Sunday, March 27, 2011

The Business of Investing

Ok, I know this is a logistics blog but I also have a passion for business in general so I thought I would write very quickly about investing.  Warning:  I am a Jack Bogle, index investor who believes there is absolutely no way to beat the market in the long run.  I am reading "Don't Count on It!" by Jack Bogle and he summarizes the simplicity of investing in this way:

A return on a stock / equity investment is simply the addition of:

1) The economics (i.e., growth rate plus dividend yield) and...

2) Speculation / Emotion - This is essentially the change in the P/E ratio over or under the long term averages.

For P/E, he basically says if P/E is under 10 then it is clearly likely to increase and if P/E is around 20 it will likely decrease (of course as all good indexers remind you, you just never know when!).

Applying this very simply, here is what I think of what your or my expectation of stock market returns should be right now:

1) Growth of the entire market is about 2 - 4% (i.e., the GDP0
2) Dividend yield is (Using the vanguard total market ETF as proxy): 1.76%

This means you can plan on "enterprise" returns of 3.76% to 5.76%.  However, the P/E is 8.04 which means you are likely to pick up an additional 2% or so in "emotional or speculative" returns as the P/E reverts to the mean.  So, you should plan on about 5-10% returns on stocks with the middle ground being most likely.  That is a normal expectation.

Impact of High Diesel prices.. Get Ready

Owner operators will exit the business, the "big 3" will get bigger, everything will cost a lot more. Get ready.

Impact of high Diesel prices.

Sunday, March 13, 2011

Government to Buy EOBRs for Mexican Trucks

I saw this a few days ago when it was revealed but had not commented until now.  My first reaction was what a disgrace.  How can our tax dollars be used to fund Electronic On Board Recorders (EOBR) on Mexican trucks when US trucking companies are making the investment themselves?  Further, what is the point of this and how will it be managed?

I just read Brian Straight's article over at Fleet Owner titled Tax Dollars Wasted on Mexican Truck EOBRs and there was a bit of a different spin here.  Could this provision be a "poison pill" placed into the agreement by the US Government knowing it will cause huge outcry?  While that is possible, I do not give them that much credit.   I really believe someone in our Government thought this would help the cause by showing how we will be able to track these trucks.  The enforcement just seems massive and the costs outrageous.

In the end, I do not think we will see many of these trucks coming across the border as it is just too complicated.  But, time will tell and if the American trucking industry gets out of hand in terms of cost and low capacity, I suppose this will become our relief valve.

The Logistics Daily is Launched

Get a compilation of my twitter feeds (@logisticsexpert/logisticsindustry) in a newspaper form at the Logistics Daily.

Japanese Tragedy Brings Importance of Logistics to The Front

There has been a raging debate going on over at Linkedin about whether Logistics has lost its importance and luster in the corporation.  I think the devastating tragedy in Japan will put this to bed once and for all as it is clear logistics will drive the recovery in that Country.

For the GIS folks who believe logistics has been displaced with information flow, I would love to see you get water, food, fuel and recovery needs to people who need it with an iPad and some code.  What will solve Japan's crisis and help people in need are trucks, truck drivers, warehouseman and "boots on the ground" not computers.

This puts this debate to bed in my mind.  Computers are a tool for the people who will actually do the work recovering.

My heart and prayers are with the people of Japan AND with those courageous people who will risk their lives to get the food, fuel and medical supplies to those who desperately need it.

Saturday, March 5, 2011

Back to Square One - Mexican Carriers in the US

Well, we are back to square one... what was the point of that?  Mexican Carriers Will Be allowed in US

Very Interesting Article in NYT: Does Technology REDUCE The Need for Education?

This is really interesting and it may apply in the logistics' field.  Paul Krugman asks the question if technology reduces the need for an eduction ?  He also cites an article in today's NY Times about software which is making a lot of junior lawyers and paralegals' jobs obsolete (combing through documents during the discovery phase). This article is titled: Armies of Expensive Lawyers, Replaced by Cheaper Software.

So, the question this poses for all of us is as supply chain software gets ever so sophisticated will it reduce the need for much of the higher education currently being used in supply chain management (i.e., Masters in Supply Chain Management, Ops research, etc.).  This is also being debated right now over at Linkedin.  Logistics and supply chain will continue to be extremely important in the firm and the overall structure of a corporation, the question is will the people managing it be that important?