Gaining Attitude, Ready to Cruise

As we end the year it seems that many are anticipating great change in the future. I hear optimistic notes in voices about next year and beyond.

I just finished a deal for replacing a pickup truck fleet for a client. They let the current trucks run until the wheels were falling off as they were unclear if they even had a business future.

As I sit here typing, I await a phone call from the owner to let me know he is ready to sign the credit app , the first money he has borrowed since we took him through chapter 11 six years ago. He is out playing golf to get some in before the deep freeze rolls in next week.

Another group is building apartments in Georgia (the US one) and just decided to double the number of units.

My dental equipment startup which sells a lot to the VA is doing very well , as there is suddenly a massive desire to protect patients from infection , which our product does.

I once had an economics professor, very near his retirement explain to me that economics runs on numbers but economies run on optimism.

His face is in my mind this New Year’s Eve.

I wonder how far a President can go with infectious optimism? I expect farther than most realize.

Sometimes improving things is not just policy, it requires attitude. Attitude may be the most important thing in running large organizations.

TKC1101

About TKC1101

Curmudgeon (Reserve Status), Corporate Refugee, Proud Grandfather, Small Business Advisor and Salvage, Heinlein American
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23 Responses to Gaining Attitude, Ready to Cruise

  1. EThompsonEThompson says:

    Very timely post as one of our great American economists, Thomas Sowell, announces his retirement at age 86. I’m feeling a tad bereft at this news but my favorite historian Paul Johnson might agree with you here in his essay in Forbes “When Excess Is A Virtue.”

    Worth reading.

    http://www.forbes.com/sites/currentevents/2016/03/23/when-excess-is-a-virtue/

  2. BrentB67BrentB67 says:

    I am hearing some similar optimism, but when challenged on the execution the enthusiasm moderates.

    There is definitely optimism regarding business, but what isn’t clear is where the firepower comes for buying/investment.

    All debt levels as measured by the federal reserve are higher than 2008 and the Fed is in a tightening cycle. This is not historically expansionary backdrop.

    I’ve heard responses ranging from tax reform allowing corporations to repatriate offshore capital to fed buying directly from Treasury 50-100 year bonds with nominal yields. The former may be of assistance the latter – then we are a banana republic.

    We never cured the ills of the last recession; we exacerbated them.

    I like the optimism, but am skeptical on the execution.

  3. TKC1101TKC1101 says:

    Brent, there is a level of significant investment that is off the radar. It is investors putting money into their own businesses, privately held. I know no measures of it, but these folks have parked their money in the market when the small business sector went to hell.

    Now, if they see demand coming back, it makes sense to take $500K out of the market and buy a piece of equipment to return 25% and more annually on the investment.

    The amount of deferred investment is staggering and has built up over ten years. Watch for activity in equipment makers and commercial starts for buildings.

    • BrentB67BrentB67 says:

      TKC1101, I don’t have a way to measure or get a good feel for that.

      I think if we are to have an economic expansion the only way we make another leg is primarily (solely?) through equity investment/capital as you suggest.

      Very good words.

  4. DevereauxDevereaux says:

    The essence of a market, the essence of buying/selling is attitudinal. Yes there is some math involved, but ultimately one chooses to buy or sell based upon one’s thought about the value present – to both sides. Those are attitude issues. One reason a car salesman will sell the exact same car to two different people for two different prices.

    So I agree with you, TKC. Attitude is very important. Indeed, one way to gauge the market is by what you feel returning from your friends/co-workers rather than the numbers we get from the Fed. ?Does anyone honestly believe the unemployment percentage is 5.5%.

    • EThompsonEThompson says:

      Agree with this:

      “One reason a car salesman will sell the exact same car to two different people for two different prices.”

      With that said, it does depends upon the car. If the car is in high demand (particularly if it qualifies for the lux category), you can sell that car to anybody at the same high price.

      MY one splurge in life is my BMW and I have tried to buy in four different parts of the state; there is absolutely no differential in price because that customer base/demographic will pay what it has to to get the product they want.

      Another small example: I’ll pay $500 dollars for a pair of good shoes and even more for a good handbag but I buy my t-shirts and shorts at Old Navy. I’ll pay $1,000 for a pair of tickets to the local Philharmonic but wouldn’t dream of spending $200k in my favorite restaurant for dinner on New Year’s Eve.

      How about kids (some with no jobs) who insist on spending $600k on an i-Phone 7 but eat dinner at McDonalds?

      This post brings up the interesting topic of how consumers choose to spend money. I think it is a wildly varying set of demographics depending upon generation and gender and oddly enough, financial considerations are becoming less and less important. (That could become an interesting post in itself.)

      • BrentB67BrentB67 says:

        Another small example: I’ll pay $500 dollars for a pair of good shoes and even more for a good handbag but I buy my t-shirts and shorts at Old Navy. I’ll pay $1,000 for a pair of tickets to the local Philharmonic but wouldn’t dream of spending $200k in my favorite restaurant for dinner on New Year’s Eve.

        I love you E, but if anyone is considering spending $200k on dinner they deserve to be committed.

      • DevereauxDevereaux says:

        Money (how much you have) has always been a factor in any economic transaction. You would not be buying those $500 shoes if you were a single mom working at Denny’s to try to cover your family. The average American doesn’t drive a BMW.

        So “consumers” are not one lump sum. They vary in all manner of things, from means to likes to disposition. That’s what makes the market so interesting – so many variable concepts of “value”.

        When I was young, we built hot rods. We had large bore American iron which we could add, modify, etc. to make serous horsepower. Today kids don’t seem to have the same idea about cars. And those that do go about it differenctly. So I cruise down the highway and get passed by a kid in a Jap car with a can, turning R’s like there is no tomorrow. Makes me smile. But I would never consider doing that.

        We often speak of “globalization” but truth be told, things tend to be local. Yes, McDonalds is about the same the world over (to the chagrin of many foreigners) but we are still different cultures, etc. Indeed, I would submit that the Floridians have different views on numerous issues than the Minnesotans. You walk a lot about Minneapolis because it’s cold as snot and they have all these transfer corridors between buildings. So you can walk about much of downtown Minneapolis without ever going outside. Can’t imagine something like that in Miami. Or Birmingham. Or Charlotte. Or Houston.

        So while we can say there are cultural aspects of “trading” (which is all buying/selling is), in the end, it is the attitude of the persons involved in the transaction that count. Your BMW was the same expensive price all over Florida. But I bet you could have gotten it a lot cheaper up here in Chicago, then driven it home. You just didn’t want to go to that trouble – over price. That’s a value decision. First car we bought when we first got married, I flew to Sacramento and bought a used Highway Patrol cruiser on auction for $800, then drove it home to Chicago. No sales are the same, even if the prices are.

        • EThompsonEThompson says:

          “So ‘consumers’ are not one lump sum. They vary in all manner of things, from means to likes to disposition. That’s what makes the market so interesting – so many variable concepts of ‘value’.”

          Completely agree as I commented:

          “This post brings up the interesting topic of how consumers choose to spend money. I think it is a wildly varying set of demographics depending upon generation and gender and oddly enough, financial considerations are becoming less and less important.”

          * (That could become an interesting post in itself.)

  5. Mike LaRocheMike LaRoche says:

    Looks like it’s morning in America, again!

  6. TKC1101TKC1101 says:

    I paid $200K for dinner once, but it was a whole ballroom of customers and not my money. I think half was the bar bill. The vodka ice fountain was pricey.

  7. DevereauxDevereaux says:

    Heh. $200k dinners.

    One of the guys who helps us plan and execute our Marine reunions was once in charge of doing a lot of “events” and ran serious budgets to that end. We are lucky to have him as he gets us great hotel prices and sees to it the contract doesn’t leave us with risk. I am the treasurer and have to manage the cash flow. But we don’t get into the $100k regions in expenses. I still have to be on the lookout for frivolous expenses. People get crazy ideas when it’s not their money.

    • DevereauxDevereaux says:

      Actually, it turns out to be almost everyone. When it isn’t your money, it’s harder to keep value perspective. What seems to creep in is the “kool” factor, not the “value” factor. So, eg. one of the things I have done is introduce side trips as options which you pay for – if you want to go. Thus it isn’t in the basic registration fee. We advertise we need so many to make the numbers work and may cancel an event if we don’t get enough people.

      Congress seems often to operate on similar principles. This expenditure is “necessary” – ?but for whom and at what cost doesn’t often come to the fore.

      Gun control has similar mystic properties. The law be damned, less guns is “better”. It’s obvious, ?right. Yet any serious view of gun control and murder, whether by region, county, country, ALWAYS fails to make the case. There just is no correlation. Yet those liberals that are against guns often get a totally different attitude when the violence affects them. Skin in the game is essential to good market behavior.

  8. EThompsonEThompson says:

    “People get crazy ideas when it’s not their money.”

    I believe you’re referring to Congress, no?

  9. Mike LaRocheMike LaRoche says:

    He could be referring to academia, too.

  10. EThompsonEThompson says:

    Like.

  11. EThompsonEThompson says:

    I will add to this post that expensive dinners are fine if the individual or a company is paying for it because they’re supporting private industry. As a stockholder, I am leery of excess expense that may affect my dividends, but I take full responsibility for my decisions to invest in said company. I do the homework.

    The infamous heiress Barbara Hutton blew a $30 million dollar inheritance (worth probably 2 billion by today’s standards) and I thought that was fine. She contributed a lot to WWII efforts and Lord knows how many caterers, jewelers, dressmakers, etc. she supported. She certainly injected a significant cash flow into the economic system at no taxpayer’s expense. This is how it should be.

    What is highly unethical is that people who don’t make the donuts (Congress) feel it is their right to recklessly distribute OTHER PEOPLE’S money to support programs that we not only disagree with but that rob us of personal choice.

  12. EThompsonEThompson says:

    “Skin in the game is essential to good market behavior.”

    Best observation in this early New Year; now how do we successfully indoctrinate this mode of thinking?

    Answer: Results. Go have it Mr. President-elect. I’ll support you every step of the way; you have in 6 short weeks affected my net worth in a significant way.

    Love you.

  13. AdministratorAdministrator says:

    Watch gross receipts at the big box offices supply stores.

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