If you’ve been in an apple store lately, you will experience a bit of deja vu.

Think about it.  Every bust, every scandal: Technology is their undoing. That’s why bankers hate technology.  No–that’s not the reason bankers hate technology, I kid.  

Why? What’s the biggest issue secular trend staring the industry in the face today? Cut waste and inefficiency.  And, you see? Technology is quite capable of solving that problem. But it is in these inefficiencies of information flow and waste that bankers grow fat. They live in the margins of friction.

The truth of the matter is, when these Schwab commercials came out (below), Wall Street laughed. Afterall, he’d started out marketing newsletters. They were on ‘the inside’, no competition.
 

It was 1974 and the investment world was changing. Legislation had just deregulated commissions and of course, that changed the face of finance.

Computers were beginning to come on-line. Within a few years? Mainstream. And within enterprises all over the world, including the stock exchanges. (read: goodnight trading)

It was technology that was creating the ‘real change’. It started with being able to pick up a phone, call a computer,  and put in an order directly into the exchange. Read: No Broker, No Trader. And so, it was light’s out for the business as they’d known it: trading in huge spreads between buyer and seller.  Living fat off the land. 

Now. Philosophically, banks are nothing more than a manifestation of a bunch of people. And, in, this group of people there is arguably, even probably, a desire to survive.  And this grouped ‘desire’ lives, thrives,survives,or dies within the framework we give them: taxes, laws, &ethics.  We, as a society, grant them their role. To be certain, there are also generational advantages, but most of the wealthiest people are of course, self-made. We create the bankers.

Bankers are a special breed. But they can get lazy.  And to be certain, we’ve bred them to not suffer the ills of a plebian life.

So what happens when we take their money? They seek survival in a different profit center: InitialPublicOfferings. (…And didn’t that turned out lovely.)

And then we can roll the tape. From there: we scampered to Loose Lending, which then shotgunned into bizzaro Financial Engineering. Rocket fuel for the entire eco-system.  And all within a framework we set up. And, now the genie is out of the bottle.  There is no going back. It is a new interconnected world we live in. And this, to me, is incredibly exciting…

And so, why: why, this constant shuffle? Why do the banks keep moving the ball? Well; bankers keep inventing new stuff to sell because, they don’t really ‘make’ anything.

Technology has yet to fully integrate into the banking model.  It will though.  Sharespost is a perfect example.

You see, bankers exist in the cracks of millions of transactions. They are Friction. The friction of the transaction, is their life blood.  They need it.  And you don’t.  No one in their right mind would.

Technology removes this friction especially from an intellectually based transaction.  It’s not like we have to ship you a car or anything.  A couple of emails and a phone call, things get done.  

Now imagine all of that overhead sitting in those offices….It’s sad but true.  Banking is the one industry that hasn’t really seen the change technology is going to bring.

Tom O’Malia

Orfalea Director’s Chair in Entrepreneurship – University of Southern California

Tom’s entire career experience has been in entrepreneurial ventures and teaching. He has served as the Director of the Lloyd Greif Center for Entrepreneurial Studies. Under his leadership, USC’s entrepreneur program consistently ranked among the top programs in the nation. He has personally taught and inspired thousands of entrepreneurs. Tom is widely-regarded a leader in both academic and business circles.

The USC entrepreneur program was recognized as the #1 program in the country by Success Magazine.

See this fantastic interview. (courtesy of: PerfectBusiness.com)

If Video Killed the Radio Star? What will social media kill?

We’re not waiting to see.

Here’s our new channel on YouTube with a new series. Gurus: Before and After.  Prognostications: before and after.  We love to watch the guru.

Did you know guru means ‘teacher’?  So. First? Dr. Doom himself, Nouriel Roubini.

The truth of the matter is, most of the people in my industry are sales monkeys. I should know, to some that’s what I may seem like.  

I worked for one of the ‘majors’. I spent almost 10 years in the industry. I’ve attended all of the conferences. And I have seen all of the types of people we label a success and failure in this business.  

A couple of my favorites are still the rich boy or girl playing banker with their family and friend’s money.  Then there’s the hard nose, pushy person who argues their way into your wallet, gotta love ‘the street’ in them.  And the truth is, we know this.  Yet, we perpetuate the cycle. Over, and over, and over.

We trick ourselves into thinking that if "so and so" is working at "such and such", then ‘this is what we should do’– this is how it works.   The media perpetuates it with guru worship, because you watch. Hollywood aids in it, with sexy voice overs ’cause it pays the bills. Politicians live by it because it’s easier. And if you really took the time to look, you’d notice– Wall Street is exactly like Amway; top heavy. 

The thing is, we know from behavioral science, the human condition likes to forget. Otherwise, we cannot be so brain-dead to think another $20 million in an ad campaign is going to make us forget.  How many times have we been burned, by the very people who feed us our information? Oh, no…

After much thought and personal debate about where to host such an endeavour to change this lemming movement, I’m starting a new series here at GDP.  

Everything your broker won’t tell you. Are you ready?

 Andy Xie, Former Chief Economist for Asia at Morgan Stanley drops tidbits of knowledge that you should be listening to.

Here’s a quick lesson on High Frequency Trading. Get yourself up to speed on how things really work on the exchanges.

Dear Valued Readers and Clients,

I’m sorry for the radio silence this week on our blog and sporadic posting since we’ve upgraded the site.  It is my goal for us to be back to at least one post a day in the coming days.  We’ve been trying to upload new code to the site and it’s been a miserable failure.  We will try to tackle it with a fresh perspective next week.  As for the markets, I do think they are overpriced; whether looking at it from a technical or fundamental standpoint.  That being said, the markets are rallying and it can’t be ignored (albeit on smaller volume). So, celebrate today.

As a firm we are currently invested (on a basic level) as follows: 46% Stocks, 35% money market and alternatives, 15% in Bonds, and 5% alternatives. I do expect our allocation to change in the coming days. I was originally in the "retest the lows" camp–I still think we are due for a market correction (approx. 10%) but a retest of the March lows looks unlikely given this week’s action from a technical standpoint.  That is all I will say at this time in this forum, for competitive reasons.  Of course, you can email questions to ceo@gdpwealth.com . 

I hope we will have more interesting charts, documents, and, in general more compelling media to show in the coming weeks.  Thanks for your patience.  Wordpress (our website platform) is infinitely more powerful, but also WAY more complicated. 

If I could compel you to watch one thing for the summary of this week it’s this video.  The video involves a discussion of yet another example of how Wall Street is trying to squeeze the little guy, you, the millionaire next door. The panelists bring up the term, "front-running."  For those who don’t know about front-running— 

here’s the definition. Have a good weekend.

(this is not an endorsement to effect trades/allocation for your own personal account or solicitation) 

The link below is a guest posting (via Zerohedge) on why there will be DE-flation in the near future with very salient points.  It is my contention that inflation is still of concern because of simple market mechanics.  If the Treasury continues to print money as they have, we will see the market participants require higher rates of return on the debt the Fed is issuing.  It is also known that China and the rest of the world will actually have to increase their buying from the current (record) elevated levels to maintain the current market levels.

Add-in any unknown, like the aftermath of California and New York’s deficits, an unforeseen geo-political crisis, or the continued selling of treasuries by foreign governments, and the armchair odds still are tilted toward inflation in my opinion.   That being said, it is a thesis we are all debating and watching. Here is the argument for deflation.

Wikipedia: Deflation

This is not intended to be advice or solicitation.