markets

What Makes a Home's Location "Good"

Dan Rafter — Mon, 23 Apr 2018 08:30:05 +0000

You've probably heard that only three things matter when it comes to real estate: location, location, location. But what does that mean? When you're looking for a home, what makes a location a truly good one?

Here are the factors that matter the most when searching for that perfect location. (See also: How to Research a Home's Location Before You Buy)

How much are other homes selling for?

Ideally, you want to buy a home in a neighborhood where home values are rising. This is an indication of demand — people want to live in the neighborhood you are considering.

Your real estate agent can give you a history of home prices in the communities you are targeting, whether prices are on the rise, and what the average home in the area sells for.

How long is it taking homes to sell?

Your real estate agent can also show you recent home sales in the neighborhoods you are considering. Look at the prices homes have fetched, of course. But also consider how long it takes homes to sell. This is another good indicator of the demand within a certain location. If homes are selling quickly — a month or less — you're looking at an up-and-coming neighborhood.

How good are the schools?

Quality schools are one of the most important features for homebuyers. This isn't surprising: Think of how many people buy homes as they are starting families, or how many people move into bigger homes as their family grows.

When you are ready to buy, pay close attention to the schools in the area, even if you don't have school-age children. Being near a good school will add value to your home, making it more attractive to buyers if you should later decide to sell.

You can look up the local school rating on Zillow, or get information on a school's overall performance on GreatSchools, which offers data on test scores, student progress, equity, and reviews. You can also check the school report cards for the public schools in the area. These report cards, maintained by your state's board of education, will give you a snapshot of how students are performing on national tests. (See also: How to Evaluate a Neighborhood Before You Buy)

Is there much crime?

It's no surprise that locations with lower crime rates are considered more desirable than those with higher ones. But, there is a caveat here: If you're looking for a home in a bustling neighborhood filled with restaurants, shops, and entertainment, these areas often have higher crime rates due to the added foot traffic and activity. This can lead to an increase in thefts, car break-ins, and shoplifting.

That doesn't mean, though, that a busy, popular neighborhood isn't a good location. The positives of a bustling urban area can outweigh the increase in crime that comes with them.

Is it a walkable location?

There's still a market for suburban homes, but a growing number of buyers are looking to live in a neighborhood where they can walk to public transportation, restaurants, grocery stores, bars, and shops. You can check out how walkable a neighborhood is by visiting WalkScore and entering an address. The higher the walk score — on a scale of 0 to 100 — the more errands and activities you can complete on foot.

Are there unfixable problems nearby?

There are plenty of problems with homes that you can fix; you can update that 1970s-era kitchen or add that missing bathroom. But there are also plenty of issues you can't fix, especially if they're part of the greater location.

For instance, most buyers consider a busy main street to be a negative, which is something you can't fix. Another example? Train tracks running behind the backyard. There's nothing you do can do to muffle the roar of passing trains or get those tracks moved.

When looking for a home, turn your attention to more than just what you don't like about the interior. Make sure that there aren't any unfixable negatives nearby that might chase future buyers away. A home that sits on a busy street might cost less than it would in a quieter part of town, but this means that it will sell for less, too. (See also: 14 Things You'll Hate About Your Next House)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How the Pilgrims Did Personal Finance

Tim Lemke — Fri, 04 Nov 2016 09:00:09 +0000

It's the time of year when we celebrate the Pilgrims crossing over to the New World and settling the land we now call America. The stories of the Pilgrims' courage in traveling on the Mayflower and surviving those early years are legendary. But they did not survive and eventually thrive without some financial savvy.

Are there money lessons to be learned from the Pilgrims, even though they had little money to begin with? Yes. Here's a look at what we know about the Pilgrims and their financial habits.

1. They Were Deeply in Debt for Many Years

The Pilgrims' journey to the New World was financed by people who might have sympathized with their desire for religious freedom, but these businessmen believed the colony would actually generate a big financial return. In reality, the Pilgrims asked their investors repeatedly for more money just to survive. An initial debt of as little as 1,200 British pounds grew to as much as 7,000 pounds, and the Pilgrims weren't out of debt for almost 30 years, according to the Pilgrim Hall Museum. That would be hundreds of thousands of pounds today.

2. They Had Little Currency, So They Used Beads

When the Pilgrims arrived in Massachusetts, they didn't have much in the way of real money — and it's not like they had any ATMs to go to. So, they instead relied on something called wampum, or strings of beads made of shells. According to The Mayflower and the Pilgrims New World, wampum was a remarkable innovative currency, with purple beads worth twice as much as white beads, and rules governing the quality, shape, and size. It quickly became the defacto currency for trading with the Native Americans.

3. They Were Thrifty

No question, the Pilgrims were forced to make do with the bare necessities. They grew and hunted their own food. They made wood slab homes from wood they chopped themselves. In fact, they were probably even more thrifty than popular images suggest. Those buckles you often see depicted on Pilgrims' shoes and hats? Those were unlikely to have been there, as Pilgrims more likely used simple leather and laces. The myth of the buckles arose from artists during the Victorian era.

4. They Were Communists — Then They Were Capitalists

When the Pilgrims first arrived, they experimented with something called "Common Course," in which all of the settlers owned property together. But it didn't last: "Because they could not reap the fruits of their labors, no one had any incentive to work, and the system failed — confusion, thievery and famine ensued."

By 1623, the Pilgrims divided the land equally, and an early form of capitalism began.

Conservative organizations and politicians have hailed the Pilgrims as an example of America rejecting communism for capitalism, even back then. Things are probably a little more complicated than that, but there's ample evidence that the colony began to thrive over time when each settler had land of his or her own.

5. They "Pivoted"

These days, you often hear about young startup companies shifting their focus or even their entire business concept due to market conditions. This is called a "pivot." And the Pilgrims were pretty good at pivoting. Early on, they tried to make money off the fur trade. But by 1650, the beavers they relied on became scarce, and they faced competition that made it hard to expand their operation. So, they switched to fish and lumber, and those became main revenue sources.

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Signs a Stock Is About to Tank

Tim Lemke — Thu, 09 Jul 2015 13:00:10 +0000

If we all knew exactly when stock prices will go up (or down), we'd be residing on our own tropical islands. But predicting the markets is a tough business. That said, it's often possible to know that a stock is due for a big drop in value. There are a variety of signs that can help us know when a company may be overvalued by the stock market.

Note that even if one or more of these indicators applies to a stock in your portfolio, it doesn't necessarily mean you should sell. In fact, it may be a good time to buy more of a stock, if you believe it will eventually rebound.

Here are 10 potential signs that a stock you own may be ready to tank.

1. The Price-to-Earnings Ratio Is High

A stock price should be based at least loosely on its earnings, so it's important to track a company's earnings on a per-share basis. If a stock is trading at $40, and it earned $2 per share, its P/E ratio is 20. Generally speaking, any P/E ratio over 25 is considered too high, though it's also important to look at expected growth rates. If a P/E ratio is high and a company does not appear to be projecting strong future growth, the stock may be ripe for a tumble.

2. An Earnings Announcement Is Delayed

Companies are required to announce their earnings each quarter, but can occasionally delay their release for a variety of reasons. Often, it's a sign that there will be a some surprise negative news, or some other problem. It's not necessarily wise to immediately sell a stock if the company is late making an announcement — you should at least hear the company's reasons and determine if they are valid — but it can be a foreshadowing of bad news. Researchers from Harvard noted that news of an earnings delay can cause the price of shares to drop 6% in a single day.

3. Price Is Sinking, But Volume Is High

When trying to determine whether a stock is ripe for a big fall, it helps to look at the volume of activity. Generally speaking, the worst combination for a stock is to see higher-than-usual volume on a stock coupled with a lower share price. If you see these two things happen, it's often an indicator that a lot of shareholders are selling. If you're into technical analysis of stocks, this is often referred to as the "accumulation/distribution" indicator.

4. Shares Are Trading Well Above Consensus Price Estimates

Stock analysts are known to issue estimates of a company's earnings per share in advance of an earnings report. And there is something known as a "consensus estimate" that combines the opinions of the analysts and determines a target share price. When share prices are well above the consensus estimate, it's a sign that the company may be overvalued. Be wary of any company that is trading at more than 25% more than the consensus estimate.

5. The Advance/Decline Line Is Sinking

This is another technical analysis tool that can be used to predict when an upward trend may be coming to an end. It's particularly helpful in determining the future path of the overall market, so it can be used to predict prices for things like S&P 500 indexes or ETFs. In simple terms, the advance/decline index tracks the difference between the number of stocks on the rise versus the number on the decline. If the market is going up, but the number of declining stocks outweighs those on the rise, then a reversal of the upward trend may be on the way.

6. The Competition Shows Up

It happens all the time. A company has an innovative and popular product, and spends a few years raking in the dough. But then a much larger company unveils a similar product and has the muscle to dominate the space. Game over. We saw it with Blackberry, after Apple introduced the iPhone. More recently, we've seen struggles from camera maker GoPro, after Sony, Garmin, and others announced they would produce an action camera.

7. Inventories Are Rising, But Not Sales

If you have a company with a rising inventory of products, that can be a good thing, as it may indicate they are stocking up to anticipate demand. But you have to convert inventory into sales. One key thing to track, if you are willing to dissect an earnings report, is a company's inventory-to-sale ratio. The right ratio depends on the industry, but it's generally good to see a ratio close to 2:1. The Census Bureau tracks these ratios for various industries, so check out the historic ratios to see if a company is out of line. If it seems like a company has a lot of inventory it's not selling, the stock price will suffer.

8. There's Been Bad News

An airline stock right after a deadly plane crash. An automaker after a massive recall. A drug company after a rejection by the Food and Drug Administration. Every company could be subjected to a potential single event that will hammer its stock price. Be careful, though, before unloading a stock in this situation. A major negative event might lead a stock price to tumble, but it doesn't necessarily mean that the company's fundamentals are unsound.

9. Economic Indicators Aren't Good

It's possible to predict how some company share prices will perform based on statistics that reflect the overall economy. The unemployment rate and consumer confidence survey can be indicators that affect retailers, for instance. Not all companies are impacted by the broader economy in the same way, but some are uniquely sensitive to these reports. And a bad report could mean a drop in share prices.

10. A Leadership Change Is Rumored (Sometimes)

Shareholders like to see stability at the top, and a potential change in leadership can make investors nervous, especially when the top executive is a hugely influential figure. Consider what happened to Apple after Steve Jobs passed away, when shares fell about 8% in a few days. (They did rebound.) A well-run company will have a good succession plan in place, so a leadership change is not always a major problem. And sometimes a change will be for the better. Just be aware of a company's reasoning behind the change, and understand that share prices may be impacted for a brief period while a leadership change takes place.

What stock value indicators do you track?

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Tips for Stress-Free Retirement Investing

Craig Ford — Tue, 12 Jun 2012 10:24:13 +0000

Most investors forget that investing is a journey, and the trip is just as important as the end result. Who wants spend the investing journey biting nails, losing sleep, feeding ulcers, and being paralyzed by fear?

For many investors today, that's what the investing journey is like. But it doesn't have to be. Instead, you need to be sure to follow a well-laid investing plan. (See also: 5 Killer Free Investment Tools)

1. Decide If You Should Be Investing in the Stock Market

I hate riding on roller coasters. I know there are a lot of people who actually like riding on roller coasters — and they'll gladly pay money to do it.

I won't.

Some of us just don't have the stomach for the stock market. There are too many dips and spikes, and the result is a lot of emotional anxiety.

If that's the case for you, avoid the stock market and find another type of investing (i.e. bonds) that involves less risk.

2. Invest According to a Game Plan, and Stick to It

Who really knows if this is a good month to be investing or not? I don't, and I don't listen to anyone who thinks they do.

Instead of looking for mystics and prophets, you should stick to one of the following common low-stress investing strategies:

Dollar Cost Averaging (DCA)

Dollar cost averaging means investing the same amount of money on the same day of every month. Many brokerages even let you set up electronic transfers, so you never have to be involved in the act of initiating your investing.

Value Averaging

Essentially, with value averaging, when the market goes down, you buy more shares, and when the market is strong, you buy less. This helps ensure you'll reach your investing goal.

Invest It When You've Got It

With the historic upward trend in the market, some people suggest that you should invest the money whenever you have it to invest. If you can do all your investing at the beginning of the year, you should, because the shares will probably be more expensive at the end of the year.

3. Diversify

If you've read a single article on investing, you've heard the word — diversify. Spread your risk out. Don't leave yourself exposed to serious losses with the immediate decline of any single company's stock.

4. Don't Listen to TV News About Huge Gains or Plummeting Stocks

The folks on the news get paid to do one thing — keep you watching TV. The best way to do that is to talk about big movements (gains or losses) in the market. While not everything is hype, there are certainly people who stick around to watch when their money is on the line. Instead, you should turn off the TV and go for a walk, read a book, or play with your kids. Those are much more productive uses of your time.

5. Don't Check Your Portfolio Balances More Than Once a Month

There are some people who sign into their brokerage accounts every day. That's crazy.

Investing is like a crock pot and not a microwave. When you put a roast in the crock pot, you walk away because it will be hours before something happens. There's no point watching what your investments are doing if you don't plan to access them for 20, 30, or 40 years. Set it and forget it.

6. Review Your Asset Allocation Twice a Year at Most

When some segments of the market are performing really well or very poorly, there might be some changes you should make with your asset allocations. Once or twice a year at most, you can move your investments around just to re-diversify to your intended asset allocation.

7. Remember That Even When the Market Drops, There Is Good News

When the market drops, stocks go on sale. Some folks in their 20s are complaining about how much the market is going down. What? That's good news for them. That just means they get to buy more shares while they are cheaper.

Change your perspective and remind yourself that when the market goes down, it's not all bad news.

Armed with these few stress-free investing tips, hopefully you'll be able to put your retirement money in the market, place your head on the pillow, and have a worry-free night of sleep.

What tips do you have for stress-free investing?

This article is from Craig Ford of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Market Segmentation to Grow Customers, Sales, and Profits

Julie Rains — Sun, 11 Jul 2010 03:25:37 +0000

Link:

http://www.openforum.com/idea-hub/topics/marketing/article/market-segmentation-t...

Orchestrating a business turnaround, expanding customer base by 60%, and introducing a new product embraced by consumers in the midst of a deep recession are among the marketing successes of Neil Lindsay. He's the chief marketing officer for Sprint Prepaid Group, which created and introduced four prepaid brands in the past year.

Market segmentation fueled the conceptualization and launch of Boost Mobile (emphasis on nationwide talk, text and web); Virgin Mobile (emphasis on messaging, email, data and web rather than talk); Common Cents (basic talk with easy-to-understand billing); Assurance Wireless (free phone and 200 minutes of talk for qualifying customers, supported by the Universal Service Fund). Features vary but include product purchase separate from service agreement; nationwide coverage areas; no-contract, unlimited and per-minute plans.

Identifying market segments, reaching multiple types of customers, serving their unique needs, and leveraging resources to generate greater profits amidst the day-to-day turmoil of running a business isn't easy. Lindsay shared his approach to brand positioning, messaging, and go-to-market strategies with me. These basic principles can be adapted to your small business.

Market Segmentation at Sprint Prepaid Group

Growth in the prepaid market was the impetus behind market segmentation for Lindsay's business. Over the past year, new wireless customers have been just as likely to prepay for service as sign a contract.

When prepaid comprised a much smaller share of the market, wireless carriers reasonably made general assumptions about prepaid customers: They were very often credit-challenged, independent youth not able to qualify for contract service. But as the industry grew and more people opted for prepaid plans, the opportunity to slice the market into multiple segments emerged. Designing multiple, targeted offers — products, service features, pricing plans, etc. — aligned with the needs of customers representing all ages and levels of creditworthiness held the potential to grow sales and profits.

Lindsay's team members reviewed Nielsen reports, gathered information directly from Sprint customers, conducted market research drawing from the general population, and hosted focus-group sessions. Quantitative data drove analyses of the market based on not only traditional demographics and geography but also psychographic characteristics and behavior. Focus group sessions helped to explain the reasoning of customers.

This research provided insights useful in beginning the process of defining new market segments along with brand messaging and mix of media buys that could resonate with target audiences.

Lindsay gathered his brightest people to review findings and talk about the best ways to think about the market in context of research, their domain knowledge, and instinct. They determined how to delineate market segments and approach each market. They predicted what types of consumers might respond to certain offers.

Finally, he led the design of each brands' go-to-market strategy, which integrates all customer touchpoints: products, customer care, and more — wherever, however, and whenever customers interact with the brand.

To create diverse, desirable offerings while controlling costs, the group tapped common back-end support, such as customer care and technical infrastructures; and shared financial services to further leverage the business.

Marketing Lessons for Small Businesses

Lindsay provided guidance for smaller businesses:

Deepen market research when you realize that the market is shifting, growing, and becoming more diverse. Identify possibilities for segmenting your markets or identifying a new niche through ongoing conversations with customers and analyses of industry trends.
See the benefits and constraints of segmenting markets solely on traditional demographics (age, income, and ethnicity), which are very often geographically clustered. Recognize that income doesn't necessarily indicate willingness to spend; instead, personal priorities are just as likely to dictate consumer behaviors and spending habits.
Let research findings and focus-group results inform, but not dictate, your decisions. Simplify information. Trust your instincts and that of your best people, guided by knowledge.
Develop and test hypotheses about how customers will react to new offers (inclusive of products plus pricing). Adjust marketing plans using real-world reactions.
Consider all customer touchpoints when creating, launching, and managing a new brand or new offer. Remember that the product is just one component of the customer experience. Devise and execute a consistent, holistic strategy that covers all elements of the customer's interactions with your business including pricing, policies, customer service, and billing.
Understand that your business can create fresh, compelling offers with or without the introduction of a proprietary product (though intellectual property can provide a "sustainable differentiation" that is immensely valuable). Create brands, messaging, and products based on greater market segmentation.
Make sure that expected volume will support incremental operational costs (staffing, advertising, infrastructure) associated with attracting and serving new markets.

The "sweet spot" for business and market segmentation, Lindsay tells me, is the "intersection of customer needs, technology capabilities, brand credibility, and business model."

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Book review: Supercapitalism

Philip Brewer — Thu, 07 Feb 2008 15:17:44 +0000

Supercapitalism: The Transformation of Business, Democracy, and Everyday Life by Robert B. Reich.

For most of the 20th century, capitalism and democracy seemed to go hand-in-hand. After all, every democratic country was largely capitalist and nearly every capitalist country was, at least to some extent, democratic. What we've seen since the 1970s, though, has been a huge upswing in capitalism, while democracy has weakened. Robert Reich's book is about how this happened and what we might do about it.

The upswing in capitalism

As early as 1984, Alvin Tofler (in The Third Wave) was talking about the technological shifts that were making short-run and custom manufacturing competitive with mass production. Those changes, together with improvements in transportation, began to make it possible for small firms to compete effectively with large firms in many areas.

Before that, economies of scale meant that there could only be a handful of firms in most markets. Although those firms would compete, the competition was circumscribed by the fact that neither consumers nor investors had many choices. This situation also strengthened the hand of organized labor--a large company taking full advantage of its economies of scale was both highly profitable and highly vulnerable to a strike. It was cheaper to share those profits with labor than to have them vanish as a result of a work stoppage.

Beginning in the 1970s, though, new production technologies began to allow smaller firms to offer niche products that were better (for their niche) than anything the big companies could mass produce. New transportation technologies began to allow companies to source their supply chains anywhere in the world--including in countries where wages were low and environmental protection didn't add to costs.

Not only did more choices let consumers get closer to exactly what they wanted, it also let them choose the cheapest alternative. Over time, that produced relentless pressure on all companies to lower their costs.

At the same time, changes in capital markets gave investors more choices, making it easier for them to move their money to the most profitable investments. That produced relentless pressure on all companies to raise their profitability.

Reich uses the term "supercapitalism" to refer to this situation, where the ordinary choices of ordinary consumers and investors are aggregated in a way that simply forces businesses to choose minimizing costs and maximizing profits over all other objectives. It is pointless to suggest that a corporation would make any other choice. Even if an executive was inclined to do so, the corporation's profits would suffer, the stock price would suffer, and the executive would be quickly replaced.

Supercapitalism has had two positive effects:

Consumers have vastly more choices than they had before.
Goods are much cheaper than they were before.

These things are great. And, just as it is pointless to suggest that corporations do anything other than minimizing costs and maximizing profits, it is largely pointless to suggest that consumers do anything other than buy the products that best suit their needs at the lowest possible price. Some consumers (especially affluent consumers) do--they buy local, they buy organic, they buy fair-trade, they buy green--but in the aggregate, consumers buy what they want at the lowest possible price.

This is where Reich's book really starts to get good. Up to here, he hasn't really covered much that hasn't already been covered by Tofler or by William Greider in One World Ready or Not: The Manic Logic of Global Capitalism. Now, though, he shows how this situation is driving changes in standards of living.

Results of supercapitalism

Other people have observed that incomes for the poor and middle-class have stagnated, while incomes for the wealthy have risen sharply. Reich points out that this is entirely to be expected. With shareholders demanding maximum profits, corporations don't have any choice but to give it to them. A lot of those shareholders are ordinary people, who hold significant amounts of stock in their 401(k)s and elsewhere. But although there are many people getting a share of these maximized profits, most of the dollars are going to the already wealthy--because they have so much more of the shares than anyone else.

Also to be expected is the very high pay for CEOs. Not just anybody can do the job of minimizing costs and maximizing profits. The people who can do it well make so much more profit for the corporation, that they more than cover the incremental cost of hiring a first-rate CEO.

Many people are entirely happy with this situation. Corporations are supposed to maximize profits, and the CEOs who guide them earn their high salaries and huge bonuses (or, at least, many of them do).

Most people, though, Reich says, are of two minds about supercapitalism. Most people think that at least some more of the revenue that flows through corporations ought to end up flowing to the workers in the form of health insurance, higher wages, a pension, and so on. Most people think that working conditions should be safe, products should be safe, and that environmental destruction should be avoided.

So, if most people are of two minds, why are we in the situation we're in? Because markets powerfully aggregate the desires of consumers for low prices and the desires of shareholders for high profits. However, says Reich, "The institutions that used to aggregate citizen values have declined."

The point Reich wants to make most strongly is that there is no hope to make change through exhorting corporations or corporate leaders to behave differently--the corporations are functioning as they are supposed to, and any corporate leader who tried to do differently would quickly be out of a job. Because of this, all manner of "guidelines" for good corporate citizenship and "voluntary programs" that corporations undertake for publicity are pointless--worse than pointless, because they distract from the real issues.

Reich spends a good section of the book detailing some efforts supposedly intended to try to shame corporations into better behavior, such as making corporate officers testify before congress on why their corporation did something bad. His point is to demonstrate that such things are always a distraction from actually fixing the problem--which would be to pass legislation requiring the desired behavior. One example is the massive oil leak in Alaska caused by undetected corrosion in a BP feeder pipe. BP executives were grilled about why they hadn't done the same sort of inspection and maintenance that was done every two weeks on the Trans-Alaska Pipeline that the feeder pipe fed into. Nobody mentioned, however, that the inspections of the Trans-Alsak Pipeline were required by law and the inspections of the feeder pipe were not.

If there is no hope to get corporations to behave better (except through legislation), Reich also feels that there is little hope that consumers or investors could be convinced to behave differently.

I know that many Wise Bread readers would put the onus on the consumer. If consumers don't want third-world sweatshops, they shouldn't buy products produced in them. If they don't want dangerous toys or dangerous food-like edible products, they shouldn't buy them. If they want employees to be well-treated, they should buy from companies that treat their employees well.

The problem is, the market doesn't work this way. You can go to the store and see which bag of dog food is cheapest. You can't see which one is contaminated with melamine. You can tell which tennis shoe fits best by trying it on, but there's no way to know if it was manufactured by slave labor. (There are people who try to find out and publish the information, but their efforts are thwarted, standards are unclear, opinions differ, and in any case, the information is rarely to hand at the moment when the consumer knows whether the shoe fits.) When all companies are arguing how much greener they've become by using renewable energy, the stock price stands uncontested as the market's estimate of future profitability.

So, this is Reich's point: markets can be expected to produce vast arrays of products at attractive prices and with a good return to shareholders--and that's all they can be expected to produce. If we want something other than that--if we want fairness, health, safety, a clean environment, and so on, then the place to turn is not the market; it is to government.

Solutions

Reich has some suggestions. He has a few suggestions for modestly easing the pressures of the market, none of which are new ideas. He has more interesting suggestions for changing the balance between corporations, individuals, and the government.

The most important is to get rid of the idea that corporations have rights. "Corporations should have no more legal rights to free speech, due process, or political representation in a democracy than do any other pieces of paper on which contracts are written. . . . Only people should possess such rights."

Issues

As you can imagine, I've left a lot unsaid here. There's a long and interesting section on income inequality, and another fascinating section on how corporate lobbyists have captured the legislature. If you're at all interested in these topics, definitely pick up the book and read it.

However, there are two topics related to using legislation to control corporate behavior that Reich doesn't touch on. One has to do with the difficulty in following the law when laws become complicated, and the other has to do with the modern corporation's ability to escape.

It is all well and good to suggest that, in a democracy, the citizens should decide what the proper bounds of corporate behavior are and mandate those bounds with legislation. In practice, though, it can easily become absurdly difficult for any business to keep track of all the laws and regulations that it has to comply with. This leads to all manner of ill effects: expense (money paid to lawyers and others, just to figure out what the law is), unfair results (when it's impossible to know what's legal, ending up a criminal turns into a matter simply of bad luck), disdain for the law (if anything you do is likely to be illegal, perhaps the law isn't worth respecting), and corruption (if it's impossible to comply with all the laws, the officials charged with enforcing them can extort bribes as a cost of doing business).

Of course, we've got all those things already without the advantage of better corporate behavior, but more legal strictures will lead to more of it.

When businesses had large factories and large workforces that worked at them, they had no choice but to accept the legal restrictions that were in force wherever the factory happened to be. Now that businesses have global supply chains, they're in a position to play states and countries off against one another. If one state has laws they don't like, they can move production to another state, or move it offshore. They don't have to move their business itself--they can buy what they need from some business in another jurisdiction--but they can move the business if they want to. In many cases, businesses hardly exist as a physical entity anymore. More and more they are just a corporation that owns some intellectual property and has some contracts with suppliers and with customers. Any jurisdiction that passes onerous laws will find that such corporations choose to register elsewhere.

Reich doesn't seem to address that issue at all.

Aside from those two issues, I think Reich has done a great job of analyzing the changes of the past few decades. I really enjoyed this book. If you're interested in the intersection of capitalism and democracy, I expect you'll enjoy Supercapitalism.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Recession Depression

Andrea Karim — Wed, 28 Feb 2007 22:26:37 +0000

Yesterday's market "correction" had a lot of investors experiencing acute arm pain as they clutched their chests, watching the Dow Jones average plummet over 200 points in the course of about 2 seconds. The swiftness of the drop was attributed to a computer glitch, which isn't exactly reassuring, either from a technological standpoint (how did that happen???!?!) or a practical one (it still dropped over 500 points, right?). The Shanghai index correction was the obvious impetus for the drop, and that makes me feel even worse.

I don't have much dough invested in the stock markets, save for a paltry sum that fluctuates in my IRA, so I wasn't as concerned about the drop as say, my dad, whose entire 401k is directly affected by market swings.

Despite this, I was definitely clutching my chest when I heard that former Federal Reserve Chairman Alan Greenspan predicted a recession for the US economy. Some economists have been predicting a recession for a while, based on the housing slowdown/slump or other indicators that most of us don't think about much. Other economists with actual jobs have predicted that a full-blown recession is not, in fact, likely, but it certainly got me thinking: how does one prepare for the possibility of a recession?

There's lots of info out there on how to survive a recession as an investor, but what about us regular Joes who are simply worried that we won't have a job should the economy turn southward?

Well, there are some articles and books on the subject. Some bloggers are giving it some serious thought and have their own ideas on the subject. Forums are filled with helpful (and not-so-helpful) tidbits. Paul Kirvan penned some advice back in 1991 regarding this exact topic, when it may have been even more relevant than today.

Here are some ideas that I am exploring:

Start your own business. Be prepared to start working on a consultant or freelance basis if you lose your permanent job, and get some great tax write-offs in the meantime.
Look around your workplace and find ways to make yourself more useful. Job security is when no one else can do everything that you are doing.
Know ahead of time if you qualify for unemployment. If you don't, look into that emergency savings account that you've been meaning to get started for the past 6 years.
Take the classes that you need to take now. Make sure to include the costs of continuing education when you file taxes. You can probably make a shift in your career with relative ease if you pick up a few new skills or take a risk and try out a new field altogether.
Develop a love of peanut butter and jelly sandwiches.
Get a roommate (shudder).
Join the Compact. Not sure if I WANT to do this, but I might have to at this rate.
Budget. Budget. Budget.
Chose a hobby that will actually promote your career. Volunteer for a professional society or nonprofit organization that corresponds to your work. Life shouldn't be all about work, but these are great networking opportunities, should you ever need them.

How about you guys? Are eBay careers the way to go? Do you have any ideas for recession prep besides what we normally tout to our readers (Save, Budget, Buy Used, Library Card, etc.)?

This article is from Andrea Karim of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Ethnic Markets: Feel worldly for cheap

Tannaz Sassooni — Tue, 16 Jan 2007 02:39:57 +0000

Growing up in an immigrant family meant living on a shoestring budget, even when we didn't need to. It also meant needing ingredients that you simply aren't going to find at the local supermarket. So, ethnic markets were part of the routine for us. My frugal mom knew she could save tremendously at them, and still make elaborate meals with their bounty.

Granted, you may have to deal with a bit of grit: these are generally not national chains, so the decor might be pretty un-spiffy, and the staffing may be slimmer. But steel yourself — it's an adventure that surely beats the local Mega-Lo-Mart, and an exploratory attitude can really pay off. The produce is substantially cheaper than supermarkets across the board, and you can find deals on gourmet ingredients and, of course, ethnic specialties, if you know where to look.

You'll find that whatever foods are used a lot by a given group are sold in much larger quantities than at supermarkets, and for cheaper. You also might find ethnic crossover, as suits the community. Here in Los Angeles, I've often found Arab shops carrying kosher goods, every kind of shop carrying Mexican goods, etc. Then again, this city is the proud home of the pastrami quesadilla. Here are some tips on what to buy at which markets:

1. Israeli

Israel is known for its dairy products, so you'll find a wide selection of yogurts, puddings (chocolate pudding cups that I absolutely loved as a kid), and cheeses (especially feta). You'll also find packaged salads (with eggplant in various recipes), hummus (sometimes with olive oil and pine nuts ... mmm), and coffee and instant coffee. Elite coffee is ubiquitous in Israeli kitchens, and if you like a mild, almost sweet cup (the antithesis of burnt-tasting Starbucks), this'll do it for you. If you're focusing on cheap, avoid meats — they are usually kosher, so you'll have to pay a premium.

2. Iranian

Cheap, good produce and fresh herbs. Large bunches of cilantro at a local Iranian store cost 29 cents. Whole Foods, care to defend yourself? Dried herbs are available in huge bags for a couple dollars. You'll find a wide variety of black teas, loose and in teabags. Sadaf special blend is a favorite, while Ahmad is a pretty fine British tea company and I've found 1.7oz sample packs of their loose teas for 49 cents! Basmati rice. Saffron. Great flatbreads. Exotic-tasting sweets flavored with rosewater and cardamom.

3. Indian

Spices! You can find large bags of spices, sometimes freshly ground on premises, for far cheaper than the supermarket. Try garam masala — a heady spice blend that will perk up your cooking routine. Fresh ginger, chili peppers, basmati rice, Bollywood movies! Try Dil Se for epic love and tragedy (and the most amazing dance scene ever filmed on the roof of a train running through snow-capped mountains), Mohabbetein for British Knights-era fashions (the shoes, that is, not the actual knights), or Jadu for the weirdest character computer animation has ever created. My local Indian market has a small selection of hot foods, too — can't beat samosas for a buck!

4. Mexican

Try the carne asada: pre-marinaded, so incredibly good. You'll find a variety of chili powders and dried and fresh chilis. Radishes with the leaves and ends already cut off! Plantains: fry the superripe ones (the skin is black) in some butter — so good.

5. Japanese

Great fish and seafood is plentiful here. You can often buy small packages of diced sushi-grade seafood for just a few dollars. Sometimes they even come with a small package of wasabi — sashimi for the masses!

Good beef, too. My local Japanese market (which is actually part of a small national chain has small packages of pre-sliced Angus beef for $3-$5. There's bizarre junk food in bizarre packaging (and by bizarre, I mean bizarrely awesome). Beverages: from small cans to large bottles of teas and coffees and refreshers like Pocari Sweat and Dakara Life Partner (I'm not kidding — although, I'm sad to say Calpis turns into the far-less-entertainingly named Calpico when it comes to the states). There is great produce, sometimes pre-packaged. Green tea ice cream. Toasted sesame seed oil. Oh, and this one comes with a challenge: If you can find the green tea flavor of MeltyKiss cubic chocolate truffles (I think they are called MeltyBlend in this country — not to be confused with another chocolate kiss), I will love you forever and ever.

6. Korean

Seaweed — try tearing off pieces of the toasted seasoned sheets and using them to pinch off bites of sticky rice for a yummy snack. Mochi — yes, the texture is weird, learn to love it. There is fresh seafood (some so fresh it's still swimming around in a tank), kimchi, large jugs of soy sauce, and huge bags of sticky rice. Tasty muskmelon popsicles will make you feel like you're biting into a hunk of frozen melon.

7. Russian

You'll find tons of great vodkas (I'm not kidding) and beer, of which there are tons of Russian varieties I had no idea existed. (And dare I mention the horrible/awesome pun that ensues? Russki brewskis, people!). You'll also find pickled vegetables and a wide variety of deli meats and cheeses.

This is hardly exhaustive. I'd love to hear your tips! And seriously, find the green tea MeltyKiss. I'm begging you.

This article is from Tannaz Sassooni of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: