Tag Archives: Technology

Baking, Sourdough and Martha Stewart – Is There Room Today for Investing in Stocks and Bonds?

Cara used to call me “Martha Stewart”.  I supposed it was partly her age and being embarrassed at having a mom-dad at home.  I had single parented for a decade by this time and I didn’t want the girls to be somehow disadvantaged because their primary care provider was a guy.

In the days before the richness of online recipes and apps, my “go-to” was a tattered copy of “The Joy of Cooking” and I’ll admit that reading the basic skills part at the beginning of the book coupled with my proclivity to measuring in “about” rather than precise amounts, and sometimes skipping steps, led to as many failures as successes.

In time I started to watch Martha Stewart on TV and slowly built the skills and confidence to master the basics.  And it helped me affirm that my tastes, while decidedly masculine, were appropriate.

My quip back to her was “fine, you can’t have any of the chocolate chip cookies I’m making”, or something like that.  I always felt insecure raising the two girls alone and worried that I would somehow fail them.  I was pro-feminist before I knew what that meant and supported them in whatever choices they made.  If that meant walking to the school to pick one up with her bass baritone sax because the truck was broken down yet again and I didn’t have the slack to get it fixed or making homemade cookies because it was cheaper than store bought, so be it.  The important thing was to make sure that they didn’t miss out or do without.

I read and posted an article recently about a growing trend in making the perfect sourdough bread.  I was intrigued by this group of male tech-employed millennials, their search for perfection and the precision with which they undertook baking that perfect loaf.  I’ll admit that some basic skills coupled with my recent experience with a food delivery service leaves me in the artisanal space and the world of food excellence, but I doubt I have the temperament to pursue the perfect loaf.

One of our CSI members is working through the process of launching a beer bread business, baking sourdough bread from the leavings of the beer making business.  Looking beyond conceptually the impact of both a green and circular economy and how he is creating value from something that was destined for pig feed or the big organic digesters the city runs for bio-waste, I was struck by how the opportunities for making and selling artisanal bread are limited by scalability issues.  The excellence of the product lies in part in the lack of preservatives, so its shelf life is limited, the margins of the product are such that there is no room for sales returns and finally the product is a one-off so there is no suite of artisanal products that can be wholesaled.

If anyone can figure out how to ramp this business up it is Dihan.  He is doing enough to have perfected his recipe and approach, has examined his options and is exploring what avenues are available to him.  I strongly suspect that his final choices are going to rest in both technology and the disruption that technology is causing in the area of fulfillment.

Consider for a minute what the process is for you in bread fulfillment.  You could go to Costco and buy Costco sized bread products.  You can buy the same product at your local grocer, but (bread scandals aside) at a higher price.  Or you could nip into your local convenience store and pay a higher price still.  From bakery to retail, you are largely unaware of the steps and effort to make, ship, stock and manage that inventory so that wherever you buy it, it is easy and convenient.  Well maybe not Costco – but who shows up to Costco just to buy bread?

What you’re buying isn’t something full of wholesome goodness, but a product designed to remain fresh for a lengthy time.  I can buy a loaf of pedestrian whole wheat or some douchie version, but I guarantee you that the last slice two weeks from now is going to be as fresh as the first slice that I took out.  No mouldy nor desiccated offering as it sat out on my counter; truly a marvel of food engineering.

Over the course of two decades I have heard the cries of foul from my peers complaining about discount brokers. Like the male millennial purveyors of the ultimate sourdough experience, there are those that find enjoyment in constructing and managing their own portfolios.  Others with less discipline but more experience are like the home-made pierogi crowd who through years of making them know just the right mix and texture to make the perfect dough (hint, save and use the potato water). They don’t need us to be order takers.  In fact, the DIY group can do it far more cheaply and effectively than I can.

Our chosen profession is in the advice-giving channel; our value proposition is in the experience.  I am toying what it means to be “artisanal” using stocks and bonds as the base ingredients, but I share the same struggle as the beer-bread entrepreneur.  I’m just not sure how I fulfill the client experience in a world of tighter margins and packaged goods.  In fact, I may be convinced that back-to-the-basics is better but don’t know how to communicate that.

So yes Cara, maybe I haven’t lost my Martha Stewart tendencies.  I just haven’t figured out how to make it work for me.

David Chellew and Linda Odnokon have been life partners and in business together for almost 19 years. During that time, they have mellowed into their respective roles and enjoy working with individual investment clients. Dave is a Portfolio Manager and Linda is an Investment Advisor with iAS and work out of the co-work space, Centre for Social Innovation at Queen and Spadina downtown Toronto.

Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.

 

Stranger in a Strange Land: my daughter’s terrible, horrible, no good, very bad day

Cara, child mine daughter oldest, is in Tartu, Estonia, preparing to give a TEDx talk on Defensive Architecture.  She’s been globe trotting a little, taking part in a work-related workshop in Frankfurt, and has had time to visit Latvia in her free time.

Technology can be a wonderful thing, giving us a real connection particularly during challenging times.  I noticed Cara, 6808 km and six time zones away, posting on Facebook about the 17 pedestrians that were hit in Toronto in a four-hour period yesterday evening.  These are important issues to her as an urban planner and citizen of the downtown.

More importantly, Cara was able to have a text conversation with me about her terrible, horrible, no good, very bad day.

Between struggling with her personal preparations for tomorrow’s talk, being shoved in a grocery store, being mocked by a barista in Estonian to the accompanying snickers from other customers and then dropping her coffee as she fled through the door I get why she was upset.  I reminded her that given that she is Anglo-Canadian she probably sounds and looks American.  She replied that she’s often been mistaken for one, and in Europe, that means being subject to a fair amount of derision lately.  I opined that maybe painting a maple leaf on her face might help.

There were lots of back and forth and affirmation, and I pointed out that she is a world expert on her subject and that it was normal to worry about not being able to be perfect, that only some time after it was over would she be able to look back and feel a sense of satisfaction and completion.  She may be 34, but mostly she needed to hear that daddy missed her and loved her no matter what.

I can remember picking up a copy of Heinlein’s Stranger in a Strange Land when I was 12 or 13 and struggling to get through the first few pages.  I picked up that book many times in my teenage years, never getting past the first few chapters.  In fact, I was off put by both the messianic message at the end and the often-tortuous tension of establishmentarianism (church/state), when in my early twenties I finally read it.  And as for free love and communal living, it was about as appealing to me as individualism in Atlas Shrugged.

I’ve always been an outsider looking in.  High school dropout and military veteran who went to university, anti-authoritarian while embracing the comfort and expectations of being a liberal democrat, most recently pony-tail challenger of the orthodoxy in my industry.  I have no doubt had I been more conscious of my choices and understood the impact of trying to be a norm breaker, I would be far more successful today.  I am a norm breaker only within the bounds of what I can get away with and then only within a very tightly prescribed range.  Perhaps my life would have been easier if I didn’t try to keep within those ranges.

We’ve all felt like Alexander (in Judith Viorst’s Alexander and the Terrible, Horrible, No Good, Very Bad Day) at one time or another.  And I always seemed to have those days when I was conflicted, torn between two courses of action even though I wasn’t clear in my own mind which direction I should take

The richness of the tapestry of my life has allowed for many terrible, horrible, no good, very bad days.  But for every 5 of those, I’ve had 95 opportunities to grow and excel at the things that I’ve been very good at.  As much as I enjoyed and learned by being a parent, I’ve also learned a lot from my children, especially lately.  James, the youngest boy, is extraordinary at what he does, and I should have respected his wishes not to go to university.  Shannon and her husband Emi have taken all the good they’ve learned from me and his parents and are heads and shoulders better parents than I ever was.  I should have respected Rob’s gentle soul and his creativity rather than trying to push him into the very structure that in many respects I rejected.

It is not that I love Cara more.  Certainly, it is true that each of my children represents one aspect of myself, just more fully expressed.  Cara’s academic journey mirrors not just my journey but she is realizing my frustrated academic ambition.  Although each of my children have likely felt an outsider looking in, it’s her turn.

I had to remind her that we all have terrible, horrible, no good, very bad days, but running off to Australia is not going to solve anything.

(It would be fun though).

Post Script:  What does that have to do with investing?  Everything and nothing.  Our path to our goals is never straight, and if we don’t focus on the journey to get there and what we’ve learned, we’re going to have too many days of angst and disappointment.  On the other hand, if we write down and have a look at where we want to go, then put it away focusing on the trip, you’ll surprise yourself and get there before you know it.  And you’re not going to get lost along the way.

David Chellew and Linda Odnokon have been life partners and in business together for almost 19 years. During that time, they have mellowed into their respective roles and enjoy working with individual investment clients. Dave is a Portfolio Manager and Linda is an Investment Advisor with iAS and work out of the co-work space, Centre for Social Innovation at Queen and Spadina downtown Toronto.

 Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.

On Change, Golf and Millennials

I was drifting as I often do Monday morning when I decided to check out the distress debt listings from our bond desk.  I saw Golf Town Canada/Golfsmith debentures and wondered what the golf press looks like.

Before going any further, while I own a decent set of clubs, I am undoubtedly one of the worst golfers around.  It’s not that I lack athleticism or the wherewithal to be a decent golfer, it’s that I am loath to invest the time and effort to be so.

One Google search later and the first article that caught my eye was from Business Insider – “Millennials are Hurting the Golf Industry”.  There are times I think that the press throws around the “Millennial” tag like some specter representing some malevolent force of unreasonableness that disrupts the status quo.

The many reasons for the long decline in popularity that I came across were all anecdotal.  From where I sit, it is no wonder that many golf courses are being turned into subdivisions.  After all, the ultimate economic driver for any business is “next best use”, and if the acreage of a golf course is worth more as undeveloped land than as a going concern, it will fast become a subdivision.  I guess I’ve always seen golf courses as suburban parking lots – a source of revenue until something better comes along.

Business conditions, like the evolution of society because of demographics, change.  My neighborhood local, my rock bar, closed because the landlord decided that it made more sense for him to have different uses for the space he owned.

Casting my eye up and down Queen Street between Spadina and Dufferin shows that many businesses, former stalwarts on their respective blocks, have closed and given way to the mind-numbing sameness of chain retailers, trying to reinvent their big-box-retailer-bound former selves into something more relevant.  What is more significant, I suspect, is that the “next best use” that has driven rents ever-so-higher for commercial tenants ultimately will be a landscape populated with condos, flanked and faced by historical facades, catering to a population that is more into convenience and shopping online that doing the retail dash.

The closest I come to Millennial is having four as kids.  If they are however drivers of the trends I take advantage of, bless them.  Friday night I did the grocery shopping (Costco and Walmart), laundry and bought some Bluetooth headphones for my iPhone.  All online.

I can no more roll back the present to the past than you can.  As inconvenient or unpleasant as some of the things that happen today can be, it is what it is.  And besides, my rock bar reopens four blocks north.  And I’m never going to be a good golfer.

Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.

The Changing Face of Consumerism and Technology: Disruption, Diminishment and Disappearance

 

mini-wheats

Linda and I were talking two days ago about losing our Saturday morning delivery of the national newspaper. For all the comfort of having it in your hand and sipping coffee while outside its storming, more likely than not I’ve already read the articles online and the paper moves from front door to recycling. I think the bigger issue is a business model that is falling by the wayside and the effective diminishment of the very thing that newspapers are all about, the newsroom, while the organizations struggle to continue to offer a product that fewer and fewer of us care about. Is the cancellation of our home delivery merely one more sign of a troubled company?

One of my favorite Sunday morning recreations is walking up and down Queen Street West counting the number of stores and restaurants that have gone out of business. Rent is often blamed for the demise of many of these businesses, some open for little more than weeks, but in my opinion it has more to do with relevance in the online age. After all ordering on Amazon is far more convenient and more price competitive. When I go into one of these retailers my experience had better be superlative given the options available to me, and all too often it falls short of even adequate. More importantly, in a rapidly changing landscape, evolve or perish, and many of them are fixed in their perception of what the market is rather than letting the market dictate what they should be.

Changing buying habits of the millennials are also held up as a reason for the rapid shifts in our consumer society. If anything they’ve taught me to be more astute and demanding; all my habits and preconceptions about how my world works have been turned on its head as I’ve looked more closely about how shifts in consumerism have affected everything from media to retailing, manufacturing to logistics. I am not sure it is the generation itself or the fact that they are more closely allied to technology driving the change.

Vegas

I didn’t realize how significant my urban lifestyle has informed me until a recent trip to Las Vegas for the Life is Beautiful Music Festival. Over the course of six days I grew more and more frustrated looking for a satisfying foodie experience (funny how fast foodie has entered my MS Word dictionary). Our experience on Fremont Street was something generationally challenging – often heard was how cheap the food was (it wasn’t) and how large the portions were (I’m sure I could have fed a family of six on what would appear on one plate), as if my physique which is more akin to Humpty Dumpty than Adonis and white hair meant that I was generally interested in trough feeding. We did find some King Street West experiences to satisfy our palate and conscience but frankly would have ranked the fare bottom tier compared to what I’m used to. We also heard from many about the great food on the strip but frankly for the price point versus offerings, I would rather wander around my city. I didn’t go there to eat.

A couple of road trips during our stay meant a ubiquitous trip to Walmart to buy a cooler and food and frankly as disconcerting as the shopping experience was at least we were able to cherry pick some decent and healthy options. The bigger shock was the plethora of convenience single serving foods we saw and how the price points were more amenable to budgets than was healthy eating.

Consumer Spending

Consumers are responsible for the majority of economic spending and growth. Leaving aside the obvious excesses, there is little doubt in my mind that the competition now is not amongst companies in the same industry fighting over a slowly growing market share, but rather new competition for the aggregate consumer dollar.

I will admit to spending on convenience. We have a cleaning service come in once a week to do our condo. I like to be able to order my groceries online. And who likes laundering sheets and comforter covers – we send those out at the same time our dry cleaning is picked up. On those occasions we haven’t planned the night’s meal we’re as likely as anyone in our neighborhood to go out and either buy take out or eat in at one of the local restaurants.

What dictates how we spend our discretionary dollar now has everything to do with the duality of convenience and excellence. And we grumble every time one of those two dimensions fail; as soon as a better opportunity presents itself we’ll embrace it. And if that opportunity is online (like our groceries or dry cleaners) then that will be our preference.

On Sugar and Cereal

I recently made the weekly trip to our local Shopper’s Drug Mart to pick up some staples – milk, bananas, etc. I snagged a box of sugar cereal and without thinking boldly carried it to the cash. Lots of yoga-wear sweaty people were in the store that Saturday morning and the looks I received left me feeling sheepish, until, that is, I looked behind me and saw several of them with the same box of sugar carefully hidden in their arms.

I have no doubt that a smaller market will exist for these former stalwarts of the weekday breakfast table, but more as a guilty pleasure than as a significant staple. And as the next generation comes of age never having known the ubiquitous presence of some crisp or pop, even that diminishing market will disappear.

Bringing it Home

Technology makes embracing a new way of living easier and the adoption faster. It also creates a new definition of what a market is. In business school I learned about both the economics of substitution and competition, but I have never seen how pervasive the competition is for the consumer dollar. It is no longer from competitors in the same industry.

What I know for sure is how to spot companies that are going to excel – those that focus on speed of convenience, price and excellence are going to win. The rest are merely grist for disruption, diminishment and ultimately disappearance.

Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.