Investing in particular ways during a financial bubble, in this case Cryptocurrency, is a good way to lose a lot of money but it also gives us amazing insight into the nature of greed. If we analyze and understand human nature during these events there is money to be made. Today let’s talk about Long Island Iced Tea Corp.

That company specializes in selling non-alcoholic beverages. What, you might ask, does this have to do with cryptocurrency? Good question. The answer is nothing. Nevertheless, the officers of the company decided to change the name to Long Blockchain and claim to be refocusing on businesses using something called blockchain. This technology is an integral part of cryptocurrency. We need not understand the particulars.

Immediately upon rebranding the company stock soared to unseen heights. What this means is people saw the name change and, in the mania surrounding cryptocurrency, immediately purchased shares. Now, the money people use to buy the stock has to come from someplace. Perhaps their saving account or their child’s education fund. The assumption of the purchaser is that, like other cryptocurrency companies, the value will rise dramatically. They hope the stock price will continue to rise and they will eventually sell their shares for an enormous profit.

There is some reality to these desires. Those who buy low and sell high stand to make a lot of money. The danger is you don’t know exactly what is low or what will be high. It’s entirely possible Long Blockchain has already reached its peak price, that anyone purchasing now will lose a lot of money. This does not dissuade the speculative investor. It is something that can be taken advantage of by a wise investor.

When perception is not aligned with reality mistakes will be made. This is clearly what is happening with cryptocurrency speculation and Long Blockchain. The company is a tea company. They have an infrastructure designed to manufacture and distribute tea. They are not well-positioned to function in competition with existing blockchain companies.

Now, I will get to the point of all this. In the same way Long Blockchain knows little or nothing about blockchain technology, the average investor, you, knows little or nothing about the nuances of the market. You see something interesting and make a purchase. In the same way Long Blockchain is most likely doomed to failure, so is the average investor. The women and men who know something about investing, who can properly take into account perception and reality; are brokers. They can help you invest your money wisely. They can take advantage of misperception without so easily falling prey to it.

The lure of easy money is almost always false and the people most vulnerable are those who have the smallest disposable income. In essence, the Middle Class. The poor cannot invest at all and the wealthy have financial advisors.

You say to yourself it’s just a bit of money and there is the chance to get rich. The same applies to purchasing lottery tickets. It’s your money, do with it as you will. I’d advise you to get sound financial advice and avoid get rich quick purchases like Long Blockchain. If not, well, my financial team is happy to take your money and I’m thrilled to pay them for doing so.

Tom Liberman

An interesting lawsuit has been filed in my home state of Missouri in which a man claims Hershey is violating the law by underfilling their candy boxes. The reason the case fascinates me is because it brings into question both the manufacturer and the consumer.

The man filing the lawsuit believes the box size is a promise of a certain amount of candy. In a contract situation, this means Hershey has promised to deliver that quantity of candy for the price of the box. If the purchaser is deceived about this amount, then the transaction has not been successfully completed. The person making the purchase is entitled to either the correct amount of candy or a refund on a percentage of their outlay.

On the other hand, Hershey believes the weight of the box is sufficient to inform the customer of the nature of the quantity of candy within. If a customer picks up the box, judges its weight, and gives it a rattle, they are fully aware of how full the box is and Hershey has fulfilled their promise.

I think both sides have a legitimate point. Unlike certain boxed items, candy does not need extra space in order to survive jostling. Things like potato chips need the room in order not to shatter on shipping. Candy does not suffer from this issue and therefore there is only one good reason not to fill the boxes to the top. Hershey is hoping people will be deceived by the size of the box and discount the weight and the rattling factor.

The purpose of the larger boxes is simply to deceive, nothing more and nothing less.

But does this intent to deceive rise to the level of breaking a promise? Certainly, Hershey representatives are correct when they say the consumer is fully aware of the weight of the box and the lack of fullness. You cannot pick up such a container without noticing it is far short of being completely full. If the purchaser was deceived, then aren’t they to blame?

I strongly suspect Hershey will prevail in this lawsuit but I would like to think they could easily fill their boxes and forego the attempt to deceive. I understand they don’t fill the boxes because this strategy has an apparent impact on their bottom line. A box of Whoppers filled only slightly more than halfway means there is the appearance of saving a huge amount of money.

Hershey produces X number of boxes for sale. There is Y amount of product in those boxes. If you decrease Y, this lowers the cost of material to make the candy, the cost of shipping as weight is reduced, and perhaps increases boxes sold because people go through the candy faster and come back for another box.

There is however, another factor. Hershey’s has competition in this world. If people continually get less candy for their money, they can easily go to a competitor for their sweet desires. This underfill strategy might be costing the company a lot of money in the long run. Particularly if their competitors are not engaged in such.

That is the glory of capitalism. Consumers have a tremendous amount of power. Rather than filing lawsuits we can get what we want simply by changing our purchasing habits. Naturally a single person can’t do very much, but if enough people start to abandon Whoppers, you can bet Hershey will start to fill the boxes with more product.

This is even more true in the age of Social Media and the internet. Simply pointing out the discrepancy in the size of the box compared to the amount of candy therein can garner a huge amount of attention. If enough people agree with your assessment and Whoppers’s sales drop significantly in a short period of time, executives at Hershey will notice. They know exactly how many boxes are sold and any decline is something they will immediately attempt to rectify.

A Social Media strategy is likely more powerful than any lawsuit.

The Information Age has put increasing amounts of power in the hands of consumers. Speaking as a Libertarian I say … excellent.

Tom Liberman

There was a time in this country when the town center was where people gathered to socialize, shop, and spend their free time. Then along came a fellow named Sam Walton and destroyed the vast majority of them. First it happened in larger communities but eventually Walmart spread to small towns and mom and pop stores went bankrupt in enormous numbers.

A lot of people were upset by this turn of events. Sam Walton was known as the Most Hated Man in America in rural areas and small towns. The people who ran those local stores fought hard. They put up the good fight. They asked their neighbors and friends to shop at their store rather than Walmart even though the price of goods was higher and the selection was smaller. A picture of economic doom and gloom was forecast as more and more small businesses closed and enterprise business began to take a larger share of the market.

With the success of Walmart came all sorts of Big Box stores and Malls. The gathering place for people changed from town centers, which largely became deserted, to malls and large shopping stores. Anyone who had a small business again fought hard. They took out loans. They asked friends and family to remain loyal.

Then the internet arrived and with it online shopping led by Amazon. Social Media blossomed in this Information Age. Now it was the malls and big box stores’ turn to feel the pain. People didn’t need to leave their house to socialize or to purchase most goods. They did due diligence with online research, ordered the product they wanted at the price they liked, and had it in a remarkably short period of time.

The malls are fighting hard. They are now offering more of the sorts of services people can’t get online, things such as haircuts and dining options. The people in the community who are losing their jobs because of online shopping are pleading with their fellow citizens to buy at the mall instead of online, hoping to save jobs.

What does it all mean? All those closed mom and pop stores, all those shuttered malls, all those lost jobs? It means we get a better product, in a timelier fashion, at a lower price, and there are more jobs than ever!

The reason the mom and pop stores died is because they couldn’t compete economically with the big box stores. The reason the malls are dying is because they can’t compete with online shopping. The winner in all of this is you and me.

It hurts when that little shop around the corner closes and the people you know and like lose their jobs. Economics and capitalism is a harsh mistress. They don’t promise wine and roses for everyone. Nothing can make everyone happy all the time. But look around. What can’t you purchase? What thing that you want can’t you have? Yes, there are some things out of your price range, but far fewer than as little as twenty years ago.

The next generation is going to expect this sort of service in the same why we can’t live without a remote for the entertainment center. There is no going backward in this world. You can’t go home again.

You can lament the end of the malls and all the jobs the same way people were upset when all the family owned businesses went under to the tornado that was Sam Walton. Don’t worry, you probably won’t notice because you’ll be busy posting a picture of your new hat on Social Media.

Tom Liberman

This month is apparently National Hamburger Month. At least that’s what Facebook tells me. Or more accurately, one of my friends on Facebook.

These things are often called Hallmark Holidays because they encourage people to purchase greeting cards. Hallmark denies responsibility for this phenomenon, but it cannot be denied it exists. The commercialization of various products is largely the reason such days litter our social media walls. Every industry worth their salt … hey, is there a National Salt Day? Let’s find out! Off to the internet.

Now, I want you to know this was a complete coincidence. I’m writing this post on May 12, 2017 and I just found out National Salt Day is May 17! That is hilarious. There is also National Salt Awareness week in late February and early March but that is actually a holiday trying to keep us from buying something. So, it doesn’t count.

Is there any end in sight? A simple answer, no. As long as there is profit to be made, we’ll have more and more of these consumer holidays. And, to be honest, it’s not a bad thing. If a company wants to promote their product and they find a good way to do it, why shouldn’t they? No one is forced to purchase Salt on National Salt day. You don’t have to buy a Mother’s Day card, flowers, or candy. Consumerism is a wonderful thing because it is largely voluntary. We buy things we want.

It is only when capitalism is constrained that we should start to be worried. When one company is not allowed to sell their product because it competes with another favored by the leaders of a country, then there is a problem.

We buy the things we want because they are priced attractively. This is the very nature of consumerism. We too often blame the corporate world for causing us to eat too much, go too far into debt, or something else related to capitalism. I won’t deny these things exist. We have an unhealthy population in the United States because of abundantly available food of a type we like. People go into debt because they want things, this overwhelms their financial good sense.

If I happened to want a nice hamburger, I might use the excuse that this is National Hamburger Week to purchase one. I’d be interested in seeing the metrics involved with many of these new holidays. Certainly, we see an enormous uptick in sales of flowers around Mother’s Day and ties around Father’s Day. If not, we wouldn’t see all these new holidays appearing on our calendar.

Naturally they are somewhat self-defeating in that as we see more and more of these holidays appear, we become inured to them. That’s perfectly normal as well and eventually someone will find a new way to market their product.

Here is an interesting theoretical question. If the government banned such days, would it reduce consumption of that particular item? I think the answer is yes, but no one is calling for such bans. Mother’s Day is a huge boon for the flower industry but we don’t see consumer protection groups advocating the end of the holiday to prevent people from spending their money.

On the other hand, we do see all kinds of groups promoting the outlawing of particular items, be they drugs or simply large soda containers. The thrust of these laws is that we don’t know what is good for ourselves. That we lack the impulse control to stop self-destructive purchases. This is true. We do lack such control, but solutions based on legal remedies are doomed to fail.

We must teach people impulse control. We must educate them on financial realities. These are the methods by which we improve the lives of citizens, by helping them improve themselves.

It’s just not the role of government to protect us from ourselves, or made up national holidays.

Tom Liberman

I’d guess the majority of people under my age, fifty-two, don’t remember how dominate Sears, Roebuck and Company was in the retail industry. Sears was enormous. Too Big to Fail according to a metric that seems to be prevalent in this political era. Sears has pretty much failed and it hasn’t affected the economy or jobs in a significant way. There’s a lesson to be learned in that.

First let’s take a look at how dominant was Sears prior to the Wal-Mart and Internet era. At the turn of the century, that’s nineteenth century youngsters, people purchased things from their local general store. The selection was limited and the price was exorbitant. Then came the Sears Catalog. It changed everything in the same way as did Amazon and online shopping. People no longer had to rely on their local store. People simply sent an order form in and, within a few weeks, they had their item. It was revolutionary. It was the beginning of the end for small stores across what was then the largely rural United States.

Sears grew from that initial catalog until they were the dominant retail sales company in the country. There were, and remain, Sears stores in every city. The Sears Tower was for a time the largest building in the world. They employed huge numbers of people and their sales methods allowed others all over the country to purchase the goods they wanted at an affordable price.

I feel confident suggesting that if someone back in 1980 told Congress Sears was going to fail, there would have been panic. The thought of all those lost jobs and the fact that so many wouldn’t be able to purchase cheap goods would have caused an immediate effect. We would have seen a rush of public committee meetings, speeches about how vital was Sears to the economy, and a plethora of grim looking politicians pledging to save us from this impending disaster.

Happily, no one knew. Wal-Mart came along. The Internet came along. Sears pursued a bad business model and now they stand on the brink of insolvency. They are closing stores all over the country but, and this is important, politicians don’t care. It’s the natural course of business in their eyes and, for once, they are right.

Businesses fail. When executives make poor decisions, when the nature of the market changes, when circumstances and luck go against it, a business fails. The vital factor is that it failed for reasons. Another business model can succeed and provide profit, and people who pursue a good strategy will fill the void.

If the car manufacturers had been allowed to fail someone else would have stepped up to take their place. If the financial institutions that badly managed their affairs had been allowed to fail, others would have ably stepped up to replace them. For every job lost to the failing company, another one would have been created, if not two.

There is no such thing as too big to fail. What exists is too much vested interest in politics. The businesses that were going to fail had the Democratic and Republican Nation parties in their pockets. It was in the interest of the two major political parties to save those companies. The politicians and their parties don’t want the gravy train to stop.

The lesson to be learned is that there is no too big to fail. Failure is as much a part of capitalism as is success. Where one business fails, for whatever reason, another arises with a better model. Where one job goes away, two more appear.

Does it hurt for those who lose their job? Is it painful for the executives who have failed? Yes.

That’s capitalism.

Tom Liberman