Category: Public Policy

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Rest of the World

 

  • Catalonia Wants ECB Seat After Referendum http://t.co/Dbggf0LOWs So Catalonians want to be free? Guess what, the EU does not want that $$ Oct 12, 2013
  • French State?s Bluster Belies Alcatel?s Job-Cutting Reality http://t.co/kzmpjKDNTC France will lose; companies will leave, so will jobs $$ Oct 12, 2013
  • Danes With World-Beating Debt Loads Prepare 2 Dig Deeper http://t.co/Vgx0fqqf9N This will eventually blow up; it is only a matter of time $$ Oct 12, 2013
  • Tepco Gets Japan?s First LNG Spot Cargo From Angola at Futtsu http://t.co/A3OnIzAFJH Future of energy is more efficient hydrocarbon use $$ Oct 11, 2013
  • France Calls for Alcatel-Lucent to Revise Job Cuts Plan http://t.co/KySqRhGqvN France won’t b happy until every large business leaves $$ Oct 10, 2013
  • Korean Banks? Margins Seen at 4-Year Low on Rate Decline http://t.co/bWhpoYhs6g High pread loans mature, low spread loans originated $$ Oct 10, 2013
  • Icelanders Run Out of Cash to Repay Foreign Debts http://t.co/RdCFa8jRl4 Perhaps they can default on these debts as well $$ #externaldefault Oct 09, 2013
  • Swedish Bubble Concern Grows With Soaring Home Prices http://t.co/VwiAVbm1wD What happens when monetary/financial policy is too loose $$ Oct 09, 2013
  • Algerians Cry Currency as Euro Black Market Thrives http://t.co/ftRHUXwF3q Really bad currencies attract competition from betr currencies $$ Oct 08, 2013
  • Finns Foraging for Cheap Food Shows Price of AAA Obsession http://t.co/kuPKb8g3KQ Really, it’s being in the E-Zone, not having own curncy $$ Oct 07, 2013

 

US Politics

 

  • 7 doomsday default scenarios http://t.co/sDgNpzRCSU There is nothing good here, particularly banks and money market funds blowing up $$ Oct 12, 2013
  • Budget Battle Ends Soon With Tea Party Loss: King, Corker http://t.co/Dk6XVMUPRo Discharge petition coming as liberal GOP teams w/Dems $$ Oct 11, 2013
  • Now Is the Time to Delay ObamaCare http://t.co/Dklp65OWnJ Make case off of lack of technical readiness of computer systems $$ Oct 11, 2013
  • EPA may reduce ethanol blending volumes for 2014 -sources http://t.co/Ve4DU5AaV2 End the RIN-sanity & watch refiner stock prices fly $$ Oct 10, 2013
  • Legislative History of Sec 4 of 14th Amndmnt http://t.co/JCEmr9SnHZ Must Executive prioritize payments? Must Congress raise debt ceiling? $$ Oct 10, 2013
  • Justice Kennedy Offers Views on Shutdown, Congress, Gay Marriage http://t.co/Nq9VcPtbNn Love him, hate him, you have to understand him $$ Oct 10, 2013
  • Obama Seems 2Think Presidency Gives Him Absolute Power http://t.co/IhFwBRTcYn Scotus has ruled presidents can’t delay, amend or repeal laws Oct 09, 2013
  • Surplus to Cost Uncle Sugar Up to $300M http://t.co/vl4QNMq2Vb Environmentalists & free marketers can agree: Eliminate sugar subsidies $$ Oct 09, 2013
  • Once the budget is balanced, businessmen will have greater certainty over sustainable tax policy, & will become more aggressive $$ Oct 09, 2013
  • Ryan: Here’s How We Can End This Stalemate http://t.co/QePY6Y3XWd Behind every economic debate in DC, entitlements is the hidden issue $$ Oct 09, 2013
  • President Obama Might Ask Who Benefits from US Debt Default http://t.co/F8mzQQQSUU Anybody know how big total notional amt on CDS on US? $$ Oct 09, 2013
  • White House Backs Temporary Debt-Ceiling Fix http://t.co/moMSWfLKab This may be how agreement is reached, w/some budget compromise also $$ Oct 08, 2013
  • Meltdowns Hobble NSA Data Center http://t.co/NpnnX0eyPy Investigators Stumped by What’s Causing Power Surges That Destroy Equipment $$ Oct 08, 2013
  • USDA Buyers Stuck in Limbo as Shutdown Hurts Housing http://t.co/M0LvI019Ye USDA should not be in the lending business. Ag is doing well $$ Oct 08, 2013
  • He Beat Us in War but Never in Battle http://t.co/Gixl0Fm9mt John McCain writes on recently deceased N. Vietnamese Gen. Vo Nguyen Giap $$ Oct 08, 2013
  • Americans are more conservative than they have been in decades http://t.co/GQrkq0ZHg5 I find this difficult 2 believe, would b more chg $$ Oct 07, 2013

 

Market Impact

 

  • Better Beta Is No Monkey Business http://t.co/UrSmi7Ql3h High dividend stocks are overvalued; dividends are not the best proxy for value $$ Oct 12, 2013
  • The BIGGEST Problem with Buy and Hold http://t.co/lIb3cQpqgY Biggest companies, bot&held do not have the same room to grow vs smaller cos $$ Oct 12, 2013
  • How Investors Lose 89% of Gains from Futures Funds http://t.co/inEYR2xDgi Long article on how managed futures doesn’t make $$ 4retail invtrs Oct 08, 2013
  • Worst Stocks to Reverse With Commodity Profits Rising 18% http://t.co/ImKtQ5KXPi A contrarian idea w/precious metals doing poorly of late $$ Oct 08, 2013
  • Finra to Consider Requiring Brokerages to Carry Arbitration Insurance http://t.co/qjxeVp89b7 A very good idea; mkt would weed out the bad $$ Oct 06, 2013

 

Companies & Industries

 

  • Boeing’s New 777X Could Make the Largest Jumbo Jets Obsolete http://t.co/VnBflpZ6dr Efficient engines, folding wings end the 747 era $$ $BA Oct 11, 2013
  • US eyes cutting ethanol usage http://t.co/d7r88Z2hA8 This should be a no-brainer, aside from corn farmers, $ADM, & ethanol refiners $$ Oct 11, 2013
  • Jeff Bezos and the Age of Amazon: ‘The Everything Store? http://t.co/EtF1QvWcqg Looong & interesting about Amazon & its founder’s origins $$ Oct 10, 2013
  • Costco Stands Behind Its Cheap Rotisserie Chicken Strategy http://t.co/aptxcuyH8u $5 for a Rotisserie Chicken? Can’t buy raw that cheap $$ Oct 10, 2013
  • Verizon and Vodafone Talks Took Four International Cities and Eight Months http://t.co/GmR1XjxTgl Patient $VOD wins against needy $VZ $$ Oct 09, 2013
  • US Banks Margin Under Tremendous Pressure http://t.co/EQVHiLmKWr Funding costs can’t get much lower, while old high-yielding loans mature $$ Oct 09, 2013
  • Ohio Smelter Faces Shutdown Without Utility Rate Relief http://t.co/O87iyfFdNQ & aluminum is in oversupply; why should we subsidize this? Oct 06, 2013

Healthcare

  • Mapping America?s Coronary Stent Hot Spots http://t.co/EFfUjfbjHD Check & c whether u live in an area that over-installs stents $$ #savelife Oct 10, 2013
  • Mother Dies Amid Abuses in $110B US Stent Assembly Line http://t.co/Nag1UCiqfi Sad tale of medicine done 4 profit 2 the harm of patients $$ Oct 10, 2013
  • Micro Businesses Find Health-Care Rollout Is Slow http://t.co/1hhcfPlCfX State Small-Business Exchanges Still Aren’t Ready $$ #gigo Oct 08, 2013
  • Republicans Didn’t Sabotage Health Exchanges, Obama Did http://t.co/OkGA7HEBVw Very difficult 2get complex programming projects done fast $$ Oct 08, 2013
  • Robot Surgery Damaging Patients Rises With Marketing http://t.co/fFe29Nesdp Check out track record of any doctor doing robotic surgery $$ Oct 08, 2013
  • Exchanges Will Raise US Healthcare Costs http://t.co/8UhQm58INQ Removing economic incentives has always raised healthcare costs $$ Oct 07, 2013
  • IT experts question architecture of Obamacare website http://t.co/hvfjKXp5Rt System architecture flaws caused problems, not traffic alone $$ Oct 07, 2013

 

US Local Economics

 

  • GED Faces New Rivals for High School Dropouts http://t.co/SG0UQ1wqzT Passing the GED doesn’t mean much, but if you pass a tougher test? $$ Oct 12, 2013
  • Machines Gauging Your Star Potential Automate HR Hiring http://t.co/MOcnq8Hd5E Can playing games well reveal u better than your resume? $$ Oct 11, 2013
  • Montana Towns Struggle With Oil Boom Cost as Dollars Flee http://t.co/3Wz5aUCc2p Small town’s budget can’t keep up w/Infrastructure needs $$ Oct 10, 2013
  • Housing Boom Bigger in Texas as Home Bidding Wars Erupt http://t.co/GyOZGL1fgC the Texas economy very strong & the builders can?t keep up $$ Oct 09, 2013
  • Puerto Rico Debt Troubles Regulators http://t.co/s3b54N9UsT Check your muni bond fund, b/c even single state funds bot PR 4extra yield $$ Oct 07, 2013
  • Pay Raises for Teachers With Master’s Under Fire http://t.co/N3ogmAntdZ The next study should b whether education BAs harm teaching skill $$ Oct 07, 2013

 

Other

 

  • Colleges Try Cutting Tuition?& Aid Packages http://t.co/6MWuklxikq Unlikely 2 work; higher sticker w/greater aid helps selectivity/cachet $$ Oct 11, 2013
  • Snowden Says He Has No Regrets http://t.co/KFVhXMW7Fu satisfied his actions had an impact; Sam Adams Award 4Integrity in Intelligence $$ Oct 11, 2013
  • Baseball Battling Dominican Drug Use While Grappling With A-Rod http://t.co/kU2zOHvECu Doping begins in the minors, w/many from DR league $$ Oct 11, 2013
  • Light Point Security: A Software ‘Jail’ 4 Malware? http://t.co/s1cPTtwlD6 Clever idea: browse in the cloud, image relayed 2local browser $$ Oct 10, 2013
  • Chemistry Nobel Goes to Three for Computer Program Work http://t.co/GBZA3RtgcB Interesting. Didn’t know u could do chemistry w/computers $$ Oct 09, 2013
  • Sudden Collapse of Cloud Provider Rattled IAC http://t.co/ilhmBtahWe If cloud provider announces shutdown, act fast 2preserve your data $$ Oct 08, 2013
  • New York Bans Harbinger’s Falcone From Insurance Role http://t.co/IFfrBHv9Xq Interesting how the NY Commish got Falcone out of MD ins sub $$ Oct 08, 2013
  • Gold Befuddles Bernanke as Central Banks? Losses at $545B http://t.co/lgtX56v0Oq Central Banks r not immune from the fear/greed cycle $$ Oct 08, 2013
  • Younger Americans Fare Poorly on Skills Against International Peers http://t.co/c5dL26lXPM But Americans r more flexible & creative $$ Oct 08, 2013
  • Finance People To Follow On Twitter http://t.co/Q6jBZWGtkg A great list, at least for those that I know, should u have time 2follow 106 $$ Oct 08, 2013
  • Humans Trump Robots at the Grocery Store http://t.co/atazmQ8R5h Cashiers Trump Self-Checkout Machines at the Grocery Store $$ Oct 07, 2013

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Janet Yellen

  • When Yellen Speaks World Listens as Fed Plans US Course http://t.co/iRO9Fg6JMf More hagiography as media/acdmics overestimate her ability $$ Oct 11, 2013
  • Senate Confirmation Hearing 2Test Yellen’s Skills of Communication http://t.co/3lQVrH3zXh Can she think on her feet w/hostile questioners $$ Oct 10, 2013
  • The Yellen Difference http://t.co/Wgeop65jct How Yellen is different than Bernanke: Tobin Keynesians will b in charge at Federal Reserve $$ Oct 10, 2013
  • Janet Yellen: 5 Things You Should Know About Obama?s Fed Chair Nominee http://t.co/52Ie5o9nkk Wealthy, apolitical, Akerlof, forecasting $$ Oct 09, 2013
  • Yellen 2b Named Fed Chairman, First Female Chief http://t.co/DSsky1sDgM What’s done is done; someone has 2b the fall guy/gal $$ #glasscliff Oct 09, 2013

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Tower Group

  • Commented on StockTwits: It’s a question of probabilities. Clearly the odds are higher now than a week ago, much h… http://t.co/XPlzWLxvy9 Oct 10, 2013
  • Commented on StockTwits: I used 2b a corporate bond manager. When u c a 1-yr obligation trading below $95, solven… http://t.co/AugmpPF1Ib Oct 10, 2013
  • Risky equities should be priced to earn 20%+. The bonds of $TWGP yield 20%+. Makes me think bonds r the true equity & stock a call option $$ Oct 10, 2013
  • 20%+ yield = panic $$ RT $TWGP just watch the bonds they are $88 and B-. Off lows they do not reveal panic. HOLD. http://t.co/VMc0Rih0bT Oct 10, 2013

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Wrong

  • Wrong: Obamacare Foes Using Shutdown Echo South?s Nullifiers http://t.co/js120efIId Not a fair portrayal. Obamacare was badly thought out $$ Oct 12, 2013
  • Dubious: How Yellen Will Shape Fed’s Banking Regulation http://t.co/DHGcgEOqmb Surprise me if much happens; Fed rarely strong regulator $$ Oct 10, 2013
  • Uncertain: Recession Looms If Treasury Uses Tools to Prevent a Default http://t.co/FY39fp90eQ Not so sure it would create a recession $$ Oct 09, 2013
  • Wrong: Detroiters Living Amid Ruins Resist Moving as City Reorganizes http://t.co/MuaBzAfVbm Article purely anecdotal, population shrinks $$ Oct 07, 2013

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Replies, Retweets, & Comments

  • @SilentMachinery I wondered about that also. There may be something there. Oct 12, 2013
  • I need 2brighten my mood. Ah, @AARP has sent me membership cards. Snip, snip, snip. Much better. Old people suck the blood of the young $$ Oct 10, 2013
  • Luck seems to even out for me. I miss gains & losses evenly. I usually don’t spend much time on a stock after I sell it $$ @merrillmatter Oct 10, 2013
  • RT @researchpuzzler: on endowment investing ~ 1) @AlephBlog: http://t.co/UrctMBjW9R ~ 2) @advperspectives: http://t.co/AlhZQgPGnw Oct 09, 2013
  • To @TheUncorrelated : my article on your whitepaper, with my advice to endowment investment managers is here: http://t.co/dQlapwbWqO $$ Oct 08, 2013
  • @rishad Beautiful, but it follows the footsteps of Detroit. One poet said, “Chicago is a pompous Milwaukee.” The skylines don’t compare tho. Oct 08, 2013

 

Taleb Versus Reality

Taleb Versus Reality

Posted on by David Merkel

I looked for this article out on the web, and at the CFA Institute website, and didn?t find it.? I asked for permission to use this and no one responded after more than one week.? The following was excerpted from an interview with Nassim Taleb by Rhea Wessel in the September/October 2013 issue of the CFA Institute Magazine on pages 40-43.? CFA Institute, I consider this fair use.?? If it is not, let me know, and I will take it down.

Is there an investment strategy that fits with the idea?

I will get there. Let me make some investment rules in general.

Number 1: I introduced earlier the 1/n rule?be as broad as you can in whatever risky assets you are investing in to minimize the risk.

The second trick, or rule, [is to] implement that barbell to reduce your fragility. Because if you see the barbell, then no fragility is in the tail. In other words, if you are “bar- belied,” putting a floor on your losses at 90%, the maximum you could lose is 10%. If the markets go down 20%, you don’t lose twice as much as [you would] if the market went down 10%. You lose much less. That puts you in the antifragile category. [For a third rule] I’d say, look for companies that have optionality.

What is optionality?

Optionality means to have more upside than downside because the company has options. An “option” in this sense acts like a financial option, and a financial option is an instrument of antifragility because you pay a premium and you have all this upside and very little downside.

The companies make more from the upside of something than from the downside. Make sure the optionality is not priced by the market. And of course, go away from companies that have negative optionality.

An optionality that is priced in the market is, for example, buying energy companies and gold companies before a rally in gold. Instead of investing in gold, people invested in companies that made a lot more than gold. But after a while, this got priced in. In other words, if you’re wrong on gold, you do a lot better than those who invested in gold outright. If you’re right on gold, you do a lot better than those who invested in gold.

You have to avoid the lottery-ticket effect of investing in companies that are overpriced because people are looking at the big upside.

So, now we have three rules [1/n, implement the barbell, and pursue optionality].

Let me make one more?never invest in company stocks or strategies that have very low volatility without ascertaining that there’s a floor on the return.

[Consider that] a Sharpe ratio measures return divided by risk, as measured by past variation. You have to be wary of companies that exhibit no volatility yet have a high return, unless they are genuinely low volatility. Most of them are fake low volatility.

What do you mean by “fake low volatility?

You know the funds of Bear Stearns that blew up in the subprime crisis? They were funds that never had a down month. A lot of people who blew up in subprime did not have a down month?ever. And people rushed to invest in them because they were low volatility. And then they blew up.

Typically, I never get close to anything that has no volatility, unless it’s justified, like Treasury bonds. If you go to a balance sheet, you can see why there is low volatility, whether it is genuine. The company can have a barbell. The company can have very, very low leverage. Or you might discover that a company is doing the equivalent of selling remote options, and the company can lose a lot of money in one blow.

Let’s link it to make it more intuitive: In general, I can say that a system that has very, very low volatility is likely to blow up. Take the example of Syria. Syria had no political volatility for 40 years, and look what happened.

Forests that never have fires are likely to be completely eradicated by fires when they happen. Forests that have regular fires are much more stable.

You mentioned the concept of leverage. You could make another investment rule regarding debt?

Yes. You know the rule?what you don’t do is more important than what you do. In natural systems, you need redundancy to make the system work better. People think that redundancies are inefficient. I think they’re the most efficient thing in the world, if you do them right.

Redundancy is bad if you buy the same morning newspaper twice or if you have two subscriptions to the same website. But redundancy is fine if you have a stock of cash in the bank or if you’re a company that needs oil and you have extra oil.

Let’s assume that you have cash in the bank and there’s a big crisis. You have dry powder. It will make you antifragile to have the extra dry powder if nobody else has money. You can buy anything you want. Cash is the opposite of leverage.

In fact, the number one indicator of fragility is leverage. It can be operational or financial. Leverage corresponds to people’s overconfidence about the future.

Most people who have leverage will be completely squeezed in a crisis, and you will have cash.

Whose compensation models do you agree with?

Most investment advisers are not harmed by the downside. The only people who have a good compensation model are hedge fund managers. Typically, when I managed money, I was harmed 50 times more than any of my clients as a percentage of my net worth.

The hedge fund managers I know are typically far more invested than their average client. When that person is on board calling the shots, I sleep like a baby. You don’t get this with fund managers.

Okay, Taleb has offered up six ideas for us to consider regarding risk control.? Here they are:

  • 1/n
  • Barbell ? safe & risky
  • Positive optionality
  • Want a floor ? no ?fake low volatility?
  • Avoid leverage ? operational & financial
  • Alignment of Interests

Let’s take them one-by-one, but before we do, every risk mitigation scheme has to pass the test: “what would happen if everyone did this?”

1/n

This is a fancy way of saying equal-weight everything.? In such a scheme, ExxonMobil and Apple get the same weight as Phoenix Companies and American Independence Corp.? Nifty idea until too many people follow it.? This is an idea that cannot scale.? Yes, owning small companies and the debts of small companies have yielded high returns, but if many people do that, it will cease to be true.

Barbell ? safe & risky

Yes, owning safe and risky investments is a bright idea — that’s where the 60/40 stocks/bonds came from.? You get positive optionality and your downside is clipped.? Taleb argues for a lower risk version of this.? But again, this can’t scale.? Most assets are in-between — they carry moderate risks.? What is the risk premium at which you buy moderate risks?

Positive optionality

Everyone wants the best of both worlds, but how much are we willing to pay to get it?? Options normally carry a cost.? When you can get them for free, rejoice.? The market is competitive, and there are few places where free options exist.

Want a floor ? no ?fake low volatility?

Taleb is looking for guarantees, or near-guarantees.? He does not trust low volatility investments, and I agree.? He wants something that tells him that that floor for the asset price is not too far below the current price.? Makes him sound like a value investor.

Avoid leverage ? operational & financial

Margin of safety is the credo of all good value investors.? That makes us avoid financial leverage, and to a lesser extent operating leverage.? As I have stated before, good investing takes moderate risks.? Low risks avail little, while high risks take too many losses.? Moderate risks have a greater probability that humans can deal with them.

Alignment of Interests

Yes, it is important that management and fund managers have incentives aligned with shareholders.? I aim for this and have no argument against this, unless it costs too much to get this.

The Main Point

If something in the markets is a good thing, it will get bought, and the price of it will go up.? Free optionality is rare.? Assets that offer easy guarantees are also rare.

Thus I think the advice of Nassim Taleb is vacuous, because the methods that he recommends for safety are risk factors which have prices.? They are great ideas when they can be executed at no cost.? But most of the time, there are costs.

In 2002, we had the ?we eat asbestos for lunch? trade.? After aversion to asbestos risk, some were willing to take the risk because they thought it was overstated.

Any risk can be overplayed.? There are fair levels for taking and avoiding risk.? Good investors and businessmen understand this.

Few Things Are Impossible

Few Things Are Impossible

Posted on by David Merkel

Buffett supposedly once said something like, “We’re paid to think about things that can’t happen.”? What would be examples of this?

  • The Housing Bust, and the ensuing funk with banks.
  • Hurricane Katrina, and the flood that it helped create.
  • The Tohoku Earthquake, with the surprising damage to the nuclear reactor
  • Four hurricanes hitting Florida in 2004.
  • The Fall of the Soviet Union
  • The Murderous effect of forced collectivization in the Ukraine, China, Cambodia, and other places.
  • The rise of Hitler
  • Chernobyl
  • Long US interest rates would fall below 5%.

This will be a short piece, but what I want to stress is that things that pundits say can’t happen sometimes do happen.? The application is that it is not impossible that the US Government defaults for political reasons.? Brinksmanship is a tough and heady thing, and it is possible for all parties to miscalculate and be intransigent.? Pride brings out the worst in mankind.

I’m not saying a default will happen, or that it is more likely to happen than not.? I am only saying the probability is non-zero, like rolling boxcars or snake-eyes at the craps table.? Thus credit default swaps [CDS] on a US default have risen considerably, because a few are hedging the possibility.

Personally, I think it would be interesting to see what would happen in a default, because we don’t have a lot of data points there, even for a short default.? That said, vain curiosity of mine should not be satisfied to the harm of many, so would prefer that the GOP and Dems would agree to a short-term extension of the debt ceiling combined with spending reductions.

But nothing is impossible among men.? Pride has often driven the otherwise sane to take courses of action that harm their enemies more, even as their friends are harmed also.

The Bible says, “An eye for an eye, and a tooth for a tooth.”? People look upon it as cruel, but it was meant as a limit.? You can’t force suffering at a greater level than you were harmed, and the threat of equal suffering would lead offenders to negotiate a monetary settlement to protect their eyes and teeth.

But when men will not restrain themselves, and seek to gain revenge, all manner of bad consequences occur.?? There is something to having limits on political processes.? There is something to having manners in society.? There is something to having personal self-control.

We have lost a lot as a society as the Greatest Generation has handed power over to the Baby Boomers.? We agree far less on what society ought to pursue, and what is right and wrong.

That is why the fights in DC are so bare-knuckled.? Gerrymandered districts send ideologues to Congress, which have very different views on policy and ethics.

Back to the main point — when the two or three sides of the debate have widely different views should it be surprising that it is possible that we may end up with a stalemate leading to a temporary default?? A permanent default is another matter — I don’t think the politicians are that stupid, at least not yet.

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

US Government Shutdown

 

  • To Lead Is to Negotiate http://t.co/AJTjPESgiI Elements of an interview w/James Baker describing Reagan the pragmatic dealmaker $$ Oct 04, 2013
  • Pig Sales Fly Blind as Data Cut by Shutdown Hampers Firms http://t.co/MHHnn29XXH Guess what? That’s the way most markets operate $$ Oct 04, 2013
  • Troops Forage for Food While Golfers Play On in Shutdown http://t.co/Y9HV5IpF3A “the appropriations process has completely failed” $$ Oct 04, 2013
  • Obama Rewrites Debt-Limit History http://t.co/BIRNHLH7Pm D&R Congresses have used the borrowing limit as political leverage w/a president $$ Oct 04, 2013
  • US banks fearing default stock up on cash http://t.co/tYXMlQXcIe If money markets freeze, currency will be needed to mediate exchange $$ Oct 04, 2013
  • Loose monetary policy needed to counter Washington gridlock: Fed officials http://t.co/AmJqqcMQPQ Fed enables intransigence of congress $$ Oct 04, 2013
  • Republicans Are No Longer the Party of Business http://t.co/Vwa5U0pENS Case not proven; as if the Democrats think of any biz but big biz $$ Oct 04, 2013
  • Frustrated Republicans Pressure Boehner to End Shutdown http://t.co/m6eSEtXQ5n Likely endgame: Democrats & liberal GOP ally in House $$ Oct 03, 2013
  • US Stocks Rise as Investors See Limited Shutdown Impact http://t.co/nB5WCCcsd4 Will they say the same thing today off neg mkt action? $$ Oct 02, 2013
  • Behind the Noise, Entitlement Reform http://t.co/Ed2ug8HoCN This is the elephant in the room; the economic problem behind all the rest $$ Oct 02, 2013
  • More Than 800,000 Federal Workers Are Furloughed http://t.co/GP0XdAxugH Oddly, this helps point out what true priorities of the govt r $$ Oct 01, 2013
  • In Government Shutdown, Few Parallels With Most Recent One http://t.co/RmJ7X3iL0Q Maybe shutdown is an alternative mode of running govt? $$ Oct 01, 2013

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Companies & Industries

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  • Twitter Look-Alike Ticker Triggers 684% Advance in Penny Stock http://t.co/hLf2VRP6Hs Big difference btw Twitter $TWTR & Tweeter $TWTRQ $$ Oct 04, 2013
  • Mars Repays $4.4B of Berkshire Bonds Tied to Wrigley Deal http://t.co/U5uSgTXBd8 Now Buffett has tough job of redeploying capital $$ #cash Oct 04, 2013
  • Twitter Sends Different Message Than Facebook in Filing http://t.co/azMDDPHVwz 32 pages of risk factors, no classified stock, refreshing $$ Oct 04, 2013
  • Blackstone Opens Europe Spigot as Distressed Deals Surge http://t.co/yYQl2dwhzS As EU banks get reasonable, $BX sees opportunity 4 deals $$ Oct 04, 2013
  • Alcoa on ?low risk financiers? and parallel metal markets http://t.co/ganjSH2aZg With low interest rates, cheaper to store metal $$ Oct 03, 2013
  • Beanie Baby Creator Pleads Guilty to Swiss Bank Tax Dodge http://t.co/V8PrsbKEAO He’ll make up the $$ w/a line of Ty the Jailbird dolls Oct 03, 2013
  • We Are Googling the New York Times to Death http://t.co/OLJ0XsSCRA Use Google 2get free access to the $NYT – broken media revenue model $$ Oct 02, 2013
  • OGX Upheaval Portends Deeper Bond Loss for Pimco http://t.co/m9Do3MALyM BK is tough on creditors in Brazil; long process, low recoveries $$ Oct 02, 2013
  • How BlackBerry blew it:The inside story http://t.co/4K7Kw4Y5bL Long article as $BBRY focuses on core biz, misses threat from new entrants $$ Oct 01, 2013
  • Schwarzman Says Selling BlackRock Was ?Heroic? Mistake http://t.co/G8ZKjxNOZ0 Missed out on 79%/yr returns compounded over 19 years! $$ $BLK Oct 01, 2013
  • BlackBerry Rare Breakup Fee Seen Deterring Bids http://t.co/uyo9Ra1zzA Watsa gets a free look, while others effectively locked out $$ $BBRY Oct 01, 2013
  • Why Anglo American Walked Away From Pebble Mine Gold Deposit http://t.co/QwqmjykuD9 Interesting, but only speculations on y $AAUKY left $$ Oct 01, 2013
  • Commodities ?Super Cycle? Is Seen Enduring by McKinsey http://t.co/Jnj1XwZNKO Marginal costs keep rising as lower costs ores deplete $$ Oct 01, 2013
  • Storage Wars Seize Metals Market http://t.co/WkX0fsOx3o Aiming 2end games that lock up metal in storage as collateral for loans, I think $$ Oct 01, 2013
  • Falcone?s Funds Sell Harbinger Group Shares to Leucadia http://t.co/2l8dSyEPKP $HRG funds sell shares 2 $LUK @ a 20% discount 2 mkt price $$ Oct 01, 2013
  • Of course $LUK has 2 hold onto the shares 4 a while, but still that’s a pretty stiff price 2 pay 4 liquidity $$ $HRG Oct 01, 2013

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Finance, Pensions, Etc.

?

  • More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities http://t.co/E5lczvdLJP Don’t buy what someone wants 2 sell 2u $$ Oct 04, 2013
  • How to Look Under a Hedge Fund’s Hood http://t.co/oKy6ZQWo1q There’s more 2ask than this, but these 7 questions r a good start $$ Oct 04, 2013
  • Hedge Funds Used Obscure Bond Bet to Win in GM Bankruptcy http://t.co/SaLKh7sg9Q They did hard work with their brains, & won $$ #distressed Oct 04, 2013
  • 8 Incredible Shares On StockTwits About Hedge Fund Market Wizard Ray Dalio http://t.co/tjQ9ecAF1A I added two more resources $$ Oct 04, 2013
  • Time to Ditch the Yale Endowment Model?http://t.co/aYWfleXE7R Similar to an article I wrote 4 years ago http://t.co/2ox3Zzdaac $$ @M_C_Klein Oct 04, 2013
  • S&P 500 Pension Status Continues to Improve in September http://t.co/tyL1fqCivB Rising prices for risky assets & more contributions help $$ Oct 03, 2013
  • Peak-population investing http://t.co/0I5s49iBBC Demographics affect inflation – goods inflation w/many young asset inflation w/many old $$ Oct 03, 2013
  • 10 Terms Investment Pros Use to Raise Money @Reformedbroker http://t.co/cHivwK8uvh Points @ 10 buzzwords w/fuzzy meanings & little truth $$ Oct 02, 2013
  • Option-Selling Is Not Income http://t.co/zdiP91nKsK Well written,& it needs 2b said. Option “income” vs capital losses & opportunity costs $$ Oct 02, 2013
  • Eric Schneiderman, Wall Street Time-Machine Sheriff http://t.co/trSBh80ObO Dig deep enough in2 any multiparty trnsctn & u will find dirt $$ Oct 02, 2013
  • In multiparty transactions, u have 2b careful. Who has more info than u? How r incentives aligned? Y r u lucky one invited 2play w/them? $$ Oct 02, 2013
  • Student-Loan Straitjacket http://t.co/1keTvDykpV They should look at income-based repayment plans; in many cases they would pay far less $$ Oct 02, 2013
  • Fab Tourre Wants Another Chance to Explain http://t.co/X4H8b70hVi Did Tourre withhold mind-chging information deal players were entitled2 $$ Oct 02, 2013
  • Inter-dealer brokers? inside information @FelixSalmon http://t.co/cCcVMM3foF What is fraud vs making/arbing a mkt? http://t.co/6aKN6t0Abw $$ Oct 02, 2013
  • Top 20 Films about Finance: From Crisis to Con Men http://t.co/nDv0Rz4P4P I added on the film “The Billion Dollar Bubble” Equity Funding $$ Oct 01, 2013
  • Gibraltar Seen as Europe-Beater for Finance Professionals http://t.co/YzHgQRv82A Perhaps more money per hectare than any other place $$ Oct 01, 2013
  • Commodity Trader Didn’t Really Believe in Market Prices http://t.co/qVEC4lQB8u Citi mismarked illiquid exchange-traded ethanol contracts $$ Oct 01, 2013
  • This Sociological Theory Explains Why Wall Street Is Rigged 4 Crisis http://t.co/ff6NWs1GOO Technological efficient w/odd feedback loops $$ Oct 01, 2013

?

PPACA / Obamacare

 

  • Overwhelming Demand 4 Obamacare Shows Potential Success http://t.co/4i3Kb6P8SN Success?? Show you what happened 2me http://t.co/vlrqUxFXzr Oct 04, 2013
  • How ObamaCare Wrecks the Work Ethic http://t.co/3U2z8PKPwR Saw this a month ago, subsidies raise marginal tax rates 4 lower middle class $$ Oct 03, 2013
  • The Republicans Fighting Obamacare Aren?t Crazy http://t.co/A61poB4ArU PPACA *can* b repealed, but would take a GOP swing in 2016 2do it $$ Oct 01, 2013
  • Why must the American people suffer when even so many Democrats don’t want Obamacare? http://t.co/uJfncEetS7 Congress exempts itself $$ Sep 28, 2013

 

Civil Liberties in Cyberspace

 

  • NSA chief admits misleading numbers, adds to Obama administration blunders http://t.co/wsS2qrIW74 Politicians overstate metadata value $$ Oct 04, 2013
  • NSA Involvement in NIST Encryption Standards Could Make Companies Less Competitive http://t.co/RzRVSYVtiv Does NSA demand backdoors? $$ Oct 03, 2013
  • On NSA’s encryption defeating efforts: Trust no 1 http://t.co/afq1Fjngzv Big companies r in cahoots w/NSA, can’t b trusted, r lying 2us $$ Oct 02, 2013
  • NSA Gathers Data on Social Connections of U.S. Citizens http://t.co/oVIYLWdHFi The NSA endangers our civil liberties; we need to end it $$ Sep 30, 2013

 

Monetary Policy

?

  • Will Unconventional Monetary Policy Be the New Normal? http://t.co/nN00ta4UIM Fed is hopeless; they don’t get they r inflating assets $$ Oct 04, 2013
  • Aluminum Prices: Blame It on the Fed http://t.co/kgjOTbNeqd Low interest rates lead to loans collateralized by aluminum $$ Oct 03, 2013
  • Don?t Cry for Me, Ben Bernanke http://t.co/unN01G8N8K Developing Countries should get ready for the eventual Fed tightening, if they can $$ Oct 01, 2013

?

Banking

 

  • The Bailout That Never Came http://t.co/cROhzGqjYB Bailout for homeowners was half-hearted at best; 4 banks it was a warm friendly hug $$ Oct 04, 2013
  • Banks abandon mortgage preapprovals http://t.co/ro6NE8T5Yb Makes the purchases of homes more complex b/c likelihood of financing down $$ Oct 03, 2013
  • Are Banks Forward-Looking in Their Loan Loss Provisioning? http://t.co/1V6ytChwB2 I would be more inclined to think it is a “cookie jar” $$ Oct 02, 2013
  • The JP Morgan apologists of CNBC http://t.co/HJgOH3NGvT Media often panders 2 power or they lose access to the powerful people $$ Oct 01, 2013

 

Other

 

  • Duke to NYU Missteps Abroad Lead Colleges to Reassess Expansion http://t.co/1ZoHGD2CeP Have 2 make sure of a good cultural fit first $$ Oct 04, 2013
  • Freak Grape-Razing Hail Crushes Burgundy Winemakers? Dreams http://t.co/rxSiKaRpvl 2years of hailstorms destroy the prospects of vintners $$ Oct 04, 2013
  • Migrant Ship Sinks Off Italian Island, Killing Dozens http://t.co/KCYgVt0Bx8 Europe is Elysium 4 these migrants; US is the same 4 others $$ Oct 03, 2013
  • NFL Free-Agent Lawyer to Unlock $16B in NCAA Athletes http://t.co/nfitchpsSt Free student labor may disappear; may hit big programs hard $$ Oct 03, 2013
  • Moon walker demo lets wannabe astronauts feel 0.17G http://t.co/BsenBrl8ck Cool. Could b used 4physical therapy after severe leg injuries $$ Oct 02, 2013
  • Educators in the art of life must have chance of their own http://t.co/HxiCZUOyP3 Certain college depts survive on low paid p/t academics $$ Oct 02, 2013
  • Worried About Cancer? Get Married http://t.co/PQFp8Q67SD A man & a woman who get & stay married tend to take care of each other $$ #healthy Oct 01, 2013
  • Gangnam-Style Nip and Tuck Draws Tourists to Seoul?s Beauty Belt http://t.co/2nC182RWtV Plastic surgery becomes a tourist draw 2 Seoul $$ Oct 01, 2013

 

US Politics & Policy

 

  • Small town, big impact: Supreme Court case could define religion’s role in public http://t.co/oD09WqaOaT Govt Ceremonial deism may end $$ Oct 04, 2013
  • Who Do You Believe: The White House and Wall Street ? or the American People? http://t.co/ZIRZDU1i5p Economic Confidence continues 2drop $$ Oct 03, 2013
  • Bankrupt Stockton Plan Favors Retirees Over Creditors http://t.co/yZ80M5s5lz Will b difficult 2get thru BK city, unless emplyee benes cut $$ Oct 01, 2013
  • ‘Strings Attached’ Co-Author Offers Solutions for Education http://t.co/BMF9zPqMU6 I learned the most from teachers that were hard on me $$ Oct 01, 2013
  • Panel Finds Planes Can Handle Use of Electronic Devices http://t.co/hCnZNFfR98 At last, the bad science crumbles & freedom increases $$ Oct 01, 2013
  • The most predictable economic crisis? http://t.co/XAqVj9QZ9S Implicitly, entitlement reform lies behind almost all our problems in DC $$ Oct 01, 2013
  • Why I Am Cancelling My Documentary on Hillary Clinton http://t.co/oKxLjUwRDZ No openness from the Clintons dooms a documentary from CNN $$ Oct 01, 2013

 

 

Replies, Retweets & Comments

 

  • 2 all who follow me on Twitter, my account was hacked, & someone sent out a bunch of spam tweets & DMs that I would never send. My apologies Oct 01, 2013

 

  • @kltblom when the amount of range for premium variation is only three, it is not a workable system. Anti-selection will occur. Oct 05, 2013
  • @M_C_Klein I started out as an Asset-Liability Management actuary, and I have traded in illiquid securities, makes me think differently Oct 05, 2013
  • @kltblom Removed deduction for employer-paid healthcare. Encouraged HSAs, and try to move to predominantly first-party payer model Oct 05, 2013
  • @TheUncorrelated I willprobably write an article on this next week. Will sound like the one I cited b4 & like: http://t.co/Y8CA0LX9Qi Oct 05, 2013
  • @kltblom I’m an actuary; since the PPACA was proposed, the health actuaries I have talked with have said tht PPACA won’t work Oct 04, 2013
  • ‘ @JonathanWeil Say run rate EBITDA for 2013 is $50M. If Market Cap of $TWTR is $12B, that is an astounding EV/EBITDA of 240 $$ #nosebleed Oct 04, 2013
  • @_DM0_ I can confirm that, they have taken down the slides. Pity, quickest way to absorb the material Oct 04, 2013
  • @Kitsune808 It is not infrequent that @BloombergNews Headlines are misleading, or quirky. They march to the beat of a different drummer Oct 04, 2013
  • @PlanMaestro I know, but given attention to the video, I thought I would show the PDF that better fleshes out his position. and the slides Oct 04, 2013
  • Thanks @onlineawards @TightTalk @valuetakes for being top new followers in my community this week (insight via http://t.co/sern3wLA13) Oct 04, 2013
  • “”Spain?s public debt in 2014 is expected to be the equivalent of 98.9 percent of total economic?” ? David_Merkel http://t.co/HPR50Rjijp $$ Oct 04, 2013
  • “Two more: 9) And for those that want to read Ray Dalio’s economic template book, it is free here:” ? David_Merkel http://t.co/QLWdRs1odG $$ Oct 04, 2013
  • @ToddSullivan A computer could do it anywhere by minimizing the distance of internal boundaries subject to equal popoulations. Not hard. Oct 04, 2013
  • @ToddSullivan We need structural reform 2 end that given gerrymandered districts. A lot of people want change, but districts not competitive Oct 04, 2013
  • @kltblom If PPACA were mere risk pooling, I might agree. It is a messy ugly law that ignores basic actuarial principles & will not work well Oct 04, 2013
  • @volatilitysmile They give us different pieces of the puzzle (insight by http://t.co/sern3wLA13) Oct 04, 2013
  • #FollowFriday Thanks @ReformedBroker @pelias01 @researchpuzzler for being top influencers in my community this week 🙂 Oct 04, 2013
  • @ReformedBroker The Baby Boomers gray, and money socked away, let finance guys play, make dough every day. Thus so many wealthy $$ managers. Oct 04, 2013
  • Thanks @ToddSullivan @ReformedBroker for being top engaged members in my community this week (insight via http://t.co/sern3wLA13) Oct 03, 2013
  • Thanks @TightTalk @BabyFreshNuggz @X9T_Trading for being top new followers in my community this week (insight via http://t.co/sern3wLA13) Oct 01, 2013
  • Thanks @moneyscience @TopInvestBlogs for being top engaged members in my community this week (insight via http://t.co/sern3wLA13) Sep 30, 2013
  • @RexHuppke You are a real man, unlike many today. You may be stupid, but at least you are taking action, rather than compromising w/losers Sep 28, 2013
Two is Company, Three is a Crowd

Two is Company, Three is a Crowd

Posted on by David Merkel

This post should be short and simple.? When there is a battle/negotiation between two parties, the one with that is stronger wins.? With three parties, unless one is stronger than the the other two combined, the negotiation may take some time until a coalition with a majority of power emerges.

In the present statement in the House of Representatives, I suspect the solution is that a faction of 20 or so liberal/moderate Republicans defect to the Democrats, and pass a clean bill that goes to the Senate.

Now, that’s not assured, and I think more broadly than many.? It is possible that the Republicans in the House will not raise the debt ceiling.? I’m not saying it would be a good thing, just that it is possible, and it might not be as bad as the worst outcomes of Y2K.

But think of Syria, and other places in the Arab Spring.? The calculations might be easier if it were simply this versus that.? But in Syria, you have the existing government versus two rebel groups, one of which is more doctrinare about Islam.? Such a situation will not be easy to solve, and US foreign policy will be challenged to choose a right and effective course of action.? (In this case, it probably means doing nothing.)

My main point here is that when there are multiple factions, results can be messy.

Because of gerrymandering, the US has mostly polarized their parties — that makes agreement difficult.? Gerrymandered districts produce ideologues.? Far better to set districts by computer, minimizing the length of internal boundaries, subject to substantially equal populations in each district.? That would produce fairer districts with more moderates.

I’ve written about this before, and better than this evening:

The main thing to remember is that reconciling multiple party disputes can be difficult; structural change, such as creating districts in a way that avoids polarization could help us avoid disputes like that in the House in the future.

As it applies to conflicts arising out of the Arab Spring, I would only say: think hard before rebelling, and analyze what other forces might be released by rebelling — there is no guarantee that you can beat the government, or the other forces you release.? Better the devil you know, than the devil you don’t.? Better negotiated change than change that springs from the chaos of war.

And, that’s all for now.

The Education of an Investment Risk Manager, Part VIII

The Education of an Investment Risk Manager, Part VIII

Posted on by David Merkel

“So you’re the new investment risk manager?”

“Yes, I am,” I said.

CA: “Well, I am the Chief Actuary for [the client firm].? I need you to do a project for me.? We have five competitors that are eating our lunch.? I want you to figure out what they are doing, and why we can’t do that.”

Me: “I’ll need to get approval from my boss, but I don’t see why not.? A project like this is right up my alley.”

CA: “What do you mean, right up your alley?”

Me: “I’m a generalist.? I understand liabilities, but I also understand financing structures, and I can look at assets and after a few minutes know what the main risks are and how large they are.? I may not be the best at any of those skills, but when they are combined, it works well.”

CA: “When can you have it to me?”

Me: (pause) “Mmm… shouldn’t take me longer than a month.”

CA: “Great.? I look forward to your report.”

The time was late 1998, just prior to the collapse of LTCM.? Though not well understood at the time, this was the “death throes” of the “bad old days” in the life insurance industry for taking too much asset risk.? Yes, there had been bad times every time the junk bond market crashed, and troubles with commercial mortgages 1989-1992, but the industry had not learned its lessons yet.

The 5 companies he picked were incredibly aggressive companies.? One of them I knew from going to industry meetings came up with novel ways of earning extra money by taking more risk.? I thought the risks were significant, but they hadn’t lost yet.

So what did I do?? I went to EDGAR, and to the websites of the companies in question.? I downloaded the schedule Ds of the subsidiaries in question, as well as the other investing schedules.? I read through the annual statements and annual reports.? I had both my equity investor and bond investor “hats” on.? I went through the entirety of their asset portfolios at a cursory level, and got a firm understanding of how their business models worked.

Here were the main findings:

  • These companies were using double, and even triple-leveraging to achieve their returns.? Double-leveraging is a normal thing — a holding company owns an operating insurance subsidiary, and the holding company has a large slug of debt.? Triple leveraging occurs when a holding company owns an operating insurance subsidiary, which in turn owns a large operating insurance subsidiary.? This enables the companies to turn a small return on assets into a large return on equity, so long as things go well.
  • The companies in question were taking every manner of asset risks.? With some of them I said, “What risks aren’t you taking?”? Limited partnerships, odd subordinated asset-backed securities, high yield corporates, residential mortgage bonds with a high risk of prepayment, etc.

So, when I met with the Chief Actuary, I told hid him that the five were taking unconscionable risks, and that some of them would fail soon.? I explained the risks, and why we were not taking those risks.? He objected and said we weren’t willing to take risks.? As LTCM failed, and our portfolios did not get damaged, those accusations rang hollow.

But what happened to the five companies?

  • Two of them failed within a year — ARM Financial and General American failed because they had insufficient liquid assets to meet a run on their liquidity, amid tough asset markets.
  • Two of them merged into other companies under stress — Jefferson Pilot was one, and I can’t remember the other one.
  • Lincoln National still exists, and to me, is still an aggressive company.

Four of five gone — I think that justified my opinions well enough, but the Chief Actuary brought another project a year later asking us to show what we had done for them over the years.? This project took two months, but in the end it showed that we had earned 0.70%/yr over Single-A Treasuries over the prior six years, which is? a great return.? The unstated problem was they were selling annuities too cheaply.

That shut him up for a while, but after a merger, the drumbeat continued — you aren’t earning enough for us, and, in 2001-2, how dare you have capital losses.?? Our capital losses were much smaller than most other firms, but our main client was abnormal.

To make it simple, we managed money for an incompetent insurance management team who could only sell product by paying more than most companies did.? No wonder they grew so fast.? If they had not been so focused on growth, we could have been more focused on avoiding losses.

What are the lessons here?

  • Rapid growth with financials is usually a bad sign.
  • Analyze liability structures for aggressiveness.? Look at total leverage to the holding company.? How much assets do they control off of what sliver of equity?
  • If companies predominantly buy risky assets, avoid them.
  • Avoid slick-talking management teams that don’t know what they are doing.? (This sounds obvious, but 3 out of 4 companies that I worked for fit this description.? It is not obvious to those that fund them.)

And sadly, that applied to the company that I managed the assets for — they destroyed economic value, and has twice been sold to other managers, none of whom are conservative.? Billions have been lost in the process.

It’s sad, but tons of money get lost through some financials because the accounting is opaque, and losses get realized in lumps, as “surprises” come upon them.

Be wary when investing in financial companies, and avoid novel asset risks, credit risk, and excess leverage.

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

China

 

  • Chinese Cities Hooked on Land Revenue Fuel Housing Costs http://t.co/8SXwubzUjk Ppl invest in what they think they ctrl; no alternatives $$ Sep 28, 2013
  • Amway Bankrolls Harvard Course?For Chinese Cadres http://t.co/XVk5MXV2eh May not b pyramid, but successful sellers mostly recruit sellers $$ Sep 26, 2013
  • Chanos Undeterred by China Growth as O?Neill Bullish http://t.co/xwvC9mOFHa China will become the biggest windshield bugsplat ever seen $$ Sep 25, 2013
  • Party Will Pay the Price for China?s Rebalancing http://t.co/inQ5BHYMdn The Day has arrived: Michael Pettis is on Bloomberg. Go Michael! $$ Sep 25, 2013
  • China?s Generation Winnebago Avoids Traffic in RVs http://t.co/Q8z41qGv1j New Chinese status symbol: RVs. Rest while your driver works $$ Sep 24, 2013
  • China + Gold = 9 Million iPhones Sold http://t.co/DfIAopLDLV Gold may do nothing, but it is beautiful, & beauty drives much marketing $$ Sep 24, 2013
  • Michael Pettis, in his current newsletter, reminds us that loan growth outstrips ability to repay in China, recent “growth” is a fake-out $$ Sep 24, 2013

 

Companies & Industries

?

  • Meet Hummingbird: Google Just Revamped Search To Answer Your Long Questions Better http://t.co/mtAf5pxGIA Improved Search Engine $$ $GOOG Sep 28, 2013
  • JC Penney Is on the Brink http://t.co/UtMX5sa3ZT Now $JCP has liquidity, @ a cost, but can they transform their business model? $$ #unlikely Sep 28, 2013
  • Penney’s Share Offering Prices at a Discount http://t.co/CWVp8dOKln $JCP Danger Will Robinson! Stock price does not hold secondary level $$ Sep 27, 2013
  • Kat Cole, Former Hooters Waitress, Runs Cinnabon’s $1B Empire http://t.co/sOe9WKUB1v Ppl go gaga 4 Classic Roll. 60% more cals vs Big Mac $$ Sep 27, 2013
  • Oaktree group to sell US foreclosed homes http://t.co/dUuGn768TI Too many investors chasing residential RE vs owner occupiers $$ #badsign Sep 24, 2013
  • Meet Prem Watsa: The Man Riding to BlackBerry?s Rescue http://t.co/flg4xn1MkX A case of regret, throwing good $$ after bad $BBRY Sep 24, 2013
  • Banks Prove Safer Than Industrials in Bond Rally http://t.co/B2t3pbaNGd I would b willing 2 overweight industrials now; they r safer $$ Sep 24, 2013
  • Do Amazon’s Lockers Help Retailers? Depends on What They Sell http://t.co/Pbd2cPK6zl Works if $AMZN doesn’t sell what u sell, &vice-versa $$ Sep 23, 2013
  • FireEye Takes Off as Shares Rise 80% in IPO Debut http://t.co/fnY1YkvvD1 Score processes on weirdness, share info globally 2 stop malware $$ Sep 23, 2013

?

?

Rest of the World

 

  • Irish Billionaire Has ?Boatload? of Customers for Spanish http://t.co/GhyDzrhkhk Get your own Spanish Villa while supplies last! $$ Sep 27, 2013
  • Debt Disaster Seen Unless VAT Rises to 20% by 2020 http://t.co/fXyeptRNJZ Japan is a bug in search of a windshield; 20% would kill econ $$ Sep 26, 2013
  • Merkel?s Cold Embrace Leaves SPD Wary of Coalition Talks http://t.co/6pCmU9KgCf If SPD doesn’t compromise, cud a minority government form $$ Sep 24, 2013
  • Believing Data Not Required W/GDP Warrants http://t.co/36SKEKLcha Do u think Argentina is fudging GDP #s up? Buy Argentine GDP Warrants $$ Sep 23, 2013
  • For Migrants, New Land of Opportunity Is Mexico http://t.co/jy3XaZeRCA Immigrants r moving to Mexico as the economy deregulates a little $$ Sep 23, 2013
  • Czechs Yearning for Growth Set to Abandon Merkel Path http://t.co/sU8mxocTL7 No natural political coalition 4 austerity, even when right $$ Sep 23, 2013
  • Greece Plans Foreclosures to Meet Bailout Demands http://t.co/W7Ryxvv6J6 Inability 2 foreclose gums up Greece’s financial system $$ Sep 23, 2013

 

Central Banking

 

  • Richard Koo says ‘vicious cycle’ taking hold as Fed faces ‘QE trap’ http://t.co/se3uPY5eP1 Similar to my arguments in Easy in, Hard out $$ Sep 27, 2013
  • Constitutional Money by Richard Timberlake http://t.co/iipZBfnFqm “Treaties may become inapplicable because of changes in circumstances” $$ Sep 25, 2013
  • US Fed Shouldn’t Give Forward Guidance, Former Bank of Israel Head Fischer Says http://t.co/ZzbTLqTEU9 Correct. Fischer 4 Fed Chair $$ Sep 24, 2013
  • Why we listen to former FOMC members who r partisans of the Fed, rather than skeptics of central banking, like James Grant, amazes me $$ Sep 24, 2013
  • Yellen Would Bring Tougher Tone to Fed http://t.co/xoNY2kKWqa Academic economists, like Yellen, do not understand how the economy works $$ Sep 24, 2013

 

Housing/Mortgages

?

  • Mortgage Bonds Without Government Backing Face Tough Time http://t.co/MrtGxmynes Tough 2 mkt private label RMBS, not enough excess spread $$ Sep 28, 2013
  • Subprime bond bounces back, leaving behind a subprime borrower http://t.co/x7KRB8Rp9n Long article about a deadbeat & his subprime loan $$ Sep 27, 2013
  • There have been a scad of articles like this, but the guy did not do “due diligence” on the loan, and did not have to buy the house $$ Sep 27, 2013
  • Home gold rush is over http://t.co/AASXbe14zc Too many investors vs owner occupiers creates an imbalance as smarter players start 2 sell $$ Sep 26, 2013
  • FHA, Facing Losses, Likely to Tap Treasury http://t.co/Hdpqqdplri Shortfall for Fiscal Year Could b at Least $1B, Early Projection Shows $$ Sep 26, 2013

?

Financial Sector

 

  • BATS Prepares to Take On Big Bell Ringers http://t.co/x8PjU05xE9 NYSE + Arca > BATS + Direct Edge > NASDAQ $$ Graph: http://t.co/rDV3hY7uzf Sep 28, 2013
  • Shine a Light on Repo http://t.co/KrF4MtaA7Y Did u know that repos r 96 years old? Learn about obscure corner of the fixed income market $$ Sep 27, 2013
  • The bank that rejects the most mortgages http://t.co/JxD3xhvlY4 $JPM highest rejection rate, $STI lowest, $WFC biggest lender, avg 20.6% $$ Sep 27, 2013
  • Covenant-Lite Loans Need Uniform Definition http://t.co/RbEywreAEC It would help, but there is always nonstandard data in securitizations $$ Sep 26, 2013
  • Wells Fargo: New CLO Regulations May Lead to Issuance Slump http://t.co/FcK5NLQvba Forcing securitizers 2 take first losses ruins profits $$ Sep 24, 2013
  • The VC Secret: 3 Out of 4 Start-Ups Fail http://t.co/jjFrQc9JNP Ratio sounds high, but when VC-backed firm wins, it pays 4a lot of losers $$ Sep 24, 2013
  • That’s the way 2 manage pension assets if u r big enough. In-source, build up expertise, & keep adding smart people 2 addl asset classes $$ Sep 23, 2013
  • In-Sourced, Fully Funded, Public, and American http://t.co/ISUDgDvGhC! South Dakota Retirement System manages 65%-70% of assets in-house $$ Sep 23, 2013
  • America’s latest financial crisis? It’s incredibly personal. http://t.co/yHLcIm7xuR People do NOT understand how to save or handle cash $$ Sep 23, 2013
  • Value Investor Charles de Vaulx On China, Gold, Apple And Berkshire Hathaway http://t.co/4LgwGyzI7g Longish good interview. $$ $STUDY $BRK.B Sep 23, 2013
  • Fidelity sued by employees over its own 401(k) plan http://t.co/yo5h32QQD6 Biting hand that feeds them, they object 2 high fees 4 funds $$ Sep 23, 2013
  • Inside Nasdaq’s succession planning process http://t.co/6uOUsgrpuQ $NDAQ trades at a discount 2 peers; it needs a merger or better mgmt $$ Sep 22, 2013

 

Other

 

  • Billionaires Battle as Bezos-Musk Companies Vie for Launch Pad http://t.co/jEOhw4xXac Fight over a launchpad @ Kennedy Space Center $$ Sep 28, 2013
  • Supersonic Drones Can Outmaneuver Humans. So Why Do We Still Need Pilots? http://t.co/J5N9FhDVbH Pilots fly better in complex situations $$ Sep 28, 2013
  • Postal rate hike proposal faces Senate scrutiny http://t.co/aq7gKcDnm1 First Class would go to 49 cents, as internet slowly eats USPS $$ Sep 26, 2013
  • This Year’s SAT Scores Are Out, and They’re Grim http://t.co/04jtzUJMtL <50% of 2013 graduating seniors got “college-ready” SAT scores $$ Sep 26, 2013
  • Little GAAP Could Drive Accounting Simplification http://t.co/Ti24zRMFY2 If the acctg is 2 complex, biz is probably 2 complex as well $$ Sep 26, 2013
  • Work is not waiting for a job. If you don’t have a job, start your own business. http://t.co/pkUXupCOJg Sep 25, 2013
  • Investors Are Buying High, Yet Again http://t.co/PaTcowZvk8 Opportunities are fewer now, listen to Buffett & Klarman & trim back risk $$ Sep 25, 2013
  • Tweet tips: Most effective calls to action on Twitter http://t.co/PrcHMiNDMc! U could also ask them to favorite your tweet $$ $TWTR Sep 24, 2013
  • Death Dinners at Baby Boomers? Tables Take on Dying Taboo http://t.co/68nxd534eB Good 2 talk about death, but r u ready 4 the afterlife? $$ Sep 24, 2013
  • Here Are The Best Fundamental Investors To Follow On StockTwits http://t.co/a72aV98KUo A good list of resources & teachers; I’m listed #5 $$ Sep 23, 2013
  • A Backdoor Roth IRA for a High-Income Couple http://t.co/79fYNIF5d6 Invest in regular IRA, convert 2 Roth, repeat process annually $$ Sep 23, 2013

 

PPACA / Obamacare

?

  • Will Obamacare hurt job creation and marriage? http://t.co/n7h7BEkrXK Belief in Obamacare is akin 2 belief in magic; resources r free $$ Sep 27, 2013
  • Prices Set for New Health-Care Exchanges http://t.co/J4VFjvF5HR Younger Buyers May Face Higher Insurance Premiums $$ Obamacare #FTL Sep 26, 2013
  • Best of the Web Today: The Young and the Clueless http://t.co/3GbWYOqipM ObamaCare may work, provided no one responds to its incentives. $$ Sep 26, 2013
  • Young Invincibles Caught in Crossfire Over Obamacare Cost http://t.co/hgyCGtZMaj Note how Obama packs the gallery w/young people $$ Sep 24, 2013

?

Municipal Debt / Detroit

 

  • Stockton to Unveil Plan Including Cuts for Creditors http://t.co/zBj3ngCXMz Trying to preserve pensions may draw lawsuit from bondholders $$ Sep 28, 2013
  • Detroit spent billions extra from pensions http://t.co/UBdb3GaqtI That’s what u get 4 having 1-party rule, w/no 1 to look over shoulder $$ Sep 27, 2013
  • Orr proposes freeze for Detroit pension funds http://t.co/sSFtqADV23 Unions don’t get that they destroyed the finances of Detroit $$ Sep 27, 2013
  • Judge Rules Retiree Health Protected Like Pension http://t.co/xg7bcR28oM! Loopy ruling sets Los Angeles on a course 2 bankruptcy $$ Sep 25, 2013
  • Hands off DIA, pensions, Detroiters say in poll http://t.co/dHmp2qjc5n! Detroit is an example of a complex system self-destructing $$ #dying Sep 23, 2013

 

Energy

 

  • Pipeline Billionaire Ready for Next Round of Deal Making http://t.co/KhTwsdBDRs $ETP CEO thinks there is room to consolidate pipelines $$ Sep 28, 2013
  • Six Myths About Renewable Energy http://t.co/G0dB1SJ2aU Balanced article. 3 myths pro, 3 myths con. It will b a minority of total energy $$ Sep 23, 2013

 

The Economic views of Ray Dalio

 

  • One more note, this slideshow put together from BI moves a lot faster than Dalio’s video or the… http://t.co/ytGIHQEaxP Sep 24, 2013
  • And for those that want to read Ray Dalio’s economic template book, it is free here: http://bwater… http://t.co/f1AVlDufxo Sep 24, 2013

 

US Politics & Policy

 

  • Texas Counties Lead in Job Growth, Lag in Wage Gains http://t.co/XdyNF4ZEJt No surprise, but biz leaves CA & there is high unemployment 2 $$ Sep 27, 2013
  • CHRISTIE KEEPS PENSION PROBE RECORDS FROM PUBLIC VIEW AS GOVERNOR EYES 2ND TERM http://t.co/NmnbLRxRwd! Running mate has pension scandal $$ Sep 24, 2013
  • Open-Government Laws Fuel Hedge-Fund Profits http://t.co/P5vZBpkiDq Hedge funds file FOIA requests 2get FDA reports on drugs, etc. $$ Sep 23, 2013
  • At 77 He Prepares Burgers Earning in Week His Former Hourly Wage http://t.co/jQJaWTiQd3 Example of “failed 2 save” Don’t let it happen 2u $$ Sep 23, 2013
  • Self-Driving Vehicles Progress Faster Than Rules of Road http://t.co/1lFAmdlJKz Regulations, laws, insurance all need 2b revised 4 this $$ Sep 23, 2013
  • The Hidden Classified Briefing Most of Congress Missed http://t.co/eSBnz0uPxd How intelligence gets disseminated w/o getting disseminated $$ Sep 23, 2013
  • How the NFL Fleeces Taxpayers http://t.co/OeG5kRTM2O Longish article on how they get free stadiums, pay no federal or state taxes, etc. $$ Sep 23, 2013
  • Facebook ?Likes? Are Now Legally Protected Speech http://t.co/Oi7XQkYVlB Political speech is protected by the 1st Amendment even “like” $$ Sep 22, 2013

 

Wrong

?

  • Over the Top: Jordan R. VanOort Earns Prestigious CFA Designation http://t.co/jRMcdyRq1R CFA designation is good, but prestigious? $$ Sep 28, 2013
  • & really, when there are over 100,000 of us, does receiving your CFA Charter really rate a press release? Tougher to become an Actuary $$ Sep 28, 2013
  • Wrong:Pimco shook hands with Fed – & made a killing http://t.co/gBlELQ6U7p 2 notes: agency MBS r easy 2 understand, & TBA mkt not obscure $$ Sep 27, 2013
  • Point: Fed could have easily done this internally. What! They can’t find any among their 1000s of Ph.D. economists to get simple mkts? $$ Sep 27, 2013
  • It is probable that enough data on what the Fed would do escaped over the transom 2 give PIMCO & the other firms insider info. $$ Sep 27, 2013
  • Wrong: New idiots, same as the? actually these idiots might be worse http://t.co/Xa5jGmbQII US economy grew faster under balanced budgets $$ Sep 27, 2013
  • Wrong: Reduce working week to 30 hours, say economists http://t.co/HiI7Zmhimo More work means more production means more GDP, Consumption $$ Sep 27, 2013
  • Loony: Detroit Union Seeks 2 Revive `13th’ Pension Check Policy http://t.co/Lf5YMVBKxW Practice that continues 4 28Y is a tacit agreement $$ Sep 27, 2013
  • Wishful thinking: Let ObamaCare Collapse http://t.co/n3yNizNAfP Until the US itself fails, no entitlement has ever been eliminated $$ Sep 26, 2013
  • Wrong:Shinzo Abe: Unleashing the Power of ‘Womenomics’ http://t.co/R00AN5pUEH This comes from nation w/a shrinking population. Ridiculous $$ Sep 26, 2013
  • Wrong: How Sensitive Is Public Pension Funding to Investment Returns? http://t.co/hSeoOLsvrc! Should use mkt-based assmptns not historic $$ Sep 25, 2013
  • Wrong: US city, county public pension levels sank in 2012 http://t.co/o2JUwsi5JF! 2 optimistic, b/c risk assets bottomed in late 2002 $$ Sep 25, 2013
  • Wrong: Don?t Be Alarmed by Obamacare?s Failures http://t.co/fS63xQpaaP PPACA doesn’t make actuarial sense, young people won’t participate $$ Sep 24, 2013
  • Wrong: Yellen Isn?t a ?Knee-Jerk Dove,? Kroszner Says http://t.co/0aeTM6BIiB Favoring negative interest rates == ?Knee-Jerk Dove? $$ Sep 24, 2013

?

?

Replies, Retweets & Comments

 

  • Thanks @TightTalk @BabyFreshNuggz @X9T_Trading for being top new followers in my community this week (insight via http://t.co/sern3wLA13) Sep 27, 2013
  • “Here is part of my solution: accounting for repos should be bifurcated, so that is not treated ?” ? David_Merkel http://t.co/caWGlbe3eL $$ Sep 27, 2013
  • Loonies, Detroit is dead MT @ToddSullivan: RT @AmyResnick: just wow. Detroit Union Seeks to Revive `13th’ #Pension http://t.co/u3XJAER0bi $$ Sep 27, 2013
  • Believe MT @ReformedBroker: You’re not gonna believe this – but Detroit’s pension doled billions left and right http://t.co/9i5MinpGAX $$ Sep 27, 2013
  • RT @ezraklein: Perhaps if President Obama makes the House GOP 300 sandwiches, they’ll agree to lift the debt ceiling. Sep 27, 2013
  • #FollowFriday Thanks @ReformedBroker @pelias01 @researchpuzzler for being top influencers in my community this week 🙂 Sep 27, 2013
  • ‘ @allstarcharts @jfahmy The 1st discipline of investing/trading is humility; even if you know more, the timing/environment can be tough $$ Sep 27, 2013
  • Commented on StockTwits: I think Watsa can be trusted. Aside from financials in the old days that were dodgy, I th… http://t.co/dJ8g2rVKmK Sep 27, 2013
  • Thanks @abnormalreturns @dpinsen for being top engaged members in my community this week (insight via http://t.co/sern3wLA13) Sep 26, 2013
  • “I never directly pay for research… most of it is freely available on the web. What is not, I?” ? David_Merkel http://t.co/EAk37XXNdJ $$ Sep 26, 2013
  • “This is already known by those that study the statistics. Look at year over year figures, you ?” ? David_Merkel http://t.co/5J46Rm19vo $$ Sep 26, 2013
  • I just left a comment in “We’ve got bubbles, we’ve got troubles – MarketWatch” http://t.co/P11awJw1KQ Sep 26, 2013
  • ‘ @Reddy Cummings is my gerrymandered rep. He is by far one of the most intellectually underpowered members of the House, & that says a lot Sep 25, 2013
  • @moorehn @ReformedBroker @SimoneFoxman @SallyPancakes @kensweet @jennablan They r favorites of mine. $$ Sep 25, 2013
  • Entitlements will have to be reduced; it is only a question of how and when. Druckenmiller’s presentation:… http://t.co/BsA9S78RTI Sep 24, 2013
  • Thanks @MarshaCollier @EdmundSLee @rwohlner for being top new followers in my community this week (insight via http://t.co/sern3wLA13) Sep 24, 2013
  • Thanks @researchpuzzler @pelias01 for being top engaged members in my community this week (insight via http://t.co/sern3wLA13) Sep 23, 2013

 

Quiet Companies Are Better

Quiet Companies Are Better

Posted on by David Merkel

I appreciate the companies in my portfolio that don’t say much.? They just do their work, and don’t advertise it.

There is a bias among promotional companies, that one must promote the company in every press release.? I disagree.

Just be honest.? If you don’t have anything significant to say, don’t say it.? Spend your time on growing the business, rather than advertising accomplishments.

Truth: I would prefer that companies simply issue a 10-Q or 10-K, and do not hold a conference call for analysts.? Just give us the data, and let us analyze it.

Let the analysts do their work, and don’t answer their phone calls.? Create a genuine level playing field where no one gets to talk with management unless everyone is invited to listen.

I realize this is radical, but I am trying to be genuinely fair, which does not happen often on Wall Street.

Two Additional Ways To Fix Money Market Funds

Two Additional Ways To Fix Money Market Funds

Posted on by David Merkel

With my experience in insurance there are yet two additional ways to fix money market funds under stress.

  • You can do a distribution in kind, where one withdrawing under stress gets pro-rata the securities held by the money market fund.? Then they can figure out what to do with the securities that are under stress.
  • You could send the money market fund into windout — taking the fund cash flows pro-rata, and sending the cash to clients as they emerge.

Though I think my earlier thoughts on how to fix money market funds are better that current proposals, these ideas will still work well.

I would recommend doing either of the above two strategies if there is a significant credit event, and there was a demand for withdrawals at par.? These strategies would eliminate the fund, unlike my earlier strategy, but would hand over the the remaining assets equitably, which could be reinvested in other money market funds.? And again, with my strategies, there is no need for bailouts.

Personally, if those managing money market funds were smart, they would go for my original proposal, because it allows them to manage the assets for best returns, but with no risk that they could lose their franchise, or suffer having to hold capital or have an openly disclosed NAV.

I think of my original proposal as the best compromise position for the SEC & money market funds.? No one will be perfectly happy with it, but that is the sign of good laws — they split the difference.

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Monetary Policy

 

  • Buffett Calls Fed History?s Greatest Hedge Fund http://t.co/vToZwL7D21 Buffett great on practical business economics, lousy on politics $$ Sep 21, 2013
  • Bernanke Faith in Housing Seen Shaken in Bonds http://t.co/F0xtRsM13v The Fed never had control of the long end of the yield curve $$ #barmy Sep 20, 2013
  • The Fed has lost all credibility http://t.co/NhXbQjxiNa For an institution that values clear communications, things have been murky $$ Sep 19, 2013
  • Excellent question on financial regulation from the lady from the American Banker. $$ Sep 18, 2013
  • Good question from @pdacosta on the labor force participation rate and unemployment. $$ #Fed Sep 18, 2013
  • Less Tapering Becomes Tightening Credit No Matter What Fed Says http://t.co/rQMp900dxA Q: what total pkg does 2 forward rate expectations $$ Sep 17, 2013

 

 

Janet Yellen (we get what we deserve)

 

  • White Houses Urges Democratic Senators to Defend Yellen http://t.co/pBd1U1dz7u She seems like a lock: to QE Infinity & Beyond! $$ #FTL Sep 21, 2013
  • Yellen Chances Grow as Obama Aides Test Senate Support http://t.co/kbDdWmlX4L “She will make Bernanke look like a hawk.” Marc Faber $$ Sep 19, 2013
  • White House official says Yellen front runner for Fed chair http://t.co/wGor8xIJoI This is to make us oppose the uber-dove #anyonebutyellen Sep 19, 2013
  • Yellen No Lock for Fed Chair Despite Summers Exit http://t.co/ycEBcedvTe “This was an unprecedented struggle for leadership of the Fed.” $$ Sep 17, 2013
  • Yellen Now Front-Runner for Fed Chief http://t.co/H4xh8vmot1 Yellen means no change from the current failed policies $$ #anyonebutyellen Sep 17, 2013
  • Fed Leader Doubt Erodes Low-Rate Message as QE Taper Looms http://t.co/CgyxacYaap Can’t appoint Yellen now, lest it look like a loss $$ Sep 16, 2013
  • Why Larry Summers Bailed on the Fed http://t.co/lVn10kgYIL Bring on Don Kohn, better still, bring on that monetary dissident John Taylor $$ Sep 16, 2013

 

Rest of the World

 

  • Bermuda’s Search for New Wealth http://t.co/LPMJJvD6QE I like Bermuda a lot, & learned a lot here. No paparazzi, much privacy $$ #humble Sep 20, 2013
  • Rebel-on-Rebel Violence Seizes Syria http://t.co/LsZUvpQTuo Two player games r easy; Three-or-more player games r tough & confusing $$ Sep 20, 2013
  • What Happens When the US Isn?t the Biggest Gas Guzzler? http://t.co/pl8X9TkOUM 1 reason y I am long energy stocks: rising global demand $$ Sep 20, 2013
  • Olympic Athletes in Tokyo Risk Hottest Weather in 120 Years http://t.co/4E9MnDTzv5 Same for FIFA in Qatar, but humidity in Tokyo is a factor Sep 19, 2013
  • Why Even the Worst Bloggers Are Making Us Smarter http://t.co/PhztCBG6kP It is amazing how many people are writing their ideas on the web Sep 19, 2013
  • China?s Choking Cities Means Job Cuts at Steel Town: Commodities http://t.co/3Xmz1Z7zqh China has over-invested in heavy industry #japan1989 Sep 19, 2013
  • In Post-Tsunami Japan, Homeowners Pull Away From Grid http://t.co/kPUIVdYq8b Power is now less reliable, some move to solar & fuel cells Sep 19, 2013
  • What Egypt Wants: Cheaper Bread http://t.co/S8NE6Zo8JU Demand for Subsidized Food Vexed Ousted President and Pressures Interim Government Sep 19, 2013
  • Obama Rifts With Allies on Summers-Syria Limit Debt Dealing http://t.co/M8f1f1fPm6 Weakened by bad choices but he is the President! $$ Sep 18, 2013
  • How Did Advanced Economies Get in So Much Debt? http://t.co/QGF1acUQf8 They absorbed bad private debts, rather than letting them fail $$ Sep 18, 2013
  • On Putin, his NYT editorial: http://t.co/eb45qkGBq1 Peggy Noonan responds: http://t.co/qwFRsk83cR Avoid interfering in foreign wars $$ Sep 18, 2013
  • Canadian Household – Drowning in Debt http://t.co/hJz8057OMF Total Canadian Household Debt-to-Income Ratio Rises to Record 165.6% @ 6/13 $$ Sep 17, 2013
  • $$ @paulvieira Point taken. Q: If someone bot an avg house in Canada 2 rent it out, would he make money; if arb is neg, Canada faces probs Sep 17, 2013
  • Eleven Countries with Soaring Inflation http://t.co/xl6Ivzr5bx Soaring means >6%/yr; leading the parade are Venezuela, Argentina & Egypt $$ Sep 17, 2013
  • Political Risk: What Should Investors Know About China’s Interest In Peru? http://t.co/85wGZJ1x3W Biz in Peru means negotiate w/locals $$ Sep 17, 2013
  • Smallest Ships Profitable Again as Logs Feed China Boom http://t.co/YsPOJMW9ul Chinese demand for wood raises freight 4 small ships $$ Sep 17, 2013
  • Vladimir Putin, the Richest Man on Earth http://t.co/bpLFDXtPWw Who needs wealth when you control a country? Putin makes his cronies rich $$ Sep 17, 2013
  • China Reins in Popular Voices With New Microblog Controls http://t.co/0tlX38uI1q The internet is a threat & an aid 2 every government $$ Sep 17, 2013
  • No Confidence in China Markets Inflates Housing Bubble http://t.co/G8qgXC8OEW Distrust other assets leads Chinese 2 invest in real estate $$ Sep 17, 2013
  • Germany’s Migrating Seniors http://t.co/Bhsqr6TePo Good care cheap, but you have to move 2 Poland to get it. Solves some old age problems $$ Sep 17, 2013
  • Germans Export Grandma to Poland as Costs, Care Converge http://t.co/e9w45mHkQe But where will the Poles export their Grandmas? $$ #long Sep 17, 2013

 

US Politics & Policy

 

  • Benghazi investigators gave Hillary Clinton heads-up on findings http://t.co/6Oimx1LhSx Mrs. Clinton appointed 80% of the review board $$ Sep 21, 2013
  • Weeds amidst the ivy |http://t.co/nvMFuNioFN A long & relatively thorough analysis of for-profit colleges & how they milk student loans $$ Sep 21, 2013
  • House GOP Ties Government Funding to Health Law http://t.co/rcNBBl2c6m This is a Q of short- vs long-run. Balancing budget best 4long-run $$ Sep 20, 2013
  • Big Insurers Skip Health Exchanges http://t.co/JWvGJSYVdQ Y deal w/ markets that attract sick people w/limits on underwriting & pricing? $$ Sep 20, 2013
  • What caused the financial crisis? The Big Lie goes viral http://t.co/1qFMg1BYGo The crisis was not merely caused by bad regulation Sep 19, 2013
  • The Queen Mary of macro trends: Rising rates http://t.co/OSgaYzIQkg Less certain than article says, as the economy weakens, no loan growth Sep 19, 2013
  • Walgreen will drop its traditional health insurance and instead give its 160,000 workers payments 2buy plans http://t.co/dpvbC8IigC via @WSJ Sep 19, 2013
  • National pension group challenges Pew?s work http://t.co/iiZROFHzRy! Cash balance plans give lower benefits, but maybe that’s affordable Sep 19, 2013
  • Puerto Rico can only cover 11.2% of pension costs http://t.co/wdnQJFniEF! Puerto Rico exists 2 make Illinois think it is prudent $$ Sep 19, 2013
  • Obama Feels a Pinch From Congressional Democrats http://t.co/d78z6b9a2c Obama gets constrained by the Left as much as the Right $$ Sep 18, 2013
  • Republicans Weigh Defunding Health Law, Avoiding Shutdown http://t.co/cbiqo2vBoW Ignore the economists, they don’t know anything, & cut! $$ Sep 18, 2013
  • Republican Newcomer Influence in Congress Risks Shutdown http://t.co/dtdHcg59po 3-player games r much less stable then 2-player games. $$ Sep 18, 2013
  • The Financial States of America http://t.co/xGQ8c6uajo Clever infographic; click a state 2c how it ranks; click on categories 4 diff maps $$ Sep 17, 2013
  • States With The Most Zombie Homes http://t.co/Dj6hphkUrM >20% of foreclosed homes vacant: Indiana, Nevada, Georgia, Florida, MD, AZ, SC $$ Sep 17, 2013
  • Heroin Pushed on Chicago by Cartel Fueling Gang Murders http://t.co/GmuhpbSxIk Getting a receipt from the Indiana police 4 forfeited cash $$ Sep 17, 2013
  • Armed EPA raid in Alaska sheds light on 70 fed agencies w/armed divisions http://t.co/90YKg3TWB2 Interesting how many have police units $$ Sep 16, 2013
  • Obama stands firm on refusal to negotiate over US debt ceiling http://t.co/kUDp9Q4ZL2 Nothing bad happened from sequester; do it again $$ Sep 16, 2013
  • How the SOPA law got defeated politically http://t.co/X3ZJiTiJ48 Creation of a website to highlight & affect legislative markups was key $$ Sep 16, 2013
  • Health Law Faces Skepticism http://t.co/AYf9IjdUL9 Complex laws typically don’t work well; Obamacare/PPACA is the epitome of complexity $$ Sep 16, 2013

Market Impact

 

  • The Long, Sorry Tale of Pension Promises http://t.co/6Pi2V0yiPA It started w/accounting rules allowing2much flexibility4funding/valuation $$ Sep 21, 2013
  • ING CEO Says Stress Tests Without Safety Net Bring Risks http://t.co/Bi7IKXvuYK If u fail the stress test, y would anyone recapitalize u $$ Sep 21, 2013
  • Challenging the Imperial Boardroom http://t.co/VW6IrzKIF9 @Carl_C_Icahn argues 4 mgmt transparency, competence, & shareholder orientation $$ Sep 20, 2013
  • Money Market Funds Ready for Battle with Regulators http://t.co/1VIxWqfVLE Floating NAVs will kill money market funds; better solutions $$ Sep 20, 2013
  • Banks? $10B Sweet Spot Sets Off Buying Spree for Lenders http://t.co/2oDNEEqEdY Bank capital rules r helping create medium-large banks $$ Sep 20, 2013
  • Avoid ?Dividend Yield Traps?, Look To Releveraging Stocks http://t.co/0k3Qs4mJHx 2 risks: higher bond yields compete; free cash flow 2low $$ Sep 20, 2013
  • Longevity-Proof Your Future http://t.co/0MB5S7Yx5S The main point is that you need to save. Beyond that, invest well, but savings r capital Sep 19, 2013
  • Novogratz to Burbank See Stocks Surviving First Fed Taper http://t.co/Xeig2UVtvT So what? We already know “Three steps and a stumble.” Sep 19, 2013
  • How Social Responsible Investing Can Be Irresponsible — Pension Fund To Sell Energy Stocks? http://t.co/JE6g2S8hHC Vacuous city council Sep 19, 2013
  • Remembering the families at the center of the financial crisis http://t.co/ICSLkY2TcD If finances were related 2 finance/housing it hurt $$ Sep 19, 2013
  • Judge Dismisses Bank Lawsuit Over Mortgage Foreclosures http://t.co/aJ5VmA64x2 Richmond needs supermajority 2 use eminent domain $$ Sep 17, 2013
  • Dr Copper & his funny friends disagree tremendously with SP500 level http://t.co/uNpdfvlbC9 On the divergence of stocks & commodities $$ Sep 16, 2013
  • Is Fiscal Austerity Good for the Economy? http://t.co/gQif4JHXqc “austerity is costly in the short run, it can provide long-run benefits” $$ Sep 16, 2013
  • Gross?s Trade Sours as Bonds Lose Faith in Fed Guidance http://t.co/YGZgvVries Depends on level of future GDP growth, keep watching $$ Sep 16, 2013
  • Montepeque of Platts Caught in Battle Over Oil Assessments http://t.co/4o0wvVyCEz All human systems r gamed, just a question of how much $$ Sep 16, 2013
  • Wall Street trading in US fuel credits hurts consumers http://t.co/8hZ8shAIJJ Very difficult 2manipulate prices in long run: sup/dem chgs $$ Sep 16, 2013
  • Uh oh. People buying houses fear rising prices http://t.co/FWAAeHwKdz Bubbles persist until financing costs more than implied rents $$ Sep 16, 2013

 

Companies & Industries

 

  • Twitter announces IPO: The Pricing Game begins http://t.co/GlR7MWJz4X Daring Damodaran gives a value 4 $TWTR w/out having any financials $$ Sep 21, 2013
  • Secret Rocks and Gem Hunters http://t.co/4Dpm6jGavk Colored gems r like small cap stocks, they r unique & illiquid mkts w/odd characters $$ Sep 20, 2013
  • Companies Seize on Rate Reprieve to Issue Bonds http://t.co/qQJzknEqhp Many think rates will go higher, & so they issue debt now $$ Sep 20, 2013
  • Google May Stop Using ‘Cookies’ to Track Web Users http://t.co/MgvZtEHo1Q Could concentrate marketing power in hands of a few companies $$ Sep 20, 2013
  • How ?Cord Never? Generation Poses Sales Drag for Pay TV http://t.co/10M73Td7jL Once you get used to not paying for your video, u don’t pay Sep 19, 2013
  • Verizon Pays $5.1 Billion in Extra Interest http://t.co/om7PsDAwzO That was the price of getting a big deal done in the short-run. Sep 19, 2013
  • Companies are increasingly choosing to generate their own power, delivering a jolt to utilities http://t.co/brVyNOWokp Disintermediation Sep 19, 2013
  • For TV Shows, It’s a Seller’s Market http://t.co/eja7JEhl1t Producers have many more outlets for content & networks must pay up 4 content $$ Sep 18, 2013
  • Capstone Metering Provides Smart Water Management Solution, Powered By Verizon Wireless Network http://t.co/0xd77Bnz0q fascinating tech $$ Sep 17, 2013
  • Berkshire Billionaire Found With More Shares Than Gates http://t.co/wqoceUXHJW Tales of old buyers of $BRK.A & cpmny sellers taking stock $$ Sep 17, 2013
  • Retailer REI Ends Era of Many Happy Returns http://t.co/0xDYFXDV95 Abuse leads REI to end returns on items bought more than one year ago $$ Sep 16, 2013
  • Wildcatter Hunch Unlocks $1.5T Oil Offshore US http://t.co/4lTsK10aj0 Longish story of how a hunch led2 deepwater drilling, amid failures $$ Sep 16, 2013
  • How Did Wal-Mart’s IPhone Discount Defeat Apple’s Price Controls? http://t.co/F3ZuYFvbWM $WMT takes a low margin on sales of $AAPL phones $$ Sep 16, 2013
  • Home, Sweet (Crude) Home in Fort McMurray, Alberta http://t.co/GpuUq289T8 Economies based on resource extraction flourish 4 a time & die $$ Sep 16, 2013

 

Economics

 

  • Women Waiting Tables Provide Most of Female Gains in US http://t.co/eoetZdyRAi Not so much demand 4 workers w/degrees in certain majors $$ Sep 20, 2013
  • Martin Feldstein: How to Create a Real Economic Stimulus http://t.co/bH2e2Z67mb Suggests mild entitlement reform; we need retirement @ 72 $$ Sep 17, 2013
  • Want Marital Bliss? Pool Your Money http://t.co/mJQb3XEkZn The more things r shared in marriage the better/tighter the bond becomes $$ Sep 17, 2013
  • Mysterious Disappearance of James Duesenberry http://t.co/LD3GfjTyka Old article on relative income hypothesis. Ppl r envious not greedy $$ Sep 16, 2013
  • Explanation of the discrepancy is that poverty is relative. Ppl r not maximizers & economists resist this b/c the pretty math falls apart $$ Sep 16, 2013
  • & if the pretty math falls apart, economists can’t publish & there goes their jobs. That is y they would rather hang onto a wrong theory $$ Sep 16, 2013

 

Other

 

  • The Time a Cleveland Newspaper Divulged Manhattan Project http://t.co/mFDKvhJTlW Fascinating tale; clever reporter http://t.co/o5CzDU61nL $$ Sep 21, 2013
  • Our Chat With Jeremy Grantham http://t.co/FSlADefGi0 In general, need 4 technological change has driven technological change; we will win $$ Sep 21, 2013
  • Marc Faber’s Biggest Mistake http://t.co/Dui1ZehA09 Really pretty minor. Interesting guy who gets things right, but speaks bearish Sep 21, 2013
  • Pope Warns Church Focusing Too Much on Divisive Issues http://t.co/2yEMa3O89I More than other Popes, this one is a slave2 liberal opinion $$ Sep 20, 2013
  • How a 91-Year-Old Geek Helped Keep the Aged Independent http://t.co/GD1AmUK6OQ Small cheap sensors monitor oldsters, watching their needs Sep 19, 2013
  • Say Goodbye to the Password http://t.co/pTnQ4ng2Xn New technology aims to offer security that is more convenient and more effective $$ Sep 18, 2013
  • Veggie-Heavy Stress Reduction Regimen Shown to Modify Cell Aging http://t.co/b3KNrSOdSY Cooking from scratch improves your life & health $$ Sep 17, 2013
  • Jonathan Jacobs: As Education Declines, So Does Civic Culture http://t.co/tk7WHue1mS Biggest complaint about new analysts: can’t write $$ Sep 17, 2013
  • Gonorrhea Among Drug-Resisting Germs Sickening Millions http://t.co/Fbgw14Q4ZQ Add C. difficile & E. coli; resistance 2 antibiotics grows $$ Sep 17, 2013
  • Twitter Co-Founder Evan Williams Lays Out His Plan For The Future Of Media http://t.co/e7nv4u8Z0T Need the equivalent of @abnormalreturns $$ Sep 16, 2013
  • Google?s Boss and a Princeton Professor Agree: College Is a Dinosaur http://t.co/ffUTIQFxdV True, but what do we do 2prove knowledge then $$ Sep 16, 2013

 

Replies, Retweets, & Comments

  • Thanks @MarshaCollier @EdmundSLee for being top new followers in my community this week 🙂 | insight by http://t.co/sern3wLA13 Sep 20, 2013
  • #FollowFriday Thanks @ReformedBroker @pelias01 @researchpuzzler for being top influencers in my community this week 🙂 Sep 20, 2013
  • @dpinsen I almost never read fiction. Sep 20, 2013
  • RT @interfluidity: the Fed has learned the trick about stretching your feet out beyond the covers then pulling them back in to feel warm. Sep 19, 2013
  • RT @BloombergNews: Sold for sex at puberty is village girls’ fate in wealthier India | http://t.co/oZsp9d2LcV Saddest article I have read Sep 19, 2013
  • @ppearlman Congratulations, Phil. One of my favorite websites is going to get better still. Sep 17, 2013
  • $$ @joebrusuelas Wrong. Yellen is an imitation of the policies of Bernanke & QE. They don’t work. Summers — rejection of the Rubin clique. Sep 17, 2013
  • @rj_trades Worked 4 me. Don’t know what’s wrong… Sep 16, 2013

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