I was given my first story to check. I vaguely remember that it was something about new mutual fund products, and it was written by a freelancer. It sounded good — that is, until I started checking it. In essence, the entire thing was wrong. Up until that point, words on the page, in their unambiguous black and white, had always conveyed such authority that I didn’t question them. I never read that way again. An editor once said to me that good writers were really dangerous because you could be so seduced by their writing that you simply drank in their unsupported leaps of logic.

Answers to questions about art

Carlo, a student at the University of Kent, sent me some questions for the thesis he’s writing. He said I could blog my answers, so:

1)Has contemporary art become just a commodity? Do buyers see art purchases mainly as an investment?

No; no. At the very highest end (think Warhol, or Richter) contemporary art can sometimes approach the status of a commodity. But the overwhelming majority of contemporary art is not a commodity, nor is it seen as such. And while some buyers see some art (again, we’re talking mainly about the richest buyers here, and the most expensive art) as an investment, most buyers do not look at it that way. Despite the fact that many dealers and auction houses are encouraging them to do so.

That said, if you’re spending hundreds of thousands of dollars on an art work, you’re generally going to want some kind of assurance that it has a decent chance of keeping its value, or even perhaps rising in value. Dealers in large part compete on the degree to which they can convincingly answer that question in the affirmative.

2) About the current health of the market. In 2013 auction sales were down in China (10%) and the UK (over 5%), but in America increased of 14%. In the beginning of 2014 auction sales picked up again, it seems. Christie’s evening auction in London, for instance, did 40 millions more than the previous year. Is this a sign the market is doing well? And what about the middle market that is never mentioned in the news? And private sales?

The market is very healthy right now — healthy to the point of feverish, you might say. But most of the market, as always, at least in dollar terms, is at the very top end. You don’t hear about the “middle market” because it’s never much of a market to begin with. Private sales are the same way: there is a small number of dealers doing very well by selling a small number of extremely expensive artworks. Art isn’t a middle-class thing any more, and if you’re trying to make money by selling to the middle classes, you’re struggling.

3) In an article on your blog “Is the end of the art-market bubble?” you state there is an ongoing bubble. What are the signs which make you think there is one? And is this bubble becoming/will become eventually a speculative one?

Flipping, mainly; it’s a bearish, toppish sign. Where there are flippers, there are speculators. And art dealers, of course, have always been speculators. The question is whether the flippers and the speculative dealers have become the marginal price setters. They probably have in Oscar Murillo, but have they in general? I’d say not yet.

4) What role auction houses play in creating this bubble? Are they to blame or other actors of the market for creating it? And does the practice of leverage or “on-credit” purchases help to inflate the prices?

Auction houses love bubbles: that’s where they make the big bucks. So they try very hard to get the biggest baubles to sell, and to get the most avaricious buyers to bid up to and beyond their means. If it were entirely up to the auction houses, of course, there would always be bubbles in every asset class. So they can’t do it on their own. But they can add fuel to the fire.

5) Do big prices influence the cultural value given to an artwork?

Yes, especially in contemporary art. There are exceptions, but in general if you find an artist getting big prices, that artist is going to have a lot of cultural cachet.

slavin

slavin:

Stanford Professor Andrei Linde celebrates physics breakthrough (by StanfordUniversity)

This video is so beautiful.

I have some friends who are religious, and I envy that, because so much of science is just, you know, kind of a downer.

But then there’s this: the tears brought to a man’s face, who then says: “it’s an understanding of nature at such magnitude that it overwhelms.”

Wherever it comes from, more of that.

Tom Keene: What is the direct evidence you have that this gentleman changed the technology world with this cryptocurrency?

Leah Goodman: I connected all these dots through. Through forensic research. And forensic research isn’t about supporting what you think is true. It’s about eliminating what you think a candidate may or may not represent. All you’re doing — I want to make this really clear right now — you’re eliminating candidates. We cannot eliminate this man at all. And in my confrontation with him, he confirmed his involvement. End of story.

Tom Keene: Is that journalism? Where you’re working on a Type 2 construct, where you’re pulling away, to “we’ve eliminated these other people”? But, there could be other people out there that you could do the same action with, right?

Leah Goodman: You could go off on the other way, and say “let’s find reasons to support a person”. But the best way to do forensic research is to eliminate people, not the other way around. You don’t say “I have a conjecture, let me find every way to support it”. No.

2 suggestions for Nest

The Nest thermostat is a great product. But there are two software updates it could really do with.

  1. One of the best features of Nest is “auto-away”: when you’re not at home, it turns the energy down. (Which, in the winter, means your house gets colder.) And the best feature of Nest is that it can be controlled remotely: when you’re on your way home, you can turn the energy back up, so you arrive to a nice warm house.

    The problem is that the two features end up working against each other. If you’re not at home, you can set the thermostat to “Home” remotely, and it will spring to life — briefly, before it realizes that you’re not actually at home after all, at which point the auto-away kicks in. The result is that when you arrive, your home is not warm, and you have to wait a couple of hours (if you have a slow radiator system, like I do) before it becomes comfortable.

    The solution here is easy: when a user switches the Nest from “Away” to “Home” remotely, then allow the home to warm up without  the auto-away kicking in. How hard can that be?
  2. Heating devices (boilers, etc) normally work — but, sometimes, they don’t. When they stop working, that’s bad news. Everybody wants to be alerted as quickly as possible when the boiler isn’t working.

    Nest could do this quite easily. Sometimes, it will be trying to heat the house, but the house won’t be getting any warmer. Or sometimes the thermometer in the Nest will show that the temperature in the house has dropped below the minimum setting. In those cases, Nest should send out a simple email alert, saying “hey, there might be something wrong with your heater”. This would be very useful!
This picture has been doing the rounds, and it’s certainly an interesting explanation of the Economist’s house style. I particularly like the idea of a red rectangle as a way of keeping the chart identified as coming from the Economist, even when it moves onto Twitter, Tumblr, etc. But, why on earth would you want to “move the chart as far into the background as possible”? There’s an inferiority complex, here, with respect to “the surrounding article”, which is unhealthy.
Most interesting, however, is the squib at the bottom, saying that the chart “has been created for educational purposes only” and “has not been created by The Economist”. Which means that this chart shows what a *designer* thinks an Economist chart should look like. As opposed to a data visualization professional, who understands numbers and how to convey information using charts. I’ll give you a second, here: what’s the big screaming error in this chart, which the designer of this infographic has completely missed?
…
That’s right, it’s charting share price, rather than market cap or enterprise value. In other words, the chart is conveying no useful information at all, since the relative share prices of the two companies tell you nothing about their relative value. Bad chartist!

This picture has been doing the rounds, and it’s certainly an interesting explanation of the Economist’s house style. I particularly like the idea of a red rectangle as a way of keeping the chart identified as coming from the Economist, even when it moves onto Twitter, Tumblr, etc. But, why on earth would you want to “move the chart as far into the background as possible”? There’s an inferiority complex, here, with respect to “the surrounding article”, which is unhealthy.

Most interesting, however, is the squib at the bottom, saying that the chart “has been created for educational purposes only” and “has not been created by The Economist”. Which means that this chart shows what a *designer* thinks an Economist chart should look like. As opposed to a data visualization professional, who understands numbers and how to convey information using charts. I’ll give you a second, here: what’s the big screaming error in this chart, which the designer of this infographic has completely missed?

That’s right, it’s charting share price, rather than market cap or enterprise value. In other words, the chart is conveying no useful information at all, since the relative share prices of the two companies tell you nothing about their relative value. Bad chartist!

I think for a number of decades, there was this very odd recruiting climate where Wall Street and consulting firms became the default option for students at good schools who didn’t know what they wanted to do after graduation. If you knew you were going to be a doctor, but you didn’t feel sure about your options, Wall Street was an incredibly enticing option. It created a generation of accidental bankers, and some of them did the wrong thing. I think now what you’re seeing with the competitiveness is the people who became bankers, they really want to be bankers. And I think that’s a good thing because it’s better for the banks and the rest of the economy to have people who are talented.

I think Kevin Roose is exactly wrong here. Maybe The Epicurean Dealmaker can explain why?

A Conversation About Young Wall Streeters - NYTimes.com