A Boring Project

By |2018-06-19T09:52:00+00:00June 15th, 2018|Global Market Update|

Is Elon Musk boring? TBM that tunneled under Mont Blanc, from Switzerland to Italy. Photo: Cooper.ch. Source: Wikimedia That’s what I wondered when I read that the tech billionaire just won the bidding to build a high-speed link from downtown Chicago to O’Hare Airport. A year ago Musk announced that digging holes in the ground – using a Tunnel Boring Machine (TBM), the type of excavating equipment that built the 30-mile under the English Channel – had become a personal hobby. He soon proposed [...]

A Windy Future

By |2018-06-14T07:12:02+00:00June 14th, 2018|Global Market Update|

Are big cities doomed? Chicago Skyline. Photo: J. Crocker. Source: Wikimedia The problems that many big cities face are well known: crumbling infrastructure, ossified politics, and economic decline. Without the economic growth to support public services, political factions end up squabbling over pieces of an ever-smaller pie. This matters for investors. Not only do they make direct investment decisions, like whether to purchase municipal bonds issued by a city, but investors also need to look at where companies are based. If a firm is [...]

Leading by Investing

By |2018-06-13T06:15:53+00:00June 13th, 2018|Global Market Update|

Can investors be leaders? Aeneas holding his father Anchises, by Simon Vouet (1635). Source: Wikimedia They should be. The same qualities found in the best leaders are crucial to the best investors: clear goals; a culture of integrity; understanding what they can and can’t do; and they have to be able to effectively communicate these values to those around them. Leadership has always been this way. The great epic poem from Roman times, The Aeneid, portrays these classic leadership qualities in a dramatic style. [...]

Long Term Ownership?

By |2018-06-12T07:56:38+00:00June 12th, 2018|Global Market Update|

What kind of bosses are Chinese owners? Photo: Photo Mix. Source: Pixabay 3,500 employees of Genworth Financial are about to find out. Genworth is the successor company to the old Life of Virginia, a Richmond-based life insurer founded in 1871. In the 1980s, they went through various business combinations, mergers, divestitures, and spin-offs. In 1996 they were bought by GE and sold back into the public markets about a decade later. Their principal products are annuities, mortgage insurance, and long-term care insurance. The mortgage [...]

Fashions and Fads

By |2018-06-11T07:08:52+00:00June 11th, 2018|Global Market Update|

Remember bell-bottom pants? Illustration: Clker-Free-Vector-Images. Source: Pixabay Bell-bottoms became fashionable in the ‘60s and ‘70s. They were featured in music lyrics, on TV shows, and in the movies. For a while, bell-bottoms were all the rage. Then they were replaced by skinny jeans, which gave way to the “grunge look,” which turned into hip-hop pants, which have been replaced now by athleisure wear. Today, you can’t find bell-bottoms anywhere – even if you wanted to – except as collectible vintage clothing. I thought about [...]

Finding Cod

By |2018-06-08T06:47:09+00:00June 8th, 2018|Global Market Update|

Where have all the fish gone? Photo: Joachim Müllerchen. Source: Wikimedia It can be hard to find good fish today. Fresh-caught seafood used to be abundant and cheap at the market. Cod was a staple on New England tables. By some accounts, the rich cod fisheries in the Grand Banks and Georges Banks were the foundation for American prosperity in the 17th century. Captain John Smith was famous as a colonial leader in Virginia, but he got rich fishing for cod off the New [...]

Going Deep

By |2018-06-07T06:54:54+00:00June 7th, 2018|Global Market Update|

What is deep learning? Photo: Seeman. Source: Morguefile Deep learning is a machine-learning method that computers use to recognize complex patterns, like human speech and 3-D objects. It takes a signal – like a sentence – and processes it through multiple layers of calculations and algorithms to come to a conclusion. It’s a way for a computer to “learn” something without being explicitly programmed. Of course, the computer has been programmed, just at a higher, more abstract level. It uses probability to improve performance. [...]

Fear and Loathing in the Markets

By |2018-06-06T06:19:41+00:00June 6th, 2018|Global Market Update|

Who’s afraid of the big, bad market? Doré illustration from Paradise Lost. Public Domain. Source: Wikipedia We fear losing a lot more than we value winning. That’s why money-back guarantees are so effective in getting us to try something new, even though it’s usually a real hassle getting our money back. We don’t want to get stuck with something we don’t want, and that guarantee sounds pretty good. Three centuries ago, a mathematician figured this out by looking at the lottery. He suggested that [...]

There Be (Data) Giants

By |2018-06-05T07:01:20+00:00June 5th, 2018|Global Market Update|

Why are the data giants so giant? Jolly Green Giant near Le Sueur, Minnesota. Public Domain. Source: Wikimedia In a word, fundamentals. Since 2010, the market size of Facebook, Apple, Amazon, Microsoft, and Google has tripled, while their revenues have more than tripled, and their earnings have more than doubled. This has happened while the companies have amassed a giant cash hoard of over half a trillion dollars. By some measures, the valuation of the data giants has gotten cheaper, not more expensive. How [...]

User Goods

By |2018-06-04T07:06:39+00:00June 4th, 2018|Global Market Update|

How much are users worth? Public Domain. Source: Dreamstime Amazon has Prime, Netflix has subscribers, and Limebike has riders. Each of these companies has a user-base that loves its service, and creates value for the firm that manages it. But what is the basis for this value? What makes some user-bases profitable, while others – like newspaper subscriptions – seem to wither away and die? It goes back to the fundamentals of finance. The value of any asset is based on its cashflows, growth, [...]