Monthly Archives: March 2013

Barry Ritholz of The Big Picture blog posted a BuzzFeed article called 35 Astounding and Uplifting Facts About The Universe.  All 35 are pretty good but the ones below really stuck in my head.  Yes, they could be cheesy posters in a stoner’s dorm room but they’re interesting thoughts nonetheless.  Also, I have no idea if the numbers presented are accurate and I have no intention to check – enjoy them at your own risk.

… that’ll push your wig back.

Runner up: Who Ate The Internet?


Below are a few excerpts from Tim Duy’s article about the strength of the economic recovery.  Go check out the full article, charts included, here.

The economy has proved to be very resilient.  We have weathered external demand shocks, external financial crises, and even fiscal contraction, and all the while economic activity continued to grind higher.  Looking back, it seems that the biggest risk the economy faced was the Fed’s start/stop approach to quantitative easing.  That problem appears solved with open-ended QE linked to economic guideposts.

At the risk of sounding overly optimistic, I am going to go out on a limb:  The recovery is here to stay.  Not “stay” as in “permanent.”  I am not predicting the end of the business cycle.  But “stay” until some point after the Federal Reserve begins to raise interest rates, which I don’t expect until 2015. This doesn’t mean you need to be happy about the pace of growth.  But it does mean that a US recession in the next three years should be pretty far down on your list of concerns.

His take is based on strength in (1) industrial production, (2) retail sales, (3) the housing market, and (4) employment.

What does this mean for the market?  Good question, nobody can be sure – but its certainly possible to see equities contract while the underlying economy continues to improve.  Just read the previous posts highlighting John Hussman’s bearish take on the markets.  Whatever the markets do, lets hope the economic recovery stays intact and at least provides a buoy should Mr. Market freak out.

Also, lets take into account the forward looking nature of equities, after all any real investor worrying about fundamentals should be thinking a minimum of 3-5 years out (despite the majority of Wall Street focusing on the next quarter or two).  This will put fundamental / value investors in the uncomfortable position of factoring in the Fed’s exit well ahead of the rest of the market, if not already.

Tim’s bottom line:

Bottom Line:  The US economy is less fragile than commonly believed; it has endured a series of shocks over the last three years without major incident.   I am claiming neither that equity prices won’t stumble, nor that we should be happy with the pace of activity.  But I do think that a recession is unlikely before the Federal Reserve begins raising interest rates – something not likely to happen for two years.  While long-run predictions are dangerous, for the sake of argument add up to another two years for tighter policy to reverberate through the economy and you are looking at sometime around 2016/2017 when the next recession hits.  That’s the timeframe I am currently thinking about.

Nice infographic from the WSJ for their article on messaging apps – check it out here.  They say that on average few app developers make much money, which was a surprise to me.  Every startup I’ve worked with / talked to over the last 2 years routinely complains about a shortage of talent – mobile app development is particularly problematic because you have to develop for multiple platforms (iOS, Android, and to a lesser extent Windows, and Blackberry) you’re not just designing one web page accessible by any device.


app developer

A very sobering infographic carrying a lot of information.  Can you imagine if you had to carry all the water you used?  Also, the cost of providing global access to safe water is only $30 billion?

I know, that is a large huge number but when you put it in the context of the things our government wastes money on, it could easily fit in.  When you consider the Iraq war cost us between $3.2-$4 trillion it really puts this number in perspective – we could have provided safe drinking water to everyone on earth 106 times over for that cost – or completed the project one time for what about one month in Iraq cost us.  Now that would win some hearts and minds.  I digress.

SO – if you’re fortunate enough to be Water Rich try to take shorter showers, fix your leaky faucets, and don’t over-water your lawn.  The more you save, the cheaper your beer will be.

Infographic Water Rich Vs PoorSource: Seametrics

Found via Coolinfographics


Last week I highlighted John Hussman’s contrarian view of the market.  Hussman’s market commentary this week is full of more pearls of wisdom that are worth highlighting.  And no, he has not turned bullish:

The present environment is characterized by unusually overvalued, overbought, overbullish conditions, with rising 10-year Treasury bond yields, heavy insider selling, valuations on “forward earnings” appearing reasonable only because profit margins are more than 70% above historical norms (fully explained by the negative sum of government and personal savings as a share of GDP), with the S&P 500 at a 4-year market high, in a mature market advance, with lagging employment indicators still positive but more than half of all OECD countries already in GDP contraction, Europe in recession, Britain on the cusp, and the EU imposing massive losses on depositors in order to protect lenders in an unstable banking system where Cyprus is the iceberg’s tip. Investors have assumed a direct link between money creation and stock market performance, where provoking yield-seeking and discomfort among conservative investors is the only transmission mechanism of a nearly-insolvent Fed. Investors have assumed that stocks can be properly valued on the basis of a single year of earnings reflecting the benefit of massive fiscal deficits, depressed household saving, and extraordinary monetary distortion – when the more relevant long-term stream of earnings will enjoy far less benefit. Historically, extreme overvalued, overbought, overbullish, rising-yield syndromes have outweighed both trend-following and monetary factors, on average. For defensiveness to be inappropriate even in this environment, investors must rely on the present instance to be a radical outlier.

I especially like his notion of “The Hook”, a term that appears to be coined by Richard Russell:

“Every bull and bear market needs a ‘hook.’ The hook in a bear market is whatever the bear serves to keep investors and traders thinking that everything is going to be all right. There is always a hook.” – Richard Russell, Dow Theory Letters, November 2000 (S&P 1400)

The “hook” today is the dramatically elevated, deficit-induced level of profit margins. While the complete faith of investors in the Federal Reserve may prove to be the hook for ordinary investors, it’s not enough to draw in more careful observers. The real hook, in my view, is the absence of a bubble in any individual sector, and instead a bubble in profit margins across the entire corporate sector. That is the hook that serves to keep investors and traders thinking that everything is going to be all right.

Buyer beware.  Do yourself a favor and go read the entire piece here.


“Everybody’s got to find their own way. Listening to me, maybe it’s fun, maybe it’s boring, who knows, you’re not going to succeed until you find your own way. I mean if you’re a musician you’ve got to find your own sound, your own way. Great musicians through history were the people who had their own madness, and were proud of their madness, especially if it was not what everybody else is doing. Well, the same is true of art, literature, politics, finance…especially finance. Yeah, you can copy other people, and many people do, that’s why everybody invests in the same thing, and that’s why it winds up being a bad investment. No, you’ve got to figure out your own way, no matter how absurd your way may sound, especially if your own way sounds absurd to others, you should pursue it even harder. You can learn from other people, but don’t try to be like Joe or Sally, try to be like yourself.” – Jim Rogers in Investor Guide

Found via Jim Rogers Blog



Shrewd or spirited initiative and resourcefulness.

This morning Sir Richard Branson blogged about a glass bottom boat startup he loaned money to in the British Virgin Islands.  The bulk of his short post is about the startup and his plans to continue to fund startups in the BVI.

What struck me most about his post was his first paragraph: “It takes gumption to become an entrepreneur. You need to show initiative, bravery and resourcefulness. You also need a lot of help along the way

I’ve often thought about the most important qualities of an entrepreneur but to me, gumption might be the most important.  It’s not always the smartest or most well funded that survive; it’s the shrewd, resourceful, and dedicated.  While those qualities don’t guarantee success I would argue they’re fundamental to it.

You show me an entrepreneur who has made it without gumption and I’ll show you one lucky bastard.

For those of you who don’t stay up to date on Ag related investing, farmland has been absolutely killing it:

There are a few structural drivers behind this and it’s expected they’ll remain strong tailwinds for the asset class:

  • Global Population continues to increase – more mouths to feed (increasing demand)
  • Maxed out Crop Yields – for a long time the amount of crops we were able to grow per acre of land increased with population growth – we became expert farmers and were able to squeeze more and more out of the land (see chart below – this also explains why everything you eat today is made from corn) that increase in yield is starting to stall (squeezing supply)
  • Reduction in arable land due to development (squeezing supply)

So how do you get on the Farmland gravy train?  Besides buying a farm outright you can invest through the new platform Fquare.  It appears to be a crowdfunding platform designed to give accredited investors diversified exposure to US farmland.  Unfortunately their website falls well short of answering even the most basic questions of how the platform works.

I don’t know enough about Fquare to endorse it or not – I only mention it here because (1) it appears to be a cool confluence of agriculture and technology, and (2) I haven’t posted anything about Ag investing until now.