A Thought Journey

Casual readers of this blog will notice the random themes, introspection, and commentary on events in business and finance. I have decided to channel this, but hopefully in a more meaningful way, into a series of essays. The themes are broad and the ideas random. This fits my personality and allows me to reflect and create. By posting this, I commit myself publicly to this work: a short book of essays.

That said, I will use this site to diffuse any finance-related theme I include in my writings. A note of warning or of jubilee: postings going forward will be more sporadic and less frequent than the past. Below is what I have so far. I'm halfway done with two of the essays. I welcome your comments and ideas.

Education:

i) Why I Write

ii) Types of Books

iii) Education

iv) Cultural Observations

Places:

v) The Real Mexico

vi) The Farm

People:

vii) Mr. Buffett

Misc:

viii) On Investing

ix) My Experience at Goldman Sachs

x) Our Sacred Stuff

xi) Running

xii) Skiing & Golf

xiii) The Buy Recommendation

Fees

Ebay's exit from the Skype debacle is a boon for financial helpers: fees for buying and then fees for divesting. Ain't life grand. It's not that advisers don't always earn their keep. But there are definitely misaligned incentives, when, from their perspective, the payout is: deal closes, big payout; deal fails, little money. Unless of course, you advise on both the acquisition and the divestiture. But I'd hope Ebay would have more sense than using the same helpers twice.

One Question

From its humble beginnings decades ago, Berkshire's annual meeting has morphed into a series of events known as the Woodstock for Capitalists. Rental car prices for that weekend attest to the popularity of the meeting; I can't find a car for less than $50.00 per day.

That said, this year's annual meeting offers a huge improvement over past years: the Q&A format will be half questions pre-screened by three journalists, and half awarded by drawing. Previous years were plagued with disputes about the ethics of hydroelectric dams and the conflict in Darfur (two important issues but not worthy of so much mic time in this type of setting).

And so, I offer my question, which I've emailed to one of the journalists mentioned in the 2008 shareholders' letter.


Messrs. Buffett and Munger:

Berkshire in the past has bought and sold interests in public companies. Could you comment on the orthodoxy of the till-judgment-day-do-us-part philosophy of Berkshire's operating companies?


Disclosure:
None

Credit-Default Swaps

If there's been one benefit of the financial crisis, it's the improvement in financial literacy. People are now paying attention to ratings, interest rates, and Fedspeak. Even credit-default swaps, at whatever level of understanding , are fair game for dinner-time conversation.

The recession has even brought into question the bedrock of finance theory: efficient markets, or the idea that market prices reflect all available information. One professor at the Solvay Brussels School of Economics confesses that the CDS market is "opaque, often illiquid, and prone to manipulation." This leads to share price pressure and a bundle of screwy signals to both rating agencies and short sellers. Alas, the markets are mostly efficient, and certain anomalies are worth exploiting. Just don't try to argue with your business school professor about this.