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jerryking : unfair_advantages   15

What You Need to Know to Pick an IPO
April 7, 2019 | WSJ | By Andy Kessler.
Dig up dirt on the competition and board members, and buy to hold long-term.......How do you know which IPOs to buy? No, not to trade—you’d never get it right. Lyft priced at $72, traded at $85 on its first day, then closed at $78, only to fall to $67 on its second day. It’s now $74. I’m talking about buying and holding for a few years. Yes I know, how quaint.

The trick is to read the prospectus. What are you, crazy? That’s a couple hundred pages. Well, not the whole thing. But remember, where the stock trades on its first day is noise....... So understanding long-term prospects are critical. Here are a few shortcuts.

(1) First, glance at the underwriters along the bottom of the cover. On the top line are the banks putting their reputation on the line. If the one on the far left is Goldman Sachs , Morgan Stanley or JPMorgan , you’re probably OK.
(2) open the management section and study the directors. Forget the venture capitalists or strategic partners with board seats—they have their own agendas. Non-employee directors are the ones who are supposed to be representing you, the public investor. And their value depends on their experience.
(3) OK, now figure out what the company does. You can watch the roadshow video, look at prospectus pictures, and skim the offering’s Business section. Now ignore most of that. Underwriters are often terrible at positioning companies to the market.......when positioning companies, only three things matter: a monster market; an unfair competitive advantage like patents, algorithms or a network effect; and a business model to leverage that advantage. Look for those. If you can’t find them, pass. Commodities crumble........read the Management’s Discussion and Analysis. Companies are forced to give detailed descriptions of each of their sectors and products or services. Then flip back and forth to the Financials, looking at the items on the income statement and matching them up with the operations being discussed. Figure out what the company might look like in five years. And use my “10x” rule: Lyft is worth $25 billion—can they make $2.5 billion after-tax someday? Finally there’s the Risk section, which is mostly boilerplate but can contain good dirt on competition.
(4) Put the prospectus away and save it as a souvenir. Try to figure out the real story of the company. Do some digging.
(5) My final advice: Never, ever put in a market order for shares on the first day of an IPO.
10x  advice  algorithms  Andy_Kessler  boards_&_directors_&_governance  business_models  competitive_advantage  deception  due_diligence  howto  IPOs  large_markets  long-term  Lyft  network_effects  noise  patents  positioning  prospectuses  risks  stock_picking  think_threes  Uber  underwriting  unfair_advantages 
april 2019 by jerryking
‘You’re Stupid If You Don’t Get Scared’: When Amazon Goes From Partner to Rival - WSJ
By Jay Greene and Laura Stevens
June 1, 2018

The data weapon
One Amazon weapon is data. In retail, Amazon gathered consumer data to learn what sold well, which helped it create its own branded goods while making tailored sales pitches with its familiar “you may also like” offer. Data helped Amazon know where to start its own delivery services to cut costs, an alternative to using United Parcel Service Inc. and FedEx Corp.

“In many ways, Amazon is nothing except a data company,” said James Thomson, a former Amazon manager who advises brands that work with the company. “And they use that data to inform all the decisions they make.”

In web services, data across the broader platform, along with customer requests, inform the company’s decisions to move into new businesses, said former Amazon executives.

That gives Amazon a valuable window into changes in how corporations in the 21st century are using cloud computing to replace their own data centers. Today’s corporations frequently want a one-stop shop for services rather than trying to stitch them together. A food-services firm, say, might want to better track data it collects from its restaurants, so it would rent computing space from Amazon and use a data service offered by a software company on Amazon’s platform to better analyze what customers order. A small business might use an Amazon partner’s online services for password and sign-on functions, along with other business-management programs.
21st._century  Amazon  AWS  brands  cloud_computing  contra-Amazon  coopetition  data  data_centers  data_collection  data_driven  delivery_services  fear  new_businesses  one-stop_shop  partnerships  platforms  private_labels  rivalries  small_business  strengths  tools  unfair_advantages 
june 2018 by jerryking
Opinion | How to Level the College Playing Field
April 7, 2018 | The New York Times | By Harold O. Levy with Peg Tyre. Mr. Levy is a former chancellor of the New York City public schools. He wrote this article with the education journalist Peg Tyre.

Despite the best efforts of many, the gap between the numbers of rich and poor college graduates continues to grow.

It’s true that access programs take some academically talented children from poor and working-poor families to selective colleges, but that pipeline remains frustratingly narrow. And some colleges and universities have adopted aggressive policies to create economic diversity on campus. But others are lagging. Too many academically talented children who come from families where household income hovers at the American median of $59,000 or below are shut out of college or shunted away from selective universities.....The wealthy spend tens of thousands each year on private school tuition or property taxes to ensure that their children attend schools that provide a rich, deep college preparatory curriculum. On top of that, many of them spend thousands more on application coaches, test-prep tutors and essay editors. ......
(1) Let’s start with alumni. It is common to harbor fond feelings toward your alma mater. But to be a responsible, forward-looking member of your college’s extended community, look a little deeper. Make it your business to figure out exactly who your college serves. What is the economic breakdown of the current student body? Some colleges trumpet data about underrepresented minorities and first-generation students. But many don’t. And either way, there are follow-up questions to ask. How has that mix changed over the past 10 years? What policies are in place to increase those numbers?
(2) Legacy admission must end.
(3) shorten the college tour.
(4) cities and states should help students who come from the middle and working classes with programs that provide intensive advising, money for textbooks and even MetroCards
(5) Refine the first two years of some four-year liberal arts education into an accredited associate degree.
(6) Stop acting like everyone already has the road map to college plotted. The college application system has become costly and baroque. Make it possible for high schools to hire, train and deploy enough guidance counselors.
(7) stop giving to your alma mater. Donors to top universities are getting hefty tax deductions to support a system that can seem calculated to ensure that the rich get richer. If you feel you must give, try earmarking your donation for financial aid for low-income, community college students who have applied to transfer to your alma mater.
Colleges_&_Universities  accessibility  legacies  roadmaps  admissions  op-ed  unfair_advantages  social_mobility  meritocratic  alumni  hereditary  nepotism  education  self-perpetuation  super_ZIPs  opportunity_gaps  college-educated  upper-income  compounded  low-income  elitism  selectivity  follow-up_questions 
april 2018 by jerryking
How We Are Ruining America
JULY 11, 2017 | The New York Times | David Brooks.

Over the past generation, members of the college-educated class have become amazingly good at making sure their children retain their privileged status. They have also become devastatingly good at making sure the children of other classes have limited chances to join their ranks.....Over the past few decades, upper-middle-class Americans have embraced behavior codes that put cultivating successful children at the center of life. As soon as they get money, they turn it into investments in their kids......Richard Reeves of the Brookings Institution recently published a book called “Dream Hoarders” detailing some of the structural ways the well educated rig the system.

The most important is residential zoning restrictions. Well-educated people tend to live in places like Portland, New York and San Francisco that have housing and construction rules that keep the poor and less educated away from places with good schools and good job opportunities.....second structural barrier is the college admissions game. Educated parents live in neighborhoods with the best teachers, they top off their local public school budgets and they benefit from legacy admissions rules, from admissions criteria that reward kids who grow up with lots of enriching travel and from unpaid internships that lead to jobs.....the structural barriers emphasized are less important than the informal social barriers that segregate the lower 80 percent (e.g. being aware of cultural signifiers around, say, gourmet food)

.......American upper-middle-class culture (where the opportunities are) is now laced with cultural signifiers that are completely illegible unless you happen to have grown up in this class (i.e. excelling at being socially graceful). They play on the normal human fear of humiliation and exclusion. Their chief message is, “You are not welcome here.”
David_Brooks  social_mobility  Colleges_&_Universities  socially_graceful  inequality  geographic_sorting  college-educated  super_ZIPs  self-perpetuation  values  opportunity_gaps  upper-income  social_exclusion  books  structural_barriers  admissions  elitism  social_classes  zoning  restrictions  social_barriers  cultural_signifiers  privilege  gaming_the_system  unfair_advantages  ruination  rituals 
july 2017 by jerryking
Conglomerates Didn’t Die. They Look Like Amazon. - The New York Times
Andrew Ross Sorkin
DEALBOOK JUNE 19, 2017

Amazon's purchase of Whole Foods re-opens the debate about conglomerates which supposed to be dead, a relic of a bygone era of corporate America as investors supposedly want smaller, nimbler, more focused companies......Amazon is just one of several digital-economy conglomerates. Alphabet, the parent company of Google, is another. Facebook is quickly becoming a conglomerate, too...... today’s tech-enabled conglomerates, are spending, and often losing, tens of billions of dollars annually on all sorts of projects and acquisitions that may or may not turn out to be successful. But investors are seemingly willing to give these new behemoths a free pass in the name of growth and innovation — until they aren’t.

If there is any lesson from the last breed of industrial conglomerates, it is that there is a natural life cycle to most of them....When it comes to Amazon (or Alphabet, or any of the new conglomerates), the question is whether there is something fundamentally different about these businesses given their grounding in digital information — especially as they expand into complex brick-and-mortar operations like upscale supermarkets.

In an age of big data and artificial intelligence, are businesses that look disparate really similar? And can one company’s leadership really oversee so many different businesses? When does it become too big to manage?...a recent article in the Yale Law Journal made a compelling case that Amazon has built perhaps the ultimate economic mousetrap — one impervious to the natural life cycle of a conglomerate, but one that might ultimately prove to be anticompetitive.

The author, Lina M. Khan, a Yale Law student who has written about antitrust law and competition policy, argued that Amazon had created a “platform market” and can use its size and scale to subsidize its entrance into new businesses through predatory pricing.....The economics of platform markets create incentives for a company to pursue growth over profits,.....Amazon’s role as both a distributor and cloud provider for many of its competitors gives it an unfair advantage. “This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors,”.....Jeff Bezos, is clear. The man who is assembling the 21st century’s most fearsome new conglomerate once explained his view of competition this way: “Your margin is my opportunity.”
conglomerates  Andrew_Sorkin  Jeff_Bezos  Amazon  GE  Jeff_Immelt  unfair_advantages  Whole_Foods  Silicon_Valley  digital_economy  Alphabet  Facebook  lessons_learned  Yale  Charles_Munger  antitrust  competition  Berkshire_Hathaway  platforms  predatory_practices  diversification  FTC  margins  staying_hungry  life_cycle  Lina_Khan  competition_policy 
june 2017 by jerryking
Buying Competitive Advantage - YouTube
"clock speed"
privileged insights = unfair advantages
value-creation plans

Due diligence helps create privileged insight which needs to be tied to a value creation plan that helps you to achieve it.
competitive_advantage  KPMG  proprietary  insights  customer_insights  clock_speed  value_creation  due_diligence  unfair_advantages 
may 2017 by jerryking
Why It’s Not Enough Just to Be Disruptive - The New York Times
By JEREMY G. PHILIPS AUG. 10, 2016

Short-term success may be driven by exceptional execution; long-term value creation requires building a defensible model.

Any microeconomics textbook will tell you there are limited sources of competitive advantage. The most valuable companies combine several reinforcing strands, like scale and customer loyalty.....

While it is hard to stay ahead solely through superior execution over an extended period, it is sometimes enough in the short term to draw a deep-pocketed buyer where there are strong, immediate synergies. Creating enormous value over the long term requires turning a tactical edge into some form of durable advantage....Superior tactical execution can still create real value, particularly where it provides ammunition for a bigger war (like Walmart’s battle with Amazon). And in the long term, value is created not by disruption, but by weaving together advantages (as both Amazon and Walmart have done in different ways) that together create a barrier that is hard to storm.
disruption  value_creation  Gillette  competitive_advantage  execution  books  slight_edge  Amazon  Wal-Mart  microeconomics  short-term  long-term  barriers_to_entry  compounded  kaleidoscopic  unfair_advantages  endurance  synergies  M&A  mergers_&_acquisitions 
august 2016 by jerryking
The rich have advantages that money cannot buy - FT.com
June 8, 2014 7:01 pm
The rich have advantages that money cannot buy
By Lawrence Summers

average affluent child now receives 6,000 hours of extracurricular education, in the form of being read to, taken to a museum, coached in a sport, or any other kind of stimulus provided by an adult, more than the average poor child – and this gap has greatly increased since the 1970s.
Larry_Summers  high_net_worth  moguls  children  The_One_Percent  parenting  super_ZIPs  self-perpetuation  values  opportunity_gaps  college-educated  upper-income  unfair_advantages 
june 2014 by jerryking
Incognito
October 2003 | Report on Business Magazine | by Doug Steiner.

"...He always seemed a step ahead, and he did it by working harder, thinking harder and trading harder—and in ways that the competition couldn't quite grasp."

Steiner's 10 rules for making serious money:

1. Economists say investing is a zero-sum game It isn't. Money moves to smart hands quickly, and lazy investors pay a price. Tiger Woods became the been golfer by practising a lot. How many prospectuses have you read in bed after the news?
2. Really good investors rarely crow. If there is $5 to be made from a trade, there will be loss than $2.50 after you've blabbed about how smart you are. There are traders who quietly take home $10 million a year. They live beside you in a modest house and drive a beat-up Nissan.
3. The best follow rules and they‘re patient. They may not invest for months. One great trader I know wanted to buy a house in a fancy neighbourhood. He spent more than a week in the registry office on his vacation, searching the title on each property in the neighbourhood to find what buyers paid and how much of that was mortgaged, going back 20 wars. He got a good deal. He does the same amount of homework investing.
4. Sharp traders never add to losing positions. Too many headaches.
5. Smart investors. when puzzled about when to sell. wonder if they should buy more. If they don’t think they should buy more,they sell.
6. The most information wins. If you like a company, phone some people who work there. Apply for a job. Try their products. Phone the shipping dock to find out if they're busy.
7. Get a Bloomberg terminal. Bloombergs have more information in them than you can use, but smart people use a lot of it.
8. Following really smart traders around the market is hard. Most have more money to invest in a position than the arbitrage or opportunity can handle. They leave few tracks.
9. Great investors an: like great athletes—they see opportunities that others don’t. Often you don't realize that what they've made the most money on is even fungible.
10. If you can't do it yourself, find someone who likes the foldouts in annual reports more than anything. Their management fees are usually worth it. And they usually don't have slick marketing brochures.
absorptive_capacity  arbitrage  Bay_Street  Bloomberg  dedication  Doug_Steiner  hard_work  hedge_funds  humility  idea_generation  investment_advice  investing  investors  money_management  obscurity  opportunities  overlooked_opportunities  patience  perception  primary_field_research  prospectuses  rules_of_the_game  self-discipline  sleuthing  slight_edge  smart_people  traders  training  unfair_advantages  zero-sum_games 
december 2013 by jerryking
Do we really want elite youth to get more elite? | mathbabe
December 16, 2013 Cathy O'Neil,

Finally, let me just take one last swipe at this idea from the perspective of “it’s meritocratic therefore it’s ok”. It’s just plain untrue that test-taking actually exposes talent. It’s well established that you can get better at these tests through practice, and that richer kids practice more. So the idea that we’re going to establish a level playing field and find minority kids to elevate this way is rubbish. If we do end up focusing more on the high end of test-takers, it will be completely dominated by the usual suspects.

In other words, this is a plan to make elite youth even more elite. And I don’t know about you, but my feeling is that’s not going to help our country overall.
education  PISA  elitism  meritocratic  Cathy_O’Neil  compounded  self-perpetuation  Matthew_effect  opportunity_gaps  privilege  high-end  cumulative  unfair_advantages 
december 2013 by jerryking
Open data is not a panacea | mathbabe
December 29, 2012 Cathy O'Neil,
And it’s not just about speed. You can have hugely important, rich, and large data sets sitting in a lump on a publicly available website like wikipedia, and if you don’t have fancy parsing tools and algorithms you’re not going to be able to make use of it.

When important data goes public, the edge goes to the most sophisticated data engineer, not the general public. The Goldman Sachs’s of the world will always know how to make use of “freely available to everyone” data before the average guy.

Which brings me to my second point about open data. It’s general wisdom that we should hope for the best but prepare for the worst. My feeling is that as we move towards open data we are doing plenty of the hoping part but not enough of the preparing part.

If there’s one thing I learned working in finance, it’s not to be naive about how information will be used. You’ve got to learn to think like an asshole to really see what to worry about. It’s a skill which I don’t regret having.

So, if you’re giving me information on where public schools need help, I’m going to imagine using that information to cut off credit for people who live nearby. If you tell me where environmental complaints are being served, I’m going to draw a map and see where they aren’t being served so I can take my questionable business practices there.
open_data  unintended_consequences  preparation  skepticism  naivete  no_regrets  Goldman_Sachs  tools  algorithms  Cathy_O’Neil  thinking_tragically  slight_edge  sophisticated  unfair_advantages  smart_people  data_scientists  gaming_the_system  dark_side 
december 2013 by jerryking
Larry Fink: “We need confidence back”
Jan. 24 2013 | The Globe and Mail |

BlackRock is huge. Are you getting opportunities that individual investors are not?

That's such an open-ended question that it's kind of meaningless. Is the sky blue? I have offices worldwide. I talk to clients worldwide. That's information, but it's not inside information. It's knowledge from being an active participant. We are serving our clients better by doing that. Do I have a better understanding of what's going on in the markets than an individual? I would hope so.

What were the biggest lessons investors should have learned from the financial crisis?

There were many of them. There was way too much leverage in the system, and this is one reason that economies still are not fully out of their doldrums. Institutions really didn't have a good handle on their risk in 2008, either. You could argue that, rather than too big to fail, some of them were too big to understand, too big to manage. Also, when all that leverage was sucked out at once, the whole world became correlated. That aggravated things. Hedges that people thought would minimize their exposures did not. It took a lot of liquidity and capital supplied by central banks to steady things.

Look, from an equity investor's perspective, the beauty of the world right now, and the negative, is that there's so much uncertainty, such a lack of confidence.

How would you invest $100,000 right now?

It depends on your age. If you're 22 years old, I'd put all of that into stocks. But that's me. Before I'd even answer that question, I'd ask: Tell me, how neurotic are you? Can you live with short-term losses? Can you accept the need to hold? Is your holding period 10 years, 20 years? Are you frightened of volatility? It's a cardinal sin if we think that one size fits all. And if you're looking at your mobile device every day to see what the markets are doing, to see if your $100,000 is up or down, that's not good.
Laurence_Fink  BlackRock  investing  investment_advice  liquidity  market_intelligence  questions  cash_reserves  lessons_learned  mistakes  idle_funds  confidence  problem_definition  unfair_advantages 
january 2013 by jerryking
The Opportunity Gap - NYTimes.com
The Opportunity Gap
By DAVID BROOKS
Published: July 9, 2012

Decades ago, college-graduate parents and high-school-graduate parents invested similarly in their children. Recently, more affluent parents have invested much more in their children’s futures while less affluent parents have not.

They’ve invested more time. Over the past decades, college-educated parents have quadrupled the amount of time they spend reading “Goodnight Moon,” talking to their kids about their day and cheering them on from the sidelines. High-school-educated parents have increased child-care time, but only slightly.

A generation ago, working-class parents spent slightly more time with their kids than college-educated parents. Now college-educated parents spend an hour more every day. This attention gap is largest in the first three years of life when it is most important.

Affluent parents also invest more money in their children. Over the last 40 years upper-income parents have increased the amount they spend on their kids’ enrichment activities, like tutoring and extra curriculars, by $5,300 a year. The financially stressed lower classes have only been able to increase their investment by $480, adjusted for inflation.

As a result, behavior gaps are opening up. In 1972, kids from the bottom quartile of earners participated in roughly the same number of activities as kids from the top quartile. Today, it’s a chasm.
David_Brooks  parenting  achievement_gaps  opportunities  social_classes  purchase_decisions  opportunity_gaps  college-educated  working_class  attention_gaps  affluence  behavior_gaps  super_ZIPs  self-perpetuation  values  unfair_advantages  upper-income  high-school_graduated 
july 2012 by jerryking
The man who must keep Goldman growing
March 5 2008 | Fortune Magazine | By Bethany McLean, editor at
large. Lloyd Blankfein has a lot on his mind. The chief of Wall
Street's most successful investment bank has to outsmart treacherous
markets while balancing the firm's interests with those of its clients.
"Its range of operations gives Goldman unparalleled access to
information and ideas from around the world. "Goldman has more touch
points to more clients around the globe," says Jeff Harte, an analyst at
Sandler O'Neill. "It gives them more opportunities and better
collective intelligence.""
Goldman_Sachs  Lloyd_Blankfein  collective_intelligence  market_intelligence  informational_advantages  CEOs  unfair_advantages 
february 2010 by jerryking

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