Teri Bernstein, MBA, CPA has been teaching full time in the Business Department of Santa Monica College since 1985. Prior to that, she worked in Internal Audit and Special Financial Projects for the 1984 Los Angeles Olympics, CBS, Inc., and Coopers & Lybrand. She attended the University of Michigan and Wayne State University.
"Spoofing" is a new twist on robocalls. The telemarketing call is routed so that it looks as though it originates from the town in which you grew up. So, instead of ignoring it, you might answer it, hoping that it is an old friend. Because robocalls are internet-based, and the calling is mechanized, the calls are cheap. Moreover, hundreds of calls can be placed at the same time. There is not really a disincentive for marketers with regard to these calls--if they get any leads resulting in sales at all. So you may be duped into answering.
I often call back the numbers that I have ignored...and get the classic message that the number I have dialed "has been disconnected or is no longer in service." As it turns out, this is a violation of FCC regulations, which require that a telemarketer:
The problem in this day and age is that these regulations are unlikely to be enforced. Nevertheless, one can file a complaint with the FCC.
Source: "Episode 789: Robocall Invasion," by Sally Helm and Kenny Malone, NPR: Planet Money, August 18, 2017.
The historically unprecedented rainfall and storm damage of Hurricane Harvey has had massive human and economic costs. Some of the impacts include:
One new response to this disaster--supplementing the FEMA, Red Cross, and other established non-profit aid--has been crowdfunding. Individuals have set up GoFundMe and other accounts to benefit specific disaster victims
Source: "How Crowdfunding is Changing Disaster Relief," by Sabri Ben-Achour and David Brancaccio, with input from Diane Swonk and Amy Scott, Marketplace American Public Media, August 31, 2017.
Management systems seem to have a life cycle. This is not surprising, since they are a product--especially if they utilize software or hardware. In any event, a person seeking a middle-management-track position would benefit from being aware of systems currently in vogue, and the ones they are replacing.
Here is a short list of systems with a brief description of each:
Software development is a good project to apply any management system to, as it:
Above: Ace Hardware sells Eclipse glasses. Photo by Doug Strickland/Chattanooga Times Free Press, via Associated Press and the linked source article
The positive side of the American spirit came alive during the eclipse. Entrepreneurs sold products to protect enthusiastic viewers. Printers were busy with clever and non-so clever eclipse memorabilia. New entities were formed to take advantage of the phenomenon. Some were sole proprietorship operations devoted only to this project. Others were established businesses. Many were non-profits. Scientists, both amateur and professional, rented, purchased, and/or developed telescopes, lenses, sensor boards, light meters and other equipment to document eclipse phenomena.
Intellectual property relating to the eclipse includes websites with copyrighted photos and videos, as well as information both prior to the eclipse and aggregating information after the eclipse. Many (like Wikipedia) ask for donations, which may or may not be tax-deductible, depending on the form of business organization the information provider has set up beforehand. Here are some sites to explore:
Here are some eclipse highlights in case you missed it, courtesy of Tech Insider:
By the way, huge traffic tie-ups DID materialize within a few hours after the eclipse, along the state and interstate highways leading away from the eclipse centerline. It seems that, while viewers arrived on various days at various times, when the event was over, most people wanted to leave at the same time. I took a detour to the only U.S. Post Office in Idaho Falls that had a special eclipse hand-cancellation stamp (I'd already bought my eclipse Forever Stamps). At the Post Office, there was a different kind of line-up--quite festive--to get souvenir mail hand-stamped FOR FREE.
Scientists and non-profit institutions will be working on eclipse data for many weeks and months to come. Many who were gathering data (scientific and entrepreneurial) have learned what they would do differently next time. Most of us who experienced the eclipse first hand are still recovering from the surreal, humbling and wondrous quality of the event. And, of course, we are making plans for April 2024, when the next major viewing opportunity occurs in the continental U.S.
Source: "Can't Eclipse the American Spirit," by Frank Bruni, New York Times, August 16, 2017.
Makanda, Illinois is a town of less that 600 people. But because it is located where the total eclipse will be visible for the longest period of time, it is a destination for many who want to view the total eclipse on August 21, 2017. Across the United States, many small towns are expecting crowds they almost never experience--which creates business opportunities for many. Hotel and motel rooms at all levels are fully booked. New hosts are offering Airbnb bookings for the first time. Restaurants and retail stores that usually close Sunday and/or Monday are opening for business. Every type of customizable trinket, T-shirt and mug has been manufactured and offered for sale.
Full disclosure: I am viewing the eclipse close to the centerline, near Rexburg, Idaho. Our group is doing astrophotography and some science experiments, but the rural family who is hosting the space for viewing has contributed to the Business of the Eclipse by customizing T-shirts and mugs. We booked middle-range motel rooms more than two years ago (@$134/ night) but as of today the only available room for miles (at the very edge of the totality area) is asking $750 for a room that usually rents for $49.
Nevertheless, the anticipated Carmageddon has not materialized, and the weather might not co-operate. Stay tuned for a full report locally, nationally and financially.
Source: "This tiny town is the best place to catch the solar eclipse," by Aidan Kelly, AOL News, June 21, 2017.
Amazon did not require vendors selling eye protection for viewing the partial solar eclipse to prove they were selling "certified" wares prior to posting on the retail site. But it turns out SOME of the glasses sold were fakes. In order to avoid lawsuits and the harm that may be caused by inadequate eye protection when viewing the eclipse, Amazon issued a broad warning and recall. This has been very confusing to consumers. The American Astronomical Society recommends that only glasses made by reputable vendors be used. Those glasses carry the international safety standard number “ISO 12312-2”....but of course anyone can print that on their product. Real eclipse glasses block 100,000 times more light than regular sunglasses. Looking at the sun directly can cause eye damage and blindness.
I have looked at an overhead light through some of these fake eclipse glasses, and was able to see the shape of the bulb. This means these glasses are definitely fake! Even welder's glasses aren't all good enough. Number 14 or 15 welder's glasses should be OK. When looking at the sun, it is important to stay safe.
Source: "Amazon recalls potentially hazardous solar eclipse glasses," by Nissan Akpan, PBS NewsHour, August 14, 2017.
Those of us who buy milk in the continental U.S. have the experience of checking dates on milk cartons, and knowing that fresh dairy products are stocked multiple times a day in many supermarkets. But dairy products (as well as 90% of all of its food products) have to be imported to Hawaii, which has become a favorite getaway spot for Silicon Valley entrepreneurs. And one tech billionaire, Pierre Omidyar of eBay, wants to make a difference. He wants to build and operate a 699-cow, sustainably-pastured, dairy farm in the Maha’ulepu Valley on Kauai. I imagine that this would be similar to the beautiful dairies on the peninsula at Point Reyes, California.
But local businesspeople are mostly opposed to the idea. The farm would be about a mile away from Poipu Beach on Kauai's south coast. And with each cow producing 90.8 pounds of manure per day, an impact on air quality and ground water are definitely possible. But the proposed dairy claims that there would be little or no impact, partly due to the planting of special grasses to "filter" the manure.
The president of the group Friends of Maha'ulepu claims that the dairy "would be a serious threat to Kauai’s biggest source of revenue, tourism, to the environment and to our quality of life." A judge has required Hawaii Dairy Farms to do an environmental assessment before proceeding with plans.
Meanwhile, some residents are driving around with bumper stickers that say "No Moo Poo in Maha’ulepu.” I wonder what effect that has on tourism...
Source: "EBay's founder has a new idea: Build a dairy in Hawaii," by Stephanie Strom, New York Times, August 13, 2017.
How did the characters played by Eddie Murphy (Billy Ray) and Dan Ackroyd (Lewis) get rich (at the expense of The Duke Brothers and others) in the movie Trading Places? (They are getting revenge for Lewis having been unfairly treated.) Dan Ackroyd reminisces about his understanding of the financial process in this clip:
As Ackroyd notes, this is a movie about commodities trading--and the commodity being traded is orange juice. In the commodities market, traders bet on what a commodity will sell for in the future--at the end of the growing season. In the film, The Duke Brothers are buying orange juice contracts at higher and higher prices, based on insider information from the USDA that the season will be terrible and there will be orange shortages. Ackroyd and Murphy are selling these orange juice contracts "short"--that means they sell contracts for oranges that they don't own the rights to...yet.
Elaine Schwartz, writing in Econ Life, explains the situation concisely: "The problem for the Duke Brothers is that their USDA report was a fake. Created by Eddie Murphy and Dan Aykroyd, the fake report contains bad news about the crop. Expecting orange shortages, the Dukes and traders who copy them propel prices skyward. At a high of $1.42, Murphy and Aykroyd start selling contracts. When the real report is released, prices plunge, and at 29 cents they buy."
This means that Murphy and Ackroyd can buy the real contracts at 29 cents, then turn around and immediately sell them for the price the Duke Brothers promised to pay, $1.42, making a profit of $1.13 per contract.
The Eddie Murphy rule, by the way, is in Section 786 of the Dodd-Frank Act. It makes trading on insider information in the commodities market illegal for the first time. Even though insider trading in stock transactions has been forbidden since 1934, it was not illegal to use insider information in the commodities market until 2010, when Dodd-Frank was signed into law.
Source: "Episode 471: The Eddie Murphy Rule," by Robert Smith and Roman Mars, NPR: Planet Money, originally aired ; updated August 2, 2017.
image from LinkedIn SlideShare, Matt Bentley
One of the axioms of capitalism (just like in Vegas) is that when there are winners, there are going to be losers. Even globalization--which appeared to be a welcome expansion to new markets, allowing for continued growth--has had some unforeseen consequences. It seemed like a good idea twenty years ago, when Scott Tong and his buddies were going to Georgetown. Here are Scott (in the center, peeking out from the second row) and his classmates:
image from the article linked below
Scott and his friends discussed how everyone thought that the dawn of globalization would mean big opportunities for all. From President George H. W. Bush : "A new world order can emerge. A new era. An era in which the nations of the world can prosper and live in harmony." And, from another sector, columnist Thomas L. Friedman (NYT 12/08/1996) theorized that "globalization was so powerful that no two countries with McDonald's would ever go to war."
But the manufacturing sector in the United States has suffered, and workers in those sectors have felt the most economic pain. Georgetown Professor Jennifer Tobin said, "By focusing on the winners from trade and ignoring the losers, I think we created the situation we’re in today."
Although the idea arose that globalization was not necessarily good--nor was it necessarily here to stay--no one was really prepared to predict where we will go from here.
Source: "What went wrong with globalization?" by Scott Tong, Marketplace: American Public Media, August 7, 2017.
"Giving back to the community" is sometimes a goal of successful individuals who have succeeded financially even though born into poverty. Stephon Marbury is an NBA star who longed for expensive Air Jordan shoes as a kid. He decided to create quality shoes at the lowest price possible once he hit the big-time.
However, it was not as easy as he thought it would be. Listen to the podcast and draw your own conclusions about Marbury's project.
Source: "Episode 785: The Starbury," by Kenny Malone, NPR: Planet Money, July 21, 2017.
PayPal's second-quarter earnings "beat the numbers": its revenues of $3.14 billion were higher than analysts predicted "Beating the numbers" is helpful in maintaining or increases the corporate stock price.
But PayPal used a non-GAAP way of recording the stock portion of employee compensation. According to the FASB rules regarding Generally Accepted Accounting Principles (GAAP), stock compensation is an employee expense. Expenses decrease net income. PayPal is required to report the lesser amount...but it opts to also report--and highlight--the earnings report that does not include the stock-based compensation expense.
Not all tech companies do this, which makes earnings results harder to compare. For example, from the NYT:
"Dave Wehner, Facebook’s chief financial officer, told investors on a May conference call that the company would report results that include share-based compensation because it’s a true cost of running the business.
Ruth Porat, chief financial officer of Alphabet, which is Google’s parent company, said the same thing on a conference call in January."
Source: "The Accounting Tack That Makes PayPal's Numbers Look So Good," by Gretchen Morgenson, New York Times, August 4, 2017.
Full disclosure: I am an electric-vehicle owner with solar roof panels living in sunnier-than-normal Southern California. So I am pretty much in the booster section for alternative energy sources. NEVERTHELESS, I recognize that driving an electric vehicle is not always a net "win" for the environment.
A major factor in energy expenditure is the cost to mine the raw materials, then manufacture each new car. Electric batteries have rare metal components. Another factor is the source of energy for the power plants that will be charging the electric car batteries. Is there a coal power plant? Local solar panels? Other renewable sources of energy?
The acronym "EEV"--"Elsewhere Emissions Vehicles”--is used by Kevin Book, managing director of ClearView Energy Partners, as a more accurate term than "Electric Vehicle" (EV). "Different states have different generation mixes,” said Book. “Different local sources of power create different impacts.” This is one of many factors to consider in making sustainable vehicle decisions.
Source: "Do electric vehicles reduce emissions when the electricity comes from coal?" by Jed Kim, Marketplace: American Public Media, August 4, 2017.
After a seven-year investigation, the European Commission (EC) has imposed an antitrust fine against Google (Alphabet) of 2.4 billion Euros (~$2.826 billion U.S.). The issue involved consumer searches for products to buy. The EC determined that Google had too much power over the information that was provided in those searches. In other words, Google directed consumers to advertisers and basically controlled which companies would be considered for purchases.
Whether Google's choices are directed by ad revenue or another reason, the EC determined that the search engine had too much power. In addition to the fine, the EC is requiring Google to change some of its business practices.
Source: "Episode 787: Google is Big: Is That Bad?" by Jacob Goldstein and Noel King, NPR Planet Money, August 4, 2017.
Logistics is a major factor in management and profit. Amazon, UPS and FedEx are a consumer-end supply chain giants. But all products need to find a way to get to market. Fresh food that needs to be ripened poses particular challenges. Bananas are one example.
Joe Palumbo, founder and manager at Top Banana, has first hand knowledge of how 20 million bananas per week are distributed in New York City, where local entrepreneurs remain a major player in this process. The steps include:
The history of the banana business includes ruthless competition, a continuing fight against diseases that effect banana plants, and diminishing profits. Nevertheless, it remains a versatile fruit with continuing demand that is far from the areas in which bananas can be grown. Logistics management will always be part of the U.S. banana business.
Source: "The Secret Life of the City Banana," by Annie Correal, New York Times, August 4, 2017.