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Comment: Re:Why not fantasize about finding a winning ticke (Score 1) 480

by hendrips (#49039413) Attached to: The Mathematical Case For Buying a Powerball Ticket

The risk-free (i.e. government-guaranteed) inflation-adjusted 30-year interest rate in the U.S. is about 1% at the moment. On the one hand, that a seems depressingly low, and compared to historical rates it is. On the other hand, periods of low long-term real interest rates tend to be highly correlated with periods social and political stability, so perhaps today's low interest rates are a price worth paying.

If you are willing to accept a reasonable, but non-trivial, amount of risk, you could invest the stock market. A 3.5% inflation-adjusted rate of return is actually a very solid guess about future long-term stock market returns. Of course, there is definitely a risk that your returns will end up lower - that's why the stock market is a higher-risk, higher reward investment.

Here's a useful rule of thumb for estimating inflation-adjusted stock market returns in developed nations over long periods time (at least 20 years): Rate of return = Real economic growth rate + Divided rate - Expense ratio - Dilution rate. The "dilution rate" is the rate at which your shares of stock are diluted by companies issuing new shares of stock, and the the "expense ratio" is the proportion of your assets that are consumed by investment costs, usually in the form of transaction and recordkeeping costs incurred by your mutual fund.

The dividend rate of the domestic stock market is currently about 2% per year, and the market's dilution rate seems to be around .5% per year. Assuming that you invest via a low-cost indexed mutual fund from a company like Vanguard or Fidelity, your expense ratio should be a rounding error - less than .2% per year. The real economic growth rate is the only unknown, but for the past two centuries has remained surprisingly close to 2% per year in industrialized nations. Again, keep in mind that we're talking long term trends; obviously growth rates were much lower during the recent recession and much higher during the .com boom.

Putting that all together: 2%+2%-.5%-.2% = 3.3% estimated rate of return, which is almost exactly the rate cited by the grandparent. Keep in mind though, that this is a very long term estimate; the stock market might go up or down 50% in a single year. Also keep in mind that there's a good chance that this estimate will be wrong - after all, the reason that the expected return is relatively high is that there's a reasonable but non-trivial risk that your rate of return will be much lower than expected, even in the long run.

Anyone who wants to become a finance nerd would do well to read William Bernstein's book The Intelligent Asset Allocator. The book explains the rationale behind this rule of thumb, and everything else you might ever want to know about estimating financial returns.

Comment: Re:Another silly decision (Score 1) 480

by hendrips (#49038695) Attached to: The Mathematical Case For Buying a Powerball Ticket

The reason to buy instead of rent is specifically for the investment in the property itself.

That is not true for most people, at least in the U.S. People tend to buy houses because they desire independence (and to a lesser extent, status) - they want to be able to paint the walls, plant bushes, or whatever without needing a landlord's approval. The idea that a home is an investment tends to be a rationalization, not a motivation, for home purchases. And there's nothing wrong with buying a house so that you can have greater control over your living area. I am a homeowner - even though I could save money by renting - precisely because the ability to more or less do what I want with my house is more valuable than the extra cost of the house.

Comment: Re:Who they do not attempt to stay relevant? (Score 1) 145

by hendrips (#48875533) Attached to: Doomsday Clock Could Move

It's often hard to remember how devastating ancient wars were because there's no visual evidence and almost no testimony from the average population. Also, many of the deaths were indirect, as ancient warfare tended to cause widespread plague and famine.

In the Hundred Years War (actually a series of seven wars from 1337 to 1453) between England and France, France lost over half of its population ... and that was a conflict that France won decisively.

There were a few cultures where the situation you describe held true. In Ancient Greece, between the 8th and 6th centuries B.C., wars were mostly small scale affairs that resembled an extremely violent rugby match, with ritually defined locations, combatants, and prizes (usually a herd of goats). But those days were long past by the 5th century, when the Peloponnesian War erupted. We know that Athens lost at least a third of its population during that war, and they got off lucky compared to many other Greek city states, in which the entire citizenry were genocidally wiped out.

Comment: Re:So this is a great year to BS my tax return (Score 1) 253

by hendrips (#48875159) Attached to: IRS Warns of Downtime Risk As Congress Makes Cuts

While your cynicism about the IRS is understandable, it is misplaced in this case. Private citizens, provided they are not wealthy and have an uncomplicated tax return, are often never audited in their entire lives. Large multinationals are audited every single year. Indeed, I know that Exxon gets so much scrutiny from the IRS that they have set aside a floor of their corporate headquarters for the IRS's use (IIRC there were up to 35 auditors plus support staff on site at times).

The reason for this is cause for cynicism - the IRS auditors have quotas, and large corporations are where the money is. I don't have the article now, but I remember reading in 2012 that the IRS's corporate audit division produced around $9,000 per hour in audit revenue. Your puny personal tax return can't compete unless you make a particularly egregious error, or you're one of the unlucky few to get chosen for a random audit.

Comment: Re:The IRS could shut down??? (Score 4, Insightful) 253

by hendrips (#48875011) Attached to: IRS Warns of Downtime Risk As Congress Makes Cuts

As someone with a fairly libertarian outlook, I'd like to chime in with my agreement. There is a whole raft of cuts that I'd like to make to the IRS and the tax code generally, but I'm not silly enough to think that de-funding their IT budget is going to help accomplish my goals.

Comment: Replacing One Insurance Agent With Another (Score 1) 238

by hendrips (#48859207) Attached to: Google Thinks the Insurance Industry May Be Ripe For Disruption

It sounds like the services described in the summary are still insurance agencies, just with lower (and less visible) costs and more technological awareness:

Some [of these] companies, like CoverHound and PolicyGenius, are online insurance agencies. Others, like Comparenow, send traffic to insurers and get a finder’s fee whenever someone buys a policy.

Now, that's fine as far as it goes; traditional insurance agents are an unnecessary, costly, and often unsavory gatekeeper if you're just looking to buy a vanilla personal insurance policy. If Google et al. can finally get people to cut out traditional agents, that's great - banging on about the evils of old-fashioned financial gatekeepers like stockbrokers and insurance agents is a pet hobby of mine. Still, I guess I'm missing what's so revolutionary here - I've been able to comparison shop directly from company websites like GEICO or Esurance for over a decade, with no intermediary at all.

Comment: Re:Honest question. (Score 3, Informative) 479

by hendrips (#48834159) Attached to: Fighting Tech's Diversity Issues Without Burning Down the System

If the answer to that question is "no," then so be it. But that leads to a new question of, "why isn't IT experiencing the same relative gender parity that other professions are?" Admittedly, that question would probably be more suited for a sociologist or psychologist to answer than an employer that's just trying to fill a job vacancy, but it would still be a worthwhile question.

Personally, I am an actuary, and I find this issue to be interesting because my profession has had little trouble attracting qualified females once it started trying. Somewhere around 40%-45% of actuaries in the U.S. are female, up from 7%-8% in the 1970s. That number will presumably get pretty close to parity as the oldest, all-male generation finishes retiring.

Being an actuary is generally technically demanding - it usually requires the ability to perform complex statistical simulations, a knowledge of SQL (or at least enough SQL to be dangerous), an understanding of the finer points of applicable state insurance regulations, and passing a long series of reasonably difficult examinations on probability, finance, general insurance knowledge, and specialty topics. As far as I can tell, getting into the actuarial profession is every bit as difficult as getting into the IT profession, at least in terms of the amount of intelligence, adaptability, and perseverance needed to acquire the necessary technical skills and domain knowledge.

Yet, the actuarial professions has almost achieved achieved gender parity, without really even trying - it just stopped deliberately excluding women in the '70s, and the problem solved itself. And I would point out, my profession is not unique in this respect - it's almost an identical story in the medical profession. There's another post in this thread somewhere claiming that the legal profession is seeing the same pattern. So I do think it's fair to ask why all these other fields that require a high amount of technical skill, not to mention perseverance, can attract women, but IT (and nursing) can't. What makes IT (or nursing) different?

Comment: Re:Build your own fab (Score 4, Informative) 230

by hendrips (#48749403) Attached to: AMD, Nvidia Reportedly Tripped Up On Process Shrinks

As of September 2014:

-AMD's available cash: $950 million
-AMD's market capitalization: $2.6 billion
-AMD's credit rating: Absolute garbage
-Cost of a new Intel/TSMC style fab: $7 billion - $10 billion

It's a nice thought, but the reason that so many companies, including huge companies like Apple, IBM, and Qualcomm, have gone fabless is that fabs are astonishingly, mind-blowingly, expensive.

Comment: Re:bean counters ruin another company (Score 2) 230

by hendrips (#48749343) Attached to: AMD, Nvidia Reportedly Tripped Up On Process Shrinks

Considering the astonishing rate that AMD was losing money on its fabs, and the fact that upgrading a single fab to a new process node would cost more than AMD's entire market capitalization, I'm going to have to side with the bean counters here.

AMD coundn't even keep its production facilities running. How could they possibly have kept up with TSMC - the world's premier foundry operator?

Comment: Re:Fire all the officers? (Score 4, Interesting) 515

by hendrips (#48584753) Attached to: Once Again, Baltimore Police Arrest a Person For Recording Them

If you want a more industry standard source for the relative danger of different jobs, the National Council of Compensation Insurers is a good source to look at. They are the source of information on occupational hazard for workers compensation insurers, so they have an extremely strong incentive to rate work related hazards correctly.

NCCI rates occupations by their Expected Loss Rate - the average number of dollars that an employee will receive in workers compensation payments in a year, per $100 of salary. This tends to be a pretty good indicator of relative occupational hazard for just about everyone except clergy and active duty military, because of the extreme uniformity of claims handling procedures within each state.

Looking at Maryland, where the police in question live, law enforcement officers have an ELR of $1.28. That's compared to, say, rock excavators and stone crushers, who have an ELR of $7.20. So, by that metric, the guys you see on the side of the road in the front wheeled rock crusher have a job that's about 5 and a half times as dangerous as law enforcement work, at least in terms of economic harm.

Comment: Re:Mississippi Is Doing Something Right? (Score 3, Insightful) 1051

by hendrips (#48582543) Attached to: Time To Remove 'Philosophical' Exemption From Vaccine Requirements?

Most people who object to vaccination are either 1) wealthy and well educated or 2) members of certain non-mainstream cults/religions. Let's just say that Mississippi is not particularly well known for having a high concentration of people in either of those groups.

Comment: Re:The first few comments are awfully pessimistic (Score 1) 105

by hendrips (#48564477) Attached to: Seeking Coders, Tech Titans Turn To K-12 Schools

Bad example - modern evidence suggests that the Great Pyramids were built by salaried employees, possibly as a public works program to make up for the seasonal "unemployment" that would have occurred in sync with the Nile's flooding.

The Western notion that the Egyptians had vast hordes of slaves building the pyramids comes from incorrect speculation by the Ancient Greek historians, who didn't know what they were talking about - not really their fault, since the age of pyramids ended 1500 years before the Greek historians began writing.

Suburbia is where the developer bulldozes out the trees, then names the streets after them. -- Bill Vaughn