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Regardless of what you think of this whole Kavanaugh circus, Ashe Snow makes a very good case that we're living in a moral panic right now. Moral panics, or instances of mass hysteria, have occurred throughout history. Two of the most notorious are the Salem Witch Trials of the 1690s and the Satanic Panic of the 1980s and '90s. The panics almost exclusively involve women and children and fears for their safety, especially from sexual abuse. She notes five signs that we are "in the midst of a moral panic."
I could quote her on each point and it's well worth reading the article, but one quote really jumped out at me regarding the "believe the victim" mantra, Multiple surveys were created during the Satanic Panic. One limited survey conducted by psychologist Richard Peterson, who worked with police during Paul Ingram’s investigation, found about 25% of therapists in Tacoma and Seattle had treated alleged victims of satanic abuse. A survey from the American Psychological Association conducted in 1991 found that 30% of respondents had treated someone alleging ritual abuse, and 93% of those said in a follow-up survey that they believed the claims. Of course, the Satanic abuse daycare hysteria turned out to be a hoax.
Some of the recent revelations regarding high profile men such as Harvey Weinstein and Matt Lauer (and a couple women, such as #MeToo advocate Asia Argentino) are important. Sexual harassment and assault are important issues, but they are much more complicated than the media makes them out to be. No, it's not just Men=Bad, Women=Good every time. And moral panics are never a wise way to deal with serious problems.
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Check out my latest livestream for BiggerPockets with my brother Phillip. We discuss the advantages to hiring a property management company versus managing yourself as well as when it's generally best to either. We also get into the weeds of how to manage yourself or "manage the manager" too. Enjoy:
And for more on this, check out my article on the subject here.
Previous Livestreams: - A Guide to BRRRR Investing - How to Find Banks to Lend to You - How to Work with Tenants - How to Invest in Student Housing - How to Convince a Bank to Lend to You - Due Diligence for Real Estate
My latest article on BiggerPockets is up and it's about something we all need to take note of: Our reputation is everything, guard it with your life. I expand on this lesson as one of The 48 Laws of Power by Robert Greene. As he puts it,
OK, Robert Greene approaches these issues as a psychopath might. Even still, it's a critical lesson for all of us non-psychopaths as well. Guard your reputation with your life. Don't take the shortcut for the quick buck. In the long run, it just isn't worth it.
Check out the article here. This article was published on Data Driven Investor. The textbook industry has had a long history in the United States and world for that matter. Indeed, they’ve pretty much been with us since the dawn of writing. As Encyolpedia.com notes, “Historical records indicate that for as long as systems of writing and formal schools have existed (whether for secular, religious, or other purposes), textbooks, in one form or another, have also existed, whether on clay tablets; scrolls; bound sheets of papyrus, vellum, or parchment; or modern mass-produced books.” (1) As far as more modern times, The New England Primer and McGuffey Readers became hallmarks of American education all the way back in 18th century. According to the Lindy Effect, which states the future life-expectancy of a non-perishable item is proportional to its current age, we should expect the textbook to be around for a long time. That being said, given the rapid rate of technological change, it’s hard to imagine that textbooks won’t look dramatically different than they do now. Many already look dramatically different than a few years ago. Over the past ten years or so, the textbook market has fallen on hard times. Indeed, this is true for the book industry on the whole. Much of the book stores problems were related to ecommerce. Borders went bankrupt in 2011 and the number of book stores in the United States has fallen from 38,000 in 2004 to 22,000 in 2018. (2) That’s a drop of close to half in less than 15 years! But specifically, regarding the textbook industry, the problems that hit it were also from ecommerce, but in a different way. As noted in the article “The future of textbooks,” Richard Benson-Armer, Jimmy Sarakatsannis and Ken Wee note that, “In the 1990s, e-commerce players such as Amazon.com and eBay transformed the used-book market by better connecting buyers and sellers. As a result, used-textbook sales rose from a historical average of about 30 percent of total textbook sales to about 36 percent by the late 1990s.” (3) Then, in 2008, a mainstream textbook rental market started to emerge. As they note, New entrants such as BookRenter and Chegg were able to rent out new textbooks for less than the price of a used book. Budget-conscious students no longer had to worry about reselling their textbooks at the end of every semester.” (4) Survey data showed that in 2012, only 10 percent of students preferred renting their textbooks. By 2018, it was up to 30 percent. This all resulted in some fairly large losses for the major textbook publishers. As Tophat.com points out, “most of the sector’s major players reported substantial declines in sales and revenue for 2016, leading many of them to reorganize operations and lay off staff.” (5) Pearson PLC, which is the largest such education company in the world, had a 15 percent reduction in sales and reported losses of $3 billion that year. Right off the bat, one can see that rental services for textbooks are a new niche industry that has carved out a sizeable share of the textbook market. In some ways, this can be seen less as a loss to the industry as a whole, but more as a restructuring. In the same way that Uber and Lyft didn’t reduce the number of people paying for rides (in fact, they substantially increased that number). But Uber and Lyft did take a big share of the business away from more traditional taxi companies. The analogy to Uber and Lyft can obviously be extended further as they are both technology companies and it is in technology that the textbook industry is the most likely to be disrupted. Indeed, it has already been disrupted by technology. In an accounting class I have at UMKC, the textbook is an online textbook that is integrated into a testing and feedback system. The textbook is fairly similar to a PDF (although with different tabs that send you to different sections). The main difference is you can only login through a portal provided once you pay for the program. In addition, there is an interactive testing tool that corresponds to each chapter in the text. Each question in the interactive testing tool is multiple choice. If you get the question right, the next one will be slightly more difficult. If you get it wrong, the next one will be slightly easier. This allows students to progress through the material at their own pace instead of being over or underwhelmed by it. This interactive component to the textbook is also something that traditional textbooks simply could not provide. And there are many other options like this. For example, if I think back to the GMAT training course I purchased about five years ago, the program was extremely interactive. The program (provided by Kaplan) mixed readings, videos, questions, diagrams and the like, all of which improved the experience. And these various programs continue to improve. Indeed, this change was almost inevitable. As Karl Hughes compares the textbook industry to that of video rentals, “If you need an example of this shift, take a look at the video and movie rental business. At one time, video rentals happened in small ‘mom and pop’ stores or on a wall at your closest convenience store. As tends to happen with widely fragmented industries, a couple of amalgamated chains eventually rose to prominence - Blockbuster being the dominant one in most of the United States. Blockbuster is now all but extinct, and family video stores are a rarity - even in small towns - thanks to digital distributors like Netflix, Amazon Prime, cable companies, and the low-cost physical alternative, Redbox.” (6) Hughes offers four major reasons that the current situation is unsustainable,
As far as the first point, the average textbook cost $135 in 2011, which is very high for a book. We should expect competition to drive that down or offer better products (such as the interactive products noted above) for such a price. (8) As technological alternatives replace more traditional textbooks, we should also not expect the same companies that were successful in the past (such as Pearson PLC) will necessarily be successful in the future. The question will be how well these older companies can transition to new types of products (rentals, exchanges) and mostly to creating online products. Some will likely survive. It appears that Kaplan and Princeton Review, which specialize in test preparation programs for things like the SATs, MCATs and GMATs, have successfully made the switch. Others will likely be pushed out or diminished by new competitors. Old companies can no longer survive on inertia. Schools are becoming more and more focused on technology-driven classrooms, so even if they’ve bought a textbook from a particular publisher for many years, they are starting to look at alternatives. Already, we’ve seen a massive shift toward online products. Major publishers such as McGraw-Hill, Pearson and Wiley are still around and creating online products as well. But there are also a range of newcomers to the field. Many of these companies are similar to those noted above in that they focus on renting and exchanging textbooks. For example, Locolist, which calls itself “Your Campus Craigslist,” and focuses on allowing students to easily buy or sell textbooks (and other things) to each other. Another company called Packback “enables users to rent digital textbooks for $3-$5 per 24 hours. This pay-as-you-use method allows users to save hundreds of dollars on printed textbooks. The principle is similar to renting videos.” (9) Another interesting new company is named FlatWorld. Here’s how DistruptorDaily.com describes it, “FlatWorld is one of the pioneers in the movement to bring more affordable, ‘open’ educational content to college students. By “open,” they mean open source. (Open source means that virtually anyone can edit or add to the program.) This could have a major effect on educational textbooks as it could keep the textbooks while removing much of their profit potential. In effect, it could do to the textbook industry what Wikipedia did to the encyclopedia industry.
Only time will tell if the industry moves in a more open-source direction or not. I suspect we’ll see more digital, interactive software programs like the one I currently use in my accounting class. In that sense, the for-profit nature of the business should continue, although with a lot of new faces and probably a few bankruptcies. Regardless, textbooks will live on, even if they won’t look much like they have in the past.
 From SwiftEconomics.com
I consider Jim Collins to be the gold standard when it comes to business management literature. He has previously authored the bestselling and highly informative Built to Last, Good to Great and How the Mighty Fall. This time, he has teamed up with Morten Hansen to write Great by Choice: Uncertainty, Chaos and Luck-Why Some Thrive Despite Them All. This book rounds out the, err, quadrilogy (so far that is) about what makes some companies great and others not-so-great. This one focuses, as the subtitle implies, on how some companies thrive in volatile environments. Jim Collins’ strength is in simultaneously using massive amounts of research and finding a way to boil that down into a readable, coherent, almost bullet-point type narrative. For this boo, he had a team of 20 some researchers look through every major company in at least the last 50 years to find which one’s beat their industry averages by at least 10 times in highly volatile, unstable environments. He then puts forward memorable phrases to help build an overall framework. Terms such as “Level 5 Leadership,” “BHAG’s” and the “Hedgehog Concept” have become a part of the business lexicon. And in Great by Choice, he adds a few more. I will start at the end, however, with what in my judgement is the most important part; great companies don’t survive turbulent times by luck. He and his team painstakingly went through each of the seven 10Xer’s and their comparisons (similar companies that did not perform well in uncertainty) and lists every notable event of either good luck or bad luck. As it turns out, there was no statistically relevant difference in the amount of good luck or bad luck the 10Xer’s had as compared to the control companies. In fact, the control companies had ever so slightly more good luck. As a small aside, much was made about the case Malcolm Gladwell made in Outliers that much of what makes super successful individuals, super successful is luck. And while there is certainly some truth to this, he also makes the case that those outliers had to put at least 10,000 hours of work into their craft and have an IQ of around 120 or better (at least if they were in an intellectual field). It should also be noted that the less successful people he discussed who still had those types of qualifications were still quite successful, they just weren’t outlier successful. There are many less companies than individuals. Doing things the best way as an individual gives you a very high chance of success, and a shot at greatness. For companies, doing things the right way can all but ensure greatness. After all, tragically bad luck, like getting cancer, can kill an individual. But even if the CEO dies, a great company can still endure (assuming that CEO was a level 5 leader, of course). Indeed, what Jim Collins finds is that a “return on luck” is what is important. Great companies make the most out of it when they are lucky and are able to stomach the blows when they are not. Mediocre companies, not so much. How? Well, the keys all seem to lie in preparation and prudence. Here are some of the major points:
As Jim Collins discovered in How the Mighty Fall, making big bets with bad information is what usually kills great companies, not simply sulking into a slow, painful decline. And this book shows the other side of the coin. Great companies that thrive in uncertainty (and elsewhere) do so by marching at a steady pace while making prudent, careful decisions. Success, folks, is not flashy. If Jim Collins, and Great by Choice as well, have a weakness, it’s the flip side of the same coin that is its strength. While I think they’ve employed solid “research foundations”, one always has to be careful in boiling down the massive amount of information available into a few catch phrases, no matter how well supported they are. After all, we only have seven cases here, and it’s all correlative. Correlation does not by itself equal causation. Are there lurking variables? Did they oversimplify? Probably, in a few places here or there at least. Indeed, even his discussion on luck is, by necessity, rather subjective. After all, which events should qualify? If there is another reason to criticize Collins, it’s also, at least, superficial evidence that he is right; most of what he writes here, and elsewhere, rings true. Is it not better to be prepared than not prepared? Is it not better to try to get better at a consistent rate then go all in? But these lessons, like the one’s that Dale Carnegie illustrated in How to Win Friends and Influence People seem obvious at times, but so few practice them. Much of what Jim Collins writes feels similar. In a way it’s obvious, in a way it’s genius. But the most important thing is that he’s right. At least I think so. And therefore, I recommend reading his book. It’s not as good as Good to Great, so start there, but it stands on its own and is a very good addition to his seminal series.  Healthcare is (shockingly) not in the news right now. Regardless, this short article from SwiftEconomics discusses a not-very-well remembered part of American healthcare history: I came across a fantastic article a while back by Roderick T. Long titled “How Government Solved the Health Care Crisis: Medical Insurance that Worked – Until Government “Fixed” It.” As it begins: Today, we are constantly being told, the United States faces a health care crisis. Medical costs are too high, and health insurance is out of reach of the poor. The cause of this crisis is never made very clear, but the cure is obvious to nearly everybody: government must step in to solve the problem. Basically, there used to be these things called mutual aid or fraternal societies. These groups were made up of people, usually based on a common profession, that negotiated for cheaper services for their members and helped each other out when someone fell on hard times among other things. And they worked really well, at least they did until they were replaced by the dependency-inducing welfare state.
The article is definitely worth the read, and you can find it here.
I won't jump into the whole Brett Kavanaugh/Christine Blasey Ford debacle here. But I do think it's worth noting that this new "second accuser" Deborah Ramirez is, well, quite the sight to behold:
I mean, I don't hold the newspaper of Walter Duranty, Judith Miller and Sarah Jeong to a particularly high standard... but geez.
Has there ever been more transparent bullshit? The marijuana industry is a fascinating one. I recently watched the episode “Marijuana Millions” on the CNBC show The Profit (Season 4, Episode 20, obviously) and I think it provided a pretty good rundown of the rapidly growing sector. (1) While I’m not a user of marijuana myself, I do find the new industry to be immensely fascinating. After all, how many other businesses involve a product that is still considered illegal by the federal government? Yet, since Colorado legalized recreational marijuana in 2014, one state after another has followed in their footsteps. According to the Governing.com, “Thirty states and the District of Columbia currently have laws broadly legalizing marijuana in some form. This episode focused on the budding marijuana industry (pun intended) in California. The show took place in 2017, just before the broad legalization of marijuana was set to go through. So pretty much each company that was documented expected substantial growth in the coming years. In 2017, the marijuana industry grossed $9 billion in revenue nationwide and the show noted that the industry was expected to grow to $20 billion by 2021. (2) That is an extremely fast growth curve. That being said, there are a lot of things that make this industry very unique and somewhat risky. The host asked every entrepreneur he talked to about the risks of federal action. Some were nervous about it, as the federal government could do to the marijuana industry what it did to the alcohol industry in 1929 with Prohibition. Most thought that it wouldn’t be a problem, though. One even described this perception as a competitive advantage because it kept some competition out. He also noted that many of the large private equity firms had avoided the industry because of vice clauses and things of that nature. Such restrictions in supply create an “inefficient market” that can have higher margins than they otherwise would. But the risks of the government coming in and shutting these operations down did loom over some of the entrepreneurs. Ironically, the opposite problem loomed over one individual who was interviewed. He ran an illegal marijuana business that catered to recreational users. With recreational use being legalized in 2018, he feared that in all likelihood (unless taxes kept legal companies’ prices high), he would have to find an alternative source of income. Despite some restrictions and the fear of federal action, it still appeared that marijuana had been de facto legalized in California already. In many ways, at least in states with more liberal or libertarian cultures, politics was well behind the culture. This was definitely the case with California. The host even interviewed one woman named Bretta Carter who noted she was “a lifelong Republican” but that she had changed her mind on marijuana and was now building a 30,000 square foot facility to grow marijuana. Republicans tend to favor the free market, so I would expect this change of perception to continue among conservatives. The first company the show highlighted was called Canndescent. The firm opened in Desert Hot Springs, which is nearby the far better-known and more prosperous Palm Springs in southern California. For the better part of the 2000’s, the city has struggled. In 2001, the town went bankrupt. In 2014, it almost did again, when as CBS Los Angeles reported, “Desert Hot Springs, a modest bedroom community known for its boutique spas and hotels, expects to take in nearly $14 million in revenue during this fiscal year while spending $20 million. The city has already slashed its non-sworn workforce by 66 percent in the past eight years but has been overspending for several years.” (3) Having a $6 million, or 42.8 percent, deficit is an enormous hole to climb out of. But by 2017, the city had made a dramatic turnaround. And that turnaround was almost entirely due to the marijuana industry. Desert Hot Springs became the first city in California to allow for industrial-scale, indoor pot farming. Mayor Scott Mattis put it up for a vote and 70 percent of the town’s population voted yes. He credits this decision with the town’s revival and notes that taxes on marijuana growers and sellers could bring in as much as $50 million. This shouldn’t be that surprising since the town has issued permits to 30 growers for 3 million square feet of warehouse construction. Indoor growing has some significant advantages over outdoor growing. With outdoor growing, there can only be two harvests each year. There can be six with indoor growing. Obviously, this means you can produce a lot more marijuana with a lot less space. The host met with the founder of Canndescent named Adrian Sedland, who happened to be a Harvard MBA. Their brand focuses on the “high-end, luxury market.” A layman might not think that such a market exists in marijuana, but there are a lot of stereotypes about marijuana users that don’t fit well with the facts. Sedland believes they can sell each pound of marijuana for $3000. As a comparison, the seller noted above who works in the black market sells his marijuana for $2000 a pound. The goal of each facility is to produce 65 pounds of flour each harvest, which happens every 10 days. That would equate to $195,000 of product for each facility every 10 days. The question, of course, is can Canndescent break into the high-end market that may or may not exist. I believe they can. As the market develops, many niches and subniches will develop with it. It’s much better to own a particular niche than to be just a plain, old commodity. And some marijuana users will want (and have the money to afford) high quality marijuana and don’t want to be associated with the “stoner culture” that many marijuana users have been stereotyped with. In order to create this perception, Canndescent has dropped all the “stoner lingo” and has simply offered five products that are each named after a type of emotion that each brand of marijuana is supposed to enhance:
And if you are going to go after the high-end market, you have to provide a high-end product, as this exchange emphasizes: Sedland: “Smell the nose [of the marijuana], you’ll recognize that our nose doesn’t have any chemical burn. You’d recognize the cure on our product is perfect. That when you break it, it has a perfect snap, which means it’s going to be a perfect smoke.” It may cost more to provide a high-end product, but you can also sell it for more and there is usually a larger margin.
The show also detailed several other producers. One was a small startup named Treat Yourself that was started by two friends who made low-THC, vegan and gluten free edibles (food that contains marijuana). If this doesn’t show that the broader marijuana market is becoming very niched, than nothing will. The two friends were just getting started, but at the end, the show noted they had signed a deal with a major distributor which should drastically increase the size of their business. Another company highlighted was Kiva Connections. Kiva Connections is the biggest manufacturer of edibles in the state and focuses primarily on chocolate edibles. The company employs 85 people and produces 1000 pounds of edibles each day. Another company named Medmem were buying up stores, distributors and growing warehouses alike to vertically integrate their company and cut out the middleman. As can be seen, there were a lot of different business models being employed in this industry. Overall, what’s fascinating about the marijuana industry is the ability to watch a new industry rise out of almost nothing at an extraordinary pace. The profit potential is certainly there, although competition is becoming more and more stiff each day. And the ever-present threat of federal regulation is also there. That being said, it would appear that this industry is here to stay and should remain profitable for a long time to come.
So the roots of science's ever-growing reproducibility crisis probably lie in what's called the "file drawer problem" or "publication bias." As Wikipedia describes, Publication bias is a type of bias that occurs in published academic research. It occurs when the outcome of an experiment or research study influences the decision whether to publish or otherwise distribute it. Publication bias matters because literature reviews regarding support for a hypothesis can be biased if the original literature is contaminated by publication bias. Publishing only results that show a significant finding disturbs the balance of findings. And just how bad is the problem? Well according to a new study from The Royal Society; really, reall bad. In this paper, we show how Bayes' theorem can be used to better understand the implications of the 36% reproducibility rate of published psychological findings reported by the Open Science Collaboration. We demonstrate a method to assess publication bias and show that the observed reproducibility rate was not consistent with an unbiased literature. We estimate a plausible range for the prior probability of this body of research, suggesting expected statistical power in the original studies of 48–75%, producing (positive) findings that were expected to be true 41–62% of the time. Publication bias was large, assuming a literature with 90% positive findings, indicating that negative evidence was expected to have been observed 55–98 times before one negative result was published. These findings imply that even when studied associations are truly NULL, we expect the literature to be dominated by statistically significant findings. The underlined part is mine, of course. And I'm just going to repeat that again. "Publication bias was large, assuming a literature with 90% positive findings, indicating that negative evidence was expected to have been observed 55-98 times before one negative result was published."
Ouch! How long until we can conclude that every new science study--at least those in sociology and psychology--is completely bogus? |
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