I'm back!

First let me apologize for my one month posting hiatus.  On June 2nd, I took the Level I CFA exam and had been spending the entirety of my blogging time allocation on studying.  While the CFA Designation is not something I "need" for what I do, I strongly believe in what the CFA Institute stands for and does to enhance the integrity of capital markets and further, I have always felt a chip on my shoulder coming from a background in political science, philosophy and law into investing.  As such, the effort to earn the CFA designation for me is an expression of my commitment to my career path and to the ethical standards I ultimately aim to uphold.  

While on my path to prepare for the CFA Exam, markets hit the skids and global macroeconomic events jumped into mainstream headlines.  Considering many of these events lie at the heart of the social sciences--that intersection between sociology, politics and economics--I am eager to get some of my thoughts clearly spelled out.  Without further ado, I will start slowly but surely laying out my beliefs and opinions on the nature of the crisis and the road map to putting a light at the end of this seemingly never-ending tunnel.  

Links for Thought -- April 27, 2012

Pixar Story Rules (The Pixar Touch, h/t to Ritholtz) -- This is a great list of the "rules" that shape Pixar's stories.  No matter what our age, we all know (and I'm sure love) the great stories from Steve Job's computer animation studio.  While these rules are about how to structure a great animated film, they are deeper life lessons with broader implications.  Definitely worth a read.

Logical Fallacies Poster (Boing Boing) -- Ah remember the good 'ole days as a philosophy major in college memorizing the long list of all the fallacies.  Each day as I peruse the financial news, I'm pretty sure I encounter at least a handful.  Slippery slopes, strawmans and appeals to emotion are RAMPANT throughout today's 24-hour news cycle.  Which others do you see regularly?

Lonesome Dove (Free Exchange) -- The Economist's economics blog looks at Ben Bernanke's maneuvering and posturing through the financial crisis.  In particular, this post looks at how Bernanke has positioned himself between those like Paul Krugman saying the academic Bernanke would do more to fend off deflation, and the inflationistas who at every step of the way insist that hyperinflation is right around the corner.  This is a must read for those interested in macroeconomics.

Don't Cripple Innovation for the Sake of this Quarter's Numbers (Harvard Business Review) -- This article touches on a point I will get back to time and again.  Companies need to manage their business to maximize the long-term value, and not for meeting quarterly numbers.  Too often we see companies doing precisely the wrong thing.  Many of today's managerial challenges on this end are driven by increasingly fickle shareholders looking to make a quick buck on a trade, rather than building wealth through long-term investment.  The tide does seem to be shifting though.

Bullish Sentiment At Lowest Level Since Last September (Pragmatic Capitalism) -- I usually try to focus on pieces that are not pegged in time, but this I just found so damn interesting.  Right now as the market sits within spitting distance of multi-year highs, investor sentiment is much nearer levels consistent with a bottom.  This is a pretty consistent contrarian indicator, where the preponderance of market participants tend to be wrong.  It's also a great counterpoint to those talking heads who keep speaking of excessive bullishness.

People are Figuring Out Austerity is Stupid (Ritholtz) -- It's about freaking time! Austerity has never worked throughout history and it sure as hell won't work now.  Don't be fooled by all the appeals to emotion and slippery slopes (go check out those logical fallacies from above).  The austerity argument is stooped in moralism far more than sound economics, and in reality the morality is all wrong anyway.  There is a sound empirical explanation for why austerity not only doesn't work, but is also in fact counterproductive and a force which increases (not decreases) an aggregate debt burden.  It's all about thinking of things in terms of their relative levels (i.e. debt to GDP) instead of gross levels.

David Wright: Greatest Met Ever? (Fangraphs) -- Well just 3 years ago I think every Mets fan would've agreed Wright had a clear shot at being the greatest Met ever.  Today many would beg to differ.  Reality, as it often does, lies somewhere in the middle.  He had some all-time great Mets years, with a couple of injury riddled ones we'd rather forget.  Looks like things are getting back to normal though for D. Wright.  The most shocking surprise from the Fangraphs analysis is that Edgardo Alfonzo is way higher than I thought he'd be statistically speaking.  I was a HUGE fan back in the day.

Typically I leave off with a great nature shot, but today I will again diverge and end with the 3 best photos I took at today's flyby from the Enterprise Space Shuttle.  What a cool site that was flying first up the Hudson from downtown, and then back towards the city, past the Hudson cliffs and over the George Washington Bridge.  While the space shuttle is old and headed for retirement, I still couldn't help but laugh at the contrast with my recent post on New York City pre-concrete junge.  Just an awesome site to see! 

Links for Thought -- April 13, 2012

Speech Notes: Howard Marks at NYSSA (Distressed Debt Investing) -- Hunter from DDI gives us a great summation of a recent Howard Marks speech.  Marks' highly successful Oaktree Capital recently IPO'd on the NYSE and in this speech, Marks shares some of the wisdom that underlies his success.  One of the key points to take is that contrarianism is essential for long term investment success, but it ain't easy.  In order to be a contrarian investor, one must master both analysis and emotional management.

The Tail Wagging the Dog (the JETS blog) -- The Jets Blog digs in to the fact that Woody Johnson is running the Jets for profit first, football second, whereby economic concerns are driving football decisions.  There's an important message here to extrapolate to investment and corporate management: it's a good product that drives good business, not good business that drives a good product.  If the Jets want to make more money, the answer is simple: get better at on the damn football field!

Craft Beers Get Ahead (The Daily) -- Craft brews enjoyed a 15% jump in revenues during 2011, and in my opinion, this trend is only beginning.  Even the big boys are getting into the action, with Budweiser having bought Goose Island in the past year.  I've been thoroughly enjoying the proliferation of high quality craft brews, and look forward to the acceleration of this trend.  In fact, I will be enjoying a fine craft brew (or two, or three...) this evening.

Lunch with the FT: Larry David (Financial Times) -- Larry David gives in and gives us a good little interview, with a couple of humorous quips.  He also gives a pretty thorough answer to the representation of George Costanza and Larry on Curbed in relation to his real life personality.  Hint:people can think certain things but should never say them (you hear that Ozzie Guillen???)

Why a Housing Recovery Could Happen Sooner than You Think (Washington Post) -- Evidence is growing on multiple fronts that a housing recovery is either underway already, or very near.  This particular link takes a look at the mortgage applications and loan-to-value element.  I have spoken much of the rent-buy equilibrium lately, and here is a look from Calculated Risk that adds further conviction to my belief that renters are being forced into buying.  Even the homebuilders are enjoying a huge sales spike.  

One Big Reason to go Public that Nobody Ever Talks About (Business Insider) -- These days many young tech companies are foregoing the IPO while enjoying increasingly liquid private markets and staying away from the macrovolatility that plagues stock picking amongst public market equities.  Here is a compelling argument for why young tech companies should ignore the concerns about volatility and use the platform (or bully pulpit) of the public equity forum to grow their business.

New York Pre-Concrete Jungle

As I've mentioned several times already, I am thoroughly addicted to TED Talks. I just watched a particularly cool one by Eric Sanderson, where he goes back and reconstructs a visual model of what the island of Manhattan looked like when Henry Hudson first sailed into New York Harbor and the river that bares his name, including an analysis into the topography, geography and robust ecosystems of the island.  

Often I find myself in awe of the natural element to New York, these days even far more so than the gigantic buildings that make up the city's renowned skyline.  Yes the big buildings are impressive, but to me, they have become so natural that there is a deep internal apathy to its effect.  As time evolves, I have started to marvel more at the actual topography of the lands around me, from the Harbor down by the Battery, to the cliffs opposite Washington Heights, to that large still seemingly natural swath of land we call Central Park in the middle.  The Hudson River itself is so large and powerful that it has crafted one of the most unique systems of tidal pools, straights, estuaries and meadows in the world.

I can't help but wonder when on a boat with the following view, what would this look like sans concrete, steel and people? 

Or when on a rooftop looking West over New Jersey, what the river, transitioning to meadows, growing into forests and ultimately mountains would look like compared to what is there today:

It's always fascinated me how the geography of Manhattan specifically allowed for the city that is today New York.  Eric Sanderson gives an amazing glimpse into the original nature behind the island itself, beyond just the geographical location, which enabled New York to become the city that it is today:

My Media Consumption Habits with the iPad

I want to skip over reviewing the device, because its awesomeness has been acknowledged a million times over, with little unique to say.  Instead I’d like to jot down some notes on how the iPad 3 has impacted my web browsing and media consumption.  Over the course of the past month, there are some notable changes in my long-term habits that I have developed, which I think portend at least a little about the future of technology and media.  Please note, none of these points are supposed to be right or wrong, they are simply observations about how my personal habits have changed.

iPad and Video

By far the most impactful shift has been my embrace of web video.  I always watched the occasional video, and with my GoogleTV, I started watching a bit more online video content.  Now with the iPad, web-based video has chopped my TV viewing time in half, and has eroded a decent chunk of my web reading time allocation as well.  In fact, reading has been a far more significant loser since getting the iPad than anticipated.  Reading had always been the means through which I pursued my primary interests and my self-enrichment time, while video was primarily my escape time.  Even between cable, on demand and DVR, I didn’t have nearly enough video content that was “smart” and crafted for my desires.  Now with the iPad it is far simpler than ever before to seek out and consume interesting and informative content that meets my tastes. 

Now, I spend about 30 minutes a day watching TED Talks on different rewarding topics, and an additional 30 minutes of select YouTube content, ranging from old interviews, to lectures from some great thinkers, to cool videos of nature.  Altogether, I find that the video watching I do on the iPad is distinctly different from what I watch on TV, therefore it has only cut out of my mindless TV time, rather than my entertainment TV time

(Slight digression: to me, mindless and entertaining are distinct types of consumption. Mindless are those channels I put on because there is no other option, just to clear my head, while entertainment is the content that I am thoroughly addicted to seeking out.  Mindless TV for me is watching a Seinfeld rerun for the millionth time, while entertainment TV is watching the latest episode of Mad Men). 

To that end, the amount of mindless time I spend watching actual TV has shrunk substantially (i.e. watching something just for the hell of it, when there is little else to do, like the 45 minutes while in bed before sleep), and has been replaced predominantly with much smarter content.  I feel better for it at the end of the day too.  All this helps further confirm my belief that YouTube will be a big winner in the future of video.

iPad and my Computer

One of the biggest changes is on the bigger level, about how I use my computer.  My computer has become my exclusive domain for productivity functions, while the iPad, although not monopolizing consumption, has become the primary outlet through which I consume content.  It’s just so easy to read and watch on the iPad, while still relatively difficult to coherently build something.  I have used it in a complimentary role for my stock research, mostly as a 2^nd screen and an easy way to visually see something that I am manipulating in either Excel or Word. 

There are two important observations here.  First, while the iPad is great for consumption of information, it really isn’t all that good for productivity functions.  For this reason, I think all those who fear the imminent demise of the PC are overlooking the obvious—people use computers to both use stuff and to do stuff, and doing stuff isn’t going anywhere anytime soon.  For data analysis and writing, the iPad simply cannot compete with a computer, and there is no reason as of yet to make that transition.  Second, the iPad is much easier and more efficient for consumption, not because the screen is so shiny and pretty, but because the combination of finger flicks and taps is much simpler, smoother, easier and more fun than a keyboard and track pad, especially when making words out of buttons (aka typing) just is not necessary.  The simplicity and fun combined are a powerful force in driving said consumption to the iPad. 

The Future

The iPad alone brings cord cutting much closer to reality.  One of the real consequences is that quite a bit of my personal cable-watching time has shifted to the web, and that trend will definitely continue to accelerate.  With apps for each of the major networks, covering the majority of the shows I actually watch, the only real missing link continues to be live sports.  As soon as the day arrives that sports are available for streaming on the web (note to the cable companies: you can only fight the inevitable for so long) my cord will be cut and cable will be in my past.