December 30, 2012

An introduction to data visualization

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I've recently discovered something called Infographics which could be explained as the art of explaining something difficult in a picture. This something difficult could be a lot of numbers, or an event such as the sinking of the Titanic. The goal of the Infographic is that someone without any knowledge within the subject the picture is explaining, immediately should get what the picture is about. If you need an example, you should visit visual.ly which is an Internet service where you can show the finished Infographics you've made.

So, how do you create an Infographic? The reason I'm asking is because there's a competition going on at Kaggle where the goal is to visualize the school system in Colorado, and I'm participating in that competition. I've never made one before, so this will be a summary on how to do one. To learn how to make an Infographic, I've decided to read some books and watch some online tutorials on YouTube.

The best book I've found on the subject is Envisioning Information by Edward Tufte, and it was recommended to me by Tim Ferriss in one of the Random Show episodes. Edward Tufte is a professor at Yale University and has written several books on the same subject. Envisioning Information is a quite small book, around 130 pages with many pictures, and it explains how to represent a rich visual world on "flatland" where flatland is something flat such as paper, but could also be a memorial and similar structures. One example is how to represent a subway system on a map to make it fast and easy to understand if you have never entered the subway before. A tourist in London should immediately understand,without any confusion, how to travel from the hotel to Madame Tussauds.
Edward Tufte explains that to envision information, you should work in the intersection of image, word, number, and art, using visual principles that tells us how to put the right mark in the right place. Here are some of the visual principles from the book:
  • Avoid "chartjunk." Chartjunk is the art of decorating a chart with "fluff", such as unneeded pictures or dark grid lines, to make it look more interesting, but the chart will also be less credible to the spectators. Decorations are never needed, and if the numbers are boring, then you've got the wrong numbers. You can still use techniques such as colors, typography, layout, and similar, as long as you avoid unneeded junk.  
  • Respect the audience. Consumers of graphics are often more intelligent about the information at hand than those who fabricate the data decoration. The audience may be busy, but they are alert and caring - not stupid. 
  • To clarify, add detail. Thin data may lead to suspicions: "What are they leaving out? What are they hiding?"
  • Clutter and confusion are failures of design. It is not how much information there is, but rather how effectively it is arranged. 
  • Use a panorama. A panorama deliver to viewers the freedom of choice that derives from an overview, a capacity to compare and sort through detail. When appropriate, you can combine a panorama with a more 2-dimensional picture.  
  • 1 + 1 = 3. White space is something. Add more shapes, and thus spaces between the shapes, and the amount of noise will increase exponentially. On white backgrounds, a varying range of lighter colors on the shapes will minimize the clutter.   
  • Avoid color damage. Pure, bright or very strong colors should be used sparingly on or between dull background tones. Light, bright colors should not be mixed with white next to each other. Color spots against a light gray or muted field highlight and italicize data, and also help to achieve an overall harmony. Use colors found in nature to represent and illuminate information since these colors are familiar to the human eye. Gray is regarded in painting to be one of the prettiest, most important and most versatile of colors. 

To create an Infographic, you will need some kind of software, and I believe that Illustrator is the most common software used by the designers of Infographics. One good, and free, replacement software for Illustrator is Inkscape
The YouTube tutorials I've found on the subject are:

December 29, 2012

Books I read in 2012

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This year, I've read the following books:
  1. 100 things every designer needs to know about people
  2. A long way gone
  3. Aldrig fucka upp
  4. Coders at work
  5. Crossing the chasm
  6. Den som dödar draken
  7. Don't make me think
  8. Envisioning information
  9. Escape from Camp 14
  10. From Beirut to Jerusalem
  11. From dictatorship to democracy
  12. Glädjedödarna
  13. Great by choice
  14. Handelsmännen
  15. High performance web sites
  16. Historien om IKEA
  17. How to think like a computer scientist
  18. Insanely simple
  19. Jag vill förändra världen
  20. Kon-Tiki
  21. Krigare
  22. Lägg ut
  23. Mindhunter
  24. Minecraft: block, pixlar och att göra sig en hacka
  25. Mining of massive datasets
  26. Moments of truth
  27. No easy day
  28. On writing well
  29. PHP in action
  30. Programming collective intelligence
  31. Pulitzer
  32. Selling in a new marketspace
  33. Skjut inte på journalisten
  34. Steve Jobs
  35. Stenbeck
  36. Tesla: man out of time
  37. The design of everyday things
  38. The lean startup
  39. The miracle of mindfulness
  40. The numbers behind Numb3rs
  41. The publisher
  42. The thank you economy
  43. Total recall
  44. Trust me, I'm lying
Let's hope that I didn't waste any time!

December 27, 2012

The Traveling Santa Problem

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I've participated in the "Traveling Santa Problem"-contest over at Kaggle, and the goal of that contest was closely connected to the Traveling Salesman Problem (TSP). The idea behind the TSP is to help a salesman to find the shortest route through a number of cities, and the salesman can only visit each city once. You can use the solutions to the TSP in real-life as well, often connected to different logistics-areas, but also when manufacturing circuit boards.

This is a plot showing the 150,000 different cities (or chimneys in this case):
The easiest way to find a solution is to begin at one random point, and then find the closest point to that random point with the help of Euclidean distance. This is the plot when using that method, using only 5000 chimneys:
As you can see in the plot above, the method using the least distance will miss some points, and in the end, Santa will have to travel back to chimneys very close to chimneys that he has already visited. To solve this problem, you can use an Hilbert curve combined with the least distance method. An Hilbert curve will "snake" its way through all the chimneys, and at each Hilbert-point you can calculate the shortest path through that box. The plot will then look like this using all of the 150,000 chimneys:
It took about 30 minutes to generate this path and the distance traveled was 7,646,647. A random solution would generate a distance of 1,290,678,097. I then tried a Simulated Annealing algorithm to improve the path without much success. The problem is that we have 150,000 chimneys and it takes too long time to generate a better solution.

If you are interested in the Python-code used, you can find it here: github

November 22, 2012

How to install PyBrain on Windows

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This is a tutorial on how to install PyBrain (and other Python packages) on Windows 7. It sounds like it would be easy, but could be tricky if you have never done it before.
  1. Download the zip-version of PyBrain from https://github.com/pybrain/pybrain/downloads and unpack it at some location that's easy to remember
  2. Open Windows Explorer and navigate to C:\Windows\System32 and in that directory you will find a file with the name cmd.exe. (You can also press the start-button and search for cmd.exe)
  3. Right-click on cmd.exe and choose "Run as administrator" - this is important or the install will complain that you don't have the proper privileges to install PyBrain
  4. This part is tricky if you have never used DOS-commands before. Now you need to navigate to the folder where you unpacked pybrain-master.zip with the help of DOS-commands. To jump down one step you print "cd.." in the window, and to jump up a step you print "cd name_of_folder". To begin with you probably see something like C:\Windows\System32> and to jump down to C:\Windows>, you just type "cd.." and then press the enter key. If you don't know which folders to choose from in a specific directory, you can write "dir" to display the folders and files
  5. You have now navigated to the PyBrain-folder containing the file setup.py. To install PyBrain you just write "setup.py install" (or "python setup.py install"), and PyBrain will now be installed on your computer! 

October 25, 2012

Who could have known that the Terminator was a true entrepreneur?

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Iv'e just finished the book Total Recall: My Unbelievably True Life Story which is a biography written by Arnold Schwarzenegger himself. I didn't really expect much from the book, but it turned out that it was really good, and it changed my thoughts about Schwarzenegger. One may have a preconceived conception about Schwarzenegger, possibly because of his accent in several movies, but it turned out that he was a real entrepreneur.

Schwarzenegger grew up in a smaller village in Austria, and the house where he grew didn't have running water. He has kept many of the habits developed when living in this house to save resources. In the current Schwarzenegger residence, the water is always saved and the family members are only allowed to shower for five minutes, and the lights are always turned off when they leave a room. He never wears anything expensive when skiing.
"And even though I can afford it, I would never wear cashmere to go skiing or play sports. It has to be cotton or wool or something cheaper, like a $10 sweatshirt, before I feel comfortable getting sweaty." 

Before Schwarzenegger began with recording movies, he was sponsored by a gym in the US, but the sponsor money wasn't quite enough, so he began to think about other opportunities to make more money. He realized that people wanted to know how he could be so strong, and what type of exercises he did, and what he ate to grow the muscles. So to respond to these demands, he began selling booklets that consisted of articles and photographs. As the business grew, he added more products such as the "Arnold Schwarzenegger weight-lifting belt."

As the mail-order business grew, he decided to found a construction company. He was strong, and knew many strong body builders, so why not use the strength to carry bricks? They lied a little bit when they said in the ad that they were "experienced" bricklayers, and were "experts" in marble and stone, but no-one noticed that they were not experienced. They also realized that American loved foreign names, such as Italian design, and Swedish massage, so they decided to measure everything in meters to pretend that they had been working in Europe. They did also, on purpose, argue in German in front of their clients about the price the client would have to pay, and it turned out that the client often paid a higher price because of this argument. Once they managed to break an antic window because they were so strong, so when they were going do demolish a wall, the stones flew all over the place, and in the end they didn't profit from the job thanks to the expensive window that had to be replaced.

But every investment decision was not a good one. Schwarzenegger once invested in a large part of a desert where someone had a plan to build a supersonic airport. This was at the times when the Concorde were flying across the Atlantic Ocean, and everyone believed that the Concorde would soon fly around other parts of the world as well. But it turned out that the Concorde never would, and the piece of desert would be worthless.   

But Schwarzenegger never gave up the plans to own real estate, and he decided to invest in houses.
"I wanted an investment that would earn money, so that I could cover the mortgage through rents instead of having to pay it myself." 
He made his research and each day he looked in the newspaper to get a feeling about the prices of the buildings, and he found a mentor, Olga Asat, and eventually he would knew every building in Los Angeles. Finally, he bought a six-unit apartment house, and he took one apartment for himself, and the rest of the apartments would be rented to actors. This way, he could build connections to the movie business. He would later sell this building, and buy more and larger buildings.

When Schwarzenegger began with the acting, his plan was to double his salary with each new movie. It didn't always work, but almost. The first movie he participated in was Hercules in New York, and it failed miserably, but the first successful movie was Conan the Barbarian, and he got $250,000 as a salary from that movie. And so it went on:
  • The Terminator: $750,000
  • Conan the Destroyer: $1 million
  • Commando: $1.5 million
  • Predator: $3 million
  • The Running Man: $5 million
  • Red Heat: $5 million
  • Total Recall: $10 million
  • Terminator 2: $14 million
  • True Lies: $15 million
Before he decided if he wanted to participate in a movie, he always thought about what the return on investment would be. To make more money, he wanted that his movies would go global, and he thought about every possible details.
"Is this movie appealing to an international audience? The Asian market is negative on facial hair, so why would I wear a beard in this role?" 
He wanted to go all over the world to promote the movies, while the movie folks thought that a couple of countries were enough.
"Whenever I finished a movie, I felt my job was half done. Every film had to be nurtured in the marketplace. You can have the greatest movie in the world, but if you don't get it out there, if people don't know about it, you have nothing. Picasso would go into a restaurant and do a drawing or paint a plate for a meal. Now you go to theses restaurants in Madrid, and the Picassos are hanging on the walls, worth millions of dollars. That wasn't going to happen to my movies. Same with bodybuilding, same with politics - no matter what I did in life, I was aware that you had to sell it."    
The lines in the movies were also important to Schwarzenegger. "I'll be back" is the most famous line from The Terminator, but he first argued with the director James Cameron that he didn't want to say the line because it sounded wrong, but Cameron didn't change his mind.

Schwarzenegger always believed that the most important thing was not how much you would make - but how much you would keep of that sum of money. The list of famous entertainers and athletes who have been wiped out financially is long. He recalls how he saw the actor Burt Reynolds and his manager showing up in a Rolls-Royce before the money were all gone.
"My goal was to get rich and stay rich. I never wanted to have the phone call where the manager says 'Something went wrong with the investment. We can't pay our taxes.' I wanted to know the details."
The idea was to always "Take one dollar and turn it into two." He wanted big investments that were interesting, creative, and different, and he could tolerate big risks in exchange for big returns - not the kind that would generate 4 percent a year. He also disliked trendy investments such as hotels and clubs - but he did co-found the restaurant chain Planet Hollywood. Schwarzenegger was also proud to pay taxes on the money he earned, so he didn't like offshore corporations and other "gimmicks" designed to minimize the taxes paid.

In the end of the book, Schwarzenegger explains some of the rules he has in his life, including:
  • Turn your liabilities into assets
  • When someone tells you no, you should hear yes
  • Never follow the crowd. Go where it's empty
  • No matter what you do in life, selling is part of it
  • The day has 24 hours
  • Stay hungry 

October 23, 2012

What can zebras and lions teach us about the stock market?

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Investors or zebras? Source: Wikipedia

Zebras have the same problem as those who are interested in the stock market:
  • Both seek profits. Investors want to beat the market - Zebras want to eat fresh grass
  • Both dislike risk. Investors can lose all of their money - Zebras can be eaten by lions
  • Both move in herds. Investors tend to buy when everyone else is buying, and thus a bubble is created. Many investors also tend to look like zebras in their black-and-white suits. 
If you are a zebra living in a herd, you have to make a decision. The less risky option is to stay in the middle of the herd and eat the grass which is half-eaten and has been trampled by the rest of the herd. The more risky alternative is to stay outside of the herd, where the grass is fresh. If a lion approaches the herd, the fat zebras who have eaten the fresh grass will end up as lion dinner, while the skinny zebras in the center of the herd will be safe.
Investors have the same option. Stay in the middle of the herd and buy boring stocks and you will probably only end up with small profits, or stay outside of the herd where the large opportunities can be found, but where you can end up as lion dinner.
The best option is to be the fat zebra which can also run away from the lions, and the best stock to buy is a risky stock that also can outrun a lion.

Source: Money Masters of Our Time

October 22, 2012

One may have a worse view from a work window

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A Day in the Life of a Fire Lookout. from Gary Yost on Vimeo.

This beautiful video features Gary Yost who is working as a volunteer fire lookout at Mount Tamalpais, California. It seems like one may have a worse view from a work window.
I've been a Marin County Fire Department volunteer lookout for two years and deeply love the mountain and the peace it brings to us here in the Bay Area. Perhaps this 6-minute video will convey some of the emotions I feel when sitting (and sleeping) on her peak.
Here's another video from the same mountain and photographer:

Mt. Tamalpais Fog Timelapse Tests from Gary Yost on Vimeo.

October 19, 2012

Creative ways to clear landmines

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One often forgotten threat to humans around the world is landmines. Nearly 20,000 people are being killed by them each year, and many more are being crippled. One can currently find 110 million landmines across 70 countries. To make a landmine, you have to pay $3, but its is 50 times more expensive to clear one. Here are some creative ways to clear landmines:

Mine Kafon
The Mine Kafon is a new way to clear landmines, and has been designed by Massoud Hassani. He was born in Afghanistan so one can clearly understand why he wants to solve the threat of minefields. Roughly 10 million landmines have been buried throughout Afghanistan. So to solve the problem, Massoud Hassani designed the Mine Kafon which is a device that you roll out on a mine field. The device will now roll though the minefield as it is powered by the wind, and when it hits a mine, it will simply explode. But the entire device will not be destroyed, some parts can be used again to build another device. It features a GPS navigator so you can see where it has been rolling around before. One problem is that it will not clear the entire minefield since you can control it, but it will clear maybe 50 percent of the landmines, and that will save lives - or you can clear the rest of the field with another more dangerous method.

The Mine Kafon (teaser) from Callum Cooper on Vimeo.

RedDetect
The Danish company Aresa made a genetically modified flower that was supposed to detect mines in a minefield. To clear a minefield, you planted plants on the minefield, and when one of the plants came in contact with nitrogen dioxide (a compound released by decaying chemicals used in explosives), the plant would change its color to red. The company has now been given up the idea to continue with this project, but I believe that it was a good idea, and someone else could perhaps continue with it.


HeroRAT
The HeroRat is a trained Gambian pouched rat, and the rat is not a kamikaze rat, the rat will probably survive the process since the rodent is using its excellent smell to find landmines. They are being trained by the company Apopo, and one rat will cost €6,000 to train, and the training will take 6 months.


Source: BBC, WorldChanging

October 15, 2012

The fall and rise of the electric car

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I've been doing some research about electric cars, and it seems like they are on their way to come back. A part of the research consisted of watching the movies Who killed the electric car? from 2006, and Revenge of the electric car from 2011.

The first movie is mostly about the EV1 which was an electric car developed by General Motors. The first electric car was produced in the 1800s, but the EV1 was the first mass produced electric car, and a total of 1117 were built between 1996 and 1999. The EV1 was a two-seat car and had the similar shape as a Citroen DS where the back wheels are almost covered, and it was developed in California. Several celebrities liked the car, and the actor Mel Gibson said that he felt like he was driving the same car as the superhero Batman, because of the good performance.

But the EV1 failed, and many of the cars were crushed because GM didn't believe that the cars would bring a profit to the company. GM didn't sell the car, you had to lease it for $250 to $500 per month. When GM wanted to pull back the EV1's they simply told the owners that they had to turn them in, or they would face the legal consequences. Some owners fought back, and had to beg to not get their leased cars crushed by GM as well, but in the end all cars were crushed except for a few which were donated to museums and schools. This is one of the reasons to why GM never tried to build another electric car, until they learned about the Roadster developed by Tesla Motors. Here's a video showing one of their models - Model S:


The next movie is mostly about Tesla Motors ($TSLA) and how GM tries to catch up with their own electric car, the Volt. Tesla Motors was founded in 2003, and by now they have three electric cars: The Roadster, Model X, and Model S. What they have done to increase the performance of their cars is to replace the old car batteries, with the same battery as in your laptop. The Roadster has a total of almost 7000 batteries, but the car is faster and has a longer range than any other electric car.

Everyone were blaming General Motors during the financial crisis in 2008, that they were producing the wrong type of cars, and that the Japanese were the smart one who produced the correct environmental friendly cars. But that's not true, GM were producing the exact type of cars the world wanted until the gas prices went up. So now when everyone have begun to produce electric cars, then the car makers will need a high gas price if these models are going to sell, or the electric car may die once again. Most people will care more about their wallet, than the environment, and the current price of gas - not what the price of gas may be at tomorrow.

So in the end what we need to replace the gasoline cars with electric cars is:
  • A higher gas price - people follow their wallet.
  • The ability to charge the electric cars. I myself live in an apartment and can't have an electric car simply because I can't charge it. You currently need to own your own garage if you want to own an electric car, or be able to charge the car where you are working. But more and more charging stations are being build - there's a total of one million of them today around the world.
  • We need to charge the electric cars with clean energy - not with coal power plants. If you buy a car from Tesla Motors, you will at the same time have the option to purchase a solar panel that you can attach to your house. This solar panel is enough to cover all your electricity you need for your electric car. 

October 11, 2012

How to hack the air

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In 1989, NASA released a report with the name "Interior landscape plants for indoor air pollution abatement." The goal of the report was to research different indoor plants to see if they could be used as a tool to solve indoor air pollution problems on Earth. The indoor air pollution has its own name and it's "sick building syndrome." The report estimated that 30 percent of all the buildings are suffering from this sick building syndrome.

The background to this problem is as follows. In the 1970s, a series of energy crises occurred. The worst crises of this period were the oil embargo of 1973 when several countries in the middle east didn't want to supply the US with oil because the US supported Israel during the Yom Kippur War, and the 1979 crisis caused by the Iranian revolution. The result was that the price of oil increased with several hundred percent.

Because of these high energy prices, everyone decided to reduce the fresh air exchange to improve the energy efficiency of the buildings. The workers in these new buildings began to complain on various health problems, such as itchy eyes, and headaches. What contributed to these problems were a combination of the airtight sealing of the buildings, and the design and manufacturing of the equipment and furnishings used in the buildings.


The best solution to these problems is to use indoor plants. The Indian researcher Kamal Meattle gave a Ted talk in 2009 with the subject "How to grow fresh air." He began his research when he became allergic to the pollution from the air in New Delhi. You can measure air pollution with AQI, where 0 is no pollution and 500 is then highest level of pollution. An AQI below 50 is considered to be good, and above 200 is considered to be very unhealthy. The AQI in New Delhi is between 320 and 380, or hazardous on the AQI scale. Do you think this sounds bad? Then visit Shanghai, China, where the AQI could be 600.

Kamal Meattle came to the conclusion that he needed three types of different plants to clean the air in his indoor environment. In total, he would need about 12 plants to be able to live in a sealed bottle without any ventilation. This was per person, so if you are three persons living in the house, you will need 36 plants. But if your city AQI is lower than the AQI in New Delhi, and if you don't live in a sealed bottle, you will not need that many plants. A common rule is to use one plant per 100 feet^2 (9 m^2) of house. Kamal Meattle also installed 1200 plants in an office building, and the result was that the number of headaches decreased with 24 percent.

When you have realized that you need to use indoor plants to clean the air, you need to choose which plants to use since some are better than others. You also need to check if the plant is dangerous to your kids and your cats, how often you need to water them, and if they can survive in darkness or if they need sun light. You can find a complete list here: List of air-filtering plants. Remember that a plant may be considered to be non-toxic to your cat, but your cat may still get sick if the beast eats all of your plants.

A plant that is considered to be easy to take care of is the Snake plant (mother-in-law's tongue), it cleans everything except ammonia, but it is poisonous to your cat. It was also on the list used by Kamal Meattle in his experiment.

Snake plant. Source: Wikipedia

Another plant that is easy to take care of is the Spider plant, but it is less good at cleaning the air, but it is non-toxic to your cat.

Spider plant. Source: Wikipedia

The best air-cleaner is the Peace lily, but the plant needs water regularly, and it is poisonous to your cat.

Peace lily. Source: Wikipedia

So the task to choose an optimum plant is clearly not an easy one. I myself bought a Spider plant last week (the price of the plant was like $10 so an healthy environment is clearly not expensive), and I'm currently trying to hunt down a Snake plant. The apartment is small, and the AQI is within reasonable levels, so two tough plants will hopefully be enough.
     
Source: The New York Times, ASPCA, Using houseplants to clean indoor air

October 7, 2012

Slow and steady wins the race

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A new book by the author Jim Collins is out, and it's called Great by Choice - Uncertainty, chaos, and luck - why some companies thrive despite them all. The book is basically part 4 in a series of books on why some companies are different from other less good companies. I've used two of his earlier books: Good to great and The fall of the might, when I analyzed the rise and fall of the company Digg. The new book analyzes why some companies are surviving a state of chaos, such as the credit crunch of 2008, and spikes in the price of oil, while other companies perish under the same conditions. One thing we know for sure is that the chaos in the world will continue, as it always has, but how can you prepare yourself and company when the next chaotic event occurs?

One example of a company that has endured misery in the period 1972 to 2002 is Southwest Airlines. The company began with three airplanes, and if you had invested $10,000 in the company in 1972, you would have had $12 million by the end of 2002. The return of the stock was 63 times better compared with the stock market. How did Southwest Airlines survive despite all the events that occurred during the period, including fuel shocks, strikes, recessions, terrorist attacks, when so many other airlines have struggled for their survival?

To find out why, one can travel back in time to 1911, and visit the explorers who was about to make a race towards the South Pole in the Terra Nova Expedition. The race would be of equivalent length as if you would have traveled from New York to Chicago, and back again. One would make it, and the other would make it to the South Pole, but didn't make it back home again. The one who would make it was the Norwegian Roald Amundsen who said:
"Victory awaits him who has everything in order - luck people call it. Defeat is certain for him who has neglected to take the necessary precautions in time - this is called bad luck."
Amundsen arrived in December 1911, 34 days before his competitor the Brit Robert Falcon Scott. They were both of the same age, and had roughly the same experience, so why did Amundsen make it?

The first big difference between the two was that Amundsen was better prepared. Amundsen took the bicycle from Norway to Spain just to practice how to survive, he lived like a shipwrecked even though he wasn't, he studied the maps and stories from previous expeditions, and he lived with Eskimos who knew how to survive in a  rough environment. Scott on the other hand was a Royal Navy Officer and didn't practice in the same way. He decided to choose horses instead of dogs, he brought with him motor sledges that were untested. The result was that the horses died, and the motor sledges stopped working in the cold, so Scott had to drag his equipment by himself. Meanwhile, Amundsen's dogs were traveling at high speed toward the South Pole. Thanks to his studies of the maps and previous expeditions, Amundsen could find a more efficient way to the South Pole.

Foreseeing unexpected events. Before the race had begun, both team built supply depots on the way to the South Pole. Amundsen decided to place black flags in a wide array around his supply depot, so he was sure that he wouldn't miss it if there was a storm. Scott on the other hand placed only one flag at his depot. Amundsen stored three tons of supplies for his five men and could survive if he missed a supply depot, while Scott stored one ton of supplies for his seventeen men and couldn't miss one of his supply depots. Amundsen brought four thermometers, while Scott brought only one and that one thermometer would eventually break.

The 20 mile march. Each day, the goal of Amundsen was to travel a distance of between 15 and 20 miles (24-32 km). If the weather was bad, he tried to travel 20 miles, and if the weather was good, he traveled 20 miles and rested the rest of the day to regain his energy. Scott didn't have any goals at all. If the weather was good, he would go as far as possible until he was exhausted, and if the weather was bad, he would sit in his tent and wait for the good weather to come back.

Amundsen at the South Pole. Source: Wikipedia

September 25, 2012

Quotes from the book Beating the Street by Peter Lynch

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One problem when trying to learn to become a better investor is that most books on these topics have not been written by professional investors themselves. Most of these books are based on interviews and facts found across the Internet and from different newspapers and annual reports. The result is that some books will contain errors, and you as a reader will learn the wrong things. One example here is the book The Warren Buffett Way. I read that book a couple of years ago when I was trying to learn everything on how Warren Buffett thought when he invested in stocks. The book has not been written by Warren Buffett himself - the author has used different writings about Warren Buffet, such as annual reports from Berkshire Hathaway. Fast forward a couple of years, and the book The Snowball was released. The Snowball has not been written by Warren Buffett himself, but he has been involved when the author Alice Schroeder wrote the book. After I've read The Snowball, I realized that some facts in the book The Warren Buffett Way wasn't completely correct. This is exactly why you should read books about investors written by the investors themselves, or in closely collaboration with the investors.

One famous investor who has written several books about himself and how he thought when he analyzed stocks is Peter Lynch. He has written several books, and I've read two of them: One Up On Wall Street, and Beating the Street. If you are going to read one book about Peter Lynch, you should read One Up On Wall Street - the book is on my top-5 list on books to read about stocks. The book Beating the Street was a great book as well, but not as good. However, you may find some interesting quotes from the latter book:

Why it is easier for an amateur to make money from stocks - compared with professionals:
The individual is free of a lot of the rules that make life difficult for the professionals. As an average investor, you don´t have to own more than a handful of stocks and you can do the research in your spare time. If no company appeals to you at the moment, you can stay in cash and wait for a better opportunity. You don't have to compete with the neighbors, the way professionals do, by publishing your quarterly results in the local shopper.
Always invest in companies you can easily understand:
Never invest in any idea you can't illustrate with a crayon.
Professionals are sometimes wrong. If I recall correctly, one can hear the same old thoughts from Jim Rogers in 2012:
The lone panelist to sound an alarm in 1987 was Jim Rogers, who in 1998 rang the alarm bell once again, warning of an impending collapse of stock prices around the world. But nothing happened in 1988. Jim Rogers also thought that we were going to get a worldwide depression like we saw in the early thirties. Friends of mine, sophisticated people and not easily frightened, were talking about taking the money out of banks and hiding it at home, because they thought the money-center banks might fail and collapse the banking system.
When choosing a fund, don't try to chase the latest hottest fund out there, pick one with a consistent track record:
This is another national pastime, reviewing the past performance of funds. Yet with few exceptions, this turns out to be a waste of time. The lesson here is: don't spend a lot of time poring over the past performance charts. That's not to say you shouldn't pick a fund with a good long-term record. But it's better to stick with a steady and consistent performer than to move in and out of funds, trying to catch the waves.
You don't have find new stocks to invest in:
The best stock to buy may be the one you already own.
Professionals are losing money on stocks, the key here is to sell the losers and not add more to the position. The famous trader Paul Tudor Jones always said: "Losers Average Losers" - or losers are buying more when the stock is moving down:
There's no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or, worse, to buy more of it, when the fundamentals are deteriorating. That's what I tried to avoid doing. Although I had more stocks that lost money than I had 10- baggers, I didn't keep adding to the losers as they headed for Chapter 11.

September 24, 2012

David Einhorn - He who predicted the fall of Lehman Brothers in 2008

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Beginning
Most investors and traders remember the fall of Lehman Brothers in 2008 with horror, but the hedge fund manager, David Einhorn, made money from the crash. David Einhorn was born in 1968 and graduated in 1991 from Cornell University with a degree in Government. He has been described as an independent, original thinker who isn't afraid to stand on the conviction of his ideas.
    After finishing his college degree, David Einhorn wanted to work for the CIA, but decided to work for the investment bank Donaldson, Lufkin & Jenrette. He didn't like the job, and instead he joined the hedge fund SC Fundamental Value Fund where he worked until he founded the hedge fund Greenlight Capital with $1 million in 1996. Originally he wanted to get a PhD in Economics, but he got rejected from every program to which he applied to. 
    David Einhorn is a board member of the charity organizations Michael J. Fox Foundation and the Robin Hood Foundation. The Robin Hood Foundation was founded by the hedge fund manager Paul Tudor Jones and the goal of the foundation is to help poor people in New York. One other contributor to the foundation is George Soros - another hedge fund manager - who gave a contribution of $50 million to the foundation in 2009.
    While not analyzing stocks, David Einhorn plays Bridge, but he's most famous for being a skilled poker player. In 2006, he finished in place 18 in the World Series of Poker, and he finished in 3rd place in the 2012 World Series of Poker Big One for One Drop Tournament. One note here is that he gave the price money to different charity organizations. He has also paid $250,100 in a charity auction to have a lunch with the famous investor Warren Buffett. Poker and investing are actually not that different from each other. "Both poker and investing are games of incomplete information," he said. "You have a certain set of facts and you are looking for situations where you have an edge, whether the edge is psychological or statistical."

On his own
The hedge fund Greenlight Capital is long-short, value-oriented, and has generated more than a 20 percent annualized net return for its partners and investors. Today, the hedge fund manages about $7 billion of capital.
    David Einhorn is famous for criticizing the rating agencies. Moody's sovereign risk team has only four professionals covering twenty countries in Asia and the Middle East. Moody's does not have a long-term quantitative model that incorporates changes in the population, incomes, expected tax rates, and so forth. They use a 12-18 months short-term outlook to analyze data to assess countries abilities to finance themselves. David Einhorn criticized them because they lower the rating of a country or company after an event has happened. Two examples here are Lehman Brothers and AIG. The rating agencies Moody, Standard & Poor, and Fitch Ratings all maintained at least A ratings (a good rating) on AIG and Lehman Brothers up until September of 2008. Lehman Brothers later had to shut down, and AIG had to be rescued with a large bailout. If these three large rating agencies couldn't see that these companies were bankrupt - why do we need these rating agencies? "The truth is that nobody I know buys or uses Moody's credit ratings because they believe in the brand, they use it because it is part of a government-created oligopoly and, often, because they are require to by law," David Einhorn said.
    One other investment made by David Einhorn was Apple. Greenlight Capital bought the Apple stock in 1999 at $14 per share, and later sold the shares for $18 in 2000 - a profitable investment. Apple is currently trading at $700 per share. Greenlight Capital later purchased Apple again, but at a much higher price. 
David Einhorn is negative to the Japanese debt-mountain and believes that the probability of a Japanese debt default is high. Japan may already be past the point when Japan can't reduce its ratio of debt to GDP over any time horizon, and thus can never repay its debts. The Japanese debt is currently financed by its own population. The problem is that the population in Japan decreases as the population get older because of demographic issues, and a smaller population can't finance a growing debt.  
    One asset David Einhorn is positive to is gold. Gold is often being criticized for just sitting in a vault earning no interest - but how much interest can you get on the bank account today? "But then I look at the other major currencies," he said. "The Euro, the Yen, and the British Pound might be worse. So, I conclude that picking one of these currencies is like choosing my favorite dental procedure. And I decide holding gold is better than holding cash, especially now, where both earn no yield."
    Gold is not a bet on inflation or deflation. Gold does well when monetary and fiscal policies are poor and does poorly when monetary and fiscal policies appear sensible. One should buy stocks in great companies, but David Einhorn believes that there's also room in the portfolio for some gold.

Strategy
What David Einhor learned from his younger years at SC Fundamental Value Fund was to understand:
  • The nature of the business
  • The economics of the business compared to reported earnings
  • If the managements decisions are aligned with shareholder interests - David Einhorn doesn't like managers who don't answer questions directly
One of the analyzes made by Greenlight Capital is available in the book Fooling some of the people all of the time written by David Einhorn himself. The first chapter of the books gives a brief introduction to who David Einhorn is, and the rest of the book describes why the stock of the company Allied Capital is going to crash. David Einhorn began analyzing the company in 2002, but he had to wait until 2008 before the stock finally crashed. The shares of Allied Capital fell with 50 percent before the company was purchased in 2009 by Ares Capital.
    Greenlight Capital try to make money when a stock is moving up and when a stock is moving down, and they generally have a portfolio of companies with both types of long-short investments. The portfolio is always net-long - they have more long positions than short positions. In 2013, the average distribution between the positions looked like this: 109 percent long and 72 percent short.

Conclusions
  • It may take a very long time before the underlying value of a company is reflected by the stock price. David Einhorn analyzed the company Allied Capital in 2002, but had to wait until 2008 before Allied Capital finally crashed. The famous investor Peter Lynch always said that it takes between 3 and 10 years before the underlying value of a company is reflected by the stock price.
  • Professionals make mistakes. Both David Einhorn and Peter Lynch missed the large gains of the Apple stock. 

Source: Wikipedia, ValueWalk, Huffington Post, GuruFocus, Reuters, Bloomberg, Washington Post, New York Times, Scribd

Split of a second (crazy norwegians)

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This is Split of a second - a breathtaking and nicely done documentary. It features a crazy Norwegian throwing himself out from a cliff and glides like a squirrel to the ground. Each jump involves a minute of flying time and they can only make seven jumps in seven days.


September 22, 2012

5 must read books about how you can sell and market your company

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This is the distribution of your time when you are building a company:
  • 5 percent is the idea behind the company
  • 25 percent is the building of the product or service
  • 70 percent is the selling/marketing of the company
The number one reason to why a new company fails is that the founders of the company can't sell the idea. Some ideas can sell themselves if the ideas are good enough, but most ideas need some help to spread around the world. The best sellers can sell the worst idea, while the worst sellers can fail with the best idea. So, if you are building a company, you need to learn how to sell. Here are five good books about selling:

Crossing the chasm by Geoffrey Moore. This book is considered to be a bible if you would like to market a newly created company. The essence of the book is that when you are marketing a new company, you need to do it in several steps depending on the size of the company. Each step involves a certain type of target audience and you need to market differently to each target audience. Between step 2 and 3, there's a chasm you need to cross to reach step 3, hence the name of the book.  

The thank you economy by Gary Vaynerchuk. This book will tell you how to market your company by using the Internet. The author of the book used Twitter - and Twitter only - to market his wine business. He used to interact with people on Twitter, solving their problems involving wine, and he became some sort of expert on wine, and got more customers.

Influence by Robert Cialdini. The book will tell you how you can use different psychology principles to affect people. This book explains why the book above, "The thank you economy", actually works. One of the psychology principles covered in the book is "authority". The essence of the principle is that we as humans follow authorities. If we see someone in a black suit crossing the street despite a red traffic light, we follow him across the street. If we see someone wearing shorts, we wait until the traffic light turns green. This is what Gary Vaynerchuck did, he became an authority on wine, and his customers followed him. To be able to sell your business, you need to become an authority within your area. This book is similar to the book Predictably Irrational by Dan Ariely, and if you have the time you should read both. 

101 successful sales strategies by Stephan Schiffman. If you have never sold anything before, this book will give you an introduction to the art of selling. You can use the strategies from the book almost everywhere in every business area - not just online.  

Selling in a new market space by Brian Burns and Tom Snyder. This book will tell you how to sell something new no-one has ever heard about before. One example here is how to sell Trejdify. You can't tell someone that Trejdify is a social news site similar to Reddit where one can share and vote on the best business news. Almost no-one in the target audience will understand that. What you need to do is to change the description of the company to something people can understand. We changed the description to "online business newspaper where the readers are choosing the content". People will understand "online business newspaper" better compared with "social news site". 

Update! Since I made this list, I've discovered another good book on sales. It's called The Ultimate Sales Machine by Chet Holmes


The book's content is similar to other sales books - always prospect, write to-do-lists, etc. (That's is actually a good thing - it means you've learned something.) But it includes a few other pieces as well - including how to recruit sales people. 
Maybe the most important concept in the book is what is called "The Stadium Speech." The idea is that you should know enough to be able to sell your product/service to an entire stadium filled with people. What the author tells you to do is to change what you are selling. Let's say you are selling a kitchen. Tell that to the stadium and 95 percent will leave the stadium because they don't need a new kitchen. What you need to do is to change what you are selling into something else, such as "How to become a better chef." If you tell that to the stadium audience, then far more people will stay and listen to what you have to say. Then you just have to sneak in that kitchen you are selling into the presentation about how to become a better chef.   

September 19, 2012

Ryan Holiday explains how he can manipulate the media

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The book Trust Me I'm Lying has been written by Ryan Holiday who's working as a media manipulator. The book will tell you how you can manipulate the media and how it has been done before. One may think that everything written today by the larger newspapers is the truth - but that is not always the case. The reporter on the newspaper may have been manipulated by a new group of people whose job it is to manipulate the media.

To find news stories, 89 percent of the journalists today are using blogs and other social media services such as Twitter. To manipulate the journalists, one has to begin with manipulating the blogs. Blogs are easy to manipulate - they are each day searching through the Internet for news stories - and they are desperate to find something to blog about. Many bloggers are making their money from ads - and to get money from ads, you need many users each day. To get many users each day, you need to write many posts - and if you write many posts, you don't really have the time to check the sources behind each story you publish. From the book, we also learn that many of the larger blogs are lying on purpose. They publish made up stories to get more traffic to their blogs.

Let's say that you come up with a fake story about Microsoft that goes viral across the Internet. After a while, someone discovers that the story was a fake one, and thus all the journalist have to admit that they were wrong. The people who read the first article and the article saying that the first article was wrong, they will still believe that some of the faulty facts from the first article is the truth. Most people will also miss the second article since these types of articles correcting faulty facts are often hidden somewhere in the newspaper.

Here's a video produced by Greepeace to manipulate the media:


The name of the person who submitted the video to YouTube is kstr3l and the description of the video says:
"This was a private send-off for Shell's arctic rigs (Kulluk and Noble discoverer) at the Seattle Space Needle. The rigs were visible outside the window. Incredibly, there was an obvious malfunction of the model rig that was supposed to pour drinks for guests."
To make the video go viral across the Internet, they published the video on a smaller blog written by Occupy Seattle. The video was later picked up by larger Internet sites like Gizmodo, and the local Seattle newspapers. To make it look even more real, the people involved created fake legal messages on behalf of Shell threatening bloggers who reported on the story. How are you supposed to know if this was a hoax - or not? How credible is Greenpeace if the produce fake videos? How are we supposed to know that future videos from Greenpeace are not also fabricated?

Source: Forbes

September 18, 2012

Never trust a journalist - or why we need services like Trejdify

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I've recently found a research paper on the subject on which party Swedish journalists are voting on compared with what the people in Sweden are voting on. This is the result:

Party Journalists People
V 15% 5%
S 14 28
MP 41 12
C 4 5
F 7 7
M 14 34
KD 2 3
SD 1 3
Other 3 1
Source: jmg.gu.se

We can clearly see that there is a big difference between what the people in Sweden are voting on compared with what the journalists in Sweden are voting on. I believe that this is an important fact and that we don't always get the full picture from the newspapers.

The party most favorable by journalists is MP (Miljöpartiet) - or the The Environmental Party the Greens translated to English. If you remember the earthquake in Japan in 2011, and the following Fukushima disaster, you might also remember that the news about the nuclear power plants spread around the world and everyone were terrified about the events. The stock market crashed and some people in Sweden bought those Iodine pills that are supposed to be good if you are exposed to dangerous radiation. Sweden is on the opposite side of the world from Japan, and the dangerous nuclear radiation from Japan could not have spread to Sweden. Many journalists compared the Fukushima disaster with the Chernobyl disaster - but you can't compare a Chernobyl reactor type with a reactor type from a modern nuclear power plant. This is what happened at Chernobyl:
"These events exposed the graphite moderator of the reactor to air, causing it to ignite. The resulting fire sent a plume of highly radioactive smoke fallout into the atmosphere and over an extensive geographical area, including Pripyat. The plume drifted over large parts of the western Soviet Union and Europe."
A modern reactor doesn't have a graphite moderator - the graphite has been replaced with water - and water can't ignite. So the spread of the dangerous radiation can't become as great as the spread from the Chernobyl disaster. Why didn't journalists mention this when scientists during the Fukushima disaster mentioned it? You had to dig really deep through the Internet to find out why the spread of dangerous radiation could not have reached Europe. I'm not saying that nuclear power is not dangerous - of all the nuclear power plants in the world, 20 percent have dangerous graphite moderators, and I believe that we should close these power plants. Living close (within 30 km) to a nuclear power plant is also still dangerous.

In the end many countries decided to shut down their nuclear power plants. One other interesting fact is that the MP party in Sweden also want to shut down the nuclear power plants. Is this a conflict of interest? Can we expect that journalists write objectively about nuclear power - or will their writings be influenced by what they themselves believe in?

This is exactly why we need social news services like Trejdify, Digg, Reddit, and Hacker News. These content aggregators publish articles made by journalists and amateur bloggers. The big difference is that it is the people - not the journalists - that determines which of the articles are the best.

September 15, 2012

Random Show Episode 18

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A new episode of the Random Show with Kevin Rose (founder of Digg) and Tim Ferriss (author of The 4-Hour Workweek) is out! This is episode 18.

Ep18 THRQ7 from Glenn McElhose on Vimeo.

Lessons learned:
  • TF explained how you can find out whether a book is good or not by reading the most shared quotes on the Amazon Kindle site

Recommendations:

If you want to watch the rest of the episodes, you can find them here:
The Random Show with Kevin Rose and Tim Ferriss

September 12, 2012

Case Study: The worlds greatest amateur investor according to Peter Lynch

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Little is known these days that the famous investor Peter Lynch used to write columns labeled Investors Edge in the Worth Magazine. Most of these columns are not available online, so if you have them somewhere at home, please make them available to the rest of the world. One of the columns is however available online. The topic of that column is "Charlie Silk's 150-Bagger". In the column, Peter Lynch tells the story about Charlie Silk who was using the same methodologies as being used by Peter Lynch to find great stocks.

Charlie Silk used to run his own data-processing company, and since he had experience from that industry, he bought shares in the company Cook Data Services. The company sold software programs to oil and gas companies, didn't have any debt, had $4 per share in cash, and the stock itself was selling for $3. Charlie Silk bought as much as he could, and it proved to be a profitable decision. A couple of months later, Cook Data Services changed its name to Blockbuster Entertainment, and began renting video tapes to consumers. This was in the 1984 and only 30 percent of the US households owned VCR's to play the video tapes.

Charlie Silk talked directly with the management of Blockbuster, and one of the things he learned was that the revenues from the first Blockbuster store had doubled in the first 3 months after the opening. The customers could drive as far as 30 miles (48 kilometers) just to rent videotapes.

The Blockbuster stock increased 5 times between 1984 and 1985, but Charlie Silk didn't sell. He did not focus on the price of the stock, but on the company itself. Charlie Silk found the company before Peter Lynch himself had a chance to invest in it. The reason was that a Blockbuster store had opened in the same neighborhood as where Charlie Silk lived. Peter Lynch lived in a neighborhood without any Blockbuster video stores, so he didn't know about the company. Charlie Silk visited the stores himself, and he said:
"My sons and I would go over there on Saturday night and count cars. The parking lot was always packed."
Charlie Silk didn't sell when the analysts talked about that the US didn't need any more video stores, he had  seen the many customers in the store. Hard facts are often worth more compared with predictions from analysts.

The only mistake Charlie Silk made was to sell some stocks before the Black Monday crash of 1987. He didn't lose as much money has he could have short-term, but if he had kept his amount of stocks in Blockbuster Entertainment, he would have made 4 times his money. In the end, the Blockbuster stock had increased 150 times.

Source: Worth Magazine, May 1994 

September 11, 2012

What can the airliner SAS teach us about how to focus on our customers?

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Source: Wikipedia

The book Moments of truth tells the story of how the Scandinavian airliner SAS went from an aircraft-focused company to a customer-focused company. Yes, you heard right, SAS used to prioritize their planes - not their customers. The book was written by the former SAS CEO Jan Carlzon, who was also responsible for the change of focus in the 1980s. I don't believe that it was the intention of the old SAS to not focus on their customers, no-one at the company did it on purpose. Many organizations today believe that they are focusing on their customers, but in reality they are focusing on their products.

If you are going to focus on your customers, you have to let the employees at the floor make up their own decisions - and it will always involve taking risks of making the wrong decisions. Sure, you may lose money short-term - but your customers will be more satisfied with your company long-term. If 10 million customers are meeting five employees each time they interact with the company, the total amount of meetings will be 50 million. You can't control these 50 million meetings with standardized rules and instructions from the top.

Lose money short-term while making money long-term
An American businessman stayed at a hotel in Stockholm before he went to the Arlanda Airport outside of Stockholm. At the airport, he realized that he had forgotten his ticket at the hotel.
The old way: SAS would have probably said something like: "No ticket, no flight!"
The new way: SAS gave him a temporary ticket while sending a car to his hotel to pick up his lost ticket. The ticket from his hotel arrived before the aircraft departed from Arlanda Airport. SAS probably lost money since sending a car to pick up a ticket is not free, but the customer was happy and could tell his friend about the event.

Speak the same language as your customers
Make sure your customers are understanding what you are saying. SAS offered a 50 percent discount to everyone aged below 27.
The old way: The discount was named Y50. No-one understood what it meant and no-customers used the discount.
The new way: The discount was re-named to the Hundred Note. The price of the ticket was 100 SEK, and everyone understood the meaning of the Hundred Note. The Result? 125,000 more customers the first summer.

Provide a service and a product
When you are oriented toward your customers, your are probably in the business of providing your customers with a service in addition to the basic product.
The old way: SAS is in the airline business.
The new way: SAS is in the service business, transporting people in the safest and most efficient way possible.

Adapt the product to the customers - not the other way around
The old way: The planes at the Copenhagen Airport were being positioned at the departure gate that was most convenient for the planes. The customers had to move around the terminal to find the plane.
The new way: The planes had to be moved around the airport to the departure gates most convenient for the customers.

Test if it works
Go on a holiday to see if everyone can take responsibility
The old way: Jan Carlzon took a two weeks long vacation at his country house. But as soon as he arrived, the phone began ringing, and it kept ringing with unimportant question from people at the office. After a couple of days answering the phone, Jan Carlzon had to go back to the office.
The new way: Jan Carlzon took a four weeks long vacation and the phone was silent during the four weeks.

September 8, 2012

How could Paul Tudor Jones predict the Black Monday 1987 crash?

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Ask someone who was interested in the stock market in the 1980s to mention a day they will always remember, and the person will answer the Black Monday of October 19 1987. What happened on that day was that the Dow Jones fell with 22.61 percent. It was a bad day for all investors - but not for all traders. One trader who actually predicted the crash was Paul Tudor Jones. We are here going to explain exactly how he did it - and how you may do it yourself in the future.

To be able to understand the events of the Black Monday, we need to understand what happened in the markets the days before the crash. The Dow Jones moved from 777 in year 1982 to 1700 in year 1986 - that's 119 percent in 4 years. From that point and to August 1987, the Dow Jones moved up to 2700 in nine months. So the market had moved up very fast in a very short time, so the valuations were too high. These types of rapid movements are called parabolic curves, as seen in the image below.

Parabolic curve. Source: Chartpattern

If we draw a similar curve on the chart from the events around October 1987, we will find the following:

Dow Jones 1982-1988. Source: Yahoo Finance

Here's a more detailed chart:

Dow Jones 1983-1988. Source: Yahoo Finance

We can clearly see from the charts how the move before the crash of 1987 was parabolic, and how the crash began when the last "base 4" trend-line was crossed. The stock market has an historical tendency to accelerate downward whenever an upward sloping parabolic curve has been broken. This is a similar chart to the chart Paul Tudor Jones had before the crash. The same thing had happened in a similar crash in 1929, and Paul Tudor Jones had compared the chart from 1929 with the chart from 1987. He didn't know exactly when the crash would begin, but he had a plan drawn up to use when the crash finally happened.

We are not exactly sure what kind of plan Paul Tudor Jones had, but we know how Paul Tudor Jones finds the tops and the bottoms of the market. He has a very strong view of the long-run direction of the market and a very short-term horizon for pain. To find the bottom of a market, you need to test the bottom several times, sell if you haven't found the bottom, and buy again several times until you have found the bottom. You will end up with several small losses - and a big profit when you have finally found the bottom. That big profit is now hopefully larger compared with the small losses. Back in 1987, Paul Tudor Jones probably sold short several times as the market moved up - trying to make money when the market eventually would crash. He accumulated several small losses, but when the market crashed, he made a large profit. His fund's return after October 1987 had ended was 62 percent, and the fund's return after 1987 had ended was 200 percent.

It's also possible to see from the chart that it was a good idea to buy when the price had reached the "base 2" trend-line. Of course, the price could have continued to the "base 1" trend-line, but it can be something to have in the back of your head as a rule-of-thumb, to be ready to buy when the price is close to one of the lower bases.

One other funny thing from the crash was that after the crash, the stock market was at the same levels as one year before. The companies were doing just fine, and it was probably a buying opportunity of a lifetime. The famous investor Peter Lynch was on a holiday in Ireland at the time of the crash and had to fly home to New York. He later said:
"The decline was kinda scary and you'd tell yourself, "Will this infect the basic consumer? Will this drop make people stop buying cars, stop buying houses, stop buying appliances, stop going to restaurants?" And you worried about that."

September 5, 2012

How to solve a problem like North Korea in a peaceful manner

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Let's say you are living in a country like North Korea and one day you wake up and you say to yourself that you have had enough of this Kim Jong-un dictator. This is the day when you and your neighbors are going to take charge and once for all end the dictatorship that's destroying your country. The big question now is: What's the next step? How do you actually overthrow a dictator? The man who has the answer to your questions is Gene Sharp.

Gene Sharp was born in the US in 1928. He has always been a man of peace, so when he protested against the conscription of soldiers to the Korean War, he ended up in jail. He now faced a prison sentence that should have lasted 14 years. Before ending up in prison, he had begun to write a book about Mahatma Gandhi, another man of peace who contributed to the non-violent liberation of India from the British Empire. Gene Sharp asked no-one else than Albert Einstein if Einstein could write the foreword to his book about Mahatma Gandhi. Albert Einstein accepted, and using his connections with Albert Einstein, Gene Sharp had to spend only 2 years in prison. Gene Sharp would later found the Albert Einstein Institution - a non-profit organization advancing the study and use of strategic non-violent action in conflicts throughout the world. The video at the top features Jamila Raqib, who's working at the institute. There's also a documentary about Gene Sharp: How to start a revolution? if you are interested in learning more about him and his work.

Gene Sharp has written several books on the subject of non-violence. The most famous book is "From Dictatorship to Democracy - A Conceptual Framework for Liberation". If you ever need a manual on how to overthrow dictatorship - this is the book you should read. The book is available for free here and it's available in 27 languages. The book has spread around the world and did probably inspire the recent uprisings in the Middle East known as the Arab Spring. We know that the methods from the book were used in Serbia to successfully overthrow the dictator Slobodan Milosevic.


From Dictatorship to Democracy focus on how to destroy a dictatorship and how to prevent the rise of a new dictatorship. Destroying a dictatorship will never be an easy or a cost-free endeavor. Fighting dictators will bring casualties, but these casualties can be minimized if you use the findings from the book. As of 2008, 34 percent of the world's population lived in countries with extremely restricted political rights and civil liberties. Non-violent struggle could help these people as it helped the people when overthrowing dictatorships in Estonia, Poland, East Germany, Slovenia, Bolivia, and many other countries. We don't know for how long these non-violent struggles will last before the dictator falls, some took years while other struggles only took a few days.

One common alternative when fighting dictatorship is to use violence. Violent rebellion rarely works and could trigger a brutal repression by the dictator that leaves the people more helpless than before - like in the current conflict in Syria. The dictators often have a superiority in military hardware, ammunition, and transportation. Violent struggle worked in the Libyan civil war, but only because the outside world helped the "rebels" to bomb the tanks and fighter planes used by the dictator Muammar Gaddafi. Other often non-working alternatives are:
  • Guerrilla warfare - will last a very long time
  • Military coup - will replace one dictator with another dictator
  • Elections - are rigged by the dictator
  • External forces from the outside, such as the United Nations. Many foreign states will act against a dictatorship only to gain their own economic, political, or military control over the country. International pressure, such as economic boycotts, can be useful, but the people in the country are the ones who have to do the main push
  • Negotiations with the dictator - the dictator often refuses this alternative, or the democratic negotiators disappears mysteriously to never be heard from again 

In the end, liberation from dictatorships has to ultimately depend on the people's ability to liberate themselves. To get to this point, the first step is to understand the relationship between the people and the dictator. Dictators require the assistance of the people they rule, without which they cannot secure and maintain the power. If a dictatorship depends on the cooperation of people and institutions, then all you have to do is shrink that support. A dictatorship may appear to be strong - and the opposition may appear to be weak. But in reality, all dictatorships have some sort of weakness, such as personal rivalries and internal conflicts. These weaknesses tend to make the regime more vulnerable to resistance. Target these weaknesses and your revolution will have a greater chance of success.

To peacefully fight a dictatorship, you should use strikes and mass demonstrations. These two methods are not always enough since there are 200 other methods available to use. The use of a considerable number of these methods - carefully chosen, applied persistently and on a large scale - should cause the current dictatorship severe problems. Some of the 200 other methods are:
  • Selective use of various types of strikes - what happens if you stop the delivery of petrol?
  • Operating an underground press distributing anti-dictatorship material
  • People may report for work, instead of striking, but may work more slowly
  • Educate children at home to protect them from the propaganda by the dictatorship
Non-violence is the key here. It is not possible to combine non-violence with violence despite brutalities by the dictators. Here's a scene from the movie about Gandhi showing non-violence despite violence by the dictatorship:


If we return to North Korea, we know that it is up to the people in the country to solve their own problem, as we learned in the previous post: The impossible peace between South Korea and North Korea. South Korea doesn't want to be re-united with North Korea because of the costs involved.

Source: CNN