Strunk and White

You don't know the importance of writing until you seriously write something. That was my first thought when I began to write up the prospectus for my Ph.D. dissertation. Although I am far from being a good writer, I collect good tips of how to write well. Therefore, I can share some writing advice with you.

1. Read a lot. If you don't know how other good writers write, it is very likely that you are not going to be one. Newspapers and magazines are the best sources. You should not only rely on reading blogs and academic papers. Sometimes they can be very poorly written, though being extremely informative.

2. Use adverbs. The veteran Fortune journalist, Carol Loomis, is the mastermind behind Warren Buffett's fantastic writing. If you love reading annual reports, Buffett's Berkeshire Hathaway is an incredible source. One piece of advice from Loomis to Buffett is to use adverbs. It will enrich the whole article. Of course, you need to know lots of adverbs.

3. Read Strunk and White's The Elements of Style. So many people talk about it that I have to have one by this holiday season. Greg Mankiw mentioned it in his blog. Bob Flood talked about it when he was in town. I will probably talk about it more when I have it.

4. Write often. Starting a blog yourself?

After writing all these, I checked again the advice from Mankiw. Nothing can top his. Check it out: How to write well by Greg Mankiw.

Never stop believing

Dallas Fed recently released a videotaping of the interview with Milton Friedman. Although I am pretty familiar with what the great economist had said in all sorts of interviews, he never stopped surprising me. In this particular interview, he called the social security system a Ponzi scheme. The sustainability of the system relies on recruiting new members to pay off retirees. There is no asset accumulation in the system used by the U.S. If you think it carefully, it is indeed the case. How can Paul Krugman look at this fact and still think we don't have a crisis? Once again Prof. Friedman proved to me: we should not stop believing in him.

(Picture: Dallas Fed)

Fire Mike Nolan

There is a reason why 49ers have more flags than any other team in NFL this season. Players are lack of discipline. When that happens, it is always the coach to blame. That sums up this disappointing season. Fire Mike Nolan and make him take Alex Smith with him.

(Picture: sf49ers.com)

Robert Flood is in town

Robert Flood was in the department to give a couple of talks this week. One was about advice for graduate students. I am just so happy to learn that I am doing most of the things he suggested. Can I say, "great minds think alike?" Maybe it is too early to tell if I will be as big as he is, but I am really inspired.

Having seen the unusual high attendance to Dr. Flood's talk, I want to say something about seminar attendance in general. I have decided to commit myself to one of the department seminars since I cleared field exams. Commitment means attending every week without questioning what the topic is. Most of my peer selectively go. Make no mistake, I did struggle sometimes because the talk was so boring or too difficult. But my take on this is that going to seminars is like taking vitamins. You won't see the immediate benefits, but in the long run, it sure helps. Besides, you know what happens if you take vitamin only once in a while: eventually you will stop taking it for good.

(Picture: worldbank.org)

How to tell something is over heating

A while back when we were still in L.A., we lived in a large apartment complex very close to Disneyland. Because I stayed home quite often during that time, I knew most of the maintenance crew. The head of handymen once talked to me about buying a house through a broker that could hook him up with low down payment and low interest payment mortgage. When I pressed him for more details, he shrugged, "I don't know. I can give you a card and you can call him. He is really nice."

Some day before we moved to Santa Cruz, he told me again that he bought a second house because he made a fortune on the first one. "Jesus," I told him, "you need to be more careful." He didn't seem to care even after I told him I was an investment adviser. He still held on to the first one. I don't know if he had cashed out before the subprime crisis hit. (Good luck, Gus!) But here we have two lessons to learn.

First, as Prof. Ravenna pointed out, bubbles can be rational. As long as there are buyers with higher offer than your purchase price, your buying high is rational. I doubt Gus knew about the theory, but he made a fortune on the first house.

Second, when a handyman is going all in and not hesitating to brag about it, the market is probably over heating. It is only a matter of time to see the bubble burst.

(Picture: www.bconnex.net)