Cut the Cable

Posted by Tad Johnson - Feb 25th, 2008 at 15:02

The cable companies are worried. They see the writing on the wall–products like Apple TV and Xbox 360 are blurring the lines between television and internet content. The studios are in on the game as well, releasing their popular shows to online video sites like Hulu.com. Add to this the availability of over-the-air HDTV, and you may end up asking : why pay for cable?

Try this thought experiment : write down your favorite TV shows. How many are network stations (and therefore available for free in HD)? How many are available at Hulu or Joost or iTunes?

Cut the cable cord

Chances are, your $60 monthly cable bill is significantly higher than the value you’re getting out of it. Do you really watch 30 shows a month (assuming $1.99 each from iTunes)? Unless you’re a sports junky who can’t live without ESPN or you’re watching TV for hours a day, you’re paying too much for cable!

That $720 a year would make a real nice addition to your Roth IRA. Is Project Runway really worth it?

The Oscar’s and Making Money from Movies

Posted by T.W. Hanson - Feb 24th, 2008 at 12:02

Oscar

$9.7 billion is the amount people have spent on movies released in 2007. Is it possible for you to get access to that money? By owning studios, yes is it.

Time Warner, Viacom, Sony and News Corporation are four of the studios that first come to mind. Studios reap approximately 50% of the gross box office figures, approximately $4.85 billion from 2007 releases. There are many costs the studios face with blockbuster films, but $300 million in box office receipts for Harry Potter and the Order of Phoenix has a noticeable effect. The major studios are all conglomerates with other lines of business that dampen the successes and cushion the flops. Therefore they are not directly correlated to the success of their films. However, if you enjoy movies, want to be invested in them and the securities fit your investment profile, movie studios are one way of owning a piece of Hollywood.

Stagflation?

Posted by Tad Johnson - Feb 23rd, 2008 at 12:02

Guest post from Ryan over at ActionsTalk.com

Stagflation on the horizon?

20070413_money_grip_2.jpgThe sub-prime mortgage mess has led to a looming recession. The combination of that looming recession and continued inflation causes an economic state called stagflation. This is a state we have not seen in the US since the 1970’s. The US Labor department reported yesterday that over the last 12 months the CPI or consumer prices have risen 4.3%.
Rising prices (inflation) + Mortgage mess (recession) = STAGFLATION

What to do…?

Nothing in the mean time. Economist agree that there are no monetary or fiscal policy actions that are considered sufficient to remedy stagflation. There is really nothing that can be done in the short-run (less than 5 years). If a restrictive monetary policy is implemented the “stagnant” part increases, (further recession) but if a fueling monetary policy is implemented the “inflation” portion increases.

How did we fix stagflation last time?

The Federal Reserve chairman at the time, Paul Volker, significantly increased interest rates (the opposite of what is occurring now) to reduce the money supply. This was called a “disinflationary” scenario. Fiscal stimuli and money supply growth combined to create a sharp economic recovery, but during that time there was a significant rise in unemployment. Volker trusted that these unemployment concerns would self correct. They did and by the early to mid 1980’s we had recovered from stagflation.

The Power of Rumors

Posted by T.W. Hanson - Feb 22nd, 2008 at 21:02

rumors

Late in today’s trade, the equity markets reversed course.  Stocks that had been down for most of the day moved sharply higher in the last thirty minutes of trading.  The reason for this was a rumor of a split and bailout for one of the major bond insurers.  The rumor came from someone at CNBC who falsely speculated last week that the bond insurers would likely be downgraded this week.

I am not judging the behavior of CNBC, the reporter or the market’s behavior.  However true the rumor may be, what is of note is how billions of dollars moved around on rumors coming from a source that was wrong the week before.

This is one more example of how trying to time the market is dangerous, even for professionals.

The cost of your commute

Posted by Tad Johnson - Feb 22nd, 2008 at 15:02

Where do you live? Where do you work? How do you travel between the two?

In many cities in the U.S., this feat of transportation is accomplished by the personal automobile. We call it a commute. The question is, what does it cost?

Assuming gasoline stays at or above $3 a gallon (which is highly likely) and assuming your car gets the average of 25 mpg, you’re paying $0.12 a mile. If you drive an SUV, you’re likely paying twice that. A hybrid might be half as much.

At this rates, a 10 mile commute costs $2.40 (round trip); a 20 mile commute runs you $4.80. Those of us unfortunate enough to drive 30 miles each way pay $7.20 every day. Over the course of a year, this would cost $600-1800. Just for gas. Ouch.

Then there’s auto maintenance, car payments, insurance, parking, etc. Driving to work every day turns out to be a pricey endeavor. As a vicenarian, you can do better.

carpool500.jpg

First, the easy stuff: take public transportation or carpool. Work from home one a week if you can. If you’re lucky enough to bike to work, take advantage. (You’d be surprised at how enjoyable a 10 mile bike ride can be.) When you do the math, you can save a good deal of cash just by modifying your transportation choices.

Now, the harder stuff: think about where you live. Our nation’s suburbs have lured many a homeowner with promises of cheap houses and huge yards. In most cities, you’ll pay more to live near the city center. Then again, you’ll pay less for transportation. In the ideal case, you could live in a city with good public transportation and give up a car altogether.a

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