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The financing of air disasters.

July 18, 2014

Any psychologist who is not too clinical will tell you that behavior is regulated by its consequences. If you buy a car and insure the driver and his passengers for $100 million in case there is an accidental death, you are manipulating the driver’s awareness threshold. You are invariably increasing his unconscious probability negligent driving behavioral that may end with such a fatal accident.

When the Malaysian airplane Boeing 777 flight 370 disappeared without a trace (probably a suicide 90 degrees smooth deep diving plunge that leaves no trace for years) the insurance co. paid the airline company much more money than the financial worth of the plane (air disasters are good investment). Considering that the airline in required by law to pay only a small amount of that money to the relatives of the dead passengers, the “blood profit” for the airline company remains a Hugh amount. Behavior is regulated by its consequences. Please don’t be stupidly sentimental about it, the human unconscious is very old and cold. Behavior will be regulated by the unconscious mind regardless of the pain and misery to people. Think, if you are a woman driver in love and you say to your friend for a year now, “I am dying to meet that handsome paramedic,” you are increasing the probability of a fatal car accident. My friend who started a new business a year ago repeated, “I may lose my business if I am not careful.” He did. Freud said about the unconscious, “This beast in the cellar of life is 4 times stronger than conscious awareness!

Another Malaysian airplane just crashed with 290 passengers dead! Please don’t go into all kinds of logical, mundane explanations.  Remember, these are human lives at take, not just your relationships, personal health or business. Hey, you want to be really smart, review all your behaviors and their consequences for a month. Don’t be stupid enough to challenge reality. Don’t expect good consequences from bad behavior, don’t expect bad consequences from good behavior, expect bad consequences from bad behavior and expect good consequences from good behavior. The mind hates this “stuff” so be careful when you decide what is good or bad behavior for you. Making rewarding decisions in life is the name of the game!

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What’s common to a CEO of a company and a football coach in the world cup in Brazil.

June 30, 2014

I post this psychological comparison between a CEO of a company in Wall Street and a football coach of a team playing in the world cup in Brazil for the purpose of alerting a diamond in the rough coach to excellence. I will describe both in my peaceful revolution blog on how to relate to people (drkinarthy.worldpress.com) and in my psychology of investing blog on how to make money (eliorkinarthy.wordpress.com). In my presentation at UCLA in 2011 on behavioral economics I stated that the behavior and personality of a CEO of a company trading on Wall Street is always the major variable in its distribution of share prices. If you want big returns you buy shares in great CEO’s like Jobs, Page, Brim, Besos, Zuckerberg and so on. If you want big wins in sports you hire great coaches like john Wooden. Great coaches and great CEO’s are rare!

I think that most of you believe that to relate well to people, make a lot of money and win games in sport is not that simple or easy to do. Well, I got psychological news for you, not only it is simple and easy to do but the world cup in Brazil shows that my CEO theory applies also to Coaches in Sports. Investors underestimate the importance of a CEO to their earnings and countries and team managers underestimate the importance of a Coach to the national team’s winning games. For example, today, the Netherland with skilled players almost lost to Mexico with passionate players. Both have average coaches that underestimate the importance of focusing on scoring goals, Netherland by spending a lot of time on passing and elegant play and Mexico by spending a lot of energy on running around and playing one-on-one for goal possession. Another good example of average coaches are Costa Rica and Greece. Their coaches emphasize long kicks towards the opponent field but without much success (training). Their long passes from one side of the field to the other were sloppy and hard kicks toward the goal were few and far between.

So far I haven’t seen a great coach in Brazil, may be Costa Rica but I doubt it. A great CEO produces great products and services. A great coach produces goals. Where are they? Agreat coach emphasizes team spirit and the following exercises in practice training: Practice successful penalty kicks toward the opponent goal frame untill all 11 players can do it well and at least 4 can do it focused 9 out of 10 times. Successful kicks that hit the corner net from 30-40 matters at least 50% of the tries. Pinpoint kicks from difference players and distances in the field. Practice perfect corners kicks to the goal area until you are blue in the face so important that practice is. And add great skill head kicks. Long arched kicks that change the focus of the game from front and back and left and right. Long, medium but not short quick sharp passes from player to player. Coordinated attack plan on the goal from 2 well-trained forward players who practiced the attack plan to the hilt. A great coach is in command of his teamwork and trains players in behaviors on the field and in a classroom until they are good. Such a coach knows how to teach his players how to convert their anger at an opponent’s behavior into goals. The key to a great coach is how he sets up the training sessions in behaviors, what he makes his team members practice throughout the year. He is a designer of victories! I would like to predict that Brazil will win the world cup in 2014 because it is good and a host country but I don’t know their coach and there are 4 additional variables in the world cup play of about 10% value each besides the 60% coaching that determine victory.

I am not a sports psychologist but I am a behavioral psychologist and soccer is a behavior. I watched European football since childhood. A great foot ball coach at the world cup tournament at the caliber of a great CEO like Steven Jobs should train his players to perform key behaviors 100%. They should practice to pinpoint corner kicks to focus on the best area for a goal. A great coach trains his players to avoid kicking balls back as a strategy, double their awareness and kick the ball to a team player in the open in a strategic position, keep a forward twins (trained together) always ahead and ready to kick to each other and to the goal, learn to pin point long kicks, keep records of each player’s total mileage and average speed on the field, pace the game fast with periods of play rests, practice a lot to aim the kick better (especially avoiding a kick above the opponent’s net, avoid penalty kicks above the goal bar, avoid one-on-one struggle for possession of a ball unless you have perfect skill and control of the ball (10% of players), practice receiving the ball and kicking it in fast from the air, repeat the sentence, “kick the ball into the net fast, scoring goals is the only purpose of the world cup, and accepting money as bonuses for goals is good.

I know, this is a long list of technical skill things to do to become a great coach. Don’t forget the psychology: Design team uniforms with subliminal messages to score and practice kicking toward the goal line with a big sign W(IN) in appropriated spots near the goal line. Create a team spirit by becoming a leader coach, friend, disciplinarian, father figure, a John Wooden, in short be the one out of ten! Go win games!

Twitter is trying a 280 words post.

June 26, 2014

Twitter changed from a 140 words tweet to a 280 words two-way tweet, an opportunity for investors to predict scientifically whether Twitter is a real company or a kid’s game. Do they have a future or not? Twitter analysts tell us that Twitter is experimenting with a 280 words message. I know the answer is they are not, they may not even know what I am talking about, but my question may still decide Twitter’s future: Did Costolo and Board randomly selected a control group that was asked to continue to use 140 words per post and an experimental group that was asked to use 280 words per tweet? Did Costolo collect the data for 3 months and published the study in a respectable journal? I doubt that Twitter is doing an experiment. If they are I will change my mind about the future of Twitter’s management.  Daniel Kahneman, the Nobel Price winner in 2002 established that trying to improve your economic outcome by doing what you believe in, using common sense, logic, reasoning and rationality tend to come short of cash in the modern market place. Twitter reasoning that it may become successful by adding 140 words to your post is called a fallacy of rationality in my book on investing. Did they do an experiment? I want to point out to all the investors who are now discussion the value of the 280 words tweet to wait for a scientific pilot study before they invest, especially those of you who are rational: You may analyse the move as a great move. I like someone who knows to tell me what kind of study is Twitter doing before it tells the engineers to design a permanent new 280 words platform? I hope Twitter’s decision is not based on Khaneman’s System 1 logic!

Advertising Will Be an Amazon Jungle.

June 21, 2014

The winning companies will be:

FIND the ONLY AD that COUNTS for more than 5%:  A rare system engineer somewhere  is ready to design a unique advertising platform, really unique in the field. The way it is happening now most companies are not getting it. For example, Yahoo uses a buckshot approach. CEO Mayer recently hired 50 engineers with the hope that one of them or the group will   Read more…

Twitter is twisted.

June 17, 2014

I put an order to buy 500 shares of Twitter when the share price decides to roll down about $10.00 to its $26.00 per share IPO. Am I testing the water? Not really, I know that the twisted state of Twitter in the next few quarters will get it down below $30 again, buy I am not sure that the share price would eventually get all the way down to its last resort support level. Such phenomenon is rare in an American stock market.

I have additional reasons besides boredom with the market right now why I placed an order to buy T at a ridiculous price, one is that there is less risk in putting an order to buy at IPO unless Twitter collapses and there is a no chance of that. Being twisted doesn’t mean being on the verge of collapsing. It means exactly what the word says – confusion, mixing rolls at the top, etc. CEO Costolo meddles with the rolls of COO and CFO instead of improving his own. He fires people left and right as if they screwed up the balance sheet and not he. Jack Dorsey the founder chairs a aboard in transition, too weak to lead or advice and too important to ignore. Die hard investors push the share price pass $37.00 for passion and no substance, so when the next quarter arrives the gap between predicting earning and actual earning will be too wide to bridge by excuses and a few heads will roll or twisted minds may turn neurotic not being able to accept what is happening and what could have been. Twitter is the most overestimated success story and the most underestimated potential success story today. The only reason I have a foot in the door is because I can see Facebook coming to the rescue and buying Twitter (the pair will be awesome together). Without Facebook to guide it Twitter will continue to play twisted management games until it is bought out or gets a new CEO. Great! Investing is a boring game without human incompetence at play. Right now Twitter is an exercise in futility when CEO Costolo thinks he know what to do and he doesn’t. Mr. Costolo, there are 2 CEO’s right now in the field that you can learn from how to run a great company, call Marissa Mayer or Mark Zuckerberg.

The Resistance to a New Business Model in the Economy.

June 11, 2014

By now I have enough evidence to show  that there is resistance by economists, economic departments in Universities, curriculum committees and the rank and file of  businessmen to psychologists joining the movement to modernize economics and finance. I suggest that PhD candidates study the reasons. I think they are fear of turf invasion, dislike of psychologists meddling in consumer-retailer relationships, conservative attitude about renovation,  and above all a sacred belief in Smithsonian economics as perfect. The Wealth of Nations has become a Bible.

I presented 3 papers at 3 universities in the last 3 years to experience the subtle resistance to improving the sacred old economics in the market place. Adam Smith wrote The Wealth of Nations on the rational relationship between Capital, Labor, Resources and Management (CLRM). Psychologist Dr. Kahneman discovered in 2002 that the relationship was not rational but behavioral. I discovered what was missing in 2011. I wanted to bring the old Smith model up to modern times by adding 2 more variables to the old 4 CLRM. The subtle resistance to the new business model became visible.

My behavioral theory of consumer-retailer relationship didn’t see the light of day in Europe. My paper at UCLA how economists curtailed the power of behavioral economists for 70 years in the 20th century made no waves. In a group of 30 attendees only one graduate students from China asked a question. My introduction of behavioral economics as a discipline at the University of Valencia, Spain was exciting to me, 2 out of 30 attendees asked questions. Finally, my paper introducing the complete new business model adding the social media variable interacting with the Technology variable in shaping future economics was accepted for reading at the university of Rome, but to my great disappointment no one challenged my model, no one asked questions, and so far my presentation has no follow-up.

Most presenting professors who make the effort to travel are financed by their universities and their research is fully supported. I am retired and each presentation I do at a university cost me about $10,000.00, including travel and all expenses. I pay my way because I care about the poor and I want to change marginal economics. At that level of dedication that I have to my new model of economics I expected more support in Europe and America. I perceive the indifference as resistance to change. This posting is a feeling posting for me because I truly believe that Adding the 2 new variables, Social Media and Technology to the old traditional 4 CLRM would have given a model impetus to eradicate poverty, crime and unemployment in the world. Oh, well, you can’t win them all!

AAPL split 7 to 1. Congratulation to my followers!

June 10, 2014

My awesome guidebook The Psychology of Investing: How To Play the Game and Win! was published in 2009. I used that book as a textbook in my first (and only) workshop that I conducted based on my book. In that book I wrote something that I shouldn’t have written about how easy it is to make a lot on money in the stock market if you don’t follow the “experts.” 2009 was a once in a lifetime opportunity that average investors like me had to buy Apple shares at around $21 per share. Today those Apple shares split 7 to 1. That means that if you bought 10,000 Apple shares in 2009 today you would own 70,000 Apple shares at $93 per share, or six and a half million dollars! And, if you sell for capital gain the price you initially paid for each Apple share would be reduced to only $3 per AAPL share because of the split! Most of the participants in my workshop dropped out in disbelief before the end of the class. Why? I could quote the Nobel Price winner psychologist Dr. kahneman who said that most students are too lazy to analyse things. But, I wrote in my second book on investing that came out in 2011 that you should not tell investing students that it is easy to make big money in the stock market because they won’t believe you and you would lose credibility with them! The fact that Warren Buffett said the same in his book The Snowball, that it was easy to make money in the stock market if you know what you are doing, I still feel that I made a mistake assuming that I can can tell the truth like Warren and be believed. Anyway, I just wanted to share with you about the split. Investors usually make about 7% extra money the first year after a good big split. Be happy you have listened to me about Apple’s performance in 2009. It is nice to get a $70,000.00 dividend at the end of  2014 that you didn’t expect to get. Apple is on a roll. Do a correct analysis before you buy. What are you waiting for, a winning lottery ticket? That’s gambling and I don’t believe in it. I don’t like to take risk with my money! Read more…

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