Bill Hicks was all attitude and owned the stage everywhere he played. Listening to him, you’d think this routine was brand new, not recorded 30 years ago.
Yes, I think you wield lots of power buying derivatives — essentially things that don’t exist. And yes, Buffett once said they were a bad idea but is now invested in them. That doesn’t mean he’s contradicted himself, however. If I say biting your toenails is a bad idea and you go ahead and do it anyway, why can’t I profit from it in some way (if we both agree I’m allowed to)? Imbeciles of the Internet: derivatives were not Buffett’s idea. He just saw an angle and profited from it. THAT’s HIS JOB.
2. On Moody’s.
Charlie Gasparino, speaking on Fox Business, says Buffett owns Moody’s even though he believes the ratings agencies are a sleazy business. “That takes Warren Buffett down three notches in my book,” he adds.
Mssr. Gasparino, are you kidding me? Value investors invest in companies they believe to be of good value (i.e., cheap). Moody’s was a very profitable and undervalued company at the time — according to its numbers. Now there’s a question of fiduciary duty that Buffett has — or anyone in charge of a company has — to make decisions for the benefit of the company and not any one particular individual. If Buffett did not invest in a company he thought would be highly profitable because “he didn’t like the business,” that would be a breach of fiduciary duty.
Imbeciles of the Internet: running a business is about mathematics, not feelings. If the numbers work, proceed. If they do not, do not proceed. If that system is abused, you put regulations in place. Business is not charity, it’s commerce. I might not, for instance, like the idea of using monkeys for research, but that would never preclude me from investing in a biotech start-up that used them in their research, because I am investing in VALUE, not opinions. Can we invest in what we believe in? Absolutely… but with our own money, and NOT WITH COMPANY MONEY.
Warren Buffett was always more of a myth than anything else. Before recently at least, he seemed to have a stature that transcended his extraordinary wealth. He seemed to be the voice of reason in the markets – the person who wanted to make money in the right way. Somehow in the last month, however, Buffett has gone from being the authority on value to defending some of the most dysfunctional and socially worthless elements of the global financial system. It’s funny how heroes end up cutting themselves down to size even when no one else can.
Bond Girl, by “value,” we mean market value, not family values. You’re getting these confused here. Buffett did not create the markets; he only invests in them, like everyone else. Once you put your money in something then yes, you must defend it, because you have a duty to your shareholders to defend your decision to invest in said something. You might not like how things work in the markets, but your personal feelings about the markets should not affect your duty to your shareholders — ever. Buffett did the right thing at the time in respect to the data available to him. That’s just good leadership.
Buffett received a lot of press in early May for defending Goldman Sachs at Berkshire Hathaway’s annual meeting, directly after the SEC sued the bank for securities fraud. I found his enthusiastic and unqualified support for the firm somewhat jarring because I had not met anyone else willing to offer the same. Most of the people in finance that I know at least lamented the fact that such deals were becoming synonymous with the finance industry as a whole and that they were perceived as guilty by association in the popular consciousness. Most people seemed to acknowledge that even if Goldman’s behavior was legal, it was not particularly ethical and not the way one would want to run a business. But there was Buffett, saying that if he has to pick a successor for Blankfein, he’d want Blankfein’s twin brother.
Most people? Have you ever run a business? Running a business is about making tough choices. And sometimes, you get a break, you see an angle. When you do, you take it. Now I’m not talking about stealing, but if Zappos, for instance, decided to price all their shoes below wholesale for one day, and you knew about it, you should take advantage of their mistake — THAT’s BUSINESS. Period. Not good business, not bad business, but business itself.
And it’s not like Buffett stopped there. Buffett not only defended Goldman but the Abacus transaction itself, which offered no value in the markets generally and was indistinguishable from gambling. The WSJ quoted Buffett as saying “it’s a little hard for me to get terribly sympathetic for a bank that made a bad credit deal.”
Exactly. If a bank, or any business for that matter, makes bad deals, they should not be in business. It is not for you to pass judgment.
Today, Buffett decided to defend Moody’s Investors Service. Curiously, Buffett did not make the same argument with respect to Moody’s as he did with the banks – that is, that they should have recognized a bad credit deal when they saw it – because… Well, I’m not sure… What function are rating agencies supposed to serve again?
Instead:
“I’m much more inclined to come down hard on CEOs of institutions” that needed to be bailed out by taxpayers, Buffett said today at a hearing of the Financial Crisis Inquiry Commission in New York. [Wait, you mean like the ones whose credit derivatives were backstopped by taxpayers at par? I thought we wanted to hire them or their twin brother.] Managers at Moody’s “made a mistake that 300 million other Americans made,” he said.
I’m not going to say that ratings analysts represent the sharpest minds in finance, and I’ve said in the past that credit analysis can be very subjective, but the rating agencies’ decision to stamp pretty much anything with an AAA rating was hardly just an intellectual accident and, more importantly, this behavior did not end with the financial crisis.
Buffett makes sense here. If your business is to gauge creditworthiness, and you fail to do that job well (despite having tools in place to do so), it’s a problem with management and you need to fix that problem (and that DOES NOT always mean you fire the person responsible). This is a very basic rule of business. Service at the local diner shitty? It’s a management problem, not a waitstaff problem or a line cook problem. This is very clearly the opinion of someone who doesn’t know what it’s like to run a company.
Nevertheless, your logic sounds good to me, Mr. Buffett. My next-door neighbor’s opinion about the relative creditworthiness of a security is not used as a standard in financial regulations. Moody’s opinions shouldn’t have that status either.
I agree with you here, Bond Girl. The problem, however, is that industry standards prevail on Wall Street. You have a problem with that? If you do, then it’s regulation you seek, not finger-pointing at people who don’t really deserve it.
Buffett is that rarest of institutional shareholders: someone who actually owns and runs lots of large companies of his own. As such, he can and should act much more like an owner than most shareholders. But he doesn’t, and he has no visible desire to fix the problems at Moody’s or at the ratings agencies more generally. He just says he wishes he’d sold his Moody’s stock earlier, passing on those losses to some other sucker. I don’t think he’s ever going to be able to live this one down.
Mssr. Salmon, do you know what it’s like to own a company? If you do, you’d also understand the importance of installing a good management team and giving them room to do their thing. That’s what Buffett does: he lets management manage. In other words, he does not micromanage, as you are prescribing here. Or, in other words still, Buffett is not an imbecile.
And why are you such an asshole? Do you know how many people in the world would’ve liked to have sold their home at the peak of the market, “passing on their losses to some other sucker”? He got caught in the mess, like so many of us. Should we all be judged by you?
A couple of years ago I applied for a Marshall Scholarship and, in the application, there was a section that asked you to detail the languages you speak. This is what I wrote:
They say if you speak three languages, you’re trilingual.
If you speak two, you’re bilingual.
And if you speak one, you’re American. I am an American.
Cherie, my good friend from Singapore, told me that this one joke probably sank my application, because the British don’t laugh during working hours.
Vanity Fair has posted an entertaining feature/excerpt about Michael Burry, medical doctor AND hedge fund manager. It’s a unique angle from which to explore the sub-prime mortgage crisis (Burry was one of the few who made money on that play), and explains in simple terms how Burry gamed the big players on Wall Street.
This ability to work and to focus set him apart even from other medical students. In 1998, as a resident in neurology at Stanford Hospital, he mentioned to his superiors that, between 14-hour hospital shifts, he had stayed up two nights in a row taking apart and putting back together his personal computer in an attempt to make it run faster. His superiors sent him to a psychiatrist, who diagnosed Mike Burry as bipolar. He knew instantly he’d been misdiagnosed: how could you be bipolar if you were never depressed? Or, rather, if you were depressed only while doing your rounds and pretending to be interested in practicing, as opposed to studying, medicine? He’d become a doctor not because he enjoyed medicine but because he didn’t find medical school terribly difficult.
That last post was probably unfair to TED, which I think is generally awesome. There are some great talks I’ve looked at recently, and I want to let you know about a few of them here.
The first is by Simon Sinek, who has a really clever concept about how to think about life and meaningfulness in general:
Saul Griffith and his kites:
And Richard Dawkins, always a favorite to listen to amongst men of the book:
“What’s this?” he’d ask, rubbing the tips of his shoes together. “A black guy taking off his condom.”
Which reminded me of the Coolidge Effect, which is where mammalian males and females engage in lots of sex if presented with new, willing partners.
The term comes from an old joke, according to which U.S. President Calvin Coolidge and his wife allegedly visited a poultry farm. During the tour, Mrs. Coolidge inquired of the farmer how his farm managed to produce so many fertile eggs with such a small number of roosters. The farmer proudly explained that his roosters performed their duty dozens of times each day.
“Tell that to Mr. Coolidge,” pointedly replied the First Lady.
The President, overhearing the remark, asked the farmer, “Does each rooster service the same hen each time?”
“No,” replied the farmer, “there are many hens for each rooster.”
“Tell that to Mrs. Coolidge,” replied the President.
As a side note, let me mention the Bruce Effect for a moment. This is seen in lab mice, where a pregnant female will abort or reabsorb the embryo when exposed to the pheromones of another male. Nitric Oxide (NO), if you didn’t know, will counter this effect if administered before exposing the foreign pheromones — as if to say (mouse) sex can be replaced by an injection.
A week later and I’m in London with this terribly catchy worm digging a hole deep in my ear. It’s Lady Antebellum’s Need You Now, which is a hit in the US, but hasn’t yet reached the UK. And I’m telling you, it’s like coming from the future: you know it’s about to be released and everyone will like it, but no one knows it yet.
OK. You’ve been asking for me, whether it be to review your project or interview your someone or have tequila shots with you. Now is the time.
I’m in New York from the 5th to the 17th. I have to go to Boston on the 13th or so, since I have an interview on the 14th (PhD positions…) and would like to see my advisor, Dan Wegner, for a bit. If you’re around, you should call me on the New York line. Better yet, send me an e-mail.
I learned this weekend that Bratislava can be seen in a day. Salin found a great deal on the Falkensteiner Hotel, something like $125 for the both of us for two nights. It was fantastic. Great multilingual TV selection, clean bathroom, comfortable sheets, and a rooftop gym that overlooks the castle. (There is also a business center that overlooks the castle.) Everything within walking distance, including a large Tesco.
What to do? Devin Castle (the locals say “hrad”) was worth the trip; 70 eurocents from the city. We didn’t buy a return ticket and got stuck a bit when we went hiking along the river that surrounds Devin. Lesson: buy a return ticket.
We also tried to go to Hainsburg, Austria for a day, but we didn’t do enough pre-planning to make that happen. (We went shopping in the new mall they built along the river and watched Legion instead; good movie, three stars.) If I would go again, I would plan a day in Bratislava, then maybe two days in Vienna, reachable by train from Bratislava.
It’s my opinion that the London - Stansted airport Terravision bus should only be taken if Easybus is unavailable. Why? Because Terravision doesn’t mind having its buses come late. And 10 minutes is not very late indeed, unless it’s 11pm and you’re trying to make the last tube run at Liverpool street.
And that just happened to me. Terravision is ostensibly cheaper, but you end up paying more (18 pounds for the taxi, to be exact.)
It’s not that I don’t like to add new posts — I do — but unlike so many of my peers, I don’t think highly of blogging. It’s cheap writing. And it doesn’t matter if the writing is beautiful — the writing is cheap because there’s no paper involved. Your head doesn’t hurt from the thinking, the depression, the investment. There’s no paper with which to create the story. Instead, it’s the internet, where pseudo-stories — of Tiger and Paris and Britney — change with the weather. And that’s sad, because I’d love to say we once aspired to something more than celebrity gossip, but I don’t think we really ever did.
That said, I’m done with scanning and back to writing. And boy does my head hurt…
For parents who do not speak English — at Stuyvesant, perhaps 5 percent to 10 percent — the process is all the more discomfiting. Stuyvesant, a school of 3,200 students, has seen its Asian population soar to 70 percent
I just returned from Canterbury. Not my first choice of destinations, but I have insomnia… and when you’re that tired and on the internet, you buy tickets for all kinds of things. (Last week, I bought a ticket for a seminar on bridges…)
Canterbury is the kind of place you go to whittle away a few hours of your life, if for no other reason than to look at old stone walls and eat bad Chinese food. I spent the day walking around the marsh, which I enjoyed (because I’m easy like that), and looking through army surplus and, finally, taking an hour-long punt ride down the Stour river. That ride was especially hilarious. Here’s a guy with a big stick pushing a 20-foot boat, with just me in it, reclined, upriver. Now this guy is working up a sweat because the water is unusually fast today. We’re crawling, inch by inch — slow enough to count blades of grass on the bank — and small children walking by are asking their mothers why I’m laughing so hard.
“Is there a place on earth left for me?” I wonder. My life is transient, peripatetic. Is there a home, like Carolina:
Perhaps not. But I’ve never been known to be sentimental (admittedly, however, I am — especially about weekends in Central Park, afternoons in Tannens, and those early travels to California, when work was less burdensome and, sadly, profitable) at least, not the way James Taylor seems to be.
But this isn’t really about James Taylor, or, at least, it shouldn’t be. It’s about finding a home. Someplace that doesn’t seem so ridiculous or crowded or frustratingly wet as the world often seems to me. But that might be metaphorical: we sometimes substitute places for things, like people, and, I must say, I haven’t seen many of the people I care about in a long while. (Which one can argue is the point of Fire and Rain.)
When I lived in Cromwell, a town of 10,000 in nowhere, Connecticut, I was in a marching band. I played tenor sax with Rosario, a gelled Italian kid with a mouth full of braces, who was a great friend of me, teaching me the greatest lesson I ever learned about woodwinds: flat is fuck, sharp is shit. Rosario explained that if the notes are sharp, it means “shit,” and you have to pull the mouthpiece out a bit, because shit comes out. (Fuck, if you’re not aware, means shoving it in.)
And those dazzling spats you see in the This Too Shall Pass video are similar to what I wore to keep horse shit out of my shoe many a time (bands love marching behind horses, everywhere, in every event, and the fat tuba girl gives you the evil eye whenever you’re out of step, and that’s scary enough to keep you from jumping or sidestepping the steaming poo).
Which speaks nothing of how I am now. I eschew rigidity and conformity (I am, after all, a hypnotist who cannot sleep).
I cannot say much for the song, which I think is just “fair” in terms of artistic merit (”it was a good try”), but this Gaga video, my god, what a vision. It’s one of those things that you’re going to think about decades from now.
The Replacements certainly did that with their anti-video for Bastards of Young, which, to me, is like a revolt against the visualization of music, something once revolutionary itself, but had quickly become commercialized, rigid, conformist. (The Lady Gaga video, in contrast, seems to be a comment about the ridiculousness of our pop-obsessed culture.)
And why the analysis… why the music? Well, Kurt Vonnegut says music is proof that god exists. I don’t know about that, but I’ll agree music is indeed proof that something exists. Hope. That the sun will rise tomorrow. That grapes grow sweeter after some rain.
It’s all part of a home experiment he is conducting in a form of year-round, sustainable agriculture called aquaponics — a neologism that combines hydroponics (or water-based planting) and aquaculture (fish cultivation) — which has recently attracted a zealous following of kitchen gardeners, futurists, tinkerers and practical environmentalists.
A couple quick video explanations makes it more clear:
In interviews, the 32-year-old Mr. Mayer comes across as somewhere between boyish and immature—self-absorbed, a little goofy and every now and then overly earnest. (Perhaps in answer to Rolling Stone’s question, his handlers declined to make him available to the Journal.) On stage, as he was here earlier this month, in the formal kickoff of a tour of the U.S. and Canada that runs into mid-April before he travels to Europe, Mr. Mayer has the opportunity to get down to business. Anyone who doubts he can do it hasn’t been listening.
That’s what I’ve been saying of Mayer for years. Here’s a guy with a great set of skills and artistic ambition but puerile and weak in mind — he has absolutely no idea how to mine his potential.
The Huntsville Times has identified the likely shooter in the University of Alabama shootings: Amy Bishop, a Harvard-trained neuroscientist.
At Harvard, we learned quickly that all female graduates are cursed: too smart to keep good men, too in-their-own-heads to get out of their own way. Assuming Bishop is the shooter, we can surmise that she felt she was doing the University of Alabama a favor by teaching there — “Deny me tenure? You looking to die today?”
Everyone in the NY real estate game knows it’s controlled by a handful of powerful families. The NY Times takes a look inside, and lets us know how they’re doing in the recession.
What distinguishes the families from other real estate players is that they buy property but rarely sell. They usually have relatively low levels of debt on their buildings, and they do a couple of projects every economic cycle rather than go on a binge, a practice adopted after bitter experiences with a deep recession in the 1970s. The families’ supremacy was challenged in the 1990s by the rise of publicly traded real estate companies and private equity firms. Land and construction prices began to soar, raising stakes for anyone undertaking a big residential or commercial project.
