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Showing posts from 2011

Bumper stickers worth saving

Author of a book I read ("Spent" by Geoffrey Miller) claims these are actual bumper stickers in Albuquerque, New Mexico:

"A PBS mind in a Fox News world"
"Don't say ironic when you mean coincidental"
"Eschew obfuscation"
"If it fits on a bumper sticker, it's not a philosophy"
"TV is gooder than books"
"Tongue pierthing ith thtupid"
"If God didn't want us to eat animals, he wouldn't have made them out of meat"
"Gun control means using both hands"
"Get off the phone and crash already"
"Jesus would have used his turn signals"
"Saturday has a morning?"
"Who would Jesus bomb?"
"Has anger solved your other problems?"
"Sniper: Don't bother running, you'll just die tired"
"If you can read this, you're in my kill zone"
"Honk if you've never seen an Uzi fired from a car window"
"Can't sleep. Clowns will…

The problem with banking is ...

That as a business it is not the kind of business that can run on 10 or 12% capitalization. The risk profile of banking as a business is not any lower than that of a company making widgets or a transportation company and arguably it is actually higher than most. And yet, banks are run on a tiny sliver of capital only (and whether it is 8% or 12% does not fundamentally make all that much difference).

In just about any other business, if 10% of your customers walk away - don't buy your widgets, or subscribe to your service or eat at your place, the business may become less profitable or not profitable at all for a while but it would not mean the end of it. In banking, if 10% of your customers (depositors) walk away, you are insolvent and practically out of business.

I have no idea what the "right" level of capitalization is for a business that has the risk profile of banking - maybe it's 35% or maybe it's 45%. I am sure it is not 12%. Not that there is much that c…

The 3rd period

Living in Canada it is impossible to avoid hearing about hockey, getting involved in hockey .. and that is a good thing. It is certainly the most interesting spectator sport out there.

Hockey terminology is used a lot and recently an example occurred to me as I contemplated stages in life as one is apt to after turning 50.

So the way I look at it is that I have entered the 3rd period of this particular game given that a life expectancy of 75 years is not unreasonable for a healthy, non-smoking male living in North America.

In looking at it this way, the 1st period was all about education. Getting the most out of the process of learning and developing the mind to then be able to maximize the value of that intellect. Masters Degree was at 24 and if one considers the first year at Citibank as training, than that fits rather neatly into the metaphor.

The 2nd period was all about family and that includes professional achievement and economic success which were in the function of providin…

On Decision Making

Ability to make good decisions is key to just about everything from work to relationships to investing. And yet, the process of how we educate and raise young people is woefully absent of any useful decision making training and is arguably actually sabotaging any chance that good decision making may emerge.

As young people grow up, all decisions are made for them from what they eat to what they wear to how they spend their time. Through teenage years the only "decisions" they get to make are about what electives to take at school and even that only towards the end of high school. Not surprisingly, they yearn for more freedom and the more structure is imposed on them the more they rebel against it.

What if instead of depriving them of decision making authority we were to do more to teach them the skills of making better decisions?

Starting with simple things such as that every decision is a trade-off. What if instead of saying "you can play computer games for not more than…