SOPHISTICATED FINANCE

Everything Sophisticated Finance

The following image is a word cloud for Sophisticated Finance, courtesy of Wordle. May be developing an addiction to Washington bashing. Did not think I had devoted that many posts to the current economic crisis. When is Obama going to call me?

Twitter Humor

From those funny people at Geek & Poke.

 

Key Performance Indicators

Key performance indicators run through the life of a business, from building the growth drivers in the business model, to creating a proper financial model and finally to monitoring the actual performance of the business. Key performance indicators, simple put, are the 5-10 critical items that need to be constantly monitored to grow the business and achieve the profit and cash flow performance that makes the business self-sustaining.

Many of the companies I see do not use key performance indicators, a few use a poorly thought out subset and nobody I deal with has performance indicators for all lines of business. One thing is always true--once the situation is grave, a look back at the key performance indicators always shows the problem early enough to have fixed it in time. Perhaps the following joke from Flowing Data will help you to remember to instill the concept of key performance indicators at startup.

 

Credit: Flowing Data

Reality

As usual, the folks at Geek and Poke have it right.
 

Recognize Anybody You Know?

Oil Price Nonsense

I have heard two arguments recently with increasing frequency:

1. The U.S. should expand drilling in Alaska and the Gulf of Mexico as a means to increase the oil supply and reduce oil prices
2. The recent high oil prices are good because it provides the economic incentive to develop new types of alternative energy

An equally attractive argument is that the U.S. annex the rest of Mexico or at least the Mexican oil fields. The logic is both compelling and historically relevant

• First, we wanted all of Mexico at the end of the U.S. Mexico War in 1848 but anti-slavery forces thought that Mexico would expand the area supporting slavery and so we settled for just Texas and environs. We are no longer concerned about slavery (although the new citizenry might vote Democrat).
• Second, we would solve the contentious problem of illegal immigrants. All the Mexicans would just become citizens and we could build a really high, electrified fence along the short, new U.S. border with Guatemala.
• Third, we could take over Mexico for a lot less money than Iraq, which would lead to an acceptable ROI for the U.S.

My argument, of course, adopts the best parts of both of the other two arguments. We increase the area for drilling by "annexing" Mexico and we use economic incentives because the war with Mexico would only last two days and therefore be very cheap on a per barrel basis.

Now that we have covered all the stupid arguments related to higher oil prices let's get back to work on finding new ways to reduce oil consumption. Polluting the environment in more of the U.S. is not a viable alternative and we are only at the frontier of understanding and measuring the benefits of clean tech and alternative energy sources.

Cost Cutting?

In this blog I try to deal with finance and related topics in a serious way. However, sometimes we must digress and thereby provide you with real insight into the world of "high" finance. This morning's lead story on NPR (National Public Radio) is just such an opportunity. NPR reported that Deutsche Bank, one of the largest commercial banks, will no longer allow employees to use company credit cards to entertain clients in brothels and strip joints. This drastic measure is reportedly part of a new cost cutting effort at the bank.

There are several important lessons to be learned from this story:

• The ladies who work in the brothels were unwilling to accept sub-prime mortgages in payment or could not agree on the mark to market discount for the mortgages, an ample amount of such securities being available at Deutsche Bank and presumably the reason for the cost cutting
• The brothel owners patronized by Deutsche Bank will be diversifying into new businesses so that the charge slips will not fall into the prohibited category, thereby leading to a boom in new barber shops, restauarants, etc.
• Deutsche Bank will be at a competitive disadvantage to other leading international banks who can still patronize brothels, so now is the time to bring Deutsche Bank your marginal projects in Eastern Europe, South Asia and Central America.

There was no announcement this morning on whether the bank would finance brothels. We hope that the sleuths at NPR do a follow up on this important unanswered question.

Machines Rule

I believe this qualifies as universally funny.

clipped from geekandpoke.typepad.com Voting Machines It's time for the real voting machine which deserves its name. (See also Wired about mysterious voting machines) 12:03 AM | Permalink

It's time for the real voting machine which deserves its name.
(See also Wired about mysterious voting machines)

Voting Machines

It's time for the real voting machine which deserves its name.
(See also Wired about mysterious voting machines)

Humor-The Auto Industry Needs to Change

Everybody talks about the need for the auto industry to change, but for such change to have an effect it must be dramatic.

clipped from geekandpoke.typepad.com

Leadership and Responsibility

All wise men are smart. Not all smart men are wise.

clipped from geekandpoke.typepad.com

Humor Gives Us Perspective

The daily cartoons at Geek and Poke are worth adding to your RSS feed reader. See below. Site http://geekandpoke.typepad.com/geekandpoke/

clipped from geekandpoke.typepad.com