Culture Eats Strategy

By | 2017-07-26T06:41:27+00:00 July 26th, 2017|Global Market Update|

Collateral dominates structure. Silk purse. Photo: Sideshowmom. Source: Morguefile That’s a phrase I coined twenty-five years ago when I was an institutional bond investor. At that time, Mortgage Backed Securities were still pretty new. Brokers would take MBS “pools” and put a bunch of them into a single trust. Then the trust would issue its own bonds, with different bonds getting paid first, some bonds taking more prepayment risk, other bonds protected, and so on. They called these bonds Collateralized Mortgage Obligations. They were [...]

The Death of Retail?

By | 2017-07-17T16:43:47+00:00 July 14th, 2017|Global Market Update|

Are we facing a retail apocalypse? Photo: Cbikle. Source: Morguefile That’s the story that’s being told. Payless, Radio Shack, Rue21, and The Limited have all filed for bankruptcy this year, as have five other retailers. Over 4,000 physical stores have been impacted. There are fewer than 750 Kmart stores open now, down from over 2000 at their peak, and their owners plan to close more stores. Since late last year, general merchandise retailing has shed over 80 thousand jobs. The phrase, “Retail apocalypse,” even [...]

Public Issues, Private Issues

By | 2017-07-17T16:44:41+00:00 July 13th, 2017|Global Market Update|

What is private equity? Source: Wikipedia Private equity is an equity position in a company that isn’t publicly traded – that hasn’t been listed on a public stock exchange. For ordinary investors, there are two ways to invest in private equity. You can invest in a private equity fund, or you can give money to a friend or family member in exchange for a share of their business venture. Limited partners of Bain Capital’s Asia XI Fund are private equity investors, as are your [...]

Seeking Safety

By | 2017-07-17T16:45:21+00:00 July 12th, 2017|Global Market Update|

Are there any safe places? Photo: Ben Tubby. Source: Wikipedia During the Cold War the superpowers relied on a doctrine called “Mutually Assured Destruction,” or MAD. The idea was that neither party would initiate a nuclear first strike, because enough of the other side’s nuclear arsenal would survive to retaliate. The global devastation would be so complete that both sides would lose. To average folks, the doctrine seemed “mad,” indeed. There was a low-grade fear surrounding everyday life. If someone irrational got hold of [...]

On Tripods

By | 2017-07-17T16:45:42+00:00 July 11th, 2017|Global Market Update|

Tripods are stable. Photo: Eriger. Source: Pixabay They allow us to keep things steady. Their three legs lean upon each other making the entire structure more stable than any one leg could be. We use tripods in photography, weapons, surveying, and for offshore wind turbines – anywhere we don’t want things shifting around. Tripods are often used as metaphors, as well, for any area where we need constancy. Our military depends on a nuclear triad: missiles, bombers, and submarines. English teachers use grammar, literature, [...]

Rx: Competition

By | 2017-07-17T16:46:20+00:00 July 10th, 2017|Global Market Update|

What’s wrong with the health care debate? Public Domain. Source: Wikipedia I don’t pretend to have a solution. Health care is complex and multi-faceted, with lots of market and non-market elements. And it’s huge: a sixth of our $20 trillion economy. But one thing that’s so disheartening about the debate is that it mostly focusses on the demand side of the equation. Health insurance, Medicare, Medicaid, exchanges – these are all ways that we get access to care. It’s as if we debated food [...]

PC David and Goliath

By | 2017-07-17T16:47:00+00:00 July 7th, 2017|Global Market Update|

Remember Compaq? Photo: Tiziano Garuti. Source: Wikipedia The PC maker was founded in 1982. It went from start-up to $1 billion in sales in only five years. It tripled that number in four more years, becoming the third-largest PC-maker – a leading producer of a revolutionary product. Compaq made a “luggable” computer – a PC that weighed 25 pounds or so. You could “lug” it from place to place, unlike desktops, which needed a lot more time to set up. It was one of [...]

The (Serious) French Connection

By | 2017-07-17T16:47:38+00:00 July 6th, 2017|Global Market Update|

What do you do when your boss announced plans for a layoff? Emmanuel Macron. Source: Wikipedia That’s what Emmanuel Macron did a couple days ago, in a powerful speech to both houses of the French Parliament. The assembly has 925 seats, and Macron announced plans to cut its number by a third. If the houses don’t agree, he said, he will bring his initiative to the voters directly. He also told the lawmakers that they need to legislate less, that France can’t keep up [...]

A Durable Future (Part 2)

By | 2017-07-17T16:48:08+00:00 July 5th, 2017|Global Market Update|

Do durable assets create durable returns? Jason and the Golden Fleece, c. 340 BCE. Source: Wikipedia Gold and silver are often touted as “alternative” investments. That is, their returns aren’t highly correlated with other, more typical, investments. So they have the potential to diversify an investment portfolio while providing return in their own right. Gold and silver served as a monetary standard for millennia. Are they useful investments? It’s hard to evaluate the long-term returns of a monetary base. The price of gold was [...]