Some articles you may find interesting - December 4th of 2010
Here are some articles I found interesting. I have a bunch related to politics and this may anger some of you so if you don't want to hear it, skip over the WikiLeaks stuff near the bottom. As usual, not in any particular order...
- Some Canadians snapping up US residential real estate (MoneyVille): Real estate bulls such as John Paulson have said that it's a great time to buy American real estate but I am not so sure. Although not as risky as buying near a peak, I can see someone not making any money for years. Having said that, the funds mentioned in this article are buying prime Florida real estate—I assume they are prime?—so they should be ok in the long run. After all, they don't build those sandy white beaches in America.
- A bubble in private Internet companies? (Dealbook): The privately rumoured valuations of Internet companies like Twitter, Groupon, Zygna, and others, often reach billions of dollars. Some of these companies are revolutionary and likely will dominate their respective fields for years—think Ebay—but I wonder about others. One thing that concerns me about Internet service companies is their over-reliance on advertising. Yes, the whole television industry was built on advertising but I think it would be healthier for the Internet service industry is they generated some income by selling products or from pay-per-use.
- GE tries to climb out of the hole (New York Times): As recently as 3 years ago, GE was the largest non-bank financial company—I haven't done any research but I think it still is??—GE is trying to go back to its industrial roots. I haven't looked at the company since the financial crisis hit but some of the damage by Jack Welch likely can't be undone. My wild guess is that GE will be broken up within 10 years.
- Will Google stay dominant? (The Economist): As the web matures, will Google hold onto its leading position?
- Commercial real estate takes off... at least when it comes to hotels (New York Times): Private equity and some wealthy investors are zeroing in on hotel properties. Does this mark the bottom? One thing I notice is that a lot of bulls, not just with hotels but in other assets as well, suggest that the present will rhyme with the early 90's when distressed property buyers made a fortune; while many bears are almost certain that the present state of affairs will differ from the recent past. Pick your history for the rhyming lesson.
- Canadian companies at the forefront of semiconductor reverse engineering (The Globe & Mail): I think I applied for a job in similar companies when I was in school (never got any jobs or interviews though :( ). Interesting field, where you reverse engineer products, either to gain an understanding of competitor's technology or to see if your patents have been violated.
- The decline of the US-side of Niagara Falls, NY (Bloomberg Businessweek): Apparently, one of the topic romantic destinations in the world, so do take your loved one over to Niagara Falls, Canada. The Ontario economy badly needs your tourist dollars ;) This story, though, is about the US side of the falls. Apparently things have been heading downhill.
- Tale of two regions in Australia (The Globe & Mail): The Western part of Australia is booming due to the commodity boom. The East, not so much. It reminds me of Canada and how the resource-oriented West is booming but the manufacturing/service-oriented centre is struggling.
- Ontario Teachers' Pension Fund & Jim Leech (The Globe & Mail): As head of one of the largest pension funds in Canada—probably 3rd largest fund in Canada—Jim Leech has done remarkably well. Avoiding the debacles of University endowments in the US and elsewhere, and private equity competitors, the fund has managed to avoid any serious mistakes in the last few decades. The fund is still under-funded and may end up selling Maple Leaf Sport and Entertainment, which owns sports teams such as the Toronto Maple Leafs and Toronto Raptors.
- Should China scale back its high-speed train build-out? (The Atlantic): This is what the bears have been saying for a while—remember what Hugh Hendry—but even the official Chinese agencies are starting to wonder. Building a rail is all good but if no one can afford it, or conversely, it has to be run at huge losses, is that benefitial to the country in the long run?
- The Economist's books of the year (The Economist): A big list of books covering various topics. Unlike many lists you'll see in the business press, this list contains uncommon books and many British ones.
- (not related to investing) Private companies—Amazon and Ebay so far—refuse services to WikiLeaks (The Globe & Mail): I am in favour of freedom of speech so I am in favour of WikiLeaks—as I have said in the past, it is similar to the Pentagon Papers incident; WikiLeaks is censoring personnel info so it's not as if lives are at risk as the governments claim—so it's dissapointing to see private companies like Amazon and Ebay refuse to service WikiLeaks. Private companies can obviously decide who they want to service and I would agree with these two giants if WikiLeaks was doing something illegal. However, it's dissapointing to see these companies refuse service without anything being decided in a court of law. Paypal, a subsidiary of Ebay, kicked off WikiLeaks by saying it was doing something illegal but why not get the courts to rule on the legality of all this? The problem, of course, is that the publishing done by WikiLeaks, and other media organizations, is likely legal in USA. If neo-Nazis can put up websites promoting hatred, or some black separist can write hateful messages, WikiLeaks likely can post documents as well. What may be illegal is the leaking of the info which is why Bradley Manning is held for trial by the US military. The actions of these two Internet giants will likely also have long-term consequences for cloud computing. The actions Amazon's cloud computing service likely won't give much confidence to future customers, if the company can kick off a company almost arbitrarily (TOS violation) within a short period of time. Imagine if you were a small entrepreneur spending millions of dollars setting up shop and then Amazon just kicks you off their cloud because you violated their Terms Of Service and wouldn't even give any details... Some of the actions by the US government also show how the Barack Obama, who even claimed to represent transparency, is anything but. Obama administration has probably attempted to roll back civil liberties and freedoms more than anyone else in the last 20 years, except the George Bush administration. The recent airport scanning scandal—needless to say, will not improve security at all—kind of shows how this administration is.
- (not related to investing) (opinion) "The shameful attack on Julian Assange" by David Samuels (The Atlantic): At least some Americans don't roll over for their government... On a different note, it's not that surprising but it's still kind of surreal to see everything unfold so quickly. On top of those DDOS attacks on WikiLeaks—is this the government or someone else—we have either (i) some foreign governments attempting to leak information they couldn't have otherwise, or (ii) disinformation campaign initiated by the US or someone else (by possibly leaking fake diplomatic cables). What I am referring to, is this story in The Atlantic about a Lebanese newspaper publishing diplomatic cables appearing to have not been released by WikiLeaks or any other media that was granted access by WikiLeaks.
- (not related to investing) WikiLeaks: The tussle between China & Google (New York Times): Do keep in mind that the cables provide the American perspective so you can never tell what is true and what is speculation by the diplomats filing the cables. In any case, this story provides some context into how the conflict between Google and China started and how the American diplomat(s) view the Chinese information controls. It looks like the key censorship guy in China is someone by the name of Li Changchun.