
Information Arbitrage: How I Invest - alexjmann
http://www.informationarbitrage.com/2009/12/how-i-invest.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+InformationArbitrage+%28Information+Arbitrage%29&utm_content=Google+Reader
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mattmaroon
"2. Tomorrow's ad exchanges will resemble the stock and options markets for
equities."

Already largely the case. See adwords.

"3. Social media will simply be called "media," and viewed as a fully-
integrated part of the overall media buy."

I'm skeptical. I've purchased a lot of Facebook/Myspace ads and I can tell you
first hand, they just don't perform as well as other types of media.

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zck
>I'm skeptical. I've purchased a lot of Facebook/Myspace ads and I can tell
you first hand, they just don't perform as well as other types of media.

Notice that you said "other types of media". So it's already coming true -- it
is a type of media in the same way as newspapers, television, etc. Also,
social media ads don't have to perform as well as other media to be considered
media. They just have to be considered when a company is going to advertise.

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mattmaroon
Social media is a subset of media. It doesn't blend into the superset (in an
advertiser's mind anyway).

When I purchase AdWords, that's just media. It shows up on Google, blogs, some
professional content sites, etc., and I don't know or care where. If they
added Facebook to that, it would drag CPMs way down so they won't,

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rfreytag
I just finished reading "The Snowball" (Buffett bio) and can recommend it
highly. You get a real sense of what it takes to follow Buffett's dictums to
(taken from the book):

1\. not lose money

2\. see rule number 1

3\. never go into debt

Buffett only uses a computer to play bridge, "helicopter" and read newspapers.
Pretty long way from Ehrenberg's #1 - "Machine-driven trading will continue to
proliferate, and represent a sustained source of alpha."

I had to look up alpha <http://www.investopedia.com/terms/a/alpha.asp>

I think while it is likely anything new will be computerized, overused, and
consequently cause "alpha" it will not be sustained. For anything sustained
will be met with a financial instrument to hedge the alpha away (see LTCM). As
we saw that hedge went spectacularly wrong.

Instead Buffett tries to find good management running undervalued companies
that he thinks he understands to be selling something people need no matter
what (and with which his substantial capital can assist). Its amazing how much
personal effort Buffett has taken with his various acquisitions even when he
was only a shareholder to help them through rocky times and so realize value.

Such a different perspective. Another Buffett rule: "Anything multiplied by
zero is zero." Meaning if you constantly accept a small risk of losing it all
you eventually will. Buffett prefers a higher margin of safety and look where
that got him.

BTW, I bought informationarbitage.net long ago because I thought it was an
interesting idea. More intersting still is to just happen across the guy that
owns the .com variant posting to my daily feed.

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euroclydon
When I read how relational databases are inadequate to store, index and
process unstructured data in real time, it made me draw an analogy between the
old virus/anti-virus game where it was a race between the virus writers and
the anti-virus software makers, and sometimes they were accused of being in
cahoots.

Could we not say the same thing about the content indexing technologies
(NoSql, MapReduce) and the content creating technologies (Twitter, ECommerce,
Content Farms)?

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masterponomo
Geeknet (formerly Sourceforge) is trying to do a lot of what this guy
describes. Aside from owning an e-commerce site and several news/community
sites, they bought Ohloh.net. They are working toward understanding their user
base and selling ads that target them intelligently w/o alienating them (not
always successful, but that's why it's a challenge).

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euroclydon
If machine driven trading continues to proliferate, will the job of the CEO be
to keep the algorithms happy as opposed to keeping the investors happy? At
least the investors will call you up and tell you what's on their minds,
whereas the algorithms are mainly black boxes.

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Hoff
Algorithmic trading is already the norm with most any of the large investment
organizations.

And from the other side, if you're not already using program trading for your
investing or otherwise investing ginormous sums, you're probably not big
enough for the CEO to take your call.

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mark_l_watson
That was a good article, not only for investing strategies, but also had a few
good tech business ideas - very appropriate for HN.

