Archive for May, 2006

Long the Web 8.0

The Web 2.0 Conference in San Francisco has become a hotbed for entrepreneurs eager to separate venture capitalists from their cash. With business models dependent on flashy graphics and Google Adsense revenues, these startups often appear more like interesting features for existing products than standalone companies (Click for previous research on What is Web 2.0?). Still, innovation must continue and the forward-thinking Web 2.0 Conference organizers have sent out the call to begin defining the Web 3.0.

Long or Short sees no reason to look ahead only one generation. We have instead decided to begin defining and building the Web 8.0. Our new concepts will be a full 5.0 generations ahead of current thinking. Discounting the Web 8.0 at the prevailing web generation discount rate (10%) gives us a present generational value of Web 3.39

We recommend a long position in Web 8.0 with an expected return of 13% (= 0.39/3.0).

Please note that we are simultaneously downgrading the Web 2.0 Conference to Web 1.3 after finding out that the initial roster of speakers includes Jon Miller (AOL, a Web 1.0 company) and Arthur Sulzberger (NYTimes, a Paper 3.0 company).

Note that this post is still in Beta


How to be a Mini-Baller

Some of you may have heard that working at a hedge fund you can make “a lot of money”. Well it’s true. Now some of you might be saying to yourself: “Wow, how am I going to get a job at a hedge fund so I can make all that money?” which is a good question. But, there are a few of you who are more foresighted that are saying “Wow, how am I going to SPEND all that money?” And that’s really the more important question, because let me tell you, it’s not easy.

The first step you need to take to make sure you’re good at spending money is to properly categorize yourself, I believe there are two socio-economic groups which are important here: “Ballers” and “Mini-Ballers”.

How to know if you’re a baller:

1. You don’t have a savings account, just a HUGE checking account
2. You make use of private air travel
3. You have outrageously expensive clothes, all of which were given to you for free
4. You’re dating a smoking hot babe
5. You’ve never heard of a mini-baller

How to know if you’re a mini-baller:

1. You choose to live paycheck to paycheck even though you have a six figure salary. You have a 1% money market savings account with a few thousand dollars, meanwhile you overdraft your checking account on a regular basis.
2. You buy your flights on expedia but you don’t like to, you use miles to upgrade to economy plus, you buy vodka tonics on the plane
3. You have outrageously expensive clothes, all of which you paid for and most of which you buy because you saw a mini-baller the previous night who was wearing that outfit and “getting it done”
4. You say “get it done” all the time. You’re not sure what this means, but you know its important, and when you say it . . . you mean it.
5. You aren’t dating a smoking hot babe but you want to, so on saturday nights you call your mediocre looking girl friends and ask them to help you get into Marquee hoping you can meet a hot babe there. You look at the liquor list and almost order Absolut, then you remember you’re here to get it done and so you pony up for the Goose. You always hit on the waitress and you always tip her over and above her 20% grat, then usually you go home with one of your mediocre friends. You like it, but you tell other mini-ballers that you regret it.
6. You refer to yourself as a mini-baller, you tell other dudes that you’re a mini-baller and suggest to them they start calling themself a mini-baller too.

As you can see, once you’ve established that you’re a mini-baller it’s important that you make some mini-baller friends. Then if you’re ever hesitating with a big purchase, you can count on one of them to lean over and tell you “dude, it would be so mini-baller if you got that done, chicks love that sh-t, get it done buddy”. And you’re off to the races . . .

Next week: How to Live The Jet Set Lifestyle.


Quotes Entirely Relevant to Investing

There is not so much difference between the ideologies of capitalism and communism, you know. The difference is simple. Capitalism is the exploitation of man by man, and Communism is the reverse.

-John Gardner, in his book The Man from Barbarossa

Past Quotes Entirely Relevant to Investing


Notice to Subscriberholders: Change in Accounting Principle from GAAP to SAAP

Long or Short Capital has been conforming to Generally Accepted Accounting Principles (or GAAP) for all financial disclosures up through May 2006. However, beginning in June 2006, Long or Short Capital will be changing to Seldom Accepted Accounting Principles (or SAAP). While we acknowledge that most of our readers and subscriberholders invest most commonly in companies using GAAP, we have come to the conclusion that our unusual equity structure requires SAAP to more accurately portray our financial strength. Our previously stated financials are not to be relied upon. We will be issuing new guidance shortly which we expect will be signficantly higher than past results.

Our statements will continue to be audited by the Cambridge, MA based accountancy Dewey, Cheetham, & Howe.


Diversification, a Euphemism for Crappy Investment Option

I have read two articles today, which is my daily limit.

Linked from Going Private was this article on hedge fund and private equity shops investing in big budget movies. The second article I found while Googling a rationale for the existence of the catastophe bond .

The articles contained these excerpts respectively. 1st excerpt:

For its part, companies such as Virtual see Hollywood as a potentially lucrative place to diversify investment portfolios. And Virtual is pursing that strategy in a significant way, investing in Leonardo DiCaprio’s “Blood Diamond,” Brad Pitt’s “The Assassination of Jesse James,” and George Clooney’s “The Good German.”

……

As a result, Virtual covered about $125 million, or half of the $250 million it should cost to make and market “Poseidon” around the world. At the current rate of ticket sales, Virtual could end up with $75 million or so from “Poseidon” — meaning it could lose more than $50 million on the movie, said two people familiar with the film’s finances. A Stark executive disputed that worst-case scenario and also said its Hollywood investments should not be judged on the domestic box office of one movie.

2nd excerpt:

Advantages of [catastrophe] bonds are that they are not closely linked with the stock market or economic conditions and offer significant attractions to investors. For example, for the same level of risk, investors can usually obtain a higher yield with CAT bonds relative to alternative investments. Another benefit is that the insurance risk securitization of CATs shows no correlation with equities or corporate bonds, meaning they’d provide a good diversification of risks.

I can provide some other investments that would provide attractive diversification for these companies — the roulette wheel. Some secondary thoughts: If you have a proprietary algorithm that picks Poseidon as a likely hit, it’s time to get a a new algorithm. Libor+230 is an insanely low risk premium for the chance of losing all your money if Mexico has an Earthquake in the next three years; to compare the market pricing for secured near investment grade debt is L+220. If a Mexican offered me that deal, I’d build a fence around him on the spot.


Quotes Entirely Relevant to Investing

There is lots of things to take into account? Do you even know what your EBITDA is? EARNINGS BEFORE INTEREST TAXES DEPRECIATION AND AMORTIZATION? Gives the true picture of a company’s profitability.

-Paulie Walnuts, Season 6 Episode 4 of the Sopranos

Past Quotes Entirely Relevant to Investing


Meiosis is the MOST Horribly Marketed Word Ever

I use the word “Hyperbole” and its most awesome derivatives all the time, but I have never in my life used the word “meiosis,” which is to hyperbole as understatement is to overstatement. I see this as clearly shoddy marketing, a pure failure to resonate with the average word user. It’s time for a rebranding — meiosis should become minibole.

Minibole offers an improved logical relationship to the word’s natural counterparty, Hyperbole. It is also cheaper to produce as s’s have been in short supply due to instability in both the Sudan and South America; the cost of b’s have seen some recent escalation due to Bolivia’s threats to nationalize different sections of the alphabet, but we think this will abate as more b capacity comes online in 2008.

I have already used minibole 6 times today, indicating its improving traction in the word market and it will only get better as the word gets out. And that statement is not hyperbole.


Quotes Entirely Relevant to Investing

In response to a question about having to comply with China’s censoring mandate for Internet companies:

I’ll tell you this, it’s not more hard than dealing with Sarbanes and Oxley.

-Xin Ye, a founding executive of Sohu.com (SOHU)

Past Quotes Entirely Relevant to Investing


For $100mm I Would Have Sex with Toyota’s Harry Otaka

Dear Mr. Harry Otaku,

Based on recent events, it looks like you need a new personal assistant and I am writing this letter to make you aware of my availability in every sense of the word.
For a situation such as this:

Otaka allegedly committed all the sins – he sent Kobayashi flowers, gave her jewellery, repeatedly invited her to intimate lunches and walks in Central Park and boasted to her about his affairs.

One of the money shots came on a business strip to Washington where Otaka allegedly summoned Kobayashi to his room, asked for sex and went the big grope.

According to Kobayashi, Otaka was told the complaint against him had come not from her, but her husband. This was apparently done to protect Otaka’s masculine sensibilities and, on Kobayashi’s account at least, it seemed to work.

..

Otaka allegedly criticised Kobayashi for failing to give proper thanks for the gifts he had sent.

…you should know that I love walks in the Central Park with 62 year old men. And what guy doesn’t love when his boss sends his a thoughtful bouquet, or gives him a nice pat on the butt with an accompanying oral message “Great job, JD.” I type maybe 20 words per minute, appreciate jewelry, make a crappy cup of coffee and come at the bargain basement price of $100mm. I also will never say “No.” Please consider me for the position.

Toyyyyy O-TA!,
Johnny Debacle

If only I could have found the still from At Close Range


Rise in Ficitional Cities Proof of Real Estate Bubble

First there was Urville, fictionally located in France. Now there is the City of Galvez. The year to date year over year (YTD YOY) increase in fictional cities is infinite, a frightening fictious growth rate. This is a sure sign of the mania that has taken a grip on the real estate market as individuals are being forced to live in figments of their own imagination rather than figments of Bay Area, California.

Note the famous floating cupolas of Galvez in the right side of the picture.

Recommendation: Rent don’t own!


Why is the BP Blue in Google Talk? Winner

This contest wasn’t even close. The winner was Ethan Furtek with this entry as to “Why does Google Talk make the letters of “BP” blue in Google Talk?“. No description could do justice to Ethan’s epic meditation on numerology

Modern cinema has, from time to time, exhibited unnatural prognosticative capabilities. For example, in Back to the Future II, Michael J. Fox scoffs at the idea of ‘Miami winning the World Series in 1997’. As it turned out, Florida was granted a baseball team in 1993 and did in fact take home the championship in 1997.

Similarly, when James Cameron released The Terminator in 1984, he unknowingly predicted the demise of mankind. Skynet, the computer program responsible for the downfall of the human race, was installed and operated by the military. In reality, however, the US government is far too careful to make such an oversight. The computer virus that eventually cripples the planet would need a more innocuous introduction: say, through an Internet search engine.

Google is Skynet, and the proof is in Google Talk’s highlighting of ‘BP’. In The Terminator, the apocalypse arrives when Skynet goes live on August 29, 1997, or 8/29/1997. Adding 8 + 29 + 1997 gives 2,034. Google filed its S-1 rescission offer (the final documentation necessary to go public, or in this case, ‘live’) on August 4, 2004, or 8/4/2004, and similar addition yields 2,016. The difference between these two numbers is 18, the same sum given when applying a number to each letter of the alphabet (A=1, B=2, etc.), and adding B + P. As you can see, Google has already become self-aware, and is dropping hints as to the arrival of Judgment Day. Someone call Schwarzenegger.

We also learned the real reason BP is made blue in Google Talk from my girlfriend.

BP is blue because it is a smiley with sunglasses sticking his tongue out.

Excuse me while i go make myself invisible to you on gtalk.

Love, GF