While many people are focused on the silly idea that speculators (the von Trapps!) are the primary cause of current oil market advances, what if a more useful thing to think about was hoarding? What hoarding, specifically? Well, there are those supertankers hanging around in the Persian Gulf.

According to Bloomberg, there is currently tanker capacity of at least 30-million barrels parked off the Iranian coast. That is about five months worth of the proposed Saudi boost to crude supplies.

Here is a map from Bloomberg, and it is followed by a Google Maps satellite shot of oil tankers lounging about double-parked in that general area:

Here's an (undated) satellite shot of the above area:

Call it the "Nuke" Laloosh rule: People who know what they are doing should just stop futzing about and get on with things. The preceding is the main finding in a fascinating golf-driven (!) new paper in The Quarterly Journal of Experimental Psychology:

Novice and skilled golfers performed a series of imaged golf putts followed by a series of actual golf putts under instructions that emphasized either speeded or nonspeeded imaging/putting execution. Novices putted less accurately (i.e., higher putting error score) following either putting or imagery instructions in which speed was stressed. Skilled golfers showed the opposite pattern. Although more time available to execute a skill enhances novice performance, this extra time harms the proceduralized skill of experts. Manipulating either actual execution time or imagined execution time produces this differential impact on novice and skilled performance outcomes. These results are discussed in terms of the functional equivalence between imagery and action and expertise differences in the attentional control structures governing complex sensorimotor skill execution.

It's a great example of how, if you know what you are doing, you need to get your brain the hell out of the way, whether it's golf, trading, etc.

[via QJEP]

Hugely fun and wildly bearish stuff in a recent issue of welling@weeden. The discussants are the co-heads of global cross-asset strategy at Societe Generale, and they are among the more bearish (in a nice and rational way) investors I have read in some time.

Here is a brief excerpt on why the current commodities and emerging markets bubble is different, sort of, than the dot-com bubble:

Reluctantly removed at the request of the copyright holder.

Read it all.

[via BigPicture]

A few weeks ago I wrote here that analysts who didn't own the stocks they recommended were not to be trusted. Today I see that Felix Salmon over at Portfolio has up his own take on the subject, more or less arguing the opposite. I have invited him to have a little debate here.

Start by reading my original post, as well as Felix's. Here is my response to him:

-------------

June 25/2008 -- 10:10am

Felix. You argue that analysts shouldn't own the stocks they cover. I have argued the opposite, so we disagree. Let's have it out.

The essence of your argument is three-fold:

• Institutional investors ignore analysts' buy/sell recommendations. It is their analysis that counts.
• Owning or being short the stocks would introduce behavioral biases.
• Analysts can't pick stocks anyway, so having them own the stocks they cover wouldn't improve things.

Saying that institutional investors ignore analysts' buy/sell recommendations is both a broad statement and an untrue one. While some institutions ignore analyst recommendations, many others don't. Matter of fact, I am familiar with both quantitative and non-quantitative investors for whom analyst recommendations are key factors in their investing. For example, among the best performing factors in some current quant funds' models is relative changes in consensus recommendations, while the underlying analysis to which you attach so much importance is irrelevant.

It is, in short, untrue and simplistic to say that institutional investors ignore buy/sell recs. There is ample evidence to the contrary, both at quant and non-quant funds.

Second, there is no question that owning stocks would create behavioral biases. But those biases exist anyway via the pegging of one's reputation to one's picks. Pretending that you can disassociate yourself from your picks as analyst, whether you own the stock or not, is just not the reality of the business. I speak from painful experience here. 

Finally, saying that analysts can't pick stocks, so we shouldn't let them own stocks, strikes me as a heady mixture of cynicism and paternalism. We should let them go on publicly pretending they can pick stocks via price targets, earnings recommendations, and buy/sell ratings, but we should all, nudge-nudge wink-wink, ignore those things because we know it's all a fraud.

The trouble is, first, they do hold themselves out as stockpickers. And since i-banking no longer pays the bills, it is through stock-picking they are paid, it is difficult for me to fathom why you insist they are not stock-pickers. They may be, as a group, poor stock-pickers, but that is a different problem -- and one that allowing them to be paid better via owning their picks might help fix.

Over to you, Felix.