Archive for September, 2008

Paul Newman 1925-2008

Posted: September 27, 2008 in Technology and Business
Paul Newman passed. One of the most entertaining actors ever. We had the pleasure to meet him a few years ago… my wife raced against him in a charity go-kart race and we got to spend a little time with him in the racer’s trailer. He was exhausted but still was ever the elder gentleman… such a nice, gracious person. Very sad news.

Did The World Skip A Day?

Posted: September 24, 2008 in Technology and Business
Two days ago oil shot up past the $130 level.  It eventually closed above $120.  Lots of news agencies covered it.  Here’s the headline from Reuters:
Yesterday, oil was trading around $107.
Amazingly — at least, I’m amazed by it — I couldn’t find a single headline that oil "plunged" $13.
What gives, did we skip a day?
P.S.  Oil closed down again today, around $105.  I finally found one — buried– report that said the jump in oil may have been artificially caused by a short squeeze and it was being investigated.  Unfortunately, no retractions, even news coverage, from any of the major news services.

The entire weekend people kept calling last week’s action "a bailout"… and how the very rich "screwed" everyone… and other such malarkey.

It drove me crazy… I wasn’t hearing anyone refute.

So I did… and will here.


MYTH: AIG is a bailout.

FACT: Everyone called the S&L crisis of a few decades ago a bailout.  But taxpayers made money from the S&L crisis.  And — important here — taxpayers are setup to make money from AIG… we now own 79.9% of AIG… plus we get 11% interest!   Where’s the bailout?  Looks like AIG got itself in trouble… and U.S. taxpayers were the only investment group of size that could step forward… which means we taxpayers got a helluva deal.  Anyone who calls it a bailout is simply parroting political rhetoric.  The dangerous, ignorant kind.


MYTH: That we’ve "nationalized" the world’s largest insurer… the implication being that we’re run by some dictatorial government who greedily hordes gains for their own wasteful sloth.

FACT: Hello? This is the United States of America. We elect our government every four years. We are the U.S. Government.


MYTH: That only the super rich gained and everyone else got screwed.

FACT: Well, certainly, some super rich folks gained.  Because SEC regulations allowed them to over-lever.  So they did.  And while the underlying assets they were levered against were appreciating (the housing bubble), it worked… and not a single person complained… that’s because everyone was making out-sized gains on their money… that is, anyone invested in a money market fund or a 401K fund or a pension fund… that is, everyone.  Once the value of the underlying asset depreciated, that extreme levering bit everyone, causing out-sized losses.  So excuse me for thinking that the people bitchin’ about the current situation are a bit disingenuous.


MYTH:  We need more regulation.

FACT:  It wasn’t lack of regulation… it was poorly administered regulation that got us in trouble.  As I understand it, the SEC loosened up levering ratios in 2003 — from 1-to-12 to 1-to-40. 

OPINION:  Why did the SEC do that?  Who knows.  Maybe something simple as wanting to make home ownership more attainable… you know, the foundation of the American Dream.  Anyone think of that?  Nope, people are too busy placing blame.


What’s the difference between financials and tech?

Techs have cash in the bank. 
Ironically, the financials, which are the banks, don’t.
Which is why, ironically, the volatile techs are — relatively speaking — actually one of the safer investments these days.
It’s getting about time to start talking about what I’ve been doing the last few years… egad… CAD*. 
Let me start off with… you guessed it… an observation about my favorite company in the world:  Google.
Everyone thinks Google is a one product company.
Not true.
Google owns a big hunk of another market, too.  Turns out Google Earth is based on an innovative conceptual drawing product called SketchUp, originally from a tiny company called @Last.
When it became apparent that Google Earth was going to explode (so to speak), GOOG bought @Last.
That was about two years ago when they had about 0% marketshare in large CAD houses.
Now they’re in about 70% and are giving fits to the 800lbs. gorilla in the precision design space, Autodesk. 
Why?  Because they give away their product for free!  GOOG makes its money selling ads, not software, so they don’t need to sell the software.  They only care that everyone is using it.  Which they are.
And since Google SketchUp is distributed online, Autodesk’s sacred reseller channel — the most tightly controlled sales channel in the history of sales channels — doesn’t even come into play.
Another way to say this:  Autodesk doesn’t even have the chance to strangle the life out of SketchUp like it does everyone else.
Pretty cool, eh?

How’s that for a nicely disruptive strategy all the way around?

* Sorry, my daughter is five, not nine, so I had to prime the Dr. Seuss rhyme just in time!