Friday, April 18, 2008

My Link Blog needs some love

Link blogging is all the rage. Or at least that's what I tell myself because I'm working on a link blog aggregator idea. If you're not familiar with what a link blog is, its basically a collection of articles or article headlines from many sources. A link blog may be a manually selection of interesting articles or be automatically aggregated out of a collection of sources. Google Reader shares are a popular way of creating manually collated collections, and Google Reader public tags will create automatic feeds of all the blogs under a particular tag/topic.

So of course I have a few link blogs of my own. If you're subscribed to this blog in a reader you're missing these link blogs, which I have to admit are usually more interesting than what I write here. These link blogs cover various topics - I have link blogs on investing, software development, interesting articles by other bloggers, web infrastructure and so on. These are visible in the sidebar of this blog, or you can try them out by clicking on the links below and importing the feeds into your reader. You can also create your own if you use Google Reader.

My "interesting reads" link blog

Software Development - mainly Rails/Ruby related


Web infrastructure


Happy Reading!

Tuesday, April 8, 2008

Losses this Recession

Roubini, the IMF, Goldman Sachs, and a number of others are coming up with total credit losses due to the housing crisis similar my estimate in a previous post. Some of these estimates are rolling up losses on credit cards, auto loans, and commercial real estate along with residential housing losses. Others like Roubini are estimating a $1T loss just due to residential housing. Either way this level of losses will wipe out a good portion of Wall Street financial firm's market cap not to mention pension funds and insurance organizations.

A massive government bailout seems inevitable, probably at even larger scale than occurred with the RTC during the early 90's S&L crisis. This bailout is already under way, particularly in terms of inflating our way out of the problem. I do not anticipate a 15 year depression/recession such as occured in the US during the 1930's or Japan over the last 15 years, primarily because the Fed in the US has shown a strong bias towards an activist, inflationary strategy.

I do anticipate sharply higher commodity prices, a 20-40% decline in the dollar, multiple financial firm bankrupcies/rescues and house prices bottoming only after 25-50% declines.

With every decline comes a great shorting opportunity followed by a great buying opportunity. I just picked up "Anatomy of the Bear" a study of the last 4 bear market bottoms. This book looks at the actual historical record to refute popular mythologies on what characterizes bear market bottoms. Apparently both "buy and hold is your best strategy" and "Bottoms only occur when everyone thinks things will only get worse" are both false.

I'll post the Cliff Notes soon as I'm done.

Friday, April 4, 2008

Ingredients of Startup Success

Paul Buchheit of Gmail and FriendFeed fame recently posted the best synopsis of the ingredients of startup success I've seen.

There's one thing I'd add, using the same mountain climbing analogy. Often you put a team together, and it climbs partway up a mountain expecting gold at the top. About halfway up a number of things can go wrong.
  • The route may be impassable given the climbing techniques the team is capable of (the technology doesn't give the hoped-for benefit)
  • You may get a good view of the top and see that there is no gold, just a bunch of shrubs. (the market dynamics make it hard to make a profit)
  • The view halfway up the mountain lets you see the top of an adjacent mountain that does have gold at the top (Focusing on a different segment of the market is more profitable)
  • There's a weak link in the team that makes climbing slow and difficult (missing skill sets)
In my experience these types of problems are not exceptions, rather the norm. Successful teams recognize the issues quickly and make the changes necessary, whether that be changing market focus, hiring different skillsets, or changing the product to better meet the market's needs.