8 Fascinating Reads

Reversion to the mean 

The New York Times writes about housing's drag on the economy:

If building activity returned merely to its postwar average proportion of the economy, growth would jump this year to a booming, 1990s-like level of 4 percent, from today's mediocre 2-plus percent. The additional building, renovating and selling of homes would add about 1.5 million jobs and knock about a percentage point off the unemployment rate, now 6.7 percent. That activity would close nearly 40 percent of the gap between America's current weak economic state and full economic health.

Progress

Bill Gates talks about the end of poverty:

Q: In your annual letter from the foundation, you argued that there will essentially be no poor countries in the world by 2035. Why do you believe that? 

A: We made really unbelievable progress in international development. Countries like Brazil, Mexico, Thailand, Indonesia – there's an unbelievable number of success stories. The places that haven't done well are clustered in Africa, and we still have Haiti, where I was last week, as well as Yemen, Afghanistan and North Korea, which is kind of a special case. But assuming there's no war or anything, we ought to be able to take even the coastal African countries and get them up to a reasonable situation over the next 20 years. You get more leverage because the number of countries that need aid is going down, and countries like China and India will still have problems, but they're self-sufficient. And over the next 20 years, you get better tools, new vaccines, a better understanding of diseases and, hopefully, cheaper ways of making energy. So time is very much on your side in terms of raising the human condition. Even things like decent toilets, which is a particular project of the foundation, can make a big difference.

Optimization

Want to be more creative? Go for a walk:

Steve Jobs, the late co-founder of Apple, was known for his walking meetings. Facebook's Mark Zuckerberg has also been seen holding meetings on foot. And perhaps you've paced back and forth on occasion to drum up ideas.

new study by Stanford researchers provides an explanation for this.

Creative thinking improves while a person is walking and shortly thereafter, according to a study co-authored by Marily Oppezzo, a Stanford doctoral graduate in educational psychology, and Daniel Schwartz, a professor at Stanford Graduate School of Education. The study found that walking indoors or outdoors similarly boosted creative inspiration. The act of walking itself, and not the environment, was the main factor. Across the board, creativity levels were consistently and significantly higher for those walking compared to those sitting.

Truth

The Onion satirically reports on saving for college: 

In an effort to plan for their newborn daughter's future, local parents Jonathan and Kate Bradbury have shrewdly begun investing in a college fund that will pay for an estimated 12 weeks of their child's education, the couple confirmed Wednesday. "As soon as Ashley was born, we started putting aside a little money each week just to make sure that when the time comes, we'll almost be able to cover her first semester of freshman year," Kate Bradbury told reporters of the plan that will help offset nearly three months of room and board, the most basic meal plan, and four total textbooks. "It's just a small amount out of our paychecks, but it adds up. And it's worth it to have the ease of mind that comes from knowing that, after inflation, we'll be able to cover barely 9 percent of our little girl's tuition as long as she takes the minimum course load and doesn't do too many activities." Bradbury added that she knew all of the scrimping and saving would ultimately pay off when she finally sees her college-educated daughter land a three-month unpaid internship.

Market share

Business Insider shows the density of Wal-Marts across the country: 

Easy life

KJ Dell'Antonia decided to stop being busy:

I hate being busy. Busy implies a rushed sense of cheery urgency, a churning motion, a certain measure of impending chaos, all of which make me anxious. Busy is being in one place doing one thing with the nagging sense you that you ought to be somewhere else doing something different. I like to be calm. I like to have nothing in particular to do and nowhere in particular to be. And as often as I can — even when I'm dropping a child off here or there, or running an errand, or waving in the carpool line — I don't think of myself as busy. I'm where I need to be, doing, for the most part, what I want to do.

Risk

Howard Marks asks if you're willing to be successful:

Who wouldn't want to be great? No one. Everyone would love to have outstanding performance. The real question is whether you dare to do the things that are necessary in order to be great. Are you willing to be different, and are you willing to be wrong? In order to have a chance at great results, you have to be open to being both. Here's a line from Dare to Be Great: "This just in: you can't take the same actions as everyone else and expect to outperform." Simple, but still appropriate. 

Hungry companies

Jason Zweig writes about enormous share buybacks: 

Last year, the corporations in the Russell 3000, a broad U.S. stock index, repurchased $567.6 billion worth of their own shares—a 21% increase over 2012, calculates Rob Leiphart, an analyst at Birinyi Associates, a research firm in Westport, Conn. That brings total buybacks since the beginning of 2005 to $4.21 trillion—or nearly one-fifth of the total value of all U.S. stocks today.

Enjoy your weekend. 

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  • Report this Comment On May 23, 2014, at 11:54 AM, slpmn wrote:

    The last one on stock buybacks - What am I supposed to do with that? Is it good, bad, or meaningless? If it's good, how much of any increase in stock prices during that period can be attributed to stock buybacks? If it's a material contribution, then what does that say about the underlying strength in the market? Buybacks can't be relied on as a perpetual crutch for the market to lean on. If it's not material, then what's the point of the buybacks? It's just throwing money away. Pay it out in dividends - that's easy to measure. And what does the love affair with buybacks say about management? They can't find a better use for cash than buying their own shares? That should be viewed as an indictment of their performance.

    I don't pretend to know the answers, but in my gut, I've always felt buybacks were fool's gold. Overrated at best, a harmful tool used to cover up underlying weakness at worst.

  • Report this Comment On September 18, 2014, at 12:56 PM, madbulk wrote:

    Opposite opinion, sipmn.

    Theoretically, I love the buyback on any stock in my port. If I re-buy my port every day, why wouldn't I want the company to agree with me?

    I don't wanna pay taxes on dividends! I want the company to buy back the stock when they're the smartest guy in the room.

    Example: Apple? How can you not like this? They know the pipeline, the price reflects no confidence in growth, and they've got cash earning nothing.

    Example: Berkshire. I won't even bother.

    You'd have to be a helluva cynic, looking for subterfuge, to find it. And I am, and I do, sometimes. But when it looks wise and right, buybacks are a warm fuzzy blanket.

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