Max out your friends, not your credit card

A guy I worked with years ago (circa 1991, a time when a young Victoria Jackson was teaching America to laugh and Sergeant Slaughter finally defeated Ultimate Warrior for the WWF championship belt) told me about how when his father was a young salesman he was part of a “suit financing ring”. Each ring would have, say, 10 friends or coworkers. Basically each person put in $5 a month. At the end of each month, one person would get a new business suit (10 people putting in $5 a month would give the fund $50 a month and I guess back then a good business suit would run you about $50). After 10 months, everyone had a new business suit and the cycle would continue.

Anecdotal observations from Las Vegas

I happened to be in Las Vegas for a conference this weekend and noticed something new. No, not another hotel or attraction- those are always springing up. Rather, I noticed that prices have risen on the strip. Not hotel room prices- those have fallen hard.  In fact, a room at the center-strip and recently renovated Mirage are just $63 per night. The Monte Carlo offers rooms from just $38. I have paid double and triple these rates at the same properties in the past.

The Amazon Tax

In these cash-strapped times legislators everywhere are trying to find creative ways to raise revenue. California, for example, is issuing IOUs to help temporarily ease its cash crunch. Lawmakers in both Rhode Island and North Carolina are trying another tactic: they are trying to tax the internet.

Before we pass judgement, however, a little background is in order. Way back in the mid 1990’s, when the nascent internet was just developing “ecommerce” in earnest, Congress decided it was best not to tax the internet so as not to nip in the bud the growth engine that ecommerce was deemed to be. State legislatures were and still are very worried about lost sales tax revenue. If a company has no physical presence in your state, the state can not collect sales taxes from it. So when Amazon ships a book from Washington to Colorado, Colorado can not collect sales tax because Amazon has no presence in CO. Washington does not tax Amazon’s sales (unless in WA) because the shipment to CO is inter-state commerce, protected from tax by the Constitution.

Idiot Revisited: Fisher

A while back, last September 9th to be exact and right before the world really fell apart, I took some flack for calling the Dallas Fed President Richard Fisher the economic idiot of the week. If you don’t recall why, let me help you. As the world was rapidly deflating in a giant credit crunch, Mr. Fisher’s position was described in the Fed’s meeting minutes as

“While the financial system remained fragile and economic growth was sluggish and could weaken further, he saw a greater risk to the economy from upward pressures on inflation.” [Emphasis mine]

A few months later he changed his tune and accepted that the right thing to do during a credit crunch is not tighten credit, but rather expand credit and liquidity. Thankfully, Bernanke already knew this.

I raise this issue again because Mr. Fisher was in the news again today. Bloomberg reported on some of his remarks this week. I’ll quote from Bloomberg’s article (again, emphasis mine):

Skeptical of Recovery

I admit it. My brain hurts. The financial/economic world isn’t making a whole lot of sense to me right now. Current consensus is that the worst is over, “green shoots” are taking root, and that growth is just around the corner. The stock market goes up on news deemed “less bad” and interest rates have also risen based on the idea that inflation will return with growth- how can it not return with all the stimulus and liquidity put into the system? Yet somehow I can’t help but remain skeptical of this growth story.

Long-Term Bond Funds

I was just working on a review of a new client’s 401K and I noticed a holding called “XYZ Long-Term Bond Fund”. Fine. Nothing terribly special about that. However it occurred to me just how misleading such a fund name can be to the uninitiated.

Many people not versed in financial matters might see this choice and think “I’m investing for the long-term, this is for me.” In their mind, retirement is far off, perhaps twenty years or so, and investing in 20 or 30 year bonds might seem like a perfect fit. Unfortunately, things aren’t so simple and the funds named like this can be very misleading.

Pirates

Anyone notice we’re about to go through a whole summer with out a Pirates of the Caribbean movie? I have. But this posting isn’t about that. Pirates, of course, are in the news. They’re the new big enemy, the crazier-than-Hitler types we love to read about and wish our governments would squash.

As January goes, so goes the year

That’s an old, old Wall Street adage. So old, in fact, that I couldn’t even track down its origins. What the maxim means is that the direction of January foretells the stock market’s direction for the rest of the year (February through December) that is. Financial journalists love to pull this one out every year, particularly since a little quick math is impressive. In the 82 full years since and including 1926, this metric has worked 70% of the time. Considering markets are either up or down, 70% is much better than the coin flip odds would suggest. Or is it?

Poor logic makes for good sales tactics

I happen to be a pretty loyal Toyota customer now. We have two “Toys” and get them both serviced at the dealer. I’m not a do-it-yourselfer and I have had my share of bad service from non-dealer shops. Once upon a time, I tried to save a few bucks by using Midas for brakes. What I saved in dollars paled in comparison to the aggravation of getting it re-done over and over until they got it right. Another time, my non-Toyota vehicle had something wrong, but I didn’t know what. The local mechanic couldn’t tell me either because they didn’t have the scanner/computer/technostic thingy the dealer uses to read the vehicle’s computer error codes. So I learned to just build a relationship with my dealer and get all the maintenance done by them. You know what? They give me a discount, don’t make up repairs and the work gets done right with genuine parts. Saves me aggravation in the long run. While that is my experience, your mileage may vary, as they say.

The Conspiracy Skeptic Podcast

Want to know the truth behind Roswell and UFOs? You know how I write, but are you curious how I sound? Then listen to Karl’s fantastic The Conspiracy Skeptic Unplugged podcast with this episode’s guest- me. You can find it on iTunes, the links to the right, or here.

One thing that became obvious to me, is that Karl really knows a lot about conspiracies. Several times right before the recording, I emailed him with a change in the conspiracy I wanted to talk about. Karl’s response was always “great, that’ll be fun” where I had expected him to need time or preparation to change topics. Nope. Karl knew almost everything he needed off the top of his head. That, my friends, indicates a genuine conspiracy groupie! If you want to wade through conspiracies to find the truth in a fair, logical and fun fashion, you are in good hands with Karl.

If you haven’t yet tuned in, I highly recommend it. In fact, I had asked Karl to participate here at TLRB after listening to his double show about the Fed. He gets it!