An Investment Book Worth Buying

James Altucher’s new “Trade Like a Hedge Fund” book is excellent. While the title might seem a little off-putting, like a “…for Dummies” book aimed at jejeune hedge fund managers, the book is among the very best of its (admittedly narrow) kind.

In the book, James (a fellow columnist at RealMoney) divulges in tradable detail a range of real-world strategies used by quantitative hedge fund shops to generate positive returns in good times and in bad. The strategies range from one-sided pairs trading, to QQQ crash systems, and so on. James is a smart, creative fellow, and if you have any interest in disciplined short-term strategies in the markets, this is a must-read.

Parlez-Vous Economist?

Economist Greg Mankiw of the President’s Council of Economic Advisers is apparently turning his troubles with politically-sensitive econo-speak into a laugh line.

Recall that Mankiw got himself in political trouble last month when he said, “Outsourcing is just a new way of doing international trade. More things are tradable than were tradable in the past, and that’s a good thing.”

While that is common sense to economists, it is fuel for political fire in an election year. Mankiw was pilloried for his comment, and he has now apparently been trying out two new lines that poke fun at his problem.

He recently told one appreciative audience that if there were an award for “the most politically inept phrasing of Adam Smith”, he would win. He told another audience, “‘Economists have a fundamentally different language from average people. The problem is we both use the same words.”

Adventures in Prosecuting Tyco

From an article in today’s WSJ on the pending mistrial declaration in the fraud trial of Tyco exec, Dennis Kozlowski:

In a highly unusual move, a juror in the trial appeared to make an “OK” gesture in the direction of the defense table as she filed into court Friday morning. Juror No. 4, a retired lawyer named Ruth Jordan, made the gesture as she brushed back her hair. It was widely noticed in the courtroom, although apparently not by the judge. The gesture appeared to signify solidarity with the defense.

Why Venture Capital Refuses to Bust

Good Gary Rivlin piece in Wired about the continuing capital overhang in the venture business. Too many VCs went underground in 2000, froze spending, and now that things have thawed a little their capital is all reappearing and messing up valuations of private companies everywhere. And now that the term end of their fund is closer they are, if anything, even more eager and less discerning than before.

Harrowing stuff, and yet another example of how the excesses of the late 1990s have not yet disappeared.

A Little Population Growth isn’t a Bad Thing

One of the more interesting and rarely told stories in demographics is how global population growth is slowing. Consider the following chart:

While the global population is projected (in this case, by the U.S. Census Bureau) to reach 9-billion by 2050, the rate of population growth will have slowed to 0.6% by that year. Some studies, particularly ones that see more rapid economic advances in third-world and developing countries, have an even steeper growth decline, with no net global population increase by 2045.

The trouble is, of course, one of the main engines of domestic economic growth is domestic population growth. The U.S. (and other countries with low birthrates) has benefited from “importing” higher birthrates elsewhere, thus increasing U.S. economic growth. While that can continue, it won’t always as easy as it has been in the past.

Prodigious Returns from KKR

Private equity firm KKR has had positively prodigious investment results of late. Compound returns of 18.2% over the last five years, driven by buoyant recent equity markets (for exits), has meant that KKR tripled its capital and is handing back about $5.9-billion in profits to investors. Remarkable stuff.

Frank Talk about Air Canada Bankruptcy

Bankruptcy proceedings are usually hard-fought affairs, but it is ordinarily the creditors and their lawyers who do most of the fighting. It is unusual for the presiding judge to weigh in with any sort of pithy riff.

The judge in the ongoing and painful Air Canada bankruptcy restructuring broke with tradition recently:

Justice James Farley of the Ontario Superior Court has asked any parties involved in the proceedings to tell him if they consider it “advisable or desirable to crater AC.”

It is an eye-opener, not just for his unusual choice of metaphors, but for showing how frustrated he is with the entire process.

My NatPost Column on Microsoft

The first few paragraphs of tomorrow’s National Post column on Microsoft versus the EU:

Microsoft will be punished this week by the European Union, and the punditrocracy is dutifully taking up flanking positions. But both supporters and critics are adrift this time around.

On the one hand you have people like the EU’s Mario Monti complaining that Microsoft doesn’t play fair. His concern, apparently, is that the next generation of Microsoft’s Windows software, a product codenamed Longhorn (“Late”-horn might be better given the product’s tardy arrival), will contain new features that will hurt Microsoft competitors.

Say it ain’t so. A profit-seeking company in a competitive market would be so bold as to keep its products current? Outrageous.

More seriously, the question of whether Microsoft can and should add features to its products is long-settled, and the answer is a resounding “Yes”. To prevent Microsoft from adding an arbitrary and changing list of features to its software is absurd and tantamount to a death sentence for the technology company. If senescence is the goal, then fine, simply say that.

Because it was just a scant few years ago that Internet browsers were the technology regulators wanted to keep from being included in the operating system. Does anyone reading this column — many using a browser — really think they have been damaged by not having paid separately for the browser they are using? I thought not.

But arrayed against the EU are some other folks who aren’t doing the Microsoft cause any favors either. Economists, pundits, and assorted others are wailing about the death of innovation and the perils of interfering in fast-growing technology markets.

That is well and fine, of course, but it has little do with Microsoft. Because Microsoft is not a growth company. You have to go all the way back to the mid-1990s to find Microsoft growing sales consistently at more than 30% per year.

Tiger (and Nike) are Free Riders

Everyone who uses Tiger Woods in an advertisement is actually advertising Nike. In case you hadn’t noticed, almost any ad with Tiger usually has him wearing Nike clothing, especially a hat. While advertisers don’t complain, the upshot is that Nike gets to free ride on everyone else’s money, something unprecedented in such advertising programs.

Why would advertisers do it? Interestingly, it’s not because Nike demands it. The company says that Tiger is not forced to wear its apparel when appearing in, say, an Accenture ad. Tiger just chooses to do so.

The result, however, is that every Tiger ad seems to be a Nike ad. Look at the Accenture ad at right. Is it Accenture that you notice, or Tiger’s swoosh’s emblem on his hat?

Most Influential Businessperson of All Time

Who is the most influential businessperson ever? Forbes is asking that question, and business historian Joel Mokyr has helped out with a starter list.

Was it Matthew Boulton, who powered the Industrial Revolution? Andrew Carnegie, the steel baron? Walt Disney, the first media mogul? Or Henry Ford, who brought speedy transportation to the masses? Mokyr proffers these names, and others, here.

While these sort of questions are ultimately nigh impossible, it helps to have some clear criteria in mind. Perhaps size of economic impact, unlikelihood of his/her contribution having happened in a timely fashion otherwise, etc. In case anyone’s curious, I think ultimately the answer will be Sam Walton, but I’m open to other ideas.