Causation and correlation

1. In choosing stocks to serve as comparables/competitors to your target company, correlation does not always suggest causation. In evaluating Hertz, we saw enplanements being a key indicator of increases or decreases in rentals, and picked UAL as a comp. Because WYN hotels are all over the place, up and down market, price conscious folks might forgo a plane ride and drive to them with off-airport rentals. But people don't buy UAL and WYN with the same motivations they buy HTZ. They're connected, but they're not causes--they may be effects, or indicators, but that doesn't make them great comps. Gonna check out UHAL and some others tomorrow, then try to figure out what "psychometrics" means.
2. Just watching Shark Tank: after waling in and being laughed at while debuting their idea, the Hoodie Pillow is gonna be a $100 million product, all based on the force of the salesman and solid contextualization. Almost anything can be sold to almost anybody.
3. Bank loans are essentially a line of credit (similar to a checking account for individuals) offered to companies for durations somewhere in between money markets and repurchase agreements and longer-term debt. They can sometimes involve what's called a revolver--a loan "window" that can be accessed from time to time by the company, for example on a seasonal basis to purchase inventory, and then is quickly paid down again. Taking a look at the credit markets for a company's bank loans and bonds, and the prices of these instruments, can be a good way to get a sense of future equity share performance.