In Search of the Perfect Investment

The stockmarket went up big-time yesterday. That confounded all my friends who are out of the market, because of lousy first quarter earnings (some, not all) and a dreary outlook for the world economy (Europe, China, etc.). I offer no learned explanation for the big-time rise, except that things are generally OK. Our official government statistics are somewhat screwy, and ignore our burgeoning underground cash economy, which I’ve written about — it’s the way “unemployed” people get by — and which James Surowiecki has now written about. See below.

That’s not today’s story. Today’s story: My friends and I are jack of conventional, stick-in-the-mud, bricks and mortar, 19th century banks — i.e. most of them.

We are researching online banks.

Here’s the story. We are good bank clients. We don’t borrow money. We leave lots of money with them. Not only are we not getting rewarded for leaving our money with them. But we’re getting hit by ridiculous fees and antediluvian (before the flood) practices.

Every time I receive a wire, my bank charges me $13 — even if the wire is for $13. Every time I want to send a wire, I have to go to their branch, fill in stupid paperwork, wait until a bank employee painfully types my information into their agonizingly slow computers, have me check what he mistyped, correct it on his screen, then he charges me $20. To deposit a check I have to mail it or go physically into their branch and wait in line for their one teller — while the rest of their employees are goofing off, checking their friends on Facebook.

Nothing has changed at our banks in 100 years, except their furniture now comes from Ikea and looks it.

Some banks have changed. Some have moved into the 20th century. They now have things my friends and I are looking for:

+ Photo deposits. Take a photo of your check. Email it to your bank. Bingo, no more visits. No more printing mailing labels. No more scurrying for envelopes. No more postage. No more rushing to the post office.

+ Bill pay. I can pay my bills online, like PayPal.

+ Online wire sending. I can sit at home, and send wires. I can type my own information. I don’t have to deal with a bored, banking employee moron. Sending wires is free.

+ Mobile banking. I can see my balances online and I can do banking with my iPhone.

+ I don’t get charged for incoming wires. (I’ve never understood why I get charged. It seems to me that my bank would want money. Why would they penalize me for bringing them money? Answer: they don’t think.

+ No fees for taking money out of ATMs anywhere in the U.S.

+ etc. etc.

I am a customer of my bank because once upon a time, a long long time ago, the president was a friend of mine. But he moved on long ago. And I didn’t. Call it dumb inertia. Anyway, we’re moving on. But where? That we don’t know. Strikes me it would be nice to a have a bricks and mortar bank with real Internet services. There must be a bank somewhere that’s moved into the 20th century. Note, I’m not asking for the 21st century. We’re looking for a modern, thinking bank.

According to GoBankingRates.com, there are four online banks. Here’s their skimpy comparison chart:

 

I’m making an appeal to my readers. Does anyone have a decent bank? What’s been your experiences?

This morning I’m going through the charges my bank has hit me for recently. So far, I’ve found 15 charges of $13 in the past few months. My bank will refund the charges. But why do I have to go through this waste-of-time ritual idiocy when they should not charge me in the first place — except for the stupid 19th century computer which can’t be programmed to be nice to Harry and horrible to deadbeat Charlie.

You got a better bank? Send an email. Leave a comment.

 The insanity of spending what you don’t have. Try this on for size. A restaurant is trying to raise money for their first restaurant of what they hope will be a hugely-successful chain. The prospectus says they will open in February, 2013. I ask “what happened? Its April and they still haven’t opened.”

Turns out they needed $1,5 million. But they raised only $1.2 million. Still they went ahead and built what they could for $1.2 million, figuring someone would quickly pony up the remaining $300,000. They didn’t. So, now they have a half-finished, closed restaurant on which they’re paying huge monthly rent.

Would you give these great entrepreneurs $300,000?

I mulled Apple all yesterday. Should I buy some  ahead of the late afternoon earnings announcement — purely for the gamble? I figured Tim Cook had to do something — anything — to help boost the stock. Announce a new product, a new direction, a new one-time dividend, a stock split… anything to give some indication he cared about the billions of dollars his stockholders have recently lost. After all Apple can’t go on being a one-product company — the iPhone — in the face of declining smartphone sales in most places.

In the end, I didn’t buy any Apple and Tim Cook did nothing, except confuse the poor market. Last night Apple rose 5%, but this morning it’s down 3%. Talk about confusing. Tim is upping the dividend by 15% (whoopee do) and increasing the share buy back (whoopee do). But that’s not what the Apple world wants. They want excitement. They want buzz. New software. (Will he ever fix Apple Maps?) New products. I, for one, would like a bigger screen on my iPhone (like the hot new Samsung Galaxy S4 — see ComputerWorld’s review here) but it’s not going to happen, according to Mr. Cook. Why? he thinks the present screen is “right.” Who knows?

In the end, I did nothing and missed the after hours bounce, but avoided this morning’s hefty fall.

 From a learned stock analyst report yesterday:

Look at it. The analyst’s target price is 4% what the stock is selling for. Yet his recommendation is Hold. Go figure.

From this week’s New Yorker:

The Financial Page
The Underground Recovery
by James Surowiecki April 29, 2013

When we all finished filing our tax returns last week, there was a little something missing: two trillion dollars. That’s how much money Americans may have made in the past year that didn’t get reported to the I.R.S., according to a recent study by the economist Edgar Feige, who’s been investigating the so-called underground, or gray, economy for thirty-five years. It’s a huge number: if the government managed to collect taxes on all that income, the deficit would be trivial. This unreported income is being earned, for the most part, not by drug dealers or Mob bosses but by tens of millions of people with run-of-the-mill jobs-nannies, barbers, Web-site designers, and construction workers-who are getting paid off the books. Ordinary Americans have gone underground, and, as the recovery continues to limp along, they seem to be doing it more and more.

Measuring an unreported economy is obviously tricky. But look closely and you can see the traces of a booming informal economy everywhere. As Feige said to me, “The best footprint left in the sand by this economy that doesn’t want to be observed is the use of cash.” His studies show that, while economists talk about the advent of a cashless society, Americans still hold an enormous amount of cold, hard cash-as much as seven hundred and fifty billion dollars. The percentage of Americans who don’t use banks is surprisingly high, and on the rise. Off-the-books activity also helps explain a mystery about the current economy: even though the percentage of Americans officially working has dropped dramatically, and even though household income is still well below what it was in 2007, personal consumption is higher than it was before the recession, and retail sales have been growing briskly (despite a dip in March). Bernard Baumohl, an economist at the Economic Outlook Group, estimates that, based on historical patterns, current retail sales are actually what you’d expect if the unemployment rate were around five or six per cent, rather than the 7.6 per cent we’re stuck with. The difference, he argues, probably reflects workers migrating into the shadow economy. “It’s typical that during recessions people work on the side while collecting unemployment,” Baumohl told me. “But the severity of the recession and the profound weakness of this recovery may mean that a lot more people have entered the underground economy, and have had to stay there longer.”

The increasing importance of the gray economy isn’t only a reaction to the downturn: studies suggest that the sector has been growing steadily over the years. In 1992, the I.R.S. estimated that the government was losing $80 billion a year in income-tax revenue. Its estimate for 2006 was $385 billion-almost five times as much (and still an underestimate, according to Feige’s numbers). The U.S. is certainly a long way from, say, Greece, where tax evasion is a national sport and the shadow economy accounts for twenty-seven per cent of G.D.P. But the forces pushing people to work off the books are powerful. Feige points to the growing distrust of government as one important factor. The desire to avoid licensing regulations, which force people to jump through elaborate hoops just to get a job, is another. Most important, perhaps, are changes in the way we work. As Baumohl put it, “For businesses, the calculus of hiring has fundamentally changed.” Companies have got used to bringing people on as needed and then dropping them when the job is over, and they save on benefits and payroll taxes by treating even full-time employees as independent contractors. Casual employment often becomes under-the-table work; the arrangement has become a way of life in the construction industry. In a recent California survey of three hundred thousand contractors, two-thirds said they had no direct employees, meaning that they did not need to pay workers’-compensation insurance or payroll taxes. In other words, for lots of people off-the-books work is the only job available.

Sudhir Venkatesh, a sociologist at Columbia and the author of a study of the underground economy, thinks that many workers, particularly younger ones, have become comfortable with casual work arrangements. “We have seen the rise of a new generation of people who are much more used to doing things in a freelance way,” he said. “That makes them more amenable to unregulated work. And they seem less concerned about security, which they equate with rigidity.” The growing importance of services in the economy is also crucial. Tutors, nannies, yoga teachers, housecleaners, and the like are often paid in cash, which is hard for the I.R.S. to track. In a 2006 study, the economist Catherine Haskins found that between eighty and ninety-seven per cent of nannies were paid under the table.

It’s obviously a good thing that people are able to find work to keep themselves afloat when the legitimate economy has been terrible at creating new jobs and raising incomes. And the size of the shadow economy means that our economy as a whole is probably doing better than we think. But the damaging effects of this trend are clear. It’s hard for businesses to play by the rules if their competitors aren’t paying payroll taxes or workers’ comp. And off-the-books workers have no benefits or Social Security, and not much recourse if a boss decides to shortchange them. What’s more, when a sizable chunk of the population avoids taxes, confidence in the system diminishes. “Too much off-the-books work is not good for the social contract,” Venkatesh says. “Economies work best when people have some sense, however abstract, that they are all tied together.” 

It’s all over. Everything is gone. Or soon will be. Today I received this email:

The evidence is total bullshit — even if I knew what it was.  It comes from someone called Mike Larson, who is Editor of the Safe Money Report. It’s amazing how many gullible, frightened people there are.

Harry Newton who is aghast at what airfares are now costing — especially for peak ravel times. Harry’s advice: Try a different arriving or departing airport. Travel earlier or later. Negotiate your fares directly with the airline. Do American Express Platinum Two-For-One business tickets. But be wary. The airlines have cottoned onto American Express and are now offering cheaper flights — if you call. Or stay home.

Or travel and see the sights. I found these at Roosevelt Island subway station yesterday. I had to crawl around the floor to get this priceless photo. The lady told me that  the shoes were actually  comfortable. And pigs will fly.

Susan is playing tennis outside this morning. The first time this season. It’s warm and sunny in New York. Hallelujah. Perfect biking weather.