Jargon: Bad Language in Business

By Jeff Robinson


Jargon-Language We know it all too well because we hear it all too often: jargon. I don’t mean the kind that teens use; the kind that can, oh my god, like totally annoy adults. Seriously, the kind of jargon I’m referring to is the kind commonly used by many businesspeople. And not all of that jargon is equal, or bad. In fact, there are three kinds of business jargon: the acceptable kind, the unacceptable kind and the marginally acceptable kind.


The acceptable kind is used by people in a trade or profession like, for example, plumbers, doctors, or software engineers. Their jargon is necessary because it’s the clearest way, and often the only way, to describe crucial aspects of their work. More importantly, everyone in the respective trade or profession uses the same terminology.


The unacceptable kind of business jargon is the unnecessary use of complicated or ambiguous language when simpler, clearer alternatives exist. Unlike the jargon of doctors, plumbers and software engineers, this kind is not needed to explain any part of their work. Here’s an example:


“We encourage these proactive employees to push the envelope by enthusiastically taking ownership of cutting edge projects. That way, we leverage core competencies and stay ahead of the shifting marketplace paradigm. Our marketing tiger team keeps everyone in the loop by being constantly on top of the numbers and by engaging in monthly face time with each player. This tight-knit ecosystem empowers the company to punch above its weight and stay ahead of the curve. Crucially, it enables us to monetize the synergy and so significantly boosts the bottom line.”


Businesspeople that use this kind of jargon do so merely to show how clever they are. It doesn’t work because everyone knows that they’re just trying to show off. Indeed, they usually produce the opposite result: they annoy their audience, devalue their message, and belittle themselves. Worse still, they rarely communicate their core points because their language both confuses and irritates the listener. A confused, but sufficiently interested listener may make an effort to ignore the jargon, but an annoyed listener is likely to walk away.


Just as it is in speech and presentations, jargon is also widespread in business documentation; it constantly crops up in correspondence, reports, white papers, and webpages. It’s not uncommon even in material produced by professional writers in advertising, PR, and the media, and it’s a particular problem on business websites because of the potentially large number of people who can view it. Websites that target people spread over a wide geographical area, especially when it spans different countries, run a high risk of alienating potential customers if they use terms specific to particular regions or that have different meanings in different places. Webpages should be written in simple unambiguous language that English speakers in any part of the world will understand.


The marginally acceptable kind of jargon is the kind used in informal conversations, emails, and text messages by most businesspeople in order to make the exchange more relaxed. It has a positive, though limited, role as long as it’s used sparingly and not to sound clever. In most business interaction, it’s safer to avoid any kind of jargon unless the communication is with a close associate.


Unnecessary jargon makes life difficult for everyone dealing with a business. It delays decision-making because people waste valuable time trying to decipher its meaning. The prerequisite of all business communication is very simple and can be summed up in one word: clarity, not cleverness. The word should be hung over every businessperson’s desk.


Jeff Robinson






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Is it Time We Decriminalized Insider Trading?

By Jeff Robinson

Insider Trading

In May 2012, The Economist held an online debate on the motion “This house believes that the crackdown on insider trading has gone too far”  link here. After hearing both sides’ arguments, readers were asked to vote. 78% voted against the motion and 22% for it. Even the newspaper’s own debate moderator expressed surprise at the strong “No” vote, citing the fact that many of the newspaper’s readers “are moneymen and business executives.”

There are two interpretations of the readers’ verdict: If you’re against decriminalizing insider trading you could claim that “moneymen,” being close to the action, know better than anyone what shady practices go on behind the scenes. If, however, you’re in favor of decriminalization, you could claim that the result reflected not so much the proportion of The Economist readers who are “moneymen,” but the large number who are senior public servants – a category hardly likely to support decriminalization.

The fact is that the jury is out on insider trading even though some of the finest financial and legal brains around the world have frequently presented the arguments for and against. Only politicians can change the law. Many of those, however, have vested interests in maintaining the status quo since it criminalizes the use of material non-public information by most other people, but not by most senior legislators, who have access to quite a lot of it. So, if you’re hoping for change, don’t hold your breath.

Recent US court cases such as the indictment of Mathew Martoma of SAC Capital Advisers have focused attention once again on insider trading. (Questions remain after SAC Capital’s Mathew Martoma is found guiltylink here). The debate about whether the authorities are going too far or not far enough, or indeed whether insider trading should be decriminalized, has heated up. It would take an excessively long post to rehash all the arguments, but here are the main ones as I see them.

Reasons not to decriminalize

Helping Market Confidence

In the past six years or so, headline-making scandals have led many people to become extra cautious about investing in the stock markets. Without sufficient market confidence many potential investors, especially smaller ones, put their money in safer, relatively non-productive places like savings accounts. Businesses, thus, have more difficulty raising capital for new ventures and expansion, and the knock-on effect is less wealth generation, lower economic growth, and weak job creation.

Prosecuting high profile names for insider trading helps restore some of that investor confidence and demonstrates that the Law is intent on insuring that a level playing field exists for all players.

Curtailing Unfair Advantage

Increasing amounts of information are needed to make informed decisions on future share price movement. Hedge funds and other investors with deep pockets get this information usually by paying “expert networks” to dig it out. Individual smaller investors can’t afford such methods, but at least have the assurance that those engaging expert networks are unlikely to use illegal insider information because they fear vigorous legal enforcement by zealous authorities.

Reducing the Number of “Victims”

Illegal insider trading always creates victims despite claims to the contrary. When an insider with material non-public information sells shares knowing that tomorrow the price is certain to drop when that information becomes public, he robs the person who buys those shares. That buyer may not realize he was robbed, thinking that he was just unlucky, but he was robbed nonetheless. It’s not much different from a barman diluting the whiskey he sells with a little water. Most customers won’t notice any difference, but they’re still being robbed.

Reasons to decriminalize


If insiders were legally allowed to trade on their knowledge, their trading would alert the market and cause prices to find their true value quicker. A few people would benefit more than others, but the widespread availability of material information to all investors would lead to a more transparent and fairer marketplace. The argument that this would create victims is over-exaggerated. The relatively small number of insiders who might benefit from decriminalizing would have a negligible effect on the large number of other shareholders.

Laws are Unfair and Vague

Over the last decade or so, the authorities have gradually expanded the definition of insider trading through what some people cynically call “legislative creep.” Apart from the obvious targets, it now also encompasses trading or tipping by anyone who has the most tenuous “relationship of trust.” Many people have difficulty knowing who’s excluded by the law and who’s not. The result is that individuals are often charged and convicted through what is sometimes termed “regulation by enforcement” – they only know they may have broken the law when they get a summons. Then, they may be offered a deal: pay the amount earned in the alleged illegal activity, or go to trial and risk paying a multiple of that figure as well as serving prison time. Many people, confused by the complexities and vagueness of the laws and terrified of losing in court, pay up and try to get on with their lives. Who knows how many of them are innocent? This situation not only causes devastation to individuals, their businesses and their families, but also hinders the whole area of legitimate information research causing inefficiencies that undermine normal market activity.

The laws don’t work

The number of people privy to material non-public information that might affect the value of even one stock /security is enormous. Multiply that by all the stocks and securities in play, then factor in the imprecise nature of the insider trading laws and you have a legislative behemoth that by virtue of its very size could not work efficiently. The relatively small number of people arbitrarily prosecuted each year attests to this. These prosecutions amount to little more than ridiculously expensive gestures. Rather than trying to achieve the impossible, the authorities should divert their resources to areas of real financial criminality where they could make a profound difference.

Cost of Enforcement

Because most cases involve many grey areas, the very high costs of regulating and prosecuting cannot be justified. In the US, the SEC prosecuted an average of 20 cases of insider trading each year since 2009. As hundreds of thousands of people work in the industry, only a naïve person would suggest that this represents any more than a tiny percentage of transgressions.

The Options

Politicians ultimately decide if the laws should be changed. Like everyone interested in insider trading, they are well aware of the most obvious three options.

The first is that insider trading legislation should be tightened and extended to all activities that enable any category of insider to benefit from or pass on material non-public information. Tightening existing regulation would ensnare, for example, congressmen and their staff who benefit directly or indirectly from the use of confidential information about the kind of planned legislation that would be likely to move the markets when published.

Such regulation tightening would probably also prohibit the currently widespread practice of selling market sensitive statistical data (like reports from trade groups, universities and other organizations) to a restricted number of select companies or individuals before releasing the data to the general public.  (High frequency insider trading and its completely legal - link here). The sale of such data generates valuable income for the selling organizations as well as enabling investment analysts and other professionals to accurately predict the markets’ movements before everyone else.

The second option is to decriminalize insider trading by repealing most or all relevant existing legislation.

The third option is to freeze the legislation in its current state allowing for occasional minor adjustments, but not new fundamental changes.


If you favor decriminalizing insider trading, you’re not likely to see your wish come true any time soon. It won’t happen till politicians feel under sufficient pressure. And they won’t feel that pressure until many more reports appear in the Media showing how the current legislative environment is counterproductive and unfair, and how it would be greatly improved by decriminalizing. Evidence suggests that this may be starting to happen. But media coverage alone won’t alter politicians’ minds. In the end, they follow public opinion and rarely do anything that might cost votes.

Since the 2008 global financial crisis, more voters than ever distrust the financial / banking industries and believe those industries should be regulated more tightly because of their key roles in causing the crisis. Much of the opposition to decriminalizing insider trading derives from this general distrust. This is regrettable since insider traders were mostly not implicated in precipitating the crisis, yet are tarred with the same brush as those who were.

Jeff Robinson


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Law and Innovation – Why Lawyers Need To Be More Like A Bougainvillea


BougainvilleaThis is a translated guest blog post written by Pablo Vinageras, Senior Manager – J&A Garrigues, S.L.P.e  Pablo focuses his practice on cross-border mergers and acquisitions, management buyouts, joint ventures, start-up investments and restructuring transactions. Mr. Vinageras commonly advises global and Spanish companies, private equity firms and financial institutions on their inbound and outbound investments. He has an extensive experience in advising global and Spanish companies investing in Latin America and China. Mr. Vinageras has also worked in Mexico and New York.

The original version of this blog in Spanish can be found here: http://blogs.morethanlaw.es/la-teoria-de-la-buganvilla


The Bougainvillea Theory

What is a Bougainvillea?

According to the Spanish Royal Academy Dictionary a Bougainvillea is a South American climbing bush in the Nyctaginaceae family, with oval, elliptic leaves, bracts of various colors and small flowers. Their main quality is their bracts as their flowers are very small and usually go unnoticed.

The trend?

The current trend is to see lawyers are sedentary sales people or people with no business insight. At university we suffered the onslaught of a whirlwind of rules, procedures, decisions, interpretations, doctrines, articles and guarantees but in most cases we never developed business savvy or an ability for business matters which today is a must in our legal practice.  Honed technical professional skills are no longer enough to have a brilliant career. We are in an era of transparency and the professional world has been transformed as a result of a demanding, difficult, environment in which every last drop is squeezed out of services. This environment calls for a different, carefully considered and more cohesive service. Legal advice has become a box of treats (“piñata”), the one that has the most to offer will win the day. To be able to offer more than the rest we obviously need to be able to set ourselves apart and provide more robust business awareness.

The transparency society

A good guideline is that every step we take will be judged by the environment, social media has transformed our profession into a place of bursting transparency. History is forged with facts and we lawyers have to craft our own history, it is no longer enough for a lawyer to have good judgment or knowledge of the law, society is demanding disciplined but exotic professionals. In my humble opinion, anything different sells and price will not be the only parameter or element that sets you apart from the rest. We are required to work hard to give added value to exceed and stand out from the rest. It is no longer enough to be a good professional; you have to innovate or be ostracized, be enterprising or be forever doomed to insipidity and push yourselves or you will collapse into a vast arid professional desert. Without distinction there will be no horizon. The client only wants to see boldness, the price for being half-hearted will be gradual exile in the best-case scenario.

If we are carried along by the common denominator and fail to take a business step to the front, we will end up permanently foundering in a sea with no life, where there will be no room for innovation and the mundane will be the prevailing factor. If I may say so again, clients want something out of the ordinary, they are constantly demanding added value, always eagerly on the look-out for a breath of fresh air, and for the advisor to work magic and above all diminish their problems.

What does the future look like (today)?

The future is different, if we are not different we cannot stand out and society will pull us under (if there is too much of anything in this environment it is legal services, professional inertia and failings on the business side). Today is tomorrow, work is light and light is development. What use is a horizon without a clear landscape. Every one of us can stand out in the jungle. Our mission is to transform the jungle into woodland, the desert, into a fertile plain. We live in a changing world, in which the winds of change blow.  We have to become the brightest color in the rainbow. Without any business light there will be no color at all.

The Bougainvillea is the alternative

The Bougainvillea is different and brings color to its environment. Above all it is a hybrid that transforms the landscape, we must mutate into a legal/business hybrid that can survive in harsh climates and shine out in grey seasons. There are many and very diverse flowers, but none like the Bougainvillea, its colorfulness is unique and its bracts are what makes it special and its chief characteristic. The Bougainvillea is simple but intense, mischievous but firm, austere but with integrity, basic but a climber, simple but resilient, frank but spontaneous and a hybrid but captivating. That is it, nothing more, the Bougainvillea alternative. Simply put, you have to stand out from the rest and grab the bull by the horns. Are you ready?


Brad Feld posted a blog on October 3 entitled : Recreating Law School found here: http://www.feld.com/wp/archives/2013/10/recreating-law-school.html - An interesting take and worth the read.

Law and lawyering,  no different than any industry needs to innovate. Change is inevitable and good.


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Barcelona – A Global Startup Hub in the Making

This post first appeared at Joining Up The Dots - A blog created by Neil Murray which focuses on the various startup communities and ecosystems that have formed. The purpose of his blog is to give exposure to these communities and provide them with a global voice.
This coming December will mark my third year living and working in beautiful Barcelona. My wife and I love it here and have no plans to head back to my hometown of Toronto anytime soon. I’m fully committed to doing my part in seeing Barcelona reach the potential it should in the startup world.
When I first arrived and started to get settled in I created a Meetup group called Barcelona Internet Startups . The group is now a thriving community of 1600+ members with many events all to do with entrepreneurship and startups. What is interesting to note is the composition of the membership – 60% Co-Citizens (expat) and 40% Spanish. This group has allowed me first hand to get ensconced in the startup community – Thanks Meetup! ( If you are wanting to create a hub in your city, I highly recommend you do the same)
Barcelona has many of the ingredients necessary to build a successful and sustainable ecosystem for startups.
Some relevant criteria needed: 
  • The  population count is 1.7 Million – Good population density – For comparative purposes Boulder,Colorado, the home of Brad Feld has but 100,000.
  • Top ranked Business and Technical Schools globally: IESE , ESADEUPC BarcelonaTech , The Artificial Intelligence Research Institute and many other remarkable institutions of higher learning.
  • Industry sponsored Incubators and Accelerators: The Telefonica sponsored Wayra, and the Barcelona Government run Barcelona Activa. Many other private initiatives are available for startups to reach out to. ( It has become very hip and cool to have an incubator or accelerator globally, hence the quality of such is suffering. Buyer beware)
  • A plethora of talented coders,developers and designers eagerly looking for work at very affordable rates.
  • Ample and inexpensive coworking space.
  • Many startup and entrepreneurship events throughout the year for learning, exhibiting and networking. The expat community tends to take advantage of these events much more than the Catalan community. Locals would benefit greatly by participating much more.
  • VC Firms – Barcelona needs to attract foreign VC firms who have a much higher risk tolerance level.
  • Angel Investor Community – Many like to call themselves angel investors as it is fashionable. The vast majority will not invest as they don’t have the means. Those that do have the wherewithal to invest need more coaxing to take risk. The entrepreneur must learn how to sell their story such that qualified angel investors takes action.
  • Barcelona is home to the Mobile World Congress - Barcelona gets on the map in a big way during this conference but needs to exploit the story throughout the entire year.
  • Tremendous foreign capital influx as assets are cheap.
  • Tremendous local wealth that needs to be tapped into.
  • Supportive local Government.
  • Inexpensive cost of living comparatively speaking to other established hubs like London or Berlin.
  • A wonderful lifestyle – Beaches, climate,culture,food and so much more…
So why is Barcelona not yet on the map? 
Risk Aversion: The Catalan culture does not lend itself to “taking a shot” or “rolling the dice”. Their very nature is to be conservative. Many entrepreneurs with good and viable ideas do not get funded due to the almost non existent risk culture. This extends from early seed stage to A or B rounds.
Afraid to sell: No matter where a startup is based, the entrepreneur must be selling like there is no tomorrow. I recently witnessed this in Israel where startup entrepreneurs take this to heart as they never know what tomorrow may look like. They have no fear of communicating and networking to reach as many potential investors as possible. The Catalan culture is very reserved.
Evangelists: Barcelona needs many more evangelists shouting from the hills proclaiming how Barcelona is a hotbed for startups. Like other movements, with enough action and less talk this would become a self fulfilling prophecy.
Less Government or Bank Funding: Government or bank loan programs have no place in the startup world. It only scares off smart money down the road. Entrepreneurs in Barcelona and everywhere for that matter, must learn to sell their idea and raise their own initial capital to build their MVP. The Spanish startup community in general must stop looking to the Government or banks for financial help.
Where the Government can help:
- Easier fast tracking process for setting up special purpose vehicles for startups.
- A quick and easy visa program to retain and attract talent.
- Introduction of tax breaks or incentives for high risk capital.
And my favourite that would be so incredibly beneficial for Barcelona…
- Set up a Venture Stock Exchange to fund startups. The Barcelona Stock Exchange resides in a beautiful building on the remarkable Paseo de Gracia. Sadly next to nothing goes on there to speak of. Barcelona should follow the lead of the immensely successful  Toronto Venture Exchange , where billions of dollars are raised for speculative high risk, high reward ventures. The economic spin-off from this initiative would be simply resounding.
All in all, Barcelona can become a global player. Less talk, more action and greater risk taking and in a few years the local coffee shop will be humming with the sound of entrepreneurs making their pitch.
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Emotional Intelligence (EI) – The Other Kind of Smart

By jeff Robinson

EI - Emotional Intelligence

Success in life depends on numerous factors including brainpower, education, personality, ambition, inheritance, and health. Yet, we all know people who score highly in these areas, but who accomplish little in life: brainy people with high academic achievements who cannot hold down a job; ambitious people who never give up, but who never succeed either; and people with substantial inherited wealth who squander it all. Conversely, we know individuals who were academically mediocre, inherited nothing, yet, achieved great success. Clearly, there’s something else at play. Nearly always, that “something else” is emotional intelligence (EI). Yet, important though it is, EI is often overlooked because it’s a nebulous concept, which attracted little media attention until recently. So what exactly is it?


In a way, it’s like a mental version of the Japanese martial art of Judo. In Judo, contestants need to harness a competitor’s strength as well as their own in order to win. For that, they must analyse and understand the other person’s mental and physical attributes. Similarly, people with a high EI level are keenly aware of other people’s emotional plusses and minuses as well as their own; they use both to create empathy and encourage cooperation in order to achieve a desired result. Of course, other factors matter, but without a high level of EI, most interpersonal relationships are frustrating, uphill struggles.


Unlike Judo, however, EI is not primarily about winning a game or contest (though it certainly improves a person’s chances of success in a competitive environment). It’s more about seeing the other person’s point of view and attributes – both positive and negative – while being fully aware of one’s own in order to achieve the best outcome. Good managers with a high level of EI, for example, bring out the best in employees by constantly being sensitive to their subordinates’ psychological triggers, while also being fully aware and in control of their own. Crucially, those managers don’t just ensure that emotional prejudices won’t impede a desired outcome, but actually turn them into positive forces that support it.


Some people are born with a high level of EI. It should not, however, be confused with charm, charisma, or an agreeable personality. Some charmers may have a high EI, but many don’t. Like most of us, they too can greatly improve their personal and professional lives by increasing it. Unlike IQ, which is fairly static throughout life and difficult to alter, EI can be improved with the right techniques. These techniques involve focusing on three key areas: ourselves, others, and the interaction between both. That may seem simple, but it’s not. Let’s look more closely at the three areas:


We must identify the factors in our interpersonal relationships that trigger quasi-automatic reactions in us, so that we can replace such reactions with well-considered responses. The goal is to take control by turning unproductive habits into productive ones. (See my two blogs related to the power of habit: “The Winning Habit” and “Don’t Leave it Too Late to Start Being Early”). By identifying the triggers, we can control our impulsive reactions. The result is nearly always transformational because it quickly turns negative or neutral relationships into nurturing and mutually beneficial ones.


When we’ve developed the habit of controlling our own reflexive responses, we can focus our attention on others. The most important skill in dealing with other people is listening, and many of us are poor listeners. To be a good listener we need to develop the habit of turning attention away from ourselves and fully onto the other person. When we do that, the other person unconsciously focuses all their attention on us. My blog “Stop, Look, Listen” deals comprehensively with this vital skill.


Mutual understanding is automatically improved when even one person in a group is acutely aware of the reflexive response triggers, and knows how to manage them to produce a beneficial outcome. A manager with those skills can transform an entire department into a hive of productivity, pride, and mutual respect. It’s hardly surprising that most CEOs of successful companies have an abundance of EI.


The process of increasing your EI can start immediately. You don’t have to join a club or enroll in a course. All you have to do is make the decision. The sooner you do that, the sooner you’ll start enriching your personal and business relationships, and, in the process, transform your quality of life.

Jeff Robinson


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Investing 101: Pennies from Heaven


Pennies from Heaven

A few years ago, a good friend told me that he first invested in penny stocks because of the word “penny.” He naively assumed they were an inexpensive and relatively risk-free way of getting into the stock market. He was half-right: the unit price of a penny stock is generally low (in the past, many actually traded for pennies, hence the name). Whether or not they’re inexpensive, however, depends on how much you’re willing to spend. But one thing they’re not is risk free. To be fair to my friend, his mistake was a common one and, like him, many people have the wrong idea about penny stocks.

So, what exactly are penny stocks? There isn’t a single, agreed definition of the term – it varies depending on whom you ask. Nevertheless, penny stocks usually have all or most of the following four characteristics:

  1. Low stock price, usually below $5, often much less
  2. Relatively small market capitalization, usually below $300 million, often much less
  3. Limited liquidity due to low trading volume
  4. Not traded on major stock exchanges

Investing in penny stocks is significantly riskier than investing in stocks traded on the major exchanges for three main reasons. First, unlike stock traded on the tightly regulated major exchanges, penny stocks are traded on the OTCBB (Over-The-Counter Bulletin Board) and the “pink sheets.” The OTCBB is an electronic trading service provided by the National Association of Securities Dealers. It has limited listing conditions, though there are requirements for companies to file some financial information with the SEC (Securities and Exchange Commission). The “Pink Sheets” is a list of OTC (Over-The-Counter) stocks published daily by the National Quotation Bureau. The stock ticker symbol of such companies has the suffix “.PK.”

Second, detailed reliable information about the underlying companies and their principals is usually difficult or impossible to come by. This means that prospective investors struggle to make informed decisions on the stocks’ potential.

Third, frauds are widespread in this largely unregulated environment. A common and relatively easily perpetrated fraud is the biased promotion of the stock by unscrupulous individuals. These often-plausible tricksters are paid to disseminate misleading or even false information about a penny stock company with the aim of convincing gullible people to buy the stock. Since trading volume for most penny stocks and the total number of issued shares are both low, a relatively small number of people unexpectedly purchasing the stock can dramatically affect the price. When the price peaks, the scammers make a large profit by suddenly selling their shares, and leave the gullible new shareholders holding a whole lot of virtually useless paper.

Yet, with penny stocks, as with every kind of investment, there’s a broad range of risk profiles. Not every penny stock is connected to fraudulent activity. Many are the stock of legitimate companies and some return good profits to their stockholders. The problem is that filtering the good ones from the bad is almost impossible because of lack of dependable independent information. That lack of information coupled with an inherent illiquidity makes the best of them risky investments.

After all that, I’m now going to be the true contrarian and go on record for a specific penny stock! Why? Because, for careful people who do their homework, penny stocks can yield significant returns. And being a contrarian, I naturally think outside the box and tend to follow my gut feeling. The stock in question is Bontan Corporation (OTCBB BNTNF). But first, I must state my personal interest: I’m a shareholder, as are other family members. I don’t represent the company, receive compensation from it, or expect to receive any compensation in the future (apart from benefiting if the stock performs positively). I’m involved primarily because I believe that, unlike many penny stock companies, Bontan has exciting short- and medium-term plans. Those plans are both exciting and credible, and are the reason I think that the company’s prospects are very encouraging.

Briefly, the plans revolve around a complex deal Bontan is currently working on with Portage Pharma Ltd. – a deal it expects to conclude by April 15. Portage Pharma’s management team is impressive. It boasts some big names in the biotech business – people with remarkable track records who understand the biotech industry intimately and the potential of the current deal with Bontan. Nevertheless, like all penny stocks, indeed all investments, it’s not without risk. (See my recent blog article about shrewd investing “Investing 101: Apple’s Lessons for Investors.”) For me, however, Bontan is not a run-of-the-mill penny stock company. That’s why I’m an investor and why I’m endorsing it. Of course, it’s a risk, but it’s one I’m willing to take.


For those interested in learning more, below is the March 26 2013 Press Release about the proposed deal and the two companies involved.

Bontan Signs Letter of Intent

Jeff Robinson


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Investing 101: Apple’s Lessons for Investors




What is it about us humans that we can be oblivious to crucial evidence that’s as clear as day? The stock market is a good example. I’m not suggesting that as investors we ignore blatantly obvious evidence of a stock’s likely trajectory. What I’m referring to is more serious. It is that we follow the advice of highly paid independent investment analysts when there’s compelling evidence that many are far from independent, but navigate a complex web of conflicting interests in a private club restricted to the analysts themselves and to the big investment banks and brokers they “advise”. The losers are the other players, especially the smaller investors. The stocks these analysts champion rise because enough people believe their hype. That hype often has little to do with a company’s track record, future plans, senior management, or competition. This problem is widely known, yet most investors don’t seem concerned. It’s possible that many believe that the problem was solved when the US Congress passed the Sarbanes-Oxley reform legislation in 2002. But they’d be wrong. The level of abuses decreased, but the problem is still endemic and more creatively disguised.


A second difficulty with expert analysts is a variation of what I call “The IBM Syndrome” – the decades-old IT adage that says, “You don’t get fired for buying IBM equipment.” An IT director might have saved a company a substantial sum by recommending a more cost-effective alternative manufactured by a less well-known computer company, but few IT managers were willing to take the risk; they followed the herd and recommended IBM. Investment experts suffer from the same herd mentality. Like IT directors, most follow each other, afraid to make the contrarian call and go with their gut feeling. Just look at Apple stock.


The collapse of Apple’s share price since late 2012 was on the cards for at least a year for numerous reasons. I was one of a small number of commentators who raised the red flag early. See my January 2012 blog “Has Apple Reached the Tipping Point?” Yet most experts and investors chose to ignore powerful evidence, and followed each other like lemmings. The stock was trading at $702 on September 19th, 2012. By March 4th 2013, it had tumbled by 40% to $419. Ironically, that is roughly the price it was trading at when I wrote my blog article in January 2012.


Apple’s stock price collapse is a textbook example of a third and less common investing problem: vanity. Apple’s marketing strategy ingeniously exploited the guru-like veneration of Steve Jobs by implying that not only were Apple products ultra-cool, but so were their users. They bought into this vision and saw their devices as strong fashion statements, which told the world that they themselves had a unique sense of style, above average intelligence, and the cash to prove it. Apple exploited this age-old marketing stunt to the full. Yet the results surpassed the company’s wildest dreams because not even Jobs could have guessed that the same psychological factors that caused people to buy iPhones and iPads would induce serious analysts to recommend Apple stock and astute investors to buy it. Yet millions of usually cautious people did just that. They bought first to make a statement and second to make a profit.


A fourth factor that works against ordinary investors is experts’ greed. Even if legislation eliminated all conflict-of-interest issues (which it couldn’t), and analysts and brokers stopped following the herd and left their egos at home, underlying greed is never far away. Despite Gordon Gekko eulogizing the word, greed is not good. Analysts’ recommendations to “buy” as opposed to “sell” stocks are disproportionately weighted in favor of the former because of greed. Brokers’ revenue depends on trading volume, and a “buy” is likely to generate more trading than a “sell” since everyone is a potential buyer, but only stock owners can sell. ( yes you can borrow stock, sell it and go short – a blog post for later)


Not all experts are dishonest, or follow the herd, or are unduly influenced by greed and fashion. Many are meticulous and trustworthy, and provide valuable, accurate advice, though they often struggle to convince clients that they’re not just like the rest. That’s a pity since all investors need unbiased market intelligence, whether they’re in the market for the long haul or a quick profit, and whether they stand to gain from a stock rising or, in the case of short selling, from it falling.


That’s why investors should do their own research, even if they also pay for professional advice. They should critically scrutinize company data from numerous unrelated sources. That data should provide comprehensive information on the company’s key personnel, recent balance sheet figures, innovation record, competition profile and the likely future impact of local, national and global political developments on its business. If Apple investors had coldly examined such data in 2012, most would not have been burnt. Yet they chose to ignore strong warning signs – two in particular. First, the company’s chief executive and visionary leader, Steve Jobs, had recently died. Second, a growing number of formidable innovative competitors – Samsung in particular – were eating into Apple’s core markets of smartphones and tablet computers at an alarming rate. In the last six months, a third less obvious but potentially lethal warning sign appeared on the horizon: A growing number of people were starting to see Apple’s products as being for an older market segment. Samsung had shrewdly nurtured that image for a few years, and last year highlighted it in a clever TV advert for the Galaxy S3. It shows a long line of people queuing for what is obviously a new iPhone, (though the advert doesn’t explicitly say so). Unlike all the others, one young guy in the queue is using a Galaxy S3, and the guy beside him asks, “…guess the Galaxy S3 just didn’t work out for you?” “No, I love the G S3,” the first one says, “I’m just holding this spot for someone.” When the “someone” arrives it turns out to be two people: his parents. Ouch!


On March 4th, investment guru Jeff Gundlach (who like me had predicted the collapse of Apple stock a year ago) was quoted by influential Business Insider website as saying that the collapse of Apple’s stock price “effectively debunks ‘efficient market’ theories.” The efficient market theory hypothesizes that the market always prices a stock correctly because it accounts for all relevant information about the stock. Apple proves how wrong and dangerous that theory is.


Apple’s stock collapse teaches us many valuable lessons, but four in particular. The first is to treat investing as if we’re lending money – in a way, we are; second, to ignore our egos and fashion trends, and dispassionately examine the market and the company’s fundamentals. The third lesson is to follow the advice of experts only if it makes sense to us, and fourth, to invest no more than we can comfortably afford to lose. Only when we’ve taken those four lessons to heart and done our homework, can we make an informed and independent decision about any potential stock investment. Only then should we consider reaching for the checkbook.


Jeff Robinson


P.S. After many months of consideration I have locked in on my next stock destined to crater. It currently has a 19B market cap and trades around $175.  My blog will be out on it within 2 weeks. Stay tuned…


Chart on AAPL

Apple chart



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Stop, Look, Listen


Stop Look Listen

“Information” is a buzzword. Computers gather vast amounts of it, filter it, and help us use it to our advantage. It may be a cliché to say that information is power; yet, it’s a cliché worth repeating because we’re barely aware of the most powerful information of all: analogue information that intimately affects our lives and that has been around as long as mankind. The sad thing is that we ignore much of it. We go through our days like a horse with bad eyesight who also wears blinkers. We only see what’s literally “staring us in the face” and even then, we often fail to appreciate its significance.


The reason is our minds are preoccupied with data that has little to do with where we are at a given moment and what’s around us. We’re mainly concerned with our recent past or our imminent future. We’re rarely “in the moment” as the phrase goes, so we’re unaware of all the useful data around us – data that could lift our spirits or warn us of danger – because there’s so much background noise buzzing around our heads. We hardly notice the trees, the sky, or the people we pass on our way from one place to another; we’re not truly aware of the pleasant-smelling plants we walk by in the park, or the blissful warmth of the sun on our skin, or how it sparkles on water. We miss so much of the world’s beauty because we’re in a constant and blinkered hurry.


This problem is not new, but it’s become worse in recent decades, and it’s accelerating. Never before in man’s history have we been so constantly bombarded with data. Most of this is digital data delivered to one of our many electronic devices. Much of the data is of little use to us, but like gossip, we’ve developed a voracious appetite for it. We’re so bombarded with it especially by social media that our perception of the outside world is molded more by software than by our senses.


The problem even extends to our face-to-face communication. In this vital area, increasingly we’re becoming bad listeners and bad observers. The result is that all parties to a conversation miss much of what’s being communicated. We can’t force others to change, but we can do much to address the problem ourselves. Four simple techniques greatly enhance face-to-face interaction, and usually cause the other person to pay much more attention to us too.


First, we should give our full attention to the person speaking by maintaining direct eye contact and really listening to what they’re saying. Second, we shouldn’t interrupt them until they’ve finished a specific point, even if we strongly disagree with what’s being said. Third, we should let them know that we’re getting their message by using facial expressions like nodding and smiling. Fourth, when it’s our turn to speak, we should first ask a few simple questions to ensure that we understand the full meaning of what the other person had just said. This fourth point has another important function: it shows that we’re interested in the other person’s point of view, even though we might not agree with it. Using these four simple techniques has an almost magical effect on the communication because it prompts the other person to act in a similar way towards us.


Much fuss is often made of non-verbal communication, especially the kinds most of us are hardly aware of, like slight changes in posture, tiny hand movements, or minute facial expressions. These convey independent messages that usually strengthen the verbal one. But sometimes they contradict it. For example, when a speaker is nervous they may furrow their forehead or bite their lips. Such signals are often interpreted as meaning the speaker doesn’t fully believe his or her own words. Some people take such signals “at face value,” in other words, as solid evidence that the person is lying. More often than not, however, that’s the wrong interpretation. According to Joe Navarro, the former FBI special agent and bestselling author of many books on this and related subjects, it’s almost impossible to reliably determine if someone is lying through reading their non-verbal messages. He says that, though a person is on balance more likely to be lying, if he or she displays many different non-verbal signs that usually suggest lying, it’s far from certain. That’s one reason, he says, that law-enforcement agencies always get independent collaborative evidence; the other reason is that courts attach no weight to such non-verbal signals; nor should we. I just finished reading his latest book: What Every Body Is Saying - I highly recommend you read it.


To get the most out of life we must live in the moment. Eleanor Roosevelt wisely said “The purpose of life is to live it, to taste experience to the utmost, to reach out eagerly and without fear for newer and richer experience.” We must be keenly observant of the world around us in all its aspects and when we’re with other people we must really focus on them. That doesn’t only mean that we benefit from the abundant beauty and inspiration offered by world around us; it also means that we show respect for others, and so, develop a mutually deeper understanding of each other. Few gifts are more important than those.


Jeff Robinson

Contrarian’s Mind



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Thriving on Adversity




Natural systems become stronger each time they’re confronted by a disruptive event. They improve not by resisting change but by adapting to changing circumstances. You might say that they learn from experience. In biology, the best “mistakes” – mutations that bestow an advantage – endure, while those that don’t eventually disappear.


The same rules apply to systems created by humans. Yet many people want to stop that undulating course of the world’s complex systems by trying to fight or even eliminate inherent fluctuations. From finance to education, they want to get rid of the natural stressors. They envisage a scenario where major events are predicted so that the most disruptive can be avoided. They want a graph where the line showing events and their magnitude over a specific period is as close to a straight line as possible.


In economics and finance, they aim to all but flatten the business cycle. In education, they want to make every child’s achievements equal. So, some schools have eliminated red correction marks because they might undermine the confidence of sensitive children. In school sports, they award medals to every participating child, telling them that they’re all winners and that nobody lost. (See my blog: “Education and Parenting: Are We Sowing the Seeds of Disaster?”)


In the financial world, governments and central banks aspire to remove natural market fluctuations by aggressive intervention policies and restrictive legislation. Not long before the 2008 financial crisis, they confidently predicted that their robust systems meant “the end of booms and busts,” while simultaneously allowing the development of banks that were too big to fail. When they did fail, the authorities forced the taxpayer to bail them out, yet didn’t hold any individual in those banks, or the agencies that regulated or rated them, personally liable. (See my blog: “Skin in the Game”). Many financial institutions have again become too big to fail because the authorities have yet to fundamentally change the system.


As individuals we too want to eliminate the ups and downs of nature and the systems that directly affect us. When we feel down, we demand anti-depressants from our doctors. When we ache, we expect another pill; we even want pills for ailments we don’t have “just in case.”


From children to politicians, educators to bankers, fewer of us stand on our own two feet and take responsibility for our actions. By removing too many of our natural challenges, we’re weakening our ability to handle the big ones. As a result, we’re becoming as vulnerable to unexpected events as ice cubes are to a sharp increase in temperature. We’re convinced that we can build a robust defense against every possible occurrence; that no matter how much the temperature rises, we can always build a better freezer.


It’s understandable that we should try to predict the future and build bigger and stronger defenses against perceived threats based on those predictions. Yet, for at least two reasons each approach is a waste of resources and doomed to fail much of the time. First, it’s nearly impossible to predict when we’ll be confronted by challenges and what kind of challenges they will be – we can’t even accurately forecast the weather for more than about a week. Second, by strengthening all the defenses to withstand challenges, we’re actually undermining the inherent abilities most systems have to become more resilient through dealing with stress.


We can learn much from our bodies. They grow stronger because they’re constantly exposed to mild stressors: If we don’t take regular exercise, for example, we become physically and mentally weaker, and less able to handle any stresses, particularly big ones. At the biological level, organisms become immune to diseases by developing resistance to them. In business, astute venture capitalists invest in entrepreneurs with innovative ideas. But they’re especially drawn to those who have steered a steady and honorable course through a prior business failure, and so are more likely to identify future dangers. (See my blog: “Must We Fail before We Succeed in Business.”)


According to Nassim Taleb, the noted Lebanese American scholar and author, we should build systems that are what he calls “antifragile.” Most people, he says, would suggest words like “robust” and “tough” as antonyms of “fragile” because robust and tough things are, by definition, not fragile. But antifragile doesn’t mean “not fragile.” Antifragile things are improved by the stresses of chaotic and unpredictable situations; they benefit from the encounters.


Taleb is right. We must become counterintuitive and accept that we cannot know the future. Rather than build robust defenses against every conceivable threat (which is impossible), we must strike a balance between reasonable defense and extraordinary flexibility. We must become more adaptable so that we can respond quickly to the unpredictable. We must be agile and learn from our mistakes. Only then can we become progressively better at dealing with both the future and the many challenges with which it will inevitably present us.

P.S. I highly recommend you read Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb.

Jeff Robinson

Contarian’s Mind 

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Skin In The Game

skin in the game

By Jeff Robinson

Let’s take a quick look at Ireland. International banks, mainly European, lent oodles of money to Irish banks, who in turn lent it to customers to buy houses. House prices increased faster than inflation, promising big returns on investment and enticing more people to buy more houses. So the banks lent more and more money, often without carefully checking if the borrower was a good risk because the banks were satisfied that the collateral – the houses – fully covered their exposure. In the process, one of the biggest asset bubbles in decades was created. When the bubble burst, the Irish banks pressurized their borrowers to repay, but a large number couldn’t  The Irish banks in turn couldn’t repay their loans to the international banks, thus threatening a collapse of the banking system in Ireland and the viability of the euro.

With variations, this scenario was replicated in many countries, most notably the US, Spain, and the UK. Its repercussions are ongoing and will be felt for decades. Many individuals and institutions share responsibility: the banks, who lent recklessly to each other and then to the retail customers; the politicians, who didn’t ensure that the responsible authorities properly controlled the banks’ activities; and the ratings agencies who gave top scores to the most dubious assets. The vast majority of the population in each country had no responsibility for the problem, yet picked up the entire tab. Those taxpayers didn’t even know they were in the game till they got the bill.

In a classic case of moral hazard, the real players, the ones who ran it and signed off on its outrageous risks had – to coin a phrase of Warren Buffett – no “skin in the game.” They had nothing significant at stake, so nothing significant to lose. Yet the game was so grotesquely rigged that they had everything to gain. Many of them made immense personal fortunes betting with other people’s money – fortunes that they never had to forfeit even after their later bets went disastrously wrong. Sure, a few of the more blatantly negligent were sanctioned. But the “punishment” usually meant early retirement with outrageously generous pensions and severance deals. Most of the top people who oversaw the most reckless activities still hold top positions in banks, regulatory authorities, ratings agencies, government, and elsewhere. Meanwhile, the economies of the affected states and countries are struggling. Many of the people who were left with the bill – the taxpayers – have lost their jobs, and the rest have seen their wealth and income diminish.

The financial crisis exposed many types of moral hazard as well as hypocrisy. Bankers took huge risks they knew would be covered by the taxpayer if something went wrong. Cynically, the same bankers later cited moral hazard to resist partially forgiving the mortgage debts of people most badly hit by the economic downturn.

Moral hazard – not having skin in the game – is not unique to the financial world. It permeates most areas of society and is one of the main reasons much of the world under performs  Politicians, generals, heads of federal agencies, civil servants, union leaders, lawyers, doctors, business consultants, auditors, and top executives of big companies rarely have skin in the game. They seldom suffer real personal consequences when their decisions are wrong. The ordinary people pay for their mistakes.

That’s the way the world works and it’s obviously unfair. But the implications go far beyond inequity. The world’s full potential can never be reached because the major decision makers don’t take personal risks; they have no skin in the game. If they had, they would up their game dramatically because nothing promotes efficiency and concentrates our minds better than the possibility of real personal loss. It’s what makes entrepreneurs different, and is why start-up companies produce so many innovative products and ideas. And it’s why many fail. Ironically, when companies become successful and grow very big, many lose their edge because they end up being run by accountants and lawyers who lack entrepreneurial vision. They use the company’s financial clout to fend off competition for as long as possible. Most of those top executives don’t have skin in the game. They’re highly paid employees with gilt-edged contracts guaranteeing huge salaries and golden handshakes if they leave for any reason, even bad performance.

The Soviet Union collapsed because nobody had skin in the game. The state was the sole employer and banned virtually all free enterprise. People who worked hard got the same pay as those who did the absolute minimum. Not surprisingly, most people just went through the motions of working and the economy paid a terrible price. The factories produced outdated, unreliable industrial and consumer goods unsalable outside the Soviet bloc. The highly inefficient collective farms were unable to feed the population, resulting in frequent food shortages and occasional famines.

Obviously, the capitalist world is different not least because enough people still are entrepreneurial. Yet it’s not as different as some might like to believe. We have allowed a work culture to develop where many players have no skin in the game. From the top down, fewer people take responsibility for the advice they give or the work they do. This undermines efficiency across society, which all but guarantees a poorer world for all of us in the future if we don’t change tack soon.

Jeff Robinson

Contrarian’s Mind

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