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    The End of Accounting Book Review – Part One

    Posted by Carl from Chicago on 8th January 2017 (All posts by )

    Recently I read an excellent book called “The End of Accounting and the Path Forward for Investors and Managers” by Baruch Lev and Feng Gu. I highly recommend this book for investors, analysts, accountants, and those with a general interest in business. The book is very well written and researched in that it:

    1. Describes the current situation in depth
    2. Aligns the situation across an historical context and with relevant research
    3. Makes specific recommendations about how to improve the situation

    If you’d like to read more about this topic on your own (will help to frame out these posts), here is an excellent Wall Street Journal article titled “The End of Accounting” (if the link doesn’t work because you don’t have a subscription you can probably find it elsewhere on the internet). Here is a link from Accounting Today and an interview with the author from CFO magazine.

    The first post in this series is going to be my personal insights and journey in the area of accounting information, financial and investor relations analysts. This context is relevant because I, too, have seen the problems that the authors outline in the series and come up with my own “hacks” to attempt to gain better information and insights.

    I started out my career as an accountant, and I used to help create the footnotes that you see at the end of the financial reports. This wasn’t creative work per se – you would start with last year’s footnote as a template and insert new numbers, unless it was a new requirement, in which case it was a lot of work and we would turn to specialists. At that time (20+ years ago) there were only a few footnotes and the financial statements themselves weren’t that long; you would be able to read from the Chairman and CEO’s letter all the way through to the last footnote in a couple of hours.

    This was also before the internet; we would go into the company library and look at microfiche sometimes to do research or you’d pull up the hard (printed) copy from the files. At that point an annual report was also somewhat of a marketing document; companies put a lot of thought into the cover, for instance.

    At various points in the history of accounting there has been a focus on the balance sheet (assets and liabilities), the income statement (earnings per share and price / earnings ratio) and on cash flows (cash generated from the business). Each of these views are important and have their merits and their drawbacks. The statements were generally the “GAAP” view which focused on financial statement presentation and used taxes at official rates (many companies pay almost nothing in taxes in actuality by deferring them indefinitely) and held assets at historical costs. Both of these assumptions made the financial statements less useful for certain types of companies and industries.

    Read the rest of this entry »

    Posted in Book Notes, Business, Capitalism, Economics & Finance | 3 Comments »

    A Great Concert – SRV at Champaign IL 1987

    Posted by Carl from Chicago on 7th January 2017 (All posts by )

    Dan is much smarter than me and he holds on to all the ticket stubs for concerts and sporting events that he’s attended over the years.  He recently sent me a rug and a coffee mug that he created based on the ticket stub for a special concert we attended almost 30 years ago when we were at the University of Illinois.  The show was Stevie Ray Vaughan at Foellinger Auditorium.

    At the time I was in college and had almost no money.  I saw that Stevie Ray Vaughan was coming to campus and thought I would get up early and stand in line to purchase tickets before class (I rarely got up early in those days when I could avoid it).  Alas, the line was already long and I pretty much gave up right away.  There was a guy who was scalping tickets, however, so I went up to him and bought two tickets for what I remember was about $50.

    The tickets were up front in the first couple of rows as it turned out but way, way on the left side of the stage.  Dan and I got rip roaring drunk before the show (which was the custom, back in the day) and we headed to Foellinger.  Note that Foellinger was a lecture hall and I had many classes in that room – the room had bolted-down desks with the fold out panels that you could write on, so it was kind of odd that they had concerts at that same room (I also saw the punk band Husker Du in that same lecture hall, which seemed even odder).

    Read the rest of this entry »

    Posted in Music | 4 Comments »

    Autos and Disruption

    Posted by Carl from Chicago on 1st January 2017 (All posts by )

    Prior to moving to the West Coast, I had little need for a car because I walked and / or took public transport to work (or a cab if I was lazy, back in the days when you could hail a cab on the street).  Thus I typically invested the minimum amount I could in a reliable car that could fit 4 passengers with a full size trunk and also squeeze into a narrow parking garage.

    The cars that “fit the bill” for me were the older model Nissan Altima which I drove for a decade and then a Jetta which I picked up in 2011.  Each of these cars cost about $17,000 “out the door” and contained a reasonable level of equipment (the Altima was my first car with air bags, the Jetta was my first car with ABS and traction control) – they weren’t completely stripped down models with manual transmission, for instance.  These cars have both turned out to be highly reliable autos – and the old Nissan Altima is still driving today, almost 20 years later, as a starter car in my extended family.

    The average age of a car on the road today is 11.5 years (nowadays you don’t even have to “link” to sources – Google just brings in the data from Wikipedia as a search response when you ask a common question) and that seems long to me.  For every new car on the road, for instance, there is a late ’90s model still driving to offset it in order to get back to an average of 11.5 years.

    My theory today is that the total package of “functionality” or “value” that you could obtain from a new Jetta for $17,000 would be comparable to autos that cost far more for 99% of the scenarios in which you would plausibly use that auto.  These scenarios include 1) commuting to work 2) running errands around town 3) going on a trip and putting luggage in the trunk.

    That’s not to say that there aren’t scenarios where it doesn’t make sense to have a more powerful or capable auto.  In Oregon we went to visit a friend who lives up in the hills and I had 4 people in the car and gravel had been newly laid on an uphill slope (which, as it turns out, means that it is very slippery).  As a result our car couldn’t make it up the hill and we slid sideways into a ditch and had to have a friend hook up a rope and give us a pull from their big pickup truck to get us back on the road.  If I lived up there, for instance, then this car would be completely inappropriate.  But that isn’t a common “use case” for my auto.

    When you look at the “true cost” of owning an auto, there are a lot of factors to consider, and whole web sites to calculate it in various ways.  Instead, I am going to make the general statement that if you buy a new car at around the $17,000 price point and drive it for perhaps 7-8 years before selling it you are probably going to pay about $150 / month for that car (net of what you receive on resale).

    Read the rest of this entry »

    Posted in Economics & Finance, Personal Finance, Transportation | 23 Comments »

    Updating Apple Products Part II

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

    In a recent post I discussed the spate of updates that have occurred in my Apple products including a new iOS for my work and home phone, a new iOS for my iPad, a new iOS for my Apple Watch, and a new operating system for my Mac.

    Apple Watch

    Let’s start with the Apple Watch. The Apple Watch is an evolutionary product and the jury is out on whether or not it will be a giant part (“move the needle”) of the Apple portfolio. Personally, I find the Apple Watch to be very useful because I can get notifications when big events occur (for instance, I was the first to say “Prince is dead” in a big meeting) or just to be reminded when texts happen and I don’t have my phone on. It also is good for sports score notifications and tracking workouts. Finally, you can also always know if someone is calling you even if the ringer on your phone is off, and you can answer it “Dick Tracy Style” on your wrist (if you want to annoy everyone around you).  Here is my review of the Apple Watch from 2015 when I bought it.

    Apple Watch iOS 3.0 is OK. The watch seems a bit faster. They made it easier to utilize some popular apps like the workout app and incorporated some other improvements here and there. I can’t take advantage of all the iOS 3.0 features because my older Apple watch doesn’t have some of the features like the built in GPS that comes with the new watch.

    Mac OS Sierra

    There has been a lot of noise in the press about Apple not updating their core computers and even letting Microsoft steal their thunder with the new Surface tablet.  However, Apple deserves immense credit for making their OS upgrades work effectively even on older model machines – for instance the Macbook that I am writing this blog post on is from 2011 (my friend Brian installed an SSD and more memory which I documented here).

    The most important elements from my perspective are the continued integration of the Mac OS with the iPad and iPhone devices.  With this upgrade I now can easily share a single photo stream (which will get its own post since it is so complicated), use Apple music easily across devices, and use key apps like messenger, notes, ibooks, contacts and Facetime (mostly) seamlessly.  Siri also works on the Mac now which is fine for most people but I don’t use Siri much so it is irrelevant to me.

    Read the rest of this entry »

    Posted in Tech | 9 Comments »

    Obama’s “Nuclear Renaissance” Receives Its Final Obituary with Toshiba’s Write Down

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

    Back in 2009 at the start of Obama’s first administration he proclaimed that a “nuclear renaissance” was coming. Although I am a fan of nuclear power, I knew right away that this effort was doomed to failure by a lack of structural incentives in the USA and the ability of NIMBYs and lawyers to drag out and kill any project by a thousand cuts. I wrote that it was doomed here and summarized the players here.

    Yet 2 companies plowed along with their nuclear projects – Southern Company (big in Georgia and the south) and SCANA (a South Carolina utility), mainly because their state rate environment was favorable and allowed them to include the cost of assets in their “rate base” rather than being forced to price energy at something close to market prices. Eventually those that pay for electricity in these jurisdictions are going to be soaked with the enormous costs of these plants and / or the finances of Southern Company and SCANA will be seriously impacted. Southern Company has a market cap of around $50B and SCANA has a market cap of around $10B. For context, the Southern Company nuclear project is currently 3 years behind schedule and $3B over budget and likely to cost up to $20B (although costs are borne by many parties, not just Southern Company) and the SCANA project is likely to cost up to $12B (although not all borne by SCANA).

    These nuclear projects, already non-competitive due to price declines in natural gas (caused by fracking), became even MORE non-competitive as their completion dates were extended and costs ballooned due to inevitable and completely predictable delays. The history of nuclear power projects is littered with failed efforts and those that were completed often had huge cost overruns, especially those completed near the “tail” of the initial nuclear building effort which petered out in the ’80s.

    Now Toshiba is being hit with part of the overrun costs. Their stock recently went down 20% (the most that it can fall in a single day trading session) with discussion of potentially billions of dollars in write downs tied to their work on nuclear power projects.

    What is sad about all of this is that the debacles that will hit rate payers in the south (predominantly Georgia and South Carolina) and / or shareholders were completely predictable, although the situation could get even worse if delays stretch on indefinitely and the plants are never even completed (which is always possible in the litigious USA). As the current administration leaves their utterly failed nuclear policy should be something that they accept responsibility for, as well as their ameteur-ish ignorance of history and the predictable consequences of these sorts of mega-projects (in our current legal and regulatory environment). However, I highly doubt that will occur.

    Cross posted at LITGM

    Posted in Energy & Power Generation | 6 Comments »

    Evergreen Aviation Museum- Spruce Goose

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

    Near Portland there is a great aviation and military museum called the “Evergreen Aviation and Space Museum“. I highly recommend that you visit this campus, which includes an IMAX theater, if you ever visit Oregon.

    The highlight is the “Spruce Goose“, the immense wooden plane designed and built by Howard Hughes which resides inside the facility. It is fantastic that the museum was built at a large enough scale to keep this plane indoors else it would likely soon be lost to the elements.

    Read the rest of this entry »

    Posted in Aviation, Oregonia | 5 Comments »

    Portland Winter Weather

    Posted by Carl from Chicago on 15th December 2016 (All posts by )

    Recently I re-located to Portland, Oregon. While Portland has a reputation as a rainy, gloomy place, we had a great April through November, with lovely and mostly sunny weather. In December, however, things have taken a turn for the worse.

    I grew up in the Midwest where it snows all the time. The difference, however, is that we salt our roads and plow them with vigor. This wikipedia article shows the “salt belt” of states that use this method; Oregon is not one of them.

    While snowfalls are infrequent in Portland (some parts of Oregon see immense snowfalls… like this town and anywhere near Crater Lake) we have already had 2 “major” snowfalls that snarled traffic to an inordinate degree – the city ceases to function and everyone stays home when they heed the weather warnings (if they turn out to be accurate). On Wednesday, however, the snowfall and ice occurred during the evening rush hour and caused chaos with hundreds of abandoned cars litering the streets and highways. Commutes that would take 20 minutes could take 4 or more hours; many (including myself) went on foot.

    Streets were still icy and treacherous a day later, since the temperature remains below freezing. Cars that drive were generally either all-wheel drive, trucks, or used chains. I had to buy a pair of chains for my Jetta for $85 but I hope to never need to use them.
    Read the rest of this entry »

    Posted in Oregonia | 15 Comments »

    25 Stories About Work – Experience

    Posted by Carl from Chicago on 1st December 2016 (All posts by )

    I was recently on a plane doodling and thought of some funny / interesting stories from 25+ years of working and traveling. So I decided to write them up as short, random chapters of a non-book with the title of this post. Hope you enjoy them and / or find them interesting. Certainly the value will be at least equal to the marginal cost of the book (zero)…

    Chicago, 1990s through today

    I just finished reading the book “Disrupted” by Dan Lyons about a journalist from Newsweek who takes a job at a start up which eventually goes public called Hubspot.  Mr. Lyons is out of place from day one as he describes how the company acts without much oversight, firing workers on a whim (they ‘graduate’) and rapidly turning over employees as the company attempts to get to the public markets before the money runs out.  To make this even stranger, the author also writes for the HBO sitcom “Silicon Valley” and Hubspot allegedly goes after him to stop this book from being published, and the board finds out about it and fires / sanctions some (but not all) of the managers that he portrayed in the book.

    All that aside, the purpose of this post is to talk about experience, and how it changes you over the decades, and its value and detriments.  Reading that book caused (not “inspired”) me to think about my own views and how they’ve evolved over the years.

    It is strange when you go from being the “new kid” to being the grey-ish haired “experienced” one.  Recently I was at 1871, the incubator in Chicago for new start-ups at the Merchandise Mart in River North where I used to live.  As I walked around I noted all the fresh faces, the beer on tap, and the grown men riding around on razor scooters to get from meeting to meeting.  Then I realized – hey I am just an old guy here.  I’m not one of them, although I could probably be a boss of some sort in one of these companies (depending on what they are looking for).


    Read the rest of this entry »

    Posted in 25 Stories About Work, Book Notes | No Comments »

    25 Stories About Work – Getting a Review and Thinking Like Your Boss

    Posted by Carl from Chicago on 22nd November 2016 (All posts by )

    I was recently on a plane doodling and thought of some funny / interesting stories from 25+ years of working and traveling. So I decided to write them up as short, random chapters of a non-book with the title of this post. Hope you enjoy them and / or find them interesting. Certainly the value will be at least equal to the marginal cost of the book (zero)…

    Chicago, 1990s through today

    If you are ever looking for a great book to read, I would recommend High Output Management by Andy Grove, the late former founder of Intel. I picked up a hard copy on the internet for just a few dollars including shipping and although it was written in the mid 1980s (and updated in the early 1990s) much of the book is completely relevant for both new entrants to the work force and those that have been engaged for decades.

    Andy Grove had a passion for getting the most out of his employees, since he was focused on productivity and his staff represented a large cost (and opportunity) for his organization. He approached productivity in two main ways 1) by leveraging process and eliminating bureaucracy he could move faster at lower cost 2) by training and motivating his staff, he could achieve greater outputs. For the purpose of this post we will focus on #2, although it should be remembered that Andy Grove also essentially popularized key elements of the “open office” plan where executives sit amongst their staff which I will cover in a future post.

    For his employees, he defined motivation as getting the maximum that he could achieve. His motivation would broadly be considered “engagement” in the modern definition. “Engaged” employees go the extra mile and are passionate and drive for results, while “dis-engaged” employees are an active drag on the business and your company would frankly be better off if they just stayed home. Most employees are in the middle of the spectrum, neither actively engaged nor disengaged.

    Training and feedback are the key elements of this post. Andy pushed training in his business and held his executives to a standard that they needed to teach and be part of the process of investing in employees. I remember when I was starting out in my master’s program many case studies held up Motorola as ahead of their time with the “Motorola University” of classes to train and advance their employees. All of this was done before the internet with papers, books and physical classes and it represented a significant investment for the company. Today, these programs have mostly been minimized at large corporations, although many service firms (financial and technology) still invest heavily in training and grooming their own staff, and most large internet / technology firms have more extensive orientation and learning methodologies.

    For feedback, there is a template for an annual review in this book from the 1980s which contains all of the key elements of an employee review that you might receive today. The employee is supposed to do a self-review prior to the meeting, and the manager goes through the strengths, weaknesses, and areas of improvement and seeks out feedback from peers in order to develop a thorough analysis. Andy Grove mentioned how important employee development and feedback was to him and how he forced other top executives to be part of and even care about the process although many of them did it in a perfunctory manner (complying with the process but not the “spirit”).

    From my personal experience and from those of my work acquaintances across many industries, the formal personnel appraisal has been dying for many years and is usually done in a perfunctory manner if it happens at all. If you are in a services business (consulting, law, finance), your personnel review is essentially done for you in the course of your engagements, since “good” staff are selected for teams and “poor” staff are shuffled around and / or “ride the bench”. Leaders have an incentive to collect (and shield) the best staff because they make the most money for their groups by pleasing clients and billing lots of hours while the poorer performers are not selected and (mostly) find their way out of the organization (or into the back office bureaucracy where they don’t face clients). While the service firms’ HR departments would vehemently deny this statement, it is the “broad” truth.

    But if you are in a corporation or smaller business that is not service facing, you will be most impacted by a poor or minimalistic review process (as an employee), because you won’t get valuable and direct feedback that will help you grow and improve. In today’s corporate environment, re-organizations are frequent and managers rotate through departments (or are thrown into direct work), so supervision routinely moves to the back burner. There is little incentive to groom and work on staff (as a manager) if you aren’t going to be around for 2-3 years in the same job because it takes time to invest in staff and improving processes and behaviors and there is no purpose in putting in this sort of investment if you are just going to move on to the next job anyways.

    Read the rest of this entry »

    Posted in 25 Stories About Work, Book Notes, Management | 12 Comments »

    Portland “Riots”

    Posted by Carl from Chicago on 12th November 2016 (All posts by )

    Recently I moved to Portland, Oregon. Portland is a very clean and safe city, albeit one with a lot of homeless people allowed to camp out on the street. Crime here is miniscule by the standards of Chicago – rather than seeing murders every day (with multiple murders and shootings compressed into one story since it isn’t “news”), you can actually see leading news stories about a guy who got his bike stolen, with a picture of the thief from a security camera.

    Now Portland is in the national news for a different reason. After the election, protestors have been taking to the streets. I was in a cab back from the airport Thursday night and my twenty minute ride became a 1 1/2 hour ride since the protestors were blocking bridges and highways. It was a bit unnerving because you were just sitting in traffic with no information and it could go on indefinitely.

    The protestors have been walking through neighborhoods and shopping areas and blocking bridges and the police have mostly left them alone. They did break business windows in an area less than a mile from where I live such as this Bank of America ATM bank branch. They set a couple of fires in dumpsters too. But generally they were pretty calm and the police followed them and didn’t bust their heads, Chicago-style.
    Read the rest of this entry »

    Posted in Civil Society, Current Events, Oregonia, Politics | 27 Comments »

    Efficiency and Restaurants

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

    Since I eat out a lot and have frequented restaurants of every stripe over the last few decades I am always interested in restaurant efficiency. The restaurant industry is brutally competitive and it always disturbs me when I eat at a restaurant and enjoy it but then fear that the restaurant won’t survive because it lacks a critical mass to make enough money.

    There is an Italian restaurant called “Grassa” in Portland (you can see their logo, below). They are attached to another restaurant called “Lardo”.

    These restaurants serve high-end food (not luxury cuisine, but far from fast-food) and alcohol but have communal tables and always seem to be packed with a line out the door. They are different because their menu is a large signboard (dishes are frequently updated) when you enter the space and you order your food at a central register and they hand you a “flag” to bring with you to your table. Then when your food is ready, they bring it out to you and take away your flag and you eat your meal. Drinks are brought out first (and appetizers) and you can also flag down one of the servers to order more drinks (although most people tend to have one drink with their meal and then leave, based on a few times that I’ve sat at the restaurant). You can also order your food “to go” at Grassa, as well.

    This model drives peak efficiency at the restaurant. There are many fewer tables than you would need at a “standard” restaurant due to the communal standing tables and the food comes out as soon as it is available (the servers don’t have to take orders, they just serve the food as soon as it is up and return back to the kitchen area, unless they are bussing a table that just left). They don’t have to take reservations or mess with any of that complexity, either.

    Read the rest of this entry »

    Posted in Business, Economics & Finance | 11 Comments »

    The Hive Mind

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

    As smartphones become more powerful and more connected there are subtle phenomenon that are very powerful that can go by unnoticed. For years I either walked to work or took public transit but now in the Pacific Northwest I commute by car. Since the surroundings are new I pay much more attention to what is going on than I used to in Chicago.

    In Chicago, there aren’t a lot of opportunities to optimize your travel if you are driving alongside major roads such as I290 or the Dan Ryan. Unless you really, really know what you are doing it is not recommended to get off the highway in many Chicago neighborhoods and just to follow your mobile navigation blindly. Thus in Chicago when I was in bad traffic it pretty much looked like this – a speed of zero and stuck crawling ahead.

    The first generation of car navigation tools told you how to get somewhere with the most efficient route, taking standard traffic into account. The new generation of navigation apps, however, have real-time information and continuously re-adjust the “recommended” route based on traffic, accidents and construction.
    Read the rest of this entry »

    Posted in Chicagoania, Tech | 17 Comments »

    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.

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    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.

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    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).

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    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.

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    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).

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