Graeme's

Blog

Bad modelling

A flawed analysis of trends in the number of blogs, and the increase in the number of spam blogs, has lead people to think that the number of non-spam blogs is falling. In fact the growth trends remain strong.

Is capitalism obsolete?

We now live in an economy which is very different from that in which capitalism, in its modern form, emerged and it is doubtful how relevant efficiency in production is the the key sectors of the knowledge economy.

Wordpress theme: Esthwaite

My first completely original Wordpress themes. You can preview it by using the theme browser (you may have to reload the page to get the theme to change).

Ignore terrorism

I have lived in two cities (London and Colombo) which have been heavily targeted by terrorists. Bombs twice went off somewhere I was going to. I have once been close enough to see serious injuries. I have always regarded it as a duty to to simply carry on with life as normal, and I still regard this is the best way to deal with terrorism.

Terrorism is a means by which small groups with limited resources can cause serious disruption and gain wide publicity. As their aim is to disrupt our lives, we can best defeat them by not allowing our lives to be disrupted.

Wordpress plugin: Frameable

This plugin is designed to make individual pages of a site frameable. This can be used to enable cut and paste quoting of individual posts or cut and paste (X)HTML only syndication of a blog or blog category.

Thanks

I have mentioned my other sites and the various changes but some thanks and acknowledgements are needed.

All three of my sites are running on Wordpress. Although known as blog software (and that it what it is in the default configuration) it is very versatile and makes a great CMS for many sites. The support forums are very invaluable. The most useful for me of the many plugins I have tried have been The_excerpt Reloaded (which allowed my to show excerpts to the length I wanted) and WP-Cache (which made my sites noticably faster loading).

Wordpress plugin: Simple Sparklines

Updated version available.

This is a very simple Wordpress plugin that allows the creation of simple sparklines (small graphs that fit in the flow of text). It uses James Byers’ Sparkline PHP Graphing Library.

The aim of this plugin is simplicity, it therefore does not use the full range of features of the PHP sparkline library, let alone the full potential of sparklines per se. However it is very easy to use. For example this graph [spark] [type line] [size 20,30] [series 66,64,62,60,56,54,52,50,40,30,20,10,0][dot 7,50,5,green][/spark] illustrates the kinked demand curve faced by a firm in a oligopolistic market. The EBITDA of telecoms company Thus over the last five years is shown by [spark] [type bar] [size 20, 4] [series -24.6,3.1,27.1,43.6,39.1][/spark].

New website

After a very busy week that left me hardly any time for writing, I have split the investment definitions pages off from my investment research site.

Hopefully this will improve usability and make the site more visible in search engines - although the risk is that they may take time to catch up on the change.

Google still has not got page rank flowing through my site five weeks after I changed the URL structure. Yahoo and MSN seem to have been faster at this, but on the other hand Yahoo took much longer to index my whole site in the first place and MSN has still only indexed about 10% of it.

Investors and changing media

I have previously written about how the media are changing, but, with most of the benefit likely to go to consumers and individual content creators, the more difficult question is how investors can profit from the change. However there are some areas likely to produce winners:

How the media will change

I have little doubt that the media will be rapidly changed by technology (primarily the internet and mobile phones), and it is not too difficult to think up the most likely scenarios of that change, however this is a diffiult change for investors to profit from.

Skyepharma - problems solved, price still down

Either the market is simply not prepared to be anything but negative on Skyepharma or I am missing something. The problems with Paxil continue, but Skyepharma has been shielded from the effects of this by a new agreement with Glaxosmithkline’s which gives Skyepharma the royalties on the budgeted sales until normal sales resume.

Compass profit warning

I seem to be getting rather obsessed with strong market reactions to bad news, following my recent piece on Skyepharma with this. This time its Compass. Yesterday the price fell 5% on the back of a fairly minor profit warning.

Compass announced £24m in lower profits and extra costs, 3.7% of forecast EBIT, and with no change to cashflow expectations.

Good stock pickers

What I am interested in is what makes a good stick picker, or an analyst who can really add value by finding the investments that outperform.

Firstly I will leave aside the obvious. A good stock picker or analyst needs to be good at financial analysis, understand the companies, sectors or economies they look at, understand valuation issues etc. There are simply too many people with these skills for them to give a stock picker an edge. What we need is the ability to consistently pick stocks that are mispriced

Successful site move

Lots of work, working late Saturday and Sunday, but I moved my investment research site site to the same platform as this blog.

So far so good, now I have to go back to writing stuff. I have about 30 more pieces planned for the re-named “what is?” section, so if it intersts you visit it next week and it should all be up. I think it compares very will with other similar sites on the web, I (most of that section is written by me) have taken the trouble to give detailed explanations and to explain how to use numbers, not just given defintitions. In any case my defintitions are mostly better, not all the accounting defintitions are technically perfect but they are pretty good given how accessibly it is written. In any case I am aiming at an audience that is looking at things from a finance (especially valuation) perspective, not accounting.

Beer markets - and Microsoft

My dissatisfaction about the beers that a golf club bar stocks started me thinking about what gives a firm monopoly power in the absence of any apparent reason. Unlike in software there are no apparent network effects, a dominant player has little leverage to bias distribution channels and switching costs for consumers are zero. So how can an inferior product (and I am firmly convinced it is inferior) continue to dominate the market?

Closet trackers

Supposedly active fund managers often place a large chunk of the money they are managing in a few large caps, in effect ensuring that their fund’s performance can not deviate too far from the market. Brokers often do, or encourage clients, to do the same. The reason is supposedly the control of risk, however it is interesting that what is being controlled is not the volatility of the portfolio (i.e. the risk of losing money) but the risk of under performing the market. There are plenty of ways of managing volatility directly so why choose to do it indirectly, and possibly less effectively, by tracking the market?