Beating the Market Depends “on Your Ability to Be a Reader of People”

(p. B1) The person who helped inspire the passive-investing boom, the late economist Paul Samuelson, became wealthy from his active investments.

The greatest active investor of our time, Warren Buffett, advocates investing passively.

. . .

(p. B6) Prof. Samuelson’s decisions show why investors shouldn’t become so doctrinaire about index funds that they completely cut themselves off from any chance, however rare, of doing better.

In 1970, the same year he became the first American to win the Nobel Prize in economics, Prof. Samuelson began buying stock in Mr. Buffett’s Berkshire Hathaway Inc., at a cost that eventually averaged about $44 per share. (Berkshire’s A shares traded this week at approximately $290,000 apiece.)

. . .

In an interview this week, Mr. Buffett says Prof. Samuelson believed the same thing he does: that markets are “generally very efficient but not perfectly efficient.”

Mr. Buffett adds, “I do think if you know something about finance and about people, you may be able to identify someone out there who can overperform. But for every one you identify who can, there’ll be 1,000 others who don’t turn out to be able to.”

Continues Mr. Buffett: “You’re betting enormously on your ability to be a reader of people, even more than your ability—or theirs—to select securities. They’re all promising overperformance and spending a lot of money on selling it very persuasively. Overwhelmingly this is a world of salespeople.”

For the full commentary, see:

Jason Zweig. “THE INTELLIGENT INVESTOR; From a Skeptic, a Lesson on Beating the Market.” The Wall Street Journal (Saturday, December 22, 2018): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the commentary has the date December 21, 2018, and has the title “THE INTELLIGENT INVESTOR; What You Can Learn From One of Warren Buffett’s Smartest Investors.”)

Founder Re-Acquires StubHub

In my book Openness to Creative Destruction: Sustaining Innovative Dynamism, I praise project entrepreneurs for having as their main goal, not wealth or fame, but making a ding in the universe (to use Steve Jobs’s phrase). I also suggest that they are more likely to succeed, in part because they are more likely to stick with the venture they founded. But there may be exceptions to my narrative. Eric Baker sounds like a project entrepreneur who left his start-up because of conflicts with his co-founder, and who now is back in charge.

(p. B4) Eric Baker long envisioned bringing together the two ticketing companies he started.

This week eBay Inc. agreed to sell its StubHub unit, a business Mr. Baker launched nearly two decades ago, to Geneva-based Viagogo Entertainment Inc., the ticketing firm with a large European presence he has been running since 2006.

The $4.05 billion all-cash deal would create a global ticketing juggernaut in the booming business of live events. It would also put StubHub back in the hands of the person who early on saw the opportunity in the legitimate resale of tickets.

. . .

“You had to pay through the nose or find people on the street corner to purchase from,” says Mr. Baker. He felt there had to be a better, more efficient way to find tickets and imagined that could happen online.

He headed to Stanford Graduate School of Business that fall and, together with classmate Jeff Fluhr, started StubHub—then called Liquid Seats—in 2000.

. . .

Mr. Baker and Mr. Fluhr—who was chief executive and had majority ownership of the company—had their differences, and in 2004 Mr. Baker left at the board’s direction, said people familiar with the decision.

. . .

When eBay bought StubHub in 2007, Mr. Baker says he opposed the deal. “It’s rare you have the opportunity to have a business like that,” he says. “To me, you try to hold on to something that’s working.”

For the full story, see:

Anne Steele. “StubHub Acquisition Puts Co-Founder Back in Charge.” The Wall Street Journal (Monday, December 2, 2019): B4.

(Note: ellipses added.)

(Note: the online version of the story has the date November 29, 2019, and has the title “The Tale Behind StubHub’s Sale: How Eric Baker Bought Back the Ticket Seller.”)

My book, mentioned above, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Cancel Culture Seeks to Silence the Heterodox

(p. A23) Christopher Hitchens was one of the great essayists in America. He would be unemployable today because there was no set of priors he wasn’t willing to offend.

Now the boundaries of exclusion are shifting again. What we erroneously call “cancel culture” is an attempt to shift the boundaries of the sayable so it excludes not only conservatives but liberals and the heterodox as well. Hence the attacks on, say, Steven Pinker and Andrew Sullivan.

This is not just an elite or rare phenomenon. Sixty-two percent of Americans say they are afraid to share things they believe, according to a poll for the Cato Institute. A majority of staunch progressives say they feel free to share their political views, but majorities of liberals, moderates and conservatives are afraid to.

Happily, there’s a growing rebellion against groupthink and exclusion. A Politico poll found that 49 percent of Americans say the cancel culture has a negative impact on society and only 27 say it has a positive impact.   . . .

After being pushed out from New York magazine, Sullivan established his own newsletter, The Weekly Dish, on Substack, a platform that makes it easy for readers to pay writers for their work. He now has 60,000 subscribers, instantly making his venture financially viable.

Other heterodox writers are already on Substack. Matt Taibbi and Judd Legum are iconoclastic left-wing writers with large subscriber bases. The Dispatch is a conservative publication featuring Jonah Goldberg, David French and Stephen F. Hayes, superb writers but too critical of Trump for the orthodox right. The Dispatch is reportedly making about $2 million a year on Substack.

The first good thing about Substack is there’s no canceling.

For the full commentary, see:

David Brooks. “The Future of Nonconformity.” The New York Times (Friday, July 24, 2020): A23.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date July 23, 2018, and has the same title as the print version.)

“Greatness in Science Often Comes From the Well-Prepared Mind Turning a Chance Observation Into a Major Discovery”

(p. 27) Takuo Aoyagi, a Japanese engineer whose pioneering work in the 1970s led to the modern pulse oximeter, a lifesaving device that clips on a finger and shows the level of oxygen in the blood and that has become a critical tool in the fight against the novel coronavirus, died on April 18 [2020] in Tokyo.

. . .

Mr. Aoyagi’s contribution to medical science was built on decades of innovation and invention. In an essay about Mr. Aoyagi, John W. Severinghaus, a professor emeritus of anesthesia at the University of California, San Francisco, wrote in 2007 that Mr. Aoyagi’s “dream” had been to detect oxygen saturation levels without having to draw blood.

. . .

But he soon ran into a problem. Blood does not flow smoothly like an open tap, but pulses through the body irregularly, thus preventing an accurate recording of dye levels. The problem, however, turned out to be an opportunity. By devising a mathematical formula to correct for this “pulsatile noise,” he created a device that measured oxygen levels with greater accuracy than before.

“Greatness in science, often, as here, comes from the well-prepared mind turning a chance observation into a major discovery,” Dr. Severinghaus wrote.

For the full obituary, see:

John Schwartz and Hikari Hida. “Takuo Aoyagi, 84; Invented Medical Device.” The New York Times, First Section (Sunday, May 3, 2020): 27.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the obituary was updated June 20, 2020, and has the title “Takuo Aoyagi, an Inventor of the Pulse Oximeter, Dies at 84.”)

The essay about Aoyagi mentioned above is:

Severinghaus, John W. “Takuo Aoyagi: Discovery of Pulse Oximetry.” Anesthesia & Analgesia 105, no. 6 (Dec. 2007): S1-S6.

“Slavery Without Private Property”

(p. B11) Yuri Orlov, a Soviet physicist and disillusioned former Communist who publicly held Moscow accountable for failing to protect the rights of dissidents and was imprisoned and exiled for his own apostasy, died on Sunday [September 27, 2020] at his home in Ithaca, N.Y.

. . .

A credulous Communist Party member since college, Professor Orlov began having doubts about the party based on a growing foreboding under Stalin over what he later described as “slavery without private property.” He was further alienated by the subsequent Soviet repression of civil liberties movements in Hungary and what he called the “savage suppressions of workers’ unrest” in Czechoslovakia.

. . .

In 1956, after publicly advocating democratic socialism, Professor Orlov was fired as a research physicist at the Institute of Theoretical and Experimental Physics and expelled from the Communist Party. In 1973, in a letter to Leonid Brezhnev, the general secretary of the party, he denounced the stultifying effect of repression on scientific research and presciently proposed “glasnost,” or openness, long before that word was in common use.

. . .

Professor Orlov was arrested in 1977 and, after a show trial, sentenced to seven years in a labor camp, followed by five years in Siberian exile, for “anti-Soviet agitation and propaganda.”

For the full obituary, see:

Sam Roberts. “Yuri Orlov, Dissident Of Soviet Union Sent Into Exile, Dies at 96.” The New York Times (Friday, October 2, 2020): B11.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the obituary has the date Oct. 1, 2020, and has the title “Yuri Orlov, Bold Champion of Soviet Dissidents, Dies at 96.”)

“Robinson Insisted That Creativity Can Be Taught”

(p. B12) Ken Robinson, a dynamic, influential proponent of stimulating the creativity of students that has too often been squelched by schools in the service of conformity, died on Aug. 21 [2020] at his home in London.

. . .

Mr. Robinson consulted with governments and schools around the world, conducted workshops and wrote books, including “Out of Our Minds: Learning to Be Creative” (2001) and “You, Your Child and School: Navigate Your Way to the Best Education” (2018), with Lou Aronica.

He preached that schools needed not only to broaden their curriculums but also to support teachers as creative professionals and to personalize learning by breaking large classrooms — artificial environments that invite boredom, he said — into small groups.

“Kids will take a chance,” he said in the TED Talk. “If they don’t know, they’ll have a go. Am I right? They’re not frightened of being wrong.” But, he added, “By the time they get to be adults, most kids have lost that capacity.”

Mr. Robinson insisted that creativity can be taught — not through direct instruction, but by giving students opportunities, inspiration, encouragement and mentoring.

The educator Salman Khan said that his popular online website Khan Academy draws on Mr. Robinson’s teachings in part by personalizing curriculums to meet individual students’ needs.

“He opened our eyes to an educational system that isn’t fair to a lot of kids and holds back their potential,” Mr. Khan said in a phone interview. “He helped a lot of educators, including myself, say, ‘Hey, look, this is a time to change.’ ”

For the full obituary, see:

Richard Sandomir. “Ken Robinson, Who Encouraged Schools to Nurture Creativity, Is Dead at 70.” The New York Times (Saturday, Sept. 19, 2020): B12.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the obituary has the date Sept. 11, 2020, and has the title “Ken Robinson, Who Preached Creativity in Teaching, Dies at 70.”)

The updated third edition of Ken Robinson’s first book mentioned above is:

Robinson, Ken. Out of Our Minds: The Power of Being Creative. New York: Wiley, 2017.

Oligopolists Compete Intensely

(p. B3) The race is on between the world’s largest videogame console makers, this time during a period of heightened demand for at-home entertainment through the coronavirus pandemic.

Sony Corp. SNE 1.45% on Wednesday said two versions of the PlayStation 5 would go on sale in November, one for roughly $400 and another for $500. Both consoles will be sold in a small number of countries including the U.S. and Japan starting Nov. 12 and the rest of the world a week later.

Last week, Microsoft Corp. said it would release two new consoles as well, the Xbox Series X for $499 and the Series S for $299, on Nov. 10.

For the full story, see:

Sarah E. Needleman. “Videogame Rivalry Heats Up.” The Wall Street Journal (Thursday, September 17, 2020): B3.

(Note: bracketed year added.)

(Note: the online version of the story was updated Sep. 16, 2020, and has the title “Sony to Launch Two PlayStation 5 Models This Fall.”)

“The F.D.A. and the Drug Houses Were in Bed Together”

(p. A22) Dr. John S. Najarian, a groundbreaking transplant surgeon who made headlines for taking on difficult cases, and who weathered a different type of headline when he was accused, and then exonerated, of improprieties related to a drug he had developed, died on Aug. 31 in Stillwater, Minn., east of Minneapolis.

. . .

In November 1982, Dr. Najarian performed what may have been his highest-profile surgery. The patient was Jamie Fiske, who became the youngest successful liver transplant recipient when Dr. Najarian performed the operation a few weeks before her first birthday. Her parents had made a widely publicized appeal for a donor.

“They were told that she wouldn’t survive that kind of an operation,” Dr. Najarian said in an oral history recorded in 2011 for the University of Minnesota’s Academic Health Center. “I’m not the kind of guy that takes that lightly. So I told them, ‘If a liver becomes available, we’ll transplant it, and it will work’ — a pretty brash statement, but it did.”

Dr. Najarian’s success with transplants was aided by a drug he developed in 1970, a type of antilymphocyte globulin known as Minnesota ALG, which addressed the biggest problem with early transplants: the rejection of the new organ. He said the drug, which he began using around 1970, gave the Minnesota transplant teams notably better results than other surgical centers were getting with a product offered by a pharmaceutical company.

“Everybody thought we were lying,” Dr. Najarian said, “because we could take patients and we could transplant them, and 65 to 70 percent of them did extremely well, whereas they were lucky to have 50 percent with the commercially available product from Upjohn.”

Other transplant centers began asking for the product, and it turned into a multimillion-dollar business for the university. But in 1992, the Food and Drug Administration, which had approved ALG as an investigational drug but not for interstate sale, stopped the program, and the federal authorities began an investigation. The university turned on Dr. Najarian, pressuring him to resign, and in 1995 he was charged with violating drug safety laws and other crimes.

Dr. Najarian maintained that the case was an attempt by the pharmaceutical industry and its friends in the F.D.A. to squash a successful treatment that was costing drug companies money by besting their products.

“The F.D.A. and the drug houses were in bed together,” he said bluntly in the oral history.

His trial in federal court in St. Paul, Minn., in 1996 provided vindication. Judge Richard Kyle threw out six of the charges, and a jury acquitted him of the other 15. The judge then took the extraordinary step of blasting the F.D.A. and the prosecutors.

“I have some questions as to why we were here at all,” Judge Kyle said.

The F.D.A., he added, “was certainly aware of what was going on, and yet they came in here as a witness to testify that somehow they were hoodwinked by this defendant and his colleagues and other people at the university.”

“We had a program here in Minnesota,” the judge added, “which, for all its problems and shortcomings, was a good program, literally saved thousands of lives.”

For the full obituary, see:

Neil Genzlinger. “John Najarian, 92, Revered Transplant Surgeon Who Took Tough Cases, Dies.” The New York Times (Monday, September 29, 2020): A22.

(Note: ellipsis added.)

(Note: the online version of the obituary was updated Sept. 19, 2020, and has the title “John Najarian, Pioneering Transplant Surgeon, Dies at 92.”)

Least-Well-Off Were Gaining Before Pandemic

(p. A3) U.S. families’ income and wealth rose in the years heading into the coronavirus pandemic, with those in lower-income and lower-wealth categories reaping relatively large gains, the Federal Reserve said in a report on household finances.

. . .

The distribution of wealth between low- and high-income households narrowed slightly in the latest survey period, Fed economists said, a shift from the 2010-to-2016 period when incomes largely stagnated for all but the most well-off after the 2007-2009 recession.

Families in the lowest two income groups recorded large percentage increases in median net worth, suggesting the decadelong expansion benefited a wide swath of society. Net worth rose 37% to $9,800 for the lowest earners, and increased 40% to $44,000 for the second-lowest group. The median net worth of the highest and second-highest groups declined 8% and 9%, respectively.

For the full story, see:

Harriet Torry. “Household Wealth Rose Before Crisis.” The Wall Street Journal (Tuesday, September 29, 2020): A3.

(Note: ellipsis added.)

(Note: the online version of the story was updated Sep. 28, 2020, and has the title “Household Wealth Rose in Years Before Pandemic, Fed Says.”)

Science Is a Process, Not a Fixed Body of Truths

(p. 14) Both writers exemplify the humanity of science: Seager and Johnson laugh, grieve, hope, fail, try, fail and try again. “We started from almost nothing,” Johnson writes about Mars, though she could be talking about pretty much every human endeavor. “We’ve gone careening down blind alleys and taken countless wrong turns, yet somehow, miraculously, the passion, ingenuity and persistence we have brought to the enterprise have moved us toward a truer understanding of another world.”

Why keep searching for life elsewhere when we sometimes seem to have a hard time appreciating it in our own backyard? What does it say about us?

“It says we’re curious,” Seager writes. “It says we’re hopeful. It says we’re capable of wonder and wonderful things.”

For the full review, see:

Anthony Doerr. “Galaxies Far, Far Away.” The New York Times Book Review (Saturday, September 6, 2020): 14.

(Note: ellipses added. In both the print and online versions, “WSJ” and “Mr. Mackey” are bolded, as are the questions asked by Jaewon Kang. The bolding is not visible in the theme used for this blog.)

(Note: the online version of the review has the date Aug. [sic] 18, 2020, and has the title “These Books Transport You to a Galaxy Far, Far Away.”)

The two books under review are:

Johnson, Sarah Stewart. The Sirens of Mars: Searching for Life on Another World. New York: Crown, 2020.

Seager, Sara. The Smallest Lights in the Universe: A Memoir. New York: Crown, 2020.

California Energy Shortage Partly Due to Government Mandated Price Ceiling on Energy Imported from Out-of-State

(p. B9) As California keeps facing electricity shortages, the discussion around its grid often veers to extremes.

. . .

Should California . . . have shut down less natural gas and nuclear power? That is definitely part of the issue, and future shutdowns might need to slow.

. . .

. . . at least some of the shortage is addressable through market rules.

For example, California has a hard import bid cap of $1,000 per megawatt hour. Christopher DaCosta, regional director of western power markets at Wood Mackenzie, says that surrounding areas have a softer cap and are able to pay more. During this summer, that meant power plants often rerouted electricity to higher bidders than California.

For the full commentary, see:

Jinjoo Lee. “To Keep Lights On, California Needs Power Play.” The Wall Street Journal (Thursday, September 17, 2020): B9.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Sep. 16, 2020, and has the title “How to Keep the Lights On in California.”)