Paul Kedrosky's Infectious Greed

Alex Honnold on 60 Minutes
Stuff ‘n’ Things
Daily Deals: Prediction, Social Diffusion, and Reputatio

Posted: 03 Oct 2011 01:20 PM PDT

When stuff happens on “TV” I miss it all the time. Apparently free solo climber Alex Honnold (of Alone on the Wall fame) was on 60 Minutes, and so … the clip follows. Warning: Whoever the woman who hosts this segment might be, she doesn’t know climbing.

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Stuff ‘n’ Things

Posted: 03 Oct 2011 01:10 PM PDT

Just back from a week in Europe. Totally exhausted still. Some catch-up.

Real Men Don’t Miss a Season (Source)
This Season’s Snowiest Resorts (Source)
The Wirecutter | A List of the Best Gadgets (Source)
Euro fix a con trick for the desperate (Source)

For those of you interested in other random things financial, a few of my current positions, whether directly or via options:

Longs: UUP, GLD, PCY, RWX
Shorts: RIMM, SNE, NOK, SPY, EEM, XLI, XLF, XME, XLK

I’m generally of the view that, assuming the Euro wheels don’t come off first, we get a screamer of a bounce higher sometime soon, and then trade off into Q1 2012, by which time we revisit, say, 800-900 on the S&P as the world comes unglued against $0.80 in earnings on the S&P. Sometime in 2012, likely early, we will get the best prices of the current cycle for equities, and then we will tumble cheerfully deeper into depression as austerity bites hard here and in Europe.

Thematically, I’m still big on the idea that a host of consumer electronics companies being clobbered, mostly while people are ignoring them for some bizarre reason. So I remain in my year-long short in RIMM (even if worried that activists are going to mess me up), SNE, NOK, etc. I’m also short EEM in a paired trade against PCY, largely as a crash trade where emerging sovereign debt outperforms emerging equities. I’m also short a host of U.S. sector ETFs as I have been since June-ish, a trade that started terribly and has done much better ever since. On the long side, the dollar is another crash trade, which I have done via options in a sort of bull strangle, and I’m also long real estate via RWX, mostly because I like the idea that the second derivative is tapering and people hate it more than I do.

Looking forward slightly, I imagine that we will see that bounce shortly, and it could very strong indeed, causing me to hedge these holdings fairly dramatically, and even close a few out.

Daily Deals: Prediction, Social Diffusion, and Reputatio

Posted: 03 Oct 2011 12:51 PM PDT

New paper:

Daily Deals: Prediction, Social Diffusion, and Reputational Ramifications

Daily deal sites have become the latest Internet sensation, providing discounted offers to customers for restaurants, ticketed events, services, and other items. We begin by undertaking a study of the economics of daily deals on the web, based on a dataset we compiled by monitoring Groupon and LivingSocial sales in 20 large cities over several months. We use this dataset to characterize deal purchases; glean insights about operational strategies of these firms; and evaluate customers sensitivity to factors such as price, deal scheduling, and limited inventory. We then marry our daily deals dataset with additional datasets we compiled from Facebook and Yelp users to study the interplay between social networks and daily deal sites. First, by studying user activity on Facebook while a deal is running, we provide evidence that daily deal sites benefit from significant word-of-mouth effects during sales events, consistent with results predicted by cascade models. Second, we consider the effects of daily deals on the longer-term reputation of merchants, based on their Yelp reviews before and after they run a daily deal. Our analysis shows that while the number of reviews increases significantly due to daily deals, average rating scores from reviewers who mention daily deals are 10% lower than scores of their peers on average.

via [1109.1530] Daily Deals: Prediction, Social Diffusion, and Reputational Ramifications.