Archive for July, 2009


We’ll be honest. We have no idea what to do with Twitter. We can’t figure it out. The 140 character limit is restrictive, following “discussions” on it is completely incoherent, it doesn’t make money for the owners and never will. It’s unclear why it exists just as it’s unclear why people use it.

But we have found in our long lives that the best thing to do when you have no idea what to do with something is to just simply to do a lot of it. And that is precisely what we intend to do. We are going to Twitter the shit out of you today, Tuesday July 14th. We will be tweeting a minimum of 6 times per hour and a maximum of perf times infinity divided by unicorn.

You can either follow our tweets on this site in our sidebar or on Long or Short’s twitter feed itself. Where will you find the Tweets on our sidebar? Try and pick up on visual cues that might be pointing to their location.

Is Hamermesh Hitting That? Yes

Daniel Hamermesh, an econ professor and author, discussed the economics of an ugly boyfriend:

One of the came up with what is perhaps the most amusing negative externality example that I have heard in my teaching career.

Her roommate is beautiful, but her roommate’s boyfriend, so she says, is very, very ugly. No problem, except that the roommate has a poster-sized photograph of the boyfriend on the wall on her side of the room, a poster that my student has to view whenever she is on her own side of the room.

I ask my student why, if the guy is so ugly, her roommate goes out with him, and she answers, “He goes to Harvard; and he’s also a very nice guy.” This illustrates the importance of human capital in the matching market that is dating, and also that looks aren’t everything, either. We also supply personality and the ability to get ahead, both of which are valued by the labor market and thus by potential spouses. Indeed, careful research shows that, compared with average-looking women, good-looking women marry guys with an extra year of education. Today, an extra year of education is associated with about an extra twelve percent annual earnings.

We have all used this construct before, the “I have this cousin who loves the site Is She Filthy. Does that make him a perv or just a connoisseur?” or “This friend of a friend of mine hooked up with a girl with crabs. What treatment options should I recommend to this friend of friend fellow?”

Daniel Hamermesh, we are so on to you. You can pretend to the uninformed masses that this is just promotion for your book, just some anecdotal externality action, but we know the truth. You have hunkered down with some fine Texas coed(s?) and you want savvy fans to read between the lines. There is a young lady who is so into Dr. Hamermesh, so worked up, she has a poster-sized picture of your ugly mug draping her dorm room wall. You want us to know that this may be your best accomplishment. You even go on to brag about your extra-long education. Women always tell us that it’s not the size of your PhD, it’s the motions in your notions.*

I'd like you to do a little modeling on the side

It likely started as something casual. Maybe a little modeling on the side. Perhaps you decided to explore the pareto frontier together. Next thing you know she is hanging a poster of you on the wall and sexting you pictures which visually demonstrate how far her demand curve has shifted out.

Recommendation: The answer is Yes. With impunity. If you doubt me, click through and read the opening sentence that prefaces the quoted excerpt. “Naked self-promotion.” Naked self-promotion indeed you old dog, you!

*Also how much you make.

HT to Economists Do It With Models and to Long or Short’s Twitter

Quotes Entirely Relevant to Investing 07-12-2009

Brains are like hearts — they go where they are appreciated.
-Robert McNamara

Past Quotes Entirely Relevant to Investing

Short the Tyranny of Form! Embrace the Freedom of Insubstantial Mistakes!

thus spaketh JDOften sites’ comments’ section devolve into a mutually destructive duel between two or more parties. Sides becomes entrenched, dig in and then continually try and crush the opposition with typed mustard gas. This kind of duel is fine and represents a dialogue that may lead to progress.

But another duel lurks deep in the bowels of comments section, the pernicious spelling bee or syntactical nitpicking duel. It it this duel against which I launch my campaign. I seek to destroy idiotic irrelevant comments like pointing out someone can’t spell, can’t do grammars or even stupidlier places a comma in the wrong place. Usually it’s just an indication that the commenter can’t type, or rather can’t type well, but even if it’s more, who really cares? In the days when you would spend hours drafting 300 words with ink and paper or painstakingly craft a single simple thought in cuneiform with a stick, spelling errors were a sin. But let’s move on now that we all compose thousands and thousands of words in rapid fashion daily. It’s asinine and unhelpful to slog that into any discussion, especially when the mistakes are understandable enough that nothing is lost in transmission which is the case 99% of the time.

I declare a Pax Spellimanicus et Typographicus.

In all debates, focus on your opponent’s idiotic substance not their idiotic form.

As a note for commenters, we won’t delete comments that we disagree with unless they are really vile (racist mainly) or worse, spam. But consider the above a thoughtful suggestion that can push communication to better levels as opposed to letting it be weighed down by the red-tape and bureaucracy that is inherent in grammatical, syntactical, spelling and typing nitpicking. Use this in your daily life and spread this to the uninitiated! Indoctrinate your friends and enemies alike! Reject the tyranny of perfect form! Embrace the freedom to make minor insubstantial mistakes!*

*Excepting the egregious error of spelling “patients” as “pacients” by HF in our comments. That is unforgivable, a sin that should be punished by internment in the harshest gulags. HF, pack your bags for Vorkuta.

Bramdean Has Woman Run Money, Is Wrong

Nicola Horlick, a “superwoman” by trade, founded and runs a closed-end investment fund called Bramdean Alternatives Limited (LSE: BRAL). She named the fund after a Hampshire town in which she has a house. Both the fact she did so and the house itself can be described as “quaint.” Here is a description of what Bramdean does:

Bramdean takes on the responsibility of investing with funds and fund managers on behalf of our clients. We research the worldwide investable universe of alternative fund managers and funds, searching for the most talented managers and highest quality investments available to our clients. Our goal is to find investments that will deliver superior returns and which are lowly-correlated to more traditional investments.

Our own experienced investment management team together with our network of industry specialists enable Bramdean to access managers and funds that are often closed to new investors.

Ah yes! Access! But what kind of access was Bramdean getting?

Bramdean Alternatives Ltd (BRAL.L) said almost 10 percent of its holdings were exposed to Madoff, the U.S. company at the heart of an alleged $50 billion fraud, sending shares in the UK asset manager crashing on Friday.

Bramdean, headed by well-known fund manager Nicola Horlick, said it had two holdings that maintain trading accounts with Bernard L. Madoff Investment Securities that represented 9.5 percent of its net asset value at the end of October.

Separate WSJ piece:

Before news of the Madoff scandal broke in December, Ms. Horlick had publicly endorsed the money manager, calling him “very, very good at calling the U.S. equity market” in an interview with the Financial Times.

If you follow that second link, you can read how Horlick has done so well at getting access that she may well be out of her own firm by a mob of shareholders.

Maybe this played a part:

Apparently allocating assets into the biggest Ponzi scheme since the Securities Exchange Company is NOT a good call. Math indicates that it is in fact detrimental to investment performance. Maybe some due diligence should have been due done? Isn’t that why people pay fund of funds fees? Isn’t that the only reason? Oh wait, I forgot, they were paying for access. Silly me! Over the same time period as outlined above, the S&P 500 returned -30% to her closed-end alternative FoF’s performance was -45% — not what you’d expect from a “superwoman.”

Recommendation: Now this is not to say that all women shouldn’t run money. Only a fool would say something so blatantly sexist. But I will write it. Women shouldn’t run money. If you do find yourself in a situation wherein a woman is running money for you, you can expect them to charge you for “access” to a money sucking blackhole just as was done here.

It’s worth expanding this negative sentiment across all people who mostly trade on their name, whether it be Uma Thurman’s husband or whoever the bullshit artist du jour is. Sometimes, not often, but sometimes WHAT you know (and the desire TO know rather than wallowing in your own lazy ignorance) matters more than WHOM you know.

HT to WC Varones

Alaskan Bail-Out

California has looked down the fiscal precipice, and decided, in what will likely be its last act before it is broken off into the Ocean, that it will be to try and pay people with monopoly money. While former big 3, current Detroit 3 automakers have a certain distinctive bailoutable je ne sais quoi [Spanish Editor: CHE¿], top 10 global economies apparently lack that very same certain distinctive bailoutable quality. Alaska on the other hand, its keen efficiency likely stemming from its walrus population, is entirely bailoutable. So long as it is being bailed-out of rather than just bailed-out:

My decision was also fortified during this most recent trip to Kosovo and Landstuhl, to visit our wounded soldiers overseas, those who sacrifice themselves in war for our freedom and security… we can ALL learn from our selfless Troops… they’re bold, they don’t give up, they take a stand and know that life is short so they choose to not waste time.

If I have learned one thing: life is about choices!

And one chooses how to react to circumstances. You can choose to engage in things that tear down, or build up. I choose to work very hard on a path for fruitfulness and productivity. I choose not to tear down and waste precious time; but to build up this state and our country, and her industrious, generous, patriotic, free people!

So I choose, for my State and my family, more “freedom” to progress, all the way around… so that Alaska may progress… I will not seek re-election as Governor.

My mother always told me “When the going gets tough, you gotta get the fuck out…to progress” so it’s good to know that at least one elected official agrees with Ma D. Thank you Sarah Palin! She also told me if you want to build something up, you have to set it free by quitting your job with it. Mom was the best. Until she left us for lucrative book offers, TV positions and our continental Uncle Sam.

Recommendation: After Alaska’s bail-out, I can only imagine that Alaska will be on a roll. But will this Alaskan roll be superior to the California Roll? Because of the avocado overlap, the key angle for analysis will be the freshness of the salmon that is used in the Alaskan roll. For now we think the Alaskan roll looks promising but our analysis is subject to change based on the day of the week, the ability to source fresh salmon and the reputation of the sushi-chef.

Quotes Entirely Relevant to Investing 07-05-2009

Defined in psychological terms, a fanatic is a man who consciously overcompensates a secret doubt.
-Aldous Huxley

Past Quotes Entirely Relevant to Investing

Marijuana Tax: Crack Strategy

Marijuana Firms are pushing Californian municipalities to tax them.

This week, Oakland began sending out ballots in a special mail-only election on four revenue-generating ballot measures, including Measure F, a tax on medical marijuana.

The clubs see the ballot measure as a way to help the broader cause of medical marijuana.

“Criminals don’t pay taxes,” said James Anthony, an attorney for Harborside Health Center, one of the dispensaries. “Law-abiding citizens do. We are nothing if not law-abiding citizens.”

The strategy at work is what is known as “Crack Strategy.” Crack Strategy can be broken down into four phases.

  1. First one’s free: Give your customer product for free.
  2. Get’em hooked: Wait for your customers return. If they are not suitably addicted, repeat Phase 1.
  3. Kill your competition: Your profits are surging, but competition remains and is a constant threat. You must crush them.
  4. Buy an Island: A place where you can retire to. Phase 4 is almost never reached before death.

Recommendation: California medical marijuana dispensaries are currently in Phase 1 of their Crack Strategy as they attempt to get the Government hooked on their tax money. As we know the Government has a very addictive personality. If the weed firms succeed in attaining addiction to the extent we expect, Phase 3 will occure and a rash of related violence will commence as larger firms seek to crush their competition. This would lead to a surge in demand for hemp garrotes, brass hackey sacks and kabongs (explosive bongs). It is here where you can build your position ahead of the inevitable gap up in prices. Phase 4 is a pipe dream so it shouldn’t be used in any of your modeling.

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