Carl Sgro fixes reputations. Carl Sgro also likes to fish for bass. Both of these elements of who Carl Sgro is are congruent... and here's why...
(Find the rest of this article at The Creating Wealth Blog published on 4/22/09)
Wednesday, April 22, 2009
Friday, April 3, 2009
Rising Unemployment Brings Rising Numbers of Students
Yes, things are bad all over, and unemployment in the United Kingdom is adding to the stress of consumers there. But there may be a silver lining to this cloud. Application for enrollment in universities in the UK have increased dramatically, as people of all ages become increasingly pessimistic about employment opportunities and instead turn towards furthering their educations. The Universities & Colleges Admissions Service (UCAS) has indicated that applications increased by over five percent from twelve months previous, and the University of Dundee in Scotland saw applications increase a whopping 16.5%.
(Find the rest of this article published at The Creating Wealth Blog on 3/31/09)
(Find the rest of this article published at The Creating Wealth Blog on 3/31/09)
Frank Hanna on the Love of Money
We have heard a lot about how people such as Warren Buffett and Bill Gates have given the majority of their fortunes away to charity. While many people with fortunes not so vast as theirs may see this philanthropy as a good thing, what has not really been explained are the reasons behind such philanthropy.
(Find the rest of this article published at The Creating Wealth Blog on 3/31/09)
(Find the rest of this article published at The Creating Wealth Blog on 3/31/09)
Selling Virtual Real Estate
While the housing market is down in the doldrums and the stock market is tanking, what else can someone invest in that will make money?
(Find the rest of this article published att The Creating Wealth Blog on 3/5/09)
(Find the rest of this article published att The Creating Wealth Blog on 3/5/09)
Individual Voluntary Arrangements (IVAs): A Tool for Consumers in Debt
As I have stated previously, in the current economic climate, businesses that help free people from debt are going to be doing well for years to come.
(Find the rest of this article published at The Creating Wealth Blog on 3/5/09)
(Find the rest of this article published at The Creating Wealth Blog on 3/5/09)
Socializing the "Free" Market?
I began thinking about socialism a few days ago when I read a blog entry that suggested the nationalization of banks. Now, socialism has more commonly been identified as an evil, especially by politicians in the United States, and perhaps they had a point. Nazism was essentially "national state socialism", a type of government that curtailed the freedoms, including economic freedoms, of all the citizens of Germany and the countries that were under its control The Union of Soviet Socialist Republics used the word "socialist" in its name, and it too restricted radically the freedoms of its citizenry. So too does China, which describes itself as a socialist state, and in which all of the major industries are controlled by the state.
(Find the rest of this article published at The Creating Wealth Blog on 2/28/09)
Is This the End of the Debt Culture?
Is it just the winter in the UK that's bringing out more grim news? Ever more people are becoming insolvent and declaring bankruptcy in the United Kingdom.
(Find the rest of this article published at The Creating Wealth Blog on 2/18/09)
(Find the rest of this article published at The Creating Wealth Blog on 2/18/09)
The Future of Online Advertising
Forget about Google AdWords and those annoying ads that pop up when you go to some commercial sites. I came across a site called "Hired to Blog" in my search for freelance opportunities online. It's about getting paid to blog, as per the name.
(Find the rest of this article published at The Creating Wealth Blog on 2/16/09)
(Find the rest of this article published at The Creating Wealth Blog on 2/16/09)
Do What You Love and the Money Will Follow
What, truly, is the point of doing something you despise in order to make yourself wealthier? Isn't part of the point to life, perhaps even the main point, to love what you do? That essentially is why I write.
(Find the rest of this article published at The Creating Wealth Blog on 2/13/09)
(Find the rest of this article published at The Creating Wealth Blog on 2/13/09)
Ready to Invest in Valentine's Day?
Want to order flowers for Valentine's day? Call 1-800-FLOWERS or visit their website.
No... this is not a commercial. While browsing around on the Internet, searching for something that will get me more than a kiss on the cheek from my wife on February 14th, I came across their 2008 Annual Report. It made for some interesting reading. Considering the free fall the American and world economy took last year, it is surprising that 1-800-FLOWERS actually showed some remarkable achievements for what should have been a down year in luxuries.
In a brief overview, here are some of their 2008 fiscal achievements:
• Grew EPS 23 percent to $0.32 per diluted share
• Grew EBITDA 9.3 percent to $61.6 million
• Reduced Operating Expense Ratio 70 basis points to 36.5%
• Grew Free Cash Flow 166 percent to $38 million
• Acquired DesignPac Gifts LLC for $38 million, increasing Company’s Gourmet Food and Gift Baskets total annual revenue run rate to more than $250 million
What this means in a nutshell is that the dividends 1-800-FLOWERS pay investors increased significantly, the company's earnings increased by nearly 10% (remember, the recession actually started in December 2007), the company became more productive, they have considerably more cash reserves, and they are expanding by buying up other companies. It's a good position for any company to be in, and reading their report I gathered that they are well prepared to weather the storm of this recession of recessions.
True, their financial year only ended in June 2008, before the worst of the credit crunch was realized. But it shows that even in tough times, things like flowers still sell. The company has positioned itself well, by cutting costs, in part by investing in online ordering platforms.
And while searching I found a 15% discount on flower designs by Martha Stewart. So if you're wanting to send flowers to a loved one, you can even get a discount.
Martha Stewart? I did a double take. I remembered she had gone to prison under a cloud of insider trading. It has been nearly five years ago since she surrendered to a prison camp in West Virginia. Still, she has served her time and paid her debt to society, and her improprieties were much less hurtful to others than say... Bernie Madoff's.
So... if you want to order flowers and other gifts by Martha Stewart through 1800FLOWERS.COM, visit their site, and perhaps even consider investing...
(Originally published at The Creating Wealth Blog on 2/11/09)
No... this is not a commercial. While browsing around on the Internet, searching for something that will get me more than a kiss on the cheek from my wife on February 14th, I came across their 2008 Annual Report. It made for some interesting reading. Considering the free fall the American and world economy took last year, it is surprising that 1-800-FLOWERS actually showed some remarkable achievements for what should have been a down year in luxuries.
In a brief overview, here are some of their 2008 fiscal achievements:
• Grew EPS 23 percent to $0.32 per diluted share
• Grew EBITDA 9.3 percent to $61.6 million
• Reduced Operating Expense Ratio 70 basis points to 36.5%
• Grew Free Cash Flow 166 percent to $38 million
• Acquired DesignPac Gifts LLC for $38 million, increasing Company’s Gourmet Food and Gift Baskets total annual revenue run rate to more than $250 million
What this means in a nutshell is that the dividends 1-800-FLOWERS pay investors increased significantly, the company's earnings increased by nearly 10% (remember, the recession actually started in December 2007), the company became more productive, they have considerably more cash reserves, and they are expanding by buying up other companies. It's a good position for any company to be in, and reading their report I gathered that they are well prepared to weather the storm of this recession of recessions.
True, their financial year only ended in June 2008, before the worst of the credit crunch was realized. But it shows that even in tough times, things like flowers still sell. The company has positioned itself well, by cutting costs, in part by investing in online ordering platforms.
And while searching I found a 15% discount on flower designs by Martha Stewart. So if you're wanting to send flowers to a loved one, you can even get a discount.
Martha Stewart? I did a double take. I remembered she had gone to prison under a cloud of insider trading. It has been nearly five years ago since she surrendered to a prison camp in West Virginia. Still, she has served her time and paid her debt to society, and her improprieties were much less hurtful to others than say... Bernie Madoff's.
So... if you want to order flowers and other gifts by Martha Stewart through 1800FLOWERS.COM, visit their site, and perhaps even consider investing...
(Originally published at The Creating Wealth Blog on 2/11/09)
Grim Real Estate News from the United Kingdom
Several of my fellow bloggers on The Creating Wealth Blog have gone on about debt. Having a great deal of debt inevitably makes it more difficult to create wealth, as payments and interest to creditors eat into money that could be better used for investments.
Yes, many people, including myself, have made money through borrowing for real estate investments. We did it back in 2005 with a 100% loan, something you can't even get here in South Africa anymore. When the housing market went up astronomically with no end in sight, aphenomenon experienced all over the world, there was nothing to worry about. If you could double your investment every two to three years, who cared about fine details of those loans. Everyone was making money.
Now, there's news from the United Kingdom, that repossessions have climbed yet again. The rate of repossession has almost doubled since the third quarter of 2007, compared to the same period in 2008. The UK is going through the same thing as the US, and there are a lot of people in need of assistance with their debts. My bet is that services that help people bring down their debts and negotiate with lenders will do well this next year and for several years to come.
People are going to have to tighten their belts to keep their homes; that is, those who have not yet been affected. Consumers' past overspending has caught up with them, and we're waking up with a collective financial hangover, wherever in the world you find yourself. UK Banks, like those in the US, are no longer lending as they did before the credit crunch, and the number of real estate deals in the UK is down by nearly 90%.
All of this affects my wife's sister and her family, who live in southeastern England. They are in a good position, in a way, as her husband still has decentemployment that may enable them to weather the storm. They have two properties, one the house they live in Kent and the other an investment property nearBasingstoke . They don't want to know how much either of them is worth, as both have plummeted in value, though at least the investment property has a decent renter and is finally paying for itself.
That said, perhaps the UK is through the worst of it. 2008 was a grim year, but that year's over. Maybe 2009 will be better...
(Originally published at The Creating Wealth Blog on 2/10/09)
Yes, many people, including myself, have made money through borrowing for real estate investments. We did it back in 2005 with a 100% loan, something you can't even get here in South Africa anymore. When the housing market went up astronomically with no end in sight, aphenomenon experienced all over the world, there was nothing to worry about. If you could double your investment every two to three years, who cared about fine details of those loans. Everyone was making money.
Now, there's news from the United Kingdom, that repossessions have climbed yet again. The rate of repossession has almost doubled since the third quarter of 2007, compared to the same period in 2008. The UK is going through the same thing as the US, and there are a lot of people in need of assistance with their debts. My bet is that services that help people bring down their debts and negotiate with lenders will do well this next year and for several years to come.
People are going to have to tighten their belts to keep their homes; that is, those who have not yet been affected. Consumers' past overspending has caught up with them, and we're waking up with a collective financial hangover, wherever in the world you find yourself. UK Banks, like those in the US, are no longer lending as they did before the credit crunch, and the number of real estate deals in the UK is down by nearly 90%.
All of this affects my wife's sister and her family, who live in southeastern England. They are in a good position, in a way, as her husband still has decentemployment that may enable them to weather the storm. They have two properties, one the house they live in Kent and the other an investment property nearBasingstoke . They don't want to know how much either of them is worth, as both have plummeted in value, though at least the investment property has a decent renter and is finally paying for itself.
That said, perhaps the UK is through the worst of it. 2008 was a grim year, but that year's over. Maybe 2009 will be better...
(Originally published at The Creating Wealth Blog on 2/10/09)
Working For Free
When you go to the doctor, do you expect to be treated for free? Do you expect a farmer to plant his crops, fertilize and otherwise nurture them, and then send the food to market without getting paid for the time and money it took? Or how about when you visit a financial advisor?
I'll get back to this one later...
What I am really wondering is why do so many people think writers will be happy to work for free? I write because I love words and have always had a way of putting them together. I'm good at what I do, but so too are many people who take up professions for which they get paid. Yet, when I research my next writing gig, there are numerous advertisements from people who offer no pay or very little pay
Most of these ads are upfront and honest, informing applicants if they pay based on royalties, or don't pay at all for that matter. Some free jobs may even lead to other work. In fact, the manager of this blog was very upfront when I first approached him, saying that payment would be on a revenue sharing basis, but he also added something that I liked. He said that by blogging on the site, I could increase my exposure online and further my freelance writing career.
By writing for "free" I was really creating a space where I could showcase my work. I was, in essence, advertising. And it's paid off for me to a certain extent, even in the short time I have been writing for this blog.
So... if you're a professional of any sort, providing advice without asking for payment can be a way of attracting new customers and thus increasing income. In this day and age, for example, starting a blog on financial matters would be a great way to bring in potential clientele for a financial advisor, just as blogging about health would be for a doctor, or blogging on writing would be for a writer.
(Originally published at The Creating Wealth Blog on 2/6/09)
I'll get back to this one later...
What I am really wondering is why do so many people think writers will be happy to work for free? I write because I love words and have always had a way of putting them together. I'm good at what I do, but so too are many people who take up professions for which they get paid. Yet, when I research my next writing gig, there are numerous advertisements from people who offer no pay or very little pay
Most of these ads are upfront and honest, informing applicants if they pay based on royalties, or don't pay at all for that matter. Some free jobs may even lead to other work. In fact, the manager of this blog was very upfront when I first approached him, saying that payment would be on a revenue sharing basis, but he also added something that I liked. He said that by blogging on the site, I could increase my exposure online and further my freelance writing career.
By writing for "free" I was really creating a space where I could showcase my work. I was, in essence, advertising. And it's paid off for me to a certain extent, even in the short time I have been writing for this blog.
So... if you're a professional of any sort, providing advice without asking for payment can be a way of attracting new customers and thus increasing income. In this day and age, for example, starting a blog on financial matters would be a great way to bring in potential clientele for a financial advisor, just as blogging about health would be for a doctor, or blogging on writing would be for a writer.
(Originally published at The Creating Wealth Blog on 2/6/09)
I Want to Live in a Double Wide Trailer!!!
Well, I don't. Not really. Although owning a park filled with manufactured homes, the PC description of trailers, may not be a bad investment.
On the surface, this may seem like a bad idea. A really bad idea. Manufactured homes are seen as down-market, their value depreciates more quickly than regular houses, and most local governments will try to prevent a new trailer park from opening.
Lonnie Scruggs disagrees. He has made his living owning mobile home parks.
There will always be a market for affordable housing. In more rural areas, there are few apartment buildings and renting a regular house is inevitably more expensive than renting a manufactured one. Let's face it, some people just aren't interested in creating wealth, and are happy paying rent for the rest of their lives. So... that double wide sitting in your mobile home park can be seen as a ticket to grow your money, just like any other real estate investment.
The manufactured home business saw the credit crunch a lot sooner than the rest of the housing market, as banks refused to lend money for people to buy them. But then, banks had previously been lending nearly 100% of the purchase price for new mobile homes that depreciated to a point that buyers were paying much more for them than they were worth, just like in many real estate markets around the United States... and the world.
The secret is finding an already existing park, and then buying the land outright. Some parks rent out mobile homes. Many have owners living in them. Most are a combination of owners and renters. But even if someone owns their manufactured home, they don't own the land in the park, so have to pay rent on it.
So... what about financing? These days traditional loans are nearly impossible to get, even with good credit. There are ways around this, however, even in the current economy. The secret is owner financing. It's not much of a secret, really, but it does require additional negotiating, which you can do through a real estate agent if you feel your negotiating skills are not up to par. You would have to find someone who owns a trailer park, and who is tired of running it. Perhaps they are ready to retire, or perhaps there are changes to their financial position that mean they are eager to sell. Then, you negotiate terms with the owner, based on what price they want and their and your own unique positions.
Owner financing is not just something that can be used for manufactured homes, either. It is something that can be used for any real estate venture, and may become more common unless banks loosen their credit.
But back to reasons why owning a mobile home park is a good investment opportunity. Firstly, for the reasons I mentioned, you're not likely to get a whole lot of competition when looking around to buy a trailer park, as it is seen as inglorious. This is a good thing, though, as it lessens competition. Next, by owning a mobile home park, the government is likely to be on your side, making it difficult for others to start new, competing parks.
Just one thing to remember. Do not buy a manufactured home NEW! Mobile homes depreciate VERY quickly, and buying new ones are bad investments. But you can certainly make money by renting them out.
(Originally published at The Creating Wealth Blog on 2/4/09)
On the surface, this may seem like a bad idea. A really bad idea. Manufactured homes are seen as down-market, their value depreciates more quickly than regular houses, and most local governments will try to prevent a new trailer park from opening.
Lonnie Scruggs disagrees. He has made his living owning mobile home parks.
There will always be a market for affordable housing. In more rural areas, there are few apartment buildings and renting a regular house is inevitably more expensive than renting a manufactured one. Let's face it, some people just aren't interested in creating wealth, and are happy paying rent for the rest of their lives. So... that double wide sitting in your mobile home park can be seen as a ticket to grow your money, just like any other real estate investment.
The manufactured home business saw the credit crunch a lot sooner than the rest of the housing market, as banks refused to lend money for people to buy them. But then, banks had previously been lending nearly 100% of the purchase price for new mobile homes that depreciated to a point that buyers were paying much more for them than they were worth, just like in many real estate markets around the United States... and the world.
The secret is finding an already existing park, and then buying the land outright. Some parks rent out mobile homes. Many have owners living in them. Most are a combination of owners and renters. But even if someone owns their manufactured home, they don't own the land in the park, so have to pay rent on it.
So... what about financing? These days traditional loans are nearly impossible to get, even with good credit. There are ways around this, however, even in the current economy. The secret is owner financing. It's not much of a secret, really, but it does require additional negotiating, which you can do through a real estate agent if you feel your negotiating skills are not up to par. You would have to find someone who owns a trailer park, and who is tired of running it. Perhaps they are ready to retire, or perhaps there are changes to their financial position that mean they are eager to sell. Then, you negotiate terms with the owner, based on what price they want and their and your own unique positions.
Owner financing is not just something that can be used for manufactured homes, either. It is something that can be used for any real estate venture, and may become more common unless banks loosen their credit.
But back to reasons why owning a mobile home park is a good investment opportunity. Firstly, for the reasons I mentioned, you're not likely to get a whole lot of competition when looking around to buy a trailer park, as it is seen as inglorious. This is a good thing, though, as it lessens competition. Next, by owning a mobile home park, the government is likely to be on your side, making it difficult for others to start new, competing parks.
Just one thing to remember. Do not buy a manufactured home NEW! Mobile homes depreciate VERY quickly, and buying new ones are bad investments. But you can certainly make money by renting them out.
(Originally published at The Creating Wealth Blog on 2/4/09)
Opportunies in Dark Times
A lot of people are talking about jobs these days, or rather I should say about the loss of them. Yesterday, I received the report for regional and state employment and unemployment figures for December 2008. This is a month on month comparison by state and tells a grim story about the increasingly gloomy employment picture. Only one state, Louisiana, and the District of Columbia reported an increase in employment, with one state, Oklahoma, not experiencing any major job drop offs. Louisiana is still recovering and rebuilding from Katrina and the District of Columbia was preparing for the inauguration of a new president, so these figures may very well be different next month.
It also makes comparisons to last year, which look only marginally less bleak. Wyoming (+2.2%), Texas (+1.5%), Oklahoma (+1.0%), Alaska(+0.9%), and South Dakota (+0.8%) are the top five of eight that had higher employment figures than this time last year. These may be the best places to find work in the coming year. And then Rhode Island (-4.5%), Arizona (-4.3%), Idaho (-4.3%), Michigan (-4.1%), and Indiana (-3.7%) all experienced the greatest declines in employment. If you live in any of these states and are looking for work, you might have to move.
That said, I got an e-mail about ten opportunities to pursue in the current economy. It was from an online legal site that I was considering using to make up a closed corporation, but I was a bit leery about doing anything through them as it was praised by Rush Limbaugh. Nothing against Rush personally, but I'm not a ditto-head. Anyone who might have some advice on this?
But... back to the ten top businesses to start in a sluggish economy.
1. Financial Advisor: Yes, you heard me... don't make me repeat myself! In uncertain times like these, people need solid advice more than ever. Those "financial advisors" that were there in boom times and are no longer there are on their way to prison (Bernie Madoff) or out there trying to find other work. Those that kept their clientele above water, and saw the way the markets were moving are the ones to talk to. There are a couple of financial advisors on this blog that can give you some great advice. And no... I'm not getting paid to write this.
2. Business Coach: To compete in a tough economy, businesses need to become ever more efficient. If you are a whiz at cutting costs and increasing bottom lines, this is the job for you.
3. Beer Distributor: Yes!!! I mentioned this in a previous blog. Beer is a plebeian drink, and it is less expensive than wine or cocktails, unless you're in South Africa. There are wines here, good wines too I might add, that are available from under $4 a bottle (decent wines also under $3) at current exchange rates. Perhaps importing South African wines could also become lucrative? I would be happy to speak to someone with capital...
4. Reusable Water Bottle Sales: Because of the scares about Bisphenol A and other chemicals that leech into water from plastic bottles, they say bottles containing no BPA will become more in demand. I don' t know about this, but certainly people have taken more and more to bottled water, so why not.
5. Green Café: This is a great idea! Some restaurants here in Cape Town feed their food waste to worms, which create mulch that can be either sold or used to grow organic herbs and vegetables. Oh, and that used fryer oil can be turned into diesel fuel. Here in Cape Town, it is used by people in the Cape Flats as a source of fuel.
6. Consignment Shop: Doesn't require a lot of start up and is part of the whole reuse, reduce, recycle mantra. Personally, I know of one, Bona Celina Resale Boutique, that caters to wealthier types in the Minneapolis area.
7. Automotive and Appliance Repair: Simple really. People are fixing up their cars instead of buying new. Same goes for other major appliances. Another area that may be a growth industry in this same vein is providing information for people who want to fix things themselves.
8. Auto Salvage Yard: Low on funds? I've gone digging around in auto salvage yards for parts before to save money. Again, this goes along with reusing...
9. Residential Real Estate Appraiser: Huh? Well... with all the foreclosures, I guess this will still be a useful profession.
10. Home Healthcare Services: Baby boomers are aging, and they need health care. Home healthcare is a booming industry, and it's a less expensive option than hospital treatment.
(Originally published at The Creating Wealth Blog on 1/27/09)
It also makes comparisons to last year, which look only marginally less bleak. Wyoming (+2.2%), Texas (+1.5%), Oklahoma (+1.0%), Alaska(+0.9%), and South Dakota (+0.8%) are the top five of eight that had higher employment figures than this time last year. These may be the best places to find work in the coming year. And then Rhode Island (-4.5%), Arizona (-4.3%), Idaho (-4.3%), Michigan (-4.1%), and Indiana (-3.7%) all experienced the greatest declines in employment. If you live in any of these states and are looking for work, you might have to move.
That said, I got an e-mail about ten opportunities to pursue in the current economy. It was from an online legal site that I was considering using to make up a closed corporation, but I was a bit leery about doing anything through them as it was praised by Rush Limbaugh. Nothing against Rush personally, but I'm not a ditto-head. Anyone who might have some advice on this?
But... back to the ten top businesses to start in a sluggish economy.
1. Financial Advisor: Yes, you heard me... don't make me repeat myself! In uncertain times like these, people need solid advice more than ever. Those "financial advisors" that were there in boom times and are no longer there are on their way to prison (Bernie Madoff) or out there trying to find other work. Those that kept their clientele above water, and saw the way the markets were moving are the ones to talk to. There are a couple of financial advisors on this blog that can give you some great advice. And no... I'm not getting paid to write this.
2. Business Coach: To compete in a tough economy, businesses need to become ever more efficient. If you are a whiz at cutting costs and increasing bottom lines, this is the job for you.
3. Beer Distributor: Yes!!! I mentioned this in a previous blog. Beer is a plebeian drink, and it is less expensive than wine or cocktails, unless you're in South Africa. There are wines here, good wines too I might add, that are available from under $4 a bottle (decent wines also under $3) at current exchange rates. Perhaps importing South African wines could also become lucrative? I would be happy to speak to someone with capital...
4. Reusable Water Bottle Sales: Because of the scares about Bisphenol A and other chemicals that leech into water from plastic bottles, they say bottles containing no BPA will become more in demand. I don' t know about this, but certainly people have taken more and more to bottled water, so why not.
5. Green Café: This is a great idea! Some restaurants here in Cape Town feed their food waste to worms, which create mulch that can be either sold or used to grow organic herbs and vegetables. Oh, and that used fryer oil can be turned into diesel fuel. Here in Cape Town, it is used by people in the Cape Flats as a source of fuel.
6. Consignment Shop: Doesn't require a lot of start up and is part of the whole reuse, reduce, recycle mantra. Personally, I know of one, Bona Celina Resale Boutique, that caters to wealthier types in the Minneapolis area.
7. Automotive and Appliance Repair: Simple really. People are fixing up their cars instead of buying new. Same goes for other major appliances. Another area that may be a growth industry in this same vein is providing information for people who want to fix things themselves.
8. Auto Salvage Yard: Low on funds? I've gone digging around in auto salvage yards for parts before to save money. Again, this goes along with reusing...
9. Residential Real Estate Appraiser: Huh? Well... with all the foreclosures, I guess this will still be a useful profession.
10. Home Healthcare Services: Baby boomers are aging, and they need health care. Home healthcare is a booming industry, and it's a less expensive option than hospital treatment.
(Originally published at The Creating Wealth Blog on 1/27/09)
No, Really, It's Not a Recession
I read today in the newspaper that we're not going into a recession, and that the economy is likely to keep growing. And no, I was not reading one of those newspapers you see at the checkout lines in grocery stores with headlines like "Aliens Stole My Baby" and "Elvis Spotted Alive on South Pacific Island."
For those who don't know where I live, if you're in the United States, Europe, Japan, or a number of other First World countries, I'm sorry to say that this won't be true for you. You're already in a recession, and one that's touted to be the worst economic downturn since the 1930s.
But here in South Africa, everything's rosy. South Africa's financial minister, Trevor Manuel, announced today that South Africa's economy is likely to keep growing through this year. South Africa has kept to sound economic policies for the most part since its first democratic election in 1994, drawing the country out of debt after the country's economy had sunk into the doldrums in the 1980s, as country after country refused to trade with it due to its racist policies. The South African government passed the National Credit Act, which came into effect in June 2007 and essentially prevented people from taking on debt that they couldn't repay.
Now... don't you wish that someone had thought about that in the United States? Instead, U.S. banks lent recklessly to people who couldn't repay their debts. That's what the subprime lending meltdown was all about. During this downturn, Americans should look long and hard at their spending habits, as most of my fellow bloggers have wisely suggested. Taking on debt inevitably siphons off money that can be used to create wealth.
That said, South Africa isn't immune to the downturn. Already, massive layoffs are looming in the mining sector here. Platinum, which is widely used in automobiles, is stagnant. Gold mining companies are laying off workers, even with the gold price going above $900 an ounce.
So... maybe if people keep seeing gold as a safe haven, the South African economy won't follow the First World into a deep recession. I hope it just doesn't inflate the rand too much, as I get paid in dollars...
(Originally published at The Creating Wealth Blog on 1/26/09)
For those who don't know where I live, if you're in the United States, Europe, Japan, or a number of other First World countries, I'm sorry to say that this won't be true for you. You're already in a recession, and one that's touted to be the worst economic downturn since the 1930s.
But here in South Africa, everything's rosy. South Africa's financial minister, Trevor Manuel, announced today that South Africa's economy is likely to keep growing through this year. South Africa has kept to sound economic policies for the most part since its first democratic election in 1994, drawing the country out of debt after the country's economy had sunk into the doldrums in the 1980s, as country after country refused to trade with it due to its racist policies. The South African government passed the National Credit Act, which came into effect in June 2007 and essentially prevented people from taking on debt that they couldn't repay.
Now... don't you wish that someone had thought about that in the United States? Instead, U.S. banks lent recklessly to people who couldn't repay their debts. That's what the subprime lending meltdown was all about. During this downturn, Americans should look long and hard at their spending habits, as most of my fellow bloggers have wisely suggested. Taking on debt inevitably siphons off money that can be used to create wealth.
That said, South Africa isn't immune to the downturn. Already, massive layoffs are looming in the mining sector here. Platinum, which is widely used in automobiles, is stagnant. Gold mining companies are laying off workers, even with the gold price going above $900 an ounce.
So... maybe if people keep seeing gold as a safe haven, the South African economy won't follow the First World into a deep recession. I hope it just doesn't inflate the rand too much, as I get paid in dollars...
(Originally published at The Creating Wealth Blog on 1/26/09)
Does Anyone Have a Time Machine?
Back in April 2006, the rand-dollar ratio was just over R6 to the dollar. Today it is over 10. Back in October 2008 it briefly went to nearly R11.5 to the dollar, almost double the rate of two years ago.
Now, if I had access to a time machine, I would take all my liquid cash (now in rands), go back to April 2006 to buy dollars, zoom forward to October 2008 to buy rands, and repeat the process until I could retire on a tropical island. Unfortunately for me, I don't know anyone with a time machine.
I now understand why this happened as well as why the rand is still weak. Taking this knowledge, I can perhaps make a profit next time I want to exchange currency.
So... why did this happen? The rand was at a respectable rate even in early August 2008, when it was about R7.2 to the dollar.
It was part politics and part economics.
In mid-September, there were calls for Thabo Mbeki, to step down as president of South Africa. These calls came from his own party, the African National Congress, and his resignation went into effect as of September 25. Within a month after his resignation, the rand had plummeted from just over R8 to the dollar to its lowest point at R11.47:$1.
Mbeki's economic policies were touted as bringing much foreign investment into the country, but domestically the high unemployment and poverty rates made him increasingly unpopular among the majority. Mbeki was nearing the end of his second five year term as president of South Africa, and became increasingly unpopular for how he dealt with his former deputy president, Jacob Zuma, whom he had fired because of allegations of fraud and corruption. Zuma now leads the ANC and is slated to become next president of the country. The problem with Zuma is that he is embroiled in a long term investigation into his allegedly corrupt involvement in an arms deal, for which his financial advisor is now imprisoned because he solicited a bribe for Zuma.
Right about that same time Mbeki resigned, the United States and other major economies were in the process of bailing out banks and trying to avert a full scale collapse of the global economy. South Africa, like much of the rest of Africa, is very dependent on commodities to sustain its economy. With the downturn in the world economy, demand for commodities such as gold, platinum, and other metals fell, causing the rand in turn to fall. And then there was the widespread shedding of investments in all developing economies, as investors scurried for safer places to put their money.
Add to this the recent breakaway party, the Congress of the People (Cope) that is now challenging the ANC for votes in the 2009 national elections, and you have a very chaotic political situation, one from which most investors will steer clear.
I am not one of those investors. I brought over a good portion of my "wealth" to South Africa. There are a number of reasons why I did so. South Africa is Africa's biggest economy, and a major producer of gold, platinum, uranium, and other metals. As such, when the world economy turns around, the rand will improve. Investors will be attracted to the high interest rates of the banks, which did not feel the effects of the subprime lending collapse that their American and European counterparts did. Also, though the political situation is chaotic, there is not the violence associated with elections that you find in other Third World and African countries.
Now is a good time to buy rands, at just over R10 to the dollar. It will stay there at least until the election in March or April (the exact election date has not yet been set). If Zuma becomes president and is then put on trial, I can see the rand tanking further, and may decide to bring more dollars over. Even amid political turmoil, South Africa is well positioned economically to weather the economic storm, and the banks and businesses here will do better than their counterparts in the First World. Plus, I like that I can make over 10% on my money by just putting it in the bank!
Still... there is risk in this move, and I am the first to admit that this might be a mistake. So... does anyone have a time machine?
(Originally published at The Creating Wealth Blog on 1/25/09)
Now, if I had access to a time machine, I would take all my liquid cash (now in rands), go back to April 2006 to buy dollars, zoom forward to October 2008 to buy rands, and repeat the process until I could retire on a tropical island. Unfortunately for me, I don't know anyone with a time machine.
I now understand why this happened as well as why the rand is still weak. Taking this knowledge, I can perhaps make a profit next time I want to exchange currency.
So... why did this happen? The rand was at a respectable rate even in early August 2008, when it was about R7.2 to the dollar.
It was part politics and part economics.
In mid-September, there were calls for Thabo Mbeki, to step down as president of South Africa. These calls came from his own party, the African National Congress, and his resignation went into effect as of September 25. Within a month after his resignation, the rand had plummeted from just over R8 to the dollar to its lowest point at R11.47:$1.
Mbeki's economic policies were touted as bringing much foreign investment into the country, but domestically the high unemployment and poverty rates made him increasingly unpopular among the majority. Mbeki was nearing the end of his second five year term as president of South Africa, and became increasingly unpopular for how he dealt with his former deputy president, Jacob Zuma, whom he had fired because of allegations of fraud and corruption. Zuma now leads the ANC and is slated to become next president of the country. The problem with Zuma is that he is embroiled in a long term investigation into his allegedly corrupt involvement in an arms deal, for which his financial advisor is now imprisoned because he solicited a bribe for Zuma.
Right about that same time Mbeki resigned, the United States and other major economies were in the process of bailing out banks and trying to avert a full scale collapse of the global economy. South Africa, like much of the rest of Africa, is very dependent on commodities to sustain its economy. With the downturn in the world economy, demand for commodities such as gold, platinum, and other metals fell, causing the rand in turn to fall. And then there was the widespread shedding of investments in all developing economies, as investors scurried for safer places to put their money.
Add to this the recent breakaway party, the Congress of the People (Cope) that is now challenging the ANC for votes in the 2009 national elections, and you have a very chaotic political situation, one from which most investors will steer clear.
I am not one of those investors. I brought over a good portion of my "wealth" to South Africa. There are a number of reasons why I did so. South Africa is Africa's biggest economy, and a major producer of gold, platinum, uranium, and other metals. As such, when the world economy turns around, the rand will improve. Investors will be attracted to the high interest rates of the banks, which did not feel the effects of the subprime lending collapse that their American and European counterparts did. Also, though the political situation is chaotic, there is not the violence associated with elections that you find in other Third World and African countries.
Now is a good time to buy rands, at just over R10 to the dollar. It will stay there at least until the election in March or April (the exact election date has not yet been set). If Zuma becomes president and is then put on trial, I can see the rand tanking further, and may decide to bring more dollars over. Even amid political turmoil, South Africa is well positioned economically to weather the economic storm, and the banks and businesses here will do better than their counterparts in the First World. Plus, I like that I can make over 10% on my money by just putting it in the bank!
Still... there is risk in this move, and I am the first to admit that this might be a mistake. So... does anyone have a time machine?
(Originally published at The Creating Wealth Blog on 1/25/09)
The Way Forward
I felt for a moment that I was back in the United States yesterday. People all over the world are rejoicing at the peaceful regime change in the US, and there is a sense of optimism around the world about our country that hasn't been seen or heard in several years. Newspapers are filled with articles on the inauguration and people all over the world are musing about what Barack Obama will do in what is often regarded as the most powerful political office in the world.
Now... with any change in government come clues to where to investment.
Morality aside, under the Bush presidency, it was oil and energy stocks that did well. Military hardware providers didn't do too badly either, as did many companies that supported US troops in Iraq and Afghanistan. Investing in Haliburton would have been a good investment, for example. Even property and stocks in general did well except in the last year and a half of his tenure.
Now, where to invest under a Barack Obama administration? True, many industries are in jeopardy, but there are some slated to do well during his term, or terms, in office. There are clues in his inaugural address. Alternative energy providers will offer future investment oportunities. Wind, solar, and other alternative energy providers will do well. Those companies that help to upgrade America's electrical grid will be good investments. So too will technology stocks, and especially software companies whose programs will help make the health care system more efficient. Science, especially when it comes to stem cells, will open up. There is talk of building much needed infrastructure, such as bridges and highways, as was done under Roosevelt in the 1930s.
But perhaps the most important thing said in his address is an underlying promise of peace and cooperation with others, which will inevitably lead to expanded trade among the nations of the world. Wars are costly things, and if Obama can disengage our military from Iraq and eventually Afghanistan, the United States will once again become a leader among nations, rather than a nation that bullies with the use of its overwhelming military force.
I am uncertain what will happen in the coming days and months and years, and I do not see Obama or his administration as a savior with all the answers, but I will hope that this new government will bring the world's respect for the United States of America back to where it belongs. The investments that this country will make under this new president, the things of which he says we are capable, things that we had forgot that we had done as a people and a nation, and the hope President Barack Obama brings are perhaps the greatest investment that can be made to and by the American people.
(Originally published at The Creating Wealth Blog on 1/21/09)
Now... with any change in government come clues to where to investment.
Morality aside, under the Bush presidency, it was oil and energy stocks that did well. Military hardware providers didn't do too badly either, as did many companies that supported US troops in Iraq and Afghanistan. Investing in Haliburton would have been a good investment, for example. Even property and stocks in general did well except in the last year and a half of his tenure.
Now, where to invest under a Barack Obama administration? True, many industries are in jeopardy, but there are some slated to do well during his term, or terms, in office. There are clues in his inaugural address. Alternative energy providers will offer future investment oportunities. Wind, solar, and other alternative energy providers will do well. Those companies that help to upgrade America's electrical grid will be good investments. So too will technology stocks, and especially software companies whose programs will help make the health care system more efficient. Science, especially when it comes to stem cells, will open up. There is talk of building much needed infrastructure, such as bridges and highways, as was done under Roosevelt in the 1930s.
But perhaps the most important thing said in his address is an underlying promise of peace and cooperation with others, which will inevitably lead to expanded trade among the nations of the world. Wars are costly things, and if Obama can disengage our military from Iraq and eventually Afghanistan, the United States will once again become a leader among nations, rather than a nation that bullies with the use of its overwhelming military force.
I am uncertain what will happen in the coming days and months and years, and I do not see Obama or his administration as a savior with all the answers, but I will hope that this new government will bring the world's respect for the United States of America back to where it belongs. The investments that this country will make under this new president, the things of which he says we are capable, things that we had forgot that we had done as a people and a nation, and the hope President Barack Obama brings are perhaps the greatest investment that can be made to and by the American people.
(Originally published at The Creating Wealth Blog on 1/21/09)
Tips on Customer Service
Is anyone wondering why I haven’t posted for the past few days? It’s a matter of customer service. It's at times like these that I miss America, where telecommunication companies' customer service representatives actual try to serve their customers.
Like the United States back in the 1980s, telecommunications here in South Africa is monopolized by one entity. Telkom. I didn’t realize at the time just how wise those judges and politicians were who broke up AT&T’s monopoly.
Telkom controls all telecommunications, including broadband Internet connections, here in South Africa. There are exceptions, such as wireless iBurst technology, but by and large, everyone in South Africa with Internet connections, both the antiquated dial up and broadband, must go through Telkom. In layman’s terms, Telkom owns the pipe through which information flows. While we have a different provider for the flow of information through the Internet, our provider is dependent upon Telkom for this.
On Friday our Internet connection went down, and after going to our provider and speaking to representatives at Telkom, it was determined that the problem was due to Telkom's lines. Now we had to wait for a technician to come out. As this happened late in the afternoon on Friday, we had to wait the entire weekend for a technician. On Monday, no technician came, and calling Telkom’s customer service became increasingly painful, as they repeatedly told me that they had already handed it off to their technical department, who would deal with it in due course. They also flippantly explained that there “were a lot of faults in our area” and that their technicians were "very busy" and would attend to us when they were able. Several representatives also said that they had no way of notifying us as to when the technician would come.
On several occasions there was much laughter in the background, and the customer service representatives were for the most part extremely unhelpful about when someone might be able to come out to us. Finally, on Tuesday morning, a technician came.
It turned out it was not Telkom after all, but our router, and the technician kindly resolved our problem, though he was not obligated to. Still, the length of wait for a service call and the representatives' unhelpful attitudes left me with a bad taste in my mouth. If I had a choice, I would find another provider for every service Telkom currently provide me.
(Originally published at The Creating Wealth Blog on 1/21/09)
Solar America
Yesterday I told you that companies dealing with solar energy (as well as other alternative, renewable energy sources) would do well in the coming years. Today I give you a list of three companies that won the Department of Energy's new technical assistant awards. These are three companies to watch, and perhaps also in which to make invest. Expect many more companies to jump on the bandwagon as the Obama administration gives increasing incentives to companies to produce alternative & renewable energy.
Below find an excerpt from the DOE's article on January 16. You can find the entire article by following this link.
Below find an excerpt from the DOE's article on January 16. You can find the entire article by following this link.
The three new Solar America Showcases winners are:
- The Hartman Company: This project involves a 115 kilowatt solar photovoltaic installation at the Hyatt Regency Resort in Scottsdale, Arizona, which is part of a master plan to replicate a number of solar energy technologies at other Hyatt facilities.
- Philadelphia Water Department: This project involves new photovoltaic installations to power drinking water treatment facilities, providing up to 7.6 megawatts (MW) of new capacity.
- Southwest Solar Technologies, Inc.: This Phoenix-based development at Riverpoint Solar Research Park involves a solar test and demonstration installation, providing 1 MW of combined solar and storage energy.
Investments to Avoid in 2009
If you're going to invest in 2009, it's a good idea to know where NOT to invest, so I decided to do some research and make some predictions about where NOT to put your money.
PROPERTY
Okay, if you're looking at the long term, property is not a bad investment, but know that commercial property is something you should stay away from, at least for the near future. With business closings looming, the possibility of one of your rentors going belly up makes buying commercial property risky. Even residential property may be risky, as experts have month after month predicted that the housing market had bottomed out. Now some people are even predicting prices to fall as much as 30% further this year. Because of foreclosures, it is possible that larger multi-unit rental properties will not fall under these trends.
(Originally published at The Creating Wealth Blog on 1/14/09)
EUROPEAN MARKETS
The strength of the euro has made investing in Europe increasingly expensive, and especially so if you live in the United Kingdom, as the pound has taken a recent drubbing. Eastern European countries may not experience as much of a hit, as their cheaper production costs, including lower wages, are making them attractive to companies looking to economize.
BANKS & BONDS
The FDIC now protects the money you keep in banks up to $250,000, and U.S. government bonds are one of the safest investments you can make, but if you want to increase your wealth then putting your money in banks or bonds isn't the way to go this year (unless you live somewhere like South Africa, where rates for savings accounts are as high as 12%). Low interest rates on government bonds and on savings accounts in the U.S. and other major economies will probably make this a negative investment this year. On the up side, businesses able to offer credit should do well this year, as there is still a scarcity in credit markets even after the worldwide bailouts.
AUTOMOBILE MANUFACTURERS & AIRLINES
With consumers nervous, travel will be down. So too will large-scale purchases like automobiles, which will be put off or avoided, as will unnecessary travel. Airlines and automotive companies have gone begging the federal government for funds to keep them afloat, but their recovery this year is far from certain. Expect cheaper and subsidized modes of transport, such as public transportation, busses, ride share sites, etc. to experience increased usage. Oh, and pre-owned cars may also become fashionable.
INFORMATION TECHNOLOGY
IT spending is predicted to drop for the first time since 2002. With all major world economies hit by the worldwide economic slowdown, communications and computer equipment sales are slated to decline, though software sales may hold steady. Don't expect Microsoft to need a bail out any time soon!
INSURANCE & THE FINANCIAL MARKET
I qualify this. As per a previous blog, don't go into the market or buy insurance without doing thorough research. Though there are some who are predicting an upswing in markets worldwide later this year, this is far from certain. Use a trusted financial advisor or insurance agent to guide you toward the best places to put your money.
DERIVATIVES
Especially if you're a new investor, stay away from the derivative market, as they are "financial weapons of mass destruction” according to Warren Buffett. Leveraging large amounts of other people's money with only a fraction of it being your own might sound like a good monetary strategy, but like any form of investment, it's a gamble if you don't know what you're doing.
PROPERTY
Okay, if you're looking at the long term, property is not a bad investment, but know that commercial property is something you should stay away from, at least for the near future. With business closings looming, the possibility of one of your rentors going belly up makes buying commercial property risky. Even residential property may be risky, as experts have month after month predicted that the housing market had bottomed out. Now some people are even predicting prices to fall as much as 30% further this year. Because of foreclosures, it is possible that larger multi-unit rental properties will not fall under these trends.
(Originally published at The Creating Wealth Blog on 1/14/09)
EUROPEAN MARKETS
The strength of the euro has made investing in Europe increasingly expensive, and especially so if you live in the United Kingdom, as the pound has taken a recent drubbing. Eastern European countries may not experience as much of a hit, as their cheaper production costs, including lower wages, are making them attractive to companies looking to economize.
BANKS & BONDS
The FDIC now protects the money you keep in banks up to $250,000, and U.S. government bonds are one of the safest investments you can make, but if you want to increase your wealth then putting your money in banks or bonds isn't the way to go this year (unless you live somewhere like South Africa, where rates for savings accounts are as high as 12%). Low interest rates on government bonds and on savings accounts in the U.S. and other major economies will probably make this a negative investment this year. On the up side, businesses able to offer credit should do well this year, as there is still a scarcity in credit markets even after the worldwide bailouts.
AUTOMOBILE MANUFACTURERS & AIRLINES
With consumers nervous, travel will be down. So too will large-scale purchases like automobiles, which will be put off or avoided, as will unnecessary travel. Airlines and automotive companies have gone begging the federal government for funds to keep them afloat, but their recovery this year is far from certain. Expect cheaper and subsidized modes of transport, such as public transportation, busses, ride share sites, etc. to experience increased usage. Oh, and pre-owned cars may also become fashionable.
INFORMATION TECHNOLOGY
IT spending is predicted to drop for the first time since 2002. With all major world economies hit by the worldwide economic slowdown, communications and computer equipment sales are slated to decline, though software sales may hold steady. Don't expect Microsoft to need a bail out any time soon!
INSURANCE & THE FINANCIAL MARKET
I qualify this. As per a previous blog, don't go into the market or buy insurance without doing thorough research. Though there are some who are predicting an upswing in markets worldwide later this year, this is far from certain. Use a trusted financial advisor or insurance agent to guide you toward the best places to put your money.
DERIVATIVES
Especially if you're a new investor, stay away from the derivative market, as they are "financial weapons of mass destruction” according to Warren Buffett. Leveraging large amounts of other people's money with only a fraction of it being your own might sound like a good monetary strategy, but like any form of investment, it's a gamble if you don't know what you're doing.
Money & Morality
Over the weekend I read about how the first lady of Zimbabwe, Grace Mugabe, raided the country's coffers of foreign currency to help finance the family holiday in Malaysia.
You can't really blame her. After all, Zimbabwe has the world's highest rate of inflation, which was nearly 80 billion percent per month as of November 2008. At US$92,000, the amount really wasn't much for a month long vacation of a VIP family of five. Besides, it looks as if the US dollar is becoming the de facto currency of the country in any case, even as new $20 billion and $50 billion Zimbabwean dollar notes have been announced, and health workers along with others will soon be receiving their pay in US currency.
While the first family of Zimbabwe goes on its annual vacation, thousands of Zimbabweans pour over the border into South Africa to find work and escape from increasingly difficult conditions there. One such family ended up in Cape Town.
Late last year, Masiiwa and Miriam crossed from Zimbabwe into South Africa in order to buy food, leaving behind her 12 year old daughter and 9 year old son. Miriam thought she would return shortly with much needed food. Instead, unable to afford the bribes to get back over the border, she got stuck in South Africa and separated from her children. Masiiwa, her husband and a former teacher in Zimbabwe, put an ad in the paper to get work so that they could return to get their children out of the country.
In steps my wife's uncle, Dave Rattle, and his wife, Annie, who were looking for a part time gardener. They saw Masiiwa's ad and decided to help. They spent approximately US$2500 to help reunite the Zimbabwean family.
Dave and Annie are not super rich by any means, but would be classified as comfortably middle class using American terms. They retired a couple years ago from a real estate agency that they founded, and have a couple of holiday properties that they rent out on a short term basis to supplement their income.
The point to this is that you can decide what to do with your wealth once you have created it, even if you aren't in the Gates's or the Buffett's league. Sure, if you have the money, you can go on holiday while your nation sinks into an economic malaise, as did the Mugabes, or you can use a portion of your wealth to make the world a better place, like Bill Gates or Warren Buffett... or for that matter Dave and Anne Rattle.
(Originally published at The Creating Wealth Blog on 1/11/09)
You can't really blame her. After all, Zimbabwe has the world's highest rate of inflation, which was nearly 80 billion percent per month as of November 2008. At US$92,000, the amount really wasn't much for a month long vacation of a VIP family of five. Besides, it looks as if the US dollar is becoming the de facto currency of the country in any case, even as new $20 billion and $50 billion Zimbabwean dollar notes have been announced, and health workers along with others will soon be receiving their pay in US currency.
While the first family of Zimbabwe goes on its annual vacation, thousands of Zimbabweans pour over the border into South Africa to find work and escape from increasingly difficult conditions there. One such family ended up in Cape Town.
Late last year, Masiiwa and Miriam crossed from Zimbabwe into South Africa in order to buy food, leaving behind her 12 year old daughter and 9 year old son. Miriam thought she would return shortly with much needed food. Instead, unable to afford the bribes to get back over the border, she got stuck in South Africa and separated from her children. Masiiwa, her husband and a former teacher in Zimbabwe, put an ad in the paper to get work so that they could return to get their children out of the country.
In steps my wife's uncle, Dave Rattle, and his wife, Annie, who were looking for a part time gardener. They saw Masiiwa's ad and decided to help. They spent approximately US$2500 to help reunite the Zimbabwean family.
Dave and Annie are not super rich by any means, but would be classified as comfortably middle class using American terms. They retired a couple years ago from a real estate agency that they founded, and have a couple of holiday properties that they rent out on a short term basis to supplement their income.
The point to this is that you can decide what to do with your wealth once you have created it, even if you aren't in the Gates's or the Buffett's league. Sure, if you have the money, you can go on holiday while your nation sinks into an economic malaise, as did the Mugabes, or you can use a portion of your wealth to make the world a better place, like Bill Gates or Warren Buffett... or for that matter Dave and Anne Rattle.
(Originally published at The Creating Wealth Blog on 1/11/09)
Employment Situation News Release
Today, I received an e-mail from the Bureau of Labor Statistics, updating me on the current employment situation in the U.S. I like to analyze data and statistics, even when it doesn't directly affect me, and try to determine what these figures mean.
It intrigues me that of all the types of work, the category entitled "Management, professional, and related occupations" had the lowest unemployment rate at 3.3%, with the subcategory of "Professional and related occupations" being 2.9%. The other subcategory, "Management, business, and financial operations occupations," was slightly more at 3.9%.
Why does this interest me?
Because it means that the majority of people in the industries that helped bring about this economic downturn are the ones that are being hurt least by it. Meanwhile, other occupations range from a high of 18.3% in "Farming, fishing, and forestry occupations" to 6% in "Installation, maintenance, and repair occupations." Government workers were the only category that had a lower unemployment rate at 2.3%. That figures. The U.S. government is going to become an even more important employer, if the doom and gloom economists are predicting is gets to be as bad as they say it will.
(Originally published at The Creating Wealth Blog on 1/9/09)
It intrigues me that of all the types of work, the category entitled "Management, professional, and related occupations" had the lowest unemployment rate at 3.3%, with the subcategory of "Professional and related occupations" being 2.9%. The other subcategory, "Management, business, and financial operations occupations," was slightly more at 3.9%.
Why does this interest me?
Because it means that the majority of people in the industries that helped bring about this economic downturn are the ones that are being hurt least by it. Meanwhile, other occupations range from a high of 18.3% in "Farming, fishing, and forestry occupations" to 6% in "Installation, maintenance, and repair occupations." Government workers were the only category that had a lower unemployment rate at 2.3%. That figures. The U.S. government is going to become an even more important employer, if the doom and gloom economists are predicting is gets to be as bad as they say it will.
(Originally published at The Creating Wealth Blog on 1/9/09)
Worldwide Economic Crisis
I was looking through the business section in the Cape Times, one of the local broadsheets here in Cape Town, and found an article about how people are dealing with the worldwide economic crisis. This difference with this article, unlike so many others I have read of late, is that I found it amusing.
1. The Church of England (known in the States as the Anglican Church) published two new prayers for the New Year: the Prayer on Being Made Redundant (for those recently laid off) and the Prayer for Those Remaining in the Workplace (for those guilty about not being laid off while so many of their fellow employees have).
2. In New York, the Rainbow Room has closed its grill but is keeping open their bar. And I think establishments serving alcohol will do well during this downturn... as long as they learn from the banks and don't give their clientele too much credit! The smart bar owner these days will not give ANYONE a tab.
3. In a related subject, Australians have taken to buying home brewing kits, with demand outstripping supply. Hmmm... a business opportunity perhaps?
4. The New York Times is now selling ad space on its front page in a bid to raise revenues. This is good news, truly. It gives work to a salesman, a graphic designer, a copywriter, and whoever else is involved in selling and designing the ad.
5. In the United Kingdom, the Girl Guides gave readers advice on making smart fiscal decisions, urging them to shop for the best deals at banks and to avoid debt, and especially not to count on the "Bank of Mum and Dad."
6. At a Borders book store in Maryland that was going out of business, sale items that languished on the shelf despite being 40% off included The Complete Idiot's Guide to Investing. I think perhaps too many people had been reading this book in recent years...
7. Calls to the 211 hotline, which gives referrals for Americans in need of economic assistance, have increased by two thirds in Los Angeles. Meanwhile, there has been a 40% increase in requests at the Los Angeles Food Bank. Well... perhaps at least this could translate into a couple new jobs?
8. But at least there is some relief being offered for prescription medicines, as two large U.S. supermarket chains offer free antibiotics to customers through the rest of the winter.
9. The Washington Post includes castration of executives as something that will be in for 2009, whilst executive compensation will be out. So... I think I'll pass on that offer that just appeared in my inbox to apply for the position of CEO at AIG...
Yes... 2009 will be an interesting year.
(Originally published at The Creating Wealth Blog on 1/9/09)
1. The Church of England (known in the States as the Anglican Church) published two new prayers for the New Year: the Prayer on Being Made Redundant (for those recently laid off) and the Prayer for Those Remaining in the Workplace (for those guilty about not being laid off while so many of their fellow employees have).
2. In New York, the Rainbow Room has closed its grill but is keeping open their bar. And I think establishments serving alcohol will do well during this downturn... as long as they learn from the banks and don't give their clientele too much credit! The smart bar owner these days will not give ANYONE a tab.
3. In a related subject, Australians have taken to buying home brewing kits, with demand outstripping supply. Hmmm... a business opportunity perhaps?
4. The New York Times is now selling ad space on its front page in a bid to raise revenues. This is good news, truly. It gives work to a salesman, a graphic designer, a copywriter, and whoever else is involved in selling and designing the ad.
5. In the United Kingdom, the Girl Guides gave readers advice on making smart fiscal decisions, urging them to shop for the best deals at banks and to avoid debt, and especially not to count on the "Bank of Mum and Dad."
6. At a Borders book store in Maryland that was going out of business, sale items that languished on the shelf despite being 40% off included The Complete Idiot's Guide to Investing. I think perhaps too many people had been reading this book in recent years...
7. Calls to the 211 hotline, which gives referrals for Americans in need of economic assistance, have increased by two thirds in Los Angeles. Meanwhile, there has been a 40% increase in requests at the Los Angeles Food Bank. Well... perhaps at least this could translate into a couple new jobs?
8. But at least there is some relief being offered for prescription medicines, as two large U.S. supermarket chains offer free antibiotics to customers through the rest of the winter.
9. The Washington Post includes castration of executives as something that will be in for 2009, whilst executive compensation will be out. So... I think I'll pass on that offer that just appeared in my inbox to apply for the position of CEO at AIG...
Yes... 2009 will be an interesting year.
(Originally published at The Creating Wealth Blog on 1/9/09)
Renting Money
Today I got an e-mail from Peter Carruthers, who sends an e-mail newsletter around on a weekly basis concerning South African small businesses. The bits of wisdom he brings up in his no-nonsense style go way beyond South Africa, so I will from time to time expound on the topics in his newsletters.
As his first newsletter of the year was a bit low on content, however, I went to his Crashproof Your Business website, where he talks about banking from the perspective of small business owners.
Unlike banks in Europe and the U.S., banks here in South Africa were not exposed directly to the subprime-lending crisis in the American housing market. Though there have been increased rates of foreclosure, as the economic crisis and credit crunch have been felt even in Africa, banks here have come out relatively unscathed.
I'm not going to beat that dead horse today. I bring up banks because most business owners depend upon banks for credit to maintain their cash flow. Peter Carruthers makes several discerning, and universal, observations about banks. I make note briefly of them here:
1. Banks make money primarily from the rental of their money to you.
2. Interest is the price of the money you are renting.
3. The bank wants to make as much money off of this rental, while you want to pay the lowest price for it, just as with any other product or service.
4. Banks want security, so will only rent their money to people who have something of value, and will only rent this money and (in theory) if you cannot pay the rent, they will take the assets you put up as security.
5. Always remember that the bank is not your friend, but a supplier of services.
Of course, this shows us where the banks in the U.S. failed. Security could not be found in those high risk, subprime loans and the collapse of the American real estate market essentially took away what security the banks had, which led to where we are now.
(Originally published at The Creating Wealth Blog on 1/8/09)
As his first newsletter of the year was a bit low on content, however, I went to his Crashproof Your Business website, where he talks about banking from the perspective of small business owners.
Unlike banks in Europe and the U.S., banks here in South Africa were not exposed directly to the subprime-lending crisis in the American housing market. Though there have been increased rates of foreclosure, as the economic crisis and credit crunch have been felt even in Africa, banks here have come out relatively unscathed.
I'm not going to beat that dead horse today. I bring up banks because most business owners depend upon banks for credit to maintain their cash flow. Peter Carruthers makes several discerning, and universal, observations about banks. I make note briefly of them here:
1. Banks make money primarily from the rental of their money to you.
2. Interest is the price of the money you are renting.
3. The bank wants to make as much money off of this rental, while you want to pay the lowest price for it, just as with any other product or service.
4. Banks want security, so will only rent their money to people who have something of value, and will only rent this money and (in theory) if you cannot pay the rent, they will take the assets you put up as security.
5. Always remember that the bank is not your friend, but a supplier of services.
Of course, this shows us where the banks in the U.S. failed. Security could not be found in those high risk, subprime loans and the collapse of the American real estate market essentially took away what security the banks had, which led to where we are now.
(Originally published at The Creating Wealth Blog on 1/8/09)
Let Farmers Farm and Financial Advisors Invest
At least you don't live in Zimbabwe. That is something that can get you through the direst economic downturn the world has seen since the 1930s.
Why am I bringing up this failed African state? Because it provides us with numerous lessons about what NOT to do if you want to create wealth.
Now... I know that most Americans do not follow African politics, as it does not directly affect the lives of the vast majority of Americans. This said, a little background.
Robert Mugabe, the current president of Zimbabwe, has been in power in the country since the early 1980s. In 2000, he embarked on a controversial land reform program. Veterans from the liberation movement that helped put Mugabe into power began to expropriate land from farmers, mainly Zimbabwean citizens of European decent. The result of this expropriation? Zimbabwe, once the bread basket of southern Africa, now has a third of its citizens reliant on the World Food Program to keep from starving.
The reason this occurred is simple. The veterans who took over the farms were not farmers. Okay, anybody can put seeds into the ground and harvest plants or animals for food, but the farmers who lost their land in Zimbabwe were knowledgeable about how to get the most out of their land. Many of these farmers were also trained in the UK or elsewhere, and were educated in modern farming techniques.
One can argue from a point of fairness that these few thousand farmers of European decent, who controlled nearly half of the arable land in the country, had too much and should give some of the land back to the native population. That was essentially the Marxist philosophy held by the ruling party. The result of this philosophy of fairness rapidly brought about the collapse of a once prosperous nation state, making life hard for all who lived there, and most difficult for the poorest of the poor in the country.
In a similar vein, anyone can invest money, just like anyone can farm. All you need these days is a bit of cash and an Internet connection. Maybe you can see where this is going...
As it takes someone with a wide knowledge set and experience to eek the most out of the land, so too does it take someone with knowledge to make the most out of your investments, whether these include a farm in Zimbabwe, a small mom and pop business, an Internet start up, or shares on the New York stock exchange. Think about it. Why is it that we have financial advisers? Because they are the ones who have intimate knowledge about the markets, not to mention experience. And why do companies spend vast amounts on market research? Because by spending a small fraction on research, companies can save themselves from making costly mistakes. (Does anyone remember New Coke?)
Essentially, in business or investing, it is the person with the right kind of knowledge who usually comes out ahead. Investing your money without doing thorough research is essentially gambling, and if you choose to do so, just remember that the house always wins in the end.
(Originally published at The Creating Wealth Blog on1/3/09)
Why am I bringing up this failed African state? Because it provides us with numerous lessons about what NOT to do if you want to create wealth.
Now... I know that most Americans do not follow African politics, as it does not directly affect the lives of the vast majority of Americans. This said, a little background.
Robert Mugabe, the current president of Zimbabwe, has been in power in the country since the early 1980s. In 2000, he embarked on a controversial land reform program. Veterans from the liberation movement that helped put Mugabe into power began to expropriate land from farmers, mainly Zimbabwean citizens of European decent. The result of this expropriation? Zimbabwe, once the bread basket of southern Africa, now has a third of its citizens reliant on the World Food Program to keep from starving.
The reason this occurred is simple. The veterans who took over the farms were not farmers. Okay, anybody can put seeds into the ground and harvest plants or animals for food, but the farmers who lost their land in Zimbabwe were knowledgeable about how to get the most out of their land. Many of these farmers were also trained in the UK or elsewhere, and were educated in modern farming techniques.
One can argue from a point of fairness that these few thousand farmers of European decent, who controlled nearly half of the arable land in the country, had too much and should give some of the land back to the native population. That was essentially the Marxist philosophy held by the ruling party. The result of this philosophy of fairness rapidly brought about the collapse of a once prosperous nation state, making life hard for all who lived there, and most difficult for the poorest of the poor in the country.
In a similar vein, anyone can invest money, just like anyone can farm. All you need these days is a bit of cash and an Internet connection. Maybe you can see where this is going...
As it takes someone with a wide knowledge set and experience to eek the most out of the land, so too does it take someone with knowledge to make the most out of your investments, whether these include a farm in Zimbabwe, a small mom and pop business, an Internet start up, or shares on the New York stock exchange. Think about it. Why is it that we have financial advisers? Because they are the ones who have intimate knowledge about the markets, not to mention experience. And why do companies spend vast amounts on market research? Because by spending a small fraction on research, companies can save themselves from making costly mistakes. (Does anyone remember New Coke?)
Essentially, in business or investing, it is the person with the right kind of knowledge who usually comes out ahead. Investing your money without doing thorough research is essentially gambling, and if you choose to do so, just remember that the house always wins in the end.
(Originally published at The Creating Wealth Blog on1/3/09)
Virtual Money
A little over a year ago a virtual world, Second Life, shut down all virtual banks (except those with an applicable government registration statement or financial institution charter) that promised interest to its investors. This occurred because of complaints aboutGinko Financial, a bank in Second Life that offered interest rates of forty percent and more on its deposits.
Ginko collapsed in August 2007 and it was later learned that Ginko's investment strategy was simply a Ponzi scheme involving very real US dollars, reminiscent of Bernard Madoff's recent $50 billion scam. The failure of Ginko inevitably led to calls for regulation, which caused the inventor of Second Life to ban all institutions offering interest in the virtual world.
How can anyone lose real money in a virtual world? Simple. Linden dollars, the currency of Second Life, could be readily bought with very real US dollars. So… you have people enticed by high returns changing real US dollars into virtual Linden dollars, thinking wrongly that they can then change the Linden dollars back into hard US currency. They could, but not easily, and there was a run on banks in this virtual world.
It turned out that more than a few of the virtual banks promised returns that they couldn't sustain. This was a precursor of what was to happen in the real world of banking...
In the latter part of 2008, a number of very real banks in the real world began to experience similar financial troubles for notdissimilar reasons, as the value of many of their assets shrunk due to the subprime-mortage lending crisis that, among a number of other factors, helped cause a general worldwide financial meltdown. Over the course of a few weeks trillions in very real dollars were virtually (pun intended) wiped out.
Instead of being summarily shut down or made to not offer returns on investments, as banks in Second Life were, they instead went begging for money from the federal government, along with a number of other financial institutions.
Though the losses in the virtual world due to Ginko's collapse were only $750,000, it shows what can happen when financial institutions are completely unregulated. And perhaps we can take some solace in the fact that real banks are returning to Second Life, as it provides a ray of hope for real world investors.
So... what can we learn from this? Perhaps that the old adage that if something sounds too good to be true, it probably is...
(Originally published at The Creating Wealth Blog on 1/2/09)
Location Location Location
Property can make you wealthy. I saw it a few years ago. Experienced it, even.
My wife and I bought a townhouse in an up and coming neighborhood in Cape Town, right below the University of Cape Town, with secure parking, next to the training center for doctors, and near a trendy area known for its night life.
We bought a brand new unit in this security estate for what would today be approximately $34,000. We sold two years later for what would be about $64,000 to a doctor in residence. A nice profit.
Why am I talking about property when so many people have gone and are going into foreclosure?
Because now is a good time to buy property. Wherever you are. Property here in Cape Town hasn’t slid, but it certainly has plateaued, and the exchange rate against the rand is the most favorable it’s been in years. And yes, I know an ethical real estate agent here in Cape Town that I can refer you to.
It’s also to make a point about property. If you have a place that is near where people want or need to be, you won’t have a problem renting it out or selling it. That’s why you want to pay heed to the oldest tenet of real estate. It’s all about location. If you buy somewhere and it’s a good location, you will almost assuredly make a good return on your investment, even in uncertain times.
Oh, and know your market. Because of endemic crime in South Africa, the fact our property was in a security estate helped Also, it was in a neighborhood that was not easily accessible, making crime in the area less prolific.
(Originally published at The Creating Wealth Blog on 12/30/08)
An Introduction
I am a U.S. citizen currently living in and writing from Cape Town, South Africa. I have written two novels, am currently marketing them, working on a number of other writing projects, including this blog.
Creating wealth’s all about seeing opportunity, and if you limit your worldview to just one country or market, you may pass up numerous opportunities to build your wealth. The world today is so interconnected, that what happens in New York or London or Tokyo or any other place affects people everywhere.
Along with stuff I find interesting online, I intend to bring stories and information from southern Africa, and around the world, including personal bits from my own life and people here I know in business. Stuff that will make people think and perhaps delve into more deeply.(Originally published at The Creating Wealth Blog on 12/30/08)
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