the signal and the noise (sic)

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The Book of the Week is “the signal and the noise (sic)” by nate silver (sic), published in 2012. In this volume, the author described in redundant and wordy terms, why human beings are so fallible in their predictions and forecasts (and explained the difference between the two). Basically, humans get distracted by noise, so they don’t zero in on the right signals in order to tell the future correctly.

Ironically, the author used less-than-ideal language in describing the epic failings of ratings-agencies in the 2008 financial crash. He should have pointed out that they could have mitigated, just a little, their false advertising by using better risk-assessment wording.

Silver wrote, “… trillions of dollars in investments that were rated as being almost completely safe instead turned out to be almost completely unsafe.” (Never mind the awkwardness of the word “being” in the middle of the sentence, or “it” in the middle of a sentence– so many recently published books have that kind of bad writing.) The ratings agencies should describe investments as “low-risk” or “high-risk” and use the adverbs “extremely” or “very” or “somewhat” or “slightly” as applicable, but never use the word safe.

Anyway, another irony was that the author appeared to be distracted by vast generalizations that were just noise– as cherry-picked data tend to be. He provided all sorts of line graphs and scads of data on housing bubbles. He cited a study on market prices of the “American home” completed by Robert Schiller and Karl Case that created an index based on a century’s worth of data– the years between 1896 and 1996, inclusive.

The research indicated that an inflation-adjusted home bought for $10,000 in 1896 would be worth $10,600 in 1996. Is that noise or what? Silver didn’t specify what “American home” meant. Anyhow, who would buy a home in 1896, and sell it in 1996?

Silver did admit that predictions and forecasts were less inaccurate when qualitative data supplemented statistical models. Worded facts are considerations that add real-world conditions because numbers never tell the full story in complex situations, which are dynamic.

Incidentally, at the book’s writing, he had had success in making predictions in professional baseball because: 1) an excessive amount of data on it had been collected, and 2) he claimed its rules didn’t change. The latter is not true anymore. And besides, performance-enhancing drugs, not to mention new stadiums– among other factors– have put new noise and signals in baseball statistics.

The author pointed out that more data actually made for worse accuracy in predictions in many areas of life. Technology in the form of software that can process scads and scads of data in record time has improved humans’ ability to specifically forecast severe weather, but not earthquakes. As an aside– in any area that involves linguistics, technology is overrated. A chatbot cannot comprehend complex concepts and nuanced language (like sarcasm, irony and idioms). American English is especially fraught with words that have multiple meanings, so it is highly contextual.

There are still financial crashes, gamblers who lose big-time, and “experts” who can’t modify conditions to improve the economy with certainty. Incidentally, as is well known, more and more, daily life in America has been infiltrated by politics.

Read the book to learn about futuristic pronouncements of: television pundits, professional-sports commentators and gamblers, seismologists, chess software, national-security advisers, poker players, and many others.

Nice Guys Finish Last

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The Book of the Week is “Nice Guys Finish Last” by Leo Durocher with Ed Linn, published in 1975.

Durocher was born in 1906 in West Springfield, Massachusetts. He began his baseball career playing utility infielder for the New York Yankees in 1925. He developed a reputation as a contentious alpha male. Branch Rickey, one of his bosses through the decades, said he was a “… man with infinite capacity for immediately making a bad situation worse.”

Durocher squandered his initial $5,000 annual salary on clothing, food and nightclubs in New York City. Always in debt, he was a pool-hall hustler, too. But everyone wanted to be seen with him, as his social set consisted of celebrities who lived life in the fast lane.

According to the book (which appeared to be credible although it lacked Notes, Sources, References, and Bibliography) professional baseball culture for most of the twentieth century was mean-of-spirit, with alcohol-fueled violence. Team personnel such as Durocher were always thinking of new dirty tricks to win games.

Durocher admitted to trash-talking to batters to psych them out so his team’s pitcher would strike them out. Players suffered injuries galore due to lack of protective gear that would minimize or prevent injuries; batters especially suffered, as team-managers told their pitchers to deliberately hit batters with their pitching.

If hit, the batter was awarded the equivalent of a single as compensation. Durocher wrote, “I once saw Diz [pitcher Dizzy Dean] hit seven straight Giants [the baseball team players] in Miami early in the exhibition season, because the Giants had the nerve to score seven runs off him in one inning.” Finally, in 1940 (!), team-executive Larry MacPhail of the Brooklyn Dodgers ordered his players to wear plastic batting-helmets. This, after batter Joe Medwick was knocked out by a pitch by Bob Bowman of the Saint Louis Cardinals.

Durocher claimed that during the time he managed the Dodgers, MacPhail “fired” him zillions of times in the mid-1930’s, but most of the time, didn’t really mean it, until a tipping point was reached. As is well known, from the 1970’s into the 1980’s, the “You’re fired” situation became a running joke between Yankees owner George Steinbrenner and team manager Billy Martin, in order to entertain baseball fans.

Read the book to learn of other similar episodes, and trials and tribulations Durocher faced in his career (hint– major issues included his own newspaper column; the ongoing hostilities between the Yankees and the Dodgers; the media’s anti-Durocher lies and smears in its baseball reporting; punishments imposed by a few baseball commissioners over the years for alleged libel committed by, and gambling among, members of the ball clubs managed by Durocher; and a few of the colorful characters whom Durocher recruited and managed) and more. Curiously, Durocher failed to mention performance-enhancing drugs.

Anyway, speaking of contentious alpha males, here’s some advice for voters in this ditty concerning the 2024 candidates.

SHOW, NOT TELL

sung to the tune of “Express Yourself” (Official Video) with apologies to Madonna.

[spoken] C’mon America, do you want to see substance and quality in 2024? Of course you have something to SAY about it. That is how we roll.

Ignore the candidates’ bragfest, people.
Feel FREE to put them to the test.
You know, you know you’ve got to make them disPENSE with their spiel.
We want to KNOW their positions for REAL.

Politicians PULL the strings and THEY reap all the gold.

Their eight-year plan is way too vast.

You know, that never lasts, no, no.

What we need is a maTURE public-servant whose policies are smart and sound.
What we usually GET is a king on a throne, who’s abOVE the law and brings us down.

Ignore the candidates’ bragfest, people.
Feel FREE to put them to the test.
You know, you know you’ve got to make them disPENSE with their spiel.
We want to KNOW their positions for REAL.

Deep tax cuts are the way to your heart, but they treat you like an airHEAD. No, budget plans are NOT romantic. We’re hypoCRITically in the red.

Well, there’s no FREE lunch in life, it is TIME for the nation to move ON. Govern-ment should give you chances, but you’ve got to CRE-ate wealth on-your-OWN.

Ignore the candidates’ bragfest, people.
Feel FREE to put them to the test.
You know, you know you’ve got to make them disPENSE with their spiel.
We want to KNOW their positions for REAL.

De-STRESS yourselves. You’ve got to make them SHOW, not tell. Hey, hey, hey, hey.
To distinguish the greats, make them have the debates.
Show what they’ve GOT. We’ll see the best of the lot.

After all, you won’t reGRET it. Think about how much support they deserve.
If they don’t deserve it, they shouldn’t get it.
It’s YOU they should serve. So please

Show themselves. Show themselves. Hey, hey.

What we need is a maTURE public servant whose policies are smart and sound.
What we usually GET is a king on a throne, who’s above the law and brings us down.

After all, you won’t reGRET it. Think about how much support they deserve.
If they don’t deserve it, they shouldn’t get it.
It’s YOU they should serve. So please

Ignore the candidates’ bragfest, people.
Feel FREE to put them to the test.
You know, you know you’ve got to make them disPENSE with their spiel.
We want to KNOW their positions for REAL.

De-STRESS yourselves. You’ve got to make them SHOW, not tell. Hey, hey, hey, hey.
To distinguish the greats, make them have the debates.
Show what they’ve GOT. We’ll see the best of the lot.

SHOW themselves. SHOW themselves. Hey, hey.

To distinguish the greats, make them have the debates.
Show what they’ve GOT. We’ll see the best of the lot.

De-STRESS yourselves. ReSPECT yourselves…

Black Box Thinking

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The Book of the Week is “Black Box Thinking, Why Most People Never Learn From Their Mistakes– But Some Do” by Matthew Syed, published in 2015. This volume attempted to answer the question: “How does failure-denial become so deeply entrenched in human minds and systems?”

The author described two ways of thinking:

1. Some people believe their abilities are fixed, so they won’t improve with practice. They have fear of failure, and make excuses and / or blame others for their failures.

2. Other people believe they can get better with practice, and they are honest about admitting they have made errors. They learn from them. Success is achieved only through trial and error, hard work and persistence.

Number 1 above is also described in the following quote from Bertrand Russell: “There is something feeble and a little contemptible about a man who cannot face the perils of life without the help of comfortable myths. Almost inevitably some part of him is aware that they are myths and that he believes them only because they are comforting. But he dare not face this thought! Moreover, since he is aware, however dimly, that his opinions are not rational, he becomes furious when they are disputed.” Yet another way of putting it is “hubris syndrome.”

Two of America’s recent presidents– George W. Bush and Donald Trump– were this kind of thinker. According to the author’s thesis, they succeeded against the odds (if success is defined as getting elected president), considering that they were blind to their own character flaws.

BUT– their common beginnings saw them through: They both began with the special advantages of inheriting money, mentors, lawyers, and valuable career and political contacts. They proceeded to fail upwards until they reached their peak “Peter principle” level, kind of like the joke: How do you make a small fortune in Israel? Answer: Come with a large one.

The author drew parallels between the topic-areas of aviation and healthcare delivery. These involve life-and-death scenarios when things go extremely wrong. However, that is where the similarities stop. People who have shaped the evolution of aviation have built up a knowledge-base that has served to produce lower and lower death tolls when catastrophes have occurred; powerful, influential people working in healthcare have been stubbornly resistant to adopting measures that would result in a drastic reduction in unnecessary deaths.

The author cited real-life examples from Great Britain and the United States. But there are other major reasons why his comparison is mostly invalid. These involve lawsuits, unions, government regulations and the political climate at the time of the disasters, and the following:

Obviously, workers in aviation have more of an incentive to improve safety, because in a disaster, many more people might die all at once in a plane crash, compared to the one patient on an operating table or examination table. Even if members of the flight crew survive a disaster, their careers are likely over. Even when doctors are at fault, they usually continue their careers.

The author discussed the pros and cons of just-culture versus blame-culture. He described the latter thusly: “It may be intellectually satisfying to have a culprit, someone to hang their disaster on. And it certainly makes life simple.”

The author recounted how a public-relations campaign can fool even intelligent people into believing a particular method of crime-prevention among young people, works wonders. The only way to debunk such a myth is through numerous Randomized Control Trials.

Read the book to learn about additional concepts surrounding psychological self-deceptions that humans employ in order to avoid admitting failures: cognitive dissonance, narrative fallacy, top-down versus bottom-up product development, various biases, and others.

The Education of A Speculator

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The Book of the Week is “The Education of A Speculator” by Victor Niederhoffer, published in 1997.

Born in 1943 in Brooklyn in New York City, the author sorted “market advisers and investment newsletter writers” into eight different categories, providing a brief description of their behaviors or personality traits. He classified himself as “The Other World Person” because he ignored the overpaid noisemakers and distractions of conventional media outlets that purported to convey information on which securities to buy, sell, or avoid.

The author’s two data sources for his commodities, currency trading and investing ideas consisted of the National Enquirer and his research results from testing all kinds of variables in statistics-calculations of past securities-market data using software. No other sources.

The mid-1990’s saw great advances in statistics software modeling that could process scads and scads of data; hence, market players could erroneously use past performance of investment vehicles faster than ever before for predictive purposes to help themselves and others lose their money faster than ever before. And those advances might have played a part in the scandals and financial crashes that have occurred with alarmingly increasing frequency in the last thirty years. Big Tech’s and Big Media’s incestuous oligopolies (fraught with political donations) just keep getting more hegemonic, so that power and money keep feeding on themselves ad infinitum. Globalization is yet another wrench in the works.

At the book’s writing, global trade had been maturing for decades, but capitalism was still in its infancy in many territories of the world; particularly in ones that were becoming politically democratic again, or for the first time in their histories. Many European countries were in the process of adopting cooperation rather than competition in their financial and economic dealings. A large proportion of them even voted to use one currency among them. The United States kept to itself, but more and more people around the world were starting to trade or invest in foreign securities, currencies and governmental financial entities, so chain reactions occurred more and more.

The Federal Reserve (aka Fed) has always been a major influence on America’s financial markets. The author contended that the Fed was just as clueless as the rest of the country about what effects its making of rate-adjustments would have on the nation’s economy. It is currently just as clueless. But its announcements are made with such confidence and arrogance, that a large number of their listeners are brainwashed into believing they are receiving valuable information.

The incumbents– known names pre-Internet–became the most influential voices in the financial sphere. The wiliest ones use propaganda techniques to paper over their wrong predictions. They never apologize for the losses stemming from their pronouncements. The walls of the author’s business office were lined with portraits of ones who had disastrous losses.

To be fair, the author himself told various anecdotes of his own failures. In 1992, he bought IBM stock for his own kids. That was an embarrassing mistake. He learned to cut his losses at a certain level of the total money he reinvested. And, he didn’t let his greed get out of control when he was winning.

The author was a champion squash player. One similarity between squash and speculating is externalities–opponents’ actions determine players’ actions in the game. So, for instance, in ten-pin bowling, there are no externalities. In squash, there are. In one college finals-match, the author moved his body in a way that tricked his opponent into thinking the ball was going to go in a certain direction, but it went the opposite way. Traders and investors play similar tricks in their communications in the financial markets. Conditions change rapidly so even the market propagandists’ winning streaks don’t last long.

The reason is:

First, independent thinkers make observations or find obscure data that works in making them money. Then software detects their trading tricks. So word gets around, and everyone else jumps on the bandwagon so that the advantage is lost.

Human beings want so badly— to believe they can predict the future, and love to fantasize about getting rich quick– that they tend to look for patterns and order where none exist. The author did provide one vast generalization that might be valuable, though. His statistical analysis between the years 1870 and 1995 inclusive showed that years ending in the digit 5 were good years, and those ending in 7 were bad, for the American stock markets. He didn’t speculate as to why.

However, politics is one major mover of markets, and the collective mood of the United States specifically, might be a bit more upbeat in years when political uncertainty is at a minimum. Presidents and other politicians begin or continue their terms during years ending in 5. The public might be unclear about their future policy directions, or weary of them by the years that end in 7.

Anyway, read the book to learn a boatload more about the author’s philosophy, his trials, tribulations and triumphs in the markets, his research results and comparisons between financial markets and: ecology, games and sports.

Breaking the Ice

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The Book of the Week is “Breaking the Ice, The Black Experience in Professional Hockey” by Cecil Harris, published in 2003. This wordy, redundant volume described the experiences of African Americans who have played ice hockey in North America beginning in the twentieth century. As is well known, Canada’s national sport is ice hockey.

The first African American player in the National Hockey League (NHL) was Willie O’Ree. Originally from New Brunswick, Canada, at twenty-two years old, he played one game in January 1958, was demoted to the “minors” but then returned to play in the 1960-61 season. Professional hockey saw no African American players again until the 1974-75 season, when Mike Marson made the big leagues.

In 1978, the World Hockey Association was competing with the NHL for talent. Tony McKegney, an African-American Canadian, signed a contract with the former, to play with a team in Birmingham, Alabama. When racist white fans found out, they said they would cancel their season tickets if McKegney played. The team owner felt pressured into breaching the contract with him. The player’s agent was a crook, too. That’s another story.

Some newspaper writer in Toronto reported that McKegney was okay with his canceled contract. But the lying writer had never even spoken with him. Anyway, fortunately, McKegney was later drafted by the NHL to play with the Buffalo Sabres.

One major measure of talent is total goals scored in a season. In the winter 1973 season, McKegney scored thirty-six goals and was still a young twenty-five. Yet he was traded a bunch of times, anyway– playing on six different teams (one of them twice) by the time he turned thirty-three. It is certainly debatable whether race was a factor in those circumstances. For the 1991-1992 season, he played hockey in Italy.

Grant Fuhr helped the Edmonton Oilers win the Stanley Cup four times in the second half of the 1980’s and in 1990. He wore a plastic face covering for protective equipment– not because he was afraid of harm from opposing teams and racist fans, although that’s a justified fear. He was a goalie, so no one could see his skin color.

In March 2003, a racial slur led the coach and general manager of the Sault Ste Marie Greyhounds (Ontario League) to resign in disgrace. One black player said in essence, that hatred is taught in families where insecurity abounds, and is a sign of weakness all around.

In the 2003-04 NHL season, there were roughly six hundred players, only seventeen of whom were African American. Canadian hockey players (of any ethnicity) who are professional-hopefuls, can be chosen to live with a host family near a hockey venue to do an internship of sorts, that pays their expenses.

In the early 1990’s, one of the first black NHL players who trained in this manner, at sixteen years old, was Jarome Iginla. He also got to go to New York City to play with NHL greats in a special program, and played in a major international competition in Salt Lake City in 2002.

Read the book to learn much more about racial issues in ice hockey, the crackdown on hate speech uttered by hockey insiders, the childishness of fans (such as the throwing of chicken bones and bananas at black players), and the bygone era of hockey-fighting as sideshow entertainment.

Every Town is a Sports Town

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“Its demise was caused by low attendance, conflicting agendas among the owners, and a number of very poor business decisions.”

MLB? Possibly, but definitely the USFL by 1985.

Regardless, the Book of the Week is “Every Town is a Sports Town; Business Leadership at ESPN, from the Mailroom to the Boardroom” by George Bodenheimer with Donald T. Phillips, published in 2015.

In September 1979, the Bristol, Connecticut-based cable-TV channel ESPN began televising sports-related shows, by means of deals with: RCA (regarding a space-satellite), the NCAA (regarding covering basketball games), and Anheuser-Busch (regarding sponsoring the programs). The initial concept of the then-shoestring operation was to dispense information on sports 24/7, to serve fans. ESPN won contracts to show March Madness games and the NFL draft to start.

The workplace was team-oriented with a family-feel, so everyone was a jack-of-all-trades. In 1981, the author, a recent college graduate, worked as a mailroom guy and chauffeur of sorts, for executives of ESPN. He was later promoted to videotape librarian. He was willing to relocate when the company opened new branch offices, including Denver.

Anyway, ESPN could not survive financially on ad revenue alone, as the company was paying cable operators to carry its channel. It saw a loss of $25 million annually until it negotiated in 1982 to have cable operators pay the company a certain number of cents for each household receiving its channel, and that figure could rise up to a certain maximum percentage during the term of a multi-year contract.

Due to the ultimate takeover by Capital Cities Communications, and a favorable change in media law– ESPN grew by leaps and bounds. Meanwhile, it added professional tennis, golf, NASCAR, World Cup soccer, the America’s Cup yacht race, and Sunday Night Football (for which ESPN had to pay the NFL) to its lineup in the mid-1980’s.

Globalization, recording devices, the Internet and mobile devices have made the negotiations over intellectual-property rights and sports programming between and among ESPN and other stakeholders, infinitely more complicated. In 1985, ESPN could be watched in about 30 million viewer-households in America; in 1999– in about 80 million in America and about 100 million elsewhere worldwide.

Read the book to learn: of how the author achieved a high position at ESPN, and how he boosted the morale, energy and innovative thinking of his fellow employees; what the company did when it saw its ratings plummet; what his executive team did to resolve the controversy that arose when ESPN made a movie in which the “F” word was uttered approximately thirty times; about the author’s business philosophy; and much more about the history of ESPN.

ENDNOTE: The author’s photo appears on the book’s cover with his head very slightly tilted. This flex is pleasing to the human brain, projecting the impression that he is a people-person. His boyish good looks probably served him well, too. [Total lack of head-flex, projects an unfriendly vibe.]

Steinbrenner

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The Book of the Week is “Steinbrenner, The Last Lion of Baseball” by Bill Madden, published in 2010.

George Steinbrenner was born in July 1930 in Ohio. At fourteen years old, he was sent by his father to military school. He was groomed to inherit his father’s Great Lakes shipping company.

In late 1972, he got investors together to buy the New York Yankees baseball team from the media network CBS. His financial interest was the largest, however, so he was the face of the team. After the 1974 baseball season, he was indicted for committing felonies by making illegal, individual and corporate political contributions to the former late president Nixon’s reelection campaign. He never spent a day in jail, but was fined. The then-commissioner of Major League Baseball (MLB) Bowie Kuhn was out to get him for other reasons, though.

Nevertheless, in 1977, after just five years of ownership, Steinbrenner’s Yankees won the World Series, “… in spite of clubhouse dissension, a crazy manager [Billy Martin] and an even crazier owner.” This was due to overwhelming hitting talent. That is the most crucial skill required for a winning baseball team. The reason is– there is limited opportunity to score, unlike with all other major professional American sports (football, basketball, hockey and soccer). In baseball, a team must get its players on the bases and run around those bases in order to win the game. In all the other games, when there is a turnover, any player from the team on defense, can score on the spot.

Aspects of Steinbrenner’s character rubbed people the wrong way. His frequent dishonesty, temper tantrums, impulsive decision-making, micro-management, and excessive spending to recruit players for the Yankees caused emotional burnout and sky-high turnover among his employees. Even so, starting in 1976, there was a major change in the legal rights of Major League players– called free agency– that prompted the average player’s 1975 salary of $44,676 to rise by 1980 to $143,756. Steinbrenner was willing to pay top dollar for the players perceived to be the absolute best prospects for his Yankees, and also for his top executive team.

In 2004, the Yankees’ payroll was $185 million. Beginning in 2005, Joe Torre became the then-highest paid MLB manager, with a $19.2 million, 3-year contract. The following year, Brian Cashman became the then-highest paid general manager with a $4.4 million, 3-year contract.

Read the book to learn much more about Steinbrenner’s career as a professional baseball-team owner, and the constantly changing cast of characters who helped him navigate the Yankees’ ups and downs.

Somebody Down Here… / How Football… BONUS POST

The first Bonus Book of the Week is “Somebody Down Here Likes Me Too” by Rocky Graziano with Ralph Corsel, originally published in 1981.

Born in January 1921, Graziano grew up in Little Italy and the East Village in Manhattan. However, when he wed in 1943, he moved in with his wife’s well-to-do family on Ocean Parkway in Brooklyn; of which he nostalgically remarked, “They got Coney Island and Nathan’s hot dogs and Sheepshead Bay with all that good seafood, and they got Ebbetts’ Field and the Dodgers and a few bums like Leo Durocher…”

Nonetheless, his poverty-stricken childhood experiences and abusive father soured him on life at an early age. He continually ran afoul of the law, but his mother, who loved him unconditionally, kept bailing him out. For such boys in his generation (rejected by the military because he was an ex-con), the only way to escape his bad environment was to succeed in the “rackets” or make it big in show business or become a professional boxer. Read the book to learn how he turned his life around when he put his mind to do two of the three.

The second Bonus Book of the Week is “How Football Explains America, by Sal Paolantonio, published in 2008.

Incidentally, Vince Lombardi sought to recruit wayward boys such as Graziano for the high school football team he coached in New Jersey in the late 1930’s. He used the Englewood police department as his talent source.

Another interesting bit of information from the author in describing how professional football evolved into its current state: safety rules had to be imposed so the sport could turn its barbaric reputation around. For, in 1905, there occurred “…battered faces, broken ribs, bloody skulls, and at least 18 recorded on-field fatalities.”

Read the book to learn many other ways football and American culture became intertwined.