Tired Of Taleb?

Theodore Sturgeon famously said "80% of everything is crap." I remain convinced that if he had lived to see the Internet, he would have revised his figures substantially upward.

How that quote is relevant is because I was disappointed by this guest column on the normally thoughtful and insightful Infectious Greed blog (which defies the odds by usually being 80% good) by author Pablo Triana:

Paul Kedrosky's Infectious Greed: Guest Post: Nassim Taleb Got It Right

Unless you're just now tuning into the world financial crisis, I'm struggling to see what insight this essay has to offer, beyond a lot of back patting, which is somewhat redundant given how self-sufficient Taleb is when it comes to very public acts of self-congratulation. That, and telling us, again and repeatedly, what he's already told us many times before.

As a reader of Taleb's work I have to wonder at his self-exemption from his own line of reasoning from Fooled By Randomness.

Take a big enough sample of mathematicians and economists, and like the proverbial monkeys with typewriters, Taleb would argue that just as a large enough sample of investors will produce someone as wealthy as Warren Buffett, it's inevitable that one of them would be right about what was going to happen.

If it was someone else, he'd call them a product of survivor bias, but because it just happened to be him, that make him a genius.

Besides, the fact that this Taleb is correct is a sample size of one, which anyone tell you is meaningless, but of all the possible economic scenarios, what about the average across all possible Talebs? Would the deviation across the Taleb mean be significant? Would all possible Taleb's be mostly-wrong, or mostly-right? If you buy into Fooled By Randomness, this is important!

More than one commentator has begun to think that Taleb is growing tiresome. At the risk of sounding cute, he's gone from being a Cassandra to being a broken record.

I don't begrudge Taleb his passion for appearing on television, but if he's going to keep up his schedule of media appearances, it's time to stop telling us what he began telling us ten years ago.

It's time to pull the self-congratulation train into the station, and tell us what he thinks is going to happen in the next ten years, and start dining out on that, if and when he happens to be right.

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This Week In Marketnews: Economic Woes, Part 2

Marketnews: Custom Corner: Surviving a Downturn - Part 2

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Royal Bank Of Scotland Still Foundering

What's the Gaelic word for schadenfreude?

At this moment, RBS is hovering at $3.16 a share. That's equivalent to 15.8 cents a share before their ill considered 2o:1 reverse split.

On the bright side, the UK government seems to have a bottomless appetite for shoring them up, so who knows where the bottom might really lie?

Maktoob: Royal Bank of Scotland expects annual loss up to 8.0 bn pounds

Royal Bank of Scotland, majority-owned by the taxpayer because of the credit crisis fallout, said Monday it estimated an underlying annual loss of up to 8.0 billion pounds (11.9 billion dollars)."
Credit and market conditions in the fourth quarter of 2008 were particularly challenging and RBS estimates the group will report for full year 2008 an attributable loss, before exceptional goodwill impairments, of between 7.0 and 8.0 billion pounds," RBS said in a trading update

**The content contained in this blog represents the opinions of Mr. Distad. This commentary may contain forward looking statements and definetely contains sarcasm and rude sentiments. This commentary in no way constitutes a solicitation of business or investment advice. If you're looking for stock picks from me, look somewhere else. Really, what were you thinking? If you came here because you were trolling Google looking for someone to help you get rich in only twenty minutes a month, you need to seriously re-evaluate your worldview. This blog is intended solely for the entertainment of the reader, and the author, and not neccessarily in that order.

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Global Shipping Now Taking Cues From Amazon.com

Clusterstock's Joe Weisenthal covers a number of interesting beats, including global cargo carriers. His piece today reports that not only are some sea routes below their break-even, they're effectively free.

Clusterstock: Global Trade: Now With Free Shipping And Handling

Shipping rates, which totally collapsed in 2008, have shown some signs of life in the past few weeks, but it's still a pretty miserable environment. Along some Asia-Europe trade lines, shippers are charging $0 for suppliers to send their wares overseas. It literally couldn't get any worse.

Naturally, the first thing that I thought was "Well, maybe they can make it up on volume."

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Royal Bank Of Scotland Postpones Inevitable

UK's Royal Bank of Scotland has been tempest-tossed as one of the non-US banks most exposed to the gyrations in the US mortgage market. So much so that their stock took an absolute drubbing, falling below US$1 at one point.

That is, until the geniuses at RBS undertook a 20:1 reverse-stock split. For readers who don't know, a reverse split reduces the total float of common shares while maintaining the same total market cap, mashing the stock price of 20 shares into the price of one super-share. Thus a 94-cent stock became an $18.85 stock.

There's a specific financial term for this sort of hocus pocus: bullshit. For a start, there's zero value created for existing investors. If you owned 10,000 shares when they were worth a 94-cents each, you promptly own 500 shares worth $18.85. Six of one half a dozen of the other, since the value of your shares are valued at $9425 either way. Hooray.

Of course, if you jumped in after the split and bought 10,000 shares at $18, God help you. Obviously, none of the problems vexing RBS have simply gone away. The market concurs, since RBS has continued to slide downwards since the split, reaching yet another 52-week low of $14.76 today. You don't have to be George Soros to know that pre-split that would have been 73.8-cents a share. Woof.

**The content contained in this blog represents the opinions of Mr. Distad. This commentary may contain forward looking statements and definetely contains sarcasm and rude sentiments. This commentary in no way constitutes a solicitation of business or investment advice. If you're looking for stock picks from me, look somewhere else. Really, what were you thinking? If you came here because you were trolling Google looking for someone to help you get rich in only twenty minutes a month, you need to seriously re-evaluate your worldview. This blog is intended solely for the entertainment of the reader, and the author, and not neccessarily in that order.

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Lots Of Schadenfreude Over Starbucks

All sorts of people are rubbing their hands together and cackling with glee over Starbucks' crummy quarter.

Yahoo!: Starbucks fourth quarter profit drops 97 per cent on closure costs

Fewer U.S. customers and venti-sized costs for closing poorly performing stores led to lower sales and profit in the fourth quarter at Starbucks Corp., the company said Monday.
Seattle-based Starbucks said profit fell 97 per cent to US$5.4 million, or a penny a share, from $158.5 million, or 21 cents per share, a year earlier. The coffee retailer earned 10 cents per share when the costs from closing about 600 stores in the U.S. and 61 locations in Australia are excluded.

SBUX ranks up there with Wal-mart and Haliburton in contention for the title of "Corporation People Most Love To Hate." They may be large (and personally, I think their coffee tastes like dirt), but that doesn't mean they're unstoppable. Threat Of Subsititution is always a danger to big brands, and coffee is one market with plenty of competition.

As it happens, I just got this email from a friend who is a keen coffee watcher like myself:

Last summer I visited a single location independent coffee shop and got in to a conversation with the owner. 2 blocks away from a Starbucks. All it took for him to make a go of it were 2 things, entry level good cup ofcoffee for 60% of the price at Starbucks and the secret weapon.... Freewifi. I guess sometimes a brand, no matter how powerful it might be perceived to be, can have a critical weak point.

If you're a clever business owner, there's always a way to differentiate yourself and prosper, even in the face of giant competition.

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Commentariat On Warren Buffet: A Little Less Talk And Lot More Action

I'm a huge fan, verging on slobbering fanboy even, of VC Paul Kedrosky and his blog Infectious Greed.

By and large, not only are his posts extremely educational, but quite often the comments left by readers are as insightful as his news posts.

there are exceptions however. There's some silly commentary stemming from Mr. Kedrosky's reasoned and thoughtful note about Berkshire Hathaway and the state of their investments in the current economic climate.

Paul Kedrosky: Warren Buffett: Lost His Touch (Again)?

Sorry but there's something absurd about a bunch of readers who aren't in Buffet's league Monday-morning-quarterbacking his calls, when in game terms, we're not even at halftime yet. Really, who here has the track record to call him out? I know I sure don't.

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Vizio Continues To Grow

More good news from the upstart little-TV-company-that-could.

The Retail Bridge: Vizio Continues To Pick Up Market Share

Despite the sinking U.S. economic situation, HDTV maker Vizio reported Tuesday that its products accounted for more than 10 percent of all North American flat panel TV sales in the third quarter, placing the low-cost maker third behind Samsung and Sony in terms of overall flat panel TV shipments.What's more, the company continued its upward year-over-year trend by selling more than 800,000 units in the quarter. Given this growth and its position among value-oriented shoppers, Vizio said it expects to post a 50 percent quarter-to-quarter increase this year for Q4 on particularly strong holiday sales.

In a way, Vizio is like the Hyundai Motors of the video world: initially they were cheap and poorly regarded, but the company worked hard to improve their quality while still delivering low price points, winning fans and converts in the process.

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Harvard Not So Well Endowed Anymore

The Business Sheet: Harvard Endowment Blows Up

Harvard's $40 billion endowment is getting clobbered. The Ivy League school faces "unprecedented endowment losses," as its investments decline and its alumni get poorer. The school will keep many of its programs intact, such as allowing students from low income households to attend free of charge. It's just going to tighten its belt, like everyone else.

I've got no real insight or value to add to this story, I just really wanted to write that headline!

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Circuit City Failure Wounds Landlords

Call it the domino effect. As Retailer Daily reports, it's going to be a Blue Christmas for retail landlords.

Retailer Daily: Circuit City Bankruptcy Sends Landlords Reeling

The market reacted harshly to the news: Shares of Developers Diversified Realty, which has 50 Circuit City stores and derives 1.7% of its annual revenue from them, fell 24.6% on Monday. Real estate investment trusts (REIT) Kimco Realty and General Growth Properties also declined 9.6% and 34% respectively. (General Growth dropped another 68% in Tuesday trading.)Among the other REITs that lost value are Simon Property Group and Vornado Realty Corp.

Don't forget that REIT and other property stocks have already been clobbered this past year, so it's not as if there was oodles of market cap that could be erased and shrugged off with impunity.

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Breaking News: Blockbuster Loses Less Money

Given the general economic climate, not to mention the collision course with obsolescence that video rental stores are on, this is cause for much rejoicing at Blockbuster HQ.

TWICE: Blockbuster Reports Lower Q3 Net Loss

Blockbuster reported lower sales and a reduced net loss for its third quarter, ended Oct. 5.
Total revenues for the third quarter decreased 2.7 percent, or $33.6 million, to $1.20 billion, as compared with $1.24 billion in the third quarter of last year.
Net loss for the quarter narrowed 48.3 percent to $17.8 million, as compared with a net loss of $34.4 million the third quarter of last year.

Sometimes you just have to be happy with what you've got.

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This Week In Marketnews: It's The Economy, Stupid

Marketnews: Custom Corner: Price Hikes in CE

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Posted Without Comment

Got this in my email from one of the Lefties in my family.

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Some Quick Linkage

I'm pressed for time, but here's some links to a couple of things that caught my attention.

Clusterstock's John Carney ladles out some bad news about credit cards:

The Coming Credit Card Bust:

One of the worst kept secrets in the economy has been that consumer credit is overdue for it’s own subprime meltdown. After years of cheap credit that fueled a boom in consumer spending, credit card companies and retailers providing credit to customers are seeing a spike in defaults. They’re reacting by pulling back on available credit and raising rates, making consumers less able to pay bills by moving balances to the next card.

And on an entirely unrelated note, here's a thought provoking contrarian view of intellectual property from the Von Mises Institute:

Is Intellectual Property the Key to Success?

One of the greatest tragedies of intellectual property law is how it generates intellectual confusion among successful businesspeople. Many are under the impression, even when it is not true, that they owe their wealth to copyrights, trademarks, and patents and not necessarily to their business savvy.

Relating to the above, a friend of mine had this to say (tongue in cheek) about the Von Mises Institute:

“the Austrians? They're just boo hoo doom and gloomers babbling on about how fiat money and fractional reserve banking and the FDIC and government influence on financial markets will cause a catastrophy! Idiots”

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Sales Up, Profit Down At LG

LG took a big Q2 hit, alledgedly on currency fluctuations.

TWICE: LG Sees 93% Drop In Q3 Net

Seoul, South Korea – LG Electronics reported that its net income declined 93 percent to $19 million, due in large part to a higher cost in foreign-currency debt resulting from a weaker won.
The drop in profit was the first for the company in the last six quarters, and came as revenue rose 21 percent to 6.89 trillion won ($5.24 billion).

On the bright side, mobile and display are way up, but still, that's gotta sting!

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Over At GadgetTalk: Surely you can't be SIRIUS?

MarketnewsGadgetTalk: What Now SIRIUS?

Apropos of nothing, now seemed like a good time to revisit a great line:

Rumack: Can you fly this plane, and land it?

Ted Striker: Surely you can't be serious.

Rumack: I am serious... and don't call me Shirley.

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WaMu Gets Kicked While It's Down

From PencilsForSale.com. Poor, poor Washington Mutual.

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Random Bloggotage On The TARP

I was just going through some files, and this picture seemed like a good tie-in to all the bloggotage going around about the Troubled Assets Relief Program.

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GM Negotiating For Chrysler. Wait, What!?

So the WSJ and NYT reports, and pointed out by Calculated Risk.

Calculated Risk: GM to Acquire Chrysler?

The WSJ reports that GM has recently talked with Cerberus about acquiring Chrysler's automotive operations in exchange for GM's remaining 49% stake in GMAC.
Cerberus would keep Chrysler's financing arm - and probably would combine it with GMAC.

As I'm fond of saying about airline mergers: great, after they merge they can plunge into bankruptcy together. Now there's a synergy for you!

I suppose we ought not to be surprised that it didn't take Cerberus long to decide that the carmaking business wasn't what they hoped for, and to seek an exit back to straight finance, which I expect they have a clearer understanding of.

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Financial Post really wants Canadian banks to go shopping

Just got this story sent to me in my email:

National Post: Fed trolls Canada to rescue U.S. banks

In a desperate bid to help U.S. banks recapitalize, Washington is reaching out to Canadian financial institutions to gauge their willingness to participate in rescue operations.
...
The communications have included phone calls from Fed officials pitching potential sales of assets of U.S. financial companies and at least one intensive discussion of a major rescue operation, according to people familiar with the contacts.
"I don't think Canadian banks want to take a lot of balance sheet risk but I don't think they are going to have to," the [UNNAMED] source said, adding that while the target banks have manysubprime mortgages, the Federal Reserve will backstop these high-risk liabilities. "We could end up in a funny situation two years from now saying this was a once in a generational opportunity for Canadian banks."

While it's been widely reported that the Fed is exhorting foreign banks to check under the sofa cushions for anything they can spare, reading this I see a little conjecture, and a whole lot of effort to drum up a Canadian angle to the story. Call it the financial version of "you provide the pictures and I'll provide the war."

Given the generally provincial and introspective attitude of Canadian banks, I would be deeply surprised if any of them went all-in on distressed US finance assets. A Calgary-born friend who works on Wall Steet is fond of pointing out that Canadian bankers with big balls, bigger ambition and a huge appetite for risk end up in New York, London or Honk Kong. The ones who stay home, well, you could call them cautious, although he uses a different word that starts with "P."

This may indeed be a once-in-a-bubble fire sale. Certainly some big global players are taking advantage. Do Canadian banks have the sack to play too? I have my doubts.

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