Back of the envelope energy calculations

I don't know the energy sector very well, but I come across interesting cost numbers every now and again.

I saw an article today that talked about the avg. Eagle Ford/Bakken shale/oil well producing about 400 barrels a day with decline rates of 50% per year. The article estimated the all-in cost of extraction/production was as high as $75/bbl.

I have heard the cost to drill a well varies between $5m-$10m (up from $1m to $3m less than 5 years ago).

Assuming the price of oil is $100/bbl and those estimates are about right, the economics are approximately:

Year 1: $100-$75 = $25/bbl margin x 400 x 365 = $3.65m profit
Year 2: $25/bbl x 200 x 365 = $1.825m profit
Year 3: $25/bbl x 100 x 365 = $912k
Year 4: $25/bbl x 50 x 365 = $456k
Year 5: $25/bbl x 25 x 365 = $228k
Total Profit Over 5 Years = $7.07m
Discounted at 12%
PV = $4.01m

Interesting.

P.S. From a USA Today article 11/4/13 "Tight oil development is still at an early stage, and the outlook is highly uncertain," says the Department of Energy's EIA in its Annual Energy Outlook 2013, adding its future will depend on how individual wells perform as well as their costs and the revenue they generate.

The reason: "sweet spots" — small areas with the highest yields. Hughes says these spots simply don't last long. Unless more wells are drilled, the Bakken shale of North Dakota and Montana loses 44% of its production after a year and the Eagle Ford shale of Texas, 34%. Most of the nation's major shale regions produce both oil and gas.

Working Through The Gas Equation

Demand is rising for natural gas due to low prices and government policy shifting the electricity industry away from coal.

Prices are low because the shale gas revolution is producing more gas than ever. The industry is constrained by how much gas it can produce brought on by the limits of men and materials available to drill more holes. At some point, demand is likely to exceed supply (not sure where that is) leading to rising natural gas prices. Current cost of drilling ($5m-$10m a well) is high and likely not producing much profit for producers with depressed gas prices. When the supply/demand dynamic changes, then producers will experience hyper profits. Caveats are environmental backlash/limits on fracking and substitution of gas for coal should prices rise.

The gas industry is rushing to build LNG terminals to allow US gas to reach much higher prices for gas in overseas markets.

The effect of all this will be to increase the price of gas in the US and decrease the global price of gas. It will lead to an increase in demand for gas and the development of a global gas pricing system similar to global oil prices.

Implications: Producers of drilling equipment will sell more equipment to meet rising demand. Oil & Gas producers could be in for windfall profits if the price of gas goes up. Coal likely to rebound. 

What's In Play

There are three interrelated and somewhat connected "ancillary investing" activities in play at the moment: end of month/year window dressing, tax loss harvesting, and end of year catch-up.


Many mutual funds fiscal year end is October 31. Consequently we have been seeing the selling of losers and the buying of winners for window dressing purposes.

In addition, we have year end tax harvesting in operation. This has the effect of selling losers and buying winners.

End of year catch-up. Those managers who are behind the market (and that would be most of them) will be looking to catch-up and the way to do that is to buy stocks with strong momentum in the hope that that momentum will carry through to the end of the year and juice their performance.

All of these activities have the effect of selling losers and buying winners.

The Valuation Dilemma

The dilemma of a value oriented investor. When opportunities dry up (because markets have appreciated substantially and everything is a lot more expensive), it is still incredibly hard to sell…because (1) we are in the business of owning assets long term, (2) we don't know whether the market will continue to go up or go down, and (3) we know that timing the market is a pretty tough thing to get right consistently. So we stick with what we've got and are a prisoner to market movements.

When and How to Return Capital to Shareholders

This is a good article on what to do with a big cash hoard with Apple as the example par excellence. I am with Felix. I don’t like financial engineering. I have seen too many good companies hollowed out just to juice the stock (often with little effect) only to leave them with financial risk that comes back to bite a few years down the line (ala Private Equity). And I don’t like roll-ups. I have seen too many companies raid the cookie jar either to keep the growth for growth sake game going (at a much lower quality level), or for ego purposes or because they don’t know what else to do with the money (because they have no vision). The underlying thought or dislike is that we mouth epithets to shareholder value creation and returning capital to shareholders but the reality is that management controls the show. It is not too far from the truth that management does most things to benefit management. Being disciplined with cash is just as important for a company as it is for an individual. From an investor/shareholder perspective I am quite happy with a firm accumulating cash and maintaining a strong, clean balance sheet. If the cash stock is beyond what is reasonable (as is the case with Apple...ironically) then it can be returned in the form of a dividend (drip it out), rather than buybacks that sound good in theory but I never seem to see any real effect (other than juicing EPS for management stock options).

http://blogs.reuters.com/felix-salmon/2013/10/29/apple-should-be-like-bloomberg/

Philosophy - The Renaissance

The Renaissance

Renaissance - fall of Constantinople in 1453 to the beginning of the Enlightenment 1680, saw the rebith of Greco-Roman culture, spirit of learning, interest in humanities and the termination of the subserviency of philosophy to theology and the authority of the church.

Humanistic period (1453-1600) Science period (1600-1680)

Humanists included da Vinci (1452-1546); Machiavelli (1469-1527); Copernicus  (1473-1543); Martin Luther (1483-1546); Melanchthon (1497-1560); John Calvin (1509-1564).

Scientists included Galileo Galilei (1564-1642); Francis Bacon (1561-1626); Grotius (1583-1620); Thomas Hobbes (1588-1679); Isaac Newton (1642-1727).

Rene Descartes (1596-1650) - father of modern philosophy

Machiavellianism - in politics, the ends justifies the means (reflected the low moral standards prevalent at that time), wrote The Prince which advocated power as an end in itself.

Social and Political Philosophy

Utopia by Thomas More in 1518, advocated a Platonic communism

The New Atlantis (Bacon : 1623) - community who sort increased productivity through scientific advancement, put forward the proposition that civilisation progresses through science.

Leviathan (Hobbes : 1651) - advocates a social contract as a formal civil law, restricts the natural liberties of all persons through mutual consent, overseen by the ruler or Leviathan.

What Drives Equities

Over the long term equities are driven by two things. One, fundamental and the other sentimental.

The Fundamental
The fundamental driver of equities values is earnings. Earnings are a function of revenues (demand), margins (efficiency) and tax regimes. Earnings may vary over time, but trend positive.

The Sentimental
The sentimental driver of equities values (which is to some extent and at different times more important than earnings) is the multiple. What the market is prepared to pay for earnings at any particular point in time. It is a function of confidence and risk. The multiple the market is prepared to pay for present (and implied future earnings) varies from a high of 35x to a low of 8x.

Since bottoming in 2009 the market has been propelled by substantial earnings recovery and earnings growth ($30 EPS to $115 EPS), and by multiple expansion (11x to 16x). With earnings plateauing, future market performance is likely a function of multiple performance. If the multiple goes from the present 16x to 20x then the market can rise to 2300 (30% above the present level). Projecting earnings is relatively easy (or if not easy, more stable). Projecting multiples is a lot more difficult.

Philosophy - Scholasticism

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The Scholastics

Scholasticism sought to justify rationally what the church had already accepted.

Platonic period of medieval philosophy (529-1200); and the Aristotelian period (1200-1453)

Two fundamental problems (1) the problem of universals as objective realities  (2) the problem of logical proofs for the existence of God.

John Scotus Erigna (810-877) - the universal is the essence of reality; the more universal an object is, the more real it is; essence precedes existence

universalia ante rem - the universal is prior to the particular thing

The assumption that universals exist as objective realities is the principal thesis of Scholastic Realism

St Anselm (1033-1109) - his ontological argument: since we possess an idea of a perfect Being, such a Being must necessarily exist because perfection implies existence.

- inasmuch as some things possess more goodness than others do, there must be an absolute good (Summum Bonum), a standard which can be used to evaluate their comparative goodness.

Anselm formulated his Christological theory of satisfaction in an attempt to reconcile the apparent inconsistency between the ideals of divine justice and divine goodness.

Credo ut intelligam - I believe in order that I may understand

Universalia post rem - the universal exists after the particular thing; existence precedes essence

Nominalists (1100), Roscellinus - reality is found in the sensory world, not in the ideal world.

Tritheism - the three persons of the Godhead are actually three separate Gods.

- the universal of something is nothing more than a flatus vocis (oral word).

Peter Abelard (1079-1142) - advocated an appeal to reason (not faith or authority) as a proper means of arriving at the truth.

Intelligo ut credam - I understand in order that I may believe

- there is no sin in doubting, because the person who doubts is led to enquire about the truth.

- morality is not simply a matter of act also the intent that motivates an act.

Conceptualism attempted to synthesize the opposing views of the Nominalists and the Realists by means of rational comparative enquiry.

Arabian philosophers had preserved Aristotle’s work until it was translated from Greek to Latin in the 12th Century, whereby it was acclaimed as a criteria of truth.

St Thomas Aquinas (1225-1275) - founder of Dominican order; he organised a philosophical system designed to establish the fundamental rationality of the world as God’s revelation.

- revealed teachings cannot contradict the laws of logic, since would negate the attributes of God.

- since all truth comes from God, the nature of its transmission (reason or revelation) doesn’t matter.

Thomas synthesized both Anselm and Abelard by accepting both propositions.

Thomas posited that God created the world ex nihilo (out of nothing).

God is not only the first cause, but also the final cause (the purpose of existence).

Arguments for God’s existence (1) motion or first cause   (2) efficient causality  (3) possibility and necessity   (4) degree of perfection  (5) design or purposiveness

God’s grace can function only if the freewill of man assents.

Thomistic ethics - God created everything for a definite purpose.

- evil is not a substance with its own essence, but rather is a lack of good.

- everything seeks its own good as its own aim

- no one desires evil, they only misconstrue it as good for themself.

virtues function to direct man toward his own good, namely God

theological virtues - faith, hope and love

ethical virtues - temperance, courage, prudence and justice

intellectual virtues - wisdom, science and understanding

- the contemplative life is the highest and best, brings us closest to God where the soul unhampered by the senses can enjoy God in deep mystical contemplation

The goal of the State is to achieve the common good, to establish peace and security, and to protect against enemies.

Democracy is not to be practiced because it goes against nature, some are born superior and others inferior.  Monarchy is the preferred form of government.

- societies/communitie are established by God for Man’s own good, therefore one should obey the law’s because they ultimately have originated from God.

The church is the superior of the two divinely established social institutions (the other is government).

John Duns Scotus - denied the primacy of the intellect over the will, attributed to the will decisive control over the intellect; monk of the Franciscan order.

- philosophy must be subordinated to theology because natural reason is incomplete unless aided by revelation.  Logic can neither prove or disprove questions of faith.

accidental creation - it was not necessary for God to create the world the way it happens to be or to create any world at all.

- whatever God wills becomes good automatically by virtue of his willing.

William of Occam (1280-1347) - a Franciscan student of Scotus, constructed his philosophy on the premise that only particulars exist, the universal is a mere abstraction

scientific agnosticism - science cannot gain truth or knowledge; if scientific laws are not universal principles but only works identifying a number of individual things, then universal laws of science do not exist.

God must be accepted on the basis of faith not proof, because theological beliefs are not subject to demonstration.

Occam’s Razor - hypothetical realities must be kept to a minimum, the simplest explanation is the best.

real science - pertains directly to individual real things.

rational science - deals with abstract concepts without direct sense data.

Philosophy - Early Christian Philosophers

Early Christian Philosophers

Philo, Justin and Gnostics - no specific qualities should be predicated of God because they are all too delimiting.

Christian philosophers conceived of God as a spiritual personality, as an infinite Being bearing a personal relationship to Man, as a Being whose personality finds its image in Man.

Christians regarded persons and interpersonal relationships as the very essence of reality.

Plotinus (204-269 AD) student of Athmonius Saccas founder of the Alexandrian school of Neo-Platonism an eclectic mix of Plato, Aristotle, Neo-Pythagoras and Stoicism.

- fundamental principle the doctrine of the transcendence of God

- soul is liberated from the material world through asceticism and can be transported mystically to a state of rapturous ecstasy in contact with the divine.

Patristic philosophy was the body of philosophical doctrines accepted by the Fathers of the early Christian church [ante nicene and post-nicene: Council of Nice 325 AD].

- early Christian philosophers were called Apologists because they devoted most of their time to the philosophical defense of the Christian faith against the claims of secular philosophy and Gnosticism.

Ante-Nicene} Hellenic School: Justin Martyr (150 AD), Felix (200 AD), Aristides, Theophilus, Melito     ===> African School: Tertullian (165-220 AD), Arobius of Numidia (290) - renown for their anti-rationalism, sceptical attitude toward reason, in order to establish the supremacy of faith.

Alexandrian School: Clement (150-220), Origen (185-254)

Christian philosophy was dominated in the post-Nicene period by Augustine (353-430).

Augustine subordinated philosophy to Christian doctrine (laid foundation for medieval philosophy).

- the Scholastics (Middle Ages) sought to resolve the conflict between faith and reason.

Origen - founder of Christian philosophy set on the basis of the Bible and the Regula Fidei (rule of faith as taught by the church or church council)

- matter is changeable and perishable, but the unchangeable God is everlasting (eternal)

- the Logos is not the God who participates in creation; a personal copy of God.

Man’s fall is attributed to his misuse of his freedom of will.

Man aspires through use of his freewill to attain salvation with the assistance of the Logos.

Two fundamental criteria of truth underlie the entire philosophy of Augustine: (1) The authority of the church, (2) The certainty of conscience (knowledge which man actually funds in his inner experiences (memory, intellect and will)).

- incongruities sometimes become evident when church doctrines cannot logically be reconciled with the dictates of reason (inconsistency between his theology and philosophy).

Augustine’s arguments against Skepticism used the experience of uncertainty and doubt as a logical defence for the existence of certainty and absolute truth.

God’s personality: omnipotence, omniscience, absolute goodness.

God created ex nihilo, therefore all natural things are good.

- sin impairs the natural process, attributable not to God but to the will of Man.

Fall of Rome (476) to Charlemagne’s coronation (800) } The Dark Ages

Sitting Out A Rally

In our business you can't sit out a rally. Even if your philosophy and your process support such a move. The reason is because "the business of money management" will not allow to sit out a positively trending market and in the back of your mind you justify staying-in on the basis that "you can't time the market." The other thing is, each time you have attempted to go to cash, you have been steamrolled.

What this does is change you from an intrinsic value investor to a relative value investor.

Monetary Roulette

Another thought to be developed is monetary roulette.

This is the game the central banks of the world are playing with their credibility and the global monetary system on the line as they continue to roll the chambers adding new QE to the system.

By now, they may have bought their own line that it may not actually have an effect.

The key question for policy makers are, when will the market call their bluff, and how big is the problem when they do."

Paraphrasing Herb Stein, "if something can't go on forever, then it won't."

A Developing Thought - Traditional Security Analysis as Scholastic Philosophy

In the same way traditional security analysis sought to justify rationally, ie. put a structure around, what the marketplace already accepted so Scholasticism sought to justify rationally what the church had already accepted.

The main schools of thought during the scholastic period were universalia ante rem (essence precedes existence) and universalia post rem (existence precedes essence) arguing over what came first or what comes first, essence or existence. The same can be applied to security analysis with regard to whether fundamental value comes first or market price comes first.

In the ethical/moral realm scholastics guiding light was summum bonum (absolute good) as the yard stick for devining whether something was good (a relative value basis). In security analysis there is the implied belief that there is some fundamental/intrinsic value based upon some as yet unknown future set of cash flows discounted at an appropriate rate that equals an assets true value (absolute value) which can then be compared to its current market price to determine whether it is undervalued or overvalued.

This is still a developing thought, but one I hope to explore a little more in the future.

Likewise, modern finance (Modern Portfolio Theory, Efficient Markets, CAPM) may be equated with the philosophy trends of the enlightenment (especially Hume's rationalism), and recent developments in finance practice (HFT, quantification, algos) may be equated with quantum physics or existentialism.

Implications of Momentum Investing

Trend following, aka momentum investing is probably the weakest part of my investing DNA. I am a natural contrarian with a strong value tilt. I have learned the value of growth and the importance of sentiment and momentum, but they are still both hard for me to fully commit  to.

Over the past 10-15 years research has vindicated and validated trend following strategies as a way to add alpha. Consequently, and in conjunction with the increasingly quantitative/algo driven basis of the market, I believe trends, predicated upon more momentum investors and trend followers, will be longer and of greater magnitude that previously. The nature of momentum is that it feeds upon itself. It is self perpetuating, self replicating. There are three major implications. First, you need to incorporate momentum into your investment strategy. Second, a momentum based market leaves opportunity for fundamental based value investors. Because the trend goes longer and for a greater duration than fundamental value would indicate, it creates an opportunity for a fundamental based value perspective. Third, turns in the market or changes in trend will trip up a lot more investors. Trend followers, quant or qual, always get burnt by the turns in the market. The length and magnitude of trends will be greater on boths sides of a trend. Significant alpha will come from picking a change in trend. Incorporating a market reversal component into an investment process (albeit incredibly difficult) will be very rewarding.

The old adage, go with the flow will be the dominant characteristic of future markets.

Philosophy - Aristotle

Aristotle

Aristotle (384-322 BC)- disciple of Plato, founder of the Lyceum or Peripatetic School [to walk about], the philosopher.

Theoretical philosophy = mathematics, physics, metaphysics

Practical philosophy = ethics, politics

Poetic philosophy = art, poetry, drama

- logic was a method of finding truths rather than as a compendium of truths

Truth = the agreement of  knowledge with reality

Two principle forms of logical inference: syllogism - reasoning from the universal to the particular  ie. deduction; and induction - reasoning from particulars to a universal

Scientific inference - conclusions based on true principles or premises

Dialectical inference - conclusions drawn from apparent data

Inference: derivation of new knowledge from known information

Sophistical inference - results in false assumptions based on erroneous premises

Two fundamental laws of logic: The principle of contradiction (a proposition cannot be both true and false); The principle of the excluded middle (a proposition must be either true or false).

essence - the ontologically real Being or Plato’s Ideal reality.

metaphysics - branch of philosophy that goes beyond physical events or substances.

study of ontology (the study of Being)

epistemology (the theory of knowledge)

- ultimate reality unfolds itself in the phenomenal world; every thing seeks to realise its essence.

For Plato, the sense world realised itself by imitating the ideal world, whereas for Aristotle, the Platonic Ideals realise themselves through the phenomenal world.

Essence within phenomenon strives to realise itself (entelechy - purpose)

Causes - contribute to the formation of matter in order that it may attain its end.

- the causes [matter or substance; for or essence; motion; end] constitute the principles by which each particular thing is changed from its original potential state of unformed matter to one of full realisation.

- each material object moves toward God in its striving and longing for perfection

Argument for the existence of God: teleological (argument from design: form and pattern); cosmological (argument from first cause).

God =first mover = unmoved mover

- the basis of his ethical philosophy is that everything has a purpose

virtue comprises the use of one’s ability to act purposefully in conformity with one’s intellectual insight.

- the virtuous or right act is a mean between two extremes (moderation).

- every true virtue impels man to live in harmony with reason, to live a rational life.

* if forced to, choose the lesser of two evils (Aristotle)

The purpose of the State is ethical training for the benefit of its citizens.

Forms of government: monarchy, aristocracy, polity, tyranny, oligarchy and democracy

- government form is unimportant provided the public interest is paramount

The form of government adopted by the State should depend upon the social situation prevailing at the time.

Art is imitation, copying the essence rather than the individual object.

Catharsis - purification of the soul

Neo-Platonists and the Patristics were faced with the problem of ethical and religious salvation

Neo-Platonism: matter is the product of spirit; phenomena are essentially spiritual; there is a dualism between spirit and matter that poses a moral problem; the sense  world is evil and alien to God; the soul’s salvation requires that it extricate itself from matter and return to pure spirit from which it originally came.

Ancient philosophy ended with the Neo-Platinists and the Patristics attempt to spiritualise the world.

Philosophy - Plato

Plato

Plato (427-347 BC): disciple of Socrates, founded the Academy of Athens in 386 BC, truth is identified with ultimate reality consisting of Ideal, sense experience (phenomena) provides us with merely relative truths, while our understanding gives us absolute truth.

The phenomenal world is tangible, perceived by the senses; the ideal world is intangible, conceived by the mind.

Plato laid the foundations of natural science.

Two orders of Being: mind and matter; and two orders of knowing: sensory knowledge and conceptual or philosophical knowledge.

The phenomenal world is a representation of the real world.

- the sensory world is in a continuing state of Becoming (development), striving for the Ideal or ontological real.

- the Ideals of Plato become the teleological (purpose) force motivating the world of the senses toward ultimate reality or the ideal goal.

- the Ideals are immaterial, immutable, eternal

- the phenomena are: material, perishable, transitory

- the soul (Ideals) unites with its body (matter)

Man is created with a purpose, that of transforming himself into closer approximation of Ideal Resemblance to God, is the ethical end of Man.

- knowledge of the Ideal good is necessary in order to become good.

Hierarchy of Pleasures (1) sensual  (2) sensuous  (3) ideal

Platonic love - intellectual love of one mind for one another, one person for another

- the social responsibility of a collective society is to strive toward the actualisation of the Ideal State.  Thus, political activity is a moral endeavour.

Ideal State = The Republic (ruled by a single, wise ruler); every individual functions in his best capacity according to his natural abilities.

- the State is based upon the ethical ideal of training citizens to become virtuous.

Social classes: guardians, warriors, artisans } the class to which an individual belongs will depend upon his natural ability (derived from education).

Forms of government: timocracy, oligarchy, democracy, tyranny

Philosophy - Socrates

Socrates (470-399 BC) was in many ways anti-thetical to the Sophists; he was a defender of the objectivity of truth, preferable to suffer wrong than to commit it, freedom meant control of the passions and impulses (autarkia), the goal of mankind is moral improvement, intellect directed will, knowledge is virtue

Socratic irony: asking questions, seek information from others.

Socratic dialectic: all points of view regarding an issue are debated from every angle.

Cynicism developed into Stoicism, it sought a return to a state of nature (ascetic).

Cynics: Antisthenes (445-365 BC); Diogenes (412-323 BC); Crates of Thebes

To Stoics evil meant the failure of man’s reason to control his passions

Happiness is a state of inner tranquillity, freedom from disturbance, mental composure.

Cynics emphasised the Socratic concept of virtue, the Hedonists stressed the Socratic principle that happiness results from the practice of virtue.

Cyrenaics: pleasure = happiness, therefore pleasure is mankind’s highest attainable good.

Ethical relativism: pleasure is never evil, only communities and laws designate some as good.

- feelings which we experience are the essence of our existence.

Epicarps (341-270 BC): the moral quality of any action depends upon the amount of pleasure derived (a sensory experience), ascribed greater value to spiritual or mental than to physical pleasures.

- the central idea of the early Sceptics was to avoid mental insecurity by abstaining from judgement on issues; they could not prove their philosophical conclusions so they sought to defend them by launching attacks against their rivals.

- since we can’t know ultimate reality and must therefore be indifferent, the only significant problems were those of everyday living (appearances can be known on the basis of probabilities).

Eclectics [Cicero (106-43 BC); Seance (4-65 AD)] sought truths in all the school of thought (1. Stoics, 2. Epicureans, 3. Platoons, 4. Aristotelian) and attempted to unify them into a single integrated philosophical system.

Philosophy - The Early Philosophers

Milesian philosophers or Ionian Physicists (Thales 624 BC; Anaximander 610-545 BC; Anaximenes 585-528 BC) concerned themselves with cosmology (branch of metaphysics which deals with the nature or essence of the orderly universe).

hylozoism - matter possesses life or sensation

Apeiron - ultimate cosmic matter, Boundless, Infinite.

metaphysics - unveiling the mysteries of ultimate reality.

metaphysical monism - ultimate cosmic stuff is only one basic substance

Eleatic school - Xenophanes

- the problem of Being and Becoming; and that of rest and motion.

Heraclitus of Ephesus (544-484 BC) - the entire substance of the world is in a ceaseless process of change (“flux”)

Parmenides (540-470 BC) ultimate substance (Being) is unchanging and unchangeable, permanent.

Empedocles (495-435 BC) - postulated a definite number of ultimate elements and noted their combinations on fixed mathematical proportions (founder of the science of chemistry).

Leucippus coined the term atom (indivisible, inert dense bodies, ultimate reality)

Democritus (460-370 BC) - father of Materialism.  Reduced all phenomena to atomic substances mechanistically governed.

Phenomena- that which can be observed by the senses.

Skepticism- knowledge is unattainable, nothing is known or can be known.

Phenomenal reality: refers to our knowledge of appearances

Metaphysical reality: refers to our knowledge of real objects

Pythagoras (580-497 BC) founded a religion which taught the transmigration of the soul.

Philolaus - set out to prove that the phenomenal world of physical nature is grounded on mathematical principles.

The Sophists (Greek Enlightenment 5th Century BC) turned the course of philosophy away from cosmology toward the problem of man, civilisation and ethics.

Protagoras (481-411 BC) founded the science of grammar

Epistemology - the study of what knowledge is and how it is obtained.

The Sophists based their philosophy on the doctrine of the relativity of truth (ie. no Being, always Becoming) and so concentrated on debate to convert opponents.

The Eleatic concept of changeless Being and the dialectical paradoxes of Zeno impelled Giorgias (483-375 BC) to formulate a philosophy of Skepticism.

- absolute truth cannot be shown to exist, all that remains are ideas in the form of words.

- doctrine that “might makes right”: person(s) endowed by nature with superior strength has the moral right to impose his will on weaker individuals [Nietzsche adopted it].

Getting Unstuck

From Brain Pickings:

In the 1960s, psychologists identified three stages that we pass through in the acquisition of new skills. We start in the “cognitive phase,” during which we’re intellectualizing the task, discovering new strategies to perform better, and making lots of mistakes. We’re consciously focusing on what we’re doing. Then we enter the “associative stage,” when we’re making fewer errors, and gradually getting better. Finally, we arrive at the “autonomous stage,” when we turn on autopilot and move the skill to the back of our proverbial mental filing cabinet and stop paying it conscious attention.

And so we get to the so-called “OK Plateau” – the point at which our autopilot of expertise confines us to a sort of comfort zone, where we perform the task in question in efficient enough a way that we cease caring for improvement. We reach this OK Plateau in pursuing just about every goal, from learning to drive to mastering a foreign language to dieting, where after an initial stage of rapid improvement, we find ourselves in that place at once comforting in its good-enoughness and demotivating in its sudden dip in positive reinforcement via palpable betterment.

The challenge, of course, is that we can't get better on autopilot. Fortunately, psychologists have found a number of strategies to help us overcome this stagnation by overriding our auto-mode – and it turns out the benefits of reflective failure and the art of making mistakes play a key role, something to which J. K. Rowling has attested. Foer writes:

Something experts in all fields tend to do when they’re practicing is to operate outside of their comfort zone and study themselves failing. The best figure skaters in the world spend more of their practice time practicing jumps that they don’t land than lesser figure skaters do. The same is true of musicians. When most musicians sit down to practice, they play the parts of pieces that they’re good at. Of course they do: it’s fun to succeed. But expert musicians tend to focus on the parts that are hard, the parts they haven’t yet mastered. The way to get better at a skill is to force yourself to practice just beyond your limits.

Early psychologists, Foer tells us, used to believe the OK Plateau signified the upper limit of one's innate capacity – in other words, they thought the best we can do is the best we could do. But Florida State University's Anders Ericsson and his team of performance psychologists, who have studied the phenomenon closely, found that the single most important factor for overcoming the OK Plateau to become truly exceptional at a skill is the same thing that turned young Mozart into a genius and that drives successful authors to their rigorous routines. Foer writes:

What separates experts from the rest of us is that they tend to engage in a very directed, highly focused routine, which Ericsson has labeled “deliberate practice.” Having studied the best of the best in many different fields, he has found that top achievers tend to follow the same general pattern of development. They develop strategies for consciously keeping out of the autonomous stage while they practice by doing three things: focusing on their technique, staying goal-oriented, and getting constant immediate feedback on their performance. In other words, they force themselves to stay in the "cognitive stage."

And yet, Foer is careful to point out, the mere amount of practice has little to do with improvement – it is, rather, its deliberateness that drives progress.

What Ericsson found, rather, is that the best way to transcend the OK Plateau and reboot the autonomous stage is to cultivate conscious control over the thing we're practicing and, above all, to actually practice failing:

Deliberate practice, by its nature, must be hard. When you want to get good at something, how you spend your time practicing is far more important than the amount of time you spend. … Regular practice simply isn't enough. To improve, we must watch ourselves fail, and learn from our mistakes.

Argument Mechanics - The Realm of Reason Part X (Cause)

Cause

Causal arguments attempt to support causal statements - those that reduce to the claim that A causes B.

- cause may be particular ie. this individual thing caused, is causing, or will cause something - or they may be general  ie. this type of thing causes this other type.

- causes may be affirmative or negative.

We have immediate cause, proximate cause.

Causes are not exclusionary: different interests suggest different avenues of prevention, or cure, and hence different causes.

Unlike “did” and “do” causal statements, which require more proof,  “could” causal statements are established simply by getting duplicate results in duplicate conditions.

A true “could” causal statement definitely rebuts a claim that something cannot be or have been done.

Most causation results not from a single claim of immediate and proximate causes, but from complexes of factors.

When wishing to emphasise the complexity of a problem people speak of contributory causes (no one thing is responsible).

Many a perceived “difference” has turned out to be purely psychological.

Assessing the causal arguments of others, is frequently an obligation of good citizenship.  Therefore it is important to have explicitly in mind what good causal arguments look like, and to be articulate at explaining the strengths and weaknesses of those sorts of causal arguments.

Good causal arguments are (1) congruent (they state a connection between occurrence or phenomena), (2) always contain an exclusion aspect, a ruling out.

- if we connect two occurrences we have a connection but not yet a causal connection.

correlation - a repeated, regular connection between one phenomena and another.

- a correlation connects one phenomenon with another.

- correlations may be of degree.

Correlations may be positive, or direct, or they may be inverse, or negative.

Many correlations are coincidence.  Then again many correlations result not from the action of one variable upon another but from that of yet another variable.

Some correlations, though parts of a causal chain, do not count as causal because their point in the chain is not the one at which we can exert control, or is incidental to the point in the chain where we can exert it.

post hoc ergo propter hoc = “after it, therefore because of it”, an error in logic or bad causal reasoning.

A simple causal argument can be seen as built on an “if then” premise, the causal hypothesis.

Good causal arguments are twofold comparisons, (1) “before” and “after”, but requires a control group[(i) a control is matched to the material being tested in every respect except one, namely the alleged cause, (ii) a test or trial is run, (iii) if the test material undergoes change and the control does not then the change is attributable to the difference]

retrospective and prospective studies make use of natural controls.

- retrospective studies can be valuable in defining causal issues and in leading to breakthroughs, but they are rarely sufficient to settle causal issues.

- even second-best attempts at controls are better than no attempt.

The term “control” denotes not only the standard against which a supposed causal change is measured but also the whole process of monitoring and regulating the many details, which could affect the result.

Placebo effect - “effects” tend to occur for no other reason than that subjects expect them to occur.

Test should be done blind ie. the subjects not knowing which stimulus, which batch, they are sampling.

- the test should be repeated (replicated).

Avoid a possible order effect, half the subjects should be given the test material first and half given to the control first.

“fatigue” effect - senses become dull upon successive simulation.

crossover - test and control are reversed in a latter trial.

Groups which are to be compared must be comparable.

A result is said to be causally significant when the probability of its having occurred by chance falls below a certain level.

Significance will be higher the greater the difference between control and test groups. the greater the number of trials, the greater the number of individuals and the less the inherent variability in the material.

Argument Mechanics - The Realm of Reason Part IX (Comparison)

Comparison

When we place 2 or more things together in order to measure them against each other, we make a comparison.

When a similarity, a likeness, seems to be found, we have to that degree an analogy.

- analogies go by various names: simile, fable, precedent, model, metaphor, caricature, extrapolation.

Comparisons underlie the acquisition and practice of language and everything else distinctly human.

Analogies can also mislead.

There is some difference between simply stating a resemblance between two things and drawing a conclusion from a resemblance (the former is an analogy, the latter an analogical statement).  Whoever uses it argues by or from analogy.

Sizing up an analogy (1) exactly what is at issue, (2) exactly what is being compared, (3) exactly what are the real similarities and differences.  Next one should be able to either (4) attack half of the comparison, (5) attack or defend the analogy, (6) change it, (7) extend it, or (8) attack the pivot.

- using an analogical argument in support of a point not at issue would be to argue irrelevantly.

When considering a difficult and important analogical argument, one should try to achieve perspective by listing similarities and differences.

Since analogies typically convey more psychological force than logical force any chance to nip a misleading analogy in the bud should not be missed.

If possible, attack a premise.

Instead of wasting words in trying to break an arguments spell, one can sometimes make use of the spell.  One can turn the magic against its perpetrator by extending the analogy.  Thus elaborated, the analogy may actually support a thesis contrary to the one claimed for it, or lead to ridiculous consequences.

An analogical argument can be thought of a “pivoting” on an implied generalisation.  The pivot generalisation, if true, underwrites the argument and, if false, weakens or ruins it.

In an argument from historical analogy, one or more historical situations, together with a present or impending situation are found similar.  The past situation(s) contain an additional characteristic.  The inference is then drawn that the present or impending situation also exhibits the characteristic.  Then an implication for policy is drawn or left to speak for itself.

To behave justly is close to, or is, being fair.  Fairness dictates equal treatment - similar action in similar circumstances.  Therefore much moral argument will be analogical.

defenses usually stress analogy of treatment in analogous situations.

condemnations and entreaties usually stress disanalogy of treatment in disanalogous situations.

Many analogical arguments sometimes lurk in seemingly innocent explanatory metaphors and similes.  They hide beneath veiled references.

The careful reasoner will have developed facility at making implicit comparisons explicit.