Gyroscopic Investing

Thought-provoking article in the New York Times the other day.

The Middle Class Is Steadily Eroding. Just Ask the Business World.

In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.

Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.

More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.

The effects of this phenomenon are now rippling through one sector after another in the American economy, from retailers and restaurants to hotels, casinos and even appliance makers.

http://www.nytimes.com/2014/02/03/busin ... pe=article

But I thought that income inequality was the Republicans' fault!
No, actually I take that back. It's Fox News' fault, just like the failure of Obamacare.

Now I see the Democrats and MSM are trying to make the case that disincentivizing workers from working full time is actually a good thing. 

Speaking of the middle class, MMM just came out with this scathing article: http://www.mrmoneymustache.com/2014/02/ ... the-shaft/

I own several "crossfit ish" micro-gyms in affluent neighborhoods.  Our target demographic is 30-59, 60% female.  Average membership is $185/mo.  We've been absolutely crushing it for several years and no one complains about price.  A friend who owns a similar gym 10 miles away in a more middle-class neighborhood has more trouble filling spots (but still does well). 

Not sure if that says anything about a shrinking middle class or just the realities of discretionary spending decisions.  All I know is business has been fantastic lately and selling to the affluent is the way to go.

Yeah, I go to a gym like that, but it's probably only 30 - 40% female.  It's on the edge of a large city, near a university, so the target demographic may be different.  Are you a crossfit affiliate?

Lowe wrote: Yeah, I go to a gym like that, but it's probably only 30 - 40% female.  It's on the edge of a large city, near a university, so the target demographic may be different.  Are you a crossfit affiliate?

No.  We don't program olympic lifting because of the implied risk/reward with beginner and/or detrained athletes.  We also don't teach kipping because of the risk of SLAP tears.  It's more of a group personal training environment rather than a "here's the WOD, go do it" type set up.  For that reason we don't compete much with the crossfit affiliates.  Their bread and butter is 20-30ish males.  We prefer selling to the 40yo housewife because its an easier sale to make.

You're not the first person I've seen mention that micro-gyms are doing well.  Crossfit and similar programs really took off in the last decade.  You get what you pay for, I guess.

My shoulders bother me a lot, at times.  I think it is because of the accumulated strain of doing pushups, kipping pull ups, and press movements often, and sometimes in the same workout.

Wonk wrote:

Lowe wrote: Yeah, I go to a gym like that, but it's probably only 30 - 40% female.  It's on the edge of a large city, near a university, so the target demographic may be different.  Are you a crossfit affiliate?

No.  We don't program olympic lifting because of the implied risk/reward with beginner and/or detrained athletes.  We also don't teach kipping because of the risk of SLAP tears.  It's more of a group personal training environment rather than a "here's the WOD, go do it" type set up.  For that reason we don't compete much with the crossfit affiliates.  Their bread and butter is 20-30ish males.  We prefer selling to the 40yo housewife because its an easier sale to make.

In other words, you are just using the name and brand recognition to get people in the door? Ive seen this more and more among trainers who realize that crossfit programming isn't ideal for people just looking to stay healthy and fit but want the traffic through the door that crossfit provides.

Olympic lifting...especially done for high reps under fatigue as a cardiovascular conditioning exercise... is one of the most asinine things about Crossfit to me and makes be boycott the whole thing.

The randomness of the WOD training method without a system of progressive overload is another detractor. Also, the fact that time and numbers take precedence over form bothers me as well.

Just my two cents...

Lowe wrote: You're not the first person I've seen mention that micro-gyms are doing well.  Crossfit and similar programs really took off in the last decade.  You get what you pay for, I guess.

Sometimes you get what you pay for.  I've been in or around this industry for a long time and anytime someone can call themselves an expert after a weekend of "education" and then open a shop, it's a recipe for trouble for the consumer.  A lot of times the public can't figure out who the true experts are, so getting seriously injured is a distinct possibility.  However, I do love the micro-gym business model as long as it is tweaked properly.  Potentially low capex, potentially very high margins and a fantastic value proposition to the consumer when compared to alternatives.

Lowe wrote: My shoulders bother me a lot, at times.  I think it is because of the accumulated strain of doing pushups, kipping pull ups, and press movements often, and sometimes in the same workout.

Overuse injuries are chronic and happen over time.  Crossfit is legendary for them.  I'd take a hard look at your programming (or get a true expert to do so) and make sure you have a clear plan for your recovery as well as your training.  Be sure to keep up with your remedial shoulder work: scap retractions/external rotations, etc for a healthy shoulder girdle.  Also be sure your warm ups are gradual and appropriate for the task at hand.  Take some time off and focus on getting healthy.  Good luck!

doodle wrote:
In other words, you are just using the name and brand recognition to get people in the door? Ive seen this more and more among trainers who realize that crossfit programming isn't ideal for people just looking to stay healthy and fit but want the traffic through the door that crossfit provides.

Olympic lifting...especially done for high reps under fatigue as a cardiovascular conditioning exercise... is one of the most asinine things about Crossfit to me and makes be boycott the whole thing.

The randomness of the WOD training method without a system of progressive overload is another detractor. Also, the fact that time and numbers take precedence over form bothers me as well.

Just my two cents...

A lot of great points.  We don't trade off the Crossfit name.  I do think affiliates get a lot of free help with door traffic because of the name(especially televised on ESPN).  But it also scares others off.  It's very much a "Bro" domain where pain and pushing beyond reasonable limits is celebrated.

Crossfit didn't invent crosstraining--or incredibly intense workouts.  They just put their own spin on them.  I agree that high-rep Oly lifting, random training protocols and lack of progressive overload is all sheer stupidity.  We share the view (with Crossfit) that short, intense training sessions involving multi-joint movement patterns is the way to go.  We deviate from them in the execution & oversight.  We periodize our programming well in advance, set clear objectives for progression and have reasonable scaling protocols for those who are less fit or have mobility issues.  We avoid risk/reward scenarios that aren't in the client's best interest and add more coaches to the floor so they don't do something stupid and hurt themselves. 

To hire a full time trainer it'd be $1000-$1500/mo.  We deliver the same results for 50-90% less.  This segment of the industry isn't going away.  Should be interesting to see where Crossfit specifically goes, though.

The spending is what is hurting the economy. Everyone is spending and not saving. Savings are need for capital investment in plant property and equipment. This is what raises human productivity and increases living standards and let's us get more for less.

The ulta-low interest rates discourage savings. The meager savings put into banks is being borrowed by the government so they can hand out goodies for votes and allegience. It's not going to people trying to start or expand businesses. There isn't enough savings to go around for loans on riskier stuff, just government and housing crowding out product uses for the money.

As long as interest rates stay low the economy can't re-structure into sustainable growth. They've promised to keep rates low for years like Japan.     Let's hope they stop at some point or this will turn into decades. Unless we have a dollar crisis first.

Another HORRIBLE jobs report.  Oh well, the liberals will tell us that weak jobs reports are good for the economy.

The presidents council of economic advisors spokesperson is on CNBC right now saying how great the jobs creation is and how unemployment keeps dropping. The president's policies are working perfectly according to him. Scary thing is on that last point I think he's being truthful.

Kshartle wrote: The presidents council of economic advisors spokesperson is on CNBC right now saying how great the jobs creation is and how unemployment keeps dropping. The president's policies are working perfectly according to him. Scary thing is on that last point I think he's being truthful.

I think their end goal is a 0% unemployment rate with a 15% participation rate

Interesting how that graph shows the top 5% income dropping over the last few years as well - how come everyone's been talking about how much wealthier the top 5% has gotten?

Not to mention, that's not great for an economy based on consumer spending either.

WiseOne wrote: Interesting how that graph shows the top 5% income dropping over the last few years as well - how come everyone's been talking about how much wealthier the top 5% has gotten?

Not to mention, that's not great for an economy based on consumer spending either.

Top 1% getting richer....or top 0.1%

It's surprising that this is surprising. This is always the result of communisim. It's not equality, it's everything in the hands of a tiny few.

When you accelerate the violence in society the people who benefit from violent threats steal the property of the rest.