The Smartest People Reject Racial Identification

Steve Sailer writes a lot of extremely politically incorrect and fascinating stuff about race and culture. His discussion of the racial breakdown for LSAT scores contains one interesting piece of data that went unremarked: the people who didn't declare race ("No Response") were by far the most successful on the LSAT.

African Americans: 142.3
Native Americans: 147.3
Asian Americans: 152.1
Caucasian: 152.7
Hispanic: 146.5
Mexican American: 147.7
Puerto Rican: 138.3
Other: 150.7
No Response: 155.2

I wonder if some racial scores suffered disproportionately because members of that group are more likely to refuse to answer questions about race. How do I go about getting a racial breakdown for people that don't like to discuss their race? :-)

Unrestrained Anger

Rolling Stone has done some blame-assigning for the current economic situation. A bit of a "deregulation caused all the problems" bent that I don't really buy, but it's highly enjoyable to read such a negative view of all the parties involved.

This article was sent to me with the following economy related quote which cracked me up:

I am a serial dater and a man-whore. I used to take artsy low-income girls on expensive dinners to get laid. Now I can only afford to date fat chicks and punk rock girls. I have adapted.

Stock Trading Lesson Learned

After the great market collapse of ought 8 (here's hoping that collapse is mostly done!), I decided that it was time to dip a toe in the pool. So I opened up a Questrade account, minimally funded it, and started learning how to read financial statements. And asked a lot of obnoxious questions of Sacha of Double Blind.

I have opened a few positions, but closed none. While there is plenty of opportunity for me to further squander my money, I made one series of mistakes on a single position that I hope to never repeat. The company in question - which I will not name to avoid increased mocking by Sacha - was clearly going to pass through a rough patch, but the stock had already taken a beating and I thought there was an opportunity.

My mistakes:

1. Obvious trouble ahead does not mean that the price will not fall further when the bad news is officially announced. In this case the news wasn't even bad - the quarter was actually fantastic but the dividend was cut in preparation for the coming hard times.
2. I used 2008's financials for valuing the company, without looking at previous years. Turns out that 2008 was a banner year, with almost double the revenue and profit from 2007. Not representative at all.

By the time I pieced this together the stock had fallen to the point where it is again a good buy according to my new standards. So I am now holding hoping to recover what I lost, but am concerned enough about the inevitable real bad news that is going to be announced that I won't increase my position.

Do Mutual Funds Ever Make Money?

Make that: Aside from the issuers and managers, does anyone ever profit from investing in mutual funds? I'm aware that there are ups and downs in the price, so it is theoretically possible to buy low and sell high, but mutual funds target people that don't know how to calculate what is low and what is high. (If they knew that, they would probably cut out the middle man.)

Now, I've been burned twice by company matching plans that encouraged the purchase of mutual funds that fared poorly, so I have a pretty negative impression of the things. However, it seems that there a number of systemic problems with mutual funds that make them virtually guaranteed to lose money.

• Mutual funds never turn away investors. Even if a fund manager believes that there are no good investment opportunities, people are still allowed to purchase more shares of a fund. If those purchases were kept around as cash, they would simply dilute the profits of the earlier investors. However...
  
• Mutual funds can't hold large sums cash. It says in the prospectus what the cash percentage target is, and you can be sure that every dollar beyond that is going to be invested in something, regardless of how overpriced the market might be.
  
• Mutual funds are stuck with a defined category of investments. This makes it much more likely that your money is being put in mediocre (at best) investments.
  
• Mutual funds take their two percent (or so) every year regardless of performance. OK, this one everybody understands. But it means that in order to make average returns, you will have to have better than average market timing. And again, mutual fund investors are taught to buy regularly and hold long - not to learn enough to predict bottoms and tops.