Thursday, April 29, 2021

Thursday Night Links

  • Save like a pessimist means you acknowledge the cold statistics of how common bad news is. It’s common at the global, national, local, business, and personal level. Save heavily, knowing with certainty that you’ll need a cushion to deal with the next banana peel. Be a little bit paranoid, knowing the assumptions you hold today could break tomorrow, and you’ll need enough room for error to make it to the next round. More people and businesses try to solve problems than fudge success or get into trouble. Not by much. But the odds tilt ever so slightly toward long-term progress amid frequent setback. It’s been happening for thousands of years: millions of people solving one problem and moving on to the next, bit by bit, experiment by experiment. Since progress is cumulative (we don’t forget past innovations) but setbacks are temporary (we rebuild), the long-term odds tilt towards growth. [link]
  • What they learned, and what lots of suppliers, restauranteurs, and others are learning, is that demand is not as elastic as they had thought; that everyone wants a lower price but they’ll pay for the value of the product if they need the product. That, with more money in the system, raising prices a little doesn’t hurt business very much at all. [link]
  • Me: “Yes, paper towels. I can almost guarantee you the price of paper towels will increase 3-5% over the next year. So in theory, if you buy paper towels today, you’ll receive a 3-5% holding gain on your inventory!” Chris: “You can’t be serious! That’s it?” Me: “Well, no, not exactly. In theory, you can apply this to many of the things you need that are rising in price. In other words, my best idea today is to buy things!” [Eric Cinnamond]
  • Given the size of the profitability gap, why did corporations historically deploy almost half of their earnings into investment? Why didn’t they instead deploy all of their earnings into dividends, or use all of their earnings to buy back shares (after doing so became legal)? That’s the question that we have to answer. To frame the question in terms of the cost of equity and the return on equity, if the corporate sector’s average cost of equity was 3.48% higher than its average return on equity, then why did it expand its equity by retaining and reinvesting its earnings? Why didn’t it instead contract its equity, shrink it, give it back to its shareholders? If the calculated numbers are correct, that would have been the most accretive thing to do. [OSAM]
  • "This is an important milestone in the development of a new source of reliable green helium supply, and long-term sustainable helium production industry in Saskatchewan," NAH Chairman and Chief Executive Officer Nicholas Snyder said.  "Our company will continue working with our partners and relevant stakeholders to ensure that we can grow our nitrogen-based helium production as a replacement for declining legacy sources of hydrocarbon-linked helium supplies in the lower 48 states." [NAH]
  • We committed to fighting back against patent trolls in a way that would turn the normal incentive structure on its head. In addition to defending the case aggressively in the courts, we also founded Project Jengo — a crowdsourced effort to find evidence of prior art to invalidate all of Blackbird’s patents, not only the one asserted against Cloudflare. It was a great success — we won the lawsuit, invalidated one of the patent troll’s other patents, and published prior art on 31 of Blackbird’s patents that anyone could use to challenge those patents or to make it easier to defend against overbroad assertion of those patents. And most importantly, Blackbird Technologies went from being one of the most prolific patent trolls in the United States to shrinking its staff and filing many fewer cases. [Cloudflare]
  • "Today,we are in no better position to cure polio or massive myocardial infarctions than we were a thousand years ago. But we can prevent these diseases entirely (vaccines), reduce incidence (dietary changes, statins), or mitigate severity (stents, thrombolytic agents) and thereby make a major impact on morbidity and mortality. This focus on curing advanced cancers might have been reasonable 50 years ago, when the molecular pathogenesis of cancers was mysterious and when chemotherapeutic agents against advanced cancers were showing promise. But this mindset is no longer acceptable." Instead, it seems important to figure out how to prevent more cancers via better diet and lifestyle, and to detect tumors earlier so that surgery can remove them before they have metastasized. [CBS]
  • After over 8 years of hard-fought litigation, the Blue Cross and Blue Shield Association, together with its 36 Blue Cross/Blue Shield members (“the Blues”), recently announced a proposed settlement of class action antitrust litigation (In re Blue Cross Blue Shield Antitrust Litigation) brought against them by a nationwide class of subscriber members. The settlement terms, summarized in the plaintiffs’ motion seeking the Court’s approval of the settlement, includes both the payment of substantial monies to the plaintiff class ($2.67 billion) and significant agreed-to changes to the way in which the Blues operate. The action, begun as a single case in 2012 and subsequently converted into a multi-district proceeding in the Northern District of Alabama after numerous similar cases were filed across the country, centered on the contention that several of the Blue Cross Blue Shield Association (“BCBSA”) rules pertaining to the use of its trademarks unlawfully impeded competition among its Blue members, causing consumers to pay higher rates for health insurance. Notably, almost 1 in every 3 Americans with private health insurance currently obtains health insurance from 1 of the 36 Blue members. The Blues defended the existence of these rules as being reasonably necessary to protect the value of the Blue Cross trademarks. The litigation was particularly hard-fought and expensive, with the production of over 15 million pages of documents, over 120 depositions, and over a dozen motions to dismiss the plaintiffs’ claims. After those motions to dismiss were denied, and the 11th Circuit Court of Appeals refused to consider those rulings on an interlocutory basis, settlement discussions between the parties accelerated. [link]


Allan Folz said...

OMG, it's the paper towel and tall kitchen trash bag HODL.

Stag Mark, this is your moment!

How's the pile? Still going to make it to 2058? You ever fill up the kitchen bags with natty gas like I suggested? Sorry, if so. I might have jumped the gun on the natty gas, but that's the beauty of HODLing, you don't lose if you don't sell.

Stagflationary Mark said...

Breaking News: Paper Towel and Toilet Paper Prices

Those attempting to make easy money off of the obvious paper trade by buying Kirkland paper towels and Marathon toilet paper at Costco right now will be sorely disappointed.

The damage has already been done. The price hasn’t increased but the quantity has fallen.

Each new roll of paper towels only has 140 sheets down from 160.
Each new sheet of toilet paper is now 4”x4” down from 4”x4.5”.

I did stock up on the toilet paper quite a bit even after the size went down, but the damage was more than offset by a generous coupon. Those buying today are not so fortunate. They might think they are, but they definitely aren’t.

Since I do not expect inflation to be more than a transitory issue, I do not expect further household paper product shenanigans for at least 5 years. 2012 was the last time it happened.

The new roll weighs 174 grams and has 470 sheets.
The old roll weighs 200 grams and has 500 sheets.

The cardboard tube weighs 5 grams.

The new sheets therefore weigh 0.36 grams each (169 / 470).
The old sheets therefore weigh 0.39 grams each (195 / 500).

Very clever. I seem to be getting about 8% less toilet paper per sheet and nobody is the wiser.

Well, that's not quite true. At least one person is the wiser now and if he tells two friends, and if they tell two friends, and so on, and so on, then perhaps nearly everyone can be the wiser.

In any event, I would argue that the majority of my toilet paper hoard just went up in value by about 8%. Woohoo! I feel so much richer now!