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March Madness Brings Productivity Sadness

You feel that scratchy throat coming on? Taking a long lunch to discuss business? Has there been a death in the family? Don’t feel bad about calling in sick or being unproductive during March Madness, the multi-week annual NCAA college basketball tournament, because you are not alone. According to Challenger, Gray and Christmas, 3.0 million people plan to watch up to three hours of basketball games during work hours, costing companies and the economy at least $134 million in lost wages during the first two days of the tournament. What’s more, March Madness tends to attract other unproductive habits in the form of illegal gambling to the tune of $2.5 billion each year (source: FBI).

While I don’t have the time to spend hours filling out a 64-team bracket, I can’t do all the finger-pointing – I too participate in my fair share of unproductive lollygagging. I’ve been known to throw away hours of my time scrolling through my Twitter news feed (twitter.com/WadeSlome) or paging through my Flipboard timelines. Heck, if you really want to talk about unproductive, the President of the United States even filled out a bracket (click here) – so far, so good, but his Wisconsin pick didn’t help his cause.

If you need more proof of our country’s collective lack of productivity, then consider the following:

Fantasy Fun: In 2008, there were 35 million people (mostly men) participating in fantasy football at a cost of $6.5 billion over a 17-week NFL season (source: Challenger, Gray and Christmas).
The Juice: The 1995 O.J. Simpson verdict cost the country $480 million in lost output and the New York Stock Exchange trading volume plummeted by 41% during the half hour surrounding the reading of the verdict (source: Alan Dershowitz’s America on Trial).
Shop until You Drop: “Cyber Monday” is one of the largest online shopping days of the year, which occurs shortly after Thanksgiving’s “Black Friday”. Workers wasted $488 million of their time in 2007, and that number has undoubtedly increased significantly since then (source: Challenger, Gray and Christmas).
Summer Sport: In 2012, Captivate Network found out that workers watching the Summer Olympics at the office resulted in a productivity loss of $650 million.
Hangover Hammer: Super Bowl Sunday is one of the largest alcohol consumption evenings of the year. The U.S. Center for Disease Control estimates that hangovers cost our nation about $160.5 billion annually.
Social Media Profit Black Hole: Are you addicted to Facebook (FB), Twitter, LinkedIn (LNKD) or other social media network of choice? A report by LearnStuff shows that Americans spend as much time collectively on social media in one day as they do watching online movies in a year. The cost? A whopping 4.4% of GDP or $650 billion.

Investor Madness

One of the biggest black hole productivity drains for investors is the endless deluge of foreboding news items – each story potentially becoming the next domino to collapse the global economy. The most productive use of time is an offensive strategy focused on identifying the best investment opportunities that meet lasting financial objectives. Reading prospectuses, annual reports, and quarterly financial results may not be as sexy as scanning the latest Twitter-worthy headline, but detailed research and questioning goes a long way towards producing superior long-term returns.

On the other hand, news-driven fears that cause investment paralysis can cause irreparable damage. A counter greed-driven performance chasing strategy will lead to tears as well. It’s OK to read the newspaper in order to be informed about long term trends and economic shifts, but as Mark Twain says, “If you don’t read the newspaper, you are uninformed. If you do read the newspaper, you are misinformed.”

While March Madness may not be the most productive time of the year, when your sore throat clears or you get back from that late lunch, it behooves you to become more productive with your investment strategies. Picking the wrong investment players on your portfolio team may turn March Madness into investor sadness.

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper.

www.Sidoxia.com

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in certain exchange traded funds (ETFs), but at the time of publishing SCM had no direct position in FB, LNKD, Twitter, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.

March 24, 2013 at 10:39 pm Leave a comment

Another Year, Another Decade

Article from Sidoxia Monthly Newsletter (Subscribe on right-side of page)

As we approach the 2010 finish line, investors are reevaluating their nest eggs and investment positioning for the New Year and the new decade. After experiencing two “100 year floods” over the last decade in the form of the technology and credit bubbles bursting, a wave of conservatism has swung everyone over to one side of the boat, in the form of cash, CDs, Treasury Bonds, and other fixed income instruments.

These conservative tools should absolutely be a part of everybody’s portfolio (especially for those in or near retirement), but an overly conservative portfolio can end up drowning more people than saving them. Bonds run the risk of collapsing in value if interest rates spike or potential inflation rears its ugly head. Under both scenarios, purchasing power and retirement lifestyle can be significantly compromised. Diversification and duration shortening (less sensitivity to interest rate changes) strategies should be explored to better manage these risks.

Ignore the Good, Highlight the Bad

With the financial crisis so close in our rearview mirror, putting those fiscal fears to rest can be difficult, even if the equity markets have rebounded between +80% (S&P 500) and +100% (NASDAQ) over the last 18 months. These fresh worries have diminished the attention placed on some of the positive undercurrents occurring in the economy:

· GDP Growth: You wouldn’t know it, but we have experienced five consecutive quarters of GDP (Gross Domestic Product) growth with a recently upwardly revised Q3-2010 growth figure to +2.5% (from previous +2.0% estimate).

· Job Growth: Although the unemployment rate has stubbornly remained in the 9.6% range, the country has created more than 1million jobs over the last year, thanks to ten consecutive months of private job creation. We’ll find out more about hiring trends this Friday.

· Record Profits: S&P 500 profits are on track to exceed the $88 peak profit earned by the index in 2006 (Thomson). Corporations may not be hiring in droves, but the cash is piling up for increased investment and pent-up hiring. Unprofitable companies generally do not hire.

· Changing of the Guard: Regardless of political leanings, with Presidential re-elections only two years away and Republicans gaining control of the House, some common ground between the Right and the Left could be found. Specifically, gridlock is the default, but there is genuine potential for compromise on taxes, fiscal restraint, tax relief, and investment incentives with the aim of sparking job creation.

· Holiday Cheer: Holiday sales got off to a good start judging by “Black Friday” (the day after Thanksgiving) and “Cyber Monday” – the day after Thanksgiving weekend. Sales on Cyber Monday rose +19.4% versus last year, according to Coremetrics. Traffic to retail stores and websites over Black Friday weekend increased by +9%, reportedthe National Retail Federation.

Keeping a lid on the enthusiasm are the following:

· Un-Luck of the Irish: With the recently announced $112 billion bailout of Ireland, focus has returned to the other side of the pond. Too much debt at Irish banks and excessive spending by the government has forced a large bailout, which has created contagion worries across some of the weaker Eurozone countries.

· Korean Skirmish: Apparently sinking a South Korean warship earlier this year was not enough belligerent activity for North Korea in a year, so they decided to bomb and kill innocent civilians recently. Will China help deflate the tension, or will our military just get stretched thinner in support of our southern ally?

· QE2/Inflation: Yesterday the fear was deflation, today the fear is inflation, but don’t hold your breath, a new “flation” phobia will likely be reintroduced tomorrow. Although the U.S. dollar has bounced of late on European concerns, longer term investors worry about the debasement of the currency because of funny money printing.

· China Taking a Brake? Inflation is on the upswing (+4.4% in October) and concerns over Chinese government officials pressing the brakes on speculative real estate growth (reserve rate increased by +0.5%) may hamper overall expansion.

· Insider Trading: Consensus thinking has it that Wall Street is rigged. The SEC is hoping to rebuild credibility after receiving a black eye for its poor handling of the Bernie Madoff Ponzi scheme scandal. The FBI raided three hedge funds, which may be the beginning of a widespread investigation.

As you can see, some items fall on both sides of the positive/negative ledger. Although many of the green shoots of 2009 have sprouted, critics complain the recovery process has progresses too slowly. Regardless of the worries, we have had 11 recessions and recoveries since World War II, and the average expansion has lasted five years. While we approach the next decade, do your portfolio a favor and focus on optimizing a proper diversified portfolio taking advantage of current multi-year opportunities, rather than succumbing to the endless fountain of daily pessimism.

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper.

www.Sidoxia.com

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds, but at the time of publishing SCM had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

December 1, 2010 at 12:37 am Leave a comment