The Black Swan: The Impact of the Highly Improbable

The Black Swan: The Impact of the Highly Improbable
by Nassim Nicholas Taleb

Read the First Chapter at New York Times. Throw out the Gaussian! In with the Power Law??
The central idea of this book concerns our blindness with respect to randomness, particularly the large deviations: Why do we, scientists or nonscientists, hotshots or regular Joes, tend to see the pennies instead of the dollars?

The book is written in a very confrontational style, as if the author was emailing text or posting on Usenet, very harsh tone at times towards economists, and others, and a very professorial tone in laying traps that the author uses to berate reviewers on missing his clues! But taken with a hint of humor (which may have been the original intent) it is quite entertaining. Ignoring all such exclamations, and the times when it seems that the author is taking things to the extreme to make a point (are people really that taken with the Gaussian?) the technical parts of the book are very illuminating, and the central premise of the existence of Black Swans is certainly important. The author certainly is an interesting character, in another article, the simple question of Street Charity is turned into long winded response bordering on the incomprehensible, in this Freakonomics - Street Charity Quorum!

The Dork of Cork

The Dork of Cork
by Chet Raymo

With humor, the story describes the life of Frank Bois, a dwarf who is obsessed with all things beautiful. Reviews and Comments available at the web site.

The book starts with ‘Begin with beauty’, and continues with tales of interesting personalities and their travails. The ending though is a major let-down, completely different from the flow created by rest of the story.


by Voltaire

As I was listening to this book on my MP3 player, I was stunned at the story - seemed incredulous. Then I read the historical background to this story, and then it starts making sense, and it becomes a great, fantastic tale. A google search yields many reviews, many sites have the whole book online, here's one Literature Network - Candide.


Master Pangloss ... "It is demonstrable," said he, "that things cannot be otherwise than as they are; for as all things have been created for some end, they must necessarily be created for the best end.
"Now we are upon this subject," said Candide, "do you think that the earth was originally sea, as we read in that great book which belongs to the captain of the ship?"
"I believe nothing of it," replied Martin, "any more than I do of the many other chimeras which have been related to us for some time past."
"But then, to what end," said Candide, "was the world formed?"
"To make us mad," said Martin.

This book is also available in MP3 Audio Download format. Unfortunately, this is DRM protected and requires support for Microsoft DRM (so no Apple iPod support). Available at most Public Libraries in the US and UK. Visit your library web site to see if they offer NetLibrary downloads.

Easy Centigrade-Fahrenheit and Kilos-Pounds Conversions

Traveling between cities in the US and other countries requires conversions between Centigrade and Fahrenheit, as well as between Kilos and Pounds. Here's a easy way to do the calculations, inspired by the faint childhood memories of the Trachtenberg method of arithmetic manipulations, and achieving error rates of 1% or less.

Converting Centigrade to Fahrenheit
Converting Fahrenheit to Centigrade
SHA: SUBTRACT 32, HALVE, ADD one-tenth
The exact formula: °F = °C * 9/5 + 32
The easy formula is the same.

Easy conversion using D-S-A (or DSA32) steps, with example converting 14 °C:
1. Double: 28
2. Subtract one-tenth: 28/10 = 2.8, rounded to 3, gives 28 - 3 = 25
Ignore negative sign if any, to make it easier, and then put sign back again.
3. Add 32: 25 + 32 = 57 °F [exact value is 57.2 °F]

The exact formula: °C = (°F - 32) * 5/9
The easy but approximate formula: °C = (°F - 32) * 1/2 * 1.1

Easy conversion, using S-H-A (or 32SHA) steps, with example converting 57 °C:
1. Subtract 32: 25
2. Halve: 12.5
3. Add one-tenth: 1.25, rounded to 1.3, gives 12.5 + 1.3 = 13.8 °C [exact value is 13.888... °C]

If no rounding is done, these steps provide the precise Fahrenheit value, with no error. This calculation leaves an error of around 1%; adding 1% to final result will give a more precise value in Centigrade.
The exact error is (5/9 - 1.1/2) / (1.1/2) = 1.0101...%, but 99% accuracy should be good enough for most day-to-day purposes.
Calculator:  °C      °F (Exact & Easy)
  [Calculators Rounded to 1 Decimal Digit]
Calculator:  °F       °C (Exact)      °C (Easy)

Katz's Deli

Food Rating: 3 stars/4 Value Rating: 3 stars/4

205 E Houston Street (corner of Ludlow St), New York, New York.

Given that the smoked meat available at Schwartz's in Montreal is my number one food choice, there needs to be some mention of corned beef and pastrami in New York too - the other big city in the world for cured meat.

Katz's Delicatessen is pretty good. It certainly exhibits quite a few quirks and oddities that provide a quintessential New York experience - but the food is good too, better than some of the other similarly famous pastrami and corned beef places in New York City. It has been in business since 1888 - a long time - which is usually a very good indication of a good restaurant.

When you enter the place, you are handed a ticket - hold on to it, and get it filled in when you order food - loose this, and they they will charge you $50! Diners also have to enter and exit in a single file.

Katz's Deli - Corned Beef and Pastrami The meat is quite good - nice, spicy enough - certainly still not comparable to Schwartz's - Schwartz's is more spicy, more tender, but Katz's is a pretty good alternative. And like all things American (US-American), the quantity is outrageous - too much meat. So, too much for one person, but great to share between 2-3 persons. And smoked meat fans won't need to be told this, but these sandwiches are best with rye bread, with mustard, and nothing else. Black Cherry soda for a drink, or hot black tea (well, hot black tea is probably just me). The sandwiches go for around $15, not including tax and tip.


Food Rating: 4 stars/4 Value Rating: 3 stars/4

2077 Ste-Catherine W, 514-937-0156. On Ste-Catherine, just west of Rue du Fort.

This Turkish restaurant has a unique window display of the cooks making lavash - basically huge chappatis/tortillas.

The appetizers - Mezze platters - are good enough for a meal, many choices to pick from, and come with a freshly made lavash bread. The appetizers include Baba Ghannouj - charbroiled eggplant puree with pomegranate paste and roasted vegetables, Hummus - chickpeas puree with tahini, lemon, garlic, olive oil, Muhammara d'Alep - pomegranate paste with mixture of walnuts, pine nuts, pepper.

The borek - Turkish feuillette - is excellent. These are flaky phyllo dough pastries filled with feta and spinach or beef and potatoes along with a splash of hot spice - really good. The spinach and feta borek is a great accompaniment to main dishes like Manti, or to a sampling of the mezzes. With a main dish, you can request an half-order of borek so you have chance of finishing it all. 2015 update: They heard me! Now the borek is half-size - a single large square instead of two, so it is now the perfect accompaniment to Manti. 2015 Manti and Borek picture.

Le Petit Alep

Food Rating: 4 stars/4 Value Rating: 3 stars/4

Street View 191 Jean-Talon Street East in Montreal - walk West towards St-Laurent from the Jean-Talon metro station. Phone: +1-514-270-9361.
Open Tue-Sat for lunch and dinner.

2013: Le Petit Alep Official Website is now online with details and the whole menu.

Great food and excellent ambiance in the converted garage that houses this cafe.

Syrian/Armenian food.
Filet-mignon with a special spicy sauce - Chiche Kebab Terbialy. Absolutely the best, this is always a safe choice.
Pureed eggplant, tahini, garlic, lemon - Métabal.
Chicken in tahini - Poulet Trator.
Grilled Pita sandwich - Pitas grillés poulet. Chicken, mayo, garlic, with a nice kick - hint of spicy red-pepper?

For pictures, including a picture of the menu, visit the travel gallery Le Petit Alep in the Montreal album section.

The terbialy sauce is a nice, medium-to-hot spicy sauce,
and it makes the difference, best on the beef kababs (medium-rare), but also available with shrimp.

And then there are the weekday daily lunch specials with great soups -- just remember to get there during lunch Tuesday through Friday.
Kebbe Labanie (Kibbe Lebanese) - large meatballs in yogurt, garlic, mint sauce.
As they describe it: "boulettes de bœuf, blé concassé, noix, souce yogourt, ail, menthe".
Filet de sole Amandine
Soupe Harira - tomatoes, beef, fennel, cardamom - nice spicy soup.

Montreal Restaurants Map

The Restaurants & Food Markets - Montréal posting describes all these restaurants.

Google Earth users may be interested in the KML File for these locations.
Microsoft Live Search Maps is also a good way to view the KML file data.
If the map does not display below, this link may work: Google Maps - My Maps - Montreal Restaurants

Determining Portfolio Asset Allocation

Asset Allocation is a key factor in analyzing an investment portfolio.
Surprisingly, it does not seem very easy to get an asset allocation analysis done based on a particular set of specific asset classes. Every financial web site seems to have a portfolio analyzer - but they use a predetermined set of asset classes.

Self-directed investors will likely need more than just knowing about percentages allocated to "stock, bonds, cash", for example, following the lazy portfolios, one might settle on the following classes in 2007:
Large-cap US
Small-cap US
Emerging Markets
Inflation-Indexed Securities

Getting any of the portfolio analyzers on the web to provide analysis based on above set is not possible. But with just a little amount of research, it is very easy to get the data and create a spreadsheet to help with the analysis. Assuming a portfolio of around 10-20 mutual funds (which seems to be a popular recommendation), it should not take more than a hour or two to collect this data which is reasonable time to spend once every year on portfolio analysis.
As an example, here is a Microsoft .xls format spreadsheet that determines the asset allocation for a portfolio based on the asset classes shown above. The spreadsheet also has formulas that can be used to enter actual amount invested in each fund, and it will print out total percentages for each asset class. The basic instructions for using the spreadsheet are:
Step 1: In the first section - "Percentage Holdings" - create a row for each fund, enter unique code, and with information gleaned from Annual Reports, enter the distribution of holdings in that fund. Create new rows by copying or replacing one of the existing rows.

Investing for the long term - Lazy Portfolios

Long term investing - with so many options available it is great to read all about lazy portfolios and how they can be the best bet for passive, long-term investors. The key to a steady and good investment strategy relies on diversification - selecting a bunch of categories with historical returns that are not correlated to one another - one may go up while another may go down and vice-versa.

Here's a site with many articles on Lazy Portfolios - Paul Farrell on Lazy Portfolio Performance, beating the S&P 500 for passive investors, advisers and pros ... Simple well-diversified portfolios of three to 11 low-cost, no-load index funds... Aronson Family Portfolio, No-Brainer Portfolio(Dr. William Bernstein), Coffeehouse Portfolio (Bill Schultheis), ...
Interview and portfolio - NPR: Yale's Money Guru David Swensen's Advice for the Individual Investor: Beware of the Mutual Fund Myth ... for-profit mutual funds have an inherent conflict of interest. They make money by charging fees that suck profits away from investors in the funds.

Now the truth is that the Nobel-Prize winning Modern Portfolio Theory is over 50 years old, but it is still going strong even though some people may argue whether risk and volatility should be tied together given that most people may be ok with large upside volatility and only concerned about downside volatility. I would lay credence to what David Swensen says above - essentially that there are many other factors that go into what a for-profit financial professional looks at, and Swensen's analysis shows that diversifying and looking for lowest transaction costs is the key and this strategy is something every investor is capable of executing on their own.