Monday, January 4, 2016


Scientists Are More Creative Than You Might Imagine

But original thinking could be declining among students because of the growing emphasis on test-taking in schools.

Thomas Edison learned how to think creatively as a scientist, but he admitted that his process was more perspiration than inspiration. DcoetzeeBot/Wikimedia


Scientists don’t usually have a reputation for being very creative. They have to adhere to the scientific method, use statistics and data, and carefully measure their results—activities that would appear to take the magic out of the creative process, like having to explain your own joke. But few would dispute that the great scientific and technological innovators were creative thinkers.
"The greatest scientists are artists as well," as Albert Einstein said.
“I think we take for granted that we rely heavily on science creativity, whether we realize it or not,” said Rex Jung, a professor of neurosurgery at the University of New Mexico in Albuquerque. Whether we use our advanced technology to watch cat videos or take advantage of life-saving medical procedures, scientific innovation is “incredibly important to our quality of life,” Jung said.
Society needs creative scientists for continued innovation. But does the process for teaching scientific creativity differ from artistic creativity? And can creativity be taught?



Scientists have a bad creative rap, Jung said, because their work is more tangible and “real.”
“Our work builds on previous work—you’re standing on the shoulders of giants,” he said. “We’re incrementally working to expand upon previous work, and that is deemed less creative, or somehow derivative. But I would argue that artists do the same thing.” Cubist artists built upon the foundation of impressionism, Jung noted, just as scientists innovate based on the work conducted before their own.*
In 1926, social psychologist Graham Wallas wrote a book called “The Art of Thought” in which he described the four stages of creativity: preparation, incubation, illumination, and verification. Jung, who has written a number of articles about the neuroscience of creativity, noted that the stage between incubation and illumination involves a pretty big cognitive handoff.
When an idea is incubating, Jung says, you rely heavily on the neural connections your brain uses for brainstorming—a system known as the default-mode network: “You use the regions of the brain involved in daydreaming and imagination. You’re looking inward instead of solving the problems of the world.” That allows ideas to bounce around and intersect in novel ways.
But the cognitive control network takes over once your brain wants to articulate and implement the idea. This is your brain’s error checker, where you plan and make decisions to overcome your habitual inclinations.



Jung is most interested in that tenuous transfer between the two systems, when an idea evolves from something abstract to something it can articulate and evaluate.
“We see that the most highly creative people flip easily between the two and are better able to modulate these networks,” Jung said.
Neurologically, the creative process should look the same regardless of whether a person is an artist or a scientist, Jung says. And researchers have just begun to see this creativity in real time.
Charles Limb, an ear, nose and throat surgeon at Johns Hopkins University in Baltimore, scanned musicians’ brains as they improvised melodies. Limb didsimilar study with rap artists, asking them to improvise on the fly.**
What researchers found was that the improvising brains turned off their error checkers and let the ideas bubble to the surface while they were in earlier stages. If they studied scientists, researchers would presumably see the same neurological activity, although they haven’t yet tested it.
But Jung and others who study creativity fear that it’s on the decline among students. Even though creativity is innate, it needs to be cultivated. And as schools place greater emphasis on learning material and taking tests, Jung fears that opportunities for thoughts to flow freely are fewer now than in the past.
“I always advocate for recess,” Jung said. “This is where imagination often happens. That downtime is really important—kids had their time in class, so then they need time to think about something they learned in class or absorb the material in a different way by getting away from it for a period of time.”



In a blog post on his web site, Jung notes the value of what he calls “imaginability,” or the ability to play out ideas in one’s mind. This sort of exercise can only be done with the default-mode brain, Jung said, while the conscious mind is busy doing something else that’s not too taxing—like cooking or making sure your teeth are brushed.
“Most creative people stumble upon their tool to increase their imaginablity, whether it’s taking a bath or a walk or a drink of bourbon,” Jung said. They find some way to turn down the noise of the conscious mind so ideas can flow more naturally.
People may prefer to meditate, exercise, or just lay in bed all day, but they have to know themselves and how their minds work before tapping into their creativity systematically. And without the time to do this as children, learning how to do it later in life may be more difficult.
Some who foster creativity in scientists encourage students to learn these facts earlier in their scientific careers. Ted Clark, a professor of chemistry at Ohio State University in Columbus, has been working for years to enhance creativity in his first- and second-year students.
Students like to do research, Clark said, but most universities require at least a few years of science education before students can really get into the lab. So Clark and his colleagues created curriculum for basic science courses that involves a hands-on research component to get students more engaged.



During an entry-level chemistry course, Clark charges his students with collecting water or soil samples as part of a larger project to determine the contaminants that may be present around the city of Columbus. This kind of flexible project allows students to incorporate knowledge from other fields like architecture or history, Clark said, to figure out why a particular area might be contaminated. Clark has also been working with a number of high schools throughout Ohio to integrate creative problem solving into science classes.
Efforts to cultivate and understand the neurological processes of creativity may mean a more creative generation of scientists with stunning innovations yet to come. But to do that, they have to have the space and time to understand their own minds.
To solve a problem in science, Clark said, scientists have to think logically and linearly.
“But scientists aren’t robots. You can’t just take your data and put it in something and have the answer come out,” he said. “That’s my top priority: How can we have some opportunities for [students to work on] authentic problems where we welcome diverse solutions? In science, we don’t begin by knowing the answer—we value the process.”

  * This post originally indicated that cubism predates impressionism. We regret the error.
  ** This post originally stated that Rex Jung was involved in the study on rap musicians. We regret the error.

ABOUT THE AUTHOR

  • ALEXANDRA OSSOLA is a science writer based in New York. She has contributed to Popular Science,Motherboard, and Scienceline.





hy You Shouldn't Buy a Highly-Rated Mutual Fund

This blog is about financial deceptions, swindles and costly untruths.

Say a mutual fund makes a “best buy” list or is highly rated. Should you buy it?
The latest round of research, which confirms decades of academic findings, suggests you should avoid top-rated funds. They rarely repeat their best years.
According to a new study by Baird Wealth Management Research, not only do mutual fund ratings not predict future performance, they may be reliable red lights that should warn you against buying a fund.
Baird analyst Aaron Reynolds asked the question “do fund ratings predict future performance?” Here’s what he found:
* For US stock funds, the research found that ratings were negatively predictive of future performance, e.g. a high rated fund will perform worse than a low rated fund.
* For international stock funds, there did not appear to be a similar trend.
* For bond funds, ratings and performance showed a positive relationship and higher rated funds tended to show
higher performance.
How do you explain these results? Often, when a stock fund manager has a good year, it’s due to chance. Many funds reflect the market as a whole, that is, they are “closet” index funds that mimic the market at 10 times the cost.
If stocks in general have a good year, then most stock funds will do the same.  But having a good year should not be confused with persistence of performance. They probably won’t repeat their results.
Recommended by Forbes

The end of mutual funds is coming


Pimco is launching an ETF to track the biggest mutual fund, its Total Return Fund. Will this portend the end for mutual funds? We looked into the future to find out, and this 2022 story tells it all.

March 1, 2022
Ten years ago, in March of 2012, the world’s largest mutual fund cloned itself as an ETF. It occasioned a small amount of business media attention at the time, but in hindsight, it was the event that changed everything.
Many of you today do not even know what a mutual fund is (or how to write in cursive or dial a phone with your finger, but that’s another story). But once upon a time, the mutual fund was the center of the financial universe and the dominant vehicle for retail investors. Before President @MeghanMcCainDC was sworn in and before the Facebook-Google naval battle that tragically claimed the lives of thousands of our young programmers, the mutual fund was King.
Prior to the Crash of 1929, almost one hundred years ago, there were around 700 closed-end funds and only a handful of mutual funds. But closed-end funds were leveraged with debt and had to report their holdings each night. The majority of these early funds were wiped out in the sell-off. And when the smoke cleared, it was the open-end mutual fund that took the baton from their debilitated closed-end cousins.
And that new pecking order stood for seven decades without a challenger in sight, as retirement vehicles like 401ks blossomed. Exchange traded funds (ETFs), which came to prominence in the late 1990’s, grew their assets under management quickly, but mainly as passive index vehicles; very few actively-managed ETFs could raise any money at all.
But one fund family, Pacific Investment Management Co. (PIMCO) saw an inevitability that the other mutual funds were slow to accept. They saw that as brokers morphed into advisers, broker-sold products like mutual funds would eventually lose assets by attrition (there once was an old saying that “mutual funds are sold, ETFs are bought”). Pimco recognized that what people hated most about their mutual funds were their high expense ratios, the 12-b1 marketing fees and the inflexibility of a product that could not be purchased or liquidated until after the market close each day.
And so rather than react to that eventuality when the time came, Pimco helped usher in that new era with the launch of its flagship Total Return actively-managed ETF. It was a nimbler version of its ubiquitous $300 billion Total Return mutual fund  PTTRX 0.10% . Its March 1, 2012 launch under the ticker symbol TRXT would henceforth be recognized as the Shot Heard ‘Round Boston, the birthplace and epicenter of the traditional fund complex.
Within one quarter, financial advisers and pension fund managers realized that the small basis point cost difference between the Total Return Institutional Class fund and the Total Return ETF was de minimis (48 basis points versus 52 basis points). And tens of billions of assets flowed from the former to the latter in an unstoppable torrent. After another quarter had gone by, the retail holders of Total Return A and C shares (which carry extra fees) rebelled against their brokers and demanded a switch, especially when the performance gap turned out also to be almost nonexistent.
The total sacking of the Mutual Fund Empire certainly didn’t happen overnight. It took Jeffery Gundlach’s DoubleLine two years to launch his competing Total Return ETF into the marketplace, T. Rowe Price  TROW -0.83%  and Janus  JNS -0.49%  began cloning their top shelf funds shortly thereafter. War erupted nationwide across the asset management landscape with two trillion dollars and the soul of the industry up for grabs. There were skirmishes between custodian and transfer agent, there was the Creation-Redemption Unit Massacre of October 2014, the TIAA-CREF versus Putnam Bloodbath and the Battle of the Pension Fund during which the Teachers Union mercenaries were told to “do their worst” (they happily obliged, pelting Wharton MBAs with rotten fruit outside of an investment committee meeting at the Charles Hotel in Harvard Square).
It wasn’t until the barrier for ETFs into 401(k) plans was finally overrun in 2015 that the Provisional Mutual Fund Government in Exile (PMFGE) finally conceded under a shady tree in Zuccotti Park. The surviving fund families buried their dead index funds and sector funds and converted the remaining active strategies to the ETF wrapper.
Most people in the fund management industry don’t like to discuss those days. The fees charged now are significantly less and profitability will never be what it once was during that bygone era. Fidelity decamped from Boston, opting for a more decentralized presence. The Jack Bogle-worshipping old guard alliance promptly slipped into hiding so as not to face a war crimes tribunal for the atrocities they committed in the spring of ‘17.
The mutual fund industry died from a thousand cuts — but it was Pimco who drew the first blade in 2012.
The financial services landscape is an ever-changing environment. The mutual fund industry, in particular, has been in the spotlight in recent years, with questions around the cost and value of offerings. Regulatory pressure has also made headlines. The collective attention has led to changes, and has also raised questions about the future of such funds.
Industry Changes
Massachusetts Investors Trust, the world’s first mutual fund, was unveiled by MFS Investment Management in 1924. That fund is still sold today. While mutual funds have a long legacy and lasting staying power, they have faced challenges over the years, undergone changes and will no doubt continue to do so.
Mutual share classes are a case in point. There are two main types of share classes: load funds and no-load funds. Load funds come in three primary share classes: A shares, B shares and C shares. Ongoing developments in the industry have put pressure on all of these, particularly B shares and C shares.
Goodbye to Bs
B shares were once considered a hot commodity for the financial services industry. Financial advisors liked them because they generally had higher management expense ratios (MER) compared to other funds within the same family, making them more profitable to sell. Investors liked them because, unlike A shares, they were not subject to an initial front end-load. However, in 2008 and the Financial Industry Regulatory Authority (FINRA) issued an investor alert titled "Class B Mutual Fund Shares: Do They Make the Grade?"
In its own words, FINRA issued the alert "because we are concerned that some investors may purchase Class B mutual fund shares when it would have been more cost effective for those investors to purchase a different class of shares." The alert was another manifestation of the ongoing concern that many investors would become enticed by the lack of up-front costs, only to realize charges once they tried to cash out. On the other side of the coin, B shares provide the advantage of using your entire investment to gain market exposure rather than paying towards upfront fees.
Sales of B shares have been in decline and many mutual fund firms are moving away from them, with big-name firms including Goldman Sachs, PIMCO, American Century and many other financial institutions dropping B shares from their product lineups.
The Great Recession reduced investment returns, making the complex fee structure of B shares less attractive to fund companies. B shares became a significantly less valuable product from a seller's point of view. Pressure on the fund industry to reduce fees in light of poor performance, competition from low-cost ETFs and pressure from regulators add fuel to the fire.
Writing on the Wall for C Shares?
The future of C shares may also be questionable, as they usually have a higher management expense ratio than other mutual funds in the same fund family. A combination of regulatory pressure and concerns about fees may make it difficult to justify selling clients expensive C shares when less expensive shares of the same fund are available.
Give me an "A" 
A shares are the least expensive of the traditional load-fund fund share classes. They are also the least complicated. There are no back-end loads and no graduated pricing structures that reduce the cost to investors based on how long the investment is held. That noted, there are less expensive share classes available.
No-Loads
No-load funds offer a wide variety of investment strategies at lower prices than those typically charged by load funds. These less expensive shares are popular among do-it-yourself investors and are also used by some financial advisors. Of course, no-load funds face challenges too. Recently, regulatory attention has centered on money market funds and their traditional positioning as stable, cash-like investments that maintain a $1 per share net asset value. Proposals to let the share price float, moving up and down like the share prices of equity funds, could result in changes to how fund companies and investors view these funds. Cost pressure exists in the no-load area too, as investors seek to reduce expenses.
ETFs offer a low-cost investment alternative that is fiercely competing with mutual funds. Still, despite all the attention they have attracted, there are only a little over 1,200 ETFs in the marketplace versus more than 8,700 mutual funds, according to the Investment Company Institute.(If you're an investor who likes to understand how and why your investment products work, An Inside Look At ETF Construction provides a close-up look at the popular, inexpensive portfolios, and Active Vs. Passive ETF Investing explains how you can use these securities for more than just indexing.)
The Bottom Line
The rise and fall of B shares and the development of ETFs highlight the dynamic nature of the financial services industry. New products are developed and old products are enhanced or eliminated based on a mix of market-moving forces, including supply and demand, the regulatory environment, and the performance of the products and the financial markets in general. Despite these changes, mutual funds remain quite popular. In the United States, where innovation in the investment industry is commonplace and the focus on cost containment intense, assets in “registered investment companies”(which includes mutual funds and ETFs) surpassed $13 trillion at the close of 2012 and set a new record with a year-end close of $14.7 trillion. Of that number, just $1.3 trillion was accounted for by ETFs. (Source: http://www.icifactbook.org/)


Read more: The Future Of Mutual Funds | Investopedia http://www.investopedia.com/articles/mutualfund/10/future-mutual-funds.asp#ixzz3wHjChLlE 
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