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W. Edwards Deming: 14 Points for Management

“Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment.” -W. Edwards Deming

Dr. Deming’s Ideas Dr. Deming’s famous 14 Points, originally presented in Out of the Crisis, serve as management guidelines. The points cultivate a fertile soil in which a more efficient workplace, higher profits, and increased productivity may grow.

Create and communicate to all employees a statement of the aims and purposes of the company.

Adapt to the new philosophy of the day; industries and economics are always changing.

Build quality into a product throughout production.

End the practice of awarding business on the basis of price tag alone; instead, try a long-term relationship based on established loyalty and trust.

Work to constantly improve quality and productivity.

Institute on-the-job training.

Teach and institute leadership to improve all job functions.

Drive out fear; create trust.

Strive to reduce intradepartmental conflicts.

Eliminate exhortations for the work force; instead, focus on the system and morale.
(a) Eliminate work standard quotas for production. Substitute leadership methods for improvement.
(b) Eliminate MBO. Avoid numerical goals. Alternatively, learn the capabilities of processes, and how to improve them.

Remove barriers that rob people of pride of workmanship

Educate with self-improvement programs.

Include everyone in the company to accomplish the transformation.

Think Like A Fundamentalist & Trade Like A Technician

emailSomeone once said that to trade successfully, you must think like a fundamentalist but trade like a technician. Do you agree?

A:  Yes, I agree with it. Understanding the context and fundamentals, even when you trade the technicals can be helpful as long as you’re able to separate the two when needed. The problem is that many traders will have a bias toward one discipline over the other and will justify poor technicals with faith for the fundamentals. How traders handle these conflicts that arise from time to time and how flexible they are based on market conditions will make a huge difference.

Trading Madness

Psychological BiasEffect on Investment BehaviorConsequence
OverconfidenceTrade too much.  Take too much risk and fail to diversifyPay too much in commissions and taxes.  Susceptible to big losses
AttachmentBecome emotionally attached to a security and see it through rose-colored glassesSusceptible to big losses
EndowmentWant to keep the securities receivedNot achieving a match between your investment goals and your investments
Status QuoHold back on changing your portfolioFailure to adjust asset allocation and begin contributing to retirement plan
Seeking PrideSell winners too soonLower return and higher taxes
Avoiding RegretHold losers too longLower return and higher taxes
House MoneyTake too much risk after winningSusceptible to big losses
Snake BitTake too little risk after losingLose chance for higher return in the long term
Get EvenTake too much risk trying to get break evenSusceptible to big losses
Social ValidationFeel that it must be good if others are investing in the securityParticipate in price bubble which ultimately causes you to buy high and sell low
Mental AccountingFail to diversifyNot receiving the highest return possible for the level of risk taken
Cognitive DissonanceIgnore information that conflicts with prior beliefs and decisionsReduces your ability to evaluate and monitor your investment choices
RepresentativenessThink things that seem similar must be alike.  So a good company must be a good investmentPurchase overpriced stocks
FamiliarityThink companies that you know seem better and saferFailure to diversify and put too much faith in the company in which you work
   
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