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ACTL1101 Quiz: Reflection

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bluebee342
25 Oct 2018
School
UNSW, UNSW Sydney
Department
Actuarial Studies
Course
ACTL1101
Professor
BA

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Document Summary

Our topic: family background as a socioeconomic indicator of icsea. Firstly, the most important thing in this major assignment task was obviously team work. We made up our team contract at the start of the semester, which clearly stated our meeting up schedule, individual tasks, goals and some basic thoughts about the topic. I got lots of great advice from my teammates throughout the period and also provided help to others as much as i could. It was a great pleasure to study with a group of outgoing friends. Teamwork was especially helpful when there was limited time and resources. As everyone in the group was giving out their unique ideas, i was encouraged to think actively and contribute. It also helped us to have more objective conclusion as we discussed with others regularly and fault ideas could be eliminated. Secondly, my ability of gathering information was significantly improved during the period.

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Related Questions

As you may recall in the work of Triplett (1898), the presence of others in a bicycle race was found to enhance individual performance. This is called social facilitation (Williams, Harkins, & Karau, 2007). At times, however, the presence of others can detract from individual performance, which is termed social inhibition (Crisp & Turner, 2007). Similarly, social loafing can occur when an individual’s performance within a group decreases due to his or her reliance on others in the group (Crisp & Turner, 2007).

For this Discussion, review the media program, Week 5: The Virtual Office. Focus on the characters in the media and determine which characters displayed social facilitation, social inhibition, and social loafing.

With these thoughts in mind:

Post by Day 3 a description of the characters in the media program demonstrating social loafing, social inhibition, and social facilitation. Explain how you identified them. Then, select one of the characters and, using the current literature, explain two ways you might mitigate their behavior.

Media Program

(Onscreen Text: The employees at the United Cardboard Company often work individually on projects, but as with most environments, they are occasionally asked to participate in group projects. One such group is about to meet right now to plan a presentation for the Board of Directors. Observe the conversation and reactions of various group members to determine which group members exhibit signs of the following: Social Loafing, Social Inhibition, and Social Facilitation.)

(Interior of an office. Ken stands at the front of the conference room.)

KEN: OK, I guess we might as well all get started. As we all know, the big man has requested the five of us to get together and write and conceptualize a presentation to the board on our new packaging system. Maybe we can start by going around and throwing out some initial ideas.

KATHY: Sounds good to me. I think a PowerPoint presentation would do the job well.

GAVIN: I agree. We could follow it up with a physical demonstration of how the packaging looks and folds-- maybe a video of the larger pieces that won't fit into the boardroom.

KEN: Sounds perfect to me. Amanda, Brian, what do you guys think?

BRIAN: Yeah, what you guys said sounds fine.

(Amanda thinks, “I don’t know what to say!”)

KEN: Amanda?

AMANDA: I don't know. I didn't really get much chance to think about this. We only found out we needed to do this together three days ago.

KEN: OK, no worries. Let's focus on the PowerPoint idea. I've been doing a lot of them lately, so I'm happy to take the lead on the design aspect. What do you guys think we should all incorporate into the slides?

GAVIN: I think we should start with where we got the idea for this new packaging -- the company that designed it and the different sizes that it comes in.

KATHY: We should follow that with a graph comparing the old prices to the new ones to illustrate how much we'll be saving over time. Amanda, didn't you have most of that information collected at some point?

(Amanda thinks, “Oh no! What if I deleted that?)

AMANDA: I don't know, maybe, it's been so long. I didn't think I'd need it again for a group project like this.

(Gavin thinks, “I wonder what’s gotten into her. She’s not usually this tense.”)

KEN: That's OK, Amanda, I'm sure we can easily dig it up again. Brian, do you have any other ideas for the PowerPoint slides?

BRIAN: Nah, I think what you guys mentioned sounds right.

(Kathy thinks, “Wow. Way to contribute Brian.”)

KEN: OK then, Kathy and Gavin why don't you send me all of the info and I'll write it up and make the slides. Amanda, don't worry about the cost saving document, I'm sure I can dig it up from my old emails and put it into that slide too.

AMANDA: Are you sure? I'm happy to look. I mean I'm sure I have it somewhere. (Kathy thinks, “She really needs to get it together. Why is she so nervous?”) At least I think I have it somewhere. You won't tell the Board of Directors if I lost it, will you?

KEN: Of course not, we're in it together. So as I was saying, I'll write up and prepare all the PowerPoint slides. Then we can start our presentation with reading and explaining each slide. Then, what?

KATHY: Well, and then I think we should show them the packaging live, and the quick deconstructing techniques.

KEN: Great idea. You and Amanda can demonstrate the folding, while I narrate what you're doing.

(Amanda thinks, “Is he doing too much of the work? And what if I drop everything while he’s talking?”)

GAVIN: And after you all demonstrate the smaller packaging, we could show a quick video of how the really big ones function down at the warehouse. Brian, would you be able to go film that quickly one of these days?

BRIAN: I don't really have any experience with video cameras or anything like that, so...

(Gavin thinks, “I should have seen that one coming.”)

KEN: That's OK. My wife actually just got me this great little camera for our anniversary. It takes great videos. So I can just run down to the warehouse, get some footage, then put it together on this new editing software I just downloaded. Maybe add a little music. It's going to be really slick!

KATHY: Are you sure, I wouldn't mind doing that too.

KEN: Oh no, it's fine. I love this kind of stuff; just leave it to me. But I suppose that's enough planning. Now it's time to get to work and make the presentation a knock out. Go team!

(Everyone except Ken thinks, “Team?”) ©2012 Laureate Education, Inc.

Short Story
“The Bet” (or how your money finds its way to Wall Street)

Long Bets was seeded by Amazon’s Jeff Bezos and operates as a non-profit organization that administers just what you’d guess: long-term bets. To participate, “proposers” post a proposition at Longbets.org that will be proved right or wrong at a distant date. They then wait for a contrary-minded party to take the other side of the bet. When a “doubter” steps forward, each side names a charity that will be the beneficiary if its side wins; parks its wager with Long Bets; and posts a short essay defending its position on the Long Bets website. When the bet is concluded, Long Bets pays off the winning charity.

Here are examples of what you will find on Long Bets’ very interesting site:

In 2002, entrepreneur Mitch Kapor asserted that “By 2029 no computer – or ‘machine intelligence’ – will have passed the Turing Test,” which deals with whether a computer can successfully impersonate a human being. Inventor Ray Kurzweil took the opposing view. Each backed up his opinion with $10,000. I don’t know who will win this bet, but I will confidently wager that no computer will ever replicate Charlie.

That same year, Craig Mundie of Microsoft asserted that pilotless planes would routinely fly passengers by 2030, while Eric Schmidt of Google argued otherwise. The stakes were $1,000 each. To ease any heartburn Eric might be experiencing from his outsized exposure, I recently offered to take a piece of his action. He promptly laid off $500 with me. (I like his assumption that I’ll be around in 2030 to contribute my payment, should we lose.)

Now, to my bet and its history. In Berkshire’s 2005 annual report, I argued that active investment management by professionals – in aggregate – would over a period of years underperform the returns achieved by rank amateurs who simply sat still. I explained that the massive fees levied by a variety of “helpers” would leave their clients – again in aggregate – worse off than if the amateurs simply invested in an unmanaged low-cost index fund.

Subsequently, I publicly offered to wager $500,000 that no investment pro could select a set of at least five hedge funds – wildly-popular and high-fee investing vehicles – that would over an extended period match the performance of an unmanaged S&P-500 index fund charging only token fees. I suggested a ten-year bet and named a low-cost Vanguard S&P fund as my contender. I then sat back and waited expectantly for a parade of fund managers – who could include their own fund as one of the five – to come forth and defend their occupation. After all, these managers urged others to bet billions on their abilities. Why should they fear putting a little of their own money on the line?

If Group A (active investors) and Group B (do-nothing investors) comprise the total investing universe, and B is destined to achieve average results before costs, so, too, must A. Whichever group has the lower costs will win. (The academic in me requires me to mention that there is a very minor point – not worth detailing – that slightly modifies this formulation.) And if Group A has exorbitant costs, its shortfall will be substantial. There are, of course, some skilled individuals who are highly likely to out-perform the S&P over long stretches.

In my lifetime, though, I’ve identified – early on – only ten or so professionals that I expected would accomplish this feat. There are no doubt many hundreds of people – perhaps thousands – whom I have never met and whose abilities would equal those of the people I’ve identified. The job, after all, is not impossible. The problem simply is that the great majority of managers who attempt to over-perform will fail. The probability is also very high that the person soliciting your funds will not be the exception who does well. Bill Ruane – a truly wonderful human being and a man whom I identified 60 years ago as almost certain to deliver superior investment returns over the long haul – said it well: “In investment management, the progression is from the innovators to the imitators to the swarming incompetents.”

Further complicating the search for the rare high-fee manager who is worth his or her pay is the fact that some investment professionals, just as some amateurs, will be lucky over short periods. If 1,000 managers make a market prediction at the beginning of a year, it’s very likely that the calls of at least one will be correct for nine consecutive years. Of course, 1,000 monkeys would be just as likely to produce a seemingly all-wise prophet.

But there would remain a difference: The lucky monkey would not find people standing in line to invest with him. Finally, there are three connected realities that cause investing success to breed failure. First, a good record quickly attracts a torrent of money. Second, huge sums invariably act as an anchor on investment performance: What is easy with millions, struggles with billions (sob!). Third, most managers will nevertheless seek new money because of their personal equation – namely, the more funds they have under management, the more their fees. These three points are hardly new ground for me: In January 1966, when I was managing $44 million, I wrote my limited partners: “I feel substantially greater size is more likely to harm future results than to help them. This might not be true for my own personal results, but it is likely to be true for your results. Therefore, I intend to admit no additional partners to BPL. I have notified Susie that if we have any more children, it is up to her to find some other partnership for them.”

The bottom line: When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.

In many aspects of life, indeed, wealth does command top-grade products or services. For that reason, the financial “elites” – wealthy individuals, pension funds, college endowments and the like – have great trouble meekly signing up for a financial product or service that is available as well to people investing only a few thousand dollars. This reluctance of the rich normally prevails even though the product at issue is –on an expectancy basis – clearly the best choice. My calculation, admittedly very rough, is that the search by the elite for superior investment advice has caused it, in aggregate, to waste more than $100 billion over the past decade. Figure it out: Even a 1% fee on a few trillion dollars adds up. Of course, not every investor who put money in hedge funds ten years ago lagged S&P returns. But I believe my calculation of the aggregate shortfall is conservative.

Much of the financial damage befell pension funds for public employees. Many of these funds are woefully underfunded, in part because they have suffered a double whammy: poor investment performance accompanied by huge fees. The resulting shortfalls in their assets will for decades have to be made up by local taxpayers.

Human behavior won’t change. Wealthy individuals, pension funds, endowments and the like will continue to feel they deserve something “extra” in investment advice. Those advisors who cleverly play to this expectation will get very rich. This year the magic potion may be hedge funds, next year something else. The likely result from this parade of promises is predicted in an adage: “When a person with money meets a person with experience, the one with experience ends up with the money and the one with money leaves with experience.”

Question:
Summarize Buffett’s views on “The Bet” and passive investment management