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Written by L. M. Lloyd
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Tuesday, 24 May 2011 00:31 |
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In a previous article, I explained how one aspect of the stock market works, in the plainest language I could. After talking to a few people, I realized that there was another, more basic function of the market, that a lot of people are confused about, and that is shorting stocks, or selling short. A lot of people don't really understand how you make money off of a stock losing money. In fact, it is very counter-intuitive (at least to honest people), so I want to try to illustrate it as simply as possible, with as little Wall Street jargon as I can. It really isn't that complicated, but the way people talk about it makes it seem a lot more cryptic than it really is. So, let's look at how you 'short' a sale. Say you are a camera buff, and have lots of friends who are camera buffs and professional photographers. One of your friends has so much equipment, he could never use even half of it. He has one lens in particular, that you are really interested in. The reason you are interested, is because it sells on Ebay for as much as $2,000, but you have heard a rumor that it is about to be replaced by a newer, better version. You know that when the new lens is released, the value of the current lens will drop through the floor, because everyone will be selling them to get the new one. So, you get an idea. You get your friend to rent you his lens for $10 a month, with the promise that after a set amount of time, for this example let's say three months, you will return it (or one just like it if something happens to it) to his collection. As soon as he rents it to you, it immediately goes up on your Ebay page for sale, and you end up getting $2,000 for it. Two months later, the new lens you heard rumors about comes out, just like you hoped it would. As you predicted, the old lens plummets in value, as everyone unloads them, and you are able to buy one for $500. You then return the $500 replacement to your friend, and walk away having made $1,500 on your $30 rental fee. You have just completed your first successful short. |
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Last Updated ( Tuesday, 24 May 2011 02:06 )
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Written by L. M. Lloyd
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Friday, 20 May 2011 05:35 |
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Ok, I've been doing a lot of research on the financial sector, and what caused the financial collapse a couple years ago, and I think there is something I need to explain, because people seem to have a fundamental misunderstanding about what really happened, and what caused it. Now, this is all pretty complicated, so to try and make it clear, I'm instead going to create a hypothetical situation, which illustrates the problem, instead of going into details about Credit Default Swaps, Collateralized Debt Obligations, and all that sort of thing.
So, say you are really hungry, but you don't have any money until payday a week from now. So, you get an idea that you will go to one of those restaurants that will give you the meal on the house, if you can finish their giant steak. Of course, you don't want to get in trouble if you can't finish it, so you ask a friend of yours to loan you the money for the dinner, just for the night, and promise you will give it back to him tomorrow, plus another buck on payday, just for the trouble of loaning you the money. You are pretty sure you can eat the whole steak, at which point the meal will be free, and you can give your friend his money back, and even if you can't the worst that happens, is you pay him back everything on payday. Still, to put his mind at ease, you tell him that if for some reason you can't pay it tomorrow, then you will give him a dollar for every day you don't pay him back. So far, so good, right? Your friend likes the deal, because no matter what, he gets extra money, and if you keep his money longer than you promised, he actually makes more than if you pay it when you say you are going to. As long as you don't lose your job, or welsh on the deal, then everything is good. Nothing too complicated.
So, you go to the restaurant, you eat your meal, and let's say you don't actually finish it, and have to take a little longer paying your friend back. No big deal. You pay him back, and he is happy with the money he got. Normally, this would be the end of it. However, he happens to have a friend who is a natural born trader, who notices that he got a pretty good return on investment, and thinks there has to be a way to turn this into a real revenue stream. So, he starts taking out ads in papers, offering to provide this same service to anyone. He quickly learns that he needs to be careful who he offers to do this for, but on the whole, he makes money at it. Enough money, in fact, that he sets up a company to do this, and starts hiring people. Pretty soon, there are competitors, and several companies vying for this business of making loans to people to cover their meals, for an interest rate. Problem is, there is plenty of demand, after all everybody needs to eat, and everybody is short of cash once in a while, but there are a limited number of people who are a safe-enough bet, that you aren't going to lose your shirt. Because unlike a friend, they have a lot less reason to actually pay the business back. So, all the companies trying to do it, are basically trying to go after the same safe customers.
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Last Updated ( Friday, 20 May 2011 05:46 )
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Written by L. M. Lloyd
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Friday, 08 April 2011 10:40 |
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When Android started out, it was treated as little more than a joke. A great many people dismissed it as an irrelevant experiment, by a company blindly casting around for any way to grow their business beyond their core competencies of search and advertising. Back then, Android's claim to openness was undisputed, and treated if anything, as one of the many reasons not to take it seriously as a contender, because it was so clearly some wrong-headed amateur hour OS, from a company who didn't 'get' the market. Now it is the predominant smartphone OS in the world, and practically all anyone can talk about is whether or not it is really “open.” Problem is, that is a trick question, and it can't be answered, until you figure out what is really meant by the people asking it. Open is a vague word, that can mean many different things, depending on your point of view, and for the most part, anyone asking if Android is open, is doing it more as a ploy to forward an agenda, than as a serious question.
To get the actual technical question out of the way, Android’s source code is open. You can go right now, download it yourself, and start working on your own version of Android. It might not be the up-to-the minute latest version, but it is still, undeniably, the source code of the OS, there for you to use how you see fit, with no restrictions. You can design your own device around it, and distribute that device in any way you wish, without having to ask permission from a single person, or pay a single license fee. That, in and of itself, is a radically different model from a great many software products, and to most people, meets the minimum requirement by which you can reasonably claim your software is open.
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Last Updated ( Friday, 20 May 2011 05:39 )
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Written by L. M. Lloyd
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Thursday, 07 April 2011 02:15 |
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When I was a teenager, and the Soviet Union was still around, I used to regale people with hyperbolic tales of a dystopian future, which I was sure was what lay down the path for America. I would plead with people to recognize the little things, which were the first baby steps toward a society that was the antithesis of everything people said set America apart from the "evil empire" of the USSR. I talked a lot about slippery slopes, and unintended consequences to well meaning laws. I carried predictable trends to absurd extremes, to try and illustrate a point. Yet never did I actually expect those dark scare tactics to be so oddly prophetic. I never actually expected that America would become a country with tens of thousands of state video surveillance cameras at intersection, or where the state would charge you fines for not living a 'healthy-enough lifestyle', or where smoking a cigarette was illegal. Sure, I might have told people they could look forward to a future where they couldn't board a plane, train or bus without presenting their papers, but I didn't actually expect it to happen. I certainly never seriously predicted that America would become a secure Homeland, where citizens were denied the right to travel because their name was on a suspicious persons list, or where women are required to be felt up before they are allowed to get on a plane. Even in my most elaborate Kafkaesque vision, I never expected the state to issue software for handheld computers to aid citizens in informing on their neighbors. I never even imagined that the US would have more of its citizens incarcerated than any other nation on Earth. It never occurred to me that people would be arrested for exercising their first amendment rights without a permit, or that American citizens would only be able to gather, under the watchful eye of armed troops in full body armor. No, I never actually expected the bleak reality of my imagination, to become the world I actually lived in. The reason I never expected it to actually happen, even though I could see the writing on the wall, was because deep down, I really believed that once it became blatant enough for the average American to notice, they wouldn't stand for it. I believed that Americans were, by nature, freedom-loving people, with a healthy mistrust of authority. The very reason for all my dreary prognostications of doom and gloom, was because I honestly believed that if you could just shock people into seeing the disconnect between the rhetoric of freedom, and the developing reality, then they would snap out of it, and choose liberty over oppression. I thought that ingrained in the American psyche, was the idea that it was better for a hundred criminals to go free, than for one innocent man to be imprisoned. I had always taken it as a comforting article of faith, that Americans were the ones who would purposely do the stupid thing they knew was bad for them, rather than submit to to someone telling them they had to do what was good for them. I had never questioned that Americans were the people who would die to protect your right to say the most offensive shit imaginable, no matter how much they hated you for saying it. In my imagination, Americans were the type of people who would go back to a barter economy, before they would stand for businesses reporting their cash transactions to the FBI. In short, I apparently completely misjudged the culture in which I grew up. |
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Last Updated ( Friday, 08 April 2011 10:43 )
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Written by L. M. Lloyd
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Wednesday, 16 February 2011 05:32 |
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I was reading a fascinating interview a Facebook friend sent me, and started to reply to him, but realized it was a long enough topic to deserve a post. One of the things I saw mentioned in the interview, was a concern, which I have heard voiced quite a bit around the world, that people fear 'the Internet' will soon be under siege by corporate forces, who will seek to "own and control it." Now I don't know if it is because I have actually been involved in the Internet industry for so long, or if it is because I am American, and we have a bit of a head start on a lot of the world when it comes to the Internet, but for whatever reason, my perspective puts me in the unenviable position of delivering an uncomfortable message to the everyone. I'm afraid that fight already happened around the turn of the century, and the corporations already won. I think there is a fundamental misunderstanding around the world, of what kind of control corporations want from the Internet, which is probably the reason people don't understand that they already own everything on the Internet. See, corporations don't want to keep people off the Internet, they don't want to decide who does or doesn't use the Internet, they don't want to control what you do on the Internet. They want three simple things. - To convince as many users as possible that their service is essential to their life.
- To use this perception to raise their stock valuation.
- To find a way to monetize as much of their user's lives as possible.
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Last Updated ( Thursday, 07 April 2011 06:14 )
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