Monday, November 30, 2015

The Haiku of Finance for 11/30/15

Adviser practice
Register, insure, audit
No such biz for me

A Former Financial Adviser's Unchosen Route To Independence

I created Alfidi Capital to be a research-only platform, which is fine by the SEC so long as I do not maintain fiduciary relationships, sell securities for third parties, provide personal advice or recommendations, or do other things that fall under regulatory guidelines. I considered going that traditional route at inception, and I quickly realized that doing brokerage or capital markets transactions were part of the things I did not like about working for other people. My thinking has not changed since 2008 and neither has my business model. I might as well lay out some of the thinking I did before turning away from the more common path to independence.

I first checked the regulatory requirements for a registered investment adviser (RIA). The SEC's basic guidelines for investment advisers point to its IAPD site for filling out its Form ADV. I reviewed that form and realized that it does not apply to me as long as I am not providing financial advice, selling financial securities, or maintaining custody of assets other than my own.

I reviewed the institutional platforms of several leading self-service brokerages. The platforms come bundled with custodian and clearing services, plus some optional things like independent research subscriptions. I would not be surprised to find social media services bundled with some platforms now, along with media archival systems that meet SEC compliance standards. I realized I did not need to spend money for such a platform if the only money I ever manage will be my own.

I checked FINRA's rules for the registration and qualification of advisory firms. There's a lot of things there to know for someone who doesn't handle compliance as a full-time job. I would have had to meet all of the compliance requirements like client correspondence recordkeeping, transaction auditing, keeping copies of advertising material, writing a compliance manual, using business cards with the state insurance registration number on back, etc. There are lots of independent SarBox consultants who charge big fees for this activity. I will always be too cheap to pay for anyone else's services. I did not want the operating expenses of regulatory compliance or an "RIA in a box" solution.

I needed an alternative to the overhead of an owned RIA platform. I briefly researched an arrangement where potential clients could custody their assets in a conventional account with a discount broker, but grant an adviser limited power of attorney to execute transactions and extract a management fee. That's the approach of at least one RIA in San Francisco. When I spoke to the local one I thought was a good model, I realized there was just no way to escape the potential problems of dealing with clients and regulators.

The administrative things that my former wealth management employer used to pay for like insurance, licensing, continuing education, etc. would have become my own expenses. I thought about finding CE requirements through a local chapter of the Financial Planning Association. The FPA is probably full of plenty of independent practitioners, and I had wondered if some older adviser would hand over a book of business prior to retirement. The window for such opportunities is rapidly closing now that discount brokerages are deploying robo-advisors with automated portfolio rebalancing. I would have wasted time buying into a dying business model.

All of my homework revealed that an adviser model would never work for me. Publishing general circulation research is consistent with SEC analyst rules and reflects my intellectual gifts. I have said before that Alfidi Capital does not perform financial brokerage and advisory services for others. There is no way this firm or I will ever conduct securities transactions and business with the investing public. I stand by my decision.

Sunday, November 29, 2015

The Limerick of Finance for 11/29/15

Cyber Monday is looking so good
Shoppers prefer online neighborhood
Retail sales pitches shift
Discount changes are swift
Stores would all sell online if they could

Saturday, November 28, 2015

Friday, November 27, 2015

Thursday, November 26, 2015

The Haiku of Finance for 11/26/15

Thank America
Freedom to think for one's self
No need to thank me

Giving Thanks For Stuff In 2015

Thanksgiving in 2015 means I get to watch the rest of America slack off and indulge. I did some of that too today but my brain is still engaged 100% in the genius of Alfidi Capital. It's about time that I recognized some recent inspirations for my genius and give them thanks.

I'll thank the steady drip of followers who add to my Web brand presence when they republish my content. Smart people know quality when they see it. I just can't help it when the raw genius radiates from my presence. Life is best when we fulfill our destinies.

I might as well thank a couple of recent critics who called me names on social media channels. They kept my Web brand in circulation for a few more media cycles. I really enjoy being the target of ill-informed, ad hominem attacks that feed my ego. The First Amendment gives every American the right to speak their minds. I am thankful that even small-minded people notice what I have to say.

I must especially thank a handful of female friends whose constructive feedback is helping me abandon my previous sexism. Careless word choices do have real negative impacts. I am now much more careful than I was earlier this year when commenting on gender subjects. Women don't need some random loudmouth stereotyping them into irrelevance when they deserve more in life. They do in fact need men as advocates who include them as equals, whether it's at the Thanksgiving dinner table or in the corporate boardroom. I have a lot of advocacy to do with the rest of my life.

In years past I've stated that the world should be thankful for my existence. I still see nothing wrong with that even if the world has no thanks to give me. It is unrealistic to expect much of the planet to think like me. I am still morally obligated to be true to myself. I can thank my favorite philosophers - Stoics like Marcus Aurelius and Seneca, plus Immanuel Kant and his Categorical Imperative - who reminded me how to live when I reviewed their works this year. My life is still my own, but my work should enhance humanity's moral worth.

Finally, I thank the Founders of our country who wrote the US Constitution and its Bill of Rights. The rule of law and the elevation of individual freedom enable me to run Alfidi Capital in a manner of my choosing. I could not have this type of lifestyle in other countries where busybodies, thugs, or authoritarians would silence me for speaking my mind. America is awesome and so am I. Happy Thanksgiving, America.

Wednesday, November 25, 2015

Tuesday, November 24, 2015

The Haiku of Finance for 11/24/15

Food selfie takers
Sponsors will pay promotion
Dinner makes money

Financial Sarcasm Roundup for 11/24/15

I should have blasted this out yesterday but cleantech thoughts kept me occupied all day long. It is better to be clean than dirty. Just ask any pig headed to the slaughterhouse.

Wall Street averages continue to rise in spite of global economic headwinds. Greater fools are always ready to rush into the top of a bull market. I have been waiting for these fools to get financially kneecapped for the past several years. The spectacle will be worth the wait. My cash will be ready when the top-buyers are all broke.

The Federal Reserve may raise rates in December, according to the consensus interpretation of its most recent notes. It's important to remember that the Fed can immediately reverse itself if a rate increase proves too explosive for the system's emergency brakes. Our mandarins are playing it by ear because they have enticed every investor to take on extraordinary risks. The first rate rise past 0.25% will test the yield curve's long end, and make long-duration bondholders wonder whether their portfolios are safe.

Some obsessive food selfie people have figured out that restaurants and other food service sector companies will monetize their food photos on Instagram and other social media sites. It's great that people who want us to know what they eat will make money from their idle habits. Eating is a natural function, so perhaps we can take other natural functions to their logical monetary conclusions. People who take shower selfies can sell Instagram advertising space to makers of soap and shampoo. Do I have to mention other bathroom functions? Don't make me go there.

I promised my cleantech contacts that I would clean up my act. I behaved myself this time around. My word is my bond.

Monday, November 23, 2015

The Haiku of Finance for 11/23/15

Startups pitch green stuff
Magic tech cleans the planet
Living the profit

Mastering The Cleantech Open Global Forum 2015

I have attended the Cleantech Open's events for three years now and I always come back for more. I had to jump into the CTO's Global Forum 2015 last week to see what this year's class of startups had done. Badge selfies are my bona fides because they prove I am not some AI bot randomly generating blog content.


Driving down to the CTO's home at GSVlabs is always worth my time. The co-working trend is now a serious thing. Startups eschew privacy and security by taking open-space collaboration to an extreme. I think the next trend could be co-working outdoors, where startups can plot their huge markets on picnic tables. Nah, just kidding. I wouldn't want to do office work outside because wild animals like bears and coyotes run around out there looking for people to eat. Smart VCs won't fund a startup where the founders risk getting devoured by packs of wild beasts.


The Investor Connect speed-dating round had a table reserved for yours truly, the CEO of Alfidi Capital. Someday I'll be #1 but this time I was at the #2 table. I am usually the #1 genius on hand wherever I go in life. Most normal people recognize this as soon as they meet me. Serious VCs and angel investors were at the other tables and I had the chance to interact with a few of them during breaks between meeting startups. Sharing insights helps me understand how much startups learn during their early phases.

I will share what I learned from the startups I met at my table. These are general impressions that cover many verticals. Addressing a scalable market means going after a big demographic whose price points and buying power are easily understood. Going after boutique markets with fragmented demographics (like organic farmers, for example) means a startup's marketing channels will be less efficient. Lowered efficiency in anything, especially finding a marketing channel, means a startup needs a longer runway to profitability. Proprietary technology must be difficult to duplicate. A simple device with common components is easy for a competitor to reverse engineer.

I also attended the CTO's Celebration Day in San Francisco's Herbst Theatre. It was my first visit to the Herbst since the Veterans Building's renovation. The drinking fountains on multiple floors actually work now after several years of inactivity. The downstairs bar looks pretty snazzy. Dag-nabbit, I should have taken photos.

The winners and finalists ran the gamut of tech. I heard pitches from startups doing biomass gasification, carbon nanotubes, pollution tracking, and SaaS analytics. I can't connect with businesses outside the United States because my personal prerogative is to only work with companies located in the US that American citizens own. I'm sure there are plenty of those to find.

Famed VC Ira Ehrenpreis gave his keynote that doubled as a highlight reel of his favorite investments. I'm pretty sure I heard him give this talk before at a conference down in Silicon Valley at least a year ago because I recognized many of the slides and themes. He told us that the best time for tech investing is right after a sector bursts its bubble, because the final survivors are in the best position to be long-term winners. I think the solar sector is still in the middle of its shakeout, so anyone making panels or modules after the last low-quality Chinese producer goes bankrupt will be in a sweet spot. I also think solar suppliers that adhere to all of the DOE EERE SunShot Initiative's standards will have an easier time convincing developers to include them in supply chains. Ira also mentioned the "second bottom line" importance of ESG criteria, another set of guidelines our aspiring startups must adopt if they want to attract impact investors.

I noted one concluding quote with interest: "There's no such thing as a bad contact, but there is such a thing as a bad way to follow up on a contact." Well, I had plenty of bad contacts when I worked in sales, and plenty more when I was between jobs trying to make a career for myself. There really are tons of bad people in the world and they succeed in spite of themselves. I avoid those types because I'd rather meet the ambitious folks populating the cleantech sector. If I get rich after investing in one of these startups, then I could finally afford to be a big-shot sponsor of the Cleantech Open.

Sunday, November 22, 2015

The Limerick of Finance for 11/22/15

Trading futures contracts is okay
For companies with cash to pay
Hedging the supply chain
Avoid volatile pain
Commodities always in play

Saturday, November 21, 2015

The Haiku of Finance for 11/21/15

Launching restaurant
Take a bite out of savings
Tasting sweet success

Restaurant Investing 101's Sustainable SF Bay Area Flavor

A dear friend recently asked me if I would ever invest in a restaurant. The restaurant sector isn't for me, and I don't personally know anyone who invests there, but it's a fascinating area nonetheless. I scoured the Web for some basic coverage of restaurant investing and the investors who make it work. Check out this 101 primer.

The National Restaurant Association should be the first stop for first-time eatery investors. The industry's clearinghouse reveals the inside scoop on managing a store. The search box turned up tons of articles on topics like "investment" and "sustainability," including the NRA's Conserve Program that's worth a look for potential owners.

I tried to find a link to the NRA's annual Restaurant Finance Summit. Instead I found Restaurant Finance Monitor, which runs its own finance and development conferences. Capital sources populate the Monitor's finance and real estate directory. I don't have time to read through their white papers but the ones on sale-leaseback financing and restaurant valuation look especially useful for investors.

Not every source is as authoritative as the restaurant industry's official organs. The Wiley "For Dummies" imprint has a bunch of articles on food trucks, but of course the dining sector is much larger than what rolls on streets. Searching the Dummies brand for "restaurant" turned up tips on menu selection and social media marketing, plus many irrelevant topics. I sought wisdom at Restaurants.com and found mostly anecdotal articles touting "industry insights" rather than the hard research and checklist an owner-operator needs. Gourmet Marketing's learning center has some decent tips on investor due diligence and critical management numbers, but I would prefer to see those suggestions populated with industry data.

Owner-operators have a wealth of prospecting sources thanks to the digital economy. AngelList has thousands of self-identified restaurant angel investors. It is difficult to tell at first glance which ones are still active or have successful investments. Some AngelList people don't mind being prospected because that's how they vet new ideas. EquityEats is a crowdfunding platform specifically for restaurateurs raising seed capital for their first storefront. The good news for all startups, including eateries, is that the SEC is liberalizing rules on crowdfunding right now. Non-accredited investors will soon have many more crowdfunding options available, and entrepreneurs will have more channels to raise capital if they have good legal counsel to keep them compliant with the SEC's JOBS Act rules.

Non-profits like to help with restaurant incubation, at least here in the SF Bay Area. La Cocina focuses on assistance for restaurant owners in disadvantaged demographics, but their resources page includes planning and financing sources invaluable to any restaurateur. Forage runs another Bay Area kitchen incubator and promotes sustainable dining through its supper club.

Speaking of sustainability, it now matters in retail dining. My San Francisco blog coverage must include the local scene's sustainable dining culture. The Center for Urban Education about Sustainable Agriculture (CUESA) covers everything from farm to table. Entire dining supply chains can now be sustainable. The trend towards sustainability also gets national notice. Full Service Restaurants has detailed coverage of sustainability developments. The Center for Food Integrity and its CFI ENGAGE Resource Center offer a national perspective on food supply chain quality. Entrepreneurs launching a sustainable dining space need the seal of approval that comes from participating in these programs. Earning a B-Corporation designation probably helps show a restaurant's commitment to a sustainable philosophy.

There's a lot here for a restaurant owner to digest, no pun intended. San Francisco investors like to see sustainability when they perform due diligence on potential investments in any category, based on what I've gleaned from attending the Bay Area Impact Investing Initiative's (BAIII) events. The federal government is getting into the act with the SBA's sustainable business practices for small firms. It's all food for thought . . . again, no pun intended.

Wednesday, November 18, 2015

Tuesday, November 17, 2015

The Haiku of Finance for 11/17/15

Open source robot
Runs on networks anywhere
Market fit for nerds

Open Source Random Automation Everywhere After K-TECH K-Global

I attended another Silicon Valley conference last week, just for kicks. This one was the K-TECH K-Global Silicon Valley 2015. I don't think I'll ever tire of the non-stop innovation merry-go-round of conferences, trade shows, lectures, pitch sessions, and other stuff. One theme from last week's event was the "open source" movement in several tech fields. I absorbed a great deal of what the featured speakers said because I'm like a sponge. Prepare yourselves for a blast of my genius thinking on how it's coming straight to you.


Every multinational corporation that makes anything electro-mechanical is gearing up to market connected living and the Internet of Things. All devices requiring remote power management will have really cool marketing campaigns. Crowdfunding can deliver tiny things that VC funding cannot build. The ugliest things in your neighborhood, like above-ground utility poles and traffic lights, will become exploitable IoT sensor platforms.

Minimally educated non-experts can now program robots to perform complex tasks by moving their armatures around. Mobile phones have reduced computation costs to do more things on chip space, enabling advanced robotics. Robots are coming to your senior citizens' assisted living facilities because the West's demographics are increasing the number of retirees per active worker. Vision sensors developed for gaming will make robots more capable. Open source standards like the Robot Operating System (ROS) make enabling software easier to develop. One dude at last week's conference mis-identified the Unified Robot Description Format (URDF), making me wonder which of his assistants needs corrective training on due diligence.

Robot as a Service (RaaS) is a cute term for hospitality or other service sectors leasing outsourced robot servants. I expect autonomous cars to be part of this category. Programmed drones and cars eliminate operator error. Humans will build trust with these things by experience. Instances like "mobile moments" will need another definition like "autonomous moments" that include the short engagement spaces where humans interact with autonomous things for the first time.

The Open Source Robotics Foundation (OSRF) is right here in the SF Bay Area. I predict OSRF will be as ubiquitous as GitHub and Wikipedia once the automation revolution takes off in our personal lives. IoT devices need APIs and PKIs to interact with networks and cloud platforms. Drones, medical devices, and 3D printing will bring new headaches for tech companies' Chief Data Officers and Chief Privacy Officers. Those things must also tap into IoT APIs and PKIs. I checked for National Institute of Standards and Technology (NIST) standards covering drones, robots, and other automated IoT things. The NIST search box revealed many preexisting standards for related subjects in manufacturing, design, and programming. The next-gen standards will have to come from places like OSRF pushing NIST to catch up.

We will all need something to do once automation makes our jobs redundant. Basic income guarantees aren't enough without something to occupy our idle time. Video games and creative stuff are primed for an explosion. Social cohesion may explode too. Elites have not prepared memes for the population to adopt in a jobless future. Thought leaders like me will work overtime to sell the good news of open source automation.

Full disclosure: I did not talk to any South Koreans who attended K-TECH. I was only there to listen to speakers on the first day. I have no business interests in South Korea or with South Korean citizens at all. The last time I was in South Korea was January 2000 while performing US military duties.

Monday, November 16, 2015

The Haiku of Finance for 11/16/15

Imagine cable
More bandwidth for mobile streams
Synchro-video

CableLabs Brings Inspiration For Reimagining Cable

I attended the "Reimagining Cable" presentation last week at the CableLabs Silicon Valley office, sponsored by HVCK. Mobile enthusiasts say cable broadcasting is going the way of the dinosaur. Well, Silicon Valley's innovators have something to say about that. CableLabs pushes the industry into a new digital era. I sat down to watch the new era take shape after some snacks. Our hosts gave me an awesome adhesive visitor badge.


The assembled startups presented their stories. I won't name them or retell their stories because I would rather share my impressions. Personal video profiles are a cool addition to social media channels. The competition in video profiling is exploding because there is little barrier to entry other than the first-mover advantage of licensing a video standard to one of the leading social media platforms. Video production that competes directly with YouTube and Vine needs some compelling advantage in editing or animation. Synchronous remote video viewing and interaction may actually be less convenient than social media sharing because it requires friends to watch something live together. The best social media experiences are shared to allow the convenience of watching video anytime rather than synchronously with other people. Some shared video experience may be useful as a bridge of high-speed and low-speed streaming if it is sufficiently distinct from Periscope or other chat sharing portals.

I tried to see into the future based on what techies were portraying at CableLabs. IMHO live video sharing will only reach viable mass markets in two verticals: enterprise video teleconference (VTC) and adult entertainment. That's really it unless use cases confirm that groups of people will stop whatever they're doing to chat on video at a moment's notice. Snapchat's billions of videos served are good market proof that TV viewers now watch more video of each other than of traditional productions. I would still like to see deeper metrics on total hours watched and numbers of videos watched to completion instead of just video upload totals. An upload does not always get watched, and it rarely goes viral.

Some ideas still need new tech, while other new ideas compete with tech that's already available. Multiple streams requires much more bandwidth stressing 4G's real-time streaming ability. Multi-second lags will degrade viewing quality. Engineers must design new compression methods allowing real-time multi-streams with no lags on mobile devices. I have already witnessed eyeball-tracking video tech startups that demo'd at other events and got VC attention. That train has already left the station. Eyeball-tracking is viable and some players think it will disrupt advertising spending. Maybe 360-degree video will be the next compelling viewer experience if it's immersive.

I grew up on cable TV. Reality shows had not yet taken over programming back in the 1980s. The shows on the high-minded cable channels like Discovery, A+E, and Bravo really had quality before lowbrow programming took over. Cable networks still have enormous bandwidth and content libraries. They just have to move their legacy business model into something that fits mobile platforms. I will live long enough to watch the complete transformation.

Sunday, November 15, 2015

The Limerick of Finance for 11/15/15

Japan falling back in a hole
Nothing made the economy whole
Abenomics can't lift
A demographic shift
Central bankers should find a new role

Glimpsing IBM Watson's High Tech Analytics In Silicon Valley

Silicon Valley types want me hanging out at their business events. One such event last week brought me down to one of the Valley's private venues for an IBM Watson presentation. I'm not the target clientele for this Big Data analytics solution but I had to check things out. There was no suitable on-location backdrop for my badge selfie, so I had to take the photo below at an undisclosed location.


I signed up to hear their two tracks on procurement intelligence and trade-off analytics after the main pitch. IBM people get the API economy. I heard them pitch their API developer ecosystem at Oracle OpenWorld 2015, and now it's good to see the Watson engine in action. The Alchemy Language API looks like an incredible business intelligence (BI) tool. The "news explorer" live link diagram showing connected news stories would be excellent for PR or marketing people, or for open-source intelligence (OSINT) practitioners.

The main pitch dude's recommended reading list included a book on machine learning, but I couldn't write down the author's name from where I sat. Amazon lists plenty of machine learning best-sellers, so my local library must have one. I did capture Pedro Domingos' The Master Algorithm and Provost/Fawcett's Data Science for Business from his list, unless I copied the titles incorrectly. I have so many books to read already that adding these will push the completion of my business reading list well into 2016. That's what it takes to demonstrate thought leadership, and that's why I get invited to these events.

One IBM guy introduced his "Cognitive Computing Index" describing multiple ways for human operators to educate maturing AI systems. IBM suggests Watson's clients iterate revisions every 90 days for whatever they have the system compute. Iterative approaches to refining BI output are supposed to maximize the BI's monetary value, and seat count users should see this value in their commission revenue.

The trade-off analytics session demonstrated Watson's Pareto optimization, graphical outputs, and social media stream matching. The recommended pathway records are a useful audit trail for some data miner to explore. I bet that data mining the faulty pathways will reveal how the top 20% of data scientists in an enterprise are making 80% of the correct decisions. That would be some useful Pareto optimization when performance bonus allocation time comes around.

The procurement intelligence session was all about making purchasing people into knowledge workers. I remember how I did purchasing as a junior supply officer in the US Army back in the late 1990s. I searched the Web for three different vendors and picked the one with the lowest price. It was too easy and probably sub-optimal. The difference today is that Watson is supposed to make research on prices, vendor choices, and spending history a Big Data effort. If AI truly integrates internal and external data feeds as advertised, then it's a bona fide ERP revolution. If users comprehend Watson's word clouds, heat maps, and visualizations, then it's also a knowledge management (KM) solution.

I keep hearing Silicon Valley people talk about how they increasingly prefer workflow ERP solutions over managing legacy files. I told several IBM reps at this event that they will have to integrate workflow data signatures into the internal feeds Watson ingests if they want to stay relevant. It will still be a challenge for developers to build APIs that handle unstructured data, especially if the enterprise has no data warehouse or data lake aggregating external data feeds. The best developers will figure it out. I would figure it out but I'd rather fiddle with financial applications. Watson and other AIs are supposed to be the "easy button" for data transformation once operators are comfortable educating the systems. The AI revolution means everyone becomes an amateur data scientist.

Saturday, November 14, 2015

The Haiku of Finance for 11/14/15

Solar project help
Free financing resources
SunShot knows the cost

Solar Project Finance Brief Notes Q4 2015

I absorb tons of renewable energy news every year, even when Intersolar North America is not in session. There's no stopping the growth of solar power. Every apartment rooftop and parking lot in America is untapped real estate for PV panel projects. Getting the basics right matters. Here come some brief notes for developers wondering about financing a solar project.

Engineering, procurement, and construction (EPC) costs are hard to estimate. Changing a major supplier for racks, mounts, or converters means recalculating part of the project's cost estimate. The shakeout in commoditized solar module providers has not ended. The future bankruptcy of some mount maker means replacement parts will not be available after a localized system failure. The cost of procuring some potentially incompatible mount that requires further customization is a variable adding potential cost to a project's out-years.

One large solar tech provider, who shall remain nameless, argues that cost of capital is a major factor in solar's levelized cost of electricity (LCOE). I think that was true up until the 2008 financial crisis when the Federal Reserve lowered its interest rate target to less than 0.25% and kept it there. I also think developers in a low-rate era should concern themselves more with how soft costs detract from a solar project's bankability. Developers who apply the DOE EERE SunShot Initiative's soft cost best practices have a leg up in getting those estimates under control. Of course, if the Fed raises rates or loses control of the yield curve during hyperinflation, then capital costs will matter once again. Solar developers with long-term supply contracts will progressively reduce their inventory costs during a hyperinflationary period.

Free public resources help developers learn about project finance. The DOE EIA Annual Energy Outlook Documentation and Assumptions section has an excellent reference for estimating LCOE. Developers need good references to make robust estimates. The DOE's NREL Renewable Energy Project Finance site is loaded with tips on securitization and credit enhancements. The Solar Energy Industry Association (SEIA) policy page keeps developers current on tax credits and other incentives that mitigate project costs. Solar Industry Magazine's October 2013 edition had an excellent primer on preparing project finance. The article's coverage of the PPA's relationship with site details and off-taker financial strength is noteworthy.

Solar project finance help is as close as a Web search. You can all thank me later. I'll take my bow right now for keeping the best solar financing references out in the public eye.

Friday, November 13, 2015

The Haiku of Finance for 11/13/15

Selling sarcasm
Many people won't buy it
They want hope instead

Adjusting My Voice On LinkedIn, Without Sarcasm

Sarcasm has long been one of my favorite accents. It can be appropriate in sparing amounts. It can also be too much of a good thing. Branding myself as all sarcastic, all the time, in front of all audiences has outlived its usefulness. Observing my personal brand through someone else's eyes made me realize it needs some polish.

I made some significant wording changes to my LinkedIn profile. I removed all of the sarcastic references to my former employers in finance and my alumni associations. I re-worded those experiences to describe my roles there in a more balanced way. I cannot be angry forever. Permanent anger is not a healthy way to see the world or approach people. It no longer matters whether privileged people treated me poorly. Bad people will always exist and they do not belong in my life. The bitterness I reserved for them on my LinkedIn profile allowed them to remain as burdens in my life. It is time to move on to greener pastures.

Readers will still see my Financial Sarcasm Roundups every week or so on this blog. I can still reserve my sharpest barbs for news makers whose affronts are too egregious for polite commentary. It is a weapon I should use sparingly rather than habitually. Maybe someone important will surprise me by making a smart decision for a change.

Public image is a component of leadership. Consider two different US Army generals in World War II: Joseph Stilwell and Dwight Eisenhower. Gen Stilwell's nickname was "Vinegar Joe" due to his penchant for sarcastic, prejudiced comments. Historians regarded him as marginally successful leading the China Burma India Theater, but he could have accomplished much more if he had gotten along with others. Gen. Eisenhower spent years cultivating an optimistic, confident outlook. His personal skills paid off in building the multinational coalition that liberated Europe. Gen. Stilwell is mostly a historical footnote today. Gen. Eisenhower's victories live forever in glory. How they viewed themselves and the world determined how they led their people.

One of the Internet memes going around is built on Ayesha A. Siddiqi's great Twitter quote, "Be the person you needed when you were younger." A growing child doesn't need a steady diet of vinegar. Optimism and confidence are much healthier.

The Financial Adviser's Standard Deception

I used to be a financial adviser a decade ago. I had no success at a wealth management firm from 2005-2006. I told dozens of prospects exactly what I would do and made good on my word. No one cared. I learned why after interacting with some of the humans who did succeed. Financial advisers and their sales managers have a large bag of tricks they deploy against clients.

One corporate trainer I encountered early in my financial career built his entire training script around pushing people's emotional buttons. Humans make decisions around greed and fear. Emotional impulses trigger rash, irresponsible decisions and lots of financial advisers count on that to make money. Cajoling a client into discussing their hopes and dreams reveals a host of emotional buttons the adviser will push. Like in sales jobs anywhere, a cynical understanding of human weakness pays off. The difference in financial sales is that pushing a short-term emotional button can harm a client's long-term financial worth if they're pushed into an expensive or unsuitable product.

Insincere commitment is another standard financial adviser trait. The best actors can portray sincerity. Sociopaths are also convincing when they say something knowingly false. Financial sales jobs attract large numbers of actors and sociopaths because they can be persuasive all day without troubling their souls. Detecting fake sincerity is difficult. Poker players and law enforcement officers are among the few professions who develop skills in reading people. Maybe fraud investigators for insurance companies can figure out liars. It takes time and practice to read someone's body language and facial expressions for the "tells" of insincerity.

I had no bag of tricks as a financial adviser. I relied upon my intellect and integrity, and I told my bosses that's exactly what I thought was most valuable about myself. My bosses laughed at me. They bragged that painting a dreamy picture in a client's imagination was more important than giving them what they said they wanted. In a bizarre way, their insights into human nature had some merit. Most humans prefer self-deception and will paradoxically respect those who deceive them. I refused to deceive my contacts and that's one big reason why they refused to entrust me with their wealth. The human race will need a strong evolutionary leap to validate my business approach.

Nota bene: I am not a financial adviser, and I have not been one since I left UBS in December 2006. Alfidi Capital is not a financial advisory firm or brokerage of any kind. Readers will only find the truth here, not advice or deception.

Thursday, November 12, 2015

Wednesday, November 11, 2015

Tuesday, November 10, 2015

Monday, November 09, 2015

The Haiku of Finance for 11/09/15

Impressive venture
Investors fully fund it
Pay for startup hype

Financial Sarcasm Roundup for 11/09/15

More Americans might be tuned in to my sarcasm if they weren't watching Monday Night Football or some cable TV movie. I might get more traffic if I convert my periodic sarcasm blast into a Netflix series.

One asset management firm thinks Chinese debt benefits from China's recession. The tortured logic right there just baffles me. Devaluing the yuan means a yuan-denominated bond's payment stream to Western investors will be worth less, not more. Buying notes issued by Chinese real estate developers means investors are hurt more by further crashes in a very inflated sector. Some money managers just can't let go of a thesis that no longer matches reality. The next bullish bet could be on wax paper rather than yuan paper, because it easily wraps fish from the live fish market. See, this investment thesis stuff is really easy.

China and the Middle East have an insatiable appetite for natural gas. The West is converting to locally available renewable energy while the developing world becomes even more dependent on hydrocarbons from beyond their borders. Addictions typically end badly. Going cold turkey in a couple of decades won't be an option for developing countries facing bad demographics.

Many European bankers are about to be jobless. Think of the fun they can have becoming tour guides for rich Chinese and Russian expatriates. The fired bankers didn't move fast enough to raise capital cushions. Now they can raise money for the Middle Eastern refugees flooding Europe. Grab those tin cups and hit the street corners in Munich and Prague. Bank CEOs can only fake the ECB's stress tests for so long. The money they save on compensation goes into the rainy day crisis buffer.

My sarcasm is way more entertaining than whatever is on television right now. Tune in again next time for another blast from Alfidi Capital.

Sunday, November 08, 2015

The Limerick of Finance for 11/08/15

Chain eateries give away food
Hoping diners will improve their mood
Something free with a meal
Good for a one-time deal
If it brings repeat business, it's shrewd

Saturday, November 07, 2015

The Haiku of Finance for 11/07/15

Spend on solution
High opportunity cost
Save time for more work

When To Trade Dollars For Hours

Productive people do not have enough hours in the day to accomplish all that they need to do. The cheapskates among them, including me, will push non-urgent tasks off to the next day. The more rushed or spendthrift among them will splurge for outside help. There may be a way to optimize the decision point prompting someone to choose spending money that saves time.

The idle rich have both money and time on their hands. Paying someone to do work they could easily learn to do themselves gives them even more time. It also gives them the psychological satisfaction of pushing around people who are far beneath them on the socioeconomic scale and bragging about it to their peers. I have met people like this in San Francisco and I do not ever want to be like them. The behavior is self-reinforcing and enhances class solidarity among the only social class that matters. It also carries moral peril. Devaluing human life is easy when the handiest measuring tool available is a checkbook.

Most outsourcing decisions are thankfully practical and born of necessity rather than luxury. Spending for expertise or other outside help makes sense if it obtains an otherwise remote level of quality. Opportunity costs are useful here. The cost of acquiring a skill or asset on one's own may be greater than the cost of hiring a ready-made capability.

I host my website with a cloud provider. It is far cheaper than buying my own server, learning to be a sysadmin and DBA,  and running a dedicated 24/7 high-speed connection just so the Alfidi Capital website is available all the time. I spent a smaller amount of money because the cloud's scale delivers a very efficient solution. We make the same decisions when we buy groceries instead of raising our own crops. Trading dollars for hours is easy when the benefit is immediately clear.

The choice is less difficult after calculating the DIY cost. If I absolutely cannot easily do something myself, and the cost of learning a new skill takes too much time away from my real money-making activities, then paying for an outside solution is acceptable to me. The choice is even easier if I don't have to directly engage a human being. I prefer that others do whatever they are meant to do in their lives. Their time should matter as much as mine.

Friday, November 06, 2015

The Haiku of Finance for 11/06/15

Never shortchange cash
Freebies do not pay the bills
Avoid tech serfdom

Never Shortchange Yourself In Tech-Land

I really got into a tussle yesterday on my friend's Facebook wall. Her immature "friends" were endorsing the non-cash benefits of employment at a very large, well-known tech company in Silicon Valley. I argued for ignoring the non-cash amenities and for prioritizing compensation. I was the lone voice crying out in the wilderness. I am right and everyone else is wrong.

Silicon Valley techies love to think of an employer as a substitute parent. Tech firms encourage this juvenile mentality with free food, on-site gyms and masseuses, video game break rooms, and other nonsense. The global firms with billions in revenue can afford to spend on this baloney. Startups that can't afford it with organic revenue convince their venture investors to subsidize them, like adult children whose parents cover their rent. Replicating a fun college campus is supposed to incentivize creativity. I think it's a misguided but unfortunately effective way of keeping highly productive workers psychologically attached to a big employer.

The workers who fall for this Silicon Valley wage slavery are usually highly logical in their daily work. It makes the seduction all the more befuddling until we consider behavioral economics. Humans are not as rational in making decisions in their personal lives as they believe themselves to be. We give more weight to recently acquired information, for example, than we should give to more thoroughly proven information learned at various points. The behavioral habits inculcated from daily trips to the free "campus" cafeteria and free yoga rooms are hard to break even when a competitor offers a five-figure cash raise.

I'll work the math for my super-smart Silicon Valley friends. Let's say I'm weighing two job offers, one with $20K more than I make now and the other with no raise but free food. Eating the equivalent of a $10 meal three times a day is a cost savings of $30 a day, which BTW is also a couple week's worth of groceries for the few Silicon Valley people proactive enough to plan their own meals like grown-ups. Anyway, I have digressed. The $30 savings over about 260 or so actual work days per year (not counting the weekends or a few holidays) comes to about $7800 in annual savings. Any proposed offer from a competitor that exceeds that $7800 after taxes and commuting costs is a step up in lifestyle. I would rather take the extra $20K if it meant I'm back to buying my own meals, because my penchant for cheap groceries means my bills will be much less than that $7800 meal cost avoidance. Too many very smart Silicon Valley engineers fail to run those numbers when weighing job offers. They stick with the free stuff and their employers know it. The HR people hidden on these big tech campuses know the math and that's why spending on free food matters more than cash bonuses.

Non-cash benefits are always ephemeral. Companies that hit a rough patch for a quarter or two cut back on frivolous expenses first, before they cut more important things like ad spending or the IT budget. They cut those other things too in recessions, right when they're about to cut people. The non-cash benefit of a corporate reputation also means just about nothing. The prestige of having a high-flying company's brand name on a resume means nothing without the personal pedigree to back it up. Plenty of people went to work at Webvan, Enron, Bear Stearns, and Lehman Brothers with high expectations before those firms collapsed. Top programmers are in demand because of their reputations earned at big firms, startups, hackathons, and academia. They are their own brand. I have a couple of top financial brands on my resume that mean nothing because elitists look down their nose at me. Prospective employees who prioritize a company's prestige and empty promises over cash have their priorities backwards.

I can't tell my fellow Bay Area professionals how to live their lives or spend their incomes. I am sometimes sad when I realize that so few of them think like me. Many STEM graduates work hard solving complex problems and not all of them are highly compensated. The enormous cognitive load of coding, designing, and diagramming all day must leave little energy left on the charter bus ride back home to think about gaining financial advantages. Maybe these top-notch Silicon Valley producers are just as immature as the spoiled brat trust fund kids and permanent adolescents I've met in San Francisco. They all need to get spanked. Adults work for money because that's what pays rent, taxes, insurance, college debts, and every other bill that would otherwise bring bankruptcy if left unpaid. Cash compensation enables wealth creation that accelerates retirement and makes our final years of life comfortable. San Francisco and Silicon Valley need to grow up. Part of growing up is learning not to sell yourself short. I will never shortchange my financial future in exchange for the phantom freedom of high-tech campus paternalism.

Thursday, November 05, 2015

The Haiku of Finance for 11/05/15

Pulling all-nighter
Prep pitch for next angel round
Bullet points raise cash

Wednesday, November 04, 2015

The Haiku of Finance for 11/04/15

Yellen's layer cake
Disguise signal inside text
Hidden in plain sight

Slicing The Federal Reserve's December Layer Cake

Here we go again. Federal Reserve Chair Janet Yellen is making noise about an interest rate increase. If it's not happening in 2015, it's probably not happening in 2016 either. One of my finance friends is very kind and intelligent. She often shares her wisdom with me on what this serial messaging means. It all comes down to a "layer cake" metaphor. Here is what the cake tastes like to me.

A public official's message to the general public is built on several layers of meaning. Most of those layers are intended for a general audience but other insiders hear the message too. General statements about a desire to raise rates are for the general public to hear. The public must remain confident that central bankers care about a normal economy. That reassurance is one layer of the cake.

Expressing faith in higher rates someday pushes bond yields up now, while prices of existing bonds decline. The second-order effect is to gradually make bonds less attractive as an asset class. Investors are thus less inclined to put new money into bonds, and more inclined to give bonds a lower weight in blended portfolios by selling some now. Reducing bond overweights makes an eventual bond market crash or crisis less severe, with a less stressful imposition of exit gates on bond funds. That scenario is another layer of the cake.

I cannot name my contact or describe her background in detail. She often speaks in guarded metaphors because she has access to privileged and confidential information she cannot discuss in public, and certainly not with me in private. I totally respect confidentiality imperatives. Suffice it to say that her assessments reflect a widely held culture among public policy officials, and this culture also informs the decisions of private sector financial executives. One could even say this culture circumscribes the decision making ability of private actors, because it signals how far they can push innovation before they cross a red line into public sector decisions they cannot influence.

The Fed still owns an enormous amount of mortgage-backed paper and cannot destroy its balance sheet by playing with rates. The policy innovations standing ready to impose bond fund exit gates, trading halts, and money market backstops are mostly for public officials to adjudicate, and mostly for private sector actors to execute. Wall Street's key influencers need enough advance warning to ensure their capital market decisions do not constrict the Fed's ability to act in a crisis. The Fed also continues to push for stronger capital buffers and resolution authority for SIFIs, and Wall Street gets that message too at the same time it gets the interest rate messages. That's why layer cake messaging matters.

Tuesday, November 03, 2015

The Haiku of Finance for 11/03/15

Get your event straight
Organize your speakers well
Track the invite list

Blasting One Tech Conference That Yanked Me Around Today

I made the mistake today of trusting some small-time tech conference promoters to be squared away. We all make mistakes and this one was mine. One tech conference promotion team shall remain publicly nameless but they shall live in infamy in my memory.

The organizers contacted me last week to confirm my attendance. They even registered me as a "speaker" but had no slot for me to fill. I asked them what they wanted me to do, and with less than 24 hours left before the event kicked off they wanted me to moderate a panel on a topic that was completely unrelated to my background. I politely declined. When I drove all the way down to Palo Alto this morning, they had no proof that I was even registered for the conference. The final red flag about their competence came when they asked me to pay full price for entry. No way, folks. I politely declined and then departed.

The lessons for conference promoters ought to be simple. When you invite speakers, schedule them to address subjects that reflect their professional competence. Keep records of your invited guests. Above all else, the people you "invite" to appear by virtue of their expertise should attend free of charge. I know that words like "invitation" mean different things to different people, but to analysts and subject matter experts like me they mean a host seeks the benefit of my presence. Social media "invitations" and other forms of marketing outreach are legitimate ways to attract paid guests and clients seeking publicity. I get that. I don't get being labeled a speaker, panelist, or moderator who is expected to pay up merely to share my own expertise. I will not pay one penny to hear myself think out loud.

I have accepted free admission to plenty of conferences that saw value in my coverage as an analyst or participation as an expert, even if I said something controversial during or after the event. Tech conferences like speakers, and I like speaking. The two forces should be naturally congruent. Conference organizers who schedule me in advance and let me shine are invariably pleased with the result. The ones who wait until the last minute, offer me nothing, and then require me to pay them are not the ones I need in my life. Please don't play games with my schedule, people. It invites the wrath of Alfidi Capital.

Monday, November 02, 2015

The Haiku of Finance for 11/02/15

Duke serving Java
Oracle OpenWorld fun
Secure silicon

Alfidi Capital Visits Oracle OpenWorld 2015

I had enough white space on my calendar this autumn to accommodate the other big San Francisco tech conference besides Dreamforce. That would of course be Oracle OpenWorld 2015. I love these big brand-driven showcases for the latest enterprise computing things. I also attended parts of Oracle's JavaOne 2015 even though I have no clue how the programming language works. All I know is that installing Java updates on my computer used to require changes to my browser's advanced options TLS and SSL checkboxes just to keep pop-up reminders away. I think the Java people finally fixed that bug.


A whole week of tech keynotes includes free food and booze. I scored access to multiple receptions during the week. I listened dutifully to product pitches while enjoying snacks and libations. The food was always excellent. I had more meatballs and sauteed shrimp than a mere mortal could handle. I did not leave one Oracle reception until I tried all three varieties of boutique whiskey on hand. Mission accomplished. My buzz wore off every night. It was nice to score free granola bars and banana bread during the day thanks to my high-powered tech connections. One vendor was very generous with pastries and smoothies. I learned a new cloud computing term: "Happiness as a Service" (HaaS). I think it means the consultants smile and say nice things while they migrate on-prem apps to the cloud.


Oracle's Java mascot "Duke" awaits the JavaOne opening keynote. I high-fived it as I entered the keynote hall. Duke has way more personality than some people I used to serve with in the US military. I spent some quality time at his namesake "Duke's Cafe" blocking Taylor Street during Oracle OpenWorld. I scored so much free coffee there that I may as well run on Java myself. I was tempted to find out what happens when tea mixes with beer. I did not have as much time as I did last year to probe vendor pain points on the OpenWorld trade show floor. One vendor gave me a mimosa but did not scan my badge. That scores a booth marketing fail.


Arriving early to the JavaOne opening act means sitting in front of giant screens like the one above. I have never done drugs in my life. When I see these wild animations at major corporate tech conferences, I think, "Oh, that must be what drugs are like." I get high on life, people. I must say, this corporate keynote canned warm-up music is really dreamy. One of my Spotify playlists is devoted to ambient music. I could spice that playlist up with this upbeat corporate conference house music.

The first JavaOne keynote covered orientation to their mini-conference, along with what sounded like product announcements. I don't see what's so earth-shattering about announcing that versions of Java now run end-to-end on Intel and other platforms. Java has always worked pretty well on all of the Intel and AMD desktop PCs I've used, so mobile use is the only real hurdle remaining. I missed the whole Geek Bar, Maker Zone, and on-site immersive experience celebrating 20 years of Java. That's what happens when an on-demand genius like me gets over-scheduled.

Oracle does listen to its developers' pain points when updating Java releases. Maybe that's how they solved the pop-up thing I noted above. I could have used a good definition of generic programming while the Java experts were discussing their innovations on stage. I did comprehend their explanation of how data laid out across different caches takes longer to process because electrons must travel farther. Their solution was to increase the number of instructions per clock cycle so data speed would increase. I could not understand why one Java presenter stood silently while two Java-enabled toy cars' onboard sensors sent cloud alerts to a display table. I know it was recorded, but he could have at least talked us through what was happening instead of waiting until the pretty graphs and tables came up at after the simulated data load. Sheesh, even engineers can learn to make running commentary.

The fun part was Scott McNealy's surprise video appearance wearing a classic Sun Microsystems sports jacket. In case you're too young to remember, Sun created Java when Mr. McNealy was its boss, and then Oracle bought Sun and everything. He did a top-ten list of inside jokes that only Java developers could truly appreciate. The video gave me flashbacks to the mid-1990s with magazine covers talking about how great the Internet was going to be. It turned out great, all right.


Java engineers celebrate the 20th anniversary of their programming language. I was tempted to take a selfie with the cake but I did not want to miss the next keynote. The OpenWorld opening keynote was the next thing in the Moscone North hall after the Java engineers cleared off the stage. I wanted to make time for their Modern Finance Experience sessions but I didn't think my lowly Discover pass would get me access. Hey there Oracle, I had a full-access analyst pass to Dreamforce 2015, so next year you folks need to upgrade my status. I'm a bona fide thought leader around this neighborhood. The discussion of data center optimization made me wonder whether Intel and Oracle consider data center HVAC and facilities management as pain points their solutions can mitigate. Run the Cloudonomics numbers, folks.

Speaking of cloud economics, the brief mention of cloud KPIs like variance/swing, workload, IOPS, and latency deserve more explanation for the non-engineers at OpenWorld. The CIO people throwing those terms around at their CFOs and COOs need to show that they've actually calculated the economics on how more IT spend will improve those metrics. Every CFO needs to ask for the CIO's data proving their proposed innovation has the promised higher IOPS and lower latency.

Oracle allowed Intel to introduce their "Trusted Analytics Platform" during the opening keynote. The platform enables domain experts and data scientists to run analytics during real-time data collection. Bay Area startups have been claiming they can do this for years. Some critical mass of acqui-hires and internal development now allow the big ERP providers to dominate this action. It is the natural end result of all of the knowledge management (KM) and business rule management system (BRMS) trends I have tracked for several years.

Larry Ellison came out for his portion of the OpenWorld initial keynote. His biggest disclosure was about how Oracle gradually discovered it must operate in all three cloud layers in response to competitors' moves. I inferred that Oracle has not driven the cloud sector's innovation. They are reactive rather than proactive, and it explains their acquisition strategy since buying Sun. I do not recall hearing Larry mention Workday as a major cloud competitor at last year's OpenWorld, so mentioning them here was news.

Security is very much on Larry's radar. The new Oracle stuff about automated backup and restoration with no human intervention is an omen for the end of human system administrators. Even engineers will now face a jobless future as the cloud sector matures. Larry moved Oracle to open standards so enterprise cloud accounts will be more portable between providers. He also thinks the full transition from on-prem to cloud will be sufficiently long to require a decade or two of continued on-prem support. Predictions of long transitions remind me of the migration from 1970s mainframes to 1900s client-server architectures. The client-server paradigm reigned supreme throughout the dot-com boom-bust cycle until the cloud was ready to replace it.

I liked Larry's improvisation without his glasses. "I don't have glasses . . . I can still do this" was his mantra when he ran his live tutorial of Oracle Learning modules showing employees how to pitch Oracle cloud products. I noticed one of the Oracle executives sprint past my near-front seat to go backstage; I wondered if she was going to fetch Larry's glasses. I couldn't LOL because that would be classic teamwork and loyalty. I would have done that for any boss, but my bosses never appreciated me with huge compensation packages like the ones Larry gives his people.

Tuesday's keynote was Oracle co-CEO Mark Hurd's chance to offer his predictions about the cloud sector. I gleaned his live insights into CEO thinking. He argued that CEOs care first and foremost about current period performance, i.e. survival. Growth, agility, and new markets are all secondary because CEOs don't have the luxury of long-term thinking if they don't meet short-term earnings expectations. He confirmed an assumption I have long held about how enterprises cut IT spending when their revenue growth stalls. Get ready for lean times in the next recession, people, and I've been harping on that note for a while. I was intrigued to hear the guy claim that the demographic shift to a gig economy will stress IT for rapid workforce development tools. I take that as another hint that Larry's demo of Oracle Learning is the next big thing. I agree with his prediction of an oligopoly coming to cloud, and you can recall my predictions from OpenWorld 2014 about how the sector's leaders would fare. The tech big shots from GE and AIG also came out to share how impressed they were with their own cloud stuff. Good for them.

The combined forces of Wipro and the Golden State Warriors in another keynote were instructive. Wipro thinks digital tech can reduce fulfillment cycles to two weeks, down from the current 8-12 weeks of design, production, and distribution in retail supply chains. I think there are implications for IT spending priorities if legacy records must migrate to the cloud before customer engagement systems migrate.

It was really awkward to switch narratives between the Oracle guy and the Warriors dude when they were on stage. They didn't even address the same subjects. The Warriors' building project and brand management are not the same thing as Oracle's cloud service scalability. I would have got their  points if they had stuck to leadership in renewing corporate culture, but the juxtaposition of the moderator's questions made no sense. The whole point was to enhance Oracle's brand by association with the Warriors. The experience of watching a Warriors game is not completely scalable with tech. The TV or mobile audience can only remotely experience the two dimensional visuals of the game.

I liked the coffee bean bag props thrown on stage during the video vignettes about how some IT bit player could use Oracle's open-source solutions. I could have used come coffee at that moment. My big takeaway from the coffee escapade was how containerized databases enable linking data to apps with no coding. Non-developers can thus create new business functions in sales, discounts, incentives, and loyalty programs without learning to code. I like how spreadsheet uploads mean mobile users can do analytics and visualizations without access to data warehouse. Darn it, these mobile sales people now have all kinds of on-demand OJT modules for prospecting and closing that I never had when I was in sales. I hope all of these Oracle things work as advertised.


Getting an early seat in Larry Ellison's keynote on Tuesday had its perks, like the seat photo I snapped above. The legendary founder had to wait for the warm-up acts from Infosys and GE. Infosys wanted everything automated because it reduces full-time employee headcount. Now I'm getting a clear impression that all tech CEOs want a jobless future for the rest of us. Here comes the bad news. Everyone who does not attend these tech conferences is doomed to be either a ward of the state or a peasant on some CEO's plantation. Now for the good news. I promise to be a benevolent plutocrat to my subjects, because I'm a really nice guy. The GE person said ERP must move faster, but I wasn't sure whether he meant with faster data processing or faster ERP deployment. I had no chance to ask him for clarification because I was sitting in the audience among thousands of Larry Ellison fans.

The long-awaited Larry Ellison keynote on "Innovations in Security and IaaS" was one for the ages. Larry's tour de force through modern enterprise security placed every recent mass data breach into one context. The singular point of failure in ERP security to date has been software vulnerability. Hard-coding security protocols into silicon hardware may solve this problem. Larry announced an always-on memory intrusion detection system into Oracle's hardware, claiming they are the first software company to encode security into a microprocessor. Their "Silicon Secured Memory" uses color matching to compute a number key that locks memory.

Larry also noted that any cloud service provider DBA who can read client data represents a massive security vulnerability. He emphasized Oracle's storage of encryption keys on-prem for clients, and I got the impression that he prefers clients storing their keys on-prem instead of in the cloud. Larry also announced other initiatives like the "Private Cloud Machine" that replicates an Oracle cloud's performance for on-prem clients who just aren't ready to migrate due to regulatory requirements or geo-specific preferences. The guy covered all the right bases. His presentation style is different from Marc Benioff's persona at Dreamforce. Personal characterization is great as long as the software works.


The Oracle CX afterparty at Moscone West was memorable. I had to try this "Blue Lagoon" cocktail with Curacao, one of my favorite liqueurs. A neon dance troop (pictured above) materialized out of nowhere and jammed to the Party Rock Anthem. All we needed were some glow-sticks and it would have been a rave party. This is normal for a San Francisco tech conference afterparty. My contacts told me another party had dancing electric violin players, but I missed that to hear a former US Navy SEAL discuss leadership lessons. Long live Oracle OpenWorld.

I attended the final JavaOne keynote only partly for the free lunch. I really wanted to see how engineers have fun. IBM people kicked it off with an obvious pitch for IBM Bluemix as a PaaS solution for cloud apps touching multiple APIs. The dudes from Big Blue hit the right note by toasting Java's 20th anniversary with mini whiskey bottles at the podium. That is just totally awesome. I might have become a software programmer if I had role models like that as a kid. Containers, business logic, the API economy, and microservices mean so much more if you can drink whiskey on the job.


Oracle's Java engineers have a house band called the Null Pointers. They entertained us prior to the JavaOne keynote. I think the extra percussionist in back should have done a cowbell solo. The real "JavaOne Community Keynote" was one big interactive party with free beer, cute sketches, and Duke the Java mascot. The kickoff video featured a geeky coder powering up on cans of "Java" to impress his attractive female boss. The level-up cues from video games would impress the male geeks in the audience. I don't think the video was sexist, but tech parodies ought to feature women as something other than foils for a male-driven plot if the tech sector is serious about encouraging women to have careers.


The skits were low drama that only an engineer could love. They had a UK-style red phone booth on stage (pictured above) but pretended it was the TARDIS from Doctor Who with the soundtrack, time tunnel, theme music, and everything. Dude, every true nerd knows the TARDIS is a UK blue police box. Only Bill and Ted's Excellent Adventure used a phone booth as a time machine. I didn't mind the mixed metaphors because these folks were on a budget. Duke was the central plot element in the skit series. The engineers were concerned when they saw him destroying San Francisco in 2035, so they time-traveled to various points in Java's developmental history to figure out how to stop him. The Paris programmers waved French baguettes and made inside jokes about development projects. The Brazil people used a "Future Communicator" to predict how Java would change. The outer space skit has a cute "soh-crates" mention of the Socrates character from Bill and Ted, which no one in the audience under 30 had probably ever seen. James Gosling, the father of Java, helped the skit engineers launch T-shirts into the audience. The JavaOne 2015 app revealed a secret code that enabled kid programmers to tear off Duke's angry mouth and save San Francisco from destruction. Wow, I have no idea why I noted all of these details except for the sake of posterity. If I had been an engineer instead of a finance person, I could have invented something that would have put me on stage. I did score a bite of some Java 20-year anniversary cake they had on stage, so I got my taste of nerd excellence for the week.

I did catch a few minutes of some workshops in the Modern Finance Experience after all. The door sentries generously let me in, so I guess they instantly recognized the pure genius of Alfidi Capital. I was shocked to discover that some SMBs still track financial reporting from geographically separate branches on linked spreadsheets instead of using cloud ERP. What is with those people? This isn't the 1980s. It's amazing that small-time CFOs and COOs now discover that automating some FP+A tasks reduces forecasting errors and saves time. That must have been how cave dwellers felt when they discovered fire. No kidding. The partner network people from larger firms talked about how Millennial generation employees expect tons of incentives even for marginal performance, because all of them got participation trophies growing up. I don't think those incentives will last long if the big-shot CEOs get the jobless future they expect. Millennials can expect zero self-esteem support when they're shoveling dirt on some plutocrat's ranch.

Oracle OpenWorld 2015 brought me more glimpses of the future. I didn't even need Duke's Java-powered time traveling phone booth to see the future, even though it was a nice touch. Here comes the standard Alfidi Capital mental jet-blast, so strap yourselves in for my genius. The future is a cloud full of encrypted silicon tended by a dwindling number of STEM graduates who slowly work themselves into obsolescence over the next decade or two. The early DBA and sysadmin dropouts still have a window of opportunity to create cloud service startups the bigger firms will acquire as they build their oligopolies. The final STEM survivors will be godlike analytics and domain experts keeping cloud systems running with AIs. The rest of the tech workforce in between these two forces will see their wages and career prospects gradually slide into nothing as everything they do is automated away. I will invest my capital accordingly so my perspectives survive indefinitely. Future tech conferences like Oracle OpenWorld are my path to salvation.

Sunday, November 01, 2015

The Haiku of Finance for 11/01/15

Business icon choice
Moral qualities matter
Reflecting judgment

Buffett Vs. Trump On Women

Warren Buffett and Donald Trump are both undeniably rich. That is where they part company. Their temperaments are very much opposites. Buffett is reclusive and unassuming where Trump is vain and bombastic. Consider how their opinions of women in the workplace reflect their public personalities.

Mr. Buffett endorsed female empowerment in his legendary 2013 Fortune essay. Maximizing prosperity means getting the most from all of your people. Mr. Buffett sees vast potential in one half of the population that history has mostly ignored. Mr. Trump's remarks about women during this election season confine them to second-class status. His ridicule of journalist Megyn Kelly for capably performing her job tells women that their potential won't matter if they irritate powerful men with the truth. One business leader broadcasts an encouraging message while the other enjoys smacking competent people down. Feel free to decide which one you would prefer as your boss.

Consider how the two men treat women in their personal lives. Warren Buffett remained married to one woman for half a century, and even though they were separated for some time she approved of his longtime companion. The trio were comfortable with an enduring, lifelong partnership that most Americans would find unconventional. Donald Trump has been married three times, each time to a younger woman, yet some "conservatives" still think he's a role model. Uncle Warren's women are his partners and confidants. The Donald's women are his trophies and possessions. Feel free to decide which one would be a more reliable husband.

Hollywood icons offer useful ways to think of America's favorite business leaders. The Art of Manliness describes Jimmy Stewart as dignified, dutiful, and humble. Warren Buffet's folksiness recalls Mr. Stewart's graces. American author William Manchester wrote in 1987 about how real combat veterans of World War II humiliated John Wayne for his phony bravado. Brash, bold images that don't square with reality are an apt description of Donald Trump's reality TV franchise.

Business titans know a lot about success. They don't know everything, and some deserve more attention when their inner qualities are on display. Donald Trump's net worth is somewhere between $4B (according to Forbes) and $9B (according to his own big mouth). Warren Buffet's net worth was over $64B in 2014, according to SEC-compliant financial statements that everyone can read. The billionaire who sees enormous value in women is worth several times more than the one who sees them as mere playthings. Results matter in business. The more capable of these two investors knows the value of human life. Feel free to decide which one you would rather be. I'd work for Warren Buffett any day if it meant I could think like him.

The Limerick of Finance for 11/01/15

Demand crash felt on Asia's shop floor
Inventory can't get out the door
Manufacturing slump
World growth in the dump
Next recession will test them some more

Inside Information Is Worthless And Illegal

Every analyst on Wall Street has access to the same public information about corporate performance and the economy's health. Just like in school, when every student has access to the same course material, a few with superior abilities will get the top grades just by bringing better insights to bear. Financial analysis works the same way. Intellectual firepower and solid character are the top investor's primary tools. Only criminals resort to insider trading. Competent investors never use inside information.

Any US government intelligence analyst who has ever held a security clearance and handled classified information can draw analogies between their responsibilities and those of a Wall Street analyst. Intelligence professionals cannot discuss their classified work in public. Only very privileged insiders at higher levels of the government can make policy using classified information. Policy actions for classified information must adhere to FedRAMP security protocols and Freedom of Information Act (FOIA) disclosure procedures. These legal controls on the use of classified government information are just as stringent as legal controls on the use of inside information from public companies.

The best deep dives highlight the uselessness of any and all so-called privileged information in making financial decisions. Everything relevant to a public company's performance is found in its published financial statements. The superior analyst ignores management spin in conference calls. The classic ratios of fundamental analysis reveal everything. The intelligence community's experience also offers another valid analogy. Somewhere between 80-85% of actionable intelligence is available through open sources. Collection is as easy as parsing a Google Search result.

Warren Buffett ranks among history's best money managers precisely because he bases all of his decisions on the study of publicly available information. He pals around with America's top CEOs and could probably find out anything he wants about what goes on behind closed doors. He doesn't need to poke behind the curtains because he can't use any of that information in his investment decisions anyway. Knowing how to read financial statements, industry reports, and government statistics is always good enough for Mr. Buffett. It's good enough for me too.

The SEC enforces its rules against insider trading. Regulators take the misuse of material, nonpublic information very seriously. Harvard Law School's 2014 article "Hedge Funds and Material Nonpublic Information" covers the case law establishing liability for various parties in a tipping chain. Huge legal fees at best, and prison time at worst, await any financial titan who trades on some tidbit the public can't discover. I want very much to catch some negligent hedge fund misusing information so I can turn them in to the SEC for prosecution and collect a bounty. I attend San Francisco's tech and finance conferences with just such an intention. Call me the financial bounty hunter.