via inc.com
This is a great example of how financial considerations can motivate an acquisition without being the deciding factor
Monday, June 28, 2010
Wednesday, June 16, 2010
Monday, March 8, 2010
An Outlook Mystery, Solved: Why Some Emails Have Inline Attachments While Others Have an Attachment Field
For years I have been stumped by one of the small mysteries of Outlook: 99% of the time my emails would have their attachments in the attachment field. The other 1% of the time the attachments would be inline with the text (the two possibilities are illustrated below).
I can recall one of my consulting teams back in 2005 trying to figure out why this happens, and have wondered on many occasions why this happens. I finally came across the answer: It turns out that if the email is in HTML or plain text formal, the attachment goes in the attachment field, but if it's in RTF it goes inline.
Go back and check every email you've ever had w/ an attachment inline and you will see that they were in RTF format. Emails sent as replies to calendar items in outlook are RTF format btw, which explains why they have inline attachments.
Sunday, February 28, 2010
Mixed Security Metaphors
Heard on the NYC subway system: "Backpacks and other electronic items are subject to search."------------------------
Sent from my phone. Pls excuse tpyos & brevity
Sent from my phone. Pls excuse tpyos & brevity
Sunday, February 7, 2010
How to Bike When It's 17 Degrees Outside
My blog description claims to cover cycling, so here goes my first post on the subject.
This morning when I left the house on my bike it was 17 degrees Fahrenheit (-8 Celsius). I normally do not bike when it gets below freezing, but my love for two-wheeled transport led me to finally find a solution. It started with wool socks and a sweater in addition to my usual coat, but the real trick was in pulling out some mountaineering gear that I had laying around from a trip up Kilimanjaro. I put a balaclava on top of my formerly useless $3 hat from Walgreens, making a potent combination, pulled on some wool hiking socks, and put some heavy-duty North Face ski gloves on top of my regular fleece gloves. With two hats, two pairs of gloves, a fleece scarf and wool socks, I was so toasty that I was sweating despite the chill. The best part was that the balaclava caught my warm breath on my exhales and trapped it inside, keeping my face warm. I don't know how well that would have worked if I had been out long enough for the moisture to start freezing, but in 30-minute max runs from point-to-point it was never an issue. The only downside was that my visibility through the balaclava was not great, and as a result I was constantly trying to shift it around to see better. I will probably buy a new one soon with a larger eye hole. I was also told by a few friends that I looked like a terrorist, but that could be either a positive or negative depending on the situation. I had one run-in with a guy in an SUV who clearly was about to yell at me for almost cutting me off, but you could see him take one look at me with my black ski-mask and black trenchcoat, think better of it, and drive off. Clearly having people slightly afraid of you on the New York streets is not entirely a bad thing :-)
Thursday, January 14, 2010
The Definition of Speculation, Part II (it gets worse)
In my last post I defined speculation as "buying commodities for the capital gain from anticipated increases in their prices rather than for their use," following Kindleberger's Manias, Panics, and Crashes.
According to Hyman Minsky however, speculative is only the middle type of three types of finance: hedge, speculative, and Ponzi. Minsky, for those unfamiliar, is the late American economist whose genius was unappreciated in his lifetime but has suddenly become quite trendy to quote in relation to the recent economic bubble and crash.
Minsky's three types of finance are defined in reference to debt that the "investor" is assumed to have taken to fund his investments. In other words, it does not cover self-funding investments. His model is nonetheless quite useful, as the reality is that most economic activity is funded by debt, be it mortgages, small-business loans, or larger bond floats that are done by major corporations or governments.
Hedge finance, then, is defined as purchasing an investment asset for which the anticipated operating income (rent, dividends, etc.) is sufficient to pay both the interest and principal on the debt incurred to acquire the asset. Regardless of what happens to the value of the asset, the hedge financier is covered. He might not make a killing, but he will not go bankrupt; he is "hedged."
Speculative finance is where the anticipated operating income is sufficient only to pay the interest, but not the principal, on the debt incurred to acquire the asset. The speculative financier can only pay down the principal and avoid bankruptcy by borrowing more money, in the form of new loans or renegotiated terms with the original lender. He is OK as long as the asset value appreciates and he is able to get new loans, but if the asset value depreciates (as it inevitably does when a bubble bursts), he will have a liquidity crunch and both be forced to sell at a loss and potentially face other consequences of not being able to pay back his loan.
The final type of finance, Ponzi finance, is where the anticipated operating income does not even cover the interest. The Ponzi financier finds himself falling into ever greater indebtedness as he borrows new money to pay merely the interest on the old, and will find himself in deep trouble as soon as others realize what he is up to, unless he is so lucky that the asset value appreciates fast enough to allow him to sell and pay back all of his creditors.
According to Minsky, when the economy sours, some of the individuals and firms in the hedge category get pushed to the speculative category as their income goes down, while some of the players in the speculative category find themselves in the Ponzi category. This is precisely what happened in 2008-9 with many of the banks who had liquidity crises as their payments from their CDOs started shrinking as defaults rose.
The original Ponzi, by the way, was not particularly successful at his eponymous scheme, only managing to keep his hustle going for a few months before it crashed.
According to Hyman Minsky however, speculative is only the middle type of three types of finance: hedge, speculative, and Ponzi. Minsky, for those unfamiliar, is the late American economist whose genius was unappreciated in his lifetime but has suddenly become quite trendy to quote in relation to the recent economic bubble and crash.
Minsky's three types of finance are defined in reference to debt that the "investor" is assumed to have taken to fund his investments. In other words, it does not cover self-funding investments. His model is nonetheless quite useful, as the reality is that most economic activity is funded by debt, be it mortgages, small-business loans, or larger bond floats that are done by major corporations or governments.
Hedge finance, then, is defined as purchasing an investment asset for which the anticipated operating income (rent, dividends, etc.) is sufficient to pay both the interest and principal on the debt incurred to acquire the asset. Regardless of what happens to the value of the asset, the hedge financier is covered. He might not make a killing, but he will not go bankrupt; he is "hedged."
Speculative finance is where the anticipated operating income is sufficient only to pay the interest, but not the principal, on the debt incurred to acquire the asset. The speculative financier can only pay down the principal and avoid bankruptcy by borrowing more money, in the form of new loans or renegotiated terms with the original lender. He is OK as long as the asset value appreciates and he is able to get new loans, but if the asset value depreciates (as it inevitably does when a bubble bursts), he will have a liquidity crunch and both be forced to sell at a loss and potentially face other consequences of not being able to pay back his loan.
The final type of finance, Ponzi finance, is where the anticipated operating income does not even cover the interest. The Ponzi financier finds himself falling into ever greater indebtedness as he borrows new money to pay merely the interest on the old, and will find himself in deep trouble as soon as others realize what he is up to, unless he is so lucky that the asset value appreciates fast enough to allow him to sell and pay back all of his creditors.
According to Minsky, when the economy sours, some of the individuals and firms in the hedge category get pushed to the speculative category as their income goes down, while some of the players in the speculative category find themselves in the Ponzi category. This is precisely what happened in 2008-9 with many of the banks who had liquidity crises as their payments from their CDOs started shrinking as defaults rose.
The original Ponzi, by the way, was not particularly successful at his eponymous scheme, only managing to keep his hustle going for a few months before it crashed.
Sunday, January 10, 2010
The Definition of Speculation, as Opposed to Investing (by some really smart economists)
In a book so mind-blowingly insightful that I had to stop marking because the whole page was turning red, I read the most concise, precise, comprehensive, and accurate definition for speculation: "buying commodities for the capital gain from anticipated increases in their prices rather than for their use."
As an example, buying oil or wheat to have fuel or grain is not speculation, but buying them to trade them to someone else after their value rises is. Note that it is only speculation if the gain on the commodity is a capital one rather than an operating (or ordinary income) one. In other words, if you are a distributor, retailer, broker, or trader of oil or wheat, you are not speculating. The precise difference between a capital gain and an ordinary gain on a commodity can be fuzzy in some cases, but in general is quite clear.
Once speculation is defined that way, the next step is to consider the special case where the commodity is a stock. Stock is definitely a commodity: one share of a given class of stock in a given company is completely exchangeable for another share of the same class of stock in the same company. Most other securities are commodities as well.
In the case of a security, a capital gain is the result of income from selling the security at a higher price than paid for it. Operating income is the dividends or payments from the security during the period that it is held.
This definition might miss a few cases in its simplicity, such as growth stocks that don't pay dividends, but it's pretty much spot on.
The books is Manias, Panics, and Crashes by Charles Kindleberger. Kindleberger was a professor of economics at MIT for 30 years, and his book is widely cited by other books on market cycles such as Bull! by Maggie Mahar, which is where I read about it.
As an example, buying oil or wheat to have fuel or grain is not speculation, but buying them to trade them to someone else after their value rises is. Note that it is only speculation if the gain on the commodity is a capital one rather than an operating (or ordinary income) one. In other words, if you are a distributor, retailer, broker, or trader of oil or wheat, you are not speculating. The precise difference between a capital gain and an ordinary gain on a commodity can be fuzzy in some cases, but in general is quite clear.
Once speculation is defined that way, the next step is to consider the special case where the commodity is a stock. Stock is definitely a commodity: one share of a given class of stock in a given company is completely exchangeable for another share of the same class of stock in the same company. Most other securities are commodities as well.
In the case of a security, a capital gain is the result of income from selling the security at a higher price than paid for it. Operating income is the dividends or payments from the security during the period that it is held.
This definition might miss a few cases in its simplicity, such as growth stocks that don't pay dividends, but it's pretty much spot on.
The books is Manias, Panics, and Crashes by Charles Kindleberger. Kindleberger was a professor of economics at MIT for 30 years, and his book is widely cited by other books on market cycles such as Bull! by Maggie Mahar, which is where I read about it.
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