Monday, September 3, 2012

Pricing Power

From the book The Investment Checklist by Michael Shearn.

“Businesses that have pricing power typically have several characteristics in common such as high customer- retention rates; their customers spend a small percentage of their budget on the business’s product or service; the customers generate high margins and lots of cash flow; or the quality of the product is more important to the customer than the price.”
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"Price increases add value to the business when they add to operating income, rather than just offsetting new expenses."

Neil Barofsky on EconTalk


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Related book: Bailout

2010 Repost: WSJ Op-Ed: Open Letter to Ben Bernanke

As talk of QE3 remains in the headlines, I thought it might be a good time to review this Op-Ed, which was signed by Seth Klarman, Jim Grant, Jim Chanos and Niall Ferguson, among others, in November of 2010.





Scaring the Voters in the Middle – by Nicholas Kristof

I don’t link to much political stuff here. I don’t claim any affiliation to a political party and try to be as independent in my political views as I am when looking at potential investment ideas. I think my distaste of the ideologies by both major parties on many issues is likely shared by a lot of other people, but that the benefits and feelings that come from being part of a specific group are unlikely to bring Darwin-like objectivity into the political discourse any time soon.

In his 2007 USC Law School Commencement Speech, Charlie Munger said: “Another thing I think should be avoided is extremely intense ideology because it cabbages up one’s mind. You see it a lot with T.V. preachers (many have minds made of cabbage) but it can also happen with political ideology. When you’re young it’s easy to drift into loyalties and when you announce that you’re a loyal member and you start shouting the orthodox ideology out, what you’re doing is pounding it in, pounding it in, and you’re gradually ruining your mind. So you want to be very, very careful of this ideology. It’s a big danger.”

I didn’t watch much of it, but the clips I did see from the recently-completed Republican National Convention contained plenty of cabbage, though there were certainly some good and important points made as well. I suspect we’ll see the same from the Democrats during their convention, which takes place in my home city this week. The Kristof article excerpted and linked to below goes into a little of the Republican ideology on the issue of abortion. I think the economic ideologies of the advisors and economists giving advice to each party would of more interest to readers of this blog, and maybe someone will write an article on that in the future.

Maybe one day—in a galaxy far, far away—politicians will take the approach that: (1) differences of opinion exist on topic ‘x’ and will continue to exist; and so (2) because of these differences, I need to focus on making the best laws for the country and its people that take those differences into consideration, even if I am firmly on one side or the other as far as my personal opinion is concerned.








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Genome Brings Ancient Girl to Life

Things like this get me excited for all the young people of the world who are interested in science and choose some field related to genomics for their career paths.




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Related links:


John Mauldin: The Consequences of Easy Monetary Policy


Baltasar Gracián quote

“Character and intelligence. The poles your talent spins on, displaying your gifts. One without the other brings only half of success. It isn’t enough to be intelligent; you must also have the right character. The fool fails by behaving without regard to his condition, position, origin, or friendships.”-Baltasar Gracián, The Art of Worldly Wisdom

Hussman Funds 2012 Annual Report

Sunday, September 2, 2012

Nassim Taleb quote

“Seize any opportunity, or anything that looks like opportunity. They are rare, much rarer than you think. Remember that positive Black Swans have a necessary first step: you need to be exposed to them. Many people do not realize that they are getting a lucky break in life when they get it….Collect as many free nonlottery tickets (those with open-ended payoffs) as you can, and, once they start paying off, do not discard them. Work hard, not in grunt work, but in chasing such opportunities and maximizing exposure to them. This makes living in big cities invaluable because you increase the odds of serendipitous encounters—you gain exposure to the envelope of serendipity.” –Nassim Taleb, The Black Swan

Why You Should Lift and Lower Heavy Things

Art De Vany talks a lot the importance of the lowering process when working out and focusing on fast twitch (FT) muscle fibers. This article from Mark’s Daily Apple is a great summary, with the key ‘how-to’ points on the lowering part of it pasted below (though whole article contains more detail). Below that excerpt, I pasted an excerpt from De Vany's Essay discussing his 15-8-4 sets that probably would combine well the lowering recommendations in this article to access the FT fibers on both the concentric and the eccentric movements.

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Excerpt:

Lowering Heavy Things to Maximize Muscular Force

Every exercise has two parts: lifting the resistance and lowering the resistance. Lifting the resistance is called the concentric portion of the exercise. Concentric is when the muscle contracts. Lowering the resistance is called the eccentric portion of the exercise. Eccentric is when the muscle extends. Lifting weights—the concentric action—gets the most attention, but research shows that lowering weights—the eccentric action—can get us more results since safely and slowly lowering heavy things enables us to generate more force. M. Roig at the University of British Columbia found that “Eccentric training performed at high intensities was shown to be more effective in promoting increases in muscle.” Why? E.J. Higbie at University of Georgia tells us, “Greater maximum force can be developed during maximal eccentric muscle actions than during concentric.” And N.D. Reeves at Manchester Metropolitan University echoes with, “Muscles are capable of developing much higher forces when they contract eccentrically compared with when they contract concentrically.”

If you’d like to see how much stronger you are “on the way down,” hop on a seated row or chest press machine (or any exercise that moves on a horizontal plane—to eliminate the influence of gravity) and select a weight that you cannot lift with one arm but can lift easily with two arms. Lift it with two arms and cautiously relax one arm and observe as you are able to lower the resistance with one arm. You couldn’t lift the weight with one arm, but you could lower it with one arm because your muscles are literally stronger on the way down. You muscles can generate more force eccentrically—when lowering heavy things—than they can concentrically—when lifting things.
"Over the past several decades, numerous studies have established that eccentric contractions can maximize the force exerted and the work performed by muscle…that they can attenuate the mechanical effects of impact forces; and that they enhance the [good] tissue damage associated with exercise."
– R.M. Enoka, Cleveland Clinic Foundation
The takeaway here is not to stop lifting heavy things. It’s to note that our muscles generate more force eccentrically, so lowering heavy things may enable us to activate even more of our uniquely helpful type 2b fibers. It’s another great exercise option for us. Here’s how to give eccentric exercise a whirl.

How to Lower Heavy Things

  1. Get warmed up by walking briskly or riding a bike for a few minutes.
  2. Pick a resistance you cannot lift with one arm or leg—depending on the exercise—but can easily lift with both arms or legs. Let’s say 50 pounds.
  3. Lift the resistance with both arms or legs. Each arm or leg is lifting about half the weight—25 pounds in this example.
  4. Lower the resistance with only one arm or leg for ten seconds. Each arm or leg slowly—count to 10—lowers all the weight—50 pounds in our example.
  5. Repeat until it is impossible to lower the resistance with only one arm or leg for ten seconds. If this takes more than six repetitions, gradually add resistance until it only takes six repetitions.
  6. Smile because previously you would have stopped doing this exercise when you could no longer lift 25 pounds per limb, and now you are stopping when you can no longer lower 50 pounds per limb.
"Eccentric training resulted in greater hypertrophy than concentric training. We conclude that eccentric fast training is the most effective for muscle hypertrophy and strength gain."
– J.P. Farthing, University of Saskatchewan
With this technique we can lower heavy things in the comfort of our own home or at the gym. But before we go get eccentric, there are two important rules to keep in mind.

First, if we choose to exercise eccentrically on machines at our local gym, then we should only use machines that work both of our arms or both of our legs together. This is the only way to have less resistance on the way up and more on the way down. If we pick machines working our arms and legs independently, we will lift and lower the same amount of resistance.
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Second, exercise eccentrically only when little if any balance is needed. Just as you would not pick up a giant flat-screen TV with two hands and then let go with one, you should only exercise eccentrically when no balance is needed.

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Excerpt from Art De Vany's Essay on Evolutionary Fitness:


Ascending Threshold Sets

In order to hit all the fibers and scale intensity according to a power law, I do supersets of ascending weight and descending repetitions. The sequence is intended to move up the energy and muscle fiber hierarchy, recruiting successively more muscle fibers and different fiber types until all but the FT fibers drop out. This exploits the "size principle" which says that the threshold of intensity needed to stimulate the motorneurons that fire the muscles increases with the size of the motorneurons. The FT fibers have the largest motorneurons and, therefore, require the highest intensity to fire. Power law training exploits this feature.

You apply the technology by doing one long superset of ascending intensity to force the ST and then the IT fibers to drop out until only the FT fibers are left. I begin a set with a fairly light weight, lifting and lowering the weight slowly to prefatigue the ST fibers. Do this for 15 repetitions. Then, taking only enough time to increase the weight do 8 to 10 more repetitions at a faster speed. Increase the weight one more time and do 4 to 6 repetitions at high, but controlled speed. I also slightly increase the speed within each set of repetitions, aiming at the FT fibers near the end of each stage.

I pause between stages of the superset just long enough to change the weights and these 10 to 20 seconds is enough to regenerate the ATP and PCr to do the next set. By the third phase, the lactic acid is burning, but it will quickly be taken up because I don't do any more of that exercise and move on to something completely different. (This is an advanced technique. It takes conditioning and a tolerance for lactic acid to get to this stage. To begin, do only two stages of the superset, aiming for 12 and 7 reps. Then move on.) I may aim at 15 reps, 8 reps, 4 reps in each phase of the superset, but no one is counting; it is always the acid burn that tells me when to stop, not some preset target of reps.

I do not go to complete failure, ever. Failure at the last rep is over rated because by then the high-energy muscle phosphates are gone and the lactic acid is limiting your power. You lose form and get hurt when you push too hard on the last rep. You don't develop strength using the muscle when its power is depleted and restricted by lactate; it is better to use alactic training (see below) for power. Each exercise is one brief superset with only 10 seconds rest between. Then it is over and that is all I do for that muscle group and I move quickly to the next group.


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