Archive for the ‘Business’ Category

Diary of a Hedge Fund Manager

Sunday, November 30th, 2014

The Book of the Week is “Diary of a Hedge Fund Manager” by Keith McCullough and Rich Blake, published in 2010. This sloppily proofread ebook is about McCullough’s passion for ice hockey, and personal experience on Wall Street in the the single-digit 2000′s.

McCullough grew up playing hockey in the Thunder Bay area of Canada. He had a dream of playing professionally, but built a career in the stock market in the United States instead.

At the turn of the 21st century, Ivy-League college connections allowed McCullough to get a job with money managers. He spent a short time at a few places, having been lured to the next place by more money. The companies were able to run legalized Ponzi schemes because they had “… access to institutional channels, corporate and state pension funds, nonprofit foundations, and university endowments, not to mention the world’s wealthiest individuals…”

Most of the hedge funds of that period engaged in poisonous groupthink– cartelizing behavior (but apparently were never taken to task by the government for price-fixing/monopolistic practices)– they all bought the same stocks to overhype them and push up their prices artificially. They “… had devolved into nothing more than highly touted engines for producing excessive compensation.”

Read the book to learn:

  • the steps McCullough took to co-found a hedge fund and how he and it fared;
  • what else he has been doing;
  • how he defines a trade, a trend and a tail; and
  • the method he uses and philosophy he espouses to sense what is going to happen in the market.

Here are two hints: He thinks closing share prices and integrity are very important.

Bonus Post

Wednesday, November 12th, 2014

This blogger skimmed “Too Late for the Festival” by Rhiannon Paine, published in 1999. This ebook recounts the expatriate experience of the author, a tech writer, at the Hewlett-Packard office in Japan starting in 1985.

Paine describes in detail the then-culture in Japan, which discriminated against women in the office. Fluent in English, “Miyuki had graduated from Keio, the top private university in Japan” and yet could get only a low-level secretarial job with H-P, where one of her tasks was to serve tea twice a day.

Paine was tolerated as a tech-writer because she was a foreigner, but was still treated as an outsider. She was on a long-term temp assignment, for which she was grossly overpaid. However, she felt unfulfilled, as the tech product was obsolete by the time she was done with her role in the project. As is typical at a lot of American companies, the boss was just giving her make-work to justify the department budget and his supervisory power.

One quirk of Japanese culture this blogger found interesting, was with regard to the commuter trains. The author was taking a train, and suddenly informed by a traveling mate that they were going the wrong way. The reason was that some commuter trains are split at a particular station so that one portion departs in one direction, and the other portion, in the opposite direction. That doesn’t happen in the United States.

Read the book to learn of many other aspects of Japanese culture, and the fate of the author.

Idea Man

Sunday, October 5th, 2014

The Book of the Week is “Idea Man” by Paul Allen, published in 2011. This autobiographical ebook’s author is best known as the co-founder of Microsoft, and one of the world’s wealthiest people.

This is not exactly a career memoir, because he gives only an overview of his eight years with the company– from which he withdrew as an employee– and the rest of the book is devoted to his other life experiences. It appears that the amount of information he chose to provide on his short tenure with the software company is insufficient to fill an entire book, so he supplements with his: investments in sports teams, stadiums and communications and aerospace companies; his medical problems; travels; musical encounters; and philanthropic endeavors.

Allen, a ten-grader in 1968, describes eighth-grader Bill Gates’ physical appearance: “…pullover sweater, tan slacks, enormous saddle shoes… blond hair all over the place…”

The two youths took full advantage of the opportunity of a lifetime to learn the craft of programming in the computer room of a private school in Seattle. They had endless capacity for the extremely time-consuming and labor-intensive brainwork required. When he had yet to turn twenty years old, Allen’s experience spanned “…ten computers, ten high-level languages, nine machine-level languages, and three operating systems.” Pretty good for a college dropout.

In the late 1970′s, affordability was a major requirement for selling personal computers, an industry in its infancy. “Today’s laptop is thirty thousand times faster than the machine [the PDP-10] I was lusting after, with ten thousand times more memory.” At that time, memory was expensive and lack of it made machines glacially slow. Today’s base iPhone has four million times the memory contained in BASIC– the programming language that ran on Altair, one of the first computers sold to businesses and consumers in the late 1970′s.

Allen said Gates was a thrill seeker, enjoyed driving fast. In the early 1980′s, “Bill got so many speeding tickets that he had to hire the best traffic attorney in the state to defend him.”

The author discussed how a technology company must always be on the qui vive for the Next Big Thing, and introduce it before its competitors in the right way with the right people, or perhaps suffer significant financial losses. In 1982, DEC came late to the party by selling the high-quality Rainbow 100. Unfortunately, the minicomputer was behind the times– running on the old 8-bit CP/M system, while a 16-bit system was already on the market.

Suffice to say on most of his investments, Allen was a Warren Buffett wannabe. He deserves credit for freely admitting to his epic losses. Nevertheless, it was just another case of redistribution of wealth among the wealthy.

Read the book to learn the details of this billionaire’s life stories.

Bonus Post

Wednesday, September 17th, 2014

This blogger skimmed “Madboy” by Richard Kirshenbaum, published in 2011. This ebook is mostly a name-dropping brag-fest.

Granted, the author does have bragging rights as an adman and did provide numerous tips on acquiring clients and maintaining good client relations, and described what it was like working in the ad industry in the 1980′s and 1990′s. But the first anecdote about a major business decision that resulted in a large financial loss, appeared almost halfway through this book. The author did gloze over a few mini-fails prior to that. However, this blogger thinks a career memoir need not put a happy face on every negative story, as though the author is in a job interview. He should be more introspective. Kirshenbaum seemed a tad insecure, and both he and his wife seemed easily starstruck. This blogger is not impressed that he has met and worked with dozens of celebrities in the last few decades.

The author recounted one amusing anecdote involving indecency during a camera shoot in Mississippi. He also made a few rather unfortunate statements:

  • Witty ads for his agency’s first client mentioned politicians famous in the 1980′s, that he said, “…captured the public’s attention, as it hadn’t seen this kind of creativity in the advertising business before.” Doubtful. There is nothing new under the sun.
  • About social networking: “…where now consumers actually control the conversation about brands and have honest and controversial conversations about a company’s brand preferences.” See http://educationanddeconstruction.com/?p=4180
  • Kirshenbaum believes American consumers are fiercely brand-loyal and “…the rise of social media (Facebook, Twitter, and YouTube) influence them.”  Again, see http://educationanddeconstruction.com/?p=4180

Read the book to learn of some of the big-name people Kirshenbaum met through the years, the campaigns and entities he spearheaded, places to which he traveled, what he learned from whom, and what became of his agency.

Bonus Post

Thursday, September 4th, 2014

This blogger was reminded of two books by Herschell Gordon Lewis (“Direct Mail Copy That Sells” and “On the Art of Writing Copy”) that contain actual facts and excellent advice, after watching this video:

This blogger thinks the above is well worth watching in its entirety.

[Warning:  some language in this video]

Bonus Post

Friday, June 27th, 2014

This blogger skimmed the ebook, “In the Name of Profit” by multiple co-authors, originally published in 1972. This depressing set of anecdotes on corporate greed simply reminds the reader that there is nothing new under the sun.

One theme is that through the 1950′s and 1960′s, big manufacturers such as Goodrich and General Motors had constructive knowledge that the products they sold were defective. Purchasers had bad experiences, and were seriously injured or were killed by those products. The companies’ attorneys and their employees rationalized that “‘planned obsolescence” meant progress. “But the meaning is clear: ‘Go cheapen the product so we can make more money.” In the case of drug company Richardson-Merrell, the product wasn’t cheapened, but rather, serious side effects were downplayed or hushed up and the results of FDA pre-approval testing were fabricated. Unsurprisingly, the company and its subsidiaries hired top-dollar attorneys skilled at helping businesses weasel out of legal trouble.

Another topic covered was Napalm, whose evolution began at Guadalcanal during WWII. “The Napalm fire bomb was deliberately designed as an indiscriminate terror weapon for mass destruction and death among civilians.” When people in Vietnam were harmed, Dow Chemical’s legal defense was bolstered by the fact that it had received orders by the U.S. Government to make the controversial product.

This ebook also discussed stock manipulation and corporate takeover. SEC laws were shown to be very lax in the 1950′s and 1960′s, as one particular perpetrator did jail time for various securities violations, but after his release, went right back to his old tricks. One Herbert Korholz repeatedly gamed the system with acquisitions. President of the Susquehanna corporation, he was able to bribe directors and officers in taking over another company with a secret tender offer of a share price higher than what was to be offered to the general share-owning public. “Profit-making firms can cut their taxes magnificently by merging with big losers…” One Maurice Schy, an attorney, attempted to make the government aware of Korholz’s unethical, unlawful and disgusting behavior, by filing lawsuits through the years, to no avail. Government officials were mired in conflicts of interest (favorable to Korholz’s interest) and ruled against Schy every time except one; a ruling was pending as this book was being released in 1972. Schy had finally gotten a possible break only because there was another case brought by another party against Korholz’s companies’ illegal activities.

In sum, we human beings are a mixed bag of evolutionary traits; altruism and greed among them. On many occasions, greed wins out, and we never seem to learn from those past occasions.

Bonus Post

Wednesday, May 14th, 2014

This blogger skimmed the book, “So Far, So Good– The First 94 Years” by Roy Neuberger, published in 1997. This is Neuberger’s autobiography. He was born in July 1903. His father was 52 at the time. He was nine when his mother died and thirteen when his father died. His sister Ruth was twelve years older than he was.

In the winter, he would ice skate on the flooded tennis courts of Columbia University in Manhattan. Neuberger inherited lots of money from his father, who had been a successful businessman. He dropped out of New York University after a year because he felt he wasn’t learning enough to justify staying to join the tennis team when permitted to– in sophomore year.

In October 1929, Neuberger worked to record stock transactions via pencil and paper for a clearinghouse. The market at that time was open for two hours on Saturday. The borrowing power allowed for a margin account in the late 1920′s was 1000% but at the time of release of Neuberger’s book, it was only 100%.

Neuberger & Berman– the investment-managing business started by the author in December 1940– bought a computer in 1967, costing $1.5 million. It needed sixty people to run it, but was worth the cost because in 1970, “… five of the ten largest Wall Street brokerage firms failed, in part because they couldn’t keep up with the volume of trading.” And the market closed at 3pm in those days.

Read the book to learn of how Neuberger, along with his contemporaries amassed tremendous wealth and privilege, and a giant collection of fine art.

Bonus Post

Tuesday, February 25th, 2014

“The Big Rich” by Bryan Burrough, published in 2009, is a long ebook that details the lives and times of the four Texas families who became extremely wealthy Americans from the oil business in the first half of the twentieth century. “They… became the country’s first shirt-sleeve billionaires… accumulated every toy of their age…” including lavish residences, private jets, boats, fancy cars and politicians (when they got into politics).

The editing of this book is a bit sloppy in spots. Nevertheless, according to this book, oil was first discovered in Texas in a well that was later named Spindletop in Beaumont, around 1901. The abundant quantity of oil found there caused a price drop that prompted a conversion from coal to oil among railroads and steamship companies. Suddenly, thousands of people sought to get rich quickly from oil, similar to the way people wanted in on the California Gold Rush. The nineteen teens saw a proliferation of automobiles requiring oil.

Read the book to learn all the details about the people, places, politics and peripheral issues (such as professional sports) associated with the oil industry in Texas over the next ten decades.

Work is My Play

Sunday, February 9th, 2014

The Book of the Week is “Work Is My Play” by Wallace E. Johnson, published in 1973.  This is the career memoir of a lifelong workaholic.

The author discusses his passion for doing business. In the 1950′s, he co-founded Holiday Inn on the concept of offering an affordable place for families to stay while they were on a road trip, with accommodations and dining that were superior to those of Howard Johnson’s (no relation to the author), the only other option at the time.

The author fondly describes the opportunistic personality of one of his business partners with a memorable anecdote. The partner grabbed his wife before she had finished her lunchtime pie (she was used to that) in order to punctually attend a government auction of land parcels in an undeveloped area. He then proceeded to win the bid on every single parcel because he knew real estate prices would rise in the long term.

Read the book to learn how the author had fun working nonstop and making lots of money.