It's Like I'm In A Geico Commercial, But With Refinancing

How was my day?

Well, I didn't get much research done, and I didn't get too much done on my classes either. I did meet with a student for about an hour while on a presentation that my class has to give to our outside advisory board.

But other than that, I didn't get much done. But I'm happy anyway.

Why? Because I just saved a bunch of money on my mortgage. I refinanced it from its initial 6.25% rate to a new rate of 5.75%. Total costs (once the escrow gets paid back in about a month) were about $1500. So, the decrease in the mortgage payment means I pay back costs in about a year, and after that I'm $1,500 to the good each year.

Not bad. The Unknown Wife and I are trying to save some money, but we celebrated by going out to the loval Java shop for a couple of good cups (Kona for her, a Latte for me) and an extremely rich pastry.

Yeah-- with two kids (and a still hefty, but less so after today mortgage), this is about as much as we end up splurging.

Earnings Restatements, Dilbert Style

Here's one for the "to use in class" file (from Dilbert.com website.)

And a tip-o-the-hat to The Big Picture for the link

The Unknown Son and Late-Stage Effects of Chemo (and a Link Dump, of course)

Today's a bit busy - I teach in the morning, and meet Unknown Wife immediately after so we can go to meet Unknown Son's new oncologist. He's in remission from his Neuroblastoma, so it's not a "serious" meeting. But he does have to issues to deal with.

Most chemotherapy works primarily by attacking ALL fast-growing cells, and he's had a lot of it. So, it often has implications for childhood growth. Unknown Wife and I are both on the smallish side, so we didn't expect U.S. to be a giant in any case. But he's by far the smallest in his class (most people guess him to be about 6 instead of 8, at least until he open his mouth). In addition, he probably has some slight neuropathy (nerve damage), which is a common side effect of pediatric chemo. Both U.W. and I have the reflexes of tree sloths, but U.S. is even more uncoordinated.

In any event, the new oncologist has specialized in late-stage effects of chemo. She actually did "write the book". So, we'll be consulting with her today to determine what options we have, or even if we need to be concerned.

Meanwhile, here's some stuff to keep you busy:

CXO Advisory group has been going back and forth with Jim Cramer on his investment performance. I think they've gotten under his skin.

Theresa Lo is guest blogging at Alpha and Omega about "computer-replicated hedge funds". It seems that there are a couple of groups that are trying to do it on an automated basis that claim they can do it better than a flesh-and-blood manager.

Worthwhile Canadian Initiative has some good advice on how to present (or discuss) an academic paper.

John Prestbo at Marketwatch.com goes over the ins, outs, ups, and downs of hedge fund indexes. To quote Inigo Montoya, "I don't think that means what you think it means".

Enough bloggery - back to work.

Slouching Toward The End Of The Semester

There's exactly two weeks (6 classes) left to the semester, and I have a little more than two chapters of material to cover. I actually have three chapters to cover, but since we're only taking parts of them, it works out to about 2 1/2 chapters. So, there's a bit of a time crunch. But there always seems to be at the end, so nothing new here.

I still have hopes of getting a paper out to a journal by the end of the semester. Stuff submitted just before the break always seems to take longer to get a referee report back on, but if I wait until we get back for the spring semester it'll be even longer. So I might as well punch it out and get it situated on some editor's desk (so he can get it on a reviewer's desk).

While I'm finishing up the edits, here are some links to keep y'all busy:

The Wall Street Journal has a piece titled "The November Effect"that says that the stock prices of big winners (and losers) reverse course in November. I'm not aware of any academic research that shows this, but I'm more of a corporate guy. Still, it's interesting.

Matthew Goldstein of Thestreet.com is reporting on leveraged private-equity backed IPOs (or LIPOs, as they're commonly known). PE-backed IPOs accounted for 42% of all offereings this year, so they've become a significant part of the IPO market.

This week's Carnival of the Capitalists is up at Blueprint For Financial Prosperity. My pick of the week is the post by gongol.com that claims that responding to penny-stock internet spam may be unwittingly funding terrorism.

The Wall Street Journal online has a piece on Information networks.
It seems that there are now companies that pay industry "consultants" to gain superior information about the firms (or industries). Larry Ribstein says it's the inevitable consequence of Reg FD.

Eszter Hargittai gives a primer on how to send emails to academics correctly. If you're a reporter or someone trying to get help from one of my tribe read it - it's got some very good info.

Marketwatch.com reports on "Fundamental etf's" - ETFs that base portfolio wieghts not on market cap, but on factors like sales, market-book, market share, and so on.

Enough bloggery - back to work.

The Seven-Headed Dragon

[I put a revised edition of this blog entry into my website "Living Without Money"]

Wail, you inhabitants of the market district!
For all the merchant people are cut down;
All those who handle money are cut off.
(Zepheniah 1:11) 

And there is no merchant any more
in the Temple of Yahweh of Hosts in that Day!
(Zechariah 14:21)

Today is probably my last day house-sitting, so I'll use the time to write here.

I had a nice thanksgiving dinner at my friends', Damian & Dorina. She made an incredibly delicious vegetarian nut loaf.

After dinner, we discussed different philosophies and such. Then a friend brought to my attention, and not at all in a nice way, that I tend to interrupt and dominate the conversation. I have always thought of myself as a listener who doesn't talk much. And I like to think of myself as "aware." But I had to concede that he was right, though. Sometimes I get excited about stuff I'm learning and tend to forget about others. Just when I think I'm getting it together, I find I'm not. Knowledge isn't enlightenment. In fact, as I keep saying, it veils us from enlightenment. Anyway, I've been licking my ego wounds a lot since. And just that fact of still feeling wounded shows a great attachment to this ego that I thought I had pretty much overcome.

That's also a problem with blogging like this. You can only see words, not my person. And it's easy to present ourselves as flawless to the world when we write.

Comment Reply Becomes Blog Entry
I started writing a reply to a comment by "Angeldust" after "My Summary of Why I Live Moneyless". Then I decided to just go ahead and make it a blog entry.

It's time to see the Bible in a whole new light. It's time to shake up tired, sleeping JudeoChristian religion out of its materialistic stupor. This might just blow you away.

Angeldust brought up the Beast in the book of Revelation, the Beast who has 7-heads, the AntiChrist that end-of-timers like to talk about. So I started tracing this 7-headed dragon back to the very serpent in the Garden of Eden. Here's a taste of the mysteries:

Serpent Coiled Around the Tree, Serpent Coiled Around Pole In Genesis 3:13 Eve says, "The serpent [nahash*] deceived [nasha*] me." The Hebrew Bible is filled with plays on words totally missed in translation. The word nasha* means both 'deceive' and 'lend on interest,' or 'be creditor'. (In Strong's Lexicon, 'deceive' is Srong's # 5377 & 'lend on interest' is 5378, which are identical)*. This nasha is found in 1Sam 22:2, Neh 5:7, Psa 89:22, Isa 24:2, all of which, like the Koran, strongly denounce lending at interest).

Now look at the Hebrew word for snakebite, nashak [Strong's 5391]* , which also happens to mean both 'lend' and 'receive on interest' (Num 21:6-9, Deut. 23:19, Prov. 23:32, Jer. 8:17, Amos 5:19, etc). 'The serpent bit me,' Eve says. 'The serpent charged me interest,' Eve says.

Now the word for serpent, nahash is also a wordplay with nasha. Nahash also means 'divination,' and also 'copper' or 'bronze,' the basic currency [Strong's 5174 & 5], just like our English word 'cobra' is related to 'copper'. You can see this play on words taken into the story of Moses lifting up the Bronze Serpent in the wilderness.
_____________________________________

So Moses made a bronze [nahashet] serpent [nahash], and put it on a pole; and so it was, if a serpent [nahash] had bitten [nashak] anyone, when he looked at the bronze [nahashet] serpent [nahash], he lived. (Numbers 21:9)

If a serpent had bitten anyone can literally be translated, if a serpent had become creditor to anyone...!

Now it gets even more intriguing. a varient spelling of nasha [# 5375], pronounced the same, means 'to lift up, bear up, carry, be exalted, bear sins, atone for sins.' And the related word for 'debt' is nashi [5386]. Now you can see clearly what Jesus is referring to when he says, As Moses lifted up the serpent in the wilderness, so must the Son of Man be lifted up. (John 3:14)

This word nasha is used first by Cain in Genesis 4:13, "This punishment is more than I can bear [nasha].' And the word 'Cain' itself is a pun on the word canah, which means 'purchase'! Again, the play on words:

And she conceived and bore Cain, and said, I have purchased [canah] a man from Yahweh." (Gen. 4:1)

Now we can see why there is a Jewish interpretation that Cain is actually the son of the Serpent! He is the son of purchase, of credit & debt, while Abel is the son of Grace.

Mayan Ouroboros

The Seven-Headed Dragon

Next, in the story of Cain, you see allusion to the 7-headed Leviathan (Hydra, Beast) with the 7-fold vengeance of Cain in Genesis 4:15 & 24. Now it is clear that this credit-and-debt 7-head Serpent is poking his heads up in Deuteronomy 28! He is Leviathan.

'Leviathan' shares the same root as 'Levi,' meaning "to twist, bind, join [3878 &3867]. Again, notice the word-play in the passage that speaks of the birth of Levi, the father of law:
"'Now this time my husband will be bound [lavah] to me,...' therefore he was named Levi." (Gen. 29:34).

Levi was the father of the tribe of Levi, the Priestly Clan, the establishers of Levitical Law, starting with the Levites called Moses, Aaron, and Miriam. Law is consciousness of Credit and Debt. Law is control of Credit and Debt. The Levitical Law, as all law, was given to manage people under Consciousness of Credit and Debt, a way of keeping disease in check until the cure comes - the cure of Grace. Just as Krishna speaks of transcending the cycles of Credit and Debt, transcending the perpetual reincarnation of Karma, the old Hindu Law, through crucifixion of the ego, so speaks the Buddha, so speaks the Christ.

Leviathan is the Hebrew word for the Canaanite Lotan, found in Ugaritic texts, where he is slain by Baal:

“When you smite Lotan, the fleeing serpent,
finish off the twisting serpent,
the close-coiling one with seven heads."
( KTU 1.5:I:1-3, D. Pardee in CS, 1.265)

Then the Bible quotes this Canaanite text, saying Yahweh slays Lotan/Leviathan:

IN that day Yahweh with His severe sword, great and strong,
Will punish Leviathan the fleeing serpent,
Leviathan that twisted serpent;
And He will slay the dragon that is in the sea. (Isaiah 27:1)

You broke the heads of Leviathan in pieces,
And gave him as food to the people inhabiting the wilderness. (Ps 74:14)

Land of Canaan, Land of Commerce

Leviathan is the Serpent of Canaan. Canaan means trade, or commerce in Hebrew. Here again we see the play on the words for 'Cain' & 'purchase'. The land of Canaan, called Palestine and Israel today, was wedged between two great superpowers, Babylon and Egypt, and two great continents. This made it the land of Trade - the land of war, oppression, and deceit - the products of Trade. And it was out of this that the rage of the Bible is born.

Now you can see, more and more, studying both the Bible and history, that the Canaanites were not a literal race of people, but were the Spirit of Merchandise that possessed the people. And the very theme of the Torah is to wipe out every vestige of Canaanite from the land. The later Jewish prophets confirm that this is so:

Wail, you inhabitants of the market district!
For all the merchant people [canaanites] are cut down;
All those who handle money are cut off. (Zeph 1:11)

And there is no merchant [canaanite] any more in the temple of Yahweh of Hosts in that day! (Zechariah 14:21)

And Jesus' clearing the merchants from the temple is a direct act-out of this Zechariah scripture. Wiping out the Canaanites.

Yes, the mystery is that the Levitical law is to become fulfilled, to become obsolete at the End of Time, which is the Eternal Now, the Day of Yahweh. Money/trade serves its purpose and becomes obsolete. All written law becomes fulfilled, obsolete.

Money and law simply cannot exist in the Present, in Reality! This is not opinion. This is simple observation, if we but look inside.

It's interesting that, in the Christian Bible, the Greek word for money is nomisma and the word for law is nomos, sharing the same root meaning "to parcel out." There is no need for law when there is no money or barter, and there is no need for money when there is no law - for both are one and the same - control of credit and debt. When you start trusting Nature again "to parcel out", that vengeance, repayment, belongs to God, not human ego-mind, then Balance comes, as it already exists in the infinite Universe surrounding our little bubble of "civilization". And this is the very theme of Christian theology: freedom from written law and taking on the law of the heart, which is love. Crucifying the Ego, which is Consciousness of Credit and Debt.

It is about giving up the ego to the cross, lifting up Moses' serpent on a pole in the wilderness, the Lamb breaking through the Seven Seals.

*If you want to confirm these word studies, you can go to www.blueletterbible.org to look up the Hebrew, Greek, and Aramaic words of scripture passages, or www.scripture4all.org/OnlineInterlinear/Hebrew_Index.htm for Hebrew-English interlinear Tanach (Old Testament), and www.scripture4all.org/OnlineInterlinear/Greek_Index.htm for Greek-English interlinear New Testament. The Blue Letter Bible uses Strong's Lexicon, so I've put in Strong's numbers to make it easier for you to look up.

A Good Thanksgiving For The Unknown Family- Now Back To Work

After a short (about 90 minute) drive, we had a great Thanksgiving at the house of the Unknown Sister-in-law. In addition to us, there were Unknown Wife's two sisters (both with spouses and two children), Unknown Grandparents, and our neighbor from when we lived in the MidWest who now lives about an hour away (we moved halfway across the country, and so did she). Good food, conversation, and fun was had by all. Here's hoping your Thanksgiving went as well. One of the more touching moments was when Unknown Son gave the blessing for the food and prayed for his cousin, who also has Neuroblastoma (he actually had it before Unknown Son and went into remission before U.S. was diagnosed, Then last year, the canvcer came back for his cousin).

Then last night, Unknown Wife and Kids took advantage of the opportunity to stay with Unknown Sister-In-Law and her family (we'd planned it earlier this week). So, I drove back, got an early night's sleep, and will work on research and classes until Saturday and their return (it's the end of the semester, so everything gets backed up).

In the meanwhile, here are a few links for your reading pleasure:

Abnormal Returns has done a very nice piece on the Five C's of Private Equity Buyouts. It discusses some of the factors that have led to the growth of PE as a major force in the market. They are

• Capital
• Credit
• Complexity
• Control
• Congress

Read the whole thing here, and a follow up piece here.

Jim Mahar at FinanceProfessor.com links to a piece by Brav, Graham, Harvey, and Michaely on payout (i.e. dividned and repurchase) policy. Anyone teaching advanced corporate finance should read it and give it to their class. It's another of Graham's great survey pieces, and shows what managers actually do (and what a surprise: sometimes it's different from what finance textbooks say they should do). And if you want to read more of Graham's research, click here. He also has a good survey piece that covers a broader range of topics in general corporate finance,

In addition, CXO Advisory Group discusses a piece by Lyandres, Sun and Zhang, titled "The New Issues Puzzle: Testing the Investment-Based Explanation". It argues that corporate investments patterns should be included when constructing benchmark returns (because issuing firms invest more than non-issuers). Once they do, much of the long-term underperformance for these firjms dissappears.

Finally, here's a quote by J.R.R. Tolkien to think about for the remainder of the day: "I don't know half of you half as well as I should like; and I like less than half of you half as well as you deserve."

Now back to work!

Dia de Gracia

Feliz Dia de Gracia.
I like the Spanish name for this holiday, because it shows this is a celebration of Grace, of Gratis. You can't feel Gratitude for something that you "earned". Gratitude is the sense of unmerited favor, of Gift, and every particle of the Universe, outside our money-mind system, runs on, by, and through Gratitude. Look into any wild creature's eyes and see its burning fire for yourself.

I'm all excited. Somebody left me a comment with this link: www.utterpants.co.uk/notpants/madmoney.html, which I just added to the link bar to the right.
It's a blog entry I've been wanting to write, and now I don't have to do it because this Michael Dickinson already did, and I couldn't have written it better! You gotta read it, and you'll see these ideas on money aren't my own hair-brain ideas or opinions, but a universal truth that another witness is tapping into.

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A Message for Materialists/Scientists

Now I want to write from a "materialistic" viewpoint, this time not for folks who follow the religion of Evangelical Christianity, but for folks who follow the religion of science and materialism.

So you believe that we all came about by chance, that the universe is a hodge-podge of random reactions. So you believe that Natural Selection brought us from an amoeboid to a rodentoid to an ape-oid to a homo sapiens. This is a fine and true religion. It is the result of simple observation, just as the ancient faiths are. And I maintain that if everybody in the world but believed (practiced) their own religion of simple observation, our world would fall back into balance with the rest of Nature, and we individuals would fall back into balance with our own natures. But let me point out that you most likely do not believe your own religion of science, just as most self-proclaimed Buddhists, Orthodox Christians, Mormons, Muslims, Hindus, Taoists, Sikhs, etc. do not believe their own religion.

Simply put, faith is abandoning yourself to chance. Chance is the random interactions of credit & debt, positive & negative, outside human mind control. If you believe Chance brought us from a dust particle to a human, brought us thus far, why do you now not trust Chance to carry us further??? Why can't we trust that balance will occur if we but give up consciousness of credit & debt, if we but give up control of balance of positive & negative? When has a negative charge ever NOT been naturally met by an equal and opposite positive charge? When has a death ever NOT been naturally met by an equal and opposite life? Why do we continue to not trust that a "bad" deed is naturally met by an equal and opposite "punishment"? Why can't we, who call ourselves scientists, trust our own science, like an infant, that "Vengeance belongs to Chance, Chance will repay", not to our minds that can't even balance a budget. Why can't we trust that Nature is perfectly Just. When have wave crests ever NOT been met by equal and opposite wave troughs? If Female were not met miraculously by an equal and opposite Male, then life would cease. A positive coincides with a negative. If Coincidence ceased, the Universe would cease. Why do we think Coincidence, called Miracle by the religious, is an exception, rather than The Rule?

The Money World Blocks Evolution

Now I'm going to say some seemingly hard things. But you know they are true. Money and possessions side-step chance, putting a block on Evolution, skirting around Natural Selection. We think we are avoiding Death by accumulating money and possessions, by stockpiling positives and squelching negatives. But all we are doing is building up our own demise. The negatives will come back on us in a tidal wave, to bring themselves back into Justice with the positives we've horded. Isn't this what the Koran keeps saying? Isn't this a theme of the Bible and the Dao De Jing? Isn't this basic science?

Why are we as a species nursing prolonged suffering from year to year, generation to generation, in the name of compassion, while Nature abhors prolonged suffering, knocking it off in Just Natural Selection before it can even establish itself? Mutations are naturally balanced with Order in the Wild World. But they are heaped up in massive imbalance in our Domestic World. And we pass them down, in ever larger masses, from generation to generation. Then people like Adolph Hitler arise and think they can re-establish the Balance, and they make it way worse. The erroneously call it Social Darwinism - but Darwinism it is NOT. Darwinism is Natural Selection, not Human Mind-Control Selection. Darwinism is Faith in the Law of Nature, not faith in the laws of human mind-control.

Hunter-Gatherers Our Example

I like how the Inuits (Eskimos) of the past (and maybe still the present) lived in such balance with Nature, that when one became old and too lame to be happy, to contribute to the tribe, she would voluntarily go sit on an ice float cross-legged like the Buddha and wait for a polar bear to eat her up. Missionaries thought this barbaric and put an official end to the practice. Now the Inuits are so happy with their booze and chronic illness and their oil money. When you read accounts of anthropologists who studied the Inuits before Missionary money "saved" them, they are totally astounded how these tribes living in one of the harshest environments on earth could be so constantly happy.

The Kung (Bushmen) of the Kalahari, like the Inuits, lived in another of the harshest environments on earth. The Kalahari doesn't even have regular surface water, and the Kung only carried bows & arrows. The rumor among the civilized was that these Bushmen were poor souls continually suffering, slaving, scratching out a living from the harsh desert. Then anthropologists went in to study them, and were astounded. The Kung were, in fact, the most studied of all hunting-and-gathering tribes. And anthropologists found that they only worked 2 to 3 hours a day, and the rest of the time they spent in leisure. But even that is bogus, because I can testify that when you live without money, there is no distinction between work and play. Watch any wild animal and you'll know what I mean. Don't watch money-funded propaganda nature flicks on TV if you want an accurate view. Go out and see for yourself.

Slaves of Civilization are struggling and suffering, not for food, but to maintain possessions and fictional bank accounts and appearances. And such slaves can't imagine that life could be any other way, so they believe nature is cruel to justify their own cruelty against both themselves and others.

Yet, I Am Not a Primitivist!

I am not really a primitivist. Human inventions come from the same Creative Source as leaves and flowers and chimpanzees and electrons come. Do you know who invented the automobile, the television, the microchip, the rocket, the piano, the paintbrush, the wheel? Chances are you don't. But you know who got famous marketing each of those things and pushing them like drugs for profit, don't you? I had this realization once when I worked at a homeless shelter in Boulder, Colorado. One of the residents was an inventor of machine parts. Presently, he was working on a better sewing machine bobbin. He was doing it for the pure joy of creating - and you know he wasn't doing it for money or fame. The greatest works of art are in temples, done by the obscure for the obscure, simply for the pure joy of doing. Work and play and creation and reward and joy are all One in the Present Moment.

Last summer I talked with a Nepalese Buddhist in Portland, Oregon about these ideas on living moneyless. He got all excited and immediately started envisioning people building cars purely because they wanted to, making computers from a place of pure joy, building cities from instinctual creativity - all within a purely gift economy. Nobody owns anything and all things are shared. And everything balances out as in Nature, because our true selves are Nature. He had the look of a child as he envisioned this "naive" world. Naivete is our only salvation. All great things begin with the "impossible" vision. With faith all things are possible.

It's Always Christmas Time For Visa (video)

I'm usually not a fan of more legislation, but this one even I have a hard time being against.

One of my readers sent this link to Consumer's Union (the non-profit publisher of Consumer Reports). They're trying to encourage legislators to make credit card disclosures more transparent, and to rein in some of the more abusive credit card company practices.

They've got a great short animated video titled "It's Always Christmas Time For Visa". Check it out.

Then sign the petition, if you're so inclined.

It's a Research Day

It's a research day today. I have an exam tonight (and an alternate one earlier for those students who can't or don't want to take it tonight), so there's no teaching on the table today (except for the last-minute tide of panicked students who'll show up at my office). So, since I'm going in a bit later, I thought I'd put something up on the blog.

On today's research menu:

• I have to get data to a student at my former school (I sit on her dissertation committee). As I mentioned before, she knew I was coming here, so she chose her topic to take advantage of the new resources I'd have access to (pretty smart on her part). So, I'll pull some of the data from the big Hansen data set and send it to her.
• I'm still editing a paper that my coaters have send me. One knows the literature in the area phenomenally well (she's written a book), and the other's doing the empirical part. But I'm the only one who speaks (and writes) English as a cradle language. So I get to be the editor. They've actually written a very good first draft (as far as the basic story), but it needs polishing. So, I get to be what I call the "grammar & word nerd". I never thought I'd get so much mileage out of having my writing terrorized by nuns in my formative years.
  
• Finally, I'm pulling data for another project. It involves merging data together from three different databases and then sending it off to my coauthors for further torture. We got the idea at a recent conference when the three of us had a few beers one night - they were colleagues of a classmate of mine, and I knew them only in passing. But that's the great thing about conferences (and having a few beers) - you start talking and the ideas start flowing. And before you know it, you have a new research project.

Anyway, here are the links of the day:

Corporate Dealmaker highlights a study by investment bank Houlihan Lokey.
The study finds that termination fees in mergers are slightly lower than they were in previous years. If it's a continuing trend (and not driven by a few data points), it might make for a good research topic -- it could have a lot of implications for the corporate control market.

Everyone's Illusion (a relatively new blog that looks like it's worth checking out) has a great, short post on hedge funds, tail risk, and loss aversion.

This week's Carnival of The Capitalists is up at Gongol. Posts of note include The Big Picture with links to the most influential of Milton Friedman's works
and James Hamilton of Econbrowser on how the yield curve indicates slower growth ahead but less chance of a recession.

Real Returns reports on a recent trend - share buybacks are increasing. He makes a good point-- that buybacks increase EPS even if earnings are flat.

The NY Times has an interesting piece titled Rewriting the Rules for Buyouts. It notes that minority shareholders don't share much in the gains to MBOs. However, one reason for the unequal sharing is that the managers in an MBO take on a great deal of risk. So, they might just be getting compensation for that risk. The article suggests some "cures", but I'm not sure they wouldn't do more harm than good. HT: Jim Mahar at FinanceProfessor.com.

Enough bloggery - it's time to head in to the office and get some research done. I've got data (and the English language) to torture!

When Will I Learn?

I was grading problem sets last night, and I thought, "Man - A Mike's Lemonade would go down pretty well right now". After all, I'd put in several hours of raking leaves (no, they're not done yet, but I have managed to give myself tendinitis in my wrist), spent a couple of hours editing a paper, and the kids were in bed.

And before I go further, I didn't have more than one.

But for some reason, any alcohol in the hour or two before bed messes up my sleep cycle. And I know this from experience. So I woke up at 3:00, and tossed and turned for the next 3 1/2 hours. Of course, today is my long teaching day.

Tomorrow is a research day. I've got a data set I have toget together for a student at my previous school who's working on her dissertation (I'm on her committee). We have the data she needs here at Unknown University version 2.0, but not at U.U. version 1.0 (in fact, since we knew I was coming here, the knowledge that I'd have access to the data was a major determinant in her choosing the topic). So, I'll make a cut of the data set and send it to her and she takes it from there.

I've also got an exam to give at 6:30, and the early version of the same at 3:00. So I'll be around all day (and evening).

In other words, I'll need breaks. So I'll post more tomorrow. For now, I'm going to bed.

Without Lemonade.

The Now Testament

Another beautiful fall day around Moab.

In a previous blog entry, I wrote of my friends, Gordon & Kay, coming to visit at the end of last May. What I didn't mention is that Gordon came to make a short docu-film on living moneyless. He finished the film, & has an webpage intro & teaser for it, which I finally was able to get into. It's at www.moneylessinmoab.com. The music it starts with is some jamming I did on the "Freenotes", which are pentatonic-scale xylophones installed in a park in Moab that anybody can bang on - thanks to Moab's very own Richard Cook, who installed them years ago. Of course, free music on free instruments on public land is right down my alley.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FOR EVANGELICAL CHRISTIANS:

Okay, now, this is written for Evangelical Christians, and has a lot of Bible-quoting. It's my "95 Theses" I'm tacking to the Evangelical church door, challenging the very foundations of this institution:

The Word

It's been a quiet & exhilerating last few days in the canyon. You know, when you become still, and all thoughts & words leave your mind, this is when you find that the same Indescribable Calm that is within you is the same Indescribable Calm that upholds all of Nature. Your mind cannot see reality until all words, all thoughts cease, and your mind becomes like a child's - a blank slate. You don't see things through the filter of judgement, of words, but just as it is. You see that words do not reveal Reality, but veil it. With words you believe in God. But without them you know God. "Be still and know that I am God," the Psalms say. And you see that this Indescribable Calm is the Source, like a Seed, from which all forms of Nature sprout, and to which all forms return again. And these forms of Nature are no different than the thoughts & imaginations that arise spontaneously in your mind. It's an exhilerating realization. Yet words & imagination can never, ever grasp it. You can never, ever grasp God, Reality, with thoughts, with words, with imagination.

"Eye has not seen, nor ear heard,
Nor have entered into the heart of man
The things which God has prepared for those who love Him."
(1 Corinthians 2:9)

Now, looking within to this Law written on your heart, this is where you see that the very Heart of Christianity is the very Heart of Buddhism is the very Heart of Hinduism is the very Heart of Islam.
Because this Calm is beyond time & beyond possession, it cannot be contained in human memory. All we have are words, messengers, that tell us about it, but the words, messengers are not it.

Yet, how can I tell you about this No-thought if there isn't one point of contact between No-thought and thoughts, between No-word and words? There must be one Single Word that mediates between words and no-words, between Heaven & Earth, God & Human, Reality & Illusion, no? It's like the very infinitesimally sharp tip of a pyramid that goes from stone to no-stone, into the sky. It is the very Chief Capstone. It is the One Word that mediates between Reality and Thought (Illusion), that is both Reality and Thought - both Reality and Illusion. In the beginning was the Word, and the Word was with Reality, and the Word was Reality. . . . And the Word became illusion and dwelt among us illusions. When you discover the Infinite Calm of No-Thought, something drives you back to the world of thoughts. It is a desire to take the message to others. Perfect No Thought becomes imperfect thought, that it may gather up all of us who are lost in thoughts and bring us back to No-Thought. Our minds are lost in thoughts, and all we like sheep are gone astray from the Eternal Present (YHWH). So the Eternal Present (YHWH) becomes illusion in search of us, to draw us back. Buddhist masters know exactly what I am talking about. The Buddha, from the sense of Eternal Compassion, relinquishes Nirvana to go back as the Bodhisattva to gather up all of us souls lost in thought.

This is the One Word, One Mediator, between Eternity and Time (Kosmos, illusion). If you look within, you will know what I am saying.

"Do you not know yourselves, that Jesus Christ is in you?"
(2 Corinthians 13:5)

Professed Christians look in the past and in the future and up in heaven for Christ & the Kingdom of God and the End of Time, but never within, never Here & Now. Having been raised Evangelical Christian, I know that most Evangelicals are obsessed with Jesus in the past and Jesus in the future; and they are obsessed with proving past creation of the world and future end of the world. They love everything but the Present.

"Then He also said to the multitudes, "Whenever you see a cloud rising out of the west, immediately you say, 'A shower is coming'; and so it is. And when you see the south wind blow, you say, 'There will be hot weather'; and there is. Hypocrites! You can discern the face of the sky and of the earth, but how is it you do not discern this present moment? Yes, and why, even of yourselves, do you not judge what is right?" (Luke 12:54-57)

"Now when He was asked by the Pharisees when the kingdom of God would come, He answered them and said, "The kingdom of God does not come with observation; nor will they say, 'See here!' or 'See there!' For indeed, the kingdom of God is within you."
Then He said to the disciples, "The days will come when you will desire to see one of the days of the Son of Man, and you will not see it. And they will say to you, 'Look here!' or 'Look there!' Do not go after them or follow them. For as the lightning that flashes out of one part under heaven shines to the other part under heaven, so also the Son of Man will be in His day. (Luke 17:20-24)

The Love of Money, the Worship of the Letter, the Idolatry of Evangelical Christianity

Now we come back to the subject of Money. Money represents things past, things future, but never the Present. Images represent things past, things future, but never the Present. Words represent things past, things future, but never the Present. These words you are reading right now are illusions, unless you can't read. Covetousness (Greed) and Idolatry are one and the same, according to the Bible (Colossians 3:5, Ephesians 5:5). Idolatry is clinging to illusion, image. Idolatry is the mind lost from the Present, and is the root of all evil.

Evangelicals believe that the Bible is the inerrant Word of God, and that to question this is sin. And we were told that there is no salvation apart from the Bible, just as fundamentalist Muslims believe about the Koran. From a child, I was quoted this verse, to show that faith comes by the Bible:

"Faith comes by hearing, and hearing by the word of God." (Romans 10:17)

But then one day I actually looked up the context and it blew me away:

So then faith comes by hearing, and hearing by the word of God.
But I say, have they not heard? Yes indeed:
"Their sound has gone out to all the earth,
And their words to the ends of the world."
(Romans 10:17-18, quoting Psalm 19:4)

Then I looked up the quoted Psalm 19 to get a clearer picture of what this "Word of God" really is:

"The heavens declare the glory of God;
And the firmament shows His handiwork.
Day unto day utters speech,
And night unto night reveals knowledge.
There is no speech nor language
Their voice is not heard.
Their line has gone out through all the earth,
And their words to the end of the world."
(Psalm 19:1-4)

Whoa! I thought, all my life I've been taught that this "Word of God" is the Bible, when the Bible itself says that this "Word of God" is not a book, but is the Utterance of Nature, beyond speech, language, and voice, and this Word is spoken to all the world!

All Evangelicals are also taught these words of Jesus:

"And this gospel of the kingdom shall be preached in all the world for a witness unto all nations; and then shall the end come." (Matthew 24:14)

This is why Evangelicals want to get the Gospel out to the ends of the earth, so that this world will end. And Jesus also states:

"Go into all the world and preach the gospel to every creature". (Mark 16:5)

But then we have this verse:

"This is the gospel that you heard and that has been proclaimed to every creature under heaven" (Colossians 1:23)

The Gospel already has been preached to every creature? And Jesus said the end would come when this happened? Then I looked up the original Greek word for creature. It is ktisis, which means every created thing! How on earth can a human preach human words to every created thing, every rock, every clod of dirt, every robin, every atom??? And how is it that the Psalms keep speaking of the heavens & earth and everything in them hearing the word of God? And how is it that the Psalms speak of the heavens & earth & everything in them singing praises to God? Hello... somebody look up the word animism.

According to the very Bible, this is the Gospel According to Nature, not a book.

The New Testament

When I say New Testament, don't you think of a book written with ink on paper? But this is not what the Bible says the New Testament is. Look up all occurences of New Testament (New Covenant) in the Bible, and see what I mean.

"You are our epistle written in our hearts, known and read by all persons; clearly you are an epistle of Christ, ministered by us, written not with ink but by the Spirit of the living God, not on tablets of stone but on tablets of flesh, that is, of the heart. And we have such trust through Christ toward God. Not that we are sufficient of ourselves to think of anything as being from ourselves, but our sufficiency is from God, who also made us sufficient as ministers of the New Testament, not of the letter but of the *Spirit; for the letter kills, but the Spirit gives life." (2 Corinthians 3: 1-6)

The first mention of the word New Testament is in "The Old Testament" book of Jeremiah (31:31-34). And this passage is quoted in the "New Testament" book of Hebrews (8:7-8). It says that this New Testament is not written with letters, but on the heart. It is the Law of the Heart. And this, Hebrews states, is the goal of Christ, to bring to obsolete the imperfect Old Testament, the letter written with human hands, and bring us the New Testament, the Law written on the heart.

Now what is strange, is that the Bible talks about the Law already written on the hearts of the Gentiles (non-Jews, non-Christians).

"For it is not the hearers of the Law who are just before God, but the doers of the Law will be justified. For when Gentiles who do not have the Law do instinctively the things of the Law, these, not having the Law, are a law to themselves, in that they show the work of the Law written in their hearts, their conscience bearing witness and their thoughts alternately accusing or else defending them, on the Day when, according to my gospel, God will judge the secrets of men through Christ Jesus." (Romans 2:13-16)

Now we see that the non-religious (Gentiles) already have the law written on their hearts! They already have the New Testament, the Now Testament, which is already preached to every creature and is the end goal of Judaism and Christianity! And in the very end sentence of the above passage, we see that this is happening in the Day of Judgement, the Now, the End of Time!

Yes, New means Now. Both words are of the same root. This is the Now Testament. These words I am writing are Old Testament. As soon as I write, my words are past, they are old. As soon as a word enters my memory, it is a thought, out of the Present, old. All thoughts, all words, all letters, are Old Testament. And all words are illusions which fool us. No words are Reality, except the One Word that cannot be spoken, the One Name that is hallowed. The opening verse of the Tao Te Ching says,

"The way that can be described is not the Eternal Way.
The word that can be spoken is not the Eternal Word."

To say any written words, anywhere, any time, are inerrant and eternal is idolatry. The very core doctrines of Evangelical Christianity are idolatrous, as are the very core doctrines of fundamentalist Islam and Mormonism. And idolatry can produce no truth. Idolatry can only produce destruction. It causes war, environmental degradation, pollution, poverty, and self-righteous bigotry. See for yourselves. Am I wrong? "The letter kills, but the Spirit gives life."

Jesus' message was aimed at the fundamentalist Jews of his day, the Pharisees, who clung to the Bible as their source of salvation, believing it the literal, inerrant Word of God, and who also were "lovers of money". Idolatry & covetousness always go together, for they are one and the same ("Now the Pharisees, who were lovers of money, also heard all these things, and they derided Him." {Luke 16:14}). Now, with new understanding, read what Christ says to these fundamentalists:

"You have neither heard His voice at any time, nor seen His form. But you do not have His word abiding in you, because whom He sent, Him you do not believe. You search the Scriptures, for in them you think you have eternal life; and these are they which testify of Me. But you are not willing to come to Me that you may have life." (John 5:38-40)

Now, if you want to know truth, not just believe truth, you need to turn this computer off and put away these and all words of illusion and find the Stillness within, the Now, the Reality, "the Peace that passes all understanding." It's not enough to believe in God, "Be still and know that I am God."

TGIF Link Dump

It's the weekend at last. Well, not really, since I have enough work to make it necessary for me to come in to my office Satuday (and probably Sunday, too). But at least classes are done. And next week I have an exam in one class and a review in the other. And then Thanksgiving.

Hopefully, the light schedule for next week will allow me to catch up a bit. The first semester at a new school is always a bit hectic, and this one certainly ran true to form.

In any event, here are today's links:

CXO Advisory group reviews some academic research on "synthetic hedge funds"

JLP at AllFinancialMatters has a short tutorial on how to get refreshable stock quotes in an Excell spreadsheet.

The traditional hedge fund compensation is "2 and 20" (i.e. a 2% annual fee of aasets under management and 20% of the profits). The NY Times Online reports on a hedge fund that has a very different compensation structure-0 ti's based on performance over multi-year windows.

The NYT also has another article where they profile a paper by Bebchuck, Grinstein, and Peyer. It indicates that options backdating wasn't just limited to high-tech firms. there was also a lot of it going on at old-line companies. HT: Jim Mahar at Financeprofessor.com.

Enough blogging. Back to research or no soup for you!

Milton Friedman RIP

Nobel Laureate Milton Friedman passed away last night at age 94. He was truly one of the great champions of of our times for both personal and economic freedom. Here's a good piece his obitiuary in the Financial Times:

Both his admirers and his detractors have pointed out that his world view was essentially simple: a passionate belief in personal freedom combined with a conviction that free markets were the best way of co-ordinating the activities of dispersed individuals to their mutual enrichment. Where he shone was in his ability to derive interesting and unexpected consequences from simple ideas. As I knew from my postbag, part of his appeal lay in his willingness to come out with home truths which had occurred to many other people who had not dared to utter them. Friedman would then go on, however, to defend these maxims against the massed forces of economic correctness; and in the course of those defences he, almost unintentionally, added to knowledge.

Read the whole thing here --it gives a very detailed account of his life and work.

We're definitely the poorer for his passing.

Wednesday Link Dump

I'm done teaching for the day, but still in the midst of rewriting a paper. So, without further ado, here are some links for your viewing pleasure:

The SEC has released a new and improved search tool for EDGAR (the online repository for company filings). HT: Jack Ciesielski at AAO Weblog for the pointer.

Know a concept but can't think of the word for it? Here's a handyreverse dictionary from onelook.com to help you out.

A couple of days ago, I linked to a paper that claimed the IBES had subsequently anonymized analyst forecasts. According to Thomson, the matter's been resolved, and the paper's been withdrawn.

Marshall Loeb of Marketwatch.com explains why cancelling your credit card might not always help your credit score.

Joe Carter at Evangelical Outpost has the latest installment in his Yak Shaving Razor series.

Hopefully, I'll have more to say later.

However, if you want more things to read, go amuse yourself with Scott Adams' blog (yes- the creator of Dilbert has a blog). He's even funnier on the blog than in his cartoons.

Tuesday Link Dump

No teaching today, so it's time to catch up - there are quizzes to grade and solutions to a problem set to type up for the students. I post the worked out solutions to my problem sets on the web after the problem set has been collected so students see where they went astray in the assignment (and it saves time in class - they can see digest the solutions on their own time rather than me having to blow a whole class period working through them).

And last but not least, I have RESEARCH to do. I've got a paper to carve up and rewrite. The initial draft of the paper was written by my colleagues -- a very good theorist, and a very young but promising empiricist. But the other two "ain't from around these parts". So, since I'm the only one who speaks (and writes) English as a first language, I get to be the writer/editor. Luckily, I like editing.

It's even more interesting, since our study extends some seminal work by someone who's likely to be the referee. So I have to be vewwy, vewwy careful to be complimentary of his contributions (after all, while I'm not hunting Wabbits, I AM hunting publications). Ah well, that's what Chapstick is for.

So, here are some links to keep you busy while I try to be productive:

Stockpickr has a list of the Top 100 Business Blogs (and no, FR isn't on it - sniff!).

CFO.com discusses some issues related to spreadsheet security.

What should you call the payouts an executive receives following a merger? Footnoted.org has some examples from recent mergers.

Banks are talking about developing "Death derivatives". If they can get the right data, it could potentially provide pension funds another tool for hedging mortality risk.

Finally, for the "inside baseball" post of the day, it looks like discrimination in higher education is still around. But now it's against Asian American Students. After all, it wouldn't be fair to make admissions decisions strictly based on merits now, would it?

Back to work -- I don't have tenure yet!

Monday Link Dump

Monday is my main teaching day, and I have a lot to prepare before my evening class. So, blogging might be sparse. In fact, I only have three links for you today. Here they are:

This week's Carnival of The Capitalists is hosted at Casey Software. My favorite piece of the week was Undoing Roth IRA Contribution Mistakes from Fivecentnickel.com.

Richard Kang at SeekingAlpha.com tells us about some new leveraged ETFs from Rydex they seek to provide double the return of an index, the inverse of the index's return, and double the inverse of the index's return. They'll be linked to various equity indexes.

Finally, Mary Mckinney at Academic Coach is talking about the benefits of using an editor.

I may blog later today, but I feel a low-pressure system and lack of sleep migraine coming on. So probably not.

Thoughts On A High School Reunion

We survived my 30th reunion. It was held in my hometown in a fairly low-rent place- a social club known as the Italian Benefit Society (or, as it's now called, The Italian Club). Since I grew up in an Italian immigrant mill town, it used to be the center of social life for the town - it had a bar, picnic tables, a horseshoe pit, and two rolled-clay bocce courts. Now, since the old guard (my father's generation) have all passed away, it's mainly a bar.

Since the 30th isn't such a big deal, there were only about 30 of my classmates there (out of about 145 graduates). Most of the people there were either those who never left my small town or the group who held all the class offices, played on the teams, and so on.

The first group was kind of sad, and mostly got very, very drunk. The second, however, had lived pretty interesting lives (they'd left town, gone to college, and then moved back to nearby towns). One had cycled from New England to Anchorage, Alaska, another had lived on an Indian Reservation and was now a priest, and another had crewed a sailboat to South America and now taught Social Studies in a rural part of the state. The classmate we shared a table with was a pretty quiet guy in high school that mostly partied and barely made it through. After spinning his wheels for a bit, he ended first going to a community college and ended up with an engineering degree. He and his family (he married his high school sweetheart) visit a new major league baseball stadium each summer.

So all in all, it was a pretty good weekend.

We got back this afternoon (we stayed at my mom's place last night). So, since I've pretty much finished my preparation for the week (I still have to put the finishing touches on a quiz for tomorrow, but that shouldn't take long), it's time to veg out a bit.

Saturday Link Dump

The Princess (a.k.a. The Unknown Daughter) turned six on Thursday. We had a small family celebration that night, but she has her friends over for the big to-do today. That means that in a short while there'll be 10 little girls in the house having a tea party, decorating cookies, and otherwise causing a merry commotion.

This afternoon, Unknown Son has a soccer game, and later this afternoon we drive about 90 minutes to Unknown Grandma's house (incidentally, we do cross a river and go through a wooded area). She'll watch them for the evening while we go to my 30th high-school reunion.

So, since later blogging is unlikely, here are today's links:

According to the Wall Street Journal, political junkies are trading in political futures markets like Tradesports.

The NY Times reports on how companies targeted by hedge fund short-sellers are starting to fight back using the courts.

About Economics has a good primer on Foreign Exchange Rates and FX Markets.

I won't even describe this stunt except to say Do. Not. Try. This. HT: The very strange lads at Catallarchy.

Lisa Fairfax at The Conglomerate discusses a recent study by TIAA-CREF that indicates that having women on corporate boards changes governance dynamics.

James Hamilton at Econbrowser has studied the effects of Fed interest rate changes on the housing market. He finds that an interest rate change affects new home sales for up to five months later.

That's all for today, folks. I have a few errands to run before we get overrun by little girls.

Revisionist Revisions at IBES!

Like many academics in the fields of finance and accounting, I regularly use the IBES (Institutional Brokers Estimate System) database of analyst forecasts (compiled by Thomson) in my research. So this next piece troubled me. It seems like restatements are not just limited to companies - IBES makes them too!

Ljungqvist, Malloy, and Marston have done a very interesting study of IBES forecasts titled Rewriting History. They find that the some "bad" analysts reports on IBES are subsequently removed from the database in later versions:

Comparing two snapshots of the entire I/B/E/S analyst stock recommendations database, taken in 2002 and 2004 but each covering the same time period 1993-2002, we identify nearly twenty thousand changes of an unusual nature: the selective removal of analyst names from historic recommendations ("“anonymizations"”). This practice turns out to be pervasive and non-random: Bolder recommendations are more likely to be anonymized, as are recommendations from more senior analysts, Institutional Investor "“all-stars,"” and those who remain in the industry beyond 2002. Abnormal stock returns following subsequently anonymized buy recommendations are significantly lower (by up to 11.0% p.a.) than those following buy recommendations that remain untouched, suggesting that particularly embarrassing recommendations are most likely to be anonymized. Analysts whose track records appear brighter due to anonymizations experience more favorable career outcomes over the 2003-2005 period than their track records and abilities would otherwise warrant.

It's reminiscent of the old Soviet style of rewriting history to suit current needs. In retrospect (no pun intended), it doesn't surprise me that this could happen. But it does make Thomson look pretty bad. It also might add some biases to the data that might make researchers less likely to trust results derived from this data.

I know it's got me thinking about how this affects my current IBES-based project.

HT: The New Economist

Update: I just received an email from a representative of Thomson (the company that puts IBES together). In the interest of fairness, I thought I'd post it here:

“The conclusions of the report are wrong. The integrity of Thomson Financial’s I/B/E/S database is without question and all analyst ID’s and their recommendations are maintained in the master I/B/E/S database. This particular report was based on an incomplete data set. The analyst data in question was however, available in other subfiles, which were accessible to the researchers. While we are disappointed the report was issued as is, we have reached out to the authors to ensure they both understand the data and alternate mechanisms to access the data they were originally looking for.”

I'm agnostic about the whole business, but time will tell which story holds more water.

But I must say, I'm impressed that the Thomson p.r. department understands enough about reputation and the internet to monitor the blogosphere.

Wednesday Link Dump

It's post-election hangover time, and it looks like the Democrats have taken the House (and possibly the Senate). So it's back to work. Here are today's links:

All it took was Tom Cruise, and Going Private is back! Once again EquityPrivate is talking about "Vegetable Capital". And it doesn't refer to this.

There are a couple of Carnivals to go to. City Girl is hosting The Carnival of Personal Finance (my personal favorite is 10 Ways To Save On Beer (with beer calculator ). And the Carnival of the Capitalists is up at Gill blog. Make sure to check out Dan Melson's post on Sellers Lending to Buyers and Selling the Note and Sox First on accountants pushing to get government protection from shareholders who might want to sue them for doing bad audits.

EconLog highlights research by Hausman on WalMart. He finds that Walmart is good for economic efficiency - it cuts suppliers' margins and passes the savings along to customers, thereby driving producers closer to marginal costs. And it benefits the poor more than the rich.

I learned about another financial instrument today The Financial Times discusses the how and why of CPDOs (Constant Proportion Debt Obligations). The new products and strategies created by financial engineers never cease to amaze me.

And for a chuckle, Dan Melson at Searchlight Crusade links to a way of dealing with telemarketers I wish I'd though of.

And now, it's time to do some research ( Maybe on IBES data...).

Prediction Markets and Elections - Updated

I'm a big fan of prediction markets. They're a very good way of illustrating how markets impound information into prices.

Since today is election day, I thought I'd put a link up to Tradesports. For those of you who've never heard of it, Tradesports runs a futures market that allows you to bet on various events. Since the contract pays $1 if the event occurs, some fairly basic algebra shows that its fair price is essentially the probability that the event will occur.

To illustrate this, let's look at the contracts for Republican Control of the House and Senate. They're trading at $0.17 and $0.698 at the time of this posting. This implies that the traders in these markets currently assess the probability of Republicans retaining control of the House at 17% and of the Senate at 69.8%.

To see how information affects the contracts' prices, assume a trader had information that led him to believe that the chance of Republicans retaining House control was actually much higher than 17% (let's say 45%, for example). If so, he'd consider the current price a real bargain, and would start buying contracts. This would drive the price up until his information was fully reflected in the price.

Like I've said before, they're not a perfect predictor. But I do trust them much more than polls. I have several friends who make it a point to answer incorrectly whenever a pollster calls -- just so the polls will be less useful. Granted, I have a pretty contrarian bunch of friends, but I doubt they're alone.

In contract, in a prrediction market, the traders' own personal ideologies wouldn't matter - if they thought the probabilities were off, they'd trade in the contracts to make money.

Any one trader could be wrong. But if there are enough players in the market, the prices would be pretty good aggregators of everyone's info.

So check into Tradesports throughout the day, and see how the prices (and hence, the probabilities) change.

Updated 11/8: As of 10:15 a.m., Tradesports gave the Republicans between a 10.5% and 12.5% chance of retaining control in the Senate (obviously, trading in the House Control contract has closed).

Tuesday Link Dump

Since I'm teaching on a MWF schedule this fall, today is an off off day - no teaching. But tomorrow is also an off day. Unknown University has a very interesting approach to calendars and the days of the week. Since today is election day, we have it off (somebody must have done a great job in negotiating - we get days off for alomost every conceivable holiday, and a few that aren't).

But, it gets even stranger - since classes on Tuesday were skipped, tomorrow (which is Wednesday anywhere else) becomes Tuedsay and Wednesday disappears into some academic black hole. Other times, if we have a Monday off, Tuesday becomes Monday. It has something to do with making sure all days meet an equal amount of time, but it does get a bit surreal at times.

So, without further calendarial confusion, here's the Tuesday (or whatever it is this week) Link Dump:

In addition to being one of the smartest economists around, Kevin Murphy of the U of Chicago also had one of the more unusual goals in life - to be the "world's best coauthor." He's done that HT: Marginal Revolution

Barry Rehfeld of the NY Times online discusses the Long-term investment performance of spinoffs

Craig Newmark links to a list of 50 Things for professors to do on the first day of class. Maybe next semester.

Since I just linked to an interview of Eugene Fama yesterday, it's only fitting that I link today to a Wall Street Journal Article on Dimesionsl Fund Advisors. It's run by former Fama students who use a lot of his work, and Fama sits on the board.

There's a story in Marketwatch.com about a new search engine called Powerset. It's not publicly available yet, but it sounds very interesting - it allows "natural language" queries and seems to understand the context of a question.

Back to the world of research. I'll get back to teaching stuff on Wednesday (er, ah, Tuesday. Or whatever they call it this week).

Eugene Fama Speaks

It's the start of a new week at Unknown University. And what better way to get it started off right than with an interview of one of the "founding fathers" of modern finance, Eugene Fama . His dissertation (published whole in the Journal of Business in 1965) set the groundwork for the modern version of the theory of efficient markets, and he's played a big part in many of its subsequent developments.

Click here to read an interview of Fama by Nina Mehtais in Financial Engineeering News.

Fama does a great job of explaining the way the development of the CAPM affected the discussion of market efficiency:

Nobody realized before that if the market was working properly, you had to say something about what the market was doing in setting prices in terms of the relation between expected return and risk. Something like the Capital Asset Pricing Model was necessary before you could really test market efficiency. If you look back, you can see primitive statements about expected returns that were built into tests people were doing. But they didn’t realize they were making these statements.

FEN: What are you referring to?
EF: If you say autocorrelations must be close to zero, what you’re really saying is that expected returns are constant, so that’s a statement about equilibrium right there.

There's much, much more in the article. Read the whole thing -- it's short, and well worth it.

TGIF Link Dump

Yes, it's Friday at Unknown University (and everywhere else, for that matter). I've taught my classes, graded my exams, and even done a little research.

Unfortunately, I also had to fill out faculty evaluation forms for other faculty. Yes, that's right -- at Unknown University, ALL college members get to chime in on ALL tenure and promotion cases.

So, we end up in the ridiculous situation of a brand new untenured assistant professor filling out an evaluation of whether or not an Associate should be promoted to Full. And better yet - the associate professor can ask to see the untenured assistant professor's evaluations (after the fact, but still, it's a possibility).

Since I'm brand new, I decided not to fill out evaluations for anyone but the two assistant professors in my area that are going up for tenure, and a couple of other assistant professors who have regular annual reviews (I know their work, so it's pretty easy). Both should be shoo-ins for tenure, but stranger things have happened. As for the others, if I'm challenged for not having filled out an evaluation, I'll just say that I'm not comfortable with my ability to make a decision that carries so much importance.

In any event, here are some links to keep y'all busy while I go out for a Strongbow's Cider ( or two) with some colleagues (who aren't up for either tenure or full):

Ever wonder what GDP, CPI, and all those other acronyms mean? About Economis has a good primer on economic indicators.

The scheduled host of the Carnival of the Capitalists screwed up. So, the fine folks who run the Carnival have posted it here.

And last but not least, Seeking Alpha discusses ETFs with 12b-1 fees. Now THAT's an investment to avoid.

Enough blogging - pass the StrongBows.

ETFs That Don't Follow Indexes

Tuesday's Wall Street Journal carried a piece titled ETFs Redefine What is An 'Index', which reported on a new trend in ETFs. The first ETFs tracked known market benchmarks, like the S&P 500 or the Dow Jones average. However, since most of the well known indexes are taken, Amex has started offering ETFs that track "rules based portfolios".

What's a rule based portfolio? It's a portfolio constructed based on some rule, or algorithm. An example might be "the stocks in the lowest decile of Earnings-price ratios" or "all mid cap stocks that have had 5 years of greater than 10% annual revenue growth".

So what's the difference between a "rule based portfolio and an actively managed one? I can't see one, but the proponents of these funds say that the algorithm will be executed entirely by computer, so there's no human judgement or discretion involved.

It's an interesting concept, and one that might spark a lot of classroom discussion. Here are a few questions I'll be asking my investments class:

1) What's the difference between a rule-based ETF and an actively managed mutual fund?

2) What role might these funds play in an investment portfolio?

3) If these ETFs become more popular (and I bet they will), how will it change the nature of the investment process (for either individuals or professional money managers)?

4) Will these ETFs eliminate the need for security analysis?

As I said, interesting stuff. And they pay me to do this. Amazing.

My Guru the Desert

I'm back in the Moab, Utah area, living in the canyon.

West Coast Coasting

The last I wrote here, I was in Arcata, Cali, on my way from San Fran to toward Portland, OR. But then the wind blew me another direction. I had emailed my parents telling them my cousin said my uncle in the Bay area might not survive through the winter, and my parents decided to rush on out to see him. So I decided to hitch back to the Bay area for the mini fam reunion.

On my way down, I took a detour to visit my friend, Dan, in Ft Bragg. I was so glad I did. We went through a lot of processing about our mutual friend, Ayla, who had killed herself a year & a half ago. Some of you who've gotten my mass e's from that time might remember that Ayla was one of the folks traveling in our "moneyless tribe" about 5 years ago.

My parents, my Uncle Louis & Aunt Edith, my twin cousins Annie & Sue and their families, plus my 2nd cousin Lauren (who also happened to be passing through), all had a little family reunion. I was glad I decided to go. Life is short & precious.

After much debate, I decided I didn't want to be in Portland for the rainy season, so I decided to go back to Colorado with my parents, and then back here to Moab. I have a piece of my heart in Portland, so it was hard deciding.

Desert Chaos & Order

So I headed back into the canyon for the first time since last June. The canyon here looks very different, from all the floods. And not only that, there was a fire where the cave is - so it looks nuked. But it felt kinda good seeing it cleansed like that. When I got just about to the cave, a coyote appeared about 50 yards from me! He was playfully poking into bushes, like dogs do, and he totally didn't notice me. I stood there quietly until he finally turned his head and noticed me. Startled, he trotted to the edge of the burned-out woods. Then he stopped and looked at me curiously for about half a minute, then walked out of site.

Then I looked at the blackened trees, the washed-out dirt, the patterns of ripples & lines on the rocks, sand, and the water. In fact, I tried to pick out a random square inch anywhere, just to see if I could find a single portion of disorder! Go out & try it for yourself. Is there a single square inch outside civilization's boundaries anywhere that is not saturated with pristine order? Actually, every square inch has a baffling balance between order and chaos - in everything, everywhere, constantly. It's perfectly imperfect! It's so perfectly imperfect, it eases the mind from the stress of civilization.

We humans have the strange power to separate the order from the chaos in our minds, which takes effort. So we look around and either see one or the other - either order or chaos - but rarely the two in harmony. And in this separation of order & chaos our minds become either lethargic or stressed out. Then we blame it on chaos and try more & more to erase chaos, and make our world more & more clean & perfect. It's like we're living more & more on sugar, and cutting all else from our diet. But we can only hide chaos like a seed in the ground, where it grows unseen, waiting to come back in grand vengeance. Human representatives of chaos can't stand the sugar anymore and crave challenge, so they rise up in gangs and terrorism and random rebellion and screaming. Our bodies revolt and start strange self-attacking cancers, allergies, and self-defeating mental illnesses. Isn't this Nature's innate sense of vengeance, Nature's rebalancing act, bringing back balance between positive & negative? Chaos wants her rightful place of unity beside Order, and will get it, as long as galaxies roll.

Human minds cannot balance the positive and the negative. Can any human mind truly balance a budget? Can any person balance the environment? Vengeance, pay-back, justice, balance, belongs to Nature, not us. We stole Fire, or Consciousness of Credit & Debt, from Heaven. We took the fruit of the Tree of Knowledge of Good & Evil. Isn't this the theme of myths in every corner the world?

Back to that playful coyote again. The closer I live with nature, the more I see Nature playful. It's not the dreary, incessant scrounging for survival that most TV nature shows portray it to be. Chaos plays with order, perpetually, forever and ever. Why do bunnies & squirrels & deer run in front of cars, and why do climbers scale mountains and skydivers dive? Is it stupidity or the play of Risk? Playfulness is imbibed into every particle.

Nature is harsh, yet it is gentle and quiet most of the time - and full of grace. Nature doesn't tolerate prolonged suffering, so it knocks out the lame. Thus we call Nature cruel. But it has such a perfect balance of life and death, pleasure & pain, that it keeps all of life interesting & stimulated with challenge, with no room for the mental illnesses & boredom that we suffer within the walls of civilization. Maybe we ought to redefine cruel. In the end, every single one of us life-forms will be smashed, selected away by Nature, as much as civilization tries to fool you that we won't. But if we come to realize there is no separation between chaos & order, won't we know there is no separation between pleasure & pain, life & death? Won't we have discovered what IS?

This can all be translated into religious language, describing the very walk of Faith.