Mike Dorsey

So on Wednesday, I went to a Stanford MBA Admissions session in Bangalore, to be on the student panel.  It was a lot of fun talking to the applicants about the program, about our classmates, the courses, etc.  I was there with Dan, my buddy from South Africa, and Vasily, my buddy from Russia, as we were all interning in India for a month.

The session was fun and the questions were interesting.  But, once we broke into small groups, the obvious and most frequent question was ‘how should I write my essays?’, ‘what are they looking for’, etc?  Answering those questions is almost as impossible as writing the essays is.  The only advice I could tell anyone was to read THIS book.

MBA Admissions Strategy. Getting in to top 10 MBAs

When looking for the right book to read when I was applying, I skimmed the table of contents of every relevant book and thought this was the most useful…I felt that this one did the best job, to me, of explaining (1) what the admissions committee is thinking and (2) what the question archetypes are and how to respond to them.

I read the entire book, cover to cover, 3 different times over the course of my application preparation and essay writing process.  It was literally my reference guide every time I got stuck writing my essays; I marked it up, re-read certain passages many more times, etc.

Everything about the entire application process requires so much personal introspection that it’s REALLY hard to give applicants advice…the usual lame stuff like ‘be true to yourself’ is really unhelpful, so the only advice I can possibly give is, “read this book and do what it says.”

swine flu

(1) It’s allegedly still safe to eat cooked pigs; we’re just not supposed to kiss living ones.

(2) There’s Nothing fun about Swine flu.  For me, it entailed a 101.6 deg fever, exhausted days, two restless nights, some painful coughing, and it felt like a rogue sprinkler had been re-routed through my nose, not to mention 73 years worth of glue-sniffing causing me to emptily stare off into space w/ an empty headache.

(3) The ‘2009 flu pandemic‘ is about the spread of H1N1, about which Wikipedia can tell you more than I can.

(4) Some are predicting that 50% of the US population is going to get some form of H1N1 this year.  It’s obviously difficult to predict, but the incidents are expected to increase dramatically in the first month or so that children are back in school this fall.

(5) The best way to prevent infection is to avoid being near people. If human interaction is unavoidable, then prevent those around you from sneezing or coughing.  Jokes aside, if you feel like you have the flu, my personal experience is that the best thing to do is immediately go to a doctor to get the anti-viral medicine you need.

(6) Even if you wanted to go back to work/school as soon as you start feeling better, you can’t, because you’re contagious for ~7 days from date of infection.

(7) Once I got the right medicine (Tamiflu was my savior), the illness actually wasn’t that bad…basically just a headcold+fever. The key, however, is getting to the right medicine - it is apparently especially important to do so w/in 48 hrs.  I got it after 60 hrs, but by hr 66, I felt human again.  Now, at day 4, I’m at about 80%.

(8) Speaking of Tamiflu, we have the ‘05 Avian flu situation to thank for the large stockpiles of the medicine that is now readily available now.  Fearing a global pandemic, many of the world’s governments really loaded up on the stuff.  In fact, the box I received from the clinic in Bangalore was manufactured in ‘06.

(9) For once, older folks (>52yrs old) may be in better shape to fight this off than us young whippersnappers.  Apparently, those who got the flu prior to 1957 had a version that is similar enough to this ‘novel H1N1′ that the older folks have some immunities that anyone born after 1957 doesn’t have.  Apparently, it’s most dangerous for pregnant women.

(10) Swine Flu is better than dengue fever.  Another student in my intern abroad program was unfortunate enough to get the dengue (ugh).  As long as you can get the right meds and you aren’t in a high-risk category, then this current version of ‘novel H1N1′ is basically just the flu.

That being said, I’m not a doctor, nor an expert on pandemics.  I only know what I’ve read in the news and wikipedia, plus the advice of a handful of doctors I’ve spoken with about my current, but improving, 5-day illness.  There’s an unbelievable amount of info available about this, so trust experts’ advice over mine.

Public Service Announcement - MacBook speed issues.  I found series of steps that actually fixed my computer speed problems and I thought I’d share what worked.  (Please note, I am not a Mac expert.  I just trusted what these people did and so far, it has worked nicely for me…exercise caution and only do these if you’re comfortable w/ it yourself.)

Got the advice from this forum:  http://community.livejournal.com/macintosh/3164116.html.  People there were nice enough to help some person out - and I happened to find the nuggets later:

Q:  MacBook is laggy, slow, sluggish, stuttering, etc.  Delays when I use mousepad, click around Firefox.  Frustrating.

A: You might do these things
(1) Try going to Accounts in System Preferences and seeing if your account is set to autorun any programs at login, and if it is, remove the ones that you didn’t know were autorunning and remove the ones that don’t need to.

(2) Then, restart the Mac and run Activity Monitor (it’s in /Applications/Utilities) and see what’s running - if there’s anything undesirable running in the background you might want to consider coming back and asking us how to stop it doing so.

(3) Secondly, verification/repair of a disk permission isn’t difficult - simply go to /Applications/Utilities again but this time run Disk Utility, select your hard drive and click ‘Verify Disk Permissions’. Mac OS X will check your drive and come back with a verdict as to how healthy the drive is, and if it isn’t healthy, should offer to ‘Repair Disk Permissions’. Try that, too.

(4) Run Activity Monitor (in /Apps/Utilities) to see what’s running on your Mac. You can sort processes by % CPU or Real Memory to see if anything is using abnormal amounts of system resources. I’ve had problems with Firefox leaking memory

(5) Run Leopard Cache Cleaner and see if that helps.  Run a deep cache cleaning, and all maintenance tasks.   Free download:  http://www.apple.com/downloads/macosx/system_disk_utilities/leopardcachecleaner.html.

MD: I think what really solved my problem was (5) the Leopard cleaner - I did like 5 different ‘cleaning’ operations using that thing and it even rehabilited my very old iMac, too.

Check out my ‘tweets’ to the right   —–====>>>>

Or, you can follow me by on Twitter by visiting my twitter page here:

www.twitter.com/MikeDorsey

Great chart, “Top 10 Online Retailers by Conversion Rate - October 2008″ posted on www.marketingcharts.com, listing the sites with especially good sales conversion rates.

Matt (@tugglmatt) pointed this out and theorized a bit about why they exceeded the performance of the other gajillion websites out on the information superhighway.  He asked: “Top 10 web retailers by conv. rate. Is it traffic quality? site optimization? user intent? interesting chart…”

This got me wondering, so I checked out a sampling of three that I wasn’t intimately familiar with.  I suspect that conversion rates at a site like ‘OfficeDepot.com’ might partially be so strong because of their obvious brand leadership.  Along the same lines, I figured that a site from a company who was not the obvious industry leader might be more related to its layout and design quality…

ProFlowers.com
Blair.com
Roamans.com

I found ProFlowers.com (same company family as RedEnvelope.com and others) to be especially sharp and awesome.  Roaman’s is awesome too.  I find the actual product listings sub-pages to be more attractive than the index page on all 3 examples.

So here’s a quick hit list of my observations.  Clearly, this isn’t the whole story, but I noticed the following common threads:

First, they all have the obvious, clean layout, seo friendly text link navigation, nice buttons, sharp edges.

• All have bright colors, either a pretty pastel or otherwise attractive coloring
• Lot of white space, or clean space
• All have trust signals clearly displayed…McAfee, plus Verisign or another
• All have narrow page width, not 1000mpx, would fit horizontally on small-ish monitor
• Product prices in red font
• Large selection of relatively low cost products
• Images’ prices displayed below the image, not to the side
• Full secondary product pages always 4 columns wide, many rows tall,
• Prices in red font in two of them
• Attractive smiling women on index page of two
• All have nav bar across top, not along side
• All have a search box clearly displayed at the top
• Order Status, Track My Order links at top of every one

So what do you all think?  What about these sites makes their per-visitor conversion so much higher?  Notice something in common among them that are unobvious?  Other examples of the finest sites you can think of?

Works on IPhone. Big selection of customized audio news, on Iphone. No more chintzy local radio for me.

Its huge - he ability to listen to NPR, WSJ, and Top Rated Podcasts on your PC or IPhone - they have a huge list of categories that you can choose from - and their algorithm notices what you like and don’t like - delivering you better stuff the more you liten.

Amazing stuff - this will be my go-to source for news for the foreseeable future.  Go Stitcher.

Interesting thoughts from TC:

I have mixed feelings about Stitcher’s potential. While the desktop-based version of the website works as advertised, I have a hard time picturing many people sitting at their computers listening to recommended news articles and debates. This works well enough with music, but news content is much more involved - generally you need to pay more attention to what is being said, which probably isn’t how most people will want to spend their free time.

On the other hand, the iPhone version of the site has a chance to be a runaway success. The prospect of having my favorite blogs and podcasts streamed to my iPhone without ever having to sync up with a computer is very appealing. Right now the iPhone version of the site is clunky, mostly because of issues with iPhone’s integrated Quicktime player (though streaming over Edge works surprisingly well). But these problems should be short-lived, as Stitcher’s development team is hard at work on a native iPhone application which could see the service really start to shine this June, when Apple releases its sanctioned app store.

I totally agree.  While the PC version of this might be useful for some, the mobile version has the potential to be a game-changer.  I’m very impressed that they’re even reading top blogs aloud to provide this quality audio content to our phones.  I will definitely be using and paying attention to this company.

Stanford has been amazing - the people are spectacular.  The access to local VCs has been great - and we’re already fully into recruiting & interviews for summer internships.  The campus itself is really pleasant - I get to bike to class each day, the weather is almost always sunny and fresh feeling.

I got a deepdive in Finance this past quarter, so I can now understand the WSJ when I read it.  I am about to dive into another quarter of classes, but this time, they will be almost exclusively quantitative (modeling, stats, microecon, mngrl accounting, and corporate finance).  Between the courseload and spending time with classmates, the school absorbs practically all of my time - my life is once again managed by an Outlook calendar that finds lunches regularly double and triple booked.  We call it ‘drinking from a firehose’.   It’s crazy to have so many interesting lectures, seminars, and activities to spend time with.

Anyways, I’m getting to spend time with a lot of high-achieving and well-meaning people who want to build companies (either Internet businesses or clean energy companies) - and those are the two things I’m most interested in.  All in all, it’s been every bit the experience I had hoped it would be.

Fortunately, Joan has been a great companion - getting to spend time with her helps keep me balanced and after Q2, everything is supposed to ease up a great deal - giving us more time to work on projects, meet people outside the school, etc.

I have some expiring AA miles that I wanted to cash in and found that I could use Points.com to pick up some magazine subscriptions.  While I’m at business school at Stanford GSB, I want to have some quality business / finance / investment magazines that I can use to keep current.

In deciding which ones to purchase, I collected these reviews from the public reviews on Amazon.com.  I hope you find this compilation useful - and there is plenty more like this at Amazon, if you’re interested.

**Please note, I don’t personally know much about the bias, content, or relative quality of any of these magazines.  All of the info below is simply what I collected from the customer reviews done by others.  I hope it’s useful as a collection of others’ opinions, but I certainly don’t have the expertise to make any concrete judgments about any of them myself.** I did, however, buy three of them and I will know more soon

SmartMoney - Personal Finance, WSJ - 4/5 - http://www.smartmoney.com/
Among the features I look forward to every month:

- Ten Things: a “watch out” list of 10 things that you should know about the different professionals you interact with (your dentist, your accountant, a real estate broker, etc.). Always an eye-opener.
- Stock Screen: Paul Sturm is a knowledgeable, value-oriented journalist who puts together a list each month of 8-10 stocks that make it through a rigid screen of several characteristics. Each month, he features a different screen and he uses a good mix of quantitative characteristics and common sense to generate the list.
- Feature articles that profile common people and the serious personal finance problems they have endured (e.g., collecting on insurance, fighting the IRS, traveling overseas).

SmartMoney is frequently compared to Money magazine, but Money is often more narrowly focused on investing and it sometimes dumbs down its articles. I also read BusinessWeek, Forbes and Fortune regularly. While they all have their place, none provides the depth and common sense focus of SmartMoney when it comes to personal finance. I have photocopied and saved countless articles and I sometimes refer to them years later. … my advice is to get a subscription now - it’s definitely worth it.

Smart Money is a solid magazine about business and finance and I have been reading it on and off again for the past five years. This magazine is a little bit big business and a little bit personal finance, combining together the features of a business magazine with that of an investment publication.

One of the main things I like about Smart Money is the fact that it includes so many different articles each month. There are only a few regular departments in this magazine. The majority of the pages include featured articles and short articles that change from month to month. These articles can cover a wide range of topics from ways to cut your electric bill to the latest regulations in the insurance industry.

Smart Money is an intelligent magazine and its articles are often a little more advanced than those of other financial publications. They don’t reach a level that is too advanced to make them incapable of understanding, and that is good. But they are certainly intended for the savvier investor who already knows the ropes and wants some more specific, intermediate to advanced advice on personal finance and corporate happenings.

has some intermediate technical analysis, covers a great range of financial issues including new stock pics (performance of which which they track over time), mutual funds, financial managers/discount and full service broker comparisons, bonds, tax and retirement issues, travel, just the right amount (minimal) of tech product reviews, and a monthly car review/comparison.

I appreciate the focus on bargain hunting, both in stocks and the other areas mentioned above. These guys are not stock pumpers, but value seekers!

I like this magazine because it has a lot of short, concise and easy to read articles. I am no financial genius but I do like to read about what is going on

Forbes - Conservative Concise - 3/5 - http://www.forbes.com/
Cancelled my subscription (mostly due to the fact that I got utterly tired of their absurd right-wing slant)

I always look most forward to receiving my next issue of Forbes. Why? Several reasons:

- The articles are generally shorter and more “to the point” than Fortune. Forbes is also not as beholden as BusinessWeek is to cover the hot news stories.
- This magazine is the best of the three for discovering new investment ideas and it is generally more investor focused than either Fortune or BW.
- The editorials throughout the magazine are usually thought-provoking and I guarantee you will develop your own favorite columnists whom you will look forward to reading in each issue
- Forbes has a politically conservative and pro-business slant (with Steve Forbes as Editor-in-Chief, that should be no surprise).
- Forbes offers two supplemental issues, which are quarterly. Forbes ASAP is entirely focused on technology and many articles are actually thought pieces written by influential executives, investors, and technology visionaries. Forbes FYI features lighter articles which are thematically aimed at the upper class. You will probably find some of the stories (and the ads) irrelevant to your life (we’re not all millionaires yet, are we?). But it’s an amusing magazine and it’s a good break for me from the stream of more business-oriented stuff I read.

If you like CNN, you might as well stick with Fortune. But if you are more of a Fox News viewer, then you’ll like Forbes much better.

If you are sensative about your politics then this magazine will have a profound effect upon you. Liberal? You’ll hate it - and miss its more subtle and profound insights into raw capitalism. Conservative? You’ll love it - and miss its more subtle and profound insights into raw capitalism.

Forbes must be read with an open mind. It is unabashedly capitalist, boldly conservative, and stunningly pro-business. But it’s editorial arguments (the various editorals are its best feature) are always intelligently written and very effectively made. Regardless of your personal views you will find the opinions compelling. This magazine will make you think and, as a result, you’ll get more than your money’s worth from your subscription.

Forbes has some problems:
1. each issue features yet more conservative opinions promoting trickle down theory. If you want to read articles written by Steve Forbes complaining about having to pay taxes, this is for you!
2. after the Steve Forbes commentary, you find yet another billionaire or celebrity salary ranking. If you like to brown nose rich people, this is for you!

Fortune - Liberal Executive Profiles - 4/5 - http://www.exitocoastal.net/fortune.html
What does Fortune bring to the table that still makes it so vital? Several things:
- The most in-depth feature stories among the three magazines. They are thoroughly researched and Fortune works hard to interpret the facts and draw conclusions, as opposed to just aggregating and reporting information.
- More than either of the other two, Fortune will profile prominent executives, giving you a unique window into their philosophy and how they rose to prominence.
- The investing section near the back is always decent and there’s a reasonably good focus on technology, both devices and companies.

Why is it my least favorite?
- Fortune clearly has a liberal bias, with frequent articles on employee rights, racial or gender-oriented issues, philanthropic causes such as AIDS, and the general plight of the poor, the elderly, or working mothers. Nothing wrong with that, and some of these articles are eye-opening. But I mainly read business magazines with an eye toward investing, so these types of articles fall outside that scope.
- Yeah, there are too many ads and special advertising sections. It is a necessary part of the world of magazines (or else you’d be paying triple the price for a subscription). But it’s still annoying.

Although they seem to be substitutes for each other, Fortune, Forbes, and BusinessWeek each provide something different enough that I see the value in subscribing to all three (and I have been doing so for a decade). If you’re looking to go beyond the weekly headlines and want business-oriented articles that don’t always have an investment angle, then Fortune seems to be the best bet.

There is some good reading to be found here from time to time, with Fortune writers presenting some good articles on a diverse range of topics from taxation, to employee benefits, to political regulation of business. But in other ways, Fortune’s primary focus makes it the type of magazine that few can relate. Most of what you read in Fortune is aimed at CEO’s and other high- ranking corporate officers. Articles that discuss how a CEO successfully contained costs and helped increase shareholder value make for some ok reading, but they are not the type of articles that most readers can relate to.

Fortune is very much a corporate publication, and while it does present a few articles on personal finance, it would be better if it contained more. Also, it would be nice if there was a more personal dimension to this magazine. Along with more articles on personal finance and investing, I would like it better if it included stories of actual families illustrating what they have done to achieve their personal goals.

Fortune is like the fashion magzine in the business world, and Businessweek is more news centric. Fortune always has at least 5 or 6 very interesting featured articles about people, companies, or the economy.They are always insigtful, personal (as if the writer is talking to a friend), well researched, and perfectly structured. These long essays is the core of Fortune, but the rest of the magzine, columes, personal finances and so on, aren’t as good. 50% of the magazine seems to be ads, and the contents are not as tightly connected together in a clear manner as the Economist or Businessweek. That’s why I think it’s like a fashion magzine.

Money - Personal Finance Info For Beginners - 3/5
I subscribe to several financial magazines, of which “Money” is one. I think that “Money” is an excellent publication for neophyte investors, as it does provide generally sound information and advice. It is very good at explaining terminology in plain English, which is to be applauded, but investors with more knowledge of investments and financial planning would probably be better off with another magazine, like “Kiplinger’s”, for instance.

“Money” covers primarily investments in mutual funds, bonds, and stocks, although real estate and retirement planning are also dealt with regularly. I like the investment index feature in the back of the issue: it is honestly the only part of the magazine I routinely use anymore, although I do skim the articles, and read one or two per issue. My chief complaint with the magazine is how formulaic the articles are. It seems like every month there is an article called “The Best Places To Put Your Money Now”, for instance. Timeliness is a good thing, but the magazine endorses long term investing (as do I) so the last thing I want to be doing is thinking about where to move my money to this month.

Beginning investors: this is an excellent magazine for you, and I say that without reservation. Overall though, “Money” is not bad, but if you are already fairly knowledgeable about financial management you can do much better.
Money is a decent magazine. I subscribed to it for a year and learned some interesting things. It is good for beginning finance, but I also believe it can be a little dangerous. See my pros and cons.

Pros:
1. Good at outlining sound, traditional, general financial advice from issue to issue. Nearly every issue covers basic information on 401(k)’s, IRAs, home ownership, education, etc. They do an especially good job at providing narrative to help explain some of the more technical issues. Instead of writing a technical treatise on 401(k)’s, for example, they will instead describe the experiences of actual families with different needs and problems. This is probably Money’s greatest strength, even if the stories can sometimes be a little sappy.
2. They do a good job outlining major new trends in investing, taxes, etc. with a healthy dose of buyer beware.

Cons:
1. I believe mass market magazines are a HORRIBLE place to find stock tips. Please be very, very careful when reading their stock tips. I could write an essay here, but I hope that financial neophytes take all Money’s stock advice with a heavy ladle of salt. I don’t think Money is doing anything unscrupulous, I just think a monthly magazine is a poor forum for this kind of information.
2. I wish they would stay out of the consumer product reviews. I would rather read a couple more articles on finances than wade through a special section on automobiles, electronics, etc. Money should be about money. Sure, making good purchasing decisions is a part of a healthy financial lifestyle, but I personally believe their reviews sections are very thin and are just there to get people to buy the magazine off the newstand. No one should use Money, for example, to figure out which car to buy. I hope they don’t.

Harvard Business Review - 4.8/5
HBR transcends the purely academic and provides concrete advice on a wide range of critical areas, including leadership, strategy, management, decision making, delegation, organizational behavior, and communications. While the articles often address management theory, they always address the real-world practice of management. HBR is written for practitioners. The writing style is clear, concise, and compelling - just what busy execs need. If you are too busy or don’t know if you are interested in a full article, each article is summarized at the end. And no, you don’t need an MBA to understand the articles and take action.

Yes, a HBR subscription is expensive compared to other periodicals, but HBR is worth every penny. Set yourself above the competition and read the HBR.

I will go through the typical set-up of each issue: The front page contains a table of content, which is handy when you are looking for a particular article. There is an introduction by the editor. There is a Forethought-section is “a survey of ideas, trends, people, and practices on the business horizon.” It reports on research and studies that are currently ongoing, not just at Harvard Business School. There is a Harvard Business Review case study followed by advice from experts in the field on that particular case study. There is an autobiographical articles based on experiences from (typically) a business leader under the title First Person. This is followed by an article called ‘HBR at Large’ on issues that are not necessarily related to management issues. This section is followed by at least four new articles on management issues. Most articles are based on research by academics in fields ranging from human resource management, accounting to strategy and technology. Most of these articles present materials that later form the foundation for books. At the end of each Harvard Business Review, there is a short summary of each article. There is an article based on experiences at various organizations, which are described in ‘Best Practice’. There is an article for the manager’s ‘Tool Kit’. Finally, there is at least one proper book review. This book review is normally by someone related in the field, so there is some good critics on that particular book.

HBR is the most intelligently written executive-grade business magazine available. Forbes and Fortune would be the next runners up, but way in the distance. It takes a mag directed to people with chief positions and the aspiring chiefs to have an executive summary at the end of every magazine!

The September 2006 issue before me is not as tightly themed as some, yet its diverse offering is as rich as ever. Articles include

* Ten Ways to Create Shareholder Value
* Rethinking Political Correctness
* With Friends Like These: The Art of Managing Complementors
* How to Keep A Players Productive
* Curveball: Strategies to Fool the Competition

Then there are the regular departments:

* HBR Case Study: Indispensable
* Managing Yourself: the Decision to Trust
* Tool Kit: The New Science of Sales Force Productivity
* Best Practice: When Your Contract Manufacturer Becomes Your Competitor

Each month’s articles are treated to an executive summary at the back of the Review.

HBR gives its readers a mix of sociological, economic, psychological, and statistical takes on business at a level that can reasonably be called authoritative.

Portfolio.com put together a tremendous insider story about the underpinnings of the economic mess we’re in:  excessive leverage on securities made of rolled up subprime mortgages, by speculators who bought despite home price-to-income ratios skyrocketing, and investors that saw this coming and made a killing shorting bonds made of this junk.

Who saw this coming?  Certain brilliant skeptics that had been a part of the inner workings of this complex web of financial engineering.

I’m only beginning to learn how this complex and disconcerting web became a monster.  This Conde Naste article does an excellent job of painting the horrifying picture.  Excellent work by Michael Lewis in producing this piece.  I’ve copied excerpts of this article below:

“In retrospect, pretty much all of the riskiest subprime-backed bonds were worth betting against; they would all one day be worth zero. But at the time Eisman began to do it, in the fall of 2006, that wasn’t clear. He and his team set out to find the smelliest pile of loans they could so that they could make side bets against them with Goldman Sachs or Deutsche Bank. What they were doing, oddly enough, was the analysis of subprime lending that should have been done before the loans were made: Which poor Americans were likely to jump which way with their finances? How much did home prices need to fall for these loans to blow up?”

“The smart trade, Lippman argued, was to sell short not New Century’s stock but its bonds that were backed by the subprime loans it had made. Eisman hadn’t known this was even possible—because until recently, it hadn’t been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision.”

“Here’s where financial technology became suddenly, urgently relevant. The typical mortgage bond was still structured in much the same way it had been when I worked at Salomon Brothers. The loans went into a trust that was designed to pay off its investors not all at once but according to their rankings. The investors in the top tranche, rated AAA, received the first payment from the trust and, because their investment was the least risky, received the lowest interest rate on their money. The investors who held the trusts’ BBB tranche got the last payments—and bore the brunt of the first defaults. Because they were taking the most risk, they received the highest return. Eisman wanted to bet that some subprime borrowers would default, causing the trust to suffer losses. The way to express this view was to short the BBB tranche. The trouble was that the BBB tranche was only a tiny slice of the deal.”

“But the scarcity of truly crappy subprime-mortgage bonds no longer mattered. The big Wall Street firms had just made it possible to short even the tiniest and most obscure subprime-mortgage-backed bond by creating, in effect, a market of side bets. Instead of shorting the actual BBB bond, you could now enter into an agreement for a credit-default swap with Deutsche Bank or Goldman Sachs. It cost money to make this side bet, but nothing like what it cost to short the stocks, and the upside was far greater.”

“The arrangement bore the same relation to actual finance as fantasy football bears to the N.F.L. Eisman was perplexed in particular about why Wall Street firms would be coming to him and asking him to sell short. “What Lippman did, to his credit, was he came around several times to me and said, ‘Short this market,’ ” Eisman says. “In my entire life, I never saw a sell-side guy come in and say, ‘Short my market.’””

“And short Eisman did—then he tried to get his mind around what he’d just done so he could do it better. He’d call over to a big firm and ask for a list of mortgage bonds from all over the country. The juiciest shorts—the bonds ultimately backed by the mortgages most likely to default—had several characteristics. They’d be in what Wall Street people were now calling the sand states: Arizona, California, Florida, Nevada. The loans would have been made by one of the more dubious mortgage lenders; Long Beach Financial, wholly owned by Washington Mutual, was a great example. Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking home­owners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.”

“More generally, the subprime market tapped a tranche of the American public that did not typically have anything to do with Wall Street. Lenders were making loans to people who, based on their credit ratings, were less creditworthy than 71 percent of the population.”

“All that was required for the BBB bonds to go to zero was for the default rate on the underlying loans to reach 14 percent. Eisman thought that, in certain sections of the country, it would go far, far higher.”

“A full nine months earlier, Daniel and ­Moses had flown to Orlando for an industry conference. It had a grand title—the American Securitization Forum—but it was essentially a trade show for the ­subprime-mortgage business: the people who originated subprime mortgages, the Wall Street firms that packaged and sold subprime mortgages, the fund managers who invested in nothing but subprime-mortgage-backed bonds, the agencies that rated subprime-­mortgage bonds, the lawyers who did whatever the lawyers did. Daniel and Moses thought they were paying a courtesy call on a cottage industry, but the cottage had become a castle. “There were like 6,000 people there,” Daniel says. “There were so many people being fed by this industry. The entire fixed-income department of each brokerage firm is built on this. Everyone there was the long side of the trade. The wrong side of the trade. And then there was us.”

“You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.”

“On July 19, 2007, the same day that Federal Reserve Chairman Ben Bernanke told the U.S. Senate that he anticipated as much as $100 billion in losses in the subprime-mortgage market…Steve Eisman had become a poorly kept secret. Five hundred people called in to hear what he had to say, and another 500 logged on afterward to listen to a recording of it. He explained the strange alchemy of the C.D.O. and said that he expected losses of up to $300 billion from this sliver of the market alone. To evaluate the situation, he urged his audience to “just throw your model in the garbage can. The models are all backward-looking.  The models don’t have any idea of what this world has become…. For the first time in their lives, people in the asset-backed-securitization world are actually having to think.” He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt.”

“Not so for hedge fund managers who had seen it coming. “As we sat there, we were weirdly calm,” Moses says. “We felt insulated from the whole market reality. It was an out-of-body experience. We just sat and watched the people pass and talked about what might happen next. How many of these people were going to lose their jobs. Who was going to rent these buildings after all the Wall Street firms collapsed.” Eisman was appalled. “Look,” he said. “I’m short. I don’t want the country to go into a depression. I just want it to fucking deleverage.” He had tried a thousand times in a thousand ways to explain how screwed up the business was, and no one wanted to hear it. “That Wall Street has gone down because of this is justice,” he says. “They fucked people. They built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience.””

I, personally, don’t know nearly enough yet to know exactly what I think about all of this.  I believe that the majority of the junior analysts at these firms knew little of what they were doing.  I also know that a lot of the leaders of these organizations made an absolute killing off of the crisis that they helped create.  I am interested in seeing how this plays out.

The problem many people face is that there are so many sources of information that we’re trying to keep track of, we’ve become buried. Information overload is a real problem for many web users, and one way to cope with it is to filter your RSS feeds so you only see what you want to see.  There are many ways to filter news feeds from your favorite sources, including passively by relying on meme trackers like Techmeme or social news services such as Google Reader’s shared items.

My biggest problem is that each of my feeds is a single, sequential series of posts that is organized by time, NOT by importance or relevance to me.  With a super-bright friend, I’ve been working on some interesting new ideas in feed filtration.  Imagine a website that had the most interesting and relevant information for YOU.  A sort of fully customized TechMeme…a YouMeme.

Poking around, I’ve found several interesting attempts at solving this challenge:

Feedhub.com -  learns from your behavior to suggest posts to you - so far, the user interface and service looks pretty sweet.  It gave me my own feed, based on my OPML, which I added to Google Reader, and it will look at my history and give me feeds back.  TBD.

** FeedZero.com -  It uses Bayesian filtering to present you with a list of filtered feed items - all you need to do is subscribe to a bunch of feeds, mark which ones you like and don’t like (similar to classifying items as spam or not spam in an email client) and it’ll learn your preferences.  It has just gone into testing so any feedback would be appreciated - http://www.feedzero.com.  I loaded up my OPML here and it does some interesting things.

The interface is sometimes clumsy in operation but clever in its layout.  Seems fairly effective at choosing stories I’ll like.  This bayesian method must be interesting.  So far, so good.  Despite the somewhat clumsy interface, the news it is filtering for me is good.  Great case in point, after only one day (yesterday) of reading posts and saying ‘yes / no’ to certain ones, it loaded up several articles.  The 3rd one, which impressed me the most, was a post about the sale of the domain name, solarenergy.com.  It knows I like domain names, it knows I like solar energy, and it spooled up THAT article, out of several hundred it could have shown me.  It’s also doing well on other themes too - it’s awesome enough to have this sort of service that I find myself reading MORE news overall, because of the consistently high relevance of the stories to ME.

There are a LOT of other services that are doing something in this sphere:  AidRSS, FeedRinse, FilterMyRSS, BlastFeed, etc, but for me, the two above look the most interesting.

TBD if the end result of all of this is (a) to build my own company that does this, or (b) that FeedZero or some other service is useful enough that it is unwise and unnecessary to dive in myself.