Business

Wall Street, Pro Wrestling, and Seventh Grade

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A couple of years ago, Sallie Krawcheck, then CFO of Citigroup (now Chairman & CEO of Citi Global Wealth Management) was asked how being a woman had affected her career. Her response:

I think it’s an advantage. I grew up in Charleston, a very genteel, very Southern city, a gorgeous city. I will say there’s something about going to an all-girls school in Charleston that’s tougher than Wall Street. You don’t know what it’s like. I had the glasses, the braces, the corrective shoes. I was half-Jewish, half-WASPy. I couldn’t have been further outcast. There was nothing they could do to me at Salomon Brothers in the ’80s that was worse than the seventh grade.

The current issue of Fortune (8/18) has a profile of Meredith Whitney, who was one of the first securities analysts to recognize the seriousness of the subprime/CDO situation. Ms Whitney is married to a professional wrestler. From the article:

Another eye opener for Whitney has been how gracious most wrestlers are–at least when the cameras aren’t rolling–in comparison with the viper-pit culture on Wall Street. It sounds absurd–the world of high finance being less collegial than an industry in which employees belt each other in the face.

If we put these two assessments together, we get:

Pro Wrestling

is nicer than

Wall Street

which is nicer than

Seventh Grade

Communal Memory and Financial Markets

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Via Instapundit, an interesting NYT column about how quickly, after a natural disaster, people start to over-discount the risks of future disasters, especially in advanced societies:

Communal memory of rare disasters is worse in more developed societies because knowledge now is passed on in schools, movies or the internet leaving no time for oral history or reliance on the elders to learn about the world.

Something similar to the quick-forgetting phenomenon happens in financial markets. In every market, some players prosper for a while by following trading strategies that tend to be highly profitable from day to day but that are almost guaranteed to be big long-term losers: martingales, naked out-of-the-money option writing and other short-gamma strategies. Every time there is a big market event, a lot of these players suffer large losses and go out of business. They move on to other businesses (I assume) and are no longer around to warn market newcomers to avoid the kind of risky, short-term-profitable strategies that they themselves once followed. So there is a constant stream of new traders who enter the markets and rediscover risk.

This is an oversimplification, since the better traders, by definition, somehow learn how to stay in the game for the long term. But the behavioral parallels between market traders and people who rebuild villages in flood zones — and countries that seek to appease their enemies — seem clear. The common element is lack of an adequate inter-generational feedback mechanism. I doubt that there is a remedy for this pattern of human behavior (I wouldn’t characterize it as a “problem” any more than I would say that rain is a weather problem) other than for people to study history more.

The Return of Commercial Sail?

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In a post on Ships and the Global Economy, I mentioned a sail-assist technology which has been develope by a German company. Operating something like a kite, the SkySails system is said to be capable of lowering vessel fuel costs by 10-35%.

Comes now Compagnie de Transport Maritime à la Voile which has entered the cargo transportation business with a pure-sail approach. The 106-year-old Kathleen & May will be running wine from Bordeaux to Dublin. CMTV has chartered several additional sailing ships and will be using them to ship products such as coffee and jam. The company also intends to have new vessels built to its specifications.

Here’s CMTV’s website. Note that shippers get a “logo sticker” that they can attach to their products, certifying that “goods are transferred to consumers in a clean and socially responsible way that contributes to sustainable development, without neglecting the requirement to exchange necessary goods between people.”

I doubt if pure sail will ever recapture a significant portion of the world ocean transportation industry, but it may well thrive in some niche markets, serving people who want to buy products which are defined as “green” or “sustainable” and who may also enjoy the association with the romance of sail.

Sail-assist technologies for powered vessels, on the other hand, may have a significant role to play, particularly if oil prices continue to climb and if environmental restrictions mandate the replacement of bunker fuel with the more-expensive distillates.

Here’s a report on the test on the SkySails system on the multipurpose cargo ship Michael A. Note the interesting comparison of the tractive force from the sail with the thrust from an Airbus A318 turbine engine.

CMTV item via Checks with Chart.

Freakonomic Based Real Life Story

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I am a middle man.   I run a business that sells HVAC products and equipment to contractors.   We do not do any retail.

In my world, it is common for the manufacturer of the equipment that I am selling to set up factory direct stores that welcome contractor business.   It makes it interesting, to say the least.   Imagine you are doing your best you can to sell a company’s products, then they set up a store down the street a few blocks and sell directly to your customers.   It may sound weird to some, but it happens all the time in my industry.

We sell service, delivery, no damage, taking care of problems, and basically do everything that the factory direct stores can’t, or won’t.    The relationship is more complex than this, but for this post that is all  I need to  explain about it, as that is the nuts and bolts of it.  

The  huge problem with this situation is that  as a reseller, you  are obviously at a price disadvantage to the factory direct store.   There is only so far you will go with this line.   That is fine with me, you either take it or leave it.   But something interesting happened a few weeks ago.   I received a call that this particular manufacturer was shutting down its operations in my state.   That is awesome news for me.

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Good Karma

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I got slagged like never before in my posts about copyright infringement here and here.   Eventually I came to the realization that I was wrong in my practice, no matter how hard I wanted to justify it.   It killed me, but I decided to stop watching the show through the illegal means.

Well, I see today that one of my favorite networks, Versus, is going to be airing the very show that I never thought I would get to see, Contender Asia.   They will call it Contender Muay Thai over here.   Unfortunately I  know who the eventual winner is,  from my normal surfing in the  Muay Thai and fighting forums.   Sometimes maybe there is good karma to be had.   I can’t wait.