Is there a link between suicide and weakened social ties? The problem is that as it’s grown easier to be remarkable and unusual, it’s arguably grown harder to be ordinary

May 18, 2013

All the Lonely People

By ROSS DOUTHAT

OVER the last decade, the United States has become a less violent country in every way save one. As Americans commit fewer and fewer crimes against other people’s lives and property, they have become more likely to inflict fatal violence on themselves.

In the 1990s, the suicide rate dipped with the crime rate. But since 2000, it has risen, and jumped particularly sharply among the middle-aged. The suicide rate for Americans 35 to 54 increased nearly 30 percent between 1999 and 2010; for men in their 50s, it rose nearly 50 percent. More Americans now die of suicide than in car accidents, and gun suicides are almost twice as common as gun homicides.

This trend is striking without necessarily being surprising. As the University of Virginia sociologist Brad Wilcox pointed out recently, there’s a strong link between suicide and weakened social ties: people — and especially men — become more likely to kill themselves “when they get disconnected from society’s core institutions (e.g., marriage, religion) or when their economic prospects take a dive (e.g., unemployment).” That’s exactly what we’ve seen happen lately among the middle-aged male population, whose suicide rates have climbed the fastest: a retreat from family obligations, from civic and religious participation, and from full-time paying work. Read more of this post

China’s national problems start in local government; Appeals for financial restraint and prudent investment have failed

May 19, 2013 6:32 pm

China’s national problems start in local government

By George Magnus

Appeals for financial restraint and prudent investment have failed, writes George Magnus

The structural slowdown in China’s economy is starting to cause waves in Beijing, prompting trenchant questions about what the government should do about it. Premier Li Keqiang has recently played down the expectation that there is much the government could or should do, saying that China must rely more on “market mechanisms”. This is, in effect, an acknowledgment of a contradiction in China’s economic model.

Local governments and state enterprises, pillars of that model and its investment-driven growth, have become the agents of both the downswing in growth and increased concerns about financial risk. Fixing this problem, as Mr Li suggested, would be transformational, if the party can do it. Driven by vigorous internal competition and a considerable degree of political autonomy, local governments play a pivotal role in promoting local economic, investment and political interests, and delivering economic growth. Despite strong demands for greater provision of public services, local officials are incentivised by reward and patronage to focus on gross domestic product. Local government spending, however, is having less traction with the economy. Read more of this post

As growth in its core catering business slows, Sodexo (SW) is helping oil rig workers stay fit and convicts get in touch with their inner artist as it seeks a bigger share of life outside the kitchen

Sodexo Tackles Slowdown With Rig Workers and Prison Art

As growth in its core catering business slows, Sodexo (SW) is helping oil rig workers stay fit and convicts get in touch with their inner artist as it seeks a bigger share of life outside the kitchen.

Better known for operating office canteens and cleaning college campuses, the world’s second-biggest caterer is expanding into prison management, office maintenance, and concierge services such as booking hair appointments.

Those initiatives are aimed at making up for slowing growth as the company last month reported a slide in first-half earnings and cut its full-year profit forecast, sending its shares down 10 percent.

“The business is evolving and clients are looking more and more for an end-to-end solution” that encompasses services beyond food, said Lindsay Tocher, chief operating officer of Sodexo’s offshore business unit, which assists energy companies. Read more of this post

Now You Can 3D Print Your Own Invisibility Cloak

Now You Can 3D Print Your Own Invisibility Cloak

Charles Q. Choi, TechNewsDaily | May 18, 2013, 12:00 PM | 2,110 | 1

Invisibility cloaks made of plastic can now be created at home using 3D printers, researchers show.

The first clues that cloaking devices might one day become more than science fiction, a la “Star Trek” began emerging seven or so years ago.

Since then researchers have made such cloaks a reality by smoothly guiding rays of electromagnetic radiation such as microwave beams completely around objects so they proceed along their original trajectory as if nothing were there.

The first working invisibility cloaks were demonstrated using complex lab experiments. They can now, in principle, get made at home using 3D printers. Read more of this post

Demise of Swiss banking secrecy heralds new era

Last updated: May 19, 2013 9:39 pm

Demise of Swiss banking secrecy heralds new era

By James Shotter in Zurich

Over the past five years, Switzerland has fought tooth and claw to keep its 80-year-old tradition of protecting the secrecy of its banks’ clients alive. It is looking like an increasingly forlorn cause. The latest blow came last week, when EU states – under mounting pressure to crack down on tax evasion following a rash of high-profile scandals – finally agreed to open negotiations on a new tax accord with Switzerland. The precise nature of the EU’s demands is not yet clear. It seems likely, however, that the bloc will request that Swiss banks automatically share information about the offshore wealth stashed away in their vaults by EU citizens.

Such a move, says Stéphane Garelli, a professor at the IMD business school in Lausanne, would be the “final nail in the coffin” for the system of secrecy that has helped Swiss lenders suck in SFr2.7tn ($2.8tn) of foreign assets. “Switzerland is now moving towards an orderly retreat,” he says. Read more of this post

Former Korean Prime Minister Nam Duck-woo, who led the nation’s economic development in the 1970s, died of complications from prostate cancer at 89

2013-05-19

Architect of economic development Nam dies

By Kim Rahn

Former Prime Minister Nam Duck-woo, who led the nation’s economic development in the 1970s, died of complications from prostate cancer, Saturday. He was 89

Born in 1924, Nam Obtained a master’s degree in economics at Seoul National University and a doctorate at Oklahoma State University

in 1969 when he was teaching at Sogang University, then President Park Chung-hee picked him as finance minister. Nam maintained the position for five years, leading Korea’s industrial Development called the “miracle of the Han River.”

Between 1974 and 1978, he served as deputy prime minister and minister of economic planning, and as an economic advisor to the Park in 1979.

It is said that the former president selected Nam after reading one of His papers critical of the government’s economic Policies.  Read more of this post

CJ Group, Koreas 20th largest conglomerate, has adopted an emergency strategy as a steep decline in profits of its key affiliates is directly hitting the companys bottom line

2013-05-19 19:15

CJ adopts emergency strategy

By Kim Yoo-chul

CJ Group, Koreas 20th largest conglomerate, has adopted an emergency strategy as a steep decline in profits of its key affiliates is directly hitting the companys bottom line, CJ officials said Sunday. Chairman Lee Jay-hyun is considering closing some of its money-losing businesses while focusing on core and lucrative areas to enhance profitability. The money that will be saved from the cost-cutting efforts will be used to find new cash-cows and to expand its overseas businesses. All of our affiliates went into emergency management mode since early this month. Weve told employees to start work about an hour early, said a group official. Thats part of efforts to boost competitiveness amid market uncertainty. CEOs of the group affiliates agreed to draw up survival plans. The group is tightening its belt. It asked executives to reduce expenditures using corporate credit cards. Only sales personnel are allowed to use cards to treat clients and business partners after regular working hours. Read more of this post

On Hong Kong Shelves, Illicit Dirt on China’s Elite

May 18, 2013

On Hong Kong Shelves, Illicit Dirt on China’s Elite

By CHRIS BUCKLEY

HONG KONG — Visitors from mainland China climb the narrow stairs to a cramped room here filled with forbidden delights: shelves of scandal-packed exposés about their Communist Party masters.

The People’s Recreation Community bookstore and several others on Hong Kong’s teeming shopping streets specialize in selling books and magazines banned by the Chinese government, mostly for their luridly damning accounts of party leaders, past and present. And at a time when many Chinese citizens smolder with distrust of their leaders, business is thriving.

“We come here to buy books that we can’t read in China,” said Huang Tao, a salesman of nutritional supplements from southeast China, who picked out a muckraking volume recently about corruption among senior party leaders. “There are so many things that we’ve been deceived over,” he said, waving toward books on the devastating famine of the late 1950s and early 1960s, an episode that official histories have muffled in euphemisms. “We can’t learn the truth, so black becomes white and white becomes black.” Read more of this post

The most-indebted U.S. companies are rallying more than any time in almost four years compared with the rest of the stock market amid the broadest rally since at least 1995

Leverage Loved in Equities Spurs Broadest U.S. Rally Since 1995

The most-indebted U.S. companies are rallying more than any time in almost four years compared with the rest of the stock market amid the broadest rally since at least 1995.

Federal Reserve interest rates near zero and the expanding economy are allowing Standard & Poor’s 500 Index companies with the lowest working capital, smallest earnings and highest debt ratios to reduce borrowing costs and avoid default. The stocks surged 27 percent this year, almost double the gains for businesses with the most cash and least borrowing, according to data compiled by Bloomberg and Goldman Sachs Group Inc.

Bulls say the spread shows the futility of fighting the Fed at a time when more than 90 percent of the companies in the Russell 1000 Index have risen in 2013, the most in at least 18 years. Bears say loose monetary policy has inflated prices and owners of the riskiest stocks will suffer the biggest losses when the Fed curtails bond purchases.

“The rally is so broad that the weakest companies that hadn’t been participating have finally caught fire and roared ahead,” said Anthony Lawler, a fund manager who helps oversee about $53 billion at GAM Holding AG in London. “A rally can stay broad-based for a period of time. It’s not an indication that it’s toppy.” Read more of this post

Aquino’s New Philippine Senate Majority Boosts Political Mandate

Aquino’s New Philippine Senate Majority Boosts Political Mandate

Philippine President Benigno Aquino won control of the 24-member Senate in mid-term elections, giving him a political boost as he starts the process of choosing his successor.

Candidates backed by Aquino, who’s halfway through his single six-year term, won nine of 12 Senate seats contested in the May 13 vote, according to the official results, meaning his allies now hold 13 seats in the upper house. Aquino’s Liberal Party continued to be the single-biggest bloc in the House of Representatives.

Aquino, who has overseen an economic revival during his three years in office, wants a tighter grip on the Senate to push for stronger anti-graft measures, speedier trials and a more efficient procurement system. The 53-year-old leader is now in a better position to anoint a successor who will continue his reforms, Joseph Abaya, who heads the Liberal Party, said in a mobile-phone message. Read more of this post

Despite curbs, China’s vast hot money triangle flourishes

Despite curbs, China’s vast hot money triangle flourishes

4:59pm EDT

By James Pomfret and Matthew Miller

ZHUHAI, China/HONG KONG (Reuters) – In an underground mall just a stone’s throw from China’s teeming border with Macau, a row of 30 small shops with identical golden plaques does a brisk, though shadowy trade with mainland Chinese visitors, many of them bound for the gambling hub.

“Good rates. Better than the banks,” shout salespeople jostling to usher clients into shops where thick wads of Chinese 100 yuan ($16.31) and HK$1,000 ($130) bank notes change hands and shuffle noisily through electronic cash-counting machines. Licensed as liquor and dry goods stores with stacked shelves of rice wine and cigarettes, many conduct their real business in back rooms – as underground bankers and remittance agents.

“It’s very simple,” said one agent surnamed Choi, dressed in sandals and ripped jeans, as he served tea in a back office where larger transactions are typically carried out. “You give me renminbi here. Then we deliver Hong Kong dollars to you in Macau. We can move tens of millions each day,” he said, glancing up at six security camera images of his shop front flickering on a flat-screen TV. Read more of this post

On fleeting Hong Kong trips, Chinese make frugal fashionable

On fleeting Hong Kong trips, Chinese make frugal fashionable

2013-05-20 01:48:01 GMT2013-05-20 09:48:01(Beijing Time)  SINA.com

Armed with empty suitcases and same-day return tickets, an army of mainland Chinese is descending on suburban outlet shopping malls and international fashion chains in Hong Kong, turning cheap into the new chic as luxury falls out of favor.

Wealthy Chinese used to stop over in Hong Kong for a few days to pick up a Louis Vuitton (LVMH.PA) bag or a wristwatch for up to 40 percent less than in Beijing or Shanghai.

These well-heeled tourists have now been overtaken by bargain-hunters that stay for a few hours, spend more at shops like Inditex SA’s (ITX.MC) Zara and malls such as Citygate Outlets (1972.HK), turning Hong Kong into a must-be location for retailers who are braving some of the world’s most expensive commercial rents. Read more of this post

China Spends $125 Billion Per Year On Riot Gear And ‘Stability Maintenance’

China Spends $125 Billion Per Year On Riot Gear And ‘Stability Maintenance’

Agence France Presse | May 19, 2013, 8:34 AM | 2,595 | 3

Two Chinese paramilitary police test a telescopic sight fitted on a gun model at the China International Exhibition and Symposium on Police Equipment and Anti-Terrorism Technology and Equipment in Beijing on May 15, 2013.

Mannequins in riot gear, armoured cars and drones line a police equipment and “anti-terrorism technology” trade fair in Beijing as vendors seek to profit from China’s huge internal security budget.

The country is estimated to have more than 180,000 protests each year and the ruling Communist Party spends vast sums on ensuring order — more even than on its military, the largest in the world. Read more of this post

Chinese cyber crime: More crooks than patriots

May 19, 2013 3:22 pm

Chinese cyber crime: More crooks than patriots

By Kathrin Hille

The biggest threat is posed by online criminals the state is ill-equipped to police, says Kathrin Hille

On a muggy spring night five years ago in the southern Chinese city of Shenzhen, six young men were slowly getting drunk. “We’d all had a few beers when someone first mentioned Foxconn,” one of them recalls. “But we immediately saw that it was a great idea.” The plan was to hack into the computer systems of the giant Taiwanese contract manufacturer, which assembles many of the world’s best-selling electronic gadgets, such as Apple’s iPhones. This was no drunken whim. Four months later, the six hackers had breached Foxconn’s email system, according to three people with knowledge of the operation. Foxconn’s position at the heart of the global technology value chain made it an alluring target for potential blackmailers. The company’s 1.4m workers assemble products for the cream of the global technology industry including HP, Dell, Cisco, Acer, IBM, Microsoft and Sony. Read more of this post

Why China’s Riches Won’t Bring It Freedom

Why China’s Riches Won’t Bring It Freedom

Modern history is the story of how liberal democracy, originating in the U.K. and America, spread around the world. This may sound like an absurd fantasy. In actuality, this Whiggish narrative of progress underpins most newspaper editorials, political commentary and speeches in the West, and frames larger views of political developments in the non-West.

It accounts for the gloomy undertone to Freedom House’s latest report, which records the shrinking of liberal democracy worldwide. Even countries with regular elections, such as India, are far from upholding the notion of liberalism, which advocates the maximizing of individual rights for the fullest realization of human potential.

Perhaps we should discard the ideological prejudice that assumes the universalization of liberal democracy. We might then be able to see dispassionately the true multiplicity of political forms, how they came into being and what they portend.

The specific socioeconomic conditions that enabled both liberalism and democracy, such as the Reformation’s stress on individual responsibility or industrial capitalism, were particular to Western Europe and America. Read more of this post

Power Grab Trumps Nanotechnology in Putin’s Russia

Power Grab Trumps Nanotechnology in Putin’s Russia

Russian President Vladimir Putin’s changing attitude toward two giant government-led high-tech projects sends a troubling message about his third term in office: Maintaining power is more important than modernizing the economy.

The projects, known as Rusnano and Skolkovo, were meant to propel Russia’s raw-material economy into the technology age. They involved multibillion-dollar government investments, the first in nanotechnology and the second in a new city that would become Russia’s answer to Silicon Valley. They were supposed to provide the infrastructure and stability required to attract large amounts of foreign investment.

Now, both have become targets in Putin’s campaign to demonstrate that he’s being tough on corruption and mismanagement of government funds. As a result, their chances of succeeding are looking increasingly remote. Read more of this post

China Small-Cap Bubble Seen Bursting by Chen After 43% Advance

China Small-Cap Bubble Seen Bursting by Chen After 43% Advance

Chen Li, the UBS AG (UBSN) strategist who predicted the tumble in China’s smallest shares two years ago, says the companies are poised to retreat again after valuations rose to the biggest premium over larger stocks since 2010. The ChiNext index of Shenzhen-listed companies with a median market value of $765 million has climbed 43 percent this year while the CSI 300 Index, which has a median capitalization of $3.5 billion, rose 2.7 percent. The smaller-company gauge trades for 4.6 times net assets versus 1.7 for the CSI index, the widest gap since June 2010, data compiled by Bloomberg show. Small-cap stocks have surged on speculation President Xi Jinping’s plan to boost the consumer, technology and alternative energy industries will benefit companies from Huayi Brothers Media Corp. (300027) to Leshi Internet Information & Technology Co. (300104) The rally may get derailed by tighter monetary policy, which helped spur the last slump, according to Chen.

“The bubble may burst” within two months, Chen said in a May 9 phone interview. The Shanghai-based strategist predicted in January 2011 that small-cap stocks would drop as much as 20 percent. The ChiNext gauge fell 21 percent in nine months. Investors will rotate out of smaller companies and into larger stocks as liquidity tightens, Chen said.

Read more of this post

Japan Biotech Ventures Surge as Abenomics Cash Spurs Speculation

Japan Biotech Ventures Surge as Abenomics Cash Spurs Speculation

Japanese biotech ventures promising to make jet fuel from algae and to produce synthetic cartilage are soaring in Tokyo trading as cash pumped into the economy by the central bank cascades into speculative investments.

Five of the 10 best-performing stocks this year traded on JASDAQ, which has lower minimum profit requirements than Japan’s main bourse, are biotech firms.

The companies have surged as the Bank of Japan last month voted to double debt-buying to more than 7 trillion yen ($68 billion) a month to achieve 2 percent inflation in two years. Prime Minister Shinzo Abe’s proposal this month to provide 110 billion yen in support to stem cell research over the next 10 years is also helping the shares.

“The market expects quantitative and qualitative easing to continue long term, boosting liquidity and drawing investors to speculative shares like biotech,” said Kazuyuki Terao, chief investment officer at Allianz Global Investors Japan, in an interview. “Abe raised health-care reform as a part of his growth plan and that’s also supporting the buy.”

Japan’s regenerative medicine market will probably increase by 62 times to 1.6 trillion yen by 2030 from 26 billion yen in 2012, the economy ministry estimates. Read more of this post

Oil prices are likely to fall over the next few years, the chief executive of Eni, one of Europe’s largest energy companies has said, suggesting a tough time ahead for oil producers

May 19, 2013 7:16 pm

Tough oil pricing ahead, says Eni chief

By Ed Crooks

Paolo Scaroni: ‘Where we can add most value is in countries that are complex and not easy to work in’

Oil prices are likely to fall over the next few years, the chief executive of one of Europe’s largest energy companies has said, suggesting a tough time ahead for oil producers.

Paolo Scaroni, chief executive of Eni, the Italian oil and gas group, said that unless there was another boom in the world economy, sluggish demand and new supply coming on to the market meant the price of crude was “more likely to go down than up” over the next two to five years. However, he suggested his company could survive at much lower prices, and identified Asia as the main target in its plans for future growth.

Mr Scaroni’s expectation of lower oil prices is based on his view that there are two glaring “anomalies” in world energy markets resulting from the US shale revolution, which has caused a surge in gas and oil production. Benchmark US gas at Henry Hub in Louisiana is about $4 per million British thermal units, which compares with about $15 per mBTU for liquefied natural gas imported to Asia, and about $16 per mBTU for the energy content of US crude oil. Over time, Mr Scaroni believes, market forces will narrow both of those gaps. Read more of this post

Enron No Lesson to Traders as EU Probes Oil-Price Manipulation

Enron No Lesson to Traders as EU Probes Oil-Price Manipulation

Enron Corp.’s 2001 collapse revealed the extent of its manipulation of spot gas prices. Twelve years later, European Union regulators may discover energy traders never learned the lessons of the scandal.

BP Plc (BP/), Royal Dutch Shell Plc (RDSA) and Platts were visited by EU inspectors last week over allegations they “colluded in reporting distorted prices” to manipulate the published prices of oil and biofuel products, the European Commission in Brussels said after the raids.

Shell, London-based BP and Statoil ASA (STL), three of Europe’s biggest oil explorers, are under investigation for potential manipulation of prices in the $3.4 trillion-a-year global crude market. The involvement of McGraw Hill Financial Inc. (MHFI)’s Platts, which publishes pricing data, hearkens back to other pricing scandals including Enron, and more recently, Libor.

“We’re making exactly the same mistakes we did with Enron, just with a different commodity,” Robert McCullough, an energy consultant, said by telephone from Portland, Oregon. “The same manipulation we saw in electricity and gas pricing is what we’re seeing in oil.”

The Enron scandal started in 2001 as traders used trading strategies called “Fat Boy” and “Get Shorty” to create phantom congestion in the California energy markets. Electricity prices rose 10-fold on average and California consumers endured days of rolling blackouts. Read more of this post

US shale gas may become export rival to Australia

US shale gas may become export rival to Australia

May 20, 2013, Peter Ker

Fears that the US could become a gas export rival to Australia are firming, after the Obama administration approved more liquefied natural gas exports at the weekend.

In a positive indicator for BHP Billiton’s petroleum business, the US Department of Energy gave conditional approval for the Freeport LNG project in Texas to export to nations that do not have a free trade agreement with the US.

The US has traditionally been reluctant to allow energy exports, given the nation has needed imports to meet its energy needs, but the recent shale boom has created a gas glut that has allowed the nation to consider more exports. Read more of this post

Toyota Pulls Bond Deal Due To Soaring Yields: The Japanese “VaR Shock” Feedback Loop Is Back

Toyota Pulls Bond Deal Due To Soaring Yields: The Japanese “VaR Shock” Feedback Loop Is Back

Tyler Durden on 05/19/2013 12:18 -0400

Despite the eagerness of Abenomics and the new BOJ head Kuroda to have their cake and eat it too, in this case manifesting in soaring stock prices, plunging Yen, rising GDP and exports, and most importantly, flat or declining bond yields, so far they have succeeded in carrying out three of the four (assuming Japanese economic data reporting is more accurate than that of its neighbor China), as it is physically impossible for any central planner to completely overrule the laws of math, economics and physics indefinitely. In this vein, we have described on numerous occasions in the past several days the shock to the system that the massive one-way transfer out of all asset classes and into equities has engendered, and resulted in several JGB futures trading halts in an attempt to normalize a market where bond volatility has suddenly exploded. Volatility aside (and it shouldn’t be as the below section from JPM explains), the recent surge in yields higher is finally starting to take its tool on domestic bond issuers. As Bloomberg reports, already two names have pulled deals from the jittery bond market due to “soaring” borrowing costs.The first is Toyota Industries which as NHK reported, canceled the sale of JPY20 billion debt. Toyota is among Japanese firms that put off selling debt as long-term yields on government debt have risen, increasing borrowing costs, public broadcaster NHK says without citing anyone. Last week JFE Holdings announced it would delay plans to sell bonds due to market volatility. Two names down… and the 10 Year is not even north of 1%.

Var Shock 1Var Shock 2_0 Read more of this post

Greying China taps rural elderly to care for those even older

Greying China taps rural elderly to care for those even older

1:08pm EDT

By Li Hui and Maxim Duncan

QIANTUN, China (Reuters) – Two years short of 70, Zhang Guosheng spends his days caring for an 81-year-old fellow villager – washing his clothes, bringing meals to his bed, and keeping him company – a routine he’ll keep up until he himself needs the type of care he is now giving.

“Living here is better than staying at home alone. We help each other and have a common language,” said the spritely Zhang, an enthusiastic dancer. “We are very happy here.”

With younger villagers who would traditionally have looked after their parents and grandparents flocking to the booming cities to seek work as part of Beijing’s urbanization drive, Qiantun village in northern China’s Hebei province has had to pioneer a new model – the old looking after the even older. Read more of this post

Burton Malkiel: Asset Management Fees and the Growth of Finance

Asset Management Fees and the Growth of Finance

Burton G. Malkiel

Journal of Economic Perspectives—Volume 27, Number 2—Spring 2013—Pages 97–108

From 1980 to 2006, the financial services sector of the United States economy grew from 4.9 percent to 8.3 percent of GDP. A substantial share of that increase was comprised of increases in the fees paid for asset management. This paper examines the significant increase in asset management fees charged to both individual and institutional investors. Despite the economies of scale that should be realizable in the asset management business, the asset-weighted expense ratios charged to both individual and institutional investors have actually risen over time. If we exclude index funds (an innovation that has made market returns available even to small investors at close to zero expense), fees have risen substantially as a percentage of assets managed. One could argue that the increase in fees charged by actively managed funds could prove to be socially useful, if it reflected increasing returns for investors from active management or if it was necessary to improve the efficiency of the market for investors who availed themselves of low-cost passive (index) funds. But neither of these arguments can be supported by the data. Actively managed funds of publicly traded securities have consistently underperformed index funds, and the amount of the underperformance is well approximated by the difference in the fees charged by the two types of funds. Moreover, it appears that there was no change in the efficiency of the market from 1980 to 2011. Arbitrage opportunities to obtain excess risk-adjusted returns do not appear to have been available at any time during the early part of the period. Passive portfolios that bought and held all the stocks in a broad-based market index substantially outperformed the average active manager throughout the entire period. Thus, the increase in fees is likely to represent a deadweight loss for investors. Indeed, perhaps the greatest inefficiency in the stock market is in “the market” for investment advice.

How Wall Street titan Leon Cooperman stays on top in investing and philanthropy

SATURDAY, MAY 18, 2013

Cues From Cooperman

By LAWRENCE C. STRAUSS | MORE ARTICLES BY AUTHOR

How Wall Street titan Leon Cooperman stays on top in investing and philanthropy.

Leon Cooperman has never been afraid to blow his stack. In fact, his volcanic tendencies are so well known on Wall Street that almost no one was fooled when the late Barton Biggs, Morgan Stanley’s longtime market strategist, introduced a character named Greg in Hedgehogging, a 2006 investment memoir. “Greg has a reputation of being difficult to work for and a screamer,” Biggs wrote, attempting to disguise Cooperman. “A screamer is a hedge-fund guy who yells at the people who work for him when they are wrong or careless.”

Asked about that description in a recent interview, Cooperman, 70, offered a warm, gentle smile. He is not a screamer, he said, but does take pride in being a “demanding” boss. Just look at it from his investors’ perspective, he said. “If you are paying somebody two and 20, as opposed to 1%, you basically have the right to expect more from that person,” he says. “And that’s what I tell my people: You’ve elected, for better or worse, to be in the two-and-20 game, so you have to be on the balls of your feet at all times.” Read more of this post

The Giant of Shareholders, Quietly Stirring; BlackRock, the world’s largest asset manager, is far from being an activist investor, but it is starting to ask more questions about companies in which it has stakes.

May 18, 2013

The Giant of Shareholders, Quietly Stirring

By SUSANNE CRAIG

Blackrock

AT 11 a.m. on a Wednesday earlier this month, Michelle Edkins and her team began wheeling extra chairs into a cramped conference room in a San Francisco office tower, preparing for the corporate-governance equivalent of speed dating. Once settled, Yumi Narita started describing the disappointing qualities of a big entertainment company she’d been checking out. “I’m inclined not to trust this compensation committee,” she told the group.  “Year-over-year, they pay their C.E.O. more, and the metrics are often questionable.” There were sympathetic nods around the room. Ms. Narita is one of about 20 analysts on the corporate governance team at BlackRock, the world’s largest asset manager. BlackRock’s size is mind-boggling. With almost $4 trillion under management, it is, according to a recent University of Michigan study, the single largest shareholder in one of every five United States companies. It manages money from pension funds and endowments as well as retail investors, controls large stakes in companies like JPMorgan Chase, Wal-Mart and Chevron and owns 5 percent or more of roughly 40 percent of all publicly traded companies in the country.

Read more of this post

Is This the Best Time for Investors? Don’t Bet On It.

Updated May 18, 2013, 8:34 p.m. ET

Is This the Best Time for Investors? Don’t Bet On It.

By BRETT ARENDS

SJ-AG481_LEDE_C_G_20130517163304

These have been good times—surprisingly good times—for investors. Stock prices have hit record highs. The Dow Jones Industrial Average has rocketed above 15000 for the first time, leaving even Wall Street bulls scrambling to raise their year-end forecasts to catch up. Meanwhile, even the normally staid bond market, as measured by the Barclays U.S. Aggregate Bond index, is up about 30% over the last five years. Interest rates on Treasury bonds are near historic lows. Corporate bonds, including those for blue-chip and riskier companies, are booming. Those who stuck with markets through the crisis of 2008, and especially those who held a balanced portfolio of stocks and bonds, are probably feeling very pleased with themselves, and well they might. But there’s a problem at the heart of financial markets. Psychologists would call it cognitive dissonance—the problem of trying to believe two incompatible things at the same time.

Read more of this post

China’s King of All Social Media: Tencent is China’s Facebook, Twitter, Zynga, and Tumblr all rolled into one, and it’s pushing hard into e-commerce. How it stays on top

SATURDAY, MAY 18, 2013

China’s King of All Social Media

By RESHMA KAPADIA | MORE ARTICLES BY AUTHOR

Tencent is China’s Facebook, Twitter, Zynga, and Tumblr all rolled into one, and it’s pushing hard into e-commerce. How it stays on top, and why the shares could climb 20%.

Chinese Internet companies are facing growing pains, as new competitors emerge and new trends like mobile Internet turn their business models upside down. Tencent Holdings (ticker: 700.Hong Kong) is coping better than most, aided by a diversified mix of businesses, among them: China’s dominant, youth-oriented gaming operations; one of the nation’s largest instant-messaging services, QQ; and the wildly popular WeChat, a free mobile social-networking and messaging software that allows users to send photos, videos, and voice messages to each other, walkie-talkie style.

Tencent’s individual businesses put it on par with Facebook (FB), Twitter, Zynga(ZNGA), and Tumblr, but it has more power than these firms because its users, advertisers, and application developers can access them all on a single platform. “Tencent is the winner-take-all social player in China,” says Ravi Sarathy, Citigroup’s head of Asia Pacific entertainment, media, and telecom research. Read more of this post

You Can Do Too Much Due Diligence: The Case of Feedburner

May 132013

You Can Do Too Much Due Diligence

It’s Monday, time for another lesson I’ve learned in the venture capital business. Today I will tell a story that I love telling. It has some of my favorite people in it. Back in 2004, early in my blogging career, I heard about a service that had just launched called Feedburner. It provided a number of useful services for a blog’s RSS feed. So I went and signed up and AVC became one of the first users of the service. I immediately liked the service and the idea. So I contacted the founder/CEO Dick Costolo, who has gone onto bigger and better things. I told Dick that I was interested in making an investment in Feedburner. My friend Brad Feld was also talking to Dick about the same thing so we decided to do the investment together. As part of our investment process, we do a bunch of fact gathering/checking work that is called Due Diligence in the vernacular of the VC business. So my partner Brad Burnham and I put together a list of leading blogs and online publishers who had popular RSS feeds at the time. I think there were a dozen or so publications on that list. It included Weblogs (Engadget), Gawker (Gawker), NY Times, and a bunch more. We know most everyone who ran those operations so we called them. What we heard was surprising. Not one of them was willing to hand over their RSS feed to a third party for analytics and monetization. We were very surprised to hear that and thought a bit about it. But, we decided, we could not invest in something that the big publishers would not support. So regrettably, I called Dick and told him we had to pass and why. Brad Feld went ahead with the investment and Feedburner closed their round without USV. About six months later I ran into Dick at an industry conference. We decided to grab lunch together and during lunch he said to me “you know those dozen publishers you called?” I said “yes, what about them?” He said “every single one of them is on Feedburner now.” I was pissed. How could that be? So I said to Dick, “Would you consider letting us into that last round we walked away from.” He said “No, but I will let you invest at a 50% increase in price”. We did that and became an investor in Feedburner. And that worked out well when Feedburner was sold to Google a few years later. So what did I learn from this lesson? First, trust your gut. I was using Feedburner and knew it was a very useful service. I felt that others would see that too. They did, but it took some time. Second, I learned that a service can get traction with the little guys and in time, the big guys will come along. I have seen that happen quite a bit since then. And finally, I learned that you can do too much due diligence. It’s important to talk to the market and hear what it is saying. But you have to balance that with other things; the quality of the team, the product, the user experience, etc. You cannot rely alone on due diligence, particularly early on in the development of a company and a market.

Adrian Cheng: updating the Hong Kong family empire of Chow Tai Fook/New World for a changing China

Saturday May 18, 2013 MYT 10:05:00 PM

Adrian Cheng: updating a Hong Kong family empire for a changing China

HONG KONG: He has trained on Broadway and been a Wall Street banker.

Now, Adrian Cheng, 33-year-old scion of the world’s largest jewellery retailer and one of Asia’s leading property developers is gearing up for his latest challenge – modernizing his family’s $25 billion empire for what he calls a “new era”.

The grandson of Hong Kong billionaire Cheng Yu-tung, who built up jeweler Chow Tai Fook (1929.HK) and real estate titan New World Development (0017.HK), Cheng is one of a new generation of business leaders in Asia who are taking over the corporate reins from their ageing rags-to-riches forebears. Read more of this post