I strive to be smart, wise, analytical, creative, intuitive, and informative. I hope to help make you a better active investment management pro.
I recommend you start with the Best of the Blog.
the hypocrisy of american capitalism
Whew! Its tough to type, “the hypocrisy of American capitalism” just knowing that so many folks have “dyed in the wool” faith in their own personal capitalism. So lest I leave a potentially controversial statement out there for too long, let me get straight to the point… In my opinion, capitalism is supposed to be about, as Joseph Schumpeter and others before him described it: creative destruction. Capitalism’s long-term health requires that innovative entrepreneurs enter the economy with new...
read morethe importance of trust
I have had several conversations in the last week with my fellow, non-retired, financial professionals about the impending regulatory environment. In each case they are fearful that too much regulation will be put into place. They all feel that it is inevitable that the regulators will overstep their bounds and put in place regulations that will make our economy less competitive. I totally disagree with this assessment, if not with the concern. Why? Well first of all, yes it is possible to put in place too much regulation. Regulation...
read moresince when did Best Buy become a bellwether?
Just a quick note: As you may know financial markets are reeling again today. The cause seems to be Best Buy’s Third Quarter Earnings report. Best Buy did say some things using pretty strong language. For example, “Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen,” said Chief Executive Brad Anderson. Obviously that is strong language. But since when is Best Buy a tech or economic bellwether? The answer is that it is neither. Wal-Mart is THE...
read morea simple model for understanding freefall markets
I wanted to share with you a piece of wisdom from Edgar Peters who wrote a book about using Chaos Theory as applied to investing, called “Fractal Market Analysis.” The book is fairly long, but the one insight that I have continued to use for over ten years is about the underlying reasons for rapid market declines. Peters says that there are two types of investors: those with a short-term perspective, and those with a long-term perspective. Investors of a short-term perspective are constantly trading because of their short...
read morecrudeness
…and by crudeness, I mean oil prices. I wanted to copy the text of an e-mail that I sent out to friends and family back on July 21, 2008: “Hello Friends and Family, Normally I do not send out bulk e-mails…however I have believed for a couple of years now that market speculators have done much to drive up the price of our natural resources in the last three years. I have copied the text of a letter from executives in the airline industry below and they provide a link to a website where you can sign a petition. This...
read morehubris sucks, pt. 2
So I realized early this morning (5:30 here in the forgotten time zone) that I neglected to fully empower each of you with actionable information yesterday. I rambled on about hubris without giving you the full tools necessary to ferret it out at a prospective or current business. Yes, it’s true that I defined the difference between “swagger” and “hubris,” but I got a little caught up in my ramble and did not tell you how you can have access to the behavior and words of the management teams of your...
read morehubris sucks
Hello everyone! Wow! $150 billion for AIG! Unbelievable. That ‘s a hell of a lot of money. Who could have seen that coming? Well, interestingly enough there is one tell-tale sign that always underlies these sorts of colossal problems; from Enron, to Tyco, to Worldcom, to AIG. That tell-tale sign is: hubris. Hubris is a behavioral disease that leads to extraordinarily bad judgments being made. Hubris is another way of saying that someone is extremely selfish and self-centered. What that means in the context of managing a business is...
read moremedia bias is a real thing
Hello all! For today’s post I wanted to have a conversation with you about something that is discussed mostly by the right wing folks in our country, namely that there is a media bias. My personal credibility in discussing this issue comes primarily from the fact that for nearly a decade as a professional investor my primary job was to read, process and act on news. At the end of my career I was reading 17 newspapers, all of the major news and business wires, and company published SEC documents each and every single day. Yikes!...
read moreinstitutional changes are coming
Financial market volatility got you down? As you know, I have been saying for some time that the markets will continue to be volatile until the actors that got us here are either gone or have legitimately changed. Additionally, there will be volatility for at least one quarter’s worth of earnings announcements from businesses. That’s because their results, affected by the financial industry meltdown and recessionary conditions, have not yet been baked into the financial markets. This is a point that I made a month ago but...
read moreGObama!
Just a few points to make this evening. First, the election has come and gone and a vast constituency of former political leaders have been voted out of office. As I have been saying for a while now, in order for the financial markets to stabilize there has to be a change in the leadership that got us to this place. These include: CEOs and other executives, bureaucrats, legislators and the President. What has changed? The President has changed clearly. So too have many of the legislators. What will follow is a change in the bureaucracy as...
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