Economy Blog

February 2004. I was CEO of DB Advisors at the time, and was introduced to Marc Cenedella, Founder and CEO of TheLadders.com, though a mutual friend (one of my guys from derivatives). It took me about 5 minutes to "get it," after which I asked for all the requisite follow-up information (business plan, financial model, etc.). If Marc were to present to me today, having now been an active angel investor for almost four years, I’d probably have written him a check on the spot. But having never invested in a start-up, I really wasn’t sure how I’d "know" that it was a smart investment. But my instincts were good. Then, like now, I need to be able to get the business in minute, have deep faith and confidence in the entrepreneur, and know that I can help due to my connections, business experience, etc.
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February 2004. I was CEO of DB Advisors at the time, and was introduced to Marc Cenedella, Founder and CEO of TheLadders.com, though a mutual friend (one of my guys from derivatives). It took me about 5 minutes to "get it," after which I asked for all the requisite follow-up information (business plan, financial model, etc.). If Marc were to present to me today, having now been an active angel investor for almost four years, I’d probably have written him a check on the spot. But having never invested in a start-up, I really wasn’t sure how I’d "know" that it was a smart investment. But my instincts were good. Then, like now, I need to be able to get the business in minute, have deep faith and confidence in the entrepreneur, and know that I can help due to my connections, business experience, etc.
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Based upon the current sell-side research model, prospects for these legacy research providers (and the commissions that have largely supported these efforts) are increasingly poor. Hedge funds - accounting for approximately 70% of equity-based commissions - demand value for their research spend, and are finding less and less of this value emanating from the bulge bracket sell-side firms. So how are these fund spending their research budgets?:
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The cost of active investing: $100 billion per year, according to Kenneth French at Dartmouth University. That’s up from just $7 billion in 1980, you can see why Wall Street has made so much money in the interim. In his annual letter this year, Warren Buffett does a nice job of explaining the mathematics:

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Large economic shocks occur so infrequently that bankers often underestimate shock probabilities.
Here is a good piece, worth meditating.
The ability to estimate the probability of a shock – like a collapse in real estate prices – depends on two key factors. First is the frequency with which the shock occurs relative to the frequency of changes in the underlying causal structure. I…
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The ABX has some major flaws. It represents only a small number of securities and the tranches underlying the indices account for a minuscule 14% of the principal value.
Now, The Economist tells us, Markit, the king of credit indices is casting doubt on its own products. About time.
The indices are undoubtedly useful, but some people think banks are putting too much emphasis on them. They capture only a narrow slice of the market: the ABX references 20 securities, for instance […
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“If history is a reliable guide, the recession of 2008 is now unavoidable.” (NYTimes.com)
“(A) weird financial dynamic seems to be feeding on itself in an unusually violent fashion.” (…
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When a stock gets too far extended and starts showing a negative volume pattern while moving higher, it is either topping or pulling back to support….
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The best way to lose at trading is to go with the obvious. I’ve argued in the past that the market is rigged against human nature: it is easy to lose money buying in an uptrend, and it is easy to lose money buying strength and selling weakness….
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You may feel secure now, but you never know when the pink slip is coming…
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nice interactive chart…
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we are going to see almost exactly these same headlines again and again and again for the next 2-3 years. They are a representative mix of short- and long-term trends, trends about which investors and all citizens should be aware when trying to get a grip…
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Altucher: Google’s a Short-Term Buy

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Altucher: Buffett’s Lying About a Recession

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The first week of March started off with a deepening credit crisis that appears to have pushed the US economy into recession. Richard Russell, 83-year old author of the Dow Theory Letters, remarked: “The end of a costly (for most) and difficult week. … this market has darn near worn me out, and I don’t wear out easily.” Read all about this in my regular weekly blog post, highlighting some thought-provoking news items and quotes from market commentators during the past week, and briefly reviewing the week’s market action on the basis of economic statistics and a performance chart.
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I have the itch. I hate having it. I thought I was too tired to even think about it, but the yellow pad has been out and the ideas are being sketched out.
Since Mexico and my Yoga retreat with my wife Ellen and friends, the juices have been flowing. I am committed to Wallstrip , helping my buddy Ian grow out SpritualGangster (now an investor) and all the companies in my portfolio, but wanting to take the lead on another idea of mine.
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I am going to begin a series of posts looking at my portfolio companies, sharing my thoughts as to why I invested, the things I’ve learned, and how the companies have grown since my initial involvement. I figured it was high time now that my portfolio looks more like a VC portfolio than an angel portfolio, and that I am now starting to see the maturing of a number of my earlier investments. It is very exciting and has been cause for me to do some reflecting on my investment process, my deal instincts and my success (or the lack thereof) as an early-stage investor.
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Here are some current headlines from three of the premier mainstream media publications dealing with business and the economy:

The Wall Street Journal

March May Be Quite CruelTop Bankers Defend Pay PackagesM…
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There has been lots of cringing in the northeastern U.S. and in eastern Canada this year about the amount of snow that has fallen. So, is the current snow cover — the amount of snow on the ground — anomalous by historical standards? Well, one way to answer that question is to to go to the Rutgers University Climate Lab, which maintains a nifty map that shows a graphical "diff" of current snow cover from satellite-based norms. And here is the answer as of yesterday, with purple areas denoting surplus snow. Looks like there is an area in the eastern U.S. with more snow on the ground than normal, but, that’s about it — other than a few areas in the Rockies (and lots in Europe) with less snow than usual. …
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Much of my family lives in Ottawa, Canada, and so now and then I like to check a live webcam across the street from Parliament Hill. Mid-winter it can be lovely, with snow all around and the Canadian flag streaming with the Gatineau hills behind; mid-summer it’s even nicer, with a verdant lawn on a gorgeous cliff overlooking the Ottawa River. Today, however, it’s March 8th, and there is a walloping snow storm going on in Ottawa, one that produced the following view of the Peace Tower, as if through a contracting lens: …
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