Are You Advertising Your Irrelevance?

When we advertise whether we do it on our own or we pay for a big firm to get us into large media buys, one thing must be certain: You convey a message that can’t be taken any other way than what you intend.

Here’s an example: You wouldn’t pay big bucks for an ad buy for your big-ticket item where the goal was to demonstrate speed yet, within that very commercial one could clearly see a competitor’s product in the background going even faster.

Something like this getting by the agency or the approval committee would warrant heads to roll. Yet, in effect – the very same set up not only gets buy accidentally, but worse, one can tell where such glaring flaws had to have been signed off on.

Here are two examples that have been rolling on my television screen for a while now and every time I see them I just cringe thinking,”Who is the brainiac who thought this was ready for prime time?”

One is local the other is a world brand which proves this happens across all businesses. No one is immune. Only you can help in making sure it doesn’t happen too you. For nothing hurts more, or leaves a scar more visible, than that self-inflicted moment of “Oh man, how did I let that happen!”

The local ad: We have an ad running for a local eye doctor that for all intents and purposes helps people with a specialty in eye wear: as in glasses. The ad goes on about their selection of frames, their attention to detail in the fit and finish. Then the ad ends with a supposedly satisfied happy customer. However, the happy customer (an attractive young lady) in an isolated shot looks into the camera and states: (I’m paraphrasing) “When I chose my glasses I went only to one place (location here) and even though I’m wearing contact lenses now, when it came to my glasses I was very satisfied.”

If you just went “huh?” and re-read that line. Yep, that’s correct. In an advertisement as “the place to go” to get your glasses. The satisfied customer is so satisfied she’s not wearing any glasses. Even though the commercial is about selling glasses. You can’t make this stuff up. And remember – someone (and that someone has to be the owner of this establishment) believed (or was talked into) this was a great idea.

The national ad: You have probably seen this one however I wonder how many of you have noticed what I just can’t get my head around that no one at both the company, as well as the agency, was making the case just how irrelevant they are. The commercial is for Buick™.

The catch phrase or line is, “That’s not a Buick!” or, “I’m in the Buick.” Where? “Right here in front of you!” Where?

Here’s the punchline as I see it: No one in the commercial can believe, recognize, or find the Buick when right there on the grill is the emblem logo prominently displayed on the front of the car that in some ways is so big, well – It’s the size of a Buick!

Yet no one knows what it is or stands for because even though it’s right there in front of them – they can’t find or recognize the car, nor the brand itself. Again, you can’t make this stuff up.

Advertising can be a very expensive proposition. But what can turn expensive into costly is when it does the exact opposite of what was intended. And if you’re paying the freight, it’s your job to ensure that the ROI of an ad buy – doesn’t cost you in places you never intended.

© 2014 Mark St.Cyr

F.T.W.S.I.J.D.G.I.G.T.

(For those who say I just don’t get it…Get this!)

Nothing brings on the chance for people to point fingers, or sing like schoolchildren the old, “Nah, nah, na, nah nahhhh!” when you’re in the public eye faster than saying one thing – and having the opposite happen.

I can not begin to count just how many people I know, (let alone only vaguely familiar with) that are looking at the financial markets today as they rocket higher wanting me to explain myself. My initial response almost to a person was, “What do you mean me? Ask your financial adviser!” That’s when I could see (if not feel through an email) the absolute frustration many are having.

All kidding aside, it is with good reason they’re upset. In actuality many are coming around to an all too frightening idea that many of the people they’ve listened to (or been advised by) as well as the explanations they have relied on as “fact” is dissolving right before their eyes. They are beginning to see for themselves 1+1 is not adding up to what they’ve been told.

They knew it should be 2, but have allowed themselves to be lulled into it equaling “whatever” as long as that “whatever” was more than it was before. The “whatever” was then OK. But now? Not so much. And they can’t make heads or tails of it. (if you yourself fall into this category please continue reading. I’ll try to make it worth your while.)

As I write this the financial markets are once again on an absolute tear higher. Since my original post this weekend we have recovered nearly 2/3rds of all the losses over the last few weeks it less than a few days. Today alone is setting up for a 2% gain in the S&P 500™. What could be better right?

Well to start, what could be better is – if this gain was what you, or I, have believed over the years of being in business, Good earnings = higher markets. Or better yet, Great earnings = even higher markets.

So then why when some of the largest names in these very indexes report terrible earnings, and their stock prices have in effect what I described and said to watch for i.e., “trap door” like events, does the markets rise?

Easy. As I’ve said till I’m near blue in the face: “It’s all about the Federal Reserve and their interventionist policies. Not business as you or I once understood it.”

McDonald’s™, Coca-Cola™, IBM™, just to name a few tumbled in outright “trapdoor like” fashion as they reported their earning. And Netflix™? The once darling of Wall St. (and I still believe there are more to mirror this fate) seems to have been thrown under the bus, let alone left at the curb.

But what changed “bad” to “Let the good times roll?” Well to start, as I alluded previously it’s all about the Central Banks. And not just our Fed.

The initial “ignition moment” was done on Friday and then another Fed. official piled on Monday agreeing and jawboning the chorus theme of maybe QE (quantitative easing) should be extended.

Then as some of that momentum fell by the wayside Monday evening none other than ECB (European Central Bank) was reportedly getting into the game in a more dramatic fashion.

Again, what’s not to love right? Obviously the meme is intact “The Fed.’s got your back!” Great! But what does that mean for all you know about business if that’s all it is now?

For if that’s what the financial markets are currently, that is, nothing more than what a Mario Draghi, or Janet Yellen, or other official decides. If you lose money or even make money, is it now “their” fault or prowess? Because it’s impossible to be anything else. For it’s now evidenced prima facie by the very timing and movements within the markets they only respond to one thing: Not business, not indicators, not earnings, not unemployment, not housing, not ____________(fill in the blank) but the only indicator that now matters – what a Central Banker says, or doesn’t say. Period.

I just saved you about $250,000.00 and 6 years of your life in that one statement. You can now go work on Wall Street and compete with all the current MBA’s holders for you now know – all you need to know about Wall Street and the markets. Welcome to the “new normal.”

Not only that, you may just as much know more than the poor saps that are just finding this out, while just receiving their first student loan book. Harsh? Yes. Based in truth and fact? Absolutely, as far as I’m concerned.

Add onto this the fact that all day the markets have done nothing but experience major issues dealing with “breaking markets, ” “stock halts and trading halts” in the very largest of trading names. Apple™ shares itself were un-tradable due to “issues.” The list is absolutely staggering. The markets are acting as if they are suddenly switched over to vacuum tubes let alone the “‘efficient” markets they’re touted as.

For what it’s worth, I’m going to post a few headlines you won’t see elsewhere but for ZeroHedge™. They’ve been following the markets today and listing these issues at a break-neck pace, and they deserve Kudo’s. I’m not a “link type guy” however the amount of information along with the analysis should be required reading for any and all whether they be a seasoned, or a budding entrepreneur. As well as any businessperson from the global conglomerate CEO, to the solo practitioner.

Having a working understanding of the financial markets is not something to be looked upon as “work for others.” It is a must for any serious business person. For we all, one way or another, are directly correlated, as well as connected too it. Period.

To wit: Just today on ZeroHedge. Some headlines and links.

VIX Has Never Done This Before… Ever

What Rout? Stocks Have Best Day In A Year

The Magic Number Is Revealed: It Costs Central Banks $200 Billion Per Quarter To Avoid A Market Crash

 NYSE Gives Up Trying To Fix Itself

There are more however those show best exactly what is going on within these markets. You needn’t be a financial market maven to understand what is implied. You just have to be a businessperson. And if you are, just these 4 should make one’s blood run cold.

As for me many of you know I’m not a financial adviser, nor have I ever worked on Wall St. I don’t pretend to know anything more than anyone else. I’m just a business man and I know from hands on experience unicorns and rainbows have their place: in children’s books.

However, when someone wants to try and explain to me that balancing the books of a business is similar to reading a children’s novel I’ll have none of it, and I’m not bashful about calling it out either.

There is a place and a time for fairy-tales. However – there is NO place for such within the most important financial markets in the world.

Saying different isn’t storybook thinking – that’s just plain ole lunacy that even Alice would find disturbing.

© 2014 Mark St.Cyr

When Confidence Crumbles

Once again we awake to an array of seemingly contradictory news and reports across the spectrum. Whether it be Ebola, the financial markets, or just plain ordinary life in general. It seems everything is once again in turmoil.

The issue at hand is migrating from worrisome to darn right alarming. And that’s not counting the general public at large. That speaks directly to the very one’s trying to re-establish confidence.

Today, what was once presumed as “a troubling situation in competent hands.” Now appears more inline with the space between “in” and “competent” being a typo.

The confidence in the people who are supposedly, as well as supposed to be “in charge” is doing more than just dwindling. It’s crumbling in Humpty Dumpty like fashion. For no matter how they try – it too may never go back together.

Once confidence wanes, or is lost, regaining it can be just as monumental of a task than the actual crisis itself. In particular it’s in the manner of reflexive or reactive assumptions that are communicated, along with conflicting assertions made by the very people trying to instil it – that diminish it. For it too can not only feed upon itself as not helping in real-time, but rather, hurting any and all credibility moving forward.

Sometimes no amount of “rights” will affect the one impression held by the public which you made wrong. Once it’s lost sometimes no amount of words seems to help. In fact, more words can actually make matters even worse. Sometimes – much worse.

This in turn is the exact tipping point where politicians, academics, et al find themselves not only up against a rock and a hard place, but also looking down the hillside where torches and pitchforks are advancing up the once presumed impassable slippery slopes.

The more they try to calm the public with words or speeches, the less anyone listens. For they believe they knew (as well as still know) all they needed earlier. And all of that has been shattered.

In other words: All that was told to them prior acts as the very foil as to not believe anything else. Regardless be it the truth – or not.

A great example of this paradigm can be found in Taleb’s book, The Black Swan:

“When you develop your opinions on the basis of weak evidence, you will have difficulty interpreting subsequent information that contradicts these opinions, even if this new information is obviously more accurate.” -Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (2007-Random House)

Here is where things get unusually uncomfortable for both those in the positions of leadership, as well as those that are supposed to follow their guidance. For when it’s shown what you’ve told proves out to have been nothing more than an exercise in how well one can spin the specious? They wont believe you – even when you speak the truth. And there in lies the explicit danger.

Nothing in recent memory is showing just how precariously close we are in an outright confidence crisis than the memes being unraveled in dramatic fashion today.

One need look no further than the financial markets to get a dose of reality where the contagion of both Ebola as well as The Federal Reserves omnipotence is disrobing for all to see. And the picture isn’t pretty.

Suddenly what many would describe as “out of nowhere” the markets fell wiping out a years worth of gains (and for some individual stocks far more) in a matter of weeks. And for others – just days.

Then with what mirrored this “out of nowhere” interpretation; the markets bounced and rallied. But (and its a very big but) rallied to where? Higher? As in back to new all time never before seen in the history of mankind new highs as had been the case every other time? Nope.

It would seem the “Fed’s got your back” meme now means – only so far. Because what was demonstrated by anyone that cared to truly look was it was nothing more than jaw-boning for effect. And how long its effect lasts is truly up for grabs. Maybe months, maybe weeks, maybe hours, and maybe – it’s already over.

The only thing that stopped the markets from what many could see as the precipice of an outright calamity was the revelation from St. Louis Federal Reserve Bank President James Bullard with a comment where he interjected his view, (I’m paraphrasing) “The Fed. should consider delaying the end of its QE program to halt a decline in inflation expectations.”

Suddenly the markets in a headline reading, algo fueled, HFT tsunami released wave after wave of stop running buy orders sending stocks rocketing higher in such a dramatic fashion it was touted as one of “Wall Street’s best days in years.”

All because of a great economic report? A great earnings report? A great _________ ?(fill in any economic indicator you like here) Once again sorry, but no.

It was all initiated because someone at the Fed. posited in public that maybe QE should continue. All I can say to that is welcome to your new “economic indicator.”

However this indicator says more about the reality of the markets today than the picture of confidence and stability they keep trying to convey. What’s at issue is; this won’t work when it’s no longer believed by the algos, let alone anyone else.

Truth is the machines can and will be fooled – but only for so long. For it doesn’t take a programmer to realize words from a non-voting member means little more than the cause or effect of a one day headline. For unless Ms. Yellen says it – it’s now yesterdays news. Regardless of how newsworthy or market moving it seemed at the time.

We’re watching this play out and how it may portend to events coming here in the coming days with another once reliable headline market moving wordsmith, ECB president Mario Draghi.

Mr. Draghi’s market moving line of “whatever it takes” seems now to be taken by the markets in the vernacular – “What-e-ver.” For the markets in Europe are also showing signs of great unease. (Personally if I hear that supermodel Gisele wants to be paid in anything but euros? All bets are off!)

Now there are a great many people both here as well as abroad suddenly paying attention and watching their money vanish in a fashion unseen since that which shall not be named. i.e., The financial crisis of 2008.

Today many of the so-called “smart crowd” are finding themselves once again in the all too distant past of near forgotten question and answer debates with clients reminiscent of that period.

Customers will sit with expressionless faces as they wait through the never-ending platitudes of, “Invest for the long haul; This is a buying opportunity; If you loved them at the highs you should love them even more now; Stocks are on sale!” etc., etc.  Only to then hear that dreaded response that chills their blood faster than a margin call on Monday: “Sounds great…Can I have my money now?!”

I would bet dollars to doughnuts a vast majority aren’t going to take the chance let alone have the confidence as to just let their “money ride” once again. Regardless of how much “confidence” one wants to shout into the camera on a trading room floor.

Just as previous outflows show – nothing will change their minds. Many never came back to begin with, while those that still remain will themselves be looking for the exits.

And that alone poses extreme difficulties for the market as a whole in the coming weeks and months; let alone years.

Add on top of this? The never-ceasing contradictions availing themselves daily when it comes to Ebola.

It has gone from “Don’t worry, we got this!” to “Who’s got it and where?” to now “What do you mean I might get it?!!!” The confidence around this whole containment facade has crumbled so fast it’s a wonder it stood at all.

In less than a week we have gone from contained to now verified reports the actual agency responsible for that assurance of containment not only dropped the ball, but actually gave reassurance to first responders in direct contact with the first ever documented patient with Ebola on U.S. soil permission to travel via commercial air.

As much as the moniker “you just can’t make this stuff up” fits, add too this the surreal news where another of these individuals (one that actually handled samples) is now traveling aboard none other than – a cruise ship!

Officials have been falling all over themselves and answering questions with such contortion twisting phrases it would make a carnival worker blush. (that irony is not lost on me)

It is also absolutely ironic and jaw dropping that the very officials in charge of containing the spread of such a deadly disease who have stated over, and over, and over again that “banning travel or entry onto U.S. soil is not helpful in helping containment” is finding that every country they ask for permission to use their air, ground, port, whatever flat-out says: No!

Can one imagine what it must be like for the well over 1000 passengers and crew aboard that ship now put back out to sea knowing full well they were not only forbidden from disembarking for fear of contagion, but rather they now have to turn around and sail back aboard that very ship along with the possibly infected passenger!

What happens to all those people once they return? And how is this ship’s arrival going to be portrayed in all the media upon that arrival?

This will shatter people’s perception of confidence if the television news follows that white cruise ship into port in any way reminiscent of the way they followed the white Ford™ Bronco down the freeway.

How does one think this looks to all those that believed (or at the very least fooled themselves into believing) “The way to ensure containment is by not isolating us from it. That’s why we need not restrict air travel or anything else that could help inoculate us from spreading it within our own population.”

Just when you think it can’t get more Keystone Cops-like we wake to just the latest version of “are you kidding me?”

In a show of what was touted as “helping to instil confidence” it was announced the President via an executive action created the position of an Ebola Czar naming Ron Klain to that position.

Forget the left-right politics of this. That’s not what I’m talking about. What is glaringly, mind-boggling, absolutely surreal about this appointment is in the fact that by all accounts and reports he has no medical, healthcare background.

What is also being reported is that he was picked because in effect – he’s nothing more than a political insider. But rest assured he can get things done because: he knows how Washington works. Again “are you kidding me?”

In my opinion what’s needed right now if there was any chance for building on any remaining credibility or confidence would to have at the very least chosen someone channeling both the demeanor as well as the military uniform with all the accoutrements of former U.S. Surgeon General C. Everett Koop.

Why this position wasn’t demanded to be filled first before a calling for anything or anyone else has not been lost on a great many.

As bad as this blunder is in the ever-growing list of missteps, I believe there is one that shakes any last remaining confidence right into the abyss.

For one doesn’t need to know anything more than when a press conference is called by the President as to make an available photo-op session for the press to use as to help quell any and all questions or concerns. The one thing you do as your first duty as the newly appointed “Czar” is to show up!

For the picture of the President there alone without him regardless of the room being filled with others speaks more than the words conveyed by the picture itself – It screams volumes so loud one can’t ignore them.

You can be confident in that.

© 2014 Mark St.Cyr

Profiting At The Bottom Line™

This month’s focus: Stabilizing Turbulent Business Cycles

There are times when a business might think hunkering down during a raging business upheaval or uncertain business climate is prudent. That may be true in certain circumstances however, what I would argue is; this is exactly the time to also be proactive in helping current customers as well as potential in a more educational process rather than just the selling version.

Case Study: During the late 1980’s the banking crisis now known as “The Savings and Loan” crisis hit. It changed the business landscape so quick, so fast, that at times it was hard to keep one’s head about you let alone trying to make plans.

Everyone was nervous from the large-sized right down to the solo business owner. Banks were changing credit terms on the fly. Companies that were funded for daily operations via their accounts receivable found one day what was accepted and know became unacceptable and mysterious.

A figurative example would be: You had working capital loaned on 30 days of your receivables to suddenly be notified now it was only on 21 – then the next month 14 – then maybe only weeks later 7. It was absolute chaos for anyone in business let alone businesses such as the food and restaurant that lived and died via credit terms.

Outright fear from uncertainty was held by many, and with good reason. The next call or letter from your bank could mean when you hung up the phone – you hung up a “Closed” sign. Yet there were those that came out even better on the other side.

The one’s that not only stabilized but actually gained market share were those that cut through all the nonsensical aspects of trying to close sales and began working from a standpoint of offering expertise, or valuable resourceful knowledge that both customers as well as employees could make use of.

Many of us took on the demeanor of “information conduits.” We began by qualifying as well as quantifying the staggering amounts of useful and purging the useless information that we could get our hands on. Then I/we relayed openly and honestly what we believed we knew – and what we knew we didn’t.

I had prospective customers that previously wouldn’t take my calls – call me looking for information because of a referral from my actual clients telling them “they could trust what I was saying.”

Once the dust settled it was clear: The one’s that truly offered to be of service to any and all that were looking in an honest, open, and fair manner reaped the business left behind by those either too scared to say a word, or talked too much about “how scary” it was.

When things are tough – that’s when opportunity strikes. When it’s easy – anyone and everyone is doing it. But during turbulent times most either don’t (or wont) get in the batters box.  Or worse, they look for walks when they should be looking to read the stitches – and swinging when appropriate.

© 2014 Mark St.Cyr

Profiting At The Bottom Line™ is a monthly memo, which is pithy, powerful, and to the point. It focuses on innovative techniques and or ideas that you can put to work immediately in your daily or business life.

When Nothing Matters – Until It Does

It would seem to anyone that’s been in business before the financial crisis of 2008 not only had the rules changed, but rather they changed so much even Alice would find our current looking-glass far more surreal.

It also seems that it wasn’t all that long ago where one thought that maybe, just maybe, to understand the craziness around you; you needed to ever so grudgingly accept the nonsensical mindset of “bad is now considered good.”

So, you adjusted your investing theses, your business plans, your whatever as to try to navigate these  uncharted waters. Waters that emanated via the Federal Reserve opening (if not destroying) the dam and flooding the financial markets with liquidity so deep even Montana thought it had a new water view. To then suddenly all you bought into (literally) all you’ve been told. All of it – falls like the house of cards you tried to will (wish) away as if it weren’t true.

And there in lies the true crux of today. For a great many will rue the day when they bought into: “Pigs can fly,” “The markets are at these levels based on sound fundamentals,” “The Fed’s got their back,” and “Ebola is contained.”

It is astounding just how far behind the curve many are finding themselves. Suddenly, almost to a person I meet is either doe eyed, or worse, portraying signs of a deer stuck in the headlights.

Just look at these two headlines only weeks apart to give one clues as to why many they now meet appear in fact clueless:
Aug. 21st, “S&P 500 Tops Record, Nears 2,000 Amid Confidence in Fed”
Followed by:
Oct. 9th, “Top Investors See More Pain as 10% Losses Spread; S&P 500 ‘Painting a False Picture'”

Just these two latest examples put on display why one needed to be able to think clearly and not buy into the false narrative. Again, the problem is a great many are now finding their prior believing in that narrative is becoming clearer and more problematic because – they were not (or refused) thinking to begin with.

This is where everything is changing because the great masses whom many relate to as “the herd mentality” is now showing signs of great nervousness. And once this group gets spooked: It’s Katie bar the door time.

The issue that compounds this problem is what many  more are realizing and never thought possible: The very real possibility of a pandemic that can actually affect them. Not just someone on the other side of a screen (or phone). But actually – them.

Again, this is where everything that seemingly didn’t matter, or was brushed off as “never gonna happen” suddenly turns into “Wait…what?” And there are many “Wait…what?” moments compounding one on top of each other.

In less than a few weeks the markets have negated all of the gains (and then some) for 2014 as we stand today. Are 5 – 7- 10% corrections out of the blue a normal thing? Of course they are. However, what makes this one different from the others? Easy – just look at the timing.

How is it that a market corrects in a dizzying fashion when all of the “fundamentals, fairly priced, economy improving,” etc., etc. are in place as everyone’s been told ad nauseam? Unless – it was a mirage.

And what makes a mirage a glaring reality is this: The very month quantitative easing ends – so to does an ever-rising relentless “bull” market with a sell off reminiscent of earlier crises exposing for all to see prima facie the house of cards it truly is.

Again: If these markets were based on fundamentals why the need for any concern? For concern there suddenly is.

On top of this comes the compounding effect where what was once seen as improbable begins morphing to not only plausible – but probable. Fear of an actual outbreak or pandemic. e.g. Ebola.

As we stand here today many are waking to differing headlines breaking out across the web and wondering: “But how? I thought, or, we were told….”  And just like the above example with the markets – this also is where everything changes.

While the issue of “why or how” can be understood quite easily, it’s the compounding effect on one’s psyche as they look at both their financial well-being as well as their health and they cross once presumed separate paths. Where what they’ve been told no longer is in the abstract, but is both tangible, and all too real i.e., A 401K balance that suddenly is cut, along with headlines, “Dallas Hospital Worker Tests Positive For Ebola In First Person-To-Person Transmission On US Soil”

Now we have a confirmed Ebola case transmission between a care taker and patient that was not by casual contact, but rather to someone who was encapsulated “wearing full protective gear.” Along with a correction in the financial markets negating all the years gains where everyone was told “it’s a great time to be in the markets!” All in less than about a week.

For the one’s lovingly refereed to as “the herd mentality” this changes everything regardless of how the main stream media will try to push a differing narrative.

And that’s if they want to push a “don’t worry calm down” story line. For we all know “blood in the streets” sells, and what the media needs more today than yesterday is anything that sells. So I wouldn’t look for anymore rainbow and unicorn puff pieces on the markets or health concerns anytime soon.

As a matter of fact I won’t be surprised if the drumbeat of panic not only intensifies – but gets turned up to 11 by this very same band of cohorts that just weeks ago were touting: “Everything is beautiful man!”

When I first began to raise serious concerns on Ebola on just how and why the dangers that could manifest within an economy such as ours. Some regarded my thoughts as “throwing gasoline on a contained fire.”

At the time it was a fair criticism (although I stand by my article and thoughts) because many just can’t get their heads around what they themselves see as “unlikely.” Until it is shown not only as possible – but probable. To wit:

“Public Health Emergency Declared In Connecticut Over Ebola: Civil Rights Suspended Indefinitely”

That’s not hyperbole, nor is it not something as a “well that’s what they say but will never happen.” No, that’s now law, backed up with the enforcement of by any, and all means at the disposal of a government body. Period.

Suddenly everything I outlined in my last article as possibilities to ponder, or at the least; a business owners (regardless of size) need to think, understand, and be proactive as to deal with possible disruption scenarios has moved from some meaningless exercise to be done in the abstract – to the very possibility they could be realized at any given time. Regardless of geography.

An example of what I was trying to convey within this construct is this: What most don’t understand is that many of the very people who an advanced economy rely on for keeping an infrastructure running require mobility. i.e., The crisis team that fixes large-scale power outages, maintains water treatment facilities, ____________ (fill in the blank) travel from job to job. They are very specialized and usually run in teams.

What happens if an embarked team to repair a water treatment facility that is shut down due to unresolvable circumstances (for lack of critical expertise) is aboard a plane that has a similar episode as the one in Philadelphia; where a passenger prompted an entourage of hazmat suited personnel?

What if that happened in Connecticut today? And it just so happened the very people needed to repair that scenario of a water treatment facility are also aboard? Now what once seemed improbable becomes very real and a whole lot more plausible. Along with its disruption and impact to a great many more hundreds if not a thousand miles away.

Do you now still send teams or people in groups? Or do you split them up? Do you fly them on different planes? Do you fly them at all? Do you now send some via air while others go via ground transportation? Where do they stay? All at the same hotel? What does this do to once accepted costs? Can you charge accordingly? Can they pay?

All these questions are very real, and the list goes on, and on. And not just for this skill set, but for a myriad of others across an advanced economy.

As one can clearly see. It not only changes the lens of how one has to view this economy, but rather, it might be prudent to look through a whole new set of glasses.

And none of them had better be rose-colored.

© 2014 Mark St.Cyr

Welcome To A “New” New Normal Earnings Season

It’s not supposed to be like this. We’ve all been told earnings are great, corporate profits are great, analysts estimates have been rising. As a matter of fact, if one dared to question any of these metrics we were referred to as “idiots.” (And that is an actual quote.)

Today as we enter this earnings cycle we have a new phrase that I’m sure will enter the lexicon of the lay person in reference to stocks, but will send shivers down actual Wall Street’ers as they have to defend, argue, or give a smoke and mirrors story that will have a chance of being believed. That phrase will be “a trap door event.”

Wall Street loves to spout nice little catch phrases when suddenly what they thought (or told) investors should happen suddenly turns around and does something else.

Some classics? The “value trap.” This basically is said when something was a “sure thing” as to go to the moon, and all you had to do is get on the launching pad now as to be along for the ride.

Then? Squat happens. Not only does it not go up, it just sits there. However, the whole time it is burning fuel. (i.e., burning through your balance in some form of fee to sit there.) But not too worry, you’re stuck in “value.” Makes one feel all sort of fuzzy when it’s put that way is it not?

Then there’s the dreaded “Liquidity trap.”

This is where you’ll hear talking head, after talking head tout this line as the reason “you need to be in stocks!”

It used to have a strict definition pertaining to interest rates, savings, and bonds. Now it’s just a mantra to instill fear into anyone sitting on any type of actual cash as to prove they are “missing out on this wonderful bull market.”

What it really means, is that they are missing out on grabbing a fee. And that can not be tolerated. After all, it’s their sole purpose to gain a fee (ahem) I mean: Its their job to make sure “you’re not leaving money on the table.” Yes, that’s it.

Lately it has worked in this “new normal” they have told everyone is upon us. For we were all not as sophisticated to understand that other mantra – “It’s different this time.”

Well, I may not be as sophisticated as those on Wall Street, but I will make this observation. It just may be “different this time.” Only not for those that have been trying to weed through all this smoke and mirrors. Rather, for all those architects that put these houses of cards together in the first place.

Suddenly this other “trap” analogy is showing its hand and it has a great many that pontificate that stocks are “fairly valued” and other such drivel very nervous; for its implications can have a great effect on their own investing future.

For how does one explain a “trap door event” to a client, when they’ve been assured their investment thesis was on solid ground?

Nothing puts this into the correct framing and shines a spotlight brighter for all to see than the latest absolute debacle for stock recommendations from non other than the once touted “genius” of mom and pop investors (or should I use his own “home gamers” moniker) Jim Cramer of CNBC™ fame.

In my opinion, this talking head has done more damage to the individual investor who follows his dissertations or recommendations than almost any other single person.

Why? Easy – For the few that are actually left in these markets with their 401K’s still struggling or trying to understand the ups and downs. Then basically being reassured by nearly every so-called “smart crowd” talking head that the absence of downs is a product of “the new normal.” And those that say it’s not should be shunned.

To suddenly watch their investment go up – down – then out – changes the way you view a thing. Dramatically! Here’s just the latest example.

On Aug. 26th Mr. Cramer (the person who shouts at your screen to: “make sure you do your own homework!” because that’s what he does) was recommending to people why an investment in GT Advanced Technologies Inc. is the place to be. Only weeks later on October 4th it loses not 10%, not 20, 50, or even 70 – but 93% of its value in what? A “trap door event.”

Here’s a chart of what I believe will become a reoccurring theme to many more so-called “Wall Street darlings.” Welcome to the “New” New Normal earnings season.

Chart screenshot Courtesy of Zero Hedge

Chart screenshot Courtesy of Zero Hedge

You can read a breakdown along with the actual clip reported on ZeroHedge™ here. Cramer Does It Again: GTAT -93% Since Aug 26th Recommendation

At issue here is not that it’s just Jim Cramer, he was far from the only one. However, he is basically the single most recognizable figure with his main stream investing books, bells, buzzers and whistles TV show, along with putting on “investing shows” across the country on college campuses.

Along with probably single handily instilling more false confidence in many nervous moms and pops by touting the line “The Fed’s got your back!” more than any other single individual I can fathom to name.

Here’s another just because it brings more light. Here is a quote from Mr. Cramer’s Mad Dash in April:
“Cramer likes Apple but called Samsung a “great company” and stock. However, it may be difficult for U.S. retail investors to get in the name since it trades in the Korean stock market.”

That might be the best news that one might have not been able to “get in” for as of this writing the headline terms being used for Samsung™ earnings? “Implode.”

Not what other analysts want to hear being used either. For it was reported consensus estimate was around $5.2 Billion in profit. That’s quite a bit however when it comes in at $3.8 – that’s a whole lot of “value” no longer there.

As we move deeper into this earnings cycle I expect more “trap door” scenarios in some of the very names we’ve all been told ad nauseum were “fairly priced based on sound metrics and comparatives.”

The whole social media space I believe will be one of these areas hardest hit in the whole “new” new normal earnings period, based solely on the facts that “free money” will no longer be available to throw at this space as it goes away – at the very time it’s probably needed more than ever to keep it propped up.

With the Federal Reserve’s QE policy set to end this month all these “new economy” juggernauts are going to have to prove that giving away the store for “free” as to entice users, customers, and more; will have to prove they have the ability along with the quantifiable hard numbers accompanied by real “cold cash” they can pay those promised returns to Wall Street.

If this proves to be the case the term “trap door” will not be used in reference to some new gaming app available. It will be to describe serious consequences to people who assumed investing in these markets has been nothing more than a game to be played by “players.”

Just watch how fast the “players” in the world of algos and High Frequency Trading can change the meaning of “liquidity trap” when they decide – it’s not in their best interest to play.

It will take on a whole different connotation than anyone on Wall Street has been telling you.

© 2014 Mark St.Cyr

Over The Top “End Is Nigh?”

I’ve had quite a lot of feedback from both readers, subscribers, family members, and more about my most recent post on Ebola.

I was at first taken back with some of the feedback. Some were from both sides of the gambit. e.g., “I never thought about it in those terms or scenarios…” where others said, “Just what we need more gasoline on an already controlled fire…”

The more I thought about it, I could see where many were coming from. And many were valid criticisms too a point. However, many of the criticisms I found when talking to a few people were based on what they read in about the first 25% of the article.

As soon as the read the example I used involving a “nuclear power plant’s control room” they basically didn’t read any further into it and more or less just skimmed, while noticing I used other examples such as “medications” “police” and others which they immediately inferred that I was (to use an example) “nothing more than flame-throwing.”

I can understand why one might skim for it was nearly 2500 words and was basically me thinking out loud on a very important issue. And for those that have been visiting this blog for a while have come to know – this is where I don’t hold back. Here, I’m unfiltered.

Whether that’s for good or bad can only be judged by you. I tend to say what others wont, and look at business in ways others not only wont, but many will refuse to.

Again, at least one knows where I stand and too me – that’s really all that matters.

But let me get back to this post and why I wrote it as to explain something that’s very hard at times to express unless one has actually been through it.

First: No one ever thinks bad things will happen. It’s part of human nature. And in many ways it’s one of our greatest attributes of being human. If we didn’t have any trust. Or, if we thought every move would land one into jail, court, a hospital, ________ (fill in the blank) we’ld never do anything. Period.

Yet, too not look at events and understand just how fast something can turn around along with the implications for that as far “as you were concerned would never effect you,” or happens to someone else or else where. Let me give you just one small example where one would think: “C’mon that will never happen to me!” For I once felt the same way – till many of them did.

I know some are aware but for those who may be new September 11th is a little more personal in nature for me. Many don’t remember things like that weren’t supposed to happen especially after all the “security” measures instituted after the first Trade Center bombing and the attack on the U.S.S. Cole. Then to find out not only does it happen, but one of your friends is on the first plane to strike the towers. It changes the way you look at things forever.

Another: The Occupy movement takes hold. As I wrote in an article before Zuccotti Park even took hold or was even mentioned as a movement I warned of the potential dangers a business could find themselves in. Then suddenly businesses found themselves in situations that crippled many. And some never recovered from the loss of revenue because they were basically shut down for no one could (or wanted to ) get through the protesters to conduct business at their locations.

Then: it is me that receives a phone call from my wife as she is being evacuated out of her office building because of a bomb threat. The building (which just happened to be a banking building but my wife was working for a totally different company that was also a tenant) was being protested by an Occupy movement. 1000 miles away from what every one is watching take place at Zuccotti.

Receive a phone call from your loved one as they’re being evacuated for fear of their lives in a building 1000 miles away from New York and Zuccotti Park but being protested in solidarity and: It changes the way you look at things forever. (You can read my real-time thoughts here.)

Those are just two which I hope helps one to understand why I look at things the way I do. I’ve had more experiences in life which at times makes me sit and question as I stare into the sky: “Are you giving these examples on purpose? Or am I just extremely lucky/unlucky? Because I don’t know anyone else even close that can share such stories!”

I truly believe this whole Ebola crisis could take a turn for the worse. However, I am fully aware – we just don’t know. And that is fine. Yet, acting like it can’t with something that has the potential to alter a landscape just a rapidly as waking and finding your country has gone too war  – is ludicrous.

You don’t wait till you hear the bombs dropping, or soldiers fighting in your streets to then make plans. If you’re paying attention to the right things you quietly but decisively construct plans and make adjustments, so that if a worse case scenario rears its ugly head one at least has the opportunity to react proactively. Rather than being caught flat-footed.

To end this discussion let me give you the gist of one conversation that I had. This person in an attempt to knock me back on my heels stated: “And what did you do or think when the Avian flu was posing a threat? How did that all work out? All you types were scare mongering around and come to find out all the protocols they put in place worked. This will probably end the same way. Much to do about nothing”

He was my response: “You have a point and you’re also making my point. For I’m not sure by what you just said that you know, all those protocols that were put in place as to quench something like this before it starts has been reported by many media outlets they were either rescinded or they are just no longer in place. That’s why I’m more nervous than I was before.”

Here’s the PDF file pandemic-influenza-implementation for those wanting more info. Or wanting to judge for themselves.

And one last thing: No one wants to be more wrong than I do. Believe me.

© 2014 Mark St.Cyr

Why An Ebola Outbreak In An Advanced Economy Has Even Harsher Ramifications

(Editorial note: The following could be read by some as trying to be controversial for that sole purpose. That is not the intent. Its raison d’être is for the sole purpose not to spur some “thinking out of the box” it’s to remind, more often than not, “there is no box.” You might want to visit this accompanying article first to understand the rationale behind it. Or, as a follow up.)

As we sit here today the Ebola disease has now moved not only off the African continent, but has made its way past all the barriers, checkpoints, safeguards and more that we were told are “in place.” And, has been officially diagnosed in a patient in none other than one of the United States most populous areas Dallas Texas.

I needed to make that review for it should provide some insight and background as I move forward and express other thoughts. For it is important that we keep things in perspective, as frightening as they just might be.

Along with this let me put out a few details about myself so there is also some context for the standpoint of where I’m coming from.

First, I’m a businessman. I write, speak, and help business people of all shapes and sizes address issues others just either can’t, or don’t even see. That said I also have background in the understanding of government protocols in one of the most encompassing areas: food safety.

I was part of the first in the nation to be trained, certified then formulate procedures, and protocols into a documented corporate standard operating procedure in accordance with U.S.D.A. approval and oversight when they introduced its new and revised Food Inspection Service program incorporating the NASA inspired H.A.C.C.P. program.

So with that said, it is for this reason why I am discussing this issue of Ebola in the ways I am. For I am not an alarmist, nor do I want to be seen as someone banging pans in a central square with a placard around my neck stating “The End Is Nigh!”

However, what I do want to get across is what may be in store along with the evolution of that process with its possible speed. As far as I can surmise, not only is no one talking about some alarming risks. Rather – it seems no one is giving it even the slightest hint of any consideration.

Here’s what we know. We currently have what is now being referred to as “Patient Zero” in a Dallas hospital under quarantine. What we also know is by all accounts the reporting of the possible contact or spread to individuals has gone from only a handful the day of the report, to now it’s been reported over 100 people including school children and others.

Adding too this both the response and the subsequent isolation and cleanup measures have done more to instil more cause for worry – than anything resembling reassurance for control or containment.

And that’s just Dallas. Now there are reports of Hawaii, Utah, DC, and possibly others where we just don’t know yet. Again, what we do know, is that – it is here. Period. And with that comes a whole new set of lenses to view possibilities through if one wants to be active and possibly be ahead of the curve in one’s business.

The reasons and consequences to be proactive should be self manifest. This is now uncharted territory and only prudence and eyes wide open with all scenarios on the table thinking will help one self inoculate from what might be in store. Or at the least help in minimizing potential losses.

Let’s explore a few “what ifs” and understand the potential impact that the general population at large just wont understand along with what is glaringly obvious; the main stream media willfully wont address.

Currently the focus of the potential spread of this disease is on the impact of infecting a large swath of the general population at large. And that alone is a frightening aspect.

However, the problem with this thinking is that it fails to address the more relevant factors in an advanced economy. i.e., What happens when just a small yet vital minority of the population gets hit? As in – the specialized work force?

Today the focus is on what we do if a large percentage of the population comes down with symptoms, let alone the actual disease. If one is symptomatic and feared exposure is present, quarantine will be inevitable.

What if one or more of those forcibly quarantined works for say a nuclear power plant? What if they were showing signs where transmission concerns are valid and they were at work during a day, an hour, what ever?

Do you now quarantine the entire control room staff if that’s where they were? And if so – who and how do you get replacements? Not only to fill their positions, but to actually go into what many will consider a contaminated area? Can you clean it in a  timely manner? Can you clean it at all?

For those who may be thinking “Here come the fear mongers” that’s far from the case. The above example is only to get one thinking, for if I may be so bold, when I wrote “Clarifying Why’s With What If’s” a great many lined up to tell me just how foolish of a notion that thinking was. Yet, within days we had reports of possible cases, and now only weeks later, not only is it here, but we have growing concern it’s far more wide-spread than first thought.

So lets move the nuclear power plant scenario off the table for those that can’t get their heads past the implications, and move to something that can have just as much impact: Our nations port workers.

We’ve all seen the pictures of merchant ships coming in from different countries loaded to the brim with cargo containers stacked so high many wonder how these vessels even float let alone sail. And many never stop to realize, nearly everything we touch or use on a daily basis comes to us via those ships.

What else many fail to realize is all that cargo, all those thousands upon thousands of containers that are removed as well as loaded onto these vessels: is done by no more than a handful of specialized crane operators.

What if one of these infrastructure critical workers were to become ill? What’s worse – what if they were to become symptomatic where transmission was possible within the actual cab itself? Who could replace them? Who would? Just like the scenario I asked in the prior example: could you decontaminate the area as in the actual crane cab?

The issue that has so many looking in the wrong direction is that they are looking at the spread and its implications via the lens of what is viewed as a third world environment and populace.

The issue is that as horrible and as devastating of loss or infection within a population can be, the effects within an advanced population can have potential impact to millions just as fast – even though they may be hundreds of miles.

A third world populace by its very nature is more of an economically self-contained environment. In an advanced economy water alone for a million homes, or waste treatment for 6 counties might be handled hundreds of miles away by only a handful of specialized workers.

Sound hyperbolic? Fair enough, but what exactly happens to an airplane, or airline, or for that matter all the passengers when the first occurrence of a hazmat suited team boards planes and removes passengers as that which happened in Newark just yesterday becomes wide-spread?

That’s why every single case of Ebola has the potential for disruption that can effect millions in ways an advance population wistfully thinks won’t or can’t happen here.

The default way of thinking is “Well we have the healthcare expertise to deal with this.”

Well, yes that might be true. But here’s my counter: “Expertise in medicine means nothing if you have to shut down a port, power plant, police force, water treatment facility, air traffic control tower, ___________ (fill in the blank) as you wait for 21 days just to see if there’s even something to treat.”

The disruption to a population during that time can be near as devastating as having the actual virus. Again – and they can be perfectly healthy and hundreds of miles away.

What happens to our banking infrastructure if an employee was found symptomatic at a clearing center? What then?

How about our stock markets which are by all accounts 70% if not more total volume dependent on High Frequency Trading? What happens if one of these facilities or a few technicians becomes symptomatic and contagion concerns are warranted within their offices?

The havoc that one scenario alone could cause along with its own monetary contagion fears throughout the world economy has the potential to dwarf the initial impact of any actual virus.

There are other scenarios just as scary – and just as feasible .

We all can understand the potential impact at the food supply level in the where or how people react or panic if food supply lines are disrupted.

However, what happens to a seemingly well-behaved town or community if suddenly their local pharmacy can’t supply their medications because the distribution warehouse has experienced a lock-down because a dock worker was found to be symptomatic and possibly courageous?

Suddenly you would have not only routine maintenance prescription users in jeopardy (e.g. blood pressure medication, etc.) but rather in many communities just as large of a populous suddenly made to go cold turkey off some very powerful, and highly addictive medications from pain to psychotic.

These are the issues any professed business person needs to take into account and prepare for the best they can. Not later – but now.

Again, this isn’t to be alarmist, this is prudence, because all these scenarios are currently on the table. Whether or not they come to fruition is something we’ll all gladly breathe a sigh of relief in when warranted. Yet, as of today, anything lackadaisical in thinking, planning, and viewing all potential disruptions to one’s business would not only be foolish, but downright irresponsible in my book.

Some might be thinking “OK, but they have to be infected, or symptomatic first, and the transmission we’re being told is not that easy unless they are.”

Yes, that may be true. Again I’ll reiterate: “What if the people critical to certain infrastructure needs is fine, has no issues, but ( and it’s a very big but) lives in an area, or an apartment building, or has family such as a wife or child that has just been isolated as in quarantined?”

Are they going to leave their family member in what they may perceive as a dangerous environment? (Think hurricane Katrina and the Superdome™ environment for clues to back up the term “dangerous.”)

Will there be a sudden need to forcibly “quarantine in place” these highly specialized workers in the chance of an outright pandemic situation? What impact might that have?

Time flies when there are no perceived dangers. But forcibly demanding and instilling 21 days in isolation or quarantine for the purpose of locking down key personnel, away from their own families during a crisis, whether it be for water, police, distribution, technological, and more, will be viewed as imposing a life sentence in prison for those involved should the right forces cross paths at the wrong time.

And it doesn’t take a lot. Just a few of the “right” ones to send shock waves throughout an economy and the citizenry at large.

Many also forget 21 days is just about what any local supermarket has on hand for inventory at any given time. And that is when everything is going as planned. Not when the undertones of a nearing panic starts to take hold.

Most people living in today’s day and age of an advanced economy have forgotten that with all those advancements we’ve made – we’ve also created some weaknesses as well as strengths.

One of those flip sides of “strength” is the weak point of disruption in a “just in time” inventory market place. Or to put it more succinctly: Many times what you perceive as being in a backroom of an establishment for reserve inventory is not only not in the backroom – there is no backroom.

What you may pick off a shelf might not have even been in the same state let alone store just days prior. Inventory management along with modern distribution channels give the seamless impression there is always more at the ready. But that’s not the reality. And it doesn’t take anything more than a power outage, or weather related event to remind one of this fact.

I’m not saying you need to be hunkering down in some spider hole waiting for the end of the apocalypse. However, what I am saying is that whether you’re a solo practitioner, or the CEO of a Fortune 500™ or even a Fortune 50™: to not be sitting down with key personnel and opening up discussions of thoughts and asking tough and pointed questions on the how’s or if’s that can transpire to effect your business and formulating plans to the best one can as to possibly deal with known variables is not only foolish, it’s down right lunacy.

Let me further my argument with this point. Back in early 2011 before protests and protesting took hold in the way we’ve seen of late I penned the following article:  Protests at home and abroad and what it means for your business .

This was when the first inclinations of how unrest and more were being seen in Greece. At the time no one thought they would go any further than within the Greek population for they had issues that we were told by the so-called “smart crowd” we don’t have here and as such “would not be any need for concern here.” Then the Occupy movement took hold.

Forget about all the others that have taken place since then. Now just look at Hong Kong. Imagine trying only now to formulate a plan on how to deal with the disruption if you were located or had to do business on that thoroughfare.

Not looking at the total risk and asking what impact things could have while asking relevant questions and putting into place prudent measures on the best way to deal with them as something such as this makes its way through the economy again isn’t just crazy – it’s nuts.

It’s almost as absurd as what we are now being told by the people supposedly in charge, and in control of what is currently transpiring.

You know, where you’re told at a national press conference that “It’s illogical and wrong-headed to consider quarantine or isolating the source country as to help contain this deadly virus.”

Yet, the first thing we are to do when we determine its whereabouts here – is to isolate and quarantine it as to not spread it.

Do I need say more?

© 2014 Mark St.Cyr

Average is Doomed

Anything that is close to average is not only where you don’t want your product to be, but neither do you want you job, your sales presentation, your meetings, your whatever to be “average” either.

Average is the new term for disposable. Average is the key word, or mindset, that will make a buyer decide they don’t need to hear any more of your presentation, or opinion. Average is quickly becoming the first sign of business atrophy.

Businesses, people, organizations of any kind need true expertise in this business cycle. Average was viewed as “acceptable” when only bodies were needed rather than thinking beings. Today: any position along with almost anything that fits into average, will be viewed as the first thing to be replaced or cut out all together.

This doesn’t apply to just people. This applies to systems, interfaces, education, management, online, physical locations, you name it. Anything and everything is now up for review and will be changed at rates far faster than many ever dreamed.

The opportunity to stand out, to show your value, to make the case why you are not an expense but rather an asset – is today. In this landscape.

Not when the times are easy, but when they are hard for if you can just imagine; most of your competition will not do the hard. They will do the easier; which is to complain about how hard it is. That is a losing position and will eventually lead to even worse circumstances.

You will stand out from the crowd and people will listen to your offerings if only you veer from this business chilling point alone.

People want solutions, they want help, they have needs, but what they don’t need any more of is a defeatist attitude from other businesses or people. They don’t need to hear “how tough it is for the average business or person in this environment” or more from anyone else. They’re probably telling themselves the same far more often than they’ll admit. And many are down right sick of it.

What they need is, “Here’s what I can help you achieve in this environment.” “Here’s what you should be doing to maximize X in this environment.” Or better yet, “Here’s what I need to do in this environment!” I believe you get my point.

Start from where you are, regardless of where that may be, and make the hardest commitment of any journey: The commitment to be better than you were yesterday. To move away from anything average and start striding towards excellence.

That’s all, nothing more. Just that one thing alone will propel you, and give you, the needed fuel to thrive while everyone else is just trying to “get by.”

It seems so simple, so small an act. Yet, it’s usually the smallest of acts that set the course for where the journey needs to go. And while everyone else is waiting for their next “big break” you should be engaged in doing the little things first – that make those breaks appear on command.

© 2014 Mark St.Cyr

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