Happy Friday! There are more good articles on the web every week than anyone could read in a month. Here are eight fascinating pieces I read this week.
You've been fooled
Millions will line up today in anticipation of Black Friday megasaving deals. They're fooling themselves, writes BusinessWeek:
Among the 15 largest U.S. retailers, operating margins in the holiday quarter last year were 11 percent, compared with 9 percent in the preceding nine months. Amid the year-end shopping frenzy, these companies padded their bottom lines, on average, by roughly one-quarter.
We've been here before
Bitcoin, the digital currency, has a predecessor. It didn't end well, writes The Financial Times:
The founder of e-gold, an oncologist and economic history buff in Florida called Douglas Jackson, had hoped his gold-backed electronic currency would become a new base money to rival flawed fiat currencies.
Instead, it became a tool for hackers and drug dealers. The FBI and Secret Service raided his offices in December 2005, and he wound up spending three years on probation, including six months under house arrest, after pleading guilty to running an unlicensed money transmitter business and aiding money laundering.
The unemployed have a much higher rate of substance abuse than the employed, writes CNNMoney:
About 1 in 6 unemployed workers are addicted to alcohol or drugs -- almost twice the rate for full-time workers, according to the government's National Survey on Drug Use and Health.
The survey shows that 17% of unemployed workers had a substance abuse disorder last year, whereas 9% of full-time workers did so.
The only real get-rich quick scheme
As analyst Eddy Elfenbein tweets:
The S&P 500 is up 99% since Warren Buffett's 2008 op-ed "Buy American. I Am." http://t.co/lxU9QHeDrY— Eddy Elfenbein (@EddyElfenbein) November 27, 2013
Bloomberg writes about the recovering housing market:
The number of Americans who owe more on their mortgages than their homes are worth fell at the fastest pace on record in the third quarter as prices rose, a sign supply shortages may ease as more owners are able to sell.The percentage of homes with mortgages that had negative equity dropped to 21 percent from 23.8 percent in the second quarter, according to a report today from Seattle-based Zillow The share of owners with at least 20 percent equity climbed to 60.8 percent from 58.1 percent, making it easier for them to list properties and buy a new place.
Boxed began building its e-commerce platform just six months ago, with a little over $1 million in initial funding. Three months later, it went live with an app for the iPhone (there's now an Android app too but so far, at least, it's not building a shopping website) and a pilot program delivering in New York and New Jersey. It rapidly expanded, and as of a week ago, it can now ship to everywhere in the lower 48 states of the US. Shipping is free on orders of $75 or more, and they are delivered overnight to Philadelphia, Washington DC, Boston, New York and Los Angeles, and within two days to everywhere else.
Following the leaders off a cliff
Mebane Faber writes about the folly of following the great investors:
For example, want to follow Baupost? Great idea, top 10 holdings beat the markets but about 9% a year since 2000. Want to follow Baupost's top holding? BAD IDEA. Returns -0.9% a year, over 4% a year worse than the S&P.
Want to follow Warren? About the same difference, 9% a year.
Across 20 of my favorite managers since 2000, investing in the top 1 idea underperforms investing in the top 10 ideas by 4% a year. Massively bad idea. 70% of the funds top holding clone underperforms the top 10.
Enjoy your weekend.