Currently, InTrade has the chances of McCain winning at 38.8%, and Obama at 61.0%. The way the system works is that currently you can buy a share of Obama's stock at $61, and if he wins you'll get back $100, but if he loses you get back nothing.
Is Obama's current lead a good thing for the tech sector? Sonia Arrison believes that it is not, and that McCain's proposals would be better for the technology industry. But isn't Obama a big aficionado of text messaging? How could his policies not be pro-tech?
In her article, she cites a few major issues, including Obama's proposals for increased capital gains tax, his relative reluctance to increase the number of H1-B visas, and his desire for more regulation on how companies manage their pipes. Time and time again it seems that McCain's policies are more in line with what the market is looking for.
Saturday, August 23, 2008
Thursday, August 21, 2008
No Free Lunch in Obamanomics
The problem with Mr Obama's tax and fiscal proposals is that he keeps changing it, as Glenn Hubbard explains. Earlier he had planned to make Social Security solvent by eliminating the caps on payroll taxes. Now his economic advisers plan to only unveil payroll taxes that affect the top 3% of earners, which is much more restrained, but he still plans to shore up Social Security. So which is it?
One argument is that either candidate's plan will go haywire once January 2009 rolls around, because they will be facing a macroeconomic crisis. But if judgment in times of (relative) calm predicts judgment in times of crisis, we may have reason to fear. This is an investment blog, so I'll make myself perfectly clear. Wall Street seems to prefer Mr McCain's economic proposals, and Wall Streets movements predict the success of the economy as a whole. You could argue that Mr Bush's terms proved that Republican economics is failing, but I would take issue with that counterfactual because you haven't controlled for any other variables.
The question becomes, how can Mr Obama make his policies more friendly to investors? Or perhaps more appropriately, will he do so?
One argument is that either candidate's plan will go haywire once January 2009 rolls around, because they will be facing a macroeconomic crisis. But if judgment in times of (relative) calm predicts judgment in times of crisis, we may have reason to fear. This is an investment blog, so I'll make myself perfectly clear. Wall Street seems to prefer Mr McCain's economic proposals, and Wall Streets movements predict the success of the economy as a whole. You could argue that Mr Bush's terms proved that Republican economics is failing, but I would take issue with that counterfactual because you haven't controlled for any other variables.
The question becomes, how can Mr Obama make his policies more friendly to investors? Or perhaps more appropriately, will he do so?
Monday, August 11, 2008
The Streisand effect in analyst suits
In 2003 Barbara Streisand sued Pictopia.com for $50 in order to have satellite pictures of her beach front property taken down. The suit backfired, because as soon as the suit became public, the pictures became extremely popular on the internet. The explanation was that as soon as Streisand admitted she didn't want people to see the pictures, it made everybody else want to see them more.
Barry Ritholtz has a post today about MBIA, an muni bond insurance company, that is suing analyst Bill Ackman for making "untrue" statements about their solvency. As Ritholtz points out, it isn't a good sign for the company that they are reduced to suing their critics.
The parallels between this suit and the Streisand effect are obvious. In the internet age, the best way to deal with criticism like this is to downplay and discredit it. Overreactions such as this silly suit will only lend more publicity to the original criticism.
Barry Ritholtz has a post today about MBIA, an muni bond insurance company, that is suing analyst Bill Ackman for making "untrue" statements about their solvency. As Ritholtz points out, it isn't a good sign for the company that they are reduced to suing their critics.
The parallels between this suit and the Streisand effect are obvious. In the internet age, the best way to deal with criticism like this is to downplay and discredit it. Overreactions such as this silly suit will only lend more publicity to the original criticism.
Thursday, August 7, 2008
Marty Feldstein on the economy
He says that the Bush tax rebates from earlier this year has not been effective. The tax rebates in May gave $48 billion to consumers, and spending rose by less than $6 billion, while in June the rebates gave $28 billion to consumers, and spending rose by $5 billion. That equals a total of $76 billion dollars in rebates and just less than $11 billion in increased spending. If the original goal of the tax rebates were to boost consumer confidence and spending, it failed. Only 14% of the money infused was put back into the economy.
He goes onto explain how Obama's tax-rebate plan is based on similar tendencies. Based on these percentages, $65 billion dollars in rebates (which he proposes) will only yield $10 billion in increased spending. Perhaps Obama should rethink it.
Addendum: Greg Mankiw relays some analysis from a friend of his at the white house:
"Prof. Feldstein assumes that the growth in consumer outlays would have been flat had there been no stimulus. He then observes that consumer outlays actually grew by $12 billion more from Q1 to Q2 that they did in the prior quarter, and attributes that to the stimulus. Many observers think that, without the stimulus, consumer outlays would have grown more slowly in Q2 than Q1. If this is the case (and we believe it is), then the effect of the stimulus is bigger than $12 billion."
Interesting, but they are presupposing a pre-stimulus decline in consumer spending of $55 billion in May and June, which seems a bit excessive.
He goes onto explain how Obama's tax-rebate plan is based on similar tendencies. Based on these percentages, $65 billion dollars in rebates (which he proposes) will only yield $10 billion in increased spending. Perhaps Obama should rethink it.
Addendum: Greg Mankiw relays some analysis from a friend of his at the white house:
"Prof. Feldstein assumes that the growth in consumer outlays would have been flat had there been no stimulus. He then observes that consumer outlays actually grew by $12 billion more from Q1 to Q2 that they did in the prior quarter, and attributes that to the stimulus. Many observers think that, without the stimulus, consumer outlays would have grown more slowly in Q2 than Q1. If this is the case (and we believe it is), then the effect of the stimulus is bigger than $12 billion."
Interesting, but they are presupposing a pre-stimulus decline in consumer spending of $55 billion in May and June, which seems a bit excessive.
Tuesday, July 29, 2008
Assorted Links 9/29/08
Hey guys. Here's a few interesting links I've picked up the last few days around the internet:
1) Housing is still overpriced. Along with some pretty compelling graphs.
2) From good to great!... and then bankrupt. Many of the companies in the book Good to Great are doing terribly now, which forces you to question the original wisdom of the book. The companies include (!) Fannie Mae.
3) Quotes on investing. From Paul Graham, Warren Buffett, and Nassim Nicholas Taleb, among others.
Hope you are all having good summers. If you have something interesting to share but don't want to post it yourself you can e-mail it to me and I'll pass it along.
1) Housing is still overpriced. Along with some pretty compelling graphs.
2) From good to great!... and then bankrupt. Many of the companies in the book Good to Great are doing terribly now, which forces you to question the original wisdom of the book. The companies include (!) Fannie Mae.
3) Quotes on investing. From Paul Graham, Warren Buffett, and Nassim Nicholas Taleb, among others.
Hope you are all having good summers. If you have something interesting to share but don't want to post it yourself you can e-mail it to me and I'll pass it along.
Tuesday, July 8, 2008
Campaign Contributions at Vassar
From the perspective of the contributor, donating money to a campaign can be seen as an investment. You are allocating assets in the hope of future will be to office.
Here's some interesting data from Fundrace.com on the campaign contributions from professors at Vassar:
It's almost an even split... between Obama and Clinton. Why have no professors donated to the McCain campaign? I have three hypotheses:
1) Professors at Vassar almost unanimously support Obama.
2) Professors at Vassar who may support McCain are afraid of being ostracized by their peers if they donate to a Republican candidate, so they either do not donate or do not list their profession as a Vassar Professor.
3) McCain supporters at Vassar are too pragmatic with their money to donate small amounts of it to a presidential campaign.
I'm leaning towards #1, but #3 is an intriguing possibility.
(Hat tip: Mads Vassar.)
Here's some interesting data from Fundrace.com on the campaign contributions from professors at Vassar:
It's almost an even split... between Obama and Clinton. Why have no professors donated to the McCain campaign? I have three hypotheses:
1) Professors at Vassar almost unanimously support Obama.
2) Professors at Vassar who may support McCain are afraid of being ostracized by their peers if they donate to a Republican candidate, so they either do not donate or do not list their profession as a Vassar Professor.
3) McCain supporters at Vassar are too pragmatic with their money to donate small amounts of it to a presidential campaign.
I'm leaning towards #1, but #3 is an intriguing possibility.
(Hat tip: Mads Vassar.)
Thursday, July 3, 2008
Assorted Links
1) An article from Overcoming Bias on the biases involved in investing. Money quotes:
Basically, the totally rational investor won't count what he can't quantify, but much of the value in investing, or entrepreneurship, comes from an option value that is impossible to quantify. I know someone who built a product based on an optimization routine for superior investment strategy—the flagship idea failed, it never had a chance, but his system is now a popular risk management tool.
2) Venture capitalist Fred Wilson discusses the potential Yahoo and Microsoft merger. He calls it the "soap opera drama that won't go away." Indeed.
3) A new form of performance evaluation, using "matching" stocks to account for the fact that many of the stocks chosen by investors are not as large-cap as the S&P.
Basically, the totally rational investor won't count what he can't quantify, but much of the value in investing, or entrepreneurship, comes from an option value that is impossible to quantify. I know someone who built a product based on an optimization routine for superior investment strategy—the flagship idea failed, it never had a chance, but his system is now a popular risk management tool.
2) Venture capitalist Fred Wilson discusses the potential Yahoo and Microsoft merger. He calls it the "soap opera drama that won't go away." Indeed.
3) A new form of performance evaluation, using "matching" stocks to account for the fact that many of the stocks chosen by investors are not as large-cap as the S&P.
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