Friday, May 8, 2020

May 8th Links

  • Lead acid bateries are more like 66kj/lb, and the energizer bunny about 180kj/lb. Nickel Metal Hydride batteries are about 150kj/lb. The most insane kind of battery, which is also explosive (and low in current capacity), is lithium chloride; it stores about 900kj/lb. You can't generally buy those unless you are NASA or a large industrial firm. By contrast, gasoline stores about 20,000kj/lb. This is why we do not use electric cars on a wide scale; you can store a lot more energy per pound of fuel in a gasoline car. Each gallon is about 6lbs. So a 12 gallon capacity is equal to to 10,000lbs of advanced batteries in terms of energy storage. The next time a hippy tells you "clean electric cars" were destroyed via a conspiracy of oil barons and auto executives, remind him it is really the laws of physics. For what it is worth, hydrocarbons are about as good as it gets; a factor of 10 better than TNT; and they don't explode in inconvenient ways. The only simple thing I can think of which does substantially better in terms of energy storage is liquid hydrogen (about twice as good), and that poses difficult storage problems. Probably if we ever develop practical fuel cells, they will operate on gasoline or alcohol. Intelligent people have contemplated building small internal combustion engines with generators for powering laptops; that's how bad batteries are at this sort of thing. [Scott Locklin]
  • When you buy a unit of stock, you're buying a legal contract entitling you to part of the profits of a corporation. What is a corporation? It's a legal arrangement for providing goods and services to the public, and providing some vaguely defined way of sharing the profits with the owners. The owners being, the people who own stock in the company. The owners are protected from legal risk incurred by the actual agents of the corporation. In other words, if a Lockheed executive tries to bribe a congressman and actually gets into trouble for it, the shareholders won't go to jail. This is socially useful in that the shareholders can't be expected to be accountable for the tens of thousands of Lockheed employees. While shareholders are protected from legal indemnity, they're not protected against the financial shenanigans of the agents of the corporation. This is something that people rarely think about: if the corporation they're invested in is manned by criminals, they probably won't realize any returns. Even assuming the agents of the corporation are honest, that doesn't mean they're not dumb, or at least optimizing a utility which isn't aligned with that of the owners. For example: many companies will incur massive debts; debts which could eventually bankrupt the company. Accounting systems are also a bone of contention. While most American companies are reasonably honest, the way that the accounting is done is hugely relevant to how a company is valued. There are a couple of ways ordinary humans think about stocks. They may think the idea behind the company which issued the stock is a good, see a stock going up in price, and so they buy into the trend. They may actually know something about the the company: perhaps they notice lots of other people lining up to pay $4 for a cup of sugary caffeine water at the local coffee house, and so, see it as a good investment. That's all well and good, but if you don't know about the company's plans, the intimate details of it's accounting methods, and who is running the joint, you really don't know anything about it. If you're buying on the trend, well, that can work too, but unless you're willing to sit around and white knuckle the trend to its ultimate conclusion and time it well enough to sell at the top, you are just gambling. Not that there is anything wrong with that. [Scott Locklin]
  • His immediate neighbors, which include a golf oriented community and a condominium complex have been perpetually at odds with his activities. His garden is too low brow for their taste. I noticed that Richard is actually far wealthier than many of his neighbors and owns a great deal more valuable property than they do. But the outward appearance of his garden is that of a lesser demographic. The insecure middle class is both more vulnerable and less tolerant of cosmetic deviation. Fortunately his home and gardens are not part of a home owners association and nothing he does is in violation of any municipal regulations. It's ironic that a place like Montana with a culture of rugged individualism is so hostile toward people providing for their own needs. [Granola Shotgun]
  • Berkshire Hathaway Inc. was building its massive cash pile to a record $137 billion by the end of March. The company said that figure climbed even higher as it dumped more than $6 billion of stocks in April, making Buffett a net seller of equities so far this year. [BRK]
  • In recent years, Silicon Valley fortunes have been made by taking yesterday's depressing ways to eke out a few bucks -- taking in lodgers, hacking a gypsy cab, selling your possessions, etc. -- and giving them a 21st Century gloss. For example, Lyft and Uber would appear to be taxicab companies that employ you to use your own car, not theirs, to pick up strangers and drive them around. But Uber spokespersons deny that, explaining that Uber is actually a "ride-sharing smartphone app," so it's, like, awesome. Plus, Uber has an ironic name. Similarly, airBnB enables you to turn your home into a boarding house. But, while you are scrubbing the toilet after your latest paying guest has departed, you can console yourself that some guys in Silicon Valley have made a fortune off this, so it's actually much more glamorous and buzzworthy than it might appear at the moment from your perspective (on your knees in front of your second bathroom's toilet bowl). [Sailer]
  • Don't bother with The Better Angels of Our Nature. I think you have to be very careful before buying anyone's ponderous 800 page tome. (I wasn't fooled into buying Piketty, but look how many copies of his are going to have to be pulped.) Unless the author is an utter genius crystallizing some subject for the rest of us, the result is going to be a muddled mess. Since Pinker uses "'six trends' interacting with 'five inner demons,' 'four better angels,' and 'five historical forces,'" to attempt to explain his hypothesized decline of violence, I think we can tell it fits squarely in the muddled mess category. (Twenty degrees of freedom in the model!) [CBS]
  • In 2000 the net leverage of a BBB bond was, on average, 1.7x. This is basically a measure of a company’s financial capacity to service its debt. Cash and short-term investments easily convertible to cash are subtracted from gross debt to arrive at net debt. The funds available would include earnings before deducting interest, taxes, and non-cash charges of depreciation and amortization. By 2017 the average leverage was 2.9x. That means ratings agencies have seen fit to assign the same rating to a bond with 70% higher leverage than allowed just 17 years ago. Essentially, while the volume of BBB bonds, as an absolute amount and as a percentage of corporate debt, is unprecedented historically, it is also of lower quality than that same grade of bond historically. [Frank Martin]
  • Human beings have always concocted rationalizations for why they deserve privilege. For most of history, a common explanation of why you should be privileged was that your ancestors were warriors and conquerors who had defeated their foes. In 21st-century America, however, the new fashion for asserting your claim to privilege is that you come from a long line of victims and losers. By intention, this leaves white Americans, the descendants of the men who won The Big One and went to the Moon, psychically dispossessed in their own native land. [Sailer]
  • There is also an enormous region that spans the globe where work is done with a digging stick or hoe, and animals are generally not used. These societies are surprisingly homogeneous: "The world of men with hoes was characterized - and this is the most striking fact about it - by a fairly marked homogeneity of goods, plants, animals, tools and customs. We can say that the house of the peasant with a hoe, wherever it may be, is almost invariably rectangular and has only one storey. He is able to make coarse pottery, uses a rudimentary hand loom for weaving, prepares and consumes fermented drinks (but not alcohol), and raises small domestic animals - goats, sheep, pigs, dogs, chickens and sometimes bees (but not cattle). He lives off the vegetable world round about him: bananas, bread-fruit trees, oil palms, calabashes, taros and yams." [link]
  • Humans have overpopulated the Earth and in the process have created an ideal nutritional substrate on which bacteria and viruses (microbes) will grow and prosper. We are behaving like bacteria growing on an agar plate, flourishing until natural limits are reached or until another microbe colonizes and takes over, using them as their resource. In addition to our extremely high population density, we are social and mobile, exactly the conditions that favor growth and spread of pathogenic (disease-causing) microbes. [wiki]
  • Troglodytes Aedon was one of the two pets of King Friday the XIII in Mister Rogers' Neighborhood. Trog, as the King called him, was a wooden wren on a stick, and Trog had his own song. King Friday's other pet was a mockingbird (a wooden mockingbird on a stick) named Mimus Polyglottos (see Neighborhood of Make-Believe). [wiki]
  • People who concentrate positions remind me of the live hog trader on the CME who accumulated a fortune and was considered a genius at trading hogs. He knew hog fundamentals cold. Well one year he just knew hog supplies were going to be severely constrained so he built up a full limit long position in hog futures because how could he lose? Well, the USDA came out with one of their periodic pig crop reports and it was super bearish with apparently a huge crop of pigs on there way to market. Well the market tanked limit down for several days and the genius hog trader lost 36 million dollars, his exchange seat, his home in Winnetka and eventually his wife and family. Long story short, the USDA revised their pig crop report as an incorrect number had been entered into the USDA computer; too late for our friend, and the market reversed course and was limit up for several days. [Seeking Alpha]
  • As I've mentioned before, when I moved to Santa Monica in 1981, my parents were very concerned about Santa Monica's notorious foggy dampness. My parents had both moved to Southern California before penicillin arrived in 1945, so fear of tuberculosis was a huge factor in driving migration of well-to-do people, like my paternal grandfather, from the Midwest. The cool coastline was largely shunned in favor of the drier inland areas like Pasadena, which attracted the health conscious from the 1880s to the 1940s. Then about 1943, smog became a problem, which blew inland on the ocean breezes, so Pasadena began to fall out of favor relative to the coast. Now the smog is gone, so both Santa Monica and Pasadena are expensive. [Sailer]

3 comments:

League of Women Voters said...

It’s 2020. It is widely known that Elon Musk is a business fraudster and a government propaganda asset. He has never once generated any annual profit at any company, and he’s been playing a businessman on TV for almost a quarter century now. And his business plan for satellite internet service has even less profit potential than all his other unprofitable ventures. He’ll be funding his fraudulent plans to “colonize Mars” with our tax dollars, just like he’s always done. In 2017 he announced that SpaceX had contracted to fly tourists around the moon in 2018. When in fact SpaceX has never lifted a human even 100 feet off the ground in Elon Musk’s 17 years and counting at SpaceX.
https://blog.jim.com/science/fill-the-stars-and-subdue-them/#comments

Anonymous said...

Syed Shah usually buys and sells stocks and currencies through his Interactive Brokers account, but he couldn’t resist trying his hand at some oil trading on April 20, the day prices plunged below zero for the first time ever. The day trader, working from his house in a Toronto suburb, figured he couldn’t lose as he spent $2,400 snapping up crude at $3.30 a barrel, and then 50 cents. Then came what looked like the deal of a lifetime: buying 212 futures contracts on West Texas Intermediate for an astonishing penny each.

What he didn’t know was oil’s first trip into negative pricing had broken Interactive Brokers Group Inc. Its software couldn’t cope with that pesky minus sign, even though it was always technically possible -- though this was an outlandish idea before the pandemic -- for the crude market to go upside down. Crude was actually around negative $3.70 a barrel when Shah’s screen had it at 1 cent. Interactive Brokers never displayed a subzero price to him as oil kept diving to end the day at minus $37.63 a barrel.

https://www.bloomberg.com/news/articles/2020-05-08/oil-crash-busted-a-broker-s-computers-and-inflicted-huge-losses?sref=vuYGislZ

Stagflationary Mark said...

Humans have overpopulated the Earth...

It’s always seemed like a locust swarm to me, and it may someday end as locust swarms always do. Or maybe not. The fertility rate could slowly fall until the population starts going down instead of up, I suppose. Either way, population growth is very unlikely to be the economic growth engine it once was.

For example: many companies will incur massive debts; debts which could eventually bankrupt the company.

Many people incur massive debts. Companies are made up of people (so are governments). The unfortunate difference is that the massive debt of companies is not necessarily tied to the people who incurred it. Some who incurred it were rewarded with stock option profits and may no longer even work there, whereas those who came later are stuck servicing the debt. Or maybe I should say serving the debt, as if the debt is the master. And when they can no longer serve the debt, like now, we all step in to serve it (as taxpayers).

But, while you are scrubbing the toilet after your latest paying guest has departed, you can console yourself that some guys in Silicon Valley have made a fortune off this, so it's actually much more glamorous and buzzworthy than it might appear at the moment from your perspective (on your knees in front of your second bathroom's toilet bowl).

It’s especially glamorous and buzzworthy when wearing a modern N95 respirator, assuming you can find one during a pandemic.

Unless the author is an utter genius crystallizing some subject for the rest of us, the result is going to be a muddled mess.

This is a tome we’re talking about, right? For some reason I had flashbacks to coronavirus daily press briefings.

Essentially, while the volume of BBB bonds, as an absolute amount and as a percentage of corporate debt, is unprecedented historically, it is also of lower quality than that same grade of bond historically.

Have you noticed that fewer and fewer people each year talk about the Fed Funds rate going back to “normal” levels? It’s like watching radioactive material slowly decay and wondering when the process will reverse. Spoiler: It never will. It just keeps decaying.

People who concentrate positions remind me of the live hog trader on the CME who accumulated a fortune and was considered a genius at trading hogs.

I think it depends on the position to some degree but this was a great example! One reason I felt comfortable concentrating in TIPS was my theory that if I was ever financially ruined in long-term inflation protected Treasuries, I would not be the only one. Stock market investors depended on me doing okay far more than I depended on them doing okay. This year somewhat proved my point. I actually did better when they did not do okay. Hardly surprising.

The cool coastline was largely shunned in favor of the drier inland areas like Pasadena, which attracted the health conscious from the 1880s to the 1940s. Then about 1943, smog became a problem, which blew inland on the ocean breezes, so Pasadena began to fall out of favor relative to the coast. Now the smog is gone, so both Santa Monica and Pasadena are expensive.

I sometimes regret not living in a condo in crowded downtown Seattle instead of the quiet suburbs. This is not one of those times. The higher the unemployment rate goes and the higher the virus death toll goes, the less I regret it. And right now, there are no regrets at all. The only feeling is relief. That said, why did I pick a house with a large yard? I did not factor in mowing, apparently. First world problems. It’s not a complaint, just an observation.