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You Can Start the Money Management Firm or Work for Someone; Different Beasts

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Hey Michael, if you had a 23 yr old wanting to become a CTA, graduating with a degree in Finance from U. South Florida in May, is there a certain firm you would push him towards? Two summers ago he did an internship with [Name] Capital ($106 mln AUM), last summer with R.J. O’Brien’s CTA platform Oasis. He works two days/week with me holding down our trade desk. We work with commercial Ag hedgers. Any ideas would be helpful. [Name] gave Patrick your book on the TurtleTraders 1st day on the job, along with 4 other books on trading.

No short cuts. All the trading “names” are well known. It’s an issue of knocking on doors. Seth Godin’s blog may give you a good non-trading perspective that will better help him to break into trading.

Why Do I Have to Go to School?

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Michael, I have never contacted you before but have listened to all your podcasts. Great stuff! My wife forwarded this to me and I immediately thought of you, in addition to a number of other free thinkers …and just knew I had to forward it. Enjoy,
Tim

Give a big thanks to your wife for the find:

Are You Throwing Your Children Under The Bus?

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Hi Michael,

Just listened to your podcast on the universal kick-in-the-ass known as the death of the McJob. I couldn’t agree more. What people do not realize, however, is that through osmosis we pass our attitudes on to our children. If we are afraid to get out from under the weight of societal expectation to be another drone zombie with the rest of them, what message does that give to our children? A child looks up to its parents for guidance and reassurance. We see it during, say, a thunder storm, where our children are nervous and instinctively glance over at us to see if WE are afraid. Well what if we are and we show it? What do we communicate to our children if we show our fear? The obvious answer is that they then become afraid because they rely on the parent to show them the things they should be afraid of.

So when a parent does not follow your message, does not get out there and make something happen, and instead retreats into the illusory safety of corporate zombi-ism, they have let down their child in a way that goes far beyond not giving them the latest toy or a ride to the mall. They have basically told them that there is safety to be had by huddling in a collapsing building. So if people won’t take your words to heart for themselves, then they should at least do it for their children.

By the way, Mike, I’m writing this from my hotel room overlooking The Bund in Shanghai. I’m here visiting my daughter who graduated last year as a top-notch high school student and winner of a couple significant citizenship awards. She has read all your books and has the Trend Following mentality. Last summer she made the decision to head to China to learn Mandarin and to see more of the world before going to university. And in case everyone thinks that what you’re saying is all about money, she is volunteering for a charity that helps Chinese kids make a difference in their world because she herself wants to make a difference. Because of her can-do attitude, the money is already there; it’s a given, because once you are there mentally, the results are inevitable. She has had no trouble accumulating the money she needs to achieve her goals, but she’s taking this year to go beyond the money, and as you probably guessed, I couldn’t be more proud of her. She not only thinks it, she does it.

Thanks Michael, keep up the message!

Dale

Thanks Dale. I couldn’t have said it better myself.

If you want to live a life of complacency, a life that is run by what the masses are telling you to do, then that is your choice. Just know that your children will be subject to the same kind of ruling over their lives. Don’t lead them to believe that “there is safety to be had by huddling in a collapsing building”.

Peter Bernstein. Against the Gods: Steve Jobs and Risk

A friend of mine passed this piece along courtesy of her friend a prominent vascular surgeon living in Washington, DC:

In reading about Steve Jobs’ death, I was disappointed to learn that after his carcinoid tumor (a rare type of malignant tumor) of the pancreas was diagnosed, he waited nine months before having it removed because he believed that a strict change in diet would cure the problem. This raises the issue of risk analysis, a hard and sometimes controversial topic that, blessedly, doesn’t seem to be a Republican or a Democratic issue. Nonetheless, while this topic is difficult to understand in depth, it is, in my view, well worth spending some time contemplating. For, as most of you undoubtedly know, risk assessment is at the heart of economics, banking, horseracing, investments, medicine, agriculture, baseball and public policy to name just a few.

There is a wonderful book entitled: “Against the Gods, the Remarkable Story of Risk” by Peter Bernstein. At a minimum, have it on your bookshelf and peruse it periodically. One interesting point is that there is an amazing asymmetry as to how we make decisions with regard to gains and losses (pages 272 forward). When decisions involve the possibility of considerable gains, we are consistently risk-adverse (i.e., we will opt for a sure gain versus an even greater gain with the possibility of no gain). In contrast, when the choice involves losses, we are risk seekers, not risk-adverse (i.e., we would rather take an 80% chance of losing $4000 and a 20% chance of breaking even than accepting a 100% chance of losing $3000).

On the surface this may seem like an interesting conundrum but one which has little relevance to our day-to-day lives. In general, I think this is correct. But not always. The term “conventional wisdom” has acquired, in many cases justifiably, a patina of being pejorative. Ordinarily, one would think that conventional wisdom was for the most part based on experience (also known as “data”). Given the increasing focus within health care and policy making to have decision-making be driven by data (“evidence-based”), it seems reasonable to be supportive of this concept while keeping in mind that close calls can be skewed one way or another by how the statistics are formulated or interpreted.

But analysis of a large amount of conventional thinking seems to me to reveal that in most cases the conventional wisdom is entirely correct and in a few notable cases conventional wisdom falls far short (that is, most of the time it’s not a close call as to whether the perceived understanding is credible upon close inspection). As a notable example, we all know that eating a meal diverts blood supply to the intestines and thus vigorous exercise such as swimming immediately after a meal will divert blood supply away from leg muscles and cramps will occur such that a large number of children will drown if they go swimming soon after eating lunch. How do we know this? Our mothers told us so. The confirmatory data supporting this hypothesis are the many dead children who must be removed from pools in the early afternoon each summer. It is because of a number of instances of such ludicrous and loose thinking that for more than 50 years we have frequently succumbed to the notion that most established dogma should and can be subjected to criticism and thus often be dismissed immediately. My suggestion is that when you are inclined to do this, do so because you have acquired believable and reproducible data from reliable sources that support your opinion and reliably debunks conventional wisdom. Absent reliable data, think twice when you are inclined to summarily reject conventional wisdom. Remember the adage “everyone is entitled to his own opinion, but not his own facts”.

My plea therefore, is that we try to train ourselves and our children as well as our friends, when appropriate, to be aware of the need to make ourselves make important decisions based on reliable data rather than whim or opinion not well grounded.

This brings us back to Mr. Jobs. My speculation, based on what I have read thus far, is that he viewed much of his phenomenal success as being a result of his amazing ability to confront and overturn conventional wisdom. I suspect he assumed his extraordinary talent in this one facet of life translated into a belief that he was equally talented in other arenas where he had little training or experience (I have been astounded through the years at what poor health care decisions truly rich people make–I guess it’s called “regression to the mean”). So, when Mr. Jobs made the decision that he could cure the carcinoid cancer that he knew he had (biopsy confirmed) with diet, he did so with not one scintilla of believable data. To my knowledge there has never been a case of carcinoid tumor cured by diet. Of course, we have to keep in mind that a prompt operation might not have been curative. Unfortunately, for him as well as for us, we’ll never know.

Thanks. And I am a huge Jobs fan.

Note Added Oct 20: The Associated Press purchased a copy of the book Thursday. The book delves into Jobs’ decision to delay surgery for nine months after learning in October 2003 that he had a neuroendocrine tumor — a relatively rare type of pancreatic cancer that normally grows more slowly and is therefore more treatable. Instead, he tried a vegan diet, acupuncture, herbal remedies and other treatments he found online, and even consulted a psychic. He also was influenced by a doctor who ran a clinic that advised juice fasts, bowel cleansings and other unproven approaches, the book says, before finally having surgery in July 2004. Isaacson, quoting Jobs, writes in the book: “`I really didn’t want them to open up my body, so I tried to see if a few other things would work,’ he told me years later with a hint of regret.”

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Speculation wins, Meir Statman Interview, Annie Duke Podcast Episode, Should Curiosity really take the back seat?, Why we sleep, Process, the Outcome and Sport.

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