You went where? You studied what?


I may not be telling you something in this blog you don’t already know. Or haven’t already heard or read. In fact, I do hope that you’ve heard this elsewhere recently. Liberal Arts lives. I grew up in the securities industry, and have met more than my share of finance majors. I can’t count how many parents I’ve spoken to that were pushing their kids towards schools with stellar reputations for the finance majors they churned out. This isn’t even the traditional, and broad, economics education of old. It is a focused, blinders on, pursuit of a degree pointing students to a very specific career path. Finance. That’s where the money was going to be, so why learn anything else. And if you wanted the best job, the thinking was, this would give you the preparation employers were looking for. Someone who could step right in and understand what they were looking at when presented with a stack of balance sheets to analyze.

I was a Political Science major. Actually at my school, Clark University, it was a Government major. I planned on being a lawyer. Midway through my freshman year I decided not to go down that road. The question became “Now what?” I was lucky enough to land a job at Bear Stearns in the Management Training Program. This allowed me to get exposure to a broad array of roles within the firm and decide which route to go down. Investment banker was the path of choice for many, but those many were primarily business and finance majors. Interestingly enough, I went on to spend 14 years in the commodity futures pits, where many of the most successful traders had never graduated from college, or even attended at all.

More recently, while at Bloomberg, I had the opportunity to speak to a group of students from my alma mater. And they were? You guessed it, finance majors. In fact, since I left, Clark added a Graduate School of Management. Go figure. This was a school known for its Psychology department, riding the coat tails of having had Sigmund Freud speak there. And students majoring in Government, Philosophy and Sociology were what the school churned out. The current business school students had no connection to this. They thought I must have been a business or finance major as well, and they were very interested in my career path.

The question I enjoyed answering the most during their visit was, “What was the most valuable thing you learned at Clark?” I answered that as a liberal arts major, Clark had taught me how to think. Not to think about the value of a security, but to think about the world around me. The world and the people around me determine the value of a security. My own approach to trading is to look at charts. I use these charts because they are displaying price, and price is the culmination of everybody else valuing a security. Many of those people are finance and business majors. I’m happy to let them interpret a balance sheet. I just need to look at the results of their analysis on the charts to make my own interpretation of future price and value.

I like to simplify things as much as possible. I explain to students when I teach that my opinion of the markets is they are large experiments in sociology. What is the crowd doing? If more people are buying the price goes up. If more people are selling, they all believe the security is overvalued and the price goes down. Having this perspective allows me to not have to try to compete with the finance majors at their game. It allows me to understand their analysis results without needing to drill down and understand all that fundamental information. That’s my game.

This isn’t to say that I have no interest in the information. After all, I named my blog “The Story Behind The Picture.” I do think it’s important to know the information. I just accept that I won’t know it all, and I definitely won’t know much of it as quickly as others. Students have heard me say many times that I take for granted that any information I have, someone else has more and had it sooner. Then those people trade, set a new price, and I try and determine whether that price indicates the probability of the security going up or down from there.

So where does the liberal arts education come in? Well, when I try and ascertain the information, I can process more than just a balance sheet, supply chain, and current regulatory influence. I can find a way to put the information in real world terms. Things that are simple to relate to, often even obvious after the fact. There are no ‘blinders’ involved. I can think about it from a political perspective, a philosophical perspective, and a sociological perspective.

What has made me smile recently are the number of news stories that are now encouraging the same. America Online (AOL), Adobe, and Paypal all had liberal arts majors among their founders. Steve Jobs was a college dropout, we all know. What many don’t know is that he dropped out of a liberal arts focused university. And that’s just tech! Many of our great pioneers of recently successful (understatement) companies, weren’t focused on tech. And many of the most successful hedge fund managers are now focusing on hiring liberal arts majors. In fact, one of my favorite young colleagues at Bloomberg, who I had the pleasure of teaching and mentoring was a Classics major. He just landed his dream job at a hedge fund. I always said, “He gets it.” They must have said the same after his interviews.

Recently Mark Cuban, who’s had a bit of success himself, said during an interview with Bloomberg that we need more liberal arts majors in the next 10 years. He spoke of perspective. One of my favorite words. My first blog entry described the Friday Wrap’s I conducted at Bloomberg. The idea was for the younger employees, most of whom were finance and business majors, to gain perspective on the markets. What makes them move. How to interpret everyday events and find a way to translate them into investment ideas.

And that’s what more and more people are realizing. That it’s not the early “blinders on” focus that matters. It’s the ability to grasp the ‘big picture.’ Look beyond some basic finance or business education training. Look outside the balance sheet and supply chain. Grasp the impact of everything around you. This is what leads to broad investing success. It exposes opportunities you might not otherwise see. It allows you to think, not just crunch some numbers in a repetitious fashion. The more you look around, the more you think, the more you learn, the more you’ll make. That’s what makes you smart, the MBA is merely some icing on the cake.

Focus People!

This one’s been tough. I generally look for a pertinent news piece or an event, even as simple as a plane flight, to trigger a topic I’d like to cover that is relevant to the markets or trading and investing. It hasn’t been easy the last couple of weeks to get that spark. I don’t think anyone would be surprised, given that the daily headlines and much of our daily conversations revolve around the first 2 weeks of the Trump presidency, and speculation about what the next 4 years (- 2 weeks) will bring. These discussions seem completely focused around politics and the unfortunate us vs. them our country has become. We’re as separated as we’ve been in a while, but while unfortunate and disappointing on a personal and social level for many, there is more to it than just right vs. left, with a few curveballs thrown in.

I realized that this is the most pertinent topic out there. Not to inject my political opinions or leanings, and certainly not to editorialize on the moves President Trump has made. Honestly, I can debate both sides of many of them to some extent. Thank you high school debate class. But all of what’s going on in the news, as divorced as it may often seem from our business conversations, is affecting us all monetarily on a daily basis. And yes, there are cycles and trends at work as there always are, you just have to want to get away from much of what is headlines, and look at the same things we always do. It’s been more difficult as it’s all just moving a bit faster these days.

You may have missed some of the stories out there related to what we try and do, have an advantage in our decisions, or at least learn more perspectives and seek more information before making decisions. We can start with the US Dollar. From the chart below we see two things very quickly. First, the dollar is almost exactly where it was when the election was held. So we’ve survived the news cycles both pre and post inauguration and effectively gone nowhere. Second, we’re 4% off the high reached the first week of the year. Not a major correction by any means, but it certainly has the chart looking less bullish in the short term.


The major market indices are trading at record highs. Overall perception (which of course is reality) is not that the sky is falling. Respected technicians, Louis Yamada among them, are calling for corrections before we head even higher. At the same time, it is not difficult to find calls for doom and gloom. I won’t argue against a gold rally (I’m a gold bug at heart) but I’m not sure I’m on board with the gloom and doom crash ahead.

We’ve got Snap Inc., parent of Snap Chat, indispensable to my previously mentioned 15 year old daughter market signal, looking forward to a $3 Billion IPO. Crude Oil is near the top of its recent range with many calling for a breakout. I personally think crude is a great mean reverting market by nature once it’s found a range, so I’m not a believer. Doesn’t make me right…Does make a tradeable time in that market.

In the area of cool things that always catch my attention, Lady Gaga had a spectacular show including over 300 synchronized drones. Way cooler than synchronized swimming, and much more important to so much of our corporate future and lives in general. There is no current shortage of articles about self-driving cars. I think that these will be like cell phones, going from gimmick to integral part of our lives in less time than anyone would have imagined. From fascination to need at 100 mph. And when you really want to learn about something that will affect the way we live and work, check out the newest WOW! The Hyperloop. With Elon Musk helping drive this one (pun intended), I’m not going to be the one that doubts the viability, or the timetable for when you and I can use it.

My point is, we are easily distracted, and the media on both sides is doing a great job of grabbing our short attention spans. But success in investing and the markets is driven by getting past the distractions. Most often, the volume isn’t as loud, but the noise always exists. As always though, there are plenty of places to look for opportunity. There are plenty of ways to conduct traditional research and analysis, or if you’re more of a gambler by nature, take a shot. The difficult part is having confidence in the tools that have always worked for you, and understanding that they are more powerful than network news cycles. IPO’s like Snap deserve attention and analysis. Earnings season will always be earnings season. These are constants. They are constants with Republicans or Democrats having the power in our government. They are constants through foreign currency manipulation accusations. And keeping an eye on trade agreements has always been an important thing to consider.

I always go back to my charts, because they help me filter the noise. Others tell me it’s voo-doo, and that’s fine as well. Different techniques breed different opinions. Different opinions breed active and healthy markets. In my last blog, I touched on making a plan. If a type of plan has worked for you previously, then focus on that same type of plan. Understand that it has worked for you before. It may not work every time, but it will work again. Be consistent. Put on some noise cancelling headphones (figuratively). Set them to pick up the information that you find pertinent, and cancel out the rest. There will always be noise. Sometimes quieter, sometimes louder. It’s still noise as it pertains to your investment decisions. Politics unto itself is not noise. It drives our economy. The hard part is figuring out what are the drivers and what is noise…to you. But through it all is opportunity. And that is what we’re after. Now find it, and you will quickly realize that all that our country is going through, on an investment basis, is giving you information to absorb, process, and hopefully profit from. Then sit back and take in the rest of the noise. Act on it socially if that is what drives you, but don’t let it interfere with your investment plans and goals.