Work Rules! by Laszlo Bock

For human resources / people operations specialists and anyone who leads his or her team:

https://www.workrules.net/

AI in the investment management industry

To avoid competition with AI, note that humans are better at:

1. Common sense (that is hard to be verbalized)
2. Social skills (to understand other people's behavior)
3. Creatibity (to create a story in the future that cannot be generated only by using the past data.)

Programming for kids (free)

If you want to start teaching programming for kids around 6 years old, the following apps are great to begin with:

On iPad (App Store)
http://www.daisythedinosaur.com/
You can choose actions (move, turn, etc.) and manipulate a dinosaur.

https://www.gethopscotch.com/
After enjoying app above, I'm sure you want to do more. Then this is a great app for you(r kids).

---

If you want to do even further, then the following two would be great choices.

http://scratch.mit.edu/
ScratcJr (on iPad, App Store)

http://www.tynker.com/

Source:

https://www.edutopia.org/blog/7-apps-teaching-children-coding-anna-adam

How to Win Friends & Influence People by Dale Carnegie

How to win friends & influence people:

Part 1 (Influence people and let them move.)

Principle 1: Don't criticize, condemn, or complain.

Principle 2: Give honest and sincere appreciation.

Principle 3: Arouse in the other person an eager want.

Part 2 (Let them like you.)

Principle 1: Become genuinely interested in other people.

Principle 2: Smile.

Principle 3: Remember that a person’s name is to that person the sweetest and most important sound in any language.

Principle 4: Be a good listener. Encourage others to talk about themselves.

Principle 5: Talk in terms of the other person’s interests.

Principle 6: Make the other person feel important - and do it sincerely.

Part 3 (Persuade them.)

Principle 1: The only way to get the best of an argument is to avoid it.

Principle 2: Show respect for other person's opinions. Never say, "You're wrong."

Principle 3: If you are wrong, admit it quickly and emphatically.

Principle 4: Begin in a friendly way.

Principle 5: Get the other person saying “yes, yes” immediately.

Principle 6: Let the other person do a great deal of the talking.

Principle 7: Let the other person feel that the idea is his or hers.
Principle 8: Try honestly to see things from the other person’s point of view.
Principle 9: Be sympathetic with the other person’s ideas and desires.
Principle 10: Appeal to the nobler motives.

Principle 11: Dramatize your ideas.

Principle 12: Throw down a challenge. (Ignite rivalry.)

Part 4 (Change others.)

Principle 1: Begin with praise and honest appreciation.

Principle 2: Call attention to people’s mistakes indirectly.

Principle 3: Talk about your own mistakes before criticizing the other person.

Principle 4: Ask questions instead of giving direct orders.

Principle 5: Let the other person save face.

Principle 6: Praise the slightest improvement and praise every improvement. Be “hearty in your approbation and lavish in your praise.”

Principle 7: Give the other person a fine reputation to live up to.
Principle 8: Use encouragement. Make the fault seem easy to correct.
Principle 9: Make the other person happy about doing the thing you suggest.

Seven Rules For Making Your Home Life Happier

1. Don't nag.
2. Don't try to make your partner over. (Admit other's strength.)
3. Don't criticise.
4. Give honest appreciation.
5. Pay little attentions. (Care about your significant others.)
6. Be courteous. 
7. Read a good book on the sexual side of marriage.

References:

http://www.hubspot.com/sales/how-to-win-friends-and-influence-people-summary
https://en.wikipedia.org/wiki/How_to_Win_Friends_and_Influence_People#Seven_Rules_For_Making_Your_Home_Life_Happier

---

Buy this book at:
Amazon.com

Daniel Kahneman - Nobel Lecture - Nobelprize.org

Daniel Kahneman - Nobel Lecture - Nobelprize.org
http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2002/kahnemann-lecture.pdf

Operations of humans:
perception -> intuition (intuitive judgment) -> reasoning


Humans' bounded rationality: Humans make decisions by limited abilities of perception and reasoning.
(bounded rationality ≠ irrationality

1. Changes matter; states don't. (short-sighted)
2. Averages matters even when you have to sum up.

Dark Pools / Scott Patterson

The biggest, most front-line, best connected (to politics, regulators, pipes, etc.) player wins the competition. Is it fair? Is it going to be a fair competition? Is it good for our society?

We have the following kinds of players now:
1. Passive
2. Smart beta / factor investing
3. High Frequency Trading, Technical
4. Quants, valuation model-driven (e.g., residual income model)
5. Traditional Fundamental Bottom-up Research

Even for the type 5, investment professionals have to have help from computer systems to compete with other players, like chess players.

Most importantly, computers should be used by someone who really knows what he/she is doing.

amazon.com

amazon.co.jp

AI (Artificial Intelligence)

Level
1: Simple control programs (Input and output relations are pretty simple.)
2: Classical AI (many input and output patterns with assumptions, explorations, and knowledge)
3: Machine learning, i.e., learning rules and knowledge by using sample data (e.g., pattern recognition)
4: Deep learning, encoding and decoding, i.e., learning and then making rules by themselves (Finding concepts and feature values, which implies which data should be focused. It could be done by using Monte Carlo.) A part of representation learning.

Boom / Generation
1st (late 1950-60's): simple deduction/inference and exploration (search tree)
2nd (80's): knowledge input oriented
3rd (~2010 and after): machine learning, deep learning, IBM's Watson, singularity (Machines' CPU power exceeds human beings. AI create new and better AI and then it goes on with an accelerated speed.)

Challenges to understand humans' concepts

1. A body with various sensors as human being has.

2. Grammar

3. Instinct

4. Creativity (interaction with external environment, trial and error)

Does AI control humans?

Human = Intelligence + Life

Does AI create lives? If AI has its life, then it wants to keep their lives, defeat enemies, and create their own "children".

Irreplaceable human jobs

1. Management (e.g., CEO, division head) who has to make a decision with limited info, time and other resources.

2. Human interaction needed (e.g., some sales, shop clerk, restaurant workers, doctor/nurse, etc.)

Value Investing: From Graham to Buffett and Beyond(WileyFinance)KindleEdition by Bruce C. N. Greenwald, Judd Kahn, PaulD.Sonkin, & 1more

You should invest in a company that:

1. has long-term, sustainable competitive advantages in business, and
2. has honest (and good) management, and
3. its stock is left undervalued due to short-term and fixable company issues, a problem within the industry, and/or market disruption as a whole(*).

(*) These are irrelevant to a company's long-term value.

Most importantly, you have to understand its business before investing in it.


Investors should have (1) diligence, (2) honesty, and (3) common sense.


Valuation approaches: (1) asset, (2) earnings, and (3) growth


Warren Buffett:

• Equity Investment Strategy = Evaluate the Business in Its Entirety
• "We want the business to be one (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price."
• Time is the friend of the wonderful business, the enemy of the mediocre.
• An economic franchise arises from a product or service that: (1) is needed or desired; (2) is thought by its customers to have no close substitute and; (3) is not subject to price regulation. The existence of all three conditions will be demonstrated by a company’s ability to regularly price its product or service aggressively and thereby to earn high rates of return on capital. Moreover, franchises can tolerate mis-management. Inept managers may diminish a franchise’s profitability, but they cannot inflict mortal damage.
• "Investment is most intelligent when it is most businesslike."
• "When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact."

Mario Gabelli:

• Private Market Value (PMV): the value an informed individualist would pay to purchase assets with similar characteristics (*)
• Graham & Dodd + Warren Buffett = GABELLI
• Graham & Dodd
• net-net stocks that are discounted to their book values
• Warren Buffett
• valuing a business's franchise
• taking a substantial stake in portfolio companies
• Gabelli
• Assessing a company's private market value (PMV)
• Identifying a catalyst to surface these underlying values
• Catalysts: An industry or company specific event. For instance,
• a regulatory change,
• industry consolidation,
• a repurchase of shares,
• a sale or spin-off of a division, or
• a change in management
• Valuation methodology
• free cash flow (earnings before interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow the business); (EBITDA - capex)
• earnings per share trends; and
• private market value (PMV), which encompasses on and off balance sheet assets and liabilities
• Gabelli's sell decision is made when
• the securities are selling in the public market at or near Gabelli's estimate of their private market value or
• if the catalyst Gabelli expected to happen fails to materialise
• In summary, "value plus a catalyst" is a winning formula for generating superior returns in any market environment.
• PMV as an investment strategy: three additional features that make it a genuine innovation:
• [1] PMV = intrinsic value + premium for control
• Unlike the passive investor who buys a security and hopes the company exceeds expectations, the industrial buyer is in a position to change the underlying business. He or she can fire incompetent management, dispose of unproductive assets, consolidate the operations with those of another firm, restructure the balance sheet, and do a host of other things to make the assets more productive and swell the cash flow. Because this buyer is probably familiar with the industry, it will not take long to turn things around. Because they can do more with the company than can the passive portfolio investor, they may be willing to pay more for it than the current market price. That extra amount is the premium for control. The payoff for portfolio investors such as Gabelli is that if they can identify firms selling substantially below their PMV, they can buy the shares and capture that control premium when the industrial buyer moves on the company.
• [2] Discovering gaps in GAAP, moving beyond financial data and focusing on operating statistics
• That is, either assets or earnings power that are masked by genially accepted accounting principles (GAAP) and thus not revealed in standard financial statements. Some of these may be the old standbys: assets not reported at all on the balance sheet or carried at cost rather than current market value; operating income not disclosed on the profit and loss statement thanks to some unusual financial structure or the consolidation of profitable divisions with those that are losing money. Certainly, the industrial buyer will not be blind to these values.
• Knowing the number (of subscribers for the communications business, cable and broadcast television companies, radio operators, and magazine and news paper publishers) helps the financial analyst compare the performance of different firms in the same industry: what their revenues or operating earnings per subscriber are. It also permits the analyst, on the basis of recent sales of firms within the industry, to see how much the industrial buyer was willing to pay per subscriber.
• [3] Catalyst
  • Recognition that it takes something—an event, a person, a change in perception—to narrow the spread between the market price and PMV. All investment strategies require a catalyst to make them pay off. Value investors in general, and PMV investors in particular, would prefer not to rely on such an amorphous and fickle instrument.
  • Two kinds of catalysts
  • Specific
  • Those changes, either anticipated or recently occurring, that alter the prospects of a particular company. The grimly labeled “death watch” stocks are attractive to investors who believe that the departure of the CEO or a large shareholder will allow the company, once freed from restraints, either to improve its performance or to restructure itself, including here selling the whole thing.
  • The slower-than-anticipated upfolding of the catalyst resulted in a somewhat lower annualised return on his investment.
  • Other company-specific catalysts include all types of financial or operational restructuring, such as the spin-off of a division or a significant repurchase of shares, a change in management, and investments in new business developments.
  • Changes like these stir the pot and reward investors who understand the company and can see, before the market, that improved earnings are on the way.
  • Environmental
  • Disruptive shifts in the world in which business operate. We refer not only to global warming, which is obviously an environmental catalyst however one uses the term, but to changes in the political, social, and economic climates as well. e.g., the destruction of the Berlin Wall in 1989
  • In many instances, the environment in question is the government, in its legislative (i.e., laws), administrative (i.e., monetary policy, fiscal policy, and contracting standards), and regulatory roles (i.e., regulations and tax rulings).
  • Other environmental catalysts emerge as the consequences of disruptive shifts in technology that facilitate the reorganisation of whole industries. The most unavoidable one in our time is the Internet and al the related changes that flow from breaching the protective barriers of time and space.
  • Consolidation is one result of many of these environmental catalysts.
  • For Gabelli, prepared with techniques for appraising PMV and adept at spotting catalysts, it is a heady time.
  • It does try to identify large-scale trends—economic, demographic, political, or cultural—that will help or impede the earnings of the company moving forward.
• Capitalisation rate = (Operating cash flow) / (Enterprise value); pretax earnings on the entire investment

(*) For more details about PMV:
http://www.gabelli.com/news/articles/reg-selby_123099.html


Glenn Greenberg:

• Investigate, concentrate, and—watch that basket, rather than scattering your money and attention.
• Investigate
• It is far more important to select the proper eggs to put into that basket than to watch them once they have been chosen. Greenberg attributes a great deal of his success to the firm’s approach to finding the right stocks.
• Concentrate
• Under the rules they established for themselves, the Chieftain partners will not bing to buy a stock unless they are willing to put at least 5 percent of their assets into it. This is an anti-diversification device, and it has a manifold influence on their entire investment process.
• First, they need to have two types of confidence in the selection: (1) confidence in their ability to understand the company, its industry, and its business prospects; and (2) confidence in the company, that it will continue to perform well and increase the wealth of its shareholders.
• Greenberg doesn’t even start his purchasing until he has done most of the research that will make him an expert in the company. Obviously, there is always more to learn, and in the time that he holds the stock, which can be years, his knowledge and understanding deepen and broaden.
• To improve their odds, all four professionals in the firm study the same stocks, and they have to agree before they buy a share. If diversification is a substitute for knowledge, then information and understanding should work in reverse.
• Buy good companies (and watch the basket)
• Buy "good" businesses, by which they mean those that are unchallenged by new entrants, have growing earnings, are not vulnerable to being technologically undermined, and can generate enough free cash flow on a regular basis to make the shareholders happy, either through dividends, share repurchase, or intelligent reinvestment.
• Current managers are healthy and young enough to keep the company on course for a few more years.
• Buy Them Cheap

Robert H. Heilbronn:

• Heilbronn’s innovation was to focus on the variability of a single stock as it is traded within its historic ranges, identifying its highs and lows as compared with itself. (e.g., P/E ratios)

Seth Klarman:

• The two oldest investment rules: (1) Don’t lose money, (2) Don’t forget the first rule.
• Value investing was the only strategy that took care to limit risk while still holding out the prospect for attractive returns over time.
• Evaluate risk (the likelihood and magnitude of possible losses) first.
• Motivated seller is selling for a noneconomic reason. e.g., An index fund’s charter—own only the securities in the index
• Missing buyers due to small size, no coverage (spin-offs), or distressed debt (bankruptcy or the threat of it); these also apply to motivated sellers' case.
• Find situations in which the overall market plays little or no role in the timing and amount of return. e.g., distressed debt especially in the bonds of companies in default, liquidations, and takeovers.

Michael Price:

• A goal frequently invoked is to match the market when it is going up but to decline less when it is going down.
• Portfolio
• Two thirds: cheap stocks
• One third: divided as opportunity dictated among bankruptcy plays, arbitrage positions, and cash, with the cash never falling below 5 percent of the portfolio.

• Price's approach to investing
• Discipline: Don't deviate from the valuation standards, especially as the sirens of momentum are enticing the unwary. Also, don't alter the policy you have established for the compositon of the portfolio just because other approaches are currently more favored.   
• Patience: After the analysis has been completed and the intrinsic value is determined, don't chase the stock. It is important to wait for the market to offer a price with a discount large enough to allow for a margin of safety. (Patience is certainly a virtue for investors, but so is alacrity when the situation demands.)
• Focus: Don't be distracted by global predictions or macro forecasts. It is much easier to understand a security than an economy, and the way to profit is by using that understanding.
• Do-your-homework: Each investment is a wager against the party on the other side of the trade. Only one of you will be right, and the prize usually goes to the person who knows more about the security and knows it sooner.

Walter and Edwin Schloss:

• Modern investment theory argues that return is compensation for risk, that higher returns are achieved only by increasing the volatility of the portfolio. The investment success of the Schlosses does not confirm the theory.
• Focus almost exclusively on the published financial statements that public firms must produce each quarter.

Paul D. Sonkin:

• Cap Rate = (EBIT)(1 - tax rate) / (MVDebt + MVEquity - Cash&Cash equivalent)
• The cap rate analysis is a starting point for Sonkin, a kind of screening test to see if the company merits further work. The purpose is to expose what a (debt & equity) investor would have to pay to own all the after-tax operating earnings of the company.
• It is a truism that though all value investors are contrarians, not all contrarians are value investors. Value investors want to compare the current price of the securities not simply to its former high—all that means is that some investors are deeply disappointed—but to the intrinsic value of the firm, which means examining the assets and the earnings power.
• Small stocks:
• are better growth prospects than those the are already large (more nimble to take advantage of new opportunities or changes in markets),
• may be a bargain because many funds are prohibited from owning them, 
• have less coverage, and
• are much easier to understand.

Value Investing: From Graham to Buffett and Beyond (Wiley Finance) Kindle Edition

by Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, & 1 more

amazon.com

amazon.co.jp

Deals Deals and More Deals: Risk Arbitrage - The Announcement of a Merger is the Beginning of an Opportunity by Regina Pitaro

Return

(Spread) = (Deal price) - (Price after the deal announcement)

Timing (annualized return): approval from regulatory authorities, approval on a shareholders meeting, completion of  merger / acquisition

Capital cost (borrowing cost for long, lending gain for short)

Dividends (gain for long, cost for short)

Taxes (short-term capital gain tax, tax-exempt or not?)

Risk

Deal break-up

Regulations

Due diligence (financials and law/regulation)

Capital raising (cash, credit facility)

Hostile takeover (e.g., poison pill, staggered board of directors, shark repellents)

TOB or Shareholders voting

Decline of the stock price of acquirer (when it's stock swap merger)

Other conditions

Valuation: earnings to deal price, sales to deal price, EV/EBITDA

Break-up fee: usually around 2% of the deal dollar amount

Cash or stock for acquisition

----------

[Decision making flow on risk (merger) arbitrage]

Questions before taking actions

1) How much is the spread / annualized return?

2) What is the problems and obstacles from (anti-trust) laws and regulations perspective?

3) Did you complete fund raising?

4) Did you complete due diligence?

5) How much is the downside risk when deal-breaking?

Corpoarate analysis
1) Who's the buyer?

    Buyer's financials (B/S, interest payment / operating profit)

    Buyer's reputation (past M&A activities)

    Buyer's size (Does the M&A change their business strategies?)

    Why does the buyer want to merge or acquire? (strategic and/or financial reasons)

    How much has the buyer already bought the shares of the target?

2) Who's the seller?

    Seller's financials

    Seller's current business (same or different?)

    Seller's reason to get merged or acquired

    Is there any ongoing lawsuit or any unresolved conflicts for the seller with others?

3) The company after merger or acquisition

    Any corporate growth?

    Any synergy (including cost reduction)? If any, how much?

    Financial statements after the M&A. Does it make sense?

Fund raising

1) How to raise fund for the M&A? Stock, cash, or LBO?

2) Did the buyer finish fund raising? Any credit facility from a bank?

3) Is there any reason that the fund raising is not a problem?

4) When stocks are used for the M&A, how much are new shares issued? How much dilution?

Background

1) Friendly or hostile deal?

2) How does the deal happen? Who brought it?

3) Does the seller want to sell themselves? If so, why?

4) Any other buyer? Any higher bid price?

5) For bidding, any competition? Non-public?

6) Who's a financial and legal adviser?

Conditions

1) What are the conditions to complete the deal?

2) Have the due diligence completed? Or is it a necessary condition?

3) How much is the minimum bidding shares and/or actual bidding shares?

4) Which counter-party can cancel the trade and under what condition?

5) What is an obstacle that prevent the deal from getting completed? (revenues, profits, or minimum sales)

6) Any uncancellable debt obligation on the seller?

Law/regulations

1) HSR anti-trust

    Any duplicated business?

    TOB for 15 days, merger for 30 days

2) Approval from FTC and/or DOJ

    Any concerns for competitions in the industry?

    How much market share after the M&A?

3) Approval from SEC for calling the shareholders' meeting

    Any required amendment for the invitation? If so, what's the problem?

4) Approval from states

    Insurance, medical, utilities

5) Approval from industry authorities

    Banks: FRB

    Utilities: FERC

    Communications: FCC

6) Approval from foreign authorities

    e.g., EU, a certain foreign government regulatory body

Risk vs returns

1) How much deal spread / annualized return?

2) When deal break-up, how much is the downside risk?

3) Probabiltiy of the deal break-up - what triggers?

4) Any other possible buyer with a higher bidding price?

5) Is the deal done? Any letter of intent / memorandum? Advanced negotiation?

[amazon.com] Deals Deals and More Deals: Risk Arbitrage - The Announcement of a Merger is the Beginning of an Opportunity

Rainy Mood

Rain sounds make people feel relaxed. This is a great rain experience website while reading books.
http://rainymood.com

Give and Take by Adam Grant

There are three types of people: taker, matcher, and giver
Ideally, when you start giving, your reputation get higher, and it expands your possibility. Thanks to the Internet, especially social networking websites, people can come to know your reputation faster, in a larger scale, and in a more transparent way than before. It is getting more and more difficult for takers to get people fooled by behaving like a giver.
Successful givers have unique approaches to interactions in four key domains: networking, collaborating, evaluating, and influencing.
Networking: building a relationship with new and existing people in your network to gain (1) non public info, (2) various skills, knowledge, and experience, and (3) power.
Collaborating: work with your colleagues to achieve results and respect from them
Evaluating: find talented people, improve it, and then achieve a result
Influencing: get others interested in your ideas, concerns, and so on for your sales, persuasion, negotiation, and getting support

If you want to know someone, see how he or she is treating others who do not have any merit to him or her. If he or she has more power, then he or she tends to show who he/she really is while being generous and responsible.

Successful givers give others while pursuing their own satisfaction / merit / profit, asking for help from someone, but not sacrificing themselves. They think when, where, how, and who to give. They try to feel appreciated.
Also, they should think that they're doing something not only for themselves, but also for their family, friends, bosses, colleagues, or someone they are responsible or care for. It prevents them from getting exploited by takers.

amazon.com
amazon.co.jp

"You play with the cards you're dealt, whatever that means."

"You play with the cards you're dealt, whatever that means."
Snoopy


A reply to Lucy van Pelt, saying "Sometimes I wonder how you can stand being just a dog."

(Life and Management) Principles by Ray Dalio

This is a great paper to understand having and applying principles to day-to-day business and personal lives.

If you do not have your own principles, you easily get distracted and/or influenced by others. Have your own princinples and get is tested by yourself and someone you believe so that you can improve it though open-minded discussions.

You should differentiate your goals and desires; focus on your goals that you want to achieve and forget your desires. (e.g., try to do everything including what you are poor at all by yourself in order to look good while sacrificing what you really want)

Be objective, neither subjective nor emotional.

make sure that his incentives are aligned with his responsibilities and that he is doing his job well

You need to build your own and/or team's machine with feedback loops:

In picking people for long-term relationships, values are most important, abilities come next, and skills are the least important.

If someone is doing their job poorly, consider whether this is due to inadequate learning (i.e., training/ experience) or inadequate ability.

 It is your job as a manager to get at truth and excellence, not to make people happy. 

Source:

http://www.bwater.com/home/culture--principles.aspx

http://www.bwater.com/Uploads/FileManager/Principles/Bridgewater-Associates-Ray-Dalio-Principles.pdf

Owner's Manual - Berkshire Hathaway

http://www.berkshirehathaway.com/ownman.pdf

THE 50 GREATEST JAZZ ALBUMS…EVER

At the end of any year it’s a great time to look back and so we’ve decided to attempt to come up with a definitive list of the 50 Greatest Jazz Albums of all time. Impossible, you are probably thinking, and it probably is, but rather than just thinking of our favourites we decided to take a good look through the web to see what other lists there are and combine our findings.

As usual we expect many of you to disagree, sometimes strongly, but as usual we will love hearing from you.

It took us several days of searching but here it is, the 50 greatest…

50. Thelonious Monk – Genius of Modern Music vol.1 & 2.*
49. Count Basie – the Original American Decca Recordings*
48. Bud Powell – The Amazing Bud Powell Vo.1
47. Weather Report – Heavy Weather
46. John Coltrane & Thelonious Monk – At Carnegie Hall*
45. Horace Silver – Song For My Father
44. Grant Green – Idle Moments*
43. Count Basie – The Complete Atomic Basie*
42. Hank Mobley – Soul Station*
41. Charlie Christian – The Genius of the Electric Guitar*
40. Art Pepper meets the Rhythm Section
39. John Coltrane – My Favourite Things
38. Benny Goodman – At Carnegie Hall 1938
37. Wes Montgomery – The incredible Jazz Guitar of Wes Montgomery
36. The Mahavishnu Orchestra With John McLaughlin – Inner Mounting Flame*
35. Clifford Brown and Max Roach – Clifford Brown & Max Roach
34. Andrew Hill – Point of Departure*
33. Herbie Hancock – Head Hunters
32. Dexter Gordon – Go
31. Sarah Vaughan – With Clifford Brown
30. The Quintet – Jazz at Massey Hall
29. Bill Evans Trio – Waltz For Debby
28. Lee Morgan – The Sidewinder
27. Bill Evans – Sunday at the village Vanguard
26. Thelonious Monk – Brilliant Corners
25. Keith Jarrett – the Koln Concert
24. John Coltrane – Giant Steps
23. Herbie Hancock – Maiden Voyage
22. Duke Ellington – Ellington at Newport
21. Cecil Taylor – Unit Structures
20. Charlie Parker – Complete Savoy and Dial Studio recordings*
19. Miles Davis – Birth of the Cool
18. Art Blakey & the Jazz Messengers – Moaning’
17. Albert Ayler – Spiritual Unity*
16. Eric Dolphy – Out To Lunch
15. Oliver Nelson – The Blues and the Abstract Truth
14. Erroll Garner – Concert By the Sea*
13. Wayne Shorter – Speak No Evil
12. Stan Getz & Joao Gilberto – Getz/Gilberto
11. Louis Armstrong – Best of the Hot 5s and 7s*
10. John Coltrane – Blue Train
9. Miles Davis – Bitches Brew
8. Sonny Rollins – Saxophone Colossus
7. Cannonball Adderley – Somethin’ Else
6. Charles Mingus – The Black Saint and the Sinner Lady*
5. Ornette Coleman – The Shape of Jazz to Come
4. Charles Mingus – Mingus Ah Um*
3. Dave Brubeck Quartet – Time Out
2. John Coltrane – A Love Supreme
1. Miles Davis – Kind of Blue

* Not in my personal iTunes library

source:
http://www.udiscovermusic.com/50-greatest-jazz-albums-ever

THE 50 GREATEST JAZZ PIANISTS

Scroll down for their playlist of the 36 Greatest Jazz Pianists…

But why 36? Well as we all know there are 36 black keys on a piano…

36. Andrew Hill
35. Dave Grusin
34. Cecil Taylor
33. Lyle Mays
32. Sonny Clark
31. Michel Petucciani
30. Hank Jones
29. Scott Joplin
28. Ramsey Lewis
27. Wynton Kelly
26. James P. Johnson
25. Kenny Kirkland
24. Bob James
23. George Shearing
22. Joe Zawinul
21. Teddy Wilson
20. Horace Silver
19. Red Garland
18. Tommy Flanagan
17. Erroll Garner
16. Dave Brubeck
15. Jelly Roll Morton
14. Earl Hines
13. Count Basie
12. Fats Waller
11. Duke Ellington
10. Ahmed Jamal
9. Chick Corea
8. Keith Jarrett
7. Bud Powell
6. McCoy Tyner
5. Oscar Peterson
4. Herbie Hancock
3. Bill Evans
2. Thelonious Monk
1. Art Tatum

Source:
http://www.udiscovermusic.com/greatest-jazz-pianists

The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt, Jeff Cox

This is a great book that explains the Theory Of Constraints (TOC) for supply chain and production management.

"The Goal" of a company is making a profit.

For a factory, key performance indicators from an accounting perspective are (1) net income, (2) profitability = (net income) / (capital invested), and (3) cash flows. This book explains that indicators are (a) throughput: cash inflow generated by sales, not production, (b) inventory: capital invested for products/services to generate cash flows, and (c) operating expenses: cash outflows, expenses to turn inventories into throughput.
Also, the cash used and saleable is (b) inventory while the cash used but unsaleable is (c) throughput. You can explain everything in your factory by using cash.

A well-balanced factory produces products by using resources in a timely manner; that is, supply and demand from their customers are perfectly matched. However, this type of factory is vulnerable; say, if you reduce your (a) throughput based on decreased demand, then (b) inventory gets bigger and (c) operating expenses get higher. This is mathematically proved, although the proof is omitted here. This is due to both statistical fluctuations and dependent events. Every process is connected with each other, so if you would like to optimise your entire process at your factory, you can have redundant resources because there is statistical fluctuations.


TOC / five focusing steps:

1. Finding a constraint
2. Decide how to optimise the constraint
3. Change every process based on the optimisation in step 2
4. Improve an ability limited by the constraint
5. If you can fix the problem of the constraint, then go back to step 1

The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt, Jeff Cox
amazon.com
amazon.co.jp

The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience / Carmine Gallo

The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience Carmine Gallo

The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience

Two Sigma

Two Sigma builds trading algorithms around four kinds of information:

1. Technical information (e.g., trading volumes of stocks)

2. Event-based information (e.g., credit agency actions, mergers or other news)

3. Fundamental data (e.g., corporate financial statements)

4. Alpha capture (company- or industry-specific intelligence, not publicly available per se and gathered via proprietary surveys)

David Siegel (cofounder)

"You have to formulate your big-data analysis in a way that you can understand whether or not you are over-fitting the data or actually extracting legitimate information out of the data--that is what the business is all about."

Source: Forbes

Smartphone addiction

When a train arrived, a woman behind me in the line pushed and passed me, and kept her seat while staring at her smartphone. It is like drag and alcohol addiction. People like her need doctors and therapists' help to fix her/his problem. They are vulnerable to stimulation and temptation from smartphones. They have no sense of self-discipline.

Japanese at train stations and/or on trains in Tokyo

Japanese at train stations and/or on trains in Tokyo:

1. Rushing into their trains (and sometime s bump into you)

2. Cling to others to fill in the space (I'm sure you feel uncomfortable.)

3. Staring at their smartphones (even while walking)

4. Drunk and noisy (especially late at night, because they always have to be quiet and stay sober during the day and it is stressful to them?)

The Intelligent Investor, Rev. Ed Kindle Edition by Benjamin Graham,Jason Zweig, Warren E. Buffett (Collaborator)

Ben Graham is considered to be a father of value investing and a teacher of Warren Buffett.

"Great investors have objectivity, simplicity, and passion."

"Great companies to invest are like castles surrounded by a moat, which includes brand, low cost operation, near-monopoly status, and impressive services."

"No matter which techniques they use in picking stocks, successful investing professionals have two things in common: First, they are disciplined and consistent, refusing to change their approach even when it is unfashionable. Second, they think a great deal about what they do and how to do it, but they pay very little attention to what the market is doing."

"As Graham liked to say, in the short run the market is a voting machine, but in the long run it is a weighing machine."

"When you buy a stock, you become an owner of the company."

"The first and most obvious of these principles is, "Know what you're doing--know your business.""

"A second business principle: "Do not let anyone else run your own business, unless (1) you can supervise his performance with adequate care and comprehension or (2) you have unusually strong reasons for placing implicit confidence in his integrity and ability.""

"A third business principle: "Do not enter upon an operation--that is, manufacturing or trading in an item--unless a reliable calculation shows that it has a fair chance to yield a reasonable profit. In particular, keep away from ventures in which you have little to gain and much to lose."

A fourth business rule is more positive: "Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgement is sound, act on it--even though others may hesitate or differ."

The Intelligent Investor, Rev. Ed Kindle Edition
by Benjamin Graham, Jason Zweig, Warren E. Buffett (Collaborator)
amazon.com
amazon.co.jp

The Black Swan / Nassim Nicholas Taleb

Features of the "black swan":

1. Abnormal (outside of our imagination)

2. Huge impact

3. Two types.

Type I: After it happened, we tend to think it predictable by using reasons that sound like a truth (but actually aren't). Probabilties / impacts of this type are overestimated.

Type II: We cannot include this type into our model, so it tends to be ignored. Probabilties / impacts of this type are underestimated.

We have to distinguish two things:

[A] There is no evidence that a "black swan" exists.

[B] There is an evidence that a "black swan" does not exist.

You can keep betting on a black swan, if you want. However, people tend to prefer small and short-term continuous profits to big ones that might not get realized in the long run.

Consider biases (e.g., survivorship bias - You can't know what underdogs did/thought.) and distortion (e.g., skewness, kurtosis, over- and under-estimation, estimates vs realities).

You must imagine what you cannot see or recall. People do not recognize what they cannot see and something don't promote their emotional interests.


Do right things at a rough estimate and/or hypothesis, don't do wrong things in a precise manner.

The Black Swan: Second Edition: The Impact of the Highly Improbable Fragility" (Incerto) Kindle Edition by Nassim Nicholas Taleb
amazon.com
amazon.co.jp

Getting to Yes: Negotiating Agreement Without Giving In by RogerFisher, William L. Ury

Focus on both principles and incentives of each other, not one's position. This is a well-balanced book, in terms of theories and examples.

[amazon.com]
Kindle Version

[amazon.co.jp]
Kindle Version

Zero to One / Peter Thiel

To work on an eternal value-added process, don't do a commodity business; hold a monopolistic influence in a market.

Humans and computers are good at different things; a computer is just a tool to help a human (pursue a higher productivity), not a rival to replace a human.

Seven questions for a successful business:

1. Engineering

Breakthrough, not a gradual change

2. Timing

Appropriate timing to begin with?

3. Monopoly

Start with a small market that you can be dominant.

4. Team

Build a team.

5. Sales & Marketing

Not only product development, but sales & marketing

6. Eternity

A right positioning to survive in the market in the next 10-20 years?

7. Hidden truth

Nobody but you noticed the unique truth?

[Amazon.com]
Kindle Version

[Amazon.co.jp]
Kindle Version

The Big Short by Michael Lewis

Markets could go too far without proper regulations. Greed is a precondition of financial markets because it drives the market. Having appropriate incentive systems under the precondition is a practical solution to avoid and/or mitigate impacts from financial crises.

To be a good investor, you have to be realistic and do your own deep research to see facts and doubt about what has been believed.

[Amazon.com]
The Big Short: Inside the Doomsday Machine Kindle Edition by Michael Lewis

[Amazon.co.jp]
The Big Short: Inside the Doomsday Machine Kindle Edition by Michael Lewis

Creativity is connecting dots.

Creativity is not creating something from scratch; rather, it's connecting dots, which are somebody's findings, knowledge, experience, works, and so on.

The Physics of Wall Street / James Owen Weatherall

A comprehensive history / story of quants, scientists, and engineers which includes the concepts of return distributions (standard normal vs fat tails), self-organization / herding effects in bubbles and bursts, and so forth.

All (financial) models are destined to fail in a certain point because of false assumptions and/or unconsidered factors (e.g., black swans). Like natural scientific approaches, we have to learn from failures, get it tested again, and improve the models.

Financial models are not for pursuit of truth that can solve any problems under any conditions. Rather, finding formulae that work under several conditions and clarifying how / when to be used. That is more realistic and practical goal because global economy, regulations/rules, and people's behaviour are always changing. (e.g., innovation) Financial models themselves are not only monitoring cameras but also engines that move markets.

The Physics of Wall Street / James Owen Weatherill
amazon.com
amazon.co.jp

Flash Boys: A Wall Street Revolt by Michael Lewis

If you can always buy or sell a certain security at a fixed price before others do, you can always make money. The problem is that it is not the right thing to do.

Flash Boys: A Wall Street Revolt [Kindle Edition] by Michael Lewis

Why I Left Goldman Sachs: A Wall Street Story by Greg Smith

Greg loved Goldman Sachs, and he left the company because of the love. His description about the quant meltdown in August, 2007 was accurate and well explained.
Why I Left Goldman Sachs: A Wall Street Story by Greg Smith

Please also see his original article on March 14, 2012, on the New York Times.
"It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are."
Why I Am Leaving Goldman Sachs By GREG SMITH

Non-commodity professional

To become a non-commodity professional who cannot be replaced by others and/or machines, you must have four skill/mindsets:

1. Knowledge (deep and multidiscipline) and thinking power

2. Decision making (best possible one in a timely manner under various constraints)

3. Action (i.e., implementation)

4. Evaluation (review)