Favorite Motivations/Inspirations

I do not often write many motivational statements or inspirational statements.  I actively seek them out, I say them to myself each day, and I think they are of great benefit.  But rarely to I write my own or re-post those that I have heard.  But for some reason, today I will.

1) Discipline is really quite simple.  Doing what I should do each day.  And not doing the things I shouldn’t do.  – Ethan Frey

2) The only easy day was yesterday – Navy SEALS

3) A good plan violently executed right now is better than a perfect plan executed next week – Gen. George Patton

4) Life’s journey is not to arrive a the grave safely in a well-preserved body, but rather to skid in sideways, totally worn out, shouting….”What a ride!”

5) Leadership is action, not position. – Donald H McGannon

6) If your habits don’t support your dreams, one of them has to change. – Anonymous

7) Love is Love’s reward – John Dryden

8) There is no remedy for Love but to Love more – Henry David Thoreau

Finally, my personal favorite, a small clip from Theodore Roosevelt’s Man in the Arena speech…….

9) It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

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How a 1967 Study on Used Cars Affects a $5.3 Trillion per Day Industry

George Akerlof’s academic study, “The Market for Lemons: Quality Uncertainty and the Market Mechanism” from 1967 on asymmetrical information in a market, and the associated market mechanics recently caught my attention.  And I am not the only one who took a while to grab the value of his conclusions.  The study was conducted in 1967, published in the Quarterly Journal of Economics in 1970, and finally won George a Nobel Prize in Economics in 2001.  (A note of thanks to Daniel H. Pink’s To Sell is Human for enlightening me on this subject).  Akerlof summarized his conclusions with a “finger exercise” of the used car market, circa 1967, to make his points.

In the 1967 used car market in America, there was a significant level of asymmetrical information.  The used car sellers had way more information about the product than the prospective buyers did.  No internet to do research, few “lemon laws”, and importantly no methods of information dissemination that could harm the sellers.  There was no e-mail to friends blasting poor service, no Twitter for venting, no Yelp!

With asymmetrical information, buyers are not willing to pay a fair market price as there is an inherent need to discount the unknown.  Many potential buyers would decide not to buy a used car at all.  Especially if the seller or the seller’s industry has a reputation for using the asymmetrical information to their favor, or being downright dishonest.  Even honest sellers are harmed because buyers will apply the same “unknown” discount to any transaction.  So even honest sellers of high quality products (used cars) have to accept a lower than fair market price when there is asymmetrical information.

Akerlof wrote, “Dishonest dealings tend to drive honest dealings out of the market.”  Further he concluded, “The presence of people who wish to pawn bad wares as good wares tends to drive out the legitimate businesses.”  When the honest dealers are pushed out, only the dishonest sellers remain.  It is possible the industry would then self-destruct, but if the product is needed, then the industry continues in a less than efficient manner.

The OTC trading industry has had it’s fair share of dishonest dealers.  Whether the retail FX world, mortgage-backed securities, treasury auctions of the early 90’s, NASDAQ in the late 90’s…..there have been many examples of the dishonest pushing out the honest.  But the OTC markets continue on as the business of risk and reward always needs new products and liquidity for those products.

In the retail FX (OTC) world, where asymmetrical information has been the norm (as has asymmetrical slippage), change is possible.  There is a clear way for the honest brokerage firms to drown out the dishonest, and to prove to clients and prospective clients the value of an honest broker’s offerings.  How?  Transaction Cost Analysis.  TCA.

Simply put, Transaction Cost Analysis is a way to analyze how well a broker execute’s client’s orders.  There are numerous, institutionally-validated price streams available in the FX marketplace.  A TCA program would see a brokerage forward information from their trading platforms to a qualified, independent, maybe even registered firm to see how close to a mid-point each firm executes it’s clients’ orders.  Is there any slippage?  If so, was the market actively moving at that time, or did the broker purposefully delay execution of the order or even execute at an off-market price?

Once this information is available, information mediums such as blogs, websites, e-mail, and social media would make it such that all but the purposefully uninformed traders would know which brokers are honest and which are less so.  There would be a rush of clients to the honest brokers at the expense of the dishonest brokers.  This would have the opposite effect of Ackerlof’s 1967 study of the used car market.  Rather than diminish the value of the industry as a whole,  the value of the marketplace as a whole would increase with economic benefits to the retail FX traders of the world, and to the brokerage firms acting as “honest sellers”.

Intermediation in the Healthcare Exchanges?

I admit I have not paid too much attention to the implementation of Obamacare.  I was building and growing CMAP, selling the company to oneZero, raising three kids, yada, yada, yada…..

But I have started to pay attention now that the healthcare exchanges have opened for business.  I have a basic understanding and am learning more each day.  The launch of the exchanges has been a technology nightmare with some reports stating that the insurance companies are receiving just 1% of the applications that are started online via the exchanges.  I am sure there are issues with the technology rollout.  There usually is.  But it is just bad management to roll-out such a massive offering without having better testing.  Any project of this scale with have issues, but it should have been done in a limited fashion to start, learn, and resolve the issues.

The real purpose of this post is that I am an “exchange” guy.  Been working on the transactional side of the financial services industry for a long time now.  Exchange traded assets, OTC-traded assets, clearing, margin, credit, platforms, connectivity.  So when I hear the term, “healthcare exchange”, I get interested.

I have a lot to learn about the rules of the exchanges.  And I am sure I will be aghast at some of the rules and policies that will be implemented by the exchange managers.  I will have to remind myself that any government run entity is not seeking max efficiency, but that there are other considerations involved.  However, at some point the operators will get involved.  You know, the private concerns that search for opportunity.  Who discover what users want, cobble together the resources to have a try at making it happen, recruit others to join the cause, launch a product or service, then evangelicalicise the concept to all who will listen.

That is when “healthcare exchanges” will start to work more efficiently and really deliver all that they are capable of delivering.