Category Archives: Random thoughts – keeping you on your toes

Random thoughts – keeping you on your toes

Governance – an exploration

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Very generally,  governance refers to undertaking processes and practices by which others actions/activities are controlled and directed.

In effect these processes and practices start with guidelines, laws and rules  and end with enforcement to ensure they are adhered to.  For example, speed limits are a law most of us are familiar with.

This law is a governance practice intended to reduce the risk of accidents (or it represents a government money grab) . Speed cameras are one enforcement practice associated with this law.  Fines are another.

Governance, Yuk

A typical reaction to governance is distaste.  Like most things though  governance has associated pro’s and con’s.  Low levels of governance  usually result in:

  • faster completion
  • greater flexibility/ innovation
  • simpler solutions
  • lower quality
  • greater risk of error
  • inconsistency across repeated activities

Clearly high quality, consistentency and low risk are better attributes than the opposite listed above.  Yet higher governance is usually less flexible, slower and lacking creativity.

What to do?

Both approaches to governance (a lot and a little) have pro’s and con’s generally exactly the opposite.  The best way to achieve the highest results (best of both worlds) is “surprise,surprise” through a balanced approach.

Too much or too little governance is not a one size fits all balance.  It is very contextual.  For example, as an investor you probably desire strong governance to be in place around your investment.

The intent is to risk your reduce of loss.  However if the regulations are too onerous the investment can be strangled by them.  You might not lose but you might not gain either.

An example of this is Trumps approach to reducing regulations put in place during the last financial crisis.

In his view the risks mitigated by these outdated regulations have subsided in the current economy and the regulations are holding back economic and job growth.

I am not sure I agree with his assessment but the principle of balancing governance practices to get the best result really does resonate with me.

Random thoughts – keeping you on your toes

The obligatory drum solo

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In the late sixties and early seventies rock concerts typically had a 10 to 20 minute drum solo while the other musicians rested.  During this era the freeform and artistic touch were hallmarks of the heavy music scence.

The obligatory drum solo came to mind as I was wondering if I would comment on the recently announced annual Canadian Federal budget.

There is not much to comment on but like the psychedelic era drum solo, I felt the need for an obligatory comment.  It is an annual obligation, but this year I wondered if there was a point.

Spending Money you Don’t Have

The theme of the Canadian liberal government is announced as “Building a stronger middle class” but the reality is “Spending money we don’t have so the middle class in the future will be worse off (and everyone else too)”

Why does the government spend more money that it takes in revenue?  The only explanation is “because they can”.   The economic harm to furture generations and to the basic economic principles which enable our current lifestyles is insurmountable.

Unfettered spending destroys the basic model of suppy and demand ( in the long term) and is unsustainable.  I am neither against, nor for using the budget as a tool of political policy, but spending money that does not exist is unjustifiable by any rationale.

And in summary, my obligatory comment, basically the same as last year, is cut spending, raise income or both.   Think of our children, stop destroying their future.

Random thoughts – keeping you on your toes

Emerging Markets

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Less developed countries or the more politically correct term,  Emerging markets, refer to  countries that have some characteristics of a developed market, but do not meet standards to be a developed market. Frontier market is used for developing countries with slower economies than those of emerging countries.

This is a bit of a subjective classification.  What are generally considered to be obvious examples of each category are:

  • Developed – U.S., Japan, Canada, U.K., France
  • Emerging – India, Russia, Brazil, china
  • Frontier – Kenya, Cote de Ivoire, Nigeria

Capital Investment Opportunities

A colleague and I recently had a fascinating discussion about the advantages and disadvantages of investing in Emerging and Frontier economies.

The number one benefit is the opportunity for outrageous returns.  Return on capital of 1000% is not unknown – this over a short term of 5 to 10 years.

Of course the risk of losing everything is very high.  The more “frontier” the economy the greater the risk.   In short investing in emerging or frontier markets follows the basic axiom; high risk, high reward.

Mitigation

A key driver of the potential for poor results or significant losses arises from the environmental unknowns.   Things like political maneuvering, cultural norms (e.g., are bribes allowed, even expected), material constraints and so on.

My colleague suggested  these risks can be easily overcome by employing locals inhabitants or management firms who can guide your  investment past the trip wires.

My question was, why would I take these risks when my North American investment capital could return me 100% over 5 to 10 years with none of the environmental risks or unknowns?

Simply put why venture into the unknown when the known works just fine.  I guess ultimately it boils down to your appetite for risk.

 

Random thoughts – keeping you on your toes

The Sales Rant Continues

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One of the foundations of our economy is sales.  It is a very simple equation.  On one side is a producer with a product or service to sell and on the other is the consumer who needs the product or service.

When the price the producer wants equals what the consumer wants to pay a sale occurs.  No sale, no economic activity.  The buy and sell transactions can be linked in chain.

In these cases, failure to sell at the bottom of the chain can impact a long string of financial activity.  For example, the steel sales falls through, the car is not built, so no gas or oil need be purchased.

Sales are Good for All

Logically then, from this perspective, sales are good for everyone and important for a growing and/ or thriving economy.  Yet sales people have a bad reputation.

Many feel, don’t sell me, if I want to buy it I will seek you out.  The problem with this is the fact sales are a fundemental driver of our economic prosperity and the submit and hope approach really doesn’t cut it.

In short, the economy needs  sales activities and not just neccessities like food but unnecessary things like junk food sales are a key factor in vibrant economy.

Valuing the Sales Person

Over the years my wife and I have bought and sold seven homes.  We paid for the services of a professional sales person in every case (i.e.a real estate agent).

If we had not recieved value from these agents we would have stopped using them.  However, seven times without fail they helped us get better faster deals, with less effort on our part.

A service well worth paying for.  Like most I don’t like dealing with sales people, but I sure see the value.

 

Random thoughts – keeping you on your toes

Banks Sell Services – OMG what a surprise!

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The recent negative publicity afforded to the TD bank about aggresive sales practices has raised questions about Financial Services employees selling their companies products to customers.

Seriously

These stories make me laugh out loud.  The banks in Canada are not altruistic institutions, don’t kid yourself, they are in it for the money.  As a shareholder of almost every major financial institution in Canada, my view is, go for it, sell your products and services for a profit. The more sales the better.

A paid employee is complaining about their employer setting sales gaols and monitoring their progress.  And some are sympathizing with the employees and chastising the employer, really, give your head a shake.

Lets Get Real

When you ask a financial advisor for assistance, whether it is to buy insurance, get a loan or make an investment, or even just give advise, don’t kid yourself, they are not helping you out of the goodness of their hearts.

Probably, selling you a product or service (e.g., advice) to satisfy their performance goals or increase their compensation (like a commission,bonus or tip) is the prime motivator.

That is not to blanket all financial services employees with a single brush stroke.  Of course most do want to be helpful and viewed to be such.  That can after all drive both referals and repeat business ( more sales, commissions bonuses, etc).

That being said, they are still ultimately going to try and sell you something, after all that is what they are paid to do.

Am I schocked TD employees are complaining about sales targets?  Not really, getting paid while not having to work hard is probably easier.

Am I surprised that the public does not seem to be aware that employees working for a company that makes money from product and service sales are expected to be sales people?  It does make me wonder.

Speaking from Experience

Full disclosure, I worked in Financial Services for more than 37 years and sold a lot of products while providing exceptional service and I don’t feel guilty at all.  It was a job I chose and was good at.

It never occured to me to try and figure out if the customer needed the product, only if they wanted it – which really equates to need.  That is, if you want it, you need it. Who am I to question that?

 

Random thoughts – keeping you on your toes

International Day of Happiness

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March 20th is the International Day of Happiness,  unanimously adopted by  the United Nations 193 member states in 2012.  This day is intended to highlight the need to recognize the pursuit of happiness as a human right and a “fundamental human goal.”

Not New

There is no question this is a noble goal albeit not a new one.  Throughout the ages since dawn of civilization humans have philosophized about the pursuit of happiness.

Philosophers  such as Bhudda, Socrates, Confucius, Aristotle, Plato, Epicurus, Mencius, Abu Hamid al-Ghazali, and religious figures like Jesus, Abraham, Moses, and the prophet Muhammad have all comptemplared the definition of happiness, and how to achieve it in some shape an form.

My own personal philosophy of life stems from the work of plato.  I consider my happiness founded in the belief I can persue my own maximum pleasure as long as I don’t impinge on that of others.

Making it Happen

Sadly creating a worldwide environment of happiness and joy for all, while a noble objective, is hard to do.  A simple poll in my workplace today revealed few (actually I found none) aware this was International Happiness Day.

The need to declare such a day, to bring attention to the basic human requirement for global happiness is in itself unfortunate. Happiness should be endemic, the norm rather than something to strive for.

Ah, Utopia.

Random thoughts – keeping you on your toes

Figuring it out

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When making a decision we use information to figure out how to proceed.  The information is basically interpreted through one or both of two lenses.  Those perspectives are commonly classified as objective and subjective.

Objective Analysis

Taken as an adjective, as in objective analysis or objective perspective, the term refers to an interpretation of information in a way that is not influenced by personal feelings or opinions.

When considering and representing facts objectively your behaviour is described by others as impartial, unbiased, unprejudiced, nonpartisan, disinterested, neutral, uninvolved, even-handed, equitable, fair, fair-minded, just, open-minded, dispassionate, detached or neutral.

To do this, the information must not only be interpreted objectively but the sources must be objective as well.  Truly objective data cannot be tortured into saying anything.

Subjective Analysis

Again considered as an adjective, subjective analysis is
based on or influenced by personal feelings, tastes, or opinions.  In essence the opposite of the objective view.

When considering and representing the facts subjectively your behaiour can be described as personal opinions, individually based, emotionally driven and perhaps  instinctive or intuitive.

Back to Balance

A theme that runs through many of my posts surrounds the benefits derived from balanced behaviour.  Using both objective and subjective perspectives in balance is a great example of this practice (balancing opposites).

This can also be described as the Art and Science of decision making.  Founding a decision purley on logic can result in the bi-passing of moral and emotional well being .

Purely emotional views can lead to high risk and even result in the goal not being reached.  Keep in mind, the next time you are making a decision both objective and subjective perspectives add value.

Recognize when you are using each and maintain an equitable balance, this will most likely lead to figuring out the way to consistently good decisions?

 

 

 

Random thoughts – keeping you on your toes

Checks and Balances

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The law of supply and demand can act as a key behaviour control.  Action and reaction can also serve this purpose.  These two practices can be used as tools to effect change.

It’s So Unfair

I had a conversation the other day about people being mistreated.  Things like unrealistic job performance demands, little sympathy for hardship, or taking a hard line on working hours or working conditions.

Clearly wrong or harsh behaviour cannot always be corrected or resolved through a reaction or by managing supply or demand.  However, these approaches can influence change and do provide the opportunity to drive outcomes.

Whether successful or not, at least you tried.  Taking action is far more likely to achieve a result than just hoping the “luck of the Irish will prevail”.  That is, if you take no action you should expect no result.

(Side note, luck of the Irish refers to winning or succeeding at something for no apparent reason.  Like finding gold when others cannot or winning at gambling).

For Example

An obvious example of using the law of supply and demand to affect behaviour change is trade sanctions (limiting supply). In this case one group of countries might apply a trade blockade to another country to influence them to change their behaviour (e.g., stop developing nuclear arms)

At a more granular level, if an employer cuts your wage, you could just accept it but alternately you could refuse to accept the insult and provide supporting evidence of your value, (measurable evidence) and outline the impacts of losing you as a valuable resource versus some short term monetary savings.  The ability to react and how you react is up to you.

Give it a try

Next time you see unjust behaviour, try to effect a change.  What can you lose, beyond the time and effort to try.

Random thoughts – keeping you on your toes

The World is my Oyster

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I think many would be surprised at how large a number of English idioms have their source in the literary works of William Shakespeare.  A key driver of the longevity of these sayings is how cleverly constructed they are.

From the play ” The Merry Wives of Windsor” the lines,  “Why, then the world is my oyster,   Which I with sword will open. (2.2.3-4), Pistol to Falstaff”  have come to mean, I can do whatever I want in this world.

The use of an Oyster , from which, with a little effort, a pearl might be found is a very clever way to make this point.

Here is a brief list of some of the more well known sayings from Shakespeare’s works.  This is not a complete list, intended just to give a flavor of how prolific he was in this space.

  • A fools paridise
  • A foregone conclusion
  • A horse, a horse, my Kingdom for a horse
  • A sea change
  • A sorry sight
  • As dead as a doornail
  • At one fell swoop
  • Beware the ides of March
  • As pure as the driven snow
  • Et tu Brute
  • Fancy free
  • Eaten out of house and home
  • What a piece of work is man
  • Woe is me

I took this small sample from a list of 162 common sayings atributed to the Bard.  While I did not recognize all of them the majority struck me as very well known.

The beauty of these, as you can see from the examples, is how with just a few brief words, Shakespeare is able to create a clear and. compelling image which contains a strong, clear message.

And for me, a long and fruitful life awaits, the world is my oyster.

Random thoughts – keeping you on your toes

Maggies Farm

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Nobel laureate Bob Dylan (for literature)  wrote a large number of songs during his career to date (which is not over) and continues to do so.

I heard “Maggies Farm” on the radio the other day.  For some reason I listened more closely to the lyrics than I had in the recent past and transported back to the nineteen sixties (in my mind at least).

This is a basic protest song.  The line ” I ain’t gonna work on Maggie’s farm no more” sets the tone.  We are done working for the man, being driven by the esablishment.

Simply put, I ain’t going to take it no more.  Full stop.  Ah the idealism.   of youth.  I won’t say I have grown jaded but while the lyrics are still a interesting listen  (great song) the sentiment and protest value is somewhat lost on me.

Deserving of the Nobel Prize?

I was struck by the quality of the music, both lyrics and melody.  Bob Dylan has done a fantastic job of story telling throughout his life so far, whether sentimental, political or just a intriguing story I do believe the recently awared prize was fully desderved.

More interesting for me though is how my appreciation of his music seems to have grown. (I have been listening to a number of his albums again over the last several months.)

Am I influenced by the publicity and accolades he has been recieving as of late or are my musical tastes maturing?  Historically I appreciated Dylan’s music but would never have classified myself a big fan.

I think it’s probably a bit of both, regardless, I am enjoying my morphing musical tastes albeit they still seem rooted in the decades of the sixties and seventies.