Archive for April, 2011

One of the fundamental disagreements I have with evangelical Christianity is the appeal to mystery.  This is when Christians discuss something about the nature of God and the state of the world, and when something doesn’t make sense, it is written off as a mystery. 

One common candidate is the problem of pain and suffering.  In Cambodia in the 1970’s, the Khmer Rouge systematically killed around 25% of their population in a bid to reform the country.  In an attempt to explain this, Christians will assert that this wasn’t God’s will, but He was nonetheless in control.  Well, if He was in control, why did He allow it and not stop an inexplicable act of horror?  It’s a mystery… which means that God had a reason for allowing it and the logic is so advanced (or convoluted) that us humans could not possibly comprehend it, let alone discover it.  What looks like an act of evil (allowing speakable horror) was actually an act of good (accomplishing a better purpose).

I refer to this as the “Mystery Defense”.  It frustrates me because it is an admission of defeat without surrendering your position.  Calling something a mystery means that you can believe something without having to justify why you believe it even if there are good reasons for not believing it (heck, you can believe anything and not need to rationalize it).  Believing in a mystery with regards to moral arguments are not the same thing as believing in something (such as the law of universal gravitation) without understanding it because physical laws are laws that are part of nature, they are amoral.  Moral laws must be used to explain the actions of others.

The problem with the Mystery Defense is that multiplying something by infinity does not change the result.  It only intensifies it.  If you took an introductory calculus class, you were presented with the following equation:


The teacher then told you to write a number sequence and see what happens with 1, 2, 4, 8, 16, and so forth.  The answers, if you plug in the numbers, are 1, 1/2, 1/4, 1/8, 1/16, etc.  The numbers get progressively smaller.  When you get to infinity, the answer to the mathematical problem is 0.  It continues in the same trend.

What does not happen is that once you get to infinity, the number becomes very, very large.  It doesn’t become progressively smaller and then suddenly become instantly larger.  Negative numbers do not get more and more negative and then suddenly become positive.  A sine wave oscillates between 0 and 1.  At infinity, it doesn’t acquire some other value.

Morality works the same way.  An evil act doubled is still evil.  An evil act quadrupled is still wrong.  An evil act multiplied by infinity is still morally wrong.  It doesn’t become wrong, wronger, wronger still… and then suddenly become morally good.  Attributing evil acts to an infinite God doesn’t make the acts good, it just attributes morally wrong acts to an infinite God.  It then forces the person doing the attribution to figure out a way to rationalize why an evil act is actually good.

Or more likely, call it a mystery.

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Donating to charity

I’m getting a large tax refund this year because I lost so much money in the past year – on my rental property and in trading (the latter of which is embarrassing).  Next year, I do not anticipate getting back such a big refund because I will lose much less money on my property (because I moved into it) and I have slowed down my trading and stopped experimenting with options.

This means that my refund will be much less but the amount of money I lose will similarly be smaller.  I am fine with trading off refunds for net losses because the out-of-pocket cost to me is so much less.  I’d rather lose $3 and get a $1 refund (net loss = $2) than lose $10 and get a $4 refund (net loss = $6). 

What will I do with the extra money?

One thing I am planning on doing is donating some of the money to charitable organizations.  But which ones should I donate to?  There are so many, it’s hard to pick.  Here’s what I am thinking:

  1. The Red Cross – the Red Cross does relief work in disaster afflicted areas.  They also have a good reputation.  The reality is that anything I donate to would work but this is the one I am going to pick.
  2. Some science organization – I like science.  It’s something I like to read about, whether it is in traditional fields like physics or more of the human sciences such as anthropology.  I also think that environmental problems like global warming and resource consumption is eventually going to wipe out the human race (or at least cause us to decline as a civilization).  Therefore, I want to donate to some science foundation.  But I have no idea which one to give to.

    I thought I might donate to the National Science Foundation, but it turns out that they are a government organization (that is already funded by tax dollars) and they hand out grants.  I couldn’t find a page on their website to donate to.  So, that’s out.  I need to figure this one out.

  3. Local churches – I give some money to a local church as well because they do a lot of community work.  Now, I know that some people will say that I should give 10% to them and then anything else to charities is above that but my response to that is that anyone can misquote scripture to support their own position.  Why don’t ten-percenters ever quote Lev 25:1-7 which says that every seven years, the people were given a break from tithing?

  4. The Ayn Rand Institute – When I originally started banning my friends’ updates on Facebook because they were posting slanted political stories, it was inspired because I think that my friends on the left are very “in your face” with their political opinions.  I blocked 17 people – 15 on the left and 2 on the right.  Not much balance there.

    The left absolutely hates Charles and David Koch, two brothers who made a lot of money in the oil industry.  They hate them more than an SUV with one driver.  Anyhow, these two give money to a lot of causes, including Republican candidates.  But they also give to many different charitable organizations and the size of their donations to these causes greatly exceeds their political contributions.

    However, the political left still villainizes them.  They ignore all of the causes they give to that they would like and fixate on a minority position.  This irks me.  Rather than focusing on the things they agree with, they demonize them for the small things.  When I saw that going on, it cemented the fact that it doesn’t matter what you do, even a bunch of good things people will still find something about you to criticize.

    That is my inspiration for giving to the Ayn Rand Institute.  I don’t agree with everything about Objectivism.  But my giving money to them is my way of protesting the political left’s claim that they are all about tolerance… and then fixating on the small stuff that they won’t tolerate (the left also hates Ayn Rand).

    Neither the left nor the right (well, religious right) would approve of giving money to the Ayn Rand Institute.  It will be a minority position in all of my donations.  But that’s the point.

Those are my causes.  It’s things that I like to support and fit in with my world view.  This way, if I “lose” money by giving to them, I am still doing some good with my money rather than letting it vanish into the ether.

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The cat came back

Myself and my girlfriend were out in Utah and Las Vegas for a week and we wondered what was going to happen to our rental cat.  Would he be fed while we were gone?

Well, we got back to my place and we were there no more than ten minutes when the furball came wandering up to my back door and started to meow.  We let him in, gave him some food and then booted him out because we had to leave to go somewhere.

This cat clearly thinks that this is a place where he can get food (he is correct).  What we normally do is bring him in for a bit and give him some.  After he is finished, he starts to wander around the place and then I harass him for a bit, pat his belly, chase him around, he then bites and/or scratches me, and then I toss him out.  My cats are not allowed to scratch me unless I deserve it.  This one is too skittish because when I pick him up and carry him some place he has been known to scratch me.

He still needs to learn the arbitrary set of rules that cats must abide by at my place.


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As I have said before, there is a gray cat that belongs to one of my neighbors that wanders around the condo complex.  He now frequently sits outside my door or comes wandering around when I get home.  He seems to be hedging his bets because he’s not right outside my door, he’s by the stairs and runs up them (I guess to his real owners) before he figures out that I’m not going there.  I think he believes that if he can’t get into his real place he can get into mine.


If he wants to come in, I usually let him in and give him some food.  He always chows it down and then comes wandering around throughout my place like he owns it and it’s perfectly natural for him to be there.

The problem with the cat is two fold:

  1. He’s not my cat.  He belongs to someone else and I have exchanged emails with her (though she didn’t tell me where she lives, I think it’s right above me).  I’m not going to kidnap someone else’s pet.
  2. He gets too hyper.  He has bitten me a few times, and in the latest incident I was bugging him while he was lying next to me on the couch.  Finally, he decided to take a big bite into me right on my wrist.  He didn’t press down hard and it didn’t hurt much, but we both kind of froze in place staring at each other.  He had his jaws around my arm, me glaring at him.  We held that position for five.  I then swatted his posterior and he jumped off the couch.  Whenever he starts to get into that mood I kick him out of my place.

From my perspective, this arrangement works fine.  He comes to my place, I let him in and harass him for a while, and then when he wants to go out, he leaves.  It’s like renting a cat!  All of the benefits with none of the responsibility!

The thing is that when he jumps next to me on the couch and lies down, I’m never sure if he’s going to start getting rambunctious.  I know he wants to… but I’ll just have to keep bugging him until he learns not to do it.

He’s definitely starting to figure out that he has a temporary home at my place.  I have found him sleeping in his box bed several times at night and a couple of times in the morning.  I’m not sure why his owner lets him out so much, the condo rules say that cats are supposed to remain indoors.

One thing’s for sure – if he thinks he can get away with waltzing into my place and taking over like he owns it, he’s got another thing coming.  My former cat Java can fill him in on a reality check regarding that particular attitude.

The Silly Cat 007


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In my on-going quest to dispute Dave Ramsey’s claim that you can easily get 12% return on the markets over the long term, I have evidence that contradicts what he says.

In order to calculate your return on any investment, you need to calculate the annualized rate of return, not the average rate of return.  The best way to show this is an example.

Let’s say that at the start of Year 1, you invested $1000.  At the end of Year 5, you have $2000.  What is your average yearly rate of return?  Well, $2000-$1000 = $1000.  Divide that by 5 years and you have $200/year.  $200/$1000 = 20% rate of return per year.  Not bad, eh?

Unfortunately, 20% is not your average rate of return.  20% is higher than your actual rate of return.  Here’s why:

Year 1 = 1000, end of year 1 = 1000 + 1000 x 20% = 1020
Year 2 = 1020, end of year 2 = 1020 + 1020 x 20% = 1224
Year 3 = 1224, end of year 3 = 1224 + 1224 x 20% = 1464.80 ~ 1465
Year 4 = 1465, end of year 4 = 1465 + 1465 x 20% = 1758
Year 5 = 1758, end of year 5 = 1758 + 1758 x 20% = 2109.60 ~ 2110

What the?  A 20% average yearly return is $110 more what you actually ended up with!  How’d that happen?  It happens because the 20% return is on the amount you have at the end of the year which goes up every year, not on the original $1000.  Therefore, calculating your total return and then dividing by the time frame is not how to calculate your average return.

What about taking the average return per year?  Let’s suppose your money doubles, then splits in half (i.e., loses half its value), and repeats, and then is flat in year 5:

Year 1 = 1000, end of year 1 = 1000 + 1000 x 100% = 2000
Year 2 = 2000, end of year 2 = 2000 + 2000 x -50% = 1000
Year 3 = 1000, end of year 3 = 1000 + 1000 x 100% = 2000
Year 4 = 2000, end of year 4 = 2000 + 2000 x -50% = 1000
Year 5 = 1000, end of year 5 = 1000 + 1000 x 0% = 1000

The average rate of return is (100 + (-50) + 100 + (-50) + 0)/5 = 20% average return.  Yet at the end of five years, with this supposed 20% average return, you have the exact same amount of money you ended up with!  This is wrong because averaging out the yearly returns does not reflect your actual end value if you were to invest that amount at the start.  The numbers do not work that way.  Unfortunately, it’s also how many mutual funds report their average annual returns.

How do you calculate your average rate of return?

The answer is you have to use mathematics in order to calculate the annualized rate of return, which is the correct one.  The formula for future value, given the present value, the rate of return (or interest) and time is the following:

Future Value = Present Value x (1 + rate)time

That’s how interest on your house is calculated, or how much a savings bond will be worth.  If a bond gets 3% interest, and it matures in 10 years, then $100 now will be worth $134 then.

To calculate the rate of return, you need to use that formula and then rearrange it using the skills you learned in 10th grade math:

rate = 10 (log10(future value/present value)/time) – 1

[I am using log base 10, but you could use a natural log or any logarithm value]

In our example above, the future value is 2000, the present value is 1000, and the time is 5 years.  Therefore, plugging in those numbers above, the rate of return is 14.86%.  Does this work out if we do the math manually?

Year 1 = 1000, end of year 1 = 1000 + 1000 x 14.86% = 1148.70
Year 2 = 1148.60, end of year 2 = 1148.60 + 1148.60 x 14.86% = 1319.51
Year 3 = 1319.28, end of year 3 = 1319.28 + 1319.28 x 14.86% = 1515.72
Year 4 = 1515.33, end of year 4 = 1515.33 + 1515.33 x 14.86% = 1741.10
Year 5 = 1740.50, end of year 5 = 1740.50 + 1740.50 x 14.86% = 2000.00

What do you know, the numbers match exactly the way they have to match up.  Thus, when we are looking for the stock market’s historical rate of return we have to use the annualized rate of return, not the average rate of return.

And that brings me to Dave Ramsey.  In his book The Total Money Makeover, on page xv, he says that “this book is NOT going to mislead you on investment returns.”  He goes on to say the following:

Sadly, many intelligent but ignorant people seem to think that making a 12% rate of return on your money in a long term investment is impossible.  And that if I state that there is a 12% rate of return available, then I have lied to you or misled you.

The supporting data for that bold statement can be found by looking at the historical averages of the S&P 500 index.  Widely regarded as the best single gauge of the US equities market, the is an index with 500 of the largest companies in leading industries of the US economy.  The S&P 500 has averaged 11.67 percent per year for the last eighty years, as of this writing.  This includes the big drop in the 2008 market.

This book was published in 2009, so I am going to give Ramsey the benefit of the doubt and give him the year 2010 as well to include in the stock market average return.  He is definitely correct, the S&P 500 is the best gauge of the US equities market.  Anyone can go and verify his claim that the S&P has averaged 11.67 percent per year.

That’s what I did, I took the returns from the past 85 years.  And you know what?  He’s right.  I went back to this page, got the historical returns for the S&P 500 and plugged them into Excel and calculated the average returns.  The result, including 2010, is 11.87%, just what Ramsey claims.  So I guess I should shut up.


But no!  I will not shut up!  As I demonstrated above, the average rate of return is not the rate of return that matters, it is the annualized rate of return!  Just like from the example above, if you invest into a fund that averages 11.87%, that doesn’t mean you can expect to get that.

How much is the annualized rate of return of the S&P 500 since 1925?  It is 9.9%, nearly 2% less than Dave Ramsey claims it is (you can verify yourself by going to this page).  Well, well, well.

When Ramsey says that the S&P is averaging 11.67% per year, he is quoting the average rate of return.  However, he should be quoting the annualized rate of return of 9.9% because that’s what an investor can expect to make each year going forward.  It’s like saying to someone that Canada has the world’s longest coast line.  It’s true… but irrelevant.  He does explicitly state that he is not going to mislead the reader about investment returns.  By quoting the average rate of return and not the annualized rate of return, that is misleading.  After all, in all of his examples he says that you should take your money and put it into a good growth mutual fund getting 12% and then his examples are based upon a 12% return.  Yet as we can see above, the 12% average return is not representative of what someone could expect to get in real life.

Numbers do not lie.  You can plug it into your own spreadsheet and do the math for yourself.  In order to get an annualized return of 12% per year, a mutual fund manager would have to outperform the market by 2% each year.  That’s incredibly difficult to do over the long term.

I think I am going to write Dave Ramsey a letter and see what he says.

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Got my taxes finished

Well, I finally got around to getting my taxes done today.  Every year I say to myself “I’m going to get them done early this year!” and each year I wait until the first or second week in April to get everything complete. 

Others like to get theirs done early, but I can’t get them done before mid-February because my online brokerages don’t send me the right forms until then.  Furthermore, I like to space out extra money.  I get an annual bonus from my employer in September, and six months later I like to get my tax refund.  If I do my taxes earlier, then I have to wait longer between little bursts of unexpected income.  I like to space it apart.

Anyhow, my taxes took my accountant four hours to complete.  I was there at their office today getting it all sorted out and answered a few questions (I had already been there twice before for an hour and a half each time).  Finally, she pressed some buttons and prepared to show me my refund.

She turned the screen and showed me the number.  I literally said out loud “Holy sh*t.”

I’m not going to disclose the number, but it’s the biggest I have ever gotten by a long shot.  The reason it is so high is because I lost so much money on my rental condo last year, and I also had a bad year in stock trading (I’m a horrible options trader and my stock picks were almost as pathetic).  Ergo, I got to write off a lot of my income to capital losses.  Because I did that, my taxable income was a lot lower than what the government thought it was, and that means I overpaid my federal income taxes.  That entitled me to a bigger than average refund.

While the refund is nice, I’d much prefer to not lose any money at all on the market or in my rental property.  A tax refund because of a loss is like giving the government $4 and they give you back $1.  Sure, the $1 feels nice but you’re still out $3.  I’d prefer to give the government $2 and get back nothing.

Next year I will have a much smaller refund because I am no longer renting out the condo.  I will be losing at least $10,000 in deductions which translates to a $2500 smaller refund.  But do the math there – it means that I am saving $7500.  I’ll take that any day.

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The idea that humanity evolved from the same common ancestors as apes (technically, we all evolved from common ancestors even further back than that) is not well accepted today in many conservative Christian circles.  Within that camp, there are a couple of positions that attempt to reconcile the theory of evolution with the creation account that is told in the book of Genesis:

  1. The theory of evolution is totally incorrect.  All of the evidence that support human evolution is either fabricated or misinterpreted, intentionally or not.

    The problem with this position is that it is scientifically untenable.  The vast mountain of evidence is that the earth is very old and that we evolved.  Science is not a random process, if there is anything that we can be sure about, it is that the earth is old and that we evolved.  It is the theory of evolution in the sense that there is a theory of relativity.

    We trust science for electricity, physics, chemistry, and biology.  It is to be trusted in geology and paleontology, also.

  2. The theory of evolution is correct and can be harmonized with the Genesis account.  One way this is done is by stretching the days in Genesis.  Each “day” is really a period of time.  When God creates the heavens and earth on the first day (i.e., the earth and the sky? Hard to say that it would be the stars since the earth is a star and was created on day four), that really took thousands or millions of years until day two when he made the land between the waters below and above.  Each day may be of varying length.

    Another position is the gap theory wherein there is an undisclosed period of time between Genesis 1:1 (when the earth was created) and Genesis 1:2 (when light was created) and in this period of time, evolution of the earth’s land masses was taking place and this process took billions of years.

    The problem with either of these two positions is that it forces the reader to interpret the passages in unnatural ways.  The passage reads that God created on six days, there was evening and then there was morning.  Taken that way, there’s no room for long spaces of time nor large gaps.  It’s obvious that the writer means them to be sequential and other writers assumed the same thing (Israelites work six days because God worked six days).  Furthermore, the order of creation contradicts what we know from science (sun on day 4 vs earth on day 1 is backwards, creating light before creating the sun).

    This doesn’t work either.

What do we do?  The key is to stop interpreting the story of Genesis as a literal history.  It is not a timeline of events.  It is the Israelites way of telling the reader that God intentionally created the earth.

Other cultures at the time had their own creation myths.  One was that the ancient gods were at war with one another and in their cosmic battles, accidentally created the earth.  Others postulated that the earth was supported by some sort of large creature.  By contrast, the Jewish creation story states that created the earth deliberately, not accidentally.  It also states that God created order out of chaos, not chaos out of order like the other gods.  Thus, we should better understand that the creation story makes a theological point, not that it is scientifically accurate because it is not scientifically accurate. 

That’s the way to harmonize science and religion.

Of course, reconciling science and religion becomes a bit more difficult later on in the New Testament.  Sometimes when pastors answer the question “Why is there so much evil in the world?” they reply that it wasn’t originally this way.  The world was originally created very good and fell into decay.  Furthermore, quote Paul in Romans 8:19-21:

For the earnest expectation of the creation eagerly waits for the revealing of the sons of God.  For the creation was subjected to futility, not willingly, but because of Him who subjected it in hope; because the creation itself also will be delivered from the bondage of corruption into the glorious liberty of the children of God.

I don’t know about you but I find that passage really hard to read.  The way most Christian speakers or writers quote it, they are saying that the creation was originally good.  Because of humans, it became a broken world and God did not intend for it to be this way.  It was not his original plan.  But fear not!  God will restore it to its rightful place, the way it was in the beginning.

The problem with this interpretation – claiming that the earth was originally good – is definitely at odds with science.  We know from natural history that death was a part of the earth long before man ever appeared.  From the time the first animals appear several hundred million years ago, animals were living and dying, living and dying.  Disease occurred.  Mass extinction events wiped out 75% of the species on earth and this has occurred multiple times in our planet’s history.  To say that the earth was created good is not reflective of reality because what the earth is like now is representative of its beginnings.

Ironically enough, in the book of Job, God appears to answer all of Job’s complaints and never answers it.  He describes all of the work of his creation and leaves humanity out of it.  He doesn’t say that life is fair or that everyone will be repaid.  He just says that He does his thing and that’s all there is to it.  It’s not a particularly reassuring speech but it definitely dovetails better with what we know about the history of the earth than saying it was originally good.

How do we resolve this problem?

I’ll leave that as an exercise to the reader.  Because I can’t.  But am I worried?  Not particularly, because the church has been around a long time and while they have been slow to respond to technological innovation, they get around to it eventually.  They will no doubt do the same with this.

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