When news broke in late October that some of London’s largest banks were investing in Bitcoin, cryptocurrencies in general got another boost. According to reports, however, this latest move to embrace Bitcoin was not a positive embrace of the digital currency per se, but rather a move to stockpile Bitcoin to fend off denial of […]
Category: Finance
Since 1972, Britain has been part of the European continent. I remember the opening very well. I was a kid, living in London. The new openness meant we could afford oranges from Spain. Every week, an old French farmer would also peddle through London with strings of onions hanging from his bicycle. I thought the […]
Categories
Levered Monkeys
As Oxford’s poet-philosopher Ludovic Phalippou once put it, “we are all just levered monkeys!” What did Phalippou mean by this comment? Well, as I explained to my corporate finance students this week, the use of debt by companies is called “financial leverage”. That is, debt acts like a lever which can magnify the size of both gains […]
Categories
Capital For You and Me
This past Friday marked the 40th anniversary of the passing of Mao Zedong, the founding father of the People’s Republic of China. Most notable here in China was the absence of discussion or commentary. This is perhaps understandable since it is Chinese government policy to celebrate past leaders’ birthdays rather than the anniversary of their […]
Categories
Cheap money, what is it good for?
Cheap money should help to stimulate the world economy, but is it working? Following the leave campaign winning the Brexit referendum, which will see the UK leave the EU two years after the Prime Minister notifies the European Council of its intention to do so, there was much fear about what this would mean for the strength of […]
Categories
End of the Republic
If I were a betting man, at this stage my money would be on Trump to win the American presidential election. This is not an endorsement, or a show of support of any kind. I think a Trump victory would be a horrible outcome. So, why do I think Trump has more than a 50/50 chance? And what […]
Categories
Harnessing Creative Energy
China comes up for criticism in modern times for stealing software technology from the West. Software is a language (or a set of languages) which can be used to make computer hardware do marvelous things, and because software is easy to copy (or reverse engineer), it’s easy to steal. But if there is software stealing going on in China and elsewhere, […]
Categories
Efficiency vs Fairness
On Thursday 23rd of June, the British people voted by a majority of 52% to 48% to leave the EU. This is a monumental event, and it is worth trying to piece together what happened, and what some of the implications might be. The voter turnout was strong with around 72% of voters casting a ballot. However, the results […]
Categories
Taking Profit
I am currently living in Beijing, lecturing strategy and finance courses to undergraduates. One observation I’ve made is that the people here are good at identifying opportunities for profit. And I use the word profit not in a financial sense, but with the broader meaning of the French verb profiter, which means “to make the most advantage of”. This […]
Categories
In Search Of Returns
The wonderful thing about financial markets is that they help to get funds from people who have them to people who have a productive use for them. In other words, they help to make things more efficient by enabling money to be put to good use. The problem with financial markets, though, is that more […]
Categories
Scarcity or Abundance
Not enough, or more than you need. It’s generally one, or the other. Are you working for the money, with grand plans for what you will do when you one day finally have “enough”? Or are you just happy to be here, every day, because you can’t believe they are paying you to do what […]
Categories
The Great Reset?
This past week there has been fear circulating among founders and private investors who hold stock in certain early stage startups that have achieved sky-high valuations. Why the fear? The startups in question are privately held, meaning that the founders and early stage investors own shares in the companies, but shares have not yet been offered for sale […]
Categories
The sky is falling
Back in September last year, the Wall Street Journal wrote an article about how low oil prices could lead to a global recession. An article by the Guardian last Friday repeated the sentiment with a suggestion that low oil prices could hurt the stock market. Look out, Chicken Little, the sky is falling! The doom and gloom argument appears […]
In many areas of today’s economy, numerous jobs go unfilled due to a lack of people with the proper qualifications. However, as this dilemma continues, more and more employers are starting to re-examine the typical business thinking that aptitude must always take the lead over attitude when it comes to new hires. As Human Resource […]
There are different kinds of capital that individuals and organisations use to pursue their goals and deliver value. Employees usually trade human capital (their individual talent, skills, knowledge and efforts) and intellectual capital (their thoughts and ideas) in exchange for financial capital (money). Effort, ideas and money are not, however, the only forms of capital that […]
Categories
Proven vs Actionable
You don’t always need proof that a threat exists in order to take action. You don’t need to know everything, you just need to know enough to get moving. In behavioural economics the common human bias towards doing nothing is called the “status quo bias”. Faced with a difficult decision in the midst of uncertainty, […]
Categories
Trust Based Business
I recently bought a coffee from Quarter Horse Coffee, my new favorite Oxford coffee house. Not having exactly the right change, I asked the friendly bearded hipster behind the counter whether they accept card payments. He told me that they accept payment by card, but they charge a 20P surcharge for amounts under five pounds. I […]
Categories
Immediacy Bias
(Source: Flickr) Whether it be pictures of cats on the Internet, a phone call from a friend asking you to come to the movies tonight, or a university assignment due tomorrow morning, we all suffer from it. We tend to perceive immediate emotions much more intensely when making decisions about what we should do right […]
Categories
You, Humans and Life
When a baby is born it knows nothing about the world. So little, in fact, that it has no concept of self. The baby, its mother, and the world are one. As the baby grows it discovers the world for the first time. Hands, feet, pee, poop, mumma and dada. The baby’s mother whispers “you […]
Phil Libin, CEO of Evernote, doesn’t like the word “cannibalisation” because it’s zero sum. It implies that you’re the guy doing the eating or being eaten. He says being in business is not like playing a sport or being in warfare. It’s more like music, it’s more like art. It’s not a zero sum game. […]
Categories
Free Services vs Privacy Online
Big data (combined with data analytics and machine learning) offers exciting opportunities to decipher patterns and solve complex problems more quickly and cheaply than ever before, but it also has the potential to infringe the privacy of individual users. Looking at a company like Evernote, which uses a freemium business model to help tens of millions of people be more productive […]
(Source: Flickr) When can you consider something that you have to be an asset? This may sound like a funny question, but it is particularly important for the success of organisations and your success as an individual. The answer turns out to be largely a matter of perspective. If you are an accountant, then your goal is to categorise resources into groups: assets, liabilities, and […]
Categories
Impending Grexit?
(Source: Flickr) We have seen this week some heated negotiations between Greece and its European lenders. Here are some of the issues facing Greece at the moment: Technical default: Greece is due to repay €1.6bn (£1.2bn) to the IMF at the end of June. On Wednesday, Athens announced that it is stony broke and will not be able to pay […]
Categories
Libin’s Law
(Source: Techworld) Phil Libin, founder and CEO of Evernote, was one of the guest speakers during Silicon Valley Comes to Oxford which was hosted at Oxford’s Said Business School a fortnight ago. As part of the conference there was a debate held at the Oxford Union, the world’s oldest debating society, the motion being “This […]
Categories
What’s Going On At FIFA?
(Source: Flickr) Seven senior FIFA officials were arrested on Wednesday at a high end Swiss Hotel as part of a larger two decades long investigation by the FBI into corruption at FIFA. The alleged wrongdoings include racketeering, wire fraud and bribery to the tune of more than $150 million. The arrests occurred just prior to […]
(Source: Flickr) This is the tenth instalment of my conversation with Nigel Lake, CEO of Pottinger, a global corporate advisory firm based in Sydney, Australia. Nigel is the author of The Long Term Starts Tomorrow, a must have book “for any manager, leader or Minister.” The Hon Mike Baird MP, Premier of NSW Tom: There has been […]
Categories
Price and Value
Price and value, there is a difference. Price is what you pay for something; the number of dollars that you need to part with in order to obtain it. Value is what you receive; the positive feelings or practical utility that the object or the experience imparts. I recently had my birthday, and I was delighted to […]
Categories
The death penalty is cruel
(Source: Virgin.com) It was very sad to hear about the eight people executed by firing squad by the Indonesian government, including two Australians. The death penalty is cruel. People who traffic drugs may be desperate, reckless, foolish, greedy or a combination of all of these things, but they are still people. And killing people is barbaric. The […]
(Source: Flickr) Anchoring is a common psychological effect whereby people tend to rely too heavily on readily available information (the “anchor”) when making decisions involving uncertainty. To illustrate the point, let me ask you two questions: Is the population of Argentina greater or less than 80 million? How many people do you think live in Argentina? Write […]
(Source: Flickr) Traditional strategic thinking, the kind championed by HBS Prof Mikey Porter, says that real economic value is only created when a company can sell a product or service to customers at a price that exceeds the cost of producing it. In other words, companies are entities that sell products or services, and strategic thinking is […]
Categories
Gatekeepers vs Enablers
OVER the past weeks we have been reaching out to various university career services teams to let them know about the free consulting resources that we have produced for students. If you missed this development, you can access all the resources here. The interesting thing about this process of reaching out to different universities is the vastly different responses that we have received. […]
Where do you place value? (Source: Flickr) ONE of our heroes, New York based consultant Alan Weiss, has a unique perspective on wealth. He regularly shares the view that “wealth is discretionary time”. The reason his approach to wealth is so striking is that most people, at least those of us living in Western market based economies, tend […]
WILLIAM Black, former bank regulator and Professor of Economics and Law at the University of Missouri, witnessed first hand how banks took control of the banking system to commit fraud on a colossal scale. In his TED Talk from last year (watch it below) Black talks about “liar’s loans” and other tactics that the banks used to bring […]
Categories
The Emperor’s New Clothes
THE Emperor’s New Clothes, the famous fairy tale by Hans Christian Andersen, tells a story of a vain Emperor who enjoys parading his fine clothes around town. One day a pair of swindlers promise to weave a magnificent suit of clothes for him which are so fine, they tell him, that they are invisible to anyone who is unfit for […]
Categories
Other People’s Money
Australian Senator David Leyonhjelm makes an impactful speech about the risks of being cavalier with other people’s money, of valuing everything and understanding nothing about the cost
Categories
Learning From Experience
A natural and unstructured process that results from doing the work LAST week we looked at the value of breaking with experience, which followed on nicely from our initial article on the Experience Curve. This week we focus on learning from experience. What does it mean to learn from experience? And what role does management have to […]
Categories
Breaking with Experience
Innovation involves breaking with the past to create something even more remarkable (Source: Flickr) THE traditional Experience Curve focuses on increasing production experience which leads to predictable cost reductions. This kind of experience is relevant in industries that are relatively stable, competitive, and production-intensive. (Source: Wikipedia) But what about high tech and creative industries where the lifecycle […]
The Experience Curve captures the relationship between increasing production experience and declining costs (Source: Flickr) Background The Learning Curve, the concept which predates the Experience Curve, was first described by German psychologist Hermann Ebbinghaus in 1885 as part of his studies into human memory. In 1936, T.P. Wright described the effect of learning on production […]
Categories
Monopoly Money
If you were playing Monopoly, Quantitative Easing would be the equivalent of helping yourself to a $100 note every time you rolled the dice and never having to pay it back (Source: Flickr) CENTRAL banks continue to finance government spending by easing monetary policy in order to help economies get back to “potential output”. (It […]
Categories
Understanding Intelligence
Understanding the mechanism that underlies intelligence could have big implications for economics, business and finance. The below TED Talk is worth watching.
Categories
The Power of Persuasion
How can you get what you ask for? How can you significantly increase the chances that another person will say yes to your request? ROBERT Cialdini, best-selling author of Influence: The Psychology of Persuasion, gives an insightful talk on how you can persuade people to do what you want. As a tenured professor, Cialdini jokes […]
“Everything is relative in this world, where change alone endures” (Leon Trotsky) IF you were offered the chance to win or lose $100 on the basis of a coin flip, would you take the bet? If you are like most people, you would probably decline the wager. Even though the gamble offers an even chance […]
Categories
Loss Aversion
Loss aversion is a widespread behavioural trait which causes people to experience the suffering from a loss much more deeply than the joy from a commensurate gain Background Everyone knows that people don’t like to lose things. People are reluctant to give their old clothes to Vinnies, to leave dysfunctional relationships, or to throw away […]
Categories
How to Thrive in Hard Times
Invest for the future, reduce your debts, and insure your income TODAY’S economy is vastly different compared with our parents’ generation, and even those of us in ‘stable’ jobs should be prepared for increasingly rapid technological change and a continued downturn. The competitive landscape can change at any time and in ways that you may […]
Categories
World Collapse Explained in 3 Minutes
Bailouts: a band-aid solution for continuing sovereign debt crises BAILOUTS were the band-aid solution prescribed for the Greek sovereign debt crisis. And every indication suggests that Greece will require another band-aid early next year. In this context, Clarke and Dawe raise an interesting and often carefully overlooked question. Where does the money come from to bail out basket […]
Categories
Kyle Bass: The End is Nigh for Japan
“I would like to live in a world where it’s all rainbows and unicorns, and we could make Krugman the President … And then reality sets in” ~ Kyle Bass KYLE BASS founded and runs Hayman Capital Management, a Dallas-based hedge fund. He is a successful investor who is well known for predicting and profiting […]
Categories
Don’t Be Seduced
By sweet sounding lies RISK taking is important. Entrepreneurs are in the business of taking risks in the pursuit of profit and are the engine room of the capitalist market economy. Risk taking makes sense where the likely consequences of action have been well considered and are deemed acceptable. The quote above though states that “we only regret the […]
Categories
The Tortoise and the Hare
Stable growth is often more important than fast money SINGAPORE is on the rise as a wealth management hub with funds under management growing by 22% in 2012 compared with around 5% for Western Europe as a whole. The disparity in growth rates is large, and the FT has attempted to narrate a story that fast […]
Categories
Balancing the Scale
Scale improves productivity but also increases bureaucracy Scale can help a company to produce more output at lower average costs. However, production at scale also leads to unhelpful bureaucracy. As production rises, more employees are needed and executives implement more rules to keep things under control. Increasing production tends to lead to higher cash flows, and managers […]
This guest post is by a PhD student in philosophy from the Australian National University. THE FUTURE presents a paradox: no one can predict it but we are told to plan for it anyway. It is a tricky problem for individuals wanting to make provision for their retirement and for the vicissitudes of their health […]