2015 observational study suggests these results are not unique to Covid: ""Our research shows a correlation between hospitalisation due to infection and impaired cognition corresponding to an IQ score of 1.76 lower than the average. People with five or more hospital contacts with infections had an IQ score of 9.44 lower than the average. The study thus shows a clear dose-response relationship between the number of infections, and the effect on cognitive ability increased with the temporal proximity of the last infection and with the severity of the infection." Source: https://www.sciencedaily.com/releases/2015/05/150521095016.h...
The linked article did not say climate research is fraud. It says the climate implications of permafrost thawing are complex and very difficult to model.
I found Firefox to be much more response when operating lots of tabs and opening and closing tabs quickly with keyboard shortcuts on Windows. My direct comparison is Microsoft Edge (Chromium based) which is noticeably sluggish on CTRL-W and then trying to type a new address.
Even after days of usage, my Firefox process might grow to 3-4gb of ram usage with no noticeable performance penalty.
Have you found a better alternative for someone who trades a lot? I'd like to drill down into trade results per symbol and get ROI statistics and visualize past buy/sell points.
Spitznagel runs a fund that specializes on so-called "tail-risk events", i.e. he profits from extremely unlikely economic scenarios such as hyperinflation or violent economic crashes. He profits more the more assets he has under management, because he charges his clients a performance fee of probably around 20% of profits. So part of his job is to constantly find new investors by telling them that the worst economic crisis is just around the corner. And how he he just happens ot have the right solution.
If his fee is based on profits, he needs to be correct some of the time. The types of events you mentioned aren't all hype and he can't will them into existence, so maybe he's on to something?
No idea about his specific fund's pricing but the "traditional" pricing model for hedge funds is 2 and 20, ie, 2% of assets under management plus 20% of profits.
But also, a performance fee is kind of like an option in that it has an asymmetrical payoff - if you make 100 in profit, you get 20, but if you lose 100, you don't have to pay 20. All other things being equal, the expected value of a performance fee will increase with portfolio size as long as there is a chance you are right (and there is always a chance you are right).
Yes, the predicted events will have to come to pass eventually to collect on the performance fee. Nobody (not even this guy) knows when that will happen, but everyone knows that it will happen eventually, and in the meantime, you can position yourself so as to maximise the payoff when they do.
I believe most hedge funds also charge a fee on total assets under management regardless of profitability, so he’d be profiting just by luring in new customers, profits not necessary.
>If his fee is based on profits, he needs to be correct some of the time. The types of events you mentioned aren't all hype and he can't will them into existence, so maybe he's on to somethin
So all he's doing is timing the market. That's it. And here's the thing: it's impossible. Statistically, he and everyone else are on average bad at it. For example, over the past year he and many folk have predicted recessions, depression, stagflation and even collapse. And here in the US they've been entirely wrong. And if you invested according to them then you lost a lot of money.
The reason why this is a bad investment is because the opportunity cost of what you could be doing with your money during all the time that he's wrong up until he's right. And then you have to hope that when he's right, it makes up for all the time he was wrong. Statistically, it's unlikely.
Your best bet is to make the best investment you can that pays today, not a bet on a payday that could happen tomorrow... Time in the market beats timing the market.
This is an old European disease. Corporate profits are often seen as an adverse result; of consumers being taken advantage of unfairly. Taxing excess profits beyond what are already high tax rates is popular amongst voters (e.g. see poll results in the UK, 2022). However, this lowers the appeal for new entrants to enter these markets to compete for these excess profits through better and more efficient products and services. If one wants free enterprise and reap its benefits one has to allow high profits for companies and see if competition takes care of the "problem".
Irrespective of the the benefits and/or feasibility of competition to bring prices down, the larger problem with this ad-hoc windfall profit tax is that it is ad-hoc. This is changing the rules after the game has started.
The article reports the effort as a "surprise tax".
Companies made ad-hoc profits on pretending it's the inflation and raising the prices while having rising profits. I have zero problems with ad-hoc tax on that.
Frankly I think taxing some part of revenue instead of just income on big companies would be beneficial, no more "investing" in making market harder to newcomers (or outright buying them out) and getting tax cut on that.
This is changing the rules after the game has started.
The point is that a windfall is also - by definition - a favourable change in the rules after the game has started.
The moral question here should be a simple one. Did the investors in the banks know (or at least reasonably expect) that they would make these profits when they decided to make their investment? If they didn't and they invested anyway then there's a reasonable argument for a windfall tax as long as it only claws back gains they had no reasonable expectation of making and did nothing useful to earn.
its not a “game”. Its the people of Italy legislating whats best for the people of Italy. This is what government is. You are pre-supposing a capitalist framework where private enterprise should compete with the people. You could alternatively think of private enterprises being allowed to exist at the pleasure of the people. And that is the way it should be. People are real, companies are fiction.
Just because it was accomplished via a "legislative process" doesn't automatically make it a good idea. Surprise laws are a bad idea in any economic system IMHO. It isn't even a "capitalist" issue.
Utilities (water, electric, telephony/cable/data services) or where having two of something makes no sense given physical limitations (Transportation sector, etc.)
You're right but the person is talking in the context of competition and how competition doesn't reduce profit margins "for industries with big capital requirements."
Banking! If there are meaningful competitors then that implies there is meaningful competition. But many financial services firms have been making huge windfall profits by creating a wide interest rate spread even though they would still be (very) profitable with much lower spreads and their customers have a clear incentive to go with a competitor offering a better interest rate. So clearly there is not effective competition in this market.
And are they offering them at competitive rates or are they all mysteriously making enormous profits despite the "competition"? Because in much of Europe it's definitely the latter that is happening. There are lots of banks but evidently they are not really competitors.
But will their choice of health insurance provider be accepted at the hospital an ambulance took them to? Who knows but for that person, its time to play bankruptcy roulette.
These are mobile providers. For home internet with a physical connection you usually don't have a choice and it is not outlandish to consider them a "natural monopoly" like you would electricity and water.
And in cases where there are competitors, they'll often have similar prices for similar offerings, with equally poor service or reliability.
After all, if you're Time Warner, you could compete with Verizon by improving your infrastructure or lowering your prices, but that would spur them on to do the same thing, and then it's a race to the bottom where "everybody loses" (by which I mean consumers win a bit more and corporations win a bit less).
If you instead take the gentleman's agreement to not make any substantial changes, then you both get to gouge customers for poor service as much as you want, keeping profits high without having to do any work to maintain it. Sure, you might lose some customers to your competitor, but they also lose customers to you and everyone is happy (except the customers).
Most Americans have access to one "high-speed" (50Mbps+) provider, and then maybe one low-speed (<15MBps) provider, and maybe one dish option. It's not competition if the product isn't comparable.
Your assumption, that if without these extra taxes, more banks would be created and the industry would become less concentrated, seems untrue. The banking industry seems to be becoming hugely concentrated in every Western country, regardless of windfall taxes.
The opposition to these extra taxes runs surprisingly parallel to trickle-down economics.
If we pass these windfall taxes and then use that money to help individuals who are struggling, those individuals then benefit; however, if we let all that money to go to the millionaire/billionaire shareholders, then there's a chance that, instead of adding it to the excess wealth they're already hoarding, they might decide to spend it on business or projects that they could already have afforded but didn't. Those businesses or projects could then theoretically create work opportunities which would then employ some more people, and maybe some of those people would be the people who are struggling, and maybe the pay would be a bit better than the market rate they're already getting paid for their labor for some reason and so they'd get paid a bit more, and maybe that would help them to struggle less. Didn't you ever think of that?!
>I dunno why only wage tax is progressively taxed.
Companies are just groups of people. Why should a group of 100 people get taxed more than a group of 100,000 people? Progressive rates on wages make sense because it's applied to each person individually.
Yeah there's a bunch of other stuff like limited liability and governance rules, but they're not really to the topic at hand which is why bigger companies should get taxed more.
>This is in order to encourage the formation of new groups, which almost always start out small.
If that's your goal, having slightly lower taxes is a terrible way of doing so. It's far better to address the barriers to business formation directly (eg. availability of capital, market power of incumbents, regulatory requirements). We want people to found new companies to produce a better product (eg. Tesla), not to chase some tax incentive.
Weird argument but okay, then increase tax past say 100k/employed person in company of revenue.
Or tax on revenue once company becomes big enough. Taxing on income made sense to make investing into expansion a good thing, but those companies clearly don't need to be bigger, it seems to just make stuff worse and worse.
>then increase tax past say 100k/employed person in company of revenue.
That would cover most professional services firms (eg. lawyers/accountants). I don't really see why they should be considered worse than a mcdonalds.
>Taxing on income made sense to make investing into expansion a good thing, but those companies clearly don't need to be bigger, it seems to just make stuff worse and worse.
TSMC brings in 73.67 billion/year in revenue. Equifax only brings in 5.12 billion/year. Which one is making stuff "worse and worse"? Surely there's a better metric than dollar amounts, which totally ignore the financial nature of the underlying industry?
In an industry where "too big to fail" is a real thing, taxing bigger companies more seems perfectly reasonable. Not just a little bit - significantly more, even painfully more. Create some actual incentive for banks to not get that big.
Banks have been trying to reduce their balance sheets and their risk-weighted assets, because of all the extra charges and reserves they need to keep. They cannot just get rid of a large of their customers like that and collapsing shareprice.
In some businesses there is also a benefit in scale (like in trading), and there you see the US banks leading because they've had it.
If you want the US banks to fully take over IB and corporate banking, definitely do tax the EU banks painfully more.
Or tax every financial counterpart painfully more, so then eventually the customers pay much more for their loans because the financial system has become so expensive.
This is misleading. Banks have capital sufficiency requirements following the implementation of the Basel 3 capital sufficiency framework. This has created an international growing market for bulk capital availability and reinsurance services.
In short, due to international capital sufficiency regulations, there's now a market for excess regulatory capital. The attempt to prune low performing assets is due to a market as an alternative to low return on capital investments.
It's not because of charges and overhead.
Banks aren't worried about bad assets more than usual, they just have another arena to make money in now.
Excessive regulation doesn’t help if your law doesn’t have teeth. Plenty on laws on the books in the US, but I don’t see enough people prosecuted for 2008.
And then the incentives are all wrong if you bail your buddies out anyway. Play with fire and the fed will bail you out is terrible.
I think that's correct. I have a theory about bullshit jobs in highly regulated or profitable industries. Places like Google have a ton of employees that don't contribute anything but make work projects. Why don't they just cut the workforce in half? Because their profit margin would be too high. It's already 25% with all the bloat. Imagine if their profit margin shot up to 50%? They would likely be dragged in front of Congress to explain themselves. It's even more true for banks (who i would argue have even more bullshit jobs where people literally do nothing)
You could think this is good as it supports people but I think it's kind of sad thousands of people get up and go to work every day with no impact on anything,just waste away at a desk. This doesn't even mention the economic waste
Bullshit jobs are encouraged for management to grow their org into a promotion. These companies are growing so nobody really questions the bloat as making the wrong move might impact future growth (or cause your action to be blamed for growth miss).
Bullshit jobs are created for many reasons, I think you and GP are both right.
GP's point may not be obvious on the surface, but another way to look at it is, if for example the economy cools down and GOOG is pressured to maintain its profits, you can bet that management will decide to lay off even more people. In this sense it is just behaving as if it earns as much money as "expected" (by shareholders or the public, doesn't matter).
I think the other HNer is closer to the truth: in a bureaucratic organization, the more people you manage, the more important you are.
So, basically, result of a status competition that comes from misalignment between the interests of the company and the interests of individual managers.
I’ve wondered this too. I don’t think it’s conscious so much as it’s unclear exactly what jobs are bullshit. So when profits are high, there’s more leeway to allow jobs that you’re not quite sure.
But when times are tough you start making riskier jobs because you just don’t have the funds to support bullshit jobs.
I'm in my 40s now, and would be pretty content to get up and remote to work every day with no impact on anything. Let me save that energy up for my family instead.
I don't know. I kind of like competition in banking. I like free checking, ATM fee reimbursement, better customer service, better websites and apps, better alerting etc.
Interac is a great example of the opposite. The government of Canada had to strong arm the financial sector to create a non profit third party to allow zero cost transfers and a robust debit payment system. The banks have been lobbying to dramatically increase interchange and transaction fees on Interac payments for years to allow for an expansion in lucrative 'premium' credit card processing fees.
Competition did nothing to stop industry alignment against consumer interests.
Maybe they won't but new competitors will see the outsized profits and try to get my business by offering these things. I have all these things at my bank (TD) so the system seems to work.
Not often enough. You've seen the reverse due to high regulatory costs.
If you're a healthcare provider in the US you often have to get a "certificate of need" to offer a service where a board full of competitors in the neighborhood determine if the neighborhood really "needs" this service:
> CON programs primarily aim to control health care costs by restricting duplicative services and determining whether new capital expenditures meet a community need.
I certainly do. I like have lots of choices and banking is important to me. I also like innovative new banking products. I wish there was free enterprise in banking, it seems like we have an oligopoly, in the US at least.
Unfortunately the old American disease of not ensuring competition and instead passing regulation ensuring monopolies stay in power means the "problem" is not actual solved, and is in fact made worse.
> The US is home to over 4,700 FDIC-insured banks. It’s not far off from the EU, which has 5,171, but stop and consider that the EU consists of 27 countries. The UK currently has 365 banks, and Canada has 83
I shared the whole quote, but the goal was to just highlight that the number of banks is fairly similar.
I agree that the number of people is a better characteristic in this context, however the number of countries is important. EU has many different cultures, languages, regulations, so they have to have more banks. But looking at data, despite these considerations, EU still has worse competition. So still not sure what exactly parent meant.
How silly. Per million people the US has 14.1 banks, which is only slightly more than the EU's 11.5. I don't really know what's up with the UK and Canada, but there's probably some economic variable I'm not considering.
Can you imagine if the number of banks per country was constant?
The number of banks is not a good indicator of how much competition exists in a market. The elasticity of prices in that market is a better measure, but also has flaws. In general you need to look at how much margin a given industry is pulling in to determine how much leverage it has.
On the bank metric:
There are plenty of quasi non functional FDIC insured banks that are used as vehicles for reverse takeovers to allow a market entrant to avoid the hassle of obtaining their licenses.
Additionally given the substantially increased variability within different European markets we'd expect significantly different competitive dimensions between regional and international tier banks.
These numbers have strong historical reasons. The US had unit banking leading to a gigantic explosion in banks and this number has been going down as bank merge since the end of unit banking in the 30s.
Canada on the other hand had branch banking, meaning a few insitution each covering the whole country. So Canada had very far fewer banks historically.
During the Great Depression many 1000$ of banks failed in the US and none in Canada.
Forgive me but this kind of comparison is hilarious, given Europe is smaller in area, has more population and way more different countries than the USA.
> Corporate profits are often seen as an adverse result; of consumers being taken advantage of unfairly.
What is it then?
I think it's a clear sign that competition doesn't work and savings were not passed to consumers. The thesis that competition will work eventually reeks of trickle down economics.
Such tax is just punishment for the lack of competition. It sends a message that if you are not going to compete for the customer then you can't keep the profits gained from your reluctance to compete.
> However, this lowers the appeal for new entrants to enter these markets to compete for these excess profits through better and more efficient products and services.
And how many de novo banks have there actually been in any country recently? In the US, the land of plenty (banks), there's been one in the last twenty years.
Bloomberg's Odd Lots podcast just had an episode on this (including the topic of de novo):
Banking is low margin, and it takes decades to get any kind of return: few, if any folks, have the patience for that kind of ROI when there are alternatives.
Retail banking is low margin high volume, but a bank's CMG or IB divisions are NOT low margin operations. Trading desk margins vary depending on the strength of the group and the clientele. If you're a primary desk for a trillion dollar AUM entity, you make a very pretty penny off your Bloomberg terminal subscription.
I'd go further than that. Corporate profits become stores of value. The money stops moving, which reduces the transaction rate and lowers inflation.
That is, after all, how interest rates work. We 'tax' the mortgage payers and give it to deposit holders to hold as a store of value. That reduces the transaction rate.
So if we tax corporate profits and redistribute it around, then interest rates have to go higher to force the money released from the corporate profit store, to the deposit holder store.
If prices are too high, the solution is to encourage the capitalisation of more competition, not encourage keeping money in the bank.
> If one wants free enterprise and reap its benefits one has to allow high profits for companies and see if competition takes care of the "problem"
One must just glance at the US to see what happens, the high profits get used to lobby politicians to make competition impossible, thus the problem doesn't get solved and becomes the status quo.
Permanent high taxes are better than unpredictable windfall taxes.
It's very difficult to budget for the future when you don't know how much tax you're paying by a binary order of magnitude. When industry specific, it can create perverse incentives for outsourcing.
But like, you can use those profits before they get taxed to pay your workers more and invest in more and better equipment and tooling. So you can lower your tax bracket by providing a better service anyways.
which could easily be visited by a landing ship full of guardia di finanza. If the corrupt british regime would not offer protection for services rendered...
> If one wants free enterprise and reap its benefits one has to allow high profits for companies and see if competition takes care of the "problem".
I sometimes wonder if perhaps other parts of the world have a different vision of how to run their economy. Surely "free enterprise" isn't a universal rule and certainly not the way it is conducted in North America. Maybe they're just doing things differently?
That is a very narrow and frankly sweepingly incorrect description of "CEOs" or "companies". They're not all the same. I for one (alongside many other investors) carefully study incentive programs and compensation oversight executed by the board of directors. There are many thoughtful companies (and CEOs) who e.g. align over very long-term targets, such as '5 year return on capital". Investors have found out a long time ago that incentivizing by short-term measures such as share price (or revenues, or EPS) can bring about very adverse long-term investing outcomes.
Let's imagine that shareholders agree on a 5 year return on capital plan. Now let's say some missteps/economic circumstances make revenue go down in the 4th year. The CEO will get heat from the investors. This is especially true if the board contains an investor representative who can vote the CEO out.
What choice does the CEO have at that time but to boost short term?
Look at the same story from an employee perspective. Imagine that employee worked for 4 years and the downturn arrives. They invested a lot of time of their precious life, much like the shareholders invested their precious money.
In the downturn, the CEO gets to make a choice and the choice ALWAYS is to boost the stock price for shareholders (and for themselves). Often, at the expense of employees.
It's really crazy how just a few months ago Facebook's long-term prospects were worth just 1/3 of what they are now! What do you think changed so much during that time to warrant the 3x increase?
Did you just learn this in Finance 101? The real stock market is priced based on many factors including interest rates, future growth expectations, etc, but the biggest factor of all is psychological.
Yes, but I think that is because investors rationally realize that the future is extremely uncertain and complex so it is better to weight towards shorter term more predictable outcomes.
Average CEO tenure is less than 7 years, not sure how you'd practically be able to accomplish any kind of compensation plan on a longer time horizon. What is the person supposed to do in the meantime, life off of savings?
I looked through the new features list, but couldn't find the "conversational" threads feature which was on the roadmap for Q1 2023. Is this will coming or am I just missing it?
Ballou's criticism of PE fund managers being skilled in finance but not in operations or engineering is missing the point. A good PE fund manager understands the ins and outs of capital allocation and its long-term effects on corporate performance. A typical engineer or product company founder does not, and those who do are the exception. PE companies are never operators of businesses. They find (ideally) competent management teams and advise them in capital allocation. Ballou alleges PE buys to pillage and throw away the corpse. In truth, PE buys to sell, that's the only way to make good returns.
In a perfect world, they'd buy an under-managed, undervalued company, where necessary throw out management, bring in competent management, perform bolt-on M&A where it makes sense, improve KPIs, then sell a rejuvenated and much more competitive company 5-10 years later at a much higher multiple. Examples? Ingersoll-Rand, Brenntag, SS&C. Unfortunately, Ballou does not talk about the positive outcomes because they don't make headlines.
What are some good Nero quotes? Wikiquotes only has two; one of which is "I wish I could not write." which seems a bit ironic since it seems most of his writings are now gone.
