Economics and similar, for the sleep-deprived

A subtle change has been made to the comments links, so they no longer pop up. Does this in any way help with the problem about comments not appearing on permalinked posts, readers?

Update: seemingly not

Update: Oh yeah!

Thursday, December 31, 2009

Welcome, thrice welcome, to the year 2010!

The year in which, realistically, it's all going to happen again
4 comments this item posted by the management 12/31/2009 02:05:00 PM

Tuesday, December 22, 2009

Why has the Fairtrade coffee minimum price only gone up by 6 cents in the last five years?

Five years ago, I was defending the Fairtrade organisation against various neoliberal ballbags making obviously silly arguments ("price support in coffee is stopping coffee farmers having the incentive to grow all those other profitable crops you can plan in the mountains!") or things that were visibly untrue ("they ban tractors!"). I still think I'm broadly right on those specific points.

On the other hand, Peter Griffiths makes some good points here, and given the massive growth of the Fairtrade marketing organisation over the last five years, I think it's pretty scandalous that the minimum support price has hardly risen, and the Fairtrade 10c premium (which is only paid to some growers) hasn't increased either. Most coffee merchants earn a lot more than 10c per pound on their marketing. There's something worth taking a look at here.
4 comments this item posted by the management 12/22/2009 01:48:00 AM
Lumumba Stanislaus Di-Aping

Just a note - I have seen this mistake being made on a few blogs now. Sudan has a complicated power-sharing arrangement in its government, which means that not all Sudanese government officials are war criminals alongside al-Bashir, and many of them hate the NCP more than you do. The Sudanese representative at the Copenhagen talks has a Congolese first name and the middle name of a Catholic saint, which means it is very likely (I can't find a proper biography) that he is from the South of Sudan. He's also Oxford-educated and a former McKinsey consultant, which means he may be a heck of a tool in many other ways, but he's not a war criminal and, particularly, there is nothing awful about Johann Hari and Naomi Klein interviewing him respectfully. He's also speaking for the G77, who haven't disassociated themselves from his remarks, so it's not true to say that "Sudan derailed the Copenhagen talks".
3 comments this item posted by the management 12/22/2009 01:39:00 AM
Risk-adjusted performance - a squib

It is, of course, a truth universally accepted that active money managers are timewasters and charlatans and that any occasional outperformance they ever generate is simply the result of excess risk-taking. This point has been belaboured so often by Nicholas Taleb on one side and the index-fund cultists on the other that I have long since given up arguing otherwise. However ...

The 2009 performance year is coming to an end, and some fund managers will have outperformed massively and some underperformed massively. In general, across the sector, whether you underperformed or outperformed will depend on one thing alone - whether you went long financials in mid-March. More or less nothing else will have made enough of a difference to move the dial compared to that - for quite a long period at the end of Q1/beginning of Q2, the underweight financials position would have been costing your average manager as much as 50bp of relative performance a day.

On the other hand, think back to March of this year. Would "men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested" really have gone all in on financials, the week after AIG announced the largest loss in corporate history at that time? What sort of risk were people taking who made what was objectively clearly the right decision? What would Taleb say about the big outperformers of 2009, and what does this imply about how one should judge the risk of the underperformers? Given what we know about the performance of people who invest in index funds (much worse than the funds themselves[1], because they tend to get scared at market bottoms and take their money out).

I think that March 2009 is clearly a reductio ad absurdum of the notion that risk can meaningfully be measured by standard deviations or that the CAPM alpha can ever be used as a metric of investment performance. By the way, although I certainly don't propose to discuss my own performance this year in blog comments, this is not sour grapes.

[1] And the funds themselves often have really quite terrible performance relative to the indices they are meant to replicate - one should be aware that when using the Vanguard SP500 tracker, this is basically the Warren Buffet of tracker funds, and if you believe that it can continue in future to generate the exceptionally good tracking-error result that it has generated in the past, then this ought to have implications for your beliefs about the possibility of persistent performance in other areas too.
26 comments this item posted by the management 12/22/2009 01:18:00 AM

Monday, December 14, 2009

Grasping reality with one hand and my wallet with the other ...

After the "first hundred days" in the term of a new Democratic President comes the next stage; the almost impreceptible transition among his supporters from saying

"of course, he's been hampered by all sorts of obstacles to date, but he's about to start delivering on all those promises he made to his supporters on the left"

to saying

"well, he never really promised anything and it's terribly naive to think he was ever going to deliver anything to his supporters on the left"

Apparently we've reached it. It's rather like, although not quite the same phenomenon as, that by which literally millions of people who all evidence suggests were highly likely to have been U2 fans in the past, have reconstructed a version of history in which they always hated U2 (I am entirely guilty of this last one myself).
38 comments this item posted by the management 12/14/2009 12:33:00 AM

Sunday, December 13, 2009

Taliban pay, again

At least now it's fallen from the Times adverts' $15 a day to $350 a month, but still more than any other occupation in Afghanistan, apparently. I still, frankly, don't believe this.

Back in the day, I used to win bets against people who didn't believe that the most junior rank of full-time counter staff at a couple of UK high street banks were paid less than the most junior rank of full-time counter staff at McDonalds. (True at the time and quite possibly still). The trick was that McDs were, of course, big users of part time staff for the grunt-work, and so the most junior rank of full timers were still about halfway up the food chain. Maybe something similar is going on here, because I still don't see the sort of payroll logistics that would be needed to transport tens of thousands of USD in cash around Helmand.
34 comments this item posted by the management 12/13/2009 12:52:00 PM
Arseholes, a taxonomy

Number 12,052: The type of arsehole who waxes nostalgic about the particular kind of distortion introduced by the recording technologies of his own youth, while bemoaning that anyone else could prefer the type of distortion introduced by recording technologies of their own youth


26 comments this item posted by the management 12/13/2009 09:34:00 AM

Saturday, December 12, 2009

Embarrassing questions, an occasional series

Now that we've got that matter of the Laboratoires Garnier (not real laboratories, have never produced any PhDs, no significant research carried out) sorted out, perhaps you can help me with another one.

"Popping a cap in your ass". Does this mean shooting someone specifically in the arse, or just generally shooting them?
18 comments this item posted by the management 12/12/2009 06:59:00 AM

Friday, December 04, 2009

Quotations relevant to investment and other matters

I think this insight was originally from Henry Kissinger, but I can't source it. The quote I can't find was on the effect on a politician of being elevated to power and attending confidential briefings for the first time. The experience of getting information that is not generally available tends to put up a barrier between the politician and others outside the circle - newly elevated politicians go through a period in which they stop listening to anyone without their level of clearance because they can't stop thinking "but you don't know what I know".

"Inside" information puts up a communicative barrier between you and other people; it makes you view the world in a different way from everyone else, and it impairs your ability to evaluate the reliability and importance of different sources. In other words, it has a similar effect to that of hallucinogenic drugs.

In general, it is a bad idea to make investment or foreign policy decisions while under the influence of psychedelic drugs.
14 comments this item posted by the management 12/04/2009 02:34:00 AM

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