Commodity Speculation and Middle East Turmoil

Here is an excerpt about the subject

The short answer with regard to the role of speculation in the Middle East turmoil (and the spike in gas prices) is that speculation is obviously playing a large role. Everyone I’ve spoken to seems to think this is a virtual replay of 2008, only the larger spike here is in food commodity prices. Wheat and corn are both up more than 75% over the last 12 months; cotton is up over 125%; coffee up 85%. Meanwhile oil prices are soaring and there’s talk again of futures maybe hitting $200 a barrel – oil futures are trading at about three times what they were in February 2009. The blame for all of this is going to be laid at disruptions in the Middle East and other factors, but the inescapable fact is that commodity index speculation was up $80 billion last year, meaning that there was $80 billion of new money coming on the market betting on the rise of commodity prices. The total amount of commodity index speculation approached $400 billion last year, meaning the amount of speculative money on the market was roughly twenty times pre-2003 levels – and again, this is all “long-only” speculation, i.e. money betting on prices to go up. Obviously disasters and political unrest and other factors (a very weak harvest in Russia last year was a factor in the wheat price spike, for instance) play a part in all of this, but I think in the end what we’re going to find out is that index speculation was a huge factor in both the skyrocketing food prices that led to the Middle East crisis and this current oil-price situation.

Another Inside Story

Two films apart from the recently celebrated “Inside Job” show some glimpses how money is made in the Wall Street and these carry the same name Wall Street (1987) and Wall Street:Money Never Sleeps (2010).

Mario Puzo has rightly quoted at the start of his famous novel “The Godfather” that Behind every great fortune there is a crime. Great fortunes or huge wealth can not be achieved without usurpation.

Here is an excerpt from another such story

The vast investigation into insider trading on Wall Street that culminated this week in Raj Rajaratnam going on trial in New York accused of securities fraud was always likely to ensnare a large institution – perhaps a big hedge fund or a Wall Street bank. No one, however, expected the institution in question to be McKinsey & Co.

It was bad enough for the blue-chip management consultancy when Anil Kumar, one of its partners, admitted to supplying Mr Rajaratnam with inside information in return for bribes (Mr Rajaratnam denies all charges). But the Securities and Exchange Commission’s claim last week that Rajat Gupta, who was the head of McKinsey between 1994 and 2003, passed on tips as a board member of Goldman Sachs and Procter & Gamble, is a heavy blow.

It is hard to believe that trading on price-sensitive inside information from clients is rife inside the puritan, strait-laced firm – if evidence of that emerged, it would soon collapse, as Arthur Andersen did after Enron. But the accumulation and sharing of privileged knowledge is integral to how it works and it cannot afford its corporate and government clients to pull the shutters down.

Thomas Watson Jr, the former president of IBM, wrote in his autobiography Father, Son & Co of being asked by a company executive in 1956 whether he should share sensitive internal pricing information with a Booz Allen Hamilton consultant. “‘Sure,’ I said, ‘It’s like your doctor. You have to tell them everything.’”

The calculation every client makes is, in the words of Christopher McKenna, a professor at the Oxford university’s Saïd Business School who studies professional services firms, that “consultants will carry information in and information out. The client has to decide which of those flows is worth more.”

Indeed, one of the main reasons companies hire consultants is to make sure they do not fall behind what their competitors are doing – in return for parting with their own secrets, they gain access to their rivals’ suitably disguised “best practices”. The consultant is a broker who attempts to amass so much knowledge that each company has to hire him, no matter how uncomfortable that feels.

Is Doing PhD Worthless?

The Economist has published an article “The disposable academic – Why doing a PhD is often a waste of time”.

From reading the full article one gets that first things should always be first – first get a reasonable degree required by job market, land at a good job and then pursue your interest to become a PhD.

Following excerpts from the article are worth reading.

But universities have discovered that PhD students are cheap, highly motivated and disposable labour. With more PhD students they can do more research, and in some countries more teaching, with less money. A graduate assistant at Yale might earn $20,000 a year for nine months of teaching. The average pay of full professors in America was $109,000 in 2009—higher than the average for judges and magistrates.

Indeed, the production of PhDs has far outstripped demand for university lecturers. In a recent book, Andrew Hacker and Claudia Dreifus, an academic and a journalist, report that America produced more than 100,000 doctoral degrees between 2005 and 2009. In the same period there were just 16,000 new professorships. Using PhD students to do much of the undergraduate teaching cuts the number of full-time jobs. Even in Canada, where the output of PhD graduates has grown relatively modestly, universities conferred 4,800 doctorate degrees in 2007 but hired just 2,616 new full-time professors. Only a few fast-developing countries, such as Brazil and China, now seem short of PhDs.

In research the story is similar. PhD students and contract staff known as “postdocs”, described by one student as “the ugly underbelly of academia”, do much of the research these days. There is a glut of postdocs too. Dr Freeman concluded from pre-2000 data that if American faculty jobs in the life sciences were increasing at 5% a year, just 20% of students would land one. In Canada 80% of postdocs earn $38,600 or less per year before tax—the average salary of a construction worker. The rise of the postdoc has created another obstacle on the way to an academic post. In some areas five years as a postdoc is now a prerequisite for landing a secure full-time job.

These armies of low-paid PhD researchers and postdocs boost universities’, and therefore countries’, research capacity. Yet that is not always a good thing. Brilliant, well-trained minds can go to waste when fashions change. The post-Sputnik era drove the rapid growth in PhD physicists that came to an abrupt halt as the Vietnam war drained the science budget. Brian Schwartz, a professor of physics at the City University of New York, says that in the 1970s as many as 5,000 physicists had to find jobs in other areas.

PhD graduates do at least earn more than those with a bachelor’s degree. A study in the Journal of Higher Education Policy and Management by Bernard Casey shows that British men with a bachelor’s degree earn 14% more than those who could have gone to university but chose not to. The earnings premium for a PhD is 26%. But the premium for a master’s degree, which can be accomplished in as little as one year, is almost as high, at 23%. In some subjects the premium for a PhD vanishes entirely. PhDs in maths and computing, social sciences and languages earn no more than those with master’s degrees. The premium for a PhD is actually smaller than for a master’s degree in engineering and technology, architecture and education. Only in medicine, other sciences, and business and financial studies is it high enough to be worthwhile. Over all subjects, a PhD commands only a 3% premium over a master’s degree.

Gary Hamel: Deconstructing Apple

"Over the past decade, the pride of Cupertino has produced a mind-boggling parade of accomplishments.

– Having been dismissed as a footnote in the personal computer industry, Apple is now the market leader in computers costing more than $1,000. In one recent month, its market share in this segment exceeded 90%.
– Though it was a late entrant into the mobile phone business, Apple currently makes more money from roughly 3% of the global handset market than Nokia makes from more than 30%.
– Within six years of launching its online music store in 2003, Apple had become the world’s largest music retailer.
– Apple’s first physical store opened in 2001. Five years later, Apple’s sparse, elegant shops were generating four times more revenue per square foot than its big box competitors,v and its Fifth Avenue store in New York is thought to be the most profitable retail outlet in the world.
– At $180 billion, Apple’s market value is currently three and half times that of Nokia, and more than 60% higher than Hewlett-Packard’s—a company with three times Apple’s revenue.

So rather than fretting about the prospects for the iPad, clever Apple watchers and envious wannabes should be asking themselves: How in the world could one company have accomplished all this? How do you build an organization that is capable of reinventing not just one industry but four—computing, music, electronics retailing and mobile phones. How do you do the unprecedented repeatedly?


Competitors and business analysts would probably credit Apple’s gravity-defying success to a contrarian strategy that . . .

Focuses heavily on design.
Fuses hardware and software.
Integrates a broad array of complementary technologies.
Locks up customers with velvet hand-cuffs.
Harnesses the efforts of independent software developers.
Leverages the company’s core competencies into new markets.

But as logical as this analysis may seem, it’s also unsatisfying. It reveals something of the “how,” but nothing around the “why.” Why has Apple been able to rewrite the rules in a handful of industries when most companies struggle to do it in even once? Why does the company seem to take such pride in defying conventional wisdom? And most importantly, why is it able to routinely deliver the exceptional?

Nevertheless, I don’t think it’s a particular strategy that makes Apple Apple. Nor can you attribute all of the company’s success to the executive abilities of Steve Jobs. Instead, I believe the company’s extraordinary run of success reflects an unstinting devotion to a particular set of values. Within the universe of inventors, designers and artists, these values aren’t particularly remarkable; but within the universe of Fortune 500 companies, they are as rare as a rose in winter.

It’s not too hard to deduce at least some of the ideals that have propelled the company forward . . .

Be passionate.
Lead, don’t follow.
Aim to surprise.
Be unreasonable.
Innovate incessantly and pervasively.
Sweat the details.
Think like an engineer, feel like an artist.

Apple—but if they aren’t, they should be! For me, the case of Apple is just a convenient and plausible vehicle for driving home a fundamental truth: you can’t improve a company’s performance without improving its values. So don’t get distracted by all the things you hate about Apple. I agree: it’s a company, not a shrine.

With that out of the way, let’s compare and contrast. If the values in the left hand column characterize Apple (or my airbrushed rendering of it), what are the values that characterize your company? I’m guessing it’s something closer to what’s on the right.

Be passionate. Be rational.
Lead, don’t follow. Be cautious.
Aim to surprise. Aim to satisfy.
Be unreasonable. Be practical.
Innovate incessantly. Innovate here and there.
Sweat the details. Get it mostly right.
Think like an engineer, Think like an engineer,
feel like an artist. feel like an accountant.

Unlike Apple, most companies have a lot more accountants than artists. Most are prisoners of Management 1.0—of industrial-age management practices that emphasize discipline, focus, efficiency and alignment above all else. They are bound by the shackles of a management model that is utilitarian, antiseptic and hyper-rational. And that’s why they won’t soon mimic Apple’s success.

But what if Apple’s passions were the norm rather than the exception? What kind of world would it be if the values I’ve attributed to Apple were the values that characterized the world’s leading insurance company, or publisher or shipping company or airline or hotel chain? What if they were the cherished ideals of the paper shufflers at the Internal Revenue Service and the Department of Motor Vehicles? OK, now I’m hallucinating. But I still can’t help but dream of a world in which Apple seems a lot less exceptional because every other organization has become more so."


Gary Hamel: Deconstructing Apple - Gary Hamel’s Management 2.0 - WSJ

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Tips for Extraverts and Introverts

"George Bernard Shaw said: “The single biggest problem with communication is the illusion that it has occurred.” Nowhere is this statement more applicable than when considering the issue of introverts and extraverts communicating in the workplace. Each of these two solitudes faces particular challenges and the entire communication process can be emotionally draining for both groups. Here are pointers for emotionally-intelligent communication:

Tips for Extraverted Leaders:

Be concise.
Circulate information ahead of a meeting.
Don’t expect immediate decisions.
Allow silence its moment.
Ask introverts for their thoughts.

Tips for Introverted Leaders:

Give visual clues when listening.
Raise your comfort level with public speaking.
Beware of voids created by non-communication.
Provide timely feedback.
Learn the art of small talk.
Share more personal information.

There are many gifts that each group brings to the table. Introverts and extraverts form a beautiful palette of diversity if we are willing to capitalize on each other’s strengths. And the quickest path to reach this is through emotionally-intelligent communication."


For detailed Tips please click below.

Are You Talking to Me? Rx for Extraverts and Introverts : The World :: American Express OPEN Forum

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It is the perception that matters

Here is an article about the record revenue at box office by "Avatar". The author shows that when this record is viewed from another perspective "Avatar ranks as the 26th highest grossing film in the U.S., according to Box Office Mojo."

With no film on the near horizon poised to challenge "Avatar"'s dominance, the film is sure to continue to mint money. But it's got a way's to go to catch up with a classic like "Gone With The Wind."


Forbes.com: Is Avatar Really King Of The Box Office?

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Free Market is an Illusion

"There is much to be said for markets. When working efficiently they engender competition thus forcing producers to pass on value to consumers. A good illustration is the Pakistani mobile phone market, perhaps one of the most competitive in the world. Despite the many virtues of markets, however, it is not necessary that they serve everyone all the time.

The reasoning is simple. Markets are blind and allocate on the basis of effective demand, i.e. demand backed up by purchasing power. Thus, if Demi Moore, say, wishes to take a milk bath every day, the market will ensure delivery of sufficient milk to her, even if it means that 100 African children, who cannot afford the price, go without a drop.

Amartya Sen who won a Nobel Prize in economics pointed out how many of the world’s worst famines were actually caused by unfettered market forces."

DAWN.COM | Business | Sugar crisis and free markets

Golf and Business

There are many things that are common between the game of golf and running a business. Both need a strategy to achieve objectives. before you play a shot of golf, you visualize where the ball should land. It is the same in business before you begin a day or a month or a year, you visualize where you should be at the end of that period. To play a good game of golf, you need to take stock of the resources you have e.g. number of irons and woods in the bag, your accuracy and yardage with each iron / wood. The same way, you need to take stock of your resources while running a successful business e.g. HR, Funds availability, Products etc. It is said that golf is a thinking man's game and the same is true for business, you can't run it without being thoughtful to so many things.It is imperative for a good shot of golf to have relaxed muscles and yet mentally focused towards the objective and same is said about the business achievement, the organization, the system should be in place, there should not be frenzy or paralysis but a calm and quite control over its affairs and yet all the organization as a whole, the system as a whole should be focused on the achievement of its objectives. There is observation that successful businessmen are mostly golfers. The reason may be that they enjoy the intricacies of game of golf with as much ease as that of business. They are typically challengers, are not afraid of any bad shot, constantly thinking to achieve the objectives, are relaxed in tough situations and focused towards the goals.

The lesson learned from this comparison is play golf to become successful businessman or be a successful businessman to play good golf.