Musings of Technology in Private Equity

  Burry's Prediction of the Collapse of the U.S. Housing Market The purpose of this post is to research and discuss an infamous business prediction that proved to come true.   This discussion will include a summary of the prediction and two forces that impacted the prediction’s success.   I will discuss Dr. Michael Burry’s prediction of the 2007 housing market collapse for this discussion. Predicting the Collapse of the U.S. Housing Market Dr. Michael Burry, the founder of the hedge fund Scion Capital, is known not only for predicting the collapse of the U.S. housing market but also for driving profits for his fund and himself by $700 million and $100 million, respectively (ANDERSON et al.; McKay, 2015; Van der Kolk, 2020) .   This prediction and the story of how Dr. Burry’s prediction came to be was famously told through the 2015 movie, “The Big Short” (ANDERSON et al.; McKay, 2015; Van der Kolk, 2020) .   Using publicly available information submitted to t...

Traditional Forecasting vs. Scenario Planning Writing this week’s post, I was engrossed in the academic and professional literature comparing traditional forecasting and scenario planning.  Professionally, I serve as both the Chief Financial Officer and Chief Strategy Officer for a portfolio company held by a private-equity firm.  Most of my days involve discussing the current and expected business performance via forecasts generated by our various operating companies nationwide.  These forecasts are then communicated to our executive team, investors, and banking partners.  A common phrase we use within the finance community that is well written within the academic literature, too, is, “As soon as a forecast is published, it’s wrong” (Amer et al., 2013; Coates, 2000; Peterson et al., 2003).  If accurate, how can strategists and futurists provide a better framework and greater context to these forecasts? Traditional Forecasting Traditional forecasting is the ...

  Contrasting the Delphi Method & Nominal Group Technique for Group Decision-Making Think Tanks and the Delphi Method As I've written in prior posts, think tanks are organizations tasked with generating and expanding ideas without restriction (Aly, 2019).  To accomplish these objectives, they can employ several structured and unstructured group decision-making techniques (Aly, 2019; Jackson, 2022).  A short-list of these methods and techniques include:  (Aly, 2019; Gordon, 1994; Jackson, 2022; Michael & Libarkin, 2016): ·        Delphi method ·        Backward planning technique ·        Nominal group technique (NGT) ·        Brainstorming ·        Stepladder technique ·        Analytical hierarchical ·        Structure design process ...