Blue Sky On Mars

Two years ago, I wrote about how Harry Potter and the Order of the Phoenix’s $90 million haul was bigger than that of Hollywood’s biggest movie of the week. With reports of Harry Potter and the Half-Blood Prince selling through more than 10 million copies *today*, this book is debuting bigger than any movie has ever debuted. If Amazon’s $17 price is at all representative, that means that Half-Blood Prince will have a $170 million day.

Oh, and if the spolier Stallman posted a couple days ago turns out to be accurate, this is going to be a helluva story.

For a large software development project, the risks of offshoring development can potentially be huge. For small, specific parts of a project, farming that piece out to someone else can be fairly low risk. This can also apply to very small project, like one you might want done yourself. Ben Hammersley gives a tiny taste of personal offshoring. The internet really does change things.

Right now, Apple (AAPL) is trading for about $39 per share. If you want to get a gift for someone, you can get them one framed share of Apple for just $122. Or you could get them three shares of stock instead.

Which one would you choose? That says something about you… a practical person would buy three shares of stock: that’s three times the dividends (if Apple pays dividends), three times the appreciation and three times the value when sold. A more sentimental person would get the spiffy framed version to put on the wall.

Maybe if I were a true Apple geek, I’d want one of these. But, I just don’t see it.

If this story about Google’s plan to take on PayPal has any truth to it, this may indeed be a fine time to invest in GOOG despite the $70 billion valuation. Why? Because my guess is that if they enter that market they have original spin on online payments. I can’t imagine that they would just offer up a clone of PayPal. Everything else they’ve done to date has had a significant technological edge to it.

Update:

This is what I posted in response to Scott Sanders’ post about Google going after micropayments.

That’s interesting. I very nearly wrote on my blog that Google could implement a functional micropayments system.

I’m just not sure that that’s what they’ll go after though. I was reminded of Clay Shirky’s article (that actually goes all the way back to 2000!) arguing that micropayments are bad, because people will need to make a thousand little purchase decisions every day. Imagine if your typical blog was 1 cent per page viewed. 1 cent is nothing and seems easy to throw away… but if every blog you viewed did that, you probably would view a whole lot less and think about what you subscribe to more. Here’s Shirky’s article:

http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.html

That said, I do think you’re right that if Google pushed some kind of identity system and reduced the general friction in payments somewhat, they could produce a lower-cost (to buyers and sellers) system. This may have the sideeffect of enabling micropayments, but I doubt that their pitch is going to be about micropayments.

I’m certain that they’ll keep a transaction log and that it’ll be no big deal for them. (I betcha they have an absolutely enormous amount of data being logged as it is.)

One other thing to note that I didn’t see in the article that I had linked to or here: this story apparently was in the Wall Street Journal, which gives it a modicum of credibility.

http://online.wsj.com/article_email/0,,SB111905141149263168-IdjgINhlaN4oJyobIKHbK2Bm4,00.html

(I got that link from /.)

In the rush to capitalize on internet efficiencies, many businesses use their websites 100% in lieu of person-to-person communication. As a small business owner, I can understand this to an extent. However, there are certain kinds of communication that are really vital to their business.

Google makes more than 90% of their revenue from advertising. I don’t know what portion of this is AdSense (ads that appear on other sites like this one), but I’m sure it amounts to many millions a year.

Given the value of that business, Google goes the extra mile to make sure that AdSense is implemented effectively, even going as far as offering a phone call with a real live human to explain how to use AdSense well.

I declined, because their documentation is already quite good. You’ll note that I’ve already made a change on the individual entry pages that better reflects best practices.

Of course, I’m also not out to squeeze every last cent from AdSense. Somehow, I doubt that the “link units” (canned searches related to the content on the page) are as effective, but they seem useful so I put them up. So far, the ads and links that I’ve seen appear pretty topical, so I’m pleased with that aspect.

Marshall Brain, creator of the most excellent How Stuff Works has posted a presentation he gave in which he talks about how to make a million dollars. The presentation is a nice, light read and is generally of the “motivational” sort, by which i mean that it’s main purpose appears to be to get you off your butt and start something. Which is a very worthy goal, to be sure.

As an adjunct to this, he has created WebKEW, where he talks about making money online. There appears to be quite a bit of reading there, and it looks well worth checking out if you’re thinking of gettnig your own business going. (Some of what they have to say may even apply to folks not starting online businesses…)

It’s getting to be time to rebalance the finances. Much of my thinking of the current state of the economy and the stock market echoes what you see in John Mauldin’s excellent Bull’s Eye Investing. (Do be sure to check out John’s free newsletter, as he dispenses useful and timely thoughts every week). The short of it:

• Stocks are richly priced and are not going to provide decent returns for the next few years. Don’t believe me? Take a look at how good the returns for the major indexes have been over the past 5 years. (Hint: it’s close to zero.) For the full story on this, read Mauldin’s book. He goes into almost excruciating detail.

• There are still stocks out there that are good values. The Motley Fool does a decent job finding them.

• The trade deficit, though it declined in the most recent month, is huge. Couple this with a government that’s borrowing money like a teenager with their first credit card, and you’ve got a recipe for a falling dollar. Already, the dollar has taken a huge tumble against other currencies. I wish I had acted on this sooner, but it wouldn’t seem that the dollar is done falling yet. As Mauldin has mentioned in recent newsletters, Asian governments are buying up dollars to hold up their business in exports to the US. If they stop, the dollar will plunge. If you don’t believe me that the trade deficit and the budget deficit are a problem, listen to Mauldin or Warren Buffett and Charles Munger. Those guys know what they’re talking about.

• Interest rates are on the rise.

This is some scary stuff. So, I’m going to look into some good sources for safe returns. I’ll also mention one that’s a bit less safe, but interesting nonetheless.

I’m not a lawyer, financial planner, CPA, gardener, bartender or anyone else qualified to give professional financial advice. You’ll have to figure out for yourself what you want to do with your money, but I’ve got some good links here to share.

First stop, Bankrate.com, where you can get a quick snapshot of interest rates. They’re listing five banks offering 3.9-4.0% APY on a 1 year CD. That’s a big boost over the rates of a year ago. 6 month CDs can be found with 3.5-3.68% APY.

Want something more liquid than that? How about an Emigrant Direct “American Dream” Savings Account? 3.25% APY, and it’s “linked” to your existing checking account. This is an FDIC-insured bank account from a real bank with $10 billion in assets.

With inflation on the rise, Series I Bonds are a good deal. In fact, these have had some of the best returns for completely safe investments. Currently, they are paying 4.8% (1.2% fixed + the inflation rate). You have to hold the bond for a year, and you pay 3 months interest as a penalty if you cash it in before five years is up. When CDs were paying 1.5%, these guys were paying 2.2%.

These rates of return may not sound all that great. But, if the stock market has another five years like the previous five, you’ll be better off putting your money into one of these guaranteed investments. Of course, I don’t advocate putting all of one’s money in “safe” investments, but that’s what I happened to be looking at right now and figured I’d pass along what I find.

Now we come to the promised “less safe” option. Actually, if you believe that the dollar is going to fall, this is more safe. You see, earning 3.25% in a money market is great. But, if the dollar is falling against other currencies, we’ll likely see inflation increasing and our buying power drop. This is what makes EverBank interesting.

EverBank offers FDIC insured accounts like other banks, so you don’t need to worry about that aspect. On the surface, their site lists a 2.76% APY money market. At 0.5% less than Emigrant, that’s not interesting. Take a look on the right hand side of the page, and you’ll notice “World Currency” rates. That’s what makes EverBank interesting.

These folks let you open up savings accounts and CDs in other currencies. Let’s say you think the dollar is going to fall against the euro. You could open an account with a European bank, and then deal with all of the extra paperwork that holders of foreign accounts have to deal with. Or, you could just open an account with EverBank, a US bank that makes it easy to deal in foreign currencies.

When you look at EverBank’s rates, keep in mind that shifts in foreign exchange rates alter what the net rate is to you. If the dollar drops 15% against the euro, and you’ve got your account in euros, you’ve just made 15%! That’s why it’s a bit riskier a proposition: you’re gambling on foreign exchange rates. When you invest in one of the other places I described above, at least you know your principal is safe and that you’re getting a guaranteed rate.

For stock tips, you should probably go to the Fool. You could also pay attention to the investment spam messages that show up, but I wouldn’t recommend it. Then again, it doesn’t matter what I’d recommend, because I’m not a professional

Tiger Direct appears to be shameless. One day before the slated release of Mac OS X Tiger, they have decided that Apple is infringing on their trademark. The claim does indeed have merit, but the timing certainly doesn’t. The Mac OS X Tiger name was announced a long time ago, and I’m sure that Tiger Direct had heard of it before this week.

They’re just hoping for a cushy settlement, given Apple’s billions in cash.

TUAW makes the statement: buy Apple stock! Here’s my response:

Something you see a lot on the Fool regularly is that you really need to by stocks by value. And, not just value relative to other stocks, but real value of the business. According to Yahoo, Apple is worth about $30.5 billion right now, even after the 9% drop.

http://finance.yahoo.com/q?s=aapl

Apple earned about $300 million this past quarter. That would work out to $1.2 billion per year. But, adding in more growth and the fact that the 4th quarter is the biggest moneymaker, maybe they can do $1.5-$2.0 billion. Historical price-to-earnings ratio is about 16, and that earnings range puts them between 15 and 20.

What does all of that back of the envelope calculation boil down to? Beats the hell out of me. Just kidding. Actually, AAPL seems like a good value *if* the iPod business or something like it keeps on chugging.

If the economy goes sour, though, I’d bet that fewer people will pony up $250 for a music player.

(This should in no way be construed as financial advice. Talk to your financial professional. Do not eat AAPL.)

Engadget and Slashdot are reporting that Best Buy is going to stop their rebate programs within two years. Though Best Buy does not use TCA, as far as I know, this is probably a good move for them. CompUSA, who does use TCA, should pay attention, given that one of my most popular posts over time has been about problems with getting rebates fulfilled. Hopefully, the rebates will be replaced by lower direct sale prices.