Ideas

  • Is Knowing Why and How Enough?

    Over the years, I've used a number of different assessment tests on
    myself and our team. It's a great way to help people better understand
    a each other and the different forms of communication and problem solving styles we use.

    Here are several of the tests that have proven themselves time and again:

    1. Kolbe: measures a person's instinctive method of operation, and identifies the ways they will be most productive.
    2. Myers-Briggs: identifies personality styles and temperaments.
    3. StrengthsFinder: helps people uncover their talents, so they can do more of those things each day.

    090822 whytelligence logo Recently Janine de Nysschen from whytelligence introduced me to a new tool.  She helps people perform better by getting them to understand the "Why" and "How" patterns driving them. Janine believes every person has a core sense of purpose that drives their beliefs and behavior, and a logic pattern that is hard-wired into how they think and decide.

    The whytelligence process helps people discover their distinct purpose, and shows them how embracing and leveraging that can help them thrive and succeed with less effort or resistance.

    What Can You Learn from whytelligence?

    Janine's starting point was clarifying "Why" I do things. She
    identified that I like to help people see what's real (though often hidden), and then show
    them how that truth about themselves or what they are doing can help
    them. During her next step in the process, here is how she described my "How" pattern:

    090822 Making a Point

    • First, you confront positions. You listen, you observe, but then you question and you challenge.
    • Second, you re-frame the thinking. Most of the time, you do this using stories or metaphors; but sometimes you use practical experiences too.
    • Third, you reveal the new paradigm. You get people to re-state their positions in light of what you have helped them understand.
    • Fourth, you help people put it into practice. You find opportunities or tell them about options for them to use their new paradigms, knowledge, and experience.
    • Finally, you measure response.  You will try the applied intelligence, the new technique, or better way – but they have to produce a certain level of value and give you the sense of peace, fulfillment, success, etc. … or it's back to the drawing board.

    If you know me, then you probably recognize that pattern.  After she pointed it out to me, I recognize that I use it often in my business and personal dealings.  It is how I argue, and how I help people. As a coaching point, Janine points out that my first step often is to confront; and that by becoming aware of it, I can soften its delivery for greater impact.

    This How pattern also defines my work.  In many respects, my job is to decode the logic moving the markets, and to translate that into easy to follow trading systems. This makes sense and is a great fit given my Why and How patterns.

    However, Janine then asked if I ever get so focused on finding the right tool or technique to get to a better solution, that I sometimes I forget to look for an endpoint? If you know me, then you probably recognize that pattern too. 

    Awareness Is the First Step of the Next Step.

    In other words, the How pattern can become such a powerful habit, that sometimes it runs by itself.  That's interesting information to know. Consequently, recognizing that it is running is important … as are the questions: 'Does it need improvement?' and 'Would breaking-out of it serve you better'?

    And in keeping with my pattern,
    it made me think a little bit deeper. In a sense, knowing about your pattern shows you how and why you get what you tend to get.
    However, if you want to get different results, then you need to change, or perhaps transcend, your habitual patterns in a way that lets you get better results.

    Knowing your Why and How patterns can be a great first step towards making those changes happen.

    For More Info:

  • Is Knowing Why and How Enough?

    Over the years, I've used a number of different assessment tests on
    myself and our team. It's a great way to help people better understand
    a each other and the different forms of communication and problem solving styles we use.

    Here are several of the tests that have proven themselves time and again:

    1. Kolbe: measures a person's instinctive method of operation, and identifies the ways they will be most productive.
    2. Myers-Briggs: identifies personality styles and temperaments.
    3. StrengthsFinder: helps people uncover their talents, so they can do more of those things each day.

    090822 whytelligence logo Recently Janine de Nysschen from whytelligence introduced me to a new tool.  She helps people perform better by getting them to understand the "Why" and "How" patterns driving them. Janine believes every person has a core sense of purpose that drives their beliefs and behavior, and a logic pattern that is hard-wired into how they think and decide.

    The whytelligence process helps people discover their distinct purpose, and shows them how embracing and leveraging that can help them thrive and succeed with less effort or resistance.

    What Can You Learn from whytelligence?

    Janine's starting point was clarifying "Why" I do things. She
    identified that I like to help people see what's real (though often hidden), and then show
    them how that truth about themselves or what they are doing can help
    them. During her next step in the process, here is how she described my "How" pattern:

    090822 Making a Point

    • First, you confront positions. You listen, you observe, but then you question and you challenge.
    • Second, you re-frame the thinking. Most of the time, you do this using stories or metaphors; but sometimes you use practical experiences too.
    • Third, you reveal the new paradigm. You get people to re-state their positions in light of what you have helped them understand.
    • Fourth, you help people put it into practice. You find opportunities or tell them about options for them to use their new paradigms, knowledge, and experience.
    • Finally, you measure response.  You will try the applied intelligence, the new technique, or better way – but they have to produce a certain level of value and give you the sense of peace, fulfillment, success, etc. … or it's back to the drawing board.

    If you know me, then you probably recognize that pattern.  After she pointed it out to me, I recognize that I use it often in my business and personal dealings.  It is how I argue, and how I help people. As a coaching point, Janine points out that my first step often is to confront; and that by becoming aware of it, I can soften its delivery for greater impact.

    This How pattern also defines my work.  In many respects, my job is to decode the logic moving the markets, and to translate that into easy to follow trading systems. This makes sense and is a great fit given my Why and How patterns.

    However, Janine then asked if I ever get so focused on finding the right tool or technique to get to a better solution, that I sometimes I forget to look for an endpoint? If you know me, then you probably recognize that pattern too. 

    Awareness Is the First Step of the Next Step.

    In other words, the How pattern can become such a powerful habit, that sometimes it runs by itself.  That's interesting information to know. Consequently, recognizing that it is running is important … as are the questions: 'Does it need improvement?' and 'Would breaking-out of it serve you better'?

    And in keeping with my pattern,
    it made me think a little bit deeper. In a sense, knowing about your pattern shows you how and why you get what you tend to get.
    However, if you want to get different results, then you need to change, or perhaps transcend, your habitual patterns in a way that lets you get better results.

    Knowing your Why and How patterns can be a great first step towards making those changes happen.

    For More Info:

  • What If You Outsourced Your Job Overseas?

    News satire from The Onion. It is funny, well done, and like most good humor … it has an insightful kernel of truth.  This one provides a different perspective on employment and outsourcing.


    More American Workers Outsourcing Own Jobs Overseas

  • What If You Outsourced Your Job Overseas?

    News satire from The Onion. It is funny, well done, and like most good humor … it has an insightful kernel of truth.  This one provides a different perspective on employment and outsourcing.


    More American Workers Outsourcing Own Jobs Overseas

  • Capitalogix Commentary 08/02/09

    090802 Bush FlightSuit - Declaring Victory Declaring Victory Over the Financial Crisis?

    This week's news brought President Obama declaring: "We have stopped the free-fall. The market's up and the financial system is no longer on the verge of collapse. … So there's no doubt that things have gotten better." Obama also defended the bailout of the banks as a necessary measure to hold-off greater financial trouble; explaining that he inherited "the worst economy of our lifetimes." That's all well and good; yet, it reminds me of a different President who declared "mission accomplished" … just a tad too quickly.  Time will tell.  I  just hope we keep making progress.

    The Markets Have Done Well Recently.

    During the last three weeks, the S&P 500 climbed more than 10% higher on better than expected earnings.  So far over 70% of companies have beat earnings estimates.  The Dow Jones Industrial Average Index is strong too.  Here is a chart showing recent performance.

    090802 Dow Trend Strength

    What is Driving the Rally?

    Sentiment is driving the markets higher.  But, does it worry you the earnings picture isn’t actually improving?  How about that the defensive posturing by corporations evidenced by massive cost-cutting is not true organic income statement improvement?  It’s certainly not sustainable, and it’s only questionably good news.  Still, the market has continued to respond bullishly to “better than expected”.  This is similar to celebrating that the economy and consumer spending are shrinking … but less than expected.

    Markets can continue to rally in the face of logical questions about its true strength.  For proof, you can look at the following chart of Shanghai's market, which many skeptics believe is a bubble waiting to pop.

    090802 Shanghai Trend Strength

    So, are we really in a new bull market?  Or is this prolonged rally a massive trap, sucking-people-in, only to collapse back down? In my opinion, it doesn't matter.  Despite what we call it, whatever will be, will be.  What matters is how you trade it.

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Major Dow Theory Buy Signal; But Should You Take It? (Barrons)
    • Triggering an S&P 500 Buy Signal That’s Worked Since 1950’s. (Traders Narrative)
    • Ned Davis' Seven Factors to Determine a Secular vs. Cyclical Bull Market. (Ritholtz)
    • Some Promising Signs for the Economy and the Equity Market. (Dash of Insight)
    • CNBC Viewership Down 28%. Does that say something about the Market? (ZeroHedge)
    • "Cash for Clunkers" May Cost Up to $45,354 Per Vehicle. (Seeking Alpha)
    • High-Frequency Trading: A Good explanation of the Core Issues. (WSJ & NYTimes)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

  • Capitalogix Commentary 08/02/09

    090802 Bush FlightSuit - Declaring Victory Declaring Victory Over the Financial Crisis?

    This week's news brought President Obama declaring: "We have stopped the free-fall. The market's up and the financial system is no longer on the verge of collapse. … So there's no doubt that things have gotten better." Obama also defended the bailout of the banks as a necessary measure to hold-off greater financial trouble; explaining that he inherited "the worst economy of our lifetimes." That's all well and good; yet, it reminds me of a different President who declared "mission accomplished" … just a tad too quickly.  Time will tell.  I  just hope we keep making progress.

    The Markets Have Done Well Recently.

    During the last three weeks, the S&P 500 climbed more than 10% higher on better than expected earnings.  So far over 70% of companies have beat earnings estimates.  The Dow Jones Industrial Average Index is strong too.  Here is a chart showing recent performance.

    090802 Dow Trend Strength

    What is Driving the Rally?

    Sentiment is driving the markets higher.  But, does it worry you the earnings picture isn’t actually improving?  How about that the defensive posturing by corporations evidenced by massive cost-cutting is not true organic income statement improvement?  It’s certainly not sustainable, and it’s only questionably good news.  Still, the market has continued to respond bullishly to “better than expected”.  This is similar to celebrating that the economy and consumer spending are shrinking … but less than expected.

    Markets can continue to rally in the face of logical questions about its true strength.  For proof, you can look at the following chart of Shanghai's market, which many skeptics believe is a bubble waiting to pop.

    090802 Shanghai Trend Strength

    So, are we really in a new bull market?  Or is this prolonged rally a massive trap, sucking-people-in, only to collapse back down? In my opinion, it doesn't matter.  Despite what we call it, whatever will be, will be.  What matters is how you trade it.

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Major Dow Theory Buy Signal; But Should You Take It? (Barrons)
    • Triggering an S&P 500 Buy Signal That’s Worked Since 1950’s. (Traders Narrative)
    • Ned Davis' Seven Factors to Determine a Secular vs. Cyclical Bull Market. (Ritholtz)
    • Some Promising Signs for the Economy and the Equity Market. (Dash of Insight)
    • CNBC Viewership Down 28%. Does that say something about the Market? (ZeroHedge)
    • "Cash for Clunkers" May Cost Up to $45,354 Per Vehicle. (Seeking Alpha)
    • High-Frequency Trading: A Good explanation of the Core Issues. (WSJ & NYTimes)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

  • Capitalogix Commentary 07/26/09

    This video from The Economist is a great metaphor for where we are in the market.

    The Economist is one of those magazines that piles-up in my office.  I don't want to throw it out; but I also don't read it as often as I want to, or should.  I tell myself it is because I want to read it thoroughly.  Then, when I finally read them, I think that I should read them when they come in (rather than putting them in the pile). 

    Nonetheless, The Economist always seems to provoke thought, and they throw-in something funny more often than you might expect.  I like that they often talk about the "bigger" ideas … and as a trader, I too often get sucked-in by the Siren's Call of urgency and "news".

    So, this week I thought I'd write about two of the bigger ideas that the markets are provoking me to think about recently. 

    The first is how much stock to put into China's recent economic growth?  The second, perhaps related, is really a question about how much can we trust the recent rally, in light of what happened just beforehand. With regard to the second question, I'm talking about the U.S. Markets too.

    First, Let's Look at China.

    The Chinese market and economy seem to have rebounded quickly.  However, there are some signs that all might not be well behind the Great Wall.  For example, here is a chart that shows a dramatic decrease in electric power usage.  It leads to this question. Although Chinese government officials claim GDP is well, are they lying or making things out of thin air (meaning, without electricity).

    Chinese Electrical Usage May Hint at GDP

    When confronted with this inconsistency, China had a quick response; it stopped releasing that data.

    With tongue-in-cheek, here is a video where China celebrates its status as the world's biggest polluter, as proof of its productivity and prosperity.


    China Celebrates Its Status As World’s Number One Air Polluter

    Getting back to our markets, I continue to be surprised by the length and strength of the rally.  Apparently,  Artificial
    Intelligence is a good substitute for lack of the real thing. So at least
    my trading systems have been comfortably "long"… even though I'm feeling bearish.
     

    Could The Recent Rally Simply Be a World-Wide Reflex?

    090727 Sector Rotation Model At its simplest, most people try to create a diverse portfolio by trying to buy different types of assets. For example, banks, utilities, tech, staples, and cyclicals. Other classes of assets include things like real estate, precious metals, currencies, and energy. Common sense says that some things go up, while other things go down; that is called "Sector Rotation".  However, during times of economic and financial market distress, a surprising number of things move in the same direction, resulting in few safe havens. 

    This asset class correlation was prevalent during the past year.  There were days when virtually everything, around the globe, seemed to fall.  I saw unusual correlation in our trading systems, too. When the markets really broke down, the diversity we normally see in our trading signals disappeared. It is tough to be long and wrong when trading models say it is more likely that the next move is back up, but the markets keep falling.  Discipline says follow the model; but common sense says the model was designed for normal (or at least "mostly normal") market conditions … and that was not the type of market we were in at the time.

    Not surprisingly, research shows that high correlations were a result of the steep fall in market prices and investor sentiment. An interesting article about this is "Do Correlations Matter When the World is On Fire".  In addition, Felix Salmon poses a disturbing question: since we're still seeing such a high correlation, even as so many things are going up … is it possible that this is a natural artifact of the recent financial crisis, and perhaps another sign that the market is still in a time of economic and market distress. Likewise, Bloomberg points out that investors are moving in-lockstep like never before, driving up stocks, commodities and emerging markets.

    The point is this high correlation actually creates a risk of replaying last year. In other words, the herd mentality threatens to leave investors with little refuge once again. 

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Buffett’s Goldman Stake Pays Richly. (DealBook)
    • Morgan Stanley Compensation Soars to 72% Of Revenues. (Business Insider)
    • Europe Falls Behind Silicon Valley In VC Deal Flow. (WSJ)
    • Implications of High-Speed Trading Systems On Markets & Investors. (NYTimes)
    • What Went Wrong with Economics? Avoiding the Mistakes of the Past. (Economist)
    • Investors in India Bet on the Weather. (WSJ)
    • Superstition & Finance: A Total Eclipse of the Brain. (Economist)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

  • Capitalogix Commentary 07/26/09

    This video from The Economist is a great metaphor for where we are in the market.

    The Economist is one of those magazines that piles-up in my office.  I don't want to throw it out; but I also don't read it as often as I want to, or should.  I tell myself it is because I want to read it thoroughly.  Then, when I finally read them, I think that I should read them when they come in (rather than putting them in the pile). 

    Nonetheless, The Economist always seems to provoke thought, and they throw-in something funny more often than you might expect.  I like that they often talk about the "bigger" ideas … and as a trader, I too often get sucked-in by the Siren's Call of urgency and "news".

    So, this week I thought I'd write about two of the bigger ideas that the markets are provoking me to think about recently. 

    The first is how much stock to put into China's recent economic growth?  The second, perhaps related, is really a question about how much can we trust the recent rally, in light of what happened just beforehand. With regard to the second question, I'm talking about the U.S. Markets too.

    First, Let's Look at China.

    The Chinese market and economy seem to have rebounded quickly.  However, there are some signs that all might not be well behind the Great Wall.  For example, here is a chart that shows a dramatic decrease in electric power usage.  It leads to this question. Although Chinese government officials claim GDP is well, are they lying or making things out of thin air (meaning, without electricity).

    Chinese Electrical Usage May Hint at GDP

    When confronted with this inconsistency, China had a quick response; it stopped releasing that data.

    With tongue-in-cheek, here is a video where China celebrates its status as the world's biggest polluter, as proof of its productivity and prosperity.


    China Celebrates Its Status As World’s Number One Air Polluter

    Getting back to our markets, I continue to be surprised by the length and strength of the rally.  Apparently,  Artificial
    Intelligence is a good substitute for lack of the real thing. So at least
    my trading systems have been comfortably "long"… even though I'm feeling bearish.
     

    Could The Recent Rally Simply Be a World-Wide Reflex?

    090727 Sector Rotation Model At its simplest, most people try to create a diverse portfolio by trying to buy different types of assets. For example, banks, utilities, tech, staples, and cyclicals. Other classes of assets include things like real estate, precious metals, currencies, and energy. Common sense says that some things go up, while other things go down; that is called "Sector Rotation".  However, during times of economic and financial market distress, a surprising number of things move in the same direction, resulting in few safe havens. 

    This asset class correlation was prevalent during the past year.  There were days when virtually everything, around the globe, seemed to fall.  I saw unusual correlation in our trading systems, too. When the markets really broke down, the diversity we normally see in our trading signals disappeared. It is tough to be long and wrong when trading models say it is more likely that the next move is back up, but the markets keep falling.  Discipline says follow the model; but common sense says the model was designed for normal (or at least "mostly normal") market conditions … and that was not the type of market we were in at the time.

    Not surprisingly, research shows that high correlations were a result of the steep fall in market prices and investor sentiment. An interesting article about this is "Do Correlations Matter When the World is On Fire".  In addition, Felix Salmon poses a disturbing question: since we're still seeing such a high correlation, even as so many things are going up … is it possible that this is a natural artifact of the recent financial crisis, and perhaps another sign that the market is still in a time of economic and market distress. Likewise, Bloomberg points out that investors are moving in-lockstep like never before, driving up stocks, commodities and emerging markets.

    The point is this high correlation actually creates a risk of replaying last year. In other words, the herd mentality threatens to leave investors with little refuge once again. 

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Buffett’s Goldman Stake Pays Richly. (DealBook)
    • Morgan Stanley Compensation Soars to 72% Of Revenues. (Business Insider)
    • Europe Falls Behind Silicon Valley In VC Deal Flow. (WSJ)
    • Implications of High-Speed Trading Systems On Markets & Investors. (NYTimes)
    • What Went Wrong with Economics? Avoiding the Mistakes of the Past. (Economist)
    • Investors in India Bet on the Weather. (WSJ)
    • Superstition & Finance: A Total Eclipse of the Brain. (Economist)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

  • Bezos’ Video About the Zappos Acquisition

    Amazon acquired Zappos this week.  What follows is a terrific video where Jeff Bezos says he shares “Everything I Know” about business, and offers a peek inside the entrepreneurial spirit and culture of Amazon.

    The four main points are:

    Obsess Over Customers. While they pay attention to the competitive marketplace, they don’t let competitors determine what they do. Instead, it is the customer that drives their strategy.

    Invent. A critical part of what Amazon does is to invent solutions for, and on behalf of, their customers.

    Think Long-Term. Amazon strategists take a long-term perspective. They are willing to take actions that quickly offer benefits to customers, even if those actions don’t offer a pay-off for the company or its investors for five to seven years.

    It’s Always Day One. There is always a bigger future and more opportunities to invent for customers. It’s never over, or too late.

    Yes, it is a simple list.  Still, it is worth watching. 

    It gave me a sense that Amazon not only preaches these principles, but practices them as well.

    Also, here is a link to Zappos’ CEO, Tony Hsieh’s letter about the acquisition.

    And here is a link to Four Questions About the Acquisition.

  • Bezos’ Video About the Zappos Acquisition

    Amazon acquired Zappos this week.  What follows is a terrific video where Jeff Bezos says he shares “Everything I Know” about business, and offers a peek inside the entrepreneurial spirit and culture of Amazon.

    The four main points are:

    Obsess Over Customers. While they pay attention to the competitive marketplace, they don’t let competitors determine what they do. Instead, it is the customer that drives their strategy.

    Invent. A critical part of what Amazon does is to invent solutions for, and on behalf of, their customers.

    Think Long-Term. Amazon strategists take a long-term perspective. They are willing to take actions that quickly offer benefits to customers, even if those actions don’t offer a pay-off for the company or its investors for five to seven years.

    It’s Always Day One. There is always a bigger future and more opportunities to invent for customers. It’s never over, or too late.

    Yes, it is a simple list.  Still, it is worth watching. 

    It gave me a sense that Amazon not only preaches these principles, but practices them as well.

    Also, here is a link to Zappos’ CEO, Tony Hsieh’s letter about the acquisition.

    And here is a link to Four Questions About the Acquisition.