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    On Investing

    Posted by Carl from Chicago on 18th September 2016 (All posts by )

    Investing has changed significantly during the 25 or so years that I have been following both the market and also the tools available for an investor to participate within the market.  The following trends are key:

    • The cost of trading and investing has declined significantly.  Trades used to cost more than $25 and now are essentially free in many cases.  Mutual funds used to have “loads” of 5% or more standard when you made an investment, meaning that $100 invested only went to work for you as $95.  These sorts of up-front costs have almost totally been eliminated
    • ETFs have (mostly) replaced mutual funds.  ETFs “trade like stocks”, meaning that you can buy and sell anytime (mutual funds traded once a day, after being priced with that day’s activity) and they don’t have income tax gains and losses unless you actually make a trade (mutual funds often had gains due to changes in the portfolio that you had to pay taxes on even if you were just holding the fund)
    • CDs and Government Debt are all electronic.  You used to have to go to a bank for various governmental bond products or to buy a CD.  Now you not only can buy all of this online, you can choose from myriad banks instantly rather than settle for whatever your main bank (Chase, Wells Fargo, etc…) offers up to you
    • Interest Rates are Near Zero.  One of the key concepts in investing is “compound interest”, where interest is re-invested and even small, continuous investments held for a long time can end up amounting to large sums (in nominal terms, because inflation often eats away at “real” returns).  However, with interest rates basically near zero, you need to earn dividend income or take on more risk (i.e. “junk bonds”) in order to receive any sort of interest income.  There is no “safe” way to earn income any more
    • Read the rest of this entry »

    Posted in Economics & Finance, Investment Journal, Personal Finance | 4 Comments »

    Updating Apple Products

    Posted by Carl from Chicago on 18th September 2016 (All posts by )

    I started out as a Windows user and was actually a Windows programmer (using MS Access) for quite a long time. I resisted the siren call of Apple products and stuck with Windows for years and years, for work and for personal use.

    Finally, I gave in and bought a MacBook Pro in 2011 which turned out to be a great purchase (and got rid of my Windows Desktop PC). I always had an iPhone for my personal cell phone and when I turned in my work Blackberry (a sad day at the time) for an iPhone, that meant that I had two iPhones. For a while I also used a Mac at work, although I ended up switching back to a Windows laptop because password resets, system upgrades and a lack of compatibility for applications built for Windows made it too much of a pain in the rear. Mac laptops still struggle in the corporate world.

    Then over the years I of course bought an iPad and then upgraded that iPad, and an Apple Watch, which I really like (although the jury is mixed on that one). Here is an Apple Watch article and review that I wrote.

    Thus I now have five (5) Apple products – a MacBook Pro, an iPad, an Apple Watch, and two iPhones. And now it is time for all the updates… iOS 10 is out now which means I need to update my iPad and both iPhones. Apple Watch OS 3 is also out and I am downloading that right now (downloading the operating system into the watch, from the iPhone, seems to take a long time). My MacBook Pro will get updated to the new Sierra OS when it comes out on Tuesday, September 20th.

    Read the rest of this entry »

    Posted in Tech | 3 Comments »

    Monitoring Air Quality – Speck Sensor

    Posted by Carl from Chicago on 14th August 2016 (All posts by )

    Due to the fact that computing power continues to increase exponentially, devices that once were out of reach for the general population are now becoming mainstream. I wrote about Netatmo, a device that measures temperature, humidity and sound (indoor and outdoor) here. Due to the internet, these devices can also be connected together in order to see a real-time version of the country, without having to look at a weather forecast.

    Recently I saw an article in an MIT journal about indoor air quality which described how cooking eggs aggravated the authors’ asthma and they were able to take specific actions because they were able to pinpoint the source of the spike in unclear air. The name of the company that created the monitor is called Speck and it was sold for approximately $200 so I thought that was a decent price point for me to join the air quality monitoring revolution. I am specifically most interested in INDOOR air quality but I will explain the broader context and then come back to the specific items I am reviewing (basically you can get official measurements of air quality in the US from public sources).

    Read the rest of this entry »

    Posted in Environment, Medicine, Tech | 3 Comments »

    Amtrak and Train Travel

    Posted by Carl from Chicago on 30th June 2016 (All posts by )

    Over many years I’ve commuted on trains for work – the light rail Metra in Chicago in the suburbs and the “L” tracks in the CTA in Chicago. However, I’ve never taken the Amtrak trains so I was excited to take the opportunity to travel between Portland and Seattle and avoid the horrendous traffic that I’ve heard plagues Seattle. Plus, you can have a drink along the way, which is frowned upon nowadays while driving (good for a Friday evening).

    You can buy your train ticket online, but you don’t get seats for coach class. When you get to the train station, there is a line that forms before the train departs and you physically stand in the line to get your ticket. At that point they assign you a seat on the train, and if you buy two tickets in the same online purchase, they will plan to seat you together. This is the ticket that they manually wrote out for us coming back from Seattle to Portland on Sunday.

    Not very high tech, I’d say. But the experience on the train was fine. You get all kinds of folks on the train, from families with kids to people who look like they can’t afford a plane. The Amtrak personnel were all very friendly and seemed to know what they were doing.
    Read the rest of this entry »

    Posted in Transportation | 13 Comments »

    Keeping Portland Weird

    Posted by Carl from Chicago on 28th May 2016 (All posts by )

    I recently relocated to Portland and there’s a lot of interesting stuff to see and do here, along with annoyances.

    Pug AT AT

    Pug AT AT at Star Wars Pug Parade in Portland

    I went to a Star Wars themed Pug Parade at a local brewery and this pug dressed as an Imperial AT AT was my favorite. I love the dog’s shy look as it was lavished with attention.

    Didgeridoo Band

    Didgeridoo Band

    This guy plays an amplified Didgeridoo along with a drummer and while it is amusing for the first few minutes it gets old quite quickly as the low drone buzz reverberates through the neighborhood.

    Barlow Gin and Tonic

    Barlow Gin and Tonic Portland

    I ordered a gin and tonic at a local artisanal bar over happy hour and this is what I received, quite different from my expectations of clear liquid with a lime. But it was quite tasty!

    Posted in Photos | 5 Comments »

    Carl in Portland

    Posted by Carl from Chicago on 14th May 2016 (All posts by )

    Recently I became “Carl from Portland” with a move from living in downtown Chicago to the West Coast. It has taken me a while to get settled but I wanted to say hello to my friends at Chicago Boyz.

    Originally I started taking pictures of all the weird people I saw in Portland – guys wearing kilts or fishnets, girls dressed up like bumblebees with ukuleles, and all manner of tattoos, nose rings and piercings. But then I realized – hey – that’s like taking a picture of a drunk, fat guy at a Bears game. Unless you can go beyond the obvious, don’t do it at all. Or maybe that is grist for a future post.

    First the highlights – Portland has an incredible location. Not only does the city offer everything you’d expect in a big city (restaurants, concerts, cool stores, ability to walk around, nightlife) – they have little to no crime (when compared to ChiRaq) – but you can go about an hour and a half and be on the Pacific Ocean, or about an hour and a half the other way and be hiking in real mountains. Here is a photo I took at Cannon Beach when I went there early in April for an unseasonably warm and beautiful day (I’m told). Below is a photo of Mount Hood from a recent hike we took last weekend.

    Read the rest of this entry »

    Posted in Announcements, Photos | 12 Comments »

    The Federal Takeover of State Debt is About to Begin…

    Posted by Carl from Chicago on 17th April 2016 (All posts by )

    Often people focus on the “loud” items and miss the subtle, important events that really change the world. On the positive side, the 401(k) plan has that obscure name because a financial expert basically “invented” it out of a line in the tax code which enabled tax-deferred savings. And Jack Bogle of Vanguard did the same thing with “passive” investing, which reduced fees and for practical purposes has taken over the investing world (along with ETFs).

    One very subtle item that is about to occur is the nationalization of state debt (and likely debts of individual cities) by the federal government. At the highest level, states and cities have made promises (mainly pensions) to their employees that are un-payable without raising taxes to extortionate rates. Detroit cracked first but since it was a city and there was some state framework they were able to use bankruptcy, but many more are to follow, including Puerto Rico (right now) and soon thereafter likely the City of Chicago or its teachers’ pensions as well as the state of Illinois.

    A very similar event occurred in Europe when the ECB basically put the debts of Greece and Portugal onto the backs of taxpayers in Germany and Holland. The ECB had a moment (several moments, actually) when they could have fundamentally changed how Greece ran their economy, shutting down statist laws and heavy governmental interference in the economy to open up competition and growth, but they blinked and instead just “wired them money in exchange for promises”. The Greeks, of course, haven’t kept their promises, and why should they, given that the ECB continually blinks when the showdown occurs.

    The reason that these states and territories like Puerto Rico are in dire straits is because they

    1. Spend more money than they make every year,
    2. Rely on borrowing to pay for operating expenses,
    3. Have giant, unfunded liabilities on top of this that can never be repaid (pensions, medical bills, etc…).

    This situation is enabled by a governing class that views funds as an opportunity to redistribute wealth to favored constituents and relies on “fairness” as a bedrock of their planning. The apex of this sort of planning can be seen in crony capitalist states like Brazil, where large enterprises like the National Oil Company (partially on the stock market, partially owned by the state) are used to fund politicians and social programs and are systematically diverted away from their core mission (to make money) until the enterprises are bled almost totally dry. Then, ironically, the state has to bail out the very companies that were supposed to provide for the socialistic wealth in the first place.

    The CORE issue is – if you give these sorts of entities money (bailout) without a “root and branch” cleaning of the issues – you will just get more of the same, indefinitely, as their individually painful debts become part of the larger national (or pan-European) debt, which continues the little game of overspending and wasting money on favored political groups for a little longer (maybe a couple years, maybe longer).

    The slippery slope – the trigger – is occurring right now in Puerto Rico. That entire economy is corrupt and ridden with subsidies from electricity to taxes to everything else. For Puerto Rico to thrive, it would need to break down barriers to private enterprise, reduce taxes, levies and bureaucracy, and find some way to bring logical industry into their jurisdiction. However, the more likely course is as follows:

    1. Point out the current individuals suffering from a lack of funding (the poor, kids in school, the elderly),
    2. Note that the debt which was once owned by individuals was bought up by hedge funds for a fraction of its original value – these funds are in a position to fight (legally and politically) for repayment and although they may be termed “vultures” or something else, they really are the last man standing for individuals who lack the means to fight legally for their rights,
    3. Use the political system to “promise” reforms that will never be carried out (because why would you if you can use funds to enable the current system to thrive),
    4. Talk about the retirees, and “promises” made to them over the years that cannot be paid, and how they can’t go back to the work force and earn more money so that they have to be made whole,
    5. Use political or class warfare to point out the groups that run Washington don’t look like the groups that are broke and make it a fairness issue or tied to some century plus grievance.

    It is very likely that these tactics will “work” and that the debts of Puerto Rico will be backstopped by the US government. While this technically isn’t a “bailout”, it absolutely is, because Puerto Rico can’t borrow one dollar on their own anymore (who would lend money to someone who says they won’t pay you back?), and we know that without major reform (which won’t happen) Puerto Rico will just continue to bleed money indefinitely (and fall back on fairness arguments and the above listed tactics to ensure that this keeps happening).

    Then soon after this subtle bailout (and likely before Puerto Rico fails AGAIN, which will happen again as it will with Detroit), entities of Illinois or the state itself will drive straight through this loophole and federalize their debt, too. The state and entities will make lavish promises about change that will never occur, because this is the lifeblood of the Democratic Party (patronage workers and the public sector) and all of the clout / featherbedding / etc… will continue on indefinitely, without any of the sorts of laws that enable competition.

    Watch the headlines… see this occur… it will be seismic in its long-term nature, because it will fundamentally change the nature of the US government, since the debts of the states and cities will become everyone’s debt and we don’t have any “real” tools to govern their behavior or fix the long-term promises that destroy competitiveness and economic growth.

    This is the real story, it is happening under our noses, and instead of paying attention we are following these idiotic presidential campaigns of pure vapor.

    Cross posted at LITGM

    Posted in Big Government, Chicagoania, Economics & Finance, Illinois Politics | 13 Comments »

    Chicago River and Construction

    Posted by Carl from Chicago on 20th March 2016 (All posts by )

    There’s a lot of activity along the Chicago River. If you haven’t been to Chicago in a while I highly recommend that you take the river walk along the south side of the Chicago River which extends through Streeterville / River North. They have bars and restaurants and you can rent canoes and do some people-watching at river level. Here’s the official web site.

    The construction is fun to watch as you walk down Wacker Drive. They have barges where they bring in equipment and install a metal barrier and then fill it in with gravel to extend out into the river. The river is still green from St. Patrick’s day in this photo above. If you have kids or grandchildren who like to watch construction and cranes and such this is highly recommended, as well.

    We keep building new high rises in Chicago. This photo is looking west along the river and you can see the two large buildings that are nearly completed. It is a whole new Chicago!

    Cross posted at LITGM

    Posted in Chicagoania, Photos | 3 Comments »

    Disruption – Part Four – The US Airline Industry

    Posted by Carl from Chicago on 6th March 2016 (All posts by )

    I have been considering “disruption”, including what is hype and what is real. Here is one on the cab industry where it occurred, in the electric and gas utility industry which has proven resilient in its current business model, and retail which is in the process of being disrupted.

    My theory under these posts is that increasing supply (broadly defined) has been the key to whether or not “disruption” is truly real or not occurring. I don’t know if it will play out that way or not in the end but this is a starting point.

    I have been interested in the airline industry for decades… in high school for my statistics class I built a model which correlated the profits of United Airlines with the price of oil. As an auditor and consultant I spent hours every week on a plane crossing the country serving utilities. And ever since I have traveled at least ten times a year for business or pleasure. So perhaps I would not consider myself an expert on the airline industry but certainly an interested observer.

    The airline industry famously de-regulated in 1978. From 1978 to 2010 the airline industry added myriad new entrants and saw them fail along with much of the old guard. Wikipedia summarized this era here. In recent years, through bankruptcy and mergers, the US airline industry consolidated into four major carriers – American, United, Delta and Southwest. These four carriers control the vast majority of gates at major cities and effectively operate as an oligopoly. Now these four carriers are in rude health, as you can see in the stock chart below. Their stock prices have increased between 135% to 355% over the last 5 years. As an investor I bought Southwest after 9/11 and held on to it for years as the price languished; unfortunately I exited the stock before they became today’s oligopoly.

    Another contributor to these gains is the collapse in oil prices. During the “peak oil” era, the airlines profits were strangled by the high cost of fuel – today they benefit immensely from today’s commodity price crash. This article describes how lower fuel costs saved them $4.3B in the third quarter 2015 alone and these lower costs have generally not come through to end users as price decreases – the airlines have banked the money or used them for dividends and capital improvements.

    Read the rest of this entry »

    Posted in Business, Economics & Finance, Tech, Transportation | 13 Comments »

    My Pathetic Vote in Illinois Is Now the Hottest Ticket in Town

    Posted by Carl from Chicago on 27th February 2016 (All posts by )

    Due to the fact that I live in Illinois which has been carved into districts to ensure Democratic majorities, my vote is mostly useless or a protest vote at best. I wrote about gerrymandering here and the fact that perhaps I live in the most ruthlessly gerrymandered district in the nation (and that is no small feat), the fifth Illinois house district, with our current representative, Ken Dunkin.

    Recently I have been receiving a series of mailings for Ken Dunkin’s re-election, which is hotly contested. Currently in Illinois, the Democrats technically have a super-majority, meaning that they can unilaterally issue a budget (more or less) and raise taxes. However, not every Democrat “falls into line” with Mike Madigan, the speaker of the Illinois house, who is the true leader of the Democratic party in Illinois. Rauner is looking for Democrats who might listen to his message of reform or for some reason or another be amenable to working constructively with him (don’t want to speculate too long on why this might be, but you can probably jump to your own conclusion). Dunkin refused to show up for a vote that Madigan thought was crucial in September and conspiracy theories have him aligned with Rauner.

    Per this article from the Chicago Tribune:

    More than $2 million, an unprecedented sum for a legislative primary contest, could be spent between Dunkin, who has allied himself with Rauner against Madigan, and Stratton, who is backed by organized labor.

    This is a ridiculous amount of money to spend on a primary race for a house seat for the Illinois legislature. Given the Democratic machines’ hold on this part of the city, it is accepted as a “given” that the Democratic candidate will win so all of the efforts go into the primary.

    Thus my vote is now a precious commodity. Seemingly every day I get a giant, colorful, nearly insane flyer in the mail with the two candidates attacking each other. Here is a flyer stating that Ken Dunkin was convicted of abusing women and is unfit for office.

    Read the rest of this entry »

    Posted in Chicagoania, Illinois Politics, Politics | 12 Comments »

    Disruption – Part Three – Retail

    Posted by Carl from Chicago on 20th February 2016 (All posts by )

    I have been considering “disruption”, including what is hype and what is real.  Here is one on the cab industry where it occurred and in the electric and gas utility industry which has proven resilient in its current business model.

    While “retail” is a nebulous category, it is one that touches virtually everyone in the USA. Let’s start with the definition of retail:

    the sale of goods to the public in relatively small quantities for use or consumption rather than for resale.

    My experience with retail has been that of a consumer, although I live in an area near Michigan Avenue which features a huge variety of stores of all types, from mass market to high end “showcase” stores. I also have a long history with e-commerce, having been involved in a variety of businesses helping them to go “online” and “digital” from the earliest days of the web. Since the primary threat to modern retail today is from e-commerce, this experience is relevant.

    This chart above is from a recent Business Insider article on retail. The graph clearly shows how shopping is moving from the physical retailer to the online retailer, and it is being accelerated by the adoption of mobile technologies (which enable you to shop and research while on the move, not just when you are in front of your computer at a desk).

    Read the rest of this entry »

    Posted in Business, Economics & Finance, Tech | 17 Comments »

    Disruption – Part Two – Electric and Gas Utilities

    Posted by Carl from Chicago on 16th February 2016 (All posts by )

    I started a trend of posting on disruption with the taxicab industry being walloped by Uber. While disruption is everywhere in the press, the question is – when is disruption truly real and where is it a distraction? Let’s move on to the electric and gas utility industry.

    The electric and gas utility industry is the “exact opposite” of the classic “disruption” thesis… although disruption and revolution have been promised many times over the years, they have failed to materialize. Let’s look at the characteristics of this industry and find the salient facts that either “enable” or “defeat” disruption.

    I worked in the electric and gas utility industry throughout all of the 90’s. I traveled to over 100 public, private and municipally owned utilities (there aren’t that many left today because there have been many mergers in the industry space). Since then I have followed them through business publications and public sources of information.

    The electric utility industry has 4 main components:
    1. Generation – the generation of power through nuclear fuel, coal, natural gas, hydro or solar / renewable
    2. Transmission – moving power via high voltage lines from where it is generated (remote) to the cities where people live
    3. Distribution – the local city with overhead and underground wires and substations and physical trucks
    4. Customer Service – who you call and how they dispatch crews and respond to incidents

    The electric utility industry also is characterized by “real time” surges and the fact that power can’t be stored (yet) on a large scale; thus peaks occur on the hottest days or the coldest days and power is needed exactly at that moment at your particular location. These peaks can results in demand far higher than during a “typical” day.

    The natural gas utility industry is conceptually similar to the electric energy industry with two main differences. Generation isn’t handled by them (exploration companies find natural gas and get it to their system through their own processes and methods) and natural gas is much less “peak sensitive” and can be stored near the point of demand and injected into the system.

    Broadly speaking, there have been many attempts to “de-regulate” the electric and gas utility markets over the last THREE decades. Let’s start with natural gas.

    Read the rest of this entry »

    Posted in Business, Economics & Finance, Tech | 11 Comments »

    Disruption – Part One – the Taxicab Industry

    Posted by Carl from Chicago on 14th February 2016 (All posts by )

    The term “disruption” is everywhere in the popular press. You should “disrupt yourself” and new internet unicorns are going to “disrupt” all kinds of industries. Let’s think a bit about what really is disruptive and what isn’t. This post is going to start with the taxi industry. Later I will turn to other industries, where disruption was predicted but didn’t occur, and we can try to determine why.

    I am very familiar with taxis, having traveled all around the country for business over decades and using taxis all the time in Chicago. Downtown Chicago is one of the few places where you could hail a street taxi at almost any hour of the day or night and assume that one could be found in a relatively short period of time (within 10-15 minutes at worst).

    What were the elements of the traditional taxicab industry? They were as follows:
    – Limited numbers of licenses were offered, and they were generally bought up and consolidated into a few taxicab companies
    – The taxis operated mostly where they offered the highest returns; downtown, in wealthy areas, or near clubs and nightlife. While they theoretically served the entire city, in practical terms they ignored the poorer areas not only for the inherent danger but also due to the fact that it was hard to get a “return” trip once you dropped someone off, necessitating a drive back to a wealthier area and lost time with no earnings
    – If you talked with a taxi driver, they typically worked very long hours and did not earn much money. Since driving a car an “entry level” skill, there were in practical terms an infinite number of possible drivers (a large supply) so the earnings of the drivers were as low as the market would bear (very low). The medallion owner then kept all the remaining profits
    – The taxicab experience as a rider generally was lousy and perceived to be unsafe to single women. You didn’t have any information about the driver and they could be anyone; the low wages of being a taxicab driver also tended to attract drivers on the margins economically
    – The taxicab used a consistent rate based on time or mileage plus a charge to start the meter and often specific additional charges such as tolls or airport fees. The costs could be high; for instance in Chicago if you left the city limits after the first city you were charged “meter and a half” – thus to travel out to a far suburb the fare could easily exceed $100. This was explained as the fact that the cab can’t get a local fare (they are licensed to pick up in Chicago, not the remote city such as Naperville) so they had to drive all the way back to the city to start working again. And on a big night like New Years’ Eve, it was a crapshoot to find a taxi since supplies were limited and not everyone was out driving
    – The main role of the taxi associations was to limit new medallions (which increased competition) and manage the local regulators, who generally defined rates and other business conditions. After a while most cities had “regulatory capture” and didn’t issue new medallions and mainly kept the status quo
    – If you were out of a major city, generally no one used cabs except maybe to go or be picked up at the airport. When I lived in Texas in the late 90’s I tried to get a cab and I was laughed at; cabs were terrible and no one took them. The alternative was drinking and driving or finding a designated driver

    By now everyone knows what has happened to the taxicab industry. They have been disrupted practically out of existence by Uber (and to a lesser extent ride sharing apps like Lyft).

    Read the rest of this entry »

    Posted in Business, Economics & Finance, Tech | 4 Comments »

    New Era Drugs and Death

    Posted by Carl from Chicago on 17th January 2016 (All posts by )

    One of the most fascinating shows that I watch is called “Drugs, Inc.” on National Geographic, which describes the “business” of drugs from its creation (chemicals) or growth (agriculture), through transportation (to America or Europe) and then to distribution (street level), along with interviews with drug abusers and their families.  I did a blog post about this show here if you are interested.

    Unlike television shows with a “narrative arc” of redemption, the business of Drugs, Inc. shows users as ever-insatiable and ever-addicted to the various drugs that are investigated by the show.  Drug dealers are meeting demand that exists and is never questioned; the only risks to the dealer are competition from other cartels / distributors or the police.  The fact that demand will always be there assuming the quality of the product is solid is taken as a given.

    When they interview addicts their lives are not glamorous and often are morose and filled with regrets.  The addicts may take an hour to find a place on their body to inject the drug, they steal from their own families, and they live brutal and dangerous lives in order to acquire the cash to make the next fix.  The traditional high school movies that tried to scare you off drugs have nothing on this systematic and pragmatic approach to just watching the destroyed lives of drug users as they live to support their next fix.

    Read the rest of this entry »

    Posted in Business, Current Events, Health Care | 17 Comments »

    Blackberry’s Fall… and Apple Watch Part II

    Posted by Carl from Chicago on 9th January 2016 (All posts by )

    As I watched the movie “the Big Short” (which I highly recommend) one item I noted was the ubiquitous nature of the Blackberry. Everyone on Wall Street lived on their Blackberry, and much of the action took place via a Blackberry (phone conversations, updates via email, watching stock prices remotely, etc…). A book was written called “Losing the Signal” that covers the rise and fall of Blackberry.

    While I haven’t read the book I am intimately familiar with Blackberry, having owned one for many years and waking every morning to see the blinking red light which indicated that I had new emails outstanding. I had an early version with the combined numeric / letter keyboard, which meant you had to hit the button multiple times (with delays) to type a “C” for instance. Like everyone else I was soon able to type at a rapid clip in this insane method and it seemed like an enormous relief when this was replaced by a “full” keyboard.

    Blackberry also was a pioneer in instant messaging, another technology whose power I underestimated when I initially encountered it. A co-worker tried to connect to me by messenger and I just didn’t see the use – why not just send an email? Of course nowadays it is completely obvious why messages are useful and email is mainly “just for work” and overtaken by reams of spam. And initially when texts were expensive (remember when your phone plan limited the number of texts?) this enabled text messaging that was essentially “free” (if you owned a phone already). But when you watch the complete and utter fall of Blackberry it must be remembered that not only did they invent and perfect the phone / email hybrid but they also had a head start on messaging, another multi-billion dollar technology.

    My Blackberry was more reliable than my iPhone – I received email quickly and with more certainty, especially when compared with the wonky iPhone connections to outlook. However, with the lack of an “App Store” and no touch screen, the Blackberry was doomed by both iOS and Android. Reliability and a keyboard lost to an open system, a touch screen, and a seemingly infinite number of apps from third party programmers. You could look to a Blackberry as a lesson for Apple and their iPhone dominance, but Apple does a lot of things well that Blackberry never did, such as let vast numbers of third parties program for their platform, and continually evolve their platform with new tactile features (touch, GPS, etc…).
    Read the rest of this entry »

    Posted in Tech | 9 Comments »

    Crazy Chicago Weather

    Posted by Carl from Chicago on 3rd January 2016 (All posts by )

    Earlier this year when I was laid up I bought an indoor / outdoor weather station called Netatmo and wrote about it here. It is a lot of fun and I recommend it highly. It is likely that some of these temperatures are impacted by the sun (although I went to a lot of trouble to keep it out of direct sunlight) although this shouldn’t impact the lows which generally occur at night.

    I was struck when I looked at the temperature for October – December. I have lived in the midwest my whole life (traveled a lot) and have never seen this many typically cold months so unseasonably warm. We haven’t had any days below 20 degrees (or at least not on my balcony). This aligns with my experience at the Bears games, which have almost all been nice and warm (and home losses).

    We had one day recently with high winds and blowing sleet that was terrible – it felt like I was being sandblasted. We still have snow and big chunks of rock-hard ice on the ground that haven’t melted yet. But that was the exception, and it is likely to all melt away this week.

    Not to say that the weather hasn’t been rough in other ways – Illinois and the whole midwest faces flooding from continuous rainfall and my parents’ basement has been inundated numerous times after being mostly dry for decades.

    Cross posted at LITGM

    Posted in Chicagoania | 10 Comments »

    Electricity and Ethics and Europe

    Posted by Carl from Chicago on 29th December 2015 (All posts by )

    When I was a young auditor I was on an airplane heading out to a utility client in Iowa. I sat next to a woman and her grade school aged child. I was making small talk with them and the kid asked me what I did. I said I worked with the electric utility. And he said

    Are you the guy who comes over and turns off the power?

    The child’s mom was embarrassed and the conversation was muted after that but I never forgot that exchange – the reality that, for the poor, electricity was a bill that had to be paid, and frequently it came ahead of other key necessities which then was brutally enforced by pulling the plug. Electricity is a big bill for the poor.

    This discussion is completely relevant to what is occurring in Europe today, as these countries move to wind and solar renewable energy instead of economically efficient coal, natural gas and nuclear power. This great article from Forbes summarizes the current debacle:

    To illustrate, Denmark and Germany are the proud wind capitals of Europe, but they also have the highest home electricity prices on Earth, 42 and 40 cents per kWh, respectively, against just 12.5 cents in the U.S…. Undeniably non-sensically, Germany has been paying over $26 billion per year for electricity that has a wholesale market value of just $5 billion

    This sort of mass economic distortion (possibly suicide) has a real, human toll:

    higher cost electricity (and energy) is horrible for our health. That’s because, since electricity is so indispensable, meaning that it “cannot not be used,” higher cost power drastically erodes our disposable income, which is the very basis of our health – while also disproportionately hurting the poor most. As a percentage of income, poor families pay 5-9 times more for electricity than rich families do. Predictably silently, higher cost electricity in Europe is killing tens of thousands of people a year, ”Excess Winter Deaths,” where older residents on fixed budgets in particular are forced to turn their heat down to avoid overly expensive utility bills. For example, there were 44,000 Excess Winter Deaths in England and Wales in 2014-2015

    It is amazing that while Europe is able to penalize the poor and elderly on fixed income in the name of clean energy, their same economic champions, the car companies, ran elaborate schemes to defeat emissions limits on diesel cars in a massive scandal that we’ve all heard about. The cost of remediation and penalties will be in the billions.

    Finally, in perhaps the bitterest pill, moving to expensive and unreliable energy sources means that the reliable blood-money energy available from Putin and Russia becomes even more important to maintaining their grid. While Western Europe has been making a (relatively feeble) effort to punish Putin for his atrocities in the skies and in Ukraine, they ignore the obvious morality issues linked to filling his coffers so that he can buy weapons and pay his soldiers that are used for repression and dictatorship in the east. It is amazing that there will be sit-ins for climate change and animal rights but the rights of Ukrainians and fellow European citizens apparently count for nothing if it enables their energy fantasies to be supported.

    The Europeans are breathtaking in their ability to unilaterally punish the poor and the elderly and increase their payments to Putin while cheating on emissions testing and pursuing their odd goals of “clean” power. These issues apparently do not keep them up at night despite their real-world effects.

    Cross posted at LITGM

    Posted in Economics & Finance, Energy & Power Generation, Europe, Germany, Russia | 51 Comments »

    Hedging ETFs and Foreign Currency Impact

    Posted by Carl from Chicago on 14th December 2015 (All posts by )

    I wrote an article at Trust Funds for Kids about using hedged vs. unhedged ETFs for investing. If you are interested it is below the fold. The impact of currencies on investing is very large and linked closely with interest rate and Central bank activities.

    Read the rest of this entry »

    Posted in Economics & Finance, Investment Journal, Markets and Trading | 6 Comments »

    Apple Watch Review

    Posted by Carl from Chicago on 2nd December 2015 (All posts by )

    I do enjoy gadgets and for some time I have been eyeing an Apple Watch. Recently a friend of mine pointed out a special at Target where a $499 watch was reduced to $399 with a $100 target gift card (meaning it effectively is $299, since it is easy to spend $100 on target for items you need around your house and groceries). At $299, I decided to “take the plunge” and it effectively is my XMAS gift to myself.

    This is what the watch looks like in the box. The box is very long and it contains an extra watch band in case your band gets mangled from over-use. The watch bands also are replaceable – I picked the white one because it was the last watch available at the target that was walking distance from my condo.

    Here’s what the watch looks like on your wrist. This is one of the more basic faces, with the time, the weather, calendar notifications, and the “universal” time which apparently is Cupertino. The multiple circle image is their sort of fitness tracker, and the red dot on the top means that I have notifications waiting.

    It took me a little while to figure out how to use the watch, and I am still learning. At this point Apple basically includes no useful documentation – they just have a few pictorial pull-outs and then you figure out the rest by going to the web or watching videos on Youtube. When I turned on the watch it needed to be charged, which occurs when a magnetic disk is attached to the bottom of the watch face. It seems to take an hour or two to fully charge the watch. I also upgraded the watch to the version 2+ operating system which took a while (a few hours).

    It is important to understand that the watch is of marginal use without your iPhone being nearby. Your watch is basically receiving all of its information and connectivity from your iPhone – it can still tell time and function as a fitness tracker, but it can’t do much else on its own.
    Read the rest of this entry »

    Posted in Tech | 15 Comments »

    When It Took Guts To Live Your Music

    Posted by Carl from Chicago on 21st November 2015 (All posts by )

    Some nights when I have time to kill I just put on a recorded music video show from MTV2 or Palladia and fast forward until I see something that looks interesting. I stopped briefly on a new band out of the UK that looked like half glam / half punk just long enough to get a screen shot… I don’t even care enough to spend ten seconds looking on the internet to figure out their name.

    What I really thought about was that once it took guts and rage to look different from everyone else and music / lifestyle / looks were one and the same, not just an act that you put on like makeup. If you want to read about that in action, try “Get in the Van” by Henry Rollins, the iconic lead singer of the seminal Southern California punk band “Black Flag”.

    Growing up we listened to Black Flag all the time, especially the iconic “Damaged” album. I was too young (and too chicken) to go see them in concert, but reading the “Get in the Van” book really brought home all the violence and flat-out deprivation that it took to live that lifestyle, with Rollins completing a set after being punched and kicked and often drenched in spit. We also forget that Rollins was one of the first individuals to get interesting tattoos in addition to his hairstyle and overall look, which constantly got him in fights everywhere he went. If you want to read about a real and dedicated artist, not some band that was prefabricated for TV and the internet, just read anything Rollins writes but start with “Get in the Van”.

    Reading the book prompted me to get back in the spirit and listen to my favorite Black Flag albums. However, they’ve been lost from vinyl to cassettes to CDs and I’m pretty much done with physical media anymore. So I just signed up for Apple Music and there they all are – the whole catalog. Kind of ironic to listen to music that was made and played with fire in such a bloodless manner as through my iPad and bluetooth speaker…

    Cross posted at LITGM

    Posted in Book Notes, Music | 10 Comments »


    Posted by Carl from Chicago on 17th October 2015 (All posts by )

    I remember when I first joined companies I assumed that the executives in charge knew what they were doing and wouldn’t do something ridiculously stupid. After a while I came to learn that this wasn’t the case.

    In Chicago recently an effort is underway to increase the use of bikes and create additional lanes for safety. At the same time they are attempting to create a bus corridor in the loop.

    The net result, sadly, is utter and complete gridlock. I have stopped taking the bus unless the weather is horrendous because many of the intersections between River North and the Loop are facing gridlock, where cars are in the intersection after the light changes and no one can move. This was already the case on Thursdays and Fridays after work as everyone moved to exit the city at one time.

    They are also building a lot of new high rises, particularly near the Merchandise Mart / Wolf Point. It is incredible that they are able to pack more high rises into that area because traffic is unbelievably bad at that location, already. There is a Brown Line stop nearby but that only is useful for those on that train line and most of the wealthy folks that live / work in that location will likely drive frequently.

    On the other hand, it is good for the “steps” that I track on my iPhone. Since taking a cab or even the bus is mostly pointless I am walking to work more often. When the weather gets terrible I will likely just sit on the bus and read my iPhone like everyone else while sitting motionless in traffic.

    Cross posted at LITGM

    Posted in Big Government, Chicagoania | 18 Comments »

    Fun with License Plates

    Posted by Carl from Chicago on 16th October 2015 (All posts by )

    Some folks want attention on their license plates.

    Here’s one of the few that remembers the predecessor to the Internet, known only by old techies and weirdos like me.

    And here’s a reference to one of my favorite authors, horror pioneer HP Lovecraft and his mythos.

    Cross posted at LITGM

    Posted in Humor | 8 Comments »

    The Most Important Story No One Is Talking About – Puerto Rican Debt

    Posted by Carl from Chicago on 15th October 2015 (All posts by )

    Dan and I go back and forth on the relatively arcane topic of municipal debt. As we all know, the state of Illinois is awash in debt. The situation is so bad that:

    1. The State of Illinois is operating without a budget

    2. The city of Chicago is proposing a massive property tax increase

    3. Cook County just raised our sales tax (one of the highest rates in the country, already) and is proposing additional fees

    4. Chicago Public Schools face a major deficit and without some sort of massive state tax relief is likely going to face significant layoffs and a likely teachers strike

    5. Note that we are one of the few states and cities to be in such dire straits that we issue TAXABLE debt instead of MUNICIPAL debt which is generally exempt from Federal taxes and some state taxes. This is due to the fact that you generally cannot issue muni bonds to pay off operating expenses (like payroll and legal settlements)

    The long term most indebted players have been Detroit, Puerto Rico, and the State of Illinois / City of Chicago. We saw how the Detroit bankruptcy occurred, with bondholders generally taking it on the chin and unsecured pension holders in fact emerging in a relatively better situation.

    Now Puerto Rico is up to bat. They have massive, unpayable debts of many varieties (some secured by full faith and credit, some secured with revenues, some bank loans, etc…) and their governor basically said so out loud. All of this is inevitable as their island’s best talent has fled to the mainland USA and the remaining population is more and more reliant on government aid to survive. They also have failed to modernize their power infrastructure and / or build new industries outside of tourism which erodes their ability to compete against the mainland USA that in turn has much higher productivity.

    The real issue – long term – is whether or not the Federal government will back up the states. This is essentially the “long game” of the State of Illinois and the city of Chicago – waiting to see whether or not the Federal government is really going to stand by and let us go bankrupt or not. If the government is ultimately going to pick up our debts, it is “business as usual”, and the corruption, back-scratching, and non-competitive behavior can just continue indefinitely, with taxpayers across the nation picking up the debris rather than forcing the citizens of Illinois to clean up our act.

    Today Puerto Rico and the treasury announced that they are working to backstop the Puerto Rican debt with some sort of Federal umbrella per this article.

    Puerto Rico and U.S. officials are discussing the issuance of a “superbond” administered by the U.S. Treasury Department that would help restructure the commonwealth’s $72 billion of debt, people familiar with the plan said.

    And what a great name! A “superbond” means that all the US citizens will pick up the “super” obligations of our corrupt, crony-laden, inefficient city and state. That’s super!

    This is the path out for Illinois and the city of Chicago. Play brinksmanship with Federal government and receive a backstop. Puerto Rico leads the way!

    Cross posted at LITGM

    Posted in Big Government, Chicagoania, Economics & Finance, Politics, Public Finance, Taxes | 15 Comments »

    Midwestern Drinking

    Posted by Carl from Chicago on 12th September 2015 (All posts by )

    Dan and I and Gerry often joke about Midwest drinking and how people from other parts of the country simply have zero concept of what the midwesterner’s relationship with alcohol is like. We often go to sporting events together and watch massive drinking binges playing out to the left and to the right.

    Recently I was out in Wrigleyville which is just packed with new bars and drinkers as far as the eye can see. The plaque below was at a bar called “Stretch”. For best results, click on the photo and read the individual “merit badges” that have been earned.

    Here are some of the “highlights”

    8 shots of Bacardi 151 in 22 seconds

    Wow that much alcohol that fast is crazy. Dan and I were at a bar with some of the heaviest drinking I’ve ever seen and some crazy guy tried to buy us all shots of Jagermeister (there were 6 of us standing around) and no one would drink them so he just took all the shots and poured them into 2 regular drinking glasses and downed them in a couple gulps. That was so nuts I had to ask Dan the next day if we really saw it.

    15 shots and 6 beers in one hour

    This sounds about like “Mayor Daley” the merry idiot immortalized at Drunk Bear Fans. That guy was just probably trying to get loaded before going to a Cubs game. The best part about this is that I’d bet that guy drinks like that all the time and someone just had the foresight to document it for history’s sake. When you are on the clock you need to make the most of it, I guess.

    The biggest differences occur when someone from another city is just plunged into the madness that we take for granted here in the midwest. A “normal” citizen who walks into Wrigleyville or game day near Madison or any midwestern city on a Friday night in the summer really can’t believe what is happening and thinks it is something special – it can’t be like this every day, can it? Oh yes it can. We are old now but I saw with my own eyes an entire new drinking class at Wrigleyville last night and they cover most of River North at 2am and beyond.

    It is nothing to be proud of but it is reality here. You have to see it to believe it. Or just put up a plaque.

    Cross posted at LITGM

    Posted in Chicagoania, Human Behavior, Humor, That's NOT Funny | 7 Comments »

    History and Unexpected Shock

    Posted by Carl from Chicago on 7th September 2015 (All posts by )

    One of the fallacies of studying history and interpreting historical events is that:

    1) you look at the course of events that occurred and assume that they mostly would follow a similar narrative with different variables
    2) you ignore what might have happened that is significantly out-of-the-box or the “black swans” that could have resulted in  radically different outcomes.

    I discussed this here with equity markets by country; while we talk about the “long term” and staying with stocks since they generally rise, we ignore that for most countries there have been “liquidation events” that wiped out all the players who remained in the markets (of their stockholdings, at least).

    For instance, in the course of WW2, there has been much discussion of whether or not the Germans would have won had they attempted a sea-landing of England.  The much more important train of thought, however, is what might have happened had Churchill not been the Prime Minister of England during those critical hours.  Many, many lesser men would have capitulated in that time of crisis.

    On the Russian front, in 1941, Russia likely came within a hair’s breadth of moral and system-wide collapse after their frontier armies were annihilated and the Germans began driving across the steppe.  The fact that they were able to sacrifice armies for time and keep some semblance of discipline is taken as a given, but likely if the world ran that as a true Monte Carlo simulation over and over again that outcome is rare.

    A third WW2 example is “what would have happened had the US Navy lost at Midway” which was what the odds said would have occurred.  It is true that in the end US material advantages would vastly outstrip Japan, but another issue is “if we didn’t have victories, would the US political system have produced an isolationist president who would have sued for peace?”  FDR was an ill man and could have conceivably died anytime from 1940 onward.  Even today, looking back, I am amazed that so many US servicemen were preparing to invade Japan at the end of the war, a task that would have led to virtually certain death or injury (for the lucky ones) for tens of thousands without some sort of riots or desertion given the immense casualties and deaths the US faced at Okinawa and Iwo Jima.  Today we lack the social cohesion to attempt anything so disruptive and likely to result in mass casualties.

    It is important to remember that historians and prognosticators are notoriously bad at predicting events – even on topics that they are intimately close to.  For example, few saw the collapse of the USSR in 1989 and the entire “Arab Spring” that began with a vendor self-immolating in Tunisia swept the world with surprise.  It isn’t that in hindsight many showed the “rot” of these decaying systems, but that they couldn’t predict the “triggers” that would set off the maelstrom.

    Read the rest of this entry »

    Posted in Deep Thoughts, History, Military Affairs | 6 Comments »