11th July 2013: The Futures of Power in the Network Era

Coauthor Jose M. Ramos has a new article out in the Journal of Futures Studies:

 

This article asks questions about the futures of power in the network era. Two critical emerging issues are at work with uncertain outcomes. The first is the emergence of the collaborative economy, while the second is the emergence of surveillance capabilities from both civic, state and commercial sources. While both of these emerging issues are expected by many to play an important role in the future development of our societies, it is still unclear whose values and whose purposes will be furthered. This article argues that the futures of these emerging issues depend on contests for power. As such, four scenarios are developed for the futures of power in the network era using the double variable scenario approach.

11th July 2013: The Moral Worldviews of Man of Steel

I finally saw Zack Snyder’s Man of Steel on the weekend.

 

The film contrasts four moral worldviews: (1) Jor-El’s (Russell Crowe) imperative that Kal-El/Clark Kent (Henry Cavill) create a different, better future for Earth than Krypton; (2) Jonathan Kent’s (Kevin Costner) imperative that Clark Kent becomes a symbol for human potential and meta-ethical awareness; (3) General Zod’s (Michael Shannon) role to ensure the continuity and survival of Krypton’s civilization; and (4) Faora-Ul’s (Antje Traue) belief that “amorality has an evolutionary advantage.”

 

The meta-ethical clash is between Jonathan Kent’s servant leadership ideal and General Zod’s rigidity which prevents reaching a compromise for both civilisations to co-exist on Earth and to reach a social contract.

 

The supporting characters including Lois Lane (Amy Adams) and Perry White (Laurence Fishburne) have their own meta-ethical stances, namely about investigative journalism ethics and an institutional view of newspaper editing.

 

Man of Steel also addresses genocide prevention explored in Samantha Power’s book A Problem From Hell: America and the Age of Genocide (New York: Basic Books, 2002).

5th July 2013: Egypt Event Arbitrage

I have a shelf of international security books I acquired in 2005-11 as I was developing possible PhD topics. When the Egyptian Army deposed President Morsi this week I thought of my secondhand copy of John Samuel Fitch’s The Military Coup d’etat As Political Process: Ecuador, 1948-1966 (Baltimore, MD: John Hopkins University Press, 1977). I thought about a Political Islam course I took with Shahram Akbarzadeh in 2006, and the military’s role in Egypt’s history. Then I looked at the financial markets for event arbitrage opportunities I had missed. Two weeks ago, the Market Vectors Egypt Index ETF (NYSEARCA: EGPT) had predicted a political change, and then rallied after news of the coup d’etat, in a trend-following pattern. The Dow Jones Egypt Total Stock Market Index (EGP) had risen, whilst the Egyptian pound $EGP had fallen against the $US dollar. Someone has read Andrew Busch’s World Event Trading: How to Analyze and Profit from Today’s Headlines (Hoboken, NJ: John Wiley & Sons, 2007) and ‘shorted’ Egypt’s currency cross-rates. Alternatively, this might all be a case of Nassim Nicholas Taleb’s narrative fallacy.

5th July 2013: Felix Salmon on the Winklevii’s Bitcoin Trust Fund

Reuters’ Felix Salmon nails why the Winklevii’s SEC filing for a Bitcoin Trust Fund is a bad idea:

 

Still, if you want to own bitcoins, and you never want to spend your bitcoins, and if you want to pay the Winklevii for the privilege of looking after your bitcoins on your behalf, and if you trust that the Winklevii, after putting out a huge shingle saying “millions of dollars worth of bitcoins stored here”, won’t get hacked and lose all their coins, — then, well, then I’m afraid I have bad news for you. Which is that the SEC will never, ever, approve this product. After all, this is an asset that senators want to ban, an asset which is probably illegal under US law, and an asset that is mainly known for its ease of facilitating money laundering, tax evasion, and the purchase of contraband material. It’s hard to see why the SEC would do anything whatsoever to legitimize that asset as an investible asset class.

 

Post-GFC, media pundits are now far more skeptical about new financial innovations and their supposedly disruptive potential.

2nd July 2013: Financial Bloggers vs. Bank Fees

I left freelance journalism in 2004 after a decade of work. My last piece filed was a preview of Google’s initial public offering. I could already see freelance rates were falling: they are now $US12.50 an hour or less. I learned whilst editing and writing for the alternative news website Disinformation about commitment bias, and paid my dues in deliberate practice (or: expectation, framing, hindsight, and outcome biases).

 

So, I was amused this week to read about how two of my favourite financial bloggers — Slate‘s Matthew Yglesias and Reuters’ Felix Salmon — dealt with ATM fees and cheque account overdrafts. Salmon goes into detail about Citibank and transatlantic differences in bank account management. It’s an elegy for retail banking’s demise. Yglesias and Salmon also illustrate that these little details are important to bloggers and freelance writers who make small incomes from writing. Retail bank fees can detrimentally impact or even wipe out a publisher’s payment.

 

Keep an eye on your bank account fees. Keep your financial affairs in order. You’ll write more. You’ll feel happier. (Thanks, James Altucher.)

 

Or, if you’re the Winklevoss twins, you’ll waste investors’ money on a Bitcoin trust fund (belief, hot-hand, irrational escalation and optimism biases). Their SEC filing.

2nd July 2013: The Essential Wall Street Summer Reading List

Andrew Ross Sorkin has posted his Essential Wall Street Summer Reading List:

 

This year, however, a reader, an M.B.A. student, asked the question slightly differently. The reader, who approached me on the subway with a copy of “Barbarians at the Gate” in hand, asked, “If you wanted to get smart about business by reading your way through the summer, what would your master reading list look like?”

I had to get off the subway before I was able to answer the question.

 

To Sorkin’s list I would add:

 

● Connie Bruck’s The Predator’s Ball on Michael Milken and Drexel Burnham Lambert.

 

● Roger Lowenstein’s When Genius Failed on the 1998 collapse of the hedge fund Long-Term Capital Management.

 

● Either Bethany McLean and Peter Elkind’s Smartest Guys In The Room or Kurt Eichenwald’s Conspiracy of Fools on Enron’s demise.

 

● Jeff Madrick’s Age of Greed on Wall Street’s financial revolution from 1970 to today.

 

● Aaron C. Brown’s Red-Blooded Risk: how the AQR Capital risk manager views financial markets.

 

● Michael Mauboussin’s More Than You Know on alpha generation and investment idea screening.

 

● On the GFC, Sorkin’s Too Big To Fail; William H. Cohan’s House of Cards and Money & Power; or Lawrence G. McDonald’s A Colossal Failure of Common Sense.

 

The above list is heavily biased toward financial journalist reportage.

 

These books are useful for the self-development of new traders:

 

● Ari Kiev’s The Mental Strategies of Top Traders on trader psychology, leadership, and variant perception.

 

● John Coates’ The Hour Between Dog and Wolf on the neuroscience of trading.

 

● Daniel Kahneman’s Thinking, Fast and Slow on cognitive biases and decision heuristics.

 

● Mihaly Csikzentmihalyi’s Flow: The Psychology of Optimal Experience on ‘flow’ psychological states.

 

In May 2012, I compiled a Wall Street Reading List of books I had read in 2010-12 to understand financial markets.