Archive for the ‘Alternatives’ Category

« Older Entries

What to Do When Your Business Model Depends Entirely on Google’s Search Results

Wednesday, March 9th, 2011

“In a recent e-mail to employees, company founder and CEO Jason Calacanis and Mahalo President Jason Rapp said the start-up trimmed a tenth of its workforce due to a reduction in traffic caused by Google’s change to its search algorithm, according to the blog CenterNetworks.

The Google changes were meant to push down low-quality sites in search results, but some unexpected websites such as Mahalo lost their ranking as well, the report said. With less traffic visiting Mahalo, revenue took a hit, the e-mail said, according to CenterNetworks.”

What do you think?

How can online businesses protect themselves against rapid changes in the technology industry? Does this news make you think twice about investing in web-based companies?

Who Owns Facebook?

Friday, March 4th, 2011

who-owns-facebook.jpg

i.e., Who’s profiting from your news feed addiction?

Facebook isn’t publicly-traded, which means you can’t buy stock in the company on any stock market. But it seems to have found plenty of well-heeled investors without reaching out to the great unwashed masses (i.e., us).

J.P. Morgan Will Take Your Gold Booty

Wednesday, February 9th, 2011

Alonzo-Babers-with-gold-medals-1984.JPEG.jpg

If gold is the same thing as cash, why can’t you use your gold medals to pay for coffee?

  • 40 years after the U.S. dollar stopped being backed by actual gold, JP Morgan is saying that if you’ve got enough of the metal, it will trust you with a loan. From now on, some of their clients will be able to use their gold holdings as collateral* on certain loans.
  • This is kind of a big deal. It means that the bank thinks gold, cash, and (super-low-risk) U.S. Treasury bonds are all equally safe bets.
  • For a long time, investors stayed away from gold. There weren’t that many gold buyers around, so if you suddenly needed to sell your gold for cash (to buy that cup of coffee, maybe), it would take too long.
  • Supporters of the gold-as-collateral decision say that gold is a stable, real-life source of value that can be relied upon no matter how the economy changes. Skeptics point out that the price of gold changes every single day on the commodity market.

*Collateral is something of value (e.g. your house, your credit card, your firstborn) that you give to a lender until you’ve repaid your debt. If you don’t repay your debt, the lender gets to keep whatever you’ve put up as collateral. For instance, if you loan your friend $10, you can keep his sunglasses as collateral until he gives you the money back.

Facts & Figures

  • More than $100 billion in trade occurs in the gold market every day
  • Former U.S. President Nixon stopped backing up the dollar with real gold in 1971

Best Quote

“When a bank, such as J.P. Morgan, is willing to extend collateral value against an asset such as physical bullion, it shows that they are not worried about the liquidity issue if they might take the collateral over or they have to liquidate the collateral.” – Frank McGhee, Head Precious Metals Trader, Integrated Brokerage Services

What do you think?

Does an old-fashioned form of currency like gold have a place in today’s plastic society? Do you know if there’s any gold in your investment portfolio?

Goldman Sachs-Facebook Deal Actually Was Too Good To Be True

Tuesday, January 18th, 2011

“It was supposed to be Wall Street’s hottest tech deal in years: the private offering of as much as $1.5 billion in shares of Facebook Inc… Goldman bankers burned up the phone lines in the first week of January, pushing many of their best American clients to invest in the deal. And then, on Sunday and Monday, those same advisers were on the phone with those same clients with some bad news. They wouldn’t be getting any Facebook shares, after all… Goldman worried that the media spotlight surrounding the private offering might violate U.S. securities laws and expose the firm to legal action.”

What do you think?

How would you feel if your bank promised you something it couldn’t deliver? How much would you risk to be one of the first investors in a hot company like Facebook?

A diverse investment portfolio. With butter and sprinkles.

Thursday, December 23rd, 2010

cookie-allocation.png

from Let It Dough! by Christoph Niemann (NYTimes)

You can invest in lots of different things – stocks, bonds, mutual funds, currencies, cows. (For real! They’re called commodities and they’re really weird.) And you can invest in this stuff in the U.S. or in almost any country in the world.

But here’s the trick: you want to have a diverse mix of all these things, so you don’t lose all your money if, say, the U.S. economy crashes or all the cows go on strike.

Diversification is a way to reduce that risk by creating a portfolio with a wide mixture of different investments. In basic terms, it means “don’t put all your eggs in one basket.”

Mmm. Sprinkles.

Groupon Will Not Be Googled

Monday, December 6th, 2010

They can probably find a better deal anyway.

  • Google allegedly offered $6 billion for the popular online coupon company – the most expensive acquisition in Google history. The initial offer was between $3.5 – 4 billion.
  • Online coupons have never been more popular, and Google was eager to get a piece of the action. They think that advertising locally is about to become really, really big.
  • Groupon is currently owned by a private group of investors, but it may go for an initial public offering (IPO) in 2011.

Facts & Figures

  • Over 33 million people subscribe to Groupon’s daily emails
  • Google is currently sitting on $33 billion in cash and other assets
  • Groupon made $500 million in sales this year – it’s growing at a faster rate than Google or Amazon did

Investment Advice From A Banker’s Deathbed

Wednesday, December 1st, 2010

Some people would shatter under the weight of Gordon Murray’s diagnosis. But he channeled his remaining energy into creating a legacy.

  • In 2008, former Wall Street bond salesman Gordon Murray was diagnosed with brain cancer. Five months ago he decided to end his treatment and write “The Investment Answer.”
  • After 25-years of high-level jobs on Wall Street, Mr. Murray says he suddenly realized that everything he knew about investing was wrong. Actively managing (tinkering with) investment portfolios, he says, is useless at best, and harmful at worst.
  • Even as an experienced financial player, Murray found he didn’t actually know much about asset allocation. He learned the ropes in firms like Goldman Sachs and Lehman Brothers, which valued risk and bravado over safety and simplicity. His book, full of simple investment advice, is aimed at investors who are in the same position he was.

Facts & Figures

The five choices Murray says every investor needs to make:

  • Only work with financial advisors who earn commission from you – not mutual funds or insurance companies
  • Diversify! Keep your money allocated between stocks and bonds, big and small, and value and growth
  • Make sure to include foreign investments to guard against economic disasters in the U.S.
  • Be skeptical of actively-managed funds… even experienced fund managers can’t predict the future of the market
  • Rebalance – sell your winners, buy more losers. It’s painful, but improves your returns in the long run

Best Quote

“It’s American to think that if you’re smart or work hard, then you can beat the markets.” – Gordon Murray

Meet Adam Blake, the Young Prince of Real Estate

Wednesday, November 24th, 2010

TILE showed up for part of the Global Student Entrepreneur Awards at the New York Stock Exchange this October, and we met some young folks who made us feel bad about sleeping through college.

Adam is just one of them. He was THE Global Student Entrepreneur of the Year in 2005, because he figured out how to turn a simple off-campus housing need into a multi-million dollar real estate business.

But… why? Well, we asked him:

Watch the oh-ficial GSEA 2010 recap video here. To see all our GSEA interviews, click here.

Toxie The Toxic Asset Dies

Thursday, October 7th, 2010

Those crazy kids at NPR spent $1,000 on an adorable toxic asset named “Toxie” to teach us all a lesson about the subprime mortgage disaster. And then they made a 3-minute cartoon about it. It’s really good:

(via npr.org)

Home Ownership No Longer A Safe Investment Option

Monday, August 23rd, 2010

Before the real estate bubble burst, a home was more than just a home – it was an investment.

  • For the past 50 years, homeowners have seen huge profits as their homes went up in value every year. It was relatively easy to buy low and sell high, so there was more money moving around in the housing market and the economy as a whole.
  • No more. Some experts predict that home values will now increase only by the rate of inflation – nowhere near the 10% increase many homeowners had been expecting every year.
  • Buying a home is now more of a risk than a definite reward. But not everyone has a dismal view. Housing is a necessary part of life, and in areas where there is a limited number of options, prices will have to keep up with demand.

Facts & Figures

  • Home sales are expected to have declined by 20% since last July.
  • $6 trillion in housing-related assets has been lost since 2005.
  • It will take at least 20 years for those losses to be regained, though it’s possible they never will.

Best Quote

“There is no iron law that real estate must appreciate.” – Stan Humphries, Chief Economist for Zillow (a real estate website)

« Older Entries