essays pieces of the puzzle
Sunday, February 6th, 2011
the music of our times

For the hundredth pix, here’s an update of the chart from the first one.  That in turn came from a chart I’d been publishing for awhile before, and which I called “the yield curve accordion.”

A comment from a December 2009 version:  “Each economic stumble is met with low short rates, a steepening yield curve, and a return to risk taking.  Given the downward trajectory over time and the fact that we are sitting on zero short yields, where will the next bout of craziness take us?”

The same place as always.  (Chart:  Bloomberg terminal.)

stagecraft here

Remember Freescale Semiconductor?  It may be coming again to an IPO parlor near you, after many twists and turns over the last few years and some stagecraft here and there.  An archetype of the private equity craze.

devil’s bargain

Given that he’s the best-known fixed income manager on the planet, the monthly commentaries by Bill Gross always receive a fair amount of attention.  The latest has provided that and more.  Gross bemoans the markets, the market players, and the market manipulators of today.  Of investment professionals, he states (in bold type):  “As a profession we have failed miserably at our primary function — the efficient and productive allocation of capital.”  The sentence previous to that one ends with a reference to the “80% of active money managers that underperform the market.”  Gross misses the connection between the quotes; the relative performance derby has perverted the business.

content content

It’s hard to keep up with the evolution of online investment content and what kinds of business models will support that content in the long term (and in different kinds of market and economic environments).  A couple of posts worth reading include one by Lewis D’Vorkin on the lessons he’s learned in trying to rework Forbes, and another from Barry Ritholtz about an idea to get the money flowing to the producers of the content.  The latter includes a number of worthwhile comments.

reflexivity

I love the topic of a paper by Craig Chapman of Northwestern, entitled, “The Effects of Real Earnings Management on the Firm, its Competitors and Subsequent Reporting Periods.”  When you play games, you often don’t think of the long-term effects.

girl economist

It is an odd aspect of today’s world that we have relationships with people that we never meet.  In late December, I had a wonderful email exchange with Maxine Udall, “girl economist,” whose writing I had just discovered.  It was a great dialog and I looked forward to more.  Unfortunately, shortly thereafter she passed away.  Maxine Udall was a pseudonym; her real name was Dr. Alison Snow Jones.  Thanks to the girl economist for leaving us some great writing.  Rest in peace.