Investing Curiouscatblog

Author: John Hunter

  • China’s Job Market

    Students Grow Desperate Over China’s Tight Job Market

    The Labor and Social Security Ministry estimated recently that as many as 4.9 million youths will graduate from universities by the end of 2007, up by nearly 20 percent over 2006. Another 49.5 million will graduate from high school, also a 20 percent increase. The sharp climb in graduation rates represents a dramatic improvement in the lives of many Chinese, made possible by the economic transformation that has taken place here over the past quarter-century.

    But indications have emerged that, booming as it is, the economy may not be able to absorb that many degree-holders into the jobs for which they are being trained. “The fact is that it’s very hard for college students to get the right job these days,” said Zhang Xuxin, a Zhengzhou student with close-cropped hair and plastic-rimmed glasses who plans to pursue postgraduate studies next year. “You may have a job, but it’s very hard to have an ideal one.”

    Growing an economy to create huge numbers of even decent jobs is very difficult, especially when starting from where China and India were in 1990. Often the strength of China’s economy blinds people to the continued great difficulty. Good jobs are the lifeblood of an economy. China has lost far more manufacturing jobs than any other country. Yes, even as they have grown their manufacturing production enormously. The entire world is increasing manufacturing output while decreasing manufacturing employment, see: Manufacturing Jobs Data: USA and China.

    Graduates shut out of job market
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  • Europe and USA Housing Price Boom

    The booms in Spanish and Irish real estate make the US real estate boom look timid

    Central banks are concerned that recent pursuance of housing price growth in both countries wasn’t supported by fundamentals. The Irish national Bank stated in its latest financial stability report that the 2006 price surge wasn’t expected. In Spain, the Central bank has already issued some warnings regarding credit risk monitoring. The IMF Directors noted “that an abrupt correction cannot be ruled out” in Ireland.

    Cotis from the OECD has acknowledged that several big countries are at risk of a housing downturn: with the USA, France and the UK topping the list. But, given the extreme dependence of both Spain and Ireland on housing, both countries are even more exposed to a sharp correction.

  • Pork Sugar

    A good article from the New Yorker – Deal Sweeteners:

    But American sugar producers aren’t satisfied with supplying the most sweet-hungry population in the world. They’ve relentlessly sought—and received—special favors from the federal government, turning the industry into one of the most cosseted in America today. The government guarantees producers a fixed price for domestic sugar and sets strict quotas and tariffs for foreign sugar. Economically speaking, this has many obvious bad results. It keeps sugar prices in the U.S. at least twice as high as the world average. It makes it harder for companies that use lots of sugar to do business here—in the past decade, an exodus of candy manufacturers from the U.S. has eliminated thousands of jobs.

    Related: China and the Sugar Industry Tax Consumers

  • Telephone Savings

    Update: I would not even consider using Vonage. Any company that takes you money using there online site and then refuses to cancel your service without you call them is exactly like the traditional phone companies they try in ads to say they are different than. Then you call and then force your through a ridicules voice mail tree and then they tell you you have to call back between 9-5 on weekdays to have the privilege of not having them take your money. Completely unacceptable behavior. You can get VOIP phone service without a monthly free now via Ooma by purchasing a device to plug your broadband internet connection into (I got mine for $203 via Amazon).

    old post:
    Cutting expenses is a great way to free up money to add to savings.

    A couple years ago I switched to Vonage for my phone service. They provide phone service through my DSL high speed internet line. I play just $18/mo for local and long distance calls (this is for 500 minutes or less – for $29/mo you can get unlimited calling in North America and Europe). I still use my same phone (I just plug my regular phone into a modem they provided). You do lose the ability to make phone calls when the internet is down which happens if the power goes off – people can still leave you voicemail). I have been very happy and get free voice mail and free caller ID.

    More recently I picked up a prepaid phone from Virgin. I pay only for the time I use (no monthly charges) – 25 cents a minute for the first 10 minutes any day and 10 cents a minute thereafter. There are no fees for calling from out of your service area and you have a regular cell phone number. They require I add a minimum of $15 every 3 months to the account but if I don’t use that much the balance just keep growing. This is ideal for anyone that doesn’t spend much time on cell phones. Now some people are very attached to their cell phone. Then this isn’t a good way to save money but for those that don’t feel the need to to stay in touch at all times this is a good option to stay connected when you want without having to pay high monthly fees.

    Together I save at least $35/mo. (over $400 a year) and loose nothing I value. I would have to earn an extra $700, or so, to have the same impact (I have to pay taxes on additional earning).

  • Google Approaching $500 and Entering the S&P 100

    Standard & Poors is placing Google in the S&P 100. Google is close to $500 a share today. Here are our thoughts before Google was added to the S&P 500:

    The price of a share of Google stock rose 5.7% to $255.45 today. The stand “explanation” “reported” by the media is along the lines of this quote from CNN:

    Internet shares rose along with Google (up $13.84 to $255.45, Research), which jumped 5.7 percent on rumors that it could be added to the S&P 500. Should that happen, the stock would benefit from index fund managers having to buy it for their portfolios.

    I don’t understand how these types of “explanations” are accepted by the media and their customers. If some investor really was surprised that Google was going to be added to the S&P 500 they shouldn’t be investing in the market, they should just buy an index fund and leave well enough alone.

    If CNN (and the others [MarketWatch Potential index inclusion drives GOOG”], Reuters (via CNBC)… reporting the same story) really believes the increase of 5.7% is due to a rumor that Google could be added to the S&P 500 I don’t know what to think of the other reporting they do. Even when much smaller companies are actually announced as new additions to the S&P 500 and that company’s addition really was questionable (for say anytime in the next year or two) they don’t go up 5% in price. But, if CNN doesn’t believe it, wouldn’t that be worse? It just seems financial reporting is more concerned with finding some explanation even if that explanation lacks almost any merit.

    SmartMoney’s “explanation” was much better: “Google (GOOG) shares shot up nearly 6% to the latest all-time high with nary a provocation.” But if you don’t know anything about investing this seems like SmartMoney don’t know what the others are reporting. I don’t know whether SmartMoney actually made a good editorial decision or they just wanted to vary the language a bit. (more…)

  • How Rich Are You?

    Here is a great tool to see how rich you are: Global Rich List. It drives home the point I made yesterday about how rich almost everyone in America is. Most people (not only in the USA) will probably be surprised how rich they are compared to everyone else in the world.

  • Trying to Keep up with the Jones

    People in the USA make a great deal of money. There are many who make huge amounts of money so many who make a great deal think it is unfair they don’t make more. And many of those just decide to buy what they can’t afford. Then they create their own financial weakness.

    Why Living in a Rich Society Makes Us Feel Poor

    Writers from the “personal responsibility” movement, for example, denounce those they consider too weak-willed to resist the influence of other people’s spending. In their view, middle-class families should just spend less and stop complaining.

    I guess that would be me. I don’t mind if people spend what they earn, but I do mind when people that are given huge amounts of money and spend beyond their means and then complain that they can’t have their cake and eat it too. I am not saying that people don’t have to make tough choices but there are hundreds of millions of people alive today that have real tough economic lives. People that want to live beyond their means in the USA and then complain that life is not fair need to realize that yes life is not fair. And the biggest truth is that hey have been given the advantage over most everyone else in the world (yes some small number that happen to live near them may be even richer).

    If they want to spend more – go earn more first. This option, available to most in the USA, is not available to most people alive today. Most people in the USA should be helping those less fortunate than themselves not complaining that they don’t get to buy enough toys compared to this person they see on TV or that they know…

    Charities to consider: Trickle Up – Accumen Fund – Grammen Bank – Habitat for Humanity

  • Is Amazon a Bargain?

    Is Amazon a Bargain?:

    Amazon stocks 1 million unique products in inventory, whereas grocery stores stock roughly 50,000, and supercenters stock around 125,000. What’s more, Amazon sells out its entire inventory 14 times per year, which is more than Costco (Nasdaq: COST), Wal-Mart, and Best Buy (NYSE: BBY), whose inventory turns are 12, eight, and eight times.

    Furthermore, Internet real estate doesn’t require Amazon to make monthly lease payments. But Amazon, in turn, can collect rent from other retailers by “renting” out its virtual real estate. In fact, Amazon made roughly $3 billion last year, or 30% of sales, from outside sellers by “renting” out its Internet real estate to third-party sellers.

    Amazon is a very interesting stock. It is not cheap (on a PE basis) and trying to evaluate what the earning picture will look like going forward is not easy. This article does a good job of looking at some of the interesting questions.

    Related: 10 Stocks for 10 Years Update – Amazon Innovation

  • The Greatest Wall Street Danger of All: You

    re: Born Suckers – The greatest Wall Street danger of all: you by Henry Blodget.

    Henry Blodget mentions two profoundly (though simple) important factors that lead to poor investment decisions: Prospect Theory and Outcome Bias. He lists 7 factors, I find two profound.

    Prospect Theory (more details) essentially states people are eager to “lock in gains” (sell positions with profits to realize gains) and hold losses (deffer selling positions in which they have losses so as not to “realize” the loss). Like many profound ideas the simplicity of the idea undermines the importance. This factor can make a huge difference in investment results. Many of the most successful investors understand the importance of this idea. And they repeat the importance of taking action to avoid falling into the patterns prospect theory predicts.

    William O’Neil (founder of Investors Business Daily) – “Remember, 7% to 8% is your absolute loss limit. You must sell without hesitation – no waiting a few days to see what might happen or hoping the stock rallies back; no need to wait for the day’s market close” page 90, How to Make Money in Stocks: a winning system in good times or bad, 3rd Edition, 2002.
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  • The Value of the Public Domain

    The Value of the Public Domain by Lawrence Lessig:

    Taxes are awful, but necessary. Let’s have them where necessary, but only when necessary. And so why not have them to extend the term of an existing copyright? BECAUSE THIS IS A TAX THAT CANNOT “INCREASE THE BOUNTY.” The work is already produced. No matter what we do today, Elvis is not going to produce any more recordings in 1957. So it is a tax that benefits some plainly (those who get almost twice the term they originally bargained for), but benefits society not at all. I.e., a very bad tax.

    Exactly right. Lessig mentions an interesting article, The Value of the Public Domain by Rufus Pollock that goes into this area in more detail.

    Related: Innovation and Creative Commons – Estate Tax Repeal