Archive for February, 2009

So my brother came by last night for a visit and we started talking about the stock market.  He and a buddy of his want to massively short the Dow Jones Index for 3rd or 4th quarter of 2009.  He asked my thoughts on the strategy and I told him to be careful.

I actually believe the market will fall as he predicts.  The market, in my opinion, will crash in May or August/September time frames but the problem with shorting or buying large amount of puts is that there is a high likelihood  that if the market begins to crash, the government will step in and halt trading.

I can already hear Obama’s words, “These are unprecedented times and the markets aren’t functioning properly……so I’ve ordered the suspension of trading on the major US exchanges for a period of …. after which we’ll reopen trading.”

If you’re in a massive short or put position, the closure of the markets will likely put you in a bad spot.   This is one of the reasons that I’ve effectively abandoned the stock market.  I still hold positions but I suspended 401k investments, further cash flows into the market and have been holding on to cash because of frequent, unpredictable government meddling in the free market.

I have a love/hate relationship with LinkedIn right now and I’m formulating a theory around the social networking movement that makes me think that it is the future for job markets supplanting job boards and websites like Monster, CareerBuilder and Indeed to name a few.

The reasons are quite simple:

From an end user standpoint, LinkedIn allows you to establish your professional credentials, history, recommendations, knowledge, skills, experience and the network of people you have associated yourself with over a period of time.   The recommendation feature is fairly valuable to get insight into what others have to say about you and how you treated them.

From a business user (hiring manager) standpoint, LinkedIn allows you to review all of the things above but saves a great deal of time of trying to figure out if a person is a good fit for a particular position.  For example, imagine there is a group (cluster) of LinkedIn members who have all worked at the same company for the same period.  Now imagine that this group of people have all endorsed each other and recommended each other except for one lone individual.   A person would begin to wonder why the cluster has good/positive reviews and recommendations of each other yet the lone individual has no one to speak up for him/her.   Clearly, an astute observer would make note of this and perhaps bring it up during an interview and question why there are no endorsements.

Unfortunately, LinkedIn has a growing problem that might end up crippling its usefulness.  What is this great problem?   A huge HORDE of recruiters are coming onto the board and requesting to be “LinkedIn” to everyone and everybody.   I’m seeing professional profiles so saturated with recruiters now that it’s becoming concerning.    You can read any recruiters profile and see it inundated with dozens and dozens of recommendations and endorsements which dilutes the whole system.   The particular dilemma for me at the moment are these recruiters dangling “job carrots” but only making them available if you become Linked to them.   This creates a problem because you essentially open up your network of associates to these recruiters who don’t always have the best intention.    The long term problem that this is going to create is of course, huge volumes of SPAM.

I’m not going to hold my breath but ultimately, I can foresee advertising, SPAM and other crap start flowing into the LinkedIn system to the point where people will just abandon it.   Regular readers know that I started a LinkedIn category in April of last year as I anticipated the housing and economic mess to take it’s toll.   Last year I had 80,000 people in my extended network, today I have 673,000 “professionals” in my network.  I can imagine half of those are recruiters!

Doing the math, growing from 80,000 in April 2008 to 673,000 in February 2009 that translates to 741% growth in 11 months or about 54,000 people per month added to the network.

I’ve been perplexed about something I’ve seen at the grocery store over the past few weeks.  I generally buy organic milk when I go grocery shopping and it is usually 2 or 3 times more expensive than the regular white liquid that goes by the name of milk.   For the past few weeks, the grocery store has had deep discounts, in-store coupons and even offering free milk with the purchase of an item like cookies.

I’m perplexed about how the grocery store is making a profit on milk and I came to the following conspiracy theory regarding their milk dilemma.

Theory 1 – The grocery store might have signed a large contract for a large quantity of milk on the expectation that it would be able to sell it for a higher margin/premium a few months (maybe year) ago.    When the credit crisis hit and consumers balked at paying $6/gallon for organic milk, the store was left holding the bag and needed to come up with a way to dump milk (coupons, freebies, etc).

Theory 2 – Organic milk producers are desperate to sell their organic milk wares that they have partnered with the stores to provide discounts and freebies although this doesn’t make much sense to me because if the milk is too expensive for the consumer, they simply need to reduce the price or find cheaper ways to produce it.

Theory 3- My wife suggested that by offering milk for free with the purchase of cookies, the store was trying to encourage greater consumption of milk.  This makes perfect sense except for the fact that the milk is the more expensive item and is being given away for FREE.  It would make more sense to get free cookies with the purchase of milk than free milk with the purchase of cookies.

Ultimately, I think organic milk producers are going to be in a world of hurt if the economic crisis continues as I rarely see anyone pick up organic milk these days.   I’ve actually noticed a surplus of milk at the grocery store lately and the price for non-organic milk (and eggs) have been drastically dropping over the past few weeks.

Deflation continues to hit the grocery store as today I saw Dreyer’s Ice Cream being offered at $1.75 discount right off the top!

I get a large array of calls from debt collectors looking for people that have the same name I do but owe someone, somewhere money.   Lately, I’ve been inundated with debt collectors calling me and asking if I know my neighbors phone number!

Here’s how one call went recently.

Phone: Ring…Ring…Ring

Me: Hello?

Phone: Hi, do you know XXXXXXXX, he lives next door to you?

Me: Excuse me?  Who are you looking for?

Phone: I’m looking for XXXXXXX, he’s your neighbor right?  He lives at XXXX street and you live at XXXX street next door right?

Me: I guess so but I don’t know my neighbor that well (neighbor barely speaks English).

Phone: I want you to give him this message……and tell him to call me.

Me:  What?  Are you serious?  I don’t think that’s a good idea and I’m not a messenger service .

Phone:  But do you know him, I want you to give him the message!

Me: If you know where he lives, SEND HIM A LETTER AND ASK HIM TO CALL YOU!

Phone: OK, bye.

I figured that would be the end of it but the caller called back again and repeated the same script.   I told her to stop calling me and that she was breaking the law by doing so.  She quickly hung up but I suspect I’ll be getting another call soon from this person again.

I can only imagine that as the subprime loans, credit card dead beats, and other debtors descend into poverty that the collection calls are going to increase dramatically.

So I came up with a business idea.  Someone needs to create a company that will send a blanket cease and desist letter to ALL the debt collection agencies around the United States and offer a preemptive “cease and desist”  service for a nominal fee.  I don’t owe anyone any money and even if I did, the last thing I would want to do is talk to a debt collector over the phone so why not take a preemptive strike.   Some enterprising young man/woman might even make money out of the deal by suing the company that violates the cease and desist order and keep the fees or awards issued by a court.   Someone could combine this service with Grand Central service to pre-screen and route violators to the service!

I would sign up for this in a minute as my phone rings constantly from debt collectors looking for deadbeats with my same name.

I’ve spent the better part of the last hour trying to print that free Quiznos sub and it won’t print no matter what.  I tried it from different computers and different browsers and still no luck.    Oh well, I won’t be going to Quiznos anytime soon after putting me through so much aggravation.

Of course, I should have known better, I usually wouldn’t have even bothered with the promotion were it not for the fact that I’ve cut all external spending as the economy continues to decay.  I figured a free toasted sub would cheer me up but it just made me think that Quizno’s promotion sucks.

Continuing on yesterday’s discussion about what to do in the post economic collapse (ecopalypse), my friend wants to return to a gold standard.  While I own physical gold and agree it’s prudent to own some, it’s not the panacea that many people think it will be to return to a gold standard.

For starters, if gold increases to $2000/oz you can bet that there will be more armed robbers chasing after women’s (and men’s) wedding bands and gold jewelry.  You’ve already seen those cheesy “Cash For Gold” commercials and how long before outfits like that become the defacto pawn shop for criminals?

I just finished Kim MacQuarrie’s The Last Days of the Incas which gives a great overview of the Spanish conquest of the Incan Empire and it helped remind me that there was a great deal of suffering in the world because of the lust for the yellow metal during the colonization period.

Imagine if gold increased in value to $5000/oz.  What do you think would happen to society at that point?  Walking around with gold jewelry of any kind would be the same as flashing a giant neon sign with, “I’m Loaded, Rob Me!” right over your head.

While I occasionally have been infatuated with gold, I clearly understand the danger it represents if the price for it gets out of control.

Check the Dow lately? It’s down to 1997 levels so we are now officially in a lost decade. The question: Will the Dow stay here for the next 10 years or shoot to 17,000?

I was talking to a friend about the coming epocalypse (economic apocalypse) and what to do the day after. He strongly suggested that I buy a farm or land and start growing my own food. I retorted that is was unrealistic and unfeasible for every American to go out and start their own farm and grow their own food.

Think about the sheer amount of land, water and fertilizer needed for each person to grow their own food and maintain their own livestock. I’ve always wondered how many horses we would have roaming around if the automobile hadn’t been invented. Think about 300 million Americans each owning their own horse. I don’t know how much shit a horse produces in a day but that would be a ton of crap all over the place. How much food and water does it take to maintain a horse anyway? How much grazing land would be needed?

He quickly agreed that it was impractical for everyone to go out and get a farm to grow their own food. The discussion turned to gold and silver and I’ll have another post on this subject tomorrow but we concluded by saying that having ample stores of food to last for a while was a prudent move. We came to the same conclusion that I talked about a while ago: Food, Medicine, Shelter and Security are the main priorities now.

You need to prepare for it today. Watch the video.

httpv://www.youtube.com/watch?v=wmR54swMWo8

These are the best videos explaining the housing mess and ensuing economic crisis that I’ve seen so far.

httpv://www.youtube.com/watch?v=Q0zEXdDO5JU

httpv://www.youtube.com/watch?v=iYhDkZjKBEw&feature=related

The only thing left out was the fact that the money for the whole scheme came from the average Joe investor through his bank deposits (from paycheck), from his 401k contributions, and from his pension and other retirement and savings accounts.

Shhhh…..don’t tell anyone but the money you think you have in checking, savings and elsewhere really isn’t there. It’s been gone for a while now.