Wednesday, May 28, 2008

Good trading idea

I'm reading an interesting paper by Brad Delong on international capital flows, and I come across this brilliant story:
A huge amount of industrialization in the resource-rich, temperate periphery
before 1913, was financed by the willingness of British investors to commit
their capital overseas—not just to build up Britain’s capital stock, but to
build up capital stocks abroad as well. (Let’s pass over for a moment the
fact that the British investors in the Erie Railroad found that Jay Gould stole
two-thirds of their money, not least by taking a huge leveraged long position
in the stock and then announcing his retirement from the company. He
retired, the stock price boomed, and he pocketed something like 50 percent
of the present discounted value of the fact that he would no longer be around
to loot the company.)
I love it when people are willing to pay you to stop robbing them.

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