10 Friday AM Reads

Wrapping up the week, with our allergy stricken morning train reads:

• China, the world’s worst investment bubble will burst soon (Marketwatch)
• The Market for “Lemons”: A Lesson for Dividend Investors (RAFI)
• Twitter’s CEO is stepping down. Here’s why the company’s in trouble. (Voxsee also For Twitter, Future Means Here and Now (NYT)
• Reagan and Thatcher Would Mock Today’s Pessimists (RealClearMarkets)
• The Inside Story of How the iPhone Crippled BlackBerry (WSJ)

Continues here

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  1. WickedGreen commented on Jun 12

    The discretionary spending chart is – literally – insane.

    What exactly is the point of a vigorous defense of a hollowed-out shell?

    • rd commented on Jun 12

      Campaign contributions and flag lapel pins.

    • farmera1 commented on Jun 12

      The best part is the US military spending is roughly the same as the rest of the world combined. How else are we going to invade countries like Iraq?

    • ilsm commented on Jun 12

      WickedGreen,

      It is worse than that!

      DVA is over $180B a year, the big part is included in entitlements. Military retirement/health care as well as a lot of DoD’s retired civilians are also in entitlements. That $450B a year in left out expenses from US’ imperial wars should be included in war spending.

      farmera1

      If war were not profitable there would be a lot less.

      rd

      Exactly, make work in districts. No concern for too little strategy, the expensive stuff is for the PAC’s.

      It is correct the US spends more than half the world spending a lot of it hidden!

  2. rd commented on Jun 12

    Re: RIMM vs Apple

    In the late 80s and early 90s, I realized that the electronics tech sector was different from pretty much all the others (other than retail fads) because companies were required to throw themselves out and replace themselves once a decade. Other major sectors typically have half-century types of reinvention timeframes which provide decent moats. As a result, any investing in tech companies is a bet on the management pure and simple. And that management can’t just be good managers, they need to be constantly innovating at a high pace as well as being gurus in management and marketing. This is a very tough order and not many people can do it once never mind three or four times in a row. Steve Jobs is one of the few – even Bill Gates couldn’t do it. So as a result, most good to excellent tech companies have meteoric rises that them crash and burn because they can’t survive the next critical product cycle. What has been interesting to watch is the sheer volume of people tinkering in dorm rooms and garages who have been able to come out with the next big thing. In the industrial age, this was a relatively as much of the advances were done in the big corporations (albeit often in skunk works lost in a corner of them).

    Based on this thinking, I skipped both the 98-99 Nasdaq spike and the 2000 NASDAQ bear market. I ended up mainly in value funds from late 98 into the mid-2000s because they were the only ones that had 20% tech or less in them. So my portfolio largely just cruised along with much smaller peaks and valleys. The one that really surprised me was when the financial sector blew up the world’s financial system and the world economy – I wasn’t expecting that from the people who were supposed to be the adults. Unfortunately, I don’t think they have learned enough lessons from that yet for us to be safe.

  3. swag commented on Jun 12

    “Based on a stylized model and simulated outcomes from a richer model, we argue that a money manager has an incentive to remain invested in momentum even when the crash risk is known to be high when (1) he competes for funds from return-chasing investors and (2) he is compensated via fees that are convex in the amount of money managed and the return on that money.”

    http://www.nber.org/papers/w20660

  4. VennData commented on Jun 12

    Reagan and Thatcher Would Mock Today’s Pessimists.

    No. That’s how they grabbed power. Remember how optimistic the pessimists were when Romney was sure to win?

    Everyone who listened to the Anti-Obama screeds have gotten killed. They used to brag how gold saved them. Rightsplaining their way to a Socialist hell hole right around the corner.

    Republican rhetoric is laughable. Their investigations are comic. Their “World’s on Fire” nonsense hysterical

  5. rd commented on Jun 12

    Brownback and Kansas Republicans are panicking into a hasty tax bill to cover tax shortfalls before they have to annihilate education spending. I am sure an implicit threat there was that the university basketball team could have been negatively impacted which would have been a political death knell.

    http://cjonline.com/news/2015-06-12/house-breaks-gridlock-narrowly-approves-tax-increases-early-morning-vote

    I am sure they have been shocked that businesses have not flocked to Kansas from California and New York to take advantage of their lower taxes. However, I had heard that Goldman Sachs was considering relocating to Topeka to take advantage of the tax reductions and lower cost of living compared to NYC.

  6. VennData commented on Jun 12

    Jeb Bush: I Won’t Dwell on the Past

    “I made a huge mistake back in the United States,” Bush said. “I said that it takes five minutes to fill your tax form in Estonia. And it turns out it’s only two minutes. So, I’m really sorry about that…”

    http://www.bloomberg.com/politics/articles/2015-06-12/jeb-bush-i-won-t-dwell-on-the-past

    He just lost the TurboTax lobbyists and their friends.

    One thing we know about Republicans, they never want to put in complicated things into the tax code.

  7. Jojo commented on Jun 12

    No One Knows What to Do With Fukushima’s Endless Tanks of Radioactive Water
    Posted By Eliza Strickland on Jun 09, 2015

    This is what passes for good news from Fukushima Daiichi, the Japanese nuclear power plant devastated by meltdowns and explosions after a cataclysmic earthquake and tsunami in 2011: By the end of last month, workers had succeeded in filtering most of the 620,000 tons of toxic water stored at the site, removing almost all of the radioactive materials.

    After numerous false starts and technical glitches, most of the stored water has been run through filtration systems to remove dangerous strontium-90, as well as many other radionuclides. TEPCO, the Japanese utility that operates the power plant, trumpeted the achievement: “This is a significant milestone for improving the environment for our surrounding communities and for our workers,” said Naohiro Masuda, TEPCO’s chief decommissioning officer, in a press release.

    But it’s not quite so easy to bounce back from a nuclear disaster of this scale. For one thing, don’t take TEPCO’s statement too literally: No one is living in the “surrounding communities”—they’re far too contaminated for human habitation. Furthermore, the filtered water is still full of tritium, a radioactive version of hydrogen. (When two neutrons are added to the element, it becomes unstable, prone to emitting electrons.) Tritium bonds with oxygen just like normal hydrogen does, to produce radioactive “tritiated water.” It’s impractical—or at least extremely difficult and expensive—to separate tritiated water from normal water.

    Hence TEPCO’s dilemma—which gets bigger by the day.

    http://nautil.us/blog/no-one-knows-what-to-do-with-fukushimas-endless-tanks-of-radioactive-water

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