Sunday, April 23, 2017

The Stock Market Index Revolution

The Index Revolution: Why Investors Should Join It Now by Dr. Charles Ellis explained a lot of the changes that I have witnessed in the stock market over the last 40 years. Dr. Ellis has a great deal of experience managing large pension funds and wealth funds. He explained the reasons why investing by amateurs like me no longer works and why it makes sense to invest in indexes.

In the 1960’s 99% of stock market trades were by amateur investors who traded just a few times a year. Today, less than 1% of stock trades are by amateur investors. Now, over 1.5 million professional traders, mutual funds, pension funds, and automated trading systems make 99% of the world-wide stock trades.

Full time professional and institutional traders take advantage of underpriced stocks by finding them faster than amateur investors. They do it by getting instant and detailed information about companies unavailable to amateurs.  Stock information sources can cost over $20,000 a year, impossibly expensive for an amateur like me managing my IRA and small portfolio of individual stocks.

Over the past 40 years, the trend toward professional and institutional stock trading led to the creation and spectacular growth of professionally managed mutual funds. Although the “famously successful mutual fund managers” paid huge salaries touted that their mutual funds performed better than the overall market, academic researchers found that over the past decade only one or two of their mutual funds out-performed the S&P 500 stock index. And, after the cost of trades and the high management fees, none of the mutual funds out performed the S&P 500 index.

The stock market generally goes up about 8% per year, averaged over 10 years. The expense of trades and staff, which is commonly 4% of the gain, can cut the long term appreciation of an investment portfolio by 50% of even the best performing mutual funds. Most of the mutual funds do not come close to matching the performance of the overall stock market index, but even if they did the net result would be less because of their costs.

These findings published by academia have led to a mass exodus from mutual funds to exchange traded index funds (ETFs).

The author’s career included managing foundation portfolios as well as researching stock fund results at Yale, Harvard, and Princeton. His unique experience makes the book an especially enjoyable read. I was so impressed with the data and view he presented that I immediately started moving out of individual stocks into ETFs. It has been about 90 days since I started and I am already very happy with the greater stability of the ETFs; no more disturbing daily volatility of individual stocks.

I highly recommend the book. Five stars. 

Thursday, March 23, 2017

Mini Habits

The book Mini Habits: Smaller Habits, Bigger Results by Stephen Guise is based on the story of how the author discovered that mini habits work better than traditional big habits. For ten years the author tried many different personal development systems, to build significant daily habits that would help him achieve his fitness and writing goals, and had no success. One night in desperation he decided upon a mini habits - just one push-up a day. To his surprise this mini habit empowered him to do more and more push-ups and to ultimately develop fitness habits that helped him achieve his goals.

His surprising results with mini habits inspired him to research why they worked so well in achieving major results. The author’s personal experiences with a motivational approach to achievement was that to be motivated to work on a goal, it had to be big enough to be exciting, like running five miles a day or writing 2000 words a day.  The daily tasks required to achieve the goals took so much willpower to start that he never had the energy to get started, much less start a new habit.  Without “motivation” he could not get anything done.

Researchers have discovered that to be motivated to achieve a goal, which requires habit formation, the goal has to be big enough to get people excited. For many people just coming up with a big “exciting” goal was enough of an accomplishment. Having the goal was a reward enough and they no longer felt the need to actually accomplish it. Those who tried to accomplish a big goal which required developing new habits that took a lot of energy and willpower had a very negative experience and feeling of failure when the goal was not achieved.  The result was a huge resistance to developing new habits and a negative experience every time forming new habits was attempted yet not accomplished.

Establishing a mini-habit, on the other hand, does not require a lot willpower to start and since it is easy to do, it creates a regular positive experience by doing it each day. Even though the mini-habit is ridiculously small, it provides a positive sense of accomplishment and encouragement. It is important not to increase the mini-habit goal so that it remains easy to do. The mini-habit doesn’t require much energy to start so there is more energy to do the work.

The author suggests taking at least a month to see if mini-habits will work for you. I tried the mini-goal the author had, to write 50 words a day on a book I have been working for a year about what I have learned about cancer that I think everyone should know. The first few weeks the mini-goal seemed to help a little, but now that I have been doing it for 6 weeks it seems to be helping a lot. It not only helped with writing the book, but it contributed to me focusing the content and scope of the book. Instead of trying to explain the historical models of cancer and how recent discoveries are finding them to be wrong, I am focusing on the stunning new discoveries and the success of non-toxic cancer  treatments. Last week I wrote more in a day than I have since high school.

I feel using mini-goals is helping me achieve my goals. If you want to try a new way to accomplish things try out mini-goals. I highly recommend this book - Five Stars.  

Sunday, February 12, 2017

Trump’s Plan for America – Improve your Health and Sanity by knowing the Future

Rapid change and uncertainty can be upsetting and even make you sick.  The media’s daily portrayal of President Trump’s s behavior as crazy and unpredictable has convinced many people that his plans are vague and out of control.  The reality is that Trump published the actions he planned to take as president in 2015 and as far as I can tell he is following the plan exactly.  Knowing his plan and what to expect next has reduced my stress and allowed me to ignore the media’s portrayal of Trump as a clueless president who has no idea what he is doing.  I summarized Donald Trump’s 10 major plans for America based on his book, Crippled America: How to Make America Great Again:

End illegal immigration in America. Enforce existing immigration laws and deport all illegal immigrants who have come across the border or overstayed their visas. Build a wall along the US/Mexico border. End US “birth citizenship” which grants a US passport to babies born in the US to non-US citizens, in many cases their mothers travelled to the US on tourist visas, temporary visas, or illegally for the sole purpose of the birth.

Foreign policy
Foreign policy will be based on what is best for the US. The US will no longer put other countries first at the expense of the US tax payers and American workers. This will have wide-spread effects on trade, defense, and foreign policy where America is footing the bill for the defense, economic protection, safe ocean passage , or international organizations for other countries.

Renegotiate all US trade deals to favor the US.  Renegotiate or terminate NAFTA. Although WTO is not mentioned, changes to trade deals with China and Europe and Japan are specifically discussed.  Stop countries like China, Germany, and Japan from getting a trade advantage by keeping their currency artificially low.

Make the US military unquestionably the best military force in the world. The plan is to increase funding, increase troop numbers, improve training, and improve the quality and military equipment available to US troops. Have the best missile systems in the world. Charge countries the US protects around the world for the cost of the defense.

Support US oil, gas and coal production. Stop the EPA from enforcing rules that are not laws. Repeal environmental laws that impede the energy industry. Charge OPEC for the cost of the military protection the US Navy provides them.

Health Care
Replace Obamacare. Provide cheaper alternatives for health insurance that gives people more choices and does not fine those without insurance. Create more competition between insurance companies to reduce healthcare prices. Negotiate with drug companies for lower drug prices. Build and fund mental hospitals to take care of the people that need to be there.

Make the tax code so simple that no American will need an accountant to fill out their forms. Any person earning under $25K or couple earning under $50K will pay no federal taxes. All corporate taxes will be 15% as well as individual entrepreneurs.  US corporations will be able to bring money earned overseas back to the US and pay only a 10% tax. All loopholes for the rich will be closed and the effective tax rates for the top 1% income earners will be increased.

Make gun law standard nationwide.  Allow everyone, except felons, to carry a concealed gun anywhere in the US. Make it a federal crime for any felon caught with a gun, with a 5 year sentence in federal prison with no parole or reduced time for good behavior.

End federal programs for education. Give all federal funds for education to the US States to use as they see fit.

Rebuild the infrastructure across the US.  Increase the amount the US spends on infrastructure from 2.4% of the US GDP (Gross Domestic Product) to 9.0% of our GDP. 

I have come to believe that much of the commotion surrounding President Trump’s actions are caused by his business approach of getting his plan completed as quickly as possible and not from him doing  the unexpected. Whether you agree with Trump’s plan or not, you can reduce your stress by knowing more about details of what he plans to do. I highly recommend this book, 5 stars. 

Saturday, February 4, 2017

The Power of Habit

The book, The Power of Habit: Why We Do What We Do in Life and Business was written by journalist Charles Duhigg who became interested in habits while covering the Iraq war after observing US troops quickly and calmly respond to attacks. He learned that most military training is teaching soldiers habits so they know what to do without thinking. The author explains how habits allow us to do complex tasks without thinking, like driving a car, cooking breakfast, and walking in a familiar place.

Much of the new understanding about habits is from Eugene Pauly who had significant brain damage caused by a viral infection at age 70. Though much of his brain was destroyed by the virus including his ability to make new memories, he was able to perform complex tasks that had been established as existing habits and create new habits. By studying Pauly, scientists discovered that habits are stored in the basal ganglia, the small primitive part of the brain. Habits make up over 40% of our daily activities, which makes us very dependent on this small part of our brain. If we had to think (in our cerebral cortex) through every action we take during the day we would quickly become exhausted and unable to function. Habits are instantaneous responses to stimuli; if a child jumps in front of your car you slam on the brakes without thinking.

Habits are described as behavior loops that start with a cue like being hungry, followed by a behavior, like cooking breakfast, and ending with a reward like feeling full.  All habits start out with a craving of some kind, like a craving for food, or a craving for stimulation or socialization. Habits effectively satisfy a craving by an automatic behavior.  This seems a bit simplistic of an explanation to me considering that habits can be formed without a craving through external pressures, like a job or by your own initiative.

Although habits are powerful and never really go away, they are also fragile and can be altered by small changes to the cue. An example given was the loss of customers to a McDonalds that moved just a block away; the cue at the specific place where drivers saw the McDonalds sign was disrupted and that stopped their behavior of driving in for food.

The author states that to gain control over a habit we must understand what craving is being satisfied by the behavior. To uncover the unconscious craving  we must experiment by giving ourselves different rewards. The author gives a personal example of his cookie craving in the afternoon at work. His routine was to go to the cafeteria, buy a cookie, and talk to people while he ate it. He didn’t know if the craving was for food, stimulation, or socialization. To test out food, he brought an apple to work and ate at his desk. This did not stop his afternoon cookie craving. The next day he went for a walk around the block and that didn’t stop his craving either. Finally, he tried leaving his desk to talk to people and that stopped his craving. So he set an alarm 30 minutes before he normally went to get a cookie in the afternoon and instead talked to coworkers for ten minutes and no longer craved his afternoon cookie.

I found the description of keystone habits very useful. Keystone habits are good habits that lead to developing other good habits. One example of a keystone habit is daily exercise. Once daily exercise becomes a habit, it can lead to a habit of controlling spending, drinking less alcohol, and eating less. For weight loss, keystone habits are keeping a daily food journal and recording your weight every day.  Studies have found people who exhibit these two habits lose more weight than people who don’t have these habits. I am trying to develop these keystone habits to see if they will help me take off the ten pounds I have put on since moving to Oahu.

Another keystone habit is keeping a “conflict planning journal”, which leads to preparation for difficult circumstances. By writing down ahead of time how you are going to deal with a conflict, for instance how will you deal with a really hostile customer, you will be less upset and emotional when it happens. Being less upset leads to other positive things.

The author described successful organizations that teach their employees habits to make their businesses more effective and profitable. Alco Aluminum increased their profits by 500% by developing safety habits in their employees. Starbucks teaches their employees communication habits to deal with hostile customers. A low ranked NFL team became top ranked by teaching their players better football habits.

Although some of the author’s claims in this book are thin and there is minimal discussion about how to create habits, I found the book worth reading and recommend it.  Five stars.

Sunday, January 15, 2017

IP6 - a non-toxic Treatment for Cancer

I became interested in the nutrient “inositol hexaphosphate”, known as IP6, after finding out that it reduced toxic levels of iron in the blood and organs. Initially, my research on IP6 concerned me as many health websites identify IP6 as an anti-nutrient  since it removes iron, copper, selenium, zinc and other metals from the body. If I had not just read the about the dangers of iron and learned that older adults frequently have toxic levels of iron, I would not have considered taking IP6 as a supplement.

IP6 is a natural substance found in the bran of grains, cereals, seeds and nuts. Since bran is now removed from most grains, Americans are getting very little IP6 compared to their grandparents. Long term studies have shown lower rates of cancer in individuals who consume lots of foods with high levels of IP6. More recent studies of IP6 consumption have also shown significantly lower cancer rates in countries that consume IP6 rich foods. Unfortunately, IP6 tends to bond with proteins in the grain which reduces how much the body can absorb from foods and makes it difficult to get the amount of IP6 into the bloodstream that was used in studies that cured cancer in mice.  The book recommends IP6 supplements be taken on an empty stomach to get the best benefit and avoid the IP6 bonding with food.

IP6 provides key nutrients to the mitochondria and cell membrane. Since the mitochondria control cellular reproduction rate, cellular death, intercellular communication, and cell differentiation of new cells, it is critical for them to receive nutrients to function properly.  I learned from Tripping Over the Truth that cancers are caused by damage to mitochondria, not damage to the cell nucleus DNA which was believed for decades.  The nutrition from IP6 curtails the mitochondria from initiating increased blood flow to support cancer cells rapid growth, slows cell reproduction rates, and increases cell differentiation. Cancer cells are rapidly reproducing cells that are immortal (no apoptosis) caused by damaged mitochondria.  In late stage cancer, cancer cells replicate so fast that the cells are not differentiated enough to be recognized as a specific type of cell like a breast or liver cell. Undifferentiated cancer cells (known as cancer stem cells) can be transported in the blood stream to other organs in the body where they are not recognized as being foreign by the immune system and can continue to replicate and create a metastasized cancer site.

The book described the many other benefits of IP6 that researchers are discovering:

  • reduces excess iron in cells;
  • reduces xanthine oxidase, an enzyme that makes uric acid. Uric acid causes gout so reducing xanthine oxidase could offer relief to gout suffers;
  • helps people with Type II Diabetes because getting inositol into the cell makes cells more responsive to insulin;
  • appears to reduce blood sugar levels in the blood and help repair damage blood vessels from high glucose levels in diabetics;
  • helps reduce kidney stones by binding to and removing excess calcium.
  • improves the immune system, increases bone density, reduces anxiety attacks, reduces obsessive compulsive behavior, and increases energy by recharging the potassium in  ATP cycle.

IP6 looks like it may be an effective nontoxic treatment for cancer as well as a nutrient to prevent cancer. (The author did mention that he has a patent on IP6.) The book convinced me that there were enough benefits of taking IP6 to risk any side effects of lowering my metal levels. I have been taking it as a supplement for about two weeks and I have noticed that it has improved my energy level and seems to be making my skin look better (something not predicted by this book but mentioned in the Dumping Iron book).

In addition to IP6, the book covers many other topics about cancer. For example, there was a review of what is wrong with the methods used to diagnosis and treat bowel cancer. The current method of looking for blood in fecal matter results in a large percentage of false positives which requires expensive, painful, and dangerous procedures to confirm if the diagnosis is accurate or not. Even worse, this entire system of diagnosis only detects 20% of colon cancers, so 80% of colon cancer cases go undetected. The author proposes using a less invasive mucus test that is 78 to 90% effective for finding all colon cancers. Similar cases are made for breast cancer and lung cancer diagnoses using more accurate and less costly diagnostic tests that are currently available.

Although this book was not an easy read and written for people with a bioscience background, I recommend it to anyone wanting to learn more about how to improve their health through better nutrition. A lot of the information and topics were understandable to an average reader like me. Highly recommended. Five stars.