1. Don’t talk yourself into the opportunity. It’s easy to give the president your advice and your ideas.<\/p>\n
2. Listen to the management.<\/p>\n
It’s all about the management. Repeat five times. The management should be super-talented, super-motivated and super-impressive. And, hopefully have lots of their own money in the venture.<\/p>\n
Don’t bet the house on startups. The failure rate is very high. Pick correctly. Your gains can be much higher than anything you’ll see in today’s miserable stockmarket.<\/p>\n
For a flavor of today’s start-up craziness, visit Zephyrnet<\/strong><\/a>,\u00a0 RocketHub<\/strong><\/a> and KickStarter<\/strong><\/a>.<\/p>\n Europe is killing us.<\/strong><\/span> It’s hard to see our markets going anywhere if Europe keeps getting worse and worse. I read that half<\/strong> our big banks have big exposure to Europe. Greece and, now, Italy, can’t pay their bills.<\/p>\n So, do something. Anything. The longer they delay the more political problems, the more strikes, the more civil unrest. Who knows where it will all end. Italy’s bonds are now yielding 7%. That doesn’t seem high to me. I’d want a lot more before I even considered them. But people are buying them… And the press is screaming that this is a disaster.<\/p>\n There’s a huge emotional attachment to the Euro. The whole idea of Europe coming together as one Europe was motivated by two devastating World Wars. We’re not going to have World War III any time soon.<\/p>\n It’s time to move on. Solve the economic debt crisis before it’s too late. Let Greece out of the Eurozone. Maybe let\u00a0 Italy out also. Let them devalue and come back in later.<\/p>\n Will the politicians do this now? Or wait? They’ll wait. They’ll prolong our agony for eons. “What really ails Italy<\/em>” is a big piece in the atest New Yorker magazine. Click here.<\/strong><\/a><\/p>\n It’s hard to like equities in this uncertain world.<\/p>\n Please say no to on-line gambling and on-line FX trading. <\/strong>Israel banned on-line gambling not because they had moral convictions. But because it was crooked and run dishonestly. The operators were crooks and thieves. And the whole system was too open to being hacked by other crooks and thieves. Ditto for on-line foreign exchange trading by many of the operators you see heavily advertising on bubbleTV. <\/span><\/span><\/p>\n I could burble on with more stuff. Stories about how hackers can see your poker hand. And know when to bet against you and take all your money. <\/span><\/span><\/p>\n You get the message: On-line gambling and on-line FX trading are stacked against you, the\u00a0 player. Don’t go near them. My son Michael bitched to me last night. <\/strong>He said I should have taught him computer programming when he was a kid. He’s right. All kids should learn how to write\u00a0 software. It will enhance their career. Whatever career they choose being able to program will make it better, easier, faster, more satisfying etc. Kids with programming skills will get jobs over those who don’t have them. Trust me on this one. You owe it to your kids. Buy them programming books. Send them to software school. Do whatever is necessary. But teach them programming. You owe it to them. Ditto for grandkids. The 100 Best Com;puter Products of 2011. <\/strong><\/span>PC World has a list. <\/span><\/span>Click here.<\/strong><\/a><\/span><\/span> This one intrigued —\u00a0 the Maxthon browser. Click here.<\/strong><\/a><\/span><\/span><\/p>\n There are two big ways to improve your computing “experience. ” (Don’t you hate that stupid word?) First, buy an SSD (solid state hard drive). I like the Kingston ones. OCZ makes faster ones, but they’re pricier. I can’t notice any difference in speed no matter which SSD I use. Simply having a SSD makes the difference.<\/span><\/span><\/p>\n Second, buy a large external computer monitor. They’ve become really cheap. Don’t buy anything at Best Buy — unless you’re desperate. Their selection is too limited, their prices often too high and they often charge sales tax. I prefer on-line places like Newegg.<\/a> Apricorn’s Aegis drive are no more, for now. <\/strong>Remember the external hard drive I love? It came from Apricorn and I featured it in the right hand column under “Favorite Tools.” It’s still a favorite tool. But the flooding in Thailand has hurt the supply of hard drives<\/span><\/span>. Apricorn stopped making the external drive system because it simply can’t get sufficient drives. Give it a few more months.<\/span><\/span><\/span><\/p>\n AT&T sucks even more than you can imagine. <\/strong>You can be an AT&T Wireless customer <\/span><\/span>for a lifetime. But you won’t get a penny off if you want to upgrade your iPhone4 to a 4S. You’ll still have to pay the standard price for the phone and commit to a two-year contract. Hence AT&T is offering absolutely no incentive for me NOT <\/strong>to switch to Verizon, which is exactly what I’m going to do. AT&T has horrible service, and is dumb. Maybe there’s a worse combination. I haven’t found it. Do not buy AT&T’s shares, despite their high 5.8% dividend yield.<\/span><\/span><\/span><\/p>\n The Deleveraging Myth, from a favorite author, <\/strong><\/span>James Surowiecki in the November 14 issue of the New Yorker:<\/p>\n When the government reported, last month, that the U.S. economy grew at an annualized rate of 2.5 per cent in the third quarter, it was a classic good-news, bad-news situation. The good news is that we aren’t falling back into recession (the dreaded “double-dip”), but the bad news is that, two and a half years after the recession ended, the economy is still just limping along. Many analysts casting about for an explanation of why this recovery has been so tepid have concluded that, as Paul Krugman has written, “it was debt what did it.” Between 2001 and 2007, Americans went on an incredible borrowing binge, nearly doubling their household debt. Now, the argument goes, consumers are focussed on paying off that debt instead of spending freely, and, as long as this process of “deleveraging” continues, the economy is going to stay stuck in the doldrums. Debt, in the words of The Atlantic, is the recovery’s “silent assassin.”<\/p>\n Americans certainly have lots of debt, but the evidence that it’s killing the recovery is surprisingly sketchy. For a start, American consumers are not actually keeping their wallets closed. Real consumer spending, after collapsing in 2009, has risen for nine straight quarters; this past quarter it was up at an annualized rate of 2.4 per cent. That looks anemic by the standard of past recoveries, but, with an unemployment rate near ten per cent and wages barely rising, that’s to be expected. More important, several things that you’d expect to see if the deleveraging thesis were correct haven’t happened. Personal consumption hasn’t shrunk as a share of the economy: in 2010, it accounted for more than seventy per cent of G.D.P., close to where it’s been for the past decade. And consumers aren’t saving at an unusually high rate; the savings rate during the recovery has hovered around five per cent, significantly lower than the postwar average. And although consumers did reduce their total amount of non-mortgage debt very slightly in 2009, in the two years since, that number has risen again. By historical standards, then, consumer spending is high, not low.<\/p>\n Of course, relative to the housing-bubble years, both spending and debt are down. But this is the wrong benchmark to use. Borrowing furiously against home equity to fuel a spending spree wasn’t sustainable, and we shouldn’t be looking to get the economy back to that state. Indeed, one simple reason Americans have been spending less on cars and durable goods is that, as the economist Robert Hall has shown, their spending on these things during the bubble was extraordinarily, unnaturally high. If we’ve been buying fewer cars and washing machines, it’s in part because we’ve been working off the overhang from the bubble years.<\/p>\n In any case, you don’t need to talk about deleveraging to explain sluggish consumer spending. The far likelier cause is what economists call the housing-wealth effect. It’s well established that when housing prices go up people feel richer and spend more: the rule of thumb is that they spend between five and seven per cent of the increase in housing wealth. But when housing prices go down people cut their spending by the same amount in response. Between 2006 and 2011, American homeowners saw the value of their homes drop by seven trillion dollars or so. That means that-even if consumers had no debt at all-we’d expect a dropoff in consumption of about four hundred billion dollars. Toss in the steep decline in the value of people’s retirement accounts and the sense of fear engendered by the near-meltdown of the global financial system, and it’s hardly shocking that consumers are cautious. Given how much wealth Americans lost and how weak the job market is, the real wonder is that spending has proved as resilient as it has.<\/p>\n There’s no need to posit a “silent assassin” to explain why the recovery is weak. You just need to look at what the bursting of the housing bubble did to the economy. As the economist Dean Baker has pointed out, if you couple the negative impact of the wealth effect due to the housing bubble bursting with the steep decline in residential investment once the bubble burst, you end up with a huge shortfall in demand. Debt exacerbates this, but the core problems are weak demand and the fact that our monetary and fiscal policies haven’t done enough to strengthen it. People are simply much less rich than they were-or thought they were. The average American household lost almost twenty-five per cent of its wealth during the crash. And incomes are not rising briskly enough to offset this. In fact, during the past decade median income fell in real terms.<\/p>\n This doesn’t mean that the piles of debt accumulated during the bubble aren’t a serious problem and incredibly onerous to the people who are struggling under them. But it does suggest that dealing with the debt problem, or the housing crisis, is not the panacea for the economy that many have made it out to be, especially as debt-servicing costs are already near a twenty-year low. Indeed, even if you could overcome the political obstacles to wiping out all of homeowners’ negative equity, the impact on consumer spending would be surprisingly small. The important lesson is that, if, after all, consumers aren’t keeping their spending unnaturally low, we can’t look to them to jump-start this recovery, even though they’ve been the engines of recovery in the past. This time around, business, export markets, and, especially, the government need to do what consumers can’t.<\/p>\n Favorite recent New Yorker cartoons.<\/strong><\/span><\/span><\/span><\/span><\/p>\n
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