Bloomberg TV

I watch and like Bloomberg TV.  I switched to Bloomberg during the financial crisis for sound, hyperbole-free news and never went back to CNBC.  I read here in this Business Insider article that Bloomberg is in the "midst of some kind of reassessment of its TV business."  I hope that doesn't mean Bloomberg plans to kill its business news channel.  It's level-headed and informative, and if you watch it on a regular basis you won't find it boring.  You also won't switch back to CNBC.  (Fox Business News is horrible and in its own strange orbit.)

Think For Yourself

Back in my corporate days - many years ago - a series of corporate sales left the company I worked for as a twice-acquired company.  The second and final acquirer, then part of one of the largest financial companies in the world, instituted predictive indicator personality tests for all employees.  My test showed that I was too rational, an independent thinker, a "threat" to teamwork, and was an employee who could "potentially" question authority.  (Really?  Mild-mannered me, a corporate subversive?  Awesome.)  This flimsy test was all a group of new, inexperienced managers needed to make life unpleasant for a double-sold employee.  I left the then-behemoth conglomerate not long after the test and in wonderful example of schadenfreude the managers were fired within a year.  Sometimes it's better to read tea leaves than test results.

The test was right:  I am "rational" and do question conventional thinking, which are important qualities for an analyst.  Here is a must-read article from Research Magazine on the perils of following conventional thinking, and the difficulty in challenging it.  The author, Rob Seawright, details historical examples of detrimental collective thought that is eventually proved wrong. 

Questioning conventional wisdom is important, especially as the stock market hits new high and alternative investments - specifically non-traded REITs and business development companies -  are about to see their greatest annual inflow of investor equity.  Sales are more concentrated than ever in just a handful of firms, a clear, cliched case of the rich getting richer.  As the rich get richer, questions and dissent are going to get narrower, which is the opposite of what should be happening.  Not only do the big sponsors need tough scrutiny, but smaller competitors need closer review, too, as they may make risky moves to try and stay competitive.

(As an aside, Seawright mentions the "self-serving bias (where the good stuff is my doing and the bad stuff is always someone else’s fault)."  The owners of the twice-sold company where I originally worked could have their picture in the dictionary next to the definition for this bias.  I still crack a wry smile at some of the admonishments delivered to employees, the self-created, self-congratulatory awards they earnestly gave themselves, and the unabashed usurpment of employee initiative, hard work and success.)

Check Under The Hood

Here is a gem of a Wall Street Journal article (WSJ subscription required) that I hope was not lost in last week's Thanksgiving feasting and traveling.  Collateralized loan obligations (CLOs) are showing up in retail investments, including business development companies (BDCs).  CLOs have multiple tranches that offer varying levels of risk.  In general, I question the transparency of BDC portfolios, and with CLOs appearing in multiple BDC portfolios my suspicions are not allayed.