Hot Real Estate Market

I got an e-mail this afternoon from a real estate agent who was telling me that the real estate[...]

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http://www.al6400.com/blog/2009/11/03/hot-real-estate-market/

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Outsmarting Investment Fraud

After watching FRONTLINE’S Video “The Warning” which exposed rampant fraud at the topmost level in this country, I’m almost too discouraged to report information that may help prevent less significant fraud. It’s almost like we’re doomed to failure in keeping the crooks from stealing our savings.But, what the hell. If it’ll save an honest American [...]

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http://guzzothecontrarian.com/2009/11/03/outsmarting-investment-fraud/

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Gold Surprises

Well...heck! In this business you are either right or wrong and we were wrong on gold this week. The US dollar did indeed continue its upward course as we expected but gold vaulted higher despite that. Was this all about India buying 200 tonnes of IMF[...]

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http://www.murdockglobalinsight.com/2009/11/03/gold-surprises/

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Strategic Portfolio Scorecard 11/03/2009

This post is for members only, you must log in to view this post Username: Password:[...]

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http://www.murdockglobalinsight.com/2009/11/03/strategic-portfolio-scorecard-1102
2009/

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Daily Chart Art - November 4, 2009

"The trend is your friend" is the theme for this week as sellers are sellin' the rallies and buyers are buyin' the dips. Go take a look at my daily chart art to see what I mean! Enjoy!

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http://www.babypips.com/blogs/pippinainteasy/daily_chart_art_-_november_4_2.html

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How Do I Make My Resume Stick

Q: For the last 7 years, I've been working for a consulting firm--that is, until last week, when I was given my walking papers. This was basically my first "real" job since graduating from college. I am putting together a resume for the first time since the days when I listed student-club memberships and honor rolls on it. Any advice for making a resume stick? - CV.v2

Dear CV.v2, the first thing to realize is this: Resumes are the kryptonite of stickiness. (The Pam of stickiness? The Crisco of stickiness? Whatever, you get it.) To advertise yourself with a resume is like trying to advertise a box of cereal with its UPC code.

Resumes play only one role: They establish credibility. You either clear the bar or you don't. You've looked at resumes before; you know the drill--we look for keywords. We look for organizations that we recognize: "Stanford," "Nike," "Bain," "Apple," "Teach For America," etc. Then, we look for keywords that match our job descriptions: "product development," "retail consulting," etc. If I'm advertising a job in my group for a "mar/com director," it reassures me to see the keyword "mar/com" on your resume. If you call it "marketing communications," you're making me do too much work.

One corollary of this is that if you're broadcasting 1 resume around to 12 different jobs, you're almost certainly failing the keyword test. There are lazy people like me reading your resume. So tailor it to me. Play back my own language--it is beautiful to me.

Meanwhile, the cover letter is the hero of our story. It's the place where you can make yourself memorable. Ideas stick because they are full of concrete details, emotion, surprises, etc. All of these traits are impossible to deliver in the bulleted resume format, where you'll find yourself unwittingly writing captions for Dilbert cartoons: "Managed 17% increased in administrative responsiveness while actionalizing key strategic initiatives."

Make it your goal, in the cover letter, to do two things: (1) Give headlines; and (2) Defend the headlines with stories. For instance, if you're applying for a job in retail consulting, a headline might be: I'm the right guy because I have experience mining data to find useful insights. But don't stop there. Support the claim by telling a story from one of your past clients: "In a recent engagement, my team worked for a major supermarket chain that had issued 'loyalty cards' to its customers. It worried that these loyalty cards were not improving profits--that they were simply giving away discounts to customers who would have shopped there anyway. They wanted us to study whether they should drop the discount cards. It was my job to explore the data in a systematic way--I'd love to discuss the process with you--and what I found, in short, is that discontinuing them would have been a $100 million disaster."

Now you've got their attention. And meanwhile, your competitors for the job will be wasting their cover letters on a bunch of bland points, concluding that they're "very interested in pursuing a career in retail consulting with your firm." You'll beat them every time. Good luck with your search!

Ask Dan is a weekly column. Read last week's entry: How Many Slides Should I Put in a Presentation?.

Submit a question to Dan Heath for his weekly Q&A.

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Who Wins Under a Cap-and-Trade System

The idea behind the cap-and-trade system for greenhouse gas emissions is simple: Energy companies that rely mostly on oil and coal will have to pony up big bucks, while those who rely on more diversified forms of power will benefit. The new "Carbon Exposure" (PDF file) study from market research firm PointCarbon digs deeper into who, exactly, the winners and losers are.

Under the system proposed in the Kerry-Boxer bill, energy companies such as Exelon and Pacific Gas & Electric comeout on top, thanks to their use oflow-emissions fleets and diversified forms of alternative energy. But ExxonMobil, for example, will face $5.9 billion in annual losses after being required to buy carbon allowances. It's no wonder why CEO Rex Tillerson has referred to the system as "doomed to fail."

Exxon and like companies plan to pass on the costs of cap-and-trade to consumers, leaving us to pay an estimated 13 cents extra per gallon at the pump. The hike is even more drastic in the Midwest, South, and West, where energy prices could leap $10 to $17 per megawatt hour. In fact, after passing the buck, Exxon, Chevron, ConocoPhillips, BP, and Royal Dutch Shell will pay only $247 to $355 million extra for carbon credits.

There is a bright spot on the horizon, though, as cap and trade does seem to be pushing coal-happy utilities like Duke Energy toward solar and wind power for future projects. In many cases, however, these utilities are turning towards alternative energy anyway to hit statewide greenhouse gas emissions targets.

But even if cap-and-trade affects consumers more than it affects energy companies, it's still a good thing--higher prices at the pump and on the power meter will increase the demand for alternatives.

[Via Green Inc.]

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Infographic of the Day: The G-20 Carbon
Calculator

Tracking the carbon emissions, among G-20 countries

In December, dozens and dozens of world leaders will descend on Copenhagen, for the 2009 Copenhagen Climate Summit. It's variously been billed as a major crossroads for battling climate change--and one unlikely to yield much in the way of action, due to disagreements over how the costs of these efforts should be split.

So in that light, it's useful too look at who's actually been emitting all of the carbon. And that's what The Washington Post's Global Emissions chart does. The graph focuses only on the world's heaviest polluters: The so-called G-20 countries, which represent the world's twenty largest economies. Together, they account for 75% of world GDP and 75% of its carbon emissions. But their performance, relative to each other, varies quite a lot.

The graph allows you to see both total and per capita emissions in the last 60 years. A slider above the map allows you to adjust the time, and to the left, there's an ordinal ranking. They've shuffled tremendously over time, as countries such as China, India, Brazil, and Russia have developed. Empty bubbles represent the carbon emissions in a region; colored bubbles show the emissions of individual countries--thus, you can see who exactly the biggest polluters are in a given region.

But what might be most surprising is that, per capita, the U.S. has always been very high--but other countries have rapidly caught up to us, even as we've remained somewhat steady. The world has quickly taken up bad habits that we pioneered.

The point being: The U.S. has been slow-rolling its participation in curbing global climate action. But if any change is going to happen, it only makes sense that it should start with us.

[Via Treehugger]

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In Cheap We Trust by Lauren Weber - Book review

In Cheap We Trust

The Story of a Misunderstood American Virtue

By: Lauren Weber

Published: September 7, 2009
Format: Hardcover, 320 pages
ISBN: 9780316030281
Publisher: Little, Brown & Company






"Part of the reason I embrace the word cheap is that it embodies some of the contradictions, ambivalence, and confusion we feel about money", writes self professed cheapskate Lauren Weber in her entertaining and thought provoking book about the changing nature of thrift in America In Cheap We Trust: The Story of a Misunderstood American Virtue. The author takes the reader on a whirlwind tour of American history, exploring how different times had different social attitudes toward thrift, and dispels many of the myths surrounding how Americans thought about saving money. The author points out as well, that thrift is returning to America as a social virtue, and she sees saving becoming a social badge of honor following a period of reckless consumer spending and debt.

Lauren Weber grew up with a father who was very cheap with money for household expenses, but was very generous with charitable donations and with providing good educational opportunities for his children. His dualistic approach to spending forms an archetype of the American historical relationship toward personal spending and saving. The author points out that many people will state emphatically that Americans used to be savers in the good old days, not like the irresponsible spenders of the modern era. Lauren Weber demonstrates that thrift was not always a highly regarded American virtue. She begins her study with a description of Benjamin Franklin, often considered the epitome of thrift. While Franklin may have practiced caution with money some of the time, he was free spending the rest of the time. As America changed from the early agricultural era, where saving everything was a matter of survival, to the industrial world of consumerism, the attitude toward thrift changed many times as well.



Lauren Weber (photo left) describes how thriftiness, as a cultural and racial characteristic, became part of the shameful prejudice against Jews and Chinese immigrants. The alleged cheapness was seen by nativists as feigning poverty or for undercutting already low wage levels. During the latter 19th Century, extravagantly spending Gilded Age millionaires were the idealized role models, while savers were mistrusted as being misers and somehow dangerous. The First World War, however, brought about a fresh wave of saving as a patriotic activity. That sense of frugality, in the form of buying heavily promoted war bonds, was out of fashion once again in the free wheeling Roaring Twenties. The Great Depression, out of necessity, and the Second World War, through war bond drives, ushered in a fresh wave of saving. The post war consumer based world, awash in Keynesian economic theory of demand and spending as a basis of a strong economy, removed the any remaining social support for frugality.

For me, the power of the book is in Lauren Weber's even handed treatment of the past, present, and future of thrift in America. Not being satisfied with the mythology that saving money was always a way of life of all previous generations, the author demonstrates the constant changes in social attitudes toward frugality. On the one hand, Americans are told to save for their retirement and are warned that savings levels are dangerously low for most people. At the same time, the general public is encouraged to spend money on consumer goods to help strengthen the economy. This ambivalent, and often openly contradictory cultural view of money is indicative of American historical attitudes as a whole. For Lauren Weber, the idea that people saved money throughout history, in the good old days, is simply a myth. Her research proves that point conclusively. At the same time, she describes a new culture of frugality that is arising in reaction to the free spending, and debt ridden society of the recent past. Again, the author shows the reader that constant contradictory nature of social mood and ideas about money.

I highly recommend the very readable and highly enlightening book In Cheap We Trust: The Story of a Misunderstood American Virtue by Lauren Weber, to anyone seeking a well researched and balanced social history of thrift in America. The author presents the changing cultural views of thrift, and how even the supposed virtue of saving money, has often been used as a tool of bigots. Lauren Weber makes clear that at some moments in American history, saving money has been noble and even patriotic, while at other times, thrift has been seen as dangerous and subversive to the good of the country as a whole. The author describes how Americans have never been able to make up their collective minds about the ultimate virtue of thrift.

Read the informative and often quirky history of thrift in America In Cheap We Trust: The Story of a Misunderstood American Virtue by Lauren Weber, and enjoy the ride through this charming, and insightful history of thrift in America. Discover the joys of saving money, and learn how the concept of frugality was attached to bigoted treatment of minority groups. At the same time, discover how cheapness is once again becoming an admired cultural phenomenon, as the pendulum of history swings back in support of savers. As throughout American history, contradictory attitudes toward spending and saving money are part of the national way of life.

Tags: In Cheap We Trust: The Story of a Misunderstood American Virtue, Lauren Weber, saving money, frugality, history book reviews.

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The Trouble With a High-Priced Valuation

Lately, in spite of the down economy, I've been seeing what I would call rich valuations for companies in the digital media space. A certain white-label social networking site, a microblogging site, and a behavioral analytics firm all reportedly raised significant amounts of money at relatively high valuations (and some of these are pre-revenue). From an entrepreneur's perspective, that's fantastic news right? Raise as much money as you can while giving up as little of the company as possible. What could be better?

Charlie O'Donnell, now with FirstRound Capital, wrote an insightful piece about this earlier this year, when he was still CEO of a startup. The article, titled, "Bizarro Fundraising: Aim Lower, Raise Less, and Lower Your Valuation," seems to go against the prevailing notion that entrepreneurs should try to raise as much as possible at the highest price. His basic message was to raise less money at lower valuations with more modest milestones so that the company can execute on more modest goals and be in a better position to raise money at better terms in the next round. There was some debate in the venture community but I have to say that it certainly made sense to me, and not only because I am an investor.

A high valuation is problematic for a number of reasons. The first, and probably most important, is the impact on the company's ability to attract quality talent. That's not to say that you couldn't (I'm sure the aforementioned microblogging site is seeing a flood of resumes). However, most people in the startup world join startups for the equity upside in a liquidity event or IPO (although the garage sale furniture and stale pizza at 1 a.m. is tremendously appealing). When a highly priced round is completed, guess what--the strike price of the options also go up. In effect, the hurdle for the options to be "in the money" has gone up and the value of the options has decreased. The motivation for the employees coming in after the financing has been materially altered.

Another difficulty in raising a highly priced round is the set of expectations from the new investors. Given the high valuations, the milestones that you'd have to hit to justify the valuation are usually aggressive. The difficulty in setting such aggressive milestones is that if you only complete 50%, you've basically built a bridge to nowhere. When you next need to raise capital, you may be faced with a down round, or in extreme circumstances, a complete recap or non-funding. Lawsuits and tensions around the board about fiduciary responsibilities are common. Not very fun stuff.

Now let me shift gears and look at it from an investor's perspective. There is logic as to why people invest at such high valuations. They don't want to miss the boat on the next potential Google, and while the valuation they pay may seem high, perhaps they can institute other terms in the term sheet that would "protect" their downside and guarantee returns.

One way to attempt to achieve this would be to get a higher liquidation preference or get participation rights. For those of you unfamiliar with the term, liquidation preference refers to the procedure for paying investors off in a sale or winding up of the company. It typically includes two components: a 'preference' (an amount that gets paid before other classes of investors, i.e., a 2x liquidation preference means you get paid twice your money back before any other class of investors gets paid) and 'participation' (the ability to take the preference and then take your share of the remaining proceeds). Even if a company is sold for only half the valuation, you could still double your money if you have a 2x liquidation preference!

The reality is that this scenario is highly unlikely. This is because new investors typically buy such a small percentage of the company that they can't influence the voting on any decision. Earlier investors and employees own the majority of the company and they won't sell unless they're meeting their return hurdles. Nevertheless, we're seeing investors going ahead in high valuations even without this type of protection.

So as you can see, while the media is abuzz about the high valuations, and it may seem like it's a great thing for entrepreneurs, there are risks. Take into account the pros and cons when raising your next round of capital.

Paul Lee is a founding member and Senior Vice President at the Peacock Equity Fund, a joint venture between NBC Universal and GE Capital. Paul's current Board and Observer seats include 4INFO, Greystripe, and Everyzing. He first started in digital media as a co-founding employee of Click2Asia, a venture-backed online media company. While at Click2Asia, Paul headed corporate development and played a pivotal role in the acquisition and integration of North America's largest online Asian media retailer. Paul entered the venture industry when he joined GE Capital's Technology Finance business. He leveraged his digital media experience and oversaw the growth of the digital media portfolio. Paul received a dual undergraduate degree in Mathematical Methods in Social Sciences (MMSS) and Economics from Northwestern University. In his free time, Paul enjoys competitive BBQ (dry rub only) and practicing mixed martial arts. He hopes to one day to see his beloved Chicago Cubs win the World Series. Follow him on his personal blog or on Twitter.

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