The 8 Most Fascinating Things I Read This Week

Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are the eight most fascinating ones I read this week.

1. You're so biased
Business Insider put together an awesome collection of 61 behavioral biases we fall victim to. Some of my favorites:

  • Attentional bias: "When someone focuses on only one or two choices despite there being several possible outcomes."
  • Backfire effect: "When you reject evidence that contradicts your point of view or statement, even if you know it's true."
  • Outcome bias: "Judging a decision based on the outcome over the quality of the decision when it was made. This is not accounting for the role luck plays in outcomes."

2. Greece lightning                                                                             
The Pew Research Center published a chart showing how European countries feel about each other. Presented without comment:

Country

EU Nation Most Offered as Top Choice for "Most Hardworking"

Britain Germany
France Germany
Germany Germany
Spain Germany
Italy Germany
Greece Greece
Poland Germany
Czech Rep. Germany

3. Advice to students: Become a charlatan
The blog Stumbling and Mumbling posted a great summary of a study by Nattavudh Powdthavee. It starts with a piece of advice: "[M]y advice to graduates wanting a lucrative career would be: become a charlatan. There has always been a strong demand for witchdoctors, seers, quacks, pundits, mediums, tipsters and forecasters."

Powdthavee's study went like this. A group of students made bets on the toss of a coin. Each got five envelopes containing a prediction for the outcome of the coin toss. "Before the relevant toss, they could pay to see the prediction. After the toss, they could freely see the prediction," the blog writes.

Here's the punch line: "Subjects who saw just two correct predictions were 15 percentage points more likely to buy a prediction for the third toss than subjects who got a right and wrong prediction in the earlier rounds. Subjects who saw four successive correct tips were 28 percentage points more likely to buy the prediction for the fifth round."

Gullibility: It's real, folks.

4. Good for nothing debt
I wrote this morning about how the student-loan bubble might not be as bad as it looks. Time elaborates on a Washington Post report that offers a different view:

According to the WaPo's analysis of government data, nearly 30% of Americans who borrowed for college wound up dropping out. In 2001, by contrast, 23% of those with student loans became dropouts. Unsurprisingly, it's the dropouts who are "most likely to default on their loans, falling behind at a rate four times that of graduates."

5. Oil's next hurrah                   
Business Insider reports on a meeting money manager Barton Biggs had with an unnamed but seemingly well-connected Saudi businessman. As Biggs writes, the source explained:

The [Saudi] ruling council has decided that over the next two years we have a brief window of opportunity to impoverish and weaken [Iran and Iraq] by driving down the price of oil. Iraq and Iran need to produce and sell their oil at well over one hundred dollars a barrel. In the next twenty four months, we will gradually increase our production with the objective of breaking the price of crude down to sixty dollars a barrel.

This could, of course, be a wholly unfounded rumor. But it shows how unpredictable geopolitical risk can be. Through it all, I still think big global oil giants like ExxonMobil (NYSE: XOM  ) and Chevron (NYSE: CVX  ) offer a great opportunity for long-term investors.

6. Heavy reliance
According to The Wall Street Journal, 49.1% of Americans now live in a household "where at least one member received some type of government benefit in the first quarter of 2011." That's up from 30% in the 1980s, and 44.4% in late 2008.

The Journal elaborates:

The increase in recent years is likely due in large part to the lingering effects of the recession. As of early 2011, 15% of people lived in a household that received food stamps, 26% had someone enrolled in Medicaid and 2% had a member receiving unemployment benefits. Families doubling up to save money or pool expenses also is likely leading to more multigenerational households. But even without the effects of the recession, there would be a larger reliance on government.

7. Deep underwater
Housing website Zillow.com reports that 31% of U.S. homes with a mortgage are now "underwater," or owe more on their mortgage than their house is worth. That's up from 28% a year ago and 22% the year before that.

Zillow created a neat map showing the percentage of homes underwater by county throughout the entire country. Skimming through it shows massive disparities: 71% of homes are underwater in Clark County, Nevada (Las Vegas), compared with less than 6% in parts of North Dakota and Montana.

8. One way to get rich
Bloomberg tells the story of Sherry Hunt, a midlevel Citigroup (NYSE: C  ) employee who blew the whistle on the bank's shady mortgage practices and walked away with a $31 million reward for her effort. 

Similarly, a former Countrywide employee was recently granted a $14.5 million reward for blowing the whistle on parent company Bank of America (NYSE: BAC  ) . For perspective, that's about seven times what CEO Brian Moynihan earned in 2010.

Enjoy your weekend.

Fool contributor Morgan Housel owns shares of Exxon, Chevron, and B of A preferred. Follow him on Twitter @TMFHousel. The Motley Fool owns shares of Bank of America and Citigroup. Motley Fool newsletter services have recommended buying shares of Chevron. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (10) | Recommend This Article (27)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 02, 2012, at 1:15 AM, Zombie111 wrote:

    Are the Greeks demonstrating the backfire effect?

  • Report this Comment On June 02, 2012, at 2:22 AM, TrackUltraLong wrote:

    LOL @ #2....

    Dying over here...

    TMFUltraLong

  • Report this Comment On June 02, 2012, at 2:38 AM, lowmaple wrote:

    Hold on! they are working very hard not to pay taxes!

  • Report this Comment On June 02, 2012, at 3:33 AM, lcdyers wrote:

    Geeks voted for themselves the most hardworking. I guess they must be working really hard to dig themselves a really deep hole.

  • Report this Comment On June 02, 2012, at 12:02 PM, dcflipflop wrote:

    ^ I think you mean "Greeks," not "geeks." I work with bunch of geeks, and most of them are hardworking. ;-)

  • Report this Comment On June 02, 2012, at 2:18 PM, PrudentCourier wrote:

    Zillow does not have much credibility with me. We just did a HARP 2 refinance and the bank appraised the house nearly 20% higher than the Zillow estimate.

  • Report this Comment On June 02, 2012, at 7:09 PM, Thaeger wrote:

    Food for thought about those 'lazy' Greeks

    http://www.bbc.co.uk/news/magazine-17155304 :

    "Quote Figures from the Organisation for Economic Co-operation and Development (OECD) show that the average Greek worker toils away for 2,017 hours per year which is more than any other European country.

    Out of the 34 members of the OECD, that is just two places behind the board leaders, South Korea.

    On the other hand, the average German worker - normally thought of as the very epitome of industriousness - only manages 1,408 hours a year. Germany is 33rd out of 34 on the OECD list (or 24th out of 25 looking at the European countries alone)."

    "(blah blah apples oranges...)

    If you account for these factors by stripping away part-time and self-employed people and look only at full-time salaried workers, the Greeks are still working almost 10% more hours than the Germans.

    This is because the Germans take more holiday, sickness leave and maternity leave - on average four weeks more than the Greeks..."

    http://stats.oecd.org/Index.aspx?DatasetCode=LEVEL#

  • Report this Comment On June 03, 2012, at 3:40 PM, kyleleeh wrote:

    ^ ^ ^ ^

    The fact that Germans are taking more days off then Greeks and still have a more productive workforce is only further proof that the Greeks are NOT working very hard...putting in more hours at work does not mean you're working hard if very little gets done during that time.

  • Report this Comment On June 03, 2012, at 10:56 PM, Thaeger wrote:

    Actually, it just proves that the average Greek work year is 50% longer than the German work year.

    I’m not denying that attributes such as enthusiasm, energy, and morale play a large role in the productivity of a worker, of course. I understand that study after study have shown that, as overtime increases and/or downtime dries up, fatigue and other factors cause productivity to suffers considerably…I just don’t consider that ‘being lazy,’ so much as being human.

    In any event, the article reminds us of some of the structural differences between Germany and Greece that contribute to the disparity in productivity:

    "...the average German worker is more productive than the average Greek. Germany ranks as the eighth most productive country by worker out of the OECD countries - or the seventh out of the European countries - while Greece comes in at 24th.

    Mr Marianna says this is mainly because Germany has a very efficient manufacturing sector.

    And while a smaller proportion of Germans work in agriculture, here too they are more efficient - partly because "technology is more widespread", he says."

    (I admit that I'm a bit biased against subjective labels like 'lazy,' 'fair/unfair,' 'right/wrong,' etc, and tend to see them as attempts to moralize an otherwise rational discussion.)

  • Report this Comment On June 04, 2012, at 12:22 PM, slpmn wrote:

    $60 oil would be nice, but hopefully the Saudis are not so stupid as to think driving their neighbors to desperation by impovrishing them is a good geo-political strategy.

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