Monday, August 2, 2021

Newt Gingrich Selling Fear


Fear sells - particularly among old people.

We stopped by a place to get a lobster roll ($25 if you can believe that!) and they had televisions playing all over the restaurant - which is typical of many restaurants today, chain or otherwise.  We're talking six televisions, at least.

Three of them were playing an informerical starring Newt Gingrich, selling something called "Home Title Lock" to protect your home from being stolen from you!  Maybe you missed the bus this morning, but the scenario goes down like this:  Someone "buys" your house by recording a fake deed, with fake signatures and a fake notary.  They then go to the bank and get a mortgage on the house, and take the money and run away.  You are stuck paying off the mortgage.

Well, not exactly.  You see fake deeds are not enforceable, and a mortgage obtained through false pretenses is not your problem, but the bank's.   It might create some minor hassles for you, to straighten things out, but no one is taking your house away or making you pay off someone else's mortgage.  But hey, let's not ruin Newt's fine narrative!

For only "pennies a day" (and I guess 100 pennies is "pennies a day") you can sign up for this "Home Title Lock" to prevent the thieves from stealing your home!   Well, except that it doesn't really prevent anything. What they agree to do is monitor your local County's register of deeds and then send you an e-mail if anyone files any document related to your home.  You get a notice of this, you are still liable to straighten things out with the bank.   And chances are, you'll get notice of this in due course, as the scoundrels never make a payment on the fraudulently obtained mortgage and the bank tries to foreclose or contact you.

I suppose an earlier notification would be handy, but it doesn't solve the problem, merely notify you of it.  And is this a common problem?  You read about it in the paper, but is it a trend?

Likely not.  For the very simple reason that banks hate walking away from hundreds of thousands of dollars in fraudulent mortgages.   They, or their insurance company, not you, are on the hook for the balance.  It is like these other incidents of "identity theft" which are hyped in the press.  Someone is going to take out a loan in your name!  You'll have to pay it back!  No, you won't.

Banks who lend money to fraudsters impersonating you are the ones who made the mistake - and have to pay.  It may be a "hassle" to straighten things out, but you are not liable for the loan amount.  And guess what?  Banks are tired of writing off bad loans and are taking steps to insure that the money they do lend, is to a real person or an actual homeowner.

The press reports breathlessly that "identity theft" is on the rise! But by including ordinary credit card and debit card theft in these numbers, they can make the trend seem more alarming.  Credit and Debit card theft are a problem, but in most cases, you can just click a mouse and the problem goes away.  With Debit cards, it may take a phone call.   Big deal.

And the cases of actual "identity theft" where someone actually impersonates you and takes out a loan in your name?  Well, in many cases, it is your friends and family members doing this (find new friends, avoid those family members) as they may resemble you and have access to your driver's license and other data. 

For example, I recounted before about my friend whose husband, while in law school, decided to take up a crack cocaine habit, and spent the mortgage payment on crack.   She left him and later divorced him.  He's now in jail.  As a nice going-away present, he took out a loan, forging her signature as a co-signer.  Nice fellow.   But she wasn't liable for the amount of the loan - although proving this, in a situation where you are married, is a little harder to do.

How can someone record a deed in your name?  Well, the recordation system isn't a system that determines ownership of properties, it merely records, in a big book, a file, a microfische, or a computer system, copies of documents purporting to transfer ownership or place a lien or mortgage on a property.  For example, we had recordation system at the Patent Office - Assignment Branch - that recorded ownership (assignments) of Patents and Pending Applications.  As I noted to more than one client, Assignment Branch will record a roll of toilet paper, provided you fill out the cover sheet properly.

And in more than one instance, people have filled out these sheets incorrectly - getting one digit wrong - and you see an "assignment" listed for your Patent or Application that shouldn't be there.  They own your Patent now!   Well, relax, they don't. It is just an error and in order for a contract to be legit, is has to be legit - there has to be a "meeting of the minds" and a slipped number isn't a meeting of anything.  Similarly, an attempt at fraud isn't a valid contract, just because your county clerk recorded it - as is their job.  Like I said, they'll record a roll of toilet paper, if it has the correct cover sheet on it - just like the Patent Office.

So old Newt uses this fear to sell this service.  Implying that somehow a fake deed with a forged signature (that might not even be your name!) with a forged notary stamp, is going to have legal effect in the transfer of ownership of your home. I'll give you another example which illustrates why this isn't true. When the Island Authority extended our leases, they noted that our deed was in error - it had the wrong plot number on it.  Technically, the deed was to our neighbor's house, and the fellow we bought our house from still owned ours (Funny thing, the tax people had no trouble sending us the tax bill!).

This didn't mean we owned our neighbor's house, only that the deed was defective.  The seller signed a new deed and this was recorded and the error corrected.   Life goes on, without fanfare. Suppose the seller was dead or refused to sign a new deed?   Well, in the latter case, he could be sued.  And since was a Real Estate Agent, he would have lost his license. In addition to that, we had an owner's title policy to protect us.  The closing attorney who made the error would be on the hook as well, and of course, he has malpractice insurance.  There were layers of protection here.   Not to mention the bank with which we had a mortgage at the time would have intervened.   But no, you can't just file a deed and take possession of someone's home.

I mentioned before this "sovereign citizen" nonsense.  Someone tried to "squat" on an abandoned property and then take possession by filing some nonsense "sovereign citizen" deed they typed up on their home computer. It didn't work.  Recordation of a deed means just that - it is recorded.  It is not a judgement by a legal authority that it is valid.

So why do we record deeds?   Recordation of a deed serves to put others on notice that the property has been transferred, that a lien has been filed, that the property has been mortgaged, or whatever.  A bank loaning money to someone would check the County clerk's office to see if the property is already mortgaged and also to see who is the current owner.  A sloppy bank might go along with a fraudulent deed recordation, but the onus is upon them, not you, to prove their claim.
 
And yea, that would be a hassle, if someone did this to you - but it doesn't mean you lose your house or have to pay off someone else's loan.  And this "service" provided by Newt Gingrich isn't going to prevent that hassle - all they agree to do is notify you of any change to your recordation status - which is a public record they can access online.  In fact, you can access this data online.  For example, I could search deed records for the State of Georgia on a Statewide record base - but not all counties participate! My local county had an online record of property transfers.  I was able to check it - I still "own" my house.

It used to be, at one time, that a lot of actual records (images)  were available online, but in recent years, you have to request records, in paper forms.  So I am not sure this "home title lock" is of any use.  And others, even Fox News (a big Gingrich fan!) don't seem impressed, either.

Why Newt, why?  And why do celebrities get involved in these things?  Tom Selleck (Sellout?) selling worthless "burial insurance" (Parodied brilliantly by Michael Douglas on The Kominsky Method) or Tom Bosley before him?  Well, they get paid a lot of money for what amounts to less than a day's work - maybe not even an hour or so.  So they take the money.  And many of these celebrities, even after earning millions, end up broke, because they spend it even faster than they make it.  Hard to imagine Tom Selleck being broke enough to sell burial insurance. Not so hard to imagine Newt Gingrich doing anything for a buck. And think of it - some folks thought he could be President!  Of course, the bar for that has been lowered a lot since then.

It is sad that these celebrities sell their credibility like that.  Some of them need the money and they go for it. And these scammers out there, they know old people will trust an older, white, male celebrity who is a father-figure.  In fact, you can kind of sort of spot these scams, again, from 100 yards away, by how they are presented.  When they use a celebrity endorser, one who played a trustworthy father-figure type on television, or who has a reputation among the older, conservative, set, well, you can pretty much figure out, it is a scam, without even looking at it in detail.

UPDATE:  A reader writes that Rudolph Giuliani is also doing ads for this home lock thing. Not hard to figure out why he's doing it. He needs the money. One wonders whether the people behind this are salting the pot. In other words, creating these incidents where someone tries to file a false deed in order to create fear in people. It wouldn't be hard to do, you just contact a few of your underworld friends to do this for you.

Sunday, August 1, 2021

Should You Run A Business? Probably Not!

Very few of us are cut out to be business people.
Cheerful sign to welcome customers to your business!

Be your own boss! Start you own business! the advertisements proclaim.  Most of them are for frauds.  But it is an interesting angle they use - apparently a lot of salary slaves believe that running your own business is some sort of Shangri-La, where you sit behind a big desk all day long, with your feet up, while your minions do all the work - and even count your piles of money for you!

But the reality is often far more harsh, and many a salary slave has given up a sure thing, in terms of a retirement plan and a 401(k) and squandered it all on starting a business, only to see their dreams shattered and their future destroyed.  I wrote before about a friend who took an "early out" from a company.  It was popular in the 1990's, when many rustbelt companies were failing and offering cash sums to employees to leave - or else!  And employees, used to getting paychecks, think any amount of money more than a years' salary is a lot.

So they take the money and leave and often find out it isn't enough to live on for the rest of their lives.  My friend - like many others - decided to take this money and start a business with a friend.  Actually, he tried more than one business.  Each one went bust - as statistics show is the norm - and depleted his little pile of money further and further.  Finally, he wised up and realized that just having enough money to get by was a good deal and gave up on his dreams of avarice.

The failure rate of small businesses is enough to give anyone pause.  But the problems go further than that.  I wrote before about ill-conceived ventures that go broke regularly, such as the coffee shop in Lansing, or the various NASCAR collectible shops.  Another friend opened a shop on "The Commons" - a street in Ithaca which was blocked off and made into a pedestrian walkway (another trend from the 1990's) surrounded by restaurants and candle-and-soap shops. After running his own gift shop for a year, my friend said to me, "The Commons is where dreams go to die!" - this after seeing a half-dozen stores go bust, just in the short time he was there.  And yes, his went bust, as well.

Your average salary slave has no idea how to run a business.  They don't figure out who their customer base will be, how much they are willing to pay, what the overhead will cost, what the cost of materials and labor is like - none of that.  They just hang out a sign and hope business comes, and often there is not enough business to even pay the light bill, much less themselves.  It is sad.  Employees have no business acumen.

I realized this myself, when I started my own business.  I had no idea about accounting practices, and it wasn't until I bought a copy of Quickbooks that I figured out one of my largest clients wasn't paying me.  It was kind of embarrassing, really.  But you can be the best in the business, but if you don't mind the bottom line, you go broke.  Mr. See had the same problem with his catering business - he "forgot" to send an invoice to a client, and didn't do so until they called wondering why.  You can't run a business that way.

But beyond the nuts-and-bolts of running a business is your personality.  Very few of us are cut out to be managers or business owners.  It is a tricky business, if you'll pardon the pun.  You have to be firm yet fair with employees.  You don't want them walking all over you, but on the other hand, you don't want them quitting in droves because you are a task-master. You have to cajole them into working hard - making money for you - and yet not be their friend at the same time.  Most salary slaves, used to having an "asshole boss!" think they can enact some sort of social justice by being nice to their employees, and oftentimes this backfires and they are twice as much of an asshole as a result.

At the same time, you may have to serve the public - your clients and customers. And you have to be pleasant and firm with them, in similar, yet different way that with your employees. You can't treat customers like employees - they will run away. And if you treat employees like customers, they won't work very hard and ironically, will likely quit, too, as no one likes a "soft" boss, even as they profess otherwise.

There are just some folks who shouldn't deal with the public.  I'm probably one of them myself.   I don't tolerate a lot of nonsense, and how people behave as customers (alas, even I) is often embarrassing.  Everyone wants special treatment and a discount and throws a fit when it doesn't happen.  Kevin and Karen rear their ugly heads.   It takes a special person to smile and say "have a nice day" when a customer has been ugly.

But sometimes, the person behind the counter is even worse. And such people should not run a business.  What got me started on this was we visited a campground in New England run by a guy who seems to hate life and hate humanity.  We read and heard positive reviews of the place, but were warned by some folks that "the owner is a little weird!"  When you visit the campground, the first thing you see are a plethora of "No Trespassing!" signs stapled to all the trees by the entrance. A real warming welcome!

When you go to a KOA or other commercial campground, you are greeted with a friendly smile and a "how are you?"  The employees are trained out of a handbook to be pleasant, and most are "work-campers" who are RV'ers themselves.  They know that at the end of a long day wrestling a motorcoach down the highway, the last thing you need is to see a grumpy person behind the desk, or worse yet, someone who thinks sarcasm is the height of hilarity.

Not so here.  You go to the office and the first thing that greets you is a giant sign with a picture of a handgun aimed at you, with the notation, "There ain't nuthin' in here worth you dyin' for!" which is weird.  I mean, do they have this fear of being violated or something?  Someone is going to take all their firewood money?

The owner was even less friendly. He complained, he bitched, he acted like we ruined his day by coming there.  And he wanted all-cash (audit bait!) as well.   And while we were checking in, we were treated to a litany of grievances he had against other guests and former guests, who he gleefully told us were "banned for life!" (which we later learned was a favorite phrase of his).  When I asked him some simple, basic question (Does this site have full hookup?) he responded with sarcasm.

He was abrasive, a bully, and also passive-aggressive. Vague responses to specific questions were his specialty.  "What time is the potluck supper?" for example, was answered with a question. We finally figured out it was at 6:00 PM, but that really didn't help much, as he delayed the start of it by a half-hour, so all the food was sure to be cold, including the entree we brought.  You don't want to know what happened to the ice cream another camper brought.  Soup, anyone?

Worse yet was the way he bullied the guests - shouting at them and shaming them and threatening, always threatening, to "ban them for life!" as if not going to his campground would be a deprivation.  The "seasonal" guests who stayed for the summer all talked trash about him behind his back and called him nicknames like "The Landlady."   Why you would want to stay for more than a few days at such a place is beyond me.  Why anyone would want to stay at all is beyond me.  Why we stayed, is beyond me.

The weird thing was, he claimed to have worked "with the public" all his life, and was sick of it.  So why not open a campground, where you will be serving the public?  Tellingly, the campground is for sale (no takers yet).  I suspect that it will be a hard sell, as on paper, he isn't making a profit (he claims), but under-the-counter, all that cash income goes right into a cigar box.  That is the conundrum with an all-cash business that is playing dodge-the-IRS. You might make good money, but of course, be subject to home invasion (hence all the threatening signs) and you risk the ire of the IRS in terms of being audited.  Cash businesses are their favorite! And yes, they can use forensic accounting to figure out you're cheating. All it takes is one disgruntled customer to blow him in, and he's minting those like coins.

But worse is that if you go to sell the business, it is darn hard to prove it is profitable, when you've been siphoning-off all the cash over the years.  You can't blame a buyer for being skeptical, when your books show modest profits or small losses, from year to year.

The other problem in running your own business is age. At age 61, I don't want to run a business, which is why I retired.  It is not that I can't do all the hard work required, it is just that I don't want to.  But more than that, I realize that to successfully run such a business, I would need a decade just to get it going.  And that would be well into my 70's.  Life is finite - something you don't realize until you hit 60 or so.  So running a business seems like a perpetual thing to a 30-year-old, it is a closed-end deal to a 60-year-old.

Many of these campgrounds (private ones, not the big chains) suffer from this problem.  Mom and Dad decide to run a campground, but don't think about the end game or where it will go from there.  They get old, and they get tired, and they become friends with the tenants and don't raise their rates.  They stop doing improvements and maybe attendance tapers off.  Their client base dies off - literally.  Some young buck who took the "Trailer Park University" seminar, buys the place for a pittance, and then doubles the lot rent, evicting the old-time tenants. Without a succession plan in place, this is usually what happens to RV parks and trailer parks, as the owners "age out" of the system.

Sometimes, I think it might be interesting to run a campground.  But listen to any owner, and all they do is bitch, bitch, bitch, about the government, taxes, regulations, zoning, the customers, the suppliers, and of course, the employees.  Not only that, I realize that serving the public is no Swiss picnic - people can be pleasant or irrational.  You have to be pleasant, all the time.  And the vaunted "profits" are often illusory.  And to keep the place in business, you have to keep making capital improvements and doing repairs and overhauls all the time.   You can spot the parks where they stopped doing maintenance - they are circling the drain.

It just struck me as odd, that this fellow decided to start an RV park, when his personality was so ill-suited to running any kind of business serving the public.  Not only that, he is a few years older than I am, and quite frankly, I would be terrified of risking capital to start a business at this stage in my life, when I am coasting comfortably toward the great inevitable.

I am not sure we will ever come back to this park.  The setting is nice and the infrastructure is above-average.  The people are friendly - except for the owner, of course.   Sadly, too, is that all the surrounding land is being developed for housing.  I suspect that the park will be sold, eventually, not to someone who wants to run an RV park, but to someone who wants to bulldoze everything and plant a new crop of vinyl-sided homes.

All that work, and all that effort, for nothing.  That surely will drive the landlady over the edge!

Saturday, July 31, 2021

Better Call Saul!

I am not against religion per se, but most religions - if not all - have a lot of skeletons in the attic.  Saul has quite the modern desk!

I mentioned before that a lot of stuff in Christianity is not very well explained.  People believe in things like the Holy Ghost, without really understanding what they mean.   Others don't believe in things like the Holy Ghost (Unitarians, for example) or other things that are in the Bible.  To some extent, everyone selects, cafeteria-style, from their religion, because most religions teach ideas that internally conflict with one another.

For example, while Jews and Muslims eschew pork, most Christians chew it - particularly in the South, particularly Baptists.  And speaking of Baptists, most profess not to drink alcohol (while secretly doing so, in many cases) while the Bible clearly states that Jesus enjoyed a good glass wine with supper.

The problem with most ancient religions is that, well, they are ancient, and thus if you go back to the old texts, there is a lot of pandering to prejudice and bigotry of that era.  Most old-time religions (and even some newer ones) relegate women to the position of property - if that.  Children are little better off.   Talk back to your parents, and well, they have no other choice than to kill you.

Of course, some folks have figured out wiggle-room on this.  For example, in the previous cite, they argue that since it is in the old testament, it only applies to Jews (the chosen people) and since Christians get the Bible 2.0 upgrade, it over-writes that nonsense.  We are free to eat pork, shellfish, and not kill our children! Of course, that fails to explain the "full gospel" Christian churches which root around in the old testament, looking for trouble, and often finding it. Like a Rorschach test, you can read whatever you want to, in the Bible, by "interpreting" it.

Christianity is an interesting beast - it really didn't take off until it found a promoter - the famous Saul/Paul who on the road to Damascaus had a vision - "I can make something of this!  Think of the angles!" and supposedly changed his name to Paul. But others claim that the two names were equivalent in Roman times - Paul being the Roman pronunciation of Saul.

His big idea?  Christianity should not be limited to Jews.  Yes, it sounds funny today, but back then, it sort of limited expansion of the franchise.  And yes, this is a problem with most groups, including our Parcheesi club - the old members don't want to let in new ones - and black-ball anyone they don't like. It sort of limits how far the franchise can expand.  Saul's brilliant idea was to let anybody in, even if the end of their penis wasn't cut off.  And today we have the Holy Roman Catholic Church as a result. Oy Vey!

I am not picking on Christianity - every religion has its variations and divisions, and often people fight to the death over these trivial (to the rest of us) differences in theology.  Islam would surely have taken over the world, if not for the Sunni/Shiite rift, which no doubt we in the West foster. Divide and conquer, the oldest game in the book. But Christians have their own bloody history, of Protestants versus Catholics. Jews have their own sects and differences, but I am not aware they have killed each other over the difference between reform and orthodox.

You would think modern religions would suffer less from this problem.  Starting out with a clean slate and a new "Bible" that you get to write, a modern religion could eliminate all this archaic "don't eat pork" and "beat your children" nonsense.  But it seems the more modern religions have their own set of beliefs that are often hard to square with reality.  The idea of everyone getting their own planet in the afterlife (as in Mormonism) seems somewhat attractive, if not implausible (suppose you get Pluto - not even a planet!).  And Scientology, well, just sounds too "out there" of you'll pardon the pun.

The problem of course, is that every religion out there has one thing in common:  They believe they are the one true religion and that anyone else is dead wrong, even people of the same religion, but a different sect.  And sadly, they often believe that folks who think otherwise are worthy only of death.  Pardon me if I object to this sort of thing.  Yes, I know it offends your "religious beliefs" which are (pun intended) sacrosanct.  But your belief in murdering me conflicts with my belief that I should be allowed to live a natural life.

And of course, it goes without saying that if every religion is the one true religion, then a vast majority of the planet is going to hell, because by default, most folks are believing in the wrong God.

As the whole Saul/Paul thing illustrates, religions are not created by God, but my man.  Bibles are not the word of God, but an interpretation - or a series of interpretations - of what mortal men (and yes, it is usually men, not women) think is the word of God.  And men are fallible, even if God isn't.  So you have to take religion with a grain of salt, even if you are a devout believer.  Because men get things wrong, all the time.  And often, they twist things around to favor their own interests. Yes, shocking, I know.

I am not sure what the point of all of this is, other than I was thinking the other day about Pauline Christianity.  In Sunday school, this wasn't talked about a lot.  We just assumed that the day after Jesus rose from the dead, Christianity was invented and it pretty much took off from there.  Oh, sure the Romans fed Christians to the lions, but they eventually came around.  And sure, maybe the Catholics went off the rails a bit, but Mr. Martin Luther straightened them right out, eh? 

Well, maybe not.  The creation of Protestantism is itself an example of how men create religions - not Gods.  And often, the motivation behind creating new religions or sects is not based on celestial matters, but earthly ones.  Luther was pissed-off that the Pope was selling indulgences.   Henry VII was pissed the Pope wouldn't give him a divorce.  Lots of people get pissed-off at the Pope, it seems, even today.

There are more flavors of churches, as a result, than there are fast-food restaurants.  Go into any town of any size, and you will see a half-dozen churches, from the Catholic to Presbyterian to Unitarian, to storefront "evangelical" churches to Baptist churches (both black and white).  We all want to believe in something, but not the same thing.

That is the nature of belief.   It doesn't matter which version you believe it, it wasn't meant to be taken literally, but figuratively.  Belief is comfort, and can provide relief and perhaps even strength.  It is only a problem, in my opinion, when it replaces reason, or is used to justify odious things.

The man running the company that rips off thousands of people will say that Jesus blessed him, which is why what he is doing is holy.   Slave-owners used the Bible to justify slavery (and yes, it is in there, in the Old Testament).  People can use religion to justify torture, war, or whatever - and have, and do, and will continue to do.

Better call Saul!

UPDATE: Two readers respond.  The first makes my point, inadvertently.  He argues that I am not "qualified" to comment on belief, that only ordained ministers, priests, pandits, Imams, Bishops, Cardinals and Popes can make such interpretations of religion!  Where do I come off claiming to know anything about God?

Exactly my point.  No one has the Copyright or Patent on God.  No one has the inside track to the almighty, even if they claim so.  Maybe some religion guy studied religion in school, that doesn't mean he knows a helluva lot more than you or I do about the great mysteries of the universe - Why are we here?  What is life?  What is consciousness? What happens when we die?

But organized religion would like to sell you these answers, for a fee, of course.  And you can't disagree or argue with any of their pat answers.  They's experts!  You know, people like Cardinal McCarrick, right?  Uncle Ted is such a nice fellow - and he knows.  So no questions, please!  Those guys are experts - don't try this at home!

I believe that God is accessable to everyone and no one at the same time.  No one is more of a expert on God that you are (or I am) and no one really has the answers to the unanswerable questions in life - except that we all get to find out, in due course.  And compared to the life of the cosmos or infinitiy, our lives are a tiny drop in the bucket.  The wisdom of 50 years or 100 is nothing compared to all there is to be known.

Another reader points out that our Pope Poopa the 1st has said we should go back to non-Latin mass, even as many parishioners live the pomp and circumstance of it.  But he's infallible so he must be right.  Problem is, the last Pope - who is still alive, btw - was also infallible, and he was the one who wanted to go back to Latin mass.

They can't both be right and both be infallible.  One has to be wrong.  And one is - but who it is, isn't the point.  The point is, they are just humans, like you and me - with failing bodies and clouded minds and one with a bad intestine.

Religion sucks.  But that doesn't mean you have to be an Atheist, either.  Like everything else, mankind takes a good thing - God - and mucks it up for good!

Friday, July 30, 2021

Stealing From The Poor is Easy!

You don't have to steal from the poor, they willingly give you their money.

Much ado has been made over the Robinhood IPO. Like most modern IPOs, they sold a pittance of the stock for a huge amount of money to chump investors.  Unlike earlier IPOs, however, they allocated one third of the IPO stock to chumps. And while the stock premiered at $38 a share, quickly sank to about $33.

Some folks are claiming this is a way for the small investor to get in on the ground floor of an IPO.  I disagree.  Retail investors (chumps like you and me) are the ones who drive up a stock price far beyond its metrics. For example, Gamestop has no real plan to make billions overnight, and with a negative 77 P/E ratio, probably never will.  But retail investors don't look at metrics like that - profit and loss, business plans, dividend ratios.  Rather, they look at pricing trends and assume "some greater fool" will pay even more for an overpriced and overheated stock than they will.  And the financial press - and now the Internet - will work to hype up the price of loser stocks.

Or, if they do look at metrics, they look at specious metrics.  EBITDA sounds sexy and all important, until you realize it basically means, "what we would be earning, if we didn't have to pay back our debts and pay our taxes".  In other words, it is a fantasy number.   It is like how the financial press breathlessly reports "revenue" as if it were profits and not merely gross income.  And the financial press has been breathlessly reporting how Robinhood's "revenue" is skyrocketing, even as it continues to hemorrhage cash.  Somewhere along the way, you have to make a profit.

So it made sense for Robinhood to do this deal - selling IPO stocks to members.  First, they get lots of press for it, and second, it makes them sound like a "good guy" even after all those SEC investigations.   But most of all, it insures that someone will actually buy the stock and bid up the price.  Or that was the plan, anyway.

Small investors are convinced they can make huge amounts of money investing in stocks like this. But one has to ask about the fundamentals of the company. The earnings per share is blank, because the company is losing about $6 per share at the present time. With the share price of about 33 to $36 this means but negative 6 P/E ratio.  In other words, they are losing money, and you have to make money to stay in business.

To me, what is really scandalous is they sold off only a few hundred million dollars of stock to these suckers, while the vaunted market cap is now listed at 30 billion. This tells you that the vast majority of the company stock is held by insiders, and the poor chumps who bought this at $38 a share or whatever are buying a tiny slice of the company. Like most modern IPOs, the entire point is to create a market for the shares so the Insiders can cash out. They really aren't interested in "raising money" so much as in cashing out.

Of course, they have great plans to make money. By offering free trades they can create profits by... I'm not sure how.  In fact, when the stock didn't do so well out of the chute, they issued a new press release, with vague promises of "expanding" the business into other areas.  I am not sure where they could expand do - massage parlors and drug dealing?  What other financial services could they offer?

But like any obedient lapdog, the press dutifully barfed-up the Robinhood press release, after breathlessly reporting the IPO.  This is good meaty clickbait stuff here, folks!

What is interesting to me is how the media presents this.  One breathless article talks about how their "revenues" (gross receipts) have skyrocketed.  No word on net profits.  Yes, the company is losing money and has lost money.  How do they plan on making money?  That is the conundrum with "free trades" - because even if there are no trading fees they have to pay, if you are a stock market trader, you do have overhead - your license, your salary, your office expenses, your light bill.  So the question remains - how does a bank or firm stay in business offering "free trades" if they are making no money on these trades?

It is a question that troubles me not just because of Robinhood.  I have an account with Merrill Edge, which is part of Bank of America, and yes, they offer me "free trades" because I carry a balance of over $100,000 or so invested with them.  The question is, how are they making money on this?  Bear in mind that before this time, the "low cost" traders like E*Trade and Ameritrade (where I had accounts before) were charging $6.99 to $9.99 a trade and we thought that was a freaking deal.

When my grandfather died, he left each of us a small amount ($500) of Republic of Texas bank stock.  It was a solid "blue chip" stock back in the day, paying dividends and all.  I sold all of mine to pay tuition (and buy pot, no doubt) which turned out to be a smart move.  My late sister thought this would be the start of a stock portfolio, as pathetic as that sounds, but some operator took over the bank and ran it into the ground, to the point where the stock was worthless.  My poor sister - she also had a CD with a "savings and loan" run by some sketchy guy selling "junk bonds" and that dissolved into nothing as well - it was not FDIC insured.  She got the shit end of the stick in life - cancer to boot.

And you wonder why some folks think capitalism is a scam.

But when I sold that Republic of Texas bank stock, I think I paid the broker $30 or more in fees, handing him the actual share certificates, and him handing me a check.   Back then, buying and selling stock was a pain in the ass, which is why buying stock through shareholder services - with a $1 fee - seemed like a good deal - at the time.

But now.. free?  How do they make money at that?  The answer, I guess, is in part that they don't, or at least not in a way we can see.  I notice that in some funds I purchase through Merrill Edge, there are fees involved.  And who knows how much they get in kickbacks from the funds themselves, who charge a "management fee" (expense ratio) for running the fund.  No one works for free.

But Merrill doesn't offer free trades to the plebes - they want to see a certain amount of dough, which in turn insures that there is a certain amount of income.  Offering free trades to Joe Schmotz and his $500 "investment" in Gamestop isn't as enticing.

Hence the IPO.  Again, and I will say this until I beat it into your head, the purpose of the modern IPO is to allow insiders to cash out.  Unlike old-timey IPOs back in the day, where they sold off 90% of the company stock to raise capital to expand and improve, today's IPOs sell off 5% of the stock to suckers like you and me to create a market for the shares the insiders want to sell later on.  In fact, some IPO prospectuses are very up-front about this - saying baldly that the purpose of the IPO is to create a market for shares.  But no one reads the prospectus, do they?

If you did, you might find this tasty little tidbit:

We have three classes of authorized common stock, Class A common stock, Class B common stock and Class C common stock (collectively, our “common stock”). The rights of the holders of Class A common stock, Class B common stock and Class C common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 10 votes per share and is convertible at any time into one share of Class A common stock. Shares of Class C common stock have no voting rights, except as otherwise required by law, and will convert into shares of our Class A common stock, on a share-for-share basis, on the date or time determined by our board of directors following the conversion or exchange of all outstanding shares of our Class B common stock into shares of our Class A common stock. Upon the completion of this offering, no shares of Class C common stock will be issued and outstanding. For more information about our capital stock, see the section titled “Description of Capital Stock.” 
Upon completion of this offering, all outstanding shares of our Class B common stock will be held by our founders, Baiju Bhatt and Vladimir Tenev, and their related entities
I had to scroll all the way through that document to page 1 to find that, too!  So the founders, in addition to having a whopping majority of the shares of the company, have ten times as many votes as you do for your pathetic Class-A shares.  And when they sell their shares (as they have done) they will no doubt "convert" their Class-B shares to Class-A before selling them to you, stripping you of nine votes.  So in terms of control of the company (the only real reason anyone would buy out your shares) it is a non-starter.  No one needs Class-A shares to take over the company.  They pay no dividends.  They earn no money.  In essence, they are worthless - a share certificate to the idea of Robinhood, nothing more.

Robinhood raised $2 Billion in its debut, but has a "Market Cap" of $30 billion.  Do the math on that - they sold off 6.6% of the company in the IPO.  The insiders kept the 93.3% of the rest.  Well, except the shares they sold off, that is:

The company sold 52.4 million shares, raising close to $2 billion. Co-founders Vlad Tenev and Baiju Bhatt each sold about $50 million worth of stock. The company was last valued in the private markets in September at $11.7 billion.

Fifty million - about fifty times what you can expect to save in your lifetime, if you have a good middle-class job.  And fifty million represents a drop in the bucket compared to the "billions" they still own in remaining Class-B shares.  In other words, Fifty mil was just a taste for them - enough to buy a mansion and a new Ferrari.

Note also how the "valuation" of the company last September was only 11 billion, but the "Market Cap" - thanks to the IPO is now $30 billion.  Nice way to triple your money, overnight, if your name is Bhatt or Tenev!  This illustrates why Market Cap means nothing, really, except to insiders.

And who pays for all of this?  Little people, lining up to give them $500 here or $1000 there, with their blubbering thanks.  "Please Mr. IPO - take my money!  PLEASE!"

It also explains why the share price languished.  Not only did they have to unload the IPO shares, but the founders were diluting the market by selling off $50 mil of their own stuff!

Robinhood doesn't steal from the rich and give to the poor, the poor give them money, willingly, and make the Robinhood insiders rich.

So why do people throw money at these things?  Why indeed, when in recent history - not even ten years ago - we realized what cons these things were.  Sure-fire investments that can't go wrong - right?  People out-bidding each other for the privilege of buying an overpriced house.  It all sounds so familiar, yet people fail to see the parallels.  It is 2007 all over again.

Bear in mind that the 20-somethings throwing money at these things were barely 10 years old when the market collapsed in 2008.  Maybe they saw their parents weep when their portfolio was cut in half, or they lost their house to foreclosure.  But they didn't learn a damn thing from it.  Far from it - they will invest in clever stocks and make a fortune!  Not end up broke like their elders!

Funny thing, I was shopping at Hanniford supermarket the other day, and like most places they had a big sign saying they were hiring.  The benefits were pretty amazing, including a Fidelity 401(k) with 5% matching feature.  And I am sure few employees took advantage of this guaranteed 100% immediate return-on-investment, either.  But I am sure more than a few threw a few bucks at Gamestop or Robinhood or Bitcoin or Gold or whatever - and are "hanging in there" because it is sure to come back.

Like I said, you don't have to steal from the poor, they will willingly hand you over their money.

It is sad to watch.  Maybe I am wrong about this - that Robinhood will figure out some way to make huge profits off of free trades and become a wildly profitable company and drive the share price up to $70.  Maybe, but I doubt it.  Like Gamestop and so much of the market today, it will go up in price, but not in value, driven by the law of supply and demand, not by underlying metrics.  Clueless masses buy and buy, based on these breathless stories in the financial press and anonymous postings on Reddit.

This will not end well!

Wednesday, July 28, 2021

A World Without Men? (Amen!)

Are men the cause of all the trouble in the world - or do they just have more opportunity?

Men are always up to no good, make no mistake about that.  Due to our biological differences, men have always enjoyed a more dominate role in society throughout history, and even today, throughout the world and even in progressive Western countries, despite the strides women have made.

Men dominate industry, politics, government, academia, religion, the sciences, and just about everything else.  Women are catching up, at least in Western countries, but are still far behind in terms of participation and pay.  Why is this?

Well, part of it may be biological and historical.  Women were viewed as "the weaker sex" or "the fairer sex" as they were not as large and strong as men, at least in terms of upper-body strength.  They also got pregnant.   And pregnancy meant, historically, being incapacitated for a time, not only during the latter part of pregnancy, but during childbirth and the early child-rearing years.  Historically, women were charged with raising the young, and this carried over even into relatively modern times, where jobs like teaching or nursing, which required nurturing, were historically women's roles - and often the only roles they were allowed, outside of the home.

There may be other physical manifestations as well - the dominance of testosterone versus estrogen might explain not only physical differences but behavioral ones as well.

The problem is, not only do men dominate much of society, they also create more than their fair share of troubles.  Men make up over 90% of prison inmates and are responsible for more than 90% of the crime in the world.  And it is safe to say that men are behind most if not all the wars in the world, and the atrocities and horrors - although women have lent a helping hand there as well.   But overall, it seems men create much trouble for the rest of society.

Some women - particularly Lesbians - argue that men are unnecessary.  "You finish the candy bar, you throw away the wrapper" they argue.   Men's only real contribution to "mankind" is to provide seed to inseminate an egg - something that can be done from a test tube or even artificially.   It is an interesting thought - would a society that was all women be much different than the male dominated society we have today?

There was a mythical society of women, called Amazons - no relation to the river or the online shopping site.  But of course, this was a myth created by men, and in their limited imagination, the only thing they could come up with, is a race of women who behave like men - warriors and invaders.  So I doubt that would be a model for a women-dominated society.

I have heard from some feminists (and again, Lesbians) that they believe that women work differently than men.  Men want a hierarchy, with someone on top, and then layers of authority radiating downward to the bottom.  And indeed, corporations and the military are arranged this way.  You take orders from above, and give orders to those below - unless of course, like most people, you are on the bottom rung.

Men, they argue, compete and conflict with each other, to claw the way to the top of this pyramid.  And historically, some leaders - Presidents, even - have played off one subordinate against another, figuring that this competition leads to greater achievement. Others might argue it leads to wasteful infighting and disunity, when pulling together as a team might be more productive.

Women, they argue, work cooperatively, and in a woman-dominated society, people would work together, in concert, and use consensus, not strongman leadership, to determine what course of action to take.  Everyone would live together in peace and harmony!

Maybe.  Or they might show themselves to be assholes like men are.  It is hard to say, given that we haven't had a chance to experiment with society this way.

When I worked at Planned Parenthood as an intern, I was shocked that I was one of the few men working there.  The women explained to me that the janitor did the heavy lifting of boxes and changing lightbulbs, and the director oversaw the entire operation.  And then there was me.   I was flabberghasted that this women's health organization was headed by a man. "Oh, you have to have a man running things," one of the 'liberated' woman told me, "if we had a woman in charge, we'd spend all day tearing her down!"  The other women nodded in agreement.

As an aside, I should note that I learned a lot about men while at Planned Parenthood.   The boyfriends would \sit in their hopped-up cars listening to 80's rock in the parking lot, while their girlfriends were fitted for a IUD.  Nice.  But worse were horrific stories, such as one told to me by a woman from the Dominican Republic, who explained that her boyfriend would beat the crap out of her, every time she got pregnant (her fault, right?) and kick her down the stairs.  Men - what's not to like?

But getting back to topic, maybe back in 1985 women thought men needed to run things.  Maybe it isn't true today.  But then again, a friend of mine recently retired from a charity organization that was staffed entirely by women.  He was the director, and the women there said the same thing as the women at Planned Parenthood back in 1985 - that they would respect the authority of a man, but would tear down a fellow woman if she was put in charge.

Maybe this isn't true.  Or maybe this is the flaw in the "consensus" theory of management.  If you manage by consensus, it goes without saying you can't have someone "in charge" - elevating their opinion above the consensus of the group.

Of course, there is another possibility.  Women, given the chance, would turn out to be as evil and domineering as men can be - they just haven't had the chance to do so.   They would start holy wars and Jihads and invade countries and create strife and difficulties just like men do.   It is possible - that the only reason women aren't more represented in these statistics is that they have traditionally been in the background, supporting their men, but not risking their own situation in the process.  Every evil dictator in the world had a wife or girlfriend.   Men marching off to war are supported by their families back home.  You look at the Nazi parades of the 1930's and there were plenty of women giving the Hitler salute.

Maybe it is just that men, having more time on their hands, get into more trouble.   Some biologists claim that sleep in animals isn't just a chance to rest and recuperate from the day's labor, but a way of keeping animals inactive so they stay out of trouble and are not eaten by other animals.  Maybe men get into more trouble because they have more spare time on their hands.  Maybe if they spent more time at home, raising the kids, the world would be a better place.  Maybe.

On the other hand, women have proven themselves to be competent in almost - if not every - field of endeavor that men engage in.  In my lifetime, I've seen our society go from an era where a "woman doctor" or a "lady lawyer" was a novelty, to the point where they are starting to dominate these fields of endeavor, at least in terms of recent school graduates.  And women in the military went from being an auxiliary service to combat roles.  Maybe we don't have an army of Amazons - yet - but it is clear women can be warriors and killers, if they choose to be.

This makes me wonder - do we need to build more women's prisons?  Are crime rates starting to equalize as well?   Some statistics seem to indicate this is the case - the incidence of women in crime is on the rise.  If this is the case, perhaps men and women aren't so different after all - we are all humans, and whether or not we engage in certain behaviors depends more on opportunity than motive.

Perhaps.   I guess we'll never really know, at least in my lifetime.