18th June 2013: The Wolf of Wall Street Trailer

 

There are two kinds of Wall Street films: the techno-science thriller involving financial risk management and VaR (The BankMargin CallArbitrage); and the elite trader’s excessive lifestyle (Wall StreetBoiler RoomWall Street: Money Never Sleeps). Martin Scorsese’s forthcoming film adaptation of Jordan Belfort’s ‘pump and dump’ memoir The Wolf of Wall Street (New York: Bantam, 2007) goes for the latter, because it appeals to a far broader audience. The trailer benefits from Kanye West’s pulsating new song ‘Black Skinhead’ (from Yeezus).

 

Belfort’s friends got him the film deal with Scorsese and actor Leonardo DiCaprio whilst Belfort was resurrecting his sales career on the Australian seminar circuit (PDF). In just a few years Belfort transformed his Straight Line Sales technique from free MP3 interviews into slick website and seminar circuit presentations on sales psychology. Josh Brown outlines in his book Backstage Wall Street: An Insider’s Guide to Knowing Who to Trust, Who to Run From, and How to Maximize Your Investments (New York: McGraw-Hill, 2012) how pitch books like Befort’s Straight Line works. Maybe Belfort’s seminar clients in Australia need to read Brown’s book and blog. It all reminds me of telemarketing stints I had in the mid-late 1990s, whilst reading Tom Hopkins and Zig Ziglar, and watching friends get recruited into Amway’s multi-level marketing schemes. Maybe Belfort will be able to pay back his clients, after all, if his deal includes a share of Scorsese’s film residuals.

 

The elite trader image of ‘conspicuous consumption’ has its roots in Thorstein Veblen‘s leisure class economics, and Reagan era money managers like Henry Kravis, Peter Lynch, Victor Sperandeo, and Martin Zweig. The traders I know enjoy the Hollywood media imagery. But they also know it is a myth that artificially inflates the subjective expectations of how trading actually works and what it is really like. The ‘excessive lifestyle’ myth actually serves as an entry barrier. Most novice and retail traders will more likely ‘blow up’ their trading accounts.

4th October 2012: David Einhorn @ Value Investing Congress

David Einhorn (ValueWalk)

 

Reformed Broker Josh Brown has notes posted from David Einhorn‘s speech to the Value Investing Congress.

 

ValueWalk also has an analysis of Einhorn’s speech and observes that sell-side analysts now follow the hedge fund manager’s thinking.

 

I’ve followed Einhorn since his book Fooling Some of the People All of the Time revealed his analytical research approach to value investing.

 

Einhorn’s list of long and short stocks is an interesting read. You sense Greenlight Capital‘s research and valuation processes: the significant factors (management view, company, industry, market, macroeconomic and causal) that shape companies, and the Bayesian inferential view of investor beliefs about them; how this analysis then translates to a market forecast; and how Einhorn intends to capitalise on these dynamics. The estimate assessment of multivariate factors shape investor beliefs and decisions. The market action which occurs from this creates opportunities using behavioural finance and market microstructure models (with a nod to technical analysis and high-frequency data analysis of transaction flows and volatility). It’s like reading Michael Mauboussin about how to think about investment ideas; or Peter Schwartz about trend forecasts and scenarios; or Robert Jervis and Gregory Treverton on strategic intelligence.

1st October 2012: Money & Freedom of Choice

No artistic integrity beyond this point

 

Reformed Broker Josh Brown makes an interesting observation about how money shapes artistic freedom and specifically the freedom to release a creation into the world, on your own terms. Browns’ examples include the late New York Times publisher Arthur O. Sulzberger; Renaissance and Medici patronage of artists; and the ‘sellout’ debate about ‘indie’ rock bands.

 

‘Dabblers’ and non-artists can have a Romantic image of the relationship between artistic creation, money, and freedom. Early career academics talk of an attractive ‘life of the mind’. Journalists talk of a Fourth Estate role in society and the investigative craft. Musicians talk of innovative strategies for new releases. Yet each of these beliefs about freedom also involves financial choices about money. The academic ‘life of the mind’ is often based on institutional incentives, patronage networks, and administrative support. The Fourth Estate and investigative journalism both need funding mechanisms to sustain a ‘quality media’ reputation. The much-touted ‘free’ albums by Radiohead and Nine Inch Nails arose when both artists had fought with their major labels and were label shopping for new contracts. Wilco’s experience in I Am Trying To Break Your Heart is another example of being ‘dropped’ by one major label and using an unreleased album as leverage to create a bidding war with other major labels. U2, Depeche Mode, and New Order now have detailed, archival reissues of their early, influential albums in part because they have strong management, legal and creative teams, and have ‘decision rights’ control of their intellectual property.

 

Brown is correct that money-awareness is not a Mammon-like ‘sellout’ of artistic integrity. The recent controversy over Amanda Palmer‘s use of ‘crowdsourced’ musicians and whether or not she should pay them is a small-scale incident compared with the business complexities of major labels’ accounting practices, the creation and recognition of ancillary revenue streams, the control of song catalogues, and intellectual property strategy. The latter area will be an important battleground for academics, journalists, musicians, and other so-called cultural creatives. You might start with Intellectual Property Strategy and Essentials of Intellectual Property; consider the Schumpeterian dynamics in Driving Innovation; and understand the corporate and institutional perspectives of Intangible Assets and Harvesting Intangible Assets.

 

Photo: classiccopenhagen/Flickr.

31st July 2012: Fixing TheStreet.com

In the late 1990s, I used to discuss magazine redesigns with publisher/editor/journalist Ashley Crawford. I also got to interview designer Roger Black on his creative process. I kept this in mind when Disinformation went through several redesigns whilst I was site editor. Now, Josh Brown, John Standerfer, and Mebane Faber consider how 1990s trader site TheStreet.com could be renewed. Brown focuses on the kind of editorial and content changes that I would discuss with Richard Metzger and Gary Baddeley at Disinformation. Faber notes the growth in financial and trader bloggers who challenge the late 1990s model of a site with editorial and writing staff. Standerfer distinguishes between three types of content developers: Reporters from media outlets; Observers who are like Faber’s bloggers; and Parrots who create ‘noise’ to drive advertising revenues and social media presence. (My preference is to combine the Reporters’ craft with the Observers’ accessible writing.)

 

It’s a good exchange that could apply to a lot of sites.