Opening Bell: 11.1.17

Citadel’s Kenneth Griffin to Donate $125 Million for University of Chicago Economics (WSJ)
The Citadel LLC founder and chief executive’s gift, announced Wednesday, will be used to pay for more economics professors, expanded financial aid for students and creation of a research incubator, among other things. “You need resources to take long bets,” said John List, the Kenneth C. Griffin Distinguished Service Professor of Economics at the university and chairman of what will now be called the Kenneth C. Griffin Department of Economics.

Gold Bugs Embrace Bitcoin, Upending Retail Sellers (WSJ)
One reason for the declining business: A number of retail buyers are turning to cryptocurrencies like bitcoin to store money during periods of stress, some analysts say. Bitcoin has “taken some of the dedicated interest in gold away from gold,” said Mohamed El-Erian, chief economic adviser at Allianz SE, who warned at a CME Group event in September that cryptocurrencies could pose a long-term threat to the precious metal.

Buffett Streak of ‘Free’ Insurance Money May Be Ending (BBG)
The insurance business has been good to Warren Buffett. For decades, his stable of carriers at Berkshire Hathaway Inc. have provided him billions of dollars to invest. They’ve also turned an underwriting profit every year since 2002. That streak could be coming to an end.

Odey Notes Market-Calls Record ‘Not Good,’ Makes Another One (BBG)
Stock markets are “now starting to go hyperbolic,” a sign that time is running out and a bubble is developing, London-based hedge fund manager Crispin Odey said in a letter to investors. “Having called these markets down in 2015, my record on such calls is not good,” Odey wrote in the letter. “However, the idea that we will continue along the lines of the last 10 years looks a dangerous starting point for strategic thinking.”

Worries About Short-Termism Are 40 Years Old, but Are They Overblown? (HBR)
If you go back 40 years you can find the same arguments from Marty Lipton, and from Hayes and Abernathy in HBR. You can go back 25 years and hear the same argument from Michael Porter. Porter said the U.S. system of allocating investment capital is failing, putting American companies at a serious disadvantage. So this view that U.S. companies are too short-term has been with us for roughly 40 years, if not longer. Relative to 25 or 40 years ago, today is the ”long term” in which U.S. companies should be a disaster.

Statistical Illusions (Morningstar)
Statistically, that conclusion was incorrect. We cannot interpret those numbers, because we do not know the predictor's base rate. Imagine, for example, that first quote reworked, so that the subject is lottery Powerball winners, not 5-star funds. "Of that year's Powerball winners, only 14% won Powerball prizes during the next three years." Say what??? Scrap that "only"; the predictor of previous winners is hugely relevant, so much so that the fraud squad must be alerted.

Value Investing Deadpool (Macro Tourist)
“The current technology, Internet and telecom craze, fueled by the performance desires of investors, money managers and even financial buyers, is unwittingly creating a Ponzi pyramid destined for collapse. The tragedy is, however, that the only way to generate short-term performance in the current environment is to buy these stocks. That makes the process self-perpetuating until the pyramid eventually collapses under its own excess.”

[Tyler Cowen and Matt Levine] Debating Where Tech Is Going to Take Finance (BBG View)
I think the possible surprise here lies in the connection between finance and identity. People are sort of inchoately aware of it now; we use the term "identity theft" to mean "someone using your name and Social Security number to get a credit card." But most people don't really think of their credit report as being central to their identity. Really ambitious proponents of blockchain technology, though, envision a world in which a lot of identity information -- your citizenship and marital status and college degrees and employment and certifications and whatnot, maybe your fingerprints and retinas and DNA, as well as of course your credit information -- are encoded on a blockchain and used in every aspect of your life.

We May Not Have Enough Minerals To Even Meet Electric Car Demand (Jalopnik)
While demand for nickel keeps increasing, half the world’s nickel supply is too low in quality to use for car batteries. All of which is going to have seismic effect on the world’s suppliers. In short: There will be winners and losers, and the winners will be the ones with the highest-grade stuff—not unlike, I suppose, the illicit drugs market.

Judge orders man to write nice things about ex-girlfriend (AP)
Judge Rhonda Loo ordered Daren Young on Friday to write 144 compliments about his ex-girlfriend, in response to the 144 “nasty” text messages and calls that he is accused of sending her. “For every nasty thing you said about her, you’re going to say a nice thing,” Loo told Young. “No repeating words.”