Vonage continues the dance

I wish I could have sold short VG when it bounced up on the DC Federal Court staying the injunction that had stopped VG from recruiting new innocents into their web. It will be very interesting to see if Vonage is still around in a year.

Vonage's latest announcement

So now (April 17) they are making not so thinly veiled threats of bankruptcy...speak and it will be so...Reuters is carrying a story that V's latest SEC filing stated that its legal woes could lead to bankruptcy, plus some other possible endgame events: NYSE delisting, a liquidity crunch and, oh yeah, no more service. (and don't expect any money back)

Deja vu all over again...

What comes next for Vonage...financial troubles lead to departure of CEO followed by retrun of founding CEO. Vonage isn't ENRON but the following quote from a MARCH 11, 2005 Business Week interview with CEO Citron (pre-IPO) when things were still rosy has that Enron-quality of wishful thinking.

"Q: Is the company profitable?
A: It depends on how you look at it. Clearly, we're spending more on marketing than we earn in free cash from the existing user base. For quite some time now, we've been generating free cash from the existing user base, and significant amounts of it. We take that cash and invest it in marketing to get new customers."

It's basically a legal quasi-pyramid scheme...Use current subscribers $ + invested $ to get more customers...(in other words, new customers keep things running for the existing customers.) Unfortunately, those early adopters are getting harder to find and the cost is getting bigger. Oh well, sometimes we're the bug, sometimes we're the windshield. The court order banning new customers is now a tad moot...why would anybody sign up with a company heading for the exits???

Carlyle's hedge fund

I'm guessing every investment bank, exchange, brokerage, private equity firm, hedge fund wants to bring in-house as much of their operations as possible. Thus a Goldman-Sachs runs hedge funds and other trading entities inside the umbrella of the larger company. That way M&A activity, trading schemes, etc. can be pursued away from prying eyes of competitors, regulators, clients, and the financial press

Hedge Funds v. Private Equity

The Carlyle group has just launched a new hedge fund. What does this mean?

Best model for the market?

The primal models: fundamentalism and technicalism
The first contrarian: random walk

the big list: noisy box; chutes and ladders (things come down a lot faster than they go up) ; slapjack (no peeking) ; antique roadshow (at auction I would value this widget at a $zillion) ; ebay (the end is coming)

So if all models have some resemblance to some aspect of the market, how do we know which model to apply? Pick one, any one, and stay with it until you no longer trust its algorithmic (explanatory) power. (A primary goal of any model is to allow the modeler to sleep at night)

Then there is the complicating factor of scaling: models work best at a certain distance from what they are modeling. A random walk down wall street at one scale, looks like a piece of cheese at another.

Is the market a black box?

What if we could only check out our investments once every 10 years? Would this change our behavior? Should we only look in the box at the same pace as our story that got us into the investment?

What I like

Ford: no way, given the political situation, is this company going to go bankrupt...I'm guessing, after GM's experience that the UAW, retirees, and consumers are all going to do what they can to help out. This iconic company has a lot of good pieces, they just need a little time to rearrange the deck chairs.

DorBiopharma: cheap at the price for a company with real products...

Nintendo: ...and the last little piggy went wii, wii, wii all the way home.

Will there be just one social form above subsistence

Large corporations, like government bureaucracies or other large organizations, are not moral entities. They are, however, social contexts that create ethical issues for individuals. Modern American corporations, Caribbean plantations in the 18th century, and European feudal society are all ways of getting stuff done.

Watched pots don't boil

It is important to take a view in sync with the phenomena we are tracking...If we are growing a tree then we check it a couple of times a year; if we are feeding the birds then it may all happen within a minute.

Musical Chairs

A big game in my kindergarten...This was my first exposure of the gray area between cheating and good strategy. At least in the early rounds the idea was to spend as much time as possible by a chair. And most importantly, don't get distracted...expect the music to stop.

Can you believe?

Can you believe the waffling on the future of the markets by the talking heads? I feel like I'm in a car with 19 family members trying to decide where to eat. Minor correction, major correction, recession, yes, no, maybe...From Greenspan and Bernanke down to your co-worker everybody is wondering: what next? Well we all know what next...we just don't know when.