Poking through 11+ years of posts I find information that’s as useful now as when it was written.

Golden Oldies is a collection of the most relevant and timeless posts during that time.

Sometimes old posts just depress me. I wrote this one in 2008 and it’s still applicable today. With very slight alterations, it would be just as applicable in 1908 or 1808 or even earlier and it will probably be just as applicable in 2118 and beyond.

Expecting companies to “do the right thing” when they think the right thing will impinge on their bottom line is just plain stupid. It hasn’t worked historically and I doubt it will work in the future; certainly not on the tech world, whose arrogance makes Wall Street look humble.

The only thing stupider is businesses’ inability to understand that the right thing is often more profitable — of course, they could take a lesson from Blackrock,  but more about that tomorrow.

Read other Golden Oldies here.

Yesterday I asked, “What else does Wall Street and the financial industry do besides cripple corporate strategic efforts?”

They fight for self-regulation, assuring watchdog agencies and Congress that they are good guys that should be trusted to do the best thing and that the economy will tank if any kind of control or regulation is enacted—and they win.

They win based on the money spent to focus the efforts of well-connected lobbyists on stopping cold, or at least significantly watering down, any legislation or rules that might offer protection to us—the people who keep them all in BMWs and champagne.

Wall Street and the other financial services industries aren’t alone in this, every industry does it, but the money guys seem to be exceptionally successful—until something blows up. Then, when public outcry is loud and tempers are hot, Congress has the leverage to pass anything—whether it fixes the problem or merely makes them look like they care.

Deregulation was one of the prime factors in the S&L mess in the eighties; earnings pressure combined with personal greed fueled many of the recent corporate financial fiascos—think Enron, WorldCom, Adelphia Communications, Citigroup, Goldman Sachs, J.P.Morgan Chase, Deutsche Bank, and others.

And now, of course, we have the Sub-prime debacle with which to contend.

And after each of these, Congress, the SEC and others all run to add laws and rules to prevent it from happening again.

The repercussions from the latest snafu (Navy term meaning ‘situation normal—all f*ked up’) are reverberating through the credit markets making it more than difficult for corporations, small business and just plain folks to access it.

Who will step into the breach to provide investment and liquidity?

Private equity and big hedge funds—both with even less regulation and even larger egos and greed factors than more traditional Wall Street firms.

But a land grab by big hedge funds and private equity firms might create new problems. The Securities & Exchange Commission and the Finance Industry Regulatory Authority oversee investment banks to some degree, and the Federal Reserve is moving in that direction. But hedge funds are largely unregulated and aren’t bound to make any disclosures to anyone but their investors. Even that information is often incomplete. A move by hedge funds into traditional corporate finance would mean even less transparency than exists on Wall Street now.

It’s a sad fact that the 214-year-old force that was instrumental in building the most powerful industrial nation on the planet could be just as instrumental in presiding at its demise.

Understand, it’s not that I have much faith in government regulation, but have seen little-to-no proof that self-regulation works—it’s too much like having the fox care for the hen house.

So-called government intrusion is the result of the inability of various industries to “self-regulate” for any reasons other than short-term profit, doing as much they can get away with and pushing the boundaries beyond what’s reasonable.

So you tell me, how can we get well-reasoned laws that aren’t defeated or seriously watered down by special interest groups and industry lobbyists before the crisis?

Image credit: pinkfloyd

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

I had a $15 K lesson in founder ego when I lived in San Francisco. That’s how much I lost when I invested in a startup run by a guy with a bad case of it.

The only thing to do when that happens is to move forward and forget it. Money is replaceable — your sanity isn’t.

I haven’t thought about it in years, but reading the abstract from Do Alpha Males Deliver Alpha? Testosterone and Hedge Funds reminded me of “Craig,” in spite of its focus on hedge funds. (The full paper is available at the link.)

Using facial width-to-height ratio (fWHR) as a proxy for pubertal testosterone, we show that high-testosterone hedge fund managers significantly underperform low-testosterone hedge fund managers after adjusting for risk. Moreover, high-testosterone managers are more likely to terminate their funds, disclose violations on their Form ADVs, and display greater operational risk. We trace the underperformance to high-testosterone managers’ greater preference for lottery-like stocks and reluctance to sell loser stocks. Our results are robust to adjustments for sample selection, marital status, sensation seeking, and manager age, and suggest that investors should eschew masculine hedge fund managers.

This makes one wonder if the lack of testosterone is an underlying factor in the outstanding success of women-led companies outperforming those led by men.

Hedge fund managers have a number of traits in common.

They are white, attended ‘good’ schools, graduated from elite colleges and are connected through a web of similarly privileged friends.

Sound familiar?

That description fits much of Silicon Valley, both founders and investors.

As does the abstract.

As do the egos.

Image credit: HikingArtist

All my life I’ve written rhymes for certain days and special events or people. Last Halloween I wrote Scary Times Require Rhymes for Leadership Turn and A Halloween Economy at MAPping Company Success.

I’m always surprised when I go back, read one and it doesn’t make me run screaming from the screen.

So, here is Halloween 2009 for your reading pleasure. I hope you enjoy it, because I had a lot of fun writing it.

Are you attending a party tonight

wearing a costume that inspires fright?

Halloween’s a night for spooks,

for witches, demons and other kooks;

vampires, werewolves, serial killers and more—

all those types who are drenched in gore.

But if you really want to inspire fear

you can do it best with much simpler gear.

All you need is a designer suite, well-styled hair,

a fancy watch and executive chair.

The back story’s simple, you just have to choose

which character best fits your particular ruse.

Hedge fund manager, Wall Street or insurance exec

depends on whose world you are planning to wreck.

Have fun tonight and stay safe!

Your comments—priceless

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Image credit: boydiz on flickr

Today is International Talk Like a Pirate Day with the goal to “unleash your inner buccaneer.”Black humor indeed, considering the financial headlines this week.

Wall Street not only unleashed its inner buccaneer, it walked the pirate talk to financially rape and pillage with nary a thought to the consequences.

That’s what 30 years of bipartisan deregulation (three Republican and two Democratic Presidents) gets you.

Not that I think regulation always works, nor that Congress crafts good regulation, since it’s heavily influenced by lobbyists, PACs, and other special interests.

But assuming that “leaders” will act in the best interests of all is way beyond stupidity.

To add to the hilarity, the folks on Capitol Hill are debating whether to allow the same financial institutions that are melting down to take over private pension funds.

Only this time the totally unregulated, shrouded-in-secrecy, completely opaque hedge funds want a piece of the action, too.

So if bailed-out AIG, Chapter 11 Lehman and the already acquired Merrlil Lynch haven’t given you nightmares this certainly should.

Maybe we should all just walk the plank and get it over with.

Your comments—priceless

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Image credit: slightlywinded   CC license

Yesterday I asked, “What else does Wall Street and the financial industry do besides cripple corporate strategic efforts?”

They fight for self-regulation, assuring watchdog agencies and Congress that they are good guys that should be trusted to do the best thing and that the economy will tank if any kind of control or regulation is enacted—and they win.

They win based on the money spent to focus the efforts of well-connected lobbyists on stopping cold, or at least significantly watering down, any legislation or rules that might offer protection to us—the people who keep them all in BMWs and champagne.

Wall Street and the other financial services industries aren’t alone in this, every industry does it, but the money guys seem to be exceptionally successful—until something blows up. Then, when public outcry is loud and tempers are hot, Congress has the leverage to pass anything—whether it fixes the problem or merely makes them look like they care.

Deregulation was one of the prime factors in the S&L mess in the eighties; earnings pressure combined with personal greed fueled many of the recent corporate financial fiascos—think Enron, WorldCom, Adelphia Communications, Citigroup, Goldman Sachs, J.P.Morgan Chase, Deutsche Bank, and others.

And now, of course, we have the Sub-prime debacle with which to contend.

And after each of these, Congress, the SEC and others all run to add laws and rules to prevent it from happening again.

The repercussions from the latest snafu (Navy term meaning ‘situation normal—all f*ked up’) are reverberating through the credit markets making it more than difficult for corporations, small business and just plain folks to access it.

Who will step into the breach to provide investment and liquidity?

Private equity and big hedge funds—both with even less regulation and even larger egos and greed factors than more traditional Wall Street firms.

“But a landgrab by big hedge funds and private equity firms might create new problems. The Securities & Exchange Commission and the Finance Industry Regulatory Authority oversee investment banks to some degree, and the Federal Reserve is moving in that direction. But hedge funds are largely unregulated and aren’t bound to make any disclosures to anyone but their investors. Even that information is often incomplete. A move by hedge funds into traditional corporate finance would mean even less transparency than exists on Wall Street now.”

It’s a sad fact that the 214-year-old force that was instrumental in building the most powerful industrial nation on the planet could be just as instrumental in presiding at its demise.

Understand, it’s not that I have much faith in government regulation, but have seen little-to-no proof that self-regulation works—it’s too much like having the fox care for the hen house.

So-called government intrusion is the result of the inability of various industries to “self-regulate” for any reasons other than short-term profit, doing as much they can get away with and pushing the boundaries beyond what’s reasonable.

So you tell me, how can we get well-reasoned laws that aren’t defeated or seriously watered down by special interest groups and industry lobbyists before the crisis?

Your comments—priceless

Don’t miss a post, subscribe via RSS or EMAIL

Image credit: pinkfloyd   CC license