Games of Chance Produce Large Winners
When I was a freshmen in college I remember hearing that Peter Lynch was speaking at a nearby university - even as a poor college student I ponied up the $25 entrance fee to hear this investing guru speak.For those who don’t know, Peter Lynch was the manager of the popular Fidelity Magellan Fund. He took over the fund when it held around $20m in assets and by the end of his 13-year stint the fund was valued at $14b - it averaged an annual return of 29.2% during his tenure.I thought the most interesting thing about Peter Lynch, however, was the fact that he quit while he was at the top of the game to spend more time with his family. That’s not the point of my story, though - just an interesting side note.Maybe Peter Lynch just got luckyA few days after hearing Lynch speak I was chatting with my accounting teacher, Ralph, a brilliant man who also happens to be a money manager (I am still in contact with him to this day). He said something very thought-provoking about Lynch - he said, “you know, some people think he’s just lucky.” I didn’t understand - how could you beat the S&P all but 2 years of a 13-year career by luck? He went on to tell me that a lot of people thought Warren Buffet was just lucky too. Now this just sounded like a crazy conspiracy theory…Games of chance produce large winnersI was surprised, though, when I started listening to Ralph that the theory actually made sense - games of chance produce large winners.Take, for instance, a lottery - it is a game of chance that creates a lot of losers and a few very large winners. Assume for a second that investing has nothing to do with skill, that it is purely a game of chance where an investor has a 50-50 chance of winning or losing. (Hey, after what we’ve been through over the past 2 years 50-50 odds seem pretty good, don’t they?)Over time most investors would break-even - they would win as many bets as they lose. There would be a lucky few, however, who seem to always be right. Since this is a game of chance, of course, there is nothing special about them - they are just bell-curve-outlying-freaks. (At the same time, there would be the very unlucky few who seem to always be wrong - assuming a large sample size there should be just as many “losers” as “winners”).Market influenceBut that’s not all - when a statistical outlier has demonstrated an unusual pattern of winner-picking they start to attract attention from their peers. Their peers assume that the outlier has some sort of magical winner-picking powers. At this point the outlier can actually create their own market adjustments - if they are betting on a stock, for instance, the stock is likely to increase solely based on the fact that they are willing to make a bet on it (regardless of the fundamentals of the underlying stock).Savvy outliers learn to quickly capitalize on their newfound fame - some are able to parlay even the shortest stints of success to major, market-moving influence. Celebrities are really good at this.The FormulaSo what we are left with is a basic formula for becoming an influencer (assuming that whatever business you are in is merely a game of chance, see disclosure below):
- Learn to publicize your successes. You will have plenty of time for self-deprecating banter after you are an influencer - when you have achieved influencer status you really can’t do anything wrong. At this point people think you know something that they don’t (even when you don’t).
- When you hit a string of lucky breaks you should learn to capitalize on them quickly - the faster you do this the sooner you will be able to create your own market adjustments.
Disclosure: I don’t really believe that all business is a game of chance, but I do think it’s an important factor. I think that really, really smart business owners can increase their chance of success significantly. If, for instance, an entrepreneur can increase their odds of success to 60%, statistically they will probably become an influencer in their industry organically (without needing to be a statistical outlier). In this case their influence in the community would be well deserved since they really do have magical winner-picking abilities.By the way, I know now that Ralph doesn’t personally subscribe to this theory (he is after all an investor in Berkshire Hathaway).Also, I think Warren Buffet and Peter Lynch increased their odds of success by paying attention to basic business fundamentals and sound investment practices - they probably had better than 50-50 odds on each stock-picking decision they made. However, I think there are a lot of other investors who make rational, disciplined investment decisions like Peter Lynch and Warren Buffet - I just don’t know their names because they weren’t quite as far out there on the bell-curve 
Palm’s patience pays off with the Pre
Saturday morning Cameron and I ventured out at 6 AM looking for a Sprint store in Chicago (we were there for Adwords Seminar for Success, Pay-Per-Click training which was really good).We were 5′th and 6′th in line and the store opened at 8. We managed to get 3 Pre’s between us (I got one for myself and one for my wife) after waiting a couple of hours.The phone is amazing - I do have some gripes (the email app seems too clunky, the battery life isn’t great and I often find myself wanting to type when I’m in landscape mode, which isn’t possible), but overall the phone blows me away. I love loading up one window and running a big report and going and doing something else while it runs.This post isn’t really about that, though - if you want a more in-depth review check out PalmPreReviews.net, Cameron’s Pre site.What I’m really impressed with is the leadership and vision of Palm’s management - a year ago I thought the company was on life support and would be going under. I loved my Centro, but was looking longingly at the iPhone and even the Samsung Instinct. Palm seemed to have lost the “cool factor” they once had.And boy did the press notice - they were beat up for being out of touch and stuck in a different era. The Foleo was an epic disaster that made everybody wonder who could have allowed such a catastrophe to happen. But with an ace up their sleeve Palm just bided their time.There was some chatter in late December/early January that Palm was introducing a new phone - finally we got a peek at the Pre at CES and the rest was history - five months later and they were finally available. A lot of people try to tell me that Palm built the Pre in those 5 months - that’s simply not possible. In 5 months they probably had enough time to find and fix major bugs and sharpen up a few features, but they couldn’t have done the bulk of the heavy lifting - that must have been in the works while Palm was constantly being criticized for being behind the times and clueless about what consumers wanted.So what’s the moral of the story? Don’t listen to the haters. Palm didn’t even worry about it because they knew they were going to release a device that would raise the bar, even for the king of cool, the iPhone. They played it cool and now they have the last laugh.
Why do silicon wafers break easily?
Note: This has nothing to do with internet retail.This is totally random, but I always wondered and my father-in-law (Ralph Ahlgren) was kind enough to give me an answer.The real answer is that they really don’t break that easily (I mean, they won’t fall apart in your hands like I always thought they would), but are kind of brittle because they use single-crystal silicon (the atoms are carefully aligned in a single crystal form).I posted the full answer on Sewell’s site: Why do silicon wafers break easily?
Don’t use Amazon Unbox
I thought Amazon Unbox would be pretty cool - it lets you download movies on to your Tivo (kind of like an Apple TV without having to switch inputs from the Tivo which we’re always using anyway).Apparently, however, many users are having problems with partial downloads and on my very first Unbox order I experienced this. The frustrating thing is that they don’t have any way for you to re-enable the download yourself, you have to call in to a poorly staffed call center - my guess is that they are gambling that most people won’t wait on hold for an hour to rectify a $4 purchase.They are right about that, but I won’t be purchasing from them again - Apple TV wins.
Some people don’t “get it”
With the explosive growth of internet retail I always kind of wondered why more traditional retailers weren’t decimating their online counterparts with better websites (with the obvious advantage of better distribution).Over the past few years we have seen more and more retailers turn to the internet and actually do a pretty good job. I would put Target, Best Buy and (begrudgingly) Walmart on that list.The bigger question, really, is can old companies adapt and compete when all the rules change? We know from history that some can, and some can’t.Maurice Levy is a good example of somebody who really gets the new digital era. As the CEO of the 4′th largest advertising company in the world his ability to innovate and maintain his company’s dominance in traditional media should be frightening to would-be competitors. (Note: he has been known to criticize the web 2.0 business model, but come on, who wouldn’t?)We have a lot of examples, however, of people who really don’t get it - and when I read things like Donald Trump’s assessment of email in the work place I breathe a big sigh of relief…
Checking Adsense on a Palm
If you own a few sites with Adsense you are probably addicted to checking your earnings several times a day. One of the problems I always had was checking Adsense on my Treo - the login boxes would not load.I finally figured it out. Here are my tips:1) Change the browser to “Wide Page Mode” as opposed to “Optimized Mode.” It makes navigation a little trickier (you have to scroll in 2 directions), but this was the only way I could login to Adsense.2) When you try to go back in later it will tell you that your browser is not set to accept cookies even though it is. This only happens after you have logged in once. Go clear your cookies out and reload the page - that should fix it.3) Develop a Palm Adsense client and I will provide a free, in-depth review on this site.
Sprint wins
…the contest for the lamest cell phone of all time.(Disclaimer: I use sprint and I like them, but I also hardly ever use my phone for calls, mostly just email. My only theory is that Sprint wants to make their users happy with whatever phone they currently have when they see this thing.)
Apple, keep the politics out of business
It’s really hard when I’m seriously contemplating making the switch to Apple to see that they have dedicated their homepage today to congratulating Al Gore on his recent Nobel prize. Yes, he is on their board - but still, 70% of the homepage is about him instead of their products.Regardless of your political persuasion I think mixing business and politics is a bad idea. Here is the quote they have on their homepage next to a large picture of the ex-vice president:
Al has put his heart and soul, and much of his life during the past several years, into alerting and educating us all on the climate crisis. We are bursting with pride for Al and this historic recognition of his global contributions.
Check out gthing for a totally unrelated article on why apple is ruining everything. Gthing also has an article about the ozone layer and environment worth reading. Keep in mind that gthing is actually one of those mac users…I might try a mac, but I will never be a fanboy. My decision to get a mac is will be a vote against microsoft, not a vote for apple
New look and feel
Well, it’s been a couple years since I launched my blog and figured it was finally time for a change. I like the theme because it’s not busy and seems easy to navigate. Let me know what you think.
When BlogDesk drives me crazy…
I really do like BlogDesk, don’t get me wrong - I think it’s one of the greatest blogging tools available, especially if you want to upload pictures to your post.My irrelevant post on this site yesterday, however, about a local Utah company reminds me that I do need to be more careful with BlogDesk, however.By default BlogDesk will post to this site - I have to actually go change the blog I’m posting to if I don’t want the post here. I meant to post to another site but in my haste didn’t notice until this morning that I had posted to the wrong one.So no, I haven’t gone crazy - just forgot to click a button yesterday