Haiku - Dr. Doom

This one goes out to Nouriel Roubini, the "prescient" one-trick pony of the economics world:

Econ's Doctor Doom,

the man who says down, down, down

it's always the same.

-JDW

links of the day 01-29-10

The economy grew at a 5.7% pace in Q4! (Bloomberg)

A graphical examination of why this labor recession is like no other (Economist's View)

Bear flag central (Upside Trader)

A blogger wonders how Goldman makes their money (Business Desk)

The best economic indicator you've never heard of (TBP)

links of the day 01-28-10

Shiller: how to diagnose a bubble (Dealbook)

Soros - Gold is the "ultimate bubble" (Telegraph)

On China's GDP (FT Alphaville)

Haiku - Life Lesson #2

Dan's guide to living through the majesty of haiku, Lesson 2:

Corporate ladder -

keep your head up and mouth shut

climb, hope you don't slip.

-JDW

Haiku - Life Lesson #1

Dan's guide to living, through the medium of haiku, Lesson 1:

When you lose too much

got to learn another game

one where you can win.

-JDW

links of the day 01-25-10

What was your stealth inflation last year? (Davian Letter)
-I think this is a really fantastic idea because he is absolutely correct that my basket of goods certainly isn't the same as the CPI.

On Bullshit (Epicurean Dealmaker)

Cool map graphic of millionaires by state (TRB)

A man with nothing to lose, Coco

Tonight, like I suspect a significant amount of other people, I watched the last episode of the Tonight Show with Conan O'Brien. Conan wrangled Steve Carrell, Tom Hanks, Will Ferrell, and Neil Young on the show tonight - a true all-star guest line-up to get that last curtain call with.

Even though Conan may not have had the viewership and hit the ratings sweet spot for the last seven months, I think the outporing of support for his cause since the announcement is amazing. And I believe it shows how Americans feel about this economic crisis' impact on jobs. People feel double crossed - NBC vetted Conan from an SNL writer in the '80s through the late, late spot finally awarding him the coveted Tonight Show - and they can directly empathize with his situation. Conan gave NBC his all, but has been shown the door in favor of Leno, who had stepped aside and "retired" (which burns especially for younger viewers who think he is only a yuck-yuck comic --> which is pandering to old viewers whose advertisers are more lucrative). People perceived the system's rules, played by them, and developed their skills for their employer only to feel wronged by being downsized in one of the massive layoffs of the past two years.

I don't get political very often, but:
I think this empathy is just a symptom of a much larger condition. If anything, it shows that the populist sentiments from last year's tea parties hasn't abated. And I think it is just the beginning of a much larger movement. This country hasn't had unemployment like this in a long time and I fear that unemployment's nastier side-effects may appear: mass demonstrations or worse, crime. You can take it home to the bank that the Democrats will feel it too after Election Day in November. I think they will probably lose even a simple majority in the Senate.

In full fairness, I've always liked Conan more. His bits were original and he wasn't afraid to take chances. I've always viewed Leno exactly the opposite - corny and repetitive. But when it comes down to the business, NBC's president Zucker made his decision - and Leno got the call back. I wish Conan the best. And personally, I hope he takes up a new role doing his own show or teaming up with a group of people on Adult Swim.
And disclosure: Long GE

Haiku - ETFs' Ascent

ETFs took off

which frightened mutual funds

low cost will kill them.

-JDW

links of the day 01-22-10

The copper market is a very good predictor of stock prices - it is now predicting a stock price correction (Crossing Wall Street)

A new metric, EVA momentum, could be tamper-proof (Fortune)

-Academic study of EVA momentum (SSRN)

The impact of changes in implied volatility on stock returns (CXOAG)

World poverty is falling (Vox)

Gary Kasparov discusses chess and AI (NYB)

Haiku - The Speculator

He trades on a hunch

and earns big bucks; they call him

the Speculator.

-JDW

links of the day 01-21-10

It's not who you know, it's who you are (EconLog)

On the bank tax-
A pro:David Wessel thinks Obama's bank tax has a good shot at passing (WSJ)

And a con: Return our investment (NYT)

Haiku - Defender of the Money Supply

Defender of the Money Supply

Econ PhDs

ready monetary tools

Ben'll fight inflation.

-JDW

links of the day 01-20-10

the correlation between the S&P and NASDAQ holds important information (CSS Analytics)

Insider buying strikes a new all-time low (PragCap)

Should the Fed manage leverage cycles? (Economist's View)

Haiku - MBS's

Wall Street got drunk on

mortgage backed securities;

bad hangover man.

-JDW

Quote of the day

"The only thing currently missing from my life is the absence of
panics, from, say, finding a gigantic snake in my library, or watching the
economist Myron Scholes, armed to the teeth, walk into my bedroom in
the middle of the night." -Nassim Taleb

Leftover thoughts after watching District 9

On an unserious note: this weekend my girlfriend and I picked up District 9 from the Redbox after we finished grocery shopping. I would rate it very highly, because it was a stand-out science fiction movie that told a unique story in an innovative way. What I mean by that is that it started out like Cloverfield, i.e. a documentary that flowed into a regular story flow. The only qualm that we had was over the frame rates – they cycled too fast for my girlfriend making her nauseas so she just listened for a while.

Story-wise, I had a number of leftover questions that were unresolved:1.) These aliens came from another world on a inter-planetary ship meaning that they are presumably highly intelligent. But we confined them to a slum section of Johannesburg, relegating them to sub-second class status. Why? The economist in me says they must have a comparative advantage in something, so why didn’t we allow them to have jobs? I assume another movie watcher would say that it isn’t about other world aliens but apartheid so this parallel would answer my question, but I guess I’m just more of a literalist than that. I don’t see all the connections with apartheid but my knowledge of South African history is rough at best. Or the other reply they may have is that there was a protectionist reaction from the people of South Africa: “Earth jobs are for Earth people.” This interstellar anti-trade rhetoric reminds me of Paul Krugman’s interstellar trade farcical article.

2.) Why would the government contract out the running of District 9 to a multi-national (MNU) that was the largest arms-manufacturer in the world? I assume this is a dig at Halliburton and their industry, but realistically the coordination and care would be the domain of a newly-minted division of the UN who may sub-contract small services like food distribution or medical care. My initial answer to my own question is that after a number of years it became too expensive so they solicited bids of which MNU was the low-bid, but sentient species contact, if or when it occurs, will probably be among the most important events in the history of our planet – not something you want to have the lowest bidder managing. That setup seems rife for conflict, which I know is the set-up for the story but again I’m trying to be realistic.

links of the day 01-19-10

John Bogle, founder of Vanguard, on restoring faith in financial markets (WSJ)

Mankiw: The inflation beast around the corner (NYT)

Why aren't bloggers talking about writing off principal on mortgages? (MR)

I'm not a big fan of this article, but it makes you think about your expectations for net-net-net returns (WSJ)

links of the day 01-15-10

A great piece contrasting the styles of John Paulson with Nassim Taleb (Felix Salmon)

Interview with Justin Fox, author of The Myth of the Rational Market (Simoleon Sense)

When you charge a personal finance reporter 704% APR, this happens (MoneyWatch)

The difference b/w Wall Street and academic economists (Macro Musings)

Something I'm brushing up on today: Black Wednesday (Wiki)

How to guarantee your luggage won't be lost (Barking up the wrong tree)

Haiku - Efficient Markets Hypothesis defined

The EMH states

prices reflect all of the

known information.

JDW

links of the day 01-14-10

Arnold Kling discusses "safe" assets (EconLog)

Is there an indicator in brokerage margins? (The Reformed Broker)

Seems ill-timed but Tyler Cowen thinks about why Haiti is so poor (MR)

Buttonwood blasts trade protectionists (The Economist)

David Wessel scolds Ben Bernanke, responding to his AEA speech (WSJ)
-I guess I could label myself a Bernanke apologist, but I don't agree with this line of reasoning at all - you can't blame the Fed 100% nor can you lay all the blame on Wall Street nor can or should you blame the millions of borrowers who took an active role in the craze. It isn't like school where there is only one solution. The housing bubble was a mania which means that there were many many people who were complicit in bidding up asset prices.

links of the day 01-13-10

The big news headline of the day: Google responds to cyber attacks by threatening to exit the Chinese Market (WSJ)
Google threat jolts Chinese Internet industry (WSJ)

John Carney thinks there is no way you can invest like Buffett (TBI)

Defending the government's policies (Krugman)

Media brands are less important than personal ones (Ben Casnocha)

Sitting through previews - a game theoretic perspective (Cheap Talk)

Behavioral biases are a major factor in momentum moves (SSRN)

links of the day 01-12-10

10 timeless lessons from three of Merrill Lynch's best (The Big Picture)

Retail investors demand for equities has definitely changed (Global Investor)

Don't buy a home right now, seriously, check out these 10 graphs for a heads-up (New Observations)

Wow, that's one way to reduce the deficit, the Fed earned $45 billion in 2009 (WaPo)

Thoughts on Confessions of a Shopaholic

I have a few thoughts after watching Confessions of a Shopaholic with my girlfriend yesterday. For those who aren’t already familiar with the title you probably won’t ever be and that’s OK. I’ll give a brief synopsis: this is a movie of a journalist with a shopping problem who lands a job as a personal finance columnist. She falls in love with her boss while combating her problem and evading her debt collector. Eventually all of these pieces collide and make a big mess, but the heroine perseveres through the adversity and the leading man comes and sweeps her off her feet. It is a happily-ever-after romantic comedy written and directed by the book.
1.) This movie debuted in February 2009 right before the market’s crater-y bottom (right after the bottom if you go by the movie poster at right). Despite this unusual timing, I don’t think that it is an ill-timed allegory praising consumerism. Rather, I feel that it is a parody that mocks the excesses of mid-2000s in a light-hearted fashion, e.g. the main character says “When I shop the world gets better, and the world is better, but then it’s not so I need to do it again.”
2.) I realized that I’m probably similar to the main character in that I love accumulating things, but different in that these things aren’t tangible, they are financial. I have financial goals and I know the path to reach them involve heavy saving, no debt, and smart (and hopefully low-risk)investing. I'm taking that path. Many negative behaviors are curbed just by their conscious realization and this one is no different; which is why I decided to slow my stride down my financial goals-path and as a result I took my girlfriend out to a Sunday night sushi dinner and bought some books I’ve been wanting after I thought about my obsessive saving.
JDW

Haiku - Warren Buffett

Berkshire Hathaway,

large value created by

sage, Warren Buffett.

Don't watch actor list:

Tom Cruise, who better watch out-

Zooey Deschanel.

-Right? I mean, come on, she plays the zany, spontaneous, and odd character in every role.

-JDW

links of the day 01-11-10

John Taylor responds to Bernanke's Jackson Hole remarks (WSJ)
-Personally, I think that Mr. Taylor is right. And I would bet that Mr. Bernanke agrees with him as well - interest rates were held too low for too long. But as THE wielder of monetary policy in this country, Mr. Bernanke is not allowed to be fallible. Ex post he cannot be wrong, so I can see why he chose to defend his policies 2002-05 at the summer conference in Jackson Hole.

What would be the effect of the Fed discontinuing its purchase of MBS? (Calculated Risk)

The economics of virtual worlds (The Walrus) with a hearty hat-tip to Marginal Revolution

I'm not a technical guy, but I like reading their narratives:
Here is a write-up of a new pattern that has been occuring lately (InvestingwithOptions)

Haiku - Market's fuel

I seem to have created a semi-regular thing here of writing a little poetry mid-day. Ah-hem:

This market is high

fueled by hopes of good earnings

I hope it comes true.

I'm really busy

Stop yelling, I'm doing it

Six-pack, here I come.

JDW

links of the day 01-08-10

ETFs that beat their underlying index have investors' interests at heart (WSJ)

Roubini says yes to the carry trade, Bill Gross says no (naked capitalism)

The Ultimate Guide to 2010 Outlooks - a meta list of investment reports (Pragmatic Capitalist)

Read this post, you'll be happier that you did (Penelope Trunk)

Haiku - ROE

Return on assets

times financial leverage

equals ROE.

-JDW

links of the day 01-07-10

An interview on investments with Tariq Ali (Simoleon Sense)
-My favorite part is:

Q. Which investors do you admire? Besides these investors who else has influenced you?
I think that when we study investors, we should look for certain unique qualities that they possess and seek to learn whatever we can from them.
The best investor to study is Warren Buffett. Buffett basically has had two careers, his partnership and his time at Berkshire. The ways he invested differed between those two careers and they are appropriate for running different amounts of capital. So if I were to open a $1M partnership today, I would focus on Buffett’s partnership time, when he was running a similar amount of capital and hunting for microcaps and special situations/workouts.
Then, if I am ever fortunate enough to run a multi-billion dollar company I would study the Warren Buffett of today and try to reverse engineer recent purchases, BNI, his preferred deals, and so on.
The problem I see with most people looking at Buffett is that they forget the partnership days and instead try to emulate the Buffett of today. I do not believe that is the right course of action for most investors.

Ten shocking ETF stats (ETF Database)

The George Mason economists have been blogging a lot of advice lately but this one is the best:
Tyler Cowen answers a reader's question on the value of time (MR)

R&D spending on cancer research is money better spent than we previously thought (Freakonomics)

links of the day 01-06-10

Peter Larsen: what is an acceptable ROE for the banking industry (Breakingviews)

Inflation troubles investors (FT)
-and I think it should. With rates on the floor people are taking on more risk than they really want to in order to generate return because they are worried about high inflation coming on. And rightly so. A number of economists at the AEA are talking about 5% in 2011 or 2012. 1% on a money market just won't cover that.

The Visa fees debate filtered through Coase's theorem (MR)

How the mind works with regards to time (NYT)

Haiku - Commuter Hell

Inspired by recent events (hmm-hmm this morning), I bring to you an original haiku that I wrote while I was being off-loaded my morning train:

In commuter hell
I just want to get to work
Red line is broken.

JDW

links of the day 01-04-10

Becker, Davis, and Murphy talk about uncertainty and its impact on the recovery (WSJ)

Tabarrok makes a great post on the growing interest in Samuelson's treatment of the Soviet growth rate in his textbooks (MR)

A good article featuring vignettes about economists who are spendthrifts (WSJ)

How Bill Gates works (CNN/Fortune)