Quotes of the day

Apple couldn’t have killed Flash if HTML 5 hadn’t recently been adopted by major browsers. HTML 5 offers alternatives to most of the key features of Flash. And no one controls it the way Adobe controls Flash. Since no software company wants to build its products on a standard it doesn’t control, every company other than Adobe has a natural incentive to adopt HTML 5 over Flash.  This brings to mind Jonathan Zittrain’s book The Future of the Internet and How to Stop It. Zittrain warned that the success of the proprietary iPhone threatened to undermine the decentralized, bottom-up structure of the Internet. The Flash story is a useful counterexample to Zittrain’s thesis. On the one hand, iOS is a proprietary standard controlled by Apple, so its ascendancy looks like a threat to open standards. Yet the rise of the iPad was a major factor in the decline of another proprietary standard, Flash.  ... for at least two decades, it has looked like proprietary technologies were on the verge of taking over the software industry. Yet open standards have grown more and more dominant. This hasn’t been a lucky fluke, it’s a matter of basic economics. Proprietary software is central planning. And in the long run, central planning doesn’t work as well as bottom-up organization.--Timothy B. Lee

Trading is about being self-aware to obtain profits in excess of losses. Gambling is about the emotional payoff. ... When a trader lacks emotional intelligence and has no inner voice to listen to, he is more of a philanthropist than a trader. He’s giving money away, so it doesn’t matter who is on the other side of the trade ... [rogue traders] didn’t deliberately trade a Martingale system, but this is what their emotions led them to do, whether they knew it or not. That’s how vicious a cycle it is if you don’t learn to take small losses and flush your ego. Traders don’t think it can happen to them, and then all of a sudden they’re emotionally invested in the outcome of a trade. A trader must detach emotionally from the outcome of any particular trade.--Joshua Brown

You [men] don’t have to take the pill, wear a patch, insert messy rings or go through the hassle of making an appointment with your doctor to change and refill your prescription for said pills, patches, rings and paraphernalia. As for the potential short and long-term health consequences such as nausea, decreased libido, blood clotting, cancer, and infertility? On us. Cervix with a smile. If I didn’t know better, I would say that it’s like men invented birth control. But, of course, that’s just the woman in me talking crazy.--Clare Halpine

... if your blogger was good at forecasting market movements, he would be running a hedge fund, not enduring the daily sardine-like commute on the Piccadilly line. It is that the nature of financial journalism is in assembling evidence from published sources, analysts, fund managers that other people know as well. By the time the evidence of a trend is convincing enough for an article, the trend may well be over.--Buttonwood

[Jamie] Dimon, a lifelong Democrat who was rumored to be on Obama’s short list for treasury secretary before he settled on Tim Geithner, met privately with Romney on Tuesday morning before a fund-raiser at Brasserie 8¹/2 hosted by Highbridge Capital, a JPMorgan-owned hedge fund. Dimon, who was spotted “in a discreet one-on-one” discussion with Romney, cannot publicly endorse a candidate because he sits on the board of the Federal Reserve Bank of New York. But he donated to Democratic candidates in 2008 and privately supported Obama. ... Political insiders are buzzing that a defection would signal further Wall Street hostility toward Obama, who famously called them “fat cat” bankers in 2009. Dimon responded, “I don’t think the president of the United States should paint everyone with the same brush.” One insider said, “There is not a person on Wall Street, with the exception of the genetic Democrats, who would get anywhere near supporting Obama. The hostility to the administration is huge. Dimon will continue to look bipartisan, then work behind the scenes to get a Republican elected.” There were few big Wall Street names openly linked to Obama’s fund-raisers in New York. And we’re told ticket sales for Obama’s Friday event with Warren Buffett have been slower than expected, with staffers calling and e-mailing supporters to shift tickets at up to $35,800.--Page 6

High-frequency traders—often seen as the destabilizing villains of the currency markets—may in fact be helping it to run smoothly, a study by the Bank for International Settlements suggested Tuesday. Many traditional market players blame secretive high-speed traders for "predatory" or "unfair" practices, bemoaning the superfast computers they use to pick out trade signals and exploit banks' often slower machines. Some banks have even toyed with the idea of setting up closed trading systems, where they can trade with one another and avoid these accounts. But in a report based on research by officials at 14 central banks, the BIS said high-frequency traders help to make trading cheaper for everyone by squashing so-called spreads—the gap between where banks buy and sell currencies. High-frequency traders also support liquidity, and don't tend to flee the market in tough times any more often than banks.--EVA SZALAY And JACOB BUNGE

A good corporate board should be characterized by constant tension, with non-executive directors respectfully questioning the decisions of management. This can make board meetings very uncomfortable, especially for young people. Chelsea’s background makes her very well suited to dealing with this situation. So stop your hating, kids.--John Carney

Sometimes, frankly, it seems the Jets organization is afraid of Namath.--Mike Freeman

Photo links here and here.

Quotes of the day

Perhaps when you acknowledge the importance of your own history, you are then more likely to transcend it.--William Easterly

For single male investment bankers, there will be a good male-female ratio for them.--Tami Kessleman

With the bases loaded and no outs Ichiro isn’t trying to hit a home run. He isn’t even trying necessarily to get a hit. Ichiro gets himself in a 1-2 hole and plays into the weakness of a big strong American power pitcher. Schilling is thinking high heat. Ichiro eats it up and sends the ball into deep left field. The at-bat results in an out, but more importantly, it results in a run scored. 1-0 Japanese All-Stars over Americans. Investing is no different. It is a game of repetition where hundreds of small actions result in one larger result. But most importantly, it is a game of risk management. It is not the home run hitter who wins in the long-run. Rather, it is that strategist who devises the best long-term plan who ultimately wins. While hitting home runs is sexy it is rarely a recipe for success in the investment world. Aim high, but play small. Over time, good risk management and patience wins. Power is no substitute for precision and patience.--The Pragmatic Capitalist

Mr. Dimon earned that distinction by playing as much defense as offense during the housing boom, which insulated JPMorgan more than most when the boom went bust. Then, when the bust became a full-blown financial crisis, Mr. Dimon went hunting for bargains, significantly expanding his position in investment and retail banking while others were shrinking. Now, those efforts are paying off. Even with a slowdown in trading, analysts are forecasting a profit of 70 cents a share when JPMorgan reports its second-quarter earnings on Thursday, about the same as a year ago. At age 54, Mr. Dimon has only begun trying to build the kind of global banking empire he initially set out to create with Mr. Weill at Citigroup. While JPMorgan’s share price fared better than most of the banking sector through the turbulence of the last few years, at around $40.35, it remains roughly where it was when Mr. Dimon took over as chief executive in December 2005. And analysts point out that while JPMorgan’s overall operation is in better shape than most, the bank does not enjoy a top position in any single business.--Eric Dash

Quotes of the day

In the year since Lehman's collapse, it's become even clearer that Jamie Dimon was the only chief of a major bank to have properly prepared for the hundred-year storm that hit Wall Street. Starting the year before, his firm had been aggressively dialing back its exposure to mortgages—particularly of the subprime sort—while others were sitting tight.--Duff McDonald

The esteem in which Obama holds Dimon was revealed by The Wall Street Journal's Monica Langley in a story about a March 2009 meeting at the White House. Business executives, she wrote, "implored Mr. Obama to get credit flowing again. 'All right,' the president said. He'd have his people 'talk to Jamie.' " Even today, it's a fair bet that those conversations are continuing.--Duff McDonald

For years now, many businesses and individuals in the United States have been relying on the power of government, rather than competition in the marketplace, to increase their wealth. This is politicization of the economy. It made the financial crisis much worse, and the trend is accelerating. ... President Dwight D. Eisenhower warned of the birth of a military-industrial complex. Today we have a financial-regulatory complex, and it has meant a consolidation of power and privilege. We’ve created a class of politically protected “too big to fail” institutions, and the current proposals for regulatory reform further cement this notion. Even more worrying, with so many explicit and implicit financial guarantees, we are courting a bigger financial crisis the next time something major goes wrong. ... In short, we should return both the financial and medical sectors and, indeed, our entire economy to greater market discipline. We should move away from the general attitude of “too big to take a pay cut,” especially when the taxpayer is on the hook for the bill. If such changes sound daunting, it is a sign of how deep we have dug ourselves in. We haven’t yet learned from the banking crisis, and we’re still moving in the wrong direction pretty much across the board.--Tyler Cowen

Do not do that again, I've warned you. I will take you out.--Secret Service agent to CNBC reporter Bob Pisani

The Rays' opening-day 2008 payroll, $43.8 million, ranked 29th among the 30 major league clubs and came to about 21% of the top spending club, the Yankees, who didn't make it into the playoffs.--Michael Hiltzik

Jamie Dimon and Meredith Whitney

on a conference call earlier today:

But Mr. Dimon was also quick to state that his bank is not cutting back significantly and said he sees the loan market returning to normal in the future.

Ms. Whitney, who has a “perform” rating on JPMorgan’s stock, then asked: “If you really believed that, you would be gunning credit card lines, right?”

“We are not speculators,” Mr. Dimon shot back. (No one on the call challenged him on this point, or at least not audibly.) “We are buying slightly more risky assets and we are growing our business, so we are not panicking.”

Mr. Dimon continued: “Obviously we are trying to modify what is going on — we are not going to say ‘Yahoo, this is over,’ and go extend credit — like we did — without fear. If you are not fearful, you are crazy.”

Then from Ms. Whitney: “I’m fearful, thanks.”

“We know you are,” Mr. Dimon replied, his smile coming through the conference call. “We are waiting for you to reverse your position.”

Another anecdote proving why Jamie Dimon

is the man:

The subprime call--literally, a call to the head of structured products who was on vacation--came from Dimon after a meeting discussing the performance of the retail bank. In October 2006, the mortgage servicing business was reporting that late payments on subprime mortgages were rising at an alarming rate. Dimon and his team concluded that quality control had slipped at the originator level and decided to slash its holdings of subprime debt. It was this leap from the granular details to the bigger picture that enabled JP Morgan to make the right call on subprime while so many others were still rushing headlong into what was one of the hottest businesses on Wall Street.

We can't help but wonder if there are, in the Dimon and subprime story, the seeds of an even greater story defending the efficacy of the mega-bank. After all, it was the fact from a retail business that tipped Dimon off to a strategic change at the investment level. A smaller brokerage or investment bank would not have had access to this data. Maybe its not the model of mega-banks that's broken, after all.