It is the allure of fast money that we seek when financial adversity strikes; it is the incomparable suspense and drama that eats away at our nerves minute-by-minute, second-by-second; it is the roller coaster that brings both twists and turns, ups and downs; it is the bringer of extreme frustration and exuberance; it is the unending permutations and combinations of unfolding events that help us break away from the monotonous nine to five; it is the reason that Mondays are loved and Fridays, well, are loved as well. It is my life. I am an options trader.
The misconceptions people make about me and option traders is a result of at least two things: their misunderstanding and lack of knowledge of the financial markets, and the stigma day traders have. To call me a day trader is a bit slanderous but having done both, I can tell you that the styles are vastly different. Sure, we have minor similarities. We both hope the direction of a stock goes in our favour, and we both might watch the market all day long to capture that fast money, but that’s really where the similarities end.
Day traders need significant movements or capital to make money. That is why so many have charts up all day waiting for the right time to close their positions. It is why it is an extremely stressful task, especially when you have an interest in the money being traded. Every second you must make a decision at the same time as every trade goes through. It represents your missed opportunities or your vindications, stirring doubt and questions about the validity of a sudden rise, processing every bit of information or lack of and creating a conclusion. You must time it and hope the move you made was correct, like sliding the queen, sitting next to the king, across the board as you prepare to execute some divine plan.
Thankfully, I have evolved beyond the stresses of day trading and onto the options trading market. Yes, I am arrogantly calling options traders better than day traders, live with it. While day traders worry every waking moment, I sit back and wait for the days to roll by until the morning of Friday or more commonly, the middle of the afternoon as I prepare to close my positions. This is the life of an options trader.
Monday January 6, 2014
Waking up at 9 AM MST is a bit tough for me, because I am a night owl. I love being up until 2 AM getting in some exercise, reading articles, playing computers games, or just watching Jon Stewart and Sportscentre. So, I decide to wake up at noon. I rarely trade on Monday. It's just too far from expiration and the market is more volatile than the option market is pricing. This Monday was particularly boring too. I usually let the big guns on the floor duke it out, flex their muscles, and move their stocks in whatever way they feel like. So, I keep note of the stocks on my watch list: Apple on a downtrend, not too good but heading higher on the day; Amazon still trading between $390 and $405; Netflix charts show negative sentiment taking over; Google supporting at $1,100, waiting for some direction, GLD extremely volatile and had a flash crash; and Tesla Motors moving sideways. Time to just sit back and relax.
Tuesday January 7, 2014
Nothing to take advantage of again. I'm my own boss. I only make money by trading, but nothing catches my eye. Again, it's time to relax and just cruise through the day. As we can see, there isn't much stress so far. Meanwhile, there's probably some day trader ripping his grey hair out as the market either is not moving or his stocks aren't performing for him. Either or, I'm taking the day off.
Wednesday January 8, 2014
For my own level of comfort, I find that executing my credit spreads after 2 PM EST on Wednesday seems to work best for me. So, looking at the prices of the options of my followed stocks, I find that only Amazon is worth touching. So I call in, spend a whopping 7 minutes, and ask for a 4-legged spread on Amazon with five contracts to expire on Jan 10. The trade speculates Amazon will be between $395 and $405 with protection at $385 and $415 at the close of Friday. At the time of the call, Amazon was trading at $400.xx, a price it continued to tread near for weeks. The total capital required is $5000 (as that is the maximum loss); the total money received: $1,037.02. That's 25 per cent (calculation is actually $1037.02/($5000-1037.02)). That's better than the average mutual fund's return in a given year. Now you see why I moved into the options market.
Thursday January 9, 2014
So, I get up around 11 AM and check the markets. Again, very little excitement remains. But holy, Amazon opened up above $405 but quickly drew back to $400. It's a new all-time high for the stock but it could not manage to hold gains. Fortunately for me anyways, it was what I needed. I decided to call again, this time it was 8 minutes, and asked the trader to create the exact Amazon position I have, doubling it to 10 contracts on all four legs. With an entire day's worth of "time value" gone, the total proceeds dwindles to just $542.02. This creates a return just over 12 per cent for one day, still a remarkable return. And the work day is done. I have now spent 15 minutes having to call in, with perhaps a total of another 10 minutes checking the prices of the options prior to each phone call. Everything is looking good so far, but it's not Friday. Nothing matters today.
Friday January 10, 2014
I wake up at 10 AM , always earlier in excitement, and find Amazon shares at $397. Still holding strong. I take a shower, eat some breakfast, and get ready for work. Okay, the shares have moved closer to $396, but I am still safe. Some stress is forming. I think to myself, "I knew I should have done lower call strikes." Doubt kicks in the moment it went below $395.
It is now 12:20 PM MST. I was not happy at all. For the next 40 minutes, it is excruciating pain. Oh my goodness, it's $393.80! For every penny it drops, I essentially lose $10, so you can understand why I'm now angry. At $394, I would have to pay $1 x 1000 shares to close. "I should have just paid the 25 cents!" I scream in my head. Day traders can empathize. It's now 12:58 and I call to ask iTrade if they can ask credit to extend the closing deadlime an additional 30 minutes. I want to see if Amazon will move back out of the money. It's now $394.40ish. They agree. I enter a buy to close for $0.25 while the option is bidding about $0.75 to an ask of $0.84.
Out of no where, the stock pushes higher at around 1:04. Some firm must have made a very similar bet too and must be buying the shares. I don't care if it's coincidence or manipulation, but it's helping me. Amazon had a nice upward move in a matter of 15 seconds pushing it from $394.40 to $395.26. Like a switch, my feelings went from disgrace to ecstasy. I would compare it to watching your favourite hockey team allow a goal in the last seconds of the game and then winning it in over time on the first shot. The stock makes another move at 1:14. Before I can even change the order, it has been filled. The shares would end up closing at $397.66. The total profit earned after fees was $1,309.55. All in three days!
To capture the emotional roller coaster that exists on the last day through this blog does not do it justice. Every second, every sweat drop, every penny, every share trading hands sends multiple emotions through my body. As I discussed above, it can fill you with joy and excitement or anger and frustration, sometimes all emotions before you blink. Is it fun? I love it! And when I'm right, when I tell myself to be aggressive and get the trade perfectly, that feeling of success, fulfillment, and self-gratitude boosts my confidence like nothing in this world. And when I'm wrong, shame, disappointment, and failure just takes control. It's a short-lived addiction that has its financial benefits, where work is considered a phone call, and a casino looks like child's play. But for everything that is negative about it, it is the positives that I love. And I wouldn't have it any other way.
Showing posts with label Miscellaneous. Show all posts
Showing posts with label Miscellaneous. Show all posts
Yakupov Nailed the Celebration
Passion, enthusiasm, excitement, pride. That is what I see when I re-watch Nail Yakupov's game-tying goal celebration over and over again. But there are people out there criticizing him for his over zealous reaction, for disrespecting the game and making a mockery of hockey. He cheered like a soccer player, so what? They have passion for their careers and teams too. Let's give the kid a break here. If the Kings did not have a problem with it, neither should anyone else.
He is 19 years old and just scored the most exciting Oilers goal since Hemsky against Dallas. Puck mid-air, rebounding off of Quick's blocker with just 4.7 seconds remaining. The drama that was built exploded in passion from a kid. He skated and slid across the ice leaving his fellow team mates behind and collapsed in joy. He looked to the crowd and cheered with them. It is the epitome of hockey. It is what I, along with millions, missed three months for. This is what I live for.
Had this been a game-tying goal at the ten minute mark, then absolutely it was too much but it wasn't. It was at 4.7 seconds against the Stanley Cup champs when the odds were so stacked against the them, when the team just had a disallowed goal a minute prior, when Quick was sensational all game, it was right. It was perfect!
Nothing astounds me more than the fact that all of Canada hated him exactly one month ago for his remarks against team Canada's Junior team. Today, he is a hero, at least in Edmonton, and those remarks? History.
Yakupov is a sensational player who clearly wants to win and has a passion and drive that many of us lack. I for one am glad that he has brought his personality to the league. Hockey is not confined to gentlemen with cuts, scrapes, missing teeth, and bruised fists. It is also for the energetic, immature, naive boys who grew up wanting to be in the NHL and will make every moment of it memorable.
A Fan's Plea at the 10th Hour
No matter how many times the NHL will abuse this fan, like a low-esteemed boyfriend, I will always come crawling back to you. That is how much I love this sport. I grew up watching and playing hockey and I intend to watch and play it for another 60 years. But if what we're hearing from the NHL and NHLPA discussions are true, the NHL will probably cease to exist. The only benefit is that the Canucks will never reign as Stanley Cup Champions, but I digress.
Please reach a deal, compromise, and move forward. There is no need to hinder the growth of the sport by fighting for personal rights which can be negotiated off the ice while players show case hockey and generate revenue on the ice. A lockout is a last resort tactic that Bettman will reluctantly impose, and I firmly believe Bettman does not want this, considering he had a very emotional tone of voice when speaking about it last night. But nobody wins in a lockout, not the players, not the owners, not the employees, not the fans, not the bookies, not the bars and restaurants, not merchandise retailers, not a single entity stands to gain when a lockout occurs. So why force a lockout and accept to be locked out? It is a lose-lose-lose-lose-lose situation.
Bettman has to stop the tactic of using lockouts to string the NHLPA into agreeing with its proposed terms. It has damaged the sport and this third lockout will undoubtedly do more damage than ever. Even I am hesitant on supporting the league right now, when a short-term solution can be found that keeps the game on the ice and allows owners and union members to work on a better deal.
Conversely, I believe that Fehr and his lackeys at the NHLPA must acknowledge how good their employees have it. Their rights are more equitable than the rights of other professions. Unions were designed to give a voice to the front-line staff who were not paid enough to make ends meet, did not earn overtime, and worked in unsafe conditions. Instead, we have a union fighting for every penny when members don't necessarily need it.
I understand that the NHL and NHLPA want to battle for what's right and fair and I believe they should, but both parties must also accept that their biggest stakeholder is the fan, which happens to be their consumer. We represent a fraction of the revenue, but without any fan, there would be no revenue at all. We buy tickets, but businesses pay to advertise along the boards, to televise and broadcast the games, to sell hats and shirts and flags and cups all to us. Consumers and fans do not have a voice. Instead, we are heard through consumption and trends and businesses know that. This is why it is so critical that a deal is worked out because the NHL stands to lose too much over a few million dollars in a billion dollar industry.
I am not asking for the NHL and NHLPA to bow down to our every wish because the fans deserve it. No, I want both parties to create a perfect CBA agreement that simply can be renewed without work stoppages or disruptions for a very long time - a pipe dream perhaps. All parties want the same end result so listen to the fans that want to cheer for every great moment that your sport delivers, listen to the players that wish nothing more than to play for a shot at the holy grail, and listen to the owners that need to operate a business.
Please Mr. Bettman and Mr. Fehr, for the enhancement of the game, to respect the wishes of the fans, players, and owners, please find a way to come to terms to prevent a lockout. I can barely stand summer, you think I can survive another year?
An Ode To Ben Bernanke
Ben Bernanke is an American hero. He has never been given any credit in his role. He has exposed nearly every century-old financial theory as wrong. He has shown resilience, perseverance, and leadership exemplifying the adage, "If at first you don't succeed, try, try again," with his actions as Chairman of the Federal Reserve. It is the start of a new macroeconomic system that governments have started to employ in their arsenal, all thanks to Ben. He is a king among men and it should be known.
Ben challenged the current economic system by proving that the books were inaccurate. What we learned in university was simply a ruse, a brainwashed methodology that ensured the middle class followed the rules, paid our tuition, watched our investments like sheep, and thought supply and demand existed. How we were wrong. Ben brought to light the misleading information that was clearly developed by a secret society to control fiat currency, to control the world's government, and keep the middle class at bay.
Ben made it clear that hyperinflation was just a scare tactic developed by this secret society, at least in first world countries. When the Fed started printing money in 2008 and 2010, economists all over believed that the value of the American dollar would decrease, that this devaluation would eventually lead to major inflation. People were outraged at the possibility that their money would not buy as many goods and that the country was putting itself in major debt. But Bernanke ignored the fears and acted like a leader, doing what he thought was right, not popular. To the economists that cried the sky was falling, where are they now? Too busy buying goods that cost virtually the same as they did years ago I assume.
My boy Ben unknowingly showed that the stock market is not a leading indicator of the strength of a national economy, a traditional school of thought we blindly followed. The US stock market today is higher than it was in 2007, which formerly would have indicated that the US economy is as strong as it was five years ago. Clearly, with unemployment near 9 per cent and GDP growth tepid, Ben has proven that the stock market acts with free will with no correlation to the despair in America.
And Ben, what resilience you have; all the better to lead us with my dear. The first round of quantitative easing failed and did nothing to help the common folks, so he tried again in what is known as QE2. It failed too, so today he announced a round of bond purchases that will occur every month until the labour market strengthens.
If it were any one else, I would have questioned how buying bonds and keeping interest rates near zero helps create jobs, but because it is Ben, the man that has shown our economic models are wrong, he deserves the benefit of a doubt. In fact, since quantitative easing, unemployment has dropped from above 10 per cent to around 9 per cent today. And in another three years, he predicts it will fall to 7.5 per cent. In 20 years, you will have enough citizens that can afford to purchase a home as you maintain record low interest rates.
The simple plan Ben developed could outlive his tenure as Chairman as well. It allows future Chairmen to follow in his footsteps by lowering America's unemployment rate 1 per cent every three years just by spending $40 billion a month on bonds.
Nobody will give you credit Ben. People will argue that it was the private sector, that you hold no power over unemployment, but look at the proof. You initiated strategies that have existed while unemployment lowered and stock and bond markets rose. Countries adopted your strategies. You are a leader and have enlightened and frustrated the best economic thinkers with your rebellious ways. You stood above when the crowd said "No." You want everyone to own a house by creating super low mortgage rates for the next 20 years. You created a debt so large that you exposed the Chinese as frauds with their "elite" math skills. You inspired millions to start saving and stop spending because it was necessary. Don't listen to the critics. Ben, it was all you.
A Prayer to a Lost Soul
I rarely discuss topics unrelated to money on this blog, but friends laugh with you, create memories with you, and endure with you. I decided to write about my thoughts on friendship because I've started to see a friend of mine, one I thought I really cared about, drift away from me and into a life that I don't much respect. What's worse is that I've been able to do nothing as she changed and it made me question who I am. I try to meddle as little as possible and let people learn from their own mistakes. It is how people grow, but it's hard and frustrating having to witness someone you really care about lead down the wrong moral path.
Most of us are afraid to confront our friends because we lack the courage to face the issue head on and we lack the knowledge to tackle the problem. The reality is that confronting your friend often results in conflict and the end of a friendship, but I pose myself the question, "What friendship is left when the transformation is complete?" A non-existent relationship and the wasted life of an awesome person that made my world brighter.
People will tell you that they mean a lot to you and when you lent all those ears and let them lean on all your shoulders, you learn that it was all for naught, all in vain if you will, as their life unfolds and withers away into what it potentially will or has become. We are all given an equal chance to make our lives positive and to be role models to others, but people are greedy and selfish and they crave money, power, drugs, and lust. Why can't we all crave respect, humility, love, and dignity?
Dear friend: just five months ago, we talked about your future; we talked about fun things like boys, movies, and places to visit. And remember when we used to hate those that do the things you do now? Because I sure do. Honestly, I can't say for sure if my suspicions are accurate, but from the words of others, those that I trust and respect, it appears they are true. I won't say names because this applies to so many others, but I want you back. I want you to change to the girl who saw the world as a stage and wanted to be an interior designer, a girl who started a tradition of gelato every month with me, a girl who punched me when something really cute happened beside us.
Most of you won't have made it to this paragraph, but I needed to use this as a catharsis, as a way to figure out what's going on in my head. It is a shame to see a life possibly wasted yet again and to see that the people she surrounds herself finds no inspiration to be better people. I want her to change back to who she used to be, but people are often set in their own decisions.
The girl I knew two years ago is long gone and the body that remains is just an empty vessel to me. I care enough to get you back on track but I feel I was too late in recognizing who you have become. I feel that I've come to the same solution that I've always resorted to and that is if you choose to ask for my help, kid, I'll be there before the sun peaks above the horizon, but if you decide that the path you have taken is best, and you feel that I shouldn't have known about it from the start, then the respect and admiration for my wisdom you have shown me was devoid of any maturity that I once thought existed in you.
I surround myself with people who will inspire me and be inspired by me. I surround myself with people who have identified their goals and wishes, things that they are passionate about, people who love to be alive and make every minute count because they know it is limited, and people whose legacy will survive because I will tell others of their wonderful soul. But the person you may become is not someone I would admire and someone I would never surround myself with. Are you ready to lose me and the people that are on this side of the track who have laughed, created, and endured with you?
I would much rather find out I'm entirely wrong and you are offended by my misleading information and intuition. I would love to know you stayed true to yourself, that your strength in character was underestimated, and you are same person I appreciate having in my life. Honestly, I really would.
My First Christmas
However, as I got older, I started to learn more about my history and realized how I should celebrate the holidays. The story of my first Christmas is very unique and tells a tale about struggles, oppression, and finally, freedom. The events that occurred on that day has allowed me to appreciate everything in life, from the mundane to the those that really matter. This is the story of my first Christmas.
My parents were caught up in a conflict known as the Vietnamese border raids in Thailand. It was a conflict that occurred from 1979 to 1988, which dispersed millions of Vietnamese and Cambodian citizens across three nations, many of which ended up in the refugee camps on the Cambodia-Thai border. This infamous region is known as the Dangrek Mountains; a site that is associated with inhumanity.
They made the decision to escape Vietnam shortly after they got married and had to reach Thailand where the conflicts were much more subsided and refugees were being relocated all across the world. With literally nothing, they trekked hundreds of miles from Soc Trang, Vietnam to Phnom Penh, Cambodia. To say the trek was long and arduous would be an understatement considering the war-like conditions of Asia. Years of conflict through multiple wars really did make the regions unsafe as minefields littered the country. After arriving in Phnom Penh, they had to take a train to Battambang, but were too poor to pay for a train ticket. My parents, along with dozens of others, sneaked onto the train which led to the first obstacle.
Mom and dad were quietly looking out the window as the train voyaged on. A train inspector entered the car and looked towards my parents immediately. He saw the lighter skin tone and lack of characteristics commonly found in Cambodians. If he could find out they were not Cambodian, my parents would be forced off the train as trespassers. The inspector asked a question in his native tongue. My dad replied back in Cambodian to the shock of the inspector. The inspector looked at my mom, who did not speak Cambodian and did not understand what he was saying. Quickly, my dad interrupted and said "My wife, she is both mute and deaf." The employee stared at my parents and dismissed them as lighter-skinned Cambodians, and gave them a pass even though they lacked ID and a ticket. A sigh of relief. My dad, a life-saving skill perhaps, was able to pick up the Cambodian language, very fluently in fact, during a short period of time. This allowed them to continue their way north under this ruse.
This train ride was frequently interrupted with stops as the train tracks had been destroyed from the war. Passengers would have to exit one train and board a new train, sometimes miles away. At times, transported by bus, motorcycle, or by horse to the next train stop.
Finally arriving in Battambang, they were not greeted with cheers. Instead, my parents were sent to an outskirt town and put in a prison. The prison loved taking people in because humanitarian organizations like the Red Cross and the UN would pay rice in exchange for the release of prisoners. My parents were fortunate enough to be selected as trade bait and were placed on the Red Cross's list to leave to Canada, but the ordeal was not over as they still had to go to another camp, known as Nong Samet, for placement.
The camp was situated in the jungle and the trail into it was a sliver wide, where a small error in judgement would result in catastrophe. It was covered with mines and where there were no mines were dead bodies. My parents described the refugee camps as filthy and full of disease. While residing in the refugee camp, I was conceived. I was born so thin that my body looked undeveloped, as the silhouette of my organs could be seen. Not given much chance to live, but my parents did what they could.
But my mom was malnourished. We had no food, and my mom weighed just 65 pounds that day. She was unable to breast feed her own son. Luckily, other mothers were very giving and fed me their excess breast milk, and other families fed my parents congee and water. It was months of pure starvation for my parents but they survived, barely.
My dad recalled it may have been Christmas Day, and we were told that we were being taken away to freedom, but suddenly, tanks started rolling in and my family was right in the middle of a war zone. Bombs, gunfire, and tank shells blasted the camps. 60,000 refugees took cover and tried to escape the mayhem, not wanting to be a casualty of war. Hundreds, including my own family, hid underneath a cliff that was a waterfall in the summer, but a dry well in the winter. The Thai soldiers that accompanied us were also hiding there. They were forced to shoot or beat babies that cried, often to death, for fear that their cries would alarm their enemies towards us, yet by some miracle, I did not cry. This allowed us to remain alive among the dead.
When the sun rose, the battle had ended. The dead and alive were covered in ashes from fire that destroyed parts of the camps and jungle. The chaperones started calling the names of those who were listed on the Red Cross's list to stand on one side and the rest on another side. One man that had not been selected ran to the selected group and tried to give us a letter to give to his loved ones, but the Thai soldier shot and killed him for disobeying them. It was unruly and vicious, but it was the law and order of the times.
The bus awaiting for the lucky folks was seven miles away, understandably being cautious as to not enter the camps just hours after a battle. My dad, holding me and an empty bag for food, and my mother, too weak from giving birth still, would become abandoned by the rest of the group because we were too slow.
The remainder of the group had been at the bus waiting for us, but many were getting impatient and restless. An argument ensued between refugees and staff. "The Luu family is dead! Get us out of here," someone yelled.
"My job is to make sure we count everyone on the list. We cannot leave until we find them, dead or alive," replied the driver. Staff and refugees continued to fight over the process when suddenly a man yells. "There they are!"
My parents emerged from the jungle with cuts all over their body. Their clothing torn to bits from the thorns and bushes. Blood soaked my dad's body and clothing. The Red Cross associates ran towards us and helped us get onto the bus. They gave buns the size of a fist and one hard-boiled egg. It was not very much, but for my dad, after having not eaten in more than 24 hours, it felt like a buffet. My mother received a blanket and turned it into a Tarzan-like tunik for me. Up until that point, I had been naked since birth, but that blanket was my first Christmas gift ever courtesy of the Red Cross.
My family was relocated to Edmonton Canada in May 1985 - a place I now proudly call home. I couldn't be prouder to be Canadian and I have always been so thankful for those that accepted us into their country when a lack of trust existed towards Vietnamese and Asians at the time.
Remember how people often ask me why I don't celebrate Christmas. I shrug off the question with a simple, "I just don't." It's only the half-truth. I feel blessed everyday knowing that each moment is a gift. I am surrounded by people that matter more than any present. The whole truth is "I just don't need to."
Post-Script
After years of research, we recently found the historical event on a Wikipedia page "https://en.wikipedia.org/wiki/Vietnamese_border_raids_in_Thailand" and I contacted the Associated Press for more details in 2018 about this article, however they have not yet responded to date. Thank you for reading my family's story!
Occupy Wall Street? No, Occupy Humanity
My opinions on Occupy Wall Street (OWS) and any other derivative form won't earn me any new friends. The demonstrations represent the ideals of free speech and protest in a democratic society and I for one hope these values stand the test of time, but the Occupy Wall Street movement, which apparently stands for nothing or everything, is a hypocrisy, and I'm starting to question if protestors are eating their cake and having it too.
Let's get this straight. I am not a right-wing nut job like Rush Limbaugh or Glenn Beck claiming that they are lazy, unemployed, angry hippies trying to ruin American capitalism. I believe they are angry at a system they perceive to favour the rich at the expense of the poor. I believe they view themselves as the victim of a government system that can be bought. I believe they want an end to corruption at the top. But we are being manipulated by the "fair" media that tend to shift from facts to finger pointing because it is the ideal thing to do. And don't anybody dare say the media is not to blame here, when in every situation, the media is always to blame. I also believe that many have never been in a position of power and that the participants of the demonstrations asking for the end of "moral greys" are morally no better than the people in positions of power. It just happens the latter are; the ending results would very likely be identical.
The democratic system that so many perceive as no longer representing the 99 per cent is being questioned through the voices of the rally. The general problem is that these rallies are against a large entity, known as the corporation. In reality, a corporation is run by thousands of workers making conscious decisions to benefit their company, their family, or themselves. A corporation exists because it is run by the 99 per cent but a corporation itself is not corrupt; it is that humans are corrupt - easily persuaded by money and power. This is the underlying issue that has created a broken democracy.
For us 99 per cent, it is unfair to criticize and slander those in positions of power for making greedy decisions. I have seen many instances where the common man has taken bribes, stolen from family to make a few extra bucks, and compromised their own values for supposedly justified reasons. Money can motivate men to do both good and evil. People know the laws of their countries, the commandments of their religions, the policies of their company, but people break them for selfish gains. I just find it ironic, perhaps hypocritical, that occupiers can whine about the rich and then go back to work and try to earn that promotion.
Here's something to think about. It is believed that up to 15 per cent of Americans are defrauding unemployment benefits from their government at a time when so many Americans are against wasteful government spending. Other taxpayers are bailing out these lazy bums for up to 99 weeks while they sit on their couches (or occupy Wall Street) criticizing banks for accepting money they don't necessarily deserve. To clarify to some, the bail out packages were loans and have largely been paid back. Another thing, thousands of Americans have purposely claimed bankruptcy just so they don't have to repay their mortgages because they want to protect themselves first. As we see, greed exists in humans at all levels of wealth.
I read on a MarketWatch forum from a poster that the 99 per cent do not have a say in capitalism anymore, and elections are too few and far away for our voices to be heard, but this is just not true. As consumers, we have the most powerful voices in a capitalistic economy with our wallets. We as individuals choose what companies we support by purchasing their brands, but we never put money where our mouth is. I have a friend that is against the child-labour practices of Apple, but justified purchasing an iPhone for its look. I know many people who are against outsourcing jobs, but they choose to buy the cheaper product made in China. Americans want to secure health care, but there is a battle against raising taxes half a per cent to help millions. People will fight for their environment, their democracy, their norm, but people do not change habits or take action where it really counts. This rally against corporate America is meaningless and hypocritical.
Upon Steve Jobs's death, occupiers set up a temporary memorial in his honour, which I deemed to be undermining. Protestors grieved and lamented at the former Apple boss, with one person saying that he made the world a better place. That biased opinion just wouldn't sit with me. He didn't change the world for the better, he changed lives for the wealthy Westerners living in North America and Europe, at the cost of the poor, at the cost of children in China working in their factories, and at the cost of the environment. This individual appeared in front of the camera and did not support the antics of Wall Street, but, for the decisions of Jobs; a greedy and egotistical boss that did not promote charitable donations; whose company is valued as the largest in the world by market capitalization; and has the most cash ever in the history of the world, more than the US Treasury; never once giving a dime back to shareholders, he approved because he probably owned an iPhone, iPad, or iPod somewhere and did not want to seem like a hypocrite. Occupiers can not unite against the destruction of their world by corporations while revering them too.
The super wealthy are wealthy because of our decisions. They have not stolen from the poor; they have earned a large piece of the pie. They created great companies offering great products and services that we all loved and admired a few weeks ago, but demonize today. It is strange that the protestors are shamelessly receiving free Starbucks coffee, free wifi, and free fancy tents. That's a thousand times more than a child in Ethiopia would ever see in their life time if he even made it to adulthood. This child has more of a reason to protest wealth inequality than we do, that's for sure. I for one would like to know that if I worked my butt off, I could one day be wealthy without the evil eye from the common man staring with envy.
But how rich would I have to be before I am considered the evil 1 per cent playing the role of "backwards Robin Hood?" In Canada, to be classified as a top 1 per cent earner, an individual would have a salary above $200,000. These include doctors, lawyers, engineers, small business owners, and professional athletes, hardly an enemy by any definition.
The protestors are rallying against something unclear, but it represents anger at the economy, at government, at everything that has not gone right in their lives. My Canadian government provides free education and subsidized post-secondary education so that its citizens can achieve great heights, universal health care because they want its citizens to be healthy and help run a democracy, multiple political parties to represent a wide array of opinions and beliefs with checks and balances, the ability to walk safely anywhere I choose. My Canadian democracy is not perfect. It might be guided by corporate hands. It might be somewhat corrupt at all levels. So what? It is run by humans who are not perfect. Honestly, the people of Occupy Wall Street, Occupy Toronto, Occupy Edmonton have never seen real poverty, real government corruption, real oppression. These people are 83 per cent luckier than the entire world and will always be.
The resolution of our problems do not involve changing the rules of democracy or destroying government or redistributing wealth. The resolution exists only when people realize we all act corruptly, have a thirst for money and power, and every action has a reaction, and decide to change our collective behaviours, but that will never happen. The rally lacks clarity and objectives. I have not heard one demonstrator make a suggestion on how to make this free world better. I have only heard criticisms and attacks at corporations and governments. The rally has not conceived a solution, just garnered attention at the belief this is the start of change. I don't think it's remotely similar enough to even compare Occupy protests to spring time Middle East revolts; it is unfair and blind. I think these demonstrations are a farce and this is why I do not support Occupy Wall Street and its derivatives forms. Instead, we should be occupying humanity.
America's Spending a Problematic Staple
America is a country addicted to spending; always has been, always will be. Its economy functions most effectively only when its citizens spend. Nearly 70 per cent of its gross domestic product is consumer spending. We are now seeing a massive shift in consumer spending which has put a damper on a recovery. Because of this, we're seeing America's fleeting dominance fall into a hopeless downward spiral. The government believes that it must spend its way out of the recession. It worked before, so it shall work again. But this concept of government spending, whether it be an addiction, a cure, or a habit, has created a $14.3 trillion deficit that is so large its value seems completely arbitrary. The mindset of massive consumerism and materialism built the country that dominated the 20th century; it is also this mindset that will destroy the country in the 21st century. It is a troubling evolution that has led America to its current hopeless conditions.
Masked in the financial irresponsibility was sustained long-term economic prosperity that took the nation to the top. The idea that America would topple seemed unimaginable. Its debt has been rated the safest global investment for decades and that image still stands today. Its economy recovered strongly after the Great Depression, as did everyone else I suppose, but also thrived for decades after, unlike so many. It contained the wealthiest individuals and corporations on the planet, proving once and for all that capitalism was an overall effective method of financial success. America's rise resulted in consumption and materialism by its citizens so envied by third-world nations. Complacency in the economy proved to be powerful as saving rates were some of the lowest in the world and goods were more important than saved assets. But all this changed in the late-2000's, when the biggest and safest companies in the world started showing signs that giving citizens the power to buy at their own will without accountability was not sustainable.
It started with the issuance of sub-prime mortgages, mortgages issued to higher risk individuals that did not meet the criteria for traditional mortgages. Under stricter regulations perhaps, these individuals would not have received loans in the first place, but since the practice of issuing sub-prime mortgages persisted for so many years, it seemed the norm. These individuals would hold loans that carried higher interest rates as they were considered high-risk. The housing market peaked in 2007, followed by drastic declines in home values. Refinancing became immediately difficult and it resulted in massively high amounts of mortgage delinquencies, which lowered the values of mortgage-backed securities held by the biggest financial firms.
Shortly after in 2008, global markets collapsed as confidence in the financial system eroded directly from troubled mortgage-backed securities. Names like Merrill Lynch, Lehman Brothers, and Bear Sterns, the biggest names on Wall Street, some of the oldest companies in the history of America, bankrupted. Soon thereafter, banks implemented stricter lending policies, which halted economic growth. Suddenly those who qualified for loans two years ago, would be denied access to capital funding. America's economy, which heavily relied on consumer spending, was in jeopardy. Business investment ceased, which would have eased negative growth. And governments spent billions bailing out banks trying to save the country instead of normally investing in infrastructure and programs.
Fast forward to August 2011. America is technically not in a recession, but its "positive" GDP growth doesn't inspire confidence. Millions of Americans are pinching every penny and low interest rates aren't bailing out the innocent victims of a troubled system. Banks still have bad debt on their books and nobody has money left to fund them. Bank of America and Citigroup probably won't make it to the next federal election. Business spending has ceased and companies are still laying off workers. Signs of a recovery disappeared months ago and optimism is a shadow of today's state.
Consider that over the past three years, the country's multiple plans to restore confidence in the market and economy required spending or borrowing through quantitative easing strategies and low interest rates to "spur" growth and spending. The lack of creativity and imagination from lawmakers have been ineffective and continued bailouts of banks, automobile firms, and government-sponsored enterprises pushed spending to the $14.3 trillion debt limit. Consequently, the country is in worse condition than it was three years ago and the country was on the brink of default.
It was clear that nobody would ever allow this to happen, not even the Republicans, but the stalemate drew worried eyes. Republicans prevented the debt ceiling from being raised for what seems like political motives. Although a deal eventually passed, it resulted in the first ever downgrade of the country's debt by the Standard & Poor's because of political ineptitude, along with other reasons. After all, the US debt ceiling has been raised nine times since the turn of the century, some of which occurred during Bush's presidency. In fact, the US has only twice gone more than three years without raising its debt since 1939 (See link). So why the fuss? It seemed Republicans decided it was time to cut the massive spending and show some fiscal responsibility and they would not budge on this concept. Brilliant!
But wait a minute... The debt deal that raised the ceiling to nearly $16.7 trillion passed through bipartisan cooperation is expected to be revisited in 2013, after elections (coincidence?). Even with the Republicans spending cuts, the country is still borrowing more money than it earns and saves. The deal did not raise taxes which ultimately puts the burden of debt reduction on savings programs. The country is expected to save $2.4 trillion over the next decade, yet the country is expected to spend a net of $2.4 trillion over the next 18 months. Not only that, the "savings" is expected to be withdrawn from public programs aimed to help those who need it the most, such as social security, Medicare, and education. Can someone explain how this leads to the resolution of spending addiction in American government while restoring economic sustainability?
The economy is highly dependent on one facet, consumer spending, therefore it lives and dies by the sword. Now that we are witnessing consumers drop their spending and pay off credit cards, loans, and save, a majority of the economy has been affected. It is a shame that the plethora of personalities and opinions of US government has become too large to be effective. The government's inability to resolve its economic woes leads me to believe that its lawmakers lack or will not pursue creativity. Other countries have escaped a long-term recession, and although conditions are not near pre-financial crisis levels, growth in many sectors are relatively strong. Yet, signs of a real recovery has started to dissipate everyday.
With rumours swirling that the Fed is about to act, maybe they can do something else other than spend another trillion dollars keeping interest rates low so that the few that still have money left to spend or wish to spend eventually do. Or maybe, America is too addicted to spending it will never find another way to resolve its problems.
Marble Slab for Cheap
Save your movie stub from a recent movie and get a good deal. Have a friend that doesn't like ice cream (blasphemy I say) or is lactose-intolerant? Keep their movie stub and use it to treat yourself. Or, if you don't want to justify spending $12 at the movie to save $3 at Marble Slab, then maybe go through the trash, if you're really that desperate.
I recently exercised the coupon and found that although they have strict rules, which are available on their Facebook page, I found the cashiers and attendants did not enforce it entirely. Actually, the employee did not even verify the paper I gave him was a movie ticket! The seven-day period after is meant only to ensure customers do not forget about the promotion and is not actually a requirement, but use it as early as you can, because the deal ends August 4.
In mid-May, there were some locations that were unaware of the promotion, but I believe most stores know about it now, so you should not face any conflicting information. However, if there are still issues, Marble Slab has suggested people call 1-888-337-7522, their customer service hotline.
Other than that, I hope everyone enjoys their summer. I'll get back to financial posts when I have some spare time.
How Rich People Think
Statistics in the first week of June have shown that another recession may be on the horizon. And to think, we just got out of a recession two years ago. But author Steve Siebold claims that more people will emerge as self-made millionaires than ever in the past during the next five years.
Let's be frank, America is a country full of problems in dire need of solutions. But America is also full of smart entrepreneurs, creative thinkers, and inventors that can turn problems into profitable opportunities. Siebold says that the amount of resources available at our finger tips has never been seen before. Technology has given us the tools to connect with the right people and find information. These tools along with significant problems with energy, the environment, the financial system, and education will breed millionaires.
Steve Siebold, author of "How Rich People Think" (link to view item on Amazon on the left) interviewed hundreds of millionaires over 27 years to determine how these people think and why they succeed where so many have failed. In a recent television interview, he pointed out a few subtle differences in their mindset.
The first thing he mentioned was that millionaires use money as an opportunity rather than a means and they view money as something positive, not as a negative or a fear-based asset.
Siebold writes that millionaires use the money to make more money, while the rest of us save money in fear that we will need it for retirement or that we will be laid off. They earn money and work towards something they want instead of earning money to move away from something they don't want, which is what the masses do. It's like working at a job you dislike and saving enough to leave the place, or you can think like a millionaire and work at a job you dislike, but save enough to start a new life. They may have the same result, but the subtle difference in mindset is key.
He also explains that millionaires view money as something positive, where most people view it as something negative. People who do not have a millionaire mindset will think rich people are greedy, narcissistic, and don't pay their fair share of taxes. It's a very common belief from low and middle income earners. For the first 23 years of my life, I thought rich people were all snobby, and then I worked at a brokerage, soon realizing that the millionaires I dealt with everyday were more optimistic, more respectful, and more tolerant of others. It completely changed my perceptions on rich people. Strangely, I found those who were "poor" had a unique sense of entitlement, wanting things for free, wanting refunds, and complained over the smallest things for reasons they found justified.
Another reason rich people are rich is because they seek resolution during dark times. They reject middle-class cynicism during recessions. It's difficult for people to move forward when the media, friends, and family are negative, yet the ones that rise to the occasion are often spoiled with the riches and goals they desire. It is a little known fact, but more millionaires were made during the Great Depression than in any era of American history. Think for yourself, over the last three years, since the recession started (and ended in 2009), did you find yourself saving money for a rainy day or did you find yourself investing it in assets and creating solutions?
It seems so simple, so why do so few of us ever become high net-worth? It's because we've been trained by those who do not possess riches and think like the common man. We have been taught by people like our parents, friends, church leaders, and maybe an entry-level banker on how to save money. But who in your life has ever taught you to create opportunity with the few dollars you have?
When you treat money as something you earn for being an employee then you become stagnant. Financially, you will never grow. But if you treat money as your employee, as a tool to become wealthier, then you grow as a person, as will your riches.
Let's be frank, America is a country full of problems in dire need of solutions. But America is also full of smart entrepreneurs, creative thinkers, and inventors that can turn problems into profitable opportunities. Siebold says that the amount of resources available at our finger tips has never been seen before. Technology has given us the tools to connect with the right people and find information. These tools along with significant problems with energy, the environment, the financial system, and education will breed millionaires.
Steve Siebold, author of "How Rich People Think" (link to view item on Amazon on the left) interviewed hundreds of millionaires over 27 years to determine how these people think and why they succeed where so many have failed. In a recent television interview, he pointed out a few subtle differences in their mindset.
The first thing he mentioned was that millionaires use money as an opportunity rather than a means and they view money as something positive, not as a negative or a fear-based asset.
Siebold writes that millionaires use the money to make more money, while the rest of us save money in fear that we will need it for retirement or that we will be laid off. They earn money and work towards something they want instead of earning money to move away from something they don't want, which is what the masses do. It's like working at a job you dislike and saving enough to leave the place, or you can think like a millionaire and work at a job you dislike, but save enough to start a new life. They may have the same result, but the subtle difference in mindset is key.
He also explains that millionaires view money as something positive, where most people view it as something negative. People who do not have a millionaire mindset will think rich people are greedy, narcissistic, and don't pay their fair share of taxes. It's a very common belief from low and middle income earners. For the first 23 years of my life, I thought rich people were all snobby, and then I worked at a brokerage, soon realizing that the millionaires I dealt with everyday were more optimistic, more respectful, and more tolerant of others. It completely changed my perceptions on rich people. Strangely, I found those who were "poor" had a unique sense of entitlement, wanting things for free, wanting refunds, and complained over the smallest things for reasons they found justified.
Another reason rich people are rich is because they seek resolution during dark times. They reject middle-class cynicism during recessions. It's difficult for people to move forward when the media, friends, and family are negative, yet the ones that rise to the occasion are often spoiled with the riches and goals they desire. It is a little known fact, but more millionaires were made during the Great Depression than in any era of American history. Think for yourself, over the last three years, since the recession started (and ended in 2009), did you find yourself saving money for a rainy day or did you find yourself investing it in assets and creating solutions?
It seems so simple, so why do so few of us ever become high net-worth? It's because we've been trained by those who do not possess riches and think like the common man. We have been taught by people like our parents, friends, church leaders, and maybe an entry-level banker on how to save money. But who in your life has ever taught you to create opportunity with the few dollars you have?
When you treat money as something you earn for being an employee then you become stagnant. Financially, you will never grow. But if you treat money as your employee, as a tool to become wealthier, then you grow as a person, as will your riches.
The Jersey Shore Epidemic
If "The Guiness Book of World Records" had a category for the longest 15 minutes of fame, the cast of Jersey Shore, mainly Snooki, would most definitely hold that record. The show and cast have become a pop culture sensation to the amazement of me and many, many people around the world, so much so that I think it's becoming an epidemic.
Recently, Snooki appeared on the cover of Rolling Stones, a respectable magazine for music, politics, and pop culture news. Ne-Yo, one of my favourite singers by the way, resented this atrocious decision by Rolling Stones Magazine and really questioned what the editors and decision makers were thinking. She also appeared last week at a university and was paid $32,000 by the student committee to speak, $2,000 more than a Nobel Prize winner to tell students to work hard and party harder and those with a tan were happier. The student body claims that it was money well spent. Oh and today she appeared on Wrestlemania and won (to be fair, I was impressed with her athleticism). It has officially gone too far.
After hearing that she got paid more than most Canadian's salary, I knew that this epidemic of shallowness, this wildfire of stupidity, this contagion of lunacy just had to end. Oh yeah, did I also mention Snooki was so offended by Ne-Yo's comment that she deleted all of his songs off her iPod? Her megalomania really has made her head big. She expects that when she opens her mouth with her boneheaded opinions and crude remarks about others, they should not be offended, but dare a celebrity speak their own opinion about her and it becomes a personal attack. She even replied saying that Ne-Yo's career is in the gutter right now! Listen lady, you've accomplished very little in the eyes of everyone, so don't act like you own a high chair on your high horse. And your hypocrisy: laughable.
Of course, this Jersey Shore epidemic is only spreading because so many people love this show. The thing is, so many claim that they watch this show for their stupidity, but I honestly think it's a cover up for their pure love of the show and cast. I mean, there are people who dress up like Snooki, people who wait in lines to see DJ Pauly D, people who would probably buy an ab machine or workout routine endorsed by Mike "The Situation." Unless I've gone mad, I thought having some association with this show had a negative stigma.
It bothers me that some of my friends watch this show on a regular basis; I know you guys are better than this. Drunken exploits, narcissism, and sex are a dying act on this show. It's a one-trick pony if you will. The fact that much of the cast has not yet finalized a contract with MTV for the fourth season makes me think the show is nearing its end. The show without its most famous stars would only validate this show is trash. Strange as it may seem, there are millions of other airheads that would fit right in, yet the show needs Snooki and The Situation not because they add anything to the show, but because of their undeniable popularity with Generation Y. Once these characters are gone, its novelty erodes.
If that's the case, maybe my misguided anger at terrible television can be directed at K-Town, a rumoured show identical to Jersey Shore which stars Asians. Yes, our stereotypes are being showcased with millions waiting to see. The fact that television continues to air reality trash only validates where the industry is headed. Reality shows provide a cheap alternative for networks who pay their stars a fraction of what they would have to pay professional actors and actresses while collecting the same revenue from advertisers. Financially, it's a well-thought out scheme that has ultimately hindered the growth of television creativity and programming quality. The stars who rise to the top of these shows very often amount to nothing after the show's end, with many relying on future reality shows exploiting their former celebrity.
With the future of society in the hands of this generation, I'm quite worried we'll have another financial catastrophe in 30 years. The best part about that sentence is that fans of Jersey Shore won't get it, but the rest of us most certainly did.
A Light-Hearted Take on Valentine's Day
Every woman wants to feel special and privileged to be a part of your life. On the other hand, no man wants to be perceived as though he's whipped beyond belief. That's where Valentine's Day comes in: a day where you can shower her with love and make her feel like she's your princess. It allows you to do the cheesy things no man would want to get caught dead doing, unless it's on Valentine's Day where you will be praised for taking her on a hot air balloon ride or made her a heart-shaped pizza for dinner.
Don't want to buy her an expensive gift you can't justify spending on during a recession? Fair is fair, so make her something. Women, and even men of the sensitive kind (like me), often prefer the cute and adorable. Flowers, chocolates, bears - yeah they might be generic and overdone, so use them as a complement to your creation. It also adds the benefit of a hedge in case your hand-made craft turns out hideous.
Now I know you naysayers might argue that Valentine's Day is overrated and quite possibly useless or redundant, but is it really? I've heard that saying, "You should celebrate your love for one another every day of the year, not just on Valentine's Day." Yes, yes you should, but unless you shower her everyday with the same added attention and romance most women receive on Valentine's Day, which is rarely the case, you have done little to prove such an argument. I feel confident in refuting your claims that you really do make her feel special every day, or at least once a week.
Think about it in another way. Many of us celebrate our birthdays as a day where we have become older and wiser, but I could argue that we all age everyday and any day could be used as a celebration for that. Christmas is a time for giving and family reunions, but everyday should be a day of giving and a union of family. Thanksgiving is an excuse to stuff our faces with junk and to give thanks to everything we have. I think you know where I'm headed now.
The argument that Valentine's Day is unnecessary is as flawed as those who are opponents of every other major holiday. So instead of trying to pretend you're anti-establishment and have an issue against the globalization and marketing of a non-statutory holiday, just go out and spend $30 on your woman and make her feel awesome. If she's already mad at you for forgetting Valentine's Day or ignoring it, well then, you've already learned the lesson the hard way. Remember, when a woman says "No," it often means yes.
I should note that I do believe that Valentine's Day has become very commercial, along with most major holidays as well, but this article is to discuss the celebration of a relationship and its love, not just about buying her expensive gifts. So take a moment of your busy life and stop. Give her a memory that will outlast every error, every battle, every bad decision you've had and get laid.
Happy belated Valentine's Day.
Dotcom the Sequel
Society was finally embracing technology into their lives. Businesses that were capable of using the Internet as a second outlet to reach a wider audience saw themselves flourishing. The values of many Internet companies double, tripled, even quadrupled in just a few years, even though many never had a quarterly profit. The belief was that massive early expansion would eventually lead to massive cash flows and profits. Investors and corporations speculated on hundreds of publicly traded companies that were at historically outrageous prices. Then in March 2000, the bubble burst, and the formula that pushed up the NASDAQ and its technology components came crashing down. Between 2000 to 2002, $5 trillion of market value disintegrated, combined with the terrorist attacks. But that was a decade ago and a painful, expensive lesson. It was sure to never happen again, or would it?
Many journalists have brought up the idea that a second technology bubble is in the works and I have to agree. Facebook, the obvious poster boy of the debate, has seen exponential growth and valuations. Goldman Sachs's investment in Facebook worth $500 million values FB at $50 billion. Others like Groupon, Living Social, Twitter, FourSquare and even Zynga (develops applications used on Facebook) have seen valuations rise as well.
A few weeks ago, Google offered to buy Groupon for $6 billion but failed after Groupon rejected the offer. Groupon later raised $950 million from private investors. Twitter raised $200 million in December 2010 alone (Blog continues below).
Of course, one significant difference that many point out are the large revenue streams and cash flow. Facebook is estimated to have earned about $1.5 billion in 2010 and earned $800 million in 2009. Twitter also has an estimated revenue of $150 million in 2010 as well, but because these companies are private, these numbers can not be confirmed.
As said, Facebook probably earned $1.5 billion in revenue, not profit, last year and is valued at around $50 billion. To put that into perspective, Dell's current market capitalization is $27.2 billion, nearly half the value of Facebook, but generated $53 billion in revenue and net income of $1.4 billion. Companies like Starbucks and Texas Instruments are also worth less than Facebook but generate at least $1 billion in net income.
Of course, Goldman is clearly paying ridiculous multiples today for big returns tomorrow. But if Facebook does go public against its will, which it most certainly will (if a company has over 500 investors in the US, it must go public), how long before current holders push the sell button? A secondary market with massive liquidity would allow investors who want to get out an opportunity to sell their shares. At 41 times revenue and probably 350 times earnings, Facebook's multiples can only be supported with rapid growth never seen. Most established companies trade at about 15 times earnings. Surely, many investors will wait a few years, but how long before one quarter disappoints?
The most Facebook can grow is twelve times. At almost 600 million active users already and a world population not yet exceeding 7 billion, in which only 2 billion use the Internet, there really is little room for expansion realistically. Not only that, based on those figures, 600 million users earns the company about $1.5 billion. That means each active user generates only $2.50 annually, which sounds right, since I have never paid for anything on Facebook. Starbucks needs to sell just one beverage to match Facebook's awesome earnings power.
To be honest, I have very little experience with venture capitalism and do not find speculative buying combined with buy-and-hold a way to make money, but at these crazy valuations on Facebook and many other media sites, I'm confident in saying that I would never buy a Facebook IPO except to day trade it. Only time will tell how correct we all are though.
Many journalists have brought up the idea that a second technology bubble is in the works and I have to agree. Facebook, the obvious poster boy of the debate, has seen exponential growth and valuations. Goldman Sachs's investment in Facebook worth $500 million values FB at $50 billion. Others like Groupon, Living Social, Twitter, FourSquare and even Zynga (develops applications used on Facebook) have seen valuations rise as well.
A few weeks ago, Google offered to buy Groupon for $6 billion but failed after Groupon rejected the offer. Groupon later raised $950 million from private investors. Twitter raised $200 million in December 2010 alone (Blog continues below).
Of course, one significant difference that many point out are the large revenue streams and cash flow. Facebook is estimated to have earned about $1.5 billion in 2010 and earned $800 million in 2009. Twitter also has an estimated revenue of $150 million in 2010 as well, but because these companies are private, these numbers can not be confirmed.
As said, Facebook probably earned $1.5 billion in revenue, not profit, last year and is valued at around $50 billion. To put that into perspective, Dell's current market capitalization is $27.2 billion, nearly half the value of Facebook, but generated $53 billion in revenue and net income of $1.4 billion. Companies like Starbucks and Texas Instruments are also worth less than Facebook but generate at least $1 billion in net income.
Of course, Goldman is clearly paying ridiculous multiples today for big returns tomorrow. But if Facebook does go public against its will, which it most certainly will (if a company has over 500 investors in the US, it must go public), how long before current holders push the sell button? A secondary market with massive liquidity would allow investors who want to get out an opportunity to sell their shares. At 41 times revenue and probably 350 times earnings, Facebook's multiples can only be supported with rapid growth never seen. Most established companies trade at about 15 times earnings. Surely, many investors will wait a few years, but how long before one quarter disappoints?
The most Facebook can grow is twelve times. At almost 600 million active users already and a world population not yet exceeding 7 billion, in which only 2 billion use the Internet, there really is little room for expansion realistically. Not only that, based on those figures, 600 million users earns the company about $1.5 billion. That means each active user generates only $2.50 annually, which sounds right, since I have never paid for anything on Facebook. Starbucks needs to sell just one beverage to match Facebook's awesome earnings power.
To be honest, I have very little experience with venture capitalism and do not find speculative buying combined with buy-and-hold a way to make money, but at these crazy valuations on Facebook and many other media sites, I'm confident in saying that I would never buy a Facebook IPO except to day trade it. Only time will tell how correct we all are though.
This Canadian Angry at Unemployed Americans
Billions of dollars have been leached from the American taxpayer over a short two-year period, but earlier today, the bleeding may have come to end, at least on this front. No, I'm not talking about the General Motors IPO, which pays back a large portion of TARP, nor am I referring to some big banks which are now making profits. I'm talking about the millions of unemployed Americans who have continued to live off the backs of their fellow working man.
Earlier today, the House blocked a jobless benefits bill that would have seen Unemployment Insurance (UI) benefits extend until the end of February. Instead, the House of Congress decided to put an end to fiscal recklessness, and said enough is enough. I was expecting an uproar from Americans, but I discovered the complete opposite.
As a Canadian living outside the border, I was shocked to see so much division and anger from Americans towards other Americans. Today, there is a very negative sentiment at those who are unemployed. It turns out that many, and I mean many, Americans are purposely unemployed because the UI benefits are more than many jobs are willing to pay. UI currently pays $300 a week for 99 weeks. That's almost $30,000 in just under two years. It might not be a lot to live off, but it's better than the alternative: working hard and getting the same amount of money.
Whatever happened to integrity and character? Hard work and ethics were once great characteristics in a human being, but I guess that's a fool's game now. The entire country is in debt and unemployment rates are sky high; fingers should be pointed at these lazy slobs for creating debt and not accepting jobs (to be clear, I'm referring to those who rejected job offers, not those who really are suffering). I've heard story after story of people writing about their friends who were offered two or three jobs, but declined because they wanted the easy way out.
I used to think that things were really that bad in the US, but it turns out that's not entirely true. Economic data shows nearly ten per cent unemployment and trillion-dollar deficits. Now I actually wonder what the figures would be if all these unemployed, at least the ones who are purposely unemployed, took a job.
But like all short-term, ill-conceived decisions, the consequences are often dire. UI benefits are coming to an end in December; millions of Americans will suddenly need to hit the job market and competition will be more fierce than ever. Call it poetic justice, or karma, or just the natural order, but we'll be seeing many Americans wishing they took that $100 a day job instead of having to fight for a $50 a day job.
I remember reading a story a few months back. A wife made his husband take on a job as a chicken delivery driver. The pay was much less than UI payments, but his wife, reluctant on taking money for free when he had a job offer, made him take the job. So for 9 months, he drove around his city delivering chicken. Then one day, things got better. He stumbled upon an opportunity that would never have existed if he did not take the chicken delivery job. I don't remember what it was, but it was along the lines of an IT job with the company or he met a customer who owned an IT company and needed a specialist. The man now makes significantly higher pay and has great benefits and job security.
It's a lesson that all Americans need to revisit. Opportunities only exist when your skills are being marketed through employment, education, or networking. By hiding your skills, you do yourself no favours.
The government took a big stance on fiscal responsibility today with a side effect of a lesson. The government will not take care of you forever. Good luck living on welfare and food stamps. If it makes you feel any better, you're still going to be living and eating better than half of the world's population.
Quotes from a MarketWatch forum attesting to the above
"I have a friend who turned down TWO jobs because he made more on unemployment. How many know someone like this?"
"Or everyone could finally grow up & learn how to take care of themselves, all by themselves. Like the other 90% of working people already do. "
"I've been trying to hire for months now. It's a high skilled, high paying job. Wish some of these people would've spent some time going back to school or acquiring some marketable skills in other ways."
"Re: I have the same problem. Going on 3 weeks. I think people are spending all their time whining on the net instead of training."
"There may be a role for government to play, albeit a limited one. There are other resources to tap - church, family, and other non-profits. I get tired of everyone looking first and last to government. The only money it has to give out either came from someone else so it is simply redistributing what it took, or it printed/borrowed it. This is the time for neighbors to be neighbors!"
"I believe that a honest man will do whatever he has to do legally to feed family. No matter if he has to work more than one job. I have family members that make $6 per day in the Philippines. Do the math, that is about $1200 a year. And while people are so quick to ignore this because I'm talking about the Philippines my family members have lived frugal lives in order to ensure their family is taken care of. None of the kids had Ipods or PSPs. They didn't have a TV. They ate rice and occassionally had a small amount of chicken on holidays."
Earlier today, the House blocked a jobless benefits bill that would have seen Unemployment Insurance (UI) benefits extend until the end of February. Instead, the House of Congress decided to put an end to fiscal recklessness, and said enough is enough. I was expecting an uproar from Americans, but I discovered the complete opposite.
As a Canadian living outside the border, I was shocked to see so much division and anger from Americans towards other Americans. Today, there is a very negative sentiment at those who are unemployed. It turns out that many, and I mean many, Americans are purposely unemployed because the UI benefits are more than many jobs are willing to pay. UI currently pays $300 a week for 99 weeks. That's almost $30,000 in just under two years. It might not be a lot to live off, but it's better than the alternative: working hard and getting the same amount of money.
Whatever happened to integrity and character? Hard work and ethics were once great characteristics in a human being, but I guess that's a fool's game now. The entire country is in debt and unemployment rates are sky high; fingers should be pointed at these lazy slobs for creating debt and not accepting jobs (to be clear, I'm referring to those who rejected job offers, not those who really are suffering). I've heard story after story of people writing about their friends who were offered two or three jobs, but declined because they wanted the easy way out.
I used to think that things were really that bad in the US, but it turns out that's not entirely true. Economic data shows nearly ten per cent unemployment and trillion-dollar deficits. Now I actually wonder what the figures would be if all these unemployed, at least the ones who are purposely unemployed, took a job.
But like all short-term, ill-conceived decisions, the consequences are often dire. UI benefits are coming to an end in December; millions of Americans will suddenly need to hit the job market and competition will be more fierce than ever. Call it poetic justice, or karma, or just the natural order, but we'll be seeing many Americans wishing they took that $100 a day job instead of having to fight for a $50 a day job.
I remember reading a story a few months back. A wife made his husband take on a job as a chicken delivery driver. The pay was much less than UI payments, but his wife, reluctant on taking money for free when he had a job offer, made him take the job. So for 9 months, he drove around his city delivering chicken. Then one day, things got better. He stumbled upon an opportunity that would never have existed if he did not take the chicken delivery job. I don't remember what it was, but it was along the lines of an IT job with the company or he met a customer who owned an IT company and needed a specialist. The man now makes significantly higher pay and has great benefits and job security.
It's a lesson that all Americans need to revisit. Opportunities only exist when your skills are being marketed through employment, education, or networking. By hiding your skills, you do yourself no favours.
The government took a big stance on fiscal responsibility today with a side effect of a lesson. The government will not take care of you forever. Good luck living on welfare and food stamps. If it makes you feel any better, you're still going to be living and eating better than half of the world's population.
Quotes from a MarketWatch forum attesting to the above
"I have a friend who turned down TWO jobs because he made more on unemployment. How many know someone like this?"
"Or everyone could finally grow up & learn how to take care of themselves, all by themselves. Like the other 90% of working people already do. "
"I've been trying to hire for months now. It's a high skilled, high paying job. Wish some of these people would've spent some time going back to school or acquiring some marketable skills in other ways."
"Re: I have the same problem. Going on 3 weeks. I think people are spending all their time whining on the net instead of training."
"There may be a role for government to play, albeit a limited one. There are other resources to tap - church, family, and other non-profits. I get tired of everyone looking first and last to government. The only money it has to give out either came from someone else so it is simply redistributing what it took, or it printed/borrowed it. This is the time for neighbors to be neighbors!"
"I believe that a honest man will do whatever he has to do legally to feed family. No matter if he has to work more than one job. I have family members that make $6 per day in the Philippines. Do the math, that is about $1200 a year. And while people are so quick to ignore this because I'm talking about the Philippines my family members have lived frugal lives in order to ensure their family is taken care of. None of the kids had Ipods or PSPs. They didn't have a TV. They ate rice and occassionally had a small amount of chicken on holidays."
The Square Root of 1764 Is...
I was watching Arthur earlier today (yes I still watch that show) and Buster asked "the Brain" what was the square root of 1764. Unlike most people, I knew the answer without having to find a calculator.
The question of "What is the square root of ...?" is a common question people ask geniuses. I won't lie, I used to get this question all the time because I was a math whiz, but as a child, I was unable to recognize the simple pattern that existed in numbers. As a result, I never really knew the correct answer, just an estimate.
As I grew older, I soon realized that finding the square root of a number, which would have a rational number as the answer, was actually very simple, and here's how you can show your intellectual superiority to your friends by finding the square root of a number without a calculator, using the example of 1764.
When finding the square root of a number, there are two key components: the last digit (4) and the entire number itself (1764).
The last digit of the number can be used to determine the final digit of the square root. Since numbers are merely a set of patterns, you need only know the squares of the first 9 numbers (0 will always end in 0). The table below illustrates this point.
Using the above method, 1764 has only two possible outcomes: _2 or _8.
The second component now lies within the enitre number itself. Since most people are familiar with the squares of the first ten digits, even twelve, we can use this information to determine that the nearest squares (of a multiple of ten) are 1600 (40x40) and 2500 (50x50). At this point, we realize that the first digit must be a 4_, since anything above 2500 would start with a 50, but because there are two numbers whose square ends in a 4, we must now determine if it is either 42 or 48.
The "distance" of the entire number will result in the final answer. In this case, the distance of 1764 is closer to 1600 than it is to 2500, indicating that the number is closer to 40, than it is 50. Therefore, the answer must be 42!
Here are some other examples for you to try:
3136, 6561, and 1849. You should get 56, 81, and 43. Try getting a friend to ask you what is the square root of ...? and see if you can solve it without using a calculator. As you can see, it's quite easy.
The question of "What is the square root of ...?" is a common question people ask geniuses. I won't lie, I used to get this question all the time because I was a math whiz, but as a child, I was unable to recognize the simple pattern that existed in numbers. As a result, I never really knew the correct answer, just an estimate.
As I grew older, I soon realized that finding the square root of a number, which would have a rational number as the answer, was actually very simple, and here's how you can show your intellectual superiority to your friends by finding the square root of a number without a calculator, using the example of 1764.
When finding the square root of a number, there are two key components: the last digit (4) and the entire number itself (1764).
The last digit of the number can be used to determine the final digit of the square root. Since numbers are merely a set of patterns, you need only know the squares of the first 9 numbers (0 will always end in 0). The table below illustrates this point.
| 1 x 1 = 1 | 11 x 11 = 121 | 21 x 21 = 441 |
| 2 x 2 = 4 | 12 x 12 = 144 | 22 x 22 = 484 |
| 3 x 3 = 9 | 13 x 13 = 169 | 23 x 23 = 529 |
| 4 x 4 = 16 | 14 x 14 = 196 | 24 x 24 = 576 |
| 5 x 5 = 25 | 15 x 15 = 225 | 25 x 25 = 625 |
| 6 x 6 = 36 | 16 x 16 = 256 | 26 x 26 = 676 |
| 7 x 7 = 49 | 17 x 17 = 289 | 27 x 27 = 729 |
| 8 x 8 = 64 | 18 x 18 = 324 | 28 x 28 =784 |
| 9 x 9 = 81 | 19 x 19 = 361 | 29 x 29 = 841 |
Using the above method, 1764 has only two possible outcomes: _2 or _8.
The second component now lies within the enitre number itself. Since most people are familiar with the squares of the first ten digits, even twelve, we can use this information to determine that the nearest squares (of a multiple of ten) are 1600 (40x40) and 2500 (50x50). At this point, we realize that the first digit must be a 4_, since anything above 2500 would start with a 50, but because there are two numbers whose square ends in a 4, we must now determine if it is either 42 or 48.
The "distance" of the entire number will result in the final answer. In this case, the distance of 1764 is closer to 1600 than it is to 2500, indicating that the number is closer to 40, than it is 50. Therefore, the answer must be 42!
Here are some other examples for you to try:
3136, 6561, and 1849. You should get 56, 81, and 43. Try getting a friend to ask you what is the square root of ...? and see if you can solve it without using a calculator. As you can see, it's quite easy.
The Dow Jones: Evolving Beyond Its American Industrial Roots
Since 1928, the Dow Jones has consisted of 30 companies. Unlike its origins, today's "Industrial" portion of its name mainly holds tradition, with companies in the field of finance, retail, pharmaceuticals, and food bearing a larger portion of the Dow. These companies include Bank of America, Wal-Mart, Pfizer, and McDonald's, better representing today's current composition of the American economy. They can be found in the heart of down towns of metropolitan cities, in strip malls of suburban neighbourhoods, and concentrated commercial areas of small towns. The American economy has grown well beyond its industrial roots, focusing heavily on services and consumer goods, now the biggest driver of American GDP.
But over the past two years, America has struggled to emerge out of a economic hardship, dare I say recession? Meanwhile, the Dow Jones and other American financial instruments have soared since the financial crisis of 2008 that triggered a near collapse of the American empire. And why? Low interest rates and a dropping US currency has helped add to boost the value of many investment vehicles, but the bulk of the growth in the market is the continued global expansion of the 30.
Companies like McDonald's, Wal-Mart, Coca-Cola, Hewlett-Packard began expanding to the Far East more than a decade ago, and investments in Asia, mainly China, are starting to pay off. China continues to develop economically at double digit growth, very similar to the early 1900's of the United States, as well as Canada. But the major difference is that China had 1.2 billion people at the turn of the century when it was becoming a more capitalist country, and Canada and the United States had less than 1/10th of that, roughly 85 million.
Middle-income earners in China now have the luxury of better food, computers, vehicles, and furniture, trying to emulate the American way, which was once the envy of the world. As a result of this increased power, middle-incomers in China have given American companies more and more money by purchasing their goods. And more jobs in China are being created by Dow companies than are being created in America by all companies combined. As we head into 3Q earnings season, we will see many companies post profits that would have been unattainable in the 1980's during economic hardship in the United States.
Disgruntled traders have mistakenly shorted the market basing their strategies on a distressed American economy. Perception is reality, not always. Traditional trading methods may have proven profitable, but globalization has weeded out poor traders unwilling to admit to the reality of the 21st century.
Over the past year, earnings reports from multinationals have been stellar, but many admit that less than half their revenues now stem from America. And with Q3 earnings now underway, we could soon see more conglomerates share this information.
The companies of the Dow Jones reliance on the American people for profits will continue to diminish if China's expansion is for real. In a not-too-distant future, the Dow Jones, which will still consist of 30 of the largest and best American companies, will no longer represent the state of America, but represent the global economy and how the shift of power has moved to the East.
Consider this: America's estimated population is about 310 million, about one quarter of the population of China, and only 4.5 per cent of the world's population. The Dow Jones, which turns 126 years old this month, has seen itself start off as a railroad heavy index focused solely on American growth turn to a more consumer-based index focused on global expansion. Over the next 126 years, there will be major changes in the world and the directional flow of money. It is highly conceivable that growth in every part of the world will be fairly equal, meaning the 30 companies of the Dow Jones will earn only 5 per cent of their income from America and evolve well beyond its American industrial roots.
Double Down Comes to Canada
The Double Down Sandwich, contains two strips of bacon, two slices of cheese, and sauce ensconced between two chicken breasts, instead of the traditional bun. But before you become the head spokesperson for healthy living and condemn this sandwich, this heart attack-inducing burger's "nutrition" is comparable to many other burgers in the market.
The Double Down contains 540 calories and 32 grams of fat, healthier than the Whopper from Burger King, boasting a calorie count 670 calories and 39 grams of fat. It is also similar to the Big Mac, containing 540 calories and 29 grams of fat. But the Double Down contains 1,310 mg of sodium, almost half the maximum required daily intake of the average person. So the sandwich would give you a stroke before you clog your arteries.
KFC also admits that this sandwich is not a healthy choice, claiming it as an indulgence food, not a replacement item.
The lines at KFC on the first day of release probably will not be as chaotic as the lines at the Apple store on the first day of a release filled with hypnotized tools of marketing, but be prepared to wait a few minutes in line, most likely surpassing the average Toonie Tuesday line.
Will I try it? Probably, but only half a burger, because I don't really like the taste of chicken, but I definitely have to try one. KFC claims it will be temporary, but if it is as successful as it is in the US, don't be surprised if the Double Down becomes a staple in the KFC menu.
Budweiser Rules
We've all seen the ads, but who here remembers all the rules? I don't know where Budweiser Canada came up with these but it's definitely caused a buzz throughout consumers.
I've compiled a list of all the rule numbers I've seen and will update this as soon as possible, even if it takes us ten years. Nearly all the links are sourced back to Budweiser Canada's Facebook fan page videos, with some linking to other sources. Some rules were not available on video and were witnessed from other Budweiser sources, such as, but not limited to, their website, newspaper or print advertising, online banners, and radio. If you know of any rules, please comment and I will update as soon as possible. Please post real "rules" only. Thanks.
Rule #12, Buds don't let buds drink and drive
Rule #15, It's not over, till it's over
Rule #16, Keep the faith (unverified)
Rule #19, Keep your friends close
Rule #20, Keep your enemies closer
Rule #23, Leave no man behind
Rule #26, There are no small victories
Rule #32, Live the dream
Rule #34, Be a gentlemen
Rule #36, Show your true colours
Rule #37, You can't win if you don't get in the game
Rule #38, Make the call
Rule #41, Take one for the team
Rule #42, Take it in stride
Rule #47, Own the party (website)
Rule #48, Chart a course
Rule #72, Live Large (unverified)
Rule #73, Go Big or Go Home (unverified)
Rule #75, Buckle up
Rule #76, Choose your friends wisely
Rule #79, Set the pace
Rule #88, Sundays are sacred
Rule #93, Seeing is believing
Rule #95, Party as hard as you work (unverified)
Rule #99, Follow detours
Rule #117, Cut loose (Calgary Stampede banner)
Rule #145, Rise to the occasion
Rule #186, Don't pay for something you can get for free (website)
Rule #196, Bring your game
(Last updated Apr 5, 2011)
Understanding the "End of the Recession"
Earlier this week, the National Bureau of Economic Research (NBER) released data concluding that the American recession had ended nearly 15 months ago, back in June of 2009. But for those living outside the world of numbers, also known as reality, the recession is still hitting hard.
Recent data suggests that about 1 in 7 Americans are living below the poverty line, which is a direct result of a "jobless recovery." Unemployment in America has steadily held just under ten per cent for a few consecutive months, and underemployment, a better indication of the job market, shows that almost 19 per cent of Americans are not working the amount of hours they want. With so many having trouble making ends meet, many question how the NBER claimed that the recession ended 15 months ago.
The reason is that a recession is defined only as two or more consecutive quarters of negative GDP growth. The image (see below) shows that negative growth ended in June 2009, preceded by four quarters, or one full year, of negative growth. However, those impacted via the job market, falling credit, and increasing debt will argue that the recession is still a reality for too many.
Courtesy of www.tradingeconomics.com
The chart also tells a tale of a potential double-dip recession. The last two quarters have seen GDP growth decelerate and it is not unlikely for the next report, due in October, to show negative growth, the first criterion for a new recession. To be clear, GDP growth is a net figure, which accounts for inflation. For example, if the real economic output increased 5 per cent, but inflation rose 3 per cent, GDP growth would be reported as 2 per cent.
Inflation can mean either the increase of money supply, which we are seeing today, or the increase in overall prices. A lack of inflation in the American economy is the only reason they are not yet back in a recession, but as the US continues to print money, it is only a matter of time before inflation kicks in.
The reason I point this out is because worries about deflation (a prolong drop in the prices of goods) was brought up at the last Fed minutes, released Tuesday September 21. If deflation some how became a reality, GDP figures could show substantial growth, even though economic output may decrease. But, with the US continuing to print money, ever increasing their debt, it is more likely that inflation will take place before deflation.
What is troubling is that the potential for inflation will co-exist with tepid economic growth. It is highly possible for many Americans to earn next to nothing and be forced to battle increasing costs of goods, which could lead to cost-push inflation, a type of inflation caused by increasing costs to producers (such as raising wages demanded by workers to pay for goods) passing the buck on to consumers. It would just be a never ending cycle only to be resolved by real economic growth, if that ever happens.
Recent data suggests that about 1 in 7 Americans are living below the poverty line, which is a direct result of a "jobless recovery." Unemployment in America has steadily held just under ten per cent for a few consecutive months, and underemployment, a better indication of the job market, shows that almost 19 per cent of Americans are not working the amount of hours they want. With so many having trouble making ends meet, many question how the NBER claimed that the recession ended 15 months ago.
The reason is that a recession is defined only as two or more consecutive quarters of negative GDP growth. The image (see below) shows that negative growth ended in June 2009, preceded by four quarters, or one full year, of negative growth. However, those impacted via the job market, falling credit, and increasing debt will argue that the recession is still a reality for too many.
Courtesy of www.tradingeconomics.com
The chart also tells a tale of a potential double-dip recession. The last two quarters have seen GDP growth decelerate and it is not unlikely for the next report, due in October, to show negative growth, the first criterion for a new recession. To be clear, GDP growth is a net figure, which accounts for inflation. For example, if the real economic output increased 5 per cent, but inflation rose 3 per cent, GDP growth would be reported as 2 per cent.
Inflation can mean either the increase of money supply, which we are seeing today, or the increase in overall prices. A lack of inflation in the American economy is the only reason they are not yet back in a recession, but as the US continues to print money, it is only a matter of time before inflation kicks in.
The reason I point this out is because worries about deflation (a prolong drop in the prices of goods) was brought up at the last Fed minutes, released Tuesday September 21. If deflation some how became a reality, GDP figures could show substantial growth, even though economic output may decrease. But, with the US continuing to print money, ever increasing their debt, it is more likely that inflation will take place before deflation.
What is troubling is that the potential for inflation will co-exist with tepid economic growth. It is highly possible for many Americans to earn next to nothing and be forced to battle increasing costs of goods, which could lead to cost-push inflation, a type of inflation caused by increasing costs to producers (such as raising wages demanded by workers to pay for goods) passing the buck on to consumers. It would just be a never ending cycle only to be resolved by real economic growth, if that ever happens.
Has Disney Lost Its Magic?
Time and time again, I've heard adult's say that children's shows today aren't as good as when they were younger. Now, whether this is an accurate representation of the decreasing quality in television programming is debatable. Many argue that it is the maturing of an individual and their evolving taste that results in this belief, all the while, still adoring their own childhood favourites because of the dose of nostalgia that it brings. I once heard an older gentlemen tell me that the programming of my childhood were downright terrible, and could never replace his favourite shows. But growing up as a child of the 1990's, I personally believe that I was treated to a myriad of great cartoons, including my favourites the Ninja Turtles, Aladdin, and TaleSpin.
Many of these shows shaped my life and probably the lives of many other kids too. Why, the reason I love pizza is because of a quartet of mutant turtles who also loved them too.
Disney is, and always will be, an integral part of the lives of youth in North America. It has created dozens of great tv shows and movies that made childhood so fun. When most of us think of Disney, we are immediately reminded of Mickey Mouse, Disneyland, or princesses finding a handsome prince. But, as I have evolved into an adult myself, I have noticed a shift in Disney's programming line-up that may potentially end Disney's roots.
For decades, Disney brought magic to the forefront of their cinemas and captured audiences around the world. These timeless tales will be shared for generations and have been immortalized in the Disney theme parks. But starting around the turn of the century, the same time Robert Iger became president, and later in 2005, CEO, we have seen a large shift in the paradigm of Disney programming. I for one believe that Disney's reputation as a magical company will soon be lost and Iger could be to blame.
The resurgence of Disney occurred during the Eisner era, considered the Disney Renaissance. Michael Eisner moulded Disney into a dominant corporation which reached children and parents through family-oriented movies that revolved around fairy tales and stories of heroism. The movies released during his era include The Little Mermaid, Beauty and the Beast, Aladdin, The Lion King, and Pocahontas, each having won two Oscars. But as his reign ended, and Robert Iger took over, so too did the quality of Disney movies and programming. Tarzan (1999), the last movie of the Eisner era, was the last time any Disney film won an Oscar award, a testament to the success of Eisner or possibly the lack of success of Iger.
Disney's large focus on teen dramas for television programming has created successful shows like Hannah Montana and That's So Raven. But unlike Disney creations of the past, shows today focus on youth problems, such as relationships and family, not heroes battling mobsters, evil wizards, or space aliens. These major shifts in programming leads me to believe that Disney is attempting to attract a different target audience, mainly pre-teen girls.
Another major alteration to Disney's programming and marketing is the subtle focus from teams or groups to one main character. Even the titles in today's television programming suggests the star of the show is Hannah Montana or Sonny Monroe, not The Rescue Rangers or the Gummi Bears. These changes will ultimately decrease the longevity and long-term popularity and nostalgic commerciability. In fact, some of the most popular cartoon series of the 1990's are team-related shows, including the Ninja Turtles, Care Bears, and Power Rangers. Side note, there is a running joke that the Power Rangers was racist because of their suit colours, but really, it is marketing technique.
The idea behind teams and groups was not only designed to promote team work, equality, and unity, but to market to a wider range of children and their different personalities. So many shows, not just Disney, used colours and varying personalities to attract children. They would include an athletic character, a shy character, a smart character, a clumsy character, and a humourous character, alongside many other possible personalities. This is how children create "favourite characters," something that seems to be lacking in today's shows because of its one-character focus.
Adult hit shows, like Friends, The Big Bang Theory, and How I Met Your Mother have also developed multiple characters with multiple personalities. I'm sure everyone had a favourite Friends character because of how we identified them. Chandler was the witty-remarked one, Monica the clean-freak, Rachel the ditz, and so on. It was a formula that has proven to work in all genres.
Disney's new format of live-action teen dramas has proven to be profitable, but its longevity wears off. Lizzie McGuire and That's So Raven, two shows which ceased productions years ago, were once extremely popular, but do not sell merchandise anymore. Meanwhile, shows like Duck Tales and TaleSpin continue to sell DVDs and memorabilia because of the nostalgia. Even Lilo & Stitch, a show made after the Eisner era, continues to sell merchandise because of Stitch's cuteness. Other brands like Hello Kitty and Ninja Turtles also prove popular in today's market with adults and children. Walk into a Disney Store or outlet and see what plush toys, dolls, or collectibles are up on stock. It's usually Winnie the Pooh, Mickey, and the Chipmunks, characters which never age and carry that longevity that I keep bringing up. Or, consider going to a Disney theme park and notice what characters continue to play a large role in upkeeping the Disney magic. It's Snow White, Sleeping Beauty, and Jasmine, as well Mickey and Minnie.
Even with the purchase of Pixar Studios in 2006, Disney's magic touch is still lost. Films like Finding Nemo and Toy Story are considered the best CGI films ever for its originality, its quality of story-telling, its creativity, and its imagination. Almost five years later, viewers of Disney-Pixar collaborations, like Up! and Toy Story 3, still give credit to Pixar, not Disney, a sign that movie viewers regard Pixar as a separate imaginative entity. This is because people regard Disney as the king of hand-drawn animation, which brought the company to its pinnacle in 1999.
But many do not know that Disney had planned on halting 2-D, hand-drawn animated films. John Lasseter, who once as an employee criticized Disney for being uncreative in the past, helped create The Princess and the Frog in 2009, saving Disney's spirit and roots as a classic movie creator. What would have become of Disney if hand-drawn movies were no longer a staple in Disney's video vault?
The former king of cartoons, Walt Disney, if he were alive today, would have seen his company evolve into something he would have hated. Disney was once a company that told creative stories of fantasy and fairy tales. These stories gave children of all ages and of both genders magic and wonderment, memories and inspiration. But we have seen major changes in programming during the reign of Iger that have resulted in the production of teen drama programming and regurgitated movies during the 2000's, titles that bombed at the box office and have very little chance at future success.
Where did all the creativity go once Iger took over? It would not be fair to blame it all on him for the disappearance of the magic of Disney, but considering the decisions and results that have come out of Disney Imagineering, it could be justified.
Revenue Streams Shifting
Disney's revenue stream from its Studio Entertainment division, once represented half of the company's overall profits, but as the company grew, so did its other divisions. However, growth from Studio Entertainment peaked in 2004 and has since declined (see Wikipedia link). Revenue from this division now generates less revenue than it did before it merged with Creative Content in 1996. Consumer product sales have also declined sharply at the end of the Eisner era, evidence supporting that the lack of creative and memorable shows have proven to be profitable only in the short-term.
Now, nearly a half of the company's revenue comes from the theme park and its Media Network, which include television stations like ESPN, Disney Channel, and ABC, which make their money from advertising.
So what can Iger do with Disney to revive its name and identity? The first step was making sure Lasseter continues to lead the creative team. Disney's identity was almost lost in the mix of Pixar movies, and Disney must reclaim its reign as cartoon king. Secondly, if Iger insists on creating live-action shows, consider adding villains back into the picture. Classic television needs heroes to guide children because more children look up to heroes, not teenagers. It worked with Power Rangers, it can work again. Lastly, focus on creating shows with longevity and tie it in with Disney Media Networks. Memorable characters allow fans to collect toys, purchase products and merchandise that will add to the top and bottom line. Adults today, who grew up in the 1980's and 1990's are now buying DVD sets, toys, and clothing from their favourite shows, generating huge profits.
Iger took over a company whose brand was highly regarded, but today is being trashed. Major shifts back to an Eisner-like era would be easily accepted in today's market and would be inexpensive to pursue. Iger has to remember that the profitability of Disney, as important as it may be, must be secondary. The magical world of Disney (also a title of their Sunday night movies) must be upheld to the highest standards with integrity. The money will come along once Disney's reputation as a magical company is restored.
Many of these shows shaped my life and probably the lives of many other kids too. Why, the reason I love pizza is because of a quartet of mutant turtles who also loved them too.
Disney is, and always will be, an integral part of the lives of youth in North America. It has created dozens of great tv shows and movies that made childhood so fun. When most of us think of Disney, we are immediately reminded of Mickey Mouse, Disneyland, or princesses finding a handsome prince. But, as I have evolved into an adult myself, I have noticed a shift in Disney's programming line-up that may potentially end Disney's roots.
For decades, Disney brought magic to the forefront of their cinemas and captured audiences around the world. These timeless tales will be shared for generations and have been immortalized in the Disney theme parks. But starting around the turn of the century, the same time Robert Iger became president, and later in 2005, CEO, we have seen a large shift in the paradigm of Disney programming. I for one believe that Disney's reputation as a magical company will soon be lost and Iger could be to blame.
The resurgence of Disney occurred during the Eisner era, considered the Disney Renaissance. Michael Eisner moulded Disney into a dominant corporation which reached children and parents through family-oriented movies that revolved around fairy tales and stories of heroism. The movies released during his era include The Little Mermaid, Beauty and the Beast, Aladdin, The Lion King, and Pocahontas, each having won two Oscars. But as his reign ended, and Robert Iger took over, so too did the quality of Disney movies and programming. Tarzan (1999), the last movie of the Eisner era, was the last time any Disney film won an Oscar award, a testament to the success of Eisner or possibly the lack of success of Iger.
Disney's large focus on teen dramas for television programming has created successful shows like Hannah Montana and That's So Raven. But unlike Disney creations of the past, shows today focus on youth problems, such as relationships and family, not heroes battling mobsters, evil wizards, or space aliens. These major shifts in programming leads me to believe that Disney is attempting to attract a different target audience, mainly pre-teen girls.
Another major alteration to Disney's programming and marketing is the subtle focus from teams or groups to one main character. Even the titles in today's television programming suggests the star of the show is Hannah Montana or Sonny Monroe, not The Rescue Rangers or the Gummi Bears. These changes will ultimately decrease the longevity and long-term popularity and nostalgic commerciability. In fact, some of the most popular cartoon series of the 1990's are team-related shows, including the Ninja Turtles, Care Bears, and Power Rangers. Side note, there is a running joke that the Power Rangers was racist because of their suit colours, but really, it is marketing technique.
The idea behind teams and groups was not only designed to promote team work, equality, and unity, but to market to a wider range of children and their different personalities. So many shows, not just Disney, used colours and varying personalities to attract children. They would include an athletic character, a shy character, a smart character, a clumsy character, and a humourous character, alongside many other possible personalities. This is how children create "favourite characters," something that seems to be lacking in today's shows because of its one-character focus.
Adult hit shows, like Friends, The Big Bang Theory, and How I Met Your Mother have also developed multiple characters with multiple personalities. I'm sure everyone had a favourite Friends character because of how we identified them. Chandler was the witty-remarked one, Monica the clean-freak, Rachel the ditz, and so on. It was a formula that has proven to work in all genres.
Disney's new format of live-action teen dramas has proven to be profitable, but its longevity wears off. Lizzie McGuire and That's So Raven, two shows which ceased productions years ago, were once extremely popular, but do not sell merchandise anymore. Meanwhile, shows like Duck Tales and TaleSpin continue to sell DVDs and memorabilia because of the nostalgia. Even Lilo & Stitch, a show made after the Eisner era, continues to sell merchandise because of Stitch's cuteness. Other brands like Hello Kitty and Ninja Turtles also prove popular in today's market with adults and children. Walk into a Disney Store or outlet and see what plush toys, dolls, or collectibles are up on stock. It's usually Winnie the Pooh, Mickey, and the Chipmunks, characters which never age and carry that longevity that I keep bringing up. Or, consider going to a Disney theme park and notice what characters continue to play a large role in upkeeping the Disney magic. It's Snow White, Sleeping Beauty, and Jasmine, as well Mickey and Minnie.
Even with the purchase of Pixar Studios in 2006, Disney's magic touch is still lost. Films like Finding Nemo and Toy Story are considered the best CGI films ever for its originality, its quality of story-telling, its creativity, and its imagination. Almost five years later, viewers of Disney-Pixar collaborations, like Up! and Toy Story 3, still give credit to Pixar, not Disney, a sign that movie viewers regard Pixar as a separate imaginative entity. This is because people regard Disney as the king of hand-drawn animation, which brought the company to its pinnacle in 1999.
But many do not know that Disney had planned on halting 2-D, hand-drawn animated films. John Lasseter, who once as an employee criticized Disney for being uncreative in the past, helped create The Princess and the Frog in 2009, saving Disney's spirit and roots as a classic movie creator. What would have become of Disney if hand-drawn movies were no longer a staple in Disney's video vault?
The former king of cartoons, Walt Disney, if he were alive today, would have seen his company evolve into something he would have hated. Disney was once a company that told creative stories of fantasy and fairy tales. These stories gave children of all ages and of both genders magic and wonderment, memories and inspiration. But we have seen major changes in programming during the reign of Iger that have resulted in the production of teen drama programming and regurgitated movies during the 2000's, titles that bombed at the box office and have very little chance at future success.
Where did all the creativity go once Iger took over? It would not be fair to blame it all on him for the disappearance of the magic of Disney, but considering the decisions and results that have come out of Disney Imagineering, it could be justified.
Revenue Streams Shifting
Disney's revenue stream from its Studio Entertainment division, once represented half of the company's overall profits, but as the company grew, so did its other divisions. However, growth from Studio Entertainment peaked in 2004 and has since declined (see Wikipedia link). Revenue from this division now generates less revenue than it did before it merged with Creative Content in 1996. Consumer product sales have also declined sharply at the end of the Eisner era, evidence supporting that the lack of creative and memorable shows have proven to be profitable only in the short-term.
Now, nearly a half of the company's revenue comes from the theme park and its Media Network, which include television stations like ESPN, Disney Channel, and ABC, which make their money from advertising.
So what can Iger do with Disney to revive its name and identity? The first step was making sure Lasseter continues to lead the creative team. Disney's identity was almost lost in the mix of Pixar movies, and Disney must reclaim its reign as cartoon king. Secondly, if Iger insists on creating live-action shows, consider adding villains back into the picture. Classic television needs heroes to guide children because more children look up to heroes, not teenagers. It worked with Power Rangers, it can work again. Lastly, focus on creating shows with longevity and tie it in with Disney Media Networks. Memorable characters allow fans to collect toys, purchase products and merchandise that will add to the top and bottom line. Adults today, who grew up in the 1980's and 1990's are now buying DVD sets, toys, and clothing from their favourite shows, generating huge profits.
Iger took over a company whose brand was highly regarded, but today is being trashed. Major shifts back to an Eisner-like era would be easily accepted in today's market and would be inexpensive to pursue. Iger has to remember that the profitability of Disney, as important as it may be, must be secondary. The magical world of Disney (also a title of their Sunday night movies) must be upheld to the highest standards with integrity. The money will come along once Disney's reputation as a magical company is restored.
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