Sunday, June 23, 2024

Its Demise is not in Question

In an expected development, the Governor and Legislature closed the upcoming year's California budget deficit by agreeing to a $297.9 billion spending plan.

(Image from the Economist)
In parallel news the slavery reparations bill ("Fund for Reparations and Reparative Justice"), estimated to cost $800 billion, was approved by the Judiciary Committee and moves to the State Assembly for consideration.

When I have an instinctive negative reaction to policies--in this case to pay big penalties for actions that neither I nor my ancestors had anything to do with--I like to turn to guidance from spiritual leaders to gauge whether I'm off base. This article (What the Bible Says About Reparations for Slavery) is helpful: [bold added]
Any examination of the question must begin with the notion of time and its relation to evil acts. The Bible, in Exodus 34:7 and elsewhere, tells us that God will “visit the iniquity of the fathers upon the children unto the third and fourth generation.

These passages acknowledge that bad acts frequently have consequences that ripple beyond the temporal space of the perpetrator and can create a sphere of responsibility that far exceeds the individual actor. Importantly, the text also indicates that the ripples dissipate after three or four generations. The adverse consequences of nefarious acts don’t continue indefinitely—and, similarly, the desire for vengeance and the right to compensation for such acts can’t endure forever.

Why only three or four generations? This limitation is tied to the duration of emotional memory, including the transmitted personal sense of suffering and injustice. Most people have a vivid awareness of and emotional ties to parents and grandparents—perhaps even to a great-grandparent. Yet no such bonds can plausibly exist beyond that. The Bible is thus establishing a statute of limitations that is tied to the strength of personal memory and, therefore, to a limitation on the personalized rectification of historic wrongs.

Our legal system echoes this biblical teaching. Civil and criminal statutes of limitation generally bring to an end the pursuit of perpetrators for acts that are too distant in time to warrant subjection to judicial processes. Implicitly they also recognize that witnesses, tangible evidence, and raw emotions engendered by wrongful acts have disappeared—no matter how heinous the offenses.

While American slavery remains a powerful and tragic historical event, there are no individuals alive today who have direct personal links to it or even to those who suffered directly as a consequence of it. For all its evil and injustice, slavery is no longer a personal reality in the U.S. It is still a wrong to be righted, but in a collective manner, through national efforts—civil-rights legislation, improvements in education, public services, quality-of-life enhancements for the descendants of slaves, and the like. To its credit, our nation has vigorously pursued such efforts for decades.

The notion that direct compensation should be paid to sixth-, seventh- or eighth-generation descendants of slavery’s victims by similarly distant descendants of those who may have been complicit with slavery is simply unjust. The original actors, perpetrators and victims, are too far removed in time to merit punishment or retribution.

It is appropriate to punish a perpetrator or exact restitution from an individual who may have benefited directly from the acts of the perpetrator. Yet more than 1½ centuries’ distance makes such punishment for slavery incompatible with justice. Similarly, individuals separated by many generations from a vile act suffered by distant ancestors can’t have a justiciable claim for suffering they didn’t endure directly or indirectly.
The above interpretation of Biblical justice doesn't relieve me of my moral responsibility to help the poor and downtrodden. However, it's quite different to use the State's taxing authority to take from Peter to pay Paul --by force, if necessary--when both Peter and Paul and no one they know have any first-hand experience with the injustices perpetrated.

However, there is no point in getting too worked up about reparations. There is zero probability that California can come up with $800 billion, so it's just the timing and manner of reparations' demise that's in question.

Saturday, June 22, 2024

Finance Bros' Day in the Sun

Forget about going after doctors or lawyers, ladies, it's time to prowl Wall Street:
It all started with a TikTok video by 27-year-old Megan Boni, known as Girl On Couch. Her April post, amassing about 49 million views, features a singsong message: “I’m looking for a man in finance. Trust fund. 6’5.” Blue eyes.”
This video was clearly made in jest. For the height criterion alone the percentage of men over 6'5" is less than one percent. Plus a trust fund and blue eyes? That's a unicorn.
Boni said she made the original video as a satire of women with impossible dating standards, not because she’s particularly interested in dating a man in finance.

“I wanted to make fun of single people, including myself,” she said.
Your humble blogger went into finance, is well short of 6', has brown eyes, and has no trust fund. Nevertheless, his life turned out all right. I recommend finance as a career if you're willing to work hard, but don't expect success on dating apps.

Below is a video that starts with Megan Boni's original, then riffs on it.

Friday, June 21, 2024

A Lack of Imagination

Starbucks charges 70¢ for coconut milk
Lactose intolerance causes me to forego dairy additives in hot or cold drinks, but if I really want the taste I'll sometimes substitute almond, soy, or coconut "milk." It's reasonable that coffee shops charge extra for the substitution, since in the supermarkets plant-based milk is pricier than real milk.

My willingness to accommodate, plus a lack of imagination, is probably why I'm not further ahead in life, as the following lawsuit illustrates: [bold added]
DETROIT – A woman suffering from lactose intolerance is suing Michigan-based franchise Biggby Coffee over a surcharge for non-dairy alternatives, saying the extra charge is excessive and violates the Americans with Disabilities Act.

The woman, Leslie Bower, filed a lawsuit on Wednesday in the U.S. District Court Western District of Michigan, seeking at least $5 million for damages. The lawsuit claims that the surcharge “represents an even higher percentage proportional to the price of milk.”

Court records show that the woman visited multiple Biggby shops in Ohio and Michigan since 2020 and substituted 2% milk for oat milk. According to the lawsuit, the woman has been advised by a medical physician to avoid dairy due to bloating, diarrhea, excessive gas, nausea, abdominal pain, cramping and fatigue.

The lawsuit said that the company charged 50 cents to $1 extra to customers for non-dairy substitutes, adding that other companies, like Tim Hortons, do not charge extra for substitutions. “Biggby will modify its regular beverage offerings to remove sugar or use sugar-free sweeteners at no additional charge for those persons with diabetes or who need to control weight,” reads the lawsuit. “There is no expertise or additional work required of Biggby employees to substitute whole milk or fat-free milk in place of 2% regular milk, to make caffeine-free or sugar-free beverages, or to substitute Non-Dairy Alternatives such as almond, coconut, oat, or other lactose-free “milk” in place of 2% regular milk.”

The lawsuit also claims discrimination, saying that the Americans with Disabilities Act considers lactose intolerance as a disability. It alleges that the company’s actions are “malicious” and “intentional.” The lawsuit claims the company has earned in excess of $50 million “as a result of its discriminatory and illegal levying of the surcharge.”
I didn't know that the ADA considers lactose intolerance as a disability. I'll start applying for my handicap placard now.

Thursday, June 20, 2024

Amusing While it Lasted

Assoc. Justice Goodwin Liu wrote the 7-0 ruling.
As expected, the Governor, the Legislature, the labor unions, and all the powers that run our one-party State were successful in having the California Supreme Court disqualify the tax initiative from the November ballot. If passed, it would have required higher taxes to be approved by two-thirds of the voters in addition to the two-thirds majority already required of the Legislature.The measure
must be removed from the November ballot because it is so far-reaching that it would be a “revision” of the state Constitution, the California Supreme Court ruled unanimously Thursday.
Initiatives can amend but not "revise" the Constitution, went the Court's reasoning.

Well, it was amusing while it lasted. As I posted last month
To be frank (and a little childish), I like seeing the single-party State squirm a little and, after denouncing Republicans as a threat to democracy, argue that the people should not have the ability to decide.

Wednesday, June 19, 2024

Willie Mays (1931-2024)

(SF Chronicle photo)
Willie Mays has died at the age of 93. Rather than do what hundreds of others have done in reciting the statistics that show his greatness or tracing a career that began in the Negro leagues, I'll just provide a (free) link to the Chronicle's obituary. Several of its sportswriters also chipped in with separate articles about what Willie meant to them.

I had become a baseball fan in the early 1960's when my grand-uncle Fred (the owner of Buck's sweet bread), bought season tickets behind home plate for the Triple-A Hawaii Islanders. He often gave tickets to my father and me to the games at Honolulu Stadium (aka the "Termite Palace"), which was only a quarter of a mile from our house.

Another catalyst for my interest was the chase after Babe Ruth's home run record of 60 in a season by Yankees Roger Maris and Mickey Mantle in 1961. I devoured every baseball article in the morning Advertiser and the evening Star-Bulletin. I learned about all the stars in the game, and none were greater than Willie Mays.

I did get to see him and the San Francisco Giants play in the summer of 1962, thanks to my uncle who was the best mechanic I ever knew. He invited me to stay with him over the summer at his home in San Bernardino.

One night he took me to Dodger Stadium, whose four decks dwarfed the Termite Palace back home. But the real difference was in the players. Even from our distant seats along the right-field foul line, I could sense the power in just the practice swings by Giants Orlando Cepeda, Willie McCovey, and Willie Mays. I don't remember the specific batting statistics from the game, although the Dodgers did win because their outstanding pitching staff got the better of the Giants.

I did see enough to realize that both the Dodgers and Giants played on a different plane from the Islanders. Baseball is the one professional sport, IMHO from watching film clips, where the stars from a half-century ago can compete with the stars of today. Willie Mays was the greatest player in history during his time, and according to many baseball fans, sportswriters, and players he retains that title 51 years after his retirement. R.I.P.

Tuesday, June 18, 2024

NVDA: Now the Top of the Heap

MSFT and AAPL rose 81% and 65%, respectively, while NVDA returned 754% over the last two years.
Today, with no international crises or natural disasters as competition, the headlines again return to Nvidia, which surpassed Microsoft as the most valuable company in the world. [bold added]
Nvidia, a 31-year-old company, became the world’s most valuable firm on Tuesday. The stock closed at $135.58, giving the chip maker a valuation of $3.335 trillion, just above Microsoft at $3.317 trillion. [Blogger's note: Apple closed in third place at $3.286 trillion.]

It marks the first time a company other than Microsoft or Apple has held the title of largest company since February 2019 when Amazon.com briefly topped the list. Nvidia was ranked fifth largest by market valuation a year ago and was ranked 10th largest two years ago. Five years ago, it wasn’t in the top 20 largest companies.
How could so many on Wall Street have been so wrong about Nvidia? One easy explanation: investors had become jaded because the realization of artificial intelligence was always sometime in the future. That is, until the release of ChatGPT in November, 2022, showed everyone how millions could become instantaneously more productive in research and writing reports. Just imagine the possibilties in hundreds of other endeavors. Note from the graph that Nvidia's stock price growth separated itself from Microsoft, Apple, and other tech companies in November, 2022.

Nvidia's limits will eventually be reached when the companies that can buy its chips for multi-million-dollar data centers find that they can't realize a return on their investment. But that moment is years away, especially with everyone jockeying for leadership positions in markets that no one fully understands.

Monday, June 17, 2024

Gains and Losses

The view of the Hayward-San Mateo Bridge from the Foster City levee.

I went for a walk along the new $90 million Foster City levee. The path is wider and better engineered than the narrow strip it replaced. There are separate marked lanes for pedestrians and bikers, reducing the chances of injury.

The big change was the height of the levee. It was built to protect Foster City from floods, which means that one can no longer see the Bay from ground level. Walking along the top is nice enough, but one can no longer go up to the Bay and touch the water. No big deal you say? It's the difference between a cliff and a beach. Both have good views of the ocean, but the latter is more popular.

Below is how the Bay and the San Mateo Bridge appeared along the old path in 2018. I used to sit on a bench a few feet from the water and ruminate on various and sundry. Then there was a little sand, now there are only rocks.

Sunday, June 16, 2024

Happy Father's Day

Paia, Maui boy makes good.
On this Father's Day I thought of my father-in-law, who passed away 23 years ago, and his fondness for a good deal.

When Fred visited us in Fremont in 1976, he chanced upon a small supermarket that called itself "Canned Foods." They sold canned, packaged, and frozen goods that were produced by recognized manufacturers but were priced at a huge discount from comparable products; this was because the items were discontinued, overstocked by retailers, or new-product introductions that failed.

Over the next 25 years his and our station in life improved, but he would always stop at Canned Foods (renamed Grocery Outlet in 1987) to see what bargains he could find. We enjoyed having my in-laws visit because they always cooked, cleaned, gardened, and baby-sat for us; the only downside was that we had to drink a lot of $2 wine and eat a lot of 59¢ canned chile from Grocery Outlet.

Scenes from the Oakland Grocery Outlet (SFGate)
In 2024 Grocery Outlet is a lifeline for inflation-embattled consumers. Its business is booming.
While Grocery Outlet provides an unorthodox shopping experience, those willing to take a chance on it have the opportunity to not only save hundreds of dollars but also bring home anything from pantry staples to high-end organic oddities. And as prices continue to rise and pandemic-era assistance programs grind to a halt, discount retailers are becoming more important than ever for millions of Americans who are struggling to put dinner on the table.

Originally a military surplus, Grocery Outlet was founded in San Francisco in 1946 by Jim Read. Though it was once a modest outpost, by 1973, the company signed its first independent operator agreement and began slowly introducing refrigerated goods, meat and produce over the next three decades. Once Grocery Outlet reached $1 billion in sales in 2011, it expanded its presence to the East Coast and Southern California shortly after...

Now, it has over 500 locations that serve millions of customers each week, easily making it one of the largest “extreme discount” stores of its kind in the state. Hundreds of them are concentrated in Northern and Southern California. In its 2023 fiscal year, Grocery Outlet unveiled 28 new locations, and though it has a presence in Oregon and Washington, more outposts are slated to open as far east as Ohio, Maryland and Philadelphia...

The way it works: When a company is suddenly left with 20,000 extra cases of frozen entrees, for instance, it’ll summon Grocery Outlet’s buying team, which purchases them at a reduced price and resells them to customers at a steep discount. Often, this will happen when a product’s packaging changes or a company can’t get rid of enough inventory by the expiration date. Once these items sell out, [CEO R.J.] Sheedy explained, chances are, they won’t return.
My last trip to the Grocery Outlet in Redwood City, 8 miles away, was to fill a box for a local food charity pre-COVID. Now that charities are welcoming gifts-in-kind again, not just monetary donations, I am going to pay another visit.

Saturday, June 15, 2024

(Much) Higher Cost to Repair EVs

Saving the planet is expensive (WSJ illustration)
When weighing the advantages and disadvantages of electric vehicles, one should include the much higher cost of their repair: [bold added]
For EVs, repairs following a collision can cost thousands of dollars more than their gas-powered counterparts, because the fixes tend to require more replacement parts, the vehicles are more complicated and fewer people do such repairs...

Last year, repairing an EV after a crash cost an average $6,587 compared with $4,215 for all vehicles, according to CCC Intelligent Solutions, a company that processes insurance claims for auto repairs in the U.S....

Higher repair costs are also helping to drive up insurance premiums for electric owners, who pay on average $357 a month for coverage compared with $248 for gas vehicle owners, according to insurance comparison website Insurify.
Here are more specifics about why EVs cost more to repair (and insure):
Part of that cost can be the greater work involved: over three mechanical labor hours on average for a repairable EV claim estimate, versus less than two for ICE vehicles, according to Mitchell data. Mechanics sometimes have to de-energize electric vehicles before removing their high-voltage batteries to avoid damaging them during repairs, Mitchell said...

One complication is the trend toward “gigacasting”—using smaller numbers of larger cast parts to make vehicles. Tesla has championed the technology, and others, including Toyota, are now following. But it could make cars even more expensive to repair. If lower production costs mean higher insurance costs, then drivers won’t actually save money.
Higher insurance and repair costs reinforce last year's decision not to be in a hurry to buy an electric vehicle.

We will first need to replace our 20-year-old roof and install a solar panel/battery storage system to defray the EV recharging cost, so at the earliest it's three years away.

Friday, June 14, 2024

Flag Day, 2024

For God, for Country, and for Mickey D's
After 9/11/2001 people of all persuasions flew the flag.

McDonald's is as American as apple pie and keeps up the tradition in Foster City. It welcomes everyone.

Alas, two decades later everything has become politicized.

Thursday, June 13, 2024

The Trump Tariffs

Republican Senators greet Donald Trump in DC (WSJ)
Donald Trump's tariff proposals--and their acceptance by the Republican Party--show how far Republicans have strayed from their free-trade principles. [bold added]
Trump floated the idea of an all-tariff federal revenue system, large enough to replace the income tax, during a morning session with the House GOP, according to a GOP lawmaker in attendance.

The presumptive GOP presidential nominee has consistently supported higher tariffs as a way to protect domestic industries. He has long backed income-tax cuts, including extensions of the ones he signed in 2017. An all-tariff approach would combine the two stances and take them to the extreme, reversing more than 100 years of economic policy that encourages free trade and requires higher-income households to pay higher tax rates than the middle class. Such a return to 19th-century fiscal policy could amount to a tax cut for high-income people and, effectively, a tax increase on consumers, who would pay tariffs passed along to them in prices.
Economic theory teaches that barriers to trade, such as tariffs, make one's own population worse off because they have to pay more for imported goods. Tariffs are typically justified to protect the home industries that cannot compete on price with imports.

One problem with tariffs is that other countries retaliate by imposing tariffs of their own. For example, a tariff on Chinese electric vehicles (President Biden proposes 100%, while former President Trump wants 200%) will likely result in Chinese tariffs, which they have imposed in the past, on American agricultural products. As retaliatory tariffs escalate, perhaps bringing in other countries, a trade war results, impoverishing everyone.

Another problem with tariffs is that domestic industries become dependent. They exert political pressure to keep tariffs in place instead of raising their own game, making it likely they will never be competitive in world markets.

One of Mr. Trump's strongest arguments for his election is that inflation will return to the much lower level of his first term. Broadly increasing tariffs will raise the general cost of living and torpedo that goal. If he is elected, let's hope that his economic advisers will talk him out of widespread use of tariffs and restrict them to products like EV's that Americans don't seem to care about.

Wednesday, June 12, 2024

Mindful Chewing

I'm an infrequent gum chewer. I buy a pack before boarding a plane, when needing a breath freshener, or am feeling some stress and need something to chew on.

"Mindfulness" ad is not meant for boomers.
Mars Wrigley has come to the realization that we boomers aren't the demographic that will lead a chewing-gum revival and have designed a new marketing campaign [bold added]
that jettisons typical category promises such as fresh breath or great taste.

Mars is instead promoting its Orbit and Extra gum brands through the lens of mindfulness, purporting that mastication can silence anxious thoughts, improve focus or boost confidence. “Quiet your mind mouth with Extra Gum,” one ad concludes...

commercials in other countries lean more obviously into the idea of mental wellness with surrealist images of mouths in the middle of people’s foreheads.
Surrealist images of mouths evoke a negative reaction in this consumer--is that psychologically revealing?--but these ads have no influence on my gum-purchasing decision anyway.

Having no clue to what the TikTok generation will respond to, I wish Mars Wrigley--two venerable brand names--success.

Tuesday, June 11, 2024

Quick Vindication Leads to Chortling

AAPL rose $14.03 to an all-time high
Permit me to chortle a little.

After Apple made its AI announcements and an unimpressed Wall Street knocked Apple stock down by 2% yesterday, I wondered why the experts didn't see the benefits from "Apple Intelligence" that I was seeing ("if I didn't already own Apple stock, I'd be buying some.")

Just before yesterday's close I bought a few Apple call options. Your humble blogger was under no illusion that he was "investing" in AAPL; this was gambling--backing my judgment that Apple's artificial-intelligence strategy was a winner--and that the market would come around to this point of view very soon. Whatever the result, I intended to get out of the position by the end of the week.

Within 24 hours various Wall Street analysts (not the first take people) published glowing reports on Apple's strategy, and the stock rocketed up $14 to an all-time high. I sold my position and made enough $$$ to pay for the iPhone 16 that will be issued later this year.

Buying and selling options successfully is more luck than skill, but I am chortling anyway.

Monday, June 10, 2024

Apple: the Primacy of Privacy

AAPL sold off 2% today
After its run-up to the Worldwide Developers Conference, Apple stock sold off 2% today, as traders greeted Apple's introduction of its artificial-intelligence products with a yawn.
Apple said its new software will retrieve information from across apps and scan personal information to help users proofread text, call up photographs of specific family members or gauge traffic patterns ahead of an atypical commute. Users can create images and emojis and even convert rough sketches into polished diagrams...

For certain complex Siri requests, Apple will surface a prompt to ask if the user wants to connect with ChatGPT to get a better answer. Apple is also allowing ChatGPT to connect with other areas of the operating system, such as using the AI to help with composing text. Apple said it gives users the ability to control when and if they want to use ChatGPT...
Apple's AI features didn't overtake the competition technically, but as an Apple customer I really liked the emphasis on privacy. (By way of contrast Microsoft Windows' AI tool "Recall" takes snapshots of users' screens every five seconds and stores the images on an unencrypted database that is easily hacked.) [bold added]
Privacy is at the heart of Apple’s new AI capabilities, a feature that could further lock users into its ecosystem. Most processing will be done on a device instead of shipping to the servers in the cloud. But the company said for running larger AI models Apple will keep it private by running its own servers with what it calls Private Cloud Compute. It will only send data relevant to the task to these servers. The data isn’t stored or accessible by Apple for further training, the company said.

ChatGPT queries from Apple devices will be routed to OpenAI servers, but user information won’t be shared with OpenAI, and the startup won’t be able to identify the queries from specific Apple users. Apple will use a version of ChatGPT that is available free elsewhere online, but those with premium ChatGPT subscriptions will be able to link their accounts.
Users' data is stored on the device itself. If more processing power is needed, then tasks are diverted to Apple's private servers. Users can call on Open AI's ChatGPT, but even here protections are in place.
user information won’t be shared with OpenAI, and the startup won’t be able to identify the queries from specific Apple users.
As an Apple investor and a customer with privacy concerns, I appreciate the fact that Apple will be using its own silicon and not be as beholden as everyone else to external data centers running on Nvidia chips.

This fall I'll be buying a new iPhone 16. My six-year-old iPhone XS Max has served me well, but it's time to move on to the brave new AI world (as well as a much better camera and battery).

I'm not so presumptuous as to believe that hundreds of millions of iPhone, Mac, and iPad customers think like me and will soon upgrade their hardware, but there's a good chance that will be true, so if I didn't already own Apple stock, I'd be buying some.

Sunday, June 09, 2024

Spreading the Gospel of Net Present Value

Your humble blogger studied accounting and finance before the personal computer was invented.

The only electronic devices that we brought to class were calculators that performed basic arithmetic. And so it was that we labored over present value/future value problems, pencilling out intermediate solutions so we at least could get partial credit from the proctor.

After learning how the basic formulas were derived, we were taught how to use books of tables to bypass much of the repetitive drudgery in financial calculations. The future-value table below is from McGraw-Hill.


Until financial calculators and PC's came on the scene, such tables were used in finance for 3½ centuries(!) These tables seem extraordinarily crude today, but when they were first published in the 1600's, it sparked the widespread acceptance of "discounting" as an alternative payment. It wasn't businessmen or bankers who spread the word, but the Anglican church. [bold added]
In the early 1600s, the officials running Durham Cathedral, in England, had serious financial problems. Soaring prices had raised expenses. Most cathedral income came from renting land to tenant farmers, who had long leases so officials could not easily raise the rent. Instead, church leaders started charging periodic fees, but these often made tenants furious. And the 1600s, a time of religious schism, was not the moment to alienate church members.

Interest-calculation book from 1700.
But in 1626, Durham officials found a formula for fees that tenants would accept. If tenant farmers paid a fee equal to one year’s net value of the land, it earned them a seven-year lease. A fee equal to 7.75 years of net value earned a 21-year lease.

This was a form of discounting, the now-common technique for evaluating the present and future value of money by assuming a certain rate of return on that money. The Durham officials likely got their numbers from new books of discounting tables. Volumes like this had never existed before, but suddenly local church officials were applying the technique up and down England.
Spreading the "Gospel of Net Present Value" was one of the most important developments in capitalism. With apologies to the bard,
Neither a borrower or a lender be
But if you are either
Be mindful of the NPV.