David Einhorn, “We’ve scoured the Nasdaq listing rules, reviewed the Securities Exchange Act of 1934, and engaged a leading numerologist. We can’t find any prohibition on trillion dollar market capitalizations.”  (StreetSleuth via Clusterstock)

Chart of the day

What now for gold?  (The Reformed Broker)

Markets

Of course interest rates can go lower.  (MarketBeat)

Just because bonds are rich does not necessarily mean stocks are headed higher.  (Above the Market)

Dividends can be the basis for the next ‘cult of equity.’  (FT)

A lot of people wanted to buck the “Sell in May” signal.  (The Reformed Broker earlier Abnormal Returns)

Strategy

On the fear of failure and the need to “trade to win.”  (Kirk Report)

How much is growth worth? It depends… (Aswath Damodaran, ibid)

On the differences between low beta and low volatility portfolios.  (IndexUniverse)

Another interesting interview with Jack Schwager author of Hedge Fund Wizards.  (Steven Goldstein via TraderHabits)

Companies

The case for Facebook ($FB).  (The Atlantic)

Why Apple ($AAPL) needs to buy Spotify.  (TechInsidr)

Why Loews ($L) always seems to trade at a discount to NAV.  (The Brooklyn Investor)

Why Aetna ($AET) is undervalued.  (Turnkey Analyst)

Why Whole Foods ($WFM) has been on such a tear.  (YCharts Blog)

Some big technology companies are more stable than commonly thought.  (YCharts Blog)

Finance

High frequency trading firms are now investing in microwave networks to save milliseconds.  (WSJ)

Why the private equity industry is facing tough times, and what the big boys are doing about it.  (Dealbook)

Does restricted stock make management more likely to pay a dividend?  (Money Game)

Why investors are interested in seeding emerging hedge fund managers.  (Institutional Investor)

Why the IPO process is not for companies trying to max out their value.  (Epicurean Dealmaker contra Bronte Capital)

Global

Japanese companies are trying to buy some growth wherever they can find it.  (WSJ)

Skilled worker shortages are a global issue.  (Businessweek)

Economy

Nassim Taleb speaks. People freak out.  (Bloomberg, Money Game, Tim Duy)

Seriously people housing is bottoming.  (Money Game, The Basis Point also Bloomberg)

Something’s gotta give: the yield on rental housing is too damn high.  (Modeled Behavior)

Enrico Moretti, author of the The New Geography of Jobs, on why technology is so important to the jobs outlook.  (Pando Daily)

American companies are having a hard time filling open positions.  (Global Macro Monitor)

Earlier on Abnormal Returns

The results of a conversation I recently had with Bill Luby about the Abnormal Returns book.  (VIX and More)

What you missed in our Wednesday morning linkfest.  (Abnormal Returns)

Mixed media

Another example of good old fashioned curation at work.  (Pando Daily)

Intellectual property protections keep growing, while stifling innovation along the way.  (NYTimes also Slate)

There are five types of entrepreneur and Elon Musk.  (Pando Daily)

Abnormal Returns is a founding member of the StockTwits Blog Network.

Technology

Not surprisingly Facebook ($FB) options volatility is pretty high.  (Barron’s, WSJ)

The endgame for Research in Motion ($RIMM) is nigh.  (Dealbook, Deal Journal)

Symantec ($SYMC) management does not like having its errors pointed out at its annual shareholders meeting.  (Capital Observer)

Commodities

Energy stocks are discounting much lower oil prices.  (FT)

About that whole gold as safe haven play as miners rethink their capital spending plans. (WSJ also FT)

Global

Spain is “climbing the steps of the liquidity hospital.”  (FT Alphaville)

China is none too keen on further economic stimulus.  (Bloomberg, WSJ)

The evidence keeps piling up that the BRICs are slowing.  (Finance Addict)

Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.

Felix Salmon, “The stock market is no longer the common ownership of the means of production: it’s a place where early-stage investors can exit to a group of muppets and high-frequency traders.”  (Reuters)

Chart of the day

Have you checked out lumber prices this year?  (WSJ)

Video of the day

Michael Martin talks with Jack Schwager author of Hedge Fund Wizards.  (MartinKronicle)

Markets

Another look at the stresses individual investors have faced of late. (TheArmoTrader also WSJ)

Hedge funds are piling into long bond futures.  (MarketBeat)

Strategy

The use of metaphors in investing is a double-edged sword.  (Interloper also TRB)

Great lessons from the other side of the trade…a margin clerk.  (Brian Lund)

Companies

Why Twitter and LinkedIn ($LNKD) have better prospects than Facebook ($FB).  (Minyanville)

Who knew? Heinz ($HNZ) has a fast growing emerging market segment.  (Crackerjack Finance)

Medical devices as pharmaceutical replacements.  (The Source)

Finance

The case of IPOs: who exactly is the client?  (Bronte Capital)

How credit default swaps help create an illusion of hedgability.  (Bloomberg, Felix Salmon)

Shadow banking ain’t what it used to be.  (FT Alphaville)

Global

How might a Euro crackup affect the UK.  (FT Alphaville)

What sort of equilibrium is Spain facing?  (Marginal Revolution)

What countries would benefit most from Eurobonds?  (Free exchange also Wonkblog)

India and China are looking for more investment.  (WSJ, ibid)

Why the place premium is so high.  (Businessweek)

Economy

The Case-Shiller numbers show a real mixed geographic bag for home prices.  (Calculated Risk, Money Game, Big Picture)

Just how big an effect did the debt ceiling debate have on the US economy?  (Bloomberg)

Lower energy prices are on reason for the trend of US companies “reshoring.”  (Dr. Ed’s Blog)

Skill and luck, risk and uncertainty and our need for overconfident entrepreneurs.  (Noahpinion)

Earlier on Abnormal Returns

The “confidential holdings” hedge funds do not want you to know about.  (Abnormal Returns)

What you missed in our Tuesday morning linkfest.  (Abnormal Returns)

Mixed media

Yodlee powers many of the new financial apps. Zack Miller talks with Chief Strategy Officer Joe Polverari.   (Tradestreaming)

An interview with Daniel Gross author or Better, Stronger, Faster: The Myth of American Decline..and the Rise of a New Economy.  (Time)

A look at Moshe Milevsky’s The 7 Most Important Equations for Your Retirement: The Fascinating People and Ideas Behind Planning Your Retirement Income.  (Capital Spectator)

Abnormal Returns is a founding member of the StockTwits Blog Network.

One of the big ways in which a hedge fund can choose to delay disclosure is through seeking confidential treatment of certain holdings. For example, Warren Buffett is well-known for his seeking this treatment. By seeking this treatment hedge funds can delay the disclosure of certain holdings, even if their application is eventually denied.

This provision provides for a natural experiment to see if the holdings hedge funds choose not to disclose differ from their other holdings. The answer is yes. A new paper forthcoming in the Journal of Finance explore this very issue. The abstract from the paper:

Uncovering Hedge Fund Skill from the Portfolio Holdings They Hide

Vikas Agarwal
Wei Jiang
Yuehua Tang
and Baozhong Yang

This paper studies the “confidential holdings” of institutional investors, especially hedge funds, where the quarter-end equity holdings are disclosed with a delay through amendments to the Form 13F and are usually excluded from the standard databases. Funds managing large risky portfolios with non-conventional strategies seek confidentiality more frequently. Stocks in these holdings are disproportionately associated with information-sensitive events or share characteristics indicating greater information asymmetry. Confidential holdings exhibit superior performance up to twelve months, and tend to take longer to build. Together the evidence supports private information and the associated price impact as the dominant motives for confidentiality.

The bottom line is that you have to be a careful consumer of information surrounding hedge fund disclosures. There are number of ways in which hedge fund positions are not captured in 13Fs. You are often not seeing a hedge fund’s entire picture, nor their best ideas. So-called confidential holdings are just one of the ways hedge funds try and keep hard-earned information private for just a little while longer.

Trading

Proprietary traders out on their own with hedge funds are having a tough time of it.  (Reuters)

Why so many traders lose: they are in for the action.  (ZorTrades)

High yield

Short interest in junk bond ETFs has surged.  (FT)

European borrowers are coming to the US to obtain funding.  (WSJ also Bloomberg)

Europe

Stress is showing up in the inverted Eurepo curve.  (FT Alphaville)

We should all fear a disorderly breakup of the Euro.  (Baseline Scenario)

A Spanish bank bailout is now inevitable.  (Sober Look)

Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.

Howard Lindzon, “Tuesday is just as good a day as ever to begin to invest, begin a career in the equity markets or pursue a career in Venture Capital. It is your commitment to your goals that matter and your angle of attack. Start building domain experience around your passion today!”  (Howard Lindzon)

Chart of the day

The spread between Spanish and German yields continues to blow out.  (FT Alphaville, ibid)

Markets

Investor sentiment is a mixed bag at the moment.  (The Technical Take)

Markets should be paying more attention to China, not Europe.  (Humble Student of the Markets)

A true out-of-sample tests of some technical trading rules.  (CXO Advisory Group)

What role do commodity indices have on oil prices?  (Econbrowser)

Regulating high frequency trading would be a logical response at this point.  (Streetwise Professor)

Psychology

Why bearish calls are so easy to make.  (The Reformed Broker)

Chris Dillow, “(P)eople are too quick to perceive skill and thus to pay for something that doesn’t exist. The demand for forecasters and tipsters substantially exceeds the real ability such pundits actually have.”  (Stumbling and Mumbling via Economist’s View)

Fifteen great investor quotes.  (Big Picture)

Companies

If you own Santander preferreds you should probably read this.  (Bronte Capital)

Global brewers as a safe haven.  (WSJ)

Is Newmont Mining ($NEM) the best way to play gold?  (WSJ)

A Facebook ($FB) phone, redux.  (Bits, SAI)

Global

Notions of equity, or fairness, are making compromise in Europe more difficult.  (James Surowiecki)

Who would stand behind Eurobonds?  (NYTimes)

To add insult to injury olive oil prices in Europe are dropping.  (FT)

The SNB is preparing for a Euro crackup.  (WSJ)

Money is leaving peripheral European banks.  (Slate, Sober Look)

On the many troubles still facing the Indian economy.  (naked capitalism)

China’s real estate economy is on the “tipping point.”  (FT Alphaville)

Economy

The US housing economy continues to recover.  (Sober Look also Globe and Mail)

Putting the Facebook IPO in some economic context.  (Modeled Behavior)

Some employment report forecasts.  (Calculated Risk)

New York City is the new Silicon Valley.  (NYTimes)

US consumers have decoupled from the Euro mess.  (Sober Look)

Week in review/preview

The markets are going to bring to bear a lot of ‘evidence’ this week. (A Dash of Insight)

The coming week is filled with opportunity…and data.  (UpsideTrader)

Where markets stand at week-end.  (Global Macro Monitor, ibid)

The economic week that was.  (Bonddad Blog, Calculated Risk)

The economic schedule for the coming week.  (Calculated Risk)

Abnormal Returns is a founding member of the StockTwits Blog Network.

MS, “The next time you take a loss thank your lucky stars it happened. Celebrate it. You did what you needed to do.”  (Mortality Sucks)

Chart of the day

IYT data by YCharts

Keep an eye on the transports for market clues.  (MarketBeat)

Markets

Why we need an “air traffic control” for the stock markets.   (Jason Zweig)

Why we need to slow markets down.  (Aleph Blog)

Why does everyone think ‘IPO pops‘ are a good thing?  (Henry Blodget, Joe Nocera)

Equity cult

Michael Santoli, “Reports on the death of the public stock investor may only be slightly exaggerated. But these reports have certainly gotten loud, shrill and rife lately.”  (Barron’s)

No new secular bull market can begin until the end of ‘financial repression.’  (FT)

Why the ‘equity cult’ is still dying.  (Money Game)

Strategy

How to invest with a targeted volatility approach.  (VIX and More)

On the need for, and calculation of, multi-asset class benchmarks.  (SSRN via @quantivity)

Reaching for yield in the bond market is a real thing..amongst insurers. (SSRN)

Companies

What does Carl Icahn think he can accomplish with troubled Chesapeake Energy ($CHK)?  (WSJ, ibid)

The most recent version of AOL ($AOL) stock is back to near all-time highs.  (Money Game)

A look at another under the radar company, Seacor Holdings ($CKH).  (The Brooklyn Investor)

Finance

Is there really an illiquidity premium?  (Felix Salmon)

Why do you still have money with a financial adviser at a TBTF bank?  (I Heart Wall Street)

Why investment advisers should be graded like restaurants.  (The Atlantic)

Check out who made money betting against JP Morgan’s ($JPM) ‘London whale.’  (NYTimes)

Funds

Thank goodness, finally an ETF that holds Facebook ($FB).  (IndexUniverse)

Not all target date funds are created equal.  (Chuck Jaffe)

Greece

Nobody really knows how a Greek exit from the Euro could play out.  (Real Time Economics)

Don’t forget about this factor driving the price of the Euro (lower).  (Money Game)

What odds are Intrade traders putting on a Euro exit.  (NYTimes)

The failure in Europe is in large part a failure of leadership and coordination.  (NYTimes)

Elsewhere

The case for the strength and flexibility of the US economy.  (Free exchange)

Have we overrated the prospects for the Indian economy?  (naked capitalism)

What countries are undervalued these days?  (Marginal Revolution)

Earlier on Abnormal Returns

What you missed in our Saturday long form linkfest.  (Abnormal Returns)

Top clicks this week on the site.  (Abnormal Returns)

Why secular bear markets are a good time to learn about investing.  (Abnormal Returns)

Mixed media

Looking forward to John Coates’ The Hour Between Dog and Wolf: Risk-Taking, Gut Feelings and the Biology of Boom and Bust.  (Economist)

Why the “experience economy” is overtaking the product economy.  (Chris Dixon)

An interview wit Elon Musk about where SpaceX is going.  (New Scientist also LATimes)

Abnormal Returns is a founding member of the StockTwits Blog Network.

1. Why are smart people doing so much stupid stuff?  (The Reformed Broker)
2. One big reason why the pullback may not be over.  (Dragonfly Capital)
3. Ray Dalio on the “beautiful deleveraging” in the US and risks of a full-on collapse in Europe.  (Barron’s)
4. What macro bets does David Einhorn have on at the moment?  (The Brooklyn Investor)
5. Rich guys think investing is easy.  (Above the Market)
6. Don’t jump the gun…corrections take time to play out.  (Chris Perruna)
7. Why France churned out so many quants.  (Newsweek)
8. Jeff Saut on why it is time to start putting money back into stocks.  (Market Folly)
9. Keep single guys as far away from your portfolio as possible.  (The Reformed Broker)
10. The Bullish Percentage Index led stocks lower.  (StockCharts Blog)

The Abnormal Returns book tour rolls on. Our stops this week:

1. On the importance of compounding experience, not just interest along the way.  (The Reformed Broker)
2. An excerpt from Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere on what men can learn from women about investing.  (FT Alphaville)
3. Part one of a blog interview with the team at Riskalyze.  (Riskalyze)
4. Part two of my discussion with Aaron Klein CEO of Riskalyze.  (Riskalyze)

What else you missed on the site this week:

1. Why secular bear markets are a good time to learn about investing.  (Abnormal Returns)
2. The seeds of a new secular bull market are being sown.  (Abnormal Returns)
3. Parts one and two of our discussion with Nardin Baker on the low volatility anomaly.  (Abnormal Returns, ibid)

Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.

Investing

On the tradeoff between investing in human capital and financial capital.  (Nerd’s Eye View)

Banks hope to manage more of your money. Too bad there is a host of online firms looking to get in on the action.  (Economist)

Now that we have a big list of behavioral biases what do we do with them?  (The Psy-Fi Blog)

Finance

Robert Shiller, “Finance, at its best, does not merely manage risk, but also acts as the steward of society’s assets and an advocate of its deepest goals.”  (Project Syndicate)

The ongoing algorithmic arms race.  (Reuters)

Economics

Who lost the Euro?  (Businessweek)

Is China’s economy more resilient than commonly thought?  (Economist)

The global middle class is bigger than commonly thought.  (Foreign Policy)

The economics of all-you-can-eat buffets and what it tells us about health insurance.  (Modeled Behavior)

Apple

How Tim Cook is changing  Apple ($AAPL).  (Fortune)

Jonathan Ive on the design process at Apple, post-Steve Jobs.  (The Telegraph, ibid)

US manufacturing

The story of American manufacturing in a nutshell:  higher output with fewer jobs. The case of the Burns Harbor steeel mill.  (WSJ, ibid)

How the Midwest got its manufacturing groove back.  (The Atlantic)

Startups

The myth of the lone inventor in the garage.  (Slate)

An interview with Noam Wasserman author of The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup.  (NYTimes)

Science

SpaceX has shown great technical prowess, but can it become a real business?  (WSJ)

The date when humans reached America keeps getting pushed back.  (NYTimes)

Is the universe really a multiverse?  (Newsweek)

Psychology

Do spoilers spoil? On the ‘paradox of suspense.’  (NYTimes)

Why we lie, an excerpt from Dan Ariely’s new book The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves.  (WSJ)

A talk with David DiSalvo author or What Makes Your Brain Happy and Why You Should Do the Opposite. (Simoleon Sense)

Entertainment

Some big names talk about the future of television.  (GQ)

On the rapid rise and long decline of Playboy magazine.  (Prospect Magazine)

Profiles

A look at Douglas Brinkley’s new biography of Walter Cronkite, Cronkite.  (Newsweek)

The best third grade teacher ever.  (Freakonomics)

Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.

The problem with simply giving up on investing is that you lose the chance to gain some experience in the markets that will likely serve you well down the road. I have a guest post up today at Josh Brown’s The Reformed Broker looking at this very issue. I write that we can look at secular bear markets as a laboratory for investing:

Secular bear markets happen to be a great time for investors to learn the lessons of risk and return. Why? Because we see these cycles play out in a much more rapid and concentrated fashion. Secular bull markets are in contrast a tough time to gain much perspective on the true challenges of investing.

Check out the post for the whole story. You might get a different perspective on why might now be a good time to get acquainted with investing.

*John Authers at the FT thinks the onset of the next ‘cult of equities’ is far off. He believes we need to see the end of ‘financial repression’ before that can happen.