Clipping

[zAPPa]

We were wrong on peak oil. There's enough to fry us all.
A boom in oil production has made a mockery of our predictions. Good news for capitalists – but a disaster for humanity

The facts have changed, now we must change too. For the past 10 years an unlikely coalition of geologists, oil drillers, bankers, military strategists and environmentalists has been warning that peak oil – the decline of global supplies – is just around the corner. We had some strong reasons for doing so: production had slowed, the price had risen sharply, depletion was widespread and appeared to be escalating. The first of the great resource crunches seemed about to strike.

Among environmentalists it was never clear, even to ourselves, whether or not we wanted it to happen. It had the potential both to shock the world into economic transformation, averting future catastrophes, and to generate catastrophes of its own, including a shift into even more damaging technologies, such as biofuels and petrol made from coal. Even so, peak oil was a powerful lever. Governments, businesses and voters who seemed impervious to the moral case for cutting the use of fossil fuels might, we hoped, respond to the economic case.

Some of us made vague predictions, others were more specific. In all cases we were wrong. In 1975 MK Hubbert, a geoscientist working for Shell who had correctly predicted the decline in US oil production, suggested that global supplies could peak in 1995. In 1997 the petroleum geologist Colin Campbell estimated that it would happen before 2010. In 2003 the geophysicist Kenneth Deffeyes said he was "99% confident" that peak oil would occur in 2004. In 2004, the Texas tycoon T Boone Pickens predicted that "never again will we pump more than 82m barrels" per day of liquid fuels. (Average daily supply in May 2012 was 91m.) In 2005 the investment banker Matthew Simmons maintained that "Saudi Arabia … cannot materially grow its oil production". (Since then its output has risen from 9m barrels a day to 10m, and it has another 1.5m in spare capacity.)

Peak oil hasn't happened, and it's unlikely to happen for a very long time.

A report by the oil executive Leonardo Maugeri, published by Harvard University, provides compelling evidence that a new oil boom has begun. The constraints on oil supply over the past 10 years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

Maugeri's analysis of projects in 23 countries suggests that global oil supplies are likely to rise by a net 17m barrels per day (to 110m) by 2020. This, he says, is "the largest potential addition to the world's oil supply capacity since the 1980s". The investments required to make this boom happen depend on a long-term price of $70 a barrel – the current cost of Brent crude is $95. Money is now flooding into new oil: a trillion dollars has been spent in the past two years; a record $600bn is lined up for 2012.

The country in which production is likely to rise most is Iraq, into which multinational companies are now sinking their money, and their claws. But the bigger surprise is that the other great boom is likely to happen in the US. Hubbert's peak, the famous bell-shaped graph depicting the rise and fall of American oil, is set to become Hubbert's Rollercoaster.

Investment there will concentrate on unconventional oil, especially shale oil (which, confusingly, is not the same as oil shale). Shale oil is high-quality crude trapped in rocks through which it doesn't flow naturally.

There are, we now know, monstrous deposits in the United States: one estimate suggests that the Bakken shales in North Dakota contain almost as much oil as Saudi Arabia (though less of it is extractable). And this is one of 20 such formations in the US. Extracting shale oil requires horizontal drilling and fracking: a combination of high prices and technological refinements has made them economically viable. Already production in North Dakota has risen from 100,000 barrels a day in 2005 to 550,000 in January.

So this is where we are. The automatic correction – resource depletion destroying the machine that was driving it – that many environmentalists foresaw is not going to happen. The problem we face is not that there is too little oil, but that there is too much.

We have confused threats to the living planet with threats to industrial civilisation. They are not, in the first instance, the same thing. Industry and consumer capitalism, powered by abundant oil supplies, are more resilient than many of the natural systems they threaten. The great profusion of life in the past – fossilised in the form of flammable carbon – now jeopardises the great profusion of life in the present.

There is enough oil in the ground to deep-fry the lot of us, and no obvious means to prevail upon governments and industry to leave it in the ground. Twenty years of efforts to prevent climate breakdown through moral persuasion have failed, with the collapse of the multilateral process at Rio de Janeiro last month. The world's most powerful nation is again becoming an oil state, and if the political transformation of its northern neighbour is anything to go by, the results will not be pretty.

http://www.guardian.co.uk/commentisfree/2012/jul/02/peak-oil-we-we-wrong/print

[zAPPa]

Um sistema baseado na inteligência artificial que prevê, mediante certas condições, a localização de uma pessoa com a antecedência de vários anos, foi criado por Adam Sadilek, investigador do Departamento de Ciências da Computação da Universidade de Rochester (Nova Iorque).

O funcionamento deste sistema - chamado "Far Out" - deve-se, em parte, à crescente utilização de sistemas GPS nos telemóveis (smartphones). Com efeito, quase 50% da população americana, por exemplo, transporta um equipamento portátil com um sistema de GPS durante as suas deslocações, segundo um estudo do Pew Research Center (EUA).

O "Far Out" poderá ser usado para mapear fenómenos do futuro tão diversos como o congestionamento do trânsito numa cidade, a progressão de uma epidemia ou a procura de electricidade.
Localizar com elevada precisão

Sadilek e a sua equipa analisaram os dados de 703 pessoas (que transportavam sistemas de GPS) relativos a uma grande variedade de períodos de tempo. E recolheram 32 mil amostras diárias da localização dessas pessoas.

A partir daqui conseguiram demonstrar que o modelo de previsão utilizado "prevê a localização de uma grande variedade de pessoas com elevada precisão, mesmo a anos de distância no futuro".

"Vemos a previsão a longo prazo como um processo que identifica motivos e regularidades fortes nos dados históricos das pessoas, que modela a sua evolução através do tempo e que estima as localizações futuras através da projeção dos padrões de comportamento dessas pessoas no futuro", afirmou o cientista checo à publicação online "Futurist Update", da World Future Society (EUA), uma organização com 25 mil membros em mais de 80 países.

Num artigo assinado por Adam Sadilek e John Krumm, da Microsoft Research, que vai ser apresentado na 26ª Conferência sobre Inteligência Artificial organizada pela Associação para o Avanço da Inteligência Artificial, que decorrerá de 22 a 26 de julho em Toronto (Canadá), os dois cientistas recordam que "já foi feito muito trabalho de investigação para prever onde poderá estar cada um de nós no futuro imediato, isto é, na próxima hora".

Há de facto muitos modelos de mobilidade a curto prazo, tanto descritivos como preditivos, seja a nível de uma pessoa ou de grupos de pessoas. "Mas há uma lacuna na modelação e previsão da mobilidade a longo prazo, e mesmo os modelos focados no longo prazo consideram apenas previsões para as próximas horas".   
Identificar padrões de comportamento

Por isso, o que estes investigadores querem fazer é inédito e muito ambicioso. "Pretendemos prever a mobilidade humana no futuro a longo prazo, numa escala de meses e anos", afirmam Sadilek e Krumm.

Assim, propõem "um método eficiente que identifica padrões robustos e significativos a partir dos dados históricos de localização de uma pessoa,  assinala as suas associações com características de contexto (como por exemplo um determinado dia da semana), e depois usa esta informação para prever a localização mais provável numa certa data no futuro".

Por outro lado, o modelo geral definido pelos dois cientistas faz previsões tanto a curto prazo (horas ou dias) como a longo prazo (meses ou anos), ou seja, "é capaz de trabalhar com os dois tipos de representação de dados". O mais surpreendente é que Sadilek e Krumm demonstraram que "o desempenho do "Far Out" não é significativamente afectado pelas distâncias temporais".
Publicitar serviços, reunir amigos, planear cidades

"Precisa de cortar o cabelo? Dentro de quatro dias você vai estar a 100 metros do cabeleireiro Hair Dream que faz descontos de 20%". Esta mensagem recebida no telemóvel poderá ser uma das muitas aplicações, a nível individual, do "Far Out", tal como todo o tipo de spots publicitários, lembretes ou resultados de uma pesquisa pessoal. No fundo, são mensagens que consideram todas as localizações prováveis de uma pessoa em datas específicas no futuro.

Para além da escala individual, o "Far Out" poderá ser aplicado a uma escala social, envolvendo as pessoas que nós conhecemos, como sugerir um local, dia e hora conveniente para nos encontrarmos com um grupo de amigos, mesmo quando eles estão espalhados pelo mundo; ou sustentar um sistema de entrega de encomendas em qualquer local onde o cliente se encontre.

À escala de uma população, o "Far Out" poderá ser uma ferramenta decisiva para o planeamento urbano, para modelar a evolução de uma área metropolitana ou de uma região, em realidades tão diversificadas como o trânsito automóvel, o consumo de energia e de água, a qualidade do ar, a procura de habitação, ou a construção de infraestruturas de telecomunicações. Tudo porque identifica os padrões da actividade das pessoas e pode também detetar comportamentos pouco habituais.

Ler mais: http://expresso.sapo.pt/cientista-descobre-como-prever-o-futuro=f738911#ixzz20L4zEMnT

[zAPPa]

The planning of the construction is going well. Half a dozen architecture firms are designing and developing the city’s districts. Nobody seriously doubts that Skolkovo will rise in one form or another—although it will probably take longer than planned. Conor Lenihan, a former Irish innovation minister who is in charge of Skolkovo’s corporate partnerships, praises the Russian government’s decisiveness. “In a typical European democracy,” he says, “it would have taken three to five years to get this far.”

The university, too, is no longer just a PowerPoint presentation. For an undisclosed sum, the Massachusetts Institute of Technology (MIT) has agreed to set up the Skolkovo Institute of Science and Technology, or SkTech. In August the first 21 Russian students will start taking courses (they will spend their first year studying abroad).

Skolkovo has already lured some big names. Attracted by the perks and anxious not to upset the Russian government, their largest customer in the country, some 20 companies have signed up, including Cisco, IBM and SAP. Each of them will open a sizeable R&D laboratory and co-operate with SkTech.

It will be much harder, however, to create the rest of the ecosystem. Silicon Valley has a critical mass of entrepreneurs and venture capitalists and, more importantly, a culture of turning whizzy ideas into profitable businesses. Such a culture takes decades to evolve. The Skolkovo Foundation, which runs the project, wants to jump-start it with cash—some $1 billion over five years. “We want to fill the institutional void and take some of the risk,” explains Alexander Lupachev, the organisation’s chief investment officer.

The aim is to build a long pipeline of start-ups to reside in Skolkovo. The Skolkovo Foundation will then provide them with some initial cash and hope that venture capitalists invest in them. Firms first apply for “resident status” and are reviewed by some of the hundreds of experts who work with the Skolkovo Foundation. If the firms pass muster, they are eligible for the city’s tax and other preferences and can apply for grants, usually $150,000. If they want more money, they have to find a matching investment from a venture capitalist.

So far, more than 500 firms have obtained resident status. Over 100 have received some money from the Skolkovo Foundation, and about half of these have attracted regular venture capital, mostly from Russian firms. Yet local capital is limited and foreign money is not pouring in—Western investors deem Russia too risky. Even the foreign venture capitalists who work with the Skolkovo Foundation do not invest directly in Russia, but funnel the cash through offshore shell companies.

A small version of the Technopark, with 25 firms, is already in place in part of the Skolkovo School of Management, based near the new city. It is early days, but most of the offices are empty. Many firms use them only occasionally and do the real work elsewhere. That may prove a lasting problem: being a Skolkovo resident does not mean that a company has to base its operations in the city, even after it is built.

More fundamentally, the project doesn’t exist in a vacuum. Russia is a tough place to work. Great fortunes have been made by grabbing a share of the country’s mineral wealth. But try to think of a Russian who has grown rich by inventing something and you’ll probably think of someone like Sergey Brin of Google, who moved to America when he was six.

Ready for the Skolkovo summit?

Graft may be a problem in Russia, says Mr Lupachev, but it mostly afflicts big, highly regulated industries. It seldom involves start-ups, he claims. And the process of selecting start-ups for Skolkovo and giving them grants is hard to rig, he says.

Not everyone is reassured. Skolkovo is Mr Medvedev’s baby. Will it thrive now that he has been demoted to prime minister, or will it end up as just another office park? Vladimir Putin, the current president, seems supportive. His government recently decided to host the summit of the G8 in 2014, when Russia holds the group’s presidency, at Skolkovo. Victor Vekselberg, the president of the Skolkovo Foundation, who made his billions as an oil oligarch, says: “This is no longer Medvedev’s or Putin’s project, this is Russia’s project.” He adds: “If the country really wants to change it needs something like Skolkovo.” Others retort that for Skolkovo to work, Russia would have to change so much that it would no longer be necessary.

http://www.economist.com/node/21558602

[zAPPa]

Which countries think that the rich deserve their fortune?

SOME 39% of adults think that the rich in their country deserve their wealth according to GlobeScan, a market-research company which polled 12,000 people in 23 countries. Top earners have attracted more opprobium as their salaries and the performance of the economy have headed in opposite directions. Europeans and Latin Americans tend to have similar attitudes to the rich; the Anglo-Saxon world is a bit more forgiving. The biggest contrast, though, is between emerging economies (a group in which Russia sits, rather awkwardly). In China, where 600m people were lifted out of poverty between 1985 and 2005, about half the adults think their rich are rightfully so. But in Russia, an economy dominated by oligarchs who extract large windfall rents, only 16% do.

[Incognitus]

É um tema engraçado. Existe um enviezamento fantástico das pessoas, por exemplo em Portugal quando a construção civil permitiu a muitas pessoas enriquecerem, rapidamente se criou a imagem do "pato bravo" com Mercedes, etc. Basicamente toda a gente queria ter um Mercedes, toda a gente achava que se o pato bravo tinha direito a um, eles também tinham (ou então era preciso arranjar forma de o tirar ao pato bravo) ... mas, fazer prédios? Bem, isso é que não dava jeito nenhum. No fim ninguém vê que o caminho para a maioria das fortunas é precisamente entregar bens e serviços físicos a terceiros.
 
E como não o vêem, criam mais e mais sistemas para repor a igualdade, e esses sistemas, ao lidarem com a riqueza e rendimento de muitas pessoas em simultâneo, atraem corrupção e criam efectivamente caminhos para a riqueza que NÃO passam necessariamente por fornecer bens e serviços físicos a terceiros.

[zAPPa]

By Robert Frank

One of the most controversial issues surrounding inequality is work effort. Some on the right argue that top earners are successful in part because they work harder than others. Many on the left argue that the middle class and poor work just as hard – maybe even harder, with multiple jobs — but that the economic deck is stacked against them.


A new study offers evidence that higher-educated (and therefore higher-earning) Americans do indeed spend more time working and less time on leisure than poorer income groups. In fact, while income inequality may be growing, “leisure inequality” – time spent on enjoyment – is growing as a mirror image, with the low earners gaining leisure and the high earners losing.

The paper, by Orazio Attanasio, Erik Hurst and Luigi Pistaferri, finds that both income inequality and consumption inequality (the stuff that people buy) have increased over the past 20 years.

The more surprising discovery, however, is a corresponding leisure gap has opened up between the highly-educated and less-educated. Low-educated men saw their leisure hours grow to 39.1 hours in 2003-2007, from 36.6 hours in 1985. Highly-educated men saw their leisure hours shrink to 33.2 hours from 34.4 hours. (Mr. Hurst says that education levels are a “proxy” for incomes, since they tend to correspond).

A similar pattern emerged for women. Low-educated women saw their leisure time grow to 35.2 hours a week from 35 hours. High-educated women saw their leisure time decrease to 30.3 hours from 32.2 hours. Educated women, in other words, had the largest decline in leisure time of the four groups.

(The study defines leisure as time spend watching TV, socializing, playing games, talking on the phone, reading personal email, enjoying entertainment and hobbies and other activities.)

Of course, some of the decline is due to non-educated people being unemployed or under-employed. Some of their leisure time is simply “not being able to work” time.

Yet the research shows that up to half the gap is due to unemployment. Mr. Hurst says the leisure gap still remains between employed high-educated workers and employed low-educated workers. It also persists among unemployed high-education people and unemployed low-education people.

While the study doesn’t seek to prove that the high earners work harder “that story would be consistent with the data,” said Mr. Hurst.

Do you think higher earners work harder?

http://blogs.wsj.com/wealth/

[Incognitus]

Bem, em todo o caso é óbvio que a esmagadora maioria da desigualdade de rendimento não virá de trabalhar mais tempo, até porque o tempo que se trabalha não tem muita margem para expandir. Virá sim do valor pelo tempo trabalhado, sendo que os mais ricos conseguirão até desligar o seu rendimento do tempo que trabalham.

[zAPPa]

HEDGE-FUND bosses rarely double as cult authors. But an out-of-print book by Seth Klarman, the boss of the Baupost Group, sells for as much as $2,499 on Amazon. A scanned version of “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor” has been circulating around trading floors. One hedgie likens Mr Klarman’s book to the movie “Casablanca”: it has become a classic.

Why are Wall Street traders such avid readers of Mr Klarman? Baupost, which manages $25 billion, is the ninth-largest hedge fund in the world. Since 2007 its assets have more than tripled, as other funds have wobbled. Baupost has had only two negative years (in 1998 and 2008) since it launched in 1982, and is among the five most successful funds in terms of lifetime returns (see chart), a particularly striking record given its risk aversion. Long closed to new investors, Baupost counts elite endowments like those of Yale, Harvard and Stanford among its clients.

Soft-spoken and based in Boston, a safe distance from the Wall Street mêlée, Mr Klarman keeps a low profile and rarely speaks at industry shindigs. He is probably the most successful long-term performer in the hedge-fund industry who has managed to stay out of the spotlight.

Mr Klarman is a devotee of “value investing”, a discipline forged by Benjamin Graham (see article) and popularised by Warren Buffett, which involves buying stocks at a discount to their intrinsic value. He will look beyond equities for bargains—a good example is Lehman Brothers, which at the end of last year was Baupost’s largest distressed-debt position. But in every investment he insists on a “margin of safety”, the buffer between what investors pay for the stock and what they think it is worth, so they are protected against unforeseen events or miscalculations.

Mr Klarman first became an acolyte of value investing when he worked at Mutual Shares, a value-investing mutual fund, as an intern and again after he finished Harvard Business School. One of his former Harvard professors then recruited him to run a family office for him and three other families, with an investment pot of $27m (Baupost is an acronym for these families’ surnames). Although the fund is significantly larger today, Mr Klarman still runs Baupost like a family office. He is extremely risk averse; his primary goal is not stellar returns but preservation of capital.

In other ways, too, Baupost is not a typical hedge fund. It uses no leverage, which is partly why Mr Klarman is not famous for one stunningly profitable trade, like George Soros’s bet against sterling or John Paulson’s against the housing bubble. Baupost has few short positions and often holds its positions for years, rather than days or months. Mr Klarman is patient and confident enough to do nothing. He currently has around 30%—and has been known to have as much as 50%—of his portfolio in cash. In 2008 Baupost was one of the few firms that had the scale and the available capital to buy up lots of assets from distressed sellers. “The ability to be one-stop shopping for an urgent seller is very advantageous,” he says.

Given Baupost’s allure, it could easily make a killing on fees. But Mr Klarman eschews the generous “2 and 20” compensation structure typical of most hedge funds, which take 2% of capital as a management fee and 20% of gains. Instead, old investors pay “1 and 20”, and newer ones (he has let them in twice, in the early 2000s and 2008) no more than “1.5% and 20”.

That is not the only way Mr Klarman has positioned Baupost in contrast to other funds. He thinks one of investors’ greatest mistakes is chasing short-term performance and obsessively comparing returns with those of competitors and with benchmarks. In the year to April, Baupost was up by around 2%, trailing the S&P 500 (which was up by 11.9%) and the average hedge fund (4.4%). He is probably the only hedge-fund manager ever to tell investors that he does not want to be their best-performing fund in a given year, as he did in a recent letter. He has deliberately maintained a sticky investor base composed almost entirely of endowments, foundations and families, which understand his investment philosophy and will not redeem after a few negative quarters.

Some have nonetheless expressed concern about Baupost becoming a behemoth. The bigger a hedge fund, the more its investments become restricted to bigger companies and the harder it is to generate profits. Returns could flag. “He’s pretty damn big. That doesn’t excite me,” says the chief investment officer of a large American endowment with money in Baupost. Mr Klarman himself says he remains “convinced that unlimited size is a bad idea.” Two-thirds of the firm’s approximately $17.6 billion in growth over the past five years comes from compounded profits, as opposed to new money coming in. In 2010 Baupost returned 5% of investors’ capital, because he did not think there were enough ways to put it to work.

Hedge funds are notoriously monotheistic and usually suffer if the founder leaves. Mr Klarman, who is 55, has already started working with his team on succession planning. Last year he promoted someone to serve alongside him as manager of the portfolio. Mr Klarman has also hired coaches to work with him and some of his team on devising strategy and maintaining the firm’s culture.

In 2011 Baupost opened a London office, its first outside Boston in its 30-year history, to buy assets as European banks deleverage. That has happened more slowly than expected. Mr Klarman has been critical of governments propping up markets through stimulus and keeping interest rates low, all of which has perverted markets. But this is the type of environment where bargains will eventually surface. “Whatever investment success we achieve will take place against a troubled backdrop,” he wrote in January. Last year “felt like we were playing a great hand of cards in the basement of a condemned building filled with explosives during an earthquake.” He did not get where he is now by being an optimist.

http://www.economist.com/node/21558274

[zAPPa]

Bargain hunting for quality in Europe
Posted by Lisa Pollack on Aug 10 09:25.

What do we want (in a low growth environment with considerable macro risk)?!

– Better than market returns on equity and strong balance sheets with above average free cash flow yields!

When do we want it?!

– Now-ish would be good, according to the equity strategy team at Citi in a note published on Thursday.

The way the Citi analysts look at it, even though we’re in for a rough time in Europe in terms of growth, an unresolved sovereign crisis, deleveraging, and political risk with assorted elections on the way in the autumn, the region’s “corporate sector appears attractive measured by current returns (RoE) and balance sheets.”

And so off they went hunting for wabbits European companies that meant these criteria:

    1) better than market average FCF yield for 2012-14E,

    2) better than market average return on equity for 2012-14E, and

    3) strong balance sheet, with sub 1.5x net debt/EBITDA.

Having obtained the shortlist, they went looking for bargains — in terms of 12-month forward P/E ratios — within certain market cap ranges, ending up with this table for the above €10bn bracket:

[zAPPa]

Google's Sergey Brin knows a multibillion investment opportunity when he sees one. Acutely aware of the competitive edges timely data offers sophisticated investors, the company's ever-entrepreneurial cofounder once proposed that Google launch a hedge fund. After all, what company on earth enjoyed greater access to more insights more quickly from more people searching for more information? Then–Google CEO Eric Schmidt was appalled: "Sergey, among your many ideas, this is the worst." (The legal and regulatory entanglements were apparently deemed too daunting to confront.) What a pity.

But Brin's commercial instincts were inarguably correct. The world's biggest and fastest search engine can't help but generate terabytes and petabytes of actionable investment intelligence. The company might well have given Temasek, Pimco, and Berkshire Hathaway a run for their money. In fact, Google chief economist Hal Varian (and other economists and forecasters) already use the search engine's data and analytics to predict economic futures. Google Trends is fast becoming an indispensable tool for many analysts who believe — as Brin does — that the wisdom (and/or delusions) of googling crowds can successfully inform investment strategies worldwide. Google may not have a hedge fund, but it's unlikely that high IQ hedge funds aren't using Google's data to better manage their own situational awareness and risk.

Google, of course, is hardly the only digital juggernaut supersaturated in an embarrassment of informational riches. What kind of hedge funds might an Amazon set up (remember, Jeff Bezos actually came from a New York hedge fund)? With the company's retail insights into the browsing, shopping, and purchasing behaviors of its customers, its views into entrepreneurial investment through its Web Services offering, and its Kindle and Fire media consumption devices, Amazon is extraordinarily well-positioned to strategically invest in explicit companies or particular sectors. The same investment logic holds for Apple's innovation ecosystem; the flow and fortune of its third-party apps development alone would yield valuable insight.

Any data-driven, analytics-obsessed trader or investor would be thrilled running a Facebook fund. LinkedIn, Twitter, and other social media platforms couldn't help but induce precisely the sorts of proprietary insights that might make even a Warren Buffett sit up and take notice. These novel data opportunities indeed reflect "fundamental value." That's as true for a Walmart or a JCPenney as it is for a McKinsey & Co. or a PricewaterhouseCoopers. Virtually all growing businesses are becoming more virtual. The proliferation of digital media means that all organizations are becoming data-rich. The rising ability to identify, capture, and repurpose the data byproducts of an ongoing business is coming to rival the perceived "core competence" of the core business itself.

So what's the best way for executives to rethink their relationship with the gigs, teras, petas, and exas they'll be accessing over the next few years?

The classic business perspective typically views these data as high-performance fuel to make the business run faster, better, and leaner. That's the essence of the Big Data business case. But that mind-set's simply too focused and operational. Truly strategic leaderships — and their boards — should treat Brin's "worst idea" as their most provocative thought experiment for revisiting how they recognize and value data.

Every CEO, CMO, CFO, and business unit leader should ask themselves these questions: If I decided to launch a hedge fund based solely on the data our business generates, what kind of financial opportunities immediately suggest themselves? Who would want to invest with us? Would we do better as traders or investors? Would our opportunities be more global? Does our data suggest exciting investment options in adjacent or complementary industries? How should we be analyzing our data differently? If we collected or connected slightly different data to what we have now, could our fund do even better?

Warren Buffett is famous for observing, "I am a better investor because I am a businessman, and a better businessman because I am an investor." The data-driven "Hedge Fund Hypothetical" challenges the business to reformulate its value proposition in the context of orders of magnitude more data. Conversely, figuring out how to maximize ROI on terabytes and gigabytes can't help but force leadership to reevaluate how orders of magnitude more data should make their business more valuable. The more data-centric or Web 2.0ish an organization becomes, the more quickly and easily portfolios of interactional, behavioral, and transactional opportunity emerge. Marry the Buffett and the Brin to get a glimpse of an alternate future.

Yes, this exercise will surface all manner of ethical — and possibly legal — conflicts and risks. But those are exactly the kinds of values conversations (privacy, exclusivity, fairness, and intellectual property) innovative organizations need to have. The Hedge Fund Hypothetical is designed to be cognitively uncomfortable.

If it feels a little too contrived and uncomfortable, take a simpler first step: Picture the kind of hedge fund your most serious competitor would run.

http://blogs.hbr.org/schrage/2012/09/what-if-google-had-a-hedge-fun.html

[zAPPa]

THE question of whether the Mexican economy might one day regain the top spot in the Latin American league tables has once again become an interesting one. In 2010, many thought it had been settled. The Brazilian economy, more than double the size of Mexico’s, grew at a 7.5% annual rate while Mexico puttered forward at close to 2%. What a difference two years makes. While the Brazilian economy is shambling along at an annualised rate of 1.9% so far in 2012, the Mexican economy is set to grow at 3.9%. If this trend continues, some reckon the Mexican economy will overtake Brazil’s as soon as 2022.

One believer is Benito Berber, Nomura’s Latin America strategist. In a recent report Mr Berber applies Solow growth accounting to a series of forecasts on Mexico and Brazil, with striking results:

Solow splits the contributing factors to economic growth into three categories: human capital (or worker skill levels), physical capital, and total factor productivy, which is essentially a residual that accounts for remaining, unexplained growth. Between 2000 and 2010 Mexico fell behind Brazil in human-capital terms thanks to competition from Chinese labour, lagging education, and incomplete labour-market reforms. This was amplified by steady emigration to America. By contrast, Brazil benefited from a “formalisation” of the labour market as 40m Brazilians entered the middle classes over the decade. A commodities boom led to big investments in Brazil, bringing up its investment-to-GDP figure from 15% to 19%. Mexico’s dependence on America's economy and a manufacturing sector heavily exposed to China led to disappointing gains from physical capital accumulation and total factor productivity.

Yet despite a slow start to the millennia, things are looking up for Mexico across all three of Robert Solow’s measures. Firstly, high manufacturing costs in China are improving the competitiveness and demand-environment for Mexican factories. Secondly, Brazil may have become too dependent on commodity-led growth. While moving resources to the commodity sector allowed Brazil to exploit a comparative advantage, many now see limited opportunity to improve total factor productivity, something which is usually limited to manufacturing. And although Brazil enjoyed a strong reforming government led by Hernando Cardozo in the 1990s, the last decade has been one of increasing welfare costs rather than additional reform. In Mexico by contrast, a newly reinstated PRI, a centre-right party, has promised to continue along the path of supply-side reform pursued by the previous government.

Mr Berber concludes that under a low growth estimate for Brazil and a high growth estimate for Mexico, the countries cross economic paths in 2022 (see chart). This is of course highly speculative; forecasting a decade ahead is notoriously difficult. Yet that such outcomes seem reasonable is remarkable given the conventional wisdom just a few years ago.

If the Mexican economy is to one day take over the Brazilian, it would be a boon for liberal economics in the face of Brazil’s more statist approach. Yet do not expect Brazil to give up the top spot easily. Indeed, a friendly rivalry may benefit both countries’ reform agendas.

http://www.economist.com/blogs/freeexchange/2012/10/growth?fsrc=gn_ep

[zAPPa]

Investing in Master Limited Partnerships: Risks and Opportunities

2012 09 Nepc Investing in Mlps - Risks and Opportunities

[zAPPa]

Maverick Capital Ltd. has launched a new fund that places concentrated bets on the firm's best stock trades, reflecting the hedge-fund industry's push to juice returns that have lagged behind the market and disappointed investors.

The hedge fund, called Maverick Select, will hold 15 to 20 long positions and 15 to 20 short positions from the firm's more than $9 billion portfolio, subject to certain constraints, people familiar with the firm said. The fund is betting on positions that Maverick's new quantitative system believes have the most upside going forward.

Simulations by the firm, helmed by Lee Ainslie III, found Maverick Select would have bested both the flagship fund and the benchmark Standard & Poor's 500-stock index from 2004 through September 2012, more than doubling the index's annualized gains during the period, Mr. Ainslie said earlier this month during Maverick's annual investor meeting.

http://online.wsj.com/article/SB10001424052970204789304578086891622884814.html?mod=googlenews_wsj

[zAPPa]

In the massive 100+ page report they feature twenty investment candidates from a battered Europe, an interview with Charles de Vaulx, and ten value screens.

They highlight features of three favorite stocks - includes Alcatel-Lucent (NYSE: ALU), Anglo American (OTC: AAUKY), and Nokia (NYSE: NOK).

http://www.manualofideas.com/wp-content/uploads/2012/10/moi201210_europe_secured.pdf?utm_source=The+Idea+Farm&utm_campaign=0a20791583-First_Email8_14_2012&utm_medium=email