Sunday, April 27, 2008

A Random Walk Down Wall Street

Saturday I finished A Random Walk Down Wall Street by Burton G. Malkiel. I liked it a lot. The author advocates a buy and hold investment strategy. Most of the book is spent comparing buy and hold with other strategies. The last few chapters of the book give concrete advice on how to setup an investment portfolio.

I think I'm going to take Malkiel's advice and buy and hold from now on. I have a modest amount of money to invest and a ShareBuilder account. I've picked several ETF's. On May 6th, Ill put half my money into the market. A few months later I'll put the other half in. By then I should have more to invest and I'll put that in a few months after putting the second half in (sort of like Dollar Cost Averaging -- I just don't want to put it all in at once in case that's the wrong time to do it) .

With a ShareBuilder account, it costs just $4 to make an "automatic investment". I think they batch up everybody's orders and execute them all at once on Tuesdays. So, if your purchase is at least $400, your cost to get into the market is 1% or less. I think it then costs $9 to sell shares. You can schedule investments to take place on a regular basis or just when you have the money. It seems like a good place to implement a buy and hold strategy with multiple purchases of the same shares over a period of time.

On or just after May 6th, I'll reveal which ETF's I picked for my portfolio. As the months go by, I'll update this blog with how I'm doing. Maybe I'll write a python script to grab stock data and produce pretty little graphs.

Random Walk is the second book in my "try to read more books program of self-improvement". The next book in the program is Freakonomics and the one after that will probably be The Tipping Point.

Each time I read a book, I'll review it here. If you see a book reviewed here that you'd like to read, let me know and I'll loan it to you. If you know of a good book that you think I should read, I'm open to suggestions. Reading good books seems to make me smarter (and we all know I need as much of that as I can get).

Friday, April 25, 2008

Things I Heard

I heard this on WOAI today:

"Wesley Snipes was sentenced to three years in prison yesterday, one year for each of his 'Blade' movies."

On TNT's coverage of the NBA playoff last night I heard Tracy McGrady say:

"It's my fault. It's my fault we missed free throws. It's my fault we lost both games. Blame me. It's my fault we fouled to tie the game up. That's my fault. It's my fault they get easy layups. It's my fault we're not executing well on the offensive end. It's my fault a couple people in the stands ordered Heinekens and they got Budweiser. It's my fault. I'm sorry."

That's awesome. Good for McGrady. = )

Thursday, April 24, 2008

Mnemosyne Project

The Mnemosyne Project is a python implementation of Piotr Wozniak's ideas (see previous blog post). A couple of days ago I installed the software and imported a bunch of cards. Each day since then I've used it to memorize those cards.

I like it a lot. The system for determining the timing of repeating the display of cards is better than the Leitner card system. While using the system, you rate your recall of a card from 0 to 5. Various ratings induce various repeat schedules. A card rated 0 is repeated almost immediately. A card rated 5 is scheduled to repeat on some future day.

However, it's not clear if the ratings are the only factor considered for the timing. I need to either read through the documentation or the code to find out.

It's awesome that this is an open source project. If I continue to use the software and desire an additional feature, I can just code it up!

I wonder what features SuperMemo has that would be useful. In particular, I wonder what incremental reading is and how well it works.

Tuesday, April 22, 2008

Want to Remember Everything?

Wired often has some great content.

For example, this article from yesterday:

Want to Remember Everything You'll Ever Learn?

The article describes the lifelong efforts of a Polish guy named Piotr Wozniak to learn things well and indefinitely. If the article is to be believed, his efforts have met with great success. However, his method requires extreme discipline and living life in a very structured way.

A big part of Wozniak's system is his software called SuperMemo. It's supposedly makes computer aided learning very effective.

One of my favorite all time Wired articles is The Curse of Xanadu.

Stories about people dedicating large amounts of time to pushing the edges of knowledge/technology are almost always interesting to me.

These stories remind me of the 1980's. I spent the entire decade exploring words, sounds, and meaning. It was in '87 or '88 that I invented the words "woot" and "booya". Those were heady times.

Friday, April 18, 2008

Chris Madrid's Fork Accident


This really, really hurt.

Wednesday, April 9, 2008

The Olympic Torch is in Danger

I heard on the radio last night that the Olympic torch was being kept at a secret location. I think that's great. It'd be horrible if the torch was assassinated.

The torch has a lovely wife who is smoking hot (she's a torch also). They have one kid who is still a match stick and another kid that just became a cigarette lighter.

I would hate to see the head of that family snuffed out by a bucket of water. That would make me very sad.

Saturday, April 5, 2008

Fortune's Formula

I recently read Fortune's Formula by William Poundstone. I enjoyed it a lot. The title refers to a formula for determining how much you should risk on a gamble when the odds are in your favor. The formula determines the wager amount that will give you the maximum return over time. It's surprising to me that there even is such a formula.

The book consists of a sequence of events related to the formula. Poundstone carefully connects the dots between many disparate things to form a comprehensible story. The story has computer scientists, gangsters, casinos, Wall Street, huge corporations, investing strategies, gambling strategies, politicians, etc.

The formula from the book is described on this Wikipeida page: Gambling and Information Theory.

Some of the main characters from the book include: John Kelly, Claude Shannon, and Edward Thorp.

A lot of ideas were presented and explored in the book. One of my favorites is called "Shannon's Demon". It's a sort of theoretical method for making money off a stock with a randomly fluctuating price and no overall upward or downward movement in price. You build a portfolio that is half cash and half stock. Periodically, you rebalance the portfolio to have this ratio of cash and stock. Over time, this will result in a profit. The method is described on this page: The Shannon Method. The method is theoretical because transaction costs and taxes would eat up much of your profit. Also, you'd need a stock that fluctuated fairly wildly without losing or gaining too much over time.

Thursday, April 3, 2008

Google Be Evil?

I like this blog post from

In it, Google is described as a cult of children, children of the corn type children. That's classic!

Also, the idea of having a fake Steve Jobs blog is an awesome. There is so much comedy gold made possible with such an idea as foundation.