What we’re reading (12/5)
“Police Zero In On New York Hostel In Hunt For UnitedHealth Shooter” (Wall Street Journal). “Police are combing New York City for the suspect who used a Sharpie to write ‘deny,’ ‘defend’ and ‘depose’ on cartridges that are believed to have come out of his gun when it jammed, law-enforcement officials said. Some of the words are commonly associated with tactics insurers use to avoid paying claims.”
“Torrent Of Hate For Health Insurance Industry Follows C.E.O.’s Killing” (New York Times). “The fatal shooting on Wednesday of a top UnitedHealthcare executive, Brian Thompson, on a Manhattan sidewalk has unleashed a torrent of morbid glee from patients and others who say they have had negative experiences with health insurance companies at some of the hardest times of their lives.”
“Failure Costs” (Silicon Continent). “Last week the Financial Times published a piece by British entrepreneur Ian Hogarth with a provocative question: can the EU build a trillion dollar company? Hogarth responds that the EU first needs to solve a lack of experienced founders, a lack of ‘audacious capital’, and excessive US buyouts. These answers, according to a recent paper by Olivier Coste and Yann Coatanlem, two French entrepreneurs, miss the point: the reason more capital doesn’t flow towards high-leverage ideas in Europe is because the price of failure is too high. Coste estimates that, for a large enterprise, doing a significant restructuring in the US costs a company roughly two to four months of pay per worker. In France, that cost averages around 24 months of pay. In Germany, 30 months. In total, Coste and Coatanlem estimate restructuring costs are approximately ten times greater in Western Europe than in the United States.”
“The Greatest Scourge In Factorland: Revaluation Alpha = Fake Alpha (JPM Series)” (Research Affiliates). “When introducing a new factor or strategy, few take the time to test whether its historical success stemmed from upward or downward revaluation alpha…Past returns contain both structural alpha and a likely one-time revaluation alpha; however, the sum of the two is not a reliable method for anticipating future structural alpha.”
“Is ‘Rothification’ Coming For Your Retirement Account?” (Morningstar). “The tax incentives for retirement savings will cost the government more than $1 trillion in forgone revenue over the next 10 years. There are also trillions in expensive new tax priorities that members of both parties want to see passed into law. In combination, it’s easy to see why members of Congress will start to explore restricting or even ending some tax benefits for retirement savings. Enter the likely solution of choice: ‘Rothification.’”
