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jerryking : bull_markets   5

Also Stalking the Fund Industry: Obsolescence -
Dec. 10, 2003 | WSJ | Holman W. Jenkins.

Quiz for economists: Suppose you have a competitive, transparent industry that one day begins acting in a more short-sighted, exploitative way towards its customers. What's really going on?

Here's a hint: Think of the gradual slide toward sleazier marketing by the traditional long-distance companies. When your business has a future, you invest in customer relationships. When you see your future going away, you milk them like the wasting assets they are. Big swaths of the fund management business are behaving exactly like an industry in decline...Mutual funds exploded in the 1990s, growing from less than $2 trillion in assets to $7 trillion. A long bull market helped to conceal the fact many of these entrants brought no value to the table. Their managers were, on average, merely as lucky as everyone else to be standing in the right place at the right time.
mutual_funds  Holman_Jenkins  Eliot_Spitzer  industry_analysis  obsolescence  customer_satisfaction  financial_services  luck  short-sightedness  sleaze  customer_relationships  exploitation  bull_markets  imposters  decline  '90s  cash_cows 
december 2013 by jerryking
Tired of being dumb money? Here’s how to get smart fast
Mar. 29 2013 | The Globe and Mail | DAVID BERMAN.
First, ignore the herd. Retail investors get into trouble because they like to follow the market. They love stocks when they’re expensive and bull markets are in full swing, and loathe stocks when they’re cheap and the bear is growling. Do the opposite: As the saying goes, buy when there is blood in the streets.

Second, accept that you are not Mr. Buffett. Over-confident investors get themselves into trouble because they take on too much risk in the hope of scoring spectacular gains. Instead, diversify and aim for the unspectacular, perhaps with low-cost exchange-traded funds that track a basket of stocks.

Third, think long-term. Retail investors are prone to expect their investments to pay off in a big way immediately – and when they don’t, these investors switch tactics, often with dismal results.
investment_advice  personal_finance  contrarians  long-term  patience  Warren_Buffett  overconfidence  individual_initiative  smart_people  independent_viewpoints  bull_markets  ETFs  low-cost 
march 2013 by jerryking
Go Ahead, Take a Risk
June 22, 2004 | WSJ | By ADRIAN SLYWOTSKY

What are the risks you should be taking but aren't? Most managers treat risk as an unwanted byproduct of the business. They think narrowly of financial, operating, and hazard risks, such as currency fluctuations, employee fraud, and earthquakes. And they defend themselves through practices like hedging, internal controls, and insurance.

But disruptive strategic risks can be a much larger source of value destruction for a firm. I looked back to the bull market of the 1990s to analyze movements of the Fortune 1000 stocks; even then, before the market collapsed, 10% of stocks lost over one-quarter of their value in a single month, primarily because of strategic-risk events.

The most successful companies do not try to simply minimize strategic risk; they embrace such risk by making prudent bets in their growth-oriented strategies. Strategic risks include not just the obvious, high-probability events that a new ad campaign or new product launch will fail, but other less-obvious risks as well: Customers' priorities will change quickly -- as when baby-boomer parents quickly migrated from station wagons to minivans, catching most automakers off guard. New technology will overtake your product -- as mobile telephony has stolen market share from fixed-line voice. A one-of-a-kind competitor will render your business model obsolete -- as the Wal-Mart tidal wave has washed over mid-range department stores.

Although insurance and hedging can't address strategic risks, there are an array of countermeasures that can, including these three:
1) Smart sequencing for new growth initiatives. Look for incumbents that are moving deliberately, leveraging existing assets and customer relationships to gain the experience, knowledge, and reputation necessary to take the next step with confidence.
2) Proprietary information to reduce the risk of each new initiative. Gather and generate proprietary information that produces a depth of insight into the customer's needs and activities that traditional suppliers cannot match. This will make you a supplier of choice, reducing bidding volatility and allow you to plan with greater certainty.
3) Double betting to minimize the risk of obsolescence. When several versions of a new technology are competing to become the standard, it's impossible to predict which will prevail. So smart managers make double bets. Betting on both Windows and OS/2 positioned Microsoft to be the winner, regardless of which operating system prevailed.

Traditional risk management seeks to contain losses. But that's just one-half of the growth equation. By embracing strategic risk, Cardinal, JCI, and other risk-savvy companies have raised their growth potential in addition to reducing their economic volatility. That's important at a time when aggregate market growth is sluggish: The biggest risk of all is not to take the right growth risks for the business.
leaps_of_faith  Adrian_J._Slywotzky  risk-taking  proprietary  sequencing  scuttlebutt  information  growth  strategic_thinking  Mercer  Oliver_Wyman  product_launches  nonpublic  low_growth  slow_growth  insights  customer_insights  value_destruction  disruption  insurance  new_products  obsolescence  countermeasures  volatility  customer_risk  one-of-a-kind  hedging  overly_cautious  risk-aversion  de-risking  double_betting  risk-management  bull_markets  customer_relationships  dark_data  risk-savvy  internal_controls  financial_risk  risks 
june 2012 by jerryking
Innovation isn’t in Canada’s DNA
July 24, 2009 | | by Paul Wells. “I don’t think
you could say that innovation is deeply in the DNA of our Canadian
business enterprises,” he said. “We have built prosperity, up to and
including this decade, on a fairly basic paradigm: we are rich in
natural resources. We’re good at harvesting them. And we have built a
manufacturing and processing sector, and to some degree a services
sector, which has been quite successful in exploiting access to the U.S.

So Canadian business often doesn’t do much more than build factories 20
km north of the U.S. border and lob products 50 km south. For years,
that model got a lot of help from a cheap Canadian dollar. “I got into a
certain amount of trouble when I was deputy prime minister for saying
you shouldn’t mistake a bull market for brains. The fact that the
Canadian dollar was trading at 62 cents . . . you shouldn’t take that
for granted.”
innovation  John_Manley  productivity  Canadian  CCCE  Paul_Wells  complacency  natural_resources  beyondtheU.S.  loonie  weak_dollar  bull_markets  imposters 
september 2011 by jerryking
Growth's perilous seduction
Feb. 13, 2006 | National Post | by Michael Urlocker, a
management consultant and former Bay Street analyst, points out,
pursuing non-existent growth can be a killer. "To me the question, "Are
we in a growth market or are we in a bear market?" was the single most
important one I asked during the tech meltdown."

By National PostFebruary 13, 2006
growth  assumptions  BCE  bull_markets  bear_markets  questions  the_single_most_important 
february 2010 by jerryking

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