Andy Kessler

WSJ: It's Time To Fire Your Doctor

https://www.wsj.com/articles/its-time-to-fire-your-doctor-11549829009

Barack Obama famously and falsely said, “If you like your doctor, you will be able to keep your doctor, period.” But . . . what if you don’t like your doctor?

Let’s say you, like me, are one of the 20 million Americans who work for themselves—no boss, but also no corporate-tax deduction for health insurance. The smart move is to get a high-deductible insurance plan. Now it suddenly matters what doctors charge: $500 to take your blood pressure and bang your knee with a rubber hammer, $1,200 for a blood test that uses pennies worth of chemicals to tell you your hemoglobin levels are fine. Plus four months to get an appointment, and then the doctor asks you to fax an authorization. What? It’s 2019. It’s time to fire your doctor.

Like roughly half of American adults, I’m borderline: hypertensive, high cholesterol, though only “pre”-diabetic. A streak of misdiagnoses has led me and many others to take doctoring into our own hands. I do an annual blood test for $199 through WellnessFX and get results on a smartphone app. A Bluetooth-connected cuff from Omron Healthcare tracks my blood pressure and even notes atrial fibrillation or irregular heartbeat. A Fitbit scale tracks my weight. Beautyrest Sleeptracker tells me my REM sleep duration. My Apple Watch charts my resting pulse and does a simple electrocardiogram. The more data, the better.

When you do get sick, you still need to see a doctor—they have that prescription pad. But insurance companies tired of overpaying for five-minute doctor visits have begun setting up alternatives. Sutter Health runs walk-in clinics for $129 a visit. Online care is cheaper, so Anthem Blue Cross encourages customers to use LiveHealth, a videoconference platform, for $49. Aetna has a deal with Teladoc, a $4.5 billion public company, for $38 consultations. No pain meds, of course, but almost everything else.

Consumer-driven options have already changed nonvital care. After doing in-home teeth impressions, you can order orthodontic aligners for $80 a month. For acne treatment, you can upload photos of affected areas and receive medicine by mail monthly. Technology is lowering costs and improving care on all fronts.

Technology has moved so fast that several smartphone-based platforms now function like Uber for doctors.

Read the rest here.

WSJ: Strike Back Against Every Cyberattack

 

https://www.wsj.com/articles/strike-back-against-every-cyberattack-11548624081

Another week, another data breach. The latest is 773 million online accounts for sale, many with passwords included, known as Collection #1. More are likely to come—go ahead and check your status at HaveIBeenPwned.com. All this the same month Marriott admitted that five million unencrypted passport numbers were snatched from its system, probably by the Chinese. Oh, and the Russians might have hacked the Democratic National Committee again after the 2018 midterms. How do we stop this?

The foreign hacks are the most disturbing. Last month members of a Chinese espionage ring known as Advanced Persistent Threat Group 10 (a k a “Godkiller” and “Stone Panda”) were charged by the Justice Department with hacking NASA, the Jet Propulsion Laboratory and even IBM . Earlier last year the Chinese were caught stealing submarine data from a U.S. Navy contractor. And horror of horrors, in 2017 an Iranian national hacked HBO and threatened to release unaired episodes and plot summaries from “Game of Thrones.

The U.S. has done close to nothing in response. Sure, special counsel Robert Mueller indicted 12 Russian intelligence officers last summer. I’m sure they’re quaking in their boots. Maybe those “Game of Thrones” episodes could have taught our leaders something about retaliation and revenge.

So what is America’s policy? That’s unclear. But a good start would be to heed the words of Israeli Prime Minister Benjamin Netanyahu, who told the press last week that his state has a permanent policy of hurting “everyone who is trying to hurt us.” The U.S. needs a similar stance to halt cyberattacks.

John Yoo, a Berkeley law professor and former Justice Department official, sees a parallel between deterrence in cyber and nuclear warfare. “Offensive nuclear weapons are relatively cheap,” he explains to me: “It’s defensive systems that are expensive.” Think about it. Each mission to drop one nuclear bomb would cost the U.S. about a quarter-billion dollars. But we’ve spent trillions on our defense and deterrent system. The nuclear triad of intercontinental ballistic missiles, bombers and subs ain’t cheap.

Mr. Yoo continues: “Similarly, offensive cyber weapons are cheap. It’s defensive cybersecurity tools that are expensive.”

Read the rest here.

WSJ: Stock Picking Is Like Time Travel

https://www.wsj.com/articles/stock-picking-is-like-time-travel-11547412001

Tesla stock—bam! Apple —kapow! That sound you hear amid the market tremors is the future screeching back to the present, like the wail of the flux capacitor in Marty McFly and Doc’s DeLorean. Wall Street perfected this sort of time travel long ago: Successful investing is mostly about looking into the future and deciding what to pay for it today. But how do investors know where to look?

The equities side of Wall Street, including me, always writes off bond investors as automatons. Their business is straightforward: Bonds have a face value, maturity date and coupon. That’s it. The rest is math such as Macaulay duration, which is basically how long it takes to get paid back. Investors just guess future interest rates and the risk of default. How hard is that?

If only it were that simple for stocks. At its most basic level, the value of a company is the sum of all its future profits discounted back to today. But it’s tricky to pin down this value because the variables are all loosey-goosey: earnings, growth rate and a theoretical discount rate. Future earnings are at the whim of management, growth depends on the economy and industry trends, and the discount rate is based on inflation and that fuzzy thing called risk. In other words, every input to the value of stocks is elusive. That’s why stocks rise and fall by the minute.

It helps to think of stocks as having a focal length, like the lens of a camera, which is the point in the future investors are looking at. Stocks with long focal lengths have an area of high magnification, a smaller angle of view, and fewer things in focus. Amazon’s investors were willing to overlook low margins in the short term in exchange for a bountiful prize out there somewhere. A short focal length means investors don’t look too far and can see everything all in focus, warts and all, like General Electric . Stocks have a duration, but you can’t really measure it—you have to sense it, or feel how far out the market is willing to look. It’s the most confusing part of investing.

How far should you look? Typically—though things are rarely typical in investing—investors look between 18 and 24 months into the future and apply a price-to-earnings ratio on future profits. Today the market multiple is 16 times 2019 earnings, which is close to the average for the past several decades. Since 1990, forward-earnings multiples have been as low as 10 at the 2009 market bottom and as high as 26 in the 2000 dot-com boom.

But P/E multiples aren’t buy or sell signals.

Read the rest here.

WSJ: Where in the World Is Larry Page?

https://www.wsj.com/articles/where-in-the-world-is-larry-page-11546199677

Has anyone seen Google founder Larry Page? Me neither. He’s in the witness protection program of his own doing. Brilliant.

As you chill the champagne ending 2018, the only thing worse this year than owning bitcoin was being the visible face of corporate America, especially technology. It’s the year of the beleaguered CEO, with Facebook ’s Mark Zuckerberg being the poster child under the caption “Mamas, don’t let your babies grow up to be CEOs.”

Whenever I meet chief executives, whether they’re fresh-faced startup founders or grizzled managers of public companies, I remind them there are only two rules for being successful. The first is pretty easy: Don’t run out of money. Ever. Former General Electric CEO John Flannery now knows this. Elon Musk might be whistling past this graveyard again as Tesla’s batteries run low.

And the often neglected second rule of CEO success? Hire a solid No. 2—but not for the reason you think. Sure, a competent operating person would be nice, to offload some of the drudge work. But the real purpose is to serve as a heat shield—someone to roll out front when the villagers with torches and pitchforks show up at your door. Bluntly, someone to take the blame when things go sideways, or even fire so your board doesn’t fire you. What could be more important?

In October 2015, Sundar Pichai became CEO of Google. But really, he is CEO in name only. Mr. Pichai runs a division of Alphabet, a holding company that contains Google (which accounts for 99.6% of Alphabet’s revenue) and a bunch of hemorrhaging “Other Bets.” Mr. Page is CEO of Alphabet, a heat shield between himself and trouble.

It was Mr. Pichai who fired James Damore in 2017 for writing the “Google’s Ideological Echo Chamber” memo.

WSJ: Inner Peace Is a Booming Business

https://www.wsj.com/articles/inner-peace-is-a-booming-business-11544991939

California is weird—and full of contradictions. On the one hand, California as a country would have the world’s fifth-largest economy. On the other hand, state Senate leader Toni G. Atkins is doing her best to diminish that wealth by pushing a campaign to ban fossil fuels. Despite the drama, a 2017 WalletHub survey concludes that 12 of the 20 happiest American cities are in California. Hmmm. Maybe it’s because California is home to an endless expanse of spiritual retreats—a booming enlightenment industry.

You may know of such places, promoting harmony among mind, spirit, body and earth. They have rooms filled with crystals to tune your vibrational frequency, Himalayan-salt therapies high in negatively charged ions, and meditation mazes with a speaker blasting “Ommmm” from its center. On your way to happiness are large doses of xylophonic-oboe-harpy new-age music, root-vegetable dining, cozy chakra chambers and, of course, handwritten signs with Eckhart Tolle-like spiritualist scribblings everywhere. “You have only one life to live, but if you do it right, you’ll only need one.” Insightful! And “Let go of your material possessions.” Conveniently, the Ranch at Live Oak Malibu takes care of that for you. One week starts at $7,800 a person—I hope that includes bottomless cups of bearberry herbal tea.

The famous Esalen Institute, left over from the culty ’70s, offers more than 400 workshops on topics from cosmology to other shams—er, I mean “shamanic rituals.” In 2013 Esalen brought in almost $18 million in revenue with margins rivaling some software companies.

Follow the money. According to Marketdata Enterprises, meditation is a more than billion-dollar business. Deepak Chopra is the meditation master and mogul, offering books, seminars, videos and several California-based “Perfect Health Retreats” where you can get instruction in primordial-sound meditation.

I heard Mr. Chopra pitch one of his more than 100 books at a conference I attended. His spiel was something about “your cosmic self.” He went on about the vastness of time and space and then stopped and asked attendees, “Shall I teach you how to meditate?” “Yes!” they roared. “OK, close your eyes, relax,” he said—then launched into a bunch of stuff about rotating galaxies and interstellar motion and karma. I started chuckling, because all I could think about was my favorite bathroom-stall graffito, “My karma ran over your dogma.” I opened my eyes and saw a room in a trance. Then Mr. Chopra caught my eye and I thought I saw him crack a tiny smirk. Maybe that’s how he achieves his own moments of zen.

WSJ: Life as We Know It Turns 50

https://www.wsj.com/articles/life-as-we-know-it-turns-50-1543786471

San Francisco in 1968 was littered with flower children, free love and dreams of utopia encapsulated in Timothy Leary’s exhortation: “Turn on, tune in, drop out.” How wrong that was! But out of this purple haze rose that year’s Joint Computer Conference, where an assembly of geniuses wearing white short-sleeved shirts and pocket protectors convened 50 years ago this week. The event shined a guiding light on the path to personal computing and set the modern world in motion.

On Dec. 9, 1968, Doug Engelbart of the Stanford Research Institute presented what’s now known as “The Mother of All Demos.” Using a homemade modem, a video feed from Menlo Park, and a quirky hand-operated device, Engelbart gave a 90-minute demonstration of hypertext, videoconferencing, teleconferencing and a networked operating system. Oh, and graphical user interface, display editing, multiple windows, shared documents, context-sensitive help and a digital library. Mother of all demos is right. That quirky device later became known as the computer mouse. The audience felt as if it had stepped into Oz, watching the world transform from black-and-white to color. But it was no hallucination.

At the time, the data line Engelbart used for the demo probably cost more than 10 grand a month. And he needed an amazing amount of not-yet-invented science to back up his vision: The first internet transmission wasn’t sent until the next year, when a message was sent from a UCLA lab to a terminal at the Stanford Research Institute. The integrated circuit was invented 10 years earlier, but Engelbart would be considered a false prophet today if the microprocessor hadn’t come along a few years later. He saw where the technology was headed and helped to hurry it up.

The coolest thing about this story is that, starting 20 years ago, Doug Engelbart was my next-door neighbor. We would invite him to our parties and get invited to his. At his place I got to meet the tech hall of fame: In the living room I met Ted Nelson, who conceptualized hypertext, and I met the inventor of the disk drive in his kitchen.

One of Engelbart’s biggest influences was Vannevar Bush’s 1945 essay, “As We May Think,” which envisioned a “memex” machine—a portmanteau of “memory” and “index”—that would enhance human cognition. While I chased my kids’ errant basketballs in his backyard, Doug would tell me about this sort of “human augmentation,” arguing that computer science was developing in ways that would aid humans, not replace them. Networks of humans and computers would create a “collective IQ.” He would interlock his fingers to make sure I got the point.

So what have we learned in 50 years?

WSJ: Anything Good Takes Exactly Five Meetings

 https://www.wsj.com/articles/anything-good-takes-exactly-five-meetings-1542578334

I was headed out of the office with a stack of papers I spent all week preparing. My boss stopped me at the door and asked, “What are you doing with all that junk?” I was trying to sell a company. “It’s the first meeting, right?” Yeah. “Don’t be an idiot. Leave all that stuff here.” But . . . “Don’t dump it all now. You need something to talk about the next few times you meet.” I looked confused. “Listen,” he told me, “everything good takes five meetings.”

I was mad, but he was right. Everything—and I mean everything—takes five meetings or at least five touch points. Deals, interviews, promotions, club membership, dating.

They have something you want, and you have something they want. But you can’t just come out and ask for it. Like poker, you never lay all your cards on the table. Reveal them slowly. Sadly, no one has the patience anymore.

We were all taught by Blake, Alec Baldwin’s character in “Glengarry Glen Ross”: “A-B-C. Always be closing.” As he berates an entire Chicago real-estate office, he brags, “I can go out there tonight with the materials you got, make myself fifteen thousand dollars! Tonight! In two hours! Can you? Can you? Go and do likewise!”

Two hours? That’s so 1992. A recent Comscore study shows millennials have an attention span of five seconds. That’s less than goldfish. (Sounds about right.) Everyone’s in such a hurry these days. Likes, 1-click buying, retweets, Amazon Dash order buttons, binge watching, keyless ignition.

Slow down!

WSJ: Big Brother Isn't Watching You

https://www.wsj.com/articles/big-brother-isnt-watching-you-1541361909

Hardly a week goes by that I don’t run into people who, when I ask how they are doing, tell me they’re worried about authoritarianism. Living in California, my impulse is to ask if they’re worried about the state’s one-party rule. But before I can get that out, the complaints begin: Trump, Facebook , Google, police state. Uh boy. Pot-dispensary paranoia?

This fascist-behind-every-tree thinking isn’t helped by the tech industry. Apple CEO Tim Cook told privacy commissioners in Brussels last month that personal information “is being weaponized against us with military efficiency. Today, that trade has exploded into a data-industrial complex.” Mr. Cook was poking at Facebook and Google and calling for more regulation.

In high Silicon Valley style, former Facebook security executive Alex Stamos took to Twitter to criticize Mr. Cook’s hypocrisy: “Apple uses hardware-rooted [digital rights management] to deny Chinese users the ability to install” virtual private networks. That means iPhone users in China can’t avoid their government’s censorship and surveillance. Fear mongers in the U.S. worry about authoritarianism, but in China it’s real. Anyone caught resisting there gets a mark on his not-so-proverbial permanent record.

In 2014 China began rolling out a Social Credit System, aiming for nationwide implementation by 2020. Like the FICO financial-credit system in the U.S., scores come from hundreds of data sources, but in this case those sources include more than 200 million cameras that monitor citizens’ behavior. Debtors end up on blacklists, unable to take trains or stay in luxury hotels. Some who have refused to join the military have been locked out of universities.

There are also “red lists” of good citizens, who are entitled to perks like skipping lines at ferries and not paying a deposit to rent bikes. Every man, woman and child must adapt to the government’s social pressure—or else. As the Dead Kennedys sang in 1979: “It’s the Suede-Denim secret police / They have come for your uncool niece.”

Is authoritarianism a rational fear in the U.S.?

WSJ: A Universally Bad Idea

https://www.wsj.com/articles/a-universally-bad-idea-1540147422

Bad ideas just won’t die. Ronald Reagan’s goal was to “leave Marxism and Leninism on the ash heap of history.” But they keep coming back, albeit in different forms. Of today’s bad ideas—from net neutrality to open curriculum and living wages—the most dangerous is the universal basic income.

For twisted reasons, Silicon Valley, the embodiment of meritocracy and incentives, thinks universal basic income will be the next great economic force. Facebook co-founder Chris Hughes is helping to fund a UBI pilot program in Stockton, Calif. He even wrote a book about the idea—something about 1%-ers paying money via tax credits—hardly original.

He’s not alone. Barack Obama has recently expressed interest in the idea. So have Bill Gates, Richard Branson, Mark Zuckerberg, Elon Musk, Marc Benioff and others in Silicon Valley. Why? I figure it’s their misplaced guilt about patriarchal dominance over workers displaced by automation. That’s a triple crown of bad excuses.

The enthusiasm seems infectious. In July, Chicago Alderman Ameya Pawar told the Intercept, “We need to start having a conversation about automation and a regulatory framework so that if jobs simply go away, what are we going to do with the workforce?” It wasn’t a long chat. This summer, Mr. Pawar introduced legislation for a pilot program that would give $500 a month to 1,000 families. Think of it as a new version of walking-around money. Never mind that Chicago can’t even afford to fund its public-employee pensions.

It sounds eerily similar to startup incubator Y Combinator’s Basic Income Project Proposal. It’s the harebrained idea of the organization’s president, Sam Altman. A thousand lucky folks would receive $1,000 a month for as long as five years. Another 2,000 would form a control group and might get $50 a month for their troubles.

WSJ: Think You’re Smarter Than Your Boss?

 https://www.wsj.com/articles/think-youre-smarter-than-your-boss-1539546566

Oct. 16 is National Boss Day, a Hallmark holiday if there ever was one. It’s a funny holiday, because almost all employees hate their bosses or at a minimum think they can do the job better. CEOs are especially reviled—slightly above cable installers and just below lawyers on the Rodney Dangerfield “no respect” totem pole.

Popular opinion insists that chief executives are greedy: CBS’s Les Moonves paid himself $69 million each of the last few years to air “NCIS” reruns. Or heartless: Amazon’s Jeff Bezos paid meager wages until a tight labor market forced him to raise them. Or scheming: Mark Zuckerberg and Facebook know our wants and desires. Or truth-challenged: Investors in Elizabeth Holmes’s Theranos learned that the hard way. Or plain clueless, like Lehman’s Dick Fuld and just about every other CEO.

But where would we be without them? Despite an industry of business schools, management books and seminars, nobody can teach you how to be an effective boss, leader or entrepreneur. They’re all self-taught. I’m always impressed when one is actually successful.

Most of investing is analyzing management. When I ran an investment fund, my partner and I would visit a dozen-plus CEOs a week in their offices. One rule of thumb was that if they closed their door, it was because they didn’t want their staff to catch them lying to us. Silly, I know, but it worked more often than you’d think. We’d grill them on their organization—how many people report to them directly, how soon after the quarter closes do they get accounting numbers, who signs off on contracts? The answers didn’t mean much; we were more interested in how the CEOs answered—confused, confident or hubristic—and seeing how good a handle they had on their teams.

We learned that running a company is like driving a tank down the middle of the road, except there are no windows so you can’t see the road. There are dozens of levers and knobs to adjust the tank’s direction. Your team works together to drive this machine as efficiently as possible with the fuel (capital) on hand. You’re doing fine until you sense a giant tree right in your path, and you make a million small decisions in short succession as your team scrambles to adjust the levers and knobs to get around it safely. Oh, and unknown to you, a few members are plotting a mutiny to oust you.

It’s not easy.