Wild Lifestyles

Earlier today, I read about the astonishingly hedonistic lives of male walruses:

“The males show off in the water for the females who view them from pack ice. Males compete with each other aggressively for this display-space; the winners in these fights breed with large numbers of females.” - (Wikipedia Entry for Walrus)

“Each herd of estrous females is attended by one or more large adult males. According to one study, the ratio of males to females averaged 1 to 23.” - (Seaworld.org on the Walrus’s mating)

Walrus bulls sure have it good.

Then, Dealbreaker buzzed about a Jeffrey Epstein sighting at Time Warner Center (in New York, for you non-initiates). From what I remember of the article, Mr. Epstein lives a life much more similar to the male walrus than you and I, or anyone we happen to know. He just can’t keep his hand out of the cookie jar (remind you of anyone? *cough* R. Kelly *cough*), and that’s why he’s going to jail (unless he pays the judge/jury a commensurate amount so as to keep this billionaire out of the throngs of the penal system).

Really, Jeffrey Epstein and walrus bulls have NOTHING on Porfirio Rubirosa:

Mr. Rubirosa was a Dominican diplomat, polo player and race car driver who competed in the 1950 and 1954 24 Hours of Le Mans,” in addition to a playboy who bedded starlets Marilyn Monroe, Rita Hayworth, and Ava Gardner, in addition to (oddly enough) Eva Peron, Zsa Zsa Gabor, and billionaire heiress Doris Duke (who, in the divorce, gave Porfirio half-a-million dollars, several sports cars, a 17th-century home in Paris, and a B-25 bomber). Yes, that’s right — playboy hustled a military bomber out of his ex-wife. This guy is a genius.

(click to enlarge)

Rubirosa, with Zsa Zsa Gabor at Paris Orly airport.

His next marriage to Woolworth’s heiress Barbara Hutton (previously married to actor Cary Grant) lasted only 75 days, and he managed to hustle from her the following: a coffee plantation in the Dominican Republic, another B-25 bomber, and $3.5 million in the divorce settlement. His last marriage was at age 56, to then-19-year-old French actress Odile Rodin, which lasted until his death, when he — you guessed it — crashed his Ferrari on a joyride through Paris.

James Dean — make room for Porfirio Rubirosa, our new grandmaster of hedonism.

New York Magazine - The Fantasist
Wikipedia - Porfirio Rubirosa
The New York Times - A Jet-Set Don Juan, Right Up to the Final Exit
Wikipedia - Barbara Hutton
Wikipedia - Doris Duke
Are Walruses Efficient? - Long or Short Capital

Russia Still The Real ‘Wild West’

Anna Loginova ran an agency for female bodyguards, some trained by the ex-KGB, to give discreet protection to Moscow’s high-profile billionaires, their wives, and even mistresses. She trumpeted claims such as the fact that her female guards would be allowed into posh restaurants and clubs, while traditional male bodyguards were made to wait outside. She protected people in addition to their valuables.

Anna is now dead.

She was guarding a Porsche Cayenne when she was carjacked. Not wanting to give in to the thief, she clinged to the door handle of the Cayyenne and was dragged along the street at high speed as the car screeched away. She died from head injuries at the scene.

Last year, 50 Porsches were stolen in Moscow, including 12 within the last two months. Only three were ever found.

Daily Mail - Russia’s most famous female bodyguard killed in Moscow

Hardwired To Be Wrong

“Anthropologist Pascal Boyer, who studies the psychology of religion, argues that our brains have evolved with an overactive agency-recognition system: We look for—and find—individual intention and design behind any pattern, even when none exists. After a bad harvest, we wonder how we have angered the gods; after a trend goes viral, we wonder what special person could have made it happen.”

There are so many examples that fit this ‘agency-recognition system’, it’s ridiculous.

For instance, conspiracy theorists. The conspiracy theorist is confronted with an event (JFK shot) and their brain will concoct an explanation (it wasn’t Lee Harvey Oswald), and they’ll misguidedly attempt to prove their contention with any data point that fits their story while ignoring any data point that doesn’t.

Scientists often do the same. Instead of searching for an undetermined truth, whatever that truth may be, the cocksure scientist designs his experiments in order to achieve a certain preconceived outcome at experiment’s-end. The experiment is not truth-finding; it’s not science. It’s manufactured opinion masquerading as science.

Perhaps we should focus on logic and reason, and leave behind our predisposition to irrationally hypothesize about what could have been.

Ars Technica - Tipped Over: social influence “tipping point” theory debunked

KDDI au Outs Spring Phones

(click to enlarge)
Whenever NTT DoCoMo or KDDI au launch new phones, I crack a smile. Their handsets have fantastic design and are executed perfectly. About a year ahead of handsets that make their way to this side of the pond.

Engadget’s got a good rundown of the new goods.
Click over:
KDDI au Announces Spring 2008 Collection - Engadget

Bill Gates, The Mexican

Bill Gates was surpassed in wealth last year by Carlos Slim-Helú, the Mexican billionaire most famous for his position in America Móvil, a Latin America wireless provider.  Instead of putting all his resources into a non-profit foundation, as has Gates, Slim believes that he can wield the power of his businesses to best foment positive change for the lowest quartile of the world’s income.  For instance, building out a wireless network to serve underserved populations might allow fisherman from deep in the Amazon to find out about fish prices downriver, enabling commerce to better serve the local and regional population, as well as allowing communication to facilitate commerce and even payments.  Many people in the third world will experience their first bank account as a wireless payment-enabled cellphone.

Bill Gates has taken a different approach, instead funneling his wealth to the Gates Foundation, which spends money on global health and poverty programs.  Critics berate the Foundation for owning equity positions in firms that aren’t socially responsible.  For example, consider a health clinic sponsored by the Gates foundation in wartorn Chad.  The Foundation might also own a toxic-gas-spewing oil refinery 10 miles away, in-effect poisoning the same people the Foundation wants to help.

This conflict of interest is a tricky situation for any large foundation that invests money.  Socially responsible investing is not black and white, and finding every little conflict in an investment takes a lot of effort and is, at some point, incrementally futile.  The more you dig, the more dirt you find, and the less possible candidates for investments there are.  Not easy when your foundation needs to invest some $40+ billion.

Today, in a speech in Davos at the World Economic Forum, Gates outlined his belief that business can do more to help the underserved, essentially stealing a trick from his pal Slim-Helú.

Perhaps Mr. Gates, in being passed up by the Mexican billionaire, has had a sort of epiphany.

But don’t expect Bill to rock a sombrero anytime soon.

Gates Argues That A New Form Of Capitalism Can Save The World - TechCrunch 

Research In Motion’s Gambit

Research In Motion (NASDAQ: RIMM), the Waterloo, Ontario-based maker of BlackBerry smartphones is one of my favorite firms, and I’m addicted to their products. They always seem to make the right moves.

One area that RIM could improve on, however, is customization and luxury stratification. The 8800-series phone for executives/enterprise customers along with the more consumer-focused 8100/Pearl are their bread and butter, and their 8300/Curve is their entry on the modern design front. Of all these, the 8800 series carries the most cachet; it makes a statement that the user is an important person who needs to be constantly in touch. No wonder business-savvy stars like Paris Hilton, John Mayer, and Lindsay Lohan are die-hard fans.

However, more could be done here. The 8800 series is pretty boring…it’s metallic/black/grey reflective finish is all business, and RIM could take cues from Vertu in the styling/materials department and offer BlackBerries made from carbon fiber and leather to satisfy the highest-echelon of luxury buyers. It could be a halo product, just as we see in automobiles.

Goldstriker just answered my prayers with its platinum and nightfire leather edition housing for the BlackBerry Pearl. It’s not cheap, however, at $1,600.

Really, RIM, you should jump at this. Think Black MacBook (charge more just for a subtle design change that only a few will notice), but in your pocket. Instead of $1,600, charge $100, and mint money with it.

Goldstriker Blackberry pearl platinum & nightfire leather edition - LuxuryLaunches

Triumph At The Border

I was vacationing in Whistler last weekend, luxuriating in a hottub overlooking beautiful mountain vistas, while residents of Gaza had their electricity and water cut off. Quite the striking dissimilarity of situation, no?

Today, hundreds of thousands of Gazans broke through the border to Egypt with the help of Hamas’ explosives, allowing them to flood into Egypt to stock up on necessities in border towns to return home. Luckily, Egypt allowed their safe passage. This comes as a victory for Hamas (as interpreted by Gazans, at least): it solidifies the view of Hamas as the protagonist and Israel the antagonist. Really, this recent conflict is too complex to be summed up in a sentence (or even a paragraph), and even taking sides is difficult because both sides are seemingly so culpable. It all depends on which side of the fence you sit.

Israel is in a really tough position here. They’re at war (both ideologically and militarily) with Hamas. If they allow Hamas to fire Qassam rockets without retaliation, it would signal an admission of weakness. If they retaliate strongly, with a ground invasion force, they’d be labeled a brutal invader. And if they attempt to starve Hamas by closing the borders, Gazans will find a way through and Hamas will claim victory.

This episode shows that you can’t fight an idea, a belief, or a religion with a blockades or bullets. And that’s not good news for Israel.

Saudi Arabia Steps In The Right Direction

I can’t believe the laws in some parts of the globe. In Afghanistan and ultra-conservative Saudi Arabia, you cannot print out documents off the internet that are anti-Islam without being punished with the death sentence. In Saudi Arabia, women aren’t allowed to drive, vote, or testify in court.

One of these injustices is about to change.

Courtesy of MotorAuthority:

“The Saudi government has succumbed to public outrage and is now planning to lift the ban [on women driving]. The ultra-conservative law was first introduced when the Saudi Kingdom was established back in 1932 and it’s still being supported by the royal family.

But women have been protesting the law for years by driving through the Islamic state in full defiance of threats of detention, reports the Daily Telegraph. Those against the lift say the move “will only bring sin” and that the “evils it would bring - mixing between the genders, temptations, and tarnishing the reputation of devout Muslim women - outweigh the benefits.” Government officials, however, have confirmed the landmark decision and plan to issue a decree by the end of the year.

Other asinine laws making it harder for women to start their own businesses or to own certain assets will also be overturned.”

Let’s hope this goes over without a hitch.

Mental Note: Do Not Print Stuff From The Internet In Afghanistan

Rural WiMAX Already Profitable

Posting from Whistler so I’ll keep it brief:

As I’ve argued before, WiMAX is going to see the most success in emerging markets, and areas in which wired broadband doesn’t see big penetration (i.e. outside of cities). In those situations, WiMAX’s property of having 1/10th the network build cost gives it a big advantage.

This is no secret to DigitalBridge Communications, whose WiMAX network in Rexburg, Idaho is already producing cash-flow-positive results according to CEO Kelley Dunne. In an interview with GigaOM’s Paul Kapustka, DigitalBridge’s CEO describes their strategy of building around Clearwire and Sprint, aiming at underserved markets with 150,000 residents or less. This means little to no competition in both wired and wireless broadband services, as 3G data networks still haven’t done the buildout to small towns.

This strategy is blatantly superior to that of Clearwire’s, who is swinging for the fences by taking on hundreds of millions in debt and has yet to see profit. Investors seem to agree with DigitalBridge - they’re just raised a B series round of funding of $20 million to fund its buildout to 15 more small towns.

In defense of Clearwire, their coverage map shows that they’re also taking a shot at second-tier cities, with places like Roseburg and Medford, Oregon.

Clearwire, XOHM, DigitalBridge: game on.

Amazon Changing The World, One Over-Regulated Country At A Time

Hopefully, Amazon can strike down ridiculous laws like this one and allow the free market to deliver to the people what they demand.

Courtesy of Ars Technica:

A French appeals court in Versailles ruled that Amazon.com was violating the country’s 1981 Lang law with its free shipping offer. That law forbids booksellers from offering discounts of more than 5 percent off the list price, and Amazon was found to be exceeding that discount when the free shipping was factored in.

The company was told to discontinue the offer within ten days or pay a daily fine of €1,000, and an additional €100,000 to the French Booksellers’ Union for the court battle and for the losses it had apparently caused them. With the ten-day grace period over, Amazon has officially announced its plan to ignore the court order and pay the fine instead.

Amazon can do so for 30 days (€30,000), but after that time the court will review the fine. They could raise it, or they could lower it, but given that Amazon has chosen to flip the justices the bird, guess which outcome is more likely? At some point, if Amazon doesn’t change its ways, the fine will probably be jacked up so high that the company has no choice but to comply.

Jeff Bezos, Amazon’s CEO, has taken to the virtual airwaves to rally the French public in support of Amazon’s free shipping. He sent out a recent e-mail to French customers in which he claimed that “France would be the only country in the world where the free delivery practiced by Amazon would be declared illegal.” He then asked people to sign an online petition that has so far garnered more than 120,000 signatures.

It’s a bold and potentially antagonistic move for an American company to make, but Amazon is serious about its free shipping. Judging from the response to Bezos’ e-mail so far, so are Amazon’s customers.

Cadillac Is Back On Its Feet

This car is simply beautiful.

It’s got classic new-CTS flavor, attitude, and even some G35 Coupe proportions at the rear quarter panel.

Also, they’re going to be rolling out a 550-hp CTS-V Coupe, which is going to blow the doors off just about everything on the road.

Kudos to Cadillac for building cars that people will buy.  Other manufacturers ought to learn something from this.

Cadillac Drops the CTS Coupe concept in Detroit - Motor Authority

High Prices = More Enjoyment.

Restaurants charging inflated prices for wine could be doing their customers a favor: a study has found that people who pay more for a product enjoy it more.

Researchers discovered that people given two identical red wines to drink said they got much more pleasure from the one they were told costs more. Brain scans confirmed that their pleasure centers were activated far more by the higher-priced wine.

High Price Makes Wine Taste Better - The Times

Zacks Slips Up

Zacks, a respected equity research house and fund manager with a stellar track record for performance, recommended on December 28th buying Chipotle Mexican Grill shares, which have since fallen more than 26% value in only 7 trading days.

Here’s their admittedly short recommendation:

“Aggressive Growth – Chipotle Mexican Grill, Inc. (NYSE: CMG) Chipotle Mexican Grill is serving up spicy earnings. Its latest quarter registered 75% earnings growth as more customers visited its burrito restaurants. Same-store sales grew at an awesome 12.5% rate during the quarter. This year’s earnings estimates have increased 13 cents to $2.15 per share over the past 60 days. Analysts expect over 27% growth next year in earnings.”

Now, because this only covers two weeks’ as a sample, it’s not entirely representative of Zacks and their overall record. However, this buy call on CMG shows the downfall of buying what Zacks calls”Aggressive Growth”. Being valued into the stratosphere and approaching the sun, it’s easy for the wax holding your wings together to melt.

Let’s learn more about the Zacks Rank:

“Since 1988, the Zacks Rank has proven that “Earnings estimate revisions are the most powerful force impacting stock prices.” Since inception in 1988, #1 Rank stocks have generated an average annual return of +32.2%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 129% annually (+5.3% vs. +12.1%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.”

Sounds impressive. Let’s see how they got their numbers:

“The performance of the Zacks Rank portfolios shown above for annual and year-to-date periods [...] assume monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios.”

Wow. Zero transation costs. How genius! Zacks’ modeling of real portfolios is just SO accurate, because everybody knows that trading stocks is free! Wait-

So Zacks assumes monthly rebalancing to come up with these theoretical returns. Monthly rebalancing is great as a risk management tool. It scoops up your gains monthly, limiting downside exposure to high-flying growth stocks, and scoops up more value by doubling-down on positions that have lost money. However, this increases your turnover and your transaction costs, which are-SURPRISE!-not even taken into consideration by Zacks.

They’d have more credibility if they modeled their portfolio’s historical/theoretical return with conservative average transaction costs for each period. Obviously, transaction costs have gone down since 1988, but they’d make a very big difference on the final results, especially when adjusting for the compounding of the transaction costs on performance.

I wish everyone were that straightforward, but it appears Zacks is more interested in getting attention and generating buzz than being honest about their theoretical historical returns.

Zacks Buy List Highlights: Chipotle Mexican Grill, Joy Global, Mechel OAO and AVX Corporation

A Perfect Storm

I sure do love when I see stocks dropping into the red; for me, that irrational selling only represents more opportunity for me to scoop off the table. I believe equity markets have bottomed, and that a perfect storm for equities has formed.

Why are equities poised to outperform their historical returns in 2008? First, we’re lucky enough to come into the new year amid a huge selloff. On January 4th, 2008, the S&P 500 was already down 3.86%, its 2nd worst start ever. Pundits fear recession, economists point to sour jobs reports, and the non-treasury debt market’s gridlock has derailed private-equity financings and corporate debt issues alike.

Risk-averse investors have fled equities and just about everything else for the safety of treasuries. When the desperate hordes mob the 30-year and concurrently bring down its yield, they form the basis of a Slingshot Effect: at some point, those who flocked to treasuries will inevitably chase higher returns in a mass exodus to underpriced equities, slingshotting equity prices higher along with treasury yields.

When equities show signs of health, vanilla bonds (and later exotics) will start trading again, then finally at some point, banks will be able to hawk debt for private equity deals again.

These financial crises are always temporary.

Will you be prepared when the Slingshot Sheriff comes to town?

Note: My prediction that we’d reached the bottom of the price slide was well timed; the next day after my note was published, the indices were in positive territory for most of the day, when they collapsed and ended up closing down 2.36% (Nasdaq) and 1.84% (S&P 500). It just shows how notoriously difficult it is to call a top or a bottom, and how difficult it is to predict the future in general. Noted.

CES Highlights, Day 1

Here are some of the sweetest things intro’d today at CES:

LG Vista UMPC 

Sandisk 12GB MicroSDHC card, instantly turns your MicroSD-slotted mobile phone into 1.5 iPhones, in storage at least.

Alienware Curved 900 x 2880 OLED screen 

Motorola gives us the scoop on two phones (widely expected, but nevertheless cool devices).  The Z10 banana-slider, the first of its form-factor, was made famous recently when used in the highest-altitude call made on Earth, atop Everest.

Nothing of importance really from Nokia or Sony Ericsson, but Panasonic made up for them by intro-ing a 150″ plasma.  Hotness.

Debt Crisis Eerily Similar To 1998

From page 159 of Roger Lowenstein’s When Genius Failed (contextual note: this account describes the liquidity drought in 1998 after the Russian debt default):

“Spreads on investment-grade bonds exploded upward - on that one day-from 133 points to 162! In truth, such spreads had to be inferred, because almost nothing in bond markets traded that day. The bond market had effectively closed; no one could trade out of anything, or not without suffering horrendous losses. It was as if a bomb had hit; traders looked at their screens, and the screens stared blankly back. Buyers were simply no where to be found [...] The month had ended with the most nightmarish kind of bond market imaginable: no bond market at all.”

Remind you of any other liquidity crises?

OQO Outs Sprint’s Lifeline: Embedded WiMAX

Sprint, notorious for poor customer service, its historical poor reception (I’m aware they have a top-notch EVDO data network), and being an also-ran in general, may have just had its prayers answered by a niche UMPC manufacturer, OQO.

OQO’s announcement of it’s Model02 coming with integrated Sprint XOHM WiMAX service offers Sprint an opportunity to bundle WiMAX service with devices, a major coup over Clearwire, it’s WiMAX competitor, which has had trouble selling WiMAX service to consumers through traditional channels.

Intel (who is planning on including WiMAX on its premium laptop chipsets) and Motorola (maker of the WiMAX modem hardware are also pushing XOHM, and are working with Taiwanese ODM ASUS to include WiMAX as an option on most of its laptops.

If Sprint can pull this off (launching XOHM to fanfare, winning consumer and enterprise clients), it’d certainly bolster Sprint Nextel’s stock price, which is in need of a shot in the arm. Sprint Nextel Corp (NYSE: S) is down more than 43% from its high of $22.87 last June, and it’s sold off so hard that many value investors have been calling the fall an overreaction. Today, Sprint closed higher, a major development considering this has happened only 4 times in the last 20 trading days. Perhaps the value investors will be right on this one. Sprint sure has fallen hard.

OQO Demonstrates World’s First Ultra Mobile PC with Embedded Mobile WiMAX for Sprint Xohm Network

Verdadero éxito empresarial

“Se que hago bien mi trabajo cuando puede desconectar un mes entero y cuando vuelvo todo esta igual o mejor que antes de marcharme.”

Via El Blog Salmon.

George W. Bush Goes To Jerusalem

On his trip to Jerusalem, George will stay at the King David Hotel - best known for getting blown up by Jewish terrorists in 1946. Members of the hardline Irgun group, opposed to British rule over what was then known as Palestine, disguised their explosives in milk jugs and destroyed a wing housing British offices, killing 91 people.

Real safe choice, George.

Don’t think Bush is going there alone - all 237 rooms at the hotel are booked for his entourage. His own presidential choppers will be flown in from the U.S. on Air Force cargo planes, along with armored limousines—complete with District of Columbia license plates—vans filled with high-tech communications gear, and other vehicles for a heavily-armed counter-assault team.

In addition, Israel is doing their part to protect America’s leader. They’re spending $25,000 per hour on his security, and mobilizing fully one third of the entire country’s police force to protect Mr. Bush.

George travels deep, like a gangster.

Jerusalem Readies For Bush’s Arrival 

New Handsets Leak: Bhupinder Panesar, You’re Fired.

The Boy Genius was sent a boatload of screen captures from a confidential Vodafone Powerpoint presentation of their future product pipeline. Bhupinder Panesar, Vodafone’s Enterprise Portfolio Manager, has either had a security leak, or leaked the Powerpoint for publicity. Either way, it’s done wonders for our understanding of what’s coming up in the global handset market. The highlights:

The big announcement here is fast connectivity - and lots of it. Plenty of these devices support HSDPA at 3.6Mbps and a few even 7.2Mbps.

Also, this confirms the direction that RIM’s 8800-series replacement is going in, and it’s not good. They just bred an 8800 an an iPhone, and got this ugly thing. That’s not innovation, RIM. Perhaps I’m a bit biased - I believe that the 8830/8820/8800 is the best looking phone RIM has ever produced.

I’m really excited about these HP phones - HP recently put out some gorgeous PDAs (I secretly wished they were phones!) and HP came through! They seem to follow the same design language. If only they could hire their designers out to RIM and keep the enterprise handsets beautiful.

Tim Sykes Is An Idiot

One of the most lampooned people in finance, Timothy Sykes, has just made a mistake that ensures nobody will take him seriously.

For those of you who don’t know Tim, he’s a pure technical analysis trader who makes money trading charts.  Technical analysis has merit because it’s the study of visual representations of the the market’s psychology - essentially graphs of market sentiment.  If you find a way to interpret the data, building a system of buy and sell triggers that produces gains time after time and in the long term, then congratulations.  Welcome to systems trading.

Value investing is also a system, no different in many ways than technical analysis.  You’ve got rules.  You’ve got research to look at (financial statements as opposed to charts), and you make your decisions on when to buy and sell according to rules that you set out in advance.  Though specific strategies may vary, the basic mantra has stayed the same since Bejamin Graham was around.  If you buy stocks when they’re cheap, or when they’re selling for less than what your research indicates is the business’ true value, you’ve scored a bargain that will more often than not be rewarded with a gain from the market’s realization that they’ve overreacted in a selling-spree.

The real truth is that both fundamental analysis and technical analysis have their merits, and are best used together.  The amount you choose to blend is up to you: I pay very  little attention to technicals, instead only consulting charts for an entry/exit point.  Also, investors on both sides need to have respect for one another, because, in the end, they’re just trading different systems.  I admit that others can make money continuously trading technical indicators, and by the same token, they should also admit that my business (fundamental analysis) has plenty of merit.

Mr. Sykes, however, has no respect for his value-investing brethren.  He doesn’t know a thing about the businesses he sporadically buys - he cares only about the shape of it’s recent price chart. Dealbreaker pointed me to a diatribe that Mr. Sykes posted today on his website that included an exchange between himself and a value investor.  Mr. Sykes asked the value investor to read his book and possibly write a review.  The value investor read it and liked it, but opted not to review it because he felt doing so would promote technical analysis, which he doesn’t agree with.

I encourage you to read the exchange; the value investor represents exactly what I would say in such a conversation, and Tim Sykes comes off alarmingly like Britney Spears: saying outlandish things for attention but having little or no substance - not to speak of his lack of connection with reality.

Why Value Investors Are Little Sissy Girls - TimothySykes.com 

Global Crisis: Food Shortage Edition

“It’s not a matter of if, but when. It’s going to hit this year hard.”

BMO Financial Group global portfolio strategist Donald Coxe says that the sharp rise in raw food prices in the past year will intensify in the next few years amid increased demand for meat and dairy products from the growing middle classes of countries such as China and India as well as heavy demand from the biofuels industry.

“The greatest challenge to the world is not $100 oil; it’s getting enough food so that the new middle class can eat the way our middle class does, and that means we’ve got to expand food output dramatically,” he said.

The impact of tighter food supply is already evident in raw food prices, which have risen 22% in the past year.

Mr. Coxe said in an interview that this surge would begin to show in the prices of consumer foods in the next six months. Consumers already paid 6.5% more for food in the past year.

Wheat prices alone have risen 92% in the past year, and yesterday closed at US$9.45 a bushel on the Chicago Board of Trade.

At the centre of the imminent food catastrophe is corn - the main staple of the ethanol industry. The price of corn has risen about 44% over the past 15 months, closing at US$4.66 a bushel on the CBOT yesterday - its best finish since June 1996.

Forget Oil, The New Global Crisis Is Food - Financial Post

Unethical Ways Of Measuring Hedge Fund Performance

I just read a list over at FINalternatives Hedge Fund and Private Equity News of the latest Dow Jones Top Hedge Fund Trades List.

The list, as I read it:

THE BIG TEN: Top Hedge Fund Trades of 2007

1. 1. Atticus Management: Freeport McMoran Copper & Gold
      Profit: $800 million
   2. Pershing Square Capital Management: MBIA Inc. and Ambac Financial
      Profit: more than $500 million
   3. Tontine Partners: Foster Wheeler
      Profit: $426 million
   4. Atticus: Union Pacific and other U.S. railroads
      Profit: $387 million
   5. Maverick Capital: First Solar
      Profit: more than $350 million
   6. Glenview Capital Management: Crown Castle International and American Tower
      Profit: $319 million
   7. Dawson-Herman Capital Management: CF Industries
      Profit: $160 million
   8. Meditor Capital Management: Onyx Pharmaceuticals
      Profit: $155 million
   9. Tremblant Capital Group: Chipotle Mexican Grill
      Profit: $95 million
   10. Shunway Capital Partners: United Therapeutics Corp.
       Profit: $73 millionsource: Dow Jones Hedge Fund Trades

This list is useless, and, once again, Dow Jones uses garbage methods.  For one, the top trades aren’t measured by an appropriate metric such as percent gain but rather amount of dollars made.  This list just encourages hedge funds to take more irresponsible bets using either increasingly concentrated positions, more leverage, or volatile derivative products.  Surely the additional volatility and risk inherent in this game is detrimental to investors, and the market system as a whole.  The list is also slanted towards huge hedge funds with over $2 Billion in assets - how could a $200 million fund make it to this list without using ridiculous amounts of leverage?

If Dow Jones wants to rid itself of its image as a firm stuck in the past whose market measurements are antiquated (price-weighted averages?  Come On!) they’ll need to devise rankings and indexes that measure fairly that which they set out to.

Like Looking Into A Mirror

While reading When Genius Failed, I came upon a passage that almost exactly describes me:

“A devotee of baseball and cars, he studiously memorized first the batting averages of players and then the engine specs of virtually every American automobile. [...] When he was an undergrad, another interest, investing, blossomed.”

He also studied Economics as an undergraduate. His name is Robert C. Merton and he is a mathematics genius whose contributions to derivitives valuation are un-rivaled (he completed the Black-Scholes puzzle, but graciously allowed them to take credit, for they set the stage by starting the quest to value options).

Perhaps there is something all baseball-stats and car obsessed boys have in common. It would make for an interesting study (no doubt Merton’s father, a renowned social scientist in his own regard, would have loved to head up.)

Policy Outcomes More Important Than Means

The greater good is often more important than the means. That’s the lesson being dealt with in many high-profile flicks in theaters now: Charlie Wilson’s War, I Am Legend, and Gone Baby Gone.

In Charlie Wilson’s War, a high-level debate over the Soviet invasion of Afghanistan pits freedom-advocate against pacifist, and, as we now know, the freedom-advocates won, along with Afghan sovereignty. The policy outcome (an independent Afghanistan) was more important than the means (secretly arming and training mountain rebels).

In I Am Legend (SPOILER ALERT) Will Smith’s character gives his life to ensure safe passage for his cure for a disease that had ravaged the planet. The outcome there is clearly more valuable than the one life (his) given up in exchange.

The ethical dilemma makes the movie in Gone Baby Gone. The main character is confronted with an account of a police officer raiding a drug den. He knew it to be a den of heathens who should be in jail, but he found no evidence to convict anybody. He planted evidence (herion) on the ringleader. Planting evidence is just plain wrong, but the officer’s reason was more complex, and arguably benevolent. The ringleader had a child. His home was an infested drug den full of misanthropes and didn’t serve as a hospitable environment to raise any child, least of all a young one. By sending the criminal to prison, justice would be served because the child would have a chance at a normal upbringing with a foster family.

If you had the choice between sending a child into an upbringing full of drugged-up criminals or gently modifying your story and bringing the child into a safehaven, what would you do?

If you really want to see the pain wrought by these so-called “white lies”, do yourself a favor and go see Atonement. Sometimes, a white lie can kill.

El nuevo bolívar fuerte no es ni fuerte ni nuevo

Hay un cambio en Venezuela de su actual moneda, el bolívar, por una nueva llamada el bolívar fuerte.

“Que el Banco Central de Venezuela repita su mantra “Un Bolívar fuerte, una economía fuerte, un país fuerte”, no quiere decir que llamándolo bolívar fuerte y quitandole tres ceros, han creado una moneda fuerte y que su problema de la inflación está resuelto.

Deberían tener más cuidado con su utilización de las palabras.

Sólo la política económica correcta valdrá para que la economía se estabilice, y no hay bolívar fuerte que valga. La inflación seguirá subiendo porque así está la política económica y así están las expectativas inflacionarias, y no hay bolívar fuerte que valga.

El bolívar fuerte es fuerte en nombre solo.”

Via El Blog Salmon.

University of Washington Upholds Privacy

Kudos to my alma mater University of Washington for refusing to pass on RIAA prelitigation letters to students.  The RIAA’s contention that one IP address constitutes one specific person is ridiculous, and I’m glad the University understands that establishment of identity along with a demonstrable link to proof of wrongdoing is a prerequisite to litigation.

Golf claps.

Another School Says “No” To RIAA Prelitigation Letters - Ars Technica

IBM: Posterchild for Responsible Health

A while back, I caught an episode of Dateline (or perhaps another similar program) that had a feature on one of IBM’s fantastic incentive programs for employee fitness: they pay their employees to go on walks at lunch. It just plain makes sense: IBM spends upwards of $2 Billion annually on healthcare for their workers. By incentivizing exercise (to the tune of $130 million paid out so far), IBM shaves a larger amount off its healthcare bill than the initial outlay of the incentive. In addition to the measurable decrease in healthcare costs (some $390 million so far), the exercise increases productivity, reduces stress, boosts overall mood, increases concentration, boosts metabolism, reduces food cravings, stimulates the immune system, and strengthens the heart. Some of these benefits are easily measurable and show results immediately, others such as improved heart-health will show their benefits over decades and will result in decreased risk of heart disease.

Stefanie Chiras works for IBM. She gets an additional $150 in her paycheck for tracking her eating habits online and losing weight.

“When I reach for that next unhealthy thing, I think, oh, but I have to log it in to the tool.”

The incentive sure seems to work for Stefanie.

My question to you is this: does your organization incentivize a healthy lifestyle? If not, why?

Companies Rewarding Workers’ Healthy Habits - WCBS TV