In other words, the science itself makes clear that hormones, enzymes and growth factors regulate our fat tissue, just as they do everything else in the human body, and that we do not get fat because we overeat; we get fat because the carbohydrates in our diet make us fat.The science tells us that obesity is ultimately the result of a hormonal imbalance, not a caloric one—specifically, the stimulation of insulin secretion caused by eating easily digestible, carbohydrate-rich foods: refined carbohydrates, including flour and cereal grains, starchy vegetables such as potatoes, and sugars, like sucrose (table sugar) and high-fructose corn syrup.These carbohydrates literally make us fat, and by driving us to accumulate fat, they make us hungrier and they make us sedentary.

…and later…

If your goal in reading this book is simply to be told the answer to the question, “What do I do to remain lean, or lose the excess fat I have?” then this is it: stay away from carbohydrate-rich foods, and the sweeter the food or easier it is to consume and digest—liquid carbohydrates like beer, fruit juices and sodas are probably the worst—the more likely it is to make you fat, and the more you should avoid it.

In math, our intuition can’t always be trusted.

In a striking example, he considers how one should react to testing positive for cancer.

Assume that there is a test for cancer which is 98 percent accurate; i.e., if someone has cancer, the test will be positive 98 percent of the time, and if one doesn’t have it, the test will be negative 98 percent of the time. Assume further that 0.5 percent — one out of two hundred people —actually have cancer. Now imagine that you’ve taken the test and that your doctor somberly informs you that you’ve tested positive. The question is: How depressed should you be? The surprising answer is that you should be cautiously optimistic.

So the question is, assuming you’ve tested positive for cancer (under these assumptions), how likely is it that you actually have cancer? As he demonstrates, it’s suprisingly low; the conditional probability that one has cancer, given that one tests positive, is only 20%.

The influence of sampling.

In another example, Paulos discusses filtering and the effect of sample-size on probability distributions.

When measuring a random variable, it turns out that in most situations, you don’t need to take very many samples to reasonably determine the average; often 30 samples will be enough. What changes with additional samples is the distribution — the extreme values will be far more extreme.

An interesting manifestation of this, and the fact that most news broadcast filter the news on that which is “bad,” is that a 30 minute broadcast covering international news will seem worse, than a broadcast covering national news, which will seem worse than local broadcast, which will seem worse than a neighborhood broadcast.

Daily exposure to global news can, therefore, have a profound affect on our perception of the world. If we were only exposed to our local news, most of us would likely perceive the world to be a far more tranquil place.

I read this book by Paulos about three years ago, and subsequently stopped watching or reading the news — cold turkey. Looking back, I believe I’ve benefitted from the absence of daily reports of murder, disaster and suffering. Furthermore, the sense of shock I now feel when I occasionally look at an international newspaper, serves as a cold reminder at how anesthetized my senses had become when exposed on a daily basis, and how, over time, I’d become unaware of that even happening.

Extension to social media.

Recently, I’ve been thinking about how Paulos’s lessons might be applicable to other areas in which we’re frequently exposed to filtered information on a global scope — the obvious example being consumption of social media, like Twitter.

As I reflect on my personal consumption patterns, it’s clear that the slice of Twitterers that I follow on a daily basis mostly come from the contexts of design and online products — areas in which I’m personally and professionally interested. I also observe that, for the most part, this slice represents the fat section of the long-tail of socially active participants in these industries — and I guess that’s no surprise; the constituents of this section are who most of us follow.

Acknowledging the influence that daily exposure to this segment of the industry is likely to have, over time, on our perception of what’s important in these fields, and even what defines these fields, we should probably more often reflect on questions like the following:

• In the same way that news tends to filter on the bad, on what dimensions does filtering occur in the context of social selection? Certainly we find great achievers among the fat-section of the long tail, but we also find first-movers in the social space, as well as those whose popularity apparently derives from being controversial.

• How does achievement of influence today, in the context of social media, compare with the achievement of influence in the past? Are we better or worse off?

• Analogous to the way that global sampling in the news space exposes us to greater extremes, which can distort our perception of reality, in what ways can the social sampling (geographically, culturally, etc.) brought to us by social media patterns distort our perceptions related to a particular field?

• Can we trust our intuitions in these questions?

It’s some interesting food for thought.

(And in a note of irony, I notice that my blog footer suggests…)

Cash in a bank will lose value over time due to inflation. Value in a real estate isn’t very liquid. Money invested in a company’s stocks can be lost in a bankruptcy. In general, modern investment theory speaks with a uniform voice — we should allocate our savings across a diversified mix of (ideally uncorrelated) assets. But which assets?

Conventional wisdom — stocks and bonds.

Almost all of the leading investment experts (Malkiel, Bernstein, Bogle, etc.) recommend that we allocate our savings primarily across stocks and bonds. Within this camp, a few peripheral voices recommend mixing in small quantities of alternative investments such as commodities or real estate investment trusts, for their diversification benefits.

In addition, the particular proportion of stocks and bonds is important, as it defines one’s expected “risk” level. A portfolio of 80% stocks and 20% bonds will provide far greater opportunities for gain than a portfolio of 20% stocks and 80% bonds. At the same time, however, it also provides opportunity for far greater loss.

The experts insist that each individual must assess his own level of acceptable risk when choosing a particular allocation, and that we must monitor and adjust accordingly over time, as we get older or as our circumstances change.

Will the future look like the past?

While I am undoubtedly certain of the importance of diversification, I’ve always had two fundamental problems with asset selection conventional wisdom:

• First, the particular assets of stocks and bonds have been chosen solely because of their historical performance. For as long as we’ve had data available (more than 100+ years), a mix of stocks and bonds would have outperformed other passive investment vehicles available to us. But, what if the future doesn’t look like the past (at least within my lifetime)?

• The second problem I have is a lack of confidence in my own ability to assess my own level of “acceptable risk,” and to adequately monitor and manage that risk over time.

An alternative — the Harry Browne “Permanent Portfolio”.

In part due to these doubts, I became attracted to the investment philosophy of Harry Browne — a successful investor, writer, and Libertarian politician from the mid-1970s through late 1990s — introduced in his book, “Fail Safe Investing.”

Harry Browne’s approach begins with the question: What are our objectives for the wealth we consider precious? On that, he had two answers:

• Protection. We don’t want to lose our savings, under any circumstances.

• Growth. If possible, we should try to grow our savings, at least enough to compensate the erosive effects of inflation.

Then — and this is key — rather than selecting assets by looking backwards, he selected them looking forward. He asked, “What are the possible states of our economy? And for each of those states, which is the asset that responds most dramatically?”

He identified the following four states of the economy, and corresponding optimal investment assets:

• Prosperity. In times of prosperity, stocks perform well. According to the principle of diversification, he recommended (as do most experts) investment in passively managed mutual funds or ETFs that track broad market indicies.

• Inflation. In times of strong inflation, when the purchasing power of our paper currency is being eroded (and in times of political or currency crisis), gold does well. He recommended owning physical gold, although owning it in a more convenient alternative (such as an ETF) is also acceptable.

• Deflation. In times of deflation, when interest rates and prices are dropping, the value of bonds increase. The sensitivity of bond prices to such conditions is a function of the bond duration — the longer the better. Furthermore, we need to be holding bonds that can’t be called. In such times, we therefore need to be holding long-term government bonds — e.g. 20 year US treasury bonds.

• Recession. In times of recession, almost all investments decline. During such times, we need a cash cushion to sustain ourselves, and with which to buy up those other assets that are temporarily dropping in value.

Browne recommended that we divide our savings equally among those four assets, and periodically sell those that are doing well, and buy those that are doing poorly — a critical process known as “rebalancing” — in order to maintain that equal 25% distribution of savings across each.

This portfolio, known as the Permanent Portfolio is attractive for a variety of reasons. It is simple. It is permanent. It doesn’t require self-assessment of risk or time-frame. It contains at least one asset that should be doing well at all times, and which historically has carried the portfolio as a whole. Finally, through modern ETFs, it’s very easy to own this portfolio, at extremely low costs.

But how does the Permanent Portfolio perform?

How has the PP performed historically? Very well, in fact! Since 1964, the PP has returned an average of 8.5% per year; quite respectable compared to the 8.8% return of the common 60/40 stocks/bonds portfolio. But whereas the common stocks/bond portfolio lost 30% of its value in the crash of 2008, the PP lost only 1.3%. (You might want to pause, to contemplate that last point.)

In fact, the Permanent Portfolio has prospered during both bull and bear markets, in a manner that has been very stable.

So what’s the catch?

One might wonder, as I often have, why more experts don’t recommend the PP, and why more people don’t invest in it?

Regarding the second question, the PP has a big issue working against it — tracking error. It’s ups and downs will not mirror those of the general stock market, and so when stock-heavy investors are boasting of their big returns in a given year, the PP holder will more likely than not be looking at more meager growth. For this reason, investing for the long-term in the PP requires determination and fortitude.

That I have no problem with; I can stick with a plan. The other question has long bothered me more — why don’t the other investment experts, for whom I have such respect and admiration, give this portfolio much thought or attention?

Well, this past week, one of those investors, William J. Bernstein, did just that — he published an article about the Permanent Portfolio, in which he refers to it as, “a thing of beauty.” In fact, the main problem he has with the PP is precisely what I mentioned above: It’s hard for most people to stick with it, over the long run. Reading that article made my day.

There’s a lot more to the permanent portfolio (and investing in general) than I’ve covered here. For general investing, I’d recommend Bernstein’s book, “The Investor’s Manifesto”, and for information about the permanent portfolio, the best starting point is the Crawling Road blog. (The Crawling Road forums are great.)

In his talk, I was excited to hear Paul emphasize the importance of some areas in which I’m invested, both personally and professionally:

• OS X on the desktop. Paul points out that open-source, while a great model for the development of technical solutions, falls short at the boarder with design, because of the human psychology aspects which are central to good design. For that reason, he believes (as I’ve long believed) that Linux will never have a place on the desktop, and, of the remaining options, Mac OS X is and will continue to be the clear winner. (He also notes that over 50% of his audience was using Macs — perhaps an early indicator of broader future market trends.)

• The iPhone will be a huge deal. Paul believes the iPhone has no competition, and is unlikely to see any competition in the near future — because it’s the top priority of the world’s best design company. He also believes this is a tragedy for such a hugely important emerging market (i.e. mobile), because of Apple’s application approval process, which is pretty much the anti-thesis of free markets. (Interestingly, he points out that the central thing going against Android is that it belongs to Google — since a firm can only have one top priority, and for Google, that’s search.)

• Bet on design. As more and more of our daily lives involve interaction with software systems, the scope of design will continue to increase, and the need for good design will become ever more important. He points out the unfortunate curiosity about design — that everybody believes they’re good at it, and in that respect, it’s quite different than, say, the engineering or medical fields. (Nobody, other than trained physicians, feel they’re “probably good at surgery.”)

I strongly agree with Paul on all these points, especially the one about design. And that’s particularly exciting for me, as design is both a personal passion, and a (if not the) fundamental value of my company.

On a closing note, as clever as he is, Paul didn’t get it right on all fronts. At 41:30 in the video, talking about the coming importance of real-time, he says, “I think Google Wave is going to be important.” On that, he must have momentarily forgotten his earlier emphasis on the importance of good design. Oh, well, nobody’s perfect.

Examining my own life, while I can’t see many areas where I’m excessive, I could only find one area in which I consciously set limitations, and that’s in the area of diet. I follow the Paleo diet, which avoid sugars and carbohydrates (pastas, breads, grains, beans, etc.), and focus on meats, vegetables, nuts and fruits — basically what the “hunters & gatherers” ate during the Paleo age.

In part due to the Pareto 80/20 principle, and in part due to the suggestion that it helps the metabolism from resetting, I allow myself one day per week to eat anything I want. On that day, I might have Churros con Chocolate for breakfast, paella for lunch, a double ice-cream in the afternoon, and maybe some spicy Jamaican jerk chicken with lots of beer for dinner.

I’ve definitely observed that limiting consumption of sugars and carbs to once per week both amplifies my enjoyment of them, and allows me to enjoy them without any of the detrimental health and weight-gain consequences of their regular consumption. (Particularly interesting is the amplification of enjoyment.)

So on the point of setting limitations, it looks like Leo Babauta may be right on the money.

We are aware of a recent issue whereby the wallst.com cookie is now required on the Account Overview page. If the cookie is not accepted, you are logged off of the website. The issue appears to be the result of recent changes to the site, and the appropriate technology partners have been engaged. You can correct this issue by going to Safari – Preferences, then press the Security icon. Please press the radio button next to ‘Always’ and press the red button in the upper left corner to close the window.

Oh, the irony. While, on the one hand, Bank of America continually makes doing business with them increasingly cumbersome in the name of ‘security’ (e.g. the recent requirement to setup ‘SafePass’), they are now telling me that in order to use their website, I’ve got to configure my own browser as insecurely as possible.

Posted via email from Matt Henderson’s Posterous

1. Could it be the new 3.0 version of the iPhone operating system?

2. Could it be the new 3GS model of the iPhone?

3. Could it be a problem with my 3G provider, Vodafone España?

UPDATE

The situation has not improved with the update to OS 3.1. Furthermore, OS 3.1 nuked my internet tethering, and so I’m now going to downgrade to OS 3.0. (I previously though tethering had been preserved, as it was still present in the user interface; however, when I actually tried to tether, it disappeared.)

SETUP

I’ve run these tests using a MacBook with OS X 10.6, and both iPhone 3G and 3GS models, running OS 3.0. (Also, I should note that both my iPhones are Apple official unlocked versions, purchased in Italy, i.e. they are not jailbroken.)

TESTS & RESULTS

A) MacBook tethering to 3G-connected iPhone (Speedtest.net)

For these tests, I had the MacBook tethered to the iPhone, and ran the tests at Speedtest.net using the Spanish “Elda” servers.

• MacBook tethered to iPhone 3G, 0.18 Mbps
• Macbook tethered to iPhone 3GS, 0.14 Mbps

For comparison, here are the results when: (a) untethered, and connected to the local Wifi, and (b) tethered to the 3G-network via a different phone than an iPhone.

• MacBook on local Wifi, 6.00 Mbps
• MacBook tethered to HTC phone, 2.5 Mbps.

B) iNetwork iPhone App Test

For these tests, I ran the iNetwork Speed Test application on the iPhones, comparing the results of being connected to the local Wifi, and connected via the 3G network.

• iPhone 3G: Wifi (2.3 Mbps), Vodafone 3G (0.12 Mbps)
• iPhone 3GS: Wifi (1.2 Mbps), Vodafone 3G (0.12 Mbps)

CONCLUSIONS

Based on the following tests, I conclude that the problem must be with the 3.0 version of the iPhone operating system.

• It’s not a problem with the 3GS model of the iPhone, because the performance was similar on the iPhone 3G model.
• It doesn’t seem to be a problem with Vodafone, as tethered performance using an HTC phone was fine.

Posted via email from Matt Henderson’s Posterous

Most style-aware applications support a “Paste and Match Style” option, but some don’t (like “sidenote”, the application in which I’m writing this post.) For those, we’re kind of stuck.

Based on how I work (mostly in plain text), as well as most people I know, a preferred approach would be:

• “Paste and Match Style” should be the default behavior of the basic “Paste” function.

• The current “Paste and Match Style” option should be renamed and re-functioned “Paste with styles”.

• Applications that are particularly interested in styles (page layout applications, graphic design applications, etc.), could, on pastes which include styles, simply prompt the user, “Include styles with this paste?”