Wealth Transfer: Savers -> Spenders

A friend made a comment over the weekend that high inflation would be yet another wealth transfer from savers to spenders. There is a good opinion piece in the Washington post today that enumerates the other ways the government transfers wealth from the prudent to the risk takers

Difference Between Goals and Objectives

Business cases often require a statement of goals and objectives. I did not know until after I left business school that they are actually different. One of my senior colleagues gave me a business template to fill out that had a short answer for both and I had to ask "What is the difference?" I soon learned that goals are what you are trying to acheive and objectives are the milestones that you will complete to reach those goals. For me, goals are strategic and objectives are tactical. If liberty is the goal, increased democracy could be an objective.

This is helpful when it comes to personal organization, market research, business plans, and just about any planning activity.

Wild Thing Spike Jonze

There is a great article in the Times about Spike Jonze and the making of Where the Wild Things Are. Check it out. It is worth the time.

Ketchup Economists and Pricing

Krugman has a lengthy piece in the Times this weekend about how economists got is so "wrong." Krugman is referring to the current recession. He has a good notion in there, about Ketchup economics. It goes like this: if a one quart bottle of ketchup costs X than a two quart bottle of ketchup should cost 2X. For me, the notion is one of pricing. Krugman talks about this in relationship to how people justified the housing bubble. He attributes this to Larry Summers. I think it is very illustrative of pricing. Competitive pricing is only one piece of value a good or service.

A lot times people make arguments about what price something should be. On the job, as a marketer, pricing is a key responsibility to address. In business school, I took away three ways that pricing actions should be taken:

1. Competitive - This is very simple, "how much are your competitors charging?" But it can also get very complex. In most pricing exercises, especially business to business ones, there is no perfect competitors. Often times there are substitutes that overlap with some of your offer's capabilities.

2. Economic Value - This is pricing an object by the economic value it yields to the recipient. For example, flying from Washington DC to Boston saves 2 hours over driving, nominally. This would mean that the price of that flight should be the price of driving plus the value of your time multiplied by the hours on the plane because of the savings.

3. Cost-based - This is based on the cost it requires the produce, plus some margin. This is typically used in commodities and manufacturing products.

The ketchup economists are using the competitive or market based pricing and not really taking into consideration the economic and intrinsic value of the good. The less those other two legs are taken into account, the more ripe the market is for a pricing correction by a new entrant or in the housing standpoint, a bubble bursting.

Buffett's for Bartlett's

I like Warren Buffett's homespun thoughts on business and life. Makes me think I should start keeping track of the ones that I really like. Here are a couple that really stick in my craw, in a good way:

But it was a wise man who said, “All I want to know is where I’m going to die so I’ll never go there.”

-Warren Buffett, NYTimes.com, 2009-08-18

After all, you only find out who is swimming naked when the tide goes out.

-Warren Buffett, Chairmens Letter 2002-02-28

Google Search Tools to Make Research Easier

Google has some really great features in their search engine that are frequently overlooked when doing research. Two of the most useful are site searching and "site:" and "define:"

1. Define: - Using "define:" is a very quick way to get common definitions for words without having to bare the clutter and adds of an online dictionary. For example using "define:PCI" returns "peripheral computer interface", "payment card industry", and picoCuries. This is helpful while exploring new areas and technologies. Or even using it for common words that I do not normally know. Like kafka-esque..

2. Site: - This is one of my favorites. It is often useful for searching sites for specific articles on certain topics. It is often more useful then using the site's native search itself. It is especially helpful if you are doing competitive intelligence. For example, if you are searching a competitors site for specific topic to see if they are using that same messaging you use "site:Message." For example, if I were to do a search on HP to see if they have OLED displays for their laptops, I would type "site:hp.com oled laptop". I also like to use them to find specific article formats. For example, all PowerPoint presentations "ppt" or "pdfs" containing keywords on the site.

Use them wisely. They will save you time and give you better search results!

"Did a single broker ever complain to a media outlet that reporters were being "too optimistic" about house prices...?"

My mother recently gave me a hard time for not warning her about the impending doom in the markets. I do remember questioning, gently, at the time about investing in real estate as she considered a vacation home. My major gripe was that even being in the upper-half on the income spectrum, I could not afford a home in most of the cities that I have worked. This article draws a connection between the rise and incomes and the rise in home prices. It also figures that we are not at the bottom. This is good analysis! Perhaps my predictions of the Journals quality death were premature...

Aw Snap!

I got this "Aw Snap!" error when I load Google's Chrome browser. I have been running Chrome since it was released. This link had a remedy for the problem. It's possible that something my employeer loaded on my computer that broke it. 

However, I have been having really flaky performance from Chrome at home and at work ever since I installed the "local" email and did the multi-panes of inboxes. It has been a real pain. For the first time, I have been feeling let down by Gmail. I have also noticed a bunch of people switching back to Yahoo mail recently... That could be the power of suggestion though.

Relationship Between Budgeting and Health

The more I spend eating out, the less healthy I eat. When I go to the grocery store I do not purchase cookies and cheeseburgers. When I eat out, I inevitably will choose cookies with cheeseburgers.

The past few weeks have been a good time to apply some of my lessons from work to my personal life. I have been doing a little bit better job of cleaning up my Quicken data from 2008 so that I can do some analysis. Nothing too surprising. I did spend an appalling amount of money on dining out. I bought my lunch at work almost every day. That is a big factor. All that money would be fine, but I think a lot of the food that I eat out is pizza and burritos, like most people. I don't think that is very healthy.

In 2009, I am going to spend a lot more time grocery shopping and then cooking. As you can see from the graph, I could probably spend $1000 more on grocers and $2000 less on eating out and eat much better. If I am still around in 2009, I'll post an update.

Buying the Market

John Bogle, founder of Vanguard, has a prescriptive post on the WSJ.com website. I think it is pretty cut and dry and I like his advice. Although, I think he can be a little windy in the interviews I have heard with him.

It is interesting his point about buying the market. If you look at Vanguard's Total Market ETF, it has outperformed the S&P500 significantly over the past 8 years.

Rent vs Buy Calculator

This Rent vs. Buy calculator on the NYTimes.com website is one of the best financial tools around. It even has an advanced tab on the right hand side that let's you calculate all of those second order things that affect the ROI. Check it out..