“You’re looking at one loss that can give you a hit of $400 million, and annual market premium is $750 million. One loss that burns more than 50% of the annual income for the entire market.”
Monitoring Trader’s Emotions
Legal Insider Trading Biotech
Let’s say a biotech CEO learns that, in two days, her company is going to announce clinical results that will surely boost its stock price. She can’t legally buy up a bunch of the company’s shares right then — that would be the bad kind of insider trading — but she can cancel a scheduled 10b5-1 sale to avoid dumping stock just before its price soars.
https://www.statnews.com/2016/08/08/insider-trading-biotech/
Avoiding Taxes like a Corporation
Coke’s effective tax rate, globally, was listed at just 15 percent (2007-2012) or $9.4 billion, far below the nominal top tax rate of 35 percent.
Management Consulting
Former Management Consultant describes the management consultants. I had an experience early on in my career where someone describes consulting as a process of telling you what you already know and then charging a lot of money for it.
I think it is still an excellent early career choice for most people, the individuals who went into consulting seem to have the most ‘exit’ opportunities and most diverse networks, which is ultimately more important than skill or aptitude, even in trading.
And if anyone remembers the EPICLY timed Bankers vs Consultants rap battle:
Soon after, the global economy collapsed. #Shocker
Tax Tips
When you get rich you’re going to need these tips. Than you can donate to the site!
Edit: Related to taxes, an impressive example of the power of compounding and deferred taxes:
Imagine that Berkshire had only $1, which we put in a security that doubled by year-end and was then sold. Imagine further that we used the after-tax proceeds to repeat this process in each of the next 19 years, scoring a double each time. At the end of the 20 years, the 34% capital gains tax that we would have paid on the profits from each sale would have delivered about $13,000 to the government and we would be left with about $25,250. Not bad. If, however, we made a single fantastic investment that itself doubled 20 times during the 20 years, our dollar would grow to $1,048,576. Were we then to cash out, we would pay a 34% tax of roughly $356,500 and be left with about $692,000.
Bootleggers & Baptists
Politicians & Administrators as brokers between interest groups. Very important topic:
https://en.wikipedia.org/wiki/Bootleggers_and_Baptists
CEO Scam
Very interesting article on French scam artist and Chinese Money Laundering efforts:
http://www.cbsnews.com/news/gilbert-chikli-china-2-billion-con-game/
“The brain is the world’s most dangerous weapon,” Chikli said. “I learned not to control but to try to make someone believe that I was right. And from that moment, all the doors opened.”
Chikli calls this “the gift.” With it, extracting millions from some of the world’s best educated and most privileged can be a matter of a single phone call.
Machiavelli of Maryland
h/t @timferris for posting this article. Pretty fascinating look into a political & military strategist.
“strategy is about looking for turning points. Politics is too predictable. Look at Hillary. She is an empty carapace with ambition rattling inside. You can predict everything she does. Strategy is about being unpredictable.”
“But doesn’t that unpredictability become predictable?” I asked. “What happens when every army in the world abides by strategic logic?”
“But they never will,” said Luttwak, “because most people cannot master their emotions. Above all, strategy is about mastering your emotions.” And the emotions of others, he might have added.
“Abundance” All Over Again
@ReformedBroker piece entitled “Abundance” has really been resonating in my Twitter stream and for good reason. It’s an excellent piece but somehow oddly familiar to me. A little google search and I found it’s actually a theme written quite extensively by @todd_harrison from Minyanville.
His tag line is that we have deflation in things we DON’T NEED (TV’s, phones, NetFlix, Facebook) and inflation in things we NEED (education, healthcare, housing) He calls it “inflastagdeflation”.
That article was written in 2007 and he has continued to write about it, from 2014 with an excellent chart:
I’m still trying to wrap my head around WHY exactly this malinvestment occurs?
Edit: I wrote a long, winding hypothesis and decided to delete it. I’d rather hear your thoughts/comments/links.
LargeCapLinks 