Weekly Roundup 26: A Curated Linkfest For The Smartest People On The Web
If you like my weekly roundup I highly recommend you signup for our free weekly wisdom newsletter via our homepage
Click The Title To Access The Articles
Feature Post: The Alfin blog has found something very interesting. The Khan Academy YouTube. The goal and ongoing mission of Khan Academy is to provide videos to “help anyone learn anything they want to learn”. As of today, there are 821 free videos (lectures) on the Khan Academy channel. Please visit the khan academy here. Or Visit the Khan Academy’s You Tube Channel Here. – Thank you Alfin Blog.
Feature Post: Genius: The Modern View – Via NYT – Some people live in romantic ages. They tend to believe that genius is the product of a divine spark. They believe that there have been, throughout the ages, certain paragons of greatness — Dante, Mozart, Einstein — whose talents far exceeded normal comprehension, who had an other-worldly access to transcendent truth, and who are best approached with reverential awe.We, of course, live in a scientific age, and modern research pierces hocus-pocus. In the view that is now dominant, even Mozart’s early abilities were not the product of some innate spiritual gift. His early compositions were nothing special. They were pastiches of other people’s work. Mozart was a good musician at an early age, but he would not stand out among today’s top child-performers.
1. Paul Wilmott Interview in The Guardian – Via Money Science & The Guardian. – Paul Wilmott, one of the world’s leading financial mathematicians, looks like a 30-something, although he is 49. Mathematics keeps him in shape, he says, relaxing in his jeans and trainers in his Bayswater flat. Wilmott has made his name and fortune by applying mathematics to finance and now claims to run the biggest “quantitative analysis” website in the world. So-called “quants” combine maths and finance to produce many of the models that underlie the complex derivatives blamed for causing the credit crunch.
2. Daniel Goleman: On Ecological Intelligence – Via Daniel Goleman.info – There’s a new kind of math for the environmentally concerned, one that answers those everyday eco-conundrums like, Which is better: a reusable stainless steel water bottle, or those throwaway plastic ones? The answers come from life cycle assessment (or LCA), the method used by industrial ecologists — a discipline that blends industrial engineering and chemistry with environmental science and biology — to assess how man-made systems impact natural ones. LCAs tells us that buying food in one store that’s been shipped in bulk leaves a smaller carbon footprint than driving around town to the local bakery, farmer’s market, and dairy. Or that the better wine choice for those living east of Columbus, Ohio, is a French Bordeaux, and for those to the west it’s the Napa Valley.
3. Brain Games: Do They Really Work? – Via Scientific American – Do you misplace your keys or regularly miss appointments? Do you often forget the names of people you know well? Do you feel like your memory is slowly getting worse? If so, then you may find yourself considering those brain games advertised everywhere. Sales pitches such as “where the sweat is figurative, but results are real” and “your brain will thank you” are amusingly alluring. But you may find yourself wondering whether they are really worth the time and expense. You shell out the money, play a few rounds and your brain will start spitting out names, dates and pin numbers like you’re 18 again—right?
4. Ponzi Schemes in the Caribbean – Via The IMF – In several Caribbean states, unregulated investment schemes grew quickly in recent years by claiming unusually high monthly returns and through a system of referrals by existing members. These are features shared with traditional Ponzi schemes and pyramid schemes. This paper describes the growth of such schemes, their subsequent collapse, and the policy response of regulators, and presents key policy lessons. The analysis and recommendations draw on country experiences in the Caribbean, and in such diverse countries as the United States, Colombia, Lesotho, and Albania.
5. M&A Strategies for Bankruptcy and Distressed Companies – Via Harvard Law School – The beginning of the credit crisis in mid-2007 and other recent economic trends have increased the number of distressed companies that are seeking to sell assets as part of their plans to improve their financial condition or undergo other corporate debt restructurings. Based on recent financial data, the number of distressed companies soared from the fall of 2007 to the summer of 2008, as have the number of downgrades of corporate bonds.
6. Genesis of the debt disaster – Via FT – In the 1990s, a young team at Wall Street investment bank JP Morgan pioneered a new way of making money – credit derivatives. Within a decade, the market for these exotic securities had exploded to more than $12,000bn – and some people later blamed them for fuelling the global financial fiasco. In the first of two extracts from her book, Fool’s Gold, the FT’s Gillian Tett reveals how the innovation genie was first let out of the bottle – and eventually devoured the system, to the horror of its creators.
7. The Social Cost of Fraud and Bankruptcy – Via HBR – Following one of the most complicated and closely watched corporate reorganizations in the history of U.S. bankruptcy law, WorldCom is now poised to emerge from Chapter 11 with a confirmed reorganization plan. A beneficiary of laws meant to preserve sound companies in temporary distress, WorldCom stands to gain undeserved advantage from its misdeeds. The firm—once greatly admired as the low-cost price setter in the hypercompetitive telecommunications industry—was in reality an elaborate work of fiction. Through fraudulent underreporting of operating expenses, the company concealed losses of more than $12 billion from public view.
8.What does a dollar a year salary mean? Many ‘No-Pay’ CEOs Actually Were Richly Compensated – Via Finance Professor Blog – “When a corporate chief executive voluntarily forgoes a salary or takes $1 a year in pay, it’s largely symbolic in many cases, according to a report released by The Corporate Library. In 41 companies where the chief executive had either no base salary or a salary of $1 for the year, as well as no cash bonus, 21 received some form of “all other compensation” payment, the study—of 2008 proxy filings—released Friday, April 17, found. And the 18 executives who voluntary went without base salary had a combined total of nearly $6 billion in company stock alone.”
9. Entrepreneurial DNA: Do You Have it? – Via Anthony Tjan – Over my years as an entrepreneur and now venture capitalist, I am struck by the number of people who say they want to be an entrepreneur. I am also struck by how evident it is that they don’t have “entrepreneurial DNA.” Entrepreneurship is rarely a planned journey. I recently met with a b-school student who was interviewing at our firm. “I have a 10 year plan towards becoming an entrepreneur,” he told me. Really? A 10-year plan to become an entrepreneur? What’s that all about? He wasn’t the only person to say such things to me. Here are some of the other excuses I have heard from people when I asked them why they weren’t being an entrepreneur, despite their professed love for it. “I want to spend some years learning first, and building a base of security.” “I do not have access to the capital or resources to start.” “I know I want to be an entrepreneur, I just don’t have the ideas.”
10. Earnings Quality and Ownership Structure: The Role of Private Equity Sponsors – Via HBS – This study explores how firms’ ownership structures affect their earnings quality and long-term performance. Focusing on a unique sample of private firms for which there is financial data available in the years before and after their initial public offering (IPO), I differentiate between those that have private equity sponsorship (PE-backed firms) and those that do not (non-PE-backed firms). The findings indicate that PE-backed firms generally have higher earnings quality than those that do not have PE sponsorship, engage less in earnings management, and report more conservatively both before and after the IPO. Further, PE-backed firms that are majority-owned by PE sponsors exhibit superior long-term stock price performance after they go public. These results stem from the professional ownership, tighter monitoring, and reputational considerations exhibited by PE sponsors.
11. Book Reviews – Can We Make America Smarter? – Via NYRB – However the current economic crisis is resolved, the future living standard of Americans will turn on how productive we are and how much other countries will want what we create. The challenge goes beyond restructuring institutions. More crucial is whether we will be astute enough to hold our own in a world more competitive than we have ever known.
12. Empire-Building or Bridge-Building? Evidence from New CEOs’ Internal Capital Allocation Decisions – Via Oxford Journals – This article investigates how the job histories of CEOs influence their capital allocation decisions when they preside over multidivisional firms. I find that, after CEO turnover, divisions not previously affiliated with the new CEO receive significantly more capital expenditures than divisions through which the new CEO has advanced. The pattern of reverse-favoritism in capital allocation is more pronounced if the new CEO has less authority or if the unaffiliated divisions have more bargaining power. I find evidence that having a specialist CEO negatively affects segment investment efficiency. The results suggest that new specialist CEOs use the capital budget as a bridge-building tool to elicit cooperation from powerful divisional managers in previously unaffiliated divisions.
13. Financial Constraints, Investment, and the Value of Cash Holdings – Via Oxford Journals -Previous studies report that cash holdings are more valuable for financially constrained firms than for unconstrained firms. We examine (i) why this is so and (ii) why some constrained firms appear to hold too little cash. Our results indicate that greater cash holdings are associated with higher levels of investment for constrained firms with high hedging needs and that the association between investment and value is stronger for constrained firms than for unconstrained firms. These findings imply that higher cash holdings allow constrained firms to undertake value-increasing projects that might otherwise be bypassed. We further find that some constrained firms exhibit low cash holdings because of persistently low cash flows. Overall, our findings support the view that greater cash holdings of constrained firms are a value-increasing response to costly external financing.
14. Video: Distorting vital information in managerial decision making – Via FT & Chicago GSB – Professor Of Behavioural science at University of Chicago shows how we unconsciously distort or omit vital information when choosing what to do.
15. Chrysler Files Bankruptcy – Part II: Testing The Limits Of Section 363 Sales – Via Bankruptcy Litigation Blog – “Be careful what you wish for,” the old saying goes, and so too for those who wished for Chrysler to file for bankruptcy in order to achieve their objectives. Chrysler and all its major constituents will argue that the house is on fire and absent a quick sale on the agreed-upon terms (well summarized in this Treasury release), asset values (whatever’s left of them) will be irrevocably destroyed. The dissident lenders will argue that the fire is an ingenious illusion meant to force them to accept a deal that denies them their first priority rights to Chrysler’s assets and is merely a disguised plan of reorganization that a Court has no authority to approve in the 363 sale context.
16. Video: LORD OF THE CLOUD – John Markoff and Clay Shirky Talk to David Gelernter – Via Edge.Org – The central idea we were working on was this idea of de-localized information — information for which I didn’t care what computer it was stored on. It didn’t depend on any particular computer. I didn’t know the identities of other computers in the ensemble that I was working on. I just knew myself and the cybersphere, or sometimes we called it the tuplesphere, or just a bunch of information floating around. We used the analogy — we talked about helium balloons. We used a million ways to try and explain this idea.
17. The Age of Pandemics – Via WSJ – The threat of deadly new viruses is on the rise due to population growth, climate change and increased contact between humans and animals. What the world needs to do to prepare. In 1967, the country’s surgeon general, William Stewart, famously said, “The time has come to close the book on infectious diseases. We have basically wiped out infection in the United States.” This premature victory declaration, perhaps based on early public health victories over 19th-century infectious diseases, has entered the lore of epidemiologists who know that, if anything, the time has come to open the book to a new and dangerous chapter on 21st-century communicable diseases.
18. Birthrates & Trends The World’s New Numbers – by Martin Walker – Via Wilson Center & Paul Kedrosky – “Here lies Europe, overwhelmed by Muslim immigrants and emptied of native-born Europeans.” That is the obituary some pundits have been writing in recent years. But neither the immigrants nor the Europeans are playing their assigned roles. Something dramatic has happened to the world’s birthrates. Defying predictions of demographic decline, northern Europeans have started having more babies. Britain and France are now projecting steady population growth through the middle of the century. In North America, the trends are similar. In 2050, according to United Nations projections, it is possible that nearly as many babies will be born in the United States as in China. Indeed, the population of the world’s current demographic colossus will be shrinking. And China is but one particularly sharp example of a widespread fall in birthrates that is occurring across most of the developing world, including much of Asia, Latin America, and the Middle East. The one glaring exception to this trend is sub-Saharan Africa, which by the end of this century may be home to one-third of the human race.
19. Google co-founder Larry Page delivers the Spring commencement address to the 2009 graduating class of the University of Michigan – Via You Tube & Paul Kedrosky
20. Advice From Pros To Journalism Graduates – Via Media Shift – It’s an anxious time to be graduating from journalism school. The economy is in the tank and newsrooms are being decimated. But yet, it is also a great time to be a journalist, with more news and information available than ever before and more ways than ever to reach audiences. At the recent International Symposium on Online Journalism at the University of Texas at Austin, I asked a range of professionals what advice they had for journalism graduates entering the job market.
21. The Carnivore’s Dilemma– Via Good – Seeing as we’ve been given to meat-eating discussions of late, it seems appropriate to mention today’s Green Lantern post, which answers the question of which meat products do the most environmental harm. The Lantern cites both Michael Pollan’s recent work and a 2006 United Nations study, which found that the cattle industry “uses more land than any other human activity; it’s also one of the largest contributors to water pollution and a bigger source of greenhouse-gas emissions than all the world’s trains, planes, and automobiles combined.”
22. Why Stock Price Volatility Should Never Be A Surprise Even In The Long Run – Via Knowledge At Wharton – Stock market investors have suffered deep losses in the past 18 months, challenging the belief that stocks are the best long-term investments. Indeed, Wharton finance and economics professor Robert Stambaugh recently coauthored a paper titled, “Are Stocks Really Less Volatile in the Long Run?,” which suggests that equities are subject to bigger price swings than previously understood. The research adds a new perspective to the work of Wharton finance professor Jeremy J. Siegel, author of the book, Stocks for the Long Run, which says stock returns more than offset risks if you stay with the market through its ups and downs. In a recent interview with Knowledge@Wharton, the professors described their views about the market’s long-term behavior.
23. From Car PLans To Car Boats – Via Britannica Blog – Now Gibbs Technologies has announced that they may soon start shipping their Aquada “boatmobile” to locations within the United States. “This Aquada car is part boat part car and is just a really cool piece of technology. The car can operate as a normal car, but then the wheels will retract and you can take it for a boat ride at speeds of up to 30 miles per hour across the water.”