Day: November 11, 2014

Is Wall St. Now Just A Form Of Legal Gambling?

It’s really hard to tell the difference when one looks at the markets today to see any real difference from that of the floor of any casino.

For all intents and purposes financial shows seem to be more concerned with showing great legs on-screen as much as some sports broadcasts are pushing to have their female equivalent commentating from the side lines. What’s next – a cheer-leading squad of scantily dressed talking heads waving pom-poms every-time the camera pans? Sorry, I forgot…That’s CNBC™.

I find it almost uncanny in just how the once bastions of free market capitalism are morphing into both the look and feel of today’s casino. If you look at the myriad of assorted slot machines on a casino floor one can’t help but notice that all the lights and sounds with their inner entangled games within games seem to have all the color pallets and changing graphics of most trading screens.

“Look! You got three gold bars, Oh so close to the winning combination, but wait – here comes the free bonus round where you can win a great second chance. Just watch the screen above to see if you get that winning combo!”

Is it really all that dissimilar from today’s day-trader locked in their basement or “trading room” in the dark with screens flashing multicolored candlesticks with “alerts” ringing and buzzing to alert one “the three gold bars” have just been hit. So look to your other screen and see if the 50 MA crosses the 100 MA and claim another prize!”

Whether it’s on the trading floor or in one’s own trading room there will be at any time from one to multiple television screens showing the “box scores” ticketing across the screens from multiple sources with pre/post game analysis, game players, handicappers, et al touting exactly when, where, and how the next big game is about to unfold or has ended.

Who needs football, or basketball and all the others when the stakes for handicapping the Federal Reserve Bowl is about to take center stage at any given time?

Whether you sit directly at a casino table, or you sit at your own virtual one. The same sort of rules apply: Sure your playing against other players, but you’re all playing against the house.  And today that house is Wall Street where the actual bank is now solidly owned by Central Banks.

The equivalent of floor managers are the direct dealers of Treasuries with the keys to the “discount window.” Pit bosses are the regulatory agencies. And the croupier? Fill in you favorite discount brokerage firm ___________ here.

Nowadays more and more it seems everyone is only truly betting on one outcome or the other: Will the Fed. do this? Or will the Fed. do that?

Who cares about what it means to things like the economy, and more. All that’s cared about now is the “win.” i.e., Do they keep interest rates at near zero for another month or not?

Who needs to wait for a Super Duper Bowl-arama type event once a year when you have one you can bet on every month in the form of some kind of Fed. announcement.

Odds makers layout the spreads and more in detail via most option platforms that are available from near any discount brokerage house. These platforms now move with such swiftness as well as up to the near millisecond speed it brings a tear to the eye of book runners of yesteryear.

Banks themselves act as the “booking agents” where one can place their bet right directly into their own bookmaking brokerage platform. Just deduct it from the 401K account.  Don’t worry about the vig – “you’re a valued customer when you use XYZ’s custom platform with low, low commission rates.”

Tongue in cheek? Sure, but in reality – just how far off is it really?

Nowadays the markets have far less to do with capital formation than they do with the A or B choice of what the Federal Reserve is going to do today vs tomorrow. All one needs to do is figure if, or how, they’ll play the alpha of the move, or the beta. Can, and will, the carry trade cover the spread if it all goes against one? Will the counter-party be there to pay up? (Remember the MFS™ debacle of not that long ago?)

The only discernible difference I see from the Wall Street version of a casino it’s now so prominently become, and the one we find on some island or strip is this:

At the least, when I have a great winning bet placed on Red or Black…

The odds that someone from the house bank coming down to floor and yelling “Fire” as the wheel is about to stop right on my stop is far, far less than a Central Banker coming out touting “Well maybe we should or shouldn’t do…..” the moment the true free hand of market is about to expose itself.

At least at a true casino – they do have some level of integrity.

© 2014 Mark St.Cyr

Leadership 202

The glass half empty analogy: and why the simplistic view can not be the focus for leaders.

Whether you’re in business, politics, or some other position where your job is to lead others in a cohesive way. A term that will come to mind more often than not when issues arise is the mantra: How do you look at a problem? As the glass half empty? Or the glass as half full?

In its simplistic form we use it as to help people in understanding there are two ways to look at an issue. i.e., Things could be worse. Or, It’s not as bad as it could be.

However, as a leader you can’t take that small of a position when viewing the glass. You must distinguish the reason or reasons for why the glass is half full. In other words: Was the glass full where now there is only half left? Or the flip side: Was the glass empty, yet now it has been filled, but only half way? And one that many leaders skip entirely: Is the glass half full or empty because half is all the water there is to be found or lost?

It doesn’t take more than a glass of water to observe the job of a leader is to have far more observation and inquisitive reasoning skills than most others. It’s points like these that bear out the reasoning and understandings that fall on many deaf ears that leadership is a skill that constantly needs to be honed.

Far too many get into a leadership position and think, “Whew…made it! Guess I do know what I’m doing. So now I can just hide out here in my new fancy digs and “lead.”

The “lead” part doesn’t come with a title. Many so-called “leaders” have found themselves with their backs against the wall all by themselves when their subordinates are not only remaining on the other side of that wall – but have locked the door to make sure there’s no way the “leader” can reach them as to give further orders.

Remember that other old sage: If it were easy – everyone would be doing it.

The viewpoint, the decision-making process, along with the decisions themselves are diametrically different as to challenges facing “a glass half empty” because it’s draining as opposed to “a glass half full” because it’s filling.

You can throw in a few other variables that a great many also miss and has in itself another complete set of issues that have to be dealt with in different ways: The glass is half empty because it’s just been left to stagnate and evaporate. Along with: The glass is half full because it’s in a place that occasionally drips or pours water into it without any intervention by the glass owner.

These are not distinctions without a difference. They are radically different issues that must be addressed sometimes employing diametrically opposing remedies.

Let’s use a hypothetical example where the exact same issues can be transpiring within an organization yet, they are for two completely opposite reasons.

While both may fit into the “glass half empty” scenario. Again, the decision-making process, the way that process is conducted, the way in which others need to view the reasoning’s of the leader, along with gaining consensus and building a cohesive action plan that people will both follow and help to achieve – is very different.

Example: A company is having severe worker orientated issues that is both effecting customer satisfaction along with customer retention. Workloads per department as well as employees have been increased by as low as 25% to well above 100% in some cases.

Although the process of hiring staff is onerous the HR department makes clear they are being bombarded with highly qualified resume inquiries. It seems everyone wants to work here. Sales are up 30% this fiscal year and backlogged sales estimate the beginning of next year sales will be even higher and profit margins are good.

However, you can’t seem to hire personnel quickly enough to handle the surge. This is also causing customer orders to be riddled with mistakes causing returns, customer dissatisfaction, and customer abandonment. Yet, you’re outgrowing your present location to handle this workload and what you really need is more space to handle all this growth.

Add to this, it would seem your competition is falling by the wayside as you gain more and more market share. Sounds like a perfect problem that fits the “Glass half full” analogy. For at least these issues are from growth – correct?

Not so. This is where careful analysis, an understanding of exactly what questions are to be asked for clarification, what are the true reasons for why X is producing Y, what is to be observed and what is to be overlooked. etc, etc, is imperative.

What many “newly minted” or “book trained only” leaders will do when faced with the above listed overload rears itself – is to seek counsel or advise based solely on the above criteria.

The problems and issues seem ready for text-book solutions and procedures to follow that will be heralded as “The thing to do in these situations” from outside sources. However, it just might be the exact opposite of what is needed and will have disastrous effects down the road.

Why you say? “For these are great problems to have!” One should be optimistic for the “glass is half full!” It could be worse: there could be no sales, no expansion, little work, no one wanting to work there, and more. “These are issues one should be happy with” you might conclude.

And, you might have a point. However, what I just described in the above scenario was not caused by growth. Its causation is borne out of the exact opposite. i.e., the final gasps within a dying industry.

You can envision this scenario happening at companies during the transition from CRT television manufactures when flat screens started to take hold. Vacuum tube manufactures when transistors were first gaining steam. Video stores as entities like Netflix™ or even Redbox™ first gained acceptance. The list goes on, and on. Along with the other variables as to “why there is any water in the glass at all?” as being a very pointed question that must be addressed and understood by a leader if they are truly serious about leading.

It’s not all that hard to get people to follow you into battle if they believe you know what you’re doing and have the fortitude to address the issues in a cohesive well understood pragmatic fashion. Even if they know you might not currently know the answer to every question. It’s in their knowing that you will seek to find those answers is what gives you their trust as too lead.

What they will not do is get behind you when they instinctively know what’s really happening is the exact opposite of what you’re saying. Unless it’s to push you out in front to be used as fodder – as they run for the hills.

© 2014 Mark St.Cyr