WorldoutofWhack

1. World’s Most Admired Companies Rank 2008 2018 1 Apple Apple 2 GE Amazon 3 Toyota Alphabet 4 Berkshire Hathaway Berkshire Hathaway 5 Procter and Gamble Starbucks 6 Fedex Walt Disney 7 J and J Microsoft 8 Target Southwest Airlines 9 BMW Fedex 10 Microsoft JP Morgan Chase
2. Top Ten Tennis Rankings Rank 2008 2018 1 Nadal Djokovic 2 Federer Nadal 3 Djokovic Federer 4 Murray Zverev 5. Davydenko Del Potro 6 Tsonga K Anderson 7 Simon Celic 8 Roddcik Thiem 9 Del Potro Nishikori 10 James Blake Isner
3. Is GE a case study of death due to Strategy, Disruption, Competition, Capital Allocation, Execution and Culture?
4. Where did strategy team and consultants go wrong?
5. A whole industry went wrong
6. Competition is more local than global-India example Category in India Category leader Value share 15 years ago Category leader share today Soaps 63 % 39% Shampoos 62% 45% Tea 54% 19% Mobile Phones 40% 20% plus Airlines 40% 20% plus Deodorants 70% 20% plus So, in early 2000s, category leaders had 60 share, now they have 40 share and in five years they will have mid 20s share !
7. Harsh and Stark Reality of today 1. Profitable Growth is hard to come by 2. Capital, Technology easily available off the shelf 3. Talent is attracted by challenge 4. Investors, stakeholders, boards want fast action and faster results 5. Society is placing its rightful demands
8. Strategy- lot of jargon, not enough substance? Category Sample descriptors General Purpose, Vision, Mission, Generic Strategy, Specific strategy Famous people Napoleon strategy, Iacocca strategy, Bill gates strategy Descriptive Offensive strategy, Defensive Strategy, All Out strategy Color Blue ocean, Red ocean, Green, Code Red Strategy, Numbers 20,000 feet strategy, 365 day strategy, 90,180,360 strategy Aerospace Glidepath strategy, lift off strategy, strategy thrust And above all…. “Your strategy needs a strategy”
9. Strategy in a past, predictable world was all about planning, it was centralized, precise and directive. In this era, the past became a powerful linear extrapolation tool.
10. In the past, products changed, Markets, Go to market, and business models didn’t change. With technology everything changes
11. Today’s world is anything but stable. The pace of change is more than what one human being can absorb. We cannot extrapolate
12. Strategy From • Planning in a stable world • Long Periods of stability • Strengthen our Core? To • What’s Emerging? • What are the unknowns? • What could kill this industry? • What could kill us? • What’s the new Core?
13. When is it time to change? What to change? How to change?
14. In Summary… 3 points
15. 1. All disruptors are innovators , not all innovators are disruptors
16. 2. Throw simplicity at a complex world
17. 3. EGO system to Eco system

https://www.slideshare.net/ShivShivakumar1/presentation-on-strategy-disruption-competition

Kevin Muir writes…It seems like a lot of hard-mony-hawks were caught off guard by last month’s dovish shift by Powell. I have had more than a couple of conversations with different market participants who have expressed disbelief about how quickly Powell abandoned his tough “we-won’t-let-market-conditions-influence-our-monetary-decisions” policy. These Powell-disciples are rightfully feeling a little betrayed. After all, Powell promised he would tune the economy to the real economy, not the financial economy. For these new-era hawks, the problem of the last decade has been a FOMC board that has caved to every hiccup in the stock market. They have argued that in the long run, these policies create an economic environment filled with excesses and mis-allocated resources which ultimately leads to less growth. They were excited to finally have a non-academic business-person in the FOMC Chair that recognized this reality.
I understand their point of view. And although I am not smart enough to judge correct policy, I have been around the block enough to know the chances of their policies being enacted is about high as Salma Hayek phoning me up to go out for coffee (see High Debt Levels Rant for backstory).
It was easy for Powell to mouth words about not being beholden to each market tick when the stock market was shooting higher. It didn’t take much courage to stress the long-term-soundness of money when financial conditions were easing.
But really, why was Powell so intent on establishing such a hawkish tone?
After all, have a look a the Federal Reserve’s preferred measure of inflation – the Core PCE Deflator – over the past two decades:

You might disagree with the Fed targeting 2% inflation. Yeah, I get it. it is arbitrary and could very well be improper policy. But here is my advice. Instead of spending your money fighting the market hoping for the Federal Reserve to realize that 0% is a better target, take that money and run for office so that you can change policy. As I repeat time and time again, trade the market in front of you, not the one you want.
Like it or not, the Federal Reserve has a 2% inflation target and the reality of the current economic cycle is that there have only been five months when inflation has ticked above their target. If we accept that the Fed’s 2% target is a not a ceiling but a long-term average that the Fed is aiming for, then it makes Powell’s hawkish stance all the more peculiar.
Here’s my take. When Powell took office, financial markets were rocketing higher due to Trump’s pro-growth tax cuts. Financial conditions were easy and it looked like another bubble was forming. So Powell took the opportunity to lean against the froth and adopt a hawkish bias.
Ironically, this caused financial conditions in the United States to ease even further as capital stormed in. In the current environment where most Central Banks are actively engaging in financial repression, Powell represented a welcome change. Capital goes where it is treated best, and for most of 2018 that was the United States.
As the money kept pouring in, financial conditions continued to ease, and Powell became more emboldened to become even more hawkish. The market pundits who had long argued against easy money policies pointed to the massive US financial market outperformance and proclaimed that America was drinking the world’s milkshake.
But then something happened October 3rd when Powell said the US was “still quite a ways from neutral.”
The self-reinforcing reflexive capital-attracting-cycle of Powell’s hard money stance hit the point of saturation. At that point the yield curve started to invert (or at least kink) and risk assets sold off hard. Powell finally tightened too much.
Now, this is where it got really interesting. Those who had taken Powell’s comments at face value were convinced that he wouldn’t shift policy simply because the stock market dipped a little. After all, in the grand scheme of things, financial markets were still elevated. What’s 350 S&P points when the stocks market is up 2300 over the past decade? Surely Powell will not cave at the first dip.
Wrong. He folded like a lawn chair.
And now here we are a few days away from the next FOMC meeting, and many of these hard-money pundits are still predicting Powell will walk back his dovish tilt.
A good trader knows to never say never, but I think the chances of that happening are extremely low. What’s the point? Inflation is running below target. Risk assets are selling off hard. Why take the chance that a hawkish comment from the FOMC causes the next crash?
The only real susprise
The fact that Powell is doing what every Fed Chair before him has done (err on being easy) is not a surprise. The only real surprise is that he lasted this long before caving into the pressure. Powell is no second-coming of Volcker the hawks fantasize about.
The simple fact is that there are no atheists in foxholes. Especially when there is so little to gain from a hard-money stance.
If Core PCE was running 4%, then I might be sympathetic to the argument that Powell will hang tough and take the pain. But it’s not. It’s running below target and has been for the whole recovery.
It just got a whole lot harder for Powell to remain hawkish
If you remember back to when President Trump was making the decision for the next FOMC Chair, one of the front-runners was Kevin Warsh. The hard-money hawks were positively giddy about the possibility that Warsh be appointed. After all, Kevin was extremely critical of Bernanke/Yellen’s easy money policy in the aftermath of the Great Financial Recession.
But Trump ultimately decided against putting a hard-money guy in charge of the price of money (shock) and chose a practical businessman that he hoped would thread the needle. Much to Trump’s disappointment, Powell has been way more tight than Trump would have ever predicted.
Yet that’s old news. We all know Trump is not pleased with his choice in Powell, “not pleased even a little bit.”
What’s amazing is that over the weekend, Kevin Warsh and Stanley Druckenmiller – two of the most outspoken critics of the easy-money-policy of past Fed chairs – have penned an op-ed in the Wall Street Journal that argues Powell needs to stop tightening… immediately.
In an article titled “Fed Tightening? Not Now”, the two argue the Federal Reserve has gone too far and risks causing a market crash that will have profound ramifications:
Around Oct. 1, global central-bank liquidity reversed and stocks began their descent from peak prices. That is no coincidence. The Federal Reserve should take an important signal from recent developments at its meeting this week.
As we head into 2019, quantitative tightening is expected to accelerate. It has been paired with expectations of interest-rate increases from the Fed – and the timing could scarcely be worse.
Economic growth outside the U.S. decelerated over the past three months. Global trade growth also slowed markedly, running about one-third lower than earlier in the year. Growth in some important economies, like China, is significantly weaker. No ocean is large enough to insulate the U.S. economy from slowdowns abroad. And no forecasting model adequately captures the spillovers and spillbacks between the U.S. economy and the rest of the world.
U.S. financial-market indicators also signal caution. Market prices may be showing their true colors for the first time since QE’s expansion. These indicators aren’t foolproof, but they have a better track record than economists. Bank stocks are down about 15% since Oct. 1. Other economically sensitive sectors, like housing, transport and industrials, are down by double digits, underperforming the broader markets. Credit markets are softening, and the decline in major commodity prices is foreboding.
These indicators are at odds with strong U.S. economic growth for 2018, which will come in at around 3.25%. Labor markets also remain strong, although they too are a lagging indicator.
The new Fed leadership team faces the most difficult challenge since Chairman Ben Bernanke and his team confronted shocks to the financial system in 2007-08. They deserve forbearance, not censure. But time is tolling, and the Fed is well-advised to break from the old regime.
The Fed should worry less about fine-tuning its communications strategy and more about getting policy right. In recent months, Chairman Jerome Powell stepped up outreach to Congress and other interested parties. He spoke with refreshing humility about the appropriate policy rate setting. And he prudently scaled back on the kind of pinpoint forecasts his predecessors made. These moves, while welcome, are insufficient.
In response to market tumult, the Fed governors recently hinted at less enthusiasm for rate increases next year. The new forward guidance is different from what they signaled in September. But it is no more reliable. The Fed should stop this option-limiting exercise entirely. And if data dependence is the Fed’s new mantra, it should actually incorporate recent data into its forthcoming policy decision.
The Fed’s balance sheet is where the money is. Yet it has provided little additional clarity on its balance-sheet plans since Chair Janet Yellen’s tenure. At a time of global quantitative tightening and uncertain economic prospects, the Fed’s silence on its asset holdings is contributing to the tumult.
The time to be dovish was when the crisis struck and the economy needed extraordinary monetary accommodation. The time to be more hawkish was earlier in this decade, when the economic cycle had a long runway, the global economy ample momentum, and the future considerably more promise than peril.
This is a time for choosing. We believe the U.S. economy can sustain strong performance next year, but it can ill afford a major policy error, either from the Fed or the rest of the administration. Given recent economic and market developments, the Fed should cease – for now – its double-barreled blitz of higher interest rates and tighter liquidity.
This op-ed is a way bigger deal than most the market participants currently appreciate.
Sure, you can complain all you want about how Stanley and Kevin talk tough until risk assets sell off, but then quickly shift to the dovish side. Or you can claim that they are trying to talk their book, but the reality is that Stanley can make just as much money on the short side as he can on the long side, so I don’t buy that one bit.
Regardless, all I care about is what this means for the market.
And having the biggest legitimate hawk out there – Kevin the “ferrugineous rough-legged hawk” Warsh – publicly advocating for easier monetary policy has given tons of cover for Powell to err on the dovish side.
Don’t overthink this. Don’t sit around trying to imagine all the ways Powell will push back on Warsh’s op-ed. There is little reason for him to do so. You might want him to do that, but he isn’t going to. Who knows? Maybe Powell is glad that Kevin and Stan wrote the piece. Heck, Jay might have even asked Kevin for some cover.

(My two cents-The divergence below is already telling that smart money is betting that FED will throw in the towel hence relative outperformance of Emerging Markets)

I don’t have the answers to what should be done, but I have an educated guess on what will be done. And it’s obvious the days of relatively hawkish US monetary policy are behind us. The surprises will not be how high Powell takes rates, but rather, how quickly he gives up on that idea and reverses course.

Book Summary: Atomic Habits
1. Atomic Habits Tiny changes, remarkable results Build good habits and break bad ones James Clear
2. British cycling changed in 2003. Top bike brands in Europe refused to sell bikes to the British team because they were so bad and hence brands worried about their reputation. That’s when David Brailsford was hired.
3. David Brailsford started searching for tiny improvements in everything the team did. We always think we need massive effort to make massive change, when it actually needs small effort repeated everyday.
4. If you get 1% better everyday, you will get 37 times better at the end of the year. If you decline 1% everyday, you will be nearly zero at the end of the year. Habits are the compound interest of self improvement
5. It does not matter whether you are successful or unsuccessful right now. What matters is whether your habits are putting you on the path to success.
6. Your outcomes are a lagging measure of your habits. Your weight is a lagging measure of your eating habits. Your net worth is a lagging measure of your financial habits. Your knowledge is a lagging measure of your learning habits.
7. Time magnifies the margin between success and failure. It will multiply whatever you feed it. Good habits make time your ally. Bad habits make time your enemy.
8. Habits do not make a difference till you cross a critical threshold and unlock a new performance. If you find yourself struggling to build a good habit or break a bad habit, it is because you have lost the ability to improve. Mastery requires patience.
9. Winners and losers have the same goals, so goals cannot differentiate winners from losers. Achieving your goal changes life only for the moment. Fix the inputs and the output will fix itself.
10. The purpose of setting goals is to win the game, the purpose of building systems is to continue to play the game. Your commitment to the process will determine your progress
11. Changing habits is challenging for two reasons – we change the wrong thing, or we try to change our habits in the wrong way.
12. We must change our approach from outcome based habits to identity based habits. Its like offering a cigarette to two people who are trying to quit smoking. The first one says “no, thanks I am trying to quit smoking” which is output based, the second one says “ No, thanks, I am not a smoker” which is identity based.
13. True behavior change is identity change. you might start a habit because of motivation, but the only reason you will stick with it will be because it becomes part of your identity.
14. The more you repeat a behavior, the more you reinforce the identity associated with that behavior.
15. In 1898, a psychologist named Edward Thorndike established with his studies that behaviors followed by satisfying consequences tend to be repeated while those that produce unpleasant consequences are less likely to be repeated. A habit is a behavior that has been repeated enough times to become automatic.
16. Habits are simply, reliable solutions to recurring problems in our environment. As habits are created, the level of activity in the brain decreases. Habits are mental shortcuts learned from experience. Habits do not restrict freedom, they create it.
17. The process of building a Habit has four simple steps – cue, craving, response, reward.
18. Many people think they lack motivation to start a habit, when in reality they lack clarity.
19. One of the best ways to build anew habit is to identify a current habit and stack this new one on top, this is called habit stacking. E.g., as I pour my coffee every morning, I will meditate for a minute, as I sit down for dinner, I will call out one thing in the day I am grateful for etc. etc.
20. In 1939, psychologist Kurt Lewin wrote a simple and powerful equation. Behavior is a function of the person in the environment. B= f ( P,E)
21. In 1965, a Hungarian man named Laszlo Polgar wrote a series of strange letters to a woman name Klara. Laszlo believed in hard work, he believed if you worked hard you could become talented.
22. Laszlo courted Klara and married her. They had three girls – Susan,Sofia, and Judit.Their lives were dedicated to chess only. All conversation at home was chess and everything one could ask for was there at home relating to chess. The Polgar sisters were praised and rewarded for chess achievements.
23. All three Polgar sisters did very well at chess at a world level. Judit the youngest, was the youngest grandmaster of all time even before Bobby Fischer and was the world No 1 for 27 years
24. Charles Darwin said “In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed” we don’t choose our earliest habits, we imitate them. We go with what the family does or society does or a school does. Going along with the group does not feel like a burden and has no risk.
25. We imitate habits of three groups in particular: a. Those close to us b. The many and c. The powerful
26. When we are unsure about how to behave , we look to the group to guide our behavior. We are drawn to behaviors that earn us respect, approval, admiration and status.
27. We copy the behaviors of successful people because we desire success ourselves. Many of our daily habits are imitations of people we admire.
28. Jerry Uelsmann, a professor in Florida divided his photography class into two sections. He told one section that they would be graded by the quantity of pictures they shot in the course. He told the second section that this group will be evaluated for the quality of the picture even if they brought only one picture at the end of the term.
29. At the end of the term, he was surprised to find that all the good photos came from the quantity group and there were no good pictures from the quality group. The quantity group hones their skills as they shot picture after couture while the quality group was thinking about that perfect shot!
30. This concept is called being in motion(quality group) versus taking action ( quantity group). Motion makes you feel that you are getting somewhere , when in reality you are not progressing. Action on the other hand delivers an outcome. If I outline twenty ideas for articles I want to write, that’s motion, if I actually sit down and write an article, that’s action.
31. The behaviors that fill up our daily life can be performed with very little motivation. These are convenient habits, like scrolling a phone, like not being prepared for meetings, like cancelling things at the last minute.
32. Much of the building of better habits comes down to reducing the friction associated with our good habits and increasing the friction associated with our bad habits. That’s what governments do with smoking-increase friction.
33. Researchers estimate that 40 to 50 pc of our actions on any given day are done out of habit. When you start a new habit, it should take less than two minutes to do e.g. Read before each night become “read one page”
34. In the summer of 1830, Victor Hugo was facing an impossible deadline. Twelve months earlier, the author had promised his publisher a new book and wasted the year. The publisher gave him six months by February 1831.
35. Victor Hugo called his servant and asked him to lock away all his clothes except one pair and a large shawl. This forced Victor Hugo to stay indoors and finish the book. The book was published on January 14, 1831, two weeks ahead of schedule. The book ? “ The hunchback of Notre Dame”
36. Making your bad habits more difficult in this way is called a commitment device. A commitment device is a choice you make in the present that controls your actions in the future.
37. In the late 1990s, a public health worker Stephen Luby left Omaha and bought a one way ticket to Karachi, Pakistan. Karachi has poor sanitation and this led to widespread illness an disease. Luby and team contacted Procter and Gamble Pakistan.
38. Luby and P & G partnered to supply safeguard soap to society. Luby saw this not as behavior change but as a habit adoption. Luby argued that it was easy for people to adopt a product with a strong positive sensory signal.
39. Within months, Luby and team saw a massive drop , diarrhea fell by 52%, pneumonia by 48%, and skin infection by 35 %. ( surprising that P & G did not roll this out in India but Unilever copied this and did it with Lifebuoy)
40. Animals in the plains of Africa hunt other animals for food. This is what scientists call an immediate return environment. In society many of the choices we make do not benefit you immediately. When you work, you get a paycheck in a week or in a month. These are examples of delayed return environment. Our brains are coming to grips with delayed return environment only after society has got civilized.
41. The consequences of bad habits are delayed while the rewards are immediate. Smoking might kill you in ten years but it reduces stress now. Put another way, the costs of your good habits are in the present, the costs of your bad habits are in the future.
42. The vital thing in getting a habit to stick is to feel successful, even if its in a small way. The feeling of success is a signal that your habit paid off and the effort was worth it. In a perfect world, the reward of a good habit is the habit itself.
43. It is important to have a habit tracker, It is a simple way to measure whether you did a habit. What’s important is to recover quickly if you miss a routine and get back. This is what differentiates winners from losers.
44. We should not track meaningless numbers. If you run a restaurant, revenue might not be the best way to measure if your food is good and the chef is doing a great job. Measuring how many people finished their meals or the size of tip they left might be better indicators of satisfaction. The dark side is that we get driven by a number rather than the purpose behind it.
45. In a data driven world, we tend to overvalue numbers and undervalue the soft and the difficult to quantify parameters.
46. The people at the top of any competitive field are not only well trained , they are also well suited to the task. And hence, if you want to be great, choosing the right place to focus is crucial. Competence is highly dependent on context.
47. What habits are most satisfying to you? Here is a quick check, as these 4 questions: 1. What feels like fun to me, but work to others 2. What makes me lose track of time? 3. Where do I get greater returns than the average person? 4. What comes naturally to me?
48. The greatest threat to success is not failure but boredom. We get bored with habits because they stop delighting us. Professionals stick to the schedule, amateurs let life get in the way. Professionals know what is important and work towards it, amateurs get pulled off course by the urgencies of life.

https://www.slideshare.net/ShivShivakumar1/book-summary-atomic-habits