The Power Of Web 2.0 – And the Myth of Google and FaceBook

The more time i spend delving into all that is web 2.0 and the more closer we get to the Launch of the the Brain Make Over Beta Site, the more perplexed i become by certain factors.

Firstly, we live in an age where Google (goog) is quoted at some $681 at time of writing which gives the company a valuation of approximately $213Bn. This is for a company that if my memory serves me correctly has about $11Bn of revenue and $4Bn profit.
Do I use google every day, resoundingly YES,
Do i think that Google has a fantastic search algorithm, again YES,
Do i believe that the company is worth 20 times its revenue and more than 50 times its profit, one second, did i just say 50 times their profit…something must be wrong with my calculator, maybe i have time warped back to 1999 and we are pre millennium and euphoric with Greenspans low interest rates!!!

Do you guys that own google stock realise that even if Google gets the 700mhz cycle and enters the cell phone market and even if they build solar plants and land a man on Mars, the potential earnings growth for the next decade has already been accounted for …. so here is my question…… Larry Page, Sergey Brin and Eric Schmidt are all bright and talented boys….so why do they own stock. If i was them, which obviously i am not, I would sell my stock and by someone like Microsoft who has a market cap of about 30% more 307Bn but has over $12Bn in profits on $50Bn+ of revenues. Lets throw in that this company fits the dynamics of both a Growth and an Income stock.

The second question is that of FaceBook, again valued at somewhere in the $10-15Bn range with revenue of less than $300m. This is another disruptive technology (I believe it is disrupting email as a more fluid and fulfilling interaction if i am to understand the hype correctly.) Like Skype this is all great but where is the revenue stream, the market is captive (which means they will surely leave given enough time) and it really serves little or no useful purpose!!! Did i just say that out loud, blasphemy. But in reality, there is a novelty in finding people i had long forgotten about and would have had no way of getting in touch with. However did i really want too, will i be able to strike up a stirring friendship and get something meaningful outr of the relationship.

So they counteracted this with a genius like devilishly cunning move (similar to the Fed increasing the Discount window to save the banks in August) of creating applications and opening up their platform. But Google copied the rapidly with a far larger network and there is still that huge issue of stick ability! Does anyone really stay on the site that long. You want to check what you friends are doing now, ok cool, i am gone see ya!!!!

So where does this all leave us, Web 2.0 the new internet will in my opinion soon cede itself to Web 3.0 which for me is interactive application based internet usage. whilst currently available i am talking about the web as a medium for absolute harmonization and integration of all facets of life…….. Big, Bold and Brash maybe ….. or some would already say we are there ……. I will continue further when i explain the concept of Brain Make Over within the next month, so hold that thought.

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Credit Cards and American Consumer Debt

Household debt has now exceeded the national debt of the USA – what does this mean, this means that the people who live in America, you and me, owe more money to companies (particularly banks) than the entire government does to other countries!!!!

This figure is incredible but how has debt spiralled so far out of control. The average American family owes more than $16,000 on credit cards, many only making minimum payments. With some credit cards charging exorbitant “loan shark” style interest of 39%, late payment fees, partial payment fees etc etc credit card companies are able to double their money annually! This is quite possibly the most rewarding part of thew whole financial system for banks. The majority of hedge funds do not produce mid to high double digit returns – for mainline banks this is a n incredible pipeline that they will continue to milk until America wakes up.

Minimum payments (around 4% on average) will require 15 or more years to pay off if no further charges are made to the card. This is with a more normal 19.98% apr.

With the Universal Default Clause your credit card company can change your interest at any time for almost any reason, your debt is too high with another company, you were late on your mortgage payment etc etc. This is one of the scariest and most open ended, open to abuse clauses in the American legal system as it exposes more than 1 billion card holders, yep 300
million Americans with an average of 3 cards each, to the whim of the card company. Should you choose to retaliate in any fashion they deem unfit to this injustice, there goes your FICO score.

Meanwhile whilst on the topic of FICO scores, this number has become more critical than ever before as now it holds the key to how high your charges on your mortgage will be. Fannie May et al will be charging higher fees and possibly require higher down payments from “sub prime” borrowers. This means anyone with a 680 or less is going to be dinged – i believe on a sliding scale.

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Is your VOIP call being recorded

It has been generally well known and accepted for years now that our governments listen in on our phone calls, triggered by certain keywords. It used to be the the British tapped the American public and vice versa, until the patriot act pretty much allowed the US government a free hand.

It is now emerging that it would be possible to tap VOIP calls and you can bet your bottom dollar that if the government isn’t already doing this they will be soon!

As mentioned in the article this will also be a potential boon for those criminally minded as well.

So remember, when talking on “ANY” type of phone – be careful what you say, someone may be listening!

To hear what they have been doing as a proof of concept on this have a look and listen at the following website http://siptap.voipcode.org/

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We have survived the Cold War and Nuclear threat, but will we survive the Gray Bomb, the most dangerous threat to the USA

The world stands at the edge of a cataclysmic financial abyss, and no i am not talking about the current housing and liquidity crisis, i am talking of something a little further away and somewhat grayer (excuse the pun). Although the drop to 12800 is 1200 off the high, nearly 10% as i predicted back in August (month off due too Bernankes pointless meddling)

The financial and social timebomb is the graying population of the industrialized world. I have coined the phrase the “Gray Bomb” to categorize this impending threat.

We live longer, live better, consume more and expend more. If you sit down and read the social security/ welfare document sent each year to every tax paying American, you will also see that the US welfare system is budgeting to run out of money within the next 20-30 years!

Yes

You heard me

Thats correct, they “admit” quite openly that their coffers will have run dry and they will not be able to provide for anyone properly after that time, without a drastic increase in taxes (probably to a scandanavian style 60+%) Why is this, because the Baby Boomer’s will mature, the first of them passed 59 1/2 in 2005 and thus over the next 10-15 years there will be more people claiming social security pensions than people working and paying into the system, creating an insurmountable deficit.

What do i propose or advocate as a solution, don’t just throw stones i hear you cry, give us a solution! I hope to provide suggestions that will spark open debate and could ultimately lead to some kind of resolution.

So lets try this, Romania “i believe” recently told its populace they would not be paying for their retirement, people had to plan for it themselves! I think that the social security system is somewhat archaic and grotesquely mismanaged and rather that continue it, make everyone more that 25 years out responsible for their own retirements!!! These people must take financial responsibility and accountability now and start saving.

Several things that need to happen to help society survive;

The government find ways to become more financially efficient and stop or even reverse inflation.

reduce dependency on oil as it is a finite supply and prices will continue to rise even on the exaggeration on the speed of reduction of this decreasing supply. Like Diamonds, it isnt as scarce as prices would indicate, but neither is its supply going to last out our lifetimes!

My solution will have several consequences, many of which i think are inevitable either way, that will be interesting;

The first being that as a collective generation, those that come after the baby boomers will probably be poorer than their parents!

The second that property values will fall significantly as more housing stock is returned to the open market with less inhabitants!

Immigration will increase from countries such as China and India that will become overly populous and lower more affordable prices will draw people in. These countries will ultimately come to resemble Japan and Tokyo in terms of density and expense.

Our generation will have significantly fewer children than our parents as we will simply not be able to afford them.

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World Shift

The world stands at the edge of a cataclysmic financial abyss, and no i am not talking about the current housing and liquidity crisis, i am talking of something a little further away and somewhat grayer (excuse the pun).

The financial timebomb that is the graying population of the industrialized world.

We live longer, live better, consume more and expend more. If you sit down and read the social security/ welfare document sent each year to every tax paying american, you will also see that the US welfare system is budgeting to run out of money within the next 20-30 years!

yes

thats correct, they admit their funds will have run dry and they will not be able to provide for anyone after that time without a drastic increase in taxes (probably to a scandanavian style 60%) Why is this, because the baby boomers will mature, the first of them passed 59 1/2 in 2005 and thus over the next 10-15 years there will be more people claiming social security pensions than people working and paying into the system, creating an insurmountable deficit.

What do i propose or advocate as a solution, don’t just throw stones, give solutions, provide answers that spark debate and could ultimately lead to some kind of resolution. So lets try this, Romania “i believe” recently told its populace they would not be paying for their retirement, people had to plan for it themselves! I think that the social security system is somewhat archaic and grotesquely mismanaged and rather that continue it, make everyone more that 25 years out responsible for their own retirements!!! These people must take financial responsibility and accountability now and start saving.

Several things that need to happen to help society survive;

The government find ways to become more financially efficient and stop or even reverse inflation.

reduce dependency on oil as it is a finite supply and prices will continue to rise even on the exaggeration on the speed of reduction of this decreasing supply. Like Diamonds, it isnt as scarce as prices would indicate, but neither is its supply going to last out our lifetimes!

My solution will have several consequences, many of which i think are inevitable either way, that will be interesting;

The first being that as a collective generation, those that come after the baby boomers will probably be poorer than their parents!

The second that property values will fall significantly as more housing stock is returned to the open market with less inhabitants!

Immigration will increase from countries such as China and India that will become overly populous and lower more affordable prices will draw people in. These countries will ultimately come to resemble Japan and Tokyo in terms of density and expense.

Our generation will have significantly fewer children than our parents as we will simply not be able to afford them.

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The Ultimate Gift

Every once in a while there comes a movie that embraces or harness the power of human goodness, lifts us to want for or strive for more and to do better. “Pay it Forwards” ” Forrest Gump” “Meet Joe Black” “God Grew Tired Of Us” are good examples of this inspiring genre. I was blessed to watch such a movie recently, “The Ultimate Gift” which incorporated and embodied so many values that I personally aspire to hold true.

If you haven’t seen the movie then don’t read on!

The 12 gifts are:

The Gift of Family
The Gift of Love
The Gift of Dreams
The Gift of Laughter
The Gift of Giving
The Gift of Friends
The Gift of Learning
The Gift of Work
The Gift of Money
The Gift of Problems
The Gift of Gratitude
The Gift of A Day

Take a little time and watch this movie, allow it to inspire you, don’t be afraid!

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Credit Card Credit Crisis

It is only a few month since I was discussing the impact of credit card and consumer debt on the economy and that everyone saying American Express etc would not be impacted by the sub prime meltdown was crazy. If you aren’t paying your mortgage and are establishing bad credit , why would you pay your credit card bill. If you are going to go bankrupt as a method to protect any money you do have, why not throw the cards in it.

It is unfortunate too reflect that Greenspan’s reduction of interest rates was so extreme to recover the markets in 2001-2003 that another bubble came about. No one believed interest rate would rise ever again and they would never have to pay more interest on their principal. This short term-ism is rife throughout society and is probably one of the most significant parts of this crisis. America demands instant gratification.

Bankers looking for short term gains, their year end bonuses more critical to their lives than the long term business profitability. This is why renumeration is so important and has to be reviewed more carefully. The requirements placed on CEO’s for short term stock market gains are compounded by the fact that businesses take time to change and may not necessarily benefit from the constant demands of shareholders for faster and faster growth.

This always brings me back to the anomally that is Google. With its valuation climbing past $200bn with only $4.23bn of profit on about $10bn in revenue. The price has taken into account all possible growth for the next 5-10 years. Brin and Schmit should be selling stock like crazy and investing in someone like Microsoft with a similar company valuation but over $50bn in revenue.

Which brings us full circle, analysts are all telling you:

1) Bank stocks look cheap, buy them now!!!

I say don’t bother, they still haven’t priced in the full extent of the crash yet as no one realizes how bad it will be.

2) Credit card company stock has been adversely affected by the housing crisis and is unfairly impacted.

I think not, they are the next to topple in the house of cards. This also has a very bad knock on impact to GM and Ford who really are a credit company now more than a car manufacturer. Expect Ford to weather the storm better on strong European sales, bt neither will be doing well in the medium term.

3) Flight to gold for safety

I think not, $800 plus is unsustainable long term and whilst you might see $900-1000 in short term hysteria, long term expect somewhere around $500.

4) Oil at over $100 a barrel.

I think this is price gouging, whilst supply is not indefinite, $65-70 per barrel is a real figure. The answer is to force manufacturer’s to sell fuel efficient diesels in the US and the work on hydrogen powered cars and a distribution network that will allow them to become popular and utilitarian!

Overall expect a global depression of epic 1929 proportions, position yourself to weather a storm. Also ho0pe that Bernanke doesn’t continue with his insanity and hope that the cutting has stopped, even a 1% interest rate cannot shore up the economies current messes at some point we have to turn into the storm and ride through it, perpetually running in front of the wave means it grows larger and larger making it scarier and scarier to turn into it and get through to the balmy waters on the other side.

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The Power Of Music

One of the biggest changes that occurred during that last century was the progression of music and its impact upon society.

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Diesel Vrs Hybrid Vrs Petrol Cars – The great deception

I love to hear people talking about hybrids and buying them at many thousands of extra dollars! But do these people really understand what they are doing.

a) MPG from EPA. To calculate the fuel economy of a vehicle in the US to the best of my knowledge the EPA uses a rolling road and essentially eradicated the factors of wind resistance/ aerodynamics,
vehicle weight, tire width etc. This give highly inaccurate figures. This system is reputedly being changed during 2008 to give fuel economy figures that come in line with European and Japanese testing methods. I am certain that you will see a dramatic fall in the quoted average fuel economy of all cars, but hybrid in particular! The battery weighs a lot!!!!

b) Cost of ownership. Do you know what it costs to replace the battery on a hybrid car (if you keep you car 7-8 years then lease it don’t buy it) if you are buying a used car then it is a ticking time bomb as you could end up paying as much or more than the value of the car to replace the battery.

c) Disposing of the battery. Batteries are a combination of acids, lead and other toxic material, review a short article on what it takes to dispose of batteries and how dangerous they are and you will get the idea here.

d) Diesel. Diesel engines are not what they used to be, blutech and other technologies produce engines that have significantly lower emissions than older petrol cars and also get far better fuel economy. With fewer moving parts they are a lot cheaper to maintain and have longer service intervals (this is one of the biggest revenue centers for car manufacturers so they don’t want this)

e) California. California is seem as the progressive state, yet in this arena it is archaic, by pushing hybrids harder and harder (with access to hov (high occupancy vehicle) lane and free parking downtown they have created a boon for Toyota in particular with its prius and other hybrid manufacturers.)

f) Celebrity endorsement. Celebrities have been seen turning up to all kind of event in Prius’ to show their concern for the environment! However check the license plate and you will invariably see a LCS tag which means they hired it and don’t own it!!!!

g) Alternative. Greenland has gone hydrogen, Brazil is using biodiesel. UK uses gas. Whilst these are the technology of the future American car manufacturer and oil companies have a strangle hold on the economy and political decision makers. Don’t expect to see these technologies until oil starts to dry up, (they love gouging you at the pump.) or significant pressure is applied. Gas stations would have to carry these alternate fuels and have supply system and infrastructure in place which will involve considerable expense and therefore loss of profit to all important shareholders!

h) Electric cars. Have you seen how an electric power station generates power (baring solar etc) they spew coal or nuclear waste out to generate the electricity, I rather use the diesel thanks!!!!

So what am I saying with all this, don’t buy a Hybrid, the Europeans have it right, get yourself a state of the art diesel for the next car and save the environment and you pocket with significantly reduced expense!

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Everybody wants to be an instant millionaire these days! Here’s a fairly easy way to achieve it in far less time than you would imagine!

Everybody wants to be an instant millionaire these days! Here’s a fairly easy way to achieve it in far less time than you would imagine!

Guess what, you don’t have to be a football player, a “pop idol” or win the lottery to become a millionaire, you can just do it the old fashion way (saving).

The answer to this myth of how to get rich quick is that you can’t, everything in life requires hard work, dedication and nothing comes easily. I am fortunate enough to know many millionaires and several billionaires and every one of their overnight successes was preceded by at least 5 years of hard work and graft (and in many cases 10-20)! However you can increase your net worth and therefore directly affect your ability to create greater returns form existing investments as well as to accrue wealth faster.

How do you do this, it is very simple, if you want to become a millionaire, write a $1 million whole life insurance policy. This will require some effort on your part, nothing in life worth having is easy. If you get a borrowing/ cash value rider then you can borrow, often upto 90% of the policy cash value. The principal appreciates tax free. Once you have used up your tax free allowance into IRA and pension funds this is the next place you should look to put some money so it can at least grow tax free.

What doors will such a policy open for you and why will it increase the probability of you becoming rich!

If you go to any major banking/ investment institution they will have a varied range of financial products. Many of these offerings though are limited to high net worth individuals and accredited investors. Derivatives, Notes, Structured Products, Hedge Funds and other vehicles for generating double digit annual returns (sometimes with capital protection) are considered speculative or are only available to experienced investors with “suitable experience” to make such investment. A $1,000,000 whole life policy will provide you with access to many of these deals.

Why is the gulf between rich and poor widening?

For exactly the reasons mentioned above, the wealthier you are, not only do you have greater investable assets but you have access to better asset classes. Banks such as Merrill Lynch, UBS, Deutsche Bank regular issue complex derivative products that have double digit returns with capital protection through the utilization of options, hedging etc. A money market CD offer 5% per annum whilst a “sophisticated investor will have access to a principal protect barrier note with 210-230% the upside and 100% principal protection based upon the Deutsche Bank Currency Returns Index (Bloomberg Ticker: DBCRUSI Index). Sound complex, well it is, the brightest minds in the world are constantly trying to figure out new ways to make rich people richer and with a million dollar net worth you will have access to such products. As a result a $10,000 account can earn as much as a $43,000 Cd over a 5 years. Now do the maths and use the whole $43,000 and you will see what i am getting at! (its over 100k) The other huge factor this accumulation of wealth is compounding, were interest in accreted!

Why are the baby boomers so wealth and why will the next generation be poorer?
What happened to home equity and property value as Americas saving method for retirement?

This is a fascinating question and the answers are inextricably linked. During the 50-70’s people were encouraged to adopt the American dream and buy their own home. At the time people were paying capital and interest so with every payment they reduced the principal owed on the house and built their equity value. The property appreciated as it almost does over any 25 year period and the home owner was left with what had essentially been a tax deductible savings account containing a considerable and valuable asset.

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