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Thursday 24 May 2012

The book’s conclusion is that each industry has started out chaotically with many different companies employing rival standards and establishing their own network. However eventually a large company or small group of large companies has arisen to dominate each industry. These larger companies often offers lower prices, higher quality services or universal service which attracts consumers. However the result of this is the formation of monopolies which ultimately inhibit the creative process. The dominate monopolist will use a variety of methods to inhibit anything that threatens their position such as patients, buying rivals, pricing to remove competitors or surpressing innovations that threaten their core market(an example is AT&T discovering but surpressing the Answerphone).  

The monopolisation matters as the result is that a small group have control of the “master switch” that determines the flow of information. The trends the author highlights are then applied to the new internet technologies and the relate to the patient wars that are currently being thought in the mobile phone/internet arena.

The author argues that there is a cycle effect as new technologies emerge which disrupt the existing industries or regulators break them up. A new cycle of consolidation then commences. The book draws on the ideas of Schumpter’s “Creative Distruction”, arguing that the collapse of old monopoly spurs innovation.

I enjoyed the history of film making which has become increasingly high risk, so failures can bring down film studies. Films have increasingly adopted strategies to mitigate that risk,

1.        Vertical integration – buying cinemas in order to guarantee a market for films. Regulators have broken up the older Hollywood studio system and forced the studios to sell of their cinemas.
2.       Sequels and remakes, this gaurantees a market for fans of previous versions and reduces the risk of developing new intellectual property
3.       Films also have a longer product lifecycle, with revenue from sales of DVDs, to television and video game ties ins.  
4.        Merchandising, especially for children’s films or comics.
5.       Establishment of smaller studios owned by larger studios that develop low cost, high risk films.
6.       Finally some studies are owned by large conglomerates who can stand the risk of large losses.

A possible flaw in the book is assuming that the Master Switch is as possibly going to matter as much in the internet age. It is fair easier for media owners to censor television, radio or film that YouTube. YouTube and Facebook offer close to zero cost of content creation and distribution, resulting in too much content for any Master Swith owner to moderate. The only way it could be done would be to limit the form in which people can publish their information, but it seems hard to see how that can be “closed down” without user migrating elsewhere.
Tuesday 22 May 2012
The main thesis of the book is that a lot of our actions are driven by our subconscious and the author claims that he will provide some insight into the latest research from a variety of areas such as Neuroscience and Psychology.

In terms of structure the book follows to imaginary people, Harold and Erika, following them from Harold’s birth to his death. Oddly the events always take place in the 21st century, which gives it a rather unusual feel. The characters are bright and generally lead successful upper middle class lives. Despite the title neither  character seem to lead especially social lives. Harold’s influences are his parents and a teacher. Erika is influenced more by a people she meets as she strives to climb the corporate greasy pole. Friends and family of the characters do not feature.

The author believes that:
1.       The unconscious mind is far more important in our decisions than we realize.
2.       Emotions are bound up in reason and motivate and influence even our most rational thought processes
3.       That we are learn from institution and relationships and these have a profound impact on us

The book therefore argues against the model of  human beings that are seen to be rational decision makers as in simple economic models. It aims to replace older models of human behavior with deeper, more subtle modesl. However the book suffers as the science is rather weak. There is nothing especially original, and  there are better books on aspects of behavioural economics, evolutionary economics and psychology.  The author attempts to bring lots of themes together, but it all lacks rigour. There probably is a gap in the market for a book that analyses how people make decisions and the science behind it, but this book falls somewhat short.

A big problem for me is that the main characters are rather dull and the stories of their lives are not especially compelling. If this were a novel it would be a rather tedious one. They don’t really help to draw out his key insights, rather they seem to pad out the word count. The continual setting of the book in the present day makes it hard to suspend disbelief. Finally the characters are not really embodied in any culture or social group and seem to live successful middle class lives, largely on the basis of the fact they are quite intelligent and make good decisions.
Saturday 5 May 2012

I found this book for free on the web via the excellent Moneysavingexpert website.

This book broadly argues that whilst stock market investing promises high returns – either via funds or directly the truth is that in reality the returns for the normal investor have been disappointing. There are a few reasons for this: -

  1. Fees – individual investors have to pay an array of fees. These include bid/offer spreads, stamp duty, professional fees for brokers and advisors, dealing costs, etc. It is not easy to assertain these costs as they are not really clearly disclosed.
  2. Psychological Costs – individuals make mistakes on when they trade often being sucked into rising markets and selling when the pain of falling markets is too low.
  3. Surviorship Bias- this is a direct cost, but more the reported returns of stock exchanges to include only the winners. Because the losers dissappear they are not included in the average returns(as the data can only include shares that exist at the beginning and end of a period being considered). A similar argument applies to funds as poorly performing funds are closed.

The author believes these costs will total about 6% per year, the costs being broadly similar whether an individual invests in funds or individual shares. The funds seem to be based on “actively managed funds” rather than passive funds which track an index, these in theory offer lower costs.

The author reconsiders another form of investing which is simply to use money held in cash accounts such as building society rates. He believes that the returns from equities are usually based on money market rates rather than the rates available to high street savers. The savers rates are often loss leaders and often exceed money market rates by a significant margin.

For those who wish to invest in shares the advise is to drive costs as low as possible and avoid the urge to churn a portfolio too often. The author also seems to advise that investors ought to have some sort of strategy and stick to it. These ventures into the territory of looking at charts and trying to spot trends, the author only seems to consider this anecdotally and it is a weak part of the book in my opinion. I don't believe there is much evidence that this kind of analysis works.

The final section of the book looks briefly at the future of the industry where the author sees the investment industry entering a period of disintermediation – predicting a decline in IFAs, fund managers and an era of lower costs.  
Friday 4 May 2012


An interesting idea for a book. It claims we can deduce much about a person from their living or working space.

The book starts by detailing the big five traits of psychology

Openness - how willing you are to experience new things
Conscientiousness - organisation
Extraversion - outgoingness
Agreeableness - how much you like other people
Neuroticism - worrying

The book goes on to argue that you can read clues about these traits from people’s living space. However mostly it is on merely two of these traits. If a person is open they are likely to have a wide range of books and if a person is very tidy then they are likely to be conscientious.

In many ways the book seems to argue that snooping might not be so useful. In general people tend to underestimate context(except with regard to themselves), and the book argues it is hard to deduce much from a few cues. For example, a messy person can tidy up or certain items can belong to other people or company policy might change the way a person’s desk is set up, etc. And things such as music tastes or drinking tastes are less important than we imagine.

The big problem with this book is that it obvious that conscientious organised people are likely to have organised personal spaces and open people are likely to have interesting reading material. This book counsels against making big deductive jumps, but that rather limits the scope of snooping. Snooping can be quite good at determining gender and the attractiveness of people (by the photographs of their partners).

The book is quite long as the author goes into various anecdotes about experiment he has done with college students. It is actually quite interesting, although I found myself a bit disappointed at the end of the book to discover that there aren’t really a set of rules that turn us into super snoopers and that in practice it is not such a good way to find out about people.

I enjoyed this book, but it is a bit of a guilt pleasure kind of book than on that will change lives or offers much in the way of deep insight.