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Interesting post.

As a former banker, the tagline, “the investment banking model is all but broken” certainly caught my attention. However, after reading your post, it seems your criticism focuses more on trading efforts rather than traditional advisory banking (which appears to be flourishing given the record years for deal-making, albeit perhaps the bigger banks are losing share to smaller boutiques).

In terms of your proposal of investing in digital for trading to reduce costs, are you focusing on a tree rather than the forest? If trading really is the “ROE anvil,” would MS be better simply exiting the business altogether? Or, have these last few years simply been challenging and therefore trading remains a structurally attractive business with need of minor improvement?

On November 19, 2016, AT commented on Is The New York Times on its way to becoming old news? :

Thanks for the post. Fully agree that print industry has been incredibly hard hit by digital and has been too slow to adapt.

I actually wrote my post on TIME, and it seems that NYT is suffering from many of the same issues as TIME and is attempting similar solutions. I just worry if it is enough. Clearly the NYT is a valuable brand, but I question whether consumers, particularly millennials and younger who grew up on social media, care enough about the brand.

Interesting post. I, too, have questions about who will ultimately win the connected car arena. On one hand, clearly GM currently has an upper-hand given they control the production of the car. On the other, I carry my phone with me everywhere I go, and I think my phone does a fine job of navigating and playing music – rendering the OnStar (or equivalent) largely irrelevant.

Another pressure point for the OEMs will be that of autonomous vehicles. While GM is working hard, it appears Google, Apple, and others are currently ahead of GM in this race, and, if this trend continues, I wonder who will then hold the bargaining power?

On November 19, 2016, AT commented on How to Save the U.S. Postal Service :

Thanks for the post.

I wonder if there is an easier solution to close the financial gap – could USPS simply raise prices? Perhaps that solution is untenable politically, but it would seem that closing a $5bn+ annual gap will take quite a lot of time, effort, and resources. My personal experience has been that USPS is consistently cheaper than UPS and FedEx, and per the below article, it appears that is certainly the case.

Definitely agree that the digital improvements can help, as your post clearly states, but do you think they are truly enough?

On November 19, 2016, AT commented on The Limits of FinTech Disruption :

Thanks for the post.

It seems your assertion is that OneMain should generally keep all of its brick and mortar branches, which are rather costly, and simply use technology to supplement. This seems contrary to what many other large banks are doing (see below).

Also, I wonder if their high-touch, costly footprint could result in OneMain becoming uncompetitive with purely online competitors. It reminds me of the Amazon vs. traditional retailer battle, and from an outside perspective, it would appear as if Amazon is winning.

I guess the key question will be, as you noted, whether when a recession occurs, these online lenders had the right standards/practices in place that enable them to perform adequately through a cycle. The US has generally enjoyed a smooth economy for the last several years, when most of these start-ups came online, so it will be interesting to watch how this plays out. If their loss ratios are actually in-line with OneMain’s, would that change your perspective?

On November 6, 2016, AnthonyTesta commented on Tesla: Profitable? It depends on the climate. :

Interesting analysis. It seems that you are highly supportive of Tesla, but quite punishing toward the other major OEMs. While I agree Tesla is the clear leader in the automotive clean energy arena, I don’t think the progress of the other OEMs should be overlooked. For example, per the below article, it seems that almost every OEM has some sort of eco-friendly vehicle, including notable cars such as the Ford Fusion and Toyota Prius

At the end of the day, for all of the OEMs, including Tesla, consumer demand will likely determine the success of these vehicles, not regulations. Unfortunately for hybrid vehicles, with gas prices at extremely low levels, it seems that much of the steam has been taken out of the electric vehicle movement.

On November 6, 2016, AnthonyTesta commented on Climate Change and General Motors – When to Step on the Gas Pedal? :

You raise an interesting question of whether GM and other automakers should bear the burden of leading change. Unfortunately for the automakers, I think the answer is yes, because if they do not, no one else will.

If you take a step back and look at the automotive value chain, clearly the major OEMs (GM, Ford, Toyota, etc.) have the most bargaining power. Upstream, the suppliers are diverse and small, and downstream, the OEMs also influence the dealers. For example, GM generated revenue of $150bn in 2015 and had a market cap of $50bn, whereas BorgWarner, a major auto supplier, had revenue of only $8bn and a market cap of $7bn.

If the OEMs only had to influence their suppliers and dealers, the challenge would be manageable, but the problem is that they must change consumer behavior, a considerably more challenging task. With hybrid vehicles representing only 2% of sales, clearly consumers present a large hurdle.

As the phrase goes, you can bring a horse to water, but you can’t make him drink. Unfortunately for GM, they need to figure out how to make consumers drink the Kool-Aid of hybrid vehicles.

On November 6, 2016, AnthonyTesta commented on Shocka Brah! How Climate Change Is Impacting the World Surf League :

Learn something new every day – never realized “grom” was a term for young surfer.

On a more serious note, I never appreciated the impact climate change had on surfing. Interestingly, we have seen top athletes in a number of sports take up important issues to help raise global awareness. For example, look at the case of Black Lives Matter. On this topic, LeBron James gave a powerful message at the ESPYs and Colin Kaepernick took a knee during the singing of the national anthem. I wonder if, in addition to the WSL, top surfers could help further this cause? Per the below article, it seems at least some in the sport are trying to make a positive impact:

Hopefully help is coming, but in the meantime, hang in there, bro.

On November 6, 2016, AnthonyTesta commented on Ski Season is Coming… But Where is the Snow? :

Interesting analysis. As you noted, it appears that Vail’s primary efforts – geographic diversification, technology investment, and business model change – all focus internally and attempt to address the symptoms of climate change, rather than the underlying root cause (increasing greenhouse gas emissions).

This is pretty surprising to me. I would have guessed Vail and other ski resorts, given they are directly impacted by climate change, would have been at the forefront of this debate. I wonder if, because they have a relatively small market cap ($6bn), represent a luxury good, and because they themselves are not a major driver of climate change, Vail’s voice carries less weight?

Interesting analysis (and critique) of Coca-Cola’s sustainability efforts. In many ways, your solution of Coke utilizing suppliers with efficient water usage strategies reminds me of our recent IKEA case, in which IKEA was debating a similar problem relating to their wood sourcing.

Though I agree there is a significant amount of water used to make Coke’s end product, it would seem that they have done some real good, for both themselves and the planet as a whole. Also, as you said, the media seems to be praising their efforts, as in the below article:

At what point has the company done enough? Or is the answer never? For example, you note a plastic bottle uses 4.5L – if Coca-Cola restored 3.0L, would that satisfy critics? How about 4.5L, have they done enough or do they still need to restore more than the supply chain uses? Everything has trade-offs, and it would seem Coke has made reasonable efforts while still ensuring value for their shareholders.