Category: Uncategorized

Are we in a fed bubble?

Some people say no!

But if you just look at the numbers, say the NASDAQ, its up 50% since the end of last year. If you recall, the fed started printing money in 2019. The indexes are up *alot* even though unemployment is high. Does Wall Street really need to do any math here? After all, financial analysis is fairly useless. Or is it?

Lot’s of people are making money. But with any bubble, its a game of musical chairs. The loser loses. So financial analysis is needed…make money where you can but make sure you get a chair.

Fed bubble?

It was hugely popular in 90’s and 00’s strategy circles to talk about disintermediation, focus on core, do what you do well and what-not.

Well, all of that was only partially true and people & consultants who pushed that as a cure were stunningly wrong as usual.

It’s always been the case that economies of scale are important to managing costs. For a long time, companies vertically integrated when appropriate because they felt they could lower their costs or improve their products by controlling their dependencies. The strategy consultants came in and said, no matter what a big or small company can do, if you do not focus on the core you are wasting money and management attention.

Strangely enough, consultants felt that this concept applied at any scale. Of course, small companies with limited means need to rely on others. But even small or large companies can vertically integrate. The criteria for “what is core” and “outsource everything” was fairly helter-skelter. At times, the outsourcing and disintermediation process was linked to the customer experience at other times money at other times, it was based on what you thought your business was (which was sometimes hard to define or constantly changing).

Amazon will be, shortly, a larger package delivery operation than UPS or FedEx. Amazon vertically integrated. Their core is not package delivery, but they are building one of the largest consumer delivery capabilities in the US. They are doing this to save money and enhance the customer experience with 1-day or same-day delivery.

Disintermediation? With so much capital floating around, companies can invest and do it themselves. There are limits to this approach of course and in knowledge-based areas it may be better to rely on others. But even in the knowledge-based area that’s also less true as, for example, FANG companies buy others with innovative technology versus “consuming” it as a customer. FANG is also “vertically integrating.” While google fiber was not a huge success, it is more evidence that even in knowledge-based companies, vertically integration is alive and well.

In general, do we think disintermediation really happened or that there is more disintermediation than before?

Many people believe that the government is not working. The storyline is that “we the people” have become polarized and the government no longer works. The left, right, ultra-left and ultra-right are all attacking each other, the middle, the government and everything else.

Strangely enough, our government is working.

The government is a reflection of the people–that’s a big point about our constitution. When our people are divided and the consensus is far away, the government should not be able to make wild changes. It is after all about “we the people” and not “this group of people over here.”

So if our people are divided, the government should not be rapidly changing until a consensus is reached. A state of consensus almost by definition means that we are less polarized. Once a consensus is reached, the government should be able to move quickly again. Typically, national emergencies or other really “large” events are needed to unify a group and today’s America is no different.

I do not disagree that certain things the far-right/far-left believe in are hypocritical and often oblivious of the real-world and how it works. The ideology of the tribe often seems to be the reality when in fact, ideological positions are, literally, comically wrong on the facts or non-workable in the real world.

Today, it seems the far-right is more outlandish than the far-left but it has been flipped in the past. There have been worse times in the United States and indeed, it takes decades to heal, if ever, from some civil conflicts. Both sides have significant issues. Social media makes far-* positions seem mainstream when they are most likely not. It is also most likely true that big money is influencing the current political environment even more than usual-although that is debatable. Think about the Koch brothers and their effect on man-made, global climate change policy or the Sacklers on drug trafficking. But also then think about Carnegie or Vanderbilt.

Politicians hack on the government with their point of view (aka ideology) about how the world should work. There is no law against a person being a hypocrite, boorish, ignorant or downright despicable. Politicians are a reflection of us.

Only “we the people” can change how well the government is working and when the time right, we will.

Yesterday, my family went on a fishing trip.

We keep a twenty-one foot, center console fishing boat over on the Eastern Shore just off the Chester River. The Chester feeds the Chesapeake Bay. The mouth of the Chester is about 1 mile north of the Bay Bridge.

There were four of us, my wife and I and our two sons. I bought sandwiches and some chips at the nearby Safeway and we had each had our own water jugs. We brought 10 fishing poles. Four poles are heavy duty and are designed to catch larger fish deeper in the bay (around forty to fifty feet in the main channel). We had our planar boards with us to spread out the lines but we used them only once.

This was October–the stripers had just started running. The stripers (aka Rockfish) become larger by November, but we were out early to see what we could catch. Most of the time we did the following:

• Jet out to the middle of the channel.
• Look for bird flocks on the water.
• Jet the boat to the seagull flock, along with several other fishing boats.
• Fish with individual poles using a variety of lures. My youngest son is an expert fisherman so he knew which lures to use for each situation.
• Try not to hit the other boats.
• Catch fish.
• Release those that were too small.
• Catch seagulls, by accident.
• Untangle the seagulls, unharmed.
• When the seagulls picked up and moved, following the fish, jet to the new spot.
• So we, along with alot of other fisherman, move from flock to flock, jetting around in the water, trying to catch legal sized fish.

That’s it! We did that for half the day.

Our “charter” started late because I was late from a Saturday meeting. We left around 1:30pm on the boat and came back right after sunset, around 6pm. As we returned to the Chester after sunset, we were not paying close attention to driving and almost hit a dock, but that’s another matter that my youngest son can explain one day to his kids when discussing boat safety.

It was wonderful weather, not too cold. Skies were overcast which kept it cooler–good for fishing of course. We had forgotten to fill the oil reservoir so the oil engine light kept coming on. We had plenty of oil, the reservoir was just low that’s all.

After the trip, we came back and had some delicious crab cakes at the house with my wife’s mom. The crabcakes were from the Bay Shore Steam Pot in Centerville. I think they are the best crab cakes on the Eastern Shore and the shop is very close to where we keep our boats.

It was our older son’s eighteenth birthday. He had wanted to go fishing. The night before, we went to a jazz concert with the Anderson twins (sax, clarinet and flute) and Alex Wintz (guitar), known as the Peter and Will Anderson Trio, in Baltimore at the fabulously cool An die Musik. Fabulous concert. All of the chairs were oversized and full of padding; relics from a regal hotel no doubt. Front row seats. The jazz seemed to infuse the next day’s boating trip.

It seemed to me that fishing was about getting things done and working together, like jazz, versus pop music or old style rock and roll both of which have a different type of energy.

Overall, we caught around forty fish but only a few were keepers. Stripers need to be twenty inches to keep, and our largest was seventeen. No matter.

While you can still catch a fish on a simple fishing pole off the dock, the larger fish need to be found. You need the right gear but it’s not excessive. You need to know some techniques to catch alot of fish to find the few keepers. You need to work as a team since steering, fishing and keeping your eyes open for the bird flock is hard for just a single person to do. My wife and I did less fishing than the kids but we helped as much as we could having been relegated to deck hands. My wife took alot of pictures and I sneaked in a few. We were fortunate to grab some pictures below the Bay Bridge with the bridge framing our fishing activities.

As we headed back to the dock for the night, I thought this was the nicest family weekend in a long time. We all worked well together on a small boat and got things done. Everything seemed to come together and it felt good. My youngest son captained the boat and it was my older son’s birthday. In a crazy, fast world, we spent a little slice of time trying to catch a few fish, together. Perhaps the fish were really not the point.

That’s why I like fishing.

 

 

I use google alerts to provide me a sense of flow around articles. One of the filters is around bigdata and healthcare. The flow around this topic has increased. I see many stories, $100m investment here, $20m investment there, and so on. That’s alot of dollars! Alot of it is government backed of course and put on hyperdrive with a recent McKinsey report on bigdata and potential healthcare savings.

Breathlessly, drawing on my own bigdata and scientific background, I then ask, “well when should see the effects of these bigdata exercises?” The answer is not so clear. Just as I explained in my last post, there has not been a dramatic lack of analytics applied to healthcare. However, I do think to do more analytics because clearly there are many ideas and insights to draw on.

But it will still take a few years before insight turns into action. And it will take longer for any significant savings and benefits to be realized. Why?

Unless we solve the payment and incentives issues (also blogged on before) what’s the incentive for large scale change?

Bryan Lawrence in today’s Washington Post’s opinion article “The fine-print warning on Medicare” put it well.

• No real productivity growth in many areas of healthcare
• Benefits of reimbursement will never be given up to the government (every year we see this with Medicare payments, every year Congress avoids implementing payment changes, literally). This is the age-old question of making investments, “who gets to cash the check?”
• Lower prices usually leads to providers increasing volumes
• Congress will keep changing the laws anyway, you’ll never catch up.

You could peg this as cynical thinking, but its this type of envelope thinking that calls out issues that are hard to ignore and overcome quickly.

So while bigdata could give us great insights, implementing and acting on those insights (the change management problem) is larger and more complex. Its like the Artificial Intelligence (AI) claims back in the 80’s and 90’s that said we can really use analytics to get better answers. After two decades, the crickets were chirping. The value realization is better now, and it is clear, at least to me,  that more people performing analytics can make a difference. But the real policy world is much more difficult to navigate.

There are no good answers to accelerate value capture from bigdata. Although everything from nationalization to forced integrated capitated models (like Kaiser) may be the only way to structurally change the system. It’s clear that competitive forces have been inhibited in the US and that there are externalities driving the dynamics of the healthcare system.

And the real change that’s needed is in you and I. We need to get healthier. And for that, we need increase both our personal commitment to better health as well instill changes in our government policies  to change arcane food and commerce laws that lead to bad diets.