Belgium bids adieu to civil liberties

Posted on April 1, 2010 by | 7 Comments

BBC — A Belgian parliamentary committee has voted to ban face-covering Islamic veils from being worn in public.

These stupid Belgians are well on their way to throwing the baby out with the bathwater, Baruch. There should be a law against women being forced to wear burqas by their husbands, not against wearing burqas outright. If that is hard to enforce, well, tough. The right of a woman not be forced to wear a burqa by her husband must not come at the expense of the right of a woman (or a man) to wear a surfeit of fabric in public, for whatever reason, including religious belief.

Belgians forbidding the wearing of burqas is as backwards as Saudis forbidding the not wearing of burqas. Both constrain the civil liberties of women. That this blazingly obvious point does not gain more traction in Belgium infuriates me.

If Belgian lawmakers want to convince me that this is not a law borne of religious intolerance then I look forward to the ban on motorcycle helmets, ski masks, carnival masks, full-face bandages, wedding veils and Halloween costumes. Otherwise, there will be a ready-made excuse that should hold its own all the way up to the European Court of Justice: “It’s not a burqa, officer, it’s my Halloween costume.”

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Posted in Barbarians, Philosophising

No Stock Recommendations here; move along

Posted on March 28, 2010 by | 5 Comments

Baruch recently found himself commenting on Wall Street Cheat Sheet, on a post by Damien Hoffman, who seems to really dislike Jim Cramer. The post was about some investigation of TheStreet.com by the SEC, which Damien thought highly amusing, perhaps because he also runs a competing subscription-based financial edutainment site. Now, Baruch doesn’t pay attention to Jim Cramer on TV, but in fact quite likes him in print. He reads his posts on theStreet.com, and respects his track record as a hedge fund manager and pioneer econo-blogger.  So Baruch felt a brief moment of annoyance about seeing someone he liked being unecessarily trashed, but soon his heart was filled with forgiveness and understanding again. We must not be too harsh; snark is Damien’s job, what he gets paid for. He is a financial blogger-journalist, and being cheeky about mainstream media figures is part of that David and Goliath thing blogging used to be all about.

Anyway, this post is only a bit about Jim Cramer and Damien Hoffman. The exchange got Baruch thinking about the differences between journalists/bloggers (or whatever you want to call them) and investors, and what it means to communicate about investments with the public. Baruch finds this terribly interesting, because of course as an amateur econo-blogger and a professional investor, he has a foot in both camps.

Some of Baruch’s best friends are, or have been, financial journalists and commentators, on blogs and print. Being a financial journalist is a good, interesting job, and very important to the proper functioning of a marketplace. Journalists can do things, find things out, and explain things the public and investors need to know in ways investment professionals can’t, at least without risking jail.

But in the end journalists are explainers, commentators. They are dependent on market participants to provide them with things to write about. They review what others do. They work with the huge advantage of hindsight. And when it comes to giving advice about what what should be done, most media commentators are no better than the rest of us. Probably worse; they don’t get as much practice at it.

The major problem that commentators have is that rewards are based on reputation. Praise from peers and increased readership is the only way they have of knowing how good at their jobs they are. This is dependent on how smart the writer sounds, rather than how good he or she is at giving actual foresight. It’s a difficult thing, having to appear smart all the time. A well publicised prediction gone wrong can be pretty devastating to a reputation and undo lots of less well-publicised predictions which went right. Many writers solve this problem by not making many predictions at all. This is why most analysis pieces in newspapers and mainstream blogs end up in prevarication and fence sitting. Most journalists these days are smart enough not to end their articles with the words “only time will tell” — but they may as well.

The need to constantly appear smart also incentivises some to find a shortcut. A good and quick way of appearing relatively smarter is to find some fellow commentator who has broken the cardinal rule of journalistic punditry and actually had a stab at predicting something in a clear, falsifiable way — and got it wrong. Pointing out someone’s errors is a good way to come up with copy when you can’t think of anything constructive to say.

Ironically, consumers of financial media are actually crying out for someone to tell them what to do, rather than the prevarication they are confronted with everywhere. So pundits who do state clear positions tend to get eyeballs pretty quick. This unsettles their peers, who are universally relieved when these outliers inevitably cock it up, and they can now write gleeful articles about how it was obvious their colleague didn’t really know what he was talking about in the first place. Realising this, even sites which purport to give readers actionable intelligence, such as Lex, don’t actually tell them what to do, which would be too risky. A conclusion is always hinted at, but never made as plain as ” we think you should sell”. Instead you get some coded priggishness, like the chairman of company X “should enjoy the view from the top while he can”. Which gives the Lex writer enough wiggle-room to appear clever whatever the outcome for shareholders. This is, after all, the point of his writing, which he would freely admit to you as well if you bought him a pint.

Compare financial journalists now to actual market participants. While every now and then hedge funds get in a feeding frenzy and will short your longs and go long your shorts if they think you are in distress, the rest of the time professional managers are remarkably civil about each other in print, in person, and in front of clients. They don’t have cat fights very often. Continue reading →

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Posted in Fellow Collegiant, Lens grinding, Stupid Cartesians, What Would Spinoza Do?

Econobloggers need their crisis back

Posted on March 7, 2010 by | 30 Comments

I think so, dear readers. With the advent of peace and plenty, as we move to the broad sunlit uplands of The Recovery, I fear some of the spice has gone out of the commentary on sites like this one, and its friends. Where people used to read econoblogs to actually understand a crisis that CNN and Fox News soundbites didn’t seem to encompass anymore, as the meltdown recedes into the past there’s now just a dull ennui.  And with that, the econoblogosphere is moving back to where it used to be, which is to cater to a niche, broader than most, but a niche nonetheless, with a circumscribed influence.

The high point of bloggy “power”, we shall probably find in retrospect, was when a number of bloggers were invited to the US Treasury department and fed some by all accounts delicious cookies, as well as being ferociously spun to by the Goldmans guys whose turn it was to be on sabbatical at the Treasury that when it came to financial reform and what had gone wrong in the banking sector they did in fact Get It, whatever It was.

Since then, of course, we have had Obama praise the bonuses to “savvy businessman” Lloyd Blankfein, who as we all know is doing god’s work;  mind-numbingly massive “trading” profits from all the big commercial, investment, commercial investment banks at the same time as accepting government and Fed largesse*; an even more hideous clusterfuck over finance reform than exists over healthcare reform in the US; and this despite none of the proposals under discussion seeming likely to properly change anything worthwhile, other than maybe the Volcker prop trading rule and this last seems fairly dead in the water.

What really rankles this blogger is that the Great Spinozist Republic is being subverted again. Regulatory capture is one thing, the total inability of a political system to make any steps to reform itself when what is wrong is staring at you in the face, is quite another. Political money and public ignorance has corrupted civic decency in the US to such an extent that doing the right thing for the Republic appears quite impossible.

All these things should make econo-bloggers all quiver with righteous anger, which we would communicate to our readers who would then rise up en masse against the legislators captured by Big Banking, and some form of actual reform might even take place.

But something along the chain has broken. Either we have lost interest or, more likely, the world has. To be sure, there are brave souls who carry on the fight. Felix does an admirable job of keeping us up to date with the nuts and bolts of finance reform. Taibbi provides the rhetoric (“vampire squids”, indeed). Calculated Risk and Naked Capitalism carry on doing their thing, as does Zero Hedge in its batshit sawn-off shotgun way. TED gives us the lowdown and I mean low, on what it really means to be a banker (though TED’s next post is just as likely to be about his favourite type of upholstery. Thanks for including us in the list of blogs you read, BTW). There are others, and Abnormal Returns continues to aggregate them. But the rest of us seem to have stopped caring so much. The minutiae of practical policy is much less amusing than making lots of money in financial markets that really, truly appear to be on the mend.

The wider global economy seems to be much better too. Sure, the US seems a bit screwed up still, and unemployment is high, but frankly that’s not where the action is at anymore. Baruch was astonished to read that Gartner is predicting 20% year on year growth in PC units globally. We can talk about overleveraged consumers until we’re blue in the face and we’ll still be wrong. That’s a crapload of PCs, and someone’s buying them. You don’t sell craploads of PCs like that unless there was something going fundamentally right in more places than where things are going fundamentally wrong.

But a better economy just makes people fat and happy, and fat and happy people aren’t likely to be roused by righteous anger. Fat and happy people are not likely to want to change much. Fat and happy people are much more likely to assume the light at the end of the tunnel gives out onto a large outdoor buffet than the next oncoming crisis. Hell, fat and happy people are more likely to do the stuff to bring on the next crisis, to binge, to borrow more, stoke the next bubble wherever that may be and feel pretty smart doing so, just like we did in 2006 and 2007. Reformed Broker Josh captures the new Zeitgeist rather well just today when he lists the things people no longer appear to be interested in e.g. financial reform, unemployment, etc and says

most market participants have instead turned their focus to finding secular growth stories, deep-value high yielders to replace the lack of money market interest and other such assorted baskets to put their eggs in.

Fine with me.  I could use a break from the “news” myself.

I can’t say much better. Josh is saying what lots of us think.

Baruch isn’t really the person to do anything about this himself. He isn’t Spartacus. It was no co-incidence he was not invited to hob-nob at the Treasury; David at Aleph Blog was kind enough to suggest he and some others should be next time, but Baruch would probably have just eaten more of the cookies than was fair and got bored and played Homerun Battle 3D on his new iPhone until it ran out of power, annoying everyone. Baruch is one of those who likes to analyse what Is and try and make money out of it. He is not very interested in, or good at, what Should Be, though is slightly envious of those who have strong opinions in this direction. Less “designing better futures“, more buying the right ones. Even if Baruch had a prediliction to think about policy he doesn’t have time to think about more than what he writes about already; he has a day job, and a very intense one, which soaks up what mental energy he can muster these days.

But buying better futures are not what the best blogs in this space are about (and not what Nick Gogerty’s blog is either). Posts about the latest chart formation in the S&P500 are not memorable. They help no-one. Blogs about how best to trade can be interesting, but remain narrow and mercenary. So in the end are posts about how many iPads Apple will sell, the stock-in-trade of UB recently. Myself and Bento are just not that qualified to do much else and don’t have the time to post as often as we want. But there are other bloggers who are and who can. At its best, the econo-blogosphere can be the last haven of truly independent, non-captured, and crucially, informed, commentary able to affect policy and opinion makers positively. It used to do just that. It may not help in the end but let someone at least try.

Get your game back on, people. Get some fire in the belly again. A crisis is a terrible thing to waste, and it looks like we are on the verge of wasting ours.

* the irony is of course, is that the millions in banker wodge financing the lobbyists is at least partly the hot money doled out by the Fed to banks in that extraordinary money machine called ” quantitative easing”: Fed buys up at full whack the treasuries it issues to banks at a discount, financed by cheap rates set by the Fed itself. Said banks, busting out with Fed-invented cash, or more properly, “trading profits”, refuse to lend it to small businesses like they’re supposed to in the textbooks and support the economy. No, they plow it into awarding themselves big bonuses and, most pricelessly, pay lobbyists to pay off politicians to subvert both good sense and a public opinion which is as viscerally opposed to big banking as it is ignorant and pliant, and make sure the status quo ante crisum is restored. An edifying spectacle.

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Posted in Blogroll, Fellow Collegiant, Lens grinding, Philosophising, What Would Spinoza Do?

What is Apple up to in China?

Posted on February 28, 2010 by | 7 Comments

Baruch, in this post: A new piece of information, augmented by local insight, that amounts to yet another upside case for Apple. And yes, it involves the iPad.

The new information: This past Thursday, Apple revealed plans to open 25 retail stores in China. Currently, there is one swish Apple Store in an upmarket outdoor Beijing mall, with one more planned in Beijing and two in Shanghai this year. Opening Apple stores in Chinese cities that most foreigners have never heard of (The likes of Shenzhen, Hangzhou, Chongqing, Chengdu, Kunming — there are 25 such cities in China bigger than Chicago) betrays a whole new level of ambition in the Chinese market, beyond just servicing creative elites in their international watering holes.

But what could Apple possibly sell in those stores that the Chinese can afford en masse? Let’s put that question aside for a moment and look at these recent observations:

  • My Chinese teacher, upon visiting my apartment, ogles my 17-inch MacBook Pro and 24-inch Apple screen. She goes so far as to run her fingers over the logo. “Made in China!” she beams. There is pride in the fact that Apple devices are made here, even if the IP comes from elsewhere. They are obviously built very well, which is more than you can currently say about Chinese-assembled cars or buildings. Apple computers may well be the most famous high-quality product coming out of China right now, and the Chinese know it.
  • Take a subway in China during rush hour and you will see few Chinese reading books or newspapers — the subway is far too crowded to claim that much personal space. Instead, more than half are pressed against their multimedia devices — hacked Sony PSPs, shanzhai touch-screen gadgets, or large-screen mobile phones — often scrolling attentively through long texts or watching soaps.
  • Luxury good brands usually tackle China by setting up shop in the most prestigious mall available and then running an ad campaign. These high-end malls are always empty when I inspect them, because very few Chinese right now can afford what’s on offer — but that’s OK: The idea is to stake one’s claim early as an aspirational destination, to be that symbol of success craved by the Chinese, so that when they do all eventually achieve success in droves, they will be preprogrammed to want that Mont Blanc pen in their Gucci bag slung over a Prada one-piece — just as we in the West have long been conditioned to want.
  • Luxury goods are easy to fake. Premium goods are not. As the world’s best fakers, the Chinese are well-positioned to appreciate that difference. Truly premium products (Audi, Nikon, Apple) are difficult to fake because their value lies in their superior functionality. Luxury goods are easy to fake because their prime function — to tell time, or to carry your makeup — costs very little. The rest is about conventional status messaging, wrought through expensive materials and labor, scarcity and branding — and these can easily be subverted to produce knock-offs. I suspect luxury brands will find they have a far harder time gaining a foothold in China than premium brands, because the Chinese are uncommonly pragmatic.
  • The Apple store in Beijing, on every occasion I have visited, is just as bustling as the ones in New York or London. I haven’t seen many computers being walked out the front door, but there is definitely a lot of experimenting with the display units, and the most popular items are iPod and iPhone accoutrements. (I have already explained why low official iPhone sales in China are nothing to worry about.) In short, the Beijing Apple Store is nothing like a luxury goods store in China. The focus is on transactions in the here and now.

Perhaps it is time to come to the gist of this post. For all the reasons above, I don’t think Apple’s move into 25 Chinese cities is the conventional luxury brand play for China, but a plan to sell them something that they can use, crave and afford today: Yes, iPads. at 499 USD, they are far cheaper than iPhones, which maybe 3 million Chinese have already bought without a subsidy. (I bought a Hong Kong factory-unlocked 16GB iPhone 3GS for 730 USD in Shanghai a few weeks ago.)

But why would the iPad be a success in China? Well,

  • Premium UI, multi-touch, battery tech = Hard to knock off.
  • Made in China = National pride.
  • 499 USD = Affordable to a middle class that is still a minority but huge in absolute numbers.
  • Long, crowded commutes = A compelling real-use case and an opportunity to show off.
  • iPhone OS = Best-in-class Chinese language support right out of the box. Far superior to any home-grown device — seriously.
  • iTunes = All those pirated mp3s and movies will work just fine on the iPad. (Don’t expect the Chinese to pay real money for their music or movies — ever. Sorry.)
  • App store = It’s just a matter of time before a third-party Chinese-language ebook app sells cheap literature.

The iPad is the first Apple computer many Chinese can afford. They will flock to it. You might even want to ask “why just 25 stores?” Apple COO Tim Cook has an answer:

“We are very, very focused on the quality of the point of sale and consumer experience,” Cook said. “We would prefer to move slow because we are building the brand for the long-term.”

Expect great things from Apple in China. Expect them sooner than you might think.

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Posted in Lens grinding, Philosophising

In defence of the Verizon iPhone

Posted on February 13, 2010 by | 13 Comments

OS share

Baruch has already forgotten about the iPad. Whether chick magnet or large print e-Reader for the elderly, any ideas we have about its significance are speculation at this point, and will probably unravel in the face of reality.  The most tangible action at the moment is in the iPhone, and the most interesting thing that didn’t happen last month is that Verizon didn’t get their own CDMA iPhone announced alongside the iPad.

This was seized on last week by a number of Wall Street analysts who concluded that poor old Verizon won’t get an iPhone at all this year. Credit Suisse reckons there’s a “75%” chance the iPhone stays with AT&T in 2010. I read the research, which also suggested that AT&T might have made some interesting concessions in order to persuade Apple to play along. Barclays Capital (I haven’t read theirs) thinks the fact that Apple is sticking to AT&T for the iPad is a “vote of confidence” in the AT&T network; that, and the comments Apple have made to the effect that they think the AT&T network is very nice, thanks, and they are very happy with it. They don’t see a VZ iPhone in the works either.

Hey, sell side analysts! Are you totally, like, stupid!? There is no way you can make that conclusion on the facts we have so far. The rudest understanding of what Apple is trying to do here and the opportunity set it faces would tell you that the most mind-bogglingly idiotic thing Apple could do would be to keep the iPhone as an AT&T exclusive a moment longer than it has to. And I am not alone assuming that Apple is not mind-bogglingly idiotic. Continue reading →

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Posted in Lens grinding, Philosophising, Stupid Cartesians

iPad: forget the old people — it’s a chick magnet

Posted on January 29, 2010 by | 45 Comments

The iPad: Bloggers hate it. Investors hate it — AAPL is down 4% in the cold light of the day after. Fake Steve Jobs doesn’t seem to like it much. Even Andrew Sullivan is down on it.

What do all these people have in common? They’re all (mostly) men. What are their complaints? The lack of multitasking; no Adobe Flash; no front-facing camera; it’s just a glorified iPod Touch; where’s HDMI? it doesn’t fit in a conceptual box — it’s not a smartphone, it’s not a netbook; 64 gig NAND Flash isn’t enough, why not 128? Where can I put it? Do I have to carry it under my arm?

Many of these complaints may be justified, but are missing the wood for the trees; we are men. We are nerds and geeks, we love specs, and compete for mastery over each other by comparing the wattage of our hi-fi systems. But we are only half the population. The women I have asked about the iPad (admittedly not a statistically relevant sample) seem to be viscerally enthusiastic. 

Bento, you will be surprised to find I totally agree with your post below, even as I am extremely vexed you got yours out in front of mine on the subject and are thus getting all the glory. The iPad is as you say “a complex computer simplified”, and ideal for baby boomers like our parents. I was going to put it slightly differently however, and say it is a complex computer, turned into an internet appliance. Yes, it is to the internet as a blender is to food and as such it will attract the old and decrepit, it is true. But that’s a bit of a sideshow, if you don’t mind me saying so.  As an appliance, iPad has the potential to tap a much greater prize, that vast hard-to-reach segment of consumer tech: busy, empowered women.

Men don’t like appliances. We want things that can do lots of different things, that we can tweak and fiddle with, and then argue with each other about which one is better. Women aren’t like this, and because of this I have a feeling that it’s women who actually determine the eventual winners in consumer tech; I believe but can’t prove that Nokia, for instance, came out on top in mobile phones in the 1990s and early noughties because it was the brand of phone women liked the most. It worked. It was simple. It didn’t attempt to wow you with numbers and specs. Nokias had great battery life so it didn’t matter if you forgot to charge it the day before. Nokias were nice to look at, in a non-flashy way. Women can accept and love mobile phones, a way to communicate, much more readily than they do PCs, for instance, which most males have used for solitary gaming or porn. That’s changing now pretty rapidly, but is still probably why almost 1.5 billion mobile handsets will be sold this year, and only 200 million PCs.

Women will like the simpleness of the iPad not because, like an increasingly creaky boomer, they cannot put up with computing complexity; they can. They just don’t see why they should have to. They can’t be arsed. They multitask in their heads; they don’t need it on their screens as well. How many gigahertzes it has is not important — does it do the job it is supposed to? And what is an Adobe Flash anyway? Embarrassingly, I am not sure I know myself. Women do not worship at the altar of technology.

Mrs Baruch often forgets to charge her mobile phone . This often drives Baruch up the wall, especially when he needs to get in touch with her. She knows it needs charging, but trusts that it will last that bit longer when she needs it. Why shouldn’t it? And really, she’s right, it should. The month-long standby time of iPad will mean this is a problem much less often. The large iPad screen should be good for sharing, for doing things together with the kids, showing things she finds interesting to all her friends over lunch, simultaneously, rather than having each of them hunch over an iPhone one by one. Through tied media content, she can buy fashion magazines full of glossy adverts and miniscule amounts of irrelevant content, and keep them on hand for instant recall while shopping. She doesn’t have to worry about carrying the iPad under her arm — she has a handbag it will fit into rather neatly.

For developers, this will be great – iPad has the potential of opening key new demographics, and will keep them working on the Apple OS platform to the exclusion of Android, Windows, and everything else. That’s the key for Apple here, I think. iPad doesn’t need to be a massive 50 million unit hit product for it to work (one hears of a production run of 5 million this year FWIW). It just goes to cement the edifice of Apple’s mobile internet platform dominance even more firmly — something we have written about before.

The other, highly important, meaning of the iPad is that it opens a wholly new battleground; it is the first new category we have seen in tech for some time. It is effectively a smartphone with gigantism– largely all its innards are shared with the iPhone — and as such it is finally signalling the collision of the PC with the mobile phone, with first round to the mobile phone. We are likely to see an explosion of me-too products from PC and smartphone makers, using Intel Atom or ARM-based processors, and a swathe of different yet similar sizes and form factors are likely to emerge. On the platform side, Windows, Windows Mobile 7, Chrome, Android and other Linux-based OS are all going to be vying for supremacy. It’s going to be a very exciting time, and I can’t wait to see what’s going to happen.

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Posted in Lens grinding, Philosophising

The real reason why the iPad will be a success

Posted on January 28, 2010 by | 49 Comments

Those who are dubious about the iPad’s impending success (and I suspect that you are one of them, Baruch) are of course in danger or repeating history (qv iPod, iPhone). I have no intention of replicating all the arguments pro- and con the iPad, so I will limit myself to just one wholly original observation as to why I think the doubters once again are not getting it:

1. The iPhone was a success from the start, but it really became a ubiquitous device when it proved competent at a whole range of tasks beyond Apple’s original marketing copy. (It was just “a revolutionary mobile phone, a widescreen iPod with touch controls, and a breakthrough Internet communications device,” remember?) Now games rule on the iPhone, and as many parents will attest, the iPhone’s one true calling is as breakthrough child pacification device.

A similar role awaits the iPad. No, not for children; rather, look to the burgeoning end of the demographic curve: baby boomers.

I know many baby boomers who are intimidated by computers. Plenty are not, but a great many spend far too much time wrestling with viruses and drivers, wondering what a DLL is, and generally not knowing the difference between their RAM and a hard disk — all just so they can read emails and check their bank account online. Some boomers have sired offspring who gladly help them with remote tech support sessions, but many others have not, and suffer for it. The reason for all this misery is simple: Computers are still too complex for those not prepared to give them their undivided attention. That’s even the case for Macs.

Not so with the iPhone. I’ve seen that thing understood within minutes by 2 year-olds and 84 year-olds. It does one thing at a time. Your finger is the cursor. There is no need to tap things twice before stuff happens. You are allowed to turn it off with the power button.

But the iPhone isn’t perfect for baby boomers. The screen and text are too small for aging eyes, the keyboard too cramped for confident typing, making it unusable for even basic office productivity tasks.

Enter the larger, faster iPad. It’s a complex computer simplified, which makes it a perfect fit for those whose remaining life is too short to spend it defragging drives. Add the keyboard dock, and the iPad is versatile enough to be a baby boomer’s only computer. The only thing it won’t let them do is videoconference with their grandchildren — which is an omission I hope they fix in next year’s version — but on the other hand, at $500 this much is forgiven.

My prediction: Within 2 years you will be reading articles describing how it was obvious — with hindsight — that the iPad would be a hit with aging baby boomers. But who needs hindsight when you have Ultimi Barbarorum?

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Posted in Lens grinding, Philosophising