Blogs for the Buyside: Boiling Frogs
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There is an old parable about a boiling frog. If one is put directly into boiling water, the frog will perceive the danger and jump out. But if put in room-temperature water that is gradually heated, the frog won’t perceive the change in temperature and will just stay in the water until its death.
It is a common way to explain to people that they need to monitor gradual changes as well as severe ones.
Boilingfrogs.info does a great job tracking the stories that seemingly got dropped off your Bloomberg scroll but still can burn your portfolio.
This is becoming more important as business news flows faster and faster. There is an abundance of news to digest every day and there seems to be a tendency to ignore information that is not placed directly in front of our eyes. It leads one to wonder—if it falls off our screens is it unimportant?
But, we should have learned from the recent past. It seemed like Greenspan had cured the malaise from the bursting of the Internet bubble, yet now it's clear he just traded a telecom bubble for a real estate bubble.
Boiling Frogs does its best to feature economic shocks from a few years ago and shows that they are still festering.
Remember that little Irish real estate bubble? Well, Boiling Frogs has pointed out that 10.1% of all Irish mortgages are in arrears, over double the rate when it was making headlines in 2009.
Of course given the size of the country, the absolute numbers are small but it points to a larger problem. It is applicable to all of the other countries experiencing debt problems now (Spain, Greece, Italy...are you listening?), and as the United States continues to pile on debt year after year I feel the water getting warmer.
Aram Fuchs, General Partner, Fertilemind Capital, is captivated by the ability of the Internet to change buyside research. He founded a website called Capitalist Collective, where he invites finance professionals to share their research and learn from others.