Miller & Conley, Legacy in the Making

Branding has gotten a bad rap in the wake of Donald Trump’s election to the presidency. It has been conflated with egotism and narcissism. But entrepreneurs and companies work hard to develop and burnish their brands, knowing that it is an essential part of doing business. In Legacy in the Making: Building a Long-Term Brand to Stand Out in a Short-Term World Mark Miller and Lucas Conley show how some brands are charting a modern legacy on maps of their own making.

The book itself is, I assume, meant to be some kind of branding statement. It is square (9” x 9”) with glossy paper and lots of photos. It is printed in black, white, and cyan. It comes across as something of a coffee table book, although its intent is much more serious. As an effort in book design branding, I consider it a failure. Fortunately, the reader can learn to ignore the design noise and focus on the message.

The meat of the book is its profiles of brands, both for-profit and not-for-profit, based on interviews, most often with the brands’ founders. The reader can learn from, among others, Patagonia, the Tribeca Film Festival, Girls Who Code, The Honest Company, the Ritz-Carlton Hotel Company, the It Gets Better Project, Grey Goose, the Belmont Stakes, Lexus, and Wimbledon.

Legacy in the Making will inspire budding entrepreneurs and challenge executives of established brands.

Nasher, Convinced!

Jack Nasher’s Convinced! How to Prove Your Competence & Win People Over (Berrett-Koehler, 2018) proceeds from the well documented premise that it is not actual but perceived competence that determines the impression you make on people. In fact, modesty is probably not a virtue. Icons, top names in their field, are anything but modest or stoic. “In extreme cases, these people have an almost narcissistic personality disorder, convinced of their own grandeur—and they are extremely successful.” We have only to think of Donald Trump.

So, if you are the type who is inclined to hide your light under a bushel (which is not even a Christian thing to do), Nasher has a lot of tips on radiating competence. They range from how to deliver bad news to how to speak and move like an expert, from how to increase your popularity and attractiveness to the power of symbols.

One of Nasher’s recommendations is not to show how much effort you put into an undertaking. Natural talent is more prized than acquired skills, so “perceived effort must be minimized to maximize perceived competence.” Reflecting this, the unofficial motto of one of the colleges at Oxford University is “Effortless superiority.”

Although here and there I cringed at some of Nasher’s suggestions, and although occasionally it took me back to my days as an insecure teenager reading pamphlets on how to be popular, on balance his points are well taken. So, if you think you’re underrated by your colleagues, your bosses, your clients, here you can learn how to convince them otherwise. And you don’t even actually have to be competent.

Hirsch & Mistal, Stock Trader’s Almanac 2019

The Stock Trader’s Almanac is now in its 52th edition. Not quite the track record of The Old Farmer’s Almanac, which launched in 1792, but presumably a tad more data driven.

The spiral bound almanac opens flat for easy access to its data or for jotting down notes. The format remains essentially the same as in previous years, with a calendar section, a directory of trading patterns and databank, and a strategy planning and record keeping section. The calendar section has on facing pages historical data on market performance (verso) and a week’s worth of calendar entries (recto). January’s verso pages, for example, give the month’s vital statistics, January’s first five days as an early warning system, the January barometer, and the January barometer in graphic form since 1950. Each trading day’s entry on the recto pages includes the probability, based on a 21-year lookback period, that the Dow, S&P, and Nasdaq will rise. Particularly favorable days (based on the performance of the S&P) are flagged with a bull icon; particularly unfavorable trading days get a bear icon. A witch icon appears on monthly option expiration days. At the bottom of each entry is an apt quotation. There’s about a five-square-inch space in which to write.

The Stock Trader’s Almanac pays particular attention to the presidential cycle, but 2019 may defy the normally bullish results for pre-presidential election years (only one loser in 80 years and an average gain for the Dow of 47.4% from the midterm low to the following year high). “With all the gains paid forward in 2017 and 2018, mushrooming levels of debt and deficits [plus “the waning positive impact of the tax cuts and tougher quarterly earnings comparisons, not to mention the potential for a yield curve inversion”] are likely to begin to weigh down the economy and stock market in 2019” and “awaken the long-hibernating bear.”

What about the January effect? As goes January so goes the year 75% of the time. Fifteen of the last 17 pre-presidential years followed January’s direction. And every down January since 1950 preceded a new or extended bear market, a flat market, or a 10% correction. As for the first five days of January, the last 43 times these days were up the market had full-year gains 83.7% of the time, with an average return of 13.7%. The 25 down “first five days” were followed by 14 up years and 11 down, for an average gain of 1%.

Each year the editors of the almanac choose the year’s best investment books. This year heading the list is Michael Batnick’s Big Mistakes.

This almanac is full of data that will delight those traders who believe that past is prologue. Even those who are skeptical have to pay attention to data that seasonal traders rely on and that therefore tend to move markets.

Furr et al., Leading Transformation

Companies frequently have to reinvent themselves, a task that tends to be neglected because of comfort with the familiar and fear of the unknown. And because management simply doesn’t know how to go about envisaging a different trajectory for the company, let alone implementing it. Nathan Furr, Kyle Nel, and Thomas Zoëga Ramsøy pooled their skills and experience to write Leading Transformation: How to Take Charge of Your Company’s Future (Harvard Business Review Press, 2018).

The tools of change the authors recommend may seem bizarre—science fiction, comic books, applied neuroscience, and archetypes—but companies as diverse as Lowe’s, Pepsi, IKEA, Google, and Walmart are already successfully using them. So it behooves other companies to take their recommendations seriously.

Science fiction has inspired many notable technologies, from the submarine to earbuds. “Indeed, many argue that science fiction underpins the entire culture of Silicon Valley and the technology revolution created there.” Whether or not that’s true, the authors believe that science fiction “can be a tool to break the bonds of incrementalism and to imagine other possibilities.” Companies can use science fiction to dream bigger. Specifically, the authors suggest that companies use their existing data as a foundation and give it to five writers, asking each of them to write a short story about what the future could look like in five to ten years in light of the data. That’s, of course, only the first step, but it’s a step that might just set a company off on a wildly successful venture.

In the course of this book the authors propose a series of actions that companies might take to transform themselves. They are not the run-of-the-mill suggestions that one finds in business books but what I would consider frontier ideas (as opposed to cutting-edge or fringe ideas). Maybe they will be how the new West in business will be won.

Truthful Living: The First Writings of Napoleon Hill

It’s hard to have missed Napoleon Hill’s Think and Grow Rich, which has sold more than 100 million copies since it was published in 1937 and helped spawn the self-improvement marketplace, currently valued at $10 billion in the United States alone. A few years ago material was unearthed in the Napoleon Hill Archives that predated Think and Grow Rich by 20 years, during the time that Hill taught courses in advertising and sales at the George Washington Institute in Chicago. Jeffrey Gitomer compiled, edited, and annotated these writings. The result is Truthful Living: The First Writings of Napoleon Hill (Amazon Publishing, 2018).

Why the title “Truthful Living”? Because Hill believed that all living had to be built upon the foundation of truth. “Without this firm foundation, no person or business can hope to permanently succeed in this day of progressive policies.”

Hill also maintained that “the chief reason that ninety-five percent of the people are working for the other five percent is that ninety-five percent do not know how to think.” The beginning of all successful undertakings—he cites Andrew Carnegie, John D. Rockefeller, James J. Hill, Orville and Wilbur Wright, Andrew Graham Bell, and Guglielmo Marconi—is thought, “scientific, accurate thought!”

In order to become an accurate thinker, you must “concentrate the forces of your mind and direct them upon one subject until that subject has been mastered. The power to concentrate presupposes the ability to finish all that you start—to stick to everything you undertake with a grim persistence that knows no defeat!”

Hill suggested that “writing out our thoughts not only aids concentration, but this bodily, physical action helps us make the first step toward the crystallization of thought into reality. Thought without persistent, concentrated bodily action would be useless.”

These snippets from Hill’s first writings illustrate the thrust of his own thinking. There’s of course much more in this volume: for instance, dealing with adversity, happiness, and the principle of service. Here and there Hill’s work is dated because in some ways the world has become a darker place (hard to imagine, since 1917 wasn’t exactly an idyllic time), but for the most part it teaches the same kinds of principles that modern self-improvement writers advocate. That authors are churning out these books in record numbers shows that people feel a need for them and yet few readers ever really learn from them.

Speziale, Capital Compounders, 2d ed.

Robin R. Speziale, author of Market Masters, is a 31-year-old, self-taught Canadian growth investor. In this second edition of Capital Compounders: How to Beat the Market and Make Money Investing in Growth Stocks he shares the principles that have guided his wealth-building journey.

Although a skilled editor could have improved the book significantly, Capital Compounders offers many insights for the active investor, both budding and experienced. The most daunting chapter sets out the author’s 72 (!) rules for investing in stocks. Yes, 72 because of the rule of 72.

Speziale focuses on small- and mid-cap Canadian stocks, with some micro-caps added to the mix as well, but his investing process is equally applicable to the U.S. market. In fact, in his chapter on how to find ten baggers, he draws on the work of American growth investors Peter Lynch, Philip Fisher, William O’Neil, Joel Greenblatt, and T. Rowe Price, Jr. as well as Canadian managers. In a bonus chapter, his DIY investor friends share their strategies.

In many ways, this is an old-fashioned book. But old-fashioned doesn’t mean out of date. On the contrary, it’s refreshing. And, according to Speziale’s own track record, profitable.

Smith & McKeen, Driving IT Innovation

Driving IT Innovation: A Roadmap for CIOs to Reinvent the Future by Heather A. Smith and James D. McKeen (Prospect Press, 2019) is outside my wheelhouse, so I will simply note its publication and give a one-sentence summary.

The authors, both affiliated with Queen’s University, Kingston, Ontario, have published extensively on IT management issues. In this book, based on interactive sessions with groups of senior IT managers from a wide variety of industries, they outline three drivers of successful IT innovation: opportunity drivers, discovery drivers, and delivery drivers.

Crosby, The Behavioral Investor

In 2014 Daniel Crosby, a psychologist and asset manager, co-authored the bestselling Personal Benchmark: Integrating Behavioral Finance and Investment Management and followed that up in 2016 with The Laws of Wealth. Another two years and he’s produced a new book: The Behavioral Investor (Harriman House, 2018). His “admittedly audacious” goal is for this book “to be the most comprehensive guide to the psychology of asset management ever written.” I’m not sure that he has succeeded in this task, though perhaps my hesitation comes from having read far too many books on behavioral finance and having mashed them all together in my mind. But even if he has fallen short of his own self-defined goal, he has written a sweeping account of the impediments that human beings have to overcome to become successful investors. He also points investors to a “third way” of investing, distinct from both the passive and the active approaches.

Crosby starts with findings from sociology, brain studies, and physiology—for instance, that taking financial risk causes real bodily pain. And, from John Coates’s seminal research, that during times of market volatility “the cortisol levels of traders increased a whopping 68% over a period of just eight days!”

In the second part of his book Crosby tackles four main issues in investor psychology: ego, conservatism, attention, and emotion. One takeaway from the chapter on conservatism is that, “holding outcomes equal, action is more likely to lead to regret than inaction.” So, even when action is called for, we tend to do nothing.

Part three looks at what it takes to become a behavioral investor. Let’s revisit the problem of conservatism. One of the ways we can surmount this problem is, oddly enough, to procrastinate. In a research study “subjects chose the default option 82% of the time when asked to decide in an instant, but only 56% of the time after being given a short delay.”

In his chapter on honing attention Crosby argues that “an investable factor [and he highlights the factors of value and momentum] must be empirically evident, theoretically sound and have roots in behavior.” He claims as a fact that “data without theory and theory without data both produce spurious results.”

The final part of the book analyzes how to build rules-based behavioral portfolios. The process includes an element of market timing, “infrequently taking risk off the table when the market is poised to do its worst.”

Crosby’s book is eminently readable, with ample stories and studies. Here and there we find howlers, such as his claim that Thales was a contemporary of Aristotle, just a little less egregious than my saying that I am a contemporary of Sir Isaac Newton. But the book offers the reader valuable lessons in creating a portfolio that can, at least in part, circumvent the most pervasive behavioral pitfalls.