The usefulness of hedge funds

Reflections on investing.

What is hedging in investment? You buy something that tends to rise AND something that tends to sink. You are betting for the best horse AND hedging your bet with a slow nag. That kind of hedging makes no sense.

You can hedge against an expected catastrophe, like inflation or deflation. You can hedge against expected market changes or new regulation. 

It has been demonstrated that almost none of the hundreds of hedge funds existing generates alpha. Why are they prospering? Because there are pension funds, wealth funds and so that need management, and the services of a professional "safe" management. It is not really expensive, about 2% per year.

If they maintain their value is enough of an achievement and justifies the fund manager's salary. Eventual alpha is only a bonus, not really expected.

Therefore, if a managed fund produces AT LEAST the same as an index fund, then it is worthwhile. If it does so by investing in lower risk bets (if there really exist such a thing) then it is the best thing available.

The Futility of Diets and Excercise

Obesity is very difficult to impossible to treat. The most common prescription, and indeed the prevailing conventional wisdom, is that “lifestyle” changes are the best solution. This typically means diet and exercise. However, this has been extensively studied. Across the population, diet and exercise, each individually and in tandem, are completely useless to treat obesity, in the long term.

In the case of exercise, randomized controlled trials (RCTs) don’t even show a short-term benefit. One 2007 meta analysis by Franz et al looked at the results of all sorts of different interventions. For exercise-alone prescriptions, it found that the treatment groups lost no weight at 6 months (well, less than 2 kgs, but even this number comes only when you look at those who remained in the study). Indeed, after a year, the control groups actually lost more weight than the treatment groups. The total weight change was small and close to zero throughout.

In the case of diets, particularly the most common low-fat and low-calorie diets, a very large meta-analysis of RCTs with a combined N > 60,000 (of which ~48,000 came from a single mammoth trial) and a study duration of 2.5 – 10 years, found that diet was completely ineffective for weight loss. The subjects showed no aggregate permanent weight loss at the end of the study period. The largest of these studies, the one by Howard et al (2006) found little change, a total loss (over 3 years) of less than 1 kg (and a difference between control and treatment groups of 1.29 kg, favoring treatment).

As for diet and exercise combined, several studies in both previous meta-analyses look at trials which tested both together. The result was the same: little to no significant aggregate weight loss, especially after longer periods of time.

This is true of low-carbohydrate diets as well. One meta-analysis looked at RCTs. Each of the trials were individually small (n = 11 – 153), but all told there were 712 subjects in the low-carb trials. The duration of studies ranged from 12 to 24 months. The total average weight lost with the low-carb diet groups was on the order of 4 kg! And that’s with considerable attrition in the studies. Low-carb diets don’t work much better, either.

A new randomized comparison trial (Bazzano et al, 2014) of a low-carb vs a low-fat diet (N = 148) found only a weight loss of 5.3 kg after 1 year with the low-carb diet, but only 1.2% change in body fat percentage.

Source: JayMan 

The question is how much I am harming myself by being obese? Should I just sit and wait  till a heart attack or signs of diabetes hit me?

Azarbaijan Lake Urmia - Dying Silently

Lake Urmia, in Iran's Azarbaijan, used to be one of the largest permanent hypersaline lakes in the world. Its volume in 1997 was 30 billion cubic meters. Today is 2.5 billion cu.m. Mohammad-Reza Tabesh, chairman of the parliament environment and sustainable development group, said climate change and low precipitation have caused the same problem for many wetlands in Iran. There are also 100,000 illegal wells in the area. 

Iranian Hotties

In a laudable initiative, Iran's government encourages the use of traditional dress. The women in the southern port town of Bandar Abbas and the island of Qeshm are notable for their brightly colored, floral chadors and niqab, which come in two types. The first gives the impression of thick eyebrows and a mustache from afar, a ruse used in the past to fool potential invaders into mistaking women for men. The other is a rectangular embroidered covering revealing only the eyes. Many women choose not to wear the niqab today, but it is part of a centuries-old tradition that helped protect the face from the wind, sand, and scorching sun in these areas. I like the idea, but mustachioed women are not my type.

Pic. left:  Princess Fatemeh Khanum “’Esmat al-Dowleh” (1855/6-1905). Inscribed: “Khanum ʻIsmat al-Dawlah daughter of Nasir al-Din Shah, wife of Dust Muhammad Khan Muʻayyir al-Mamlik,” and dated mid/late 19th century. Part of the collection of the Institute for Iranian Contemporary Historical Studies (ع 3-5216). Courtesy Women’s Worlds in Qajar Iran.

The Erythrean Ghetto in Tel Aviv costs 100 million dollars per year

The abominable lunatic fringe lefwing fishwrap HaAretz published yesterday an article estimating the monetary cost of having an African ghetto in South Tel Aviv and the amount that will be saved by their return to Africa. Signed by the respected economist Hani Amit, it quotes the Police that the marginal cost of patrolling the neighborhood cost 119 million sheqel (2016), and the Social Security and Health expenses, given that the refugee population is young and fertile, etc. etc. they arrive to the conservative estimate above. Expelling them would save annually hundred million dollars minimum. We are paying them 3000 US$ to leave voluntarily, but the unwritten corollary is that every dollar spent on getting rid of each one is worth several times that sum. The NPV of 119 million divided by 35,000 Erythreans is ...  (do your math!).  I assume that other countries are making similar estimates but they would never acknowledge it.

The Ending of Death's End

Eighteen million years after the Three Body Problem inception, a Chinese couple finds refuge in a small universe. They receive a desperate message that the great universe (the one we live in) is doomed, because its total mass is not enough for its eventual collapse, so it is projected to expand endlessly, cool down and die. They sacrifice their own universe to add its mass to the great universe, so the cycle of collapse and re-birth may continue. The series ends with a Chinese communist exhortation that everyone has to sacrifice its private interests in order to save the collective. So, after a thousand pages of Trisolar invaders and their four dimensional weapons, we realize that we have never left contemporary China.

A visit to the cemetery

This is the grave to the right of my Mother's. The headstone is a typical sandstone of the Shomron with cavities created by water. The poem must mean something but it escapes me.

He said Yes to Life,
and Good Morning to the new day, 
of hours and days, 
of beautiful moments,
In the hope of strength - without trepidation. 

No mention of where he was born, name of the father and the mother, if he was married or had children. This unique in this place. The circular stamp in the upper left corner says "Magen ve Lo Yiraeh" - Defends without being seen. The logo of the Shabak, the Secret Service. An anonymous soldier.  


I tried to google Shmulik Erez. Appeared the despicable fishwrap HaAretz. Quote:
 
 שמוליק ארז. תת-אלוף שמוליק ארז. במודיעין האיראני יכולים להירגע: אין איש כזה

"Shmulik Erez. Lt. General Shmulik Erez. The Information Service of Iran may relax: This man does not exist. "

Mystery.