Your iPod as a learning tool.
An interesting post by JP on GenM information consumption.
I like this meme. Songs are similar to securities. Think about it. You know it’s true.
‘Twas serendipity whot brought me here.
In the generalised mobius strip that is the blogosphere, investigations into the nature of Enterprise 2.0 took me quite naturally into a curiously passionate debate on the meaning of serendipity.
I’d rather not take sides (I’ve noticed a small but potentially potent vein of zealotry in some of the views and I don’t have enough conviction on this subject to risk being branded a serendipitous heretic) 
however I think I broadly agree with Steven Johnson’s view, especially his response to Nick Carr’s response. (Possibly influenced by the fact that he authored one of my favorite books.)
In any event I believe that embracing the immense possibilities embedded in the very idea of serendipity has unambiguously and positively shaped my life. I don’t really have the time or the inclination to tell my life story here but those that know me will, I hope, understand what I mean. And for those of you I’ve yet to meet, just think, what a great way to start a conversation. Call it planned serendipity.
Some interesting thoughts on management.
From Knowledge at Wharton:
David Sirota, co-author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want (Wharton School Publishing), believes far too many managers stifle employee enthusiasm across the board by using bureaucratic or punitive techniques that should be reserved for a troublesome few.
I haven’t read the book, but this interview with K@W gives a pretty good summary. While much of what the authors say might seem obvious, even trivial - I would suspect that many managers and organisations do not apply these principles and fall into the obvious traps. Sometimes through incompetence or venality, but most often I suspect by accident. It’s actually easier (to fall into the trap of creating an adversarial working environment &/or treating employees like children) than one would like to think.
Will the LME join the modern world?
As reported in the FT this week:
The London Metal Exchange, the world’s largest base metals market, is looking to turn the 129-year-old exchange from a non-profit entity into a profit-making organisation. The move could pave the way for an outright sale of the exchange or a potential initial public offering.
…The LME is the last big commodity exchange that is membership owned. Its larger peers, the IntercontinentalExchange (ICE), Chicago Board of Trade and the Chicago Mercantile Exchange, have listed in the past five years and, as a consequence, have seen their share prices soar on strong futures trading volume growth. This in turn has added billions of dollars to their market valuation.
and also:
The launch of a strategic review by the LME comes as competition between commodity exchanges becomes more intense as rival exchanges move to compete on formerly sacred turf.
…ICE Futures is owned by the Atlanta-based IntercontinentalExchange, which is understood to be looking at launching electronic base metal futures after the success of recent launches.
“If another exchange wanted to take control of LME’s business, it would be cheaper to do it by launching competing contracts rather than buying it, says John Lothian, president of electronic trading at Price Group, an electronic futures broker.
The exchange plot thickens…
The rest really is fictional. Promise.
Yes, AmazonBay is fictional and speculative and is not supposed to be taken literally.
That said, I did smile when I saw this in the FT:
“Three-way exchange merger not dismissed”
If the New York Stock Exchange winds up buying Euronext one major question will remain: what will NYSE chief executive John Thain do about the London Stock Exchange?
Insiders say Mr Thain still very much wants a deal with his London counterparts. But that might be tough to swing if he is still trying to close a complex Euronext merger. Now some Wall Street analysts and exchange shareholders say there is but one logical answer: do both at once.
…Analysts say a three-way merger would make perfect sense and skip ahead one step in the inexorable advance of exchange consolidation. “It is certainly appealing in many ways,” said Joe Gawronksi, chief financial officer at Rosenblatt Securities.
“And you may end up with something like that some day anyway. But because of all the complexities regarding political issues, social issues and integration issues, it would be an extreme long shot. Which doesn’t mean it wouldn’t be a good thing.”
I wonder if they could sort out all the ‘complexities’ by say…March 2008?
The Digital Generation, part 43
This story has got a lot of play in the blogosphere this week, so at the risk of saying something that has already be said 100 times, the Digital Generation is different: (as reported in Advertising Age)
Only one in four 12- to 34-year-olds can name all four major broadcast networks: ABC, NBC, CBS and Fox.
The finding comes via an online poll conducted by Bolt Media, a 10-year-old Web site that six weeks ago relaunched itself as a place for users to upload videos and photos. About 400 members responded to the questions, including one that asked how respondents spent their free time.
The most popular activity? That would be surfing the Internet, which 84% said they did during their idle periods. Hanging out with friends came in second at 76%, watching movies third at 71% and TV viewing fourth at 69%. The five most-watched TV networks were Fox, Comedy Central, ABC, MTV and Cartoon Network.
“There’s a massive movement going on in people under 30 and how they spend their media time,” said Bolt President Lou Kerner, who once upon a time was a cable analyst on Wall Street before leaving to run TV.com and then Bolt. “Our audience spends lots of time on net, creating their own media.”
I’m not going to dissect this finding, but I think it does underline how the world is changing quite substantially and this generation has a fundamentally different world view from their predecessors (baby boomers, generation x and y.)
Businesses of the future will have to adapt. Yes even financial services.
Gore/Clinton 2008?
With Al Gore’s continuing renaissance gathers steam and with the upcoming release of what looks to be (from the trailer) a terrific and topical film - An Inconvient Truth (which opens in the States on May 24th), the draft Gore voices are starting to come out of the woodwork.
If you look at the markets, the rally has already started. Gore’s price on Betfair has come down from 20-1 to around 8-1 over the past couple months (albeit on very light volume):
And just to prove that the arbitragers (or the invisible hand of the markets or both) are alive and well in this market, the price at Intrade has also seen the equivalent rally from 5c to 12c (on the dollar so equivalent to 20-1 going to c. 8-1) since February, also unsurprisingly as Intrade accepts US business, the volumes traded are higher:
He is now clearly 3rd favorite, behind Clinton and Warner, with Warner in particular seeming to suffer from Al’s advance.
Wonder what the odds are of a Gore/Clinton ticket? Of them winning? Can’t see anyone making a market in that anywhere yet.
Makes you think…
From the Economist:
In America at least 12m households have no bank account—are “unbanked”, in the industry’s ugly jargon. Once unnaturalised immigrants and the “underbanked”—an even uglier term for those with a low credit score or none—are added, some estimates exceed 40m.
I wonder how many of these people have a cell-phone? (Among those that did, it would also be interesting to know the breakdown between contracts and pre-pay accounts.)
You don’t have to go to Africa or the Indian sub-continent to identify a large and underserved market in financial services. Heretofore the problem has been that the cost of customer acquisition and maintenance has been higher than the expected revenues and so these markets lay fallow (or were priced - from the consumers’ point of view - prohibitively expensively:)
All of this is good news for the unbanked, who often use expensive “alternative financial providers” to pay bills, cash cheques and borrow. For instance, payday lenders, which provide short-term (usually two-week) loans, often charge interest rates that top 470% when annualised—no small sum when you are living from one pay cheque to the next. Worse, those without bank accounts find it hard to save, build credit histories and obtain loans at reasonable rates. A study published this week by the Federal Reserve Bank of Chicago and the Brookings Institution reports that cities with higher shares of “banked” residents tend to have higher rates of income, employment and homeownership, and lower crime rates.
Rate your broker.
In the May edition of the 16,000 strong SII members’ magazine, Securities & Investment Review (S&IR) the editorial “Why we need better feedback” praises the eBay customer ratings system as a key factor in the company’s success.
…In the editorial Mr Culhane argues that eBay customer feedback relies entirely on individuals wanting to protect and enhance their reputation, using no legal rules or power. He draws a parallel with the financial world where reputation and trust are crucial. “What is needed is a measure of proportionality that discriminates between firms with systemic problems and those with occasional blips. Wholesale, private client and retail trades would all be rated”, he says.
The effect on reputations when these ratings are published would be immense: “Counterparties and customers would be able to ascertain the reputation and integrity of a firm immediately. They would have a more informed opinion gathered from tens of thousands of transactions.” Says Mr Culhane.
Firms that adopt a principled approach, as expressed in the SII Code of Conduct, and actively demonstrate their fairness, honesty and integrity will be the winners, the editorial says.
Wonder if Mr. Culhane has seen AmazonBay?
Thanks to David H for the pointer.
$30 billion dollars and what do you get?
According to a new report from Aite Group, LLC, the U.S. securities industry, driven by regulatory and competitive pressures, appears ready to plan for long-term strategic IT projects. These projects will be designed to streamline enterprise-wide operations in the hope of minimizing operational risk and identifying new revenue opportunities. By the end of 2010, the total IT spending in U.S. securities will reach an estimated US$31.2 billion, exhibiting a CAGR of 3.3% over the next four years.
I’m not an expert, and I imagine built into these predictions is the inevitable march of improved productivity (ie more bang for the same buck) but a CAGR of 3-4% over the next 5 years just seems low to me. Typically IT accounts for between 15 and 20% of operating costs for most investment banks. That rough benchmark hasn’t changed in many years. The ‘correctness’ or ‘appropriateness’ of that ratio is in my opinion far from given. On the one hand you have the circular logic of benchmarking (where each firm uses the next as a marker), and on the other hand it does not seem intuitive to me that a ratio that was relevant a decade ago would still be relevant today given the massive changes in market structure, information & communication technology, etc. I’m not saying I know what the optimal ratio should be (or even that such a monolithic concept makes sense) but it seems probable that it has moved on and if you were to build a securities business from scratch today it I suspect you might be inclined to allocate rather more than 20% of your opex to IT.
