Via Infectious Greed:

There is a nifty new paper (in PDF format) that describes how you can fruitfully use simple time series U.S. weather data to make in money in weather markets:

We take a simple time-series approach to modeling and forecasting
daily average temperature in U.S. cities, and we inquire systematically
as to whether it may prove useful from the vantage point of
participants in the weather derivatives market. The answer is, perhaps
surprisingly, yes. Time-series modeling reveals conditional mean
dynamics, and crucially, strong conditional variance dynamics, in daily
average temperature, and it reveals sharp differences between the
distribution of temperature and the distribution of temperature
surprises. As we argue, it also holds promise for producing the
long-horizon predictive densities crucial for pricing weather
derivatives, so that additional inquiry into time-series weather
forecasting methods will likely prove useful in weather derivatives
contexts.

In 1953, The National Hurricane Center began naming storms, rather than relying on the old system of map coordinates for identification. Originally, all storms were named for women, but, starting in 1979, men’s and women’s names were alternated.

An international committee of the World Meteorological Organization now creates and maintains the annual lists. Names are used on a six-year rotation, meaning the 2005 list will come up again in 2011. Names of especially damaging and deadly storms are retired. From the 2004 list, Charley, Frances, Ivan and Jeanne — four major hurricanes that struck Florida — will not reappear when the list returns in 2010.

On this year’s list, Franklin and Lee replace Floyd and Lenny, which were retired in 1999.

For 2005, Atlantic tropical storms will be named:

# Arlene
# Bret
# Cindy
# Dennis
# Emily
# Franklin
# Gert
# Harvey
# Irene
# Jose
# Katrina
# Lee
# Maria
# Nate
# Ophelia
# Philippe
# Rita
# Stan
# Tammy
# Vince
# Wilma

Via The Big Picture

Dr John Llewellyn, chief global economist at Lehman Brothers, writes about lessons from 35 years as a professional economist:

1) Economic events (’shocks’) – seldom produce just one consequence. Usually, the effects ripple on for years.
2) Good economic policies do not guarantee good economic performance; bad economic policies inevitably result in bad performance.
3) It is structural, not demand-side, policies that most influence economic performance over the long term.
4) People respond powerfully to economic incentives.
5) Economic and social policies have to be considered as a whole.
6) Competition is one of the most powerful of forces that motivate the perpetual quest for more efficient ways of doing things.
7) History seldom, if ever, repeats precisely. Economies have the habit of producing new mixtures of circumstances that require new approaches.
Complicated economic policies whose rationale is hard to explain usually fail.
9) Some of the biggest, and most important, economic issues remain unresolved.
10) Just because professional economists don’t always have a confident answer, it does not follow that all proffered solutions have equal validity. Demonstrate why the current fad is wrong and will fail is a valid contribution.

Tim has an excellent post on how to get quickly acquainted with a market or technology, starting from general knowledge. I found it to be very interesting.

First, every technology and market has a private language. It’s built of terms of art, but also names of landmarks such as products, famous papers and projects, labs, and researchers and other experts. To begin to understand the market you need to learn this language. Fortunately, such a distinctive use of language and interlinkage of people and information artifacts is the very best thing you can have to feed Google or other modern search tools. The second observation is that the best way to learn a field is to watch experts argue about it.

So let’s assume you’ve had a meeting with a new venture, claiming to be able to commercialize a new technology that will be significant in an existing marketplace. It could be a science project, it might have no entry barrier, the market might not care, but you like the team and their market logic seems sensible on the face. You want to dig deeper, and see if their arguments hold up, but you’re not ready to lay down the cash for a consultant, and may not want their biases at this stage anyway. Now what?

1. Pull out the PPT or exec summ. Extract the following: Names of competing products and companies. Any apparent terms of art or catch phrases. Names of any domain experts or advisors cited.

2. Run searches on various combinations of the competitors. You are looking for reviews or survey articles, as recent as possible. Skim them. Make sure these guy’s idea isn’t obviously misfit or already common knowledge. But you’re mostly looking for more names, particularly of analysts, technologists or researchers who are commonly quoted. Add these names to any you extracted from the PPT. Add any newly discovered competitors to the search list and repeat.

3. Track down the analysts, and technologists associated with existing competitors, using the net. Where do they work now? What else have they done? Read their output. Do they seem to know this field, or are they ‘generic’? You’re looking for competitive analysis, and also for corporate white papers. The latter will be ’spun’, of course. What you’re trying to extract are the key competitive issues, current and envisioned, and the code phrases used by the various competitors to tout their advantages and diss the opposition. You may strike out on the analysts if it really is a nascent area; Gartner doesn’t follow $0b markets. With luck, you’ll know someone on the list, or have a mutual friend. Buy a couple of lunches. While waiting for your schedules to align, do the following.

4. Track down the researchers, their labs, and any technologists not currently in play. What you want to find are survey level papers, or even better a graduate level course deck or project paper. These can be pure gold – loaded with definitions of terms of art, and without spin. Digest. Build your own little glossary of the technology and market. Pull out the key phrases from the original pitch, and compare. If they match, your candidate venture is using the consensus language of their field. Score one point. If not, they are in some way disconnected from the market, or they are inventing terms to make their positioning look good. Dig deeper. You now also have your initial list of diligence experts.

(3-4a. Did you run across any public policy reports or government sponsored lab work in the process? This is called ‘free research’, though it has its own spin. Use as a crosscheck on terminology, and on the qualifications and points of view of your experts list.)

5. Marketers argue through marcom. Engineers and researchers tend to have at it in more direct ways. Somewhere, there is a good argument going on in this field. Go find it. It may be on blogs, mailing lists, or at conferences, but it’s likely to have an online presence and perhaps an archive. Read as much as you can handle, taking careful note of people and company names. If you’re lucky, the same venues will also carry lists of positions wanted and available.

6. Get a big piece of paper, your various lists of terms, people, products, etc., and make a network graph, cluster chart, or whatever works for you, noting central issues and people. You’re not an expert, but you’ve now got some of the fundamentals of the technology and the market structure laid out.

7. Reread the original pitch. Does it now make less sense, or more? If the former, either you’re incapable of understanding this field, or the team is playing you for a naif. Either way, chuck it. If it sounds better given your learning, go ask for a budget to hire someone who really knows what they are doing.

Business Week profiles five Indian firms (table) who have realized that â??Westernâ?? models are not the only way to do business:

What characterizes the best of the Indian outfits? They’ve learned to question the basic concepts of their industries, an attitude born of collective experienceâ?¦ So the best ones learned how to devise ingenious, low-cost solutions to their problems and even reimagine industries such as software services.

Such creative thinking has allowed these firms to cater to a huge segment of the population which larger firms often ignore. For example, rumor has it that telecom provider Bhart is able to operate at a 50% profit margin while at the same time only charging 2 cents per minute on calls. As NextBillion puts it:

An excellent review of some business models that are helping Indian firms serve the poor, profitably.

The Business Experiment:

Here’s a fascinating idea: The Business Experiment — Its is an open-source site meant to explore the wisdom of crowds, business, and the distributed nature of work. Can a group of online strangers democratically create a business plan, and wiki-like, execute it?

“In an effort to grab a bigger share of the fast-growing $9.8-billion a year bottled water industry in the U.S., Starbucks is rolling out a new brand of bottled water, with a twist.

No, that’s not a twist as in lemon or lime; the twist here is that Ethos Water, a tiny startup acquired by Starbucks in April, will donate five cents for every $1.80 bottle of water that it sells to fund drinking water projects in poor countries in Africa, Asia and Latin America.

This is shrewd marketing. How else would an unknown brand of a look-alike, taste-alike product like water stand out from the crowd in an industry that is dominated by giants like Pepsico (Aquafina), Coca-Cola (Dasani) and Nestle (Poland Spring, Arrowhead and Deer Park) and well-supplied with premium brands like Evian and Fiji.

‘We’ve got a very simple message,’ says Peter Thum, the 37-year-old co-founder of Ethos, who is now a Starbucks vice president. ‘Every bottle makes a difference. Buy this brand and help children get clean water.’

Starbucks would not say how much it paid for Ethos Water, but it probably amounted to little more than pocket change for the $5.8-billion a year retailing giant. Founded in 2003, Ethos was struggling to break even, with just six employees and limited distribution near its Santa Monica, California, offices when it was bought by the coffee chain. Thum and his co-founder, Jonathan Greenblatt, 34, had approached Starbucks with the hope of getting their water distributed in its stores.

Hedgebay is a website where serious investors take part in an online auction, finding and selling rare and coveted hedge funds that are closed to new investors. It began as a niche market in 1999, but its volume tripled in 2003 and now grows at an annualised rate of 20%.

Hedgebay is, in effect, marketing liquidity. Sellers who use the site avoid the lock-up periods during which they cannot sell their shares?which can be three years or more and are enforced by redemption fees. Even the most lenient funds tie up 90% of an investor’s assets for a month and the remaining 10% for much longer. Jared Herman, one of Hedgebay’s founders, estimates that the site’s average seller reclaims the balance of his assets two months earlier than he could ordinarily do.