Felix Salmon

News Corp loses its news

June 27, 2012

“In a way,” says Jeffrey Goldfarb today, “the scandal may have been the best thing to happen to News Corp,” on the grounds that Hackgate is likely to end up forcing Rupert Murdoch to spin off his newspapers, along with HarperCollins, into a new, separate company.

Why are US stock pricing conventions so sticky?

June 22, 2012

Last week I explained why Wall Street prefers lower-priced stocks: they mean that bid-offer spreads are wider, in percentage terms, and when that happens, brokers make more money.

Wall Street’s preference for low-priced stocks

June 13, 2012

Three weeks ago, Alex Tabarrok found an intriguing post by high-frequency trader Chris Stuccio. The idea is very elegant: if you want to stop high-frequency traders extracting rents from the market, there’s an easy way to do so — you just allow stocks to trade in increments of much less than a penny. Matt Levine puts it well: right now, he says, “because you can’t be outbid by another bidder within the same penny increment, you get free money by just getting there first”. If high-frequency traders could compete on price rather than just on speed, then a lot of the silly arms-race stuff would be replaced by better prices for investors.

Is Nasdaq to blame for Facebook’s share price?

June 11, 2012

The WSJ has a good post-mortem on the Facebook fiasco today, pointing fingers very much at Nasdaq. And clearly Nasdaq was Ground Zero for the trading problems the day that Facebook went public. But this kind of thing smells fishy:

Lessons in pricing a scarce resource

June 9, 2012

There’s a fine art to pricing any scarce resource. Ex ante, it’s impossible to do a precise calibration of supply and demand, but being able to do so is crucial to getting things right. If you’re in a business where you can make more of whatever you’re selling when demand rises, that’s one thing. But when you’re selling tickets, or Facebook shares, that’s not the case.

Facebook muppet of the day: UBS

June 8, 2012

CNBC has a breathless report from Maria Bartiromo today, under the headline “UBS May Have Facebook Trading Loss of $350 Million”:

America’s jobs crisis

June 1, 2012

This is about as bad as the jobs report could possibly be: just 69,000 jobs created, split between 95,000 new jobs for women and 26,000 fewer jobs for men. The market reaction has been swift and merciless, with stocks and bond yields plunging: the 10-year Treasury bond now yields less than 1.45%. When stock prices fall, of course, the earnings yield on the S&P 500 goes up, even as bond yields go down. Which means that the numbers on this chart are now even more extreme than at the close yesterday:

Facebook’s SecondMarket muppets

May 30, 2012


Remember how excited SecondMarket was about the Facebook IPO? I’ll bet they’re not nearly as excited any more. Because if anything demonstrates that there’s a venture-capital bubble in Silicon Valley right now, it’s Facebook.

Why we’re right to worry about the Facebook IPO

May 29, 2012

The bad news is that the Greek stock market is down 58% over the past year; the good news is that it’s up 7% today. So far, so uncontroversial: while it’s possible to quibble with the standard CNBC convention that rising stock prices are always good and that falling stock prices are always bad, in the case of Greece it’s much harder.