February 15, 2011

How to Short the Higher Education Bubble

You know the return on investing in college is low and declining. You know there are better alternatives to college. You know that “college for all” harms students—Harvard says so!

Some day, the education bubble will burst. How can you trade this?

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August 5, 2010

The Talent Acquisition “Put” Will Create More Startups and Better Startups

From the outside, a talent acquisition looks a little bit like a failure: a founding team got together, launched a product—and couldn’t get traction. The company was liquidated, and its most valuable asset turned out to be the founders’ resumes.

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August 2, 2010

Higher Education: The Next Big, Bad Bubble

“Good afternoon, sir. I’m a broker with Churnham & Burnham, and I’d like a few moments of your time to discuss an extraordinary investment opportunity. It’s an asset that everyone is buying—your friends, your neighbors, teachers, firemen, doctors, lawyers, and even your humble broker.

“Not only that, but it’s an exceptionally long-lived asset. Once you own it, you’ll be getting dividends for your entire working life.

“While it’s not as cheap as it used to be—in fact, it’s going up in price at about twice the rate of inflation—it’s never been easier to get government-subsidized loans to purchase it. In fact, third parties may pay for some or all of it for you!

“The asset is, of course, a college education. Now, wouldn’t you like to review the prospectus?”

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May 1, 2010

Good Bubble, Bad Bubble

In the future, historians will stop using the word “bubble,” because it refers to two opposite phenomena:

• In an equity bubble, investors have limitless optimism about the future. They expect many of the companies they invest in to fail, but believe that the 95th- or 99th-percentile performers will more than make up for this.

• In a credit bubble, investors have limitless faith in the status quo. They expect volatility to decrease, and they believe they can estimate returns with increasing accuracy. If they want higher returns, they know they can use leverage—but for the most part, investors celebrate the middle of the bell curve, and expect the tails to cancel each other out.
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