One CD of mine matured and I bought some INTC stock with the proceeds, having also picked up some INTC recently. INTC's yield is about 4.3 %, a little better than the CD. Plus, with only a PE of about 10, it was pretty hard for me to pass up, especially since most other stocks I like have run up quite a bit in price this year. This is my stock portfolio, largest holding to least....
INTC (Intel)
WAG (Walgreen)
PEP (Pepsi)
PG (Procter & Gamble)
KO (Coca Cola)
GPC (Genuine Parts)
MMM (3M)
HAS (Hasbro)
ADP (Automatic Data Processing)
T (AT&T)
KMB (Kimberly Clark)
SYY (Sysco)
MSFT (Microsoft)
JNJ (Johnson & Johnson)
Stocks now make up about 18.5% of my assets, with my goal being about
25% as I route some of my cash flow to stocks, as situations present
themselves.Other assets are mostly CDs and holding a home mortgage, also about 2% precious metals.
Monday, April 08, 2013
Sunday, April 07, 2013
My Review of "The Unfair Trade"
5 out of 5 stars......
The global economy changed everything and it is unfair. Money politics must be destroyed for democracy to flourish. Neo-liberal economics of a free economy is not free to all. Undervalued Chinese currency favored exporting over domestic consumerism....should be less saving in China and more saving in the US. Tea Party and OWS should create new institutions instead of attacking old ones. Nixon taking the US off the gold standard unshackled the FED all the way to today's QE's. Both gold and paper fail because international cooperation is needed. Repeal of Glass-Steagall. Breakup of USSR led the way for more neo-liberal, free-market economics. The great financial transfer of our age - China/Asian savings buying US assets (Treasuries). GWBush/Greenspan - debt/low interest rates led to housing bubble and creation of AAA junk sold all over the world. Euro was the bubble creating power of Europe alowing Italy, Greece, Spain, Portugal,Iceland, etc to borrow at low interest rates.BRICs did well being smart, but commodity inflation hurt many poor like with the Arab Spring. Chimerica led to deflationary forces in the US. China's infrastructure all geared to manufacturing, Germany a moreefficient manufacture than the US because of its better infrastructure. Chinese economy flawed because too dependence on cheap labor. Problems will remain until Chinese become big consumers to lesson deflation in US.
W. Austrailia became wealthy because of mineral resources demanded by China - potential bubble? Race to the bottom - Mexico can't compete with China on manufacturing - so crime/murders rampant. Globalization makes regulating banks harder. Income disparity isn't as important as the disparity of the financial industry and the rest of the economy where "too big to fail" creates all kinds of unfair situations including income disparities.Lobbyists still the biggest problem keeping the financial industry in control. Iceland is a pretty good example how a runaway financial industry wrecked the country, but then Iceland was able to finally cut it down to size, so to speak.
Anyway, the Global economy has caused all kinds of distortions, leaving too many people behind and can only be corrected by proper control of the financial industry, including international agreements so that proper regulation can occur.
The global economy changed everything and it is unfair. Money politics must be destroyed for democracy to flourish. Neo-liberal economics of a free economy is not free to all. Undervalued Chinese currency favored exporting over domestic consumerism....should be less saving in China and more saving in the US. Tea Party and OWS should create new institutions instead of attacking old ones. Nixon taking the US off the gold standard unshackled the FED all the way to today's QE's. Both gold and paper fail because international cooperation is needed. Repeal of Glass-Steagall. Breakup of USSR led the way for more neo-liberal, free-market economics. The great financial transfer of our age - China/Asian savings buying US assets (Treasuries). GWBush/Greenspan - debt/low interest rates led to housing bubble and creation of AAA junk sold all over the world. Euro was the bubble creating power of Europe alowing Italy, Greece, Spain, Portugal,Iceland, etc to borrow at low interest rates.BRICs did well being smart, but commodity inflation hurt many poor like with the Arab Spring. Chimerica led to deflationary forces in the US. China's infrastructure all geared to manufacturing, Germany a moreefficient manufacture than the US because of its better infrastructure. Chinese economy flawed because too dependence on cheap labor. Problems will remain until Chinese become big consumers to lesson deflation in US.
W. Austrailia became wealthy because of mineral resources demanded by China - potential bubble? Race to the bottom - Mexico can't compete with China on manufacturing - so crime/murders rampant. Globalization makes regulating banks harder. Income disparity isn't as important as the disparity of the financial industry and the rest of the economy where "too big to fail" creates all kinds of unfair situations including income disparities.Lobbyists still the biggest problem keeping the financial industry in control. Iceland is a pretty good example how a runaway financial industry wrecked the country, but then Iceland was able to finally cut it down to size, so to speak.
Anyway, the Global economy has caused all kinds of distortions, leaving too many people behind and can only be corrected by proper control of the financial industry, including international agreements so that proper regulation can occur.
My Review of "Europe's Financial Crisis"
3 out of 5 stars....
This book is pretty good in describing the steps which led Europe to its current problems and juxtaposed America's handling of its financial mess which also became part of Europe's mess.
Anyway, the book does think pretty much all financial markets have been tampered with such that their future directions are more uncertain than usual. As for Europe, more planning for the Euro should have happened especially since there are significant problems remaining, mostly political. Weak nations can be bailed out, but it is doubtful politics will allow that, so probably too much austerity will still lead to real recovery being delayed. The author does think it would be wise if a few of the smaller/weaker nations left, but that still would leave Spain and Italy, two nations too large to leave but with much different politics than the strongest nations. So, it is hard to see things working out well in the foreseeable future.
So, a good book in laying out what has happened, but it doesn't seem to me there are any great revelations as to what might happen.
This book is pretty good in describing the steps which led Europe to its current problems and juxtaposed America's handling of its financial mess which also became part of Europe's mess.
Anyway, the book does think pretty much all financial markets have been tampered with such that their future directions are more uncertain than usual. As for Europe, more planning for the Euro should have happened especially since there are significant problems remaining, mostly political. Weak nations can be bailed out, but it is doubtful politics will allow that, so probably too much austerity will still lead to real recovery being delayed. The author does think it would be wise if a few of the smaller/weaker nations left, but that still would leave Spain and Italy, two nations too large to leave but with much different politics than the strongest nations. So, it is hard to see things working out well in the foreseeable future.
So, a good book in laying out what has happened, but it doesn't seem to me there are any great revelations as to what might happen.
Saturday, April 06, 2013
My review of "Street Smarts"
4 out of 5 stars.....
Jim Rogers goes through much of his personal biography, growing up in Alabama, graduated from Yale, studying history, then worked on WS for awhile and got hooked on investing, then off to Oxford to learn more of the world, then got back to finance, hooking up with George Soros and the very successful Quantum hedge fund, all the while having a passion to travel the world and basically figure out things.
Anyway, he is convinced the US is in decline, as all great civilizations eventually do, basically because we are too much in debt...while it is China and Asia which will dominate. Beginning in 1999, he saw a bull market in commodities with US workers falling behind seeking white collar jobs, rather than getting into farming and commodity related businesses. NYC - hotels and airports don't compare to Asia.
He is critical of the 2008 crash, thinking we should have let all the banks, etc go bankrupt...that capitalism can't exist without bankruptcy.....creative destruction as Schumpeter said.
He thinks US education should make greater use of the Internet.............thinks our college system is in a bubble which won't last.
He does feel immigration is great and would prefer no borders. Throughout history the most profitable societies were open to the world.
He does think our federal government should make better use of the Internet and have politicians stay home mostly and vote from there....less contact with DC lobbyists, etc.
He advocates bringing all troops home, not taxing savings and investments, and a simpler tax code.
His key advice to any investor is to ignore him and concentrate on what you know best - everyone has something they know more about than most people.
Overall, a very good book, especially welcome because Rogers is a truly successful investor. That said, one should read the book with a critical eye.....maybe Rogers would understand the US better if he wasn't such a world traveler.....but, I can't say he's wrong...but, personally I do think the US is still unmatched in creativity, I do have more hope for the US than he does.
Tuesday, March 05, 2013
Saturday, February 16, 2013
Portfolio - "Update"
The only change to my portfolio was the selling of my AVP options and taking the proceeds and buying some MSFT stock.......MSFT, because it pays a good dividend and shows a trend to raising the dividend each year, and is a solid company with a good balance sheet, which fits with all stocks I own, so that I really don't care what the stock price does as the income increases each year, though since all are solid companies, I assume sooner or later the price will exceed its current price.....while I will react to any meaningful changes to the companies. So my current stock portfolio, in the order of largest holding to smallest.....
WAG (Walgreen)
PEP (Pepsi)
PG (Procter & Gamble)
KO (Coca Cola)
GPC (Genuine Parts)
MMM (3M)
HAS (Hasbro)
ADP (Automatic Data Processing)
T (AT&T)
KMB (Kimberly Clark)
SYY (Sysco)
MSFT (Microsoft)
JNJ (Johnson & Johnson)
Stocks now make up about 14.5% of my assets, with my goal being about 25% as I route some of my cash flow to stocks, as situations present themselves.
WAG (Walgreen)
PEP (Pepsi)
PG (Procter & Gamble)
KO (Coca Cola)
GPC (Genuine Parts)
MMM (3M)
HAS (Hasbro)
ADP (Automatic Data Processing)
T (AT&T)
KMB (Kimberly Clark)
SYY (Sysco)
MSFT (Microsoft)
JNJ (Johnson & Johnson)
Stocks now make up about 14.5% of my assets, with my goal being about 25% as I route some of my cash flow to stocks, as situations present themselves.
Thursday, February 07, 2013
The "sequester?"
Although I think a deal will be done to avert the March 1st "sequester,"
I do think the recovery is solidly in place enough, so the sequester,
at worst will not harm the economy too much, maybe just causing a slight
recession.......but some deficit reduction is really OK at this time to
calm financial markets from worrying too much about the nation's deficit
and outstanding debt.
As I judge the economy right now, there is plenty of cash around (booming stock and bond markets), more truly wealthy people, plus the economy is now solidly in the recovery mode, slow, but slow is good since more longer lasting. And, CA is currently BOOMING with the budget now forecast to be in surplus by 2014, the largest reduction in unemployment in 25 years, currently an oil boom in Bakersfield, the Facebook IPO, Tesla being Motor Trend Car of the Year, etc. And at about 12% of the nation, enough to lead the economy no matter what obstructionist politicians do. The BOOM is on…..maybe the greatest ever…..sure, there will be a bubble to be popped, but still much too early……as for bid-up RE prices in some areas, just a typical thing happening at the start of a boom. For those who think the middle and lower classes are being left out……true, but just a sign that there are so many more people left to keep the boom continuing, when they eventually benefit from the economy…….plus, booms always climb a wall of worry……the more I hear words like “crazy” and “insane” while things like employment, RE and stock prices are still well below highs, just makes me more confident. So, as far as any negative impact of the "sequester" or market worry about the possible sequester going into effect, I see it as just an opportunity to load up on undervalued stocks, stocks of great companies which have good balance sheets, pay good dividends and have a history of raising them each year......stocks, like INTC (Intel), MSFT (Microsoft) and some stocks I already hold and I think are undervalued like HAS (Hasbro), in particular, but any other which dips decently in price.
As I judge the economy right now, there is plenty of cash around (booming stock and bond markets), more truly wealthy people, plus the economy is now solidly in the recovery mode, slow, but slow is good since more longer lasting. And, CA is currently BOOMING with the budget now forecast to be in surplus by 2014, the largest reduction in unemployment in 25 years, currently an oil boom in Bakersfield, the Facebook IPO, Tesla being Motor Trend Car of the Year, etc. And at about 12% of the nation, enough to lead the economy no matter what obstructionist politicians do. The BOOM is on…..maybe the greatest ever…..sure, there will be a bubble to be popped, but still much too early……as for bid-up RE prices in some areas, just a typical thing happening at the start of a boom. For those who think the middle and lower classes are being left out……true, but just a sign that there are so many more people left to keep the boom continuing, when they eventually benefit from the economy…….plus, booms always climb a wall of worry……the more I hear words like “crazy” and “insane” while things like employment, RE and stock prices are still well below highs, just makes me more confident. So, as far as any negative impact of the "sequester" or market worry about the possible sequester going into effect, I see it as just an opportunity to load up on undervalued stocks, stocks of great companies which have good balance sheets, pay good dividends and have a history of raising them each year......stocks, like INTC (Intel), MSFT (Microsoft) and some stocks I already hold and I think are undervalued like HAS (Hasbro), in particular, but any other which dips decently in price.
Monday, January 14, 2013
Portfolio - "Update"
I recently did make a major change to my portfolio. I sold some stock and raised some cash from CDs to finance a home purchase for my family, where I will live. It was complicated and took advantage of two short sales and a still discounted home price (about 26% from the 2005 new-home purchase price). The result for me, holding the mortgage on the home. So, besides the mortgage, stocks, etc are....
PEP (Pepsico)
WAG (Walgreen)
PG (Procter and Gamble
KO (Coca Cola)
GPC (Genuine Products)
MMM (3M)
ADP (Automatc Data Processing)
HAS (Hasbro)
KMB (Kimberly Clark)
T (AT&T)
SYY (Sysco)
JNJ (Johnson & Johnson)
AVP (Avon Products) 2014 call options
The stock portfolio represents about 13% of my net worth, Gold/Silver about 2%, and CDs, cash and Mortgage (about 85%). And I will be using my investment cash flow to build up my stock portfolio to about 25% of my net worth, depending upon which stock opportunities exist. Also, I continue to hold no debt.
PEP (Pepsico)
WAG (Walgreen)
PG (Procter and Gamble
KO (Coca Cola)
GPC (Genuine Products)
MMM (3M)
ADP (Automatc Data Processing)
HAS (Hasbro)
KMB (Kimberly Clark)
T (AT&T)
SYY (Sysco)
JNJ (Johnson & Johnson)
AVP (Avon Products) 2014 call options
The stock portfolio represents about 13% of my net worth, Gold/Silver about 2%, and CDs, cash and Mortgage (about 85%). And I will be using my investment cash flow to build up my stock portfolio to about 25% of my net worth, depending upon which stock opportunities exist. Also, I continue to hold no debt.
Tuesday, January 01, 2013
My Review of "Paying the Price"
5 out of 5 stars......
First off, I already respect the author, Mark Zandi, since he does appear to be one of the more reasoned voices during the last several years during this financial mess of recent years.
And after reading the book, I also conclude this book is well-reasoned and excellent for anyone who seeks to be better informed about what has happened and the risks which lie ahead. Some of the things from the book which I think are noteworthy.....
1. Great Recession bad, but bottomed by 6/2009 with 8.75M jobs lost and unemployment 10+%. By 2012, Occupy WS and youth have re-shaped lives, some good (save more/spend less), some bad (less likely to seize opportunities or start new ventures even though the economy needs them).
2. Large businesses are doing well, WS is back and bank failures have abated. What policy makers did to stem the financial panic and combat the Great Recession (GR) remains controversial, but can be judged a success, including the auto bailout.
3. Obama blundered by saying unemployment wouldn't rise above 8% with the Recovery Act.
4. Government policy stopped deflation in housing, while being least effective with mortgage modifications and re-financing's.
5. Dodd/Frank not perfect but had some good things - didn't solve "too big to fail," but makes failures more manageable like with stress tests.
6. The US outlook has never been brighter.
7. Only when the US gov't went all-in in acquiring stakes and debt of largest US financial institutions did the system's free-fall stop.
8. Unlike 2000, the Global Economy was using US financial institutions for investments/savings - Treasuries first then mortgage-backed bonds. Securitizing of bonds and of mobile homes, credit card debt, no-down, no-doc mortgages, etc resulted in regulators hurt by complexity of the system. Banks usually capitalized at 10xCash, but investment banks 30x and Fannie and Freddie 70x.
9. Fannie and Freddie were bit players -- mortgages dominated by the private sectors, but in 2008 concern triggered panic - Lehman should have been taken over, not permitted to fail. After bailouts, banks resumed lending to each other, FDIC ended silent runs by raising FDIC insurance. TARP made it all work. Also TAF, banks borrowing from the FED via silent auctions, creative loans to investment banks, PDCF, TSLF, QE's, etc all helped. However, ultimate judgment can't be made until the FED begins retreating from all the stimulating.
10. Emergency unemployment insurance is one of the largest economic multipliers.
11. Austerity made Europe worse. The US Recovery Act (ARRA) passed Feb 2009 GR ended in June. CBO said ARRA lowered jobless rate by 2%.
12. Should have been rapid principal markdowns on mortgages. FHA came to life, but offered loans as intended in 1930's. Temp. tax credits worked, stops buyers from waiting for prices to drop further.
13. Bankruptcy is OK for non-financial companies, but not for financial ones since they deteriorate quicker/bank runs, etc. Fixing the financial plumbing - Dodd/Frank not perfect, but helped - stress tests and identifying SIFI's sooner and making sure they have enough capital and liquidity. Important to have large banks so the US remains competitive in the global economy. The US financial system, despite its risks, powers the most productive economy in the world. Financial crises are most difficult because they choke off credit - so, must restart credit ASAP to fuel a staggered economy.
So, an excellent book, especially welcomed because Mark Zandi, the author, I judge to be more open-minded than the typical economist.
First off, I already respect the author, Mark Zandi, since he does appear to be one of the more reasoned voices during the last several years during this financial mess of recent years.
And after reading the book, I also conclude this book is well-reasoned and excellent for anyone who seeks to be better informed about what has happened and the risks which lie ahead. Some of the things from the book which I think are noteworthy.....
1. Great Recession bad, but bottomed by 6/2009 with 8.75M jobs lost and unemployment 10+%. By 2012, Occupy WS and youth have re-shaped lives, some good (save more/spend less), some bad (less likely to seize opportunities or start new ventures even though the economy needs them).
2. Large businesses are doing well, WS is back and bank failures have abated. What policy makers did to stem the financial panic and combat the Great Recession (GR) remains controversial, but can be judged a success, including the auto bailout.
3. Obama blundered by saying unemployment wouldn't rise above 8% with the Recovery Act.
4. Government policy stopped deflation in housing, while being least effective with mortgage modifications and re-financing's.
5. Dodd/Frank not perfect but had some good things - didn't solve "too big to fail," but makes failures more manageable like with stress tests.
6. The US outlook has never been brighter.
7. Only when the US gov't went all-in in acquiring stakes and debt of largest US financial institutions did the system's free-fall stop.
8. Unlike 2000, the Global Economy was using US financial institutions for investments/savings - Treasuries first then mortgage-backed bonds. Securitizing of bonds and of mobile homes, credit card debt, no-down, no-doc mortgages, etc resulted in regulators hurt by complexity of the system. Banks usually capitalized at 10xCash, but investment banks 30x and Fannie and Freddie 70x.
9. Fannie and Freddie were bit players -- mortgages dominated by the private sectors, but in 2008 concern triggered panic - Lehman should have been taken over, not permitted to fail. After bailouts, banks resumed lending to each other, FDIC ended silent runs by raising FDIC insurance. TARP made it all work. Also TAF, banks borrowing from the FED via silent auctions, creative loans to investment banks, PDCF, TSLF, QE's, etc all helped. However, ultimate judgment can't be made until the FED begins retreating from all the stimulating.
10. Emergency unemployment insurance is one of the largest economic multipliers.
11. Austerity made Europe worse. The US Recovery Act (ARRA) passed Feb 2009 GR ended in June. CBO said ARRA lowered jobless rate by 2%.
12. Should have been rapid principal markdowns on mortgages. FHA came to life, but offered loans as intended in 1930's. Temp. tax credits worked, stops buyers from waiting for prices to drop further.
13. Bankruptcy is OK for non-financial companies, but not for financial ones since they deteriorate quicker/bank runs, etc. Fixing the financial plumbing - Dodd/Frank not perfect, but helped - stress tests and identifying SIFI's sooner and making sure they have enough capital and liquidity. Important to have large banks so the US remains competitive in the global economy. The US financial system, despite its risks, powers the most productive economy in the world. Financial crises are most difficult because they choke off credit - so, must restart credit ASAP to fuel a staggered economy.
So, an excellent book, especially welcomed because Mark Zandi, the author, I judge to be more open-minded than the typical economist.
Saturday, December 29, 2012
Thursday, November 29, 2012
My Review of "The Knockoff Economy"
4 out of 5 stars........
The book makes the point that copying in many cases actually increases innovation, contrary to what some think that Intellectual Property (IP) must be protected always or else there will not be enough incentive (money) for people to make important new innovations. Sure, sometimes IP must be protected, but the author tries to show, quite well, that it is overused and in many cases restricts innovation, along with having other negative effects. From the book, I took note of the following.....
1. Fashion is an area with little IP protection and the copying thrives along with innovation and profits in the industry, and actually improves the whole industry. Copying is the way trends develop and the pioneer gains reputation in the process which can translate into even more for the pioneer, than if the original product was protected via copyright. And, really it is impossible to protect most things as just slight changes to a product can always be done defeating a copyright, anyway. Not to mention the costs of lawsuits, etc for the pioneer to try and protect something, in time,and money. Also, the speed of the copying hastens fashion cycles, making more innovation and profits- induced obsolescence..
2. As for morality, unlike stealing a car, stealing an idea still leaves the originator with the idea, plus also since someone else has the idea there is greater chance for innovation, improvement of the idea.....this brings up the term "piracy paradox."
3. Cuisine is another area, with little IP protection, which thrives because of the copying, encouraging many variations/innovations like the Korean taco - LA's Korean Tacos in a Truck - Kogi. The recipe can be copyrighted, but the "built food" can't because it is so easily changed in minute ways. Chefs can't protect food concoctions, but can the look and feel of a restaurant.
4. Comedy, also rife with stealing, but slightly different presentations are what makes comedy thrive even more. An example is Louis C.K and Dane Cook.
5. Football, also.....can't copyright plays, yet football thrives like never before. Plus, the originator still holds an advantage by being the first - even if another team copies the play, the team might not have the kinds of players best to execute it and would take years of drafting, trading players, new coaches, etc to match the originator's team.
6. The financial industry, also. Even with copying the originator, by reputation and lead time can gain advantages which others can never match.
7. The computer database industry, also. Can't copyright data, but the ways it can be organized. e.g. Lexis-Nexis,.Factiva.
8. The VCR actually created new industries, like video rental, also new revenue streams for the maker of films.
9. "Useful articles" is a benchmark in copyright law - a dress is useful, a painting is not therefore can copyright. Though, there are special cases, a dress which is more ornamental than functional might lead to special protection. A printed fabric is protected, but the cut and style aren't. Also "trade dress" is protected, the packaging for instance, but not necessarily the product inside. So, trademarks, brands and logos are protected and can increase the value of its products/services even if they are easily copied, in fact copying actually can increase the values.
10. Positional goods - those which create status, like trademarks, logos.
11. Also, copying can spur innovation, what lawyers call "derivative works," tweaking of the original.
12. Copying can also lower the consumer's knowledge costs, by seeing trends happen right before their eyes - also called "anchoring."
13. Social norms can protect IP better than laws sometimes, like with comedians, chefs, etc.
14. The book also discusses "first mover" advantages and disadvantages.
15. For music, can make exact copies, but can't reproduce the performance, live session/concert, etc, so the performance aspect is thriving even more despite the copying, etc. Also, some restaurants won't allow takeout or home delivery.
17. Open source software is discussed. Wikipedia more successful than Microsoft's Encarta. Linix operating system also has led to a new company, Redhat. Plus, creates competition to put pressure on Microsoft, etc to keep improving their products.
18. Fonts are also discussed, zillions of different ones, lots of copying and tweaking....plus, the usefulness test, can't print w/o them, so only certain ones can be protected, so creativity thrives, creating more and more fonts.
Anyway, the book does give one a better understanding of the effects of copying, which it seems more often than not increases creativity, innovation and overall prosperity. After reading it, I think my understanding of IP and its effects is better.
The book makes the point that copying in many cases actually increases innovation, contrary to what some think that Intellectual Property (IP) must be protected always or else there will not be enough incentive (money) for people to make important new innovations. Sure, sometimes IP must be protected, but the author tries to show, quite well, that it is overused and in many cases restricts innovation, along with having other negative effects. From the book, I took note of the following.....
1. Fashion is an area with little IP protection and the copying thrives along with innovation and profits in the industry, and actually improves the whole industry. Copying is the way trends develop and the pioneer gains reputation in the process which can translate into even more for the pioneer, than if the original product was protected via copyright. And, really it is impossible to protect most things as just slight changes to a product can always be done defeating a copyright, anyway. Not to mention the costs of lawsuits, etc for the pioneer to try and protect something, in time,and money. Also, the speed of the copying hastens fashion cycles, making more innovation and profits- induced obsolescence..
2. As for morality, unlike stealing a car, stealing an idea still leaves the originator with the idea, plus also since someone else has the idea there is greater chance for innovation, improvement of the idea.....this brings up the term "piracy paradox."
3. Cuisine is another area, with little IP protection, which thrives because of the copying, encouraging many variations/innovations like the Korean taco - LA's Korean Tacos in a Truck - Kogi. The recipe can be copyrighted, but the "built food" can't because it is so easily changed in minute ways. Chefs can't protect food concoctions, but can the look and feel of a restaurant.
4. Comedy, also rife with stealing, but slightly different presentations are what makes comedy thrive even more. An example is Louis C.K and Dane Cook.
5. Football, also.....can't copyright plays, yet football thrives like never before. Plus, the originator still holds an advantage by being the first - even if another team copies the play, the team might not have the kinds of players best to execute it and would take years of drafting, trading players, new coaches, etc to match the originator's team.
6. The financial industry, also. Even with copying the originator, by reputation and lead time can gain advantages which others can never match.
7. The computer database industry, also. Can't copyright data, but the ways it can be organized. e.g. Lexis-Nexis,.Factiva.
8. The VCR actually created new industries, like video rental, also new revenue streams for the maker of films.
9. "Useful articles" is a benchmark in copyright law - a dress is useful, a painting is not therefore can copyright. Though, there are special cases, a dress which is more ornamental than functional might lead to special protection. A printed fabric is protected, but the cut and style aren't. Also "trade dress" is protected, the packaging for instance, but not necessarily the product inside. So, trademarks, brands and logos are protected and can increase the value of its products/services even if they are easily copied, in fact copying actually can increase the values.
10. Positional goods - those which create status, like trademarks, logos.
11. Also, copying can spur innovation, what lawyers call "derivative works," tweaking of the original.
12. Copying can also lower the consumer's knowledge costs, by seeing trends happen right before their eyes - also called "anchoring."
13. Social norms can protect IP better than laws sometimes, like with comedians, chefs, etc.
14. The book also discusses "first mover" advantages and disadvantages.
15. For music, can make exact copies, but can't reproduce the performance, live session/concert, etc, so the performance aspect is thriving even more despite the copying, etc. Also, some restaurants won't allow takeout or home delivery.
17. Open source software is discussed. Wikipedia more successful than Microsoft's Encarta. Linix operating system also has led to a new company, Redhat. Plus, creates competition to put pressure on Microsoft, etc to keep improving their products.
18. Fonts are also discussed, zillions of different ones, lots of copying and tweaking....plus, the usefulness test, can't print w/o them, so only certain ones can be protected, so creativity thrives, creating more and more fonts.
Anyway, the book does give one a better understanding of the effects of copying, which it seems more often than not increases creativity, innovation and overall prosperity. After reading it, I think my understanding of IP and its effects is better.
Wednesday, November 28, 2012
Nation's Economic Recovery Accelerating!
The recovery did reach, in my opinion, a self-sustaining mode, recently, led by housing which normally leads a recovery. What is new, is that now, it looks like the self-sustaining recovery has entered an acceleration phase, with the news that CA's recovery is now on solid footing, with the budget now forecast by independent sources to possibly have a surplus by 2014, plus recently released unemployment numbers showing the largest percentage decrease in over 25 years. CA has always been boom and bust, with the busts always coming back to all-time high economic highs. Since CA represents about 12% of the nation, it does look like CA will now accelerate the current slow recovery.
I am no fortune teller....I look at facts....and what is currently happening. The only thing I can see stopping this accelerated recovery is some unexpected catastrophic event......not already known risks like the "fiscal cliff, "Greece," "Gaza," etc.
I am no fortune teller....I look at facts....and what is currently happening. The only thing I can see stopping this accelerated recovery is some unexpected catastrophic event......not already known risks like the "fiscal cliff, "Greece," "Gaza," etc.
Tuesday, October 30, 2012
My review of "Occupy World Street"
5 out of 5 Stars.....
This book is a response the Occupy Wall Street and other Occupy movements around the world, where the protestors know there is something wrong, the 1% vs the 99%, most people on the planet, but so far haven't come up with any comprehensive descriptions of the problems or possible solutions, because it is so complex. The author lays most of the blame on neo-liberal economics and related politics, beginning around 1980 with US president Reagan and Britian's Margaret Thatcher - basically complete free-trade and free movement of money with negligible government regulation, resulting in a transference of wealth from public hands and the poor and middle class, into the hands of the wealthy and well-connected. This all represented, in the US, along with, to a degree, Britain, which he calls "The Empire," where what has resulted in a corporatocracy, a form of fascism, where the political system is bought and paid for by large corporations where this capitalism seeks cheap labor and resources from around the world, all the while using up the planet's resources to the point where we are nearing a point of no return where the survival of the world's civilization is at stake unless we change this direction.
What the author claims is that we are going through a paradigm shift from Cartesian/Newtonian physics to Quantum physics at the world level, where the world is a living organism where it isn't "cause and effect" at the world view level, but everything is connected. He offers a possible solution, a Gaian society, led by some small nations and leaders including some wise elders from around the world, to work together with new organizations and local currencies replacing the WTO, IMF and World Bank to work toward a sustainable planet which will change the way we live from from one of greed and accumulating money and material things to one where there is more meaning to our lives.
The book is divided into 6 parts - Planet under siege, Drivers of Destruction, The Empire, New values/New beliefs, Toward a Gaian World Order, Getting There.
Among the things covered are...
1. Global warming (carbon footprint), extinction of species, genetic engineering a risk, antibiotic resistant bacteria, monoculture (industrial farming reduces crop rotation, etc).
2. Corporatocracy is a threat to our civilization because it is overloading our ecosystem as exhibited above, plus overpopulation.
3. Peak oil is mere decades away - tar sand oil and natural gas via fracking use more energy to produce, especially when clean-up costs are included.
4. Tainter's Theory - civilizations solve problems using greater complexity until they become so complex the are overwhelmed by it and collapse.
5. Currently, nations measure progress by GDP, but GDP includes negative things like building of prisons, disaster clean-ups, etc. A more accurate measure GPI (progress)which started declining about 30 years ago.
6. Greater consumption leads to speculative bubbles. Bhutan has a Gross National Happiness Index.
7. Gini Coefficient measures income disparity where societies have shifted to "Greed is good" philosophy which at high levels as it is now, always leads to social and health problems with people rebelling.
8. Beginning in the 80's banks migrated from low risk investments to high risk ones including derivatives, high leverage, Credit Default Swaps, naked derivatives, unrestricted capital flows allowed speculators to get money out of countries fast if bets went bad leaving countries to suffer, front-running to exacerbate trends, repeal of Glass-Steagall, etc.
In sum, a very good look into the problems we face, though the author's solution is more speculative, but a good way to get our discussions started, so we can head in a better direction than we are now going. So, a fine book, even for neo-liberal supporters so that they know what is brewing.
This book is a response the Occupy Wall Street and other Occupy movements around the world, where the protestors know there is something wrong, the 1% vs the 99%, most people on the planet, but so far haven't come up with any comprehensive descriptions of the problems or possible solutions, because it is so complex. The author lays most of the blame on neo-liberal economics and related politics, beginning around 1980 with US president Reagan and Britian's Margaret Thatcher - basically complete free-trade and free movement of money with negligible government regulation, resulting in a transference of wealth from public hands and the poor and middle class, into the hands of the wealthy and well-connected. This all represented, in the US, along with, to a degree, Britain, which he calls "The Empire," where what has resulted in a corporatocracy, a form of fascism, where the political system is bought and paid for by large corporations where this capitalism seeks cheap labor and resources from around the world, all the while using up the planet's resources to the point where we are nearing a point of no return where the survival of the world's civilization is at stake unless we change this direction.
What the author claims is that we are going through a paradigm shift from Cartesian/Newtonian physics to Quantum physics at the world level, where the world is a living organism where it isn't "cause and effect" at the world view level, but everything is connected. He offers a possible solution, a Gaian society, led by some small nations and leaders including some wise elders from around the world, to work together with new organizations and local currencies replacing the WTO, IMF and World Bank to work toward a sustainable planet which will change the way we live from from one of greed and accumulating money and material things to one where there is more meaning to our lives.
The book is divided into 6 parts - Planet under siege, Drivers of Destruction, The Empire, New values/New beliefs, Toward a Gaian World Order, Getting There.
Among the things covered are...
1. Global warming (carbon footprint), extinction of species, genetic engineering a risk, antibiotic resistant bacteria, monoculture (industrial farming reduces crop rotation, etc).
2. Corporatocracy is a threat to our civilization because it is overloading our ecosystem as exhibited above, plus overpopulation.
3. Peak oil is mere decades away - tar sand oil and natural gas via fracking use more energy to produce, especially when clean-up costs are included.
4. Tainter's Theory - civilizations solve problems using greater complexity until they become so complex the are overwhelmed by it and collapse.
5. Currently, nations measure progress by GDP, but GDP includes negative things like building of prisons, disaster clean-ups, etc. A more accurate measure GPI (progress)which started declining about 30 years ago.
6. Greater consumption leads to speculative bubbles. Bhutan has a Gross National Happiness Index.
7. Gini Coefficient measures income disparity where societies have shifted to "Greed is good" philosophy which at high levels as it is now, always leads to social and health problems with people rebelling.
8. Beginning in the 80's banks migrated from low risk investments to high risk ones including derivatives, high leverage, Credit Default Swaps, naked derivatives, unrestricted capital flows allowed speculators to get money out of countries fast if bets went bad leaving countries to suffer, front-running to exacerbate trends, repeal of Glass-Steagall, etc.
In sum, a very good look into the problems we face, though the author's solution is more speculative, but a good way to get our discussions started, so we can head in a better direction than we are now going. So, a fine book, even for neo-liberal supporters so that they know what is brewing.
Friday, October 26, 2012
GDP up 2%
Economic news today is that the GDP increased 2% for the last quarter, compared to an estimated 1.8% and up from 1.3% in the last quarter. To me, it seems the economic recovery continues, slowly, but continues.
I think the Great Recession, despite being in recovery mode for about 3+ years, really ended a few months ago with Housing appearing to have bottomed. Housing generally leads an economy out of recession.
In addition, autos and light trucks are doing very well, further signaling a healthy economy.
Corporate investment is flat, but for now that is OK, as representative of unemployment which is a lagging indicator of economic recoveries.
As for the "fiscal cliff," which some think will start a new recession, I will be surprised if a recession begins because of that. I think the recovery is now pretty much in self-recovery mode, so now is the time to begin reducing the deficit, plus the fiscal cliff is really a misnomer since not all effects from it happen right away, plus there will likely be some modifications made within the next few months.
There is also a concern about Bernanke leaving the Fed next year. I do think there is appropriate worry if he is replaced by someone who takes a different approach. Although I do think Bernanke was complicit in the Housing Bubble, I think he has been very good since the bubble burst and his QE's have been very important in capital formation by way of a rising stock market and strong Treasury bond market. A lot of capital AND debt was erased by the Great Recession financial collapse.
The stock market has been overdue for a correction and there usually is a year-end rally. And, the year after a presidential election is usually a time to be defensive, but the stock market is not in bubble territory, so any weakness is just an opportunity. History does show that the stock market does do better with a Dem president than with a GOP president and I see no reason for exception for the next four years. as of now.
I think the Great Recession, despite being in recovery mode for about 3+ years, really ended a few months ago with Housing appearing to have bottomed. Housing generally leads an economy out of recession.
In addition, autos and light trucks are doing very well, further signaling a healthy economy.
Corporate investment is flat, but for now that is OK, as representative of unemployment which is a lagging indicator of economic recoveries.
As for the "fiscal cliff," which some think will start a new recession, I will be surprised if a recession begins because of that. I think the recovery is now pretty much in self-recovery mode, so now is the time to begin reducing the deficit, plus the fiscal cliff is really a misnomer since not all effects from it happen right away, plus there will likely be some modifications made within the next few months.
There is also a concern about Bernanke leaving the Fed next year. I do think there is appropriate worry if he is replaced by someone who takes a different approach. Although I do think Bernanke was complicit in the Housing Bubble, I think he has been very good since the bubble burst and his QE's have been very important in capital formation by way of a rising stock market and strong Treasury bond market. A lot of capital AND debt was erased by the Great Recession financial collapse.
The stock market has been overdue for a correction and there usually is a year-end rally. And, the year after a presidential election is usually a time to be defensive, but the stock market is not in bubble territory, so any weakness is just an opportunity. History does show that the stock market does do better with a Dem president than with a GOP president and I see no reason for exception for the next four years. as of now.
Wednesday, October 24, 2012
My Review of "Too Much Magic"
4 out of 5 stars.....
The author, James Howard Kunstler, though he denies it, is a doom and gloomer. Though I don't subscribe to what he envisions, I do think there is credibility in it for a longer term than he sees, so it is definitely worth learning what he writes so the reader can better know what challenges are ahead for humanity which do require more serious policy decisions by the US than which are currently in place. Here's some of his thoughts in the book.
1. He sees a worse crisis than the crash of 2008.
2. We are already past peak oil and population overload.
3. Warnings - BP oil blowout, Fukoshima nuclear meltdown, lots of tornado's, hurricanes, floods, droughts, etc.
4. Time frame We've already entered the zone of middle-class dissolving and no consensus about what to do.
5. Jevon's paradox, Tainter's model - greater complexity and diminishing returns?
6. Something for nothing mentality/legalized gambling. Cheap fast food, happy motoring, air conditioning. Peak everything. Then came housing bust after 2005. Roman culture took centuries to wind down.
7. We had peak debt which leads to deflation/contraction which we will never emerge because less money for auto loans,etc. Lack of public funds to fix roads. Auto bailout money should have made car companies make railroad stuff since will need a betterrailroad system.
8. Entropy - beginning, middle, end with only one direction. "Too much magic/"complexity. Farewell to drive-in utopia, suburbia over.
9. After WWI - suburbia building boom, roaring 20's, impetus for bubble economy, 1929 crash, then after WWII suburbia boom continued..
10. Women's lib in 60's really just 2 workers needed to continue suburbia,run lives of families.
11. GOP he calls the party of stupidity, mostly in sunbelt - suburban sprawl complete with oil, air.cond. - future bleak - "rural idiocy." Total bailouts (incl international) = $77T.
12. Hopefully towns will be redeveloped - more compact/dense/inland since climate change will flood coastal areas. - skyscrapers will be obsolete because electricity costs will be too high. Since San Diego near Mexico, there will be a fight over the terrain. Unable to garden grain crops. "New Urban-ism" still car centric, too complex.
13. Thinks Ray Kurzweil's "Singularity" where technology will solve problems is the vision of a mad scientist - AI can't transcend biology, genetic engineering, virtual sex, eternal life, nanotech robots/nanobots in humans, elsewhere is nonsense. He has no idea of diminishing returns or the dark side of humans. Gaia Theory where Earth is a living organism is just a so-so theory.
14. Party politics began to decline in 60's. Clinton turned over the economy to WS, continued with GW Bush. WS went from 5% of the economy to 40% - repeal of Glass-Steagell - neo-liberal economics. Lobbyists dictated healthcare and regulations with Obama. GOP led wave of anti-intellectualism. We benefited from post WWII - Highway system, cheap gas, FDR programs -TVA, military bases/military middle class + a prosperity gospel in churches - "God rains money on the favored."
15. Reagan turned the US from largest creditor nation to largest debtor nation. Began the corporate takeover of America by WS.
16. After WWII the US was in charge - no competition for goods, lent countries money to buy goods, #1 in oil/energy - an empire. In 60's began to crumble. Reagan lucky - north sea, Mexican, USSR's oil. Clinton lucky - leveraged buyouts, but then US went from manufacturing to junk bond mess and the S+L mess. Then the housing bubble and derivatives - Brooksly Born warned, but government didn't listen. Peak oil, peak debt, peak banking.
17. Solar panel makers use 11% of silver supply. Wind and solar energy use rare earth minerals which are rare, radioactive, pollute and cause other problems. By 2100, sea level is predicted to rise 3-17 feet and temperatures 3-7 degrees F. Most critical effect of climate change is food scarcity. US will become balkanized because not every immigrant learns English and adopts culture. The space shuttle retired/science compromised because US is out of money.
18. The only thing complex societies haven't been able to do is contract which will be necessary.
So, the author is good at describing the path we are on, but I'm not big on fortune tellers - I doubt things will go exactly as he says. But, the bok is an interesting read and does describe well the sequence of major events and where they have led us and what future changes are.
The author, James Howard Kunstler, though he denies it, is a doom and gloomer. Though I don't subscribe to what he envisions, I do think there is credibility in it for a longer term than he sees, so it is definitely worth learning what he writes so the reader can better know what challenges are ahead for humanity which do require more serious policy decisions by the US than which are currently in place. Here's some of his thoughts in the book.
1. He sees a worse crisis than the crash of 2008.
2. We are already past peak oil and population overload.
3. Warnings - BP oil blowout, Fukoshima nuclear meltdown, lots of tornado's, hurricanes, floods, droughts, etc.
4. Time frame We've already entered the zone of middle-class dissolving and no consensus about what to do.
5. Jevon's paradox, Tainter's model - greater complexity and diminishing returns?
6. Something for nothing mentality/legalized gambling. Cheap fast food, happy motoring, air conditioning. Peak everything. Then came housing bust after 2005. Roman culture took centuries to wind down.
7. We had peak debt which leads to deflation/contraction which we will never emerge because less money for auto loans,etc. Lack of public funds to fix roads. Auto bailout money should have made car companies make railroad stuff since will need a betterrailroad system.
8. Entropy - beginning, middle, end with only one direction. "Too much magic/"complexity. Farewell to drive-in utopia, suburbia over.
9. After WWI - suburbia building boom, roaring 20's, impetus for bubble economy, 1929 crash, then after WWII suburbia boom continued..
10. Women's lib in 60's really just 2 workers needed to continue suburbia,run lives of families.
11. GOP he calls the party of stupidity, mostly in sunbelt - suburban sprawl complete with oil, air.cond. - future bleak - "rural idiocy." Total bailouts (incl international) = $77T.
12. Hopefully towns will be redeveloped - more compact/dense/inland since climate change will flood coastal areas. - skyscrapers will be obsolete because electricity costs will be too high. Since San Diego near Mexico, there will be a fight over the terrain. Unable to garden grain crops. "New Urban-ism" still car centric, too complex.
13. Thinks Ray Kurzweil's "Singularity" where technology will solve problems is the vision of a mad scientist - AI can't transcend biology, genetic engineering, virtual sex, eternal life, nanotech robots/nanobots in humans, elsewhere is nonsense. He has no idea of diminishing returns or the dark side of humans. Gaia Theory where Earth is a living organism is just a so-so theory.
14. Party politics began to decline in 60's. Clinton turned over the economy to WS, continued with GW Bush. WS went from 5% of the economy to 40% - repeal of Glass-Steagell - neo-liberal economics. Lobbyists dictated healthcare and regulations with Obama. GOP led wave of anti-intellectualism. We benefited from post WWII - Highway system, cheap gas, FDR programs -TVA, military bases/military middle class + a prosperity gospel in churches - "God rains money on the favored."
15. Reagan turned the US from largest creditor nation to largest debtor nation. Began the corporate takeover of America by WS.
16. After WWII the US was in charge - no competition for goods, lent countries money to buy goods, #1 in oil/energy - an empire. In 60's began to crumble. Reagan lucky - north sea, Mexican, USSR's oil. Clinton lucky - leveraged buyouts, but then US went from manufacturing to junk bond mess and the S+L mess. Then the housing bubble and derivatives - Brooksly Born warned, but government didn't listen. Peak oil, peak debt, peak banking.
17. Solar panel makers use 11% of silver supply. Wind and solar energy use rare earth minerals which are rare, radioactive, pollute and cause other problems. By 2100, sea level is predicted to rise 3-17 feet and temperatures 3-7 degrees F. Most critical effect of climate change is food scarcity. US will become balkanized because not every immigrant learns English and adopts culture. The space shuttle retired/science compromised because US is out of money.
18. The only thing complex societies haven't been able to do is contract which will be necessary.
So, the author is good at describing the path we are on, but I'm not big on fortune tellers - I doubt things will go exactly as he says. But, the bok is an interesting read and does describe well the sequence of major events and where they have led us and what future changes are.
Sunday, October 21, 2012
Portfolio - "Update"
It's been awhile since I posted an update. It really hasn't changed too much, although I did exit Treasuries since I wanted to lock up profits and because the bond market is in bubble territory while better interest rates exist in the stock market with the kinds of stocks I own. Also, I am planning to enter the housing market, so I put the bond proceeds into cash/money market accounts also from locking in some stock profits, so also reducing some of my stock portfolio, while also managing it - Adding HAS and MDLZ. In the order of largest position to the least.......
HAS (Hasbro)
PG (Procter and Gamble)
KMB (Kimberly Clark)
PEP (Pepsico)
SYY (Sysco)
KO (Coca Cola)
WAG (Walgreen)
GPC (Genuine Products)
MMM (3M)
JNJ (Johnson & Johnson)
T (AT&T)
ADP (Automatc Data Processing)
MDLZ (Mondelez)
The stock portfolio represents about 20% of my net worth, Gold/Silver about 3%, Cash/MoneyMarket about 10%, and CDs (about 67%).
HAS (Hasbro)
PG (Procter and Gamble)
KMB (Kimberly Clark)
PEP (Pepsico)
SYY (Sysco)
KO (Coca Cola)
WAG (Walgreen)
GPC (Genuine Products)
MMM (3M)
JNJ (Johnson & Johnson)
T (AT&T)
ADP (Automatc Data Processing)
MDLZ (Mondelez)
The stock portfolio represents about 20% of my net worth, Gold/Silver about 3%, Cash/MoneyMarket about 10%, and CDs (about 67%).
Sunday, July 03, 2011
My Review of "The Other Side of Wall Street"
This is an interesting memoir of a Wall Street insider's (Todd Harrison's) look at his life, so far, and his experiences in Wall Street. Things of note...
1. His grandfather, Ruby, told him all you have is your name and your word, and that honesty, trust, and respect were the foundation of any successful endeavor. Over the years, Todd confused net worth with self-worth. Dad left when he was 2, Mom and Todd moved from house in NJ to apartment in Great Neck, LI. He was diagnosed with ADHD, didn't fit in socially, placed in private school, 7th grade in Great Neck South Middle School, Bagel shop boy at 13 - learned if you want money get a job. Still had ADHD, but did well in sports and had a pretty traditional childhood. Jr and Sr year HS spent in CA to be with dad. Applied to UC Santa Barbara, San Diego State, Boston U., and Syracuse. Went to Syracuse, good education, sports program, fraternity, did well. Met friend Kevin Wassong at Syracuse, talked about working together sometime, Kevin got job at reative Arts Agency, Todd got a business degree, in finance so to be near the "cash register." Todd got an internship at Morgan Stanley, then hired by them after school - Chuck Feldman made the offer.
2. At MS, clueless at first, worked at the equity derivative desk. Slow, but learned - "Buy-write" - long calls, short stock, "synthetic put" - long stock, short calls - "married put" ,long put, long stock.
3. Jim Cramer called, "Do you like ....what do you think? Todd said "yeah," Cramer hung up. Learned to give quick answer, not waste time.
4. 1st yr - $28K, no bonus. One incident told sell something, couldn't, told to lie.
5. 2nd yr - same, no bonus, warning, 3rd yr,/1993 - $75K, 4th yr, $150K
6. Had a big loss with First Interstate Bank, learned money makes you do things you don't like, became arrogant, cocky, innocence gone replaced with power.
7. Saw that WS had an uncanny ability to recreate, repackage and sell risk. And, saw steady stalwarts passed over for promotions - bad things happening to good people - all politics. Then, he was "ambushed" - told he couldn't be trusted, joined the Galleon Group hedge fund, they needed a derivative specialist. Struggled at first with Galleon - no bonus, told lucky to have a job. Then, Asian contagion, Greenspan stimuli, seeds of dot.com bubble which evolved into booms and busts in next decades.. By 1999, things were good, he began to covet things, wanted to be a partner.
8. Moved to Cramer-Berkowitz hedge fund as partner, smaller $400M fund, base salary $300K + % of profits, ran trading operation. Cramer was master of momentum and Berkowitz had a brilliant analytical mind. After Cramer threw a tantrum over a bad trade, Todd saw the true colors - you are only as good as your last trade - never the same for him. 4/2000 NASDAQ dropped 20%, in Summer, Cramer had Todd write column for Street.com - "The switch was flipped." Dad in jail in Hawaii, Bipolar like Cramer, Todd decided to leave, $5M final paycheck, $700K annual salary at the time. Cramer went on to CNBC, Berkowitz headed fund, Todd went to Street.com to write.
9. 9-11 hit, falling out with Street.com, decided to leave.
10. Met Casey Cannon, entertainment field, found bridge between finance and entertainment, Minyanville was born with "Hoofy and Boo" characters, launched 10/2002 along with the Ruby Peck Foundation. 12/2002, quit Berkowitz-Cramer, Street.com and started own small hedge fund. But made wrong call after financial collapse, didn't anticipate strong recovery, was wiped out. Became depressed. It took losing nearly everything to understand what real wealth was - happiness is not in a bank account.. Fork in the road, almost insolvent, decided to focus on Minyanville and foundation, Kevin Wassong joined him - remembered, "do whaat you love and the money will come." Minyanville won an Emmy. Finally, real success. In business, be an animal, in life, be yourself.
So, a pretty good memoir. My thinking from the book, is that he was successful at Galleon, because he had good tips, but recent uncovering of insider trading at Galleon, Todd was only successful because he was given illegal info, though he probably didn't know it was illegal. And, his success trading at Cramer-Berkowitz, was because Cramer, a genius of momentum, caught the dot.com bubble run-up just right. His real talent was in learning the inside of Wall Street and writing about it in an entertaining way. So, a worthwhile book, in learning a little bit about one of the Wall Street players and his connections.
4 out of 5 stars.
1. His grandfather, Ruby, told him all you have is your name and your word, and that honesty, trust, and respect were the foundation of any successful endeavor. Over the years, Todd confused net worth with self-worth. Dad left when he was 2, Mom and Todd moved from house in NJ to apartment in Great Neck, LI. He was diagnosed with ADHD, didn't fit in socially, placed in private school, 7th grade in Great Neck South Middle School, Bagel shop boy at 13 - learned if you want money get a job. Still had ADHD, but did well in sports and had a pretty traditional childhood. Jr and Sr year HS spent in CA to be with dad. Applied to UC Santa Barbara, San Diego State, Boston U., and Syracuse. Went to Syracuse, good education, sports program, fraternity, did well. Met friend Kevin Wassong at Syracuse, talked about working together sometime, Kevin got job at reative Arts Agency, Todd got a business degree, in finance so to be near the "cash register." Todd got an internship at Morgan Stanley, then hired by them after school - Chuck Feldman made the offer.
2. At MS, clueless at first, worked at the equity derivative desk. Slow, but learned - "Buy-write" - long calls, short stock, "synthetic put" - long stock, short calls - "married put" ,long put, long stock.
3. Jim Cramer called, "Do you like ....what do you think? Todd said "yeah," Cramer hung up. Learned to give quick answer, not waste time.
4. 1st yr - $28K, no bonus. One incident told sell something, couldn't, told to lie.
5. 2nd yr - same, no bonus, warning, 3rd yr,/1993 - $75K, 4th yr, $150K
6. Had a big loss with First Interstate Bank, learned money makes you do things you don't like, became arrogant, cocky, innocence gone replaced with power.
7. Saw that WS had an uncanny ability to recreate, repackage and sell risk. And, saw steady stalwarts passed over for promotions - bad things happening to good people - all politics. Then, he was "ambushed" - told he couldn't be trusted, joined the Galleon Group hedge fund, they needed a derivative specialist. Struggled at first with Galleon - no bonus, told lucky to have a job. Then, Asian contagion, Greenspan stimuli, seeds of dot.com bubble which evolved into booms and busts in next decades.. By 1999, things were good, he began to covet things, wanted to be a partner.
8. Moved to Cramer-Berkowitz hedge fund as partner, smaller $400M fund, base salary $300K + % of profits, ran trading operation. Cramer was master of momentum and Berkowitz had a brilliant analytical mind. After Cramer threw a tantrum over a bad trade, Todd saw the true colors - you are only as good as your last trade - never the same for him. 4/2000 NASDAQ dropped 20%, in Summer, Cramer had Todd write column for Street.com - "The switch was flipped." Dad in jail in Hawaii, Bipolar like Cramer, Todd decided to leave, $5M final paycheck, $700K annual salary at the time. Cramer went on to CNBC, Berkowitz headed fund, Todd went to Street.com to write.
9. 9-11 hit, falling out with Street.com, decided to leave.
10. Met Casey Cannon, entertainment field, found bridge between finance and entertainment, Minyanville was born with "Hoofy and Boo" characters, launched 10/2002 along with the Ruby Peck Foundation. 12/2002, quit Berkowitz-Cramer, Street.com and started own small hedge fund. But made wrong call after financial collapse, didn't anticipate strong recovery, was wiped out. Became depressed. It took losing nearly everything to understand what real wealth was - happiness is not in a bank account.. Fork in the road, almost insolvent, decided to focus on Minyanville and foundation, Kevin Wassong joined him - remembered, "do whaat you love and the money will come." Minyanville won an Emmy. Finally, real success. In business, be an animal, in life, be yourself.
So, a pretty good memoir. My thinking from the book, is that he was successful at Galleon, because he had good tips, but recent uncovering of insider trading at Galleon, Todd was only successful because he was given illegal info, though he probably didn't know it was illegal. And, his success trading at Cramer-Berkowitz, was because Cramer, a genius of momentum, caught the dot.com bubble run-up just right. His real talent was in learning the inside of Wall Street and writing about it in an entertaining way. So, a worthwhile book, in learning a little bit about one of the Wall Street players and his connections.
4 out of 5 stars.
Saturday, January 01, 2011
My Review of "The Drunkard's Walk"
The book, "The Drunkard's Walk: How randomness rules our lives," looks at randomness and really randomness plays a greater role in what happens with humans than people, in general, think. I found the book to be exceptional. Although I have always suspected what the book claims, the book backs up its conclusions with mathematics. Plus, it does it in a fun way, making for a very enjoyable book, also. Although not specifically a financial or investing book, the book really is helpful in understanding such stuff. Some points which I noted are....
1. Human intuition is ill suited to uncertainty since in the 1930's researchers noted that people couldn't make sequences of random numbers nor recognize a random sequence.
2. Sometimes in life things happen which can't be foreseen.
3. The amygdala in the brain is active when making a decision, hence decisions are emotional.
4. Rewards work, but punishment doesn't. The opposite is just regression to the mean.
5. Examples which are more likely due to randomness - Roger Maris/1961, success of certain movies and studio heads.
6. Research has shown that people will assign greater probabilities to outcomes which are described in greater detail, the "availability bias."
7. Arithmetic didn't really exist until the 16th century, hence probability not understood before then.
8. DNA in courts - lab error = 1/11, DNA = 1/1B, so chance of error more like 1/10.
9. The Law of Sample Space - Gerolano Cardano - the Book of Games of Chance - 16th century.
10. The Probability of Points - 2 entities competing.
11. Pascal's Triangle - if need to know # of ways in which you can choose some # of objects from a collection that has a > or = #. Pascal's wager -odds about consequences of a pious life, 1/2 if G-d exists, ie. if pious. Confusing, but discussed.
12. Sweepstakes - cost of mail cheaper than chance of winning. Lottery, odds of winning same as one person dying driving to place which sells lottery tickets, but not advertised that way. Dice and roulette wheel are not perfectly balanced, so some uncertainty, not predictable.
13. The book mentions calculus and how it is composed of 1) a sequence, a succession of elements,b) a series which is the sum of the sequence of elements, and 3) a limit where the sequence is heading. But, in Zeno's paradox, the paradox is resolved because of constant motion, no stops. That's how Bernouli attacked the the relationship between probability and observation - toss a coin 10x maybe 7 heads, toss a zillion times expect 50% heads. Bernouli's Golden Theorem - large enough sample to ensure confidence within a certainty. Too small of a sample = the law of small numbers. For instance 1/3 chance that 5 of a CEO's performance will reflect his ability, so better to analyze his abilities rather than just look at results.
14. Bayes's Theorem is discussed where conditional probabilities. Prosecutor's fallacy/ mistake of inversion - just because A happens then B doesn't mean if B happens A will happen. Examples are SIDS deaths and OJ trial.
15. Understanding and quantifying random error led to a new field - mathematical statistics.
16. Wine tasting influenced by all kinds of things, price, context. Statistical measurements include standard deviation, standard deviation squared = variance. Also the Error Law known as a normal distribution or bell curve - in certain cases can expect certain proportionality of results. But, social physics not all normal, like Pareto principle - 80/20 rule or regression to the mean concept. Brownian motion shows Drunkard's Walk, randomness.
17. Book mentions V2 rocket attacks in WWII and cancer clusters, more due to randomness than predictable patterns. The human need to feel in some control interferes with the accuracy in perceiving natural events.
18. Lorenz's Butterfly effect - just small changes can lead to massive differences in results. Plus, unlike laws of physics, human affairs are too complex to predict. Asymmetry makes things impossible to predict, yet look predictable on retrospect, like the stock market. Also, people failing or in poverty may be more random than predictable.
In summary, a terrific book - will likely change the way a reader looks at things, or if a reader does think that way the book will show the mathematics behind it, in a very readable form. 5 out of 5 stars.
1. Human intuition is ill suited to uncertainty since in the 1930's researchers noted that people couldn't make sequences of random numbers nor recognize a random sequence.
2. Sometimes in life things happen which can't be foreseen.
3. The amygdala in the brain is active when making a decision, hence decisions are emotional.
4. Rewards work, but punishment doesn't. The opposite is just regression to the mean.
5. Examples which are more likely due to randomness - Roger Maris/1961, success of certain movies and studio heads.
6. Research has shown that people will assign greater probabilities to outcomes which are described in greater detail, the "availability bias."
7. Arithmetic didn't really exist until the 16th century, hence probability not understood before then.
8. DNA in courts - lab error = 1/11, DNA = 1/1B, so chance of error more like 1/10.
9. The Law of Sample Space - Gerolano Cardano - the Book of Games of Chance - 16th century.
10. The Probability of Points - 2 entities competing.
11. Pascal's Triangle - if need to know # of ways in which you can choose some # of objects from a collection that has a > or = #. Pascal's wager -odds about consequences of a pious life, 1/2 if G-d exists, ie. if pious. Confusing, but discussed.
12. Sweepstakes - cost of mail cheaper than chance of winning. Lottery, odds of winning same as one person dying driving to place which sells lottery tickets, but not advertised that way. Dice and roulette wheel are not perfectly balanced, so some uncertainty, not predictable.
13. The book mentions calculus and how it is composed of 1) a sequence, a succession of elements,b) a series which is the sum of the sequence of elements, and 3) a limit where the sequence is heading. But, in Zeno's paradox, the paradox is resolved because of constant motion, no stops. That's how Bernouli attacked the the relationship between probability and observation - toss a coin 10x maybe 7 heads, toss a zillion times expect 50% heads. Bernouli's Golden Theorem - large enough sample to ensure confidence within a certainty. Too small of a sample = the law of small numbers. For instance 1/3 chance that 5 of a CEO's performance will reflect his ability, so better to analyze his abilities rather than just look at results.
14. Bayes's Theorem is discussed where conditional probabilities. Prosecutor's fallacy/ mistake of inversion - just because A happens then B doesn't mean if B happens A will happen. Examples are SIDS deaths and OJ trial.
15. Understanding and quantifying random error led to a new field - mathematical statistics.
16. Wine tasting influenced by all kinds of things, price, context. Statistical measurements include standard deviation, standard deviation squared = variance. Also the Error Law known as a normal distribution or bell curve - in certain cases can expect certain proportionality of results. But, social physics not all normal, like Pareto principle - 80/20 rule or regression to the mean concept. Brownian motion shows Drunkard's Walk, randomness.
17. Book mentions V2 rocket attacks in WWII and cancer clusters, more due to randomness than predictable patterns. The human need to feel in some control interferes with the accuracy in perceiving natural events.
18. Lorenz's Butterfly effect - just small changes can lead to massive differences in results. Plus, unlike laws of physics, human affairs are too complex to predict. Asymmetry makes things impossible to predict, yet look predictable on retrospect, like the stock market. Also, people failing or in poverty may be more random than predictable.
In summary, a terrific book - will likely change the way a reader looks at things, or if a reader does think that way the book will show the mathematics behind it, in a very readable form. 5 out of 5 stars.
Monday, September 06, 2010
Portfolio - "Update"
I've done a few things to my portfolio. When a CD came due, rather than roll it over, with interest rates on CDs not as good as dividends for the kind of quality stocks I own, I added more shares of some stocks I already owned and added stocks of Johnson & Johnson (JNJ) and Walgreens (WAG). I added JNJ because it was now selling for much lower than I had previously sold it at and it remains a quality company with a nice dividend which is raised annually, plus it has a super great balance sheet. WAG, I have never owned, but have always wanted to if the dividend was in the range which is acceptable. Now it is, also with a pristine balance sheet and a policy of raising dividends generously each year. So, now with my kind of stocks generally paying more than CDs, stocks now make up about 23% of my assets - higher than my usual goal of about 15%.
Plus, I have sold the shorter term TIPS I owned since they were at a profit and reinvested the funds in longer term TIPS which I was able to buy below par, so I was guaranteed a profit with them, plus they offer protection against future inflation. Plus, some of the profit from the TIPS I sold, I used to buy more shares of the stocks I own.
Stocks are listed in order of largest position to least:
KMB (Kimberly Clark)
PG (Procter & Gamble)
MMM (3M Corp)
PEP (Pepsico)
KO (Coca Cola)
SYY (Sysco)
KFT (Kraft)
ADP (Automatic Data Processing)
T (AT&T)
GPC (Genuine Parts)
BMY (Bristol Myers Squibb)
JNJ (Johnson & Johnson)
WAG (Walgreen)
My major asset remain CDs. I don't own a home, though I do think that is OK, as long as one doesn't go into much debt to do so. I have no debt at all, and never want any, though I do think some is OK for a home, especially in the areas which were first to collapse during this Housing decline. I also own US Treasuries, about 6% of my assets. Right now I own inflation protected ones (TIPS). The ones I hold are...
2028's
I like them because they protect both against deflation and moderately against inflation. I also own some gold (coins), but it is only about 3% of my assets and use a safe deposit box to store it. Gold does not qualify as an investment, but I do think it is warranted as a small insurance policy on US currency.
Plus, I have sold the shorter term TIPS I owned since they were at a profit and reinvested the funds in longer term TIPS which I was able to buy below par, so I was guaranteed a profit with them, plus they offer protection against future inflation. Plus, some of the profit from the TIPS I sold, I used to buy more shares of the stocks I own.
Stocks are listed in order of largest position to least:
KMB (Kimberly Clark)
PG (Procter & Gamble)
MMM (3M Corp)
PEP (Pepsico)
KO (Coca Cola)
SYY (Sysco)
KFT (Kraft)
ADP (Automatic Data Processing)
T (AT&T)
GPC (Genuine Parts)
BMY (Bristol Myers Squibb)
JNJ (Johnson & Johnson)
WAG (Walgreen)
My major asset remain CDs. I don't own a home, though I do think that is OK, as long as one doesn't go into much debt to do so. I have no debt at all, and never want any, though I do think some is OK for a home, especially in the areas which were first to collapse during this Housing decline. I also own US Treasuries, about 6% of my assets. Right now I own inflation protected ones (TIPS). The ones I hold are...
2028's
I like them because they protect both against deflation and moderately against inflation. I also own some gold (coins), but it is only about 3% of my assets and use a safe deposit box to store it. Gold does not qualify as an investment, but I do think it is warranted as a small insurance policy on US currency.
Saturday, August 28, 2010
The "Joseph Oppenheim Specu-Vestment."
It is possible to speculate with stocks, yet at the same time invest in them. I am an investor - investing being buying stock in a company I would like to own fully if I could, which deals in products or services used all the time. And, the company must pay a good dividend and has a record of raising it each year. As an investor, I don't want to speculate - speculating being hoping for a short-term profit based on the price of a stock rising. But, there is a way to speculate, without really speculating. That is, by buying a stock I would be content to hold long term, no matter what it does in the short term, but I suspect there is an opportunity for a short term gain. So, if I buy the stock and it goes up quickly, I can sell and take a quick speculative profit. However, even if I am wrong about the short-term, worst case is I have just bought some shares in a stock I am content to hold long term at what I think is a good price. It is win-win and what I call a "Joseph Oppenheim Specu-Vestment." Note, that this also includes what I have termed previously, the "Joseph Oppenheim Kicker Theory" to investing - that is by buying a stock which has both a short term price gain potential and is also a long term investment quality - buying a stock at a time when it also has an extra kicker - a speculative one..
This is the only way I think speculating is OK, and like I say, is also an investment if the short term gain doesn't happen.
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