The Extreme Pragmatism of Wall Street Traders

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 The extreme pragmatism of Wall Street Traders:

Art Cashin told a story on Tuesday at Barry Titholtz’s Big Picture conference that illustrated the mindset of all good Wall Street traders. In the days before the Cuban missile crisis, Mr. Cashing was a young trader. A rumor exploded that the Russians had launched their missiles and that World War III had commenced. Mr. Cashin ran across the street to find a senior trader who was in a bar having a drink. Breathless, he conveyed the news. The senior trader told him to stop and have a drink. After everything was explained, the senior trader told him, “Buy. Don’t sell. Buy.” Looking back in wonder Mr. Cashing asked, “Why?” The response was cool and calculated, “Because if you’re wrong, the trade will never clear. We’ll all be dead.”

The cool pragmatism of the senior trader took what should be an emotionally charged situation that prompts thoughts of mortality or the end of the world and turned it into a trading opportunity. The ability to trade on news of impending doom makes these guys great at their jobs… and sociopaths.

The Cuban Missile Crisis has been oft used as an allegory to describe the debt ceiling battle currently going on in Washington DC. Both sides are not budging and the threat of default, which is playing the role as the missiles in this crisis, guaranteeing destruction for all. In the midst of all this, some traders see opportunity. As the market goes up and down (mostly down) in response to the budget and debt ceiling talks, some traders are buying during the dips. Most believe that much like during the Cuban Missile Crisis, a deal with be struck in the 11th hour since neither Democrats nor Republicans really want to blow up the world. After all, they they aren’t sociopaths… right? 

Crumbling Public Infrastructure Increases Business Costs

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Crumbling public infrastructure adds to business costs

One in nine U.S. bridges is “structurally deficient” and 42% of major urban highways are congested according to the American Society of Civil Engineers. This poor infrastructure could cost companies an extra $430B in operating expenses by 2020 and cause an additional $1.7T in lost sales. Detours to avoid these public hazards are costly in terms of time, gas, and vehicle wear and tear.

 

Boeing to furlough employees if shutdown continues

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Boeing to furlough employees if shutdown continues

Boeing (BA) plans to furlough a significant part of its workforce this week should the government shutdown persists. Workers in its defense, space, and security unit would be the latest Americans to directly feel the pain of the government shutdown. The cuts would come as a result of limited access to federal instillations, funding cuts, shortage of government inspectors, and stop-work orders from customers who are largely from the government. This unit accounted for about 40% of Boeing’s $82B in revenue in 2012.

 

Netflix in talks to partner with cable providers

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Netflix in talks to partner with cable providers

Netflix (NFLX) is reportedly in talks with Comcast (CMCSA), Time Warner Cable (TWC) and other cable television providers to make its video streaming service available to their customers. This partnership would include an app added to set-top boxes of cable operators, which would enable customers to search for web-based movies and television along with traditional programs. Cable providers ostensibly see Netflix’s $7.99 per month service as a tool to attract and retain customers, essentially subscribing to the view, “If you can’t beat them, join them.”

 

This Week's Top Posts

Curious Trend of Declining Student Attendance in College Football

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The Curious Trend of Declining Student Attendance in College Football: I was at a college football game in the MAC last week. It was the team’s homecoming and they were playing a hated rival, yet the stands were empty. Granted, there was supposed to be and eventually was a huge rain storm, but I was surprised nonetheless. This trend of empty stadiums seems to extend beyond the MAC into other conferences including the SEC. Given all the talk of the money in college football (justified), you'd never know that nearly 40% of the seats in the Georgia Bulldogs student section were left open over the last four seasons. During the same time, Alabama left 32% of their student section seats unused while winning three national championships. Even The Ohio State left 26% of the student section vacant last year. What is going on?

This emptying of stadiums is occurring in even the nations proudest football traditions. It has been attributed to poor cellphone reception within the stadiums, convenience of watching the game next to a keg of beer and a flat screen TV, or a desire to watch other games playing throughout the day. In the SEC, alcohol sales are banned to the public, so some students report preferring to watch in a bar or at home while multitasking, because they just have better things to do. There is nothing like being in a packed college football stadium, the energy contained within it could power the world for an afternoon. Athletic departments around the country are hiring researchers and consultants to identify why students aren't coming and how to get them back in the stands. Fans are fundamental to the sport of college football and are a huge advantage for home teams in close games. I'm not sure what the solution is, but I really hope someone finds figures it out. It probably won't be me though, I've got a date with my couch, flatscreen, and a beautiful IPA to watch college football all day.

 

Your Weekend Hangover

Fewer links this week, but with more commentary. 

How to immunize yourself from rejection before a date: By mentally reviewing your best qualities (e.g. I’m a good listener, I’m funny, I’m sexy, I play a mean jazz flute) a few times before a date you will have higher self-esteem, more emotional resilience, and less sensitivity to rejection. But if you really want to play it safe, stay at home and get a cat.

Taking another look at if in fact, dogs are people too. If it walks like a dog, barks like a dog, and looks like a dog, it must be a person.

Five Things Successful People Do Before 8am: I do 4ish of these things before 8am. I’ve never really gotten into visualization. Henry Ford once said, “Vision without execution is just hallucination.”

Love hurts, physically:  Looking at images of a former girlfriend or boyfriend that broke up with you caused activation in the same areas of the brain physical pain does. Next time you’re going through a break up, take an aspirin. I’ll help both your heart disease and heartache.

Six Reasons to Hire an Athlete: 1. Drive and resilience. 2. Goal orientation. 3. Learning Orientation. 4. Entrepreneurship. 5. Good balance. 6. Teamwork.

Study: Females lose self-confidence throughout college:. I haven’t read the study itself so I can’t attest to the methods or conclusions. It looks as if it replicated research with the same results published in the 1980s though.

Please Twitter, Just Stay Weird: How the IPO may change the social network.

How and Why to Track Your Sleep: The 7 keys to good sleep hygiene include: 1.  A consistent bedtime and wake time.  2. Keeping your bedroom dark and cool. 3. Avoiding alcohol, tobacco, heavy meals and exercise within three hours of bedtime. 4. Avoiding caffeine after 2:00pm. 5. Avoid naps after 2:00pm. 6. Turn off turn off electronics (unless you’re using it to track your sleep). 7. Your bed should ONLY be for sleep and doing the no pants dance. If you’re not involved in one of those activities, get out of bed.

15 Rules for Good Relationships: My favorites include making an effort to initiate sex more, making rules about technology, avoiding criticism, and following through on everything you say you’ll do.

The New Face of Risky Drinking Is Female: Female college student are more likely to binge drink than males, women with a university degree are almost twice as likely to drink on a daily basis as those without, and 16% of college students said they have restricted their caloric intake to reserve the calories for drinking.

 

Twitter's IPO Date:

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Twitter Eyeing November IPO:

An early version of Twitter’s S-1 states the company’s IPO lockup period ends on February 15th. These lockup periods typically last 90 days, so backtracking from there an IPO on Friday November 15th would be likely. This would be just in time for you to gift Twitter stock for Thanksgiving or Christmas!

You can read more about the IPO details here and here and how they caused Tweeter to jump nearly 2,000% here.

 

BlackBerry Warming to Breakup:

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BlackBerry More Open to Breakup:

BlackBerry is reportedly more open to breaking up and selling off the business piecemeal as doubts continue to be raised that Fairfax Financial will be able to obtain the funding for its $4.7B bid to purchase the company outright. Other companies who would be interested in parts of the firm include SAP, Cisco, and Samsung. Firms believe that breaking up the company unlocks more value for the buyer and some companies like Intel are only interested in BlackBerry’s patent holdings.