wcgortel

Congratulations on your launch! Well done. A great idea that needed to happen. Looking forward to kicking the tires on it.

You may be interested to read the other guy's take on that bet. One of the more interesting reads on the business of running a hedge fund I've seen.

http://blogs.cfainstitute.org/investor/2015/02/12/betting-wi...

(Disclosure: I work at CFAI)

It really depends how you use it. "Technical analysis" refers to techniques that are as disparate as "cooking". There is evidence of some technical stuff being quite valid--the relevance of momentum to returns, for example--but there are also plenty of people who misuse it.

My own view is that it's a window into the pricing process and adds depth to the practice of reading the market that many analysts go through. Ignoring technical analysis when looking through charts is kind of like watching TV in standard definition instead of HD. Even though it's kind of still the same thing, I enjoy it.

You might dig this article on the economics of star trek. It's kind of an inquiry into what currency might look like in an era of abundance.

https://medium.com/@RickWebb/the-economics-of-star-trek-29ba...

I just updated with a couple more grabs. I don't want to pull the full article, but I added in the FT's long time series chart of income inequality and conclusion though.

Posted links to piketty's response and more detailed explication of the issues on my blog: http://wcgortel.com/pikettys-problem

FYI, with charts like this it's kind of important to do some quantitative work, not just take a look. Check out this taxonomy of charts:

http://blogs.cfainstitute.org/investor/2013/05/15/an-r-squar...

Thought this might be a useful addition to the discussion about "is the tech market in a bubble?"

If you're going to talk about how over/under/fairly valued these companies are, it seems necessary to me to ask questions about their competitive position.

The snapchat valuation seems lofty (and I wouldn't defend it) but I could see it as reasonable if an investor believes that they have a reasonable chance of continuing to cement their competitive advantage. They are stealing market share among youth from facebook, and could extend that into a relatively meaningful and durable business once they begin to advertise.

Note that Facebook has begun effectively monetizing its mobile users: it's possible. This is probably not the right space to launch into some detailed work on Snapchat, but I doubt the valuation is driven by "lol IDK" idiocy on the part of the group backing them.

Yeah, there are a lot of unstated premises here.

Volatility is important to option valuation but the mechanics of real option valuation (what we are talking about) are materially different from black/scholes. In fact, black scholes is more descriptive of option trading than predictive of option valuation. Since there needs to be an active market for this to be relevant, I wouldn't use it for thinking about startups.

That said, these highfalutin financial concepts are definitely applicable to startups, but really the question is "what do you think the terminal value of your startup is?"

If you think you have a shot at owning a big chunk of a billion dollar company, the value of that shot is:

(Probability of success) * (Terminal value)

If the undertaking has a 1% chance of being worth 1,000,000,000 and 99% chance of being worth nothing, then the whole opportunity is worth about ten million dollars.

So, yeah. Volatility doesn't matter all that much. Also if you are doing a Startup because of a black scholes model you are probably insane.

Many businesses have characteristics of ponzi schemes without being ponzi schemes. You're right that there is a bright line distinction in some places (i.e., if there is actually a fraud), but why is it wrong to bring up that there is a resemblance in some way?

I'd probably also note that the JOBS act, while it does give additional opportunity, doesn't do much for your ability to assess an opportunity. My colleague Jim Allen gives a good overview:

http://blogs.cfainstitute.org/marketintegrity/2012/09/07/job...

The value of lean in is almost unrelated to anything except for it's author's gender. Most of this stuff has been said before. There are tons of career books, and she cites a lot of existing research.

It's valuable because it shows a career track to women in technology, which is undoubtedly a male-dominated field. It also repackages a lot of existing knowledge into a format that is accessible to ambitious young women.

It's valuable because it allows me to talk to my sister about how she perceives gender issues. She is a mechanical engineer, and without having a common language it would be difficult for me to relate my career to hers.

It's valuable because my girlfriend can pick it up and use it to develop an understanding of how she fits in the workplace. Having a reference text allows her to interface with peers and build a dialogue.

When I first started editing inside investing, I realized something about two days into the job: we commonly conceive writing as the pursuit of truth through argumentation. In many cases, that is patently wrong. Most writing serves to stoke conversation.

All of this discussion--whether it suggests males are intrinsically different or that there is more to women's pay and achievement gap in terms of social dynamics--is the point of the book.

All of this criticism is valid, but guess what--did the book get you to think about women in the workplace? Have you considered how you behave in relation to your female colleagues and employees as a result of reading this book? If so, it's done its job.

What do you think about the CQF?

Just a quick NB here: I installed the 'churnalism" add-in that was talked about here a few days ago, and it popped up with a note that some of the text had appeared in a press release from the British Medical Journal.

In this case, it is no big deal, but what a cool use of technology to inform and extend our knowledge.

Very difficult to imagine another cause. 100 point drops are not standard, and this one happened right after the "news" broke.

I don't think that definition helps much[1].

For one, arguing that the cause is usually central bank inflation would eliminate a great deal, including the dutch tulip bubble.

What about bubbles that took place before central banks existed or were powerful?

What about bubbles that had nothing to do with inflation like the tech bubble?

Must other markets remain stagnant to satisfy this definition of bubble? What if one market goes up a little, and another goes up a lot?

If there is an underlying cause, how can the movement be "for reasons unknown"?

Can bubble tendencies occur in only one direction? Is it not possible to have a bubble in negativity towards something?

[1] I may be an armchair economist, but my armchair is located at a large academic institution.

Generally in financial time series, any exponential growth is indicative that something is growing "too fast." It has a better than "pure luck" shot at being right eventually when applied to stocks, but is misapplied when used on fiat currency....There is no constancy underlying the asset.

Of course...in order to prove something was a bubble you'd have to define "bubble" which is surprisingly hard.

This is a very interesting use case, particularly in investment analysis, my area of specialty.

The problem of obscure, rarely updated blogs with fantastic information (but no reader base) is plainly evident here. I can think of a blogger who is a fixture on "who's who" lists, but publishes a blog so ill-trafficked you can hear the crickets chirping. There are hundreds of these guys.

I'm at work on a finance-specific version of this. Hopefully we can announce something before the readerpocalypse.

By nature this will work better--or at least be most available--working at companies with established headcount needs and turnover. Think of "analyst" programs at investment banks.

I agree though. It'd be cool if I could be sure that the period had value.

Oh heck yeah...the S&L "debacle" was outrageous AFAIK. I was ~ 2 years old when it occurred though, so can't really comment in depth.

I retained counsel and ultimately left the firm to work in the investor education department of an NGO. I had a conversation with a regulator, but it was clear that they were neither serious about pursuing it or adequately staffed to do so.

I would agree with you that it's reasonable to expect that to be a conversation that would result in your desired outcome. There are a few technical things at issue.

Again, I agree this is broken. My only point is that saying things are "fraud" is harder than I think you expect.

The problem is that saying "I want X% return with Y risk, show me suitable investments" introduces two problems. The first is that risk is not easily quantifiable[1] and also that there are likely many things that are plausibly suitable for that requirement.

If you are dealing with a salesperson, they are required only to present stuff that has a reasonable likelihood of meeting your goals.

If they're working with someone who is a fiduciary, that fiduciary is required to do the extra analysis, but many people are not lucky enough to work with folks who are held to that higher standard.

In my view, every consumer when transacting with every salesperson should use their own judgment to make sure that the products they are being sold are sensible and suitable for them.

Failing to do that -- to just walk into a store and buy what the salesperson (not your personal shopper or your sister or someone who actually cares) says is best -- is just a bad idea.

I hope that adds some clarity as to where I'm coming from.

[1]Quanta exist, but are not comprehensively descriptive. Any metric will not comprehensively describe risk, especially because there are behavioral factors (your own changing attitude towards risk over time) that need to be incorporated into a thoughtful assessment.

Point one is really good. I like your way of thinking.

I've got to say that the problem for me comes down to one of competence versus theivery. I don't think that the guys I worked with were outright thieves. I do think they were not especially competent in recommending investments.

These guys are salesmen. They could be selling you printers, but they're selling investments instead. They really are not paid to understand the stuff...they are paid to move product.

When I say that the consumers are equally complicit, what I really mean is that in many cases they just listened to a sales pitch and accepted it as truth.

Not to say that there weren't defrauded consumers or evil salesmen. I'm sure there are individual cases of fraud. I just think it's a really complex system with overlapping spheres of incompetence that defies easy characterization as "fraud" or "not fraud."

We can strenuously agree it's broken though.

I'd say similar in intent to those funds, but starkly different in terms of execution and associated risks.

A target date fund approaches your goals by varying the percentage of the portfolio invested in bonds and cash.

My approach doesn't rely on those fixed income instruments to mitigate risk, so isn't exposed to rising interest rates as directly.

In short, it's a new kind of target date fund (in a sense) that is smarter in the present environment.

My thing takes your investment capital and cohorts it sensibly against your time horizons.

It's new. A lot of what you get from an is along the lines of "Oh, you want this money in seven years huh? You should probably just buy a bunch of bonds." That's crazy. A .15% change in interest rates will wipe out a year's worth of interest on the long bond.

My thing is an invented modification of a CDO/CLO that keeps your global risk sensible while making sure that your short term objectives are preferentially met. It also makes really customized risks available at almost no cost.

It's cool. PM me for details.

I mean, you're justified in a way. I don't think it's fraud though. Consumers are equally complicit.

What I mean by that is that as the buyer of a product, you usually would go out and read the reviews, kick the tires, etcetera. At this time, many buyers of investments didn't do that at all.

Our sales guys didn't understand the product for sure, but if they had a customer who asked the right question they would have arranged a conference call with me or a colleague, no issue. That happened like, one time.

I think the concern that my firm had at this time was principally related to the likelihood that emails like this would hit the public domain at some point.

Edit: shameless plug. My stealth mode thing should change this a little bit (for certain investors).

I sent a similar email to the CEO of my bank in 2007 -- there was a product I was involved in that (it was clear) was not understood by our sales force or by our investors. I'll spare the details, but I was called into his office and reminded that the "e" in email stands for "evidence."

Would love to make it out to this, but am in another class on Mondays. Looks worthwhile though.

Fair point, but I'll note that Mr. Smith didn't manage $1T, rather he had clients who had an asset base at that level. That could mean "manage" but could also mean "I have spoken to people who manage."

Back when Mr. Dodd was in office, I and others referred to him as "the Senator from AIG." Though his recent comments set off a firestorm, I am more interested to see that relationship examined in full daylight.

As wonderful as this is, we've got to remember that tweets are only a symptom of success. We've got to continue translating virtual action into actual action, like the NY Tech Meetup did today.

Even with that, I'm familiar with at least one SOPA agnostic who walked right by without noticing them. This still doesn't feel life and death to the Bobs and Marys around the country.