6 Surprises of Transition Management

Transitions of leaders in businesses can be surprising, especially for the new leader. Here are the common surprises new CEOs face, and how to tell when adjustments are necessary.
Surprise One: You Can't Run the Company
Warning signs:
You are in too many meetings and involved in too many tactical discussions.
There are too many days when you feel as though you have lost control over your time.
Surprise Two: Giving Orders is Very Costly
Warning signs:
You have become the bottleneck.
Employees are overly inclined to consult you before they act.
People start using your name to endorse things, as in "Frank says…"
Surprise Three: It Is Hard To Know What Is Really Going On
Warning signs:
You keep hearing things that surprise you.
You learn about events after the fact.
You hear concerns and dissenting views through the grapevine rather than directly.

To read more
Transition within companies is the most important time to reap wealth for your hard work. Loewen & Partners advises owners on how to get the most value out of their businesses.

the 7 habits of inefficient markets

What is the market up to? I get to listen to the market, or at least a fairly large part of it, as I belong to a finance club with Bay Street's smartest money guys. Collectively they control several billion Canadian dollars, so when they talk, I listen. Over the last five years, since I joined, I have listened to leaders of public companies, owners of private companies, stock promoters, investors and many more. Yet few of these people spoke about the big crash coming up in 2008.
As we leave the decade of the "Naughts" and wrap up lessons learnt about markets in the past ten years, I realize that even this club of such smart men and women followed the markets off the cliff in 2008. What were they thinking?
Back in 2007, Paul Krugman summarized the seven habits that help produce the anything-but-efficient markets that rule the world. I thought a great way to begin the next decade would be a quick review of these:
Seven habits that help produce the anything-but-efficient markets:
1. Think short term. 
2. Be greedy. 
3. Believe in the greater fool 
4. Run with the herd. 
5. Overgeneralize 
6. Be trendy 
7. Play with other people's money 
I got these 7 habits courtesy of Paul Krugman, quoted in Fortune back in 2007. Worth contemplating.
Jacoline Loewen, author, writer, and expert in private equity.

Private Equity interested in good companies

The credit markets are changing.
Banks may not be lending but private equity has cash for owners of businesses looking for growth capital. Watch Toronto's BNN's Squeezeplay as they chat with Jacoline Loewen, author of Money Magnet
http://watch.bnn.ca/squeezeplay/december-2008/squeezeplay-december-30-2008/#clip125488

For more information:
http://www.moneymagnetbook.ca

It's that time of year again, forecast 2009

As the new year begins, so do the market forecast sessions. I will be attending the Toronto Bay Street Ticker Club forecast dinner this week, and this past year unfolded in a very different path from the one described at last year's dinner. It gives everyone comfort that even the best analysts did not see the level of the crisis - we all are in this together.
One bright light is the 2009 forecast by Niall Ferguson in National Times. It may bring you some joy in the New Year. Here's a sample:
"Many commentators had warned in 2008 that the financial crisis would be the final nail in the coffin of American credibility around the world. First, neo-conservatism had been discredited in Iraq. Now the “Washington consensus” on free markets had collapsed. Yet this was to overlook two things. The first was that most other economic systems fared even worse than America’s when the crisis struck: the country’s fiercest critics – Russia, Venezuela – fell flattest. The
second was the enormous boost to America’s international reputation that followed Obama’s inauguration. "

Squeezeplay with Kevin O'Leary

Appearing on the always interesting, often controversial TV show - BNN’s ‘Squeezeplay’ with hosts Amanda Lang and Kevin O’Leary - on Tuesday 30th at 5:30, is Jacoline Loewen, author of Money Magnet. Find out about the world of private equity and how private capital is taking advantage of this collapsed market.

The Baltic Dry Index

Much of the focus in the news today is on the economy, and for obvious reasons, it's subprime mortgage this, credit crisis that, the CBC's The National and its slapdash analysis of our woes would make you think we're all getting pink slips tomorrow and an ice cream cone (CTV's National News does a better job at understanding and describing what is going on in the market). 

Much of the economic indicators that proliferate from our nightly news, like monthly employment numbers and housing starts, mark the goal posts through which our economy is kicked.  Any errant balls are wistfully reported on by journalists voraciously anticipating thousands clamoring for the newstands the next day, full of fear that their homes will soon be unafordable.  At times, it seems the journalist is the first to fall to mass hysteria and the last to admit it.  Thomas Jefferson said, "advertisements remain the only truth to be relied upon in a newspaper", of all the facts that come from our nightly news these day, this sadly remains true.  

It's best to take our own minds into our own hands, lest we be led astray by journalists.  A great economic indicator that is never quoted in the news and that may be of interest to the skeptical reader or viewer is the Baltic Dry Index.  It has been touted in the past as one of the best economic indicators you have never heard of, and what's more, it's a leading indicator, a prescient little factoid that could be unwrapped neatly at dinner parties and delivered to impress the impressionable.

The short of it is, the Baltic Dry Index is a number issued daily by London's Baltic Exchange, which was founded in 1744 by the Virginia and Baltick coffeehouses in London's financial district.  Every day, the exchange asks brokers around the world the cost to book a variety of cargoes of raw materials on various routes around the world.  The result measures the demand for shipping capacity versus the supply of dry bulk carriers.  Shipping capacity is generally inelastic, it takes two years to build a new ship, so increases in demand for raw materials pushes the index up quickly and drops in demand do the opposite at the same rate.  What makes this index so interesting is that it ultimately charts the demand for the raw materials that make up our finished goods,  so it would be here, at the Baltic Dry Index, where we would see the first signs of a stable increase in demand, signaling a sustained return to growth.

The index has fallen considerably in the past year, a reflection of plummeting demand and deflation, but under closer inspection it seems to have reached a bottom from which it is stabilizing at around 800.  A sign of good things to come?  Unfortunately, economic indicators, much like economist, make little sense alone, but the Baltic Dry is a good place to start making up your own mind on things.

Crisis on Wall Street - Blodgett's view

Back to the last big market downturn - the Tech Bubble - I took the advice of a certain Mr. Henry Blodgett (who was the tech guru at Merril Lynch) and bought AOL instead of Amazon. Herny has tried to redeem himself after his massive fall from the heights of Wall Street. I've tried to redeem my savings too.
I was intrgued to see old Henry's take on the current state of the markets. Read...
Last year, I wrote about the fall of the public markets in Money Magnet. At the time, my publisher asked me to tone it down as she could not see Wall Street ever losing value!

Credit Crunch Games for Your Christmas Party

Want to really understand what the credit crunch means for the economy? In Canada, private equity will have a challenge getting anyone to think about debt or credit. Our economy is frozen to match the weather.
I was surprised to see that The Economist has a sense of humour during these dark days but this is a good game to play. I got it from Jeff Watson.
Check it out:
http://www.economist.com/displaystory.cfm?story_id=12798307

Manufacturing in Ontario

Business owners and manufacturers in Ontario are struggling with the new realities.
We have passed the agricultural, industrial, and information ages and we've entered the conceptual age. The three As—abundance, automation, and Asia—ushered in this new era.
In the same way that machines have replaced our bodies in certain kinds of jobs, software is replacing our left brains by doing sequential, logical work.
And that brings us to Asia, to where that work is being shipped.
In Asia you have tens of millions of people who can do routine tasks like write computer code. Routine is work you can reduce to a spreadsheet, to a script, to a formula, to a series of steps that has the right answer.
Daniel Pink has written A Whole New Mind about this change and how it applies to the companies we create. "This is great book to tell you where to invest your private equity fund money," says Jacoline Loewen , author of Money Magnet and a partner in the private equity company of Loewen & Partners. "Every manufacturer in Ontario should read it to know what to do."
He tells us that his generation's parents told their children, "Become an accountant, a lawyer, or an engineer; that will give you a solid foothold in the middle class."
But these jobs are now being sent overseas. So in order to make it today, you have to do work that's hard to outsource, hard to automate. To play an interview with Daniel Pink, press on link below:
http://event.oprah.com/videochannel/soulseries/oss_player_980x665.html?guest=dp&part=1

Getting the Public Equity Markets Right

Here is the brilliant Nassim Nicholas Taleb in a recent Charlie Rose interview:
http://www.charlierose.com/view/interview/9713
Taleb talks about Capitalism 2 where instead of relying on public markets to make money, people will now revert back to private money.
This is exactly what I said in Money Magnet, where I predicted the end of the public markets as the main model for creating value. Private equity is money which goes into companies directly from one human to another human who look eachother in the eye at least once every few months and who work together to build value in the business.
Beats the ATM machine style of investing in the public markets.