Recently I launched a new business. It allows people to find their favorite Kindle books at a big discount.
Why bother launching a new business? One day, suddenly the idea came to me. When shopping on Amazon, I noticed that the price of a book can fluctuate wildly from one day to the next. The price could be $12.99 one day, and free the next.
Who has time to check the price every day? Wouldn’t it be great if there were a way to be notified when the book is on sale? That was the idea. And then I created the site.
If you are interested, you can check it out at Librosso.com. I would love to hear your feedback about how the service can be improved.
After launching the site, I began thinking about the different steps to business success. And that there is only one way to get from one step to the next: Action.
The Value of Action
It always amuses me when people talk about their bright idea like it is a valuable asset. Everybody has great ideas. But 99.99% of the time they don’t do anything about it.
After analyzing the traffic for the Online Investing AI blog, I became curious about the most popular post of all time. It turns out to be Rich Dad’s Cashflow Game is Now Free!. This got me thinking: why is this post so popular? Of all the Rich Dad posts, why do people love this one?
Rich Dad’s Cashflow Game
Perhaps it is because of the high price of the board game. When I last checked it cost over $100, compared to perhaps $20 for most board games. Does the Rich Dad game cost more to produce? No, it costs more because it is worth more.
It seems that we are entering a decisive period for the stock market. The S&P 500 is right at the top of a channel between 2,100 and 1,920. Although I don’t like technical analysis, it is pretty clear that if it rises significantly about 2,100, then a new bull market will start. Conversely, if it drops below 1,920 a major market crash may follow.
S&P 500 10 Year Chart
Although anyone with limited knowledge of technical analysis would come to the same conclusion, I imagine 100,000,000 would-be retirees don’t look at this chart. And even if they did, they would not be able to see its importance.
With all the attention placed on Trump, Sanders and the other candidates, it amuses me how clueless the vast majority of Americans are. Most people are focused on the wrong thing. They focus on the inflammatory remarks made by Trump, on they believe in the panacea fantasy described by Clinton and Sanders.
Virtually no one is focussed on the real problem. The country is bankrupt. Does it really make sense for Clinton and Sanders to deliver on their promises if they will make the country’s finances even worse? Trump does not provide details or a plausible plan either, probably because he knows that if he did large numbers of people would not like it.
Chart courtesy of ShadowStats
Nobody talks about QE Infinity or the inflation that has been accelerating over the last decades. Nobody cares that the country is bankrupt or that the party is followed immediately by major financial upheaval. Continue reading →
When I wrote about the US Debt Bomb back in August 2009, it was only(!) about $12 trillion. Since then it has grown to $19 trillion. If it’s difficult to comprehend such a large figure, consider it breaks down to $159,000 per taxpayer!
US Debt Keeps Growing
Unfortunately, this is only a small part of the country’s unfunded liabilities. When you add Medicare and Social Security, the total is about $100 trillion. Many people believe that this is too much for the country to pay off, and that we will never be able to pay it.
How did this happen?
As I have mentioned before, most of the politicians that have run this country for the last 50+ years have not been fiscally responsible. They treat budget spending the same way a teenager uses a credit card. Am I saying that they are bad people?
No. I am just saying that they do not have the skills or inclination to fix the budget problem. They don’t know how to manage money or a business. Even if they did promise to fix the problem, they would never be voted into office. They would have to make massive cuts to Social Security, Medicare, military spending and every other area that people are not willing to cut. The people who depend on all this excessive spending would have to vote for the politician, and they would never do it.
Enter Donald Trump. Although there are many things that are not great about Trump’s proposals, I think that he has the potential to fix problems like this. He’s not a politician. He has so much money and power that he doesn’t have to play politics. And, his confrontational personality seems to be the incompatible with the political process of trading favors.
Although this may seem incredibly obvious, many people say that markets always go up. I remember during the real estate bubble that popped in 2008, agents were saying,
Real estate always goes up.
It’s pretty obvious now that is a lie. But it works for them. The clueless would-be investors that believed them bought up properties like there is no tomorrow. And for them, there wasn’t much of a tomorrow. Most of the properties went into foreclosure and were repurchased by more savvy investors.
When I read this and anlyzed some of the major market tops over the last 100 years, I was surprised by the accuracy of this statement. (One major exception was the 2000 Tech Bubble, which was quite different from other market dynamics.)
S&P 500 Jan 2011 – 2016
The theory behind this is that the “smart money” figures out that a market is topping long before the average Joe. I’m not sure if I agree with the theory, but it does seem to me that the “stupid money” gets out way too late, after the market has dropped significantly.
One of the biggest hurdles that the individual investor faces in trying to create a nimble, smart portfolio is the competition.
Investment bankers, quants, mutual fund companies, and big Wall Street firms are employing Ph.D. researchers with degrees in everything from finance to physics to create model portfolios. They use the latest and most powerful technology to guide their buys and sells.
The little guy doesn’t have a chance.
That’s what I thought, until last week. George and I had a chance to see a demonstration of Chaikin Analytics, probably one of the most complete set of investment tools and stock market model-building technology that’s available for the money. Or at least I’ve ever seen.
The predominant economic systems are capitalism and communism. Both have their problems, which seems to explain the existence of mishy-mashy socialism in most countries.
Most futurists debate which economic system will dominate the next century. That’s a mistake, according to some experts, like Jeremy Rifkin. Rifkin recently wrote The Zero Marginal Cost Society that looks at how technology and ideas, like the Collaborative Commons, will re-shape the financial status quo.
Adding sensors to just about everything will move the power of info-centric businesses — think energy and utility companies — back into the hands of individuals. If a person had smart enough algorithms, for example, they could purchase energy much more efficiently, use it efficiently, and save it efficiently. In a very real sense, an individual could run their own utility company.
But, that’s just the beginning. Let’s try to connect all the zero-marginal cost technologies. 3-D Printing has already received lots of hype, but buried deep within this technology are several — forget disruptive — transformative technologies. What if you could 3-D print your own efficient solar cells? What if you could 3-D print your own efficient battery? Let’s go crazy here. What if you could 3-D print a fusion reactor for your home.
So, now you’re going to not only be a smart consumer — a prosumer in Rifkin’s lingo — to a smart producer — or a producer… wait, that doesn’t work. Anyway, what happens when you produce something for almost free and use it so efficiently that you avoid costs. Well, everything becomes nothing. In other words supply increases to near infinity and costs fall correspondingly to near nothing.