journalism

Some personal news …

The following memo went out today at The Wall Street Journal from finance editor Charles Forelle.

I’m delighted to announce that Spencer Jakab is the new editor of Heard on the Street.
Spencer is a rock of the Journal’s financial commentary. He has been deputy editor of Heard since 2015, and he wrote the Ahead of the Tape column for years before that. His knowledge of companies, markets and financial instruments is encyclopedic. (By my Factiva count, Spencer did nearly 800 Tapes in about 45 months; good luck finding a topic in our universe he hasn’t touched.) He is an incisive financial thinker who embodies the Heard’s spirit of smart, provocative and timely analysis. He also writes killer ledes. He’s the ideal leader for our expansion of the Heard.
Before the Journal, Spencer worked at the Financial Times and here at Dow Jones Newswires, and was a stock analyst at Credit Suisse. He is the author of “Heads I Win, Tails I Win,” which is, naturally, a book about investing.
Spencer’s move means we are looking for a new Heard deputy. Please get in touch with him if you are interested. And please join me in warmly congratulating Spencer. I believe he’llbecelebratingatOlive Garden.
-Charles

Columns

GE Brings Bad Things to Light


PHOTO: YURIKO NAKAO/BLOOMBERG NEWS

If nothing else, General Electric Chief Executive Officer Larry Culp has a keen grasp of investor psychology. A little more than a week after he let slip at a conference that industrial free cash flow at the troubled conglomerate would be negative this year, he attached specific, ugly numbers to that expectation in a Thursday morning investor update. GE shares rose sharply anyway as the glimmers of hope and specific action Mr. Culp outlined lifted spirits.

(Read the rest of this column in the WSJ).

Uncategorized

I Am a Bad Gym Member

gymSo there were a few new faces at my gym this week. I seem to recall seeing the same thing about a year ago and about a year before that. If you go frequently enough, and particularly if you normally work out at the same time of day, you notice these things.

Although no Charles Atlas, I’m a creature of habit and as regular as rain when it comes to exercise. Other than when I’m traveling, I can count the number of days a year that I fail to show up on the fingers of one hand.

So why is such a loyal customer a bad gym member? Failure to wipe down the equipment? Loud grunting? Hogging the Stairmaster? No, no, and no – it’s precisely because I show up so frequently. I didn’t think much about this before my old gym started facing financial difficulties and finally went out of business. It had been there for 15 years with its main competitors being a fancier but much more expensive gym in town and a similarly-priced but less personal chain in a neighboring town.

During the last year that they were in business a handful of new competitors opened up nearby – a fancy spinning studio, an expensive interval training chain, a cult-like group workout/prison-style gym franchise, and finally my current gym, which is basically a newer, shinier copy of my old one.

Just based on what I could observe, my gym seemed at first to be plodding along despite all the new entrants. My view was limited, though, to two types of members:

  1. My fellow cheapskates who only paid for the “floor” and not the more lucrative group classes or personal training sessions; and
  2. Members who exercise almost every day.

People like me, it turns out, aren’t doing the owner any favors by showing up religiously. Gyms, you see, aren’t very cheap to run. They open early, close late, take up a lot of space and pay high bills for heat, electricity, hot water and janitorial services. Their machines are expensive (several thousand dollars for a new stair climber or elliptical) and break frequently. Even after they raised prices a couple of times, I was paying, by my rough calculation, about $1.03 per hour spent at the gym. How many people like me would a gym have to pack in per hour to cover its overhead? Probably a lot more than it can comfortably hold.

Therein lies the answer to how gyms can stay in business with such daunting economic factors working against them: All those people I’ve seen the last couple of weeks but probably won’t be seeing in a month or two. Author Dan Davies explains in “The Secret Life of Money” that 75% of gym memberships are taken out in January as people attempt to fulfill their New Year’s resolutions but that the vast majority only actually go a handful of times.

In addition to these nearly perfect customers, the other segment of my old gym’s clientele that kept them afloat were those who paid extra for premium services like zumba classes, personal training, or $5.00 protein shakes with an 80% profit margin. It seems, though, that many of the members willing to pay a premium were lured away by the new offerings in town. By last summer, a month or two before my gym said it would close, it offered a month of free spinning sessions for “floor members,” presumably in the hope that we’d step up our subscription. My wife and I went a few times and were shocked to see how few of the bikes were occupied. One time it was just the two of us.

So there you have it – I’m a bad gym member. I shudder to think how crowded the facility might be or how much they would have to charge if everyone were like me. Even if they leave dumbbells lying around or fail to wipe off the elliptical, I won’t complain about the new January people again.

(This post also appeared on LinkedIn and on Cacophonyandcheese.com)

The book · Uncategorized

Heads I Win Voted “Best Read” for Advisers

aapic

I’m honored that my book was just listed as one of the best summer reads for advisers by Financial Planning. It’s on the list with some great books such as Michael Lewis’s The Undoing Project,” Daniel Kahneman’s “Thinking Fast and Slow,” and a book called “Great Expectations” by some British guy named Charles Dickens whose name rings a bell.

“There’s great stuff in here to share with clients, particularly when markets head south. Good behavior is handsomely rewarded for investors with long-term time horizons. I quote from it often.” – reviewer Stephanie Genkin.

This was a great one-year “bookiversary” gift. I’ll be speaking this fall at the FPA’s Financial Fitness Workshop in New York and at the annual meeting of the American Association of Individual Investors in Orlando for anyone who wants to see and hear me discuss the book’s lessons in person.