Wednesday, December 19, 2012

Ludwig von Mises Institute : The Austrian School Is Advancing Liberty

 

"We owe the origin and development of human society and, consequently, of culture and civilization, to the fact that work performed under the division of labor is more productive than when performed in isolation."

— Ludwig von Mises, in Epistemological Problems of Economics







Source:
Ludwig von Mises Institute : The Austrian School Is Advancing Liberty

http://mises.org/


 

Friday, November 23, 2012

Learning to Love Volatility: Nassim Nicholas Taleb on the Antifragile - WSJ.com


Learning to Love Volatility


In a world that constantly throws big, unexpected events our way, we must learn to benefit from disorder, writes Nassim Nicholas Taleb.


Several years before the financial crisis descended on us, I put forward the concept of "black swans": large events that are both unexpected and highly consequential. We never see black swans coming, but when they do arrive, they profoundly shape our world: Think of World War I, 9/11, the Internet, the rise of Google.


In economic life and history more generally, just about everything of consequence comes from black swans; ordinary events have paltry effects in the long term. Still, through some mental bias, people think in hindsight that they "sort of" considered the possibility of such events; this gives them confidence in continuing to formulate predictions. But our tools for forecasting and risk measurement cannot begin to capture black swans. Indeed, our faith in these tools make it more likely that we will continue to take dangerous, uninformed risks.


Some made the mistake of thinking that I hoped to see us develop better methods for predicting black swans. Others asked if we should just give up and throw our hands in the air: If we could not measure the risks of potential blowups, what were we to do? The answer is simple: We should try to create institutions that won't fall apart when we encounter black swans—or that might even gain from these unexpected events.


Fragility is the quality of things that are vulnerable to volatility. Take the coffee cup on your desk: It wants peace and quiet because it incurs more harm than benefit from random events. The opposite of fragile, therefore, isn't robust or sturdy or resilient—things with these qualities are simply difficult to break.



Robert Maass/CORBISProtesters on the Berlin Wall in 1989.

To deal with black swans, we instead need things that gain from volatility, variability, stress and disorder. My (admittedly inelegant) term for this crucial quality is "antifragile." The only existing expression remotely close to the concept of antifragility is what we derivatives traders call "long gamma," to describe financial packages that benefit from market volatility. Crucially, both fragility and antifragility are measurable.

As a practical matter, emphasizing antifragility means that our private and public sectors should be able to thrive and improve in the face of disorder. By grasping the mechanisms of antifragility, we can make better decisions without the illusion of being able to predict the next big thing. We can navigate situations in which the unknown predominates and our understanding is limited.

Herewith are five policy rules that can help us to establish antifragility as a principle of our socioeconomic life.

Rule 1: Think of the economy as being more like a cat than a washing machine.


We are victims of the post-Enlightenment view that the world functions like a sophisticated machine, to be understood like a textbook engineering problem and run by wonks. In other words, like a home appliance, not like the human body. If this were so, our institutions would have no self-healing properties and would need someone to run and micromanage them, to protect their safety, because they cannot survive on their own.

By contrast, natural or organic systems are antifragile: They need some dose of disorder in order to develop. Deprive your bones of stress and they become brittle. This denial of the antifragility of living or complex systems is the costliest mistake that we have made in modern times. Stifling natural fluctuations masks real problems, causing the explosions to be both delayed and more intense when they do take place. As with the flammable material accumulating on the forest floor in the absence of forest fires, problems hide in the absence of stressors, and the resulting cumulative harm can take on tragic proportions.


Reuters

Rescue vehicles surround a US Airways plane after it crashed into the Hudson River in New York on Jan. 15, 2009.


And yet our economic policy makers have often aimed for maximum stability, even for eradicating the business cycle. "No more boom and bust," as voiced by the U.K. Labor leader Gordon Brown, was the policy pursued by Alan Greenspan in order to "smooth" things out, thus micromanaging us into the current chaos. Mr. Greenspan kept trying to iron out economic fluctuations by injecting cheap money into the system, which eventually led to monstrous hidden leverage and real-estate bubbles. On this front there is now at least a glimmer of hope, in the U.K. rather than the U.S., alas: Mervyn King, governor of the Bank of England, has advocated the idea that central banks should intervene only when an economy is truly sick and should otherwise defer action.

Promoting antifragility doesn't mean that government institutions should avoid intervention altogether. In fact, a key problem with overzealous intervention is that, by depleting resources, it often results in a failure to intervene in more urgent situations, like natural disasters. So in complex systems, we should limit government (and other) interventions to important matters: The state should be there for emergency-room surgery, not nanny-style maintenance and overmedication of the patient—and it should get better at the former.

In social policy, when we provide a safety net, it should be designed to help people take more entrepreneurial risks, not to turn them into dependents. This doesn't mean that we should be callous to the underprivileged. In the long run, bailing out people is less harmful to the system than bailing out firms; we should have policies now that minimize the possibility of being forced to bail out firms in the future, with the moral hazard this entails.

Rule 2: Favor businesses that benefit from their own mistakes, not those whose mistakes percolate into the system.


Some businesses and political systems respond to stress better than others. The airline industry is set up in such a way as to make travel safer after every plane crash. A tragedy leads to the thorough examination and elimination of the cause of the problem. The same thing happens in the restaurant industry, where the quality of your next meal depends on the failure rate in the business—what kills some makes others stronger. Without the high failure rate in the restaurant business, you would be eating Soviet-style cafeteria food for your next meal out.

Getty Images

A satellite image of Hurricane Sandy over the Atlantic Ocean on Oct. 28.

These industries are antifragile: The collective enterprise benefits from the fragility of the individual components, so nothing fails in vain. These businesses have properties similar to evolution in the natural world, with a well-functioning mechanism to benefit from evolutionary pressures, one error at a time.

By contrast, every bank failure weakens the financial system, which in its current form is irremediably fragile: Errors end up becoming large and threatening. A reformed financial system would eliminate this domino effect, allowing no systemic risk from individual failures. A good starting point would be reducing the amount of debt and leverage in the economy and turning to equity financing. A firm with highly leveraged debt has no room for error; it has to be extremely good at predicting future revenues (and black swans). And when one leveraged firm fails to meet its obligations, other borrowers who need to renew their loans suffer as the chastened lenders lose their appetite to extend credit. So debt tends to make failures spread through the system.

A firm with equity financing can survive drops in income, however. Consider the abrupt deflation of the technology bubble during 2000. Because technology firms were relying on equity rather than debt, their failures didn't ripple out into the wider economy. Indeed, their failures helped to strengthen the technology sector.

Rule 3: Small is beautiful, but it is also efficient.


Experts in business and government are always talking about economies of scale. They say that increasing the size of projects and institutions brings costs savings. But the "efficient," when too large, isn't so efficient. Size produces visible benefits but also hidden risks; it increases exposure to the probability of large losses. Projects of $100 million seem rational, but they tend to have much higher percentage overruns than projects of, say, $10 million. Great size in itself, when it exceeds a certain threshold, produces fragility and can eradicate all the gains from economies of scale. To see how large things can be fragile, consider the difference between an elephant and a mouse: The former breaks a leg at the slightest fall, while the latter is unharmed by a drop several multiples of its height. This explains why we have so many more mice than elephants.

So we need to distribute decisions and projects across as many units as possible, which reinforces the system by spreading errors across a wider range of sources. In fact, I have argued that government decentralization would help to lower public deficits. A large part of these deficits comes from underestimating the costs of projects, and such underestimates are more severe in large, top-down governments. Compare the success of the bottom-up mechanism of canton-based decision making in Switzerland to the failures of authoritarian regimes in Soviet Russia and Baathist Iraq and Syria.

Rule 4: Trial and error beats academic knowledge.

Things that are antifragile love randomness and uncertainty, which also means—crucially—that they can learn from errors. Tinkering by trial and error has traditionally played a larger role than directed science in Western invention and innovation. Indeed, advances in theoretical science have most often emerged from technological development, which is closely tied to entrepreneurship. Just think of the number of famous college dropouts in the computer industry.


Corbis

Thomas Edison was a prolific American inventor. Tinkering by trial and error has played a large role in Western innovation.

But I don't mean just any version of trial and error. There is a crucial requirement to achieve antifragility: The potential cost of errors needs to remain small; the potential gain should be large. It is the asymmetry between upside and downside that allows antifragile tinkering to benefit from disorder and uncertainty.

Perhaps because of the success of the Manhattan Project and the space program, we greatly overestimate the influence and importance of researchers and academics in technological advancement. These people write books and papers; tinkerers and engineers don't, and are thus less visible. Consider Britain, whose historic rise during the Industrial Revolution came from tinkerers who gave us innovations like iron making, the steam engine and textile manufacturing. The great names of the golden years of English science were hobbyists, not academics: Charles Darwin, Henry Cavendish, William Parsons, the Rev. Thomas Bayes. Britain saw its decline when it switched to the model of bureaucracy-driven science.

America has emulated this earlier model, in the invention of everything from cybernetics to the pricing formulas for derivatives. They were developed by practitioners in trial-and-error mode, drawing continuous feedback from reality. To promote antifragility, we must recognize that there is an inverse relationship between the amount of formal education that a culture supports and its volume of trial-and-error by tinkering. Innovation doesn't require theoretical instruction, what I like to compare to "lecturing birds on how to fly."

Rule 5: Decision makers must have skin in the game.

At no time in the history of humankind have more positions of power been assigned to people who don't take personal risks. But the idea of incentive in capitalism demands some comparable form of disincentive. In the business world, the solution is simple: Bonuses that go to managers whose firms subsequently fail should be clawed back, and there should be additional financial penalties for those who hide risks under the rug. This has an excellent precedent in the practices of the ancients. The Romans forced engineers to sleep under a bridge once it was completed.



Corbis  The opposite of trial and error is regimented, Soviet-style production. Here, workers at a Soviet bagel-making plant

Because our current system is so complex, it lacks elementary clarity: No regulator will know more about the hidden risks of an enterprise than the engineer who can hide exposures to rare events and be unharmed by their consequences. This rule would have saved us from the banking crisis, when bankers who loaded their balance sheets with exposures to small probability events collected bonuses during the quiet years and then transferred the harm to the taxpayer, keeping their own compensation.

In these five rules, I have sketched out only a few of the more obvious policy conclusions that we might draw from a proper appreciation of antifragility. But the significance of antifragility runs deeper. It is not just a useful heuristic for socioeconomic matters but a crucial property of life in general. Things that are antifragile only grow and improve under adversity. This dynamic can be seen not just in economic life but in the evolution of all things, from cuisine, urbanization and legal systems to our own existence as a species on this planet.

We all know that the stressors of exercise are necessary for good health, but people don't translate this insight into other domains of physical and mental well-being. We also benefit, it turns out, from occasional and intermittent hunger, short-term protein deprivation, physical discomfort and exposure to extreme cold or heat. Newspapers discuss post-traumatic stress disorder, but nobody seems to account for post-traumatic growth. Walking on smooth surfaces with "comfortable" shoes injures our feet and back musculature: We need variations in terrain.

Modernity has been obsessed with comfort and cosmetic stability, but by making ourselves too comfortable and eliminating all volatility from our lives, we do to our bodies and souls what Mr. Greenspan did to the U.S. economy: We make them fragile. We must instead learn to gain from disorder.





—Mr. Taleb, a former derivatives trader, is distinguished professor of risk engineering at New York University's Polytechnic Institute. He is the author of "Antifragile: Things That Gain From Disorder" (Random House), from which this is adapted.



A version of this article appeared November 17, 2012, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Learning to lovevolatility.







SOURCE:

Learning to Love Volatility: Nassim Nicholas Taleb on the Antifragile - WSJ.com

Lint: 
http://online.wsj.com/article/SB10001424127887324735104578120953311383448.html





Thursday, November 22, 2012

We need a new solution to feed the world - Vegetarianism





Food shortages could force world into vegetarianism, warn scientists



Water scarcity's effect on food production means radical steps will be needed to feed population expected to reach 9bn by 2050

 
 

John Vidal, environment editor
guardian.co.uk, Sunday 26 August 2012 19.00 BST



A bull grazes on dry wheat husks in Logan, Kansas, one of the regions hit by the record drought that has affected more than half of the US and is expected to drive up food prices. Photograph: John Moore/Getty Images


Leading water scientists have issued one of the sternest warnings yet about global food supplies, saying that the world's population may have to switch almost completely to a vegetarian diet over the next 40 years to avoid catastrophic shortages.


Humans derive about 20% of their protein from animal-based products now, but this may need to drop to just 5% to feed the extra 2 billion people expected to be alive by 2050, according to research by some of the world's leading water scientists.


"There will not be enough water available on current croplands to produce food for the expected 9 billion population in 2050
if we follow current trends and changes towards diets common in western nations," the report by Malik Falkenmark and colleagues at the Stockholm International Water Institute (SIWI) said.
"There will be just enough water if the proportion of animal-based foods is limited to 5% of total calories
and considerable regional water deficits can be met by a … reliable system of food trade."

Dire warnings of water scarcity limiting food production come
as Oxfam and the UN prepare for a possible second global food crisis in five years. 

Prices for staples such as corn and wheat have risen nearly 50% on international markets since June, triggered by severe droughts in the US and Russia, and weak monsoon rains in Asia.

 More than 18 million people are already facing serious food shortages across the Sahel.

Oxfam has forecast that the price spike will have a devastating impact in developing countries that rely heavily on food imports, including parts of Latin America, North Africa and the Middle East.


 Food shortages in 2008 led to civil unrest in 28 countries.

Adopting a vegetarian diet is one option to increase the amount of water available to grow more food in an increasingly climate-erratic world,
the scientists said. 


Animal protein-rich food consumes five to 10 times more water than a vegetarian diet. 

One third of the world's arable land is used to grow crops to feed animals. Other options to feed people include eliminating waste and increasing trade between countries in food surplus and those in deficit.

"Nine hundred million people already go hungry and 2 billion people are malnourished
in spite of the fact that per capita food production continues to increase," they said. 


"With 70% of all available water being in agriculture, growing more food to feed an additional 2 billion people by 2050 will place greater pressure on available water and land."

The report is being released at the start of the annual world water conference in Stockholm, Sweden, where 2,500 politicians, UN bodies, non-governmental groups and researchers from 120 countries meet to address global water supply problems.

Competition for water between food production and other uses will intensify pressure on essential resources,
the scientists said. 


"The UN predicts that we must increase food production by 70% by mid-century.  

This will place additional pressure on our already stressed water resources, at a time when we also need to allocate more water to satisfy global energy demand which is expected to rise 60% over the coming 30 years – and to generate electricity for the 1.3 billion people currently without it," said the report.

Overeating, undernourishment and waste are all on the rise and increased food production may face future constraints from water scarcity.


"We will need a new recipe to feed the world in the future,"
said the report's editor, Anders Jägerskog.

...........................................................................


Global development
Food security ·
Access to water
Environment
Food ·
Water ·
Drought ·
Farming
Society
Life and style
Vegetarianism
World news
Population 





Source:
Food shortages could force world into vegetarianism, warn scientists | Global development | The Guardian


link: http://www.guardian.co.uk/global-development/2012/aug/26/food-shortages-world-vegetarianism




Find your path, your purpose, your focus...


Never bear more than one trouble at a time. Some people bear all they had, all they have now, and all they expect to have." Edward E. Hale


 "Patience and time accomplish more than strength or passion." — Jean de La Fontaine


 "Happiness is not a goal, but a byproduct."  -- Eleanor Roosevelt


"Life comes at us in waves. We can't predict or control those waves, but we can learn to surf." — Dan Millman


 "Strive not to be a success but rather to be of value." — Albert Einstein 

“To think is easy. To act is hard. But the hardest thing in the world is to act in accordance with your thinking.   Goethe http://www.goethesociety.org/pages/quotescom.html



 "Stay firmly in your own path, and dare." — Paul Gauguin


"The world makes way for those who know where they’re going." - Ralph Waldo Emerson (Dream big but start small. Then connect the dots...)



 

"Until one is committed, there is hesitancy, the chance to draw back-- Concerning all acts of initiative (and creation), there is one elementary truth that ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then Providence moves too. 

All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one's favor all manner of unforeseen incidents and meetings and material assistance, which no man could have dreamed would have come his way. 

Whatever you can do, or dream you can do, begin it. Boldness has genius, power, and magic in it. Begin it now."
-- W. H. Murray in The Scottish Himalaya Expedition





Wednesday, October 31, 2012

Research - Five top macroeconomic websites - Video - investmentexecutive.com

 
Ian Campbell, founder of Campbell Valuation Partners Ltd. and owner of stockresearchportal.com, describes his top five macroeconomic websites. He spoke with Gavin Adamson of Investment Executive at the TMX Broadcast Centre.






Research - Five top macroeconomic websites - Video - investmentexecutive.com

 http://www.investmentexecutive.com/-/video-26637-five-top-macroeconomic-websites


 Investment Executive
 
Investment Executive (IE) is Canada's national newspaper for financial services industry professionals. Launched in 1989, Investment Executive is published 16 times a year and reaches more than 120,000 financial advisors and managers. No other financial media has the depth of IE. The brand has gained the respect of its readers by offering intelligent, informed coverage of the financial services industry and by providing insightful information for advisors on topics as diverse as mutual funds, investment research, technology, estate planning, tax, building relationships with clients and developing products and services for the client of the future.


Our sister publication, Finance et Investissement, offers similar content for francophone advisors.
 
investmentexecutive.com

Our web site is the leading destination for Canada's financial services industry professionals. It delivers complete, comprehensive and up-to-date information. The day's breaking news and building your business stories always appear on our home page. We've also organized stories by categories, such as Industry News, Products or Practice Management, to help you keep up to date in your area of interest. All news stories are fully searchable. IE:TV features videos with a wide range of experts in the financial services industry discussing issues pertinent to advisors and their practices. And in our multimedia centre, you'll find webinars designed to help advisors build their business.

Canadian Investment Guide (CIG)

The Canadian Investment Guide magazine is aimed at consumers and can be kept as a reference tool. It is also used by advisors to prospect and build long-term client relationships.

CIG 2013 is an educational tool designed to help you guide your clients through these uncertain times. It also highlights the long-term track records of the top performing funds as selected by the Morningstar Canadian Investment Awards™







Tuesday, October 30, 2012

The Art of the Sale

 A revelatory examination of the alchemy of successful selling and its essential role in just about every aspect of human experience. When Philip Delves Broughton went to Harvard Business School, an experience he wrote about in his New York Times bestseller Ahead of the Curve , he was baffled to find that sales was not on the curriculum.  Why not, he wondered?  Sales plays a part in everything we do-not just in clinching a deal but in convincing people of an argument, getting a job, attracting a mate, or getting a child to eat his broccoli.  Well, he thought; he'd just have to assemble his own master class in the art of selling.  And so he did, setting out on a remarkable pilgrimage to find the world's great wizards of sales.  Great selling is an art that demands creativity, mindfulness, selflessness, and resilience; but anyone who says you can become a great salesperson in 15 minutes is either a charlatan or a fool.  The more Delves Broughton traveled and listened, the more he found a wealth of applicable insight.  In Morocco, he found the master rug merchant who thrives in Kasbah by using age-old principles to read his customers.  In Tampa, he met with Tony Sullivan, king of the infomercial, and learned the importance of creating a good narrative to selling effectively.  In a sold-out seminar with sales guru Jeffrey Gitomer, he uncovered the ways successful selling approaches religion, inspiring faith and even a sense of duty in customers.  From celebrity art dealer Larry Gagosian to the most successful saleswoman in Japan, Broughton tracked down anyone who would help him understand what it took to achieve greatness in sales.  Though sales is the engine of commerce and industry-more Americans work in sales than in manufacturing, marketing, or finance-it remains shrouded in myth. The Art of the Sale is a powerful beam of light onto the field, a wise and winning tour of the best in show of this endeavor which is nothing less than the means by which all of us, one way or another, get our way in the world.



The Art of the Sale | Vancouver Island Regional Library | BiblioCommons


THE ART OF THE SALE (reviewed on February 15, 2012)
Sales was not part of the curriculum at Harvard Business School. Former Daily Telegraph journalist Broughton (Ahead of the Curve: Two Years At Harvard Business School, 2008) explains why that’s a big problem.
For the author, sales is where the rubber hits the road, where the deals are done. If a business can't sell its product, of course, it won't survive. More Americans are employed in sales than any other line of work. Not to be confused with marketing, the author's definition of sales goes from his sons' lemonade stand to the Dalai Lama representing the Tibetan people against Chinese repression. Broughton has met with top sellers around the world, traveling to Japan, Morocco and the United Kingdom in search of the keys to success in sales. In addition to his interview research, he examines academic studies, history, self-help literature, academic research on the psychology of selling and the character attributes of sales people. He explores the differences in theory and practice, and he draws from the history of the field, by way of P.T. Barnum and Joseph Duveen, who brought fine-art sales to the U.S. Broughton does not exclude the seamy underside—e.g., pharmaceutical companies recruiting college cheerleaders to “sell” their products to the country's doctors, who “buy more and prescribe more to please ex-cheerleaders than they do for salesmen who look like themselves”—but he supplies plenty of success stories, including Ted Turner, casino magnate Steve Wynn and former AOL executive Ted Leonsis.
Entertaining, balanced and provocative.

Pub Date: April 12th, 2012
ISBN: 978-1-59420-332-9
Page count: 320pp
Publisher: Penguin Press
Review Posted Online: Jan. 30th, 2012
Kirkus Reviews Issue: Feb. 15th, 2012

Tuesday, September 18, 2012

18 Tips For Success From Richard Branson - Business Insider



Richard Branson founded Virgin in 1970 at the age of 20, and he hasn’t looked back.

He’s the only entrepreneur to have built eight separate billion-dollar companies in eight different industries — and he did it all without a degree in business.

"Had I pursued my education long enough to learn all the conventional dos and don'ts of starting a business I often wonder how different my life and career might have been," he writes in his new book,

Like a Virgin: Secrets They Won’t Teach You at Business School.


1. Don't do it if you don't enjoy it.

Running a business takes a lot of blood, sweat, and tears (and caffeine). But at the end of the day, you should be building something you will be proud of.

Branson says, "When I started Virgin from a basement in west London, there was no great plan or strategy. I didn't set out to build a business empire ... For me, building a business is all about doing something to be proud of, bringing talented people together and creating something that's going to make a real difference to other people's lives."

2. Be visible


Sir Freddie Laker, a British airline “tycoon.”

“Make sure you appear on the front page and not the back pages,” said Laker. “You are going to have to get out there and sell yourself. Make a fool of yourself, whatever it takes. Otherwise you won’t survive”.


3. Choose a unique name for your brand



4. You can't run a business without taking risks.



5. The first impression is everything. So is the second.


Branson thinks of one of his favorite sayings when advising about taking business risks: “‘The brave may not live forever—but the cautious do not live at all!’”

Every business involves risks. Be prepared to get knocked down, says Branson, but success rarely comes from playing it safe. You may fail, but Branson also dares to point out that "there's no such thing as a total failure."


6. Perfection is unattainable.



7. The customer is always right, most of the time.



8. Define your brand.



9. Explore uncharted territory.



10. Beware the "us vs. them" environment.


The workplace should be one in which the boss and his or her employees communicate well and work together toward the same goal. “If employees aren’t associating themselves with their company by using ‘we’, it is a sign that people up and down the chain of command aren’t communicating,” says Branson.

If you think there might be discrepancies or tension between employees and management, Branson advises to check with the middle management first to try to uncover the source of the problem and address it head-on.


11. Build a corporate comfort zone.



Employees must feel free and encouraged to openly express themselves without rigid confines so they can do better work and make good, impactful decisions.

"This may sound like a truism," begins Branson, "But it has to be said: It takes an engaged, motivated and committed workforce to deliver a first-class product or service and build a successful, sustainable enterprise."


12. Not everyone is suited to be CEO.


A manager needs to be someone who “brings out the best in people,” someone who communicates well with others and helps an employee learn from a mistake instead of criticizing them for it.



13. Seek a second opinion. Seek a third.


Branson says you must learn to be a good listener in order to succeed, and that means bouncing “every idea you have off numerous people before finally saying, ‘We’ll give this one a miss,’ or ‘Let’s do it.’”

That means being thorough and deliberate before executing any decisions. In business, seeking a variety of opinions "can save you a lot of time and money," says Branson. "Don't tell people about others' suggestions until you've heard what they have to say. In the end you may decide that the best advice is to walk away—and later find out it was the very best solution."

14. Cut ties without burning bridges.


Business ventures with another person, be it a friend or a partner, don’t always work out. If this is the case, successful entrepreneurs know when to part ways.

But just because you decide to go in another direction doesn’t mean things have to end badly, especially with a friend, says Branson. Handle any problems quickly and head-on, and end the relationship as amicably as possible.

15. Pick up the phone.


great to be tech-savvy, but don’t text or email when you should be calling. "The quality of business communications has become poorer in recent years as people avoid phone calls and face-to-face meetings, I can only assume, in some misguided quest for efficiency," Branson says.

Problems are more difficult to solve by text or email, and “there is nothing efficient about allowing a small problem to escalate,” says Branson, when it could have been easily addressed with a phone call.

16. Change shouldn't be feared, but it should be managed.


“Companies aren’t future-proof,” says Branson, and nothing lasts forever. An entrepreneur should be prepared to adapt, and avoid being nostalgic about the company itself.

"Sometimes you have to take your company in a new direction because circumstances and opportunities have changed." If this is the case, Branson advises that you should "find ways to inspire all employees to think like entrepreneurs ... so the more responsibility you give people the better they will perform."

17. When it comes to making mistakes, bounce back, don’t fall down.


Your decision will not always be the best decision. Everyone makes mistakes, but the best thing you can do in the face of a mistake is own up to it.

Honesty isn’t just the best policy, it’s the only policy, notes Branson. When a mistake is made, don’t let it consume you. Uncover the problem and get to work fixing it.


18. Be a leader, not a boss.


Branson sees the classic image of “the boss” as an anachronism. Being bossy is not a desirable trait in a manager, he says. A boss orders while a leader organizes.

"Perhaps, therefore, it is odd that if there is any one phrase that is guaranteed to set me off it's when someone says to me, 'Okay, fine. You're the boss!'" says Branson. "What irks me is that in 90 percent of such instances what that person is really saying is 'Okay, then, I don't agree with you but I'll roll over and do it because you're telling me to. But if it doesn't work out I'll be the first to remind everyone that it wasn't my idea.'"

A good corporate leader is someone who doesn't just execute his or her own ideas, but also inspires others to come forth with their own.








18 Tips For Success From Richard Branson - Business Insider

Source: "Like a Virgin: Secrets They Won’t Teach You at Business School."

Read more: http://www.businessinsider.com/18-tips-for-success-from-richard-branson-2012-9?op=1#ixzz26rh8ZEcB



 

Monday, August 13, 2012

What you need to know before dumping stocks - The Globe and Mail

 Blogger Preface:  This article rang a bell for me.  All my Yuppie friends, who still have money after the 2008 meltdown, feel they need to keep adding to the mutual funds they own in their retirement funds.  They worry about not having enough money to retire as soon as they want or in the style they want.

How about taking the least possible risk (inflation is always a risk, deteriorating buying power) and making adjustments to your retirement plans?  Financial Planners have done a good job of promoting mutual funds and the stock market as the best form of investment to grow your wealth for retirement.  Some people see no alternatives to having their money work for them other utilizing the equities and bond markets.

Careful budgeting is out of fashion with our consumer oriented, 'must-have-it-all' North American society therefore, not bei ng seen as an alternative to aggressive investment plans to produce the extra money to keep the party happening in retirement.


 .........................................................................

 

What you need to know before dumping stocks

The Globe and Mail


“If you do not want to invest in equities, that does not make you dumb,” says Carl Richards, author of

The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money.

This needs to be said because we live in a world where stocks long ago won the image war in investing. Stocks are for hunters, while bonds and guaranteed investment certificates are for gatherers. Smart people buy stocks, sheep buy the other stuff.


If all that’s keeping you in stocks is peer pressure, for God’s sake get out. Don’t be naive about it, though. The move out of stocks requires both sacrifice and the ability to resist temptation.

“I know plenty of people who don’t want to take equity risk any more – it’s not a problem,” said Mr. Richards, a Utah-based adviser who regularly contributes sketches explaining investing concepts to The New York Times’ Bucks blog. “But let’s build a plan where you save a little more and work more in retirement.”

Mr. Richards’ book doesn’t tell you how to invest – it tells you how to think about investing so you make better decisions. The approach makes him the perfect person to consult on the case of the frazzled investor who wants out of stocks.

People who have lost money in stocks may question why he believes that safe investing requires you to save more and work longer.

 Here is a Statistic that might seem surprising:

bonds and stocks have generated nearly equal returns in the past 10 years at roughly 6.5 to 7 per cent annually.  (in Canada)


Can this be repeated in the next 10 years?  


In fact, it’s not unreasonable to expect a big stock market rally at some point in the years ahead that will be coupled with a bear market for bonds.
 ...............................................................

 Blogger Comments: The bull market in bonds has actually persisted for 20 years...

Avoid stocks if you want to shun stock market risk.  This does not mean you are forced into the bond market which may be getting 'long in the tooth' as far as producing high returns.  Maybe you want to stay in shorter term GIC's or buy government of Canada Savings Bonds for yield and liquidity.  If rates begin to rise you will be able to benefit in the money markets and short term instruments, whereas the bond market would enter a bear phase and bonds would lose lose value.
 .................................................................

 Mr. Richards suggests you look at the long-term numbers for the stock market. In Canada, the S and P/TSX composite index averaged 8.7 per cent annually for the 20 years to June 30, a period that includes the bull market 1990s and two market plunges since 2000. The S and P 500 made 8.3 per cent annually over that period, although this return slips to 7.4 per cent for Canadians as a result of our currency appreciating against the U.S. dollar.

If you still feel abused by the stock market, it could be because you have more stock market exposure than you should. Mr. Richards describes an overweighting in stocks as speculating in the market...

While he believes that decades of stock market history argue for having some stocks in your portfolio, he’s realistic about the possibility of more upsets to come.
 ...........................................................................................................................

 Blogger Conclusion:

 RISK and REWARD is the name of the Game and the Financial Services Industry has sold the Returns 'Possible' investing in Mutual Funds, managed accounts and common stocks in general to  the extent that public perception has seen these promises as near guarantees.  Bad idea.


 The 2008 meltdown in equities and financial markets caused by the housing market collapse in America did a great deal to educate the general public about the risks inherent in all markets.



______




What you need to know before dumping stocks - The Globe and Mail

 LINK:  http://m.theglobeandmail.com/globe-investor/personal-finance/drawing-on-your-better-judgment/article4441484/?service=mobile






Friday, August 10, 2012

Define Success to properly set your compass

I found one day in school a boy of medium size ill-treating a smaller boy. I expostulated, but he replied: The bigs hit me, so I hit the babies; that's fair. In these words he epitomized the history of the human race.
- Bertrand Russell

“All you need in this life is ignorance and confidence; then success is sure. ”
― Mark Twain
 
"In the confrontation between the stream and the rock, the stream always wins
- not by strength but by perseverance."
- H. Jackson Brown 
 “Don't mistake activity with achievement.”
― John Wooden
 “Supreme excellence consists of breaking the enemy's resistance without fighting.”
― Sun Tzu, The Art of War

“Whatever the mind can conceive and believe, it can achieve.”
― Napoleon Hill, Think and Grow Rich

 
“Don't aim at success. The more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side effect of one's personal dedication to a cause greater than oneself or as the by-product of one's surrender to a person other than oneself. Happiness must happen, and the same holds for success: you have to let it happen by not caring about it. I want you to listen to what your conscience commands you to do and go on to carry it out to the best of your knowledge. Then you will live to see that in the long-run—in the long-run, I say!—success will follow you precisely because you had forgotten to think about it”
― Viktor E. Frankl, Man's Search for Meaning

“I want to do it because I want to do it. Women must try to do things as men have tried. When they fail, their failure must be but a challenge to others.”
― Amelia Earhart

“Over the years, I have come to realize that the greatest trap in our life is not success, popularity, or power, but self-rejection. Success, popularity, and power can indeed present a great temptation, but their seductive quality often comes from the way they are part of the much larger temptation to self-rejection. When we have come to believe in the voices that call us worthless and unlovable, then success, popularity, and power are easily perceived as attractive solutions. The real trap, however, is self-rejection. As soon as someone accuses me or criticizes me, as soon as I am rejected, left alone, or abandoned, I find myself thinking, "Well, that proves once again that I am a nobody." ... [My dark side says,] I am no good... I deserve to be pushed aside, forgotten, rejected, and abandoned. Self-rejection is the greatest enemy of the spiritual life because it contradicts the sacred voice that calls us the "Beloved." Being the Beloved constitutes the core truth of our existence.”
― Henri J.M. Nouwen

Monday, June 25, 2012

Robbie Burns: To A Mouse

A sculpture of a mouse in the garden of the Robert Burns Birthplace Museum, Alloway
 
 
TO A MOUSE
ON TURNING HER UP IN HER NEST WITH THE PLOUGH, NOVEMBER, 1785
by: Robert Burns (1759-1796)
      I
       
      EE, sleekit, cowrin, tim'rous beastie,
      Oh, what a panic's in thy breastie!
      Thou need na start awa sae hasty,
      Wi' bickering brattle!
      I was be laith to rin an' chase thee,
      Wi' murd'ring pattle!
       
      II
       
      I'm truly sorry man's dominion
      Has broken Nature's social union,
      An' justifies that ill opinion
      Which makes thee startle
      At me, thy poor, earth-born companion
      An' fellow-mortal!
       
      III
       
      I doubt na, whyles, but thou may thieve;
      What then? poor beastie, thou maun live!
      A daimen-icker in a thrave
      'S a sma' request;
      I'll get a blessin wi' the lave,
      And never miss't!
       
      IV
       
      Thy wee-bit housie, too, in ruin!
      Its silly wa's the win's are strewin!
      An' naething, now, to big a new ane,
      O' foggage green!
      An' bleak December's winds ensuin,
      Baith snell an' keen!
       
      V
       
      Thou saw the fields laid bare an' waste,
      An' weary winter comin fast,
      An' cozie here, beneath the blast,
      Thou thought to dwell,
      Till crash! the cruel coulter past
      Out thro' thy cell.
       
      VI
       
      That wee bit heap o' leaves an stibble,
      Has cost thee mony a weary nibble!
      Now thou's turn'd out, for a' thy trouble,
      But house or hald,
      To thole the winter's sleety dribble,
      An' cranreuch cauld!
       
      VII
       
      But, Mousie, thou art no thy lane,
      In proving foresight may be vain:
      The best-laid schemes o' mice an' men
      Gang aft a-gley,
      An' lea'e us nought but grief an' pain,
      For promis'd joy!
       
      VIII
       
      Still thou art blest, compared wi' me!
      The present only toucheth thee:
      But och! I backward cast my e'e,
      On prospects drear!
      An' forward, tho' I cannot see,
      I guess an' fear!
"To a Mouse" is reprinted from English Poems. Ed. Edward Chauncey Baldwin & Harry G. Paul. New York: American Book Company, 1908.

 Source:
 http://www.poetry-archive.com/b/to_a_mouse.html



 Portrait of Robert Burns 
 Robert Burns by Alexander Nasmyth
(By permission of the National Galleries of Scotland) 


Sunday, June 3, 2012

Neuroscience and Financial Markets


This discussion leaves many questions to be answered by investors, like - 

Do you want money managers gambling with your pension money?  Emotional stability is one hallmark of a good investor according to Warren Buffett and John Coates is suggesting that the financial markets are dominated by bipolar emotions exaggerating moves in both up and down movements.  Markets may eventually revert to the mean but do you have the constitution to stay the course amidst the volatility?


CBC Books - The high stakes of Wall Street



John Coates  explains his ideas: 




"The Hour Between Dog and Wolf: John Coates Research in Neuroscience" suggests that the physical reactions on trading floors are similar to war zones or elite sports where the pressure to perform and survive is great. 

In such situations, the Visceral trumps the Rational.

The man behind that view spent years on the trading floor for the big players on Wall St. before studying neuroscience.




The trading floor looks like an adrenaline-fuelled battle zone and the truth isn't far off. 

Research in neuroscience suggests that being a part of this whirlwind world of buying and selling leads to physiological reactions akin to fighting in a war zone or playing in the NBA playoffs. The pressure to perform is huge and the instinct to survive is powerful.



One man who knows much about this is John Coates, author of The Hour Between Dog and Wolf.





Coates was a Wall Street stock trader for years,  at  firms like Goldman Sachs and Deutsche Bank during the dot.com boom of the 1990s.

 Seeing the behaviour of other traders,  he observed hey seemed to operate contrary to how economics is supposed to work.


"Well, I think everybody was seeing it, but I guess I was particularly struck by how anomalous the behaviour was from the point of view of economics," Coates said.

"Traders on the floor had become delusional and euphoric ... They were putting on trades in ever-increasing size with worse and worse risk-reward trade-offs. And I thought this was odd because they hadn't been this way before the bubble, and after it crashed or popped, they weren't like that any more, in fact they were like revelers with a hangover. And they couldn't believe that they had just blown five years' worth of profits on a handful of stupid trades."

There are some chemicals that your body producing that was basically having this narcotic effect on you. And that got Coates to think about the influence of the body on financial risk-taking.

We'd like to think that financial trading is based on solid reasoning and rationality, but human beings are not robots, even if some purport to operate that way.

Emotions get in the way. Fear can sink in. So can the natural instinct to fight. 
 


Through studying neuroscience, Coates explored his theory about what he was seeing on the trading floor: that physiological changes happening within traders as they gain and lose vast amounts of money may be driving the instability of the financial markets.


"The trouble is right now we've got an unstable biology coupled with risk-management practices that expand risk limits during the bull markets and contract them during the bear, and a bonus scheme that rewards high-variance trading."

Coates concludes the biology increases volatility by exaggerating movements on markets whether up or down because the reward system of bonuses encourages high risk trading;  flight or fight drives behavior when markets start crumbling and adrenaline , testosterone, and pleasure seeking kicks in when market start running to the upside.... more bonuses and more high risk taking behavior.  Egos expand brashness and the "greater fool" theory takes precedence over value investing.


Coates suggests: "I think also if there is the biological contributor to this instability, then a way of dampening it is to have more women and older men managing money because they have very different biologies from young men."



First aired on The Current (28/05/12)

Link:

http://www.cbc.ca/books/2012/06/the-high-stakes-of-wall-street.html






Tuesday, March 6, 2012

There Are No Shortcuts in Investing: Nobel Laureate William Sharpe - YouTube

There Are No Shortcuts in Investing: Nobel Laureate William Sharpe - YouTube



ploaded by on Jan 11, 2010

Nobel Laureate William F. Sharpe explains how futile it is to read sure-thing investing books or watch the latest financial guru to find easy answers on weathering the financial crisis or filling the holes in your portfolio.

Sharpe is the Stanco 25 Professor of Finance Emeritus and Nobel Laureate.

Part of a series discussion on "Stanford Pioneers in Science", a program sponsored by Stanford Continuing Education.

Interviewed by Paul Costello, communication and public affairs director, School of Medicine

Story: http://www.gsb.stanford.edu/news/headlines/sharpe_interview_09.html

Recorded: October 7, 2009

Characteristics of Great Investors - YouTube

Characteristics of Great Investors - YouTube



ed by on Aug 5, 2009

Thomas Barrack, Founder, Chairman, CEO, Colony Capital gives the keynote address to the Principal Investment Conference. Recorded: February 13, 2008

Category:

Education

Tags:

License:

Standard YouTube License