November 2016

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My favorite quote about criticism

Here is my favorite quote about criticism: To avoid criticism, say nothing, do nothing, be nothing. This quote has been mistakenly attributed to Aristotle. The fair credit should go to Elbert Hubbard. I saw the quote for the very first time last week. Someone posted it on LinkedIn, linking it to Aristotle. I loved the
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Big banks are uniquely dangerous

Before we jump into banking, let’s start with a personal example. Say you make $50,000 per year. What are some of your biggest expenses? You might rent an apartment. You might buy or lease a small sedan. You might buy a big flat screen television. There are plenty of other one off items you might
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This is how the Minneapolis fed wants to break up the big banks

On Wednesday, the Federal Reserve Bank of Minneapolis proposed a plan for breaking up the big banks. What’s the focal point of the plan? Much more aggressive capital requirements. Capital requirements 101 “Capital requirements” sounds fancy. But the concept is simple. Every business has a balance sheet. On the balance sheet, you’ll find assets and
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Innovation in commercial banking is doomed because the upside is so limited

Think about a commercial bank, the kind you see sprinkled throughout most large cities. Its business model has two parts: accepting deposits and issuing loans. The key to a commercial bank as a business is that it pays less to depositors than it collects from borrowers, in the form of interest. Commercial banks are commodity
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A headline about Amazon that should scare scientists and engineers

“Amazon stock tanks after disappointing profit” That’s the headline. The article is about Amazon’s most recent quarterly financial performance. You can see what happened to Amazon’s profitability by looking at one of its own charts: Earnings sank, after three consecutive quarters of growth. Investors hate that. Rewind the clock in your head. Imagine you’re anxiously awaiting Amazon’s
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My interview with Mark Miller, Libertarian candidate for Texas Railroad Commissioner

Mark Miller is a petroleum engineer. He has a PhD from Stanford. He taught at The University of Texas at Austin for 18 years. And he worked in different capacities across the oil and gas industry. He’s also the Libertarian candidate for Texas Railroad Commissioner. Why is an oil and gas guy running for Railroad
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How does Goldman Sachs make money?

A couple of weeks ago, Goldman Sachs reported its most recent quarterly financial performance. In short, the company did great. It smashed expectations for both revenue and earnings. In the beaten down world of financial services, this kind of news is especially good. It’s one thing to celebrate a good quarter. It’s another thing to
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