Baruch! We have (gasp) competition: Necessarily Eternal: A Catablog of (All) Things Spinoza
Monthly Archives: March 2008
Seems like Spinozists of the world have united
Posted in Fellow Collegiant, Philosophising
Spinoza still has it coming
Barurch, when we maintain that Spinoza’s life is especially relevant in these trying times, this is not what we had in mind:
David Grossack, an attorney representing an elderly couple whose home is being foreclosed on, argued in a letter to a Boston rabbinical court, or beit din, that his opposing counsel, Jewish lawyers who represent the Federal National Mortgage Association, have defied Jewish law and therefore should be excommunicated. To be specific, Grossack is seeks for them to be put in what’s known as cherem, or full exclusion from the Jewish community. This legal feature in Halacha, or Jewish law, was famously applied to philosopher Baruch Spinoza in the 17th century but has been used very rarely in modern times.
If this legal practice were to gain currency, perhaps we can hope for more lawyers converting to a life of introspective philosophising. Or is that wishful thinking?
Posted in Uncategorized
Happy Blogoversary to us
We’ve been doing this for a year now, Bento. Do you think we’ve converted anyone to Spinozism?
Posted in Uncategorized
No bad bottom puns in this title
Well, Bento, I am probably going to mark a bottom (see below) here, but at this point (10pm central European time on Sunday), no-one has stepped up to buy Bear Stearns. There was a brief rally into the close on Friday on the prospects of a buyer coming in over the weekend, but they may be disappointed. In 15 hours the US market will open and I will be very interested what will happen. I have to confess to having a few ants in the pants, because it is conceivable it could be something nasty. It could equally be a huge rally; according to the Costanza Doctrine, a very useful guide to investing in bear markets, it is at times of one’s greatest anxiety that you should probably be deploying your capital the most aggressively. Crash or bull market salvation, frankly I and my fund are well positioned for neither.
I won’t pretend to be a huge expert on what has happened, but I firmly believe the long-term, root cause of it all is an excessive reliance on tools which utilise standard deviations, but I can’t prove it yet. Meantime, our current difficulties seem to be more a problem of insolvency than a classic, Bookstaberian illiquidity crisis, although we clearly have one of those as well. Whenever one of these has cropped up in the past the Fed has generally washed it away in a bath of hot money. Somehow I worry it won’t work this time.
Whatever is happening is also highly US-centric at this point (sadly the global effects are still to come). I think this WSJ article was very illuminating about the wider context of what we’re facing. Reading this, it’s possible this is a game changing moment in the history of the global economy, something similar to the collapse of Bretton Woods, the end of the Cold War, that sort of thing.
I have 3 major impressions I want to share: Continue reading
Posted in Lens grinding, Uncategorized
Deep makes more money than Wide
Apologies for not blogging this sooner, knowledgeable reader; I have had this bee in my bonnet for some time. It is important, and goes to the very heart of the nature of rationality and investing. Have a look at this:

Where IR is “Information Ratio”, which I would understand to be longhand for how much money you make, and IC is “Information Coefficient” (whenever I hear the word coefficient something inside me dies), or how good you are at selecting things which go up or down in the right way, and N is how many independent opportunities you have to exercise your IC on.
So, how much money you make, or your schmalpha, is how clever you are at picking investments times the root of however many different things you can invest in. Clearly, I can make more money by being more clever (more cleverer?), or if I am just a bit clever, I can make more money by spreading that bit of cleverness over lots and lots of different independent opportunities. Looks pretty easy, doesn’t it?
This, according to a Humble Student of the Markets, (found, like so many other interesting things, during a daily troll through Abnormal Returns) at is viewed as a “Fundamental Law of Active Management.” I would call it a “Recipe for Serious Underperformance”, or alternatively “Arse-Bitingly Wrong”. To Humble’s credit, he also notes that “a blind application of this work may lead to suboptimal results.”
There are many things which make me cross about this. Where to start? Continue reading
Posted in Lens grinding, Philosophising
Whatchoo talkin about, Willis?
I won’t bore you with the details of how I got my hands on a computer safe for blogging. Mostly because I haven’t actually managed to. Stupid Toshiba. Astonishingly, hyperlink is deactivated; it won’t let me link to anything properly except with full URLs. Never mind, I will press on, despite the threat of discovery, tapping away at my this, my work laptop.
Obviously I have been champing at the bit to blog great things at you all this past month or longer, but I want to start with a small, easily disposed of matter, but one which has been bothering me for a while now, and which I cannot let lie.
I do believe Old TED has bitten the hand that feeds! Can it be that with this post (http://epicureandealmaker.blogspot.com/2008/02/survey-course.html) he is disagreeing with me, me who so skilfully defended his livelihood against the attacked of the baffled, pissed old hacks at the FT? And, Scylla on Charybdis, as he does so he engages in an implicit attack on my livelihood? Well, he does it quite gracefully, so Baruch’s powerful ire remains comfortably in its scabbard, so to speak, but it twitches, TED, it twitches. Continue reading
Posted in Uncategorized
On moral instincts
Dear Baruch,
So there I was, eight days into a two week trek through Ethiopia, staying in Axum in the North, when I had my breakdown. I just couldn’t go on like this, so removed from the internet for so long. I headed up the road, entered the nearest telecenter, and surfed.
That in itself was an adventure, what with a 56K modem and a spotty phone connection. Most web pages took actual minutes to download. But I persevered, and an hour later had paid $10 to a happy proprietor to print out 35 pages of interesting articles, which I took to the hotel to devour greedily.
The article that made most of an impression on me in that bunch was Steven Pinker’s The Moral Instinct, in the New York Times. It is a good overview of what psychologists, philosophers and evolutionary biologists have been working on recently to better understand the phenomenon of morality. In particular, Pinker talks about the work of a Jonathan Haidt, who counts five basic moral principles that all humans possess: “harm [avoidance], fairness, community (or group loyalty), authority and purity”. While we all subscribe to these principles, we can rank them differently, and a society’s overall moral compass is determined by how its members predominantly rank them.
The “Do unto others as you would have them do unto you” prescription that guides my morality is thus one that prioritizes harm avoidance and fairness over the others. But other societies, such as the one in Tigre that I found myself in as I read the article, might value a sense of community and authority more than I do.
I found this fascinating, as it offers an explanatory framework for comparing and contrasting the dominant moralities of the world’s different societies without requiring us to enter into the moral relativism trap. We can now presumably start to discuss which of these principles are the most useful in a world that is growing increasingly connected and technologically advanced. For example, I believe that blind obeisance to community, authority and purity is dangerous in a globalizing world (heck, it was dangerous in the first half of the last century too).
But is an absolute aversion to harm and a love of fairness also dangerous? Haidt’s talk at the just-ended TED argues that we should at least consider the possibility. Via Ethan Zuckerman’s notes:
Why should liberals care about these other three moral values? Because there’s a tendency for social order to decay. [Haidt] shows us the Hieronymus Bosch “Garden of Earthly Delights” – reading from left to right, we see purity, then sexual excess, then hell. This is true artistically, but it’s also true in terms of behavioral economics – research shows that cooperation in games delays without punishment. We may need authority and purity to maintain social order.
[I think he means that positive sum games don’t work if you don’t punish defectors.] It’s too soon for me to come out with conclusive statements about all this, but that is why I’m blogging it, so you can destroy any faulty logic. For example, I’m thinking that an obsession with purity makes sense in poorer societies, where contagious and infectious diseases are an ever-present danger, but that as we grow more well off, the usefulness of this impulse fades. And some of these moral precepts are surely there through a process of “natural” selection: More militant “patriotic” societies would tend to wipe out, over time, societies attaching less importance to militantly defending the community.
I’m sure Spinoza would have been intrigued by the notion of a taxonomy of moral principles. He came up with something similar, and also from the psychological perspective, but never really extended his work from the individual to the sphere of comparative sociology. At the same time, I’m not sure if Haidt’s taxonomy is complete. How would he explain mob rule, of the kind that tore Spinoza’s friends the de Witts to shreds? Community minus order minus authority? And is my strong belief in freedom of speech truly just a lack of regard for authority, or might it be a positive value, let’s call it tolerance? Might an affinity for rationality not be a moral precept? It’s the bedrock of the scientific method, after all. Your thoughts, Baruch?
Posted in Philosophising, What Would Spinoza Do?


