8 Fascinating Reads

Here are 8 great articles and pictures I read this week. 

Expectations

An anonymous writer says he made $15 million by the time he was 30 and it wasn't even all that great:

Being rich does come with some downsides, though. The first thing you are thinking reading that, is, "cry me a river". That is one of the downsides. You are not allowed to complain about anything, ever. Since most people imagine being rich as nirvana, you are no longer allowed to have any human needs or frustrations in the public eye. Yet, you are still a human being, but most people don't treat you like one.

Smart money

Ben Carlson shows the returns and volatility of the world's largest college endowments vs. a simple index fund. It's sad: 

Pay for performance-ish 

Vox plotted CEO pay against shareholder returns. There's basically no correlation at all: 

Talent

ESPN writes about one of Lebron James' secrets: He has a wicked memory: 

  • One of LeBron's childhood friends says that when you play the Madden videogame against LeBron, you can't be the same team twice because he'll remember which plays you ran.
  • In February of 2014, after making a game-winning shot in Golden State, he recalled a game-winning shot he made against the Warriors in 2009, noting small differences: "That one was probably about six feet closer to the baseline and inside the 3-point arc. It was over Ronny Turiaf, I stepped back on him but I crossed him over first and got him on his heels. I'm sure of it. It was down the sideline a few feet. It was a side out-of-bounds play; this one we brought up."
  • During a game against the Pacers, he suggested that they run a certain play "like we did in Game 3 against Dallas" — a three-year-old game.
  • He remembers the jersey number Kevin Ollie wore for the Cavaliers in 2003-04.
Stability
Here's an amazing story about hacking the markets:
Hackers broke into Nasdaq's network four years ago with custom-made malware that had the potential to spy and steal data. But it could also cause digital destruction, potentially disrupting Nasdaq's computer system.

It's still unclear who the attackers were. A federal official briefed on the investigation said the FBI has not developed enough evidence to conclude a foreign government was responsible behind the hack.

Misbehavior

The latest Dalbar study shows how bad the average investor is at timing the market:

  1. Over the past 20 years, "equity fund" investors achieved an average 5.02% annualized return, which is 4.2% less than the 9.22% that he/she could have achieved by simply investing funds in an S&P500 index-tracking fund. This gap expanded in 2013, for only the third time in ten years.
  2. Over the bull market of the past three years, "equity fund" investors achieved only an average 10.87% annual return, lagging the average annual S&P500 return (16.18%) by 5.31%.
  3. Investors in "asset allocation funds" did even more poorly. Their 20-year average annual return was only 2.53%, lagging the S&P500 index (9.22% per annum) by 6.69% per annum.
  4. Investors in "fixed income funds" did more poorly still. Their 20-year average annual return was an abysmal 0.71%, fully 8.51% less than the S&P500 index, and 5.03% per annum less than the Barclay's Aggregate Bond Index (5.74% per annum) over this time.
  5. Not surprisingly, investors show little evidence of skill in "market timing." The DALBAR report notes that in the six best months of 2013, when the market was up sharply, there was no evidence that individual investors moved more than average amounts into equity funds.
Sad because it's true
Andy Borowitz sarcastically writes about decline:

MINNEAPOLIS -- Historians studying archival photographs from four decades ago have come to the conclusion that the U.S. must have believed in science at some point.

According to the historian Davis Logsdon, who has been sifting through mounds of photographic evidence at the University of Minnesota, the nation apparently once held the view that investing in science and even math could yield accomplishments that would be a source of national pride.

Legend

Here's a fascinating video about Benjamin Graham: 

Have a great weekend. 

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