Regruntled.com

I got spammed with a solicitation for True Wealth, one of the top five financial newsletters in the world. Yeah, right. The email touts the “Pinchot Plan”,

“…an unusual investment most Americans have never heard of… which was made possible by a former U.S. Presidential Advisor and Governor of Pennsylvania.

This investment is safer and more profitable than stocks, bonds, real estate, mutual funds, gold… and just about every other asset on the planet.”

Gifford Pinchot was the first Chief of the US Forest Service, and advocated scientific forest management. Very Progressive, very Teddy Roosevelt. He has a National Forest named after him. The “Pinchot Plan” is investing in publicly traded timber companies. Minus the huge steaming pile of marketing, that’s all it is. No need to subscribe to the newsletter. Anyone can do this on his own.

I mentioned Plum Creek Timber (PCL) in an earlier post, but here are a couple of other possibilities: Rayonier (RYN) owns 2.5 million acres and has a 4.27% dividend. Potlatch (PCH) owns 1.5 million acres and has a 4.25% dividend. All three companies are REITs. I own some PCL right now, but both RYN and PCH are plausible alternatives.

Virtual timber is a decent investment. Buy it when it’s on sale. Better than stocks? Better than gold? Well, no, not better, just different. It’s a good diversifier.

I found something new, at least new to me: the prayer blog. There seem to be a number of these, and of two varieties. Some are places where people post their prayers, which raises some interesting theological questions.

Does posting to a prayer blog count as prayer? Does God have an internet connection? Does infinite bandwidth go along with omnipotence and omniscience? Is Heaven behind a firewall? Does God have a PC or a Mac? Does God use commercial software without paying for it?

Other prayer blogs are solicitations for others to pray for a particular purpose, like healing a child with a medical problem. The parents have presumably already tried prayer, to no avail, and now want some help spamming God with prayers.

Does God like being spammed? In other words, do a million similar prayers have more effect than one prayer? Does God have a spam filter? Is that why so many prayers go unanswered? Does spam piss Him off? I assume that dietary restrictions aren’t a factor here, since spam is only metaphorically a pork product. However, the God of the Old Testament was a wee bit touchy about a lot of things, and getting spammed just might qualify as smiteworthy.

I keep hearing and seeing a term that for some reason irritates me: “eye candy.” This term is often used to describe the visually appealing aspects of new computer operating systems like Windows Vista and Mac OS X Leopard. The term gives me the creeps, because it makes me feel like I have some sticky gooey (not GUI, forgive the pun) substance in my eye. The use of “candy” in this way probably comes from the seventies term for cocaine, “nose candy.” The meaning is slightly different, however. With “eye candy” the meaning is one of something aesthetically appealing to the eye, whereas “nose candy” was not aesthetically appealing to the nose, which it often did damage to, but made the user feel good. The metaphor here does make more sense because the cocaine was physically ingested by the nose just as candy by the mouth, although the nose didn’t necessarily enjoy the experience. However, it might suffer damage as the mouth does from candy in the form of tooth decay. “Eye candy” is not physically ingested by the eye, and won’t damage it.

Taking these two terms together, one might arrive at the following meaning for the new additive element, “candy”: some aspect of a thing or process that contributes an enjoyable or aesthetic feature appreciated by one of the senses.

Now imagine the horrific results if this usage spreads. If cocaine is “nose candy”, then marijuana can be called “lung candy”, and heroin, “vein candy.” Music will have to be referred to as “ear candy” and art in general is an other example of “eye candy.” Would Preparation H be “butt candy”? Perhaps the users of this product might disagree, because the term “candy” implies that the thing, substance, whatever, is not essential to the “operating system.”

Finally, if the term really gains wide acceptance, then we will have to call real candy (like chocolate) “mouth candy,” which of course could refer to cake, ice cream, and all forms of desert. I suppose alcohol would be included.

So please, stop the spread of “candy,” and instead of “eye candy” substitute “aesthetically appealing features.” Not as catchy, but it won’t give your eye that sticky gooey sensation.

And if you find this rant to be a frivolous, but enjoyable addition to Regruntled, just consider it “blog candy.”

In a previous post, I discussed a warm and fuzzy version of Pascal’s Wager. Today, something a bit more extreme.

Some Christians believe that the “end times” are coming as soon as 2008. Allowing three and half years for the Great Tribulation, that would put the Second Coming sometime in 2012. Coincidentally (OR IS IT?), December 21, 2012 is the Mother of All Solstices, when the Mayan calendar’s odometer rolls over into a new age.

How exactly did the Mayan astronomers and the Biblical prophets synchronize their watches? And why didn’t someone tell the Millerites, who abandoned their farms or quit their jobs in anticipation of October 22, 1844?

What would Pascal do? Would he profess belief in the Second Coming while quietly putting away money in his 401K plan? It’s a huge waste of money if he gets Raptured. On the other hand, the scoffers who die in the Great Tribulation lose their lives AND their 401Ks. Would Pascal max out his credit cards, figuring that the money lenders will be wiped out along with everyone else?

The Second Coming is the original vaporware. Christians have been expecting Jesus to come back Real Soon Now for 2,000 years, and they’ve been wrong every single time. By induction, they’re almost certainly wrong this time. Even if you believe that the Christians will be right sooner or later, it’s almost certain that their timing is wrong now. And that’s a purely statistical argument that doesn’t even look at the validity of their belief system.

I’ve been reading Jared Diamond’s “Collapse: How Societies Choose to Fail or Succeed“. Diamond studies a number of societies from the past for lessons we can use today. He discusses the usual suspects (Easter Island, the Maya, the Anasazi, etc.) within a five-point framework:

1. Cumulative environmental damage
2. Gradual climate change
3. Conflict with neighbors
4. Support from neighbors
5. Adaptability

The most interesting story is that of Viking Greenland. The Vikings settled Greenland during the Medieval Warm Period (984 AD) and vanished sometime in the 15th century at the beginning of the Little Ice Age. Climate change is the obvious explanation, with the colder weather reducing crop yields and the increase in sea ice making it more difficult for ships from Iceland to get there.

And yet, the Inuit had the technology to survive in harsher climates than the Vikings’ protected fjords. All the Vikings needed to do was copy the Inuit. Here is where the last factor, adaptability or the lack thereof, comes into play. The Vikings thought of themselves as Europeans, and apparently preferred to die as Vikings than live as skraelings.

The modern notion of sustainability seems to be about reaching equilibrium with a more or less constant environment. Equilibrium leads to conservatism which leads to a lack of adaptability. But nature is not constant. Sooner or later, Mother Nature will try to kill us with earthquakes, tsunamis, hurricanes, tornados, floods, droughts, forest fires, ice storms… even if we get our carbon dioxide under control. When that happens, we need adaptability, not sustainability.

MicroPlace, an eBay company, is a new online micro-lending platform. The idea of micro-lending can be traced back to Lysander Spooner, but the most well-known implementation was by Muhammad Yunus and Grameen Bank (2006 Nobel Peace Prize).

Foreign aid involves transferring relatively large amounts of money from government to government and is subject the usual inefficiency and corruption. Micro-lending places small amounts of money directly into the hands of specific poor entrepreneurs, for example $500 to a woman in Peru who wants to expand her pig farm. (Is a Peruvian pig an Oinca?)

The internet, of course, can help match people who have money with people who need money and there are several models available. Kiva matches lenders directly with the borrowers, but Kiva loans pay no interest. Kiva lenders diversify by spreading their money over several borrowers. MicroPlace matches lenders with organizations in specific countries. The organizatons spread the money out over many borrowers and pay the lender 2 or 3% interest. Is this a better model? Will below-market monetary interest attract more capital than individual stories with human interest?

Are loans better than grants? At Save the Children, one can sponsor a child for $28 a month. On the other hand, at current money-market rates, $28 in foregone interest works out to about $7000 in Kiva loans or $19000 in MicroPlace loans (to an organization that pays 3%).

We can compare micro-lending to peer-to-peer lending platforms like Prosper. At Prosper, the borrowers are not third-world entrepreneurs, but fellow Americans. The interest rates are much higher and the default rates are much higher. It is possible to earn above-market returns at Prosper, but in practice many lenders end up with below-market returns.

I say let many flowers bloom. Some of these models may not work, but there’s no reason that several different models can’t thrive at the same time.

Ken Wilber defines Boomeritis, the characteristic psychological condition of Baby Boomers, as Narcissism plus Relativism.

Using the language of the “story”, narcissism is the notion that the story is about oneself, while relativism is the notion that one story is as good as another. Combining these, we get the notion that we can have whatever story we want. This appears in various forms:

I don’t feel the need to limit myself to linear logic.

I choose to live life on my own terms and not be guided by charts based on statistics.

I like to consider myself a co-creator with the powers that be in the story of my life.

Like my fellow Boomers, I’m so vain, I think this song is about me. I acknowledge that there is no one right way to be. There are, however, wrong ways to be. The universe sets limits on our stories.

The problem with Boomeritis is that Mother Nature has a story too, and that story is not about us. In Mother Nature’s story, our survival is a matter of complete indifference. In Into the Wild, Alex thought he was living an adventure story, but in fact he and the Alaskan wilderness co-created a story in which he starved to death.

I was browsing at a Ross store the other day. My rule is to browse one day and come back to buy on Geezer Tuesday for the discount. If it’s not worth making a second trip, it’s not worth buying.

Anyway, Ross often has quality stuff at a discount, but they’ve also got a lot of godawful garish crap, made in China, and very inexpensive. This got me to thinking. Living in a consumerist society as I do, I have some choices to make. I can play the game and pay up for recognizable brands and try to impress people. I can hunt for bargains at Ross and maybe find a recognizable brand half off. Or I can shop at Wal-Mart and people will instantly recognize me as the type of person who shops at Wal-Mart.

Or… I can buy godawful garish crap at Ross and people will think, “duhhh, I get it! He’s being ironic. How clever of him.”

One does have to avoid paying up for irony. I saw a bottle labeled “Cheap Red Wine” that was twice as expensive as Inglenook Burgundy, which really is a cheap red wine, only without the irony.

Voluntary Simplicity is a lifestyle choice for those disgruntled by modern life, who want to quit the rat race, get off the treadmill, drop out or walk away. The idea is that by simplifying one’s life, by working less and consuming less, one can enjoy life more.

Sometimes I find the complexity of modern life aggravating. For example, I have a digital camera with features I’ve never used, and a 200-page manual I’ve never read.

On the other hand, I like to do Sudoku. A Sudoku, with the squares and the numbers and the zillions of possibilities, is a rush of pure complexity. Maybe you have your own favorite obsession, like crosswords or chess or bridge.

If I simplify my life so I can spend more time doing Sudoku, am I practicing Voluntary Simplicity or Voluntary Complexity?

The Voluntary Simpletons see a spectrum from complexity to simplicity and conclude: complexity bad, simplicity good. I think they’re looking at the wrong spectrum. The right spectrum is the one from aggravation to satisfaction, from disgruntlement to regruntlement, and the goal is to find a more satisfying mix of simplicity and complexity.

Prosper is a peer-to-peer lending plaform, an eBay of unsecured personal loans. The premise is that banks take in deposits at low interest and lend them out at high interest, so there is an opportunity to disintermediate the banks. The borrower gets a lower rate, the lender gets a higher rate, and Prosper gets a little something in the middle for matching the borrowers and lenders.

I am a lender at Prosper, with $200 of edutainment money. You can see my loan portfolio if you like. It’s been a fascinating experience, reading people’s sob stories and bidding on the loans. Prosper would make a great hobby, at the $2000 level or so, where you’d have decent diversification and receive enough money in payments to make a new loan every three or four weeks. The hobby would keep your interest and pay for itself besides.

I think there is an agency problem. Prosper offloads all the risk to the lenders, so there is no direct incentive to collect on the loans. On the other hand, Prosper is a start-up with $40 million in venture capital, so there is a strong incentive to scale up as rapidly as possible by whatever means are available. In my judgment, Prosper has to scale up from $90+ million in outstanding loans to about $7 or $8 billion. The US consumer debt market is $2.5 trillion, so it is certainly possible.

The result is that a lot of lenders have been sucked in by the marketing hype and ended up with much lower returns than they expected. There is a large community of lenders, many of them disgruntled, both on and off Prosper, for example at Prospers.org. If you’re even thinking about lending on Prosper, read the forums and learn from the mistakes of others.

As for me, I’ve stopped lending at the edutainment level. It’s still early days. Prosper is changing, lender behavior is changing, and there are competitors on the horizon. Someone will get it right, and peer-to-peer lending may become a viable asset class for investors.

However, all the things that make Prosper unattractive for lenders, work to the borrowers’ advantage. If you want to borrow money, by all means check out Prosper! Read the forums, and study which stories get funded and which don’t. You may be able to borrow on excellent terms at Prosper.