8 Fascinating Reads

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Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating ones I read this week.

Poor incentives
Municipalities around the country are trying to crack down on plastic-bag usage at grocery stores, many by offering discounts to customers with reusable bags. But Tatiana Homonoff of Princeton found an interesting trend:

I investigate the effect of a five-cent shopping bag tax imposed in the Washington Metropolitan Area. Despite the small size of the incentive, I find that the tax decreased the fraction of customers using a disposable bag by a substantial amount. In contrast, a similar policy that offered customers a five-cent bonus for reusable bags generated virtually no effect on behavior.

Same financial incentive, vastly different outcomes.

Rate of return
According to

On Monday, tiny start-up Contrail Systems was in stealth mode. On Tuesday it officially launched. Today, Juniper Networks (NYSE: JNPR  )  bought it for $176 million.

Contrail's founders, employees, and investors are sharing $57.5 million in cash and almost 6 million shares of Juniper stock.

Not bad for two days on the market.

Crystal balls
As analysts publish their stock outlooks for 2013, Barry Ritholtz looks back at how predictions made in 2007 fared:

Jon Birger, senior writer, Fortune Investors Guide 2008
"Smart investors should buy [Merrill Lynch] stock before everyone else comes to their senses." 
Merrill's shares plummeted 77 percent.

Elaine Garzarelli, president of Garzarelli Capital, Business Week's Investment Outlook 2008
Buy some of the most beaten-down stocks, including those of giant financial institutions such as Lehman Brothers, Bear Stearns, and Merrill Lynch.
As of January 1, none of these firms will still exist.

Sarah Ketterer, CEO of Causeway Capital Management, Fortune Investors Guide 2008
"Fannie Mae and Freddie Mac have been pummeled. Our stress-test analysis indicates those stocks are at bargain basement prices."
Fannie and Freddie had lost 90 percent of their value.

James J. Cramer, "Future of Business" New York Magazine
"Goldman Sachs ... finishes the year at $300 a share. Not a prediction -- an inevitability."

Goldman Sachs' share price was $78, and the firm announced its first quarterly loss -- $2.2 billion.

Looking up
Fareed Zakaria analyzes our recovery:

A McKinsey & Co. study of crises in recent decades found that the United States is mirroring the pattern of countries with the strongest recoveries. It noted that "Debt in the financial sector relative to GDP has fallen back to levels last seen in 2000, before the credit bubble. US households have reduced their debt relative to disposable income by 15 percentage points, more than in any other country; at this rate, they could reach sustainable debt levels in two years or so."

Kenneth Rogoff and Carmen Reinhart, the leading experts on financial crises, argue that the United States is performing better than most countries in similar circumstances. U.S. consumer confidence is at its highest levels since September 2007.

The Bureau of Labor Statistics highlights manufacturing wages (link opens PDF) across the industrialized world:

Still got it
The blog Calculated Risk shows real (inflation-adjusted) consumer spending on the rise:

From MS-DOS to this
CNNMoney discusses tomorrow's computer:

IBM (NYSE: IBM  ) researchers are developing technology to analyze odors in people's breath that identify ailments, including liver and kidney disorders, asthma, diabetes and epilepsy. By determining which odors and molecules in a person's breath are associated with each disease, computers of the future will be able to make an instant analysis for problems that today could be misdiagnosed or go undetected by a doctor.

Getting off track
Chamath Palihapitiya, a former Facebook (NASDAQ: FB  ) executive, talks about how companies lose it:

Enjoy your weekend.


Read/Post Comments (5) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 22, 2012, at 1:05 PM, maiday2000 wrote:

    A little late on the Zakaria article from two months ago, although it does give time to show how some of those upbeat trends he cited have substantially cooled since then. Kicking the can down the road is always positive for stocks...until it isn't.

  • Report this Comment On December 22, 2012, at 2:06 PM, Shawnerz wrote:

    Amazing interview with Chamath Palihapitiya! Thanks for the link, Morgan.

  • Report this Comment On December 22, 2012, at 6:32 PM, jvgfool wrote:

    Interesting conversation, but Chamath Palihapitiya confused bureacracy with elected officials. People make this problem all the time. There needs to be distinction between the people that work for the government and the elected officials who are the ones that actually create the policies.

  • Report this Comment On December 22, 2012, at 8:50 PM, Sunny7039 wrote:

    I wouldn't have thought that compensation costs in manufacturing would track quality of life this closely. I would have expected a strong correlation, but this is close to an equivalence. When people make good money in exchange for making real things, it apparently has all sorts of positive ripple effects throughout a society.

  • Report this Comment On December 23, 2012, at 12:29 PM, solarfool314 wrote:

    While not so impressive as a very expensive piece of high tech equipment, dogs can be trained to detect the diseases you mentioned and more.

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