Thursday, October 17, 2013
The Big Winner in the Financial Crisis, from The Economist
The Economist has an article from September about how Wells Fargo really emerged from the 2008 financial crisis as a "winner." Read all about it here.
Thomas Sowell on the government shutdown
Casting blame is usually futile, but I offer this post as an attempt to sort out the facts. After all, Bernard Baruch said
"Every man has a right to his own opinion, but no man has a right to be wrong in his facts."
Thomas Sowell writes here about the facts in the government shutdown. What's important in this discussion isn't the hype or political posturing (although he identifies the opinion points as well).
What's to be learned from this episode in American history? Control the media, control the message, and you can do whatever you want to. It's the same in local politics or national politics or within your own business. When people hear the same things over and over they will start to believe them, regardless of whether or not they are factually accurate. And most people, we've seen, won't take the time to ask research questions on their own or to understand the basic economic forces involved in political decisions.
Dr. Sowell was nice enough to leave out any reference to bullying. Now that society is starting to commit more resources to "anti-bullying" campaigns and measures, I wonder how the Washington situation looks in light of our renewed awareness of bullying. Shutting down national parks although 83% of the government remained open? Refusing to negotiate or discuss compromise on any terms? Dr. Sowell points out the flaws in our current leadership, but he's nice about it.
For the record, a management style that says "my way or the highway" isn't going to leave any lasting impressions on this world. Notice I referred to it as a "management" style - that certainly isn't good leadership. Leadership finds a way to address the issues that concern its constituency, and that means EVERYONE in its constituency. In this case the Washington leadership would be better served by listening to those folks who they expect to PAY FOR the ongoing shenanigans and renewed social welfare agenda. They may end up leading just themselves and a few cronies by the time it's all said and done.
"Every man has a right to his own opinion, but no man has a right to be wrong in his facts."
Thomas Sowell writes here about the facts in the government shutdown. What's important in this discussion isn't the hype or political posturing (although he identifies the opinion points as well).
What's to be learned from this episode in American history? Control the media, control the message, and you can do whatever you want to. It's the same in local politics or national politics or within your own business. When people hear the same things over and over they will start to believe them, regardless of whether or not they are factually accurate. And most people, we've seen, won't take the time to ask research questions on their own or to understand the basic economic forces involved in political decisions.
Dr. Sowell was nice enough to leave out any reference to bullying. Now that society is starting to commit more resources to "anti-bullying" campaigns and measures, I wonder how the Washington situation looks in light of our renewed awareness of bullying. Shutting down national parks although 83% of the government remained open? Refusing to negotiate or discuss compromise on any terms? Dr. Sowell points out the flaws in our current leadership, but he's nice about it.
For the record, a management style that says "my way or the highway" isn't going to leave any lasting impressions on this world. Notice I referred to it as a "management" style - that certainly isn't good leadership. Leadership finds a way to address the issues that concern its constituency, and that means EVERYONE in its constituency. In this case the Washington leadership would be better served by listening to those folks who they expect to PAY FOR the ongoing shenanigans and renewed social welfare agenda. They may end up leading just themselves and a few cronies by the time it's all said and done.
Wednesday, October 16, 2013
Monday, October 14, 2013
Data visualization and the birth of modern statistics (or something like it)
Data "visualization"? Isn't that just a big map with pins in it? Well... sort of.
I'm reposting a blog that discusses how John Snow identified the source of the 1854 cholera epidemic in London and used visualization to convince politicians to shut down the town pump. Interesting. A good reminder about how stupid politicians can be sometimes.
I'm reposting a blog that discusses how John Snow identified the source of the 1854 cholera epidemic in London and used visualization to convince politicians to shut down the town pump. Interesting. A good reminder about how stupid politicians can be sometimes.
Monday, October 7, 2013
AFP posts survey condemning debt and budget fight in Washington. Or does it?
The Association for Financial Professionals (or AFP) has released the results of a survey it conducted on 10/3 and 10/4, asking financial managers about their intended behavior and the anticipated results of a government shutdown. You can find the press release here with a link to the actual survey results farther down on the page.
The press release is worded to make one think that there would be a staggering number of executives who are worried about federal government budget shenanigans. However, if you look at the survey results themselves, it turns out that the overwhelming majority of financial managers don't plan to change their behavior, and don't anticipate major market responses to either a fight on the budget (the shutdown) or a fight on the debt ceiling.
This survey, in particular, doesn't separate (or even try to separate) the overriding effect of uncertainty on the business decisions it is focused on. If there's no way to understand how healthcare costs are going to change for individuals and businesses, and there's no way to project how new government expenditures are going to be paid for without tremendous corporate and individual tax penalties and increases, then the level of uncertainty alone may be enough to drive some very dim estimates and responses out there in the world. The failure to address the decision-making environment BEFORE the debt fight really makes some of this stuff questionable.
Don't take my word for it - go get the survey results and read it. Remember, too, that without hard info about the group surveyed and the wording of the entire instrument (the questions themselves, all of them, and the instructions) then surveys are usually unreliable. In this case, too, I think it suffers from the "Big Bad Wolf" effect - respondents have no way of knowing what WILL happen, based on experience, and so the act of taking a survey itself may change their answers. Heisenberg was a genius!
For example:
Meanwhile, half of the respondents say that a government default would harm their organization’s access to, and raise their cost of, capital. An increase in the cost of bank credit and higher cost of debt financing were each cited as possible outcomes by 27 percent of financial professionals.
27 percent! That should read "73 percent thought that a higher cost of bank credit and debt financing were not possible outcomes from the current fight." See Huff, Darrell, How to Lie with Statistics, now in it's 400th edition (that's not much of an exaggeration, really).
It's not unheard of for professional organizations to sell out to political interests (completely), but I find it unusual that they would post the actual results and then spin them so poorly. Perhaps the AFP should stick to doing research about finance.
The press release is worded to make one think that there would be a staggering number of executives who are worried about federal government budget shenanigans. However, if you look at the survey results themselves, it turns out that the overwhelming majority of financial managers don't plan to change their behavior, and don't anticipate major market responses to either a fight on the budget (the shutdown) or a fight on the debt ceiling.
This survey, in particular, doesn't separate (or even try to separate) the overriding effect of uncertainty on the business decisions it is focused on. If there's no way to understand how healthcare costs are going to change for individuals and businesses, and there's no way to project how new government expenditures are going to be paid for without tremendous corporate and individual tax penalties and increases, then the level of uncertainty alone may be enough to drive some very dim estimates and responses out there in the world. The failure to address the decision-making environment BEFORE the debt fight really makes some of this stuff questionable.
Don't take my word for it - go get the survey results and read it. Remember, too, that without hard info about the group surveyed and the wording of the entire instrument (the questions themselves, all of them, and the instructions) then surveys are usually unreliable. In this case, too, I think it suffers from the "Big Bad Wolf" effect - respondents have no way of knowing what WILL happen, based on experience, and so the act of taking a survey itself may change their answers. Heisenberg was a genius!
For example:
Meanwhile, half of the respondents say that a government default would harm their organization’s access to, and raise their cost of, capital. An increase in the cost of bank credit and higher cost of debt financing were each cited as possible outcomes by 27 percent of financial professionals.
27 percent! That should read "73 percent thought that a higher cost of bank credit and debt financing were not possible outcomes from the current fight." See Huff, Darrell, How to Lie with Statistics, now in it's 400th edition (that's not much of an exaggeration, really).
It's not unheard of for professional organizations to sell out to political interests (completely), but I find it unusual that they would post the actual results and then spin them so poorly. Perhaps the AFP should stick to doing research about finance.
Thursday, October 3, 2013
Should you get an MBA? An excellent analysis based on Business Model
LinkedIn today has a great article on whether you should get your MBA. [If the link doesn't work, just search for " Should I get an MBA? Entrepreneurial Finishing School. "]
The gist of the article is that an MBA will help you move beyond the start-up phase of a business (or, by analogy, your career). The added depth and breadth that an MBA will give you can help you understand the later, more mature phases of a business.
A couple of things to bear in mind:
1) Later stages of a business are different (and often just as tough or tougher) than the early parts. Some people are addicted to the thrill of the chase, too, and that makes long-term commitment (even to a career) difficult.
2) There are lots of MBA programs out there, and many of them are even accredited (by somebody, somewhere). A low-quality MBA program won't really help you learn anything - it just gives you a piece of paper. If the program doesn't challenge you or push your boundaries, then it isn't going to really give you anything to take away or use to your advantage later.
3) The MBA should be less about management and more about leadership. Some MBAs even pride themselves on their entrepreneurship focus. Make sure the program you pick suits you, but remember that the MBA is a general degree. Sure, you can specialize if you want to, but when you're done it's expected that you will have a well-rounded understanding of everything that business is about. If anything, you should come out with a good set of quant skills, especially in analysis, finance and accounting. You should come out knowing how to express yourself in writing and in an oral presentation. If those things somehow elude you during your schooling, your MBA won't help you much.
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