For those of you Financially savvy, did you know that 90% of the Fortune 500 are using derivatives in thier portfolios?
Here’s why this is interesting: it is further proof that not enough time is being spent on strategic decisions and instead too much time is given to minutia.
Why are derivatives minutia? Well, think about it this way: if management felt they were doing a kick-ass job, wouldn’t they reinvest all possible capital into their own efforts….
I’m serious, consider that.
With the “odds of winning” with derivatives greatly below the psychologically percevied odds, why are top brass spending ANY TIME on playing with that kind of fire? It doesn’t make sense. If CEO GGG is doing such a great job, shouldn’t the company be using all of its available resources (including capital) to back the ideas of CEO GGG?
Sure, not every business is scalable – I started with a non-scalable and quickly added scalable ones, but still it makes more sense for me to pour my capital into my next business and the employees in my next business line than it does to play the derivative market.
Here’s how to understand this if you don’t really know what’s up with derivatives: 40% of earners expect to be in the top 1% of earners. Well, 39% of all earners will be terribly disappointed. Same thing with the derivative markets: you don’t plan to go belly up, you assume that you’ll win….
Best case in the long run, you break even. I can do better with your capital. So CEOs of the world, send me your cash and I’ll send you 13% steady. How’s that?
Image courtesy of Mike Licht