Snarky Behavior

Fishing the Long Tail

June 15, 2009 · 2 Comments

I heart kanye

I heart kanye

My friend Leo showed me a shirt he had purchased in London, that I thought was pretty amusing.  It was the classic “I <3 NY” white t-shirt, only in small font the characters “Mo” and “e” were added so the shirt read “I <3 Money.”  About a year ago, I made the shirt myself on zazzle to give as a gift to a friend who had gotten into graduate school at Columbia.  I left the shirt publicly searchable, and would receive a small commission ($1.60) for every shirt purchased.

This morning I checked my much-neglected yahoo! e-mail account to find that someone had bought the shirt(!)  I went to my account page and found that over the last year, FIVE people had somehow found and purchased this shirt (there are over 18 million searchable products on zazzle).  Even better, the shirts were purchased in Europe, meaning I got the good side of the exchange rate.  Plus, there were over 100 page views, meaning I had about a 5% conversion rate on a product I did zero advertising for.

Since I’m unemployed and without an income stream, and I frankly have nothing better to do, I spent about 3 hours today thinking of words that have “n” and “y” in some order, and making graphics in photoshop.  I ended up with 50 shirts, the majority of which are pretty crappy, although there are a few I’m pretty proud of (you can check out the full product line yanhast01">here).

Highlights below:

PS I don’t think this post means I’m back to regularly blogging, but maybe I’ll take a hack once in awhile since I currently have so much free time.  Or when I inevitably move into my parents’ basement.  And I’ll definitely give an update about whether this get-rich slowly scheme actually works.

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Overheard in New York

March 31, 2009 · 1 Comment

[At Starbucks on Columbus and 59th]

Bald White Guy in Track Suit, trying to impress Asian Woman in what seems to be a first/blind date: Oh, I’ve traded stocks for 9 years.
Asian Woman: Oh really? How are you doing now?
BG: It’s the first time in 9 years I’ve lost money.
AW: Well it seems everyone is…
BG: Yeah, but the thing is I should be making a killing right now. I mean, my strategy was still good.
AW: What do you mean?
BG: You see, I’m a short-seller, meaning I make money when the market goes down. My best day ever was the day after 9/11.
AW: And you’re proud of that?
BG: Yeah, it’s perfectly legal.

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Right now

March 8, 2009 · 1 Comment

There is a birthday party for a 1 year old going on next door, complete with blaring Latino ballads alternated with reggaton; a Muslim service going on across the street celebrating the birthday of the prophet Muhammad; and an ice-cream truck parked out front, blasting “the Farmer in the Dell” while the driver sells drugs to five dealers who front as clothing store operators (as they themselves are straining the sub-woofer of their SUV blasting crappy hip-hop).

The cogitative dissonance that all of these sounds, taken together, this creates for me (as I try to study for a statistics midterm) is so god-awful that it took me a good 15 minutes just to write this post, and I’m not even sure if it’s grammatically correct. This is the worst.

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8:00 Mile

January 7, 2009 · 1 Comment

See my newest documentary here.

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Who is Defaulting?

December 9, 2008 · 3 Comments

Somewhat dropping knowledge:

The news media is very good at shaping a collective narrative of what’s going on in our economy.  Times are tough, Americans are hurting, etc., etc.  And while this is true for many, it certainly is not true for all.  We need to stay diligent of how we provide assistance, and to whom.

My international capital markets professor, in a lecture about mortgage-backed securities, shared a VERY interesting study done by Fitch ratings agency.  The study randomly selected 45 case files of homeowners who had recently foreclosed on their homes due to “an inability to pay.”  What did those homeowners look like?

  • 66% fraudulently stated at the time of the loan that the home would be “owner occupied.”
  • 51% fraudulently overstated the value of the property, or the condition of the home at the time of the loan
  • 48% fraudulently stated they were first-time home-buyers, when a simple credit report showed past mortgage activity
  • 44% could not pay their structured debt due to “payment shock,” defined as greater than 100% increase (i.e.  balloon mortgage)
  • 44% questionably or fraudently stated income or employment
  • 22% had fraud alerts on their credit reports at the time of the loan
  • 18% had questionable ownership of accounts due to name or social security numbers not matching
  • 16% Strawbuyer/Flip scheme indicated based on evidence in servicing file
  • 16% Identity theft indicated
  • 10% Signature fraud indicated

So before we go running to help out these “struggling homeowners,” let’s be clear who we’re REALLY helping out.  Dumb, or oftentimes fraudulent, speculators.

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December 2, 2008 · Leave a Comment

I remember in college, I used to watch a show called “House-Flippers” or something like that.  The premise was: some realator would go around buying up houses, do minimal renovations, and “flip” the house for profits of $30-100k.

Last week I watched a similar show, only the premise was different.  Instead of speculators “flipping” houses, it focused on homeowners trying to increase the appraised value of their home so that they could either refinance their mortgage and keep the house, or qualify for a home equity loan to pay down some other liability.

The environment now is so drastically different!

Still, I was shocked at how “valuation” takes place on these shows.

For instance, one couple spent something like $10k to completely renovate their garage into a master bedroom.  They did all of the work themselves, and saved a bundle in labor costs.  At the end of the day, they had an appraiser come in and re-evaluate the home, and he claimed that he would list it on the market for like $70,000 more than before.

People still don’t seem to understand the word “value” in “valuation.”  If I do $10k worth of renovations to a house, the house is logically $10k more “valuable.”  It may be worth more based on how much I value the time and labor costs of the renovation, but it certainly isn’t suddenly $70k more valuable.

Part of the confusion boils down to people buying into the idea that a home is an investment.  An investment is a good that expects to produce a return to the investor.  For instance, if I buy a house, I COULD sell it in the future for an appreciable return.  But what is a house?  It’s a building on a piece of land, that typically “lasts” 50-100 years.  After that, the thing starts falling apart… the pipes rust, the wood rots, the bricks crumble.

The fact that a house “breaks down” or deteriorates over time means that houses should logically be seen as DEPRECIATING INVESTMENTS.  Therefore, house values should logically increase over time ONLY at the rate of inflation, less any depreciation costs, unless significant repairs and/or restorations have been made along the way.

Any increases in house value besides inflation can be attributed to one of three things:

1.)  Real increased consumer demand (i.e. influx of immigrants, new generational wave of homeowners, etc.)

2.)  Real decreased producer supply (i.e. fire/flood/earthquake destoys housing stock)

3.)  Rennovations/restorations on/of the property

Now, as consumers, we have very little to go by in terms of measuring “real” consumer demand, and only a bit more in terms of measuring the “real” available housing stock.  We use the price as the indicator of the market, but what is included in that price?  Let us remember who has an interest in seeing that price high:

1.)  The seller, who wants a profit

2.)  The realator, who works on percentage commission

3.)  The banker, who also works on percentage commission, and can squeeze higher rates on higher principals that imply “riskier” loans.

4.)  Other home-owners, who measure their wealth and net-worth based on the perceived market value of their own home and equity therein.

The information provided to a consumer in the housing market is SO DISTORTED.  Not only are people watching shows where appraisers come in and “ball-park” ridiculous sums (do we forget who realators are?  They are mostly stay-at-home or part-time moms with Associates’ Degrees at best… and we’ve allowed them to “divine” the demand curve?), but they are being led by the hand by third-party brokers who work on commission, and financing their purchases by seedy lenders who artificially inflate the income constraint (and thus, the price) on all other parties by providing easy money.

Hind-sight is 20-20, but it’s amazing how we let that monster of a bubble build on itself.  And if the show I just watched on HGTV is any indicator, people still don’t get it.  There is no “rule” saying houses should increase in value over time.  Indeed, when adjusting for inflation, logic implies the opposite.

A home isn’t an investment to be upgraded and “flipped.”  It is a building to be lived in.  It’s value is providing shelter to its inhabitants, in proximity to schools, safe neighborhoods, and places of employment.  There’s no “law” that guarantees a house can be a “nest-egg,” that the equity will earn a return over time.  And a garage turned into a master bedroom just means that former 2BR/2B/G at $750k is now a 3BR/2B at $780k… and you’d better have street parking somewhere.

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I voted!

November 4, 2008 · 1 Comment

…and it felt so good!

I have a lot to say about how convoluted the procedure was but suffice it to say that there are efficiencies to be had in the process.  I also didn’t get an “I voted” sticker and I’m pretty heated about that.

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Who are you voting for?

November 3, 2008 · Leave a Comment

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The Insider Baseball World Series

October 27, 2008 · Leave a Comment

This past week, the New Yorker ran a profile on Ariana Huffington that I was quite excited to read.

Some of you may remember that last year, I briefly considered dropping out of (or at least post-poning) grad school to take a job offer as an associate blog editor at the Huffington Post.  I wasn’t ready to give more than a year’s committment, so nothing came of it, but I did get a chance to speak with Ariana and the site’s chief editor.

I don’t really have anything to say about the opportunity other than the fact that I was given what I considered a fair “heads up” of what the working relationship with Ariana would entail… being a blog editor is a glamorized term for “copy and paste monkey,” and she’s a very demanding boss.

That’s why I find it utterly amusing when Gawker is running posts based on the testimonies of jilted ex-employees… people who sucked at a job that, while probably stressful and unrewarding, is also quite easy to do well, in the grand scheme of things.

What’s most hilarious is that my friend Colin- the blog’s editor and a dead ringer for Harry Potter – is described as having a “nasty temper.”  I can’t even type that without laughing.  Colin makes Matt Lauer look like Bill O’Reilly.

A solid reminder to not believe everything you read… especially on Gawker.

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I’m Offering Insurance

October 22, 2008 · 2 Comments

on my fellowship for next semester.  For it to roll-over, I need a B+ GPA for this year.  Since I’m taking 6 classes and TA’ing another, I’ve been really crunched on time, and my GPA isn’t looking so hot right now.  If I were to take a stab at my current post-midterm grades (equally weighted in terms of credits), they would look like this (you can think of “projected grades” as “credit ratings,” with anything above B+ or > 3.33 as “investment grade”):

Urban Economics:  B- (2.67)

Public Economics:  B+ (3.33)

International Capital Markets:  C+ (2.33)

Decision Models:  A (4.00)

Educational Leadership Consulting:  A (4.00)

Cost-Benefit Analysis:  B (3.00)

That’s a GPA of 19.33/6 or 3.22, which is less than the required 3.33.


So here’s how insurance markets work:  I have two possible outcomes, one in which I get my GPA for the semester above 3.33 (and keep my fellowship, valued at $6000), and another where I do not (costing me $6,000).  I would like to pay a premium such that I can hedge my risk and know with certainty that I will have some approximate value close to $6,000.

My expected value in these two uncertain states of the world depends on the likelihood of failing to get the B+ average.  I’m not TOO far off, and presumably I could spend some more time in the classes I’m doing poorly in to help myself out.  So let’s say I’m at about a 10% chance of failure (I’m keeping it low because I’m  confident in my ability to whine my way into safety if I’m within the margin).  My expected return is therefore:

.1x + (1-.1)y = EV, where x is “no fellowship” and y is “earned fellowship.”

.1*($0) + (.9)*($6,000) = $5,400.

If I’m risk neutral or risk adverse, I should be willing to pay a premium of $600 for actuarial fair insurance to pay me $6,000 in the event I don’t get my GPA up.


This might seem like a good deal to you if you’re assuming I’m an over-achiever and I can get my grades up if I put my mind to it.  Maybe an easy $600 with a low possibility of risk.  Alternatively, you could set up an office pool to share the risk… 10 people accepting 10% shares each ($60) with the responsibility to fork over $600 in the event I fail.

Maybe you could even traunch my grades!  Lower grades pay a higher rate of return than higher grades… if I failed to meet the overall B+ target, but improved in Capital Markets from a C+ to a B, you could shift the weighted burden to whomever was holding the traunch that held me back, and insulate the riskier traunches.

What about other derivative markets?  Credit default swaps?

Of course the moral hazard is:  if I know with certainty my expected value, I lose the incentive to work harder, and my risk profile shifts dramatically.  Instead of a 10% chance of underperforming, I’m maybe 50-50%.  In the presence of insurance, my behavior shifts dramatically.

So all that in mind, who wants to insure me?

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