tpeng

It's true that the concept of moderation doesn't prescribe specific targets. It only excludes extreme targets.

The two rules that you really can bank on are that calorie intake is directly linked to weight loss/gain, and you need a certain amount of protein and fat to maintain or build muscle. That being said, protein needed for survival is minimal. Other dietary parameters will affect long-term health, but laypersons are so inundated with misinformation that it's better to eat a variety of foods in moderation than to adopt extreme diets or novel nutritional theories.

Why are those "one weird trick" ads so profitable?

I have a hypothesis that people focus on magic pills (like fish oil) and conspiracy theories (like sugar toxicity) because it is a welcome distraction from an ugly truth: that in order to achieve their ideal body composition, they just need to be extremely disciplined and hardworking in their dietary and exercise habits, and for the sake of long-term health, they should lay off the junk food. There's no "trick". People already generally know what they have to do, but they pretend to themselves that they don't, because if they know what they have to do and fail to do it, that's indicative of personal weakness. It's cognitive dissonance.

Popular and consensus opinions in nutrition (including those ostensibly backed by science) are overturned all the time. Just look at historical views on saturated fat, GI, cholesterol, etc. etc. That's why the seemingly anti-intellectual advice of "eat a variety of foods in moderation" is actually quite good advice.

If I understand correctly, YC will sometimes ask applicants to return soon afterwards for a second, extended interview. So they don't always make a "yes" decision in 10 minutes, but they can make a "no" decision in 10 minutes, which is quite logical. Think of it as the professional equivalent of a coffee date.

Random thought: Companies like optimizely have key data on its customers (conversion rates) and it may be valuable to a VC to have a board seat / access for the data alone. Not alleging any malfeasance here, just think it is an interesting angle.

I agree that the concept of limited liability is critical to modern capitalism and entrepreneurship, but I think you may be mistaken about the history of companies.

The concept of corporations is based on a legal identity that is separate from any individual. Incorporation historically was a rare grant at the behest of the ruling monarch. This dates back to the Roman Emperors, who granted incorporation to municipalities, guilds, and religious groups. However, these corporations are distinct from what we would consider a company today. The typical business did not have access to incorporation.

Several of the oldest known companies, dating back to the 6th century, were Japanese companies that were family-owned, and were not legally limited in liability. The concept of joint-stock companies is based on transferable shares, and dates back to at least the 13th century. Limited liability was not really a legal concept (separate from royal charters) until the 19th century. The first joint-stock companies in England were unlimited liability, and the public was very much opposed to the concept of liability limitation. However, many joint-stock companies wrote liability limitation clauses in contracts with creditors, and these were considered legally enforceable. In the second half of the 19th century, most European and US states had adopted limited liability laws. Limited liability is a modern concept that has not existed for most of the history of companies.

Commercial banks prior to the 1930s commonly issued assessable stock to their directors and officers -- a form of stock that allowed the corporation to levy the stockholder for additional funds. The liability of the shareholder was therefore not limited to their investment in the shares. With the passage of Glass-Steagall, which established the FDIC, this form of organization fell out of favor as it was assumed that commercial banks were safe and it was no longer needed.

Investment banks continued to be run as unlimited liability partnerships until the 1980s. The partners were personally responsible for all debts incurred by the bank, and unsurprisingly, the banks were very conservatively run. Goldman Sachs, one of the most conservative firms, retained this structure until 1999. What changed was that the NYSE altered its rules to allow public companies to be member firms, and the investment banks decided to go public, converting to C-corps and listing their shares on the stock exchanges. The side effect of these two changes was that the investment banks began engaging in riskier behavior, which almost certainly contributed to the financial crisis of 2008. Post-crisis, the introduction of clawbacks has partially returned the concept of personal liability.

Unlimited liability is not needed or desirable for corporations in general, because market forces can lead to desirable outcomes in an efficient market. However, there's an argument to be made that personal liability could play a role in systemically important institutions, because systemic risk is an externality or market failure which cannot be solved by market forces.

It's not the administrative cost of reporting, it's the cost of having to run your business differently based on being measured quarterly.

Keep in mind that this generation of startups is delaying IPO as long as possible. The main reason appears to be a desire to delay public company reporting requirements, not a lack of capital needs. Since the IPO market remains strong, a set of new investors has entered the market to play this "public/private arbitrage" opportunity, buying private stock shortly before IPO for apparently* sure gains. This group of players includes hedge funds (Tiger Global), mutual funds (TROW), and private equity funds (TPG). Traditional growth-stage funds are starting to pull back as this competition is pushing up valuations. Note that the arb players are betting on near-term market reception to the stocks that they are buying, and less sensitive to absolute valuation. Without commenting on current valuations, I will say that these dynamics certainly have the potential to create significant overvaluation in the private markets.

* I call them apparently safe gains because if the IPO market collapses, these investors will be stuck with some very large, illiquid investments.

Well, to be clear, an asset purchase transaction (ex the Fed) does not change the number of "dollars outstanding" (the money supply). To be more precise in my language, investors prefer holding assets to cash at a specific asset price. The evidence for this is in the rise of asset prices (even more specifically, the rise of multiples, since underlying values change over time). The specific phenomenon you are referring to during the crisis itself is a flight to safety/liquidity, which is unrelated.

I generally agree with fred that monetary policy is driving valuations. However, I think it's not quite as simple as he describes (although he may be intentionally simplifying for his audience).

It's true that financial assets compete with each other for investors. So when the Fed reduces the yield on Treasurys or MBS, the marginal investor will rotate to a riskier asset. This will create a chain reaction that eventually raises equity prices. However, it's not the case that earnings yield (Earnings/price or the inverse of P/E) is going to be equivalent to the interest rate on Treasurys (T-bills). Typically the way that investors think about it is earnings yield = Treasury rate + equity risk premium. So at an equity risk premium of 5%, even a Treasury rate of 0% would result in an earnings yield of 5% or P/E of 20, not infinity. This isn't too far from the market multiple of the S&P 500 right now. (The historical average ERP over the past century has been 4.2%.) So the market multiple implies that the overall market is not in a bubble, but that doesn't eliminate the possibility that some sectors are in a bubble.

The Fed's influence on the market goes beyond their impact on interest rates. One reason for the sharp rise in markets is that investors are fearful of inflation. Although CPI inflation has remained low, investors would rather hold scarce assets such as equities and real estate than a rapidly diminishing percentage of the money supply (i.e., cash) that results from money "printing". While money creation is nothing new, and in a sense, unconventional money creation is not that different than conventional easing, the sheer scale of our current monetary policy is unprecedented. This lack of precedent creates a high degree of uncertainty in the ultimate outcome.

The final reason for the strength of the markets is a widespread belief that the "Fed put" is back. It is almost universally believed that the Fed has taken on a third, unstated mandate of stable and rising equity markets, by easing and talking the market up when it declines. I don’t know to what extent this is true, but the mere notion has created a hidden source of instability in the market by giving investors unusual confidence. While there is no reason to believe that markets will crash, it's also not out of the question.

The Fed has announced that it will "taper" QE purchases from $75 billion / month to $55 billion / month. At the current rate of taper, QE purchases could reach zero by the end of the year. One key question for investors is whether this may reverse any of the three dynamics listed above.

To qualify as a tax-free spinoff, the parent company must own a controlling stake in the company to be spun. Yahoo does not own a controlling stake in either Y! Japan or Alibaba.

However, there is a tax maneuver being considered, called a "cash rich split off" [0]. Yahoo would do a tax-free swap of its Alibaba shares for a 5-year historic business owned by Alibaba. This historic business can have as much as two-thirds of its assets consisting of cash. Warren Buffett did something similar with his shares in GHC.

One question is why did Yahoo not pursue a cash-rich split off in its 2012 transaction with Ali? I would argue that it's most likely for political reasons. As unfair as it may be, the optics of Jerry Yang and Jack Ma teaming up to deprive the US Treasury of tax revenue is very different from the optics of Warren Buffett and Don Graham doing the exact same thing. I think they might still pursue it, just because that's a lot of money to leave on the table.

[0]: http://taxdidactic.blogspot.com/2011/10/yahoo-evaluating-cas...

Would you say that oil companies do not impose environmental externalities, but that the guilt solely falls on drivers who consume gasoline? No, the company bears some responsibility.

As to your second question, this is a public policy issue, and there will be a policy response whether AirBNB likes it or not. I think it would be smart for AirBNB to engage in the policy conversation.

I live in a downtown residential building one block away from a hotel, so that's not always the case. Of course, some communities may choose to prohibit AirBNB altogether.

I think the bigger issue is if the externalities imposed by normal usage are so high that, when properly internalized, AirBNB no longer presents a compelling value proposition in the majority of cases. This is certainly possible.

From AirBNB's perspective, perhaps they just fight the internalization as hard as possible. There are businesses with much costlier externalities, such as energy companies, that are actually subsidized and not taxed. In the AirBNB case, however, they may have a tougher fight as the harm, while lower in aggregate, is also less diffuse.

The issue is not between AirBNB and its customers; its customers can evaluate the risks of renting on AirBNB, and factor that into their rental price, as well as insure for adverse outcomes.

The real issue is that AirBNB also imposes these risks on communities (i.e., AirBNB's customers' neighbors) by exposing them to, in the worst case, criminal elements, but even in a normal case, temporary renters who lack incentive to follow social norms or respect communal property.

This doesn't mean that AirBNB's business can't work, but it does mean that AirBNB needs to work with regulators to find a solution acceptable to the communities in which it operates. Such a solution would most likely be a combination of technical solutions to minimize bad outcomes and perhaps a tax on AirBNB, the proceeds of which could compensate communities for the externality imposed by AirBNB.

While your description certainly can conjure some bad memories, risk pooling per se is a utility-creating activity, and only breaks down when correlations are not estimated correctly. Unregulated markets also aren't necessarily a bad thing, but they do require greater sophistication and caution on the part of investors, due to the greater probability of fraud and promotion. It's important that the angels are sufficiently aligned by having skin in the game and that the method of calculating the carry does not somehow create a principal-agent problem. I am not familiar enough with the product to know if that is the case.

Interesting name for the fund. Maiden Lane LLC was the bailout vehicle created by the Federal Reserve during the credit crisis, named after the street address of the NY Fed.

Most dating businesses are inherently conflicted because a successful outcome (relationship) is a lost customer. Tinder, in the "short term" relationship space, has a unique ability to have happy, repeat customers. 5B still seems like a lot. I wonder if there is a control premium baked into the price; IAC was rumored to have a majority stake already, but it's possible that those rumors were incorrect.

Edit: Sam Yagan says the valuation was not 5B

http://www.forbes.com/sites/jeffbercovici/2014/04/11/no-tind...

If the market were efficient, it would already price in the dilution from newly minted coins, as it does for share dilution in the stock market (which is actually quite common due to employee stock options). However, every indication is that the bitcoin market is not at all efficient. It is largely driven by speculators playing a greater fool game, not investors who are betting on intrinsic value per bitcoin based on a future estimate of coins outstanding. The result has been a series of manias and panics, which will continue until real buyers enter the market.

I was simply pointing out that fairness is a matter of perspective, and in a sense, arbitrary. If I were an HFT I would no doubt think that IEX would be unfair to me.

I will claim that the proposed solution (IEX) creates a fairer market for the vast majority of market participants.

People located in non-US jurisdictions (particularly those countries which have a high level of corruption or can otherwise subvert international judicial processes) have less to fear in the way of legal consequences and therefore the likelihood of fraud is much higher.

I've seen this argument advanced several times now, but it doesn't make sense to me. Looking at the investors of IEX -- David Einhorn, Dan Loeb, Bill Ackman, Capital Group -- these are some very, very smart people. They're not idiots that were sold a bill of goods by a lying, bumbling team of Lewis and Katsuyama. And while they may have a vested interest via their investments in IEX, it's dwarfed by their interest in reducing slippage on their own trades. IOW, it doesn't seem like they are talking their book. It seems like they are really seeking a fairer market. (Obviously, what's "more fair" to one party may be "less fair" to another)

The buy side doesn't route orders. Brokers route orders, and they aren't required to tell their clients where they route the orders. (Some good brokers do allow traders to direct routing, but I believe it's not common).

Also, there is a network effect to overcome here. Try to give IEX more than a few months before writing their obituary. They haven't even fully launched yet (they are still a dark pool)

Only by implication. Calling someone a shill could be considered "only" an attack on credibility, but it's also an implied argument that the speaker lacks the right to speak on that subject.

While it's true that retail flow has no information, it's also true that a broker will obtain better executions if it does not sell order flow to HFTs.

http://www.elitetrader.com/vb/showthread.php?t=245029

https://institutions.interactivebrokers.com/en/index.php?f=1...

Why is this downvoted? There are multiple comments in the article based on racial stereotypes which are not only completely unnecessary but reflect negatively upon the author's judgment and credibility. Very ironic considering the article seeks to suppress Mr Lewis's speech.

I'm not an expert but I believe you are incorrect. What you are suggesting is that the broker could perform a "trade-through", which was allowed under the old ITS rules. Under the Order Protection rule, trade-throughs of even 100 shares are explicitly prohibited. Reg NMS is very strict and that's why it is so controversial. My understanding of Thor is that it does not trade through, but it executes at all relevant exchanges near-simultaneously by delaying order routing to lower-latency exchanges. This prevents HFTs from sniffing your order at one exchange and beating you to the next.

Vanguard is in the business of selling index funds. It's Vanguard's incentive for mutual funds and hedge funds to face unnecessary taxes on their trades. This lowers the returns of active investing versus passive investing. What's bad for everyone else is good for Vanguard.

It's true that IEX is a dark pool, and that other dark pools exist that purport to favor natural traders, but IEX is moving toward an ECN and full-fledged exchange in a staged launch. Other dark pools are highly conflicted, lack transparency, lack technical protections, and the biggest difference is that people seem to trust the principals of IEX and the incentives of the ownership structure.

I will refer you to page 96 of the book. The specific example is 100 shares of MSFT asking $30.00 and 10,000 shares asking $30.01. Because of Reg NMS, your broker is required to take down the 100 shares first ("NBBO"), allowing the HFTs to then start buying the $30.01 offer and front run the remainder of your bid. The problem with this requirement, according to Lewis, is the NBBO is priced off SIP rather than direct feeds. I don't disagree with the literal point that you are making, however, there is no need for this kind of intermediation. Why should natural traders pay intermediaries for this function? Why shouldn't they coordinate on an exchange where they don't face this tax?

The argument from IEX is that the exchanges intentionally price trades using slower data than what they (the exchanges) have access to. We can call it whatever we want, but natural traders would prefer an exchange that doesn't price match in this way, and have every right to move to such an exchange.

http://www.zerohedge.com/news/2014-04-03/bats-admits-ceo-lie...

The specific example given in the book is that an existing ask sized at 100,000 is already sitting on the order book when the buy order goes in at the ask price. The ask then disappears before the order executes. This is very different from the market moving in response to an order that has no market fill.