Wednesday, April 8, 2009

Frontrunning: April 8

  • You take 0, add 0 and what you got? - higher futures. Pulte buys Centex for $1.3 billion in stock (Bloomberg)
  • Nassim Taleb: 10 way to "black swan-proof" the world (FT)
  • The PPIP will bankrupt FDIC (Zacks)
  • DE Shaw interview questions that Larry Summers sailed through (Slate)
  • TARP oversight panel advises liquidating banks and firing (and prosecuting) failed bank executives (Bloomberg)
  • The power play at Bank Of Countrywide Lynch (WSJ)
  • The party for rich Russians is over (Bloomberg)
  • V or L: the shape of the recovery (WSJ)
  • The need for ex-wives' derivative contracts (Bloomberg)
  • 2008 CEO Compensation vs total return (Baseline Scenario)
  • Booze consumption tumbles: Pernod to sell $1.3 billion new shares, cuts forecast (Bloomberg)
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Anonymous said...

I got asked that "how much would you pay to play this game" by MS in a MBA interview. Love the DE Shaw link

Gentlemutt said...

Heh, heh, maybe we can all work at DE Shaw!

""Ten people are bidding on a stock at 90, while 100 people are offering to sell it at 91. What price is the next trade?

Interviewees often say that since there are more sellers than buyers, the sellers get to determine the price. That logic usually yields an answer between 90 and 91. That's exactly wrong. "They're not thinking about what's going on in the real world," says Rubczyk. In reality, when there are more sellers than buyers, the price falls. So the next sale would probably be in the mid- to low 80s.

"Some candidates would say you can't answer that question, because there's no formula," says Rusczyk. "If that makes their heads explode, that's a problem.""

Comment: Uh, what about maybe trading at 90 when a seller, any seller, first decides to hit a bid? Given DE Shaw's track record, probably either the Slate author or Mr. Rubczyk were very sloppy in the way the question was framed.

Wherever the error in transmission, this little anecdote reveals cloudy thinking, and it may be karma that such attaches itself to Mr. Summers, last active member of the 'Committee to Save the World' from 1999.

Unknown said...

Agree with Gentlemutt. The equilibrium price is likely in the 80s, but I'm sure some seller will realize this and hit the bid just to be closed out. A better question is what will the average sale price for the next 100 shares be, below 90, 90, 91, or above 91.

Anonymous said...


Somali Pirates(SOMAP) stock soars.