Another study on dietary fat

From The Lancet:

 

Background

The relationship between macronutrients and cardiovascular disease and mortality is controversial. Most available data are from European and North American populations where nutrition excess is more likely, so their applicability to other populations is unclear.

Methods

The Prospective Urban Rural Epidemiology (PURE) study is a large, epidemiological cohort study of individuals aged 35–70 years (enrolled between Jan 1, 2003, and March 31, 2013) in 18 countries with a median follow-up of 7·4 years (IQR 5·3–9·3). Dietary intake of 135 335 individuals was recorded using validated food frequency questionnaires. The primary outcomes were total mortality and major cardiovascular events (fatal cardiovascular disease, non-fatal myocardial infarction, stroke, and heart failure). Secondary outcomes were all myocardial infarctions, stroke, cardiovascular disease mortality, and non-cardiovascular disease mortality. Participants were categorised into quintiles of nutrient intake (carbohydrate, fats, and protein) based on percentage of energy provided by nutrients. We assessed the associations between consumption of carbohydrate, total fat, and each type of fat with cardiovascular disease and total mortality. We calculated hazard ratios (HRs) using a multivariable Cox frailty model with random intercepts to account for centre clustering.

Interpretation

High carbohydrate intake was associated with higher risk of total mortality, whereas total fat and individual types of fat were related to lower total mortality. Total fat and types of fat were not associated with cardiovascular disease, myocardial infarction, or cardiovascular disease mortality, whereas saturated fat had an inverse association with stroke. Global dietary guidelines should be reconsidered in light of these findings.

 

and

 

Research in context

Evidence before this study

We did a systematic search in PubMed for relevant articles published between Jan 1, 1960, and May 1, 2017, restricted to the English language. Our search terms included “carbohydrate”, “total fat”, “saturated fatty acid”, “monounsaturated fatty acid”, “polyunsaturated fatty acid”, “total mortality”, and “cardiovascular disease”. We searched published articles by title and abstract to identify relevant studies. We also hand-searched reference lists of eligible studies. We considered studies if they evaluated association between macronutrient intake and total mortality or cardiovascular disease. The studies cited in this report are not an exhaustive list of existing research. Existing evidence on the associations of fats and carbohydrate intake with cardiovascular disease and mortality are mainly from North America and Europe.

Added value of this study

Current guidelines recommend a low fat diet (<30% of energy) and limiting saturated fatty acids to less than 10% of energy intake by replacing them with unsaturated fatty acids. The recommendation is based on findings from some North American and European countries where nutrition excess is of concern. It is not clear whether this can be extrapolated to other countries where undernutrition is common. Moreover, North American and European populations consume a lower carbohydrate diet than populations elsewhere where most people consume very high carbohydrate diets mainly from refined sources. Consistent with most data, but in contrast to dietary guidelines, we found fats, including saturated fatty acids, are not harmful and diets high in carbohydrate have adverse effects on total mortality. We did not observe any detrimental effect of higher fat intake on cardiovascular events. Our data across 18 countries adds to the large and growing body of evidence that increased fats are not associated with higher cardiovascular disease or mortality.

Implications of all the available evidence

Removing current restrictions on fat intake but limiting carbohydrate intake (when high) might improve health. Dietary guidelines might need to be reconsidered in light of consistent findings from the present study, especially in countries outside of Europe and North America.

The study appears mainly to have been funded by Canadian health organizations.

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China tidbits

From the New York Times.

This article is discussing goings-on at Davos, January 2018.

 

At one end of town, President Michel Temer of Brazil welcomed an unexpected offer from Beijing for Latin American nations to work closely with a Chinese initiative, known as the Belt and Road, intended to spread its economic and diplomatic influence abroad.

At the other end of town, a senior Chinese diplomat helped introduce the prime minister of Pakistan at a breakfast meeting. Prime Minister Shahid Khaqan Abbasi used his talk to praise the rapidly expanding Chinese investments in his country, including to build power stations and a large port.

“The China One Belt, One Road is going to be the new W.T.O. — like it or not,” said Joe Kaeser, chief executive of Siemens, the German industrial giant, referring to the World Trade Organization.

On Friday, the Chinese government used a policy document issued in Beijing to call for a “Polar Silk Road” that would link China to Europe and the Atlantic via a shipping route past the melting Arctic ice cap.

These are very important developments internationally.

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Cancer Vaccine

This latest great report on a cancer cure comes from Stanford Medicine, which I consider a reputable source.

 

Injecting minute amounts of two immune-stimulating agents directly into solid tumors in mice can eliminate all traces of cancer in the animals, including distant, untreated metastases, according to a study by researchers at the Stanford University School of Medicine.

The approach works for many different types of cancers, including those that arise spontaneously, the study found.

The researchers believe the local application of very small amounts of the agents could serve as a rapid and relatively inexpensive cancer therapy that is unlikely to cause the adverse side effects often seen with bodywide immune stimulation.

“When we use these two agents together, we see the elimination of tumors all over the body,” said Ronald Levy, MD, professor of oncology. “This approach bypasses the need to identify tumor-specific immune targets and doesn’t require wholesale activation of the immune system or customization of a patient’s immune cells.”

One agent is currently already approved for use in humans; the other has been tested for human use in several unrelated clinical trials. A clinical trial was launched in January to test the effect of the treatment in patients with lymphoma.

Here’s how it works:

Levy’s method works to reactivate the cancer-specific T cells by injecting microgram amounts of two agents directly into the tumor site. (A microgram is one-millionth of a gram). One, a short stretch of DNA called a CpG oligonucleotide, works with other nearby immune cells to amplify the expression of an activating receptor called OX40 on the surface of the T cells. The other, an antibody that binds to OX40, activates the T cells to lead the charge against the cancer cells. Because the two agents are injected directly into the tumor, only T cells that have infiltrated it are activated. In effect, these T cells are “prescreened” by the body to recognize only cancer-specific proteins.

Some of these tumor-specific, activated T cells then leave the original tumor to find and destroy other identical tumors throughout the body.

The approach worked startlingly well in laboratory mice with transplanted mouse lymphoma tumors in two sites on their bodies. Injecting one tumor site with the two agents caused the regression not just of the treated tumor, but also of the second, untreated tumor. In this way, 87 of 90 mice were cured of the cancer. Although the cancer recurred in three of the mice, the tumors again regressed after a second treatment. The researchers saw similar results in mice bearing breast, colon and melanoma tumors.

“I don’t think there’s a limit to the type of tumor we could potentially treat, as long as it has been infiltrated by the immune system.”

Mice genetically engineered to spontaneously develop breast cancers in all 10 of their mammary pads also responded to the treatment. Treating the first tumor that arose often prevented the occurrence of future tumors and significantly increased the animals’ life span, the researchers found.

Finally, Sagiv-Barfi explored the specificity of the T cells by transplanting two types of tumors into the mice. She transplanted the same lymphoma cancer cells in two locations, and she transplanted a colon cancer cell line in a third location. Treatment of one of the lymphoma sites caused the regression of both lymphoma tumors but did not affect the growth of the colon cancer cells.

“This is a very targeted approach,” Levy said. “Only the tumor that shares the protein targets displayed by the treated site is affected. We’re attacking specific targets without having to identify exactly what proteins the T cells are recognizing.”

So we can’t all go get a shot and never get cancer.  But if a tumor is detected, and this works out in trials, we could get a shot and all of that type of cancer within our body would be killed by our own T cells.  If we got some other cancer, we would have to go get another shot for that one.

 

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Dylan Grice on Value Investing

From Advisor Perspectives, by Robert Huebscher:

Grice is a portfolio manager at Switzerland-based Calibrium AG. He previously served as an investment strategist at Societe Generale, and he spoke at that firm’s annual investment conference in London on July 9.

1. Value investing is an intellectual fraud

“What is investing if not for value?” Grice asked, rhetorically. He defined traditional value investing as betting with the odds in your favor or buying dollars for $.75.

The “value” adjective is not necessary, Grice said. “It is like fast sprinting or wet swimming.”

Grice then drew a distinction between fundamental, Graham and Dodd-style value investing, and factor, or quantitatively-based, strategies. He acknowledged that the 1992 Fama-French research showed that you could exploit statistical patterns of cheapness.

He then presented data comparing the small-cap Russell 2000 index relative to its value counterpart, going back 15 years. The annual value premium has been -44 basis points, Grice said. It is not just the Russell indices where value has failed. He said that using the MSCI world index data, the value premium has been -38 basis points over the same period; with emerging markets it was -12 basis points.

It is widely known that growth stocks have outperformed value in the U.S. over most of the last decade, and that value has been the winning strategy over longer time frames. Grice’s analysis was important because he compared value to a broader index and over multiple markets, using only the last 15 years.

But what he said next should be carefully considered by devotees of quantitative investing.

The value premium is not like the liquidity premium, Grice said, which inherently justifies a higher return for its risk. The same is true of the premia associated with credit risk or duration.

“Why should I get persistent risk premium for a cheap multiple?” Grice asked.

“Value investing is far too easy,” he said. “Anyone with a Bloomberg for Factset terminal can do this. It was a historical anomaly because it was cheap.”

“It’s now gone,” Grice said. “The value anomaly has been arbed [arbitraged] out. Value does not equal cheap.”

Quantitatively-based value investing is not the same as fundamental research, he said. Fundamentally-based investing is “hard,” he said, “and it’s got to be harder than quantitative analysis.”

The challenge for advisors is that there is no way to conclusively prove Grice’s claim. We know that quantitatively-based value strategies, unlike the broad capitalization-weighted index, cannot be pursued by all investors. Eventually capital flows to value strategies must erode returns, but we have no way to know for sure when this will happen – or if it already has.

Grice’s assertion should not be dismissed. One cannot be certain that value will “revert to the mean” and resume its long-term outperformance relative to growth the broader market. We’ll have to await further research to see the extent to which asset flows to value strategies, which have been substantial over the 15-year period he studied, have eroded returns.

This is really an interesting claim, and one that I (and I’m sure many others) have wondered for years  now.  There’s another important piece of this claim that is not discussed in this piece – idk if Grice addressed it or not.  That is, what if the value premium is gone? What does that mean for investments based on that premise? What should an investor expect from that portfolio relative to a growth portfolio or a balanced portfolio?  My question really concerns forward looking returns.  If the value premium is gone, does that mean value stocks and all the rest of the stocks now have the same forward looking return? If this is the case, then value investing may not be an advantage, but it may also not be harmful.

2. Absolute return is a myth (everything is relative)

It is generally understood that valuations, using metrics such as the Shiller CAPE ratio, are predictive of returns over long time horizons. The U.S. market is in the top quintile of historical valuations, Grice said, implying a sub-2% real return over the next decade.

“That seems clear cut and obvious,” he said, “but look closer and you see cracks.”

Grice provided data on the range of those return forecasts. Top decile valuations imply returns ranging from -2.4% to 8.7%. Thus, for the next 10 years one could “quite reasonably” make 8.7%, he said. “So how practically useful is this information? It should be a warning sign.”

Using U.S. equities, Grice then compared a buy-and-hold strategy to one based on market timing. His timing model was based on the CAPE ratio and it adjusted allocations depending on the quintile of historical valuations (he did not provide more specific details). His market timing model beat buy-and-hold, he said, but the bulk of the returns came in 1920s.

“There was no value added in the last 70 years,” he said. In addition to the S&P 500, Grice said that finding held for the FTSE 100, DAX 30 and Nikkei 225.

“Valuations matter,” Grice said, “but they’re difficult to measure and get right.”

Forward-looking return estimates are better than naïve extrapolations, he said. But the problem with focusing on U.S. equities is that there have been only seven signals in 100 years, based on valuations being in the top or bottom quintile. “There is not enough data to have statistically significant results,” he said. “The problem is that we don’t get enough movement.”

But if you look at signals across multiple asset classes, you get more useful data. Grice has analyzed valuation-based strategies using bonds and equities. He constructed a model that determines the equity-bond allocation based on the relative valuations of the two asset classes, and said that it outperforms a naïve buy-and-hold strategy. (He said his model used mean-variance optimization based on Sharpe ratios, but did not provide additional details.) Indeed, he said, his relative performance-driven portfolio “did very well.”

“The importance of valuation reveals itself when you add more asset classes to the portfolio,” he said. He has tested his findings for markets in Japan, across Europe and in different European countries. “Valuation is phenomenally powerful but only on a relative basis,” Grice said.

Right now, he said, equities are attractive relative to bonds. “Equities are not that bad,” he said, “given the unattractiveness of the opportunity set.”

OMG I could not love this more.  I had the same issue trying to make an investment model out of CAPE.  My conclusion was that 7 signals in 100 years can only lead to a model that is data-mining, in addition to being basically useless.  I wonder how this compares to Meb Faber’s dynamic allocation model?

His third point is “there is no bond bubble.”  You can click on the link to read that part, bonds are boring.

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Coal vs. Renewable Energy

OK, so solar just took a blow via new tariffs.  Here’s a story about renewables to brighten your day.  From ThinkProgress 1/10/18:

Solar, wind, and battery prices are dropping so fast that, in Colorado, building new renewable power plus battery storage is now cheaper than running old coal plants. This increasingly renders existing coal plants obsolete.

Two weeks ago, Xcel Energy quietly reported dozens of shockingly low bids it had received for building new solar and wind farms, many with battery storage (see table below).

The median bid price in 2017 for wind plus battery storage was $21 per megawatt-hour, which is 2.1 cents per kilowatt-hour. As Carbon Tracker noted, this “appears to be lower than the operating cost of all coal plants currently in Colorado.”

The median bid price for solar plus battery storage was $36/MWh (3.6 cents/kwh), which may be lower than about three-fourths of operating coal capacity.  For context, the average U.S. residential price for electricity is 12 cents/kWh.

Bid summary from XCEL's 2017 solicitation (part of its 2016 Energy Resource Plan).
Bid summary from XCEL’s 2017 solicitation (part of its 2016 Energy Resource Plan).

Note that by definition, half of the bids are below the median price — and there were 87 bids for solar plus storage, meaning many bids were quite low (see table above).

There were 96 bids for wind power alone — at a median price of 1.8 cents/kwh — which means some were very low-priced indeed. The tremendous number of bids in Colorado reveal the power of competition in driving prices down.

But it’s not just Colorado whose energy markets have been turned upside down. In November, we reported on the remarkable findings of the financial firm Lazard Ltd., which found that in many regions of North America, “the full-lifecycle costs of building and operating renewables-based projects have dropped below the operating costs alone of conventional generation technologies such as coal or nuclear.”

Moreover, Bloomberg New Energy Finance projects battery prices are projected to drop another 75 percent by 2030, even as solar and wind prices also keep dropping sharply. As a result, the price for dependable power from renewable energy sources is just going to keep going lower and lower.

 

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Negotiation Tactics

Of course some of this is right up to and maybe over the line of manipulation.  But a lot of it is NOT, and is just dealing with how we are wired as humans in a way that is constructive for everyone.  The Chris referred to in this post is Chris Voss.  He was the FBI’s lead international hostage negotiator and he’s the author of an excellent new book: “Never Split The Difference.”

From theladders.com:

  • Don’t be direct: Direct usually comes off as rude, no matter your intentions. Be nice and slow it down.
  • Don’t try to get them to say “yes”: Pushing for a “yes” makes people defensive. Try to get a “no.”
  • Do an “accusation audit”: Acknowledge all the negative things they think about you to defuse them.
  • Let them feel in control: People want autonomy. Ask questions and let them feel like they’re in charge.
  • The two magic words they need to say: Summarize their position to trigger a “That’s right.”
  • Listen for levers: They might only need the orange peel. Listen, listen, listen.
  • Keep asking “How am I supposed to do that?”: Let them solve your problems for you.

Emotions are critical. Most deals end because of negative feelings and most deals close because people like one another. So don’t alienate the other side — unless you are trying to kill the deal. (And that’s an effective technique as well.)

But what you really want to do is what that magic phrase “How am I supposed to do that?” accomplishes so well. It allows you to say “no” without making an enemy. Chris sums it up nicely in his book with a quote.

From Never Split The Difference:

“He who learns to disagree without being disagreeable has discovered the most valuable secret of negotiation.”

Discussions and negotiations aren’t about war or winning. It’s about finding a way for everyone to get what they want and to be happy with what they get. For the people closest to us, it’s also about understanding them better through listening.

And that’s what builds relationships that last.

A little more detail on the keys I found most interesting:

1) Don’t be direct

Straightforward and honest are good qualities. But when you’re too direct in a negotiation or heated discussion, it can come off as blunt and rude. You sound like you don’t care about the other side and just want what you want.

Skipping listening, empathy, and rapport is what turns an easily resolved dilemma into a fight. And you never want to turn a discussion into a war. Be nice and slow it down. Here’s Chris:

Don’t think, “I’m a very direct and honest person. I want people to be direct and honest with me, so I’m going to be direct and honest with you.” Well, that happens to come across as being very blunt and overly aggressive. If I’m not aware that my direct and honest approach is actually offensive to you, then I’ll be mystified as to what your problem is. Meanwhile, dealing with me might feel like getting hit in the face with a brick.

“Cutting to the chase” can feel like an attack. So slow down. Smile. Use a friendly tone or a calm voice.

3) You need to do an “accusation audit”

If it’s an argument with a loved one or a business negotiation that’s headed south, the other side probably has made some accusations about you. “You don’t listen” or “You’re being unfair.

And the common response is to start your reply with “I’m not ____.” You deny their feelings. Boom — you just lost the patient, doctor. They now assume you’re not on the same page. That they can’t trust you.

So what does Chris say to do instead? List every terrible thing they could say about you.

6) Listen for levers

Sometimes you feel you have no leverage. But Chris believes there is always leverage. You just have to find it. And you do that by listening and asking questions — which nicely builds rapport and makes your counterpart feel in control at the same time.

Negotiation is not a fight. It’s a process of discovery. When you know their real needs, the real reasons they are resisting you, then you’re able to address those directly and problem-solve.

What’s interesting to me is that they use the word “levers” and “leverage.”  I guess you can look at it that way, but really you are looking for points of agreement and ways to make a situation win-win.

7) “How am I supposed to do that?”

Playing dumb works. In fact, being helpless works too. Asking “How am I supposed to do that?” is deceptively powerful.

It gets them to solve your problems for you and in a way they deem acceptable. 

From Never Split The Difference:

Calibrated “How” questions are a surefire way to keep negotiations going. They put pressure on your counterpart to come up with answers, and to contemplate your problems when making their demands… The trick to “How” questions is that, correctly used, they are gentle and graceful ways to say “No” and guide your counterpart to develop a better solution — yoursolution.

By getting the other side to think about your situation it very often gets them to grant concessions. And they’re concessions that they’re okay with and will likely stick to because it was their idea to offer them. Here’s Chris:

You want to make the other side take an honest look at your situation. It’s the first way of saying “no” where you’re doing a lot of things simultaneously. You’re making the other side take a look at you. You make them feel in control, because it’s a good “how” question. You don’t want to say it as an accusation. You want to say it deferentially, because there’s great power in deference. You want to find out if they’re going to collaborate with you. 9 times out of 10, you get a response that’s really very good.

Keep asking it. In hostage negotiations Chris would ask it over and over: “How do we know the hostage is safe?” “We don’t have that kind of money. How are we supposed to get it?” “But how do we deliver the ransom to you?”

Now I know what some of you are thinking… Eventually they’re going to say, “You’re just going to have to figure it out.” And that’s fine. That’s the signal you haven’t “left any money on the table.”

This last point is a great one.  It’s the classic way that women get their ideas heard in meetings.  One important point that he left out here is that you can steer the “how” questions to lead to the idea that you have.  Of course, as women are painfully aware, this leads to you getting credit for exactly zero ideas.

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Lady Economists

*sigh*  From the NY Fed:  ht Noah Smith via Twitter.

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