The Stingy News Weekly (07/16/2010)
Into thin error
"I sought Viesturs out because I was curious about the kind of attitude you develop toward error when a single mistake can easily cost you your life. I also wanted to test a hypothesis that I call "the paradox of error": If your goal is to avoid making mistakes, then you must constantly assume that you are about to make one. That's why fields like aviation and medicine have, at their best, a productive obsession with error. It turns out the same goes for mountaineering - or, at least, mountaineering as practiced by Viesturs. He's totally comfortable with being wrong, he says; the important thing is that, "if you goof up, it's in the right direction.""
Stewardship common sense
"In the course of our research we've uncovered a fund company - one that received a good culture grade and had no regulatory deductions - that purchased shares in a related company in one of its funds. Since the firm has followed all of the rules, technically, it's not considered a regulatory issue. Accordingly, the trade was not reviewed by the IRC. But when we discovered all of the facts, we have zero doubt that a conflict of interest existed, whether or not the law defines it as such."
"Lane believed he would make his own fortune by giving luxury advertisers a forum to reach this small but growing mob of ultrarich arrivistes. Unfortunately he chose a medium that would prove to be a surefire prophylactic against profits. Despite zealously attempting to sell out, Lane couldn't make a buck. When stock markets collapsed in 2008, so did his publishing empire."
Untangling skill and luck
"In this report, we will discuss why unraveling skill and luck is so important, provide a framework for thinking about the contribution of skill and luck, offer some methods to help sort skill and luck in various domains, and define the key features of skill in the investment business."
Washington takes aim at Apple
"If you want to produce something in America, you'd better play the game. Contribute to politicians' campaigns, hire their friends, go hat in hand to a congressional hearing, and apologize for your success."
Government for sale
"The article's subhed tells you all you need to know: 'Why Lobbying Is Washington's Best Bargain; Lobbyists say for just a few million, they can make clients billions'"
Relative status in practice
"In Kenneth Fisher's book The Only Three Questions that Count, in the references under "Risk" he merely has 'see benchmarking'. If everyone benchmarks, risk is deviating from the consensus, and thus taking too little exposure to any popular investment is just as risky as taking on a lot of exposure. Cremers and Petajisto have a paper where the define portfolio manager risk this way. If risk is defined as a deviation from the benchmark, it becomes like idiosyncratic risk, unnecessary, so unpriced. Further, via arbitrage 'benchmark risk' can not be priced, because you can't get a risk premium from both having zero or twice the normal exposure to BP."
Bank of America comes clean
"Bank of America has finally admitted that it understated the quarter end assets and liabilities for the years 2007 to 2009. It does not (yet) admit that similar transactions took place in many other years and it does not spell out the effect of these transactions on BofA.s need to carry capital."
"'The true debate in economics is - between economists who care about the productivity of resource allocation and those who only pay lip service.' That is harsh, but not wrong. I'd draw the lines a bit more mildly, and say that the core argument is between people who think we are in a financial crisis that has engendered an economic crisis, and others (like me) who think that the financial crisis is the outgrowth of longstanding and continuing economic mistakes."
On business competition
"'A funny thing happens when you begin to capture competitive differences on paper', says Harvard Professor Youngme Moon in her book Different, 'there is a natural inclination for folks in the competitive set to focus on eliminating differences rather than accentuating them.'"
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