Tuesday, April 30, 2013

The Haiku of Finance for 04/30/13

Blackberry debut
Full motion image capture
Great for pic sharing

Monday, April 29, 2013

The Haiku of Finance for 04/29/13

Pricing is power
Raise it ahead of cost base
Cash flow bonanza

Financial Sarcasm Roundup for 04/29/13

There must be some sarcastic angle on the movement of the gold price, economic turning points, and the debate over whether austerity is discredited.  This blog is the right place to find such material.

France is going absolutely ga-ga over the yuan.  Maybe they could stick the trading center on Corsica to give the island some respectability.  This is mainly about French multinationals wanting to piggyback on Chinese-funded development projects in Africa, but China is too wily to let the French in easily.  The French Foreign Legion will have to learn to speak some Chinese if it wants to get missions securing Chinese project sites.  I wouldn't blame Germany for feeling jealous if France drops hints about leaving the euro once it goes live with yuan trading.

Iceland is getting sick of both austerity and the European project.  Voting in the parties who led the country into its banking crisis is pretty dumb.  No one said the way out would be painless but grown adults in Western countries don't want to sacrifice for their own good anymore.  They'd rather act like babies and throw temper tantrums when other adults in the room tell them to live within their means.  That's why economists in America are so giddy that the Reinhart-Rogoff debt threshold theory is being attacked for calculation errors.  Everyone wants to be the enabler of good times forever.  Anyway, Icelanders like their welfare state and dislike the troika's preference for austerity, so the euro won't be coming there.

Maybe the House Republicans are smart to trade away entitlement cuts for tax reform.  Entitlements aren't going to be cut anyway because both parties think they're untouchable.  It all depends on what kind of tax reform they get.  If it's a code full of bigger loopholes for corporate big shots and more earned income credits for welfare queens, then forget it.  Two tax brackets and no deductions would be a colossal improvement.  I've been mouthing off in favor a a flat tax for something like forever but I'll take what I can get.  Maybe America will get lucky and have a simplified tax code in place before we get hyperinflation, which would really take care of the entitlement problem.

High-cost financing is now a way of life for ordinary Americans.  A sub-prime nation deserves more than just sub-prime auto and home loans; it deserves a check cashing outlet on every corner to soak up all the income Americans don't need anymore for goods they can't afford anyway.  I'm really impressed with the speed at which my fellow citizens have become addicted to formerly shameful ways of making ends meet.  The crush of applicants for SNAP EBT cards, free cell phones, and SSI disability payments would not be complete without a surge in payday loans and pawn brokers.  America is turning into one big trailer park and the final coup de grace will be to change our national mascot from the bald eagle to a mangy junkyard dog.

In other news, I'm still waiting for some shoe to drop in the markets and flush out a whole bunch of trust fund babies who should never have turned Mommy and Daddy Warbucks' money into a hedge fund.

Sunday, April 28, 2013

The Limerick of Finance for 04/28/13

McDonald's and breakfast all day
Two concepts that should go away
People are just too fat
There's something wrong with that
"Eat more veggies" is what we should say

Saturday, April 27, 2013

The Haiku of Finance for 04/27/13

Indian startup
Raise funding outside country
Need home-grown VC

US-India Innovation Funding Panel at TiE Silicon Valley

I get emails from The Indus Entrepreneurs (TiE) all the time but yesterday was the first time I actually attended a TiE event.  I've really been missing out on some quality insights all of these years.  I journeyed on down to TiE Silicon Valley's conference center in Santa Clara to hear from panelists discussing U.S. and Indian joint initiatives in funding innovative technologies.

The best insight of the evening was from an Indian-American academic I met during the buffet dinner.  BTW, one reason I'm now considering joining TiE aside from the great events is that they serve good Indian buffets.    I'm sitting next to this guy and I ask him whether India still has a rigid caste system.  His answer was that it's much like the class system in the U.S. and other countries.  Indian class status is determined by economics now, and not so much by birth.  I think that's progress.

The introduction from a senior TiE guy extolled the organization's application of the "pay it forward" Silicon Valley ethos where established business leaders mentor younger entrepreneurs.  He noted that Steve Jobs was brazen enough to call Intel's Andy Grove in Apple's early days and Mr. Grove gave him a one our meeting.  That is rare anywhere else but commonplace in Silicon Valley.

The Indo-US Science and Technology Endowment Joint Panel members gave their introductory remarks.  The guy from the US-India S&T Endowment Fund said their fund originated from the US government's food aid program for India.  They grant $2-3M/year to startups to promote commercialization of technology with social impact.  The focus has historically been on accelerating India's development but US-based tech startups obviously benefit.  The fund reviewed about 400 proposals in its third round and will soon announce awards of about $500K each.

The next guy represented the Indian government's sci-tech policy body.  I didn't match all their names and faces with their jobs, so hang in there.  He said India's economic liberalization in 1993 accelerated the country's development.  Sci-tech funding grew rapidly and the number of published academic papers absolutely exploded.  The Indian government has a fund for non-Indian companies that can benefit the Indian market.  I believe he was referring to programs under the auspices of India's Global Innovation and Technology Alliance.

Another Indian guy on the panel addressed the country's business climate.  He said Indian business failures often end up in court.  Yeah, like that never happens in the US, right?  Former partners sue each other all the time in Silicon Valley.  I have digressed; back to the Indian guy.  India has had positive GDP growth for 31 years.  India doesn't seem to have much of a native VC sector, because 94% of all funding for early-stage startups comes from outside India.  I discovered after the panel that there is an India VC Association but the announcements on the home page all refer to investment conferences outside of India.  I think Indian VCs should pump their own activities because you gotta start somewhere.  The Indian guy also mentioned that there's a lack of quality Indian mentors for startups.  No wonder these guys came all the way to TiE; there's nothing like it back in India.

The panelist from the US Department of Agriculture predicted world population peaking in 2050, with water scarcity and limited arable land already setting limits on growth.  The USDA wants to see new agricultural tech to help grow a sector still characterized by hard work and low pay.  He mentioned that US cows in the 1940s produced 4000 gallons of milk (I'm not sure whether he said it was an annual figure or a lifetime figure), but today they produce 30,000 gallons.  Technology drove this improvement in yield.  I checked the USDA's National Agricultural Statistics Service for data on milk production.  I clicked through to "milk - production, measured in lbs/head" because that seems to be the metric for how much a single cow yields in a given year.  The data readout shows that the figure was 5007 lbs/head in 1947 and 21,697 lbs/head in 2012.  Maybe the USDA guy meant to say pounds rather than gallons, but his current year number is still way off and his historical number looks like an average of annual 1940s numbers.  Whatever, close enough for government work.  His basic thesis is still correct.  The technology revolution matters in agriculture.

The US Embassy India's Sci-Tech officer spoke last.  He noted that an open government platform works collaboratively with Indian innovators.  US and Indian coders rolled out upgrades to Indian government websites together and now the India government uploads much more data to its websites for public use.  He mentioned several joint programs promoting women in science, clean energy R&D, oceanography, and health care initiatives.  I'd like to see some Indian financial blogger run through that country's open source data like I do with US data.

Now we get to the panel discussion.  Someone referenced India's innovation timeline as too small and slow, asking how to scale up Indian innovation to match Silicon Valley's rapid time scale.  The panel said the board members of the Endowment Fund agree Indian innovation cycles are too slow.  Their fund has done milestone-based grant funding so far rather than equity funding.  One panelist said the Indian government has funded network centers that do virtual collaboration.

Another guy asked how entrepreneurs can expect to benefit from development funding if the Indian government's requirements for technology transfer are so restrictive.  The panelists said the Indian government takes innovation seriously, but they need entrepreneurs to help show them how to be innovative.

One TiE gal (a rare woman in a mostly male audience) said there's a huge fear of failure in India but Silicon Valley culture sees failure as a stepping stone.  She wanted to know how India would overcome this cultural fear.  The panel guy who said Indian failures end up in court commented that the Valley's tolerance of failure is unique.  Cultural change will take time.  He said India's colonial history may have contributed to its risk averse culture.

Someone asked about Indian water quality and waste.  The panel said different regions face different water contaminants, so there are many ways to deploy innovation.  The Indian ministry that regulates water use is spending money on technology.  I find it interesting that 90% of India's water is used in agriculture.

One of the final questions was about how India incentivizes US serial entrepreneurs to come and do business.  The panel extended an open invitation.  I got the feeling after several questions like this that the typical TiE serial entrepreneur is frustrated with the Indian government's limited understanding of how to develop an entrepreneurial culture.  The TiE folks have their work cut out for them.  A camera crew from the local IND TV studio was on hand to get shots of the action.

My hat is off to TiE.  I can't believe I've missed out on this organization's awesome resources for so long.  I am definitely coming down the peninsula as often as I can, and not just for the Indian buffets.  TiE people have what it takes to blaze trails in business.

Friday, April 26, 2013

The Haiku of Finance for 04/26/13

Proprietary
Can't take assets from a firm
Investor is stuck

The Hidden Agenda Behind Retail Investment Proprietary Products

I despise proprietary investment products.  These are investment securities specific to one brokerage, usually created by its investment bank or wholesale asset management arm.  They've been around for years and need to go away.  Like mutual funds, they've outlived whatever usefulness they possessed at their creation.

Internal hedge funds are stupid and probably a conflict of interest.  The academic research on the inability of actively managed funds to deliver alpha over the long term is clear.  The high expenses and volatility of hedge funds magnify this deficiency.  Firms that create internal hedge funds use them as dumping grounds for securities they couldn't sell to retail investors and as make-work jobs for well-connected insiders who have nothing better to do for a few years.

Structured notes and principal-protected notes are just as dumb.  They represent positions on a given sector or theme that knowledgeable investors can execute themselves with option strategies.  Credit spreads and collars on ETFs are a whole lot cheaper than some note underwritten by an investment bank.

Proprietary products IMHO accomplish two functions very much in the interest of brokerages.  They tie a client's assets to one firm and tie a broker's book of business to one firm.  Think about it.  A client who is dissatisfied with a broker and wants to move assets elsewhere won't normally be able to transfer the brokerage's proprietary products.  They must be liquidated, incurring a capital gain, if the client wants to move all of their assets.  This sets up the client for a very discouraging conversation with their existing wealth manager:  "Oh gee, you can't move all those structured notes I sold you because the gains will mess up your asset allocation.  You can't move your hedge funds either because you're locked in for five years."

A broker who wants to jump to another firm will face similar hurdles if she or he sold a bunch of proprietary stuff to a significant number of clients.  The top-producing big shot who just had their gross payout reduced will have to think hard after realizing that proprietary products aren't portable from one firm to another.  They are a crude form of "sticky" money that stays with a firm regardless of a broker's customer service skills.

Smart investors ignore sales pitches for the in-house favorite funds and notes.  They cost a premium, which firms and salespeople like to collect, but add little to a well-diversified portfolio (i.e., large and small caps, laddered fixed income, hard assets, etc.).

Smart brokers ignore the internal bonuses paid for sales of proprietary products.  They keep their books of business portable by focusing on widely held fund families and individual securities that any brokerage can hold.

I used to be stupid about proprietary products but I eventually got smart.  I have not owned proprietary products since 2006.  I tried to sell them to prospects when I was a financial advisor in 2005-2006; no one bought them from me.  One prospect even ran away screaming when I described how a principal-protected note worked.  I learned about structured notes' stickiness the hard way when I moved my assets from the full-service firm that fired me to a discount brokerage.  The structured notes wouldn't move until I sold them.  They netted out to just about zero gain after transaction costs.  I will never invest in proprietary products again.

Wednesday, April 24, 2013

The Haiku of Finance for 04/24/13

Mexico silver
Some major wants to mine it
If the price is right

Silver Bull Resources (SVBL) and Silver in Mexico

Silver Bull Resources (SVBL) is digging for metals in Mexico and Gabon.  It was known as Metalline Mining until May 2, 2011, yet I am puzzled that the old MMG ticker still exists.  What the name change has to do with operating a mine is anybody's guess.  Hard data and results are more relevant.

The CEO is a geologist.  I tend to favor operating geologists over consulting geologists but a breadth of consulting experience in different geologies and metals helps.  The rest of the team also has deep experience in the mining sector.

Their project in Sierra Mojada, Mexico is coming along.  Their 43-101 data indicated fairly sizable Ag deposits with attractive grades, albeit still in MII categories.  The photograph of the site in their corporate presentation shows several large flat areas adjacent to the projected mine that can accommodate milling facilities and tailings piles.  The site also has a railroad connection, grid power, and water wells.  That is truly the logistics trifecta.

It is significant that Couer D'Alene Mines Corp. owns a big piece of Silver Bull Resources.  It is also significant that Silver Bull's Sierra Mojada project is in the general vicinity of Orko Silver's project.  Coeur D'Alene completed its acquisition of Orko Silver this month.  That puts one of the largest silver projects in Mexico into a producer's control.  I do not believe Coeur D'Alene Mines is ready for another acquisition because they have to shell out CAD$100M to former Orko shareholders and had about US$125M on their balance sheet at the end of 2012.  Silver Bull's current market cap is about US$54M, a bit of a stretch right now for Coeur D'Alene Mines unless they're willing to go into debt or commit the next several quarters of FCF exclusively to another acquisition (unlikely IMHO).  

Their most recent quarterly report dated January 31, 2013 shows cash on hand of US$1.66M and a burn rate of about US$700K/month.  Holy canole, they were running on fumes at the end of that quarter.  These people needed to raise some cash pronto to have a chance at taking Sierra Mojada into production.  Fortunately they did collect about $9.2M from a private placement in February.  That's enough to last another year.

I'm going to wait for Silver Bull's PEA to see how much they think full development will cost.  I also want to see another 43-101 report with 2P data.  Acquisitions in the neighborhood are certainly encouraging because producers need to replace reserves reduced by production.  Let's see if the stock moves once they announce a PEA.

Full disclosure:  No position in SVBL (or other companies mentioned) at this time.  

Tuesday, April 23, 2013

The Haiku of Finance for 04/23/13

Charitable gift
More than just a tax write-off
Big chance to do good

Bluechiip (BCT.AX) Putting MEMS and RFID Together

Bluechiip (BCT.AX) is a tech company in an often-overlooked niche.  They are developing a next-generation RFID electronic marking system that can identify samples stored in extreme environments.  Their chip-based record solves problems that more primitive technologies cause for biobank records.

The bluechiip team is split along lines typical of a tech startup.  The CEO is experienced in establishing commercial relationships and the chief technologist created bluechiip's proprietary tech.  The rest of the team knows MEMS and product engineering but they need someone with experience in the biobank market.

RFID chips that can sense temperature have been around for several years and competitors exist.  BioTillion's BoxMapper coupled with RURO's FreezerPro ColdTrack is one such example.  Research Elemnts' Cryo Element combines barcodes with RFID.  One key to success for bluechiip will be to demonstrate that their RFID reader can display a medical sample's record without requiring the sample's removal from its cryostorage container, thus eliminating the chance of thawing.  I don't know whether their reader and chip have the same price points as competitors.  If they cost more, they need to store and display more data than a barcode to be desirable.

One thing working for bluechiip is that customers who adopt their reader/chip solution will have switching costs of returning to less effective record methods or converting to a competitor's RFID solution.  This can give them a competitive advantage if they sign up a major biobank as an early adopter.  Committing to record-keeping infrastructure is just like most major IT decisions.  One you have a company-wide solution, it's difficult (but not impossible) to change it.

I noticed something interesting in my background research on medical RFID platforms that use MEMS technologies.  A lot of them operate from Australia, just like bluechiip.  Bluechiip may be on to something.  I'm not ready to invest in them because I need to see them capture some market share to prove that their concept works for clients.  Let's see where they are at the end of 2013.

Full disclosure:  No position in BCT.AX (or other companies mentioned) at this time.

Monday, April 22, 2013

The Haiku of Finance for 04/22/13

Wear the latest trend
Pay premium for junk style
Worthless apparel

Lot78 (LOTE) Losing Money on Expensive, Trendy Threads

The pumpers at Trinity Investment Research never let me down when I need grist for my mill.  They sent me a cute mailer touting Lot78 (LOTE), some London-based luxury clothing seller.  I really couldn't care less about trendy clothing.  I wear cheap, boring threads until they fall apart.  Hot clothing retailers don't get me excited because the brain-dead consumers who sustain them with credit card purchases will soon be up against a financial brick wall.  I have digressed.  I must discuss this stock.

Their founder and CEO has a history in high-end clothing design.  That's nice but I can't understand why a brand that has successfully placed its lines in high-end retail chains is still losing millions of dollars per year.  Their retained earnings deficit gets worse every year and they have never generated any revenue.  Their annual report from April 5, 2013 shows that their auditor has going concern doubts and that they must raise additional capital to survive.  They admit they're in serious jeopardy of running out of cash.

What's most jarring about this company isn't the financial results, but its image.  The models wearing the clothes displayed on the website look bored or irritated, as if they're uncomfortable wearing the clothes.  Contrast this with the ads from dominant U.S. retailers like Macy's, where the models are overjoyed to be pictured in their clothes.  The Lot78 clothes themselves look drab with odd placements for exterior pockets and zippers.  I get the impression that some high-end clothing lines have signature styles that say "look at me, I'm expensive."  The message I would get if I saw someone wearing this stuff is more like "look at me, I'm stupid."  

I had to convert the item prices listed on Lot78's site from British pounds to US$ to figure out how much a San Franciscan in Union Square's shops would be set back.  Today's USD/GBP is $1 / 0.65 pounds.  Trans-Atlantic pop musicians and movie stars will always "need" $85 T-shirts and $306 lounge pants but commoners on both sides of the pond are bound to get hit with another financial crisis.  Broke urbanites will do without new clothes if every spare penny must pay the rent.  I don't understand why trendies spend money on spring and summer clothes that look as drab as a basement closet, and at premium prices.  I just don't understand retail at all.  That's why I don't own this stock or anything like it.

Full disclosure:  No position in LOTE at this time.  

Financial Sarcasm Roundup for 04/22/13

Whether good news or bad news, the news stream in business never ends.  That is why my sarcasm will never end.

The grand poobahs of world finance have anointed the global economy as just fine, except for weak growth and not enough jobs.  That kind of logic is so tortured it might as well reside in Torquemada's dungeon.  If GDP growth is weak and job growth is scarce, then there is no real global recovery.  The top dogs don't keep their jobs by generating spooky headlines but it's high time someone called them out.  I have no idea what these fools are smoking but I'm glad I've never smoked anything (except a couple of perfectly legal cigars on special occasions).  Oh, they're also giving moral cover to Japan's debt-fueled stimulus and currency devaluation because they can't think of anything better to do.  Lots of policymakers are backing away from austerity now that economists are questioning the Reinhart-Rogoff 90% debt/GDP formulation.  Austerity is on the ropes and Krugmanite stimulus is ascendant, with no brakes.  The die is cast for hyperinflation and currency collapse in most of the developed world.

Fitch is flushing the UK's credit rating down the tubes.  This is going to happen more frequently as the G-20 consensus referenced above endorses more mad Krugmanite spending and inflating.  The UK's finance minister still pushes austerity but the IMF gave him a polite reminder that the global consensus is shifting to super-stimulus.  Do they have any real sterling left to back the pound?  Or will they pledge the Crown Jewels and the Queen's silver flatware as collateral to stem a run on the pound?  When the dust settles they'll have to find a hard asset pool to back the value of Pound 2.0, or neo-pound, or whatever.  I'd suggest pledging North Sea oil reserves but production may have peaked.

Budget pressure on the air traffic controller workforce is forcing flight cancellations.  This is why I don't invest in airline stocks.  Too much union influence and too much debt hurt profitability.  Now a ceiling on human infrastructure is limiting the daily revenue passenger miles of the industry.  I suspect the USDOT directed the furlough to a sector that would immediately cause the public an inconvenience, in the hope that travelers would whine loudly to elected officials about restoring full budgets.  That's a cute trick.  It will last until dollar devaluation forces a bond market exodus that denies deficit spending.  The hyperinflation that follows will drive fuel costs through the roof and make airline travel unaffordable for anyone except Donald Trump.

I've got other material to write about so I'll finish with some sarcasm about my worthless alma mater, Notre Dame.  Their star football player from these last few seasons is now getting mentioned as an active prospect for the NFL.  The pro teams don't seem to care that this player had an imaginary girlfriend and that the school lied to cover up his friend's deception.  It just goes to show that you don't have to be smart or honest to succeed at Notre Dame.

Updating the Alpha-D for April 2013

I did not make any changes at all to my portfolio today.  This is the first trading day after an options expiration weekend, but I did not have any options expire last month.  My only option position is a long put against FXE because I remain confident that the euro will not survive in its present form.

I remain long GDX as a hedge against the onset of high inflation.  I am also long FXA, FXC, and FXF because I believe the currencies of Australia, Canada, and Switzerland will retain their value if inflation devalues the U.S. dollar.

My only concern with the Guggenheim CurrencyShares products is that their custodian in the UK is JPMorgan Chase.  The prospectuses for these ETFs make it clear that JPMorgan Chase is the depository for the currency accounts and that its potential insolvency would make the ETF an unsecured creditor.  That would not have been much of a concern for me before the Cyprus debacle.  Since then, I have become convinced that the bank resolution model the troika applied there is now the model that US and UK regulators will use for insolvent banks.  In other words, unsecured creditors of JPMorgan Chase cannot expect a bailout that will preserve its existing balance sheet.  We can instead expect to see unsecured creditors get nothing.

I reserve the right to alter my currency ETF holdings at any time if I believe JPMorgan Chase will ever be in danger of becoming a Lehman Brothers or Bear Stearns.  Its derivative exposure and freewheeling "London Whale" risk bets give me pause about whether currency ETFs custodied with JPMorgan Chase are useful to me over the long term.

Full disclosure:  No position in JPM at this time.

Sunday, April 21, 2013

The Haiku of Finance for 04/21/13

Clueless in the cloud
No security device
No patent, no cash

CloudStar (CLDS) Was Accend Media (ACNM)

Here comes the fruit of another mailed teaser.  Jonathan Kolber's Transformational Technology Report sent me a glossy brochure paid for with $2.5M from Elocin Investments, which has a parked web domain and an inactive corporate status at the present time.  Great.  BTW, it's cute that TTR refers to Mr. Kolber as having a "Rolodex" full of important people.  Contact databases supplanted Rolodexes many years ago but let's not let that get in the way of pumpers' efforts to entertain me.  Anyway, this brochure touts CloudStar (CLDS), a purveyor of plug-in security solutions for cloud-based data.

CloudStar was born on May 22, 2012 when the owner of Accend Media transformed his shares in that entity into a position with this new company.  Searching EDGAR for Accend Media's historical documents shows it was conceived in 2010 to market online advertising campaigns and offer web hosting/design services.  I have no clue why Accend Media (ACNM) became CloudStar after such a short time.

The CloudStar founding team is still together and seems to have the necessary qualifications for IT work.  Their suite of security products is either still in development or patent-pending.  It's impossible to evaluate the effectiveness of products that don't yet exist or don't have verifiable performance metrics if they do exist.

Their 10-Q for January 2013 reveals that they've had no revenues so far, which is understandable for a set of products still in beta.  We can only wait to see if they will raise enough capital to fund their product roll-out.  The 10-Q says they need $50K, which I think is not nearly enough for the scale of what they need to accomplish.  Plugging a secure USB verification device into every spare laptop on the market will be a big undertaking, especially if it's eventually configured for biometrics.  Maybe Jonathan Kolber can fund them (insert laugh track here).  I certainly won't be handing them anything.

Full disclosure: No position in CLDS at this time.

Saturday, April 20, 2013

The Haiku of Finance for 04/20/13

Send me tease mailer
Pump some nothing company
Feed my blog traffic

Great American Energy (SRBL) Has Options on Unconfirmed Deposits and Little Else

It's time to examine the merits of another free pump-action mailer.  MicroCap Market Place sent me a teaser touting Great American Energy (SRBL) and how it's somehow positioned to benefit from rare earth element demand.  I have quite a few doubts about how this company can succeed.

The present Chairman and CEO have zero experience in operating a mine, based on their published bios.  Experience in packaging properties for acquisition is not the same thing as turning them into producing mines.   These guys aren't even geologists.

Their web pages on lithium and REE are industry projections with no descriptions of their properties.  They ignore the likelihood that all projected lithium demand for the foreseeable future can easily be met by existing production from the world's top three producers.

The chief advantage of the option they hold to acquire the Big Smoky Valley lithium project is its proximity to Rockwood's existing Silver Peak lithium mine.  Bear in mind this is merely an option, not a working interest or producing mine.  Determining the value of this project means Great American Energy must have a firm 43-101 estimate of 2P reserves.  The expected life of Rockwood's mine could be a factor in this project; if Rockwood needed to replace declining production then acquiring this Big Smoky Valley project would be a natural fit.  Rockwood's interest in such a deal is unlikely given DOE's $28.4M grant support for Chemetall Foote's expansion of the Silver Peak mine.  There is little need to bring a new lithium mine into production if the existing mine in the neighborhood is growing on its own.  Chemetall Foote is the Rockwood Holdings (ROC) subsidiary operating the Silver Peak mine.  We might as well call it Rockwood Lithium.

Great American Energy also has an option to acquire a working interest in an REE project at Bear Creek.  They have a preliminary report on the project's geology but it does not appear to be 43-101 compliant.  It only covers surface samples and its mention of market values does not suffice as a calculation of project NPV that would complete a preliminary economic assessment.  REE prices have collapsed since 2011, just as I predicted in my interview with the Gold Report in December 2011.

Their annual report for April 1, 2013 doesn't shed much light on their progress other than announcing their business change (they used to be named Southern Bella, hence the ticker).  They ended 2012 with a whopping $4218 in working capital.  That report admits their auditor's going concern doubts and also admits the need for further equity financing.  Shareholders can thus expect further dilution.  I can't understand why the stock has an $88M market cap given these uncertainties.

Great American Energy owns options to acquire properties rather than the properties themselves.  They have a long way to go to raise the capital to buy these properties outright, let alone complete exploration and start production.  The company does not not have firm confirmation of deposit quality for either project that would pass regulatory muster.  There's sufficient lithium production from existing sources for the industry to ignore new deposits for a long time.  The worldwide REE price collapse makes new production of anything other than known high-grade concentrates a very risky proposition.  This is why Great American Energy isn't for me.

Full disclosure:  No position in SRBL or ROC at this time.  

Friday, April 19, 2013

The Haiku of Finance for 04/19/13

Boston shut-down cost
Nine-figure manhunt effort
Bad day for business

Economic Cost of Boston Security Shut-Down

The price of security is always a consideration in business.  The manhunt for the Boston bombers is an exogenous shock to microeconomic activity.  A rough estimate of $333M for the cost of silencing the city for one day is not a final figure.  The opportunity cost of lost business does not include the extraordinary costs of deploying out-of-town security forces into the area.  Someone has to pay the bill for the overtime for all those cops, most likely the taxpayers of their home towns.

The final figure will be a baseline for future municipal planning.  Terrorists now know they can inflict hundreds of millions of dollars in damage with the asymmetric use of cheap hardware.  Smart law enforcement planners will find ways to deploy police forces that don't choke off a city's business activity for days on end.  This is where Americans can learn from Russia's experience in dealing with Islamic radicals.  Did Moscow completely shut down when Chechen separatists held a theater hostage?  I doubt it but policymakers need the data.  Dunkin' Donuts stayed open in Boston because cops need donuts even in a crisis.  Resilient systems will survive terrorism.  I could use a donut right about now.

Thursday, April 18, 2013

The Haiku of Finance for 04/18/13

Market at the top
Complacent investors sleep
Nothing left to hedge

Wednesday, April 17, 2013

The Haiku of Finance for 04/17/13

Indicators peak
New data rolling over
No rebound in sight

Tuesday, April 16, 2013

The Haiku of Finance for 04/16/13

Telecommuting
Best working style for loners
Keep people away

Monday, April 15, 2013

Financial Sarcasm Roundup for 04/15/13

My post earlier today about tax day and my self-imposed portfolio limits wasn't very sarcastic.  I am not one to let my audience down.  This is Monday.  There shall be sarcasm.

China's GDP growth hit another speed bump, declining to 7.7%.  Further declines will jeopardize the nation's strategy of parceling out enough material prosperity to suppress regional separatism.  Nationalism is the only alternative, and it always brings its twin sibling - militarism - to the party.  America's allies in Asia should plan accordingly.

Ireland just got a debt payback extension of seven years.  So did Portugal.  Extending the duration of whatever is on the balance sheets of the ECB and IMF means those institutions need to shore up their asset columns.  Someone's phone at the Fed is probably ringing right now.  Whoever picks up will need to know the red line for activating trillions in dollar swaps.

Increased funding for US financial regulators faces an uphill battle.  The loyal opposition is doing it all wrong. If they're painting this as another fight against big government spending, they'll lose.  Big finance loves big government and modern Americans love deficit spending.  The smart fight should be over a return to the simple but effective Glass-Steagall regulatory regime that worked for decades.  Alas, this is a missed opportunity.

Here's a final observation that wasn't in the headlines but happened in real life.  The funniest part of my day wasn't the tech CEO who kept referring to himself in the third person during his pitch.  It was the junk email from an Indian web host stating "Columbus wanted to discover India" that attached the iconic pic of George Washington crossing the Delaware River.  Stuff like this happens to me all the time.  People who don't hang out in my crowd are missing all this fun.

Tax Day 2013 and Portfolio Limitations

Filing one's income tax returns can be like getting your teeth cleaned.  It's inconvenient but necessary.  Like it or not, taxes are the price free enterprise pays for the "commons" of defense, justice, public health, and other stuff used by all players.

My tax burden was rather light in 2012 mostly because I deliberately chose not to execute any merger arbitrage trades in my portfolio.  The opportunity cost of not playing some obvious low-risk events (well, obvious and low-risk for me alone) was probably significant.  The risk for me of having my capital tied up in strategies I can't unwind is potentially much greater than that cost because I don't want to be caught in the middle of a major market dislocation.

Merger plays are low-risk in a stable macroeconomic environment.  Our present environment is totally unstable.  Its parts hold together with duct tape, bailing wire, and the prayers of a few dozen central bankers.  If the market were to crash after I go long the stocks of announced acquisition targets, collapsing share prices may result in the merger's termination.  I'd be stuck with outsized positions in a handful of firms outside my normal sphere of competence, at valuations much lower than whatever premium the acquirer would have paid.  A merger-arb strategy in this kind of market is like picking up nickels in front of a steamroller.  I'd rather leave the nickels in place than try to run ahead of the steamroller.

I also used to be a fan of using cash proceeds from option writing to add to fixed income holdings.  I let the last of my bonds mature last year, and I'm staying away from dollar-denominated bonds.  The risk of hyperinflation is more compelling than adding yield with a bond ladder.

I probably missed a great deal of potential gains by sitting on the sidelines this long.  I have to live with this outcome.  Hedge fund managers chasing yield and pension fund managers beholden to benefit payouts must also live with the extreme risks they are taking now.  I believe my patience will be rewarded.  I have waited a long time and I have further to wait.  

Sunday, April 14, 2013

The Limerick of Finance for 04/14/13

Top filers can minimize tax
Burden falls on mid-income backs
More mandates await
With clauses you'll hate
Unpleasant but these are the facts

Saturday, April 13, 2013

The Haiku of Finance for 04/13/13

Useless MBA
Two years out of the work force
Sunk cost, zero gain

Friday, April 12, 2013

The Haiku of Finance for 04/12/13

Signs are all around
Chaos risk rising daily
No one got ready

Many Warnings, Little Preparation

This is a rant for which I have little enthusiasm.  Harvard's Carmen Reinhart warns once again that the financial crisis has not passed.  Savers and pensioners in the West who count on their fixed income holdings to retain value are in for a rude awakening when inflation and financial repression grab them by the throat.

Economic stats are getting more negative by the day.  Hardly anyone seems to notice downward revisions of past data anymore.  Inflationary times are kind to people with hard assets and high debt loads.  They are not kind to holders of cash and bonds.  Other assets are a mixed bag.  Stocks in sectors sensitive to disposable income fare less well than stocks in more basic sectors when inflation harms a nation's buying power.

I prepared my own life for whatever lies ahead.  The people I continue to meet at social events around town are mostly oblivious to obvious risks.  They continue to ride unsustainable trends and ignore contraindicators.  I wonder why people of means who can afford the best advice see little value in becoming truly resilient.

My regular readers don't have to read between the lines because my published history speaks for itself.  I mock anyone who thinks this time is different.

Thursday, April 11, 2013

The Haiku of Finance for 04/11/13

New mobile era
Microsoft cannot compete
No monopoly

Microsoft Losing Its Monopoly Power to Tablets and Smartphones

I don't follow the tech sector as closely as most business analysts in the Bay Area, but I do take note of obvious sea changes.  Slackening PC sales are hurting Microsoft and its hardware partners.  Microsoft shows no sign of learning the tablet market.  The 10.6 inch screen on its Surface tablet is almost as big as a laptop screen.  Mobile users don't want to lug around something that big.  The iPad display is 9.7 inches.  Google has a 10 inch Nexus but its operating system isn't as irritating as Windows 8.  An inch or so matters, and so does usability.

I'm noticing that the prices of smartphones and tablets are declining to points that make them desirable for late adopters.  You'd think the commodification of a new gizmo would work to Microsoft's advantage, but they haven't moved fast enough to win the operating system competition in this sector.  This will not be a repeat of Microsoft's desktop PC victory over Apple or its browser victory with Internet Explorer.  HP reads the handwriting on the wall, but appears to be reading it backwards.  It has combined the Chrome operating system with yesterday's laptop hardware and yet the solution presents the worst of both worlds, according to VentureBeat.

Microsoft has yet to learn that its cherished suite of Office applications must move to the cloud.  Outlook is already there, overlaid on what used to be Hotmail.  I am nowhere close to buying a tablet or smartphone, but if the prices keep coming down I'll have to reconsider.  My impression is that Google-compatible devices  have a much more expansive walled garden in Google's cloud than what's available from competing platforms.

Full disclosure:  No positions in any companies mentioned at this time.

Wednesday, April 10, 2013

The Haiku of Finance for 04/10/13

Fed just keeps going
Blowing new asset bubbles
Unbelievable

Indefinite Bond Buying and Another Housing Bailout

It's too early in the week for more sarcasm, so I'm going to try very hard to keep it real today.  The Fed's newly-released minutes from March hint at winding down the $85B monthly QE.  I can't believe there is any way they can do that without the housing market going straight down the tubes.  The Federal Housing Administration will need a $943M bailout because it guaranteed home mortgages that are now underwater.

Just remember that the Fed bought mortgage-backed securities to support insolvent banks' balance sheets, which encouraged banks to use credit from the Fed to buy Treasuries.  The FHA is forcing the Treasury to eat home loan losses, so the Treasury must issue new debt to be bought by banks whose mortgage-backed securities are being bought up by the Fed.  You don't need an MBA to figure this out.  The Fed's quantitative easing supports a very fragile house of cards.  If and when foreign central banks start to sell their U.S. Treasuries, the U.S. banking sector and housing sector come tumbling down.

Full disclosure:  No position in U.S. dollar fixed-income securities at this time.

Tuesday, April 09, 2013

The Haiku of Finance for 04/09/13

Foreclosure relief
Won't happen for most people
Just an empty stunt

Monday, April 08, 2013

Financial Sarcasm Roundup for 04/08/13

Cyprus is out of the headlines but not out of trouble.  There's enough going on in other countries to warrant continued sarcasm.

Portugal is going for austerity.  Europeans can say goodbye to their precious social safety nets, which are really drags on productivity.  No more nonsense like two months of vacation for those folks.  What has Portugal done lately that warrants such generous benefits anyway?  It's not like still own big chunks of the New World, for crying out loud.

Abenomics isn't going to work.  The Japanese yen is at a three year low against the U.S. dollar.  Other central banks aren't going to wait for Japan's export data before they retaliate with more printing.  When that happens, Japan will be right back in stagflation and on its way to high inflation.  Japanese exporters have window of maybe two or three months in which to use their windfall earnings to stock up on physical plant and inventory that will hold their value domestically.

U.S. unemployment is dropping only because frustrated job seekers are leaving the workforce.  Federal spending cuts so far have been too minuscule to account for the hiring slowdown, so I wish the financial media would drop that meme.  It's ironic that last week I attended a technology transfer conference with scientists and investors who would love to create new jobs.  They need STEM graduates for high-tech work but American colleges are churning out indebted liberal arts grads.  The mismatch won't last forever.

Australia is the latest country to go for direct currency exchange with China.  Neither one wants to get stuck holding U.S. dollars when the run on that currency starts sometime.  I'd like to know whether Asian multinational corporations are moving their cash holdings out of dollars.  American and European multinationals were minimizing their euro exposure in 2012 and events will prove them to be prescient.

Today's good news comes from New Zealand, where the central bank promises to raise rates to fight inflation.  That's the exact opposite of the Greenspan-Bernanke philosophy and the results for their economy will be very different from America;s current malaise.  I haven't purchased any New Zealand dollars yet but stories like this revive the temptation.

My quest for sarcastic material will never be fully satisfied.  Even "Mickey Ronin" knows that but he hasn't provided me with anything stupid to laugh at in recent days.  Come on, dude, don't save all of your lies for your court appointment.

Retirement Account Cap Will Limit Ability to Hedge Hyperinflation

The Administration's coming budget plan will cap the value of tax-advantaged retirement accounts at $3M.  It's too early to tell how the federal government will enforce this cap without seeing the enabling legislation.   I would have no objection if any excess value in a retirement account after the beneficiary's demise were subject to full taxation as part of an estate.  If the intent is to prevent retirement accounts from being abused as multigenerational tax shelters, this will prevent them from being passed to heirs in a tax-free status.  This idea has more immediate implications for investors than estate taxes.

My readers know that I expect a dollar devaluation and policy overreactions to launch hyperinflation in the U.S. at some point.  A tax-advantaged investment account would in theory allow the preservation of wealth during hyperinflation if its asset mix was heavily weighted toward hard assets.  Any cap on the account's value poses a complication.  If the cap is enforced only when distributions stop at death, it's not much of a concern.  If, however, the cap is enforced annually via a special tax, then the nominal value of the account will not rise above $3M in any given year.  This will pose a huge problem for investors positioning a portfolio for hyperinflation, because the real value of a hyperinflating currency will decline to the point where a nominal value of $3M is meaningless.

This proposed cap will pose a serious dilemma for investors who want to preserve their net worth during and after a currency crisis.  Holding an IRA that is forced to remain below a $3M ceiling will prove disastrous in a hyperinflated economy where a cheeseburger costs $3M.  Investors must now wargame scenarios that include the liquidation of an IRA as it approaches the $3M limit, the payment of a penalty, and the deposit of the remainder into a taxable portfolio (presumably also with a heavy hard asset weight) that so far is not subject to the same ceiling.  The point of such a mitigating move is to allow a hard asset portfolio to continue to keep pace with hyperinflation.

Caps and taxes on private retirement assets are a form of financial repression that keep redistributive entitlement programs fully funded.  Lazy people who did not save for the future think it's fair to take money via taxes from those who did save according to a plan.  This idea will make it much harder for makers and savers to keep their capital away from takers.

Sunday, April 07, 2013

Paying Attention at Cloud Connect 2013 in Santa Clara

The annual Cloud Connect conference in Santa Clara is a can't-miss event on my calendar.  Last week's version for 2013 was no exception.  I only attend the keynote addresses and the expo floor because those are free and I'm extremely cheap.  My readers need to know that I'm not an IT expert, so I attend to expand my knowledge.  As usual, the speaker's summarized comments are in normal text and my own interpretive comments are in italics.

Steve Wylie kicked off his intro with an announcement of Cloud Connect China coming this fall.  Great, another opportunity for Chinese state-sponsored companies to pirate Western technology without attribution.  The conference engaged Everest Group to conduct market research on their audience of cloud users.  One bottom line that emerged is that cloud solutions purchasers expect more from their systems than cost reduction.  Several of the speakers this year addressed the ROI of "cloudonomics" enhancement to an entire enterprise.

Alistair Croll spoke on "End to End Lean IT."  He sees the shift to cloud as part of a view that IT is no longer scarce.  I learned a new term at this conference called "DevOps" and several speakers developed it further.  His interpretation of DevOps is the simultaneous coding of infrastructure, data, and apps all at once so they can expand and contract as the enterprise's agility demands.  Agile coding builds out from the waterfall model, which emphasized sequential completion of development steps.  Concepts like lean, agile, DevOps, and cloud aren't new on their own.  IMHO integrating them is the new "lean" IT gold standard.  Alistair drew an analogy to "holons:"  Our biological components act on their own while we live as integrated human beings, so IT efforts should build organizations into living organisms.  I'll buy that, but an organism can't shut down or upgrade its living systems (organ transplants, hip replacements) without taking the whole organism out of action for a while.  It's a worthwhile analogy if IT systems are self-diagnostic and can schedule their own repair cycles, the way living cells repair themselves with new proteins.  He thinks overnight shippers like FedEx act like logistics "clouds."  I do know something about logistics, and I buy his analogy here.  FedEx's tracking process is like a transparent SaaS providing real-time system diagnostics.  He gave 3D printing a brief mention, implying it enables cloud manufacturing.  Lean IT components can't be built piecemeal but organizations will resist the change from a big integrated solution.  Sounds like IT people need a PMP-qualified change champion who can sell lean IT up the org chart.  He mentioned scale as a durable competitive advantage and touted Daniel McCallum's Civil War-era railroad management technique of assigning one person to monitor every 50 miles of track as the basis for the management of modern organizational scale.  He also noted that the Israeli military optimizes for resiliency, not scale, with a command structure that enables fluid replacement of key positions in combat.  The bottom line is that lean IT must build for resiliency in its components, not scale.  This sea-change in what constitutes a durable competitive advantage will be hard for the largest organizations because it implies that much of their scale will be made redundant once 3D printing, outsourced logistics, and other developments cut out big parts of their operations.  

Lew Tucker is the cloud dude at Cisco.  He said apps are narrowcast and designed for a single purpose, but a network must respond to the needs of apps.  Huh?  I don't know what he means, so I'm glad I don't work in IT.  He named four broad changes driving IT innovation:
1.  Internet of Everything (is it a Cisco trademark? seems like an evolution of the Internet of Things)
2.  Software Defined Network (SDN)
3.  Big Data
4.  Cloud Platform
BTW, if you dislike my heavy use of Wikipedia definitions, you can buzz off.  Wiki sources vary in quality but they are preferable to a branded corporate definition and their links are more or less permanent.  Lew said that SDN allows software to interact dynamically with a network, all on its own.  SDNs now have APIs enabling optimization.  An "app-centric net" merges what were several different IT layers.  This demands integrated policies governing enterprise IT.  Dynamic control of IT parameters and layers aligns supply and demand, not just for internal IT services but for deployment of resources across the whole enterprise.  I interpret this to mean that procurement and deployment of modules for an ERP system architecture require extreme flexibility, and cloud apps augment this flexibility.  There are other interpretations, of course, but the non-IT manager will interface the cloud using whatever ERP API their work group uses.  The PMP change champs will make sure that the API resembles Facebook.  Lew contends that IT pros need to revisit old subject like control theory and statistics; I take this to mean that there are time-tested methods for ensuring APIs and their governing policies are valid for large numbers of cases.  His bottom line is that disrupting the traditional IT cycle with those four numbered changes creates opportunities for startups to add value to this new virtual cycle.

Michael Barrett is the Chief Information Security Officer guy from PayPal with a British accent.  Maybe he's the only guy there with a British accent.  He predicts the imminent obsolescence of passwords as infosec barriers.  Yes!  I'd welcome that if it means biometrics can make online ID verification more secure.  He advocates considering alternative authentication methods that won't hurt the Internet's growth.  Password cracking is easily scriptable.  Most people use the same password for their email accounts and financial service providers.  Poor passwords and reusing passwords often are dumb.  The IT security manger's "sweet spot" is where high usability meets high security in a matrix that pays homage to a Gartner Magic Quadrant.  Michael leads the FIDO Alliance push for open standards in fully integrated authentication.  Commonplace biometric devices will encourage deployment of new protocols with stronger two-factor authentication.  Cloud adoption, better authentication, and federated identity combine in a perfect storm.  Biometrics should be stored on local devices because that's the user interface; this enhances cloud adoption without risk of putting biometric data into the cloud itself.  I find it difficult to add anything to Michael's vision other than applause.  Biometric devices and protocols have been around for decades and privacy arguments should not stand in the way of implementation.  A biometric print is the ultimate non-counterfeit authentication.  

William "Bill" Ruh from GE spoke on "Clouds, Big Data, and Brilliant Machines."  The coming of the "Industrial Internet" will transform IT with modeling, analytics, and deep signatures.  IMHO this impacts production with 3D printing sourcing designs from everywhere and routing them to production anywhere.  Unlocking value means fundamentally changing data collection and analysis.  Allow me to segue a bit here while paraphrasing one of his salient points.  Selling IT solutions like cloud on their own merits is less effective than linking IT solutions to productivity.  Link IT changes to efficiency gains, cost savings, revenue generated, project NPVs and ROI.  Bill said GE's gas turbines have 20 sensors, and one turbine generates 500 GB of data per day.  This includes predictive analysis of blade failure.  I recall attending a USF business plan competition several years ago where a startup pitched a sensor solution like this to a VC audience.  They made a bunch of sense to me but now it looks like the big firms have their own turbine sensor solutions.  The IT needs of health care and aviation are very different, so their cloud use will be different.  Applications and partner choices are not trivial.  I'm now concerned about whether anyone is considering SCADA vulnerability of cloud-to-machine connections.  Sending data from sensors and controls to the cloud means a hacker who breaks into the cloud can monitor and destroy SCADA, similar to the Stuxnet worm.

Kit Colbert from VMware had stuff to say about "Changing the Mindset of IT."  Apparently, IT still runs on a central planning mentality.  Yeah, especially in the U.S. government.  Try doing BYOD without an explicit exception to policy from three levels up and your personal device will be confiscated, without reimbursement.  Kit wants to virtualize resources behind IT's background interactives.  The app layer can present user with a menu of services and their costs of use.  Sounds like IT a-la-carte.  IT should provision capacity before users arrive, then enable users' requests.  It should work like FedEx's internalization of a self-service logistics model.  There's that FedEx model again.  IT pros envy FedEx's business model and financial analysts consider it to be a bellwether stock.  FedEx is doing something right to earn that much attention.  Is Berkshire Hathaway a FedEx shareholder?  Just sayin'.  Policy governance of user actions should enable user preference for virtualization of services.  Analytical tools give IT pros data on trends, capacity, and user choices that will aid decisions on system growth and governance.  My non-IT interpretation of this stuff is that the new IT mindset must internalize preferences for enabling broad infrastructure choices.  

Dave McCrory from Warner Music told us all about the "Origin of Data Gravity."  He invented the concept of data gravity and blogs about it regularly.  His theory starts with the observation that a spectrum running from lower latency to higher bandwidth offers a tradeoff for closing gaps between apps and data.  There's an accelerative effect as an app moves closer to data due to lower latency.  Terminal velocity is a point of location for data where gravity adds no value.  I believe he's doing innovative work with this theory, but one part of his presentation I disagreed with was when he displayed a linear depiction of what the knowledge management community calls the cognitive hierarchy.  He connected them with cybernetic feedback loops but giving cognition a linear structure becomes chaotic if you don't build it in layers.  The pyramidal cognitive hierarchy's layers imply the use of controls and filters to sift data into understanding.  This IMHO is a more valid model than cybernetic feedback loops.  He moves from one state to another by reducing uncertainty, which is precisely analogous to moving up the cognitive hierarchy.  He matches the OODA loop to each of his four steps and even throws in a concurrent PDSA cycle.  Picture this . . .

Data / Information / Knowledge / Action
Observe / Orient / Decide / Act
Plan / Do / Study / Act

I note that Dave replaces "Understanding" with "Action" in the cognition steps.  That obliterates the need for decision makers to understand before they act, and if you want action there's enough of it in the OODA and PDSA progressions without going for a perfect match in all three schemes.  IMHO matching things like this is too simplistic.  OODA and PDSA are non-linear processes that lead back to their beginnings at the end of a cycle.  I want to develop the proper relationship between OODA and cognition, so watch my special reports page on my main site.

Dave's thesis is that data gravity shrinks gaps between each of those four phases, accelerating cycle time and shortening cybernetic feedback loops.  I like the guy's theory and I plan to link it to existing theories.  Like I said, watch this space.

Jim Davies from Mitel had something to say about "Cloud Formations:  A Framework for Cloud Decision Making."  The big hype around cloud transitions hinders rational planning.  He argues for keeping answers independent when answering framework questions; this preserves your flexibility.  He suggests asking three questions:
1.  Does the proposed app meet requirements?  (his most important question)
2.  How do I want to deploy the app?  (not a one-time decision)
3.  How will I pay?
Jim visualized those questions as three axes of a Rubik's cube.  Don't get locked into one block.  Build contracts so you can move from one area to another.  View your IT choices with an engineer's eye to an independent variable problem.  You can't outsource accountability for making these choices even if you outsource execution of cloud components to third-party vendors.

The final Wednesday speaker was a guy introducing Cloud Connect China.  I could tell by his brief topic introductions that cloud philosophies in China are radically different from those in America.  He mentioned that there were five "cloud model cities."  Designation of those cities and articulation of the national cloud plan are all centrally-planned ideas!  Read back up into my synopsis about the shortcomings of centrally planned IT.  The People's Republic of China will never allow fully articulated IT structures to grow in their country because it would weaken the regime's control of information.  That need for control will retard China's competitiveness in everything it does.  The Chinese guy also made a point about China encouraging small and medium enterprises to use public clouds.  I must presume that these public clouds all have back doors installed so the Chinese police state can monitor internal data traffic.  No way would I want to be a medium-sized American business that opens a Chinese subsidiary if surrendering control of IT architecture is the price to pay for market access.  China just doesn't understand the cloud except as another means of social control.  

Now I'll cover the Thursday keynotes, all of which were free of charge once again.  Steve Wylie and Scott Bils discussed the Everest Group research results in more detail.  Users clearly prefer private clouds for all workloads.  Uh-oh, that's bad news for those China central planners who want everything in a public cloud.  Call the Politburo and tell them they won't be getting business from the Fortune 500.  Buyers tend to be unaware of IaaS services in public clouds.  They're also probably unaware of Chinese back doors in those public clouds, if you know what I mean.  You'll have to read the rest of those research results yourself.  My own need for cloud services is very limited anyway.

Thursday's panel was titled "Are Clouds the Gateway Drug to a Quantified Society?"  I had to wonder at the choice of title given some audience snickers.  Is there an unspoken, underground tradition of drug use in the general IT community, and Silicon Valley in particular?  I can see how repeat customer service nightmares can drive an IT pro to drink but harder drugs are a serious matter.  Maybe the title is some inside joke at the expense of Silicon Valley types who cross over into the rave scene or go to Burning Man.  I'm not part of anything like that, so it's a mystery to me.  Whatever.  Ann Winblad from Hummer Winblad moderated this gaggle of tech stars.  Here comes the stream of consciousness version of the panel's insights, without specific attribution.  Business success is increasingly determined by access to real-time data.  There are no API substitutes.  API provides the agility required to turn organizations into organisms.  Fully integrated "cloud of cloud" infrastructure requires certain decisions.  Enterprises must have open sources and open standards to use clouds.  Ouch, more bad news for China!  Open source solutions can solve problems that proprietary systems can't solve, because you can reassemble system components quickly.  IMHO proprietary platforms will only have niche appeal once open source dominates the cloud.  Consumers don't care if a downloaded app is from an open source or not.  It only matters at the enterprise level if the choice of open versus proprietary affects productivity.

Cloudified apps that facilitate data flows from devices (mobile, SCADA, smart grid IMHO) will drive the connection of billions of devices to enterprise clouds.  This implies VCs like Hummer Winblad should buy cloudified startups.  "Elastic" is not as descriptive as "adaptive" when evaluating public versus private infrastructure choices.  System flexibility determines how much an enterprise builds out.  The whole panel was a big fan of Amazon's build out of cloud as "shadow IT."  They admit Amazon's pricing model is a benchmark for competing vendors of cloud solutions.  Amazon's AWS revenues aren't segregated but the panel estimated them at several billion dollars.  I think Amazon can get more future growth from public cloud services than B2C goods transactions.  Security means keeping your "attack face" small.  I can't find a good definition of "attack face."  It sounds similar to what the military might call a vehicle's silhouette or radar signature.  The best practices in cloud security are still undefined.  That's exactly why American-hosted systems will be increasingly vulnerable to Chinese hackers until we get our stuff squared away.  Vendors must design security into systems during development.  Security isn't the only risk in the cloud.  The lack of knowledgeable operators means it's hard to extract full value from quality systems. DevOps is both a cultural movement and a technical shift.  DevOps and IT can benefit from closer alignment.  IMHO fielding a cloud implies a KM effort to ensure whole enterprise knows how to benefit from its components.

Nathan Day from SoftLayer told us that "Performance is Not a Commodity."  Automobile performance depends on speed, miles per gallon, cost, etc.  Performance means different things to different people.  Think about what matters to your organization.  "Bare metal" pure horsepower isn't possible in virtualization.  Tradeoffs are inevitable.  Don't trust vendors' claimed benchmarks.  Hire third party testing, or test against your own existing benchmarks.  Use standard deviations to assess consistency of performance when scaling up potential system build-outs by size.  Virtualization is a tool, not a requirement for cloud.  I don't have much to add here, so this stuff is published for the sake of completion.

Margaret Dawson is the VP of public cloud stuff at HP.  She asked us all to stand up and yell "Grizzly!"  I sat and remained silent.  I don't mind watching other people display enthusiasm for life but don't expect any enthusiasm from me.  Margaret wanted to tell us about "Fear and Loathing in Corporate IT."  The era of "Gonzo IT" blurs the lines between enterprise-wide IT strategy and the shadow IT of multiple services.  She gave us some options:  Ignore it, tolerate it, police it, or  . . . take control.  IT must control cloud utilization in partnership with business' larger strategy.  You know, after attending enough of these enterprise and cloud conventions over the years, I get the distinct impression that IT pros need to be hectored over and over again that they need to be an integral part of a for-profit strategy.  I wonder what the cultural imperatives are among IT people that inhibit so many of them from thinking like business people.  The same could probably be said about other professions in back-office functions.  She has an eight-step model for IT folks.  Good for her; I had an eight-step model in the Army to plan training events.  Know what data you already have and decide how much of it is mission-critical.  Shut down processes that don't matter.  Review non-IT departments' key performance indicators (like marketing's lead conversion ratio) and adapt them to IT processes.  IT people should own the ROIs of shared KPIs.  She peppered her talk with references to what's hot at HP, like open stack architecture.  Cool.  HP will be around for a while because people like Margaret can talk about business metrics in an IT vocabulary.

Lisa Larson from Rackspace was up next.  She said IT pros' jobs are jeopardized when other business units go out and buy their own solutions as shadow IT not governed by enterprise policy.  IT pros are passionate about playing with leading edge tech but their time is consumed with managing existing infrastructure.  Good infrastructure empowers an enterprise's users with self-service tools so they don't have to buy their own shadow IT.  The IT pros are then freed from daily system management routines and can spend time innovating.  CIOs should not have to build new data centers if they adapt to clouds.

Joe Weinman was the final keynoter.  He is the author of Cloudonomics, the first comprehensive study of how the cloud delivers real business metrics.  He asked us rhetorically why we're doing all of this cloud stuff and where we think it's headed.  I know where I'm headed; straight to the public library to check out a free copy of his book.  Hard metrics are indispensable.  Cloud benefits include a capex to opex translation, and the reduction of unit costs through scale.  The correct IT strategy is cost optimization because IT is now a commodified service.  Cloud combines a pay-per-use, on-demand model with scalable enterprise IT services that have heretofore existed separately.  He mentioned that the Jevons paradox really mean the price inelasticity of demand; I won't spoil the explanation here, so I need to go read his book.  He referred to Nicholas Carr's book, Does IT Matter?, and answered it with NO because it's non-strategic and non-differentiated.  That's why the correct strategy is cost optimization.  He referred to fixed effects models of firm profitability that show the ROI of IT investment.  This is heady stuff!  Now we're getting somewhere serious.  Goldcorp crowdsourced its mining data, which amazes me because I didn't think miners understood IT except as a repository for geographic modeling tools.  I really think Joe's CLOUD acronym and its supporting equations are brilliant.  He finished by arguing that a hybrid cloud is the optimal solution.

The expo floor was full, for the first time in a couple of years.  That's anecdotal evidence of the enterprise IT sector's financial health.  I scored some free T-shirts but didn't win any of the giveaway prizes.  I didn't score any phone numbers of attractive women, but frankly I wasn't trying.  Cloud Connect is a nice break from my normal routine on the circuits for the natural resource sector and financial community.  See you next year, cloud people.

Saturday, April 06, 2013

The Haiku of Finance for 04/06/13

Fisker magic car
Nothing but problems from start
Hard to find buyers

Fisker Automotive, the DeLorean of the Green Car Era

Fisker Automotive is probably out of gas, even though its cars aren't supposed to use much gas.  It laid off almost all of its workforce except for a skeleton crew of office staff who will try to sell the company or wind it down in bankruptcy.  What went wrong with this company?

The Fisker Karma is a nice-looking sports car, but just try fitting inside.  The EPA rates it as a subcompact because the interior is so small.  I've never heard of a car marketed as a luxury sedan that was actually determined to be a subcompact according to its structure.  Oh, let's not forget that the first ones out the door were recalled due to a risk of battery fire.  The battery maker, A123 Systems, went bankrupt in 2012 and was bought by a Chinese company.  The car broke down on Consumer Reports' track before it even got started with a road test, earning it a failing grade.  The thousands of suckers who pre-ordered a Karma will probably never get one; I wonder if they had to pay cash up front.

This reminds me a little of the infamous DeLorean Motor Company from the 1980s.  Its singular product, the DMC-12, was as overpriced and unimpressive as the Fisker Karma.  The DeLorean legacy only exists today as a spare parts repository and kit car builder for a handful of enthusiasts.  Fisker fans can hope for a better outcome, but hope is not a method.  The federal government may end up owning Fisker's assets if it can't repay a DOE loan.  Good luck getting those parts and tools out of a government warehouse.  I have an image in my head of the last scene from Raiders of the Lost Ark, where the U.S. government sticks the Ark of the Covenant into a warehouse where it is presumably lost forever.  That Ark was really a superpowered energy source that destroyed whoever tried to use it.  Well, the Fisker line of cars was supposed to be pretty powerful but the business ended up destroying a lot of capital.  Thus ends my convoluted analysis for today.  I hope you were entertained, but hope is not a method.

Full disclosure:  I do not own any Fisker products, nor did I ever consider buying such a car.  I drive a gas-guzzling Ford Mustang that hums better than any wimpy electric car.  

Friday, April 05, 2013

The Haiku of Finance for 04/05/13

B of A to pay
Brokerage poor fit for bank
Break off Merrill Lynch

Bank of America Still Paying for Merrill Buyout via Lawsuits

Bank of America has to pay a $2.43B settlement for a class action lawsuit over its buyout of Merrill Lynch.  Consider also that BofA is still facing potential a civil fraud lawsuit from the state of New York.  A brief history of this acquisition reveals that it cost $20B initially, then forced BofA to incur a $27.6B loss and incur a $20B bailout liability.

I feel safe in saying that the acquisition of Merrill Lynch will never really pay off for Bank of America.  Whatever specious synergy BofA may have gained from combining back office functions is minuscule in the face of $70B+ worth of financial statement degradation.  I do not want to hear any claims of referral benefits from Merrill's wealth management and investment banking units to BofA's commercial bank.  BofA has never fully integrated its U.S. Trust wealth management arm with the bank's existing wealth management unit, and watching BofA compete against itself in that sector used to amuse me.  Merrill's culture is even less compatible with BofA, and it's still separately branded just like U.S. Trust.  Imagine an investor walking into a BofA branch and asking for a referral to a wealth manager, and the teller says something like "Sure, we've got a bunch of divisions that all do the exact same thing."  Clueless.

BofA earned almost $4.2B in 2012, on declining gross revenue.  This settlement will hurt, no doubt.  What should hurt even more is that BAC's P/E is a ridiculously high 47.88 as of today's close.  That denominator is going to drop once this settlement is paid out.  The broad economy's long-term P/E is 14, so if BofA were trading in line with the economy's permanent prospects it would be around $3.50/share.  It traded at a little over $5/share back in December 2011, so maybe the market had BAC figured out back then.  I have no idea where this share price will go.  I also have no idea why any portfolio manager would buy the stock of a bailed-out bank with a history of bad acquisitions, cultural clashes, and unfavorable litigation results.

Full disclosure:  No position in BAC at this time.  

Thursday, April 04, 2013

The Haiku of Finance for 04/04/13

Fed printing headfake
No way can this stimulate
Watch those prices rise

Fed Leaders Try Headfake Distraction From Never-Ending QE

Janet Yellen is up to something.  The Fed's number two honcho is floating a trial balloon on slowing down quantitative easing.  Her hint does not move the needle immediately, but throws another meme onto the pile of memes designed to calm market fears of an eventual run on the dollar.  It's an interesting approach to waging an information operations campaign and it does impact the behavior of more gullible members of the hedge fund set.

Astute observers should be more sanguine.  The Fed cannot reduce its QE purchases of fixed-income securities as long as the U.S. economy is growing at a rate slower than the rate of new sovereign debt issuance.  It would take an indefinite number of years for GDP growth to obviate the need for new QE buys but that timeline is about to become irrelevant.  The BOJ's war on the yen is in full swing and central banks in other developed countries will print money to keep pace.

Using printed fiat currency to fund infrastructure improvements is hilarious.  Arguing that such stimulus goes "directly into the economy" is a polite way of ignoring the immediate inflationary effect it will have on commodities.  Steel, copper, cement, silicon-based compounds, forestry products (pulp / paper / plywood), and other construction inputs would be the first to skyrocket in price as QE-backed bids clear them from the market.  This will not be fun to watch at all.

Wednesday, April 03, 2013

The Haiku of Finance for 04/03/13

Artistic career
Sell dumb stuff to rich patrons
Rake in the big cash

SFMOMA Wastes Time With Christian Marclay's "The Clock"

SFMOMA is one hip, trendy, happening place.  It shows off the latest fads among the professional curatorial circuit.  The latest thing to hit the walls at SFMOMA is a 24-hour video installation from Christian Marclay titled "The Clock."  This is twenty-four solid hours of nothing but brief scenes from film and TV that cue off displays of timepieces.  I attended a sneak preview for donors tonight.  I started off with free food and drink, and it was all downhill from there.

There is no narrative structure whatsoever to this piece.  A scene with an actor doing something at 6:30AM would cut to a scene of another actor doing something at 6:30PM, for no reason.  A scene with a digital clock would cut to a scene with a wind-up wristwatch, for no reason.  Cary Grant and Henry Fonda are spliced with Ben Stiller and Owen Wilson, for no reason.  They were forced to act side-by-side completely divorced from the creative context intended by their original writers, directors, and cinematographers.  This happened not because "The Clock" makes aesthetic sense, but because someone could get away with it.  This film exists because an artist and his editing crew thought it would be a neat idea to sift through thousands of hours of classic movies just to find scenes of people looking at clocks and watches.  It really is that simple.

I arrived at about 6:20PM and left before 7:00PM.  That was more than long enough for me to figure out that there was no point to watching any scenes at all.  I regretted staying that long; ten minutes would have been enough but even I have to fight my genetic limitations.  Our species evolved to respond predictably to audio-visual cues that are now well-defined by media practitioners.  Even Yours Truly is not completely immune but I get more resistant with practice.  The well-heeled art patrons who had preceded me into the darkened performance space were sitting in their comfy chairs enraptured with the mosaic of nonsense on the screen.  They are clearly not as highly evolved as I am, despite their extensive experience with private tutors, prep academies, and Ivy League diplomas.  The average YouTube mash-up makes more sense than "The Clock."  It enthralls people who can't overcome whatever dependency on intermittent reinforcement gets them through the day.  There's even a crowdsource effort afoot to reference every clip in the work.  Our society has invented a whole new level of stupidity if watching twenty-four hours of chronological movements spawns a mass effort to catalog the interstices.

Christian Marclay is a genius but not for "The Clock" or any other particular work of art.  He is a genius because he has figured out that the secret to success as an artist is to conceive of works that are so obscure that they defy evaluation.  This ensures they get foundation grant money and museum sponsorship.  Museums are paying about half a million dollars each for single copies of this testament to mass hypnosis.  I think this thing would be wildly profitable if it played online on its own website with advertising banners embedded on the page.  The emperor often has no clothes in modern art but refusing to notice is a lucrative career for many poseurs.

I sat through just over half an hour of this video installation tonight.  It was a waste of my time.  Some artists have too much time on their hands.  I checked my watch several times and eventually figured it was time to go.  I really needed a time-out.  I don't have time for this stuff.  Will I return to SFMOMA some other time?  Only time will tell.  Go see some real art if you want to have a good time.

Tuesday, April 02, 2013

Adventure at the UC System-Wide Technology Transfer Forum 2013

A few months ago I received an invitation out of the blue to attend the University of California's annual System-Wide Technology Transfer Forum.  They must have heard through the grapevine about my extraordinary business acumen and remarkable insights.  I do have to live up to my reputation, so of course I accepted.  The forum took place today down in Millbrae and I was suitably impressed.

I commiserated with some fellow investors over breakfast about the state of the economy.  A few of us had read David Stockman's recent NYT op-ed piece arguing for the inevitability of economic annihilation in America.  I admitted I had no idea what the future held for the economy and that I was content to tread water in my own portfolio until things shake out.  My regular readers know that my coverage of natural resource stocks anticipates a hyperinflationary scenario friendly to hard assets, but that doesn't preclude Stockman's deflationary asset crash from happening first.  Anyway, we were all attending out of optimism that commercializing technology out of the UC's labs is the antidote to whatever malaise and stagflation afflict America.

The Forum's opening remarks taught me a fun new term:  the "Valley of Death."  I heard about "Crossing the Chasm" years ago so I figured the Valley of Death is where failed startups go if they can't cross that chasm.  There are ways across the chasm that avoid the valley, and the UC Forum showcased some good research ideas that could attract funding.  The winners of the UC's system-wide proof of concept program got to showcase their technological developments here after thorough peer review.

The morning's motivational keynote came from Nathan Harding, the CEO of Ekso Bionics, who got his own professional head start in UC Berkeley's laboratory system before jumping to the private sector.  His company's story was a template for everything that should go right with partnerships between universities and entrepreneurs.  U.C. Berkeley's Office of Technology Licensing helped write Ekso's business plan.  Their robotic powered exoskeletons had obvious military applications, but the defense community wasn't interested until Ekso brought in a market-specific leader with a defense background as a temporary executive.  Presto, he got them funding from Lockheed Martin.  That's how it's done, folks, and you won't learn that in business school.  They got funding from leading rehabilitation centers (the opposite of how new devices are usually introduced) by allowing sponsoring hospitals to use the Ekso devices in their own capital raising campaigns.  That's another win-win you won't read about in textbooks.

Here's the ultimate winning play.  The Ekso team demonstrated their robotic powered legs on a volunteer patient who had lost the use of his own legs in an automobile accident.  While they were strapping him into the robot harness and powering it up, he briefly fell over and the team had to do a retake.  They didn't break their stride, complain, or ask for a bailout.  They had obviously rehearsed contingencies like this and calmly proceeded to reset, reboot, and get back on their feet.  That's exactly what that patient did, folks.  In front of hundreds of executives and scientists, he got out of his wheelchair and walked across the conference room on powered legs.  The lesson for America is obvious.  It doesn't matter whether you fall into David Stockman's camp of disillusioned Reaganites or Paul Krugman's passel of needy liberals.  When you fall down, run through your playbook of backup plans and GET BACK UP.  Americans used to know how to do this, before bailouts and entitlements.  We need entrepreneurs to get us back into the habit.

I picked out the breakout sessions I wanted to attend from what looked like a biotech-heavy lineup.  I'm neither a scientist nor a doctor, so I wondered whether these subjects were going to be over my head.  I checked out a presentation on microfabricated ceramic blade arrays from folks associated with the UC Davis Engineering Translational Technology Center (ETTC).  That's a fancy way of saying ceramics can make sharper, longer-lasting edges than metal alloys.  I get the emphasis on a razor blade that holds its integrity for ten shaves before degrading.  Human skin can be course and tough, and I usually change disposable blades after seven shaves (i.e., once a week).  Going head to head with this blade against Gillette,  Schick, and others means figuring out whether consumers will change their shaving habits to a ten-day calendar that optimizes the product's demonstrated value.  I think a ceramic blade is more readily adaptable to industrial fabrication apps that integrate microfluidics, like cutting silicon wafers.

The next presentation got me really excited.  I figured I couldn't go wrong hearing about "self-healing multiphase polymers for coating applications" because it gave me a mental image of the old movie The Blob.  I had to see if these mad scientists had made a real blob that could re-form on its own, and fortunately their creation was benign.  They designed a synthetic material that can regenerate itself after experiencing damage.  The video of this stuff maintaining its integrity under load after re-forming was impressive.  This stuff combines two of the hottest trends in engineering today:  biomimicry and additive manufacturing.  The material mimics nature's use of multiphase, composite designs and is assembled layer by layer to conform to the expected temperature of its environment.  UC Irvine is behind this stuff 100% with support from their Office of Technology Alliances.  I was intrigued by the potential applications in rail transportation as a buffer between the metal rail and concrete trackbed.  I was further intrigued by the possibility that this material can be tailored to tolerate the temperature and pressure extremes of any known environmental window.  I am convinced that the oil and gas sector needs to know about this development so they can evaluate whether this self-sealing polymer is viable in the extreme environmental conditions experienced on drilling rigs and subsea infrastructure.  There are many more ways to use this stuff than in aerospace anti-corrosion coatings.  Gentlemen, you know where to reach me.

The lunchtime panel showcased the entrepreneurship programs of several UC campuses.  UCSF's Entrepreneurship Center is looking to move beyond the school's biotech focus.  Startup UCLA is focused more on educating students and reconnecting alumni than incubating live businesses (hey, whatever works).  UC Davis' entrepreneurship center sounds like it has a hard-core schedule of workshops, angel events, and prep sessions for business plan competitions.  UCSD's von Liebig Center funds innovative projects all over SoCal.  It's hard to believe California is hostile to business with all of this academic interest in fostering entrepreneurship.  Take heed, Sacramento.  Ambitious dreamers will create jobs if you get the tax and regulatory environment right.  The panelists had plenty of wisdom on how to get the job done.  They were big fans of their centers' collaborative efforts with each other and their campus laboratories.  Gift campaign pitches to donors now include requests for underwriting the commercialization of UC technology.  The entrepreneur centers want investors to get involved; their doors are open, so go visit and get on their email lists.  The culture of entrepreneurship on campus was more important than the the quality of any specific technology.

The afternoon briefings I attended touched on material science, another blind spot for me but I wanted to see what was on display.  One guy from UCSD talked about a nanostructured coating for solar thermal arrays.  I couldn't miss this one, as I've long been convinced that whatever bet California makes on a solar future should favor solar thermal (a.k.a. CSP) over PV panels.  Go back and read my blog archives for more info.  His observation that CSP allowed for energy capture from both solar radiation and visible light meant that solar thermal installations would benefit from the heat capture abilities of an enhanced coating.  His solution was a silicon-oxide spectral selective coating with embedded Si-Ge nanoparticles.  His research indicated the coating would resist oxidation and see less degradation over time.  There's no shortage of silicon for his solution, but I wonder about the availability of Germanium for his nanoparticles.  The vast majority of Ge is found in China, so that country's potential lock on supply is a cause for concern.  I want CSP to work but it has to be cost effective, so making Si-Ge viable means knowing the cost per Watt of a coated CSP cell and comparing it to the cost of a typical Bi-Sb-Te coating compound.

The briefing on broadband full duplex radios kind of threw me for a loop.  I'm unfamiliar with the commercial limitations of radio broadcast technology using half-duplex hardware.  I can see the military applications of deploying full duplex mobile base stations to isolated outposts in combat.  The mystery for me lies in convincing civilian base stations of the efficiency to be gained from improved base stations when the path of least resistance in telecommunications is to pursue advances in streaming and data compression.  The best test market for full duplex base stations may be isolated regions like sub-Saharan Africa where nomads, adventurers, and resource prospectors have no access to existing broadcast towers.

A briefing on a lithium-sulfur battery cell was intriguing but I think they've got a tough road to commercialization.  Li-Ion battery makers already have a lock on much of the hybrid car market so Li/S will need more than just a serious cost advantage or capacity enhancement.  New car models must be engineered to account for the likely difference in weight and volume of an Li/S battery.  Sulfur is an abundant material but research on the safety and degradation problems unique to Li/S batteries needs attention.

The final panel on crowdfunding was right up my alley.  I'm starting to see the same thought leaders from the same portals at more of these panels, which means a handful of committed innovators are going to write the rules for the entire movement.  Direct equity investing still isn't available because the SEC is waiting for FINRA to certify the first crop of ready portals.  Those portals that want to raise equity capital are limited to collecting login data from self-reporting accredited investors and segregating their platform interfaces so bona fide angel investors can contact startups directly.  I learned that medical device trials may offer product  iterations that lend themselves to reward-based crowdfunding; hey, donate a couple hundred bucks and get a free thingy.  I wonder if that would work for cosmeceuticals too.  The panelists were adamant that crowdfunders run their own social media campaigns rather than outsource them; that aligns with the adage that a startup CEO must give the traditional roadshow pitch, no exceptions.  The ideal time frame for a project-only crowdfund pitch is accepted as 40 days, give or take ten days; this phenomenon is maturing so quickly that metrics like that are now validated from widespread use.  BTW, crowdfunding isn't just for little startups anymore.  Large organizations can crowdfund a high-profile project they want to showcase because a well-crafted social media campaign can raise any organization's "digital footprint."  Philanthropic funds are attracted to crowdfunding projects that are already supported by well-defined communities.  Caution is warranted when crowdfunding a project that isn't fully IP-protected, because it will be exposed to scrutiny before it's mature.  See, this isn't just greasy kid's stuff anymore.

Good times lie ahead somewhere and they won't come about through monetary stimulus, fiscal profligacy, Wall Street legerdemain, or populist agitation.  They will come when entrepreneurs team up with inventors and bring forth disruptive new solutions, just as they always have in American history.  Some of those solutions were right there at the UC's Forum.  See you next year.