Koch Update: Daycare Facility, David H. Koch Plaza, Newspapers, and New Wild Bill Koch Interview

So while I have been away it seems as if the Koch brothers have been making the headlines. One I forgot last year was David Koch made it finally possible for MIT researchers to have a daycare center that would double the size of the daycare facility population (providing daycare for 126 children) and will open in August 2013. Actually the whole idea came about when a post-doc woman was sitting next to David Koch at dinner one night and talked about the state of the daycare at MIT.

In another Koch related news David Koch donated $65 million to the groundbreaking ceremony video can be seen here (Koch makes some remarks at around the 1:26 mark). Construction won’t be done until the fall of 2014. I always wonder why liberals hate David and Charles Koch so much when they give to causes like the arts that liberals and the general public tend to enjoy.

Bill Koch has been in the news as well. Bloomberg had a story a few weeks ago discussing the false imprisonment suit. In probably one of the most bizarre Koch lawsuits to date former Oxbow employee Kirby Martensen claims he was held against his will. Judge Jacqueline Scott Corley dismissed the lawsuit Martensen brought however claimed that she didn’t buy Koch’s arguments. The case is being retried and the name is Martensen v. Koch.

In somewhat Koch Industries related news Daniel Fisher of Forbes had an excellent story (his writing is superb) on the Marshall family (who are still to this day part owners of Koch Industries) describing how J. Howard Marshall II (the guy married to Anna Nichole Smith) and his family are having a fight not between family members but also the IRS for gift taxes owed. Last year Bloomberg discovered through tax documents that Elaine Marshall owned 15% of Koch Industries which gave her a net worth of $12.7 billion. It is somewhat interesting that if a few court decisions had gone a certain way Anna Nichole Smith could have ended up with ownership of Koch Industries. Fisher discovered some great primary documents like this tax court document for J. Howard Marshall II.

The most recent news that has been talked about is Koch Industries maybe purchasing the L.A. Times. It would be interesting to see market based management journalism. First I really don’t know how true this rumor really is. Also newspapers have been a dying breed as revenue is at an all-time low (even after adjusting for inflation).  The Koch’s grandfather Frederick Koch did run a news paper in Quanah, Texas.  Speaking of Koch Industries I forgot to point out this article (again by superb journalist Daniel Fisher) which describes how Koch Industries reinvests 90% of their earnings into the company while correctly pointing out that both Charles and David may have issues down the road in terms of succession planning. With a net worth of $34 billion each and 84% ownership in Koch Industries it makes estate planning difficult even though Charles claims they have been doing estate planning for years. Actually the serious estate tax bill will come not when Charles and David pass on but when their wives pass on.

Lastly and maybe one of my favorite parts is that Bill Koch actually granted an interview (7 pages worth) to 5280 (a Denver magazine). It seems like Wild Bill is spending a lot of time on the ranch working out details. Koch seems to be putting forth a lot of effort in getting the history correct and everything historically accurate. The town will be intended to be a private getaway for him and his family. The goal of his town is to all have a place to come to as they grow older and have their own families. After decades of battles between Charles, David, and Bill I guess Bill has come to realize that fighting between family members really doesn’t lead to anything good.  Bill Koch’s twin brother David Koch apparently was interviewed too and admitted in his younger days he was more interested in the popular people on campus, the girls, and the athletes. David also said that Bill was the more serious student. Bill like his brothers David and Charles had to work on the ranch (beginning at age 13 and worked 12 hours a day, seven days a week). Bill in the interview also discusses the incident with Martensen and said Oxbow became aware in 2011 of possible misconduct by Martensen and through an internal investigation (e-mails, recordings, and over 4 million items in total) Martensen was planning a scheme. When confronted about the wrongdoings Martensen admitted to some of it. The whole ordeal sounds bizarre about detaining an employee and a trial, judge, and jury will have to decide the outcome. Toward the end of the interview Bill mentions he wants to live the rest of his life in peace, spend more time with his family, and hang out in his own town. The governor of Colorado would like Koch to open the town to high paying visitors and school children (Koch is unsure if this is the right move however how often will his family even “use” the city”?”

Bill Koch is probably one of the most interesting people I have ever read about. The Koch brothers are fascinating as well. Whatever side of the political spectrum one is on I think people can agree they are interesting, controversial, and I have learned so much from studying the history of the family. I can say one thing is for sure there probably will never be a family as interesting as this. 

The Case For A Simpler Tax Code

After studying the personal income tax code for a couple of years now I believe that the U.S. tax code is insanely inefficient, gives benefits to people that don’t need it, and ends costing taxpayers not only money but countless hours.

If you look at the tax code and just look at the deductions it is pretty easy to tell what things are deductions. Nearly everything that is a deduction is only a deduction because the government has made it expensive. Take for instance education costs and medical expenses (which are deductible). You never see deductions for things like cell phones, computers, or areas where the free market is involved. People can deduct interest on their home (which leads to bigger houses than we would otherwise have without the deduction).  The charitable deduction leads to people to give to charity, however as Dan Mitchell points out here that history shows that the deduction itself does not lead people to give more to charity since giving has historically been the same (even before the deduction was put into place). The charitable deduction generally benefits people with high income as they can deduct up to 50% of their (Adjusted Gross income). Also if property is donated to a charity over a certain amount it has to be appraised which requires more forms and paperwork.

What is really sad is that Social Security benefits are taxable. So essentially people are paying taxes Social Security taxes when they work and when they collect their benefits (double taxation).

Currently the tax code is 3.8 million words long (2010). Since 2001 there have been 4,428 changes to the tax law in addition to filling out 893 forms to fill out. The complexity of the tax code can be found in this Forbes article. According to this Laffer Center report the cost of tax compliance is $431.1 billion. I would think both parties would agree this is a waste of both time and money. The biggest problem I see is that the tax code makes it hard for even honest and decent people to figure how to file out their taxes. Many of the tax laws exist to benefit certain people while disadvantaging others. Did you know for instance if you rental out a home less than 14 days per year you don’t have to report it as income. This actually came about because during the Masters Golf tournament and Atlanta summer Olympics politicians and others would rent their homes out to people and didn’t want to have to pay tax on it so they created a tax law saying you didn’t have to. 

What is strange is that let's say you invest in a stock and when you sell the stock it is worth less than you paid for it. This loss can be used to reduce your taxes. It seems troubling/odd that the government is giving investors a benefit for investing unwisely. However, the maximum amount is only $3,000 per year.

 The IRS seems to be proud of answering 68% of calls in 2012 (average wait time was 17 minutes). If a private business took 17 minutes to answer phone calls they would be out of business. Part of the reason why so many people call the IRS is because the tax code is pretty darn complicated.

Many people have an interest in the tax code being complicated. Upon a little research I discovered that there are around 1.2 million accountants (this includes auditors as well). 68,000 professional financial planners, tax accountants, and other professionals that have a direct interest in the complexity of the tax law. Also there are other indirect professions that are related to the tax code such as home relators (mortgage interest deduction), insurance industry, and others.

The opportunity costs is not only 6.1 billion hours for the people that do taxes but the amount of useless knowledge accountants, financial planners, and tax attorneys are required to know adds little value. If we had a flat tax they wouldn't be required to remember so much nonsense and could be free to add value in other ways. 

The Case For More Nurses and Physician Assistants

With much people still talking about healthcare reform I thought there was one area thing people were not talking about: nurse practitioners (NPs) and physician assistants (PAs). I see both of these professions doing mountains of paperwork and it seems as if they are not being put to their highest valued use: helping and serving patients. States like Texas nurses practitioners are required to have a doctor sign off on 10% of the charts. However, 34 states don’t have this requirement. Not only does this waste time for the nurse practitioner but also takes time away from the doctor who is trying to help patients. There is an expected shortage of doctors (expected to grow to 130,000 by 2025) however there are some issues with this.  Why not add 155,000 nurse practitioners and over 83,000 physician assistants? So let’s assume that only 90% of nurse practitioners and physicians assistants are working with patients. If they on average see 8 patients a day that means 1.7 million more people per day could see a medical professional! Every week that would be close to 11.99 million who would have access to someone who could help them.

Much of the criticism comes from people who say things like “Nurse practitioners and physicians are not as qualified as doctors”. Sometimes things that seem true are not true once you look at the evidence. What is fascinating is this article in The Journal of the American Medical Association from January 2000 entitled “Primary Care Outcomes in Patients Treated by Nurse Practitioners or Physicians a Randomized Trial” the study concluded that even when patients were randomly assigned to either a nurse practitioner or doctor the outcomes were comparable. What is even more fascinating is that the patients with hypertension did better under the care of the nurse practitioners than doctors.

Perhaps the real icing on the cake is that the American Medical Association would publish this considering it has a vested interest no one other than doctors see patients. A 2000 RAND study found no evidence that nurses provided lower quality care than their counterparts and actually could reduce office visits by 35%. This case study showed that in the late 1990's when nurse practitioners were introduced to Loyola University for their cardiovascular program the mortality rate decrease from 3% to .9% in only 4 years, complication rates decreased, and the costs also decreased. This study in a 2 year follow up found that there was no difference between the care physicians provided and that of nurses. This study showed that nurses and PAs provided similar care as HIV experts and even better care than non-HIV experts.

Women’s right activists should embrace more this since nurses make up 92% of all nurses. By giving the women in this field more responsibilities it will increase their pay which I see as positive. The elitist view view that only doctors can help people is such utter nonsense.  Medical information is more dispersed now than ever before. States and the AMA should allow nurse practitioners and physician assistants to provide care. As I mentioned the level of care is similar to that of a physician, healthcare costs would be reduced, statistically speaking women would be given more responsibilities and in turn make more money. I see all of these things as positive. The only people who wouldn’t like this are people who would have to compete with these “new” medical professionals. 

Forbes 400: Charles and David Koch & Historical Net Worth 1984-2013

(This graph shows net worth over time with net worth of each of the Koch brothers) 

Recently, Forbes came out with the richest people in America.  As some of you may know I have covered Charles Koch Relentless Goals here. If you want to see all the Koch articles I have done over the years you can go here.  Charles Koch and David Koch were on the list again this year (from looking at the top 10 of this list seem to be the only ones that believe in free markets). Their net worth increased to $34 billion from $31 billion last year (only a 9% increase while the overall stock market did a little better).  What is interesting is that what may explain why the Koch brothers are so rich is that they do take on more risk. The technical term is standard deviation which just simply means how much things deviate from the normal. When I looked at the standard deviation of their net worth it was 44%. The long run standard deviation on stocks is less than half of this. The compound annual return of the Koch brothers is 16.2% which decreased from last year. If things continue on this pace the Koch brothers would be worth $100 billion (each) by 2020. Of course by this time Charles would be 85 and David would be 80. Personally, I enjoy following the Koch brothers as I believe they are true American heroes building a successful company with 60,000 employees creating products that every day products people use from nylon, beef, paper products, and even drinking water. Truly, this is a company that is diversified and not simply in oil as many claim. The only way the Koch brothers got rich was as Dr. Walter E. Williams would say “serving their fellow man/woman”. Consumers were not forced into buying all these products Koch makes. People voluntarily decided “well Koch makes a better product at a lower price than the rest of the competition let me give them my money”. Koch practice something called market based management (MBM) which I discussed on this post. MBM really does seem to work for Koch Industries and I wonder if other companies have used it.  

Keeping up With the Sarofim Family: Divorce, Drugs, and Lawsuits (Part II)

I covered Fayez Sarofim as an billionaire investor in this prior post. Fayez first married Luisa in 1962 (only 4 years after he started his company). However Louisa and Fayez were divorced on June 25, 1990. The cost of the divorce was $250 million the largest in Texas at the time. With this wife Fayez had a son named Christopher (who now works at the firm and had his own troubles).  Daughter Allison was born in 1968. She recently was sued by someone who was bit by her dog.

By 1979 Fayez who was then 50 met a 26 year old woman named Linda Hicks. Together they had a son named Andrew who was born in 1984 (here is a picture of him with an attractive blond). Their second son Phillip was born in 1986. Linda then had another son who was not Fayez’s (this gets confusing as the even the people who get cheated are getting cheated on themselves). Finally on September 30, 1990 Fayez and Linda Hicks were married.

Linda Hicks graduated from the University of Alabama Linda herself left her husband and moved with her young son (Sean who ended up going to TCU) to Houston and worked as an entry level clerk at Sarofim’s office for between $25,000 and $50,000. Sarofirm actually got to know Linda because he needed a babysitter and offered to pay anyone at the firm $25 per hour (which back in the early 1980’s was very good money). Fayez who was already married at the time began to meet Linda for some loving at a Houston hotel. Sarofim even asked Linda to come into his meetings to “size people up”. Fayez then bought a house for her in River Oaks. Fayez was generous and offered Linda $390,000 per year (tax-free) to be his mistress.  With a new house in River Oaks Linda seemed to like nice things and used Fayez’s money to buy a Jaguar, have frequent visits to Neiman Marcus, and almost purchased every dress on sale at a trunk show. Friends would say she would drop $100,000 per day at Neiman’s.

Despite all this money Linda didn’t seem happy. By 1995 she was an alcoholic and also a pill addict looking for Valium pills. She was taking 15 milligrams of Valium every 2 hours according to this story.  The house staff (nannies, maids, and security guards) took care of the kids while Linda would go on her drinking binges and then come home and yell at the kids for no reason. Fayez would come home and remain in his suit from work and at 6:30 P.M. to watch Wheel of Fortune with the kids. Also in 1995 while in Italy Linda had one too many drinks and told Fayez to get on his Falcon 900 private jet and go back to Houston (he took her up on that offer). Another divorce was looming. Linda wanted the same $250 million that Fayez’s first wife Louisa got. However it wasn’t cheap. Linda used lawyers Bob Piro and Earle Lilly which charged a non-refundable retainer of $50,000, in addition to $450 per hour (to work on custody for kids), and then the icing on the cake was a 20% of anything above and beyond the pre-nuptial agreement they had.  This story gets ever crazier as Earle Lilly was trying to have a relationship with Linda. Linda would buy him gifts like a $4,300 Hermes briefcase. She also made Lily the trustee of her estate (which in estate planning is a big no-no). Lilly could basically use her estate to pay himself whatever he felt was reasonable. 

By November of 1996 Fayez agreed to give Linda $12 million and she could keep the River Oaks house (of course she would have to pay the property taxes on it), along with $960,000 tax free forever. However the Piro and Lilly got $6.5 million total in fees. After the case was over Lilly suggested Linda buy him a $130,000 Mercedes for his great work. By this time Linda was crashing with her alcoholism. On February 19, 1997 she was taken to a hospital for drinking too much. It was in the hospital where Linda was admitted into rehab and met Mason Lowe (high school drop-out). Mason also had a criminal record stealing equipment from Compaq computer while working as a security guard in addition to public intoxication. Linda apparently saw something in Mason though as they bought a $4 million property in Hawaii and $2 million condo in Toronto. Apparently just like Fayez took care of Linda, Linda took care of Mason buying him a Bentley, took him to art galleries, and bought him nice suits form Neiman’s. Linda’s personal problems however got worse. In 1998 Linda had been drinking for 3 days and Mason had to call an ambulance. Fayez and Linda were still friendly and Fayez even invited both of them over for dinner. Lawyers Piro and Lilly found 153 phone messages (2 hours worth) that were threatening from Linda.

In May of 2000 while climbing Mount Kilimanjaro Linda who was having trouble breathing because she smoked for so many years passed away as she try to make it up the mountain.  Linda and Mason were asked before the trip if they wanted a satellite phone however they declined. One issue Linda had was that she had two wills. The last will usually invalidate previous wills. One will named Lilly has the executor and the other will had Mason as the trustee and executor which is somewhat scary given that Mason has a criminal record for stealing things. We shouldn’t feel too bad for Mason he currently lives in an $840,000 4,700 square foot condo in Houston according to property records.

These days it seems as if the kids of the Sarofim family are also causing trouble. In 1999 Christopher (son of Fayez) married Valerie Sarofim however in the late 1990’s filed for divorce and had court hearings to fight over their daughter Gillian Sarofim. The Sarofim nanny in an affidavit said that Valerie Sarofim would just vanish and party ignoring her kids. The nanny also claims that there was drug use by Valerie. However, Christopher Sarofim admitted in court papers that he and his wife Valerie both used cocaine and marijuana in 1996. Christopher also seems to like the ladies as he seemed to be interested in Courtney Lanier (adopted daughter of ex-Houston mayor Bob Lanier).  Here is a picture of both of them (Courtney is in the middle and Christopher is on the right).

Despite all of this Fayez Sarofim has been very generous with his wealth. He has donated to many different charities including giving $25 million to University of Texas-Houston for a research building. In 2008, he gave $15 million to Southwestern University according to this article. Also he has contributed to the Houston Ballet, Museum of Fine Arts, provide financial support to Sloan-Kettering Cancer Center, Texas Children’s Hospital, Houston Grand Opera, the Houston Symphony, and given over $1 million to Hobby Center of Performing Arts.  Wherever there is a named building there is usually a capitalist behind it. Truly the Sarofim family is interesting from Fayez Sarofim as an investor, to the history of scandal, and to whatever the future holds. The Sarofim family does make the Kardashians look rather boring though.

Fayez Sarofim: Houston’s Billionaire Wizard Investor (Part I)

One day when I was in the medical center in Houston and I looked outside and noticed a building that was called the Fayez Sarofim Research Building. I thought there must be some capitalist behind it. I did some research and found it was donated by billionaire investor Fayez Sarofirm. What interest me was that Fayez made a name for himself buying high quality stocks and has been investing since 1958 which is pretty long term in the investment world. Sarofim’s motto is to never sell. However, as I did more digging I found a very different side of the Sarofim family such as $250 million divorces, having children with between different people, an ex-wife who climbed a mountain and then died, estate battles, and even drug use. Sometimes the truth is stranger than fiction.

Fayez actually came from a wealthy Egyptian family and came to the United States in the 1940’s and earned his degree from University of California at Berkeley and an MBA from Harvard. His firm was founded August 1958.

What is interesting is the number of clients that Fayez seems to have lost over the years. According to data from his website. According to this performance posted on the website it seems as if the number of portfolios decreased from 270 in 1998 to just 95 as of 2012. The assets have also decreased from $57 billion in 1998 to just $22 billion as of 2012. The firm use to (not sure if they still do) manage the pension funds of companies like General Electric and Ford along with the endowments of Rice University and the University of Houston).  There was this story last year from the Houston Chronicle that the firm might lay off people. This ADV form discloses biographical information of many of the employees who work at Fayez Sarofim (educational background, prior work experience, etc).  Many of the employees have been with the firm for many decades which is rare these days. What is also interesting is the company has many entities like Sarofim Trust, Sarofim International Management Company, Sarofim Advisors Group, Sarofim Realty Advisors, and The Sarofim Group.  The company according to this Morgan Stanley statement has 21 employees.  According to the same document Sarofirm after fees over the past 10 years has under performed the market 4.67% (versus 8.01% in S&P 500). This Fortune magazine story from 1992 discusses how “Successful investing is the result of judgment and discipline”.  During the early 1990’s he had outperformed the market.  In 1993 he was worth $300 million according to this article.  From 1983-1992 Sarofim outperformed 94% of all money fund managers.  In 1993 however he moved into the bottom 20% because of Phillip Morris. Sarofim got a personal phone call from the treasurer of Phillip Morris to say everything was okay and the company could still pay out its dividend. Fayez likes stocks with low price to earnings ratio, high return on equity, and decent dividend yields. NASDAQ actually has a website that discloses all of the firm’s holdings here.  The biggest holdings are in Phillip Morris, ExxonMobil, and Coca Cola. Fayez even helped an artist invest according to this 1999 story from the New York Times.

Sarofim owns multiple properties in Houston. According to property records he owns a 14,700 square foot home in River Oaks worth around $11.4 million. Also he owns a 8,700 square foot house in Houston that is worth $5.4 million. However, it seems like all this wealth comes at a price. (Part II Keeping up With theSarofims: Divorce, Drugs, and Lawsuits) 

Koch and Empire Grew Together (1994 Wichita Eagle Article)

Source: Wichita Eagle 

This past week I stumbled upon a really good article from June 26-27, 1994 about Charles Koch and Koch Industries. The article has some articles I referenced in my three part series (part 1, part 2, part 3) on the Koch brothers. However, the first article was more of a profile of Charles Koch. Bob Cox did a profile of Charles and his family in 1998 for the Wichita Eagle did a profile. The Wichita Eagle recently did a profile in 2012 by Roy Wenzl .

One thing I learned from the 1994 article was how much Charles Koch loves to read. According to the article at least in the 1990’s he spent at least 2 hours every day reading. He reads scholarly books on economics, history, philosophy, and psychology. He even read the Old Testament of the Bible just because he was curious. This is interesting because when Charles was younger he was more interested in parties and playing rugby and actually was expelled in high school for drinking. Koch thought about being a mathematician  scientist, or economist (thank goodness he didn't pick those). An interesting fact is he graduated M.I.T with 2 graduate degrees (chemical engineering and nuclear engineering) by the time he was 24. After all this he considered going to Harvard Business School. William Koch did take some business courses at MIT according to this.

Once Charles started working at Koch Industries he was working 7 days a week. He tended to look at problems as an engineer instead of understanding the importance of people. Everything I have read indicates that he is a workaholic which actually isn't bad as a side effect is becoming a billionaire. Charles didn't seem to understand that people had a life outside work, however Charles' life was work. One meeting in August of 1968 started at 4 P.M. and lasted until midnight. Executives were expected to work on Saturday.

Koch has an interesting management style. Up until this point I have never read anything about how he managed people. Even Charles Koch himself acknowledges that he doesn't try to be a tough boss however he may be insensitive from time to time.People say that while Koch is demanding he is also very fair and doesn't like people who lie. He has a great analytical mind (makes sense he is an engineer), sharp, and seems to know what questions to ask. Koch will actually let employees make the decision at the end of the day (this is part of market based management). One interesting quote from Koch about work is that "True self-respect only comes from real accomplishment, because you can't kid yourself for very long". Another good quote Koch has that could be applied to management is "If you have a proposition or thesis or theory, you're obligated to search just as hard for facts that disprove it as you do for facts that support it".

The relationship between Charles and Liz Koch is interesting too. Apparently the folk tale is that Charles was so busy he had to propose to Liz over the phone. Apparently when they first met Charles was not with the times as he was reading books in economics, philosophy, psychology, and history. There was a charm about Charles that was attractive to Liz however. After 5 years of dating Charles and Liz were married in 1972. What is interesting is that in the 1990's when this story was done the family had no servants or help despite being worth $1-$2 billion (according to my Koch historical net worth page)

Koch also doesn’t like to waste any time. He really uses every minute to add value or learn something. He only lives 15 minutes away from work and listens to books on tape (Dr. Walter E. Williams of George Mason University also does this listening to tapes from Academic Plant). In a 3 week trip to Orient that Koch had planned he didn't spend one minute relaxing. When the Koch family went on a trip to the Summer Olympics in Spain Charles wanted to see 4-5 events a day which wore every one out (kids swore it would be the last trip they would go on). Even on a Sunday afternoon Koch will be watching football games with his work papers out doing both things at the same time.

Charles isn't much of a partier (nor does he need to be running a multi-billion dollar company). David is more outgoing like mother Mary Koch use to hold (don't know if he still does) a New Year's Eve party that held 800 people as of 1993 in Aspen, CO. Even Newsweek said it was a great party to crash. Charles doesn't like to party but he does enjoy good wine.

What is really interesting is how in 1966 Koch Industries had $177 million revenue and in 2012 the company had $110 billion in revenue. This is an annual growth rate in revenue of 15% which is pretty amazing. One reason might be of Market Based Management. Personally I don’t think Charles Koch works for money as so many of the left claim. His house seems quite modest for his net worth. He does have homes in California and Aspen however even though they are only worth a few million dollars each it is very small compared to his net worth of around $31 billion. They didn’t even have servants in the 1990’s despite being worth in the billions. The Koch family does have expensive cars and charter company planes for trips however they are not socialites who party all the time and have fun. They say he is greedy and trying to control democracy by buying politicians. To me Charles Koch preaches about free markets and liberty. Liberals forget that means personal liberty which is for social liberty (legalize drugs, same-sex marriage, etc). People forget this and just label Charles and David Koch as Republicans but they really do have certain libertarian ideas.

Personally I am glad I found this classic article from 1994. It revealed to me that Charles Koch doesn't like wasting time, challenges himself on a daily basis, works his tail off, and really seems like a decent human being. Now if we can just get others to realize his enormous accomplishments we all might be better off. I personally do hope all the Koch brothers publish their own autobiographies so they can tell their own stories in stead of having other people tell it for them. 

Koch Industries: Challenge Process

Here is a video I dug up from YouTube from Koch Industries that discusses the challenge process that occurs at the company. Charles Koch is in the video as well and basically explains how Koch Industries became so successful in less than 2 and 1/2 minutes. I did blog about Market-Based Management in a book that Charles Koch wrote here.

John Allison on Financial Crisis and Market Purity

John Allison recently spoke to AEI on December 6, 2012. I have a lot of respect for John Allison who actually was a CEO of a bank during the financial crisis which gives him more credibility to discuss the topic rather than someone who believes what should have happened. Allison did a great interview for the Kaizen where he discussed his career at BB&T and explains how he grew the company. Dr. Walter E. Williams also wrote a column about the recent book John Allison published called "The Financial Crisis and the Free Market Cure . I read the book myself and really had no idea how much the banking industry was regulated or how government policies really were one of the main causes of the financial crisis in 2008. Allison was not to long ago was named the President and CEO of the CATO Institute. Cheers for Mr. Allison and bringing some sanity in a world of insanity!

Case for 24/7 Stock Market

So recently I have been thinking about markets and how they operate. One thing that seems strange is why the stock market is not open 24 hours a day, 7 days per week, 365 days per day. You might think this is odd however in the financial industry many people are at work a little before the market opens 8:30 A.M. and are done by 3:30 P.M. Of course there is other work that has to be done by trading can only be done in these hours. This is odd considering currency markets are open 24 hours a day 6 days per week (has been going on since 1995 too). I found this article from 1985 that talked about 24 hour trading (commissions back then were over $100 and a far cry from the $4 now paid by investors). Also since 1985 trading hours have been from 9:30 A.M. to 4 P.M. Eastern Time. However despite this after-hours trading can go on between 4-8 P.M.

Simple economics should suggest that a 24 hour stock market is a no brainer  If we had a 24 hour market then we would have less volatility because we would have more transactions. For some odd reason I believe people might get worried about the market taking a tumble at 3 A.M... However, nearly every other market is open 24 hours per day. Wal-Mart, McDonalds, and IHOP, are a few that are open 24 hours a day. People buy goods online all day and night. So it is really strange how anyone would argue against a 24 hour market. As long as there is a willing buying and seller we should have there always will be a deal to be made.