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The Hutch Report

The 4 Cryptocurrency Opinions To Avoid

By | Cryptocurrency, Money, Psychology, Technology

The level of trading activity in Bitcoin and other cryptocurrencies has begun to attract the attention of the general public. It seems to be everybody’s favorite subject these days. Discussion and debates about Bitcoin are raging at dinner tables across the nation and around the world. In addition, the number of articles outlining Bitcoin’s future trajectory have increased daily. In spite of the number of financial media channels having previously written it off as a mania, now provide its viewers the latest daily quotes.

It is not so much the promise of this new peer-to-peer technology that operates with no central authority or banks. Nor is it interest in the fact that a collective network carries out the issuance of bitcoins and manages the transactions that have captured the attention of the public. There are a number of early adoptors who have become extremely rich off of the increase in value of Bitcoin and the so called alt-coin market. It is the dream of quick riches that is really driving the interest.

Whenever a technology begins to reach fever pitch, as we are seeing with cryptocurrencies,  a large number of self-proclaimed experts begin to appear. They are suddenly gifted with incredible prediction power. They know where the price will be in 3, 5, 10 and even 20 years. They happen to know that no government will be able to control it or stop it. They seem to know that it will eventually take over the world as the primary form of currency for all transactions.

However, these are not the only voices being heard from the rooftops. There are also those with equally impressive predictive powers. Those that seem to know where the top is. The point where Bitcoin ceases to move up, reverses and begins its long slide back towards where it began. Those  that seem to know that no solutions will ever be found to the current technological challenges that a decentralized digital currency currently faces. Those that seem to know that cryptocurrencies will never be a replacement for the platform of fiat currencies on which our economies currently function. They seem to understand all the weaknesses of these digital currencies and where their limits are.

Nassim Nicholas Taleb, author of “The Black Swan,” presents a convincing case on our inability to predict events with hard-edged analysis. At the same time he stresses to protect yourself from highly improbable events. Therefore, the first thing that should be done is to avoid the following 4 outspoken opinionated groups on the subject of Bitcoin. These groups are all supporting their own interests, which don’t always coincide with the interests of the individual.

1) The Financialists

The Central Bankers and their affiliate bankers around the world see themselves as the guardians of the global economy. In addition to providing a variety of services to the public that enable the economy to function rather smoothly on a daily basis, banks are still for-profit institutions and their principle goal is to generate profits. This is often done by way of complicated products with unsusual naming conventions. They control the money transfer and credit system, therefore, they weild a large amount of control towards the stability of the system. For this reason, they will not tolerate any outside technology that threatens their position. The initial reactions to Bitcoin were that of a pure fad. Further analysis sees them now trying to discover ways to regulate it, or create their own digital currency where they have the full control to profit from it. Their opinions are changing daily based on their confidence in how to manage its evolution. They are worried and rightly so as the initial concept of a decentralized digital currency would make many of their services redundant.

2) The Technologists

Bitcoin and the blockchain are based on technology. They have, not surprisingly, attracted the attention of the technology and developer community. They believe because it is based on technology, and they understand technology that it provides them with more powerful forsight. Once the value of Bitcoin began to rise, the startup community began to move into action and started developing a variety of ideas such as wallets, new exchanges, a variety of platforms etc. It has now become the hot area to be involved in. So hot that public companies that have nothing to do with Bitcoin or the blockchain have changed their names to incorporate the term blockchain only to see their shares rise immediately. The technologist are on a crusade and want you to join the crusade. However, it is wise not to forget that at one point there was once a product called a Betamax cassette which was superior to the competing VHS cassette only to lose out and be banished to history. Apple computer produced a much higher quality product and software than the PC and Microsoft option at the time. Apple computer only managed to acquire 5% of the PC market, much to the surprise of the followers who understood the value behind the technology.

3) The Evangelists

The leader of this group and one of the most vocal has been Andreas Antonopoulos. Antonopoulos became involved with Bitcoin in 2012. He has written two books on the subject, describing in detail the technical rules governing Bitcoin in a way that a novice could understand, and has given more than 200 talks (many of them free) about Bitcoin. Antonopoulos obtained his degree in Computer Science and Data Communications and Distributed Systems from University College London. With his help the Bitcoin evangelists have an ever increasing choir. Some of them understand the technology and find its possibilities fascinating. There are the bandwagon jumpers who want to join the club and fit in with the “cool crowd.” There are those that see it as a great way to transfer money around without the peering eye of the government, or truly a new medium of exchange not governed by any central authority.

Then there are also those who have dreams of striking it rich. Ironically, Antonopoulos, after having spent the last five years of his life traversing the globe and educating people about Bitcoin found himself not only NOT taking advantage of the run up but found himself in debt, until a wrath of Bitcoin evangelists donated to his cause. This came just at the moment when he was questioning what he was doing it all for.

4) The Governmentalists

Governments are the farthest from being Bitcoin advocates. This is not because they don’t believe in digital currencies. In fact, they would garner more control by ridding the economy of hard currency and make everything digital. This would enable them to gain tighter control of the money supply or increse their efficiency of tax collecting. What they don’t appreciate is loss of control. The idea of a collective decentralized managing transactions and digital currency issuance is an idea that they will never accept. Why? They require a centralised authority (which is them). We wrote about the ways in which governments could shutdown cryptocurrencies. It is, therefore, no surpise that they are fighting vehemently against the idea.

So who should you listen to? This is one of those situations where you must truly take matters into your own hands. You have to acquire the knowledge necessary, educate yourself and decide for yourself how this new system of digital currency could affect you personally. This means choosing your information sources carefully. If you do listen to any of these groups, be cynical and don’t take what they say at face value. Double check and do your own research. Depending on who you speak to, you will be labelled as blind if you don’t buy into it or labelled as an idiot if you do. In the end, it is the market as a whole who will ultimately decide the fate of cryptocurrencies.

The Hutch Report

The Digital Marketing Mix

By | Business, Marketing

The new economy and our increasing digitised world seems to have outmoded many classical business concepts. What seemed logical from a business standpoint in the traditional sense now seems less logical from the digital point of view. Should businesses be thinking about tossing out all these old concepts that make less sense and start thinking fresh from a digital sense? Then again, has the digital hype become so great that we forget that most of the world’s economy still runs in a traditional sense and that we should merely be thinking about adapting concepts to digital models instead of having them replaced?

A real digital economy is one that is purely digital, such as information that is produced digitally, marketed digitally,  distributed digitally and sold digitally. With this definition we are able to quantify what percentage of the economy is in fact digital, which is in fact still a small portion. We know that the greater economy does not function in pure digital form, although the hype would lead you to believe this is so. If you purchase a bar of soap through a website, it may have been marketed and sold through the website but the bar of soap is still a physical object. This means that it must be produced in a factory, stored in a warehouse, and distributed to the end customer by physical means. So what we have is essentially a hybrid where the digital tools have replaced certain traditional means of doing business but not all (I don’t think you will ever see the day where we wash ourselves with digital soap).

With this in mind, businesses should be thinking about which digital processes occupy their activity chains and determine how traditional concepts can be modified to suit them, instead of rethinking the wheel and replacing them completely. As an example, we looked at effective marketing strategies in the traditional sense to see how they can be modified to accommodate the digital extension of business.

We start by looking at traditional marketing and the obvious place to begin when thinking about effective marketing strategies is the consumer. Every company’s reason for being is based on satisfying the customers wants and needs with the firm’s products and services in order to generate profits (we will not consider non-profit organisations here).

Consumers tastes vary greatly, which makes it extremely difficult for any one company to serve everybody (although Amazon is sure giving it a good try). In order to make sense of all the consumer variablities in the market, the first task at hand is to separate the market in to homogeneous segments. This way companies can better identify and analyze what really makes them tick. They will do this by asking such questions as what problems are the potential customers having that we may be able to solve better than others? Who else is experiencing these kinds of problems?

Once this is done then the company will attempt to align what it is offering with what the consumer wants or needs. Hopefully they do that properly and the segment becomes profitable for them.

In order to do that, they position four classic strategies in a way that will address the consumers wants and needs correctly and convert that into profitable sales. These classic strategies have come to be known as the “Marketing Mix” and they include: Product strategy, Pricing strategy, Distribution strategy and Promotional strategy.

Product strategy: This includes decisions about the product and its uses, packaging, branding, trademarks, as a few examples.

Pricing strategy: This includes the challenge of setting a justified and profitable price point.

Distribution strategy: This includes the selection and management of marketing distribution channels and the physical movement of goods from manufacturing to the end consumer.

Promotional strategy: This includes personal selling, advertising, publicity and sales promotion tools such as brochures.

In order to provide a simple example of this mix we will take a look at Ferrari Cars. Product strategy – they are a luxury item, therefore they are branded as such. Details of the product are all of the highest quality. The name represents luxury and automobile craftsmanship at its finest. Pricing strategy – because the product is represented as high quality and requires expensive quality materials to produce, the price point represents this fact and retails from between $188,000 and $400,000. Distribution strategy – Ferrari cars will only be sold in exclusive dealerships seeing that they cater to a very select market, and such a luxury goods consumer would accept the fact that there is not a Ferrari dealership on every street corner. Promotional strategy – their promotional strategy has to represent their product so you won’t find any flyers in your mailbox advertising “20% off if you purchase a Ferrari before Friday.”

So now, in the hybrid digital world what has drastically changed for Ferrari? The product is still a luxury car. The pricing strategy hasn’t changed to reflect that. That is to say, you are not going to get 20% off of a Ferrari if you purchase it online. The distribution strategy doesn’t change because the physical object still goes through the distributor channel to the end consumer. Essentially, we can say that the promotional strategy has changed. Instead of a nice glossy brochure (which they still have) you can get all the information you need online. The website looks high end but today you can have a luxurious looking website and sell inexpensive chocolate bars. Communication has not changed much although you get the advantage of more means of communication but so does everybody. In any case if you are going to purchase a car for $200,000 you probably want to speak directly to the seller.

What about the pure digital world? This is where the modifications have to take place because the lines become blurred.

Product strategy – This becomes a content strategy which means we are speaking about a digital good such as a book, piece of software, application etc. Product strategy can now become a bit more difficult, especially if you are thinking of branding yourself as a luxury digital product. Does this category even exist?

Pricing strategy – Because of the digital world businesses have now gained efficiencies and are given additional margin to work with so they can play with price a bit more depending on who they are selling to and what their competitors are doing.

Distribution strategy – In digital form we have the whole world at our doorstep. The strategy becomes which distribution channel to use, YouTube? Website? Instragram? or simply email?

Promotional stategy – The digital promotional strategy can still employ traditional tools such as radio/podcasts, Television, Billboards, Magazines etc. or it can be purely digital using such tools as Twitter, a myriad of websites to advertise on, Facebook, Google adwords, Instagram, YouTube or simply your own website. However, here we see that the lines can become blurred because now your distribution channel also doubles as your promotional channel.

Therefore, businesses have to take special care in thinking about how they position themselves in the new economy and what strategies they use. The most important aspect, which many businesses forget is the customer. If your segment market is 50 – 60 year olds then you have to communicate to them in the proper way and through the proper channels. This segment is not a big user of Snap Chat or Instagram so you have to change accordingly.

So, regardless of whether your product is physical or digital, there are some fundamental questions that businesses should not forget to ask;

Who are my customers? (How old are they? What is their profession? etc.)

Where are they located? (in the digital world, an Italian may be visiting your site, are you selling to them? If you are there are a number of cultural issues to consider).

What need, want or problem are we solving for them? (So many companies are in the “build it and they will come” frame of mind. A nice to have product is very difficult to sell).

Providing something of value that somebody is willing to pay for has not changed for thousands of years. The new economy and digital world does not change that fact. There are numerous articles outlining all kinds of traditional marketing strategies and digital strategies which are valid, however, many often still forget the reason for being in business and that is to satisfy a need. If your business concentrates on the end customer and how his or her needs are being fulfilled by your business, and work backward from there, the chances of success will increase regardless of if your product/service is physical or digital.

The “Follow Back” Button on Twitter – Who Benefits?

By | Business, Marketing, Psychology

John Harper lives in Pine Village, Indiana.  It is a beautiful little town with lots of friendly folk who are always willing to help their neighbors or visitors in need. The population is only 217 so John knows just about everybody in town and everybody knows John.

John works at a local factory and although he enjoys his job and being with his fellow workers John has always had dreams of having a bit more. He has always had the desire to be an entrepreneur and reap the financial rewards of being his own boss. After years of being at the factory, one day the opportunity presented itself. John jumped at the chance, left his job and set his plan to put his dreams in action.

John took his savings and started a small business selling jean jackets. John stated, “I mean, everybody wears them around here, what better business to start!” He opened his shop on the main street of town. Soon everybody knew about John’s shop and was stopping by to say hello. They, of course, wanted to help out the best they could so they purchased something from John. Right off the bat, the shop was doing great sales. Jean jackets were popular in Indiana since there were a lot of farmers and that is what they like to wear. Most people in the town could be seen wearing John’s jean jackets.

After a few weeks, sales suddenly slowed to a drip. After a quick analysis of the situation John suddenly realized the problem. The main reason was that jean jackets are quite durable. Once you purchase one you can wear if for quite a while before it wears out and needs replacing. Remember the population of Pine Village was only 217 so John quickly realised he needed to go outside of Pine Village and even Indiana if he wanted to seize the chance of selling more jean jackets and grow his business.

John came to the brilliant idea of sending out a flyer with a bold message saying, “I will come to see your shop, if you come and see mine.” John thought that if these shop owners came to visit they would see the quality of John’s Jean Jackets and want to buy them. John sent this out to jewellery stores, grocery stores, hobby stores, banks, lawyers offices etc. He sent the flyers out to every business he could think of.

After a few days some replys came trickling in. “Sure John, come and check out our shop and we will come and check out yours.” You see, these stores were thinking, “If John comes to visit our shop he is going to see our quality products and services and buy from us.” Soon John was spending most of his time visiting fish stores, furniture stores, gift shops etc. In return, these people came to visit John’s shop.  There was one big problem. John didn’t need any furniture or gifts so he never purchased anything from the shops that he visited.

John’s shop in return got lots of visitors from the fish guy, the bank clerk, the grocery clerk etc. However, there was another problem. None of the visitors bought anything from John’s shop. They liked it, and sometimes complimented him on it but there were no purchases. John began to get worried because in spite of the shop being so popular and having people come and go all day long, there were no sales. Eventually John did get a couple of sales from a few farmers that lived a few hours away in another county but nothing that could help sustain the business.

After a year, John’s store had thousands and thousands of followers but no sales. John didn’t purchase from anybody else because he had no money left seeing that his business was not doing well.

After wasting all his time and effort visiting other stores outside of town and entertaining those that came to visit him John eventually went into bankruptcy. The store was hugely popular but couldn’t make a dime. John ended back at the factory.

A few months later, all the guys at the factory started opening up Twitter accounts, as Twitter started to become hugely popular, so John did the same so he could stay in contact with all his pals. As he read his Twitter feed from day to day he decided to follow a few other accounts of people that he admired in addition to some news feeds that he found interesting.

Then one day a strange thing happened. John began to have a bunch of people follow him with the request that John follow them back. John shut down his computer and began to laugh. He realised his time might be better spent hanging with the local town folk.

The Hutch Report

2017 Wealth Management Review

By | Business, Economics, Money

At the beginning of 2017, The Hutch Report completed a “Smart Money” analysis to highlight how the smart money was looking at the markets for 2017 and beyond. It was meant to provide a high level overview based on an aggregated synthesis of the macro views of the world’s Top 50 largest wealth management institutions.

Now we are looking back on all the forecasts made by these “Smart Money” managers and institutions to see how accurate they were in predicting the future or if they were just exhibiting an “Illusion of Understanding.”

Central Banks and Monetary Policy

Federal Open Market Committee (FED) 

The consensus (40%) of wealth management firms predicted two hikes in 2017 of 25 bps each hike which would bring the Fed Funds target rate to 1.25%. Roughly 8% predicted three rate hikes. No precise forecasts were provided as to how much or when but of the wealth management institution outlooks reviewed, they all indicated an expectation that Central Bank monetary stimulus policies (eg. quantitative easing) would start to weaken.

On December 12-13 the Fed raised rates for a third time. Only 8% of our wealth management professionals got it right.

The FOMC did announce a tapering plan at the September 2017 meeting and have started in October by letting $10B in bonds mature each month and will slowly increase that number to $50B. As a reminder, in 2008 the FED balance sheet was $800B. It is now at about $4.50T as a result of QE.

European Central Bank (ECB) 

Taper would commence second half of 2017. One dissenter stated the ECB would be unable to discontinue QE.

The ECB did not make any rate changes for overnight credit in 2017 and that rate remains at 0.00%. They did not commence tapering in 2017. However, they did signal in October of this year that they would start tapering in 2018 by cutting in half the monthly purchases from the current rate of €60B to €30B.

The People’s Bank of China (PBOC)

The PBOC will continue to stimulate demand through adjustments of the reserve requirement ratio (the amount of money that the banks must hold as reserves).

In September of 2017 the POBC announced that in 2018 the reserve requirement ratio would be lowered for certain banks from 200 bps to 150 bps. In return for the reduction the banks must meet certain requirements for lending to small business, agricultural sectors, entrepreneurship and education.

Changing of the Guard

The next two years, 2018 and 2019, we will see some changes to the heads of some of the world’s most influential central banks.

Most people are by now well aware that in February 2018, Yellen’s term as Chair of the FOMC expires and Trump has nominated Fed Governor Jerome Powell as the next Fed chair. The post of the Fed chair is subject to Senate confirmation. The Senate Banking Committee has approved Jerome Powell which clears the way for the Senate confirmation vote.

At the Bank of Japan the current Governor is Haruhiko Kuroda and his term will be expiring in April 2018. Current headlines indicate that there is a strong likelihood that his term will be renewed as the Japanese government has expressed satisfaction with the BOJ’s policies under Kuroda.

In 2019, the terms for Mark Carney at Bank of England (BOE) and for Mario Draghi at the European Central Bank (ECB) will expire. Due to the bylaws of the ECB which state that the term of the ECB presidency is for an eight-year non-renewable term the ECB has to find a new president and it cannot be Draghi. It remains to be seen what will happen with the BOE Governorship as Carney has been seen as a strong leader.

Governments and Fiscal Policy

The EU

The consensus for 2017 was that the EU would experience a modest recovery but mitigated by concern, seen to be short term, on political risks due to rising anti-EU and populist sentiment but that this would be limited and most likely would not extend past the UK.

The EU economy so far has actually exceeded forecasts with real GDP growth expected to be 2.2% for the year compared with earlier forecasts of 1.7%.

Everyone was waiting with baited breath to see if populism and a BREXIT, separatist, type mindset would spread via the 2017 elections in 2017 in Europe – specifically in the Netherlands, the France and Germany. However, that did not come to pass and more centrist candidates won those elections. However, this did not mean that the populist and separatist parties went away. Even though Merkel won in Germany for a fourth term, the far-right, anti-immigration party in Germany, the AFD, won seats in the Bundestag with an historic breakthrough for the party and it is the first time in 60 years that an explicitly nationalist party sits in the Bundestag.

Meanwhile in Spain, there was a big push for Catalonia to separate from Spain. While the independence movement was effectively stifled the issue is far from being resolved as manifested by pro-independence parties renewing their majority in the Catalan parliament in the regional elections just held at the end of the year on December 21.


The consensus for 2017 was that the deflationary policies of the incoming administration with Republican majority in both houses of congress, will be positive in the short term for US equities (promises of tax cuts, repatriation of foreign US earnings and higher public spending plus a pledge to invest over $1 T in US infrastructure) Caution for the longer term with potentially greater inflationary pressure and the impact of populist and protectionist ideals.

During the course of the year and up until December, the Trump administration had not succeeded in passing any legislation. This caused some doubt during the year whether the administration would be able to succeed with the measures they had promised. The Trump administration finally did succeed in passing a much contested tax reform bill which was approved by the senate in December and then passed into law and signed by Trump on December 22. Much debate is still raging on whether the new tax bill, which among other sweeping changes cuts corporate taxes from 35% to 20%,  will be effective in repatriating corporate money back into the US and whether this will translate to investment by those corporations into the US economy.

With regards to other campaign promises, notably the border wall, while many prototypes have been proposed there is still no clarity on how the wall will be paid for or what the next steps really are. Meanwhile the $1 Trillion in infrastructure spending does not have any more clarity either. In October of the year, Trump pivoted from a stance pushing for private investment and is now looking towards the treasury which would possibly imply further borrowing and using proceeds from taxes on gas.

Emerging Markets

Despite concern on a potentially rising USD along with interest rates which would negatively impact  emerging markets, especially countries with a majority of their exports to the US like like Brazil and Mexico, the wealth managers were still predicting higher GDP growth in BRIC countries in 2017.

The final GDP rates are not yet available for 2017 however so far it can be said that: Brazil has exhibited modest GDP growth so far this year and slightly surpassed initial forecasts, while   Mexico, which started off the year well in the first half of the year has not faired so well in the second half of the year due to disruptions from two earthquakes, subdued consumer spending and inflation. NAFTA negotiations are still continuing with the US and are expected to continue in 2018.


The majority of wealth managers estimated that Trump policies would help drive up the USD and provide a tailwind to Japanese fiscal policy would also weaken the Yen which in turn would strengthen the Japanese economy in 2017.

Despite a stronger Yen against the USD, Japan saw stellar export performance, supporting manufacturing activity, as highlighted by December’s PMI figure, which hit a nearly four-year high. Investment also benefited from resilient global growth, with business confidence in Q4 climbing to an over one-decade high. So the Japanese economy strengthened but not for the reason’s outlined by the wealth institutions.

Inflation Outlook

The view was that Inflation would increase slightly in developed markets and despite the big question mark whether the central banks would be able to keep inflation in check following the massive reflationary measures they have taken the consensus seemed to be that inflation would be kept in check.

Higher inflation was forecasted in Asia due to less Asian central bank intervention.

For the developed markets, the wealth institutions basically got this one correct in their outlooks for 2017. The inflation rate in both the US and Europe increased the most in the first half of the year and is still trending slightly higher than it was at the beginning of the year. Concerning inflation in Asia, directionally the wealth management outlook for 2017 was correct. Whether or not the reasoning was correct is another story. The theory was that inflation would be higher due to less central bank intervention than in developed markets. This is a subject worthy of debate and whether or not less intervention is even true. For example, the Chinese central bank, the People’s Bank of Chine (PBOC), is suspected to have intervened several times in 2017 in order to keep the yuan propped up.


The historical experiment of quantitative easing in the US, Europe and Japan has seen unprecedented buying of bonds, driving yields down to historic lows. However, with the European Central Bank (ECB) and Bank of Japan (BOJ) running out of bonds to buy and facing the unintended adverse consequences of negative rates (for banks and insurers), 2017 was seen to be the final year for quantitative easing and negative rates. It was believed that political resistance to fiscal expansion would weaken, particularly in Japan. Therefore, the consensus was that there would be nowhere for yields to go but up.

The yields on the US 10yr began the year at 2.45%, however, despite 3 rate increases from the Fed, the 10yr yield spent most of the year lower, closing at 2.405%, going against the consensus view of higher yields.

The Eurozone 10yr government benchmark yield began the year at 0.86%. It spent most of the year above this rate and closed the year at 1.05%. German 10yr yield began at 0.189% and finished at 0.427%. When referring to the Euro Zone the consensus got it right.

Japan continues to confuse many. In July, The Bank of Japan offered to buy an unlimited amount of JGBs, as it sought to put a lid on domestic interest rates pushed higher by the broad sell-off in developed market bonds. JGB 10yr yield began the year at 0.046% and finished at 0.048%, essentially staying flat.


In regards to public equity, a large majority, nearly 85%, of those with a positive outlook on equities were positive on headroom in the US equity market.  Following the US equities market there was no other region or country for which the reports reviewed indicated a majority positive outlook in general for equities, however, close to 50% were favorable on Japan, followed in this order, by Europe, Emerging Markets and then Asia.

The cap-weighted S&P 500 gained 19.42% on the year, whereas the average stock in the index was up less than that at just over 18%. Regardless, 85% of the smart money managers were correct in forecasting higher equities for 2017.

Close behind, the Japanese Nikkei gained 19.10%, where only close to 50% envisioned such a strong performance.

The Euro Stoxx 600 index closed up roughly 7%.


There was a clear and overwhelming agreement that the new Trump administration policies would be bullish for the US dollar. In addition to the US government policies, it was also believed that the Federal Reserve would begin to increase interest rates, which would in turn also be bullish for the US dollar.  Where there was lack of vision was to how high the US dollar would rise, but it was expected to rise throughout the year of 2017.

The view regarding the Chinese Yuan (also recognized as the Renminbi) was that it would remain weak against the USD for some time. However, the majority was expecting the Yen to depreciate further against the US dollar into late 2017.

There were a number of elections coming up in Europe and that was expected to increase risk and put downward pressure on the Euro. The expectation was that it would reach parity with the US dollar.

Not everything worked out as neatly as planned by our smart money managers. 2017 was a nasty combination of buy-the-rumor-sell-the-news for the Greenback. Action on Fed tightening and fiscal reform, more weight on disappointing data versus upbeat results, and the “Trump effect” left the US dollar sliding for most of the year.

The 2016 close for the EURUSD cross was 1.0517, however the close of 1.2004 destroyed the dreams of all those banking on parity.

The USDCNY cross began the year at 6.96 and ended at 6.50. The US dollar’s unforeseen slide  helped to bump up the Yuan against the USD going against the view of a weaker Chinese Yuan for the year.

Last but not least, the US dollar lost 3.69% to the Japanese Yen, going against the majority view that the Yen would continue to depreciate against the US dollar in 2017


80% of the researched wealth institutions believed that the commodity cycle had based and was set to recover, however, the market structure remained a challenge and fundamentals across many raw materials continued to point to concerns of an oversupply. For this reason, there was not an overly bullish view on commodities but a wait and see neutral one.

Concerning Oil, we found a range of forecasts from $45 to $65 a barrel with no clear majority on any one price point. Oil started the year at $52.46, fell to as much as $42 and rebounded to end the year at roughly $60 a barrel.

There was no clear agreement when it came to Gold, however, as the majority linked the performance of gold to the USD, and that same majority expected the USD to rise (indicating Gold would fall, or stay range bound at best) were all off the mark. Gold ended up roughly 13% beginning the year at $1,150oz and ending the year at roughly $1,306oz.

New Alternative Investments

What a difference a year makes! Bitcoin was a curiosity at most at the beginning of the year, however its stubbornness to sell off for any extended period, while it continued its meteoric rise, forced wealth managers to take notice.

It began the year at roughly $984 and continued to rise to $19,211 before rounding out the year at $12,610, beating any other asset class (although the debate is still raging about whether or not Bitcoin is an asset or other). Regardless, Bitcoin is now something to be reckoned with and will not be taken so frivolously as it was in the beginning of the year.

Along with the rise of Bitcoin came a host of other Alt coins and ICOs (initial coin offerings), however, as far as professional money managers are concerned, Bitcoin is the main act for the moment until proven otherwise.

We also mentioned Bitgold in our report which was the idea of a cryptocurrency backed by the equivalent amount of gold. It was believed that this would stabilize the volatility seen in pure cryptocurrencies and provide them with an air of respectability. However, it is still too early to know if this will take hold and for the moment this concept is not really of interest to the professional investment manager.

Our special report on Gold Backed Cryptocurrencies supported this lack of interest as we researched all the principle players in the area, large and small and found them largely lacking in many areas.

In Conclusion

2017 was not an easy year for our wealth management institutions in many respects. There were no great winners or losers.

Will 2018 prove to be any easier? We don’t know, but if the smart money is having such a difficult time making sense of all these moving pieces you can bet that the dumb money is at a complete disadvantage (unless they bought and held Bitcoin, which currently would make them look like the smart money….for the moment).

A principle lesson to be learned is that all these forecasts that appear in these glossy yearly outlook reports, quarterly reports, weekly reports and minute by minute reports that continue throughout the year on your local financial media networks, by all these institutions that manage the largest fortunes are just that, forecasts.

Everybody speaks in their best interests which makes following these prognostications and forecasts all the much more difficult and more often than not puts you, as an investor, at a disadvantage because you are more likely than not to be buying from those who are selling (which happen to be the same people which have advised you to buy). Therefore, don’t listen to the smart money, follow the smart money.

The Hutch Report

Performance: What does it take?

By | Psychology

Perform. This is something we all must do. This article examines, at a high level, what it takes to perform well and what differentiates those that perform exceptionally well. Performance is most typically associated with actors or musicians, athletes, or other top talents. But, it is something we all must do. Every day. Actors play a role. We all play multiple roles on any given day. Actors are given accolades when they succeed or deliver a powerful performance in a role. Likewise, when any one of us can perform any of our roles well it also usually leads to rewards. These rewards can be material or even more importantly the non-material, inner rewards.

While of course it is great to earn more money, win prizes, win accolades from our friends, those are fleeting rewards. The more fundamental and powerful rewards are the changes that happen within us. These changes can be subtle. Some examples are increased confidence in ourselves, the satisfaction of having confronted personal challenges, of pushing ourselves to grow. Even if we do not get the material or external rewards, or people laugh in our face, insult us or mock or make fun of us, if we are rooted on what really matters to us in our performance this will allow us to motor on through, to pick ourselves up, dust ourselves off and get back on the proverbial horse.

Actors, athletes, musicians and other public performers often have relatively clearly defined roles. And they often have the luxury, once they get to a certain level, to be able to focus specific time training to improve and deliver their performance. It becomes a virtuous cycle of success. In his book, Outliers, which was first published in 2008, Malcom Gladwell contends that practice is a key indicator of performance. A widely quoted and restated premise in the book is that ten thousand hours of practice in a particular field will enable the practitioner to become a world-class expert in that field. Gladwell holds out examples of the Beatles, who before becoming huge had spent over ten thousand hours touring in Germany, or Bill Gates who had early access to computers as an adolescent and teenager. While clearly it is a great advantage if one has tons of time to practice for a certain role it is not the whole story.  Certainly, the folks cited in Gladwell’s book are successful  outliers that benefited through tons of “practice” time. So, can anyone of us become an outlier through ten thousand hours of deliberate practice? It turns out, not really. This theory has now been largely debunked in a 2014 research study conducted by Princeton University, Michigan State University, and Rice University.

The abstract from that university study reads:

“More than 20 years ago, researchers proposed that individual differences in performance in such domains as music, sports, and games largely reflect individual differences in amount of deliberate practice, which was defined as engagement in structured activities created specifically to improve performance in a domain. This view is a frequent topic of popular-science writing—but is it supported by empirical evidence? To answer this question, we conducted a meta-analysis covering all major domains in which deliberate practice has been investigated. We found that deliberate practice explained 26% of the variance in performance for games, 21% for music, 18% for sports, 4% for education, and less than 1% for professions. We conclude that deliberate practice is important, but not as important as has been argued.”

While there are clearly statistical benefits for practice, particularly in games, sports and music, practice is not the only pillar for success and even less so in education and professions. So if we want to continue improving our games, sports, music or other specific skills, for example public speaking, writing … by all means we should continue to put in the work and practice. You don’t get results without putting in the work, except when playing the lottery. While “hope” is great and good to have, “hope” itself is not a great strategy for success.

So, if it is more than just practice to succeed, particularly in education and other professions, what do those that perform well do better or differently than the others?

About education, I have an intelligent teenager who is struggling in highschool. Like any good parent, I did a bit of googling to see what the Internet had to say about how to help your kid and what do successful students do that is different. Are they just more intelligent? While of course being intelligent does not hurt, thankfully even those of us with average intelligence can be successful students. I stumbled across this Ted Talk which discusses research that was done among UK students to determine what methods the successful students in this group exhibit that helps them be successful, more successful than their peers.  The two main takeaways that I took out of this are that two important items are a) good comprehensive scheduling habits and b) practicing on test questions. These were two of the most important elements of behavior exhibited by successful students. Comprehensive scheduling means scheduling everything ahead, not just classes and revising for tests, but also scheduling in breaks and fun activities. Memorization is also important, however, more important was how to use and deploy the memorized information, hence using practice exam questions to study proves to be a key for success on developing a good understanding of the material being studied. Implementing this so far with my teenager has not been easy. For example, when asked to start planning, the initial plan and schedule was not very detailed. It would just say study at 7pm, relax at 8pm. So we hit upon the idea of planning in reverse. In order to get to a better level of detail and view on how time was being spent on which specific activities, we found it was easier to start by simply writing down the time for activities retrospectively. This approach seems to have served as a good stepping stone to learning how to develop a good forward-looking plan and schedule. Thinking in advance about what you want to do, planning when you are going to do it are two very powerful techniques for any endeavor whether it is in school or anything else.

A book that greatly resonated with me when I was beginning my career in the business world was The Corporate Athlete by Jack Groppel. Maybe this sounds a bit corny or smacks of new-ageism, but it really brought home the fact that in order to really perform any role well – parenting, investing, writing, working, bitcoin speculation  etc – the basic foundation needs to be in place for mind, body, and spirit. It comes down to basics, eating right, exercise, sleep, and mental and spiritual preparation. By spiritual I do not necessarily mean religious, but more strengthening one’s inner spirit through, for example, mindful mediation and increasing will power as discussed in our earlier article The Will Power Battery.

Thirty some odd years later, I am still striving towards that goal as a north star of getting everything in balance, and still going through ups and downs, not always doing what is good for me even though I know better. Here is a handy list that can be used as a great set of reminders that came across my Twitter feed from Vala Afshar (@ValaAfshar), currently as of this writing, the Chief Digital Evangelist at Salesforce.


We’d love to hear from you and any of our readers on what their path has been, what struggles they have faced or are facing and how they are working on overcoming them.

The Hutch Report

Bitcoin and the Bandwagon

By | Cryptocurrency, Money, Psychology

Bitcoin and the blockchain have been around since 2008 when the elusive Satoshi Nakamoto presented his/her white-paper to the world outlining its structure. Since its core is based on cryptography and mathematics, in the beginning it only attracted the attention of those in that area of research. However, because it was proposing a new medium of exchange that could not be altered and promised anonymity, the dark side of commerce quickly joined in. From here, the value of Bitcoin has begun to increase, as has the attention. After 9 years in existence, the mainstream media has begun to chime in and before you know it, Bitcoin charts and quotes have been all over the news.

The other day, my father-in-law asked me if I heard about the action in Bitcoin. He used the term as loosely as he would “Google search,” however I knew that his understanding of what Bitcoin actually was, was severely limited. My neighbor stopped to chat and told me her son (15 years old) was having a friend over. I said, “To watch a movie?” and she told me, “No, to trade Bitcoin.” She had provided her son with a few hundred dollars to trade! Last night I was in a restaurant in town that I know very well. It is a small place with the tiniest kitchen. I popped my head in to say hello to the chef. The first thing he said to me was, “Hey, did you buy any Bitcoin lately?” At that moment I realized the wagon was getting very full.

The chance that people begin to adopt certain ideas or choices tends to increase when they realize that other people have adopted similar ideas and choices. This is a human cognitive bias known as the “Bandwagon Effect.”

In 1848, Dan Rice, at the time a famous and popular circus clown, decided to use his bandwagon (a wagon that carried a band during parades) and its music to gain attention for his political campaign appearances. His campaign became more and more successful and this obviously attracted the attention of other politicians who fought for a seat on the bandwagon, hoping to be associated with his success. Bandwagons eventually became a standard centrepiece in political campaigns and the phrase “jump on the bandwagon” was born.

It is a powerful principle that is used constantly in marketing. The concept describes how the increasing popularity of a product or phenomenon will encourage more people to “jump on the bandwagon.” We see it everywhere. #America’s No 1 choice, #the fastest selling product, #most wished for, #most gifted or the myriad of top 10 lists that we see everyday.

The tendency to follow the actions or beliefs of others occurs because individuals directly prefer to conform, or because individuals derive information from others. Normally, when an individual makes a “rational choice” (see our article on the Rational Price here), it is based on the information they compile from various sources with which to come to a decision. However, as information cascades, or when people start passing on information they assume to be true, but cannot know to be true, based on information on what other users are doing, they will ignore their personal information signals and follow the behaviour of others.

The phenonmenon of Bitcoin and cryptocurrencies does not stop with the bandwagon effect. The speed at which it is moving, where fortunes are being made and lost in the most unlikely areas of society has stirred a variety of other cognitive biases into action.

Closely related to the bandwagon effect, and becoming clearly evident in the cryptocurrency mania, is the “fear of missing out” or FOMO. The fear of missing out is a type of motivation that is described as a drive not to miss current or future opportunities. It’s associated with a fear of missing chances for competitive advantage, rewarding experiences or financial opportunity gains. It is considered a common and strong form of motivation that can explain a wide range of human behaviors. However, as with other similar biases,  the fear of missing out can result in excessive or compulsive behaviour and poor decisions.

Robert Cialdini, author of the widely popular Influence: The Psychology Of Persuasion, popularized the term “Social Proof.” The Social Proof Theory, affirms that a person who does not know what the proper behavior for a certain situation is, will look to other people to imitate what they are doing and to provide guidance for his actions. Uncertainty is the fuel that activates and feeds the mechanisms of social proof. This is especially fitting in the case of cryptocurrencies, as the technology and mathematics behind them is not so simple for the average person to immediately grasp. Therefore, social proof becomes more influential when the surrounding people are perceived as particularly knowledgeable about a situation or are even just slightly more familiar with the situation than the observer is.

As the price of Bitcoin and a thousand other cryptocurrencies have risen to lofty levels, so has the debate around what cryptocurrencies respresent.  Are they a medium of exchange? Do they have true value? Do you have to pay taxes on gains? Are they something else other than a tool for speculation? This debate has come to just about every financial media news outlet; CNBC, FOX, Bloomberg or CNN Money where they present daily their panels of financial experts. So where better to gain an understanding about cryptocurrencies.

The trap that many viewers are falling into is known as the “Authority Bias.” The Authority Bias is a where you defer to any position of authority to either dismiss or confirm evidence. The thought process follows the following reasoning pattern: Person X is an authority in a particular field. Person X says something about a  topic in their respective field. Person X is probably correct because they’re an expert. Because of this reasoning, the Authority Bias maintains that if you don’t know something better yourself you will likely trust the advice or information from someone who is considered an expert in that field.

The Hutch Report has been following Bitcoin and other cryptocurrencies for a while now. We recently completed our current feature report related to Gold Backed Cryptocurrencies, which can be downloaded here. We don’t profess to be experts regarding this technology but we do follow it with interest. We believe that, although a large number of opinions exist about where all these cryptocurrencies will be in the future, nobody really knows. Nobody is even certain about true identity of the originator, Satoshi Nakamoto.

We are currently living in unchartered territory so it is up to each individual to protect themselves, keep their bias in check. Don’t blindly follow and do your best to inform yourselves.

The Hutch Report

Perfection Marketing

By | Business, Marketing

Our digital economy along with the proliferation of social media has brought about some very powerful channels of communication. In spite of all of the benefits of these channels they have also managed to magnify a darkside.  There is a form of marketing that we like to call “Perfection Marketing.” This applies to presenting your product or service to be something that it is not, or otherwise said marketing perfection.  The whole foundation of marketing is how to take your product and present it to the consuming public in the best way possible, in the hopes they will purchase it.  Although the presentation of perfection has existed for some time, the platform of social media has expanded its reach and speed of delivery. Not only do companies fight to claim their positions of perfection, but so do many of the participants in social media.

Companies use perfection marketing strategies in various ways. One way is through “puffery.” Puffery is characterized by exaggeration and hyperbole. “The best hamburger in the world” is an example of an exagerrated claim that would not be taken seriously by any reasonable individual. Advertisers use exaggeration and hyperbole to get people’s attention and make their message memorable. Because the claims in puffery are obviously exaggerated, and because exaggeration works to get people’s attention, puffery is an accepted advertising technique. These claims are subjective and a matter of opinion, therefore, they can’t be measured, so they are not challenged. Claims such as “The Best,” “The Tastiest,” “The Freshest,” “The Fastest,” or “The Smartest,” are used freely. These superlatives project the idea of perfection. Sometimes companies may push the boundary of puffery, which leads to deception. This is illegal and can be challenged. Irregardless, the intention remains the same, to position the product or service as something much greater than it is.

“If you look for perfection, you’ll never be content.” — Leo Tolstoy

In addition to descriptions and messages, it is very apparent in illustrations and photos. Very rarely do products represent in real life what we have been lead to believe from photos in magazines. Restaurants and Cosmetics companies are probably the biggest perpetrators of this strategy.  Along with the tagline “The Perfect Cup of Coffee,” you will be presented an image of what somebody believes to be a perfect cup of coffee (and before you have even tasted it, the idea as been imprinted upon your brain). Cosmetics companies reinforce this idea of flawlesness and perfection with the publication of every beauty magazine.  So much so that in 2016, Americans spent more than 15 billion dollars on combined surgical and nonsurgical procedures for the first time ever.

The Hutch Report Cosmetic Surgery

Just about everything we see in the media is in some way fake: Photos of bodies, women’s, men’s or other, packs of gum, new cars, cell phones, bottles of beer, bread, apples, iPhones, everything. There is constant societal pressure to adhere to this idea of perfection. Any advertising product that appears in the media has been meticulously lit, retouched, and airbrushed. Have you EVER ordered a McDonald’s Big Mac and received anything that ever came close to resembling what you have seen in their advertisements? That hamburger does not exist; it’s a fake, idealized, made-up image of someone’s imagined idea of the perfect hamburger.

However, this manipulation seems to work, because perfection somehow lies in the human character and we tend to try and move towards it. So we get sucked into thinking we can be perfect, which unfortunately for many ends up causing great disillusionment and pain.  Social media has exacerbated this by providing a greater distribution platform and tools that allow anybody to photoshop anything, including themselves and present to the world. In addition, they use it as a weapon against others.

The idea of perfection has in fact become the image of a sad world.  The more I think about it the more I start to dislike the idea of perfection. Stop and think about what it would really mean to be perfect. The idea of perfection insinuates that there is nothing better.  There will be no more improvement or discovery. It is the best that you will ever get. It is the be-all and end-all. It is the example that everything else in its class is to be compared against.  Nothing will ever surpass it.  After all, how could you surpass perfection?  If you could, it would imply that perfection didn’t exist in the first place.  It sounds pretty sad, knowing that nothing would ever be better again than what you know now.

The truth is that perfection is essentially a myth. No one has ever seen perfection in any form, and if they think they have, it would be very difficult to prove its validity. In reality perfection can never exist. For something to be truly perfect, the whole world would have to agree on that fact and every other competitor would have to be accounted for.  I doubt you could even get everybody to agree that the sun will come up tomorrow.  There will always be someone that will disagree. We all see things differently; therefore, one person’s idea of imagined perfection would only be their own, and just that, imagined. It is therefore a MYTH.  This is the main reason companies can get away with puffery.

So what does a perfectionist even look like? To start, being defensive is a trait of perfection.  If you are criticized and you don’t like it, it is because criticism means imperfection on some level.  So you naturally defend against it. Are you obsessed with failure? Do you always focus on what is not working? Are you all or nothing? Meaning, if something doesn’t work for you then you quit it immediately. We are, in fact, conditioned to be perfect. Think about our society.  Who has ever rewarded failure? We always reward the results. We never reward the journey, the attempt to at least try something new.

The signs of this conditioning and constant manipulation are everywhere in society and are having detrimental effects. Psychologically, it is self-destructive trying to measure up to what others see as perfection.   This is particularly apparent in Woman’s magazine ads. It is all or nothing, either I look like that or I am inferior. It is not surprising that one falls into a spiral of self doubt and depression when they come to the realization of how far off they are from the mark.

Is there a way out of this downward spiral? Yes, there is. The first step is accepting the idea of perfection as a myth. We are not perfect and never will be. But rest assured, nobody else on this planet will be perfect either and it is that diversity that makes it a great place to be. Stop focusing on the ends and more on the means. Be an individual, unique from everyone else, as everyone is. Being unique is your greatest asset. Nobody else in the world is like you. Show it and use it to your advantage.

The second step is to focus on excellence rather than the idea of perfection. Excellence is the quality of being outstanding or extremely good. Someone who strives for excellence and not perfection is someone who is open and welcoming to suggestions.  A person working towards excellence enjoys the process of moving forward, including the failures that come with the journey.  They are constantly learning and getting better by way of those failures. You can always be better tomorrow than you were today. That alone is an uplifting thought. A person striving for excellence is realistic and understands what reality really looks like, including the hamburger, and they certainly don’t give up on the journey, because the journey is the greatest part of the experience that last a lifetime!

The Hutch Report

The Omnipotent Leader

By | Politics, Psychology

What is it that prevents people from admitting mistakes, feeling superior to all those around them, feeling as if their actions are above the law, the inability to feel that their actions are responsible for someone else’s misery? We have all worked with people who have varying degrees of the unshakeable belief that they can do no wrong. In our incredibly complex world, there are leaders and professionals that are absolutely convinced that they understand how the world works and how to solve problems in spite of the fact that time after time they are proven wrong. (You can read more about this in our piece “The Illusion of Understanding.”)

In 2009, at the height of the financial crisis, many wall street CEOs were put under the spot light as the leaders of the largest financial firms were brought before congress for questioning. However, in spite of the damning evidence put before them concerning the damage inflicted on the economy and individuals by these firms, the leaders seemed to feel removed from any or all responsibility. An example of this was made during an interview with the Times of London, where Lloyd Blankfein, CEO of Goldman Sachs was quoted as saying that Goldman Sachs was merely “doing God’s work.” Obviously admitting to understanding the agenda of a higher power greater than ours and professing to be part of it immediately places you in an obviously very privileged position.

Though not officially labeled a personality disorder, the God Complex is very similar to the Narcissistic Personality Disorder. The God Complex is a psychological illusion. The first person to use the term God Complex was Ernest Jones (1913–51). His description, at least in the contents page of Essays in Applied Psycho-Analysis, described the God Complex as belief that one is a god. It suggests a personality flaw in human beings, especially those with great power, who see themselves to be omniscient and omnipotent, and treat others as mere mortals. However, one does not have to be in a position of power to exhibit these traits. There are numerous examples of people displaying these personalities in the workplace which you have most likely encountered.

The God Complex tends to show up amongst a variety of professions, although, some professions are more likely to cause a God Complex than others, as they involve one person exerting a lot of influence on a large number of people. These professions include among others: Doctors, Politicians, Bureaucrats and Celebrities.

Research suggests that in the case of several people, the God Complex affected them AFTER being exposed to a lot of power over a period of time. Hence, it is likely that people get this complex after having spent a considerable amount of time in that particular profession. Once you know what this complex is, it is easier to understand why certain people behave the way they do although that doesn’t make them any easier to be around.

With his extreme narcissistic displays, Donald Trump has become the poster child for the God Complex. However, in this particular example, he demonstrated many of the traits associated with the complex well before becoming President. Rather than developing the complex, after having been in a position of power, it was his inflated view of himself that drove him to become President.

As President, Trump now finds himself in good company because in the world of politics the God Complex plays itself out each and every day. In fact, our current political and media culture can be seen as reinforcing the God Complex.

The question is how can problems be solved and solutions found when dealing with opponents that both display the God Complex? Neither side will think about backing down because they both feel superior to the other. The result is pretty much what we have seen play out in the arena of US politics. Rather than concentrating on what is good for the country, both sides are fighting to dismantle the other. It is a dangerous trait to have, as we have seen many nations brought down by leaders with an omnipresent display of the God Complex.

Here are a few extreme examples: Omar al-Bashir—Sudan, Kim Jong-il—North Korea, Robert Mugabe—Zimbabwe (recently dethroned), King Abdullah—Saudi Arabia, Seyed Ali Khamenei—Iran, Bashar al-Assad—Syria, and Nicolás Maduro – Venezuela.

The Hutch Report

The Willpower Battery

By | Psychology

At a recent dinner with family and friends I asked the question, “What is willpower to you?”.  The answers were varied

“A combination of the desire to change something and the motivation to make it happen”

“Being able to overcome an obstacle”

“Facing a hardship and a challenge but having the stamina to work through it”.

“I think there is willpower and there is a won’t-power.”

“Resisting temptation.”

I was surprised to see the passion that had arisen around the table as we carried on the discussion. In retrospect, this is of course a passionate topic. Willpower is fundamental to each and every one of us. Every single one of us struggles with goals and things we want to achieve and also challenges such as addiction, temptation, distraction, procrastination – these are universal human experiences.

A teacher at Stanford and author of “The Willpower Instinct,” Kelly McGonigal states, “I define willpower as the ability to do what matters most, even when it’s difficult or when some part of you doesn’t want to. That begins to capture why it’s so difficult — because everything we think of as requiring willpower is usually a competition between two conflicting selves.”  So, my family and friends were accurate in their definitions.

If we dig even deeper, willpower and self-control have evolved genetically and are linked to our evolution and survival. They must be, otherwise why would we put ourselves in a situation where we are doing what part of us does not want to do? Because the other part knows that it is good for us. And if they are so important to our survival and better well-being why are we sometimes lacking willpower?

People are often confronted with this question every time they sit down to set goals or make resolutions at the end of a year. In his book, The Art of Thinking Clearly, Rolf Dobelli postulates that New Year’s Resolutions do not work due in large part to constant procrastination. I can attest to that personally as I have wanted to sit down and write this article about willpower for sometime now, however, I kept putting it off until I felt that I was in the right “mood”. Finally I owned up to the fact that the right “mood” was not coming. This piece was not going to write itself so the only recourse was to simply sit down and start writing it. In his book, “Do the Work,” author Steven Pressfield calls this the “resistance,” and the only way to break through the resistance is to simply start and “do the work.”

Human routines are stubborn things, which helps explain why 88% of all resolutions end in failure, according to a 2007 survey of over 3,000 people conducted by the British psychologist Richard Wiseman. Bad habits are hard to break–and they’re impossible to break if we try to break them all at once.

Dobelli explains that willpower is like a battery that needs to be charged, a concept widely accepted and recognised by many researchers, teachers, coaches and practitioners of willpower. There are many techniques for mastering and improving willpower based on ensuring that the “willpower battery” is sufficiently charged.

Things that can affect this battery are lack of sleep, being distracted and being under the influence of drugs or alcohol. In a previous article, Infoxication – The Information Pandemic, we highlighted how easy it is for each of us to be distracted, and means of dealing with it in this age of information overload.

Willpower can be trained and strengthened over time however like a muscle it can only exert itself so long before it gives out; it’s an extremely limited mental resource. Scientific and medical research have discovered this muscle to be located in the pre-frontal cortex of the brain (otherwise said, your forehead).

A very famous case from over a century ago demonstrates the link between the pre-frontal cortex and willpower. In 1848, a gentleman named Phineas Gage, 25, was working as a foreman of a crew cutting a railroad bed in Cavendish, Vermont. On September 13, as he was using a tamping iron to pack explosive powder into a hole, the powder detonated. The tamping iron—43 inches long, 1.25 inches in diameter and weighing 13.25 pounds—shot skyward, penetrated Gage’s left cheek, ripped into his brain and exited through his skull, landing several dozen feet away. Essentially destroying a major part of his pre-frontal cortex. Remarkably, Gage survived this horrific ordeal, and by all accounts was conscious and walking within minutes. With the loss of his pre-frontal cortex, he also lost all willpower, all inhibitions and had undergone profound personality changes.

There is an enormous wealth of information available on willpower and guides to success in achieving your goals. We have selected what we thought are some of the best tips and advice and present them in this shortlist below:

(1)    Why?

Focus more on why you want to change rather than what you want to change. Identifying what you want to change is important, but with a large caveat! Simply stating what you want to change is not a recipe for success. Otherwise all of our new year’s resolutions would work. For example, when I start out by stating “I will not eat donuts” usually ends up with my eating some delicious donuts. However, when I focus on the fact that I want to be slimmer, diabetes runs in my family and I do not want to get it … these are much more powerful motivators than just “I will not eat donuts”. A famous mantra that I have heard amongst some friends from Hollywood related to this concept is: “Skinny feels better than that tastes” – which is a powerful reminder of what I want to avoid, i.e the donut. So in summary for this point – focus on what it is you really want and not just specific modes of behavior. If you focus on what you want, your behavior will follow.

(2)    Be aware.

“Know thyself”. Focus on your self-awareness. What are the triggers for why you may engage in behavior you want to minimize or avoid. Are you getting enough sleep? Are you distracted?  Once you identify those triggers, then you can put in place a strategy to avoid ending up in a trigger situation.

(3)    Support.

Surround yourself with likeminded individuals. This is not to say do not listen to folks who don’t think like you or become close minded, but what it does mean is when pursuing a specific goal, your chance of success is greatly increased if you surround yourself with people who have the same or similar goal. Of all the 100’s of tips on succeeding and success this is probably one of the best, if not the best. An interesting article on this topic can be found in the magazine Psychological Science.

(4)    Strengthen

Incorporate mindfulness meditation into your life. Studies have shown that this practice can strengthen the  pre-frontal cortex.  MRI scans show that after an eight-week course of mindfulness practice, the brain’s “fight or flight” center, the amygdala, appears to shrink. The primal region of the brain associated with fear and emotion. As the amygdala shrinks, the pre-frontal cortex – associated with higher order brain functions such as awareness, willpower, concentration and decision-making – becomes thicker.

The Hutch Report

Computer Generated Headlines – Read All About It!

By | Business, Money, Technology

Everybody seems to be lacking time in what we call the New Economy.  In the past few years there has been a wave of innovation in order to address this. There are now more productivity tools and apps on the market than ever before. We have tools to help us stay focused better, improve our channels of communication with friends and co-workers, create projects easier, take better notes, keep your notes better organized, or how to identify distractions in your life so you can cut them out.  All these tools are meant to save you time out of your busy day to do the things you love. Still, nobody seems to be finding that time.

In addition to a lack of time, we need to deal with the massive amounts of information that we are presented with on a daily basis. We spoke about this here (The Hutch Report). There are thousands and thousands of articles being produced and published every minute and there is just not enough time in the day to read them all, along with all our other activities. In order to filter out all the noise we skimm through the headlines hoping to gain an understanding of the big picture.  The Skimm, ( does just that by providing editorial contents and headlines targeted to women.  Authors and publishers know this so it is imperative that they create the perfect headline that will catch the reader’s eye, also known as click bait, and hopefully tweak their attention enough to where they read the full article.

But wait, this is the New Economy and anything that can be automated and made more productive will be. This includes headlines. I discovered this quite by accident well before there was a New Economy, smartphones or social media.

When I began getting interested in the financial markets I used to spend a lot of time reading all kinds of newspaper articles.  I rarely missed the Wall Street Journal’s daily overview of the previous day’s market action. As time went on I started to notice that there was one headline that would pop up extremely often, “The Dow ends lower on profit taking.”  I didn’t understand the meaning of the headline. How would the writer of the article even know that this was profit taking? When I took losses on my investments, headlines such as that began to get me annoyed.  I thought to myself, “Doesn’t the Dow ever end lower because investors have been forced to take losses?”

I paid more attention to the wording of these headlines and as I did I started to see more and more contradictions.  I found it curious that no matter what the financial markets did, all these newspaper journalists seemed to have an understanding as to why it was, and managed to encapsulate that in a pithy headline. I began to question the validity of the information I was consuming.

One day by chance I met someone who was working for the Dow Jones Newswire.  I jumped at the opportunity to gain more insight as to how these journalists managed to analyze the day’s activities on the financial markets and identify the catalyst for their movement in such a short amount of time.

The representative from Dow Jones Newswire told me that the markets were constantly changing so it was far more convenient to have the computers generate the headlines.  I learned that they have a database of headlines that are related to any general world news events that may be happening during the day. This could be anything from a company takeover, to gold going up, to gold going down, to oil going up, or to the rumblings of war in the Middle East. For example, if the market drops off the open and oil has gone up, the morning headlines may read, “Dow falls on higher oil prices”. During the day, however, it is not uncommon to have the market reverse and end the day up.  The headlines would then read, “Dow rises on higher oil prices.” These are the contradictions that I recognised that began to show up daily.

This was a revelation because I now understood that the headlines I was reading were actually completely arbitrary and computer generated. In my mind, this reduced  their “news” value to essentially zero because it was not providing me with the big picture overview I wanted.

From the time of my discovery that the Dow Jones Newswire was using a headline generator, the amount of content being produced has gone up exponentially. The ability to make sense of it by way of new technologies such as artificial intelligence has in turn become much more sophisticated. A North Carolina-based startup named, Automated Insights, founded in 2007 and backed by the Associated Press, Samsung and Steve Case built technology to automatically take raw data and translate it into narratives that look like they’ve been written by a human. It uses a technology called Wordsmith to generate stories. Typically, Automated Insights works with large customers to create the templates that the Wordsmith software fills in. The company claimed it was producing hundreds of millions of pieces of content for customers that included Yahoo and Microsoft.

Wibbitz is an AI-driven production software that USA Today has used to create short videos. It can condense news articles into a script, string together a selection of images or video footage, and even add narration with a synthesised newscaster voice.

The large media companies are using all options to become more efficient and more profitable. So now, not only are headlines computer generated but we are moving into an age where complete articles will be written by computers.

As explained in his book “The End of Big”, Nicco Mele explains that it is not all doom and gloom for the future of journalism and journalists. Much of the fact finding mission is now going direct by way of user generated media. The proliferation of blogs and other small grassroots news and opinion Web sites are undercutting the current economic model of news by fragmenting audiences. A segment of the market, such as, The Skimm, is making an effort to “Humanise” headlines and provide the reader with as much information as possible in an efficient manner.

The big challenge facing us now is that as these computer algorithms get more sophisticated, it is getting more and more difficult to identify what is computer generated and what is human generated. If your goal is to be more productive and save time by glancing over headlines in order to understand the big picture, you may be putting yourself at a disadvantage as these headlines may not be providing you the complete picture. Your best bet is to carefully choose your information sources, and that includes companies that propose to summarize the daily news for you, such as Bit·of·News. But beware!  Bit·of·News is powered by PyTeaser, a news summary algorithm that ranks sentences in a news article according to how relevant they are. The top 5 sentences are used to form a “summary”.

In the end, you may find yourself reading a computer generated summary of a computer generated headline that has been constructed from a computer generated article. Although, for the moment as far as I know, the one thing that is not yet computer generated is the actual event being written about!