24 Jan 2014, 3:33pm
economy shares:
by

11 comments

  • January 2014
    M T W T F S S
    « Dec   Feb »
     12345
    6789101112
    13141516171819
    20212223242526
    2728293031  
  • Archives

  • More Interesting times in the markets, oy vey…

    No sooner does Under the Money Tree comment to the effect of steady on – not so fast on my interest in Emerging Markets then he’s proved right and the Argies are in trouble (again) and there’s another bust-up in the markets. Is this Global Financial crisis part II or the backwash from GFC I. I’m sure Argentina has been here before in the late 1990s

    Looks like no end of, er, fun 🙁 On the upside, looks like 2014 could be the year of emerging markets, for those with strong stomachs and intestinal fortitude. Not in the results department, but I have very little EM in my ISA, because I started it when emerging markets were going to be the saving of the world. Now that people have forgotten all that and really hate emerging markets it’s probably one for drip-feeding.

    I can take a breather until the next ISA year in April, then start to learn how drip feed investing works over with those people at Charles Stanley, as I have far too much with TD given the limited FSCS compensation limit. I don’t want to go into another financial crisis with shields down 😉

    So let’s take a look at what happened last time it all went titsup in Argentina.

    their economy went down but didn't stay down

    their economy went down but didn’t stay down

    Now there’s a case to be made that they had it easier then, as the world started to pull out of the post-dotcom recession, and the price of some of their key exports went up. Argentina has a bad rep already for defaulting. Nevertheless, it’s been damn tedious in the markets of late, and 2014 was a bad year for actually buying anything new because everything was up in the sky. I’m all for interesting times in the markets, and we seem to be heading for some of that now…

    22 Jan 2014, 5:28pm
    rant:
    by

    11 comments

  • January 2014
    M T W T F S S
    « Dec   Feb »
     12345
    6789101112
    13141516171819
    20212223242526
    2728293031  
  • Archives

  • empty metrics are strangling vision and leadership

    I’ve spent the last year and a quarter trying to avoid anything that smells like work, but stood in for someone who fell ill at the last minute at a conference on how to leverage the private sector and the third sector in Suffolk. There’s no money in local government, hence the absence of the public sector in the roll-call…

    Some things are clearer when you stand back and look at them from a distance. I listened, and much was about ‘collecting evidence for metrics’, and somewhere in the back of my mind a refrain was building. It reminded me of all the stuff on performance management instead of inspiration, and I realised that what has gone wrong in much of business is that process is being elevated above common-sense in an attempt to make things more transactional, so that interfaces between companies and business units can be defined with greater precision.

    Precision without accuracy means you may always miss – every time

    It is the mark of an educated man to look for precision in each class of things just so far as the nature of the subject admits

    Aristotle

    The trouble is precision and accuracy are not the same thing. It’s too easy to end up precisely getting not what you want…

    you can be precise but not accurate

    you can be precise but not accurate. In most things accuracy is what you want, rather than precision. You don’t want to be always shooting the wrong guy 😉

    Metrics emphasise precision rather than accuracy, particularly when implemented by people without a scientific background. The Guardian has a wordy version for people who prefer narrative to visuals, but basically in the battle between precision and accuracy precision is easier to assess but accuracy is what you want. You’re better off generally shooting the right guy even if you take out the wrong-un every so often rather than always shooting the fella to the right of the bad guy.

    The tragedy is that it’s really, really, easy to tell if you are precise – you always get the same answer, or at least the spread is small. Whereas it’s a bugger to know if you are accurate, particularly if you are trying to find out something unknown. If your spread is wide you may well be centred on the right target but your opposition will holler the place down yelling out at your inconsistency. So in practice we focus on measuring things that tend to be consistent, even if the answer is wrong because we had to ignore too many pesky variables that throw the accuracy off.

    Process makes us focus on metrics, and thus we easily end up with a culture with

    The endless search for evidence nobody needs, to tick boxes that shouldn’t be there, to impress people who don’t really care.

    There’s an answer to this. We used to know what it was. And we desperately need it now. It’s called leadership.

    We humans live in an uncertain world, and yet we still have to take decisions. We will get things wrong sometimes. Some things are amenable to analysis and science, and these should be assessed that way. Engineering projects often have a lot of this – nowadays we can determine if the bridge will stay up given the likely loading, unlike the Victorians, who often had to over-engineer some of their great works after they discovered the hard way than erring to over-engineering was preferable to under-engineering.

    1311_Tay_bridge_down

    Not everything to do with science is amenable to exact analysis, particularly when it comes to the unknown unknowns, which is part of science’s core business. Sometimes the balance of probabilities is the best you can do.

    James Delingpole is absolutely right. It’s perfectly possible that global warming doesn’t exist and/or if it does then it’s not anthropogenic. It’s just not incredibly likely given the data that has been collected.

    Many things in public policy are a balance of opposing forces. There’s never enough money, never enough time, there’s always more than can be done, and sometime alleviating one thing can lead to unintended consequences. There is no right answer, and cod metrics and getting your tickboxes in a row won’t help. All they will do is deflect the blame away from you and into the ‘Lessons will be learned’ catch-all refuge of last resort.

    Nowhere was this clearer than in the health and environment session. Britain seems to suffer from an appalling level of mental health problems, and one of the proposals was to get children to experience the natural environment before they were 12 – apparently the period before 12 is when a lot of attitudes and predilections are formed 1. There is significant anecdotal evidence that exposure to the natural environment and exercise are favourable to good mental health.

    Now I had the assumption that this is why every child has parents, in the case of a species such as humans that has a long period of dependency. However, it doesn’t seem to happen often enough in today’s Britain, and so the job falls to the schools in loco parentis

    After several proposals on how to measure the success of the result if something were done along these lines, I couldn’t hack it anymore, and told the assembled folk how this had happened for me. I grew up in New Cross, in London, in this area, and the primary school was also there.


    View Larger Map

    The teachers did not rely  on metrics. They relied on something older, something that has served humanity for thousands of years, mostly for good though sometimes for ill. It’s called

    Leadership

    The teachers knew they were teaching a bunch of city kids. So one spring, when it was sunny, they took us to Telegraph Hill, I believe, which is to the southwest of this map. I still remember lying on the grass and looking at the deep yellow of buttercups as they explained flowers, and how been pollinated them, and the cycle of nature 2. There were no metrics, no customer satisfaction forms to fill in, no key stage whatever garbage. The school headmaster knew his school, its intake, and led from the front. Resulting in a memory that stayed, even after four decades have rolled by.

    Curiously enough the Ermine seemed to carry people with the idea. Leadership did seem to matter, and indeed several other delegates recalled their schools doing this without funding, using local resources. Despite that the challenge was countered with another issue  as people said that schools have no funding to go into the natural world.

    Now if my inner city primary school could find green space within school crocodile walking distance then I have difficulty in believing that this is insurmountable, but I let this failure of leadership be – I was primarily as an observer, this isn’t my problem. I suspect the perfect is being the enemy of the good here. That’s again where leadership trumps box-ticking. Sometimes good enough is good enough, and it’ll do – you do the best you can with what you have to hand and then move on 😉 It would be nice to have the money to do it at Minsmere, but if the local rec or the town park is the the best that can be offered then it’ll do. I can show you sparrows, blue tits, great tits, robins, blackbirds, starlings, black-headed gulls in the rec near my home. a couple of hundred yards away in the town cemetery there are jays, crows, squirrels, green woodpeckers, chaffinches, greenfinches, great spotted woodpeckers, song thrushes and sometimes fieldfares. It really isn’t hard.

    Leadership is what we seem to be sorely lacking now, in many areas of life both corporate and political – the courage to have convictions. Its handmaiden, initiative, seems to be a little bit in short supply too, run out of town by the processes and procedures that seem to gum up the works. Where decisions can’t be avoided, we now often try and hide behind precision without accuracy, meaningless metrics collected without awareness of sample bias.

    We establish processes and systems so that faceless and distant bureaucracies can micromanage the operation from afar, maximising their metrics and results, run by vapid caretakers in systems designed by committee. When something goes titsup in such a system, it is never anybody’s fault, and inquires are held and ‘lessons will be learned’. Colour me unreconstructed, but sometimes a good honest apology along he line of ‘we really screwed up there, sorry to the people affected and I will do my damnedest to avoid this happening to us again’ would be a good deal more convincing than the mealy mouthed ‘lessons will be learned’ bullshit. Who will learn the lessons, and if they were hired to do the top job, then why the bloody hell are we paying them all this money to duck and dive their responsibility for this SNAFU rather than taking it on the chin?

    Every organisation should have the equivalent of this

    We need more of these signs

    We need more of these signs

    “If we’re going to be damned, let’s be damned for what we really are.”

    Picard, Encounter at Farpoint

    At work these spurious metrics seem to be what Farhad Manjoo calls the ‘Gamification’ of the Office (hat tip to Monevator for this one). I saw that first hand at The Firm and it did for me – it robbed working for a living of everything worthwhile. The Firm contracted a company called Successfactors to implement a software system where quarterly you’d have to gather evidence on what you were doing, how you were doing, get SMART 3 objectives.

    And with this endless measurement and metrication, the fire began to flame out. I found it alienating and hateful. For over twenty years I hadn’t had any general problem with the annual appraisement process  – I was assessed by people who knew what I was doing and its setting. I didn’t always agree with everything but  the overall process gave a fair balance between short term delivery and long-term improvement of one’s craft. Above all I could respect the people, their competence, skill and judgement.

    Successfactors and the American HR consultants turned that on its head. I am introverted, and to some extent a loner, I believe in achieving results through understanding and learning. I do my best work on  my own or with one or two others. I’m perfectly happy to present things once I have enough results to present, but what I don’t respond well to is endless interrupts. I could live with that, but the stupid performance management stuff, quarterly, with metrics of people giving 5 minute seminars and how often they used Instant Messaging that counted for 25% one one’s score drove me nuts. People ended up taking up massive amounts of time on all hand events giving 5 minute seminars on stuff that could be better learned from Google.

    There’s no point me detailing the particular problems of implementation. Farhad Manjoo did that far better than I can – I recognise every one of the ills he cites – The Firm was there ahead of time.

    Too much energy, resources and time are being spent on the worship of false metrics, in an attempt to avoid the difficult business of leadership – the art of taking decisions in the face of uncertainty, and knowing that sometimes you’ll be wrong. It’s often better to be wrong 20% of the time than to be right 20% of the time and paralysed by analysis 80% of the time. Micromanagement does that to people, and the worship of false numbers leads to micromanagement, and so the cycle turns and starts anew.

    Numbers have their place – it is knowable whether the bridge will stay up. It is knowable whether cheap Poundland batteries are actually cheap or they just look cheap. There are places where you have to run with the balance of probabilities. there are other places where it’s good to ‘fess up that you know that you don’t know – the classic Rumsfeldian treatise on epistemology and the known unknowns and unknown unknowns. A lot of economics seems to fall in the latter category.

    This is because systems with feedback mechanisms in them are the worst of all – they are often susceptible to chaotic behaviour that cannot be known other than in terms of probabilities, and then only if you can characterise and model them properly. Social sciences have a lot of this, where individual humans are adaptive creatures all trying to maximize their experience, with different time lags in the information flows. It’s why the stock market has such a shocking volatility, as all of this is worked out between independent actors, it is the analytical principle that underpins the efficient market hypothesis behind passive investment. The fundamental presumption behind passive investment is the myth of continual growth – it’s worked so far and has given a reasonable long-term trend. You are buying a slice of that and going along for the ride, with diversification averaging out company and sector volatility and decades long accumulation of holdings integrating the temporal volatility against the desperately low 4-5% or less real over inflation trend. 4

    However, systems involving humans aren’t perfect – it leads to old hands acknowledging that the market is not efficent, albeit not inefficient enough to get ahead using that awareness. Or perhaps yes, but the opportunity is temporal – we humans are prone to collective mania and the madness of crowds where everyone decides the world is ending 😉 This human capriciousness applies across the economy and across the social sciences.

    Something else I heard at the conference, for instance, was that there really do seem to be an awful lot of young people who have been deprived of, what in my day would have been called competent parenting, which is why it falls to the schools and/or society in general to try and compensate for the lack. It amazed me that everything seemed to be about identifying the problems without asking the fundamental question how the bloody hell did we get here?

    In my inner-city London primary school which had a single class of 32 of each age group, there was only one pupil that left unable to read and write. In relatively affluent Suffolk, forty years later, a fifth seem to struggle 5 Something has changed, and not for the better. One common theory is that the standard of teaching has fallen.

    However, an alternative could be that the economic cost of having children is not as devastating as it used to be, partly due to Gordon Brown’s misguided war on child poverty – where poverty was determined in relative terms. You aren’t normally allowed to even think that because it’s everybody’s right to have children, innit? Well, I don’t know, not really, not when you bail in everybody else to help clean up the mess you make and screw up the poor bastards that you invoke into the world by not giving a shit. I’d lob having kids on the responsibility side of the balance as opposed to the rights side, but obligations are unfashionable it seems.

    Or it could be something else completely different. Whatever the cause, Britain doesn’t seem to be a happy place to be young for a lot of  people, which seems rough for what is one of the ten biggest economies in the world. You’d have thought somebody would be on the case of trying to unearth the cause of this problem and nutting it at source, so that people don’t end up wringing their hands in similar conferences in 20 years time about kids that don’t seem to be getting adequate parenting… Once again, however, it takes leadership to dare stick one’s head up and ask these awkward questions about how we’ve ended up down this hole with a shovel in our hands.

    We humans aren’t logical brains on a stick and yet we have to deal with an uncertain world somehow. We need hope, grit and determination to prevail in the face of uncertainty, and what we don’t need are false numbers precisely measuring the wrong things, because measuring the right things is either impossible or it’s too hard. Better to know we are whistling in the dark; knowing that you don’t know is better than believing that you do, when you don’t know the right thing. If we applied the resources we applied to getting false metrics to actually trying things to solve the problem we’d get there a lot faster, and the third sector in particular, though well-meaning, seems terrified of being seen to have screwed up.

    Screwing up is part of life. There are no guarantees. Let’s do some real investing in people and empower them to acknowledge that known unknowns exist along with their demon spawn the unknown unknowns. To pinch another line from the fictional Jean-Luc Picard

    Sometimes, you can make no mistakes, do everything right, and still lose.

    Picard

    We’re richer than we ever were. We want for a lot less than we used to. But we’re not putting this to good use, because we seem to be building a system that existentially pisses a lot of people off. It dangles futile distractions in front of their eyes, while making essential things dearer and non-essential things cheaper. We measure the stuff that doesn’t matter because we can, and give up trying to qualify things that do matter because it’s all just too hard. That’s no way to make a better world.

    Notes:

    1. there was some supporting evidence asserted, I have to take that on trust
    2. my parents had already shared some of these essentials with me, to give them their due 🙂
    3. Specific, Measurable, Attainable, Realistic, Time-bound
    4. In a bad year you can eat a 50% fall year on year from temporal volatility. That’s ten years worth of the roughly 5% real terms assumed up trend, worst case, which leads to the old rule of thumb that you shouldn’t commit to the market resources that you will need to call on within the next 5 years. Alternatively, if you are in the market but will need to raise a lump sum, eg on retirement and buying an annuity, you should pull yourself out of the market gradually over the 5 years preceding the lump-sum payment
    5. I’m not exactly comparing like with like, there were no key stages and all that malarkey. It is possible that the bar for being considered able to read and write is set higher now than it was then
    13 Jan 2014, 7:04pm
    personal finance:
    by

    3 comments

  • January 2014
    M T W T F S S
    « Dec   Feb »
     12345
    6789101112
    13141516171819
    20212223242526
    2728293031  
  • Archives

  • Dividend tax credits count for Gift Aid

    Note – to avoid potential confusion while dividend tax credits are ‘paid by’ the Government, this is credit for taxes already paid on dividends. High-level view here, detailed HMRC lowdown here. They are nothing to do with what many people know of as ‘Tax Credits‘ in the UK

    HMRC seem to have been messing about with the Gift Aid system whereby charities could reclaim some of the basic rate tax that people pay on their income, or indeed Capital Gains Tax for those people who are fortunate enough/screwed up somewhere to pay it. Seems to be to the detriment of all concerned – you now have to give something over and above the cost of entry. I blanked Gift Aid for the National Trust Roman Villa I visited way back, because I was under the impression as an impecunious Ermine with zero income I don’t get to claim Gift Aid, natch, and so seven degrees of Hell would break out should HMRC check. I was also being a tight bastard and didn’t like the heavy upsell for the ‘additional donation so we can giftaid it’.

    SWT don't actually deliver wildife to me personally, so subs can be giftaided without increase, unlike the National Trust entry, which is considered services rendered by HMRC

    Suffolk Wildlife Trust don’t actually deliver wildlife to me personally, so SWT subs can be giftaided without increase, unlike the National Trust entry, which is considered services rendered by HMRC

    I’ve already checked the ‘I am not a taxpayer’ box on the Gift Aid declaration for Suffolk Wildlife Trust along the same principles 1, but another organisation sent me a ‘check your Gift Aid status’ just now and I figured it was time to get some facts behind my assumption with the NT that

    I can’t really fill in the giftaid ticket with integrity, as a non-taxpayer though I doubt HMRC tests them

    And it appears that I was wrong. In RE1835 – Gift Aid relief: the requirement to pay tax HMRC speak thusly:

    The individual must have paid at least as much income tax and/or capital gains tax (at any rate) as the basic rate tax the charity will reclaim on the Gift Aid donation, for the year of the donation. Tax deducted from investment income, including dividend tax credits, can be used to cover donations.

    They also repeat themselves here

    Making sure you’ve paid enough tax to use Gift Aid

    You can use Gift Aid if the amount of Income Tax and/or Capital Gains Tax you’ve paid for the tax year in which you make your donation is at least equal to the amount of basic rate tax[…], you will need to consider the tax you’ve paid on each donation on an accumulative basis. If you don’t pay enough tax you will need to pay any shortfall in tax to HMRC.

    You don’t necessarily have to be working to be paying tax. Apart from tax on income from a job or self-employment, the tax you’ve paid could include:

    • tax deducted at source from savings interest – nope – in R85 I trust
    • tax on State Pension and/or other pensions – nope – no pension no dice
    • tax on investment or rental income (including tax credits on UK dividends) – BINGO
    • Capital Gains Tax on gains – nope – I don’t do CGT and take steps to avoid incurring it.

    Other taxes such as VAT and Council tax do not qualify, nor does any non-UK tax.

    Dividend tax credits, eh? Now you can argue that you still pay the 10% tax on dividends inside an ISA 2, though there’s no need for a dividend tax credit ticket because ISA income isn’t declarable. I wouldn’t push the point – the value of Gift Aid for my involvement with charity isn’t world-changing enough to take the risk. In general you don’t pick a fight with HMRC unless you have a really good reason to 😉

    However, I hold significant unwrapped holdings, easily enough for 10% of the divi 3 to match 25% of my contribution to charity, so when these letters/subs come round over the year it appears I will be able to fill in the Gift Aid checkbox with a clear conscience. Obviously that is as long as I have unwrapped annual dividend income 0f 10/4 = 2.5 times my total annual charitable subscriptions. I’m okay on that, and I can now stop ticking the ‘skivers’ box on those giftaid forms, and redirect some of my hard-earned non-income away from HMRC with their blessing. What’s not to like?

    Notes:

    1. Gift Aid it’s a lot easier with charity subscriptions, since the services they deliver aren’t specifically delivered to me, so the subs can be giftaided for no extra cost. It’s not like SWT come round and deliver a box of screeching barn owls in return for my payment, whereas with the NT it was a straight payment for access
    2. You still only get 90% of the dividends – you don’t get any more than if you held them unwrapped, but you have no further tax liability even if you are a HRT payer
    3. to be exact it’s a little bit more as it’s 10% of the whole dividend of which you only see 90%, but 10% of the dividend you get in your bank account is a good enough rule of thumb and fails safe in HMRC’s favour
    6 Jan 2014, 1:23pm
    shares:
    by

    32 comments

  • January 2014
    M T W T F S S
    « Dec   Feb »
     12345
    6789101112
    13141516171819
    20212223242526
    2728293031  
  • Archives

  • What looks interesting in 2014 then?

    It’s still three months to the new ISA year but it’s a good point to take stock. 2013 was one of those years where pretty much whatever you invested in seemed to make money, reversion to the mean indicates 2014 may be a tough year then, and to be honest I still don’t know what the hell we are doing up here. What’s been happening then?

    Developed markets, the US in particular, have done very well. Shame I got no US then 1 – it was too dear when I started looking at it and it’s still too dear. Emerging markets, pretty much anything to do with mining, and gold seemed to be the losers of 2013. Obviously he’s talking his book, but Money Observer’s Thomas Becket socks it to the Henry II in us with

    2013 has undoubtedly been the year to own Developed World equities and avoid everything in the Emerging World.

    which is hard to argue with. Intriguingly he also asserts

    Closer to home, UK mega-caps are cheap and should benefit from a decent year for the global economy; we are currently expecting above trend growth in global GDP next year.

    I own some of these guys as you’d tend to do in a HYP and I’m not so sure I’d describe them as cheap, else I’d go get me some more – in all cases bar one they’re notably dearer than when I bought ’em. Maybe Psigma has a load of UK mega-caps in the fund too 😉

    Where am I now?

    I pinched the principles of this article on unitising a portfolio and applied it to my own, I’ve stayed 20% ahead of the FTAS over the investing period which would probably have been my index fund of choice. Rather than run a second unit tracking for the FTAS I track this Vanguard FT Allshare accumulation fund which rolls up dividend income into the unit price, and referred it to January 2010 which is the first year I had enough performance data since I started with half a S&S ISA allocation in 2009.

    I don’t think Goldman Sachs will be begging me to come out of retirement to do God’s work for them but it isn’t, so far, the usual slaughtering that seems to be expected of private investors who don’t go by the creed. I was lucky, however, to start in the investing hellhole that was 2009, 2010 and 2011. You probably don’t have to be smart to do okay from there. But you do have to start

    I am about 2/3 of the way to getting the income top-up of 5% of the ISA capital (as measured in terms of cash spent to buy it, not the dreadfully volatile market value) that I want of it by about mid 2015. As it transpires I could probably do okay without the top-up income from the ISA – you only find that out after retiring 2, which is a real bummer for financial planning 😉 So I can leave the existing investments right as they are, but maybe look further ahead. After all, if I live as long as my parents I am looking at a 40-year investment horizon from now…

    What does look interesting then?

    Everything that looks crap now, I guess. As everybody looked in the abyss in 2007-9 we projected our hopes and dreams onto emerging markets, and pumped them up as the Western financial model was shown to have feet of clay. We still do have very serious problems, many of which haven’t been fixed, but it survived the heart attack. Although he’s also obviously talking his book, I think Terry Smith’s outlook on the economy is more accurate.

    So we generally think/feel 3 everything is going swimmingly, the only way is up. So now we don’t need those damn emerging markets. The pound is also rising, which makes foreign stuff look overpriced if you bought it before the rise, etc etc.

    The rising pound helps me, as a UK investor and also one with significant cash holdings. The Government has been busy destroying the value of those cash holdings through inflation, but if the pound and interest rates rise then that means I can get more Foreign Stuff for my paltry pounds. Now normally when people talk about Foreign Stuff they thing of imports, like Samsung mobile phones and cheap DVD players, but it also applies to foreign equities, particularly where those currencies are being threatened by Fed tapering.

    For all that, the promise of emerging markets is still good – demographics to die for, many of these new consumers will come of age and start working when an Ermine is old enough to draw a State Pension, should it still exist at that time. 2014 looks like a good time to get to add some of this to my holdings. I only need about 10-20% in total, which will drop the effective return on capital to 4% from the 5% it has been since emerging markets don’t seem to pay dividends to any useful extent. The newsflow continues to be ghastly which is a good sign 😉

    However, Emerging Markets isn’t one monolithic block. Asian emerging markets seem to be different to, say, South American emerging markets, and India, China and Russia are so very different in demography, culture and resources to each other and anything else out there that rudely lumping them in together seems wrong. Demography alone leads me to lean away from Russia and China – people say the demography of the West is rotten but it’s better than both of those.

    Last year I bought a little bit of AAS at a discount, and the SP is slowly going down the toilet, so I should get a chance to buy some more at a discount this year – I will buy this in modest bits. There is a Blackrock tracker mentioned here which looks like a good one to match AAS. Finally I have a small stake in AFMF – basically Africa, which seems to be generally considered uninvestable, but from what I hear from someone I know who works in mobile telecoms out there the beating heart of capitalism seems to be stirring with  African people doing things for themselves. For all my life Africa has been considered an economic basket case, so this is a straight punt on reversion to the mean. I don’t need much EM, but 2014 is probably a good year to build this stake up.

    Then there is the gold and mining conundrum. I’ll leave consideration of the merits or not of of gold to RIT, but one difference to him is that this will be a small part of my holdings, and I will hold it outside my ISA, because I can’t live with a non-income producing dead asset like that in my ISA. If it continues to tank this year I will add to that.

    I don’t know what to do about mining, it might have to be filed into the too hard camp for now. I don’t have to swing for everything. I have a particularly pessimistic trigger alert set on BRWM so I will revisit that if it turns out to be a spectacularly bad year.

    Of course, there are the usual stalwarts – the Eurozone crisis still hasn’t gone away, and there are of course all the unknown unknowns. At the moment emerging markets are good enough to pique an Ermine’s interest.

    Notes:

    1. That’s not strictly true as it appears I have a hefty slug of US in a Vanguard FTSE Dev World ex-UK index fund, although that happens to be outside my ISA
    2. The other half of the retire early fight is reducing the crappy middle-class and work-related spending that doesn’t enhance your quality of life – note that you do increase some areas of spending. The trick is to increase spending on wants that you really want, as opposed to shit wants induced by others that don’t deliver a return in terms of quality of life. Reducing the stress and noise in your head makes discriminating between these a lot easier, but that’s a different post
    3. I’m talking homo economicus – as opposed to the strivers, and the group formerly known as the middle class who are still very pissed off, as Ed Miliband correctly highlights in his cost of living crisis, though I don’t agree that nationalising energy resources necessarily means you can control the total price
    3 Jan 2014, 12:56am
    reflections:
    by

    3 comments

  • January 2014
    M T W T F S S
    « Dec   Feb »
     12345
    6789101112
    13141516171819
    20212223242526
    2728293031  
  • Archives

  • Isaac Asimov’s visit to the World Fair of 2014 – 50 years ago

    The turning of the year is a time of soothsaying and people getting their crystal balls out. So it was with some surprise that I read this 50-year old prediction from Asimov in 1964 – hat-tip to Slate for the heads-up.

    As a teenager I rotted far too many of my brain cells reading science fiction. The future engineer was drawn to this genre, and I didn’t have enough life experience to make sense of all the mushy stuff that polluted novels featuring more human characters. I loved the Foundation series and in particular the notion of psychohistory  – even now I am drawn to the myth of the macro trend though experience has tempered it a little bit in that the shocking chaotic variations of real life throw those macro trends off course. Asimov did pretty well as a fortune-teller, and it’s striking how well he cast an eye over five decades of future human development. I was particularly struck by

    One thought that occurs to me is that men will continue to withdraw from nature in order to create an environment that will suit them better.

    Right on the nail old boy. I wandered into Carphone Warehouse while Mrs Ermine was getting some part of her mobile fixed after it’s been trodden into the mud while wrangling a bunch of errant hogs. It was a pretty alienating experience – people ready to plump down a shitload of money on smartphones and tablets and what-have you. In small print was the up-front price of one at £200, and in great big letters was the monthly price of £21 a month. On what looked like a two year contract – basic ‘rithmetic doesn’t seem to be a strong point round here, or Ipswich is full of high data users…

    Do some Facebook stalking - in the woods

    Do some Facebook stalking – in the woods

    A little piece of me started to die when I read this exhortation to get out into the Real World™ and immediately nullify the whole point of doing that. I had just come up the main road, noting the slack-jawed punters in the betting shops feeding money into the fixed odds betting terminals while others watched loads of flat screens showing sport. And now we have ads saying you need this gadget to do something rad – like going into the woods and firing up Facebook. That Thoreau geezer was so full of shit when he wrote

    I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived.

    I did not wish to live what was not life, living is so dear; nor did I wish to practise resignation, unless it was quite necessary. I wanted to live deep and suck out all the marrow of life, to live so sturdily and Spartan-like as to put to rout all that was not life, to cut a broad swath and shave close, to drive life into a corner, and reduce it to its lowest terms.

    Nope, Henry, you were on the wrong track, m8. You go to the woods to plug yourself into the hive mind, because in 200 years of human progress since you wrote that cobblers in Walden we have discovered that in a life well lived you find meaning from without, preferably garnished by ads…

    All round it was a bad day for the customer experience – a while ago I read “Authenticity” Which was meant to have been a seminal work in helping brands connect with customers. It seriously disconnected this customer as I have been sensitized to fake-real crap ever since, and I wasn’t a great fan to start with.  In Wilko I was treated to a classic example of what they meant with this complex cardboard easel rigged up to look like wood. Wouldn’t it have been easier to have a quick word with those nice Swedish fellows at Ikea? And maybe send a few of your employees back to school… Making the mistake is fair enough, but surely someone on the staff spotted it by the afternoon?

    fake easel, real illiteracy

    fake easel, real illiteracy

    Asimov was absolutely right, and we now have people worrying that nature deficit disorder is turning our children into sociopathic screenbound slobs. At least Asimov’s Solarians weren’t fat bastards though they hated being in the presence of real people and the real world. So Asimov got there first, though I am not sure that withdrawing from nature suits us that much better – I listened to ‘The Slow Coach’ on Radio 4  – this was someone who was coaching people to not fill their lives up with so much artificial garbage they forget to live.

    Asimov did well on estimating the 2014 human population, and that we would start to get a handle on it by limiting the birth rate – as Hans Rosling shows us engagingly in his TED talk

    Self-driving cars – check. 3D movies – check. Sight-sound communications is a quaintly archaic description of Skype, Facetime or Cisco Telepresence.

    It’s also interesting where Isaac Asimov went wrong –

    Although technology will still keep up with population through 2014, it will be only through a supreme effort and with but partial success. Not all the world’s population will enjoy the gadgety world of the future to the full. A larger portion than today will be deprived and although they may be better off, materially, than today, they will be further behind when compared with the advanced portions of the world. They will have moved backward, relatively.

    Hmm – I do not believe this is the case now, relative to the 1960s, at least in the predicted increase of inequality across the globe – the narrowing of this may be softening the Western expectation of your children will be better off than their parents, but not elsewhere in the world.

    The situation will have been made the more serious by the advances of automation. The world of A.D. 2014 will have few routine jobs that cannot be done better by some machine than by any human being. Mankind will therefore have become largely a race of machine tenders. Schools will have to be oriented in this direction.

    Sort of draw on that – yes and no. I’ve reserved Asimov’s epic fail for last

    Indeed, the most somber speculation I can make about A.D. 2014 is that in a society of enforced leisure, the most glorious single word in the vocabulary will have become work!

    You were one smart cookie, Isaac, but I contend that work is vastly overrated 😉 Although thinking back to the slack-jawed in Ladbrokes, maybe that’s also a score-draw…

    Looking back over several decades of work, it struck me that most of the advances we have had have been due to technology – the advances in fundamental science have been much slower. One of the discoverers of the DNA double helix structure, Francis Crick, never lived to see any discoveries that would explain consciousness and repudiate vitalism 1 – he’d still be waiting. To my knowledge we have no scientific understanding of what is essentially different about consciousness or whether the very precept behind cryonics misses the point entirely. After all, we struggle to determine the information-theoretic  death when decades of searching has still to find the structures within an animal that record memory, despite this regular structure being immediately obvious in any machine memory store on microscopic examination 2

    The sequencing of the genome, while it is  a stupendous technical achievement, hasn’t led to specific drugs and the other malarkey it was meant to lead to, because it appears that we cannot read the language properly, or we are looking in the wrong place. In the same way as leaving out all the vowels of this post would still be readable, there seems to be a lot of redundancy. In physics gravity is still out on its own and we still don’t have a theory of everything, just as my professors bemoaned at Imperial in the early 1980s.

    But technology, it’s been the bees knees. In some ways the accuracy of Asimov’s predictions may be a result of the failure of fundamental science since the 1960s to deliver breakthroughs that would have looked like magic 3 to him. We have had evolution, not revolution. So much works better, faster, smaller than when I started work. I’m not absolutely sure that withdrawing from nature into virtual worlds to Facebook from the woods was exactly the pinnacle of human existence that he might have wished for, and the problems of excess leisure were a common theme in his books showing an unhealthy influence of the Protestant work ethic 4.

    It’s strange to look back and see that over my lifetime the remarkable advances have been largely due to improvements in technology rather than improvements in scientific understanding. That wouldn’t have been the case for the first half of the twentieth century. It’s also notable how the STEM story is so dismal now – it’s all about stuff going wrong and global warming – in the 1960s it was all about he white heat of technology, and people going to the Moon and upbeat. Maybe it’s because I’m looking through the wrong end of the telescope, I hope our kids are seeing exciting opportunities and a great story in the STEM area. Otherwise our technology is going to run out of science at some point. Sic transit gloria mundi…

    Notes:

    1. in 1966 Crick delivered himself of the statement “And so to those of you who may be vitalists I would make this prophecy: what everyone believed yesterday, and you believe today, only cranks will believe tomorrow.”
    2. it is obvious in its regular repeating structure in a microphotograph of a microcontroller or other single-chip processing device
    3. One of Asimov’s contemporaries, Arthur C Clarke said that Any sufficiently advanced technology is indistinguishable from magic
    4. Asimov was of course of Jewish heritage and an atheist/rationalist as an adult – the work ethic is thus a cultural influence from the society he inhabited
     
  • Recent Posts

  • Subscribe to Simple Living In Somerset via Email

    Enter your email address to subscribe to this blog and receive notifications of new posts by email.