Many individuals, unfortunately, work such long hours that if a company restructure occurs or if an individual is a consultant and the project ends, he or she is out of work for a very long time and may not have the latest knowledge to land the next role. Alternatively, one could be stagnant within his or her role and does not know where to even begin. Luckily for our audience, we distill this down by allowing individuals to visit https://www.producthunt.com/, which allows individuals and companies to analyze the latest products associated with a specific industry or topic, in which the firm can test out new products with little to no risk. Take a look and let us know what you think.
This blog post was featured in Citizens Journal.
Former Treasury Secretary Larry Summers has railed against the latest $1.9 trillion dollar pandemic relief package. Combined with the two passed in 2020, he warned, they could overheat the economy and lead to inflation thus forcing the Fed to raise interest rates, which in turn could cause a recession.
Summers raises a valid point in that the Fed is almost out of options; if the economy overheats, the Fed would have to raise rates. However, many need to take into account the financial impact of the pandemic with 9.5 million people still out of work. The total $4.5 trillion dollars in financial assistance is more palliative than stimulative. Funds were allocated to replace the lost economic activity and to keep the wheels of commerce turning to keep people in their homes.
2020 marked a record low number of homes in foreclosure because of the CARES Act. Millions of homeowners entered and exited mortgage forbearance programs, either catching up on back payments or changing the payment terms of their loans.
The Federal Reserve has managed interest rates and aided homeowners and lenders by purchasing mortgage-backed securities. Summers needs to recognize just how dovish the Federal Reserve is on interest rates. The Fed holds $7.5 trillion dollars on its balance sheet with more than $2.5 trillion added since March of 2020, which almost guarantees low interest rates for years to come.
Inflation will not be an issue unless the Fed changes the way it computes consumer costs through the Consumer Price Index (CPI), the selective counting of goods and services consumed in the current time period. Today the CPI, unfortunately, does not include real estate, energy, healthcare costs, education costs, stock market percentage increases or food prices. Of the three basic needs in life—food, clothing and shelter—it only fully counts clothing.
While many would argue that food, stocks, healthcare, and energy prices can fluctuate for a variety of reasons—political unrest, droughts, floods, hurricanes, a cargo ship stuck in the Suez Canal—there should be a separate measure of inflation that calculates into a single bucket of food, housing, healthcare, and stock market percentage increase to actually see the real-world impact of economic policies of ultra low-interest rates. If such a measure did exist, Summers is partially correct that all of the stimulus incurred has actually increased the cost of everyday living for all citizens, and that these stimulus’ can cause individuals to mal-invest capital into overpriced assets that were caused by the federal reserve’s economic policies, such as the fact in the past economic recession.
If housing prices were counted among other missing elements, inflation would certainly be on the rise. It seems oxymoronic that the CPI is used to factor in raising or lowering interest rates that affect housing purchases, while at the same time the cost of the houses purchased is not included. The rationale behind the exclusion of the largest single purchase in most consumers’ lifetime is that the payment for said purchase is spread out over years. New car prices are included, and those payments are spread over years.
The fact of the matter is that the Fed has been trying to achieve inflation for the past decade, but it has struggled for a number of reasons. First—and one that not many people are talking about—is that many millennials are not having children, and population growth is stagnant. Ahead of the full report, the U.S. Census says that between July 2019 and July 2020, the U.S. population only grew 3.5%, the lowest growth since 1900. This is similar to the lost decade of Japan with its population issues and ultra low interest rates.
The second reason is the growth of technology. India is now the #5 economy in the world, and it’s largely IT-focused, particularly in regards to automation, which increases productivity, thus lowering inflation in the US consumer market and globally.
The third reason is Amazon, which is a global inflation-killer. Because there are no storefronts, Amazon significantly reduces operating costs, thus undercutting brick-and-mortar retailers.
The stimulus was required to keep individuals in their homes, but part of the symptom of low inflation is ultra low-interest rates because the cost of everyday goods and services is rising rapidly. Many people are choosing not to have children because of this. The Fed in turn continues to keep ultra low-interest rates, which will perpetuate population issues and asset price increases, such as bitcoin and real estate where individuals mal-invest capital from artificial price increases. Once the economic policies end to keep individuals in their homes, the foreclosures will, unfortunately, begin to occur. Likewise, bitcoin is technically an inflation hedge, which may approach $100,000 in the near future, which is defined as one to three years from now, but will also crash similar to 2017 because all things in life revert back to the average.
In short, Summers is simply stating that if the Fed needs to raise rates, deflation will occur, which is worse than inflation. The economic policies of the Fed are continuing to create asset bubbles and make everyday goods and services affordable. However, they did do something right compared to the previous crises by acting swiftly. The Fed’s swift responses have allowed institutions to take on debt with a low interest rate, keeping some people at work who would have otherwise lost their jobs.
Michael Kelly, the founder of Investment Science, is an economist and financial consultant.
It's that time of year again where we analyze all different types of opportunities associated to investments. While 2020 has been a wild ride for the financial markets, there were some players associated to achieve stable returns. Namely Bach Capital Management, amongst other firms were able to not only beat the S&P 500, but also achieve great returns due to the fact the firm manages risk properly.
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Please note that this post is intended for accredited investors, and I am compensated by Bach Capital Management. However, we are still objective consulting without compromise in that any customers we take on, we provide the best objective advice. In the event you are deemed inappropriate for Bach Capital Management, we would try to find something better for you - but they do seem like a solid company even if we didn't work for them.
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This blog post was featured in the April issue of HR Strategy & Planning Excellence.
Before the “information age” of today’s contemporary society, we saw the birth of mass production with the Industrial Revolution of the late-19th and early-20th centuries. This advent in manufacturing brought with it Henry Ford’s creation of the assembly line: the first sign of what would eventually (and inevitably) evolve into the workforce of today — a blend of human workers and machine learning.
Over the past century since Ford’s invention, the global workforce has steadily grown to more broadly adopt aspects of machine learning and artificial intelligence (AI) in tandem with the factor of human capital, eventually creating what we today call the “information age” of the 21st-century. In today’s world, incorporating AI and machine learning with a human workforce is as commonplace as the smartphones we carry around in our pockets, but this also raises the question of what the global blended workforce of human employees and AI will look like in the years to come.
AI has been replacing humans for decades
AI has been replacing humans for decades by replacing human workers with machines and AI is nothing new. One interesting trend I have witnessed is the rise in the number of major global firms hiring increasing amounts of software engineers in order to program machines and AI to fulfill jobs once performed by human workers, with everything from complex financial formulas to infrastructure development being performed by a blended workforce. In fact, an estimated 400,000 jobs in U.S. factories replaced human workers with machines between 1990–2007. With the onset of the COVID-19 pandemic last year, another estimated 40 million jobs in the U.S. were lost, with more than 40% of those jobs expected to never return and/or have the potential to be filled — to some capacity — by AI.
Just as every major economic shift in history has helped flesh out the “persona” of its time (e.g., the Industrial Revolution of the late 1800s or the “information age” of the early 2000s), these economic pivots inadvertently create new social dynamics that influence the ways businesses and their teams operate. It is my firm belief that, over the coming years, we will steadily watch as the “information age” of today’s world and workforce evolves into the “automation age” for one simple reason: trends. In particular, trends regarding venture capital (VC) investments.
For example, Elon Musk founded Tesla in order to create a line of electric vehicles (EVs) that are more affordable and accessible to the general public. Despite entering an extremely saturated vehicle market in the U.S., Tesla has gone on to receive over $20 billion in VC investments since its founding in early 2003. Tesla is also a prime example of a company that has focused on hiring a greater amount of software engineers and developers in order to continue improving upon the software used in their EV fleets.
While EVs are not yet as commonplace as traditional gas-powered vehicles, the example of Tesla in this case also raises an additional question regarding the evolution of the role of car mechanics: by the time EVs are commonplace, or even outnumber traditional gas-powered vehicles, how effective will a mechanic be if they are not up-to-date on how to best service an EV if they do not evolve their skill set?
Humans must adapt to automation
Humans must adapt to automation to make a connection between this example and the realm of finance, think of derivative options in asset trading. In this case, the mechanic’s career (or even the future of a major vehicle manufacturer such as Ford) is the derivative option, and the mechanic’s skill set (or the vehicle manufacturer’s ability to adapt to new trends) is their asset.
If the mechanic does not evolve their skill set, their options (i.e., career) will begin to expire. This means that the mechanic will have to remain up-to-date on trends regarding EV service and maintenance and adopt accordingly. For a major vehicle manufacturer, this means that they will not only have to remain updated on EV trends, but also formulate their business strategy to include hiring additional software engineers in order to create their own proprietary software for their future EV fleets.
The example of Tesla and EVs is only one of potentially hundreds or more, but the point is this: as more companies and global firms adopt more aspects of automation in their workforce, the workforce itself simultaneously has to adapt in order to remain relevant alongside increased automation. The best way that today’s blended workforce can do this is to stay as updated as possible on the trends of VC investments made over the next 3-5 years, make note of how much VC is being funneled into which industries and companies, and why.
Human beings are naturally resistant to change, but along with death and taxes, change is one of the only certainties everyone will face throughout their life for better or worse. But in the case of this article, fighting against that change — especially as a company or business — will likely make your career irrelevant in the long run.
For years the condo market in New York was untouchable. Prices per square foot where at worst two times the price and at best 60% more. In addition to that, one not only had to pay maintenance, but also property tax. For those of you who are unfamiliar with the New York market condos, NYC condos allow the owner full fee simple property ownership whereas the majority of properties which are built fall under a co-op ownership.
This co-op ownership type allows the building to regulate who can purchase based on their own private guidelines , they require board approvals interviews , reserves after closing, and typically only allow owner occupants meaning a purchaser must be willing to move in an with there as their primary residence. For this reason, condos which had none of these restrictions have easier guidelines and should be the first choice for any real estate investors. Historically speaking, about 50% of the existing inventory in Manhattan coop properties. These co-op properties could not be rented, therefore the only rentals available were all condos . This drove up the price of rent and attracted investors/speculators, which further drove up the price of properties regardless of the condition.
Due to covid-19, we're now seeing a mass exodus of both renters purchasers in primary residences in what was historically one of if not the best rental market in the country. Overnight investor appetite to purchase properties has disappeared as well as the potential returns that they could reap from these rentals month over month. The causation of this occurrence could be due to the fact individuals continually pushed up prices because in NYC there is nowhere else to build because it's an one is landlocked you can only build up. Building up is only being reserved for high rise luxury buildings. In a city where everyone is reliant on public transportation and their jobs all being close by, one can demand a steeper price for a lower quality of winning and this model has worked for decades up until today.
Now due to the cyclical nature of real estate development, the approval process is time consuming, so finding a suitable piece of land anywhere from seven to ten years. What we're seeing now is that from 2010 to 2020 there's been an extreme boom of new high rise luxury buildings being built, which has left half of the city unrenovated pops. The vast majority of these luxury new developments were being built as condos, which could also command a higher purchase price. Therefore boosting the profits for the developer.
Currently, the rental market has had a slowed inventory for sales, as well as rentals. The inventories have gone through the roof, and now more than ever we're starting to see a large shift of properties for sale go from not just the co-ops, which historically were making up 90% of the inventory of the city, but now we're starting to see uneven higher proportion of condos which are being put up for sale as well.
This can be driven in the large part because renters have been fleeing the city. If one were an investor purchasing these condos on the assumption that all of the debt would always be serviced through rent, this may now be in jeopardy.
That's a very rough baseline because the cost per square foot for a New York City apartment is roughly $1000 per square foot, and for a condo historically you could expect to pay $1500 to $2000 per square foot. We're now seeing anywhere from first around 40% a 60/40 split between co-ops and condos which historically would never occur typically it would be 90/10.
Basic economics shows us that increased supply with reduced demand drop prices. That's exactly the force that we're seeing here with the condo average price coming in roughly at 1150 per square foot and co-ops coming in still at the $1000 to $1100 per square foot range. However, the smaller unrenovated properties are priced below $1000, hitting into the eight and $900 per square foot range. Now if one were to trace this back, we would see that this is starting to come in around the 2010-2011 year based on historical price alone.
Investors were flocking to these condo properties ten years ago because they knew that they were the only ones which would allow rentals, and that drove the price to double over the past decade. Similarly, New York City real estate has doubled as a whole. What we're seeing today is essentially a reset back to that time over that exact pricing scenario.
If we look back in that the 2010 interest rates were roughly 5 and 1/8% for a 30 year fixed rate purchase. Today, one purchase maybe a half a point at 2 1/2% for a 30 year fixed. Ten years ago, the financing was 30% higher to obtain the same purchase price, so that leaves one with a good assumption to purchase real estate in NYC today,
Historically one needed to put 20% down because that's how New York is with co-ops. With condos there are fewer restrictions in that you can put down less than 20% and still be allowed to purchase. Therefore if your bank will let you put down 5%, by all means put down a 5% payment and make the purchase.
Today one would need to offer a steep discount at a 50% discount, meaning if your mortgage is $2,000 on a $400,000 apartment, and you rent it for $1000 a month you'll be losing $12,000 per year. For many of you, that may be unacceptable, but you should also keep in mind that these losses are all tax deductible. Tax write offs are one of the amazing benefits of real estate. Take into account that this apartment which you just purchased you only had to put for example 10% down. This means that if it costs a total out of pocket of $78,000 for all of the expenses, due to all of the losses.
While stocks have rebounded quite nicely, NYC real estate has been down about 30%. This means that when real estate in NYC recovers the $78,000 total cost of ownership can allow for one to obtain about $150,000 in asset appreciation. That seems like a pretty good return on investment. Do you really think that restaurants will never rebound? Do you really think that you'll never go back to work in an office again? Don't you think that someone won't want to grab an amazing apartment for rent for only $1000 a month while you take the loss month over month?
This window of opportunity might not come back in quite some time, so if you have the risk appetite definitely go purchase some condos in NYC.
We were featured on NYK Daily news for this blog post. Human Resource departments constantly struggle with change management, organizational effectiveness, and recruiting and retaining a talented and diverse workforce. HR professionals and managers need a new paradigm, one that looks at the entire organization as a living, breathing organism based on valuing individuals — more gestalt than machine. He says that there’s been too much emphasis placed on metrics for evaluating a workforce, which deserves a humanistic method, something he calls the SHREWD Approach (Support, Humanize, Rotate, Evaluate, Win, and Demonstrate).
Support All Personality Types with Real Action
Most employees at one point or another in their career have done a personality test to see where they “fit” in an organization. Frankly, you don’t need a test to know who the introverts and extroverts are. What you need is to be sensitive to them. There’s a lot of misunderstanding about introversion — it’s not about being shy. Introverts are enervated by extroverts in the same way that extroverts are energized by other extroverts. Many times, too much energy, conversation, or stimulation is physically painful for introverts. Respect that. Allow them to work at home three days a week. Don’t pair them with a team of extroverts for a project, and stop asking them to smile or why didn’t they show up for the last company happy hour.
Humanize Your Management Approach
There are lists that calculate how expensive employees are, for instance, how much it will cost the company if someone comes in late or takes too many sick days. But if you treat people like transactions, they are not going to care about the quality of their work, or even the company. So, humanize your management approach to apply relationship-based management while still obtaining results. You will get better results if you treat people kindly. I’m basically talking about servant leadership — a flat hierarchy, where we’re peers, although I’m the manager. Even when you have to let people go, do it with kindness and humanity, not just because that person might end up being your boss someday, but because we are all going through a rough time, and losing your job just compounds the stress and anxiety.
Rotate Managers and Employees
Many times, I’ve seen a situation where an employee’s not performing, but it has nothing to do with them — rather how the manager is managing them. You need to analyze the team and see how they work together. If you’re leading a team as a manager, it’s your job to build their self-esteem and protect them — it’s not about you. I’ve had people on my team that others wanted to fire because they talk too much. Again, analyze. If someone is talking too much, move them to a place where extroversion is appreciated, like sales. When the workplace serves the employees rather than the other way around, everyone benefits. You’re going to have a much more productive company where people can do their best work, instead of a fear-based environment where people contribute because they are afraid of being fired.
Evolve the Business Model
The economy pivots every two years, but companies like to keep the status quo. Large corporations may not go bankrupt, but they can stagnate. You need to evaluate your business model constantly and be ready to adapt. Educate your employees to bring up the best of them. Encourage them to read new books and learn new things, or work to improve weak areas, like soft skills. And get into the mindset that change is good. People fear change because it means uncertainty — leaping into the void without direction. But if Covid has taught us anything, it’s the importance of being able to adapt to survive. Look at Netflix as an example. It began as a DVD service in 1997, but its CEO, Reed Hastings, anticipated streaming video would change the way people would consume media. So, a few years later in 2001, he introduced customers to streaming video and revolutionized his company, which now produces original content from around the world.
Win Over Employees to Boost Corporate Profits
If you’re really concerned about your bottom line, you should be equally concerned about your employees’ happiness quotient. Oxford University did a study a few years ago showing that happy employees are 13% more productive than their grumpy counterparts. They work faster and harder, make more calls, convert more calls to sales, and although the study didn’t say this, they take that happiness home with them. Less road rage, fewer disagreements at home, and no one is kicking the dog. It’s just common sense. Treat your employees as people, not as transactions. Encourage them to grow professionally and pay for courses and conferences. Give them the opportunity to speak. Be understanding about family emergencies. Best of all, happiness is contagious.
Demonstrate Good Behavior
Returning to the idea of servant leadership, realize that managers must model good behavior. People are not ones and zeros or even introverts and extroverts. They are complex individuals, each with a history and story that cannot be summarized in a sentence or two, or reduced to a data point on a scatter graph. Unfortunately, many managers believe that remaining competitive and relevant depends on productivity, which depends on working at a rapid pace that does not allow for the expression of individualism or empathy. The SHREWD approach, which embraces “emotional intelligence,” proves this to be completely wrong. The best managers are those who lead by example with intellect, integrity, and imagination — and they most often produce the most effective teams.
We were featured on Influencive for this blog post
1.The Gig Economy Is Here to Stay
We’re going to see a continuation of consultants and fewer full-time employees. A trend I’ve been advocating for more than 10 years is an increase in remote workers. The workforce won’t be 100%, but I predict that people will only go to the office once or twice a week. We’ll see more migrations from high-cost centers to low-cost centers in cities like New York and San Francisco, where most of the real estate has dropped 30%.
2. Interest Rates Will Remain Low for the Next Decade
Technically speaking, inflation doesn’t exist in regards to some measurements. Due to the introduction of Amazon, many people are purchasing goods and services online, rather than in person. This allows inflation to go down on top of the global economy where many goods are produced outside of America. On top of that, millennials aren’t having children at the same rate as the Boomer generation. The overall impact will be similar to Japan in the time period from 1991–2001—the lost decade, where Japan had perpetual negative interest rates, which was partially because of population levels. We’re basically printing trillions of dollars right now, which is making the stock market go up, even though unemployment is so high. One can obtain a 2.5% loan for 30 years. It’s like getting money for free. The difficulty is getting approved. 3. In the Next Five Years, 50% of All Vehicles Will Be Electric or Hybrid
Elon Musk has opened up his patents to make the technology innovative. He wants to be acquired by larger companies, and they’re going to catch up to him pretty quickly. Oil and gas have had their heyday. They are on the way out, and electric is on the way up. One will still need oil to create electricity, but big oil and gas are moving sideways to downwards.
4. Machine Learning and Automation Will Increase Exponentially The future of the world is going to revolve around machine learning. Today’s user interface designers are going to become graphic designers. There’s a plugin called GPT-3 for Figma that’s going to be a game-changer. When I started Investment Science, my goal was to make money by just pushing a button. Individuals will be able to leverage existing toolsets like Weebly, and additionally some automation with tools like Zapier that don’t require one to know much in regards to coding. These automation tools are relatively inexpensive and will allow many non-technically oriented individuals to develop interesting products. Every crisis pushes the economy towards a trend rapidly. 5. Covid-19 Will Continue Into 2021
Based on the 1918 flu data, this pandemic is going to last two years from the inception of the disease (i.e., 2019), even though the current technology today is better, and the vaccine is here. Unfortunately, many individuals are still going to be nervous about taking the vaccine. Based on corporate budgets and individual migration patterns, it’s going to have a long lasting impact. The overall economic impact will last longer than two years, just like the financial crisis did in 2008. Interestingly enough, many individuals are stating that New York City may not come back, but how can it not? New York is a major economic hub. If one has the money or can obtain the financing, then New York City and San Francisco may have some nice opportunities in regards to real estate from a long-term investment perspective.
Before we begin this post, please read our disclaimer in regards to that Investment Science is able to provide financial education, but not financial advice to non-accredited investors.
Our findings are that NYC apartment prices are roughly down 30% for the past year. In regards to Co-ops, they make up about 80% of Manhattan real estate. It's important to note that Co-ops require 20% cash down, while condos only require 5%-10% cash down. Interestingly enough, 95% of Co-op purchases are restricted only to primary residence owner occupants plus additional financial restrictions set up on a case by case basis for each individual building and roughly half do not even all the owners to rent the property out.
In short, investors don't purchase co-ops. Conversely, investors tend to purchase condos, as condos do not have the same restrictions as co-ops.
Historically speaking, in 2019, co-ops went for about $1,300 per square foot and in 2020 they went for about $2,000 per square foot. As one can see, rent historically went through the roof.
Currently, rent in Manhattan is through the floor, and every incentive you could ever imagine is being thrown at any renter coming through the door with a little bit of cash in hand.
The investors who were depending on rent to cover the monthly debt service are now selling. Similarly, everybody who purchase property about a decade ago, made a substantial amount of capital. Those individuals are currently selling their studio condos via a 1031 exchange tax free, and moving out to the sub-burbs (similar to the 1950's).
Unfortunately, many individuals are speculating in the stock marketing trying to purchase NIO or TSLA (Note we don't hold any holdings in these securities), while scrolling through Netflix and waiting for this pandemic to end.
The coronavirus will last likely another year, and right now is similar to 9/11 in downtime Manhattan when nobody wanted to live there. A few years after 9/11, several properties skyrocketed 300%+. In the next 24 months, we do expect about a 234% return in Manhattan real estate.
Even better, if you have an opposing view please comment, and we can have an interesting discussion.
While Investment Science has no strategic ties to vendors, we can objectively tell you some interesting trends. If one wanted to view the trends in regards to which industries are rising, he or she could view the color grid on CB Insights to analyze whether or not the industry being sought is the most optimal industry to select. For instance, it looks as if anything to do with Software, Mobile & Telecom, Healthcare, and Internet is growing. Similarly, due to the correlation of the markets with the industries being funded, these grids can be used across hiring, investments, and prospecting.
Now we can talk about some ticker symbols. The ticker symbol VOX is up about 54%, which corresponds to the telecom. IGV is up 75%, which corresponds to software. XLV maps to healthcare and is up about 28%. We hope this helps all of our readers.
There are plugins coming out for tools such as GPT-3 for Figma, a prototyping wire-frame, where anybody can type in what type of screen he or she wants, and that screen will automatically create a user interface. The future of the world will largely revolve around machine learning, and this may change most UX designers to become graphic designers. It looks like GPT-3 for Figma will be coming out sometime next year, and as of now, it looks like the tool will be a commercial subscription. We posted a video, but this video is credit to Jordan Singer, and this tool is not yet available to the public, but it's interesting to imagine what the future holds of the economy, due to automation. Lastly, we do believe that this is the very definition of disruptive innovation.
Michael Kelly has been working within banking technology for over a decade, and his experience spans across algorithmic trading, project management, product management, alternative finance, hedge funds, private equity, and machine learning. This page is intended to educate others across interesting topics, inclusive of finance.