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[I have medium confidence in the broad picture, and somewhat lower confidence in the specific pieces of evidence. I’m likely biased by my commitment to an ETG strategy.]

Earning to Give (ETG) should be the default strategy for most Effective Altruists (EAs).

Five years ago, EA goals were pretty clearly constrained a good deal by funding. Today, there’s almost enough money going into far future causes, so that vetting and talent constraints have become at least as important as funding. That led to a multi-year trend of increasingly downplaying ETG that was initially appropriate, but which has gone too far.

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There are a number of investment ideas that pop up about once per generation, work well for years, and then investors get reminded of why they’re not so good, and they get ignored for long enough that the average investor doesn’t remember that the idea has been tried.

The idea I’m remembering this month is known by the phrase Nifty Fifty, meaning that there were about 50 stocks that were considered safe investments, whose reliable growth enabled investors to ignore standard valuation measures such as price/earnings ratios, dividend yields, and price to book value.

The spirit behind the Nifty Fifty was characterized by this line from a cryonaut in Woody Allen’s Sleeper (1973): “I bought Polaroid at seven, it’s probably up millions by now!”.

There was nothing particularly wrong with the belief that those were good companies. The main mistakes were to believe that their earnings would grow forever, and/or that growing earnings would imply growing stock prices, no matter how high the current stock price is.

I’ve seen a number of stocks recently that seem to fit this pattern, with Amazon and Salesforce mostly clearly fitting the stereotype. I also ran into one person a few months ago who believed that Amazon was a good investment because it’s a reliable source of 15+% growth. I also visited Salesforce Park last month, and the wealth that it radiated weakly suggests the kind of overconfidence that’s associated with an overpriced stock market.

I took a stab at quantifying my intuitions, and came up with a list of 50 companies (shown below) based on data from SI Pro as of 2019-09-20, filtered by these criteria:

  • pe_ey1 > 30 (price more that 30 times next year’s forecast earnings)
  • mktcap > 5000 (market capitalization more than $5 billion)
  • prp_2yh > 75 (price more than 75% of its 2 year high)
  • rsales_g5f > 50 (5 year sales growth above the median stock in the database)
  • sales_y1 < 0.33333*mktcap (market capitalization more than 3 times last year’s sales)
  • yield < 3 (dividend yield less than 3%)
  • pbvps > 5 (price more than 5 times book value)
  • epsdc_y2 > 0 (it earned money the year before last)

I did a half-assed search over the past 20 years, and it looks like there were more companies meeting these criteria in the dot com bubble (my data for that period isn’t fully comparable), but during 2005-2015 there were generally less than a dozen companies meeting these criteria.

The companies on this list aren’t as widely known as I’d expected, which weakens the stereotype a bit, but otherwise they fit the Nifty Fifty pattern of the market seeming confident that their earnings will grow something like 20% per year for the next decade.

There were some other companies that arguably belonged on the list, but which the filter excluded mainly due to their forward price/earnings ratio being less than 30: BABA (Alibaba Group Holding Ltd), FB (Facebook), and GOOGL (Alphabet). Maybe I should have used a threshold less than 30, or maybe I should take their price/earnings ratio as evidence that the market is evaluating them sensibly.

This looks like a stock market bubble, but a significantly less dramatic one than the dot com bubble. The market is doing a decent job of distinguishing good companies from bad ones (much more so than in the dot com era), and is merely getting a bit overconfident about how long the good ones will be able to maintain their relative quality.

How much longer will these stocks rise? I’m guessing until the next major bear market. No, I’m sorry, I don’t have any prediction for when that bear market will occur or what will trigger it. It will likely be triggered by something that’s not specific to the new nifty fifty.

I’m currently short EQIX. I expect to short more of these stocks someday, but probably not this year.

ticker company pe_ey1 mktcap sales_y1 yield pbvps
AMT American Tower Corp 52 100520 7440.1 1.7 18.21
AMZN Amazon.com, Inc. 54 901016 232887 0 16.67
ANSS ANSYS, Inc. 31.8 18422.3 1293.6 0 6.46
AZPN Aspen Technology, Inc. 30.5 8820.8 598.3 0 22.2
BFAM Bright Horizons Family Solutio 37.2 9181.8 1903.2 0 10.21
CMG Chipotle Mexican Grill, Inc. 48 23067.9 4865 0 15.04
CRM salesforce.com, inc. 50.1 134707 13282 0 7.02
CSGP CoStar Group Inc 49.3 21878.4 1191.8 0 6.74
DASTY Dassault Systemes SE (ADR) 32.9 37683.3 3839 1 7.05
DXCM DexCom, Inc. 110.3 14132.9 1031.6 0 20.44
EQIX Equinix Inc 70.2 48264.7 5071.7 1.7 5.46
ETSY Etsy Inc 61.7 7115.6 603.7 0 16.42
EW Edwards Lifesciences Corp 36.7 44736.3 3722.8 0 13.06
FICO Fair Isaac Corporation 36.5 9275.5 1032.5 0 33.71
FIVE Five Below Inc 33.6 7152.1 1559.6 0 10.86
FTNT Fortinet Inc 31.6 13409.2 1801.2 0 11.93
GDDY Godaddy Inc 67.2 11976.7 2660.1 0 12.41
GWRE Guidewire Software Inc 70.3 8835.9 652.8 0 5.84
HEI Heico Corp 49.3 15277.3 1777.7 0.1 10.58
HUBS HubSpot Inc 94.6 6877.4 513 0 10.93
IAC IAC/InterActiveCorp 38.3 19642.5 4262.9 0 6.51
IDXX IDEXX Laboratories, Inc. 49.3 23570.6 2213.2 0 138.03
ILMN Illumina, Inc. 44.3 44864.4 3333 0 10.5
INTU Intuit Inc. 31.6 70225.1 6784 0.8 18.67
INXN InterXion Holding NV 106.8 5995.1 620.2 0 7.95
ISRG Intuitive Surgical, Inc. 38.8 61020.9 3724.2 0 8.44
LULU Lululemon Athletica inc. 33.7 25222.7 3288.3 0 16.36
MA Mastercard Inc 30.1 276768 14950 0.5 55.23
MASI Masimo Corporation 41.8 8078.9 858.3 0 7.8
MDSO Medidata Solutions Inc 43.4 5734.1 635.7 0 8.35
MELI Mercadolibre Inc 285.4 27306.2 1439.7 0 12.59
MKTX MarketAxess Holdings Inc. 56.7 12941.1 435.6 0.6 18.93
MPWR Monolithic Power Systems, Inc. 31.5 6761.2 582.4 1 9.44
MTCH Match Group Inc 38.4 22264.7 1729.9 0 105.51
OLED Universal Display Corporation 45.5 8622.8 247.4 0.2 11.36
PAYC Paycom Software Inc 51.3 12812.8 566.3 0 28.6
PCTY Paylocity Holding Corp 47.6 5150.5 467.6 0 17.01
PEGA Pegasystems Inc. 167.2 5686.4 891.6 0.2 10.14
PEN Penumbra Inc 134 5142.8 444.9 0 11.3
RMD ResMed Inc. 30.6 19181.5 2606.6 1.2 9.33
RNG RingCentral Inc 139.4 11062.4 673.6 0 30.93
ROL Rollins, Inc. 43.6 11383.4 1821.6 1.2 15.04
RP RealPage Inc 31.3 6084.5 869.5 0 5.3
TAL TAL Education Group (ADR) 39.4 21326.2 2563 0 8.45
TECH BIO-TECHNE Corp 34.6 7483.8 714 0.6 6.52
TREX Trex Company Inc 30.2 5074.2 684.3 0 13.05
TYL Tyler Technologies, Inc. 43.5 10004.5 935.3 0 6.98
VEEV Veeva Systems Inc 62 21366.2 862.2 0 15.27
VRSK Verisk Analytics, Inc. 32.3 25948.4 2395.1 0.6 11.73
ZAYO Zayo Group Holdings Inc 42.5 7997.8 2578 0 5.95

I recently went to Aletheia, a workshop that helps people experience the creation of good interpersonal connections.

An important technique is to get people to focus on what is going on in their minds (especially emotions), and devote less attention to external objects/events. Beyond that they provided little explanation of how it works. But I see enough similarities to the advice on Charismatips.com that at an intellectual level the ideas behind it don’t seem very new.

My initial reaction was that the workshop had few ideas that seemed new to me, and wasn’t likely to influence me much. But by the middle of the workshop I felt myself being somewhat drawn toward the others in the group. I got the impression that many participants experienced more change than I did. I suspect the leaders were exercising more skill than I was able to observe directly.

I think I’ve noticed some subtle changes in how I interact with people that might be due to Aletheia, but whatever benefits I got are hard to evaluate.

At a recent LessWrong meetup, someone described his GTD system with the metaphor automated self, to emphasize that the things he offloads from his mind into the GTD system help him act more robotic. I like the idea of automating some of my actions so that I can further separate planning and execution. The term automated self is a good way to remember that goal, and should be used more widely than it is. Plus I like to distinguish myself from those who attach negative connotations to “robot-like”.

Sleep Improvements

I’ve made several changes over the past few months that have improved my sleep.

A cool environment is important to my sleep, and Chili Pad has proven to be a better way to cool myself on warm nights than attempts at air conditioning. I have it pump water at 72 or 73 degrees through small tubes sitting between me and the mattress. I was careful to buy enough tubes to put the pump in the next room where its noise and light aren’t noticeable. One drawback is that the straps that should hold it in place no the mattress weren’t quite the right length, and broke immediately – that creates a minor problem where it slides around a bit.

The second change was to use only lighting with no blue light an hour before going to bed. I had tried this more than a year ago by placing a red filter in front of my computer monitor and turning off most of the regular lighting. That produced little change even though it cut out 90 to 95% of the blue light. Last week I bought a red light to replace the remaining regular lighting, and now I see a moderate improvement in how quickly I can fall asleep.

I’ve started occasionally using a sleep mask so that I can sleep a bit later than sunrise instead of letting the sun completely control when I wake up. But I don’t like the way it feels, so I won’t use it often.

I’ve also started using a Zeo, and intend to measure the effects of caffeine on my sleep. But I don’t like wearing the headband, so I won’t use the Zeo for long periods of time.

The biggest news at the 2012 Seasteading Conference was the donation (not quite complete) of a 275 foot ship (formerly used for gambling) to the Seasteading Institute. I doubt the Seasteading Institute has much ability to use such a ship directly. It sounds like they will rent it out to some organization that is better suited to managing it, although the obvious choice (Blueseed) probably needs a bigger ship in order to achieve enough economies of scale to be profitable.

This is the first seasteading conference with a seasteading related startup (Blueseed). Most of what they said has been getting publicity for months. What seemed new about the presentation was that a quarter of those expressing interest in living on the ship are from the U.S. and are seeking a place with lots of “cool” people (i.e. not motivated by the visa problems Blueseed is designed to solve). Also, Blueseed has been turning away some businesses that might create political risks (they mentioned Bitcoin, but it wasn’t clear whether that referred to an actual business or a hypothetical).

There was talk about “Peak Phosphorus”, which might say something important about future phosphorus prices, and which is one of several motivations for growing algae, combined with some method for raising nutrient-rich deep water to the surface. The most visionary approach to raising deep water is OTEC, which is a plausible plan for producing power, but would require a fairly large initial investment, and I don’t know how to figure out whether it’s a wise investment.

I didn’t hear much about eating the algae directly, but LiveFuels Inc. has a plan to raise fish from algae. That would produce tasty food with a better omega-6/omega-3 ratio than most farmed fish (such as the soy industry backed Kampachi also at the conference).

Two lawyers who seemed to know everything possible about the Law of the Sea treaty, but not much about its relevance to seasteading, provided some interesting anecdotes. They claim that the controversy over the common heritage of mankind provision originated when Lockheed claimed to be interested in deep seabed mining as a cover for a CIA funded operation to retrieve a Soviet nuclear submarine. Competitors decided that if Lockheed thought the mining might be profitable, they should also research it. (The reports I see on the web differ a bit from what I heard at the conference).

There is a recently renewed push for U.S. ratification of the treaty. The speakers didn’t think it would have much effect on seasteading. For a better analysis of why it would create some risks of tragedy of the commons type problems, see section 4 of Charting the Course. See also the opposition to a similar provision in the Moon Treaty by the space colonization movement.

A post titled Neanderthals had differently organized brains reports evidence that Neanderthal brains did not have a larger volume devoted to intelligence (or at least that part of intelligence needed to handle social interactions in large groups) than humans.

A key fact is that “eye-socket size is correlated with latitude” – at least within a species.

Neanderthals were adapted to high latitudes, and had larger eye-sockets.

That suggests a relatively large part of their brain was devoted to the visual cortex, and it seems somewhat plausible to suspect that much of that involved low-level processing needed to make up for darker conditions at higher latitudes.

So Neanderthals’ larger skull size doesn’t imply any important advantage.

RNA in our food

What you eat can influence your gene expression.

A post titled Eat Your Grains says:

RNA from our food can survive digestion, sneak into our cells, and control our genes

Researchers studied MicroRNAs from rice that affect cholesterol levels in mice. The effect appears harmful, which is a kind of defense against predation I’d expect from something that hasn’t evolved to cooperate with animals. (Grains have probably evolved some traits that help humans, but only where farmers have long been aware of the traits). Oddly, the researchers say “miRNAs may serve as a novel essential nutrient”, but I expect them to be harmful on average, except in fruits (which have evolved to attract animals).

Interplay

Interplay is something which seems helpful at making me more spontaneous. Interplay is hard to describe, but it has aspects of meditation, dance, yoga and improv.

I’ve been to the SF group twice and the Oakland group once, and I plan to continue attending the SF group occasionally. There are a fair number of other places where you can find Interplay.

A description from SF Interplay site:

Learn to have more ease and openness through improvised movement, story, voice and stillness. The spiritual practice of InterPlay can facilitate deeper connections with the divine, other people and our planet. As improvisation becomes easier in our bodies, we have more access to our own wisdom, making us less afraid of what might cross our path. Rather than reacting with fear and paralysis in the face of what is unknown, we can breathe, dance, and find fullness.

Brainiac Dating recently added two search features which create the potential for it to be one of my favorite dating sites: one that matches people based on books listed in their profiles, and one that matches people based on overlap of all the words in their profiles.

Unfortunately, before adding those features the site was sufficiently uninspired that few people joined, so it’s hard to verify that the features are working as advertised. Please spread the word that they’ve become worth trying.