My afternoon train reading:

• The Single-Best Metric: EV/EBITDA (Crossing Wall Street)
• American Idle: Five Reasons We Hate the Stock Market (Reformed Broker) see also Stock traders with need for speed turn to laser beams (WSJ)
• Current liquidity-driven markets may be an Aberration, but Stubborn Aberrations Are Worth Paying Attention to (Tocqueville Funds)
• Is U.S. Housing Unaffordable? It Depends on How You Chart It (Real Time Economics)
• The Vampire Squid Strikes Again: The Mega Banks’ Most Devious Scam Yet (Rolling Stone)
• Characteristics of the Monied “Like” Button (Civilization Systems) see also Who ‘likes’ my Virtual Bagels? (BBC)
• Leaked Records Reveal Offshore Holdings of China’s Elite (ICIJ)
• 25 Horrible Things That Happen If You Don’t Get Enough Sleep (Business Insider) see also Does a More Equal Marriage Mean Less Sex? (NY Times)
• Google Earth: how much has global warming raised temperatures near you? (The Guardian)
• How the Beatles Went Viral: Blunders, Technology & Luck Broke the Fab Four in America (Billboard)

What are you reading?

 

Even Among the Richest of the Rich, Fortunes Diverge
Divergence At the Top
Source: NYT

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “10 MidWeek PM Reads”

  1. rd says:

    American Idle by TRB, the Tocqueville Funds piece, and Matt Taibbi’s latest Vampire Squid article make a perfect foundation for the wealth inequality graph at the bottom of the page.

    I felt that the 2009 market low was potentially a valid valuation bottom for the bear market but the Fed’s morphine shot, refusal to prosecute miscreants, and the expansion of the TBTF firms meant that the drawn out mourning process needed to terminate a bear market has only been felt by the bottom 90%, not the politicians and financiers. I don’t think the fat lady will sing until the pain has been felt by all. Historically, bear markets require virtually everybody to lose. I also think that financial markets can resist gravity for only a limited period of time as the people running them are not good enough at predicitng what can cause disaster to avoid hubris causing a fall.

    Our house is focused on saving money, reducing liabilities, and structuring portfolios and expenses so that we can survive a repeat of 2000-2002 and 2007-2009. That doesn’t mean bailing out, but it does call for a lot of diversification and managing expectations. However, unlike 2009 and its aftermath, I think the next blow-up will impact the finance CEOs and companies more than the general economy in the same way that 2001 crushed much of the dot.com and tech sector but the general economy was almost unaware of a major stock market crash. The rational conclusion of 2008-9 for the finance sector was post-poned by extra-ordinary interventions that prevented many of the firms from having to go through major re-organizations or management shake-ups. Bear Stearns and Lehmans were just the start.

    I think one of the major outcomes will be the normalization of monetary policy with short-term interest rates rising to close to inflation. The taper tantrum has already meant that long bonds have started to drift back towards normal relations with inflaiton.

  2. TDHawk says:

    Maybe it’s time for the bottom 99% of the top 1% to occupy wall street?

  3. MidlifeNocrisis says:

    RE: U.S. Housing

    I was cleaning out a file cabinet last week and ran across paperwork for our first home mortgage that the wife and I obtained in July, 1984. We’d been married about a year and a half, good credit but not much of a credit history at that time.

    Local bank, 5-year fixed rate with balloon, 14.50 % rate, 20% down payment. Yes indeed, those were the good old days.

    We’ve moved a few times and are now in our 5th different home. Same wife.

  4. Yofish says:

    Re: ‘American Idle’ ah yes, being one of those protein passengers (that) ” are almost at the anus, soon to be passed completely through”. I am quite aware that “my generation has permanently altered the snake’s body by virtue of its sheer size and girth” and, can only hope that some of the things I’ve been able to enable in my dear offspring might get them through what, I’m fairly certain, are to be tough times ahead.

    What a charming way Mr. Brown has with words. Unawares of his talents, I’ve booked him even though he’s rather too young (snicker).

  5. rd says:

    Your pilot may make less than the person who served you your burger in the airport:

    http://online.wsj.com/news/articles/SB10001424052702303874504579377181586540284?KEYWORDS=regional+airline&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303874504579377181586540284.html%3FKEYWORDS%3Dregional%2Bairline

    Regional airlines are apparently cutting back on flights because they are struggling to keep and hire pilots at the low wages they pay. Possibly the beginning of the squeeze on profits if pay costs rise.

    • Low Budget Dave says:

      Regional airline pilots are paid in hours of flight time, not cash. They build experience that gets them higher-paying positions as captains, and eventually, they hope, jobs at major airlines. They accept low pay in order to get better jobs later on.

      For better or worse, that is the free market.

      The guy at the burger stand, on the other hand, is at the peak of his career. Instead of working at a strip mall, he is working the burger stand at an airport. Just by working in an airport, he may be subject to a higher minimum wage than his counterparts elsewhere.

      At a major airline, pilots might start as low as $25 per hour, and they might only get paid for time behind the controls. If you factor in wait time and commutes, it might be as low as $18 per hour. Although they won’t be purchasing any new Ferrari’s on a couple of thousand per month, it still beats working at Wal-Mart by a wide margin.

      • rd says:

        According to the article, the regionals are struggling to replace their departing pilots. So they are currently electing to decrease planes in service instead of raising pay. As you say, the free market. However, it is hard to increase revenue if you are cutting back.

  6. intlacct says:

    Interesting article on an interesting topic by Josh. I will take his word on the lack of enthusiasm from the general public. I have not followed the issue that closely in part because it doesn’t surprise me and has happened before (1929-1954, among others).

    Perhaps it is my background (high level at large accounting firm), but I think a big piece is the ‘punched in the face’ factor. I think it was number one on Josh’s list. Plus people feel the game is rigged.

    Another factor is that I have made far more in directly owning and managing residential real estate. Leveraged, tax advantaged and high degree of control and trust in operations and management. Of course, it involves a lot more than opening a monthly statement.

    I still play the equity game but cautiously. I wouldn’t recommend a schoolteacher do anything but some simple couch potato-like portfolio with mandatory rebalancing.

  7. 873450 says:

    Even Among the Richest of the Rich, Fortunes Diverge
    “compensation for chief executives swelled about 725 percent in real terms from 1978 to 2011. At the same time, worker compensation increased just 5.7 percent.”

    All the income and wealth confiscated from 99% since 1978 had to go somewhere. It makes sense to reward a huge chunk of the take to the corporate executives engineering the redistribution.

  8. Conan says:

    The Latest Obamacare Numbers: Three Charts and Two Unanswered Questions

    http://www.businessweek.com/articles/2014-02-12/the-latest-obamacare-numbers-three-charts-and-two-unanswered-questions#r=most%20popular

    Now for some really important news!!!! How to protect my coffee!

    To Stop the Coffee Apocalypse, Starbucks Buys a Farm

    http://www.businessweek.com/articles/2014-02-13/to-stop-the-coffee-apocalypse-starbucks-buys-a-farm#r=hp-ls