I always need to eat something before I attempt writing or else nothing comes out. I eat exactly one banana before I write a blog post, and one chocolate Clif Builder's bar before writing a comic. I always assumed this was just a combination of ordinary hunger plus a habit that borders on OCD. The only thing I knew for sure was that deviating from the routine seriously impeded my productivity.

Recently a reader sent me a link about a writer who has the same experience but better research to explain why. The bottom line is that writing requires will power to avoid distraction, and will power is correlated with your glucose levels. In other words, your free will is actually sugar.


This makes me wonder if there is an optimal food strategy for seduction. Apparently bringing a woman chocolate will only increase her glucose levels and with that her ability to resist you. In fact, a guy should want his woman to be good and hungry, preferably on a diet. It turns out that resisting one sort of temptation makes it harder to resist a different sort at the same time.

If that is not enough, I just did a Google search to confirm that alcohol lowers your glucose levels. That fits the theory. Everyone knows they have less will power after a few drinks.


Putting it all together, the best first date a guy could arrange would involve a woman who is on a diet to begin with. Eating is the first temptation she is trying to resist, making other temptations that much harder to resist. The date would start at around 5 pm when her glucose levels are starting to drop and the seducer should keep her hungry as long as possible. Add some alcohol to the mix and her glucose will drop further. Now add yet another temptation. I'm thinking a stroll through a high-end shopping center would work, as long as the woman believed it would be rude to actually purchase something while on a first date. She would be tempted to pop into the stores to take a better look, but she would resist.

And you thought science wasn't good for anything.

We won!

To defeat terrorism, specifically the most impressive attacks, you must cut off the terrorists' sources of funds. Mission accomplished. In fact, thanks to the mortgage meltdown, we cut off everyone's funding.

I heard on 60 Minutes that Saudi Arabia needs oil to be at $55 a barrel just to pay the bills. With oil near $40 a barrel they are in trouble. I assume other oil producing countries are in the same leaky boat.

When oil prices were high, most people assumed prices would stay high. So oil rich countries started investing and spending like crazy, getting their citizens and friends addicted to higher standards of living. When those countries need to pull back on that spending, where do you think they will cut first? I think it will be hard to fund terrorists when you can't afford to pay the garbage man. And keep in mind that a successful terrorist attack on U.S. financial infrastructure could further lower the demand for oil.

I'm overstating the case, as I like to do, but I have to think it is becoming clear to everyone that a frail U.S. economy is bad news for everyone who would prefer driving a car over riding a camel.

On a related note, you haven't heard much bravado from Chavez and Putin lately.
In a prior post I questioned whether ignorant citizens should be allowed to gamble by buying individual stocks, as opposed to investing in an index of stocks to reduce risk. Your comments raised some interesting questions that I think are worth wrestling with.

First, many of you pointed out that capitalism depends on people having the option of buying individual stocks. That's how companies raise capital. But surely there is a better way to raise capital than by convincing idiots they know more than they do.

Suppose citizens had two ways they could invest in equities. One channel is through the general index of all stocks (not just the S&P 500). The other is a fund managed by venture capitalists along with their own money. With this system startups still get funded, but only by experts who are close to the action, and citizens are still diversified. And I could imagine some sort of percentage-of-assets limit on how much individuals could invest in venture capital funds.

If a startup succeeds, it gets rolled into the index. From that point on its stock price would move with its actual earnings, as estimated by some sort of regulating board. It wouldn't matter if the regulators got the stock price wrong one year because it would average out with other stocks, and they could always go back and adjust it on appeal from the company.

Employees of a company could still own stock in that enterprise, so they are incented to get profits up. But outsiders could not own the individual stock.

The second objection to banning individuals from owning stock is the Warren Buffett argument. The thinking is that Warren Buffett's method of investing proves that individuals can succeed by buying undervalued stocks and holding them for the long run. So since we know individuals can somewhat easily succeed at investing in stocks, it would be an unreasonable limit on freedom to prevent them from doing it.

There are a few problems with that line of thinking. First, Warren Buffett buys companies, not stocks, in the sense that his stake is so large he can influence management. And his access to information about the company is much better than yours. He's a perfect example of why an individual should NOT be buying stocks; you're competing against the likes of Warren Buffett for limited resources. In the long run, Warren Buffett will have his money and yours too. You're no Warren Buffett.

Still, there are plenty of civilian investors who have done well buying value stocks and holding for the long run. But wouldn't you expect a wide distribution of luck in any gambling arena? If every investor picked stocks entirely randomly, you would still produce a good number of Warren Buffetts entirely by chance. And our brains are wired to assume those winners had the secret formula for investing.

If Warren Buffett's success is indeed a function of following a simple philosophy of investing, and that method has been well understood for decades, you would expect most managed mutual funds to beat the averages too. They don't.
Some time ago I wrote a post about my prediction that people would use their smart cell phones to arrange ride sharing. That is happening now.


I also came across an application that allows you to use the Bluetooth feature of your phone to lock your computer when you (and your phone) walk away. I'm guessing you'll see more of this, maybe for your home and car.


I also heard about an application that lets you take a picture of any item with your iPhone and it finds an online shopping site that carries that exact item. Very cool. (Update: Here's the link: http://www.amazon.com/gp/feature.html?ie=UTF8&docId=1000291661)

These applications got me thinking what else is in the pipeline. I'll take a stab at a few predictions with full knowledge that you will provide links to people already working on these ideas.

WHATS-HIS-FACE: This application would let you discreetly take an iPhone photo of an acquaintance whose name you can't remember then it uses face recognition to search for the name online. Someday everyone will have a Facebook-like web page, so searching for faces will be feasible.

DOCTOR-IN-A-BOX: Someday you'll be able to take an iPhone picture of your suspicious moles, abrasions, fungus, or whatever and get an instant automated diagnosis and suggested treatment.

WHAT'S-IT-LIKE-THERE? Imagine wondering how long the line is to an event, or what a particular forest fire looks like, for example.  You send a query through your iPhone for anyone who is in that area, according to GPS tracking, and ask for a look. A kind stranger takes your query, sets his phone to stream video, and gives you the view from his perspective. You would have eyes anywhere there are people.

BRAIN-EXTENDER: Google and Wikipedia are already brain extenders. You can find almost any information you want and quickly. But imagine how much cooler it would be if your iPhone headset was continuously monitoring your conversations and answering your questions as they arise, or whispering suggestions in your ear. That application seems likely to me.

Do you have any more futuristic iPhone predictions?

Recently I suggested that someday it might be illegal for untrained citizens to invest in stocks of individual companies because it is too risky. As regular readers know, I sometimes throw out provocative ideas just for the fun of it. I didn't think much about that idea until after I wrote it. But the more I mulled it over, the more it started to make sense. So I'm going to develop that argument here.

I remind you that I lean libertarian (without the crazy stuff) so all of my impulses are to allow people the freedom to hurt themselves any way they choose, so long as their corpses don't block my driveway or cost me anything. So the argument I am about to make offends even my own sensibility. The troubling part is that it makes sense.

Let's begin by noting there are already plenty of restrictions on personal freedoms when the consensus is that these restrictions somehow protect people from themselves, or they protect society as a whole. For example, where I live you can't legally...
  • - Drive without a seatbelt
  • - Ride a motorcycle without a helmet
  • - Commit suicide
  • - Practice law, medicine, or other professions without a license
  • - Operate a motor vehicle while under the influence
  • - Gamble in most places
  • - Carry an Uzi down the street
  • - Buy dynamite

The list goes on, and that doesn't even include the many restrictions on underage activities. So there is nothing unusual or unprecedented about legal restrictions on freedom when an argument can be made that it protects lives or property.

My argument against allowing individuals to invest in stocks is that unless you have insider knowledge, which is already illegal, your odds of beating the index averages are slim. It is nothing more than gambling.

The myth of stock investing is that a person who does more research has better results. But there is no science to support that view. Indeed, the person who understands the most about individual stock investing avoids them completely and invests in ETFs or index funds.

The problem with doing your own research on stocks is that you must rely on the information coming from the management of a company, and managers are generally misinformed or lying. Even the most seasoned investment professionals running mutual funds perform worse than the indexes on average. Brains and research can't overcome the fact that much of your data is deliberately tainted at the source.

When people go to Vegas to gamble, they usually set some sort of limit for their losses. And they go with the full knowledge that winning is unlikely. It makes sense for that sort of activity to be legal, within limits, because it is viewed as entertainment and not investment. But if it were common for people to bet their retirement savings on Blackjack, you can be sure it would be illegal.

We don't allow unlicensed people to practice law or medicine, sell real estate, or even build a house. It is entirely consistent to restrict the untrained from making risky stock investments.

I reiterate that this runs against my own libertarian philosophy. I would feel I had lost something important if I couldn't invest in individual stocks. But it is also true that my net worth would be larger if I had never done it. And it would be larger still if I hadn't allowed professionals to do it on my behalf.

If anyone comments to this post by saying, "I do my own research and I made money in the stock market," it is proving my point. And if you don't see why that proves my point that further proves my point.


If you order Dilbert 2.0, my twentieth anniversary book, today or tomorrow, you can still get it before Christmas.


Check out the reviews. It's probably the best thing I have ever done.


There is a growing trend for people to be buried with their cell phones.


This idea appeals to me on many levels. Obviously I'd want a phone in my casket just in case I pop back to life. Although I'm fairly certain that if I wake up in a casket I would be able to scream through six feet of dirt, I'd still want a phone as a backup.

You might argue that the embalming fluid would eliminate any chance of going back to work on Monday. And the fact I specified cremation in my will reduces the odds of waking up in a casket. But I am cautious by nature when it comes to issues such as being buried alive. There is a non-zero chance my last wishes are misinterpreted then the undertaker runs out of embalming fluid and decides to fake it, and my purported death is nothing but an extra good nap. It could happen, and I want a phone. I also want an outlet and a charger. And I want my casket to be at least 2,000 square feet with 10-foot ceilings, ventilation, good lighting, and a bathroom. So yes, I get the whole cell phone thing.

I'm sure my readers realize this trend creates an opportunity for some world class pranks. Begin by pretending you are putting the deceased person's cell phone in the casket and then pocket it. Later you can call the relatives of the departed and ask questions such as "How's the weather out there?" You might accuse the living of being too hasty about dividing up your possessions. Tell them you have befriended some worms but you are concerned they are up to no good. If they ask how you are doing, say everything was fine until you farted. There's no end to the comedic opportunities.

In yesterday's blog I imagined a future where capitalism morphs into something with freedom of employment but more restrictions on how individuals can spend, invest, and buy health care. The point of the restrictions would be to keep gullible idiots from destroying the entire economy, again, through their own reckless behavior.

Most of the comments fell into two camps:

1. Capitalism is fine the way it is.

2. People would never stand for those new restrictions.

Some people also assumed I was recommending new restrictions on freedoms. I'm not. I'm predicting the restrictions because it will become clear that the alternatives are impractical. And as always, it is just a thought experiment. Don't take it too seriously.

First let's look at the notion that capitalism is fine and we're experiencing nothing more than another recession. I don't think that's the case this time for several reasons. The biggest reason is the baby boomer generation that is retiring and poised to absorb all social security and health care resources while adding little in productivity. And by the way, they didn't save enough money to retire. Next you have the Kazillion dollars in debt, and another tsunami of mortgage defaults that will trigger over the next few years as rates automatically adjust upward according to contract.

Meanwhile I see no obvious candidate for an economic driver to the upside. Apple can only sell so many iPhones.

Unwise debt and unsustainable bubbles had masked the fact that the economy was already bankrupt. The next mortgage meltdown (unavoidable), and the baby boomer impact (unavoidable) are not balanced out by anything that looks like good news. In other words, capitalism Part 1 failed.

The second objection to yesterday's post is that people wouldn't put up with any additional curbs on their spending and investing freedoms. That seems ridiculous to me since we already put up with so many societal restrictions. A few more would hardly be noticed. I don't remember the last time I heard anyone grumble about seatbelts. And if the government told banks they couldn't make billion-dollar loans to the homeless, no one would complain about that new restriction on freedom. Some restrictions on freedom just make sense.

Suppose your so-called restrictions on freedom came down to this question: "Would you rather have affordable healthcare or the right to make ignorant and risky investments?" Or how about, "Would you like to have a job or the right to be obese without being taxed extra?"

I don't know what capitalism's second act will look like, but it probably involves preventing individuals from being as self-destructive as they would prefer.

I remind you that I lean libertarian, so I'm happy to let anyone engage in risky and morally ambiguous behavior, but only up to the point where it has an impact on me. When your behavior raises my taxes it becomes my business.

Things change. It's the nature of the universe. Yesterday's greatest ideas give way to ideas that are better, or better suited to the present, or at least different. Change is the only thing on which you can depend.

So what about capitalism?

I think capitalism had a good run, but it will soon be done. Socialism will be too expensive to maintain as the world economies slow, and communism won't be making a comeback. The economies of the future will be something new.

Capitalism was conceived before the Internet, and before the gears of commerce became computerized. The system could absorb a lot of con artists because they didn't have the ability to steal fast enough to cripple the system. As you know, that has changed. Crooks in expensive suits now have the ability to swindle trillions, collectively, thanks to the efficiency of the system. And idiots in expensive suits can do even more damage.

The economy is now too complicated for even the regulators to know when a con or a huge mistake is happening. The balance of power has swung to the crooks and the market manipulators. Even if we could regulate away these problems, it's already too late. There isn't enough money left to support the planet under the current social systems, at least not when the boomers start retiring and unemployment starts climbing.

I've been wondering what the new economic system will look like. I think the next economy will have the same freedom of employment and entrepreneurship as capitalism. That part seemed to work well. But you might see restrictions on what types of investments individuals can make, to keep them out of trouble. Most people should be restricted to buying only the broad indexes with an ETF. And perhaps the percentage of stock you can legally own as a percentage of your net worth should go down as you near retirement. Stock bubbles could be avoided by restricting how much money can be invested in stocks, on an annual basis, to keep the price earnings ratios around 15. New stock offerings would be funded by existing companies and institutional investors.  (Clearly that idea isn't well thought out. It's just a directional sort of prediction.)

But the biggest change could be in what sort of consumption is allowed under the new economy. Most of our problems were caused by people who couldn't control their own spending. Banks could tighten their credit requirements but that won't be enough to stop the spending junkies from depleting their own nest eggs. So you might see some forced savings rules in the new economy.

Depending on how bad the economy gets, you could also see rules banning single passengers in cars. And working from home might become a legal requirement for economic reasons. Perhaps your health insurance premiums would be based on your body mass index and whether or not you smoke. You could see a whole range of restrictions on how consumers can live, spend, and invest, to prevent market bubbles and waste.

So I think the new economy will allow you freedom of employment, but you won't be able to spend and invest your money as freely as you once did. That was the part that got us in trouble.

I'm not saying this new economy will be an improvement. It's just a prediction.
In my capacity as cartoonist, I feel an obligation to simplify complicated discussions until two things happen simultaneously:

1. Absurdity is achieved.

2. The reader feels as if it all makes sense.

My comic from Saturday illustrates that principle.

According to Google Alerts that comic has been posted to more blogs than any comic I have ever created. It inspires me to more fully explain the theory of finance in this blog.

Think of financial theory as a stool. The stool is supported by three legs, or truisms.

  • History always repeats.
  • Past performance is no indication of future returns.
  • Asshats are trying to steal your money.

These three truisms can explain any financial phenomenon. For example, if your financial advisor suggests that you invest in a market bubble that is about to burst, he will explain that the past is no indication of future results. Just because a Price/Earnings ratio of 45 has never been sustainable in the past doesn't mean it won't be perfectly safe in the future.

And when the bubble bursts and you lose half of your money, your advisor will explain it's because history always repeats. In other words, he's an asshat trying to steal your money.

This stool also explains the housing situation. Financial experts knew that making loans to hobos had never been a good idea in the past. On the other hand, past performance is no indication of future returns. Maybe this time would be different. Then history repeated and asshats stole your money. As a bonus, they even stole each other's money this time. You have to admire their thoroughness.

One last thing you need to know: People who say it is a good time to invest are called bulls. The bulls are at the center of all financial problems.

In summary, if you want to understand financial markets find a bull and look at his stool.

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