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Market Sense and Nonsense by Jack D. Schwager
3Com Palm IPO, asset allocation, Bernie Madoff, Brownian motion, collateralized debt obligation, commodity trading advisor, computerized trading, conceptual framework, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, fixed income, high net worth, implied volatility, index arbitrage, index fund, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market fundamentalism, merger arbitrage, negative equity, pattern recognition, performance metric, pets.com, Ponzi scheme, quantitative trading / quantitative ﬁnance, random walk, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, selection bias, Sharpe ratio, short selling, statistical arbitrage, statistical model, survivorship bias, transaction costs, two-sided market, value at risk, yield curve
We consider only a few out of a multitude of possible illustrative examples. Pets.com and the Dot-Com Mania Pets.com is a reasonable poster child for the Internet bubble. As its name implies, Pets.com’s business model was selling pet supplies over the Internet. One particular problem with this model was that core products, such as pet food and cat litter, were low-margin items, as well as heavy and bulky, which made them expensive to ship. Also, these were not exactly the types of products for which there was any apparent advantage to online delivery. On the contrary, if you were out of dog food or cat litter, waiting for delivery of an online order was not a practical alternative. Given these realities, Pets.com had to price its products, including shipping, competitively. In fact, given the large shipping cost, the only way the company could sell product was to set prices at levels below its own total cost.
In fact, given the large shipping cost, the only way the company could sell product was to set prices at levels below its own total cost. This led to the bizarre situation in which the more product Pets.com sold, the more money it lost. Despite these rather bleak fundamental realities, Pets.com had a market capitalization in excess of $300 million following its initial public offering (IPO). The company did not survive even a full year after its IPO. Ironically, Pets.com could have lasted longer if it could just have cut sales, which were killing the company. Pets.com was hardly alone, but is emblematic of the dot-com mania. From 1998 to early 2000, the market experienced a speculative mania in technology stocks and especially Internet stocks. During this period, there were numerous successful IPO launches for companies with negative cash flows and no reasonable near-term prospects for turning a profit.
See Minimum acceptable return (MAR) ratio Marcus, Michael Margin Margin calls Marginal production loss Market bubbles Market direction Market neutral fund Market overvaluation Market panics Market price delays and inventory model of Market price response Market pricing theory Market psychology Market risk Market sector convertible arbitrage hedge funds and CTA funds hidden risk long-only funds market dependency past and future correlation performance impact by strategy Market timing skill Market-based risk Maximum drawdown (MDD) Mean reversion Mean-reversion strategy Merger arbitrage funds Mergers, cyclical tendency Metrics Minimum acceptable return (MAR) ratio and Calmar ratio Mispricing Mocking Monetary policy Mortgage standards Mortgage-backed securities (MBSs) Mortgages Multifund portfolio, diversified Mutual fund managers, vs. hedge fund managers Mutual funds National Futures Association (NFA) Negative returns Negative Sharpe ratio, and volatility Net asset valuation (NAV) Net exposure New York Stock Exchange (NYSE) Newsletter recommendation NINJA loans Normal distribution Normally distributed returns Notional funding October 1987 market crash Offsetting positions Option ARM Option delta Option premium Option price, underlying market price Option timing Optionality Out-of-the-money options Outperformance Pairs trading Palm Palm IPO Palm/3 Com Past high-return strategies Past performance back-adjusted return measures evaluation of going forward with incomplete information visual performance evaluation Past returns about and causes of future performance hedge funds high and low return periods implications of investment insights market sector past highest return strategy relevance of sector selection select funds and sources of Past track records Performance-based fees Portfolio construction principles Portfolio fund risk Portfolio insurance Portfolio optimization past returns volatility as risk measure Portfolio optimization software Portfolio rebalancing about clarification effect of reason for test for Portfolio risks Portfolio volatility Price aberrations Price adjustment timing Price bubble Price change distribution The price in not always right dot-com mania Pets.com subprime investment Pricing models Prime broker Producer short covering Professional management Profit incentives Pro-forma statistics Pro-forma vs. actual results Program sales Prospect theory Puts Quantitative measures beta correlation monthly average return Ramp-up period underperformance Random selection Random trading Random walk process Randomness risk Rare events Rating agencies Rational behavior Redemption frequency notice penalties Redemption liquidity Relative velocity Renaissance Medallion fund Return periods, high and low long term investment S&P performance Return retracement ratio (RRR) Return/risk performance Return/risk ratios vs. return Returns comparison measures relative vs. absolute objective Reverse merger arbitrage Risk assessment of for best strategy and leverage measurement vs. failure to measure measures of perception of vs. volatility Risk assessment Risk aversion Risk evaluation Risk management Risk management discipline Risk measurement vs. no risk measurement Risk mismeasurement asset risk vs. failure to measure hidden risk hidden risk evaluation investment insights problem source value at risk (VaR) volatility as risk measure volatility vs. risk Risk reduction Risk types Risk-adjusted allocation Risk-adjusted return Risk/return metrics Risk/return ratios Rolling window return charts Rubin, Paul Rubinstein, Mark Rukeyser, Louis S&P 500, vs. financial newsletters S&P 500 index S&P returns study of Sasseville, Caroline Schwager Analytics Module SDR Sharpe ratio Sector approach Sector funds Sector past performance Securities and Exchange Commission (SEC) Select funds, past returns and Selection bias Semistrong efficiency Shakespearian monkey argument Sharpe ratio back-adjusted return measures vs.
And most crucially, all this could be tracked and tweaked and improved to drive as many users as possible into the service. You have to understand how revolutionary this was at the time. Consider that just a few years later, Pets.com would try to launch with a multicity television and outdoor advertising campaign that culminated in a $1.2 million Super Bowl commercial and an appearance at the Macy’s Thanksgiving Day Parade. Or that Kozmo.com would blow through literally hundreds of millions with advertising campaigns featuring the Six Million Dollar Man before collapsing like Pets.com in the burst dot-com bubble. But after adopting Draper’s suggestion—which the founders resisted for the first few months because it seemed so simple—growth was exponential: 1 million members within six months. Five weeks after that, membership had doubled again.
Wall Street Meat by Andy Kessler
accounting loophole / creative accounting, Andy Kessler, automated trading system, banking crisis, Bob Noyce, George Gilder, index fund, Jeff Bezos, market bubble, Menlo Park, pets.com, Robert Metcalfe, rolodex, Sand Hill Road, Silicon Valley, Small Order Execution System, Steve Jobs, technology bubble, Y2K
Even more annoying was that despite running a technologyonly fund, we didn’t get very many IPO shares allocated to us. Sometimes we got a meager 100 shares. Someone else was clearly getting shares in these deals. It pissed me off enough that we soon stopped going to CSFB’s road shows altogether. Many of these new companies going public were selling stuff on the Internet and worse than turkeys. Pets.com, Drugstore.com, Priceline.com, and Buy.com were all lowmargin companies, but their stocks were valued at many times their revenues. As the ducks quacked, these stocks went up anyway. 180 C H A P T E R 1 2 Price Targets as a Marketing Tool W orking on Wall Street from the West Coast is an ordeal, especially for those people like me, who like to sleep. Since I was in charge of trading, and the market opened at 6:30 a.m.
As I was out of the stock recommendation business, and didn’t have any agenda to protect, I said what I thought. Remembering the 214 The Ax Syndrome summer of 1986, when semiconductor stocks had no bottom, I said that bottoms usually occur when the very last investor pukes his shares out, at any price. This got a good chuckle. Henry had a problem in that he was still recommending a huge basket of stocks, like Yahoo and AOL but also Infospace, Pets.com and other Merrill Lynch banking clients. He said the downturn was almost over. He had to follow his recommendations or risk being called a liar. So Metcalfe took a different tack. “Henry, how can you still recommend shares of these companies that have no prospects of ever making any money?” The ax syndrome whacked Henry as well. “You’ve got to understand. If I stop recommending a stock, and the shares keep going up, there is hell to pay.
Their problem was that they were right for two years, six months, and a day in a row, and then wrong for two years and six months in a row. You gottta mix it up. The long “right” streak made them superstars and the long “wrong” streak destroyed them. 218 C H A P T E R 1 5 Spitzer Fixer D otcoms were like anchors with a six-month-long rope attached to them. At the other end of the rope about to be yanked into the abyss was telecom. By October 2000, telecom started giving up the ghost as well. The stocks of Pets.com and Drugstore.com and other milk, er, Internet companies were going down as the ducks quacked in reverse and momos were selling. But telecom was a different story. They talked down their exposure to dotcom companies, and talked up their blue chip corporate customers. Worldcom, Global Crossing, and Qwest kept reporting decent revenues, and met analyst expectations. Their stocks were dropping, but not as fast as dotcoms, as telecom revenues provided a cushion to the downdraft.
3D printing, Airbnb, American energy revolution, assortative mating, autonomous vehicles, Bakken shale, barriers to entry, basic income, Bernie Sanders, BRICs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, creative destruction, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, first square of the chessboard, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Francis Fukuyama: the end of history, future of work, gig economy, global supply chain, global value chain, hydraulic fracturing, income inequality, indoor plumbing, industrial robot, intangible asset, interchangeable parts, Internet of things, inventory management, invisible hand, Jacquard loom, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low skilled workers, lump of labour, Lyft, manufacturing employment, Marc Andreessen, mass immigration, means of production, new economy, performance metric, pets.com, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Ronald Coase, savings glut, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, single-payer health, software is eating the world, supply-chain management, supply-chain management software, TaskRabbit, The Future of Employment, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, very high income, working-age population
The great dot.com land grab, in which anyone with sense could buy a domain name, crank out a bare-bones business model, take the company public and retire a millionaire (an impressive thing to be in those days), commenced. This was the era of high hopes for companies such as pets.com, the aforementioned online pet-supply retailer, which spent lavishly on advertising before collapsing, and boo.com, an online fashion retailer, which also flopped. But while the hype raged, a more important project was under way: the construction of the hardware and software infrastructure of America’s information technology networks, which would persist long after pets.com and its peers had gone belly up. It was firms such as Cisco and Oracle that truly represented the heart of the technology boom. What was not obvious at the time was just which groups of people would be the big beneficiaries of the technology mania.
Studies of information-technology adaptation reckon there is generally a gap of between five and fifteen years between investments in new technology and the appearance of measurable gains in productivity associated with that investment.10 When people survey the technology all around them, at work and in their homes, they are seeing the world of technology in a rear-view mirror. America’s productivity boom of the 1990s is associated in popular memory with the crowds of consumer-facing dotcom businesses, such as Pets.com, which spent lavishly on Super Bowl advertising and existed mostly to give their founders a million-dollar payday when the firm went public. But what actually drove the rapid productivity growth of the boom were older and more prosaic technologies, such as the ‘enterprise software’ products sold by Oracle and SAP. Firms enjoyed massive productivity gains by using computers to keep track of their inventories and customer information, and from using that data to eliminate waste (by ordering new supplies on an as-needed basis, for instance, rather than keeping lots of extra inventory around just in case).
Ray labour abundance as good problem bargaining power cognitive but repetitive collective bargaining and demographic issues discrimination and exclusion global growth of workforce and immigration liberalization in 1970s/80s ‘lump of labour’ fallacy occupational licences organized and proximity reallocation to growing industries retraining and skill acquisition and scarcity and social value work as a positive good see also employment Labour Party, British land scarcity Latvia Le Pen, Jean-Marie Le Pen, Marine legal profession Lehman Brothers collapse (2008) Lepore, Jill liberalization, economic (from 1970s) Linkner, Josh, The Road to Reinvention London Lucas, Robert Lyft maker-taker distinction Malthus, Reverend Thomas Manchester Mandel, Michael Mankiw, Gregory marketing and public relations Marshall, Alfred Marx, Karl Mason, Paul, Postcapitalism (2015) McAfee, Andrew medicine and healthcare ‘mercantilist’ world Mercedes Benz Mexico Microsoft mineral industries minimum wage Mokyr, Joel Monroe, President James MOOCs (‘massive open online courses’) Moore, Gordon mortality rates Mosaic (web browser) music, digital nation states big communities of affinity inequality between as loci of redistribution and social capital nationalist and separatist movements Netherlands Netscape New York City Newsweek NIMBYism Nordic and Scandinavian economies North Carolina North Dakota Obama, Barack oil markets O’Neill, Jim Oracle Orbán, Viktor outsourcing Peretti, Jonah Peterson Institute for International Economics pets.com Philadelphia Centennial Fair (1876) Philippines Phoenix, Arizona Piketty, Thomas, Capital in the Twenty-First Century (2013) Poland political institutions politics fractionalization in Europe future/emerging narratives geopolitical forces human wealth narrative left-wing looming upheaval/conflict Marxism nationalist and separatist movements past unrest and conflict polarization in USA radicalism and extremism realignment revolutionary right-wing rise of populist outsiders and scarcity social membership battles Poor Laws, British print media advertising revenue productivity agricultural artisanal goods and services Baumol’s Cost Disease and cities and dematerialization and digital revolution and employment trilemma and financial crisis (2008) and Henry Ford growth data in higher education of highly skilled few and industrial revolution minimum wage impact paradox of in service sector and specialization and wage rates see also factors of production professional, technical or managerial work and education levels and emerging economies the highly skilled few and industrial revolution and ‘offshoring’ professional associations skilled cities professional associations profits Progressive Policy Institute property values proximity public spending Putnam, Robert Quakebot quantitative easing Race Against the Machine, Brynjolfsson and McAfee (2011) railways Raleigh, North Carolina Reagan, Ronald redistribution and geopolitical forces during liberal era methods of nation state as locus of as a necessity as politically hard and societal openness wealth as human rent, economic Republican Party, US ‘reshoring’ phenomenon Resseger, Matthew retail sector retirement age Ricardo, David rich people and maker-taker distinction wild contingency of wealth Robinson, James robots Rodrik, Dani Romney, Mitt rule of law Russia San Francisco San Jose Sanders, Bernie sanitation SAP Saudi Arabia savings glut, global ‘Say’s Law’ Scalia, Antonin Scandinavian and Nordic economies scarcity and labour political effects of Schleicher, David Schwartz, Anna scientists Scotland Sears Second World War secular stagnation global spread of possible solutions shale deposits sharing economies Silicon Valley Singapore skilled workers and education levels and falling wages the highly skilled few and industrial revolution ‘knowledge-intensive’ goods and services reshoring phenomenon technological deskilling see also professional, technical or managerial work Slack (chat service) Slate (web publication) smartphone culture Smith, Adam social capital and American Constitution baseball metaphor and cities ‘deepening’ definition/nature of and dematerialization and developing economies and erosion of institutions of firms and companies and good government and housing wealth and immigration and income distribution during industrial revolution and liberalization and nation-states productive application of and rich-poor nation gap and Adam Smith and start-ups social class conflict middle classes and NIMBYism social conditioning of labour force working classes social democratic model social reform social wealth and social membership software ‘enterprise software’ products supply-chain management Solow, Robert Somalia South Korea Soviet Union, dissolution of (1991) specialization Star Trek state, role of steam power Subramanian, Arvind suburbanization Sweden Syriza party Taiwan TaskRabbit taxation telegraphy Tesla, Nikola Thatcher, Margaret ‘tiger’ economies of South-East Asia Time Warner Toyota trade China as ‘mega-trader’ ‘comparative advantage’ theory and dematerialization global supply chains liberalization shaping of by digital revolution Adam Smith on trade unions transhumanism transport technology self-driving cars Trump, Donald Twitter Uber UK Independence Party United States of America (USA) 2016 Presidential election campaign average income Bureau of Labour Statistics (BLS) Constitution deindustrialization education in employment in ethno-nationalist diversity of financial crisis (2008) housing costs in housing wealth in individualism in industrialization in inequality in Jim Crow segregation labour scarcity in Young America liberalization in minimum wage in political polarization in post-crisis profit rates productivity boom of 1990s real wage data rising debt levels secular stagnation in shale revolution in social capital in and social wealth surpasses Britain as leading nation wage subsidies in university education advanced degrees downward mobility of graduates MOOCs (‘massive open online courses’) and productivity see also education urbanization utopias, post-work Victoria, Queen video-gamers Virginia, US state Volvo Vox wages basic income policy Baumol’s Cost Disease cheap labour and employment growth and dot.com boom and financial crisis (2008) and flexibility and Henry Ford government subsidies and housing costs and immigration and industrial revolution low-pay as check on automation minimum wage and productivity the ‘reservation wage’ as rising in China rising in emerging economies and scarcity in service sector and skill-upgrading approach stagnation of and supply of graduates Wandsworth Washington D.C.
Running Money by Andy Kessler
Andy Kessler, Apple II, bioinformatics, Bob Noyce, British Empire, business intelligence, buy low sell high, call centre, Corn Laws, Douglas Engelbart, family office, full employment, George Gilder, happiness index / gross national happiness, interest rate swap, invisible hand, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, knowledge worker, Leonard Kleinrock, Long Term Capital Management, mail merge, Marc Andreessen, margin call, market bubble, Maui Hawaii, Menlo Park, Metcalfe’s law, Network effects, packet switching, pattern recognition, pets.com, railway mania, risk tolerance, Robert Metcalfe, Sand Hill Road, Silicon Valley, South China Sea, spinning jenny, Steve Jobs, Steve Wozniak, Toyota Production System, zero-sum game
“I don’t know. NASDAQ started out the year at 4,000, and it just hit 5,000 for the second time in three weeks. And everybody celebrates. Maybe this whole redemption thing wasn’t so smart.” “People who celebrate Dow 10,000 and NASDAQ 5,000 are the same ones who obsess over stock splits,” Fred noted. “Good point. Still . . .” “Still what? Yahoo is $200. Amazon is $70 after splitting. AOL is buying TimeWarner. Pets.com actually has a bid,” Fred said with his best dripping sarcastic tone. “It’s crazy.” “Twilight Zone,” I said. We’d just seen the list from the folks that track hedge funds— our 377% gain in 1999 made us the fourth best hedge fund for the year. We are on our way to being up 40% for the ﬁrst quarter of 2000, our sixth quarter of big gains in a row. It is just too bizarre to believe—dogs and cats living together.
“It’s the day before tax day—maybe people are selling to pay their capital gains taxes for last year,” I offered. “Maybe. But those trades don’t clear for a few days. This may be something else,” Fred said coldly. “Buyer exhaustion?” “I wish. That’s how all these bubbles end. We’re getting beat up, but it looks like they’re taking the Internet names out ﬁrst.” “Out back to the woodshed, like Old Yeller.” “And that silly Pets.com sock puppet. Couldn’t happen to a nicer group of names,” Fred said, almost a little too gleefully. “Maybe this is real. I haven’t seen that bag lady return to the bench outside.” “She was the ghost of bear markets past.” “Here’s another one for you, Fred. Your friends at Internet Capital Group?” “Yeah?” “Forty dollars. Wasn’t it just a hundred and a half last time we checked?” “Watch them all squirm,” Fred said with a mock satanic laugh.
See NUMMI New York Stock Exchange, 93, 288 Nikkei, 160, 161 Nikko, 160 Nintendo, 154, 159–60 NLS (oN Line System), 120 Nomura Securities, 160, 161 NORAD, 185 Nortel Networks, 225–26, 290 North American Air Defense Command, 185 Novell, 191 Noyce, Robert, 102, 124 NUMMI, 241–45, 246, 261 object-oriented databases, 60–62 O’Brien, David, 81–82, 204–5 ocean steamships, 93–95 ODI, 61 Odyssey Partners, 14 offshore subsidiary, 251, 254–56 O’Meara, Bill, 44–45 on-command computing, 296 oN Line System, 120 open-source community, 247 optical lithography, 102 Oracle, 61, 111, 176, 245 Ordnance Society, 51 Orr, Dominic, 139–41 outsourcing, 100, 252–55, 259, 277 fabrication facilities, 130–34, 199, 250 offshore subsidiary and, 254–55 Paciﬁc Group, 10 packets, 183, 184–90, 199, 291 packet switching, 184–85, 189–90, 290 PaineWebber, 11, 13, 48 Palo Alto Research Center. See Xerox PARC Panasonic, 253, 254, 255, 257 PARC. See Xerox Palo Alto Research Center Parliament, 55, 56, 92, 272 Parsons, Charles, 94–95 patents, 55, 56, 57, 64, 65 pricing and, 58, 59, 137 PCs. See computers PDP-8, 103 Pearse, Edward, 92 peer-to-peer ﬁle sharing, 190 people costs and demands, 246–48 personal computers. See computers Pets.com, 223, 224 phone network, 61, 183–84, 185–86, 290, 291 Pinnacle Systems, 96–97, 98 piracy, 46, 206–7, 263 Pittman, Bob, 69–73 planar process, 101–2 Porat, Marc, 97 power, cost of, 64, 65, 77–79 computer and, 121 steam engine and, 58–59, 66 power looms, 66 pricing. See competitive pricing productivity, 64, 123 proﬁtability, 256, 258, 275 gross margin, 130, 132, 135 Progressive Networks. See RealNetworks propellers, ships, 94 property rights.
How to Kick Ass on Wall Street by Andy Kessler
Andy Kessler, Bernie Madoff, buttonwood tree, call centre, collateralized debt obligation, family office, fixed income, hiring and firing, invention of the wheel, invisible hand, London Whale, margin call, NetJets, Nick Leeson, pets.com, risk tolerance, Silicon Valley, sovereign wealth fund, time value of money, too big to fail, value at risk
So in effect, banks operate under another societal bargain, we allow them to create money, under the supposed watchful eye and quasi control of the Federal Reserve, which creates money supply, which lets the rest of us to go about our business and grow the economy. Unfortunately, this shadow banking system was also creating money supply, but outside the reach of regulators to control it. Which ended up being a problem. Because it is so easy to misallocate capital. Investors are human and prone to spasms of momo-isms. Momentum investing. I’ll invest in Pets.com because dotcom stocks only go up (because there wasn’t much liquidity and every growth fund piled in). I’ll make take on another sub-prime loan derivative in my portfolio because home prices can’t go down, (because the Fed is so accommodative with low interest rates and this whole housing finance monstrosity is too big to fail, or so went the thinking.) Momo-ism almost always leads to losses. As efficient as markets are, there are always misallocation all over the place.
The Rent Is Too Damn High: What to Do About It, and Why It Matters More Than You Think by Matthew Yglesias
Edward Glaeser, falling living standards, Home mortgage interest deduction, income inequality, industrial robot, Jane Jacobs, land reform, mortgage tax deduction, New Urbanism, pets.com, rent control, rent-seeking, Robert Gordon, Robert Shiller, Robert Shiller, Saturday Night Live, Silicon Valley, statistical model, transcontinental railway, urban sprawl, white picket fence
Rather than building new homes where demand for living was highest—essentially the great coastal metropolises and, secondarily, the new or revitalized downtowns of cities elsewhere—we built them where land was cheapest. This trend is especially odd when you consider that the economic expansion in question was substantially driven by housing investment. What’s strange here is that you normally expect an investment boom, even a bubbly one, to be driven by some genuinely new innovation. The dot-com bubble of the late 1990s led to some stupid ideas (Pets.com) and to the overbuilding of fiber-optic cables, but the Internet was a real advance over previous communication technology and one from which we continue to benefit. American housing, by contrast, is mostly characterized by technology retrogression. We know how to fit large numbers of people into comfortably sized homes on small plots of land. There is no national elevator shortage, nor have we lost the skills needed to build mass transit in order to move large numbers of people through narrow corridors.
accounting loophole / creative accounting, affirmative action, Asian financial crisis, barriers to entry, borderless world, Branko Milanovic, Bretton Woods, capital controls, corporate governance, corporate raider, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, ending welfare as we know it, feminist movement, full employment, gender pay gap, George Gilder, glass ceiling, Gordon Gekko, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, intangible asset, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, manufacturing employment, means of production, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, pets.com, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, structural adjustment programs, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, women in the workforce, working poor, Y2K, zero-sum game
Basic science is heavily funded by the pubHc sector and nonprofit institutions like universities (which, despite their steady transformation into the research arms of the corporate sector, are not yet run by stockholders). Most product innovation comes fi-om large firms, not perky startups. And the role of finance during the late boom was to fiind many things that shouldn't have been funded. The dot.coms are, of course, the headline example. It's hard to imagine any definition of market rationality or efficiency that could explain the funding ofPets.com. But a much grander, and less appreciated, waste of capital occurred in telecommunications in the late 1990s. Given a Ucense to merge or speculate almost without limit by the Telecommunications Act of 1996, the industry, blessed by Wall Street, went on one of the great sprees of all time. In the words of former investment banker Nomi Prins, from 1996 through the end of the boom: Wall Street raised $1.3 trillion of telecom debt and sparked a $1.7 trillion merger spree, bagging $15 billion in fees for the effort.
, 36-38,227 ideological fiinction, 38 Internet and, 24—26 lack of diversity and, 233 as neoUberahsm's you«55ance, 228 Utopian aspects, 37-38, 229-230 New Eras, history of, 6—8 new social movements, 179 New York City, 172 fiscal crisis, 228 income distribution, 103-104 Nike, 19,159,165 Norberg-Hodge, Helena, 171-173 North American Free Trade Agreement, 175 nostalgia nationalist, 169-174,182-183 for nonexistent Golden Age, 164 O'Neill, Paul, 233 occupational crowding, 94-96 occupations female-dominated, 95-96 future growth in, 71-74 Oliner, Stephen, 57 Orshansky, MoUie, 108-109 output, measuring, 58—59 outsourcing, 215 Pacioh, Luca, 17 Panel Study of Income Dynamics, 115-116 Parenti, Christian, 77—78 paternahsm, 35 patriarchy, 165 pay. See income pensions, Enron-style, 35 Petras, James, 150,178 Pets.com, 196 phlogiston, 51 place, meaning of, 147-148 Plender, John, 35 Polanyi, Karl, 167 polarization, 29, 225; see also income distribution; wealth distribution pohtics of finance, 202-207 267 and income distribution, 79—81 market democracy, 22 polls New Economy, 31—32,231 poverty and, 110 Pope, Carl, 162 pop culture, stock market and, 187 portfolio investment, 176 Porto Alegre, 185 potential GDP, 47 poverty, 105-114 absolute vs. relative, 109—111 composition of the poor, 111-114 defining, over time, 106-109 global perspective, 129-130,133-141 historical perspective, 106,111—114 popular perceptions, 110 see also income distribution "poverty line," coinage of phrase, 237 Prins, Nomi, 196 privatization, 221,231 productivity 1960s enthusiasm, 8 acceleration in, accounting for, 56-62 and the business cycle, 47 competing estimates, 60-61 definitions, 41—42 and deflation, 228 and earnings, 45, 56 high-tech vs. rest, 52—54 historical perspective, 48 by industry, 49, 64—67 international comparisons, 41—42 labor, 41 measurement problems, 42—45, 58—60 multifactor (total factor), 41,45 historical perspective, 49 outsourcing and, 51-52 where it went, 56 and workload, 39—41 work hours, measuring, 67 profitability historical view, 203—204 MNCs and, 157 prosocial behavior, 76 protectionism, 220 public subsidy to private sector, 6 purchasing power parity, 131, 238 quabty changes, measuring, 43—45 declines in, 55-56 inputs, adjusting for, 58 Quattrone, Frank, 199 Qwest, 197 race educational attainment, 98—99 Gilder on, 12-13 wealth distribution and, 125—126 race to the bottom, 155 racism and nationahsm, 239 neo- or diflferentiahst, 172—173 Ramone, Joey, 190 Rand, Ayn, 15 Rapaille, G.
23andMe, Andy Kessler, bank run, barriers to entry, Berlin Wall, Bob Noyce, British Empire, business process, California gold rush, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, commoditize, computer age, creative destruction, disintermediation, Douglas Engelbart, Eugene Fama: efficient market hypothesis, fiat currency, Firefox, Fractional reserve banking, George Gilder, Gordon Gekko, greed is good, income inequality, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, knowledge economy, knowledge worker, libertarian paternalism, low skilled workers, Mark Zuckerberg, McMansion, Netflix Prize, packet switching, personalized medicine, pets.com, prediction markets, pre–internet, profit motive, race to the bottom, Richard Thaler, risk tolerance, risk-adjusted returns, Silicon Valley, six sigma, Skype, social graph, Steve Jobs, The Wealth of Nations by Adam Smith, transcontinental railway, transfer pricing, wealth creators, Yogi Berra
It took a few years, but eventually, as trading increased on their electronic-only exchange, the value of each company was set by its prospects for growth and profits and the market eventually transferred ownership completely from the state to individuals. My host paused and smiled and continued, “And then, with magic, companies start to make money, profits. They cut—how you say—fat?” as he grabbed his belly, “and stocks go up and they get more money to grow.” MARKETS GET A bad name—stock markets any way. Mostly because they are so volatile and do unexplained things—like going up when bad news comes out, putting a huge value on Pets.com, and crashing precipitously every once in a while. No doubt, the stock market trades to inflict the maximum amount of pain. If everyone thinks it’s going to go up, it’s sure to drop. Why is that? Well, the market measures sentiment every day, and figures out what everyone thinks, a consensus if you will, and for the most part prices that into the market. But then some of its inputs change—profits are worse or inflation has been tamed—and the market moves, well before the consensus has figured out what has changed.
People think there are riskless profits, until whatever is stuck comes unstuck and then watch out below. The stock market peaked on October 9, 2007, with the Dow at 14,164. Then the credit crisis and a Lehman Brothers bankruptcy sent the market into a free fall, bottoming out at 6,547 only seventeen months later. Contrast this with a decade earlier, when the dot-com-laden NASDAQ peaked at 5,048, only to bottom coincidentally on October 9, 2002, at 1,114. Back then, companies like Pets.com were going to fundamentally reshape the economy in the new millennium into a Kool-Aid-induced nirvana of spectacular growth and well-being. Or something like that. No one would blame you for thinking the market is a textbook delusional paranoid schizophrenic, not knowing the difference between the real and the unreal. And you’d be right. But you’d miss a valuable lesson. Misallocation of capital is everywhere and anywhere a victim of bad policy.
Mastering the VC Game: A Venture Capital Insider Reveals How to Get From Start-Up to IPO on Your Terms by Jeffrey Bussgang
business process, carried interest, digital map, discounted cash flows, hiring and firing, Jeff Bezos, Marc Andreessen, Mark Zuckerberg, Menlo Park, moveable type in China, pattern recognition, Paul Graham, performance metric, Peter Thiel, pets.com, risk tolerance, rolodex, Ronald Reagan, Sand Hill Road, selection bias, shareholder value, Silicon Valley, Skype, software as a service, sovereign wealth fund, Steve Jobs, technology bubble, The Wisdom of Crowds
The boom and bust cycle continued during the 1990s, with the venture capital industry growing slowly from $4-5 billion per year in the 1980s to $5-10 billion in the first half of the 1990s. The Internet revolution resulted in an explosion in entrepreneurship, and the amount of venture capital investment in start-ups climbed from $10 billion in 1996 to nearly $100 billion in 2000. Average fund returns exploded to 30-50 percent per year during the first half of the 1990s and climbed even from there as the IPO market seemed to accept companies on concepts alone. For example, Pets.com, an online community for pet lovers, went public in February 2000. The IPO resulted in a $300 million valuation. The only problem was that the company had negligible revenue and no sustainable business model. It went out of business in November 2000, less than a year later. Since the Internet bubble burst, the VC industry has rationalized. But many argue that it hasn’t rationalized enough. The annual U.S. funding level settled in at $25-30 billion per year in 2002-2008, climbing slightly just as the economic head winds began.
Marsha, Predictive BioSciences, development of Moveable Type Murdoch, Rupert MySpace China Nakache, Patricia background information pitch, time allowed on selecting VC as VC, path to National Venture Capital Association (NVCA) chairman templates from Negotiating deal clean terms control elements for follow-on financing inside versus outside round liquidation preference money, amount to raise postmoney valuation preferred shares, participation premoney valuation and Series A financing stock option pool term sheet Netscape Networking entrepreneurs toward VCs and VCs See also Social media tools Nguyen, Henry background information IDG Ventures Vietnam Medschool.com VinaGames Nivi, Babak Nolan, Jeff Odeo Olsen, Ken Open Market O’Reilly, Tim Outside round Overseas companies. See Global venture capital Overture Page, Larry Paley, Eric background information Brontes 3D, development of pitch to VC selling Brontes 3D 3M, role at Parker, Randy Participation feature capped participation full participation, example of nonparticipation option waterfall calculations PayPal Pelz, Bryan Perkins, Kleiner, fund size Pets.com Pincus, Mark blog of on control elements on making mistakes on VC/entrepreneur match Pitch assessing VC for and deal flow and eccentric entrepreneurs entrepreneurial team evaluation of entrepreneurs, assessing from experiment to company example importance of networking toward VC overselling, avoiding rejection by VCs risk, presenting to VC rushed decision making, avoiding time allowed Upromise, example Polaris Venture Partners.
Confessions of a Wall Street Analyst: A True Story of Inside Information and Corruption in the Stock Market by Daniel Reingold, Jennifer Reingold
barriers to entry, Berlin Wall, corporate governance, estate planning, Fall of the Berlin Wall, fixed income, George Gilder, high net worth, informal economy, margin call, mass immigration, new economy, pets.com, Robert Metcalfe, rolodex, Saturday Night Live, shareholder value, short selling, Silicon Valley, stem cell, Telecommunications Act of 1996, thinkpad, traveling salesman
I also thought it would have an unintended effect of creating more stock-price volatility because companies would hold back information until there was enough to merit issuing a press release, which would then create a shock. This was because Reg FD made it no longer acceptable to do a slow leak à la MCI in the old days. A Week from Hell By the Fall of 2000, it was obvious that what many people had believed was just another protracted episode of volatility was, in fact, a true market crash—at least on the NASDAQ, which had dropped 39 percent since its March 10 peak. Dot-coms such as Pets.com and Boo.com were in dire straits or had already gone under; layoffs had replaced luaus; and tech funding was rapidly drying up. But even though tech and telecom had in many ways become fully entwined, now the two paths seemed to be diverging, in my view. I had been cynical about many of these tech startups from the beginning, so I didn’t find the news of their demise particularly surprising. So many of the newly public dot-com companies were just ideas, with hardly any customers or assets and virtually no barriers to entry by other competitors.
While he was apoplectic that WorldCom’s stock had fallen from a high of $64 to $15, the company was essentially bankrupt already. I’m sure he now wishes I’d been more negative on the stock at the time, not less. I certainly wish I had. There had been countless press stories romanticizing the stock market and the brilliant minds behind it, and now, as the indices began to sink into an unforgiving quicksand, the pendulum swung to the other extreme. First came the dot-com debacle. Pets.com was one of the first newly public American companies to go under, in November of 2000, with hundreds of others soon to follow. A bitterly funny Web site, Fuckedcompany.com, sprang up to spread the latest gossip about each failed dot-com and the number of layoffs associated with it. In a split second, the market psychology on these new companies switched from “anything is possible” to “nothing is real.”
New York Daily News New York Stock Exchange New York Times M&A league tables Nextel 92nd Street Y preschool Citigroup donation to No-Action Letter suggested elimination of Noski, Chuck Notebaert, Dick NYNEX NYSE O’Dell, Michael offshore accounts 1 stock rating O’Neal, Stanley Oppenheimer & Co. Orwell, George Outperform. See Accumulate rating over the Wall analysts’ improper use of Grubman’s use of proposed ending of Pacific Capital Group Pacific Telesis (PacTel) PaineWebber Palo Alto Research Center Pathnet Peek, Jeff pension funds Perella, Joe Peru Peter Kiewit & Sons Pets.com pheasant hunting philanthropy Pincus, Mark Portugal Telecom price-to-earnings ratio Prince, Charles (Chuck) private-to-public discount (private market value) privatization proprietary calls PT Indosat Puck, Wolfgang Purcell, Phil Putnam quarterly-earnings reports faking of at IDB stock prices and Quattrone, Frank earnings of federal investigation/indictment/conviction of Grubman’s negative press and influence of IPO share spinning and Reingold’s e-mail to Quinton, Adam Qwest Communications background of CEOs’ stock sales at congressional hearings on “culture of fear” at current CEO of Deutsche Telekom bid and as disastrous stock pick diversification of employee savings losses at finances of Internet and IPO and MCI vs.
The Inmates Are Running the Asylum by Alan Cooper
Albert Einstein, delayed gratification, Donald Trump, Howard Rheingold, informal economy, iterative process, Jeff Bezos, Menlo Park, natural language processing, new economy, pets.com, Robert X Cringely, Silicon Valley, Silicon Valley startup, skunkworks, Steve Jobs, Steven Pinker, telemarketer, urban planning
Entering your name, address, and credit card information three or four times, only to find that the site can't sell you everything you need and a trip to the atom-based store is necessary anyway, has the unfortunate effect of making the entire online sale completely unnecessary and undesirable. Today, simply lowering costs for the vendor doesn't guarantee success. When Pets.com sold dog food over the Internet, it didn't offer better dog food, and it didn't offer a customer experience better than you could get at the local brick-and-mortar pet store; it didn't offer any better information, intelligence, or confidence. All it offered was cheaper shipping, stocking, and selling— variable costs all—for Pets.com. It was a classic industrial-age-economy tactic of cost reduction that ignored the fundamental principles of the new economy. Far from being the first breath of a new economy, it was the last gasp of the old. I am absolutely convinced that you can sell anything on the Internet profitably and successfully.
Amazon Mechanical Turk, Andrew Keen, centre right, citizen journalism, collaborative editing, computer age, computer vision, corporate governance, crowdsourcing, David Brooks, disintermediation, Frederick Winslow Taylor, Howard Rheingold, invention of movable type, invention of the steam engine, invention of the telephone, Jaron Lanier, Jeff Bezos, jimmy wales, Kevin Kelly, knowledge worker, late fees, Mark Zuckerberg, Marshall McLuhan, means of production, meta analysis, meta-analysis, moral panic, Network effects, new economy, Nicholas Carr, PageRank, peer-to-peer, pets.com, Results Only Work Environment, Saturday Night Live, search engine result page, semantic web, Silicon Valley, slashdot, social graph, social web, software as a service, speech recognition, Steve Jobs, Stewart Brand, technology bubble, Ted Nelson, The Wisdom of Crowds, Thorstein Veblen, web application
It’s the ultimate alternative newsweekly, available on the Web or by e-mail, using the Internet to collect and syndicate content from sources that just couldn’t get published any other way. And it’s free. It’s not that the original Internet community went into some sort of remission. No, not all. While e-commerce customers were waiting for return authorization numbers for misordered merchandise from Pets.com, the participants in AOL’s chat rooms were exchanging tips on caring for their Chihuahuas. While DoubleClick was reckoning with plummeting click-through rates on its banner ads, the personal ads in the Nerve singles classifieds were exploding. While the value of many E*Trade portfolios was falling into the red, people who’d never sold anything before were making money peddling items through the auctions on eBay.
See also Technomadicity No One’s Listening (radio show) Nozick, Robert NPR Nupedia Obama, Barack Object-relations psychology Objects-to-think-with Ofoto Ogilvy & Mather Olds, James Olive Garden Online personae Online relationships Online reviews On the Revolutions of the Celestial Spheres (Copernicus) Open.Salon.com Oprah (television series) Oracle Orange Revolution O’Reilly, Tim O’Reilly Media Orkut Orwell, George Overture. See Yahoo! Search Marketing Ovid Oxford English Dictionary Page, Larry PageRank Palin, Sarah Paperbacks Paradise Lost (Milton) Participatory media Pashler, Harold Patterson, Thomas Paul, Ron PayPal Penchina, Gil Perceptual coherence field Pergams, Oliver Perl Perry, Bruce Personalization Peterson, Lloyd Peterson, Margaret Petrilli, Michael Pets.com Pew Charitable Trust Pew Internet and American Life Project Phaedrus (Plato) Photoshop PHP PickupPal PimpMySpace.org Pinkerton, Brian Plastic Plato PlayStation Podcasts Poe, Edgar Allan Poets and Writers (magazine) Pokémon Politics campaign websites Digital Natives and fund-raising in Internet and Internet media for Net Geners and participatory media and social networking sites and television and Wales, J., and Pong (video game) Portraits Post-Gutenberg economics Postman, Neil Post-traumatic dissociative disorders PowerPoint Prensky, Marc The Principles of Scientific Management (Taylor) Printing press Privacy Procter & Gamble Producer public Progressive Group of Insurance Companies Project Muse Protean self The Protean Self (Lifton) Proust, Marcel Proust and the Squid: The Story and Science of the Reading Brain (Wolf) Psychoanalysis schools Ptolemy Publishing Purohit, Sanjay Python Quake (video game) Ranadive, Vivek Rather, Dan Raymond, Eric RAZR phone Reading brain and deep expert Internet use and teenagers’ skills at time spend in Web use skills and Real-time feedback loops Real-time search Real World (television series) Reason Foundation Reflection Reformation Reintermediation Religious fundamentalism Republic (Plato) Research skills, Internet use and Research strategies Results-only work environment (ROWE) Reynolds, Glenn Rheingold, Howard Robinson, Marilynne Rock, Jennifer Romanticism Romantic solitude Rosen, Jay ROWE.
The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey
3D printing, Airbnb, altcoin, bank run, banking crisis, bitcoin, blockchain, Bretton Woods, California gold rush, capital controls, carbon footprint, clean water, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cryptocurrency, David Graeber, disintermediation, Edward Snowden, Elon Musk, ethereum blockchain, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, hacker house, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, money: store of value / unit of account / medium of exchange, Network effects, new economy, new new economy, Nixon shock, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Robert Shiller, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen: Great Stagnation, Uber and Lyft, underbanked, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP
Silicon Valley innovators will frequently warn against the perils of the first approach, but history suggests it’s often not a bad idea to let a new technology fall victim to its own hype. The dot-com bubble of the late 1990s, in which the exuberance behind higher stock prices reflected an abiding belief that the first Web site retailers in every sector would win just by carving out a niche and marketing to it, makes the case. Neighborhood pet stores weren’t killed by Pets.com, no more than wedding planners were made redundant by OurBeginning.com, whose representatives joined Pets.com’s talking sock puppet among a host of overhyped Super Bowl XXXIV ads in 2000, but whose domain name has since passed to a Seattle day-care center. Remember also the Y2K threat, which reached its anticlimax weeks before that Super Bowl. We’ll never know whether it amounted to nothing because computer consulting firms successfully convinced everyone to upgrade their mainframes or whether they just brilliantly hyped a nonevent.
3D printing, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, Commodity Super-Cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, hiring and firing, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labor-force participation, liberal capitalism, Malacca Straits, Mark Zuckerberg, market bubble, mass immigration, megacity, Mexican peso crisis / tequila crisis, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, Plutocrats, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, working-age population
In 2001 the conventional wisdom was that tech investment bubbles fuel mainly junk companies, so no one was surprised that year when the collapse of the dot-com bubble led to multiple spectacular flameouts, like Pets.com. Subsequently, the Harvard Business School professors Ramana Nanda and Matthew Rhodes-Kropf found that, compared to stock bubbles in other kinds of companies, tech bubbles are likely to fund more start-ups that fail but also more that go on to become extremely successful (judged by how much money they attract when they go public) and innovative (judged by how many patents they win).5 For every few dozen companies like Pets.com that went under in 2001, there was a pioneering survivor like Google or Amazon that would help make the United States much more productive. In fact, the tech boom of the 1990s helped to drive the U.S. productivity growth rate up from 2 percent in the 1980s to near 3 percent, the highest rate since the postwar recovery period of the 1950s.6 A productivity boom of this scale is not that unusual in poor countries—where just building roads can greatly increase productivity—but it is rare in advanced economies.
The Firm by Duff McDonald
Asian financial crisis, borderless world, collective bargaining, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, family office, financial independence, Frederick Winslow Taylor, income inequality, invisible hand, Jeff Bezos, Joseph Schumpeter, laissez-faire capitalism, Mahatma Gandhi, new economy, pets.com, Ponzi scheme, Ralph Nader, risk tolerance, risk-adjusted returns, shareholder value, Silicon Valley, Steve Jobs, supply-chain management, The Nature of the Firm, young professional
The third: While the firm would never admit as much, under Gupta, McKinsey began working for just about anyone with a fat bank account and a checkbook. From the days of James O. McKinsey, the whole idea had been that McKinsey could secure its place at the top of the consulting pyramid by working only for companies at the top of the corporate pyramid. That policy went out the window when the likes of Pets.com and eB2B commerce—firms well below McKinsey’s long-held standard of quality—came calling. The firm had a thousand e-commerce assignments at the height of the madness. The fourth: The firm’s cherished culture of dissent was smothered under an “everything is good” attitude engendered by the sheer amounts of money being made. In that environment, suppression of independent thought or behavior occasionally reached levels of absurdity.
See also directors, McKinsey; specific person Pascale, Richard, 149 A Passion for Excellence (Peters), 152 Patsolos-Fox, Michael, 273, 274 Patton, Arch, 65–66, 120, 121, 128–29, 155–56 Peace Corps, 327 Pearl, David, 208 Pearson, Andrall, 121, 303 Pechiney, 79 Pemex, 103 Pendleton Dudley, 46 PepsiCo, 148, 182, 303 Perez, Javier, 238 Perkins, Tony, 228 personalizing of McKinsey, 275 personnel committees, McKinsey, 121 Perspective on McKinsey (Bower), 275 Perspectives (BCG), 111, 116 Pet Quarters, 265 Peters, Tom, 66, 136, 146–55, 164, 180, 239, 308 petroleum industry, 93 Pets.com, 266 Petters Group, 291 Philip Morris, 64, 92–93 Pichette, Patrick, 327 Pinault, Lewis, 190, 212, 251 Ping An Insurance, 229 Planning Research Corporation, 118 PlaNYC, 283 Polaroid, 233 political appointments, 67 Polli, Rolando, 162 Poor Charlie’s Almanack (Munger), 334 The Pope of Wall Street (Coleman), 62 Porter, Michael, 90, 164, 198 Porter, Suzanne, 207 The Power of Productivity (McKinsey & Co.), 156 practice bulletins, Gluck’s, 141, 278 practice information system/practice-development network, 142–43 The Practice of Management (Drucker), 55 Price Waterhouse/ PricewaterhouseCoopers, 199, 200, 322, 328 Principal Candidate Evaluation Committee (McKinsey), 105 principals, McKinsey: compensation for, 208, 233 promotions to, 208 Principles of Accounting (McKinsey and Hodges), 21 Principles of Scientific Management (Taylor), 26 private equity firms, 232 Proctor & Gamble, 53, 211, 224, 295, 311, 314, 315, 316 Professional Standards Committee, McKinsey, 317 professionalism: Bower’s views about, 51–52, 68, 105, 260 Project Alpha, 145 Project Destiny (AIG-McKinsey), 293–94 Prudential, 307 public/private partnerships, 176 publicity: and advertising by McKinsey, 45–46 and impact of Kumar and Gupta cases on McKinsey, 324 and Matassoni as communications chief, 155 about McKinsey accomplishments, 218–19 and McKinsey relationship with the press, 156–57 McKinsey reluctance about, 76 and McKinsey self-assurance, 206 and McKinsey’s Condé Nast consulting, 279–80 publishing industry: McKinsey clients in, 279–81.
And sadly, Apple couldn’t resist muddying the metaphorical waters by using the same drag-to-trash action to eject diskettes—ultimately resulting in millions of identical thought balloons saying, “But wait. Won’t that erase it?” Many sites have started using tabs for navigation. www.catalogcity.com www.drugstore.com mitsloan.mit.edu And… 800.com Amazon.com Beyond.com bn.com Borders.com Buy.com CDNOW eToys.com Fatbrain.com Fidelity.com LandsEnd.com Pets.com Quicken.com Schwab.com Snap.com ToysRUs.com I think they’re an excellent navigation choice for large sites. Here’s why: > They’re self-evident. I’ve never seen anyone—no matter how “computer illiterate”—look at a tabbed interface and say, “Hmmm. I wonder what those do?” > They’re hard to miss. When I do point-and-click user tests, I’m surprised at how often people can overlook button bars at the top of a Web page.15 But because tabs are so visually distinctive, they’re hard to overlook.
The End of Loser Liberalism: Making Markets Progressive by Dean Baker
Asian financial crisis, banking crisis, Bernie Sanders, collateralized debt obligation, collective bargaining, corporate governance, currency manipulation / currency intervention, Doha Development Round, financial innovation, full employment, Home mortgage interest deduction, income inequality, inflation targeting, invisible hand, manufacturing employment, market clearing, market fundamentalism, medical residency, patent troll, pets.com, pirate software, price stability, quantitative easing, regulatory arbitrage, rent-seeking, Robert Shiller, Robert Shiller, Silicon Valley, too big to fail, transaction costs
Our financial sector is hugely bloated, and it is a massive source of waste in the economy. Measured as a share of private-sector GDP, the financial sector more than quadrupled between 1975 and 2009. The enormous expansion would be justifiable if it resulted in a better allocation of capital, so that promising start-ups, say, could more easily raise funds than they could in the 1960s. A better allocation of capital would also mean that hare-brained schemes like Pets.com or Webvan would be less likely to receive funding today than in prior decades. But neither seems to be the case, or at least not obviously enough to justify the quadrupling of the sector as a share of GDP. Moreover, productivity growth, the most direct measure of the rate of innovation, was more rapid in the 1950s and 1960s than in the last two decades. Another indication that the economy was being well-served by its booming financial sector would be that people felt more secure in their savings than they did four decades ago.
Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover by Katrina Vanden Heuvel, William Greider
Asian financial crisis, banking crisis, Bretton Woods, capital controls, carried interest, central bank independence, centre right, collateralized debt obligation, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, declining real wages, deindustrialization, Exxon Valdez, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, full employment, housing crisis, Howard Zinn, Hyman Minsky, income inequality, information asymmetry, John Meriwether, kremlinology, Long Term Capital Management, margin call, market bubble, market fundamentalism, McMansion, money market fund, mortgage debt, Naomi Klein, new economy, offshore financial centre, payday loans, pets.com, Plutocrats, plutocrats, Ponzi scheme, price stability, pushing on a string, race to the bottom, Ralph Nader, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, sovereign wealth fund, structural adjustment programs, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, wage slave, Washington Consensus, women in the workforce, working poor, Y2K
But now that all looks like it’s coming to an end, thanks in part to the Fed’s round of interest-rate increases. Sales volumes are slowing, prices are flattening or even declining, mortgage demand is easing and the inventory of unsold houses is rising. So what’s next? Deflating the housing bubble is likely to take some time. The housing market isn’t like the stock market; it’s a lot slower, and its harder to dump one’s house in a panic than 1,000 shares of Pets.com. But removing the stimulus responsible for about half the economy’s recent growth has to have an effect. That effect could be anything from a mild drag on an already limp economy to a real financial crisis. What it is depends on whether other sectors pick up some of the slack—say, if businesses were to start hiring and investing rather than hoarding their plentiful cash or distributing it to their stockholders.
asset-backed security, bank run, banking crisis, Bernie Madoff, bonus culture, Bretton Woods, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, disintermediation, diversification, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Francis Fukuyama: the end of history, George Santayana, global reserve currency, Home mortgage interest deduction, Isaac Newton, joint-stock company, liquidity trap, London Interbank Offered Rate, long peace, margin call, market clearing, mass immigration, money market fund, moral hazard, mortgage tax deduction, Northern Rock, offshore financial centre, paradox of thrift, pattern recognition, pension reform, pets.com, Plutocrats, plutocrats, Ponzi scheme, profit maximization, pushing on a string, reserve currency, risk tolerance, risk-adjusted returns, road to serfdom, Ronald Reagan, shareholder value, Silicon Valley, South Sea Bubble, statistical model, The Great Moderation, the new new thing, the payments system, too big to fail, value at risk, very high income, War on Poverty, Y2K, yield curve
Venture Capital The second type of alternative investment fund did not invest in the markets like a hedge fund but instead put their money to work either funding new companies or buying old companies from their shareholders and making them more profitable. The business of funding new companies in their early days, or rather the business of turning ideas into businesses, is called venture capital. Its spiritual homes are Silicon Valley in California and Greater Boston in Massachusetts. It has given us EBay, Google, Amazon.com, and a host of biotechnology companies. It has also given us a host of financial dogs, including pets.com. At its best, venture capital fuels the creativity and A Tour of the Financial World and Its Inhabitants dynamism of the U.S. economy. Its only contact with the capital markets is when the venture capitalist, a private investor risking his or her own money, want to ‘‘cash out’’ one of their companies by having the broker dealers ‘‘bring it to market.’’ The dot.com boom and bust of the 1990s showed how this process gets out of hand, turning into a feeding frenzy for the investment bankers and a mania for the buy-side firms and individual investors.
Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, centralized clearinghouse, Chuck Templeton: OpenTable, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy
Indeed, the clearest message they carry is, ‘We are spending an astronomical amount of money on this ad campaign.’” The lavish destruction of value is the only way the signal can’t be copied. Competitive signaling can lead to perverse, even destructive outcomes for the companies involved. It might help explain why, in the year 2000, nineteen internet start-ups spent millions buying advertising time during the Super Bowl. It’s also telling that eight of the nineteen—including, famously, Pets.com, with its sock puppet mascot—no longer exist. Ironically, their efforts to signal they had the deep pockets and quality offerings that would allow them to be one of the survivors in the internet’s winner-take-all economy may have helped to drive these big spenders into bankruptcy.10 You might think that such a failure rate would discourage a repeat, but the trend is back: during the 2015 Super Bowl, start-ups, including Wix.com (a company that helps users build websites), and Loctite (a glue maker) spent $4.5 million for each thirty-second spot.11 Whether this all has the desired effect on someone in the market for a new truck or soft drink is another matter.
Evil by Design: Interaction Design to Lead Us Into Temptation by Chris Nodder
4chan, affirmative action, Amazon Mechanical Turk, cognitive dissonance, crowdsourcing, Daniel Kahneman / Amos Tversky, Donald Trump, en.wikipedia.org, endowment effect, game design, haute couture, jimmy wales, Jony Ive, Kickstarter, late fees, loss aversion, Mark Zuckerberg, meta analysis, meta-analysis, Milgram experiment, Netflix Prize, Nick Leeson, Occupy movement, pets.com, price anchoring, recommendation engine, Rory Sutherland, Silicon Valley, stealth mode startup, Steve Jobs, telemarketer, Tim Cook: Apple, trickle-down economics, upwardly mobile
Spore sales figures: Second quarter FY09 from Electronic Arts’ investor relations site. Spore top-10 game: NPD Group/Retail Tracking Service. 38% efficiency: Will Wright made this quote at the Electronic Entertainment Expo in July 2008. Create status differences to drive behavior Bruce Schneier: “E-Mail After the Rapture.” (schneier.com/blog). June 2, 2008. Retrieved February 2013. Eternal Earth-bound Pets: eternal-earthbound-pets.com. Bart Centre quote: Mike Di Paola. “Caring for Pets Left Behind by the Rapture.” Bloomberg Businessweek (businessweek.com). February 11, 2010. Retrieved February 2013. Emphasize achievement as a form of status Two clipped: Joseph C Nunes and Xavier Dreze. “The endowed progress effect: How artificial advancement increases effort.” Journal of Consumer Research 32.4 (2006): 504–512. Large numbers of points: Rajesh Bagchi and Xingbo Li.
3D printing, barriers to entry, call centre, Clayton Christensen, clean water, cloud computing, commoditize, Computer Numeric Control, continuous integration, corporate governance, experimental subject, Frederick Winslow Taylor, Lean Startup, Marc Andreessen, Mark Zuckerberg, Metcalfe’s law, minimum viable product, Network effects, payday loans, Peter Thiel, pets.com, Ponzi scheme, pull request, risk tolerance, selection bias, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, stealth mode startup, Steve Jobs, the scientific method, Toyota Production System, transaction costs
Founder Nick Swinmurn was frustrated because there was no central online site with a great selection of shoes. He envisioned a new and superior retail experience. Swinmurn could have waited a long time, insisting on testing his complete vision complete with warehouses, distribution partners, and the promise of significant sales. Many early e-commerce pioneers did just that, including infamous dot-com failures such as Webvan and Pets.com. Instead, he started by running an experiment. His hypothesis was that customers were ready and willing to buy shoes online. To test it, he began by asking local shoe stores if he could take pictures of their inventory. In exchange for permission to take the pictures, he would post the pictures online and come back to buy the shoes at full price if a customer bought them online. Zappos began with a tiny, simple product.
The Price of Everything: And the Hidden Logic of Value by Eduardo Porter
Alvin Roth, Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, Berlin Wall, British Empire, capital controls, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, Ford paid five dollars a day, full employment, George Akerlof, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Joshua Gans and Andrew Leigh, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, new economy, New Urbanism, peer-to-peer, pension reform, Peter Singer: altruism, pets.com, placebo effect, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, Veblen good, women in the workforce, World Values Survey, Yom Kippur War, young professional, zero-sum game
Through the ages, virtually every potentially profitable new frontier opened up to investment has led to a speculative bubble, as investors have scrambled to tap into its promise only to stampede in retreat a few years later. A decade before the housing crisis we experienced the dot-com bubble. The NASDAQ index, heavy with technology stocks, quadrupled between 1996 and March of 2000. Drunk on information technology’s promise, people poured retirement savings into companies like Pets.com, which achieved fame, though never profit, on the strength of a cute ad with a sock puppet. In 2000, AOL could use its pricey stock to take over media goliath Time Warner, which had more than five times its revenue. By October of 2002 the NASDAQ was back where it had been in 1996. In 2010, Time Warner quietly spun off AOL for a tiny fraction of its price a decade before. The dot-com crash was preceded by the Asian financial crisis, with subsidiary bubblettes from Russia to Brazil, when a surge of money into promising “emerging markets” abruptly went into reverse.
Free Ride by Robert Levine
A Declaration of the Independence of Cyberspace, Anne Wojcicki, book scanning, borderless world, Buckminster Fuller, citizen journalism, commoditize, correlation does not imply causation, creative destruction, crowdsourcing, death of newspapers, Edward Lloyd's coffeehouse, Electric Kool-Aid Acid Test, Firefox, future of journalism, Googley, Hacker Ethic, informal economy, Jaron Lanier, Julian Assange, Justin.tv, Kevin Kelly, linear programming, Marc Andreessen, moral panic, offshore financial centre, pets.com, publish or perish, race to the bottom, Saturday Night Live, Silicon Valley, Silicon Valley startup, Skype, spectrum auction, Steve Jobs, Steven Levy, Stewart Brand, subscription business, Telecommunications Act of 1996, Whole Earth Catalog, WikiLeaks
“We wanted to put a legitimate alternative in the marketplace.” As an old-media Internet venture, Hulu aroused the ire of technology business blogs like TechCrunch and GigaOM, which predict the decline of television networks with the shoe-banging subtlety of Nikita Khrushchev. The former gleefully reported that Google staffers had nicknamed the new venture “Clown Co.” The latter ran a gag interview on the topic with the Pets.com sock puppet (which would seem to symbolize the hubris of technology start-ups rather than that of television networks). When bloggers finally tried Hulu a year later, however, they liked what they saw. An intuitive interface lets users stream shows from NBC, Fox, and some of their related cable channels, and ABC joined in 2009. Hulu also offers an eclectic mix of programming from media companies that don’t have a stake in it, including independent documentaries, Japanese anime, and videos from online sites like CollegeHumor.
Hatching Twitter by Nick Bilton
4chan, Airbus A320, Burning Man, friendly fire, index card, Jeff Bezos, John Markoff, Kevin Kelly, Mahatma Gandhi, Mark Zuckerberg, pets.com, rolodex, Ruby on Rails, Saturday Night Live, side project, Silicon Valley, Skype, social web, Steve Ballmer, Steve Jobs, Steven Levy, technology bubble, traveling salesman, US Airways Flight 1549, WikiLeaks
Other times he hung out in the 550-foot-long park, an ovate patch of grass that looked like it belonged in front of the royal palace in London, not in San Francisco’s warehouse district. In the center of the park was a rickety old brown swing set. South Park had played a crucial role in the late nineties as home to many of the now-defunct start-ups that quickly wilted away after the technology bubble burst. Pets.com and other start-ups that had collectively squandered hundreds of millions of dollars on ridiculous parties, asinine salaries, and expensive TV ads met their timely demise overlooking South Park. It hadn’t always been the epicenter of tech. Before the start-ups had moved in, the park had been home to brothels, drug dealers, dive bars, and sordid hotels. After the bubble had gone pop, it had almost returned to its Seedyville roots, but in mid-2005 South Park and the Web were making a comeback.
Affordable Care Act / Obamacare, Air France Flight 447, air freight, airport security, Asian financial crisis, asset-backed security, bank run, banking crisis, break the buck, Bretton Woods, capital controls, central bank independence, cloud computing, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, Daniel Kahneman / Amos Tversky, diversified portfolio, double helix, endowment effect, Exxon Valdez, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, global supply chain, hindsight bias, Hyman Minsky, Joseph Schumpeter, Kenneth Rogoff, London Whale, Long Term Capital Management, market bubble, money market fund, moral hazard, Myron Scholes, Network effects, new economy, offshore financial centre, paradox of thrift, pets.com, Ponzi scheme, quantitative easing, Ralph Nader, Richard Thaler, risk tolerance, Ronald Reagan, savings glut, technology bubble, The Great Moderation, too big to fail, transaction costs, union organizing, Unsafe at Any Speed, value at risk, William Langewiesche, zero-sum game
If the Fed would always intervene when markets plunged, critics said, why not pay ridiculous prices for assets? The Fed, these critics said, should prick the bubbles to prevent a bigger disaster later on. Both times, the Fed refused. In the case of the Nasdaq bubble, that turned out to be a good thing. In those years, more than five hundred companies listed shares on the stock market including such memorable stinkers as pets.com (known for its sock puppet) and webvan, an online grocer that went bust less than two years after going public. Then there was Amazon.com, which went public in 1997. Amazon fascinated investors, but it bled money. Much of its strategy was based on selling books at knockdown prices and zero profits. This meant that it had to constantly raise new money to invest in marketing, promotions, and infrastructure.
algorithmic trading, automated trading system, banking crisis, bash_history, Bernie Madoff, butterfly effect, buttonwood tree, Chuck Templeton: OpenTable, cloud computing, collapse of Lehman Brothers, computerized trading, creative destruction, Donald Trump, fixed income, Flash crash, Francisco Pizarro, Gordon Gekko, Hibernia Atlantic: Project Express, High speed trading, Joseph Schumpeter, latency arbitrage, Long Term Capital Management, Mark Zuckerberg, market design, market microstructure, pattern recognition, pets.com, Ponzi scheme, popular electronics, prediction markets, quantitative hedge fund, Ray Kurzweil, Renaissance Technologies, Sergey Aleynikov, Small Order Execution System, South China Sea, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stochastic process, transaction costs, Watson beat the top human players on Jeopardy!, zero-sum game
Erik Sirri, a finance professor at Babson College who later became head of the SEC’s division of market regulation, said people like Andresen were “fooling themselves if they think they will one day replace Nasdaq. The Nasdaq’s market makers and the NYSE’s specialists are critical components to maintaining a liquid market.” Island also had several close calls with its computer system. In early 2000, the stock market started to buckle as the dot-com mania collapsed. Trading volumes surged to record levels, especially on Nasdaq, full of massively inflated tech outfits from America Online to Pets.com to eBay. By then, nearly 15 percent of all Nasdaq stocks were flowing through Island’s pipes. The Nasdaq index peaked at 5049 on March 10, a Friday. The following Monday, before trading started, a wave of sell orders for bellwether tech stocks such as Cisco and Dell swept into the market. Many flowed through Island, a haven of before-hours trading. When Nasdaq opened for business at 4879, the 170-point drop stunned investors around the country.
Wonderland: How Play Made the Modern World by Steven Johnson
Ada Lovelace, Alfred Russel Wallace, Antoine Gombaud: Chevalier de Méré, Berlin Wall, bitcoin, Book of Ingenious Devices, Buckminster Fuller, Claude Shannon: information theory, Clayton Christensen, colonial exploitation, computer age, conceptual framework, crowdsourcing, cuban missile crisis, Drosophila, Edward Thorp, Fellow of the Royal Society, game design, global village, Hedy Lamarr / George Antheil, HyperCard, invention of air conditioning, invention of the printing press, invention of the telegraph, Islamic Golden Age, Jacquard loom, Jacquard loom, Jacques de Vaucanson, James Watt: steam engine, Jane Jacobs, John von Neumann, joint-stock company, Joseph-Marie Jacquard, land value tax, Landlord’s Game, lone genius, mass immigration, megacity, Minecraft, moral panic, Murano, Venice glass, music of the spheres, Necker cube, New Urbanism, Oculus Rift, On the Economy of Machinery and Manufactures, pattern recognition, peer-to-peer, pets.com, placebo effect, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, QWERTY keyboard, Ray Oldenburg, spice trade, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, supply-chain management, talking drums, the built environment, The Great Good Place, the scientific method, The Structural Transformation of the Public Sphere, trade route, Turing machine, Turing test, Upton Sinclair, urban planning, Victor Gruen, Watson beat the top human players on Jeopardy!, white flight, white picket fence, Whole Earth Catalog, working poor, Wunderkammern
The European aristocracy had no shortage of fresh meat or fish to consume, and they had plenty of salt to preserve anything that needed a longer shelf life. Spice was a craving, not a necessity. “To limit their function to food preservation and explain their use solely in those terms,” the German historian Wolfgang Schivelbusch writes, “would be like calling champagne a good thirst quencher.” Were spices just a financial bubble, like Dutch tulips and Pets.com stock? Almost certainly not. To begin with, if spices were merely a bubble, it was the longest in the history of markets; it took almost two thousand years to burst. More importantly, the market price of spices like pepper and cinnamon was rarely influenced by second-order speculation: people driving up the price by betting that the price will go up. Those derivative markets wouldn’t flourish until after the heyday of spices, partly because of economic institutions, like publicly traded companies, that spices helped invent.
Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You by Sangeet Paul Choudary, Marshall W. van Alstyne, Geoffrey G. Parker
3D printing, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, Apple's 1984 Super Bowl advert, autonomous vehicles, barriers to entry, big data - Walmart - Pop Tarts, bitcoin, blockchain, business process, buy low sell high, chief data officer, Chuck Templeton: OpenTable, clean water, cloud computing, connected car, corporate governance, crowdsourcing, data acquisition, data is the new oil, digital map, discounted cash flows, disintermediation, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Haber-Bosch Process, High speed trading, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Metcalfe’s law, multi-sided market, Network effects, new economy, payday loans, peer-to-peer lending, Peter Thiel, pets.com, pre–internet, price mechanism, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Satoshi Nakamoto, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the payments system, Tim Cook: Apple, transaction costs, two-sided market, Uber and Lyft, Uber for X, winner-take-all economy, zero-sum game, Zipcar
With traditional metrics of business success seemingly rendered obsolete, several companies launched hugely successful initial public offerings (IPOs) without ever having made a dime in profit. Students and faculty alike were dropping out of school to launch fledgling technology businesses. Inevitably, the market came crashing down. Beginning in March 2000, trillions of dollars’ worth of paper valuations vanished in a matter of months. Yet amid the rubble, certain companies survived. While Webvan and Pets.com disappeared, Amazon and eBay survived and thrived. Steve Jobs, who had lost Apple to mistakes he made earlier, recovered, returned to Apple, and built it into a juggernaut. Eventually, the online world emerged from the depths of the 2000 downturn to become stronger than ever. Why were some Internet-based businesses successful while others were not? Were the differences a matter of random luck, or were deeper design principles at work?
Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt, Stephen J. Dubner
airport security, Broken windows theory, crack epidemic, desegregation, Exxon Valdez, feminist movement, George Akerlof, information asymmetry, Joseph Schumpeter, Kenneth Arrow, mental accounting, moral hazard, More Guns, Less Crime, oil shale / tar sands, Paul Samuelson, peak oil, pets.com, profit maximization, Richard Thaler, school choice, sensible shoes, Steven Pinker, Ted Kaczynski, The Chicago School, The Market for Lemons, Thorstein Veblen, War on Poverty
What did go away were the huge profits for selling crack. The price of cocaine had been falling for years, and it got only cheaper as crack grew more popular. Dealers began to underprice one another; profits vanished. The crack bubble burst as dramatically as the Nasdaq bubble would eventually burst. (Think of the first generation of crack dealers as the Microsoft millionaires; think of the second generation as Pets.com.) As veteran crack dealers were killed or sent to prison, younger dealers decided that the smaller profits didn’t justify the risk. The tournament had lost its allure. It was no longer worth killing someone to steal their crack turf, and certainly not worth being killed. So the violence abated. From 1991 to 2001, the homicide rate among young black men—who were disproportionately represented among crack dealers—fell 48 percent, compared to 30 percent for older black men and older white men.
The Big Short: Inside the Doomsday Machine by Michael Lewis
Asperger Syndrome, asset-backed security, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, facts on the ground, financial innovation, fixed income, forensic accounting, Gordon Gekko, high net worth, housing crisis, illegal immigration, income inequality, index fund, interest rate swap, John Meriwether, London Interbank Offered Rate, Long Term Capital Management, medical residency, money market fund, moral hazard, mortgage debt, pets.com, Ponzi scheme, Potemkin village, quantitative trading / quantitative ﬁnance, Robert Bork, short selling, Silicon Valley, the new new thing, too big to fail, value at risk, Vanguard fund, zero-sum game
By the time Burry moved to Stanford Hospital in 1998 to take up his residency in neurology, the work he had done between midnight and three in the morning had made him a minor but meaningful hub in the land of value investing. By this time the craze for Internet stocks was completely out of control and had infected the Stanford University medical community. "The residents in particular, and some of the faculty, were captivated by the dot-com bubble," said Burry. "A decent minority of them were buying and discussing everything--Polycom, Corel, Razorfish, Pets.com, TIBCO, Microsoft, Dell, Intel are the ones I specifically remember, but areyoukiddingme-dot-com was how my brain filtered a lot of it.... I would just keep my mouth shut, because I didn't want anybody there knowing what I was doing on the side. I felt I could get in big trouble if the doctors there saw I wasn't one hundred and ten percent committed to medicine." People who worry about seeming sufficiently committed to medicine probably aren't sufficiently committed to medicine.
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton G. Malkiel
3Com Palm IPO, accounting loophole / creative accounting, Albert Einstein, asset allocation, asset-backed security, backtesting, beat the dealer, Bernie Madoff, BRICs, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, Edward Thorp, Elliott wave, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial innovation, fixed income, framing effect, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Long Term Capital Management, loss aversion, margin call, market bubble, money market fund, mortgage tax deduction, new economy, Own Your Own Home, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, survivorship bias, The Myth of the Rational Market, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond
In order to jump-start the company, Flooz.com turned to an old business school maxim that “any idiot can sell a one-dollar bill for eighty cents.” Flooz.com launched a special offer to American Express platinum card holders allowing them to buy $1,000 of Flooz currency for just $800. Shortly before declaring bankruptcy, Flooz itself was Floozed when Filipino and Russian gangs bought $300,000 of its currency using stolen credit card numbers. Consider Pets.com, a real dog if there ever was one. The company had a sock-puppet mascot that starred in its TV commercials and even made an appearance at a Macy’s Thanksgiving Day parade. Unfortunately, the popularity of its mascot did not compensate for the fact that it’s hard to make a profit individually shipping low-margin 25-pound bags of kibble. The names alone of many of the Internet ventures stretch credulity: Bunions.com, Crayfish, Zap.com, Gadzooks, Fogdog, FatBrain, Jungle.com, Scoot.com, mylackey.com, and, moreover, Moreover.com.
Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis by Anatole Kaletsky
bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, bonus culture, Bretton Woods, BRICs, Carmen Reinhart, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, Edward Glaeser, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, F. W. de Klerk, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, global rebalancing, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, laissez-faire capitalism, Long Term Capital Management, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage debt, new economy, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, peak oil, pets.com, Ponzi scheme, post-industrial society, price stability, profit maximization, profit motive, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Vilfredo Pareto, Washington Consensus, zero-sum game
The financial returns from trans-Atlantic trade and investment in the American economy—the “fantasies” on which the South Sea and Mississippi Companies were founded—far exceeded the deluded speculators’ wildest dreams. Such historical examples do not prove that the speculators in property and financial derivatives before the crash of 2007 will ultimately be proved right. On the contrary. The buyers of Squared-CDOs, who were as foolish as the late investors in Pets.Com and the leveraged buyers of South Sea promissory notes, will never recover a penny of their reckless speculations. But the idiocies of CDO-2 investors do not necessarily imply a structural decline in the United States and British economies, just as the idiocies of Dutch speculators in striped-black Semper Augustus bulbs did not reflect the imminent demise of the Dutch economy. What they reflected was a spectacular transformation in Holland’s economic fundamentals that investors had no idea how to handle or evaluate, especially in its early phase.
Startup CEO: A Field Guide to Scaling Up Your Business, + Website by Matt Blumberg
activist fund / activist shareholder / activist investor, airport security, Albert Einstein, bank run, Broken windows theory, crowdsourcing, deskilling, fear of failure, high batting average, high net worth, hiring and firing, Inbox Zero, James Hargreaves, Jeff Bezos, job satisfaction, Kickstarter, knowledge economy, knowledge worker, Lean Startup, Mark Zuckerberg, minimum viable product, pattern recognition, performance metric, pets.com, rolodex, Rubik’s Cube, shareholder value, Silicon Valley, Skype
First, you might be tempted to compete with them on their terms and ramp up your burn rate accordingly. Pretty soon, you’re spending money as recklessly as they are and there isn’t any left in the bank. The second possibility is subtler but just as damaging: when investors see a certain kind of idea fail, spectacularly, they’re less likely to fund a good idea along the same lines. (Selling pet food online isn’t a bad idea but it took a long time for investors to take another shot after Pets.com failed to the tune of some $300 million.) The response? Have the stomach to wait them out. While some techniques for winning are specific to the type of competition you’re facing, most of them are universal. Concede that competitors will sometimes out-think you, so out-behave, out-prepare and out-execute them. (Moments when you have been “out-thought” are also the right times to “plagiarize with pride.”)
The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone
3D printing, airport security, AltaVista, Amazon Mechanical Turk, Amazon Web Services, bank run, Bernie Madoff, big-box store, Black Swan, book scanning, Brewster Kahle, call centre, centre right, Chuck Templeton: OpenTable, Clayton Christensen, cloud computing, collapse of Lehman Brothers, crowdsourcing, cuban missile crisis, Danny Hillis, Douglas Hofstadter, Elon Musk, facts on the ground, game design, housing crisis, invention of movable type, inventory management, James Dyson, Jeff Bezos, John Markoff, Kevin Kelly, Kodak vs Instagram, late fees, loose coupling, low skilled workers, Maui Hawaii, Menlo Park, Network effects, new economy, optical character recognition, pets.com, Ponzi scheme, quantitative hedge fund, recommendation engine, Renaissance Technologies, RFID, Rodney Brooks, search inside the book, shareholder value, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, Skype, statistical arbitrage, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, Thomas L Friedman, Tony Hsieh, Whole Earth Catalog, why are manhole covers round?, zero-sum game
Amazon also veered disastrously into the venture-capital arena. In 1998 Bezos and venture capitalist John Doerr saw an opportunity for an online pharmacy and founded Drugstore.com, recruiting longtime Microsoft executive Peter Neupert to run it. Amazon owned a third of the company. The venture got off to a promising start, so for the next two years, Tinsley and Bezos invested tens of millions of Amazon’s cash in a variety of dot-com hopefuls, including Pets.com, Gear.com, Wineshopper.com, Greenlight.com, Homegrocer.com, and the urban delivery service Kozmo.com. In exchange for its cash, Amazon took a minority ownership position and a seat on the board for each, and the company believed it was well positioned for the future if those product categories succeeded on the Internet. The startups believed they had a powerful partner invested in their success.
I'm Feeling Lucky: The Confessions of Google Employee Number 59 by Douglas Edwards
Albert Einstein, AltaVista, Any sufficiently advanced technology is indistinguishable from magic, barriers to entry, book scanning, Build a better mousetrap, Burning Man, business intelligence, call centre, commoditize, crowdsourcing, don't be evil, Elon Musk, fault tolerance, Googley, gravity well, invisible hand, Jeff Bezos, job-hopping, John Markoff, Marc Andreessen, Menlo Park, microcredit, music of the spheres, Network effects, P = NP, PageRank, performance metric, pets.com, Ralph Nader, risk tolerance, second-price auction, side project, Silicon Valley, Silicon Valley startup, slashdot, stem cell, Superbowl ad, Y2K
Then Al Gore, giving an intense look of concern, asked with the emotional spark of soggy cardboard, "Are you searching for answers? Google.com can help you find them." A pause, and then Gore asked, "Was that too over the top?" Other Googlers appeared, including Chef Charlie and our sultry receptionist Megan, who leaned forward to whisper, "Looking for something? Need a good search?" as well as a guest appearance by the Pets.com sock puppet. When the video aired, the audience of Googlers went nuts. After it ended, Sergey announced that we had decided not to spend the money airing a spot after all, and instead would split the cash among the Google staff. That went over very well. By the end of the next year, the amount of cash needed for the bonuses became unwieldy. Armored cars and shotgun-toting guards were needed to transport and watch over the funds until they could be distributed.
To Save Everything, Click Here: The Folly of Technological Solutionism by Evgeny Morozov
3D printing, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, augmented reality, Automated Insights, Berlin Wall, big data - Walmart - Pop Tarts, Buckminster Fuller, call centre, carbon footprint, Cass Sunstein, choice architecture, citizen journalism, cloud computing, cognitive bias, creative destruction, crowdsourcing, data acquisition, Dava Sobel, disintermediation, East Village, en.wikipedia.org, Fall of the Berlin Wall, Filter Bubble, Firefox, Francis Fukuyama: the end of history, frictionless, future of journalism, game design, Gary Taubes, Google Glasses, illegal immigration, income inequality, invention of the printing press, Jane Jacobs, Jean Tirole, Jeff Bezos, jimmy wales, Julian Assange, Kevin Kelly, Kickstarter, license plate recognition, lifelogging, lone genius, Louis Pasteur, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, moral panic, Narrative Science, Nicholas Carr, packet switching, PageRank, Parag Khanna, Paul Graham, peer-to-peer, Peter Singer: altruism, Peter Thiel, pets.com, placebo effect, pre–internet, Ray Kurzweil, recommendation engine, Richard Thaler, Ronald Coase, Rosa Parks, self-driving car, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, Slavoj Žižek, smart meter, social graph, social web, stakhanovite, Steve Jobs, Steven Levy, Stuxnet, technoutopianism, the built environment, The Chicago School, The Death and Life of Great American Cities, the medium is the message, The Nature of the Firm, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, transaction costs, urban decay, urban planning, urban sprawl, Vannevar Bush, WikiLeaks
Americans Elect was one such group that believed “the Internet” could help find a third-party candidate to stand in the 2012 presidential elections. Americans Elect, enthused Thomas Friedman in the New York Times, can do to American politics “what Amazon.com did to books, what the blogosphere did to newspapers, what the iPod did to music, what drugstore.com did to pharmacies.” Friedman wrote this in July 2011. By May 2012, Americans Elect could not even be counted on to do for American politics “what pets.com did to pet stores”—which is to say, not much. Friedman, of course, was not alone; many other pundits, intoxicated by “the Internet,” thought that Americans Elect would change the country’s politics forever. Lawrence Lessig, never passing up an opportunity to remind us of just how revolutionary all this Internet stuff is, proclaimed that “10,000 clicks from 10 states could begin a candidate in the process towards winning the Americans Elect nomination.”
activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, AI winter, Airbnb, Atul Gawande, Captain Sullenberger Hudson, Checklist Manifesto, Chuck Templeton: OpenTable, Clayton Christensen, collapse of Lehman Brothers, computer age, creative destruction, crowdsourcing, deskilling, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, Google Glasses, Ignaz Semmelweis: hand washing, Internet of things, job satisfaction, Joseph Schumpeter, knowledge worker, lifelogging, medical malpractice, medical residency, Menlo Park, minimum viable product, natural language processing, Network effects, Nicholas Carr, obamacare, pattern recognition, peer-to-peer, personalized medicine, pets.com, Productivity paradox, Ralph Nader, RAND corporation, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, Skype, Snapchat, software as a service, Steve Jobs, Steven Levy, the payments system, The Wisdom of Crowds, Thomas Bayes, Toyota Production System, Uber for X, US Airways Flight 1549, Watson beat the top human players on Jeopardy!, Yogi Berra
While today’s market may be, in another favorite Silicon Valley-ism, “a bit frothy,” Rock Health graduates are competing successfully for real dollars from mature, no-nonsense funders. And many of the start-ups appear to be building sustainable businesses. In mid-2014, Augmedix signed a deal with the Dignity Health system, which manages hospitals in 17 states, and Lift Labs was bought by Google. This is not Pets.com, or any of the other dot-com flameouts we’ve seen over the years. More important, these products are not indulgent and silly—they are solving real problems for clinicians and for patients. Augmedix, CellScope, and Lift Labs each have compelling human stories: helping a doctor who is struggling to satisfy both his patients and his EHR; a working mom who is confronting a wailing, febrile toddler; a proud elderly man who is too embarrassed to eat in his favorite restaurant.
Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, Berlin Wall, Big bang: deregulation of the City of London, California gold rush, complexity theory, computer age, constrained optimization, corporate governance, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Donald Trump, double entry bookkeeping, double helix, Edward Lloyd's coffeehouse, equity premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, financial innovation, Francis Fukuyama: the end of history, George Akerlof, George Gilder, greed is good, Gunnar Myrdal, haute couture, illegal immigration, income inequality, industrial cluster, information asymmetry, intangible asset, invention of the telephone, invention of the wheel, invisible hand, John Meriwether, John Nash: game theory, John von Neumann, Kenneth Arrow, Kevin Kelly, knowledge economy, labour market flexibility, late capitalism, light touch regulation, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, Pareto efficiency, Paul Samuelson, pets.com, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, Right to Buy, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, telemarketer, The Chicago School, The Death and Life of Great American Cities, The Market for Lemons, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Vilfredo Pareto, Washington Consensus, women in the workforce, yield curve, yield management
Priceline, whose main business was the sale of discounted air tickets, was for a time valued at more than the entire U.S. airline industry. Webvan proclaimed itself the future of retailing, its enthusiasts predicting the demise of"bricks and mortars," and even attracted George Sheehan to relinquish charge of the Accenture consulting business for a seat at the driving wheel of this home delivery service, not long before closing in 2001. Pets.com and etoys will forever be symbols of the implausible expectations for online retailing. As these businesses failed, breathless predictions of the future were transferred from B2C (business to consumer) retailing to B2B (business to business). Eventually reality broke in here also. The ease with which money could be raised to fund businesses such as these was widely applauded as a demonstration of the vitality of financial markets. 13 In reality, it represented a collapse of market discipline.
Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street by Sheelah Kolhatkar
Bernie Madoff, Donald Trump, family office, fear of failure, financial deregulation, hiring and firing, income inequality, light touch regulation, locking in a profit, margin call, medical residency, mortgage debt, p-value, pets.com, Ponzi scheme, rent control, Ronald Reagan, short selling, Silicon Valley, Skype, The Predators' Ball
At the time, underwriting initial public offerings and advising on mergers and takeovers provided the bulk of most big firms’ profits. Promising a positive report on a particular company was an effective way of paving the way for more advisory fees on deals. The classic case was Henry Blodget, the star Internet analyst at Merrill Lynch who said in 1998 that he believed shares of Amazon were worth $400. He publicly praised companies like Pets.com and eToys.com while his firm courted business from them. In private emails to colleagues, however, he said that he really thought the companies were overhyped, calling Excite@Home “a piece of crap” and other dotcom companies “dogs.” When the attorney general’s office exposed these conflicts of interest and settled with Merrill Lynch, Goldman Sachs, Lehman Brothers, J. P. Morgan, and the six other top Wall Street firms at the end of 2002, it extracted billions of dollars in fines and restitution as well as promises from the banks to abide by a new set of tighter rules.
From eternity to here: the quest for the ultimate theory of time by Sean M. Carroll
Albert Einstein, Albert Michelson, anthropic principle, Arthur Eddington, Brownian motion, cellular automata, Claude Shannon: information theory, Columbine, cosmic microwave background, cosmological constant, cosmological principle, dark matter, dematerialisation, double helix, en.wikipedia.org, gravity well, Harlow Shapley and Heber Curtis, Henri Poincaré, Isaac Newton, John von Neumann, Lao Tzu, lone genius, New Journalism, Norbert Wiener, pets.com, Pierre-Simon Laplace, Richard Feynman, Richard Feynman, Richard Stallman, Schrödinger's Cat, Slavoj Žižek, Stephen Hawking, stochastic process, the scientific method, wikimedia commons
Tachyons, therefore, can apparently do something scary and unpredictable: “start” from an event on the world line of some ordinary (slower-than-light) object, defined by some position in space and some moment in time, and travel on a path that takes them to a previous point on the same world line. If you had a flashlight that emitted tachyons, you could (in principle) construct an elaborate series of mirrors by which you could send signals in Morse code to yourself in the past. You could warn your earlier self not to eat the shrimp in that restaurant that one time, or to go on that date with the weirdo from the office, or to sink your life savings into Pets.com stock. Figure 22: If tachyons could exist, they could be emitted by ordinary objects and zip around to be absorbed in the past. At every event along its trajectory, the tachyon moves outside the light cone. Clearly, the possibility of travel backward in time raises the possibility of paradoxes, which is unsettling. There is a cheap way out: Notice that tachyons don’t seem to exist, and declare that they are simply incompatible with the laws of physics.77 That is both fruitful and accurate, at least as far as special relativity is concerned.
Aerotropolis by John D. Kasarda, Greg Lindsay
3D printing, air freight, airline deregulation, airport security, Akira Okazaki, Asian financial crisis, back-to-the-land, barriers to entry, Berlin Wall, big-box store, blood diamonds, borderless world, British Empire, call centre, carbon footprint, Cesare Marchetti: Marchetti’s constant, Clayton Christensen, cleantech, cognitive dissonance, commoditize, conceptual framework, credit crunch, David Brooks, David Ricardo: comparative advantage, Deng Xiaoping, deskilling, digital map, edge city, Edward Glaeser, failed state, food miles, Ford paid five dollars a day, Frank Gehry, fudge factor, full employment, future of work, Geoffrey West, Santa Fe Institute, George Gilder, global supply chain, global village, gravity well, Haber-Bosch Process, Hernando de Soto, hive mind, if you build it, they will come, illegal immigration, inflight wifi, intangible asset, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of the telephone, inventory management, invisible hand, Jane Jacobs, Jeff Bezos, Kangaroo Route, knowledge worker, kremlinology, labour mobility, Marchetti’s constant, Marshall McLuhan, Masdar, mass immigration, McMansion, megacity, Menlo Park, microcredit, Network effects, New Economic Geography, new economy, New Urbanism, oil shale / tar sands, oil shock, peak oil, Pearl River Delta, Peter Thiel, pets.com, pink-collar, pre–internet, RFID, Richard Florida, Ronald Coase, Ronald Reagan, Rubik’s Cube, savings glut, Seaside, Florida, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, smart cities, smart grid, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, spinning jenny, stem cell, Steve Jobs, supply-chain management, sustainable-tourism, telepresence, the built environment, The Chicago School, The Death and Life of Great American Cities, The Nature of the Firm, thinkpad, Thomas L Friedman, Thomas Malthus, Tony Hsieh, trade route, transcontinental railway, transit-oriented development, traveling salesman, trickle-down economics, upwardly mobile, urban planning, urban renewal, urban sprawl, walkable city, white flight, white picket fence, Yogi Berra, zero-sum game
The money followed the flights. Transportation analyst Kenneth Button confirmed as much in another study published during the dot-com bubble. Analyzing the catalytic effects of European flights from forty-one American cities, he discovered that simply increasing the number of flights to the Continent from three to four daily would create almost three thousand “new economy” jobs. (Picture the khaki-clad visionaries behind Pets.com.) Overall, he calculated that every thousand passengers crossing the Atlantic created somewhere between forty-four and seventy-three new jobs around the hubs. A similar formula applies to all air traffic. When the economist Jan Brueckner ran the numbers for ninety-one airports from Albuquerque to Wichita, he found that a 10 percent increase in passengers led to a 1 percent bump in employment.
Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das
affirmative action, Albert Einstein, algorithmic trading, Andy Kessler, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, capital asset pricing model, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Edward Thorp, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, financial independence, financial innovation, financial thriller, fixed income, full employment, global reserve currency, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, happiness index / gross national happiness, haute cuisine, high net worth, Hyman Minsky, index fund, information asymmetry, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, job automation, Johann Wolfgang von Goethe, John Meriwether, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, labour market flexibility, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, margin call, market bubble, market fundamentalism, Marshall McLuhan, Martin Wolf, mega-rich, merger arbitrage, Mikhail Gorbachev, Milgram experiment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, Naomi Klein, negative equity, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, Paul Samuelson, pets.com, Philip Mirowski, Plutocrats, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, quantitative easing, quantitative trading / quantitative ﬁnance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Feynman, Richard Thaler, Right to Buy, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, Satyajit Das, savings glut, shareholder value, Sharpe ratio, short selling, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, survivorship bias, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond, zero-sum game
The networks broadcast throughout the day, providing reports on business, updates on financial markets, stock market indices and commodities prices, interviews with chief executives and business leaders, and commentary. The growing interest in stocks and money matters culminated in the day trader phenomenon. Most day traders were small-time investors risking their own money—American Mrs. Watanabes trading part time. Between 1997 and 2000, during the euphoric dot.com bubble, day traders traded stocks like Intel or Microsoft as well as ephemeral companies like pets.com or boo.com. Day traders made large numbers of trades during a single day as they bought and sold online in a frenzy to take advantage of news and opportunities. Some day traders worked out of trading alleys housing stations (a desk and computer with high-speed connection to the electronic broker). In the corner, a large plasma screen TV was permanently tuned to CNBC or Bloomberg. From 1997 to 2000, as the NASDAQ rose from 1,200 to 5,000, investors with next to no experience made substantial profits buying and selling technology stocks.
airport security, availability heuristic, Bayesian statistics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, big-box store, Black Swan, Broken windows theory, Carmen Reinhart, Claude Shannon: information theory, Climategate, Climatic Research Unit, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, computer age, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, Daniel Kahneman / Amos Tversky, diversification, Donald Trump, Edmond Halley, Edward Lorenz: Chaos theory, en.wikipedia.org, equity premium, Eugene Fama: efficient market hypothesis, everywhere but in the productivity statistics, fear of failure, Fellow of the Royal Society, Freestyle chess, fudge factor, George Akerlof, haute cuisine, Henri Poincaré, high batting average, housing crisis, income per capita, index fund, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of the printing press, invisible hand, Isaac Newton, James Watt: steam engine, John Nash: game theory, John von Neumann, Kenneth Rogoff, knowledge economy, locking in a profit, Loma Prieta earthquake, market bubble, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, Monroe Doctrine, mortgage debt, Nate Silver, negative equity, new economy, Norbert Wiener, PageRank, pattern recognition, pets.com, Pierre-Simon Laplace, prediction markets, Productivity paradox, random walk, Richard Thaler, Robert Shiller, Robert Shiller, Rodney Brooks, Ronald Reagan, Saturday Night Live, savings glut, security theater, short selling, Skype, statistical model, Steven Pinker, The Great Moderation, The Market for Lemons, the scientific method, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transaction costs, transfer pricing, University of East Anglia, Watson beat the top human players on Jeopardy!, wikimedia commons
And told her that, within ten years, she could use it to browse the Internet on an airplane flying 35,000 feet over Missouri and make a Skype call* to her family in Hong Kong? She would have bid Apple stock up to infinity. Nevertheless, ten years later, in 2010, technology companies accounted for only about 7 percent of economic activity.42 For every Apple, there were dozens of companies like Pets.com that went broke. Investors were behaving as though every company would be a winner, that they wouldn’t have to outcompete each other, leading to an utterly unrealistic assumption about the potential profits available to the industry as a whole. Still, some proponents of efficient-market hypothesis continue to resist the notion of bubbles. Fama, in what was otherwise a very friendly conversation, recoiled when I so much as mentioned the b-word.
Stress Test: Reflections on Financial Crises by Timothy F. Geithner
Affordable Care Act / Obamacare, asset-backed security, Atul Gawande, bank run, banking crisis, Basel III, Bernie Madoff, Bernie Sanders, break the buck, Buckminster Fuller, Carmen Reinhart, central bank independence, collateralized debt obligation, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, David Brooks, Doomsday Book, eurozone crisis, financial innovation, Flash crash, Goldman Sachs: Vampire Squid, housing crisis, Hyman Minsky, illegal immigration, implied volatility, London Interbank Offered Rate, Long Term Capital Management, margin call, market fundamentalism, Martin Wolf, McMansion, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, Nate Silver, negative equity, Northern Rock, obamacare, paradox of thrift, pets.com, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, RAND corporation, regulatory arbitrage, reserve currency, Saturday Night Live, savings glut, selection bias, short selling, sovereign wealth fund, The Great Moderation, The Signal and the Noise by Nate Silver, Tobin tax, too big to fail, working poor
As the American economist Hyman Minsky explained in work I would read a decade later, stability can produce excessive confidence, which produces the seeds of future instability. This penchant for self-delusion is inherently human, but it does not inevitably lead to financial and economic crises. At the time, a similar dynamic was fueling the U.S. dot-com bubble, as investors enthralled by winners like eBay threw cash at losers like Pets.com. But the bursting of that bubble didn’t cause a major crisis, because it was financed mostly with equity rather than bank debt. Investors lost their money when their Internet stocks tanked, but the broader economy suffered only a modest slowdown. To cause a severe crisis, a mania must be financed by concentrated leverage, by excessive debt. When financial institutions or governments get overextended, they become vulnerable to creditors demanding their money back.
Hedge Fund Market Wizards by Jack D. Schwager
asset-backed security, backtesting, banking crisis, barriers to entry, beat the dealer, Bernie Madoff, Black-Scholes formula, British Empire, Claude Shannon: information theory, cloud computing, collateralized debt obligation, commodity trading advisor, computerized trading, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, delta neutral, diversification, diversified portfolio, Edward Thorp, family office, financial independence, fixed income, Flash crash, hindsight bias, implied volatility, index fund, intangible asset, James Dyson, Long Term Capital Management, margin call, market bubble, market fundamentalism, merger arbitrage, money market fund, oil shock, pattern recognition, pets.com, Ponzi scheme, private sector deleveraging, quantitative easing, quantitative trading / quantitative ﬁnance, Right to Buy, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Rubik’s Cube, Sharpe ratio, short selling, statistical arbitrage, Steve Jobs, systematic trading, technology bubble, transaction costs, value at risk, yield curve
For example, in late 2010, my underlying belief that the European sovereign debt crisis was a really big problem made it hard for me to participate in a sentiment and liquidity driven bull market. I failed to take part in the biggest macro theme of the year. From September on, equities were up a lot, and commodities were up a lot. It was a massive opportunity that I should have been in, and I wasn’t. I missed the key point that no one else cared, and as long as no one cares, there is no crisis. It’s the same reason I didn’t make any money in the Nasdaq bubble. I thought, “I can’t buy Pets.com.” But actually you can’t make money in the Nasdaq bubble by definition. You can. How do you go long a bubble and protect yourself? When it starts to go down, you sell it. It turned out that the Nasdaq move up was relatively smooth, but a bubble could be very volatile. That’s when you don’t get involved. Actually what I’ve learned is that bubbles last a long time, and that there’s money to be made out of bubbles.
The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan
air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business process, call centre, capital controls, central bank independence, collateralized debt obligation, collective bargaining, conceptual framework, Corn Laws, corporate governance, corporate raider, correlation coefficient, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Hernando de Soto, income inequality, income per capita, invisible hand, Joseph Schumpeter, labor-force participation, labour market flexibility, laissez-faire capitalism, land reform, Long Term Capital Management, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, Myron Scholes, new economy, North Sea oil, oil shock, open economy, Pearl River Delta, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, reserve currency, Right to Buy, risk tolerance, Ronald Reagan, shareholder value, short selling, Silicon Valley, special economic zone, the payments system, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, working-age population, Y2K, zero-sum game
(Like scores of other Internet start-ups, Webvan and Boo.com flamed out—in 2001 and 2000, respectively.) The Internet boom became part of TV news, not just on the networks (of which I am a faithful viewer, because of Andrea) but also on CNBC and other upstart cable channels that catered to businesspeople and investors. On Super Bowl Sunday of 2000, half the thirty-second ad slots were bought by seventeen Internet start-ups for $2.2 million each—the Pets.com sock puppet appeared alongside Budweiser's Clydesdales and Dorothy from The Wizard of Oz (in a FedEx spot). In pop culture, I was right up there with the sock puppets. CNBC invented a gimmick called the "briefcase indicator" in which cameras would follow me on the mornings of FOMC meetings as I arrived at the Fed. If my 197 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright.
The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
affirmative action, Albert Einstein, anti-communist, Ayatollah Khomeini, barriers to entry, Bob Noyce, Bonfire of the Vanities, Brownian motion, capital asset pricing model, card file, centralized clearinghouse, collateralized debt obligation, computerized trading, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, Donald Trump, Eugene Fama: efficient market hypothesis, global village, Golden Gate Park, Haight Ashbury, haute cuisine, Honoré de Balzac, If something cannot go on forever, it will stop - Herbert Stein's Law, In Cold Blood by Truman Capote, index fund, indoor plumbing, intangible asset, interest rate swap, invisible hand, Isaac Newton, Jeff Bezos, John Meriwether, joint-stock company, joint-stock limited liability company, Long Term Capital Management, Louis Bachelier, margin call, market bubble, Marshall McLuhan, medical malpractice, merger arbitrage, Mikhail Gorbachev, money market fund, moral hazard, NetJets, new economy, New Journalism, North Sea oil, paper trading, passive investing, Paul Samuelson, pets.com, Plutocrats, plutocrats, Ponzi scheme, Ralph Nader, random walk, Ronald Reagan, Scientific racism, shareholder value, short selling, side project, Silicon Valley, Steve Ballmer, Steve Jobs, supply-chain management, telemarketer, The Predators' Ball, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, transcontinental railway, Upton Sinclair, War on Poverty, Works Progress Administration, Y2K, yellow journalism, zero-coupon bond
Many of the questions hinged on Big Susie, who was going to outlive him. He told people that she would take care of everything. 55 The Last Kay Party Omaha • September 2000–July 2001 By the time Buffett got his semicolon, the Internet boom had boomeranged. The dotcoms were dying at the pace of one a day: Arzoo.com, Boo.com, Dash.com, eToys.com, Flooz.com, FooDoo.com, Hookt.com, Lipstream.com, PaperFly.com, Pets.com, Wwwwrrrr.com, Xuma.com, Zing.com.1 The NASDAQ was trading at less than half the value of its peak; the old economy stocks were still swooning. The Federal Reserve had started to cut interest rates once again. Buffett’s reputation, however, began to revive. Berkshire dipped its soup ladle into a huge stockpot of capital for Buffett to buy private companies, bankrupt companies, under-the-radar companies as the window to invest began to open again.