Why Stocks Are Doing So Poorly

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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VictoriaF
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Post by VictoriaF »

torius71 wrote:
VictoriaF wrote:In some fields innovations are very valuable, and hopefully are forthcoming. In other fields innovations are damaging, and hopefully they will be curtailed.

Valuable potential innovations may include:
- education
- stem cell based medicine
- energy
- nanotechnology
- neuroscience applications
- 3D Printing

Damaging ongoing innovations include:
- litigation
- financial engineering
- advertising

Victoria
Roger that,

Victoria
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wander
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Post by wander »

natureexplorer wrote:Apple got lucky.
I do not think Apple invent anything that is better than other companies. However, they focus on human factor well. Average users do not care what technology is built underneath of a phone or any device. All they want is a brand name, nice look, easy to use (even a 3 year old kid can play with an Iphone) and still get what they need from a phone or a device. When I started to use smarphones, I noticed it was easier to use an Iphone than an Android.
I wasn't a fan of mp3 players, but I bought an Itouch so I could watch video, listen to music and browse the web on one device that was small enough to fit in my pocket. And Apple made it synchronization so easy from Itunes library.
Zav
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Post by Zav »

Valuethinker wrote:
Zav wrote:The problem is not innovation, it is incentives. American companies, in fact, most companies, do not have enough incentive to innovate. We live in an investor driven economy. Investors want returns quickly. Unfortunately, innovation is very time consuming, and it is risky.
Really? The standard equipment on a passenger car now vs. 20 years ago (and BMW say innovates even faster).

WalMart and its culture of continuous innovation in logistics?

Track the history of TV from say 'Adam 12' or 'Dragnet' to the verite of 'Hill Street Blues' to the sublime creation that is 'The Wire'? I'd say US TV (via HBO) is incredibly innovative. The complexity of story line, plot, character is Dickensian or Proustian in something like 'The Wire'. All to my mind made possible by 'Hill Street Blues' and by 'Homicide: Life on the Street'. Consider the original Battlestar Galactica (bland morality play with biblical themes) to the remake.

Energy production technology has shown huge innovations. Since GE drove the Combined Cycle Gas Turbine out into the power market in the 1980s, the whole way utilities build power stations has transformed. You can build an 800MW power station now in less than 2 years, in the 1970s just clearing the site would have taken that. Oh and your base thermal efficiency has *doubled* from c. 30% to 55-57%.

Go and plug in a Compact Fluorescent lightbulb (get a Philips 2700K softtone one) or an LED halogen substitute and contemplate how much the ordinary 60 watt bulb has changed in 10 years.

Track the energy efficiency of home appliances. OK fridges: 2000 kwhr pa down to under 400 kwhr pa in about 25 years. That's extraordinary. But I could buy an EU-rated 'AAA' fridge now which would use 40% less energy than my 'A' rated fridge of 4 years ago.

If you poke around the eco building materials market you see some really impressive improvements: triple glazed windows with U values below 1.0 (that's R6 in American: take 1/U value and multiply result by 5.6). Walls down to U 0.1 (that would be R56 in American). Not to mention 'old' technologies like sheep's wool that are making a comeback (they are hygroscopic and so ideal for wet permeable situations).
We really need to change the investor mindset. Focus on long term performance rather than the short term.

I think poor incentives are the primary problem. My colleagues in industry always complain to me about this. In addition, the argument is economically sound; it agrees with what the economic literature has shown: essentially, that the institutions which shape incentives are always at the heart of every problem and solution. Institutions may not play thee role, however, they usually play one of the largest roles.
Institutional Economics is great stuff and I've devoted a lot of personal time to understanding it.

But we still don't really understand:

- why humans form organizations (the Coase theory re Transactions Cost Economics does not really work)

- how organizations work as internal markets

Williamson I must say I find nearly impenetrable- muy bad perhaps.

Economics of Innovation seem, to me, to similarly lack hard, predictive conclusions.

I would say John Roberts in Milgrom and Roberts (out of print now?) and his later Oxford Lectures is the best writer on this.

http://www.amazon.co.uk/Economics-Organ ... 0132246503

http://www.amazon.co.uk/Modern-Firm-Org ... 212&sr=1-5

It seems to me companies in many industries are highly incentivized to innovate.

I agree there are strong barriers to innovation arising from institutions.
I apologize, my post was not clear. When I say innovations, I mean innovations that can provide substantial macro related outcomes, and those that substantially improve workforce productivity.

As you mentioned, we have made good progress with micro innovation. However, the other two are not progressing as well as they could, especially macro innovations.
TheEternalVortex
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Post by TheEternalVortex »

Zav wrote:I apologize, my post was not clear. When I say innovations, I mean innovations that can provide substantial macro related outcomes, and those that substantially improve workforce productivity.
I think software will provide this. We're still in the early days here. Only ~25% of the world has access to the internet. Very few industries have actually made significant use of software to improve efficiency.
SP-diceman
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Post by SP-diceman »

Zav wrote: I apologize, my post was not clear. When I say innovations, I mean innovations that can provide substantial macro related outcomes
Now we need a definition of:"substantial macro related outcomes"

and those that substantially improve workforce productivity.
I thought the problem was increased productivity?
Folks have learned how to do more with less.


Thanks
SP-diceman
Valuethinker
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Post by Valuethinker »

Zav wrote:
I apologize, my post was not clear. When I say innovations, I mean innovations that can provide substantial macro related outcomes, and those that substantially improve workforce productivity.

As you mentioned, we have made good progress with micro innovation. However, the other two are not progressing as well as they could, especially macro innovations.
In the case of natural gas (shale) and CCGT power stations we are talking huge improvements in productivity. A CCGT power station can have a staff of 14, a coal fired station of similar size, over 1000.

I am not sure what a 'macro' and a 'micro' innovation are, but I would argue something like a smartphone is pretty macro. And a Kindle even more so: that's 2 whole industry value chains (publishing and newspapers) that are going to get shattered by Kindle, iPad etc.

Dreamliner is pretty innovative too if you think about it: 20% drop in fuel consumption per passenger, unprecedented ability to fly internationally to non-hub airports.

Productivity is always a tough one, something we understand very little about. But what WalMart did to supply chains in the 90s has been duplicated now by many other companies. Ditto what ETrade and Schwab did. And Dell and Cisco. The McKinsey stuff in 2000 argued that these 3 innovations (WMT in logistics, online stockbroking, computer manufacture) accounted for most of the US productivity growth in the 90s.

Housebuilding btw is an area with significant productivity improvement.

My own bet on the internets, and especially mobile internet, is that we have not even begun to see the impact of that on the economy.

But who, now, could imagine living without Google and its ilk? Oh, there's another industry at death's door-- yellow pages.
Zav
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Post by Zav »

SP-diceman wrote:

I thought the problem was increased productivity?
Folks have learned how to do more with less.
It sorta is, and it sorta is not. Our productivity is increasing, Recently, however, it is more common to see productivity increases via increases in effort (working longer and harder) as opposed to investing in methods which allow us to do more with less. I think we would all agree that it is more common these days to increase net revenues via cutting the labor force and allowing the remainders to pick up the slack.

This is a very simple and effective solution to increasing short-term net revenues. However, it has catastrophic long-term macroeconomic implications.

.....Actually, now that I think about it, I think that I am misinterpreting your statement. Are you saying that our methods are so effective that they are "dummy proof"?


Valuethinker wrote: In the case of natural gas (shale) and CCGT power stations we are talking huge improvements in productivity. A CCGT power station can have a staff of 14, a coal fired station of similar size, over 1000.

I am not sure what a 'macro' and a 'micro' innovation are, but I would argue something like a smartphone is pretty macro. And a Kindle even more so: that's 2 whole industry value chains (publishing and newspapers) that are going to get shattered by Kindle, iPad etc.

Dreamliner is pretty innovative too if you think about it: 20% drop in fuel consumption per passenger, unprecedented ability to fly internationally to non-hub airports.

Productivity is always a tough one, something we understand very little about. But what WalMart did to supply chains in the 90s has been duplicated now by many other companies. Ditto what ETrade and Schwab did. And Dell and Cisco. The McKinsey stuff in 2000 argued that these 3 innovations (WMT in logistics, online stockbroking, computer manufacture) accounted for most of the US productivity growth in the 90s.

Housebuilding btw is an area with significant productivity improvement.

My own bet on the internets, and especially mobile internet, is that we have not even begun to see the impact of that on the economy.

But who, now, could imagine living without Google and its ilk? Oh, there's another industry at death's door-- yellow pages.
Sorry, I am an economist. We tend too assume to much, and one thing we always assume too much is our assumption that everyone readily understands our terms :lol:

A macro innovation is something that is so revolutionary that it completely changes the entire landscape. A good example is a virtually costless energy source or light technology.

I am not saying that these are panaceas. But, they would help substantially.
shelanman
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Post by shelanman »

I'm a software engineer, and I can say with absolute certainty that innovation in my field is being greatly reduced to the present patent disaster.

Patents are being granted -- 4+ years after application (once the tech is in widespread use) on things that are not inventions, weren't new at the time applied for, and issued to companies that don't actually make products involving the so-called invention.

Patents are very expensive to obtain, and the cost of a legal fight (in which the courts make the factually incorrect decision about 50% of the time) is so high that even if you win, you are bankrupt.

Small companies today basically have to sell themselves to larger, entrenched players earlier and for lower prices simply to get "out" before they are destroyed -- since as soon as they have any market success, someone will come along with a $1 Billion lawsuit that means instant death.
Valuethinker
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Post by Valuethinker »

Zav wrote:
Sorry, I am an economist. We tend too assume to much, and one thing we always assume too much is our assumption that everyone readily understands our terms :lol:

A macro innovation is something that is so revolutionary that it completely changes the entire landscape. A good example is a virtually costless energy source or light technology.

I am not saying that these are panaceas. But, they would help substantially.
Now I am really confused. Economists AFAIK do not distinguish between 'macro' and 'micro' innovations. All innovations are 'micro'.

We have instantaneous and virtually costless telecommunications. *that* is an incredible innovation over 50 years ago. Over even 25 years ago in fact-- the cost of a long distance call has fallen by 90-100% (100% fall if we consider Skype).

Light technology has increased more or less 10 fold in 20 years. That's pretty damned good.

Even a highly mature technology like the motor car is 30-50% more efficient than it was 20 years ago. That improvement has manifested itself as greater horsepower and acceleration, and a greater degree of standard equipment (airbags, ESC, anti lock brakes, stereos, air con etc.) but it's there. The hedonic improvements are massive.

Artificial joint replacements are commonplace now, contrast that to 25 years ago. Or heart bypasses.

Think about online stockbroking, or banking, or WalMart's distribution chain. Compare that to 30 years ago.

Or just universal bar coding. And now, you can scan a bar code in a store, and order the same item off the web at a cheaper price.

*that's innovation*.

Yes probably the biggest innovation of the postwar years was containerization and that was mostly done by the early 1980s, but intra modal transport has grown by leaps and bounds, and that's fundamentally a follow on from containerization.

Track the amount of high speed rail in use in the world vs. 30 years ago. 30 years ago we did not yet have the French TGV. Now most major countries in the world (save the USA) have high speed rail lines travelling at 150mph+.

Britain produces *more* industrial output than it did 20 years ago, but with something like half the workers.

The examples I have given are all pretty good examples of increases in Total Factor Productivity in the last 30 years.
Valuethinker
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Post by Valuethinker »

Zav wrote:
SP-diceman wrote:

I thought the problem was increased productivity?
Folks have learned how to do more with less.
It sorta is, and it sorta is not. Our productivity is increasing, Recently, however, it is more common to see productivity increases via increases in effort (working longer and harder) as opposed to investing in methods which allow us to do more with less. I think we would all agree that it is more common these days to increase net revenues via cutting the labor force and allowing the remainders to pick up the slack.

This is a very simple and effective solution to increasing short-term net revenues. However, it has catastrophic long-term macroeconomic implications.
.
A very basic economic fallacy that there is some 'lump of work' which if fewer people do it, leaves more unemployment.

In fact we have personal trainers, web developers, feng shui consultants, personal shoppers, nannies, housecleaners, gardeners....

the list is endless. Robot repairmen? Look at the percentage of household budgets spent now paying other people to cook (eating out or takeaway) vs. eating at home 40 years ago.

Note also working hours may have risen in America (data not entirely clear) but, largely, they have not in western Europe outside the UK.
jmbkb4
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Post by jmbkb4 »

jebmke wrote:
hicabob wrote:
natureexplorer wrote:Apple got lucky.
Apple did outstanding industrial design for innovative products that people want - then backed it up with excellent software and good support - that takes more than luck.
Except now I notice that drivers have to text with both hands instead of only one.
I have a 9-year old phone and CAN still text with one hand! I always tease the Sheeple about that fact foo
Zav
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Post by Zav »

Valuethinker wrote:
Zav wrote:
Sorry, I am an economist. We tend too assume to much, and one thing we always assume too much is our assumption that everyone readily understands our terms :lol:

A macro innovation is something that is so revolutionary that it completely changes the entire landscape. A good example is a virtually costless energy source or light technology.

I am not saying that these are panaceas. But, they would help substantially.
Now I am really confused. Economists AFAIK do not distinguish between 'macro' and 'micro' innovations. All innovations are 'micro'.

We have instantaneous and virtually costless telecommunications. *that* is an incredible innovation over 50 years ago. Over even 25 years ago in fact-- the cost of a long distance call has fallen by 90-100% (100% fall if we consider Skype).

Light technology has increased more or less 10 fold in 20 years. That's pretty damned good.

Even a highly mature technology like the motor car is 30-50% more efficient than it was 20 years ago. That improvement has manifested itself as greater horsepower and acceleration, and a greater degree of standard equipment (airbags, ESC, anti lock brakes, stereos, air con etc.) but it's there. The hedonic improvements are massive.

Artificial joint replacements are commonplace now, contrast that to 25 years ago. Or heart bypasses.

Think about online stockbroking, or banking, or WalMart's distribution chain. Compare that to 30 years ago.

Or just universal bar coding. And now, you can scan a bar code in a store, and order the same item off the web at a cheaper price.

*that's innovation*.

Yes probably the biggest innovation of the postwar years was containerization and that was mostly done by the early 1980s, but intra modal transport has grown by leaps and bounds, and that's fundamentally a follow on from containerization.

Track the amount of high speed rail in use in the world vs. 30 years ago. 30 years ago we did not yet have the French TGV. Now most major countries in the world (save the USA) have high speed rail lines travelling at 150mph+.

Britain produces *more* industrial output than it did 20 years ago, but with something like half the workers.

The examples I have given are all pretty good examples of increases in Total Factor Productivity in the last 30 years.
Economists rarely talk about micro innovations because they are exceptionally rare. Anyways, I think you are missing the point. I never said that we are not innovating. I am merely stating that we have the potential to do so much more.
Valuethinker wrote:


A very basic economic fallacy that there is some 'lump of work' which if fewer people do it, leaves more unemployment.

In fact we have personal trainers, web developers, feng shui consultants, personal shoppers, nannies, housecleaners, gardeners....

the list is endless. Robot repairmen? Look at the percentage of household budgets spent now paying other people to cook (eating out or takeaway) vs. eating at home 40 years ago.

Note also working hours may have risen in America (data not entirely clear) but, largely, they have not in western Europe outside the UK.9
So, you are saying that we should not worry because, for example, unemployed engineers can work as a robot repairmen?
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jwillis77373
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Post by jwillis77373 »

I was speaking in global long terms, the strategy is sound.. so far the human race still exists and population has tended to grow.

So if you use that as a benchmark, the market has never failed to recover. (exceptions dark ages, black death, but that was not global)

Turning inward and looking smaller, the disturbances get larger and more short term.. but then the whole problem becomes one of timing your particular market, allocation, or strategy on the microscale to suit your lifespan.

The US has generally recovered faster and leads the world in innovating its way out of global instabilities. It is survivors bias to assume this will always happen, but culturally the same elements have remained in place.. though some countries are changing their culture and may make this not true in the near future.. good reason to partially invest in foreign assets.. but not overly so.

In effect its applying the principles of mutual funds to world wide cultures.. mutual culture fund investing.. rather than picking a single cultural stock. Countries have done it for centuries, millennia even.

Topic - patents

I believe a show down is coming between a start up and the abuse of a patent to shut them down which characterizes the patent portfolio as racketeering and operation of a monopoly. Perhaps even between major players.. perhaps sooner than we all think. It might be side stepped a few years by a massive settlement, or illusions of cross-licensing.. but eventually it will come about... and thats the end of the funny magic eight ball stuff from me.
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SVariance1
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Post by SVariance1 »

Stocks have done very poorly in the US and elsewhere for a variety of reasons. Most importantly, valuations are not attractive on a normalized basis. Also important to this terrible environment for stocks is the idea that the Federal Reserve can do almost nothing to stimulate the economy and risk taking at this point. At the same time, aggregate demand is weak, partly due to the so called jobless recovery. Furthermore demand is lot likely to pick if jobs are not created. Lastly, the housing market, which use to be a significant growth engine is on life support. Oh year, the mess in Europe doesn't help.
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jwillis77373
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Post by jwillis77373 »

SVariance1 wrote:Stocks have done very poorly in the US and elsewhere for a variety of reasons. Most importantly, valuations are not attractive on a normalized basis. Also important to this terrible environment for stocks is the idea that the Federal Reserve can do almost nothing to stimulate the economy and risk taking at this point. At the same time, aggregate demand is weak, partly due to the so called jobless recovery. Furthermore demand is lot likely to pick if jobs are not created. Lastly, the housing market, which use to be a significant growth engine is on life support. Oh year, the mess in Europe doesn't help.
What you describe sounds to me like a market 'reset' to a lower level closer to normal valuations. Perhaps even a devaluation of currency, which would ripple around the world. If your in cash.. not a good place to be. Commodities will be vulnerable as to their usefulness short-term, potassium for example versus gold.. there is no neutral commodity that I'm aware.. they're all time sensitive. Stocks would be judged similarly but with a leaning towards those that could survive a reset and have slim inventories. Mutual funds would probably be safest as long as there isn't something up with the company holding the funds. In principle a Mutual fund would reset along with the larger market, the broader the better.
Bonds I would guess default at a greater rate, but thereafter leaving you exposed in cash. Bond funds would rise initially but then fall as risk was exposed. Stir in brand bias.. and it might look like what we're seeing today.
SP-diceman
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Post by SP-diceman »

Valuethinker wrote:
Zav wrote:
SP-diceman wrote:

I thought the problem was increased productivity?
Folks have learned how to do more with less.
It sorta is, and it sorta is not. Our productivity is increasing, Recently, however, it is more common to see productivity increases via increases in effort (working longer and harder) as opposed to investing in methods which allow us to do more with less. I think we would all agree that it is more common these days to increase net revenues via cutting the labor force and allowing the remainders to pick up the slack.

This is a very simple and effective solution to increasing short-term net revenues. However, it has catastrophic long-term macroeconomic implications.
.
A very basic economic fallacy that there is some 'lump of work' which if fewer people do it, leaves more unemployment.

In fact we have personal trainers, web developers, feng shui consultants, personal shoppers, nannies, housecleaners, gardeners....

the list is endless. Robot repairmen? Look at the percentage of household budgets spent now paying other people to cook (eating out or takeaway) vs. eating at home 40 years ago.

Note also working hours may have risen in America (data not entirely clear) but, largely, they have not in western Europe outside the UK.
The problem is, “extras” are based on success and excess money.
A robust, secure, economy is required.
(or at least one feeling that way)

When push comes to shove, a roof over your head and food is all that’s required.

Doubt there were many personal trainers, feng shui consultants, during the great depression. :)


Thanks
SP-diceman
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dmcmahon
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Re: Why Stocks Are Doing So Poorly

Post by dmcmahon »

tripleb wrote: The reason stocks are doing crappy is due to a failure to innovate.
I would dispute the assumption that innovation is necessary for stocks to do well - growth is possible without innovation. Heck, just raising everyone in the developing world to our living standards would be a lot of growth.

But it's just not true that we don't have innovation.

Utilities - sure, it's a mature industry so naturally the pace of innovation is slow. Nevertheless, incremental progress continues. As an example, smart meters which have been rolled out here in California. Have there been no advances in water treatment? What about recycling of gray water?

Staples - yep, another mature industry, and yet new products continue to appear.

Consumer Discretionary - how about computers, cell phones, big-screen TVs. New washers and dryers have come to market that use less water and energy and have better performance. Cars have also become much safer and get better performance than ever. Etc. etc.
.
Energy - another mature industry and yet progress continues. Deep-water drilling, horizontal drilling, EOR with CO2 injection, fraking, etc. Progress on renewables continues. Safer nuclear reactor designs have been developed (though not deployed). Advances in energy efficiency might count here - LEDs for lighting as an example.

Healthcare - now I know you're not serious, progress in medicine has been outstanding and this is still an area where a lot of further progress is possible.

REITS - unclear if "innovation" is even possible in the rental business.

Industrials - Another mature area of the economy, but innovation hasn't stopped completely. What about robotics as an example? Where would you classify flash memory, silicon chips, etc.

Telecomm - services like 4G, streaming media, Skpe, etc. don't count? The internet doesn't count?

Materials - are you talking about mining, or about end products, or both? Mining is being called upon to worker harder and harder for the things we need. Advances in end materials are too numerous to list, but as an example, advanced composites used for autos and aircraft, magnetic materials, etc.
squirm
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Post by squirm »

The consumer no longer has any shock absorbers. The consumer needs to deleverage. Once that is finished then perhaps we can get a real rebound.

Of course many many jobs have moved overseas, doesn't help!
SP-diceman
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Post by SP-diceman »

Valuethinker wrote: In fact we have personal trainers, web developers, feng shui consultants, personal shoppers, nannies, housecleaners, gardeners....

Look at the percentage of household budgets spent now paying other people to cook (eating out or takeaway) vs. eating at home 40 years ago.
How much of that is related to the woman entering the workforce?
(vs. the old “stay at home” mom)

Its probably a second paycheck that covers it.
In a tight job market with Mom (or Mr. Mom) staying home.

All of a sudden you don’t need:
personal trainers,
feng shui consultants,
personal shoppers,
nannies,
housecleaners,
Gardeners,
…and cooking will revert from take-out, back to home.

Its almost as if we created an industry to cover what the
“stay at home" mom once did.


Thanks
SP-diceman
Zav
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Post by Zav »

jwillis77373 wrote:I was speaking in global long terms, the strategy is sound.. so far the human race still exists and population has tended to grow.

So if you use that as a benchmark, the market has never failed to recover. (exceptions dark ages, black death, but that was not global)

Turning inward and looking smaller, the disturbances get larger and more short term.. but then the whole problem becomes one of timing your particular market, allocation, or strategy on the microscale to suit your lifespan.

The US has generally recovered faster and leads the world in innovating its way out of global instabilities. It is survivors bias to assume this will always happen, but culturally the same elements have remained in place.. though some countries are changing their culture and may make this not true in the near future.. good reason to partially invest in foreign assets.. but not overly so.

In effect its applying the principles of mutual funds to world wide cultures.. mutual culture fund investing.. rather than picking a single cultural stock. Countries have done it for centuries, millennia even.

Topic - patents

I believe a show down is coming between a start up and the abuse of a patent to shut them down which characterizes the patent portfolio as racketeering and operation of a monopoly. Perhaps even between major players.. perhaps sooner than we all think. It might be side stepped a few years by a massive settlement, or illusions of cross-licensing.. but eventually it will come about... and thats the end of the funny magic eight ball stuff from me.
I have heard this argument a lot lately. From what I know, the government is starting to take steps to change the patent system. I wish I could point to a link somewhere to show you what I am talking about, but I forget where I read it :lol:
jaxxmjd
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Post by jaxxmjd »

Disclaimer: My views are based on my personal opinion as an electrical engineer.


Apple is not a technology innovator. It is a technology repackaging company (albeit a very good one). Apple takes good ideas that were implemented poorly and refines them into polished products. Apple rarely utilizes cutting edge technologies, preferring to let those technologies mature before implementing them. By definition, a company that eschews cutting edge technologies cannot be a technology innovator.

Apple is a marketing innovator. The company has managed to convince people who don't understand technology that there are no alternatives to their products and that they must constantly update Apple products to the newest version upon release as well. That large pool of consumers is attractive to software developers who are interested in selling their wares.

According the the OP's post, the pharmaceutical industry (as an example industry) should innovate similar to Apple in order to move the industry forward. In this case, the innovation would be something like Pfizer coating aspirin within a pretty gel colored tablet, marketing that it does a 300% better job at relieving headaches, and charging 250% more for it. Luckily, we have an FDA that prevents things like this from happening. Maybe we need a CPA (Consumer Protection Administration) to prevent it from happening in consumer industries?

Further, the OP completely oversimplified the forces currently affecting the market.
Valuethinker
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Post by Valuethinker »

Zav wrote:
Valuethinker wrote:
Zav wrote:
Sorry, I am an economist. We tend too assume to much, and one thing we always assume too much is our assumption that everyone readily understands our terms :lol:

A macro innovation is something that is so revolutionary that it completely changes the entire landscape. A good example is a virtually costless energy source or light technology.

I am not saying that these are panaceas. But, they would help substantially.
Now I am really confused. Economists AFAIK do not distinguish between 'macro' and 'micro' innovations. All innovations are 'micro'.

We have instantaneous and virtually costless telecommunications. *that* is an incredible innovation over 50 years ago. Over even 25 years ago in fact-- the cost of a long distance call has fallen by 90-100% (100% fall if we consider Skype).

Light technology has increased more or less 10 fold in 20 years. That's pretty damned good.

Even a highly mature technology like the motor car is 30-50% more efficient than it was 20 years ago. That improvement has manifested itself as greater horsepower and acceleration, and a greater degree of standard equipment (airbags, ESC, anti lock brakes, stereos, air con etc.) but it's there. The hedonic improvements are massive.

Artificial joint replacements are commonplace now, contrast that to 25 years ago. Or heart bypasses.

Think about online stockbroking, or banking, or WalMart's distribution chain. Compare that to 30 years ago.

Or just universal bar coding. And now, you can scan a bar code in a store, and order the same item off the web at a cheaper price.

*that's innovation*.

Yes probably the biggest innovation of the postwar years was containerization and that was mostly done by the early 1980s, but intra modal transport has grown by leaps and bounds, and that's fundamentally a follow on from containerization.

Track the amount of high speed rail in use in the world vs. 30 years ago. 30 years ago we did not yet have the French TGV. Now most major countries in the world (save the USA) have high speed rail lines travelling at 150mph+.

Britain produces *more* industrial output than it did 20 years ago, but with something like half the workers.

The examples I have given are all pretty good examples of increases in Total Factor Productivity in the last 30 years.
Economists rarely talk about micro innovations because they are exceptionally rare. Anyways, I think you are missing the point. I never said that we are not innovating. I am merely stating that we have the potential to do so much more.
Valuethinker wrote:


A very basic economic fallacy that there is some 'lump of work' which if fewer people do it, leaves more unemployment.

In fact we have personal trainers, web developers, feng shui consultants, personal shoppers, nannies, housecleaners, gardeners....

the list is endless. Robot repairmen? Look at the percentage of household budgets spent now paying other people to cook (eating out or takeaway) vs. eating at home 40 years ago.

Note also working hours may have risen in America (data not entirely clear) but, largely, they have not in western Europe outside the UK.9
So, you are saying that we should not worry because, for example, unemployed engineers can work as a robot repairmen?
You claim to be an economist, and yet you spout at least 2 major economic fallacies, the 'lump of labour' one being the classic one.

Setting aside your straw man about what I said (see Alan Blinder for genuine economic worrying about outsourcing) the reality is that yes, those unemployed coal workers (or their children) have gotten jobs in call centres-- studies show the Leeds accent is the most trusted in England, and that is Yorkshire, the centre of the former 500,000 man coal mining industry (now under 20,000). No surprise, Yorkshire is now a centre for call centre activity in the UK.

Consider the economy of Atlanta or Phoenix against the economy of Scranton Pennsylvania. The one emblematic of the rust belt, the other two of the growing Sun Belt.

There is no finite 'lump of labour' an economy can always find uses for slack resources-- however the current period is typical of post bubble shocks (in that there is sustained unemployment at below equilibrium, due to price and wage rigidity and confidence issues). That's not to say that there is not structural unemployment (wrong people, wrong jobs, wrong places) of that losing your job at GM and taking one at WalMart is not personally a serious financial problem both in salary, healthcare and benefits. But there are, or there can be, jobs down to full employment when the economy is functioning normally. It's not a shortage of innovation-- Cisco, WalMart etc. are innovating all the time.

You still have not defined 'micro innovations' vs. 'macro innovations'. Terminology I have certainly never heard.

All innovations are by definition micro. It is hard to measure their impact on the macroeconomic level (see Robert Gordon, the doyen of same). But it's clearly there. The economy of 100 years ago barely had motor cars, did not have telephones, universal electricity, aviation, containers (the US used to have something over 500,000 port workers, handling a volume of trade a fraction of the current one), the internet etc. etc. etc. Let alone the improvements in disease treatment: polio and smallpox anyone?

We could not argue the US economy is the same as it was 100 years ago-- it is completely transformed by technological and social innovation.

As to untapped innovations:

- it's not at all clear that there are strong barriers to innovation in private sector activity (public sector is another matter BUT the US Department of Defence is a technological leader-- aviation, atomic power and now things like drones; the VA is a significant innovator in healthcare delivery and patient management)

- the big unadapted innovations (like single payer healthcare) are unadapted because of institutional barriers. And if they were adapted, the US economy might do better, but big chunks of the US stock market might do worse. Every big change brings winners and losers, and it tends to lower profit margins

I am aware there is a current in the literature that innovation is falling (it's all about measurement of patent rates etc.) *howevever* I am not convinced by that thread and evidence, I think there are significant measurement issues, changes in patent legislation etc.

Big technological swings take decades. Consider the internet, designed in the mid 1960s. It's only in the last 10 years or so that it has begun to have a real impact. Online sales are still c. 5% of total retail sales I believe. End to end supply chain reconfiguration is still not universal.

Containerization is more or less 100% of world goods trade (ex bulk commodities). That took 40 years or so to achieve- -and, in fact, the Vietnam war was a huge driver (whatever one says about William C. Westmoreland, he was a logistician-- the US could not get the supplies to the 500,000 troops in the 'Nam, and so the US military backed one of the first containerization entrepreneurs to do it-- war is an important stimulus to innovation, as the last 10 years will prove in drone technology and robotics at the very least*).

As always, I counsel to read David Egerton ("Shock of the Old") it's not the innovation that matters so much, it is the *adoption*. Most of the key inventions of the 14th-15 century had been invented in China centuries earlier (printing press etc.) but they did not see widespread adoption.

If you look at the speed of spreadout of something like shale gas, or CCGT, it really is quite striking: 0 to 100% in less than 25 years. That's an incredible rate of change.

Technological change gets embedded in an economy via investment. That takes decades. And changing working practices takes longer. Henry Ford introduces the per hour wage in 1910 (1914?) and in the late 1960s British Leyland in the UK is still paying by piecework (see 'The Machine that Changed the World')-- that's a 60 year time lag for a basic organisational practice.

* i Robot makes a cute vaccuum cleaner robot, but it's a toy. I believe the core of its business has been in supplying bomb robots to the US military. The technological innovation of the IED begats the robot, and so the spiral of innovation and response in war continues....
Last edited by Valuethinker on Mon Sep 26, 2011 4:20 am, edited 3 times in total.
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Post by Valuethinker »

squirm wrote:The consumer no longer has any shock absorbers. The consumer needs to deleverage. Once that is finished then perhaps we can get a real rebound.

Of course many many jobs have moved overseas, doesn't help!
Jobs are always moving overseas and new jobs are always being created.

the problem is the imbalance that built up during the asset bubble. Hence the deleveraging shock. There is an insufficiency of aggregate demand in an economy stuck on the zero interest rate lower bound: interest rates cannot go negative, so it is not possible to light a fire under consumption and investment.

The idea that the US can 'keep' jobs which would naturally migrate offshore (consider that the largest industrial employer 50 years ago was the *textile* industry and a major player was Berkshire Hathaway (yes, that BH) of which Warren Buffett later said 'when a great management team meets a lousy industry, the industry usually wins'). The US hardly manufactures textiles now.

Oh and the centre of the rag trade? New York City. There's no way on wages even half what the average New Yorker is paid now, that the US garment industry would be competitive with Bangladesh. Nor should it want to be. Wine waiters are paid more than women sewing coats on piece work.
SP-diceman
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Post by SP-diceman »

Valuethinker wrote:Wine waiters are paid more than women sewing coats on piece work.
If they are sophisticated wine waiters, they’re called “Sommelier” and paid even more. :)


Thanks
SP-diceman
Valuethinker
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Post by Valuethinker »

SP-diceman wrote:
Valuethinker wrote:Wine waiters are paid more than women sewing coats on piece work.
If they are sophisticated wine waiters, they’re called “Sommelier” and paid even more. :)


Thanks
SP-diceman
The article I read in New York magazine pointed out that the existence of 250k a year law firm associates, and 2.5m a year junior hedge fundies, allowed for the existence of $100k a year sommeliers.

It seems weirdly distorted but it is an example of the post post post industrial economy.

Go back to Arthur Miller 'The Price'. New York City was once (1960s even) the largest manufacturing city in America.

Who knew?
Trestles
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Re: Why Stocks Are Doing So Poorly

Post by Trestles »

tripleb wrote:if you don't believe me, look at how much money Win7 phones and Xbox are losing annually
Microsoft's entertainment division has revenues of $3.7 billion and earnings of $679 million. Source from a quick google search: http://www.guardian.co.uk/technology/20 ... box-kinect

I don't disagree with your thesis but it's unfair to state that launching xbox was a poor decision. Launching a new business takes a lot of money and it often takes several years for it to begin earning a profit. That was the case with the xbox and it may also be the case with bing.

Trestles
HFWR
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Re: Why Stocks Are Doing So Poorly

Post by HFWR »

Valuethinker wrote:Actually market cap is based on PE (or EV/ EBITDA, or more properly, Discounted Cash Flow as a measure of Enterprise Value) and PE is a profits related measure (price to earnings).
Hmmm, I thought market cap was share price * shares outstanding...
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Re: Why Stocks Are Doing So Poorly

Post by Valuethinker »

HFWR wrote:
Valuethinker wrote:Actually market cap is based on PE (or EV/ EBITDA, or more properly, Discounted Cash Flow as a measure of Enterprise Value) and PE is a profits related measure (price to earnings).
Hmmm, I thought market cap was share price * shares outstanding...
Yes. Strictly so.

But why do companies have value? The conventional measure is Price to Earnings ratio (more profits, higher market cap). Delving deeper the correct way to value companies is by Discounted Cash Flow-- future accrual of cash flows to debt and equity holders, discounted to the present moment.
Zav
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Post by Zav »

Valuethinker wrote: You claim to be an economist, and yet you spout at least 2 major economic fallacies, the 'lump of labour' one being the classic one.

Setting aside your straw man about what I said (see Alan Blinder for genuine economic worrying about outsourcing) the reality is that yes, those unemployed coal workers (or their children) have gotten jobs in call centres-- studies show the Leeds accent is the most trusted in England, and that is Yorkshire, the centre of the former 500,000 man coal mining industry (now under 20,000). No surprise, Yorkshire is now a centre for call centre activity in the UK.

Consider the economy of Atlanta or Phoenix against the economy of Scranton Pennsylvania. The one emblematic of the rust belt, the other two of the growing Sun Belt.

There is no finite 'lump of labour' an economy can always find uses for slack resources-- however the current period is typical of post bubble shocks (in that there is sustained unemployment at below equilibrium, due to price and wage rigidity and confidence issues). That's not to say that there is not structural unemployment (wrong people, wrong jobs, wrong places) of that losing your job at GM and taking one at WalMart is not personally a serious financial problem both in salary, healthcare and benefits. But there are, or there can be, jobs down to full employment when the economy is functioning normally. It's not a shortage of innovation-- Cisco, WalMart etc. are innovating all the time.
There is no need to be rude. I am merely asking a question which you did not answer. I am asking whether the economy is using its slack resources to their most productive endeavor, and also is able to match the resource to a productive activity which is greater than or equal to its previous one.
Valuethinker wrote:
You still have not defined 'micro innovations' vs. 'macro innovations'. Terminology I have certainly never heard.

All innovations are by definition micro. It is hard to measure their impact on the macroeconomic level (see Robert Gordon, the doyen of same). But it's clearly there. The economy of 100 years ago barely had motor cars, did not have telephones, universal electricity, aviation, containers (the US used to have something over 500,000 port workers, handling a volume of trade a fraction of the current one), the internet etc. etc. etc. Let alone the improvements in disease treatment: polio and smallpox anyone?

We could not argue the US economy is the same as it was 100 years ago-- it is completely transformed by technological and social innovation.

As to untapped innovations:

- it's not at all clear that there are strong barriers to innovation in private sector activity (public sector is another matter BUT the US Department of Defence is a technological leader-- aviation, atomic power and now things like drones; the VA is a significant innovator in healthcare delivery and patient management)

- the big unadapted innovations (like single payer healthcare) are unadapted because of institutional barriers. And if they were adapted, the US economy might do better, but big chunks of the US stock market might do worse. Every big change brings winners and losers, and it tends to lower profit margins

I am aware there is a current in the literature that innovation is falling (it's all about measurement of patent rates etc.) *howevever* I am not convinced by that thread and evidence, I think there are significant measurement issues, changes in patent legislation etc.

Big technological swings take decades. Consider the internet, designed in the mid 1960s. It's only in the last 10 years or so that it has begun to have a real impact. Online sales are still c. 5% of total retail sales I believe. End to end supply chain reconfiguration is still not universal.

Containerization is more or less 100% of world goods trade (ex bulk commodities). That took 40 years or so to achieve- -and, in fact, the Vietnam war was a huge driver (whatever one says about William C. Westmoreland, he was a logistician-- the US could not get the supplies to the 500,000 troops in the 'Nam, and so the US military backed one of the first containerization entrepreneurs to do it-- war is an important stimulus to innovation, as the last 10 years will prove in drone technology and robotics at the very least*).

As always, I counsel to read David Egerton ("Shock of the Old") it's not the innovation that matters so much, it is the *adoption*. Most of the key inventions of the 14th-15 century had been invented in China centuries earlier (printing press etc.) but they did not see widespread adoption.

If you look at the speed of spreadout of something like shale gas, or CCGT, it really is quite striking: 0 to 100% in less than 25 years. That's an incredible rate of change.

Technological change gets embedded in an economy via investment. That takes decades. And changing working practices takes longer. Henry Ford introduces the per hour wage in 1910 (1914?) and in the late 1960s British Leyland in the UK is still paying by piecework (see 'The Machine that Changed the World')-- that's a 60 year time lag for a basic organisational practice.

* i Robot makes a cute vaccuum cleaner robot, but it's a toy. I believe the core of its business has been in supplying bomb robots to the US military. The technological innovation of the IED begats the robot, and so the spiral of innovation and response in war continues....
I am not sure what these arguments have to do with my original argument
:?:

Ohh, I see. I think I assumed too much again. My previous statements were unclear and I apologize. Since I was talking about institutions, my previous statements were regarding the institutions associated with producing innovation, what economists call "innovation systems". If you want to know more about what I am talking about you can try reading some scholarly articles, such as those published by Vass. His articles are relatively user friendly.
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Post by Valuethinker »

Zav wrote:
Valuethinker wrote: You claim to be an economist, and yet you spout at least 2 major economic fallacies, the 'lump of labour' one being the classic one.

Setting aside your straw man about what I said (see Alan Blinder for genuine economic worrying about outsourcing) the reality is that yes, those unemployed coal workers (or their children) have gotten jobs in call centres-- studies show the Leeds accent is the most trusted in England, and that is Yorkshire, the centre of the former 500,000 man coal mining industry (now under 20,000). No surprise, Yorkshire is now a centre for call centre activity in the UK.

Consider the economy of Atlanta or Phoenix against the economy of Scranton Pennsylvania. The one emblematic of the rust belt, the other two of the growing Sun Belt.

There is no finite 'lump of labour' an economy can always find uses for slack resources-- however the current period is typical of post bubble shocks (in that there is sustained unemployment at below equilibrium, due to price and wage rigidity and confidence issues). That's not to say that there is not structural unemployment (wrong people, wrong jobs, wrong places) of that losing your job at GM and taking one at WalMart is not personally a serious financial problem both in salary, healthcare and benefits. But there are, or there can be, jobs down to full employment when the economy is functioning normally. It's not a shortage of innovation-- Cisco, WalMart etc. are innovating all the time.
There is no need to be rude. I am merely asking a question which you did not answer. I am asking whether the economy is using its slack resources to their most productive endeavor, and also is able to match the resource to a productive activity which is greater than or equal to its previous one.
Sorry if you find me rude-- I am finding you evasive. It was incredulity: you seemed to be arguing that there is a finite amount of work in an economy- -the classic 'lump of labour' fallacy?

In reality of course there is not. There are simply new activities and new needs that an economy is constantly creating. Hence our discussion of sommeliers (or web designers; or call centre workers).

The answer to your question is:

- you can't know that ex ante, one can only presume so *unless* there is some more productive activity that comes along

Keynesian analysis would suggest that you can have supply not = demand, and hence slack resources.

However nothing in that would tell you what would be the highest marginal product-- to the extent the price mechanism works that would be determined in product markets. Keynes point would be that if you put those slack resources to work, as long as they do not actually destroy value, you've raised productivity.

An RBC theorist would presumably argue you cannot have slack resources. Unemployed resources stem simply from 'sunspots' (technological change etc.) or uncertainty created by government action.
Valuethinker wrote:
You still have not defined 'micro innovations' vs. 'macro innovations'. Terminology I have certainly never heard.

All innovations are by definition micro. It is hard to measure their impact on the macroeconomic level (see Robert Gordon, the doyen of same). But it's clearly there. The economy of 100 years ago barely had motor cars, did not have telephones, universal electricity, aviation, containers (the US used to have something over 500,000 port workers, handling a volume of trade a fraction of the current one), the internet etc. etc. etc. Let alone the improvements in disease treatment: polio and smallpox anyone?

We could not argue the US economy is the same as it was 100 years ago-- it is completely transformed by technological and social innovation.

As to untapped innovations:

- it's not at all clear that there are strong barriers to innovation in private sector activity (public sector is another matter BUT the US Department of Defence is a technological leader-- aviation, atomic power and now things like drones; the VA is a significant innovator in healthcare delivery and patient management)

- the big unadapted innovations (like single payer healthcare) are unadapted because of institutional barriers. And if they were adapted, the US economy might do better, but big chunks of the US stock market might do worse. Every big change brings winners and losers, and it tends to lower profit margins

I am aware there is a current in the literature that innovation is falling (it's all about measurement of patent rates etc.) *howevever* I am not convinced by that thread and evidence, I think there are significant measurement issues, changes in patent legislation etc.

Big technological swings take decades. Consider the internet, designed in the mid 1960s. It's only in the last 10 years or so that it has begun to have a real impact. Online sales are still c. 5% of total retail sales I believe. End to end supply chain reconfiguration is still not universal.

Containerization is more or less 100% of world goods trade (ex bulk commodities). That took 40 years or so to achieve- -and, in fact, the Vietnam war was a huge driver (whatever one says about William C. Westmoreland, he was a logistician-- the US could not get the supplies to the 500,000 troops in the 'Nam, and so the US military backed one of the first containerization entrepreneurs to do it-- war is an important stimulus to innovation, as the last 10 years will prove in drone technology and robotics at the very least*).

As always, I counsel to read David Egerton ("Shock of the Old") it's not the innovation that matters so much, it is the *adoption*. Most of the key inventions of the 14th-15 century had been invented in China centuries earlier (printing press etc.) but they did not see widespread adoption.

If you look at the speed of spreadout of something like shale gas, or CCGT, it really is quite striking: 0 to 100% in less than 25 years. That's an incredible rate of change.

Technological change gets embedded in an economy via investment. That takes decades. And changing working practices takes longer. Henry Ford introduces the per hour wage in 1910 (1914?) and in the late 1960s British Leyland in the UK is still paying by piecework (see 'The Machine that Changed the World')-- that's a 60 year time lag for a basic organisational practice.

* i Robot makes a cute vaccuum cleaner robot, but it's a toy. I believe the core of its business has been in supplying bomb robots to the US military. The technological innovation of the IED begats the robot, and so the spiral of innovation and response in war continues....
I am not sure what these arguments have to do with my original argument
:?:

Ohh, I see. I think I assumed too much again. My previous statements were unclear and I apologize. Since I was talking about institutions, my previous statements were regarding the institutions associated with producing innovation, what economists call "innovation systems". If you want to know more about what I am talking about you can try reading some scholarly articles, such as those published by Vass. His articles are relatively user friendly.
[/quote]

I am not sure what 'innovation systems' are, nor have I read anything by Vass.

However innovation in the micro does not correlate with higher profit margins or profit growth, and 'macro' innovations (I am guessing here by what you mean as you still have not defined them) are hard to measure (in terms of their effects on the overall economy).

It's appropriability of innovations that creates superior profit margins: think Apple v. Linux. Both may create equal value for customers, but Apple grabs a lot larger chunk of that value.

Less innovative industries tend to have higher profit margins, because there's nothing to compete away the margins of incumbents. Think tobacco.

It's not at all clear to me that US companies, or anybody else, is not innovating. The first Dreamliner is due to be delivered-- 3 years late, but to be delivered this week. That's one hell of an innovation in a major industry.

I look around and I see constant evidence of innovation-- maybe even accelerating innovation.

Think the cost of a long distance international phone call now vs. 22 years ago. *that's innovation*.
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Post by Valuethinker »

Dan Moroboshi wrote:
bob90245 wrote:This type of topic appears to violate forum policies for fruitlessly arguing over non-actionable issues.
Nah. It does have to do with the underlying principle of stock valuation.

I don't recall which book it was, but William Bernstein used an analogy for innovation and how it gets to market. (IIRC, it was in the Four Pillars of Investing)

Basic science is like someone operating a hand pump. It produces water which gushes forth intermittently in spurts. The water then enters a trough or pipe. Someone at the end of waterway perceives the water as coming out as a more or less steady, continuous stream.

The pump operator is the innovator, venture capitalist, or early adopter. The pipe is the market. The person at the end of the pipe is the consumer, or retail investor.

By the way, the concept of iPads existed before Apple.

Star Trek: http://en.memory-alpha.org/wiki/PADD

2001 - A Space Odyssey: http://www.youtube.com/watch?v=JQ8pQVDyaLo
Dan

You would know this. The iPad is Alan Kay's 'Dynabook' and Steve Jobs saw a mock up, at least, at Xerox PARC in the late 1970s.

Go back and Hari Seldon uses something very similar in 'Foundation' which is from memory Isaac Asimov 1951.

We've had various stabs at the portable computer (the Newton? The Go Book-- someone wrote a book about that, I think eventually Lucent bought the scrap after c. $100m of investor money had been written off).
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Re: Why Stocks Are Doing So Poorly

Post by Valuethinker »

dmcmahon wrote:REITS - unclear if "innovation" is even possible in the rental business.
.
All excellent stuff and we are on a page. Innovations in WalMart's logistics system have probably had a greater impact on the US economy than lots of obvious technical innovations like the iPad. Containerization is perhaps the great American postwar innovation (one of, but top 5 certainly).

on the day Dreamliner is finally delivered seems churlish to say there is no industrial innovation ;-). Already the world's best selling aircraft.

On REITs, consider the rental model, companies like Regus that rent desktop space by the day, week, month or provide 'virtual offices' that are just nameplates plus the ability to rent a meeting room, forward mail etc.

When I began my career, leases in the UK were 25 years, upward only, reviewed every 5 years. The average commercial lease now is 15 years, and there are plenty shorter available.

So even in rental real estate, lots of innovation taking place.

(buildings themselves have revolutionized technologically in 30 years: IT infrastructure, energy saving windows and materials, the quality of office lighting has transformed over the last 30 years, quality of office chairs, air conditioning etc.). Go into some 1970s era government office to remind yourself what offices were like 35 years ago.
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Post by Toons »

I stopped by Mcdonalds this morning to get a cup of coffee,the drive thru was lined up and the lot was almost full.Whats their secret?Dividend increases every year."Widest economic moat in the restauraunt category" :D :D


http://quote.morningstar.com/stock/s.aspx?t=mcd
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Post by TrustNoOne »

This has been a good thread, and one that has raised my level of optimism regarding our economy and innovation. I started out agreeing with the OP, but some excellant points have been made about the amount of innovation taking place.

As for Apple - the i-phone is the first Apple product I've owned (except for an antiquated Mac I needed to buy to run a specific business apllication. After that experience I always thought Apple products were for school kids, not grown ups.) I think their success is in developing products that people will actually buy.

As for litigation - that's my field. We have innovated a lot. Lawyers and expert witnesses are now much more efficient than ever before. In my filed it just to take weeks to certain regulatory rulings or various documents. I had boxes of paper everywhere. Now I can get them in minutes on various web pages. I now have a big hard drive. :D
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Post by Valuethinker »

TrustNoOne wrote:This has been a good thread, and one that has raised my level of optimism regarding our economy and innovation. I started out agreeing with the OP, but some excellant points have been made about the amount of innovation taking place.

As for Apple - the i-phone is the first Apple product I've owned (except for an antiquated Mac I needed to buy to run a specific business apllication. After that experience I always thought Apple products were for school kids, not grown ups.) I think their success is in developing products that people will actually buy.

As for litigation - that's my field. We have innovated a lot. Lawyers and expert witnesses are now much more efficient than ever before. In my filed it just to take weeks to certain regulatory rulings or various documents. I had boxes of paper everywhere. Now I can get them in minutes on various web pages. I now have a big hard drive. :D
Innovation may not benefit share prices.

Just as slower growing economies have better stock market performance, so too innovative economies may lead to rapid destruction of profit margins.

However at a macro level, in theory, productivity should rise. If productivity rises, then so too should real per capita income.

In theory.

Note the distribution of those gains is anything but foreordained. You could have a future technocracy where 1% or 0.1% of the work force become highly paid hedge fund managers, and the rest poorly paid domestic servants.
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Post by SP-diceman »

Toons wrote:I stopped by Mcdonalds this morning to get a cup of coffee

Whats their secret? Dividend increases every year."Widest economic moat in the restauraunt category"

They're giving folks what they want, at a price they want.

You were there. :)


Thanks
SP-diceman
Zav
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Post by Zav »

Valuethinker wrote:
Sorry if you find me rude-- I am finding you evasive. It was incredulity: you seemed to be arguing that there is a finite amount of work in an economy- -the classic 'lump of labour' fallacy?

In reality of course there is not. There are simply new activities and new needs that an economy is constantly creating. Hence our discussion of sommeliers (or web designers; or call centre workers).

The answer to your question is:

- you can't know that ex ante, one can only presume so *unless* there is some more productive activity that comes along

Keynesian analysis would suggest that you can have supply not = demand, and hence slack resources.

However nothing in that would tell you what would be the highest marginal product-- to the extent the price mechanism works that would be determined in product markets. Keynes point would be that if you put those slack resources to work, as long as they do not actually destroy value, you've raised productivity.

An RBC theorist would presumably argue you cannot have slack resources. Unemployed resources stem simply from 'sunspots' (technological change etc.) or uncertainty created by government action.
I hate to break it to you, but the "lump sum" labor fallacy is not a law. In the past, its arguments were substantiated with sound empirical results. However, very recent empirical studies are starting to indicate that poor institutions mixed with poor economic conditions and irrational expectations are creating relatively sizable "lump sump labor" outcomes in the United States and Europe.

I understand that great economic minds such as Samuelson and Krugman support the "lump-sum labor" fallacy. However, very recent empirical evidence provided by very prominent economists, such as David Autor and Lawrence Katz, suggest that the times are changing, at least temporarily.

Valuethinker wrote:
I am not sure what 'innovation systems' are, nor have I read anything by Vass.

However innovation in the micro does not correlate with higher profit margins or profit growth, and 'macro' innovations (I am guessing here by what you mean as you still have not defined them) are hard to measure (in terms of their effects on the overall economy).

It's appropriability of innovations that creates superior profit margins: think Apple v. Linux. Both may create equal value for customers, but Apple grabs a lot larger chunk of that value.

Less innovative industries tend to have higher profit margins, because there's nothing to compete away the margins of incumbents. Think tobacco.

It's not at all clear to me that US companies, or anybody else, is not innovating. The first Dreamliner is due to be delivered-- 3 years late, but to be delivered this week. That's one hell of an innovation in a major industry.

I look around and I see constant evidence of innovation-- maybe even accelerating innovation.

Think the cost of a long distance international phone call now vs. 22 years ago. *that's innovation*.
I am not sure how many times I have to say this, but I am not arguing with you on this position.
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torius71
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Post by torius71 »

Valuethinker wrote:
Zav wrote:
Valuethinker wrote:
Zav wrote:
Sorry, I am an economist. We tend too assume to much, and one thing we always assume too much is our assumption that everyone readily understands our terms :lol:

A macro innovation is something that is so revolutionary that it completely changes the entire landscape. A good example is a virtually costless energy source or light technology.

I am not saying that these are panaceas. But, they would help substantially.
Now I am really confused. Economists AFAIK do not distinguish between 'macro' and 'micro' innovations. All innovations are 'micro'.

We have instantaneous and virtually costless telecommunications. *that* is an incredible innovation over 50 years ago. Over even 25 years ago in fact-- the cost of a long distance call has fallen by 90-100% (100% fall if we consider Skype).

Light technology has increased more or less 10 fold in 20 years. That's pretty damned good.

Even a highly mature technology like the motor car is 30-50% more efficient than it was 20 years ago. That improvement has manifested itself as greater horsepower and acceleration, and a greater degree of standard equipment (airbags, ESC, anti lock brakes, stereos, air con etc.) but it's there. The hedonic improvements are massive.

Artificial joint replacements are commonplace now, contrast that to 25 years ago. Or heart bypasses.

Think about online stockbroking, or banking, or WalMart's distribution chain. Compare that to 30 years ago.

Or just universal bar coding. And now, you can scan a bar code in a store, and order the same item off the web at a cheaper price.

*that's innovation*.

Yes probably the biggest innovation of the postwar years was containerization and that was mostly done by the early 1980s, but intra modal transport has grown by leaps and bounds, and that's fundamentally a follow on from containerization.

Track the amount of high speed rail in use in the world vs. 30 years ago. 30 years ago we did not yet have the French TGV. Now most major countries in the world (save the USA) have high speed rail lines travelling at 150mph+.

Britain produces *more* industrial output than it did 20 years ago, but with something like half the workers.

The examples I have given are all pretty good examples of increases in Total Factor Productivity in the last 30 years.
Economists rarely talk about micro innovations because they are exceptionally rare. Anyways, I think you are missing the point. I never said that we are not innovating. I am merely stating that we have the potential to do so much more.
Valuethinker wrote:


A very basic economic fallacy that there is some 'lump of work' which if fewer people do it, leaves more unemployment.

In fact we have personal trainers, web developers, feng shui consultants, personal shoppers, nannies, housecleaners, gardeners....

the list is endless. Robot repairmen? Look at the percentage of household budgets spent now paying other people to cook (eating out or takeaway) vs. eating at home 40 years ago.

Note also working hours may have risen in America (data not entirely clear) but, largely, they have not in western Europe outside the UK.9
So, you are saying that we should not worry because, for example, unemployed engineers can work as a robot repairmen?
You still have not defined 'micro innovations' vs. 'macro innovations'. Terminology I have certainly never heard.

All innovations are by definition micro. It is hard to measure their impact on the macroeconomic level (see Robert Gordon, the doyen of same). But it's clearly there. The economy of 100 years ago barely had motor cars, did not have telephones, universal electricity, aviation, containers (the US used to have something over 500,000 port workers, handling a volume of trade a fraction of the current one), the internet etc. etc. etc. Let alone the improvements in disease treatment: polio and smallpox anyone?

We could not argue the US economy is the same as it was 100 years ago-- it is completely transformed by technological and social innovation.

As to untapped innovations:

- it's not at all clear that there are strong barriers to innovation in private sector activity (public sector is another matter BUT the US Department of Defence is a technological leader-- aviation, atomic power and now things like drones; the VA is a significant innovator in healthcare delivery and patient management)

- the big unadapted innovations (like single payer healthcare) are unadapted because of institutional barriers. And if they were adapted, the US economy might do better, but big chunks of the US stock market might do worse. Every big change brings winners and losers, and it tends to lower profit margins

I am aware there is a current in the literature that innovation is falling (it's all about measurement of patent rates etc.) *howevever* I am not convinced by that thread and evidence, I think there are significant measurement issues, changes in patent legislation etc.

Big technological swings take decades. Consider the internet, designed in the mid 1960s. It's only in the last 10 years or so that it has begun to have a real impact. Online sales are still c. 5% of total retail sales I believe. End to end supply chain reconfiguration is still not universal.

Containerization is more or less 100% of world goods trade (ex bulk commodities). That took 40 years or so to achieve- -and, in fact, the Vietnam war was a huge driver (whatever one says about William C. Westmoreland, he was a logistician-- the US could not get the supplies to the 500,000 troops in the 'Nam, and so the US military backed one of the first containerization entrepreneurs to do it-- war is an important stimulus to innovation, as the last 10 years will prove in drone technology and robotics at the very least*).

As always, I counsel to read David Egerton ("Shock of the Old") it's not the innovation that matters so much, it is the *adoption*. Most of the key inventions of the 14th-15 century had been invented in China centuries earlier (printing press etc.) but they did not see widespread adoption.

If you look at the speed of spreadout of something like shale gas, or CCGT, it really is quite striking: 0 to 100% in less than 25 years. That's an incredible rate of change.

Technological change gets embedded in an economy via investment. That takes decades. And changing working practices takes longer. Henry Ford introduces the per hour wage in 1910 (1914?) and in the late 1960s British Leyland in the UK is still paying by piecework (see 'The Machine that Changed the World')-- that's a 60 year time lag for a basic organisational practice.
As I understand it, business and technological literature describes two types of innovation; sustaining and disruptive. The latter being an innovation which creates a new (and unexpected) market by applying a different set of values. Sustaining innovation can sometimes be described as revolutionary (think expensive early automobiles), but is usually only described as disruptive, if and when, it creates a new economic market (think lower priced Ford Model T). More frequently, sustaining innovation is evolutionary, in that it improves a product in an existing market in ways that customers expect (think improved automobile fuel efficiency). Time frames between these described types of innovations may vary significantly and have varying degrees of economic impact.

http://en.wikipedia.org/wiki/Disruptive_technology

*I have not personally witnessed a shortage of innovation lately.
"A new truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it."-MP
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Post by Valuethinker »

Zav wrote:I hate to break it to you, but the "lump sum" labor fallacy is not a law. In the past, its arguments were substantiated with sound empirical results. However, very recent empirical studies are starting to indicate that poor institutions mixed with poor economic conditions and irrational expectations are creating relatively sizable "lump sump labor" outcomes in the United States and Europe.
Aka structural unemployment. I think that's widely understood.

What's at issue now is how much of current unemployment is structural v. cyclical.

That breaks down to a RBC vs. Keynesian/ neoKeynesian argument?

Or are you throwing in strategic trade theory? In which case, I think the empirical evidence for that is weak. We used to think Japan's MITI, but no one really mentions that now.
I understand that great economic minds such as Samuelson and Krugman support the "lump-sum labor" fallacy. However, very recent empirical evidence provided by very prominent economists, such as David Autor and Lawrence Katz, suggest that the times are changing, at least temporarily.
So what is their argument? That if wages and prices are fully flexible that you can still get unemployment, which is not the result of structural factors (ie mismatch between employees and employment derived from skillsets, locations or costly search?).

Isn't it more reasonable to simply argue we have a deficiency of aggregate demand? (plus nominal wage rigidity)
Valuethinker wrote:
I am not sure what 'innovation systems' are, nor have I read anything by Vass.

However innovation in the micro does not correlate with higher profit margins or profit growth, and 'macro' innovations (I am guessing here by what you mean as you still have not defined them) are hard to measure (in terms of their effects on the overall economy).

It's appropriability of innovations that creates superior profit margins: think Apple v. Linux. Both may create equal value for customers, but Apple grabs a lot larger chunk of that value.

Less innovative industries tend to have higher profit margins, because there's nothing to compete away the margins of incumbents. Think tobacco.

It's not at all clear to me that US companies, or anybody else, is not innovating. The first Dreamliner is due to be delivered-- 3 years late, but to be delivered this week. That's one hell of an innovation in a major industry.

I look around and I see constant evidence of innovation-- maybe even accelerating innovation.

Think the cost of a long distance international phone call now vs. 22 years ago. *that's innovation*.
I am not sure how many times I have to say this, but I am not arguing with you on this position.
[/quote]

Good to know because it seems to undercut your original position?
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Post by Valuethinker »

torius71 wrote: As I understand it, business and technological literature describes two types of innovation; sustaining and disruptive. The latter being an innovation which creates a new (and unexpected) market by applying a different set of values. Sustaining innovation can sometimes be described as revolutionary (think expensive early automobiles), but is usually only described as disruptive, if and when, it creates a new economic market (think lower priced Ford Model T). More frequently, sustaining innovation is evolutionary, in that it improves a product in an existing market in ways that customers expect (think improved automobile fuel efficiency). Time frames between these described types of innovations may vary significantly and have varying degrees of economic impact.

http://en.wikipedia.org/wiki/Disruptive_technology

*I have not personally witnessed a shortage of innovation lately.
I'm good to go on Christiansen, but I am not aware of the linkages to conventional economic theory.

ie I am not sure we have an economic model that says 'this innovation is sustaining, this is disruptive' and the macroeconomic effects are xx and yy.

The PC is disruptive, or was. It blew the hell out of the mainframe and the mini (although both have powerful legacies-- it's still a big business for 'last man standing' aka IBM).

Now the tablet is disruptive of the notebook and the laptop- -or maybe of the smart phone.

But an innovation in economics is basically 'more output for a given set of inputs (land, labour, capital etc.)'.

Just on disruptive innovations, my observation is it usually blows the hell out of the profit pools in the value chain. Not even the innovators make a lot of money out of it.

Since that money goes somewhere it logically goes into the hands of the end users (the customers) who have more money to spend on other things.

And that is called, roughly 'progress'.
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Post by torius71 »

Valuethinker wrote:
I'm good to go on Christiansen, but I am not aware of the linkages to conventional economic theory.

ie I am not sure we have an economic model that says 'this innovation is sustaining, this is disruptive' and the macroeconomic effects are xx and yy.
I, likewise, am unaware of any linkages to conventional economic theory, especially in any quantitative sense. This might however make a worthy PhD thesis. :idea: :) Considering the ambiguity surrounding the term, this would be quite the undertaking.

Valuethinker wrote:But an innovation in economics is basically 'more output for a given set of inputs (land, labour, capital etc.)'.

Just on disruptive innovations, my observation is it usually blows the hell out of the profit pools in the value chain. Not even the innovators make a lot of money out of it.

Since that money goes somewhere it logically goes into the hands of the end users (the customers) who have more money to spend on other things.

And that is called, roughly 'progress'.
I think you are speaking of "creative destruction". A term that originated with Marx and Engels in the 19th century, but was later popularized by Joseph Schumpeter. Schumpeter described the innovative entry of entrepreneurs into established markets as both destructive, but also at the heart of long-term economic growth. His writings eventually led to a growing economic doctrine known as innovation economics, which has attempted to reformulate the two conventional economical theories (Keynesian and neoclassical) into one which places knowledge, technology, entrepreneurship and innovation at the center of it's model. Innovation economists attempt to explain today's economic growth without the traditional capital accumulation paradigm.

http://en.wikipedia.org/wiki/Creative_destruction
http://en.wikipedia.org/wiki/Innovation_economics
"A new truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it."-MP
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torius71
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Post by torius71 »

TrustNoOne wrote:This has been a good thread, and one that has raised my level of optimism regarding our economy and innovation.
Be sure not to repeat this too loudly in a public venue for risk of being rushed to the nearest medical facility. :lol:
"A new truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it."-MP
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Post by Zav »

Valuethinker wrote:
Aka structural unemployment. I think that's widely understood.

What's at issue now is how much of current unemployment is structural v. cyclical.

That breaks down to a RBC vs. Keynesian/ neoKeynesian argument?

Or are you throwing in strategic trade theory? In which case, I think the empirical evidence for that is weak. We used to think Japan's MITI, but no one really mentions that now.

So what is their argument? That if wages and prices are fully flexible that you can still get unemployment, which is not the result of structural factors (ie mismatch between employees and employment derived from skillsets, locations or costly search?).

Isn't it more reasonable to simply argue we have a deficiency of aggregate demand? (plus nominal wage rigidity)
It is not easy to summarize their argument in a couple sentences or paragraphs.
Valuethinker wrote:
I am not sure what 'innovation systems' are, nor have I read anything by Vass.

However innovation in the micro does not correlate with higher profit margins or profit growth, and 'macro' innovations (I am guessing here by what you mean as you still have not defined them) are hard to measure (in terms of their effects on the overall economy).

It's appropriability of innovations that creates superior profit margins: think Apple v. Linux. Both may create equal value for customers, but Apple grabs a lot larger chunk of that value.

Less innovative industries tend to have higher profit margins, because there's nothing to compete away the margins of incumbents. Think tobacco.

It's not at all clear to me that US companies, or anybody else, is not innovating. The first Dreamliner is due to be delivered-- 3 years late, but to be delivered this week. That's one hell of an innovation in a major industry.

I look around and I see constant evidence of innovation-- maybe even accelerating innovation.

Think the cost of a long distance international phone call now vs. 22 years ago. *that's innovation*.
I am not sure how many times I have to say this, but I am not arguing with you on this position.
[/quote]

Good to know because it seems to undercut your original position?[/quote]

Not really. As I said earlier, I think that our institutions need an update so we can advance more quickly. I argue this due to what I see at work, and due to what my colleagues complain about. At work, I evaluate the costs and benefits associated with policies aimed at promoting changes, such as implementing new innovations or inventions, that can potentially contribute to our macro economy.

What we are concerned with is that more and more policies, with very substantial long-term returns, are starting to get delayed or rejected due to the steady accumulation of unnecessary bureaucracy. Furthermore, the bureaucracy can get substantially worse as the policy's expected returns increase.
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Post by Valuethinker »

Zav wrote:
Valuethinker wrote:
Aka structural unemployment. I think that's widely understood.

What's at issue now is how much of current unemployment is structural v. cyclical.

That breaks down to a RBC vs. Keynesian/ neoKeynesian argument?

Or are you throwing in strategic trade theory? In which case, I think the empirical evidence for that is weak. We used to think Japan's MITI, but no one really mentions that now.

So what is their argument? That if wages and prices are fully flexible that you can still get unemployment, which is not the result of structural factors (ie mismatch between employees and employment derived from skillsets, locations or costly search?).

Isn't it more reasonable to simply argue we have a deficiency of aggregate demand? (plus nominal wage rigidity)
It is not easy to summarize their argument in a couple sentences or paragraphs.
So I'll take it either that you cannot, or will not.

I'll disregard it then until the 'new paradigm' becomes more clear.
Valuethinker wrote:
I am not sure what 'innovation systems' are, nor have I read anything by Vass.

However innovation in the micro does not correlate with higher profit margins or profit growth, and 'macro' innovations (I am guessing here by what you mean as you still have not defined them) are hard to measure (in terms of their effects on the overall economy).

It's appropriability of innovations that creates superior profit margins: think Apple v. Linux. Both may create equal value for customers, but Apple grabs a lot larger chunk of that value.

Less innovative industries tend to have higher profit margins, because there's nothing to compete away the margins of incumbents. Think tobacco.

It's not at all clear to me that US companies, or anybody else, is not innovating. The first Dreamliner is due to be delivered-- 3 years late, but to be delivered this week. That's one hell of an innovation in a major industry.

I look around and I see constant evidence of innovation-- maybe even accelerating innovation.

Think the cost of a long distance international phone call now vs. 22 years ago. *that's innovation*.
I am not sure how many times I have to say this, but I am not arguing with you on this position.
Good to know because it seems to undercut your original position?[/quote]

Not really. As I said earlier, I think that our institutions need an update so we can advance more quickly. I argue this due to what I see at work, and due to what my colleagues complain about. At work, I evaluate the costs and benefits associated with policies aimed at promoting changes, such as implementing new innovations or inventions, that can potentially contribute to our macro economy.

[/quote]

Without knowing what you do, that's interesting but not terribly relevant.

Maybe you create Genetically Modified Food? Work on 3rd Generation Nuclear Power plants? There is considerably more regulation on those, although the thrust on the 3G is to *reduce* regulation post the 2G. After Fukushima we shall see.
What we are concerned with is that more and more policies, with very substantial long-term returns, are starting to get delayed or rejected due to the steady accumulation of unnecessary bureaucracy. Furthermore, the bureaucracy can get substantially worse as the policy's expected returns increase.
[/quote]

Which bureaucracy do we mean? The EU? Yes, but it's not clear it is stifling innovation: in cars, the EU is driving innovation very hard. Look at the latest generation of BNWs on fuel economy and performance on *petrol* (not diesel) engines.

Regulation can create new demands and drive innovation-- pollution control legislation certainly does.

Or do we mean within corporates? Well, in the pharma industry innovation has been outsourced to the universities/ biotech spinouts. Big pharma has a very poor R&D record, so they are focusing on the 'D' and innovative molecules are being insourced.

A whole virtual industry.

Boeing has driven innovation across its entire supply chain (and it has encountered huge problems, and had to in source: take note Ronald Coase!)-- that's why the Dreamliner is late.

But System 360, the 747... all the great innovations of the postwar years took a very long time aborning, and were way over budget (and OS 360 was a descendant of the Sage air defence system, which was an economic disaster).

Just a historian's perspective on 'updating institutions'. The record of that is poor, and the most enduring human institutions (the British Army, the Catholic Church, Oxford and Cambridge Universities-- the first dates from 1650s, the second from the 4th century, the other two from the 1200s-1300s) don't evolve very quickly. By contrasts, few corporations last as long as a century-- mostly it is family ones, like the Rothschilds.

Human political institutions have not evolved very far from Ancient Athens.

The Grenadier Guards at Corruna and Mons will be remembered a lot more than Blair's second Parliament. Yale University a lot longer than the presidency of GW Bush. And both probably have more impact on the human condition in the long run (well, if not the Guards, then the Rifles ....;-)).
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Post by Valuethinker »

torius71 wrote:
Valuethinker wrote:
I'm good to go on Christiansen, but I am not aware of the linkages to conventional economic theory.

ie I am not sure we have an economic model that says 'this innovation is sustaining, this is disruptive' and the macroeconomic effects are xx and yy.
I, likewise, am unaware of any linkages to conventional economic theory, especially in any quantitative sense. This might however make a worthy PhD thesis. :idea: :) Considering the ambiguity surrounding the term, this would be quite the undertaking.

Valuethinker wrote:But an innovation in economics is basically 'more output for a given set of inputs (land, labour, capital etc.)'.

Just on disruptive innovations, my observation is it usually blows the hell out of the profit pools in the value chain. Not even the innovators make a lot of money out of it.

Since that money goes somewhere it logically goes into the hands of the end users (the customers) who have more money to spend on other things.

And that is called, roughly 'progress'.
I think you are speaking of "creative destruction". A term that originated with Marx and Engels in the 19th century, but was later popularized by Joseph Schumpeter. Schumpeter described the innovative entry of entrepreneurs into established markets as both destructive, but also at the heart of long-term economic growth. His writings eventually led to a growing economic doctrine known as innovation economics, which has attempted to reformulate the two conventional economical theories (Keynesian and neoclassical) into one which places knowledge, technology, entrepreneurship and innovation at the center of it's model. Innovation economists attempt to explain today's economic growth without the traditional capital accumulation paradigm.

http://en.wikipedia.org/wiki/Creative_destruction
http://en.wikipedia.org/wiki/Innovation_economics
Actually the definition I was using was not 'creative destruction' but, rather, simply the outward shift in the Cobb Douglas Production function (smooth inverse curve with output a function of land, labour and capital and 'x')-- more outputs for the same imput

y = f (L, L, K)

We can measure the 3 inputs well enough, but it's hard then to relate that to output-- why Toyota was so vastly more productive than British Leyland. the difference is 'innovation'-- technology yes but more importantly the use of that technology, the 'know how' embedded in 'learning by doing'.

An example. Roughly speaking the price of solar cells falls by 20% for each doubling of world capacity. A pretty durable result.

Wind is a little lower, say 15%. Given how mature wind is, and how big those turbines are, that's impressive. That we are still figuring out ways to build better wind turbines, and locate them better, when a wind farm can be 1000 MW (ie the size of a coal fired power station).

That's called 'learning by doing'.

Innovation in an economic sense is simply doing more with the same inputs, and/or doing something new with those inputs.

On capital accumulation, the famous result is Solow's. I can't remember the exact one, but Solow estimated that something like ?70%? of economic growth is 'getting smarter' rather than 'having more capital'.

That debate runs nearly 50 years later, not fully resolved.

But I think most economists would agree that at least 50% of economic growth is about being smarter in how you do things, rather than about having more capital invested.

In the case of a technologically advanced and really mature economy like the USA, that's probably more like 70-80%. Hard to do, because the low hanging fruit (healthcare delivery, perhaps; energy efficiency) are well hemmed in by institutions. So whilst it's relatively easy for the US to become the most efficient manufacturer to consumer distributor (aka the WalMart logistics revolution-- McKinsey estimated something like 40% of US productivity increases in the 1990s was 'Big Box' stores and associated supply chain) and it's hard for Europe, the converse may be true in other areas.

Innovation is so interestingly pervasive. Think about Southwestern Airlines (another disruptive innovation) and the productivity they achieve vs. a conventional airline. When Warren Buffett said 'the Wright Brothers should have been strangled in their crib' he was not talking about Southwestern.
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Post by jimkinny »

bob90245 wrote:
Dan Moroboshi wrote:
bob90245 wrote:This type of topic appears to violate forum policies for fruitlessly arguing over non-actionable issues.
Nah. It does have to do with the underlying principle of stock valuation.
Huh? Well, yes we can have a discussion about stock valuations. Which you are the first to bring up here in this thread.

OK, if we discuss valuations, I suppose someone will tell us that valuations are too high. Therefore, we should sell stocks now. That's actionable. :twisted:
Heh, heh, heh.....IMO, I am all in favor of innovation. :)
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