A note for buyers----begin at ZERO.
My friend, Marvin, told me a story once to get the point across. A man wanted to buy a bed. He saw one advertised in the paper and went to look at it. It was a beautiful four poster bed in a very high attic.....and he noticed that the seller seemed anxious. The buyer said he would have to think it over further. About a month later, the buyer called and asked to see it again. Again the seller told him the selling price....but the buyer said he would have to think it over further.
Finally...the buyer stopped in to see the bed one more time and after going over the selling price again, the buyer asked why the seller was selling such a beautiful bed. the seller was exasperated and said, "Well, my lease is up tonight at midnight and I have to have everything out of here. I cannot imagine what else you need to know about this bed." ....To which, the seller replied that now he had the information he needed. He proceeded to offer a mere pittance for the bed and the seller accepted. He had no choice.
When you are the buyer....you wait till you have ALL the information. Secondly...you begin at ZERO...Yes...ZERO....
Wednesday, January 23, 2008
The Story of Marvin:or; When you are buying, buy; When you are selling, Sell; Never Confuse the two
I have always loved books. But at one point, I was curious as to the BUSINESS of books. I knew little about the art of buying, so I asked my friend, Marvin, a liquidation specialist, to keep his eye out for an opportunity for me to learn something about and possibly purchase a book inventory.
On July 31st, it was one of the hottest days of the year, with temps well over 100 degrees. Marvin called. He said he had an opportunity I might be interested in and to meet him at the warehouse of a notable publisher downtown at 4:00PM sharp." O.K.", I said.
As I entered the warehouse, I noted that the temp inside was about 130 deg. and quickly discarded my suitcoat and tie. When I met Marvin, he said, "Just listen, and let me do the talking."
We met the warehouse manager and in his cramped office the temperature seemed to get even worse. He explained he had some "remainders" of computer books and gave us a list of titles and numbers. They totaled almost 20,000. When I saw the numbers, I thought that Marvin was nuts. No way did I have enough to purchase all these. But I remembered his words. I remained silent.
The meeting dragged on forever. Marvin had questions, and questions and questions. Finally, the warehouse staff came in and punched out and left. It was after 6PM. Frustrated, the manager said, "Well, Marvin, I need to do something with all these books. My lease expires on Sunday, and I really need to do something."
Then Marvin spoke. " I am pleased that Dick and I can be of help in this matter. We will see that all these books are removed at no charge to you by Monday morning. The Manager was stunned, but quickly agreed.
When we were outside the building, Marvin took me aside and said, " When you are buying, you are buying; When you are selling, you are selling; Never confuse the two. When you buy, you begin at zero. Now go and rent a truck. We have our work cut out for us. "
Posted by Evansville Observer at 1:39 PM
On July 31st, it was one of the hottest days of the year, with temps well over 100 degrees. Marvin called. He said he had an opportunity I might be interested in and to meet him at the warehouse of a notable publisher downtown at 4:00PM sharp." O.K.", I said.
As I entered the warehouse, I noted that the temp inside was about 130 deg. and quickly discarded my suitcoat and tie. When I met Marvin, he said, "Just listen, and let me do the talking."
We met the warehouse manager and in his cramped office the temperature seemed to get even worse. He explained he had some "remainders" of computer books and gave us a list of titles and numbers. They totaled almost 20,000. When I saw the numbers, I thought that Marvin was nuts. No way did I have enough to purchase all these. But I remembered his words. I remained silent.
The meeting dragged on forever. Marvin had questions, and questions and questions. Finally, the warehouse staff came in and punched out and left. It was after 6PM. Frustrated, the manager said, "Well, Marvin, I need to do something with all these books. My lease expires on Sunday, and I really need to do something."
Then Marvin spoke. " I am pleased that Dick and I can be of help in this matter. We will see that all these books are removed at no charge to you by Monday morning. The Manager was stunned, but quickly agreed.
When we were outside the building, Marvin took me aside and said, " When you are buying, you are buying; When you are selling, you are selling; Never confuse the two. When you buy, you begin at zero. Now go and rent a truck. We have our work cut out for us. "
Posted by Evansville Observer at 1:39 PM
The Risky World of Bonds; or "With a Ginny Mae, You Lose in Every Way."---the story
If you are an experienced investor, or simply older person, you know that there are many ways to lose money in this world. Life is simply about "risk" and "risk assessment". Usually in times of economic stress, folks rush to secure investments. Or, more precisely, what they "think" are secure investments. That rush can be dangersous if the risk is not viewed properly.
So, I wanted to share a little jingle I learned on Wall Street many years ago. The jingle goes, "With a GinnyMae, you lose in every way."
The jingle highlights the perils of investing in bonds in a rising interest rate environment. This may or may not be the world you face right now. Usually bond investors are folks like my father, who invested monthly in bonds, and had a bond guide next to the Bible on the night stand. A child of the depression and WWII years. Back in 1973, it became necessary to review these bonds as interest rates skyrocketed in the Jimmy Carter years. It was not a pretty picture. Bonds took huge losses. It was a lesson I have never forgotten. It is one you need to know.
If you buy a bond as interest rates rise, say at 7%. You are pleased. The rate seems high. The next day, the rate goes to 7.5% Now if you hold the bond to maturity, you will get your principal plus interest, if the company does not default. However, make a note of it, most people sell prior to maturity. So if you wanted to sell that bond on the following day you would lose. After all, who would buy one at 7% when the 7.5% were available.
You may wonder about the GinnyMae jingle. The phrase "every way". In a decreasing interest rate market, people refinance the underlying mortgages and the bond trust usually gets paid off early--just what you don't want. Now you have money to invest with rates lower. So you have investment rate risk. So either in rising or dropping rates you tend to lose..That was the point of the jingle.
The overall point of the jingle is that you CAN lose with bond investments. If you don't understand how this can happen, ask your investment advisor. The purpose of the jingle is just to get your attention.
So, I wanted to share a little jingle I learned on Wall Street many years ago. The jingle goes, "With a GinnyMae, you lose in every way."
The jingle highlights the perils of investing in bonds in a rising interest rate environment. This may or may not be the world you face right now. Usually bond investors are folks like my father, who invested monthly in bonds, and had a bond guide next to the Bible on the night stand. A child of the depression and WWII years. Back in 1973, it became necessary to review these bonds as interest rates skyrocketed in the Jimmy Carter years. It was not a pretty picture. Bonds took huge losses. It was a lesson I have never forgotten. It is one you need to know.
If you buy a bond as interest rates rise, say at 7%. You are pleased. The rate seems high. The next day, the rate goes to 7.5% Now if you hold the bond to maturity, you will get your principal plus interest, if the company does not default. However, make a note of it, most people sell prior to maturity. So if you wanted to sell that bond on the following day you would lose. After all, who would buy one at 7% when the 7.5% were available.
You may wonder about the GinnyMae jingle. The phrase "every way". In a decreasing interest rate market, people refinance the underlying mortgages and the bond trust usually gets paid off early--just what you don't want. Now you have money to invest with rates lower. So you have investment rate risk. So either in rising or dropping rates you tend to lose..That was the point of the jingle.
The overall point of the jingle is that you CAN lose with bond investments. If you don't understand how this can happen, ask your investment advisor. The purpose of the jingle is just to get your attention.
The Simple Math; or The Coming Disconnect
he Janesville Gazette lead with a story today on the impact of rising utility costs over the past decade. If you just do the math, it just does not add up. There is a big disconnect coming.
The baby boomers that will enter retirement have a social security benefit that will average $1100 per month. It is easy for utilities and gasoline and meds to eat all that up, leaving nothing to eat or living expenses. It is time for all you independent types out there to review your IRA and 401K results for the past 10 years. O.K. That was a short review. I was refering to the statements that you have been unable to even open for years cause the results were so bad.
Despite 5 or 6 hurricanes, folks are heading to Florida. Down South. Out West. Anywhere. To avoid the energy crisis. And companies are relocating to the West and South to avoid the coming distress of the Northeast and Midwest. This does not bode well for those communities that are on a "growth bicycle". Growth is needed. Government investments cannot be wasted in nonproductive pork. Tax increment is important. Jobs are important. Tax base is important.
Jimmy Carter wore his cardigan sweater and told America 30 years ago that we needed to be energy independent. America just laughed at him. Now, America is paying the price.
The baby boomers that will enter retirement have a social security benefit that will average $1100 per month. It is easy for utilities and gasoline and meds to eat all that up, leaving nothing to eat or living expenses. It is time for all you independent types out there to review your IRA and 401K results for the past 10 years. O.K. That was a short review. I was refering to the statements that you have been unable to even open for years cause the results were so bad.
Despite 5 or 6 hurricanes, folks are heading to Florida. Down South. Out West. Anywhere. To avoid the energy crisis. And companies are relocating to the West and South to avoid the coming distress of the Northeast and Midwest. This does not bode well for those communities that are on a "growth bicycle". Growth is needed. Government investments cannot be wasted in nonproductive pork. Tax increment is important. Jobs are important. Tax base is important.
Jimmy Carter wore his cardigan sweater and told America 30 years ago that we needed to be energy independent. America just laughed at him. Now, America is paying the price.
The Sheep Rule: "The Many are the Sheep; Follow the Few"
(As a very young man, the Observer worked for the IRS during tax season. )
At the beginning of the tax season, it was depressing to key returns, because alas it was the many poor people who typically rush to file returns. Of all of America, the rich comprise about 1%. Maybe you have noticed the disparity of wealth in America......like the largest disparity since the 1920's.
If you do not believe this, begin calling people and asking them to invest $5000 in an attractive investment. 99% of people simply don't have the money. And as a corollary, one of the ways of getting in trouble as a financial professional is to persist in marketing to these folks.
At the beginning of the tax season, it was depressing to key returns, because alas it was the many poor people who typically rush to file returns. Of all of America, the rich comprise about 1%. Maybe you have noticed the disparity of wealth in America......like the largest disparity since the 1920's.
If you do not believe this, begin calling people and asking them to invest $5000 in an attractive investment. 99% of people simply don't have the money. And as a corollary, one of the ways of getting in trouble as a financial professional is to persist in marketing to these folks.
"Have You considered the Possibility that you May be WRONG?
The very first rule of all investments.....
"Old School Ties"--; or The Good, The Bad, The Illegal"
OpEd: Old School Ties: The Good, the Bad, The Illegal---commentary
On Saturday, June 9, 2007, I had the pleasure to meet an old alum from high school. It was back in 1963 when "M" was an ace photographer, and we had worked together on some articles for the school yearbook. In a reflective moment recently, I had reviewed all the classmates of yore, and his name popped up--I knew he was a writer. So---one Saturday night I started cold calling names that looked similar and ran across his father, now 92, who helped me get in touch. Now at the Caribou Coffee at Hwy 101 and Hwy 7 we had a moment to step back in time.
The very first thing "M" did after shaking hands, was to hand me the Business Day article from the New York Times that read " Quantifiying the Role of Old-School Ties In Investing." Click on the post for the full article.
At first I thought it was nothing really new. It's who you know not what. It was the "prestige" of the school not the content that mattered. Yes. Those were the rules of the few. Back applying for grad school, I had learned all this---just by filling out the graduate school application for Harvard. Pretty straightforward. Two or three small lines for academic awards to be listed. Then a huge space. "List the relatives, alums and donors of Harvard from your family. If you need additional space feel free to attach additional sheets."
It has always been there. The cozy bars off Wall Street where the traders congregate after hours telling tales of victory and defeat. That is what I had thought. Maybe it was making plans for victory in the future not the past that was being discussed.
The Business Day article in the New York Times suggests that "alums" and their connections had a dramatically better investment performance than ....regular investors. Regulators now are beginning to use that vast computer power to compare the trading records of investors and use "alum status" as one of the things to review.
Kind of a shock. I should have been prepared. After all, if Alums can launch wars abroad with little thought as to the factual basis, I guess investing is fair game.
The next time you get a call from an alum with a great stock tip---remember---it is always best to do the research yourself. Sophisticated crime is still......crime. Make a note of it.
On Saturday, June 9, 2007, I had the pleasure to meet an old alum from high school. It was back in 1963 when "M" was an ace photographer, and we had worked together on some articles for the school yearbook. In a reflective moment recently, I had reviewed all the classmates of yore, and his name popped up--I knew he was a writer. So---one Saturday night I started cold calling names that looked similar and ran across his father, now 92, who helped me get in touch. Now at the Caribou Coffee at Hwy 101 and Hwy 7 we had a moment to step back in time.
The very first thing "M" did after shaking hands, was to hand me the Business Day article from the New York Times that read " Quantifiying the Role of Old-School Ties In Investing." Click on the post for the full article.
At first I thought it was nothing really new. It's who you know not what. It was the "prestige" of the school not the content that mattered. Yes. Those were the rules of the few. Back applying for grad school, I had learned all this---just by filling out the graduate school application for Harvard. Pretty straightforward. Two or three small lines for academic awards to be listed. Then a huge space. "List the relatives, alums and donors of Harvard from your family. If you need additional space feel free to attach additional sheets."
It has always been there. The cozy bars off Wall Street where the traders congregate after hours telling tales of victory and defeat. That is what I had thought. Maybe it was making plans for victory in the future not the past that was being discussed.
The Business Day article in the New York Times suggests that "alums" and their connections had a dramatically better investment performance than ....regular investors. Regulators now are beginning to use that vast computer power to compare the trading records of investors and use "alum status" as one of the things to review.
Kind of a shock. I should have been prepared. After all, if Alums can launch wars abroad with little thought as to the factual basis, I guess investing is fair game.
The next time you get a call from an alum with a great stock tip---remember---it is always best to do the research yourself. Sophisticated crime is still......crime. Make a note of it.
"Past Results Do Not Guarantee Future Performance."
If you do not remember this phrase, you are probably too young to read this post.
In virtually every mutual fund brochure or prospectus for a unit trust of whatever investment, there is the caution...... after of course the investment representative has gone over the wonderful result if..... in theoretical terms..... you had invested ....$1....at the Crash of 1929 and invested that in this particular investment....you would have had the wonderful result listed above....." and after speaking of those wonderful theoretical results, there is the caution about ...."Past Results do not guarantee future performance..."
Recently, in Evansville, in our own school projections for future school demand for facilities, whether we looked at population projection or building permit historical data, nobody wanted to read the warning----"Past results do not guarantee future performance."
Even in the Evansville City budget, the city financial consultant, Greg Johnson, from Ehlers and Associates stated that "proceeding forward with no further General Obligation debt, the future seems to be no problem with debt capacity." The problem, of course, was pointed out by Fred Juergens, who counted 5 million in dreams that were penciled in on the capital investment budget for the year around 2009.
It seems we always, as human beings, want the pro forma future not to include the unfortunate expenses of the reality of the things on the horizon.
I could go on about flashing lights from dashboards of cars re warnings, but.....I think you get the jist. As a stress reliever, it is important to manage stress and ...a little denial is good. Sometimes....the denial gets too large.
In virtually every mutual fund brochure or prospectus for a unit trust of whatever investment, there is the caution...... after of course the investment representative has gone over the wonderful result if..... in theoretical terms..... you had invested ....$1....at the Crash of 1929 and invested that in this particular investment....you would have had the wonderful result listed above....." and after speaking of those wonderful theoretical results, there is the caution about ...."Past Results do not guarantee future performance..."
Recently, in Evansville, in our own school projections for future school demand for facilities, whether we looked at population projection or building permit historical data, nobody wanted to read the warning----"Past results do not guarantee future performance."
Even in the Evansville City budget, the city financial consultant, Greg Johnson, from Ehlers and Associates stated that "proceeding forward with no further General Obligation debt, the future seems to be no problem with debt capacity." The problem, of course, was pointed out by Fred Juergens, who counted 5 million in dreams that were penciled in on the capital investment budget for the year around 2009.
It seems we always, as human beings, want the pro forma future not to include the unfortunate expenses of the reality of the things on the horizon.
I could go on about flashing lights from dashboards of cars re warnings, but.....I think you get the jist. As a stress reliever, it is important to manage stress and ...a little denial is good. Sometimes....the denial gets too large.
"The Case of the Punk Driver"; On "Due Diligence vs. Rating"
Imagine yourself the parent of a young teen. You have enrolled that teen in the best of driver training programs. Spent additional time riding with that teen in teaching to merge to the speed of I90. Maybe occasionally clutching the door handle. You have been lucky. No accidents. And today is the day of the driver test. The great news. Your child has passed. You are both relieved and anxious. You make the insurance call and add the driver and put the additional premium on your Mastercard or Visa. Now you are ready for the trip home. You decide to let the new driver drive.
As you leave the city limits, and get up to speed on HWY 14, or HWY 90, ( insert your own highway here) you notice that something has changed. Your new driver accelerates up to 85 mph and ......very quickly. And seems almost giddy in the way and style that he/she changes lanes. Finally. Noting a little chest pain. You simply say: "Please pull over. I will drive the rest of the way"
All the way home, you ask that young driver what was in his/her mind. The youngster simply says, "Dad, you have the risk insured. What is the big deal? We have it covered!!!!!"
You then go over the simple truth, one that all of us know....maybe......that paying auto insurance for the risk, is not a substitute for prudent driving.
This mistake has also been made in our banking system--in our mortgages, in our securities,.....well in everything. The banks simply took some low grade mortgages and got insurance on them, and then marketed them.....with additional leverage....so that while the junk was 10%, with leverage, the entire investment was endangered. This strategy....the strategy that all of our best financial minds are trying to lie their way out of with successive notices of write offs of bad loans and then cell calls to the Asian or Saudi nations to get additional loans....is shameful....But the key point is that the original "DUE DILIGENCE" was not done. That was a point that our Federal Reserve Chairman Ben Bernanke made over a month ago. The audio is on the blog.
Now locally---some very well educated pundits have said that with respect to building on a flood plain---it is really "No Problem. "Just buy the insurance." However----just remember the Punk Driver.
"DUE DILIGENCE" and "Insurance RATING" are different. One of the major problems in America, from Malibu to locally, is building in locations where development should not happen. And also one of the major problems nationwide, is governments unable to say NO.
So--there it is. The story of the "Punk Driver." Who did not know the difference between insurance premiums and sane driving. Ditto mortgage banking....Ditto site selection for major public projects. Boards know that due diligence requires more than simply getting an insurance quote. Stay tuned.
As you leave the city limits, and get up to speed on HWY 14, or HWY 90, ( insert your own highway here) you notice that something has changed. Your new driver accelerates up to 85 mph and ......very quickly. And seems almost giddy in the way and style that he/she changes lanes. Finally. Noting a little chest pain. You simply say: "Please pull over. I will drive the rest of the way"
All the way home, you ask that young driver what was in his/her mind. The youngster simply says, "Dad, you have the risk insured. What is the big deal? We have it covered!!!!!"
You then go over the simple truth, one that all of us know....maybe......that paying auto insurance for the risk, is not a substitute for prudent driving.
This mistake has also been made in our banking system--in our mortgages, in our securities,.....well in everything. The banks simply took some low grade mortgages and got insurance on them, and then marketed them.....with additional leverage....so that while the junk was 10%, with leverage, the entire investment was endangered. This strategy....the strategy that all of our best financial minds are trying to lie their way out of with successive notices of write offs of bad loans and then cell calls to the Asian or Saudi nations to get additional loans....is shameful....But the key point is that the original "DUE DILIGENCE" was not done. That was a point that our Federal Reserve Chairman Ben Bernanke made over a month ago. The audio is on the blog.
Now locally---some very well educated pundits have said that with respect to building on a flood plain---it is really "No Problem. "Just buy the insurance." However----just remember the Punk Driver.
"DUE DILIGENCE" and "Insurance RATING" are different. One of the major problems in America, from Malibu to locally, is building in locations where development should not happen. And also one of the major problems nationwide, is governments unable to say NO.
So--there it is. The story of the "Punk Driver." Who did not know the difference between insurance premiums and sane driving. Ditto mortgage banking....Ditto site selection for major public projects. Boards know that due diligence requires more than simply getting an insurance quote. Stay tuned.
Technical Trader: A bit on "Margin"
One of the interesting aspects about today's plunge on Wall Street is that it is all about "safety" and "security" and the margin calls have not begun yet----margin calls are based on the closing values, and the last time the markets in the US closed was on Friday. The Martin Luther King holiday prevented margin calls this morning which would have been a more realistic situation.
Professional traders anticipate their margin calls but many private investors do not. Hence, the first forced trading if the markets close at sharply lower levels will be at tomorrow's opening. To the best of my knowledge there are no interday margin calls---although there is a case that there should be...this is a technical loop hole as I surmise...and it can lead to traders getting in trouble in very volatile trading sessions if they abuse the margin levels intraday.
In forced margin selling, one can see the "baby thrown out with the bathwater." The trick is if one can determine which is which, to focus on it.
Lazlo Berrini mentioned on Bloomberg this morning that it is best to buy with the wind at one's back, and his tendency is to observe till that happens.
He also mentioned something interesting: The two golden rules of Wall Street are "Don't fight the Fed" and the second being "Don't fight the Market Trend. The Trend is your Friend." The problem of course is that those two traditional platitudes are suggesting different courses of action for traders. So much for platitudes.
Stay tuned to The Evansville Observer. Where we suggest that active traders sip ice water during today's action. I have switched to Starbucks bold, since I am not in the market.
Posted by Evansville Observer at 8:48 AM
Professional traders anticipate their margin calls but many private investors do not. Hence, the first forced trading if the markets close at sharply lower levels will be at tomorrow's opening. To the best of my knowledge there are no interday margin calls---although there is a case that there should be...this is a technical loop hole as I surmise...and it can lead to traders getting in trouble in very volatile trading sessions if they abuse the margin levels intraday.
In forced margin selling, one can see the "baby thrown out with the bathwater." The trick is if one can determine which is which, to focus on it.
Lazlo Berrini mentioned on Bloomberg this morning that it is best to buy with the wind at one's back, and his tendency is to observe till that happens.
He also mentioned something interesting: The two golden rules of Wall Street are "Don't fight the Fed" and the second being "Don't fight the Market Trend. The Trend is your Friend." The problem of course is that those two traditional platitudes are suggesting different courses of action for traders. So much for platitudes.
Stay tuned to The Evansville Observer. Where we suggest that active traders sip ice water during today's action. I have switched to Starbucks bold, since I am not in the market.
Posted by Evansville Observer at 8:48 AM
"Errors Cost You Money"
Many years ago, I was a financial consultant for a major Wall Street firm. Shortly after passing my Series 7 Exam, I was working a public offering for a new series of bond funds, which were in fashion at the time. It was just before lunch. I had a stack of "tickets" or orders and carried them to "the wire", which is what we called the teletype operator that sent the orders to New York. As I presented the orders to the operator, I noticed on the very bottom of each ticket the words:
"Errors cost you money."
Just then the branch manager, who was excited about the effort of everyone during that week, offered to buy lunch at the local pizza place. I thought that was a wonderful idea. On the way over to the pizza place, I asked him, " What's the deal with the "Errors cost you money," on the bottom of every ticket."
"Well," he smiled, "If there is a stock symbol error or quantity error on the ticket, and the stock has to be sold out to remedy the error, the difference due to the error is taken from your paycheck. Also, if someone promises to pay for something.....and then does not.....and the stock or bond has to be sold......the difference is taken from your paycheck."
"What if someone lies," I asked.
"You have to hear and know the customer," he replied. "That is your first responsibility. Don't worry; You will learn quickly."
He was right. When lies cost you money, and the money comes out of one's paycheck....one learns quickly....to hear quite precisely.
This is what all bankers call the "Know Your Customer Rule." It is the very first rule of banking. In a small town, it is pretty easy. On the telephone it gets harder.
In the recent Evansville School Board Forum, Tris Lahti was heard to remark that "Who cares if we built a few too many sports facilities and the numbers are a little out of line with our peers."
Who cares?
One has to care because errors in planning cost everyone---taxpayers....students...parents...business....and teachers.......
The reason that it is important to involve the community in any decision about our schools is that we have a huge stake in the plan. Conflict of interest, whether it is in the form of an architectual firm who gets fees for building doing the planning..........or in the form of board candidates who have relatives on the school district payroll....is a detriment to objective review of our community needs.
Now more than ever, we in Evansville need experienced citizens who are committed to avoiding conflict of interest to run for our Evansville School Board. That is why I am running. I do need your vote on April 3rd. Every vote will count. It is spring break. Don't forget to vote.
Posted by Evansville Observer at 7:58 AM
"Errors cost you money."
Just then the branch manager, who was excited about the effort of everyone during that week, offered to buy lunch at the local pizza place. I thought that was a wonderful idea. On the way over to the pizza place, I asked him, " What's the deal with the "Errors cost you money," on the bottom of every ticket."
"Well," he smiled, "If there is a stock symbol error or quantity error on the ticket, and the stock has to be sold out to remedy the error, the difference due to the error is taken from your paycheck. Also, if someone promises to pay for something.....and then does not.....and the stock or bond has to be sold......the difference is taken from your paycheck."
"What if someone lies," I asked.
"You have to hear and know the customer," he replied. "That is your first responsibility. Don't worry; You will learn quickly."
He was right. When lies cost you money, and the money comes out of one's paycheck....one learns quickly....to hear quite precisely.
This is what all bankers call the "Know Your Customer Rule." It is the very first rule of banking. In a small town, it is pretty easy. On the telephone it gets harder.
In the recent Evansville School Board Forum, Tris Lahti was heard to remark that "Who cares if we built a few too many sports facilities and the numbers are a little out of line with our peers."
Who cares?
One has to care because errors in planning cost everyone---taxpayers....students...parents...business....and teachers.......
The reason that it is important to involve the community in any decision about our schools is that we have a huge stake in the plan. Conflict of interest, whether it is in the form of an architectual firm who gets fees for building doing the planning..........or in the form of board candidates who have relatives on the school district payroll....is a detriment to objective review of our community needs.
Now more than ever, we in Evansville need experienced citizens who are committed to avoiding conflict of interest to run for our Evansville School Board. That is why I am running. I do need your vote on April 3rd. Every vote will count. It is spring break. Don't forget to vote.
Posted by Evansville Observer at 7:58 AM
"The Theory of "Double Down"; The Math of the Double Down
(Ed.note: This piece was written on a Tandy 1000 almost 20 years ago. Nothing like a declining stock market to bring back the nostalgia. )
Some years ago, in high school, right after Algebra II was completed in the semester, we had a time to study probability. Or more specifically, studied how probability is expressed in gambling and algebra.
The very first class, I remember the instructor asking whether if one rolled a dice, and had lost, whether the odds of winning on the second roll were increased. Most of the kids in the room, including myself, felt that the odds got better with each passing loss. What a blow to learn that it was not so.
Over the years, beginning in the 1960's, I remember some whispered discussions within our family on whether, even though Control Data stock had been falling, whether one should "double down" to lock in the magical "basis" and thus be prepared for a large win if and when-- and of course it must-- go higher ---eventually-- if one lived long enough.
What we learned in the 60's, it seems has to be learned all over again each decade. I know that even though I learned it well, I promptly forgot it in a moment of optimism later.
I even went further. It was not good enough to "double down"----the numbers did not work out fast enough. One had to be prepared to "Triple Down" in cases where the bold could win. Yes. That theory had flaws too.
The problem. In declining markets, in the 60's, 70's, 80's, 90's and on, if a stock goes to ZERO, nothing works. And indeed, if funds go down, and even seemingly slowly, diversification alone does not work....at least for stocks. Make a note of it.
Posted by Evansville Observer at 9:41 AM
Some years ago, in high school, right after Algebra II was completed in the semester, we had a time to study probability. Or more specifically, studied how probability is expressed in gambling and algebra.
The very first class, I remember the instructor asking whether if one rolled a dice, and had lost, whether the odds of winning on the second roll were increased. Most of the kids in the room, including myself, felt that the odds got better with each passing loss. What a blow to learn that it was not so.
Over the years, beginning in the 1960's, I remember some whispered discussions within our family on whether, even though Control Data stock had been falling, whether one should "double down" to lock in the magical "basis" and thus be prepared for a large win if and when-- and of course it must-- go higher ---eventually-- if one lived long enough.
What we learned in the 60's, it seems has to be learned all over again each decade. I know that even though I learned it well, I promptly forgot it in a moment of optimism later.
I even went further. It was not good enough to "double down"----the numbers did not work out fast enough. One had to be prepared to "Triple Down" in cases where the bold could win. Yes. That theory had flaws too.
The problem. In declining markets, in the 60's, 70's, 80's, 90's and on, if a stock goes to ZERO, nothing works. And indeed, if funds go down, and even seemingly slowly, diversification alone does not work....at least for stocks. Make a note of it.
Posted by Evansville Observer at 9:41 AM
Dateline August 2007: Technical: Tale of Three Graphs
edd.note: Data compliments of Yahoo Finance:)
Advances & Declines
NYSE NASDAQ
Advances 1,302 (39%) 1,393 (43%)
Declines 2,023 (60%) 1,731 (54%)
Unchanged 44 (1%) 90 (3%)
Up Vol* 2,738 (123%) 1,117 (33%)
Down Vol* 3,749 (168%) 2,208 (65%)
Unch. Vol* 42 (2%) 53 (2%)
New Hi's 12 36
New Lo's 1,080 395
*in millionsmore...
Young students of the market will note all three graphs sharply down. These three graphs are plotted on a weekly cumulative basis in Barrons's magazine sold at the Citgo at 51 and 14 in Janesville every Saturday.
In some trading circles, when, and only when, all three of these charts are positive on a cumulative basis, has the market recovered. However, from my observation, most folks cannot wait that long. Kind of a "are we there yet" thang.
Is this a real valid rule of trading? I do not know. What a good rule is---is beyond me.
Advances & Declines
NYSE NASDAQ
Advances 1,302 (39%) 1,393 (43%)
Declines 2,023 (60%) 1,731 (54%)
Unchanged 44 (1%) 90 (3%)
Up Vol* 2,738 (123%) 1,117 (33%)
Down Vol* 3,749 (168%) 2,208 (65%)
Unch. Vol* 42 (2%) 53 (2%)
New Hi's 12 36
New Lo's 1,080 395
*in millionsmore...
Young students of the market will note all three graphs sharply down. These three graphs are plotted on a weekly cumulative basis in Barrons's magazine sold at the Citgo at 51 and 14 in Janesville every Saturday.
In some trading circles, when, and only when, all three of these charts are positive on a cumulative basis, has the market recovered. However, from my observation, most folks cannot wait that long. Kind of a "are we there yet" thang.
Is this a real valid rule of trading? I do not know. What a good rule is---is beyond me.
OpEd: "JawBoning"-----Effective Method or Cruel Hoax
Sometimes when policy makers do not want to take concrete steps to solve problems, they indulge in an exercise called "jawboning." This "jawboning" has risen to a high art in financial and political circles, whether you are the Federal Reserve Chairman or the President of the US or whomever.
Last weekend I went to Wisconsin Dells to join my editor brother in a doubles game of tennis with two younger...and faster tennis players. My bro and I only had age and .....whatever wisdom we called "experience" to work with. Speed, vision and deft of hand has been slipping for some time. O.K. You understand the situation we were in.
It was a furious paced game with lots of net play. Just the kind of game Denis and I have always loved. At a critical point, Denis hit from the baseline a direct ball toward the opposing net player, who hit it with his backhand, and popped a weak lob in the air, which I smashed for a winner.....one of the few of the day for me.
As I walked to the other side of the net, celebrating, I cheered my bro on and said, "Let's go big guy.....they may be losing their arm strength."
On the next play, the opponent smashed the ball at me and although I was ready for it, it came on the backhand and I blew the shot. The "Jawboning" had worked. I had the shot I wanted....just not the skill needed.
So------"Jawboning" as a rule of thumb is always the mark of weakness.
Think of President Bush "jawboning" the mortgage industry to "work with" the holders of the mortgages that are going to be set to new higher interest rates---over a million of them this coming year. He has the power to take effective administrative action to modify the rules of handling, but instead uses "jawboning." That indicates weakness and .....portends trouble.
"Jawboning" in the mortgage case is his way of distancing himself from the problem---a problem that he cannot distance himself from since the Treasury supervises or.....should have supervised....the industry.
In fact.....over the past 30 years whether it has been the savings and loan industry in the 80's, the bond fiasco, the stock market crash, the techno bubble, or the current situation---- money.....special interest campaign money has impaired the proper functioning of our government in the financial sector.
For years, the government has been trying to weaken the barrier between banks and the stock brokerage industry---the Glass Stiegel Act of 1933. To the extent that they have weakened this barrier, banks too have become vulnerable to the downdraft of bundled mortgage products they are financially tied to.
So---the problem: Right when we need effective decisive action from our government we get just "jawboning." Kinda like we got with Hurrican Katrina.
Today the stock market seems to be responding to the "jawboning."----and seeing right though it. That is how I see it.
Stay tuned.
Last weekend I went to Wisconsin Dells to join my editor brother in a doubles game of tennis with two younger...and faster tennis players. My bro and I only had age and .....whatever wisdom we called "experience" to work with. Speed, vision and deft of hand has been slipping for some time. O.K. You understand the situation we were in.
It was a furious paced game with lots of net play. Just the kind of game Denis and I have always loved. At a critical point, Denis hit from the baseline a direct ball toward the opposing net player, who hit it with his backhand, and popped a weak lob in the air, which I smashed for a winner.....one of the few of the day for me.
As I walked to the other side of the net, celebrating, I cheered my bro on and said, "Let's go big guy.....they may be losing their arm strength."
On the next play, the opponent smashed the ball at me and although I was ready for it, it came on the backhand and I blew the shot. The "Jawboning" had worked. I had the shot I wanted....just not the skill needed.
So------"Jawboning" as a rule of thumb is always the mark of weakness.
Think of President Bush "jawboning" the mortgage industry to "work with" the holders of the mortgages that are going to be set to new higher interest rates---over a million of them this coming year. He has the power to take effective administrative action to modify the rules of handling, but instead uses "jawboning." That indicates weakness and .....portends trouble.
"Jawboning" in the mortgage case is his way of distancing himself from the problem---a problem that he cannot distance himself from since the Treasury supervises or.....should have supervised....the industry.
In fact.....over the past 30 years whether it has been the savings and loan industry in the 80's, the bond fiasco, the stock market crash, the techno bubble, or the current situation---- money.....special interest campaign money has impaired the proper functioning of our government in the financial sector.
For years, the government has been trying to weaken the barrier between banks and the stock brokerage industry---the Glass Stiegel Act of 1933. To the extent that they have weakened this barrier, banks too have become vulnerable to the downdraft of bundled mortgage products they are financially tied to.
So---the problem: Right when we need effective decisive action from our government we get just "jawboning." Kinda like we got with Hurrican Katrina.
Today the stock market seems to be responding to the "jawboning."----and seeing right though it. That is how I see it.
Stay tuned.
"The Limbo Rock"--or when to Buy
One always wonders when there are large stock market corrections.....when the "Limbo Rock Rule" applies. When to buy.
Usually you can see lots of stories by financial professionals these days with various theories. Usually they are based on a large....very large perspective.
I like to look at it from a very small perspective. Where there are entry level workers, A, married to entry level workers, B, who desire to purchase a home, C, -----How much do their wages have to be increased to allow them to qualify to purchase that home at fair value, using traditional mortgage ratios?
Just reflecting on that question brings one pause as to what percentage house prices might have to fall....... and on the other hand,....... how much wages might have to be increased to allow traditional lending to be restarted.
This equation and question will not be discussed in any of the pundit articles today, and yet, until it is discussed, nothing will be solved.
That is how I see it. From the small perspective of my world.
And you?
You make the call.
Usually you can see lots of stories by financial professionals these days with various theories. Usually they are based on a large....very large perspective.
I like to look at it from a very small perspective. Where there are entry level workers, A, married to entry level workers, B, who desire to purchase a home, C, -----How much do their wages have to be increased to allow them to qualify to purchase that home at fair value, using traditional mortgage ratios?
Just reflecting on that question brings one pause as to what percentage house prices might have to fall....... and on the other hand,....... how much wages might have to be increased to allow traditional lending to be restarted.
This equation and question will not be discussed in any of the pundit articles today, and yet, until it is discussed, nothing will be solved.
That is how I see it. From the small perspective of my world.
And you?
You make the call.
"Sipping Ice Water"
Saturday, September 22, 2007
During Times of Crisis----Drink Ice Water
It was the stock market crash of 1987. On the telephone squack box the senior brokers from New York were advising the younger brokers not to jump----in our office, as I looked around I saw all the older brokers sipping ice water. It was no time for nerves now. Use lots of ice. Stay cool.
The last time I had seen such ice sipping was in the room of a patient close to death who could only sip ice water.
So---sip ice water. Stay cool. And pray that when the opportunity for decisive action comes you will have the cool to make the clear headed decision.
During Times of Crisis----Drink Ice Water
It was the stock market crash of 1987. On the telephone squack box the senior brokers from New York were advising the younger brokers not to jump----in our office, as I looked around I saw all the older brokers sipping ice water. It was no time for nerves now. Use lots of ice. Stay cool.
The last time I had seen such ice sipping was in the room of a patient close to death who could only sip ice water.
So---sip ice water. Stay cool. And pray that when the opportunity for decisive action comes you will have the cool to make the clear headed decision.
OpEd: A bit on Fear/Greed
This sell off from the opening is bringing just a little deja vu for the Observer...... since I did trade through the Crash of 1986. The problem with the plunge overseas that triggers the market lower at the opening, is that any stop loss orders are triggered but at the lower price of market or the limit price-----It becomes a cascade of lower and lower prices as things keep going. Fear breeds on itself.
In each panic, the opposite of the panic is the greed---the bonds are going higher. ...and bond interest rates are going lower. Which means that for those who have have bonds or have mortgages, and have perfect or very good credit, one can sell the bonds at the top or look to refinance at the lower rates. So---in the market panic, there is always an opportunity to make a wise transaction on the other side--stay calm and look for it.
Click on the post for the current municipal and corporate bond rates, for various ratings and compare to last month, and yesterday. Enjoy.
Posted by Evansville Observer at 3:59 PM
In each panic, the opposite of the panic is the greed---the bonds are going higher. ...and bond interest rates are going lower. Which means that for those who have have bonds or have mortgages, and have perfect or very good credit, one can sell the bonds at the top or look to refinance at the lower rates. So---in the market panic, there is always an opportunity to make a wise transaction on the other side--stay calm and look for it.
Click on the post for the current municipal and corporate bond rates, for various ratings and compare to last month, and yesterday. Enjoy.
Posted by Evansville Observer at 3:59 PM
"The Pea Green Carpeting"---a true story
There is a philosophy of buying that one must concentrate on like a Zen monk. One must strive in all things--to reverse the pattern of human emotions.
When fear is in the street----One must concentrate on greed.
When everyone is gasping with delight on how high the stock market has gone and how much they are worth---giggling like they have been sipping fine whiskey-----
Sell.
My brother-in-law---Mark Hector--gave the family a great example when he purchased his first home in Hopkins. It was just a simple rambler---but it had been neglected....big time. The front room was carpeted in a dark pea green that made even the most ardent buyer vomit on entrance to the home.
What turned overyone else off---got Mark excited. He could visualize the new gold carpeting and the fireplace roaring and his wife and he celebrating the remodeling.
He made the owner an offer---a ridiculously low offer. He pointed out all the things that needed to be corrected. The seller refused the first offer. That was good. Left him a little pride. Then Mark made him an offer, just a bit higher.
Bingo.
Even today, when my wife an I are out shopping or looking at homes and I see some pea green carpeting----she just smiles and says------"No way." She knows that given the killing Mark made on that home, I will always have a weakness for pea green carpeting.
When fear is in the street----One must concentrate on greed.
When everyone is gasping with delight on how high the stock market has gone and how much they are worth---giggling like they have been sipping fine whiskey-----
Sell.
My brother-in-law---Mark Hector--gave the family a great example when he purchased his first home in Hopkins. It was just a simple rambler---but it had been neglected....big time. The front room was carpeted in a dark pea green that made even the most ardent buyer vomit on entrance to the home.
What turned overyone else off---got Mark excited. He could visualize the new gold carpeting and the fireplace roaring and his wife and he celebrating the remodeling.
He made the owner an offer---a ridiculously low offer. He pointed out all the things that needed to be corrected. The seller refused the first offer. That was good. Left him a little pride. Then Mark made him an offer, just a bit higher.
Bingo.
Even today, when my wife an I are out shopping or looking at homes and I see some pea green carpeting----she just smiles and says------"No way." She knows that given the killing Mark made on that home, I will always have a weakness for pea green carpeting.
"The Plenty Rule"
While many a man would like to puke hearing women constantly go over, "Well how did that make you feel," ad nausaum, the one area that it is appropriate----is the one area that it is least applied----namely money and the sense of security or plenty.
Too often those revered financial planners---mostly men---possibly only folks that have passed some sort of exam that equates security with amounts of life insurance and mutual funds in hand--pontificate in a very abstract way that makes customers wonder---and rightfully so.
I would suggest that it is talked about in such mathematical terms since the investment in insurance and stocks is so high that one must begin at the age of 7 in order to make the numbers come out.
Phil Laut, famous author of "Money is My Friend," went over the essential rule in a Saturday morning seminar held at the St. Paul Hotel some 20 years ago. His rule was that if a person did not have a sense of plenty, even though lots of money was accumulated, that person was destined to lose it. This concept shocked me. Being a rational guy and all.
The feeling or anxiety of scarcity would cause that person to screw up and make inappropriate investments and lose. On the contrary, the person who had a sense of plenty even though poor had a better foundation for gaining a great wealth and keeping it----and being wealthy in every sense of the word.
So.
Is Plenty a feeling? Or is Plenty a fact?
You make the call.
Too often those revered financial planners---mostly men---possibly only folks that have passed some sort of exam that equates security with amounts of life insurance and mutual funds in hand--pontificate in a very abstract way that makes customers wonder---and rightfully so.
I would suggest that it is talked about in such mathematical terms since the investment in insurance and stocks is so high that one must begin at the age of 7 in order to make the numbers come out.
Phil Laut, famous author of "Money is My Friend," went over the essential rule in a Saturday morning seminar held at the St. Paul Hotel some 20 years ago. His rule was that if a person did not have a sense of plenty, even though lots of money was accumulated, that person was destined to lose it. This concept shocked me. Being a rational guy and all.
The feeling or anxiety of scarcity would cause that person to screw up and make inappropriate investments and lose. On the contrary, the person who had a sense of plenty even though poor had a better foundation for gaining a great wealth and keeping it----and being wealthy in every sense of the word.
So.
Is Plenty a feeling? Or is Plenty a fact?
You make the call.
"Volatility"---the song
(Ed. note: Click the post for some information on Gas Spot Prices compliments of Platts.)
Some years ago, I had the pleasure of working in a brokerage firm, and while I was selling conservative bonds and stocks, the gentleman in the office next to me, Elvin R, was a very heavy options player. Mostly the S&P 500 options. In that option, on very volatile days, one could lose thousands in just a few minutes.
Whenever there would be an extreme period of volatility, Elvin would go to the entrance of his office, and intone " VoLLLa TiLLLLa TTTTT". Just that short one word song would put terror in the hearts of rookie traders, including myself.
If you review the chart of natural gas spot prices in the past year, it resembles a very high tent. In summary, the natural gas prices have spiked from $6 a 1000 btu to $16 a 1000 btu and then back to $6. Why does this matter to you?
Each fall, school districts have to plan ahead. They lock in an option but that price only locks them to January, when they have to lock again. For safety sake because it might go higher and they have only so much money.
The problem is that with the lack of regulation currently, with the locking process, the tent indicates to this Observer that schools, kids and taxpayers may be getting ripped off. The governors of Minnesota and Wisconsin have called for an investigation. So does the Observer.
The Observer thinks that school districts should be able to have enough regulation in matters of natural gas pricing so they do not have to pay excessive amounts for a product and be held hostage to speculation. This may bring back memories of Enron. Yes, and other energy trading schemes.
This especially rubs The Observer when school districts have to make cuts that in fact might not have been necessary if a fair energy price had been available.
I will leave it up to the experts to decide whether the markets were the "most efficient". My gut feeling is that they were NOT.
What do you think? You make the call.
http://www.platts.com/ProductList/NaturalGas/Trader/
Some years ago, I had the pleasure of working in a brokerage firm, and while I was selling conservative bonds and stocks, the gentleman in the office next to me, Elvin R, was a very heavy options player. Mostly the S&P 500 options. In that option, on very volatile days, one could lose thousands in just a few minutes.
Whenever there would be an extreme period of volatility, Elvin would go to the entrance of his office, and intone " VoLLLa TiLLLLa TTTTT". Just that short one word song would put terror in the hearts of rookie traders, including myself.
If you review the chart of natural gas spot prices in the past year, it resembles a very high tent. In summary, the natural gas prices have spiked from $6 a 1000 btu to $16 a 1000 btu and then back to $6. Why does this matter to you?
Each fall, school districts have to plan ahead. They lock in an option but that price only locks them to January, when they have to lock again. For safety sake because it might go higher and they have only so much money.
The problem is that with the lack of regulation currently, with the locking process, the tent indicates to this Observer that schools, kids and taxpayers may be getting ripped off. The governors of Minnesota and Wisconsin have called for an investigation. So does the Observer.
The Observer thinks that school districts should be able to have enough regulation in matters of natural gas pricing so they do not have to pay excessive amounts for a product and be held hostage to speculation. This may bring back memories of Enron. Yes, and other energy trading schemes.
This especially rubs The Observer when school districts have to make cuts that in fact might not have been necessary if a fair energy price had been available.
I will leave it up to the experts to decide whether the markets were the "most efficient". My gut feeling is that they were NOT.
What do you think? You make the call.
http://www.platts.com/ProductList/NaturalGas/Trader/
The Dialectic of the News; or; The Niacin Press Process
As an admitted "news junkie" I have observed over the years that within minutes of adverse, negative news in the financial press, there is a carefully orchestrated release of stories of just the opposite persuasion to calm the waters.
If you click on the post, you will see an article by a reporter who is described as an AP business writer who tells you that the plunge of the Nikkei stock market in Japan is really no problem when one looks back to the history since 2000. This is really reassuring for the American investor who these days is heavily invested in international stocks.
If one reads the recent stories of the problem in Iran, and that Iranian finance ministers are pulling their money from the West in preparation to avoid a repeat of the problem they faced when the US froze the assets in the Jimmy Carter days, one can see that this is exactly what the US treasury does not need, folks moving money out of dollar denominated investments, and even worse, out of US treasuries. A full scale panic could cause interest rates to skyrocket. Bad for everyone.
The effect of the "niacin" press is to calm, and freeze investors. However, folks need to be aware of the risk of investment and not be frozen from appropriate action. When we are children, we might have adult folks place a hand on our shoulder and tell us "everything will be ok." When we are adults, we need to make up our own mind.
If you click on the post, you will see an article by a reporter who is described as an AP business writer who tells you that the plunge of the Nikkei stock market in Japan is really no problem when one looks back to the history since 2000. This is really reassuring for the American investor who these days is heavily invested in international stocks.
If one reads the recent stories of the problem in Iran, and that Iranian finance ministers are pulling their money from the West in preparation to avoid a repeat of the problem they faced when the US froze the assets in the Jimmy Carter days, one can see that this is exactly what the US treasury does not need, folks moving money out of dollar denominated investments, and even worse, out of US treasuries. A full scale panic could cause interest rates to skyrocket. Bad for everyone.
The effect of the "niacin" press is to calm, and freeze investors. However, folks need to be aware of the risk of investment and not be frozen from appropriate action. When we are children, we might have adult folks place a hand on our shoulder and tell us "everything will be ok." When we are adults, we need to make up our own mind.
Differences Make Markets: Or, The story of "Frug"
Some years ago when I was in the stock brokerage business, we were informed at the office that the "big kahuna" or "big boss" from Chicago was coming to the office for a review. A review of what was not made clear. He had a notorious reputation for being tough to please. We naturally cleaned our offices so it looked like we never even worked with paper. He was flying in from Italy we were told where he owned a vineyard just as a hobby. Yes, he did look a bit like Don Corleone. I was more than nervous and did not know what to expect. I wondered what we might chit chat about.
We were told to have our prediction for the best performing stock for the next year, as well as our prediction of the strongest sector and the final S&P 500 value for the year. He was to give us his view of the coming year.
When the morning arrived, we all gathered in the conference room. Then he said, " Well, let's go around the room and you each can tell me what your prediction is for the next year." As each broker stood and recited, I grew more and more impatient. I was well aware of all these guys and what they thought. I needed some answers please. I needed some guru stuff. Then I gave my speech and could relax.
When we all finished, it was time for "Frug" to speak. "Well" he said, I see you all have some real differences, and that is wonderful." There are certainly a lot of trades right here in the conference room. Dorthea loves medical, and Denis hates it; Denis likes technology and Dick hates it for next year. Dorthea loves utility stocks and I don't.
This is very healthy. In fact, these differences and your ability to see them quickly and act on them, is the very skill you need to nurture in order to be successful in this business. Do not for a moment be discouraged when you see differences. Differences are what make America great. Differences make markets!
The meeting was over. It was nothing like what I had expected. " What a waste of time ," I thought.
Over the years I have never forgotten a word of his speech, and yes I am very happy I did not go over my expertise in Boone's Farm Apple Wine.
We were told to have our prediction for the best performing stock for the next year, as well as our prediction of the strongest sector and the final S&P 500 value for the year. He was to give us his view of the coming year.
When the morning arrived, we all gathered in the conference room. Then he said, " Well, let's go around the room and you each can tell me what your prediction is for the next year." As each broker stood and recited, I grew more and more impatient. I was well aware of all these guys and what they thought. I needed some answers please. I needed some guru stuff. Then I gave my speech and could relax.
When we all finished, it was time for "Frug" to speak. "Well" he said, I see you all have some real differences, and that is wonderful." There are certainly a lot of trades right here in the conference room. Dorthea loves medical, and Denis hates it; Denis likes technology and Dick hates it for next year. Dorthea loves utility stocks and I don't.
This is very healthy. In fact, these differences and your ability to see them quickly and act on them, is the very skill you need to nurture in order to be successful in this business. Do not for a moment be discouraged when you see differences. Differences are what make America great. Differences make markets!
The meeting was over. It was nothing like what I had expected. " What a waste of time ," I thought.
Over the years I have never forgotten a word of his speech, and yes I am very happy I did not go over my expertise in Boone's Farm Apple Wine.
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