$3 bil value? That's a swing in Apple's quarterly profits, not an industry's value.

This one is a question of politics and economics. Law of the Sea follows the flag on the ship, flag on the ship goes to the least regulated country. There are cleaner alternatives to bunker fuel, and California mandates use of cleaner ship fuels in California territorial waters. The US could dictate that ships use cleaner fuels in our territorial waters, but outside of that, these ships will continue to use whatever their flag country lets them use.

Sulfur dioxide, however, REVERSES greenhouse effects. If you're afraid of global warming, you should like sulfur emissions.

http://www.npr.org/templates/story/story.php?storyId=4516989

If I were you, I'd start coming up with lists of questions that only she would know the answers to. Ask her relatives and friends to come up with questions, some silly, some serious. The more specific the questions, the more specific the answers - more general questions to get her to tell long winded stories that will capture her essence. Ask what you'll want to know ten years from now. Have your kids ask questions. Who knows, some of the answers might come in handy during junior high and high school when social problems are so vexing for kids :)

Probably 95% of the records are for compliance and things legal wants saved for CYA purposes. This is more a function of the legal environment, where everyone wants to sue every business that looks at them funny, and how courts expect tons of documents on everything you've ever done. It'd be an interesting analysis to see what the costs of excess records retention are compared to the legal losses, and more importantly, the losses consumers incur because they can't afford to fight well documented machines or what consumers lose because companies are under-documented.

Do I contradict myself? Very well then I contradict myself (I am large, I contain multitudes.)

Identifying things that WERE bubbles is easy enough, depending on what you define a bubble to be. Inside a bubble, the intrinsic defining feature of a bubble is that it is NOT observable, or else everyone would make a fortune off those not observing it by predicting it and drive the price down to prevent it from ever actually being a "bubble". If you are capable of observing a bubble, then by definition you are NOT capable of stopping it.

You're right that timing is an often ignored part of predicting - making a bet costs money, and the juice is always running on speculative bets, especially contrarian ones (here's why). The market can always stay "irrational" longer than you can stay solvent.

Grantham's methodology is based on the historical likelihood of a price movement, which is the same methodology that gave subprime mortgage debt AAA credit rating. It's very reliable for a tight range where asset returns approximate well defined statistical distributions. However the problem with rare, extreme events is that they are easy to observe after the fact, but they are rare and by the time you can tell what is going on, they have an extreme effect on your balance sheet.

His "3 sigma" events are inherently things unlikely to occur, but most importantly its based off three things that change daily, exempli gratis: prices, equity, and the average P/E ratio. Companies with P/E ratios that have been more than 3 times the market P/E ratio include those failures like Microsoft, Google, Apple... Any company with rare growth potential should have an "excessive" P/E ratio. Tech stocks as a sector, for example, have high P/E ratios - but they have not "popped" in the long term (.com bubble being a blip in this longer term trend), they have actually increased the long term P/E ratio of the entire market because they have BECOME the market by crowding out slower growing industries. The price of creativity, innovation and technology is risk.

"there were smart economists saying..."

Here's a smart economist saying an economist's saying: 12 out of the last 5 market crashes have been predicted. Half the people in the market (also known as "sellers") think the market is going down, and half the people (also known as "buyers") think the market is going up. Both have monetary incentives to proclaim the forthcoming terror/utopia and every day the economic and business news is full of them. They aren't listened to for a reason.

50% is also known as a completely meaningless prediction. Basically, it says the price could go up or down.

Bubbles are theoretically impossible to predict. If there existed any convincing predictable evidence that an asset price was a bubble, then everyone would sell the asset by the point it crosses that threshold, meaning the price would have gone down, contradicting the predicate that it was a bubble.

"Bubbles" are nothing more than post-hoc descriptions of prices that went up and came down, just like "bargains" are the description of prices that went down before going back up. Prices are very predictable - they go up and down.

Intel probably doesn't think AMD is a viable competitor anymore. AMD's net assets, prior to this deal, were in the neighborhood of negative $1.25 billion (assuming it can't get rid of its minority interests *cough GlobalFoundries cough*, and you believe its intellectual property is only worth $168 mil). So AMD is really getting a much better financial position from this deal, after you include the spinoff, and new technology. Intel is getting quite a bit out of the technology sharing agreement too: namely, their technology that they have experience with will continue to dominate the market.

If AMD were to die, their team might get snatched up by a player with deeper pockets and complementary engineering team, like an IBM, and things could get ugly for Intel. More importantly, the realpolitik at this level is important. Regulators around the world would use it as an excuse to attack a major American company as a monopoly, in order to try to boost their national champions. Every country wants a piece of the semiconductor industry and will use any means to get it. It may not be a coincidence that GlobalFoundries decides to build a plant in New York, and the NY AG comes in threatening big action to force this settlement... and if Cuomo couldn't get the case to stick, Eric Holder lived from birth to JD in NY.

60*37 20*9*60
Primetime is still more valuable. Fewer commercials means more expensive commercials - that has been long established.

FBI knows how to find these guys, and detain them for as long as possible before filing charges. You can bet there will be (non-torture) interrogations. The FBI has plenty of federal laws they can throw at these guys, can work with your local DA, and ICE, not to mention get the warrants to track who these guys are talking to and who else might be a threat to you.

The United States NEEDS you to report ANY activity of this kind immediately.

http://www.fbi.gov/contact/fo/fo.htm

The real reason SUVs are popular is because huge vehicles are safe (for those inside). Car accidents are the single leading cause of death and debilitation from ages 1 to 44 in the US (oddly, in 35-44, poisoning barely edges out motor vehicle traffic...), so having a car built like a tank is rational if you're interested in retaining life and limb. Most Americans care more about this than pollution, global warming and Middle East wars, which are statistically much less likely to kill them. A 2008 Jeep Patriot starts at $16,500 MSRP, a Mini One starts at $19,000 but doesn't have enough horsepower for AC, so it isn't sold in the US (MINI Cooper starts $18,500). Both have similar acceleration (11 sec, 0 to 100kmph), Jeep Patriot is safer (19 out of 20 NHTSA Stars vs 17 for AC equipped MINI Cooper), MINI Cooper beats in mpg (28/37 vs 23/28).

The afore mentioned "subsidy" was meant to give US car manufacturers a competitive advantage vis a vis their foreign competitors, and applied to businesses, not consumers. This was not a subsidy per se, but an "accelerated depreciation" tax credit. According to Taxpayers for Common Sense, only 100,000 out of 3.6 million SUVs sold in 2002 claimed the tax credit, so people were clearly not choosing the vehicles primarily for the tax credit. And SUVs were popular before this, so hopefully that "cause" is debunked.

Motorcycles get fantastic MPG, but are much, much more likely to kill you. Walking and horses have even better MPG, but are probably also more likely to kill you per mile traveled.

Here you have exactly why the quants got things so wrong. If you have an arbitrary random variable with a finite variance, then a law of large numbers will tell you that it converges to a Guassian under repetition. That's what most educated people know.

The problem is: the odds of an arbitrary distribution with no bounds having a finite variance is zero. In finance and economics, we know this, and we make up so many excuses to use Gaussians instead of more general LLN collection families. Gaussians are so tractable and easy to use, and so consistently used in theory that its second nature for us to use them. And since Gaussians are MLEs with relatively few restrictions, they tend to minimize measures of entropy. And since this is economics, everything ultimately has a bound... somewhere... unless its derivatives.

Not even most economists, financiers, or quants want to have to apply Levy-stable distributions all the time to variables, because working in complex spaces with integrals that never seem to converge when you want them to is a giant mathematical pain in the ass. But that's what real risk management is - your models need to be robust to whether that "variance" number your data indicates is real or bullshit or infinite.

Quants who knew better willfully ignored this, because "risk" (and "volatility" and "variance") makes "return," and they like big paychecks when things are going well. And when things aren't going well, well, who else could understand this stuff? Your average banker with an MBA might fire them, but doesn't have a chance at understanding, so he'll hire the average economist with a PhD who has a small chance, but recommends a mathematician who will say he doesn't understand the interpretation, and will refer you to a quant.

Finance adds a LOT to the economy. The basic idea of finance is deciding where the most "return" is - ie, what investments are the most productive. If you gave money to every entrepreneur who came asking, you'd be out of money by the end of the day.

Money has meaning. There is a limited supply, and that means you have to prioritize who gets it. It has to be in limited supply in order for it to have "meaning." In order to motivate people to do things, we give them money, instead of trying to guess that they want payment in the form of, say, "a two bedroom house in Santa Monica with a 30 yr mortgage, a 2007 Prius Hybrid on a 5 yr lease, Montessori school for the 7 year old..." Using money not only gives people the freedom to choose what they consume, but it removes the guesswork from employers. If you just hand out money to anyone, you have no price stability, and no ability to plan for the future.

Deciding who to give money to on what terms, based solely on their ability to honor the terms of the understood mutual agreement, is essential to the economy operating. Finance is the art of acquiring money from one source, such as bank stockholders or bond holders, and allocating that money to borrowers or investments in such a way that you reduce the idiosyncratic risk (which your investors want to avoid), thus earning compensation and a premium.

How would you feel if you could only buy a house, or a car, or a college education, or whatever you get on credit cards if you could only buy those products after you had all the money to pay for them in full at the time of purchase? Or if you could never get an incentive to save money? If you've ever been a saver or a borrower, the answer is you'd be worse off, by your revealed preference.

The problems only occur when parts of these statements are negated. For example, if banks extend credit to people who can't repay it, or if bank risk managers are idiots, or if the agreements aren't mutually understood and agreed to. Yeah, there's always going to be people who exploit their position to do unethical things, in any field. I think credit card companies are blood suckers, and I think using credit cards is evil. But I sure as hell save and invest in companies I believe have the ability to improve peoples lives and get paid for it.

Don't blame finance, blame the people who use it to do evil.