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For people interested in finance and technology, trading, investing, technical analysis, history of finance, behavioral finance

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06/08/17Guess how much it costs to withdraw bitcoin from a major exchange now, due to rising mining fees #

Adrian Scott

Guess how much it costs to withdraw bitcoin from a major exchange now, due to rising mining fees

by Adrian Scott, Ph.D.

Kraken, a major cryptocurrency exchange, now charges 0.0025 bitcoin, approximately $7 US ($6.75 at $2700 per bitcoin) to withdraw or transfer out bitcoin, in a sign of rising bitcoin transaction costs due to rising fees required to get miners to post the transaction to the bitcoin blockchain on a timely basis. Guess what this means for micro-transaction feasibility...

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06/03/17Which are the top 3 cryptocurrencies to be aware of #

Adrian Scott

Which are the top 3 cryptocurrencies to be aware of

by Adrian Scott, Ph.D.


1. Bitcoin -- the granddaddy of all, the root of almost all of the cryptocurrency codebases as well, and the market capitalization leader.


2. Ethereum -- key differentiator from an investment standpoint: the ability to spawn new coins via the "Initial Coin Offering" process, also able to do other "smart contracts" and computation


3. Dash -- possibly the next generation Bitcoin, differentiators: lower transaction costs, integrated privacy & quick send capabilities, plus a community and leadership that is executing in an impressive and coherent way, with a protocol that funds its own development and market adoption out of mining fees.



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05/31/17Crypto bubble or not? #

Adrian Scott




So, what do you think, is this a crypto bubble or not?

I'll post my thoughts in a future reply here!

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05/30/17A few interesting links and articles related to cryptocurrencies, digital assets & tokens #

Adrian Scott

Hi gang,

Here are a few links and recent articles that are interesting, related to cryptocurrencies, digital assets & tokens. Enjoy!

Warm regards,

Thoughts on Tokens, by Balaji S. Srinivasan and Naval Ravikant

ShapeShift's new Prism product

Top Digital tokens and their market caps

P.S. And it's always financially healthy to read an article by NN Taleb, here's a great recent one, Intellectual Yet Idiot :)


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06/23/16Web of Finance re-opened to member posts #

Adrian Scott

Hi, I'm now re-opening this Network to welcome members to post.

We welcome interesting posts about finance. Thoughts, perspectives, interesting links, etc. Self-promotional posts are not welcome.

Let the posts begin :)


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11/20/08A History of Money and Banking in the United States: The Colonial Era to World War II #

Adrian Scott

I can't always read a lot of pages at once, but this book is really worth having for an appreciation of history and repeating screw-ups/patterns ;)

A History of Money and Banking in the United States: The Colonial Era to World War II


Discuss this and more at:

Web of Finance Conversation


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09/09/08Statistical reasoning -- is this right or wrong? #

Adrian Scott

I came across this example, quoted in a trading book.
Is the reasoning correct or wrong? ;)

"Example. "Baby boys to baby girls ratio." Consider the following example from research on statistical reasoning (Nisbett, et al., 1987). There are two hospitals: in the first one, 120 babies are born every day, in the other, only 12. On average, the ratio of baby boys to baby girls born every day in each hospital is 50/50. However, one day, in one of those hospitals twice as many baby girls were born as baby boys. In which hospital was it more likely to happen? The answer is obvious for a statistician, but as research shows, not so obvious for a lay person: It is much more likely to happen in the small hospital. The reason for this is that technically speaking, the probability of a random deviation of a particular size (from the population mean), decreases with the increase in the sample size. To index
" -- http://www.statsoft.com/textbook/esc.html

Reply on the Web of Finance Conversation Network:


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09/07/08The Whipsaw Song #

Adrian Scott




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04/12/08Latest from George Soros #

Adrian Scott

A conf call with him:

-- with a few interesting comments re credit default swaps, amongst others

A recent article:

The worst market crisis in 60 years

His new book:

The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means



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12/09/07A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation #

Adrian Scott

Highly worth reading:

A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation

A few good things:

- some great historical perspective on financial market developments, with first-hand experiences recounted

- if you read between the lines, you can extract from this book a system for making nice profits off of the trading units of publicly-traded companies because of the overall management structure (you can see this in action in the current mortgage market situation).

Something to filter out:

- the author can't shake his EMT -- efficient market theory -- bias. This always cracks me up, I'm sorry...

Anyhow, a must read for serious students of the markets and the world.




PS What I alluded to in the last book review is the role of technology in markets... Read the Origin of Wealth, especially if you've let EMT-oriented professors cloud your mind in the past :).

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07/23/07Book recommendation: The Origin of Wealth; Web of Finance reloaded... #

Adrian Scott


I'm rebooting the Web of Finance. I will mainly be posting recommendations of readings, tools and such, along with occasional commentary.

I have created a companion Network for discussion, available at http://financeconv-network.ryze.com/

I will post these posts there, where they can be replied to and discussed.

This post is regarding the book: The Origin of Wealth.

It is quite a read and well worth the price of admission. The great thing is that it discusses the flaws in traditional academic theory and how academic finance and economics took a detour into fantasyland for many years, and discusses how behavioral finance and complexity show how, um, irrational the previous theories were in their assumptions.

But even better than that is how the author combines it all to point out the very good companion to the inefficiency of free markets, which I will disclose in a later post. I haven't seen anyone bring it all together in quite this way. It should be an eye-opener for those who are not sold on free markets.

More details at:



coming soon... Web of Finance Network, the rebirth...

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10/17/04Oracle 4 PeopleSoft #

Melanie Hollands

Now that Craig Conway's been fired from PeopleSoft, it isn't the shareholders that count now - it's THE shareholder: Dave Duffield.

I don't know what Dave (the founder of PeopleSoft) wants with regard to the Oracle bid - he might want the deal to go through but I sort of doubt it (it probably would already have happened if he did). All the folks that I pinged to see what they knew did not answer back. My guess is they don't know either.

Dave, despite his calculated nice guy exterior (his email address, harkening back to when PeopleSoft was small enough that everyone used their initials, is dad@peoplesoft.com) is a hard hitter. It's more likely he grew tired of Craig's style after three years as CEO and wanted someone else to run his company - someone like, uh, him.

Craig is walking out with about $100 million in stock (not sure what his cost basis is) and options worth a pile too. He might not be able to afford the G-V (mogul lingo for Gulfstream Five) time-share, but something a little smaller is certainly affordable. Who knows - maybe Larry Ellison would hire him.

PeopleSoft went through a wrenching moment in 1998 as it started into the post Y2K abyss. There was a huge battle over whether it should continue spending money on R&D and let the earnings go to hell or not. The company compromised and created "Momentum Business Applications", the clever off-income-statement device that would never be allowed today. I never did find out where Dave stood on that issue – but it would be a good clue as to what he wants to do now.

It’s interesting as the company also indicated what the revenues would be – it had to because otherwise everyone would have assumed Craig was getting the axe because of a revenue shortfall. I was using $160 million for the current quarter's license revenues - $20 million higher than the highest analyst number on the Street, and closer than anyone to the actual number. If I were to grow horns and be a sell side analyst once again I never would have used that number because there was nothing in it for me especially if I was neutral on the stock. (Neutral and a way high number would ensure that Cap Research would not have given me a vote for another five years.) I probably would have been at $140 million, though.

Not sure what's going on at FILE. Couple of analysts dropped their rating going into the last day of the quarter. Interesting to see if they pre announce. If they don't then my guess those guys are wrong and they come in at or above the license revenue median.

The likelihood of Oracle’s hostile bid for PeopleSoft being successful is higher now; all the more so since Oracle plans to ask the chancery court in Delaware to remove two “poison pills” in PeopleSoft’s capital structure. Oracle claims these poison pills have been used by PeopleSoft to block its $7.7 billion bid at the expense of PeopleSoft’s shareholders.

A poison pill (also called a poison pill defense) is a slang term for a finance tactic a company can use to defend itself against a hostile takeover. Usually, the poison pill takes the form of an issue of convertible preferred stock issued as a stock dividend to shareholders. This preferred stock is convertible into a number of common shares, but due to the dividend adjustments shareholders don’t have incentive to convert the preferred stock unless there is a hostile takeover. Consequently, the hostile bid (such as Oracle’s) becomes its own poison pill since it significantly increases the price that would need to be paid for the target company (PeopleSoft).

Former PeopleSoft CEO, Craig Conway's vehement opposition to Oracle’s tender offer has brought criticism from Oracle, as well as some quarters of the investment community. Some believe Conway should not have rejected the offer on the day it was launched and before the PeopleSoft board of directors had had time to consider it. I have argued in this column that I think the merger is bad for the ERP business, and that it’s unlikely to go through (although it looks more likely now); but I have also argued that from a purely financial perspective Oracle’s offer makes sense for PSFT shareholders - $21 per share is considerably more than the company is worth (around $16 per share, tops in my opinion).

Speculation has been rife that Conway was fired due to his opposition to the bid. However, when he was fired PeopleSoft said that it had lost confidence in him as CEO, despite the fact that management also disclosed that sales of PeopleSoft’s new software licenses for the current quarter were (so far) higher than expected.

The market reacted favorably to news of Conway’s firing and PSFT shares jumped nearly 15% on Friday, October 1. In addition, news that the Department of Justice would not appeal against the August court ruling that overturned efforts to block a takeover on antitrust grounds contributed to the rally in PSFT. The European Union is also expected to drop its opposition to Oracle’s bid.

PeopleSoft's poison pill was one of the company’s last defenses against Oracle’s tender offer. But Oracle has asked the chancery court of Delaware (where many US companies are registered) to overturn two of PeopleSoft's defenses. One is the poison pill, which is essentially a shareholder rights plan put in place as a defense against unwanted takeover attempts. The second is a provision PeopleSoft has been including in its new software sales contracts since 2003 (after Oracle’s bid was announced) that could provide guaranteed compensation to PeopleSoft customers in the event the company is taken over. Aggregate payments to PeopleSoft customers under this provision could exceed $2 billion, which makes a takeover by Oracle less attractive. If one (or both) of these two defense tactics is overruled by the court this could remove the last obstacles to a takeover by Oracle.


Melanie Hollands
Koala Capital, LLC

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09/09/04valuation question #

Erwin Versleijen

Dear fellow Ryzers,

Imagine a company that patented a new technology that is a) faster then UMTS, b) more secure then UMTS/wifi etc and c) also cheaper to operate and use.

For example, Dutch KPN paid over 2B euro for the UMTS frequency and the infrastructure and it's still not ready. The company I represent can do this in the Netherlands for nearly 300M euro... not to mention the huge potential of this technology in other countries.

Reason for asking: we are trying to picture how much an investor should get (capital against shares) and what the value of it all (can be) is. NPV?

Please send me a message instead of using the board. I don't read them that often.

Best regards,
Erwin Versleijen

Managing Partner
LSC Symbiosis

Investors welcome)

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09/04/04re: re: Gold #

Robert Davidson

Dear Robert,

I have tried to reply a couple of times but I think my posts may be being vetoed by the moderator. In short gold is a small market held in place by huge opposing forces of support for the USD and resistance to rising interest rates to meet inflation. If these forces get out of balance then there is the potential for large moves in gold. Generally the movement of the locus of wealth from West to East has been going on for centuaries and will continue but in the medium term (five years) I think we will see a big move as the savers in the East tire of loaning money to the spenders in the west.

Kind Regards


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09/02/04re: re: Gold #

Robert Davidson

Dear Robert

From our viewpoint here in New Zealand we see the locus of wealth generally moving from West to East. Conspiracy theories abound with gold but from the point of view of long term investor they are just winding the rubber band tighter for the inevitable correction.



> Robert Blumen wrote:
> Hi Robert,
>I am curious, if you woulod like to share wiht the Wof, what is your opinion of the recent Sprott report (www.sprott.com) on the long-term manipulation of the gold price by a coalition of central banks?
>Sprott also has spoken about the long-term movement of the world's gold reserves from West to East, as the Western central bankers sell, the Eastern ones buy. I am curious if you have any insight into this from your location in a "western" nation situated nearer to Asia?
>Robert Blumen
>> Robert Davidson wrote:
>> I think gold is in a long term bull market as the reality of the twin deficits in trade and government spending hit home. Long term America and hence the world has a problem.
>>Robert Davidson
>>Datmatrix New Zealand ltd

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09/01/04re: Gold #

Robert Blumen

Hi Robert,

I am curious, if you woulod like to share wiht the Wof, what is your opinion of the recent Sprott report (www.sprott.com) on the long-term manipulation of the gold price by a coalition of central banks?

Sprott also has spoken about the long-term movement of the world's gold reserves from West to East, as the Western central bankers sell, the Eastern ones buy. I am curious if you have any insight into this from your location in a "western" nation situated nearer to Asia?

Robert Blumen

> Robert Davidson wrote:
> I think gold is in a long term bull market as the reality of the twin deficits in trade and government spending hit home. Long term America and hence the world has a problem.
>Robert Davidson
>Datmatrix New Zealand ltd

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08/31/04Gold #

Robert Davidson

I think gold is in a long term bull market as the reality of the twin deficits in trade and government spending hit home. Long term America and hence the world has a problem. Unless some of the hype of the 90's technology boom turns into real productivity gains then the market will have to wait for the next wave of dreams to carry it higher. To be sure some of the technology companies have found a sweet spot and are making real earnings growth but many are just broken dreams waiting for the market to clean them out of its system. In the meantime there will be lots of volitilty which is good for technical traders but for mum and pop investors the outlook in equities is bleak.

Kind Regards

Robert Davidson
Datmatrix New Zealand ltd

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08/08/04book review: Bull's Eye Investing by John Mauldin #

Robert Blumen

Bull's Eye Investing by John Mauldin
Review by Robert Blumen

I didn't expect to like this book quite as much as I did because from time to time I read Mauldin's weekly column, and his macro views are utterly mainstream and conventional, while I am an adherent of the Austrian School of Economics . From an Austrian perspective, he suffers from the usual fallacies about inflation, deflation, the importance of demand rather than savings in driving production, and others.

The book, subtitled Targeting Real Returns in a Smoke and Mirrors Market is a guide to achieving absolute, rather than relative returns in what Mauldin forecasts will be a secular bear market. Relative returns, meaning beating a benchmark such as the S&P 500 Index, are fine for fund managers who manage other peoples' money, but most investors would not be happy with losing ONLY 20% when the benchmark index that their manager uses was down by 25%. Mauldin defines real returns as doing better than you would in cash.

Mauldin spends the first third of the book building a case that stocks are still expensive, they cannot remain expensive forever, the standards of what is expensive have not undergone a fundamental change, and therefore the bear market will run until stocks get to be cheap. By historical standards, this would mean the entire market selling for a P/E of less than 10, and maybe less than that. He comes at the problem from several different angles, combining finance theory and financial history.

The strength and rigor of his analysis is outstanding. Along the way he takes aim at a number of the bullish arguments that defy history and logic in suggesting that stocks can achieve average, or even above-average returns from this point on out.

The strongest part of the book is his ability to take a series of studies that have appeared in academic finance journals and quasi-academic practitioner journals such as the CFA journal and summarize them in clear and simple terms. Here he give the individual investor access to the lastest research about financial markets that would be unavailable to most and difficult to interpret and apply without his thoughtful analysis.

Then he reviews some of the other clouds on the horizon: under-funded pension plans, unrealistic expectations about retirement and the over-valued US$. To more pessimistic people like myself, this all leads to the conclusion that we are headed for an utter financial and economic collapse of devastating proportions. But wild optimist that he is, Mauldin believes that we are in the "muddle-through economy", a period much like the 1970s in which things will be bad relative to the glow of the bubble years, but somehow we will all manage to get by.

A couple of chapters on behavioral finance summarize the work of Montier in this area. The last third of the book, which I did not read in its entirey, deals with Mauldin's strategies for finding value and safety in today's markets.

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05/03/04Google IPO - Buy it, then Flip it ASAP #

Melanie Hollands

On the surface, I like the idea of a Dutch Auction (as opposed to a syndicate allocation) for the Google IPO. It seems like the company is doing well, although I'm sure the valuation will be lunacy - but that’s no surprise considering all the hype its gotten. That said, things that don't deserve to go up don't usually stay up over the long-term. But sometimes, the long-term takes a frustratingly long time to play out.

I see some short-term euphoria coming... and if the banks generate enough enthusiasm, then I can see the retail crowd running the stock up. That said, I think (I hope) the “mom and pops” of the world will not be as easily duped by Wall Street mania as they were in the late 1990s. Then again, there are still a lot of stupid, gullible, hopeful and greedy investors out there. However on balance, I think the market is way more selective than in 1999, and there is more skepticism these days than there was then. Canada recently had a “mini-Google IPO” up there for a new lower-cost oil sands company, and it was over-subscribed by 5,000 times!! Of course, many of those were phantom orders to get an increased allocation, but the stock is now underwater.

I'll also be interested to see how the rest of the Internet names behave after the Google IPO. Will getting this supposedly wonderful market event behind us be the reason to sell them? I’m inclined to think so.

Now, Google and the media have been spounting about the more "egaletarian" benefits to investors of conducting its IPO via Dutch auction, compared with the more usual "allocation to the good old boys" syndicate process.

At first blush, a Dutch auction should be a better reflection of pricing to market. It has a number of positives to it. It removes the distortions caused by the syndicate allocation process. It reduces power of bankers and big favored mutual fund clients. (Why should a few hedge funds and large institutional accounts get to make money just because they are preferred clients?)

But I also think this is a “Be careful what you wish for” situation, as with a Dutch auction there’s some benefit to pricing it cheap and placing with follow on buyers. Personally, I've seen a Dutch auction work both ways. Either the investment banks create a bidding war before the stock starts trading, or the investment banks actually price low and then create the buzz for the offering. It’s difficult because investors (and potential bidders) have to come up with the price for the stocks in advance, essentially.

In addition, there’s all sorts of opportunity for collusion in a Dutch auction; it can get real scummy, like closed bids on a house. Think of it this way: everyone wants the item and nobody knows what the other guy is bidding. If I’m bidding, I come up with price on my spreadsheet analysis; a price that, based on the fundamentals and “likely” market reaction, looks “fair” to me. But in the case of Google, we're talking about a stock here, and the truth of the matter is the damn stocks are worth whatever every other bidder in the market is willing to pay. And what I'm willing to pay would be directly impacted by what I think other people who do what i do are willing to pay. So this can create an artificially high bid price – exploiting investors’ greed.

In an efficient market, and in a perfect world a Dutch auction is the best way to do an IPO. But we don’t live in a perfect world, and I don’t believe that we have an entirely efficient stock market. We live in a world where Mary Meeker has more money than I do, anyone with a PC and a cable modem can trade stocks, Abbey Joseph Cohen is not starving to death and is still employed, CNBC is considered a "news" station and Maria Bartiromo a "reporter", not the obedient compliant cheerleader that she is.

The point here is that it is far from a perfect world or an efficient market and the Dutch auctions are designed to exploit those inefficiencies.

So, does Google trade up after the IPO? Sure. Would I buy it in the aftermarket? No. I'd let it settle and then consider adding. I think the stock may pop a bit because of the media buzz. But too much hype in the news is not a good thing. Google's business seems to be sound and I don't doubt that there will be growth there. That said, the valuations being bandied around in the media are staggeringly ludicrous. And the kinds of valuations that are being talked about in the media about cannot be sustained by a rational market.

The hype on this stock alone would be enough to keep me away. And the "Internet auction" format (an investment banker's nightmare) means that any first day stock price pop will be dampened. If I was so inclined as a hedge fund manager, I might day trade it but I wouldn't expect any long term value increase. I think it's quite likely that the stock sets its all-time high in the first week after the IPO.

So, would I plan to play this one? I’d buy whatever I could get in the IPO or at the opening bell and flip out of it ASAP. But as a long-term hold (long-term meaning in this case anything more than a few days) I wouldn’t touch it.


Melanie Hollands

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04/24/04re: re: VXO and P/C Ratio suggest a rally could be close # #

Steven Poser

Melanie, I largely agree with you, although I can make an argument for a new high, it is a difficult one. To be honest, we are still in a nine-month long mega range in the bond market and we might be stuck in a 6-month or longer range in stocks as well...

> Melanie Hollands wrote:
> Steve,
>You totally got the 1126 level right!
>Actually, the numbers are fascinating on this. During the 2000-2002 bear, if you bought the market only when it was 105% of the 50 DMA and sold when it dropped back below, you were in the mkt 256 days and had a positive return
>of 6.28%. However, if you waited for 110% of the 50 DMA then you were in for 186 days and made 12.79%.
>From this 1124 level, I think we rally up to around 1140 (maybe 1150) and then it putters out. I doubt that we break 1150. A move above there would break the downtrend line - a very important battle. As for what happens from 1140, it depends how it behaves at that level. I think it bounces off and we sell off again.

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