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52. Repotting Harry Potter: A Professor's Book-by-Book Guide for the Serious Re-Reader
- Author:
- Daniel Wahl
- Publication Date:
- 12-2010
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- I'm sometimes puzzled at people, some of my good friends among them, who never give a serious thought to rereading a book, even a classic. Yet these same people would surely not pass up a trip to Paris because they've already been there or refuse to listen to a CD of Beethoven's Ninth because they've already heard it.
53. Fooling Some of the People All the Time Updated and Revised: A Long Short Story, by David Einhorn
- Author:
- Daniel Wahl
- Publication Date:
- 06-2009
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- The scene is the offices of Donaldson, Lufkin Jenrette (DLJ) in late 1991. Analysts here are regularly given deadlines requiring them to work through the night; hundred-hour workweeks are the norm, and the environment is extremely hectic-even by Wall Street standards. It is three o'clock on a Sunday morning, and a young David Einhorn sits at his desk trying to finish the job he was given. A few months into this position, he has lost fifteen pounds due to the stress (p. 12). Two years later, Einhorn takes a job working for Siegler, Collery Company, a mid-sized hedge fund with about $150 million under management. He learns "how to invest and perform investment research from Peter [Collery], a patient and dedicated mentor" (p. 12). He spends weeks "researching a company, reading the SEC filings, building spreadsheets and talking to management and analysts." He then turns in his work to Peter-who, having read everything, makes a detailed list of questions that Einhorn wishes he had asked (p. 12). In 1996, confident in his own abilities, Einhorn resigns from the firm to start his own. The original business plan is written on the back of a napkin. The original office is a 130-square-foot, windowless room. He names the firm Greenlight Capital, as suggested by his wife, who also gave him the green light. As Einhorn explains, "When you leave a good job to go off on your own and don't expect to make money for a while, you name the firm whatever your wife says you should" (p. 12). Greenlight Capital is a "long-short" hedge fund-which means a fund that "goes long" on investment opportunities that it thinks are substantially undervalued and "short" on those it regards as substantially overvalued. Einhorn succinctly explains these terms: Short selling is the opposite of owning, or being long a stock. When you are long, the idea is to buy low and sell high. In a short sale, you still want to buy low and sell high, but in this case the sale comes before the purchase. It works this way: Your broker borrows shares from a stockholder who lends them to you, and you sell them in the market to a new buyer, thus establishing a short position. To close out the position at a later date, you buy shares in the market and return them to your broker to "cover" your short, and the broker returns them to the owner. Your profit or loss is the difference between the price you receive when you sell the shares short and the price you pay to buy them back. The more the stock falls, the more money you make-and vice versa (p. 5). For instance, on the long side, Greenlight invests 15 percent of the fund in C. R. Anthony, "a small retailer that had recently emerged from bankruptcy and returned to profitability. The market valued the company at $18 million despite its having twice that in net working capital (current assets less all liabilities)." When other investors (finally) notice the discount at which it is selling relative to net working capital, the stock increases substantially. And when they start to value the company based on its future earnings potential, the stock shoots up 500 percent from Greenlight's initial investment (page 19-20). On the short side, Greenlight sells Sirrom Capital, a business development company that Einhorn considers overvalued. "By tracking performance of [Sirrom's] loans from the year of origination, we determined that although the overall portfolio statistics appeared appealing, rapid asset growth masked poor results. . . . We estimated that from inception to final maturity, 40 percent of the loans went bad" (p. 29). After researching how Sirrom has accounted for bad loans in the past, Einhorn predicts that the company will have to recognize a significant loss on its loans in the near future. If this is correct, the market will lower its estimation of both Sirrom's current assets and its future earnings potential; the company will be unable to sell new stock in amounts large enough to mask past errors; and the price of its current shares will decline accordingly. Einhorn's prediction proves accurate. Sirrom is able to sell shares to the public only one more time before reporting disappointing results, at which point the shares collapse from a high of $32 to just under $3 (p. 30). The foregoing are just two of Greenlight's many such successes. By figuring out the true state of a company, comparing it with the state of the company as reported by its management team or as judged by the market, and then going long or short accordingly, Greenlight proceeds to earn spectacular returns for its clients. The company's earnings and assets under management soar-as does peer respect for Einhorn himself. Because of Greenlight's success in shorting Sirrom, Einhorn is approached by a hedge fund specializing in financial institutions for his opinion on a company with a structure identical to Sirrom's and with seemingly identical problems. The company in question is Allied Corporation (p. 43). . . .
54. The Snowball: Warren Buffett and the Business of Life by Alice Schroeder New York: Bantam, 2008. 976 pp. $35 (cloth).
- Author:
- Daniel Wahl
- Publication Date:
- 10-2009
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- Nine-year-old Warren Buffett is in his yard playing in the snow. Warren is catching snowflakes. One at a time at first. Then he is scooping them up by handfuls. He starts to pack them into a ball. As the snowball grows bigger, he places it on the ground. Slowly it begins to roll. He gives it a push, and it picks up more snow. Soon he reaches the edge of the yard. After a moment of hesitation, he heads off, rolling the snowball through the neighborhood. And from there, Warren continues onward, casting his eye on a whole world full of snow (prologue). Many decades later, Alice Schroeder, a former insurance analyst at Morgan Stanley and the author of The Snowball, is sitting in front of Warren Buffett, one of the world's richest men. "Where did it come from," she asks, "Caring so much about making money?" Buffett leans forward, "more like a teenager bragging about his first romance than a seventy-two-year-old financier," and begins to tell his story: "Balzac said that behind every great fortune lies a crime. That's not true at Berkshire [Hathaway]" (p. 4). Thus begins The Snowball, one of the most highly anticipated biographies of the past few years and the first to be written about Buffett with his full cooperation. As its full title indicates, The Snowball: Warren Buffett and the Business of Life sets out to present Buffett's thinking, not only about business but about life in general. Among the many topics this hefty volume explores are those individuals who influenced his thinking. A major figure in this respect is Buffett's father, whom he idolizes and from whom he learned a crucial point when it comes to judging both oneself and others: The big question about how people behave is whether they've got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard. I always pose it this way, I say: "Lookit. Would you rather be the world's greatest lover, but have everyone think you're the world's worst lover? Or would you rather be the world's worst lover but have everyone think you're the world's greatest lover?" . . . Now my dad: He was a hundred percent Inner Scorecard guy. He was really a maverick. But he wasn't a maverick for the sake of being a maverick. He just didn't care what other people thought" (p. 33). In addition to the valuable lessons he learned from important figures in his life, Schroeder shows how Buffett's own interests and thinking during childhood contributed to his development. Schroeder reveals him to have been an efficacious child, intensely interested in collecting and processing facts. . . .
- Political Geography:
- New York
55. The Garden of Invention: Luther Burbank and the Business of Breeding Plants by Jane S. Smith New York: The Penguin Press, 2009. 368 pp. $25.95 (cloth).
- Author:
- Daniel Wahl
- Publication Date:
- 10-2009
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- In 1849, millions were starving due to a then-mysterious disease that "in a matter of days, if not hours, could transform a thriving field [of potatoes] into a slimy, foul-smelling patch of rotting vegetation" (pp. 38-39). Everywhere, plants were "extremely inconspicuous, [tasted] terrible, or [went] to seed in a fast and fabulously prolific way, leaving nothing behind to harvest." And plants had evolved characteristics by which they survived just long enough to reproduce, characteristics that were unsuitable for feeding a large and fast-growing population (p. 40). But all this was about to change, and dramatically so, thanks to a man born that year: Luther Burbank (p. 6). In her new book The Garden of Invention: Luther Burbank and the Business of Breeding Plants, Jane S. Smith presents the life of this extremely influential but mostly forgotten plant breeder and businessman, emphasizing his innovations and the methods he used to develop and sell them. Burbank displayed some mechanical ingenuity as a child, but, Smith reveals, apart from this, nothing in Burbank's background suggested that he might become an inventor of new plants (p. 19). Though young men of his time were encouraged to work in an academic setting, Burbank, fond as he was of the outdoors, was unsure whether he wanted to follow suit-until, at the age of 21, he picked up a copy of Charles Darwin's The Variation of Animals and Plants Under Domestication. Smith describes this book as a "detail-crammed response to those who had criticized On the Origin of Species by Means of Natural Selection as a hypothesis unsupported by sufficient proof" (p. 27), then concisely sums up what Burbank read: From gooseberries to gladioli, Darwin compiled his evidence: plants changed in response to outside stimulus (like the cabbages Darwin described that changed their shape or color when planted in different countries), and these changes could happen within a short time span (like the hyacinths he said growers had managed to improve from the offerings of only a few generations earlier). The causes of the changes were still largely unknown, but their occurrence was a fact beyond dispute. This was evolution measured in human time (p. 28). Burbank took from the book several big ideas-each of which Smith relates in an easy-to-read style: The first was that it was possible to force the emergence of latent differences in fruits and flowers, even to the point of generating what seemed to be entirely new varieties. Still more exciting was Darwin's tentative suggestion that selecting, grafting, hybridizing, or simply moving a plant to a new environment might spur changes that would persist over generations. According to Darwin, these alterations were often inadvertent, but as Burbank immediately realized, such happy accidents could also be deliberately pursued. The creation of new plant varieties, something far beyond the familiar efforts to breed the best of an existing stock, did not need to wait for the slow accumulation of natural advantages Darwin had described in his Origin of Species. Evolutionary change could be accelerated by human intervention (p. 28). Darwin's words "opened up a new world" for Burbank (p. 27). Not only did the book give him an intellectual framework for viewing the world and man's place in it, but an advertisement on the last page of Burbank's edition of Darwin's tract (for a book called Gardening for Profit) enabled him to see for the first time his place in it. He would not have to choose "between the outdoor life and the inventor's bench" after all-plant life "could be a subject for experimentation and improvement, and a commercial garden could provide a good living for an imaginative and enterprising man".
- Political Geography:
- New York
56. Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud, and Deception to Keep You Misinformed
- Author:
- Daniel Wahl
- Publication Date:
- 12-2009
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- I'm an environmental scientist, but I've never had time to review the "evidence" for the [man-made] causes of global warming. I operate on the principle that global warming is a reality and that it is human-made, because a lot of reliable sources told me that . . . Faith-based science it may be, but who has time to review all the evidence? (p. 318) That is just one of many astonishing statements by global warming alarmists that Christopher C. Horner catalogs and analyzes in Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud, and Deception to Keep You Misinformed. Horner amply demonstrates that the acceptance of such "faith-based science" is the modus operandi of many activists, journalists, and politicians-who want you to accept it too. Horner exposes the tactics alarmists use to sell you on the faith and keep you ignorant of the facts surrounding alleged global warming. One such tactic is simple, premeditated deception: Consider the example of Gore's co-producer Laurie David, who followed [Gore's documentary, An Inconvenient Truth] with a book aimed at the little ones. . . . [In the documentary] one ought to have suspected that Al Gore was up to something when he ran two lines [for CO2 concentration and temperature change] across the screen . . . claimed a cause-and-effect relationship, and then forgot to superimpose them. . . . Gore was correct to insist there was a relationship between the temperature line and the CO2 concentration line, as measured over the past 650,000 years. . . . The relationship, however, was the precise opposite of what he suggested: historically, it warms first, and then CO2 concentrations go up. Gore's wording and visuals were cleverly deceptive-he implied, without stating . . . that CO2 increases are followed by temperature increases. The reason he didn't source his claim is that the literature doesn't support it. Somehow believing only the young would bother to open their [book] targeting children, David and [co-author Cambria] Gordon weren't so clever. Their book included the two lines, but dared superimpose them, and even stated the phony relationship more outlandishly than Gore did in his film. The reason that temperature appeared to follow CO2 proved to be because they reversed the labels in the legend (pp. 199-200). Horner shows that such deceptions are typical, not just of documentary producers and author-activists seeking to spread the faith, but also of so-called scientists and purportedly scientific organizations including, for instance, the UN's Inter-Governmental Panel on Climate Change (IPCC). Of the IPCC, Horner writes: The unsupportable advocacy from these supposed sages of science begins with their threshold dishonesty of putting forth a lurid and alarming "summary," drafted by a few dozen people who often are activists-and encouraging claims that these conclusions represent the consensus of thousands of "the world's leading scientists" from the world over (p. 294). These summaries, Horner shows, are written before scientists have submitted data. Even worse, it "appears that the IPCC intends to make the scientists . . . change their findings if they depart from the summary in order to bring them in line with it" (p. 304). The IPCC's "Lead Authors" edit out inconvenient findings, such as the following two, which, according to one scientist, had intentionally been "included at the request of participating scientists to keep the IPCC honest." . . . To read the rest of this article, select one of the following options:Subscriber Login | Subscribe | Renew | Purchase a PDF of this article
- Topic:
- Climate Change
57. The Israel Test, by George Gilder
- Author:
- Daniel Wahl
- Publication Date:
- 12-2009
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- According to George Gilder, Israel's defenders have failed to make a compelling case for the country's right to exist-though not for lack of trying. Gilder cites, as one example, Alan Dershowitz, who has contributed two books offering "over thirty chapters of evidence against [anti-Israel] propaganda."Dershowitz cogently contests the proposition that Israel is a racist bastion of apartheid, a genocidal expansionist power, and a crypto-Nazi perpetrator of "massacres." He ably refutes the verdict of the relevant UN committee that Israel is "the world's primary violator of human rights" . . . [And he] even takes the trouble to answer charges of the ineffable Iranian president Mahmoud Ahmadinejad as if the ruler were moved by legal niceties and resourceful argument (pp. 20-21). But, although Gilder acknowledges that Dershowitz's arguments refute the typical charges made against Israel, he says that this defensive posture is an all-too-typical mistake. "The central error of Israel's defenders is to accept the framing of the debate by its enemies. . . . Locked in a debate over Israel's alleged vices, they miss the salient truth running through the long history of anti-Semitism: Israel is hated above all for its virtues" (pp. 21-22). For all its special features and extreme manifestations, anti-Semitism is a reflection of the hatred toward . . . capitalists that is visible . . . whenever an identifiable set of outsiders outperforms the rest of the population in an economy. This is true whether the offending excellence comes from the Kikuyu in Kenya, the Ibo and the Yoruba in Nigeria . . . [or] the over 30 million overseas Chinese [throughout] Southeast Asia (p. 36). In The Israel Test, Gilder zeros in on both the source of Israel's success and the source of hatred toward the nation, making a strong case for why the nation's continued existence should be both supported and celebrated. . . .To read the rest of this article, select one of the following options: Subscriber Login | Subscribe | Renew | Purchase a PDF of this article
- Topic:
- Human Rights
- Political Geography:
- Israel