This document outlines the course overview for an intelligence tools course for finance professionals. The 8-session course will cover topics like macroeconomic analysis, information search strategies, actor analysis, and frameworks for understanding mergers and complex investment situations. It will aim to give students basic theories, tools, and questioning techniques to improve their analysis. The instructor provides examples of how these tools could help analyze situations like China's restrictions on rare earth element exports. Students are encouraged to practice using a "three track analysis" approach involving rational actor, organizational, and political frameworks to fully understand such events.

1. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Intelligence Tools for the Finance Professional
Prof. Milo Jones
Finance Department

2. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Who am I?

3. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Course Overview
I. Session One
 Why is this course important to you?
 What we can actually achieve ?
 What do I expect of you?
 Where does this material come from?
II. Session Two
 What is the TRUE “macro” context for any financial or investment analysis you
will do over the next few years?
III. Session Three
 How can you organize a basic search for information?
 What is important to know about strategic surprises ?
IV. Session Four
 How can you analyze who the actors are and what their motives might be during
foreign events with a market impact?
 CASE: Chinese REEs case & Three Track Analysis
V. Session Five
 How can you apply Allison’s frameworks to an M&A situation
 CASE: The battle for Endesa: Worth E.On’s Energy?
VI. Session Six
 How can you refine your view of people?
 How can you refine your view of institutions?
VII -
VIII
Sessions Seven
& Eight
 How might you put the tools of this course together to understand an ongoing
and highly complex investment situation?
 What is the IA3 Framework and how might you employ it?
 CASES: The Hermitage Fund & Hermitage’s Russian Quandary

4. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
A few other preliminary notes…
» What we achieve in eight sessions:
 Exposure - unconscious ignorance versus conscious ignorance
 Give you basic theories to help you notice things
 Give you basic tools to both organize information better…
 Build better mental habits (i.e. give you something besides a “hammer”)
 AND TO ASK BETTER QUESTIONS OF YOURSELF, COLLEAGUES &
EXPERTS
 Point you towards where to dig out more information

5. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Why did I create the course? Examples and Warnings

6. © 2015 Milo Jones
Intelligence Tools for the Finance Professional

7. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
A few weeks ago

8. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
» To a man with a hammer…
Examples…

9. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Examples…

10. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Some Warnings
» NOTE WELL: Many of the frameworks and ideas in an intelligence
course will prompt you to ask great questions, but…
» Under no circumstances is it design to encourage, condone, enable
or glamorize criminal activity, including insider trading or any other
unethical practices.
» Governments can and should do things that business and finance
can’t and shouldn’t!
X

11. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What do Intelligence Agencies do?

12. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
» Intelligence Agencies do “Big Picture” analysis of the state of the
world.
What do Intelligence agencies actually do?

13. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
» Intelligence Agencies also collect “actionable intelligence” and
issue specific warnings.
What do Intelligence agencies actually do?

14. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
» Intelligence Agencies (sometimes) organize “covert action”.
» (In my view, this is not a great mix with their main function).
What do Intelligence agencies actually do?

15. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What do Intelligence agencies actually do?
Tasking
Collection
Analysis
Production
Dissemination
The “Intelligence Cycle”

16. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What do Intelligence agencies actually do?
Tasking
Collection
Analysis
Production
Dissemination
The “Intelligence Cycle”
Where
people
focus…

17. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What forms does Intelligence come in?
» HUMINT = Human Intelligence

18. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What forms does Intelligence come in?
» HUMINT = Human Intelligence

19. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What forms does Intelligence come in?
» SIGINT = Signals Intelligence

20. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What forms does Intelligence come in?
» SIGINT = Signals Intelligence

21. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What forms does Intelligence come in?
» SIGINT = Signals Intelligence

22. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What forms does Intelligence come in?
» GEOINT = Geospatial Intelligence

23. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What forms does Intelligence come in?
» GEOINT = Geospatial Intelligence

24. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What forms does Intelligence come in?
» GEOINT = Geospatial Intelligence

25. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What forms does Intelligence come in?
» OSINT = Open Source Intelligence
» FINSINT = Financial Intelligence

26. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What do Intelligence agencies actually do?
Tasking
Collection
Analysis
Production
Dissemination
The “Intelligence Cycle”
Where you
should seek an
edge: original
questions and
inventive
hypotheses!

27. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
What do Intelligence agencies actually do?
Tasking
Collection
Analysis
Production
Dissemination
The “Intelligence Cycle”
Where the other
magic happens
(and ~75% of
CIA people work)

28. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
An Example: China and REEs

29. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
An Example: China and REEs

30. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
An Example: China and REEs

31. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
An Example: China and REEs

32. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
An Example: China and REEs

33. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
An Example: China and REEs

34. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Please tell your firm’s Investment Strategy Committee…
» 1) Why is there an apparent stoppage in Chinese REE exports?
» 2) Who or what is responsible for the apparent stoppage?
» 3) How might you explain their actions?

35. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Please tell your firm’s Investment Strategy Committee…
» 1) Why is there an apparent stoppage in Chinese REE exports?
» 2) Who or what is responsible for the apparent stoppage?
» 3) How might you explain their actions?
» A Reminder:
» SEPT. 22, 2010 “Amid Tension, China Blocks Vital Exports to Japan”
» OCT. 19, 2010 “China Said to Widen Its Embargo of Minerals”
» OCT. 28, 2010 “China Is Said to Resume Shipping Rare Earth
Minerals”
» NOV. 10, 2010 “China Still Bans Rare Earth to Japan”

36. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Peeling the Onion…
» To answer these questions, we use what I call Three Track Analysis:
» 1) Construct a Timeline and Chronology of the issue (not just the
“news stories”)

37. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Peeling the Onion…(Timeline/Chronology example)

38. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Peeling the Onion…(Timeline/Chronology example)

39. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Peeling the Onion…
» To answer these questions, we use what I call Three Track Analysis:
» 1) Construct a Timeline and Chronology of the issue (not just the
“news stories”)
» 2) Then examine events in three ways, or “Tracks”:
 The Rational Actor Track
 The Organizational Process Track
 The Bureaucratic and Personal Politics Track

40. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track I

41. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track One: the Rational Actor Track
 The Unit of Analysis is a single, optimizing, truthful actor – it is a “unitary
rational actor” that makes "decisions.“

42. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track One: the Rational Actor Track

43. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track II

44. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Two: the Organizational Process Track
» Unit of Analysis: the Unitary actor’s formal parts (Ministries, Departments,
Agencies, etc.) Assume that these sub-units act according to pre-determined
procedures to produce an "output."

45. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Two: the Organizational Process Track
» Unit of Analysis: This track is sometimes useful for otherwise mysterious
events that don’t make a “unit” look rational.

46. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Two: the Organizational Process Track
» Unit of Analysis: the Unitary actor’s formal parts (Ministries, Departments,
Agencies, etc.) Assume that these sub-units act according to pre-determined
procedures to produce an "output."

47. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Two: the Organizational Process Track

48. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track III

49. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Three: The Bureaucratic and Personal Politics Track
 TRACK THREE - Unit of Analysis is key individuals or groups - This model
ignores the "unitary“ actor idea, standard playbooks, and even formal
organizational charts! It focuses on the different perceptions, personalities
and preferences of self-interested individuals and (formal or informal)
groups. It also screens for deception…

50. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Three: The Bureaucratic and Personal Politics Track
?

51. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Three: The Bureaucratic and Personal Politics Track
 TRACK THREE - Unit of Analysis is key individuals or groups - This model
ignores the "unitary“ actor idea, standard playbooks, and even formal
organizational charts! It focuses on the different perceptions, personalities
and preferences of self-interested individuals and (formal or informal)
groups. It also screens for deception…

52. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Three: The Bureaucratic and Personal Politics Track
 TRACK THREE - Unit of Analysis is key individuals or groups - This model
ignores the "unitary“ actor idea, standard playbooks, and even formal
organizational charts! It focuses on the different perceptions, personalities
and preferences of self-interested individuals and (formal or informal)
groups. It also screens for deception…

53. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Three: The Bureaucratic and Personal Politics Track
 TRACK THREE - Unit of Analysis is key individuals or groups - This model
ignores the "unitary“ actor idea, standard playbooks, and even formal
organizational charts! It focuses on the different perceptions, personalities
and preferences of self-interested individuals and (formal or informal)
groups. It also screens for deception…

54. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Track Three: The Bureaucratic and Personal Politics Track

55. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
If you want to “Do it Yourself”…

56. © 2015 Milo Jones
Intelligence Tools for the Finance Professional
Questions?
You can contact me on Linkedin or
Or via http://www.geopoliticalalpha.com/