Posted on

Jeffrey Picower

Jeffrey Picower
Jeffrey Picower

From James B. Stewart’s Pulitzer Prize-winning Den of Thieves (New York: Simon & Schuster, 1992) (p. 236):

 

By and large, investors reacted enthusiastically. The largest single investor – and in Nagle’s view one of the most mysterious – was Jeffrey Picower, who invested $28 million. Nagle had no idea where Picower’s money came from; he occupied an unmarked office suite in an anonymous Manhattan tower.

 

We now know where Picower’s money came from: tax shelters for wealthy clients; merger deals; pharmaceutical spin-outs; and being the major investor with Bernie Madoff. Stewart’s reportage is one of several ‘weak signals’ that are now more significant given the Madoff investment scandal revelations. Picower’s estate settled a Madoff trustee suit for $US7.2 billion in 2010.

 

Stewart’s description of Picower is also interesting in terms of financier elites. Picower, like the Theosophical Secret Chiefs or the Austra family of vampires in Elaine Bergstrom‘s Shattered Glass series, deflects attention from himself. The mysterious fortune; the unmarked office suite; and the anonymous Manhattan tower made Picower more enigmatic and understated in a period when Wall Street’s Masters of the Universe indulged in excesses. The true 1% perhaps remain in the shadows.

Posted on

Ray Dalio’s How The Economic Machine Works

 

Ray Dalio is the legendary founder of the Bridgewater hedge fund which manages $US150 billion for the World Bank and pension fund clients. Dalio is influential for sharing his management principles that inform Bridgewater’s strategic subculture (PDF). He has now shared a 30-minute video on his personal model of global macro dynamics.

 

Maneet Ahuja has a chapter-length interview with Dalio in her book The Alpha Masters (Hoboken, NJ: John Wiley & Sons, 2012) in which he talks about how to learn; how he founded and built Bridgewater; dealing with the World Bank; and how to deal with crises:

 

If you’re limiting yourself to what you experienced, you are going to be in trouble. . . . I studied the Great Depression. I studied the Weimar Republic. I studied important events that didn’t happen to me. (p. 12).

 

Dalio says if you have 15 or more good, uncorrelated bets, you will improve your return to risk ratio by a factor of five. He calls this the holy grail of investing. “If you can do this thing successfully, you will make a fortune,” he says. “You’ll get the pot of gold at the end of the rainbow.” (p. 17).

Posted on

In Utero

In Utero (1993)
In Utero (1993)

 

Pitchfork and Consequence of Sound each have reviews out on the 20th anniversary reissue of Nirvana’s third studio album In Utero (1993). This album evokes a very specific period of my life. It came out a few weeks before I moved out of my family home into La Trobe University student housing, and became an industry liaison and writer for LTU’s Rabelais student newspaper. I would often reflect on Nirvana’s ‘Serve The Servants’ and ‘Frances Farmer Will Have Her Revenge On Seattle’ as I dealt with public relations executives in the major recording labels. Gen-X traumatised college friends would have ‘Heart-Shaped Box’, ‘Rape Me’, ‘Tourette’s’, and ‘Radio Friendly Unit Shifter’ on repeat, and very loud. “Married | Buried” became the signature quote from ‘All Apologies’. When I heard that Kurt Cobain had used King Crimson’s Red (1975) as a sonic reference for producer Steve Albini, I would play both albums back-to-back, ending with Crimson’s ‘Starless’. A German student exchange couple would play the secret, hidden track ‘Endless, Nameless’ as I read Idries Shah’s The Sufis. Friend Michael Keleher juxtaposed Nirvana’s ‘In Utero’ with Bob Dylan’s ‘Born Again’ phase as a charismatic Christian. This period of listening to In Utero in vivo ended with Cobain’s Rome suicide attempt in March 1994. We were preparing a Rabelais issue when I heard the news of Cobain’s death, so we rang the editors to stop the presses. Cobain’s death now overshadows what listening to In Utero felt like: an emotional, gritty, purifying, and cleansing anger at everything that felt messed up in the world, and in our young adult lives.

Posted on

Thriving On Chaos

Thriving On Chaos (1987)
Thriving On Chaos (1987)

 

One of my mid-term career goals is to understand and implement enterprise value management. I’ve started with Tom Peters‘ Thriving On Chaos (New York: Alfred A. Knopf, 1987), an artifact of the late 1980s: United States fears of Japan’s quality revolution; a mergers wave; corporate raiders and leveraged buyouts; middle management restructures; vision; innovation; decentralised information; and urgent change management. In some ways not much has changed in management books: these are still important themes for the higher education sector. I spent 1996 to 2001 reading Peters’ various books, and after a decade’s experience I can appreciate some of his insights, alongside the post-McKinsey thought leadership. Thriving On Chaos anticipates Nassim Nicholas Taleb’s antifragility and barbell strategy.

Posted on

Gray Matter

 

For several months I’ve been thinking about writing a PhD chapter on AMC’s Breaking Bad. The influential television series features Drug Enforcement Agency and Mexican drug cartel strategic subcultures centered on Albuqurque, New Mexico. One overlooked aspect is Walter White’s (Bryan Cranston) past as a talented graduate research chemist in the now multi-billion dollar firm Gray Matter. One of White’s major character motivations is that he sold his founding stake to Elliott and Gretchen Schwartz for $5000. Its return in the penultimate episode ‘Granite State’ makes the subplot a powerful one for researchers who make decisions on research commercialisation and spinout ventures

 

 

Posted on

Thomas Pynchon’s Bleeding Edge

Thomas Pynchon‘s new September 11 novel Bleeding Edge (London: Jonathan Cape, 2013) is now out and has a subplot featuring the Montauk Project conspiracy theory. The Counterpunch and Atlantic Monthly reviews mention the Montauk allegations. Pynchon likely found out about the conspiracy from an interview that Alexandra ‘Chica’ Bruce and Richard Metzger did for the Disinfo Nation television show (Channel 4, United Kingdom) which was later included on the Disinformation DVD and Disinformation: The Interviews book. (Both were on-sale prominently in St. Marks and other New York City bookshops.) Richard has blogged at his site Dangerous Minds about how the interview came about. Montauk fits Pynchon’s worldview and the themes of earlier, very influential novels like Gravity’s Rainbow and The Crying of Lot 49.

 

For me, Bleeding Edge evokes the period between the 2000 dotcom crash and the September 11 terrorist attacks, when I first edited the Disinformation website. I wrote about both incidents; as well as experiencing others like Enron’s collapse and the 2000 United States election outcome. I visited New York City between 20th and 25th September 2001, in part to visit author Howard Bloom. Pynchon’s subplots involving the darknet DarkArcher and stockmarket speculation echo some PhD-related work I am doing on the strategic subcultures of event arbitrage hedge funds: several ‘shorted’ airline stocks as the September 11 terrorist attacks unfolded.

 

The plausible Montauk-Disinfo-Pynchon connection highlights how subcultural ideas and memes can diffuse into mainstream society. Author Robert Anton Wilson likened this to strange loops. Author Don Webb described it as a fictive arcanum.

Posted on

Bungalow 8

Sometimes you can causally or process trace an interest to a specific event that involved others. I have written in the past about how I encountered the legendary Anglo-French financier Sir James Goldsmith. This was likely a remanifestation of Goldsmith’s career arc in the 1980s merger wave. James B. Stewart reveals in his book Den of Thieves (New York: Touchstone, 1992) about the 1985 Predators Ball hosted by Drexel Burnham Lambert:

 

But those thoughts quickly vanished, for far more important matters were brewing that night in Bungalow 8. Boesky was in a corner talking quietly with Icahn; Sir James was in a group with Pickens and Flom. Murdoch and Lindner were chatting with Kay and Engel, the affable host. Within only a few weeks, Pickens would launch his bid for Unocal, Peltz would bid for National Can, Sir James would attack Crown Zellerbach, and Farley would go after Northwest Industries—all with Drexel financing. (p. 138).

 

Goldsmith’s Crown Zellerbach bid used greenmail and white knight practices (pp. 160-161). It led to renewed media interest in his work . . . which eventually led to my encounter with his work in 1995, and to revisit it in 2010.

Posted on

Picks & Pans: Expertise, Giftedness, and High Abilities

Ungifted: Intelligence Redefined by Scott Barry Kaufman (New York: Basic Books, 2013). (TS-3). Francis Galton and Alfred Binet’s research have influenced how we understand human intelligence and giftedness. Kaufman’s Ungifted examines more contemporary research such as the Cattell-Horn-Carroll model of cognitive abilities that I discovered in my Fluid Intelligence Working (30th June – 1st July 2012). This research transforms our understanding of innate talent versus the environment; the neuroscience of creativity; and education initiatives for cultivating giftedness and high abilities. Kaufman emphasises passion, mindset, self-regulation, openness to experience, and K. Anders Ericsson’s deliberate practice as important for self-growth. Kaufman also edited the recent collection The Complexity of Greatness: Beyond Talent Or Practice (New York: Oxford University Press, 2013) (TS-4) which collects recent research on expertise, giftedness, talent, and deliberate practice. Heidrun Stoeger, Abdullah Aljughaiman, and Bettina Harder’s collection Talent and Development (Berlin: LIT Verlag) (TS-4) summarises recent European research.

 

Beyond Knowledge: Extracognitive Aspects of Developing High Ability edited by Larisa V. Shavinina and Michel Ferrari (New York: Routledge, 2004). (TS-4). Studies of giftedness and high abilities usually emphasise the role of personality traits, micro-social factors (family, school, and significant others); macro-social factors (the cultural, economic, political, and social conditions you live in); and subjective norms. This book examines several extracognitive factors that lie beyond these traditional approaches: adaptation, ego-strength, unconscious affect (emotions), and creative discovery processes. Other chapters consider the role of deliberate practice, chance, creative genius, and wisdom traditions. Herein lies one facet of cultivating Left Hand Path sovereignty.

 

Genius Explained by Michael J.A. Howe (New York: Cambridge University Press, 2004). (TS-4). The late Howe was a leading researcher on genius, giftedness, and high abilities. Malcolm Gladwell cites Genius Explained in his book Outliers: The Story of Success (New York: Little, Brown & Company, 2008) (TS-3) on the composer Wolfgang Amadeus Mozart as a child prodigy. (Gladwell also mentioned K. Anders Ericsson and William Chase’s respective research into deliberate practice and expertise, which also informed Daniel Coyle’s The Talent Code and Geoff Colvin’s Talent Is Overrated.) Howe’s book examines the deliberate practice strategies, environment, and psychology of Charles Darwin, the Bronte sisters, Michael Faraday, Charles Darwin, and others. For Howe, deliberate practice, the environment, and chance are pivotal yet often overlooked in discussion of giftedness and innate talent.

 

Working Minds: A Practitioner’s Guide to Cognitive Task Analysis by Beth Crandall, Gary Klein, and Robert H. Hoffman (Boston, MA: MIT Press, 2006). (TS-3). Cognitive Task Analysis (CTA) is a structured, analytical process to discover expertise, and to understand its cognitive and human factors. This book considers CTA methods (concept maps; experiments; interviews; and stories) with new domains (cognitive psychology and systems development in information technology); and applications for market research and program evaluation. CTA is part of the broader domain of cognitive engineering and human factors research, detailed in John D. Lee and Alex Kirlik’s Oxford Handbook of Cognitive Engineering (New York: Oxford University Press, 2013) (TS-4).

 

Accelerated Expertise: Training for High Proficiency in a Complex World by Robert H. Hoffman, Paul Ward, Paul J. Feltovich, Lia DiBello, Stephen M. Fiore, and Dee H. Andrews (New York and London: Psychology Press, 2013). (TS-4). K. Anders Ericsson’s pioneering work on deliberate practice emphasised the pivotal role of practice, training, and feedback. Accelerated Expertise provides an in-depth overview of how accelerated learning and deliberate practice techniques are now applied to rapidly cultivate skills and expertise. This might be a TS-1 book if you plan to utilise these techniques on a regular basis. Ruth C. Clark’s Building Expertise: Cognitive Methods for Training and Performance Improvement (San Francisco: Pfeiffer, 2008) (TS-4) emphasises training and instructional design.

 

Expertise and Skill Acquisition: The Impact of William G. Chase edited by James J. Staszewski (New York and London: Psychology Press, 2013). (TS-4). In 1973, William Chase and Herbert Simon wrote an influential article on the skills acquisition strategies of grand chess masters. K. Anders Ericsson would cite Chase and Simon’s 10,000 hour rule in deliberate practice research, and Malcolm Gladwell popularised it in his book Outliers and New Yorker articles. This book examines Chase’s contributions to the development of expertise; the neuroscience of skill acquisition; and the role of skilled memory. It connects Chase’s research program to deliberate practice and cognitive engineering.

 

The Cambridge Handbook of Expertise and Expert Performance edited by K. Anders Ericsson, Neil Charness, Paul J. Feltovich, and Robert R. Hoffman (New York: Cambridge University Press, 2006). (TS-4). This Cambridge Handbook is a major advance of K. Anders Ericsson’s pioneering research on deliberate practice and cultivating expertise. It summarises the major theories and methods for understanding and studying expertise; and considers expertise in specific professional, art, sport, and game domains. The chapters on generalisable, mediating mechanisms consider the role of ageing, creativity, deliberate practice, intelligence, tacit knowledge, and other factors. The companion Cambridge Handbooks on Creativity, Intelligence, Learning Sciences, and Thinking and Reasoning are also highly recommended as advanced references. Ericsson’s deliberate practice research and its implications for training are explored further in Development of Professional Expertise: Toward Measurement of Expert Performance and Design of Optimal Learning Environments (New York: Cambridge University Press, 2009) (TS-4). Shane Murphy’s Oxford Handbook of Sport and Performance Psychology (New York: Oxford University Press, 2012) (TS-4) explores expertise and expert performance in those domains. David Epstein’s The Sports Gene: Inside the Science of Extraordinary Athletic Performance (New York: Current, 2013) (TS-3) critiques Ericsson’s deliberate practice as applied to elite athletes and sports performance. The combination of Ericsson’s deliberate practice, performance psychology, and elite sports training has been applied to other domains, such as Brett N. Steenbarger’s Enhancing Trader Performance: Proven Strategies From The Cutting Edge of Trading Psychology (Hoboken, NJ: John Wiley & Sons, 2006) (TS-3), and the late Ari Kiev’s The Mental Strategies of Top Traders: The Psychological Determinants of Trading Success (Hoboken, NJ: John Wiley & Sons, 2009) (TS-3).

Posted on

Trading Lineages

For about three years I have been looking at financial markets as part of a practice-based research program. This past week I honed in on some specific material for a longer-term project. I then realised that much of the research material is traceable to several key sources.

 

In the 1980s, Stephen Brill’s American Lawyer Magazine helped develop the careers of several financial investigative journalists. Connie Bruck (The Predators Ball) and James B. Stewart (Den of Thieves) documented the insider trading scandals involving Ivan Boesky and Michael Milken, who both influenced Michael Douglas’ portrayal of Gordon Gekko in Oliver Stone’s film Wall Street. I recently discovered that Jim Cramer (Confessions of a Street Addict) was briefly at American Lawyer Magazine at the same time as Bruck and Stewart: Cramer founded a hedge fund, was involved in TheStreet.com, and is now a high-profile CNBC presenter. Bruck and Stewart’s detailed reportage foreshadowed the recent insider trading cases involving the Galleon and SAC hedge funds. Cramer’s experience is far more cautionary.

 

Another personal influence is the work of performance psychologists who have worked with traders. Ari Kiev (The Mental Strategies of Top Traders) worked with SAC’s Steve A. Cohen. Brett N. Steenbarger (The Psychology of Trading; Enhancing Trader Performance) has worked with several firms including SMB Capital, where Mike Bellafiore (One Good Trade; The Playbook) and Adam H. Grimes (The Art and Science of Technical Analysis) have influenced proprietary trading firms. I have found that performance psychology insights can be applied to other areas of my life.

 

Finally, I have picked up specific insights from Market Wizards traders like Linda Raschke, Michael Steinhardt, and Larry Williams, who each have lineages of hedge fund and trading students.

 

Collectively, this work from American Lawyer Magazine, performance psychologists, and specific traders continues to shape my on-going, practice-based research.