Warren Buffett’s Investing Secrets, F-Troop, and Amazing Bigfoot Investments

“Well if there were no Gods then anyone can do anything and nothing will matter.  You could do as you like and nothing would be real.  Nothing would have meaning, or value.  So even if the Gods don’t exist, it still necessary to have them.” – Vikings

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Even Bigfoot appreciates the climate in Margaritaville.

It was reported (quite a while ago) that Jimmy Buffett of “Margaritaville” fame and Warren Buffett of “Having All the Money” fame were related.  However in 2007 they spit into a tube (well, separate tubes, one tube would be gross) and had their DNA tested.  The results showed that if they were related, it was more than 10,000 years in the past, as Warren Buffett was related to Scandinavians and either Iberians or Estonians.  Jimmy Buffett was related to the Dutch, sunscreen, tequila and salt.

I’ve always regretted that they weren’t related, since my ideal restaurant would be the Buffett Buffet™.  All you can eat cheeseburgers (from Jimmy) and Coca-Cola® from Warren (who owns a large chunk of the company Coca-Cola™).  The television screens would alternate between surfing, bartending shows, and a stock ticker.

But this post is all about Warren, and only slightly about Cheeseburgers in Paradise©.

Warren Buffett is smart.  You don’t start with (relatively) small amounts of money and end up with billions by luck, unless you’re Mark Cuban, who is the only person on planet Earth who sold a company with 330 employees for enough stock to make him a billionaire.  Thankfully he has a billion dollars, so he can hire people smarter than him.   (Yes, he has more money than me, but, really – aside from being so lucky?  He’d be a wonderful bartender.)

One data point in my favor in stating that Warren is smart would be that he graduated from the University of Nebraska at the age of 19, and then went off to Columbia (the college, not the country).  Why Columbia (the college, not the country)?  He knew that Benjamin Graham taught there.  Ben Graham is known as the “Father of Value Investing,” and Buffett wanted to learn from him, and took his class.  After finishing at Columbia, he wanted to go to work for Graham, but Graham said no.  Buffett went back to Nebraska to be a stockbroker.

One day, Graham called and said that Buffett could come to work for him – he was being called up to the big leagues.  The next day Buffett killed all of his customers (no witnesses that way) and went to New York to work for Graham.  Okay, Buffet didn’t kill anyone.  That we know of – this isn’t Game of Thrones.

So, when Buffett got the job with Graham, he learned a lot.  Eventually Graham had enough money and wanted to spend the rest of his life on, well, whatever he wanted to spend it on (PEZ®, pantyhose and elephant rides?), so he shut the company down.  Buffett was, by most standards, pretty well off, and decided he wanted to move back to Omaha and open his own value investing shop because he missed all of the corn and the corn smells.  Buffett’s various ventures were pretty small – in 1990, his company (Berkshire Hathaway) was worth $7175.  Per share.  Recently that same share would cost over $260,000, and Berkshire Hathaway’s total value is over $440 billion dollars.

Warren Buffett has done okay.

He’s also known for being pretty frugal.  I know you’re happy I added frugal to that last sentence, because otherwise you’d just think that I thought that Warren Buffet was pretty.

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I personally think that this picture is pretty, even if Game of Thrones® has made dragons the good guys.

Warren has lived in the same house since the 1950’s, (it is a nice house, but not that nice), drives a car for years at a time (rumor is he bought a hail damaged one because it was cheaper), and recycles Pringles© canisters into air conditioning ductwork for his house and saves the trays for TV dinners to use to microwave Oscar Meyer® hot dogs.

Me?  If I had as much money as he does, I’d probably buy a new car every time mine ran out of gas (I kid, I drive my cars forever (LINK)).

I was watching a video while exercising (I work out for only for you and I study for only for you, Internet!) and heard Warren state “ . . . if I could invest as a small investor today I think I could . . . I know I could make a 50% return.”

That was a pretty powerful statement, since I certainly count as a small investor by Mr. Buffett’s standards.

Why can’t he do that?  He’s got billions of dollars he has to invest, so he has to do big deals.  There are a lot of good deals you could do with a few million dollars, but very few good deals in the billion plus region.  Turning the company’s $440 billion into $660 billion in a year is hard.  He could turn $10 million in to $15 million in a heartbeat.  Small deals are easier since there are so many of them.

Warren’s advice to investors is simple:  buy a low overhead (low fees) index fund (an index fund is a fund that is created to match an index, like the Dow Jones Industrial Average or the S&P 500).  If you can’t do what he does and value invest, this is the best way to get a good return.  And that’s good advice (in my opinion) for any small investor that doesn’t have the time to do the required research.

Let’s repeat that:  Warren Buffett says you should buy an index fund.

But me?  I know Warren didn’t get all of those Pringles® cans by investing in an index fund.  What did Warren Buffett do to get really rich?

What research did Graham and Buffett (reminder:  not Jimmy Buffett, but Warren Buffett) do prior to investing?

  1. Good Leadership, Good Business – Graham and Buffett were looking for leaders that had experience, capability, and great integrity. Warren can call CEOs and talk to them and give them the sniff test.  You can’t, so this is harder for you.  The business also has to be a good one. (More on this later.)
  2. Low Price to Earnings Ratio – The price to earnings ratio (P/E ratio) is how much you have to spend to get a dollar of the company’s earnings.

Before the 1980’s, the rule was a company that had a price to earnings ratio of over 20 was ALWAYS overpriced.  But the rule back then was to take the P/E and subtract the current prime interest rate.  Today the prime interest rate is ~1%, so using that old rule, a P/E of 19 would be acceptable.  Right now it’s difficult to make a return on capital because so much money is flooding everywhere . . .

Why was the rule like that?  It was assumed that you could either get returns from saving your money or from investing it.  Currently there is no benefit from saving it with historically low rates, so the P/E has continually wandered higher.

Alone, however, P/E tells you nothing.

  1. Low Price to Book Value – The book value of a company is how much all of its “stuff” is worth. In theory, if a company has a price to book value of less than one, you could buy the company (price), sell all of its stuff (book value), and come out ahead.  In theory.  If you have ever driven past a boarded up factory (and you have) you know that the book value just might be overstated.

Again, like P/E, Price to Book tells you nothing.

One video I watched while climbing on an infinite staircase to nowhere showed a screening method for value stocks that was alleged to have come from Warren Buffett:

  • Pick the Price to Earnings ratio,
  • multiply it by the price to book value, and
  • if the number was less than or equal to about 30,
  • the stock was a candidate.

Simple, right?

It is (and it’s overly simple).  Because what stocks have low P/Es and low Price to Book?

  1. Great, Undervalued Companies in Great Markets and
  2. Failing Businesses in Crappy Markets.

How do you tell the difference?  Sometimes you don’t.  Buffett will go on at length, if you let him, about all of the failures he’s had in picking companies.  But he had a consistent strategy that he followed for years that obviously resulted outstanding returns.  And he didn’t pick only small companies – Coca-Cola® was one of the companies he picked that produced amazing gains for Berkshire Hathaway.

So, how does a company like Berkshire Hathaway measure up on the value score?

  • It has a P/E of 20, and a Price to Book of 1.5. This would result in a score of about 30, so it would be within Warren’s window.  According to Warren, Warren is a value!  Also, Berkshire Hathaway has a credit rating better than (really) most countries.

What about . . . Tesla?

  • Tesla has never made any money, so its P/E is infinite. Its price to book is 12, so, 12 times infinity is  . . . still infinity.  Probably not a Buffett candidate?

And Honda?

  • Honda, maker of the best-selling electric car has a P/E or 8.6. It has a price to book of 0.77.  That means it scores an amazing 6 or so on Warren’s scale.  Wow!

So, let’s also look at a company that no one understands, Amazon:

  • It has a P/E of 120.  A price to book of 20.  That’s an astonishing 2400.  Again, probably not a “buy” rating from Buffett.

But is Honda a good buy right now?  Or not?

The only way to tell is to go back to Buffett’s first point.  But you and I can’t call up the CEO of Honda and expect to get real answers.  Warren probably could.

But we have help fortunately:  Joseph Piotroski, an accounting professor at the University of Chicago came out with a list of criteria that are objective and that anyone can find in the annual report of any publically traded company and named it the F-Score, which I really hope was based on the 1960’s show “F-Troop.”  I’d go through the list, but it’s much easier to pop up a link.  So here’s the (LINK) to Piotroski’s criteria.

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I think that Agarn was a horrible value investor . . . did you see the episode where he traded the blankets for a handful of small marbles that were supposed to bring Custer back from the dead?

Source- mycomicshop.com

Profitability

  1. Return on Assets (1 point if it is positive in the current year, 0 otherwise);
  2. Operating Cash Flow (1 point if it is positive in the current year, 0 otherwise);
  3. Change in Return of Assets (ROA) (1 point if ROA is higher in the current year compared to the previous one, 0 otherwise);
  4. Accruals (1 point if Operating Cash Flow/Total Assets is higher than ROA in the current year, 0 otherwise);

Leverage, Liquidity and Source of Funds

  1. Change in Leverage (long-term) ratio (1 point if the ratio is lower this year compared to the previous one, 0 otherwise);
  2. Change in Current ratio (1 point if it is higher in the current year compared to the previous one, 0 otherwise);
  3. Change in the number of shares (1 point if no new shares were issued during the last year);

Operating Efficiency

  1. Change in Gross Margin (1 point if it is higher in the current year compared to the previous one, 0 otherwise);
  2. Change in Asset Turnover ratio (1 point if it is higher in the current year compared to the previous one, 0 otherwise);

The lower the F-Score, the crappier the company.

And it, when combined with the screen above the Piotroski F-Score produced a return 7.5% higher than any other Value Investing test.  So, does Honda suck or not?

I don’t know.  But I’m going to check with the help of Dr. Piotroski.

But the biggest failure in Value Investing is to allow your emotions to rule.  Markets are driven by emotion:  Elon Musk is awesome, so I’ll buy Tesla!!!!!

Tesla might be awesome, but there are way too many Tesla fans for the price to be rational.  Part of finding value in the market is understanding that you want to buy at the lowest prices.  When are the lowest prices?  “When blood is running in the streets.”  When people have given up.  When people are running scared.  At that point, amazing companies can be picked up at incredible values.

In April of 2000 I was thinking of buying Microsoft®.  I had generally been a pessimist, but, at a certain point, I was finally ready to give up being a pessimist.  I was talking to a broker and then . . . the Dotcom Bubble burst.  If I had bought Microsoft© back then?  It would have taken thirteen years to be at breakeven.  And that’s not including inflation, which ate away at the buying power of the dollar.

But can I still get a Cheeseburger in Paradise?  Sure!  Jimmy Buffett will even have a Margarita with you if you have the proper parrot apparel.  But don’t expect Warren Buffett to pay for it.  But he will take your discount coupons so he can use them to get some suits he bought in 1983 altered.

 John Wilder has no positions in any stock mentioned, and won’t take any for the next week or so, until he can calculate the F-Score of Honda.  Especially Tesla – he’s not buying that though he loves Elon.  John Wilder is NOT a financial advisor.  And he’s had wine tonight.  Don’t trust him.

End of Empires, PEZ, and Decadence

“We shall fight in the hills; we shall never surrender. And even if this Island or a large part of it were subjugated and starving, then our Empire beyond the seas, armed and guarded by the British Fleet, would carry on the struggle, until, in God’s good time, the New World, with all its power and might, steps forth to the rescue and the liberation of the old.” – Dunkirk

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A marker of the change from Conquest to Commerce.  Hey, we have Porto Rico!

Sir John Glubb had the unfortunate luck to be born with a name that is most frequently associated with near-drowning experiences, but from his title of “Sir” it looks like he did okay.  He first was commissioned as an officer in the British Army in World War I (World War I was the one without the Japanese).  After that, like the United States, he spent the next 30 years meddling in the affairs of the Middle East.  He first went to Iraq, then was in charge of the fighting force of Jordan.

No, not Michael Jordan’s personal army of ninja warriors, they’re called the JNB, or Jordan Ninja Brigade, but something called the Arab Legion of Jordan (the country) that was considered for a time the most effective army in the region.

Eventually Sir Glubb and King Hussein of Jordan came to an agreement Sir John would stop coming to work and the King would stop paying him.  Glubb retired to England where he did a LOT of writing.  What brought Sir Glubb to my attention was one essay, called The Fate of Empires and Search for Survival.  You can download the .pdf here (LINK).  It’s pretty straightforward.  I’d first read this several years ago, but was more recently reintroduced by a link from The Patrick Henry Society (LINK).

As we’ve discussed before, there are others that predict history on a cyclical basis (Fourth Turning LINK), and there are various ways to look at a significant societal change, from the articles on the Roman Empire (LINK), how Collapse Happens: Seneca’s Cliff (LINK), to a general theory of the Collapse of Complex Societies (LINK).  These are interesting stories:  life goes on day after day in a continual sameness until . . . everything changes.

Now, that’s not to say that everything changes all at once.  We study the French Revolution in school (or at least I did) and went from the:

  • French Revolution to the
  • Terror to the
  • Rise of Napoleon to the
  • Fall of Napoleon to
  • Friday the 13th Part II Rise of Napoleon to
  • Napoleon III, Final Chapter

It takes (at most) a week to go through that period of history.  And it’s pretty exciting stuff, if presented well.   An entire stable society is tossed into an upheaval that results in massive change.  And when confined to a school desk it seems that if you lived in France, that all of this change was happening at warp speed!

But the Bastille was stormed in 1789, and Napoleon died in exile in 1821.  The events we covered in a week played out over 32 years, which is more than a generation.  If you were born in 1789, you could have fought at Waterloo with Napoleon.  This change would have seemed natural to you if you were in France, and the only way you can observe it (beyond freshman world history class) would be to take time to look at the events of the world in a bigger-picture way.

So, Glubb, being fired and all, spent his time in study of the rise and fall of the world’s empires.  (All quotes that follow, except where noted, are from Glubb’s essay.)

However this may be, the thesis which I wish to propound is that priceless lessons could be learned if the history of the past four thousand years could be thoroughly and impartially studied.

-Glubb

Glubb then pulls out a table and points to start and end dates for several empires and makes the assertion that empires have a maximum lifespan of about 250 years.

Empire Span
Assyria 859-612 B.C. 247
Persia 538-330 B.C. 208
Greece 331-100 B.C. 231
Roman Republic 260-27 B.C. 233
Roman Empire 27 B.C.-A.D. 180 207
Arab Empire A.D. 634-880 246
Mameluke Empire 1250-1517 267
Ottoman Empire 1320-1570 250
Spain 1500-1750 250
Romanov Russia 1682-1916 234
Britain 1700-1950 250

Okay, my criticisms first.

  • He’s cherrypicking Western Civilization and the Middle East. What about Japan?  China? The Disney Empire?
  • How did he pick the dates? There is a degree of subjectivity there.
  • He totally had to make up something to explain Rome. Rome doesn’t really follow his 250 year model.

That being said, you could make an argument that his dates are sorta right.  And he produces anecdotal evidence to back up his assertions in his text.

Likewise, Glubb notes that these durations appear to be roughly tied not to technology (it varied) communication speed (varied widely for the world-spanning British Empire and the Greek Empire), or contiguous nature of the empire (see Britain again).

I can even (sort of) support his dates on the cases I’m familiar with.  Everyone would agree that the British Empire was gone by 1970.  1960?  Probably most?  1950 might be a bit early.

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Possibly, this statue knows (nose?) that he doesn’t help Glubb’s thesis. 

So, if this 250 maximum life (*Rome Not Included) isn’t related to technology or geography, Glubb reasoned it was related to human longevity, and his theory was that it represented 10 human generations.  Differing generations of people in the empires reacted in different ways based upon their experiences in the progression of empire.  He even broke down the empire’s phases:

  • The Age of Pioneers/Outburst: In the US, Glubb argues, the age of the Pioneers was spent conquering the continent. Other places, a dominant culture takes over the nation.  This is the era of television shows involving guns and bears.
  • The Age of Conquests:  Immediately after the energy of the Outburst, the nation forms a military that leads to conquest. Television?  Guns, no bears.
  • The Age of Commerce: On the newly conquered land, per Sir John, every factor is in place for massive expansion of commerce as new systems are established and older trade barriers fall. The proud military traditions still hold sway and the great armies guard the frontiers, but gradually the desire to make money seems to gain hold of the public. Television? Not much.  It’s like an accounting show.  Some railroad robber baron shows.

The ancient virtues of courage, patriotism and devotion to duty are still in evidence. The nation is proud, united and full of self-confidence. Boys are still required, first of all, to be manly, to ride, to shoot straight and to tell the truth. (It is remarkable what emphasis is placed, at this stage, on the manly virtue of truthfulness, for lying is cowardice, the fear of facing up to the situation.

  • The Age of Affluence: All the commerce leads to wealth. Television:  Soap Operas and shows involving women in bikinis.  The wealth leads to a change in values:

The first direction in which wealth injures the nation is a moral one. Money replaces honour and adventure as the objective of the best young men. Moreover, men do not normally seek to make money for their country or their community, but for themselves. Gradually, and almost imperceptibly, the Age of Affluence silences the voice of duty. The object of the young and the ambitious is no longer fame, honour or service, but cash. Education undergoes the same gradual transformation. No longer do schools aim at producing brave patriots ready to serve their country.

  • The Age of Intellect:  few great schools are the hallmark of the early Empire. By the Age of Intellect, every Podunk town has a community college.  Television:  Community.  And the effect isn’t good:

Thus we see that the cultivation of the human intellect seems to be a magnificent ideal, but only on condition that it does not weaken unselfishness and human dedication to service. Yet this, judging by historical precedent, seems to be exactly what it does do. Perhaps it is not the intellectualism which destroys the spirit of self-sacrifice:  the least we can say is that the two, intellectualism and the loss of a sense of duty, appear simultaneously in the life-story of the nation.

  • The Age of Decadence:  This passage I found striking in Sir John’s essay: The word “celebrity™” today is used to designate a comedian or a football player, not a statesman, a general, or a literary genius.  Certainly Johnny Depp would be a celebrity in any age, right?  Television here?  Men in bikinis.

The characteristics of the Age of Decadence is given particular emphasis by Glubb:

  • Defensiveness: (Here Glubb means the country doesn’t care about duty or honor, just keeping luxury and comfort.)
  • Pessimism
  • Materialism
  • Frivolity
  • An influx of foreigners
  • The welfare state
  • A weakening of religion

Decadence is due to, per Glubb:

  • Too long a period of wealth and power
  • Selfishness
  • Love of money
  • The loss of a sense of duty

I’d argue that Glubb’s reasons for Decadence are subject to argument, but they’re not out of the question. I’d argue to add the increasing coddling of children so that we don’t ever let them experience true hardship, at any costs. My parent’s playground had a merry-go-round that cut a kid’s legs off when he fell down.  My playground put planks over the spot where he fell through.

My kids?

Soft fluffy pillows are under the swings, and games like tag are unapproved, whereas games like competitive sitting while quiet are looked on with approval by the school’s cadre of lawyers.  I could take live ammo to school and once found a live tear gas grenade on school property.  Today’s kids?  Plastic knives are out of the question.

But I think that there are few who would argue that the United States isn’t (currently) the biggest empire the world has ever seen.  The United States has 800 military installations in 70 countries. The United States has convinced the world to use the dollar as the world currency.  When Nixon took us off of gold-dollar convertibility (a “temporary” measure) it amounted to the United States being able to tax the entire world.

How?

We used to send them dollars that we printed up, in exchange for cool stuff, like iron ore, oil, and other raw materials.  They took these dollars that we just made up.  Profit margin for the government?  100%.

Nowadays, printing up those dollars is just too painful and expensive.  We now just exchange electronic information so that electronic dollars that we create are shipped via the Internet to other countries.  And, for whatever reason, everybody agrees that this is a good deal, and they keep sending us stuff, like cars and other finished products.  But, we have our standards.  We still make our own PEZ®.

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PEZ®, it’s what does a body good.  Like Brawndo©, which has what plants crave.

So, I’d call the United States an empire, both economically and militarily.  And while the world has benefited from the peace, the United States has benefited economically to an unprecedented degree.

And if you look at the points that denote Glubb’s Decadent stage of empire, I’d say that there is empirical, scientific evidence for at least six of the seven points.  Now it should be noted that Glubb noted these points in other civilizations as well.  He noted that in the Arab Empire, Arabs becoming a minority in their own capital and women studying for and being allowed in what they considered traditionally male professions, like being lawyers.

What happens on the other side of Empire?

It seems like Britain is still there.  They went through a very rough patch as the British Empire crumbled. Economic output dropped, and children were required to wear gloves without fingers, be grubby and put soot on their ruddy cheeks.  But as it adjusts to a new role in the world.  At the start of World War II (the one with cool tanks) the Royal Navy had 1400 ships, and it was the largest navy in the world.  Now Wikipedia claims they have less than 70.  And most of those are used to haul lime, rum, and fish and chips to their sailors.  And, as of this writing, the Royal Navy has zero aircraft carriers.

And, it’s understandable, their empire, like Paula Abdul’s career, is over.

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This is what a Royal Navy Ship of the Line looks like in 2017.

I think that, economically, Britain has gotten a temporary reprieve due to the North Sea oil reserves, plus their sales of merchandise related to Lady Di.  Otherwise, I think that their trajectory remains on a downward arc.  Recently I read a story that indicated that infrastructure (roads, bridges, etc.) was in pretty bad shape outside of London, which would again be indicative of the end of empire constrained resources can no longer support the infrastructure created at the peak of empire.

What does this portend for the United States?

If the Roman model is in play, we’ll end up with a Caesar:  a ruler that will follow many of the previous forms of government, but also be a more despotic ruler.  The courts and legislature will exist to support him.  A leader of this type would reinvigorate and replace the current pessimism, materialism and frivolity with a renewed focus on maintaining and expanding the power of the empire at the expense of freedom and liberty. After a rough patch, most people will be okay with this.

Good points?  Cool buildings and triumphal arches.  Bad points? Purges of people who believe that President for Life Carl XV isn’t tall enough.

It’s possible that we head the other way, the soft slipping into fractured irrelevance that other empires (like Britain and Spain) have undergone.  The bigger cracks would be the fall of the currency into irrelevance . . . be like how, in Hemingway’s The Sun Also Rises, Mike went bankrupt: “Two ways,” Mike said. “Gradually and then suddenly.” At least we have all that cool stuff we got from China, right?

There would be big disconnects on the way down, but then long periods of uninterrupted economic and social malaise.  But the end of empire isn’t horrible.  At least we’ll send our version of The Beatles® to the new empire.  My bet is that it will be into the new world capital of our Canadian Overlords.

Greater Ottawa, anyone?

High Carbs, Harvard, Insurance, and Avoiding Doctors

“Undercover insects?  Talking iguanas?  This isn’t a research station, it’s a three ring circus.  You should charge admission.” – Star Trek, Voyager

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Pugsley bravely researching a high-carb diet. The Sugar Research Foundation® thanks him for his bravery!

In 1967, a member of the Board of Directors of the Sugar Research Foundation® (yes, that was a real thing) published a statement that noted there were significant flaws in studies that linked high sugar consumption to heart problems.  The Sugar Research Foundation© paid for the work that went into backing up the statement.  No problems, right?

Perhaps the Official Song of the Sugar Research Foundationâ„¢?

The statement came from (in part) the Chairman of Harvard®’s Public Health Nutrition Department, and was published as research in the New England Journal of Medicine©.  From what I’ve read, his position at the Sugar Research Foundation™ and their funding of the study wasn’t mentioned.  Surely no bias from a Harvard© man?

This study resulted (at least partially) in the Low Fat/High Carb craze, and increasing amounts of obesity and heart disease.  So, to recap history:

  • 1967: Carbs Good
  • 1972: Atkins – “Not so fast.”
  • 1978: Carbs Good
  • 1981: Atkins – “Really, dudes, you’re wrong.”
  • 1980’s and 1990’s: WE SAID LOW FAT.  Oh, and bread works like sugar, so have as much sugar as you want.  A Milky Way® is like six pieces of bread.  Or a potato.
  • 1999: Atkins – “Dudes, not working.  Chill and have a steak.”

I could keep going.

Is it just me, or does medical research follow the model shown in the video?

Right now it seems as though the tide has finally turned in Dr. Atkins favor, probably for good, though the Wikipedia for “Atkins Diet” reads like the ghost of the Sugar Research Foundation® lurks over it to this very day.

Let’s think about cows.  Hmmm, first time I’ve ever written that sentence.

Prior to being turned into tasty steaks, cattle are taken to a feedlot, which is just that, a lot where they feed the cows.  A lot, as in mass quantities.  A cow will enter the feedlot weighing 700-800 pounds, and exit 400 pounds heavier in 4 months.  That math is easy – 100+ pounds a month (that’s like 6,000 kilograms an hour).  What do they feed the cows?  Lots of high energy grain, combined with a little bit of protein and a little bit of fat.  And they gain massive amounts of weight.

Had Harvard™ (a location where they seem to be confused) just checked the Hereford (a cattle breed) heifers (a specific cattle descriptor) then they would have known that it’s clear how to make someone gain weight, and it’s precisely the diet he suggested is better than Grandma’s steak and eggs.

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What cows might look like to a Chairman of Harvard®’s Public Health Nutrition Department.  At least they’re mammals?

Let’s talk about salt.  Here are two headlines about salt consumption health effects from August, 2017:

  • High Salt Diet Can Double Risk of Heart Failure
  • Pass the Salt: The Myth of the Low Salt Diet

There are Similar debates on statins (do they do anything but mess with your muscles OR are they a miracle?), B vitamins (generally good for you OR increase risk of cancer) and eggs.

Eggs used to be a miracle food.  Then, in the 1970’s?  Evil death in the full shell.  Now?  The kind of cholesterol in an egg isn’t the kind of cholesterol in your body.  Eggs are eggsactly what a body needs!  Today, anyway.

This has led me to two conclusions:

  • Journalists will write up anything for a Friday deadline if it gets them to Bennigan’s© faster so they can have a Bloomin’ Onion® and a scotch and soda before going to the fedora store. (I may have messed this metaphor up, but I’m working on a Friday deadline . . . .)  If they read the medical studies, most of them don’t remotely have sufficient background in biology or statistics to understand it, because the tough math tests at journalism school allow them to take their socks off so they can use their toes for counting.
  • Medical research is (shudder) even worse than journalism about medical research.

I’ll concentrate on the last point.

Doug Altman wrote an article for The BMJ.  What is The BMJ?  It used to be called the British Medical Journal, but the password got hacked and it was renamed by a group of 12 year old boys.

Back in 1994, Altman wrote an article for The BMJ called The Scandal of Poor Medical Research.  It’s behind a paywall, and I think it’s better if I just make up the content anyway.  Actually, Richard Smith gives a pretty good synopsis of the article in The BMJ Blog (LINK).  Much of the research was bad because “. . . of inappropriate designs, unrepresentative samples, small samples, incorrect methods of analysis, and faulty interpretation.”  And, presumably, he thought that medical research had an ugly, fat mother, too.  And that’s the positive news.

It gets worse.  Career interests (like our Harvard Sugar Daddy) influence research.  And, to quote an article in The Lancet, “85% of medical research dollars are wasted.”  Presumably that ($240 billion in 2010) would pay for a lot of pantyhose and elephant rides.  I think in layman’s terms that means the researchers either evil, stupid, or evil AND stupid.

And remember, medical research isn’t Scottish . . . it’s crap.

So, medical research is horribly broken.  What about medicine?

My general theory when it comes to doctors is to avoid them.  I got sick for the first time in about eight years last month.  Rather than go into a doctor (respiratory thing that was moving into my lungs) for a prescription, I was able to log onto a website and talk to a doctor.  My wait time as I was sitting in my basement in a fever-induced cold sweat?   Five minutes.  Visit duration?  Five minutes.  Cost?  $60.  The amoxicillin that cured me?  $20.  Genius.

What about hospitals?  Don’t go there – people die there!  And my theory is backed up by data.

What does the data say?

That some facets of medical science are getting to be amazing:

  • Trauma medicine, such as treating car accident victims, firearms victims, et cetera has saved tens of thousands of lives.
  • Medical imaging has allowed better diagnosis, and antibiotics have saved millions.
  • Bandaids® are much more colorful and have cartoon images on them.

However:

More people are killed by doctors than by guns.  Not on a rate basis, on an absolute basis.  It appears that the best estimate that the Internet has of those killed in the United States accidently by their doctors is somewhere between 250,000 and 400,000.  Every year.  Since only about 10,000 deaths a year from guns are not suicides, that means doctors kill 25 to 40 times more people than guns every year.

Wow.  And I thought that Clint Eastwood was tough.

Young Doctors in Love, yup, the urine sample scene.  Bonus?  Sean Young before the crazy hit her.

I know, these are accidents, the people were sick, and some of them might not have made it anyway.  Sure.  But for numbers this big to exist there really is a problem in the system.  And I’m pretty sure that all of the things we’ve done over the last twenty years have made it worse, not better, with a medical system that pits insurance against doctor against malpractice attorney in a constantly escalating struggle of money and power.

Is there another model?  Sure.  Canada, with rationed care?

Also, there are places like the Surgery Center of Oklahoma (LINK).  They don’t take insurance, but they have a fixed price list on the Internet.  Need a pacemaker?  $11,400. (Average cost after Medicare?  $20,000+.)  Knee replacement?  $15,499.  (Average cost after Medicare?  Hard to tell.  Probably $10,000 to $15,000.)

Downside?  You have to visit Oklahoma.

I know that our current system of insurance was driven by government wage and price controls during World War II – you couldn’t offer someone more money to come to work for you, but you could offer them insurance and pensions.  Note that these are precisely the systems that are exploding right now and distorting our economy to the point where they are consuming more resources in both the private sector and the public sector.

The Mrs.’ solution?  Outlaw insurance.

It sounds better and better every day.  Have a steak while you’re waiting.

Note That John Wilder is NOT a doctor so for heaven’s sake, DO NOT follow my advice without talking to your doctor.  Or Shaman.  Or whatever groovy stuff you do.  Also, I am long a company that makes Statins, but they’re not gonna be helped by this article.  I don’t plan on selling it anytime soon since the yield is pretty good (this is NOT investment advice, I’m just sayin’ and disclosin’).  I don’t plan on taking any positions in any company over the next four or five days, and haven’t recently.