[extropy-chat] WSJ: A Cold Calculus Leads Cryonauts To Put Assetson Ice

[Jack Parkinson]

----- Original Message ----- 
From: "BillK" <pharos at gmail.com>
To: "ExI chat list" <extropy-chat at lists.extropy.org>
Sent: Wednesday, January 25, 2006 5:14 PM
Subject: Re: [extropy-chat] WSJ: A Cold Calculus Leads Cryonauts To Put 
Assetson Ice


> On 1/25/06, Robert Bradbury wrote:
>> It is worth noting that the money managers who earn the "big bucks",
>> including those who manage the endowments for Harvard, Yale, etc. are
>> managing returns of something like 14-18%/yr.  I would guess that the
>> average frozen person's assets are probably getting 1/2 to 1/3 of that.
>>
>> Designing a *good* investment strategy for what is coming and taking into
>> accout the various reanimation scenarios is *not* easy and I would argue
>> that most people who would be tasked with doing it (today) are likely to
>> significantly underperform the rate of growth that the singularity may
>> bring.  [How many investment strategies detail precisely *when* you turn 
>> the
>> money over to a self-evolving, improving AI investment fund manager?]
>>
>
> You are perpetuating the myth that investment managers have a skill
> that is worth the fees they skim off your investments.
>
> Many surveys have shown that picking stocks at random does just as
> well as the average of mutual funds, better than some, worse than
> others.
>
> Of course the ideal is to pick the best performing fund every year,
> but you need hindsight for that.
>
> One sample:
> <http://www.nationalreview.com/nrof_glassman/glassman200406230851.asp>
> Quote:
> Fooled by Randomness is loaded with crackling little insights, but the
> best one is that what looks like skill is often plain old luck, so
> beware of investment geniuses. They will get their comeuppance, just
> as Solon warned. Solon was an upright ancient Greek legislator, known
> for speaking his mind. When King Croesus of Lydia, the richest man of
> his day, bragged to Solon about his wealth, Solon admonished, "The
> uncertain future is yet to come, with all the variety of future." And
> it did. Cyrus defeated Croesus and nearly burned him at the stake.
>
> "When people buy stocks," wrote Meir Statman, a finance professor at
> Santa Clara University and one of the leading experts on markets,
> "they think they are playing a game of skill. When the stock goes down
> rather than up, they think they have lost their knack. But they should
> take heart. All they have lost is luck. And next time, when the stock
> goes up, they should remember that was luck, too."
>
> End quote.
>
>
> CEOs of companies use a similar technique. If the company has a good
> year, they claim it must have been due to their wise management and
> they deserve their 5 million in compensation. If the company has a bad
> year they claim that it was due to circumstances beyond their control
> and take their money anyway.
>
> BillK

Precisely! By the same token, the rich can glory in their own prescience, 
and their acute grasp of business principles - and big corporations can 
impressively graph their efficiencies and perpetuate the myth that they are 
in every way better and more fitting to lead than their competitors. 
Incidentally (but comfortably) - If we subscribe to this view - we can 
righteously condemn the poor and pour scorn on the small business that did 
not make it to big business. They were losers! It's their fault for failing 
to compete! So of course they deserve what they get (or fail to get)

As Adam Smith remarked on (same article - url above) "the overweening 
conceit which the greater part of men have of their own abilities [and] 
their absurd presumption in their own good fortune."

Nothing new there - we still worship the people who got the lucky break. And 
they still sternly assure us there was nothing lucky about it...
Jack Parkinson