Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Boldly flying in front of a stained glass window

Portfolio Management

• Sick of the ups and downs of the markets? Assets that don’t trade at all might sound tempting, but @jasonzweigwsj says beware of the pitfalls of private offerings https://t.co/AO2RWVMdVq  Don’t let the volatility of publicly traded assets scare you into buying opaque investments Jan 13, 2023
• Why investing will grow more difficult in 2023 https://t.co/nq173pzVFO  The VIX, and option volatility generally is over-followed, and there are options speculators than before, particularly with calls. 2023 is merely a sequel to 2022, already anticipating the FOMC stopping Jan 13, 2023
• Experts Spent Years ‘Angst-ing’ Over Value. In the End, the Answer Was in the Textbook. https://t.co/7gEByaPayA  Abundant liquidity from the Fed emboldened growth investors to bid prices to unsustainable valuations. Jan 11, 2023
• Barbarians Are at Grayscale’s Gates. Can They Take Over $GBTC? https://t.co/pKLMtrt4go  This situation may be hopeless, so learn from the broader principle: be careful before investing in anything where it is extra difficult to vote out management. Jan 10, 2023
• 3 Ways to Measure Management Integrity https://t.co/ft2IfzGblW  Integrity is important because if a management team is unethical toward stakeholders, in a tough situation, they will cheat shareholders as well Jan 10, 2023
• How often do you need to rebalance your portfolio? The answer may surprise you https://t.co/Q21GMn5zLj  Rewards for rebalancing have declined because risky asset classes have become more correlated over time, as diversification has become more broad Jan 10, 2023
• Brokers that offer traders the chance to buy less than a full share of a stock are set to face more scrutiny from a key industry watchdog https://t.co/NvfIUAnFyE  These are worthy of scrutiny, but the amounts involved are small potatoes, for the most part. Jan 10, 2023
• The California Public Employees’ Retirement System is making a $1Bn wager that small private equity firms can boost the pension giant’s returns and clout https://t.co/NGKkU6tnmD  CALPERS has a knack for being late… adding money to two small private equity shops now? #pe_glut Jan 10, 2023
• Monte Carlo Failures Aren’t Plane Crashes https://t.co/AenaX40s1k  Attempts to distinguish between meeting needs and wants. Does not take into account, as far as I can see: quasi-MC, return assumptions, variances, correlation, mean-reversion, momentum, extreme events, etc. Jan 09, 2023
• Estimating Future Stock Returns, September 2022 Update https://t.co/EwIuzWnCDL  My but future returns are limited. 3.2%/year over the next 10 years. Does that sound attractive? Jan 08, 2023
• A look back at the wildest financial predictions from the everything bubble https://t.co/oOIPcQ7Se4  Impossible to have an “everything bubble.” That said, stocks, housing, and crypto are still overvalued. Jan 08, 2023

Culture

• US birth rates are at record lows – even though the number of kids most Americans say they want has held steady https://t.co/Nz026ECbUX  There is no mystery here. If you don’t have children while young, odds decrease that you will have children, and a higher number of them. Jan 14, 2023
• The Half-Madness of Prince Harry by @peggynoonannyc https://t.co/l34TqzQmK9  Seems like a PR “scorched earth policy.” Why should we care about the English monarchy, including Harry? Is he trying to destroy something because he cannot have it himself? #envy Jan 13, 2023
• The new conservative Israeli government means Jewish activists have more support for praying at the Temple Mount. https://t.co/Cbxx8xqrNq  Playing with dynamite Jan 12, 2023
• Why Italians have become the most common foreign nationality in London https://t.co/SCsAskWoS2  Culture matters. There is more opportunity in London than much of Italy Jan 10, 2023
• Xi Jinping’s plan to reset China’s economy and win back friends https://t.co/ezTQgj9u62  It’s rare to see someone have severe opinions “spin on a dime.” These efforts are meant to end the protests and regain some Western support. Xi will revert when he finds it advantageous Jan 10, 2023
• The Engineers Are Bloggers Now https://t.co/j9DU5Ot69p  Anytime you can get good writers in STEM fields to break down the complexity, it is a treat. Management appreciates those who can take a tough subject and explain it to them. Jan 10, 2023
• CFP? CSLP? There is an alphabet soup of financial-adviser credentials https://t.co/reycid43Lm  Credentialing is overdone. The only ones who directly benefit are those who create the credentials. This will eventually fade, aside from credentials that are genuinely hard to obtain Jan 09, 2023
• Is it time to kill calculus? https://t.co/7vmGjNozdI  Maybe, and it might be good to replace geometry with analytic geometry, but adding data science and probability will leave most STEM majors underprepared for college math. Jan 08, 2023
• Also, the article is wrong when it states that current math pedagogy favors boys over girls. It is the opposite, except in the top decile. This proposal would not make things better; it would create new problems. Math pedagogy peaked in the 1950s and has gone down since https://t.co/qxQl3tnt2z  Jan 08, 2023

Companies

• Bed Bath & Beyond continued to surge on Thursday after the company’s bankruptcy warning reignited interest from retail traders https://t.co/EeW4tHeUdT  Time for a secondary offering of $BBBY stock, or quietly do a PIPE. Or a rights offering w/some warrants, or a junior convertible Jan 12, 2023
• With $200 billion already squandered and Tesla in sharp decline, it’s possible Elon Musk will never be the world’s richest person again https://t.co/VPqvOEMAOk  Could Elon Musk lose all of his $TSLA stock? Dubious, but losing almost all of it is quite possible. Jan 11, 2023
• A swing and a miss https://t.co/Iva3XAYNIT  A commercial real estate pro comments on Univ. CA’s recent transaction In BREIT. His conclusion: even with the discount, they would have gotten a better deal in the public REIT markets Jan 10, 2023
• Pizza Robot Company Stellar Draws Engineers From SpaceX https://t.co/ZcxP4vAI08  If it can get the cost of a pizza down with reasonable quality, this could be interesting on a mass market basis. Jan 10, 2023
• Ukrainians accounted for 45% of all the new foreign companies that set up shop in Poland last year, according to a report https://t.co/lhFlsqYkJn  Will be interesting to see how Polish/Ukrainian relations evolve. Jan 10, 2023
• Warren Buffett’s excellent Japanese adventure will probably keep pumping out profits even as oil and gas prices slip from their highs, writes @JavierBlas https://t.co/wZrceogkZY  Another small win for Buffett Jan 09, 2023
• The US Supreme Court turned away four appeals by Fannie Mae and Freddie Mac shareholders who wanted compensation after the Treasury collected more than $100Bn in profit from the GSEs https://t.co/Uud0coWGJO  The common stock should have been canceled after the bailout Jan 09, 2023

Central Banking

• Transcript: Why Banks Are Suddenly Borrowing From the Fed’s Discount Window https://t.co/3YUSj4Jnhv  Long, but valuable if you want to learn how the Fed’s discount windows, and other liquidity facilities work Jan 13, 2023
• Peru extended its biggest-ever phase of monetary tightening Thursday to curb a spike in inflation that is aggravated by anti-government protests https://t.co/gwJ82CTznj  When no foreigners have to buy your debt, in order to aid exporters, inflation can get out of control quickly Jan 13, 2023
• The Bank of Korea raised its benchmark interest rate on Friday in what could be the final act of its 18-month tightening cycle https://t.co/5K5LrbIsK1  Yield curve inverted, seemingly stopping. Jan 13, 2023
• More investors are putting greater focus on services inflation and labor-market data as they try to grasp a more complex inflation picture https://t.co/6UsJ8f4SY6  Leaving out anything skews the inflation picture. But ignore the Phillips curve. Wages have low impact on prices Jan 11, 2023
• Jerome Powell said the FOMC is strongly committed to lowering inflation even though interest-rate increases could fuel political blowback https://t.co/BaPhhEtJM7  FOMC drives through the rearview mirror. Should use forward looking indicators even if at odds w/present conditions Jan 10, 2023
• The Fed is not a ‘climate-policy maker,’ Powell says https://t.co/fHymyqQHI0  Well said, stick to your statutory mandates — if you can actually achieve them (Tsst… the Phillips Curve was a post-WWII statutory anomaly. It does not exist when there is global trade) Jan 10, 2023

Auto Lending

• Used-vehicle volume hits lowest mark in nearly a decade https://t.co/Jwi4SzmNaq  Delinquencies are rising, & as there are more new cars, there will be more trade-ins. Used car prices should continue to fall. Then expectations effect as dealers pay less for trade-ins as lots fill Jan 14, 2023
• Inventory crisis dragged auto sales to a decade low in 2022 https://t.co/Kq8MJthZNm  Oversupply of used cars coming as many trade in for new cars Jan 13, 2023
• Growing new car supplies means used car prices are starting to drop https://t.co/6VEB0oOfkF  And the prices will likely fall further, as interest rates are higher, and credit is tighter. Jan 12, 2023
• Used car prices post biggest drop ever as new luxury car sales boom https://t.co/STXfvk1Emx  Conspicuous consumption among the wealthy Jan 11, 2023
• It’s Not Just a Car-Loan Crisis https://t.co/t6W4ZDo923  The author is partially right, in that many mortgages and car loans are now inverted as asset prices fall, as the FOMC has raised rates. But car loans are shorter, which makes inversion more severe. Defaults will be greater Jan 11, 2023
• Why worries over subprime auto bonds might be only getting started https://t.co/foKwjdA7Og  More reasons why overprovision of credit in auto finance will either led to 1) more defaults, or, 2) reduction in loan options if $CACC has to pull back –> falling used car prices Jan 08, 2023

Crypto

• Sam Bankman-Fried should be treated as innocent until proven guilty, Ackman says https://t.co/ASTbvVsyy7  A worthy thought. Spitzer won when he got people to compromise. Remember that the grand majority of cases that went to trial were won by the defendants vs Spitzer in the 2000s Jan 13, 2023
• Samsung Asset Management indicated the firm could consider starting a spot Bitcoin ETF in Hong Kong if the city allows such products https://t.co/xaiqRnevBB  Enabling people to lose more money while leveraged, and perhaps unleveraged. Jan 13, 2023
• Mike Novogratz sounds off on Sam Bankman-Fried and Barry Silbert: “The toxic masculine side of me would like to punch them both in the jaw.” https://t.co/z21VhMAhBj  A crazy dreamer — all crypto is a Ponzi at some level. Jan 12, 2023
• FTX advisers have found more than $5 billion in cash or crypto assets that it may be able to sell to help repay creditors, a lawyer for the company said https://t.co/M5UiEHUhnn  Like Madoff, claimants won’t get nothing, but they won’t get paid in full. Jan 11, 2023
• Coinbase Crypto Exchange to Cut Nearly 1,000 Jobs https://t.co/uFKd747eM0  If you are laying off people, you are likely not a growth company. With $COIN estimate cash burn rate vs cash available to the holding company Jan 10, 2023

Credit Issues

• A deal frenzy that included Elon Musk’s Twitter takeover has left Wall Street banks struggling to revive the lucrative business of backing big mergers https://t.co/X9QhKAolI8  Take your losses & be done. The bear phase of the credit cycle lasts well into the FOMC’s loosening cycle Jan 13, 2023
• To many young consumers, zero-interest layaway plans such as Afterpay mean free money, and the idea of paying down daily indulgences doesn’t faze them. A report on the problem with Gen Z’s love of “buy now, pay later” programs https://t.co/JLg75QPM3q  Credit losses emerging Jan 12, 2023
• Japanese Internet Firm Rakuten Selling $200 Million Bond https://t.co/VjsYLTR3Cz  Interesting that some junk credits are also bringing deals. Jan 10, 2023
• Europe’s Bond Sales Top $130 Billion in Record Time https://t.co/aYljLxYqkr  Interesting to see this level of borrowing… also the $20B Saudi Arabia deal. Many Non-US entities borrowing long in USD Jan 10, 2023

Rain in California

• Beach towns such as Capitola, where a wharf was torn in half, have borne much of the brunt from California’s recent series of torrential rainstorms https://t.co/ejqXBkHZbA  If you build on the coast of the ocean, or next to a large river, you are asking for trouble. Jan 13, 2023
• EXPLAINER: Storms put California levees to the test https://t.co/fjndwqBvbI  I used to live in Davis, CA. The levee systems of California are crucial for avoiding flooding. But responsibility for the levee is dispersed in public and private hands. Complex and underfunded Jan 10, 2023
• California faces more drenching rain, as concerns about drought have been replaced by fears of flooding that’s killed at least 14 people https://t.co/A2ZqSxJlBg  Excellent news for farmers and skiers. No drought in 2023. Can we get this for the Mississippi river basin? Jan 10, 2023

Science

• Why Not Mars https://t.co/cYPeEfG5Ta  I don’t favor going to Mars, unless it is done with private money. And if we go there we should ignore the international treaty requiring that we don’t contaminate Mars with Earth organisms. Impossible to avoid. Jan 14, 2023
• A climate startup removes carbon from open air in a first for the industry, potentially launching an industry to address climate change https://t.co/NDpLZUTJIv  Looks like a promising technology, if CO2 is indeed a pollutant. Jan 13, 2023
• Why ChatGPT may be the most human form of A.I. yet: It produces informed BS https://t.co/wyzVlZoSrz  I’ve been playing around with the chat utility at https://t.co/ATiFIuhEjl.  It’s not always right, but if you point it to the right resources, it learns. Jan 13, 2023

Food

• Alchemist: Is this the world’s most creative restaurant? https://t.co/suamcigX9z  Odd, not creative, I will pass on this even if one like it is nearby. Jan 14, 2023
• This new, eco-friendly ‘sugar’ has half the calories of cane sugar: ‘A world-changing ingredient’ https://t.co/DYZgg5PiVe With so many people skeptical about additives, drugs, vaccines, why is there quick adoption of new ‘sugars?’ Jan 14, 2023
• A US government agency will move to regulate gas stoves as new research links them to childhood asthma. “This is a hidden hazard,” said an official https://t.co/limmfmgZSj  If this were true, we would have known it long before. Gas offers much better control in cooking. Jan 09, 2023

Energy

• The Edge of Productivity https://t.co/VZE0RrV3nz  Interesting article on energy use trends, but way too bullish on the impact of AI for productivity. Jan 14, 2023
• The US is backing a Nevada lithium project in an effort to create its own supply chain of the metal. https://t.co/p1w4J57hdT  If it’s that good of an idea, why do you need public financing? National security? Jan 13, 2023

Odds & Ends

• A case before the Supreme Court challenging the liability shield protecting websites such as YouTube and Facebook could “upend the internet,” Google said in a court filing https://t.co/xyLPZIveIL  The internet would survive, but profitability of social media would decline. Jan 13, 2023
• “It would be great if the companies would switch away from email and start using other services,” one executive said, “but people don’t change.” https://t.co/w0q4gGOsuU  Don’t trust email. Skepticism is warranted w/those you don’t know, & those you do know when it looks weird Jan 13, 2023
• The West Coast, for the past decade a leader in the housing boom, is stumbling, while eastern and southern cities are holding up better https://t.co/CHQluSWy2F  Places where the boom was no so large, or where there have been many migrating to the area. Jan 13, 2023
• Private jet business booms despite commercial airline revival https://t.co/HG8PosSnZ4  ‘“Inflation never affected the 1 per cent,” said Kevin Singh, president of Icarus Jet, a private jet broker.’ Convenience, flexibility, and not having to go through security are the keys. Jan 10, 2023
• President Biden asked Treasury Secretary Janet Yellen to stay in her post, and she agreed, a White House official said https://t.co/GnR4FrlRAl  This should not be news Jan 10, 2023
• Unmarried Women No Longer Pay a Financial Penalty in Retirement https://t.co/caAhCPHrN8  Accurate title would be: Middle Income Women Do Badly in Retirement, Married or Not Jan 10, 2023
• Brazilian police clashed with supporters of former President Jair Bolsonaro in the capital of Brasilia on Sunday https://t.co/zLbWuoW9IP  There was no possibility that they could overthrow Lula. Jan 09, 2023