Translating Murdoch

What Rupert Murdoch said:

“People reading news for free on the Web, that’s got to change.”

What he meant:

"People reading news for free on the Web, that's got to change if I have any chance of salvaging some value from the incredible amount I overpayed for Dow Jones not very long ago. I really screwed up on that one and wasted a lot of investor money. Five billion dollars? Oops."

Nice timing by the Bancrofts. If it were still independent, what would Dow Jones be trading at today?

Quote of the Day

It takes a certain kind of mind-set to characterize Americans’ taking home their own money as a “wasteful and ineffective program,” let alone tax increases as “savings.” [source]

Well said. Hat tip Todd.

Conference Today

I'll be at the Investorside Research Association's Independents' Day 2009 conference today. This is an organization of investment research firms that do not engage in many of the conflict-producing activities - such as investment banking - that the traditional sell side houses engage in. The economics of unsubsidized research like this have always been dicey, so I'll be interested to hear how people see the industry performing going forward, especially in this climate and as the effects of the Spitzer settlement of a few years ago begin to fade away.

I'll post a recap tonight of anything that sounds interesting. During the day, though, I may twitter some highlights. If you're interested, you can follow me here.

Public Finance Advice

If you sit on a city council, local school board, small utility or college's trustee board, I have some advice for you. Issue debt for the amount of money you need at the lowest rate the market will bear. Spend the money as you advertised, account for the debt service in your budget, and pay it back as planned. Repeat as necessary. Do not play around with swaps, swap options, and other derivatives. It may work out for you, but many times you are rolling the dice in a game you do not understand.

If you insist on ignoring this advice, at least keep three things in mind. First, except in rare circumstances you do not, and will not, have the in-house expertise to understand what you are doing. Second, no one spends time trying to sell you something if they are not going to make money off of it, and the more time they spend generally the more they are going to make. Finally, and most importantly, there is no such thing as a free lunch. Both parties to a transaction sign up because they believe they are getting some value. If you are lowering your interest costs through some transaction, sit back and ask yourself why the other side would do this deal with you. Don't delude yourself into thinking that you are saving money on interest at no risk - you are definitely giving something away. Chances are you are insuring the other side against some event, such as interest rates moving in a certain way, that they are worried will occur. At the end of the day, is that the business you really want to be in?

Getting Ready to Head Out

In the early morning a fisherman prepares his gear before heading out to open water for the day. I took this picture in Lamu, Kenya and thought it was a nice metaphor for launching this project.

Welcome

Welcome. I'm going to avoid doing any long introductions, and instead just get right to some posts over the next couple of days. I'll fill in background information, etc. as needed going forward. Bear with me over the next few weeks as I may tweak the formatting and layout a bit, although right now I am liking the simplistic design.

The topics will be a lot of finance, a decent amount of politics, and some side helpings of other random things that come up. I'm also going post some of my favorite (decidedly amateur) photographs now and then, if for no other reason than to encourage me to take them more often. I'll post something formal when I get around to it, but in the meantime unless otherwise noted all photos, writing, original graphics, etc. are Copyright Robert J. Alvarez, all rights reserved, don't go using without asking, etc.

One thing I want to establish right from the beginning: play nice in the comments. I don't care when people disagree with me or with each other - in fact I enjoy it. But the immature nastiness that passes for discourse on many blogs (especially in the comment sections) is disgusting and unhealthy. I know the internet has evolved to be more tolerant of being a jerk than normal social custom typically allows, but that doesn't mean I have to like it or play along. Anybody who wants to be a jackass or rip down other people rather than address their ideas is welcome to start their own website. This one, however, is my little corner of the internet, and I'm just not going to put up with it.

With that, welcome once again. Feel free to leave a comment, or email me directly at rjalvarez001 *at* gmail.com. Thanks for stopping by.