Have the courage to follow your heart and intuition. They know what you truly want to become.
-Steve Jobs
Why did Netflix spin off it’s DVD business?
When I heard about Netflix separating its DVD out, I wondered why this they were doing to customers like me. It’s more expensive and less convenient.
Here’s the deal. Netflix killed Blockbuster and the brick and mortar DVD rental business. I was glad to be rid of the late fees and the errands. One by one, the Blockbusters and Hollywood stores closed.
At this point Netflix has to be one of the biggest buyers of back catalogue DVDs. Sure there’s a section of DVDs in the bookstores and Walmart, but its a collection of low cost evergreen movies and collectors items. Eventually DVDs and DVDs will disappear more or less the way CDs have.
By now owning DVD rental and then killing it, they gain leverage over the studios in pushing the entire catalog to streaming as has already happened in music.
Netflix knows that disc storage will be as niche as CDs in the future and wants to own the next distribution system. Netflix wants to force the future in the way that Apple forced the future in music with iTunes.
My First Earthquake
I was sitting at the kitchen table having just finished lunch. A sliced banana with some Greek yogurt spooned over it. I felt our big orange cat pushing against my chair. Odd that when I looked down, I couldn’t see him. He kept pushing against the chair even though he wasn’t there.
A few seconds later, the washing machine was unbalanced. Except for some reason it wasn’t making any sound, just shaking the whole darn house. By this time everyone was trying to figure out how the washing machine could shake the whole house even when it wasn’t even running. Must be something else! People on the roof? A tree falling and pushing against the house? Was it about to topple over?
An earthquake? Yeah right, an earthquake in Baltimore. Well at least it made sense even though it was almost impossible.
Flickr and Google+
I have a photo workflow that’s been pretty stable for the past few years. Images are ingested from cards to Aperture which is the image database. Image processing is mostly done in Photoshop using NIK filters. On saving, the PSD image is saved in Aperture and a copy exported to Flickr with the FlickrExport plugin.
Flickr is great as a place to have images seen and to look at other images. I don’t spend as much time on the social aspects of Flickr as I have in the past, mostly because I’m not as engaged in photography as I am in other activities these days. Even without the social aspect of Contacts and Groups of Flickr, its still the image repository of choice for public display of images, supporting EXIF browsing and searching.
I also love how easy it is to post images to ODB, either directly from Flickr or the media manager in MarsEdit where this post was created. In this workflow, each tool can actually take care of multiple steps, but I tend to take the approach of passing the image and text from app to app based on where I prefer to perforrm each step. I could, for example, ingest and adjust in Aperture, but I like the layer control of Photoshop. Once the image is in Flickr, I can write and post to the blog, but I like the text and preview available with MarsEdit and an external editor.
I’m enjoying the early days with Google+. Uploading iPhone images works well with location tagging and ability to comment, so that’s a great venue for casual photography with the phone, my connected camera where images are spared my tortuous post-processing. I’ve uploaded a few of my processed images directly to Google+, realizing now they’re in Picasa albums at Google. It seems unnecessary to have duplicates there, so it may be best to link to Flickr or this weblog in the case of longer posts like this.
The Search for Enlightenment
“You’re lost inside your houses
And there’s no time to find you now
Well your walls are turning
Your towers are burning
Gonna leave you here
And try to get down to the sea somehow”Rock Me On the Water
-Jackson Browne
“Truth is what works.”
-William James
On my daily run today, Jackson Browne’s Rock Me On the Water came up on the Genius Playlist. I connected emotionally with the song as I almost always do, feeling that yearning for the transcendent truth that brings joy, identifying with the seeker on his journey to understanding, seeking the peace that lies beyond the mundane world.
William James was attacked during his lifetime and in subsequent decades by philosophers who felt he was destroying the search for truth by making it completely relative. For him, truth was a construct of the mind based on theories and mental models. Truth is a quality of thought based on how well what we think resembles the external world. He called this Pragmatism. We can approximate an accurate view of the world, but never reach ultimate truth.
The materialist philosophers who attacked him believed there’s a transcendent, absolute truth in the world that can discovered through observation and experimentation. How could it be, they asked, that one person’s truth could differ from someone else’s? How could I see one truth today and a different one tomorrow? Truth must be an absolute quality of statements. What is not True is False. The world of philosophy moved toward logic and proof and away from James’ view of world as a construct viewed by mind via brain processes.
I began to appreciate James’ views after reading contemporary cognitive science and philosophers of mind. Once one begins understanding that our brains function by creating models of the external world, this psychological definition of truth becomes most relevant. We build a mental model of the three diminutional space around us. We hear music and make sense of tone spatially, thinking of notes as being high or low, moving quickly or slowly. We think of crime epidemics as infectious disease or honesty as clean behavior in metaphorical models where one model provides meaning to a different model.
Where does that leave Jackson Browne’s romantic search for (capital T) Truth? Is there any reason to “get down to the sea”? Is it entirely an illusion to seek a non-scientific transcendent truth?
I submit that the poet is talking metaphorically about looking beyond the commonplace mental models that we use when “we’re lost inside our houses”. It is the mission of the poet to find the sea and come back and tell us about the journey and what it’s like to experience that joyous song.
Certainly the purpose of the spiritual search for truth is personal gain and fulfillment. Enlightenment is the clearest, most “right” view of the world possible. Reaching full human potential is a personal goal. One becomes a poet by returning from the sea and singing the song, inspiring others to join the joyous song.
The President, Luck, and Regression to the Mean
Being particularly lucky or unlucky is sure to interfere with good decision making. It’s hard to tell whether you’re succeeding because of a confluence of favorable effects due to chance or due to your exceptional brilliance. One’s internal model of self probably plays a role in how events are interpreted. Are you special or just really, really lucky?
If success came through chance, the model predicts that the future is going to look more average, for good or bad. It may or may not result in less risk taking. I can take risk knowing that the outcome is largely not in my control. I may win or lose; it’s knowing the odds of success that’s important.
On the other hand, if you’ve climbed to the top based on your merit then the internal model predicts continued success beyond the average, never regressing to the mean.
Case in point? Barack Obama. From Andrew Gelman writing at Frum Forum
More to the point, I don’t think that in January, 2009, Obama had any feeling he was in trouble.  For one thing, he’d spent the previous two years beating the odds and winning the presidency.  (Yes, a Democrat was favored in the general election, but Obama was only one of several Democrats running.)  As I and others have discussed many times, successful politicians have beaten the odds and so it is natural for them to be overconfident about future success.
Losing the 2010 midterms may have been a wakeup call, but then again it’s easy to construct a narrative where we claim responsibility for good outcomes and blame chance or other outside causes for the bad outcomes.
Purely from a statistical point of view, expect success to be followed by failure more often than not. In the end, we’re all average.
How Undervalued Are US Equities?
I started my online writing career with The Motley Fool back in the mid 90’s when they were an AOL darling. I not only learned about investment principles from the Dave and Tom Gardner, there were some professional editors who taught me how to write for general audiences. I’m much better off financially and professionally due to the investment and writing coaching.
I used to write about investing on this blog in the early days, but really only in relationship to investment decision making. It’s a good time to make some comments.
Times like this make longterm investors very happy, at least if you have investable cash. If you’re happy with companies you currently own, then these gyrations in markets and economies don’t really affect investment decision. But when the market is driven lower by news that has no predictive value, like a down grade in the US soveriegn credit rating, it can be time to invest.
In the well known book Stocks for the Long Run, there’s a neat analysis of the sources of variability in stock price. The largest effect is overall moves in the market itself. We’ve all seen days where the market moves up and down in concert. I compare it to currency fluctuation- the dollar has gained value relative to the entire universe of equities. Since equities are now moving down in the short-term, there is potential gain as they regress to the mean of steady upward increased value. Clearly, the time to initiate long term investment is now, in crisis, not at times of peak optimism.
The best longterm metric for valuing the universe of equities is to compare the cash they generate compared to lending money. The most common value used for US equities is the S&P500, the 500 largest US companies. The value for lending money is a bit more debatable, but 10 year treasury bonds are commonly used as a safe longterm indication of the cash generated by lending.
The earnings history for the S&P500 is available as an Excel download here (registration required). I’ll use the price to earnings ratio for the full year 2011 which is half historic and half estimates. I could use either 12 month historic data or 12 month projected data and the numbers will shift a bit.
The 2011 P/E is 12.68. I actually want the reciprocal which is the earnings in dollars for each dollar of stock of the index I own. That’s 1/12.68 or 0.079 earnings yield. Yields are always percentages, so we’ll call that a whopping 7.9% earnings yield. The yield on the 10 year treasury this morning is 2.39, [a near historic low][4].
So you get more than 3 times as much cash earnings today from equities than long term bonds an unusually undervalue signal for stocks. If you believe, as I do, that the value of companies will regress to the mean over the next few years, buy solid companies you understand.
My current portfolio? Apple (AAPL), Pacific Health Labs (PHLI), Barrick Gold (ABX), Walmart (WMT), and Williams Sonoma (WSM). And outside of my investment portfolio, my employer, PAREXEL International (PRXL).
How BIll Gates Takes Notes
Note taking apps are proliferating. Everyone agrees that note taking is “a good thing” Have you thought about why? Here’s a now famous example.
Back I n 2003, Rob Howard described a meeting with Bill Gates
The first thing I notice as the meeting starts is that Bill is left-handed. He also didn’t bring a computer in with him, but instead is taking notes on a yellow pad of paper. I had heard this before – Bill takes amazingly detailed notes during meetings. I image he has to, given all the information directed at him. The other thing I noticed during the course of the meeting is how he takes his notes. He doesn’t take notes from top-to-bottom, but rather logically divides the page into quadrants, each reserved for a different thought. For example, it appeared that all his questions were placed at the bottom of the page.
This is an anecdote that continues to be retold whenever the subject of note taking comes up on the web. Perhaps It’s most remarkable that Bill Gates would come into a room with nothing more than a yellow legal pad. And then proceed to take detailed notes. After all as a computer visionary and one of the richest men in the world, Gates could have an assistant take notes. He could ask for a detailed minutes and summaries from all meeting attendees. Or he could sit back as the senior guy in the room and observe the meeting, remaining aloof from the give and take of the project review.
Taking notes during a meeting sends a powerful message. It directly demonstrates that the notetaker is listening and processing the discussion. It shows that what is being said is important enough to record permanently. I make my living providing strategic advice and oversight to drug development teams. I’ve learned to watch for note taking in the meeting as a signal of significant information. When the pens come out, something important has been said. I can gauge my own impact by whether or not anyone writes down what I say.
For the note taker, the act of recording promotes active listening. Without making the effort, it’s all too easy to just follow the flow of presentations and discussion without being intellectually engaged. Synthesizing the information into a set of useful notes requires another stage of processing beyond simple understanding. Certainly it enhances the ability to recall and present the discussion later on. The fact that Gates didn’t have a computer makes him seem almost naked in the room. With nothing besides blank paper in front of him, he had to be focused on the meeting, not scanning and sorting the hundreds of emails he certainly receives in the course of a day.
If the meeting is important enough to be physically present, then it should be important enough to be mentally present as well.
Rob’s other interesting observation was that Gates used a structured note taking system. All we learn is that he divided the page into quadrants and used the bottom area to record questions.
The Cornell System
I’ve never been able to find any more information than this, but I assume that Gates picked up the Cornell system or some variant at some point in his life. Details on the Cornell system can be found at Cornell’s site. and there’s even a pdf generator to produce prepared templates for note taking.
The Cornell system is very simple, but was created to help college students record lectures and study for exams. A vertical line is made about a quarter of the way from the left margin. The large right side is for notes, the smaller left side is for “Cues”, questions based on the notes that can be used to clarify and recall the information in the notes. A bottom area of about 2 inches is for summarizing the notes on the page for easy reference.
I modified the Cornell system for my own use by using the cue area a place to record decisions and next actions. Taking Gate’s lead, I used the bottom for questions to pursue during or after the meeting- often topics or ideas to record later for my own use. I’ll freely admit that this sometimes becomes a distraction from active listening, but it keeps me in the meeting and away from email and social networking.
That takes care of the meeting. Once you’ve captured a few pages of notes, then what? First, even if the notes were never referenced again, the act of taking notes itself has been valuable in and of itself. But most of the time some processing is in order. And that simply means getting what’s useful into the other systems used to keep information available. Gathering next actions and appointments into lists and calendars, for example. Updating project summaries perhaps.
What I’ve personally find most useful is to file the notes in a project folder that comes out of the filing cabinet when I work on the project in the future. This kind of active note taking is a great aid to memory, vividly bringing back the logic and emotion of previous discussions and decision making. There’s the good and the bad, the “I told you so” notes and the “How could we have been so naive” notes.
Using meeting notes to bring the past vividly to mind leads to better decision making that always allowing the past to be a vague shadow that clouds our thinking.
Banish Fear
It’s so hard to go back to making poor photos again. Better to keep the hand in rather than give up.
User Experience: Sony NEX-5 As Travel Camera
Over the last few days I’ve posted some images captured on a trip to San Francisco. It was one of my first opportunities to spend a few hours shooting with the Sony NEX-5 in my usual travel style.
I have two requirements for a travel camera. First, it needs to stay out of my way both in use and in transit. My Nikon DSLRs are just too heavy and complex to meet my needs. I start carrying a spare lens or two with the camera and I have a kit.
I find myself making decisions about lenses, focus, exposure that are great for contemplative landscape photography, but not my photographic mindset when walking around a city.
I shoot quickly and by instinct. If something looks interesting, I’ll focus, frame and shoot. If I’m worried about the exposure, I’ll check the image on the LCD, but mostly I grab shots and keep moving. Sometimes I stop and capture people as they pass,but its the same approach- the subject is moving instead of me.
Over the past few years I’ve created images with my Leica M6ttl on black and white film. I love the look and the Leica’s simplicity fits the shooting style. I’ve also gotten great images with the Sigma DP1. Its very slow to store a RAW image and be ready for the next shot, but that isn’t a big problem when I shoot in that slow rhythm of look and capture, look and capture.
The second requirement is that the images respond well to post processing. Exposure needs to be right on and the RAW contain enough information to re-imagine the scene using Photoshop. Both the film and DP1 meet this need in different ways. Film really auto-creates the re-imagining. The visual world rendered on TRI-X is not our world,but rather one of contrast and shading. The DP1 images have a clarity and solidity that fits my visual impressions of the world well. Both are limited by either fixed focal length (DP1) or small selection of primes (M6). Other cameras just haven’t been as responsive.
The NEX-5 is my best experience yet on both needs. It’s small and light. I don’t have a camera strap on it. I can walk with it balanced on fingertips hooked around the grip. It looks oddly proportioned but its balance as a tactile object is nearly perfect. It focuses quickly and accurately. I’ve found that using it like a rangefinder works best, keeping focus set to center spot then reframing after achieving focus. The rear LCD works well to compose. I rarely crop, preferring to frame in camera, moving until the image “looks like a photograph”.
I’m also really pleased with the sharpness and color depth in the raw files coming out of the NEX-5, These images are all captured with the kit lens, a typical midrange zoom that helps with framing and relative focus when needed. I’d like a wider angle at times, but generally in the city, my game is one of getting close and isolating as in this image.
I’ll be in Europe for a longish trip next month and expect that it will be the NEX-5 that comes along for shooting during the time off.