Filed under: Columns

An article in BusinessWeek discusses the problems recent (and even not so recent grads) are having with college debt. Saddled with enormous student loans, many are taking jobs they don’t really have a passion for — just because they need the money.

Student loan debt has exploded to the point where some experts are wondering whether people will be able to repay. Even if they can, the struggles of that generation may serve as a cautionary tale for youngsters. A decline in the size and number of student loans is something that should be celebrated.

Rather than taking out huge loans, students should focus on options that they can actually afford. As college costs rise, I would predict a huge rise in the number of students opting to do 2 years at a community college and then transfer. State schools are also likely to see an influx of higher-quality, price-conscious applicants.

And those are two good things. No one should graduate from college with a 6-figure debt load. There’s just no reason to. An ambitious, hard-working, intelligent youngster can do just as well going to a less expensive public college.

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Filed under: Apple Inc (AAPL), Marketing and advertising

No doubt, there’s mixed feelings - in the music industry - about Apple’s (NASDAQ: AAPL) iTunes. Somehow, Steve Jobs finds ways to get most of the upside from business ventures.

But some musicians are getting creative. Take a look at Radiohead. The legendary band has a new twist; that is, if you want to get the new album (I’m not even sure it’s called that anymore), you’ll need to visit the band’s website.

Oh, and the fans will be able to bid on the price of each track.

I interviewed Rafi Mohammed, a pricing expert, on the matter (he’s the author of the Art of Pricing).

Continue reading Radiohead’s Web 2.0 acid trip

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Filed under: Newspapers, Marketing and advertising, Mutual funds, Personal finance

Having already accomplished tremendous growth by marketing to financial advisers and other money managers, the ETF industry is now moving to target individual investors.

According to the Associated Press:

ETF ads have been cropping up in surprising places, including on TV during college football games and in subway cars in New York City.

Firms have also expanded advertising into personal finance magazines geared to mom-and-pop investors, such as Time Warner Inc.’s Money and Kiplinger’s Personal Finance, as well as titles for general, if affluent, readers, such as The New Yorker.

The slick marketing campaigns will no doubt lure in some investors but the question is: Is that good for the investors? I would argue that, in most cases, it probably isn’t.

ETFs, which are traded like stocks, require a commission when they are bought and sold — unless you’re trading in large dollar amounts, this means that they will likely be inferior to a traditional mutual fund.

In addition, the fact that they can be traded all day, with live real-time quotes, could encourage many individual investors to trade actively which, as numerous studies have shown, is the key to bad performance in investing.

Do yourself a favor: try to ignore the ad campaign and, unless you have a lot of money to invest or a lot of experience, stick with traditional index funds.

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Filed under: Rants and raves, Employees, Personal finance

Being in the constant presence of three very little boys (five years, two years, and three months old), and spending a huge portion of my spare time obsessing over mommy media, I have read a lot of articles along the lines of Leslie Bennett’s new The Feminine Mistake. You take your working mom, you compare her to a highly-educated stay-at-home. You worry about how the at-home mom is losing her identity, her control over her finances, her ability to escape the relationship should it not end happily ever after. You wonder if the working mom is ignoring the loving care of her children, the fund raising development of her PTA, the feeding of the home fires.

Moms are (Bennett and so many others argue) giving up their right to membership in Future Highly-Paid Executives of America if they stay at home. And most importantly: they’ll give up their fat retirement fund. What should happen if daddy dearest leaves you for his secretary, PR professional, Donna Karan-clad boss? It’s social security and a mother-in-law apartment for you.

I work from home, neatly placing myself right on the divide in this debate. I can’t side with the at-home moms; I do have adults to interact with on issues of importance all day long, and besides, I don’t have time to side with them. I can’t align myself with the working moms; after all, I do get to spend time with my kids all day, I pick up from school, I am far too familiar with the intricacies of the Berenstain Bears series. And I don’t have time to go out to lunch with them.

There’s only one problem with Bennett’s argument: it only makes sense if it’s masculine, too. Is there a “Masculine Mistake” for dads who stay home?

Continue reading ‘The Feminine Mistake’ only makes sense if it’s masculine, too

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Filed under: Magazines

At last! Evidence that it actually is possible to be such a hot mess that no one cares about you anymore! At least, according to Forbes’ new list of the celebrities whose faces sell the most tabloids. Number 1 on the list this year was Jennifer Aniston, the former Friends star, whose also found success on the big-screen.

But Britney. Oh, poor little Britney Spears. According to Forbes:

Apparently people just take for granted that Britney’s personal life is a train wreck — to say nothing of her career, whose current state was pretty much summed up by her possibly-drunken VMA performance. It’s not even worth following anymore, because every new twist and turn is just unneeded confirmation of something we already know: Britney Spears is messed up.

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Filed under: Newsletters, Bargain stocks, Stocks to Buy

“Investors continue to underestimate the growth potential at Ericsson (NSDQ: ERIC),” says global analyst Yiannis Mostrous in The Silk Road Investor. He considers the stock a core holding.

The Sweden-based company develops and produces advanced systems and products for wired and mobile communications in public and private networks and produces mobile phones through a joint venture with Sony.

Mostrous notes, “The company operates in one of the most promising segments of the global economy, where the demands of bigger and better networks increase almost daily.”

According to the advisor, “It’s currently upgrading networks for more than 50 phone companies, with about 6 million customers signing up for faster mobile access each month globally.” Industry experts, he points out, expect mobile subscribers to surpass 5 billion in the next five years.

Continue reading Global expert rings up Ericsson (ERIC)

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Filed under: Newspapers, Business of sports

A fascinating piece (subscription required) in The Wall Street Journal looks at the ways that Las Vegas bookmakers are teaming up regulators to catch cheating in collegiate sports. And with the Tim Donaghy scandal, there may be more of a need for vigilance in professional sports than we would like to think.

Las Vegas bookies have a terrific incentive to uncover game-fixing schemes: If gamblers manage to place a large bet based on illicit information before the bookie has a chance to move the betting line, they can be left holding the bag. Because they have relationships with gamblers and will be the first to notice signs of unusual gambling activity (much like a market maker might be able to detect suspicious trading activity in the stock market), they can be a valuable source of intelligence for the leagues and regulators.

In the book Freakonomics, Steven Levitt looks at the ways that the economist’s toolkit can also be used to detect signs of cheating — whether that be elementary school teachers’ changing students’ answers on standardized tests, or sumo wrestlers throwing matches.

While relying on input from members of the underworld might seem distasteful, bookies and even criminals often have valuable real world experience and connections that can help regulators. Ex-cons like Barry Minkow and Sam Antar have helped the FBI and SEC crackdown on numerous cases of securities fraud, and bookies can help the NCAA fight cheating. It’s good to see that they are taking advantage of the opportunity.

On the other hand, Major League Baseball has been reluctant to take help from the underworld. Former Commissioner Fay Vincent explained to The Journal that he hadn’t used Las Vegas as a source of information because he “can’t quite imagine what they would’ve been telling us that we would’ve been interested in.”

Perhaps that is part of the reason baseball has suffered from so many scandals over the years, including a whole decade of statistics that are in doubt because of steroids.

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Filed under: Good news, Consumer experience, Competitive strategy, eBay (EBAY), Wal-Mart (WMT), Money and Finance Today, Best Buy (BBY), Hilton Hotels (HLT), Personal finance

A blog post I recently read, written by Amy B. Scher , reminded me about one of the best practices that a person can use to protect and gain the greatest value from their own money. Negotiating the bottom line on your purchases is not old school and it’s certainly not “dirty pool”. Seeking to negotiate downward adjustments to your purchase prices shows that you have respect for the work that you have done to earn your income and it also shows that you understand capitalism in motion. The following list is only a partial exposure of the ways you can negotiate lower costs for yourself. With some considered imagination you can easily put the negotiation concept to work for yourself in a multitude of buying situations and as you do, the practice will become quite natural and very rewarding.

Continue reading Negotiate your way to financial success and get rich!

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Filed under: Internet, Stocks to Sell

Citron Research, formerly known as StockLemon.com, brings to our attention China Finance Online Co. (ADR) (NASDAQ: JRJC), which sells a series of stock tip newsletters in China. After taking a look at the company, I have to agree with Citron’s conclusions: This stock is heinously overvalued.

First a quick look at the numbers. This publisher of newsletters trades at more than 65 times sales with a price/earnings ratio of 873. Given that the company’s business model is selling stock tip newsletters with an army of telemarketers, I can’t even imagine what the company’s barrier to entry is that makes it worth such an astronomical valuation — a market cap of $925 million dollars.

As Stock Lemon points out, this is all on projected revenue of about $20 million for 2007: “Comparatively speaking TheStreet.com (NASDAQ: TSCM) generated $57 million in revenue and has a market cap of about 1/3rd this name.”

Why is JRJC trading so high? It probably has something to do with investors’ desire to find something that is tied to the Chinese stock market’s rapid growth. But at this valuation, whatever it is, it sure as heck has nothing to do with rational thought.

JRJC looks like a pretty good short here.

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Filed under: Options

LDK Solar (NYSE: LDK), a manufacturer of multicrystalline solar wafers, was sold off down $16.65 to $51.65. Piper Jaffray said “We have confirmed that the LDK financial controller recently left the company.” LDK October option implied volatility of 133 was above its 12-week average of 69 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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