Financial Rumblings (Biz Case)-July 7, 2016

Game of Thrones Script: The Winds of Winter Episode (Season VI, Episode X)

From the Winterfell-Dining Hall.

Slow zoom out from JON SNOW’s face. JON SNOW is sitting at high table. SANSA sits beside him. Representatives from Northern houses, the Vale, and the wildlings are gathered in the dining hall. TORMUND and DAVOS sit among the wildlings. PETYR stands off to the side, watching.

VALE KNIGHT: You can’t expect Knights of the Vale to side with wildling invaders.

TORMUND: We didn’t invade. We were invited.

VALE KNIGHT: Not by me.

JON SNOW stands.

JON SNOW: The tree folk, the northerners, and the Knights of the Vale fought bravely, fought together, and we won. My father uses to say we find our true friends on the battlefield.

One of the houses’ representatives stands.

MAN: The Boltons are defeated. The war is over. Winter has come. If the masters are right, it’ll be the coldest one in a thousand years. We should ride home and wait out the coming storms.

JON SNOW: The war is not over. And I promise you, friend, the true enemy won’t wait out the storm. He brings the storm.

The men begin to murmur. LYANNA MORMONT stands.

LYANNA: Your son was butchered at the Red Wedding, Lord Manderly. But you refused the call. You swore allegiance to House Stark, Lord Glover, but in their hour of greatest need, you refused the call. And you, Lord Cerwyn, your father was skinned alive by Ramsay Bolton. Still you refuse the call. But House Mormont remembers. The North remembers. We know no king but the King in the North whose name is Stark. I don’t care if he’s a bastard. Ned Stark’s blood runs through his veins. He’s my king from this day until his last day.


The most difficult thing for people in power- be they politicians, business leaders, managers, etc. – to realize is when to change their tack against headwinds in order to continue to progress forward toward their goal. The Brexit vote is an example, where those in favor of staying argued points which really didn’t register with the masses: 1) to vote to leave the European Union would be a disaster for free trade within the EU; 2) England’s status as one of the world’s financial centres would be diminished if it is no longer was seen as a gateway to the EU for the likes of U.S. banks; and, 3) the GDP would fall. In essence, the citizens of England who were in favor of leaving the EU were like Lyanna- trying to rouse the political officials to act on what they saw was was wrong with England’s involvement in the EU: lack of sovereignty on immigration and to a lesser extent court rulings that can be overturned by an EU central court; and, the despair that the working class felt as their own financial goals were fading as a result of lack of wage/career growth. In business, the constituency (consumer) cast their ballots with their wallets/clicks/follows, and they vote as frequently as they do in Chicago elections: often.

Business leaders, like lobsters, are often too slow to realize what is occurring before it is too late. Businesses need to be anxious, paranoid, and scan the horizon for new competitors, while making sure the product/service offered is the best; no one buys a crappy product for very long once they realize it is a crappy product and your competitor’s product is better or at least not as crappy as yours. H&M is growing big time, but their quality, or lack thereof, is a bit concerning. It is true that fashion trends change quickly, but, when a shirt fades and the thread in the shirt becomes less taught, it is enough for one to really question the underlying value of an item that will not last beyond the current season. H&M clothing fits a fashionable and value customer, but in order to maintain its reputation, it does need to increase the thread count/quality such that their products do have some longevity- even if it goes out of style.

Business leaders need to be empathic because when they aren’t, they sound just as clueless as those  in the Winterfell-Dining Hall arguing against supporting John Snow in his battles to come. Technological companies can be poor at not understanding their consumers, because often they are mesmerized, like the songs of the Sirens, by the “coolness” of the technology that they are providing. The wireless companies at first had unlimited data plans-which was fine when you didn’t have data hog applications like streaming video, movies, and social sites, but they were slow to address the needs of the consumers when the “unlimited” data plan became too costly to promote; thus the wireless companies started to have tiered pricing dependent upon usage-which also became obsolete due to the increased bandwidth flow because of 4G, etc. Thus, you have Verizon, increasing its prices and having roll over minutes, which is similar to offerings by AT&T. Another complaint that people had was the outsourcing of call centers to outside the U.S., which at times was challenging, which resulted in returning some of those jobs stateside/bettor training.

Winter is coming and like John Snow and Lyanna and the other houses that swore their allegiance to the House Stark, need to be in unison on how to tack to reach their goal of defeating the outside invaders -White Walkers; businesses need to tack to reach their goal of providing the best product/service/value for the consumer, which leads to increased market share and earnings (EBIT and EBITDA).


Financial Rublings (Brexit)-June 24,2016

Date: The day after the UK voted to exit the European Union (AKA Brexit)

I am sure the UK supporters for remaining in the European Union feel how Taylor felt at the end of the “Planet of the Apes” (1968) after he dismounted his horse that is carrying him and his girlfriend, Nova,  and the camera pans across large metallic metal spikes that look like tank traps, and he says,

“Oh my God, I’m back. I’m home. All the time, it was. We finally really did it.” Then he falls to his knees and screams “You maniacs! You blew it up! Ah, damn you! God damn you all to hell.”

The hand writing, or Banksy, that the masses would vote to exit the European Union, was clearly on the wall. The polls seemed to point that the vote would be to stay in the EU, though it would be close; however, there were two polls that did call the exit vote correctly: @OpiniumResearch and @TNS_UK. Those that didn’t believe that an exit vote was in the cards was Wall Street; judging by the 1.3% rise in the Dow Jones Industrial Average the eve of the vote from the 17,780.83 to 18,011.07- they are also probably the the same people that thought that the Warriors up 3-1 on the Cavaliers would win the title. The prognosticators underestimated the tenacity of the foe and were not in tune with the mood of the electorate: status quo must go.

Every nation wants its sovereignty and though the common currency, gave unencumbered access to the EU partners, and the ability to create large trade agreements were benefits, it was outweighed by what the masses felt were the short comings of being part of the EU: not being able to have full control who enters and vet those that cross borders because entering one EU country was a pass to all; having the possibility of national laws struck down by an EU court; and, if the status quo so great, then why do I feel threatened in my financial prosperity and security?

Who’s next in line to leave the EU? I do believe that more countries will chose to exit the European Union, especially if the EU does not address the free rein issue of the public. This was not a large issue before, but given the numbers of of those seeking migration, the pedestrian growth in GDP in many countries, it does create a burden to the countries accepting those migrating-especially, when there is no real plan to incorporate them into the country and the financial burden that they represent.

It will take time some time for the UK, or what remains, if Scotland, etc., choose to leave, but the UK will be fine. The pound sterling has fallen, which was expected:


It will continue to vacillate in the weeks to come as the transition becomes clearer, as the pound loses the strength it had as part of the EU.

My outlook for the DJIA is one that hasn’t changed since August 2015:  the market is overvalued and given the weakness in earnings to come, there is no reason the market should be above 15,386.82 Thus, the market still has room to drop.

Financial Rumblings (Biz Case: My Almost Million $ Baby) – June 2, 2016

For one fleeting moment, I envisioned myself as the next Mark Zuckerberg (Facebook) or at the very least Richard Hendriks (Pied Piper) -as I had come up with an idea that I thought was revolutionary.  So, I had this brilliant idea-to be revealed in the following paragraphs-but I needed to see if I could possibly make it viable enough to garner some funding from an angel investor.  Before I put a down payment on a house in Malibu, California, I needed to slow my roll and think my idea through.

I researched the internet to see if there was anything like it currently available on the web.  I conducted my research using Google, searching words/phrases for my idea; I also looked at the web sites that I currently used to see if they had something that was similar to my ground breaking idea.  The results were that I did not find anything on the web that was very close to my idea, thus, I started to get goose bumps as I was already rounding third and heading home-unfortunately, in reality, I had just completed the first inning, or at least the top half of the first inning.

The next step was to try to protect my idea and research non-disclosure agreement (NDA). Again, I used Google-no, this is not product placement, but it happens to be the search engine I happen to use- to research how difficult it would be to draft one and it turns out not very difficult as there are forms available on the web.  I felt that I could now pitch my idea, if I needed to, with the confidence of having the NDA available to me when that time came.

Time for the rubber to meet the road: I created a beta version of my revolutionary website. I am the domain owner of as well as, and since I wasn’t using the former, I created a beta version on that site.  My idea, drum roll, was to create a site so that an individual could go to their webpage that had grouped, by icons, all the sites they frequented; i.e., a grouping for mortgage/rent/loans, credit cards, sports sites, news sites, etc.  Thus, I created a version on; I liked the functionality in my proposed website. It linked to the homepage of these various sites and through my research I understood that this was the most legal means to do so and it would avoid creating links that were too specific to update regularly. I am still in the bottom of the first, but, I have one out and two to go.

I had to conduct market research to see if there truly was a need or if this idea was just pie in the sky. Since my budget was limited-very limited- I asked people I knew: How do you pay your bills?  How do you access a web page?  Would you use a website that had all the links to the pages you viewed?  I found that most people go to the website directly by typing the words in the URL or using a search engine. Although, there are Bookmarks on the web browser, they are not as user friendly as they should be and not an intuitive place to access the web. Ugh! It was time to withdraw that offer on the Malibu home, where I had envisioned throwing some great summer bashes that would be attended by all the Hollywood elite- that’s Hollywood, California, not Hollywood, Florida.

Since the goal is to make money, ultimately, and not be a unicorn, the next idea was to how to monetize it.  I determined that it would be best to sell advertisement on the right side of the page; discreteness is the key to web advertisement.  All the major banks have the ability to pay directly, thus to charge for being a conduit to their website would have probably been illegal and would have been grounds to remove the icon from my website, which defeats the purpose of my website.  We all want to click on an icon link, not an URL link-it’s the reason that Microsoft uses Windows and not DOS- which is what Apple realized long before Microsoft did. An aside, according to Wikipedia, the graphic icon traces its history from “Doug Engelbart’s Augmentation of Human Intellect Project” at SRI International in Menlo Park, California, to Xerox PARC to Xerox Alto and Xerox Star, to the Apple Macintosh. 

Although my idea was a good one and I have many more good ideas (contact me if you like), it ultimately suffered because to truly work it would have to be part of a larger established platform, such as Facebook, Snapchat, Instagram, etc. Thus, the game was called after 1/2 an inning.  To be successful on the internet, be it social (Twitter, Instagram, Facebook, etc.), or otherwise, one needs to garner followers. It’s all about the number of eyeballs you have on your product that would make it viable/worthwhile for advertisers or to be a pay site directly.  I could have created a webpage to be used individually, as I did in my beta website, but it would have been a labor of love. I do think my idea has a lot of merit and ultimately, there will probably be such a website, however, it would need to be part of larger platform to be truly successful. 

Financial Rumblings-May 19, 2016

At the time of this post on May 19, 2016, the DJIA was 17,376.65 , down 149.97 or  .86% from yesterday’s close-which is close to the 17,000 mark I thought it would be in my last post on March 21, 2016. I know, my powers of prediction are incredible- at times, but my reasoning is always spot on.

Today’s free fall appears to be the market’s reaction to the possibility of a rate hike by the Federal Reserve in June 2016.  I believe that the Fed will increase interest rates by a quarter point, though, the earnings in the next few quarters will be challenged.  The Fed is very tired of the market’s skittishness to the possibility of a rate hike, much like a dog that leaps from the couch and scurries to the front door to bark when someone is within 15 feet of the front door.  The market needed to “slow its roll” as the run up to 18,000 was not warranted and realize that a quarter point hike by the Fed would eliminate further action until next year as Q3 and Q4 earnings for 2016 will not foster any warm and fuzzy feelings for another rate hike given these last two quarters will be challenged to meet the growth expected as the top and bottom lines reflect an economy that is challenged.  

Financial Rumblings (Biz Case) – April 29, 2016

Ozzie Silna, former owner of the American Basketball Association (ABA) Spirits of St. Louis, passed on April 26, 2016. He is what everyone in business strives to be: visionary. Silna and his brother, Dan, dissolved the Spirits of St. Louis, according to the ESPN. News services, “when the ABA merged with the NBA after the 1975-76 season.” The brothers agreed to dissolve their team in exchange for a small percentage of the NBA’s future broadcast revenue. That amount increased with the growth of the NBA and the television market; the NBA estimated the amount to have been collected by the brothers to be about $750 million, which included a $500 million dollar payout in 2014 to the Silna’s in order for the NBA to minimize future financial exposure.

Ozzie Silna believed that in the 1970’s there was much room for growth in the NBA’s TV deal, though, he later conceded “we had no idea it would grow this much.” How could have the Silna brothers had known or anyone had known, the NBA would grow so much, especially, since the finals were still tape delayed up until 1981.

It did take NBA Commissioner David Stern’s brilliant marketing campaign of its stars, which were at first  Magic Johnson and Larry Bird, and later Michael Jordan (yes, he did play basketball and is not only brand of shoes) to raise the interest and entertainment value of the NBA.

In business it takes a long range view of the market as well as a viable product in order to succeed. The ABA had great players such as Moses Malone, Rick Barry, George Gervin, David “Skywalker” Thompson, Dan Issel, and Julius Erving (Dr. J); the league was entertaining and innovative (3 point line and Slam Dunk Competition during the All-Star game); and, they were mostly in cities where the NBA wasn’t: Baltimore, St. Louis, New Jersey, Virginia, San Diego, Minnesota, Indiana, Utah, San Antonio, Florida, and Denver. Businesses need to have the following questions answered-yes, it’s a simplistic list, but isn’t business:

  • Is your product better than anything currently available?
  • Is your product innovative?
  • Is there growth in the market your product is entering?
  • How will the other players in the market react to your new product?
  • Do you have the capital you need to sustain this business until it is profitable or until people stop believing in what you’re doing and the funding stops?
  • Is your belief in the product based on your hubris?
  • Why do you believe your product will succeed?
  • Is there someone who can manage the business better so that you can focus on the product?
  • What is your time horizon for success? Define success?
  • Would you be crushed if someone told you your product was crap?
  • Would you realize your product was crap before being told it was?
  • Your product is successful, now what?
  • Is your new product better than anything currently available?…etc., etc.

The ABA maybe a distant memory, but the Silna’s belief in professional basketball isn’t. The Silna’s viewed their product of professional men’s basketball to be one which had room for growth and that the growth of the NBA, which would include four of the ABA teams, would rise given the almost non-existence presence of the sport on TV. Obviously, they couldn’t have envisioned that NBA games would be streaming on phones, etc., but they did believe in their product’s entertainment value, and that demand would grow. Everyone should be thanking former Commissioner David Stern for his marketing skills as the NBA reached new heights under his leadership.

Financial Rumblings- February 12, 2016

I’m taking a vacation from my financial musings. I’ll return after the NCAA’s March Madness, well, the second round. Or more importantly, right after the next Federal Open Market Committee (FOMC) meeting: March 15-16.

As of this posting, the Dow Jones Industrial Average (DJIA) is up 244.25 or 1.56% at 15,904.43. I guess we are out of the woods- NOT! The stocks bounced as bank stocks were scooped up, in part because of the Deutsche Bank buying over $5 billion in bonds and WTI oil gained 10% or $2.63 to $28.84 per barrel. This I know will occur in the interim: stocks will yo-yo for a bit as people analyze and over analyze each bit of economic news; talking heads will wrestle with 5.0-4.9% unemployment, yet the feel of an economy that is much worse; economists will explain negative interest rates and the negative/positive impact for the global economy; politicos will focus on the Presidential race and the impact to Wall Street; and, everyone will realize that their taxes will soon be due, but why on April 18th and not on April 15th (answer: Washington, D.C. Emancipation Day).

Until then, like Glenn Frey and the Eagles sung: Take it easy, take it easy. Don’t let the sound of your own wheels drive you crazy.

Financial Rumblings-February 2, 2016

If the National Security Agency was monitoring for chatter on the word “recession” last month, they’d have a binder full of mentions, which would be right next to Mitt Romney’s binder full of mujeres. We’ll use the definition of a recession where there are two consecutive quarters of negative GDP growth-though this is not officially the definition used by the Bureau of Economic Analysis.

No, I don’t believe the U.S. will see a recession in 2016, but the U.S. economy will continue to shamble along like a “Walking Dead” zombie, not like a “World War Z” zombie. The unemployment rate is currently 5.0% -per the January 8th Labor Report, but it just feels like it’s much higher. In Southern California, there appears to be more people begging on the on/off ramps; more people sleeping in the doorways of buildings; more people needing assistance for food; and, in general, more hands out. I know Southern California is not the epicenter of the ills of the country, however, it is often said, “how California goes, so goes the nation.” Unemployment will increase  as companies begin to realize that their forecasted growth in income will not be achieved at the gross margin level, so they’ll have to begin to look elsewhere to make up the difference, and labor is always public enemy #1 or #2; it is usually one of the biggest expenses in the P&L. However, I don’t see this happening until the 3rd or 4th quarter of 2016; thus, the impact will be seen in 2017. And, since the U.S. economy is 2/3 based on consumer spending, it is easy to see the effect that a rising unemployment level has on the economy.

The Treasury Department’s hands will be tied because lowering the interest rate is now seen as purely symbolic- in part, because you’d expect the economy to be humming along by now given the easing of monetary policy for the past few years, thus companies will not invest in the company when the demand for their product is not there to justify increased expenses.

Those are my views. I’ve been somewhat spot on as Wall Street is slowly turning around to see the world through my Oakley polarized glasses-which are not very polarized given the 2016 U.S. economy is not very bright.