Buffett Put Trade Research

Rationale excerpted here: & Page 20 of the 2008 letter

It’s often useful in testing a theory to push it to extremes. So let’s postulate that we sell a 100- year $1 billion put option on the S&P 500 at a strike price of 903 (the index’s level on 12/31/08). Using the implied volatility assumption for long-dated contracts that we do, and combining that with appropriate interest and dividend assumptions, we would find the “proper” Black-Scholes premium for this contract to be $2.5 million. To judge the rationality of that premium, we need to assess whether the S&P will be valued a century from now at less than today. Certainly the dollar will then be worth a small fraction of its present value (at only 2% inflation it will be worth roughly 14¢). So that will be a factor pushing the stated value of the index higher. Far more important, however, is that one hundred years of retained earnings will hugely increase the value of most of the companies in the index. In the 20th Century, the Dow-Jones Industrial Average increased by about 175-fold, mainly because of this retained-earnings factor. Considering everything, I believe the probability of a decline in the index over a one-hundred-year period to be far less than 1%. But let’s use that figure and also assume that the most likely decline – should one occur – is 50%. Under these assumptions, the mathematical expectation of loss on our contract would be $5 million ($1 billion x 1% x 50%). But if we had received our theoretical premium of $2.5 million up front, we would have only had to invest it at 0.7% compounded annually to cover this – 3 – loss expectancy. Everything earned above that would have been profit. Would you like to borrow money for 100 years at a 0.7% rate? Let’s look at my example from a worst-case standpoint. Remember that 99% of the time we would pay nothing if my assumptions are correct. But even in the worst case among the remaining 1% of possibilities – that is, one assuming a total loss of $1 billion – our borrowing cost would come to only 6.2%. Clearly, either my assumptions are crazy or the formula is inappropriate.

More research here:
http://www.cboeoptionshub.com/2014/08/04/checking-warren-buffetts-equity-index-put-trade/

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Sugar Is Evil

Last month I read this article on how evil Sugar is in obesity (Guardian) & other problems.

Now, I just read this article in the NYT on how insulin & glucose are the key ingredients in feeding cancer cells. Must read with excerpts below.

Incidentally, both the NYT & Guardian article reference the Planck quotation:
“A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

http://www.nytimes.com/2016/05/15/magazine/warburg-effect-an-old-idea-revived-starve-cancer-to-death.html?_r=0

Warburg’s personal diet is unlikely to become a path to prevention. But the Warburg revival has allowed researchers to develop a hypothesis for how the diets that are linked to our obesity and diabetes epidemics — specifically, sugar-heavy diets that can result in permanently elevated levels of the hormone insulin — may also be driving cells to the Warburg effect and cancer.

The insulin hypothesis can be traced to the research of Lewis Cantley, the director of the Meyer Cancer Center at Weill Cornell Medical College. In the 1980s, Cantley discovered how insulin, which is released by the pancreas and tells cells to take up glucose, influences what happens inside a cell. Cantley now refers to insulin and a closely related hormone, IGF-1 (insulinlike growth factor 1), as “the champion” activators of metabolic proteins linked to cancer. He’s beginning to see evidence, he says, that in some cases, “it really is insulin itself that’s getting the tumor started.” One way to think about the Warburg effect, says Cantley, is as the insulin, or IGF-1, signaling pathway “gone awry — it’s cells behaving as though insulin were telling it to take up glucose all the time and to grow.” Cantley, who avoids eating sugar as much as he can, is currently studying the effects of diet on mice that have the mutations that are commonly found in colorectal and other cancers. He says that the effects of a sugary diet on colorectal, breast and other cancer models “looks very impressive” and “rather scary.”

Elevated insulin is also strongly associated with obesity, which is expected soon to overtake smoking as the leading cause of preventable cancer. Cancers linked to obesity and diabetes have more receptors for insulin and IGF-1, and people with defective IGF-1 receptors appear to be nearly immune to cancer. Retrospective studies, which look back at patient histories, suggest that many people who develop colorectal, pancreatic or breast cancer have elevated insulin levels before diagnosis. It’s perhaps not entirely surprising, then, that when researchers want to grow breast-cancer cells in the lab, they add insulin to the tissue culture. When they remove the insulin, the cancer cells die.

“I think there’s no doubt that insulin is pro-cancer,” Watson says, with respect to the link between obesity, diabetes and cancer. “It’s as good a hypothesis as we have now.” Watson takes metformin for cancer prevention; among its many effects, metformin works to lower insulin levels. Not every cancer researcher, however, is convinced of the role of insulin and IGF-1 in cancer. Robert Weinberg, a researcher at M.I.T.’s Whitehead Institute who pioneered the discovery of cancer-causing genes in the ’80s, has remained somewhat cool to certain aspects of the cancer-metabolism revival. Weinberg says that there isn’t yet enough evidence to know whether the levels of insulin and IGF-1 present in obese people are sufficient to trigger the Warburg effect. “It’s a hypothesis,” Weinberg says. “I don’t know if it’s right or wrong.”

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Facebook Original Sharing Down via The Information

Via the Information

Original sharing of personal stories — rather than posts about public information like news articles — dropped 21 percent year over year as of mid-2015, The Information, a tech news site, reported Wednesday. Facebook said in a statement that "the overall level of sharing has remained not only strong, but similar to levels in prior years."

The Takeaway
Facebook is trying to confront a double-digit decline in the most important kind of content that people post on the social network. It’s been working on ways to reverse the slide, with limited success that could have long term implications for the health of its News Feed.

Less than a year ago, leaders at Facebook convened to address a serious problem: people using the social network were posting fewer things about their personal lives for their friends to see, according to confidential company data about several types of content sharing that happen on Facebook, which was viewed by The Information.

Thus began an effort to deal with this long-term threat to Facebook’s primary moneymaker, the News Feed. Facebook set up a team in London to help develop a strategy to stop the double-digit decline in “original” sharing that happens on Facebook, according to four people with knowledge of the situation.

Wednesday’s extension of Live Video to all users is the latest move to increase sharing of original content. But Facebook has also tweaked the algorithm governing what kind of posts people see in their News Feed so that original posts play a bigger part. Facebook’s Android app was redesigned to make it easier for people to post. These moves so far have slowed the decline. But not by much.

A Facebook spokeswoman said in a statement: “People continue to share a ton on Facebook; the overall level of sharing has remained not only strong, but similar to levels in prior years.”

That comment might be true, but it overlooks one type of sharing that’s more important than the rest, and how it’s ailing.

As of mid-2015, total sharing had declined by about 5.5% year over year while “original broadcast sharing” was down 21% year over year, the confidential data show. Original posts are personal in nature as opposed to popular media like links to news sites. Original broadcasts are the most critical kind of content on Facebook because they bring the most engagement. Think of when people announce engagements or babies; those posts always get the most comments and “likes.” The sharing problem was particularly acute with Facebook users under 30 years of age who were sharing much less than they were a year earlier compared with people over 30, according to the data.

As of earlier this year, original broadcast sharing was down roughly 15% year over year, says one person familiar with the figure.

Several months ago, CEO Mark Zuckerberg addressed these problems in remarks to employees at a quarterly all-hands, saying content production needed to go up, according to one person.

Long Term Threat

The decline in original posts doesn’t pose an imminent, existential threat to Facebook. The core product is still growing in terms of the number of users and Facebook has found more ways for people to see engaging things in their News Feed, like viral videos. But if people don’t feel the need to contribute their own content, there may be less-compelling posts for people to view over time. That could gradually erode usage of Facebook.

Several factors are blamed for the decline. One is the growth in the number of “friends” people have in their Facebook network. Over time, the company has strived to get its users to increase the number of people they connect with, often asking them to look at a list of suggested people they might know. But as friends groups have grown, it’s made Facebook feel like a much less intimate place to share things than it used to. Add to that the increase in the number of news articles and advertisements and you get a situation where a cool hangout becomes a bustling metropolis. (These images below illustrate the situation perfectly.)

Image title

The effect is that most original posts appear to come from a minority of users. Around 57% of Facebook users who used the app every week posted something in a given week, the confidential data show. But only 39% of weekly active users posted original content in a given week, and 6% of weekly active people posted to a specific group of friends as opposed to the News Feed. People who posted original content generally did so five times per week, on average.

Another factor in the decline is that some sharing activity has shifted to messaging, and to competitors like Snapchat, which has trained people to quickly shoot and share numerous video “snaps” per day. Facebook is big in messaging, of course, owning both Messenger and WhatsApp, the latter of which has more than a billion monthly active users. But neither of those properties make money for Facebook yet. (And given the way WhatsApp encrypts communications and doesn’t store it on its servers, it’s hard to measure exactly what kind of sharing is happening there.) So it behooves Facebook to fix the sharing problem on News Feed.

The sharing problem also has significatly hurt Instagram as it has grown, according to people familiar with the issue. The photo-sharing app, which has more than 200 million daily active users, also suffers from the fact that it takes much longer to post an image or video there than on Facebook because of the multiple screens a person must click through, such as whether they want to add a photo filter or share the image or video to other social networks.

Various Tactics

Mike Hudack, a former Facebook ads product manager, last year took over the new Facebook unit in London devoted to the sharing problem. It’s unclear exactly what the team came up with on its own. But Facebook has tried various tactics to boost sharing—some of them hidden, some of them obvious. These include the News Feed algorithm tweaks to make original posts more prominent, says one person familiar with the move. Facebook (and Instagram) also prompt people to share photos they’ve recently snapped from their phone, the instant they log on to the apps. (Some people find that prompt to be intrusive.) And on Android, people once had to click a button on the News Feed in order to bring up the box where they could compose an update to share with friends. Facebook changed it so the composition box would be available right away, with the line, "What’s on your mind?"

Facebook also has developed new tools to give people ways to edit their photos and help them share photo albums and “notes.” It now sends reminders to people about holidays like Father’s Day to remind them to connect with their loved ones or post something about them. And it also periodically reminds people of original posts they made “On This Day” several years ago; sometimes, people will re-share those older posts and spark new conversations about them.

Mr. Hudack is leaving Facebook. He didn’t immediately have comment for this article.

Some at Facebook see those things as band-aid measures and are pessimistic about reversing the decline in the “original broadcast” metric because “normal” behavior on Facebook has changed as Facebook has gotten bigger. In other words, Facebook isn’t perceived as a safe place to post personal things as much as it used to be, these people say, and there’s no reason to think it can roll back the clock.

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How to Raise a Creative Child. Step One: Back Off

The extremely interesting thing about the article is that there is growing body of thought which differentiates creativity from raw intelligence.

Here is an excerpt differentiating creativity from raw intelligence & linking it to threshold theory:

But despite the implications of the title Genetic Studies of Genius, the Termites’ high IQs did not predict high levels of creative achievement later in life. Only a few made significant creative contributions to society; none appear to have demonstrated extremely high creativity levels of the sort recognized by major awards, such as the Nobel Prize. (Interestingly, William Shockley, who was a 12-year-old Palo Alto resident in 1922, somehow failed to make the cut for the study, even though he would go on to share a Nobel Prize in physics for the invention of the transistor.) Thirty percent of the men and 33 percent of the women did not even graduate from college. A surprising number of subjects pursued humble occupations, such as semiskilled trades or clerical positions. As the study evolved over the years, the term gifted was substituted for genius. Although many people continue to equate intelligence with genius, a crucial conclusion from Terman’s study is that having a high IQ is not equivalent to being highly creative. Subsequent studies by other researchers have reinforced Terman’s conclusions, leading to what’s known as the threshold theory, which holds that above a certain level, intelligence doesn’t have much effect on creativity: most creative people are pretty smart, but they don’t have to be that smart, at least as measured by conventional intelligence tests. An IQ of 120, indicating that someone is very smart but not exceptionally so, is generally considered sufficient for creative genius.

Specifically regarding the point raised in the article about not being a Tiger parent, the commenter suggests starting with empathy:
Empathy is the highest form of understanding. When raising a child, i would certainly start there. That’s all that is needed from a parent: genuine, and fully embodied empathy. Backing off is not the answer. Neither is controlling. Engaging empathically is all that we as parents need to do. There are two concepts here: engagement And empathy. True empathy is easier to achieve in parent->child relationship than any other kind of relationship. Engage empathically. The child will lead their own growth as a conversation with you, the parent, and their environment. So listening deeply (beneath the words and behavior) to the child is the first order of business, not backing off.

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How to Raise a Creative Child. Step One: Back Off

w704.jpgCredit Brian ChippendalePhoto by: Brian Chippendale

THEY learn to read at age 2, play Bach at 4, breeze through calculus at 6, and speak foreign languages fluently by 8. Their classmates shudder with envy; their parents rejoice at winning the lottery. But to paraphrase T. S. Eliot, their careers tend to end not with a bang, but with a whimper.

Consider the nation’s most prestigious award for scientifically gifted high school students, the Westinghouse Science Talent Search, called theSuper Bowl of science by one American president. From its inception in 1942 until 1994, the search recognized more than 2000 precocious teenagers as finalists. But just 1 percent ended up making the National Academy of Sciences, and just eight have won Nobel Prizes. For every Lisa Randall who revolutionizes theoretical physics, there are many dozens who fall far short of their potential.

Child prodigies rarely become adult geniuses who change the world. We assume that they must lack the social and emotional skills to function in society. When you look at the evidence, though, this explanation doesn’t suffice: Less than a quarter of gifted children suffer from social and emotional problems. A vast majority are well adjusted — as winning at a cocktail party as in the spelling bee.

What holds them back is that they don’t learn to be original. They strive to earn the approval of their parents and the admiration of their teachers. But as they perform in Carnegie Hall and become chess champions, something unexpected happens: Practice makes perfect, but it doesn’t make new.

The gifted learn to play magnificent Mozart melodies, but rarely compose their own original scores. They focus their energy on consuming existing scientific knowledge, not producing new insights. They conform to codified rules, rather than inventing their own.Research suggests that the most creative children are the least likely to become the teacher’s pet, and in response, many learn to keep their original ideas to themselves. In the language of the critic William Deresiewicz, they become the excellent sheep.

In adulthood, many prodigies become experts in their fields and leaders in their organizations. Yet “only a fraction of gifted children eventually become revolutionary adult creators,” laments the psychologist Ellen Winner. “Those who do must make a painful transition” to an adult who “ultimately remakes a domain.”

Most prodigies never make that leap. They apply their extraordinary abilities by shining in their jobs without making waves. They become doctors who heal their patients without fighting to fix the broken medical system or lawyers who defend clients on unfair charges but do not try to transform the laws themselves.

So what does it take to raise a creative child? One study compared the families of children who were rated among the most creative 5 percent in their school system with those who were not unusually creative. The parents of ordinary children had an average of six rules, like specific schedules for homework and bedtime. Parents of highly creative children had an average of fewer than one rule.

Creativity may be hard to nurture, but it’s easy to thwart. By limiting rules, parents encouraged their children to think for themselves. They tended to “place emphasis on moral values, rather than on specific rules,” the Harvard psychologist Teresa Amabile reports.

Even then, though, parents didn’t shove their values down their children’s throats. When psychologists compared America’s most creative architects with a group of highly skilled but unoriginal peers, there was something unique about the parents of the creative architects: “Emphasis was placed on the development of one’s own ethical code.”

Yes, parents encouraged their children to pursue excellence and success — but they also encouraged them to find “joy in work.” Their children had freedom to sort out their own values and discover their own interests. And that set them up to flourish as creative adults.

When the psychologist Benjamin Bloom led a study of the early roots of world-class musicians, artists, athletes and scientists, he learned that their parents didn’t dream of raising superstar kids. They weren’t drill sergeants or slave drivers. They responded to the intrinsic motivation of their children. When their children showed interest and enthusiasm in a skill, the parents supported them.

Top concert pianists didn’t have elite teachers from the time they could walk; their first lessons came from instructors who happened to live nearby and made learning fun. Mozart showed interest in music before taking lessons, not the other way around. Mary Lou Williams learned to play the piano on her own; Itzhak Perlman began teaching himself the violin after being rejected from music school.

Even the best athletes didn’t start out any better than their peers. When Dr. Bloom’s team interviewed tennis players who were ranked in the top 10 in the world, they were not, to paraphrase Jerry Seinfeld, doing push-ups since they were a fetus. Few of them faced intense pressure to perfect the game as Andre Agassi did. A majority of the tennis stars remembered one thing about their first coaches: They made tennis enjoyable.

SINCE Malcolm Gladwell popularized the “10,000-hour rule” suggesting that success depends on the time we spend in deliberate practice, debate has raged about how the hours necessary to become an expert vary by field and person. In arguing about that, we’ve overlooked two questions that matter just as much.

First, can’t practice itself blind us to ways to improve our area of study? Research reveals that the more we practice, the more we become entrenched — trapped in familiar ways of thinking. Expert bridge players struggled more than novices to adapt when the rules were changed; expert accountants were worse than novices at applying a new tax law.

Second, what motivates people to practice a skill for thousands of hours? The most reliable answer is passion — discovered through natural curiosity or nurtured through early enjoyable experiences with an activity or many activities.

Evidence shows that creative contributions depend on the breadth, not just depth, of our knowledge and experience. In fashion, the most original collections come from directors who spend the most time working abroad. In science, winning a Nobel Prize is less about being a single-minded genius and more about being interested in many things. Relative to typical scientists, Nobel Prize winners are 22 times more likely to perform as actors, dancers or magicians; 12 times more likely to write poetry, plays or novels; seven times more likely to dabble in arts and crafts; and twice as likely to play an instrument or compose music.

No one is forcing these luminary scientists to get involved in artistic hobbies. It’s a reflection of their curiosity. And sometimes, that curiosity leads them to flashes of insight. “The theory of relativity occurred to me by intuition, and music is the driving force behind this intuition,” Albert Einstein reflected. His mother enrolled him in violin lessons starting at age 5, but he wasn’t intrigued. His love of music only blossomed as a teenager, after he stopped taking lessons and stumbled upon Mozart’s sonatas. “Love is a better teacher than a sense of duty,” he said.

Hear that, Tiger Moms and Lombardi Dads? You can’t program a child to become creative. Try to engineer a certain kind of success, and the best you’ll get is an ambitious robot. If you want your children to bring original ideas into the world, you need to let them pursue their passions, not yours.

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Google Changing Ad Format – Oct 22 2014

Could this be why Clicks Increased?

http://www.benedelman.org/adlabeling/google-colors-oct2014.html

Chart of trends in Google advertisement background colors - 2002-2014

In an August 2014 article, Groupon Director of Product Management Gene McKenna assessed the impact of Google’s changing presentation format on paid advertising clicks. McKenna reports that, under Google’s prior format (including a distinctive background color for top-of-page ads), Groupon received approximately 15% more clicks on algorithmic results than on paid results. But after Google removed the background color on top-of-page advertisements, paid clicks jumped sharply — at one point 75% more paid clicks than algorithmic clicks, roughly double the paid clicks Groupon received previously.

McKenna points out that paid advertisements tend to be less relevant than algorithmic results. (My research is in accord. For example, in the third chapter of my Ph.D. dissertation, I found that paid advertisements were nearly twice as likely to fail SiteAdvisor’s safety metrics (testing for adware, viruses, spam, and links to other unsafe sites, among other problems) as were algorithmic results for the same search terms.) By diverting users from high-quality algorithmic results to lower-quality advertisements, Google sends users to less useful destinations.

An equally troubling outcome is that Google’s advertisements send users to the same sites they were already trying to reach. For example, if a user searches for Groupon, McKenna’s research indicates the user is now more likely to click a paid ad to Groupon, whereas in the past the user would often click a no-cost algorithmic link. That’s a transfer of wealth from advertisers to Google. Given Google’s $60+ billion of cash, it’s hard to see how this makes the world a better place.

McKenna finds that the effect of Google’s format change ultimately wears off: Three months after implementation, most users had nearly reverted to their prior behavior of skipping over Google’s prominent top-of-page ads. But the effect remains notable and, to my eye, worrisome. For one, consider the users too busy or naive to notice — users who, to this day, will succumb to less relevant advertising and will continue to drive up advertisers’ costs. Furthermore, the three-month period is harmful in its own right. Google changes page format often. If every change yields a several-month period where users are confused and advertisers’ expenses increase, that’s a large fraction of the time when outcomes are needlessly poor. Rather than celebrate the ultimate diminution of the problem, we should bemoan three months of bad outcomes as three months too long.

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Asimov on Creativity

http://www.technologyreview.com/view/531911/isaac-asimov-mulls-how-do-people-get-new-ideas/

Isaac Asimov

October 20, 2014

Isaac Asimov Mulls “How Do People Get New Ideas?

Note from Arthur Obermayer, friend of the author:

In 1959, I worked as a scientist at Allied Research Associates in Boston. The company was an MIT spinoff that originally focused on the effects of nuclear weapons on aircraft structures. The company received a contract with the acronym GLIPAR (Guide Line Identification Program for Antimissile Research) from the Advanced Research Projects Agency to elicit the most creative approaches possible for a ballistic missile defense system. The government recognized that no matter how much was spent on improving and expanding current technology, it would remain inadequate. They wanted us and a few other contractors to think “out of the box.”

When I first became involved in the project, I suggested that Isaac Asimov, who was a good friend of mine, would be an appropriate person to participate. He expressed his willingness and came to a few meetings. He eventually decided not to continue, because he did not want to have access to any secret classified information; it would limit his freedom of expression. Before he left, however, he wrote this essay on creativity as his single formal input. This essay was never published or used beyond our small group. When I recently rediscovered it while cleaning out some old files, I recognized that its contents are as broadly relevant today as when he wrote it. It describes not only the creative process and the nature of creative people but also the kind of environment that promotes creativity.

ON CREATIVITY

How do people get new ideas?

Presumably, the process of creativity, whatever it is, is essentially the same in all its branches and varieties, so that the evolution of a new art form, a new gadget, a new scientific principle, all involve common factors. We are most interested in the “creation” of a new scientific principle or a new application of an old one, but we can be general here.

One way of investigating the problem is to consider the great ideas of the past and see just how they were generated. Unfortunately, the method of generation is never clear even to the “generators” themselves.

But what if the same earth-shaking idea occurred to two men, simultaneously and independently? Perhaps, the common factors involved would be illuminating. Consider the theory of evolution by natural selection, independently created by Charles Darwin and Alfred Wallace.

There is a great deal in common there. Both traveled to far places, observing strange species of plants and animals and the manner in which they varied from place to place. Both were keenly interested in finding an explanation for this, and both failed until each happened to read Malthus’s “Essay on Population.”

Both then saw how the notion of overpopulation and weeding out (which Malthus had applied to human beings) would fit into the doctrine of evolution by natural selection (if applied to species generally).

Obviously, then, what is needed is not only people with a good background in a particular field, but also people capable of making a connection between item 1 and item 2 which might not ordinarily seem connected.

Undoubtedly in the first half of the 19th century, a great many naturalists had studied the manner in which species were differentiated among themselves. A great many people had read Malthus. Perhaps some both studied species and read Malthus. But what you needed was someone who studied species, read Malthus, and had the ability to make a cross-connection.

That is the crucial point that is the rare characteristic that must be found. Once the cross-connection is made, it becomes obvious. Thomas H. Huxley is supposed to have exclaimed after reading On the Origin of Species, “How stupid of me not to have thought of this.”

But why didn’t he think of it? The history of human thought would make it seem that there is difficulty in thinking of an idea even when all the facts are on the table. Making the cross-connection requires a certain daring. It must, for any cross-connection that does not require daring is performed at once by many and develops not as a “new idea,” but as a mere “corollary of an old idea.”

It is only afterward that a new idea seems reasonable. To begin with, it usually seems unreasonable. It seems the height of unreason to suppose the earth was round instead of flat, or that it moved instead of the sun, or that objects required a force to stop them when in motion, instead of a force to keep them moving, and so on.

A person willing to fly in the face of reason, authority, and common sense must be a person of considerable self-assurance. Since he occurs only rarely, he must seem eccentric (in at least that respect) to the rest of us. A person eccentric in one respect is often eccentric in others.

Consequently, the person who is most likely to get new ideas is a person of good background in the field of interest and one who is unconventional in his habits. (To be a crackpot is not, however, enough in itself.)

Once you have the people you want, the next question is: Do you want to bring them together so that they may discuss the problem mutually, or should you inform each of the problem and allow them to work in isolation?

My feeling is that as far as creativity is concerned, isolation is required. The creative person is, in any case, continually working at it. His mind is shuffling his information at all times, even when he is not conscious of it. (The famous example of Kekule working out the structure of benzene in his sleep is well-known.)

The presence of others can only inhibit this process, since creation is embarrassing. For every new good idea you have, there are a hundred, ten thousand foolish ones, which you naturally do not care to display.

Nevertheless, a meeting of such people may be desirable for reasons other than the act of creation itself.

No two people exactly duplicate each other’s mental stores of items. One person may know A and not B, another may know B and not A, and either knowing A and B, both may get the idea—though not necessarily at once or even soon.

Furthermore, the information may not only be of individual items A and B, but even of combinations such as A-B, which in themselves are not significant. However, if one person mentions the unusual combination of A-B and another unusual combination A-C, it may well be that the combination A-B-C, which neither has thought of separately, may yield an answer.

It seems to me then that the purpose of cerebration sessions is not to think up new ideas but to educate the participants in facts and fact-combinations, in theories and vagrant thoughts.

But how to persuade creative people to do so? First and foremost, there must be ease, relaxation, and a general sense of permissiveness. The world in general disapproves of creativity, and to be creative in public is particularly bad. Even to speculate in public is rather worrisome. The individuals must, therefore, have the feeling that the others won’t object.

If a single individual present is unsympathetic to the foolishness that would be bound to go on at such a session, the others would freeze. The unsympathetic individual may be a gold mine of information, but the harm he does will more than compensate for that. It seems necessary to me, then, that all people at a session be willing to sound foolish and listen to others sound foolish.

If a single individual present has a much greater reputation than the others, or is more articulate, or has a distinctly more commanding personality, he may well take over the conference and reduce the rest to little more than passive obedience. The individual may himself be extremely useful, but he might as well be put to work solo, for he is neutralizing the rest.

The optimum number of the group would probably not be very high. I should guess that no more than five would be wanted. A larger group might have a larger total supply of information, but there would be the tension of waiting to speak, which can be very frustrating. It would probably be better to have a number of sessions at which the people attending would vary, rather than one session including them all. (This would involve a certain repetition, but even repetition is not in itself undesirable. It is not what people say at these conferences, but what they inspire in each other later on.)

For best purposes, there should be a feeling of informality. Joviality, the use of first names, joking, relaxed kidding are, I think, of the essence—not in themselves, but because they encourage a willingness to be involved in the folly of creativeness. For this purpose I think a meeting in someone’s home or over a dinner table at some restaurant is perhaps more useful than one in a conference room.

Probably more inhibiting than anything else is a feeling of responsibility. The great ideas of the ages have come from people who weren’t paid to have great ideas, but were paid to be teachers or patent clerks or petty officials, or were not paid at all. The great ideas came as side issues.

To feel guilty because one has not earned one’s salary because one has not had a great idea is the surest way, it seems to me, of making it certain that no great idea will come in the next time either.

Yet your company is conducting this cerebration program on government money. To think of congressmen or the general public hearing about scientists fooling around, boondoggling, telling dirty jokes, perhaps, at government expense, is to break into a cold sweat. In fact, the average scientist has enough public conscience not to want to feel he is doing this even if no one finds out.

I would suggest that members at a cerebration session be given sinecure tasks to do—short reports to write, or summaries of their conclusions, or brief answers to suggested problems—and be paid for that; the payment being the fee that would ordinarily be paid for the cerebration session. The cerebration session would then be officially unpaid-for and that, too, would allow considerable relaxation.

I do not think that cerebration sessions can be left unguided. There must be someone in charge who plays a role equivalent to that of a psychoanalyst. A psychoanalyst, as I understand it, by asking the right questions (and except for that interfering as little as possible), gets the patient himself to discuss his past life in such a way as to elicit new understanding of it in his own eyes.

In the same way, a session-arbiter will have to sit there, stirring up the animals, asking the shrewd question, making the necessary comment, bringing them gently back to the point. Since the arbiter will not know which question is shrewd, which comment necessary, and what the point is, his will not be an easy job.

As for “gadgets” designed to elicit creativity, I think these should arise out of the bull sessions themselves. If thoroughly relaxed, free of responsibility, discussing something of interest, and being by nature unconventional, the participants themselves will create devices to stimulate discussion.

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Changing Google Ad Formats – Oct 14 2014

Slideshow of Changing Google Ad Formats:

http://online.wsj.com/articles/a-look-at-advertising-in-search-results-1413225465

http://online.wsj.com/articles/ads-tied-to-web-searches-criticized-as-deceptive-1413226602

In response, the three leading U.S. search engines have done little, making it difficult for users to distinguish ads from “natural” search results. Google earlier this year stopped placing colored shading around ads, and now displays a small yellow “Ad” label next to some paid links. The shading of ads on Yahoo and Microsoft’s Bing search results is nearly imperceptible; both search engines label ads with a single line of light-gray text.

“Consumers are being tricked,” says Robert Weissman, president of Public Citizen, a consumer-advocacy group whose complaints helped push the U.S. Federal Trade Commission in 2002 to first issue guidelines recommending that search engines clearly delineate listings that are ads.

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