Bob Carlson

February 9, 2016

Dealing with Telemarketers

Filed under: Retirement - General — Bob @ 6:41 pm

Despite the do not call registry, many telemarketers still bother people. Here’s one novel solution for this with the technology know-how.

Roger Anderson decided that telemarketers deserved a crueler fate, so he programmed an artificially intelligent bot that keeps them on the line for as long as possible.

Anderson, who works in the telecom industry and has a better understanding of how telemarketing call-in techniques work than most, first created a call-answering robot that tricked autodialers into thinking there was an actual person answering the phone.

Travel Days

Filed under: Uncategorized — Bob @ 5:06 pm

I have a few travel days this week, so there will be light posting the rest of the week.

100 Famous Jokes

Filed under: Retirement - General — Bob @ 1:32 pm

Here’s a compendium of 100 famous jokes from famous comedians going back to 1906. Many include videos.

Abbott: Who is on first.

Costello: I’m asking you who’s on first.

Abbott: That’s the man’s name.

Costello: That’s who’s name?

Abbott: Yes.

The Rolling Bear Market

Filed under: Asset Allocation,Investing — Bob @ 10:23 am

When market indexes are moving in one direction, investors often overlook what’s happening within the indexes. Last year, there was a bear market in most stocks. Most investors didn’t notice because indexes were up through August, declined for a couple of months, and recovered for small gains by year end. This year, the major indexes are down but there’s some interesting moves within sectors. Energy stocks and utilities, for example, are up. It’s technology that’s taking a real beating. Details are here.

As Jim Paulsen, chief investment strategist at Wells Capital Management, pointed out in a note to clients on Friday, “Quite surprisingly, even though fears surrounding China, oil prices and a global manufacturing recession are still touted as the foremost investor anxieties, the main sectors comprising these fears (i.e., Emerging markets, Energy, Materials and Industrials) have all “outperformed” the overall S&P 500 Index so far this year.”

February 8, 2016

Updating MLPs

Filed under: Income Investing,Investing — Bob @ 1:36 pm

Energy master limited partnerships have taken a beating over the last year. In theory, they shouldn’t be hurt by declining oil prices, because the energy services they provide are compensated for flat fees independent of the price of oil. Some analysts say recent prices are a good buying opportunity, and yields are 10% or higher. But an article in this week’s Barron’s (subscription might be required) says there is more pain to come in MLPs. The analyst who forecast today’s problems in MLPs back when all the other analysts were positive says most MLPs have too much debt, have overinvested in infrastructure, and engage in aggressive accounting. He also says they face a long-term downturn in energy production, rising competition, and the risk that the energy firms with which they contract will fail to meet their obligations. He believes we’re in the early phase of the MLP downturn.

“For MLPs to be more compelling investments, the sector has to absorb more pain, and that pain has to come in the form of distribution reductions,” he tells Barron’s. (Distributions are the MLP form of dividends.) “That’s the way the sector is going to solve its leverage problem. Cutting distributions is the right decision for an overleveraged industry entering a downturn.” MLPs are loath to cut distributions because investors, mostly retail buyers, prize those payouts and punish companies that cut them.

Kaiser is coming off his biggest coup, following Kinder Morgan’s surprise move in December to slash its once-sacred dividend by 75%. Its stock, at $15, is down 60% in the past year. Barron’s has been bearish on both Kinder Morgan (ticker: KMI), the leading energy pipeline company, and Linn (LINE). Kaiser’s comments and analysis have figured in our articles on them.

Assessing Investment Grade Bonds

Filed under: Asset Allocation,Income Investing — Bob @ 10:35 am

Treasury bonds have done quite well, and high-yield bonds have lost value in recent months. In between are investment-grade corporate bonds. They’ve appreciated some. Recent trends, however, are being interpreted differently by analysts. This article in The Wall Street Journal (subscription might be required) says that some hedge funds are betting against investment-grade bonds now. They believe that the problems in energy and commodities will spread to other sectors of the economy. But this article says that now is a good time to to buy investment-grade bonds. Their yields are at their highest spread to treasury bond yields since the European debt crisis. That’s not because corporate bond prospects are deteriorating, it says, but because treasury yields have declined so much. For now, I’m staying with treasury bonds and letting the recent trends play out a little longer.

The current spread between IG bonds and Treasuries is pricing in an extremely negative outcome.  At roughly 200 basis points above the Treasuries, IG bonds are either an attractive asset class or a very large canary in the dungeon of a coal mine that will presage a global recession.

If IG bonds are a decent buying opportunity (properly sized and risk-managed and at longer maturities), it is due to the compression of the U.S. Treasury curve.  That is, the reason for the spread widening between bonds and Treasuries is because of curve flattening, not because IG bonds now contain an embedded, previously unknown, asset class risk.

February 5, 2016

The China Myth

Filed under: Emerging stock markets,Financial crisis — Bob @ 6:09 pm

One of the vigorous discussions regarding the problems in China is whether or not the people running China are competent. Everyone knows they are autocratic and anticapitalist. But many people believe China has a bright economic future because its leaders are competent. Unlike the messy processes in democracies, China’s leaders can decide what needs to be done and do it. They don’t have to convince anyone else, compromise, or make deals. The problems over the last year, especially regarding the stock markets and currency, are denting the aura of Chinese competence and causing some to say it always was a myth. Here’s an article that looks into the question in detail.

The other systemic cause of incompetence is the well-known ill of progressive degeneration of talent in an autocratic regime. Government service in an autocracy often carries high moral costs for talented individuals: It leads to the loss of personal dignity in a political hierarchy where the only thing that matters is the status of an official (that is why Chinese officials have business cards with minute details of their official ranks and status that Western businessmen would find totally incomprehensible). Junior or subordinate officials in this system are routinely humiliated and mistreated by their superiors. With the private sector offering better opportunities and psychological well-being, most talented individuals would prefer to seek their fortune outside the government.

Consequently, government service tends to attract not only less talented but also more opportunistic individuals who otherwise cannot compete in the marketplace. Such individuals can reap outsized rewards if they are willing to toil inside the Chinese bureaucracy and endure the daily indignities inflicted on them by their bosses.

A Poisoning Expert’s Guide to Dining Out

Filed under: Health — Bob @ 1:20 pm

The Washington Post interviewed a lawyer who specializes in food poisoning cases. He explains the foods he won’t eat at all and states that the food system isn’t as safe as most people believe. He says food poisonings are common but aren’t widely reported or remembered.

Do you know the juice Odwalla? Well, the juice is made by a company in California, which has made all sorts of other juices, many of which have been unpasteurized, because it’s more natural. Anyway, they were kind of like Chipotle, in the sense that they had this aura of good and earthy and healthful. And they were growing very quickly. And they had an outbreak. It killed a kid in Colorado, and sickened dozens of others very seriously, and the company was very nearly brought to its knees. [The outbreak, which was linked to apple juice produced by Odwalla, happened twenty years ago].

If you look at how they handled the PR stuff, most PR people would say well, they handled it great. They took responsibility, they were upfront and honest about it, etc etc. What’s interesting though is that behind the scenes, on the legal side of the equation, I had gotten a phone call, which by itself isn’t uncommon. In these high profile cases, people tend to call me—former employees, former government officials, family members of people who have fallen ill, or unknown people giving me tips. But this one was different. It was a Saturday—I remember it well—and someone left me a voicemail telling me to make sure I get the U.S. Army documents regarding Odwalla. I was like ‘what the heck, what the heck are they talking about?’ So I decided to follow up on it, and reached out to the Army and got something like 100 pages of documents. Well, it turned out that the Army had been solicited to put Odwalla juice on Army PX’s, which sell goods, and, because of that, the Army had gone to do an inspection of a plant, looked around and wrote out a report. And heres what’s nuts: it had concluded that Odwalla’s juice was not fit for human consumption.

Planning a Family Beach Vacation

Filed under: Retirement - General — Bob @ 9:20 am

Large family vacations are growing in popularity. In the dead of winter, you might be considering putting one together before winter is over or be thinking of the warmer months. This article gives one expert’s views on how to plan a beach vacation for a family.

Food is a major concern for families. Parents want gourmet treats for themselves, enough selection for picky eaters and if they are like me, they don’t want to spend $25 for a breakfast buffet for a kid who only wants a bowl of Fruit Loops. That’s why many families choose the all-inclusive route. Richey says there is another advantage. “Kids of all ages get a kick out of ordering their own drinks and pre-approved snacks by just showing a wristband,” she says.

February 4, 2016

Will Artificial Intelligence Take Over the Markets?

Filed under: Asset Allocation,Investing — Bob @ 6:28 pm

Algorithms, computer programs, and artificial intelligence are the focus of many investment firms now, and robo investing is a new buzzword. Will technology take over the markets, making human decision making inferior and obsolete? This article from the MIT Technology Review takes a middle-of-the-road view. It points out the ways in which technology can help investors, but it also points out that there’s a lot of noise and other factors in the markets that make it difficult to use technology that’s useful in other areas.

Trading might seem like an obvious place to apply deep learning, but actually it isn’t clear how comparable the challenge of finding subtle patterns in real-time trading data is to, say, spotting faces in digital photographs. “It’s a very different problem,” Ledford admits.

Academic experts also sound a note of caution. Stephen Roberts, a professor of machine learning at Oxford University, says deep learning could be good “for extracting hidden trends, information, and relationships,” but adds that it “is still too brittle with regard to handling of high uncertainty and noise, which are prevalent in finance.”

Roberts also notes that deep learning can be a relatively slow process, and cannot offer the kinds of guaranteed behavior that other statistical approaches offer. In general, he says, there is a certain amount of hype around the idea of AI in finance. “AI is a very broad subject,” he says. “And many standard statistical techniques used are being rebranded as AI and machine learning.”

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