Gongol.com Archives: 2012 Weekly Archives
Brian Gongol


Cloud computing explained in two minutes
It's one of the buzzwords that's floated around for just long enough for everyone to have heard it, but it's been too poorly-explained thus far for most people to understand what it's all about

Show notes from the "WHO Radio Wise Guys" - January 28, 2012

Polk County (Iowa) is losing a good supervisor



Why it's important to control your online reputation
The principal at Valley High School (in West Des Moines, Iowa) is being spoofed by someone using his name on a fake Twitter account. He ignored the problem early. Now the clown who started the account is putting up anti-Semitic messages, and there's nothing the principal or the school district can really do about it. The account is down now, though it's not clear whether that was a voluntary thing or if Twitter took action on its own. Regardless, the fact that the principal had to contact the company to ask that the account be removed illustrates just how important it is that people -- particularly those in the public eye or who deal with large groups, like school authorities -- get ahead of the curve and assertively manage their own online reputations. You don't want the most prominent search for your name to turn up a fake Twitter account -- or a bunch of news stories in which someone using your name was saying malicious things. Anyone with reasonable concern about these kinds of hazards can take action: Set up a LinkedIn account and make it public. Get a Twitter handle and post to it occasionally -- and do the same on Google Plus. Register your given name as a domain name and either set up a website or point that domain name to one of your accounts. Only the domain name costs anything ($10 a year), and among those actions, one can very quickly (and legitimately) take up the first four or five spots in a search for one's name. It probably sounded like a remote problem in the past. Today, it's essential.

Is there bias among the academics who discuss executive pay?
It's a hot and recurring topic in economics: How should shareholders pay the executives who manage their companies? Even an average senior research seminar in college is likely to find at least one student inquiring about the subject. But nobody has broken down the issue of executive pay more thoughtfully and clearly than Warren Buffett in his 1985 letter to the shareholders of Berkshire Hathaway. Buffett clearly argues that fixed-price stock options create an incentive for executives to retain and then basically just sit on the profits they make, rather than using them thoughtfully, reinvesting or distributing those profits as dividends: "Managers regularly engineer ten-year, fixed-price options for themselves and associates that, first, totally ignore the fact that retained earnings automatically build value and, second, ignore the carrying cost of capital. As a result, these managers end up profiting much as they would have had they had an option on that savings account that was automatically building up in value." The entire letter is well worth the reading.

More evidence that the economy is very different from one part of America to another
There's a housing shortage -- yes, shortage -- in Pender, Nebraska. Employers are hiring and don't have any place for their employees to live.

Sometimes the world needs a little behavior that looks like a violation of anti-trust rules
Pharmaceutical companies are going to collaborate on producing medicines that will combat tropical diseases. The collaboration, partially at Bill Gates's behest, will try to knock down diseases found in places that aren't usually big markets for the pharmaceutical companies. The cooperation would probably otherwise look like a case for an anti-trust lawyer, but nobody's likely to complain.

Anyone who bets on stocks using technical charts deserves to get burned
A Reuters report on today's stock market used this completely incomprehensible jibberish: "The flat close with wide intraday moves in both directions describes a 'long-legged doji' pattern on a Japanese candle stick chart and is seen as a sign of uncertainty and indecision on the part of investors." What a bunch of hogwash. Either a company is worth buying or it is not. Looking for patterns hidden within stock charts to divine some kind of "market-beating" stock-picking strategy is the kind of gambling that should stay in the casino, where it belongs.

The full 2012 primary and caucus calendar

Differences in Iowa power rates: Municipal vs. co-op vs. investor-owned utilities



Facebook wants to raise $5 billion in an IPO
Among the most interesting take-aways from the filing is that Mark Zuckerberg will have enough voting power to do whatever he wants with the company. The filing says, "As a result of voting agreements with certain stockholders, together with the shares he holds, Mark Zuckerberg, our founder, Chairman, and CEO, will be able to exercise voting rights with respect to [...] a majority of the voting power of our outstanding capital stock following our initial public offering. As a result, Mr. Zuckerberg has the ability to control the outcome of matters submitted to our stockholders for approval". So if you have questions about his judgment -- and there is good reason to have those -- you might want to think twice about becoming what is, essentially, a limited partner in his company. Also amusing was this warning: "Likewise, we have a number of current employees whose equity awards are fully vested and shortly after the completion of our initial public offering will be entitled to receive substantial amounts of our capital stock. As a result, it may be difficult for us to continue to retain and motivate these employees, and this wealth could affect their decisions about whether or not they continue to work for us." True, and a little foreboding. Now, one can't blame Zuckerberg for structuring the company the way he has -- retaining a huge share of the Class B stock, each share of which has ten times the voting power of the Class A stock that will be sold in the market -- nor would it be fair to deny that Facebook has become a very popular tool that brings a lot of happiness to people all over the world. But as an investment, it's extraordinarily risky. All of the meaningful control in the company is vested in one person, who then has to get lots of decisions right -- because there's no environment in which competition is more nimble and more fierce than in online services. The stock will probably be very hot upon its IPO, but at some point it will cool, and any bets on how it will perform can only be categorized as speculation, not investment.

Would Wales try to leave the UK?
With Scotland likely to vote in the next two years on a plan to divorce itself from England, there's a chance Wales could do the same thing. This raises an interesting question: If one were to re-draw the world's political maps based upon what made sense, rather than on historical precedent, what would change? There is, for instance, no really good reason why the United States hasn't added new territory in the last half-century. Not through force, mind you, but through voluntary accession. We should have a giant "Welcome" sign hanging out to say that any city, province, state, region, or country that meets a certain set of eligibility requirements is welcome to accede into the USA. Article IV, Section 3 of the Constitution says it: "New States may be admitted by the Congress into this Union". Aren't there likely some places around the world where the locals would rather have the protection of the American military, the stability of the American government, and free-trade access to the entire American economy, rather than what they presently have? And as long as they're entering debt-free, with a commitment to the rule of law, republican government, and free enterprise, wouldn't new states be even better than the same number of new individual immigrants? In the UK and the United States alike, we're already bending the rules to make it easier for wealthy people to move in -- why not extend the principle a bit and welcome entire territories?

Iran's government misinterprets the Arab Spring...badly

The top five regrets of the dying

Ferry sinks off Papua New Guinea
The number of missing is unknown -- and quite unknown, at that. It could be smaller than a dozen, and it could be greater than 100.

Michigan tests the next generation of police cruisers
With old stand-by choices like the Chevy Caprice and the Ford Crown Victoria gone, they're having to look to a whole new range of vehicles

Traffic deaths in Iowa hit more than half-century low



Household net worth in the United States
The Census Bureau keeps tabs on a lot of wealth and poverty statistics. Among them, how much families have as their net worth.

Grassley motion in Senate intends to cut down on "political intelligence operatives" who collect DC inside information for investors


Sioux City organization holds out $5,000 grants for entrepreneurs