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 seven fascinating ones I read this week.
Derek Thompson of The Atlantic shows how the cable industry's business mix has changed over the years:
Kevin Kelly writes an excellent piece on how new forms of media expose us to improbable events so often that we think they're common:
Every minute a new impossible thing is uploaded to the Internet and that improbable event becomes just one of hundreds of extraordinary events that we'll see or hear about today. The Internet is like a lens which focuses the extraordinary into a beam, and that beam has become our illumination. It compresses the unlikely into a small viewable band of everyday-ness. As long as we are online -- which is almost all day many days -- we are illuminated by this compressed extraordinariness. It is the new normal.
The New York Times writes about Japan's aging population. A similar trend will hamper U.S. growth over the coming decades:
THE first grade class at the elementary school in Nanmoku, about 85 miles from Tokyo, has just a single student this year. The local school system that five decades ago taught 1,250 elementary school children is now educating just 37. ... Over the next 25 years, the proportion of Japan's population that is elderly will rise from almost one in four to one in three. Sales of adult diapers will soon surpass those of baby diapers.
Imagine if Mr. Buffett had decided to locate the headquarters of Berkshire Hathaway in a splendid office on the tony side of Manhattan beginning in 1967? According to my estimate, the difference in rent alone between fashionable New York City and Omaha at that time was more than 5 fold. For example, if Mr. Buffett had paid $10,000 rent for his Omaha office space in 1967, he would have had to pay $51,500 for the same space in New York City. The difference in that year's rent alone ($41,500) if invested in Berkshire Hathaway shares then would be worth over $285,040,361 today.
The next leg
A letter to the editor in The Wall Street Journal shares simple wisdom:
If investors' rearview mirrors only extend back a few years, then their expectation of the future is likely a reflection of recent events. Perhaps a bigger mirror is in order. A 50-year-plus view shows a fairly consistent pattern in the general movement of equity prices -- about 15 years of above average returns, followed by 15 years of low (or no) returns.
It has been almost 13 years since the end of the last great equity price expansion. Valuations have gone from extreme to compelling, while bond prices have done the reverse. While it might not begin next year, or the year after, another multi-year equity price advance seems not far off. The fear described by your article's subjects tends to confirm it.
The earnings yield on US stocks (the inverse of its earnings multiple) is 6.8 per cent, more than the 5.89 per cent yield available on junk bonds, a new sign of the way in which the very low yields on offer in bond markets have distorted traditional perceptions of value.
The new normal
The South China Morning Post shows how China's labor market is changing:
Zhang Weifang, head of human resources at the Yantai factory of LG Innotek, estimates the city's employable 16- to 18-year-olds has halved since her firm began production in 2004. LG Innotek is the components unit of South Korea's LG Electronics.
"It's really hard to find people nowadays," she said.
Enjoy your weekend.