Friday, June 06, 2014

Think Like a Freak

A couple weeks ago, I had the pleasure of meeting with Stephen Dubner and Steven Levitt at a reception in San Francisco prior to their speaking engagement. They are the authors of their latest popular book Think Like a Freak: The Authors of Freakonomics Offer to Retrain Your Brain. They also authored the best selling books Freakonomics and SuperFreakonomics.

The Think Like a Freak book can be described as a page turner, which you don't often hear about for a non-fiction book. The information in this book can only be described as unusual, exotic, and eye-opening. Levitt and Dubner have a way of making statistics very interesting.

Here are some examples of some facts from the book:

  • A study of over 6,000 stock market experts showed that their predictions were only 47.4% accurate overall
  • Only 4% of Pakistanis believe that Arabs carried out the 9/11 attacks
  • Suicide is more common with people having a higher quality of life
  • Wine experts can't tell the difference between $8 bottle wines and $100 bottle wines (by the way, the wine section in Charter 2 is really enlightening)
  • Legalization of abortion caused a crime drop (extensively covered in their first book)
  • If you are a Protestant in Germany, you are more likely to make more money than a Catholic
  • Stomach ulcers are not caused by spicy foods or stress
  • King Solomon and David Lee Roth have four things in common

All of the above is just a tip of the iceberg. There is a lot, lot more. There is plenty of extensive background information and research covered in the book.

If you want a book that would make great reading while you are lying on the beach for your summer vacation, or a book for a friend who likes interesting facts, I strongly recommend that you buy  Think Like a Freak. You may not like what they discovered about some of their findings but you will certainly enjoy reading about it.


Anonymous said...

Do you have a Freak analysis as to why the celebrity and model index might work?

I was thinking, if a company sinks so much money into a celebrity, they must think they have a great product. And if a celebrity will endorse it ... even if they don't use the product ... it must be good, as they don't want to be associated with a loser. Or it could be that show business is really plugged into what consumers think?

Or it could just be a coincidence ... maybe so many are tied to Disney ... which has been on a tear?

Stockerblog said...

I think that you are right about the companies, like Disney and some of the other entertainment companies that have had outstanding returns, having caused the Celebrity Stock Indexes to do so well.
A couple celebrities were connected to Apple for a while, and I even removed Apple from their index since the returns of the indexes would be enormously high.
There have actually been studies that show when a celebrity endorses a product, that sales of the product increase significantly. This especially helps the sales of small and mid-size companies.

Anonymous said...

The interesting thing is that it's similar to investing in that one would think an investor would get more value by buying a young emerging star (similar to a small cap stock) with a lot of time ahead of them ... as the older stars appear to have limited shelf life left (similar to a mature company). But the young stars seem to crash and burn while the older ones keep cranking it out far longer than anticipated. Similarly, while everyone is looking for hidden stocks, some of the best gains seem to come from big companies that are highly covered by analysts yet they still outperform for long periods of time.

Stockerblog said...

That is a unique and innovative way of looking at celebrities and stocks. Occasionally, young stars do become successful long term, and it is like a small stock (like Apple many years ago) that eventually provides huge returns.