Felix Salmon

The economics of Netflix

March 31, 2010

How come Netflix has a market capitalization of $4 billion, on 2009 net income of just $116 million? That’s about $325 per subscriber, even as each subscriber generates on average about $145 in revenue and $10 in net income per year.

Adventures in revolving doors

March 31, 2010

Gary Weiss reads the SEC inspector general’s report into its behavior with respect to Allied Capital and David Einhorn, and finds this startling nugget:

John Dugan’s CFPA U-turn

March 31, 2010

Remember OCC head John Dugan’s email to to Cheyenne Hopkins? He told her — and since the article was only published yesterday, I’m assuming it was in the last few days — that a consumer agency could conflict with safety and soundness concerns. “A consumer agency might think that down payments on house purchases should be limited to 5% to promote homeownership,” he wrote, “while a safety and soundness regulator might believe a higher minimum could be needed to ensure lenders don’t make loans that won’t be repaid”.

What’s a syndicated bond?

March 31, 2010

The term has been around for a little while now, but only recently has the concept of a syndicated bond been commonplace in news stories, and it seems to have arrived without anybody explaining what it is.

Prosecuting insider trading in CDS

March 31, 2010

It’s now been three and a half years since Bloomberg’s Shannon Harrington and John Glover showed that there was a very strong pattern of CDS spreads gapping out in advance of debt issuance by large corporates, which came as a surprise to everybody else. And it’s been three years since I noted that the SEC was going to have a hard time prosecuting insider trading in the CDS market, since CDSs aren’t securities.


March 31, 2010

A great introduction to the sleazy AFA Press by Nick Lyne — Qorreo

Stunning photos of dew-covered insects — Daily Mail

Why Are Thousands of Jews Selling Their Homes for Passover? — The Atlantic

My Global Conference panel with Carney, Ishmael, and Moore — Milken Institute

I like Gawker’s “branded traffic” metric, and wish more sites would make it public — Gawker

The sovereign exit strategy for bank shareholdings

March 30, 2010

There are very few investors for whom a 0% return is just another arbitrary point on the real-number spectrum. In theory, the difference between a +10% return and a +15% return is the same as the difference between a -3% return and a +2% return. But in practice, the latter is much more important, because it spans the crucial zero bound: it’s the difference between making money and losing money.

Why wine isn’t an investment

March 30, 2010

Swiss researchers Philippe Masset and Jean-Philippe Weisskopf have a new paper out claiming to demonstrate that if you add wine to a portfolio of financial assets, that decreases your risk, increases your returns, and helps you out (if you care about such things) on the skewness and kurtosis fronts as well. Leslie Gevirtz writes up the results here, and Reuters graphics supremo Silvio DaSilva has even put together some pretty charts from the paper here.

John Dugan, protector of predators

March 30, 2010

In the wake of Andrew Martin’s searing profile of him last week, the last thing John Dugan needed was to be quoted in the American Banker looking like even more of a banking-industry shill. Yet here’s the quote he gave Cheyenne Hopkins for her (sadly firewalled) article on whether safety and soundness conflicts with consumer protection: