A while ago I linked to a video of Obama slagging off the Supreme Court at the State of the Union address in front of several of the Court’s judges. Chief Justice Roberts, speaking at the University of Alabama, has just commented on it:
Responding to a University of Alabama law student’s question, Roberts said anyone was free to criticize the court, and some have an obligation to do so because of their positions.
“So I have no problems with that,” he said. “On the other hand, there is the issue of the setting, the circumstances and the decorum.
“The image of having the members of one branch of government standing up, literally surrounding the Supreme Court, cheering and hollering while the court — according the requirements of protocol — has to sit there expressionless, I think is very troubling.” …
Roberts told the students he wonders whether justices should attend the speeches.
“I’m not sure why we’re there,” said Roberts, a Republican nominee who joined the court in 2005.
Justice Antonin Scalia once said he no longer goes to the annual speech because the justices “sit there like bumps on a log” in an otherwise highly partisan atmosphere. Six of the nine justices attended Obama’s address.
The full article is here.
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(0)Meridee Moore founded Watershed Asset Management, a San Francisco-based hedge fund manging $2 billion. Moore is a Yale Law graduate who moved into finance after 18 months at biglaw firm Simpson Thacher.
The NY Times article reveals some interesting answers:
Q. How do you hire?
A. We look at grades and scores, of course. We want the person to be competitive. Also, if the person has had a rough patch in his or her past, that’s usually good.
Q. Why?
A. Well, if you’ve ever had a setback and come back from it, I think it helps you make better decisions. There’s nothing better for sharpening your ability to predict outcomes than living through some period when things went wrong. You learn that events aren’t in your control and no matter how smart you are and how hard you work, you have to anticipate things that can go against you.
Q. What are some other screens?
A. We give people a two-hour test. We try to simulate a real office experience by giving them an investment idea and the raw material, the annual report, some documents, and then we tell them where the securities prices are. We say: “Here’s a calculator, a pencil and a sandwich. We’ll be back in two hours.” If an analyst comes in there and just attacks the project with relish, that’s a good sign.
Q. Is this one of those impossible tests, where you’re asking them to do seven hours of work in two hours?
A. Yes. But you’d be amazed at how well people do. After two hours, two of us go in and just let the person talk about what he’s done. The nice thing about my being trained as a lawyer, and never going to business school, is that I’m able to ask the basic, financially naïve questions, like: “What does the company do? How do they make money? Who are their customers? What do they make? How do they produce it?” That throws some people off.
Q. What else do you ask job candidates?
A. I try to ask something that inspires the person to talk a little bit about their family, whether it’s their brother and sister, their parents, where they lived. And usually it’s, “Why do you want to be in San Francisco?” And they’ll say, “Oh, well I have an uncle in the East Bay.” And I’ll say, “Oh really? What does your uncle do?”
I find that guys who have had strong relationships with women — whether it was their mother, their sisters, a teacher — tend to be secure in who they are, and tend to do well in our business.
Q. Why is that?
A. Well, they have to work with me, for one thing. And they have to be able to challenge others and have me challenge them without taking it too personally.
The other question I ask is if they’ve ever been in anyone’s wedding party. If someone has asked them to stand next to him on the most important day of his life, at least one person thinks they are responsible. It means they’ve been able to establish and continue a relationship. It’s not always true, but if you build strong relationships with people, you tend to go into a management meeting or a negotiation and come out of it with some respect. You go into it thinking: “I’m going to leave this situation better than I found it. I don’t have to kill everybody to get to the right result for myself.” These are good qualities in a person and a partner.
Q. What’s your best career advice to somebody just graduating from undergrad or B-school?
A. Find a mentor. And it doesn’t have to be a mentor who looks like you. They can be older, a different gender, younger, in a different business, but someone you admire and respect, and just attach yourself to that person and learn everything you can. I’ve done this my whole career. It is so valuable, especially if you choose a good one and they end up teaching you everything and then rejoicing in your success.
Actually, the whole of NYT’s Corner Office section has some pretty interesting reading.
The “Web article database” link in the sidebar is finally working.
Cal Henderson explains the maths behind his WoW addon, which calculates the “drop chances” of game items. The maths is not particularly complicated, but it’s a novel way of explaining some probability concepts. He uses the 0.01% drop rate of the game’s rarest pet, the Hyacinth Macaw to deliver some of his examples. Incidentally, the Macaw goes for an average price of about 7,000 gold pieces in the auction house, which is about US$50. Apparently, it’s been bought for as much as 75,000 gp (US$500). A real Hyacinth Macaw costs somewhere in the region of $10,000.
The thing which governs this is called Probabilistic Independence – the fact that whether one mob dropped the loot or not, this has no bearing on whether a second mob will drop the loot. By extension, having looted 1000 consecutive mobs which did not drop the loot has no effect on the next mob you loot. If the drop chance is 1 in 100, there will still be a 1 in 100 chance that the next mob you loot will drop the item.
But if you use BunnyHunter and loot 1000 mobs that drop the Azure Whelp [with a 1 in 1000 drop rate], it wont say 100%; it’ll say 63.2%. The reason we can come up with any number at all, is because we can derive the probability that a piece of loot will drop at least once in a given sequence of lootings.
From Waxy.
I have Michael Lewis’ upcoming book, The Big Short
A lot of hedge-fund managers spent time chitchatting with their investors and treated their quarterly letters to them as a formality. Burry disliked talking to people face-to-face and thought of these letters as the single most important thing he did to let his investors know what he was up to. In his quarterly letters he coined a phrase to describe what he thought was happening: “the extension of credit by instrument.” That is, a lot of people couldn’t actually afford to pay their mortgages the old-fashioned way, and so the lenders were dreaming up new financial instruments to justify handing them new money. “It was a clear sign that lenders had lost it, constantly degrading their own standards to grow loan volumes,” Burry said. He could see why they were doing this: they didn’t keep the loans but sold them to Goldman Sachs and Morgan Stanley and Wells Fargo and the rest, which packaged them into bonds and sold them off. The end buyers of subprime-mortgage bonds, he assumed, were just “dumb money.” He’d study up on them, too, but later.
He now had a tactical investment problem. The various floors, or tranches, of subprime-mortgage bonds all had one thing in common: the bonds were impossible to sell short. To sell a stock or bond short, you needed to borrow it, and these tranches of mortgage bonds were tiny and impossible to find. You could buy them or not buy them, but you couldn’t bet explicitly against them; the market for subprime mortgages simply had no place for people in it who took a dim view of them. You might know with certainty that the entire subprime-mortgage-bond market was doomed, but you could do nothing about it. You couldn’t short houses. You could short the stocks of homebuilding companies—Pulte Homes, say, or Toll Brothers—but that was expensive, indirect, and dangerous. Stock prices could rise for a lot longer than Burry could stay solvent. …
The vehicle for Lewis’ tale turns out to be an ex-Doctor with a very interesting background.
By the time Burry moved to Stanford Hospital, in 1998, to take up his residency in neurology, the work he had done between midnight and three in the morning had made him a minor but meaningful hub in the land of value investing. By this time the craze for Internet stocks was completely out of control and had infected the Stanford University medical community. “The residents in particular, and some of the faculty, were captivated by the dot-com bubble,” said Burry. “A decent minority of them were buying and discussing everything—Polycom, Corel, Razorfish, Pets.com, TibCo, Microsoft, Dell, Intel are the ones I specifically remember, but areyoukiddingme.com was how my brain filtered a lot of it I would just keep my mouth shut, because I didn’t want anybody there knowing what I was doing on the side. I felt I could get in big trouble if the doctors there saw I wasn’t 110 percent committed to medicine.” …
He’d moved back to San Jose, buried his father, remarried, and been misdiagnosed as bipolar when he shut down his Web site and announced he was quitting neurology to become a money manager. The chairman of the Stanford department of neurology thought he’d lost his mind and told him to take a year to think it over, but he’d already thought it over. “I found it fascinating and seemingly true,” he said, “that if I could run a portfolio well, then I could achieve success in life, and that it wouldn’t matter what kind of person I was perceived to be, even though I felt I was a good person deep down.” His $40,000 in assets against $145,000 in student loans posed the question of exactly what portfolio he would run. His father had died after another misdiagnosis: a doctor had failed to spot the cancer on an X-ray, and the family had received a small settlement. The father disapproved of the stock market, but the payout from his death funded his son into it. His mother was able to kick in $20,000 from her settlement, his three brothers kicked in $10,000 each of theirs. With that, Dr. Michael Burry opened Scion Capital. (As a teen he’d loved the book The Scions of Shannara.) He created a grandiose memo to lure people not related to him by blood. “The minimum net worth for investors should be $15 million,” it said, which was interesting, as it excluded not only himself but basically everyone he’d ever known.
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(0)In one flawless take. Truly impressive. This is the RGM version. The original is here.
stuloh Another Tuesday. Another lack of new Macbook Pro. Come on Apple, your accountants want to recognize revenue earlier rather later, right?
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