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American Innovation Lies on Weak Foundation?

nytimes.com

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Re: American Innovation Lies on Weak Foundation?

#51

Post by JackFr »

roymurdock wrote: post #36
WalterBright wrote: post #31

Earlier quoted context omitted.

> they know the economy works in a cyclical fashion with alternating booms and busts. It's a chaotic system with an upward bias. Cyclical implies temporal predictability, and good luck with that :-)

> Cyclical implies temporal predictability Sure, I can say with 99.9% certainty that the economy will contract within the next 100 years. Shorten the time frame and my confidence level will drop accordingly. I'd probably have a 0.1% probability of guessing within 30 days of when the business cycle will reverse.

I think your mental model is not quite there. The stock market is a leading indicator of the business cycle.

Re: American Innovation Lies on Weak Foundation?

#52

Post by WalterBright »

arrel wrote: post #49
WalterBright wrote: post #11

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly. I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The charge that companies are eating their seed corn to sati…

You're absolutely right. James Surowieki wrote a great (research-based) article on this recently. http://www.newyorker.com/magazine/2015/08/24/the-short-termi...

Thanks. I thought I was alone in saying the short term Emperor had no clothes.

Hillary's plan to make it more costly for people to switch investments will make the economy less productive.

Re: American Innovation Lies on Weak Foundation?

#53

Post by gohrt »

munin wrote: post #35
gjkood wrote: post #10

What about the people angle (as in People, Process, Technology)? I don't know how it used to be 20, 30 or 50 years ago, but if you have sat in a graduate science/technology/engineering course classroom in any US university in the last few years and surveyed the demographic profile of your fellow classmates you might notice something. The percentage of students of Asian ethnicity will probably outnumber all other grou…

> Fewer US based students are going into graduate STEM programs Because if you're a US citizen, getting a PhD for the money is a racket. Just take your BS in CS over to Silicon Valley and start making bank working on Tinder for Dogs. Want to make six figures and have a shot at a billion dollars? The surest way to NOT do that is to go to grad school. If you're NOT a US citizen, getting a graduate degree is a great way…

You can find many ethnic-Asians in all of these groups: US Citizens, permanent residents, and student-visa holders

Re: American Innovation Lies on Weak Foundation?

#54

Post by sailfast »

This article has me extremely confused. They keep talking about a dearth of R&D spending relative to the rest of the world and then present a graph that says we are basically keeping up and have been at about the same level compared to most countries since 1995.

Am I missing something here? Is the lack of funding rickety? That all of it is moving into the "D" rather than the "R"? Is there a distinction, or are we just "feeling" like laggards without a good key metric to represent it?

Re: American Innovation Lies on Weak Foundation?

#55

Post by JesperRavn »

American corporate labs are the stuff of legend. Researchers dream of the halcyon days of Bell Labs and its eight Nobel Prize winners, who brought us the transistor and Unix. Others reminisce about Xerox PARC, which came up with the graphical user interface that propelled the personal computer into just about every home and office.

Those days are long gone...

What about commodity clusters (i.e. all cloud computing), MapReduce/Hadoop, Spark, or the deep learning renaissance? Yes, I am super biased, but I think Google and Facebook have done as much to advance technology as their predecessors.

But apart from that they have a point. Raw numbers matter, and even though R&D might have a fuzzy boundary with ordinary business, I think that R&D expenditure is a useful signal.

Re: American Innovation Lies on Weak Foundation?

#56

Post by gohrt »

arrel wrote: post #49
WalterBright wrote: post #11

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly. I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The charge that companies are eating their seed corn to sati…

You're absolutely right. James Surowieki wrote a great (research-based) article on this recently. http://www.newyorker.com/magazine/2015/08/24/the-short-termi...

From the article:

> If Clinton really wants to deal with short-termism, she’d be better off targeting the way executive compensation works, instead of the way capital gains are taxed. Ultimately, the solution to short-termism isn’t on Wall Street. It’s in the executive suite.

So my GGP's post is correct. Executives break companies by manipulating the financial short-term.

Saying "Amazon and Netflix and Tesla prove that the market is long-terminal" is silly. These companies are founder-run and there is a large part of the market (Hello Yahoo and HP) where revolving door CEOs just pillage the company to goose the short term numbers and cash out their stock options)

Re: American Innovation Lies on Weak Foundation?

#57

Post by gohrt »

toomim wrote: post #2

This whole article is assuming that innovation comes from money, and specifically from the money labeled "R&D" in the budgets of nations and companies. Yet, most startups started on shoestrings. Then they got investment from VC firms. These sources of innovation don't come from NSF or Microsoft Research. And American innovation comes from far more than money. The culture of American innovation is a huge factor, which…

Fun fact: Startups are absolutely R&D. D is for Development. Everyone who writes software is R&D as far as the IRS is concerned -- I have filled out the tax forms at my jobs.

Re: American Innovation Lies on Weak Foundation?

#58

Post by JesperRavn »

Frqy3 wrote: post #38
WalterBright wrote: post #26

Earlier quoted context omitted.

Which companies do you believe are eating their seed corn, and are you shorting their stock?

“The market can stay irrational longer than you can stay solvent.” Often attributed to Keynes, though may have originated with Shilling (or been in common use).

It's just not right. Given the existence of options, shorting is no more bound by liquidity than being long on a stock.

Imagine saying "Stock X is great, but the market can undervalue X longer than I can stay solvent"?

Re: American Innovation Lies on Weak Foundation?

#59

Post by WalterBright »

gohrt wrote: post #56
arrel wrote: post #49

Earlier quoted context omitted.

You're absolutely right. James Surowieki wrote a great (research-based) article on this recently. http://www.newyorker.com/magazine/2015/08/24/the-short-termi...

From the article: > If Clinton really wants to deal with short-termism, she’d be better off targeting the way executive compensation works, instead of the way capital gains are taxed. Ultimately, the solution to short-termism isn’t on Wall Street. It’s in the executive suite. So my GGP's post is correct. Executives break companies by manipulating the financial short-term. Saying "Amazon and Netflix and Tesla prove th…

The article also says:

"a 2014 study of companies that cut R. & D. spending in order to meet short-term earnings goals found that their stocks underperformed after earnings had been announced—hardly what you’d expect if the market cared only about the short term."

meaning the market is not being fooled, and therefore executive compensation based on market value is not driving short term thinking.

Re: American Innovation Lies on Weak Foundation?

#60

Post by tbrownaw »

JesperRavn wrote: post #58
Frqy3 wrote: post #38

Earlier quoted context omitted.

“The market can stay irrational longer than you can stay solvent.” Often attributed to Keynes, though may have originated with Shilling (or been in common use).

It's just not right. Given the existence of options, shorting is no more bound by liquidity than being long on a stock. Imagine saying "Stock X is great, but the market can undervalue X longer than I can stay solvent"?

The control against companies staying undervalued for too long is acquisitions. Plus of course, it's possible to buy stocks and hold them long-term without worrying about margin calls forcing you out.
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