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MktNeutral.com (http://mktneutral.com) seeks to promote market neutral arbitrage trading strategies by offering data services, analytical tools, educational resources, and social networking to traders and investors who would like to better manage their risk through market neutral trading.
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  • Bay Area Startups Raise $334 Million in 2012 So Far

    The year has gotten off to a good start for San Francisco Bay Area startups looking to raise venture capital. Bay Area startups have secured at least $334 million in funding thus far according to data published by SecondMarket (http://www.secondmarket.com). Below is a list of the venture capital offerings for companies in the Bay Area so far in 2012. The list of startups is led by the social media companies Lithium Technologies in Emeryville and Klout in San Francisco, the online payments company Jumio in Mountain View, and the biotech companies Aria Diagnostics in San Jose and Avinger in Redwood City.

     

    The Emeryville based social media company Lithium Technologies (http://www.lithium.com/) is the leader in vc funding so far with a Series D round of $53 million led by New Enterprise Associates and SAP Ventures. Lithium helps top brands find online and mobile social customers, understand their influence, and build lasting relationships. The Lithium Social Customer Suite offers comprehensive social monitoring, creative customer experiences, and actionable analytics across millions of blogs, forums, and social networking sites.

    The San Jose biotech firm Aria Diagnostics (http://www.ariadx.com/) is a close second with its Series C round coming in at $52 million and led by Venrock, Domain Associates, and Meritech Capital Partners. Aria Diagnostics has novel blood tests that equip pregnant women with the right information to make decisions regarding the health of their baby and their own body.

    The San Francisco SOMA neighborhood based Klout (http://klout.com/) comes in third with a Series C round of $30 million with Kleiner Perkins, Venrock, Institutional Venture Partners, and Paige Craig as leaders of Klout's latest fundraiser. Klout has a system that allows users to track the impact of their opinions, links and recommendations across their social graph. Data is collected about the content users create, how people interact with that content and the size and composition of their networks. Klout identifies influencers and provides tools for influencers to monitor their influence.

     

     



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jan 18 8:12 AM | Link | Comment!
  • Nostalgiac for the 50s and 60s: The Era of High Taxes in America and High Economic Growth
     I have just finished reviewing the slides of a presentation on the history of taxation in America and I am going to note some of my thoughts and observations on the high marginal tax rates that existed during the 1950's and 60s. You can view the presentation at the link below.
     
     
    The authors of this presentation seem to claim that high taxes can be good for economic growth and they point to the 50s and 60s as evidence to prove their claim. While I recognize that the US economy grew rapidly during the 50s and 60s in spite of the high marginal tax rates of 91% and 70% for the top earners, I don't think we can expect that such high marginal rates would produce the same type of economic growth now as they did during that period. 
     
    First, by 1950 the US had racked up an enormous debt compared to its GDP, which was used to fund primarily three things: 1) the large infrastructure projects of the New Deal during the Great Depression, 2) the second world war effort, and 3) the reconstruction efforts in Japan and Western Europe immediately after the war. The nation had taken on huge amounts of debt, but unlike today, most of that debt was held by individuals and firms inside of the United States and not by foreigners. The high tax rates were used to pay back the debt, but the payments on the debt went right back into the US economy as most of the debt was held within the United States. If the US were to implement high tax rates today in order to pay down the debt, it's hard to see how those higher tax rates would benefit the US economy internally as such a large portion of that money would be leaving the country to pay foreign creditors.
     
    As the debt was paid down, the tax rates remained high, but the economy continued growing rapidly. The federal government remained a large part of US GDP, but as the 50s and 60s roared on, the government embarked on a spending campaign driven by the cold war. The government spent billions (trillions if we adjust for inflation) on infrastructure and research and development projects. The interstate highway system was built, water works were constructed, nuclear power plants were erected, airports were built, etc.
     
    The technology that evolved from this era was nothing short of revolutionary: civilian nuclear energy, advanced jet engines that enabled civilian aviation, intercontinental ballistic missiles (ICBMs), the transistor and semiconductor technology, computer languages, satellites, advanced radar, and ultimately space exploration, which culminated with one of America's proudest moments with the moon landing in 1969. I don't believe that the private sector could have successfully funded these kinds of R&D projects that require decades of work without the federal government's assistance and the motivation and fear of communism created by the cold war. 

    If the US were to embark on this kind of R&D spending campaign today, I do believe that more revolutionary technology could result from such spending, but unfortunately, I don't see that in the cards at this point given the cognress' focus on cutting spending. The deep cuts to our space program (NASA), which was once the technological envy of the solar system, confirm my view.
     
    The demographic difference between the baby boom era and now cannot be ignored. The population growth rate of the USA peaked in 1963 at about 2.2% and has now fallen to about 0.9%. People were having lots of children in the 50s and 60s and we cannot forget about the constant in flow of immigrants that our country has seen throughout most of its history. The median age was about 27 and has now risen to 37 and is on pace to continue rising as the population ages. The result will be that any excess federal spending is more likely to go to pay for entitlement programs including social security and medicare than it is likely to fund infrastructure and R&D spending.
     
    If America were to implement higher marginal tax rates such as those that were in place during the 1950s and 60s, it is hard to see how that would lead to rapid economic growth given the differences between the two periods. Perhaps, it could lead to something of a renaissance in health and medical sciences as the demand for improved medicine would rise as the population got older, but I am still unsure how it would lead to rapid economic growth given the demographic change that is underway.
     
     
    Aug 15 8:13 PM | Link | 1 Comment
  • Cost of Gasoline vs. Natural Gas
    I just wanted to share a quick back of the envelope calculation with the SeekingAlpha community. I did not realize the price difference was this great, but it turns out that gasoline is about 5 to 6 times as expensive as natural gas on a per unit energy basis.

    In November, Boone Pickens told CNBC that gasoline was about 4 times as expensive as natural gas, but it appears that he either underestimated the true difference in price or the price has diverged even further since his testimony. Those of you in the energy industry can just ignore this blog post, as I imagine you monitor this price differential on a daily basis and I won't be saying anything you don't already know, but I would appreciate any commentary you might have to offer.

    Here in California I paid $4.80 last month for each block of 1,000 cubic feet of nat gas that I consumed from my local utility company. 1,000 cubic feet of natural gas has about 1 million BTUs of energy although it can vary slightly depending on where the gas came from. From this logic I paid $4.80 for each 1 million BTUs of energy that I consumed from natural gas.

    Refined gasoline has about 120,000 BTUs per gallon, but again it depends on where the oil came from, the precise refining process, and how much ethanol and other additives the gasoline contains. Thus, it takes about 8 gallons of gasoline to produce 1,000,000 BTUs of energy. According to Gasbuddy.com the average price today in the USA for a gallon of gasoline is $3.35. Thus, it costs about $27.92 to produce 1 million BTUs of energy from refined gasoline.

    Thus, gasoline is almost 6 times as expensive as natural gas on a per unit energy basis.

    Ethanol is even more expensive than gasoline. Wholesale ethanol is currently trading at $2.59 per gallon. Ethanol has about 80,000 BTUs per gallon, which means it presently costs about $32.38 to produce 1 million BTUs from ethanol. This is the wholesale trading price and does not consider any mark up or taxes passed on to consumers at the pump.

    I thought some of you who don't pay attention to this type of thing might find this interesting. I think it shows that we really need to begin switching to natural gas automobiles soon. Ethanol is a complete waste of time in my opinion because it causes the price of corn and sugar to rise since it is made from those agricultural commodities.

    Tags: USO, UGA, UNG
    Feb 28 6:37 PM | Link | 13 Comments
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  • VC DEAL: Aquantia gets $35 million to deploy its 10Gigabit Ethernet ICs in large scale datacenters. http://goo.gl/YQWoy
    May 14, 2012
  • Instagram, which just raised $40 million last month, gets bought by Facebook for $1 billion. Developing story. http://goo.gl/6TlQZ
    Apr 9, 2012
  • Great NY Times article on how the US lost it's mojo in tech manufacturing with a focus on Apple. http://qr.net/g1x9
    Jan 21, 2012
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