Companies get worse at truly innovating the more financial analysts cover them

They did a study! The number of patents filed (an easy, cross-industry measure of innovation, though not perfect) went down the more scrutiny there was overly quarterly performance:

[The study] demonstrated that companies produce fewer, and less-significant patents the more financial analysts cover them.

I’m fascinating by this quandary at tech companies. Some like Google and Apple seem fine, Microsoft who has generally had stellar financials over the past decade nonetheless gets punished (for not being Apple and Google, basically), and then folks like Dell feel the need to go private to escape this problem. It’s a wicked problem.

Companies get worse at truly innovating the more financial analysts cover them

The real reason women are leaving Wall Street

Chock full of meaty stuff, I don’t really think it’s limited to Wall Street:

When Keller wasn’t working sources worldwide, she was digging into vehicle costs by model, labor negotiations, management changes, market share, environmental regulations, currency fluctuations, consumer spending, car preferences, balance sheets, industry gossip and really anything else that could potentially affect profits and stock prices of auto manufacturers and suppliers. She would then type, rapid-fire, clearly and concisely, with accompanying tables and charts, her findings and conclusions. Those were published in a constant stream of output worthy of a large team of analysts. She tightly controlled her business.

“When times are good, intellectual capital is valued on Wall Street,” says long time Wall Street executive Jack Rivkin, “It is more of a meritocracy. In a downturn, political savvy and connections become predominant.”

One day in 2010, Palmieri had an epiphany. “I was at the management table with the CEO,” she says, “I sat there and realized, ‘I’m at the table. I’ve made it. I’ve networked, I’ve clawed, I’ve said ‘yes,’ I’ve said ‘no,’ I’ve put in all this time and effort and I was underwhelmed. What I was getting back was not acceptable to me.”

The real reason women are leaving Wall Street

Make $377,000 trading Apple in one day

Here’s how Hendershott’s latency-arbitrage strategy worked: Redline allowed him to use its “direct market access” — cables that run directly from exchange servers to its own. Redline’s server was co-located with that of BATS Exchange so that the “latency” on information and orders coming from BATS was cut down to barely one thousandth of a second. As a result, some of the quotes on public feeds such as the crucial “national best bid and offer” feed were a few milliseconds behind those Hendershott could see on his direct link with the exchanges. With a half-decent trading algorithm, Hendershott would have had ample time to buy Apple at a stale price with a guarantee that he could sell at a profit. Every couple of seconds. All day. Risk on the trades: zero.

Somewhere, queue programmers at IBM are getting all warm and fuzzy over this.

Make $377,000 trading Apple in one day