Thursday, September 27, 2012

Scratch South Africa from my vacation list

Not much to add here other than to point out that the Ocearch Global Shark Tracker is one of the cooler websites I've seen lately.

This site tracks great white sharks that have been tagged with satellite tracking technology and where they have pinged on the world map recently.  As of today, there was one near Nantucket and about 4 off the coast of South Africa.  To be fair, almost all of the sharks were tagged around South Africa but still, I think I'll stick to swimming in the mighty St. Lawrence.


PS - Thank you for all of the kind words of support you've passed along re: NNY Math.  So far, I'm cautiously optimistic about our prospects and given that I'm the guy that normally thinks the glass is half empty and leaking, that's saying something.

I'll continue the soft open over the weekend so if you're in the area stop by the mall to say hello.


How the Fed almost killed the NFL

How is that headline for an attention getting plea for eyeballs?  This will take a second to explain but there is some truth that mock headline.

First, the Fed has been aggressively easing for going on 4 years now (and I think you could argue it goes back to the post 9/11 era as well).  This easing, coupled with active purchases of mortgage backed securities has kept interest rates at near historic lows.  This is great for borrowers as it reduces their cost of borrowing, however, for savers the pain is felt every time you open up your statement and see that your earned $0.14 last year in interest.

Well, of course, but how does that impact the NFL you might ask?  Now that the contract has been settled (about a week too late for Green Bay fans) it is clear that one of the big sticking points was reforming the pension system for officials.  I don't have all of the details in front of me but I believe the new plan will keep the existing officials in a traditional "Defined benefit plan" through 2016 when they will switch new officials hired after that date to a "Defined contribution plan" (ie, 401k). 

So why was this such a contentious issue? Well, for one employees love the security of a defined benefit (I get $x/mth for y months) and those plans were relatively easy to manage from 1950-2001 for 2 reasons - 1) You could park 50% of your assets in US Treasuries and earn 5%  all day long and 2) You could use the other 50% of your money to buy dividend paying stocks that might yield 3% via a dividend and give you upside if the market went up.

Well, thanks to the Fed's efforts pension plans can no longer assume they will get a 5% free pass from Treasuries.  More likely they are looking at a blended return of 2-2.5%.  Since most pension plans assume an unrealistic 8-8.5% return every year the plans have to reach for return in the stock market. Some years that works out and some years it doesn't.  Business owners, in this case the NFL owners, hate that kind of uncertainty.  You are seeing it across the country as pension plans continue to underperform, the primary driver isn't poor investments as much as it is the lack of return achieved on government debt which is being suppressed by the Fed.

However, if I were on the debate team I would counter this concern of the NFL owners by saying the Fed actions have allowed them to build massive stadiums with debt borrowed at record low rates which have dramatically increased their net worth (Jerry Jones for example).

So in a nutshell, the NFL did severe damage to it's brand over the pension issue because the return on their investments have not kept pace with plan assumptions due to the Fed policy which strives to maintain a low interest rate environment -- and there you have it, how the Fed almost killed the NFL :)

Just don't tell Ron Paul or he'll want to audit the Fed's betting record to see if they bet Seattle straight up to win last week.


Monday, September 24, 2012

Can I get an iPhone6 or QE93 rumor?

So, Apple managed to sell 5 million + over the weekend and people are freaking out a bit because there were rumors that Apple might sell 10 million.  However, the market buys every dip in that stock so I wouldn't worry too much (yet).

There is always a sub-segment of the population that always has to have the latest (if not greatest) product in a market, so it's not surprising that people were clamoring to save the weight of 4 quarters off their latest phone.  Apple has legions of fans but I think the biggest question for them and their future is "Would this iPhone have been launched under Steve Jobs?".  It's not a question that we can answer but I think the marginal improvement in the phone and the cluster*(#! that is their mapping system should raise some eyebrows.

This video will probably be everywhere by the end of the day but when I saw it yesterday I couldn't believe it.  It's a terrible truck vs. truck collision but miraculously everyone was okay.  However, watch the guy in the Where's Waldo shirt FALL OUT OF THE WINDSHIELD and WALK AWAY!

Crazy stuff.
Finally, thanks to everyone that stopped in this weekend to check out NNY Math at the Mall this weekend.  I'm cautiously optimistic that we are onto something based on the response we got this weekend.  Again you can reach me at brian at if you have any questions.


Thursday, September 20, 2012

But wait, if you call in the next 20 minutes we'll DOUBLE the offer....

Hopefully, this won't be as painful as an infomercial or any of the countless used car ads running in a continuous loop on my TV.

So, if you haven't figured out yet, the side project that I've alluded to over the past few months is indeed - NNY Math.  So, please excuse this shameless plug for my new venture.

In the past, I've sought out different ways of impacting the education of children in NNY.  Whether it was my time on the board of a non-profit preschool, my years with the PTO or my current role as a school board member, I've tried to give back to the area that made such a difference in my life as a youngster. 

Frankly, like many in my industry, I've just grown tired of the markets.  There is no edge anymore.  The computers and policymakers run the markets and a simple "buy and forget it" policy has worked well this year.  I think there will be trading opportunities in 2013 but I've grown bored of watching the same stocks move in unison every day.

So, when looking at ways to serve the community, start a new business to help our local economy and ultimately improve the lives of my customers I arrived at the concept for NNY Math.

First, I'll say the name is a little misleading because we are equal parts math and science, but it was the shortest URL I could find for a reasonable price.  In the future, I have some other names in mind, but for now it's NNY Math.

The concept is simple -- kids don't hate math, they hate not being good at something.  So, I'll help them sharpen their skills in our computerized math lab.  Kids will spend the first 20 minutes of every class doing work at their own customized level on Khan Academy.  The power of Sal Khan's videos and practice pages are evident to me and I think it will work wonders for our clients.

From there kids will typically spend the next 15-20 minutes "playing" logic and math games.  Games like Math dice, Math war, Rush Hour, etc., will teach kids a great deal about problem solving while they think they are just playing a game.

Finally, we'll wrap up each class with an interactive science experiment geared toward their age group.  The science will be fun but educational and best of all messy (think Steve Spangler science, if you are familiar with his work). 

Classes will be 1 hour long and will be grouped based on grade level - grades 2-3, grades 4-5, grades 6-8.  My initial plan is to offer classes on Mondays, Wednesdays, Thursdays (3:30-7:30) and Saturday (9-1), however that is really subject to demand.  If we have more interest, we'll open more sessions.  It may also skew toward the weekend if that is when people are free. 

There are two points of differentiation for our model - 1) We are math and science.  There are lots of math chains (Kumon and Mathnasium, for example) and science chains (like Mad Science) but few combine the two offerings.  2) Our price point will be $65/month per student.  This is well below the industry average but it will keep it on par with prices for dance, gymnastics, soccer leagues, piano, etc., in the North Country.  There is also a $35 registration fee to cover materials, but we are cutting $10 off the registration fee to anyone using the code "GRINDSTONE" through the end of October.

I tend to have a fairly bright, informed readership of the blog so I imagine that you have many family members, friends, or neighbors that could be potential customers.  I've really appreciated your feedback over the years and hopefully, I've cleared the muddy waters of finance and economics just a bit.  If you have any questions don't hesitate to email me at brian at or stop by the new location at the mall (we're next to Sears).  During this "soft opening" phase hours will be a little sporadic but I plan to be in the mall much of the day on Saturday.

Thank you again and this isn't the end of Grindstone Financial.  I'll keep writing, but the posts may be spread out a bit.  As we near the election and as our next battle over the debt ceiling looms there will be plenty of clutter and inaccuracies to sift through.


Wednesday, September 19, 2012

I wonder what this is all about...

A new space seems to have popped up in the mall....

Sounds interesting.

Tuesday, September 11, 2012

My Facebook ad experience...

So Mark Zuckerberg emerge from self-imposed exile today to wow the tech crowd with hints about future products and offerings.  There wasn't any mention of the 83 million fake Facebook accounts, because today was a straight lovefest of Facebook tech.

Well, I've had a chance to test out Facebook's tech in the past couple of weeks and a couple of things are clear. 

1) They know way too much information about you.

Let's say I want to market to just college educated mom's of kids 5-18 with an interest in soccer living within 10 miles of zip code 13601.  Yep, there's an app for that.

You can drill down to an incredible level of understanding and that is what seems appealing to marketers.  Why blanket  the whole North Country with TV ads when the 300 Soccer mom's on Facebook can see my ad all day long? 

2) Does it work?

Here's where Facebook hits a brick wall like every other ad model.  The problem is two-fold --- 1) the same 20% of the Facebook population stays on the site all day, while the other 80% never seem to visit and 2) those that do see your ad never click it.

So, while there could be a case for building brand awareness even if people don't click your ad the reality is that in my case, my ads were seen by 150,000 users over a 2 day period and 6 people not related to me actually clicked the ad. 6!  Back out the mistaken clicks and you probably have 2 or 3 real clicks.  That's awful.

I'm sure Facebook will build a phone or search engine or game console or some other time suck that we can't live without but the ad business can not be the future for that company.


Sunday, September 09, 2012

What business/service is missing from Watertown?

This is kind of an open ended but I'm curious to see if there are businesses or services that people wish would come to Watertown.  We have our Ulta, Chipotle and Five Below now.  We're maxed out on pharmacies, convenience stores and Starbucks.

So, I ask you - given unlimited resources, what business do you see being successful? 

I think I've asked this question before, but I wonder if the answers has changed in the past few years.


Quick review/preview

Last week included lots of important data hit our screens thought it might make sense to review some of it and preview the upcoming week.

* Jobs report - Overall, this was a weak report.  Private jobs came in below expectations, prior months were revised down, average hourly earnings dipped,

As I mentioned last week, people have suddenly discovered that the falling participation rate is the primary driver in moving the unemployment rate lower. 

This chart from calculated risk shows a longer trend line for the participation rate and as expected if you go back into the 50's/60's you see that the participation rate was far lower than it is today as the baby boomers had not yet entered the workforce.

Auto sales continue to trend above expectations.  I suspect that loosening credit standards and the fact that we are three years past cash for clunkers (3yrs seems to be the sweet spot for many frequent buyer/traders of cars) contributed to this spike.

Finally, August rail traffic was a mixed and doesn't give us any real guidance on the health of the economy.

For the upcoming week we have a couple of things to watch:

* 9/11 anniversary - No museum, but 1 WTC is finally making some progress. 

* 9/12-9/13 - This could be the day that the Fed finally announces the long anticipated asset purchases.  Look for key phrases like open ended and mortgage backed securities.  How will the market react?  Sell the news or buy on confirmation that QE3 is FINALLY here?


Friday, September 07, 2012

Well, I'm doing my part :)

By now, the jobs report has been sliced and diced six ways to Sunday.  Everyone knows that the number of jobs were light but the unemployment rate ticked down as the participation rate continued it's steady decline.

Here's where I differ a bit from the consensus.  The majority of the talking heads are spinning the decline in participation on "people who stopped looking for work".  While some of this may be true, I think that this is part of a larger demographic trend.  The last time the participation rate was lower than this level was the early 1970's.  Well, participation rates climbed through the 70's even as the economy sputtered - why was that?  The easy answer is that the heart of the baby boomers entered the job market.  The peak of the baby boom was in the late 1950's and that means that the peak of the baby boom entered the job market in 1976-1981. 

Fast forward 30 years and it's 2006 and the boomers have survived one dotcom crash and they remain very weary of the market and its impact on their retirements.  When the 2008 meltdown hits the peak of the boomers are already thinking about retirement when they decide to start exiting the job market. 

There is no way to delineate retirements from "left the workforce" but I believe we've seen a rash of early retirements which when coupled with those truly discouraged workers has pummelled the participation rate.  I'd expect this trend to continue through at least 2024 but I expect the rate of decline will not be as steep in the future.


Here's your first look at my efforts to grow the NNY economy and inspire the next generation of math and science rock stars.  To paraphrase a commercial I saw in NJ "I'm a geek today, but I'll be your boss tomorrow!"


Thursday, September 06, 2012

Oh, by the way the stock market hit a 12 year high today...

**** Sorry for the long radio silence.  I've hinted at some major changes that could be coming and I hope to reveal more on that subject in the next week. 

Back to the markets - seriously, that isn't a joke.  The NASDAQ is at it's highest levels since October 2000. 

* That's a year before 9/11
* That's 6 weeks before Florida's hanging chads would give us GW Bush's first term.
* The number one song in the country was "Music" by Madonna
* The average cost of a gallon of gas was a laughable $1.51 (side note: while looking up that stat I saw a story that said "Gas Prices Soar: Smashing the $2 mark")

So what gives?  All we hear is gloom and doom about how terrible things are yet the markets are partying like is the middle of the dotbomb era.  Turn on any talking head it's "$16 trillion in debt, 47 million on food stamps, buy your 25 year supply of freeze dried calf livers for $188.25, blah, blah, blah."

Well, this isn't an easy question to answer.  First, the US stock market is largely comprised of global firms doing business around the world and frankly many of their profit levels are near record levels.  Historically, high profit levels have filtered down to employees as companies have shared their success.  Higher profits have also historically led to expansions which further primes the pump of the economy.  However, in today's world companies hold onto every precious penny like it's a gold ring in a Peter Jackson movie. 

Second, Apple rules the world.  Apple represents about 13% of the stock market.  The stock has been on a complete tear this summer - adding $55 billion in market value (more than Facebook's total value) in just the last month!!  The expectations that millions of people are going to fall all over themselves to get the new iphone next week has been driving this stock and because it has an unreal impact on the stock market that has pushed up the market.

Third, hope rules the day.  There is a great deal of fear that the global economies are slipping back into recession.  This fear has caused governments to consider intervening in the markets as they did in 2008.  If you remember in 2007 and 2008 as the economies started to falter, the stock markets were near their 2000 levels again on the HOPE that we were going to get a kick save from the governments.  However, we all know what happened 6 months later.

I've said multiple times that 2012 has a very 2008 feel to it but I might be a year early and maybe we're actually in a 2007 pattern.

Hit me up with any questions because there has been a great deal of activity over the past couple of months.

Again, apologies for the slow posting but I have some good news coming and I hope my loyal readers will be the first to spread the word :)