Monday, December 31, 2018

Stock Buybacks, Revisited



Stock buybacks are in the news these days.  As a result of President Trump's tax cut program, many companies repatriated billions of dollars in overseas profits and then promptly squandered them by buying back their own stock.  In the last few months of this year, the stock market has tanked, meaning that these companies far overpaid for their own stock, and the money they spent buying the stock essentially went up in smoke - or so they would have you believe, anyway.

As I noted in the very early posting, stock buybacks are one way that a company can pay back shareholders.  The theory is, if you reduce the number of shares, the remaining shares are worth more as they represent a bigger chunk of the company.  Thus, shareholders are paid back by having their stock value go up, which is not a taxable event until they actually sell their stock.  At that point it is only taxable as capital gains, not as income.  And ordinary income is usually taxed in the higher rate than capital gains.

So the people in high tax brackets who own lots of stocks make out on this.  Everyone else sort of doesn't get anything out of it.  And that sort of sticks in the craw of a lot of Democrat Socialists these days.

There are some upsides to stock buybacks other than increasing share price.  And this is a good thing, too, as history has shown that stock buybacks often don't result in a sustained increase in share price. In fact, sometimes they do the opposite.  When a company starts buying back massive quantities of its stock, there is more demand than supply.  As a result, the share price goes up and company buys back their own stock at the highest possible price.

That is the problem with buying and selling huge chunks of stock.  As I noted before, things like market cap are illusory, as they don't represent the real value of a company.  If Bill Gates put all his Microsoft stock on the market tomorrow, the share price would plummet. There would be more supply than demand for the stock. Not only that, people would wonder why Mr. Gates would be unloading stock in his own company, and panic as a result.

So, buying back a big chunk of your own stock - or selling it - will affect the market prices.  Unless you can structure your stock buyback so you buy it back in trickles and drabs over a period of months, or even years, chances are your purchase of stock will actually affect the market price.  And of course, companies have to announce their stock buybacks, which in turn triggers investors to drive up the price of the stock, as they think it'll be worth more as a result of the buyback.

But historically, in many cases, once the buyback is completed, the stock price falls back down to a lower level.  Often the problems with buying back stock cause the stock to plummet.  By purchasing back the stock from investors, the company is not buying back itself but rather paying off its investors with equity. The company no longer has that money on the books - it has less equity - and in theory, the company is worth less money as a result.  So it's no wonder the stock price would plummet after a buyback.  In fact it would be a logical conclusion that it would do so.

The other problem is sometimes companies actually need this money in order to continue operations. In almost every industry today, it is adapt or die.  Whether you are making cars, washing machines, or cell phones, you constantly have to plow money into research and development to come up with the latest and greatest product.  And if your product isn't a hit in the marketplace, you could be bankrupted overnight.

Thus, many analysts criticized stock buybacks as short-sighted.  Companies may need this money later on in order to pay for R&D.  Also, many companies will buy back stock even though they have a lot of outstanding corporate debt - or indeed are taking on more.  This places the company in an awkward position later on if it economic conditions decline - which they appear to be about to do. Debt always has to be paid back, but stockholders don't have to be paid dividends, if things go South.

Buying back stock, in effect, puts more power in the hands of bondholders compared to that of the shareholders.  If a company does go bust, it is the bondholders end up becoming the new shareholders of a company.  Not only that, when a company has more debt than equity, it may be on shaky ground.

But what about the upsides?  If a company continues earning the same amount of money as before, then the earnings per share will increase.  Since your earnings are the same and you have fewer shares, the earnings per share will go up and theoretically this should drive up the stock price.  Of course, what we are seeing in the current economic climate is that earnings are declining. Thus, earnings-per-share are staying about the same - or perhaps maybe dropping - for many companies.

The reasons for this are varied in many, and not just due to the stock buybacks.  We are in an era of record low unemployment - which means wages are ratcheting up.  Due to tariffs and other market conditions, the cost of materials is going up as well.  However inflation is not going up very fast and with rising interest rates people can't afford to pay more for products.  Thus, profit margins are being squeezed.  Maybe stock buybacks are not a bad thing overall, but right now is a really bad time to be buying back your stock.  If we are indeed headed for a recession, having that money on hand would really come in handy.

Similar to earnings per share, dividend ratios might also go up when you buy back your stock.  If you have X dollars a set aside for paying dividends, and you decrease the number of shares, then the dividend per share will go up.  On the other hand, if you pay the same dividend and have fewer shares, the cost of paying dividends will go down, which means you'll have more money from cash flow to use for other purposes.

However, I think the earnings per share and dividend ratio thing really isn't that great an effect.  Since the number of shares is rather large for most companies, the change in these numbers is going to be very slight.  And, as I noted above, if economic conditions changed, earnings per share could remain the same or actually even go down after a stock buyback.

As I noted in my earlier posting on the subject, and as others have pointed out, before 1982, stock buybacks were considered illegal.  It was considered a way of manipulating stock prices and thus in violation of SEC regulations.

Which brings us to the main reason for stock buybacks. When you decrease the number of outstanding shares, in theory you increase the price of the stock.  That is to say, in theory.  But as I've hammered time and time again in this blog, stock prices are based on market perceptions - the law of supply and demand.  They have nothing to do with the actual value of the company divided by the number of shares.  It's the same as with product pricing.  A lot of naive people think that the cost of a car is equal to the cost of its components, labor, and overhead plus a "reasonable profit."  In reality, what you pay for a vehicle is dependent on the supply and demand for that vehicle.  And some are sold at huge profits if they are in high demand - such as SUVs and trucks today - while others are sold even at a loss if nobody wants them.

So you can buy back all the shares you want, it might not budge your stock price at all.  It may cause it to go up or down.  There's not a tracking mechanism linking stock buybacks and share price.  In general, buying back stock does create a short-term boost in share prices, if only because the company is buying back the shares and thus driving up demand and increasing the price of the shares in the marketplace - which used to be called stock manipulation.  If you're an executive with a company and have a stock option that is exercisable, it might be worthwhile to have the company buy back shares so you can exercise your stock option at an all-time high price.

You see how this works - it's called gaming the system.  As an executive for a company, you can increase the share price by increasing productivity, cutting costs, and coming up with new and innovative products that are in high demand.  The company will be more robust and profitable and people will drive up the share price because they perceive your company as successful.

Now, that's a lot of hard work!   A far simpler technique is to dick around with the finances and cause the stock price to go up artificially and then cash out on your stock option and leave the company before they throw you in a Japanese prison like poor Carlos Ghosn.

The last time I wrote about this, I used Ford Motor Company as an example. They started buying back their stock in the 2000s and I was a shareholder and I thought I was happy about this, as I  thought it would make the share price go up.  But shortly thereafter, the share price in fact went down, and in fact the company flirted with bankruptcy in 2008.

Today Ford is struggling against its other American competitors and overseas competition.  Unlike GM and Chrysler, which were able to shed a lot of debt and obligations through structured bankruptcy, Ford decided to hang on.  And one reason they decide to hang on is the Ford family still owns a big chunk of Ford stock.  They would lose control of the company if it went through bankruptcy.

So now the company has a lot of debt and is facing a lot of competition and a slowing market for automobiles.  We are on the cusp of a new era in automotive transportation, it seems. Within the decade we all may be driving electric cars, or in fact electric cars may be driving us.  It remains too soon to tell, but most companies are plowing huge amounts of money into R&D with this goal in mind.

With a recession coming up, and these expensive capital investments needed, Ford is probably wishing it had a little more capital on hand to pay for all this.  All that money spent on stock buybacks could have been more useful on the company's books.

And in the coming months, we may very well see the same effect happen to other American companies.  The money spent buying back stocks could have been used for new product development or indeed just to keep the company afloat during a downturn in the economy.

Of course, companies can always sell back the stock they bought, unless they've decided to retire the shares.  Or they can make new stock offerings, provided they don't piss off the existing shareholders. Or, is it as is increasingly common, they could go to the debt market and issue corporate bonds which seems to be a trendy thing to do these days.  Or, they could look to private-equity to take over the company and take it private - another disturbing trend in recent times.

Personally, I don't view stock BuyBacks as a sign of a healthy and robust economy, but rather as a hollowed-out economy. When too much capital is concentrated into few hands, oftentimes bad things happen.  Usually, these things work out over time, but oftentimes a lot of people get hurt in the process and there was often disruption and sometimes even revolution.

Let's just hope that doesn't happen.

Something's Up!

Image result for great escape steve mcqueen Something's coming. I can feel it, and it's coming right around the corner at me, Squadron Leader.

Bartlett: It's possible for one man to get out through the wire, even get away, but there are in fact a considerable number of people besides yourself in this camp who are trying to escape.

Hilts: I appreciate that. [pause] Something's coming. I can feel it, and it's coming right around the corner at me, Squadron Leader.


When you get identically worded e-mails with just minor changes in details, something is about to happen - something not good.

Further to my previous posting on the subject, I received this e-mail today:

Hi Robert,

I came across your site while looking for resources for our next blog and I knew I had to reach out immediately, kudos on a fantastic blog. My name is Katie, and I'm reaching out on behalf of a growing food and drink retailer who operates in the same marketplace * and * and *.

This month, we're looking to secure sponsorship placements with five prominent blogs and your site jumped straight to the top of our list. Would you also be willing to accept link placements on pre-existing content on your site?

Please let me know if this is something you're interested in discussing further.

Kind regards,
Katie


If you look at the wording, other than changing the name from Debbie to Katie, the letter is the same.   "Kudos" they say, in both letters.  And for some reason, I am at the top of their list - regardless of subject matter.  Oddly enough, they are not offering money this time around, and instead of an adult social network, it is food and drink retailers.

What is going on here?  Some sort of scam to be sure.  I may respond to this e-mail and see what the gag is.  I am just guessing that they want to hijack the blog or something - ask for the username and password so they can "insert" links or whatever.   Whatever it is, it isn't something good!

I'll keep you posted.

Saturday, December 29, 2018

Will You Live Long Enough To Retire?

One question that eludes most people in retirement planning is whether they will live long enough to see it.

I was caught in one of those Wikipedia Rabbit-Holes the other day.  I was reading a book given to me, electronically, by a fellow camper (along with 6989 other titles - figure out the retail cost on that - did I mention I have 11,000 songs on my phone as well?  At $0.99 a song on iTunes, I would have enough to buy a good used car!).  Anyway, the book was from cracked.com which used to be a Mad magazine ripoff, but has morphed online and now into bookstores.  It was sort of a "News of the Weird" kind of thing - the "betcha didn't know that!" kind of book.  Amusing, but not entirely accurate.

One article was about misrepresentations by the media.  One story was about the Dateline NBC piece about "sidesaddle" gas tanks exploding on GM pickup trucks.  It seems they are guaranteed to explode if, like NBC did, you detonate them with incendiary devices moments before impact, and leave the gas cap loose to insure a fireball of flame for the cameras.  This struck me as so ludicrous that I had to Google it.  And according to Wikipedia, it is true.   The sidesaddle gas tank wasn't the best of designs (indeed, neither were the behind-the-axle tanks of the 1960's and 1970's - but their central filler was convenient to use!).  But Dateline NBC really screwed up - and in a way sanitized the image of GM.   Conspiracy theorists can step in here.... GM was a big advertiser on NBC!

But getting back to Wikipedia, I read the article about the C/K 10 pickups and it mentioned New Process Gear transfer cases (which, ironically, my BMW X5 had) and I clicked on the link to that.  I used to drive by the factory on my way to Carrier in Syracuse, and not surprisingly, the factory is now gone.   I looked up Carrier, and it is mostly gone, too - bulldozed right into the ground, as if they wanted to salt the earth.  The biggest spot for high-rise construction is no longer in America, but Asia, and the big centrifugal chillers Carrier makes are easier to make and sell nearer their main market - not coincidentally where labor is cheaper.

The workers in Indiana should have known that a measly $7M bribe to keep jobs there wouldn't work - Carrier turned down $210 million from the unions and local governments to keep the Syracuse plant going.  Too bad the unions and local government didn't figure this out in the 1970s instead of waiting until the 2000's.

I looked up my Dad's old plant - also gone, also bulldozed.  It made me kind of sad, but then again, time marches on.  One of my Dad's old plant buildings had been bought by a guy named Tony Bagadonuts, who had it declared an "Historical Landmark" (as opposed to an historical eyesore) and he hoped to make a lot of money from it.   The mob still runs things in Central New York, which is why all the companies left.

But it got me to thinking about those old days, nearly 40 years ago, and I realized my 40th High School reunion was this year.  On a whim, I looked that up, and it seems a few dozen of my classmates (out of a class of 177) had gotten together to talk wistfully about the old times.  Googling further, I found a rather morbid facebook page dedicated to all the alumni of my high school who had died.   What was shocking, to me, anyway, was that about 17 people - about 10% - of my high school class was listed as dead.   Some of them people I knew, others people whose names were only memories.   But it was jarring.

I even found out an old boyfriend of mine had died - at age 52.  No word on cause of death.  It was kind of shocking, but then again, I realized that this is probably about a normal statistical distribution, and why it is so easy to assemble things like the "Clinton Death List" - if you live long enough, a lot of people you know will die, from accidents, illness, suicide, and even murder.  And the older you get, the more people you know will kick the bucket.

It is funny, but a friend of mine said, "All you ever talk about is money and death!" which struck me as odd.   He lives in suburbia and his parents are still alive and he can still kid himself that life goes on forever and moreover, funding the 401(k) is something he can do "later on" like when he is 62 or something - or maybe his parents will leave him a pile.   Or he'll work until age 70 or never retire.   Me, on the other hand, living in "God's waiting room" and seeing my older friends get ill, infirm, and often leave the island feet-first, have a more realistic view of life.  On average, I may live another 20 years or so.  The idea that I will be around until age 95 probably isn't in the cards.

A lot of people think they will live forever - because they know friends and family who live into their 80's or longer.   They forget about their friends who died of cancer at age 50 - or view that as some sort of "but for" aberration in life.  If you just take the right vitamins and exercise, you'll live forever - regardless of your family's history of congenital heart defects.  Tell that to Jim Fixx.

The oldest man in the US - and oldest WWII vet just passed away.  Pretty soon, the youngest WWII vet - the last one - will pass away as well, and an era will be over.  But the title of "oldest person" in the country or world is a crown that is not worn for a long period of time - days, perhaps weeks, not often months, and never years.  The only exception is, of course, Mel Brooks, who has been the "World's Oldest Man" for over a half-century now.  But that is a fiction.

Confronting your mortality is helpful in planning your finances.  If you believe in the "I'll live forever" mentality, then the idea of living "paycheck to paycheck" and spending every last dollar you have on loan payments seems like a swell idea.  After all, this thing called "life" goes on forever, or anyway to a higher number of years than we can count, so don't sweat it, right?

But if you factor death into the equation, you realize the time you have to "save up for retirement" is finite and cannot be put off for tomorrow.  You realize that there will come a time - sooner than you think - when you lose your job, usually in your mid-50's (as my friend did) and you have to contemplate early retirement or a second career - which fortunately my friend found.   Now about that pesky 401(k)....

Anyway, this got me to thinking, how many people actually live long enough to retire?  It is not an easy question to answer, as "retirement age" like the drinking age, keeps ratcheting up, and it seems that like with the drinking age, I am perpetually one year away from making it.  By the time I am 70, the "full" retirement age will be 75.  You just know it.  And there is a statistical reason behind this.  When I googled the question, this response popped up:

In 1900, 75 percent of the people in the United States died before they reached age 65. Today, this is almost reversed: about 70 percent of people die after age 65. Since 1900, life expectancy has increased by more than 50 percent, from a little less than fifty years to about seventy-five years.Jan 30, 2001

And that right there illustrates why Social Security is in trouble.   When it was created, they didn't think most people would ever collect on it.  Today, most will, but a large portion - nearly 1/3 - will kick the bucket before reaching retirement age.  People like my neighbor, who had an aneurysm two months before his retirement party.  But increased lifespans mean more people are collecting.  It also means that retirement age will inevitably have to go up over time.   Bad news for our generation!

But it struck me that a whole lot of people will never experience the joy and tranquility of a contemplative life (indeed, many retirees may not - involving themselves in a bevy of activities to stave off loneliness and thinking about the inevitable).   Today, most people haven't saved a nickel for retirement and tell themselves, "I'll just work until I'm 70!" as if God will tack on an additional five years to their lives to compensate.  The longer you put off retirement, the less likely you are to ever experience it, and even if you do make it, the amount of retirement you will enjoy will be brief.

Not only that, but it will be uncomfortable.  The "I'll never retire!" crowd is usually forced out when they are too old and infirm to work, which means they transition almost directly from the office cubicle to the rest home, without a stop at the golf course in-between.

This is, of course, a choice, even if many people claim it isn't.  They spend-it-all-now and borrow more to have stuff today, and then hope to pay for it all down the road.   Some claim to enjoy working.  I met a Patent Attorney well into his 70's doing foreign prosecution for a German chemical company.  I could see where that might be relaxing work, as most of the heavy lifting is done by your overseas client's German attorney, and all you need do is fill out forms.  And with Chemical engineering, well, none of these "software" rejections that are difficult to overcome these days.   You have a practice like that, and with some good clerks and secretaries, it can almost run itself.

And besides, there is the money, which I think he likes, as it allows him to control his adult children.  Sadly, many retirees take up this expensive hobby, although few can really afford it.  But I digress.

The point is, you have to enjoy life while you can, as you are not guaranteed the "four score and 20" that they talk about in the Bible.  A young friend of mine and her boyfriend hitch-hiked around the world in their 20's - twice.  At the time, many of us shook our heads at them walking away from "good jobs" and possessions and real estate.   But they had a good time and today have "good jobs" and a house and kids - and memories of a trip that they likely might never be able to take again, or at least not in the same manner.

So many people end up with this paycheck-to-paycheck mentality, not because they barely make enough money to survive, but because they feel entitled to a luxury SUV and all the cable channels.  They fall into depression, working 8-10 hours a day and watching television 4.5 hours a day (the national average) and then anesthetizing themselves with restaurant meals and Amazon purchases.

Someday, they think, they will have a chance to get off the merry-go-round and really relax and retire.  But so long as owning "things" is the centerpiece of their life, that someday may never happen.  And the stress of paying for it all might lead them to an early grave.

Thursday, December 27, 2018

Amazon Prime Isn't Worth It.

Spending $13 a month for free shipping (when you get free shipping anyway) and for crappy streaming videos, simply isn't worth it.

We signed up for Amazon Prime as a test.   To their credit, they make it easy to sign up, and easy to quit, too.  As a negative option subscription service, they at least pass the smell test.

But was the service worth it?  I cancelled my 30-day free trial, and here's why.

First of all is the vaunted free shipping and better customer service. This is kind of an interesting argument for them to make as their customer service is very good and should be good, if they want to keep customers. You shouldn't have to pay a monthly fee to get better service. Second, the shipping usually is free anyway and is fairly quick. I've ordered things on a Monday and have them arrive by Wednesday, even without their vaunted Prime shipping service. And usually this is with standard free shipping as well.

So I am not seeing any big difference in buying stuff on Amazon as an ordinary consumer or as a Prime member.  It takes just about as long for things to arrive, and the price of shipping is about the same either way.  Even if I have to pay for shipping, the amount of things I buy on Amazon really doesn't justify the $12 a month cost. I might buy one or two things on Amazon every month and usually get free shipping by default.  In the other cases of shipping is usually less than the $12.95 a month cost of Amazon Prime.

Unlike most folks today, I just don't buy that much stuff on Amazon.   Amazon used to be a source of cheap goods, but today, they are about the highest priced store on the Internet - in most cases.  You want cheap stuff from China?  eBay is the place to look - but expect to wait a week or two for "China Post" to deliver the goods.   Other things, well, there are specialty shops online (such as for car parts) or Mom & Pop retailers who manage to undercut Amazon's vaunted "low prices".   Amazon today relies on the laziness of its customers - many of whom are making high salaries and still living paycheck-to-paycheck - rather than on low prices.  The purchase of Whole Foods was a telling move of where Amazon was going with its services - upscale.   Amazon is great for suburbanites and city dwellers all working tech jobs, who are "too busy" to shop and want to order with one click.   The rest of us can take ten minutes to search the internet and find better prices - often far better.

But Amazon is quick to point out there other benefits of being a Prime member. And one of these is access to Amazon's Prime television streaming service. It seems like everybody's getting into streaming these days, and they all want about 5-10 bucks a month or more from you. YouTube is still free, although there's a lot of advertisements. They keep bugging me to send them $12.95 a month to join premium YouTube, which would allow me to actually download videos from their site.

The problem, as many people have noted, is that if you sign up for every single streaming service out there, you end up spending more money than you would for cable television or at least a significant amount of money.  Netflix is still an inexpensive $7.99 a month but the glory days of that service are far behind it.

Years ago, we first started streaming over Netflix onto a laptop which we plugged into our television with a VGA port.  We could access the entire Starz Network library, which included a host of classic films. We basically had a film school education watching all the auteurs from the 30s, 40s, 50s, 60s, 70s, and beyond.  Today, the television itself has all of this built-in, of course.

The movie studios, sensing that somehow they were not making money in this model, pulled back. The Starz contract expired and Netflix had to search for new content.  Most of this new content is stuff they created themselves.  In some instances this has resulted in some excellent programming. But like all television programming, it gets repetitive and boring after a while.  Instead of full-length movies, more and more of the Netflix content is episodic television - basically a bunch of glorified soap operas.

The idea is, you become attached to the characters in the stories and then "binge-watch" the series all at once because you can't get enough of it. This is more of an addiction model than an entertainment model - and addiction is something I resent, particular when thrust upon me.

(One alternative to signing up for multiple services, which we are exploring, is to sign up for one service one month and then sign up for different service the next month. Netflix makes it pretty easy to sign up for Netflix and then cancel service. Once you've been through all the stuff they have on Netflix, which doesn't take long, you can then cancel the service and sign up for Hulu and explore their library of content. After a month of Hulu, perhaps you can try YouTube Premium. This way, the overall cost you is only 5 to $10 a month as supposed to $50 to $100 a month you'd pay if you signed up for every single service out there at once.)

There are two other problems with this TV show streaming model. First, a lot of the shows just basically suck. Like regular network television, it's hard to hit the ball out of the park every time. As a result, there a lot of Netflix television series that I simply do not want to watch. And again, mostly because they were just dramatic soap operas with characters coming and going and doing dramatic things every week and no real plot being advanced and no real storylines.

You know you're talking about a soap opera when they wipe out an entire season as being a "dream sequence" in order to move the storyline in a different direction. And yes, The Sopranos did  this on HBO, which is why it, too, was nothing more than a glorified soap opera.

The other problem with this episodic television model is that eventually all television shows fail. As I noted in a very early posting, the first three seasons of any show are fairly decent but by season four, they start to fall apart. The producers will try to cheapen the content of the show and jettison actors who asked for more money. They start jettisoning writers as well, and then recycle old plots. The jokes become weaker and more repetitive. We saw this with MASH, which sort of just started repeating itself after the first three seasons -  and went on for more than a decade doing this. People kept tuning in, though, because they were comfortable with the characters - the television version of comfort food.

Getting back to Amazon, their particular streaming channel really sucks. Amazon has original content on their site and one or two of the series have been reviewed on NPR and in other places. But I didn't really find them that entertaining, and the rest of their original content was also pretty poor. Again, it's the same old soap opera kind of stuff that just never goes anywhere.

Netflix, like Amazon, doesn't have a lot of content.  When you first log on, it appears there are many shows to watch, but then you realize that many of the shows are listed under numerous categories. The same program might be listed as a comedy, drama, documentary, and God-knows-what-else.  This way, Amazon can pad their content to make it seem like they have more than they actually do.

The Amazon streaming site is even worse. They show a lot of content - but if you actually click on some of the content, it's just an invitation to subscribe to yet another streaming service. So you get "free" service for $12.95 a month if you're an Amazon Prime member, but this free service is just an invitation to buy other services through Amazon Prime.

I'm finding as I get older that consuming less media content is really the best option of all.  I was at a friend's house the other day, and they had an enormous television playing the Bush Funeral.  I glanced at it for a while, and eventually they turned the sound off, and the "talking lamp" stood in the corner, mutely reporting the proceedings.  I'm not sure my life was enhanced by seeing 15 minutes of Bush's funeral.  I'm not sure I really needed to see any of it.

And that goes for most of the "news" or indeed most of this content that is on television or streaming these days.  Sitting in the chair, inactive, is probably the worst thing for the human body.  And the average American does it for four and a half hours every day.  Four and a half hours of your brain being programmed by poor normative cues.

Anyway my 30-day trial of Amazon Prime came to an end and I went online and discontinued my membership.  At least Amazon is straight with people, and allows them to discontinue their Prime Membership with the click of a mouse - the way things should be.  I had previously signed up before we left for Alaska and then immediately cancelled the membership, as I realized that we would be out of the country for the next few months. There's no point in paying $12.95 a month for service you can't even use.

But that $12.95 a month, that's pure profit for Amazon.

Wednesday, December 26, 2018

Persistence of Vision


You got to hand it to these buggers, they are persistent!

In the mail today, yet another missive:

Hi Robert,
I reached out last week but haven't heard back. I wanted to see if there was an opportunity to sponsor a post on your site.
Please see my initial email below.
Best wishes,
Debbie

On Thu, Dec 20, 2018 at 8:11 AM, Debbie wrote:
Hi Robert
I came across your site while looking for resources for our next blog and I knew I had to reach out immediately, kudos on a fantastic blog. My name is Debbie, and I'm reaching out on behalf of a leading adult social media platform.
This month, we're looking to secure sponsorship placements with five prominent blogs and your site jumped straight to the top of our list. Please let me know if this is something you're interested in discussing further. We would be willing to offer you somewhere in the region of $20 for a sponsored post. Would you also be willing to accept link placements on pre-existing content on your site?
Let me know your thoughts
Kind regards,

Debbie

$20 to spam your blog with ads for a "Naughty Debbie" adult porn site?  WTF?  I left out her full name, as it appears to be the same as another "Debbie" who sells antiques and furniture.

I get about one of these a week now, and frankly, I don't understand it.   From what I see on Google Analytics, my pathetic blog gets only a few hits a day, maybe a few hundred a week.  Well, maybe more than that, but hardly the millions of hits that are needed to make a real money-making blog:

Pageviews today
1,405
Pageviews yesterday
2,785
Pageviews last month
74,133
Pageviews all time history
10,623,515
Followers
570


This sounds impressive, but half those pageviews are me re-reading and editing entries.

I suspect that "Dirty Debbie" would not follow through on her promise of $20, even after I installed the link placement and did a "sponsored post" about her porn site (which ties into my content, how?).

The point is, and I did have one, is that missives like this illustrate how the Internet is spammed, shilled, and groomed to sell you things.   You may think you are on an impartial review site, or someone's homespun blog, or some schmuck's YouTube channel, but what you don't realize is that the person writing the "review" about a product often got free product in return for the review, or was in fact paid for it.

We looked at a truck bed cover for the new truck, and YouTube videos abounded with "reviews" of various covers.   Some reviewers were right up-front about it, that they received the product free in exchange for making an online video review.  Others were less clear about it.  Usually you can spot the professional reviewers - they have a YouTube channel that is about little more than reviewing products, such as the famous 7-year-old who makes a million a year (well, his parents make it, anyway, I suspect he will see none of it) just playing with toys.

This is the new reality of advertising - not putting in blatant ads into programs, which are demarcated and separated from content, but embedding advertising into content, in a not-too-subtle way, much of the time.   When a can of Coca-Cola appears in the movie, label facing the camera, you know someone paid to put it there.  When the star of the movie drinks from it, they paid more.  When he mentions the product by name, they paid a lot more.  And when he looks into the camera and says, "Gee, this coke is sure refreshing!" they paid a boatload!

I am sorry I can't help out Debbie with her project, and I hope I have not provided any clues here as to what her "leading adult social media platform" is all about (I googled her name, but could not find any link to a social media platform, adult or otherwise, unless facebook counts).  After all, I don't want to provide her with free advertising much less paid advertising.

Given that she has no clue what my blog is all about, I suspect the e-mail she sent me is a SPAM message, sent to thousands or millions of bloggers.   Some may bite on it, others might just take a pass.   And probably some will post something about her "social media platform" and never see the $20.   And that seems to be the amount they all promise - $15 to $20, or in one case, a bag of potato chips I was supposed to review.

It may also be an attempt to just get me to visit her porn site.   It is amazing how many platforms are SPAMMED these days - including Google Analytics!   It used to be I could see what sites referred traffic to my blog and what queries people used to find my blog.  And that was fascinating stuff.  But Google changed the algorithm so I can't see explicit URLs to sites linking to my blog, and oftentimes, not the actual search queries (which I used to see).

Instead, I am seeing URLs to porn sites!  Yup, the porn sites!

For example, the "all-time" referral data looks something like this:

Referring URLs

EntryPageviews
https://www.google.com/
1286079
https://www.google.ca/
96371
https://www.google.co.uk/
59273
http://www.google.com/
57220
https://www.google.com
42114
http://livingstingy.blogspot.com/
41237
https://www.google.com.au/
26528
https://www.bing.com/
14507
http://m.facebook.com
13726
android-app://com.google.android.googlequicksearchbox
12135

Referring Sites

EntryPageviews
www.google.com
2369641

www.google.ca
209802

www.google.co.uk
149174

www.bing.com
114309

livingstingy.blogspot.com
87123

www.google.com.au
65475

www.pinterest.com
54753

r.search.yahoo.com
33993

www.google.co.in
33104

m.facebook.com
29648

Search Keywords

EntryPageviews
living stingy
23588
pills
19793

national prescription savings network
2951

gas
2456

fidelity
2211

pictures of money
1583

government cheese
1388

accountant
1101

fan
1044

money
1043



Pretty mundane stuff.  But if I click on "today's" data, I get more "interesting" sites:

Referring URLs

EntryPageviews
https://www.google.com/
135

http://www.google.com/
26

http://*pornsite*.net/sophia32
21

https://duckduckgo.com/
15

http://www.pinterest.com/pin/383791199478581045
10

http://pinterest.com/pin/383791199478581045/?source_app=android
8

http://pinterest.com/pin/25966135324343961/?source_app=android
5

https://www.google.ca/
5

http://www.pinterest.com/pin/544161567460330629
4

http://www.pinterest.com/pin/471189179754090243
3

Referring Sites

EntryPageviews
www.google.com
162

www.pinterest.com
25

*pornsite*.net
21

pinterest.com
20

duckduckgo.com
15

www.bing.com
6

r.search.yahoo.com
5

www.google.ca
5

affordanything.com
2

axleaddict.com
2

Search Keywords

EntryPageviews
luan fiberglass
2

1973 monte carlo
1



The "*pornsite*" site, as you guessed, is a porn site (I have removed the actual URL to prevent inadvertent promotion of their site!).   And sometimes, these types of sites are the ONLY data appearing on google analytics.   Why do they do this?  They know that bloggers like me are curious as to what sites are referring traffic to them, and that we will click on a link to a referring site out of curiosity.

Curiosity killed the cat.  It could be these URLs are to sites that want to download viruses or whatnot.

On some days, all the referring URLs are from porn sites.  They hope I will click on one and drive traffic to their site.  Do they get a lot of traffic this way?   Well, probably not.  After all, the number of bloggers in the world is pretty finite.  But then again, if they get just a few hundred or a few thousand, that's something - and all for the labor involved in writing a simple bot to link to thousands if not millions of blogs out there.   It would probably juice up my page ranking, if I was still monetizing my blog.  It probably juices up theirs.

There is probably something else going on, and someone more savvy about the Internet could explain this better.   I do know that Google rankings are based on how many links there are to your site and how many sites you link to, as well as page hits and whatnot.   So, like I said, these porn sites, by embedding hidden links to my site, are boosting my page ranking, and I guess they want me to return the favor.

Thanks but no thanks.    If you can't find porn on the Internet, you probably aren't trying very hard.  They really don't need me to advertise what is the Internet's #1 selling product - outselling even Amazon, Google, and Apple combined!