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Baruch! Albert Einstein, world-famous physicist but little-known fellow Spinozist, is having a letter sold at auction this week whose contents should finally put to rest that silly notion that Einstein was religious.

We know Spinoza left a strong impact on Einstein. I visited Spinoza’s home in Rijnsburg a few years ago and saw with my own eyes Einstein’s signature in the visitor’s book, dated 1920. In 1929 a Rabbi alarmed by the suggestion that Einstein’s theory of relativity might present a slippery slope to atheism asked Einstein for a clarification of his beliefs:

New York’s Rabbi Herbert S. Goldstein asked Einstein by telegram: “Do you believe in God? Stop. Answer paid 50 words.” In his response, for which Einstein needed but twenty-five (German) words, he stated his beliefs succinctly: “I believe in Spinoza’s God, Who reveals Himself in the lawful harmony of the world, not in a God Who concerns Himself with the fate and the doings of mankind.”

Spinoza’s God, of course, is exactly analogous to “Nature”. Unlike anyone else before him, Spinoza maintained that “God, or nature” is intrinsic to the universe (as opposed to extrinsic, e.g. a God that can create a universe). Thus, postulating the existence of God is no different than postulating the existence of a universe governed by physical laws. And that is something atheists can live with.

So what does the letter being sold at auction this week reveal about Einstein’s religious views? Einstein was writing in 1954 to the philosopher Eric Gutkind, and here is what he wrote, among other things:

The word god is for me nothing more than the expression and product of human weaknesses, the Bible a collection of honourable, but still primitive legends which are nevertheless pretty childish. No interpretation no matter how subtle can (for me) change this.

[...] For me the Jewish religion like all others is an incarnation of the most childish superstitions. And the Jewish people to whom I gladly belong and with whose mentality I have a deep affinity have no different quality for me than all other people. As far as my experience goes, they are no better than other human groups, although they are protected from the worst cancers by a lack of power. Otherwise I cannot see anything ‘chosen’ about them.

Those words could have been uttered by Spinoza 300 years earlier, and indeed Spinoza’s writings make those very same arguments. At one point, Spinoza writes that perhaps not everyone has the mental fortitude to abandon conventional religion — that his abstract notion of God = Nature may only really be accessible to a philosophical elite — and that conventional religion would suffice to bring happiness to the rest. In Steven Nadler’s Spinoza: A Life (p.290) we get this response from Spinoza to his landlady when she asked him if she has chosen the right religion:

One day, when Van der Spyck’s wife asked Spinoza whether he thought she could be saved in the religion that she professed, he replied: “Your religion is good, and you need not search for another one in order to be saved, as long as you apply yourself to a peaceful and pious life.”

In other words, belief is merely a means to an end; what is more important is good deeds. Still, you might think Spinoza is being a bit patronizing here to a good but not particularly clever soul.

Myself, I am a little less sanguine about belief — happiness at the expense of a realistic world view seems like too high a price to pay. Perhaps, however, I’ve been lucky, and I can’t fathom the kinds of misery that make the crutch of religion a necessity for many.

I’m sorry to say Spinoza has been far from my mind, Bento. While you have been emulating him, coughing nobly on a sickbed, Baruch’s little mind has been awhirr with work and stocks and which ones to buy and avoid. Thus lack of posting. 

But lately Baruch has noted that AAPL stock has been on a tear in anticipation of the iPhone v.2 launch this or next month. Then he read this rather good post on business models by Baruch’s fiancée, Equity Private, who opined that with its superduper iPhone, Apple had broken free from the bonds of Porter’s 5 forces and the domination of conventional wisdom, and had redefined the handset industry. I had to disagree with her. I worry her analysis is too US-centric, because from where I sit quite the opposite seems true. I hope she will punish me severely for my insolence, and expect to enjoy it.

Yes, iPhone is the most elegant and sophisticated and user friendly phone on the market, it has set the agenda for the whole industry, and will be viewed for ever after as a watershed in the industry. Blah blah. But really, none of that matters, because iPhone v.1 was really an attempt to remake the business model of the handset industry, to redfine the rules in a way that nullified the advantages of the incumbents like Nokia and Samsung (Motorola is sadly no longer relevant, except as a cautionary tale). In this they have failed. Two bits of news make me think this:

1. 3G iPhone is going to be subsidised by AT&T to sell at $199 with a 2 year contract, according to Scott Moritz at Fortune
2. Vodafone, which semi-publicly rejected the harsh terms offered by Apple to take iPhone v.1, has announced its non-core-European (ex GB, DE and FR) properties will carry iPhone. Since then we have had a rash of similar carrier announcements from SingTel, to Telecom Italia. All are likely non-exclusive.

1) is rumour, 2) is fact. But both indicate Apple’s business model for v.1 may be a thing of the past.

I have long argued that the iPhone venture is Apple playing a weak hand as best it can, and that there is a very real chance it will be its undoing. Although it may not feel like it, and there’s likely still good news to come in the short term, overall risks for Apple have increased. They have lost the initiative and are playing by others’ rules. They are now swimming in a pool of sharks. Follow me, gentle reader: Continue reading →

Yeah, Baruch was grinning as he read a writeup of an academic study on bear raids (the full article costs money, sadly, and Baruch is mean. The writeup was found by our friends at Abnormal Returns), which like 90% of academic studies about stocks has as its conclusion something that anyone with half a brain and a couple of years of decent investing experience could tell you about in a shorter and more easily understandable way, with fewer equations. In this case, the study concluded that under certain circumstances concerted selling (ie a bear raid) can hurt a company’s fundamentals as well as its stock price and make the stock fall further. Makes sense to me.

However, to get to this otherwise reasonable conclusion, the authors construct a very strange scenario: the selling of ignorant but nasty bears convinces a company management not to undertake an otherwise profitable project. Looking at its tanking stock price, management understand the market to be non-supportive, and its judgement conclusive. They terminate the money-making project and forgo a great opportunity. Look: a bear raid hurt a company’s fundamental value, there you go, bob’s your uncle. Here is the full abstract of the article, by one Itay Goldstein (Wharton), and Alexander Guembel (Oxon):

It is commonly believed that prices in secondary financial markets play an important allocational role because they contain information that facilitates the efficient allocation of resources. This paper identifies a limitation inherent in this role of prices. It shows that the presence of a feedback effect from the financial market to the real value of a firm creates an incentive for an uninformed trader to sell the firms stock. When this happens the informativeness of the stock price decreases, and the beneficial allocational role of the financial market weakens. The trader profits from this trading strategy, partly because his trading distorts the firms investment.

Up until this point, Goldstein and Guembel sound sane, if a bit dull. Then they go off the deep end:

We therefore refer to this strategy as manipulation. We show that trading without information is profitable only with sell orders, driving a wedge between the allocational implications of buyer and seller initiated speculation, and providing justification for restrictions on short sales.

 

It’s all bollocks of course, and proof, if we needed any, that Oxford shouldn’t have a business school. It’s not that bear raids don’t suck, they do. And such a scenario could certainly happen, and I am sure it sometimes does. But in my experience the majority of company managements view the buy side as a bunch of ignorant 30-something hedge fund twits with the attention spans of crack-addicted carp, who couldn’t construct a balance sheet if Messrs Graham and Dodd were there to hold their hands. They know this to be true (and it really IS true as it describes me perfectly) because they meet them all the time and answer their inane questions. Continue reading →

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?

We’ve been doing this for a year now, Bento. Do you think we’ve converted anyone to Spinozism?

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 →

Baruch, as you have demonstrated on many occasions while we cohabited as graduate students, for the threat of an escalation to be credible, it’s not enough for others to suspect you probably mean it. They have to know you’ll escalate, even if the cost to you is greater than the cost to others, because you’re irrationally stubborn that way, because you have done so in the past, and probably because you enjoy it.

Which brings me to an article today that I feel quite queasy about:

BBC, Feb 22: Russia could use force in Kosovo

Russia’s ambassador to Nato, Dmitry Rogozin, has warned that Russia could use military force if the Kosovo independence dispute escalates.

“If the EU develops a unified position or if Nato exceeds its mandate set by the UN, then these organisations will be in conflict with the UN,” he said.

In that case Russia would “proceed on the basis that in order to be respected we need to use brute force”, he said.

With Kosovo, the added bonus from the point of view of the Serbs and Russians is that while they believe the land is theirs, very few ethnic Serbs actually live there, which makes indiscriminate bombing a no-brainer, should it come to that. In other words, the cost to others will actually be higher than the cost to themselves. Which bodes ill.

A question to you: What’s up with Cyprus, Greece, Slovakia, Spain, Bulgaria and Romania not recognizing Kosovo? Okay, that was hypothetical, the answer is that some of them have a significant conservative Christian constituency, while others are guilty of being a country while Balkan. In both cases, it means seeing international affairs through an us-vs-them Christians-vs-heathens lens. The rest of us, meanwhile, have graduated to a human-rights, self-determination perspective on things.

An example: My Arabic teacher, who has passports from Greece, Italy and Egypt, is 110% Catholic and has a Russian fiancé (don’t ask), is outraged that Kosovo has declared independence. One argument: “The Albanians (=Muslims) only recently moved there.” (My answer: How many centuries do yo have to live somewhere before you own the place?) Another argument: “The EU only helps Muslim countries. Why don’t they support (Christian) Southern Sudan? (My Answer: We do, they’ve got a referendum coming in 2011, and then they’ll get to be independent.)