7 ms·

Betting on the Engineers

98 points by alexandros 16y ago

mpare 16y ago
This is almost exactly the opposite sentiment as was voiced by Bill Joy just yesterday about Sun's downfall: > As for Sun's downfall, Joy traces it back to the fact that the company's business changed, leaving much of its research in areas where Sun no longer had products. He also blamed the business side for not doing a better job of selling what the technologists at Sun created. "I think if you wound the clock back, I'd like to think that we invented stuff in engineering that could have been marketed better," he said. http://news.cnet.com/8301-13860_3-20005814-56.html http://news.cnet.com/8301-13860_3-20005814-56.html
- jerf 16y ago
  Did you read the article, or just the headline? Your post looks like "just the headline".
sbierwagen 16y ago
Christ, Scott actually bought BP stock after the oil spill? I can see how his "buy stock of evil companies" strategy might work, but typically you do that when the company is actually doing well, and not, say, when they're about to be curb stomped by the US government. Also, his complaint about the "liberal media" is somewhat disingenuous, seeing as how he is part of the liberal media, what with the anti-corporate comic strip and the vegetarianism and the belief in affirmation and the whoa-hoy and the glaven.
- stcredzero 16y ago
  I can see how his "buy stock of evil companies" strategy might work, but typically you do that when the company is actually doing well, and not, say, when they're about to be curb stomped by the US government. But if you're really smart, you buy when they've just been curb-stomped but not killed, then sell after they recover and return to their prior growth curve. (This presupposes that the company does not die and has an upward sales curve.)
- brown9-2 16y ago
  Up until today their stock price was down 25% from a month ago. He's pretty clearly betting that the short-term damage to the stock from the media coverage is just a blip in the long-term outlook of a pretty successful company.
  - sbierwagen 16y ago
    One might quibble that the long term outlook of an oil company are perhaps not the best. Of course, they've got the alternative energy division, which had $5 billion in sales in 2008. Pity it operated at a net loss, costing BP one and a quarter billion dollars.
    - brown9-2 16y ago
      well, "long term" as in next few years, not 50 years.
      - sbierwagen 16y ago
        Your definition of long term is "the next few years"? Even so, the near future prospects of BP aren't terribly good either, what with the crashing price of oil, (good for us, bad for oil companies) the numerous civil lawsuits and (singular) criminal investigation resulting from the oil spill, and the prospect of a moratorium on offshore drilling, coupled with additional regulation.
    - RyanMcGreal 16y ago
      The more scarce oil gets, the more money oil companies will make selling what's left.
    - amalcon 16y ago
      That's just it, though: the long-term outlook is irrelevant. The relevant part is the difference between the long-term outlook and what actually happens in the long-term. This is what speculative investment (which is what he's doing here) is all about: capitalizing on the difference between what is expected and what actually happens. This is also why non-professionals (like myself) should not make purely speculative investments. You really need to have a finger on the pulse of expectations, in addition to what's actually going on.
- patio11 16y ago
  I suppose if one thought both a) it isn't really so bad and b) the government is going to deliver a (self-)righteous spanking to them and spook other investors, one could buy call options for next year.
  - ct 16y ago
    That's a great idea and I'm going to do just that. I looked at the Jan 2011 50 strike which has an Open Interest of 10k (largest of all the other strike prices) for a current ask of 2.14 a contract. The implied volatility isn't too high (35%) as well so the premium for buying those calls don't have too much time value volatility baked in. Plugged in some estimates if bought now and sold on August 1st with the same IV (implied volatility) at different price points assuming it goes back to it's normal trading range of 50 - 60. Profit per contract (% gain in parentheses - divided by current ask price of 214) at different stock prices for BP. 50: 187 (87%) 55: 479 (224%) 60: 852 (400%) The risk of losing the entire premium of 214 per contract by Jan 2011 doesn't seem to likely and the risk/reward ratio seems to be favorable.
- hnal943 16y ago
  I think the reference to the liberal media was tongue-in-cheek.
nrj 16y ago
Damnit. When I click on Dilbert links, I want to be entertained. The world is too depressing to read a serious blog entry from such a comedic genius.
- chrislo 16y ago
  I thought "I admire them in the same way I admire the work ethic of serial killers" was pretty funny. That probably says more about me than the article though ...
  - jbooth 16y ago
    That part was disgusting. If they stop all of the oil immediately, they've already done damage that we'll be cleaning up for decades. They've probably destroyed about 100 billion worth of revenue in the fishing business alone over the next 10 years. And will they be held liable? For causing 100s of billions of economic damage over the medium-long term, let alone the environmental damage? Of course not, because they have good lobbyists and 65% of congress is either corrupt or an idiot who thinks "drill baby drill" is all you need to know about energy policy. Yeah, that's admirable. It used to be we cared about justice in this country, and now we just admire those who evade it the best while they're screwing us.
    - ube 16y ago
      Come on - you haven't seen Dexter? That's an ethical serial killer show. Your points are all well stated but he is quite funny ("nerdgasm"...come on). Otherwise - just add healthcare reform and Wallstreet debacle to your list and then build a bunker and never come out.
      - jbooth 16y ago
        He's cheering for someone who's ripping us all off. That is just plain messed up. Also, you're totally missing the point of Dexter - it's about addiction and powerlessness.
jbooth 16y ago
Note to self : don't take anyone who makes throwaway comments about the "liberal media" seriously. It didn't add to his argument at all, and subtracted by implying that he's doing this more as an "f you" to liberals than out of any rational thought process. EDIT: /me watches the downvotes prove his point about how some people's thought process can be entirely hijacked. Yes guys, the apparent devastation of the Gulf is entirely a product of liberal propaganda -- things are actually perfectly fine.
- mapleoin 16y ago
  Yes guys, the apparent devastation of the Gulf is entirely a product of liberal propaganda -- things are actually perfectly fine. Is the Dodo bird also still alive and well?
  - jbooth 16y ago
    I dunno, I just know that the liberal media is really screwing up the "drill baby drill" rhetoric with their incessant propaganda about a minor accident. They're talking like there's hundreds of thousands of gallons of oil in the Gulf or something.
    - billswift 16y ago
      >It's a catastrophe, no doubt, but even catastrophes have levels. I'm betting the financial damage will be very, very, very bad and not very, very, very, very bad. Where do you get "minor accident" from "very, very, very bad"? He is just saying that the liberal media is, as it usually does (ratings anyone?) exaggerating the situation. It doesn't help either that mass media types covering this kind of problem are usually the sorts that have orgasms from hugging trees.
- scott_s 16y ago
  You're probably unfamiliar with Scott Adams. From reading his comic and his blog, I think he's actually liberal. His comment was probably tongue-in-cheek. It's also worth remembering that he loves pushing people's buttons. Remember that this guy makes jokes for a living.
omouse 16y ago
Why would you admire them? This is one of the problems with our culture. For some reason, it's acceptable to admire and respect someone's behaviour even if it is bad behaviour and unjust behaviour. Why is that acceptable?? We don't admire Hitler for being so efficient at invading countries and killing millions of people, and we don't admire or respect the way that racists or fundamentalists insult and attempt to destroy other people. Do you also admire the Wall St jerks and bankers for screwing people over with bad loans? Do you admire how 'clever' they were?
- pavel_lishin 16y ago
  Well, he did say: > I admire them in the same way I admire the work ethic of serial killers.
- mirkules 16y ago
  It is one thing to hate someone or their ethics, but an entirely different thing to respect their methods. Do not let emotions cloud your (engineering) judgment. (edit: added word engineering)
chaostheory 16y ago
I would also bet on BP having really good lobbyists.
blehn 16y ago
...my theory that you should buy stocks in the companies that you hate the most Wow, that's a pretty sad statement. No wonder our economic system is so fucked up. We've got people out there investing in companies they'd otherwise prefer never existed. Then, of course, there are machines making billions of transactions a day in an effort to game the system. Unless people start investing in companies that they truly believe in, I don't see how this system can do anything but fail in the long run.
- sliverstorm 16y ago
  It has always been very American to love the underdog (maybe it's human, not American, but I myself am not in a position to vouch for the rest of the globe). So, the companies that we like and want to succeed are almost invariably the smaller companies, and the companies we hate are the successful ones.
  - _delirium 16y ago
    I think some of that isn't just hating the successful companies, but the big/boring ones. Betting that the huge firm dominating a market will continue to dominate the market in basically the same way, with minor variants of their current products, probably is often the smart bet, but it's a really boring possibility to root for. Some innovative company shaking up the market is a lot more interesting!
- yummyfajitas 16y ago
  Suppose you want to invest in a company you truly believe in. Where will you get the shares from? Unless someone else thinks it's crap and wants to unload it, there will be no one to buy it from. Luckily, there is a machine out there willing to sell it to you. An evil evil machine.
  - timwiseman 16y ago
    Suppose you want to invest in a company you truly believe in. Where will you get the shares from? Unless someone else thinks it's crap and wants to unload it, there will be no one to buy it from. There are a reasons to sell a shares besides thinking that a company is bad. Sells are also sold to raise capital, this may of course be done by the company itself to raise capital for expansion or in lieu of a loan. This is precisely what an IPO is and companies will also do it post IPO if the cirumstances are right. But individual or institutional stock holders may also sell it to raise capital even while thinking that the company is doing fine and will likely go up over the long run. If the money was invested specifically for retirement or college for instance, it will be withdrawn (the shares sold) for that reason. An individual or instution may also sell some shares to support diversification or to move to a lower risk investment class while believing the company is most likely to prosper. And of course its perfectly rational to sell your shares if you believe an overall market decline is coming, even if the intention is to rebuy those shares when you believe it is near the bottom There will be plenty of people to buy stock in any major company without anyone necessarily believing the stock is bad.
zck 16y ago
Here's the first entry about this, where he discusses why he thinks it's a good idea to buy BP stock now: http://dilbert.com/blog/entry/engineers_to_the_rescue/ http://dilbert.com/blog/entry/engineers_to_the_rescue/
stcredzero 16y ago
Bet on engineers? Do that one better and bet on something even more powerful and absolutely amoral: Bet on basic physics, biology, and math. (Yes, there are ways you can do this in the stock market.)
hristov 16y ago
It is depressing to hear Scott Adams trot out the tired old lie about the liberal media. But he is right that BP is a good buy. The sad truth is that after the Bush years the law is so much in favour of oil companies and the federal courts are so packed with conservative judges, that it is doubtful that BP will have to pay much for this disaster. You probably do not remember but the Exxon Valdes case concluded just a couple of years ago and Exxon got away with paying a very minimal sum considering the scope of the disaster.
- miked 16y ago
  >> it is doubtful that BP will have to pay much for this disaster Since Obama has gotten more campaign contributions from BP (also from Fannie Mae and Freddie Mac) that any other politician in the US, at least we'll know who to blame if it happens.
  - hristov 16y ago
    The thing about Obama receiving most money from BP is misleading. He received most money from individual BP employees, but received no money from BP itself for his presidential campaign, as he took no money from corporations or their political action committees and lobbyists. The fact that Obama received most money from BP individual employees is not surprising because he got record donations from individuals in general. Also, the whole thing will have very little to do with Obama. BP will pay according to the law on the books and the way judges enforce/construe that law. Obama will probably campaign to change the law, but that will not affect the treatment of the spill because ex post facto laws are usually considered unconstitutional in the US. So the spill will be treated according to the law as it was at the time the spill happened.

98 points by alexandros 16y ago

mpare 16y ago

This is almost exactly the opposite sentiment as was voiced by Bill Joy just yesterday about Sun's downfall: > As for Sun's downfall, Joy traces it back to the fact that the company's business changed, leaving much of its research in areas where Sun no longer had products. He also blamed the business side for not doing a better job of selling what the technologists at Sun created. "I think if you wound the clock back, I'd like to think that we invented stuff in engineering that could have been marketed better," he said. http://news.cnet.com/8301-13860_3-20005814-56.html http://news.cnet.com/8301-13860_3-20005814-56.html

jerf 16y ago
Did you read the article, or just the headline? Your post looks like "just the headline".

sbierwagen 16y ago

Christ, Scott actually bought BP stock after the oil spill? I can see how his "buy stock of evil companies" strategy might work, but typically you do that when the company is actually doing well, and not, say, when they're about to be curb stomped by the US government. Also, his complaint about the "liberal media" is somewhat disingenuous, seeing as how he is part of the liberal media, what with the anti-corporate comic strip and the vegetarianism and the belief in affirmation and the whoa-hoy and the glaven.

stcredzero 16y ago
I can see how his "buy stock of evil companies" strategy might work, but typically you do that when the company is actually doing well, and not, say, when they're about to be curb stomped by the US government. But if you're really smart, you buy when they've just been curb-stomped but not killed, then sell after they recover and return to their prior growth curve. (This presupposes that the company does not die and has an upward sales curve.)
brown9-2 16y ago
Up until today their stock price was down 25% from a month ago. He's pretty clearly betting that the short-term damage to the stock from the media coverage is just a blip in the long-term outlook of a pretty successful company.
- sbierwagen 16y ago
  One might quibble that the long term outlook of an oil company are perhaps not the best. Of course, they've got the alternative energy division, which had $5 billion in sales in 2008. Pity it operated at a net loss, costing BP one and a quarter billion dollars.
  - brown9-2 16y ago
    well, "long term" as in next few years, not 50 years.
    - sbierwagen 16y ago
      Your definition of long term is "the next few years"? Even so, the near future prospects of BP aren't terribly good either, what with the crashing price of oil, (good for us, bad for oil companies) the numerous civil lawsuits and (singular) criminal investigation resulting from the oil spill, and the prospect of a moratorium on offshore drilling, coupled with additional regulation.
  - RyanMcGreal 16y ago
    The more scarce oil gets, the more money oil companies will make selling what's left.
  - amalcon 16y ago
    That's just it, though: the long-term outlook is irrelevant. The relevant part is the difference between the long-term outlook and what actually happens in the long-term. This is what speculative investment (which is what he's doing here) is all about: capitalizing on the difference between what is expected and what actually happens. This is also why non-professionals (like myself) should not make purely speculative investments. You really need to have a finger on the pulse of expectations, in addition to what's actually going on.
patio11 16y ago
I suppose if one thought both a) it isn't really so bad and b) the government is going to deliver a (self-)righteous spanking to them and spook other investors, one could buy call options for next year.
- ct 16y ago
  That's a great idea and I'm going to do just that. I looked at the Jan 2011 50 strike which has an Open Interest of 10k (largest of all the other strike prices) for a current ask of 2.14 a contract. The implied volatility isn't too high (35%) as well so the premium for buying those calls don't have too much time value volatility baked in. Plugged in some estimates if bought now and sold on August 1st with the same IV (implied volatility) at different price points assuming it goes back to it's normal trading range of 50 - 60. Profit per contract (% gain in parentheses - divided by current ask price of 214) at different stock prices for BP. 50: 187 (87%) 55: 479 (224%) 60: 852 (400%) The risk of losing the entire premium of 214 per contract by Jan 2011 doesn't seem to likely and the risk/reward ratio seems to be favorable.
hnal943 16y ago
I think the reference to the liberal media was tongue-in-cheek.

nrj 16y ago

Damnit. When I click on Dilbert links, I want to be entertained. The world is too depressing to read a serious blog entry from such a comedic genius.

chrislo 16y ago
I thought "I admire them in the same way I admire the work ethic of serial killers" was pretty funny. That probably says more about me than the article though ...
- jbooth 16y ago
  That part was disgusting. If they stop all of the oil immediately, they've already done damage that we'll be cleaning up for decades. They've probably destroyed about 100 billion worth of revenue in the fishing business alone over the next 10 years. And will they be held liable? For causing 100s of billions of economic damage over the medium-long term, let alone the environmental damage? Of course not, because they have good lobbyists and 65% of congress is either corrupt or an idiot who thinks "drill baby drill" is all you need to know about energy policy. Yeah, that's admirable. It used to be we cared about justice in this country, and now we just admire those who evade it the best while they're screwing us.
  - ube 16y ago
    Come on - you haven't seen Dexter? That's an ethical serial killer show. Your points are all well stated but he is quite funny ("nerdgasm"...come on). Otherwise - just add healthcare reform and Wallstreet debacle to your list and then build a bunker and never come out.
    - jbooth 16y ago
      He's cheering for someone who's ripping us all off. That is just plain messed up. Also, you're totally missing the point of Dexter - it's about addiction and powerlessness.

jbooth 16y ago

Note to self : don't take anyone who makes throwaway comments about the "liberal media" seriously. It didn't add to his argument at all, and subtracted by implying that he's doing this more as an "f you" to liberals than out of any rational thought process. EDIT: /me watches the downvotes prove his point about how some people's thought process can be entirely hijacked. Yes guys, the apparent devastation of the Gulf is entirely a product of liberal propaganda -- things are actually perfectly fine.

mapleoin 16y ago
Yes guys, the apparent devastation of the Gulf is entirely a product of liberal propaganda -- things are actually perfectly fine. Is the Dodo bird also still alive and well?
- jbooth 16y ago
  I dunno, I just know that the liberal media is really screwing up the "drill baby drill" rhetoric with their incessant propaganda about a minor accident. They're talking like there's hundreds of thousands of gallons of oil in the Gulf or something.
  - billswift 16y ago
    >It's a catastrophe, no doubt, but even catastrophes have levels. I'm betting the financial damage will be very, very, very bad and not very, very, very, very bad. Where do you get "minor accident" from "very, very, very bad"? He is just saying that the liberal media is, as it usually does (ratings anyone?) exaggerating the situation. It doesn't help either that mass media types covering this kind of problem are usually the sorts that have orgasms from hugging trees.
scott_s 16y ago
You're probably unfamiliar with Scott Adams. From reading his comic and his blog, I think he's actually liberal. His comment was probably tongue-in-cheek. It's also worth remembering that he loves pushing people's buttons. Remember that this guy makes jokes for a living.

omouse 16y ago

Why would you admire them? This is one of the problems with our culture. For some reason, it's acceptable to admire and respect someone's behaviour even if it is bad behaviour and unjust behaviour. Why is that acceptable?? We don't admire Hitler for being so efficient at invading countries and killing millions of people, and we don't admire or respect the way that racists or fundamentalists insult and attempt to destroy other people. Do you also admire the Wall St jerks and bankers for screwing people over with bad loans? Do you admire how 'clever' they were?

pavel_lishin 16y ago
Well, he did say: > I admire them in the same way I admire the work ethic of serial killers.
mirkules 16y ago
It is one thing to hate someone or their ethics, but an entirely different thing to respect their methods. Do not let emotions cloud your (engineering) judgment. (edit: added word engineering)

chaostheory 16y ago

I would also bet on BP having really good lobbyists.

blehn 16y ago

...my theory that you should buy stocks in the companies that you hate the most Wow, that's a pretty sad statement. No wonder our economic system is so fucked up. We've got people out there investing in companies they'd otherwise prefer never existed. Then, of course, there are machines making billions of transactions a day in an effort to game the system. Unless people start investing in companies that they truly believe in, I don't see how this system can do anything but fail in the long run.

sliverstorm 16y ago
It has always been very American to love the underdog (maybe it's human, not American, but I myself am not in a position to vouch for the rest of the globe). So, the companies that we like and want to succeed are almost invariably the smaller companies, and the companies we hate are the successful ones.
- _delirium 16y ago
  I think some of that isn't just hating the successful companies, but the big/boring ones. Betting that the huge firm dominating a market will continue to dominate the market in basically the same way, with minor variants of their current products, probably is often the smart bet, but it's a really boring possibility to root for. Some innovative company shaking up the market is a lot more interesting!
yummyfajitas 16y ago
Suppose you want to invest in a company you truly believe in. Where will you get the shares from? Unless someone else thinks it's crap and wants to unload it, there will be no one to buy it from. Luckily, there is a machine out there willing to sell it to you. An evil evil machine.
- timwiseman 16y ago
  Suppose you want to invest in a company you truly believe in. Where will you get the shares from? Unless someone else thinks it's crap and wants to unload it, there will be no one to buy it from. There are a reasons to sell a shares besides thinking that a company is bad. Sells are also sold to raise capital, this may of course be done by the company itself to raise capital for expansion or in lieu of a loan. This is precisely what an IPO is and companies will also do it post IPO if the cirumstances are right. But individual or institutional stock holders may also sell it to raise capital even while thinking that the company is doing fine and will likely go up over the long run. If the money was invested specifically for retirement or college for instance, it will be withdrawn (the shares sold) for that reason. An individual or instution may also sell some shares to support diversification or to move to a lower risk investment class while believing the company is most likely to prosper. And of course its perfectly rational to sell your shares if you believe an overall market decline is coming, even if the intention is to rebuy those shares when you believe it is near the bottom There will be plenty of people to buy stock in any major company without anyone necessarily believing the stock is bad.

zck 16y ago

Here's the first entry about this, where he discusses why he thinks it's a good idea to buy BP stock now: http://dilbert.com/blog/entry/engineers_to_the_rescue/ http://dilbert.com/blog/entry/engineers_to_the_rescue/

stcredzero 16y ago

Bet on engineers? Do that one better and bet on something even more powerful and absolutely amoral: Bet on basic physics, biology, and math. (Yes, there are ways you can do this in the stock market.)

hristov 16y ago

It is depressing to hear Scott Adams trot out the tired old lie about the liberal media. But he is right that BP is a good buy. The sad truth is that after the Bush years the law is so much in favour of oil companies and the federal courts are so packed with conservative judges, that it is doubtful that BP will have to pay much for this disaster. You probably do not remember but the Exxon Valdes case concluded just a couple of years ago and Exxon got away with paying a very minimal sum considering the scope of the disaster.

miked 16y ago
>> it is doubtful that BP will have to pay much for this disaster Since Obama has gotten more campaign contributions from BP (also from Fannie Mae and Freddie Mac) that any other politician in the US, at least we'll know who to blame if it happens.
- hristov 16y ago
  The thing about Obama receiving most money from BP is misleading. He received most money from individual BP employees, but received no money from BP itself for his presidential campaign, as he took no money from corporations or their political action committees and lobbyists. The fact that Obama received most money from BP individual employees is not surprising because he got record donations from individuals in general. Also, the whole thing will have very little to do with Obama. BP will pay according to the law on the books and the way judges enforce/construe that law. Obama will probably campaign to change the law, but that will not affect the treatment of the spill because ex post facto laws are usually considered unconstitutional in the US. So the spill will be treated according to the law as it was at the time the spill happened.