ExtremePerspective

Common sense perspectives and finding a way to retire

Archive for the ‘science’ Category

The Illusion of Knowledge

Posted by Paul on January 8, 2007

“The greatest obstacle to discovery is not ignorance, it is the illusion of knowledge”
Daniel Boorstin, 1984 Librarian of Congress

I am a naturally skeptical person (probably why I am an engineer) and I tend to analyse everything to death before I make a decision. But unlike many people I try to analyse things impartially and do not depend on opinions of the uneducated to form my ideas. Nearly everyone has opinions that are mis-informed about everything whether it is health, sex, marriage, money, business, network marketing, real estate and especially science (its really sad to me how poorly educated we are about science in the US since many of the political decisions of the day are being made based on poor scientific knowldege).

Global Warming is my personal scientific pet peeve. We have less than 100 years of fairly good scientific data on temperatures, yet we try to extrapolate that data over the life of the planet and think we can predict some disaster. Understanding normal variation is not something people seem able to grasp. Every weather event is treated like a unique event. This only demonstrates to me a foolish lack of perspective!

Getting good data is also of paramont importance when evaluating a new business as well. Now when you are investing $1,000,000 into a business you probably will do some due diligence. However, for businesses like Network Marketing with low entry costs, nearly no one does due diligence. So I found that people asked their “expert” friends about the business and they got information on how prices are too high or the market is saturated or whatever. When I got involved in the Amway business I did not ask one unsuccessful person what they thought of it. I investigated the pricing structure, the quality of the products, the payouts, the franchise “system”, and interviewed people that had made the business work.

Likewise, in the real estate business, I’ve investigated lots of different systems, bought several and evaluated how they work. I only like to talk to successful people about what works. I like real knowledge, not theoretical knowledge about what might work.

Know that doesn’t mean I won’t listen to people that have failed at something. Certainly they can provide valuable insights. However, most people really didn’t fail because they really didn’t try. So 99.9% of their opinions are worthless.

Meanwhile thousands of people listen to Barbara Streisand rant about global warming while flying around in her private jet ruining the atmosphere.

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Posted in business, finances, investments, money, Network Marketing, real estate, science | 1 Comment »

Straight Line Projections

Posted by Paul on December 14, 2006

As someone trained in engineering and statistics, one of my pet peeves is people making “straight line” projections. People tend to look at the trend line of past events and continue it into the future. (For the technically minded this is called “extrapolation” and is inherently flawed Vs “interpolation” which is technically sound.) I believe that the reason for this is that 95% of our population doesn’t understand or appreciate the concept of statistical variability (and surprisingly many scientists fall into this due to their desire to be “right”).

Some of the flawed analysis that comes out of this leads to all kind of hysteria and poor decisions. Some easy ones I can think of

  • 1970’s projections of global ice age, massive famines, population explosion
  • 1970’s projections that we would run out of oil by the 1990’s
  • Current projections of global warming continuing indefinitely and running out of oil
  • 1980’s hysteria that the Japanese would take over our economy
  • 1970’s projections about air pollutions
  • Ongoing projections that we are running out of water
  • 1900’s projections about the streets becoming 10 feet deep in horse shit

All of these projections are, of course, nonsense. The only real certainty is that there will be change in the future. Most people do not account for human kinds adaptability and resourcefulness. Take a look at this plot. Now most people and many scientists would say that after 100 points it sure points to a definite trend (maybe global warming!). In fact, this is strictly a randomly generated curve and after 1000 points it is slopped downward.

trendmodel2.gif

Take another example – water. The brilliant Marilyn Vos Savant last Sunday said that we are “running out of water”. I’ll be damned – I was taught as an engineer that we couldn’t create it or destroy it (Law of Conservation of Matter), so where is it going Marilyn?

In truth, what she probably means is that the “cheap” water is being used up or polluted. The solution to this is simple – clean it up! One process I’ve personally worked with, reverse osmosis, can be used to create clean drinking water from the ocean.

Can we run out of energy? Never, it’s impossible as long as the sun burns (and might be possible once it goes out). We just have to find a way to creatively extract energy from existing or new sources. Will it cost more? Maybe short term, but look at gas prices. We are back to inflation adjusted prices well below the 1980’s high – and they will go lower.

One of the best books I ever read was called Unlimited Wealthby Paul Zane Pilzer. His basic premise is that nearly all economic models are based on the scarcity principal (everything is a zero sum game).

If you ever want some perspective on the media and political hysteria that surrounds us, I highly recommend you read this book

Posted in politics, science | 1 Comment »

Do Over’s

Posted by Paul on December 3, 2006

Have you ever wanted a chance to re-live your life and make different decisions? I certainly have. I always seem to be just behind the curve in determining profitable course of action. In college, during one of my co-op assignments I spent 2 work periods doing computer programming. I enjoyed it but was studying Chemical Engineering at the time. I did not recognize the tremendous opportunity about to unfold in computers and computer science. I talked previously about how I got on-board the 1980’s real estate boom just 2 years before the market collapsed and didn’t recognize the negative population shift in my community. I switched all my 401k from a fixed income to stocks in late 1999 only to see the account lose 40% of its value 2 years later. I’ve missed the real estate boom of the last 7 years as well.

In a war there is something called a OODA Loop. OODA stands for Observation, Orientation, Decision & Action. The idea is that you have to cycle through that loop faster than your enemies in order to win. Here’s a drawing:

OODA

Now many people are procrastinators and have difficult time either deciding or acting. Throughout my life I have never had a problem with either of these. I make decisions quickly and act decisively.

The first two parts of the cycle have to do with observing what is happening. I am thinking of major shifts in demographics or technology. The second part, orientation, has to do I think with getting inside the mind of the competition – what are other people doing, thinking, what’s hot, what’s not.

I think that I have been deficient in both these areas. To some extent I have been aware of the broad shift in population demographics, technology, interest rates, etc. but clueless about trends in consumer activity.

I remember seeing The Graduate. I took the career advice in 1971 from movie made in 1967 and got into “plastics” when now I wish I had gotten involved in computers. Looking back at the many decisions I have made, I don’t think that they were wrong, just too late.

So many people may want “do overs” of decisions made in their life. I don’t. I feel I am just too late to the party. I think that this is a correct analysis. My personality is quite introverted and though I read a lot, I don’t interact with people much.

Blogging seems like one perfect venue for a person like me. But I’m not sure if I am too late for the OODA loop, although I don’t think blogging has really gone mainstream yet. I’ve been reading blogs for at least 2 years but until just recently didn’t see the income potential. The key part of this challenge is being oriented to what the marketplace wants. There remains the crux of the matter.

Will this be a decision I want to “do over”, bad timing or can I take advantage of a new trend early enough?

Posted in finances, personal, science | Leave a Comment »

Global Ice age, er, no …Global warming, er…?

Posted by Paul on November 26, 2006

Another nice day in Buffalo – mid 60’s – must be global warming!! Of course, one month ago we had the earliest heavy lake effect storm in history with nearly 3 feet of snow. The global warming scaremongers point to both events and conclude both indicate global warming.

I’m old enough to remember the scaremongers from the 70’s who were so certain that we were about to enter another ice age. I even got caught up on this in high school reading a copy of Paul Erlich‘s book “Population Bomb”.

As a scientist for 27 years, I can say with certainty that neither the 1970’s ice age nor todays “Day after Tomorrow“scenario represent anything but poor science paraded as fact.  Most scientists have trouble predicting tomorrows weather, much less the temperature 100 years from now. Remember last spring “scientists predicted the worst hurricane season ever?  Well, only two hurricanes made landfall this year in the US. There are many scientists that do not buy into the CW about global warming. See this analysis of the Stern Report or this article on Why the Atmosphere is not warming.

There are many more urgent concerns that should be focus of our attention at the moment – HIV in Africa, malaria, suicidal Islamist’s that are intent on obtaining nuclear weapons to name a few.  But to the true believers a reduction in population will probably be a good thing.

Posted in science | 1 Comment »