While I dislike tax day, I would feel even worse about it if after paying the government taxes I found I was giving them an interest free loan all year long. My goal is $0 and while I have come very close to this after netting the effects of both federal and state taxes, each individually is not quite there, yet.
Cell phone companies sell the phones to cellular carriers, who resell them at a loss (at best breakeven on a cheap phone). Perhaps at the beginning of life on an exclusive hot phone the carrier might make some money, but most phones are sold at less than the company paid for it. Accessories (and contract replacement phones are sold at a huge markup (>50% or more) to offset some of the initial loss on the phone. If the end user can buy cheap accessories for their new phone from a third party, the cellular company is out even more, hense the non standard connectors.
If you don't believe me, go find one of Nextel's SEC filings such as this one, go to page 54 and do the math yourself. Nextel paid $2.0 billion for handsets and accessories in 2004, and sold them for $1.4 billion. (The second line relates to an accounting gimmick Nextel previously used to minimize this cost). The three following explanatory paragraphs explain that the handsets are subsidized, but accessories are sold with gross margin (not subsidized).
Nextel's subsidies might be larger than other phone companies (due to only a single supplier), but all of them sell phones at a loss.
You also look better to investors if you have fewer assets (and correspoinding liabilities). Think of it this way, if you have two businesses to choose from the first makes $1 million on $10 million investment and the second makes $1 million on a $100 million investment which would you prefer to invest? Since most managers prefer the former (they look smarter then) leasing has grown rapidly in popularity. Cisco is one of the companies that leases and outsources almost all their operations, and they have been a Wall St. darling for a decade.
I do not have an iPod (and probably won't buy one), but my next system will either be a G5 iMac or a Mac Mini. The irony is that an X-Box was the final factor in my decision, since I found myself spending most of my gameplaying time on the console, I do not need a PC around to run games.
He changed the industry forever by showing how valuable sequel and product tie-in rights are, don't think that the studios will ever give that goldmine away again.
Keep in mind that in the US prices are frequently quoted pre-sales tax, and while they vary considerably from state to state sales taxes usually add at least 5% to the final selling price. My understanding is that European price quotes generally include VAT. Pure greed (and less local competition) does play a role, as US based game manufacturers can hold off cutting prices when currencies swing favorably in foreign countries that do not have local competition. Eventually, arbitrage will close the gap, I read about plenty of people who came across the pond to do their Christmas shopping last year (and usually saved enough to pay for the trip).
Trees grown for paper are grown on farms for that purpose (they are rapid growing hybrids (poplars and willows) that are basically cellulose factories. The concept of recycling them is almost as strange as the concept of recycling pineapple or corn. The natural cellulose factory is much more efficient than the man-made ink stripping factory.
You have the Chinese (and Japanese and Korean) governemnt to thank for your cheap home interest rate (home rates are usually tied to the long government bond which has been yielding exceedingly low rates thanks to sustained buying by those central banks.
However, keep in mind Keynes advice when even when you know you are correct about a market. "Markets can remain irrational longer than you can remain solevent." Greenspan was right in 1996, that we were entering a bubble, but anyone who followed that logic would have lost their shirt by 1999.
Be careful of what types of EU and Asian companies you invest. A whole lot of investible companies compete globally for the same few customers, their participation in a local stockmarket is largely just a result of their historic past. Coca-Cola (traded in the US) has more non-dollar denominated sales than LVMH (Louis Vuitton Moet Hennesy--a decently large European Luxury goods vendor) or Toyota both would be a would be a part of many international indicies. You want to invest in companies with mostly local revenues to maximize your benefits from currency fluctuations (which is why bonds are typically the vehicle of choice for currency investors). Generally this means telecom and retail, which aren't usually a huge part of foreign indices and may or may not be good investments in various countries. You can achieve some currency free returns through domestic investments in commodity products (because they sell globally commodities are usually quick to adjust to currency fluctuations).
Your counter to #5 is true as long as two things remain true. The Fed remains the major force in adjusting interest rates and the Asian central banks continue to hoard dollars in an attempt to keep their currencies from appreciating signficantly to the dollar. At some point the other players in the bond market become more important than the Fed (who is very big but not the whole market) and interest rates start to rise regardless of what the Fed does.
Federal debt is only state tax free, you would still pay federal income taxes on it. The reverse is true for state and local debt (federal tax free). If you live in a state that has no income tax and buy state bonds, you would have tax free income (until the AMT kicks in, I believe).
There are a large number of real estate investors who have no concept of leverage. Real estate has historically returned slightly less than stocks and just a hair more than corporate bonds, as an asset class. But the high leverage most banks allow (20% down), greatly boosts the return on equity of most real estate investors. Keep in mind that this works in reverse, as well. You can have leverage in the stockmarket with a margin account, but stock brokers are only willing to give you a little leverage (50% down). Leverage can be a powerful tool, but to use it properly you should understand how it works, not saying you or your friends don't but that a whole lot of real estate investors didn't and suffered greatly for it.
There is an old saying in business that the suites at the Plaza (the then fancy hotel in NY) are always occupied, but they are rarely occupied by the same people from year to year.
Imagine a sloping line with a big n shaped curve in the middle. If you exclude the n curve in the middle of the line you returned to the same growth cuvrve you were on originally. That is what they meant by flatten the growth around the bubble. A similar example is here notice that the slope (its a curve on a non-log chart) is pretty constant from 1980-2005, if you drew a line from 1995-2003.
I'll agree that boards are not what they should be, and think that most of that arises from two big factors, index funds and the current size of companies. Index funds are big investors and they could care less how any company they own performs, as a result they are usually the largest investors in big companies (no one else has the money to be that big an investor in GE, Citi etc) and they vote based on what ISS (a CYA consulting firm) tells them to vote. A rather relevant case is the HP Compaq merger ISS came out in approval giving about 9% of the ownership of HP to managment. Also a corporate raider generally cannot buy enough of a big company (say over $10 billion in market cap) to elect his board and change the company's course. While Gordon Gecko is reviled as a worst case guy, someone like him would have bought up HP years ago and sent Carly packing if it were a $6 billion company rather than a $60 billion company. Hopefully, once the boomers (who blindly believe that domestic large cap equities excess returns will cover their almost total lack of savings) retire and pull money out of the market, I expect that valuations between public and private firms will become much closer and a decent number of public firms will go private. The problem with cozy boards is that the directors are not generally large stockholders (who they are supposed to represent) the directorship of a company should include large shareholders rather than people who get a few thousand shares granted them annuall (and probably sell them pretty quickly). The tricky part is that what benefits the large shareholders may not benefit smaller shareholders. That balance is a whole lot easier to manage than the current managment shareholder balance that has consistently shifted in favor of managment for many years.
I work for a pension fund and know people at mutual funds and the grand parent is more right than wrong. We (the entire investment community) pretty much expects an investment to grow equity at about 15% annually (it generally has to be faster than the S&P). The reason executive compensation has soared over the last several decades is that the few people who have consistently shown the ability to do this (keep their company on a growth rate of 10% annually) are well worth the money they are paid. However, they are exceedingly rare and you do not want to loose one once it is established that they can do this. Imagine the market impacts if a Jack Welch had been hired away from GE in 1999 to say Honeywell because he was peeved that GE didn't pay him enough. So the practice has become over pay (as if they were a top performer) for a few years while a CEO establishes a record, if they are a performer your investment is golden if they are not fire them and try again. It's a lot like a lottery with tickets that cost a small fortune (but with even bigger payouts--a decent sized company that becomes a consistent returner of 15% over two decades will probably be worth about times what you bought it for (starting at say $1 billion and going to $60 billion--to the big investors in the company paying a CEO even $25-50 million per year is pretty small potatoes, if he can maintain that performance and sell the ability of the comapny to keep up with that hurdle for 20 years or so. Once they have failed they are replaced with the next person. I don't think it is right or fair, but from the viewpoint of the large investors it is more rational.
I work in finance where probably everyone in the industry knows full well that top bankers get paid in the 7 figures. This compensation is partly because there aren't many bankers who continue to maintain the lifestyle required to be a top performing banker for very many years. A similar case would be oil field workers (who work long hours with few prequisites other than the capacity to work very hard for a lot of hours in good oil years) but humans cannot work 40 years in these fields. The smart ones save enough to retire young or fund a different career, the dumb ones blow the cash on drugs, sex, and fun and while they have some really cool stories are completely burned out at around 40.
If you are not saving enough in your current job to successfully transition into something else in 10-20 years leave now.
A great way to get an early start in the game is to buy someones old force off ebay. Lots of folks leave the game each year and they want some return on the money they spent over the years. If they didn't use anything too weird to paint 'em a few hours of pine-sol will strip the paints pretty easily. Also buying the box set extras (the box comes with two armies that a decent number of people don't care about they just want the rules and perhaps one of the armies) is a good way to get a small force pretty cheaply.
I tossed foamboard in the windows. It is dark outside all the time when I am at home from Oct-Mar anyway so insulating cut my winter power use 20%-30% (old apartment with electric heat and single pane windows in Montana). I've been happy as my apartment is less drafty. In the summer I don't use the A/C at night (the only time I care as I am usually out the rest of the day) instead I take a cool shower just before bed and I'm asleep before I warm back up.
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While I dislike tax day, I would feel even worse about it if after paying the government taxes I found I was giving them an interest free loan all year long. My goal is $0 and while I have come very close to this after netting the effects of both federal and state taxes, each individually is not quite there, yet.
Cell phone companies sell the phones to cellular carriers, who resell them at a loss (at best breakeven on a cheap phone). Perhaps at the beginning of life on an exclusive hot phone the carrier might make some money, but most phones are sold at less than the company paid for it. Accessories (and contract replacement phones are sold at a huge markup (>50% or more) to offset some of the initial loss on the phone. If the end user can buy cheap accessories for their new phone from a third party, the cellular company is out even more, hense the non standard connectors.
If you don't believe me, go find one of Nextel's SEC filings such as this one, go to page 54 and do the math yourself. Nextel paid $2.0 billion for handsets and accessories in 2004, and sold them for $1.4 billion. (The second line relates to an accounting gimmick Nextel previously used to minimize this cost). The three following explanatory paragraphs explain that the handsets are subsidized, but accessories are sold with gross margin (not subsidized).
Nextel's subsidies might be larger than other phone companies (due to only a single supplier), but all of them sell phones at a loss.
You also look better to investors if you have fewer assets (and correspoinding liabilities). Think of it this way, if you have two businesses to choose from the first makes $1 million on $10 million investment and the second makes $1 million on a $100 million investment which would you prefer to invest? Since most managers prefer the former (they look smarter then) leasing has grown rapidly in popularity. Cisco is one of the companies that leases and outsources almost all their operations, and they have been a Wall St. darling for a decade.
Actually we import savings (in the from of loans from foreign savers to US banks) which is then used to finance loans to Americans.
That strategy can have some nasty reprocusions, you might consider a different one.
I'd like to add a digital audio port to the Mac Mini SE.
I do not have an iPod (and probably won't buy one), but my next system will either be a G5 iMac or a Mac Mini. The irony is that an X-Box was the final factor in my decision, since I found myself spending most of my gameplaying time on the console, I do not need a PC around to run games.
He changed the industry forever by showing how valuable sequel and product tie-in rights are, don't think that the studios will ever give that goldmine away again.
Also, make sure you weigh more than the largest duck/goose in town.
Keep in mind that in the US prices are frequently quoted pre-sales tax, and while they vary considerably from state to state sales taxes usually add at least 5% to the final selling price. My understanding is that European price quotes generally include VAT. Pure greed (and less local competition) does play a role, as US based game manufacturers can hold off cutting prices when currencies swing favorably in foreign countries that do not have local competition. Eventually, arbitrage will close the gap, I read about plenty of people who came across the pond to do their Christmas shopping last year (and usually saved enough to pay for the trip).
Trees grown for paper are grown on farms for that purpose (they are rapid growing hybrids (poplars and willows) that are basically cellulose factories. The concept of recycling them is almost as strange as the concept of recycling pineapple or corn. The natural cellulose factory is much more efficient than the man-made ink stripping factory.
You have the Chinese (and Japanese and Korean) governemnt to thank for your cheap home interest rate (home rates are usually tied to the long government bond which has been yielding exceedingly low rates thanks to sustained buying by those central banks.
However, keep in mind Keynes advice when even when you know you are correct about a market. "Markets can remain irrational longer than you can remain solevent." Greenspan was right in 1996, that we were entering a bubble, but anyone who followed that logic would have lost their shirt by 1999.
Be careful of what types of EU and Asian companies you invest. A whole lot of investible companies compete globally for the same few customers, their participation in a local stockmarket is largely just a result of their historic past. Coca-Cola (traded in the US) has more non-dollar denominated sales than LVMH (Louis Vuitton Moet Hennesy--a decently large European Luxury goods vendor) or Toyota both would be a would be a part of many international indicies. You want to invest in companies with mostly local revenues to maximize your benefits from currency fluctuations (which is why bonds are typically the vehicle of choice for currency investors). Generally this means telecom and retail, which aren't usually a huge part of foreign indices and may or may not be good investments in various countries. You can achieve some currency free returns through domestic investments in commodity products (because they sell globally commodities are usually quick to adjust to currency fluctuations).
Your counter to #5 is true as long as two things remain true. The Fed remains the major force in adjusting interest rates and the Asian central banks continue to hoard dollars in an attempt to keep their currencies from appreciating signficantly to the dollar. At some point the other players in the bond market become more important than the Fed (who is very big but not the whole market) and interest rates start to rise regardless of what the Fed does.
Federal debt is only state tax free, you would still pay federal income taxes on it. The reverse is true for state and local debt (federal tax free). If you live in a state that has no income tax and buy state bonds, you would have tax free income (until the AMT kicks in, I believe).
There are a large number of real estate investors who have no concept of leverage. Real estate has historically returned slightly less than stocks and just a hair more than corporate bonds, as an asset class. But the high leverage most banks allow (20% down), greatly boosts the return on equity of most real estate investors. Keep in mind that this works in reverse, as well. You can have leverage in the stockmarket with a margin account, but stock brokers are only willing to give you a little leverage (50% down). Leverage can be a powerful tool, but to use it properly you should understand how it works, not saying you or your friends don't but that a whole lot of real estate investors didn't and suffered greatly for it.
There is an old saying in business that the suites at the Plaza (the then fancy hotel in NY) are always occupied, but they are rarely occupied by the same people from year to year.
Imagine a sloping line with a big n shaped curve in the middle. If you exclude the n curve in the middle of the line you returned to the same growth cuvrve you were on originally. That is what they meant by flatten the growth around the bubble. A similar example is here notice that the slope (its a curve on a non-log chart) is pretty constant from 1980-2005, if you drew a line from 1995-2003.
I'll agree that boards are not what they should be, and think that most of that arises from two big factors, index funds and the current size of companies. Index funds are big investors and they could care less how any company they own performs, as a result they are usually the largest investors in big companies (no one else has the money to be that big an investor in GE, Citi etc) and they vote based on what ISS (a CYA consulting firm) tells them to vote. A rather relevant case is the HP Compaq merger ISS came out in approval giving about 9% of the ownership of HP to managment.
Also a corporate raider generally cannot buy enough of a big company (say over $10 billion in market cap) to elect his board and change the company's course. While Gordon Gecko is reviled as a worst case guy, someone like him would have bought up HP years ago and sent Carly packing if it were a $6 billion company rather than a $60 billion company.
Hopefully, once the boomers (who blindly believe that domestic large cap equities excess returns will cover their almost total lack of savings) retire and pull money out of the market, I expect that valuations between public and private firms will become much closer and a decent number of public firms will go private. The problem with cozy boards is that the directors are not generally large stockholders (who they are supposed to represent) the directorship of a company should include large shareholders rather than people who get a few thousand shares granted them annuall (and probably sell them pretty quickly). The tricky part is that what benefits the large shareholders may not benefit smaller shareholders. That balance is a whole lot easier to manage than the current managment shareholder balance that has consistently shifted in favor of managment for many years.
I work for a pension fund and know people at mutual funds and the grand parent is more right than wrong. We (the entire investment community) pretty much expects an investment to grow equity at about 15% annually (it generally has to be faster than the S&P). The reason executive compensation has soared over the last several decades is that the few people who have consistently shown the ability to do this (keep their company on a growth rate of 10% annually) are well worth the money they are paid. However, they are exceedingly rare and you do not want to loose one once it is established that they can do this. Imagine the market impacts if a Jack Welch had been hired away from GE in 1999 to say Honeywell because he was peeved that GE didn't pay him enough. So the practice has become over pay (as if they were a top performer) for a few years while a CEO establishes a record, if they are a performer your investment is golden if they are not fire them and try again. It's a lot like a lottery with tickets that cost a small fortune (but with even bigger payouts--a decent sized company that becomes a consistent returner of 15% over two decades will probably be worth about times what you bought it for (starting at say $1 billion and going to $60 billion--to the big investors in the company paying a CEO even $25-50 million per year is pretty small potatoes, if he can maintain that performance and sell the ability of the comapny to keep up with that hurdle for 20 years or so. Once they have failed they are replaced with the next person. I don't think it is right or fair, but from the viewpoint of the large investors it is more rational.
I work in finance where probably everyone in the industry knows full well that top bankers get paid in the 7 figures. This compensation is partly because there aren't many bankers who continue to maintain the lifestyle required to be a top performing banker for very many years. A similar case would be oil field workers (who work long hours with few prequisites other than the capacity to work very hard for a lot of hours in good oil years) but humans cannot work 40 years in these fields. The smart ones save enough to retire young or fund a different career, the dumb ones blow the cash on drugs, sex, and fun and while they have some really cool stories are completely burned out at around 40. If you are not saving enough in your current job to successfully transition into something else in 10-20 years leave now.
A great way to get an early start in the game is to buy someones old force off ebay. Lots of folks leave the game each year and they want some return on the money they spent over the years. If they didn't use anything too weird to paint 'em a few hours of pine-sol will strip the paints pretty easily. Also buying the box set extras (the box comes with two armies that a decent number of people don't care about they just want the rules and perhaps one of the armies) is a good way to get a small force pretty cheaply.
I tossed foamboard in the windows. It is dark outside all the time when I am at home from Oct-Mar anyway so insulating cut my winter power use 20%-30% (old apartment with electric heat and single pane windows in Montana). I've been happy as my apartment is less drafty. In the summer I don't use the A/C at night (the only time I care as I am usually out the rest of the day) instead I take a cool shower just before bed and I'm asleep before I warm back up.
I Have Been Trolled it's from an older abbreviation YHBT, YHL, HAND (You Have Been Trolled, You Have Lost, Have A Nice Day).