10 Things Wall Street Believes

Check out the full article by Jeff Cox, a finance editor at CNBC.

http://www.nbcnews.com/business/markets/10-insane-things-wall-street-really-believes-n233241

The gist of the story is that while we may have been told by various sources that the markets, particularly the financial markets, are efficient--yeah, not so much. We can go into a defense of the markets as the best thing we have, which is true, but that mechanism is often derailed by emotion.

When I was first involved in the financial business, I was told that there are only two emotions in the markets, fear and greed. Sometimes one wins, sometimes the other. The classic bull/bear. We read "analysts" telling us how the price of a stock is this or that based on, well, this or that. Others consult their Ouija board of charts and based upon those charts (and I suppose a few tea leaves), make predictions as to when and how much.

Below is the list of Ten Insane Things Wall Street Really Believes.

1. Falling gas and home heating prices are a bad thing.
2. Layoffs are great news, the more the better.
3. Billionaires from Greenwich, Connecticut, can understand the customers of JC Penney, Olive Garden, Kmart and Sears.
4. A company is plagued by the fact that it holds over $100 billion in cash.
5. Some companies have to earn a specific profit—to the penny—every quarter but others shouldn't dare even think about profits.
6. Wars, weather, fashion trends and elections can be reliably predicted.
7. It's reasonable for the value of a business to fluctuate by 5 to 10 percent within every eight-hour period.
8. It's possible to guess the amount of people who will get or lose a job each month in a nation of 300 million.
9. The person who leads a company is worth 400 times more than the average person who works there.
10. A company selling 10 million cars a year is worth $50 billion, but another company selling 40,000 cars a year is worth $30 billion because it's growing faster.

Yogi had it right. Predictions are hard, especially when you're talking about the future. Just discovered, via the Google machine, that this sentiment has been attributed as well to Niels Bohr talking about quantum mechanics. Too bad it appears to be apocryphal because it says a lot.

 

Snarky observation: surprised that Mr. Cox is an editor. From the looks of a lot of articles on the internet, didn't know they bothered with editing.

Bob Kerrey

Bob Kerrey attended the University while I was there and went off to Vietnam. Served as governor of Nebraska and Senator for many years, with distinction.

Given my fascination with aphorisms, sayings and quotes, there are two of his that make my list:

1.     When asked about his relationship with actress Debra Winger who filmed part of the movie "Terms of Endearment" in Lincoln, he said, "What can I say, she swept me off my foot," alluding to the fact he lost his leg in Vietnam.

2.     As a SEAL team officer, he admitted many years later to the killing of innocent Vietnamese in an incident for which he actually received a medal. The guilt he carried was profound, but he said something even more profound, "I am NOT the worst thing I have ever done."

That latter quotation is food for thought. Many otherwise qualified people are discouraged from running for office in this country because of the intense scrutiny they and their families will encounter. Should muck-writing in the "National Enquirer" be the lid on our bucket of candidates? A guy who got a DUI as a young man? Somebody who declared bankruptcy? A woman who divorced and married her lover?

Food for thought.

Killer Bureaucracies

A friend recently referred me to an article in the WSJ titled "Killer Bureaucracies" by Daniel Henninger, and I recommend the article as well. Just google the title.

This is my reply:

Dick,

I have long believed that business can adjust to just about any "reasonable" tax system as long as you don't change it all the time. When I first worked with customer investment portfolios, the top tax rate was 70%, and it wasn't that difficult to reach that level. Those kinds of confiscatory rates would be cause for all kinds of hand wringing and internet storms today, and it didn't sit well with people back then. But they adjusted, although the adjustments (like high-risk oil drilling limited partnerships) were sometimes worse than the disease.

When Obama was first inaugurated, the SBA bureaucracy seemed to whoop "Yippee" and swoop in with new rules that they, as bureaucrats, had longed to implement. Ever notice how a bureaucrat left to their own devices will implement rules that lessen or eliminate any work on their part? Why do educators get the hell out of the classroom and become administrators? When I worked for the utility, the measure of success was often how far from the customer your chair was located.

Maybe we could learn from China? For over 5,000 years, China has been run by the bureaucracy. For many recent centuries, that has meant delaying change to the point that China was way behind in the middle of the 20th century. Then WWII wiped out 20 million people, the Communist bureaucracy (a worthy successor to earlier versions) weakened and China has exploded into the modern world. I have no knowledge of whether that is because of or in spite of the bureaucracy, but something is working.

We so often fool ourselves into thinking that Americans possess some secret sauce that makes us superior to the rest of the world and comfortable in our arrogance. Well, part of that secret sauce has nothing to do with modern Americans, especially those of us who vote for politics of failure. A lot of our wonderful country and way of life is due to an accident of history that placed a few really talented people with power, intellect and an enlightened education in a spot to map the course with the Constitution, etc. The other was a marvelously rich land occupied only by a few, reasonably defenseless aborigines ready to be exploited.

So, yes, don't we all agree that the system is pretty much broken.

Now for the important stuff--Go Royals.

Bob

I don't like making plans for the day. Because
then the word "premeditated" gets thrown around in the courtroom.

Royals II

Wow. Three game sweep of the Angels who had the best won/lost record in baseball this year. The team that led the majors in runs scored, power hitters galore. Against the only team in decades to hit fewer than 100 home runs all season (the Royals hit 95).

On paper, this shouldn't have happened. In baseball (and life), "on paper" isn't a sure thing.

On to face Baltimore. Maybe we can deliver the same kind of karma as when Danny, Tommy and I saw them last year at Camden Yards and the Royals won.

Let's see, the managerial skill of Buck Showalter vs Ned Yost. Boy, that's a tough one, lol.

Great stuff, been waiting a while. Go Royals.

Why?

I think I have asked this before, but nobody answered.

Why do smoke alarm batteries always fail in the middle of the night?

And then the intermittent chirp, like trying to find a cricket in the basement.

If it is just one of those rules of the universe, I guess I'll have to accept what I can't change. But lemme go on record as objecting. Vigorously.

Royals

The Royals are playing in October! The game finished in October, Eastern Time, but I think it was just short of midnight in Kansas City.

Never mind, they won the one-game elimination wild-card game over the Oakland Athletics by a score of 9-8. They came back from a deficit of 3-7 and pushed it to 12 innings.

Crazy. This is the first of years of post-season play, we hope.

End of Summer

Traditionally, and for good reason, Labor Day is the signal that summer is over. But the weather in Virginia doesn't know that, and here it is, the end of September, and the trees haven't turned yet.

The days are getting much shorter and although it is still mid to upper 70's, perfect weather, there is a hint of nostalgia. Took this pic last Friday at the end of the day.

Times are good.