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Messages - aaron

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1
Water Cooler / Re: Longest Shutdown Ever
« on: January 14, 2019, 10:44:59 AM »
The pension liabilities issue was only enhanced by QE, which drove down bond yields & forced pension plans out into riskier investments. Now that they are engaging in QT they are sucking liquidity out of the system, which should generally have the opposite impact on asset prices. Many companies which trade at rather low P/E ratios like AT&T also have massive amounts of debt. AT&T's current debt load is about 80% of their stock's current market cap, so multiply the P/E by 1.8 for a starting point & then of course there are all the various adjustments made to earnings.

https://www.barrons.com/articles/barrons-2019-investment-roundtable-part-1-51547262307
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the Federal Reserve has engaged in quantitative tightening, or shrinking its balance sheet, to the tune of $50 billion per month. We are talking about the creation of an ocean of debt, while the Fed has raised rates nine times in the current cycle, in addition to quantitative tightening, which, according to some studies, equates to about two more rate hikes. The Fed wants to raise rates two more times this year, based on its dot plot [individual rate projections by the members of its policy-setting committee]. This is a problem for the stock market. U.S. manufacturing data has deteriorated. Mortgage applications are near an 18-year low. ... Backing off on quantitative tightening would be a big help to the markets, but it won’t happen with the S&P down less than 20%. Stocks would have to fall 30% from their peak for the U.S. central bank to consider this.
the impact of the central bank money printing has had an even bigger impact on emerging markets because they grew debts faster than developed markets.
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I’m negative on emerging markets and have been for the past decade, during which they significantly underperformed developed markets. Emerging markets benefit most from quantitative easing. As interest rates collapsed, they became prolific borrowers on both a country and corporate basis. Second, liquidity risk in these markets is significant. A lot of money is chasing very few stocks and bidding up allocations, even if EM allocations haven’t gone up. There are very good companies in, say, India, but I own none because they don’t compete from an investment standpoint.
I think China has been responsible for something like 40% of the global credit growth since the Great Recession & about 22% of their housing units sit empty.

2
Traffic / Re: Google Moved $23 Billion To Bermuda Tax Haven In 2017
« on: January 11, 2019, 11:55:30 AM »
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I'd just tax everything at the point of sale
That taxes the poor more than the wealthy though....   not saying I have an answer...
Longterm capital gain rates being far lower than ordinary income tax rates already does this (especially when combined with central banks buying tons of assets to inflate asset prices and drive the wealth effect). What's more, this year sees the roll out of "Opportunity Zones" (pushed by Sean Parker) which will further defer capital gains payment requirements while allowing further compounding without paying anything.

Shifting to a flat consumption tax would shift some of the burden off of domestic labor, which diminishes the returns of offshoring & further improves domestic wages.

At the lower end of the wage spectrum people can be granted a rebate in advance to lower their effective rates.

Warren Buffett regularly complains about paying higher rates than his secretary. The only way that gets fixed is if capital gains are treated as ordinary income or the system shifts to be based on consumption rather than income. Now if it goes all to consumption he might still have access to a lower rate, but at least those leasing jets for personal use can get a higher rate on that consumption, vs say...
https://www.huffingtonpost.com/2012/03/06/warren-buffett-jet-company-_n_1313351.html

https://en.wikipedia.org/wiki/Government_spending_in_the_United_States

52% of the US government discretionary income goes to defense, $678 billion in 2019.  Morality is very subjective, but to me this is a complete perversion of the use of resources. I think people get mad at companies like Google for using loopholes because it leaves more of the burden to the ordinary people to pay up the differences.   
And healthcare costs at least double what it should (or what it would in a market where anti-competitive monopolistic abuse scams were treated as the crimes they are).

3
Economics & Investing / Re: FAANG stocks 2018 performance
« on: January 11, 2019, 11:49:34 AM »
Netflix is probably going to a have a tough time in 2019 as well.

Everyone else is investing heavily in video, driving up their costs.

If the economy cools their market cap would pull back as valuations fall across the board.

If the economy gets hot they'd have to pay higher rates while larding on more debt.

What happens to Neflix's market cap the first quarter they have negative growth while still remaining unprofitable?

And they have a bunch of competition coming this year. Disney will push Hulu harder & launch Disney+, AT&T has to show massive growth for WarnerMedia to justify the acquisition price, etc. … and at the lower end Amazon's IMDB, Google's YouTube & Facebook are all paying to buy rights to movies & classic sitcoms to offer ad supported video content. Then Apple is likely to roll out an Amazon Prime-like service that includes movies with music & other media formats

4
Water Cooler / Re: One year in San Francisco as a Software Engineer
« on: January 11, 2019, 06:21:33 AM »
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lots of great cheap food.
If you are willing to walk this is still true. :)

Huge portion sizes, low prices & great meatz @ spots like http://www.taquerialoscoyotes.com

5
India is pushing widespread usage of Aadhar Cards to residents.
https://en.wikipedia.org/wiki/Aadhaar
It was launched in January 2009, but has been picking up speed in the past couple years.

About a week ago the WSJ published an article titled India’s Biometric Feat: Big Boon or Big Brother?
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Nandan Nilekani, the billionaire founder of Indian IT services giant Infosys Ltd. and the program’s original chairman, calls Aadhaar the modern equivalent of the U.S. instituting Social Security numbers in 1936. He likens the government funding to U.S. federal investments in the interstate highway system and in research projects that led to GPS and the internet.

Critics also say Aadhaar has been subject to monumental mission creep. It has morphed, they say, from a voluntary program distributing benefits to the poor to one that is effectively required for many facets of daily life. Some schools, for example, have required children to have Aadhaar IDs in order to enroll. Many local governments and businesses now demand Aadhaar numbers for obtaining marriage certificates, purchasing train tickets and even for gaining entrance to cricket matches, in addition to getting bank accounts and phones.
A story WSJ published in January stated
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Earlier this year, the Unique Identification Authority of India, the government body that runs the Aadhaar program, lodged a police complaint against a journalist for a story about how she accessed cardholders’ personal data by paying an anonymous seller on WhatsApp 500 rupees ($7.80).

6
Grid would be an open declaration of war requiring a swift & brutal response.

Almost nobody would want that unless they were making someone else look like the source.

7
A lot of states have/had laws like that for car sales.
If you are not the middleman it is easy to see that as a flaw. But if you are the middleman it is a vital layer of protection from destitution.

Some of those laws came into being due to abuses in the supply chain during the great depression.
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During the Depression, desperate manufacturers often forced dealers to take new vehicles they hadn't ordered. Automakers recruited too many new dealers, including some who sold cars from their houses, storefronts or gravel lots. Such tactics thrust too many dealers into fierce competition with each other.

Established dealers with investments in their dealerships, property, experienced employees and stock turned to discounting vehicle prices and overpaying on trade-ins to make new-vehicle sales. But they were up against brokers and low-investment storefront franchise holders who showed little regard for sales territories.

Competition deteriorated into often unsustainable actions: selling on price alone, fierce price wars, rampant overpaying for used cars, clocking odometers, hiding defects, or otherwise tricking sales customers and overcharging service customers.

Borrowing Prohibition slang, some dealers engaged in bootlegging -- shedding excess new cars by selling them for a few dollars under factory invoice to a broker in another dealer's territory.
NADA almost went under
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In May, NADA’s general manager told the board that, based on the renewal record and members’ difficulty in paying dues, it would be “impossibleto carry the association beyond the first six months of the year without drastic changes.”

The secretary was to find new quarters for the association at a cost not to exceed $50 per month. The board reduced activity to a minimum and for the rest of 1932 employed only a secretary-manager and a stenographer, who also handled bookkeeping. The general counsel, field staff and mailroomclerk were let go.

8
Wow Aaron.
Tweet-driven headline just in time for a year-end one-day rally...

WSJ: U.S. and China Fleshing Out Trade Deal
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On Saturday, President Trump tweeted that he and Chinese President Xi Jinping had recently talked by phone and made “big progress” in talks, due to conclude on March 1. “Deal is moving along very well,” Mr. Trump tweeted. “If made, it will be very comprehensive, covering all subjects, areas and points of dispute.”

But people familiar with the state of negotiations said the president may be overstating how close the two sides are to an agreement. They note Mr. Trump has looked to calm markets, which have gyrated in recent days, in part, because of concern that the trade fight between the U.S. and China could spin out of control.

9
Traffic / Re: Over 40 percent of activity on the internet is fake
« on: December 30, 2018, 03:29:00 AM »
A lot of advertisers are still blindly burning money, which incentives various forms of scams.

Sometimes while using a treadmill I play Microsoft solitaire to relieve the boredom. The ads they show there for me are often for 1 individual product (no frequency capping) and if I accidentally miss the close button when I click to close it registers as an ad click, which then forwards to a landing page on an ecommerce site that has an error in the URL, so it loads a 404 error message. I've probably seen that ad thousands of times by now.

Ad ad agency serving the above sort of client has every incentive to buy garbage inventory to pad out their own profit margins.

And publishers that see their own CPMs get clipped by all the scams also have an incentive to run ads on an extended network to bleed advertiser budget.

Almost all the incentive structures lead toward tragedy of the commons.

And as former local monopoly news publishers see their reach & influence decline, they get bought out by private equity in roll up plays, which have every incentive to squeeze blood out of a rock until the brand equity sits right around zero.

10
Traffic / Re: I Felt a Disturbance in the Google
« on: December 26, 2018, 07:05:28 AM »
Google heavily hyped the importance of switching from HTTP to HTTPS, so that is probably a reason many people believe it to be a cause for why some older content slid down the rankings. It is far easier to believe that message than it is to read dozens or hundreds of patents, actively track ranking shifts across many keywords over time, etc. to try to learn what signals might be used in the algos.

Compared to Bing, Google puts more weight on user location & recent user behavior.

The current news cycle is full of news articles that not only inform, but also offer a jumping off point to search for more related information. Google sees a spike in searches as a news story develops (along with related fresh published pages in their news index) & they trigger query deserves freshness.

Everything that is old sort of slowly decays unless it is highly influential & repeatedly cited (say like the PageRank paper).

Many / most of the older news articles lack the repeated usage & over time words also get redefined by cultural changes or even company rebranding efforts. Overture becomes Yahoo Search Marketing becomes Microsoft AdCenter becomes Bing Ads.  Google AdWords becomes Google Ads.

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Bing fails on obscure longtail phrases.
They have a smaller index (less content to rank, fewer links to use in ranking) & much less user data (to further refine & model the algos), so it makes sense they would be far worse at some of those sorts of search queries.

Google's RankBrain stuff drives users down well worn paths, pushing related results users liked on more frequently searched terms where they have better feedback. Bing does have some of the keyword substitution styled stuff, but they are still far more literal than Google in terms of keyword matching what the user searches for. Google sometimes goes so far as dropping the most rare / least common word  from the search query to try to bring people back to the more common related searches. If that dropped word is a match of the brand name of a particular publication, then of course finding that article would be much harder. Typically when Google removes a term they mention so & give a link to include it.

Where the RankBrain styled stuff gets *really* tough to deal with is not only older information, but rather information about an entity but not from that specific entity. Sometimes that stuff can get quite hard to find unless you do some advanced boolean searches.

The other area that sort of sucks is how many smaller ecommerce sites got torched by Panda & for the most part never recovered. This means if someone running a niche store has that 13 4E New Balance cross trainer shoe in last year's model in stock they are almost forced to sell on Amazon, eBay or Walmart in order to appear in the organic results. Of course there are also Google shopping ads, but sometimes stores will show up there and then not have a particular size or model in stock or such.

11
Hardware & Technology / Re: Peak Iphone?
« on: December 25, 2018, 03:19:47 PM »
https://www.aboveavalon.com/notes/2018/12/19/iphone-hysteria
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few are taking into account the impact of the iPhone gray market. The gray market is handling a growing amount of iPhone demand at the low end. This development is giving Apple the freedom to become more aggressive at the high end.

12
I sometimes thought Yahoo's strategy was to always make the wrong decision at every turn.
They had a lot of big failures...
1.) not acquiring Google
2.) not making their homepage a search box
3.) being slow to broaden out keyword matching & putting exact match bids of lower amounts above higher bids for broader terms (forcing everyone to manage huge keyword lists while making the system less efficient)
4.) over-reliance on search arbitrage partners with rather high revenue share to them (one of the first thing Microsoft did after powering Yahoo ads was to implement quality scores to cram down the revenue sent to lower traffic quality partners) combined with that bid jamming feature where you could bid a penny less than a competitor and have their irrational bids blow up their budgets.
5.) many of their verticals were heavily reliant on being early to market & the core brand halo, which left something like a Yahoo! Travel utterly undifferentiated against a TripAvisor as vertical by vertical was eaten by more focused competitors like Monster.com then LinkedIn in jobs, Match.com in dating, eBay & then Amazon.com in shopping, blogger & wordpress over Geocities, Shopify over Yahoo! Stores, etc. ... Even after the recent stock market slide where Shopify is off by about 1/3 Shopify is still valued at about triple what all of Yahoo! sold for.

I think Verizon writing down the internet media plays was a move by the new CEO to affirm that their network is their point of differentiation. As AT&T tries to launch a streaming service that competes against Netflix (along with Disney & eventually Comcast & Apple - also competing with YouTube Premium, Amazon Prime, Hulu, etc.), Verizon wants their own stock to be highly differentiated from a media-buying-spree debt orgy sort of debt load that an entity like AT&T faces.

13
Eventually a company like Facebook will buy Roku to try to catch up with Chromecast & the Fire stick.

MediaOcean is a low-margin business, but they have their hands in the pie of a ton of TV spend. They'd also be a great acquisition to bridge the gap. According to the wiki they handle over $130 billion of advertising spend per year.
https://en.wikipedia.org/wiki/Mediaocean
Mediaocean was acquired by Vista Equity Partners for $720 million back in early 2015.
https://adexchanger.com/investment/mediaocean-acquired-by-private-equity-firm-vista/

14
Confusing signals from Washington send markets plunging
That's a 15 month low.
I think the point of doing the "just checking in" with the bank CEOs & then publicly announcing it was to boost uncertainty rather than boost confidence. Somebody has to eat the loss & the faster it happens while being closely tied to a Fed rate raise the easier it is to blame the Fed & the harder it is for the Fed to raise rates again. Then Trump gets to claim he "saved the world" when he strikes a watered down trade deal with China.

15
Water Cooler / Re: Business: Do YOU plan ahead?
« on: December 11, 2018, 08:01:47 AM »
With the web I always believe nothing has more than a 3-year lifespan to it. That forces one to have a good enough return (if things look to be going right!) to choose things that are not pipe dreams that will never pan out & it forces one to periodically re-evaluate strategies for how to improve on things which already exist.

Beyond that my general approach has been to primarily focus on working on one of the following 3 areas
  • things where the numbers (visitors? revenues? some other metric?) look to be moving in the right direction. by working on what is already working you are investing more in winners and keeping your mental health up, whereas if you invested heavily (time, emotion, capital) into something that was falling off a cliff then it is very easy to get burned out & get in some self-destructive loop.
  • things I like doing. also easier to not get burned out. and easier to learn new things & be able to perhaps find ways to quickly iterate improving things in areas you like/enjoy.
  • things I think I can do in a quick burst & then sort of forget until there is an idea that fits in one of the above categories. sort of like short bursts of pain & boredom to be followed by more enjoyable things.
I don't really make big plans, thus making it easier to shift things around as the web itself shifts.

I have to do lists, but unless something is urgent (e.g. server hacked, server down, software security update that if ignored will quickly lead to server hack, etc.) I don't really use specified "do by" dates on most things.

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