On investing and porn

Stock market has been performing badly. Wall Street goes banana.

It was the banks. Bear Stearns collapsed, Merril Lynch is about to be acquired, and Lehman filed for bankruptcy.

And now it's the insurers. AIG needs a savior.

Investing looks bleak.

Some people say that I work in a safe industry - consumer products. No matter what, people still need to go on with their life. They need to bathe and wash their hair. And people still make babies too.

But there is another industry whose demand never dies, thus ought to be less volatile than technology or banking: porn.

And we can now invest in porn industry. Adult Entertainment Capital, Inc. went public yesterday in NASDAQ, under ADLE ticker.

MSN Money says the porn stocks are worth watching. With yesterday's closing at $0.0065, you can easily be a shareholder.

An article says that it's a big market, around $57 billion globally. Looks like a huge market that can still be exploited...

A classmate once interviewed with Vivid Entertainment for an internship position in finance. The whole school enjoyed his story about the interview.

Can you imagine the experience of attending ADLE's annual shareholder meeting?

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25 years too old

The Egyptians have a law that limits the age gap between spouses to 25 years.

clipped from news.bbc.co.uk

The Egyptian authorities have banned a 92-year-old man from marrying a 17-year-old girl, the Egyptian al-Akhbar newspaper has reported.

The ministry of justice invoked a law which says the age gap between spouses should not exceed 25 years.

That means, 17-year old girl can only be married by a man no older than 42 years.

That also means, if Rika Tolentino Kato is an Egyptian, Yusril would've not been allowed to marry her.

The same goes to Woody Allen, Billy Joel, and Rod Stewart.

While Michael Douglas - Catherine Zeta-Jones, and Harrison Ford - Calista Flockhart would be on the border.

However, as in "if there's will, there's a way", there's a catch in this law.

In special cases, the justice ministry does allow foreign men to marry Egyptian women more than 25 years their junior if they deposit a very large sum of money in the name of their wife at the Egyptian National Bank. (Didn't the Indonesian government try to implement something like this before?)

To be fair to the old man, though - if he is 92, he's only allowed to marry a 67-year old. Maybe we should let him make use the money he's earned all his life, lah...

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Make the most out of airfares

I came to know this only this week: many airlines (in the U.S.) will refund if the price drops after you bought a ticket.

clipped from online.wsj.com

Few customers realize it, but many airlines will give refunds if they cut the price after you have bought a ticket. Alaska, JetBlue, Southwest, United and US Airways all offer vouchers for the full price difference -- if the price drops $200, you can get a $200 coupon towards a future trip. Others offer vouchers, or cash, after deducting change fees (which can run up to $100). In industry jargon, it is called a "rollover," and in most cases it only works if you bought the ticket directly from the airline. (It generally won't work if you bought them via a Web site such as Expedia.com or Orbitz.com, unless the price drops in the first 24 hours.)

Even though the process is not that straightforward, I would think this helps many people in making purchase decision early - knowing they can get refund if the price drops. Especially with the help of websites like yapta.com.

Customers are the ones who benefit from this, I suppose.

Will the airlines lose their profits (they barely make profits even now) if more and more people claim for refunds (assuming no price increase)?

Logically, they will (lose profits), won't they? But I find it too hard to believe.

The airline yield management is already complicated (yet very interesting). If more customers claim their refunds, it gets more difficult for the airlines to price discriminate. There are more parameters or assumptions to be considered.

That said, some airlines have already made it difficult like change fees. They also have the question whether services like Yapta is a good thing.

What if it is not? They can push the "base" price up, and entertain every single refund nicely. Perceived as "good value" by customers yet still receive the same level of profits. It's all about perception anyway.

Or switch to everyday-low-price style of Wal-Mart (low cost airlines like Southwest still cut prices, if I'm not mistaken). Which would be nearly impossible in the airline industry.

Well, just like gasoline price, I think airplane passengers will still pay high price on average...

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Gasoline price and market

I remember gasoline price in Michigan was below $1 in Summer 1998. Today, it's closing $4.

Commenting Beni's question on how to reduce gasoline price, I argued that the demand must be reduced and let market sets the price. It's all in the customers' hands, and government must facilitate this by providing education and means to promote oil usage.

I was assuming that the oil market is perfect and free. Now, having thought about it again, I think I'm wrong.

(Big) Oil companies today are actually fewer than they were in the past. Exxon and Mobil are now ExxonMobil. And then Chevron, Texaco and Unocal. Conoco and Phillips Petroleum. And so on. I'm not sure about others like Roman Abramovich's Sibneft, Medco, etc. The point is, the big players are not many. Thus the market is not really perfect.

Even worse, I forgot about OPEC. The number one cartel that controls most of oil production and price. It has become the cartel example in any game theory readings.

It seems that we can't really let the market sets the price. So?

Like Beni brought up -- go to the street and shout, or write petition. Or blame the Bush administration.

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On tipping

Contrary to tipping in the United States, perhaps the most tip-conscious country in the world, tipping in Malaysia is not customary. Most, if not all, my Malaysian friends discourage (disallow is perhaps more accurate) me from doing so.

I often call and text some friends to ask whether to tip or not. The answer is always no.

"Be like Malaysians," they said. "Don't raise the expectation."

At restaurants, it makes more sense. Decent restaurants will charge 10-20% service charge. That itself is a tip.

In some other services, it's just awkward especially when compared to the practice in Indonesia. Hairdressing, for example, is a common one where people tip not only the hairdresser, but also the hair-washer.

But then, why is the tipping practice so different between Indonesia and Malaysia - despite the much similarities in other practices and culture?

Whatever the reason is - low salary, westernization, social approval, or even to ensure good service - the pressure to tip from society is definitely big. If only the proportion of people who say "don't tip" is as big as it is here in Malaysia, the critical mass will not materialize and tipping won't be as common.

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March madness

Perhaps it was too soon for me to say I didn't get killed. Didn't get shot is probably more correct. The fact is, in the past two weeks I haven't had time to write anything other than over the weekends.

Since March Madness has just started, I just want to post the bracket. The way I see it, this is one way to legalize organized gambling at workplace in the U.S. During this time in the year, many people would bet on the games. At the end, the house always wins.



Question: why are gambling markets organized so differently from financial markets? The answer might be here. :)

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Indexes drop and computer power

Major market indexes were down quite significantly, it seems, on Tuesday. Dow Jones closed 3.3% lower, while S&P500 and Nasdaq dropped 3.5% and 3.9% respectively.

For Dow Jones, particularly, a computer problem contributed to the speed of the drop.

It started with huge trading volume -- computer calculation lagged -- switched to backup system -- correction (~an hour of trading reported in seconds) -- market panicked.

Ouch.

The malfunction in the oldest, most established benchmark for U.S. stock prices shows how a technical fault can worsen a market decline.

"I don't think it would have been as bad had there not been some technology issues,'' said Kenneth Polcari, a managing director at ICAP Plc's equities unit who has traded at the New York Stock Exchange for more than 25 years. "The technology issues created some anxiety, which exacerbated the market's move.'' (Bloomberg)

I wonder if someone will soon sue for the loss...

The story from LA Times:

Dow Jones' troubles started about 2 p.m. Eastern time when computer systems were apparently overwhelmed by trading volume, causing the calculation of the widely watched industrial average and other Dow Jones indexes to lag behind trading, spokeswoman Sybille Reitz said.

Once Dow Jones realized that the indexes were lagging — that is, not properly reporting the extent of the market's decline in real time — executives notified the exchanges by phone.

About 3 p.m., Reitz said, Dow Jones switched from its primary server to a backup system, which rapidly caught up with the trading. The result was that an extended period of trading, perhaps the better part of an hour, was reported to the market in a matter of seconds, she said, making it appear as though the Dow Jones industrial average had lost nearly 200 points almost instantaneously. At one moment, the Dow seemed to be down about 280 points; when traders glanced back at their screens, it was down more than 450 points.

That seemingly unprecedented swoon apparently sparked some panic selling that in turn caused a logjam at the NYSE and other markets amid a high volume of trades.

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