Central Perk

duminică, 30 iunie 2013

Seth's Blog : Thinking about money

Thinking about money

Many marketers work overtime to confuse us about money. They take advantage of our misunderstanding of the time value of money, of our aversion to reading the fine print, of our childish need for instant gratification and most of all, our conflicted emotional connection to money.

Confusing customers about money can be quite profitable if that's the sort of work you're willing to do.

A few things to keep in mind:

The amount of money you have has nothing to do with whether or not you're a good person. Being good with money is a little like being good with cards. People who are good at playing cards aren't better or worse than anyone else, they're just better at playing crazy eights.
Money spent on one thing is still the same as money spent on something else. A $500 needless fee on a million-dollar mortgage closing is just as much money as a $500 tip at McDonalds.
If you borrow money to make money, you've done something magical. On the other hand, if you go into debt to pay your bills or buy something you want but don't need, you've done something stupid. Stupid and short-sighted and ultimately life-changing for the worse.
To go along with #3: getting out of debt as fast as you possibly can is the smartest thing you can do with your money. If you need proof to confirm this, ask anyone with money to show you the math. Hint: credit card companies make more profit than just about any other companies in the world.
There's no difference (in terms of the money you have) between spending money and not earning money, no difference between not-spending money and getting a raise (actually, because of taxes, you're even better off not-spending). If you've got cable TV and a cell phone, you're spending $4,000 a year. $6,000 before taxes.
If money is an emotional issue for you, you've just put your finger on a big part of the problem. No one who is good at building houses has an emotional problem with hammers. Place your emotional problems where they belong, and focus on seeing money as a tool.
Like many important, professional endeavors, money has its own vocabulary. It won't take you long to learn what opportunity cost, investment, debt, leverage, basis points and sunk costs mean, but it'll be worth your time.
Never sign a contract or make an investment that you don't understand at least as well as the person on the other side of the transaction.
If you've got a job, a steady day job, now's the time to figure out a way to earn extra income in your spare time. Freelancing, selling items on Etsy, building a side business--two hundred extra dollars every week for the next twenty years can create peace of mind for a lifetime.
The chances that a small-time investor will get lucky by timing the stock market or with other opaque investments are slim, fat and none.
The way you feel about giving money to good causes has a lot to do with the way you feel about money.
Don't get caught confusing money with security. There are lots of ways to build a life that's more secure, starting with the stories you tell yourself, the people you surround yourself with and the cost of living you embrace. Money is one way to feel more secure, but money alone won't deliver this.
Rich guys busted for insider trading weren't risking everything to make more money for the security that money can bring. In fact, the very opposite is starkly shown here. The insatiable need for more money is directly (and ironically) related to not being clear about what will ultimately bring security. Like many on this path, now they have neither money nor security.
In our culture, making more money feels like winning, and winning feels like the point.
Within very wide bands, more money doesn't make people happier. Learning how to think about money, though, usually does.
In the long run, doing work that's important leads to more happiness than doing work that's merely profitable.

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sâmbătă, 29 iunie 2013

Mish's Global Economic Trend Analysis

Bill Gross Discusses the "Tipping Point" For Bonds; Does He Miss the Boat?

Posted: 29 Jun 2013 10:23 AM PDT

Bill Gross did not see this major selloff in bonds coming. He discusses the setup in his recent Investment Outlook called The Tipping Point.

Much of the article is about how he almost tipped a ship while in the Navy. He uses the tipped ship metaphor to talk about the position in bonds.

Gross says "Markets just had too much risk, and in PIMCO's opinion, too much hope for a constant QE and for the growth that it would produce. In effect, the ship was top heavy with too little ballast. Guess I should have known, huh?"

That's water over the dam at this point so the question Gross asks now is "Well where does the ship go from here?"

Here is a snip of Gross' explanation.

Should you as a bond investor jump overboard and risk the cold money market Atlantic Ocean at near zero degrees? We don't think so – and not because we want to keep you on board – we just don't think so. Why not?

1) The Fed's forecast of the economy which prompted tapering panic is far too optimistic. If 7% unemployment is tapering's final port of call, we simply think that we're much further away than the Fed's compass would suggest. We argue for structural headwinds – demographic, globalization, and technology influences – that have had and will continue to have dampening effects on domestic and global growth. The Fed, we would argue, is too cyclically oriented, focusing substantially on housing prices and car sales. And speaking of housing, since mortgage rates have risen by 1½% in the last six months and the average monthly check for a new home buyer is up by 20–25% as well, then as I tweeted several weeks ago, "Mr. Chairman are you serious?" Growth will be negatively influenced.

2) Inflation, according to the Fed's own statistics is running close to a 1% pace. The Fed has told us that they "target," " target" 2% and for the next 1–2 years are willing to accept even 2½% until they reverse engines. Fed Governor Bullard of the St. Louis Fed was in our opinion correct where he dissented from the majority decision several weeks ago, citing the distant shores of 2%+ inflation and the seeming inability to even move in that direction.

3) Yields have adjusted by too much. While T.V. and the press focus on 10-year Treasuries at 2.55% as their guiding star, subjective stabs by yours truly or anyone else are difficult day to day. ... To my eye, Fed Funds will not increase until at least mid-2015 and even then subject to a consistently strong economy that produces 2%+ inflation. I wonder if we can get there in this decade to tell you the truth. But the beauty of this North Star Fed Funds sextant is that it can be rather directly observed in futures markets, either for Fed Funds or for Eurodollars, which are a close companion. Right now, Fed Funds futures markets are predicting a 75 basis point yield in 2015, and Eurodollars validating a similar conclusion. That would suggest a mispricing, despite the obvious caveat of professional observers that some of the 75 is a surcharge for potential volatility. In any case, if frontend curves are up to 50 basis points cheap, then intermediate curves – the 10-year Treasury – may be as much as 35 basis points too cheap. They belong in our opinion at 2.20% instead of 2.55%.

So there you have it, fellow passengers and paying clients. Don't jump ship now. We may have reached an inflection point of low Treasury, mortgage and corporate yields in late April, but this is overdone.

Emphasis by Bill Gross

A Tipping Point That Won't Tip

Gross' message is clearly "the ship has reached a tipping point but don't worry, the ship won't tip". Let's discuss each of Gross' three main points.

1) "The Fed's forecast is far too optimistic".

I certainly agree with Gross that the Fed (and almost everyone else) is overly optimistic.

But what if growth is not the Fed's only concern? What if the Fed is concerned about the bubbles it has blown in stocks and bonds? What if the Fed is concerned about renewed speculation in housing?

Perhaps that scenario far-fetched, perhaps not, but at least some Fed governors have those concerns.

2) "The Fed's inflation target is 2%"

OK, the Bernanke Fed has an inflation target of 2%. But Bernanke will soon be gone. Will the next Fed have the same target? Any target? Given that Janet Yellen is likely the next Fed Chairperson, it is likely but not a given.

And how does one measure inflation? Will the Fed ignore housing like it did between 2002 and 2007? Will it at all look at brewing bubbles?

3) "Yields have adjusted too much"

Have they? Let's assume that Gross is correct.

Gross emphasizes the yield on a 10-year note belongs at "2.20% instead of 2.55%".

Lovely! Let's once again assume Gross is right. The upside is 35 basis points. And what is the downside if Gross is wrong?

Is this what things have come to? That's it's necessary to speculate on a gain of 35 basis points because that is fair value? And where was Gross on "fair value" when the yield was 1.5%?

If it is correct to play for 35 basis points now, why was he in bonds when the yield was 70 basis points too low? Can you have this both ways?

And why is this suddenly a "3–5% for both stocks and bonds" when he tweeted "@PIMCO The secular 30-yr bull market in bonds likely ended 4/29/2013. PIMCO can help you navigate a likely lower return 2 - 3% future."

So, is this a 3-5% world or a 2-3% world?

Questions abound and answers are few.

I actually suspect Gross may have this correct, but what is the risk-reward if he is wrong? What if the bond revolt continues? What if the Fed has lost control? That's what Gross does not discuss, and that's where he missed the boat.

For further discussion, please see Calmer Waters for the Bond Market? Gold? Worst Over?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

FHA Swamped By Defaults; Congressional Report Shows FHA Could Suffer Losses as High as $115 Billion; Shut Down Fannie, Freddie, FHA

Posted: 28 Jun 2013 11:21 PM PDT

An alleged "worst case scenario" shows the FHA could lose as much as $115 Billion. Since these worst case scenarios are always famously optimistic, the best course of action would be to shut the agency down.

I was quoted as saying just that by the Heartland in Congressional Report Raises Spectre of FHA Bailout.

The Federal Housing Administration's (FHA) losses over the next 30 years could be much higher than originally projected, according to the findings of a congressional committee. The dismal forecast has some bracing for another taxpayer-financed bailout.

The House Oversight and Government Reform Committee, chaired by Rep. Darrell Issa (R-Calif.) is reporting that a worst-case scenario stress test conducted last year estimated the FHA could suffer losses as high as $115 billion. That forecast is significantly worse than the one reported by independent auditor Integrated Financial Engineering Inc., which projected losses of $65 billion for the 79-year old agency.

Swamped by Defaults

The primary cause of the FHA's troubles is the plague of underwater mortgages that has struck the housing sector in recent years. During the late housing bubble, the FHA lost market share as more private lenders sold "subprime" loans to home buyers. But with the collapse of the housing market in 2007-08, much of that business returned to the FHA. While the agency has played a major role in propping up home prices, it has also been overwhelmed by defaults.

John Ligon, senior policy analyst at the conservative Heritage Foundation, writes:

The FHA has a core mission of providing targeted support to creditworthy low- and moderate-income, minority, and first-time homebuyers. The FHA cannot responsibly achieve these intended objectives when it is expanding its market share and competing with the conventional market for high-cost mortgage loans.

According to Ligon, the only way the FHA can avoid a bailout is to reduce its market share by lowering maximum loan limits to $325,000 over the next four years, raise credit requirements for borrowers, and institute "burden sharing" with loan originators by reducing insurance coverage from the current 100 percent to 50 percent by 2016.

While these reforms may improve FHA's balance sheet over the long term, they would also reduce market liquidity, which in turn could cause home prices to fall. Thus homeowners with little home equity now could find themselves underwater on their mortgages, which could trigger more defaults.

But it is precisely this apparent dilemma that government-sponsored enterprises like FHA have created with their meddling into the market that has some calling for a more radical approach.

'Shut Down Fannie, Freddie, FHA'

"I would shut down Fannie Mae, Freddie Mac, the FHA, HUD, and such similar programs and agencies," says Mike "Mish" Shedlock, a market analyst and host of the Web site Mish's Global Economic Trend Analysis. "The more money government threw at housing, the less affordable housing became until the bubble popped."

He says numerous government agencies and programs "should be shut down and things would be far better off because government can never allocate money better than the free market."

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Using The New Adwords Keyword Planner For Local SEO Keyword Research

Posted: 28 Jun 2013 05:57 AM PDT

Posted by Casey_Meraz

This post was originally in YouMoz, and was promoted to the main blog because it provides great value and interest to our community. The author's views are entirely his or her own and may not reflect the views of Moz, Inc.

Let's face it. Local keywords research has never been that easy since the Venice update. While we have always been able to use the Google Keyword Tool to find out search volumes for keywords with Geo Modifiers such as "City Name + Keyword" we have been lacking some reasonable data regarding keywords that do not already have a Geo Modifier.

My frustration has always been this: So what if Google tells me there are 12,100 searches for "Personal Injury Lawyer"? My client is in a local city and I want to know how many people in his city are searching for his services. The good news is that there is now an adequate solution to this problem we have long been plagued by.

Let me introduce you to the Google AdWords Keyword Planner. This new tool combines the data from the Keyword Tool and Traffic Estimator which are nowbeing replaced by this nifty piece of software. The good news is that this data that we were previously lacking is now available in this great tool! So let's dive into a practical exercise of how to get this data.

Start with some good local keyword data

Before you start, make sure you are setup for success by doing some preliminary keyword research in your niche. While the Google Adwords Keyword Planner is a great tool by itself, you can generate even more ideas for keyword variants by using a few tools already available. I prefer to use:

Mike Blumenthal's Category Tool - To get some ideas on locally based keyword categories and synonyms
Local Marketing Source's Keyword Research Tool - This will help you get an idea of surrounding areas you want to focus on
Google Analytics - Check your analytics and see what keywords are already bringing traffic. There may be opportunities to increase your visibility on something that's already preforming.

Using these tools and collecting some good data up front will make the process more laser focused. Make sure that you always focus on converting keywords that provide the searcher (and then website visitor) with the proper intent.

So how do you use this fancy new tool? Let's get started!

Before you get started make sure you have a Google Account because to access the planner you will need to be logged in. Once you are logged in simply visit the Google AdWords Keyword Planner here.

Google Keyword Planner Intro Screen

Step 1: Log in and input your keywords

Start by logging into the Google Adwords Keyword Planner and select the option "Search for keyword and add group ideas." In this box you should put the variants you typically might use for your industry. For example, if you're a personal injury lawyer, you could put in variants related to your practice area including:

Personal Injury Lawyer
Personal Injury Attorneys
Car Accident Lawyers
Auto Accident Lawyer

This is also a good place to put in the keywords you found in your preliminary research.

Put your keywords in this box

Step 2: Remove the country targeting

This is where it starts to get real cool! Using this new tool you can see the search volumes for your keywords in certain geographic areas. By default, you will likely see your country in the list. To use this tool to its full potential for a city, you will want to click on the country name under targeting and select the remove option.

Remove the country

Pro Tip: If you don't remove the country as mentioned above you will find that your searches will also combine the data from the entire country which defeats the purpose.

Step 3: Add your first city or cities

Since we are using this for local keyword research, we want to find out how many people in our city or surrounding areas are searching for our keywords. Under the targeting area, make sure to add the cities you want to focus on. As a general rule of thumb, the larger cities with higher populations will generate more results for your keywords. Where there are more devices, there are more searches.

How to add your cities in Google Keyword Planning Tool

Pro tip: Keep in mind that this tool is using actual city boundaries defined in Google Maps. Getting to visualize this data will show you if you need to add more cities, etc.

Google Cities Visualization in the Google Keyword Planning Tool

But what if you want to target surrounding areas?
Using this new tool, Google also integrated the "Surrounding Areas" option which allows you to add surrounding cities and also visualize the data. To access this information simply click the "Surrounding Areas" option. As you will see below it will come up with some recommendations, but also allow you to add your own information including "a country, city, or region."

Surrounding Areas in Google Keyword Planning Tool

Step Four: Get Ideas & See Exact Matches

After you have inputted your keywords and selected the cities you want to target, hit the "Get Ideas" button at the bottom to be taken to the results page. If this is done correctly, it should display the areas that you're targeting on the left side of the screen. To see the exact keywords you entered, make sure to select the Keyword Idea's tab in the top middle. By default, it will likely show the "Ad Group Ideas" tab. Typically, I will also select the exact match option as seen below.

Keyword Ideas Results from Google Keyword Planning Tool

Just like the old Google Keyword Tool, you can also scroll below the keywords you input and have access to other keywords that Google believes is relevant to your search term. Of course, the more work you put into finding initial results, the better the results will be.

Other Keyword Results also show as normal

How Can You Use This Data?

There are many great ways you can use this data, but I'll point out a couple that are important to me. For starters, you can now provide clients with accurate information on the searches for their business that are happening in the area they service. You can target your campaign towards cities where you know search volumes already exist and scoop up the business. Another thing you can do is start developing strong content marketing strategies to provide great information on the web and reach potential customers through long tail searches. If you looked on in horror when you saw the low volumes for these searches, it's important to remember that all searchers are different. This is where a long tail strategy comes into play. Put yourself in other's shoes and create content that actual customers would want.

Overall, the good news is that the days of not knowing where geographic searches are coming from are at an end. I give Google props for making this tool available for use and I'm looking forward to see what they will be releasing in the future.

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Confronting the Growing Threat of Climate Change

Featured

Confronting the Growing Threat of Climate Change

In this week’s address, President Obama told the American people about a plan he unveiled a few days ago that confronts the growing threat of climate change, which will cut carbon pollution, protect our country from the impacts of climate change, and lead the world in a coordinated assault on a changing climate.

Watch this week's Weekly Address.

Seth's Blog : Less for less

Less for less

In the long run, there are only two sustainable positions--you sell less for less or you sell more for more.

It's tempting to think that you can pull a Wal-mart and appear to deliver more for less, but that's far more rare than it appears. And the market is smart (and getting smarter) so delivering less for more, while apparently a great gig, doesn't last.

People are going to figure out what's on offer, and they're going to seek out real value. For some, that means getting a little less (less service, less quality, less panache) and paying less, or getting a lot more (more meaning, more insight, more joy) and paying a bit more.

Time to pick.

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