Archive for September, 2009

Shopping To Save Money

September 17th, 2009

Not every saving is worth having I do my best to save money. My best tactic is not to buy anything, not even that pair of jeans hanging in the window of the men’s store. I also invest fair amounts of time teaching my wife the subject of economics and how to run the house on cooking oil fumes.

Here are my rules:

• If we have one, don’t buy another one.
• Shop around first, you may find the same thing cheaper somewhere else.
• Haggle – do not feel sorry for the shopkeeper.
• The supermarket will not go bust if you miss a day.
• Look at the specials but make sure we need it before you buy it.
• Go to the supermarket with a list.
• When you have all the items on the list, pay and leave.

I think the rules are all very clear and easy to follow.

Look at all the great deals

One can save money every day. The problem is you have to buy in order to save. The deals change from day to day. Basically it’s all a plot to keep you from understanding exactly what’s happening. That pair of jeans that I slobbered over was $350 when I first saw them. The next day they were marked at $299.99. Progress, I thought. Sure enough, the next day they were $275. Those jeans will soon be mine. The days passed and the price kept dropping. Then they changed the marketing strategy. 3 pairs for $599. I stopped going to look. Who needs 3 pairs of jeans?

In the supermarket

The supermarkets are great marketing strategists. The way they place the counters, the color of the floors, the subtle changes in decoration and the music that floats out over the sound systems. Everything is carefully designed to make you feel as though you have money to spend. The pricing is part of the game. One week sardines are $2 a tin and the next week they are $2 for 2 tins. Last week I was buried deep in the start of an article and I heard my wife telling me that she was off to the supermarket. I grunted in response without missing a keystroke. Some time later I heard her come back into the house. “I got some great bargains!” she said flouncing into the study. I was close to my 500 words and didn’t look up. “It was 3 for 1 day!”

Tonight’s dinner

My wife’s Chinese chicken is simply the best. It is served on a bed of rice. It is sweet and sour and the little pieces of chicken have been fried in a batter. Mmmmm. But tonight’s dish was different. “What is this awful stuff under the chicken?” “Oh that? Remember the other day I told you about 3 for 1 day at the supermarket? Well that’s the rice I bought. 3 packets for $2!” There’s something missing from my rules, right?

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Where has all the money gone?

September 16th, 2009

Billions have been slashed from stock markets. Where are they?

All the world’s markets have fallen and huge amounts of real money have disappeared. But has it? Where could it have gone? Questions are being asked, “When the headlines say ‘Billions slashed from the stock market’, where have the billions gone?” Another popular question is “I bought some shares for $1,000 last year and now they’re only worth $500. What’s happened to that other $500? Where’s it gone?” Would you believe that there are people walking around saying that what’s happening is all a scam and the “lost” money has been swiped by the financial services industry?

The answer

The answer is that when a share price changes, no actual money is involved in the change. All that changes is the perceived value of the shares in the minds of the buyers and sellers who make up the market. That perceived value may or may not reflect the true value of the piece of the company that a share represents. Investor ideas on value vary wildly and move share prices up or down to highs and lows that bear no relationship to the true value of those shares. Benjamin Graham, the great American economist and professional investor is considered the first proponent of Value Investing and he explained that, “In the short-run, the market is a voting machine, reflecting a voter-registration test that requires only money, not intelligence or emotional stability, but in the long-run, the market is a weighing machine.” So, when that investor bought those shares for $1,000 a year ago, that was the price on the market. The $1,000 went to the person who previously owned them. If the same shares are sold today for $500, that $500 will come from another investor, who is asking for that amount of money. In current opinion those shares are only worth $500.

So where’s the money?

The $1,500 in cash that existed (meaning the original $1,000 used to buy the shares last year, and the $500 that our latest investor pays to buy them now) is still there, just in different hands. It’s certainly not in the pocket of some scam-merchant in the industry and no one has taken any of it. The real money comes from the “weighing machine” part of Graham’s famous quotation. Investor sentiment does not count. All that matters is a company’s actual results. And a share price, which may have soared to great heights or sunk to suicidal lows as the market reacted to good or bad news, will keep going back to the real rational value of the company as determined by its actual financial performance.

Where is the money coming from?

Everyone who was in the market lost money. A person who was buying and selling shares in a limited portfolio of $5,000 has probably kissed goodbye to about half of his money, $2,500. Now that the market is on the upswing the question to ask is, where’s all the money coming from?

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Say Hi to Juan Martin Del Potro of Argentina

September 15th, 2009

He’s carrying a bag with 1.8 million dollars in it

Born on September 23, 1988, a resident of Tandil, Argentina, he is 6’6” tall and may be the up and coming tennis champ of the world. He seems pleasant and modest and is a great tennis player. A few weeks before his 21st birthday, he nailed the US Open Tennis Tournament by beating long-time champion Roger Federer. Del Potro still has a long playing career ahead of him and with the right coaching will probably be the next dominator of men’s tennis. Meantime, just to show that he means business, he pocketed $1.8 million in the US Open.

Up to now

To date Del Potro’s total earnings from tennis amount to $5.5 million and this year they are $3.6 million, not including the latest episode. Roger Federer’s career earnings are about $51 million. This is from play only and does not include the commercial side which comes from sponsorships and advertising. Being at the top of the tennis ladder is lucrative business!

The beginning

Del Potro began playing tennis at age seven. His talent was discovered by Italian ex-tennis professional Ugo Colombini, who accompanied him through the initial phases of his young career, and is still today his agent and close friend. At the age of 14, Del Potro played in three tournaments in Argentina, losing in the first round of each. A year later he made it to the second round of the same tournament. Later that year, he reached the quarterfinals of the ITF Circuit event in Brazil. He also reached the finals in the Argentina Cup and Campionati Internazionali D’Italia Junior tournaments. He was now established as a tennis player to watch. He was a crowd favorite and was widely known for his short temper.

2008

Del Potro enjoyed his best season in 2008, winning four titles and finishing in the Top 10 for the first time. He also finished as Argentina’s number one player and the highest ranked South American.

Tennis

The game of tennis has made great strides in the past 20 or so years, partly due to the huge amount of money that finds its way into the game and partly due to its enormous exposure on television. The money comes from sponsors and advertising and seems to be unlimited. What I find quite amazing is that this is the same game of tennis that was played in the 19th century. Even the rules have changed very little since the 1890s. Two exceptions are that from 1908 to 1960 the server had to keep one foot on the ground at all times, and then the adoption of the tie-break in the 1970s.

The prize money

In 1968, the first year of the US Open the total prize money in the beginning was $17 million. This year it was set at $19.6 million. All participating players are offered monetary compensation for accommodation and other expenses.

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