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Published: Saturday, 03 October 2020 20:45

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US Market index:

In the previous, we looked at stock market indices of major countries. Here, we'll look at USA stock market index in detail. There are many US market index. You will see their symbols on the finance websites. However, you can't buy these index directly. You will have to buy a fund that tracks this index. We'll talk about this later. Note that the companies that are part of any index are not set in stone. There is continuous reshuffling of companies that take place in an index to keep it relevant. Many companies get dropped out of the index, because they don't meet the requirements anymore, or they are just not generating enough profits or are not big enough to justify being in the index. I'm listing some of the popular indices below.

1. Wilshire index (W5000): The simplest stock market index in USA is the wilshire index. It simply adds up the market cap of all the companies in USA. So, it covers 100% of the market cap of all US listed companies. It's symbol is W5000. It's current quote can be found here:

https://www.marketwatch.com/investing/index/w5000/charts?countryCode=XX

When the W5000 is at 10,000, it means that the total market cap of all the companies in USA is $10,000B, i.e $10T. So, in this index, any company is weighted based on it's market cap.

W5000 was 33,000 at end of 2019, implying the total market cap of all US public companies was about $33T (there are many criteria for which companies are included in W5000 and which are not, but we'll bypass the details).

As of 2021 year end, it had a market cap of just about $50T (All time intraday high of $49T on Nov 22, 2021). So, in 2 years of pandemic, the total US stock market went up by 50% from a level which was already an all time high !! At end of 2024, market cap went to $60T (20% return in next 3 yrs).

Next 3 index are 3 headline index that are quoted in news all over the world.

2. S&P500 index (SPX): This is a subset of W5000 and includes only 500 US companies from different sectors. These are usually the largest companies in that sector. For US market, S&P500 is a well known index comprising about 80% of the total market. It's the most popular index, and for all practical purposes represents the whole US stock market. In fact, you won't see much difference b/w the returns generated by W5000 vs S&P500 over any long term duration.

This is the link for S&P500 Dow Jones Index: https://www.spglobal.com

As of June 30, 2020, total market cap of S&p500 index was $27T, while total market cap of whole US market based on Wilshire 5000 was $32T. So, S&P500 was about 85% of total market cap. So, returns of S&P500 would come in very close to that of the whole market, so it's wise to stick to S&P500 as an index for investing purpose. Historically S&P500 has given higher returns than Wilshire5000.

3. Dow Jones Industrial Average (DJIA): This is a very small subset of W5000, and comprises of only 30 largest companies. It's prestigious for a company to be part of this index. However, due to it's over reliance on only 30 companies, sometimes it doesn't line up with S&P500 in terms of yearly returns. However, DJIA usually has higher dividend yield,, as most of the companies in this index pay good dividend. However, it;s NOT market cap weighted but stock price weighted, so smaller companies can have bigger impact than larger companies. So, not as reliable as S&P500 index and not a good indicator of US market anymore.

4. Nasdaq Composite index (COMP, IXIC): This is one of the hottest index that is primarily tracking companies listed on Nasdaq stock exchange. This index is also commonly called as "Nasdaq", though Nasdaq is the name of the stock exchange and NOT of the index. website is https://www.nasdaq.com

There are about 2500 (or 4000??) stocks listed on Nasdaq, but only 2000 or so stocks are part of this index. Nasdaq is always associated with Tech stocks, though only 50% of the stocks listed on Nasdaq are tech stocks. Rest are stocks from other sectors as seen in S&P500. However, because of overweight of tech stocks in this index, it is a good barometer of tech stocks. In fact, top 10 stocks in this index account for more than 1/3 of the index performance.

Nasdaq-100 index (NDX): This is a further subset of Nasdaq composite index stocks. It contains top 100 tech stocks in Nasdaq. It accounts for more than 90% of the weight of Nasdaq composite index. That is why Nasdaq-100 is more widely used than Nasdaq composite index. It is heavily allocated towards top performing industries such as Technology (57%), Consumer Services (22%), and Health Care (7%). This is the most popular stock index along with S&P500. This index has consistently beaten S&P500 since it's inception. If you believe stock market will keep on making new highs, then a basket of risky hot stocks will always beat safe stable stocks. Nasdaq-100 proves that.

These are the 100 stocks in Nasdaq-100: https://www.slickcharts.com/nasdaq100

As you can see, just top 12 stocks account for 60% of the index weight. So, bottom half of the stocks aren't even relevant, since they account for  less than 10% of the index weight. But to diversify and reduce risk, they have included these smaller companies, since in tech especially, a very small company can become a very big company in a matter of weeks, so you don't want to miss out on those gains. Nasdaq-100 is the index to stick to instead of Nasdaq composite. when people say they are buying nasdaq, they usually refer to Nasdaq-100.

5. Miscellaneous indices: There are many hundreds of indices available in USA and worldwide which have various misc stocks in them. Russell2000, Rusell3000, etc are many more indices which track small companies, growth companies, stable companies, etc. These indices have lagged behind S&P500, so not worth exploring.

Comparison of stock index:

Below is the chart showing returns of the 3 stock index from 1980 to 2020. As you can see, all indices track each other. The indices which rise faster during bull markets tend to fall faster during bear markets. However, one thing that is startling to notice is that the ratio of Nasdaq Composite to S&P500 never fell to below 1 except for very brief time in 2003 when Nasdaq had crashed 80% from the peak (i,e if you invested money in Nasdaq in 1980, at no point until 2020 did you end up with less money than if you had invested the same amount in S&P500). You read all these articles about how nasdaq is more risky than S&P500 (since nasdaq is overly concentrated in tech stocks, which is not entirely true), so we should invest in more diversified S&P500 index. But the charts show otherwise. Whether bull or bear market, nasdaq returns never fell below S&P500 returns over any 20 year period. Since markets always makes new highs, nasdaq will almost certainly keep beating S&P500 with lower risk than S&P500. This is the truth of markets that always keep making new highs. AndI'll repeat it again - as long as FED's ponzi scheme supports stock market, Nasdaq is the smarter way to go.

 PERFORMANCE CHART OF 3 MAJOR INDICES

As seen from the chart above, Nasdaq index returned 2X the return of S&P500 index or the DJIA index. And that too with a lower risk, since Nasdaq never went below the other 2 indices. In a nutshell, if you believe that markets will always make new highs, you should always invest in Nasdaq composite index rather than S&P500. Dow Jones index is just way too concentrated in few stocks to really consider it (although here DJIA generated better returns than S&P500). However, the best time to invest in Nasdaq index is during a bear market (when market is down 30% from the top), since that is when Nasdaq will give you much better returns than S&P500 (since nasdaq would be down 50% or more if avg market is down by 30%). However markets going down by 30% or more may not be a possibility anymore with FED being in the market to support the market at any dip. In fact it will be harder and harder to see larger dips or market being in red for a long time with Fed's ongoing scam with money printing.

S&P500 went from 10 in 1945 to 100 in 1975 to 1000 in 1997. From 1997 to 2010 it remained around 1000, but went to 7000 in 2025. Overall it went 700X in 80 years, implying 9% avg annual return with dividends not even reinvested.

More detailed Analysis of S&P500:

Index value: S&P500 has 500 companies, market cap of which is close to $38T. However, index value is only 4500 (as of 2023), which implies that we divide total market value by some "base divisor", which kind of represents "number of shares". So, S&P500 index value can be thought of as price per share. This base divisor changes every year to adjust for a lot of changes in market (i.e companies getting dropped, added, stock splits, etc). As of 2023, that base divisor is 8.3B, so index value = $38T/8.3B = ~4540. Base value is just a arbitrary number and has no real significance. This index value is known as S&P500 per share value, and all dividends, earnings, etc are quoted based on this per share. It's difficult to get earnings in raw number (i.e earnings in billions of dollars for all s&p500 companies combined) as the base divisor keeps changing every year.

Here's a chart for s&p500 divisor from 2000 to 2020: https://www.yardeni.com/pub/spdivisors.pdf

It went from 8.3B in 2000 to 9.3B by 2005 and then back to 8.3B by 2020. So, for rough calculations, we can take divisor as 8.3B.

Let's delve into few important metrics for S&P500 companies, and they fared historically.

Earnings: Here's a chart of EPS: https://www.gurufocus.com/economic_indicators/58/sp-500-earnings-per-share

As can be seen, EPS went from $5 in 1970 to $135 in 2020 in a span of 50 years implying an EPS growth of 7% per year. Avg nominal GDP growth has been 5% per year. So, earnings grew faster than GDP. Price over earnings or P/E for S&P500 has been around 10-20 with avg of 16.

Dividend: Here's a chart of dividend per share (DPS): https://www.gurufocus.com/economic_indicators/59/sp-500-dividends-per-share

As can be seen, DPS went from $3 in 1970 to $60 in 2020 in a span of 50 years implying an DPS growth of 6% per year. So, DPS grew at same rate as EPS. According to the Wall Street Journal, over the past 50 years the S&P 500’s dividends grew at an average 5.7% per year, outpacing the average 4.1% inflation rate.

Until 1980's, companies were paying about 2/3 of their earnings in dividends, but now they pay only 1/3. As such, until 1982, dividend yield of S&P500 was ~5%. Once the ponzi scheme to lift up the stock market took hold in 1982 via 401K retirement accounts, govt money printing, etc, yields starting going down. 2 things drove this => stock prices rising along with companies distributing less of their income. They went down to 2.2% by 1995, and never got above that level since then (except for brief period in 2008 when market fell by 50%). They did get close to 2% when markets fell by 20% or more. 2% dividend yield for S&P500 will remain a dream forseeable future. Historical yield Link: https://www.multpl.com/s-p-500-dividend-yield

List of top companies paying dividends (as of 2023): https://www.dividendinvestor.com/top-100-dividend-stocks-by-market-capitalization/

Top Dividend payers by year:

• 2021: These are top 5 dividend payers of S&P500 as of 2021: https://www.fool.com/investing/2021/10/03/5-dividend-stocks-pay-71-billion-a-year-combined/
  • These are: Microsoft ($20B), Exxon Mobil and Apple ($15B), Chase and Johnson and Johnson ($12B). So, just these 5 companies paid out $71B in dividend out of $500B dividend.
• 2023: Fast forward to 2023, and these are the top 7 dividend players: https://www.fool.com/investing/2023/09/29/7-dividend-stocks-pay-98-billion-year-shareholders/
  • These 7 companies paid about $100B in dividend: Microsoft ($22B), Exxon Mobil and Apple ($15B), Chase, Chevron and Johnson and Johnson ($12B) and Verizon ($11B)
• 2024: Top dividend payers are same as in 2023.
  • On top of above 7 companies, we have AbbVie ($11B), P&G ($10B), Pfizer ($10B), The Home Depot ($9B), AT&T, Merck and Coca Cola ($8B each), United Health Group, Pepsi ($7B each), Walmart, Cisco, IBM, Altria ($6B each), Texas Instruments ($5B)  as next top dividend payers. Outside of S&P500, we have Petrobras Brasileiro ($17B), Nestle ($12B), HSBC ($11B), Samsung ($11B), Toyota ($10B), BHP, Roche, Shell ($9B each), China Mobile, Novartis, TSMC ($8B each). Alibaba paid it's 1st yearly dividend in 2024 at $5B. All of these are international companies, since any high dividend paying US company would already be in S&P500.
  • Up to 2022, Intel paid out $6B in dividends, but cut it's dividend to 1/3 in 2023, and then entirely eliminated it in 2024. 

Dividend Aristocrats (DA): S&P500 includes companies from all sectors in USA, so it's most widely followed index. About 66 companies in S&P500 (as of 2023) have increased their dividend every year for > 25 years and these companies are known as "Dividend Aristocrats (DA)". Link: https://www.nerdwallet.com/article/investing/top-dividend-aristocrats-list

Some well known names in DA are Walgreens, 3M, IBM, Chevron, Exxon Mobil, Walmart, Target, Coca-cola, Pepsi, Colgate-Palmolive, Procter & Gamble, Johnson & Johnson, Abbott Laboratories, Lowes, McDonalds, Caterpillar, etc.

There's an ETF to track these companies: ProShares S&P 500^® Dividend Aristocrats ETF (Ticker: NOBL)

The dividend yield is still low at 2.5%, but higher than S&P500 yield of 1.6%. About 1/2 the companies have dividend yield > 2.5% out of 66 DA (as of 2023). However, the shares here are none of the high flying nasdaq 100 companies, so this ETF won't be able to match Nasdaq100 or S&P500 in returns over a long period of time. However, over the last 30 years, NOBL has beaten S&P500 with less volatility. But this may not be the case going into future. Also, many of these dividend aristocrats don't offer ultra safe dividend, as a sizeable fraction of companies get dropped out of this list from time to time. In 2007, there were 60 dividend aristocrats, but 16 of them either cut or stopped increasing their dividend during 2009 financial crises, thus losing their status. Generally higher the %yield, more likely the axe on the dividend, and more likely a very slow growth of dividend.

Here's a link showing all DA from 1989 to 2023. More than 1/2 of them got dropped over time => https://www.suredividend.com/dividend-aristocrats-list/

Here's a another link showing all DA as of 2023, and then discussing 6 top dividend aristocrats => https://www.simplysafedividends.com/intelligent-income/posts/6-dividend-aristocrats

Dividend Kings (DK): These include all companies that have raised their dividend for > 50 years. These are not limited to just S&P500 companies. There are total of 54 DK as of 2024. None of the tech or fast growing companies are part of DK, so DK aren't able to match S&P500 returns. But they do offer higher dividends, however their dividend raises sometimes trickles to bare minimum increases,just to maintain their status as DK. Just like DA, a lot of companies keep getting dropped from DK too. Altria with it's 7.5% yield stands at top of DK list. Link: https://www.simplysafedividends.com/world-of-dividends/posts/41-2023-dividend-kings-list-all-46-our-top-5-picks

Longest surviving DK/DA: A lot of companies in DA/DK have turned out to be lousy investments or outright gone bankrupt.

2 companies, York Water and Black and Decker have paid dividends continuously for 150+ years. However, both have been lousy investments trailing S&P500 by a wide margin. However, others like Colgate Palmolive and Coco Cola have been big success, both beating S&P500 by a big margin.

• York water Company (YORW) has paid dividends for 210+ years (620 consecutive quarters) and raised them for 28 straight years.It's a $0.5B company paying $15M in dividends as of 2026. It's stock grew 6X from $5 in 2000 to $30 in 2025, implying a 7% annual price appreciation + 2%-3% in dividends.
• Stanley Black & Decker (SWK) has paid dividends for 149 years and increased them for 59 consecutive years. It's a $10B company paying $500M in dividends as of 2026. It's stock grew 10X from $7 in 1985 to $70 in 2025, implying a 6% annual price appreciation + 2%-3% in dividends.
• Colgate Palmolive (CP) has paid a dividend since 1895. It had raised dividend for 63 straight years. It's a $70B company paying $2B in dividends as of 2026. It's stock grew 50X from $1.5 in 1985 to $80 in 2025, implying a 10% annual price appreciation + 2%-3% in dividends. However, it's highly indebted Co with $1B in cash and $8B in debt with a -ve Tangible book value of -$5B (book value or equity is nil).
• American States Water (AWR) has paid a dividend since 1931. It has raised dividends for 71 straight years.
• The Campbell's Co (CPB) has paid dividends since 1980's but hasn't raised them every year, so it's neither DA or DK. 
• General Mills Inc (GIS) 

Stock Buyback (SBB): Apart from Dividends, companies return money back to shareholders via Stock Buybacks. Here's a chart of stock buyback (SBB) per quarter: https://www.gurufocus.com/economic_indicators/100/sp-500-quarterly-buybacks-b

As can be seen, SBB went from $100B/year in 2000 to $800B/year in 2020. So, SBB grew 8X in just 20 years. It's astronomical rise, and a pure wastage of earning. The reduced dividends were diverted towards SBB.

Total Shareholder return: Total shareholder return (TSR) is the money that was given back to shareholders. It comprises of dividend and buybacks. Dividends are more important as that's the money we get back from business, and can't be taken away from us, no matter what happens to the company. Buybacks on other other hand is lost money, if the company goes bankrupt.

In year 2020, TSR was $230B, while in 2020,it was $1.3T, implying >5X growth in 20 years.

Book Value: S&P500 book value denotes the total amount of assets (tangible+intangible) minus the liabilities. Here's a chart of book value per share (BPS): https://www.gurufocus.com/economic_indicators/4239/sp-500-book-value-per-share

It rose from 300 in year 2000 to 900 in 2020 implying 5%-6% growth per year. BPS is about 1/4 the value of stock market, so stocks are trading at about 4X the book value, and 2.5X the sales. A lot of the book value is from intangible assets which arise from overpaying over the book value when buying other companies. I couldn't find the data on intangible book value of S&P500 stocks. FIXME.

Sales: S&P500 sales denotes the total amount of sales per year. Here's a chart of sales per share (SPS) per quarter: https://www.gurufocus.com/economic_indicators/101/sp-500-sales-per-share

On a yearly basis, sales went from 180*4=$700/yr in 2000 to $360*4=$1400/yr in 2020. So, sales doubled in 20 years, but profits and Book value tripled during that time.

2000 vs 2020: Below table shows all above stats for S&P500 for year 2000 and year 2020. These 2 years were chosen, as divisor was same for both, so easier to do a comparison.

2018 vs 2019: Few statistics for S&P500:

1. Earnings: For year 2018, total earning was $1.12T (operating earning was $1.28T). For year 2019, total earning was $1.16T (operating earning was $1.3T). So, earnings came in lower for 2019 compared to 2018. So, on average S&P500 PE ratio has been over 25 when calculated based on past 12 month earnings for 2018 and 2019. Historical average PE ratio has been below 20.

2. Dividends: For 2019, dividends set a record with $486B., while for 2018 it was $456B. So, dividends went up by 7%.

3. Buyback: For 2019, buybacks came in at $729B, while for 2018 buybacks had set a record with $806B. So, buybacks were reduced by about 10% in 2019 compared to 2018. Reason was that there was a rush of buyback in 2018 as Tax changes allowed companies to bring their off shore cash tax free to USA, so most companies spent it on buybacks.

4. Total shareholder return: For 2019, total shareholder return comprising of dividend and buybacks came in at $1.21T, while for 2018, this came in at $1.26T. The decrease was primarily due to lower buybacks.

So, for 2018 and 2019, we see that companies spent more in dividend and buyback, than what they brought in as income. Also, for the last couple of years, S&P500 companies have yielded about 2% dividend yield, and bought back 3% of their stocks, giving an effective yield of 5%. However, companies also issue more shares simultaneously, diluting their stocks, so buyback yield is lower than 3% (companies issue about 1%-2% extra stocks every year)

Conclusion: From above historical data, we see that shareholders get about 4% total return from S&P500 companies (as of 2023). That implies a lower return that what savings banks and CDs are giving, which is > 5%. This doesn't make sense as people are willing to take a lower return of 4% with much higher risk, than take higher return of 5.5% with almost 0 risk. This real return may be skewed data due to few companies being outliers. To get a better value of real return that we shareholders get, we'll look at few of the largest companies in S&P500 individually.

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Published: Monday, 28 September 2020 12:57

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Personal Care & Apparel:

This section is for Personal Care items as well as clothes, shoes items. This category includes all personal care + beauty items that you see in pharmacy stores, grocery stores sold for personal use. Also, all clothes, shoes etc that ou buy from Kohls, Macys, JCPenney, etc.

Specific items I've included are:

Personal care (Dental, soaps, razors, shampoo, etc)

• Hair Trimmer: These are used for cutting hair, and are usually very cheap starting from $10.
• Body wash: These are used during shower instead of soap. In USA, soaps are not used much, and instead body wash are in vogue. they are cheap and start from $5/litre which will easily last couple of months. Best place to get Body wash or any soap is Walgreens. You may get it for almost free after Walgreens cash. Other place is amazon subscribe and save, where couple of times a year, you may get good deals.
• Shampoo/Conditioner: These are usually available on sale for various brands. Head & Shoulders's (from P&G) is the most popular one. They usually sell for $5 to $15 per litre. On the cheaper side are brands like Suave (at $5/litre), with Pentene in the mid range (at $10/litre) and Head & Shoulders at high end (at $15/litre).
  • 12/15/2024 => Walgreens has H&D clinical strength on clearance at $6 for 250ml. With $2.25 coupon, it comes to $3.75 per bottle, which is the lowest you can get to
    • SD ( 2 for $12 @amazon) => https://slickdeals.net/f/18001725-2-pack-13-5-oz-head-shoulders-clinical-strength-dandruff-defense-shampoo-11-40-w-subscribe-save
    • Walgreens (1 for $3.75) => https://www.walgreens.com/store/c/head-&-shoulders-clinical-strength-dandruff-defense---intensive-itch-relief-shampoo/ID=300410870-product
• Dental items: Mouthwash, Toothpaste, Toothbrush, etc. For all Dental items, walgreens is your place to go. You get it for free almost every month.
• Grooming: Razors for men/women, deodorant, etc.

5. Clothes, shoes and all other apparel: Those that you wear on a daily basis.

6. Etc ....

DEALS:

2026:

01/25/2026: Walgreens - Oral B Electric Toothbrush + Heads for $10-$20 after Walgreens Cash

It's Oral B Pro/iO toothbrush (multiple combo available), will last 3-5 years, can't get it anywhere for this price. You can buy multiple times. You pay $40-$50, but get $30-$40 in WAG cash. WAG Cash doesn't expire for a year, and can be used on anything. Use it to buy heavily discounted clearance items. 

Multiple deals:

• Oral B Pro + Heads: $48 with $40 WAG Cash (net $8 price). Link => https://slickdeals.net/f/19140064-oral-b-pro-500-electric-toothbrush-and-6-brushhead-refills-48-earn-40-50-wags-cash-free-ship-to-home
• Oral B iO Series 2: $45 with $30 WAG Cash (net $15 price). Link => https://slickdeals.net/f/19138114-oral-b-io-series-2-rechargeable-electric-powered-toothbrush-30-walgreens-cash-45-free-shipping

2025:

12/13/2025: Walgreens - Oral B Electric Toothbrush for $15 after Walgreens Cash

It's io series-3 toothbrush, will last 3-5 years, can't get it anywhere for this price. You pay $56, but get $40 in WAG cash. WAG Cash doesn't expire for a year, and can be used on anything. Use it to buy heavily discounted clearance items. 

Link => https://slickdeals.net/f/18966472-oral-b-io-series-3-electric-toothbrush-56-40-walgreens-cash-free-shipping

Multiple deals from before:

• 11/30/2025: $26 with $22 WAG Cash (net $4 price). Link => https://slickdeals.net/f/18906550-select-walgreens-accounts-oral-b-io-series-2-electric-toothbrush-3-50-pay-25-50-after-coupons-receive-22-00-back-in-walgreens-cash
• 08/24/2025: $43 with $30 WAG Cash (net $13 price). Link => https://slickdeals.net/f/18552046-walgreens-oral-b-io-series-2-rechargeable-electric-toothbrush-42-50-30-walgreens-cash-rewards-free-shipping

2024:

08/16/2024: Target - Free Ulta beauty product -  valid from 08/04/2024 to 08/31/24

Free selected ulta product when linking with new ulta account.

Link => https://slickdeals.net/f/17693154-target-circle-link-new-ulta-beauty-account-get-one-select-ulta-beauty-product-free-free-store-pickup

2023:

01/16/2023: Walgreens - Multiple items for cheap at Walgreens for week of 01/15/23 to 01/21/23

Multiple deals for this week.

https://slickdeals.net/f/16382182-walgreens-2x-20-oz-softsoap-irish-spring-body-wash-5-wg-cash-for-7-18-free-store-pickup-10

• Body wash => 2 for $8 + $5 Walgreens cash
• Colgate tooth paste (6 oz) => 2 for $4 + $4 Walgreens cash

As with any Walgreens deal, your orders may get cancelled, even though the store may have items in stock. Safe not to use walgreens cash on this order (Even though it should work)

2022:

12/25/2022: Bath and Body works semi annual sale - up to 75% off

Every Christmas, Bath and Body works has sale for 75% off. GC for Bath and Body works are easily available for 20% off. Both combined, you may get 8 oz body wash for < $3.

11/07/2022: Kohls - FILA shoes for $17:

https://slickdeals.net/f/16157506-fila-men-s-running-shoes-16-99-free-shipping-with-25-purchase?src=frontpage

Decent FILA shoes available for $17. These are good shoes. You do need to spend over $25 to get free shipping. You can buy 2 pairs of these, or buy something to take it over $25, and return the unwanted item later in store.

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Published: Saturday, 26 September 2020 22:02

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Hair Cutting:

One thing that I've always considered very expensive in USA is a hair cut. They cost about $60/hr (assuming $15 haircut in 15 minutes). Of course, it includes shop cost and the hair cutter themselves make barely anything. Even the hair franchisee doesn't make too much (the owner who operates the hair salon). It's mostly the franchisor who makes most of the profit. Most of the hair salon chain are franchisor, i.e greatclips, supercuts are examples of franchisor who trade on stock markets.

Hair cut Clipper settings:

Clipper run from 1 to 27 or something. Size 1 cuts the smallest hair, while higher numbered clipper leaves your hair longer. 1 implies size of 1mm i.e that clipper only leaves 1 mm length of hair on your head, while size of 6 implies size of 6mm.

From the consumer side also, going for a hair cut is a huge wastage of time and money. He/she has to drive somewhere, spend a lot of time sitting there, then someone cuts hair for 15 min, then drive back and take shower, which easily results in more than an hour of time for a 10 min job.

So, essentially hair cutting is a very inefficient process from both consumer and producer side. Cutting your own hair is a much more efficient process. A good quality hair cutter will cost you about $10 and will last for couple of years. However, you do need another person to cut your hair, as cutting your own hair isn't easy (atleast not for me).

1. Hair Salon: If you still don't want to invest in cutting your own hair, these salons may provide a relatively cheaper option to get your hair cut.

• Great Clips: www.greatclips.com offers the cheapest option. You usually get coupons for $6 to $8 for basic haircut. If you don't get their coupons, you would want to sign up on their website.
• Local Hair Salon: Other great place is www.groupon.com. You can search under local deals, and can usually get a hair cut for under $10 (by applying 20% off coupon for local deals that groupon has almost every month).
• Training Institutes: These are hair styling training institutes that you'll have to search online. There are usually a few in any city. They cut hair for $5 or so. Hair cut quality is good, as they always have an instructor who is guiding them.

2. Hair Cutter/Trimmers: These are few hair cutters or trimmers that i've tried and they have worked well. there is no reason to spend anything more than $20 for any hair trimmer, as the expensive ones just have more bells and whistles, which aren't needed.

• Braun hair trimmer: https://www.amazon.com/gp/product/B077HQ6WH4. I bought this for $20.It's cordless, and battery lasts for multiple hair cuts.
  
  • Use the Long Beard trimmer (#3) with setting of 17 to go over all of your head.
  • Then for close cut, use short beard trimmer (#2) with setting of 7 to go around your neck and ears.
  • There is precision trimmer (#4) that you use around your ears and sideburns, as it gets close to skin to remove all small hair.
  • There is stubble look trimmer (#1) with 2 other settings of 1 and 2 that you should never use. It cuts your hair so short, that your skin is visible. So, if you accidently end up cutting hair at a wrong spot with these, there is no way to recover. It also looks very weird on that spot as hair is basically gone. The lowest you should go is may be setting of 3 on beard trimmer, and that also on very bottom hairs around neck and ears. Safest way is to stick with setting of 7, then very carefully use setting of 5 if still needed around the edges. Setting of 3 should be avoided too, until you get experienced using these clippers.

While cutting your hair is hard, cutting others hair is not that difficult. So, you can provide reciprocal services to your spouse, room mates, etc. Watch a few basic hair cutting videos on youtube, and practise it while watching. One key skill to cutting with clippers is that clippers need to go from the edges of your head to the center of your hear, i.e clipper needs to pierce thru your hair. If you take your clipper from the center of your head, to edges of your head, then you will notice that clipper is just sliding on your hair without cutting hair. If hair is not getting cut, you are using the clipper in wrong way. Watch those videos again.

Practice your skills on your kids without fears of adverse repercussions. This is one rare place where having lots of kids helps you. After all, their hair do grow fast !!

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Published: Sunday, 20 September 2020 16:37

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GDP : One way to calculate GDP is to count all the expenses incurred by people, businesses and Government. Here we look at the component of GDP pertaining to expenses incurred by consumers.

The bea.gov website has all the details of GDP. If we look at PCE (Personal Consumption Expenditure) for 2019, we see $14.8T  as total money spent by Consumers.

https://apps.bea.gov/iTable/iTable.cfm?ReqID=19&step=2#reqid=19&step=2&isuri=1&1921=underlying

We will divide consumer expenses in 2 parts => Retail sales and Services sales:

1. Retail sales:

It includes all durable and non durable goods sales

Retail Sales: A big component of GDP is Retail Sales.

This link describes Retail sales:

https://www.thebalance.com/what-is-retail-sales-3305722

So, you can think of retail sales as anything end consumers buy from a store as well as online including services as hair dressing, hotels, restaurants, bars, etc.

This link from USA census website provides details of retail sales starting from 1992.

https://www.census.gov/retail/marts/www/timeseries.html

This link shows Total Retail sales including everything (Stores selling physical goods (physical/online), gasoline, restaurants, Auto).

https://www.census.gov/retail/marts/www/adv44x72.txt

2019 Retail Categories: For 2019, Total Retail sales were $6.2T. There are 13 retail categories. Auto turns out to be biggest component of Retail sales. Following are few important categories for 2019.

1. Auto: For 2019, Auto sales were about $1.1T. This includes Auto services also. About 17M passenger vehicles got sold in USA in 2019, with an avg price of $35K. So, that would imply 17M*$35K = $600B in new car sales. Then there are used car sales, and auto parts sales and auto services, that probably account for remaining other $0.5T ($400B in used car sales + $100B in repairs as per this link: https://carsurance.net/blog/automotive-industry-statistics/ )
2. Online or mail only business (non-store): These were about $0.8T in 2019, a 10 fold rise from $0.08T in 1992. Online sales will pretty soon exceed Auto sales.
3. Food services, drinking places: In 2019, this totaled $0.8T
4. Grocery stores: About $0.7T for 2019
5. Gas: For 2019, Gas sales were about $0.5T. Assuming gas prices of $2/gallon, that implies sale of 0.25T gallons of gas used. With 200M vehicles on road, and each vehicle averaging 12K miles/year and let's assume 20miles/gallon as car gas consumption, that implies 12K/20 = 0.6K gallons used every year (or about 2 gallons a day which seems reasonable). So, total gasoline per year is easily 200M*0.6 = 120B gallons of gasoline consumed every year. Of course, a lot of these vehicles burn a lot more than 2 gallon a day (looks more like 4 gallons a day), since we are off by a factor of 2.

 If you look at sales data for 1992, retail sales were about $2T. So, in about 27 years, retails sales more than tripled to $6.2T.  What's confounding is that retail sales go up by 4% - 5% every year, even though people's wages are going up by 2% a year (as per IRS tax returns). So, where do people get extra money to keep spending beyond their wage increase, year after year? Maybe it's the extra debt they take to keep spending more than what they earn. But then, the interest will start eating into their income, where they can't afford to take on any more debt. Not sure what's going on. We need to find that?

2. Services Sales:

Bea website shows total sales as $14.8T. "goods" consumption at $4.6T, but Auto sales show as $0.5T (not sure why, since retail sales show auto consumption at $1.1T). Then services consumption is at $10.2T. Part of these services (about $1.6T) was included in retail sales number above. So, we are left with about $8.6T in services that's not part of retail sales.

The main components of this services consumption of $8.6T is as below:

1. Housing rental cost: This, combined with utility bills, is the biggest component of services. For 2019, total rental expenditure was $2.3T. Rental was $0.6T, while rental equivalent of owner occupied housing was $1.7T. Since 40M households are renting, and assuming avg rental of $15K/year => Total rental = 40M*$15K = $0.6T. Also with 70M homeowners, and assuming $2K/month rental equivalent, we get about 70M*$2K*12=$1.7T. NOTE: this is rental equivalent, the actual cost of home owning is higher since property taxes, interest, insurance, hoa dues can easily amount to $3K/month (with avg home price of $400K, and interest of 3%, property tax of 1%, HOA+insurance of 1% and 3% principal payment, it's easily 8% of home price). NOTE: it's hard to find home owner's cost of owning house, since most of the people have houses that appreciated in price, rather than them buying houses at these high prices. In order to find total expenses for housing, we have to add all housing interest income for all US banks, then add total property tax collection for all houses in USA, then add home insurance income for all insurance companies in USA. We can't include principal payments of mortgages for used houses, since they show up as expense for buyer, but show up as -ve expense for seller (i.e income for seller), so it's just trading of houses between buyer and seller. We have to include revenue from sale of new houses, since these are are the ones that got added to economy. We have to include price appreciation of used houses though. FIXME? Not sure how to include these? FIXME
2. Housing Utilities: These expenses are around $0.35T with Electricity=$0.2T, Water=$0.1T and Gas=$0.05T
3. HealthCare: These amounted to $2.5T for doctors visits, hospital bills, nursing home, etc. This is the 2nd biggest component of services. This doesn't include your health premium, as that's included in separate "insurance" category below.
4. Financial services: These amounted to $0.75T. These include bank fees, brokerage commissions, trading fees, mutual fund charges, etc
5. Insurance services: These were about $0.45T. These include health insurance, life insurance, auto insurance and home insurance.
6. Personal Communication services: These add to about $0.35T.  These include Cable/Satellite services ($0.1T), Cell phone ($0.14T), Internet ($75B), landline($25B)
7. Education services: Cost of college, schools etc amounts to $0.3T
8. Professional services: These add to about $0.2T. These include legal services ($0.1T), accounting services (tax, etc = $0.05T), various organization dues, burial services, etc.
9. Public transportation: These amount to $0.2T. These include air ($0.12T), road (cab, bus, etc amounting to $0.06T), rail and water transportation.
10. Misc expenses: Remaining $1.2T is in many misc categories as social services, religious activities, domestic household services, etc. These also include expenses of non profit institutions which is about $0.5T. Non profit org have gross output of $1.7T and receipt collections of $1.2T, resulting in final consumption expenditure of $0.5T. The reason I think we include expenses of non profit orgs as consumer expenses is not sure. ?FIXME??