Category: Food for thought

  • Norway Is Running Out of Gas-Guzzling Cars to Tax

    Makes me wonder, if some day electric cars rule over the Indian car market what will happen to all the tax revenue from petrol and diesel?

    When it comes to sales of electric cars, Norway is in a league of its own. In September, battery-powered electric vehicles accounted for 77.5 percent of all new cars sold. That figure makes Norway a world leader by a long way—leapfrogging over the UK, where 15 percent of new car sales were electric as of October, and the US, where that number is just 2.6 percent.

    Norway’s electric dream has been credited to a series of tax breaks and other financial carrots that mean brands like Tesla can compete on price with combustion engines. But these incentives—and their success—have created a unique predicament: Norway is running out of dirty cars to tax.

    Norway Is Running Out of Gas-Guzzling Cars to Tax
  • Why Birds Can Fly Over Mount Everest

    A wonderful article by Walter Murch on how the birds came to have super-efficient lungs.

    The answer seems to be that bar-headed geese, like all birds—hummingbirds, ostriches, pigeons—have super-efficient lungs. It makes our lungs—and the lungs of all mammals—look primitive. I’m sure when birds get together they gossip about how pathetic our lungs are!

    All mammals, including us, breathe in through the same opening that we breathe out. Can you imagine if our digestive system worked the same way? What if the food we put in our mouths, after digestion, came out the same way? It doesn’t bear thinking about! Luckily, for digestion, we have a separate in and out. And that’s what the birds have with their lungs: an in point and an out point. They also have air sacs and hollow spaces in their bones. When they breathe in, half of the good air (with oxygen) goes into these hollow spaces, and the other half goes into their lungs through the rear entrance. When they breathe out, the good air that has been stored in the hollow places now also goes into their lungs through that rear entrance, and the bad air (carbon dioxide and water vapor) is pushed out the front exit. So it doesn’t matter whether birds are breathing in or out: Good air is always going in one direction through their lungs, pushing all the bad air out ahead of it.

    How did birds get such great lungs? They inherited them from dinosaurs. Birds are dinosaurs! When I was growing up in the 1940s, there was a category in biology called Aves, which meant birds. But scientists have now folded Aves into a category called Dinosauria, and those dinosauria, like pigeons and seagulls and geese, are flying all around us today. If you want to know what a dinosaur probably tasted like, eat some chicken!

    Why Birds Can Fly Over Mount Everest
  • What to do with your portfolio when stock market crashes?

    I don’t know. But the folks at Marcellus know. They call it ‘Post-facto rebalancing’.

    …we stay fully invested at all times and rebalance our portfolio in two ways to benefit from a stock market crash. Firstly, after a crash, we rebalance the portfolio to increase our allocation to companies that have undergone high drawdowns (we finance this investment by shaving off our allocations to companies that have NOT undergone high drawdowns). Secondly, after the share prices of our portfolio companies have recovered, we again consider rebalancing the portfolio to sell some allocation in companies that have seen a sharper recovery than the rest of the portfolio. Such rebalancing is also carried out if share price dislocations happen without a broader stock market crash.

    How Portfolio Rebalancing Tools Enhance Investors’ Returns

    They even have an real life example and discuss on the pros and cons later in the newsletter.

  • Financial independence

    I have been reading quite a few articles about achieving financial independence at age of 30, 35, 40 and 45. But all of them sound unrealistic to a middle class person like me.

    M. Pattabiraman from freefincal asks the question ‘Are we seeking work-life balance in the name of early retirement?’ and hits nail right on the head. With our already stressful lives and lack of work-life balance, we are actually seeking an escape route. At least I am.

    Seeking early financial independence comes loaded with sacrifices. We will need to invest each month anywhere from 2-3 times our monthly expenses. This means less splurging on devices, holidays, entertainment etc. Is this sacrifice worth it when you are young? Particularly if you do not have a clear plan of what to do after FIRE. I am not suggesting one way or another here. Only pointing out that the importance of such questions.

    Can we address work-stress and poor work-life balance with a change in outlook instead of FIRE? Can we work on our time management to find some leisure time each week? Can we convert “aimless time pass” to learning new things? Can we learn to develop a sense of detachment from the office? Will doing this regularly reduce our frustration? There is a good chance it might.

    I am not trying to say aiming for early financial independence is wrong. Just pointing out that is the not solution for our work frustrations if we do not know what to after. Extreme steps are not always necessary in life. A judicious mix of regular investing (an amount = monthly expenses), leisure, health, fitness can help us lead fulfilling lives.

    Are we seeking work-life balance in the name of early retirement?

    He ends with a pragmatic suggestion to achieve financial independence which will work for 95% of the folks. Worthy of putting on a refrigerator magnet and reading it every single day.

    Maybe I am over the hill, but this route to financial independence is a lot more appealing: Put your head down and work; smartly invest as much as possible; do not let the work get to you; do not deprive yourself of reasonable wants; stay fit and balance work, family and personal needs. Maybe one day, when you look up and take stock, you will become financially independent.

    Are we seeking work-life balance in the name of early retirement?

  • Thermocline of Truth

    This article was written in 2008. We are in 2021 now. And this article is still relevant.

    A thermocline is a distinct temperature barrier between a surface layer of warmer water and the colder, deeper water underneath. It can exist in both lakes and oceans. A thermocline can prevent dissolved oxygen from getting to the lower layer and vital nutrients from getting to the upper layer.

    In many large or even medium-sized IT projects, there exists a thermocline of truth, a line drawn across the organizational chart that represents a barrier to accurate information regarding the project’s progress. Those below this level tend to know how well the project is actually going; those above it tend to have a more optimistic (if unrealistic) view.

    Several major (and mutually reinforcing) factors tend to create this thermocline. First, the IT software development profession largely lacks — or fails to put into place — automated, objective and repeatable metrics that can measure progress and predict project completion with any reasonable degree of accuracy. Instead, we tend to rely on seat-of-the-pants (or, less politely, out-of-one’s-butt) estimations by IT engineers or managers that a given subsystem or application is “80% done”. This, in turn, leads to the old saw that the first 90% of a software project takes 90% of the time, and the last 10% of a software projects takes the other 90% of the time. I’ll discuss the metrics issue at greater length in another chapter; suffice it to say that the actual state of completion of a major system is often truly unknown until an effort is made to put it into a production environment.

    Second, IT engineers by nature tend to be optimists, as reflected in the common acronym SMOP: “simple matter of programming.” Even when an IT engineer doesn’t have a given subsystem completed, he tends to carry with him the notion that he whip everything into shape with a few extra late nights and weekends of effort, even though he may actually face weeks (or more) of work. (NOTE: my use of male pronouns is deliberate; it is almost always male IT engineers who have this unreasonable optimism. Female IT engineers in my experience are generally far more conservative and realistic, almost to a fault, which is why I prefer them. I just wish they weren’t so hard to find.)

    Third, managers (including IT managers) like to look good and usually don’t like to give bad news, because their continued promotion depends upon things going well under their management. So even when they have problems to report, they tend to understate the problem, figuring they can somehow shuffle the work among their direct reports so as to get things back on track.

    Fourth, upper management tends to reward good news and punish bad news, regardless of the actual truth content. Honesty in reporting problems or lack of progress is seldom rewarded; usually it is discouraged, subtly or at times quite bluntly. Often, said managers believe that true executive behavior comprises brow-beating and threatening lower managers in order to “motivate” them to solve whatever problems they might have.

    As the project delivery deadline draws near, the thermocline of truth starts moving up the levels of management because it is becoming harder and harder to deny or hide just where the project stands. Even with that, the thermocline may not reach the top level of management until weeks or even just days before the project is scheduled to ship or go into production. This leads to the classic pattern of having a major schedule slip — or even outright project failure — happen just before the ship/production date.

    The Wetware Crisis: the Thermocline of Truth

  • Momentum Investing

    Deepak Shenoy succinctly describing what momentum investing is.

    In the financial world, our job is to react to change. Not to predict it, because predictions are folly. You can predict a hundred things, and one of them is bound to happen, so you can say you were right. No one sees the ashes of the ones that went wrong.

    Reacting is easier. You wait till something becomes a trend, enough for it to sustain. And then you get in. You’ll never get in so early you can be called a soothsayer. You’ll get in after enough people have done so, at a higher price. And in the same way, you’ll be able to get out much after the top, but before the really bad damage hits. In the markets, we say – you might give up the first 10% or the last 10%, but at least you can get 80% of the trend.

    In so many ways, that is what momentum is. The trend is established and accelerating. A stock makes a new all time high. And if you just systematically buy those stocks, you’ll win on a few of them that go on to make the 2x, 3x, or indeed, 4x returns that some stocks have seen. And when you lose, you lose 10% or so, and one big winner makes up for enough losers.

    Wealth Letter July 2021: Following the Disruption

  • You need to cut yourself some slack

    A wonderful article by Shane Parrish on why slack is so important. It’s so important there is a book about it–Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency.

    …imagine one of those puzzle games consisting of eight numbered tiles in a box, with one empty space so you can slide them around one at a time. The objective is to shuffle the tiles into numerical order. That empty space is the equivalent of slack. If you remove it, the game is technically more efficient, but “something else is lost. Without the open space, there is no further possibility of moving tiles at all. The layout is optimal as it is, but if time proves otherwise, there is no way to change it.”

    Having a little bit of wiggle room allows us to respond to changing circumstances, to experiment, and to do things that might not work.

    Slack consists of excess resources. It might be time, money, people on a job, or even expectations. Slack is vital because it prevents us from getting locked into our current state, unable to respond or adapt because we just don’t have the capacity.

    Efficiency is the Enemy

    And at the end.

    Amos Tversky said the secret to doing good research is to always be a little underemployed; you waste years by not being able to waste hours. Those wasted hours are necessary to figure out if you’re headed in the right direction.

    Efficiency is the Enemy

    Wow!

  • What’s in a name?

    It’s often said that the stock market’s main oxygen comes from sentiments and the share price has hit the roof for a company that has the word ‘Oxygen’ in its name despite its business having nothing to do with the life-saving gas — something in high demand due to the Covid-19 pandemic.

    The share price of Bombay Oxygen Investments Ltd hit its upper circuit limit ₹ 24,574.85 apiece at the BSE on Monday, with the maximum permissible gain of 5 per cent due to the stock being under surveillance. The same is the case with some other little-known stocks with ‘gas’ or ‘oxygen’ in their new or old names and all of them are being probed for any possible foul play.

    What’s in a name? A lot for stock market, if it’s ‘Oxygen’ in Covid-era!

    I mean… I can’t even… Kaun hain ye log? Kahan se aate gain ye log?

  • Embrace the Grind

    An article worthy of putting on a refrigerator magnet so that I can read it every day.

    I often have people newer to the tech industry ask me for secrets to success. There aren’t many, really, but this secret — being willing to do something so terrifically tedious that it appears to be magic — works in tech too.

    We’re an industry obsessed with automation, with streamlining, with efficiency. One of the foundational texts of our engineering culture, Larry Wall’s virtues of the programmer, includes laziness:

    Laziness: The quality that makes you go to great effort to reduce overall energy expenditure. It makes you write labor-saving programs that other people will find useful and document what you wrote so you don’t have to answer so many questions about it.

    I don’t disagree: being able to offload repetitive tasks to a program is one of the best things about knowing how to code. However, sometimes problems can’t be solved by automation. If you’re willing to embrace the grind you’ll look like a magician.

    Embrace the Grind

    Read on for some amazing examples.

  • Dependency confusion

    A simple loophole discovered by Alex Birsan and Justin Gardner

    Last year, security researcher Alex Birsan came across an idea when working with another researcher Justin Gardner.

    Gardner had shared with Birsan a manifest file, package.json, from an npm package used internally by PayPal.

    Birsan noticed some of the manifest file packages were not present on the public npm repository but were instead PayPal’s privately created npm packages, used and stored internally by the company.

    On seeing this, the researcher wondered, should a package by the same name exist in the public npm repository, in addition to a private NodeJS repository, which one would get priority?

    To test this hypothesis, Birsan began hunting for names of private internal packages that he could find in manifest files on GitHub repositories or in CDNs of prominent companies but did not exist in a public open-source repository.

    The researcher then started creating counterfeit projects using the same names on open-source repositories such as npm, PyPI, and RubyGems.

    Every package published by Birsan was done so under his real account and clearly had a disclaimer in place, stating “This package is meant for security research purposes and does not contain any useful code.”

    Researcher hacks over 35 tech firms in novel supply chain attack

    Now here’s the kicker

    Birsan soon realized, should a dependency package used by an application exist in both a public open-source repository and your private build, the public package would get priority and be pulled instead — without needing any action from the developer.

    Researcher hacks over 35 tech firms in novel supply chain attack

    Yikes!