Evan Osnos, author of this week’s New Yorker feature on the U.S. gun industry, in a Reddit AMA:

Anybody — especially people who favor free markets — should conclude that the Protection of Lawful Commerce in Arms Act was a big mistake. Imagine if Exxon was protected from liability after the Valdez? That’s not how markets should work. It will probably be revised or repealed to make sure that companies are doing safe work — as with any industry.

Update: The above comment seems to have been deleted from the Reddit thread. But The New Yorker Twitter account even tweeted it as a pull quote.

After a year of work, Overcast 2 is now available as a free update for everyone. It’s mostly a major under-the-hood improvement, with relatively few user-facing changes. But they’re pretty good, I think.

And now, all features are free, and I’m trying a new business model.

Streaming ☁️

The headlining feature of Overcast 2 is streaming. You can still download all episodes as you did before — I fixed some bugs there, too — but now, you have two more capabilities:

• Start playing any episode immediately and let it stream in, rather than waiting for it to completely download.
• Optionally set new episodes to stream instead of download, saving storage space.

And with the new storage manager, you can see how much space your downloads are consuming for each show, and optionally delete the downloads and stream the episodes on demand.

Overcast’s streaming engine is completely custom-written and designed for modern devices, the modern mobile internet, and the expectations of today’s customers, tightly integrated with Overcast’s custom audio engine to be as fast and efficient as possible.

And, of course, Smart Speed and Voice Boost are always available, even when streaming. I wouldn’t have it any other way.

Audio improvements

Even if you don’t plan to use streaming, you’ll reap its benefits: converting the audio engine to a streaming architecture has made all playback faster to start, easier on battery life, more compatible, and more reliable. (And everyone wants to play an undownloaded episode right now sometimes.)

Smart Speed and Voice Boost have also been quietly enhanced:

• Smart Speed is more efficient and now adapts dynamically to quieter voices.
• Voice Boost tone has been subtly enhanced as I’ve gotten better at audio production techniques.

Quite simply, it sounds a bit nicer.

Chapters 🇩🇪

I was wrong. (Not for the first time.) Turns out that chapters are pretty nice. Don’t doubt the Germans.

Social directory

Overcast’s podcast directory has always had a good search if you knew what you were looking for, but browsing was limited to very narrow editorial picks that I edited manually, badly, and infrequently. Since I sucked at that job, I fired myself and replaced me with someone far better: everyone else.

Now, the directory categories are powered by recent recommendations by Overcast users. This is already surfacing far more diverse podcasts, and updating far more frequently, than I could ever offer as one person who mostly listens to tech shows.

Everything else

I’ve made lots of other changes and fixed a lot more bugs. Some of the highlights:

• 3D Touch launch shortcuts (more 3D Touch coming soon)
• Swipe actions on episode cells
• Icon badge option
• Play Next By Priority option for playlist behavior
• A complete overhaul of the show-artwork architecture
• Faster, more reliable communication with the Apple Watch app (watchOS 2 port coming later)
• Moved to a new database layer that fixed tons of bugs, including some remaining sync bugs and the infamous playlist-reordering bug (sorry!)

Plus too many smaller improvements to list here.

My crazy new business model

Overcast has always been free up front to bring the best app to the most people. But I’m just one person, running this business the old-fashioned way, so it has to make money somehow.

Overcast 1.0 locked the best features behind an in-app purchase, which about 20% of customers bought. This made enough money, but it had a huge downside:

80% of my customers were using an inferior app. The limited, locked version of Overcast without the purchase sure wasn’t the version I used, it wasn’t a great experience, and it wasn’t my best work.

With Overcast 2.0, I’ve changed that by unlocking everything, for everyone, for free. I’d rather have you using Overcast for free than not using it at all, and I want everyone to be using the good version of Overcast.

If you can pay, I’m trying to make up the revenue difference by offering a simple $1 monthly patronage. It’s completely optional, it doesn’t get you any additional features, and it doesn’t even auto-renew — it’s just a direct way to support Overcast’s ongoing development and hosting without having to make the app terrible for 80% of its users.

If only 5% of customers become monthly patrons, Overcast will match its previous revenue.

Patrons may get special features in the future if I can’t afford to offer something to everyone (due to hosting costs, etc.), but today, patronage is simply that: supporting Overcast directly, because you want to. And if you’d rather not, no hard feelings.

Thanks, and I hope you enjoy Overcast 2.

Andy Chalk, PC Gamer:

Windows 10 — which is out now, by the way — comes, as it used to in the pre-Win8 days, with Solitaire preinstalled. The Microsoft Solitaire Collection, in fact, which bundles the classic Klondike with other familiar variants like Freecell and Spider Solitaire, tracks stats and logs achievements, and will even have leaderboards at some point. It also has ads.

You can make the ads go away, but, as you may have guessed, it’ll cost you, and not just once: The Microsoft Solitaire Collection Premium Edition is effectively a subscription service that goes for $1.50 a month, or $10 for a year. The Premium version of the game does away with ads, and also offers more coins for completing “Daily Challenges,” and a boost when you play TriPeaks or Pyramid.

Classy. Real classy.

The Swiss-franc-to-Polish-zloty exchange rate is an ugly thing to look at right now (Reuters/Adam Stepien/Agencja Gazeta)

The greatest trick the devil ever pulled was convincing people  it's a good idea to take out foreign currency mortgages. a mortgage in a foreign currency.

But it's one that's worked pretty well in Poland and Hungary, where plenty of people bought homes with Swiss francs they borrowed. These weren't really mortgages, though, so much as financial time bombs that went off on Thursday when Switzerland shocked markets by announcing it would no longer hold its currency down against the euro. The Swiss franc promptly went vertical, and Polish people who'd borrowed in it saw their monthly mortgage payments go up 22 percent quite literally overnight.

Now, taking out a mortgage is risky enough. You're betting you'll be continuously employed, and won't have any major medical emergencies, for the next 15, and maybe 30, years. And if you're married, you'd better be able to afford your mortgage on just one salary, otherwise you're taking twice the risk that you won't lose your jobs. If you have an adjustable-rate mortgage, which are far more common outside the Fannie and Freddie-subsidized U.S., then you're betting that interest rates won't rise too much. And, in any case, you're betting that real estate prices will go up, so you can either sell, refinance, or just build wealth, whatever may happen.

That's a lot of bets. But some people don't think it's enough. Not only do they decide to make a leveraged bet on real estate, but also to take a side position in the currency markets. That's what you're doing, after all, when you borrow money in a foreign currency. If, for example, you get paid in Polish zlotys, but borrow in Swiss francs, then you're effectively gambling that the Swiss franc won't go up too much against the zloty, otherwise your payments will explode. Even worse, you, as an individual, can't hedge this risk like a company could. You're just too small for it to be worth it for banks to sell you that kind of protection.

So why would anyone take this kind of currency risk? Well, the question answers itself: because it looks like a good deal. The costs, in other words, are hidden, but the benefits are not. Switzerland, you see, has lower interest rates than Poland, so Swiss franc loans do too. The siren call of these lower rates were too much for some people to resist—they knew they'd owe less at first, at the risk of owing a lot more later—and now they're paying the piper. Or, as the case may be, a Swiss bank.

It's bad enough in Hungary, where Swiss franc debt is 12 percent of GDP, that its central bank is offering to replace people's foreign currency loans with forint ones, nationalizing the losses. But hey, it could always be worse. They could be Russia, where, yes, people also took out Swiss franc mortgages that have doubled in value, in ruble terms, the past six months.

Foreign currency mortgages are so bad that even Keyser Söze would say they go too far.

Great short piece by Nick Bradbury.

∞ Permalink

Time, not timing, is key to investing success
Barry Ritholtz
Washington Post, August 24, 2014

Over the past month, we looked at how you would have fared if you were an uncanny stock picker who consistently beat the market by 30 percent or so (What if You Were the World’s Greatest Trader® ? and World’s Greatest Trader Revisited). As it turns out, capital gains taxes and other expenses take a giant bite. Even a very successful active trader barely keeps up with the long-term passive indexer.

This week, we consider: What if you were the World’s Greatest Market Timer® ?

Imagine: You, the individual investor, have an uncanny skill at timing markets and picking the lows. Your prescience allows you to buy near the bottom of every major crash. Anytime the market has a substantial drop, you manage to make a purchase of broad indexes at advantageous prices. Similar to the World’s Greatest Trader, you set up an online account, and then you are off to the races, timing markets with the best of them.

How would you imagine a trader with these skills would do?

Before I share the answer with you, a few words about the genesis of this idea. Gaspar Fierro, a reader in Spain with whom I have been exchanging e-mails, sent along a spreadsheet (here Best timer returns; more at bottom). It purported to show the results of our thought experiment. Fierro was following up on a different thought experiment run by Ben Carlson: What if you were the worlds worst market timer, and you only bought stocks just before major crashes?

Carlson’s terrible timer made purchases at the highs before huge drops. Starting in 1970, his unlucky investor saved $2,000 per year to be invested at market peaks. He raised his annual savings by $2,000 per decade (i.e., $4,000 a year in the 1980s, $6,000 in the 1990s, etc.) as his salary increased over time. He planned on retiring at age 65 at the end of 2013.

Our trader, the World’s Greatest Market Timer, only buys when indexes are trading at 52-week lows (assuming they are 17 percent below the last purchase).

The results of these two thought experiments might surprise you. Our market timer did very well, as you would imagine someone buying near lows would. But when we compare the trader trying to bottom-tick markets against someone who was dollar-cost averaging into the same broad indexes, the results were pretty close, on a percentage basis. In much of the world, the timer edges out the dollar-cost averager. In the U.S. markets and Greece (?!), our diligent averager actually comes out slightly ahead.

Also surprising: Carlson’s top-ticking worst timer of all time did pretty much okay. The results will vary somewhat based on which global index we used, but overall they were surprising — not all that incomparable. One would imagine that only catching the lows would create a huge performance advantage versus the ordinary dollar-cost indexer. I bet many of you assumed buying only at the highs would create losses.

The actual results differed from expectations due to the long timelines involved and the power of compounding. Let’s take a look at how these three approaches differ, and why the results were not as expected.

Let’s start with the world’s greatest timer. Fierro noted that he did not expect these results. “I had always thought that if someone was able to buy near lows continually, then that person would have spectacular returns that would beat almost any investment strategy.” As it turns out, that is not what occurs.

The reason? It’s what happens when gains accumulate on top of gains (in other words: compounding). It is an urban legend that Albert Einstein once said, “Compound interest is the most powerful force in the universe.” He never made that statement, but there is truth in it.

For proof of the power of compounding, just look at your mortgage. On a 30-year loan at a mere 5 percent rate, when that interest is compounded over time (i.e., you are paying interest on the interest you owe), a $500,000 loan costs you nearly $1 million ($966,279.60, to be exact). When you consider that market returns average almost double that 5 percent rate over 30 years, you can understand the power of compounding. In the case of equities, you are compounding gains on gains, instead of interest on interest, but the principle remains the same.

The world’s best timer misses out on the advantages of compounding. Buying only at the lows means that there are going to be long stretches when he is not making buys. Consider the past five years: Buys were made in March 2009, followed by subsequent purchases in July 2010 and October 2011.

Meanwhile, the world’s worst timer also misses out on many of the advantages of compounding. Carlson’s terrible timer  makes four purchases over his investing career: December 1972, August 1987, December 1999 and October 2007. Each of these buys is followed by a crash where his investments lose between a third and half of their value. These include Black Monday in 1987, the dot-com collapse in 2000 and the financial crisis of 2007-2009. But given the long time horizon, the returns are much better than you might guess. As his blog post shows, the terrible timer invested $184,000 in those four slugs, and that portfolio becomes worth $1.1 million. Not too bad for someone who is such a terrible timer.

The takeaway? Carlson states a clear lesson for investors: “Short-term moves in and out of the market don’t matter nearly as much if you have a long-time horizon. Thinking long-term increases your probability for success in the stock market while the day-to-day noise gets drowned out by discipline and compound interest.”

What of an ordinary investor who is a dollar-cost averager into broad indexes? He has a huge advantage over the world’s best market timer, in that he really exists. What he does is possible. The perfect market timer does not and cannot exist. There is no crystal ball or a magic formula that allows for perfect market timing. Instead, our dollar-cost averager simply makes regular contributions to his portfolio. It is a simple, powerful strategy that requires no special prescience into the future, and is a formula that actually exists.

The takeaway is that people who sit out for long stretches while waiting for the perfect entry point into the markets are giving up their single most precious asset: Time.

One last thought on this: The demographic group with the longest investing time horizon are the millennials now in their 20s. According to Patrick O’Shaughnessy, author of “Millennial Money: How Young Investors Can Build a Fortune,” despite their long timeline, members of that generation seems to be missing out. They are significantly underinvested relative to how much time they have until retirement.

Given the dramatic financial crisis of 2007-2009, O’Shaughnessy says it is no surprise that millennials as a group “don’t trust Wall Street.” They also rank “all four major banks among most hated brands.”

“The most basic (and important) decision you make as an investor is your allocation between major asset classes — primarily stocks, bonds and cash.” O’Shaughnessy observes that this cohort is wildly underweighted in equities at 28 percent and overweighted in cash at an astounding 52 percent.

Perhaps it is ironic: The group that has the longest potential runway for absorbing market volatility also seems to be the least interested in investing in stocks.

When it’s time to retire, these folks might be surprised that they cannot go back to live in their parents’ basements again.

~~~

Ritholtz is chief investment officer of Ritholtz Wealth Management. He is the author of “Bailout Nation” and runs a finance blog, the Big Picture. Twitter: @Ritholtz.

Spreadsheets:

Best timer returns (small)

Worlds best market timer  (large)

Comprando en minimos – 52 weekLOW EL MEJOR INVERSOR (Original)