Quotulatiousness

April 29, 2012

Do you read the daily stock market commentaries? Don’t bother

Filed under: Business, Cancon, Economics, Media — Tags: , , — Nicholas @ 00:04

I don’t mean the ups-and-downs of the market … if you’re invested in the market, it behooves you to pay a bit of attention now and again. No, what I mean are the interpretations of what’s happening in the market and what is or isn’t driving it. Canadian Couch Potato has a good summary:

I remembered the joke this morning when I read the Financial Post’s daily market commentary: “The S&P 500 added more than 2% in the two previous sessions as immediate concerns over rising yields in Spain and Italy ebbed and on bets the Chinese GDP data would surprise on the upside.”

This commentary can sound so knowledgeable and wise. But to suggest that daily market movements can be explained in such simple cause-and-effect terms is laughable. If you want proof, all you need to do is read the commentary every day. You’ll just as often see statements like this: “The S&P 500 shed more than 2% in the two previous sessions despite immediate concerns over…”

It can’t work both ways: either these events affect daily stock prices, or they don’t. Once you accept this, you realize that commentary linking the S&P 500 to surprising Chinese GDP data sounds a lot like the joke about Katarina Witt and Billy Martin.

Here’s my own version of the daily market report: “The S&P 500 added more than 2% during the last two sessions because of an incredibly complex and largely random combination of factors that cannot possibly be distilled into one sentence. Analysts expect gains to continue during the second quarter, but since this already priced into the markets, no one should give a fiddler’s fart what they think. Meanwhile, money managers have released their forecasts for the year, which will be widely read and acted upon, despite the fact that their previous forecasts were dead wrong. Tune in tomorrow for more of the same. In the meantime, stick to your long-term plan.”

H/T to Terence Corcoran for the link.

April 28, 2012

Charles Stross analyzes the economic and technical arguments for removing DRM on ebooks

Filed under: Books, Business, Economics, Media — Tags: , , , — Nicholas @ 00:08

A post at Charles Stross’s blog from earlier this week, when Macmillan announced that they were removing DRM from their ebook lines:

After I recommended that the major publishers drop mandatory DRM from their ebook products, I realized that my essay had elided a bunch of steps in my thinking, and needed to reconsider some points. Then I realized that it’s not a simple, straightforward argument to make. Consequently, I ended up writing another essay, although I’ve tried to summarize my conclusions below.

First, my conclusions:

1. The rapid current pace of change in the electronic publishing sector is driven by the consumer electronics and internet industry. It’s impossible to make long term publishing plans (3-10 years) without understanding these other industries and the priorities of their players. It is important to note that the CE industry relies on selling consumers new gadgets every 1-3 years. And it is through their gadgets that readers experience the books we sell them. Where is the CE industry taking us?

2. Dropping DRM across all of Macmillans products will not have immediate, global, positive effects on revenue in the same way that introducing the agency model did …

3. However, relaxing the requirement for DRM across some of Macmillans brands will have very positive public relations consequences among certain customer demographics, notably genre readers who buy large numbers of books (and who, while a minority in absolute numbers, are a disproportionate source of support for the midlist).

4. Longer term, removing the requirement for DRM will lower the barrier to entry in ebook retail, allowing smaller retailers (such as Powells) to compete effectively with the current major incumbents. This will encourage diversity in the retail sector, force the current incumbents to interoperate with other supply sources (or face an exodus of consumers), and undermine the tendency towards oligopoly. This will, in the long term, undermine the leverage the large vendors currently have in negotiating discount terms with publishers while improving the state of midlist sales.

Now the details:

April 15, 2012

Implying a link between Walmart stores and hate groups

Filed under: Business, Politics, USA — Tags: , , — Nicholas @ 11:53

This is custom-made for drawing lazy conclusions:

Study Says The More Walmarts In The Area, The More Hate Groups There Are

This one’s sure to boil some blood over at Walmart headquarters: A new study says there’s a significant correlation between the amount of Walmart stores in an area and the number of hate groups existing in that same area. As the big-box stores proliferate, so do the groups.

LiveScience.com cites the study by professors at Penn State University, New Mexico State University and Michigan State University, which says that the amount of Wal-Mart stores in a county was more statistically significant than other factors usually associated with hate group participation. For example, the unemployment rate, high crime rates and low education.

As I’m just as lazy as the others who’ll jump on that eye-catching headline, here’s another lazy conclusion: because Walmart locates their stores in areas with growing population, so Walmart stores will also correlate with any number of other phenomena that require a minimum (but increasing) population.

November 7, 2011

Occupy Winter Park!

Filed under: Business, Football, Government, Politics — Tags: , , — Nicholas @ 13:35

Minnesota is blessed with some particularly colourful legislators, but all of them must take second place to State Representative Phyllis Kahn. She has a long history of, shall we say, “imaginative” legislative proposals, and this one is a doozy:

Throw in one more idea for a new Minnesota Vikings stadium: Have the public buy shares in the team, enabling them to own a piece of the Vikings and help finance a stadium.

The community ownership idea has been floated before but Rep. Phyllis Kahn, DFL-Minneapolis, said Monday she would introduce legislation to require Gov. Mark Dayton and the Metropolitan Sports Facilities Commission to work with the National Football League to make it happen. The commission owns the downtown Minneapolis Metrodome, the team’s home for nearly 30 years.

“Dayton asked for all ideas to be put on the table and that’s exactly what I’m doing here,” said Kahn. “No single idea [for funding a new stadium] has gained enough traction to pass the Legislature.”

The Vikings are hoping to get a new stadium built, and the state legislature has been doing what they can to kick the issue down the road every time it’s come up. I don’t have a say in the matter, as I’m not located in Minnesota and I’d probably still cheer for the team even if it moved elsewhere (though it would be a sad thing to see it move after half a century in Minnesota).

In general, I don’t think governments should build stadiums for professional sports teams, as it’s using tax money to subsidize private profits. If a new stadium is going to generate a profit, the team’s ownership should bear the costs themselves. The fact that they generally don’t — mostly because politicians don’t want to deal with angry sports fans after the team leaves town — doesn’t make it right.

However, Rep. Kahn’s proposal won’t fly because the NFL itself forbids public ownership of teams (the grandfathered-in exception being the Green Bay Packers). What’s even more interesting about her plan is that the proceeds of selling shares in the team would be put directly towards building a new stadium:

The funds from selling stock in the Vikings, said Kahn, could go toward helping the team build a new stadium. She added that, under her plan, Vikings owner Zygi Wilf and his family could retain a 30 percent controlling interest in the team.

So the Wilfs will be allowed to retain a minority share, but wouldn’t be compensated for the proportion of the stock that was being sold? Isn’t that just expropriation? I didn’t realize the DFL was a modern-day successor to Mussolini’s Fascist Party.

June 26, 2011

How much did the salary cap change the NFL?

Filed under: Business, Football — Tags: , — Nicholas @ 13:14

If this analysis of the 1975 Minnesota Vikings roster by John Holler says anything, it shows that the biggest change in NFL history was probably the introduction of free agency and the salary cap:

Many players believe the 1975 Vikings were the greatest team in franchise history. But, in the free agency era, there would have been no chance they could have kept the team together. Fortunately for Vikings fans, those players were locked into contracts that didn’t allow them leave. But, what would the ’75 Vikings have cost in modern-day dollars? Too much. Consider the following:

Fran Tarkenton was nearing the end of his career, but had never missed a game and was viewed by many as the best quarterback in the NFL. Given the current wage paid the top QB, Tark could easily have been given $15 million or so.

Chuck Foreman would have been entering the third year of his rookie contract and, most likely, would have held out in order to get a better deal in the current era. The Vikings would acquiesce and he would sign a deal of about five years for $45 million, with $15 million or so up front. Current cap total about $30 million.

On the offensive line, Mick Tingelhoff would likely not be earning top dollar, but would still be worth about $3 million a year. Guard Ed White would likely be coming up for free agency himself and would probably cost another $5-6 million a year. Ron Yary, the first overall pick in the 1968 draft, would likely be in the second or third year of his second contract, which, given his five straight Pro Bowl appearances, would probably put him in the $12 million range. So far, five players would have the Vikings on the hook for about $50 million, without even touching the Purple People Eaters.

In short, free agency and the salary cap totally changed the economic side of the game, and ensured that more teams would be competitive over the long haul.

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