technological change

Warm and Fuzzy Productivity

© Can Stock Photo / arosoft

The last fifty years in business have seen the transformation from pencil and ledger to spreadsheet, the secretarial pool typing letters to email, research in the library replaced by internet services. Every process can be done exponentially better, faster, and cheaper than half a century ago.

With the incredible increase in productivity over this period, it is a wonder some believe that more increases in office productivity will fix the central issues we face. In our business, as in every business, cost pressures continually push us to do more with less.

It is the conceit of every industry that margin pressure is something that uniquely affects it. In fact, the whole history of human enterprise can be summed up in two words: shrinking margins. The first supermarkets had lower margins than the butcher, the baker and the dairy they replaced. The Sears catalogue had lower margins than the general store. Charles Schwab had lower margins than E.F. Hutton.

The way we see our work, honesty and competence are the entry requirements to the business arena. Beyond that, the productivity issues do not center around software and systems, but people and connections:

1. Do we have the empathy to put ourselves in your shoes and understand your heartfelt objectives, to learn what you can tell us about your needs and situation?

2. Do we have the creativity to collaborate with you on strategies and tactics that may get you closer to where you want to go, in light of all factors: market, economic, tax, everything?

3. Do we have the ability to communicate what you need to know in order to work effectively toward your goals?

‘Relationship’ is the word that sums up these points. Relationships are at the heart of whatever past success we’ve had with you, and whatever exciting future we may build. You, the best clients in the world, play a starring role.

In this view, the key technologies are not how fast some back-office process gets done nor the colors in the pie chart nor pages of dense calculations of statistical history. The key technologies are those things that enable you and us to communicate. When we get basic information to all of you at once, our one-on-one talks can start at a higher level and go farther.

Blog posts at 228Main.com, social media, videos, and our email newsletter are the ways we talk to everybody at once. (None of these existed fifty years ago!) Emails, phone calls, and meetings let us go one-on-one to work on your issues. We have worked diligently to master the technology that most matters to our mutual success: communications.

Clients, if you would like to talk about this or anything else, please email us or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Takeovers Mean Turmoil

canstockphoto3337968

Recent news in the investment industry touched close to home in Nebraska. Charles Schwab is to buy TDAmeritrade, and move the headquarters to Texas. How many of the 2250 jobs will be left in Nebraska is uncertain. A lot of things will change.

The first shares of stock I ever bought were at the discount brokerage firm Joe Ricketts founded. At the time, the place had fewer than twenty employees. It was in a second floor walkup office in a second-rate building in downtown Omaha. The lobby had a most amazing gizmo: a little Quotron machine. You could punch in a stock symbol, and it would show you the current price.

Those prices were not in dollars and cents, but dollars and fractions. XYZ might be selling at 27 ½ , ABC at 9 ¼.

Before personal computers, before the internet, stock quotes were something you got out of the newspaper or called your broker for. The afternoon paper had noon prices; the morning paper had the previous day’s closing prices.

But in the Ameritrade lobby, a dozen patrons stood in an endless loop of a line, waiting for a turn at the Quotron. They punched the symbols in, looked at the prices (some wrote them down), then went to the back of the line to wait for another turn. Daytrading took more patience then.

Later, the firm pioneered getting information to the people by making stock quotes available from any touch-tone phone. (Kids, ask your grandparents what I’m talking about.) Then the internet made a lot more things possible.

It is not for me to judge the takeover transaction; it evidently makes sense to the people who are making the decisions. We will do our best to help affected employees, of course. We will always remember the typically American story of innovation and success that Ameritrade represents.

Clients, if you would like to talk about this or anything else, please email us or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

Autonomy: Freedom, Independence…

© Can Stock Photo / RioPatuca

Dictionary definitions of autonomy talk about freedom and independence. This is fitting, when you think about what autonomous or self-driving vehicles (AV) are going to do for those who are unable to drive. And that is just part of the story.

In our society, a drivers license has long represented freedom and independence – autonomy, in other words. One of the toughest issues in dealing with friends or elders with diminishing abilities has been that moment when driving a car becomes a threat to one’s self and others. And some among us have never been able to drive, due to injury, sickness, or congenital conditions.

Progress has been made in the development of autonomous cars. Within the next few years, we are likely to see the first widely available autonomous vehicles. This will make it possible for those who cannot drive to live autonomously, independently, on their own. Delivery of goods and services may be more widely available than ever before. Getting to a medical appointment or store will be routine for nearly anyone, in any condition.

An even larger benefit might come from a reduction in motor vehicle injuries and fatalities. When a self-driving car is implicated in an accident, everybody hears about it – the news covers it extensively. Yet these incidents rarely happen. And each month, more people die in US traffic accidents in conventional vehicles than were killed on 9/11.

From an investment standpoint, it is possible to own stock in several of the leading approaches to autonomous vehicles. A significant fraction of the value of one of the traditional auto companies is in its autonomous vehicle division. With another company, you gain ownership in an aggressive AV development program along with the leading internet search business, among other things. These are established, profitable companies. The third is a somewhat controversial, newer company that has yet to book a full-year profit, as it works on building an electric vehicle business.

In the investment advisory accounts we manage through LPL Financial, we have chosen a number of paths to gain exposure to the evolution of the automobile. This diversified approach will hopefully bear fruit in the years to come. No guarantees, of course.

Just as in the 1990’s, it was difficult to understand the pervasive changes the internet would bring to everyday life, autonomous vehicles may present a transformation as sweeping. We humans tend to believe things will be as they are now – it is hard to visualize change. But we believe change is coming.

We will continue to study and watch. Clients, if you would like to talk about this or anything else, please email us or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Coal Museum is Powered by What?

© Can Stock Photo / eunika

In the heart of Kentucky coal country is Harlan County. There you will find the Kentucky Coal Mining Museum. Thousands of artifacts depict the industry, the people connected with it, and the role coal played through history. Notably, the collection of Loretta Lynn, “The Coal Miner’s Daughter,” occupies a floor.

Over 90% of the coal used in the US is for the production of electricity1. The museum had electric bills that were running $2,100 per month, on average2.

In 2017 the museum acted to reduce its cost of electricity by $8,000 to $10,000 per year2. Solar panels went on the roof. The museum will be able to offset its power costs by selling excess electricity back to the local utility.

One might guess that alternative energy sources which compete with coal would not be popular in the very heart of coal country. But compelling economics usually triumph in the end. The museum made a business decision. Investors should pay attention.

The cost of electricity from solar is declining about 10% per year3. We concluded from this trend that the next energy revolution is taking shape. The combination of solar plus batteries may be the dominant source of electricity at some point in the future.

Change produces winners and losers. Our portfolios are already being shaped by the energy revolution. Many more opportunities and threats will become apparent as the future unfolds.

Our sense is that the pace of change is not fully appreciated by consensus wisdom. Some of the losers in the energy revolution may now be overpriced; some of the winners may be bargains. We are studying this situation intensely.

Clients, if you would like to discuss this or anything else on your agenda, please email us or call.

1Institute for Energy Research, https://instituteforenergyresearch.org/ Accessed on January 30, 2018.

2Washington Post, “Kentucky Coal Mining Museum in Harlan County switches to solar power”. April 6, 2017.

3The Guardian, “Solar panel costs predicted to fall 10% a year”. January 1, 2016.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.