A few months ago, I blogged about the impending end of the Encyclopedia Brittanica, Webster's printed dictionary, and the Dewey Decimal system (among other things). I have not had time to post of late, but had to highlight the following news:
http://money.cnn.com/2012/03/13/technology/encyclopedia-britannica-books/index.htm
Wednesday, March 14, 2012
Monday, January 2, 2012
The Real World
I did not realize my 8 year old son was listening to the television, while I watched the news last weekend while he played his Nintendo in the background. So, I was surprised when - after I switched over to a football game - he came over to me with a pensive look on his face and said, "Daddy, whenever you watch the news, it is only about people dying and bad things happening. Aren't there any good things happening in the world? How come they only show all the bad things that happen?"
My answer was inadequate - I said "A great question. I don't know why they focus so much on the negative news, when many wonderful things do happen in the world every day." He followed up with "well, don't people want to watch happy stuff? Why does anybody want to watch all the deaths and killing and angry people?". I explained that the broadcasters do talk about good news as well, though definitely not as much as the bad news. "I don't understand why.", he said, and I could only say "Neither do I."
My wife and I watched the movie "Midnight in Paris" last week, which focused on people's romanticization of the past - the notion that the time you now live in is never as appealing as some time long ago. I would not expect people to idealize the present, but I wonder how much of our nostalgia for days gone by is tied to our immersion in negative news.
It is safe to say that few would watch positive-only news shows. Such reporting would be propaganda, and would fly in the face of the difficulties we know to be prevalent in the world. But are those challenges really as common as we believe, or are we conditioned to perceive it this way? Certainly suffering is pervasive - war, genocide, disease, famine, and a host of other horseman can easily be found with only the most cursory search. But if these were the cornerstones of life, they would not be as heartbreaking as they are. Misery must be the exception, not the rule, or it would hardly be noteworthy at all.
I wonder how a more well-rounded perspective would play in the public forum. Do people want to hear about the intermittent accomplishments and joys that make life worth living? They might tune-in to hear reports of new companies founded each week, in balance with stories of corporate lay-offs. Perhaps juxtaposition of unemployment numbers with people beaming over a new job or promotion they received. And I suspect that instead of understating real tragedies, the inverse would hold - loss would ring more tragic when shown in contrast, as black upon white. Full perspective might inspire, reassure, and yet invoke greater empathy - rather than the current "Good evening, this is Debbie Waydowner reporting" and the Pavlovian malaise such broadcasts trigger.
With careful editing, to navigate painful transitions, I believe I would prefer such a show. I like the idea of each story of an anonymous homicide or fatal car wreck being offset by a miraculous tale of survival. I would enjoy seeing births shared as prominently as deaths. Love might be less marginalized if a spotlight was shined on a couple celebrating their 50th anniversary, with their many grandchildren, for each salacious feature of celebrity infidelity or divorce. Our planet might seem less hostile if images of kids playing in a sprinkler on a perfect day were as easy to find as the horrifying aftermath of a tornado.
As it is, I do not plan to spend time in front of the evening news with my son. Instead, my wife and I are trying to gradually introduce him to the "real world" - to expose its mixed bag of joys and pain in a way that induces neither fear nor a sense of entitlement. Wouldn't it be nice if the news networks tried to do the same for we adults. I think we can handle it.
As it is, I do not plan to spend time in front of the evening news with my son. Instead, my wife and I are trying to gradually introduce him to the "real world" - to expose its mixed bag of joys and pain in a way that induces neither fear nor a sense of entitlement. Wouldn't it be nice if the news networks tried to do the same for we adults. I think we can handle it.
Wednesday, November 23, 2011
Shrugging off Atlas
I am currently re-reading Hayek's "The road to serfdom". It is, in my opinion, the definitive critique of socialism, and makes the case for individual liberty better than anything else I have read. It was eye-opening when I first read it, and sparked my interest in other great free market classics, including Adam Smith's Wealth of Nations and Milton Friedman's treatise on Capitalism. And, as I read it, I wonder why I have not recommended it to others.
Instead, I have often recommended Atlas Shrugged to friends that had little or no exposure to libertarian philosophies. And yet, after reading it again last year (for the first time since college), I realize Atlas is a novel that I have very polarized feelings about. Ayn Rand's magnum opus is a prescient tale of the collapse of western civilization, courtesy of the erosion of the free market through socialism and political corruption. If the book was a novella containing only the chapter "This is John Galt speaking", I might list it among my favorites. It eloquently presents Rand's philosophy of objectivism - her belief in a moral code of individualism and reason, and her critique of collectivism and enforced sacrifice. It is an overly utopian vision, but within it lie the core tenets of economic freedom.
That being said, while her political philosophy is well articulated, Rand is not (in my opinion) a great writer of fiction. She tends to be pedantic, and it is difficult to empathize with her characters, as they are caricatures of real people. Though she has a very clear vision for what an effective society might look like, Atlas Shrugged does not explore the true motivations of man - the flaws in human nature which lead men and societies towards socialism. This lack of empathy results in overly simplistic heroes and villians in the novel, and it becomes a comic book study in good vs. evil. It is also unnecessarily long - the book would have been only a few hundred pages were it not full of so many repetitive tales, of so many characters with identical story arcs.
It is not even one of her better works of fiction - the Fountainhead, We the Living, and Anthem are all more compelling tales, with better insight into the motivations of the antagonists. Notably, Atlas Shrugged was the last piece of fiction she ever wrote, and I wonder if turning to non-fiction was a result of her recognizing her own weaknesses. If so - mad props to Rand for her self-awareness.
Anyway, I recommend looking to Hayek for an elaboration of libertarian philosophy, without an unreasonably utopian view of the world. Rand and Hayek were contemporaries with similar visions, and both were influenced by the facism of the Nazis and by Stalin's rapid descent from freedom to socialism and statism. But Hayek's work is denser, deeper, and more actionable - and at only a few hundred pages it is about 1/4th the length of Atlas Shrugged...
So you may actually find the time to read it.
Monday, November 21, 2011
Wikipedia, Google, and the death of Dewey
My previous posting led me to think about the Encyclopedia Brittanica that my parents, like so many others, bought for our family when I was young. It was a big financial commitment for a family teetering on the line between the working class and middle class.
Long before the internet, those encyclopedias fanned my interest in random bits of information. As a child, I believed that all knowledge was contained in those volumes, and that I could learn everything there was to know, just by working my way from Aardvarks to Zygotes. I embraced the idea that knowledge was power, and invested countless hours working towards omniscience.
It was only years later that I realized how limited the Encyclopedias actually were. They provided a good overview of the natural and scientific world, but offered sparse detail and no qualitative ideas. The inherent limits of bookshelf space (and the number of trees in the world) reduced every entry to a single page or less.
At some point in my pre-teens, I lost interest and - though I continued to use it for school projects - I stopped reading it for leisure and never did finish the full set. But I always knew it was there, available for questions that did not require more than a single page to answer. I don't recall what happened to our encyclopedia. Maybe we donated it, maybe we sold it, maybe it ended up in a trash heap. Regardless, like the hardcover dictionary, it is a relic of the pre-information age.
Between Google and Wikipedia, there is an unreadable amount of knowledge at our disposal. Wikipedia is now growing by about 2 million words a month, so you could spend a lifetime consuming its content and always have more left unread than when you started. My son will never have the disappointment of realizing an apparently simple question would require research and the dewey decimal system (another dying tool - sorry Melvil).
Google almost anything, and the Wikipedia entry is usually the top result. Yet - while Google is worth over a hundred billion dollars - Wikipedia remains non-profit. It is the fifth largest website on the net, yet Jimmy Wales continues to stick to his questionable guns and refuses to monetize it. Personally, I would have no problem ignoring a few adds on Wikipedia's pages if it helped ensure the accuracy and completeness of the entries. I am sure it will happen sooner or later...
That being said, I am happy to support Wikipedia through donations until Mr. Wales stops hating money. You can do the same, just by clicking the link below:
Long before the internet, those encyclopedias fanned my interest in random bits of information. As a child, I believed that all knowledge was contained in those volumes, and that I could learn everything there was to know, just by working my way from Aardvarks to Zygotes. I embraced the idea that knowledge was power, and invested countless hours working towards omniscience.
It was only years later that I realized how limited the Encyclopedias actually were. They provided a good overview of the natural and scientific world, but offered sparse detail and no qualitative ideas. The inherent limits of bookshelf space (and the number of trees in the world) reduced every entry to a single page or less.
At some point in my pre-teens, I lost interest and - though I continued to use it for school projects - I stopped reading it for leisure and never did finish the full set. But I always knew it was there, available for questions that did not require more than a single page to answer. I don't recall what happened to our encyclopedia. Maybe we donated it, maybe we sold it, maybe it ended up in a trash heap. Regardless, like the hardcover dictionary, it is a relic of the pre-information age.
Between Google and Wikipedia, there is an unreadable amount of knowledge at our disposal. Wikipedia is now growing by about 2 million words a month, so you could spend a lifetime consuming its content and always have more left unread than when you started. My son will never have the disappointment of realizing an apparently simple question would require research and the dewey decimal system (another dying tool - sorry Melvil).
Google almost anything, and the Wikipedia entry is usually the top result. Yet - while Google is worth over a hundred billion dollars - Wikipedia remains non-profit. It is the fifth largest website on the net, yet Jimmy Wales continues to stick to his questionable guns and refuses to monetize it. Personally, I would have no problem ignoring a few adds on Wikipedia's pages if it helped ensure the accuracy and completeness of the entries. I am sure it will happen sooner or later...
That being said, I am happy to support Wikipedia through donations until Mr. Wales stops hating money. You can do the same, just by clicking the link below:
Wednesday, November 16, 2011
Ninety Thousand and One
Roughly 90,000 new words in the English language over the last century. Looking at this year's additions, I can see the need for new words like "parkour" - which describes a new sport. I understand the inclusion of net vernacular like "tweet" or "defriend". And I can almost appreciate humorous mash-ups like "bromance". But do we really need a dictionary entry for "Chillax"? Or "fist bump"? (which is 2 words, not one, describing an action).
I realize all the Scrabble players will appreciate the increased point opportunities, but Mirriam-Webster seems to have set the bar pretty low. As such, here is my contribution - I will look for it in next year's dictionary:
WTFing : verb (used without object)
1. To experience a feeling best represented by "WTF", or to literally think "WTF".
2. To have spoken "WTF" (or the long form) or written it in an email, text, web posting, or written letter
commonly used in past tense, as in:
"I was WTFing when i saw the pathetic new words that Mirriam-Webster added to its dictionary, in a desperate attempt to promote the relevance of, and reliance on, a dying publication in the world of the internet and word processors".
I realize all the Scrabble players will appreciate the increased point opportunities, but Mirriam-Webster seems to have set the bar pretty low. As such, here is my contribution - I will look for it in next year's dictionary:
WTFing : verb (used without object)
1. To experience a feeling best represented by "WTF", or to literally think "WTF".
2. To have spoken "WTF" (or the long form) or written it in an email, text, web posting, or written letter
commonly used in past tense, as in:
"I was WTFing when i saw the pathetic new words that Mirriam-Webster added to its dictionary, in a desperate attempt to promote the relevance of, and reliance on, a dying publication in the world of the internet and word processors".
Thursday, November 10, 2011
Dear SNL
Dear Saturday Night Live,
I assume you will start this week's episode of SNL with a send-up of last night's Republican debate, likely focused on Rick Perry's soon-to-be-immortal "oops" moment. I ask that you resist the temptation to go for the easy laugh. Don't present him as befuddled - it is just too easy, and frankly the actual event was more uncomfortably funny (ala the BBC version of "The Office") than any blundering you might present. Instead, take it a level above.
Instead, I propose the following skit:
Show Rick as a lucid and articulate policy wonk. Have the moderator rapid fire questions at him, and put him in full command of detailed answers to every question. Have the audience applauding, and even other candidates chiming in with nods and golf claps. Finally, ask him an energy question. Have his answer be distinctly left-wing. Have him start talking about green energy and the impact of carbon-based emissions on the environment. Have the other candidates shaking their heads and confused.
The moderator could pause, tilt his head, and ask the question "Governor Perry, you seem to have gained a remarkable level of understanding of the issues, but you also seem to have moved decidedly to the left. How do you explain your transformation?"
The Governor would glance side to side and very directly, in a much more robotic voice, would say "Why I'm afraid I don't know what you mean." The moderator would press the issue, and finally the governor would take off the Rick Perry mask to reveal Al Gore underneath. To the surprised oohs and ahhhs of everyone, and the exclamation of "Al Gore??" by the moderator, Al responds "Oops." then follows up a pause with "Way-ell, I have come to re-ah-lize that a democrat would not be able to take the White House this year. But it is my time. I won before and I will win again. The people need me! The planet needs me! I have a nobel prize! And LIVE FROM NEW YORK..."
I assume you will start this week's episode of SNL with a send-up of last night's Republican debate, likely focused on Rick Perry's soon-to-be-immortal "oops" moment. I ask that you resist the temptation to go for the easy laugh. Don't present him as befuddled - it is just too easy, and frankly the actual event was more uncomfortably funny (ala the BBC version of "The Office") than any blundering you might present. Instead, take it a level above.
Instead, I propose the following skit:
Show Rick as a lucid and articulate policy wonk. Have the moderator rapid fire questions at him, and put him in full command of detailed answers to every question. Have the audience applauding, and even other candidates chiming in with nods and golf claps. Finally, ask him an energy question. Have his answer be distinctly left-wing. Have him start talking about green energy and the impact of carbon-based emissions on the environment. Have the other candidates shaking their heads and confused.
The moderator could pause, tilt his head, and ask the question "Governor Perry, you seem to have gained a remarkable level of understanding of the issues, but you also seem to have moved decidedly to the left. How do you explain your transformation?"
The Governor would glance side to side and very directly, in a much more robotic voice, would say "Why I'm afraid I don't know what you mean." The moderator would press the issue, and finally the governor would take off the Rick Perry mask to reveal Al Gore underneath. To the surprised oohs and ahhhs of everyone, and the exclamation of "Al Gore??" by the moderator, Al responds "Oops." then follows up a pause with "Way-ell, I have come to re-ah-lize that a democrat would not be able to take the White House this year. But it is my time. I won before and I will win again. The people need me! The planet needs me! I have a nobel prize! And LIVE FROM NEW YORK..."
Tuesday, November 8, 2011
Groupon is the worst investment since WorldCom
I am chomping at the bit to write uncovered puts on this dog.
No Profits? No problem, we will make it up in volume. No Competitive Advantage? No worries, we have a cool name and we are the biggest company in this zero-value, hard to differentiate space. Unsatisfied Customers? That's ok, because even though most of our customers hate the experience, we can always find some new small businesses and restaurants that subscribe to the same profit-free philosophy we do.... and besides - The customers of our customers love Groupon. Unfortunately, we don't make any money from THEM.
Wow. It feels like the market has jumped into the hot tub time machine and set the way-back dial to 1999.
No Profits? No problem, we will make it up in volume. No Competitive Advantage? No worries, we have a cool name and we are the biggest company in this zero-value, hard to differentiate space. Unsatisfied Customers? That's ok, because even though most of our customers hate the experience, we can always find some new small businesses and restaurants that subscribe to the same profit-free philosophy we do.... and besides - The customers of our customers love Groupon. Unfortunately, we don't make any money from THEM.
Wow. It feels like the market has jumped into the hot tub time machine and set the way-back dial to 1999.
Tuesday, November 1, 2011
Greek philosophy should be studied by the Greeks
Greece may be about to sink itself with an ill-advised referendum... the citizens are likely to put short-term self-interest above the long-term good of their nation. It seems apropos to point out that Plato - arguably the most famous Greek ever - would have thought this approach to be laughable.
In the "Republic", Plato criticized the general intellectual competence of the electorate, and asserted that what the majority decides to do is rarely the best - or even an acceptable - path. He warned that short-term and long-term expectations and decisions of any sufficiently large democratic group would be - in the best case - ill-advised and uninformed, and - in the worst case - crazy and dangerous.
Ironic that the Greeks would hold him up their most brilliant philosopher, while ignoring the very foundation of his philosophies.
Saturday, October 29, 2011
Thursday, October 20, 2011
Predicting the Market
A friend of mine has repeatedly suggested I start detailing my stock predictions, given my recent history of calling out tops and bottoms for specific stocks. A few recent examples:
BP
The stock hovered close to $60 in the days after the Deepwater Horizon oil spill. I was astounded, and recognized that the market had not yet priced in any bona fide "risk of ruin", probably due to the massive amounts of cash BP was sitting on, and pulling in. I believed the stock had at least a 50% downside risk over the next 6-12 months, as details of the real impact of the spill would begin to emerge. This considered both the new laws that put BP at risk for indirect damages, as well as the historical profile of oil spill damage estimation (always wildly underestimated). I told Will that betting against BP for the next 6 months was the "no-brainer of the century". Within months, the stock was down to $27, a 55% drop
Netflix
I was bullish on Netflix for years, but as the stock rocketed past $200, and content providers began rolling out their own streaming platforms, I became increasingly bearish. I sold my holdings on 2/24/2011 at a price of $213. To my suprise, the stock continued to shoot the moon - closing in on $300 even as rumors began to swirl around difficulties in the Starz negotiations. The tipping point for me was the first time I tried out the new HBOGO platform from HBO, on my iPad. Amazing. In only a few months, HBO had rolled out an appealing, easy to use interface to every piece of content they have ever created. "Content is King" was already axiomatic by that time, and Netflix was starting to look like the Court Jester. I told Will that Netflix would soon be well below the price I sold them for... that the fall was imminent. At $300, I told Will it was time to place puts against Netflix. It began tanking the very next day... and is now close to $100.
Sprint
My current bet is on Sprint. That is correct - I am betting ( via January 2013 calls ) on the long-term success of an over-leveraged second tier telecommunications company. I made this bet with the stock at $2.50 recently. Why? Because I am confident that market has significantly underestimated the chance of that success. Don't get me wrong - their fundamentals smell like gym socks, and there is a likelihood that they will end up restructuring... but I believe the long-term upside via options far exceeds the downside risk. Personally, I *loved* the aggressive bet the company made on Apple's new iPhone.
They the street punished Sprint further for acknowledging that WiMax was a failure and LTE was the future. Yep, Sprint blew it. Massive waste of money. But that failure should already have been baked into the price, and their willingness to cut bait should be viewed as a positive, not a negative. If they can get their debt under control, they finally have a technology direction that actually makes sense...
Don't get me wrong... I think Sprint facing Ch. 11 is a coin-flip. The good decisions they are finally making may well be too little too late. But, if they are able to restructure without Ch. 11 and execute on their plan, then their stock could easily get back to $10 or higher... and that is a 3-1 upside opportunity on the $2.50 stock price... and a 10x or more upside on the $7.50 calls out in Jan/13.
LinkedIn
I bought put options when LinkedIn was over $100, for March/2012. I would not be surprised ot see it get down to $45.
----------------------
So there you have it.... a few recent successes and my current picks.
BP
The stock hovered close to $60 in the days after the Deepwater Horizon oil spill. I was astounded, and recognized that the market had not yet priced in any bona fide "risk of ruin", probably due to the massive amounts of cash BP was sitting on, and pulling in. I believed the stock had at least a 50% downside risk over the next 6-12 months, as details of the real impact of the spill would begin to emerge. This considered both the new laws that put BP at risk for indirect damages, as well as the historical profile of oil spill damage estimation (always wildly underestimated). I told Will that betting against BP for the next 6 months was the "no-brainer of the century". Within months, the stock was down to $27, a 55% drop
Netflix
I was bullish on Netflix for years, but as the stock rocketed past $200, and content providers began rolling out their own streaming platforms, I became increasingly bearish. I sold my holdings on 2/24/2011 at a price of $213. To my suprise, the stock continued to shoot the moon - closing in on $300 even as rumors began to swirl around difficulties in the Starz negotiations. The tipping point for me was the first time I tried out the new HBOGO platform from HBO, on my iPad. Amazing. In only a few months, HBO had rolled out an appealing, easy to use interface to every piece of content they have ever created. "Content is King" was already axiomatic by that time, and Netflix was starting to look like the Court Jester. I told Will that Netflix would soon be well below the price I sold them for... that the fall was imminent. At $300, I told Will it was time to place puts against Netflix. It began tanking the very next day... and is now close to $100.
Sprint
My current bet is on Sprint. That is correct - I am betting ( via January 2013 calls ) on the long-term success of an over-leveraged second tier telecommunications company. I made this bet with the stock at $2.50 recently. Why? Because I am confident that market has significantly underestimated the chance of that success. Don't get me wrong - their fundamentals smell like gym socks, and there is a likelihood that they will end up restructuring... but I believe the long-term upside via options far exceeds the downside risk. Personally, I *loved* the aggressive bet the company made on Apple's new iPhone.
The street vomited on the "bet the company" take-or-pay contract that Sprint established for the iPhone 4s, and discounted the popularity of the new iPhone, because it was not an iPhone 5. Not me... I consider the enthusiasm of Apple consumers to be boundless, and I believe Siri is a legitimate game-changer. People said the iPad was a "joke" when it was announced, and yet all jumped on board as they realized the benefits of the tool. So what if Sprint has to buy every unit... they will sell every unit. So what if they subsidize a few hundred bucks per phone... With average revenue of $50/month, it takes little time to pay back that investment... and revenue per customer will be higher with the iPhone. There is simply no other low cost provider for the iPhone. Sure, Verizon and AT&T have better coverage, but there are more than a few folks out there who care primarily about price, and the functionality of their phone. Consider that under the current plans, an iPhone 4s with Verizon can approach $200/month for Unlimited Voice, with Unlimited Texts & 12Gb Data. On the other hand, you can get Unlimited Voice/Texts & Unlimited Data for $100 with Sprint. That is compelling.
They the street punished Sprint further for acknowledging that WiMax was a failure and LTE was the future. Yep, Sprint blew it. Massive waste of money. But that failure should already have been baked into the price, and their willingness to cut bait should be viewed as a positive, not a negative. If they can get their debt under control, they finally have a technology direction that actually makes sense...
Don't get me wrong... I think Sprint facing Ch. 11 is a coin-flip. The good decisions they are finally making may well be too little too late. But, if they are able to restructure without Ch. 11 and execute on their plan, then their stock could easily get back to $10 or higher... and that is a 3-1 upside opportunity on the $2.50 stock price... and a 10x or more upside on the $7.50 calls out in Jan/13.
I bought put options when LinkedIn was over $100, for March/2012. I would not be surprised ot see it get down to $45.
----------------------
So there you have it.... a few recent successes and my current picks.
Subscribe to:
Posts (Atom)