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Archive for 2008

Lessons Learned From A Dangerous Year

Tuesday, August 12th, 2008

– I’m no one’s idea of a savvy investor. Back when the Dot-Com bust came down, I lost my shorts.

– These days, I’ve got a little money in my IRA to play around with and I try to be cautious with it. All I can say for this last year is I haven’t made much but then I haven’t lost much either and, as dangerous as it’s been out there, I think that’s good.

– I follow several economics and investing blogs (hat tip to Bruce S. for some of these). I’m always looking for small bits of insight and wisdom I can use. This piece by Barry Ritholtz seems to me to be composed of excellent advice and insight and I recommend it.

= = = = = = = = = = = = =

In the beginning of the year, a column I wrote for Real Money discussed some lessons of the past year. It never was moved over to the free site, so here is my belated update.

It is a mix of fundamental, economic, technical and even philosophical lessons that those savvy CEOs, fund managers and individual investors who were paying attention picked up in the recent turmoil.

1) Ignore market rumors: It seemed every time some firm was in trouble, the same gossip was floated that Warren Buffett was about to buy them. Time and again, these tales proved to be unfounded money-losers. This year’s most egregious example was Berkshire’s imminent purchase of Bear Stearns (BSC).

That The New York Times Dealbook got suckered into printing this just shows you how pernicious these rumors are. The stock was as high as $123 the day of the rumor.

Anyone who bought homebuilders or Bear Stearns stock on the basis of either of these rumors — or nearly any other stock that had similar rumors floated throughout the year — lost boatloads of money.

2) Buy sector strength (and avoid sector weakness): It’s a truism of real estate: It’s better to own a lousy house in a great neighborhood than a great house in a lousy one. And the same is true for stock sectors: Buying mediocre companies in great sectors generated positive results, while great companies in poor sectors struggled.

The losers are obvious: The homebuilders, financials, monoline insurers and retailers all struggled this year. The winners? Anything related to agriculture, solar energy, oil servicing, industrials, software, exporters, infrastructure plays — even asset-gatherers thrived.

More… ➡

…Later (17Aug08) here’s another list of ten rules to look over:Â ➡

Tags:Barry Ritholtz
Posted in General | No Comments »

One-fifth of EU timber imports are illegal

Sunday, August 10th, 2008

Almost one-fifth of wood imported into the European Union in 2006 came from illegal sources, with the UK being the second largest importer, a new investigation has found.

The UK imported 3.5 million cubic metres of illegal wood, which included importing the biggest quantities of furniture, finished wood products, sawnwood and plywood of all EU states. says a report from WWF. Only Finland brought in more illegal timber.

In 2006, the EU imported between 26.5 and 31 million cubic metres of illegal wood and related products, equal to the total amount of wood
harvested in Poland in the same year. Most of Europe’s illegal timber comes from Russia, Indonesia and China.

WWF presents these findings as further evidence of the need for a strong European law to prevent illegal wood entering EU markets.

More… ➡

Posted in Biodiversity Loss, Capitalism & Corporations, CrashBlogging, Deforestation, Extinctions, The Perfect Storm | No Comments »

Globalization Is Destroying the World’s Oceans

Sunday, August 10th, 2008

The oceans are a primary source of food for mankind, and fishing provides 200 million people with income, as meager as it may be. But growing demand and the industrial-scale exploitation of the seas are destroying global fish populations. The European Union’s quota system is partly to blame.

Dawn creeps across the horizon as the Pinkis brothers’ cutter returns to the harbor at KÃ¼hlungsborn. The Baltic is still calm, but wind from the northeast has already picked up sharply, a sign of the storms in the evening forecast. The Pinkis brothers and their crew have been out since 2 a.m., 10 nautical miles off the coast of northeast Germany’s Mecklenburg region, in a spot where they had staked hundreds of nets into the sea floor the previous afternoon, hoping the fish would come.

The brothers’ cutter is small, less than 10 meters (33 feet) long, with a tiny bridge on top and a large fish tank in the hold below. Two stake-net fishermen stand on the deck, wearing bright orange oilcloth clothing. The boat has hardly docked at the wharf before they begin shoveling the catch from the hold, mostly flounder and codfish, even a lone turbot. The catch amounts to 200 kilograms (440 lbs), the fruits of a day’s labor — a day that can sometimes last 20 hours. Six days a week.

More… ➡

Posted in Biodiversity Loss, Capitalism & Corporations, CrashBlogging, Extinctions, The Perfect Storm | No Comments »

There Are More Boys Than Girls in China and India

Saturday, August 9th, 2008

Preference for sons could spell trouble for China and India

It’s one thing to wish for a boy or a girl when pregnant; but it’s something else entirely to take steps to guarantee your wish comes true. Enter China and India, where the ratio of boys to girls is so lopsided that economists project there may be as many as 30 to 40 million more men than women of marriageable age in both countries by 2020.

The question is: Why? It’s more than just the historic birth ratio of 105 boys for every 100 girls. Both abortion and infanticide, largely triggered by a long-time limit of one child per family in China, each played a role. The skewed populations have prompted Chinese men, left with a limited pool of potential brides at home, to seek wives in other regions of their own countries as well as those abroad. But a dearth of mates isn’t the only concern for population giants China and India, which together account for 2.4 billion of the 6.7 billion people on Earth.

There are 119 boys born for every 100 girls in China today, compared with 108.5 boys per 100 girls during the 1980s. Recent national data is less comprehensive for India, but census records show 115 boys born for every 100 girls in 2003. That represents a major leap from 104 boys per 100 girls in 1981. By comparison, the U.S. is closer to average: 105 boys for every 100 girls this year.

The growing imbalance slows in older age because women tend to outlive men, with the ratio in both countries falling to about 106 men per 100 women after age 60. But such figures are cold comfort for younger men who lack marriage prospects in their age groups.

China’s lopsided population woes began in the early 1980s when its government began enforcing a one child per couple rule. The cap was first adopted in 1979 as part of a series of ongoing measures to curb population growth to help the government manage the country’s still-limited resources. The move correlated with an attempt by Chinese authorities to improve healthcare that included taking portable ultrasound machines to the most isolated rural villages, which gave women advanced knowledge of the sex of her fetus.

More… ➡

Posted in CrashBlogging, Culture - How not to do it, Social Breakdown, The Perfect Storm | No Comments »

How the world’s oceans are running out of fish

Saturday, August 9th, 2008

Ninety years of overfishing has brought us to the brink of ecological catastrophe and deprived millions of their livelihoods. Scientific guidelines are ignored and catches grow ever larger. Alex Renton explains why the international community has failed to act.

It is early morning in Barcelona’s La Boqueria market and the fish stallholders are setting out their wares. Mounds of pink and grey glisten down the dim alleys, as shoppers and tourists peer at the fins and tentacles. It is not like any fish shop in Britain. Some stalls sell five different species of squid and cuttlefish, half a dozen types of shrimp and prawn, 10 different cuts of salt cod. It is a fish eater’s haven in the heart of a city that eats and sells more fish than anywhere else in Europe.

Anyone who cares about where their fish come from — and this should mean anyone who wants to go on eating them — should take two tools when they visit the fishmonger. One is the handy guidance provided by Britain’s Marine Conservation Society (MCS), “Fish to Avoid” and “Fish to Eat” (the latter is still the longer); the other is a ruler. My ruler is the type handed out to commercial fishermen by the international advisory body Incofish, and has pictures of key species with marks indicating when they can be considered mature (and, thus, OK to catch).

So I set about lining up my ruler against the La Boqueria fish, starting with the mackerel (should be 34 centimetres), the plaice (39 centimetres) and the redfish (45 centimetres). All turn out to be mere babies. The mackerel is half the designated length. A glance around the stalls shows 10 or more species on the MCS’s “Avoid” list, including hake, swordfish, monkfish, bluefin tuna and, of course, cod.

I don’t spend much time doing this because the Catalan fishmongers don’t like my ruler — or me. They don’t want to talk about why they are selling tiny hake (one of Europe’s most endangered species) and why not a single fish in the market has any “sustainable” labelling.

More… ➡

Tags:overfishing
Posted in Biodiversity Loss, CrashBlogging, Extinctions, The Perfect Storm | No Comments »

To Trust or Not to Trust: Ask Oxytocin

Thursday, August 7th, 2008

When someone betrays us, how does the brain deal with it? A hormone associated with social attachment gives us clues.

The development of trust is an essential social tool, allowing people to form productive and meaningful relationships, both at a professional and personal level. Bonds of trust are also extremely fragile, however and a single act of betrayal—such as a marital affair—can instantly erase years of trustworthy behavior. The consequences of such breaches in confidence can be disastrous, and not only for a relationship. People who have been betrayed in the past will sometimes start avoiding future social interactions, which is a potential precursor to social phobia. In light of these connections, recent research has attempted to elucidate the neural mechanisms underlying trust behavior. This is the goal of an exciting new study by neuroscientist Thomas Baumgartner and colleagues at the University of Zurich in Switzerland that combines different disciplines (economics and neuroscience) and methodologies (neuroimaging and neuropharmacology) to investigate how the brain adapts to breaches of trust.

The Chemistry of Trust
To study social interactions, economists, and more recently neuroscientists, take advantage of a simple game played between two people called the “trust game.” (For more on greed and altruism, see this.)Â In a typical trust game, an investor (Player 1) is faced with a decision to keep a sum of money (say, $10) or share it with a trustee (Player 2).Â If shared, the investment is tripled ($30) and the trustee now faces the decision to repay the trust by sending back a larger amount of the initial investment (for example, $15 for each participant) or to defect and violate trust by keeping the money. In this game, the investor is therefore left with an important social dilemma: to trust or not to trust. Although it is more profitable to trust, doing so leaves the investor at risk of betrayal.

More… ➡

Posted in Mental Irrationality, Science | No Comments »

Arctic has 90bn barrels of crude

Monday, August 4th, 2008

– I suppose this is a case of good news / bad news.

– The good news is there is oil to be pumped and used and the world sorely needs more oil.

– The bad news is that we can now get at this oil because of global warming.

– The bad news is that it isn’t clear who ‘owns’ this oil as I wrote about here in September of 2007 and this may lead to political and military confrontations.

– The bad news is that finding more oil means that we can continue to dodge the energy bullet and continue to burn oil and put more CO2 into the atmosphere.

– Perspective is always good. Here’s some:

– As of 2005, we were using 30 billion barrels of oil per year. At that rate, these new arctic supplies will last three years.

– Is this discovery significant? Yes, as of 2005, only about 4 billion barrels of new oil per year were being discovered.

– This information is from here: ➡

– – – – – – – – – – – – – – – – –

The Arctic holds as much as 90bn barrels of undiscovered oil and has as much undiscovered gas as all the reserves known to exist in Russia, US government scientists have said in the first governmental assessment of the region’s resources.

The report is likely to add impetus to the race among polar nations, such as Russia, the US, Denmark, Norway and Canada, for control of the region.

The US Geological Survey believes the Arctic holds 13 per cent of the world’s undiscovered oil, while 1,669,000bn cubic feet of natural gas is equivalent to 30 per cent of the world’s undiscovered gas reserves.

“The extensive Arctic continental shelves may constitute the geographically largest unexplored prospective area for petroleum remaining on earth,” the USGS said.

Last August Russia planted its flag on the seabed 4km under the North Pole raising fears of a rush to grab the Arctic’s mineral resources, particularly its oil and gas deposits. Denmark in May called a summit of the five Arctic powers in Ilulissat, Greenland, to try to restrain competition and reiterate the countries’ joint commitment to the United Nation’s Law of the Sea Convention that governs territorial waters.

Commercial interest in exploiting the Arctic has also increased, with Royal Dutch Shell, the Anglo-Dutch energy group, pushing to help Russia develop gas from the Yamal region, and Total winning the right to do so at Russia’s giant Shtokman gas field.

In the US, companies are pushing ever further into the Arctic regions of Alaska, while Denmark has attracted a number of large companies interested in exploring for oil and gas off the coast of Greenland.

More… ➡

Posted in Climate Change, CounterCurrents, CrashBlogging, Peak Oil, The Perfect Storm | No Comments »

‘Major discovery’ from MIT primed to unleash solar revolution

Sunday, August 3rd, 2008

– This sure looks like good news for alternative energy. Let’s hope it is for real and that the folks who control it don’t slow its introduction down by attempting to squeeze every last penny out of it. Let’s hope as well that big oil and coal don’t buy it up and bury it.

= = = = =

In a revolutionary leap that could transform solar power from a marginal, boutique alternative into a mainstream energy source, MIT researchers have overcome a major barrier to large-scale solar power: storing energy for use when the sun doesn’t shine.

Until now, solar power has been a daytime-only energy source, because storing extra solar energy for later use is prohibitively expensive and grossly inefficient. With today’s announcement, MIT researchers have hit upon a simple, inexpensive, highly efficient process for storing solar energy.

Requiring nothing but abundant, non-toxic natural materials, this discovery could unlock the most potent, carbon-free energy source of all: the sun. “This is the nirvana of what we’ve been talking about for years,” said MIT’s Daniel Nocera, the Henry Dreyfus Professor of Energy at MIT and senior author of a paper describing the work in the July 31 issue of Science. “Solar power has always been a limited, far-off solution. Now we can seriously think about solar power as unlimited and soon.”

Inspired by the photosynthesis performed by plants, Nocera and Matthew Kanan, a postdoctoral fellow in Nocera’s lab, have developed an unprecedented process that will allow the sun’s energy to be used to split water into hydrogen and oxygen gases. Later, the oxygen and hydrogen may be recombined inside a fuel cell, creating carbon-free electricity to power your house or your electric car, day or night.

For the good of who?

Friday, August 1st, 2008

– Not long ago, a group of 12 top airline CEOs wrote an open letter to the American public saying that energy speculation needs to be curbed because it is distorting energy prices and will, eventually, destroy the airline business.

– Now, I read thatÂ the U.S. Senate proposal to curb speculation and increase transparency in energy markets has been blocked by Republican legislators.

– And then I saw a chart in USA Today showing the U.S. deficit or surplus since 1981 and which presidents and parties they occurred under.

– And finally I reflect on the Republican’s oft repeated mantra that the Democrats will ruin the country’s economy with their “Tax and Spend” habits and that they, the Republicans, are the ones who best husband the country’s wealth.

– Need I connect the dots for you, dear reader?

Posted in Capitalism & Corporations, CrashBlogging, Financial melt-down, Politics - The Wrong Way, The Perfect Storm | 1 Comment »

samadhisoft.com

Archive for 2008

Lessons Learned From A Dangerous Year

One-fifth of EU timber imports are illegal

Globalization Is Destroying the World’s Oceans

How the world’s oceans are running out of fish

To Trust or Not to Trust: Ask Oxytocin

Arctic has 90bn barrels of crude

‘Major discovery’ from MIT primed to unleash solar revolution

For the good of who?

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