The Financial Times’ Beyond Brics blog has posted an article by PUC-Rio professor Marcio Garcia, and it’s a very sober look at what this country has been through in the years since it was included in the “BRICs” by Jim O’Neill. Much more importantly, however, is the warning about what we must still do if we are to succeed in the future.
“A catalogue of disastrous decisions”: that’s the title of a story today in the Financial Times about the many failures in the downfall of the Royal Bank of Scotland. More specifically, the author recommends the chapter on “Management, governance and culture” in the FSA’s report about that bank’s failure. In the face of it, the board looked knowledgeable and transparent, and the CEO didn’t look too dominant. And yet the company went bust despite the fact that the “checklist” seemingly gave the “right” answers…
Two quick notes: we like reading and book lists, but this post by Farnam Street Blog is taking it into the obsession realm – unless one is really trying to build up his or hers anti-library. On Netflix: CEO Reed Hastings has some people confused with his comparisons of NFLX to Bank of America and the Oakland A’s.
Much noise has been generated by MidAmerican’s purchase of First Solar’s $2 billion Topaz solar energy project. Yes, MidAmerican is Berkshire’s utility/ energy subsidiary and this sizable acquisition has certainly been cleared by Warren Buffett. That does not mean that “Buffett is buying/ betting on solar” as a category. It is Berkshire taking advantage of an opportunity.
When we commented on share buybacks recently, we alluded to the “bad name” that M&A has received. We mentioned that, on average, M&A “destroys value” as defined by some academic studies and as seen in real life all too often. We’ve now come accross a Strategy & Business article listing “the top-10 M&A fallacies and self-deceptions”, and it’s a good list of reasons why M&A may go wrong, or may not be the best choice. Change a few words and some of the 10 points can be used to consider share buybacks as well.
Less than 24h after publishing our rant on Economic models, we get John Kay’s brilliant piece in our inbox – “A wise man knows one thing – the limits of his knowledge”. It is the ultimate summary of the many dangers of modelling in general, not just in economics – among which dangers we count over-complicating things, but most importantly over-estimating a model’s value as predictive/forecasting tool. In fact, as the article argues and as we’ve seen countless times, we tend to over-estimate models even in their ability to analyze the past, especially if one is asking the wrong questions. We also cite a few quotes by Taleb and an article on Edge.org by Emanuel Derman.
In another building block in the “Banking: Global Mess” series, the World Bank says in a report released yesterday that the Latin American financial systems still seem sound, but there are a few yellow flags. The embedded 3-min video interview (inside) is a nice summary of findings.
We highlight three articles about old truths and new business models. First the truth about economic models, according to the Scientific American magazine; second an old and huge sector disrupted by tiny start-ups; and third an entirely new business model that is becoming very relevant.
Today we have both a big, weekend-reading type article and a smaller one. The small one is a summary of Warren Buffett’s impressions about Japan, which he visited in another trip to an Iscar (IMC) plant abroad. The larger one is a New Yorker profile on Peter Thiel, the “dystopian utopian” VC/ hedge fund investor who founded Paypal and was the first outside investor in Facebook. No easy takeaways but he remains one of the most provocative thinkers in our realm.
Two follow-ups to recent posts: Not to be outdone by our recent post about reading lists, Booz & Co.’s Best Business Books 2011 feature is a sprawling selection of books covering Management, Economics, Marketing, Ethics and other business-oriented fields. And it appears that the speed of light is indeed in question, as recent studies were able to repeat the first experiment’s results.
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