Thursday, November 04, 2004

Class notes from Anthony Annunziato's lecture

For those of you who missed the presentation of Anthony Annuziado, here are some of my notes on the presentation.

NOTE: they are my notes, and not in absolute order or in his exact words, but the meaning of his comments are the close to his as I could make them.

Todd Palmer introduced Anthony Annunziato as a 1971 Bonaventure graduate and a successful energy trader.

Anthony said that the key to trading is understanding Supply and Demand and the flow of capital.

People often do not understand economics. For instance in the late 1970s people thought oil would be over $100 a barrel. However, this would have forced people to give up eating had their oil consumption remained the same. Of course, high oil prices led to lower Quantity demanded and more supply.

On Corporate America:

Large firms are not creating jobs—on net (when you consider their takeovers of firms and subsequent layoffs of employees, it may be better to look for jobs in small and medium sized firms.

CEOs and management in general have an egotistical view of themselves; they do NOT add as much value as they think they do.

One definition of management: Management is there to protect the firm from a few.

He feels that this definition is all too often correct and has many implications. For instance: Many do not reward good ideas and hard work. Want you do not shake things up. This bureaucratic mentality leads to inefficiency and no growth.

To too many people, risk management is risk avoidance. Risk and return goes hand in hand. Especially problematic when lawyers get involved.

On Competition, the job market and other things:

We now live in a global world. Competition has increased. Must consider how do we add value?

America was build on risk taking and entrepreneurial spirit. We still are way ahead in this area. Not so much in other areas. We do have best college system and finance system, but acquiring intellectual capital is relatively cheap.

Competition for jobs will keep hourly wages down. Outsourcing etc is here to stay.

Saving and investing grows in importance as hourly wage drops. Let money work for you!

To paraphrase: a rising tide raises all ships, but when the tide is not rising, you have to take risks and paddle for yourself.

On Enron

Bad ethics and much pandering to Wall Street.

On the supposed deregulation of utilities

Deregulation is overstated. No one has real incentive to end regulation. For instance, regulators do not want to deregulate themselves out a job. Most utilities do not want to have to compete. In fact probably cannot compete…See airline industry. New carriers know business and compete, older carriers can not.

Consequently, we see in the press that there is deregulation, but in reality there is not as much as we may be led to believe.

California "Energy Crisis" caused by several factors. California refused to build new electric generating facilities. Demand increased. Prices charged were capped, but prices paid by utilities were not. When they needed energy and had to go into the market to buy it, prices were high (they had not hedged). This buy high, sell low problem led to many utilities rescinding on agreed upon contracts with government's blessing. This has led some firms to vow not to do business in California.

On Energy supply and alternative energies

Right now demand = supply. Problem many feel demand wil continue to grow at a rate that is faster than production can increase. Hence price rise. Which will slow demand.

currently no alternative fuel is economically efficient. Maybe 15-20 years down the road, but right now no Alternative fuel will have to be brought forward by entrepreneurs.

On Investing

People just out of college should try derivatives. Yes you may lose money since you do not know what you are doing, but you do not have that much to lose.

On taxes and government

Government's job is to keep people safe. Other than that smaller government is better.

Taxes in NYS are much higher than elsewhere. This is one reason why firms are leaving (have left).

People can spent their money better than governments. Government bureaucrats do not understand business, customer service, etc. Yet think they know how to put money to best use.

On Jobs

Always better to work on the revenue side than the expense side of a business because better job security.

"Find a job you love and you will never have to work a day in your life."

He loves trading. It is a like a game. Objective score keeping and near instant gratification.

You can not be ruled based. Must continually grow. If doing the same thing, the same way as five years ago, you are in big trouble.

What is a Good day?

Dr. Palmer asked what a "good day or a bad day" was. TO this the answer was that he had made or lost $5 million in a day. But then went on to say a good day is most every day. A year ago he was paralyzed. Spent 17 weeks in the hospital. The experience of learning to move again makes him (and I think everyone present) appreciate what gifts simple things are (such as moving your arm or fingers or walking) and how awful they would be to lose. THese are things we often overlook until they are gone. Moral: take time to appreciate them now.

He concluded with the idea of being the best you can be. (without saying the exact words)

Pick something you like, and are good at, and have fun. To do otherwise is to waste and to waste is wrong an economic sin.

Life is too short to take advantage of people. Treat people fairly , help others, and reward others and we will all be fine.

Class ended at 12:42 to applause as we all thanked Mr. Annunziato for his time.

No comments: