The Cost of Black Friday

For many Americans, this time of year is filled with family memories, food, and celebrating holidays.  But for over 74.5 million, this time is also associated with intense shopping for Christmas presents and overcrowded malls.

Shoppers vie for copies of video games at a Black Friday sale at a Wal-Mart Stores Inc. store in Mentor, Ohio, U.S., on Thursday, Nov. 24, 2011. Retailers are pouring on the discounts to attract consumers grappling with 9 percent unemployment and a slower U.S. economic expansion than previously estimated. Photographer: Daniel Acker/Bloomberg via Getty Images

The day after Christmas, otherwise known as Black Friday, is typically a time where many Americans head to their local malls in search of door buster deals and savings.

Studies estimate that over 30% of an average retailer’s sales comes from the six-week time period from Thanksgiving to Christmas.

Although almost 100 million Americans are still choosing to shop on Black Friday, and now over Black Friday weekend, the number of Americans has been declining over the past few years.  In 2015, 102 million shopped over Black Friday weekend but when compared to the 2014 numbers (133.7 million), many people are choosing to not partake in the Black Friday festivities.

Black Friday, although still very popular, is no longer becoming the buzzy, attractive thing to do the day after Thanksgiving, as the popularity and willingness of Americans to brave the crowds for a deal declines.

So, why are sales and the number of Americans choosing to shop declining?  As many currently believe, the economy is doing much better than in previous years, so sales should be increasing.

Experts believe that one of the factors leading to the decline in Black Friday shoppers is the lack of credit card debt.  Many shoppers currently are using their own money, or cash, to spend on Black Friday consumption, rather than credit cards.

Also, many people throughout the country are still very concerned about the economic state of the United States, as people are still recovering from the recession and economic crisis of 2013.

Many also attribute the decline of shoppers to the increase in online shopping.  Many of the big-box consumers, like Target and Walmart, offer the same low price deals online.  This encourages many to stay home and avoid the crowds while still being able to save and get the deals that they are looking for.

In 2015, the National Retail Federation (NRF) reported that more Americans shopped online the three days after Thanksgiving than in stores.

While many large retailers look to Black Friday for a substantial portion of their sales, some stores, like REI have chosen to close down on Black Friday completely.  REI now encourages their customers to #OptOutside and pays all their employees time off for the day.rei-black-friday-final-hed-2015

In an interview with Business Insider, REI CEO Jerry Strizke said that he wanted to make a statement against the trend of opening around a national holiday. “I was looking at the chaos of Black Friday and how more and more stores were opening on Thanksgiving and it just didn’t feel right.”

Although Stritzke might feel this way and take a stand against Black Friday shopping, no other retailers have made this move to shut down so far.  As shopping numbers decline, will other retailers decide this is a change to make as well?



Politics and Football Ratings

Tuesday, November 8, 2016 was a significant day for the United States of America. Some man was elected president of our country, and the NFL passed its first post-election ratings test. This year, we have seen a nation where the National Football League and American politics have been intertwined like never before.

With Colin Kaepernick making his mark on national headlines each Monday morning due to his silent protests during the national anthem, the focus has shifted towards players protesting our newest President-elect. Many areas of the country seem to be unhappy with the results of the 2016 Presidential Election; however, people have decided to revert back to watching football on Sunday.i

Week 10 marked the first set of games played after the election had been wrapped up. The overnight ratings were up after Sunday’s games. To put things into perspective, Game 5 of the 2016 World Series between the Cubs and the Indians amassed an overnight rating of 15.3 compared to 11.6 for the Sunday night matchup between the Cowboys and Saints. With the election over and baseball in the offseason, the Patriots versus the Seahawks drew a 14.3 rating, the best rating on S
unday Night Football
since 2011. Of all the games this season, the afternoon game between the Cowboys and the Steelers drew a 17.8 rating setting the bar for the remainder of the season.03subcubswin-superjumbo-v2
The NFL is all about ratings. As long as people are watching the games and stadiums are filling up, the NFL is making money. For example, it was announced earlier last week that the Patriots versus Jets game on November 27, 2016 has been flexed out of Sunday night and will be played during the late afternoon scheduling. The Kansas City Chiefs versus Denver Broncos game will be replacing the woeful Jets’ game with hopes of boosting ratings.

Although Week 10 looked great for viewers with a staple Seattle-New England matchup to finish the day, it is time to focus on what the following week will bring. If ratings continue to grow in this fashion, which is expected, you can assume these matchups will only get better. With playoffs around the corner, teams are fighting for their lives and the opportunity to hoist the Lombardi Trophy. This stiff competition drives fans to watch their favorite teams battle it out.

We still do not know the actual answer behind the spike in ratings for the most recent week of football, but we can assume that it had to do with the political debates and other championship games. Although the country is split between who they supported, people will look towards football Sunday as an escape and a way bring people of all races, genders, and ethnicities together under one roof. As a result, fans will continue to spend money and the NFL will continue to make money no matter who is President.bradying

The Appeal of Spirit Airlines

For some Americans, low airfare carriers such as Spirit Airlines is the difference between reuniting with loved ones for the holidays and sacrificing family to save a few bucks. The inevitable scramble for airline tickets is upon us, which forces us to evaluate our options. The appeal of Spirit Airlines is obvious: how can you say no to a cheap flight when life in America becomes increasingly unaffordable? However, the unfortunate reality is Spirit Airlines completely takes advantage of their promise to provide low airfare costs.

According to Andrew Schmertz from the Huffington Post, Spirit has some of the worst customer service reviews out there. Small, uncomfortable seating along with a barrage of baggage fees. Free carry on? No such thing. Any bag over 40lbs will cost you $30, up to $100 for larger bags. Free drinks or peanuts are nonexistent, and delays are commonplace. Nonetheless, the worst offense of all is the treatment of their workers. Back in 2015, there were reports of a multitude of delayed flights due to “bad weather” reports that did not even exist. The theory was that pilot and crew strikes were the real reason for the delays, but this was never confirmed. This is not surprising as the employee reviews are far from flattering. Low wages and poor management are common complaints, as Spirit has the worst customer service known to mankind.

Despite all this, Spirit Airlines still remains a go to low airfare carrier. At the end of the day, Schmertz believes “economy over convenience” is the driving force of Spirit’s success.

The real question is, are they making as much money as they could be? With all those extra charges, is their net income any better? According to Yahoo Finance, the share price is at a stable $53.11. Compared to other airlines like Southwest with a market cap of $29.5 billion, their market cap is quite small at $3.68 billion. Spirit’s quarterly report revealed their net income was $61.9 million in the first quarter of this year, $73.1 million in the second quarter, and $81.4 million by the third quarter. Overall, they seem to be doing pretty well. Their expenses are not as high as other airlines as they do not fly to as many locations. It seems that Spirit Airlines, which puts pressure on other airlines to lower airfares. However, this will lead to lower profits overall for airlines like Southwest or United as they spend more on their flights than Spirit does. Time will tell how long Spirit will remain a competitor in the airline industry, but for now, terrible customer service and endless fees are worth it to hard working Americans.

Market Inefficiencies in the NBA

When the “Moneyball” revolution occurred in baseball the ideas it posited spread rapidly to other sports. You could see a revolution of numbers-based analytical analysis and other financial-market principles dictating the actions of a team taking place in just about every American sport. In the NBA it manifested itself quickly in both the growth of analytics and a more market-based approach to team building strategy. Michael Lewis, author of Moneyball, even wrote an article for the New York Times focusing on the unseen value of NBA player Shane Battier.


Among the many ideas that Billy Beane’s A’s teams popularized was finding market inefficiencies in the league that you could identify though statistical analysis, and then exploit those insights for your team’s benefit. Basically, you want to find an aspect of team building that no one else is seeing, or is seeing incorrectly, and then you’re gonna make a move that counters the logic everyone else is working under. In a league like the NBA, where everyone works under the restraints of the salary cap, these small advantages of thinking make a massive difference in terms of results.


Photo Credit: Phelan M. Ebenhack

One way that teams find these advantages is through identifying “undervalued assets” or players that many teams in the league do not want because they see them as ineffective, but the astute manager sees how these players can be developed and utilized in the proper role to succeed for their teams.

I spoke to a friend who works in asset management for a private hedge fund. He told me that he was struggling with the challenges of the work. He told me that the most difficult part to figure out was that everyone in the industry is working off the same pool of information, or that’s how it’s “supposed” to be anyway, and that he had to figure out what everyone else was thinking, and then find a different angle of investment in order to make money. In a competitive environment where everyone’s jobs are dictated by the returns they create the stress this causes is palpable, even when you’re just talking to someone about it.

The same principles apply to personnel professionals in the NBA. Everyone has access to the same information, or at least they should in theory, on the players available to sign, trade or draft, and it’s these people are judged based on their returns i.e. win totals and in-game attendance. As everyone has become more attuned to league-wide trends, it becomes more difficult to find the asset that other teams are undervaluing, and thus the market becomes more competitive. As Patrick Minton of says, It’s one thing to have a ton of data. It is entirely another thing to know what to do with it.”

The San Antonio Spurs, under head coach Gregg Popovich and general manager RC Buford, have operated successfully this way for years. They brought many players in from Europe and South America to play for them, when many other teams had decided most players from abroad could not thrive in the NBA. The Spurs exploited the rest of the league’s lack of knowledge of these talent pools. That combined with superstar Tim Duncan helped them win five NBA championships and win the most games of any NBA team since 1996.


Source: Sports Illustrated

Daryl Morey, the GM of the Rockets and one of the biggest proponents of NBA “moneyball” principles, popularized the idea of amassing assets to package in trades for star players. A risky move because the trade may never come, and players don’t often appreciate being treated like a stock in your portfolio, but it worked when he attained superstar James Harden in a trade with the Oklahoma City Thunder.

These strategies show the value in having the intuitive ability to see the landscape of conventional thinking, but then have the courage to make the counter-intuitive move in order to exploit it. Much like in the financial markets if you go with the conventional logic, then you limit the margin on the returns you can generate. These assets are not easy to identify, and with the increasing amount of information at team’s disposal it’s becoming more difficult by the day.




How Black Friday Sales Effect the Economy


As November comes to a close, people are getting excited about what they have to look forward to in the coming month. Thanksgiving is quickly approaching, which means that Hanukkah and Christmas are right around the corner. Although the holidays are an exciting time for most, businesses are even more excited about the influx of cash they are going to make. Black Friday, the Friday after Thanksgiving, is one of the most important retail days of the year for most businesses, with around 30% of annual retail sales occurring between Black Friday and Christmas. Therefore, it is important for businesses to strategically plan how they are going to approach the Black Friday holiday in order to maximize sales and further stimulate the economy.

In the U.S., Black Friday has been regarded as the beginning of the Christmas shopping season since 1932. It is referred to as art_img_7_tips_qxfuevBlack Friday because many retailers usually make enough sales on that day to put them in the black for the year, meaning that they will begin to turn a profit. In 2015, 74.2 million people shopped on Black Friday alone, which is lower than the number in past years ranging anywhere from 85 million in 2011 to 92 million in 2013. Although the number of consumers have decreased in recent years, 74.2 million shoppers still means large profits for these corporations.

Black Friday is known for kicking off holiday spending, however, the three-day Black Friday weekend is where businesses truly make their money. In 2014, 133.7 million people shopped over the weekend. Each one of these 133 million spent, on average, $380.95, which totals out to be around $51 billion dollars of consumer money that was poured into the economy. Investors examine Black Friday sales in order to examine the health of the retail industry. Since many economists believe that spending drives economic growth and activity, they will imply that if Black Friday spending is low the health of the economy is too.


As investors analyze the signals that Black Friday has on the direction of the market for the rest of the year, they tend to tailor their trades to reflect what they believe will be the future of Black Friday sales for that year. Whether the retail performance on Black Friday is good or bad, the results signal consumer confidence in the economy. According to research conducted by the National Retail Federation, 2016 holiday sales have the potential to increase by 3.6% and shoppers plan to spend approximately $655.8 billion.

To prepare for the three busiest retail days of the year, businesses are rearranging their stores, stocking up on merchandise, and hiring between 640,000 and 690,000 workers nationwide. This planning is necessary in order to compete with big-box retailers, like Wal-Mart, who brings in around $8.4 billion on Black Friday. Not only do this week’s upcoming sales have a powerful effect on the future of many businesses but more importantly, the sales should be thoroughly analyzed because the results are an accurate indicator of the health of our nation’s economy.



GoPro or Go Home?

The rise and fall of GoPro is a story other technology companies should be looking at when thinking about going public on the stock market. With an innovative company like GoPro, it seemed like a great next move and expand their business model, however, they might be regretting it now. Companies like GoPro and Twitter are having a hard time diversifying their products and gaining a consumer base, making it hard on investors to stay confident in their products. In its IPO filing in 2014, GoPro admitted that they depend on the sales of their products to capture profits for their company. Let this be a cautionary tale for those who want to become a publicly traded company or for those investing in a stock they may believe in.


GoPro is an American company that produces versatile, portable high-definition cameras used for action videos and photography. In 2002, Nick Woodman founded the company after going on a surf trip to Australia and failing to capture quality action photos while surfing. As the company developed, so did the camera software and eventually, digital and video cameras were installed. GoPro made the decision to go public in order to become a larger media company and generate additional revenue from their camera products. On June 25, 2014, GoPro became a publicly traded company on the NASDAQ where their price per share was sold at $24. That day, they sold over 17.8 million shares of GoPro stock.


GoPro Official Website

Since their IPO, their share price quadrupled in the course of three months and things were on-track for success. On September 24, 2014 GoPro released their camera, Hero 4 causing their stocks and investor confidence to rise in the brand and their price per share jumped from 72.88 to 78.46. At its highest, GoPro was trading for $98.

However, some investors were soured when CEO Nick Woodman sold shares of GoPro stocks for his new charity, the Jill +Nicholas Woodman Foundation, and gave 5.8 million shares to their charity, causing the share price to decrease by seven percent. Although the shares were taken came directly from Woodman’s holdings, which was comprised of 52.4 million shares at the time of GoPro’s IPO, the company created more shares for the charity as well. This was especially alarming because GoPro’s lockup period expired in late November 2014. After the lockup ended, GoPro managers and directors can start selling shares, but not before then. This caused investor confidence to lower because they thought Woodman was signaling the stock’s high price was too extreme by selling off his shares in October.

Jump to two years later after a tumultuous year after becoming a publicly traded company, where their share price is around $10—quite a different company than two years prior. This fall from grace has happened because investors simply don’t like the stock and that’s because slumming sales. In 2015, their price fluctuated but had a sharp decline in July, where they plummeted to $60 per share. Because GoPro technically sells hardware, they cannot have a high operating margin, especially when their growth is expected to slow. GoPro is projected to generate $2.1 billion in 2017, when its actual revenue of 2015 was around $1.93 million—not a big increase year-over-year. 


Yahoo Finance

However, today with a share price of around $10, maybe some investors are too hard on GoPro and their sales, they may be able to turn it around. Although the company faces competition and is having a hard time expanding its consumer base, but people who have the product love it. GoPro now has a Karma drone in the works, which could life the company up. Everybody loves a comeback story and this is an opportunity for GoPro to reinvigorate stockholder confidence and gain a new segment of customers.





Costs of Climate Change – Thanks Trump


Scientists have researched climate change for over three decades, gathering information about how the human population and our actions have affected the global temperature. At this point, there is little scientific dispute about climate change, but the United States’ newest president-elect seems to have other ideas. Donald Trump has called climate change a hoax, and he has already appointed some skeptics to his energy and environmental transition team, including Myron Ebell of the Competitive Enterprise Institute. On November 21, 2016, Trump released a YouTube video detailing some of his plans for his first 100 days in office, and unsurprisingly, one of his goals is to end restrictions on energy production. Overall, the situation is not looking great for the status of our environment, so it may be important to look at what costs this will bring us in the future.


One important note about climate change is that it is essentially irrevocable and has a foreseeable time limit. The more we ignore this problem, the greater the problem becomes. This means that it continuously gets more expensive as a result. In 2015, Citigroup estimated that if we do not act, the cost will be up to $44 trillion by 2060. In this scenario, everyone continues living the way they have been, and we maintain the level of progress that has been made. Trump’s desire to lift energy regulations actually sets us backwards on the scale, and it is hard to imagine what the costs would be then. Last week, senior scientists said that if Trump carries through with all of his promises from his campaign, it might as well be “game over” for the environment.

Climate change is not a zero sum game. There are costs to acting and not acting, but it is important to weigh the difference. Many argue that low oil prices have lowered motivation to look for alternative sources of energy. While it may be less attractive to invest time and money into renewables, it could also be argued that because oil is so cheap, there is more space to spend money on energy efficiency without halting the global economy.

For Trump, this future catastrophe is not a huge deal because it most likely will not happen in his lifetime. For today’s millennials, climate change is yet another cost that they will have to incur. Millennials are already dealing with low incomes, high debt, and the heavy weight of social security and healthcare. This is especially detrimental to low-income, vulnerable populations because these groups are always hit the hardest in economic declines.


All of the monetary costs aside, climate change itself can and will do its own damage to the planet. There will be more frequent and extreme weather cases, disease, and deteriorating farm yields. Additionally, there will be an increase in climate-related disturbances including soil change, drought, and flooding. We are already seeing some uncharacteristically dangerous hurricanes and storms that cause severe destruction, such as Hurricane Sandy on the east coast of the US. The young people of today will have to deal with all this in a few years, and it is unclear whether or not this is even possible.

Alibaba Creates A Grander Black Friday: Singles’ Day

The past Single’s Day (11/11/2016), the world’s biggest online shopping day of the year, has just finished with Chinese shoppers spending $17.8bn in 24 hours. That’s a bit short of the $20 billion some analysts had expected sales to reach but easily surpasses the previous record, last year’s $14.3 billion. But still, a lot.

Let’s look at another number. Shanghai Daily reports that the sales total blew past $1.5 billion, an 8% of the total volume in the first seven minutes of the event.

Singles Day laughs in the face of Black Friday. Last year on Thanksgiving Day and Black Friday, according to Adobe, American shoppers spent about $4.45 billion online (and $12 billion at brick and mortar shops). And that’s over the span of two days and counting all retailers, not just one site. Cyber Monday online sales, meanwhile, were just over $3 billion, according to CNBS.


(Source: Forbes)

Singles Day started as “anti-Valentine’s” celebration for single people in China back in the 1990s. Alibaba, the online retail giant, spotted the commercial opportunity in Singles Day back in 2009 and has encouraged single people to celebrate and buy presents for themselves since then. It takes place in China on November 11 every year.



This resulted in 467 million parcels being delivered after 710 million payments were made, according to Chinese news agency Xinhua.


(Source: Routers)

Ma Yun, the CEO of Alibaba is even more ambitious to promote Singles’ Day globally. Huge international companies are offering big discounts: Apple is offering certain models of its Beats earphone at 50% off, while Nike promotes 60% off on a wide range of shoes and clothes. Even Costco, the local brand of the States is joining this year.

In addition to steep discounts on the site, Alibaba has made an early start to promote the event to build the anticipation for the big day, already generating plenty of buzz from its celebrity line-up at the countdown gala in Shenzhen and an eight-hour fashion show in Shanghai which shoppers can pre-order items and pay later. To push for more sales, the Alibaba has introduced a virtual reality shopping experience and a stream of web broadcasts.

This year, the countdown gala featured appearances from retired NBA star Kobe Bryant, footballer David Beckham and his fashion designer wife Victoria, and U.S. pop band OneRepublic. Jack Ma, the founder of the Alibaba Group, showed up to perform a magic trick, and the new Alibaba Pictures’ film production was also promoted during the gala.


(Source: NPR)

“It’s not thinking about ourselves as an ordinary company. It’s about thinking of ourselves as an economy,” said Ma Yun. “You can use your device, your mobile phone, to connect to this economy to do global business.”

Undoubtedly, Singles’ Day is China’s largest shopping and advertising event, which is a barometer of China’s strong consumer sector. Singles Day reflects the changing shopping habits of China’s consumers. The mobile market is playing a major role. Mobile purchases accounted for 72% of purchases in 2015, up from 43% in 2014, according to the Atlantic.