You Only Get One Chance...Can't Go Back To The Well

My experience has been that you only get one chance with people when you ask for their help. There is a short window after the initial meeting where they are willing to help, but you can't keep going back to them asking for help. They turn off.

ETFs Made Factor Investing

Factor investing has been around a long time, but it was not until the advent of ETFs and the regulatory requirements for approval that factor investing came to the fore.

Why Good News Is Bad News

Bad news has been good news for the markets for a long time now. The basic premise has been bad news spells more liquidity as the authorities fight any and all negative notions.

We may be entering a new stretch where the market (and the CBs) are finally able to feel better about life. When good news starts spelling bad news for the markets, this will be the sign that the market is calming down and beginning to clear, ie. equalize valuations.

The Weird Thing About Swing Thoughts

It is weird how there are times you are playing well on the golf course (or anywhere else for that matter) and you have a swing thought that is working for you. You feel it, it feels good and you believe it is making your game better.

I know that is the case with my golf game. There are times when I have a swing thought and it just works. The funny thing is if I took a video of my swing when I have the swing thought and I look at a video of my swing any other time, it would in all likelihood be no different.

Why Won't This Market Go Down?

The fundamental reason why this market may not go down (when for all intents and purposes it probably should) is because there are still plenty of investors still sitting on the sidelines just waiting for it to fall to get back in.

I hate the idea that the market level is in fact set by supply and demand rather than fundamentals. But you would argue that supply and demand are a part of fundamentals. Yes and no. Yes in the sense that the market is simply a market with prices set by supply and demand. But no in the sense that the market does not always reflect the fundamental economic reality of an asset.

When supply and demand are more a function of sentiment than economics, then perverse outcomes tend to happen.

Inherently Distrustful Of Macro Commentary

I am inherently distrustful of macro commentary, especially if it tries to come up with some pseudo-conspiratorial explanation for what happened attributable to countries, actors, or politicians.

There is usually some truth to what they point to, but the attributing of such calculable intent when none was recognized previously is a stretch. 

Incentive Structures - Moral Hazard and Behavior

The problem with most institutional incentive structures, ie. those promulgated by major corporations, is they overemphasize increasing revenues and maximizing profit to the detriment of customer experience/service. The reason is, they already have the customers, they are now just milking them with sales and marketing gimmicks and internal employee incentives to achieve their goal of profit maximization.

At some point they will go too far. But because these organizations are so large, the cost (in fines) or damage to reputation are not sufficient for customers to move away (they already have them locked in and switching costs are high).

The other thing about the incentive plans is they are invariably unbelievably complicated. That is because, as with most things bureaucratic, they are heaping performance measures on performance measures (when new ones come along, they usually don't scrap the old ones), which will also ultimately be self-defeating due to their complexity. A structural issue which can effect employee morale is when incentives and bonuses are based on unrealistic goals, then either behavior becomes severely distorted (really leverage and exploit the client) or employees lose motivation. Both circumstances are bad and should be watched out for.

Fines are other penalties are just considered a cost of doing business.

If there are so many things wrong with these plans/structures, why don't companies reform them or change?

One reason is that they are the most effective way to exact more money out of clients. Another reason is that senior management is served by these and this effect with bigger bonuses.

One of the real problems is employees become demotivated and begin seeing the absurdity of the company and its business.