Risk Management

The world should learn that with todays business world we need to protect ourselves from risk. Simple Risk Management is a major key to success.

In our industry, most people don’t have any risk management and conversly get killed with “cash’ prices when they tank. Yet, they load up and do it all again the next turn swinging large for the big homerun.

Big Win - Big Loss = small profit (or negative profit)

It is ok when you get the big homerun, but stupid to follow with exposing yourself to risk to allow in the big loss. Why not just protect yourselves?

Futures and Options allow people to price protect their business in the commodity industry, yet are rarely used. They are complicated, but worth the knowledge if applied wisely.

Medium Win + Small Win + Small Win = + profit (regardless of size)

PROFIT IS STILL PROFIT!

Why else would we be in business?

Bankers Never Unite

It is amazing that in Canada we only really have a handful of major banks to deal with. The largest being TD Canada Trust, Royal Bank, Bank of Montreal, Scotia Bank and a few others.

This leaves us in Canada with fewer financing options than the United States. While there are few “LARGE’ chains for banks there, there are many small to mid sized banks to deal with when you need money!

No wonder there are so many entrepreneurs running around making millions of dollars in the USA and so many Canadians who are not making any money. We have to have an idea that fits into the mold of Canadian Banks Security or as I once heard it called:

“Thinking Inside The Box’

Being an entrepreneur, I would personally want to live with some free thinking “lenders’ who would do the opposite!!think outside the box! Let me say that again!

THINK OUTSIDE THE BOX!

Why is an idea that has potential need so much equity. The current system means that good ideas can be punished by having no assets. Many good ideas have remained dormant with no money until someone with money shows up and exploits it. What a waste!!

We had something going with a new venture capital company in Canada in LaunchWorks, but they died down with the drop in tech stocks. Maybe they should have diversified into other areas to lay off some risk. Either way, good or bad, they at least tried to give others a chance who could not get bank financing due to credit restrictions!

The MP3 Wave

 

I have been running out of new movies to watch, so I started watching Die Hard 2!. It was funny to see how that in most NEW movies, they try and show you some of the NEW TECHNOLOGY that is coming. That movie is pretty old, but is showed the following stuff:

1) Pager - How Bruce Willis was using a pager to keep in touch
2) Fax Machine - How you could actually transfer data over a phone line quickly
3) Airplane Phone - Being able to keep in touch with his wife while she was in-flight!

This got me thinking about how technology has changed so much! Since I am a music buff!!.I wanted to do a little something for the MP3 and how it has entered my life!

While most of the world has now heard of the MP3 format of music, it now is starting to enter all our lives with full force! My experience of the MP3 is basically this:

1) Heard that you could convert CD music (.wav format) into a smaller format called MP3. The MP3 had a similar quality to CD if compressed properly and was about 10 times smaller than the size of a CD equivelant song.

2) The start of being able to find MP3 songs on the internet in IRC (Internet Chat Relay) rooms. Often you would have to download several portions of the song and then fit them together.

3) Next came the ability to take an MP3 formatted song and convert it back to CD (.wav) format. This was great because I could take all the songs that I wanted and make a VARIOUS CD similar to the way I was making tapes at the time.

4) Introduction of share-based software (NAPSTER) that allowed users to download MP3 songs from other users with the same software. Once the software became more popular, the amount of music that could be downloaded was increased.

5) Hardware manufacturers created PORTABLE MP3 players that used flash memory to download off your computer into its memory so that you could listen to songs with the portable player.

6) Hardware manufacturers created HOME STEREO units that could play the MP3 format in your house (we just picked our first one up yesterday!)

7) CAR AUDIO players could play the MP3 format (I use that in my car now)

The small size of the MP3 format allows individuals to have 200+ songs on a CD versus having 20 maximum with the typical (.wav) CD format.

Now, every faction of my life that has music has been invaded by the MP3 format. It has really changed the way I listen to and gain music. It is quite a bit more advanced than the technology shown in Die Hard 2!, so maybe we should pay more attention to the movies!!..they just want to showcase what we should be spending our money on!

Hedging Is For Pansies

This is the article I came across the other day. It ROCKS!

Hedging is for pansies!

TEN GOLDEN RULES OF TRADING:

1 Never take a loss - You’re not here to lose

2 If a position goes against you: DOUBLE UP! !“ It always comes back

3 Always trade volume - If a deal is right for a small amount, it should be right for a large amount

4 Risk everything on one deal - Why do a million deals for a dollar when you can make a million in one deal?

5 If you can’t convince your management to back your deal, bullshit them with words that end in -tion - No one in the business is any smarter than you are anyway

6 Always use the best charts and moving averages - Your dentist can supply them for you

7 Never deal with friends - It’s alright to stuff a stranger, never stuff a friend

8 Hedging is for pansies - If you want a hedge, start a garden

9 If you don’t know what to do, GUESS - You’re here to deal, not to think

10 If you lose money, don’t worry - It’s not your money anyway. Run up your expense account before they fire you!

My Friend Jack!!

Today I did some late night talking with my friend “Jack’, “Jack Daniels’s!

He didn’t have much to say and frankly neither did I. We sat back on the couch and said nothing.

We went outside and sat on the patio for a while and once again, said nothing.

Tammy was wondering what in the hell I was doing with my running around and I told her the same thing as I told “Jack’, nothing.

Now I think that I am in shit because I should have said something instead of nothing.

If “Jack’ would tell me something, maybe I would have something to say!

World’s Free Another Day

While today was supposed to have multiple terrorism attacks throughout the world, nothing major happened. The world moved on with several moments of silence for the fallen of last year’s attacks.

I was working today and found something in my office that made me laugh. It was a piece of wood with the following engraving:

If you can keep a cool head in these times, you must not understand the situation!

It is only there to make you laugh at human nature. Often people find themselves ignorant to their surroundings due to their mis-information.

Another tidbit of info in the office was a joke called “Hedging Is For The Weak’. It goes through 12 reasons not to use price protection in today’s markets. Of course, they are all OPPOSITE reasons to use price protection, but I found myself rolling with laughter!

One of the ideas was that hedging is for gardeners. Another was why invest in a million different deals with low risk to make a million dollars when you can invest the entire amount in one deal!

On the lighter side, Tammy and I are really enjoying our time together even though we both work enough that it is less than we would like. Quality time only is our new moto!

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