Simple numbers like this always astound me. $29 billion in 2010. Greater than GDP of 28 poorest countries. Google is a powerful company. Not just because they make a lot of money. But because they control most of the world’s information. Google’s control of information is much like the nations that controlled the trade routes of the past… as long as they have that control, they will find ways to make huge money off of it.
Based on this infographic, if they want to grow profits, it would be in Google’s interest to 1) find a way to monetize their other products 2) reduce energy consumption or cost of energy consumption and 3) gain more cell phone market share.
Google has been notoriously bad about monetizing outside of advertising. However, with the market share that Android has gained in the cell phone industry, a simple $3 licensing fee per phone would get them over an extra billion in revenue (if my math is correct). And it is well past time that Google start making money off premium video products through their YouTube channel.
As for reducing energy consumption, I understand they are investing heavily in green energy, but how well that will pay off is to be determined.
Much has been made lately of a looming education bubble in the United States. It’s a case of degrees losing their value while the cost of education continues to go up. According to some, this is an especially acute issue in the world of law:
In other words, 1 in every 2 law student is graduating with big debt and no law job. And the ones who are getting jobs are often getting paid less than glamorous salaries while being saddled with back breaking debt.
Not necessarily for the better, mind you. But here’s a site called SuperScholar that has listed what it considers the 20 most influential economists alive today and we think they’ve done a good job with most of their choices. Not sure that Paul Krugman would agree though:-)
And despite the current economic malaise, not all of the economists listed are bad guys.
A few years ago, we explained that the only way to achieve serious gains in your portfolio is to invest in small and ignored companies. We showed that nine out of ten of the top performing stocks from 1998 to 2007 were Micro Cap stocks (worth less than $250 million dollars) and essentially ignored by Wall Street. The first question on our Top 3 questions to ask about every stock is: Does this company have room to grow?
The fact is, if you’re looking to do really well in the stock market, you have to focus on small, ignored companies. If you just want to protect your wealth, invest in ETFs or put your money in gold. Bear in mind, however, that 95% of public-company bankruptcies were small and micro cap stocks as well. Just because a company is small doesn’t mean it’s going to get big, and it’s not an easy task to find the quality stocks among all those potential failures. You have to do your due diligence by looking into the economics of the company: does it have a low-debt, cash-rich balance sheet? Does it have a steady free cash flow and increasing profits every year? Does it pay dividends?
Also remember, on average, companies with high and increasing consumer satisfaction rates do better than the S&P 500. So once you’ve found a small company with good financials, and a product or service you understand, look into their customer satisfaction statistics. Are they high? Have they been increasing year over year? If yes, then move on to what I consider to be one of the most important and telling metrics about a company: Insider ownership.
Here at the Common Sense Investor, along with the odd post on complex adaptive systems or peer-to-peer lending or the SEC, we’ve also posted a few individual stock picks and some quick guides for choosing quality companies to invest in. But I don’t think we’ve ever actually explained what a ‘stock’ is.
Every Wednesday at 8:00pm Eastern (5:00pm Pacific), Peter Schiff broadcasts Wall Street Unspun, which is his mid-week run-down on the market dealing with any issues making the headlines at the time. This week’s episode is one of the best I’ve heard yet, in fact, I think this episode may actually be one of the best talks on the current economic crisis that I’ve ever heard, period. Highly, highly recommended.
Initially, Peter Schiff talks about Barack Obama’s newly unveiled stimulus package. He highlights some obvious holes in that package and uses that as his launching off point. He compares the stimulus package to an individual home owner: Say you’re deep in debt, you’ve lost your job, and you’re generally in the midst of a severe financial crisis, would the solution be to remodel your house? Of course not. Obviously it would be nice to have an updated infrastructure with new roads and bridges, but this is the worst possible time to undertake that kind of activity, since we don’t have the money to do it. Read on for the rest of the episode split into 6 parts: Read the rest of this entry »
Michael Shermer is one of my absolute favorite science writers alive today. He’s the founder of The Skeptics Society, the Editor-in-Chief of Skeptic Magazine, writes the monthly Skeptic column in Scientific American magazine, and is adjunct professor in economics at Claremont Graduate University. He’s a phenomenal writer and speaker and a genius mind.
or From The Prudent To The Profligate: A Nation Of Deadbeats
This is an excellent ReasonTV discussion about the financial bailout and the high level of frustration that the economically literate are feeling in response to it. Tim Cavanaugh has a great line where he points out that the bailout redistributes wealth from “the prudent to the profligate.” And again where he says this bailout was “perfectly designed to punish the just and reward the wicked.”
One of the major issues that frustrates economically minded people is that the media portrays them as ideologically motivated, or worse, unserious when it comes to this bailout. The media has almost wholly supported the bailout from the beginning, and the issue was portrayed by them as the government having no choice but to swoop down and clean up the “market failure” of the private sector; whereas economists and other informed people tried to explain that this bailout was just a poorly designed attempt to stop the free market from naturally adjusting to problem caused mainly by government intervention in the first place. Read the rest of this entry »
In the December, 1958 issue of economic journal The Freeman, Leonard E. Read first published his essay I, Pencil: My Family Tree as told to Leonard E. Read. It’s been 50 years since that initial publication, and in celebration of that anniversary, we’ve reprinted the entire essay here, including Milton Friedman’s afterword added in 1976.
I, Pencil is one of the most insightful and important works explaining the necessity of free markets and the impossibility of centralized economic planning. Clearly written and easy to understand, it’s perhaps the most elegantly written essay on how market economies work. Long before much work was done on complex adaptive systems, Read explained them perfectly. It’s required reading for all Common Sense Investors.
