Friday, September 23, 2016

Send Them a Message

In 1972 George Wallace was on the verge of winning the Democratic nomination for President when he was gunned down at a Maryland rally. On that day he would go on to win both the Maryland and Michigan primaries. He was running on the slogan "Send Them a Message." Now 44 years later Donald Trump is implicitly running on the same slogan.

My liberal friends are traumatized that the Clinton - Trump race is so close. They just can't comprehend that on the facts Hillary is far more qualified to be president than Trump and she should be far ahead. Now just to be clear I am on the record for Hillary. 

But I have a message for my friends, this election may not be about the facts. It is all about sending a message to the condescending bi-coastal liberal elites in the media, Hollywood, Wall Street and Silicon Valley. It is reminiscent of the 1970s movie Network, "they are as mad as hell and they are not going to take it anymore."

Simply put a vast swath of the electorate is tired of being preached to that they are racist, sexist, homophobic, Islamophobic and on and on. In other words they are told by Hillary and her supporters that they are irredeemably deplorable. Trust me rhetoric like this, which may appeal to the salons in Manhattan, is not a good way to win votes in the country at large.

Whether they a guilty of all or some of these charges is likely true, but remember we are all flawed human beings trying to make our way in an imperfect world. And note carefully the liberal elites have their own prejudices against people of faith and white working class voters who don't look like them. As I have noted previously the Democrats have thrown the white working class under the bus in favor of cultural liberalism.

So when you watch the debate on Monday keep this in mind. The message will be far more important than debating points.

Tuesday, September 20, 2016

My Amazon Review of Graham Moore's "The Last Days of Night: A Novel"

Westinghouse v. Edison

It is very hard to write an enjoyable book about a 1880s patent dispute, but screen writer (The Imitation Game”) Graham Moore brings to light the titanic struggle over U.S Patent Number 223898, Edison’s electric lamp. “The Last Days of Night” is a historical novel of the first order, mostly true with more than a few embellishments. Moore’s hero is the 26 year old lawyer Paul Cravath who goes on to found the very white shoe law firm, Cravath, Swaine and Moore. He also invents in real life the associate system that drives today’s giant law practices.

Cravath represents George Westinghouse in his fight to overturn Edison’s patent. The patent fight goes on against the backdrop of what was called the “current wars”. It was a war over Edison’s DC current versus Westinghouse’s AC current. Spoiler alert, as we know AC current wins largely because of its enormous distance advantage over DC current.

His portrait of Edison as both an inventor and avaricious businessman is acute and Westinghouse comes off as an aggressive “bet the company” businessman focused on product quality. We also meet the very mercurial scientist/inventor Nikola Tesla the prophet of AC current and of power of electromagnetic waves. It is not for nothing that Elon Musk named his electric car after him.

Because this will soon be a major motion picture Moore introduces Cravath’s love interest, the opera star, Agnes Huntington. Much of her role in the book is fictitious, but she does in real life marry Cravath.

There are cameo appearances for J.P. Morgan and Alexander Graham Bell. With them Moore brings out the merger between science and business that will literally power the American economy after the 1880s. I highly recommend the book and can’t wait for the movie.

Thursday, September 15, 2016

My Amazon Review of James Andrew Miller's "Powerhouse: The Untold Story of Hollywood's Creative Artists Agency"

Hooray for Hollywood

Journalist James Andrew Miller has a written a way to long (752 pages in the print edition) and a way too hagiographic oral history of the Hollywood behemoth, Creative Artists Agency. It is filled with anecdotes about famous actors, writers and directors. However, by the end it reads like the promotional material an investment bank would use for an initial public offering, which, trust me, is coming. In their own words Powerhouse tells the story of five break away agents from the William Morris Agency to form Creative Artists in 1975. The lead players are Michael Ovitz, Ron Meyer and William Haber.

Ovitz, of course is the most famous, and is the driving force behind Creative Artists first 20 years. Although he didn’t invent packaging, where an agent puts together all of the key elements of a television series or motion picture, he certainly refined it to a high art. He is also a visionary with respect to technology by fully anticipating video streaming and the delivery content wirelessly.

The early days of Creative Artists are very reminiscent of my days at the old Salomon Brothers. It was an eat what you kill environment and everyone was hungry. In fact Ovitz acted as an investment banker with respect to the sale of Columbia Pictures to Sony and the sale of Universal to Matsushita.

However in 1995 Ovitz leaves for Disney which turns out to be a disaster for all of the parties involved and Haber leaves to run Universal. After they leave the “Young Turks” takeover and Creative Artists continues to thrive, but changes radically when they take in the private equity firm, TPG as a partner. In the 2000s Creative Artists branches out into sports management and continues the Ovitz initiatives in brand management.

The problems with the book are that it is too long and you don’t really hear from by the many people wronged by the agency.

Wednesday, September 7, 2016

The Link to the Giliberto-Shulman paper on the Interest Rate Sensitivity of REITs

Here is the link to the Giliberto-Shulman paper on the interest rate sensitivity of REITs forthcoming in the Journal of Real Estate Portfolio Management.

On the Interest Rate Sensitivity of REITs: Evidence from Twenty Years of Daily Data

Executive Summary

This study evaluates interest rate sensitivity for equity REITs using a multi-factor asset pricing model estimated with daily data. We utilize yield changes and, as an alternative, bond betas, to measure REITs’ sensitivity to interest rate shifts. We find that the degree of interest rate sensitivity varies over time, has switched direction and that any “pure” effect is often subsumed in equity REITs beta against stocks. Despite recent high sensitivity, we conclude that there is no long-run predictive rule that applies to how equity REIT returns respond to movements in interest rates.