Do corporations and their higher-ups exhibit psychopathic traits?

In the mass media these days, psychopathy has been vilified to no end. Using examples such as Jeffrey Dahmer and Ted Bundy, the media has managed to convince people that being a psychopath is contemporaneous with having an intrinsically malevolent personality. However, this could not be further away from the truth. Psychopathy is, in fact, simply an alternate way of being, not the thing that defines killers such as the aforementioned Dahmer. In fact, after having carried out extensive research about the matter over the past week, I have concluded that some of the most successful people in the world of business have psychopathic characteristics. Before I expand on my reasons for believing this, I would like to thank Mr. Matthew Gaffney for putting the proverbial seed in my mind to write about this matter. I would also like to say that these are simply my opinions and they are not to be taken as fact, or as definitive proof that any person or the companies mentioned are psychopathic in the slightest.

I will use some of the criminal psychologist Professor Robert Hare’s criteria to determine psychopaths in this blog post. The first trait I will examine is having a tendency to lie, or pathological lying. If a person is a pathological liar, this means that they lie in an extreme way, which I take to mean destructive, rather than constructive or “white” lies, which cause other people distress in some way. This trait was shown in its entirety by Coke last year, when they blatantly lied about their so called “Pomegranate Blueberry Flavored Blend of 5 Juices” a drink which contained just 0.3% pomegranate juice. Coke blatantly using false advertising in order to increase profits was indubitably to the detriment of their consumer base, meaning that Coke, did, indeed, show the trait of pathological lying when they blatantly did not tell the truth about the actual type of beverage that it was. This means that, without a doubt, some of the higher-ups at Coke must have seen this as a good thing to do, which does indicate a degree of psychopathy.

Psychopaths are also defined by another trait, which is to show a lack of remorse. What this means is that after having done something bad, a person does not feel bad about doing it and is not empathetic with the victims of whatever he or she has done. An example of this was not recherché at all, as it took me the best part of half a minute to find this article, detailing how Walmart fired 2200 employees due to “plumbing problems”. Walmart doing this just hours before stores closed shows an unequivocal lack of remorse on their part, as it shows that they were not empathetic in the slightest to the employees or their families. Again, some higher-ups in the corporation must have made the decision to make so many employees redundant at the same time, which shows this psychopathic trait has been exhibited by this corporation’s higher-ups.

According to Professor Hare’s test, a tendency to boredom is also exhibited by psychopaths. This is shown clearly when we look at the scenario of RBS executive Mr. Rory Cullinan leaving the company after complaining of being “bored” at work. Even after having such a presumably high-paying jobs, complete with the glamour of being in such a high position that we see on our television screens so much, Mr. Cullinan was bored of his life at RBS and so decided to leave. This fits in perfectly with the trait of a tendency to boredom, which shows that Mr. Cullinan was psychopathic to a degree in this regard. Being in such a high position, one can only wonder how many company decisions he may have influenced, which also must have added to the psychopathy of the company as a whole. This is also only one example, and one only has to wonder how many famous departures are not due to issues over pay and the like, but over the genuine boredom that a psychopath frequently experiences.

The final two psychopathic traits that I will examine in this article is a grandiose sense of self worth and sexually promiscuous. This means that people have an inflated ego, which leads them to believe that they are worth more than what they actually are and are somehow “special”, when it fact it may not be so. This trait could also perhaps lead to the sexually promiscuous behaviour mentioned before, as these individuals may think that they are too “good” to only keep to one partner. This is perhaps best shown by the executive chairman of Google, Eric Schmidt, who is described as a “serial womaniser” in the article, which talks about him buying a $15 million Manhattan penthouse. This article shows both of the psychopathic traits mentioned earlier in Schmidt, as not only is he buying himself such a large penthouse, which it could be argued that he does not need, but is also a “serial womaniser” and cannot stick to one partner, perhaps due to the aforementioned grandiose sense of self-worth. As such, it can be argued that Schmidt is indeed a psychopath to some degree, which may have been transferred in some part to the company he works for, Google.

In this blog post, I have examined five of the twenty traits that define a psychopath, and have shown how companies themselves and also their higher-ups exhibit these characteristics, whether it be through buying luxury penthouses or through falsely advertising pomegranate juice. Sometimes, these psychopathic traits can be good for a company, for example when a firing needs to happen and the psychopathic individual in question is only worried about the best thing for the company, and not the welfare of the individual being fired or his or her families. However, some of the arrogance displayed by these CEOs can and does give these companies a bad image. Regardless, this blog post has indeed proven that psychopathy is not also exclusive to serial killers such as Ted Bundy, but even the most successful individuals that we live up to display it as well. It is far more commonplace than the general populous think, and even the best of us are not free from its hold.

Is short selling unethical?

Let me start by stating what short selling is. Straight from Investopedia, it is “the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is motivated by the belief that a security’s price will decline, enabling it to be bought back at a lower price to make a profit.” I’m pretty sure that all of you can already see the ethical qualms which people might have about this, and you’re not wrong, either.

A number of countries have outlawed this, including countries such as France, Italy, Spain and Belgium. The reason that they have outlawed this is that their governments feel that short selling accelerates the decline of a stock, thereby “kicking them while they’re down”, if you will.

Another reason why people believe that short selling is unethical is that it promotes the spreading of false information in order to artificially engineer the downturn of a stock, so that they can make a quick buck. Regulatory authorities have been trying to stop this false spreading of information for ages, so I completely understand this. However, in this technological age, people know which information is trustworthy and from a reliable source and which information isn’t.

It’s like those fake “celebrity death notices” that you see. Nobody really believes them or cares about them anymore. What I believe is that, yes, short selling could be construed, and rightly construed, as unethical as it puts companies further into the red, but some of the disadvantages to a country and to its economy are grossly exacerbated, and have given short selling a negative image when, really, that shouldn’t be the case at all. Isn’t all trading a bit unethical anyways?

My problem with using moving averages

One of the first things that traders learn when they are starting off is the technique of using moving averages. The statistical definition of one is “a succession of averages derived from successive segments (typically of constant size and overlapping) of a series of values.” Now, these are good if the price is remaining at about the same level over a period of time, but what if a stock is appreciating or depreciating rapidly?

The data that moving averages are based on is entirely from the past, and, as they say, you can’t predict what direction the market will go in. Yes, maybe it’s been bullish over the past month, but tell me about now. When a stock is volatile, moving averages serve little to no function, as a small spike in any direction can result in huge losses, and what past trends were does not affect that.

It does not take into account significant changes in supply and demand. A great example of this would be the price of crude oil. Great, you’ve used a moving average for when it was at $100/barrel, but how is that going to help you when supply has skyrocketed and the price has fallen to $50/barrel?

Even if a stock has been at the same level for a long time, how will moving averages help you then? There would just be a horizontal line. You could say that you should buy when the price goes above the moving averages, but stocks often exhibit cyclical behaviour, and the stock is just as likely to plummet as it is to skyrocket.

All in all, because of these reasons, I don’t believe that moving averages are a very effective tool, as all they are based on is past data and they just don’t work for volatile stocks.

When, and should, footballers stop earning ludicrous amounts?

Like every bubble, the football one has to burst eventually. What I’m struggling to see is if that will happen during my lifetime, given the vast mainstream exposure and cult-like following that football has. In a football stadium, it’s sacrilegious to support the “away team”.

People are constantly saying that footballers get paid far too much and that doctors and nurses should get that salary. What they fail to realise is that footballers are in very high demand and very little supply, while, even though it’s true to say doctors are in high demand too, there’s a lot more supply of them.

You are far more likely to find a skilled doctor than you would a skilled footballer. And when you take into account the joy that footballers provide to people everywhere, their salary, while still being ludicrous, does not seem that exorbitant. Shows such as “Football Saved My Life” perfectly explore this concept.

I’m not denying that doctors and nurses save lives and that their salary should be closer to footballers’, but what I’m saying is that the people who say that footballers should be given a “normal” man’s wage are not taking into account certain key factors.

Maybe salaries such as Falcao’s 300k a week or Rooney’s 310k a week are unfair and exaggerated, but show me one person out of 100 that can do what they do on a weekly basis and I’ll change my mind.

The football bubble is bound to burst eventually, I’m not denying that, but they at least deserve some of their wage.

Give them some respect, guys.

Is it better to be conservative or reckless when trading?

When trading, there are some who are conservative, who look for the “perfect trade” which almost never comes. And then there are others who look at the tiniest changes in price and think “there we go, that’s my opportunity.”

But which one is it better to be? The low volume, low risk trader or the trader that opens positions with reckless abandon?

In actuality, my opinion is that it is the former who I would most likely place my money on to earn more. In trading, as in other areas of life, “less is more”, as they say.

Although there is potential of even the most meticulously planned trade going the wrong way, careful planning and a strong investment thesis reduce the chance of it happening exponentially.

The same can’t be said for the high volume trader, where even one failed trade will wipe them out.

Be safe, stay safe.

The issue of ethics in trading

Investing in fossil fuels has become an issue of ethics lately, especially with the issue of global warming plaguing our world today. The financial issues that investors face have now become more complicated with the additional dimension of ethics involved too.

Why do people think investing in fossil fuels is bad? They think that it’s unnecessary promotion of something that could be catastrophic to the world today. The issue of ethics isn’t just lodged in this one example, there are countless others.

Say it just came out that McDonald’s have been paying immigrants less than minimum wage to work 12-hour days,  for example. Some would say that this is cause enough for them to not invest in this company, as they would be promoting what essentially is a great evil in the world today.

My opinion, you ask? I wholeheartedly understand, but do not necessarily agree with the people who choose not to invest because of ethical reasons. Essentially, what they are doing is decreasing demand for the stock in question, creating a shift in the supply-demand curve and driving down prices.
Now, when prices are low (an example being WTI crude oil right now), people will invest. And when they invest, the price will be driven up again. So essentially, these people are not doing anything significant, rather, they perhaps might be worsening the cause they are supporting.

There is one scenario where I concur with these people, however – if they are doing it for their own personal reasons and gratification. They do not want to be associated with the unethical nature of a company and so will not invest in it, simply to give them a good guilty-free night’s sleep.

The majority, however, do it for the first reason which I have already explained. What these people don’t understand is that they are not having a monumental impact on prices, and their time would be better spent petitioning or protesting – that will have a far greater impact than simply not investing in a stock.

Why I am uncertain about investing in oil companies right now

There is a sense of security that every trader has when they know that a stock has been trading around and about the price which it is now for a long time, perhaps a few months or years. But, in the case of oil, there is a complete lack of certainty around the market right now.

Should I go long? Short? Neither? The overwhelming response right now is the latter, with most investors scared to use their money. The thoughts going through most people’s heads right now would be “If I go short, the price of oil will rocket sometime soon” or “If I go long, oil will drop even further!” Now everyone knows that these two are mutually exclusive and cannot possibly co-exist together.

The problem is that lingering voice of doubt in the back of our minds which keeps telling us not to invest. This problem is exacerbated if you have made a loss an oil recently, and most people just sit there licking their wounds long after that. The bulls of the market will be telling you to buy right now, and that is probably solid advice considering oil has to skyrocket sometime now, right?

Try getting a margin call when oil goes down and see if you can say that again with a straight face. No-one has any doubts that, when oil rises and eventually hits around $60-$70 a barrel, people will be going long like there’s no tomorrow.

But I can’t exactly say the same for right now, even though oil is $20 lower.

A book review of Making Money From Trading by Cat Davey

Firstly, I would like to state that this book is one of the only ones that explore the emotional journey that a trader goes through, and it does it very well, with a “Waterworld” or “ego trade” a page. It perfectly captures the mental anguish one goes through when making a loss trading. So, on that note, this book gets full marks from me. However, this book really doesn’t have much in the way of strategy when trading, and although the references to the emotional aspects of trading were good, it did feel a bit overdone and sensationalised.

What I mean is that I doubt the average trader would go for neurolinguistic therapy.

However, this book was not entirely exempt from references to trading – she does list her favourite stocks and how many positions she opened at the time, and the Profit/Loss accounts with the win/loss trade ratio at the beginning of every chapter was very well done. It really conveyed the concept that you don’t have to win most of your trades to make a profit.

What this book also did well was that it showed how her change in mindset was a factor in her success and exactly how it was a factor. Her continued Waterworld references conveyed her point of how easy it is to be consumed by your ego when trading excellently, and I liked the doses of her personal life that she sprinkled in, for example meetings with her ex-boyfriends. The best thing about this was that it all was eventually related to the stock market – she did not digress in any way.

One of the major issues I had with this book, however, was that it listed the technical terms to know at the end of each chapter. The reason why I think this was bad is that the reader would not want to read through a chapter not knowing what some of the words mean, only to discover that it was there at the end of the chapter after all. Even if the reader did want to know what the words meant before the actual chapter, he would have to find the end of the chapter and go back  to look at it all over again. This was more of an inconvenience than anything else, to be honest.

Overall, I really enjoyed the book, mostly because of it’s show of the emotional journey of the trader, something which very few books do. However, I do feel that there should have been more references to trading, for example technical analysis and charting. I would also have sequenced the book in a more chronological way with the “key terms and lingo” at the beginning of every chapter, rather than at the end.

Despite these issues, however, I would say that this book is a must read, simply because of its brilliant uniqueness, more than anything else. Cat Davey has done a scintillating job with this book.