The Issue of Hedging

In finance the definition of a hedge is making an investment to reduce the risk of adverse price movements in an asset.

In the wake of the JP Morgan severe hedging loss of at least $2 Billion dollars, that has made fear in the markets reemerge at a very fast pace, I wonder how this was even able to happen.  In the text of the lengthy Dodd-Frank legislation and the Volcker Rule, there are major liberal uses of language that annihilate the intent of the rules passed by the people in DC. Hedging against a single security is not allowed by banks, but somehow a bank has the ability to hedge against an entire portfolio, something much more risky!

How did this happen?  The short answer is lobbyists, the long answer is different, and needs to be answered by posing the question should banks be allowed to hedge?  The INTENT of the Securities and Exchange Act of 1933/ 1934 was to eliminate risky maneuvers by banks to protect the people who had their money in these supposedly strong financial institutions. If anyone is to hedge, doesn't that already say that the risk is too great?  There are very few if any sure things in life, but anytime a hedge is put into play, the strategy is on the basis of limiting a potentially devastating risk.  To an individual, I say go ahead and take great risks, and hedge the even greater risks.  To the financial institutions that make markets and provide liquidity and stability for global economies, I say stay out the risk business altogether.

One might respond to this by saying that banks ALWAYS take risks when they lend money to people to buy houses.  This is true, but the risks are not large, nor are these risks over leveraged when a home loan is created.  When a qualified buyer  purchases a home, a sufficient down payment is made to ensure that the buyers cash flow or other money will be able to cover every payment for the life of the loan.  At the height of the housing bubble that crashed and brought us to where we are today, people were given the opportunity to buy houses that they were not qualified to own or pay for with very little if any money down! In fact, there were loans that gave out 110% of the "value" of the house.  Those risks were evidently unacceptable, the problem ballooned, the bottom fell out, and here we are.  Housing prices have stabilized to the point that banks lending habits can't really be considered risky.  

Banks should be restricted to only the business that banks have thrived on for the better part of a century.  Hedge Funds, Private Equity Firms, Venture Capital Groups, and retail investors (not quite the 99%, but definitely not the 1%) should move cautiously when making risky investments, but at least these parties gains and losses do not affect the global economy like a big bank might in the event "something goes awry".  If banks took less risks, people would have more faith in them, that is just the logically sound way to approach the new investment world  that we live in.  Regulations on risk need to be strictly structured by the legislature. Loopholes need to be as narrow as possible to uphold the intent of the law.  Finally, everyone needs to be responsible for investment actions that either make a ton of money or lose a ton of money.  Finger pointing never leads anywhere.  

Xanax Moms: The Real Housewives of Beverly Pills

I had this really well crafted blog about mothers and fathers who roam the streets of Beverly Hills, and any other major upper class neighborhood in the United States who are hopped up on Xanax, and consider that little pill a problem solver.  I had funny names for Xanax, including "Beverly Hills Tylenol", "Mother's little helpers" and my favorite, "Beverly Hills Breakfast." This blog was all ready to go, and something in the blogoshphere had other plans for this post -- so it was deleted magically.

The main idea of this post was that people are over using anti anxiety pills at dangerously high levels without any regard for their own health or the health of people around them.  People are vilified for drinking and driving, texting and driving, and driving without a proper headset for a mobile phone; yet, too many people are operating heavy machinery or making expensive purchases on Rodeo Drive under the influence of Xanax.

These pills are perceived as problem solvers, when in reality they are problem procrastinators.  We are all very good at procrastinating.  It's part of our nature, I do not know why, but it doesn't really matter.  Something goes wrong at school, a parent pops a Xanax and meets with the principal, the $500 hair stylist doesn't have the most recent issue of US Weekly - Xanax is there, and popping a pill while going to a place of worship is just as important as the pair of Christian Louboutins you will be wearing.  (Even though I fully condone taking any mind altering substance before worshiping and Deity)

I have recently been experiencing this rampant Xanax popping by so many people, and they see it the same way that I might see taking an over the counter headache medication.  It's absurd that this is the case, and it's even more absurd to me that this is beyond recreational use of drugs, because it's regimented in a way that people go to Urth Cafe (my new have coffee spot, sorry CBTL), order their latte and pastry, down it with a Xanax and their day begins.  Not the breakfast of champions, unless a champion is a zombie walking around under the influence of "the little pill that could."

The Art of Blogging

Blogging is awesome. If you have gotten this far, and are still reading, clearly I had your attention earlier. The 21st century version of a public diary has enabled millions of people to communicate thoughts, feelings and ideas to other people all over the globe. Blogging can be done from the comfort of one's bed, a coffee shop, a desk at work, a desk at school, a plane, train, or automobile. It can be done from anywhere.

Broadcasting anything online is what some may consider a risky venture, but I have always been of the opinion that if you post anything online at any given time, you ultimately wanted it to be public, no matter what the repercussions. It is human nature to talk about other people, and it is even more natural to want to know about other people, yet I find myself most fascinated with myself. I never have, and probably never will care about what anyone thinks about ME. That is not to say that I will not put strong effort into any piece of work I do for somebody else's approval, however, it does mean that if you care to gossip or discuss my personal life amongst yourselves, go for it.

I am one of the happiest people that I know, and the people who matter to me know it, with or without a blog. With blogs, there is no magical fine line to be drawn between permissible and unacceptable. Anything written here is fair game for anyone to discuss, disagree and dissect.

Blogging allows people to express themselves freely, and uninterrupted. It enables a message to be delivered in the form that people might not get whether it is via twitter, Facebook, or a giant plane in the sky. Controversy can be caused, but this controversy can be controlled, whereas a controversy amongst people and some loose cannons can run amuck easily in an uncontrolled atmosphere like Taco Tuesdays.

If you want to keep something private, keep it private, if you have a problem with someone or something, address it, and if you just have something to say, blog it. Just remember, what you say can follow you forever, like this one thing: In second grade I confessed to committing adultery: I thought it meant acting like an adult.

THERE ARE NO ACCIDENTS - NOT MY WORDS, BUT THEY'RE WISE

http://domainnamesales.com/sevenmile/2012-02/there-are-no-accidents/#content

Oops... They did it again

The more you say something, the more people will believe it. It’s baffling how often the phrase “Don’t fuck up” is uttered; yet so many people continuously fuck up. The context of this very simple, somewhat sarcastic non-euphemism is not something that needs to be dissected in order to properly comprehend. The value of those words is precisely what they are worth. Now, with the presidential election heating up, or cooling down depending on who the flavor of the week is, it has become obvious that a good candidate is not present. If someone wakes up one morning and says that he or she is going to attempt to run the free world, my response to that person would be: Don’t fuck up.

In the feeble group of republicans who are trying to defenestrate Obama, the egregious gaffes that have been committed by each of these unqualified people have made me wonder if these people are consciously trying to disregard that universal piece of advice to not fuck up. The hateful ad campaign that Rick Perry released regarding a “war on religion” that he claims Obama has waged, in which Perry attacks gay people who serve in the military, should be the mistake that costs him the election. This action on his part may also destroy his political career.

In today’s robust media driven age, it is critical for people to be very careful about what they say. Politicians are scrutinized more than ever. Although hateful words are equally hurtful when they are said by anyone, Rick Perry’s remarks express his desire to lose this election. It may be the case that Herman Cain’s disturbing sexual allegations are just part of the political process. It is not the case that each of these soon to be former candidates listened to the simple words of wisdom. They fucked up.

The Truth Can't Kill You: So Swallow It

If you have read the news recently, most articles written about almost any topic have a lot to do with fear. Globally, topics regarding the European debt crisis, the turmoil in Africa, disease control in Asia, unemployment in the United States, and the potential complete cancellation of the NBA season all have one common theme: fear. It is human nature to have fears. There are several fears that affect people from all walks of life, of course, fears are not limited to people.

Why is fear the driving topic of news stories that carry many conversations in this day and age? Furthermore, what are people most afraid of? The answer is simple, but this answer creates a much bigger question. (A question that cannot be answered in one blog post.) The answer is that people are most afraid of the truth. If we are to base news on real events, and the people who report the news are simply stating facts for the rest of the world to digest, fear of the truth is in fact the biggest fear of people.

Op-Ed articles are written to stimulate thought and debate about the news, yet most of them involve the theme of fear as the force of the opinion piece. The pundits writing these pieces form opinions around current events and the impact that they may have on society. The impacts discussed are usually a negative event that could transpire. The situations addressed are all based on issues that have occurred in similar situations or how similar things could happen unless something is done about the current situation.

We are faced with the daunting task of absorbing this fear that is placed in front of us, and we cannot help but live in fear of the truth. Fear of truth does not only present itself in the form of a news story. Even if you lived in a bubble, completely insulated from news, our biggest fear would still be the truth. Is it that we don't want to know what is true, or is the truth sometimes too unbearable for us to live with?

If things were more like math, where 1+1 always equals 2, the truth wouldn't be so bad, it's the fact that emotion plays a huge part of what makes us afraid of the truth. What if it made us upset that 1+1 equals 2? Would we be afraid of that truth? What could we do about it? There's very little to be done once you know what is true. Only some things can be changed, and even in some cases, when those things appear to be variable, those things often are not.

If you accept reality and are true to yourself, only then will you no longer be fearful of the truth. If you really put some thought into it, the only time that you can actually fear the truth is when you had some control of an outcome, and if that outcome is controlled exclusively by your efforts, you will never be scared of the truth as long as your efforts were really efforts - otherwise you have already lied to yourself and that's a much bigger problem.

The Legacy of Steve Jobs

One of the greatest innovators in American history has died. He left this world a much better and more connected place than anyone could have ever imagined. The man was brilliant, he was a minimalist at heart with a multitude of ideas. He had the impact comparable to a religious leader to the world, of course with less controversy than religious leaders usually carry.

Steve Jobs is someone who will never be replaced, he pursued his passion by dropping out of college after one semester to start Apple out of his garage. He will be remembered for repeating excellence. He started with the Apple computer, he revolutionized the computer industry for consumers and developers, he then changed the music industry altogether with the invention of the iPod and iTunes, he then revolutionized the mobile phone industry with the iPhone line and then most recently, the iPad.

He reinvented the way we communicate, create and consume. He saw where the world was going; he chose to look where people will be to develop a new product instead of what already exists. The millions of people who have bought Apple products have come to rely on his products.

His death was inevitable. He battled pancreatic cancer, and fought very hard until nearly the very end. He even knew when to step down as CEO of Apple. He relinquished his position almost two months ago, he epitomized brilliance. The sad passing leaves a legacy so great: a visionary, a family man, and a company that has become a staple to most of the world.

He was the pioneer of our time. His products have changed the way we work, play, and communicate. His charisma left every audience in awe, his influence permeated corporate America while being an entrepreneur who never saw a barrier as a wall. He will be missed, but his impact lasts forever.