Meaningless Trading.

Two articles, one says that the ratio of insider selling to buying is at an all time high: 3177 : 1

The largest companies in three of the most important leading sectors of the market have seen their executives classified as insiders sell more than 120 million shares of stock over the last six months. Top executives at these very same companies bought just 38,000 shares over that same time period, making for an eye-popping sell to buy ratio of 3,177 to one.

for every person buy stocks for which they have insider information, over three thousand are selling. The second says that over 70% of stocks are held for an average of 11 seconds:

These are short-term bets. Very short. The founder of Tradebot, in Kansas City, Mo., told students in 2008 that his firm typically held stocks for 11 seconds. Tradebot, one of the biggest high-frequency traders around, had not had a losing day in four years, he said

Obviously the former is very negative, and the second indicates that reality is irrelevant. The majority of the trading of stocks has nothing to do with the fundamentals of the companies involved, and everything to do with trading algorithms competing against each other in a some sort of ‘game of life‘. Madness.

While you’re down there (in the pits of despair) you may as well read about how Wall St. banks are working around legislation designed to put an end to prop trading.

“Permit me to issue and control the money of a nation, and I care not who makes its laws.”

–  Amschel Mayer Rothschild 1773-1855

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William McDonough

Well, that’s a pretty soul destroying read:

It’s hard not to wonder, even with Al Gore’s Hollywood engine behind him, whether this is really the man to lead the next industrial revolution. Or whether, as McDonough says, rising with a gasp, “there’s an easier way to do this.”

It’s always rough when someone that you think (and really i do still think he’s a visionary) turns out to be, in his own words, capable of running a hardware store, and not much more.

To get some idea of what he’s like in full flow have a watch of this, from back in the year 2000 @ Bioneers. No doubt some of you will be sick of me recommending that video, but for me it really does ask all the right questions and give the right answers. Shame he’s proving incapable of the magnanimity required to implement.

Which way is up?

It has been close to impossible to write about financial stuff over the last ~six months. This is mostly due to me not really understanding what on earth is going on.

As far as i can tell the underlying issues, predominately in the states, but also in the uk and europe, remain unresolved – there is too much debt, and in turn that debt is too highly leveraged. Accounting rules have been tweaked to allow the stock markets to play a game of ‘out of sight is out of mind’, and central banks (esp. the fed) are providing pots of money to the banks, essentially for free, that they can either use to buy bonds, returning 3 – 4%, or use to gamble in derivatives.

The real economy is still bumping along the bottom. It will continue to do so until either house prices rise / stabilise, private debt is paid off, and incomes start to rise again. However, given that almost all productive capacity has been shipped out of the western world to asia, it may never happen.

Maybe it’s no surprise that things haven’t become critical again, that we haven’t had some spectacular crash – when japan went through this experience it managed to deploy enough fake money and policy distractions that people were willing to believe that they’d paid to smooth out the curve. Of course the curve has continued on it’s sustained downward trend for twenty years. It’s hard to say that it would have been better to have it all happen in a weekend.

One of the biggest mysteries (too me at least) is how japan ends up with a relentlessly strong yen. Yes, the states is massively debasing the dollar, but how do you make the case that the yen, with massive debts hanging over it is a safer bet? There are all sorts of theories about the chinese moving out of dollar, buying yen, pushing up the yen, and forcing the japanese to sell yen and buy dollars. This give the chinese a mechanism to get out of dollars without crushing it, and destroying the value of their remain holdings. Very nasty if it’s true; clever nonetheless!

Given everything that was written about the yen crossing 115, 105, 90, you’d think japanese companies would be reeling at this point. However, it looks like things are ticking along. There has apparently been some fall in the export growth (ft.com):

On Monday the head of the national Iron and Steel Federation complained the yen’s rise above Y90 to the dollar was undermining manufacturers’ ability to compete against Asian rivals – a message given extra weight by the release of data showing slow export growth.

but it’s hard to get panicky about a decline in export growth, not quite the same as exports actually declining.

It may well be that japanese companies have already adjusted to the continual decline of the yen, and are using hedging strategies to protect themselves from large changes. The comment from the Iron and Steel Federation is amusing given that, as far as i know, resource poor japan doesn’t produce any iron ore, or mine any coal. If the yen is strong this presumably that raw materials (priced in dollars) are declining. It may well be that the spread between when the contracts were signed and the end product was sold is eating into profit margins, but i don’t see why it stop japan from competing by lowering its prices to reflect the lower materials costs.

The conclusion of the above article in the FT maybe reaches a similar conclusion:

In the end, Japan may simply have to learn to live with a stronger yen. This should not be as difficult as it sounds. The focus on the looming postwar record is misleading, given that the real value of the yen has been boosted in recent years by chronic deflation, while that of the dollar has been reduced by inflation.

On an inflation-adjusted, trade-weighted basis, the yen does not look particularly strong. And Japanese companies may yet prove able to adjust to its rise.

On Monday Toshiba, the technology group, announced that earlier planning for a possible rate of Y70 to the dollar had inspired it to change production and procurement policies. As a result, the company had actually been profiting from the yen’s recent rise.

Where Toshiba leads, the rest of Japan Inc may have to follow.

Change is never easy in japan, and i suspect there will be a period of quite severe pain for those who aren’t nimble enough to adapt in the short-term, but it does look like it can done.

There is another issue related to japanese companies repatriating profits earned in dollars, which end up being worth less by the time they arrive back home in yen. There are all sort of issues that would appear to be very hard to get to grips with – does it help or hinder someone like nissan to have factories in america, paying american workers in dollars, or having holding companies for american operations listed on the us stock markets, etc? All too much for me to think about. Perhaps the answer to that is to simply move away from relying on america as an export market – they have less and less money to spend as it is…

The Firesheep Test?

My guess is that the author of Firesheep doesn’t have any malicious intent. By putting out a simple plugin that lets you intercept unencrypted login information for many popular sites as it flows over public wi-fi networks, and then assume the identity associated with a login, he is laying down a challenge: prove to me that you care about the security / privacy of your users!

Using HTTPS / SSL is obviously an easy way to prevent this session hijacking, but encrypting all traffic in and out of a site like Facebook / Twitter isn’t cheap, in fact i’d be amazed if its even possible without a massive resizing / scaling outlay.

It’s one of those issues that is easy to dismiss: never trust an open network; it’s only twitter / facebook / etc. but i suspect it won’t go away quietly as people can easily imagine what it would be like to lose control of a web mail account, or some ‘professional networking site’ (think someone hi-jacking your LinkedIn account and spamming your connections with links to porn sites…)

My feeling is that we are witnessing the start of a fight for a right to online protection from snooping, and ultimately meaningful privacy protections. Governments are going to fight this tooth and nail because they are afraid of everything they can’t control / spy on / coerce, but it’s coming. We have the crypto tools to start skirmishing in this war… Who’s up for a key swapping party?

Life After God

By the time Life After God was released i’d had enough of Douglas Coupland. In my mind it was released after Microserfs… but thinking about it, maybe it was Shampoo Planet that disappointed me, caused me to skip Life After God, but still read Microserfs. All very complicated. The point being that it has been a long time since i’ve read any Douglas Coupland.

The premise of all these short pieces is that without god people lives lack any meaning. Not having been raised with a concept of god / religion, a void opens up in life, that cannot be filled without appealing to a higher power. Alright… if you say so.

What really struck me was how well Coupland manages to evoke the feeling of living of living on the west coast of the states. Life ‘out there’ takes place on a set that is, out of the cities, indescribably huge, majestically wild and beautiful. The cities are soulless urban sprawl, new in terms of culture, but already shabby and unloved. Society, family units, and i suppose even individuals, feels somehow atomised, blown apart by the ferocious drive to be as individual / unique / special as possible. For a lot of people their work is so abstract or virtual that it is pretty much devoid of meaning, of relation to anything concrete in life. Trading pieces of paper that represent fragments of other pieces of paper; marketplaces where no one will ever walk and no goods will ever be seen; advertising / marketing ideas that can only sell other ideas…

My feeling is that it’s not so much the lack of a higher power that drives all this angst but, people living to far away from their Dunbar number. It’s all very well striving for individuality, and redefining your social interactions in a virtual world, but the truth remains that we are still some form of social ape.

x by y

Uchujin’s post reminded me of the above picture (where someone kindly explained to me that the faery lights were caused by light bouncing off the film / sensor, and being reflected back (again) by a filter), which in turn made me want to reprocess the shot. Not sure what kind of ‘look’ i was going for in the original, but it feels very heavyhanded now.

In turn this reminded me of a long discussion on Sunday evening regarding this shot of Sean’s. There is very little similar between the shots, Sean’s has his trademark cinematic look, whereas this seems rather closed / foreshortened. No colour washes, or sense of mystery here either… but hey, i’ve stolen the crop!

Open! Open! Open! (A Vein)

We’re all open these days…

It all started with one of my friends retweeting this:

@Arubin Andy Rubin
the definition of open: “mkdir android ; cd android ; repo init -u git://android.git.kernel.org/platform/manifest.git ; repo sync ; make”

which, to me, seemed like a really stupid definition of open. I hadn’t noticed who had originally made the comment, it just registered as a particularly vacuous thing to say. My initial reaction was that being able to retrieve and build the source didn’t make it inherently open. There are a bunch of issues pertaining to what changes you can make, what you can do with those changes, how the original code, plus your changes, can be distributed, that are far more important than simply being able to access and build the code. (The Java (JDK) code was almost always available and could be built, but you didn’t catch many people calling that open…)

After some back and forth, it was pointed out to me that the Twit was from Andy Rubin (head honcho of Android @ Google) and was in response to some comments made by (a high pitched) Steve Jobs during an Apple earnings call. No doubt the twat is geeks marketing to geeks. Nothing unusual to that – it’s the Google way… except that its an incredibly vapid response.

The remarks that Jobs made are, as you might expect, a little odd. You can listen to them here. Apart from anything else his definition of open as ‘being like Windows’ (presumably because any hardware manf. is open to create the hardware on which it runs…) is unlikely to garner him much support. That being said, his basic point is correct: Android is already massively fragmented as a platform, and it’s only going to get worse.

Now, of course, there is fragmentation in the iOS world, but it’s already orders of magnitude less of an issue than Android because there are simply less devices, versions, and less device / carrier combinations. The carrier and handset manf. will continue to play a game with Google where they seek to differentiate themselves from their competition by offering features / options. They’ll strike agreements with content providers to target their carrier / handset specific features. Over time the market will revert to the usual high churn mess that benefits everyone but the user.

What i find truly odd about this situation is that it’s exactly what happened to J2ME… although J2ME lacked the current geeky cachet of Android, it suffered from exactly the same fragmentation issues. It’s not so much that Android is repeating the same mistakes, but that many of the same people are repeating the same mistakes! Surely the people who were out there preaching the horrors of fragmentations to anyone who would listen, haven’t signed up to do it all again?! Once more round the hamster wheel perhaps?

For what it’s worth, my feeling is that Android will come to dominate a majority of the marketplace (in much the same way was J2ME dominated a large section of the market for mobile applications). However, this will be a largely meaningless victory for everyone, except Google.

Why? Consumers will be as screwed as always, apps that only run on their current phone / carrier, low quality and gimmicky junk. Handset manfs. will have to continue churning out low margin handsets for carriers all trying to find the killer feature that will prove as sticky as a non-portable number…

Which leaves Google. High above the fray, selling arms to all sides, and raking in the ad revenue.

Don’t like to hear the word “vampire” around here, trying to improve our public image. Build up a kindly, avuncular, benevolent image. Interdependence is the key word. Enlightened interdependence. Life in all its rich variety, “take a little, leave a little…”

However, by the inexorable logistics of the vampiric process, they always take more than they need.

— W.S. Burroughs.