Don’t Under Estimate Commodity Trading Complexity
I got off the phone today after introducing a potential investor to the CTRM scene – at least briefly. We do this quite often and often get asked to do due diligence – and even though I say so myself – I think we are the best qualified in the industry to offer that sort of service. But my post call thoughts were on this – a topic that actually didn’t come up during the call…. outsiders see Comtech as straightforward and they do not have an inkling regarding the underlying complexity. Add to that, many of them think you are either somehow old fashioned, nuts or perhaps not broadly experienced enough (or all of the above?) to insist on how complex it is. The question is always – well why does Comtech ‘lag behind’ Fintech and other industries? No matter how much detail you get into, developing an understanding of the complexity of commodities takes months and years not minutes on a phone call and so I guess it’s no surprise that people look at us thinking we are all just a little slow and dumb in this industry.
I can’t tell you how many hot shots I have dealt with in the last 20-years. Full of talk of it isn’t ‘rocket science’ and we met this ‘complexity in Futures, Chemicals, Auto etc. and succeeded’, brimming in misplaced confidence and heading for disaster, these people just do not get it. Those of us that do look knowingly at each other with a wry smile…..
The perfect CTRM would have been developed a decade ago if it were so simple. Those in this industry are not dumb but actually wise and full of very detailed and intricate knowledge about how commodities get bought, sold, managed, moved, financed, insured and so on. Surely, this much would be obvious to an outsider? The people in this industry are not dumb but rather very experienced and knowledgable. To determine after a few hours of due diligence otherwise is a fatal – and I mean FATAL – mistake. I really can’t tell you how many times I have seen people come in and dig holes deeper and deeper until forced to silently and secretively exit with tail firmly between legs.
I will say this until I am blue in the face – Do not under estimate the complexity of commodities, CTRM and CM software…….. ever. My guess, however, is that I am wasting my breath.
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