Another year, another silly fuss over the Davos Global Competitiveness Report. There’s lots of good, substantive analysis in the report each year, and each year everybody (I’m including myself here) ignores 99% of it and concentrates solely on the rankings. Daniel Indiviglio has a pretty good write-up of the report, but he gets the headline stuff wrong:
It seems that the Long Beach Museum of Art would rather lose $569,000 in annual operating support from the city of Long Beach than repay the principal on a $3.06 million loan. I find that hard to understand: it should just take the $569,000 and use some fraction of it to pay off the $3 million over time, spending the rest on art and programming. Or is there some good reason why the museum’s implied discount rate is so incredibly high (over 18%)?
In the wake of Justin’s book and Cadbury’s rejection of Kraft’s takeover offer, it’s probably worth noting that the one place the efficient markets hypothesis never took hold was in corporate boardrooms. It’s commonplace for boards to say that offers significantly above the stock-market valuation “significantly undervalue the company”, or somesuch — with the clear implication that the market is not rational at all. At least when it’s your own company on the line.
Do you remember Charles Stanish’s article about how eBay was great for antiquities because it meant that there were so many fakes around, it wasn’t worth plundering actual sites any more? Well, Matt Palmquist wrote it up for the rather fabulous Miller-McCune magazine, and now, if you scroll down to the bottom of their latest letters page, you’ll find a strong rebuttal from one Bill Stelzer, of Portsmouth, New Hampshire. Anybody care to adjudicate?
The NYT has an excellent article on the life settlement industry, explaining its pros and cons in a balanced and clear-eyed manner. If you’re interested in such things, you should read it: it was written by Charles Duhigg, and published in December 2006. He mentioned that Wall Street was getting interested in such things: