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Housing Prices: How Low Can They Go?

Friday, June 12th, 2009

There are more markets than the stock and bonds ones and they are pretty important too. Housing markets are a key indicator of the economy’s health, so obviously you can’t pass it up.

  • Housing markets take longer to rebound after recessions even if other markets recover quickly.
  • Personal housing decisions don’t often follow the fluctuations of the housing market, but instead reflect personal and economic factors – the majority of people does not constantly sell or buy housing every time the price changes.
  • A significant upswing in the economy may reverse this downward trend, but it will most likely have little effect unless attitudes towards home ownership change significantly.

Facts & Figures

  • Prices have been declining for three years and are projected to fall 41% from 2006 through 2010.
  • Current market prices are encouraging people to sell their homes while not stimulating new demand for housing: a large supply with little demand.
  • Following the 1990-91 U.S. recession, housing prices didn’t move upwards till roughly six years later.

Craigslist – If Only It Were *Your* List

Friday, June 12th, 2009

Interested in web businesses? Here’s a great example of a traditional industry that is able to thrive online, while its offline counterparts aren’t faring so well.

  • Craigslist is a free classified website that only charges for certain services in major U.S. cities.
  • It is a private company that does not disclose profits or revenue and so consulting companies frequently have to estimate these numbers.
  • While the newspaper and print classified ad industries have been downsizing, Craigslist has been bringing in record revenue.

Facts & Figures

  • Craigslist’s estimated revenue for 2009 is $100 million – a 23% increase from 2008.
  • In newspapers, classified advertising declined by 29% in 2008.
  • Craigslist is on track to generate $17.7 million in New York City alone in 2009.

Best Quote

“This is a down-market for just about everyone else but Craigslist.” – Jim Townsend, Editorial Director of AIM Group

Does The Financial Crisis Mean The End Of Bollywood?!

Friday, June 12th, 2009

The financial crisis is reaching into industries across the globe – even ones which have experienced recent surges in popularity.

  • In recent years, studios, media companies, and financial institutions began to invest heavily in Bollywood films, as India’s growing middle class could more easily afford such leisurely activities.
  • Now, this $2 billion a year industry must adjust to the global financial downturn by curbing production and budget costs, and ultimately the amount of films that will be made.
  • Producers are negotiating for lower rates from actors, choreographers, and the film crew in an effort to keep costs down.

Facts & Figures

  • Bollywood received $140 million in 2007 and $700 million in 2008 but so far only $25 million in 2009 from foreign aid through mergers and acquisitions.
  • In 2008, Bollywood produced 1,000 films but in 2009, only 700 films are projected to be completed.
  • The average budget for a Bollywood film is $2 million and only 14 films Bollywood films have ever made more than $20 million at the box office.

Best Quote

“Everybody is going to bleed a little bit. Anything with a big star associated with it will find a way but a lot of smaller films are going to have trouble.” – Siddharth Roy Kapur, CEO of UTV Motion Pictures (one of India’s biggest film production companies)

Actually, I’d Rather You Send Me A Facebook Gift Than A Real One…

Friday, June 12th, 2009

Ever sent or received a gift on Facebook–and enjoyed doing so? Experts say virtual goods and money are all the rage.

  • Virtual currencies and gifts are becoming more and more popular, especially in the gaming community.
  • Some experts say there may be a future where virtual currencies are traded in the same markets as real-world currencies. Right now, there’s even a black market for certain virtual currencies.
  • Joe Seller, a virtual world expert, believes the popularity of virtual goods stems from people wanting to take their online identities more seriously.

Facts & Figures

  • People transfer at least $1 billion into the virtual currencies each year, most of that going into online games.
  • WoW Gold, the World of Warcraft currency, is so popular that some low-wage workers in China play the game for a living and then sell their earnings to determined gamers in the West.

Best Quote

“They can’t eat the cake. It’s an image–the thing that it represents. You can send the feeling of that [cake] that you want to send.” – Santiago Martinez, virtual currency user

Don’t Give Up, Give Better…

Friday, May 29th, 2009

This article explores different strategies for giving in a changing economic climate.

  • With the wrath of the recession widespread, most people are cutting spending wherever possible, charitable giving being a popular place to start.
  • But charities are in need right now more than most and more than ever.
  • Instead of cutting charitable giving altogether, some people are reassessing which charities are most in need (prioritizing, for instance, food banks over art galleries) and directing whatever they can afford to those organizations.

Facts & Figures

  • Donors have two basic theories of giving: (1) direct service to individuals and (2) change through advocacy and public education.
  • During tough economic times, there is a shift from advocacy and public education to direct service because its effects are tangible and measurable.
  • Three techniques for giving in tough times are: (1) conversion (let the charity spend part of the pledge to an endowment immediately), (2) deferral (spread the donation out over time), and (3) triage (weed out charities no longer seen as effective).

Best Quote

“When things go down, no matter how much you have, you think you are poorer and therefore your tendency is to withdraw completely. The problem is that this is the time when you can do the most good, when you really need to give.” – Joe Briggs, retired legal-publishing executive and philanthropist

The New Face of Philanthropy Is Slightly More Feminine

Friday, May 29th, 2009

The way people spend, grow, and give their money is changing. This write-up demonstrates one way in which the face of philanthropy and finance has changed.

  • Three years ago, sisters Swanee Hunt and Helen LaKelly Hunt seeded a philanthropic challenge with $10 million, named Women Moving Millions, to raise money for programs helping girls and women.
  • Women’s charitable giving is often less publicized or done anonymously; this initiative has inspired many women to step out and give boldly.
  • The fiscal prowess and sophistication of this group has caused some people to consider if this current economic crisis might have been avoided had more women been in positions of power within the finance sector.

Facts & Figures

  • Women Moving Millions has raised $176 million for programs to improve the lives of girls and women.
  • 98 women and 2 men have joined the challenge so far.

Best Quote

“It’s about standing up for what we believe. I’ve done a lot of amazing things. I have climbed mountains and dived ocean waters. But the very best thing I’ve done is to give this $1 million gift.” – Anonymous Donor to Women Moving Millions

Why Sit On That Mountain Of Money When It Can Be Out Changing The World?

Friday, May 29th, 2009

Philanthropists are using different strategies to effect change with their money.

  • More and more philanthropists are taking on spending deadlines and sunset (aka “spend-down”) provisions to promote the urgency that is called for by their causes.
  • The current economic and political climate has people determined to make big change.
  • Ten years ago, the Beldon Fund (a New York-based environmental-policy foundation) opened its doors with a mandate to build national consensus for a healthy planet within 10 years. As promised, it closes its doors this month but will keep its site up as an example for other philanthropists.

Facts & Figures

  • 10% of active family foundations are limited-life foundations (like the Beldon Fund).
  • Warren Buffet and Bill Gates are among the leading philanthropists who have incorporated sunset provisions into projects recently.

Best Quote

“Let the next generation create new philanthropic capital for their own priorities and mission.” – Melissa Berman, President and Chief Executive of Rockefeller Philanthropy Advisors, on the implications of philanthropists spending down

Don’t Be Evil!

Friday, May 29th, 2009

How a major corporation is using its financial might to do good and sticking to its motto: Don’t Be Evil!

  • The founders of Google have started a philanthropic foundation, Google.org, with $1 billion start-up money and a mission to address poverty, disease, and global warming.
  • Unlike most philanthropies, this is a for-profit company, which can fund start-ups, partner with venture capitalists, and lobby Congress.
  • Its founders believe the for-profit choice will augment the abilities of the foundation.

Facts & Figures

  • Google allotted $1 billion to fund Google.org’s start-up. $175 million will be disbursed within the first 2 years.
  • Google began its big philanthropic venture only 6 years into the company’s lifetime. Microsoft was 25 years old when Bill Gates set up his foundation.

Best Quote

“I think how you count profit is the issue here. Google.org is measuring return on cleaner air and quality of life. Their bottom line isn’t just financial. It’s environmental and social.” – Peter Hero, President of the Community Foundation of Silicon Valley

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First New York, Now New Delhi…

Friday, May 29th, 2009

The economic recession’s reach is apparently universal – it seems nowhere will escape the clutches of the economic downturn.

  • It seemed that India’s booming economy would be one of the few lucky survivors of the global economic meltdown. But now it looks as though what happened to the rest of the world is beginning to happen in India.
  • Most of the boom of the last 5 years was a result of investment – and since foreign investment has declined with the global economy, so has a good chunk of India’s growth. A report from the IMF says this reliance on foreign investment has made India’s economy particularly vulnerable.
  • Since cheap foreign loans are harder to come by, Indians are now forced to borrow from Indian banks. Unfortunately, the same tightening of credit that happened in America is happening among India’s domestic lenders.

Facts & Figures

  • At the end of 2008, the Indian economy’s rate of growth was at its lowest in 5 years: 5.3%.
  • In 2008, 38% of the Indian GDP was accounted for by investment. At one time, more than a third of these investors were foreign, but last year foreign investment fell to its lowest level in two years.
  • The Indian stock market dropped by 58% last year, though much of that loss has been recovered in the early part of 2009.

Best Quote

“If India wants to go back to the 8 to 9 percent growth rate, private investment and low cost of capital is essential.” – Jahangir Aziz, Chief Economist for India at JPMorgan Chase

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Will The Recession Ruin The 2010 World Cup… For Adidas?

Friday, May 15th, 2009

The recession is truly changing the playing field. Even events that consistently boost sales for companies are failing to beat the recession.

  • Big sportswear companies typically see an increase in sales when huge events like the World Cup come along, but this year Adidas (ADDDF) is struggling more than usual.
  • Even after a rough first quarter, the company is optimistic about the boost they’ll receive from the 2010 World Cup in addition to a recent management overhaul and widespread layoffs.
  • However, excessive supply of product along with rising unemployment and the continuing recession throughout Europe may negate any earnings increases the World Cup brings.

Facts & Figures

  • Adidas (a German company) reported a 52% sales increase in the wake of the 2006 World Cup.
  • In the first quarter of 2009, Adidas’ reported income dropped a staggering 97.2%.
  • European retail markets account for approximately half of Adidas’ total sales.

Best Quote

“In Western and Central Europe we will continue to face some tough times.” – Ingbert Faust, Analyst for Equinet

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