The Weekend Hangover

Happy Saturday all! You survived another work week and happy hour from last night. Time to start recovering with The Weekend Hangover.  

Eight subconscious mistakes our brains make everyday. This is a great list, but I would add the fundamental attribution error to this list. The FAE describes how people attribute actions or outcomes to a person rather than a situation. If someone cuts you off in traffic, you’re likely to say that person is a bad driver or use some four letter word to describe their personality. However, did you see the car that swerved into their lane they avoided a collision with by quickly getting in front of you? Thanks to my friend Caitlin for posting this article.

With apologies to my economist friends Rob Mahrt and James Tierney (who you should be following on twitter), new study shows economists are horrible people.

Dating: How far can one go to encourage a relationship. The beginnings of relationships are fun and exciting where people are expressing mutual interest and getting to know one another, but you don’t get that feeling every time you meet someone. If that warm fuzzy feeling isn’t happening for both people and the interest seems to be one sided, we should probably move on and leave this person alone. But many times, we don’t. Trying to facilitate a relationship with another person is risky business. The goal is to generate interest and get attention from the other person without seeming pushy or desperate. In these situations, my suggestion is to keep it light and fun, then employ the Brad Pitt Rule. To gauge if you’re being blown off, ask yourself if the excuse the other person is making not to see you would still work if you were Brad Pitt (lets say Kate Upton for girls). Hint: if the excuse is, “I’m really busy at work right now” they have no interest in you.  Also, never, ever text someone you’re trying to facilitate a relationship just a question mark, unless you’re intentionally trying to slam the door on yourself.

A typical Spaniard’s working day starts at 9:00am, stops at 2:00 pm when they eat until 5:00, then they working again until 8:00pm. That may be soon changing though.

Eight inventions by women that dudes got credit for and four executives talk about how to succeed in business as a woman.

How Hollywood can capitalize on piracy: Box office figures suggests that more is gained than lost through piracy sites. 2012 was Hollywood’s best year in history, with $10.8 billion in North American ticket sales and a 6% increase in theater attendance over 2011 and it was partially attributed to a bump in online piracy.   

Study: Want people to trust you? Apologize for the rain. When a stranger simply asked people if he could use their phones, just 9% said yes, but if he first said, "I'm sorry about the rain!" (it was, in fact, raining), 47% allowed him to use their phones.

Positive Psychology is mainly for rich white people

Does Dustin Pedroia, or any pro athlete, have a right to privacy? Peyton Manning in a press conference last week said he believed in HIPPA, which is the medical privacy act. Deadspin does a great job breaking down both sides of the argument as only they can. 

How to balance kids and a career

Ohio State marching band moonwalks during Michael Jackson halftime show – I was at this game sitting in about the location where this video was shot. It was pretty awesome to see.

“We must increase our debt limit so that we can pay our bills” is a terrifying rationality by our government when you really think about it. The possibility of default was much worse, but the fact that has to be a solution is a bit scary.

Infographic: is the debt still worth the degree?

Nate Silver on the U.S. government shutdown

CEOs All At Sea : An interesting quote, “Many CEOs are genuinely naïve.”

The nine most painful impact of the government shutdown: Thank god that is over

The Friendship Bank: How and Why Even the Most Giving Friend Expects Payback

Energy’s unexpected jobs boom:

Mental Health Tips For Parents of College Students

What makes someone an angry drunk:

Blackstone's Brilliant Trade

Blackstone’s Brilliant Trade

For all their faults, the guys on Wall Street are pretty smart. Blackstone Group is the world’s largest private equity firm and they recently paid a company to purposely miss a debt payment that would allow the firm to cash in on credit default swaps. Credit default swaps act as insurance against someone defaulting on a debt payment. Essentially, if someone misses a debt payment, the owner of the CDS gets paid.

Blackstone bought bonds and CDSs of gambling company Codere, which operates in Europe and Latin America. By purchasing a bond, Blackstone was buying some of Codere’s debt. By buying the Credit Default Swaps (CDS) they purchased insurance so that if Codere did not pay its debt, an insurance company would have to pay Blackstone.

Blackstone determined they would profit more if the CDSs were activated by a missed payment than if Codere paid the interest on the bonds. Blackstone then made a perfectly legal deal with Codere where Codere agreed to make the payment two days late and trigger the CDS and Blackstone lent Codere $35M to cover the cost of a late payment.

Blackstone netted over $15.5M in this savvy deal, which was legal since both sides agreed to the terms. Codere also built some credit with banks who will now be more interest in lending to the company. The only entity that can’t be happy about this trade, is the insurance company that had to pay out $15.6M to Blackstone as a result of their collusion with Codere. It should be interesting to see if this remains legal to do, or if this will just spur insurance companies to structure the terms of the CDSs differently.

Why Unpaid Internships Should Not Exist:

In June, magazine publisher Conde Naste was sued by former interns for paying less than $1 an hour and violating state labor laws. The plaintiffs are seeking a class-action lawsuit on behalf of all previous interns. The suit alleges the publisher made the interns work 12 hour days for a $12 stipend. Amid the lawsuit, Conde Naste ended the internship program.

Under federal law, every employee in America is entitled to a minimum wage, additional compensation for overtime, and other benefits. Workers are protected by worker’s compensation laws, discrimination laws, employment benefits, state labor laws, and unemployment insurance coverage. Only under special circumstances, can there be exceptions. Internships are technically an exception, but to qualify as an internship, organizations must meet six criteria. These criteria were detailed in the case of Walling v. Portland Terminal Co. as decided by the Supreme Court:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.
2. The internship experience is for the benefit of the intern.
3. The intern does not displace regular employees, but works under close supervision of existing staff.
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.
5. The intern is not necessarily entitled to a job at the conclusion of the internship.
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

For the exemption to apply and an intern not be paid, all of those criteria must be met. Those criteria are difficult to meet, so it is unwise for an organization to have unpaid interns. There is also a strong business case for having paid interns. The return on a company’s investment is very strong. Paid internships make companies more likely to recruit, select and retain top talent. Paid internships also do a service to the industry by cultivating future leaders. When paid internships are done correctly, organizations are getting fully qualified staff at a fraction of the price, making paid internships an effective method of augmenting a workforce.

Conde Nast must have realized they were not in compliance with these six criteria, so they shut down their intern program in the midst of a lawsuit. If they started paying interns after the lawsuit was brought (which is I expect they would have preferred to do) it would act as an admission of guilt, leading them to lose a costly class action lawsuit. Let Conde Nast be an example to anyone who runs an intern program, if you’re not paying your interns and giving them every right your other employees have, you may wind up in court and out of an intern program.

Twitter's IPO to value the company at $11B

Twitter IPO to value the company at $11B.

Twitter is planning to raise between $1.2B and $1.4B in its IPO by selling 70M shares at between $17 and $20 each. This would give the company a market cap of between $9.3B and $10.9B. This appears to be a conservative move by the company since reported prices of private trades are higher than where Twitter has priced itself. This may be a lesson learned from Facebook’s overconfident valuation, which led to a disastrous IPO last year. Shares of Facebook opened at $38 and fell to less than $20 on the first day of trading. Since then shares have recovered and Facebook is sitting nicely at $52.44 as of close yesterday. That being said, a successful IPO would value Twitter at about one tenth of Facebook. Twitter is set to kick off its investor meetings in New York next Tuesday and Wednesday and in Boston next Thursday.

Since the first tweet was sent in 2006, Twitter has grown to more than 230M actively monthly users. Investors may have some serious questions for Twitter’s brass as user growth has slowed in recent quarters. While revenue year on year more than doubled to $422.2M, the company is still not profitable and actually nearly doubled its losses to $133.9M. Twitter also has to find a way to get more money out of its users overseas as they constitute 75% of overall users, but only 25% of revenue.

I want to ask Twitter’s management how they will balance paid tweets and advertisements on user’s timelines without cluttering it up so much people cut back on using the social network. I’m weighing buying Twitter at the IPO, but like many investors I have questions about its potential for revenue and am leery after what happened to Facebook.

Eight Takeaways From The PEW Study on Obamacare

Eight Takeaways From The PEW Study on Obamacare

The PEW Research Center recently conducted a survey of people who were visiting the Obamacare exchange websites. This is what they found.

1. Only 29% of Americans say the online health insurance exchanges are working well.
2. Awareness of the exchanges existence has increased significantly from September when only 51% of people knew exchanges were going to be available in their state to 65% today.
3. 14% of adults have already visited an exchange and an additional 23% say they plan to.
4. Of uninsured Americans, 22% have visited the site and 42% plan to do so eventually.
5. Of the people who are visiting the exchange websites, 70% already have insurance provided by their employer, Medicare, or Medicaid.
6. Most (58%) who visit the site say they just wanted to learn more, while 32% say they were looking for healthcare.
7. 64% of uninsured Americans have visited or plan to visit an exchange website, only 33% are looking at health insurance options for themselves and their families.
8. 40% of visitors report the website being difficult to use and 52% still disagree with The Affordable Care Act, no word on how they feel about Obamacare.

Five Things You Didn’t Know About Bank of America

Five Things You Didn’t Know About Bank of America

With 16,000 ATM’s and 5,200 branches, BofA is one of the most commonly recognized companies in the United States and the country’s second largest bank. (JPMorgan is the largest with about $2.46T in assets; BofA has about $2.13T in assets.)

1. Bank of America has over $2T in assets, but it is getting smaller. In a time where JPMorgan has grown from $2.12T in 2010 to $2.46T today, BofA has gone from $2.27T in 2010, to $2.13T today.
2. BofA has about half as many online users as Pinterest. The popular social networking site Pinterest has about 70M users, and BofA has about 30M online banking accounts.
3. BofA is comprised of 1,537 companies in one. To comply with federal regulations and intonation laws, banks have to do business using a variety of subsidiaries. In this case, “variety” equals 1,537.
4. In 2011, BofA tried to implement a $5 fee for its customer who used their debit cards. Customers boisterously voiced their objections and the plan was dropped about three days later. BofA current derives about a third of their consumer lending revenue from fees to merchants and customers.  
5. It is aptly named. While it isn’t the largest bank in the country by size, it remains the preferred bank for American consumers and companies. It holds about 12% of the $9.4T dollars of deposits in FDIC insured banks, compared to JPMorgan and Wells Fargo which each hold about 10%.

Stryker to recall hip implants at a cost of $1.13B:

Stryker to recall hip implants at a cost of $1.13B:

It’s not so easy to recall a product that has been implanted in an individual’s body. This is the case with Stryker Corp., maker of medical devices who expects to spend about $1.13B to resolve litigation and other costs related to the product recall. Stryker recalled the Rejuvenate and ABG II hip implants from the market last year due to the potential for corrosion, which causes pain and swelling for patients. About 20,000 of these devices have been implanted into patients in the U.S. alone, where Stryker will be expected to reimburse patients for medical costs.  

FBI Pursuing Action Against JPMorgan Over Madoff's Ponzi Scheme

U.S. prepares action against JPMorgan over Madoff’s Ponzi scheme.

Talk about kicking someone when they’re down. The FBI must be thinking that since JPMorgan has its fat wallet out already, they might as well get in on the action. In what would be an unheard of move, the FBI and U.S. Attorney’s Office are considering imposing a deferred prosecution agreement over allegations the bank permitted Bermie Madoff’s Ponzi scheme. While criminal charges against JPMorrgan would be suspended, fines and other concessions would be levied. If any other government need bodies need some additional funding, this would be a good time to make a claim agents JPMorgan. 

Caterpillar's Sales Plunge as Mining Continues to Sink

Caterpillar’s Sales Plunge as Mining Continues to Sink

Caterpillar has a rough third quarter. Revenue shrank to $13.4B, down 18.4% as demand for mining equipment around the world slumped and net income dropped 44.3% to $946M. Mining has been slower than the company expected, and their revised outlook reflects that as it is down $1.00 per share to $5.50 from last quarter. Expectations at the beginning of the year were about $9 per share, so revisions keeps getting worse.

As the global recession ended, Caterpillar experienced strong demand for equipment with strong commodities prices for oil, gold, and copper. Unfortunately, all those have been down significantly in the past year, and so has Caterpillar. Caterpillar has been shutting factories and has already cut 13,000 jobs and temporarily laid off thousands more salaried employees. Given how poor the outlook is for the company, Caterpillar should considering burying a couple billion dollars around the world, and begging mining companies to go find it.  

Four Things You Didn't Know About McDonalds

Four Things You Didn’t Know About McDonalds:

McDonalds’s is the largest restaurant company in the world with a market cap of more than $94B. Their brand is also one of the most pervasive around the world, with the golden arches being ubiquitous in just about every country. Here are four things from the Motley Fool you probably didn’t know about the company.

1. Ronald McDonald wasn’t the first mascot. Ronald was introduced in 1963, but before he arrived, a caricature of a chef called Speedee was in charge of marketing for the company. It was discovered Alka-Seltzer had the same mascot, so McDonald’s went another way with their iconic brand.
2. A Mixer Salesman transformed McDonald’s into what it is today. Though the McDonald brothers started the business, Ray Kroc a salesman at the now defunct Prince Castle Multi-Mixer company bought the company for $2.7M in 1961 after selling the company 8 mixers. Even before he purchased the company, he helped the McDonald brothers go from 34 locations in 1958 to 102 in 1959.
3. The Big Mac wasn’t always synonymous with McDonalds. It was developed first in 1967 at a franchise in the Pittsburgh area. The franchisee who developed it called it the Aristocrat. Unfortunately, local residents were unable to pronounce its name and were confused by the meaning (true story) so the name had to be changed. It was sold nationally a year later under the name Big Mac. There is now a Big Mac Museum located in North Huntingdon, Pennsylvania, because why wouldn’t there be?
4. McDonald’s has been allegedly linked to terrorism. In 1974, McDonalds was expanding around the world and was wrapped up in a controversy suggesting association with the Irish Republican Army or IRA. When the company opened its first location in the UK, it used the same employment forms it did in the U.S. On the forms, it asked if employees wanted to contribute money to an I.R.A. (Individual Retirement Account), but people thought they meant the terrorist organization. Classic miscommunication.