GAINPLAN

What We're Reading This Week: Part II

Back

October 09, 2017

What We're Reading This Week: Part II

Author: Thad Schlaud

Topics: News, Major Life Purchases, Industry Ideas

Autonomous Cars

Initially, when hybrid and electric cars entered the marketplace, there was a lot of concern about what the technology would do to oil prices. Eventually, though, people did some math and came to the conclusion that the result would be…small. That’s sort of changing as people start to consider the effect of autonomous vehicles and ride sharing.

In terms of commercial use, electric cars require much less maintenance than a traditional combustion engine vehicle:

“After disassembling General Motors’s Chevrolet Bolt, UBS Group AG concluded it required almost no maintenance, with the electric motor having just three moving parts compared with 133 in a four-cylinder internal combustion engine.”

While I am wholly opposed to driverless cars, I also fully expect that my children will work in a world where owning a car is unusual. When you look at the cost savings associated with electric vs. gas-fueled, Laszla Varro, the chief economist at the International Energy Agency, estimates that it will become more economical to run a fleet of electric cars in 2020. This is five years ahead of the timeline for individually-owned cars.

I’m most interested in Lyft’s aspiration to provide 1 billion rides per year in autonomous cars by 2025. That seems, disheartening? Especially for Lyft drivers, whom I suspect will be affected by that goal.

 

Bubbles

Charles Kindleberger, an Economics professor from MIT once wrote a book called “Manias, Panics, and Crashes.” This is the “bible” of bubbles and Kindleberger is credited as having predicted the dot com bubble in 2000. Shortly before he passed, Kindleberger stated:

“If I was 30 years younger, I’d write a small book on Fannie Mae and Freddie Mac.”

Four years later, the U.S. housing market crashed. His work has been carried on and is the stuff of legend, articles, research, and regulation.

Of course, one must consider confirmation bias. Predicting bubbles, to me, only matters if you get the timing right. Clients sometimes ask me if I expect the market to go up or down. The answer is always, “yes.” That doesn’t make me a genius.

Me: I’m concerned about the soybean market!

*Soybeans crash 10 years later

The Public: That man is a visionary!

 

Trump Taxes

President Donald Trump recently released his new tax plan. While there is still a lot of speculation about what this means for Americans of all income levels, the proposed changes have ignited a lot of discussion. Recently, Gary Cohn, the chief economic advisor to the White House defended Trump’s plan to reporters by focusing on the middle class:

“If we allow a family to keep another $1,000 of their income, what does that mean? They can renovate their kitchen, they can buy a new car, they can take a family vacation, they can increase their lifestyle… That’s what our tax plan is to do— our tax plan is aimed to return more income back to hard-working Americans.”

Regardless of how you feel about the tax plan, we can all agree on one thing: Gary Cohn does not know how much cars cost.

 

 

Gainplan LLC is a Registered Investment Adviser. This blog is solely for informational purposes and not a solicitation to invest. Advisory services are only offered to clients or prospective clients where Gainplan LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Gainplan LLC unless a client service agreement is in place. Please contact a financial advisory professional before making any investment.

Gainplan LLC provides links for your convenience to websites produced by other providers or industry related material. Accessing websites through links directs you away from our website. Gainplan LLC is not responsible for errors or omissions in the material on third party websites, and does not necessarily approve of or endorse the information provided. Users who gain access to third party websites may be subject to the copyright and other restrictions on use imposed by those providers and assume responsibility and risk from use of those websites.