Saturday, October 30, 2010

Quantum Mechanics

I haven't studied physics in years, and when I had studied physics, I only took a few introductory classes in it. I am hoping someone more knowledgeable will be able to answer my questions.

In quantum mechanics, electrons aren't in a specific location around an atom's nucleus. Instead, there is a probably density function that provides the location. There are places that the electron is likely to be, namely close to the nucleus, but there are places that the electron could be, like very far from the nucleus, but is actually very unlikely to be. Given the overwhelming number of electrons that exist, an extremely improbable event like the electron being very far from the nucleus is likely to occur occasionally.
How often do these events occur? What is the effect of it when it occurs?

The great Douglas Adams used these concepts in the Hitchhiker's Guide to the Galaxy books. I was hoping the popularity of his books would spur some research into the topic, but I haven't found anything useful yet.

Monday, October 25, 2010

QE2

Recently the Federal Reserve announced plans to perform more quantitative easing. The details of the plan, dupped QE2, have not been revealed, but analysts expect it to involve purchases of Treasuries. These purchases should drive down interest rates. The Federal Reserve's hope is that lower interest rates will lead to more growth in the economy and a reduction in the unemployment rate.

The Federal Reserve's hope seems misplaced. Interest rates are very low right now, and the economy is still not growing very much. Unemployment is also still at very high levels. The only outcome seems to be that it is easy for companies to raise money.

Companies have been taking advantage of the low interest rate environment to issue debt. The Wall Street Journal describes how Wal-Mart has issued bonds that pay very little interest. There's no evidence that this easy access to capital has spurred companies to increase their hiring in America. In fact, the companies are likely using this money to expand abroad. The Wall Street Journal article about Wal-Mart closes by observing of Wal-Mart's sales, "fastest growth coming from China and Brazil". This makes sense since economies like China and Brazil have been growing faster than America. By making money easy to get, the Federal Reserve is probably making it easier to chase growth abroad.

Meanwhile, states, counties, and cities across America have been cutting back. These cutbacks which include layoffs are rippling through the American economy. Many economists have noted that the benefits of federal stimulus spending has been undercut by cutbacks at the local level. If the Federal Reserve wants to improve the American economy by spreading money around, it should reduce the burden on local government. One seemingly straightforward thing would be to purchase municipal bonds with the money that would be spent on Treasuries. That would give local governments money to ride out the current recession.

It is still important for local governments to reach the right size. If that means shrinking, then they should shrink. By helping local governments in their current predicament, the Federal Reserve runs the risk of impeding needed corrections. The moral hazard of a bailout of local governments is a serious threat. However, QE2 is going to create moral hazard. In fact, there is evidence that QE1 is already creating moral hazard. If the Federal Reserve wants to embark on QE2, it is better for it to help local governments instead of helping inflate another bubble due to weak lending practices.

Tuesday, October 19, 2010

Opportunities in Car Insurance

Actuaries are the stereotypical boring people. There's no glamor or flash associated with their work, which is one reason why car insurance seems like such a prosaic business. However, in the last few years, there has been an epic wave of advertising by car insurance companies.

I am amazed by how many different ad campaigns have been launched by just one company. GEICO has run ads featuring cavemen, talking geckos, money with eyes, random celebrities, and at least one other theme that I am not remembering at the moment. The cavemen ads were so popular that a TV show spun out of them.

The other car insurance companies have not been sitting idle. While their ads are generally not as good, they have plastered our TVs, radios, magazines with their own gimmicks and celebrity spokespeople. I have not done any formal analysis, but it feels like the car insurance industry advertises far more than other industries.

It's interesting to think about the causes of this behavior. Do insurance companies lack other ways to acquire customers? Are customers so profitable that the costs of so much advertising are outweighed by the benefits of acquiring customers? How readily do customers switch car insurance companies? Is the advertising onslaught needed because consumers need many nudges before they switch companies? Or, is it needed to retain existing customers because customers switch easily? Does this advertising blitz help more with customers getting insurance for the first time?

It's also interesting to think about the implications of this both for the insurance companies as well as for consumers.

Could car insurance companies increase referrals or other word of mouth approaches? Social media is very popular right now. Does it offer any interesting ways to let potential customers know about an insurance company? Should an insurance company try to get its name mentioned in the news for example, e.g. by publishing research or advice? How do car insurance companies know their advertising is working? More specifically, how does GEICO know which of its many campaigns is effective?

Some of the biggest implications for consumers come from realizing that the spending on advertising is not flowing to them. How does a consumer capture some of the value that is being spent on advertising? For example, should consumers ask for a policy with a longer term and ask the company to return to them the advertising money the company does not have to spend anymore? Does it make sense for consumers to pool together and join in bulk, again asking the company for a rebate on the advertising?

Of course just coping with the advertising has implications for consumers. How can consumers choose between the various options? Unless all the advertising cancels out, consumers need to worry about the advertising introducing a bias into their decisions. A good guide to choosing between the myriad of options could be important, especially to avoid mistakes due to framing. While some of the advertising is amusing, it can also be overwhelming. Are there ways of avoiding the advertising that are specific to car insurance?

None of the above ideas may be valuable, but every time I see another advertisement on TV, on the radio, or in my mail, I wonder if there is an opportunity in car insurance.

Monday, August 03, 2009

Social media is the same as everything else

The partisans of social media, e.g. blogs, facebook, twitter, speak of it fundamentally changing how we interact, ushering in a new age of transparency and direct connections
But, it ends up being like everything else. Consider two examples.

Jim Jubak used to write for MSN Money. While at MSN Money, he started a presence on Facebook. People could become his Facebook friend and receive updates from him. Then one day, Jim Jubak stopped writing for MSN Money. The editors of MSN Money said that he was on haitus. Their note was brief and had few details. Readers of Jubak had many questions, even concern for his health and well-being. The Facebook page should have shed some light on what happened, but there were no updates. It turned out that there was some kind of dispute, and Jim Jubak started a new site. Until the new site was launched, there was very little communication between Jubak and his fans about his status. It was as if he had disappeared from the landscape.

Another example involves The Onion's weekly newspapers. There used to be one for San Francisco, but it stopped being published. While there was coverage in other media, The Onion hardly made a statement about it.
They had (and still have) a vehicle for making annoucements, http://sanfrancisco.decider.com/. I don't recall seeing a message there about the shutdown of the San Francisco edition of the newspaper. This url now redirects to http://www.avclub.com/chicago/. There is no mention that the San Francisco edition existed and is now shut.

What do these two examples prove? Nothing really, except that we have not arrived in Utopia. Social media, or just the relative ease of publishing content on the Internet, has enabled more openness and easier communication. But, when there are things that are uncomfortable or require some discretion, better tools aren't enough for full transparency.

Saturday, July 25, 2009

Oracle and Sun

Sun recently agreed to sell itself to Oracle. There has been much speculation about how Oracle can make money from Sun. My guess is that Oracle will start charging for Java. Java has become entrenched in enterprise software development, so there are no worries that cost will slow down the adoption of Java. Additionally, the enterprise market is used to paying for software and services, so Oracle would not have to break new ground to get that market to pay for Java.

Oracle has managed to extract money for database products even though there are several free (and open source) databases that are popular. It uses the feature richness and performance of its database product to compete against the free offerings. It also takes advantage of its incumbency to charge for a product because free competitors are not free due to switching costs.
It could use the same model for Java and probably with the same customers too.

Sunday, May 10, 2009

amazon and the importance of core competency

How importance is core competency? I first knew about Amazon.com as online bookseller. Then it expanded into other categories like music and electronics. Eventually, it started to sell all kinds of products. It dabbled in other kinds of retail endeavors like auctions, but it seemed to be sticking to selling products to consumers.

Then Amazon introduced EC2 and AWS. Suddenly, it was selling computing resources to developers which seemed far afield from selling books on the web. Then, it developed and sold the Kindle, an e-book reader with wireless access.

These seem like separate lines of business that are not very connected. What happened to the idea of core competency? It's an important concept that businesses need to consider when choosing what to do. Now, it may be possible to come up with a core competency for Amazon that encompasses all these businesses, but I would expect that explanation would cover almost any other business too. Such an all-encompassing purview seems to defeat the point of articulating a core competency.

Friday, May 01, 2009

The demise of Conde Nast Portfolio

Conde Nast's decision to shut down its business magazine Portfolio received a lot of attention. One common viewpoint was that the magazine's monthly publication schedule was not appropriate for a business magazine. BusinessWeek wrote, "It came at a time when business is a moment-by-moment bloodsport uniquely unsuited to being chronicled by a leisurely monthly frequency."

I understand that things move quickly in the finance world. For example, the day I started writing this, the stock market opened with big gains only to close with a small loss.

However, many of the important business stories of the past few years developed much more slowly. The housing boom lasted for years. And, the housing bust that followed took years to manifest itself too. There is plenty of room for a monthly publication to explore important developments.

In fact, a monthly publication has an advantage in that it can ignore the hour-to-hour, day-to-day fluctuations that the cable news and weekly magazines drown the viewer/reader in. It is too easy to lose the forest for the trees. The thinking that "a moment-by-moment bloodsport" can not be covered by a monthly frequency is not right and should be changed.

Saturday, March 28, 2009

Why is Columbia Park boys and girls club in the mission?

I've walked by the Columbia Park boys and girls club many times. It's located on Guerrero Street in the Mission, and there is no place called Columbia Park near it. I've often wondered why it was called that.

The answer turns out to be fairly straightforward. The boys and girls club used to be located near Columbia Square. Columbia Square is a park in SOMA, near Harrision and Columbia. At some point, the club moved to Guerrero Street but kept the name of the old location.

This information came from "San Francisco: As it Was, as it Is, and how to See it" by Helen Throop Purdy. From that book, I also learned that Dolores Park used to be called Mission Park and used to have a wading pool. It's available on the internet at Google Book Search

Wednesday, January 23, 2008

The reason the Cowboys lost

During this football season, I have seen a soda commercial with the Cowboys many times. At first, the ad skated by, seeming insignificant. It took on more significance with more airings, and now after the excessive number of times it was shown, it explains the Cowboys' failure in the playoffs -- they are very stupid.

First a recap of the ad. The offensive coordinator is calling the next play, but he is tired so the last part of the play call is mingled with a yawn, something like "red twenty four blue thirty-yaaaah". The head coach hears the play call and is confused by the yawn at the end of the play call. Nevertheless, he repeats the play call to the quarterback the same way. The quarterback is also confused when he hears the play call, but he still repeats in the huddle to his teammates. The play is run, but it fails. Then the Cowboys' owner, Jerry Jones, walks into the offensive coordinator's box and gives him some soda. It's mountain dew ultra or dr. pepper mega or something like that, a soda with extra caffeine, sugar, and maybe other stuff to keep people awake. After giving him the soda which will help him stay awake, Jones takes the playcalling headset away from the coordinator presumably keeping it himself. Note, the head coach and the quarterback in the ad are played by the actual head coach and quarterback of the Cowboys. I don't know what the offensive coordinator looks like, but I think that role is played by an actor.

This ad raises so many questions. Why doesn't the offensive coordinator repeat himself? Why doesn't the head coach ask him to repeat the play? Why doesn't the head coach change the play to something real? Why doesn't the quarterback ask the coach to repeat the play? Why doesn't he realize it's a bogus play and change it? Why don't his teammates tell him it's a play they don't know (because it's not a real play)?
Why would the real head coach and quarterback agree to be in ad where they look like incompetents? Is Jerry Jones taking over playcalling? Why would he want to do that? Is he that meddlesome?

Either the Cowboys can not discern how silly they appear (which means they are not very smart), or they really are not very smart. And Jerry Jones is either really meddlesome or so greedy for a little ad money that he would appear that way. Not a good look. No wonder they Cowboys lost so early in the playoffs. Next year, smarten up and make better ads.

Friday, October 26, 2007

Scripting plays and No huddle

Many teams in the NFL like to script the opening offensive plays of a game. The idea is to use the week before the game to develop a sequence of plays that takes advantage of the opposing team's defensive weaknesses. The offense can be poised on the opening drives because it knows exactly what plays it will run and because the players have practiced those plays during the week.
It seems like a good idea, though I don't know if it has been proven to make a difference in the outcome of the games.

I've watched many games where the offense is said to be a following its game-openening script, but I have not seen many where the offense is going no huddle. The consensus is that no huddle helps offenses by giving defenses less time to prepare for the play. By moving quickly, the defense can't substitute players as well and becomes more tired and frazzled. The frenetic pace of no huddle can also unhinge the offense with the players going out of sync. That's why most teams don't run no huddle often, but those downsides should not occur with scripted opening drives. The players on offense will know all the plays that they are going to run, so there should be no confusion. Since defenses will still be disadvantaged by no huddle, it seems like going no huddle on the scripted plays is an obvious benefit for the offense. Why don't more teams do it?

Wednesday, October 24, 2007

The Smell of New Pavement in the Morning

What's not to love?
One of the better things that's happened lately has been the repaving of parts of 101. The beginning of the work was annoying because the road surface was gouged and uncomfortable to drive. Now, that the new surface is in place, it's a pleasure to drive. The road is so smooth. The contrast between the new surface and the old surface is very noticeable. As if to remind us without relying on our fragile memories, Caltrans has left patches of the old pavement interspersed with the new pavement in a few places like overpasses. They needn't have done that since a bigger contrast is further south on 101 where the road is the crummy old pavement. That can't be repaved fast enough -- some of the lanes seem to have ruts in them.
Hopefully, this new road surface stays smooth and shiny for a long time.

Thursday, October 04, 2007

Some good sandwiches that are no longer with us

I used to eat turkey meatloaf sandwiches at Specialtys all the time, and they were awesome. For various reasons, I stopped eating lunch at Specialtys, but I kept meaning to go back and eat the turkey meatloaf sandwich. I finally had the chance recently, and I discovered that they no longer made it! It was quite a disappointment.

Now this wasn't the first time that a good sandwich has disappeared from the menus of Bay Area shops. It was at least the third time which calling to mind the famous Goldfinger quote means it is enemy action. But who would do such a thing?
In case it helps you, the other two times were the cuban sandwich at Bi-Rite and the Vietnamese sandwiches at Yucatasia. I miss them too.

Saturday, September 29, 2007

The Patriots Spying Brouhaha

One of the scandals of the early 2007 football season has been the revelations of spying by the Patriots. It's been dubbed CameraGate since it involves illegal videotaping during games. The Patriots videotaped the signals of the Jets during week 1; the league caught them and punished them.

The media was riveted by this story, but I somehow managed to avoid paying attention to most of the ensuing controversy. My primary exposure to the media hype has been through the writing of Bill Simmons, a Patriots fan who has been fed up with the way sports commentators have piled on the Patriots. I can see his point, but I have some doubts about his defense of the Patriots. For example, he said on September 17, "If this pattern of inappropriate behavior had been happening for six years, wouldn't they have been caught before Sept. 9, 2007?"

I thought the Patriots had been caught before illegally videotaping during games and had been warned not to do it anymore. They may not have been stealing signals earlier, but that seems unlikely. It would be nice to get clarity on this point.

Tuesday, September 25, 2007

Are Molly Shannon and Paulette Goddard related?

I watched the Charlie Chaplin movie Modern Times recently, and I was struck by the similarity between Paulette Goddard and Molly Shannon. They looked similar, and their characters acted similarly as well. Maybe it was the way the Gamin character in Modern Times danced and leapt wildly that reminded me of Shannon's characters on Saturday Night Live.

As for the movie, it was good though I didn't enjoy it as much as other Chaplin movies. The set pieces were pretty funny and well executed. However, the Little Tramp character was too bumbling to hold my sympathy throughout. The epitome of his incompetence was when he worked as a mechanic's assistant and managed to get the mechanic jammed into some machinery. I still laughed, which is probably what counts.

Monday, September 24, 2007

Bay Area Newspaper Stars

It probably doesn't make sense to have a newspaper column called Bouncer written by someone who doesn't work at a bar, but that's about the only quibble-worth thing about the column by Katy St. Clair. It's not the first thing I read in the SF Weekly (since it's in the back), but I'm less happy when I get to the back and discover it's not there. Luckily, it's there most weeks, and she usually has some interesting stories from visiting Bay Area bars. Sometimes, there is even pathos like when she talks about her autistic clients.

The Bay Guardian has a food section staffed by stars, Paul Reidinger and L.E. Leone. Their writing entertains and enlightens with wit, grace, and humor. Plus, they're both capable of writing about more than food, and often do, sometimes even while writing about food.

Saturday, April 28, 2007

Bay Area Radio Stars

I'd like to take a moment to recognize two stars of Bay Area radio.

Jerry Newman (spelling?) is an announcer on KQED and he livens up the seemingly boring task of announcing the current program name and the upcoming programs.

Gary Radnich and Tony Bruno make Bay Area sports talk radio fun. Their conversations are not always about sports, but they always drop "good knowledge".

Thursday, February 08, 2007

Q: What do Danielson and How I Met Your Mother have in common?

A: Blinders!
The character on the super bowl theme episode of How I Met Your Mother (HIMYM) gave them a fancy name, but their intent and design was very similar to the Good Eye Blinders that Danielson used to make.

It was surprising to see overlap between the two. I wonder if some of the writers of HIMYM are Danielson fans.

Tuesday, November 28, 2006

Wells Fargo ATMs: Now 10% less useful than before

Wells Fargo ATMs no longer have an option to display balances. Why is that?
The ATMs used to have this option. It seemed to disappear fairly recently. Is it going to come back?

Printing an account statement is still an option, but that's often overkill.

Update (2/8/07): The display balances option is back.

Tuesday, August 15, 2006

Gates (foundation) in a rush? Oh no!

The Gates' foundation is rushing to spend the money that Warren Buffett is giving it. This is a scary prospect.

Bill Gates has been pretty mediocre about predicting the future. In fact, his most well-known prediction is the hugely wrong '640K of memory should be enough for anybody.' [1]
He failed to signal the importance of the Internet in his book The Road Ahead despite it coming out a little bit before the popularization of the Internet.

Microsoft's success is due more to relentless tactical warfare, but the downside of that is the company's shady monopolistic behavior and technically unsound decisions. For example, Microsoft pushed ActiveX controls in order to maintain the supremacy of the Windows desktop even for Internet applications. However, it did not do a thorough job of implementing ActiveX in a secure manner. That's why we still see bugs for Internet Explorer due to ActiveX.

The world does not need to see Bill Gates in a rush to vanquish enemies again. Even if the enemies are malaria and AIDS instead of Sun and Netscape, Gates should move deliberately and carefully. There have been mistakes by philanthropists in the past, and we do not want to look back in 20 years and rue the decisions made by the Gates foundation.

[1] A Wired News article indicates that he didn't make this statement, but it does agree that he's not much of a visionary.

Thursday, July 06, 2006

The DP DP

Motley Fool published an article called "Openwave: A Closed Book" expressing disappointment in the behavior of Openwave's management.
There are other troubling issues to deal with. During the quarter, CEO David Peterschmidt exercised a significant chunk of his options in company stock, then immediately sold the shares. It happened to take place on the same day that Openwave was accused of options backdating, halfway into the quarter. Again, this makes me wonder whether Peterschmidt knew something the rest of us didn't.

This should not have been a surprise. Dave P. has historically had really good luck with his options. That's why he could make gobs of money from Inktomi despite giving away the search market to Google and falling for the hype in the network infrastructure market.