The Stalwart

Bring Out The Pre-Cogs

It's safe to say that the war on speculation has now officially entered the realm of Minority Report:

Bloomberg: CFTC to Examine Oil Traders' Intent, Ex-Officials Say

An investigation of oil trading by the U.S. Commodity Futures Trading Commission will likely target evidence that traders intended to manipulate markets rather than just schemed to make money, former officials of the agency said.

That being said, Minority Report was a great movie.

Bear Stearns' Chinese Wall

So Bear Stearns is no more and everyone on the company's distribution list (for research reports) got sent a letter saying that that was all over. Anyway, speaking of the separation of church and state (research and banking), the report included this down at the bottom:

Bear, Stearns & Co. Inc. Ratings Distribution as of March 31, 2008: Percentage of BSC universe with this rating / Percentage of these companies which were BSC investment banking clients in the last 12 months.

Outperform (Buy): 45.8 / 14.1
Peer Perform (Neutral): 46.0 / 9.6
Underperform (Sell): 8.2 / 9.9

Nothing about those numbers really strikes me as anything, but it's interesting that they're included. Would definitely love to get those numbers for all firms going back several quarters. Surely there's some fun in there.

The Right Wing And Its Political Correctness Problem

The term PC or politically correct has always been a phrase with so much baggage and weight that it's totally unusable in any meaningful way -- usually it tells you a lot more about the user (that they're a jerk and an idiot) than who it's being used to describe. That being said, there was probably a moment, perhaps in the early 90s, when the term had some descriptive value when talking about a certain strain of leftism that, shall we say, was all about not offending anyone.

After thinking more about this whole Kaffiyeh/Rachael Ray epsisode, it's pretty clear that whole notion of the politically correct has migrated rightward. Suddenly it's the folks on the right that find offense at everything. They don't like that someone is wearing a certain scarf in an ad (the outrage!). They don't like that a particular company advertisers in Spanish (¡que horror!). They don't like that Obama doesn't wear a dumb American flag on his lapel pin (what a commie) or that Hillary Clinton comes off as a phoney at a NASCAR event (she's a tea-sip, obviously).

All of the sudden the right in this country has become so fragile that everywhere they look, they see something coronary inducing. Everyone else has to walk on eggshells around them, and worry that we're not being, well, politically correct.

William Bennet wrote a book awhile back noxiously titled The Death of Outrage. Sadly, that appears to have been way premature.

Reminising On The Bubble OR Thinking About The Separation Of Church And State

Preface: The bubble of 1999-2000 was really good to me. It allowed me to pay for college and because of some incredibly fortuitous timing and circumstances beyond my control, I didn't lose everything I invested.

In a post on SAI yesterday, Henry Blodget talked a little history, explaining why he held a 'buy' rating on shares of InfoSpace even as he was dissing it privately. His basic point: He thought it was a buy, and didn't want to drop the rating near the bottom, compounding the mistake.

The first commenter on the post trots out the conventional reading of history, that the buy ratings were a function of the banks i-banking relationship with InfoSpace. The basic response to that: Everyone had the same attitude, even mutual funds were loading up the boat with this stuff, so it can't be all about specific interests.

It's a good point. What we know for sure (pretty sure, anyway) is that lots and lots and lots of folks were sippin' the codeine cough syrup those days. Not just analysts, but mutual funds, pension plans, companies' own directors, mom & pop investors. I know I was... or at least I tought there'd always be a greater fool. All but the most radical fundamentalists of the efficient markets movement would concede that it was an almost inexplicably maniacal time.

If you've read The 'Wart for awhile, you can probably guess my attitude towards Eliot Spitzer's then attack on Wall St. and analysts like Henry. I thought it was total bullshit at the time and I still do. But there's always a witch hunt, because without finding a handful of folks to blame, then we just have to admit that we were the dumb ones, and it was pretty much our fault for getting greedy and reverting to our lizardoid brains.

All that being said, I do think that the connection between analysis and i-banking created conflicts. I doubt it's a real complicated actually--I'm sure there's been academic research that's proven or disproven the notion empiricially. I doubt it'd be that hard.

My own hunch is based mainly on anecdotal evidence, so feel free to disregard. Back in late '99 I was a shareholder in Spyglass. They did stuff with the earliest browsers, and was one of the early companies pushing for stuff like internet on the mobile handset and internet over the TV. Back then they called 'em "internet devices" (non-computers that could access IP). Basically, the company was not only too early, but because of the technologies they bet on, they weren't even at the right dock, when the boat did leave the harbor. Ultimately, they got bought out within days of the bubble's peak by OpenTV, another company basically in the same situation.

That was a real frustrating stock to own. At the time it had the best fundamentals (by far) compared to its publicly traded peers: Phone.com and Liberate (a spinoff of Oracle, iirc). Having recently IPO'd, Liberate and Phone.com were market darlings, helped by their much lower float than Spyglass', which had been around for a few years. But really, their revenue picture and path to profitability was a lot worse than Spyglass'. But there was no justice at the time. Also, Phone.com and Liberate got way more analyst coverage.

I used to watch CNBC in the morning, when the dude standing in front of the NASDAQ TV screens would list some of the upgrades that morning, and invariably, every few days I'd hear... "Some positive comments out of CSFB this morning on Liberate." And the stock would pop like 20 percent and I'd go nuts, yelling at the TV: "That was the effin' bank that underwrote their IPO and their the only ones that keep boosting this POS!" And Tom Costello, standing there at the NASDAQ Market Site would just keep on keeping on, totally ignoring my please. Spyglass got upgraded maybe once every 4 months, and it was usually by some firm out in the Midwest (Spyglass was based in Illinoi) that nobody had heard of.

Also, it's worth adding that the relative underperfomance of Spyglass lead to a particularly noxious environment on the Yahoo message board, but that's another story.

Anyway, so I always thought there was a conflict of interest at CSFB, but mainly I thought about it because it made my investment look bad (relatively), but I don't really know what was going on with them. I was just a kid, you know?

So thinking back, yeah, there was probably some sleazy stuff going those days, but the notion that the lack of a Chinese Wall between banking and research was somehow core to the problem is incredibly absurd. And of course the "fixes" have really had no effect, as the latest bubble (and burst) has demonstrated.

It's kind of like that short story The Lottery. Somebody must get stoned... or apparently keelhauled.

*Hey look it's a disclosure: Blodget's site is obviously a competitor to my own employer, paidContent, though I don't think anyone would read this and think that was biasing my views in some way. Personally, I think most disclosures these days are a waste of time/garbage/just an excuse to name drop. But that's for another post.

Online Calendar Bleg

I think I can confidently say I've reached adulthood: An online calendar has become an indispensible part of my life.  I used to skate by without keeping a schedule, basically keeping it all in my head, or occasionally through disorganized notes to myself, kept in various places.

So now I use the Google Calendar, which does the basic job, sending me alerts, etc. Given my space cadet-ish tendencies, I have it so that every event sends out a million alerts, just so I can't forget.

But it still feels a bit disorganized... can anyone recommend some good apps or hacks that they use alongside GCal to make it more productive? I'm sure there's a lot more I could be getting out of it, beyond just entering in stuff and having it send me some email/SMS alerts.

499,992!

Last I checked, this here 'Wart was just 8 unique visitors away from cracking the 500k mark all time. It could've happend a lot earlier had I kept things up non-stop all these years, but hey... I'm still proud. On to 1 million.

And who will be Mr. 500k?

The American On Oil

Interesting article in one of my favorite publications The American on the direction of oil prices. This has become an enormous obsession, in party because, well, as is at $130/barrel, which is awkward, to say the least. From the piece:

In their state of forgetfulness, many pension funds and insurance companies have built up very large open positions in the oil futures market. These positions are now estimated to total over $200 billion, roughly the equivalent of a full year of Chinese oil demand. They have contributed to the recent spectacular run-up in oil prices.

And:

Past experience suggests that if the recent run-up in oil prices is sustained, it alone will subtract more than a full percentage point from U.S. GDP growth in 2008. That experience also suggests that, over the longer haul, the recent doubling in oil prices will subtract another full percentage point from U.S. GDP growth beyond 2008. Since these oil price increases have occurred in the context of a housing bust and a credit crunch, one must assume that the U.S. economy is facing the real risk of a recession that is both deeper and more protracted than the postwar average. And if the recent spike in oil prices threatens to tip the U.S. economy into recession, just imagine what a further run-up in prices—say, to the $150 to $200 a barrel range—would do.

Fred Wilson On Healthcare Privacy

Okay, so this is waaay late to this discussion, but I wanted to make a comment on a recent blog post from VC Fred Wilson about making his medical record public. Basically he carped that Google Health didn't have a way to make his record available for public viewing. Lots of folks thought this was totally bizarre and couldn't understand the point he was making. Why would anyone want to give up their privacy on such a sensitive matter.

Everyone seemed to miss the point of what he was saying though. This had nothing to do with making medical records public, it was about pushing for universal health insurance. One way to get to a single payer system would be to render the existing system unworkable and one way to render the existing system unworkable would be to eliminate any privacy and/or asymmetrical information. If everyone that ever had a canker sore or bad eyelid twitching were denied care or required to pay sky-high premiums, the current furor over our medical system would be increased ten fold, hastening the day that single payer cames to this side of the Atlantic (and this side of the US-Canada border).

It's hard to see why everyone missed this, cause he lays it out pretty clearly in his post on the subject. Also, I still don't see what's stopping Fred from just C+Ping his record into a Google Doc and posting it online, if that's really what he wants.

In Case You Missed It

Dunkin Donuts Pulled The Rachel Ray ad mentioned below. Score one for Michelle Malkin and the whole "we get outraged about every little thing" crowd.

Kaffiyeh Chic: I'm So Behind The Times

I'll freely admit to being late to picking up on styles. Anyway, as we were walking through the city this weekend, I commented to my wife that I'd been seeing a lot of trendy girls lately wearing scarves that looked like Kaffiyehs, the headresses favored by Palestinians, like Yasser Arafat. I don't really care about the political undertones (if there are any) at all. Snooze.

But interesting to see that right winger Michelle Malkin now freaking out because Rachel Ray appeared in a Dunkin Donuts ad in some neck scarf that appeared to be a Kaffiyeh. Some other right-wing bloggers all in a huff as well, though then again that's what those guys do best: get outraged over shit most people don't care about.

Anyway, turns out it's an old trend. NYT was talking about it in February of last year. And given that NYT is always about 2 years behind the trends, then I must be about three years in not picking up on this one.