Don’t tell anyone, but I am not sure I like my new iPad

It’s very embarrassing, but I think my iPad annoys me. Baruch feels that he should be raving about his iPad. It’s the biggest thing to hit consumer tech since, well since the iPhone 3G took off. When the history of early 21st century tech is written, it might even be  a more important product than the iPhone. And here am I, on record, complaining about it. I’m going to be that guy from IBM who said in I think 1945 that there would only ever be like, 5 computers.

So, why don’t I like my iPad?

1) Flash — ahh-aaaaahh! I miss Flash on my iPad like I don’t on my iPhone. I (mostly) understand The Great Jobbso’s reasons for treating Flash like a vampire looks at garlic, but I have somehow failed to make my 4-year old understand them as well. All he knows is that he is unable to play his favourite Flash-based Teletubbies game on the CBBC website. It doesn’t work, and he wants Daddy to fix it. Obviously Daddy can’t. He gets cross. So the poor little tyke’s had to go back to the PC for his Teletubbies.

Daddy had a similar experience with the Daily Show. Watching the Daily Show online is, for Baruch, almost the whole point of having The Internet. And it’s flash based. And its not just John Stewart, it’s like half the commercial video on the internet, from retail sites, to (I am told) porn, to hotel websites. Baruch hates those little lego blocks in the middle of the space where his video should be. His heart sinks when he sees them. He wonders what he’s missing.

I don’t have the same level of expectation with my iPhone. After so many false dawns in the mobile internet, I secretly think I am not supposed to surf the web on my phone, so anything I can do on it in that direction I still find mildly incredible. I don’t typically use it for streaming video. And I didn’t buy an iPad as a replacement for my iPhone.

Anyway, lack of Flash is a major problem on the iPad that I didn’t think about when I bought it. Here are more: Continue reading “Don’t tell anyone, but I am not sure I like my new iPad”

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Is the Nokiandroid an inevitability?

Priceless post by Jean-Louis Gassée on an imaginary conversation at Nokia between the amusingly named CEO Olli Pekka Kallasovo and his head of mobile devices Anssi Vankoji. The key point is where Fake Oily says to Fake Anssi:

This leaves us with one choice: Android. I have made the decision and I want you to implement it.

Go read it. It’s very funny.

More seriously, dear readers, I actually think it’s going to happen. I don’t share Jean Louis’ pessimism on this. These Finns are totally fucked. Symbian 3, Symbian 4, Maemo, Meego, no-one knows what to write code for, and everyone is just tired of listening, of attending another bullshit launch of another car crash handset. In his discussions with analysts, salespeople and other investors, Baruch feels a tipping point has been reached. Nokia have lost all credibility with investors and developers and will very rapidly fade into irrelevance unless they go Android, and do it while they can still make a difference in deciding the outcome of the war between Android and iPhone.

Needless to say, OPK and the current set of Finns will have to go.

Just think of the consternation at Motorola and HTC. Much gnashing of teeth. It’s a delicious prospect. Android is going to suffer a severe setback later this year when Verizon, the major refuge of the Androids, goes iPhone. Google getting Nokia on board, still the leading handset player in the world with a lock on the higher end in developing countries, would pretty much cancel that out and equalise the playing field. Needless to say, Nokia would immediately become Google’s préféré, the recipient of the latest updates to the OS.

Ultimately, Finns are nothing but pragmatic. I think this is going to happen and I think it will be sooner rather than later.

Thoughts on The Big Short by Michael Lewis

Just devoured the Michael Lewis book: flipping marvellous it was, too.

Baruch has 3 major takeaways.

Takeaway One: I wrote not so long ago that “investing should be a solitary activity” — in a (-nother overlong) post which was nicely taken up and expanded upon by Tadas at Abnormal Returns. What I meant was that you shouldn’t be dependent on Baruch and others for your investing results. The Big Short is a reminder of something else: that the independence of mind working alone creates is a huge asset. All the guys in the book were “out of the flow”; Mike Burry because of his Asperger’s, Cornwall Capital because it was just too small for anyone to want to service it, and Steve Eisman, well, because he was on a mission to punish evil-doers. And being out of the flow allowed them to see the unclothed nature of the Emperor. Baruch has lived through bubbles; he knows the attractions of being well-connected, getting “first call” on the hottest new trend or IPO. But its mostly bullshit; an invitation to join the current groupthink.

Takeaway Two: out of the three investors in the book, Baruch identifies most with the Cornwall Capital guys. He largely shares their epistemology, as described by Lewis. They and Baruch are Talebian investors, people who know the opportunity is that they live in Extremistan, but many things are priced like it’s Mediocristan instead. Betting on mispriced, assymetric outcomes is what Baruch tries to do too, and tech investing is great place to find opportunities like that.  It’s odd though that Taleb isn’t mentioned by Lewis in the sections relating to Cornwall, as he is sort of the intellectual father (OK, maybe uncle) of investment strategies such as Cornwall’s — but never mind.

Shorting subprime debt via buying credit default swaps, which weirdly amounted to, as Lewis makes clear, something akin to writing subprime CDOs, was the classic Talebian strategy: a small outlay for an outsized payoff in the case of an outcome wrongly judged by the crowd to be highly improbable. Situations like that can be excessively profitable for the smart punter on the right side of the trade, yet the other side is correspondingly highly dangerous. In the case of subprime, the other side was the financial system. If we ever do somehow “fix” everything, remove the leverage, create redundancy and robustness in the system, it struck Baruch, might we not also partially remove from the system the ability to make big bucks? I hope not. After all, that’s how I put food on my children, as George Bush used to say.

Takeaway 3. I’m not sure how to feel about Lewis’ conclusion about overall financial system. He thinks that when the big old Wall Street partnerships went public it removed all restraint and socialized all the risks; the managers of partnerships with unlimited liability, Lewis thinks, tend to be more careful with the money, which after all belongs to them, than when the capital belongs to faceless shareholders. This is a good insight, and should not be controversial.

However, could the old partnership structure sustain the massive expansion of financial services in the past 30 years? Many would say that is exactly the point, that our current financial system is far too dynamic, too big. But really, can we be sure there aren’t positive aspects to this as well? The past 30 years also happen to be the period where, despite the odd systemic crisis, more people around the world have been brought out of hopeless poverty into the global economy than ever before, and while we have created some undeserving super rich, I suspect that when you consider the relative change in real incomes in BRIC markets, wealth inequality on a global basis might have actually fallen. It may only be a coincidence that the two phenomena occured at the same time. Then again, it may not. If an economy gets bigger and more complex, might it not need an increase in the size and complexity of its circulatory system?

Anyway, let’s see. Roll on the next crisis if it means another book as good as this one.

Silly bears, just watch me walking on all the squares

There’s nothing to blog. Rising markets do that; we’re all fat and happy. I’ve tried to think of something interesting to say and failed. But I’ve noticed that even trivial thoughts, expressed in an unusual way, can seem much more relevant and interesting than they really are. So I’ve tried to encapsulate my more trivial thoughts in Haiku form* and see if that helps maker them look or sound more profound. Here goes:

Bears hyperventi-

late. Bulls are gloating.

Their time will come.

 ***

Who expected

A V shaped recovery?

Well this is it.

 ***

Bears should rethink.

Invent’ry restock

Is yet to start.

***

Cockroach always eats.

Not bull nor bear

He is the ball.

And a random Apple haiku to end with:

iPhones taking over.

No-one else at all

gets a look in.

So there you go. In case you were about to leave a comment, if only to bemoan the fact that Baruch seems to have “jumped the shark”, note I am as yet in two minds about whether I am going to accept comments that are not in Haiku form themselves.

* before the usual array of Haiku pedants write in to complain that I am not using the right number of syllables (17), it should be noted that English is a much more economical language to write Haiku in. 17 syllables is more or less the equivalent of a novel in comparison with the amount of information the same number of syllables can transmit in Japanese (apparently), and the economy of content is a large part of the form’s attractions in my mind. So I chose a 4-5-4 schema for better or worse; I just think it more faithful.

Swedish Internet traffic stays down

It’s not snapping back, and it’s been over a month now. I’m astonished still, especially that none of the analysts covering Cisco and Juniper has picked this up, if only to reassure the punters they don’t have to worry about it. After all, a global pushback by The Man against illegal file sharing is not a serious trend (it’s only a European Union directive). The chart comes courtesy of CNET.

Overall Swedish Internet traffic apparently dropped drastically on April 1 when a new antipiracy law went into effect. The graph represents traffic in gigabits per second through Netnod, the major Swedish node for exchange of traffic between operators.

(Credit: Netnod)

Trimming the Hedgies

Going through my daily abnormal returns browse these days makes me want to misquote Admiral Beatty at the Battle of Jutland: there seems to be something wrong with our bloody hedge funds. They’re crapping out left and right. What gets me is not just that they are all doing it at the same time, which is astonishing enough, it is that it seems to be getting worse. Given half decent risk management, this should not be happening. I was aware of the existence of hedge fund beta where it comes to Quants, but I had always assumed there was sufficient diversity of opinion within the rest of the popular hedge fund strategies, particularly in equity long short, so that they would have some sort of diversity in their returns. I had also assumed that these guys were smart and flexible enough to be able to stop themselves out, to switch stuff around and refashion their portfolios to find something that works. At the very least, they could have just stopped doing anything, cover shorts, sell longs, and go flat.

This is clearly not the case, and I have not yet found a convincing explanation for it. The Citadels, Atticus(-ses, Attici?), Tontines, Fortresses of this world seem to be deer in headlights. Their performance is deteriorating over the course of this year, not stabilising. September was the worst month ever, we were told, so it would not be a very difficult decision to retrench, take some action, gross down and change orientation some way. Instead we find out that October was worse.

What the hell is going on? Is it just that they are deeply stupid? Like the Janus and Nicholas Applegate long only guys in 2000-2002, holding on to Worldcom and JDS Uniphase until they were carried out? Is it that they are still leveraged? Is it because other strategies are losing much more money than the equity long short guys can be making or not losing? Is it because they are stuck with illiquid positions they can’t exit, or have to slowly and their own selling pressure is bleeding them white? Are they just structurally net long? How and why? Why can’t they change??

I suspect there are 2 main explanations. Firstly, while these big multi-strat managers may not actually be stupid, their problem is more that they are hidebound, cowardly and unimaginative. They are locked in a terrfied protective huddle in the same old positions, that makes them nothing more than a vast target. Secondly, they have squeezed everyone out of the market. Small hedge funds don’t get a look in. Long short equity hedge management as it is currently run is a vast crowded trade, and losses in the weight of money devoted to it outweighs the gains of the very few who are coining it. They can’t bet against the system like the old ones did; they are the system. Continue reading “Trimming the Hedgies”

Hitch vs the Godly, again

Yo Bento, check it. You love this stuff, believing as you do that the division between the religious and atheist is the great divide of our time. Hitch has a “there is no god/oh yes there is” debate with some old rabbi, and were I to momentarily forget I am an agnostic and were I to pretend I had an open mind, I would probably not be able to tell who won. Actually I am not sure whether I am an agnostic or not — ha ha geddit? Seriously, is there a word for someone who actually doesn’t care whether there is a god or not? Perhaps I am a dontgiveafucktheist.

Maybe not even that is right; it’s more like I am fairly sure there isn’t a conventional kind of god, one who likes beards, thinks about answering our little prayers and enjoys tambourines, listening to hymns and renditions of kum by yah. No, the thought is ridiculous, but there is literally no proof I can come up with to persuade the godly to abandon their silly ideas. As Taleb would put it, “absence of evidence is not evidence of absence”. Epistemologically, it is impossible to prove the lack of existence of god. Or “g-d”, as I would write if I was a complete numbnut. On this reading, I would be a ohwhocarestheist.

Similarly, I think that in the Ethics Spinoza was trying to free his generation from all the same crap: to try and find some sort of synthesis on the great argument on god’s existence or not, an argument constantly raging below the surface, belying the sometimes lukewarm declarations of piety of the time. To come up with some statement about god everyone could agree on so we could go off and discover and debate useful things instead; optics perhaps. Not have another fucking circular, endless rehearsal of the same tired rhetorical formulations. None of his friends would have to go to prison any more; finally the religious and irreligious would be able to march hand in hand into the broad sunlit uplands of the 18thC.

I get the impression from this transcript that even Hitch is bored, just going through the motions. On the verge of the end of the era of Rove, the supposedly imminent elevation of Obama (and I share the suspicion with the republican base that he is a secret agnostic), are we sure that we really care, Bento?