Classic Business Principles Matter-Especially For Venture Returns


This post is by Jeff Carter from Points and Figures

Every so often in frothy environments, people think they can bend rules and bend curves.  We are seeing that in real-time these days.  Yesterday I posted about venture returns vs stock market returns.  Historically, both asset classes are doing a lot better than normal.

One of the reasons for froth is the consistent basically zero interest rate policy of central banks around the world since 2009.  That changes risk preferences.

But, I am not going to talk about or argue about the reasons why where we are here.  I am interested in the future.  This post is less about specific areas to invest in and more about the culture of companies you want to invest in.

As an investor in startups, I feel like you have to have a keen eye to how you think things will be ten years from now.  For example, as Covid has enveloped the world, people are waking up to “How can I invest in video conferencing, alternative education, telemedicine, co-working alternatives?”

Those bets were made 3-7 years ago.  Maybe more.  If you want to invest in companies like that, be patient and wait for them to go public.  Build them into a diversified portfolio.

The companies that are in those spaces that are doing well are adhering to classic business principles.  They worry about getting a return for shareholders, increasing operating margins, and delighting their customers.

What they do not do:

  • They do not worry about their role in the broader world.
  • They don’t worry about making a virtue statement.
  • They do not take deliberately take money that would normally go to shareholders or employees or customers and give it to charity.
  • They do not keep their cost structures in place when there are cheaper alternatives.
  • They do not toss money into “of the moment” charities disguising them as marketing expenses.

What they do:

  • They execute like they are on a mission and that execution drives leadership which attracts amazing people who want to be a part of their company
  • They consistently talk to their customers and innovate for them to satisfy and delight them so the customers want more.
  • They create value every day for their customers.  Enough value that their customers happily pay for it in some way.
  • They don’t necessarily care about “fill in the blank color by number” diversity, but they actively recruit employees from all kinds of places who thrive in a business culture that values merit and achievement over victimhood.  They value each and every employee.
  • They understand how to motivate employees.  Sometimes it’s not more pay but more autonomy or more responsibility which values their dignity.
  • They allow for open conversations in the workplace, but they are not overtly political.  Politics is for the home.  Their concern is their customer and the shareholder.

Successful companies grow revenue.  They grow it fast. I thought this part of this video by Professor Deutsch was great. I have seen exceptions, but her generality in this part of the video is correct.

It is alarming to see the Chamber of Commerce pivot to caring about things other than providing the utmost value to shareholders and customers.  It is alarming to see the venture community worry about things other than funding innovation that can propel society forward and create new markets and value where none existed before.

The longer that this ethos persists, the more danger there is in lower returns.  As I showed yesterday, the risk in venture is great because of variance.  They can’t afford low returns.

I am not saying don’t invest in certain founders.  I am not saying that businesses shouldn’t care about employees or if their business is adversely affecting the environment or something else.

Know how great businesses care of both those things?  By executing and taking care of delighting their customers and shareholders.  Employees always have a choice to work for someone or not. Conversely to popular opinion which is wrong, there is no race to the bottom in capitalistic societies.  Competition along with freedom of choice takes that option off the table.

I am also not saying to avoid investing in things solving a “social good” problem.  It may be there is a market there that didn’t avail itself before.  Daily, we are churning out new technology and analytical data that uncovers new ways to go to market and create businesses.  Maybe five years ago that market was unseen.  Maybe it wasn’t possible to build a business there but the company has figured out a way to monetize that market in a way that no one else has tried.  Facebook might be a good example of that since the company monetized people’s time and personal data.  People gave it away freely in return for what they could do on Facebook.  That hadn’t really been done in that way before.

If you watched the video I posted, you will see I disagree slightly with Waverly.

The invisible hand of the market is unforgiving.  It rewards achievement and it penalizes failure. When business leaders decide to make an active choice to avoid following classical business principles that have sustained businesses since the beginning of time, they will eventually be disciplined by that invisible hand.

My prediction: the businesses that get slapped by that hand will do one of two things; make excuses for themselves or get back to basics.  The ones that make excuses will go out of business.

I think Milton Friedman articulated these basic principles in the best ways so that everyone could grasp and understand them.  He’s not so popular these days with the elites but I think he’s still correct and the principles he articulated are all sympatico with the ethos of B Corporations and the rest of the drek we read about today.

For me, I am looking for founders that are interested in building a business that totally delights their customer and eventually will reward the shareholders who took early risk investing in them.  I won’t invest in anything else.

 

 

 

The post Classic Business Principles Matter-Especially For Venture Returns first appeared on Points and Figures.

The Crown and Margaret Thatcher


This post is by Jeff Carter from Points and Figures

We binged The Crown.  We have been watching it for a while and like it.  Of course, it has a toehold in actual history, but it isn’t textbook history.  They are there to entertain and tell a story.

I thought the bias of the writers came out in their depiction of Margaret Thatcher.

The simple fact is she saved Great Britain from itself. She is probably the second greatest prime minister in the last 150 years only being one-upped by Winston Churchill who not only saved Great Britain from itself but saved Western Civilization from itself too.

Conservatives always get a bad rap from writers.

For example, they show Maggie in the kitchen with her apron on cooking the family dinner.  I doubt seriously if she did that.  Wouldn’t she have had some staff do it as Prime Minister?  They also showed her as weak when in fact, she was extremely strong and powerful.  She was unafraid and took on socialists in the Labor Party at every opportunity.

It is interesting that at the same time that Thatcher came to power in Great Britain, Ronald Reagan was elected President in the US.  He was depicted by the press as a doddering old man.  When he first took office, he was 70.  Contrast that to how Biden is being depicted.

I predict that Biden is a one termer at best.  The question remains who the standard bearers will be for both parties in 2024.  I predict it will not be Biden’s VP.  It’s clear the press wants to groom Cuomo but I don’t think it will be him either.  For the Republicans, it will be interesting to watch, but Noem, Haley, Scott and DeSantis probably have the pole positions.

For the youngsters that have no idea who Thatcher was, here is a sample.  She believed strongly in free markets, freedom of choice, individual liberty and self-determination.

We are fighting the same fights today.

The post The Crown and Margaret Thatcher first appeared on Points and Figures.

Venture Returns


This post is by Jeff Carter from Points and Figures

Returns to venture capital have outpaced the S+P 500 over the past decade. Here is the growth of $10,000 over the past decade courtesy of Ycharts.
SPY Chart

SPY data by YCharts

Very very good return when you look at historical numbers.

But venture has been better. Chicago Booth professor Steven Kaplan has studied venture returns over time and I linked to his 2017 study. That trend has persisted through today.  Venture returns are outpacing S+P returns.

I think it’s important to understand venture returns vs stock returns because with Covid, capital will get democratized more and new entrepreneurial ecosystems might jumpstart.  We might see new investors enter into venture investing that didn’t do it before.

The next twenty years will bring new technology to the market that will be powerful and some outsized returns will be gained by savvy investors.

High net worth individuals and family offices that might not have considered venture investing before might want to take a stab at it.  They need to understand what they are getting into, establish some systems and rubrics, and then have at it if they want to assume the risk.  Personally, I think it would behoove them and society if they did.

Here is the thing.  In Venture, returns happen in certain companies, and the others fail.  My friend Brian Lund wrote about two different kinds of traders in his weekly blog. 

Time works for long-term investors in a different way. It relieves themselves of the burden of themselves.  

All they need is a drawer to put their stocks in and they are good to go.

The above is the way to invest in the stock market and it’s been proven over and over again.  Stick your money in an S+P 500 fund with no fees/low fees and forget about it.  Eugene Fama showed it in 1962 and wealth managers have been fighting with him ever since.

Venture investing is not the stock market.  Returns are uneven and unpredictable.  Remember a story Bob Okabe told me about an angel investor that lost money on the first 19 companies they invested in.  They should have kept investing….

There also is a liquidity premium in venture vs stocks which demands a higher return.  Venture investing is a roach motel.  You can get in, but you can’t get out.

One of the reasons that putting your stocks in a drawer and forgetting about them works is it takes away “variance”.  You aren’t subjecting yourself to the daily gyrations of the market.  As long as the market goes up, and so far over the course of time it has despite hiccups, you are okay.  Behavioral economics would tell you why people overweight hiccups.  If you need the money, you can get the money.

Day traders want variance.  They are in and out, in and out.  Without variance, they don’t have opportunity.  But, day trading is not investing.  If you day trade and aren’t earning more than a minimum 25% on your capital, you probably won’t be doing it a sustainable period of time.  That day when you take a big loss will wipe you out.  It’s gonna happen.

Venture investing means accepting A LOT of risk, or variance. So by definition, returns should be outsized.  One thing that would be tough to execute, but I believe the time has come, is a fund to raise a huge pool of capital and become an LP in many many venture funds.  That won’t mitigate risk, but improve your chances of finding the outsize return if the manager of that fund chooses funds correctly.  The problem is getting access to the funds.

When you look at the universe of funds that return 3x after fees, it’s very small.  Venture is a tougher business than stock picking.

I have seen people try to execute on this portfolio idea by raising money and putting the same check inside lots and lots of startup firms, but that doesn’t work.  You are only adding more risk with every investment and your expected outcome isn’t any better.  There is no “diversification” in the classic finance sense.

The trick in VC is who is managing the money, or in finding the best deals.  Deal flow is the life blood of a VC because it gives them enough looks so that when they decide to invest they feel like they have an edge over the market.  The only way to make money in VC is to go against the herd.  You see something that the market doesn’t.

The other hard thing in VC is putting enough money in a company to own a big enough chunk of equity so that if it pays, it pays big.  This is why if you are an angel, be disciplined.  Put similar amounts in every company on initial check sizes so that the check sizes combined with the amount of equity you own are replicated across your entire portfolio.  That way, when one pays you probably will pay for your entire portfolio.  Rule of thumb angel math is 50% of your investments will fail.  20%-40% will return 1x-4x.  That means you need 10% of them hit 30x to realize a 27% IRR.

Over the past few years I had some angel investments pay off.  They had been in my portfolio over 10 years.  The internal rate of return was well over 20%.  It beat the same return on the SPY over the same period by quite a bit.  What I mean by this is if I invested $1 in the SPY, or $1 in this company, I was far better off accepting the risk, lack of liquidity, and being in the company.  I also had some companies fail over that same time period.  Your failures happen early.  That’s the thing about venture investing, your choices are highly dependent and the outcomes highly variable.

By the way, I co-founded Hyde Park Angels in April of 2007.  4 out of the first 5 investments paid off and the other company is still a going concern.  That’s an amazing track record.

Risk is severely misunderstood in America and not taught well.  Conditional probability is not understood, and not taught well either.  That’s apparent in how we have dealt with Covid.

I will post tomorrow on what I see for the future of VC and the stock market.

The post Venture Returns first appeared on Points and Figures.

Want To Start A Business?


This post is by Jeff Carter from Points and Figures

I’ll be doing some yoga and then teeing it up today. Nice weather in Nevada.  My golf game sucks but after taking around 17 years off I am relearning.  You might be stuck in a cooler part of the country.  I see they have around a foot of snow at my place in Minnesota already.

I ran across this tremendous series of videos by Professor Waverly Deutsch.

If you want to start a business, watch them.  You will learn something.  This is like getting a free mini-MBA in startups.  Chicago Booth has one of the top entrepreneurial programs in the US, so it’s worth your time.

Professor Deutsch runs the Polsky Center at the University of Chicago.  You probably haven’t had the privilege of being in a class with her but I have.  She’s straight, and to the point. She also has seen a lot and has a lot of data to back up what she talks about.

That is one great thing about Chicago Booth, they back up their theories with rigorous data.  Yesterday I was watching a Chicago Executives webinar and Professor Steve Kaplan showed the returns to venture have beaten the S+P in recent years.  As you know, the S+P hasn’t exactly been a laggard when it comes to returns.

Chicago Booth Professor David Altig once told me it takes 30 years for a truly disruptive innovation to make its way through the economy.  Sometimes people have to be educated like when the printing press was invented.  Sometimes, you have to build infrastructure, like laying railroad tracks.  When it comes to the internet, software and hardware, we are slightly more than thirty years in and our economy is benefitting.

So are people that have ideas and want to turn those ideas into businesses.

There is so much opportunity today to build something great.  I am seeing it in our own portfolio and in general.  Software really just works today.  Implementation times are drastically reduced.  AI, Machine Learning and things like that are table stakes.

You can do it, but you won’t do it unless you really want it.  There has to be a driving desire inside you to execute and get stuff done.

 

 

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Revolutionizing Asset Management


This post is by Jeff Carter from Points and Figures

If you run a hedge fund, or if you invest on behalf of entities this is a valuable interview for you to watch. If you engage in capital formation at all, you should watch it.

The other great part of this interview is it covers:

  • How to start a startup.  Sometimes half the battle is just getting going.
  • Thoughts and opinions on remote work

Vauban is in our portfolio at West Loop Ventures.  They are based in London, and they are hiring. If you are interested in revolutionizing asset management, contact them.

 

The post Revolutionizing Asset Management first appeared on Points and Figures.

Ignore Them. But Keep Tabs on Them


This post is by Jeff Carter from Points and Figures

One of the worst things that you can do to a person is to shun them.  Ignore them.  At service academies, it used to be a part of the punishment when you violated things like the Honor Code if you didn’t get tossed out.  You became “invisible” to the rest of the cadets.

I think that one thing social media does is amplify crazy things.  All of a sudden people that never had a platform have a platform.

One thing I never thought I’d see is the censorship of one side of legitimate opinion or legitimate data on social media.  For example, yesterday Facebook censored an article on the new Miss USA.  Asya Branch is the first black Miss Mississippi.  She’s from Tupelo, the same hometown as Elvis and near where my family is from.  She went to Ole Miss.  She is absolutely stunning and in her short life, successful.

What’s her crime?

She favors second amendment rights and she likes President Donald Trump.  Here is the banned link on Facebook.  I am going to assume it’s banned on Twitter but since I am off Twitter I wouldn’t know.  I am on Parler, and I did sign up for MeWe.  I am still on Facebook but am rejiggering it.  I got rid of a lot of business and business school friends.  Not because I don’t like them but the odds are excellent we are LinkedIn and if they need me they know where to find me.  There are some groups on Facebook that I value because of the information I receive, but if they moved off the platform I wouldn’t have a use for FB.

Perhaps we are seeing the unbundling of social media.

I think that given the tactics of the social media companies and Big Tech, conservatives need to take action.  Instead of being reactionary and tweeting the shocking tweets and statements from the far left that dominate those platforms, ignore them. Stop retweeting them.  Best of all, just leave the platform.

Who cares what Brian Steltzer, or Chris Cuomo, or Don Lemon think?  Do I care what Rachael Maddow is thinking and broadcasting?  Not really. They aren’t that bright.  They also don’t add anything to the conversation.  There is no nuance.  There is no deep thought.  It’s just clicks. Frankly, I find the same with a lot of the right-wing that is on television too.  We were never big news-watchers, but we don’t watch it at all now, except local news to get the weather and some special interest stories.  Hard news on television is lame.

My advice.

  • Shun them.
  • Ignore them.
  • Don’t link to them.
  • Monitor them but don’t engage until it becomes a physical/career threat to you.

Switch to different platforms that won’t censor you.  The left is out for blood.  They are trying to ruin the careers of people that think differently.  It is not unlike things we have seen in other societies where thinking differently, believing in individual freedom and choice, caused you a lot of trouble.

By the way, if you have people comparing you to Hitler, calling you a racist, telling you that you are unhinged and telling people that they shouldn’t work with you because of your individual beliefs, you are better off ditching them.  You have already won the argument.

Additionally, if you are a conservative news outlet, why even have sharing buttons on your website for platforms that will actively censor you?  Put your news somewhere else.  For the hardest leftists, you cannot change minds.  They aren’t interested in debate or learning.  For them it’s indoctrination, and brute force if they don’t get their way.

Initially, I thought going to a platform that was essentially an echo chamber was a mistake.  Right now, platforms like Parler are pretty echoey.  But, Twitter was a left-wing echo chamber and when you had a different opinion you were attacked mercilessly.  Twitter at the outset was just tech bros.  Facebook was just open to elite smug Ivy Leaguers. You have to start somewhere.

I still am very on the fence about the government regulation of Big Tech.  Government never splits the baby correctly.  They are apt to screw it up more than fix it.  However, when you read material from the Stigler Center at Chicago Booth you can understand the rationale behind forming some regulation.  When you see tech platforms actively deplatform one voice after another, it makes you angry because that is un-American and you might want regulation.

I also know the advice I give to startups.  At early stages, focus.  Find one target market that you can get a toehold in.  Then expand.  It pays to be “really pointy” like the tip of a sharp pencil when you start out.

There is at least a target market of 70 million people for any new social media platform.  That’s enough to make a business.

If you believe in the ideas of classical liberalism upon which the country was founded, you shouldn’t be scared to act upon them, and advocate for them.  Be confident that you can win in the end.  When you see companies like Twitter, Facebook, WordPress, and Eventbrite, along with many others, gore those values like a bull in a bullring, you can’t be passive.   Otherwise, you feel helpless.  During the Civil War, many churches in the US broke apart.  No reason that won’t happen with Big Tech.

If you are an entrepreneur that wants to build a competing platform, my bet says there is money out there to fund it if you can find it.  But, don’t go to Silicon Valley or a typical tech venture capitalist to look for it.

My bet is that just like the population movements out of heavily taxed states like California, Illinois, New York, New Jersey, the trickle that is leaving the dominant social media platforms will turn into a river, then a gusher.  It will force the dominant platforms to rethink and perhaps embrace diversity.  Or, get competed into being a smaller business.

Competition is good.  We need more competition in America in everything.

 

 

 

The post Ignore Them. But Keep Tabs on Them first appeared on Points and Figures.

Corporate Education


This post is by Jeff Carter from Points and Figures

A long long time ago, I thought about how we deliver education to people in America.  It has changed over time.  In the early days, mentors took people under their wing.  Education was only available to a privileged class.

As America matured, the one-room schoolhouse happened but education was uneven at best.  Finally, we established a public school education system.  Churches established private school educational systems and that has evolved into what we have today.

Covid is blowing up education.

I have spoken to more people that have started educating kids at home.  It’s not surprising in some ways.  Parents never knew about their kids’ education really until Covid hit with kids taking classes at home.  Some were shocked at how the teachers were instructing their kids.  In other cases, many urban public school systems simply failed to teach anything to students.

What happens next?

I think it could go in a variety of ways.  Homeschooling was always a movement prior to Covid, and it just gets stronger.  Politicians are talking about spending more on public school education, but that is throwing money down the rat hole.  Why invest in something that has failed consistently over the course of time?

I have seen a lot of startups in education.  They are doing some pretty cool things, however, startups don’t have the infrastructure necessary to scale.  You are stuck with the totally broken public school system, a network of independent private schools, or religious schools.  They are all bureaucratic in their own ways, and startups often don’t fit with them since startups tend to break a lot of traditional rules.

I wonder if there is a role for big corporations in education?  Many of them have capital.  Heck, is Apple a computer company or the world’s largest hedge fund?  What if Apple or other companies set up their own network of schools?

They have an economic incentive to do so.  First and foremost, they’d be educating their future workforce.  The competition for talent is intense.  Bringing instruction and getting exposure to talent at the earliest stages could be a competitive advantage for companies.  No different than street agents beating the bushes for pro players on playgrounds all across the country.

There might be tax incentives as well.  I am not a GAAP CPA, but they might be able to write off their investment in education against revenue.  If we expect corporate taxes to go up at state and national levels that might be a good use of their capital.

Companies might be able to partner to create some really interesting schools.  What if Microsoft and the New York Stock Exchange partnered to teach kids math and technology?  What if a museum layered in education on history?  A drug company on science?

I don’t understand why anyone is against innovation away from public schools.  I hear a lot of comments about “my body my choice”.  Those same people tend to not believe in school choice.  Why are they against, “my future my choice”?

The post Corporate Education first appeared on Points and Figures.

Never Give Up


This post is by Jeff Carter from Points and Figures

You might have been like me and watched The Masters this weekend.  Like many, I always enjoy that tournament.

There is one thing about this tournament that I really loved.  Tiger Woods back nine on Sunday.  He had an atrocious hole on the Par 3 12th.  He scored a 10.  I watched it.  Some of his shots looked like a few of mine.

Did he quit?  No.

The defending champion birdied five of the last six holes to come in at 4-over 76 on Sunday.

Grit.  It’s not born in you.  You learn it.  Not quitting.  It’s not a gift from a Creator, anyone can do it. Tiger has all that in spades.  You can you will you must.  MTXE.

Great metaphor for entrepreneurship.  Guys who run their own business that they built are like that.  I am reminded of a few people I know who built their businesses from nothing to multibillion-dollar companies.  Some public, some not.

Tiger also had to suck it up and present the green jacket to the new champ, Dustin Johnson.  He couldn’t go sulk and feel sorry for himself.  He never plays the “victim” card, ever notice that? He wins and loses with class.

I don’t care what happens in the future with Tiger.  He will always be one of the greatest champions for me.  Today’s back nine showed why.

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Who Do You Vaccinate First?


This post is by Jeff Carter from Points and Figures

One of the things I love about statistics is they are counter-intuitive.  People love stats when they confirm their gut feeling.  They hate them when they don’t.

John Cochrane was a professor at Chicago Booth. He’s at Stanford now.  I hope someday he goes back to Chicago.  Austan Goolsbee needs a counterweight but I digress.

He wrote a post about Covid.  It’s fantastic.  But one line that stood out is this one:

“But the hard fact is, give it to one millennial bar hopper and save the 25 people he would give it to.”

My gut feel was to innoculate old people first.  My reasoning was they were the most vulnerable to death.  I was wrong.

This idea smacks of putting armor on WW2 planes.

But the real reason against additional armor is that the holes precisely showed the strongest parts of the plane since the plane survived despite the damage it suffered.

To put it simply, the plane survived despite being hit on those specific parts, and that means that those badly-hit parts can withstand enemy fire. 

And boiled down to its essence: The holes revealed the parts that needed the least additional protection.

Hmmmm, survivor bias….the end result of Covid is death and the end result of not having a properly armored plane is death too….so the stakes are similar.

Going further with statistics, I saw this from Wirepoints.  Illinois has seen a spike in cases, but deaths are down.  Not just down. Statistically, you have a higher probability of dying from a gunshot in Illinois than you do of Covid.

The issue of course is that the highest percentage of people testing positive are age 20-49.  They have a 99.99% survival rate assuming no co-morbidities.  It’s not if you can run a marathon after Covid like you used to, it’s if you live or die right?

Cochrane says if the stats are right we are approaching herd immunity in the US as opposed to the herd mentality of politicians and bureaucrats that want to shut the country down again. Just a tip, it didn’t work last time and it won’t work this time.

Turns out the Pfizer vaccine should be given in mass quantities to people aged 18-50 first.  Old people are vulnerable for sure, but they are more likely to get it from a younger person spreading it around than from another older person.

Don’t you hate statistics?  But they can tell us so much.

The post Who Do You Vaccinate First? first appeared on Points and Figures.

Sometimes Sticking Your Head In The Sand Is A Good Idea


This post is by Jeff Carter from Points and Figures

One of the tougher things to do sometimes is to tune out the noise.  It’s very hard to be objective in an emotional situation.  That is true in all kinds of things, and it’s true with the US Presidential election.
I would suggest to keep your sanity no matter which party you follow to ignore all news, speculation, data, and realize you have zero control over the situation or outcome.  There is no data you will offer up that will persuade the other side.
A long long time ago, I happened to be listening to Rush Limbaugh.  He said America’s next Civil War would be over abortion.  I pooh-poohed it.   However, if I look at things today and base the judgment on how Supreme and other Federal judge hearings are based, the core dividing issue is abortion.
Don’t believe me?  Let’s play Devil’s Advocate.  Merrick Garland was a qualified justice.  20-30 years ago, he gets confirmed even at the time he was nominated.  Unfortunately for him, he got caught in the crosshairs of a political fight.  There is no doubt the core issue was the way each political party mistrusts each other and the issue of abortion.  Garland wouldn’t have ruled against Roe vs Wade.
You don’t believe me do you?  Why was Robert Bork denied a spot on the Supreme Court?  It wasn’t his ruling on antitrust.  Why was Clarence Thomas taken through the mud on the way to his confirmation?
Still don’t believe me?  What was the first thing that happened when Justice Ginsburg and Justice Scalia died?  Abortion rights advocates peppered the press, airwaves and all other forms of conversation with fear-mongering over abortion.
You can peel the onion any way you want, but abortion is at the core.
Bear this in mind if you are a Republican.  Even if there is fraud found in elections, it’s usually not enough to overturn an election.
Democrats should be thanking Trump if he finds fraud.  The Constitutional Republic cannot stand if elections are filled with fraud.  Republicans would retort that they don’t want it to stand so what do they care?  However, over the past four years we have heard a lot of talk about someone shredding the Constitution so let’s assume that everyone wants the Republic to win out in the end.  America is not a straight democracy.  Anyone who has studied Plato knows direct democracy leads to chaos which leads to totalitarianism.  The Founders knew this all too well which is why America is a Constitutional Republic.
I do think that there is enough out there that Trump deserves his day in court.  Al Gore was a sitting Vice President and was given 33 days.  Trump deserves the same as a sitting President.
The core question: Was there fraud?  Based on anecdotal evidence, yes there could be fraud.  If you know the history of Democratic Party political machines in big cities you know historically they have committed fraud to win elections—not just against Republicans but within their own party to elect favored candidates.
The question then becomes, how do we handle it?  We know neither political party nor their bases trust each other.  There is only one way we can do that and keep the peace and that is to do it in a transparent and objective court of law.  Fortunately, we have those in America.
Here is what my decision tree with speculative outcomes looks like:

Trump doesn’t get his day in court and the media working hand in hand with the Democratic Party rushes.  Trump doesn’t get any chance to prove anything.

  1.  A thousand conspiracy theories will bloom given the mistrust between the two parties.
  2.  America inches closer to Civil War.

Trump gets his day in court and doesn’t prove that there was any fraud.  By the way, this is what Democrats all over America plus their media acolytes are contending right now.

  1.  Republicans will accept the outcome.
  2.  America moves on.

Trump gets his day in court and proves there was fraud, but not enough to overturn the result and Biden becomes the President-elect.

  1.  Republicans will accept the outcome grudgingly-and will try to legislate to stop future fraud.
  2.  Democrats will fight them to keep fraud since they won.
  3.  America moves on

Trump gets his day in court and proves there was fraud, and there was enough to overturn the election.  Trump stays President until 2024.

  1.  Democrats will not accept the outcome
  2.  Republicans will legislate to prevent fraud in future elections and Democrats will fight them.
  3.  Riots will break out all over America.
  4.  We will inch closer to Civil War

In my decision tree are some variables that I didn’t elucidate about.  For example, suppose Trump proves there was fraud in Pennsylvania, and the state legislature votes the electoral votes?  Would that lead to more chaos, or less chaos?  The Supreme Court of the US will probably have to rule if the state court of Pennsylvania overstepped its Constitutional bounds or not.  If they rule one way or the other, more chaos or less chaos?

You see, we know there are some people on the left that don’t care-they will riot no matter what because they want to topple capitalism.  On the right, there are some people that don’t care either.  They want to enforce their will on everyone no matter what.

We are in a terribly sticky situation.  One friend of mine says to pray and if you are religious, you probably ought to be doing that.

The post Sometimes Sticking Your Head In The Sand Is A Good Idea first appeared on Points and Figures.

What To Do Now?


This post is by Jeff Carter from Points and Figures

Two part post:

For Trump:

Who died and made the media king?  If we learned anything over the last four years, there was incredible bias against Trump that we have never seen before.  Ask Matt Taibbi or Glenn Greenwald. Ask Kim Strassel.  The press has always been liberally biased.  But, we haven’t ever seen what we just experienced.  PRAVDA-like.  Why should we trust them to make a call either way?

Trump should definitely fight.  File lawsuits in court.  Ask for recounts. The court is the only objective place to prove fraud.  Videos, the media, and nowhere else can you prove it. Only the court. It’s objective, it’s evidentiary.  It has procedures.  It has gravitas.

If he proves it in court, it’s good for America.

Second, even if he proves fraud happened it might not be enough to overturn an election.  In that case, he should exit gracefully.

If it is enough to overturn the outcome, Biden should exit gracefully.  It’s America.  We need fraud-free elections and both candidates ought to cut the hyperbole and just litigate it peacefully in the court.  If Biden is confident he won fair and square, he should have no problem with going through that process.

So it takes a month.  Who cares?  A month is a blip in the timeline of history.

For the Democrats:

1) How do you justify your agenda of racial equality, climate action, etc. when 48% of voters rejected you?

2) Given that a large group of your voters voted against Trump, how do you claim any mandate other than not acting like Trump?

3) Given that the main complaint from your party was that Trump failed to follow norms of behavior, will you be asking the Clintons & Obama to retire from the public life, as per tradition?

3a) Will you be bringing the filibuster back to the Senate now that Harry Reid abused it, and Mitch McConnell abused it?

4) How can you justify changing course in the Middle East since peace has broken our?  Will you be renewing prior policy with Iran?

5) You framed the election as a battle for America’s soul and 48% of Americans voted against you, will you concede that your framing of the campaign was invalid? If not, how do you square that?  If we apportioned electoral votes, you would have lost narrowly 270-268.

6) Will you denounce Rep. Ocasio-Cortez’ Purge List of Trump Enablers?  Will you denounce and expunge the socialists and communists that reside comfortably inside your party?

7) Your party whined terribly about the deficit.  How will you be changing the course of spending to decrease the functional deficit, not by using accounting hocus pocus?

For the media:

How will you redeem yourself?  Will you issue a mea culpa?

 

thanks blowhards for input on this post.  they know who they are.

 

The post What To Do Now? first appeared on Points and Figures.

What Should The Republican Party Do Now?


This post is by Jeff Carter from Points and Figures

Strategy going forward for the Republican Party:

  1.  Kick the Lincoln Project people and the Never Trumpers to the curb.  The GOPe that fought and undermined Trump?  You don’t need them nor do you want them. They aren’t for people they are only for themselves.  Replace Jeb Bush with Trump, or Romney with Trump.  They’d have conceded days ago, and would be talking to their agents about speaking fees while setting up country club tee times and ordering catering for at-home dinner.
  2. Kick out the consultants, the grifters, the non-government organizations who do nothing but chatter type people from leadership positions.  They are wrong half the time and when you are in a fight you can’t rely on them.  Ask my friend Dan Proft about Illinois….you don’t want to go there.  The Republican Party in Illinois is a feckless, lifeless, rudderless, flaccid piece of crap. Viagra wouldn’t help them and if it lasted for more than four hours they wouldn’t know what to do.
  3. The big takeaway from this election is this:  do big time reach out to Hispanics and Blacks. Don’t send them candy.  Go out, interact with them. ASK QUESTIONS. LISTEN.  ASK MORE QUESTIONS.  Then, go to the states you control the legislature and governor and enact free market individual liberty focused policy that reflects what you learned.  Be a party of action.  As we know, Joe Biden was in government 47 years and what did he accomplish?  Be doers.
  4. Talk about the “dignity of work” and recruit people that think that way.  Poor Whites and all minorities generally value the dignity of work and ironically have a lot of free-market values.  Most aren’t interested in government handouts that warehouse them.  They want a chance.
  5. Fill every single open federal court position in America by December 31.  If you lose the Senate the holy hell that is going to be facing the minority will be tiddlywinks compared to what Harry Reid did, and the slap back McConnell gave.
  6. Don’t abandon voters like this that have no hope.
  7. Propose term limits for Representatives and Senators.  12 for Reps, 18 for Sens.

For example, from all data I can gather school choice is a very popular policy with lots of people.  Why isn’t Texas enacting it statewide?  Mississippi? Alabama?  Florida? South Carolina?  Tennessee?  Utah?  Idaho?  Indiana?

I don’t want to hear “We have some, we are doing a good job.”  Now is the time to be aggressive.  You have two years until another election, and four years to another big one.  You can change a lot of hearts and minds with action.

I also don’t want to hear Republicans say, “Well, we got a few more votes, turned some House seats and saved/almost saved the Senate”.  You don’t set the agenda and put in place policy by losing the big elections.  You have to win.  We don’t want a bunch of Bob Michael’s to run the Republican Party.  If you don’t know who he is look him up.  Mr. Permanent Minority.

Yes, you will lose elections.  You can look for grains of positivity, but you still lost.  Why?  Figure it out and come back fighting to win, not meekly.  Given the history of the Republican Party I am afraid they will be Romney/Bush meek.  That’s not your role model.  Trump might not be either but at least he fights.

If the state has to, reject all federal education dollars and go into deficit spending to change school to a school choice only program.  Make education competitive.  I don’t care about the teacher’s union because they are not going to be on your side.  It’s a way to break it up and decrease the influence of it.  On a small scale it seems to work for Hillsdale College.

  • Invest your time and energy recruiting small businesspeople, entrepreneurs, independent contractors, tradespeople. Expose them to 1776 Unites, The Policy Circle and organizations that are grassroots like that which will put them in networks with people similar to them. They are people of action and will be more in line with free-market policies.
  • Do not lead with social issues.  Reject identity politics.  Reject victimization. Expose it.
  • Do everything in your power to crush public-sector unions.  That means 401(k) pensions.  It means being a right to work state.  No surrender on that.
  • Clean up your voter rolls and make them squeaky clean.  Come up with a new process and procedure to take the human variability part of elections out of the order of operations. Voter ID in the short run is a must.

Here is a policy example. A stupid question is “Are you pro-choice or pro-life?”. It’s asinine.  Who doesn’t love a baby?  The most ardent pro-choice people have children and love them.

Instead, shouldn’t we be asking questions about why people even have to make that decision at all?  Shouldn’t we be talking about changing the opportunities available to them so that they don’t follow the dreadful path that forces them to a decision like that?

Would they be in that position and make the same decisions if they had a better education?  Hope for a better life?  More options?  It’s worth thinking about.

That’s my takeaway from the election.  I am seeing other takeaways that show racism is alive and well with its corresponding white supremacy.  That’s bullshit and F&^% those people.  I have no time or mental energy for them.  They are clueless.  Racism in America for the most part is dead.  It’s a relic of the past and only kept alive by the left to get what they want.

What people want is opportunity.  If you are a Republican-dominated state, now is the time to change policy drastically and give opportunity to them.  You will be surprised what happens when people experience freedom.

 

Thanks blowhards for your input. They know who they are.

The post What Should The Republican Party Do Now? first appeared on Points and Figures.

Deactivating Twitter


This post is by Jeff Carter from Points and Figures

I deactivated my Twitter account yesterday.  I have been thinking about it for a while, so it wasn’t done suddenly.  I had 10k followers or something and I really didn’t care or get an ego boost based on my followers.  I know I was shadowbanned because a lot of people I know who know how those things are done told me.

For me, the killer was how many stupid people were posting different things.   The other killer was the realization of how absolutely evil and hateful many people were, including their CEO.  Jack Dorsey is a great entrepreneur, but a pretty evil guy when you delve into the acting out of his core beliefs.  Financial advisors and venture capitalists I followed were evil too.  They’d easily round conservatives up into camps and prime us for re-education.  Even if they were Jewish!

There is no chance for nuance and productive thought on Twitter.  It’s intellectual candy.

The other thing was how Twitter put its thumb on the scale to try and tilt public opinion.  It was obvious.  They don’t care and think they too big to go out of business.  Being on Twitter, even if you don’t tweet helps their business.  I can get that information anywhere, and there is no need for me to find out “breaking news” every second.

Get off Twitter if you are a Moderate or a Conservative.  Bust up their business model.  Hurt them in the pocketbook.  It’s already a left-wing echo chamber but make it more so.  It will not change them.  But, it will provide room for competition without regulation.

 

The post Deactivating Twitter first appeared on Points and Figures.

Apportionment?


This post is by Jeff Carter from Points and Figures

A lot of people I know on the left say the Electoral College is racist.  Man are they ignorant.  They are also stupid.  Racism doesn’t exist in America the way the left tells it.  If you don’t believe it read this.

Anyway, here is exactly why there is an Electoral College.  Federalist 39 and Federalist 68.  The Federalist Papers explain the thought process behind the Constitution and operations of government.  We have bastardized it over time.  The Federal government has way too much power, and the Executive Branch of the Federal government has way too much power in the Federal government.

Lately, I have seen some interesting arguments to apportion the Electoral College.  That would mean instead of each state giving all it’s votes to a candidate, it would be apportioned by districts.

The spirit of the Electoral College is to eliminate the influence of larger states over smaller states.  When the country started, Virginia would have run the country.  I realize with all the government bureaucrats that live in Virginia they still think they do.  But, today, it would be Florida, New York, California and Texas.  Probably not cool with people in South Dakota or Rhode Island.

We wouldn’t have a union without the Electoral College.

Today in a state like Iowa or Minnesota, cities overwhelm rural areas.  Rural areas get stuck with a lot of bullshit passed by urban dwellers.  We are seeing cracks, upstate NY wants to split with NYC.  Downstate IL wants to split with Chicago.  In this last election counties in northeast Oregon voted to split and go into Idaho.

I saw a comment on a blog and someone said they did the math for this election.

When a candidate won a state by a large margin of at least 2:1, both electoral votes associated with Senators went to that candidate.  Otherwise, it was 1:1.  Then he split up the states based on representative districts.

Result:  Trump 270 Biden 268.

We are a terribly divided country. As divided as we were in 1860.  You can spin it any way you want.  But, the simple fact remains we are terribly divided.

The post Apportionment? first appeared on Points and Figures.

Blockchain Voting


This post is by Jeff Carter from Points and Figures

No matter which candidate you voted for in the recent US election, you should be upset at the way votes are cast and counted.  Constitutional Republics need certain things to thrive and sustain themselves.  Fair and transparent elections without fraud is one of them

I come from Illinois.  The Democratic Machine in Chicago has institutionalized fraud into the election process.  As an election judge, when someone showed up and the signature didn’t match, legally you had to let them vote.

Republicans do not trust Democrats, and Democrats do not trust Republicans.  We hear about 123k votes for one candidate, or bags of mail in votes being found and everyone is suspect.

Across the country, people were given Sharpies to vote and it screwed up ballot counting.  You might recall in 2000 we had “hanging chads” with punch through ballots.  Having a secure digital process would eliminate a lot of havoc.  Critics of that process have pointed to voting machines being pre-programmed and they are right to cast a critical eye on any digital process.  However, blockchain provides an avenue to do it.

One of the hard things about voting in elections is that each of the fifty states has its own law around registering, distributing, collecting, and casting ballots.   From a national perspective, I think the country can offer up best practices which should harmonize the rules.

First Principles:

First, every single state has to clean up its voter rolls.  Dead people have voted a lot in Illinois and we are hearing reports that it happened in Michigan last Tuesday.  You cannot have free and fair elections without squeaky clean voter rolls.

Second, only citizens over the age of 18 can vote.  No immigrants.  No illegals. Those citizens have to register.  Voting is not passive.  It’s active.

Third, same-day registration invites fraud.  It should be illegal.  In order to have an orderly counting process, states ought to know what their registration is a month ahead of time.  We know statistically what turnout is.  It helps states staff and deal with the operational challenges of counting votes.  Sorry, if you are too lazy to register, you don’t get to vote.  It’s an active process performed by citizens.

Fourth, ballots have to be cast on or by Election Day. Voting also shouldn’t take place for a month. A couple of weeks ahead of election day ought to do it.  Because we are beholden to an unverified or at least sloppily verified process, we are stuck with a long drawn out process.  A digital process would change that significantly.

So, how do you do it?

Blockchain provides a solution provided we implement it correctly.  It’s immutable and verifiable.  Very tough to change, and almost fraud-proof as long as the inputs are clean and fraud free.

Each citizen who registers to vote gets a unique code.  We do it with Social Security numbers so this is not difficult.  That code stays with them for the rest of their lives.  When they die, as soon as their death certificate is recorded it is extinguished.

When you move from area to area, a digital registration can move with you.  Delete from one voter roll and get added to another.  Use your code to verify the change.  For example, if I had a digital code when I moved from Illinois to Nevada, I could have used that code to register in Nevada.  I could have updated my address, and taken a photo of a document that proved my new residency.

The code you are given can only be used once.  Once you vote in person, off of your computer, or off of your phone/tablet, the code is recorded and cannot be called back.  It cannot be duplicated.  As soon as you vote, it would show on the voter roll so that if someone tried to be an imposter they’d be found right away.  Hopefully arrested right away too.

Digital voting means if I am out of the country, I don’t have to worry about whether my ballot gets there on time or not.  I am not subject to the randomness of the post office.

This is something that needs to happen before the next Presidential election.

The post Blockchain Voting first appeared on Points and Figures.

YCharts Exits to LLM Partners


This post is by Jeff Carter from Points and Figures

YCharts is the best charting service around for professionals to investigate the stock market and find structural holes that they can relay to clients to build wealth.  I am a seed investor.  Last week they exited to a private equity firm and recapitalized the company.

I decided to blog about it because there are a lot of important lessons to be learned about investing in startups from this exit.  I am still going to keep the blog on ice for a little bit though.  I do miss blogging regularly, so at some point it will come back.  Thanks for all your notes.  This blog NEVER received a lot of comments so you never knew how many people were really reading it.  Turns out, a lot.

It is interesting to note that Hyde Park Angels, the angel group in Chicago that I started in April of 2007 has had successful exits with almost all of its first few investments.

  • Shuffletech.com
  • Gradebeam.com
  • UICO.com (still operating and the leader in touchscreen technology)
  • Ycharts.com
  • Brilliant.com

I don’t think any seed investors expected that.  My favorite line on seed investing came from my friend Brian Hand.  Once he said at a presentation, “When you invest in a startup, you might as well take the money to the toilet and flush it away because the odds are you will never ever see it again.”

All of the companies above had positive returns.

One thing I don’t like about the way VC firms present themselves is on exits.  Go to websites and they have little banners that show all these firms as “exited”.  It doesn’t say if they made money or not.

As an old trader, we all know people lose money.  If you don’t lose money, you aren’t taking risk.  I think if you lose money you ought to be transparent about it.  At HPA right around when we invested in Brilliant, we invested in Tap.me and did a very small investment in Noblivity and we lost money on both.  I have lost on more companies than I have made but the trick is to have outsize gains to make up for the losers.  It’s also important to be disciplined about check size, and for a fund to be disciplined about ownership percentage.

I have some thank you’s I want to make publicly.

Personally, I want to thank the original CEO Shawn Carpenter for starting YCharts.  He brought the deal to HPA when we were still a fledgling angel group with not a lot of people and only three investments under our belt.  He pitched it in 2009 and we didn’t invest until 2010.

I also want to thank two HPA people.  Richard Box for illuminating the group on how the back end of YCharts worked.  All the traders I recruited to the group understood the power of the charting.  It was how the guts worked that turned our heads.  RH Bailin for stepping up and being a deal lead and serving on the board until he retired from the group.  They made a difference and you don’t get to exits without a team effort.

I also want to thank Bob Giammanco and Jeff Kleban for picking up the baton and serving as board member and observer after left.

I am very grateful to Sean Brown and want to thank him for becoming the CEO of YCharts.  He took over the company when it was in a very precarious situation.  This doesn’t happen without the above people but it certainly doesn’t happen at all without Sean.  He is a great CEO.   I interviewed him on a podcast and he laid out his philosophy there.  I am grateful to Sean because a lot of people wouldn’t have wanted to accept the challenge.  Sean had just gotten done running a different company, and wasn’t actually looking for a new gig and this one fell into his lap.

Sean built a great team, and culture.   He stayed extremely focused and tight.  I have spoken randomly to wealth managers and they have told me YCharts is indispensable to them.  That’s before they knew I was an investor.

The path to success in startup land is a long and winding road.  Every startup usually goes through at least one moment where they look like they are going out of business.  As a CEO, when it happens keep your head and calmly assess your options.  As an investor, you cannot panic.  You must work to keep your emotions under control so you can be a port in the storm for the CEO.

The path to exit truly is a journey.  At the beginning, you are at the bottom of the foothill on the plains.  You begin to climb and you don’t actually know how you will get to the top.

Exits from LBO funds are going to become a lot more common.  PE has a lot of money to put to work.  I always thought YCharts would sell to another Fin Tech company.  In the other companies I listed, only one sold to a corporate, Gradebeam.  The rest were creative finance and Shuffletech was a patent lawsuit.  All of them are in business in one way or another because the entrepreneurs behind them created something of value that customers wanted.

It is instructional to note that when seed investors like this make money, they plow it back into new startups.  That is how Silicon Valley was built.  This is contrary to the “greedy capitalist” spin that is currently a part of our national conversation.
Many of the initial seed investors in YCharts have left the state due to the corruption in government which has led to Illinois and the city of Chicago being insolvent.  When your sitting governor cheats on his property taxes prior to being elected, you know as a normal person you don’t have a chance.  Will the money YCharts investors earned get reinvested back into Chicago?  It’s not a slam dunk that it will.   The risk is a lot higher today than it was in 2010 because of how screwed up fiscal policy is and expected future tax policy.  Chicago and the state would be better off going through a bankruptcy process to get things straight.
If you are running a business in Chicago reading this, and you aren’t a customer of one of HPA’s companies, why not?  You support the startup community by being a paying customer, not just by investing. You’ll do more for the city by patronizing startup firms based in the city than you will be donating to some non-profit organization.  Every wealth manager in Chicago ought to be using YCharts.  If they aren’t, they are missing data and potentially losing customers to wealth managers that are using YCharts to give great insights to their clients.
It’s also interesting to note that historically, the trading community does things outside of trading in Chicago to build the city.  Traders built the Art Institute.  Ken Griffin is doing it today.  I was a trader and started HPA.  Doug Monieson was a trader who I recruited and was the first chair of the board and now is running UICO.  RH Bailin was a trader who led several deals and invested in several HPA backed companies.  Many other traders were initial or are members of HPA.  Perhaps politicians ought to think about that before they pass a transaction tax on LaSalle Street.
I think Ycharts will continue to grow as a part of LLR Partners.  They have grown this year despite COVID and that is due to the efforts of their entire team.  They are in a space that is growing and from the outside, it looks like the LLR strategy is a good way to attack their target market.

 

 

 

 

 

The post YCharts Exits to LLM Partners first appeared on Points and Figures.

YCharts Exits to LLM Partners


This post is by Jeff Carter from Points and Figures

YCharts is the best charting service around for professionals to investigate the stock market and find structural holes that they can relay to clients to build wealth.  I am a seed investor.  Last week they exited to a private equity firm and recapitalized the company.

I decided to blog about it because there are a lot of important lessons to be learned about investing in startups from this exit.  I am still going to keep the blog on ice for a little bit though.  I do miss blogging regularly, so at some point it will come back.  Thanks for all your notes.  This blog NEVER received a lot of comments so you never knew how many people were really reading it.  Turns out, a lot.

It is interesting to note that Hyde Park Angels, the angel group in Chicago that I started in April of 2007 has had successful exits with almost all of its first few investments.

  • Shuffletech.com
  • Gradebeam.com
  • UICO.com (still operating and the leader in touchscreen technology)
  • Ycharts.com
  • Brilliant.com

I don’t think any seed investors expected that.  My favorite line on seed investing came from my friend Brian Hand.  Once he said at a presentation, “When you invest in a startup, you might as well take the money to the toilet and flush it away because the odds are you will never ever see it again.”

All of the companies above had positive returns.

One thing I don’t like about the way VC firms present themselves is on exits.  Go to websites and they have little banners that show all these firms as “exited”.  It doesn’t say if they made money or not.

As an old trader, we all know people lose money.  If you don’t lose money, you aren’t taking risk.  I think if you lose money you ought to be transparent about it.  At HPA right around when we invested in Brilliant, we invested in Tap.me and did a very small investment in Noblivity and we lost money on both.  I have lost on more companies than I have made but the trick is to have outsize gains to make up for the losers.  It’s also important to be disciplined about check size, and for a fund to be disciplined about ownership percentage.

I have some thank you’s I want to make publicly.

Personally, I want to thank the original CEO Shawn Carpenter for starting YCharts.  He brought the deal to HPA when we were still a fledgling angel group with not a lot of people and only three investments under our belt.  He pitched it in 2009 and we didn’t invest until 2010.

I also want to thank two HPA people.  Richard Box for illuminating the group on how the back end of YCharts worked.  All the traders I recruited to the group understood the power of the charting.  It was how the guts worked that turned our heads.  RH Bailin for stepping up and being a deal lead and serving on the board until he retired from the group.  They made a difference and you don’t get to exits without a team effort.

I also want to thank Bob Giammanco and Jeff Kleban for picking up the baton and serving as board member and observer after left.

I am very grateful to Sean Brown and want to thank him for becoming the CEO of YCharts.  He took over the company when it was in a very precarious situation.  This doesn’t happen without the above people but it certainly doesn’t happen at all without Sean.  He is a great CEO.   I interviewed him on a podcast and he laid out his philosophy there.  I am grateful to Sean because a lot of people wouldn’t have wanted to accept the challenge.  Sean had just gotten done running a different company, and wasn’t actually looking for a new gig and this one fell into his lap.

Sean built a great team, and culture.   He stayed extremely focused and tight.  I have spoken randomly to wealth managers and they have told me YCharts is indispensable to them.  That’s before they knew I was an investor.

The path to success in startup land is a long and winding road.  Every startup usually goes through at least one moment where they look like they are going out of business.  As a CEO, when it happens keep your head and calmly assess your options.  As an investor, you cannot panic.  You must work to keep your emotions under control so you can be a port in the storm for the CEO.

The path to exit truly is a journey.  At the beginning, you are at the bottom of the foothill on the plains.  You begin to climb and you don’t actually know how you will get to the top.

Exits from LBO funds are going to become a lot more common.  PE has a lot of money to put to work.  I always thought YCharts would sell to another Fin Tech company.  In the other companies I listed, only one sold to a corporate, Gradebeam.  The rest were creative finance and Shuffletech was a patent lawsuit.  All of them are in business in one way or another because the entrepreneurs behind them created something of value that customers wanted.

It is instructional to note that when seed investors like this make money, they plow it back into new startups.  That is how Silicon Valley was built.  This is contrary to the “greedy capitalist” spin that is currently a part of our national conversation.
Many of the initial seed investors in YCharts have left the state due to the corruption in government which has led to Illinois and the city of Chicago being insolvent.  When your sitting governor cheats on his property taxes prior to being elected, you know as a normal person you don’t have a chance.  Will the money YCharts investors earned get reinvested back into Chicago?  It’s not a slam dunk that it will.   The risk is a lot higher today than it was in 2010 because of how screwed up fiscal policy is and expected future tax policy.  Chicago and the state would be better off going through a bankruptcy process to get things straight.
If you are running a business in Chicago reading this, and you aren’t a customer of one of HPA’s companies, why not?  You support the startup community by being a paying customer, not just by investing. You’ll do more for the city by patronizing startup firms based in the city than you will be donating to some non-profit organization.  Every wealth manager in Chicago ought to be using YCharts.  If they aren’t, they are missing data and potentially losing customers to wealth managers that are using YCharts to give great insights to their clients.
It’s also interesting to note that historically, the trading community does things outside of trading in Chicago to build the city.  Traders built the Art Institute.  Ken Griffin is doing it today.  I was a trader and started HPA.  Doug Monieson was a trader who I recruited and was the first chair of the board and now is running UICO.  RH Bailin was a trader who led several deals and invested in several HPA backed companies.  Many other traders were initial or are members of HPA.  Perhaps politicians ought to think about that before they pass a transaction tax on LaSalle Street.
I think Ycharts will continue to grow as a part of LLR Partners.  They have grown this year despite COVID and that is due to the efforts of their entire team.  They are in a space that is growing and from the outside, it looks like the LLR strategy is a good way to attack their target market.

 

 

 

 

 

The post YCharts Exits to LLM Partners first appeared on Points and Figures.

Breaking Silence, One Post to Stop Gossip


This post is by Jeff Carter from Points and Figures

I am not starting to blog regularly again.  My points in my last blogpost still stand.

However, a momentous moment in my life has come and I wanted to share it with people because I don’t want any third-hand conversation to come of it.   If I write it there is an original source and it cuts down on gossip.  People ought to look at more original sources since there is so much fake news and conjecture out there.  Except, to do that, you have to be a good critical thinker.  You can’t be a sheep.

My wife and I are moving from Chicago to Las Vegas.  We sold our condo, and Francis Parker School bought it.  I haven’t been in Chicago or Illinois much this year, less than 40 days since January 1.

I also wanted to set the record straight on the sale since there is so much incorrect information in the Chicago Tribune and on the news.  Trib reporter Ryan Ori got played.  The media in Chicago is not very bright and only jump on stories when it fits their confirmation bias.  In this case, they wanted to spin a story about how a bunch of wealthy people at a tony private school were encroaching and invading a neighborhood.  Nothing could be further from the truth.

In fact, the people fighting on the other side all are living in million dollar plus apartments.  You don’t live in an apartment like that unless you have a great income or some money.  For the record, there were no million-dollar apartments in my building.  Most were 1 bed/1 bath.

I also wanted to write about it because I know there are others in my shoes in different situations that are contemplating the same things.  Many have reached out to me.

Part One-stuff you probably already know and are thinking

Yesterday, we closed on the sale of our place in Chicago.  In August, we bought a place in Nevada.  We will be moving out of Illinois to Nevada in 26 days.  I was born, raised, and worked in Chicago.  I won’t die there.  For the last five years, my wife and I have left Chicago in the winter to “try on” different places.  We did it not only because of winter but because the fiscal and political situation in Illinois was so utterly broken it wasn’t worth it to stay.  We bought an apartment in Chicago we could keep as a Pied a Terre and knew we’d not be here in the winter.  In the summer, we spend a lot of time in northern Minnesota at a small fishing cabin we rehabbed.  It’s a whopping 625 square feet, not a luxury place.  It’s very remote.  Minnesota is not a place to relocate to though since it is a very high tax state.

Here are some things I want to make absolutely clear.

  •  I think the health of the Chicago startup community is okay.  It could be a lot better.  It could be a lot worse.  The riots and violence aren’t helping to attract people or talent.  Chicago needs more seed and Series A funding but it always has.  Maybe the flight from Silicon Valley will help, but I doubt it.  People are leaving the Valley and going to Colorado, Utah, Nevada and Texas.  In the next ten years, some great companies will come out of Chicago.  They are being built here today.  I am invested in some of them.  The entrepreneurs in the community for the most part are great people and they are committed to staying in Chicago.   I will miss interacting with it on a daily basis.  But, there is also little opportunity for a person like me here.  It’s a closed network.  Chicago needs to watch out, Denver and Salt Lake City along with Reno and Las Vegas are growing their entrepreneurial communities quickly.  They have advantages too.  With the city clearing out, it will be a steeper climb for the startup community.
  • P33 isn’t really doing crap to help or hurt the startup community.  It’s an ego effort for insiders.    Don’t suck up to it. Investors and entrepreneurs are building the community. They don’t need anyone’s “help”, but they could use support in the way of more investment cash, or more ready customers willing to take a chance on a startup.
  • We spent time in Austin, Texas; Jacksonville, FL; Nashville, TN; Silicon Valley, CA; Las Vegas, NV; and Scottsdale, AZ.  We even thought briefly about South Carolina.  A number of years ago we looked hard at Michiana.  Chicago people will know where I mean.
  • Like anyone, my wife and I have preferences and constraints.  Las Vegas was at or near the top of the list for almost all of them.  Las Vegas might not fit you but we will give it a try.  A very close friend of mine is moving to South Carolina because they love boating and the east coast.  He hates the desert.  Vegas wouldn’t work for him.  I don’t gamble, so access to casinos wasn’t a part of the equation.
  • One constraint we had was snow. We like to be outside and I don’t ski.
  • Another constraint we had was 0% income tax to very low-income tax.
  • We wanted low property taxes (Texas out).
  • We wanted a great airport where you could fly direct non-stop like O’Hare with a multitude of carriers.
  • We wanted to be able to travel easily to see our children. One lives in LA, one lives in Chicago.
  • We wanted lower sales taxes than Chicago which are 10.25%
  • We wanted a place where politics wasn’t the center to almost every conversation, and relationship.  I was sick of going to parties and being introduced as, “our Republican friends”.
  • By the way, I couldn’t even rent a trailer in Chicago until October.  I rented one in Grand Marais, MN and hauled it back to Chicago.  I also saved a couple of hundred bucks doing it.
  • Governor Pritzker said he wasn’t changing anything until there is a vaccine. That might be the dumbest policy I have heard.  Talk about not understanding probability or science.

If I was at a different stage of life with kids in high school it might be different.  But, if my job was virtual and not in person on the trading floor I would have pulled them out of school and moved.  There are plenty of ways to school kids and there are plenty of great schools in other parts of the country.  Chicago is fiscally toasted, and its leadership prior to and including Lightfoot is morally bankrupt.

When a city mayor, a state governor, and their entire posse of cronies allow people to destroy a city and state in the name of ousting a sitting President, you should understand they will do anything they want to you whenever they want.

There will be no honor in staying and fighting.  You aren’t “chicken” if you move.  Any victory might be Pyrrhic anyway.

I had an acquaintance that pulled his children out of Catholic school and hightailed it to warmer climes.  He loves it and the kids love it.  Some of his kids were in high school and middle school.  It’s hard to move with kids in high school but it is not impossible depending on their age.  Would be tough on a senior.  Not as hard up to a sophomore year.

For me, the opportunity costs of staying and fighting versus just moving and enjoying the rest of my life weighed on the side of the moving.  For you, it might be different.  The great thing about costs/opportunity costs is the math equation can be different for everyone depending on their preferences.  Make your own individual decision.  No judgment if you stay and no judgment if you don’t.  But it’s going to cost you bucks if you stay.

Why am I moving?  After all, as of this writing, Illinois is a 0% tax state for retirees.  At age 59.5 November of 2021, I theoretically could benefit.

Here are the reasons why I am moving:

  1.  Violence.  There are trade-offs living in a city.  You tolerate a lot of things if you are safe.  It’s not safe to live in Chicago anymore and none of the political powerbrokers are out in front making it that way. In fact, many are encouraging violence in order to advance their personal political power.  It’s sick.  My wife and I just didn’t feel safe there anymore.  Yes, this is the Democratic Machine’s fault.  Not Trump’s.  The violence was there and tolerated far before Trump.  By the way, if it can happen in Kenosha, WI it can happen in Naperville, IL.
  2. Deterioration of the city and surrounding areas.  The city parks are full of garbage and unkempt.  Streets are full of potholes and garbage.  It’s depressing.  Homelessness is increasing and it’s tolerated by the government.  Moving to the suburbs could be an option but see the point about taxes and fees.  I have no idea why you’d stay in the state if you had to be in Chicago when you can move to Indiana.
  3.  Taxes and fees.  Here is some simple math.  In Illinois, I pay 10.25% sales tax.  Nevada, 8.25%.  How much do you spend a year?  Multiply it by 2% and there are your savings.  The HOA on my teeny apartment was just over $500/mo.  We didn’t have a doorman and it was a one-bedroom one-bath walk-up.  The HOA on the place we bought in a gated community is $245/mo.    Electricity is far cheaper per kilowatt in Nevada than Illinois not to mention all the corruption between Speaker of the House Michael Madigan and Commonwealth Edison.  My property taxes in Illinois were right about $6000/yr and going higher.  My property taxes in Nevada for a 3x larger footprint will be under $8000 and there’s a limit to how much they can increase them.  No income tax in Nevada.  No loopholes to work through.  No special deals or carve-outs.  Yes, I have toilets in my bathrooms Governor.
  4. Expected Taxes and Fees.  Does anyone in their right mind think that Illinois politicians are suddenly going to wake up and get fiscal religion?  Do you think any of them will be truly free-market advocates?  Embrace competition?  That includes Illinois Republicans but frankly, the Democrats run the show and Republicans are merely court jesters at the dance.  There is no end in sight and when politicians float ideas about taxes and fees, I believe them.  Chicago elected 6-8 socialists to the city council and the mayor leans heavily that way along with the tax assessor.  I think the progressive tax will pass but thankfully I will be voting in Nevada.  There will be taxes on services like accounting and law.  There will be a city income tax.  There will be exit taxes.  There will be a wealth tax.  There will be progressive taxes on retirees.  There will be added taxes on private equity, hedge funds, and venture capital firms.  I believe in desperation Chicago will enact a transaction tax on financial trading which will cause everyone to move. Chicago’s economy is diverse, but the trading operations and exchanges are the big straw that stirs the drink.  Illinois will enact taxes on people for days they work in the state of Illinois.  It will be a businessperson’s nightmare and a connected accountants’ dream.  Remember, when politicians say stuff they really mean it.
  5. Corruption.  The entirety of Illinois government, Cook County government, city of Chicago government is morally and ethically bankrupt.  They are corrupt.  I was sick of dealing with it and being a chumbalone.  Because I am lucky enough to do what I do virtually, I can live anywhere there is an internet connection.  A lot of other people will be making the same choice and the state of Illinois is finally going to empty out.  The death spiral has started and there is no end until you hit bottom.  Bankruptcy is the only way out.  This will definitely affect the startup and greater business community.   COVID was the nail in the coffin.  Public policy that was there years and years before anyone knew what COVID has put the state in a casket.  Heck, our governor JB Pritzker is Exhibit A on corruption.  See his property tax scheme.  It really showed his true character.
  6. No incentive for change.  I know a lot of “true believers” in Chicago.  They would vote for Karl Marx ahead of any Republican.  They like to say they are fiscal conservatives and social liberals but mention school choice to them and they fly out of their rockers.  Because the changes happen slowly, like a frog in a boiling pot of water they barely notice it.  At my age, Illinois is not worth my time to fight for it.  God bless people like Richard Porter, John Tillman, Mark Glennon and Ted Dabrowski who shine sunlight where it is needed.  If you aren’t interacting and donating to Illinois Policy or Wirepoints, you should be.  Younger generations can fight but given the history of Chicago and Illinois since its founding, it will take a tectonic shift to change.  Abraham Lincoln had to deal with corruption too.
  7. Many of my friends were moving.  I run with a pretty savvy crowd.  They have been organizing their lives over the past several years to avoid anything in Illinois.  Many own real estate and pay those taxes, but none of the others.  Many just hit bids and left.  More are doing the same.  Florida is the number one landing spot people have gone but I didn’t want to go to southwest Florida.  For me, I like the drier less humid air and no bugs.
  8. My family was gone.  We have one daughter left here.  It’s hard to leave her and I loved randomly seeing her.  We lived close by.  My sisters are gone.  My other daughter, gone.  My parents. gone to Florida.  My wife’s entire family, gone.  Her parents moved to Florida in 1986.  We have siblings or nieces and nephews in Tennessee, Michigan, California, Wisconsin, Nebraska, and Nevada.
  9. Golf. Biking.  I enjoy golfing and I just wasn’t able to do it in the city.  Joining a Chicago country club was out of the question because in the summer I am in Minnesota.  You can’t golf in Chicago nor can you bike a lot from October to May.  But I can in Nevada or most of the other places we were looking at.
  10. Restaurants closing.  The food is one thing that binds someone to Chicago.  However, it’s been gutted by COVID and who knows if it comes back?  Plus, for a lot of food, I can order it on the internet and have the raw ingredients delivered.
  11. Lastly, the weather.  Winters suck and if you don’t have to tolerate them, you don’t. The Mayor was an idiot by not opening the beaches this summer and it doesn’t look like she’s gotten any smarter.  Chicago used to be the greatest summer city in America.  It’s sad what the corrupt politicians have done to it.  Architecturally Chicago is still the most beautiful city in America to me.  A jewel on a lake.  It would be so 2020 if the Sox and Cubs wound up in the World Series with no bars open and no spectators in the parks to watch….

By the way, if you decide to move, “stick the landing”.  Change your license plates, register to vote.  Change your driver’s license.  If you keep your Chicago place make sure you disavow your homeowner’s exemption.  Get insurance in your new state.  Quit your clubs if you have them, or go to non-resident status if it’s an option.  Make a charitable donation to an organization in your new city.  Discontinue all charitable donations to organizations in your former city.  It’s not enough to keep a journal with days out of the state.  You don’t need to buy a place, you can simply sign a lease.

Part 2-the somewhat gossipy part

About the sale of my place.  My condo building sold to Francis Parker School.  I don’t know what they will do with it but at alderman meetings, they have said they have a 100-year plan.  Their headmaster, Dr. Dan Frank, recently wrote a letter.  Dr. Frank is an honorable guy and you have to take him at his word.  Their board of directors is full of upstanding people that have a lot of concern for the kids that go there and the city of Chicago.

If I were a benevolent dictator and doing Parker’s 100-year plan I know what I would do.  I would build dormitories around Parker and turn it into a prep school reminiscent of east coast prep schools.  There are plenty of Parker alums outside of Chicago that would send kids there.  Given its central location, it would draw from all areas of the country.  I’d upgrade my athletic program and draw athletes that also valued education.  I’d offer more scholarships to the middle class and lower-middle-class kids that needed it to diversify the population.  I’d also scrap the social justice education and go hard on a classical education full of humanities, math, science, and arts with a gigantic emphasis on entrepreneurship.

Parker is a great institution in Chicago and it is a draw.  Of course, because of its stature, the Jacobins want to tear it down.  Tearing institutions like Parker down when Chicago has its back on the mat is terribly risky.   It was unfortunate the way the Chicago media spun the story as wealthy predators overtaking helpless people.  Nothing could be further from the truth.

The building we lived in was over 100 years old and when we rehabbed our apartment we found some 100-year-old problems we fixed.  Sometimes, it’s better to tear old buildings down than rehab them.  Sometimes, you have to examine your old habits and break them.  Closed networks like the one that exists in Chicago don’t like to do that.

Here is what anyone that is interested in the sale should know:

  1.  Parker was entirely ethical and above board with our building and the building next door.  They were transparent.
  2.  There were no secret deals.  They negotiated in good faith the entire way.
  3.  Our building voted 100% to sell when the time to vote came.  Prior to the vote, our building had a lot of discussions and give and take.
  4.  Even though my kids went to Parker, I had nothing to do with the transaction.  Once an offer was made, I was interested in selling for reasons I elucidated above.  Every property has a market.  I might have kept it as a landing spot but still relocated out of state.
  5.  I did know Parker had made an offer that was rejected on a cooperative building next to our building before I bought so I thought it could happen.  But, I didn’t bank on it.  If I was, I wouldn’t have spent over $100k on a rehab one year before moving.  If I was sure Parker would have bought, I could have put an extra $100k in my pocket…..I am a capitalist after all.

Once there was an offer on the table, our building’s board did the right thing.  They polled the residents.  When it was apparent 100% didn’t like the first offer but that more than 50% were willing to explore selling, they hired a broker and a lawyer to work through a process.

It is my understanding that the building next door to ours, Belden on the Park, didn’t do that.  If they opened their board minutes to the public we’d see more clearly.  What we heard was the board hid the offer from their residents, didn’t hire a broker or a lawyer.  Instead, they used CBS television to broadcast fake news.  They used Ryan Ori at the Tribune to write articles full of falsehoods.  They disparaged Parker publicly.  They harassed students and harassed parents who only wanted to drop their kids off at school or attend a child’s event.  I was appalled at their behavior.

When my wife and I went to a public meeting with our alderman, a woman told my wife she was a horrible person. We had never seen the woman in our life.

A person we knew set up a website and a Facebook page called “East Lincoln Park Neighbors” and spread falsehoods about Francis Parker. They tried to lead a charge at Parker, our building, and the people in our building.  The language they employed, and the tactics they employed, were straight out of the social justice Saul Alinsky playbook.  It didn’t work thankfully.

In addition, their assertions were false.  For example, property taxes will still be paid as long as the buildings are rental units. The material on the website is fueled by uninformed emotional anger.

I didn’t want to live around people like that.  They make life suck.  Living in the city of Chicago today is a miserable experience and it doesn’t look like it will get better in the next couple of years.  The beautiful garden that has been kept for over half a century is full of weeds and in disrepair.  Garbage litters the parks because they took the garbage cans out. Old Mayor Daley would be appalled.

It’s the fault of the building’s board for not being serious, and then being greedy.  Pigs get slaughtered.  I have no sympathy or empathy for them. This was not a power play of rich connected individuals using clout.  This wasn’t Parker enforcing its own will upon a group of powerless residents.  It was stupidity and greed on the part of the building’s board.

Our building had a minority of people that didn’t want to sell.  I felt a lot of empathy for them, but in a building, you have to work with the majority, not the minority.  If you want total control over your property, buy a single-family home.  Of course, the activist judges at the Supreme Court tried to kill that with their Kelo decision.

Additionally, while we were negotiating with Parker the neighborhood busybodies got Chicago City Council to increase the number of residents needing to vote yes for a deconversion from 75% to 85%.  That hurts the middle class and poor residents of buildings that might want to deconvert.  It didn’t affect ours since we voted 100% to deconvert.  The busybodies also tried to push landmarking, which we know destroys property values.  Interestingly, years ago a Parker parent and neighborhood resident tried to get landmarking in the district but was put off by some of the same people seeking it now.

What’s interesting about Champagne Socialists is they always try to dictate what you can do in your life but don’t actually want the same rules to apply to them.  We spoke with a person who monitored the Facebook page as they were measuring the frontage on their place.  There is only one reason you do that and that’s to find out what it’s worth.

The Champagne Socialists in my neighborhood tried to stick their nose in our arms-length transaction. They unfairly characterized Francis Parker to the point of slander.    They remind me of Gladys Kravitz in the old sitcom “Bewitched”.  I don’t have the right to dictate who they sell to; why should they have the right to dictate who I sell to?  The insults and gossip hurled at people in our building were atrocious.  I would never have done it to them had they sold.  The lawsuits are baseless.

Thank goodness for the Founders and their understanding of capitalism and how property rights are integral to a well functioning capitalistic system.

I have said on my blog and in any conversation I had I’d be leaving Illinois if it didn’t change course and it hasn’t.  We old floor traders mean what we say.  So, screw the politicians and cronies and Champagne socialists.  Screw the appeasers and enablers.  When the Jacobin mob comes for you because there is no bread I hope you run out of cake.  Because they are coming and they won’t stop.  You ride that Socialist/Crony Capitalism tiger at your own peril.

So, that’s what went on. Now back to silence.  See you in Nevada.

 

The post Breaking Silence, One Post to Stop Gossip first appeared on Points and Figures.

Breaking Silence, One Post to Stop Gossip


This post is by Jeff Carter from Points and Figures

I am not starting to blog regularly again.  My points in my last blogpost still stand.

However, a momentous moment in my life has come and I wanted to share it with people because I don’t want any third-hand conversation to come of it.   If I write it there is an original source and it cuts down on gossip.  People ought to look at more original sources since there is so much fake news and conjecture out there.  Except, to do that, you have to be a good critical thinker.  You can’t be a sheep.

My wife and I are moving from Chicago to Las Vegas.  We sold our condo, and Francis Parker School bought it.  I haven’t been in Chicago or Illinois much this year, less than 40 days since January 1.

I also wanted to set the record straight on the sale since there is so much incorrect information in the Chicago Tribune and on the news.  Trib reporter Ryan Ori got played.  The media in Chicago is not very bright and only jump on stories when it fits their confirmation bias.  In this case, they wanted to spin a story about how a bunch of wealthy people at a tony private school were encroaching and invading a neighborhood.  Nothing could be further from the truth.

In fact, the people fighting on the other side all are living in million dollar plus apartments.  You don’t live in an apartment like that unless you have a great income or some money.  For the record, there were no million-dollar apartments in my building.  Most were 1 bed/1 bath.

I also wanted to write about it because I know there are others in my shoes in different situations that are contemplating the same things.  Many have reached out to me.

Part One-stuff you probably already know and are thinking

Yesterday, we closed on the sale of our place in Chicago.  In August, we bought a place in Nevada.  We will be moving out of Illinois to Nevada in 26 days.  I was born, raised, and worked in Chicago.  I won’t die there.  For the last five years, my wife and I have left Chicago in the winter to “try on” different places.  We did it not only because of winter but because the fiscal and political situation in Illinois was so utterly broken it wasn’t worth it to stay.  We bought an apartment in Chicago we could keep as a Pied a Terre and knew we’d not be here in the winter.  In the summer, we spend a lot of time in northern Minnesota at a small fishing cabin we rehabbed.  It’s a whopping 625 square feet, not a luxury place.  It’s very remote.  Minnesota is not a place to relocate to though since it is a very high tax state.

Here are some things I want to make absolutely clear.

  •  I think the health of the Chicago startup community is okay.  It could be a lot better.  It could be a lot worse.  The riots and violence aren’t helping to attract people or talent.  Chicago needs more seed and Series A funding but it always has.  Maybe the flight from Silicon Valley will help, but I doubt it.  People are leaving the Valley and going to Colorado, Utah, Nevada and Texas.  In the next ten years, some great companies will come out of Chicago.  They are being built here today.  I am invested in some of them.  The entrepreneurs in the community for the most part are great people and they are committed to staying in Chicago.   I will miss interacting with it on a daily basis.  But, there is also little opportunity for a person like me here.  It’s a closed network.  Chicago needs to watch out, Denver and Salt Lake City along with Reno and Las Vegas are growing their entrepreneurial communities quickly.  They have advantages too.  With the city clearing out, it will be a steeper climb for the startup community.
  • P33 isn’t really doing crap to help or hurt the startup community.  It’s an ego effort for insiders.    Don’t suck up to it. Investors and entrepreneurs are building the community. They don’t need anyone’s “help”, but they could use support in the way of more investment cash, or more ready customers willing to take a chance on a startup.
  • We spent time in Austin, Texas; Jacksonville, FL; Nashville, TN; Silicon Valley, CA; Las Vegas, NV; and Scottsdale, AZ.  We even thought briefly about South Carolina.  A number of years ago we looked hard at Michiana.  Chicago people will know where I mean.
  • Like anyone, my wife and I have preferences and constraints.  Las Vegas was at or near the top of the list for almost all of them.  Las Vegas might not fit you but we will give it a try.  A very close friend of mine is moving to South Carolina because they love boating and the east coast.  He hates the desert.  Vegas wouldn’t work for him.  I don’t gamble, so access to casinos wasn’t a part of the equation.
  • One constraint we had was snow. We like to be outside and I don’t ski.
  • Another constraint we had was 0% income tax to very low-income tax.
  • We wanted low property taxes (Texas out).
  • We wanted a great airport where you could fly direct non-stop like O’Hare with a multitude of carriers.
  • We wanted to be able to travel easily to see our children. One lives in LA, one lives in Chicago.
  • We wanted lower sales taxes than Chicago which are 10.25%
  • We wanted a place where politics wasn’t the center to almost every conversation, and relationship.  I was sick of going to parties and being introduced as, “our Republican friends”.
  • By the way, I couldn’t even rent a trailer in Chicago until October.  I rented one in Grand Marais, MN and hauled it back to Chicago.  I also saved a couple of hundred bucks doing it.
  • Governor Pritzker said he wasn’t changing anything until there is a vaccine. That might be the dumbest policy I have heard.  Talk about not understanding probability or science.

If I was at a different stage of life with kids in high school it might be different.  But, if my job was virtual and not in person on the trading floor I would have pulled them out of school and moved.  There are plenty of ways to school kids and there are plenty of great schools in other parts of the country.  Chicago is fiscally toasted, and its leadership prior to and including Lightfoot is morally bankrupt.

When a city mayor, a state governor, and their entire posse of cronies allow people to destroy a city and state in the name of ousting a sitting President, you should understand they will do anything they want to you whenever they want.

There will be no honor in staying and fighting.  You aren’t “chicken” if you move.  Any victory might be Pyrrhic anyway.

I had an acquaintance that pulled his children out of Catholic school and hightailed it to warmer climes.  He loves it and the kids love it.  Some of his kids were in high school and middle school.  It’s hard to move with kids in high school but it is not impossible depending on their age.  Would be tough on a senior.  Not as hard up to a sophomore year.

For me, the opportunity costs of staying and fighting versus just moving and enjoying the rest of my life weighed on the side of the moving.  For you, it might be different.  The great thing about costs/opportunity costs is the math equation can be different for everyone depending on their preferences.  Make your own individual decision.  No judgment if you stay and no judgment if you don’t.  But it’s going to cost you bucks if you stay.

Why am I moving?  After all, as of this writing, Illinois is a 0% tax state for retirees.  At age 59.5 November of 2021, I theoretically could benefit.

Here are the reasons why I am moving:

  1.  Violence.  There are trade-offs living in a city.  You tolerate a lot of things if you are safe.  It’s not safe to live in Chicago anymore and none of the political powerbrokers are out in front making it that way. In fact, many are encouraging violence in order to advance their personal political power.  It’s sick.  My wife and I just didn’t feel safe there anymore.  Yes, this is the Democratic Machine’s fault.  Not Trump’s.  The violence was there and tolerated far before Trump.  By the way, if it can happen in Kenosha, WI it can happen in Naperville, IL.
  2. Deterioration of the city and surrounding areas.  The city parks are full of garbage and unkempt.  Streets are full of potholes and garbage.  It’s depressing.  Homelessness is increasing and it’s tolerated by the government.  Moving to the suburbs could be an option but see the point about taxes and fees.  I have no idea why you’d stay in the state if you had to be in Chicago when you can move to Indiana.
  3.  Taxes and fees.  Here is some simple math.  In Illinois, I pay 10.25% sales tax.  Nevada, 8.25%.  How much do you spend a year?  Multiply it by 2% and there are your savings.  The HOA on my teeny apartment was just over $500/mo.  We didn’t have a doorman and it was a one-bedroom one-bath walk-up.  The HOA on the place we bought in a gated community is $245/mo.    Electricity is far cheaper per kilowatt in Nevada than Illinois not to mention all the corruption between Speaker of the House Michael Madigan and Commonwealth Edison.  My property taxes in Illinois were right about $6000/yr and going higher.  My property taxes in Nevada for a 3x larger footprint will be under $8000 and there’s a limit to how much they can increase them.  No income tax in Nevada.  No loopholes to work through.  No special deals or carve-outs.  Yes, I have toilets in my bathrooms Governor.
  4. Expected Taxes and Fees.  Does anyone in their right mind think that Illinois politicians are suddenly going to wake up and get fiscal religion?  Do you think any of them will be truly free-market advocates?  Embrace competition?  That includes Illinois Republicans but frankly, the Democrats run the show and Republicans are merely court jesters at the dance.  There is no end in sight and when politicians float ideas about taxes and fees, I believe them.  Chicago elected 6-8 socialists to the city council and the mayor leans heavily that way along with the tax assessor.  I think the progressive tax will pass but thankfully I will be voting in Nevada.  There will be taxes on services like accounting and law.  There will be a city income tax.  There will be exit taxes.  There will be a wealth tax.  There will be progressive taxes on retirees.  There will be added taxes on private equity, hedge funds, and venture capital firms.  I believe in desperation Chicago will enact a transaction tax on financial trading which will cause everyone to move. Chicago’s economy is diverse, but the trading operations and exchanges are the big straw that stirs the drink.  Illinois will enact taxes on people for days they work in the state of Illinois.  It will be a businessperson’s nightmare and a connected accountants’ dream.  Remember, when politicians say stuff they really mean it.
  5. Corruption.  The entirety of Illinois government, Cook County government, city of Chicago government is morally and ethically bankrupt.  They are corrupt.  I was sick of dealing with it and being a chumbalone.  Because I am lucky enough to do what I do virtually, I can live anywhere there is an internet connection.  A lot of other people will be making the same choice and the state of Illinois is finally going to empty out.  The death spiral has started and there is no end until you hit bottom.  Bankruptcy is the only way out.  This will definitely affect the startup and greater business community.   COVID was the nail in the coffin.  Public policy that was there years and years before anyone knew what COVID has put the state in a casket.  Heck, our governor JB Pritzker is Exhibit A on corruption.  See his property tax scheme.  It really showed his true character.
  6. No incentive for change.  I know a lot of “true believers” in Chicago.  They would vote for Karl Marx ahead of any Republican.  They like to say they are fiscal conservatives and social liberals but mention school choice to them and they fly out of their rockers.  Because the changes happen slowly, like a frog in a boiling pot of water they barely notice it.  At my age, Illinois is not worth my time to fight for it.  God bless people like Richard Porter, John Tillman, Mark Glennon and Ted Dabrowski who shine sunlight where it is needed.  If you aren’t interacting and donating to Illinois Policy or Wirepoints, you should be.  Younger generations can fight but given the history of Chicago and Illinois since its founding, it will take a tectonic shift to change.  Abraham Lincoln had to deal with corruption too.
  7. Many of my friends were moving.  I run with a pretty savvy crowd.  They have been organizing their lives over the past several years to avoid anything in Illinois.  Many own real estate and pay those taxes, but none of the others.  Many just hit bids and left.  More are doing the same.  Florida is the number one landing spot people have gone but I didn’t want to go to southwest Florida.  For me, I like the drier less humid air and no bugs.
  8. My family was gone.  We have one daughter left here.  It’s hard to leave her and I loved randomly seeing her.  We lived close by.  My sisters are gone.  My other daughter, gone.  My parents. gone to Florida.  My wife’s entire family, gone.  Her parents moved to Florida in 1986.  We have siblings or nieces and nephews in Tennessee, Michigan, California, Wisconsin, Nebraska, and Nevada.
  9. Golf. Biking.  I enjoy golfing and I just wasn’t able to do it in the city.  Joining a Chicago country club was out of the question because in the summer I am in Minnesota.  You can’t golf in Chicago nor can you bike a lot from October to May.  But I can in Nevada or most of the other places we were looking at.
  10. Restaurants closing.  The food is one thing that binds someone to Chicago.  However, it’s been gutted by COVID and who knows if it comes back?  Plus, for a lot of food, I can order it on the internet and have the raw ingredients delivered.
  11. Lastly, the weather.  Winters suck and if you don’t have to tolerate them, you don’t. The Mayor was an idiot by not opening the beaches this summer and it doesn’t look like she’s gotten any smarter.  Chicago used to be the greatest summer city in America.  It’s sad what the corrupt politicians have done to it.  Architecturally Chicago is still the most beautiful city in America to me.  A jewel on a lake.  It would be so 2020 if the Sox and Cubs wound up in the World Series with no bars open and no spectators in the parks to watch….

By the way, if you decide to move, “stick the landing”.  Change your license plates, register to vote.  Change your driver’s license.  If you keep your Chicago place make sure you disavow your homeowner’s exemption.  Get insurance in your new state.  Quit your clubs if you have them, or go to non-resident status if it’s an option.  Make a charitable donation to an organization in your new city.  Discontinue all charitable donations to organizations in your former city.  It’s not enough to keep a journal with days out of the state.  You don’t need to buy a place, you can simply sign a lease.

Part 2-the somewhat gossipy part

About the sale of my place.  My condo building sold to Francis Parker School.  I don’t know what they will do with it but at alderman meetings, they have said they have a 100-year plan.  Their headmaster, Dr. Dan Frank, recently wrote a letter.  Dr. Frank is an honorable guy and you have to take him at his word.  Their board of directors is full of upstanding people that have a lot of concern for the kids that go there and the city of Chicago.

If I were a benevolent dictator and doing Parker’s 100-year plan I know what I would do.  I would build dormitories around Parker and turn it into a prep school reminiscent of east coast prep schools.  There are plenty of Parker alums outside of Chicago that would send kids there.  Given its central location, it would draw from all areas of the country.  I’d upgrade my athletic program and draw athletes that also valued education.  I’d offer more scholarships to the middle class and lower-middle-class kids that needed it to diversify the population.  I’d also scrap the social justice education and go hard on a classical education full of humanities, math, science, and arts with a gigantic emphasis on entrepreneurship.

Parker is a great institution in Chicago and it is a draw.  Of course, because of its stature, the Jacobins want to tear it down.  Tearing institutions like Parker down when Chicago has its back on the mat is terribly risky.   It was unfortunate the way the Chicago media spun the story as wealthy predators overtaking helpless people.  Nothing could be further from the truth.

The building we lived in was over 100 years old and when we rehabbed our apartment we found some 100-year-old problems we fixed.  Sometimes, it’s better to tear old buildings down than rehab them.  Sometimes, you have to examine your old habits and break them.  Closed networks like the one that exists in Chicago don’t like to do that.

Here is what anyone that is interested in the sale should know:

  1.  Parker was entirely ethical and above board with our building and the building next door.  They were transparent.
  2.  There were no secret deals.  They negotiated in good faith the entire way.
  3.  Our building voted 100% to sell when the time to vote came.  Prior to the vote, our building had a lot of discussions and give and take.
  4.  Even though my kids went to Parker, I had nothing to do with the transaction.  Once an offer was made, I was interested in selling for reasons I elucidated above.  Every property has a market.  I might have kept it as a landing spot but still relocated out of state.
  5.  I did know Parker had made an offer that was rejected on a cooperative building next to our building before I bought so I thought it could happen.  But, I didn’t bank on it.  If I was, I wouldn’t have spent over $100k on a rehab one year before moving.  If I was sure Parker would have bought, I could have put an extra $100k in my pocket…..I am a capitalist after all.

Once there was an offer on the table, our building’s board did the right thing.  They polled the residents.  When it was apparent 100% didn’t like the first offer but that more than 50% were willing to explore selling, they hired a broker and a lawyer to work through a process.

It is my understanding that the building next door to ours, Belden on the Park, didn’t do that.  If they opened their board minutes to the public we’d see more clearly.  What we heard was the board hid the offer from their residents, didn’t hire a broker or a lawyer.  Instead, they used CBS television to broadcast fake news.  They used Ryan Ori at the Tribune to write articles full of falsehoods.  They disparaged Parker publicly.  They harassed students and harassed parents who only wanted to drop their kids off at school or attend a child’s event.  I was appalled at their behavior.

When my wife and I went to a public meeting with our alderman, a woman told my wife she was a horrible person. We had never seen the woman in our life.

A person we knew set up a website and a Facebook page called “East Lincoln Park Neighbors” and spread falsehoods about Francis Parker. They tried to lead a charge at Parker, our building, and the people in our building.  The language they employed, and the tactics they employed, were straight out of the social justice Saul Alinsky playbook.  It didn’t work thankfully.

In addition, their assertions were false.  For example, property taxes will still be paid as long as the buildings are rental units. The material on the website is fueled by uninformed emotional anger.

I didn’t want to live around people like that.  They make life suck.  Living in the city of Chicago today is a miserable experience and it doesn’t look like it will get better in the next couple of years.  The beautiful garden that has been kept for over half a century is full of weeds and in disrepair.  Garbage litters the parks because they took the garbage cans out. Old Mayor Daley would be appalled.

It’s the fault of the building’s board for not being serious, and then being greedy.  Pigs get slaughtered.  I have no sympathy or empathy for them. This was not a power play of rich connected individuals using clout.  This wasn’t Parker enforcing its own will upon a group of powerless residents.  It was stupidity and greed on the part of the building’s board.

Our building had a minority of people that didn’t want to sell.  I felt a lot of empathy for them, but in a building, you have to work with the majority, not the minority.  If you want total control over your property, buy a single-family home.  Of course, the activist judges at the Supreme Court tried to kill that with their Kelo decision.

Additionally, while we were negotiating with Parker the neighborhood busybodies got Chicago City Council to increase the number of residents needing to vote yes for a deconversion from 75% to 85%.  That hurts the middle class and poor residents of buildings that might want to deconvert.  It didn’t affect ours since we voted 100% to deconvert.  The busybodies also tried to push landmarking, which we know destroys property values.  Interestingly, years ago a Parker parent and neighborhood resident tried to get landmarking in the district but was put off by some of the same people seeking it now.

What’s interesting about Champagne Socialists is they always try to dictate what you can do in your life but don’t actually want the same rules to apply to them.  We spoke with a person who monitored the Facebook page as they were measuring the frontage on their place.  There is only one reason you do that and that’s to find out what it’s worth.

The Champagne Socialists in my neighborhood tried to stick their nose in our arms-length transaction. They unfairly characterized Francis Parker to the point of slander.    They remind me of Gladys Kravitz in the old sitcom “Bewitched”.  I don’t have the right to dictate who they sell to; why should they have the right to dictate who I sell to?  The insults and gossip hurled at people in our building were atrocious.  I would never have done it to them had they sold.  The lawsuits are baseless.

Thank goodness for the Founders and their understanding of capitalism and how property rights are integral to a well functioning capitalistic system.

I have said on my blog and in any conversation I had I’d be leaving Illinois if it didn’t change course and it hasn’t.  We old floor traders mean what we say.  So, screw the politicians and cronies and Champagne socialists.  Screw the appeasers and enablers.  When the Jacobin mob comes for you because there is no bread I hope you run out of cake.  Because they are coming and they won’t stop.  You ride that Socialist/Crony Capitalism tiger at your own peril.

So, that’s what went on. Now back to silence.  See you in Nevada.

 

The post Breaking Silence, One Post to Stop Gossip first appeared on Points and Figures.

Breaking Silence, One Post to Stop Gossip


This post is by Jeff Carter from Points and Figures

I am not starting to blog regularly again.  My points in my last blogpost still stand.

However, a momentous moment in my life has come and I wanted to share it with people because I don’t want any third-hand conversation to come of it.   If I write it there is an original source and it cuts down on gossip.  People ought to look at more original sources since there is so much fake news and conjecture out there.  Except, to do that, you have to be a good critical thinker.  You can’t be a sheep.

My wife and I are moving from Chicago to Las Vegas.  We sold our condo, and Francis Parker School bought it.  I haven’t been in Chicago or Illinois much this year, less than 40 days since January 1.

I also wanted to set the record straight on the sale since there is so much incorrect information in the Chicago Tribune and on the news.  Trib reporter Ryan Ori got played.  The media in Chicago is not very bright and only jump on stories when it fits their confirmation bias.  In this case, they wanted to spin a story about how a bunch of wealthy people at a tony private school were encroaching and invading a neighborhood.  Nothing could be further from the truth.

In fact, the people fighting on the other side all are living in million dollar plus apartments.  You don’t live in an apartment like that unless you have a great income or some money.  For the record, there were no million-dollar apartments in my building.  Most were 1 bed/1 bath.

I also wanted to write about it because I know there are others in my shoes in different situations that are contemplating the same things.  Many have reached out to me.

Part One-stuff you probably already know and are thinking

Yesterday, we closed on the sale of our place in Chicago.  In August, we bought a place in Nevada.  We will be moving out of Illinois to Nevada in 26 days.  I was born, raised, and worked in Chicago.  I won’t die there.  For the last five years, my wife and I have left Chicago in the winter to “try on” different places.  We did it not only because of winter but because the fiscal and political situation in Illinois was so utterly broken it wasn’t worth it to stay.  We bought an apartment in Chicago we could keep as a Pied a Terre and knew we’d not be here in the winter.  In the summer, we spend a lot of time in northern Minnesota at a small fishing cabin we rehabbed.  It’s a whopping 625 square feet, not a luxury place.  It’s very remote.  Minnesota is not a place to relocate to though since it is a very high tax state.

Here are some things I want to make absolutely clear.

  •  I think the health of the Chicago startup community is okay.  It could be a lot better.  It could be a lot worse.  The riots and violence aren’t helping to attract people or talent.  Chicago needs more seed and Series A funding but it always has.  Maybe the flight from Silicon Valley will help, but I doubt it.  People are leaving the Valley and going to Colorado, Utah, Nevada and Texas.  In the next ten years, some great companies will come out of Chicago.  They are being built here today.  I am invested in some of them.  The entrepreneurs in the community for the most part are great people and they are committed to staying in Chicago.   I will miss interacting with it on a daily basis.  But, there is also little opportunity for a person like me here.  It’s a closed network.  Chicago needs to watch out, Denver and Salt Lake City along with Reno and Las Vegas are growing their entrepreneurial communities quickly.  They have advantages too.  With the city clearing out, it will be a steeper climb for the startup community.
  • P33 isn’t really doing crap to help or hurt the startup community.  It’s an ego effort for insiders.    Don’t suck up to it. Investors and entrepreneurs are building the community. They don’t need anyone’s “help”, but they could use support in the way of more investment cash, or more ready customers willing to take a chance on a startup.
  • We spent time in Austin, Texas; Jacksonville, FL; Nashville, TN; Silicon Valley, CA; Las Vegas, NV; and Scottsdale, AZ.  We even thought briefly about South Carolina.  A number of years ago we looked hard at Michiana.  Chicago people will know where I mean.
  • Like anyone, my wife and I have preferences and constraints.  Las Vegas was at or near the top of the list for almost all of them.  Las Vegas might not fit you but we will give it a try.  A very close friend of mine is moving to South Carolina because they love boating and the east coast.  He hates the desert.  Vegas wouldn’t work for him.  I don’t gamble, so access to casinos wasn’t a part of the equation.
  • One constraint we had was snow. We like to be outside and I don’t ski.
  • Another constraint we had was 0% income tax to very low-income tax.
  • We wanted low property taxes (Texas out).
  • We wanted a great airport where you could fly direct non-stop like O’Hare with a multitude of carriers.
  • We wanted to be able to travel easily to see our children. One lives in LA, one lives in Chicago.
  • We wanted lower sales taxes than Chicago which are 10.25%
  • We wanted a place where politics wasn’t the center to almost every conversation, and relationship.  I was sick of going to parties and being introduced as, “our Republican friends”.
  • By the way, I couldn’t even rent a trailer in Chicago until October.  I rented one in Grand Marais, MN and hauled it back to Chicago.  I also saved a couple of hundred bucks doing it.
  • Governor Pritzker said he wasn’t changing anything until there is a vaccine. That might be the dumbest policy I have heard.  Talk about not understanding probability or science.

If I was at a different stage of life with kids in high school it might be different.  But, if my job was virtual and not in person on the trading floor I would have pulled them out of school and moved.  There are plenty of ways to school kids and there are plenty of great schools in other parts of the country.  Chicago is fiscally toasted, and its leadership prior to and including Lightfoot is morally bankrupt.

When a city mayor, a state governor, and their entire posse of cronies allow people to destroy a city and state in the name of ousting a sitting President, you should understand they will do anything they want to you whenever they want.

There will be no honor in staying and fighting.  You aren’t “chicken” if you move.  Any victory might be Pyrrhic anyway.

I had an acquaintance that pulled his children out of Catholic school and hightailed it to warmer climes.  He loves it and the kids love it.  Some of his kids were in high school and middle school.  It’s hard to move with kids in high school but it is not impossible depending on their age.  Would be tough on a senior.  Not as hard up to a sophomore year.

For me, the opportunity costs of staying and fighting versus just moving and enjoying the rest of my life weighed on the side of the moving.  For you, it might be different.  The great thing about costs/opportunity costs is the math equation can be different for everyone depending on their preferences.  Make your own individual decision.  No judgment if you stay and no judgment if you don’t.  But it’s going to cost you bucks if you stay.

Why am I moving?  After all, as of this writing, Illinois is a 0% tax state for retirees.  At age 59.5 November of 2021, I theoretically could benefit.

Here are the reasons why I am moving:

  1.  Violence.  There are trade-offs living in a city.  You tolerate a lot of things if you are safe.  It’s not safe to live in Chicago anymore and none of the political powerbrokers are out in front making it that way. In fact, many are encouraging violence in order to advance their personal political power.  It’s sick.  My wife and I just didn’t feel safe there anymore.  Yes, this is the Democratic Machine’s fault.  Not Trump’s.  The violence was there and tolerated far before Trump.  By the way, if it can happen in Kenosha, WI it can happen in Naperville, IL.
  2. Deterioration of the city and surrounding areas.  The city parks are full of garbage and unkempt.  Streets are full of potholes and garbage.  It’s depressing.  Homelessness is increasing and it’s tolerated by the government.  Moving to the suburbs could be an option but see the point about taxes and fees.  I have no idea why you’d stay in the state if you had to be in Chicago when you can move to Indiana.
  3.  Taxes and fees.  Here is some simple math.  In Illinois, I pay 10.25% sales tax.  Nevada, 8.25%.  How much do you spend a year?  Multiply it by 2% and there are your savings.  The HOA on my teeny apartment was just over $500/mo.  We didn’t have a doorman and it was a one-bedroom one-bath walk-up.  The HOA on the place we bought in a gated community is $245/mo.    Electricity is far cheaper per kilowatt in Nevada than Illinois not to mention all the corruption between Speaker of the House Michael Madigan and Commonwealth Edison.  My property taxes in Illinois were right about $6000/yr and going higher.  My property taxes in Nevada for a 3x larger footprint will be under $8000 and there’s a limit to how much they can increase them.  No income tax in Nevada.  No loopholes to work through.  No special deals or carve-outs.  Yes, I have toilets in my bathrooms Governor.
  4. Expected Taxes and Fees.  Does anyone in their right mind think that Illinois politicians are suddenly going to wake up and get fiscal religion?  Do you think any of them will be truly free-market advocates?  Embrace competition?  That includes Illinois Republicans but frankly, the Democrats run the show and Republicans are merely court jesters at the dance.  There is no end in sight and when politicians float ideas about taxes and fees, I believe them.  Chicago elected 6-8 socialists to the city council and the mayor leans heavily that way along with the tax assessor.  I think the progressive tax will pass but thankfully I will be voting in Nevada.  There will be taxes on services like accounting and law.  There will be a city income tax.  There will be exit taxes.  There will be a wealth tax.  There will be progressive taxes on retirees.  There will be added taxes on private equity, hedge funds, and venture capital firms.  I believe in desperation Chicago will enact a transaction tax on financial trading which will cause everyone to move. Chicago’s economy is diverse, but the trading operations and exchanges are the big straw that stirs the drink.  Illinois will enact taxes on people for days they work in the state of Illinois.  It will be a businessperson’s nightmare and a connected accountants’ dream.  Remember, when politicians say stuff they really mean it.
  5. Corruption.  The entirety of Illinois government, Cook County government, city of Chicago government is morally and ethically bankrupt.  They are corrupt.  I was sick of dealing with it and being a chumbalone.  Because I am lucky enough to do what I do virtually, I can live anywhere there is an internet connection.  A lot of other people will be making the same choice and the state of Illinois is finally going to empty out.  The death spiral has started and there is no end until you hit bottom.  Bankruptcy is the only way out.  This will definitely affect the startup and greater business community.   COVID was the nail in the coffin.  Public policy that was there years and years before anyone knew what COVID has put the state in a casket.  Heck, our governor JB Pritzker is Exhibit A on corruption.  See his property tax scheme.  It really showed his true character.
  6. No incentive for change.  I know a lot of “true believers” in Chicago.  They would vote for Karl Marx ahead of any Republican.  They like to say they are fiscal conservatives and social liberals but mention school choice to them and they fly out of their rockers.  Because the changes happen slowly, like a frog in a boiling pot of water they barely notice it.  At my age, Illinois is not worth my time to fight for it.  God bless people like Richard Porter, John Tillman, Mark Glennon and Ted Dabrowski who shine sunlight where it is needed.  If you aren’t interacting and donating to Illinois Policy or Wirepoints, you should be.  Younger generations can fight but given the history of Chicago and Illinois since its founding, it will take a tectonic shift to change.  Abraham Lincoln had to deal with corruption too.
  7. Many of my friends were moving.  I run with a pretty savvy crowd.  They have been organizing their lives over the past several years to avoid anything in Illinois.  Many own real estate and pay those taxes, but none of the others.  Many just hit bids and left.  More are doing the same.  Florida is the number one landing spot people have gone but I didn’t want to go to southwest Florida.  For me, I like the drier less humid air and no bugs.
  8. My family was gone.  We have one daughter left here.  It’s hard to leave her and I loved randomly seeing her.  We lived close by.  My sisters are gone.  My other daughter, gone.  My parents. gone to Florida.  My wife’s entire family, gone.  Her parents moved to Florida in 1986.  We have siblings or nieces and nephews in Tennessee, Michigan, California, Wisconsin, Nebraska, and Nevada.
  9. Golf. Biking.  I enjoy golfing and I just wasn’t able to do it in the city.  Joining a Chicago country club was out of the question because in the summer I am in Minnesota.  You can’t golf in Chicago nor can you bike a lot from October to May.  But I can in Nevada or most of the other places we were looking at.
  10. Restaurants closing.  The food is one thing that binds someone to Chicago.  However, it’s been gutted by COVID and who knows if it comes back?  Plus, for a lot of food, I can order it on the internet and have the raw ingredients delivered.
  11. Lastly, the weather.  Winters suck and if you don’t have to tolerate them, you don’t. The Mayor was an idiot by not opening the beaches this summer and it doesn’t look like she’s gotten any smarter.  Chicago used to be the greatest summer city in America.  It’s sad what the corrupt politicians have done to it.  Architecturally Chicago is still the most beautiful city in America to me.  A jewel on a lake.  It would be so 2020 if the Sox and Cubs wound up in the World Series with no bars open and no spectators in the parks to watch….

By the way, if you decide to move, “stick the landing”.  Change your license plates, register to vote.  Change your driver’s license.  If you keep your Chicago place make sure you disavow your homeowner’s exemption.  Get insurance in your new state.  Quit your clubs if you have them, or go to non-resident status if it’s an option.  Make a charitable donation to an organization in your new city.  Discontinue all charitable donations to organizations in your former city.  It’s not enough to keep a journal with days out of the state.  You don’t need to buy a place, you can simply sign a lease.

Part 2-the somewhat gossipy part

About the sale of my place.  My condo building sold to Francis Parker School.  I don’t know what they will do with it but at alderman meetings, they have said they have a 100-year plan.  Their headmaster, Dr. Dan Frank, recently wrote a letter.  Dr. Frank is an honorable guy and you have to take him at his word.  Their board of directors is full of upstanding people that have a lot of concern for the kids that go there and the city of Chicago.

If I were a benevolent dictator and doing Parker’s 100-year plan I know what I would do.  I would build dormitories around Parker and turn it into a prep school reminiscent of east coast prep schools.  There are plenty of Parker alums outside of Chicago that would send kids there.  Given its central location, it would draw from all areas of the country.  I’d upgrade my athletic program and draw athletes that also valued education.  I’d offer more scholarships to the middle class and lower-middle-class kids that needed it to diversify the population.  I’d also scrap the social justice education and go hard on a classical education full of humanities, math, science, and arts with a gigantic emphasis on entrepreneurship.

Parker is a great institution in Chicago and it is a draw.  Of course, because of its stature, the Jacobins want to tear it down.  Tearing institutions like Parker down when Chicago has its back on the mat is terribly risky.   It was unfortunate the way the Chicago media spun the story as wealthy predators overtaking helpless people.  Nothing could be further from the truth.

The building we lived in was over 100 years old and when we rehabbed our apartment we found some 100-year-old problems we fixed.  Sometimes, it’s better to tear old buildings down than rehab them.  Sometimes, you have to examine your old habits and break them.  Closed networks like the one that exists in Chicago don’t like to do that.

Here is what anyone that is interested in the sale should know:

  1.  Parker was entirely ethical and above board with our building and the building next door.  They were transparent.
  2.  There were no secret deals.  They negotiated in good faith the entire way.
  3.  Our building voted 100% to sell when the time to vote came.  Prior to the vote, our building had a lot of discussions and give and take.
  4.  Even though my kids went to Parker, I had nothing to do with the transaction.  Once an offer was made, I was interested in selling for reasons I elucidated above.  Every property has a market.  I might have kept it as a landing spot but still relocated out of state.
  5.  I did know Parker had made an offer that was rejected on a cooperative building next to our building before I bought so I thought it could happen.  But, I didn’t bank on it.  If I was, I wouldn’t have spent over $100k on a rehab one year before moving.  If I was sure Parker would have bought, I could have put an extra $100k in my pocket…..I am a capitalist after all.

Once there was an offer on the table, our building’s board did the right thing.  They polled the residents.  When it was apparent 100% didn’t like the first offer but that more than 50% were willing to explore selling, they hired a broker and a lawyer to work through a process.

It is my understanding that the building next door to ours, Belden on the Park, didn’t do that.  If they opened their board minutes to the public we’d see more clearly.  What we heard was the board hid the offer from their residents, didn’t hire a broker or a lawyer.  Instead, they used CBS television to broadcast fake news.  They used Ryan Ori at the Tribune to write articles full of falsehoods.  They disparaged Parker publicly.  They harassed students and harassed parents who only wanted to drop their kids off at school or attend a child’s event.  I was appalled at their behavior.

When my wife and I went to a public meeting with our alderman, a woman told my wife she was a horrible person. We had never seen the woman in our life.

A person we knew set up a website and a Facebook page called “East Lincoln Park Neighbors” and spread falsehoods about Francis Parker. They tried to lead a charge at Parker, our building, and the people in our building.  The language they employed, and the tactics they employed, were straight out of the social justice Saul Alinsky playbook.  It didn’t work thankfully.

In addition, their assertions were false.  For example, property taxes will still be paid as long as the buildings are rental units. The material on the website is fueled by uninformed emotional anger.

I didn’t want to live around people like that.  They make life suck.  Living in the city of Chicago today is a miserable experience and it doesn’t look like it will get better in the next couple of years.  The beautiful garden that has been kept for over half a century is full of weeds and in disrepair.  Garbage litters the parks because they took the garbage cans out. Old Mayor Daley would be appalled.

It’s the fault of the building’s board for not being serious, and then being greedy.  Pigs get slaughtered.  I have no sympathy or empathy for them. This was not a power play of rich connected individuals using clout.  This wasn’t Parker enforcing its own will upon a group of powerless residents.  It was stupidity and greed on the part of the building’s board.

Our building had a minority of people that didn’t want to sell.  I felt a lot of empathy for them, but in a building, you have to work with the majority, not the minority.  If you want total control over your property, buy a single-family home.  Of course, the activist judges at the Supreme Court tried to kill that with their Kelo decision.

Additionally, while we were negotiating with Parker the neighborhood busybodies got Chicago City Council to increase the number of residents needing to vote yes for a deconversion from 75% to 85%.  That hurts the middle class and poor residents of buildings that might want to deconvert.  It didn’t affect ours since we voted 100% to deconvert.  The busybodies also tried to push landmarking, which we know destroys property values.  Interestingly, years ago a Parker parent and neighborhood resident tried to get landmarking in the district but was put off by some of the same people seeking it now.

What’s interesting about Champagne Socialists is they always try to dictate what you can do in your life but don’t actually want the same rules to apply to them.  We spoke with a person who monitored the Facebook page as they were measuring the frontage on their place.  There is only one reason you do that and that’s to find out what it’s worth.

The Champagne Socialists in my neighborhood tried to stick their nose in our arms-length transaction. They unfairly characterized Francis Parker to the point of slander.    They remind me of Gladys Kravitz in the old sitcom “Bewitched”.  I don’t have the right to dictate who they sell to; why should they have the right to dictate who I sell to?  The insults and gossip hurled at people in our building were atrocious.  I would never have done it to them had they sold.  The lawsuits are baseless.

Thank goodness for the Founders and their understanding of capitalism and how property rights are integral to a well functioning capitalistic system.

I have said on my blog and in any conversation I had I’d be leaving Illinois if it didn’t change course and it hasn’t.  We old floor traders mean what we say.  So, screw the politicians and cronies and Champagne socialists.  Screw the appeasers and enablers.  When the Jacobin mob comes for you because there is no bread I hope you run out of cake.  Because they are coming and they won’t stop.  You ride that Socialist/Crony Capitalism tiger at your own peril.

So, that’s what went on. Now back to silence.  See you in Nevada.

 

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