A great simple blog post by marketing guru Seth Godin

Be open minded and be curious…that’s what you need!

Managers, encourage your workers to ask “why?”.


Is it only me but sometimes I see that an exchange gifts (for birthdays, christmas, etc…) is a zero sum gain in most of time. I am sure I am not the first one to point that out but let’s face it; when friends exchange gifts at their birthdays, on average the value (in dollars) is very close. Neither party wants to give a gift at higher value, making the other party feel that they have the obligation to give a higher value gift next time. So when I look at my group of friends, we all give each other gifts therefore this is a zero sum gain (A gives a $20 gift to B, B is now +$20 and A is -$20 = 0; later on, it is the reverse where B gives to A).

So why do we exchange gifts?

When is it economically reasonable to do so?

Is it only a strange human behavior? (I mean, under an economist perspective, we are not maximizing our utility)

We exchange gift on the fact that everyone does it and therefore we should. Some behavioral economist have similar studies demonstrating this fact.

But is it always a zero-sum gain? Personally, I find that gift giving is a zero-sum gain BUT there is some occasions where this is not the case:

1) When the gift in question nourishes someone’s knowledge (the recipient) like a book or even a video game! We can’t put a monetary value to that.


2) When the giver feels intrinsically good by giving a gift (not because everyone else does it)

Is there any other occasions where gift giving is not a zero-sum gain or even negative?

Can someone tell me if you ever had any interesting, unexpected, and/or unpredictable questions at a job interview? Don’t you find this dumb that HR tends to ask all the same questions like “what are your qualities, weaknesses…why this job”? I mean, c’mon, people go to Interview workshops at their University to learn how to answer these questions and when they go to an interview, they just recite all their qualities they have learned by heart. When will be the day that HR interview questions will be unpredictible like “what’s your dream in life”, “What makes you get out of bed everyday”, “What are your true passions”…  these questions are not hard to ask but it can catch the candidate out of sync and the highly creative and outside the box thinkers will love those questions. For HR, this is a great opportunity to find who are the truly motivated and open minded candidate because they will be able to see if they have fire in their eyes or not. HR shouldn’t expect that what makes the candidate go up in the morning is because they dream to have the open position but simply see if the candidate is just a natural motivated person in life.

Only then, should HR pursue with interview questions that are particular to the position (i.e. if they have the required skills set). If HR starts with these 3 questions at the start of the interview, they will see pretty fast if they can be considered real potential candidates for the job.

Would you have any good questions that you would suggest to a HR person?

side note: I believe that opened minded is one of the best quality of a human being.

I might be wrong on this… and I hope I am but I am starting to think that the CFA designation as lost a lot of its “value” in the past years. By that, I mean the CFA exam is becoming more and more like the GMAT in terms of studying for it. The CFA used to be a hard thing to study for but now, I see more and more students at university (which I have a lot of respect for) studying those CFA quick study guides made by Kaplan and others (and they passed!) and not even go through the 6 big books for each level exams that student has to go through. The CFA is just a pass or fail…how good you do don’t matter, as long as you pass! Now, because of the “academic inflation” where just a Bachelor or a Master degree isn’t enough, everyone studying finance seems to go for a CFA, and not only finance students but economics, international business, etc… Anyone! I don’t mind someone from a non-finance background who wants to work in the financial world. In fact, I think it’s superb because having people with different academic backgrounds can only be a big plus for the future.

But now, the number of people doing the CFA exams and hopefully getting the full accreditation (after 3-4 years of work) keeps on increasing, where the supply surpasses the demand. This is the case here in the city of Montreal. There are too many CFAs according to some portfolio managers I met. They told me that now that they want to hire candidates with a master degree plus CFA. And when all the students will have a Master and CFA, what else will they need? Ph.D? It has to stop! I seriously hate this stupid academic inflation!

This month, I have to make a decision to see if I want to do the CFA level 1 exam in June or not since I can apply for a bursary where the cost of doing the CFA drops to $220 instead of $800 or so. However, next year from September 2009, I will start my Master Degree in Finance. Should I do my CFA after my Master or should I give it a shot now and do level 2-3 after my master degree? Seriously, I wish I didn’t have to do the CFA. Level 1 exam is similar to what you do in your undergrad finance studies and Level 2 is well covered (not all) during the Master Degree. It sounds pointless to me. But I do hope that I am wrong.

So what do you guys think? Too many CFAs? Should they put tougher rules and restrictions for those who want to do the CFA? I just think that the CFA has lost a lot of its value… agree?

In the old days, when you met a CFA holder, you were mostly sure that this person was very professional and serious and skilled, but now with all this increase in CFA holders… don’t tell me that everyone is skilled and professional enough to work in the finance industry and I think this seriously hurts the financial industry.

The market today went down, down, and down. In the U.S., Canada, Europe, Asia…simply everywhere the market is in the negative. Are you surprised? Not me. Failing of a big institutions is not uncommon when you look at the past. However, the failing of 4 (Bear Stern, Lehman Bro., Freddie and Fannie) and half of another one (Merlyn Lynch), is new to me. I don’t remember reading somewhere where there were so many failing institutions at the same time. Am I skeptic about investing in stocks? NOPE! I am sure there are some great deals laying around as for value stocks. But again, I always suggest to people to index their portfolios and do a dollar cost average strategy and diversify!

Bill Bonner, writer of the Daily Reckoning sends (for free via email) a great newsletter about the world of finance, and of course today he talked about Lehman. I wanted to share with everyone is little comparaison of Long-Term Capital Management and Lehman Brothers:

“From the peak of 2000 ’til today, stock market investors have earned
nothing for their trouble. In nominal terms, stocks are about where they
were 10 years ago. Adjusted for inflation, they are down 25%-80%,
depending on how you measure it.

Wall Street made a fortune selling stocks to naïve investors. When the
stock marked topped out, the financial industry might have gone back to
sleep. Instead, it got a double dose of caffeine. The Greenspan Fed cut
rates in 2001-2002 while the Bush administration boosted spending and cut
taxes. All of a sudden, every hand on Wall Street turned to pumping out
credit – derivatives, SIVs, CDOs, MBS. They didn’t really have to invent
any new theories, they merely recycled the same numbskull ideas that sank
LTCM – basically, that you could eliminate risk by modeling historic price
movements. If Lehman Bros., for example, had never failed in more than a
century and a half – the odds that it would fail this year were so close
to zero as to be not worth discussing.


“Lehman lurching closer to liquidation,” says the front page of today’s
International Herald Tribune.

Now, it’s Lehman that is failing. And no consortium of Wall Street banks
is willing, or able, to bail it out. Lehman has some $80 billion of
dubious credits. These were the products of its own – and many other –
whiz kid financial engineers. Lehman hired some of the best talent on Wall
Street. It has some of the world’s top financial mathematicians on its
payroll. It could compute the risk of loss down to 3…4…heck…as many
decimal places as you like. But it could do so only as LTCM did – based on
past history.

As we explained, once investors came to consider stocks as a riskless way
to get rich, they bid up prices to the point where they were all
risk…and no reward. And when their models told them that they could make
money by lending money to people who couldn’t pay it back, practically
every loan they made took them closer to bankruptcy.”


I bolded the word PAST HISTORY. Remember, we can predict the future with the past. (A blow to Technical Analysis People)

I encourage everyone to sign to Bill Bonner free daily newsletter. Its a must!

…but if you use stick figures (Yes, stick figures!) to explain the credit crisis, then the problem gets easier to graps. I can explain in general the credit cresis but let’s face it, it’s sure is a deep and complex problem that the world of finance got itself into in the last year. I found today from the telegraph.co.uk website, a great stick figures sketch that explains the credit crisis. Check it out here, you won’t regret it (and there’s a little touch of humour also).

Beside financial magazines such as Bloomberg or Business Week, I find that many (certainly students at universtiy) are unaware of finance newsletters. Finance newsletters, are mostly written by one author who has a lot of experience in the economic/financial world from previous or current jobs. These professionals would like to share their views of the economic financial world daily with as many readers as possible but since it demands a lot of work, reasearch analysis, many of those financial newsletters are not free. You can compare newsletters with blogs but you will find that overall, newsletters have a deeper insight in the world of finance than any regular financial blogs you can find due to the amount of reaserch and understanding of economics. When I say not free, they are costly (above $100, $200++ more for weekly letters) such as the great valueline.

The insight of knowledge you can gain from these letters are absolutely amazing. From more advanced asset allocation, to understanding the current economy, to individual stock analysis (for active investors), to new asset class, etc… Just anything you can imagine. I first heard about newsletters when I read “The Dick Davis Dividend” (2007). Dick Davis has a 40 years old and more experience in writting newsletters (the funniest thing is that he never recommended a stock). Dick Davis newsletters are not free but you MUST check is book to have an amazing overview of its understanding of investment from the past 40 years.

But are there any FREE and GOOD newsletters? YES THERE IS!

First one, my favorite is John Mauldin’s Thoughts from the Frontline. This is a great overall letter that covers multiple financial components on a weekly basis.

Second one, the American Association Individual Investor (AAII) is excellent too.

A third letter is not about finance, its about Geopolitics. George Friedman, founder of Stratfor has a weekly free newsletters (only the newsletters on his website is free but the rest is not) about anything that goes on in the political world in deep analysis, well written and easy to understand. For instance, I didn’t know much about why Russia and Georgia went to war but thanks to these letters (1) (2), I got a pretty good deep understanding of this war. But why am I talking about a newsletters that covers Geopolitics and not Finance. Easy! To be successful in the world of finance, you must understand what goes in the political world.

That’s it! Enjoy these newsletters! You won’t regret it and you’ll be hooked and addicted to them…that’s for sure!