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Tuesday, June 30, 2015

The Value of Money - Part 4

- I previously remarked that since we use the concept of 'deterrence' so readily throughout the world we are in a de-facto state of 'Cold War' whose weapons are defense, intelligence, and economics. There's a lot of interesting information out there...
- it makes sense that companies try to run lean rather than try to create. Everybody knows how to save. It's much more difficult to create something of value
- advertising is a broadcast means of achieving increased transactions but in spite of targeted advertising it is still incredibly inefficient. Based on previous experience even single digit click through rates for online advertising is considered suspect/possibly fraudulent 
- the easiest way of estabishing the difference between what's needed and what's wanted is to turn off all advertising around you. Once you've done that, the difference between need and want becomes very strange and the efficacy of advertising on your perspective becomes much, much clearer
- most businesses fail. A lot of people basically have trouble running a business, have flawed business models, or don't achieve enough transactions to make it worthwhile
- immigration is a good thing provided that the people in question bring something to the economy. I look at the Japanese situation and wonder whether or not immigration is a more cost effective means of dealing with their ageing problem than 'Abenomics'. Even if all they do is re-patriate former nationals...
- if you run through their numbers carefully, and think about where many of the world's top companies are headed, the performance (net profit in particular) of some of them aren't any where near impressive (percentage wise) as the share price growth in recent history. There are many small/mid cap firms that would out do them (% net profit wise) if you're looking to invest
- in software engineering people continually harp on about the benefits of Agile, Extreme programming and so on. Basically, all it is maintaining regular contact between staff members to get the best out of a piece of work. Peer pressure and continual oversight also forces you to remain productive. Think about this in the real world. The larger the teams are the more difficult it is to maintain oversight particuarly if the manager in question is of a poor standard and there are no systems in place to maintain standards. There is also a problem with unfettered belief in this metholodgy. If in general, the team members are unproductive or of a poor standard this will ripple throughout your team
- GDP is a horrible measure of productivity. As I've stated previously, the difference between perceived, effective, and actual value basically diguises where true value lies. Go spend some time in other parts of the world. I guarantee that there will be a massive difference in the way you view productivity (productivity means amount of work completed per unit time not overall work)
- a good measure of a person's productivity/value is what happens if they take a day off or a have a break. Observe, the increase in workload for each other staff member and how they deal with it
- people keep on harping on about self interest as the best way of maintaining productivity and encouraging people to work hard. However, I have a huge problem with this as it is incredibly hard to differentiate between actual, effective, and perceived value sometimes. At one particular firm, we had difficulties with this as well. I was therefore tasked with writing an application to monitor things (if you intend to write something along these lines please be mindful relevant HR and Surveillance laws in your jurisdiction. Also, keep the program 'silent'. Staff will likely alter their behaviour if they know that the program is running.). The funny thing is that even people you think are productive tend to work in bursts. The main difference is the amount of time that trasnpires between each piece of work and the rate of work that occurs during each burst. The other thing that you should know is that even with senior members of staff when you look at a lot of metrics it can be extremely difficult to justify their wage. Prepare to be surprised if you currently have poor oversight in your organisation. Lack of proper oversight breeds nepotism, lack of productivity, etc...
- you'll be shocked at what poor staff can do to your team. If the members in question is particularly bad he in effect takes a number of other staff out of the equation at the same time. Think about this. You all are recruited for highly skilled jobs but one team member is poor. If he continually has to rely on other staff then he in effects takes out another member of your team simultaneously (possibly more). Think about this when training new staff. Give them enough time/training to get a guage of what they'll be like but if they can't hold up their part of the deal be prepared to move them elsewhere within the organisation or let go of them. The same is also true in the opposite direction. Good employees have a multiplier effect. You'll only figure out the difference with proper oversight and monitoring. Without this, perceived value may completely throw you off
- we like to focus in on large companies because they supposedly bring in a lot of business. The problem is if they have a monopoly. If they strangle the market of all value and don't put back in via taxes, employment, etc... the state in question could be in a lot of trouble down the line. If/when the company moves the economy would have evolved to see these companies as being a core component. Other surrouding will likely be poorly positioned to adapt when they leave for a place which offers better terms and/or conditions. The other problem is this, based on experience people are willing to except a lower wage to work for such firms (mostly for reasons of financial safety). There is no guarantee that you will be paid what you are worth
- when and if a large company collapses or moves the problem is the number of others who rely on it for business
- people keep on saying that there are safe industries from off shoring and automation. I think they're naive or haven't spent enough time around good technologists. Good employees will try to automate or develop processes to get things done more efficiently. Virtually all industries (or vast chunks of them) can be automated fully given time (trust me on this. I like to read a lot...).
Only way to keep yourself safe is to be multi-skilled and entrepreneurial or else extremely skilled at a particular profession. Even then there's no guarantee that you'll be safe
- sometimes I think people just don't get it. A small number of outliers is all it takes in order to change group behaviour. Even if we ban regulate/automation there will be those who adopt it without any misgivings much like organised crime, and use of illegal migrants, cash economy, etc... Only real way is to force a cashless society so that we can run algorithms to check for unusual behaviour and breed a more puritan society
- minimal but effective regulation helps to level out the playing field. Making it too complex creates possible avenues for loopholes to be exploited. Too simple and without enough coverage and you have the same problem
- obvious ways to make sustained, long term money include creating something that others need or want, else have the ability to be able to change perception, to be able to see changes and adapt, arbitrage, and using a broadcast structure
- personal experience and history of others with emerging markets such as Asia and Africa says that results can be extremely variable. Without on the ground knowledge and oversight you can just as easily make a substantial profit as a massive loss through fraud. There is very little you can do about this about from taking due diligence and having measures/knowledge to be able to deal with it should it actually occur
- in reality, very few have a genuine chance of making it 'big', "Americans raised at the top and bottom of the income ladder are likely to remain there themselves as adults. Forty-three percent of those who start in the bottom are stuck there as adults, and 70 percent remain below the middle quintile. Only 4 percent of adults raised in the bottom make it all the way to the top, showing that the "rags-to-riches" story is more often found in Hollywood than in reality."
- use first mover advantage as quickly as you can but have defensive measures in place
- investment from third parties (angel investment, venture capital, etc...) can vary drastically. More and more want a guaranteed return on investment at least though
- based on what I've experienced VC is much more difficult to get locally than in Europe or the United States. Luckily, more companies are willing to invest provided you are posting good numbers. One other thing I've discovered locally is that they are too lazy/unwilling to help even if the idea/s may be good though (though this is changing)
- we don't want to live day by day or have creditors/shareholders to report to so seek the highest profit whenever possible
- you can select a lot of numbers and prove essentially anything in business but their are certain numbers that you simply can't ignore such as net profit/income
- pay a person with cash by the hour where he has to do the numbers versus lump sump and he will look at things very differently. That goes for any profession, even high earning ones
- growth is great but only if it can be sustained and it is genuine. If you have susbtantial variation in growth such as having a few fantastic years of growth and then a sudden drop off that is fed by massive debt you could be in a bit of trouble. You may say that you can just sell off assets. If the growth wasn't good enough then do you see a problem? Moreover, what if you don't have something that it considered worthwhile or easy to sell off? For a state/business, your credit risk suddenly shoots up and you may possibly be priced out of the market. Targeted, sustainable, growth should be the target not growth at all costs. The Chinese position towards economic management is actually making a lot more sense to me now though I'm not certain that it would work quite as easily or be accepted in other states. You may say that we'll invest during good times? The problem is that we're often not wise enough to know when and where to invest
- in many places you are seeing a rise of left wing parties. The worrying thing is that they'll lose sight of the benefits of capitalism and fall into the trap of a more puritan communism/socialist system which hasn't really worked over the long term in the past. The other thing to be concerned about is that a lot of them don't have solid policies or answers to the problems which currently face us
- if more people could distinguish real value from perceived and effective value, needs and wants, we would have less assetts bubbles and price gouging across the board
- there will be those who say who cares about the collective. Capitalism is composed of boom and bust cycles. Here's the problem. Most companies require debt to survive. If they can't survive that bust cycle they will be part of a collective collapse in the economy. Moreover, based on information I've come across other developed countries have looked at the plans for the Eurozone and the ways of dealing with high debt and are basically using that as the blueprint for the future. Your assets can and will be raided in the event of the state or systemic entities getting into trouble
- people say that we should get educated in order to have a high paying job but the problem is that we are increasingly siloed into specific roles. If we can't use the knowledge, the time and money we've spent on education has been for nothing. We require better organisation between educational curriculums and professional settings
- even if governments are aware that there are problems that are cropping up with our version of capitalism, it's possible that there are those that may be saying that we have no choice but to keep the cycle going. It's the best of the worst
- globlisation essentially buys us more time before things come to a head (if they do). Most of the sceanarios point to organised debt forgiveness as a means of dealing with the problem. Private asset seizure is something that is being metioned everywhere. Raw commodities stored at secure locations may be your only source of safety if things look bad if you are a private citizen
- if you want a resilient economy you need maintain a level playing field, flexible workforce, and possibly limit the size and influence of major companies in your economy
- I don't get it. Heaps of countries have adequate blocking technology to be help deal with this if they deem it illegal. Deploy it correctly and your rioting problem is over with...
- as stated previously, I've come to the conclusion that a lot of financial instruments are useless. They effectively provide a means of making money under any conditions. If we remove these instruments from play then I think that it may be possible that we may return to less speculative markets that depend more on fundamentals
- anyone can create something of value. The issue is whether it is negligible versus tangible value. This will also determine your business model
- you may know that ther is a bubble but as China and local experiences have demonstrated popping it gracefully is far from easy. Moreover, by the time you figure out there's a bubble it may often too late. Too many people may have too many vested interests
- theory helps but you won't figure out how market economies work without first hand experience


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