Andy Kessler

WSJ: Bad Intelligence Behind the Wheel

https://www.wsj.com/articles/bad-intelligence-behind-the-wheel-1492983234

This month Apple became the 30th company to receive a permit to test autonomous vehicles on the mean streets of California. I can’t wait to have that ponytail guy at the Apple Store Genius Bar check my oil. Beyond a $150 permit fee, the Department of Motor Vehicles requires these businesses to report all traffic accidents involving their self-driving cars. I read all the reports, and they’re mostly minor fender-benders.

Self-driving cars exist only because of artificial intelligence and machine learning. They aren’t so much programmed; rather, their sophisticated pattern-recognition-systems identify oncoming traffic, road stripes and stop signs. Autonomous cars will eventually be safer than what we have today. A time of fewer accidents and saved lives is coming.

But these cars still have a lot to learn. Most of the posted accidents involve Google’s cars, which have clocked some two million street miles. Impressive, but it’s still only the equivalent of what 200 normal drivers put on their vehicles in a year. That’s statistically insignificant given there are more than 250 million cars and trucks on American roads. Artificial intelligence needs lots more data.

Google Photos, which uses similar machine learning for facial recognition, hosts billions, maybe even trillions, of pictures. It is wicked smart, a window into a fantastic, if not slightly creepy, future. You tag a face with a name. It then correctly finds that face in other photos—even if they’re a decade old and have 30 other people in them. If you ask Google how it works, the company will say machine learning. But no one really knows exactly.

WSJ: When to Sell? Look at the HQ.

https://www.wsj.com/articles/when-to-sell-look-at-the-hq-1491768486

Rising above the San Francisco skyline, a few short blocks from where Mel Brooks filmed the Hitchcock “Vertigo” spoof “High Anxiety,” is the 1.6-million-square-foot Salesforce Tower, soon to be the company’s new headquarters and the second-tallest building west of the Mississippi. As the stock market reaches dizzying heights, my thoughts turn to the toughest decision for investors: when to sell a stock.

Wall Street’s most successful players get ahead of the news, understand a CEO’s mind, and figure out where the company is going. To do this, I often use what I call the “HQ Indicator.” It’s for those playing long ball, not day traders, but it is simple. When a company announces it is moving its executives into a lavish palace, it’s often time to get out.

Consider the Frank Gehry-designed IAC Building in Manhattan, completed in 2007. It’s the deconstructivist-style headquarters for InterActiveCorp , owners of CollegeHumor and Tinder. I find it ugly. And IAC stock deconstructed itself, going from around $40 in 2007 to under $15 two years later, though it has since rebounded.

Or the $1.7 billion Time Warner Center overlooking New York’s Central Park. Opened in October 2003, it’s a “city within a building.” Time Warner’s stock was $45 at the time, hit $68 in January 2007 and then dropped to $17 two years later. It didn’t get above $45 again until 2012.

Why does the HQ Indicator work? Investors in public companies have no control and are at the whims of management. Are a company’s leaders frugal, or do they spend shareholders’ money like drunken sailors? Are they modest or do they have the hubris that leads to an edifice in honor of the CEO’s greatness and legacy? Will management be tempted to rush to fill the huge swaths of new empty headquarters space, often taking on questionable businesses?