The Contextualist

Crypto. Over? Hardly.

Many pundits and a few clients are settling back away from cryptocurrency. Ha-ha, they say, Another scam has gone bad. Except that this situation is MUCH more like the third phase of the Gartner Hype Circle, called the “Trough of Disillusionment.” Here the subject innovation has declined slightly, the strong hands come it to fix it, and the re-directed growth becomes a fatter tail.

Further supporting my claim of continued innovation, the accompanying blockchain technology is the backbone of other innovation. The crypto “securities” (see the SEC), provide an incentive for risky but hyper-functional and secure collection and storage of data. Much of this data will improve your life (think health). You think the hack reports are the crypto death knell? Not likely. The strong hands just wanted the riff-raff to get discouraged.

Stay tuned here—more to come.

The Prophets of Cryptocurrency Survey the Boom and Bust

Brave New World Dept. Not long ago, I was in Montreal for a cryptocurrency conference. My hotel, on the top floor of a big building downtown, had a roof garden with a koi pond.

Is my broker making me (good) money?

Taken from actual conversation—A client asked me to determine if he was
making good money with his broker.

He’s irritated.  He isn’t sure why, but he feels he should be DOING SOME-thing. “How do I know if I’m making money…? I mean, the account is up–is it enough… And how can I tell?”

My brother, younger than I by about 6 years, wants to continue. He struggles on the right questions. So I try to help.

“What are you asking? Whether you are making any money? Or whether you are making what you had expected? That’s 2 questions and a bunch of concepts…”

I pause gently, imitating a favorite teacher in high school. “Well, okay. My account was at $130,000 and now it’s 131,300…? So it’s up about $1300.”

“Over what period of time…”

“What do you mean?”

“When did you put it in… and is $130.3 the most recent account balance?”

“About six months ago. And yes.”

“Fine. So is that growth okay with you?”

“Not really. I’d like to be ABLE to take that much out every month or so. For cushion. Or maybe not. I don’t really need it.”

“Ok. So let’s see how much you’re earning as a percentage.”

“That mixes me up.”

“It’s not hard. You are just comparing the before-and-after figures–but as a percentage…”

“Ummm….ohhh,” he says. Why is it I that growups melt around personal finance?

“Relax. Write this down: Your initial figure is X. Your current figure is Y.  Now divide Y by X.” He’s doing it. I can hear his breathing quicken over the phone. Oh, the angst.

“Wow. That’s almost 100%. Great!”

“Well no. Subtract 100.” [It was obvious he had divided wrong. Common sense would tell you his account hand’t doubled. But I digress.]  

“Wow. 1%. Is that good?”

“Well, you tell me. Double that if you do has well over the next six months… that’s 2%. Is that acceptable to you for the year?” The line goes quiet. I count one, two, three, four… Then he speaks. 

“When you traded for me you’d make that in a day. Sometimes in an hour.”

“So, are you okay with that much over a year?”

“No. That sucks.” The wheels are turning. The smoke from the campfires becomes dense and grey. Choose your metaphor.

“So, what are you going to do about it?”

“Talk to the broker…”

“And you will say…?” There’s a longish silence. I continue. “Look the best thing you can do is study some trades that are making more than this.”


“I will give you a few stocks and symbols that earn double digit dividends.  Not work. Much less worry.”

“I should have him buy those.” Now he’s sounding a little victorious.  We hang up. And I realize something important. No one teaches us how to excel in investing. It is criminal. 

It took my brother a year to leave his broker.  But—his account is doing  very well and he understands how to check his ROI.

Don’t allow your broker fool you. Consider starting your own
investment recovery with your own  copy of “The Plan: The Machine
That Runs the World.”
Know how to run the business side of your life.

When Mobius Talks This Student listens…

Mark Mobius is the only person worth listening to on Global business impact. PERIOD. Are you shaking from all the noise about BREXIT?

Sit down! Be silent!

Don’t take me at MY word about Mobius—gracious no! Read this and ponder the value of cool-headed analysis based on real world experience. Then you will be able to exhale. Ah, the exhilaration of working with competent individuals!

A Brief Take on Brexit and Emerging Markets | Mark Mobius

This post is also available in: Dutch, French, German, Italian, Spanish, Polish On Friday, June 24, financial markets around the world awoke to a post-Brexit hangover. The United Kingdom had voted to leave the European Union (EU), leaving many investors surprised, including me.

Thought Leading Idea: As mentioned in ‘The Plan’

There is a reason that ranks Gretchen Morgenson in the Top 5 of business journalists. She has her finger on the main financial pulse and she articulates her observations as few genuine journalists do.

Here is an idea we both agree on—it’s using Return on Capital as the preferred (No BS) metric in gauging (real) returns.

A hard rain’s gonna fall…

How to Gauge a C.E.O.’s Value? Hint: It’s Not the Share Price

Everybody knows that chief executives receive bounteous pay as a matter of course. In 2015, for example, the median pay for a top corporate executive at 200 large American companies was $19.3 million. Less discernible, though, is who actually earned their pay the most by increasing the value of the companies they run by a commensurate amount.

Can Financial Services Stop Cheating Clients? (And other issues in adult financial literacy…)

 Republished from Medium

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Lots of people mistakenly believe that Dodd-Frank fixed
banking and investment failures.* 

They expected their financial circumstances to be better. Really better. Those in the know understand the flaws and the problems. Bad law due to a lack of experience in bank rates and reserves. Little compromise.  We are all leaving money on the table. 

The Wall Street Reform and Consumer Protection Act (HR 4173) avoided dealing with Fannie Mae and Freddie Mac. The actual culprits fanning the excessive and unchecked flames of lending. Congressional accountability took the last train out long ago.

This same institutional confusion has shown up in the electoral process. It is a multi-layered media carnival promoting a spectacle. Zany, indeed.

If there’s to be no serious discussion maybe we need to ask: What can WE do right NOW?

A few things–all action oriented. First, let’s get a grasp of a few things.

Genuine solutions abound to stated problems, such as income inequalityObama Has Power To End Tax Loophole For The Rich headlined Gretchen Morgenson’s article in The New York Times, May 7, 2016. She writes that closing the ‘carried interest loophole’ begins to equalize the tax rate and generates billions in tax revenue. Tax law changes have been a talking point for and by business for several years. Yet, the ideas sit, unactionable because no one carries the idea forward.

So there are solutions. It’s not hopeless. Do we fix ourselves? Yes. Sort of.

First, let’s recap. 1) Laws now are too many, wrongheaded, and poor cures. and 2) Real solutions are ignored. Do we need to look after our own finances? Yes. But, don’t turn to TV for help.

Advertisers always see what’s happening. The “Mad Men” Era, the years after the Second World War, changed America. It was on the rise. And so were the stresses of a new suburban lifestyle. They want you to know they have what you need. No headache and a return to civility at home. Phew!

Anacin Commercial

Anacin Commercial, circa 1960’s

Over the recent last decade, companies have abused the trust they built with ads like this. So if you buy blindly into this, you may find it dangerous to your financial health.

In the past big companies, like GE, helped ease our pains. They really did ‘bring good things to life.’ Banks were rock solid. Stocks were something only wealthy people owned. Then in the 1970s came retirement planning and dabbling with investments. IBM, bank stocks. Remember American Cyanamid

Now matured, the financial service industry seems more about piling up its own assets than enriching and protecting clients. Going public, like Goldman Sachs, stripped away the gentlemanly aspects of finance.

Today financial firms hire ad agencies to make them look sensitive. To show that they respond to bad things. They know they aren’t popular. But you have to put your money somewhere. Right? So today, the ads are about an aggressively passionate person (the new APP?). 

They tell us: You don’t have to worry! We’ve got you covered.

Western Financial Group “No Worries” 2008 TV Ad

Western Financial Group is a leading financial services organization in Western Canada. When you’re insured with Western Financial Group, you’ll receive a competitive rate, annual coverage review and a fair claim – guaranteed. Not to mention, peace of mind.

Here is a slightly more honest TV ad — by the Certified Financial Planner Board (CFP). It dramatizes the investors biggest fear. Being taken.

Just keep this in mind. A real CFP may allocate your money more skillfully. But that concentration only puts them in competition with brokers. 

The intent of all these ads is to regain your trust. As in, we are different. We will help you.  We WANT you to ask questions–because we have the answers you need. But they all also want you to believe that your financial plan is all about your investments

I am here to tell you that is not entirely true. Your plan is your whole plan. Not day trading to put money into a retirement account and some life insurance and a house. Not just enough to retire on. But a whole plan that you decide. An ongoing process that checks the path you set. This path includes your legacy. How you will be remembered. 

Lastly (this series is a current reader favorite).


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Yeah, right! Except that fees are not the most important aspect. Your returns, safety, or strategy are. What you pay — is still about the transaction. We should get way beyond that. But this is a start. Asking questions is the thing. Just not softball questions about fees or what you should buy.

The preferred strategy is for you and the right professionals to help each other

At the beginning, no discussion should involve math. There’s nothing for you to tally up. No returns to estimate

Until you have gone through a process that weighs your goals and those of your family, you will not give the stockbroker-financial advisor one thin dime. You will interview, you will set the rules. Your advisors will share their advice. Then, you will decide want to do. Once again, there is historic precedence for this. 

Beginning in the 15th Century or so, advisors were bankers. These men ‘tended’ sovereign kings and queens. They would float bonds to fund wars that would add to the crown’s power and wealth. If you think risk analysis is tough today, imagine waiting a few weeks for news to reach you by ship and horseback! 

Interesting Sidenote: Chess developed around the royal court. Early on, no one spoke directly to the crowned heads of state about anything. So how did they advise? The game acted as a sort of switchboard. In a game, Bishop taking knight might suggest the church was being a bit too assertive. If she received the illustration, I imagine the Queen would say something like: ‘Golly!’ And then swiftly thwart the opposition with a public beheading. 

As wealth grew, captains of industry became advisors, mostly to their clients. Royalty and other wealthy landowners. It was serious business with deadly penalties. As wealth became more democratized so did the laws overseeing and taxing it. There were many other changes.  

Today we look down on people carrying swords into meetings. Still, it is reasonable to have high expectations of victory. Wins that make us more money. But our financial victories are very rare for most of us—aren’t they?

Is there a better way to plan your modern life? Yes. There is.

Why not groom professional allies who will guide your financial and legal decisions with advice and consent? Why not hold every top advisory accountable? We can begin with the following three tasks.

Service is watching the changes in the markets that may change your returns and your tax burden — and then alerting you to a better approach. Not harvesting commissions on Buy/Sell orders.

Fiduciary is the professional acceptance of responsibility and accountability for your money. 

And scenario planning is a discipline for studying the impact of change. It might cover law, politics, culture and certainly the effects of business changes on each of your investments. Such planning provides feedback loop of information. This helps you manage risk and grow your money in ways you fully understand.

Asking questions about money really is the secret to protecting yourself. And you must carry it over into your financial literacy.


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Learn the right questions about finance and economics and Ask Those Questions. Then, leverage the carefully chosen professionals that you hire.

All of us today must do our homework because the regulators and the leadership can not. These ads might be humorous. But money and finance are no place for goofing around.

Want you investments to grow and your dreams to come true? Pick up your economic sword and shield and lead your professional allies into battle.
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Robert Bailey is the author of “The Plan: Running The Machine That Runs The World”
and Managing Principle of TrustedAdvisory More and Free Sample at:

Available Soon as a book or eBook on Amazon.
And at better bookstores.


What can a small, private girls boarding school teach the two national political parties about character?

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What can a small, private girls boarding school teach the two national political parties?

Going into super Tuesday, and then just afterward, both major parties had demonstrated their weaknesses, and shown signs of their representative illegitimacy.   The DNC’s vice chairman had quit, over a procedural disagreement. The RNC was going after its own leading candidate for the presidency.  He’s leading, but they don’t like him;  So they’re not going to support him.  And they are pulling out Mitt Romney to give a well delivered speech to denigrate him. (At least they know not to bring out W.)

Only the more intelligent pundits have pointed out the cognitive dissonance of these, and other related events.

On Wednesday night I attended an alumni get together for a girls private school.  This is the school that wonderful Teddy attended, and loves to this day for what it did for her and for her daughter Charlotte.  We were very happy to have been invited to remain for a dinner with the new head of school, a super intelligent and kind leader and educator.  

Still new to the school herself, one of her primary missions is to preserve the school’s traditions.

It occurred to me that the contrast between these two events illustrates another level of cognitive dissonance, between tradition and change.  It’s interesting to point out that the public entities are having the most difficulty with tradition.  The private entity, in open conversation, regularly discusses the balance between tradition and change.

Change in a girls boarding school pertains to things like cell phone use.  In this case, the school encourages a qualitative cell phone use through an Instagram page.  The regularly updated page was created and is maintained by student.  On it are student photographs of things that the girls love about the school.  That to me is an interesting metaphor for the balance of tradition and change.

The parties and the school operate on two grossly different world views. The private entity’s mission is about improving the community with a long view.  But, the public entities taunt ego and power. There would be a revolt if the values changed in the girls school. But the party leadership changes the rules to maintain control.

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Control does not mean victory.  Victory comes when the players all work together for the common good. Victory over Germany and Japan, or the 1980 US Hockey team beating the Soviet Union. It was called the Miracle on Ice. These made Americans all feel exceptional–that is part of the American dream, that feeling. It builds national character.

So what’s the point?  We can’t all go (back) to girls boarding school, can we?  And, not all of us want to be involved with the national parties.

Each of us can and should embody the best. That means our personal and our national best. This goal is the magnet that has made the country truly great, despite many deep and painful divides. 

What made the country strong, and the lesson from the girls boarding school, is about maintaining an admirable sense of community and a longer view of time and responsibility. 

By removing our own selfish whims, in favor of what is good for the country long after we are gone, we will ALL do better.

A Different Middle Eastern Mindset

Screen Shot 2016-01-11 at 9.54.56 AMWe need upbeat stories now. Leadership seems overwhelmed. Followers are disillusioned. Many people lack the courage to be themselves.

I saw this story and thought I would share it here.  “The typical Iraqi Christian has, over the last 30 years, been displaced four or five times,” says General Secretary of the Bible Society in Lebanon Michael Bassous. “Many of them will never be able to leave Iraq, for financial reasons.” Much of the world has been led by Christian countries for centuries–and yet the Christians are little better than the majority of Muslims at caring for their own. Why is that?

I think it is because we need to surrender our whims to the greater good; and work on our beliefs in our greater power, however we perceive him.

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China Illustrates “UnFree” Markets

China’s leaders want market growth; but they cannot seem to let go.
Freaky how much such action feels like Sarbanes-Oxley, Dodd-Frank,
general comments from the beltway. We don’t want bad ethics on &
around Wall Street, of course.

There are better approaches to solutions.

Why not reward success using a behavioral approach? Step one: Decide
what you want to happen with our society. Step Two: Create incentives
to develop ideas around that. Step Three: Pull together all the pieces;
education, tax strategy (heavily tax what you don’t want–drugs, deviant
sexual behavior, ocean pollution, etc,), government sticking to its business
mainly security and Constitutional measures. Step Four: Hire better
leadership. That is made easier because a smart country (think Sweden)
roots out the human dreck. No one likes a loser–to quote DT. Sadly, losers
don’t stand out in a crowd of losers.

Or, we can follow China’s example.

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The Trouble with Investment Ideas

Cliff Asness and economist Tyler Cowan discuss investment ideas, but also the problem people have with making investments. Just as I write in my new book, BETTER!, behavior beats all sensibility. To get to the better behavior we have to understand and run the professional relationship. As one local Newporter once said to me: “Gee. That’s sounds like a lot of work.” Why yes…

It is. And it is well worth it. We’re talking about our money and our purpose. So why skimp of money essentials?

Watch this for more.