Carl from Chicago – Page 21

The Liquidation of Markets

February 22, 2015February 22, 2015 by Carl from Chicago

Every weekend I read Barry Ritholtz’s recommended reading and there are a lot of gems in there. Recently he posted this Credit Suisse graphic about markets at the turn of the 20th Century by market share and compared it with 2014 on the topic of global equity investing.

In his article he mentioned the fallacy one might fall into as a UK equity investor in 1899… why bother investing in the USA when the UK market is so much larger? And then this line of thought ends up missing the huge growth in US market share over the next century.

However, the real issue here isn’t the relative change in market share by the different countries; it is the fact that almost all of these markets were entirely extinguished at one time or another by political, economic or military events that wiped out the investors.

25 Stories About Work – “Don’t Run” and Rental Cars

February 22, 2015February 22, 2015 by Carl from Chicago

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)…

The Midwest, late 1990s

Along with air travel, renting a car is part and parcel of the traveling business person’s experience. Over the years I have rented hundreds if not a thousand rental cars at airports across the USA.

In the earliest days we’d always get a map from the rental car agency and then use it to navigate our way around town. Rental cars are typically near the airport and kind of tucked away often with lousy signage, so you need to know how to find your way out and how to find your way back. Nowadays most of the airports have a “single system” for rental cars where all the buses drop you off at the same facility, but back in the day each one had their own pros and cons.

The big innovation in rental cars came when Hertz implemented “Neverlost”. Neverlost was the first in-car navigation system that I was aware of and we started getting it in their cars in the mid to late 1990s. Neverlost spoke to you as a woman in an English accent and she was forever telling me to

Return to the designated route

In her peeved manner whenever I made a wrong turn or disobeyed her orders. Any sort of new directions took a long time to take effect, and the system was remarkably clunky compared to what’s available on your smartphone, but back then it seemed like an enormous leap forward. One negative element of this is that I started listening to the machine rather than learning the cities I drove through – in particular Memphis is a city I should have explored with a map but instead sat like a zombie and was told what to do by machine.

Our Need For Categorization

February 14, 2015 by Carl from Chicago

I am an enormous fan of “top lists” and almost any sort of categorization. If it is the top 100 guitarists, the greatest bands, a type of warship, or anything else – I like to see it in a category and classification that can explain trends and try to cut through complexity by organizing the data into different groupings.

Sirius XM radio stations are a great example of categorizations. Recently on a trip with Dan and our friend Brian we had the station stuck on “Hair Nation” – and then we started thinking through the different stations and how Sirius has chosen to allocate music across each of them.

Some bands are solidly “Hair Nation” – Poison, Warrant, LA Guns, and everything else with spiky hair and all about having a good time. While Dan is more “Hair Nation” – I am more on the “Boneyard” station, which has a big overlap with Hair Nation but a whole host of songs that aren’t on Hair Nation, such as UFO and older heavy metal like Judas Priest.

We started to have a mock “debate” in a snooty English style of “Dear Sir – I beg to differ with your classification of the band Skid Row. “Monkey Business” is more of a hard Boneyard song while their ballads of course could reside properly within the confines of Hair Nation.”

The End of An Industry

February 14, 2015 by Carl from Chicago

When Best Buy first moved into town maybe 15-20 years ago I was excited. I could spend hours in there looking at gadgets, components, routers, TV’s, and had thoughts and dreams of tying them all together. Later, Fry’s opened up, and you could walk through the aisles and buy all the pieces to build your own PC out of parts and make it the hottest gaming platform in town.

Recently I saw this article in Business Insider (I really like that app / site / etc…) about how to upgrade your MacBook pro (the machine I am writing this blog post on). If you have an earlier model (2011-2), you could spend less than $200 to upgrade your RAM and install an SSD drive (one without moving parts, essentially a big memory chip) and pull out your old (mechanical) hard drive and your machine will then give you many more years of excellent Apple service. Apple’s integrated operating system / hardware plan means that my older machine takes advantage of all the new features in every software upgrade of the operating system (now my Mac “rings” when I get an iphone call and that is a bit annoying but who’s complaining) as long as it has the horsepower to keep up.

So I took the (minor) plunge and went on Amazon and bought an SSD drive and upgraded RAM and it arrive in a couple of days for less than $200. I am going to take this over to my friend Brian’s house since he’s better at this than me and we are going to take apart the machine and put in the new drive and memory.

The real point of this story, however, is that the implicit industry of “taking apart devices and rebuilding them” that existed on the consumer side for the last 30 or so years (that I have been part of, at least) is dying. You can’t take apart newer Apple machines and upgrade them. While you can theoretically “jailbreak” your iPhone, fewer and fewer people I know even think of that and instead they are part of the world that views them as integrated devices that you can either use, take to a tech, or replace.

The Rise of the Dollar

February 10, 2015February 10, 2015 by Carl from Chicago

When I was growing up as a kid I remember they had TV commercials against Jimmy Carter explaining how the dollar declined vs. other currencies over the decades. In the late 1980s the Japanese Yen soared in value until their market crashed in 1989. The Euro was originally near parity with the dollar, then fell to 70 cents on the dollar (I happened to be in Europe at the time, it was great), then rose to over $1.30 against the dollar.

In general if you keep your portfolio all in US assets you are essentially “100% long” against the dollar. A few years ago the dollar effectively fell almost 40% vs. many of the world’s major currencies – this is the time when the Canadian and Australian dollar almost reached parity with the US dollar. For US citizens who traveled frequently across the border into Canada, it seemed strange to think of the Loonie as being just the same as a US dollar, since for years it was worth substantially less. Thus if your portfolio was all in US dollar denominated assets, your value fell 40% that year vs. the worlds’s currencies, even though you couldn’t “feel” it unless you traveled abroad or tried to buy imported goods.

Recently, however, this has all turned around. The dollar is soaring vs. most of the world’s currencies, which is good news for travelers and makes imports cheaper. However, those who own foreign stocks are looking at losses regardless of how the underlying stock performs (often many of the underlying foreign businesses IMPROVE when the US dollar rises; for instance Indian outsourcing firms who are paid in US dollars find that this money stretches further when paying their Indian based staff in rupees), just because of the rising dollar.