One of my hobbies over the last decade has been reading everything I can find about investing and economics. I am not a serious academic in this sense, but I do spend a large number of lunch hours reading the Globe and Mail or National Post. As everybody knows, the last 4 months or so have been a very difficult time. Stock markets worldwide have tanked, investment banks have collapsed, the US housing market continues to tank, and my local Vancouver housing market has started (finally!) to turn. Based on my readings none of this has surprised me terribly, but recent events have served to reinforce some theories that I have developed over time. These are as follows:

The experts on TV are anything but

News channels from CNN to CBC are very fond of trotting out wise men and women to give us some insight into what has happened and what will be happening. Almost without exception these people were unable to predict all the bad things that have happened in the last year. The fact that housing prices were at clearly untenable levels didn’t give them a hint, nor were they aware of the trillions of dollars in bad derivatives floating around. It should be noted that a very small number of them did know what was going on, and successfully predicted the crash. However these knowledgeable ones, before being proven right, were consistently mocked by the perma-bull guests. A perfect example of this is the appearance by Peter Schiff where he accurately spelled out everything that was going to happen, end got lambasted by the other guests (this video with Ben Stein is also amusing). The lesson? Unless you have done some serious homework on who you are watching and are able to determine they know what they are talking about it is best to completely ignore them.

Large banks will never predict an economic downturn

I’ve invested through 2 recessions now, and neither of them have been predicted by the major banks who hand out advice to clients. After some thought, the reasons for this seem clear. First, banks rely for income on clients being invested. If they tell me “oh, things are looking pretty bad, you should take your money out” then they lose income. They obviously don’t want to do that. Perhaps more importantly, however, is that big banks make markets. By this I mean that if Royal Bank comes out and predicts a collapse then people will listen, and the prediction will hasten and perhaps deepen that collapse. Royal Bank will then be accused of having been partly responsible. So, for the sake of their business I think big banks will never predict a downtown. To clarify this point, I don’t think that the big banks consciously mislead. My theory is that, because of the reasons I outlined, big bank culture encourages employees who are eternally optimistic and discourages employees who have a more realistic outlook. The realistic employees will either leave the bank themselves or be driven out for their non-conformist attitudes. The bank is then left with nothing but eternal optimists.

Politicians will not solve the problem

I have a fairly low opinion of politicians to begin with. They appear on the whole to be of very average intelligence, and typically act in an entirely self-interested manner, focused solely on achieving either election or re-election. So, when faced with something as complex as the economic crisis, which professional economists don’t even understand, I think that there is pretty much zero chance that the politicians will be able to solve anything. It is hard to defend this argument, as in this case with the economic crisis we can’t even confidently define what the problem is. I would nevertheless venture to say that a history of misguided government intervention in the markets has been at least a contributing factor to the current problems, examples being the setting of low interest rates at the beginning of this decade which inflated the housing bubble, and the setting of low reserve ratios.

Being half right can be as bad as being entirely wrong

I mentioned Peter Schiff earlier, and from the mention you might conclude that he must have made a lot of money from his predictions. Well, he didn’t. In fact he probably lost at least as much as most people. Another bright guy, Eric Sprott, who made similar predictions, also lost a lot of money, some of which was mine. Why did this happen, when they made such accurate predictions? They were only half right. They both predicted the housing downturn and the derivatives crisis, but they incorrectly predicted the outcome. Peter Schiff thought that international companies with solid balance sheets would perform well, but they didn’t. Eric Sprott thought that the oil prices would stay at lofty heights, even in the face of a recession, but they didn’t. Both of them predicted a US dollar collapse, and the dollar has soared. The lesson? It is not enough to be mostly right. Mostly right can kill you. And I don’t know of anybody who has been entirely right, which means that the last year has been brutal to almost everybody.

When the iPhone was being rolled out, what really made me perk up was the announcement that there would be an app store where developers from around the world could sell their apps. My reaction was excitement. My thought was that the app store could really differentiate the iPhone from other phones, and could foster the kind of creativity and community that elevates a technology from mere tool to life-changer.

It seems now that the app store is living up to my expectations, but there are clouds on the horizon. I just read today that the current best-selling app is “iFart Mobile.” If you are unfamiliar with this app, it allows you to reproduce a number of distinct fart noises (e.g. “Bubbler” and “Kazoo”) for the delight of friends and family. This has me worried.

My concern is that Apple will make the same mistakes as Facebook. We all know what happened with Facebook apps. The quality Facebook apps were overwhelmed by the crappy garbage that was designed specifically and exclusively to be viral. The Facebook app community is suffering as a result, and I am concerned that the iPhone app community will likewise suffer.

I don’t have a solution to this. All I know is that Apple has to somehow cultivate quality iPhone apps, while discouraging the crap. Allowing the community total power to do so is not effective, as the clever app creators will be able to manipulate the community. Apple must take an active role, while simultaneously respecting community input. Striking a balance between direct intervention and a hands-off laissez-fair approach is a tough thing to do, but is critical, as I think the vitality of the app store will largely determine the longterm fate of the iPhone.

I have been struggling the last few days over a paper. The problem is that the original (rejected) paper was 10 pages, describing 1 experiment. For this second submission attempt I had to both include a second experiment and squish the paper down to 8 pages. Not easy, it turns out, but possible. And the fact that it is possible disturbs me a little. Was half of that original paper really irrelevant? So many words, so much expended effort, which after further thought turned out to be totally unnecessary.

My life’s relevancy ratio in general isn’t all that good. If you add up all the time I spend watching TV, sleeping, and dreaming about becoming an astronaut, you are left with maybe 2% of my time being actually productive, in the sense that it will advance humanity in some form. But now, after discovering how much of that stuff is fluff, I feel I have to now downgrade that score to 1%. That is a full 50% drop in estimated total relevant output.

And if the paper gets rejected the score is zero.

There is one web browser issue that I consistently fall victim to. This is the problem that keyboard focus appears to jump, for no reason, from widget to widget, and sometimes from a widget to the address bar. I’m not sure, but I think it has something to do with starting to type before the page-load is complete. For example, I will be typing my user name into the user field, and halfway through typing the cursor jumps to the password field. Then, thinking I am still in the user name filed, I hit tab and type in my password, but it didn’t go into the password field, because I was already there. Instead the tab caused me to go to the address bar, and my password goes there.

Of course this wouldn’t happen except for the fact that I occasionally type while not paying attention to what is happening on screen. That shouldn’t be a problem, though. Once I have stuck the cursor into the user field things should happen predictably, and consistently. Keyboard focus should not jump randomly.

So, what are the possible negative outcomes of this? The most basic, and most harmless, is that I simply have to type in things again. There is a more dangerous security concern, however. When my password is entered in the address bar then anybody watching me as I type can see what it is, and possibly deduce that it is my password. Even worse, maybe, is that if I hit “enter” after typing the password then people peeking at traffic can spot this request. If they see a strange request for “mypassword” go by unencrypted they might be able to use that knowledge maliciously.

That’s it. This is a concern that is both a usability annoyance, and a security risk.

One of the things about Japan is that everything is so ordered. The trains leave within seconds of the scheduled time, there is no garbage to be seen anywhere, and everybody is courteous, even when the trains are totally jam-packed. This is why it is all the more surprising when somebody breaks the social norms.

Yesterday something like this happened. I was walking along a well-travelled sidewalk in Osaka city, and some lady comes up to me and starts yelling in my face. Not the semi-bored selling-yelling that the store employees do trying to lure people into their shops, but a full-on angry “I hate your guts and I’m going to let you know it” kind of yelling. My reaction was stupefication. I stopped dead in my tracks and just stared at her. It was one of those Star Trek “does not compute. does not compute. illogical. illogical.” moments that is usually followed by the evil robot self-destructing and Kirk getting the green girl. Afterwards I started thinking about this. I think my reaction in Vancouver would have been different. In Vancouver we are all, on occasion, approached by crazy folks. When it does happen my reaction is the instant onset of a fight/flight thought process. I put on my “I don’t take kindly to this crap” demeanour in an attempt not to look like a victim candidate, and do an unconscious evaluation of the likelihood of either escaping or winning a fight should the necessity arise to choose between the two (no, I have never actually fought anybody). But here, in Osaka, that doesn’t happen. My reaction is instead more along the lines of: “…… wha?”

While on the topic, I had another weird random street encounter about a week ago. I was again walking along the sidewalk and this guy walking the other way stops right in front of me and throws down a huge bow. Not the standard everyday bow, but one of the 90 degree big-time serious bows. I stop, confused, and think “a-ha, somebody behind me.” Turn around, nobody there. Turn back, dude is still bowing. WTF. Pause. Options: 1. talk to him and try to figure out what he is doing. 2. run away. Chance of success at option 1 is very small, so I take option 2.

I will never find out what these people were doing. My best theory is that there is some guy wandering around Osaka who resembles me, and is in the habit of pissing off middle-aged women and earning the deep respect of middle-aged guys. I wouldn’t be surprised. After all, we do all look kind of the same.

It appears that the Vancouver housing market is in trouble. Finally. We’ve been in a boom for the greater part of a decade now, and people were getting very comfortable with the idea that house prices would increase in perpetuity.

I didn’t buy it, and figured that we were entering a bubble. That may sound like bragging after the fact (now that things are clearly on a downturn), but here I admit that I actually messed up royally, not in my judgment, but in my timing. You see, I called a top in the real estate market in 2003. At that point I had some real estate, and for whatever reason as spring time rolled around I decided “this is it, we’ve hit a peak. I’ve got to get out.” So the house went up for sale, got sold in 3 days, and I was sitting much more comfortable, not having to worry about the thing.

At that point I considered buying a condo, and actually looked at one near Metrotown, but the thing was going for 250k, which is a lot, and was only 1200 sq. ft. or so. Sounds like a rip-off to me. So I gave up on that idea as well.

As you can see, I messed up. I was way way early in my pronouncement on real estate doom. And now that it is finally coming to pass I don’t feel all that good that I have proven to be belatedly correct. Being right at the wrong time is the same as being wrong.

As an aside, I find it fascinating how the Vancouver media has made an about-face in its attitude towards real-estate. For several years the local newspapers were among the biggest promoters of real-estate. Now, within the last two months they have very suddenly taken the opposite view, publishing bubble-talk at every opportunity.

Oh, and for the folks who think real-estate will be fine, I want to take this opportunity to respond to the usual arguments:

1. Vancouver employment is strong – No it isn’t.
2. Vancouver has high wages – No it doesn’t.
3. B.C. industry is strong – No it isn’t.
4. The Olympics – Please shut up.
5. International Destination – Compared to New York? LA? London? Seriously?
6. It’s different here – <facepalm>

If you are interested in reading more about the bearish case for Vancouver real-estate, I suggest you visit vancouvercondo.info.

There’s no joy quite like discovering a new quality web comic. First there was Perry Bible Fellowship, then Cyanide and Happiness, and today I discovered the magic of Married to the Sea. Like the other comics I listed it is (I think) pretty edgy, so tends to be hit and miss. But I think the good ones are really good.

In addition to the above, refer to comics dealing with geocaching, old photographs, cheating at Facebook games, furries, and why cigarettes are stupid.

It’s easy to get down, to conclude that maybe we as a species are pretty worthless and doomed to failure. Any number of things can inspire such thoughts: some random examples being the existence of an oppressive North Korean regime, people in Africa hacking each other up with machetes, or bankers in the US ripping off hundreds of billions of dollars. Then there is the smaller stuff: isolated incidences of violence, hatred, or whatnot. It can make one pretty dejected.

But then you run across something like this video of a guy named Rodney Mullen skateboarding, and you have to conclude that no, we are not hopeless. No matter how much evil there is in the world there remain great people who focus on bettering themselves, on creation rather than destruction, and expression rather than oppression. These people accomplish fantastic and beautiful things. We are not animals, and that which separates us from animals is evident in this video. Rodney Mullen, I salute you.

Today I wanted to listen to Glenn Gould’s “So You Want to Write a Fugue.” I fired up Google and the first result was a link to YouTube. Sweet. I click over and there is the dreaded message: “This video is no longer available due to a copyright claim by Canadian Broadcasting Corporation.” Dang.

But fear not. The second Google result goes directly to a page on the CBC website, where a video of a performance has been embedded. A video linked from YouTube. The same video that doesn’t exist because the CBC demanded it be taken down.

This Saturday a bunch of us from the lab went to Gifu prefecture. The occasion was the finals of IVRC 2008, a contest where different students come up with crazy ideas mixing the virtual and the real. A team from my lab had advanced to the finals, facing four other teams from various universities. The emphasis in this contest seems to be on creativity over practicality, which is fine by me.

Going back a few months, when I arrived in Japan, the team members described their idea to me. The idea is called “Funbrella” or asobrella in Japanese (I think. Maybe ansobrella). It is an umbrella that can record and play back the umbrella experience. There is a magnet and coil (basically a microphone/speaker) built into the structure of the umbrella, and if you go outside when it is raining it will record the vibrations of the rain hitting the umbrella. Then later on you can replay the tactile experience of holding an umbrella in the rain. Or, you can hook two umbrellas together over a network and “feel” the other person’s umbrella experience. Pretty crazy I think, and cool.

What I thought at the time, however, in addition to the idea being crazy and cool, was that there was no way it could work. The vibrations caused by the raindrops are far too small to be picked up by the microphone. You simply won’t be able to record anything meaningful. So, I wished the team members the best of luck, and hoped that if things didn’t work they would at least be able to learn from the experience.

Well, it turns out that I was totally wrong. I went to Gifu, tried out the funbrella, and the thing is freaking amazing. It works shockingly well. You hold onto the thing, they press a button on an iPod, and you feel the rain hitting the funbrella. Or they press another button and you feel marbles. They press a different one and you feel natto hitting it (natto doesn’t feel like much). The other demo is the networked funbrellas. You can hold one funbrella, hit the other one on the top, and it feels like you are hitting your own funbrella. Spooky, and excellent.

So, I was wrong. The team members were right, and I applaud them for having the vision and perserverence to carry the project through. Unfortunately they didn’t win the grand prize. That went to another excellent project, Yotaro, a virtual baby made out of rubber that has a genuine runny nose and wriggles around.