RichardGibbons

Hence the 1 in 6. If we knew, then it would either be 6 in 6 or 0 in 6. If you want to play Russian roulette for your family, that's fine. Don't worry about it -- the odds are in your favor that they won't die, and heck, you can get an extra 3-5% of your income if you win! Adaptation is part of the rolling the die thing. If humans weren't adaptable, things would be significantly worse. So I agree with you 100% that, if we're not willing to address the issue directly, we should try to adapt to the situation to reduce the pain as much as possible. The book Heat, by Monbiot, talks about ways to address the issue. It surprisingly isn't that hard, except for the long-haul travel issue. I would imagine that most of the scientists would wager their own money on global warming, assuming "approximately right" is sufficient to win (e.g. Newton was not right, but he was approximately right) and they get paid off if they win. It's relatively clear-cut, almost unanimous agreement. Maybe not their entire salaries, because that would be stupid, but an amount that's significant to them. It really is a no-brainer decision to address it before it becomes a problem. But I still don't think that humanity as a whole will do it, for the same sorts of reasons that we don't bother to solve debt problems and all these other things.

Yes, probably. Because it's very difficult to know what the effect of global warming could be, and there's some chance that it could result in the earth becoming much less inhabitable, causing famines or other nasty things to happen. It seems like a really bad idea to take the risk of a really bad outcome occurring, when it's not that expensive avoiding that the chance of that outcome happening. e.g. suppose I give you a 6-sided die, and say, if I roll a 1 on this die, you and your family will all die in the next 24 hours. If I roll any other number, you and your family will be fine. Would you pay something to avoid having that die rolled? I think I'd be willing to pay a fair amount rather than gamble that I hit the 83%. That said, I think humanity is likely to take the gamble, because as in general, we care much more about short-term benefits to ourselves than long-term esoteric risks.

I'm not claiming that there were charges, just that there could still be wrongdoing. There's a huge gulf between wrongdoing and prosecutable crimes.

Ending an investigation with no charges does not imply that there was no wrongdoing.

I'd say that the biggest thing to come out of it is the thinking with respect to competitive advantages. For me as an entrepreneur, it's not really about selling stuff. It's about building a moat. As such, I generally ignore ideas that wouldn't end up with a business that has a significant moat. And it also results in decisions to build the moat rather than profit in the short term. Recently, the idea of focusing on "unloved" areas is also becoming more appealing to me, kind of akin to looking at unloved value investments. Was it Lynch or someone else who suggested that you look for the most boring or disgusting areas of the market, and look to invest there? As an entrepreneur, that means focusing my efforts on niches and geographies that are boring/ugly and where my skill set is rare.

I think he's answered that already. :) The great thing about this conversation is that, though only a couple people have actually talked about their net worth, the conversation itself is pretty useful in judging people's credibility. I love the irony. Personally, I'm in the camp of "the strength of someone's arguments is a better determinant of their credibility than the size of their paycheck". So, I won't feel obliged to talk about my net worth. (That said, I don't make that many strong arguments on this board either, so, in the absence of $$$ evidence, I suggest the people want to categorize me put me in the "bozo" camp.) What I want to see now is a conversation between Moore and Harry. I think they'd either be the best of friends or completely contemptuous of each other. But I don't know which. :)

With respect to food subsidies, I have a hypothesis that they may be accomplishing a good thing. I suspect that in an efficient, non-subsidized market, there would be little incentive to overproduce. As a result, I suspect that in certain years (say one in twenty), there would be droughts, which, without the oversupply caused by subsidies, would result in starvation.

Sorry. You kind of refuted what people describe as the main benefit a gold standard, and I figured you realized that. Basically, I think what it amounts to is that the gold standard wouldn't provide the restriction against the government growing the money supply, because the government changing the ratio would be built in. That said, thinking about it a bit more, it could still be beneficial, in that when the government changes the ratio, at least it would be visible to everyone. So it would be more difficult to devalue money without people knowing. I don't think the scenario is particularly pie in the sky -- if you have any two things growing geometrically at different growth rates, one is eventually going to grow much, much bigger than the other. Ok, I tell you what. Let's each take 10 people. I'll have 10 of them build a house. You have 5 of them build a house, and 5 of them dig up rocks. Then we'll see who finishes building the house first. You may get your house, but it won't be as fast as I get my house. So, digging up rocks isn't mutually exclusive with spaceflight. It just involves allocating resources in a way that reduces the overall productivity of society. (Yes, I know that right, it doesn't cost that much today because not that many people are mining gold. But I thought we were talking about a world where people try to get enough gold to match the growth in GDP, so that lots of people have to spend time mining gold and looking for more efficient ways of mining gold rather than becoming scientists and brain surgeons etc. (Hey, does this this remind anyone of Wall Street? :) )) Fair enough. I think you're probably right that we won't get it.

As an serial entrepreneur, I'd say that the tax is basically irrelevant until it gets over 60%. I'd suggest that some of the better ways to encourage entrepreneurship are through socialized medicine and improved education. If you don't have socialized medicine then you're gambling with your family members' lives if you quit your job and lose your health insurance to start a risky venture. The more educated populace you have, the more people will be able to start businesses and the higher their chance of success. That's why the pro-business party is so eager to fund government healthcare and education. Oh wait. Never mind.

So, basically what you're saying is that it doesn't really work, or at least doesn't solve the problem of money printing. Governments can still basically print as much money as they want by changing the ratio, and indeed will be forced to do so as the economic output and supply of gold diverge. I find it fascinating that it's so easy to refute the "gold standard ensures the government doesn't cause high inflation through money printing" argument. So, you'd opt to spend the resources of humanity digging up rocks instead of, say, travelling to other planets, inventing cheap limitless energy sources, learning about the way the universe works, creating great art, curing diseases, and eliminating the ravages of aging? It provides jobs, but so does pretty well everything that improves the standard of living. It seems like the opportunity cost would be very high. Thanks for your help on this. It seemed to me that it didn't make sense, but I figured that my ignorance just meant that I was missing something. The fact that someone so knowledgeable about gold and mining in general talks about changing ratios to solve the basic divergence argument really clarifies the issue for me.

So with the gold standard, how do things work as labor produces value in excess of the world's gold supply? For instance, suppose the entire world consists of $1 backed by 1 oz of gold, and 1 person producing 1 widget per year that they sell for $1. Suppose that a bunch of people are born, and productivity goes up with the new iWidgetMaker, so that you have 10 people each producing 10 widgets per year. What's supposed to happen in this scenario? Your economy is still 1 oz of gold, but you have 100 widgets to trade. Are you supposed to just get super high velocity of money so that the widget still costs $1 and backed by 1 oz, but people are moving that $1 around 100 times faster? Or is there supposed to be huge deflation so that the cost of the widget decreases to be worth a penny, 1/100th of an oz? Or is your economy basically constrained by how fast you can produce gold, such that a huge portion of humanities resource goes towards finding more effective ways of digging up rocks? If the total economic output is growing at a higher geometric rate than the growth rate in gold, how is the gold standard supposed to handle that divergence? (This isn't a rhetorical question. I haven't thought about the issue much, so I'm curious whether there's something simple I'm missing, or whether gold standard advocates just pretend it isn't a problem.)

With Interactive Brokers, you can make the currency trade like any other trade. The commission is typically around one or two dollars (depending on the size of the trade), and the spread is tiny. For instance, I made a low six figure USD/CAD currency trade a few days ago. The commission was $2.51, and the spread was something like 1.03165-1.03205. Richard

It's unclear whether any shorts did well because you found a good list of shorts, or because we just went through the 6th biggest point drop on the Dow. (Unless you're claiming that your entire portfolio was short, or that you at least increased the number of shorts, but I didn't get that impression originally.) Or, maybe you just picked volatile stocks which tend to move more than the market, and the market moved down. I'm not claiming that you're being intellectually dishonest, but the minimum level of analysis requires showing that the portfolio went down more than the market. (And a fair level of analysis would be showing that, if you outperformed, it's not just because you named a bunch of high beta stocks as shorts right before a crash.) That said, if our positions were reversed, I might not want to spend the time posting proper analysis either. So, don't feel obliged.

On Medicare, Krugman makes a great argument: http://www.nytimes.com/2011/06/13/opinion/13krugman.html On the other hand, I'm from Canada, and USA's backwards healthcare system provides a large competitive advantage for Canada, as US businesses relocate their labor forces here to reduce healthcare costs. And, that competitive advantage will only grow as time passes and healthcare costs increase. I'm pretty sure that spending 30% less for equivalent or better healthcare would be good, right SouthernYankee? (Just doing that whole "Looking for common ground by starting with a question whose answer is obvious" thing that you suggested). Richard

The fact that a few innovative companies were able to have some success against Microsoft doesn't imply that their anti-competitive practices didn't hurt humanity. You can't say ivory poaching is fine because there are still some wild elephants. Perhaps there were 10,000 companies struggling to succeed, and 3 did, whereas without Microsoft, 500 would have. Perhaps there would be true artificial intelligence now or a polynomial-time algorithm for solving NP-complete problems, or a multitude of other beneficial advances if Microsoft hadn't been anti-competitive.

A long put gives you the right to sell shares to someone before a specified date at a specified price. So, short puts gives someone else the right to sell you shares before a specified date at a specified price. The downside of the latter is that you're taking all the downside risk, but not getting all the upside reward. So, suppose a few weeks ago, you sold Sino-Forest (TRE.to) $17.50 puts for $1. Your maximum profit would be $1. However, it turns out that TRE actually fell to $4. Now you have to buy shares for $17.50 that you can only sell for $4, so you've lost $12.50 ($17.50 - $1 - $4) in an effort to make $1. Thus, if you look at it from an overall portfolio view, one big loss will occasionally wipe out many profitable trades. And, unlike long share position, you'll never get a huge gain from, say, a stock being bought out far above its current trading price, to balance the occasional loss. Personally, I think this can be a bit of a trap. Psychologically, people like a lot of small gains and often overlook the occasional big loss because it's relatively infrequent. It's not to say that it can't be a profitable strategy, but rather that I think there's the risk with this strategy of taking credit for the gains, but mentally writing off the infrequent big losses as an aberration, and not giving it the full mental accounting it deserves. Richard

The fun stat now is by my calculations, Vancouver's been outscored by its opponents in the playoffs, by 2 goals. It would be funny if they could win the cup while being outscored.

We had the second Vancouver Value Meetup on Thursday. If anyone's interested in reading a summary of the discussion and some of the stocks came up as part of the conversation, I've posted it here: http://tickity.com/t/21924688301136127 Richard

Interesting. What method of risk control are you using, Harry? Stop buy?

I do. Forums work when people act as a community, treating each other with respect. When people are no longer treated with respect, they will not participate, the community will go away, and the value will be lost. Luckily, it's very clear that Sanjeev understands this as well. He's been good at knowing how much flexibility people should have to make vehement arguments, and where to draw the line. Richard

This whole saga reminds me of that Buffett saying: "In looking for someone to hire, you look for three qualities: integrity, intelligence, and energy. But the most important is integrity, because if they don't have that, the other two qualities, intelligence and energy, are going to kill you."

I think this is a probably a straw man, Harry, though I'm not going to go through the whole thread to confirm it. As I recall, none of them implied that it was a short-term bet on the results of a single quarter. It would be pretty unusual if someone on the board said that their premise rested on this quarter. They will be proven right or wrong over the course of years, when NFLX tries to renew the license on their content and finds it's five times the price, and the telcos, cable companies, Amazon, and the odd tech company all start jumping into the game. Also, it seems somewhat odd to me that you're not changing your mind about their risk-control strategy when they've pointed out their risk control strategy. Haven't the facts changed? That said, I think you're 100% right that risk control is a good thing.

Zorrofan, what you describe is largely the XVIX, which is the equivalent to short 0.5 shares VXX, and long 1 share VXZ. As far as I can tell (it's pretty new), it works largely as you'd expect.

I think this gives the future indices: http://cfe.cboe.com/DelayedQuote/CFEFuturesSymbology.aspx Also, the contango will become backwardization if volatility spikes too high. If one data point is useful, last May, that transition seemed to happen about when the VIX hit the low/mid-30s.

There's no such thing as intellectual property in a free market system. That's just an artificial construct created by regulations.