A Framing Puzzle

I suggest three words — ease of entry.

In most places you’ve got to have a state license to cut someone’s nails. So far even New York hasn’t seen fit to burden picture-framers with that requirement.

Ah, freedom.

Well, I can only speak about the two(!) framing stores near where I work, but both of them have branched out into selling other things, particularly lamps and small pieces of furniture.

Expanding on Craig’s point, the framing business has minimal overhead which aids the ease of entry into the industry. It surely helps that most consumers would rather not frame pictures themselves.

Another thought is that framers sell their service as an art rather than a mere commodity. The matting must match the frame and not be hindered by the shape of the frame, etc. By perceiving framers as artisans, consumers are seeing a Torpedo Factory (see: Old Town Alexandria) filled with talent rather than a starbucks next to a Caribou Coffee.

My town – 25K and very isolated – has several frame shops (as well as galleries that do framing on the side). They all seem to be empty most of the time.

I do know that there are some skill trades involved. Some people with frame shops have some sort of certification in art preservation.

I also think its regarded as a low effort franchise business by people without a lot of ambition.

This is not market failure; it is froth. It represents peripheral phenomenon in a ocean of excess…..

Valuation fractals represent a composite integration of primarily six elements in the complex economic system: cash and savings, debt, wages, assets, lending practices, and prevailing interest rates. Each of these six broad parameters has its own complex internal dynamics and summation characteristics. In a very mechanistic fashion, following simple near-quantum and near-quantum related Fibonacci numbers, valuation fractals ‘grow’ to buying saturation levels and thereafter ‘decay’ to lower selling saturation levels. The fundamental point is that the daily, weekly, monthly, and yearly valuation fractals represent the sum total integration of those six elements and their complex interactive relationships. Pour into the economic vat: cash for daily transactions, savings available for money to be borrowed at given interest rates using prevailing lending practices for both major purchases and minor credit card purchases, balanced by on-going wages and debt servicing obligations, balanced by relative valuation of assets and their relative state of consumption, mix it up on a daily, weekly, etc. basis – and – from the vat flows forth the daily, weekly, etc. summation fractals. While lower order time unit fractals such as minutes and hours represent trading valuation saturation points, intermediate fractals represent the larger picture of on going velocity of money growth percolating through the system. The higher order or 4-yearly, 17-18 yearly and 70 year fractals represent both business cycle and asset and debt saturation levels at the basic consumer level.

There are three sequential identified ideal growth fractals followed by a decay fractal. The near quantum number time units for the three cycles are x, 2-2.5x and 2x, respectively. A nonlinear devaluation typically characterizes the second growth fractal somewhere between the 2x and 2.5x time period. The third growth fractal which ideally is 2x in length can have an extension to 2.5x. This extension of the third growth fractal has characterized both the current US equity and heavily invested commodity areas, particularly oil and gold, for the entire 128 week duration of the March 2000 secondary growth period.

Just as the complex system is an integrative process, valuation fractals which exactly represent them are likewise composite nonlinear integrations. Fractals incorporate the terminal portion of the preceding decay fractal into the beginning of the follow-on growth fractal. An elegant pristine example of this rolling integration was the 40/100/100 day cycle exactly x/2.5x/2.5x that resulted in the March 2005 top for the DJIA. The first two fractals were ‘declining’ growth fractals with a very characteristic nonlinear break at the end of the second fractal in August 2004. That second fractal was likewise elegant in its evolution in that it was composed of a 29/72 day x/2.5x sub fractal sequence. The probability that these precise sequences are random numerical sequential events approaches zero and elevates fractal analysis, reciprocally, to a high probability real science descriptive of the complex macro economy.

The subsequent growth fractals dating from August 2004 likewise have followed the same very precise fractal growth evolution with a 52/130 (x/2.5x) day first and second fractal growth sequence with the typical nonlinear drop between 2x and 2.5x of the second fractal. Anyone can verify this pattern using any of the major US or European indices. The third fractal US equity sequence has been a 12/30-31/28 day sequence, approaching the extended ideal form of x/2.5x/2.5x growth pattern. The major European indices ,e.g., the FTSE, DAX, and CAC have a slightly different mix of the six aforementioned underlying elements and have extended their growth – but are still confined within the 52/130/104 theoretical maximum and the theoretical Fibonacci maximum of 52/130/(1.62 X 52 = 84-85)
days. These recurrent numerically ideal patterns since August 2004 once again lend substantial credibility to the notion that the complex macroeconomy operates according to some relatively precise laws of fractal design.

What are the rate limiting factors that result in growth saturation points or asymptotes, decay selling saturation points or asymptotes, and the general nature of fractal patterning? Each of the six controlling parameters- assets, ongoing wages, lending practices, prevailing interest rates, debt load, and cash and savings – contribute to the saturation areas. Some are more important than others in determining cycle lengths and saturation points.

Assets have two important elements: relative valuations and saturation ownership. If the valuation becomes too high or too overly consumed, demand
will decease. The timing for this decrease is exactly represented by an asymptotic valuation saturation level or a single high valuation point followed by lower valuations. The valuation curves provide precise barometric information on demand relative to valuation level and relative to the consumption level. Some assets such as gas and oil must be purchased to maintain livelihood. As global consumption for the this finite resource increases, resulting price increases squeeze the null saving US consumer,
far too many living from paycheck to paycheck, to the financial breakpoint. Unnecessarily expensive US healthcare, 25 percent of the value of which goes to third party insurers and the non-value added bill collection system, can be considered yet another consumable asset, that, like ‘uninsured equivalent’ gasoline prices, is driving many to insolvency.

Ongoing wages and just as important the jobs that support those wages are perhaps the most important rate limiting factor in determining valuation saturation points. In the US jobs sphere, high paying manufacturing jobs with the exception of the housing industry have been significantly outsourced. As the housing bubble crests, overcapacity will become evident and high paying home construction jobs will contract. A considerable subset of jobs in America have questionable value-added real economic worth and will be lightened during consumer retrenchment. It is easy to image using the 1930’s as a template of a positive feedback contracting system, where decreased ,e.g., construction jobs lead to decreased consumer spending leading to further job contraction leading to further spending contraction
and so forth.

Lending practices and prevailing interesting rates, the latter a Federal Reserve controlled parameter, work in synergy to foster money creation and asset inflation. Fractional reserve lending practices amplify the bank and money market savings used as a reserve base for lending. Extremely low interest rates, i.e., a Fed fund rate of 1 percent coupled with a lending practice of LIBOR type loans, no money down and interest only payments creates the interesting situation in which the interest cost of money is far below the real asset inflation rate. Not to borrow is to lose money that would be made with the expected inflation. Saving money under these interest rate and lending practice guidelines results in loss of purchasing power. Credit card interest rates reflect the needed higher interest rates to overcome the default rate. The last year of higher Fed Fund interest rates have resulted in both increased mortgage payments and decreased bank profitability secondary to the contracting spread of long term verses short term interest rates.

Ongoing debt load and the requirement to service that debt diminishes cash available for asset consumption and investment. Percentage wise the total debt load relative to wages and GDP has had very small incremental increases – a fact which has mistakenly reassured many linear thinking economists.
Debt load becomes a primary factor in the fractal decay process, where assets are liquated in an attempt to pay down debt. This results in a mechanistic deflationary process, lowering the value of nearly all non cash or non-cash equivalent assets.

Cash is the money that is represented by greenbacks in circulation and greenback equivalent readily convertible debt instruments such as treasuries, notes, bonds, bank deposits, and money market funds. In short cash represents the dollars in circulation and savings. The savings rate, which the Federal Reserve has bemoaned to be dangerously low and was reported to be zero in July, reflects the competition of the the various
Investment areas. With interest rates below the real(which includes housing) asset inflation rates, deposited money in saving instruments loses its purchasing power value its week that it is malinvested. Deposited money in saving instruments has been generally a bad investment in the last few years. During the decay fractal process, this scenario will be reversed with money from ongoing asset liquidation flowing into cash and cash equivalents, whose purchase power value will increase relation to asset devaluation.

These are the lumped six broad elements that are interacting with each other
to create the summation and integration valuation points, curves, saturation inflection asymptotes and fractals that respectively describe the real instantaneous state, the trending state, the saturation areas, and importantly the expected fractal nonlinearities of the complex macro economic system. Gary Lammert http://www.economicfractalist.com/

Could be that there are lots of office buildings, convention centers, colleges, hotels, motels and such like service based establishments in your area. All of which provide a steady demand for framed stuff in job lots. Any Marriott will have a demand for 2 to 3 x the number of rooms for framed prints.

Either your wife is a very unusual woman or she is hiding the bills from you.

She married Bryan! What does that say about her?

My wife and I are hobby artists. We have almost no woodworking skills or tools, so generally we need to outsource framing of our artwork.

We’ve tried to use “pre-made” frames that snap together, but the results have always been poor compared to custom framing by experts.

I have one artist friend who is an excellent framer. He helped me make a frame for one of my works of art. It took about a day (sawing, fitting, nailing, glue drying, painting, drying paint, etc.) but it came out great.

Suffice to say that I have decided to continue to outsource my framing! I don’t have whole days to blow on such things 😉

Some industries have a perpetual problem of over supply. Take the hotel and airline industries as examples. They constantly struggle with oversupply because they’re perceived as sexy businesses to be in. No one wants to talk about investing in the sand and gravel business at the country club. Economically it’s irrational, but psychologically it’s not. Besides, it’s irrational economically only to the outsider. A investor in a new airline or hotel can always rationalize his investment and convince himself that his business is unique and will beat the odds. Maybe framing, perceived as an art, has similar motivations.

I wonder how many of these framing shops have been in business for, say, 3-5 years or longer? I wonder how many will still be in business in 3-5 years?

Without having looked at the framing business at all, I see a sort of me too approach to small businesses in general. Someone starts a store selling widgets and does OK. Someone else sees this and figures they can do something similar and they may do OK too. Then people with less than unlimited imagination see these two and figure they’ll jump in too. Pretty soon you have a dozen widget stores.

SInce the market will only support 2-3 of them, the rest wind up closing in a few years.

But what do I know? A lot of the other commenters had good thoughts too.

John