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jerryking : dark_side   47

The promise of synthetic data
February 4, 2020 | Financial Times | by Anjana Ahuja.

* Race after Technology by Ruha Benjamin.
Where anonymization fails, synthetic data might yet succeed. Synthetic data is artificially generated. It is most often created by funnelling real-world data through a noise-adding algorithm to construct a new data set. The resulting data set captures the statistical features of the original information without being a giveaway replica. Its usefulness hinges on a principle known as differential privacy: that anybody mining synthetic data could make the same statistical inferences as they would from the true data — without being able to identify individual contributions........Synthetic data has the potential to squeeze useful information from tightly-controlled databases. Uncovering fraud, for example, can be challenging because regulations restrict how information can be shared, even within banks. Synthetic data can help to unveil useful patterns, while masking individual incidents.......“If you’re trying to train an algorithm to detect fraud, you don’t care about specific transactions and who made them,” he says. “You care about the statistics, like whether the amounts are just below the limit needed to trigger an audit, or if they tend to occur close to the end of the quarter.” Those kinds of numbers can be shaken out of synthetic data as well as from the original........the UK’s Office for National Statistics says synthetic data offers a “safer, easier and faster way to share data between government, academia and the private sector”........ The data does not have to be rooted in the real world to have value: it can be fabricated and slotted in where some is missing or hard to get hold of........Synthetic data could, of course, be framed as fake data — but in some circumstances that is a bonus. Artificial intelligence that is trained on real-life information flaunts a baked-in bias: algorithmic decision-making in fields such as criminal justice and credit scoring shows evidence of racial discrimination........discrimination is not something that AI should perpetuate ..... synthetic data could help tackle complex social issues such as poverty: “We could modify that bias. People could release synthetic data that reflects the world we would like to have. Why not use those as training sets for AI?"
algorithms  anonymity  anonymized  biases  books  dark_side  data  data_wrangling  differential_privacy  fairness   inequality  noise  privacy  racial_discrimination  synthetic_data 
12 days ago by jerryking
A ‘Grass Roots’ Campaign to Take Down Amazon Is Funded by Amazon’s Biggest Rivals - WSJ
Sept. 20, 2019 | WSJ | By James V. Grimaldi.

Walmart, Oracle and mall owner Simon Property Group are secret funders behind a nonprofit that has been highly critical of the e-commerce giant

About 18 months ago a new nonprofit group called Free and Fair Markets Initiative launched a national campaign criticizing the business practices of one powerful company: Amazon.com Inc. AMZN -1.50%

Free and Fair Markets accused Amazon of stifling competition and innovation, inhibiting consumer choice, gorging on government subsidies, endangering its warehouse workers and exposing consumer data to privacy breaches. It claimed to have grass-roots support from average citizens across the U.S, citing a labor union, a Boston management professor and a California businessman.

What the group did not say is that it received backing from some of Amazon’s chief corporate rivals. They include shopping mall owner Simon Property Group Inc., SPG 0.27% retailer Walmart Inc. WMT -0.11% and software giant Oracle Corp. ORCL 0.19% , according to people involved with and briefed on the project. Simon Property is fighting to keep shoppers who now prefer to buy what they need on Amazon; Walmart is competing with Amazon over retail sales; and Oracle is battling Amazon over a $10 billion Pentagon cloud-computing contract.

The grass-roots support cited by the group was also not what it appeared to be. The labor union says it was listed as a member of the group without permission and says a document purporting to show that it gave permission has a forged signature. The Boston professor says the group, with his permission, ghost-wrote an op-ed for him about Amazon but that he didn’t know he would be named as a member. The California businessman was dead for months before his name was removed from the group’s website this year.

Free and Fair Markets, or FFMI, declined to reveal its funders or disclose if it has directors or a chief executive.

“The bottom line is that FFMI is focusing on the substantive issues and putting a spotlight on the way companies like Amazon undermine the public good—something that media outlets, activists, and politicians in both parties are also doing with increasing frequency,” it said in a statement in response to questions from The Wall Street Journal. “If Amazon can not take the heat then it should stay out of the kitchen.”

The creation of a group aimed solely at Amazon is an indication of the degree to which competing companies have coalesced to counter the growing and accumulated power of Amazon and how far competitors are increasingly willing to go to counter-strike. Lobbyists that exaggerate the extent of their grass-roots support—a practice known as “AstroTurf lobbying”—are common in Washington, but it is rare for a nonprofit group to be created for the sole purpose of going after a single firm.

Amazon is facing additional opaque opposition as well, with websites and articles popping up portraying the software giant as the Evil Empire. The website Monopolyamazon.com, which does not disclose who is behind it and registered its web address anonymously, includes a handful of articles calling on the Defense Department to reject Amazon’s bid for a $10 billion cloud-computing contract. For months last year, an anti-Amazon dossier circulated in Washington alleging conflicts of interest in the Pentagon procurement process and a chart from the document later reached President Trump before he asked for a review of the Amazon bid.

Free and Fair Markets is run by a strategic communications firm, Marathon Strategies, that works for large corporations, including Amazon rivals. Marathon founder Phil Singer is a veteran political operative who has worked as a top aide to prominent Democrats, including Sen. Chuck Schumer of New York and on Hillary Clinton ’s 2008 presidential campaign.

In a statement, Mr. Singer defended the group. “FFMI is not obligated to disclose its donors and it does not,” Mr. Singer said.

Marathon initially asked for a fee of $250,000 per company to fund the anti-Amazon group, according to a person at one of the companies approached. Among those invited to fund the group but declined were a trade association that includes members who compete with Amazon, and International Business Machines Corp. , according to people familiar with the contacts. IBM, which declined to comment, previously was a client of Marathon.

In a statement, Amazon said, “The Free & Fair Markets Initiative appears to be little more than a well-oiled front group run by a high-priced public affairs firm and funded by self-interested parties with the sole objective of spreading misinformation about Amazon.”

Simon Property, the world’s largest mall landlord, declined to comment. Simon does not have any brick-and-mortar Amazon stores in its roughly 200 malls, outlets and open-air centers in the U.S., whereas its peers with smaller portfolios count multiple Amazon stores in theirs. The Indianapolis-based landlord recently launched its own online shopping platform, Shoppremiumoutlets.com.

Walmart funds the organization indirectly by paying an intermediary that pays for Free and Fair Markets, according to sources familiar with the arrangement. Walmart is a client of Marathon.

Walmart spokesman Randy Hargrove said, “We are not financial supporters of the FFMI but we share concerns about issues they have raised.” Mr. Hargrove declined to comment further.

The group’s aim is to sully Amazon’s image on competition, data-security and workplace issues, while creating a sense of grass-roots support for increased government regulatory and antitrust enforcement, according to people familiar with the campaign.

Free and Fair Markets has lobbied the government for legislation and investigations of Amazon, sent dozens of letters and reports to Congress and staff, according to congressional staffers, published scores of op-eds in local and online media and tweeted hundreds of social media posts blasting Amazon.

Over the past year, many of the actions advocated by the group have gained traction. Amazon has come under increasing antitrust scrutiny from the Department of Justice, Federal Trade Commission, states attorneys general and the European Union. In New York, Amazon backed out of plans to open a second headquarters in Long Island City after facing political opposition. Free and Fair Markets campaigned against government subsidies to support the site and tweeted more than 300 times on the topic.

Oracle provided financial support as part of an all-out strategy to stop Amazon from getting a $10 billion mega-contract to handle cloud computing for the Defense Department. The Pentagon eliminated Oracle as a bidder in the first round. Kenneth Glueck, who runs Oracle’s office in Washington, confirmed that the computer technology firm has contributed to the effort.

A goal of the organization was achieved in July when President Trump said he wanted to conduct a review of the contract. In August, the secretary of defense said he was investigating conflict-of-interest allegations surrounding the $10 billion contract known as Joint Enterprise Defense Infrastructure, or JEDI. At the urging of President Trump, the bid award has been put on hold during the review.

Mr. Trump, a frequent critic of Amazon, cited complaints about the project from several of Amazon’s competitors, which in addition to Oracle included IBM and Microsoft Corp. , saying he had heard the contract “wasn’t competitively bid.” The contract has not been awarded and Microsoft remains one of the two remaining bidders.

Though Free and Fair Markets has contacted members of Congress and the administration, it has not registered as a lobbying organization. Such groups are required to file with Congress if more than 20% of their work involves lobbying. Marathon said it complies with lobby disclosure rules.

None of the articles notes that Mr. Engel’s group is funded by rivals of Amazon.

A spokeswoman for The Hill said the publication was unaware of the funding sources and failure to disclose such payments violates a standard written agreement all op-ed writers are required to sign.

Sandy Shea, managing editor of opinion for the Inquirer’s parent company, the Philadelphia Media Network, said, “We aren’t equipped to investigate the makeup or structure of a nonprofit that submits a piece.”

Bill Zeiser, RealClearPolicy editor, said RealClearMedia publishes “commentary on politics and public policy from a wide array of sources. These submissions are assessed on their editorial merits.”

Representatives of the Post-Gazette and Chronicle did not respond to emails.

In an interview earlier this year, Mr. Engel said the motive of the group was not to promote the views of Amazon’s rivals. He said Amazon has been the only target because its business tactics run counter to the group’s goal of free and fair markets. “The one organization that feels it stands above that is Amazon,” Mr. Engel said.

Marathon did not make Mr. Engel available for comment a second time after the Journal determined that rivals were funding the group.

Mr. Engel and his group have been quoted in publications, including once each in The Wall Street Journal and The New York Times. None said who funded the group.

One article about Free and Fair Markets was commissioned by Marathon.

Last October, an Iowa writer and consultant, Jeff Patch, published an article on RealClearPolicy.com, a news website known for political coverage, about a report by Free and Fair Markets critical of Amazon’s record of hiring and firing women. “Many [women] were fired after Amazon concocted pretexts for their terminations,” Mr. Patch wrote.

Mr. Patch, who has worked as a journalist and a staffer for a Republican congressman and conservative think tanks, did not disclose in his article at the time that he was a paid contractor for Marathon.

Bank statements and invoices reviewed by the Journal show that Mr. Patch billed Marathon, and was paid thousands of dollars… [more]
Amazon  clandestine  contra-Amazon  countermeasures  counternarratives  dark_side  e-commerce  grass-roots  lobbying  lobbyists  nonprofit  Oracle  Simon_Properties  sophisticated  Wal-Mart 
september 2019 by jerryking
Keeping Cori Gauff Healthy and Sane
July 2, 2019 | The New York Times | By Christopher Clarey.

Cori Gauff studies the map of her predecessors' pitfalls

Tennis has its latest prodigy in Cori Gauff, the 15-year-old American who upset Venus Williams, once a wonder child herself, in the first round of Wimbledon of Monday......The list [of child prodigies] is extensive, punctuated with cautionary tales. As tennis has become a more physically demanding sport, these breakout moments have been trending later.......Corey Gauff, the player’s father, longtime coach and the inspiration for his daughter’s name, has attempted to do what he can to help her chances of long-term success. One of his self-appointed tasks: studying tennis prodigies extensively......“I went through everybody I thought was relevant, that won Grand Slams and were good young,” ....“I went through every one of their situations and looked at where they were at a certain age, what they were doing. I asked a lot of questions, because I was concerned about burnout. Am I doing the right things?”....“I studied and studied to prepare myself to make sure if she was able to meet these goals that we’d be able to help the right way,” he said. “That was important. I still sit there and benchmark: ‘O.K., we’re at this point now. How is she doing physically? Is she growing? This is what Capriati did at this stage. This is what Hingis did at this stage, what the Williams sisters did at this stage.’”....Great stories, which prodigies continue to be, attract not just attention but money from sponsors. Parents and advisers can get more invested in success — and continued success — than the young player, and the result can be traumatic......Some precocious talents have experienced physical abuse,.....There is also the physical and mental toll of competing against older, potentially stronger opposition......“The main thing I looked at was how do you prevent injury,”.........The family has sought frequent outside counsel: “It’s honestly been a village of coaches,” he said.

Cori Gauff chose to sign with Team8, the agency started by Roger Federer and his longtime agent Tony Godsick, in part because the Gauffs believed a long-term approach had worked well for Federer, who turned pro at 17 and is still winning titles at 37.
African-Americans  athletes_&_athletics  benchmarking  cautionary_tales  dark_side  due_diligence  injury_prevention  long-term  outside_counsel  parenting  pitfalls  precociousness  prodigies  sports  systematic_approaches  teenagers  tennis  women 
july 2019 by jerryking
When manipulation is the digital business model
May 1, 2019 | Financial Times | MADHUMITA MURGIA.
dark_side  UX 
may 2019 by jerryking
Think Like a Libel Lawyer
March 9, 2019 | The New York Times | By David McCraw, deputy general counsel of The New York Times.

It's the best way to keep an open mind in our “pick your side and stay on it” era.

My job, when I am doing it right, is to please no one. I’m a press lawyer. I’m paid by this newspaper to vet stories before publication.

Think of me as a story’s first and worst reader: doubtful, questioning, blind to subtlety, skeptical of the facts, regularly prodding editors and reporters to do something more or different. And if I have done my job well, many of the subjects of those same stories will be unhappy as well, but for all the reasons we want them to be: We got it right.

The basic idea of libel law is simple. A publisher can get sued for making a factual statement that proves to be false and hurts a person’s reputation.......I am all about the villains in many pieces — the doctor who botched the surgery, the insurance company that shafted its customers, the professor who hit on the student, the greedy industrialist who ground up workers to make a fortune. I try to look for the counternarrative that they could (and their lawyers will) build from the same set of facts. It’s a counterintuitive form of reading. It’s looking for the innocent explanation or the possibility that what appears to all the rest of the world to be nefarious may in fact just be a mistake made in good faith. It’s a tricky skill to take into the real world....for a libel lawyer, a little sympathy for the villain is almost an occupational requirement. And maybe it wouldn’t be a bad idea for all of us in the tribalized “pick your side and stay on it” era we are living in......Libel lawyers don’t serve as the fairness police. If anything, they are more like fact cops. Coverage can be wildly unfair and still be true. .....Over the past half-decade, The Times and others had reoriented themselves to reader-centered journalism. The shift in attitude has been like opening a window after a long winter. Journalism should be done as if the readers mattered.

But in a divided America there was a risk, too — the risk that we would set our compass by what people wanted rather than giving them the journalism they needed.......It was discouraging that so many people apparently believed that the time-honored journalistic act of telling a story straight had become a problem and that The Times needed instead to take sides and coach readers on what to think.

Journalism is hard when people feel the failure to take sides is in and of itself a surrender....The great risk we face comes not in giving them (the alt-right) voice but in taking their worst instincts and making them our own.

The First Amendment gives a lot of protection to even nasty speakers.....we write about people in the news, not just the people we agree with.....that is how the First Amendment works — thanks to our “profound national commitment to the principle that debate on public issues should be uninhibited, robust and wide open,......Speakers are allowed to be provocative, colorful, contradictory and wrong.

....
counternarratives  counterintuitive  dark_side  facts  First_Amendment  free-press  journalism  lawyers  libel  NYT  skepticism  open_mind  villains 
march 2019 by jerryking
The robot-proof skills that give women an edge in the age of AI
February 11, 2019 | Financial Times |by Sarah O’Connor.

in a world of algorithms and artificial intelligence, communication skills and emotional intelligence — traditionally seen as female strengths — could prove key.

The latest panic about artificial intelligence is that it will deal a blow to women in the workplace..... The concerns are legitimate enough, but they fail to appreciate the big ways in which the world of work is going to change. In fact, it is quite possible the age of AI will belong to women. Men are the ones in danger of being left behind....Some AI tools may be biased against women — a risk for any group that has been historically under-represented in the workplace. Because machine learning tends to learn from historical data, it can perpetuate patterns from the past into the future......It is right to pay attention to these problems and work on solutions. Algorithms shouldn’t be given power without transparency, accountability, and human checks and balances. Top AI jobs should be held by a more diverse set of smart people.....As machines become better at many cognitive tasks, it is likely that the skills they are relatively bad at will become more valuable. This list includes creative problem-solving, empathy, negotiation and persuasion. As Andy Haldane, chief economist at the Bank of England, has put it, “the high-skill, high-pay jobs of the future may involve skills better measured by EQs (a measure of emotional intelligence) than IQs”..... increasing demand in these jobs for supplementary skills such as emotional intelligence, which has given women an edge.....as the AI era dawns, it is the right moment to overhaul the way we value these skills, and the way we teach them. With an eye on the demands of the future, we are trying to persuade girls that coding is not just for boys. So why aren’t we also trying to persuade boys that empathy is not just for girls?

We could start by changing the language we use. For too long we have talked about “soft skills”, with connotations of femininity and a lack of rigour. Let’s call them what they are: “robot-proof skills” that neither men nor women can afford to face the 21st century
21st._century  algorithms  artificial_intelligence  biases  checks_and_balances  dark_side  emotional_intelligence  EQ  future-proofing  gender_gap  machine_learning  soft_skills  smart_people  under-representation  women  workplaces  pay_attention  historical_data 
february 2019 by jerryking
Roger McNamee on how to tame Big Tech
February 7, 2019 | Financial Times | Roger McNamee.

Government intervention of this kind is a first step on the path to resolving the privacy issues that result from the architecture, business models and culture of internet platforms. But privacy is not the only problem we must confront. Internet platforms are transforming our economy and culture in unprecedented ways. We do not even have a vocabulary to describe this transformation, which complicates the challenge facing policymakers....Google, Facebook and other internet platforms use data to influence or manipulate users in ways that create economic value for the platform, but not necessarily for the users themselves. In the context of these platforms, users are not the customer. They are not even the product. They are more like fuel.....Google, Facebook and the rest now have economic power on the scale of early 20th-century monopolists such as Standard Oil. What is unprecedented is the political power that internet platforms have amassed — power that they exercise with no accountability or oversight, and seemingly without being aware of their responsibility to society......When capitalism functions properly, government sets and enforces the rules under which businesses and citizens must operate. Today, however, corpor­ations have usurped this role. Code and algorithms have replaced the legal system as the limiter on behaviour. Corporations such as Google and Facebook behave as if they are not accountable to anyone. Google’s seeming disdain for regulation by the EU and Facebook’s violations of the spirit of its agreement with the US FTC over user consent are cases in point......AI promises to be revolutionary. That said, it will not necessarily be a force for good. The problem is the people who create AI. They are human...McNamee recommends two areas of emphasis: regulation and innovation. As for the former, the most important requirement is to create and enforce standards that require new technology to serve the needs of those who use it and society as a whole. ...... The IoT requires our approval. Do not give it until vendors behave responsibly. Demand that policymakers take action to protect public health, democracy, privacy, innovation and the economy.
accountability  Alexa  antitrust  artificial_intelligence  biases  Big_Tech  consent  dark_side  Facebook  Google  Industrial_Internet  monopolies  personal_data  platforms  political_power  privacy  Roger_McNamee  sensors  surveillance  unintended_consequences 
february 2019 by jerryking
Opinion | Warning! Everything Is Going Deep: ‘The Age of Surveillance Capitalism’
Jan. 29, 2019 | The New York Times | By Thomas L. Friedman, Opinion Columnist.

Recent advances in the speed and scope of digitization, connectivity, big data and artificial intelligence are now taking us “deep” into places and into powers that we’ve never experienced before — and that governments have never had to regulate before. I’m talking about deep learning, deep insights, deep surveillance, deep facial recognition, deep voice recognition, deep automation and deep artificial minds.

Some of these technologies offer unprecedented promise and some unprecedented peril — but they’re all now part of our lives. Everything is going deep........how did we get so deep down where the sharks live?

The short answer: Technology moves up in steps, and each step, each new platform, is usually biased toward a new set of capabilities. Around the year 2000 we took a huge step up that was biased toward connectivity, because of the explosion of fiber-optic cable, wireless and satellites.

Suddenly connectivity became so fast, cheap, easy for you and ubiquitous that it felt like you could touch someone whom you could never touch before and that you could be touched by someone who could never touch you before.

Around 2007, we took another big step up. The iPhone, sensors, digitization, big data, the internet of things, artificial intelligence and cloud computing melded together and created a new platform that was biased toward abstracting complexity at a speed, scope and scale we’d never experienced before.....as big data got really big, as broadband got really fast, as algorithms got really smart, as 5G got actually deployed, artificial intelligence got really intelligent. So now, with no touch — but just a voice command or machines acting autonomously — we can go so much deeper in so many areas....DeepMind, the artificial intelligence arm of Google’s parent, developed an A.I. program, AlphaGo, that has now defeated the world’s top human players of the ancient strategy game Go — which is much more complex than chess — by learning from human play......Today “virtual agents” — using conversational interfaces powered by artificial intelligence — can increasingly understand your intent... just by hearing your voice.....The percentage of calls a chatbot, or virtual agent, is able to handle without turning the caller over to a person is called its “containment rate,” and these rates are steadily soaring. ....But bad guys, who are always early adopters, also see the same potential to go deep in wholly new ways.....On Jan. 20, The London Observer looked at Harvard Business School professor Shoshana Zuboff’s new book, the title of which perfectly describes the deep dark waters we’ve entered: “The Age of Surveillance Capital.”....“Surveillance capitalism,” Zuboff wrote, “unilaterally claims human experience as free raw material for translation into behavioral data. Although some of these data are applied to service improvement, the rest are declared as a proprietary behavioral surplus, fed into advanced manufacturing processes known as ‘machine intelligence,’ and fabricated into prediction products that anticipate what you will do now, soon and later. Finally, these prediction products are traded in a new kind of marketplace that I call behavioral futures markets. Surveillance capitalists have grown immensely wealthy from these trading operations, for many companies are willing to lay bets on our future behavior.”
5G  algorithms  AlphaGo  artificial_intelligence  automation  books  chatbots  complexity  connectivity  dark_side  DeepMind  digitalization  gaming_the_system  human_experience  massive_data_sets  patterns  rogue_actors  surveillance_profiteers  surveillance_state  Tom_Friedman  trustworthiness  virtual_assistants 
january 2019 by jerryking
Ghost kitchens : the next disruption in the restaurant industry ?
8 Jan, 2018 | intotheminds | Posted By Pierre-Nicolas Schwab.

(1) https://www.restaurant-hospitality.com/operations/ubereats-nudges-operators-toward-virtual-restaurants
(2) https://www.theguardian.com/business/2017/oct/28/deliveroo-dark-kitchens-pop-up-feeding-the-city-london#img-3

ghost kitchen make perfect economic sense : margins are thin in the restaurant industry, driven by high employees-related costs, rent, expensive equipment and variability in demand. Setting up a restaurant is a bet with a 5 to 20-year time horizon depending on myriad factors : your positioning, the location, and many exogenous factors out of your control. Eliminating all those risks seems like a logical move :

how to make a restaurant less location-dependent ?
how to adapt quickly to demand ?
how to reduce fixed costs (renting and equipping a place) ?
The bright sides : 3 major advantages of ghost kitchens

**The 3 major advantages of ghost kitchens are their answers to the 3 problems listed above :

the restaurant is not location-dependant anymore. If there is an event likely to generate massive flow of potential customers, you can move
ghost kitchens can adapt quickly to demand : the standardized kitchen unit just has to be multipled, which is not possible with street food vans unless you own several of them (which brings us to the 3rd advantage).
ghost kitchens, because they are rented from online platforms like Uber Eats and Deliveroo, transfom fixed costs into variable ones. This is great to test your idea and is a cheap way to do market research and test traction on a market.

** The dark sides of Uber’s and Deliveroo’s ghost kitchens
1. Why would one still rent a place to operate a restaurant ?
Good question indeed. If all hurdles and risks of operating a brick-and-mortar restaurant can be removed, why would you still want to rent a place (fixed costs), buy the equipment (fixed costs), hire employees (fixed costs) and wait on patrons to come in (variable revenues) ? If a platform like Uber or Deliveroo can provide you with customers’ orders, the need to have a brick-and-mortar place would vanish.
But if every single restaurant owner adopts that posture, how will city centers look like on the long run ?

2. Dependence towards platforms
What happened with the hospitality sector may well happen on the middle-term in the restaurant industry too. Uber eats, Deliveroo have disrupted the way we consume food. This is a new societal change that is most to be felt in Europe (urban Americans use already to get food delivered to their homes, most restaurants in US cities proposing at home delivery) : it has become easier than ever to get food delivered at home.
If enough restaurant owners make a significant percentage of their revenues through those platforms, they will eventually become dependent on them and will struggle like hotels are now struggling with Booking.com. Using platforms is a wise strategy to grow revenues but it can also become a very dangerous one if your dependence to them increases.
beyond_your_control  commercial_kitchens  disruption  fixed_costs  food_delivery  kitchens  platforms  restaurants  variable_costs  Deliveroo  Uber  asset-light  event-driven  experimentation  test_marketing  pop-ups  cold_storage  on-demand  dark_side  virtual_restaurants  bricks-and-mortar 
january 2019 by jerryking
Platform companies have to learn to share
August 19, 2018 | Financial Times | Rana Foroohar.

Algorithmic management places dramatically more power in the hands of platform companies. Not only can they monitor workers 24/7, they benefit from enormous information asymmetries that allow them to suddenly deactivate drivers with low user ratings, or take a higher profit margin from riders willing to pay more for speedier service, without giving drivers a cut. This is not a properly functioning market. It is a data-driven oligopoly that will further shift power from labour to capital at a scale we have never seen before......Rather than wait for more regulatory pushback, platform tech companies should take responsibility now for the changes they have wreaked — and not just the positive ones. That requires an attitude adjustment. Many tech titans have a libertarian bent that makes them dismissive of the public sector as a whole.......Yet the potential benefits of ride-hailing and sharing — from less traffic to less pollution — cannot actually be realised unless the tech companies work with the public sector. One can imagine companies like Uber co-operating with city officials to phase in vehicles slowly, rolling out in underserved areas first, rather than flooding the most congested markets and creating a race to the bottom......Airbnb...often touts its ability to open up new neighbourhoods to tourism, but research shows that in cities like New York, most of its business is done in a handful of high end areas — and the largest chunk by commercial operators with multiple listings, with the effect of raising rents and increasing the strains caused by gentrification. On the labour side, too, the platform companies must take responsibility for the human cost of disruption. NYU professor Arun Sundararajan, has proposed allowing companies to create a “safe harbour” training fund that provides benefits and insurance for drivers and other on-demand workers without triggering labour laws that would categorise such workers as full-time employees (which is what companies want to avoid).
Airbnb  algorithms  dark_side  data_driven  gig_economy  information_asymmetry  New_York_City  oligopolies  on-demand  platforms  public_sector  Rana_Foroohar  ride_sharing  sharing_economy  safe_harbour  training  Uber 
august 2018 by jerryking
Passive investing is storing up trouble
August 2, 2018 | Financial Times | by Megan Greene.

I was recently informed by the owner of an artificial intelligence fund that markets do not listen to economists any more. .....A fundamental shift in market structure towards rules-based, passive investing over the past decade means a lot of trading is no longer based on fundamentals. But just because some markets do not pay attention to economists, it does not mean economists should not pay attention to these markets........AI quant funds are not waiting on tenterhooks for analysis of every non-farm payrolls report, Fed press conference, Donald Trump tweet, or earnings report. Instead, they look for trading strategies that are succeeding and adopt those strategies until a better one comes along, regardless of the underlying fundamentals. But what happens when the strategy suddenly becomes to sell everything? Will the computers find the buyers they need?.......ETFs, often set up to mimic an index, have to buy more of equities rising in price, sending those stock prices even higher. ETFs similarly ignore fundamentals.....This creates a piling-on effect as funds buy more of these increasingly expensive stocks and less of the cheaper ones in their indices...Risks of a bubble arise when there is no regard for underlying fundamentals or price. It is reasonable to assume a sustained market correction would lead to stocks that were disproportionately bought because of ETFs and index funds being disproportionately sold.

But again, in a crisis will the ETF managers find liquid markets? ....Passive investors and quant funds could also threaten the economy by making markets vastly more complex, noisy and opaque. They send mixed signals to active investors about what the fair value of a stock is. That could cause a significant misallocation of capital.

The danger is exacerbated by the speed at which trading is now done. The average holding period for a security on the New York Stock Exchange has fallen from two months in 2008 to just under 20 seconds today.......Systemic failures, misallocation of capital and dried up liquidity could cause a bear market, dragging on growth when the economic backdrop is already lacklustre......So even though passive investors ignore economists, economists should pay attention to risks posed by the shift in market structure they represent....This is not to say that index funds, ETFs and AI quant funds are necessarily bad. But the real test will come when there is a sudden crisis followed by a sustained bear market.
active_investing  artificial_intelligence  bear_markets  economists  ETFs  holding_periods  index_funds  investing  liquidity  misallocations  NYSE  passive_investing  piling_on  risks  systemic_failures  rules-based  bubbles  quantitative  market_fundamentals  crisis  dark_side  pay_attention 
august 2018 by jerryking
Exploring the dark side of leadership - The Globe and Mail
JUSTIN WEINHARDT
SPECIAL TO THE GLOBE AND MAIL
PUBLISHED JANUARY 14, 2015
UPDATED MAY 12, 2018

The first three characteristics of this dark side are commonly referred to as the Dark Triad. ....overconfidence can be the fourth characteristic, leading to a dark square of leadership.

Machiavellianism - characterized by manipulative tactics, a pessimistic view of humanity and an emphasis on efficiency over moral principles.... individuals who exhibit Machiavellianism will lie, manipulate and exploit others to get their way.

Psychopathy - not just a characteristic of serial killers. Individuals high on psychopathy have poor impulse control, show little remorse for others, including individuals they harm, and lack concern for the morality of their actions. They use threats and hard tactics in the workplace to gain status and get ahead.

Narcissism - have extremely inflated views of themselves, with grandiose plans for their future.

Overconfidence - "Act as if you have unmatched confidence and then people will surely have confidence in you," says Jordan Belfort in his book The Wolf of Wall Street. This is sad but true. Individuals who exemplify overconfidence are better able to influence others and gain their trust.

So, what is an organization to do about the dark side of leadership? Those who are passionate about leadership must shine a light on the dark side.

The bright side of leadership: Humility -- "an interpersonal characteristic that emerges in social contexts that connotes (a) a manifested willingness to view oneself accurately, (b) displayed appreciation of others' strengths and contributions, and (c) teachability." Leaders with greater humility are better able to deal with the realities of the modern economy such as shocks, rapid technological advances and uncertain demand. On the strategic side, humble leaders will be less overconfident and risky.
leadership  dark_side  humility  leaders  ethical  Niccolo_Machiavelli 
june 2018 by jerryking
Reporter’s Phablet: Is It Time To Panic About Quantum Computing’s Dark Side? - CIO Journal. - WSJ
By Sara Castellanos
Sep 15, 2017

At the three-day Quantum Safe Workshop that wrapped up here Wednesday, the general consensus among cryptography experts is that cybersecurity as we know it will be completely upended when a powerful quantum computer comes to market. That is, unless enterprise executives and researchers start preparing now.

“CIOs need to be planning their requirements for quantum safety today,” said Mark Pecen, founder and chairman of a working group for quantum-safe cryptography at the European Telecommunications Standards Institute, one of organizations that hosted the workshop.

Preeminent cryptographers and mathematicians who attended the conference said that when a scalable, fault-tolerant quantum computer is built, it will be able to solve the algorithms that much of today’s encryption relies on. The popular RSA algorithm, which is used to secure e-mail, online banking, e-commerce and devices connected to the internet, is particularly at risk because it’s based on integer factorization. Quantum computers are capable of solving factorization problems perhaps trillions of times faster than a classical computer.

If a powerful quantum computer is built before new algorithms and encryption methods are deployed, “the cyberspace we’re living in right now (will be) chaos,”
CIOs  quantum_computing  dark_side  cyber_security  cryptography 
june 2018 by jerryking
When algorithms reinforce inequality
FEBRUARY 9, 2018 | FT | Gillian Tett.

Virginia Eubanks, a political science professor in New York, undertakes academic research was focused on digital innovation and welfare claims. ......Last month, she published Automating Inequality, a book that explores how computers are changing the provision of welfare services in three US regions: Indiana, Los Angeles and Pittsburgh. It focuses on public sector services, rather than private healthcare insurance, but the message is the same: as institutions increasingly rely on predictive algorithms to make decisions, peculiar — and often unjust — outcomes are being produced. And while well-educated, middle-class people will often fight back, most poor or less educated people cannot; nor will they necessarily be aware of the hidden biases that penalise them....Eubanks concludes, is that digital innovation is reinforcing, rather than improving, inequality. ...What made the suffering doubly painful when the computer programs got it wrong was that the victims found it almost impossible to work out why the algorithms had gone against them, or to find a human caseworker to override the decision — and much of this could be attributed to a lack of resources....a similar pattern is described by the mathematician Cathy O’Neil in her book Weapons of Math Destruction. “Ill-conceived mathematical models now micromanage the economy, from advertising to prisons,” she writes. “They’re opaque, unquestioned and unaccountable and they ‘sort’, target or optimise millions of people . . . exacerbating inequality and hurting the poor.”...Is there any solution? O’Neil and Eubanks suggest that one option would be to require technologists to sign something equivalent to the Hippocratic oath, to “first do no harm”. A second — more costly — idea would be to force institutions using algorithms to hire plenty of human caseworkers to supplement the digital decision-making.

A third idea would be to ensure that the people who are creating and running the computer programs are forced to think about culture, in its broadest sense.....until now digital nerds at university have often had relatively little to do with social science nerds — and vice versa.

Computing has long been perceived to be a culture-free zone — this needs to change. But change will only occur when policymakers and voters understand the true scale of the problem. This is hard when we live in an era that likes to celebrate digitisation — and where the elites are usually shielded from the consequences of those algorithms.
Gillian_Tett  Cathy_O’Neil  algorithms  inequality  biases  books  dark_side  Pittsburgh  poverty  low-income 
february 2018 by jerryking
A Burglar’s Guide to the City
Ways of thinking/looking at the built environment. Consider "security architecture".

Studying architecture the way a burglar would, Geoff Manaugh takes readers through walls, down elevator shafts, into panic rooms, and out across the rooftops of an unsuspecting city.

At the core of A Burglar’s Guide to the City is an unexpected and thrilling insight: how any building transforms when seen through the eyes of someone hoping to break into it.

Encompassing nearly 2,000 years of heists and break-ins, the book draws on the expertise of reformed bank robbers, FBI Special Agents, private security consultants, the L.A.P.D. Air Support Division, and architects past and present.

Whether picking locks or climbing the walls of high-rise apartments, finding gaps in a museum’s surveillance routine or discussing home invasions in ancient Rome, A Burglar's Guide to the City ensures readers will never enter a bank again without imagining how to loot the vault or walk down the street without planning the perfect getaway.
Achilles’_heel  architecture  books  counterintuitive  dark_side  fresh_eyes  hacks  heists  mindsets  observations  pay_attention  security  security_consciousness 
april 2016 by jerryking
The dark side of on-demand work - The Globe and Mail
LEAH EICHLER
Special to The Globe and Mail
Published Friday, Jun. 05, 2015
on-demand  dark_side  gig_economy 
june 2015 by jerryking
Kobe’s competitiveness ‘scares a lot of people that are just comfortable being average’ - The Globe and Mail
JON KRAWCZYNSKI
MINNEAPOLIS — The Associated Press
Published Monday, Dec. 15 2014
Bryant has been compared to Jordan for a long time, in part because he dared to chase him. Where Bryant is every bit Jordan’s equal is in the tenacity that has kept him going through a torn Achilles tendon, bone-on-bone friction in his knees and now the painful rebuilding of a proud franchise.

“His competitiveness drives him in the off-season to work to be able to play at the level he plays,” Timberwolves coach Flip Saunders said. “His competitiveness during the games to dominate offensively and defensively and then his competitiveness of wanting to win. He’ll challenge teammates if need be and will do whatever it takes to try to get that edge.”

It’s the only way Bryant knows. And he learned by studying the best.

“I think when you look at Michael’s [Hall of Fame] speech,” Bryant said, referring to a speech in which Jordan cited those who he perceived to have gotten in his way over the years. “People really got a chance to see how he ticks and it scared a lot of people, right? But that’s just the reality of it. You can’t get to a supreme level without channelling the dark side a little bit.”

Bryant’s willingness to embrace the darkness has, in his own eyes, cast him as one of the league’s villains.
NBA  athletes_&_athletics  competition  competitive_advantage  basketball  Kobe_Bryant  competitiveness  Pablo_Picasso  averages  tenacity  injuries  dark_side  villains 
december 2014 by jerryking
Disruptors are just pirates on the high seas of capitalism - The Globe and Mail
DAINA LAWRENCE
Special to The Globe and Mail
Published Wednesday, Nov. 05 2014

Often portrayed as criminal pursuers of riches, pirates don't have the best of reputations. But is there something that can be learned from them?

Jean-Philippe Vergne thinks so.

Last January, the assistant professor at the University of Western Ontario's Ivey Business School introduced a course entitled Lessons From The Dark Side Of Capitalism: How Pirates Help To Shape New Industry. The course aims to help his students see the innovative impacts these fringe-dwellers have on the marketplace.
piracy  disruption  Ivey  Uber  Bitcoin  Airbnb  ride_sharing  new_industries  sharing_economy  mobile_applications  dark_side 
november 2014 by jerryking
Big Data makes for meaner politics - The Globe and Mail
Konrad Yakabuski

The Globe and Mail

Published Saturday, Jan. 18 2014
What do you get when you combine modern technology with old-style politics? Hillary's wrath, that's what.

News that top aides to Hillary Clinton used a computer spreadsheet to compile a "hit list" of disloyal Democrats after her devastating loss to Barack Obama in the party's 2008 presidential primaries is more proof that what used to be an art is turning into a science.

Politicians have always rewarded friends and punished enemies, as the spiteful Bridgegate scandal engulfing New Jersey Governor Chris Christie now reminds us. But evaluating loyalty and disloyalty used to be an entirely subjective exercise that required endless mental acrobatics and was rendered fallible by lapses in memory, blurred emotions and information overload.

The era of Big Data is changing all that. And none too soon for the Clintons, as Hillary keeps her options open for 2016. When you've crossed and been crossed by so many people in 35 years of bare-knuckle politics, it's naturally hard to keep track of all the slights. What better than a computer scorecard that replaces the old mental tally of friends and enemies?

According to a new book by two well-regarded White House correspondents – Politico's Jonathan Allen and Amie Parnes of The Hill – Ms. Clinton's aides assigned scores between 1 (most loyal) and 7 (most disloyal) to each Democratic member of Congress and pumped the data into a Microsoft Excel spreadsheet. The result was an instant loyalty ranking that would inform Ms. Clinton and husband Bill's future interactions with fellow Democrats on the list.

Endorsing Mr. Obama for the nomination did not mean you scored an automatic 7 if you had a reasonable excuse, such as being black or from Illinois. Similarly, endorsing Ms. Clinton did not mean you got a 1 if you "didn't go the extra mile" for her or were "just kind of there." The 7 rankings were reserved for those who "endorsed him but really should have been with her … that burned her,"
+++++++++++++++++++++++++++++++++++++++++++++++++

The Conservatives need any help, really. The party’s Constituent Information Management System (CIMS) is considered the most advanced political database in the country, compiling records on millions of Canadians....In her book Shopping for Votes, the Toronto Star’s Susan Delacourt describes the unsettling transformation of Canadian politics into a game dominated by computer geeks who pump vast amounts of our personal information into party databases to determine whether we’re naughty or nice. The Tories aren’t alone. Justin Trudeau’s Liberals are determined to outdo their rivals in data collection by the 2015 election, and the New Democrats aren’t that far behind.
massive_data_sets  dark_side  political_campaigns  politics  Hillary_Clinton  books  Richard_Nixon  data  data_driven  Konrad_Yakabuski  constituencies 
january 2014 by jerryking
Open data is not a panacea | mathbabe
December 29, 2012 Cathy O'Neil,
And it’s not just about speed. You can have hugely important, rich, and large data sets sitting in a lump on a publicly available website like wikipedia, and if you don’t have fancy parsing tools and algorithms you’re not going to be able to make use of it.

When important data goes public, the edge goes to the most sophisticated data engineer, not the general public. The Goldman Sachs’s of the world will always know how to make use of “freely available to everyone” data before the average guy.

Which brings me to my second point about open data. It’s general wisdom that we should hope for the best but prepare for the worst. My feeling is that as we move towards open data we are doing plenty of the hoping part but not enough of the preparing part.

If there’s one thing I learned working in finance, it’s not to be naive about how information will be used. You’ve got to learn to think like an asshole to really see what to worry about. It’s a skill which I don’t regret having.

So, if you’re giving me information on where public schools need help, I’m going to imagine using that information to cut off credit for people who live nearby. If you tell me where environmental complaints are being served, I’m going to draw a map and see where they aren’t being served so I can take my questionable business practices there.
open_data  unintended_consequences  preparation  skepticism  naivete  no_regrets  Goldman_Sachs  tools  algorithms  Cathy_O’Neil  thinking_tragically  slight_edge  sophisticated  unfair_advantages  smart_people  data_scientists  gaming_the_system  dark_side 
december 2013 by jerryking
Rob Ford, Charbonneau and the dark side of social media - The Globe and Mail
LYSIANE GAGNON


Special to The Globe and Mail

Published
Wednesday, May. 22 2013
Rob_Ford  social_media  scandals  dark_side 
may 2013 by jerryking
The Six Million Person Question
October 4, 2006 | WSJ |pg A 14 | by Mark Bowden
It is a tricky business, rating the moral depredations of the human species. because just when you have settled on the worst, somebody somewhere achieves a new low....The Holocaust haunts us more than those others for a good reason. The Final Solution was the deliberate act of a government to exterminate a portion of its own people. It employed the resources of the state—its policy makers, planners, intellectuals, legal system, police and military, industry. transportation system and to a large extent its people—lo single out a particular group of citizens. systematically demonize and isolate them. and then count them, label them, strip them of everything, round them up, ship them to concentration camps, kill them and incinerate them. It attempted to squeeze some last value out of the most fit among those doomed, by employing them as slave labor or subjecting them to medical experimentation before killing them, and even then looked for ways to make saleable products out of their remains. This horror began in peacetime, so the nation was not lashing out in sell-defense. nor was it being threatened in any concrete way...The Holocaust disturbs us so deeply because it demonstrates that none of the things we associate the of civilization-peace. prosperity, industrialization, education, technological achievement-free us from the dark side of the human soul. Just as there is evil in the heart of every man. there is evil at the heart of even the most "civilized" human society. It is a humbling recognition. Man and society are both capable of the most appallingly depraved behavior. Only in the case of society, it on an industrial scale.
The lives lost in the firebombing of Dresden or the nuclear flash over Hiroshima are no less significant, and the military choices that brought about those deaths remain profoundly disturbing. but they at least took place In the context of war. Whole societies were caught up In a life-or-death struggle.
What the Holocaust demonstrates is the danger of a state. It shows what can happen when a group of true believers. convinced of the superiority of their own ideas, have unchecked power. They are then free to rewrite history lo suit their political ends. and crush those who disagree or pretest . . . or who worship God in a different way.
Like. say. the mullahs in Iran.
the_Holocaust  Ahmadinejad  deaths  moral_equivalencies  WWII  dark_side 
july 2012 by jerryking
Nicholas Carr on E-Books - WSJ.com
DECEMBER 31, 2011 |WSJ | By NICHOLAS CARR

Books That Are Never Done Being Written
Digital text is ushering in an era of perpetual revision and updating, for better and for worse.

As electronic books push paper ones aside, movable type seems fated to be replaced by movable text.

That's an attractive development in many ways. It makes it easy for writers to correct errors and update facts. Guidebooks will no longer send travelers to restaurants that have closed or to once charming inns that have turned into fleabags. The instructions in manuals will always be accurate. Reference books need never go out of date.

Even literary authors will be tempted to keep their works fresh. Historians and biographers will be able to revise their narratives to account for recent events or newly discovered documents. Polemicists will be able to bolster their arguments with new evidence. Novelists will be able to scrub away the little anachronisms that can make even a recently published story feel dated.

But as is often the case with digitization, the boon carries a bane. The ability to alter the contents of a book will be easy to abuse. School boards may come to exert even greater influence over what students read. They'll be able to edit textbooks that don't fit with local biases. Authoritarian governments will be able to tweak books to suit their political interests. And the edits can ripple backward. Because e-readers connect to the Internet, the works they contain can be revised remotely, just as software programs are updated today. Movable text makes a lousy preservative.

Such abuses can be prevented through laws and software protocols. What may be more insidious is the pressure to fiddle with books for commercial reasons. Because e-readers gather enormously detailed information on the way people read, publishers may soon be awash in market research. They'll know how quickly readers progress through different chapters, when they skip pages, and when they abandon a book.
Nicholas_Carr  e-books  digital_media  shortcomings  protocols  unintended_consequences  abuses  digitalization  market_research  publishing  dark_side 
january 2012 by jerryking
The 21st century's Hiroshima ProQuest
Aug 6, 2005 | The Globe and Mail pg. A.17 | Preston ManningThe same science that can be used to develop genetically-based cures for human diseases can also be used to produce mutated smallpox bacteria or influenza viruses even more virulent than their predecessors and highly resistant to any known treatment. And if the sun of human progress should again become obscured by the storm clouds of war -- war itself transformed by the increasing scope and sophistication of terrorism -- how long will it be before the plan for utilizing mutated viruses and terrorist-induced pandemics as instruments of mass destruction appears on the underground blackboard of some terrorist cell capable of implementing it?

The third pebble

What exactly is the most disruptive and lethal dimension of the "dark side" of the life sciences -- the genetic equivalent of the first A-bomb -- and how might this destructive force be delivered to target populations to accomplish the political purposes of those desiring to unleash it?

While a terrorist attack on military or civilian populations utilizing such techniques would have immediate impacts on public health, the greater damage to human life and society will most likely be through the panic and terror that such a biological attack or pandemic will trigger throughout the general population. And this panic won't be transmitted by air, water, or utility system, but by the mass-communications network of 21st-century society, in particular the electronic media of radio, television, the Internet, cell phones, and personal computing devices. It is the electronic mass media that will most likely prove to be the B-29s of the age of genetics and bioterrorism.
life_sciences  genetics  viruses  ProQuest  Preston_Manning  21st._century  terrorism  threats  WWI  WWII  bioterrorism  panics  mass_media  virulence  pandemics  digital_media  dark_side 
october 2011 by jerryking
The dark side of mentoring -
July 1, 2011 |FT.com|| by Mike Southon. Mentoring should never
be regarded as a revenue opportunity--it should always be provided for
free. A mentoring relationship should be a 2-way process, with the
person giving the advice learning as much, if not more than the person
seeking it. The greatest learning pt. for mentors is always about
themselves....Learn one's strengths and weaknesses. Maturity &
self-awareness are essential prerequisites for giving measured advice to
others....Most mentors have little or no formal training and are
therefore unprepared when the mentees do not listen to their sage advice
– or let them down in other ways. It's important for mentors to adopt
an air of professional detachment at all times and not try to intervene
unnecessarily. Never allow the relationship or the problems of the
mentee to adversely affecting the personal life of the mentor....Study
the techniques of counselling in case they find themselves with a mentee
who is disturbed & manipulative
mentoring  challenges  strengths  weaknesses  maturity  self-awareness  advice  unprepared  dark_side 
july 2011 by jerryking
FT.com / Comment / Op-Ed Columnists - And the magic word is ...
October 29 2010 | Financial Times | By Gillian Tett.
Innovation can be a powerful totem pole but it is not a magic wand. The
spirit of Google alone cannot “Reboot America!” overnight. That will
require a long, hard slog from politicians and voters alike; it won’t be
glamorous....in practical terms, many innovations have had a dark side.
Innovations in oil exploration have cut the price of oil; but they have
also polluted the Gulf. Meanwhile financial creativity has fuelled the
credit crisis
innovation  Tina_Brown  contradictions  financial_creativity  unintended_consequences  Gillian_Tett  revenge_effects  dark_side 
october 2010 by jerryking
Rivals Secretly Finance Opposition to Wal-Mart - WSJ.com
JUNE 7, 2010 |WSJ | By ANN ZIMMERMAN. Rival Chains Secretly
Fund Opposition to Wal-Mart. Saint Consulting Group is a specialist at
fighting proposed Wal-Marts, and it uses tactics it describes as "black
arts." Mr. Saint, a former newspaper reporter and political press
secretary, founded his firm 26 years ago. It specializes in using
political-campaign tactics—petition drives, phone banks, websites—to
build support for or against controversial projects, from oil refineries
and shopping centers to quarries and landfills. Over the years, it has
conducted about 1,500 campaigns in 44 states. Mr. Saint says about 500
have involved trying to block a development, and most of those have been
clandestine.
Wal-Mart  competitive_intelligence  retailers  clandestine  big-box  unions  countermeasures  counternarratives  political_campaigns  controversies  oil_refiners  dark_side  sophisticated  power_to_obstruct 
june 2010 by jerryking
Dark Side Arises for Phone Apps - WSJ.com
JUNE 3, 2010 | WSJ | By SPENCER E. ANTE. Security Concerns Prompt Warnings
malware  smartphones  mobile_applications  cyber_security  dark_side 
june 2010 by jerryking
The Dark Side of Entrepreneurship - You’re the Boss Blog - NYTimes.com
July 8, 2009 | New York Times | By Jay Goltz. 70 percent of
businesses fail within seven years, according to the SBA. In the worst
cases, the result is not only business failure but also complete
financial failure.
entrepreneurship  failure  ksfs  bankruptcies  Jay_Goltz  dark_side 
july 2009 by jerryking
reportonbusiness.com: Disaster relief
November 28, 2008 at 2:46 PM EST G&M article by DOUG STEINER
Rules for post-disaster investing.
Step 1: Cope and gather new data. Smart people in hurricane-prone areas build defences into their homes and businesses, then watch the weather. Do you do that with your investments?.... Don't invest aimlessly assuming that you'll be able to avoid a crash, then buy at the bottom. I don't know when the next market plunge will happen or how deep it will be, but I'm fortifying my investment castle against disaster by spending less and saving more....Look for new sources of information.
Step 2: Analyze the data. I'm not smart, but I looked at historic data and made a connection-what happens in the U.S. usually happens here, too. We worried enough to sell our house in 2007, but I wasn't disaster-hardened enough to rent, so we bought a smaller house.
Step 3: Consider what country you're in
Step 4: Identify the worst thing that could happen right now. You think Canada's economy is grim? How about the city of Detroit, where the median price of a house or condo dropped to $9,250 (U.S.) in September from $21,250 (U.S.) just a year earlier? Could things get that bad here? Almost certainly not.
Step 5: Act when things stop getting worse (there's an element of "next play" here). Don't wait till they start getting better. If you wait for positive signs, it will be too late. I like hotpads.com, the U.S. real estate search engine with information on foreclosures from RealtyTrac. It lets you swoop across a map of the country like a vulture, looking for distressed properties. I'm not looking in Detroit, but I am interested in Longboat Key, Florida. I'm also combining the online information on foreclosures with updates from a local real estate agent who's desperate for buyers, and who forwards me every property listed in the area.
Step 6: Find out who's ahead of the curve and learn from them. The most interesting financial analysis these days isn't in stock and bond markets-it's in the markets for things like natural disaster insurance. A 2007 study, led by Laurens Bouwer from the Institute of Environmental Studies at Vrije University in Amsterdam (remember that Dutch people living below sea level are keenly interested in floods), includes estimates of the costs of future weather-related disasters. By 2015, potential financial losses from disasters in the world's 10 largest cities will likely climb by up to 88%. Three recommendations: 1) Get more and better data. 2) When adapting to surroundings, take precautions to reduce disaster risk. 3) Find new financial instruments or innovations to spread risks among investors.
Step 7: Invest where the potential returns are highest relative to the risks. Even though stock markets have plunged due to panic, they may not be the most profitable place to put your money in the future. The worst mispricing of assets will almost certainly be in the real estate market, so that's where you may find some of the best bargains. Detroit might turn into a mecca for artists, where $9,000 buys you a house in a neighbourhood that may rebound and thrive. You just have to have the courage to look at the disaster data and act.
ahead_of_the_curve  crisis  dark_side  de-risking  defensive_tactics  disasters  Doug_Steiner  extreme_weather_events  financial_instruments  financial_innovation  first_movers  hacks  historical_data  information_sources  instrumentation_monitoring  investing  lessons_learned  measurements  mispricing  next_play  precaution  risk-sharing  rules_of_the_game  smart_people  thinking_tragically  tips  worst-case 
february 2009 by jerryking

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