Slowpoke Traders Look to Gain Ground on Speedsters – WSJ.com

Slowpoke Traders Look to Gain Ground on Speedsters – WSJ.com.

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Time Warner Fail

Time Warner Fail

How dare you use Chrome for a browser!

What is so complicated about showing me my friggin’ bill?

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Conversation with my Senator

Dear Kirsten:

I’m confused. In your letter, you seem to acknowledge the severe constitutional problems with this bill, and the need to change it to address those problems. But the fact that you are a cosponsor says that you are happy with it the way it is.

Please clarify: will you vote to deprive people of their property without due process of law, if that provision is still in the bill when it comes to a vote? Or not?

Amos

On Thu, Nov 3, 2011 at 15:12, Senator Kirsten Gillibrand <Senator@gillibrand.senate.gov> wrote:

November 3, 2011

Dear Amos,

Thank you for writing to me regarding S. 968, the PROTECT IP Act of 2011.  I understand your concerns.

I am a cosponsor of this legislation because I believe that we must protect American intellectual property against foreign websites that infringe upon our rights.  By empowering the Attorney General of the United States to go after foreign infringing websites, this legislation becomes a necessary tool to ensure that U.S. companies remain competitive in the world marketplace.  I recognize that there are technical concerns with the enforcement of this bill that need to be addressed.  I am committed to working with my colleagues in the United States Senate to ensure that this legislation protects the Constitutional rights of Americans and does not stifle lawful free speech or innovation on the internet.

Thank you again for writing to express your concerns, and I hope that you keep in touch with my office regarding future legislation. For more information on this and other important issues, please visit my website at http://gillibrand.senate.gov and sign up for my e-newsletter.

Sincerely,

Kirsten E. Gillibrand
United States Senator

I’ll post further correspondence if/when I get it. Google this bill.

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Yield curve

An interesting article talks about the yield curve as a predictor of recessions. For various reasons (Wikipedia seems thorough on the subject) long term interest rates are usually higher than short term ones, except near the onset of recessions.

The NY Fed devotes a page to the yield-curve as a leading indicator, complete with a monthly data set back to January 1959, and charts. Indeed the correlation is impressive to the eye. If the indicator is yield curve crosses below zero, then that data shows a false negative in 1960, a false positive in 1968, and seven true positives with no false predictions since then. Other ways to use it are linked from the Fed page.

The 10-yr vs. 3-mo spread has dropped by almost half in 18 months, but is still well above zero by historical standards. Are we safe from a recession then? As they say, past performance is no guarantee of future results. The zero lower bound on rates, which the short term is close to, means that the curve will not go (more than trivially) negative, independently of any possible recession. No theory accounts for this, and so the theory may be broken here if we rely on it to feel safe from recession. OTOH, the recent drop in long term rates is not “organic”, but manipulated by the Fed’s Operation Twist, so even the dropping rates are not necessarily a danger signal.

The Fed goes further than just the spread, but derives a “probability of recession” signal from it. Zero for a positive infinite spread, one for a negative infinite spread, and in between is a (reversed) cumulative gaussian distribution with a mean of -53 basis points and a “standard deviation” of -.63. This whole enterprise seems so bogus that I am not even interested in the details. But the graph shows it to be a lagging indicator more than a leading one.

Conclusions:

  • Don’t rely on the yield curve to follow its usual statistics at the zero lower bound
  • The “probability of recession” from the NY Fed is a noise calculation, manufactured to impress the noise traders.
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Late night market musings

The fact that safety-first advice is flooding the nets seems made to order for a contrarian point of view, that the volatility phase is coming to an end and growth will start again — and I am starting to see that. For example, Barry Ritholtz, who called the March 2009 bottom pretty much to the day, is sounding much the same again. Recent market action has been good.

I wish I could believe it. But the problems in Europe that everyone knows about are ongoing, and not close to being solved. What would the effect be, over here, of a 2008-style credit crunch over there? Meanwhile, over here, people wonder about a double-dip recession. To my mind, there won’t be a double-dip, because the recession here is still going on. There is an “official definition” that says no, that recessions are measured by corporate health, without having to look at unemployment. And in the past the two went up and down together, so it didn’t much matter. But now, after 30 years of class warfare, it is no longer so. Now, our economy is run by people who want to cut workers and add customers, without realizing that those are the same people, and that this contradiction creates the headwinds beating against our economy and our markets.

On the other hand, even bear market rallies can be traded. I must not lose sight of that.

UPDATE 2016 August 28

A 5-year graph of S&P 500 index.

Well, I should have believed it. Soon after this post, we were off the the races again, at least in the markets. In the broader economy, the recovery was slow, but it stayed a recovery, and not another recession.

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Preferred Stocks

When times are good, investing is all about capital gains. Then there are the times like the present day. Investing advice is all about safety and income. Too often it boils down to — buy this dog that has been beaten down so far it looks like up to me, and hope you can remain solvent longer than the market remains irrational about it.

But sometimes there is a different story.

At a time when the Federal Reserve’s policies have decimated savings accounts, savvy preferred stock investors continue to earn 7% yields from the highest quality preferred stocks at what many agree is acceptable risk.

The idea is that a preferred stock is not particularly correlated with the common, and so is not subject to the fluctuations of a volatile but basically sideways market, but exists to provide a healthy income for the buyer. After filtering for safety and return, Le Du finds

we are left with about 150 extremely high quality preferred stocks to pick from….

More details will follow tomorrow: it’s a two-part article. But a commenter mentions Quantum Online, a site that specializes in preferred stocks in particular, and income investments in general.

As is so often the case, this article addresses what to buy, but not when, or when to sell. ASAP is the implicit answer, and sell when you need the money for something else. Fair enough — for me an income investment is not the goal, merely a parking lot along the way.

UPDATE: part 2 of 2.

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Google+

After I closed my Google+ account, they asked my why. Here is my response.

I rely on Gmail. I barely use Google+. I understand that breaking some obscure rule on Google+ can endanger my Gmail account. So, out goes Google+.

That whole “don’t be evil” thing? You should bring it back.

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Pity the poor banksters

http://seekingalpha.com/article/299343-jpmorgan-s-earnings-were-so-so-but-the-commentary-is-fascinating

In which Jamie Dimon, who cluelessly ran his bank into the ground, abandons the guy who saved his bacon.

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Jack ‘O’ DeathStar

Carve it yourself.

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RIP Steve Jobs

Excerpts from Steve Jobs’ Commencement Speech at Stanford

When I was 17, I read a quote that went something like: “If you live each day as if it was your last, someday you’ll most certainly be right.” It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: “If today were the last day of my life, would I want to do what I am about to do today?” And whenever the answer has been “No” for too many days in a row, I know I need to change something.

Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

No one wants to die. Even people who want to go to heaven don’t want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

When I was young, there was an amazing publication called The Whole Earth Catalog, which was one of the bibles of my generation. It was created by a fellow named Stewart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late 1960’s, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras. It was sort of like Google in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions.

Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s, and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: “Stay Hungry. Stay Foolish.” It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you.

Stay Hungry. Stay Foolish.

Thank you all very much.

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