Saturday 4 March 2017

J-walking, and how investors' risk perceptions are irrationally distorted

I attended the University of Auckland between 2001-05. Throughout this period I had to J-walk back and forth across a busy street regularly to reach a lecture hall. I did so for years without giving it a great deal of thought or circumspection.

Then one afternoon, as I was walking out of the hall after a routine lecture and chatting nonchalantly to a friend, I was greeted by a sudden and violent screeching of tyres, following which I witnessed a hapless young student crossing the street being hit by a car, propelled onto its bonnet, and then thrown back onto the pavement like a rag-doll (fortunately the accident was not fatal). Needless to say, it was an extremely disturbing and unpleasant experience.

Thursday 2 March 2017

A (satirical) interview with the co-founder of

Today it is my great pleasure to introduce to you the co-founder and CEO of Since its founding two years ago, the company has delivered extraordinary growth in monthly active users (MAU) and gross dollar merchandise value (GDMV). Forbes has labeled the latest addition to the prestigious 'Unicorn' club, with the company's latest funding round with SoftBank and Sequoia having recently closed and valued the company at US$1.2bn. I think you'll agree the story of what this 24 year old without any prior business experience has achieved in under two years to be truly inspiring. Thanks for joining us here today.

Pleasure to be here.

Wednesday 1 March 2017

Brokerage/ETF price wars, and implications for the cost of capital

The Wall Street Journal reported this morning that Fidelity has announced a reduction in its online trading commission rates from US$7.95 to US$4.95 a trade. This move follows Charles Schwab's decision several weeks ago to cut its commissions from US$8.95 to US$6.95, and in response to Fidelity's decision, Schwab announced yet a further reduction in rates to US$4.95 as well. This emergent price war among discount online brokerages has sent the share prices of Schwab, TD Ameritrade, and E*Trade into a tailspin (and rightly so).

It remains to be seen how far this price war has to run, but it could be a fairly long way, as these brokerages still charge considerably more than disruptor Interactive Brokers (your correspondent's primary broker), which allows you to trade US stocks for as little as 1c per share due to the platform being fully automated. It would appear that the cost of trading is on course to continue to trend steadily towards zero over time.*