The Hanover Collaboration

I think I’ve got Netflix pretty well trained to give me good movies. Of course this is largely a good job on their part; but I think that I had something to do with it.

I only rate 5s and 1s. Everything in between I don’t rate.

I’m pretty sure that Netflix still uses quadratic loss when predicting your ratings. I think this is really holding them back since it puts an artificial central pressure on ratings. I’m also suspicious that there is a thresholding effect at 4 stars. Specifically, for clustering purposes, I think considers 4 and 5 stars to be the same thing, “movies you liked”. It finds other people who have a high intersection of 4—5 movies and uses them as predictors.

Early on, I rated X-men 3 at the 4 level which led to systematic over-prediction of franchise action movies. That was a mistake. I fixed that by downgrading it to 3 but then putting a 5 on X-Men 1.

Every time I see a bad movie, I make sure to tell Netflix, especially if everyone else rated it highly, e.g., Million Dollar Baby.

If your wireless usage is between 550 and 2100 min/mo and you’re on AT&T, it might strike you as a good idea to get the the 2100 min/mo plan to take advantage of rollover minutes. That is because you don’t have to worry about going negative and paying the ridiculous premium, while at the same time taking advantage on the price non-linearity.

Seeing how it is fast becoming job interview season, I thought I’d share a parlor trick with you guys. Business-type people are very easily impressed if you can do compounding interest in your head.
It boils down to being able to estimate natural logarithms. Here’s how:

This year, I think I’m going to put my IRA contribution into bonds. At least, I don’t think I’m going to keep my 90/10 spread. “Why,” you might ask, “when Vangaurd target 2045 is so safe and consistent?” The answer is because my brother-in-law, Brian, told me to.

This post is quite a bit after the fact, but it’s something that I wanted to share. As you might have guessed, I was called for jury duty recently and ended up serving on the jury. It was a fairly interesting experience and raised more than a few questions in my mind about our justice system.

This could turn out fairly long, so be warned. But I thought it might be interesting to people who’ve never served on jury duty before.

It all started at the courthouse, at about 9am…

Courtney and I were in The Canyons, Park City, UT on the first day of our ski vacation when opportunity knocked. We were planning on skiing 8 days and were trying to do it on the cheap. We had USST gold passes (the $7000 season pass to everywhere) but we would have to give them back after the third day. So when the “consierge” asked us if we were interested in getting free lift tickets, he had our attention.

There are two types of motor oil: normal and synthetic.

Normal oil comes out of the ground and gets refined. A car’s worth of normal oil costs $11 at Walmart, plus $5 for a filter. Tom and Ray say that if you use normal oil, then you should probably change it once ever 5,000 miles. The total do-it-yourself cost of normal oil changes is thus $32 per 10,000 miles.

Synthetic oil is manufactured in a lab. Or a factory. I don’t know what they call it, but it doesn’t come out of the ground. It’s better than normal oil. It doesn’t turn into {not oil} in your car engine as quickly as normal oil does. It costs $22 for a cars worth at Walmart, plus the same filter as above. The boys say it’s ok to wait twice as long on synthetic. 10,000 miles. The diy cost of synthetic oil changes is thus $27 per 10,000.

Jiffylube costs $35 for normal oil, or $65 for synthetic oil. Those of you doing the math in your head have noticed something remarkable at this point. That’s right, you could pay full price for the normal oil change, and give JiffyLube 5 quarts of synthetic oil that you bought yourself at Walmart telling them to use that instead of their own normal oil and you’d still come out on top by $8 from what they would have charged you for synthetic oil, less whatever other way the figure out to rip you off that day.

You can find professional oil changes for $25, but not reliably.

The lesson? If you go to Jiffylube, then get the synthetic. It’s a huge rip-off, but over 10,000 miles you still net $5 over getting two normal oil changes, plus you get 1 {not a trip to Jiffylube} which I’d probably value around $10. It’s win-win. The Jiffylube guys think they’re taking you for a ride with their outrageously priced oil, but you still get the best of them in the long run.

But… now suddenly the Jiffylube versus do-it-yourself calculation has changed. Before when you thought about doing it on your own you were looking at saving $18 (plus manliness points) in return for getting all dirty and scrapping some knuckles. That’s a close call in my book. But now, on the synthetic program, you’re looking at saving $38 (plus manliness points) for doing it yourself. That handily tips the scales for me.

If any does get the Jiffylube synthetic, will you please email how many miles the sticker tells you you can go before you need new oil. I bet it’s still 3,000.

[Discaimer: My favorite tribologist uses normal oil.]

Perhaps some of you are familiar with a “Toad in a hole”. For those of you who aren’t, you take a slice of bread and cut a hole in the center, for example by pressing into it with a cup, and then fry an egg in the hole. Over-easy seems to be the best way to cook the toad.

A “Toad in a box” is a tripple-decker (i.e. 3 bread slices) grilled cheese sandwich whose middle slice is a “Toad in a hole”. It can be augmented analogously to a regular grilled cheese sandwich for instance with bacon/ham and tomato.

I’m convinced that this is the best idea I’ve had nor will I be terribly upset if I don’t have a better one.

Hey Tracy, it’s Debbie. I couldn’t find your old number and Tammy says this is the new one. I hope it’s the right one. Anyway, remember that hot stock exchange guy that I’m dating? He gave my father that stock tip on the company that went from under a buck to like three bucks in two weeks and you were mad I didn’t call you? Well I’m calling you now! This new company is supposed to be like the next really hot clothing thing. And they’re making some big news announcement this week. The stock symbol is … He says buy now. It’s at like 50 cents and it’s going up to like 5 or 6 bucks this week so get as much as you can. Call me on my cell, I’m still in Orlando. My Dad and I are buying a bunch tomorrow and I already called Kelly and Ron too. Anyway I miss you, give me a call. Bye.

The brilliant thing is, only old people have “answering machines” on their “landlines”, and old people are far more likely to be gullible in that kind of way. Brought you you by the Securities and Exchange Commision.

The website also explains some things about this business model that I’ve been wondering for a while.

Great news from Redmond. Microsoft is now offering a plugin for QuickTime Player so that it can play Windows Media files, .wmv (or something like that). This means you don’t need that POS Window’s Media Player for Mac anymore.

Download

It has become quite obvious to me that the simultaneous wielding of two swords is far more impressive than the use of only one sword. In fact, the use of 2 swords almost automatically increases ones “badassness factor” by at least 3 points.

Don’t believe me? Watch:

Crouching Tiger, Hidden Dragon, Gladiator, Lord of the Rings, and the newly released Chronicles of Narnia.

One could site General Grievous from Revenge of the Sith as a problem with my hypothesis, but I will remind the reader that he patronized four blades until his lower arms were removed.
Aparently, I’m going to have to start training with a second sword. I suggest you do the same.

The results are in. If you would still like to take the test email me the results or post them in the comments, and I’ll add them to this chart. This post will be perma-linked to the front page. The results are in no particular order.

Heads up, I’m going to talk about my finances a bit here, in case that is some kind of taboo with you.

After being paid a meager stiped for a year, I’ve actually netted a bit of money. When I tutor kids, I charge exorbitant rates¹. I think I just got myself onto IKEA’s paid survey short-list. That and I just had my last grandparent die, my grief offset by $10⁴. So I feel like I’m in pretty good shape.

Before, I just had a non-interest checking account which was totally idiot proof. The only things that cost money were other banks’ ATMs and bounced checks. My bank then bought every other bank on the planet so they are all my bank’s ATMs and I definitely don’t bounce checks. But now I have too much money for that account.

First things first, it is time to set up an IRA, Roth, obviously. Jon recommended Vangaurd, which looks like an excellent choice. It turns out that we picked the same fund. So that gets $4000, the maximum.

But now what? Savings account? CD? Interest checking? Anyone else think they’ve got this nailed? Here is Jon’s solution and it sounds pretty good.

But I still need a checking account. I could imagine a future where that is no longer necessary, but that isn’t today. After shopping around, I see this as the winner in the checking department. In fact, it is so good, it becomes hard to justify having a savings account. The extra interest on a savings account wouldn’t cover the time I would spend managing it. Well not until I have a lot more money.

But there are still many thousands of dollars that I don’t plan on touching for at least a year. Potentially longer. So here are the financial concerns, the probability of needing a new car cumulative density function is roughly 1-e^-t, where t is measured in years. There is also the potential for a “starter house” in the 5-10 outlook. In the 20 year outlook there is a dream house but my current investments will be utterly irrelevant if I’m building a million dollar house. For the starter house, the same is probably true. What I do with these $6k won’t really matter, or will they? I think $24k would matter. I would need 15% interest to quadruple in 10 years².

I am pretty confident in the index funds on which my IRA is based. I am planning on having it beat my mortage. To first order it is roughly like the sampling distribution of the means of N(2,5) [notation: normal(mean,stdev)] quarterly with 4*t datapoints. I know you can’t take the mean of interest rates but it is a decent approximation. I also know that N(2,5) is probably a horrible model, (it is colored and definitely not normal) I have some probability code lying around that I could maybe try. What sort of model do you guys use? I also know that most people probably couldn’t write this sort of code. What do they do?

But then there are mutual funds, some of these look more like N(3,8) or N(4,10). At this point, the normal model probably has to go. But still, I think it is reasonable to expect the variance to go like t^-.5. But this is not a stationary process. Yikes.

I also need a distribution of utility of investment growth given time for the next 10 years. Currently, Utility(-6k—6k) has only slightly negative curvature because I am comfortable on my stipend and I still have my parents holding the safety net. The only negative comes from the fact that my parents would have gotten a CD and if I lost money, it would be hard to convince them that I hadn’t acted rashly.

There is some concern that the curvature will get more dramatic in the future if my expenses increase and my parents become less willing to help. But to offset that, once I finish grad school, I expect to make much more money than I do now, which will surely flatten the curve. But on the other hand, I will have more invested. It seems that in absolute terms, I am pretty safe, but I shouldn’t plan on maintaining so high a fraction of my net worth in high risk investments.

So here are some candidates.

0.1) checking account 3% interest
0.2) CD 4-4.5% interest

1) I could put more money into the IRA fund. For now at least, the taxes I would pay are very little and certainly not enough to bring it down to CD level.

2) Index fund,

1. whole market ,
2. S&P

3) Regional mutual funds

1. Domestic,
2. Europe,
3. EAFE,
4. World 1,
5. World 2,
6. Emerging

4) Sector mutual funds.

1. Financial,
2. Energy ,
3. Real Estate
4. Biotech? Health care?

What do you guys think? Any recommendations? Any better ideas?

¹ The Academic Skills Center’s tutoring rate is absurd. They want me to tutor a kid a $7/hour? What are lectures $100/hour? I can usually promise a equal or higher dot{grade} (and sometimes also dot{knowledge}) than the lectures. How much does the person who sends out the ”’tutors badly needed for physics 13’ emails” make?

² Here is how you do a log calculation in your head. If ever you are hanging out with management and you pull this out of your ass, they’ll be impressed. I have heard of this move winning a job interview.

1. you have to be able to do log base two in your head. If you have a choice (like I do here) just pick a convenient one.
2. memorize the natural log of 2 = .693
3. taylor series of e^x = 1 + x + ...
4. convert your log base 2 to base e by means of (2)
5. divide by your time constant.
6. compute (3) (i.e. add 1)

But for interest rates, the 1 is implicit anyway so you can skip 6)

example, what interest rate doubles my money in 30 years?
log2(2) = 1, ln(x) = .693*log2(x), ln(2) = .693
ln(2)/30 = .02
answer: 1.02 which is typically called 2% interest.

Strickly speaking 14% is too far to use the first order taylor series of e^x with only the linear term. To be more precise, compute the next term in this case, .14²/2 = .01 so the answer is more like 15%.