Good Friday Movie Recommendation: The Long Good Friday

The Long Good Friday - very good retro movie with a heavy 1970s feel (finished in 1979, but released in 1981), with many cast members who later came big stars (James Bond's Pierce Brosnan is cast as "1st Irishman").  Part of the retro-feel is the theme music, which they use liberally throughout the movie.

Helen Mirren isn't exactly pretty, but definitely had a definite sexual appeal in this movie, which is kind of weird because I always think of her as an old woman based on most of the movies I have seen her in (Excalibur being the one exception).

WTH is TAM, SAM, SOM?

This is a re-post from waaay back in 2005, which was my most popular post ever.  Google search picked up on it, and I would get occasional emails from students asking more questions.

 So posted here again, although my guess with almost 20 years more information on the web there are a lot of other places to find this info, so doubt it will get traffic today.

Professor Michael Porter is still alive today at 77.

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From the mailbag: Would you recommend a good book or two on the TAM/SAM/SOM/3C business planning process?

People make fun of scientists and engineers with their use of acronyms, but marketing has plenty of its own, and someone not in marketing may wonder what the hell they mean.

To answer the question, most marketing books today typically try to push a "new" concept - guerilla marketing, viral marketing, etc. - rather than this basic stuff, so I'll give a quick run down on these items using some real-world examples before getting to a recommendation.

Scenario - You market a widget for the cellphone camera market. Your widget is only used in phones that have cameras embedded in them.

TAM - Total Available Market - In this example this would be the total cellphone market.

SAM - Served Available Market - This would be cellphones with cameras since your product is only used in them.

So the first question, is why distinguish between TAM and SAM, especially since you don't even sell into phones without cameras? The answer is that one way to grow your revenue without increasing market share is to grow the number of cellphones with cameras (or the penetration rate). So the SAM/TAM designation is used to distinguish between actually growing your market share versus just growing your volume. It also allows you to look at strategies on how to push penetration for your served segment instead of just market penetration if you happen to be in a market where SAM penetration is stuck. This chart shows the TAM/SAM breakdown for cellphone cameras:




Obviously there are plenty of markets where the TAM and SAM are the same.

SOM - Share of Market - this is just the market share you have in your SAM, or in this case your total volume versus the total SAM volume. As noted above, by comparing your SOM to both your SAM and your TAM, you can get a feel if you are really growing market share, or just increasing volume along with the total market growth.

Okay so far? Next we get to the 3Cs. Everyone knows the 3Rs, but what are the 3Cs of Marketing? Customers, Company, and Competition. The idea is that when doing business planning you have to do an analysis and get an understanding of these items when creating a business plan. So in our case you would do an analysis of customers Nokia, Samsung, Motorola, etc. Look at what your competition has on the market, what their roadmaps are, and also understand what your company's products and roadmaps are and how they compare and serve the market. In doing this analysis you would probably do the 4Ps: Product, Pricing, Placement and Promotion.

When I do business planning, however, I like the model presented by Michael Porter in his book Competitive Advantage. This is a pretty hefty read, and a little dated now, but the model itself is timeless and what I use for business analysis. It expands on the 3C concept to understand an industry through its entire value chain:



The thing Porter points out with this model is that just understanding your competitors, customers and company is not enough. For example, can a supplier forward integrate into your market and become a competitor? Can a customer backward integrate and become a competitor? New entrants and substitutions are always a threat. And regulations by the government should always be considered since they can break - or create - entire markets on their own (v-chip makers owe their whole product line's existence to a government regulation).

Porter has some more recent books on this topic, and his model has been picked up by plenty of others, so I would suggest a look along this line of thought for anyone doing business analysis or planning.

Will AI Come for Your Job?

At my age I have lived through a lot of hype cycles.  Everything from "cold fusion", to more than a couple of "room temperature superconductors", to the early days of the internet, and a lot of other magic technologies that were going to Change Everything. 

Now the internet did have a huge impact on everything from business to society, but not in the way anyone forecasted.  And it took over a decade for things to really materialize.  And along the way the companies that were supposed to create big change (pets.com?) are long gone and the companies that had seemingly insurmountable leads gave way to newcomers (Yahoo, Mosaic and a ton of other early pioneers made way for later upstart Google).

The latest hype of course is AI.  While I think it represents a significant change, I think the hype about it is way overdone.  Companies and stock traders are whipping up a frenzy to make gobs of money while any real changes will be years away (like the early internet).  I also think that what AI can do is rather limited.  Like everyone else I tried Chat GPT when it first came out and after a couple of hours of playing with it I was underwhelmed.  It gave incorrect answers to several queries and its default writing style comes off like a boot-licking toady due to the woke programming.

Perhaps I am too old to be impressed by AI as I actually store knowledge in my brain rather than rely on the internet.  So the fear about AI is probably true for younger generations who don't know anything, can't do critical thinking, and coasted through college while getting a Gender Studies degree.

A post over at Mish discussed a WSJ article if we are entering the "Cognitive Revolution", where someone tested if they could be replaced by an AI.  Here is my comment at Mish about the article and concept:

If your job can be replaced with AI then you have a rote data collection/data spewing job that does not create new information, advancements, or include any true creation. 

Now this does include a very large number of people holding down seats in cube farms, call centers and the like.  Plus anything that is cookie cutter/rules based output like basic wills, tax forms and the like. 

So if your answer is "yes AI can replace my job", then maybe you are good at memorization, data management and outputting that info, but not really with original creative thinking, interpersonal interaction, or a dozen other human talents I could list.  If you are worried about AI, then develop your skills where AI cannot.

I am not worried about AI replacing my job, and I don't use AI to help me because, quite frankly, I can write and find information better than it can.  But I do agree that it is better than most of the graduates the US school system is putting out these days.

 

Thinking More About Social Security

When I was 30 I didn't think much about Social Security (SS) except that I assumed that it would not be there when I retired.  So I started saving for retirement as if SS would not be there, or that the government would start means testing and deny benefits to anyone who had even a modicum of assets.

Over two decades later I can see the retirement light at the end of the work tunnel, and I find I want my  #)($*%# Social Security money!  Yeah, I planned ahead and I could live without it fine, but I've paid a lot into it for over three decades and I want back what was taken from me.  I am also tired of the free loaders who either never put in or took out a lot more than they put in, so I think it just fair that I at least get back what was stripped out of my paycheck for my entire career, plus interest.

But at this point I am actually not afraid of it not being there or being denied.  SS is too politically loaded for "major" changes for people already in or near retirement.  There would be old people riots and all sorts of politicians losing their jobs.  As usual the democrats are pulling out the scare tactics in an election year, but no one with any common sense believes there will be major changes.

Zman commented a bit on SS today, more about how Republicans basically allow themselves to be beat upside the head on this topic.  When democrats say the other side is going to "eliminate SS!", the Republicans don't say "LIAR!".  They say "well, you do know that the trust fund does need some minor changes to help solvency blah blah blah for ten minutes".  Retirees and near-retirees don't want nuance and statistics, the want assurances that they will keep getting their money, even if younger generations have to be screwed.

Which was my point in the comment section.  SS will be forced into some changes within ten years. What will happen is that anyone over 40 won't see any changes, but anyone younger than that will have a year or so added for "full retirement", then there will be a bump in social security withholding.  Note that the max income they take SS goes up every year WAY over the inflation rate, so a SS tax increase is already baked in to income, they will just raise how much it is.

I agree with the lunacy of even bringing this (SS) up in an election year as the discussion is nuanced. But SS will have automatic cuts in benefits starting about 2033. It’s written into law. And apparently this is not hand wringing BS, it’s going to happen if not addressed 

Like my own SS benefits way back when, the typical answer is to raise the age for full benefits for people under 30 by a little and raise the withholding tax a bit. This of course makes everyone on or near SS feel no pain and puts the problem on the young. It’s the baby boomer solution to everything and what will happen.

But there is time to do this after the election and have it done in the back room. Or kick the can to 2030 when cuts are imminent and everyone panics.

The general response to my comment is that nothing will happen until midnight before the automatic SS cuts start in 2033, so in a bit less than 10 years.  I will be eligible to take SS then but probably not taking it yet as each year you wait, the greater the monthly payout.

Avoid Target Date Funds

I'm a conservative investor, coming out on the side of "wealth preservation" versus "gambling".  But I was pretty lucky when I read an article and decided that "Indexing" was for me, plowing the vast majority of my equity investments into Index funds over 20 years ago.  It has been a great wealth builder, but whether this was because of John Boggle, who came with the concept of Indexing at Vanguard, or because everyone else on the planet piled into them over the past two decades is up for debate.

One investment where I wasn't so lucky was my kid's 529 college fund.  It didn't offer much except Target Date funds.  For those of you not familiar with the concept these are funds that invest in a mix of stocks and bond FUNDS with a target date in mind (for 529 the date they would start college, for retirement funds the year you retire).  The further out the target, the more stocks funds it holds to capture a higher risk/reward over time, the closer in the date the more bond MUTUAL FUNDS it holds.

And the "MUTUAL FUNDS" part of the bond investment is the main problem with these instruments.  Bond funds are risky!  I lost $10,000 in one week in a "safe" US bond fund when the Fed raised interest rates.  Sure, people made a ton when they lowered them due to ZIRP (Zero Interest Rate Policy), but bond funds have duration risk, which means that they will move up and down with more sensitivity the longer out the bond (or group of bonds) mature.

This is a long way to say that my kid's 529 invested over 18 years in a Target Date fund was a lousy investment due to duration risk.  It basically was invested in stocks when they went down, then investment into bounds right before interest rates went up since it was on autopilot.  That is not to say it appreciated some, but it could have done a lot better either actively managed, or if it had held bonds to maturity, not "bond funds".

Holding individual bonds - never bond funds - is now what I do with my personal assets.  Lesson learned.

My personal experience is reflected in a recent Barron's article, which had me nodding the entire time.  It is behind a paywall, but basically restates my folksy experience in a more professional manner.

Some say that many target-date funds are too heavily invested in a slice of the fixed-income market—investment-grade bonds—and that can leave portfolios overexposed to U.S. interest rates. They say investors could get higher returns over time and less volatility during periods of rising rates by owning a broader mix of fixed-income assets...or being actively managed.

Comission Changes in the Real Estate Market

Like most people I have a love-hate relationship with realtors.  I know a few personally, including family members who dabble, but my experience with realtors has been mostly negative because they either sucked or worked against my interests (realtors I knew always worked outside the state or region where I was buying so could never use a friend or relative).

That main problem with realtors - working against my interests - was when I was on the buying side because when you buy a house, you are not the client!  The realtor is being paid by the seller as a percentage of the sales price, so the realtor's interest is not aligned to the buyer, but to the seller with the highest priced house with the highest commission.  A realtor would rather put you in a $1M house with a 3% sellers commission, and not even show you the $800K one offering 2% to the selling agent.

This dynamic played out in my current home, which I found had all sorts of issues after I moved in.  The inspection report, from an inspector recommended by "my" agent, had outright lies, and my theory is the two agents paid off the inspector to give the house a clean bill of health so they would each collect their 3% from the seller.  By the time I figured this out the inspector had shut down his business, so I couldn't go after him, and the hassle of a lawsuit against the realtors or sellers was not worth it as it would take a lot of money and take a couple of years.  I ended up having to do a lot of work and spend a lot of money to fix problems that should have been called out in the inspection report. 

So besides declaring to never again trust a realtor to use "an inspector I've known for years who is great!", the other thing I decided that moving forward I would find a "buyers agent" that I would hire, and get out of the situation of the seller paying "my" realtor.  That way the person helping me with the house would be aligned to me, then I would find my own inspectors and any other third parties related to the sale.  But that model was actually hard to set up, until now.

Thanks to a settled lawsuit, my preferred model is what the real estate industry will start moving towards this summer:

Under the current rules, buyers typically don’t pay their own agents out of pocket. Going forward under the new system, buyers might have to foot the bill if they want an agent to represent them.

Starting in the summer, the new rules will require most home buyers to sign agreements detailing how much their agents will be paid for their services. If home sellers are unwilling to cover the cost of the buyer’s agent, these agreements would likely require the buyer to pay the agent directly.

The counter-arguments that buyers have to come out of pocket or can't roll the fees into the house financing run into the saying used for social media: if a service is "free" you are the product!  Basically the real estate industry has been ripping off buyers for years by aligning agents to only the sell-side of the street, so this this settlement is a welcome change to the industry dynamics, and look forward to using for my next real estate transaction.

My Reverse Bucket List

I was already using the term "Reverse Bucket List" before a saw an article of the same name making the rounds (now can't find the link).  In this article the term meant something you wouldn't do again, but in my case it is a list of places I hope to die before ever having to go to:

1. Anywhere in Africa (before killing tourists became popular I would have seen Egypt).

2. India.  I guy I knew had to go to India on a technical project and brought a giant jar of peanut butter and box of crackers, and ate only that for three days.  He was okay and everyone else got violently ill.  And ask anyone who has been there about all the beggars.

3. China again.  The one exception to the list where I have been a few times, and outside the major cities it's $&%-hole.

4. New Jersey

As for things I would still like to see, I can't say I have an official bucket list.  I have been to a couple dozen countries, and have seen and done amazing things.  There is nothing left where I am thinking "I gotta do THAT".   But things that might interest me would be like a reboot of the show Booze Traveler:

1. Port tasting in Portugal

2. Scotch tasting in Scotland

3. Vodka tasting in Russia - I would like to see the Kremlin and St. Petersburg, but don't think tourism will open back up there for another decade or two, so a question of when Russian tourism will return versus my longevity.

Short Term T-Bills As a Good Investment

Wolfstreet confirms my investment strategy for the last six months of parking lots of cash into short term treasuries (T-Bills), or money markets that hold them and pay about the same.

I never bought into inflation coming down (I can see it with my own eyes), nor the Fed lowering interest rates multiple times this year (not for economic reasons anyway, politically they will be pressured to do one in an election year).  So I have lots of money in a ladder at 5.1-5.3% where one matures every month, which I just put it back into another T-Bill earning 5.1% or better.  Note I am in a high tax state so it would take a CD earning 5.5% or better to match a T-Bill.

The risk here is if I get caught with lowering interest rates then end up having to re-invest at a lower rate than if I had locked in a longer duration.  I am betting my own money that inflation isn't going anywhere and rates are not coming down.

My run-on sentence comment there:

I’ve been keeping a large pile in short terms and money markets that buy them since I never bought into the rate cut mania. I’ll make 5+ risk free all this year, just a question on when I lengthen duration, but won’t buy anything less than 5%, which I expect to happen further out the yield curve since inflation isn’t cooling and government spending keeps going through the roof.

So What Do I Do With My Old Blog?

Way back in 2003 I was working at a job with nothing to do (hence the term "Window Manager", from a Japanese phrase) and I was bored out of my mind.  Blogging was a New Thing 21 years ago, and I spent a lot of my spare time wandering around the Blogosphere.

One day I decided "I can do that!" and started my blog, naming it after how I was spending my time.

I really enjoyed it the first several years, and it became a part of my daily routine.   I posted mostly on business, economics, tech (where I work), and started wandering into politics.  I also put a lot of personal stories and details on the blog since most of my friends and family read it (remember this was before Facebook).  At its peak in the mid 2000s I had quite a bit of traffic, with hundreds of unique readers a day. I kept things mostly anonymous, but maybe someone with a lot of effort could figure out who I was. 

Several things lead me to ramp down and abandon it for years at a time.  Part of it of course was the rise of social media like Facebook and Twitter, which killed traditional blogging.  I also got busy with other things in life, and like many hobbies my interest simply waned.

A strong under-current was the rising Cancel Culture, and although I don't think I ever posted anything controversial to a normal person, one never knows what the HR gate keepers at potential employers might think.  So although I had abandoned the blog for years at a time, I did take the effort to delete most personal related posts.  Except the rant against Rice University stays public forever, the woke *%#$ers.   

Although my blog laid fallow I still read and commented at traditional blogs using the moniker "whatever" (yeah, whatever).  These blogs are getting fewer and narrower as more readers abandon long-form blogging for the quick dopamine fix of Twitter (sigh, I mean "X") and Facebook.  But I really enjoy (and of course don't always agree) with blogs listed on the right like The Z Man (alt right), The New Neo (moderate right), WolfStreet (economic, libertarian) and Mish (economic, left-center).  I also read daily but don't comment at Instapundit (a bit of everything from the moderate right), Ace (more of everything, further to the right) and Zero Hedge (economic with a dash of conspiracy theory).  Sadly American Digest will have no more posts, its talented writer Gerard Van der Leun passing away last year.

But starting by blog back up, my main question is: who would read it and why?  I don't think I have anything particularly new to say as every opinion can be found on the internet, even as repression has vastly increased.  I suppose I could be on the few people blogging about tinnitus?

I suppose "how" something is said can be different or more entertaining in a blog.  And some blogs have incredibly interesting comment communities, which are often more compelling than the original blog post.  I don't expect much commenting here, but will keep commenting at my usual locations and now link back and copy here if the comment is interesting or pertinent.

Fundamentally, however, I think a blog exists for the writer.  Even if no one ever reads it, it is an outlet for the author, basically a hobby.  And I think I need another one of those these days.