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Entries in John Hempton (4)


Other Alpha Sources

These two are specifically designed for some early Sunday morning reading (I might update with some more) and should preferrebly be enjoyed alongside a good cup of tea or coffee.


I swear that if John were ever to consider buying a company making, selling or moving coffee he would probably take a barrista course, open up a coffee shop and/or take a three month tour to Guatemala to learn everything about the commodity he was implicitly buying into. This time though it is about computing, hardware, software and everything in between I really should have pointed earlier towards Hempton's recent endeavors into the world of virtualization, computing, market power in the software/hardware industry and all other related topics. Basically, John has been to school and whether he ends up buying or selling Apple, MS, Dell or Intel/McAfee (?) I don't know. Yet, reading John's posts took me back to the grand days where I was tinkering with my 800Mhz AMD power house installing my own custom fans and graphics cards/chips. Those were the days, but as John explains very eloquently the market has changed and it is not sure who of the big boys will win. As such, don't read this if you need an investment tip; it is so much more than that!


One ongoing an enviable theme over at Waldman's Interfluidity is a deepfelt need to do something about the current economic mess and to pinpoint just where we made mistakes. I like this approach since it offers a refreshing perspective different from the perennial discussion of when and where the next collapse will emerge. I mean, I am pretty bearish but I am also convinced that in the event of a relapse of the Lehman days I won't be particularly surprised about the source of such a debacle, but I will certainly be unable to predict it. Anyway, I digress; back to Waldman and his latest piece on monetary policy in the 21st century which is a very good read. 

Here’s my proposal. We should try to arrange things so that the marginal unit of CPI is purchased  with “helicopter drop” money. That is, rather than trying to fine-tune wages, asset prices, or credit, central banks should be in the business of fine tuning a rate of transfers from the bank to the public. During depressions and disinflations, the Fed should be depositing funds directly in bank accounts at a fast clip. During booms, the rate of transfers should slow to a trickle