Category Archives: The Port for Thought

Oil on the boil?

Simply brilliant:

Saudi Arabia’s oil minister Ali al Naimi who led Opec’s decision to let prices fall last year to squeeze higher cost producers, said yesterday: “Only Allah knows about oil prices.”

Crystal ball gazing debunked!

IHT is dead. Long live the dead!

How to avoid inheritance tax? Simple. Give it all away! 

Super brainy supermodel!

Petra Nemcova, the Czech-born supermodel, in an interview for the Sunday Times:

“Money is a tool and should never become a master.” 

Thank God for a bit of brain!

Ward on wine & vodka!

When President John F. Kennedy once received a whole party of Nobel prize-winners in the Oval Office he told them that their presence represented the biggest concentration of human intellect in that building since President Thomas Jefferson had sat there alone during his own presidency, 1801-1809.

Jefferson certainly was an exceptional man: lawyer, statesman, architect, oenophile, scholar, and all-round man of the enlightenment. It was he who was largely responsible for drafting the United States Declaration of Independence, surely one of the most eloquent and inspiring texts ever composed. He was also, of course, one of the country’s greatest-ever presidents. It was he, incidentally, who brought off the Louisiana Purchase, thereby doubling national territory at a cost of only $15 million – a huge sum in those day, no doubt – but even allowing for inflation surely not much compared with an estimated cost of restoring the Houses of Parliament (a relatively small project), today, for £3,000,000,000!

As US Plenipotentiary to France in the 1780s, Jefferson travelled all over Europe, visiting most of that continent’s wine regions and becoming a formidable collector and judge of wine in the process. His stay in Europe taught him much, not only about how different societies function, but also about food, wine, and the art of living. The overall sobriety of the wine-drinking Mediterranean peoples greatly impressed him, and led him to firm conclusions that have deep implications for society today.

“No nation is drunken where wine is cheap”, he observed, adding crucially: “and none is sober” where wine is so dear that the populace sees no reason not to opt for cheap spirits instead. Hard liquor, aptly named, since it’s the hardest on the system of all alcoholic drinks.

Positive proof of this has recently been supplied by researchers at the University of Colorado’s Cancer Center, who have concluded that the consumption of strong spirits – as distinct from that of wine – can lead to cancers affecting the head and neck. Meanwhile, studies carried out jointly by the Johannes Gutenberg University of Mainz (JGU) and Vienna University have not only given further support to the assertion that resveratrol – a substance found in red wines – reduces the risk of cardiovascular disease, but also found that it may prevent those very types of head/neck cancers from developing.

Thus, while wine and hard spirit both contain alcohol their respective effects on human health appears to be of a very different nature.

Why can’t the authorities see the simple truth? Where people drink wine – decent wine, that is – and eat good food with it, alcoholism is virtually non-existent. That’s still largely the case in Europe’s wine-producing countries, where obesity is still a rarity. In Sweden, by tradition a spirit-drinking nation, where alcoholism was once endemic, the powers-that-be were intelligent enough to see that, if they couldn’t stop people drinking at all, the best way to wean them off hard spirits was to get them drinking wine instead. For many years the country’s retail wines and spirit monopoly carried out an unceasing propaganda campaign, their aim being to persuade consumers to switch from spirits to wine. This strategy was largely successful. And even if spirits are still the beverage of choice for many Swedes, alcoholism there has declined noticeably in tandem with the burgeoning consumption of wine.

To my bafflement, I’ve just learned that the Chief Executive of Public Health, England, Duncan Selbie, has recently declared that “a large glass of wine is the same as downing three shots of vodka.” I don’t know how Mr Selbie’s intellect compares with President Jefferson’s, but his grasp of this particular situation seems to lag far behind Jefferson’s wise and humane appraisal. How could a man in such a key position get things so completely wrong?

How will young, inexperienced people interpret this statement? If in any way influenced by it, it’s not unlikely that the next time they order a drink they may well order vodka, or some other spirit, rather than wine. Wine, that has been shown to be beneficial to health, if drunk moderately, in literally hundreds of medical studies all over the world?

The Mediterranean diet has been widely acknowledged as the healthiest regime on earth, comprising as it does of good (non-industrial) wine with most meals, a daily mix of olives and olive oil, fruit, nuts, fish, salad, vegetables. Taken together with exercise and good company, these nourishing and delicious foodstuffs, washed down with good wine, are a virtual guarantee of well-being. Damage sets in when people, ignoring such an approach, drink high-octane alcohol of any kind (there are rotgut wines as well as rotgut spirits) while neglecting to eat. Medical studies have shown that good wine does not normally harm the system when those who imbibe it also eat properly. And decent wine, in itself a kind of litmus test of food, positively imposes a need to eat good food. And when such food accounts for a major part of a person’s nourishment, with wine in moderate quantities, there are rarely undesirable side-effects.

One cannot fail to notice that, when studies show the benefits uniquely conferred by wine, those benefits are often ascribed in the media to “alcohol” in general, rather than to wine in particular, so that many may well think that whisky, gin, and vodka are equally beneficent. In this way strong spirits gain a reflected glory, a spurious credit, by association with wine. The corollary of this is that, when alcohol does cause damage, it’s sometimes wine that’s blamed (in this particular case by Duncan Selbie) rather than hard liquor, inferior wine, or chemical beers.

More on this subject: Frank Ward on Investing in Wine!
© Frank Ward

Happy New Halo 2015!

The Halo Effect

There’s a joke that if you read just two books, What They Don’t Teach you at Harvard Business School and What They Teach you at Harvard Business School you must, by definition, have read the sum total of all human knowledge.

Hardly the best gag, but hidden beneath is the implication that no business management book can provide you with anything other than a modicum of true wisdom. In fact, one can, without much effort be more sceptical – any business book claiming to be able to define “what makes a successful company or great CEO?” is so prone to both general survivorship bias and the specific heuristics of its author, that a different writer could theoretically argue the opposite view. Depending on the author’s viewpoint, evidence is often filtered to the point that what looks superficially convincing may be little more than pseudoscience.

Phil Rosenzweig exposed such faults in his brilliant 2007 book The Halo Effect. The halo effect, closely related to confirmation bias, is the cognitive bias whereby one unconsciously assumes that, in business for example, a measure of success (such as share price performance or profits) must directly reflect its good strategy or top quality management. There is little room for luck or subtle shades of grey – and if an overall impression of a company is favourable then thoughts about all aspects of its make-up are likely to be seen as consistently positive.

The halo effect equally applies to individuals, corporate brands and even music – we often attribute positives to people or companies in areas other than their area of personal or product expertise, or assume they are consistently good. Diehard fans of The Beatles will tell you that they never made a bad record, for example, but to listen to Revolution #9 on the White Album is the best way on the planet to waste 8 minutes and 22 seconds of your life. But even I, as a Beatles aficionado, wish the White Album had been a single rather than a double, but I digress.

So how can we avoid falling for this cognitive bias? In a nutshell, we need to examine the evidence objectively and independently and try and avoid confirmatory bias. The business model that works well for some companies is not necessarily the correct one for your business, nor, indeed, for the future. As my friend and mentor, the brilliant Professor Costas Markides of the London Business School tells his senior executives “Stop thinking out of the box because there is no box. Just ask yourself three simple questions: Who is customer? What is the benefit to the customer? How should I sell it?” Only then can you decide on the right strategy for your company, whether it be disruptive strategic innovation (Enterprise became the number 1 car rental company in the US by choosing not to compete in the same space as Avis and Hertz); or by selling emotional as well as product benefits (“Louis Vuitton doesn’t sell handbags – it sells dreams.”).

And don’t assume today’s winners will even be playing the game in a few years time. This struck home with me when I saw a recent article from The Washington Post highlighting annual data from about the most visited websites since 1996. Back in the 1990s, the top 20 companies included,, and In 2001 Google made it into the top 20, and has been in the top 5 since 2002. (Last year the top 5 were, in order, Yahoo, Google, Facebook, Microsoft and AOL).

Things change but the halo effect will remain as long as we are human. People will keep buying the latest business management book assuming it will contain a scientific formula to success. There’s undoubtedly a lot of wisdom in books, but as someone who believes that improving people’s self-awareness and self-discipline are two keys to success in most things, I believe that the best way to close the gap between potential and performance is unlikely to be found in this year’s business best-seller which will be stuffed full of examples of the halo effect. The best way, in my opinion, to go from good to great is through personal coaching – but that’s another story for another day. But for now, can you imagine any sportsman or sportswoman at the top of their game not having a coach? Why should business or investment be different?

© Paul Craven