It May Be Time To Take A Ride On These 2 Rails [View article]
Obviously coal has environmental problems, but so do oil and natural gas, although the former is nearly all carbon and the others at least contain some hydrogen :)
Nevertheless, I don't think we'll just allow that coal to sit there. There is money to be made and it will be made. I suspect that as oil declines in availability and increases in cost, we'll see more projects to use coal as a chemical feedstock. By the way, most people would not define "alternative energy" as including oil and natural gas, but of course you're free to define those words as you please. Most would lump all those sources as "fossil fuels" and reserve alternative energy to refer to diffuse sources like solar, wind, tides, geothermal, etc.
Why Transportation ETFs Should Be A Core Portfolio Holding [View article]
I'm also long the rails individually - I've been a fan of railroading for decades before it became hot - and I have the transport index fund - and I am long-term bearish on airlines too. Due to the inherent physics of air flight and of aircraft themselves, planes must rely on high-energy-density fuels... which means heavy dependence on petroleum. They're not going to be running on electricity, uranium (though that's VERY high energy density!), used cooking oil, hydrogen, garbage, solar panels, or any of the other technological nostrums widely touted to keep America in automobile dependency. In other words, as energy becomes more expensive, the airlines will suck big-time. Meanwhile, the rails will look better and better. Naturally, I could be wrong: maybe zero-point energy or antimatter is right around the corner. I wouldn't bet my portfolio on new physics, however. Especially if you don't understand the physics and you're just being religious that "science will always find a way."
Meanwhile, of course, the airlines have one major strength, despite the author's (probably true) statement that they don't produce good returns for investors. Namely, whenever something bad happens to them, which is frequent, they run to Washington for handouts to maintain that "capitalist" industry, and they usually get them (do some research as to what happened after 9/11 and you'll see what I mean). This contrasts to the "socialist" railroads that never seem to need a darn thing from the government... unlike not only airlines, but trucks and cars and ships all of whose infrastructure is insanely subsidized by the taxpayer. It's fair to say that without those subsidies, the modern world would look quite different: trucks, cars, and planes would exist but have a much smaller role, and railroads would have a 90% mode share.
Activision Blizzard's Giant Leap: Is It Game Over? [View article]
One of the true mysteries of investment - perhaps the greatest mystery - is that examined by this Author, namely, when to sell. Jesse Livermore (of "Reminiscences of a Stock Operator" fame) says that many investors make the mistake of selling as soon as a small run-up occurs, fearing losing their profit. Here's the problem with selling on small run-ups: what do you do when you have a small LOSS in a stock? Do you sell? In that case, likely your gains will be balanced by your losses, less transaction friction, as small movements are effectively random noise; it's as likely that any stock you pick will go down by 20% as up by 20%. Or, do you hold on as the stock declines, hoping for a reverse? In that case, your portfolio will be full of dead wood, as you've sold all your winners before they became BIG winners, and kept your losses. This by the way is the problem with covered option writing - it's not "safe" as many say, as you will make very little money on gains (having sold your upside) but you will definitely lose plenty money on losses, only moderated by your received options premiums. Anyway, I've certainly been guilty of holding on to gains too long. An example: years ago I used Borland (remember them?) products, I liked them, so I bought in at $12. Six months later, it was $80 or so and I foolishly did not sell. Surely sextupling my money should have been good enough, no? I rode the train back down the mountain until the recent merger, clearing maybe $1 per share.
Given that it's very unlikely that even a really smart investor is significantly better at picking winners than random choice, it seems like you must limit losses to prevent the dead-wood problem. An investment professor I had recommended a 30% stop loss (also updated to recent highs - this helps lock in gains, at least those over 30%). If you do that, it seems like to earn money, based on the principles I mention above, you must gain more than 30% on your winners before you sell.
About six months ago, I was concerned about Vivendi's possible move to unload their ATVI holding. I figured that if that materialized, the stock might plummet, so I protected my long position by buying six month 10-strike puts; they were very cheap, like 26 cents per share or so. I lost it of course, but I did sleep better at night :) Generally, I've found that put protection is too expensive and significantly impacts portfolio return (no surprise there) - but here I was worried about a catastrophic loss. It's like the difference between high- and low-deductible insurance. Somebody has to pay for all those big buildings in Hartford, and if you insist on little loss thru put hedges, you will pay all your gains (when you make them!) in your insurance.
Good article, very thoughtful, and unlike certain authors who write about ATVI, you weren't clearly just talking stock down after opening a short position, or like some who are clearly grouches about ATVI's dominant gaming position (kind of like the people who hate Microsoft because it's dominant - and please don't pile on me giving me a million other reasons for hating them, I know them all and I'm a software developer in a Microsoft-using shop lol)... or some who just like other games better (of course, those other games don't seem to earn any actual, you know, returns for shareholders! But they're way cool!)
Look Out Below, Activision Blizzard: Finally A True WOW Killer [View article]
I'm curious, SJ, since we had our discussion about WoW vs GW2 and how GW2 was an automobile compared to WoW's horse-and-buggy and all. How's the car doing in killing off the buggy? How are their profits? I really don't know as I haven't found good numbers yet. Since you were touting them, you probably know.
Microsoft And The Infinite Monkey Theorem Of R&D Spending [View article]
Vince: consider though that all "innovations" are based on prior work, back to I suppose the first stone tool. AAPL has great consumer penetration but almost no footprint in business. I mention AAPL largely because so many compare the two organizations, but they are in fairly different markets. Also, as far as Windows and Windows-like systems are concerned, AAPL didn't invent that either; they got it from Xerox (I know because I worked for Xerox at that time. AAPL didn't even exist). It becomes a matter of opinion when a new product is truly innovative. I don't disagree with you that MSFT is not a great innovator, however.
Microsoft And The Infinite Monkey Theorem Of R&D Spending [View article]
I like your infinite monkey metaphor. By the way, even ONE monkey over an infinite amount of time will produce all possible works (of finite size). Similarly, an infinite number of monkeys will produce all possible finite-sized works of less than size L within L keystrokes (since one of the monkeys will surely start on any such work immediately), thus, you don't need to wait an infinite amount of time to get your Shakespeare. Note, however, that even an infinite set of monkeys over infinite time will not produce all INFINITE sized works (this can be proved via diagonalization, and was the basis of Georg Cantor's discovery that there are different orders of infinity).... lol... just offered for your amusement
Netflix: I Am Truly Living In A World I Don't Understand [View article]
I'm not convinced that a society like the US cannot eternally increase its debt - as long as the rate of increase is limited.
There is of course an obvious scenario in which this is not possible: one in which economic growth itself essentially ceases due to resource constraints, all the easy things having been done, environmental degradation, etc. Almost all investment is based on the concept of eternal economic growth. If that is possible (obviously not based on physics, but we can argue endlessly as to when such a limit would occur), then eternally growing debt is just as sustainable, as long as the average growth in the debt is smaller than the average growth in the economy. Both are equally real and equally preposterous - you cannot assert one position without asserting the other.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
Nothing wrong with challenging "established" points of view; that often leads to progress. Nevertheless, the many deniers and science-doubters who seem to think their feeble and largely selfish objections overrule the overwhelming judgement of science, don't seem to doubt quantum physics. They don't scoff at airplane flight and suggest substituting their own designs. They don't doubt electromagnetic theory as they use their computers and cell-phones. These same people who use the products of science every minute of their lives suddenly find vast dark conspiracies, accusing scientists of fattening their wallets through government grants awarded only on the basis of political correctness rather than likely validity of research. Let's challenge these people who think they know more than these modestly-paid scientists working at largely thankless jobs do, to actually invent something useful or discover something new. Let them yakk on cell phones they made themselves. Let them design their own planes and fly in them.
Activision's 'World Of Warcraft' - A Theoretical Exercise [View article]
Basically, you'll see a bifurcation in the market. Some players are willing to spend $13/mo (6 month contract) to play WoW - they get the advantage of all those developer dollars spent by Blizz on their behalf that Heartman quotes. Others are cheap and don't believe they should have to spend a dime on anything. The latter group will flit from game to game on their cell phones and facebook. The premium gamers will stick with WoW. What other gaming companies haven't been able to do is peel any significant number of premium gamers from WoW. Every few months it seems there is another game touted, often on SA, as the WoW killer, e.g., SWTOR, Rift, Guild Wars, LOTR, Warhammer, Conan, etc. None have produced any revenue to speak of. If you can't spend those development dollars, you aren't going to make a premium world, so you aren't going to attract premium players. It's as simple as that. The facebook/F2P games aren't even in the same league, those are more for spending time when you're riding the subway than for serious time wastage lol.
What Blizz will undoubtedly do is turn WoW into a kind of universal portal for many games. They made a fitful start in the "Mists of Pandaria" expansion by including a farming element like "Farmville", but they will surely go further. After all, I might like to play more than 1 game, but I only have so many hours per week I want to play across all games, and I don't want to pay one fee per game. That inevitably will lead to a kind of gaming consolidation, enabling a "roll-up" strategy where you pay one fee for unlimited play across a whole suite of games.
Are Hard Disk Drive Makers Really That Cheap? [View article]
I think the movement to the cloud will change the kinds of HDDs being sold. Gone will be the small, non-enterprise type found in home PCs, as SSDs will replace many of those. But the cloud won't use those small drives; even with failover type RAID strategies and backup, cloud vendors don't want drives failing, it's too expensive to recover and replace. Cloud vendors will want very reliable, but large drives. They're concerned of course about price per bit; note that cloud per GB prices are way higher than the same GB on your own HDD. So the HDD vendors must move entirely in the direction of higher-end, extremely reliable drives, yet with relentlessly decreasing cost per GB. Margins might be better on these, on the other hand cloud vendors will buy their selected HDDs by the thousands, which will cut margins.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
Another basic AGW denial comes from the issue that the weather goes up and it goes down. So who knows? Again, an analogy. Look at say the Dow-Jones Industrial Average. During any given day, it fluctuates seemingly randomly. Even over a several-year period its motion is fractal and unpredictable, despite all the charting tools, Elliot Waves, etc. Yet, over a long period, the signal stands out from the noise: it rises. The same is true for global temperatures.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
A common argument against AGW goes like this: "science can't predict what the weather is 3 weeks from now; how can it predict global warming over 50 years?" I answer this objection with an analogy. I can't answer the question "what will I be doing in 3 months?" I have no idea, since I'm not you, I'm not even sure if I can answer for me! But I can say for certain what you will be doing in 100 years: namely, nothing, because you will most certainly be dead! In other words, sometimes the long term is actually easier to predict than the short term.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
This is irrelevant. You cannot predict global weather changes over a long time by looking outside your window. If you put a kettle full of water on a stove, eventually it will reach boiling point. But if you put a high-grade lab type thermometer in there, you will find that different parts of the water are actually at different temperatures. The water roils, hotter parts moving towards the surface, boiling off some (and thus losing heat), then falling down back towards the flame. It turns out that no computer model on Earth can actually calculate the temperature distribution within even a simple thing like that kettle, let alone across the entire planet for all time to come. Yet, we know that when the AVERAGE temperature reaches 100 C, the water will boil. Calculating averages is relatively easy (not trivial by any means). Deniers are trying to use the fact that science cannot predict every single detail as a wedge to argue that it can't predict ANYTHING. This is absurd.
It May Be Time To Take A Ride On These 2 Rails [View article]
Nevertheless, I don't think we'll just allow that coal to sit there. There is money to be made and it will be made. I suspect that as oil declines in availability and increases in cost, we'll see more projects to use coal as a chemical feedstock. By the way, most people would not define "alternative energy" as including oil and natural gas, but of course you're free to define those words as you please. Most would lump all those sources as "fossil fuels" and reserve alternative energy to refer to diffuse sources like solar, wind, tides, geothermal, etc.
Why Transportation ETFs Should Be A Core Portfolio Holding [View article]
Meanwhile, of course, the airlines have one major strength, despite the author's (probably true) statement that they don't produce good returns for investors. Namely, whenever something bad happens to them, which is frequent, they run to Washington for handouts to maintain that "capitalist" industry, and they usually get them (do some research as to what happened after 9/11 and you'll see what I mean). This contrasts to the "socialist" railroads that never seem to need a darn thing from the government... unlike not only airlines, but trucks and cars and ships all of whose infrastructure is insanely subsidized by the taxpayer. It's fair to say that without those subsidies, the modern world would look quite different: trucks, cars, and planes would exist but have a much smaller role, and railroads would have a 90% mode share.
Activision Blizzard's Giant Leap: Is It Game Over? [View article]
Given that it's very unlikely that even a really smart investor is significantly better at picking winners than random choice, it seems like you must limit losses to prevent the dead-wood problem. An investment professor I had recommended a 30% stop loss (also updated to recent highs - this helps lock in gains, at least those over 30%). If you do that, it seems like to earn money, based on the principles I mention above, you must gain more than 30% on your winners before you sell.
About six months ago, I was concerned about Vivendi's possible move to unload their ATVI holding. I figured that if that materialized, the stock might plummet, so I protected my long position by buying six month 10-strike puts; they were very cheap, like 26 cents per share or so. I lost it of course, but I did sleep better at night :) Generally, I've found that put protection is too expensive and significantly impacts portfolio return (no surprise there) - but here I was worried about a catastrophic loss. It's like the difference between high- and low-deductible insurance. Somebody has to pay for all those big buildings in Hartford, and if you insist on little loss thru put hedges, you will pay all your gains (when you make them!) in your insurance.
Good article, very thoughtful, and unlike certain authors who write about ATVI, you weren't clearly just talking stock down after opening a short position, or like some who are clearly grouches about ATVI's dominant gaming position (kind of like the people who hate Microsoft because it's dominant - and please don't pile on me giving me a million other reasons for hating them, I know them all and I'm a software developer in a Microsoft-using shop lol)... or some who just like other games better (of course, those other games don't seem to earn any actual, you know, returns for shareholders! But they're way cool!)
Look Out Below, Activision Blizzard: Finally A True WOW Killer [View article]
Microsoft And The Infinite Monkey Theorem Of R&D Spending [View article]
Microsoft And The Infinite Monkey Theorem Of R&D Spending [View article]
Dow 14,000: Are You The Sucker? [View article]
Netflix: I Am Truly Living In A World I Don't Understand [View article]
There is of course an obvious scenario in which this is not possible: one in which economic growth itself essentially ceases due to resource constraints, all the easy things having been done, environmental degradation, etc. Almost all investment is based on the concept of eternal economic growth. If that is possible (obviously not based on physics, but we can argue endlessly as to when such a limit would occur), then eternally growing debt is just as sustainable, as long as the average growth in the debt is smaller than the average growth in the economy. Both are equally real and equally preposterous - you cannot assert one position without asserting the other.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
Activision's 'World Of Warcraft' - A Theoretical Exercise [View article]
What Blizz will undoubtedly do is turn WoW into a kind of universal portal for many games. They made a fitful start in the "Mists of Pandaria" expansion by including a farming element like "Farmville", but they will surely go further. After all, I might like to play more than 1 game, but I only have so many hours per week I want to play across all games, and I don't want to pay one fee per game. That inevitably will lead to a kind of gaming consolidation, enabling a "roll-up" strategy where you pay one fee for unlimited play across a whole suite of games.
Are Hard Disk Drive Makers Really That Cheap? [View article]
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]