So, I'm checking out my blog, to see if anyone has posted any comments or anything, and I see a fascinating story about this Wayne fellow (see below, if you don't know what I mean).
Boy, Wayne certainly seems dashing and daring, in a James Bond kind of way, doesn't he? I'll bet he's got impeccable taste, as well. Not to mention a certain joie de vivre. I believe that's French. Like the fry, the toast and the cuff.
Why does Wayne do what he does? Perhaps we'll never know. As FBB speculates, he seems quite mysterious and secretive. Probably the type of guy the government is always keeping tabs on and trying to follow. Oh, I'm sure he pays all of his taxes and everything. He's not a wanted criminal or anything like that. Rather, the powers- that-be in this country probably want to figure out how to tap into that seemingly endless reservoir of charisma he's got. Our leadership could certainly use some of that.
I'd like to think that he's something of a dreamer. Sure, he knows where he's going, but maybe - just maybe - there's some other option. A better path, to a brighter future. In that way, he's probably not unlike the brave men and women who settled this country and its frontiers.
Well, I'd certainly like to meet this Wayne guy some day. Shake his hand, perhaps hang out with him for a while, to find out what makes him tick. Of course, I'll probably have to wait on a very long line.
Thursday, September 11, 2008
One Smart Fellow, He Felt Smart
Years ago, when working in the investment field, I became familiar with the popular phrases, "smart money" and "dumb money."
"Dumb money" refers to the average "retail" investor, who typically buys a stock or other investment on the basis of something he overheard at the barbershop.
"Smart money" refers to the professional investors and money managers, such as the guys/gals who run mutual funds, hedge funds and pension funds. They invest on the basis of years of experience and knowledge, using incredibly detailed models that are sophisticated enough to make NASA blush.
On Wall Street, Dumb Money is often scorned, as their lack of knowledge and their lemming-like, blindly-follow-the-crowd investing style gets them into trouble time and again.
The Smart Money, on the other hand, is revered. These highly-regarded - and highly-compensated - men and women have devoted the better parts of their careers to learning the ins-and-outs of investing. They're smart, sophisticated, and they know how to use Excel.
There are many investors out there who try to figure out what the Smart Money is doing. Before investing in a particular stock, for example, they look at the percentage of the stock that is owned by institutional investors, particularly the shops that have become household names: Fidelity, Janus, etc. The thinking is that you want to buy what the smart guys own, and sell when they get out. In some ways, this is like going to the race track, and always betting on the same horse as the mysterious guy wearing the enormous, diamond-encrusted pinky ring, who wears sunglasses on the most overcast day, never sits in the front seat of his own car, and always seems to need two people to help him put on his overcoat. Actually, it's nothing like that at all. I just like the imagery.
Now, to be sure, the Dumb Money usually is pretty dumb. The average investor doesn't know nearly as much about investing as he/she thinks he/she does, and typically spends less time doing research before investing his/her life savings than he/she would do before buying a milkshake. In addition, the odds are simply stacked against the individual investor. It's not a matter of being smart or dumb, rather, the average individual investor doesn't have access to the information that the professional investors have. The SEC tried to do something about it in 1999, with the implementation of Regulation FD (Full Disclosure), which stated that firms could not selectively disclose material information. In other words, if during the course of a presentation to the investment community, the CEO of company XYZ tells a group of analysts and fund managers that he anticipates that the company's sales will exceed prior estimates, the company must immediately release that information to the general public, say, via a press release. However, despite this regulation, the information asymmetry (as the academic community likes to refer to it) persists.
Based on this, the Smart Money should generally perform better than the Dumb Money does. Certainly, they're not prone to the types of silly mistakes that the Dumb Money regularly makes.
Or are they?
Let's take a look at the current economic mess. The government had to bail out Fannie Mae and Freddie Mac, who appeared set to crumble under the weight of bad mortgage loans for which they were providing guarantees. Bear Stearns no longer exists, as they were sold to JP Morgan Chase a few months ago in a fire sale arranged by the Federal Reserve. At that point, absent a sale of the firm, the 80+ year old firm, a veritable bastion of Smart Money in the fixed income world, would have been bankrupted by their investments in mortgage-backed securities which can best be described as "toxic." Hedge funds, assumed to be smartest guys of all, are having a dismal year. According to Hedge Fund Research, Inc., hedge funds are having their worst year since 1990, when tracking began. According to Hedge Fund Research, the average hedge fund is down about 3.4% for the year, through the end of August. While that's better than the S&P 500's drop of 12.6% over the same period, the fact remains that you'd have been better off just leaving your money in the bank.
We haven't hit bottom yet, either. Lehman Brothers, the fourth-largest investment bank in the U.S., has seen its stock price decline by 74% this week . And the week's not over yet. Lehman's problems stem from the fact that they're not only the largest underwriter of mortgage-backed securities, they actually bought a ton of these securities. They "got high on their own supply." And it was some nasty supply at that. The stock's tumble was precipitated when it became clear that the firm, which desperately needs to raise capital, was unable to secure an investment from state-owned Korea Development Bank. Korea!? Our 158 year-old investment banks are looking to Korea for help?! What's next, Vietnam is going to help shore up Merril Lynch's balance sheet? How the mighty - and "smart" - have fallen. I'm not sure if there's any truth to the rumor that the Lehman-Korea Development Bank deal fell apart over a disagreement that arose when Lehman's chairman, Richard Fuld, agreed to sit down to eat hot dogs with the Korean contingent, only to find out what they really meant by "hot dog." Sorry, that was too easy. In any event, I predict that before the end of 2008, Lehman Brothers will cease to exist.
It gets even worse. Washington Mutual, the largest savings and loan in the U.S., has seen its stock fall to a 17 year low. WaMu has seen billions of dollars in losses on its loan portfolio. The people who are supposed to know more than anyone about lending money to the masses simply made bad loan after bad loan. Will Washington Mutual continue to exist? What will be the cost of the FDIC bailout of that institution?
So, I guess that the Smart Money isn't so smart after all. In the end, they're just like you and I. Just like individual investors will buy a stock because their neighbor owns it and has made money on it, the institutions will buy a security - any security, the more complex the better - if someone else's trading desk has created some profits with it. The only real difference, then, is in the outcomes. When Dumb Money is wrong, it results in a loss of money, at worst, someone's life savings are wiped out. When Smart Money is wrong - really, really wrong - we're all filled with the urge to run home and hide under our beds.
...so we can be close to the money we've stashed under the mattress.
"Dumb money" refers to the average "retail" investor, who typically buys a stock or other investment on the basis of something he overheard at the barbershop.
"Smart money" refers to the professional investors and money managers, such as the guys/gals who run mutual funds, hedge funds and pension funds. They invest on the basis of years of experience and knowledge, using incredibly detailed models that are sophisticated enough to make NASA blush.
On Wall Street, Dumb Money is often scorned, as their lack of knowledge and their lemming-like, blindly-follow-the-crowd investing style gets them into trouble time and again.
The Smart Money, on the other hand, is revered. These highly-regarded - and highly-compensated - men and women have devoted the better parts of their careers to learning the ins-and-outs of investing. They're smart, sophisticated, and they know how to use Excel.
There are many investors out there who try to figure out what the Smart Money is doing. Before investing in a particular stock, for example, they look at the percentage of the stock that is owned by institutional investors, particularly the shops that have become household names: Fidelity, Janus, etc. The thinking is that you want to buy what the smart guys own, and sell when they get out. In some ways, this is like going to the race track, and always betting on the same horse as the mysterious guy wearing the enormous, diamond-encrusted pinky ring, who wears sunglasses on the most overcast day, never sits in the front seat of his own car, and always seems to need two people to help him put on his overcoat. Actually, it's nothing like that at all. I just like the imagery.
Now, to be sure, the Dumb Money usually is pretty dumb. The average investor doesn't know nearly as much about investing as he/she thinks he/she does, and typically spends less time doing research before investing his/her life savings than he/she would do before buying a milkshake. In addition, the odds are simply stacked against the individual investor. It's not a matter of being smart or dumb, rather, the average individual investor doesn't have access to the information that the professional investors have. The SEC tried to do something about it in 1999, with the implementation of Regulation FD (Full Disclosure), which stated that firms could not selectively disclose material information. In other words, if during the course of a presentation to the investment community, the CEO of company XYZ tells a group of analysts and fund managers that he anticipates that the company's sales will exceed prior estimates, the company must immediately release that information to the general public, say, via a press release. However, despite this regulation, the information asymmetry (as the academic community likes to refer to it) persists.
Based on this, the Smart Money should generally perform better than the Dumb Money does. Certainly, they're not prone to the types of silly mistakes that the Dumb Money regularly makes.
Or are they?
Let's take a look at the current economic mess. The government had to bail out Fannie Mae and Freddie Mac, who appeared set to crumble under the weight of bad mortgage loans for which they were providing guarantees. Bear Stearns no longer exists, as they were sold to JP Morgan Chase a few months ago in a fire sale arranged by the Federal Reserve. At that point, absent a sale of the firm, the 80+ year old firm, a veritable bastion of Smart Money in the fixed income world, would have been bankrupted by their investments in mortgage-backed securities which can best be described as "toxic." Hedge funds, assumed to be smartest guys of all, are having a dismal year. According to Hedge Fund Research, Inc., hedge funds are having their worst year since 1990, when tracking began. According to Hedge Fund Research, the average hedge fund is down about 3.4% for the year, through the end of August. While that's better than the S&P 500's drop of 12.6% over the same period, the fact remains that you'd have been better off just leaving your money in the bank.
We haven't hit bottom yet, either. Lehman Brothers, the fourth-largest investment bank in the U.S., has seen its stock price decline by 74% this week . And the week's not over yet. Lehman's problems stem from the fact that they're not only the largest underwriter of mortgage-backed securities, they actually bought a ton of these securities. They "got high on their own supply." And it was some nasty supply at that. The stock's tumble was precipitated when it became clear that the firm, which desperately needs to raise capital, was unable to secure an investment from state-owned Korea Development Bank. Korea!? Our 158 year-old investment banks are looking to Korea for help?! What's next, Vietnam is going to help shore up Merril Lynch's balance sheet? How the mighty - and "smart" - have fallen. I'm not sure if there's any truth to the rumor that the Lehman-Korea Development Bank deal fell apart over a disagreement that arose when Lehman's chairman, Richard Fuld, agreed to sit down to eat hot dogs with the Korean contingent, only to find out what they really meant by "hot dog." Sorry, that was too easy. In any event, I predict that before the end of 2008, Lehman Brothers will cease to exist.
It gets even worse. Washington Mutual, the largest savings and loan in the U.S., has seen its stock fall to a 17 year low. WaMu has seen billions of dollars in losses on its loan portfolio. The people who are supposed to know more than anyone about lending money to the masses simply made bad loan after bad loan. Will Washington Mutual continue to exist? What will be the cost of the FDIC bailout of that institution?
So, I guess that the Smart Money isn't so smart after all. In the end, they're just like you and I. Just like individual investors will buy a stock because their neighbor owns it and has made money on it, the institutions will buy a security - any security, the more complex the better - if someone else's trading desk has created some profits with it. The only real difference, then, is in the outcomes. When Dumb Money is wrong, it results in a loss of money, at worst, someone's life savings are wiped out. When Smart Money is wrong - really, really wrong - we're all filled with the urge to run home and hide under our beds.
...so we can be close to the money we've stashed under the mattress.
Wrong Lane Wayne
This may be less of a traditional blog posting and more of a story. It's a story of a man, as the title indicates, a man named Wayne. His name may not really be Wayne, but it rhymed so nicely I couldn't resist.
So Wayne was a pleasant fellow (he still is, actually), and a pretty good driver. He didn't go too fast or too slow. He didn't weave impatiently in and out of lanes, if someone wanted to pass him Wayne politely moved over to the right lane and let the other car go. All in all, it was hard to be a backsteat driver in Wayne's car.
Unless there was an exit coming up. For some reason, Wayne always waited til the very last instant to move into the lane that would give him the best access to his exit. And he waited until the very last instant to actually exit. No dotted exit lane lines for him, he moved over when he was ready. This was not specific to just Highways. No, if Wayne needed to make a right or left off of a local road, and that road was either two lanes or had a turning lane he'd wait. til the last instant.
Maybe he was afraid to let other people guess that he might be exiting or turning, he really is a secretive kind of guy. Or maybe he always liked to keep his options open, though I dare say, your options are much wider if you give yourself time to move over. Or maybe he viewed the turning and exit lanes as the driving equivalent of the children's table, and he had too many memories to purposely travel that road again.
His wife found it annoying. Very annoying. Really it was only a major problem if they were away from home. Because when you're two lanes over, and you don't REALLY know the roads and exits, it's a little hard to have any options at ALL.
But the issue that needed to be resolved, for both Wayne and his wife was Why. Why did he need to do this?
They haven't figured it out yet. Theories are welcome.
FBB
So Wayne was a pleasant fellow (he still is, actually), and a pretty good driver. He didn't go too fast or too slow. He didn't weave impatiently in and out of lanes, if someone wanted to pass him Wayne politely moved over to the right lane and let the other car go. All in all, it was hard to be a backsteat driver in Wayne's car.
Unless there was an exit coming up. For some reason, Wayne always waited til the very last instant to move into the lane that would give him the best access to his exit. And he waited until the very last instant to actually exit. No dotted exit lane lines for him, he moved over when he was ready. This was not specific to just Highways. No, if Wayne needed to make a right or left off of a local road, and that road was either two lanes or had a turning lane he'd wait. til the last instant.
Maybe he was afraid to let other people guess that he might be exiting or turning, he really is a secretive kind of guy. Or maybe he always liked to keep his options open, though I dare say, your options are much wider if you give yourself time to move over. Or maybe he viewed the turning and exit lanes as the driving equivalent of the children's table, and he had too many memories to purposely travel that road again.
His wife found it annoying. Very annoying. Really it was only a major problem if they were away from home. Because when you're two lanes over, and you don't REALLY know the roads and exits, it's a little hard to have any options at ALL.
But the issue that needed to be resolved, for both Wayne and his wife was Why. Why did he need to do this?
They haven't figured it out yet. Theories are welcome.
FBB
Wednesday, September 10, 2008
The Demise of Astroland
This past Sunday, Astroland, the world-famous amusement park located on the boardwalk in Coney Island, closed its doors and shut down its rides for the last time, after nearly 50 years. Apparently, the owner of the park and the developer who owns the site were unable to come to an agreement on an extension of the park's lease.
While I've never had much patience for nostalgia, I must admit that this news caused me to take a trip down memory lane. When I was a kid, my family went to Astroland all the time. Probably not as often as I seem to remember (3 times a year), but I'd have to say that we went there at least a dozen times.
I was very surprised to see references to the "3.1 acre" amusement park. To me, the place seemed huge. Then again, I haven't been there since I was a kid, and back then, everything must've seemed enormous.
I've got lots of memories of the place, and I'm not just talking about the rides, like the kiddie cars, motorcycles, helicopters, boats, Tilt-a-Whirl and the rest.
Who can forget when Astroland introduced the Pay-one-Price (PoP) concept, where you paid for admission, and had access to unlimited rides, as opposed to the pay-per-ride system, which had been in place since the Civil War. For my family, this was a radical economic concept, ranking up there with the establishment of the Federal Reserve Bank as revolutionary moments in U.S. financial history. Of course, as with other game-changing ideas, there were some initial errors in its application, such as the time I was forced to ride the Tilt-a-Whirl six consecutive times in order to "get our money's worth." Then again, I've always viewed vomiting as the "boring" cells leaving the body.
There was also the time that my brother and I, then about 5 and 10 years old, respectively, went to Astroland with my grandmother. Before we left on the drive back to Queens, she instructed us to go to the bathroom. On the surface, that was a perfectly reasonable idea. Problem is, there seemed to be a miscommunication as to what she meant by "go to the bathroom." I thought she was being literal. She meant the gutter. On Coney Island Avenue. At the corner. On a beautiful Sunday afternoon in the summer. During the Feast of San Gennaro. In a local election year. At least we were able to bargain her down to a side street.
Obviously, not all of my memories of the place are positive, but they're memories nonetheless, indelibly printed on my brain.
Of all of my Astroland memories, there's one I'll never forget. One time, my parents let me try my hand at one of those carnival games. You know the kind, where all you've got to do is defy every known law of physics, and you win some sort of stuffed animal with corndog grease stains on it. To this day, I'm a sucker for this kind of thing. It's like I've got some fiscal blind spot when I enter an amusement park. Seriously, if one of these guys offered me a giant Yogi Bear doll for $750, I'd be running around looknig for the nearest ATM. Needless to say, I was having a tough time of it that day in Astroland. For some reason that I can't quite explain, my mother allowed me to continue trying. Perhaps she saw the sad look on my face everytime I missed. Finally, after ensuring that the game operator's kids would all be able to attend college (or mechanic/beautician school), we quit. The guy gave me this tiny, brown, glass-like thing, which looked like an animal of some sort. He said, "here, have a booby prize." I had no idea what a booby prize was, so I was extremely proud of what I had won.
That's why I've always seen amusement parks as training grounds for life. You learn patience (by waiting on line), you learn to overcome your fears, you learn that things are never as scary as they seem and, as the story above indicates, you learn that in life, as long as you keep on trying, there will be some payoff at the end. You also learn not to stare at or make eye contact with someone with a lot of tatoos, but that's another story.
Farewell, Astroland.
(There's no way that place was only 3.1 acres).
--MBB
While I've never had much patience for nostalgia, I must admit that this news caused me to take a trip down memory lane. When I was a kid, my family went to Astroland all the time. Probably not as often as I seem to remember (3 times a year), but I'd have to say that we went there at least a dozen times.
I was very surprised to see references to the "3.1 acre" amusement park. To me, the place seemed huge. Then again, I haven't been there since I was a kid, and back then, everything must've seemed enormous.
I've got lots of memories of the place, and I'm not just talking about the rides, like the kiddie cars, motorcycles, helicopters, boats, Tilt-a-Whirl and the rest.
Who can forget when Astroland introduced the Pay-one-Price (PoP) concept, where you paid for admission, and had access to unlimited rides, as opposed to the pay-per-ride system, which had been in place since the Civil War. For my family, this was a radical economic concept, ranking up there with the establishment of the Federal Reserve Bank as revolutionary moments in U.S. financial history. Of course, as with other game-changing ideas, there were some initial errors in its application, such as the time I was forced to ride the Tilt-a-Whirl six consecutive times in order to "get our money's worth." Then again, I've always viewed vomiting as the "boring" cells leaving the body.
There was also the time that my brother and I, then about 5 and 10 years old, respectively, went to Astroland with my grandmother. Before we left on the drive back to Queens, she instructed us to go to the bathroom. On the surface, that was a perfectly reasonable idea. Problem is, there seemed to be a miscommunication as to what she meant by "go to the bathroom." I thought she was being literal. She meant the gutter. On Coney Island Avenue. At the corner. On a beautiful Sunday afternoon in the summer. During the Feast of San Gennaro. In a local election year. At least we were able to bargain her down to a side street.
Obviously, not all of my memories of the place are positive, but they're memories nonetheless, indelibly printed on my brain.
Of all of my Astroland memories, there's one I'll never forget. One time, my parents let me try my hand at one of those carnival games. You know the kind, where all you've got to do is defy every known law of physics, and you win some sort of stuffed animal with corndog grease stains on it. To this day, I'm a sucker for this kind of thing. It's like I've got some fiscal blind spot when I enter an amusement park. Seriously, if one of these guys offered me a giant Yogi Bear doll for $750, I'd be running around looknig for the nearest ATM. Needless to say, I was having a tough time of it that day in Astroland. For some reason that I can't quite explain, my mother allowed me to continue trying. Perhaps she saw the sad look on my face everytime I missed. Finally, after ensuring that the game operator's kids would all be able to attend college (or mechanic/beautician school), we quit. The guy gave me this tiny, brown, glass-like thing, which looked like an animal of some sort. He said, "here, have a booby prize." I had no idea what a booby prize was, so I was extremely proud of what I had won.
That's why I've always seen amusement parks as training grounds for life. You learn patience (by waiting on line), you learn to overcome your fears, you learn that things are never as scary as they seem and, as the story above indicates, you learn that in life, as long as you keep on trying, there will be some payoff at the end. You also learn not to stare at or make eye contact with someone with a lot of tatoos, but that's another story.
Farewell, Astroland.
(There's no way that place was only 3.1 acres).
--MBB
Welcome to our Blog
As FBB mentioned, we've been talking about doing a blog for the longest time. Now that she's taken care of setting up the infrastructure, we're off and running.
I've got no idea what this blog will be about. It'll probably be a forum to rant and/or to post these long, stream-of-consciousness essays. In other words, it will be like roughly 99.999% of all of the other blogs out there.
Enjoy.
--MMB
I've got no idea what this blog will be about. It'll probably be a forum to rant and/or to post these long, stream-of-consciousness essays. In other words, it will be like roughly 99.999% of all of the other blogs out there.
Enjoy.
--MMB
FIRST POST
We have been talking about blogging FOR-EVER! We (really me!) decided let's do it. Now came the naming portion of this exercise, what should we call this blog?. Of course MaleblogBerg (to be known as MBB from now on)was in a meeting, necessitating a flurry of texting back and forth, until we agreed upon a name for this venture.
Aaah, so what's in a name you ask? What does this title have to do with anything? Anyone who may be near or on an iceberg has issues that probably do not relate to the cleanliness of a motorized street vehicle. However, the iceberg is a dream of mine (an ice cream concession-like a Dairy Queen) and a carwash is MBB's dream business. Why is that his dream business? I have no clue. Maybe because I'm so messy he likes the idea of keeping everyone else clean. Or maybe it's the dream of t-shirts emblazoned with his logo. OMG!!! (believe me, that will probably be the ONLY textese I'll use). MBB, not knowing that I'm already up and running literally, as I finished that sentence about the t-shirts, texted the following:
"WE NEED TO MAKE T-SHIRTS (TO GIVE AWAY TO BLOG VISITORS)"
Weird, huh. Well, don't get too excited. There will likely NOT be T-shirts. At least not for awhile.
Anyway, I guess this makes us bloggers now, and I'll be FemaleBlogberg, heretofore known as FBB.
Have fun with us!
FBB
Aaah, so what's in a name you ask? What does this title have to do with anything? Anyone who may be near or on an iceberg has issues that probably do not relate to the cleanliness of a motorized street vehicle. However, the iceberg is a dream of mine (an ice cream concession-like a Dairy Queen) and a carwash is MBB's dream business. Why is that his dream business? I have no clue. Maybe because I'm so messy he likes the idea of keeping everyone else clean. Or maybe it's the dream of t-shirts emblazoned with his logo. OMG!!! (believe me, that will probably be the ONLY textese I'll use). MBB, not knowing that I'm already up and running literally, as I finished that sentence about the t-shirts, texted the following:
"WE NEED TO MAKE T-SHIRTS (TO GIVE AWAY TO BLOG VISITORS)"
Weird, huh. Well, don't get too excited. There will likely NOT be T-shirts. At least not for awhile.
Anyway, I guess this makes us bloggers now, and I'll be FemaleBlogberg, heretofore known as FBB.
Have fun with us!
FBB
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