Monthly Archives: May 2015

Will Wall Street ever be fixed?

When it comes to the financial industry, there is a major fallacy that exists: that Wall Street deals only with elite, rich people who deserve to lose their money, and that Mom and Pop are not directly affected by the antics and conflicted practices in the industry.

 

This couldn’t be farther from the truth. Even when Wall Street CEOs are hauled in front of Congress—as Lloyd Blankfein was amid the SEC fraud charges against Goldman Sachs, and as Jamie Dimon was after JPMorgan Chase lost $6 billion on bad trades—they try to make this argument. “We are all big boys.” “We are all sophisticated institutional investors who know exactly what we are doing.”

 
But stop and think about this for a second. Whose money is being played with anyway?

 
Look at just the recent scandals: Who gets affected when a county in Alabama trades a structured derivative with JPMorgan that goes sour, and brings the county closer to bankruptcy? Who gets impacted when a government such as Greece or Italy trades derivatives with Goldman Sachs or JPMorgan to cover up its debt and kick its problems down the road? Who ultimately loses when Morgan Stanley misprices the Facebook IPO and mutual funds lose billions of dollars of retirement and 401(k) savings?

 

For More: Will Wall Street ever be fixed?

 

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When Performance Doesn’t Matter

One of the most amusing phrases on Wall Street is “smart money.”

 
This phrase is used to describe the handful of professional investors whose abilities and foresight are thought to be so acute that they spot the big moneymaking opportunities before the average Joe Pro.

 
The smartest of the “smart money” is thought to be hedge funds.

 
A look at recent performance suggests that hedge funds are indeed extremely smart money, though not in the way that most people think.

 
In fact on average, hedge funds are no smarter about picking stocks or other investments than anyone else. In fact, they’re decidedly, startlingly worse.

 
Hedge funds are in fact shutting today at a rate not seen since the financial crisis, as many managers post disappointing returns and an elite group of firms dominate money raising.

 

For More: When Performance Doesn’t Matter

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Making money consistently. A review of the state of the art

After a few decades investing in the markets I am coming to realize that to make money in such markets you have to first and foremost think independently and be humble. You have to be an independent thinker because you can’t make money agreeing with the consensus view, which is already embedded in the price. Yet whenever you’re betting against the consensus, there’s a significant probability you’re going to be wrong, so you have to be humble.

 
Early in my career I learned this lesson the hard way — through some very painful bad bets. The biggest of these mistakes occurred in the early 80s, when I became convinced that the U.S. economy was about to fall into a depression. My research had led me to believe that, with the Fed’s tight money policy and lots of debt outstanding, there would be a global wave of debt defaults, and if the Fed tried to handle it by printing money, inflation would accelerate. I was so certain that a depression was coming that I proclaimed it everywhere. Boy, was I wrong.

 

For More: Making money consistently. A review of the state of the art

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Challenges and Opportunities in India

The good news is that unlike China, which faces structural change as it shifts from an export-driven to a consumer-driven economy, India’s growth has long been dependent on domestic demand, even as exports have risen. However, its major weakness remains infrastructure, with basic transportation, power grid and irrigation systems lagging behind those of China. In a welcome move, the government plans to increase infrastructure spending by INR1.74 trillion ($38 billion) this year and that is always welcome.

 
The better news is that unlike China and Brazil, which have witnessed an increase in acquisitions by local private equity firms, India attracts a greater proportion of foreign private equity firms. The country’s legal and governance systems have indeed long attracted private equity investors from around the world which bodes very well for us at Blackhawk.

 
Further, and since the opening of the economy in 1991, the country has seen huge improvements in both capital markets regulation and in corporate governance.

 

For more:  Challenges and Opportunities in India

Wealth Redistribution & Economic Warfare

I am appalled by the level of stupidity coming from both Washington and Main Street rationalizing that if the top 1% of income generating people out there had less, then the remaining 99% would be better off….How far this is from the truth.

 
Frankly, I believe making the 1% suddenly poorer does not make the 99% suddenly richer. In fact, it just creates an environment that will make the 99% poorer.

 
This isn’t ancient times where the obscenely rich lord keeps a cellar full of gold while his vassals starve. The wealth of today’s rich is constantly working in the economy.

 

If they put it in a bank, that provides capital that the bank can use to provide mortgage, car, and student loans to the 99% and hence improves their lot.

 

For More: Wealth Redistribution & Economic Warfare

A Serious Problem with Hillary as President

I have a serious problem with Hillary as President.

 

Why?

 

Well I am afraid she has absolutely no clue of how our economy functions and I blame her too for backing the disastrous monetary policy which has wound up being the greatest redistribution of wealth in human history. On all counts, Clinton’s generation of politicians – Democrat and “Republican” alike – have taken the greatest country in the history of human civilization and, in the space of less than a quarter century, set it down the path toward an inevitable, inexorable collapse.

 
Hillary apparently believes Obama’s delusions, too. In fact, Obama lives in his own little world of denial, saying the economy is better than ever, and apparently Clinton thinks so, too.
In previous decades, the average recovery period took about two years. Seven years into Obama’s presidency, we’re still struggling in a so-so recovery.

 

 

So if anyone thinks Hillary Clinton knows how to lift the underperforming U.S. economy out of its lethargy, they’d better think again. Her knowledge of economics is close to zero.

 

For More: A Serious Problem with Hillary as President

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Game Changer

I meet with hundreds of entrepreneurs a year…from the smart operators to the ones as dumb and conceited as a rock to the real “game changers” out to change the world.

 

I have always been particularly intrigued with this last group of people.

 

Here are some personal thoughts as to what makes them unique in their own way in case you’re still wondering what differentiates a “game changer” from the rest of us.

 

Game Changers have:

 

1. An uncanny vision – One thing that is happening today the world over is the widening gap between rich and poor. The game changer is the one who can connect the dots better and faster than most people out there and pushes the next billion people towards financial inclusion, strategically and socially.

 

2. Swashbuckling Guts – This may sound obvious but never underestimate how gutsy this special breed of people can be…. in addition to the fact that they can transmit this trait to their inner circle too creating a viral effect second to none. Their “take no prisoners” approach is indeed contagious.

 

Thank You,

For More: Game Changer

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Managing a Nonprofit is already more than a Full-Time Job

For your supporters, your organization’s blog is a window into your world. It showcases what matters to you, how you’re achieving your mission, and provides insight into the type of organization you are or want to be. Perhaps most importantly, it’s a critical marketing tool to spread knowledge of your work and the issues you prioritize to millions of potential supporters.

 
So what do you do to have your Non-profit’s message or blog at the forefront of all?

 

1. It all starts with fundraising :

Behind every successful and influential organization is a team of people finding the money to fund great work. While your blog shouldn’t only be a vehicle to support the development team, every post is a good opportunity to turn a casual observer or activist into a donor. Make sure your blog contributors – whether within or outside your organization – are fully aware of this. After all, money is the fuel of it all.

 

For More: Managing a Nonprofit is already more than a Full-Time Job

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