The Finance To Value Framework

There are two major failure modes in startups. The first common failure mode is the thing you make doesn’t get adopted. That’s called not finding product market fit in startup lingo. The second common failure mode is “getting too far out over your skis” and it happens to companies that do find product market fit but mess things up by building an inappropriate cost structure (and capital base) and it all comes crashing down on them when they either can’t continue to raise money at ever increasing valuations and/or when they can’t grow into their cost structure quickly enough. The first failure mode comes with the territory. The world of startups is all about experimentation. Most experiments fail. If this happens to you, it sucks, but that is what you signed up for. The second failure mode is entirely avoidable and way more common than you might think. The capital
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Saturday links: embracing ignorance

Startup links: degrees of difficulty

Latest posts at TheMaven

I’ve had a lot going on lately. I have resigned from AdvisorShares (I will have more on that soon) but have still been doing a lot of writing at TheMaven. Some of my recent posts include; A humorous take on hedge funds. A new look at the permanent portfolio. Whether UBI is insane or brilliant. Currently we are in Kauai doing some hiking, having a tough time finding beaches (the ones we usually go to here have been rendered unsafe for now due to the floods in Hanalei). But in the meantime here are some pictures from the hikes we have done so far, some of the scenery and of course a fire truck. From Sleeping Giant Trail that starts out in Kapa’a 20180429_091931 Awa’awapuhi Trail lookout in Kokee State Park near Waimea Canyon. 20180430_105336 Part of Waimea Canyon on Highway 550. 20180430_131807 Bali Hai near sunset. 20180428_180954 bl Fire Truck IMG_20180429_183311_028

Final Random Thoughts

I have resigned from AdvisorShares effective April 30th. This is my last regular blog post at Alpha Baskets, although I will be writing one more weekly Market Update next Monday. I will of course still be posting at TheMaven, Seeking Alpha and of course here at From the post; This will be my final post here at Alpha Baskets, I am moving on from AdvisorShares after a little over four years. For my parting shot I wanted to try to summarize some of the bigger picture ideas that we’ve discussed here and tie them together on my way out the door. And from my page at TheMaven; Has a bear market started? Is active management dead? 30743490_10156187678129019_7456852550650691584_n 30688628_10156185321514019_2966057058308194304_o 29983531_10156179890974019_3213598365996548096_n  

Markets Don’t Close 4/20 On A High

The weekly Market Update is posted at Alpha Baskets and includes the following; Barron’s devoted a lot of pixels to the latest goings on with the slope of the yield curve. Earlier in the week the 2-10 treasury spread got close to 40 basis points before widening out to 49 basis points at the end of the week. This is something we have been closely following here for months. It is important to understand at a basic level why yield curve dynamics are so important. When the curve is positively sloped, which is the normal relationship, then access to capital is easier from the standpoint that lending money is a profitable endeavor for the banks. Accessing capital is crucial for growth, plant expansion, capacity expansion and so on. When the yield curve inverts, borrowing money as a means of accessing capital becomes harder to do thus it can be contractionary
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The AVC Audience

As I slowly heard toward moving the WordPress instance that hosts AVC to another provider, I was asked how large the audience was. So I went and looked for the first time in a long while and sent that info to a potential new provider. And I figured you all might be interested too. So here are some screenshots from Google Analytics: This is the total usage over the last twelve months.     This is active users (28 day, 7 day, one day) over the past year.   And here is a bit more about where you all come from and what kind of device you use to read AVC.


Albert Wenger — May 2, 2018
Uncertainty Wednesday: Beliefs (Cont’d) Albert Wenger — April 30, 2018
World After Capital: Getting Past Capital (Overview, Population)

When Knowing What Will Happen Isn’t Enough

My latest post at Alpha Baskets is up and includes the following; As I write this post on Monday afternoon Bitcoin is just under $6800. At that figure Yahoo Finance has it down 60% from its early January high. Obviously, people were buying at/near the highs. How many of those folks are looking back at merely a bad trade and how many have been crushed by over allocating to something that is down 60%? And from my page at TheMaven; Ben Carlson takes down the 200 DMA; I respond. Speaking of TheMaven, I am up in British Columbia for a conference with TheMaven. We landed in Vancouver last night, up to Whistler now until Friday and then back to Vancouver until Sunday. The view from our Airbnb last night in Vancouver. 30629200_10156178748099019_5562160580225138688_o Deep Cove 20180411_095456 Whistler 20180411_131715 backlight

Grim Reaper…

Do you know how many people died worldwide last year? According to the Ecology Global Network, 55.3 million people died which, one might say, compares “favorably” to the 131.4 million who were born (~250 births every minute) globally. The causes of death, while numerous, provide a somewhat morbid roadmap as to where one might expect future innovation. Venture investors look for technologies that will have the greatest impact on the largest number of people (“big market syndome”). Dow Jones VentureSource reported that the two most active biotech sectors in 2017 were the immuno-system and blood categories, which together raised $5.3 billion. In particular, biotech VCs have done a marvelous job over the last few decades backing entrepreneurs who are developing therapeutics to address many of the most prevalent diseases. And now here comes the healthcare technology sector (software and services), which saw $5.8 billion invested in
Mortality Disease
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Tariffs Throw A Cat Amongst The Pigeons

The weekly Market Update is up at Alpha Baskets and includes the following; Bitcoin had a bit of a tumble last week down as much as 10%, trading in the $6500’s for a time on Friday before snapping back to $7000 over the weekend. The cryptocurrencies continue to be fascinating on several levels including what seems like compressed bull and bear market cycles, it was up over 1000% in about a year, YTD in 2018 it is down more than 50%. If it turns out to go poof (not a prediction on our part) then the hindsight bias will come from all corners pointing out it was never backed by anything, never tied to anything, it was simply created and started trading. Despite the large YTD decline though it is tough to finds signs of panic. Depending on your Twitter feed, the people who were skeptical at $19,000 are probably
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Don’t Let Big Tech Ruin You

My latest post for Alpha Baskets is published and includes the following; There was one sentence that made me laugh out loud; “Passive investors who want to avoid the overconcentration risk from cap-weighted indexes can buy funds that own equal proportions of each stock in an index …” The idea may be perfectly valid but it is clear to me that the person who decides to switch to an index fund that uses an alternative weighting process is not a passive investor, they are making a very active decision, using what might be a passive vehicle to do it. And from my page at TheMaven; A two part dissection of the S&P 500’s current flirtation with its 200 DMA and what I am doing about it. Part 1 and Part 2. 29872864_2120689411545834_7228070605014418612_o

Don’t Like Amazon’s USPS Deal? Blame Congress

Congress, Not Amazon, Messed Up the Post Office Legislators passed a law that made the USPS less competitive with the private sector. Bloomberg, April 4, 2018.     Before the news cycle gets consumed by the U.S.-China trade war in the making, let’s go back to something I find much more intriguing: the U.S. Postal Service. … Read More The post Don’t Like Amazon’s USPS Deal? Blame Congress appeared first on The Big Picture.

Did Anyone Get The License Plate?

The weekly Market Update is posted at Alpha Baskets and includes the following; Tech was also seen a driver of volatility after leading the market higher in January. While you might think that tech had a relatively bad quarter that was not the case. Looking at the more heavily traded, broad tech sector funds they were actually higher on the quarter as were narrower tech-themed niche funds. While there were some very loud news stories and painful declines in select names, the gains in tech broadly might serve as a reminder that most investors would be better off not trying to trade fast, short term moves. And a couple of recent posts from my page at TheMaven; There’s a lot of morons giving out investment advice. Is it over for the cryptos? Age related steps to take for retirement planning. On Friday I hiked with a couple of
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Get your 2018 employee compensation data here!

Looking for great employee compensation data? Take part in our eighth annual Holt-MM&K-Buyouts Insider PE/VC compensation survey and get a free executive summary. Plus, you will be able to purchase the full report at a 45 percent discount. Ready to go? Click the following link to download this year’s survey: Buyouts Insider 2018 North America Questionnaire The survey is designed to be filled out by CFOs or managing general partners on behalf of all the employees of their firms. The deadline to return your survey to is Friday, June 1. Results of the survey will be published in the next edition of the Holt-MM&K-Buyouts Insider Private Equity and Venture Capital Compensation Report, North American Edition, due out this fall. All individual data is kept confidential; we publish only aggregate statistics. If you’d prefer the survey be emailed to you, please request a copy from Executive Editor David Toll
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Markets Crumble Under The Weight of Tariff Threats

The weekly Market Update is posted at Alpha Baskets and includes the following; As a qualitative observation this drop doesn’t feel as panicky as the one in early February but interestingly both declines in SPX terms stopped at that index’ 200 day moving average at least that was the case at the close on Friday. And from my page at TheMaven; Thoughts on the 200 DMA holding. Is the new shipping futures ETF a third degree burn waiting to happen? 29662886_2114216668859775_7504237780332605122_o 28947905_2114736345474474_5776270274659997274_o 29063876_2114743078807134_5266616263679632876_o

There’s An ETF For That

My latest post at TheMaven looks at Howard Mark’s thoughts on managing volatility over the course of the stock market cycle and includes the following; If you knew you could get an 8% return every single year for the next 20 years, I mean exactly 8% every year, and that the stock market would have a volatile ride to come out at the same spot in 20 years you’d take reliable 8% instead of the volatility. And my latest post at AlphaBaskets has this; If volatility is back, it makes sense for investors to ask themselves whether they should attempt to manage or smooth out their portfolio’s volatility. To my way of thinking, this is clearly part of an active investment strategy, but I would remind readers that active strategies don’t have to be implemented using only active funds they can be implemented with index (passive) funds.  13131433_1733200493628063_1103902360689790572_o 13584970_1762030084078437_4985996915999141381_o (2)

Monday links: model explanations

March Magic

This week’s Market Update is posted at Alpha Baskets and includes the following; The ten year anniversary of Bear Stearns going under was last week. It was an amazing period of history for markets as Bear was of course a venerable name on Wall Street and its failure created more awareness that any company can fail and of course even bigger names than Bear went on to fail or otherwise be rescued by the government. Barry Ritholtz quipped on Twitter that Bear Stearns was bought for less than what the Yankees paid to Alex Rodriguez. And from my page at TheMaven; The cost of retirement might be vastly overstated. A look at a couple of well known fund managers who are changing their strategies to invest in Bitcoin. 28698654_2109452056002903_6032939521562762361_o 28827605_2110528599228582_8417808124678957443_o 29064343_2109329796015129_2784320694095962747_o (1)