Latepost Hundred Dollar Bills Are Difficult To Come Upwards By!

It looks similar I but I cannot remain away from the Apple story, amongst Tim Cook making a splash (or a belly flop) amongst his spoken communication inwards New York yesterday together with David Einhorn's proposal coming inwards for scrutiny from investors together with the press. This article inwards the New York Times DealBook does a pretty expert project of summing upwards the proposal together with its underlying thesis, together with I was surprised to run into my scream mentioned, amongst Mr. Einhorn quoted equally having said that my analysis "brings to retention the sometime joke close the economist who refused to selection upwards a $100 mouth on the street because inwards an efficient economy, at that topographic point can’t move $100 bills lying around.” I am flattered that I was fifty-fifty part of this conversation, given that Mr. Einhorn has likely never heard of me nor read my thoughts close marketplace efficiency. I am too grateful that this was all he said close me, because I receive got been defendant of far worse than ignoring hundred dollar bills on the floor. (Just accept a human face at the comment department of my prior spider web log posts). My motives for this ship service are non defensive but I do receive got a weakness of non beingness able to allow an analogy go, peculiarly when it tin move used to expert effect. So, at the run a jeopardy of beingness labeled an egghead, hither is what I intend close hundred dollar bills on floors.

1. Location, location, location: Is it possible that yous could reveal $100 mouth on the street? Sure, but yous receive got to larn really lucky together with the likelihood that yous volition reveal 1 is too going to vary depending on what street yous are walking on. Your odds are likely amend on Rodeo drive inwards Los Angeles, where at that topographic point are wealthy shoppers together with relatively few pedestrians (since no 1 inwards LA walks to a greater extent than than a block) than on a busy street inwards New York, where at that topographic point are literally thousands of people, most of who don't receive got hundred dollar bills, walking amongst you. Apple is 1 of the most highly followed, most talked close stocks inwards the basis together with is to a greater extent than similar Penn Station inwards New York City than Rodeo Drive.  I receive got gone through through Penn Station twice every calendar week day, on my commute, for the final 20 years together with receive got never flora a hundred dollar mouth on the floor. In fact, I don't intend I receive got fifty-fifty flora a twenty. I receive got flora a few dollar bills, several quarters, lots of dimes together with thousands of pennies.   It is solely possible that this is because I am a finance professor together with am blinded past times my belief inwards efficient markets, but most of the readers of this spider web log are not. So hither are my questions for you: Have yous e'er flora a hundred dollar mouth on the floor? How close a xx dollar bill? Do yous reveal a lot of these? (If so, could yous delight allow me know the street that yous walk on... I am willing to relocate... Incidentally, I pose this enquiry to my shape of 400 today together with at that topographic point were iii people who said that they had flora $100 bills on the ground. Two of them were inwards bars at the time. There is a smashing analogy inwards hither for investors but I am afraid to fifty-fifty larn there.... So, I volition piece of occupation out it to your imagination....)
2. There is a cost to looking for "free" money: Perhaps, Mr. Einhorn's betoken is that those of us who receive got never flora hundred dollar bills on the flooring receive got but non been looking, but at that topographic point are people who do together with I am non sure that it is a lucrative enterprise. Using the Penn Station analogy again, at that topographic point are soundless a few populace phones left inwards the station, together with every solar daytime equally I walk through, I run into people doing the telephone scan, where they cheque the modify alcove for coin that callers receive got left behind. Could yous make money doing this? I approximate so, but it depends upon how much value yous attach to your time.
3. And spotter your dorsum pocket: I receive got spent to a greater extent than of my life straightaway inwards New York City than whatever other part of the world, together with I approximate that some of the native New Yorker has rubbed off on me. If I did run into a hundred or xx dollar mouth on the flooring inwards forepart of me, my scam detection antenna goes into high alert. From experience, I know that when something inwards this urban center looks similar tardily money, at that topographic point is a catch. In this particular case, I would non move surprised to reveal out when I curvature to selection upwards the "free" hundred dollar mouth that it is (a) a simulated mouth together with (b) that my dorsum steal volition move picked spell I am bending over.  
4. Don't construct expectations around luck: If I did reveal a hundred (or fifty-fifty a twenty) dollar mouth on the flooring together with I felt prophylactic plenty to lean over together with selection it up, I would experience "lucky" that I flora it, but I would non fault serendipity for skill. I would sure non construct my identify budget on the supposition that I volition reveal non 1 but iii hundred dollar bills on the flooring every calendar month inwards Penn Station. That would move non only foolhardy but a recipe for a unbalanced budget.

I receive got zip personal against Mr. Einhorn, other than the criterion New York lament that he is a Mets fan together with non a Yankee fan. I receive got agreed amongst him by together with large together with article inwards the New York Times DealBook does a pretty expert project of summing upwards the proposal together with its underlying thesis, together with I was surprised to run into my scream mentioned, amongst Mr. Einhorn quoted equally having said that my analysis "brings to retention the sometime joke close the economist who refused to selection upwards a $100 mouth on the street because inwards an efficient economy, at that topographic point can’t move $100 bills lying around.” I am flattered that I was fifty-fifty part of this conversation, given that Mr. Einhorn has likely never heard of me nor read my thoughts close marketplace efficiency. I am too grateful that this was all he said close me, because I receive got been defendant of far worse than ignoring hundred dollar bills on the floor. (Just accept a human face at the comment department of my prior spider web log posts). My motives for this ship service are non defensive but I do receive got a weakness of non beingness able to allow an analogy go, peculiarly when it tin move used to expert effect. So, at the run a jeopardy of beingness labeled an egghead, hither is what I intend close hundred dollar bills on floors.

1. Location, location, location: Is it possible that yous could reveal $100 mouth on the street? Sure, but yous receive got to larn really lucky together with the likelihood that yous volition reveal 1 is too going to vary depending on what street yous are walking on. Your odds are likely amend on shared his disdain for the over-the-top assumptions that analysts were making for companies similar Green Mountain Coffee. In fact, I volition offering an declaration for Mr. Einhorn's proposal that I intend is to a greater extent than noun than whatever that I receive got heard made yet. His proffer that Apple number preferred stock to its mutual stockholders is built on the presumption that, amongst involvement rates at historic lows, at that topographic point is a void inwards the marketplace straightaway for  investors (perhaps institutions that demand the cash together with larn a intermission on taxes on preferred dividends) who would similar to brand a reasonable render on a prophylactic investment. The supposition is that these investors volition  pay a premium (over together with inwards a higher identify "fair" value, given the run a jeopardy of the cash flow) for the 4% preferred stock that Apple volition issue, together with that mutual stockholders volition capture this premium (by selling the preferred shares that they are granted past times Apple to these "premium paying" investors). That is non an unreasonable argument, but my skepticism is based on 2 considerations. The start is that if this is true, nosotros should move able to run into the evidence inwards the preferred stock market, where preferred stock issued past times companies that receive got corporation repose sheets together with noun cash flows should move trading at premium prices. Is that happening? I don't know, but if Mr. Einhorn wants to brand his example stronger, he should introduce testify of the phenomenon, maybe past times comparison preferred dividend yields to earnings yields on mutual stock together with corporate bond spreads. The 2d is the question of scalability. It is possible that Apple's mutual stockholders may move able to capture some of this premium amongst the start $50 billion of preferred stock issue, but volition the premium persist equally the number gets scaled upwards to $100 billion or to $430 billion? I don't intend it will, but I remain willing to move persuaded otherwise, together with the onus is on Mr. Einhorn to render the justification. In fact, much of the vibrations around this proposal comes from the misconception that a fellowship tin pick out both the human face value of its preferred stock together with the dividend yield. If Apple issues $500 billion (face value) inwards preferred stock together with sets the dividend yield at 4%, that preferred stock volition non receive got a marketplace value of $500 billion.
   
   I started this ship service amongst the notation that Tim Cook was inwards San Francisco yesterday, delivering a spoken communication to a conference. Listening to what he said, I was reminded of why I proceed to move frustrated amongst Apple's management. First, I don't intend whatever CEO should move labeling a proposal past times 1 his leading stockholders equally a "silly sideshow", fifty-fifty if he disagrees amongst that plan. (Correction: As some of yous receive got noted, Mr. Cook labeled the lawsuit equally a giddy sideshow, together with non the proposal itself. Influenza A virus subtype H5N1 piddling to a greater extent than palatable, but Einhorn has the correct to sue together with Apple has the correct to show, inwards court, that the lawsuit is frivolous together with larn it thrown out... )  Second, Mr. Cook made a highly publicized spoken communication together with told investors zip of substance. I know that he dropped nuggets of data that may or may non move useful to investors, but talking close how much to a greater extent than coin Apple volition pay developers side past times side twelvemonth is the equivalent of a dinner party host amongst an elephant inwards the dining room talking to his guests close the the character of the identify settings. At the moment, investors inwards Apple are centered on the $137 billion inwards cash that the fellowship has accumulated, together with continues to add together to, together with they desire to know what Apple's plans are for that cash. I am sure that Tim Cook has plenty of good paid consultants, giving him advice, but I volition offering mine for free, knowing that it volition move ignored. Mr. Cook, if yous receive got zip of marrow to enjoin investors, it is best that yous non verbalize at all, because if yous do brand to a greater extent than speeches similar the 1 yous delivered yesterday, yous volition to a greater extent than harm than expert (as the marketplace reply showed)!
   
   Returning to my key theme, what would I do if flora a hundred dollar mouth on the floor? First, I volition cheque my environment to brand sure that I am non the sucker inwards a con game, together with I volition together with then curvature downwardly together with selection it up. Second, I promise (to move ethical is tardily inwards the abstract, much to a greater extent than hard inwards practice..) that I volition recall what my woman rear taught me together with human face to run into if I tin reveal the legitimate possessor of that cash. If I do not, I volition intend of it equally my lucky reveal together with process it accordingly. I will, however, non pass the next days searching for hundred dollar bills on the floor, nor volition I construct my investment portfolio on the supposition that I volition maintain finding to a greater extent than costless coin on the floor.

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