Moneyball and rings

In the cascade, value is created from below. The common stock, subordinated as this is to the preferred, will make the preferred rise as common gains in value. The cause is not that prefs surpass their baseline preference or the value that was set by the investment, but that the common down below expands to make it so.

The value that’s created there is in the asset, made by execution. The other value element of enterprise, its optionality, is all in the beholder’s eye, and anyway once that takes form it isn’t option value anymore but an addition to the business  – the  asset of which consequently grows.

Solid and consistent execution is the hardest of all things in a team context… combining, as a group, energy and inspiration, organization, diligence, persistence, communication, obviously skill… but more than skill alone… a way to fit the unique skills of individuals into a cohesive blend that’s rhythmic and harmonious, even if the movement appears scattered.

And even then, with all conditions met, resources may not be enough, and circumstances change, unplanned and unexpected… the competitive environment, economy, customer delays or new requirements, defections or new roles that may need filling… it’s a turbulent affair, which, when successful, makes or adds to or perfects the asset. It is a thing of beauty.

As in sports, this is a win, and it needs to be repeated and continuous, the sequence incrementally more challenging with added size and expectations and the progress of the seasons. At the common stock level, down where the players live below, the exercise is one of chemistry. In the sports analogy this is akin to basketball, which is akin to music, and which the best teams will have mastered.

For the preferred that is above, and with diversified portfolios and glimpses of each business from the top, the game might sometimes seem more as in Moneyball, which is to say, statistical analysis. It’s a game of hits, they say, referring to baseball batting averages.

Perhaps the best, those with consistently superior returns, or, if you will, the best performance at the plate, have an innate understanding of the game’s dynamic – the real game – mindful of the role they play around the team, the differences between assists and interference, between a steady hand that makes all players better and the barbell of neglect and dominance.

In the end, the players win the games, and when they do, the value of the enterprise increases, for the glory of the coach whose star will rise, up above the common layer.

Observation, intelligence, commitment

Technology has from its very origins evolved to break the confines of efficiency…

… biologically limited in all ways but one…

… which, unbounded, has enabled the invention and its use, not always optimal in effect…

… but fixable with new invention and enhanced technology…

… that by its very form limits the scope of unlimited imagination…

… and enhances efficiency through automation…

… that is rigid, unimaginative, literal, and precise…

… an evolution that seems more of a rebalancing than a refining…

… closer to the core than to the surface.

Fewer parts

The conundrum of 21st century -flation, which is to say, the absence of inflation in most parts of the economy and presence of deflation in some…

… despite the massive and unprecedented piles of global monetary underpinnings, which haven’t really ceased since quantitative easing started…

… back when this was still unnoticed, or noticed but maybe misconceived…

… an isolated mortgage thing, a bubble, market crash, the great recession, and so on…

… can be traced back, more or less, to the following…

… but obviously not in the narrow sense, as the headline is current.


Slowly, slowly, then all at once…

Source quote

… though we probably have not arrived at the point of general inflection.

The skin and the game

The concept of skin in the game, as recently popularized by Nassim Nicholas Taleb in his collection of essays, is a more nuanced concept, I believe, than the slogan might imply. The notion of standing to lose proportionately with one’s wrongness seems straightforward enough on the surface, though proportions aren’t always accurately measurable, just as loss and wrongness also sometimes appear arbitrary and subjective.

But I believe the professor’s idea isn’t as much about nuance within the concept as to draw contrast with instances where there is none. Such as, for instance, the recommendations of a writer, say, who has no interest in the outcome of being taken seriously. But even then, I think, there’s reputational loss, or its risk, at least in principle, which can lead to other kinds of losses, more quantifiable in nature.

And then there is a conceptual opposite, the talking of one’s book. This is the case where skin is clearly in the game and the investor is at risk, but, just because of this the views and insights shared are to be taken with some caution. There may be comfort knowing that the captain goes down with the ship, as it were, but as a passenger along for the sail, that comfort may be fleeting, especially if you don’t really know the captain’s circumstances.

For instance, the loss may matter much more to the follower than to the leader, if the latter has a more diversified portfolio of gains and losses. And in some cases, the portfolio is so large and diverse, you have to wonder if there is really any skin in the game at all, whereas, on the other hand, the follower may be all-in.

With all of this in mind, another philosopher’s precepts seem to me more correct and practical, although the honor system needs to factor in: “What can be said, can be said clearly. Whereof one cannot speak, one must remain silent.”


And there’s one other notion, which relates and overlaps, although perhaps not fully:

Authority without responsibility is no skin in the game at all, just as responsibility without authority is probably all skin and very little game, so to speak.

Indexing the catalog

Looking over the 130 daily little snippets that have taken up this space so far, there are some groupings that fall into place, like chapters, more or less along the structure of the masthead overview.

I’ve purposely not tagged them each by category, because the overlap and vagueness of where markets end and networks start, where finance starts and markets end, where books and music overlap with some of that, it may as well be everything lumped altogether and etc.

But still, there are some groupings, and I might one day review from the beginning and create a tagging system with a dropdown menu widget for the clicking. This might, one day, be beneficial as a reference tool, at least for me, to go back and reconsider all my notes and speculations after time has passed and the enthusiasm of the moment faded.

Until that time, which may or may not come, the summary of months as currently in place may be as good a reference point as any.

But one of the most interesting features of the WordPress platform that I use, is that it on its own comes up with links to three “related” posts for every one I publish… apparently dynamic… for even as I scroll around to older ones I notice links to later dates inserted, which truly is a service.

I don’t know what the recommendation engine will offer up today, because I haven’t yet hit the publish button, but, today, for this one post, that is my reason to do it.

The formula that works

In a best and ideal case, the business has grown, or is about to, at some point, like this.

But the smoothness of the curve, its slope, its symmetry and balance, its components underneath, have been, or will be, much more likely, thus.

That is, assuming that the business grows, which it may not, or may not have… and even if it has, or will, note that the values on the axes of these charts, the legends, are all blank.

This is because all businesses are, have been, and will be, different… with variables that make each one a constellation of a different type… even if from sufficiently far away, or from within, it may not seem so.

From just the proper distance, from up close but not so close as to be microscopic, the variables that come into play are more along these lines, though even this is an idealized depiction…

… because the force and aim and perfectly offsetting angles are, in actuality, all different, and liable to change at different points in time and circumstance…

… so, the machine, in actuality, is rarely just like in the movies.

And even if it were, or has been, by miracle of circumstance, note once again that the velocity of movement in the picture isn’t shown.

Because it’s always different, and, what’s more, uneven. Sometimes it slows, sometimes it picks up, and sometimes, by happenstance, it’s just exactly perfect. But that doesn’t last.


These arguments are raised because today there is a great deal of advice that flows about, for business builders or investors, really for everyone in different ways, predicated on a set of rigid formulas or definitions or how-to lists.

Some serve a purpose, though others on the other hand may just confuse the situation. But either way, and best case all around, the ideal purpose is to inspire thought, to question and to analyze, because the outcome is never formulaic. Though, hopefully, approximate enough.

The most important part of the analysis, regardless of the context, is to understand assumptions, differences and similarities, where the analogy might well apply and where it won’t, and why… the nuances are key and make all the difference.

In the end, the object is the same, for anyone, and it’s more fundamental than to grow. Before all that, it’s to survive (and maybe growth can be a side-effect, or precondition).

The formula that always works, no matter what and how and when, is this:

First, do no harm.

Within reason.

Where others go

The big city, the big fashion, the big show, the crowded trade, you end up where the others are, on average.

And where they’re not, they’re not like you are also not. Because nobody’s there and so nobody will be, typically.

Being first may be an edge, but only if a big crowd follows. And even then it all depends on when, and why, and who, the margin of your edge, and so on etc…

It’s therefore natural and most efficient to not be a contrarian, to not be innovative, despite the fact that the big gains, the breakthroughs, are by those who are.

When options are countless, virtually unlimited, to go where others go, or not, that is the question.

Nobility is defined by the outcome.