The SEC has published it's views regarding Investment Advisors.
I find these guidelines particularly interesting.
People do not often think of Investment Advisors as moral creatures.
I have summarized the guidelines below with more easily understood terms.
An Investment Advisor must be Independent, Shrewd, Suitable and Loyal :
Independent:
An investment advisor has to stand on his own two feet. His recommendations may not be that of another advisor or a news article unless he discloses to the client the source of that recommendation. The Investment Advisor ought to be progenitor of the investment ideas delivered.
Shrewd:
The Investment Advisor must buy at the lowest price and sell at the highest price to take advantage of optimal execution on behalf of his clients. Sadly most Investment Advisors do not have an independent and formal program for establishing what it means to execute orders shrewdly.
Suitable:
The advice must be suitable to the life goals and personal values of the client.
Loyal:
Although they typically do not, I feel Investment Advisors should sign loyalty oaths to their clients. In a field where there is limitless information and mixed messages, endless sales pitches and seemingly contradictions one fact must remain, the Advisor must remain loyal to the client. Specifically, it is the Advisors job to exhaust his personal energies discovering and presenting the most essential, up to date and prescient financial information to his client. This information distilling function is what empowers both the Investment Advisor and the client. Through the lens of that essential information the client is made able to act in accordance with his or her values and goals in a world that might otherwise obfuscate the context in which clients make financial decisions. For me loyalty is not just about a feeling. The degree of Advisor Loyalty may be measured by the depth of the information gathering process employed by that Advisor.
Thursday, October 15, 2009
Tuesday, October 13, 2009
My past life in day trading
I have left www.dcgfinancial.com on the internet as an example of a way of thinking, and a part of day trading history.
The trading team at the now non-existent Solid Gold Financial and I developed this information gathering platform for the purpose of making informed 24 hour trades in the Currency market.
I traded my own money using this methodology and the results from this short real life experiment are linked below:
Day one:
http://www.dcgfinancial.com/FirstTrade.htm
Months later an opportunity arises:
http://www.dcgfinancial.com/July24Statement.htm
http://www.dcgfinancial.com/4minute.htm
http://www.dcgfinancial.com/DetailedStatement.htm
Then we caught wind that the regulations regarding small broker dealers would soon change.
Needless to say most of us closed our accounts and sought greener pastures.
The discrepancies between business practices in Forex and Finance are immense.
I will not detail them here but those of you who are interested in discussing the regulatory nuances of the two fields with someone who has experience in both please call me.
Forex has been a bad experience for the vast majority of participants. I hope I can educate people on why this is the case and alternatives.
I thought you ought to know that.
-David Caro-Greene
The trading team at the now non-existent Solid Gold Financial and I developed this information gathering platform for the purpose of making informed 24 hour trades in the Currency market.
I traded my own money using this methodology and the results from this short real life experiment are linked below:
Day one:
http://www.dcgfinancial.com/FirstTrade.htm
Months later an opportunity arises:
http://www.dcgfinancial.com/July24Statement.htm
http://www.dcgfinancial.com/4minute.htm
http://www.dcgfinancial.com/DetailedStatement.htm
Then we caught wind that the regulations regarding small broker dealers would soon change.
Needless to say most of us closed our accounts and sought greener pastures.
The discrepancies between business practices in Forex and Finance are immense.
I will not detail them here but those of you who are interested in discussing the regulatory nuances of the two fields with someone who has experience in both please call me.
Forex has been a bad experience for the vast majority of participants. I hope I can educate people on why this is the case and alternatives.
I thought you ought to know that.
-David Caro-Greene
Saturday, September 26, 2009
Brokerage within the Walls of your Business
A broker is a party that mediates between a buyer and a seller.
I would like to extend this definition to represent a more abstract sense of doing business with the interests of every person you meet in mind.
In some ways every one who has ever sold anything has been a broker in the first sense.
It is rare that a person takes careful consideration of all of the ways they may trade information of value with their clients and colleagues as in the latter sense.
The abstract "brokerage" I'm describing has less to do with products, securities or services and more to do with strategic business planning with monetary goals.
If I as a Financial Planner have non-material but clearly valuable information that others do not, I am serving as an Information Broker when I write your Financial Plan. The degree of informational advantage, the money waiting to happen, may not be easily predicted, but it can be understood and compared through the double barreled process of generalization and specification.
If I provide for one company a specific way to relate to another so that the two companies make absolute gains based on the compliment of skills and assets they share I have created value greater than any goods or services exchanged. This value sourced purely in the informational advantage that I originate is the essence of brokerage.
Over time we can produce statistics to generalize about the value of information in a history of business outcomes and over time manage to produce an increasingly informed management team.
This informational advantage is non-linear. Meaning that it can produce large spikes in revenues or service cost reduction that will be noncontiguous with trends. It's source is in the depth and detail of understanding I have about the companies involved. In the information management industry small details often overtake big blue chips.
Corporate Strategy or Mergers and Acquisitions, benefits may reduce overall costs through shared services. They may also improve revenue generating messages by creating a unified front in marketing and sales. People often think that these blue chip strategies are rarely adopted in the small business environment. In reality these strategies are represented in the small business community, but only in a finite set of business owners who see the depth of their own people. The average small business owner often feels at risk when they lose any of their key talent and they can't imagine merging with another company in the same field. This would feel like giving up to a competitor.
In these lean times many small business owners are learning that they must partner whenever and where ever they may to find the hidden opportunities and bring to market core competencies. Those who "stick to their guns" tend to suffer in times of systemic change.
It is important for small businesses to observe that within each individual there is often several roles played. Many employees in small businesses take on many roles. If two competing companies knew each other well enough to identify the strengths and weaknesses within their staff, there would be the potential for the two companies to reduce the number of generalists and increase the number of specialists in either a partnership or a series of contracts for services.
Comcast encourages competitive quotes between it's own engineering cells as a means of observing the market value of the employees within each cell. Engineering cells literally auction the value of their own engineers internally through old fashioned phone calls and conversations about the projects on the table, the demand for skills, and the supply of skills across cells. There is some time lost as these engineers perform business functions with each other in cell to cell interactions but ultimately the value of the work and the cost of the work become more transparent through the conduct and tracking of this behavior.
I am not arguing for more specialization. I am not arguing for more generalization. I am arguing that a good business owner or manager can take advantage of a situation by adapting his strategy to meet the needs of the scenario at hand. This adaptation can maintain an underpinning in classic cost benefits analysis without leaning on ideal forms to produce optimal outcomes. Creative adaptation driven by bottom line orientation will increase the probability of non-linear revenue and savings spikes for your business. Free your mind and the rest will follow.
You probably already knew that.
-David Caro-Greene
I would like to extend this definition to represent a more abstract sense of doing business with the interests of every person you meet in mind.
In some ways every one who has ever sold anything has been a broker in the first sense.
It is rare that a person takes careful consideration of all of the ways they may trade information of value with their clients and colleagues as in the latter sense.
The abstract "brokerage" I'm describing has less to do with products, securities or services and more to do with strategic business planning with monetary goals.
If I as a Financial Planner have non-material but clearly valuable information that others do not, I am serving as an Information Broker when I write your Financial Plan. The degree of informational advantage, the money waiting to happen, may not be easily predicted, but it can be understood and compared through the double barreled process of generalization and specification.
If I provide for one company a specific way to relate to another so that the two companies make absolute gains based on the compliment of skills and assets they share I have created value greater than any goods or services exchanged. This value sourced purely in the informational advantage that I originate is the essence of brokerage.
Over time we can produce statistics to generalize about the value of information in a history of business outcomes and over time manage to produce an increasingly informed management team.
This informational advantage is non-linear. Meaning that it can produce large spikes in revenues or service cost reduction that will be noncontiguous with trends. It's source is in the depth and detail of understanding I have about the companies involved. In the information management industry small details often overtake big blue chips.
Corporate Strategy or Mergers and Acquisitions, benefits may reduce overall costs through shared services. They may also improve revenue generating messages by creating a unified front in marketing and sales. People often think that these blue chip strategies are rarely adopted in the small business environment. In reality these strategies are represented in the small business community, but only in a finite set of business owners who see the depth of their own people. The average small business owner often feels at risk when they lose any of their key talent and they can't imagine merging with another company in the same field. This would feel like giving up to a competitor.
In these lean times many small business owners are learning that they must partner whenever and where ever they may to find the hidden opportunities and bring to market core competencies. Those who "stick to their guns" tend to suffer in times of systemic change.
It is important for small businesses to observe that within each individual there is often several roles played. Many employees in small businesses take on many roles. If two competing companies knew each other well enough to identify the strengths and weaknesses within their staff, there would be the potential for the two companies to reduce the number of generalists and increase the number of specialists in either a partnership or a series of contracts for services.
Comcast encourages competitive quotes between it's own engineering cells as a means of observing the market value of the employees within each cell. Engineering cells literally auction the value of their own engineers internally through old fashioned phone calls and conversations about the projects on the table, the demand for skills, and the supply of skills across cells. There is some time lost as these engineers perform business functions with each other in cell to cell interactions but ultimately the value of the work and the cost of the work become more transparent through the conduct and tracking of this behavior.
I am not arguing for more specialization. I am not arguing for more generalization. I am arguing that a good business owner or manager can take advantage of a situation by adapting his strategy to meet the needs of the scenario at hand. This adaptation can maintain an underpinning in classic cost benefits analysis without leaning on ideal forms to produce optimal outcomes. Creative adaptation driven by bottom line orientation will increase the probability of non-linear revenue and savings spikes for your business. Free your mind and the rest will follow.
You probably already knew that.
-David Caro-Greene
Monday, September 21, 2009
Social Post : Best Man
Yesterday I was the best man at my best friend's wedding.
I was honored to have been chosen.
As months passed and the date approached I wrote and rewrote the toast many times. Initially I wrote about the grooms family history and his personal characteristics. I translated this into Chinese with the bride. I thought everyone should know on both sides what this guy is made of.
Realizing it was not a history lesson. I wrote the speech to reflect my life experiences with Colin to tell a character story of the man I know so well. Then I realized a man's actions must speak, not a man's best man.
As the wedding date came closer and brought plans, dresses, tuxedos, decisions, and timing, it dawned on me what the wedding rituals are all about.
Every ritual signifies a part of the relationship between two families. A marriage is made up of a series of negotiations and agreements. As single men we often think of a marriage as a kind of legal trap for the stupid. It is not. It is a time to define a complex series of subtle relationships that exist between two families.
My wife and I could never get our parents to meet and have not done so even after six years going strong. I never had a chance to begin the process in my own experience in marriage of helping individual people within families become a group.
That is when it dawned on me that the only thing that really matters is that these families share the best that life has to offer together. What greater grudge can there be than to know that as a parent you have provided less than your best for your child.
The word compromise never worked for me. For me it brings up images of two starving men on a deserted island sharing the last coconut.
One family is a traditional Chinese family. They would like shark fin soup.
The other family is a traditional Berkeley family. They would like to save the species of shark endangered by the soup.
It seems we have only to compromise. One side has the soup and the other side does not. Isn't this a way of saying what is good for you may not be good for me.
This bothered me quite a bit. Knowing that this could be a problem for the Chinese family for the next 4000 years I decided to offer bit of a competition to save the shark.
I will be throwing a one year anniversary party in honor of the groom, the bride and the soup, same time, same place. I challenge all of you out there to contribute to the National Ocean Consevancy enough money to protect at least as many smalltooth sawfish sharks as you may endanger this year. Let me know how much you have contributed. I'll keep the score.
As we all know the smalltooth sawfish is at 15% of it's virgin population domestically and that is not OK.
What you may not know is that this is also advertised nationally by protection agencies across the Chinese provinces.
Chomp all the shark you want we will make more.
I thought you ought to know that.
-David Caro-Greene
I was honored to have been chosen.
As months passed and the date approached I wrote and rewrote the toast many times. Initially I wrote about the grooms family history and his personal characteristics. I translated this into Chinese with the bride. I thought everyone should know on both sides what this guy is made of.
Realizing it was not a history lesson. I wrote the speech to reflect my life experiences with Colin to tell a character story of the man I know so well. Then I realized a man's actions must speak, not a man's best man.
As the wedding date came closer and brought plans, dresses, tuxedos, decisions, and timing, it dawned on me what the wedding rituals are all about.
Every ritual signifies a part of the relationship between two families. A marriage is made up of a series of negotiations and agreements. As single men we often think of a marriage as a kind of legal trap for the stupid. It is not. It is a time to define a complex series of subtle relationships that exist between two families.
My wife and I could never get our parents to meet and have not done so even after six years going strong. I never had a chance to begin the process in my own experience in marriage of helping individual people within families become a group.
That is when it dawned on me that the only thing that really matters is that these families share the best that life has to offer together. What greater grudge can there be than to know that as a parent you have provided less than your best for your child.
The word compromise never worked for me. For me it brings up images of two starving men on a deserted island sharing the last coconut.
One family is a traditional Chinese family. They would like shark fin soup.
The other family is a traditional Berkeley family. They would like to save the species of shark endangered by the soup.
It seems we have only to compromise. One side has the soup and the other side does not. Isn't this a way of saying what is good for you may not be good for me.
This bothered me quite a bit. Knowing that this could be a problem for the Chinese family for the next 4000 years I decided to offer bit of a competition to save the shark.
I will be throwing a one year anniversary party in honor of the groom, the bride and the soup, same time, same place. I challenge all of you out there to contribute to the National Ocean Consevancy enough money to protect at least as many smalltooth sawfish sharks as you may endanger this year. Let me know how much you have contributed. I'll keep the score.
As we all know the smalltooth sawfish is at 15% of it's virgin population domestically and that is not OK.
What you may not know is that this is also advertised nationally by protection agencies across the Chinese provinces.
Chomp all the shark you want we will make more.
I thought you ought to know that.
-David Caro-Greene
Wednesday, September 16, 2009
What Malcolm X and the Washizumu don't know
Let's begin with a quote from Malcolm.
"Anytime you have to let another man set up a factory for you and you can't set up a factory for yourself, you're a child; anytime another man has to open up businesses for you and you don't know how to open up businesses for yourself and your people, you're a child; anytime another man sets up schools and you don't know how to set up your own schools, you're a child. Because a child is someone who sits around and waits for his father to do for him what he should be doing for himself, or what he's too young to do for himself, or what he is too dumb to do for himself."
Malcolm X
This sentiment is echoed in the traditional business practices of Japan. The system is designed to make certain that Japanese businesses do as much as they possibly can in house. In theory this makes certain that costs are controlled (i.e. favorable) and that the community is not subject to external influences.
In real life business does not work this way.
If a community spends it's resources trying to produce a technology, factory or resource it is taking resources away from other functions. If it can not produce these technologies in a way that is affordable, it is wasting it's valued time and money. Wasting time and money is a sure way to lose in a competitive scenario.
Let's take an example of a Japanese company that would like to design a product for an English speaking audience. Let's say the Japanese company has four choices. A Japanese Design Firm, a Japanese American Design Firm, a Big Budget American Design Firm or a Small American Design Firm.
The money politics are clear in each of the four choices. If the Japanese choose to go with a Japanese design firm they will be keeping the money within the Japanese business community.
Business is not politics.
The question should not be "Where does the design budget go?" it should be "what will be the result of my design efforts and how much will it cost to produce those results?"
If you want to design a product for an English speaking audience, you need to hire native English speakers who understand you.
If the Big Budget American Design firm does not make it clear that they can communicate your message and they are not priced well, don't go with them. If the Small American Design firm does not make it clear that they can communicate your message and they are not priced well, don't go with them.
A cost benefit analysis only requires looking at the outcomes and dividing them by the costs.
A small American design firm may put themselves into poverty to get the job done for the Japanese business. This is both favorable to the Politics and the Finances of the Japanese business community.
If the Japanese business decides to go with a Japanese design firm at a lower cost they are certainly not going to communicate what they intend to communicate through the design. If they pay too little to the Japanese design firm they may be putting people in their own community into poverty. This does not make any sense when there is the potential to get the job done by lower cost Americans.
In any case accountability is the main issue here. The history or nationality of the firm's people is not.
Negotiations should be centered around objective and competitive comparisons of all of the firms being considered. The most effective way to damage a community is to pay them very little for a lot of work. All people in the negotiation are trying to avoid this situation. Having work that pays less than you need to sustain business is more damaging to a business than having no work at all. If you have no work you can find something else to do.
Japanese designers can find other projects that pay more money, because Japanese designers, in general, have a better reputation than American designers.
Never overlook a business opportunity. You never know when someone is going to be able to provide more of what you want at a greater expense to himself than the person you usually work with.
I thought you ought to know that.
-David Caro-Greene
"Anytime you have to let another man set up a factory for you and you can't set up a factory for yourself, you're a child; anytime another man has to open up businesses for you and you don't know how to open up businesses for yourself and your people, you're a child; anytime another man sets up schools and you don't know how to set up your own schools, you're a child. Because a child is someone who sits around and waits for his father to do for him what he should be doing for himself, or what he's too young to do for himself, or what he is too dumb to do for himself."
Malcolm X
This sentiment is echoed in the traditional business practices of Japan. The system is designed to make certain that Japanese businesses do as much as they possibly can in house. In theory this makes certain that costs are controlled (i.e. favorable) and that the community is not subject to external influences.
In real life business does not work this way.
If a community spends it's resources trying to produce a technology, factory or resource it is taking resources away from other functions. If it can not produce these technologies in a way that is affordable, it is wasting it's valued time and money. Wasting time and money is a sure way to lose in a competitive scenario.
Let's take an example of a Japanese company that would like to design a product for an English speaking audience. Let's say the Japanese company has four choices. A Japanese Design Firm, a Japanese American Design Firm, a Big Budget American Design Firm or a Small American Design Firm.
The money politics are clear in each of the four choices. If the Japanese choose to go with a Japanese design firm they will be keeping the money within the Japanese business community.
Business is not politics.
The question should not be "Where does the design budget go?" it should be "what will be the result of my design efforts and how much will it cost to produce those results?"
If you want to design a product for an English speaking audience, you need to hire native English speakers who understand you.
If the Big Budget American Design firm does not make it clear that they can communicate your message and they are not priced well, don't go with them. If the Small American Design firm does not make it clear that they can communicate your message and they are not priced well, don't go with them.
A cost benefit analysis only requires looking at the outcomes and dividing them by the costs.
A small American design firm may put themselves into poverty to get the job done for the Japanese business. This is both favorable to the Politics and the Finances of the Japanese business community.
If the Japanese business decides to go with a Japanese design firm at a lower cost they are certainly not going to communicate what they intend to communicate through the design. If they pay too little to the Japanese design firm they may be putting people in their own community into poverty. This does not make any sense when there is the potential to get the job done by lower cost Americans.
In any case accountability is the main issue here. The history or nationality of the firm's people is not.
Negotiations should be centered around objective and competitive comparisons of all of the firms being considered. The most effective way to damage a community is to pay them very little for a lot of work. All people in the negotiation are trying to avoid this situation. Having work that pays less than you need to sustain business is more damaging to a business than having no work at all. If you have no work you can find something else to do.
Japanese designers can find other projects that pay more money, because Japanese designers, in general, have a better reputation than American designers.
Never overlook a business opportunity. You never know when someone is going to be able to provide more of what you want at a greater expense to himself than the person you usually work with.
I thought you ought to know that.
-David Caro-Greene
Monday, September 7, 2009
Professional Story : Bridging IT and Finance
The Story
I have been in Tech facing C Level Decision makers for six years. I say it all of the time. What does it mean?
It means I meet people all day long to talk about the technologies they produce, the technologies they service and the technologies they use to advise them on how and "who with" they might do more of the same "better, faster and cheaper".
The Tech industry is like any other business except more complicated, containing more exceptions and until recently a lot less political.
When my father walked off Berkeley High School Campus on to the Labs to learn cathode ray tubes, Fortran and Assembly he did not know he was going to end up training engineers at NASA, Lockheed and Apple on how to do their jobs with the then new C+ programming language but he was proud to be a part of it.
When he taught me to perform text analysis on hexadecimal code to search for and replace suspected dropped bits, showed me what the VC fund had him writing for accounting software in Basic and told me "son in the future everything is going to be on the computer. You won't be able to wipe your butt without pressing a buttOn button" he was not planning on raising a second generation Technology guy, it was only natural.
I saw where things were going with my father so I picked up a UC Berkeley Degree and some Masters education in Advertising.
As he transitioned from his last position in Corporate America as an Information Architect at TIS Worldwide to IT Director for one of the wealthiest groups of Lawyers in Northern California we had a chance to work together for a year. We had a chance to reflect on the past and the future of the Industry while helping our firm win Best Firm awards and reducing administrative malpractice costs to fractions.
The main difference is that in the old days everything was specialized. Now everything is a commodity. The skills change. Since I have been in business, most if not all of the deals now involve, insurance, lines of credit, Net30 accounts, upgrade planning, upgrade financing and maintenance. As a dealer I was purchasing from 14 hardware providers, contracting 3 service groups, getting financing quotes through 6 banks and blowing away many of my customers with financing options, savings, flexibility and time to delivery.
I became a Bay Area Business to Business Sales Leader at my first job, rocked some national scale manufacturing deals with Polywell Computers and recently made deals with CIOs at several Fortune 500 Companies at the multinational Corporate Executive Board.
The Turning Point
This is where the career change happened to me. The skills for selling a commodity are that of the broker. The industry demanded that I the computer salesmen become a broker. Just because one product appears to be the same as another it does not mean that price makes the deal. More importantly who can look past the appearances? When a client needs a financial product they can get from any financial house do you tell them it's the same no matter where you go? Many people honestly believe this is the case. But the devil is in the details. I differentiate products and services when others can't. I challenge people to compare the information I provide to that of the competition. Brokers are different animals from sales people because they have in mind the interests of several counterparties in each deal. Over the years my business to business database has became ripe and cumbersome.
I see hundreds of ways that the thousands of companies I have helped with technology could benefit from financial tools suited for the kind of business they perform.
One day I speak with the man who is presently my boss about working in financial services for Tech Businesses in California. I tell him about my plan to offer Health Care Benefits, Key Person Insurance, Employee Retirement Account Planning and Capital Expenditure review all under one name. He said "That is exactly how we are going to do it. But David, compliance say's I can't promote you to management until you have been here for at least six months."
So if you are wondering why an IT Business guy is asking you questions about your financial plans you need no longer wonder.
I thought you ought to know that.
David Caro-Greene
I have been in Tech facing C Level Decision makers for six years. I say it all of the time. What does it mean?
It means I meet people all day long to talk about the technologies they produce, the technologies they service and the technologies they use to advise them on how and "who with" they might do more of the same "better, faster and cheaper".
The Tech industry is like any other business except more complicated, containing more exceptions and until recently a lot less political.
When my father walked off Berkeley High School Campus on to the Labs to learn cathode ray tubes, Fortran and Assembly he did not know he was going to end up training engineers at NASA, Lockheed and Apple on how to do their jobs with the then new C+ programming language but he was proud to be a part of it.
When he taught me to perform text analysis on hexadecimal code to search for and replace suspected dropped bits, showed me what the VC fund had him writing for accounting software in Basic and told me "son in the future everything is going to be on the computer. You won't be able to wipe your butt without pressing a buttOn button" he was not planning on raising a second generation Technology guy, it was only natural.
I saw where things were going with my father so I picked up a UC Berkeley Degree and some Masters education in Advertising.
As he transitioned from his last position in Corporate America as an Information Architect at TIS Worldwide to IT Director for one of the wealthiest groups of Lawyers in Northern California we had a chance to work together for a year. We had a chance to reflect on the past and the future of the Industry while helping our firm win Best Firm awards and reducing administrative malpractice costs to fractions.
The main difference is that in the old days everything was specialized. Now everything is a commodity. The skills change. Since I have been in business, most if not all of the deals now involve, insurance, lines of credit, Net30 accounts, upgrade planning, upgrade financing and maintenance. As a dealer I was purchasing from 14 hardware providers, contracting 3 service groups, getting financing quotes through 6 banks and blowing away many of my customers with financing options, savings, flexibility and time to delivery.
I became a Bay Area Business to Business Sales Leader at my first job, rocked some national scale manufacturing deals with Polywell Computers and recently made deals with CIOs at several Fortune 500 Companies at the multinational Corporate Executive Board.
The Turning Point
This is where the career change happened to me. The skills for selling a commodity are that of the broker. The industry demanded that I the computer salesmen become a broker. Just because one product appears to be the same as another it does not mean that price makes the deal. More importantly who can look past the appearances? When a client needs a financial product they can get from any financial house do you tell them it's the same no matter where you go? Many people honestly believe this is the case. But the devil is in the details. I differentiate products and services when others can't. I challenge people to compare the information I provide to that of the competition. Brokers are different animals from sales people because they have in mind the interests of several counterparties in each deal. Over the years my business to business database has became ripe and cumbersome.
I see hundreds of ways that the thousands of companies I have helped with technology could benefit from financial tools suited for the kind of business they perform.
One day I speak with the man who is presently my boss about working in financial services for Tech Businesses in California. I tell him about my plan to offer Health Care Benefits, Key Person Insurance, Employee Retirement Account Planning and Capital Expenditure review all under one name. He said "That is exactly how we are going to do it. But David, compliance say's I can't promote you to management until you have been here for at least six months."
So if you are wondering why an IT Business guy is asking you questions about your financial plans you need no longer wonder.
I thought you ought to know that.
David Caro-Greene
Sunday, September 6, 2009
Risk or Reward
By law your financial advisor must ask you the survey question "on a scale from one to five how would you rate your risk aversion?". Based on your answer to this question the financial advisor is legally bound to discuss with you only specific investments that are deemed appropriate for your risk tolerance.
If this is the only question your advisor is discussing with you they are doing as little as they possibly may to keep you as a client.
When people design the way they do business to barely meet the legal standards for transparency and communication this is not a sign of low effort, it is the essence of low effort advice.
If an advisor recommends a specific investment and can not answer the question "why will this investment beat all other investments during the time I wish to invest?" to the point that you are table pounding certain about the answer.
The advisor has not provided advice. The advisor has provided tips.
Tips are for service. Tips are not a service to anyone.
Do your due diligence. Drill for the hard to know stuff. Don't take anyones word for the truth. Observe how words and actions match.
The investments companies make would be the actions to compare to those words. When they don't match. Why?
When they do match. Is there more to come?
These are questions we must hold near to defend our wealth.
Arm yourself. Information is -
-David Caro-Greene
If this is the only question your advisor is discussing with you they are doing as little as they possibly may to keep you as a client.
When people design the way they do business to barely meet the legal standards for transparency and communication this is not a sign of low effort, it is the essence of low effort advice.
If an advisor recommends a specific investment and can not answer the question "why will this investment beat all other investments during the time I wish to invest?" to the point that you are table pounding certain about the answer.
The advisor has not provided advice. The advisor has provided tips.
Tips are for service. Tips are not a service to anyone.
Do your due diligence. Drill for the hard to know stuff. Don't take anyones word for the truth. Observe how words and actions match.
The investments companies make would be the actions to compare to those words. When they don't match. Why?
When they do match. Is there more to come?
These are questions we must hold near to defend our wealth.
Arm yourself. Information is -
-David Caro-Greene
Thursday, August 27, 2009
LinkedIn making professional connections
Many of you have heard of LinkedIn.
LinkedIn is a professional networking website.
Most LinkedIn profiles are made from uploaded resumes, but one's profile can be only the information a user would like to present to the public. LinkedIn earns it's revenues primarily from recruiters who would like to be able to search the 1st and second degree connections of the candidates they have Linked with on LinkedIn. This is nothing like spokes or jigsaw which are both tit for tat systems for contact information.
LinkedIn limits your ability to send messages to people. This means it is spam free. When you start out on LinkedIn it can be very difficult to use. If you have 10 people you trust and do business with maybe five will be active on LinkedIn and willing to accept your invitation to connect. When you connect to these five people they will often hide their connections from perusal. This means that you will often not be able to click on the connections link in their profile and read up on all of the people they have linked to.
If each of these five people has five connections you will have 25 second degree connections searchable by specific keywords. So if you know your friend knows a PhD in linguistics but you don't know anything else you can search for "PhD in linguistics" and the PhD's profile will show in the search even though the person connecting you to the PhD has explicitly requested that you are not able to peruse his connections. The first degree connections of these 25 second degree connections will also be visible to you, these are your third degree connections.
When you start out on LinkedIn it seems pretty redundant. Everything you find tends to be people you have heard of through conversations with the people you know. This is not very useful.
The advantages of LinkedIn come only with groups and LIONs.
When you join a group on LinkedIn, most of the group members will accept messages from other group members. This enables you to connect to professional and academic Alumni with common interests or professional synergy who you otherwise may never discover. By joining groups you brand your profile with the group logos and give recruiters and other users a sense of who you are.
LIONs are LinkedIn Open Networkers. It sounds like a dirty name. Why in the world would anyone want to promote themselves as someone who would "be open to any and all invites". Networking is supposed to enable people to grow connections less desperate then themselves not more desperate.
When I was under heavy pressure at work to learn what was going on in the offices of a handful of CIOs across the country I was a little desperate for information. So I added LION recruiters located in the zipcodes of the CIOs I needed to understand as part of my consulting practice. Through this network of LIONs I then saw many more LIONs searchable in LinkedIn. At that point I could be selective when it came to LIONs. I could choose the LIONs that shared groups and professional alliances with me and my company. I called into their offices to verify that they were indeed working where they said they worked and unlinked those LIONs who I could not verify.
So through searching, adding and filtering one can grow a networking of professional connections in large numbers from the comfort of their keyboard.
The number of direct connections a person has on LinkedIn is not a competition. If anything access to exclusive professional groups with strict verification is quite competitive but just as competitive as it is to get into these professional groups in any walk of life.
Please call me on my phone if you would like to connect on LinkedIn. It would be nice to hear the sound of your voice and learn a little about what has you curious.
I thought you ought to know that.
-David Caro-Greene
Thursday, August 20, 2009
Online Data Services
People like to buy stuff online.
The assumption is that the Internet contains a lot of data.
More price and product data means better purchasing decisions.
The tragedy is that the Internet data is often very unusual, representing only the thin slice of the job, housing, goods or labor market having marketers who choose to engage online marketing vehicles.
Zillow real estate data is old stuff coming off the MLS. In my opinion a purchase from the MLS is like leaving your door open when you live across the street from Mosswood Park. The real estate agents have total control.
Real estate associations are notorious for keeping certain properties on the databases and others off to serve the needs of their constituencies. For instance in Berkeley agents took many properties off the market during the dive to keep local values high.
Intraday brokerage price data recieved by the public reflects the trading prices the brokerage will take. If you compare the prices between any two brokerages they will be close but rarely the same. Not to mention the time delay between a request to execute a trade and time of execution is not reported. This time difference is time during which a brokerage may have enough time to find a better price for themselves before they sell it to you. The Rothschilds were recently sued in international courts for doing this within their own mutual funds.
Job sites are qualitatively each very unique. Indeed is a decent aggregator but still a traditional job site. LinkedIn provides you with jobs within your network and Jobfox uses a sophisticated model to determine your fitness for a position. These days good recruiters and hiring managers are using all of the above to cross reference applicants resumes in addition to corporate press releases relating to the uptake or release of talent.
Froogle has never worked for me but maybe you have had better luck. In any case online data services may provide more information but this has increased the work required to make decisions not decreased it. This has provided people with the tools to make more comparisons but we have to make the comparisons to take advantage of the information.
I say take the information super highway but stay in the far right lane or you may very easily miss your exit.
I thought you ought to know that.
-David Caro-Greene
The assumption is that the Internet contains a lot of data.
More price and product data means better purchasing decisions.
The tragedy is that the Internet data is often very unusual, representing only the thin slice of the job, housing, goods or labor market having marketers who choose to engage online marketing vehicles.
Zillow real estate data is old stuff coming off the MLS. In my opinion a purchase from the MLS is like leaving your door open when you live across the street from Mosswood Park. The real estate agents have total control.
Real estate associations are notorious for keeping certain properties on the databases and others off to serve the needs of their constituencies. For instance in Berkeley agents took many properties off the market during the dive to keep local values high.
Intraday brokerage price data recieved by the public reflects the trading prices the brokerage will take. If you compare the prices between any two brokerages they will be close but rarely the same. Not to mention the time delay between a request to execute a trade and time of execution is not reported. This time difference is time during which a brokerage may have enough time to find a better price for themselves before they sell it to you. The Rothschilds were recently sued in international courts for doing this within their own mutual funds.
Job sites are qualitatively each very unique. Indeed is a decent aggregator but still a traditional job site. LinkedIn provides you with jobs within your network and Jobfox uses a sophisticated model to determine your fitness for a position. These days good recruiters and hiring managers are using all of the above to cross reference applicants resumes in addition to corporate press releases relating to the uptake or release of talent.
Froogle has never worked for me but maybe you have had better luck. In any case online data services may provide more information but this has increased the work required to make decisions not decreased it. This has provided people with the tools to make more comparisons but we have to make the comparisons to take advantage of the information.
I say take the information super highway but stay in the far right lane or you may very easily miss your exit.
I thought you ought to know that.
-David Caro-Greene
Tuesday, August 18, 2009
Last Day as an Independent Consultant
Tomorrow I will be officially appointed as a representative of MetLife. Shortly thereafter my paper work will reflect my title, Financial Advisor.
I have decided to use today to produce a few graphs to give people a material framework for understanding the national economy. In other words I will show you some pictures that will help you make sense of what is going on out there. All of this data comes from the 2002 Economic Census, so it is a bit out of date but still useful for understanding the foundations of our economy in terms of real numbers of dollars.
I broke the rules in producing these graphs in a few ways.
1) I added State and Federal taxes into one lump sum to represent tax revenues in 2003 as a way of showing the money going into Public Administration as a national business to be compared to other categories of business.
2) I added all of the numbers from a slew of Construction business categories together to produce a solid national construction business statistic.
3) The "Material Product Producing" categories and "Public Administration" category do not post operating expenses the same way that all other business categories do. So I had to produce some estimates where possible to get a visual on what is going on.
The blue "Operating Profits" represents how much money is pulled into that industry after taking out all operating expenses. The red "Non-Payroll" represents how much money is spent on operations outside of payroll and the green "Payroll" is how much money is paid to employees in that particular sector.
Before I talk about the blue, and green let's talk about what they might mean. Money that is clear and free in a business (the blue) can be used to grow the business by buying things and places that make the business run better or pay the investors dividends. Payroll (the green) gives us a sense of how much money is being used in that industry to pay employed people. Unemployed people make money too, the government collects this data in one category called nonemployer business, it will show up on our pie chart. Non-payroll (the red) expenses are very hard to estimate and they are not reported the same way in the good producing, or government industries the way they are in other industries.
Right off the bat we see Wholesale, Retail, Manufacturing, Government and Construction pump the largest amount of revenues through our economy. That seems to make sense to me. Everyone must eat, buy clothes, and have a manufactured roof over their constructed home.
The next tower we see does not make a lot of sense. Non-employer business revenues are approaching three quarters of a trillion dollars in a business category where we openly admit the people working in these businesses are not employees. There are no payroll numbers for this category because land preparation for farming and many lumberjack type jobs apparently don't pay in a way that can be easily understood by us urbanites.
One example would be the fishing industry in Alaska. The seasons dictate the hours and the availability of work, so it would be hard to call someone a full time employee if the fishing seasoned limited them to working only five months out of the year. Similarly this makes health benefits and other employer/employee issues hard to control when the people may change drastically from year to year.
Sadly this means that our national statistics admits a huge percentage of our economy is not very easy to measure in terms of benefits to working people.
A few very interesting points after that would be that the Management Services Industry brings in less money than it pays in payroll. This is very strange. I have no idea how this makes any sense at all. This is the kind of thing that would make a good project for the next post. Honestly, how many hundreds of millions does an industry have to lose before they stop doing what they are doing. Strangely these Management Services companies are still paying the official employees even though they don't make enough money to pay them.
Another strange data point I noticed is that Transportation operating expenses (the red in transportation) is only a few billion dollars. We are told on the news that the price of gas is reflected in all of the goods we buy on the shelves. If the operating profits in Retail and Wholesale are over 2 trillion dollars each why does a few billion dollar industry like Trucking get scapegoated for price inflation at the checkout counter?
By simply glancing at these graphs I have learned a few things.
1) Lawyers (Scientific & technical services workers), Doctors (Health Care workers) and Managers in commerce and government have plenty of payroll to dip into, maybe they should pick up some of the dragging economy.
2) Arts and Education (Education Services) may be under appreciated in our economy, maybe that is why we are not the "America the Beautiful" that we once were.
3) Mining and Utilities companies make a lot of money without paying much.
4) The government admits through census data that a large percentage of people are working but for Nonemployers and are stuck in situations with ill defined healthcare situations.
5) I have no idea where the money in Wholesale and Retail trade could be going. If I were a pessimist I would say it is leaving our country and being invested abroad. If I were an optimist I would say this makes up a large percentage of our stock market and retirement fund growth. I'm a realist so it's probably a lot of both.
The below pie chart enables you to compare the amount of money in payroll in the industries above.
I thought you ought to know that.
-David Caro-Greene
Saturday, August 15, 2009
The Number of Unemployed People
They love to report the U.S. Unemployment Rate.
The Unemployment Rate is a number generated by the number of claims for unemployment insurance submitted during a given period of time.
It only tells us how many people lost their jobs recently due to circumstances beyond their control. That is not very useful information.
So I produced a simple graph showing the number of working people (according to the BLS) and the number of people in this country (according to the Census). I produced a third line showing the number of people not working by taking away the number of people working from the number of people.
As you can see since 1998 the number of Unemployed people has been rising at a slight incline.
In that time the number of employed people has been rising at a much faster rate.
Overall the number of unemployed people over the last 11 years has been, roughly speaking, flat.
Given how many people ramble on about how easy it is to find a job and some rail on about how the economy has prevented them from paying the bills this might provide a more middle of the road perspective.
The data shows jobs are moving along as usual. I thought you should know that.
-David Caro-Greene
Friday, August 14, 2009
Pick an Asset
People will tell you there are a virtually unlimited number of things to invest in. These people are trying to make you feel overwhelmed. There are only four classes of assets out there. I'm going to tell you what they are and how these assets make money.
1) Stocks : Sales people make revenues.
2) Real Estate : The price of a place goes up and you bought it when it was down.
3) Commodities : The price of a thing goes up and you bought it when it was down.
4) Bonds, Loans, Debt : Debtors pay interest to Creditors.
So as you can see these financial terms really only represent the stuff you see every day, people, places, things and debt.
You may be thinking "one of these things is not like the others" and you would be right. Debt is the complicated part of finance. It is the part orthodox Catholics and Muslims have a moral issue with. So it is the part I will say something about.
If you borrow money do it at a low rate of interest, under 5% annual.
If you loan money do it at a high rate of interest, over 6%.
If you borrow a million dollars at 5% and loan the same million dollars at 6% how much money do you make for doing nothing each year?
$10,000
This $10,000 dollars has many names : interest rate differential, spread, marginal profit and bank rate. But don't let them fool you. Debt done right is always a way for someone to borrow from Peter to pay Paul and make a profit.
1) Stocks : Sales people make revenues.
2) Real Estate : The price of a place goes up and you bought it when it was down.
3) Commodities : The price of a thing goes up and you bought it when it was down.
4) Bonds, Loans, Debt : Debtors pay interest to Creditors.
So as you can see these financial terms really only represent the stuff you see every day, people, places, things and debt.
You may be thinking "one of these things is not like the others" and you would be right. Debt is the complicated part of finance. It is the part orthodox Catholics and Muslims have a moral issue with. So it is the part I will say something about.
If you borrow money do it at a low rate of interest, under 5% annual.
If you loan money do it at a high rate of interest, over 6%.
If you borrow a million dollars at 5% and loan the same million dollars at 6% how much money do you make for doing nothing each year?
$10,000
This $10,000 dollars has many names : interest rate differential, spread, marginal profit and bank rate. But don't let them fool you. Debt done right is always a way for someone to borrow from Peter to pay Paul and make a profit.
Lastly, this is not a pitch. Debt has it's risk. Let's say Peter stops loaning and Paul stops borrowing or worse. Debt is a contract between two parties not a magic spell. I thought you ought to know that.
-David Caro-Greene
The Fastest Growing Occupations data according to our County Reports
After doing a bit of work with the above linked raw data I produced a chart expressing how an 18 year old High School Graduate might best interpret and choose one of these Fastest Growing Occupations.
I have made several assumptions in this chart which may seem at first odd but were absolutely required as they reflect common sense and good judgement.
1) It costs 30,000 dollars a year to live in the Bay Area. This means while you are in school you or the person supporting you is losing this money.
2) Tuition is free.
3) You do not invest.
You really only have two choices if you want to make over 2 million dollars before your 46th birthday, Pharmacist and Sciences Manager. Be ready to fight for it because there will only be 30 Pharmacists and 17 Sciences Managers positions opening each year in the East Bay.
If you don't like to compete you might try an RN program or become a Computer Programmer. At 300 new people each year you still have to be in the top 3% of your nursing school to get a job, and at 250 new people a year in Computer Programming you had better have some top 1% connections because there is a Computer Programmer acting as CEO of a new Social Networking Startup on every street corner in the East Bay.
At this point in the LifeTime Earnings Graph we get to the Nerds.
Nerds lean on Academic Credentials for stuffy cushy jobs with no future, no upward potential and no sense of the free market spirit. Their incomes are entirely dependent on the number of years they spent toiling in the Moffit Library. They are the people that scratched all of that self loathing graffiti in the bathroom stalls and blamed it on the kids smoking cigars on the grass.
Nerds do well for themselves because they lean on the State system for the education to provide them with privilege and the State budget for the pay check. Sadly the State can't borrow any more money with our tax dollars to maintain the Nerds in the life style to which they have become accustomed. So young Nerds may have the black rimmed glasses, the pocket protectors and the juicy red washington delicious apples, but they are not going to get paid like they used to.
Then you have people like me, Writers, Authors, PR specialists, Representative Agents, and Financial Consultants. We make the free market system work. We provide people with information they need to make the decisions that will determine their quality of life. When we do our jobs right people are happy. When we don't do our jobs right everything goes wrong. When writers, authors, and consultants go wrong, people get confused and make bad decisions. People usually blame themselves for their personal failure to make good decisions while they rarely take the time to know how a good decision is made. Good decisions are made by rational people who know the relevant facts. The number of facts a person may access and the applied relevance of those facts in predicting and producing the desired outcomes is what defines the quality of a person's decisions.
For instance anyone choosing to work for less than 13$ an hour has doomed themselves to a life of poverty.
Based on the above data and discussion a person should avoid the following list of activities at all times to avoid building a lifelong money losing career:
Product Promotions
Butchering
Personal Care
Pet Care
Manicures and Pedicures
Pumping Gas
Cleaning Cars
Serving Fast Food
If you are doing or plan on doing one of these forbidden activities please drop everything and see your doctor. To take any one of these occupations defies all rational thought. Those who take these positions may be suffering from brain damage. When you see one of these poor souls please give them my URL, dcgfinancial.com , and let them know we are here to help.
-David Caro-Greene
Direct
Thursday, August 13, 2009
The Raiderettes closed a deal with AsiaAir stipulating that these women will have "Money in the Bank" for the rest of thier lives based on a Jet Plane marketing deal in which images of these women are used on the side of a new fleet covering all of Asia last month.
I thought you ought to know that.
-David Caro-Greene
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