John At The Center

Recommending stocks in the current environment may well be a fool’s errand…stock selection has rarely ever been more difficult than it has over the past 2 months. Stock return dispersion is a historically low levels with macro economic factors being chiefly responsible for the direction of stocks.

via FT Alphaville » It’s so macro, man. (But maybe not for long).

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The amount of money hedge funds make is only surpassed by the amount of secrecy surrounding how they make it. To pull back the curtain on these financial wizards, Big Think asked Sebastian Mallaby, author of “More Money Than God: Hedge Funds and the Making of a New Elite,” to describe the six hedge funds that have fundamentally changed the industry:

via The Top 6 Game-Changing Hedge Funds | Think Tank | Big Think.

Weyerhauser, the lumber giant, is converting itself from a normal company to a real estate investment trust, or REIT.

Long term, that may be good news for shareholders. REITs don’t pay taxes (usually; the rules are complicated) but instead pass on profit, as capital gains or ordinary income, to shareholders. Avoiding double taxation has obvious benefits.

via Paying Taxes to Avoid Taxes – Floyd Norris Blog – NYTimes.com.

The flow of pawn customers has increased because the depletion of people’s cash holdings has been “a gradual process” since the crisis, Rubinov said. “It’s not a sudden assault as if someone robbed them…it’s that the well is slowly drying up.”“The way I’m hearing it, the banks are holding off on personal loans. I guess the public doesn’t have anything else to fall back on,” Rubinov said. He found a moment to talk during a brief break in the stream of clients coming up the stairs, each escorted by a scout from the street carrying flyers that say “We Buy Gold, Diamonds, Watche

via Boom Times for Diamond District – Real Time Economics – WSJ.

Investors will make money based on their ability to anticipate extreme events after the end of the period of stability known as the “Great Moderation,” said Richard Clarida of Pacific Investment Management Co.

via Pimco Says ‘Great Moderation’ Is Over as Extremes Drive Returns – BusinessWeek.

THE FEARFUL, SPECULATIVE MARKET | PRAGMATIC CAPITALISM.

Excellent thoughts from Jeremy Grantham’s latest quarterly letter. He remains a long-term bear, but had some awfully unfortunate timing when he turned short-term bullish last quarter….Always worth a read, however:

THE FEARFUL, SPECULATIVE MARKET | PRAGMATIC CAPITALISM.

“So, how will this unusual struggle resolve itself? Despite growing nervousness and despite a slowing economy, I am so impressed by the power of low rates and Greenspanism (for lack of a better or shorter description) that I would still  put odds of 45% (down from 50% last quarter) for the market to rise to over 1400 (down from 1500 to 1600 last quarter) by October of next year, accompanied by a speculative spin. On the other hand, I also have to recognize that the 21% I put on a quick and rapid decline to fair value looks even more likely today, perhaps closer to 30%. If the market does indeed continue down the current sell-off path, it should result in some unusual movement in the Russell 2000 (small cap index) and possibly even the junky stocks, which might give up their unusual relative strength in a real hurry. I can imagine a situation, for example, where the Russell 2000 gives up a relative 10% in two to three weeks as the aggressive investment world finally has second thoughts on the wisdom of continuing to speculate and changes its mind in its usual rapid way. (Remember, you read it here first.) High quality is perhaps not so promising in this respect, but could still win by several percentage points if the world becomes more circumspect. It would be more typical for quality to outperform over several years.”

Successful products in the Web 2.0 era had a strong social element: YouTube, MySpace and Flickr were a few relatively early examples. In the current era of the Web, which began to form in early 2009, the focus has shifted from social to data-driven software. Successful products of this era of the Web will be ones that filter, structure and personalize this vast amount of data coming onto the Web.

So if I was an entrepreneur or developer wondering what to build for this era of the Web, I wouldn’t be thinking social. I’d be thinking: How can I use all of this data and build on top of it? There are incredible opportunities out there for you.

This current era of the Web doesn’t have a name, which is probably a good sign! One thing is for sure though: It’s still a read/write Web – only now you’re reading and writing data from much more than just social services. You’re increasingly interacting with “things,” organizations, governments – virtually anything that can connect to the Web.

via Beyond Social: Read/Write in The Era of Internet of Things.

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Pimco, manager of the world’s biggest bond fund, Deutsche Bank AG and Citigroup Inc. are among firms offering clients tail-risk protection, either through funds or traded instruments that act as hedges. Taleb said few will have the stomach to stick with the strategy.

“They will drop like flies,” said Taleb, now a professor at New York University’s Polytechnic Institute, who in 1999 set up tail-risk hedge fund Empirica LLC, which he ran for six years. “They and their customers will give up at some point. I’ve seen it before.”

via Pimco Sells Black Swan Protection as Wall Street Markets Fear – Bloomberg.

Before that, he took on Joseph E. Stiglitz, the Nobel laureate, about the future of the euro. “Hello, can I tell you about the real world?” Mr. Hendry interjected at one point. Video of the encounter was a huge hit on YouTube.His verbal pyrotechnics have won Mr. Hendry a reputation for challenging the economics establishment. He is regarded and appreciated by many as overly pessimistic about, well, just about everything.His big worry lately has been China. Like James Chanos, a prominent hedge fund manager in the United States, Mr. Hendry says he believes China’s days of heady growth are numbered. A crisis is coming, he insists.

via An Outspoken Fund Manager With Contrarian Views – NYTimes.com.