Showing posts from January, 2012

Baltic Dry Index Approaches Multi-decade Low

One of the biggest bubbles over the last decade was the shipping bubble. Driven by the trade boom with China and other emerging markets, large investments were made in ships. Companies mortgaged their future and purchased a large number of ships, with the assumption of good times continuing forever. Long-time readers may recall when I wondered about the industry (from a contrarian point of view) back in 2009 in this post and this one . Time flies but even then, it seems like the shipping industry is still working through its overcapacity problem. It's interesting to note that they are still having problems—this, without China entering any slump, yet. Marketwatch reports, The warning signs being flashed by the collapsing Baltic Dry Index (BDI), a leading global economic indicator, may reflect the folly of misguided expectations during the prior global economic boom, according to Hong Kong-based shipping analysts. New super-sized ships ordered up during the era of cheap cre

Sunday Spectacle CLIX

Warren Buffett Speech at the University of Georgia  Terry College of Business 2001 (source: University of Georgia - Terry College of Business . 2001.  Thanks to Aniruddha "Andy" Kardile's League of Extraordinary Value Investors blog for bringing this to my attention.)

Traders and Computer Trading

You're using Internet Explorer 7, upgrade to a faster browser. Show me how I'm stuck using IE7, please don't show this again Remind me later The Globe & Mail's Report on Business magazine had a short blurb on the current state of computer trading in Canada . As many readers are likely aware, a huge chunk of the trading that occurs on stock exchanges presently comes from computer trading (such as high-frequency trading and computer-driven arbitrage). I am not a trader and most readers of this blog likely aren't either, but you may be interested to see how the short-term traders act. Trading has always been tough—to make matters worse, many of the markets they operate in are zero-sum markets!—but now they are competing against computers following algorithms. I have never been a trader, and am not familiar with professional traders either, so it's not clear to me if the current environment is harder for the professionals. Instead of relationship

Opinion: Do the Flaws With Private Equity Need Fixing?

(Image by Downloaded from ) In his latest for The New Yorker , James Surowiecki points out two major flaws with private equity as it currently operates. In particular, he raises the carried interest controversy and the notion that private equity uses debt to extract profits, while, at times, running the company into the ground. Should the government scrutinize how private equity is allowed to operate in America?

Sunday Spectacle CLVIII

Will China Ever be As Rich as USA? China's total GDP will surpass USA within a few decades simply due to its larger population. But will each of its citizens be as rich as USA soon? There is nothing to say China—or some other country—won't ever surpass the wealth of USA on a per capita basis, but it's not as likely as many assume. The Federal Reserve Bank of Dallas examined this question in their June 2011 Economic Letter  (bolds by me): So, is it likely that Chinese living standards will ever match those in the U.S.? To get a handle on this question, it is useful to look at other countries’ experiences over a long period. Many nations underwent development miracles in the latter half of the 20th century. Reviewing data on the evolution of global living standards over the period reveals two interesting facts. First, there are several countries where per capita GDP exceeds that of the U.S., often by significant amounts. Almost all of these nations are oil exporters.

Evaluation of Netflix's Financials

Netflix Headquarters (Image source: Getty Images, via Huffington Post ) I took a look at some of the qualitative aspects Netflix (NFLX) in prior posts ( here and here ) and it's time we look at the financials. I think any success or failure with Netflix's stock will still come down to its business model and competitive dynamics but, nevertheless, the financials provide a valuation guide for an entry point. The stock has run up so much this month that its valuation isn't attractive right now. Most of the shareholders of Netflix—or at least those represent a big chunk of the volume—appear to be growth investors or momentum traders, so you will see more volatility in this stock than a typical company. As I have mentioned before, Netflix is going through a major transformation, from a DVD-by-mail business to an online streaming business, so its financials prior to 2010 aren't reflective of its future. Furthermore, the company has grown so rapidly within an year t

Sunday Spectacle CLVII

The Technology Ecosystem Demystified (source: " Startup Ecosystem: Predator vs. Prey " Downloaded from Original source:  udemy blog )

How Much of a Threat are Technology Companies to Netflix? How About UltraViolet?

You're using Internet Explorer 7, upgrade to a faster browser. Show me how I'm stuck using IE7, please don't show this again Remind me later One the claims by some Netflix bears is that technology companies like Microsoft and Apple will be a huge threat. Although things can change, technology companies are unlikely to compete successfully in fixed price video streaming services (they can, however, do fine in pay-for-download or pay-per-view digital content businesses). You get a feel for this with the following Reuters story via The Globe & Mail on Microsoft : Microsoft Corp has put its talks with media companies about an online subscription service for TV shows and movies on hold, according to people familiar with the discussions. The technology giant had been in intense talks with potential programming partners for over a year and was hoping to roll out the service in the next few months. But it pulled back after deciding that the licensing costs

A Look at Netflix's History and Its Business Transformation

It's hard to imagine how I haven't purchased a stock in over two years — certainly not a good way to succeed in investing :( One of my New Year's resolutions is to focus more on investing and work much harder. In any case, I have been researching Netflix (NFLX) lately and it keeps getting more interesting by the minute. I remember an anonymous reader said in my prior post he/she thought Netflix was worth around $50 to $60 per share and he/she would buy it around $40. Well, the stock did decline to $62, before skyrocketing recently. There was also a roughly 10% dilutive capital raise in the last few months so the stock price is close to the range of the anonymous poster. It's still a high risk stock—it can easily go bankrupt within 10 years—but some of its qualities seem attractive. I took a preliminary look at its business model and competitive environment in  this post about two months ago, and thought I would write up its background and the transformation it is

Interview with Elon Musk

Elon Musk is the co-founder of PayPal, SpaceX, Tesla, and SolarCity. He is through-and-through an entrepreneur with a technical mind and "scientific ambition" — by scientific ambition I mean those that dream of things that don't exist. People like Elon Musk are the ones that can have a big impact on society. Those interested in science, particularly clean energy and space, or entrepreneurship will like the following video. The video is Elon Musk's answers to questions posed by reddit.

Sunday Spectacle CLVI

Hate to Say It, E-mail Spam Actually Works (click on image for larger pic) (source: " Spam Works ," Bloomberg Businessweek. December 2011)

The Year That Was, 2011

How Was 2011? Here are some items from 2011... to keep you entertained in 2012. (anything marked with stars are worth checking out) Google Zeitgeist 2011 A Picture is Worth a Thousand Words   * The Year in Pictures - Part I   * The Big Picture -   * The Year in Pictures - Part II   * The Big Picture -   * The Year in Pictures - Part III   * The Big Picture - Science in 2011: Triumphs, disasters and climaxes – in pictures The Guardian Must-see Science Videos of 2011 Cosmic Log on   * Ten of the Top Science Videos of 2011   * Txchnologist   * The Most Important Graphs of 2011 * Derek Thompson for The Atlantic   * Top 10 Video Ads of 2011   * The Globe & Mail   * Slide Show: The Top Ten Art Sales of 2011   * Bloomberg Best Google Doodles of 2011 Wallpaper* Graduate Directory - 2011 Wallpaper* Business & Investing   * Top B

Sunday Spectacle CLV

Happy New Year! Here's to Prosperous 2012 for You & Your Family!