The Big Picture

Lefsetz: 36 Things We’ve Learned
Use the News, Get the Most Out of Financial Media
10 Weekend Reads
F-TYPE Coupe

Posted: 23 Nov 2013 01:00 PM PST

1. Nobody wants old people’s albums.

Despite a plethora of press, Elton and McCartney’s and Elvis Costello’s album with the Roots sank like a stone and haven’t been heard from since. It’s almost like they never came out. Proving that publicity can make people aware, but it doesn’t necessarily make them interested. In other words, getting someone to listen is the hardest chore of the era. It’s so different from when we were addicted to radio and there were so few stations we knew everything by heart. Now we’ve got tons of options, not only musical, and just because you were important to us once that does not mean you’re important to us now.

2. Los Angeles is the center of the music business.

It was in the sixties, and then there was a shift to New York at the end of the last century. But with Lucian Grainge and Universal/Capitol, and AEG and Live Nation in L.A., this is where the power reigns. You don’t have to be in L.A. to make it, but if you’re a business person, think about moving to L.A.

3. Pearl Jam and Phish are oldies bands.

Everybody’s getting older every minute. Pearl Jam fans are over forty and Phish’s are just under that. Most of them go to the show to relive what once was. And it’s harder than ever for these bands to make new fans.

4. Justin Timberlake’s second album in twelve months was too much.

The hype sputtered out. We’re thrilled when the most beautiful person knocks on our door. But if they do it every day for a year, we no longer open it.

5. Some people are just self-destructive.

Like Anthony Weiner and Alec Baldwin and Chris Brown.

Then again, we’re all flawed.

But we rarely forgive. And if we do, we don’t let you back on the perch, you exist outside the game.

6. iTunes Radio

Too little too late. Pandora had first mover advantage. Be first and continue to innovate, otherwise you die. That’s Spotify’s advantage. They have horrific marketing, but they keep innovating, with chips in electronics and so much more. If you think Spotify is a losing proposition you never studied the mobile phone business. You invest heavily to reap rewards later. Just like the cable companies too!

7. Huawei Android phones are so cheap maybe Apple was right not to compete at the bottom of the market.

8. Some things can never come back, like MySpace.

9. You can’t go to the well every year. Bon Jovi’s tour business was soft, he should have taken a year off, if not two or three, off. U2 knows this.

10. It’s key to invest in your future. The Eagles may have not made money on their movie, but its airplay on Showtime boosted their ticket counts. You spend money to make money.

11. The key to typing on an iPhone is to let the device correct the mistakes.

If you’re used to a BlackBerry and trying to get it right, you’re gonna be extremely frustrated.

12. Everybody still hates Ticketmaster and you still can’t get a good ticket unless you know someone or overpay.

The heat is felt at the consumer level, but this is an industry problem. The lack of trust will come back to haunt artists and promoters.

13. The only money is in the ticketing.

That’s the promoter’s profit. Therefore, he who controls the ticketing wins.

14. Justin Bieber is toast.

He blew himself up.

15. You can’t will a TV show to success.

“X Factor” is a dud. It’s never gonna hit. Cancel it and put it out of its misery.

16. There’s too much information.

Therefore only the best wins. You’ve got to be the best musician with the best songs and performance and…being in the marketplace is not enough.

17. TV can only help with awareness, it cannot break an act.

18. Politics is a loser’s game.

Despite all the brouhaha about the health care act, a huge slice of the country has just tuned out. Nothing seems to get done. Just the same wannabe famous people arguing.

19. Country consumed classic rock, rap is next.

In other words, check out Colt Ford.

20. We expect you to be available 24/7.

Don’t turn off your phone, don’t stop checking your e-mail. You may hate it, but this is the new normal.

21. Artists triumph when they speak truth to power.

One of the reasons music is in a bad place is because everybody is cozying up to power. A great song knows no limits, it can become ubiquitous, it can make people uncomfortable and change behavior. Tracks have power, but you’ve got to use it.

22. You don’t have to social network to make it.

You’ve just got to do great work, constantly.

23. Most of the audience will take years to catch up to your work.

Therefore, if you’ve got some traction, don’t get frustrated you’re not bigger, just keep on keepin’ on, creating all the way.

24. Everything Google does is not successful.

Chromecast…good idea, not a lot of traction. Glass…not so good idea, tons of press, not great traction. Never mind all the Google products that have failed.

25. Execution is everything.

There are tons of good ideas. He who puts his nose to the grindstone and makes it happen is the one who wins.

26. Don’t ignore your core audience.

Touring the world may make you new fans, but it might alienate your old ones while you’re out of the picture, ignoring them.

27. Individuals make a difference.

They still call it “60 Minutes,” but without Don Hewitt, the show is a shadow of its former self.

28. CDs are for Luddites.

29. Record labels are on the verge of a financial cliff, with the expiration of the album.

30. Baseball and automobiles are so twentieth century.

Baby boomers don’t stop talking about them, but their kids shrug their shoulders and lust for the latest mobile device.

31. Gaming consoles are past their peak.

It’s not about expanding the power of the PlayStation or Xbox, it’s about expanding the power of new devices to include gaming. This has already happened with mobile devices, but my main point is it’s about the TV including gaming, not vice versa. One more time, you don’t add features to the typewriter, you make a computer that includes word processing. Gaming is a feature, not the be all and end all.

32. We live in an on demand culture.

If your product is not available 24/7, you’d better be expensive and shooting for an exclusive, tiny audience. Restrictions are history. Make it available, or people will consume something else.

33. Movies are dead and never coming back.

Television has replaced them. Because story is universal and special effects are not. In other words, you’re gonna get very tired of screwing someone who’s beautiful but doesn’t talk.

34. We live in a consumer culture.

If you want to start a trend, start with consumers, not businesses.

35. Youngsters are not always first to a trend.

36. We expect everything to work.

From cars to computers, the old sixties mantra of not buying electric windows because they break is passe. If you buy a product that breaks, you will never buy another product from that company again.

~~~

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Use the News, Get the Most Out of Financial Media

Posted: 23 Nov 2013 06:30 AM PST

Use the news: How to get the most out of financial media
Barry Ritholtz
Washington Post November 17 2013

Last time out, our topic was the signal-to-noise ratio when applied to investing. We looked at how to reduce the noise you consume in your daily information diet. The goal was to help you become a less distracted, more purposeful investor.This week, I want to focus on the "signal" portion of that ratio: Where to focus your attention so as to get more of the good stuff.

If you have read me for any length of time, you know I am less than enthralled with much of what passes for financial news. Most of it looks like meaningless filler to me. A lot of it is misleading, emotional, nonsense. Too much of it is prediction-driven — and experience has taught us that most predictions are worthless. Last, huge swaths of opinion often masquerade as analysis, and that does nothing for you. That someone else happens to like XYZ should be irrelevant to you as an investor.

Rather than repeat my usual whining about the financial press, I want to focus on how your use of media can add value to your investing process. (Okay, some whining might slip in, but I will keep it to a minimum.)

Ready? Let's dive right in:

• Hold pundits accountable: One thing I detest most about the financial press is the lack of accountability. All sorts of nonsense is said without penalty. On TV, guests are rarely called out for terrible calls or stock picks. Columnists can say anything without worry of anyone remembering their really dumb statements.

I use a simple calendar trick to hold talking heads accountable. Whenever someone makes some wild claim or rolls out yet another set of predictions, I diary them. Any calendar or even your Outlook will work, but I especially like to use a simple app called FollowUpThen.com.

As an example, have a look at this letter published exactly three years ago, signed by a long list of economic wise men and politically connected policy wonks. It warns of "currency debasement and inflation." My esteem for these folks' economic judgment is now significantly diminished; each of the list's signatories now get assessed as incompetent forecasters.

Second, I hold myself to the same standards, calling myself out annually. I publish a list of my worst errors each year (see this and this). Doing this is a humbling act that keeps me honest (and beats others to the punch). If I am going to trash others for their dumb predictions, I must at least hold myself to the same sort of accountability.

• Create your own media research team: I have a small group of favorites I deploy as my personal research team and my reality check. I subscribe to their e-mail, RSS and Twitter feeds, and read everything they publish. It doesn't matter where they publish, I digest their total intellectual output.

My shortlist of people include Dan Gross (Daily Beast), an economic realist with a knack for cutting through the crap; Jesse Eisinger (Pro Publica) for his understanding of complex financial issues and his ability to communicate them clearly; Mike Santoli (Barron's, Yahoo) has a great understanding of the Street; Bill McBride (Calculated Risk) reduces economics to its simplest essence; I devour all of Morgan Housel's Motley Fool columns for their insight and smarts; few people can help you understand your bad investing behavior better than Jason Zweig of the Wall Street Journal. I am omitting lots of other regulars, but these are the first six on my do-not-miss list.

You can create your own shortlist of people whose analytical approach and perspectives add value. (Use the process of elimination; the prior accountability bullet point helps with this).

• Focus your financial television consumption: Truth be told, most financial television bores me. Two or more people discussing the latest economic trends or hot stocks is not especially entertaining.

Why is that? Financial TV is essentially filmed radio. Because it lacks compelling visuals, we end up with all sorts of over-compensation. We see an emphasis on meaningless data; the lack of visuals also drives manufactured conflict — the pseudo bull/bear debates that one producer told me makes for "compelling TV." (I totally disagree.)

There are some worthwhile things to see on financial television: On Bloomberg Surveillance at 6 a.m., Tom Keene gives you the overview of what can expect from the day. On CNBC, my colleague Josh Brown is so insightful and witty that he makes Fast Money fun to watch. Before lunch, I search for UBS Floor Manager Art Cashin's comments from the NYSE floor on CNBC. I find more wisdom in 30 seconds of Cashin than any other 10 pundits combined. Consuelo Mack's Web show, WealthTrack, slows it down with in-depth interviews with investing legends.

I found more signal by making financial television "appointment viewing": Bloomberg and CNBC post all of their video clips online. You can use that by watching only those folks you think are worthy of your time, and not the hours of mostly dumb sound effects and countdown clocks and other empty calories and filler.

• Become a better investor: Anything that can show you how to become a better investor should be on your shortlist of media consumption. The media content that focuses on improving your process, on understanding your behavior or on providing broader context is worth considering.

Skip the stock-picking nonsense, the bloviating opinion mongers and the forecasters. Experience has shown us that this sort of stuff is worthless. Focus on those in the media who are teachers, who can share their experience and hard-won expertise. You are much better off when you are taught how to fish than when merely given a fish.

I try to keep my media consumption consistent with my desire to better understand the world I live in. This means skipping a lot of empty calories and saving my limited attention for the good meaty stuff. You should, too.

Ritholtz is chief investment officer of Ritholtz Wealth Management. He is the author of "Bailout Nation" and runs a finance blog, the Big Picture. Twitter: @Ritholtz.

10 Weekend Reads

Posted: 23 Nov 2013 04:30 AM PST

My longer form weekend reading:

• The Hidden Technology That Makes Twitter Huge (BusinessWeek)
• Wall Street Isn't Worth It (Jacobin) see also Can Suze Orman Save America? (Daily Beast)
• State of Work in the Age of Anxiety: The 40-Year Slump (American Prospect)
• What Does the Book Business Look Like on the Inside? (Vulture)
• Unaccountable: The Pentagon’s bad bookkeeping (Reuters) see also Accounting World, Still Resisting Sunlight (NY Times)
• How Republicans Rig the Game (Rolling Stone)
• Saudi Arabia's Prince Turki: 'American policy has been wrong' (Washington Post)
• The Decline of Book Reviewing (Harper’s Magazine)
• Will the EU Kill America's Death Penalty? (Vice)
• TV’s Crowning Moment of Awesome – (Esquire)