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."
Long after research contradicts common medical practices, patients continue to demand them and physicians continue to deliver. The result is an epidemic of unnecessary and unhelpful treatments.
First, listen to the story with the happy ending: At 61, the executive was in excellent health. His blood pressure was a bit high, but everything else looked good, and he exercised regularly. Then he had a scare. He went for a brisk post-lunch walk on a cool winter day, and his chest began to hurt. Back inside his office, he sat down, and the pain disappeared as quickly as it had come.
That night, he thought more about it: middle-aged man, high blood pressure, stressful job, chest discomfort. The next day, he went to a local emergency department. Doctors determined that the man had not suffered a heart attack and that the electrical activity of his heart was completely normal. All signs suggested that the executive had stable angina—chest pain that occurs when the heart muscle is getting less blood-borne oxygen than it needs, often because an artery is partially blocked.
Two historians weigh in on how to understand the new administration, press relations, and this moment in political time.
The election of Donald Trump, and the early days of his presidency, have driven many Americans to rummage through history in search of context and understanding. Trump himself has been compared to historical figures ranging from Ronald Reagan to Henry Ford, and from Andrew Jackson to Benito Mussolini. His steps have been condemned as unprecedented by his critics, and praised as historic by his supporters.
To place contemporary events in perspective, we turned to a pair of historians of the United States. Julian Zelizer is a professor of history and public affairs at Princeton University. He is the author, most recently, of The Fierce Urgency of Now: Lyndon Johnson, Congress, and the Battle for the Great Society. Morton Keller is a professor emeritus of history at Brandeis University. He has written or edited more than 15 books, including Obama’s Time: A History. They’ll be exchanging views periodically on how to understand Trump, his presidency, and this moment in political time. —Yoni Appelbaum
Plagues, revolutions, massive wars, collapsed states—these are what reliably reduce economic disparities.
Calls to make America great again hark back to a time when income inequality receded even as the economy boomed and the middle class expanded. Yet it is all too easy to forget just how deeply this newfound equality was rooted in the cataclysm of the world wars.
The pressures of total war became a uniquely powerful catalyst of equalizing reform, spurring unionization, extensions of voting rights, and the creation of the welfare state. During and after wartime, aggressive government intervention in the private sector and disruptions to capital holdings wiped out upper-class wealth and funneled resources to workers; even in countries that escaped physical devastation and crippling inflation, marginal tax rates surged upward. Concentrated for the most part between 1914 and 1945, this “Great Compression” (as economists call it) of inequality took several more decades to fully run its course across the developed world until the 1970s and 1980s, when it stalled and began to go into reverse.
A $100 million gangster epic starring Robert De Niro, Al Pacino, and Joe Pesci has become too risky a proposition for major studios.
Martin Scorsese’s next project, The Irishman, is as close as you can get to a box-office guarantee for the famed director. It’s a gangster film based on a best-selling book about a mob hitman who claimed to have a part in the legendary disappearance of the union boss Jimmy Hoffa. Robert De Niro is attached to play the hitman, Al Pacino will star as Hoffa, and Scorsese favorites Joe Pesci and Harvey Keitel are also on board. After Scorsese branched into more esoteric territory this year with Silence, a meditative exploration of faith and Catholicism, The Irishman sounds like a highly bankable project—the kind studios love. And yet, the film is going to Netflix, which will bankroll its $100 million budget and distribute it around the world on the company’s streaming service.
“The question confronting us as a nation is as consequential as any we have faced since the late 1940s,” a group of Republican and Democratic experts write.
Ben Rhodes, one of Barack Obama’s top advisers, once dismissed the American foreign-policy establishment—those ex-government officials and think-tank scholars and journalists in Washington, D.C. who advocate for a particular vision of assertive U.S. leadership in the world—as the “Blob.” Donald Trump had harsher words. As a presidential candidate, he vowed never to take advice on international affairs from “those who have perfect resumes but very little to brag about except responsibility for a long history of failed policies and continued losses at war.” Both men pointed to one of the Beltway establishment’s more glaring errors: support for the war in Iraq.
Now the Blob is fighting back. The “establishment” has been unfairly “kicked around,” said Robert Kagan, a senior fellow at the Brookings Institution and former official in the Reagan administration. As World War II gave way to the Cold War, President Harry Truman and his secretary of state, Dean Acheson, “invented a foreign policy and sold it successfully to the American people. That’s what containment was and that’s what the Truman Doctrine was. … That was the foreign-policy establishment.” During that period, the U.S. government also helped create a system for restoring order to a world riven by war and economic crisis. That system, which evolved over the course of the Cold War and post-Cold War period, includes an open international economy; U.S. military and diplomatic alliances in Asia, Europe, and the Middle East; and liberal rules and institutions (human rights, the United Nations, and so on).
In late 2015, in the Chilean desert, astronomers pointed a telescope at a faint, nearby star known as ared dwarf. Amid the star’s dim infrared glow, they spotted periodic dips, a telltale sign that something was passing in front of it, blocking its light every so often. Last summer, the astronomers concluded the mysterious dimming came from three Earth-sized planets—and that they were orbiting in the star’s temperate zone, where temperatures are not too hot, and not too cold, but just right for liquid water, and maybe even life.
This was an important find. Scientists for years had focused on stars like our sun in their search for potentially habitable planets outside our solar system. Red dwarfs, smaller and cooler than the sun, were thought to create inhospitable conditions. They’re also harder to see, detectable by infrared rather than visible light. But the astronomers aimed hundreds of hours worth of observations at this dwarf, known as TRAPPIST-1 anyway, using ground-based telescopes around the world and NASA’s Spitzer Space Telescope.
Neither truck drivers nor bankers would put up with a system like the one that influences medical residents’ schedules.
The path to becoming a doctor is notoriously difficult. Following pre-med studies and four years of medical school, freshly minted M.D.s must spend anywhere from three to seven years (depending on their chosen specialty) training as “residents” at an established teaching hospital. Medical residencies are institutional apprenticeships—and are therefore structured to serve the dual, often dueling, aims of training the profession’s next generation and minding the hospital’s labor needs.
How to manage this tension between “education and service” is a perennial question of residency training, according to Janis Orlowski, the chief health-care officer of the Association of American Medical Colleges (AAMC). Orlowski says that the amount of menial labor residents are required to perform, known in the profession as “scut work,” has decreased "tremendously" since she was a resident in the 1980s. But she acknowledges that even "institutions that are committed to education … constantly struggle with this,” trying to stay on the right side of the boundary between training and taking advantage of residents.
You can tell a lot about a person from how they react to something.
That’s why Facebook’s various “Like” buttons are so powerful. Clicking a reaction icon isn’t just a way to register an emotional response, it’s also a way for Facebook to refine its sense of who you are. So when you “Love” a photo of a friend’s baby, and click “Angry” on an article about the New England Patriots winning the Super Bowl, you’re training Facebook to see you a certain way: You are a person who seems to love babies and hate Tom Brady.
The more you click, the more sophisticated Facebook’s idea of who you are becomes. (Remember: Although the reaction choices seem limited now—Like, Love, Haha, Wow, Sad, or Angry—up until around this time last year, there was only a “Like” button.)
When my wife was struck by mysterious, debilitating symptoms, our trip to the ER revealed the sexism inherent in emergency treatment.
Early on a Wednesday morning, I heard an anguished cry—then silence.
I rushed into the bedroom and watched my wife, Rachel, stumble from the bathroom, doubled over, hugging herself in pain.
“Something’s wrong,” she gasped.
This scared me. Rachel’s not the type to sound the alarm over every pinch or twinge. She cut her finger badly once, when we lived in Iowa City, and joked all the way to Mercy Hospital as the rag wrapped around the wound reddened with her blood. Once, hobbled by a training injury in the days before a marathon, she limped across the finish line anyway.
So when I saw Rachel collapse on our bed, her hands grasping and ungrasping like an infant’s, I called the ambulance. I gave the dispatcher our address, then helped my wife to the bathroom to vomit.
High-school textbooks too often gloss over the American government’s oppression of racial minorities.
Earlier this month, McGraw Hill found itself at the center of some rather embarrassing press after a photo showing a page from one of its high-school world-geography textbooks was disseminated on social media. The page features a seemingly innocuous polychromatic map of the United States, broken up into thousands of counties, as part of a lesson on the country’s immigration patterns: Different colors correspond with various ancestral groups, and the color assigned to each county indicates its largest ethnic representation. The page is scarce on words aside from an introductory summary and three text bubbles explaining specific trends—for example, that Mexico accounts for the largest share of U.S. immigrants today.