A Primer on Mortgage-Backed Securities

This sums it up:

Long-Term Capital Management’s Pamphlet

Source: LTCM

If you like financial history, this piece of marketing is too good not to share. Thanks to François Denault, a value investor from Montreal, for the find. Here’s the pamphlet of Long-Term Capital Management (LTCM)’s marketing pamphlet. The stock photos are absolutely ridiculous. I can’t imagine anybody working there looking like that. If there’s a museum of ridiculous financial artifacts, this should be up there.

For the younger readers of this blog, Long-Term Capital Management (LTCM) almost brought down the financial system in 1998. LTCM was founded in 1994 by John W. Meriwether, the former vice-chairman and head of bond trading at Salomon Brothers. Again with the financial history, what happened at Salomon Brothers wasn’t pretty either. You may remember Meriwether from such books as Michael Lewis’ Liar’s Poker, in which Lewis painted his old boss as a high-stakes gambler (read it if you haven’t). Anyway, John Meriwether, the investment wizard (gambler/speculator), assembles the “dream team” of Wall-Street, which included two economists with a Nobel prize and the Vice-Chairman of the Federal Reserve. The best of Wall-Street under one roof.

Source: LTCM

Initially successful at first, LTCM used a highly leveraged strategy that backfired following the 1997 Asian financial crisis and 1998 Russian financial crisis requiring financial intervention by the Federal Reserve. By 1998 LTCM had amassed about $125 billion in debts against $4.7 billion in assets, and the notional value of its derivative positions had ballooned to well more than $1 trillion. On the eve of the bailout, LTCM’s leverage ratio had ballooned to 50-to-1, but investor flight further reduced the firm’s capital base before the bailout could calm the herd. The Federal Reserve of New-York organized a $3.6 billion bailout because LTCM’s failure could cause a chain reaction in numerous markets, causing catastrophic losses throughout the financial system. This was similar to what we saw in 2008 on a larger scale.

Source: Wikipedia and JayHenry
Source: LTCM

 

The ESPN Mobile Phone (not clickbait, it’s a real thing)


I don’t know how I missed that colossal flop but in 2006 ESPN released a black-and-red Sanyo flip phone with an ESPN logo above a 1-inch screen. It was called Mobile ESPN, the company’s ill-fated attempt at launching a sports-centric mobile service. Remember this was 1 year before the launch of the iPhone and Blackberry’s handsets were dominating the smartphone landscape. You’re probably scratching your head at how something this ridiculous can happened. I’m being polite here but someone wasn’t: “Your phone is the dumbest fucking idea I have ever heard.” That, according to the book These Guys Have All The Fun,  was how Steve Jobs introduced himself to George Bodenheimer, then-President of ESPN, during a 2006 Disney board meeting (Jobs was on the Disney board).

For the special privileged of receiving score updates, launch GameCast, browse ESPN.com content, and a host of other features on the limited capability phone, customers had to fork over as much as $300 for the phone itself, and between $65 and $225 per month for content. It’s small change when you need your Sunday game score update in a couple minutes on a phone with basic functions (3G network or worse I assume).

Source: PCMag

According to this Bloomberg article, the project cost $150 million to develop, including a $30 million Super Bowl ad (see below), and attracted a grand total of 30,000 customers. ESPN scrapped it after seven months. As I don’t need to explain, it turned out to be a massive commercial failure. From the Wall-Street Journal:

Mobile ESPN’s model doesn’t appear to be winning over consumers. The start-up, which was launched in February, had signed up fewer than 10,000 customers through May, according to people familiar with the situation. Robert Iger, Disney’s chief executive, said on the company’s first-quarter earnings conference call that initial sales from Mobile ESPN were “lower than hoped.”

I’m glad ESPN quickly turned the page instead of throwing money at it. Still $150m is a lot of money. I understand a company needs to be innovative and sometimes has to experiment with different things, but this was simply not a good idea. I wonder if the person that came up with this great idea is still employed. For some reason, I have a feeling the phone is worth a lot of money today. It’s probably one of those collectibles. I searched on Ebay and I couldn’t find one.

ESPN Promo:

Here’s ESPN’s 2006 Superbowl ad.

The Wall On The Canadian Side Is Now Complete

The wall on the Canadian side is now complete.

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One of the Best Trump Political Cartoon

The New Yorker probably has the best political cartoon of Trump I’ve seen in a while. The only reason Trump hasn’t bashed the New Yorker it’s because the articles are too long for him to read.

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“It lets you hold the President’s attention for a few extra seconds before he wants to change channels.”

Trump is reputed for watching a lot of TV and a very short attention span. Just think of the people he has attacked on Tweeter seconds after they said something he didn’t like on TV.

Your Home Value

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The World Economic Forum

It’s this time of the year again.

world-economic-forum

Mike Tyson the Investor

mike-tyson-trading

I love Mike Tyson.  He was the absolute dominator in his prime. There hasn’t been a fighter like him since. But it’s really hard to fall for this ad. Associating Mike Tyson to online trading…I’m not sure that’s a smart move. Mike Tyson can punch really hard. That’s his thing. I don’t know if you have heard him speak, but it doesn’t rhyme with forex or futures’ trading. What’s even more ridiculous is the note in the bottom left corner stating that U.S. citizens cannot trade on Trade12. I’m pretty sure Mike is a U.S. citizen and if he’s trading on Trade12 that would make what he’s doing illegal. I don’t think Mike is trading. He just sold his image because he’s broke (again why would that be a good person to promote making money?) But I would love to have Mike as a counter-party (in trading, not in the ring).

I don’t think the ads got much traction. There’s two videos on Youtube has about 300 views combined since July.

Just like everyone in markets…

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My Blackberry Is Not Working!

Video from 2010, still very funny. Includes Apple and Xbox jokes.