilibrium will return to our national life. They've been telling each other that for more than four years. But the influence of religious authoritarianism keeps growing...

...One conference speaker was Howard Phillips, the hulking former Nixon staffer who helped midwife the new right. Years ago, Phillips, along with Richard Viguerie and Paul Weyrich, recruited a little-known Baptist preacher named Jerry Falwell to start the Moral Majority. Though he was raised Jewish, Phillips is now an evangelical Christian who told me he was profoundly influenced by the late R.J. Rushdoony, the founder of Christian Reconstructionism. "Rushdoony had a tremendous impact on my thinking," Phillips said. As time goes on, he said, Rushdoony's influence is growing.

Christian Reconstructionism calls for a system that is both radically decentralized, with most government functions devolved to the county level, and socially totalitarian. It calls for the death penalty for homosexuals, abortion doctors and women guilty of "unchastity before marriage," among other moral crimes. To be fair, Phillips told me that "just because a crime is capital doesn't mean you must impose the death penalty. It means it's an option." Public humiliation, he said, could sometimes be used instead.

Herb Titus, another Rushdoony follower, also spoke. He was the dean of the law school at Pat Robertson's Regent University...

... The pope's funeral gave DeLay an excuse not to show up in person, and Republican Sens. Sam Brownback and Tom Coburn, both initially listed on the conference Web site, also dropped out.

These are people who could sit down to dinner with bin Laden and readily come to a mutual agreement about how society ought to be ordered. They might have some issues about cosmetics, but on the fundamentals they would find common ground. They are not going to go away.

Bangladeshi heroes in Liberia

When I was a child, East Pakistan became Bangladesh in a terrible civil war. The breadbasket of South Asia became famous for famine and starvation. I was told to empty my plate in sympathy for starving Bangladeshi children (as an adult this makes no sense, but somehow it worked for my mother). A bit later Kissinger called it the "basket case" of the world.

In 1981 I lived for two months in Bangladesh. I was in the latter part of a one year Watson Fellowship focusing on fertility management (I think in 1980 the population was about 93 million, now it's 140 million but the fertility rate is down to 3.15 children/woman and life expectancy now is over 60 years). Bangladesh then was considered almost as much a candidate for Malthusian collapse as Rwanda -- but even then they'd had remarkable success for a poor Muslim nation in encouraging smaller families. (Rwanda went on to have a true Malthusian crisis.)

Of all the remarkable places I visited during that year, Bangladesh was the most surprising and startling. Yes, it was very poor. I recall how startled I was to see domestic fights and spouse beatings take place in public; where else can the homeless fight? There was hunger and beggars and misery. There was also a very beautiful countryside, the world's best fruits in the public markets, fascinating old dusty libraries from the 19th century and quite a bit of energy and hope.

Which is all by way of explaining that I've tracked Bangladesh from afar over the past twenty years, and cheered on the often quiet successes of that nation -- despite immense challenges. I like buying clothing and devices made in Bangladesh, and I like reading this article describing the contribution Bangladesh has made to restoring some measure of hope in a truly desperate place -- Liberia.

Rebuilding failed states, From Chaos, Order
Economist.com

Mar 3rd 2005 | FREETOWN AND MONROVIA
From The Economist print edition

ONE and a half years ago, Liberia was a failed state. Two separate groups of drug-emboldened teenage rebels controlled most of the country. A gangsterish president, Charles Taylor, was losing control even over Monrovia, the capital, where all sides were firing heavy artillery into office blocks and looting strategic spots such as the brewery. In August 2003 (see article), The Economist reported from that unhappy city that “famished townsfolk have already eaten their neighbours' dogs and are reduced to scrounging for snails.”

Today, thanks to the world's largest UN peacekeeping force, Liberia is calm. Some 15,000 blue helmets are keeping the streets more or less safe. There are still road blocks, but not the old sort, where militiamen stretched human intestines across the road as a signal to motorists to stop and be robbed. The UN road blocks are typically manned by disciplined Bangladeshis, of whom the locals vocally approve.

“They are very nice,” says Richard Dorbor, an office assistant in Buchanan, Liberia's main port. During the civil war, rebels looted the town clean: Mr Dorbor points to the dark patch on the wall where the kitchen sink used to be. But then the Bangladeshis came, overawed them and disarmed them, without a single casualty.

“In any group, there are good boys and bad boys,” says Colonel Anis Zaman, the Bangladeshi commander in Buchanan, relaxing in cricket whites on a Sunday. “With the bad boys, you have to be firm. You say: ‘If you want to be funny, look at our APCs [armoured personnel carriers] and machineguns. We can be funny, too. So let's just put down the guns and talk.'”

.... By far the most cost-effective way of stabilising a failed state, however, is to send peacekeepers. Mr Collier and Ms Hoeffler calculated that $4.8 billion of peacekeeping yields nearly $400 billion in benefits. This figure should be treated with caution, since it is extrapolated from one successful example. In 2000, a small contingent of British troops smashed a vicious rebel army in Sierra Leone, secured the capital and rescued a UN peacekeeping mission from disaster.

Not all interventions go so well. But a study by the RAND Corporation, a think-tank, suggests that the UN, despite its well-publicised blunders, is quite good at peacekeeping. Of the eight UN-led missions it examined, seven brought sustained peace (Namibia, El Salvador, Cambodia, Mozambique, Eastern Slavonia, Sierra Leone and East Timor), while one (in Congo) did not. An earlier RAND study had looked at eight American-led missions and found that only four of the nations involved (Germany, Japan, Bosnia and Kosovo), were now at peace, while the other four (Somalia, Haiti, Afghanistan and Iraq) were not, or at any rate, not yet....

... The annual cost of all 11 UN peacekeeping operations today is less than America spends in a month in Iraq.

... For an illustration of how utterly the Liberian state has decayed, consider the once-busy port at Buchanan. The railway that once brought iron ore there from an inland mine has been swallowed by the bush. The iron-ore processing depot on the quayside has been stripped to its girders, as have most other buildings. A single ship sits at an odd angle in the harbour, with a tree growing out of its deck. Four swaggering youths in flip-flops accost your correspondent and demand to know what he is doing. They introduce themselves as three majors and a colonel from the Liberian security forces.

Incidentally, the anonymous author of this article (the Economist does not have bylines) is one hell of a journalist. I think I've read other articles by this scribbler -- they often feature brief comments on bone chilling scrapes with near death.

Korea - the newest land of tomorrow

Economist.com - Consumer Power - Man's best friend

Once upon a time Japan was the land of the future; William Gibson famously crowned it so. Alas, Japan is now passe, on its way to being as dull a backwater as America. Korea (specifically, South Korea) now rules the future:

Man's best friend
Mar 31st 2005
From The Economist print edition
Not a dog, but a mobile phone

... South Korea is one of the most wired countries in the world. That is why Meg Whitman, the chief executive of eBay, the biggest online auctioneer, sees the country as a “window into the possibilities” of what might happen when high-speed broadband services are widely adopted in other places too.

In 1960, South Korea had only one telephone for every 300 people—barely one-tenth of the world average at the time. Today, more than 90% of households have a fixed-line phone, three times the world average. Moreover, three-quarters of the population carry mobile phones, which means that pretty well everyone has one, apart from tiny tots and a few elderly people. With government encouragement and the benefit of a densely populated, mainly urban environment, South Korea has been relatively easy to wire up. The country boasts one of the highest internet-penetration rates in the world, with more than 31m of the 48m population now having access to the web, most of them via high-speed services. Apartment blocks display government notices by the front door certifying the speed of their internet connection.

Those connections are about to get even faster. In January, the government licensed the country's three main telecoms firms, SK Telecom, KT and Hanaro, to offer a new high-speed wireless internet service called WiBro. From next year, this will allow mobile users to surf the internet at much higher speeds than they do now, as well as more reliably. Somewhat alarmingly, the Ministry of Information and Communication (MIC) says it will work even in a car travelling at 60km an hour.

For the country's consumer-electronics makers, this vibrant home market is an invaluable development laboratory. Samsung Electronics, South Korea's biggest consumer-electronics company, has already produced a mobile phone especially for watching high-quality video. Its rival, LG Electronics, has even unveiled one with a built-in personal video recorder, which automatically switches to “record” if the user needs to take a call. Lots of other new gadgets are coming, including phones that can read the radio-frequency identification tags that will eventually replace the barcodes attached to goods. These phones, says the MIC, could be used to check the expiry date of fresh produce, say, or pick up a signal from a poster advertising a new movie, which would then prompt you to download a preview. [jf: The Economist omits mention of the 8MPixel cameraphones that drive US digicam fans mad with envy.]...

... South Koreans in their teens and 20s increasingly look on e-mail as an old and formal means of communication, according to one study. “You would exchange e-mails with your bosses, but not your friends,” says a young South Korean marketing assistant. The arrival of more features could reinforce this trend further: a new Samsung phone uses voice recognition to convert speech into text.

However, some of the new features that mobile phones will offer look like being universally popular. Walk into the experimental coffee bar at the MIC's offices in Seoul, and the screen of a handset lights up with the menu. You can order two cappuccinos, pay electronically and receive a receipt, all on the handset. Mobile phones are already configured for some basic e-commerce activities such as downloading music, and in Asia a few can already be used to make some purchases in shops...

Remember the Palm Economy? Back then the PDA was going to be wallet, key, etc (using IR rather than radio). It came true in the end, but not for Palm, alas.

Koreans will be the first to give infants unique numbers based on some statistical property of their DNA, that shall be their lifelong digital signature and personal identifier ... (yes, of course, their phone number too).