February 2012
3 posts
It's not a class war, it's a meritocracy war
Merit is a fine principle. But the most painful revelation of the debate on high pay may be this: many Britons are not convinced that they live in a functioning meritocracy. Are the bosses bluffing? Assuming that voters are not suicidally casual about who holds Britain’s biggest jobs, their desire to slash bosses’ pay leads to one conclusion: the public does not believe that executives are as...
the digital transformation of news is going...
In the fourth quarter, we launched iPhone news apps in 15 TV markets that have been downloaded by 260,000 users and generate 1.5 million page views per month in those markets.
This little tidbit came out on Gannett’s Q4 Earnings Call. Talking about the death of old school media is a little passé at this point. But I would like to point out that if all 260,000 users downloaded...
Insurance Rates Are Probably Going Up
In fact, the events in Thailand, on the heels of the Japanese earthquake and tsunami as well as a significant New Zealand earthquake, has insurance companies thinking about doing business differently. Some have cut back on their business-interruption coverage for natural disasters. And they are expecting commercial buyers to provide them with more information. “Underwriters are now realizing...
January 2012
4 posts
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As we emerge from the aftermath of the flooding, we are mindful of coming...”
– Western Digital Second Quarter Fiscal 2012 Conference Call
This should serve as a lesson to all those companies who keep thinking that operating margins can just expand infinitely as they move labor to lower and lower cost countries, and get to operate under less onerous regulation on foreign...
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“When you talk to other entrepreneurs and tell them you’re using Microsoft’s...”
– Steve Ballmer Reboots - BusinessWeek
I’d say this one quote speaks volumes about Microsoft as an underdog. As venture financing dries up and startups look to scale cheaper and faster than they already are, they may end up heading back to Microsoft.
1 tag
Know yourself, and then get to know your...
While most of the financial blogosphere is spending time recapping last year, making predictions, or crowing about or lamenting annual performance, I’ll take a different tack and get philosophical. One of the things that most investors lose sight of is that every economic moment is either a continuation or a reaction to the past. Thus, if you want to know where to put your money at any...
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A day after the Insurance Information Institute released figures declaring...”
– Global Cat Figures Released-Insurance Networking News
Some really interesting facts at the bottom of the summary. For instance, I knew the tornadoes were bad, but 226 tornadoes hit the US in a single day? Wow.
December 2011
2 posts
Glad to see someone is thinking long-term in this...
From a random sell-side investment research paper that crossed my desk:
This monthly report is designed to highlight trading opportunities we believe are likely to unfold in the short-term (i.e., over the next 30 days). Factors taken into consideration for our short-term recommendations include recent price performance, valuation, basic technical analysis, and upcoming catalysts during this...
“That any human being can earn more than 344 grand a year without having the...”
– Michael Lewis: Advice From the 1%: Lever Up, Drop Out - Bloomberg
Michael Lewis has his faults, but this is Jonathan Swift level satire. Priceless.
November 2011
2 posts
“The three-year cumulative average growth rate (CAGR) of deposits at U.S. banks...”
– business deposits flood U.S. banks
When this switch flips, it will be a doozy.
“I would, however, remind readers that while the outsized gains in the month of...”
– How to Survive an Emotion-Fueled Market | Trading Strategies, Financial Commentary, Investment Ideas
Great article, but I especially loved the data point above (H/T @AlephBlog).
October 2011
11 posts
“Klein’s proposal, which he calls the “premortem,” is simple: When the...”
– Kahneman: Bias, Blindness and How We Truly Think - Bloomberg
Definitely a great addition to any pre-launch checklist that you may have.
“U.S. consumers unexpectedly caught a case of the economic willies in October....”
– Confidence Falls Most Among High-Income Consumers - Real Time Economics - WSJ
One of the things that has perplexed me for awhile now has been the strength in luxury goods through this downturn and tepid recovery. It makes sense if you think about this recovery as one that has been led by high...
“Amazon’s browser apparently does more than caching, speeding, and munging Web...”
– Google’s “Interesting” Week | Monday Note
Read the whole thing and then come back and tell me how you can have any confidence in a P/E multiple on Google, Facebook, or Amazon to arrive at a reasonable valuation.
“One might view Dimon’s call for a Marshall Plan as a signal that he is...”
– Jamie Dimon Say U.S. Needs A Marshall Plan
I think the reason for Dimon’s “olive branch” is that he’s less concerned with pointing blame or making sure every responsible party gets the appropriate retribution, and more concerned with fixing the problems and getting on with...
“There’s no question that being available, well priced, well timed to the...”
– Robert Iger - Walt Disney’s CEO Discusses Q1 2011 Results - Earnings Call Transcript - Seeking Alpha
This might be one of the most cogent statements about digital strategy that I’ve ever seen an executive at a media company make.
“Implausible or not Apple always beats estimates; and always isn’t really...”
– Apple Earnings on Deck: How the World’s Largest Company Can Still Surprise to the Upside | Breakout - Yahoo! Finance
This is why extrapolating past trends is dangerous. Analysts who follow Apple were expecting earnings of $7.38/share vs. the $7.05/share they posted. The unit sales on virtually...
“As banks and insurers compete in the lucrative retirement market, new numbers...”
– Annuity Sales by Banks Surge
Just in case you had any doubt about the average retail investor’s appetite for risk.
“Fuller points to the book Measuring Up by Harvard professor Daniel Koretz, which...”
– The Pearson Graduate - The Texas Observer
This is what is known as the Hawthorne Effect. Basically, as you start measuring performance, subjects become aware of the impact of measurements and adjust behavior accordingly. The more we test, and the more high stakes these tests become, the more...
“Logically, it is impossible to blame high-frequency traders for this 65% rise in...”
– HFT Is NOT Responsible for Market Volatility – You Are! - High Frequency Trading Review’s blog - High Frequency Trading Review
I don’t disagree with anything that is said here. But I’d like to know what percentage of market volume can be made up of HF trades before the system...
“Respondents now forecast the overall size of the credit derivatives market to...”
– Welcome to the new world order, where macro forecasting is the hammer, and everything looks like a nail.
“I think the iPad redefines everything. Let me start from personal and then go...”
– The Vulture Transcript: Neil Gaiman on Comics, Twilight, Twitter Etiquette, Killing Batman, and Sharing Porn With His Son — Vulture
This interview with Neil Gaiman is amazing if you like his stories and his comics and his movies, but it was this section that really stood out to me in terms...
September 2011
12 posts
“Railroad mergers or acquisitions by other parties can indirectly affect freight...”
– STB Reviews Berkshire Buyout Impact on BNSF Rates | Railroad Industry News and Information
The more you find out about Buffett’s deals the more you realize how savvy they are. Back in 2010 everyone was so focused on the economy and what rail loads were doing that they never thought about...
“For the better part of the last two years, some of the world’s biggest hedge...”
– After Huge Gains in Gold, Hedge Funds Sell - NYTimes.com
Oh, investor redemptions, you are such a bitch, and you always come at the worst times.
“What about inflation? The Fed has achieved something unique in this cycle. It...”
– Barron’s Q&A With Jim Grant - Barrons.com
You should just read the whole thing, because Jim Grant is as close to genius as you’re likely to get in this lifetime.
1 tag
Multicat function for Excel
For those of you (like me) that spend way too much time in spreadsheets, you might find this multiple concatenate function (multicat) worth a look.
4 tags
“Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) hired Ted Weschler to help...”
– Buffett Hires Hedge Fund Manager Ted Weschler - Yahoo! Finance
One more sign that Buffett’s getting serious about his succession plans. While more posts will soon surface on the internet dissecting Weschler’s past performance, current portfolio holdings, etc. I just wanted to touch on...
“Most people used to pay off their debts before retiring. But as wages have...”
– Older Americans Held Hostage by Mortgages - WSJ.com
Explain to me again why we haven’t adjusted the retirement age of 65 in the US to keep up with average life expectancy inflation?
2 tags
“Investors, it seems, do not trust assurances from executives that...”
– ICBC: canary in the coal mine - FT.com
“When appointed, Bartz set about slashing costs and staff – a move that made her...”
– Yahoo could be sold after Carol Bartz is shown the door | Technology | guardian.co.uk
That’s the other thing value investors always get wrong about tech. You can’t typically slash costs to right the ship. You can cut costs to let an existing cash cow shine through. But to bring a...
“The problem had to do more with how people on the Gulf Coast were assessing...”
– The God Clause and the Reinsurance Industry - BusinessWeek
Safety devices encourage more reckless behavior that almost always mitigates their effects at least a little.
“Of course, the ancients were also fully aware that foods could be dangerous...”
– Death in the Pot - Lapham’s Quarterly
4 tags
“Today, the unintended consequences could be at least as severe, in the opposite...”
– Why Levies on High-Speed Trading Won’t Work - WSJ.com
One of the joys of participating in a market dominated by high frequency traders and having a long-term view is that you can almost always be sure that the person on the other side of the trade is not trading on information about the...
August 2011
20 posts
2 tags
“Helicopter drops by the Federal Reserve are illegal. Helicopter drops by the...”
– interfluidity » The bounds of monetary policy on Planet Earth
Brilliant
“To the economist embezzlement is the most interesting of crimes. Alone among the...”
– JK Galbraith, in The Great Crash. Via Waldman. (via felixsalmon)
This really is one of my favorite economic parables of all time. I’ve had a post expanding on this kicking around in my head for months, but I just wanted to pass along the original description for posterity until I can flesh...
“Irene will cost insurers an estimated $2.6B in the U.S. rather than the maximum...”
– U.S. Economy Currents - Seeking Alpha
In the market, it’s not whether a datapoint is good or bad that is important, it’s whether it’s better or worse than expected. Irene hit the east coast, ripped down power lines, and caused a decent amount of damage. However, it was much...
“But we learn from history, every time, that it is good when an industry becomes...”
– http://torrentfreak.com/nobody-asked-for-a-refrigerator-fee-110821/ (via coteindustries)
Entrenched factions always protest against emerging disrupters. Luddites will always be with us in one form or another. Whether the government cooperates with the old guard or not only slows down the...
"Save As..." dropped from Lion
Can someone please explain to me why I should consider the removal of “Save As..” from OS X Lion a feature and not an annoyance? I fail to see why I should rejoice that an action now takes multiple mouse movements and clicks when it used to be a simple keyboard shortcut?
3 tags
HP and the Value Investor's Dilemma
Value investors have always taken a cue from Warren Buffett, and one of the mantras through the tech bubble was an aversion to tech stocks. It might not be an overstatement to say that a lot of the outperformance of the mini-Buffetts that were operating at that time did as well as they did because of their aversion to tech stocks. So, it’s been interesting, in this environment, to see a...
4 tags
“Gold extended losses on Thursday to fall as much as $200 from Tuesday’s...”
– Gold falls $200 from Tuesday’s record high - Yahoo! Finance
Ask yourself what happens when an entire class of investors uses borrowed money to buy an asset with a negative yield and then suddenly find themselves wanting to liquidate at the same time?
3 tags
“Several former executives described Skinner as having no tolerance for...”
– Why McDonald’s wins in any economy - Fortune Management
Great profile on Jim Skinner, McDonald’s CEO. But being a fan of “Two and a Half Men” as evidence of his sense of humor? Also, check out the french fries as chart junk info graphic.
“Douglas Peterson’s highest priority as the new president of Standard &...”
– S&P Hires Peterson to Restore Ratings Confidence as Sharma Sets Departure - Bloomberg
I know I feel more confident in the veracity of the agency ratings now that I know they won’t be going after sacred cows anymore.
3 tags
Converting an xts object to a data frame in R
I feel like the last few days I’ve been struggling with what I would consider novice problems in R.
Today I spent a few minutes trying to remember how to convert an xts object to a data frame while preserving the time stamp as a column that can be accessed. I just stumbled across this post from Jeffrey Breen which shows you how to do just that as well as overlay recession bars on top of a...
“The 66,414 job cuts last month were up 60 percent from the previous month, when...”
– “Sudden And Unexpected” Burst Of Downsizing Causes Layoffs To Explode Nearly 60% In July
You should always take one month blips with a grain of salt. This is highlighted by the fact that the ADP jobs report for July was mildly positive. However, what’s worrisome about this...
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the problem is that you start `else’ on a new line; check the
...”
– [R] Got “Unexpected ELSE error”
From the “crap that I didn’t expect in the R language definition” department
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He went on to describe a recent article in the R journal that analyzed 18...”
– Revolutions: The R-Files: Martyn Plummer