I just finished watching Frontline’s documentary, United States of Secrets, which is about Ed. Snowden and the NSA spying on U.S. citizens. This narrative has some parallels with the warnings that were voiced prior to the financial crisis. In both cases a few contrarians learn about wrongdoing, do everything possible to alert the proper authorities (and general public), and no one listens to them until it’s too late.
One of my close friends is looking for an entry level analyst to work with his buy-side firm in Chicago. My friend works at one of Chicago’s most respected investment firms. Unlike other shops, this firm has permanent capital and is only constrained to investing intelligently. They invest in equities, debt, and derivatives around the world and have an amazing track record. He asked me to help him find an analyst and that leads us to this post.
If you are a recent college grad with a passion for investing – have read all of the value investing classics and have a firm grasp on accounting -this would be a dream job for you. Think of this job as a 21st century version of Warren Buffett getting a job with Ben Graham. Meaning, this job would expose you to global equity research as well as other types of research (debt, options, etc) making you a unique and well rounded investor.
You think like a value investor and have common sense.
You already have a firm grasp of accounting and a reasonable understanding of equity valuation.
You prefer long-term career success to a fancy salary and sign-in bonus.
You are not a finance/econ major who believes in efficient markets.
You do not have an MBA.
You are entrepreneurial – meaning you are willing to wear many hats.
Formal Job Description:
A Chicago-based proprietary trading firm is looking to add a junior trader/analyst to the long/short desk. The long/short desk specializes in relative value and event driven trades globally. The role calls for having a fundamental analysis background, being self-motivated and having a passion for the markets. Strong organizational skills and attention to detail are critical. The long/short desk covers many different markets and an eagerness to work off hours is expected.
The ideal candidate has a passion for investing and a Bachelor’s degree with strong record of academic performance.
If you are interested please email the following: Resume175440@gmail.com
I would recommend sending a resume, cover-letter, and an investment writeup.
Disclosure: I did not receive any sort of compensation for this post.
Former bank regulator, William Black, gives a Tedx Talk detailing fraudulent banking practices prior to the financial crisis. I think the most important part of the talk is between minutes 11:00 – 18:48 where Mr. Black talks about the reason for few prosecutions and convictions of fraudulent institutions (& senior managers).
Appraisal Fraud – Inflating the value of an asset above its actual value.
Accounting Control fraud – Is what happens when people who have control of an enterprise (i.e. ceo) use their power and insider status it to defraud. In other words, the weapon of choice to defraud people in finance is accounting.
A recipe for how fraud occurs:
1. Grow like crazy
2. Make crappy loans at a premium yield (justified by committing appraisal fraud & issuing liar loans )
3. Employ extreme leverage
4. Provide only trivial loss reserves.
If you follow the recipe 3 things will happen:
1. Your bank will record record profits.
2. The ceo will be made very wealthy by modern executive compensation.
3. Down the road the bank will suffer catastrophic losses.
Here are two readings sent by Ali & Matt, longtime readers of SimoleonSense. The first piece (via WSJ) covers the dietary crusade against fatty foods pursued by health regulators & nonprofits at the expense of the American public. The second reading is a paper from the New England Journal of Medicine addressing myths, presumptions, and facts about obesity.
“Saturated fat does not cause heart disease”—or so concluded a big study published in March in the journal Annals of Internal Medicine.
“The new study’s conclusion shouldn’t surprise anyone familiar with modern nutritional science, however. The fact is, there has never been solid evidence for the idea that these fats cause disease. We only believe this to be the case because nutrition policy has been derailed over the past half-century by a mixture of personal ambition, bad science, politics and bias.”
“One consequence is that in cutting back on fats, we are now eating a lot more carbohydrates—at least 25% more since the early 1970s. Consumption of saturated fat, meanwhile, has dropped by 11%, according to the best available government data. Translation: Instead of meat, eggs and cheese, we’re eating more pasta, grains, fruit and starchy vegetables such as potatoes. Even seemingly healthy low-fat foods, such as yogurt, are stealth carb-delivery systems, since removing the fat often requires the addition of fillers to make up for lost texture—and these are usually carbohydrate-based.”
“The problem is that carbohydrates break down into glucose, which causes the body to release insulin—a hormone that is fantastically efficient at storing fat. Meanwhile, fructose, the main sugar in fruit, causes the liver to generate triglycerides and other lipids in the blood that are altogether bad news. Excessive carbohydrates lead not only to obesity but also, over time, to Type 2 diabetes and, very likely, heart disease.”
“The real surprise is that, according to the best science to date, people put themselves at higher risk for these conditions no matter what kind of carbohydrates they eat. Yes, even unrefined carbs.”
“The reality is that fat doesn’t make you fat or diabetic. Scientific investigations going back to the 1950s suggest that actually, carbs do.”
“The second big unintended consequence of our shift away from animal fats is that we’re now consuming more vegetable oils….”
“This shift seemed like a good idea at the time, but it brought many potential health problems in its wake. In those early clinical trials, people on diets high in vegetable oil were found to suffer higher rates not only of cancer but also of gallstones. And, strikingly, they were more likely to die from violent accidents and suicides.”
“Yet paradoxically, the drive to get rid of trans fats has led some restaurants and food manufacturers to return to using regular liquid oils—with the same long-standing oxidation problems. These dangers are especially acute in restaurant fryers, where the oils are heated to high temperatures over long periods.”
“The past decade of research on these oxidation products has produced a sizable body of evidence showing their dramatic inflammatory and oxidative effects, which implicates them in heart disease and other illnesses such as Alzheimer’s. Other newly discovered potential toxins in vegetable oils, called monochloropropane diols and glycidol esters, are now causing concern among health authorities in Europe.”
“Cutting back on saturated fat has had especially harmful consequences for women, who, due to hormonal differences, contract heart disease later in life and in a way that is distinct from men.”
“Sticking to these guidelines has meant ignoring growing evidence that women on diets low in saturated fat actually increase their risk of having a heart attack. The “good” HDL cholesterol drops precipitously for women on this diet (it drops for men too, but less so). The sad irony is that women have been especially rigorous about ramping up on their fruits, vegetables and grains, but they now suffer from higher obesity rates than men, and their death rates from heart disease have reached parity.”
Reading 2: Myths, Presumptions, and Facts about Obesity
“When the public, mass media, government agencies, and even academic scientists espouse un- supported beliefs, the result may be ineffective policy, unhelpful or unsafe clinical and public health recommendations, and an unproductive allocation of resources….We review seven myths about obesity, along with the refuting evidence.”
Myth 1: Small sustained changes in energy intake or expenditure will produce large, long-term weight changes.
“Recent studies have shown that individual variability affects changes in body composition in response to changes in energy intake and expenditure,7 with analyses pre- dicting substantially smaller changes in weight (often by an order of magnitude across extended periods) than the 3500-kcal rule does.5,7 For ex- ample, whereas the 3500-kcal rule predicts that a person who increases daily energy expenditure by 100 kcal by walking 1 mile (1.6 km) per day will lose more than 50 lb (22.7 kg) over a period of 5 years, the true weight loss is only about 10 lb (4.5 kg),6 assuming no compensatory in- crease in caloric intake, because changes in mass concomitantly alter the energy requirements of the body. ”
Myth 2: Setting realistic goals for weight loss is important, because otherwise patients will become frustrated and lose less weight.
“Although this is a reasonable hypothesis, empirical data indicate no consistent negative association between ambitious goals and program completion or weight loss.8 Indeed, several studies have shown that more ambitious goals are sometimes associated with better weight-loss outcomes.Furthermore, two studies showed that interventions designed to improve weight-loss outcomes by altering unrealistic goals resulted in more realistic weight-loss expectations but did not improve outcomes.”
Myth 3: Large, rapid weight loss is associated with poorer long-term weight-loss outcomes, as compared with slow, gradual weight loss.
“Within weight-loss trials, more rapid and greater initial weight loss has been associated with lower body weight at the end of long-term follow-up….Although it is not clear why some obese persons have a greater initial weight loss than others do, a recommendation to lose weight more slowly might interfere with the ultimate success of weight-loss efforts.”
Myth 4: It is important to assess the stage of change or diet readiness in order to help patients who request weight-loss treatment.
“Readiness does not predict the magnitude of weight loss or treatment adherence among per- sons who sign up for behavioral programs or who undergo obesity surgery.”
Myth 5: Physical-education classes, in their current form, play an important role in re- ducing or preventing childhood obesity.
“Physical education, as typically provided, has not been shown to reduce or prevent obesity. Findings in three studies that focused on expanded time in physical education12 indicated that even though there was an increase in the number of days children attended physical education classes, the effects on body-mass index (BMI) were inconsistent across sexes and age groups.”
Myth 6: Breast-feeding is protective against obesity.
“A World Health Organization (WHO) report states that persons who were breast-fed as in- fants are less likely to be obese later in life and that the association is “not likely to be due to publication bias or confounding.”14 Yet the WHO, using Egger’s test and funnel plots, found clear evidence of publication bias in the published lit- erature it synthesized.15 Moreover, studies with better control for confounding (e.g., studies in- cluding within-family sibling analyses) and a randomized, controlled trial involving more than 13,000 children who were followed for more than 6 years16 provided no compelling evidence of an effect of breast-feeding on obesity.”
Myth 7: A bout of sexual activity burns 100 to 300 kcal for each participant.
“The energy expenditure of sexual intercourse can be estimated by taking the product of activity intensity in metabolic equivalents (METs),18 the body weight in kilograms, and time spent. For example, a man weighing 154 lb (70 kg) would, at 3 METs, expend approximately 3.5 kcal per minute (210 kcal per hour) during a stimulation and orgasm session. This level of expenditure is similar to that achieved by walking at a moderate pace (approximately 2.5 miles [4 km] per hour). Given that the average bout of sexual activity lasts about 6 minutes,19 a man in his early-to- mid-30s might expend approximately 21 kcal during sexual intercourse. Of course, he would have spent roughly one third that amount of energy just watching television, so the incremental benefit of one bout of sexual activity with respect to energy expended is plausibly on the order of 14 kcal.”
Presumptions about Obesity
“Just as it is important to recognize that some widely held beliefs are myths so that we may move beyond them, it is important to recognize presumptions, which are widely accepted beliefs that have neither been proved nor disproved, so that we may move forward to collect solid data to support or refute them. Instead of attempting to comprehensively describe all the data peripherally related to each of the six presumptions shown in Table 2, we describe the best evidence.”
Things we know about with reasonable confidence.
“Our proposal that myths and presumptions be seen for what they are should not be mistaken as a call for nihilism. There are things we do know with reasonable confidence. Table 3 lists nine such facts and their practical implications for public health, policy, or clinical recommendations.”
I just finished reading Fred Turner’s book, From Counter Culture to Cyberculture. Turner’s book explores the relationship between systems thinking/cybernetics/counterculture & silicon valley/digital utopianism.
Here is a quick synopsis - via The University of Chicago Press
In the early 1960s, computers haunted the American popular imagination. Bleak tools of the cold war, they embodied the rigid organization and mechanical conformity that made the military-industrial complex possible. But by the 1990s—and the dawn of the Internet—computers started to represent a very different kind of world: a collaborative and digital utopia modeled on the communal ideals of the hippies who so vehemently rebelled against the cold war establishment in the first place.
From Counterculture to Cyberculture is the first book to explore this extraordinary and ironic transformation. Fred Turner here traces the previously untold story of a highly influential group of San Francisco Bay–area entrepreneurs: Stewart Brand and the Whole Earth network. Between 1968 and 1998, via such familiar venues as the National Book Award–winning Whole Earth Catalog, the computer conferencing system known as WELL, and, ultimately, the launch of the wildly successful Wired magazine, Brand and his colleagues brokered a long-running collaboration between San Francisco flower power and the emerging technological hub of Silicon Valley. Thanks to their vision, counterculturalists and technologists alike joined together to reimagine computers as tools for personal liberation, the building of virtual and decidedly alternative communities, and the exploration of bold new social frontiers.
Shedding new light on how our networked culture came to be, this fascinating book reminds us that the distance between the Grateful Dead and Google, between Ken Kesey and the computer itself, is not as great as we might think.
If this sounds interesting, I would recommend watching this video about the book (here). Or, if you prefer a text based introduction, read this piece via Edge.org which serves as a decent prologue/background for Turner’s book.”
Finally, watch Fred’s talk on the Burning Man Festival where he -”discusses his opinions on the social phenomenon of Burning Man and how he thinks the ideals of the festival apply to the marketplace that is evolving in our society, specifically in the Silicon Valley.”