Years ago when I first began calling out what I deemed as “snake oil,” it was mainly concentrated to what is now referred to as “the self improvement/motivation industry.” Although I believe in (as well as instruct) in self improvement, as well as motivation (motivation being an internal discipline rather than an external) I have not been shy to criticize both the industry, as well as some of the players or constructs they employ.
I was one of the first to openly state the whole Left brain – Right brain mumbo jumbo was for the brain dead. All I’ll say is this; it didn’t win me any friends within the industry.
However, we now know that whole idea of “I’m a one-sided brain extraordinaire!” has been dismissed as rubbish by the scientific community via the scientific method. It’s not a “consensus” opinion. It’s a scientific fact as opposed to the pseudoscience which has perpetuated it.
Yet, that still hasn’t stopped Human Resource departments across the globe from buying some “New and Improved” version as to force down gullets in meeting rooms everywhere as they increase the effectiveness of this dribble with slide after slide in a death by PowerPoint® venue washed down with stale pastry and watered down coffee. But I digress.
So why do I bring this point up? Well, I was just sent a recent interview conducted by Bloomberg™ with one of the investors of Theranos™and it fit squarely into something else I’ve been calling out these many years: What’s behind many a “unicorn” is nothing more than a piecing together of anything which might appear believable as to hope and pray Wall Street buys it – literally.
Many of the shenanigans I’ve written or spoken about has been the literal calling out of what I see as pure – unadulterated – bulls##t.
Yes, it’s only my opinion for I have no inside information and have to make my assessments from afar just like anyone else. (anyone that is who will actually look) Yet, that said, I have a honed and practiced bulls##t meter that’s second to none. And it’s being proved out as time moves forward that many of the calls I made, about what I saw as “wait…what?” moments, were indeed worthy of pausing, as to make sure what I heard, read, or saw jived with what was being witnessed, sometimes to the absolute contrary.
I would like to take you back to just one instance as an example that wasn’t all that long ago to put more context around what I have forthcoming.
Remember when the whole Jack Dorsey controversy came up with him being CEO of both Twitter™ as well as Square™ along with the timing? That timing being Twitter on the bottom of the birdcage in stock value, and Square about to IPO hoping to soar. During that period I made the following observation. To Wit:
“This makes absolutely no sense what so ever unless: the board, as well as many investors are panic-stricken on just how bad things are behind the scenes and figured; the best they could do was to bring (or convince) a person such as Mr. Dorsey back on as CEO, spin the narrative as much as humanly possible, and pray Wall Street buys it. Literally.”
Here is where not only did I seem to get under a few peoples skin, but touched some very raw nerves. For suddenly as I predicted what was all “rainbows and unicorns” was morphing into “storm clouds and old grey mares.” Not to mention calling into question their observations or business acumen as having more of a charlatan-esque type approach, rather than anything bordering on objective.
And, once again: I wasn’t winning any friends.
As a matter of fact, such statements more often than not placed yours truly at the butt-end of some very “highbrow” twit-storms for stating such. So be it, for being proven correct in the end is always worth it. (“correct” being; hows all that, and all the other IPO’s working out? What? Too soon?)
This interview is just under 2 minutes. And it is and encyclopedia’s worth of insight for those who really want to understand what’s behind many a old-grey-mare unicorn still hoping for IPO paradise, rather, than the glue factory of M&A. That is, if the cash burn doesn’t force bankruptcy court vulture-ism first.
I implore you to watch, don’t take my word or opinion on anything. Watch, listen, and see if what you know to be true such as: their own admissions of farming out much of their testing to other vendors using generally known and accepted procedures because of their own reliability issues in their asserted breakthrough procedures, not withstanding, how its figurehead Ms. Holmes presented all those breakthroughs.
Tell me you don’t feel the need to take a shower after watching. Personally, I felt I might need to be pressure washed. I am still aghast. Welcome to “next in rotation fund manager” interviewing at its finest is all I’ll say.
If you wanted a more clear example of why people have not only left this “market” along with many of the business/financial media outlets, the above interview just about says it all. (to be fair it’s only a sampling of the whole, but it says all that needs to be in my opinion)
You can replace every-time he said “Theranos” with “current monetary policy” and “Ms. Holmes” with “Chair Yellen” and the narrative and storytelling would be about the same. Along with the push-back, or lack there of. Welcome to Bizzaro world. However, there are some signs that people have caught on to all this and are searching out different avenues as to try and understand precisely what the heck is going on, rather than be spoon fed “Bad is now good, and terrible is terrific!” And I’m very proud to say I can use myself as one of the examples: To Wit:
Here are two naked search results about 24 hours after another rather large Theranos “moment” was making headlines.
As you can see, using a naked query, that is yours truly at the top. You don’t get there because you paid. You get there because the search algo’s are reacting to real “eye balls” as much as other criteria. And for those stating “Oh, that was just a fluke you’re trying to milk!” I would say “Fair enough.” However, to the right is another doing the same some hours later and, as one can see, some of the results had changed to show it wasn’t just a fluke.
I’ll also add, this is far from the first time I’ve demonstrated things such as this. I keep track of such things. If it were just a fluke I’d be pretty foolish to tout them. I only do it for the “Well who are you to say XYorZ?” crowd. So with that all said…
I don’t do “fire-walks,” nor am I some paid “financial analyst” you’ll see on the remaining business networks. And you won’t see me in “The Economist™, NY Times™, Barrons™, or other mainstream financial/business media. Where I’ll also add – and proud of it.
No, I’m nobody ‘cept for a guy who can’t spell cat without spell checker – but has a bulls##t meter along with some business acumen that’s second to none, which seems to make news others want to read; rather than like a few others making news for “fire-walking” and “investing.” Albeit they both seem to now be feeling a lot of unwelcome “heat” themselves. But, I guess that’s showbiz – I mean – “investing” today.
Just remember and repeat 3 times while clicking your “execute order” button: “I BTFD because the Fed’s got my back.”
Over the weekend I heard from people I haven’t heard from in quite some time asking me for my thoughts on Brexit, and what it may portend for our own markets in the near future. As readers who’ve been with me for a while have come to know – I pull out the following chart. And with that, here is what I shared for those who might want to know.
Here is the current market as expressed via the SPX as of the close on Friday. To Wit:
As we can see we came down in one fell swoop and closed precisely on the bottom edge of those levels I marked as “#11 It’s all about….” and – it still is. When I was asked “Why is that level so important?” I replied, “It’ll take far too long to explain, just know I drew those lines months ago, all you need to know is the market’s reaction to them. The market is now showing you their importance, regardless of how important I claimed them to be.”
The phone went silent.
If we break free from this level with conviction and close well below it (as I iterated in previous discussions) I believe the next stop is to that #12 area I marked in grey and it will come in short order.
When I first placed it the potential for a Fed. rate hike in June was still on the table (albeit loosely.) That has now come and gone and the Fed. relented as to choose inaction, for action, once again. However, where I wrote “Where real concern should …….” I believe still stands. I’ve also just moved it more to the right as to line up with where we are, but the area is still the same.
I’m going to make one change and that’s from “Real Concern” to “Out right panic” should that level be hit in a waterfall styled event.
This is where I believe you’ll hear every central banker and who knows who scrambling to say “what ever it takes” and more. However, I think what ever happens at this level (if it is reached) will only prove out to be a respite before another real test of the now moniker’d “Bullard Bottom” is not only tested, but may in fact, not hold as the case previous. Why do I say such? Easy…
Mr. Bullard has come out and basically thrown in the towel for Fed. credibility. He went from being thought of as “a fair-weathered hawk” to an out right capitulating uber dove. I now think most (if not all) Fed. pressers or announcements during any turmoil will only slow or pause the momentum ever so slightly as the headline reading HFT algo’s react – but it will only be temporary. Then the momentum will once again resume. And it might get down right scary at times.
Whether or not any of this takes place is unknown. It’s all a best guess. However, as those of you who’ve been following the above chart since I began annotating it nearly two years ago know: the lines have been drawn well in advance – not after he fact, along with the commentary, and have been quite prescient. Whether or not it continues is, like I said, “anyone’s guess.”
But hopefully some of you now have a little more information you can use as to make your own decisions whether it be about business or other matters.
Which is the whole point of this blog to begin with.
There are very few events which go on to be hardened points in history where generations long after we’re all dead will point and say “There’s when it all turned.”
That said, living through them is far different (very different indeed) than reading about them in posterity. And Brexit, I believe, is going to mark not only one of those moments, but also, will change everything – for everyone. And yes I do mean everything and everyone.
When it comes to the vote on Brexit one issue can’t be swept under the rug (although many are desperately trying to rewrite history before the ink has even settled.) The so-called “smart crowd” of every sect in regards to the financial/business media not only got it wrong. They were adamant that even considering the opposing view proved how misinformed (if not imbecilic) one was to even consider the possibilities.
Now it is they who are scrambling for any open microphones, cameras, or keyboards to state for prosperity “Well, as I said, there was always a possibility blah, blah, blah.” And it’s here where the analogy of “fire-walking” comes into play. It’s been those of the so-called “smart crowd” whom for years have substituted a parlor trick (i.e., QE et al) for the equivalent of prudent monetary efficacy.
Now I’m sorry to be invoking Tony Robbins latest fire-walk debacle as an example. But the serendipity punctuates the whole idea of what has happened these last 7 years, culminating with the latest results. It’s just too hard to ignore. (To reiterate, I like TR, I just have a different viewpoint)
For those who may not be aware, once again, dozens were injured by sustaining burns to their feet while participating in what’s commonly known as “The fire-walk.” One of the reasons for doing this as stated via the event website is this: “Storm across a bed of hot coals. Once you start doing what you thought was impossible, you’ll conquer the other fires of your life with ease.”
The problem for me (and I have standing to make these comments for I am in the motivation, as well as business expertise business) with this whole exercise is this: It’s a parlor trick. A participatory kinetic metaphor. In other words – it doesn’t do anything other than give you the illusion that you’ve conquered fire. And that’s the problem because – you haven’t – you just “think” you have – until you get burned.
For nearly the last 8 years central bankers have been doing and acting much the same. e.g., as if they’ve “conquered fire.”
With the advent of “extraordinary measures” and “extreme accommodation” as the current setting for monetary policy, central bankers have been living in a world view as if they can no longer be burned. i.e., They have the all the tools necessary along with the wisdom on how and where to use them.
Then an event like Brexit takes place – and their house-of-cards appears ready to be engulfed in flames. Ironically, set ablaze by the incessant implementation of those very “tools.”
The problem they’ve never considered is how those very tools in which they believed helped them to “conquer fire” are precisely what will set the flames not only “to 11,” but ever higher the more they’re now applied. Again: The problem is not that there isn’t enough monetary accommodation. The problem is – there’s far too much. A thought which is anathema to any Keynesian devotee.
And like I said: that’s just the beginning of the problems currently facing central bankers. Remember: the real issue has never gone away. They were only masked in illusion.
Just like fire-walking current monetary policies are facilitated using a bit of scientific principles, and a whole-lot of parlor trick illusion. i.e., You didn’t do anything more than allow oneself to be fooled into thinking you weren’t getting burned because – you – were controlling “the fire.”
No, just like the fire-walk exercise it’s a well-known scientific fact one doesn’t get burned because of certain principles of physics at play. Let those conditions be swayed ever so slightly? See the afore-mentioned TR incident for clues.
The real issue now is that the prior economic theory (such as prolonged spraying of money across the financial markets with a fire-hose or drop it from helicopters) will now work in reverse morphing once again back into economic fact. i.e., the illusion falls apart directly in-front of the audience.
“Free money” is once again experiencing its alchemy moment, and morphing back into the equivalent of monetary gasoline. The more it’s applied from here-on-out – the more it will act as an accelerant, rather than fire-retardant.
Current central bank interventionism, (where QE and asset purchases are heralded, rather than scorned) along with its adherence to the zero bound, (where savers are put to the woodshed for the sake of Wall Street) will further fuel this into an all out inferno of monetary chaos and more. Brexit will be seen as the match that set all this current experimentation of economic theory and sorcery into the ash-heap of monetary history. Just let me add: And good riddance!
That being said, I make no allusion that there won’t to be upheavals, as well as gyrations within the capital markets which will make some of the scary moments during 2008 look tame in comparison. As a matter of fact – count on it.
As much as the voting results for Brexit were heard loud and clear. What has yet to be seen is how this disruption within the financial markets (i.e., Friday’s sell off) will be reacted to by Asia. And, more importantly: China.
The latest turmoil within the markets has only been expressed by what some may deem as more disciplined, as well as strategic or schooled traders throughout the West. Once China opens for business and the resulting swings which are all but inevitable fueled by the gyrations in one of the most oversubscribed carry-trade vehicles of choice: The ¥en. What takes place next is anyone’s guess as carry trades begin showing their stress in relation to Friday’s market moves.
Asia has had to sit on its hands over the weekend and watch the markets roil on Friday. This evening will be the first time those reactions will be acted upon in earnest.
Then, a few hours later: China opens. And with that said: All bets are off.
It’s here that “disciplined, as well as strategic and schooled traders” goes out the window. And no one knows that better than the politburo of China itself. How they react in what could shape into a re-enactment such as what transpired in August of last year is anyone’s guess. It could make Friday look calm. Nobody knows – especially the so-called “smart crowd.”
And once again lies that “fire-walk” issue I alluded to earlier. Nothing has been done except for giving central bankers (as well as the intelligentsia at large) the illusion that they’ve somehow managed to “control fire” via their monetary actions. They haven’t. It’s just been the illusion of control. And now the conditions to keep up the trick have since shifted. And if you attempt to do the same as previous? You’re going to get burned. And quite possibly – severely so.
Remember the old adage “Once bitten, twice shy?” Do you think this is just shaping up to be another BTFD (buy the f’n dip) moment once again? If you do – I have some great ocean front property in Kentucky you should consider first.
So how historic do I really think this Brexit vote will be looked at in the future? I believe the best way to think about it is in the same context as was written in a diary by a woman who was keeping notes during the monetary crisis of the Weimar Republic only switching out “hyperinflation” for Brexit. To wit:
“A month ago no one knew what Brexit was. Now? It’s all anyone will talk about.”
Yes, I do believe we are at the forefront of an extreme shift in everything in which everyone (everyone being a relative term) thought was “settled and behind us.” However, I will also add this…
If you are one of the few (where I hope this would be you dear reader) that no longer listened to the so-called “smart crowd,” and has diligently been preparing yourself with prudent and pragmatic strategies for business that requires 1+1=2 math; produces products people want; and will pay for; that result in actual net profits that can be deposited; and accounted for in actual bank balances. Rather, than seek some feel good styled parlor tricks to give you the illusion that you were actually accomplishing something. These are the moments in time where true fortunes, built on real businesses, that can last, are made.
Say what you will whether England leaves the EU in what is now collectively known as “Brexit,” because one thing to my mind much more important has finally been adjudicated and deserves attention, far more than whether some country will leave, or remain, in some contrived union. (although it does deal primarily with a few English blokes)
No, what is really important today and has consequences for the citizens of the world is this:
So, can we finally put this ludicrous suit behind us (being a former musician I feel I have the right to use the term “ludicrous”) and stop hearing about how it was “stolen?”
I am as sick of hearing about this suit, and gleeful it’s finally over. Although, maybe, not as much as when I no longer have to hear it on the radio as I did in the 70’s, 80’s, and every classic rock station for the last three decades when the DJ was in need of a “restroom” break. Never-mind how many weddings I heard it played at.
There was a time not all that long ago (circa 2009) when the markets were still gyrating wildly after the initial shocks of the ’08 collapse. It was during those gyrations that there was a very perceptible, heavy, and “hidden hand” making itself ever-present.
This “hidden hand” came in only on one side: The Bid. i.e., Buy side. And buying was all it did, with such deadly efficiency, anyone caught on the other side.(i.e., Shorts) were either sent running for the hills, or, their accounts were sent screaming for bankruptcy protection.
So insatiably strong and uncharacteristic to the dynamics associated with what veteran traders along with anyone with a modicum of business acumen knew to be true (as in how markets react to all buying and selling) it was given a name. That name was “The PPT” which stood for “the plunge protection team.”
The reason why I make this point is this: when anyone insinuated that it (“it” being the PPT) was actively at work within the markets during that period? They were immediately dismissed as “kooks,” “conspiracy theorists,” “tin-foil-hatted nut-jobs,” or any other pejorative you wish to add. Nowhere did these insults or accusations emanate more vociferously than from the financial/business media in unison with their next in rotation fund managers, economists, or Ivory Tower academics.
All of it was hurled vigorously, and squarely at people such as yours truly and others like me who dared point it out. Now? It’s so openly accepted (aka QE) with some exchanges now supplying discount pricing models exclusive to central bank operations. But my oh my, how things change, and are going to change in ways all those noted previous have not a clue.
Just last week the European Central Bank (ECB) unveiled a self-produced exposé (as reported by ZeroHedge™) on its now openly celebrated trading operation. Only an Ivory Tower’d academic or Ph.D economist who’s never spent a day in the real world of business and/or market place could envision this as helping to bolster an image of surety or confidence. I am quite confident in the opinion it will do nothing of the sort, and, will in fact have the exact opposite effect.
This is the equivalent of some self infatuated wizard throwing back the curtain triumphantly as to display all his magic to squelch the ever-increasing questioning of his power in front of an audience of veteran magicians who can see from the back row – there’s no there – there. And now it’s those very people he thought he was impressing – who are laughing. And not just at the reveal, but at themselves for ever assuming there was anything “amazing” behind the curtain to begin with. Monty’s “bazooka” just made its grand reveal – and people with real bazookas are snickering. Trust me.
As tongue-in-cheek as that may seem, there’s another aspect that is far from anything funny. And it’s this: If you’re a person or persons responsible for the well-being of a company and the welfare of the employees under your employ in this stagnant, listless business climate, after seeing that reveal and understanding exactly what it truly represents, I’ll garner not only are you not laughing – you’re furious! I’ll explain more to this point as we go along.
Yet, the problem isn’t just for the ECB. No, the real problems may have just begun for all the central banks and the Fed. in-particular. All the ECB did was unwittingly throw the curtain back on all of them. What the Fed. has done with its latest edition of back-peddling and near incoherent messaging has just added more evidence that this folly of illusion is coming apart much like a sorcerer’s apprentice – not some all-knowing omnipotent wizard.
I also have a funny inclination it’s not going to be a fun time to be the media’s next in rotation fund manager, economist, or Ivory Tower academic in the upcoming future.
This latest “Full Monty” has just exposed all of them as nothing more than shills for crony capitalism. For there is no such thing as free-markets or true price discovery, let alone anything resembling free market capitalism, with such an operation as the ECB glowingly revealed. Period. End of story. To say different is either a willful act of ignorance at best, or, a brazen act of out-and-out lying. There is no other excuse. Again: period.
Some will say, “But it’s the ECB! Not The Fed.” as if that changes the facts. So with that said, yes, that’s true. However, what does one think QE enabled via proxies? Hint: does “up to 11” bring on any clues?
Let me illustrate this a little more clearly so those with a Ph.D can follow along and not feel left behind.
First off let’s begin directly with this “trading room” operation and the out-and-out perversion it represents to everything, and anything associated with free markets, let alone capitalism in general. The following example is, of course, oversimplified, as well as hypothetical. Nevertheless, the implications are all too real.
Say you’ve been building a great widget company and you’ve really started in earnest to eat your competitor for lunch. So much so their earnings reports of late have been horrible. All you need to overtake them and gain that market share is for their investors to realize how poor of a company they truly are and divest their investment to elsewhere. Hopefully that “elsewhere” is you.
You (the widget owner) have built an extremely efficient company from the ground up. You can pay higher wages, your employees, as well as customers are quite loyal. Your product is head and shoulders above the competition’s. The other company (your competitor) is the antithesis of this. They’ve been around for years and have done nothing to innovate and seem to be merely existing.
Their product has lost all quality. They’re also financial engineering their balance sheets to such an extent it would make Bernie Madoff blush. By-right, their stock should be falling, or at the very least, their bonds should be showing severe signs of stress. But (and it’s a very big but) every time it looks like there’s a meaningful selloff in their shares – from out of nowhere comes buyer. And not some run-of-the-mill buyer trying to catch a falling knife. No, this one comes in with such a bid they send anyone caught short (and short with good reason) running or screaming. And not once, not twice, but for years on end.
And here lies the dirty unadulterated truth of exactly how this perversion kills free market capitalism and becomes the text-book example of cronyism within the capital markets.
You and your company desperately needs funding via share sales and more but can’t find a bid because? The “bid” is protected at the antiquated competitor’s. The result? You’ll go bid-less and subsequently out of business while that antiquated competitor is not only kept alive via an incessant bid provided by the lovely people within the ECB’s trading room operation; but more than likely; will be first in line to receive funding at bargain floor pricing to now buy you out on the cheap whether through a well-funded hostile bid, or – bankruptcy court. Welcome to crony-capitalism central bank style.
Want to add insult to injury?
All those nice, friendly, smiling faces residing within that trading room have one ultimate advantage in their arsenal which no other entity (other than another central bank) has, and it is this…
Every time they are wrong; or pay more than they should; or a trade goes against them? Just like someone does in a “paper trading” account – they can reload the balance to start all over again. (i.e., the power to create money ex nihlo) Only difference? Their refresh is with real denominated legal tender – not imaginary. However, what’s truly surreal is that you, and your great company, can be made gone not by free market competition, rather, by crony-capitalism fueled by central bank “trading operations.”
If you don’t understand just how perverted, offensive, exasperating and more the above is to everything we know to be free markets, as well as capitalism? Then you must be a tenured professor or Nobel Laureate from ___________(fill in your Ivy League of choice here.)
Here’s another observation I just couldn’t shake as I was looking at the people depicted within the article. (Note: this is nothing personal against those pictured, just an observation.) I would bet dollars-to-doughnuts by accessing the average age of those depicted that few, if any, understand let alone traded through such turbulent markets as witnessed beginning in ’07 finally culminating with the advent of QE in 2010.
To think (let alone believe) one understands market turbulence and can trade through with post ’10 as your base or real exposure to markets is sadly misinformed. The last 6 years have been a-one-way bet with an implied floor the last 2 years (aka “The Yellen Put.) Does one think anyone in those wonderful smiling and attentive pictures has the battle tested equivalent of working and trading in markets that are in “panic mode?”
Remember, and don’t let this point be lost on you: A person who has only traded in an account with the ability to reset the balance; at any time; with unlimited funds; regardless of how large they may have grown that account over the years; is no match in a head-to-head competition against a veteran trader who has traded his own or bosses money during turbulent times. Not even close. I’d put a million $dollars into the account of a “Natty-Gas” floor trader whose only bought and sold 1-lots for years in the pits before I would trust a dime in some “wiz kid’s” account that’s grown a $1,000 “paper money” account into a million.
Want a more relative example? Ponder this…
Do you think for a moment George Soros quaked in his boots after just announcing he is going to once again become active and is currently Shorting many markets after reading or hearing about the ECB’s trading room operation?
Now Mr. Soros may be rich, but he doesn’t have the ability to print. However, even at his age (and in reality he has a much younger, as well as battle tested group of protégés executing his positions) I’ll wager he is all but laughing. Because, when it comes to trading against the ECB’s operation? It will be just like he has the ability to print. Bet on it.
As I iterated earlier this is only one part of the upcoming issues that are going to avail itself to central bankers everywhere. Like I stated, this reveal punctuates what many of us have been stating all along. It’s proof positive: There is no market. Only the central banks.
And those who’ve argued the opposite are losing credibility and more as the days roll on. And rolling is precisely the right analogy, along with – like a snowball down a mountain.
On Wednesday, just when every defender of the Fed’s credibility was lined up as to defend their actions, even they were left slack-jawed and aghast by the nonsensical, round and round non-answers for answers to what were deemed to be very simple questions. The revelations of even some of their most reliable stalwarts such as Steve Liesman of CNBC™ were shocking to say the least. To wit:
“I think the first rate hike cycle is over. What Janet Yellen said in response to my question, and if you look at what has happened to the rate hike cycle, is pretty profound. It’s as close to the Fed getting to capitulation as I’ve ever seen, about the efficacy of Fed policy, about the outlook for the economy.
I just want to read this: “I think all of us are involved in a process of constantly reevaluating where the neutral rate is.” Basically they see these headwinds to the economy as becoming part of the new normal. This five-eights decline to the Fed Funds rate outlook for 2018 is pretty profound and GDP remained the same. That’s very important. And I am going to give rick a blue ribbon because Rick represents the markets. Rick – the markets won. The Fed has completely capitulated to the market’s point of view. The Fed is not leading the markets here, the markets are leading the Fed. Every single time.”
I would like to add this one point because when I heard it, I knew they were now just grasping at straws.
When I heard Ms. Yellen trying to use “the neutral rate” as some form of evidence or proof of efficient monetary policy? I knew right then they’re now painted well into the corner – with an empty bucket.
The implications coming for the market should there be any meaningful sell off or test of the Fed’s omnipotence is going to reverberate in ways many are not prepared for. And at worst – never conceived happening so swiftly.
I’ll use one example where I know I’m currently alone in stating, but, I’ll wager those dollars and doughnuts again – not for long. For the place ripe for upheaval is none other than “the tech space” aka “The Valley.” And here’s why…
You can just about forget about future unicorn IPO’s. And I mean that whole heartily. If you haven’t IPO’d as of today I would stake your chances of it ever happening at less than 20%. And even then I believe I’m being generous. It could be less, and much less at that. Why? Hint: Microsoft™/ LinkedIn™.
Some will argue it was a deal such as this which will put the wind back beneath the unicorns wings, placing them once again squarely upon the IPO mountain of cashing-out riches. I say – Oh contraire…
With the IPO market currently dead in the proverbial water. What has now caught the attention of VC’s everywhere is the idea of: Why grovel for an IPO when we can accomplish the same (i.e., the VC’s can get paid) by skipping the IPO process entirely? (which is dead for no QE as I said it would)
They can sell out directly to companies that will need to put together shopping lists to fill the voids in their own poor fundamentals using the Fed’s latest stance to insure more cheap financing and the MS/LNKD for framework. i.e., Who needs to grovel or put up with unwilling founders to get our money via an IPO when we can just set up the conditions as to be acquired! Boom, once again thank you Federal Reserve!
Either way VC’s can get their money (or at least an equitable return) sooner, rather than later, and more control of the process to-boot. Unicorn IPO fever has just found itself DOA in my opinion. And I didn’t even mention how “affordable” these unicorns will seem (or become) once Non-GAAP is no longer accepted as balance sheet fact.
I am of the belief the MS/LNKD deal opened the doors (as well as eyes) of VC’s to the next phase that takes place at the end of a bubble era right before it all falls apart. This is the time when “the sclerotic begin buying up the stunted.” Can you say AOL™/ Time-Warner™?
With interest rates now capitulated to near zero via the Fed’s latest revelations the next game to be played in “The Valley” will be for VC’s to work diligently behind the scenes selling the prospects of their prospective unicorns to anyone capable of writing a check. And with it will come the tumbling of everything thought was so “different this time” into a bloody rubble of – same as it ever was.
Some from the tech space maybe thinking right now: “But what does all the above have to do with me? I thought it was the ECB that had the issue?” Great question, and here it is. Ready?
Remember the example I used for crony-capitalism with the widget company? Rather than “widget,” insert your unicorn of choice. And for that competitor?
As I’ve warned countless times “the only thing that matters is whether or not its on some central bank’s buy list.” And many of those “competitors” are. And with that in hand – you can start hypothesizing which companies are in the running as to be your new boss. Or, just ask any of your current VC’s because I know they are already putting lists together of potential suitors. Again – bet on it.
Like I said, “welcome to crony-capitalism central baking style.” I bet it feels a little “different this time” when thinking about central banks and their meddling in business and capital formation fundamentals when seen via this light, yes?
And all of this is just the tip of the iceberg, for it truly is “different this time,” and for reasons a whole lot of people in the so-called “smart crowd” haven’t even contemplated.
I’ll close with just two. However, by no means are their impending implications going to be minuscule. Far from it. Here’s the first: China.
Does anyone for one moment think the politburo within Beijing looked at that ECB release and thought “Whew, well, looks like they’ve got things under control if needed.” If you do, you’re either an Ivory League’d academic, or, delusional. (redundant is for you to judge)
I would wager the reaction was more along the lines for seeing it just the way I stated at the beginning: for the farce that it is. Not to mention the infuriating sense of double standards they feel every time other central banks or politicians point their fingers and wag at China for meddling within their own markets. As to whether it’s good or bad the way China meddles is irrelevant to the discussion.
If you think China is going sit still while being on the receiving end of any detrimental currency positioning or competitor disadvantages via other central bank manipulations within markets as those central banks prints the means of that meddling ex nihlo all the while telling (and demanding) China is wrong for essentially doing the same? Can you say sell or dump _________(fill in the blank) and everything else China holds regardless of price in Chinese? I bet they can.
There’s already evidence this is already taking place within the U.S. Treasury market. But there’s another more subtle thing happening that I believe many are not truly understanding the future implications.
China just announced some form of reprisal against Apple™ stating a copyright infringement on its phones therefore halting future sales. The reports have been mixed. Some say it isn’t true, some say it is. As of this writing I’m not quite sure myself. But what made this allegation stand out to me was the most recent public statements from none other than Alibaba™ founder Jack Ma when he stated “fakes are better than originals.”
That wasn’t all. He went on to make other assertions such as this. To wit:
“The problem is the fake products today are of better quality and better price than the real names,” he said during a speech on Tuesday at Alibaba’s headquarters in Hangzhou. “They are exactly the [same] factories, exactly the same raw materials but they do not use the names.”
I would advise you to read the entire article and come to your own conclusions. But from my standpoint, it was one of those things that make you go hmmm…
Why such a statement unless…you’re moving closer and closer to what China wants (or is demanding) you to accept. i.e., we make the stuff, start taking the credit and now openly state you’re going to take the money associated with it. Trade agreement or no trade agreement. Besides, agreements? We don’t need no stinkin agreements – we make the stuff! See my point?
Then there was another which is also going to reverberate in ways few will anticipate at first. And, I believe, will be shocked at just how disruptive to the current “market” system enjoyed by the now laser driven, parasitic, front running, HFT cabal. Disruptive, but in a good way. To wit:
IEX™ of Michael Lewis’ “Flash Boys” fame has won approval to be a competitive exchange against the likes of all the HFT infested exchanges. This begins to change everything back to possibly regaining some semblance of sanity to what we used to know as free market capital formation. But to think it won’t cause some unintended or unwanted disruptions across all markets would be unwise in my opinion.
Once IEX is operational I can’t imagine any sane, responsible fiduciary not jumping at the chance to trade shares on an even playing field rather, than the current cesspool we now know as “markets.”
But with that will also come disruption. As funds relocate the venues that were built these last few years to front-run and gorge off the central banks and large block traders are going to stamp their feet and not play nice in my opinion. How that will manifest is anyone’s guess. But much like a drug addict reacts once their “fix” is denied – all bets are off. However, there is one thing which is certain. And I found it ironic as I thought about it, and it comes from none other than the divinely worshiped man himself John Maynard Keynes. To wit:
“When the facts change, I change my mind. What do you do sir?”
Well, I know what one very real, very successful trader has done seeing the latest facts emanating from the central banks: And he’s publicly announced he’s Shorting. (“he” being George Soros)
But not to worry. The fact is the ECB and the Fed. would like you to always remember: They’ve got your back. They believe it should still work. Shouldn’t you?
(For those who say I just don’t get it….get this!)
Yesterday I was speaking with a colleague and the topic of Microsoft™ buying LinkedIn™ was of course front and center. It became clear early on except for a few other details, I had already said all I needed to say. The only difference this time were my earlier points were being repeated, just not by me.
More often than not I heard “Didn’t you say something like……” or “If I remember right. I remember you saying….” I couldn’t help but laugh to myself as we talked, for the line “It’s different this time” kept appearing in my mind. Yes, it sure is, isn’t it?
Although I really have nothing further to add I would like to throw in something I read over at Zero Hedge™ which I believe sums up things pretty succinctly. To wit:
“The acquisition takes the LNKD price back to that February earnings announcement when LinkedIn’s stock price plunged over concerns its growth had sharply slowed. In agreeing to the MSFT deal, LNKD implicity admits that all those concerns were founded as it would not agreed to this deal, and its 50% premium if it expected a return to growth rates which the market was priced in when LNKD was trading at $292 last year.”
That line says about all one needs to know as for the current state of “The Valley.” And remember: it’s reported some 40% of LinkedIn employees are currently heavy with stock and/or options as compensation for salary. Without this deal (or some other form of manna) the fear was an up and coming exodus aka “a brain-drain” by both talent leaving, as well as the inability to recruit. Say what you want, but I’m of the opinion any of those seasoned looking to work for “the next big thing” probably came from a previous “Microsoft” like acquisition. Where do they go now? Twitter™?
The good thing here at least is for those looking to leave now that “the sclerotic is once again consuming the stunted” presumably will already have their resumes posted. The bad thing will be if the HR departments they’ve been selling all that information – is running some form of “T3000 Robo-Resume-Reader and Screener ” which still runs on an older version of Windows™for fear of updating.
Or, they themselves can pay up for a “premium search’ or ‘resume rewrite” at a discount. After all, isn’t that pretty much what LinkedIn was to begin with? A glorified jobs board to sell posters information? I wonder how they’ll assess the benefits of this service now that some may have to use it – rather than sell it. But I digress.
And for those who may be new, or just want a refresh on some of what I’ve stated about LinkedIn over the years, here’s a post from back in February when their stock price went “Ka-Pow!”
As the news of the day will certainly contain the debacle being witnessed in the share price of LinkedIn™ this morning, I thought I’d post a few quotes and previous links to articles where I warned of exactly what has taken place for newer readers. There are more but these cover the pertinence of the theme. To wit:
“Here’s something I know first hand from real people. Every single entrepreneur or business owner I know has either never visited the site again after signing up. Or, stopped responding to invitations of linking because; not one of these ever resulted in a worth while business opportunity. Ever!
I know some that have posted directly onto their info the equivalent of “No collaboration offers need apply.” Because that’s all they’ve ever received. Offers of collaboration that resemble offers more in line with letters from a Nigerian Prince. When they ask me what I did with my account and I say: “I deleted it.” the most common response I get is: “Yeah, I think I’ll do the same next time I remember. Only for not remembering is their info still there.”
“I have stated for years: “The only ones making money from social media, are the ones selling people the idea they need social media.”
Just look to, or remember all those stories that are consistently thrown across the financial media and others. All those buzz terms like: “user generation, followers, likes, connections,” and more? All touted as “The” metrics of relevancy for anyone using or purchasing. Now? Seems what’s needed for tangible, reliable, clear metrics is moving from the asking stage – to the demanding stage.”
“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.”
“Or maybe you’re one that couldn’t wait to sink your 401K teeth into LinkedIn™. Once again, after years of pushing higher, and higher, it seems the new story is same as the “old story.” i.e., They seemingly needed to spend money as to gain potential “integration opportunities” by buying something (e.g. $1.5 BILLION for Lynda™) rather than investing directly and maximizing everything of what LinkedIn currently is involved in. i.e., A glorified resume writing and/or job seeker data base.
In other words: They can’t make money via the old model as to warrant their current valuations. So, instead of doing what they do, and doing it better, enabling higher net profits. It seemed they had better buy something that can. Even if the price paid (again a reported $1.5 Billion) is money spent not from net profits – but from Wall Street’s pocket.”
As I write this (in the pre-market) LinkedIn’s stock price overnight has plummeted by over 30%. That’s not a typo.
If you are one of the fortunate to have not owned any shares currently – I want you to think about it this…
Exactly how do you think this latest debacle is going to be viewed by anyone who still owns shares or, is holding them in lieu of a salary in the now myriad (Twitter™, Square™, LinkedIn™, Pandora™, etc., etc.) of value purging, net worth shattering “social darlings?”
Add to that: How do you think the people not only currently working in these “social darlings” but rather; the ones hanging their hopes and dreams of “Silicon Valley” riches that maybe living in some shipping container as they await their envisioned “payday” to arrive? How do you think this latest debacle will be viewed in connection with all the others as of late?
And what about the “investor class?” What do they now do? Remain invested? Invest even more? (Whether in these or any others.) Truly think about that. For suddenly “On sale at great prices” has morphed into “Do you dare to catch the falling knives?” and now “Will I be solvent by morning?”
But not to worry I guess. After all, Mark Zuckerberg just touted for the $19 BILLION dollars he spent of Wall Street’s money for WhatsApp™ it now has 1 Billion users. Doesn’t make a net profit or anything close, but hey, it’s all about eyeballs, right? Money and profits are secondary unless – Wall Street comes back looking for their promised riches. And they always come looking. Sooner, or later. Don’t they.
If there’s one thing that’s entered the lexicon of surety as “death and taxes,” it’s this: At any timeyou, or something you own, is interacting with an algorithm across the web. Sometimes, in ways you never thought possible, let alone envisioned. Not as pithy as the first I’ll grant you that. However, as for surety? Count on it.
It’s hard to imagine a life without the web as we currently know it. What’s even more amazing is what we currently know as “the web” is younger than an adolescent child. Yes, the “world-wide web” is older (older being more akin to an older sibling shaking off adolescence I’ll remind you) but the web and all what we basically take for granted today is no older than 7 to 9 years old. Everything that you now take for granted, as far as, what you can do, know, facilitate, and more has been around no longer than it has taken a toddler in 2007 to reach the second grade today.
Why do I use 2007 as the starting point? Easy: The iPhone®.
Up and until that point what we now take for granted was bulky, clumsy, and in many ways unattainable. After? It’s been nothing but an all out blur. And the only way to make all this wonderful tech available to both you and me on demand, custom tailored, as well as “free” has been another rise that without it; nothing would be as we now know it. e.g., The rise of algorithmic robotic programming.
After the iPhone the flood gates opened and smartphones are now about as ubiquitous as clothing. It’s currently hard to imagine anyone leaving the house without their smart phone. For many, leaving the house without it strikes about as much fear (for some even more) than realizing you’ve left the house without any pants. But a little more perspective is also needed: Smartphones really didn’t take off till a few years later, say about late ’09 into ’10. And apps? Well after 2010. So why is this all relevant you might be asking. It’s a fair question and it is this…
Basically everything you now know, or think you know, about how all the “plumbing” works along with who controls “the flow,” and how – is less than 5 years old.
Don’t let that point be lost on you. Take a moment and ponder it. That’s how new everything you now take as “a given” truly is. We are not even 6 months into 2016 where less than 6 years ago if someone suggested “apps are the next thing as to replace purchased software” you would either be laughed out of the room, or asked, “What’s an app?” (on an aside, not only was I one of those people suggesting, I was one of the first to have his own dedicated personal app in the Apple Store™ in 2010.) Which takes us to today…
And while I’ve brought up the topic of “laughing.” Have you noticed a recurring defense emanating from the “world of tech” when it applies to allegations of impropriety? i.e., “It’s not us, it’s the algorithms.” Funny thing is this – you don’t hear that line when things are going just ducky do you?
Stock market levitating higher? “All done via superior trading, insights, and brain power located here at ___________” (fill in your Wall St. firm of choice.)
Need to reach a target audience? “With our amazing engineers along with our elite core of coders, we can place what you need, where you want it here at ________________” (fill in you social media platform of choice here.)
“If you want to be found – you need to be found by us or, you won’t be found at all based on our amazing group of talented people here at ___________(fill in your search engine of choice.)
However, when something goes wrong? “Must be something with the algo’s!” Or, “It’s not something we’ve done intentionally, it’s the algo’s that__________(fill in the excuse line du jour here.)
I’m beginning to find it fascinating at just how willing today’s group of “tech dependent smart phone addicts” brush aside excuses where they may have been both actively, as well as, intentionally manipulated via their platform of choice – without their knowledge or consent.
Do something similar with a brick and mortar based facility? Let’s just put it this way; even as small of an infraction such as running out of McNuggets™ can land one with an irate customer calling 911 to straighten out the issue.
As I iterated earlier if the “markets” are going up? Thumbs are pointed inwards to denote “It’s us!” Market begins tanking? All fingers are pointed at the machines in a “It’s the algo’s fault – not us!” Same with the likes (no pun intended) of Facebook™ and, what now appears to be another caught in this web of “It’s not us!” algorithmic questioning: Google™.
I found it laughable when one looks at the current excuses being bandied about that Google is somehow not responsible or, at the very least trying to make it appear as if the algos run their own world and Goog’ is just a place for them to play. Whether nice or not. For me I have only one question to ask…
Who creates the algos? And, if the algos are producing a result that is deemed favorable for the creator – even if this was not the intention as first created – if the algo is left unchecked to continue in that fashion: who is at fault? Today it seems it is the algo. Never the developer or the system that enables it. Funny how that happens, no?
Over the last 5 to 6 years algos have been allowed to take control over entire sectors of the web and more. Far more. Many of those sectors (such as those which can affect people in their decision-making processes for good or ill) have been implemented nearly without question, as well as, without any doubts for their helpfulness.
Many need reminding – you are being guided by a technology that’s both the same in age, as well as, laden with similar excuses for its results as a five-year old would use. i.e., “I don’t know why my hand is in the cookie jar?”
Whether or not one agrees with the current stand or excuses given by Facebook (in regards to allegations of suppression) Wall Street (as in defense for its parasitic use of HFT) or now Google with the allegations for the possibility of deliberate search manipulation. One needs to remember:
Those algos or machines aren’t from the future like some sci-fi film would render. No, these machines are both designed, built, and allowed to run based on the decisions of the people either in charge – or those that own them. e.g, Humans – not machines.
Whether or not a result was rendered via the algorithm that it was designed for – or not – should not be allowed to subordinate the main question that should be at the forefront: Who allowed, or was a blind eye turned in which to allow the results to continue?
That should always be the first question. Not, the initial response for excusing which we’ve seen over, and over, and over again resembling “It’s wasn’t us – it was the algos!”
You wouldn’t let a real 5-year-old get away with it. Let alone the parents of one. And to do anything less is about the same as now letting that five-year old which now knows instinctively, as well as, intuitively how to push your buttons to get their way and run roughshod over your life. Machine or not.
If a picture tells a thousand words; then a current chart of the S&P 500™ is an encyclopedic representation of bizarro world. So distorted, “juiced,” and far from reality have they now become they make a bizarro world look normal in comparison.
Once I looked at the “market” close the other day I couldn’t help but think “OK Janet – where too now?” Because, the only reason we are here is in direct response to her dulcet tones as interpreted by Wall Street. Every other metric is basically in the crapper. And one of the worst metrics to be in that category: is the volume that is basically non-present.
The other day the “markets” once again hit yearly highs and , once again, are within spitting distance of never before seen in the human history of market highs.
For those not that up-to-speed when it comes to things like volume analysis, I’ll just say this: That’s not a good thing.
You want to see this type of stat during a sell off – not – a push up. Metrics such as those now being witnessed have been harbingers more often than not for quick reversals. Not always, but when they happen at key points? Your first order of business should be too: Pay attention. And if I might add: very, very close attention at that.
So with that said I can’t help but put up “The Chart.” And here it is with another notation which I feel is at once again a critical juncture. To wit:
As I stated then, “if it didn’t hold I felt we could see a quick ride down to that #12” where you would then start hearing real concerns once again emanating from the Fed. Remember: the reason for using the word “concern” was not for you or me; but for the Fed. For as I’ll remind you over the last 6 weeks or so the tone from the Fed. has been deemed by many in the press as “hawkish” aka “We really, really, really mean to raise rates this time.”
Yet, once again during May the Chair Ms. Yellen seemed to signal more dovish tones than her contemporaries – and Wall Street took that as “back up the truck for this level is gonna hold!” and we’ve ramped up to where we now find ourselves (once again!) where it all began.
However, like I iterated earlier – very few are buying into this rally and the “markets” are experiencing another analogy for volume-less trading price movements: aka The paper cup equivalence.
The reasoning being, much like a “paper cup,” it doesn’t take much to move it and can get blown around pretty quickly and make sudden moves out-of-the-blue with any gust or breeze. And with a volume-less “market” as we are currently in the midst of, that breeze or gust can be manufactured to order in whatever direction the front running, algorithmic, headline reading, parasitical, laser enabled, high frequency trading robots want it to go, hence – we go up, and up, and up. Until?
And that’s the $4.5 TRILLION dollar question.
As far as questions go there is also one other that is just as important. And it is this…
The first time we ever made it up to these levels we had the tailwinds of $4.5 TRILLION dollars worth of QE remnants still freshly being allocated throughout the “markets.” It only took a few months later for it’s no longer available effect which caused the “markets” to careen in vertical fashion where it took Fed. speaker after Fed. speaker taking to any and all media outlets available to say “Hey, hey, no, we’re still here don’t worry!” to cease that falling, then, enable the laser-like precision and resumption of the HFT’s to front-run and gorge any and all stop-loss orders that were presumably placed during that panic. Then – Rinse, repeat with every similar “market” move to where the “markets” find itself once again.
So the questing is: Do you feel lucky? For if you think even the pros are making “informed analytical purchases based on pure business fundamentals and acumen as opposed to – just a bet based on hope and a lot of praying with other people’s money?” I have some wonderful oceanfront property in KY you can have at a bargain discount price made available only to you. Trust me, the ocean views are just spectacular, much like the views from the heights of these “markets”.
Just remember a few things when trying to take in the views from up here and they’re this: There are no windows in the casinos for two very important reasons.. One is so you don’t get distracted from the game so you can be more easily separated from your money. The other? Well, it’s to try to stop what happens on Wall St. when they not only get separated from your money – but their own as well.
To refresh one’s memory: it was in December of 2008 when Bernie Madoff admitted and subsequently arrested for what is considered the largest financial fraud in history. The main reason for his coming clean? A change of heart? Far from it. It was only for the reason he could no longer hide his pie-in-the-sky metrics (along with payouts) against a backdrop of such financial chaos and reality.
It wasn’t that he could no longer fabricate those metrics any longer. (i.e., for they were all made up to begin with) It was primarily for the fact that even he knew discovery was now inevitable. Why? It was becoming evidently clear for anyone with a modicum of business or financial sense (no matter how much they didn’t want too) that something was wrong. And he knew it. The time scale for discovery had moved from “maybe someday” to “any day now.” He just relinquished first.
Theranos™, in my opinion, has many of the same overtones for what transpired during, as well as, in the aftermath of the Madoff scandal. And the residual implications are not only yet to be seen. The consequences that are about to reverberate are going to bring forth reckonings many believed would never come. At least that is – before they could IPO, cash out and avoid it themselves. But if 2016 is any clue? Avoiding might no longer be an option.
In “The Valley” the last 7 or 8 years has seen a morphing of true business fundamentals into a place of pure financially adulterated fantasy.
Here is where the story changed from “Something built that customers love and will pay for.” Into “Build something that can give the illusion VC’s want to see and hear so they can pay for the right to then sell that illusion to Wall Street and we all get rich.” True business metrics or morals be dammed. (for a reminder about morals just enter “Secret” into your search engine of choice.)
So why do I use Theranos as the “Madoff Moment” reference some may be asking. Well, to put things into perspective I’m going to take some artistic license and employ some very general, over arching, big blanket statements for comparison purposes. For it’s the context which is more important for understanding – not the exactness of times, dates, amounts, or players et al. So with that said…
Theranos is both large enough and its figurehead famous enough to be a household name within an entire industry. Everyone who had anything to do with startups, unicorns, investing, entrepreneurship and business celebrity (especially when it came to the three-comma-club) knew of both the company, as well as, Ms. Holmes. Same for Madoff. Both the claims of what their company was, and could do, was celebrated with unmitigated praise and envy. Ms. Holmes with her amazing amount of tests with such a small sample of blood drawn. Madoff with his amazing stable profits year after year with no bloody draw downs.
Both Ms. Holmes and Mr. Madoff were held up as “celebrity” in their own light. Not once, or twice. Rather – year upon year.
For years there were articles and interviews on how wonderful and genius these people must be. Questions into their true performance whether it be their company or methods was met with evidence which, for the most part, went unchecked, unverified, and unproven. If that statement is wrong – then how could it had gone on for near a decade with Ms. Holmes, and a few decades with Bernie?
No; questioning and careful scrutiny of extraordinary claims wasn’t the first order of concern – praise and awe was of the first order where I’ll add – first, and the only ones at that.
Any of those pesky details that might ruin that narrative didn’t get in the way of such a good story. At least that’s how it now appears. Again: if I’m wrong? How could it have happened for so long? And that’s the key fact which can’t be brushed aside. e.g., “so long.” There’s just no other explanation.
Now It appears that both have finally suffered from the same fate: Once the money dried up (for Theranos it was no IPO, Bernie was the market melt down) all eyes begin to look closer and harder at what you’re doing.
Questions become more pointed. Results are more closely scrutinized. And the more you say you are able to deliver? The more that expectancy of delivery is demanded.
Theranos needed to prove it could deliver what it said because people now wanted their money (as in IPO.) Same with Bernie – you can’t hide how you’re paying for any redemptions forever. Especially when the “street” knows people are calling for them. Remember, trades are recorded and publicly available and must be reported to the SEC. When it was demonstrably clear and noticed that none of Madoff’s trade history matched up to markets – the jig was up.
Theranos seems to have befallen a similar fate. When the needed documentation was called for (and I would guess was being demanded as to prepare an IPO) the medical regulators finally caught up when it was clear – there’s no there there – when it came to its technology. Here too – the jig was now up.
However, I am of the opinion this is where the real story begins, not ends for both “The Valley”, as well as, its stable of unicorns. For much like what happened after Madoff with the relentless wave and wake of claw-backs along with the sheer upending of confidence as to who was worth what, or who stilled owned what, based on years of what was being deemed as ill-gotten gains or proceeds garnered from Madoff’s fund shook many individuals, as well as, other funds to their very core.
People seem all too willing to forget just how shaken anyone holding a “portfolio” of any kind never-mind one handled directly by Madoff felt during the following two years of ’09 and ’10. Nobody trusted what “the numbers” were supposedly touting. And most importantly – no one was buying it any longer. Both figurative, as well as, literal.
How shaken was this confidence which some need reminding of? So distrustful, so disgusted, and so put off were not only investors of all sorts, but for that matter, people in general at the scale of fraud which by all accounts was hiding in plain sight – they left the markets and have never returned. And what took place as to fill that void? Enter quantitative easing aka QE. For without it – there was (and some of us still argue) no market.
And with that you have the rise of “The Markets” along with its representative mascot of fiction parading as real: “The Unicorn.”
Again, for a little perspective: Madoff wasn’t the cause of any further disenchantment. What the Madoff scandal did was punctuate, and put a face on what everyone had an inkling was taking place to begin with.
CDS (credit default swaps) and securitization of all types of loans to unknowing, and for some, uncaring investors enabled people who more than likely should not have been able to get loans not only get them – but saddle themselves with so much debt the horse died in-place under the pile where no one noticed or cared to look. That is, until finally the odor ranked so heavily – it could no longer be ignored.
Ah, but then a new horse emerged. Stronger, better equipped. Needing far less initial investment to make people appear far richer than what could conceivably be done with general accepted business metrics or math. So cute and child friendly was this new mascot and all it seemed to encompass of “the new world of tech” it lent itself willingly to become the latest sock puppet mascot to represent the impending issues flying both above, around, and beyond “The Valley.” Enter: The Unicorn.
I know there are people chomping at the bit right now as to argue about how some unicorns of the past have become some of the largest tech giants today. I get that. However, like I’ve said so many times before: How do they stack up using GAAP not Non-GAAP? And if you look at far too many of their current valuations? Well, you just go ahead making those arguments is all I’ll say.
However, if you’re so inclined – you can send your findings and defenses directly to the SEC. For it’s they who would like you to remind them once again exactly how those “metrics” came to be. Not me. For it seems even they have come to the conclusion of “Wait what?” when looking at many of today’s reporting. So much so they’ve decided it’s time to make official inquiries.
I’ve argued ad nauseam for years about many of the valuations along with the creation and thinking behind them as to why they never made sense. And it’s coming to light that many never have, and never would, prove out those metrics without the heavy-handed sprinkling of Non-GAAP fairy dust.
I have always been of the mindset and opinion they were nothing more than what their emblematic mascot represented: a fairy-tale. Period. And Theranos, much like Madoff, is a watershed moment that puts reality squarely at the forefront and can no longer be swept under the rug; hidden, spun, or any other descriptor one wants to use.
Even to a layperson – the reality of the farce can no longer be hidden. And the more it’s tried to be spun away with rinse cycles that would make a washing machine blush? The more incredulous people become.
There are a few revelations as reported by Forbes™ which are germane to these insinuations. (and just in case you missed it, they revised Elizabeth Holmes net worth to ZERO. Imagine that. $4.5 BILLION to nothing. Think a headline like that isn’t making its way around “The Valley” faster as to make a laser employed bid ask spread jealous? Hint: you bet it is.)
Here are the one’s which in my opinion change everything in ways most don’t fully comprehend as of yet. Along with the damaging of psyche of many residing in not only “The Valley” but the tech world in particular that will morph ever the larger and become unquestionably “a force to be reckoned with” in the very near future.
One of the first is this one:
“…plus new information indicating Theranos’ annual revenues are less than $100 million, has led FORBES to come up with a new, lower estimate of Theranos’ value.”
Read that above quote again, very slowly, and ponder it very carefully.
Don’t think there’s much to that above revelation? Add it to this one while once again doing the same. Ready?
“…a more realistic value for Theranos is $800 million, rather than $9 billion. That gives the company credit for its intellectual property and the $724 million that it has raised…”
Theranos has been a Billion-Dollar-Baby not for a day, week, month, or even a year. But years. On what type of revenue? $100 Million. And that assumes $100MM is the most recent as well as best current representative.
As bad as that is (and I’ll state it’s not just bad – it implies criminality) what were the revenues years ago when it first joined the coveted “three comma valuation” club? Or said differently: What enticed $724MM to invest which is said to represents near 75% of its total value? Hint: I’ll wager more story telling than that contained in Aesop’s Fables.
This (again, all in my opinion) causes two problems for not only the early investors in “unicorns” in general, but also, for the remaining unicorns themselves. And they are these…
First: How can one believe the metrics of any unicorn when such a high flyer as Theranos is exposing just how tainted, manipulated, as well as, the possibility for out right criminal lying that made or reinforced those metrics? Putting things into context: the only story line gaining more credibility by the day for this unicorn is the incredible story-line about how deeply its lying may have gone with every newly exposed data point.
Now, just like when the Madoff scandal hit – everything is beginning to be questioned. And I’m not just talking about Theranos. I’m talking about things like the current claims or net worth of those early, as well as, subsequent investors in the round after round of Series ABC thru LMNOP and sometimes why funding extravaganzas. Let me put it this way using the following hypothetical.
Let’s say you invested $1Million dollars in early rounds at Theranos. For years you were thought to be worth who knows how many $Millions, if not $Billions of dollars in resulting net worth once Theranos went public. Do you think (or at the lease assume) some were given access to credit or other such exclusive vehicles when it came to loans and more based on this presumed net worth? Never forgetting – they’re (e.g., unicorns) presumed to be worth that much because – they tell you they’re worth that much. And you thought a NINJA or Liar loan had issues. But I digress.
Maybe I should ask it this way: Do you think Ms. Holmes was living a lifestyle afforded her via the banks or other creditors on what they assumed was her $4.5 BILLION dollar net worth? Or, do you think it was based purely on her verifiable salary with some “extra credit” thrown in for her stake in the company?
I’ll wager dollars-to-doughnuts banks and everyone else on the planet who specialized in “band wagon jumping” or “coat-tail riding” lined up and gave loans and more as to take part in those presumed riches. Of course with the intention of you being able to pay it back, with a fee mind you.
Oh, oh. Suddenly today one’s collateral might look a little shaky, if not out right shady. Here’s where the term “margin call” takes on a meaning never before fully understood by many of today’s tech crowd. All I’ll say is this: It’s not a call or invitation one wants to receive. Unlike a multi-million dollar company afforded costume gala – this one has onerous un-hidden consequences and is deadly serious.
Bought a McMansion or extended a line of credit based on what a bank or others deemed as your net worth or assets? Were those “assets” all based on your Theranos investment? Can you see the implications for an ever-growing spiderweb of questioning, as well as, outright calling in of loans of all sorts? To who knows who?
Or are you of the mindset: “Nothing to worry about once I explain how it wasn’t my fault and I didn’t know. Surely my creditors will understand and work with me.” Sorry, but I had a hard time even typing that hypothetical line without bursting out in laughter, never-mind thinking of how many “creditors” would act as such.
As bad as that is – it can get worse. Much worse. For here’s another hypothetical:
Was that (or any) line of credit based on earnings or proceeds obtained (regardless of the timing) one had in Theranos? Whether one used it to buy similar stakes in other pre-IPO darlings or, to just sit on? You don’t need to be an SEC official or have a legal shingle to see the troubling doors just waiting to be opened.
Could one now suddenly find themselves with serious claw-back issues they never dreamed possible? A lot of investors, as well as, people (some relying solely on those proceeds) found themselves suddenly penniless after the Madoff scam broke out in earnest. Not because they did something wrong, but because the money they thought was legitimately theirs was determined, by law, to be of “ill-gotten gains.” e.g., from a scheme. Then subsequently taken back either by voluntary forfeiture or court sanctioned force.
Don’t take my word for it. You can look back yourself and find article after article of the devastation left by Madoff’s revelation.
However, like I said earlier, it didn’t or doesn’t end there – it begins.
Here’s the second issue that should not be lost on anyone, and why it’s far bigger to the overall picture than just some small detail to be ignored:
The group which could be most affect by such a revelation such as Theranos are the workers, dreamers, and big-eyed “I’m rich because I’ve got stock!” group of 20 and 30 somethings who bought into the whole “It’s different this time.” meme hook, line and sinker.
The more one tried to make them aware? The more staunch the response came back resembling the teenage inspired defense of “Well because!” And this wasn’t limited to the misinformed. No, this style of rebuttal was also employed by a great many that not only knew better, they in-turn yelled louder than most two-year-old’s when throwing a tantrum. And many of this cohort had lived through the last tech bubble!
So too say “I didn’t fully know or comprehend the scale today!” Will fall on deaf ears as this all plays out in the not so distant future. Many, and I do mean just that, a great many of today’s Valley aficionados are going to find their credibility running right along side what I can only assume will be a torrent of down-the-drain valuations.
Another line in that Forbes article which I am sure flew right by many a financial maven because of its commonality and well understood assumptions was not looked upon in the same light by some recently added participants to the current “tech boom.” And whom might that be you ask?
Current employees, as well as, the myriad of others who have visions of grandeur with IPO cash outs and unicorn dreams.
These are the ones working long hours with little to no pay in exchange for stock options and more. Some have bought so deep into the dream they are living in shipping containers or under stairwells of others as to “suck it up” until their pay-day arrives. And it is well ensconced the implied payday will arrive – not – that it might. That’s a distinction with a very big difference. Don’t let that be lost on you.
Oh, and that other line, or should I say lines? To wit:
“At such a low valuation, Holmes’ stake is essentially worth nothing. Theranos investors own preferred shares, which means they get paid back before Holmes, who owns common stock. According to VC Experts, investors in Theranos own a particular kind of preferred equity, called participating preferred shares, which take precedence to common stock in the event of a liquidation.”
So the question that will most assuredly be spinning around anyone’s head who is on the “work for stock” styled incentive plan will be this: If she owned 50% and now she’s worth nothing – what the hell are mine worth?” Again – regardless of which company they are in. This question will now be asked by an ever-increasing number. And the resulting answers may not be what any of them ever considered. Ever.
Back in October of 2015 I wrote an article titled “Crying Towels: Silicon Valley’s Next Big Investment Op” I reference it routinely for it was jeered by so many I’ve coined as “aficionados” taking to platforms as to out right mock, and pooh-pooh such observations. And in that article I posited the following:
“And this brings on a whole host of other meme shattering, break out the “crying towels” type arguments. For if it can happen there – guess where else it’s going to begin happening? Is ________________ next? Just fill in your current favorite high-flying Non-GAAP social darling on that line – for it’s going to happen at all of them very soon in my opinion. Much sooner than many now even think or ever thought possible.
“Coders” will gladly live in some single bed shared between 8 others apartment somewhere near the Valley. Heck. they’re now reporting stories how one can live in a shipping container on the cheap in San Francisco. Sounds fantastic right? Well, it is. As long as the dreams (and expectations) of landing the dream job in a start-up or similar where riches based in stock options and more are forthcoming or, dangled like carrots in front of wide-eyed dreamers.”
Now, here we are just 6 months later and you be the judge as to who was looking through the correct prism as opposed to a kaleidoscope?
To reiterate – I’m going to implore that you don’t shrug off this Theranos scandal and debacle as a one-off type representation. I am of the opinion this is far deeper with far more repercussions than most grasp. So much so I think it helps put more finality to the question that so many in “The Valley” held up as both unanswered and more importantly unanswerable implying “it ain’t gonna happen” because “This time it’s different.”
Marc Andreessen (to be clear – this isn’t a slight, I’m a fan and respect his insights. I just disagreed with his current conclusions) for years one of the most vocal VC’s railing against the idea of a bubble currently taking place in “the Valley” used the following saying as to shrug off even the idea. It comes from the Warner Bros™ cartoon character Martin The Martian (one of my favorites by the way) “Where’s the kaboom? There was supposed to be an earth-shattering kaboom!”
Well, like I stated in February, The “kaboom” has not only been heard. It’s becoming more frequent, as well as, louder with an ever-increasing amount of dangerous fallout. So much so they can no longer be muffed by any amount of spin. As a matter of fact, the more spin, just like centrifuges, it increases the power with ever higher decibels for every subsequent one that goes off. And I’m of the opinion: we’ve only entered into the overture portion where the main fireworks display has yet to come.
(Be fore warned – this is an informational article wrapped in a rant. So don’t say: I didn’t warn you)
As we sit here today (today being the day after Memorial Day) I felt compelled to state a few insights that I’ve learned over the last few years. Some of you might agree. Others, not so much. Whether you agree or disagree is always entirely up too you. However – there is one caveat which can’t be pooh-poohed away as so many like to do. And that caveat is this: Others talk, write, or speak about what others do. I do – then speak, write, or explain how I did it, and give insights as to how you can to via those experiences.
If you don’t believe there’s a monstrous chasm between those two – then you should stop reading right here. For there’s nothing else I can say, or do, that would be worthwhile for your attention. And quite honestly, we’d both be better off for it.
Some of you have been with me (e.g., reading this blog) for years. Others are new as in days, weeks, or months. And some have been since the very beginning in ’09. As I’ve always tried to make you aware – No one, and I do mean that sincerely, no one appreciates your decision to read even one word of my thoughts more than I do. And I do not take it for granted. Never have – never will.
So with that said, I want to share a few things which both myself and StreetCry™ are quite proud. If you’ve noticed we made a slight change to one of the images on the front page of the site. We changed the graphic from “Read in over 100 Countries” to “Now Read in over 165.” I’ve had people ask me questions like “What? Are you counting every bot or spamming known country also?” As to try to diminish the achievement no matter what it may be at the time. Or said differently – There’s always someone who wants to pee in your pool. Regardless. It’s just the way of the world.
Sometimes as I’ve shared many times “It’s a fair point.” depending on the sincerity of the question. But there are others when you instinctively know the difference. So when I reply “Well…which countries are the biggest culprits?” I usually get a blank stare or a “Well…ah…um….” in which case I say, “No problem, take 10% off the top, that would surely cover it, but since you asked and it seems a concern for you – make it 20, or better yet, make it 50%. Cut it right in half. That would put me somewhere in the neighborhood of over 50 countries where people are actively coming to my site either to read, or find out more about me. How many people are actively searching for you – daily?” Response? “Well…ah…um….” (and that’s when it was at 100+, now it’s 165+)
I say this not to be arrogant or trying to make some brouhaha about readership. However, what I am trying to impress upon you is this: Know your numbers, know your metrics, measure what’s important to both yourself and your customers – and let the critics and holier-than-thou’s steep in their own juices. Period. And when you know someone’s trying to “make a show” of their intellectual superiority at your expense – shove it right back at them. Be unapologetic about it also. For they’re more or less just trying to swat you for their own ineptitude or flailing results. They don’t give a rats arse about what you think – only how they can possibly upstage you, or insult you. Have none of it. Again – Period.
Back in ’09 when I first began putting my thoughts to digital paper, just like anyone else, I had no idea if anyone would ever read a word. Yet, I had another problem much worse than most – I can barely spell cat without a spell checker. And when it comes to punctuation and grammatical errors? Let’s just say if there was a literal literary prison for my violations? I would surely have been sentenced to life with no chances of parole. I’m not proud of that fact (and have openly stated, as well as, explained it many times) however, I’ve been honest and open about it for the sheer fact that if people are going to pay me as to find out how they might achieve results? I had better be ready to show my own accomplishments along with my failings – warts and all. Which by the way is the antithesis of what most do. Trust me, I know.
However, I, too this day – try to be better. Every single day. I don’t say “Well it’s the best that I can do and that’s that.” No, it is the best that I can do today, but I try harder to be better tomorrow. I search out ways to be better, everyday. I read others and look for clues. Or, search out tricks as to maybe help. Sometimes it helps, sometimes, not so much. But I try.
And that makes the difference between winning and losing more than 90% of the time. Just the sheer act of searching out and trying to improve oneself even by small steps – regardless of the endeavor – puts you ahead of most because the most they’ll ever do is wish, and hope, and complain about how the odds are stacked against them. And most will quit before the real game ever begins.
So with that said, yes, today as well as yesterday was the best that I could do, and that’s that.” But (and it’s a very big but) I put it out to the world signed with my name at the bottom where I stand behind every word that I write. They’re mine, the ideas are mine, the insight is mine, and what you do with it is up to you. I can’t give, nor ask for more.
I would now assume a few of you are thinking, “OK, so what started this post (or rant) to begin with?” Fair question, and It was this…
Early Monday morning (Monday being the holiday) I came into my office bouncing with delight for I have been working on quite a few projects simultaneously and was finally starting to feel I was making headway. (announcements will be forthcoming soon) And so, I decided this day I would open the emails which come into the site. (as some know I usually don’t V.V. at StreetCry does) when I was greeted by the following…
First there were confirmations on people who had recently signed up as subscribers (which I would like to say thank you to all) and more. And then about the third email in I came across the following to the question: How can we help you? To wit:
“I’ve been reading your essays off and on for some time, but less and less frequently. Your grammar and punctuation are so poor that it makes the experience of reading your writings very frustrating.
May I suggest that you either hire a professional editor or take a crash course in writing with emphasis on grammar and punctuation. Doing so will not only make your message clearer but also allow you to rise above the herd of other similarly poorly disciplined or poorly educated financial writers.”
Now one may think at first blush, “Well… they’re just trying to help you. After all, even you know of your challenges.” That would be a fair point, and in some ways, I can agree. But it’s the last part, of the last line (e.g., “…the herd of other similarly poorly disciplined or poorly educated financial writers.”” where it’s obvious – this is meant as an intentional slight, as in: unsolicited feedback as to make themselves feel superior at your expense.
I’m here to tell you, I’ve dealt my whole life with people like this – and they aren’t worth the breath you’ll use to try to convince them otherwise. Far too many people I have deduced shake in their boots the minute someone questions either their abilities or credentials. And with that they end up leading a sullen life of hampered or reined in expectations for their own self-worth.
They’ll dream big, but do nothing to accomplish for fear of criticism from people such as the one who sent me his thoughts. Again: this wasn’t done for my benefit – it was done for theirs. i.e., throw an insult out wrapped in “Oh I’m just trying to be instructive.” Sure you are.. thanks…and don’t let the door hit you on the way out.” That’s me just trying to be “instructive” in return.
Because here’s where his argument falls apart: Are you here for my punctuation and grammatical skills? Or, are you here to find ideas you can’t find anywhere else that you can put to work immediately to either improve your business or personal metrics as to leapfrog ahead of them? Because: most if not all of the people who either read my work, or pay to have me speak (and as I’ve iterated – I’m not cheap) do it for the latter.
All they are concerned about is whether or not the ideas I express can either move the decimal point further to the right, add an additional comma to their bank statements, or help them achieve results they didn’t at first know how to go about. As far as the punctuation or grammatical errors that maybe contained within to elicit those ideas? They are inconsequential. And I’ve had that expressed to me, in person, as well as, via other methods far more than once. And if that wasn’t the case – I wouldn’t need to even be expressing this to begin with.
Let me share a little back story here as to possibly help fill in a few details as to show you why (or even have the audacity) to even write what I do, or how I do it.
As some of you know back a few years ago Seth Godin started an online sales/business e-magazine called UpMarket™. A calling for writers was made public and people from around the world were asked to send in submissions to be a charter weekly contributor. The slots were limited. I knew nobody, barely had any readers, but followed one of Seth’s own motto’s of “pick yourself” and sent a submission – and got picked. Who knows how many others sent in the same that were either schooled writers or actual free-lancers. For Seth as many of you know is not only well-known and followed in the writers circuit if not more, than the entrepreneurial circuit alone.
When it came time for my first submission I had a conversation with my editor (and yes, there was even an executive editor!) where I expressed my weakness when it came to punctuation and grammatical skills. What I told her was this, “I’ve tried using writing programs such as Word® and Pages® however, what happens is I spend what seems hours making corrections that either don’t feel right or just seem wrong. And in the end – I don’t know either way. So what I do now is just write how I think or speak, use the built-in spellchecker in WordPress™, and if it passes there I’ve done all I can do. I’ll never forget her response, “No problem. If I have an issue, I’ll tell you. If not – don’t worry about it.” And that was that. She never asked me for a rewrite and ran my articles basically as submitted where I noticed maybe once or twice where one or two punctuation marks were either removed or added in a 1000 word article. And I believe that happened once or twice in total.
Now I state the above for this reason: After months of the viewership and readers growing at a breathtaking accelerated pace Seth and the people of Squidoo™ decided to spin the e-zine off and sold it. I received notice that my submissions were no longer going to go through my editor for she had left. I now had a new one. The difference?
My first submission came back with questions and notations of could I change this, could I change that. Submit a rewrite. Submit another. Maybe change the last sentence it doesn’t seem to fit, and more. And remember – this is my first submission with the new editor!
I decided to say thanks, but no thanks to the last request and dropped out of the contributor list. Everybody else remained. Where are they now? At last I checked the only one’s still writing and publishing at any level is Seth and myself. All the others have either stopped long ago, or moved onto other ventures that seem to not entail writing. For I’ve searched – and they’re nowhere to be found. And that seems to be the same for the editor who suddenly decided I needed to change everything I wrote – then change it again.
The rest they say, “Is history.” But better yet, as I like too say, “The facts speak for themselves. And I no longer have to speak for them.”
So getting back to this “165 Countries” claim. It is a fair point to ask “Is that a tally of every country ever?” The answer is: yes, it is. But there’s also a second part to that “yes” which makes the claim far more credible: As of May, only 5 months into 2016, the site has been read in 122 countries. Not since 2009, no, that is just the past 5 months. On average as I’ve documented previously we get visitors from about 10 to 15 differing countries every day. Some of you may remember when I first started putting the graphic up and it was at 50. Even then I was absolutely awed. Now, I can comfortably state (as well as prove with verifiable metrics) my writings are seen near weekly across the known world.
I have now written over 1,000,000 (yes, that is one million) words on this site. That’s the equivalent of 40 (yes forty) standard business books in well under 10 years. Most people never write the equivalent of 1 in a lifetime. And all of it has been about ideas or insights one can use in their daily business or personal life. Not what I had last night for dinner or some other mundane topic.
My work has either been listed, run, referenced, or my name mentioned on some of the largest media sites across the globe. Depending on where my articles suddenly appear my viewership ranges from a few million to gusts of over 50 million respectively. And those figures are not pie in the sky. They are verifiable, widely accepted, standard industry metrics. My first book was downloaded in over 30 countries within its first week (again warts and all) with no fan fare, no build up, no nothing along with being released in the worst period for a book role out (the week before Christmas) and hit metrics many a “best-selling” claiming author only wished they had.
That’s not bragging…that’s just stating facts. And those are facts I can be proud of no matter who knows about them or not. It doesn’t matter: for I do. And that’s what matters most. For at least I’m not kidding myself as far too many others do. They’ll waste so much time and energy doing things that matter jack squat. Think I’m kidding? Ask someone how many “likes” they received today, and what it means. Then you be the judge.
I was once asked at a meeting “Well I’ve never seen you in Barrons™ or Bloomberg™ and a few others” To which I replied:
“And you’ll probably never see me in the NY Times™ or The Economist™ either. However, I have been on ZeroHedge™ and a few others which are far more relevant, as well as, important than those others combined. Because the people who really want to know, and here’s the real key: it’s important that they do know. Go there.
The people who are reading the others to near exclusivity just want smoke blown up their you know where as to feel, as if, they’re ‘in-the-know.’ But if that’s all they are reading – they know jack squat. Period. So yeah, I really could care less about being seen there. Too me – it would be as meaningless as getting 100,000 “likes” on Facebook™.”
This is usually when whomever brought me to the room, or meeting, begins to break into a cold sweat. However, this is also the point people who understand real business and ideas want to not only hear more – they’ll pay for it because they understand the difference between an investment – and an expense. Remember: Expenses get relegated to Purchasing and Human Resources Departments. Investments are relegated and handled in the C-suite. If you don’t understand the difference in that one line – I’ll garner you’ve wasted a lot of time and money hearing “Well, we’ll get back to you.” Or better yet…”We want more of a discount to move forward.”
Another place where I make statements like this are usually when I’m speaking in front of a group when someone wants to throw a stab. These are usually from people who only want to justify to themselves that I (or someone else) aren’t doing things the way they believe the rules or markers should be set at. After all, as the thinking will go, “I graduated as an English major and can’t get more than 2 readers on Facebook. Yet, here is this guy who can barely spell cat and he gets actual press?! The absurdity and nerve of it all! He must be paying people under the door!!” or other such nonsense is the insinuation. When I tell them I don’t use Facebook, Twitter™, or all the other social “must do’s” they’ve been told (and sold) must be used? I sometimes think they’ll just about lose their minds right then and there.
Currently when I give my talks I usually start with this brief statement as to set the tone. It may seem harsh for some. For others, it might border on arrogant. However, to the people it’s meant for – it’s not only appreciated – it’s what they’ve paid for. For as some of you know to book one of my workshops – I ain’t cheap.
My first words usually revolve around something like this:
“Let me make this clear as we start. My discussion, ideas, and explanations are meant for the top 1/3rd of the attendees here today. Knowing who or which ones you are, I can’t tell. However, with that said, this meeting is designed to be both provoking, as well as, tip-of-the-spear styled conclusions or applications. In other words – I want to discuss things at the tip-of-the-spear where the information, the premise, as well as, the results are ahead of those who are on the-cutting-edge. As the analogy suggests – this is a concentrated, first to the target discussion. We’re here to be first. I can’t, nor won’t allow as to be bogged down with remedial reviews during our discussion of what should or would be known by the top 1/3rd. If you feel you’re being left behind I’m sorry. But you can easily catch up on your own later with more research or learning as to get up to speed. For those that are already up to speed – they don’t want to go over what they already know. This is where everybody learns. The learned can learn what they didn’t previously know, and those who don’t know they didn’t know – can understand what they may need to know better with less frustration, because those deficits can be learned without being embarrassed on one’s own time. Yet, do not let this point be lost on you: Just you attending puts you into the top 5% of the top 5% of business leaders bar none. Remember that. Most can’t be bothered with furthering their knowledge or insights, which is good for you – for that’s who your competing against.”
That’s not some rah-rah-rah type of message as to get people going. I mean it. For if I work as to not bore the top 1/3 of any group? The entire group benefits, as well as, myself. For if the top 1/3 is engaged? The remaining will also and everyone gains.
Let me give another example as to express more deeply using an old story I learned years ago, followed with an example that is of my own.
I learned early on when I really began to accelerate in sales the old adage of “sell – don’t spell.” It was in relation to a weekly missive we would receive where real life examples were written as analogies for salespeople as to help in motivation. It was a story about a sales order that was left on a salesperson’s desk the night previous and was seen by his fellow sales brethren the next day before he arrived. It written in such intelligible English and so severely misspelled that no one could make heads or tails out of it till the salesman came in that morning to put it into the system himself.
As this salesman went to enter his order he was met with jeers and snickers as to just how “third grade” was the handwriting he used to write the order, and how embarrassing it must be for the company to have such an illiterate representing this fine upstanding well established company. There was an issue with the order, but it was one that took everyone’s breath away leaving most speechless.
Once the order was entered it was verified to be the largest single, most profitable order the company had ever taken in its many decades of existence. Hence its title, “Sell! Don’t spell.”
So how does something like that pertain to me? I’ll just use the following and let you decide.
Back in April of 2014 I wrote the following article: “The Scarlet Absence Of A Letter Of Credit” In that article I made the argument that there was something wrong, or something very peculiar going on within the commodity space that one should be on high alert for. At that period of time, iron ore in particular, was still holding within its lifetime highs of well over $100. To be precise, at the time of that article it was at $115 there about. Everywhere in the financial press (i.e., your Bloomberg, Economist, Barrons, etc., etc.) was making the case for how the commodity boom was here to stay and why. If you’ll remember, it was China, China, China, China, China.. that would make it so lower prices were a thing of the past. As you can read for yourself I argued something entirely different. What happened next?
Over the next 18 months or so, iron ore went from about $115.00 to about $41.00 That’s a drop of nearly 2/3rds of value. This caught everyone not only off guard but also sent many a commodity producer into not only panic mode, but for some bankruptcy mode. The names are some of the largest global concerns in the world. Don’t take my word for it – look them up for yourselves. This way you are the ultimate judge – not me just saying so. That call or warning? It’s in the $100’s of BILLIONS of vanished market value. Again, don’t take my word for it. Use your own research. But one thing I can’t make up – the date of that article, the warnings and why contained within, and the resulting market action following.
And as you do your research you’ll find except for myself, and a few others at ZeroHedge – that type of thinking was argued by all the other “business” media outlets as either “misinformed” or “ill-informed.” Here’s a chart to demonstrate. To wit:
Now maybe there are a few typos, as well as grammatical errors contained within my article. However, if you are a CEO of a company who needs to understand what may be headwinds to your business that you want to anticipate before or competition even realizes they need to take action? Whether it be a hedge against you current inventory demands for your use of steel or other commodities? Or even still, if you’re just a middle man or salesperson within an industry that depends on you knowing first before others as to help decide whether you should or should not take other actions ahead of your competition? You read that article (warts and all) and found information that would significantly impact your bottom line that was basically missed everywhere else. And specifically – not only missed, but pooh-poohed as “Chicken Little” type talk across most of the main stream “business” media.
This is only one example. As some of you know, there have been others. However, I will end with this last one in-particular. And it is this…
Back in November of 2014 another person in my field named Tony Robbins released a book on the markets and how you should go about navigating them. I will only say this:
That book is perfectly edited, more than likely every I is dotted, and t has been crossed, and searched high and low for grammatical errors. I’ll even wager to say, as far as books go – it’s probably right up there with the best as far as that criteria is concerned. However, for the details contained within? And the advice it portends to give?
I’ll stack up mine up word for word, warts and all. And I’ll again wager dollars to doughnuts there are more actionable, intuitive, and understandable reasoning’s as to what to look for, and how to see them, ideas about the “markets” and business contained here – than in his. Period. And too boot: If you’ve been able to look past the typos and disseminate the ideas or information that is useful and pragmatic to yourself? I’ll again wager that you’re far more ahead today, with a better grasp of what is transpiring, and how to view it – than what you garnered from his.
And that’s not some knock on Tony, for as I stated when I made arguments concerning it when released, “I’m a fan of Tony.” But with that said – the facts lie where they do. Only you can decide what they mean to you. And what ever they may be I have only one thing left to say, and I truly mean it.
To everyone who’s ever read, or heard, a word of what I’ve had to say. Whether you took something from it and used it, or not. Thank you. I’m always grateful and humbled.
Other than that – I have no strong feelings on the above matter. And if you’ve read this entire piece? May the good Lord have blessing in store for you. For you surely deserve it after this diatribe.