Today, hedge fund bigwigs Bill Ackman and Carl Icahn delivered the most engaging TV smackdown in recent memory on CNBC.
Here's a story about two hedge funders who hate each other. It's also a story about whether or not a multi-billion-dollar nutrient company is actually a pyramid scheme.
Back in December, activist investor Bill Ackman gave the Powerpoint presentation to end all Powerpoint presentations -- it was 342 slides long -- about why he thought Herbalife, a company better known for weight-loss shakes and other assorted non-goodies, was doomed. The 1-slide version of his argument is that its web of distributors make more from recruiting new distributors than they do from actually selling products, making it less an Amway-style legal pyramid scheme, and more an illegal one. Ackman went short the stock -- in other words, he bet its price would go down by selling high and trying to buy low -- and very publicly said he expected it to go to zero.
Betting against a stock is a bit more involved than betting on it, because you can't exactly bet against something you own. Short-sellers have to first borrow the stock, then sell it, and hope to buy it back later at a lower price before returning it to the original owner. It's a risky game -- the stock can only go down so far, but it can go up an unlimited amount -- and Ackman seems to be playing a particularly risky version of it. He's short roughly 20 percent of the outstanding shares, which means he'll have a lot of stock to buy back that he might have trouble finding if, say, the price goes up and he tries to cut his losses.
That brings us to the billionaire battle. Activist investors aren't always the best of friends, and that's certainly the case when it comes to Carl Icahn and Bill Ackman. The two of them fought a seven-year legal battle over whether Icahn owed Ackman $4.5 million, a relative pittance in the rarefied air of Hedgistan, from the 2004 merger-sale of a real estate company -- a battle that Ackman ultimately won. That bad blood has carried over to Herbalife. Icahn thinks Ackman is just using his big media profile to make an easy buck manipulating the stock down, and that he's doing so in a way that could leave him very exposed. If other investors buy the stock for the express purpose of hurting his trade, Ackman might have to cover his large short position, which would send the stock racing up in a so-called "short-squeeze". Now, it's not clear Icahn is doing this ... but it certainly seems like a good bet.
Another good bet is that watching the two of them got at it on live television would be magical. It was. CNBC had the pair on, as you can see in the video below, and Icahn did not disappoint. This was tough, but here are his seven craziest quotes.
"I want to say what I want to say, and I'm not going to talk about my Herbalife position because you want to bully me ... So let's start with what I want to say. Ackman is a liar."
Discourse even more elevated.
"He wanted to have dinner once with me, and I had dinner with me. And I'll tell you, I laughed. I couldn't figure out if he was the sanctimonious guy I ever met in my life or the most arrogant."
Do these have to be mutually exclusive?
"I wouldn't have an investment with Ackman if you paid me to do it; if Ackman paid me to do it .... As far as I'm concerned, the guy is a major loser. You know, Disraeli once said, Disraeli once said about somebody that spoke in the Parliament, a young guy that spoke in the Parliament, 'Young man, I'd be happy if I could be as sure about one thing in my life as you are sure of everything.'"
"Ackman did it, look at the timing. Ackman did it with a week to go, or a month to go before he had to show his results. His results were bad for 2012, and this got his results up double, so he could get fees for himself. And then he talks about [giving these profits to] charity. That's complete bulls***."
Oops, live TV!
"I never said that I want to be friends with you Bill. I wouldn't be friends with you. And you said to me, you'd like to be friends so we could invest together .... I wouldn't invest with you if you were the last man on earth."
"I appreciate, Bill, that you called me a great investor. I thank you for that. Unfortunately, I can't say the same for you."
Give this man a mic to drop.
Okay, that was fun, but it's time for a serious point. Markets are mostly efficient, except when they're not. As Keynes, who knew a thing or two about picking stocks, pointed out, the market can be a bit like a newspaper beauty contest where you pick the six prettiest faces from a list of 100, and the winner is the one whose picks come closest to the most popular of the combined picks. But this means your optimal strategy is picking the faces you think other people think are the prettiest, not the ones you think are the prettiest. In other words, you're betting based on the crowd, and not the "fundamentals". It's the same with stocks, even before we consider hedge fund billionaires using a nutrient supplement company's stock to settle their grudge match.
Or, as Disraeli might have said, there are lies, damn lies, and efficient markets.
"[Ackman's] like the crybaby in the schoolyard. You know, I went to a tough school in Queens, and they used to beat up the little Jewish boys. And [Ackman] was like one of these little Jewish boys, crying that the world was taking advantage of him."
President-elect Donald Trump has committed a sharp breach of protocol—one that underscores just how weird some important protocols are.
Updated on December 2 at 7:49 p.m.
It’s hardly remembered now, having been overshadowed a few months later on September 11, but the George W. Bush administration’s first foreign-policy crisis came in the South China Sea. On April 1, 2001, a U.S. Navy surveillance plane collided with a Chinese jet near Hainan Island. The pilot of the Chinese jet was killed, and the American plane was forced to land and its crew was held hostage for 11 days, until a diplomatic agreement was worked out. Sino-American relations remained tense for some time.
Unlike Bush, Donald Trump didn’t need to wait to be inaugurated to set off a crisis in the relationship. He managed that on Friday, with a phone call to the president of Taiwan, Tsai Ing-wen. It’s a sharp breach with protocol, but it’s also just the sort that underscores how weird and incomprehensible some important protocols are.
A professor of cognitive science argues that the world is nothing like the one we experience through our senses.
As we go about our daily lives, we tend to assume that our perceptions—sights, sounds, textures, tastes—are an accurate portrayal of the real world. Sure, when we stop and think about it—or when we find ourselves fooled by a perceptual illusion—we realize with a jolt that what we perceive is never the world directly, but rather our brain’s best guess at what that world is like, a kind of internal simulation of an external reality. Still, we bank on the fact that our simulation is a reasonably decent one. If it wasn’t, wouldn’t evolution have weeded us out by now? The true reality might be forever beyond our reach, but surely our senses give us at least an inkling of what it’s really like.
The Daily Show host was measured, respectful, and challenging in his 26-minute conversation with TheBlaze pundit Tomi Lahren.
Tomi Lahren, the 24-year-old host of Tomi on the conservative cable network TheBlaze, feels like a pundit created by a computer algorithm, someone who primarily exists to say something provocative enough to jump to the top of a Facebook feed. She’s called the Black Lives Matter movement “the new KKK,” partly blamed the 2015 Chattanooga shootings on President Obama’s “Muslim sensitivity,” and declared Colin Kaepernick a “whiny, indulgent, attention-seeking cry-baby.” At a time when such charged political rhetoric feels increasingly like the norm, Lahren stands at one end of a widening gulf—which made her appearance on The Daily Show with Trevor Noah Wednesday night all the more fascinating.
In his first year at The Daily Show, Noah has struggled to distinguish himself in an outrage-driven late-night universe. He has sometimes seemed too flip about the failures of the country’s news media, something his predecessor Jon Stewart made a perennial target. Noah’s 26-minute conversation with Lahren, though, posted in its entirety online, set the kind of tone that Stewart frequently called for throughout his tenure. The segment never turned into a screaming match, but it also avoided platitudes and small-talk. Lahren was unapologetic about her online bombast and leaned into arguments that drew gasps and boos from Noah’s audience, but the host remained steadfastly evenhanded throughout. If Noah was looking for a specific episodethat would help him break out in his crowded field, he may have finally found it.
A single dose of magic mushrooms can make people with severe anxiety and depression better for months, according to a landmark pair of new studies.
The doom hung like an anvil over her head. In 2012, a few years after Carol Vincent was diagnosed with non-Hodgkin lymphoma, she was waiting to see whether her cancer would progress enough to require chemotherapy or radiation. The disease had already done a number on her, inflating lymph nodes on her chin, collar bones, and groin. She battled her symptoms while running her own marketing business. To top it all off, she was going through menopause.
“Life is just pointless stress, and then you die,” she thought. “All I’m doing is sitting here waiting for all this shit to happen.”
When one day at an intersection she mulled whether it would be so bad to get hit by a car, she realized her mental health was almost as depleted as her physical state.
A few weeks ago, I was trying to call Cuba. I got an error message—which, okay, international telephone codes are long and my fingers are clumsy—but the phone oddly started dialing again before I could hang up. A voice answered. It had a British accent and it was reading: “...the moon was shining brightly. The Martians had taken away the excavating-machine…”
Apparently, I had somehow called into an audiobook of The War of the Worlds. Suspicious of my clumsy fingers, I double-checked the number. It was correct (weird), but I tried the number again, figuring that at worst, I’d learn what happened after the Martians took away the excavating machine. This time, I got the initial error message and the call disconnected. No Martians.
One educator’s reform efforts in the early 20th century say a lot about current attacks on the Common Core.
The Common Core math standards have been contentious since they were launched several years ago, with many parents taking to social media to complain about their kids getting incomprehensible homework. Kids are now expected, for example, to explain how multiplication works using the “box” and “lattice” methods. These methods take longer, and are harder to master at first, but have been shown by some research to be more effective than the multiply-and-carry method, particularly for kids who have trouble memorizing things. And while they may be new for this generation of parents, they have been around since at least the 13th century.
The research and philosophy behind the new math standards aren’t new either: They mirror the ideas espoused by the Mathematical Association of America’s National Committee on Mathematical Requirements, which formed in 1916 and put together a plan to reform math education in the United States. Until then, math education consisted of few attempts at helping students reach a deeper understanding. One impetus for reform was that, while the country had become a leader in technological and industrial innovation in the early 20th century, and while more students were taking algebra and geometry than before, many of its schools had yet to be as sophisticated or academically rigorous as those in Europe.
This week, the U.S. president-elect spoke with the Pakistani prime minister and, according to the Pakistani government’s account of the conversation, delivered the following message: Everything is awesome. It was, arguably, the most surprising presidential phone call since George H.W. Bush got pranked by that pretend Iranian president.
Pakistan, Donald Trump reportedly told Nawaz Sharif, is a “fantastic” country full of “fantastic” people that he “would love” to visit as president. Sharif was described as “terrific.” Pakistanis “are one of the most intelligent people,” Trump allegedly added. “I am ready and willing to play any role that you want me to play to address and find solutions to the outstanding problems.”
Critics say she failed to energize the Democratic base. But vote totals show her biggest shortcomings were in counties that opposed Barack Obama the most.
It now seems likely that Hillary Clinton will get fewer votes than Barack Obama did in 2012. More distressingly for Democrats, she fared worse in Democratic-leaning cities that anchor swing states, including Detroit, Cleveland, and Milwaukee. To critics on the left, that’s evidence of a campaign that dragged its feet, and a candidate who took her base for granted. Her defeat, in their minds, was an unforced error.
But the numbers show something different. There’s no question Clinton faltered in some Democratic cities, but the gaps between her haul and Obama’s in those locations were modest. The vast majority of her deficit came instead from counties that Obama lost in 2012: They didn’t like him, but they really hated her.
The mechanics of stripping empiricism out of America’s regulatory systems
In September, the U.S. Food and Drug Administration banned 19 common chemicals from common antibacterial washes, because manufacturers hadn’t shown that they were safe in the long run, or any better than plain soap and water. In October, the Environmental Protection Agency (EPA) updated a rule forcing dozens of states to reduce levels of ozone and other air pollutants coming out of power plants—a move that would protect hundreds of millions of Americans from lung diseases. In the same month, the EPA and the United National Highway Traffic Safety Administration enacted a rule that limits the carbon dioxide emissions from heavy-duty vehicles like trucks and tractors.
In a few months, these regulations could vanish, along with over 100 others designed to protect the health, safety, and welfare of Americans.
A man who will literally have life and death power over much of humanity seems not to understand or care about the difference between truth and lies. Is there any way for democratic institutions to cope? This is our topic in the post-Thanksgiving week.
Being back in China in the U.S.-election aftermath naturally leads to thoughts about how societies function when there is no agreed-on version of “reality,” public knowledge, or news.
We take for granted that this was a challenge for Soviet citizens back in the Cold War days, when they relied on samizdat for non-government-authorized reports and criticisms. Obviously it’s a big issue for China’s public now. But its most consequential effects could be those the United States is undergoing, which have led to the elevation of the least prepared, most temperamentally unfit, least public-spirited person ever to assume the powers of the U.S. presidency.