Andy Kessler

WSJ: Hedge Funders Are All a Little Nuts

http://online.wsj.com/article/SB10001424127887323665504579032830340203784.html

Hedge funders are in the news. Carl Icahn tweets about his dinner with Apple's Tim Cook. Dan Loeb tussles with George Clooney. Bill Ackman says Herbalife is a pyramid and shorts the stock; George Soros goes long. If you want to understand the guys who run hedge funds, you first have to realize that they—we—are a little nuts.

The trick to running a hedge fund is to drink from the fire hose of information, take it all in, figure out what everyone else knows and then position your portfolio to benefit when everyone else is inevitably wrong. This is no simple feat. Sleepless nights, second guessing, minds racing, almost a split personality working out both sides of all arguments.

You force yourself to think like a contrarian. Actually, you become like George Costanza in the "Opposite" episode, listening when Jerry Seinfeld suggests "if every instinct you have is wrong, then the opposite would have to be right."

Famed investor Julian Robertson climbed mountains because, I'm convinced, at the summit, when the air is thinnest, you become euphoric. Great hedge funders bottle that feeling—because once you invest, you're at the whim of markets that no one can forecast day to day. You are floating, drifting—your gut knows you're right but you tumble violently until the market catches up with your way of thinking. Stay sane? No gain.

You're often wrong before you're right, and vice versa. The London Whale showed great returns hedging credit default swaps before getting killed. 

WSJ: Robots, 3-D Printers and Other Looming Innovations

http://online.wsj.com/article/SB10001424127887324653004578649980459642530.html

Is technology to blame for our stubborn unemployment? President Obama scored ATMs and airport kiosks in a 2011 "Today Show" interview, blaming them for "structural issues with our economy." Other technophobes have piled on. Former Labor Secretary Robert Reich wondered late last year: "What if we're stuck at a new normal of high unemployment and low job growth? It's possible because technology might just have gotten the best of us." In March, Salon.com declared "Your iPhone kills jobs." And in May, the Economist suggested "technology may destroy more jobs than it creates."

These Luddites are wrong.

The road to wealth does indeed pass through the graveyard of today's jobs. But history shows that better, higher paying jobs are always created by technology—even if no one seems to remember this during periods of creative destruction.

The trick is to lower the cost of new machines and inventions that can do things never before possible, making them available for wide use. Here are a few recent examples that could be economic game-changers and job-creators:

• Three-dimensional printing. By now, you've probably heard of 3-D printers, the gadget du jour for geeks that creates objects from computer models, building them layer by layer. Right now, they are priced between $1,000 and $10,000, with the most expensive version able to print multiple materials.