Family Fortunes: How to Build Family Wealth and Hold on to It for 100 Years; Why family money should NOT be invested in “safe, conservative” investments; Why you can’t trust wealth “professionals” and why you should never entrust your money to money managers; why most celebrity CEOs are a threat to the businesses they run; Why giving your children as much education as possible is NOT a good idea

Family Fortunes: How to Build Family Wealth and Hold on to It for 100 Years (Agora Series) [Hardcover]

Bill Bonner (Author), Will Bonner (Contributor) Read more of this post

Robert Hagstrom: What Is the Difference between Investing and Speculation?

Investing is the relentless process of translating and refining tacit knowledge into a distinctive and unique investment framework or mental model that is scalable beyond one single person and adaptable in different relevant contextual situation, particularly in dealing with what we do not know. Investors write with a framework as the north star to guide and navigate the marketplace jungle where dangerous animals, poisonous creatures and alluring sirens lurk at the corner. Speculators never bother to write. Investors care deeply about ideas and research. Speculators care solely about “making money”. Writing, research, ideas, knowledge – these are frivolous/useless pursuits with no immediate or short-term profits to Speculators. Investors have an instinctive longing to weave outside our own skin some reflection of our mind. Investors uphold the notion of responsibility, which emphasizes the active nature of the agent/knower, as well as the element of choice involved in the activity of the agent/knower, who can be assessed to be responsible or irresponsible as having fulfilled his obligations to fellow enquirers as part of membership in a community. Getting closer to the truth as a result of one’s virtues is more valuable for Investors than getting it on the cheap for Speculators.


What Is the Difference between Investing and Speculation?

Robert Hagstrom, CFA

27 February 2013

Editor’s note: Today, we are doing something different. Robert approached us with a question that we found interesting, so we decided to pose it to some professional investors. In addition to our regular coverage, we are pleased to feature his framing of an interesting debate. We will be publishing select responses to the question over the next few days. If you are compelled, we invite you to comment below, tweet us @cfainvestored, or reach out to us via email.

What is the difference between investing and speculation? At first, you think the answer is simple because the distinction is obvious — that is, until you actually put pen to paper and try to answer the question.

Go ahead; take a few seconds and think about it. Write down “investing.” Now write the definition. Do the same for “speculation.” If you are like me, frustration quickly builds because the answers do not come quickly or easily, and they should. After all, these terms have been a part of the financial lexicon since Joseph de la Vega wroteConfusion of Confusions in 1688, the oldest book ever written on the stock exchange business. In his famous dialogues, de la Vega observed three classes of men. The princes of business, called “financial lords,” were the wealthy investors. The merchants, the occasional speculators, were the second class. The last class was called the “persistent speculators” or the “gamblers.” Read more of this post

If you had listened to Warren Buffett on gold a year ago you would have made a lot of money; The great thing about Warren Buffett is that all of his writing stands the test of time

If you had listened to Warren Buffett on gold a year ago you would have made a lot of money

Joe Weisenthal, Business Insider | Mar 1, 2013 10:05 AM ET
Warren Buffett‘s annual must-read shareholder letter is supposed to come out today, according to reports.

But the great thing about Buffett is that all of his writing stands the test of time.

Last year in his letter he made a great call on gold, explaining famously that for $9.6 trillion, you could buy all the gold in the world, and it would fit into a nice cube inside of a baseball field diamond.

Or for that money, you could buy all US cropland (400 million acres) + 16 ExxonMobils, and still have another $1 trillion in pocket money left over. Read more of this post

Breakfast with AQR’s Billionaire Hedge Fund Manager Cliff Asness; AQR could not be the success it is if David Kabiller did not have skills that complement the acute personality and thinking of Asness. Turning ideas into a money-making reality requires a partnership

Breakfast with AQR’s Cliff Asness

Posted By AMANDA WHITE On 01/03/2013 @ 1:37 pm In IN CONVERSATION

Having a breakfast meeting with Cliff Asness is a wake-up call. He will let you know if you’re late – something he holds in very little regard. He admits he has to constantly remind himself that just because he’s 20 minutes early to everything that others are not automatically then 20 minutes late. Asness is open, he’s entertaining, even funny. And he also possesses the rare combination, at least in this industry, of intellectual genius and social libertarianism. It’s very engaging and you quickly get the feeling that you’re only scratching the surface of his intellect as he changes from political activist to quantitative mathematician to social philosopher.

Social justice is also good business

Having two sets of twins is an almost perfect justice for a man who revels in the competitive game of statistics – he’s clearly an overachiever. But while he boasts about the competitive achievements particular to quantitative investment managers, his intellectual reach doesn’t stop there. His social and political interests include gay marriage and tax.

“I believe in all forms of small government, not just economic. Read more of this post

David Brooks: The Learning Virtues; A book on education cultures finds that the Chinese tend to define learning morally while Westerns define it cognitively

February 28, 2013

The Learning Virtues


Jin Li grew up in China during the Cultural Revolution. When the madness was over, the Chinese awoke to discover that far from overleaping the West, they were “economically destitute and culturally barren.” This inspired an arduous catch-up campaign. Students were recruited to learn what the West had to offer. Li was one of the students. In university, she abandoned Confucian values, which were then blamed for Chinese backwardness, and embraced German culture. In her book, “Cultural Foundations of Learning: East and West,” she writes that Chinese students at that time were aflame — excited by the sudden openness and the desire to catch up. Li wound up marrying an American, moved to the States and became a teacher. She was stunned. American high school students had great facilities but didn’t seem much interested in learning. They giggled in class and goofed around.

This contrast between the Chinese superstudent and the American slacker could be described with the usual tired stereotypes. The Chinese are robots who unimaginatively memorize facts to score well on tests. The Americans are spoiled brats who love TV but don’t know how to work. But Li wasn’t satisfied with those clichés. She has spent her career, first at Harvard and now at Brown, trying to understand how Asians and Westerners think about learning. The simplest way to summarize her findings is that Westerners tend to define learning cognitively while Asians tend to define it morally. Westerners tend to see learning as something people do in order to understand and master the external world. Asians tend to see learning as an arduous process they undertake in order to cultivate virtues inside the self. Read more of this post

Jonah Berger On The Power Of Scarcity; Contagious: Why Things Catch On

Jonah Berger On The Power Of Scarcity


MARCH 1, 2013

In Fast Company’s April issue, we’ll profile Jonah Berger, the 32-year-old Wharton professor who has become one of the world’s foremost experts on what goes viral and why. It’s easy to find examples of products or ideas that have spread and become popular, but as he writes, “It’s much harder to actually get something to catch on. Even with all the money poured into marketing and advertising, few products become popular.” His new book Contagious: Why Things Catch On, being published next week by Simon & Schuster, tries to answer the question, Why do some products, ideas, and behaviors succeed when others fail? In this exclusive excerpt, which will be serialized in five parts, he explores the concept of social currency, one of the six elements Berger says helps unravel the mysteries of virality.

In 2005, Ben Fischman became CEO of the discount shopping website The business model was straightforward: companies wanting to offload clearance items or extra merchandise would sell them cheap to SmartBargains, and SmartBargains would pass the deals on to the consumer. There was a broad variety of merchandise, and prices were often up to 75% lower than retail. But by 2007 the website was floundering. Margins had always been low, but excitement about the brand had dissipated, and momentum was slowing. A year later Fischman started a new website called Rue La La. It carried high-end designer goods but focused on “flash sales” in which the deals were available for only a limited time–24 hours or a couple of days at most. And the site followed the same model as sample sales in the fashion industry. Access was by invitation only. Sales took off, and the site did extremely well. So well, in fact, that in 2009 Ben sold both websites for $350 million.

Rue La La’s success is particularly noteworthy, given one tiny detail. It sold the exact same products as SmartBargains. How come Rue La La was so much more successful? Because it made people feel like insiders.

Read more of this post

Maker’s Schedule, Manager’s Schedule; Most powerful people are on the manager’s schedule. It’s the schedule of command

Maker’s Schedule, Manager’s Schedule

Paul Graham

July 2009
One reason programmers dislike meetings so much is that they’re on a different type of schedule from other people. Meetings cost them more.

There are two types of schedule, which I’ll call the manager’s schedule and the maker’s schedule. The manager’s schedule is for bosses. It’s embodied in the traditional appointment book, with each day cut into one hour intervals. You can block off several hours for a single task if you need to, but by default you change what you’re doing every hour. When you use time that way, it’s merely a practical problem to meet with someone. Find an open slot in your schedule, book them, and you’re done.

Most powerful people are on the manager’s schedule. It’s the schedule of command. But there’s another way of using time that’s common among people who make things, like programmers and writers. They generally prefer to use time in units of half a day at least. You can’t write or program well in units of an hour. That’s barely enough time to get started.

When you’re operating on the maker’s schedule, meetings are a disaster. A single meeting can blow a whole afternoon, by breaking it into two pieces each too small to do anything hard in. Plus you have to remember to go to the meeting. That’s no problem for someone on the manager’s schedule. There’s always something coming on the next hour; the only question is what. But when someone on the maker’s schedule has a meeting, they have to think about it. Read more of this post

McDonald’s to open on Zhangjiajie mountaintop; Zhangjiajie received 35.9 million visitors from home and abroad and had a tourism revenue of 20.87 billion yuan last year.

McDonald’s to open on Zhangjiajie mountaintop   2013-03-01 15:32:17

CHANGSHA, March 1 (Xinhua) — American fast-food giant McDonald’s is expected to open an outlet on the top of the Tianmen Mountain of Zhangjiajie scenic spot in central China’s Hunan Province before May 1. McDonald’s has signed a 20-year rental contract with the owner of the Tianzi fast-food restaurant located atop the 1,518-meter-high peak, an official with the scenic spot’s infrastructure construction headquarters said on Friday. McDonald’s will invest 20 million yuan (3.2 million U.S. dollars) in renovating the outlet, a staff member of the retailer’s public relations department added, while confirming the targeted timeline for opening.

Zhangjiajie, classified by UNESCO as a World Geopark and also a World Heritage Site, was formally warned by the organization in January for inadequately disseminating knowledge of earth sciences to the public. It has also been criticized for over-commercializing in the past decade. A total of 124 hotels and 1,791 residents on the mountain have been relocated in the government’s renovation campaign. Zhangjiajie received 35.9 million visitors from home and abroad and had a tourism revenue of 20.87 billion yuan last year.

Robots are getting more powerful. That need not be bad news for workers


Robots are getting more powerful. That need not be bad news for workers

Mar 2nd 2013 |From the print edition

WATSON, an IBM supercomputer, spectacularly beat its human rivals in a 2011 edition of “Jeopardy!”, an American quiz show. It has got smarter since then. Its components have shrunk from room-size to briefcase-size; its processing speed has more than tripled. The sleeker, faster Watson is now being put to commercial use: its first application is suggesting treatments in cancer clinics. Many people fear that Watson exemplifies a trend toward the displacement of human workers by machines.

In a 2011 e-book called “Race against the Machine”, Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology (MIT) worried that human workers would fail to adapt to the quickening pace of technological change. “The Lights in the Tunnel”, a 2009 book by Martin Ford, a software entrepreneur, painted a bleaker picture still. Mr Ford noted that about 40% of Americans work in old-fashioned occupations—as nurses, book-keepers and the like. He argued that innovation will soon allow firms to eliminate millions of jobs, like the 3m-plus cashiers whose positions are threatened by automated cash registers, but will create few new opportunities for displaced workers.

But plenty of research suggests that innovation need not translate into a shrinking role for human labour. Read more of this post

Luxottica Billionaire Del Vecchio Says ‘Why Not’ to Grillo as Premier

Billionaire Del Vecchio Says ‘Why Not’ to Grillo as Premier

Billionaire Leonardo Del Vecchio, the second-richest Italian, praised Beppe Grillo for taking a novel approach to public policy in Italy and said he could support the ex-comic as a prime minister.

“Grillo the premier, why not?” Del Vecchio told Italian newswire Ansa today in Milan. A spokeswoman for Del Vecchio’s Luxottica SpA (LUX) confirmed the comments and said the entrepreneur’s remarks were made off the cuff after he was approached by journalists on his way to lunch.

Grillo, 64, is at the center of negotiations over the formation of Italy’s next government after his upstart political party won more than 160 seats in the Feb. 24-25 general election. Grillo, who ran on a platform of anti-austerity and more robust social safety nets, is jockeying with established politicians like Pier Luigi Bersani and three-time premier Silvio Berlusconi for influence over the next administration.

“I don’t think Grillo is stupider than the ones we have had up to now,” Del Vecchio told Ansa. “I don’t mind the way he has of reasoning over ideas.” Read more of this post

Bob Knight’s ‘The Power of Negative Thinking’ and More


Blood and Wine: An 11th generation Riedel with his own ideas assumes the helm of the family-owned Austrian wine glass company beloved by oenophiles

February 28, 2013, 11:48 A.M. ET

Blood and Wine

This article was written by Carrie Coolidge.

It was the suit that announced a new chief executive, with his own distinct style and ideas, was taking charge at Riedel, Austria’s 1756-founded family firm that makes the fine-stem wine glasses beloved by oenophiles across the globe.

Dressed in a burgundy-colored velvet suit, the 35 year-old Maximilian J. Riedel strode purposefully through his company’s showroom in search of the Bloomingdale’s buyer who had flown to Frankfurt, Germany, to see the latest designs offered by his family’s eponymous company. At the world’s largest consumer goods fair that recently took place at Messe Frankfurt, the Riedel firm had constructed an elaborate if temporary stage to present its wine glasses and decanters to wholesale customers coming from around the world to place orders for their retail stores.


Max and Georg Riedel Read more of this post

L’Oreal’s Lessons From Indian Homes L’Oréal India’s Pierre-Yves Arzel says home visits helped him understand Indians’ relationship with water, what beauty products they use and why

L’Oreal’s Lessons From Indian Homes

by Pierre-Yves Arzel | Mar 1, 2013


L’Oréal India’s Pierre-Yves Arzel says home visits helped him understand Indians’ relationship with water, what beauty products they use and why

I had never come here [India] before—not even on vacation. I definitely had a very wrong impression of India, the kind you get by reading books. When you don’t know a country, you are always influenced by the clichés that tell you only a part of the truth.

I’ve been very surprised. I knew there are plenty of languages and different states, but I wasn’t aware of the amazing diversity of the country, of the different types of people [here]. L’Oréal has studied all skin types in the world and we have found 66 skin types, of which 44 are in India.  Read more of this post

YouTube’s Search for the Next ‘Gangnam Style’

YouTube’s Search for the Next ‘Gangnam Style’

By Bruce Einhorn on February 28, 2013


One of the ritziest addresses in Tokyo is Roppongi Hills, a vast commercial, retail, and residential complex with two art galleries, the Grand Hyatt Tokyo, and tenants including Goldman Sachs (GS) and Barclays (BCS). There are also bald vampires clad in tighty-whities and body paint filming in Google’s (GOOG) new video studio.

The Roppongi Hills studio is central to YouTube’s first significant effort at audience-building in Asia. The online video giant’s other two studios, in Los Angeles and London, help popular creators develop original programming for its online video channels. In Japan, YouTube’s biggest regional success story in Asia, the company is recruiting online video stars to bolster its local-language channels with more targeted original programming and higher production values. YouTube only launched dedicated local-language channels for Southeast Asia last year, and censorship still keeps Google’s video service out of China. Compared with the U.S., “Asia has come a little bit later” for YouTube, says David Macdonald, head of the video service’s Asia-Pacific content operations.

Local programming is important for advertisers who want to reach Asian audiences, says Trevor Healy, Singapore-based chief executive officer of mobile advertising agency Amobee. “You can get more creative in who you target,” he says. Videos like the Korean rapper Psy’s smash hit Gangnam Style (with more than 1.3 billion YouTube views) or smaller successes like the 600-odd “Eat Your Kimchi” clips by Simon and Martina Stawski, a Canadian couple who live in Seoul and have close to 500,000 YouTube subscribers, could be the breakthroughs YouTube needs. Psy’s overnight global fame demonstrated the potential of Asian-made content, says Healy: “When something goes viral in Asia, it really goes viral.” Read more of this post

Computer Interfaces: Tech’s Next Great Frontier

Computer Interfaces: Tech’s Next Great Frontier

By Drake Bennett on February 28, 2013


Consider the tongue. It’s sensitive yet muscular, packed with taste buds and nerves, and without its acrobatic ability humans wouldn’t be able to eat or talk. It’s also our most versatile sense organ, and some computer engineers say it’s underused. Wicab, a Middleton (Wis.)-based company, has designed a small, square array of electrodes for the blind. When placed on the tongue like a lollipop, it turns the feed from a video camera into a pointillist pattern of tactile stimulation. The sensation is like sparkling water, or Pop Rocks candy, but after time and practice, blind users report the paradoxical sensation of seeing with their tongues.

Massachusetts Institute of Technology graduate student Gershon Dublon is trying to broaden Wicab’s idea. He’s made a cheap ($10 to $40, he estimates), bare-bones version of the device that can be connected to any set of sensors. He encourages fellow engineers to hook their tongues up to other inputs—microphones, pressure sensors, even a magnetometer, which would give a person a migratory bird’s unerring sense of direction. The device, which Dublon calls the Tongueduino, wouldn’t be just for the blind, or the deaf, but for anyone looking to augment his senses. “It would be useful,” he says, “for anyone who wants a better sense of direction.” Read more of this post

How grandparents are being replaced by Google

How grandparents are being replaced by Google

Grandparents are being replaced by the internet as rising numbers of children ignore family advice for answers online instead, a new survey has found.

The survey of 1,500 grandparents found that children are instead increasingly using the internet to answer simple questions Photo: AFP

By Telegraph Reporters

7:30AM GMT 28 Feb 2013

Researchers found that older generations are being replaced by Google, Wikipedia and YouTube, with their grandchildren not asking them basic questions that they can look up themselves. According to the survey, fewer than one in four grandparents say they have been asked for advice on basic domestic chores such as washing clothes, learning to cook a family recipe or sewing a button. Only a third of those surveyed said they had been asked “what was it like when you were young?”. Read more of this post

‘Winner’s curse’ entraps Hite-Jinro; Hite-Jinro has seen its market share fall in the beer industry with the firm failing to create synergy since Hite took over Jinro in 2005

2013-02-28 17:06

‘Winner’s curse’ entraps Hite-Jinro

OB rises to top on stellar sales

By Rachel Lee


Hite-Jinro has seen its market share fall in the beer industry with the firm failing to create synergy since Hite took over Jinro in 2005. The setback is expected to deal a blow to the country’s leading beer and soju maker’s long-term plan to become a global alcohol beverage maker. Led by CEO Kim In-kyu, the firm has set a goal of achieving 100 percent growth in overseas sales by 2017 from 2011 and expanding exports to amount to 300 billion won by then.

The company, which had ruled the highly-competitive local beer market for 15 years, gave up the top position to archrival Oriental Brewery (OB) last year. Read more of this post

Investment Migrants Taking Billions out of China

Investment Migrants Taking Billions out of China – Economic Observer Online – In-depth and Independent

By Chao Xinrui and Wang Shulan (巢新蕊,王淑兰)

Issue 608, Feb 25, 2013

It’s been said that China’s rich are all either emigrating or planning to emigrate.

That may not be much of an exaggeration. In 2011, of those Chinese with personal assets of over 100 million yuan, 27 percent had already emigrated and 47 percent were considering emigration, according to The Annual Report on Chinese International Migration (2012), jointly issued by the Center for China & Globalization (CCG) and the Beijing Institute of Technology School of Law

The report showed that China is experiencing a third wave of large-scale emigration. Since the economic crisis of 2008, European and American countries have tightened policies on admitting skilled immigrants, but investment immigration policy has been relaxed.

Wang Huiyao (王辉耀), director of CCG and one of the editors of the International Migration report, said that in the past three years, Chinese who used overseas investment in order to obtain permanent residence in other countries took at least $15 billion out of China with them. Read more of this post

Shares of the fallen doughnut maker Kripsy Kreme have risen from a buck and change to about $13 in four years

Krispy Kreme’s Unlikely Comeback

By Roben Farzad on February 22, 2013

In the three years following Krispy Kreme Doughnuts’ (KKD) initial public offering in 2000, its shares soared 840 percent, despite a bear market. Back then, everyone wanted a bite of the Winston-Salem (N.C.) doughnut maker: Baseball great Hank Aaron scored a franchise in Atlanta, and American Bandstander Dick Clark lobbied unsuccessfully for a Times Square concession. In 2003 the cover of Fortune magazine anointed Krispy Kreme “America’s hottest brand.”

The hot-glazed hype peaked just as the Atkins diet and its carbophobia took hold. It didn’t help that Krispy Kreme alienated its franchisees by skimping on brand promotion. And when rival Dunkin’ Donuts (DNKN) reinvented itself as a top destination for coffee, its Southern rival failed to serve up a competitive brew.

Short-sellers swarmed Krispy, and were vindicated in 2004 when the company reported its first quarterly loss since going public. Later that year, the Securities and Exchange Commission opened an inquiry into accounting irregularities. As stores shut down and rumors of bankruptcy swirled, the market increasingly saw Krispy Kreme as another fast-food flameout. The stock hit bottom at $1.08 four years ago.

A lot has changed since. Krispy now trades for $13.25 a share, up more than 60 percent from a year earlier. New management has returned the company to profitability after 14 quarters of losses. International franchises kicked in $4.3 million in operating income in Krispy’s latest quarter; in the U.S., where the company owns many of its stores, franchises contributed just $1.2 million. An appreciation for fried dough, it seems, transcends cultural barriers, with appetite for Krispy Kreme’s flagship product particularly strong in Asia and the Middle East. Backed by a 12 percent equity investment from Kuwait’s Al Kharafi family, the company last year set a target to increase franchises abroad to 900 stores by 2017 from 506 now. At home, the chain hopes to expand to 400 U.S. stores from 240 over the same period. Read more of this post

Hard Landing Ahead for China’s Local Governments?

March 1, 2013, 5:05 PM

Hard Landing Ahead for China’s Local Governments?

China’s use of land sales to fund local governments is no longer on such solid ground, according to a top legislator.

Just a few days ahead of the annual session of China’s National People’s Congress, which gets under way on Tuesday, Li Shenming vented his frustration with the government’s investment-driven economic growth policies and its reliance on selling land-use rights to fund local government operations.

He called for urgent changes and suggested that time was growing short for a policy shift.

“It’s getting so bad that if (local governments) don’t sell land, they can’t even pay salaries,” said Mr. Li, a member of the legislature’s Standing Committee, a grouping of its senior members.

“How long can this ‘land fiscal policy’ last? Another five years?” he moaned in front of an audience at a financial forum.

Local governments generally rely on land sales — and taxes on property transactions — for a hefty chunk of their revenues. That often makes them a reliable friend of property developers and makes them more than a little eager to eager to sell off land.

But that formula has been sorely tested as the central government continues itsprolonged clampdown on property speculation, banning purchases of multiple homes and squeezing credit to property developers. Revenue from land sales fell 14% nationwide last year, official data show, due to the central-government campaign.

The constant push for more land sales ensures lots of development projects – some of them of questionable economic value. It supports an economic growth model that relies on investment for economic growth, and has been widely criticized as one that won’t be sustainable over the longer term. And it often leads to forced evictions of farmers or urban residents to make way for development projects, at timesendangering social stability.

Mr. Li, who is also an economist and the vice president and deputy party chief of the Chinese Academy of Social Sciences, a top state think-tank, estimated that proceeds from land sales account for over 40% of revenue for most local governments.

Economists have called for broad reforms of China’s fiscal policies by giving local governments more authority in setting taxes, and allowing them to expand trial projects setting annual taxes on property values, rather than just property sales. The tax reform is currently being tested in Shanghai and Chongqing.

China’s legislators gather for a two-week session that generally is confined to endorsing policies set by Communist Party heavyweights but also allowing legislators to blow off a bit of steam. If Mr. Li’s pre-session outburst is an indication, land policies could be a steamy topic.

China’s Government-Run Auction House Is Unstoppable

China’s Government-Run Auction House Is Unstoppable

Cain NunnsGlobalPost | 10 minutes ago | 17 | 

TAIPEI, Taiwan — In Huang Hung-jen’s plush office in old-money West Taipei, there hangs a 6-foot oil painting of US Marines manhandling an Iraqi family in their own home. The Iraqis look petrified, the Marines aggressive and overbearing. The piece, part of up-and-coming Chinese artist Yuan Liang-yu’s “War Series,” is a blunt metaphor for how China believes the human rights narrative is skewed in Washington’s favor. It’s also an example of how Beijing uses the arts to engender soft power at home and abroad. It goes without saying that Yuan wouldn’t be permitted the same artistic license were he protesting trouble spots closer to home, say in Tibet or riotous Xinjiang. But Huang, a Chinese art insider, doesn’t care about that. What he cares about is securing pieces for Beijing Poly International Auction Company, the fine arts arm of a powerful and opaque mainland Chinese business conglomerate. Read more of this post

Pine Nuts Rate Foie Gras Prices as Bugs to Drought Cut Harvests; “Pine nuts, being for the most part a product of wild ecosystems, follow the sad fate of their forests,”

Pine Nuts Rate Foie Gras Prices as Bugs to Drought Cut Harvests

French gourmets face a quandry: spend that last euro on foie gras or on a package of pine nuts.

The global harvest of the nuts — a key ingredient in classic Italian pesto sauce which graced prehistoric diets and was considered an aphrodisiac in ancient Rome — fell an estimated 47 percent last year, boosting prices to the highest in more than a decade. That’s prompting manufacturers and home preparers to substitute cheaper cashews or walnuts.

“Consumers will start treating them more like a luxury item, something of a tree-produced caviar,” said Leonid Sharashkin, pine-nut forestry adviser to Salem, Missouri-based, which harvests and sells wild crops.

The crop in China, the biggest shipper, fell 90 percent last year, while yields dropped 63 percent in the Mediterranean region, the International Nut & Dried Fruit Council estimates. U.S. import prices for shelled pine nuts were the highest in at least two decades in 2012, while German buyers in November paid the most for Chinese nuts since at least 1998, trade data show.

French retailer Monoprix SA sells the nuts online starting at 78.40 euros ($103) a kilogram (2.2 pounds), more expensive than foie gras, 20-month-cured Parma ham or lumpfish eggs. Read more of this post

Palm Oil Inventory in China Is Seen at Record Amid Global Glut; Palm Oil Heads for Worst Losing Streak Since 2006 on Inventories

Palm Oil Inventory in China Is Seen at Record Amid Global Glut

Palm oil inventory held at ports in China, the second-biggest importer, expanded to a record last month driven by slow growth in demand and after the biggest-ever purchases in December, according to a Bloomberg survey.

Shipments stored at large ports rose to 1.4 million metric tons from 1.2 million tons in January, according to the median of a survey of three researchers and one trader yesterday. Buyers in China may slow purchases further to absorb the supply that’s accumulated, they said. A separate estimate today from researcher put the reserves at 1.22 million tons.

The inventory in China adds to a glut in the world’s most- used cooking oil, which is caught in a bear market as supply expands to the biggest ever. Reserves in Malaysia, the largest producer after Indonesia, reached an all-time high in December. Futures in Kuala Lumpur fell for an eighth day today, poised for the worst run since 2006. Read more of this post

China’s Legions of ‘Housing Slaves’; In China’s affluent cities, it’s not uncommon for people to spend 40 times their annual income on an apartment.

China’s Legions of ‘Housing Slaves’

By Bonnie Cao and Zhang Dingmin on February 28, 2013

Sherry Sheng permitted herself one final splurge before joining China’s swelling ranks of homeowners: a 4,000 yuan ($642) black fur jacket. “I could never afford such a luxury after I start repaying my housing loans next month,” says the Shanghai policewoman. Servicing the two mortgages on the 1.1 million yuan one-bedroom Sheng bought on the city’s western outskirts will eat up about 70 percent of her salary.

Sheng is a fang nu, or housing slave, the popular name for a generation of middle-class Chinese who will need to work a lifetime to pay off their debts. A 1,076-square-foot apartment in one of China’s most affluent cities today costs about 40 years’ annual income, according to data supplied by the government and SouFun Holdings, a company that operates a popular real estate website. “The ‘housing slaves’ term is quite reasonable because it will put a lot of burden on home buyers if housing payments are more than half their incomes,” says Liu Li-Gang, an economist at Australia & New Zealand Banking Group.

Property prices on the mainland have almost tripled since China’s leadership began a push to encourage homeownership in 1998. That’s when Premier Zhu Rongji allowed residents in state-owned housing developments in urban centers to purchase their dwellings. The idea of buying a property with borrowed money didn’t become popular until several years later, when prices in major cities began to skyrocket. Read more of this post

In Japan, the Rising Cost of Elder Care—and Dying Alone

In Japan, the Rising Cost of Elder Care—and Dying Alone

By Kanoko Matsuyama on February 28, 2013

Itoko Uchida, 82, was counting on the nephew she raised to support her during old age. He refused, she says, forcing the Tokyo widow to pay 710,000 yen ($7,600) to a nonprofit, which will assist with her nursing home application and act in lieu of a close relative on health-care matters. Some 420,000 Japanese nationwide are waiting for a nursing home bed.

An erosion of traditional Confucian values, which stress the obligations children have to their parents, means fewer elderly are being cared for at home by relatives. By 2025, one in three citizens in Japan will be 65 or older, up from 12 percent of the population in 1990, the Organisation for Economic Co-operation and Development estimates. “The system is designed for the 1970s, when multiple generations lived together and family caregiving was thought to continue forever,” says Hiroshi Takahashi, a professor of health sciences at the International University of Health and Welfare in Otawara, north of Tokyo. “But that’s not the reality now.” Read more of this post

Expensive housing turning Australia into a nation of renters

Expensive housing turning Australia into a nation of renters

PUBLISHED: 01 MAR 2013 17:18:00 | UPDATED: 02 MAR 2013 02:42:28



Australians are headed to be a nation of renters, living increasingly in apartments, and, for the poor, crammed into more crowded homes.

On Friday the federal government’s independent adviser on housing, the National Housing Supply Council, released a major report warning of the long term consequences of constricted new supply and low affordability. Read more of this post

India’s Cycle of Recklessness and Reform; Unless Delhi holds itself accountable, it will periodically face crises

February 28, 2013, 12:21 p.m. ET

India’s Cycle of Recklessness and Reform

Unless Delhi holds itself accountable, it will periodically face crises.


India’s cycle of crisis and reform is predictable as clockwork. Ever since it faced a balance of payments crisis in 1981, the country has found itself in some macroeconomic trouble at the start of every decade. This, in turn, has pushed its reactive policy makers into reform mode.

The same pattern has been at play over the past year, with the economy slowing sharply to 5%, inflation stubbornly high at 10% and the fiscal and current account deficits widening sharply. The threat last summer of India’s sovereign rating being downgraded to junk status finally galvanized policy makers into taking some corrective measures. They liberalized foreign investment in retail and airlines, and took aim at the subsidy system. Read more of this post

Institutional Holding Periods; Our results are consistent with the agency problem that arises when clients cannot distinguish when a manager is “actively doing nothing” versus “simply doing nothing” as well as managers having overconfidence in their own short-term trading ability

Institutional Holding Periods

Bidisha Chakrabarty 

Saint Louis University – John Cook School of Business

Pamela C. Moulton 

Cornell University

Charles Trzcinka 

Indiana University Bloomington – Department of Finance
February 20, 2013

We find wide dispersion in trade holding periods for institutional money managers and pension funds, using a large database of fund-level transactions. All of the institutional funds execute round-trip trades lasting over a year; 96% of them also execute trades lasting less than one month, although short-duration trades have negative returns on average. We find only limited evidence that institutions choose trade holding periods based on portfolio optimization and no evidence that short-duration institutional trades are driven by the disposition effect. Our results are consistent with the agency problem that arises when clients cannot distinguish when a manager is “actively doing nothing” versus “simply doing nothing” as well as managers having overconfidence in their own short-term trading ability.

Can Any Mutual Fund Capture the Value Premium? Market-based value portfolios and passive value style indexes simply do not outperform growth portfolios and growth indexes over time. Therefore, we ask whether any managed fund can capture the elusive value premium that undoubtedly appears in the academic data

Can Any Mutual Fund Capture the Value Premium?

Kenneth E. Scislaw 

Drexel University Lebow College of Business

David G. McMillan 

University of Stirling
September 19, 2012

If the value premium exists as a function of risk, then value investment portfolios should systematically outperform growth portfolios over time. A long lineage of research is very clear on the matter. Unfortunately, recent tests of managed portfolios and market indexes have failed to support the risk thesis. Market-based value portfolios and passive value style indexes simply do not outperform growth portfolios and growth indexes over time. Therefore, we ask whether any managed fund can capture the elusive value premium that undoubtedly appears in the academic data. Moreover, we do so by examining the returns of one particular fund that was specifically designed to capture it. In the end, we find the fund has indeed been successful. However, in decomposing the returns of this particular fund, in order to illuminate how others might replicate its success, we find substantial evidence that the value return premium is in fact partially a growth stock discount story. This finding goes a long way in explaining why managed growth fund returns have equalled managed value fund returns over time, despite predictions to the contrary from a long lineage of academic research.

Buffett to Update His Acquisition Hunt; Investors Are Curious if Berkshire CEO Is Still Looking for Big Deals After Heinz

Updated February 28, 2013, 5:23 p.m. ET

Buffett to Update His Acquisition Hunt

Investors Are Curious if Berkshire CEO Is Still Looking for Big Deals After Heinz


Two years ago, Warren Buffett told Berkshire Hathaway Inc. BRKB +0.94%shareholders he was on the lookout for major acquisitions, as part of his unending effort to profitably employ the buckets of cash his company collects every month.

Since then, however, the billionaire investor has fired what he called his “elephant gun” just twice. Berkshire in February said it would join with a Brazilian investment firm to buy ketchup maker H.J. Heinz Co. HNZ -0.11% for $23.4 billion. In 2011, Berkshire bought engine lubricant-maker Lubrizol Corp. for $9 billion.


Shareholders watch as Warren Buffett, chairman and CEO of Berkshire Hathaway, deploys an oversize bat against table tennis prodigy Ariel Hsing in Omaha, Neb., in May.

The challenge of finding a big target at the right price will again be on investors’ minds when Berkshire files its annual report Friday afternoon. The report includes the shareholder letter penned by the 82-year-old Mr. Buffett, which over the years has been the source of many of the bon mots for which the Omaha, Neb., company’s chairman and chief executive is known. Read more of this post

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