Book Review: Just Do Something

. August 28, 2011

In this little book, Kevin DeYoung addresses a big problem: the tendency to remain paralyzed by indecision because we can't figure out what God wants us to do.

We can live without total peace about the future. Even though we don't know what's going to happen, God is in control. He's already revealed what we ought to do: live by His Word, which is given to us in the Scriptures.

Quoting both cessationist and Pentecostal scholars, he shows that the two groups have a lot in common. Both acknowledge that God can work in miraculous ways, but those miracles are rare times when God wants to communicate with us in a special way. We make the vast majority of our decisions through God-given wisdom, not supernatural surprises: and when those surprises do occur, they never take precedence over Scripture.

My favorite part of the book is the last two chapters. Major decisions can be a lot less agonizing than most of us think. DeYoung provides a four-step process: Search the Scriptures for wisdom, get wise counsel, pray, and then make a decision. He then tells the story of his grandfather, who like others of his generation lived through the Depression and didn't have unrealistic expectations out of life. Here are a few quotes from the final chapter of Just Do Something:

[Grandpa Van] got a full-time job building church furniture during the Great Depression for the princely wage of forty cents an hour. "We were rich," Grandpa told me.

Within a few years, Grandpa owned and operated several service stations in town. He was only twenty or twenty-one at the time - the age most "kids" today are still playing video games, sneaking off to parties, and trying to "find" themselves. In talking with my grandpa about his life, I asked whether he wrestled with God's will, or remembered waiting for a sense of direction before taking so much initiative in life as a young man. "No," he said. "I felt like God was waiting for me to get involved." I wonder how many of us are just the opposite - waiting for God to tell us what to do rather than assuming He's waiting for us to go out and be obedient....

Not long ago I asked my grandpa, "Is there anything you think younger generations of Christians have lost that your generation understood?"

"Oh, yes," he said quietly.

"Like what, Grandpa?"

He thought for a moment. When he opened his mouth, he didn't answer the question directly, but I got his point, and it was a good one. "I started with nothing," he stated. "What right did I have to hope for all these things that fell into place? Hard work, sure, but I knew it was from God."
I've seen a lot of Christians, including grown men past middle age, agonize over decisions and never come to peace about what they should do. This indecision has hurt not only them, but those under their leadership waiting for something to happen. Kevin DeYoung has taken some bold and needed steps to bring Scripture to bear on these situations. The book is worth reading if only so we can recognize these situations better and do something about them.

I'll leave you with an excerpt from the back cover.
Hyper-spiritual approaches to finding God's will don't work. It's time to try something new: give up.

Pastor and author Kevin DeYoung counsels Christians to settle down, make choices, and do the hard work of seeing those choices through.

Too often, he writes, God's people tinker around with churches, jobs, and relationships, worrying that they haven't found God's perfect will for their lives. Or - even worse - they do absolutely nothing, stuck in a frustrated state of paralyzed indecision, waiting... waiting... waiting for clear, direct, unmistakable direction.

But God doesn't need to tell us what to do at each fork in the road. He's already revealed His plan for our lives: to love Him with our whole hearts, to obey His Word, and after that, to do what we like.

No need for hocus-pocus. No reason to be directionally-challenged. Just do something.

Getting Beyond the Efficient Market Hypothesis

. August 27, 2011

If you're beginning to question the efficient market hypothesis and the buy-and-hold investing style it engenders, here are some links to whet your appetite for further research. They're organized from tame (Eugene Fama) to positively frightening (irrationally mispriced options).

"Markets are Efficient, but Investors are Under-Diversified"

Eugene Fama, the father of the efficient market hypothesis, promotes maximum diversification. (I do too, but I go further than that.)

Fama is skeptical of active management, but he's convinced that the value and small-cap effects are real, as well as the benefit of diversifying into asset classes other than just U.S. stocks and bonds. By this measure, most investors are under-diversified.

He's on the board of the Dimensional family of mutual funds.

Eugene Fama's Bio at Dimensional 

"Trading Strategies Work Better than Buy-and-Hold"

This paper applies portfolio management to trading strategies instead of stocks and bonds. There are real risks that the paper doesn't deal with, especially tail risk, but it does point out that there is more diversification in trading strategies than in traditional asset classes.

Portfolio of Risk Premia

"Trading Strategies Work, and Normal People Can Use Them" 

Some trading strategies have become so easy to apply that they are now asset classes in their own right, with diversification benefits that are realistic for small traders to access.

The Betafication of Alpha

S&P Makes the News... with a Trend-Following Index 

"Investors Irrationally Overpay for Protection Against Crashes"

The Crash of 1987
People overpay for the protection afforded by index options. This is inconsistent with their high exposure to stocks and lack of diversification.

This first summary is dated and doesn't have any major bear markets. It does, however, include the crash of 1987. The paper itself is an interesting read.

Why are Put Options So Expensive?

The second summary includes the dot-com crash. The two underlying papers include an interesting analysis of tail ("jump") risk as well as investor risk-aversion and whether these justify high option prices.

Abnormal Returns from Selling Index Put Options?

The third article looks at the Japanese Nikkei index, which has been in a secular bear market for the entire (short) period of the study. The results are surprising.

Scandalously profitable option selling on the Nikkei 225
What Now?

I use some of the strategies mentioned in the papers and articles above. However, you don't have to do this level of research to be moderately successful. Start with momentum.

Great Reads: What a Down Trend Looks Like

. August 21, 2011

Trading and Investing

Diversify across strategies, not just asset classes. (SSRN)

Long-term moving averages confirm downward market trends. (ETF Replay)

Are stocks cheap? Bonds expensive? Both? Neither? (Reuters)
Growth is stalling in the core of Europe. (Reformed Broker)

Detroit is an example of why "rent vs. buy" math is too simplistic. (Barry Ritholtz)

An insightful list of trading positions that have short gamma. (Surly Trader)

Someone's smart. Doesn't mean he should run a fund. (Reformed Broker)

Michael Lewis on the Euro zone crisis: an interesting read. (Vanity Fair)


Another person unprepared for his interview. (Dilbert)


Wall Street stampede. (Reformed Broker)

"Thank goodness we fought foreclosure." (Surly Trader)

The "work from home" experiment. (Dilbert)
Plan. (Dilbert)
Intuition. (Dilbert)

Mathematics. (Abstruse Goose)

So hard to find. (This Is Indexed)
Et, tu, Brute? (This Is Indexed)

Just for Laughs Gags. This channel should win an award. (YouTube)


John Piper: Do something risky with your life.

Book: The Monk and the Riddle

. August 17, 2011

Since 80% or more of businesses fail, does it make sense to put your life on hold to make it big? Or is it better to find meaningful work that resonates with your values, helps others, and satisfies the soul?

This answer is not what I expected from the former CEO of LucasArts.

Here are some quotes from The Monk and the Riddle. You figure out the rest.

When we first left Mount Popa, I wanted nothing more than to get to my destination, but now I don't have the slightest desire for this trip to end. (p. 6)

There's nothing wrong with cashing out and making a lot of money - unless those 'other things' you intend to get to are what you'd rather be doing all along. My experience tells me if you do this for the money, you'll just end up howling at the moon. The money's never there until it's there. There must be something more, a purpose that will sustain you when things look bleakest. Something worthy of the immense time and energy you will spend on this, even if it fails. (p. 48)

I can't muster the energy for a company whose founders never hope to accomplish anything more than making some bucks. By setting your expectations low, you almost guarantee mediocrity. (p.49)

Business isn't primarily a financial institution. It's a creative institution. Like painting and sculpting, business can be a venue for personal expression and artistry, at its heart more like a canvas than a spreadsheet. Why? Because business is about change. Nothing stands still. Markets change, products evolve, competitors move into the neighborhood, employees come and go... Business is one of the last remaining social institutions to help us manage and cope with change. (p. 55)

Deferring your life on the chance that [you'll] hit it big is a huge gamble. The high odds of failure don't justify betting it will buy you the freedom you want. The course of your life and the course of [your business] are not unrelated. Figure out what you care about and do that. If you can do it in the context of [this particular business idea], do it from the start. Don't concern yourself with exit strategies.
At key points in my life, I've found it helpful to ask myself a simple question about what I was doing at that moment:
What would it take for you to be willing to spend the rest of your life on [this idea]? (p. 77)

Riding the highs and lows long enough, never being able to see beyond the next peak or the next valley, makes one realize there is only one element in life under our control - our own excellence.
Here's what I tell the founders in the companies I work with about business risk and success: If you're brilliant, 15 to 20 percent of the risk is removed. If you work twenty-four hours a day, another 15 to 20 percent of the risk is removed. The remaining 60 to 70 percent of business risk will be completely out of your control. (p.152)

If you're excellent at what you do and the stars are in alignment, you will win. Of course, you may run out of time first, but if you're excellent every day, you will have furthered your chances of beating the house as much as they ever can be. That should be your primary measure of success - excellence - not simply the spoils that come with good fortune. You don't want to entrust your satisfaction and sense of fulfillment to circumstances outside your control. Instead, base them on the quality of what you do and who you are, not the success of your business per se. Unless you understand what is truly outside your control, you are likely to make serious mistakes, misallocate resources, and waste time. (p. 153)

When I drill down, I inevitably find personal risks that need to be considered along with the business risks. Personal risks include the risk of working with people you don't respect; the risk of working for a company whose values are inconsistent with your own; the risk of compromising what's important; the risk of doing something you don't care about; and the risk of doing something that fails to express - or even contradicts - who you are. And then there is the most dangerous risk of all - the risk of spending your life not doing what you want on the bet you can buy yourself the freedom to do it later...
[Personal risk as opposed to business risk is] a different game of chance in which we have far more control. (p. 154)

Considering personal risk forces us to define personal success. We may well discover that the business failure we avoid and the business success we strive for do not lead us to personal success at all. Most of us have inherited notions of 'success' from someone else or have arrived at these notions by facing a seemingly endless line of hurdles extending from grade school through college and into our careers. We constantly judge ourselves against criteria that others have set and rank ourselves against others in their game. Personal goals, on the other hand, leave us on our own, without this habit of useless measurement and comparison. (p. 155)

If your life were to end suddenly and unexpectedly tomorrow, would you be able to say you've been doing what you truly care about today? (p. 156)

When all is said and done, the journey is the reward. There is nothing else. Reaching the end is, well, the end. (p. 173)

Great Reads: Leadership Links

. August 13, 2011


Strong leadership makes enemies. Deal with it. (Reformed Broker)

Are you giving up a relationship with your audience? (Seth Godin)

Wasting time poorly is not wasting time productively. Get it? (Seth Godin)

16 harsh truths that make us stronger. (Chess 'n Wine)

Trading and Investing 

Economists tend to be late in forecasting recessions. (Reformed Broker)

The world economy is overleveraged: too much debt. (Aleph Blog)

High volatility is associated with bear market bottoms. (Aleph Blog)

Affordable Living

Use PriceLine to save money when you travel. (CNN)

Marriage and Family

This is the next step away from the traditional family. (Boundless Line)

Thoughts from a new husband. (Boundless Line)


Averages don't always tell you what's really important. (xkcd)

Beautiful people are lonely. (Softer World)

Arsenic or aspirin? (This Is Indexed)

This is Indexed on unrealistic goals:

Is God Everything You Need? (trick question)


You have big dreams: Missions, or perhaps homeschooling or Christian schools for your kids.

Saving money, investing, and using the income to fund your dreams seems like an awfully human way to get there. Does relying on your investments reflect a lack of trust in God?

Let's draw some finer distinctions.

Something can be hyperbole in one sense and not in another. For example, the statement "You are everything to me" may be true in a romantic sense without implying that one's significant other is literally a source of food.

Similarly, saying that "God is everything" is hyperbolic in one sense: God is not literally our food. In another sense, it isn't: God is provider of the things we need, which glorifies Him as the Giver.

Is it possible to trust God and yet rely on the gifts He gives us? Take a look at Proverbs 31 (emphases mine):

10 An excellent wife, who can find?
For her worth is far above jewels.
11 The heart of her husband trusts in her,
And he will have no lack of gain.

 16 She considers a field and buys it;
From her earnings she plants a vineyard.

17 She girds herself with strength
And makes her arms strong.

25 Strength and dignity are her clothing,
And she smiles at the future.

30 Charm is deceitful and beauty is vain,
But a woman who fears the LORD, she shall be praised.
31 Give her the product of her hands,
And let her works praise her in the gates. 
Don't over-simplify. That tends to be a good hermeneutical rule.

How to Beat an Efficient Market


Imagine a perfectly efficient market. In this world, no human manager will consistently beat a properly diversified portfolio over time.

Even if the real-life market were efficient, and I don't think is is, you can still beat it. The key is in how people define the word market.

My Argument with a Stock Broker

Eugene Fama (left), father of 
the efficient market hypothesis
I recently had to attend one of those meetings where a financial company presents portfolios that are supposedly optimized for your age. It was the usual pitch about how most of your money should be in stocks when you're young and bonds when you're older.

I raised my hand and asked if there were ways to capture value from strategies other than buying and holding stocks: for example, momentum and volatility arbitrage. The speaker started saying how this was a very aggressive approach to investing when I interrupted and asked, "How is it aggressive? These strategies are not correlated with the S&P 500."

He said, "Yes, they are." And that was the end of my opportunity to ask questions.

Talking to him afterward, I found out why he thinks my strategies are aggressive. None of the funds his company offers has significant short exposure to the market. There is no protection for their 'optimized' portfolios when the market goes down.

Why don't they offer a broader array of funds? His said that investors will misunderstand and misuse the funds. Rather than risk getting sued, his company prefers to not offer the funds at all.

This is perfectly rational from their point of view. It would hurt both the company and their clients if they were sued. It's better to offer the same underperforming products as everyone else. If the market crashes and everyone loses money at the same time, they can chalk it up to bad luck.

Managers Can Best Each Other

Now consider an efficient market. There will be some benefit to having exposure to trading strategies as well as stocks, bonds, real estate, and commodities. There will be an ideal, perfectly diversified portfolio that a human manager will not be able to add any value to. But a manager can still add value relative to another manager if the other manager is not diversified enough.

I've written previously about a long-short momentum strategy that not only makes money when the market goes down, it has zero correlation with the S&P 500. The stock broker described earlier thinks momentum is risky because his company's philosophy doesn't allow him to go short. If he tries to trade momentum, he has no way to protect his clients if the broad market goes down. In other words,

"Since all the strategies we're allowed to use are risky, your strategies must be risky, too."

Most managers you meet will be like this. Because they're scared of being different from everyone else and consequently getting sued if something goes wrong, they're going to put you in 50% U.S. stocks, with most of the rest in U.S. bonds, with small slivers of exposure to international stocks, real estate trusts, and commodities.

Even from the point of view of a buy-and-hold investor, this is under-diversification. Real estate investment trusts have historically not been strongly correlated to stocks. Commodities have had zero correlation to stocks. Why don't they comprise a larger portion of the 'optimized' portfolio?

Be Willing to Diversify

You can best the vast majority of money managers simply because you're willing to diversify across asset classes and trading strategies. You can beat the market simply because the industry has conveniently defined the 'market' as the S&P 500, which is an under-diversified index of large-capitalization American stocks.

Mebane Faber's portfolio beats the 'market' because it diversifies in two ways most people don't:
  • into more assets (commodities and real estate investment trusts as well as stocks and bonds), and
  • into a momentum-based trend-following strategy.
His book, The Ivy Portfolio, is worth reading.

This post was inspired by Jez Liberty's read-worthy blog post about a new S&P trend-following index. The comments section has an interesting discussion about whether human trend-following traders still add any value if investors can access trend-following strategies through well-known formulas.

Trading as an Insurance Policy


When I explain trading to people, most shudder. "Isn't that kind of risky?"

My answer is that it's not. Just as an insurance policy protects you from some kinds of risk, a good trading strategy protects you from the risk of a recession.

You buy fire insurance or life insurance to protect your family from potentially devastating events. Good traders thinks the same way. Not only do we try to protect our portfolios from damage in case something really bad happens, we want our portfolios to protect our families.

Insurance for a Poor Economy

Can you buy insurance for a decline in housing prices? What if you work for a high-tech firm, and you want to buy protection from an industry collapse like the one that happened in 2000-2002?

If you're a trader, you can. Stocks have momentum, which is the tendency to keep moving in the same direction once they've gotten started. If you're invested in the stock market and prices drop, you can use momentum to sell out and protect your portfolio in case the economy takes a downturn. This leaves you a load of cash if your home declines in value or you lose your job in the tech sector.

Mebane Faber describes the strategy in detail in his book, The Ivy Portfolio.

Making Money During Recessions

You can be even more contrarian and short the market, which is a way to make money when stocks go down. Faber briefly describes this approach in his book.

Shorting typically has poor returns, since stock markets tend to go up over time. But when you combine shorting with momentum, something remarkable happens. Returns go down a little bit, and the strategy's volatility goes up, but its correlation with the stock market goes to zero.

That is, the long-short momentum strategy does not have a tendency to lose money when the stock market as a whole loses money. During large stock market declines like 2000-2 and 2007-9, the long-short strategy actually makes money.

You exchange higher average returns for the ability to receive money when you most need it: when your house goes down in value or when you're about to lose your job. And even though the long-short strategy has lower returns than the original strategy that doesn't short, both strategies still have higher volatility-adjusted returns than an S&P 500 index fund.

Is it risky to trade your money, do better than the market, and protect yourself during recessions? Most people don't realize that you can ask the question that way. That's why it's possible to do better.

This post was inspired by a read-worthy blog entry at Empirical Finance titled Why Growth Stocks are Awesome. Reformed Trader doesn't really think growth stocks are awesome, and neither does Empirical Finance. Click through to find out why.

Great Reads: Where are the Jobs?

. August 11, 2011


Want a job? Move to Oklahoma City. (NewsOK)
Office buildings are filling up in Oklahoma City. (NewsOK)

Create something, release it, and see what happens. (Seth Godin)
Adding one step makes all the difference. (Strategic Learner)
Just because you can do something doesn't mean you should. (Seth Godin)

Trading and Investing

Bottoms can take time to finish forming. (Option Pit)

VIX backwardation is not sustainable. (VIX and More)

There's a new trend-following index. (Jez Liberty)


One giant leap. (Abstruse Goose)
Board games. (PBF Comics)

The Golden Ticket. (PBF Comics)
Memorabilia. (PBF Comics)

Chess, anyone? (xkcd)
Are we there yet? (xkcd)

xkcd: Alternate Currency

Book Review: Jonathan Goforth, An Open Door in China


The best children's books are more fun to read as you get older. We relate to them more as our wisdom grows. When our children read these books, we impart a bit of that wisdom to them.

The neat thing about this particular biography, published for children by Youth with a Mission, is that the book isn't a chore to read. The writing style isn't particularly engaging, but it doesn't impede, either, which allows Jonathan and Rosalid Goforths' fascinating story to tell itself.

The Goforths' sacrifice, bravery, and vision helped open up the China's interior to mission work in the era of the Boxer rebellion. There's more to life than air-conditioned living rooms and cable television.

Like other children's books, the length and style are actually a plus. You can finish books like this in a day and think quietly about how God might be shaping your life.

Here's an excerpt from the back cover.

"What would make you come back?" the Chinese people asked. "What is so important that you would risk your life to tell us?" Jonathan eagerly explained to them what had brought him back to China, even after so many foreigners had been killed: the need to share the gospel.

As a poor Canadian farm boy, Jonathan Goforth had no idea that he would spend most of his life braving disaster, danger, and disease to share God's love with the people of China. But when God led him to do just that, nothing, not even the violent Boxer Rebellion, would stop Jonathan and his family from answering God's call.

Making their home in China, the Goforths opened their doors to as many as five thousand visitors a month, all of whom heard the gospel message. Their nearly fifty years of service to a nation in need would leave behind a legacy of many thousands of Chinese Christians.
 Disclosure: No missionaries were harmed in the making of this review.

Obedience and Salvation


Some people seem to confuse obedience as evidence of salvation with obedience as the cause of salvation. This is an example of a more general logical error that mixes up correlation and causation.

A picture is worth a thousand words:

xkcd: Correlation

xkcd: Cell Phones

This entry is a response to Fabs Harford's read-worthy blog post titled  
Obedience: An unfortunate casualty of the 'gospel'

Great Reads: Market Smackdown

. August 9, 2011

Trading and Investing

Buy-and-hold strategies give you nowhere to hide. (Empirical Finance)
All market sectors are down, some more than others. (Reformed Broker)

Reasons not to buy cap-weighted indexes like the S&P 500. (Mebane Faber)

Experts aren't good at forecasting. Ignore what you hear on TV. (Mebane Faber)

How much does the options market expect the S&P to move? (VIX and More)
Options are insanely expensive right now. (Option Pit)

Fact and fiction about the results of the debt downgrade. (Reformed Broker)
Ratings agencies have a tough job. Look at markets, not ratings. (Aleph Blog)

Redacted Version of the August 2011 FOMC Statement. (Aleph Blog)


He took well-thought-out risks to save the lives of his men. (Art of Manliness)

Creativity just reassembles elements that are already known. (Seth Godin)
It's easy today to create content, not just consume it. (Seth Godin)

Advice for a college-bound daughter. (No Regrets)

Here's a way to save backups of your blog posts. (Labnol)

Don't just argue. Deal with things. (Abstruse Goose)

Don't be like this in your next interview. (Abstruse Goose)

Walking with God

Practicing integrity in everyday communication. (Boundless Line)

Charity is a great bargain for the giver. (Seth Godin)

Marriage and Family

The "honeymoon period" doesn't have to end. (Art of Manliness)


Aragorn. (Abstruse Goose)

The Dow tanks. (SurlyTrader)
Brokers With Their Hands On Their Faces Blog. (Tumblr)
Smurfs are no longer welcome on Wall Street. (Reformed Broker)

From Abstruse Goose:

How to Trade Without Picking Stocks


There are very few stock pickers who beat automated trading strategies.

Even if you're really good, picking stocks takes work, so you'll be under-diversified, owning only a few names. With automated trading strategies, the computer does the work for you. This makes it easy to diversify. Unfortunately, some people want the volatility of having only a few stocks, as if large price movements could only exist when the market goes up.

Why Volatility Matters

Let's say that the S&P 500 returned 9% during the period you were picking stocks, and you got a return of 11%. It may look like you beat the market, but if the volatility of your portfolio was double that of the market, the market actually beat you.

Think about that for a minute. Why would someone hire you to pick stocks when he could just leverage 2:1 into the S&P 500 and get a higher return than you with the same volatility? If no one in his right mind would hire you to manage money, why do you hire yourself?

The Evidence

This article at Empirical Finance compares a stock-picker's value fund with two automated strategies. Here are some excerpts:

There ARE definitely some good stock pickers out in the market, but on average, it seems that “good stock pickers” are few and far between when you really analyze their performance over good AND bad cycles. Or as Buffett says, “There are a lot of people swimming naked [when things go wrong].” As a benchmark to assess true “value-add,” I personally like to look at how a manager stacks up against very plain-vanilla (and tradeable) quantitative value models.

First, let’s break down the the theoretical cost and benefits of a stock-picker versus a computer stock-picker (“quant-picker”):
  • Stock-picker Benefit: a concentrated portfolio of names where the manager has high conviction and potentially high alpha.
  • Stock-picker Cost: The downside of this stock-picker is limited diversification.
  • Quant-picker Benefit: Decent alpha and diversification.
  • Quant-picker Cost:  A “shotgun” research approach versus the very precise “sniper” fire research done by stock-pickers.
In the end, theorizing about whether a stock-picker (“they overcome diversification because they are so good at picking stocks”) is better or a quant-picker (“they overcome mediocre alpha by keeping costs low and being systematic”) is better, makes for a great cocktail discussion, but to get the actual answer, we can simply look at data....

While it is true that the Value Trust beat the SP 500 for 15 straight years, it didn’t really add much in terms of CAGR relative to very plain vanilla quantitative value strategies that also did exceptionally well...

Conclusion: ~tie between stock-pickers and quant-pickers during a good market....

Next, let’s look at what happens when the tide goes out to sea in 2008.

When things go bust, the quant-pickers get rocked and the stock-pickers get rocked–all beta gets rocked! However, the stock-pickers are back to SP 500 levels, whereas, quant-pickers are still way above the market. Also, following the tide washing out to sea, when the surf came back in (2009-2010), the quant-pickers carried on with their winning ways against the stock-pickers.

Conclusion: UGLY. Quant-pickers beat stock-pickers on near every dimension I can imagine.
The entire article, including charts and graphs, is worth reading here.

If you haven't thought about using trading strategies before, read this.

How to Memorize Scripture Quickly


A while back, I memorized Psalms 66-67, James 1-2, 1 Corinthians 13, and Romans 1-10. I also did part of John 1 in the original Greek, a language that has since become dead to me.

The fastest way to memorize is to copy down the first letter of every word and practice reciting the passage. Look at the original text only when you get stumped. Here's what Romans 8 looks like when you do this:

Romans 8 (NASB)

1 T t i n n c f t w a i C J. 2 F t l o t S o l i C J h s y f f t l o s a o d. 3 F w t L c n d, w a i w t t f, G d: s H o S i t l o s f a a a o f s, H c s i t f, 4 s t t r o t L m b f i u, w d n w a t t f b a t t S. 5 F t w a a t t f s t m o t t o t f, b t w a a t t S, t t o t S. 6 F t m s o t f i d, b t m s o t S i l a p, 7 b t m s o t f i h t G; f i d n s i t t l o G, f i i n e a t d s, 8 a t w a i t f c p G.

9 H, y a n i t f b i t S, i i t S o G d i y. B i a d n h t S o C, h d n b t H. 10 I C i i y, t t b i d b o s, y t s i a b o r. 11 B i t S o H w r J f t d d i y, H w r C J f t d w a g l t y m b t H S w d i y.
There's even a tool that does the work for you. Click on the link below, paste in a passage of Scripture, and click the Convert button.

Memorization Tool

Look, Ma. No verse numbers!
You can then copy the converted text into Microsoft Word for some editing. Since the tool messes up verse numbers by truncating any number that's more than one digit, you'll have to re-create the numbers if you want to keep them.

You can also get rid of verse numbers altogether by searching for the passage on Bible Gateway, clicking on the Page Options button at the top of the page, and unchecking the Footnotes, Headings, and Verse Numbers boxes. Copy the resulting passage and paste it into the memorization tool.

There are more memorization tips at the Productivity 501 Web site. And if you ever decide to tackle ancient Greek, get a copy of Greek to Me. There are pictures and memory tools there that will make learning the language a lot easier.

This Broadway actor memorized the Gospel of Luke in the King James Version (!). Learn from the master:

Business Cards: Two Cents Each

. August 8, 2011

The Reformed Trader now has business cards!

Business cards are a great way to promote yourself and your Web site. Eventually, you're going to apply for another job. A Web site provides objective evidence that you care about your work. You're the go-to guy online for the field you want to work in.

The online business card wizard at Staples walks you through the process of designing and ordering your cards. The least expensive cards, one color on a white background, are $19.99 for a box of 1000 with free shipping.

Can you afford two cents a card to market yourself?

The Morning After the Downgrade


S&P downgraded U.S. debt this weekend. Where do you think stocks, Treasury bonds, and the dollar are trading this morning?

S&P 500: Down

Long-term Treasury bonds: Up

The dollar: Up


Short-term news usually doesn't move the markets in predictable ways. Most successful traders ignore the news and focus on strategies that have shown some evidence of working. The simplest one I know of is momentum.

Great Reads: Trading. Do You Have What It Takes?

. August 7, 2011

Trading and Investing

Self-screening for aspiring traders. (Carnegie Mellon)

A moving average keeps you out of the most volatile markets. (Mebane Faber)
Stock picking ability alone doesn't protect you in market crashes. (ETF Replay)

Short-term news distracts you from what's really happening. (Reformed Broker)
Academic research isn't as objective as most people think. (Empirical Finance)

Don't over-react to the S&P downgrade. (Aleph Blog)
Six financial bloggers weigh in on the downgrade. (Reformed Broker)
Viewpoints on the loss of the U.S. AAA credit rating. (Reuters)

Living Abroad

This woman retired early and self-funded a retirement abroad. (JetSetCitizen)
Some places have more regulatory freedom than the U.S. (Live Overseas)


When to set your alarm clock. (Seth Godin)

Marriage and Family

When sex is cheap, men have less motivation to succeed. (Slate)
The Pornification of American Culture, Part 2. (Ed Stetzer)

Walking with God

Five ways to help the poor. (He forgot one: industrialization.) (Ed Stetzer)
New research on global evangelicalism. (Ed Stetzer)

Do you really need eight spatulas? (No Regrets)
Great tips for encouraging others. (No Regrets)

This earthly father was a shadow of the heavenly. (Fabs Harford)
A thought on grief. (Fabs Harford)
Eight ways to steal glory from God. (Fabs Harford)


This is a song about a father and his daughter.

Darlene Rose's Testimony

. August 6, 2011

Darlene Rose's testimony changed my life in 1999. It's been a reminder of how God's hand is still present in unspeakable suffering. She knew what joy was.

As a newlywed, Darlene Deobler Rose served as a missionary in New Guinea with her husband from 1938 to 1942. Then, for three years, she was imprisoned by the Japanese during World War II on the island of Celebes (now Sulawesi) and endured almost unspeakable hardships, including solitary confinement, near starvation, beatings and loss of her husband, the Rev. C. Russell Deibler.

(There's also some Darlene Rose MP3 audio here that I haven't listened to yet.)

Less Stuff, More Happiness


Five years ago, I moved halfway across the country. I decided not to ship anything, so I had to squeeze everything I owned into a 2000 Corolla. The only leftover stuff I didn't give away were some books and DVD’s that I left at my parents’ house. (Nope – I haven't read them since.)

I have more now, mostly tools and furniture, but I could still fit everything I own into a tiny 300 square foot apartment. It’s really true: less stuff makes you more happy.

Most of us have more than we think, but we spend constantly to buy small things. What resources could we free up by giving up just one of those things? 

This is a response to a read-worthy blog post titled Less Is More.

Great Reads: Make Money During Market Declines

. August 5, 2011

Trading and Investing

Options get expensive during market declines. (Condor Options)
You don't have to buy options. You can sell them. (Points and Figures)
Make money on market declines while limiting potential losses. (Option Pit)

Expecting another 2008? The next recession may be milder. (Reformed Broker)

Buying something that looks cheap can be a trap. (Mebane Faber)

Dow Theory, based on momentum, has issued a sell signal. (Wall Street Journal)

Market Psychology

It's easy to confuse the today's big thing with the end of the line. (Seth Godin)

Wait long enough, and it will happen. Doesn't mean you should. (No Regrets)


Auguste Rodin's life's work. What was The Thinker thinking about? (Wikipedia)

Download Vern Poythress' books for free. (Frame-Poythress)

Ten People Who Won the Lottery - and Lost It All

. August 4, 2011

"Money is a tool and not the goal." That's easy to say if you don't have enough to live like the rich and famous. But what if you did?

Check out these quotes from an article titled 10 People Who Won the Lottery - Then Lost It All.

Ever dream of winning the lottery? The golden ticket holders on this list might convince you otherwise. Most of them either regret winning the jackpot, or admit it made their lives hell. Let them show you what the lottery could make you lose.

"My life is a shambles and hopefully now it has all gone I can find some happiness. It’s brought me nothing but unhappiness. It’s ruined my life."

"For all the trouble the lottery brought on me, I don’t know whether to be happy I won or sorry I didn’t."

"$100,000 in debt, Proxmire filed for bankruptcy. His wife left him at that time, too, according to this Time Magazine article. Since his business failure, tax payments and bankruptcy settlements have gobbled up most of his annual winnings."

"Post’s brother hired a hit man to kill him, hoping to inherit some money. Other family members persuaded him to invest in two businesses that ultimately failed. Post’s ex-girlfriend sued him for some of the winnings. Post himself was thrown in jail for firing a gun at a bill collector. 
"Over time, Post accumulated so much debt that he had to declare bankruptcy. He now relies on Social Security for income. “Lotteries don’t mean (anything) to me,” he is quoted as saying—after he lost all his money."

"Lee’s philanthropy was expensive. But combined with her gambling habit—she lost $347,000 in a single year—bank loans, and credit card debt, it harkened disaster. She filed Chapter 7 bankruptcy in 2001."

"Welshman Luke Pittard won £1.3 million in a 2006 UK lottery play. He spent a portion of his prize money on a Canary Islands holiday, a wedding, and new house. 
"After only 18 months, however, Pittard felt bored. Early retirement didn’t suit him. So he returned to his previous job—at a Cardiff, Wales McDonald’s restaurant. Back among burgers, he feels much happier, despite the fact that his winnings interest makes him more than his restaurant wage."

"Harrell’s life became too stressful to handle. He divorced his wife. Less than two years after hitting paydirt, he committed suicide. “Winning the lottery is the worst thing that ever happened to me,” he is quoted as saying shortly before his suicide." 
Money is a Test

Money isn't inherently bad. It is, however, a test of your character. (See Deuteronomy 8.)

After winning the lottery, these people lost all of it because they weren't able to handle the heavy responsibility. They were given much and didn't know what to do with it.

Imagine other situations in which people were entrusted with much. King Solomon and his harem of foreign women comes to mind. Or perhaps Simon, who had the privilege of traveling with Philip.

It's not just money. Privileges generally seem to be easy to abuse.

Money isn't everything. It won't make you happy. It won't draw you closer to God. Invested wisely, however, it can help fund your dream of ministry.

We have all been entrusted with the greatest treasure, which is the gospel message. If we make money a tool to serve the One who is greatest, we'll have no motivation to waste it.

Investing or Trading?


What's the difference between investing and trading? The biggest is how often you trade. If you only trade (and pay commissions) once a month, you live almost like an investor does. You can spend most of your time on your calling instead of the markets.

If a strategy trades a maximum of once a month, what I call it depends on the context. It's fair to call it investing if your strategy doesn't take a lot of time to implement. Even some long-term investors will trade once a month in order to rebalance their portfolios.

The reason you would use a once-a-month trading strategy instead of just holding stock is, of course, that you think you can do better than buy-and-hold. There's ample evidence that you can through momentum.

Once a market starts moving, it tends to keep going. That's momentum.

I use several strategies at the same time and trade several times a month. Titling the site Reformed Trader accurately reflects what I do, but it's one of those "don't try this at home" things. You can make healthy food at home without going to medical school, and you can invest your money wisely without being a multi-strategy trader.

True success doesn't have much to do with money, though money can help you if it doesn't become a distraction.

Great Reads: Can You Handle the Truth?

. August 3, 2011


Do we really love the truth, or do we try to hide from it? (Seth Godin)
When you challenge people, their beliefs get irrationally stronger. (Not So Smart)
How to handle difficult conversations. (Seth Godin)

On authority and responsibility at work. (Seth Godin)
Build a business marketing information. (Early to Rise)

Should you work for free to gain exposure? (Seth Godin)
Position yourself by promising, "This is what I'll never do." (Seth Godin)

Technology reduces the need for labor, but someone's hiring. (Reformed Broker)

Trading and Investing

A very comprehensive retirement calculator. Click the tabs. (FireCalc)

Trend-following keeps you out of the market in volatile times. (CXO Advisory)

Large institutions are too big to time the market, so they don't try. (ETF Replay)

Some ETF options have higher implied volatilities than index options. (SSRN)

Construction on the world's tallest building has begun. (Reformed Broker)
Record-breaking skyscrapers may indicate stock market tops. (CXO Advisory)

Churches still feel the effects of reduced giving from the 2008 crisis. (Ed Stetzer)

CAPM doesn't work. Why does your money manager use it? (Empirical Finance)

Living Abroad

This company provides international health insurance. (

Warlords in Somalia. (The Reformed Broker)

Christian Living

A "man-votional." (Art of Manliness)

"Men wouldn't look at me when I was skinny." (Fabsharford)


"The way to effect global change is to start with the microscopic." (Cole-Slaw)

Think to the next generation. Not succession, but sacrifice. (Cole-Slaw)

Missions has become compartmentalized, a "special" ministry. (Ed Stetzer)


Your calling may not be the same as your career.

Book: How Starbucks Saved My Life

. August 2, 2011

Michael Gates Gill was born into luxury: a mansion with acreage and a housekeeper. His father paid for an Ivy League education. As soon as he graduated, he was handed a prestigious job and worked hard to support his loyal wife and four children. Isn't this what everyone wants?

Michael Gates thought so, too: until the company he worked for came under new management and replaced him with fresher talent.

In his journey to seek reaffirmation as a status figure, he tried unsuccessfully to start a consulting business, experienced sexual dysfunction with his wife, fathered a son through an affair, and lost everything in divorce.

He also found that friends disappear when you're down and out.

Life went downhill until he met a young, no-nonsense African-American Starbucks manager. She offered him a job. He took it in a desperate attempt to provide for his son - and made a remarkable discovery.

People who aren't slaves to looking successful are finally free to be honest about their lives. Their relationships are more genuine, their work more meaningful, and their sleep more peaceful. Life is more satisfying when there are no Joneses to keep up with.

I won't spoil the rest of the story. For now, here's an excerpt from How Starbucks Saved My Life1.

I started walking, then literally stopped with a shock of revelation: "I am happier than I have ever been," I said out loud....

I was almost scared; still afraid to admit to myself how happy I was now... with a job as a barista at Starbucks. This was not the high-status job or affluent life my parents, my family, and my friends had expected of me.

Did this mean that my whole former life - all sixty-four years of it - had been a joke?

No. I shook my head, still planted in the spot, arguing with myself. I had loved many things. I still loved my children. But I had to admit, for the first time and with brutal honesty, and I had hated large swatches of my former, high-status life, full of so much meaningless activity....

Maybe the mistakes I had made - causing so much damage - had also helped me break out of my comfortable cocoon... to get out to a world so much more full of life and light.

[1] This is from the end of Ch. 7.

On Waiting


Impatience dwells beneath the veneer of American life. We feel it every day when we borrow on credit cards, roll over the Federal debt, and buy frozen dinners. The churchy advice we give people sometimes tries to satisfy impatience by making waiting sound rewarding.

What do you tell impatient people about saving sex for marriage? Maybe you say that we'll hurt less if we wait, since our hearts are less likely to be broken. We'll have more time to serve God undistractedly. These are good reasons, but is there more to waiting than that?

Witness Part 1 of Donald Miller's series, "How to Live a Great Love Story."

Be willing to suffer: What this means for you is that your love story needs to have a lot of lonely crying in it. Believe it or not, there will come a day when a man will fall madly in love with you and you will have the honor of sitting down with him one special night to explain that, while you weren’t perfect, you turned down plenty of guys and and cried yourself to sleep hoping somebody would come around and treat you with respect. He will be honored by this, and he will love you and feel humbled.

Could it be that waiting, along with the attendant suffering, can actually be part of reaching our dreams? For the joy set before Him, Jesus endured the cross. (Hebrews 12:2)

Viewed this way, waiting makes us hurt differently, not necessarily less.

Maybe we're impatient because we know that waiting hurts. We want to believe that if we have faith enough to pray, God will suddenly and miraculously give us what we want.

But could it take more faith to wait and make the best of what God has given us? We can put our impatient energy to work by serving Him today. That might even take us a step closer to our dreams.

It would be a step in a story worth writing.

The Missional Challenge

. August 1, 2011

Take a look at Ed Stetzer's post The Compartmentalized Mission.

In different ways, missions have been compartmentalized. What became of this is a view of missions as a specific activity or ministry of the church and only specially called people participated in it.... The challenge is that many of us have not yet figured out how to be sent into our own community. Being missional means we have to live sent here, to our place and among our people....

Often, pastors and leaders hear about what’s going on with Wayne Cordeiro in Hawaii or Andy Stanley in Atlanta, and say, “I want to be just like that.” What happens is that you begin to think that the key to what they have done is the way in which they have done ministry. It is easy to forget that when we are sent to a place, and that, in many ways, the how of missional ministry is determined by the who, when, and where of culture.

The National Debt Clock
Yes, we've created false distinctions. There are also some real differences. As Ed points out, ministry looks different depending on our circumstances. Overseas missionaries struggle with funding, language/culture, and isolation.

On the other hand, there are unique challenges to sharing the gospel within our own shores. We have a much larger task, since our home culture no longer understands the relevance of the message.

We need to apply theology to Tiger Woods, the debt ceiling debate, and the crash of 2008. Few are going to accuse the gospel of irrelevancy if we show that the world is fallen in specific ways and that the gospel addresses those problems in equally specific ways.

Most American Christians can't do this yet. We live in a foreign land when it comes to communicating our worldview.

That's a missional challenge worthy of our attention.

Debt Deliverance


Check out this recent episode of The Boundless Show:

Whether you're up to your eyeballs in debt or are financially free, you probably have to think about money every day. Handling money well is a biblical mandate, but many of us don't understand the full implications of this until financial woes are all too real. Listen as Martha and I talk with Chris and Valeen Tschamler about their story of dropping almost $35,000 of debt in less than two years. It's inspiration for us all, and motivation to use our money wisely and avoid seeing red.
Saving and investing money to self-fund your goals is diametrically opposed to accumulating consumer debt.

Listen to the episode here:

The Boundless Show, Episode 181 (mp3)