Daily Speculations
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Daily Speculations |
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8/31/2005
Bullish on the Big Easy, by Andrew Moe
The New Orleans I know and love is no more. Images of destruction pour in 24/7 as the city gives way to epic disaster. It's hard to imagine Bourbon Street's not teeming with life but there will be no reveling in the submerged streets. Tonight the living commune with the dead as they cling to opposite sides of life in the rising water. Looters rage, fires burn and petrochemicals spill into the mix. Conditions seem to have reached runaway proportions.
They say night is darkest just before dawn. It is just before dawn in New Orleans.
I predict the Big Easy will rise anew, ushering in a wave of prosperity centered in New Orleans. Engineers, architects and builders will compete for hurricane-proof designs that will withstand extreme conditions. Plans will be submitted from companies across the globe but the work will be done locally. Unions, contractors, vendors, shops and suppliers will all benefit from an enormous increase in supply. Jobs will pour in. The South is about to go to work.
The effects will be felt through a far wider swath than Katrina cut. If I owned a business selling any kind of water removal/restoration/replacement products or services anywhere in the country, I would be headed to New Orleans right now. There is huge opportunity to be Johnny on the Spot. Contracts will be awarded based on how many able bodied workers you can bring. Prosperity will be felt in many surrounding communities as strong ties to the new city are built. The people that rebuild New Orleans will visit there for many years to come.
The major oil and gas terminals will be rebuilt to withstand a direct hit. Increases in efficiency that were not cost effective prior will be introduced to streamline processing. In the short term, prices will soar but the cleansing effect of removing inefficient parts and replacing them with state of the art will herald future profits. And as we have incessantly heard, this is a big percentage of US supply.
Naturally the lawyers will have a field day. Handshake deals, backroom bargains and wink-wink transactions have all been washed away. I suspect property rights to be active, especially for areas that remain under water. But in the end even they will play an important part in rebuilding one of America's finest cities. After all, this is Louisiana. We took it from the French and we're not giving it back to a hurricane! Deeper, darker and more mysterious than ever, New Orleans will rise anew as the jewel of the South.
Rui Grenho replies:
Being in Europe (Lisbon), the looting I see in New Orleans is more Iraqi than American. Does Mr. Moe's conclusion imply that it will even be more positive here as there will be more to recover?
The Assistant Webmaster adds:
On returning from Stew's with $100 of groceries, my wife discovered a pack of burger patties she hadn't paid for. Seems they were packed into her bag rather than that of the preceding customer, their rightful owner. Our thoughts naturally turned to New Orleans as we feasted on these looted (or found or taken) burgers..
8/16/2005
Drowning, by Jim Sogi
In the Perfect Storm Sebastian Junger describes in detail the process of drowning. When drowning under water, the mind is clear, but the reflex to breath overcomes the conscious mind after several minutes even with knowledge that inhaling means drowning. The irony is that the body can survive for up to 4-5 minutes without breathing without serious brain damage, yet the reflexes cause one to give up, or drown because of panic.
Surfers train and practice and think about getting hammered in big waves, getting held under and the possibility of drowning. We practice swimming under water, running deep underwater holding rocks. Yet one technique stands out in my mind to avoid panic. This is the trick: consider that even 20-foot monster waves have a period of 20 seconds max. So if you are held under one wave, you have a good chance to come up for air in 20 seconds. Most people can hold their breath for 20 seconds. The danger comes if you get held down for two waves. Avoid panic by remembering that you will probably pop up after 40 seconds at most. Though it seems long when tumbling underwater in the dark, it's only 20-40 seconds.
For trading .... mental preparation might help to avoid the panic reflex to give up at the bottom of the trade. Remember while under water that 6 out of 10 doctor's studies show the market is only going to drop x points, not forever, and will soon bounce back up; that its only some short time until the panic ends. The irony is that most drawdowns ought to be survivable. It's good to know your strength, know the size you can handle mentally and financially, or when you feel strong or weak. Don't get in over your head. Chair recommends reducing risk in inverse proportion to your edge.
The market is up 108 points the last four months. I hear people say now they are long. A secretary told me today how much money she made in stock x, stock y and stock z. An acquaintance tells me all his stocks are up except only one. Things are good, the weather is warm. It is good that people are making money in the market.
John Lamberg adds
I discussed this with my son James during a break from his MCAT preparations.
The main reason your body forces you to take a breath is due to the increase in CO2, which is the mechanism that tells your brain to breathe. By holding your breath your blood is using up all the O2 but not able to remove CO2 from your blood. Not only does your primitive hypothalamus force you to breathe but your blood becomes acidic due to the CO2, which triggers a panic response.
It takes some serious training to try and overcome your primitive brain. A trick swimmers use is to hyperventilate before diving in...this expels most of the CO2 in your blood allowing you more time before your hypothalamus decides it needs to get rid of the CO2 build-up.
8/15/2005
Competition, by Philip J. McDonnell
In the last few decades scientists have begin to realize the important and beneficial effects of forest fires. A phenomenon which had been previously understood as a purely deleterious and calamitous event is now known to have positive benefits. When a forest fire strikes it clears the forest floor of brush. The opening of the forest floor benefits many species and allows the replanting of the forest. In particular the small fragile seedlings of the great trees often flourish only in the short period after a fire.
In fact the entire life cycle of some trees is determined by the forest fire cycle. Perhaps the greatest of all trees - the Giant Sequoia of California - is completely dependent upon forest fires for its propagation. Not only do the seedlings benefit from the clearing of the forest floor but the pine cones will not germinate except at extraordinarily high temperatures. A tree may drop its cones for years, but they will only become active during the intense heat of a forest fire.
The government's prosecution of IBM was undoubtedly intended to save certain mainframe computer hardware manufacturers e.g. Control Data, Burroughs, RCA, Sperry/Univac, GE, Honeywell. As is common with heavy handed governmental intervention the main goal was not achieved and the law of unintended consequences reigned supreme. Notably the companies which were to be saved were ultimately driven out of the computer business leaving only IBM as the dominant player.
The government's main argument was that the operating system developed by IBM, O/S 360, was dominant and allowed the company to unfairly retain its customers. Once customers had developed software for O/S 360 they tended to become locked in and it became uneconomical to switch. In effect the government forced upon IBM a fundamental choice as to whether it wanted to sell hardware or software. IBM chose hardware.
This was the economic equivalent of the government initiating a forest fire. This forest fire cleared the forest floor. The seedlings could spring up. Most importantly IBM had been intimidated and had chosen to eschew the software side of the business in favor of the hardware. Thus the way was improbably cleared for the young Harvard drop out - Bill Gates.
In effect the government action was a forest floor clearing action which promoted the success of Microsoft. It is notable that in subsequent years AT&T chose to license its Unix operating system for a very low price. In my opinion this was the result of the intimidating effect of the governmental action against IBM. In any event the clear result is that the forest floor was cleared for the seedling Microsoft to prosper. It is clear that IBM chose Microsoft on the basis that it was a small flaky company which could offer no immediate threat.
The ultimate irony is that Microsoft ultimately exceeded the market value of IBM. Naturally it's success attracted the attention of a Democratic Attorney General. And the rest is anti-trust history....
