Tuesday, December 29, 2009

Quotes of the day

If the U.S. were a stock, it would be trading at historic lows.--Joel Kotkin

I didn’t see this one coming: that the nicest responses I have ever gotten to criticisms made on this blog came from military officers (both this time and on one previous occasion). I didn’t know that a command-and-control ARMY would prove about 1 trillion times more responsive than the civilians at USAID. I didn’t know that a Lieutenant General would handle criticism better than a Starbucks PR executivewho flamed out in response to another blog post (what DO they teach in PR school?).--William Easterly

I see most progress as being asymptotic, e.g., there is a period of accelerated development and rapid growth, beyond which gains are much harder and more costly to achieve. The goal is to find businesses at the early part of the rapid growth phase, but where they are close enough to rapid growth that they don't require decades of funding to get there. For instance, if you had invested in machine learning in the 1960s (or natural language processing in the 1980s) back when it held so much promise, you'd have gone bust many times over waiting for commercial success. Does it mean that machine learning and NLP are unattractive fields? No. But if you were 20-40 years early then I'm sure it seemed that way. My goal as an investor is to avoid such delayed gratification.--Roger Ehrenberg

How much can one car crash cost? If you are Tiger Woods, as much as $12 billion. That is the amount Tiger’s corporate sponsors lost in stock value since he crashed his sport-utility vehicle the day before Thanksgiving, according to a study from two economics professors.--Stephen Grocer

This is silly stuff, of course: not only are the error bars larger than the estimated losses, but a huge proportion of those multi-billions comes from the decline of the share price of enormous companies like P&G, which had just one exposure to Tiger Woods through its Gillette subsidiary. Drawing a causal relationship between the Tiger Woods scandal and fluctuations in P&G’s share price is simply impossible.--Felix Salmon

The trade in oil that would surprise most people isn’t a rise to $100 from $75, its a drop to $50.--Barry Ritholtz

It’s just that if you’re making a bet and Goldman is your bookmaker, don’t be surprised if you end up losing.--Felix Salmon

New York Senator Chuck Schumer, with information fed to him by the head blogger at Zero Hedge, generated enough noise to move the SEC to propose a rule change. Even the mainstream media got in on the act. The New York Times and The Wall Street Journal both penned lengthy articles on the topic. ... Algo programs buy almost every new low because they bet that short-term shorts will get trapped and have to cover higher.--Mike Bellafiore

Both sports betting markets and financial markets are efficient ENOUGH that you have to do your own work - and LOTS of it - if you expect to generate alpha. Some people will deride me for making the analogy of markets to a casino or bookmaking operation - but I'm reasonably certain that most traders (myself, and everyone I know at least) do expected value calculation on their trades just like you'd do in the casino or in the sports book. It's not "Kid Dynamite is a naive immature gambler" - it's the realization that in both financial markets and in gambling markets, it's not a crime to have more information than the guy on the other side of the trade/bet."--Kid Dynamite

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