The Big Picture |
- How frequently should we re-estimate DSGE models?
- Re: Pono
- The Future of New Business is Disrupting Old Business
- MiB: Dan Alpert
- 10 Weekend Reads
| How frequently should we re-estimate DSGE models? Posted: 08 Feb 2015 02:00 AM PST
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| Posted: 07 Feb 2015 01:30 PM PST Why does Neil Young get a pass? I don’t care that no one in the mainstream other than David Pogue has criticized Pono, I’m more worried about the rest of the stories. As Tony Wilson once told me, after screwing up the football scores for a news broadcast, the boss said no one cared about that, but it cast a shadow on the rest of the news, if the broadcast couldn’t get it right about something so simple, would people believe they could get it right about the important stuff? Did you read that article in the “New York Times” wherein Harvey Weinstein bullied the PR person for his Broadway musical, “Finding Neverland,” into resigning? At first you wonder why this is news, and then you read it and you’re horrified. Weinstein is pissed that his flack can’t get guaranteed covers. He himself lined up “Vogue,” how about the rest of the magazines? Make me puke. But that’s the news industry today. Few stand alone. They want to sidle up to the rich and famous who believe they’re so much better than us. Kind of like the rich westsiders who refuse to vaccinate their kids. Of course they’re right, they went to Ivy League schools, they’re rich! And they’re perpetuating their breed, if they don’t get felled by disease, using their money, power and influence to get ahead while the poor line up for shots and take whatever is given to them. Kind of like Ken Ehrlich getting a star on the Walk of Fame and an attendant glowing article in today’s “Los Angeles Times.” I’m cool with Ken, but is this news? What next, a star for the guy who casts the Oscar statuettes? Where’s Ken’s fame? And where in the article is the blowback about his power, how Neil Portnow kowtows to him and every Grammy-worthy act is afraid of him. Nowhere to be seen. So I’m waiting for the big boys to say Pono sucks. David Pogue just did, and his opinion went viral, if you didn’t get it you need new friends, he declared that “The Emperor Has No Clothes.” Not only did Pogue say you couldn’t hear the difference, but that hi-def tracks were overpriced, the store was incomprehensible and the hardware was a failure, hell, it doesn’t even have a lock button, never mind fit into your pocket. Isn’t that what Steve Jobs promoted back in 2001? A thousand songs in your pocket? And now Neil Young is jetting us back to the past? But Mr. Young is untouchable. He gets endless press for his new, unlistenable records that don’t sell. And he gets a pass for entering a sphere he knows nothing about. That’s right, Neil Young knows something about sound, but he knows nothing about hardware, nothing about tech. Which is why anybody with a brain knew this project was doomed from the start. I said so. But I was inundated by e-mail from his fans calling me a hater. That’s how far we’ve come, you can’t say a negative thing about anybody with a profile because you’re gonna offend their tribe. Which is how Chris Christie comes out against mandatory vaccinations. Pander much Chris? Why does everybody believe they can do everything? You might as well put your teenage science project on Kickstarter saying you’re gonna deliver the new smartphone, as if Apple and Android don’t exist and everybody working there is an uneducated, inexperienced idiot. That’s right, Jony Ive knows nothing about design. And the Center For Disease Control knows nothing about vaccinations. It’s all just a plot to pull the wool over your eyes. If only the government could do this, if only it could truly prevent leaks. But you’d rather subscribe to the rantings of an inexperienced Luddite than believe the truth. What did Jack Nicholson say in that movie, YOU CAN’T HANDLE THE TRUTH? No one can handle the truth anymore. No one wants to hear that the internet has created a two class system in music, winners and losers. That the middle class has been eviscerated. It’s got nothing to do with Spotify and everything to do with access to the best instantly. No one even wants to say a negative thing about Taylor Swift, for fear she’ll write a song about them, even more that she won’t invite them to her house and cook them dinner and make small talk, as if Taylor Swift is their friend. Hell, she doesn’t care about them, she just wants to sell. We used to have a critical society. The only people poking holes in theories were not nobodies online. And the funny thing about the haters is they focus more on the nobodies, the stars are untouchable, because if the stars have feet of clay they’ve got nothing to believe in. So football is safe, global warming doesn’t exist and Neil Young can’t be wrong. But he is. Even a four year old knows twenty plus bucks for an album is too much. Hell, you can buy a Ferrari FXX for two million dollars, it’s great, but do you want to lay down for it? I don’t think so. So in one fell swoop, David Pogue killed Pono. It doesn’t even matter whether he’s right, his story dominated the news cycle. Proving once again that the viral story trumps the media message every day. That’s the power of the people, rarely used, except for inanities, cat videos and specious scientific theories. Mr. Pogue made a mistake leaving the “New York Times.” Yahoo is so disorganized it’s a hoot that it started out with the mission to make the web comprehensible. And conventional wisdom is reviewing is dead, no one has any power. But every other mainstream outlet could have bought a Pono and done an A/B test. But they didn’t because they were too busy sucking up to movie stars and non-celebrities like Ken Ehrlich, desiring to be a member of the club. Meanwhile, I’m stuck here in the middle with you. Looking for truth in a world that doesn’t want any. But it does…
~~~ – |
| The Future of New Business is Disrupting Old Business Posted: 07 Feb 2015 08:00 AM PST The future of new business is disrupting old business
There are many lessons to be learned from Uber, the taxi- and car-hailing start-up that came out of nowhere and is valued at $41 billion. Less than three years ago, Uber had zero drivers. Now it has more than 160,000 active drivers who have collected $656.8 million in fares (net of what they pay Uber). Among the lessons, some point to the rise of the sharing economy, which also includes firms such as Airbnb, Snapgoods, RelayRides, TaskRabbit and Lending Club. Others talk about the "on-demand economy," which creates a new class of labor that straddles the line between being self-employment and working for a firm. I prefer a Big Picture view to get the proper perspective on these start-ups. From 30,000 feet, we see what all of these newcomers have in common: They attack an existing market dominated by entrenched incumbents that are inefficient, expensive or both. Consider Uber. How are the cabs in your city? In Manhattan, where I work, they are rather awful. They are uncomfortable and not especially safe (who wants to slam his face into a plexiglass wall covered with metal projections?). As bad as they are, they are typically unavailable when you need one. The second it begins to rain, it is nearly impossible to find one. And what idiot decided to do shift changes at 5 p.m. — right at the start of rush hour, when swarms of riders need cars, all of whom are unavailable as they are returning to the outer boroughs for their daily change of drivers? But the biggest inefficiency is the limit on the total number of cabs, as mandated by Taxi and Limousine Commission rules. Hence, that monopoly supply limitation thwarted competition, reduced the available number of cars and allowed the value of medallions to skyrocket. The cabs are dirty and ugly, and the service is awful, but at least they are expensive and unavailable when you need one! Until Uber rolled in. Since then, the value of a medallion has fallen substantially. The same is true in other cities where Uber operates. We can credit (or blame) a number of factors. Companies like Uber and Lyft are more convenient, they are cost-competitive (especially low-cost Uber X) and the cars are nicer (especially Uber Black Car). But the biggest factor is that these firms have identified economic inefficiencies in major markets. They are bringing new efficiencies to underserved consumers. How does this happen? To begin with, the existing companies have become fat and lazy. That's what the term "entrenched incumbents" means — they are here already, and they usually have some moat around their business to prevent true competition. In New York, the former lack of real competition allowed taxis to extract excessive charges, regardless of the poor service. Uber broke that monopoly. In doing so, it brought true competition to the market for car services. That is why Uber is worth a fortune. What other industries are ripe for disruption? All of the following have some form of restriction which limits supply and reduces competition, thereby keeping prices high even when providing poor service.
All of the above sectors are the obvious markets. No one saw taxis as an industry ripe for disruption, and I bet that lots of other markets we hardly even think about are similarly ready for competition. I have no idea which market the next generation of disruptive technology will focus on. Whether it's the college admission process or virtual reality or 3D printing or advanced robotics and drones or autonomous vehicles or next-gen genomics is almost beside the point. The one thing you can be assured of is that no industry is safe from disruption. That is how progress is made. ~~~ Ritholtz is chief investment officer of Ritholtz Wealth Management. He is the author of "Bailout Nation" and runs a finance blog, the Big Picture. On Twitter, @Ritholtz. |
| Posted: 07 Feb 2015 06:30 AM PST This week, the "Masters in Business" podcast features investment banker Dan Alpert, who is tge founder and managing director of Westwood Capital, and author of The Age of Oversupply: Overcoming the Greatest Challenge to the Global Economy. Alpert created the first commercial mortgage backed securitized CDO, and one of the very first REITs. As you will hear, he is very knowledgable about distressed assets, macroeconomics, and structured products. You can hear it live on Bloomberg radio at 10am and 6pm (plus repeats), download the podcast here or on Apple iTunes (when its posted, you can also stream it on Soundcloud). All of our prior podcasts are available on iTunes. |
| Posted: 07 Feb 2015 03:30 AM PST Good Saturday morning. Pour yourself a mug of strong brew, settle into your favorite easy chair, and get ready for our long-form weekend reading:
Be sure to check out this week's Masters in Business radio podcast with Westwood Capital's Dan Alpert.
No, the U.S. economy isn't about to fall into recession
Source: Deutsche Bank
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