Niche Business Focus: Astrologists Sara Freder and Larry Pesavento

I have always been amazed by people who have a successful businesses in areas like astrology or astrological trading - as opposed to a traditional industry like a McDonald's franchise. A lot of people don't believe in astrology, and I used to think that it would be hard to find customers.

This was before I understood the power of niche marketing. The truth is that, if you take a controversial stand by, for example, selling astrological services, you will turn off one segment of the population, but you connect with those who believe, and they can become your fans.

The internet makes niche marketing very effective. Sara Freder, for example, is an astrologist who has embraced internet marketing and become successful. Rather than using hard selling techniques, she uses the "free line" concept by giving away Free astrology reading
s.

This gives me confidence because, even though my own stock trading method(Stock Trading Riches) is based on down-to-earth mathematics, and has nothing to do with astrology, it is different than the usual technical indicators, and I sometimes think that people don't consider my system with an open mind.

Yet, Larry Pesavento has sold a lot of astrological trading books, such as Astro-Cycles: The Trader's Viewpoint
. In fact, when I was learning to trade, I even bought some astrological trading books because I was willing to keep an open mind while searching for an edge. On paper, I actually saw some correlation between turning points in the S&P500 and full moons - but not enough to profit by when I actually tried to trade the signals.

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Combining Fundamental and Technical Analysis in Stock Trading

A lot of traders typically fall into either one of two camps: fundamental or technical.

Fundamental analysis looks at economic / financial data and news - at either the company level, overall economy, or both. For example, they might look at the company's cash flow, price-earnings ratio, or the impact of news (i.e. Forbes recommended Canadian National Railroad because they have exclusive rail access to the new container terminal at the Port of Prince Rupert in British Columbia. This terminal should capture more freight traffic to Asia because it is 10 days from Shanghai vs. 12 days from the Port of Los Angeles.)

The advantage of fundamental analysis is that it can help traders avoid trendless stocks in favor of those about to move significantly. The disadvantage is that fundamental analysis does not give precise buy and sell points, so it is hard to develop a testable, repeatable system. A lot of fundamental investors use buy and hold.

Technical analysis uses charts, indicators, and formulas based on stock price and/or trading volume. Pure technicians believe that studying fundamental data is not necessary because the market's reactions to it get reflected into the stock.

The advantage of technical analysis is that it gives precise buy and sell signals, that can be incorporated into a testable and repeatable system. The disadvantage is that market noise can cause traders to over-trade and get whipsawed (i.e. buy high and sell low for small losses) until the markets make a substantial move.

In my case, I use fundamental analysis (from sources such as Forbes) to add stocks to my portfolio, and then use my Stock Trading Riches formula system to make buy and sell decisions.

This way, I get the best of both worlds and have a double edge. Over time, using fundamental analysis for selecting stocks gets my portfolio invested in stocks that are stronger than the general market. Over time, using my formula system self-corrects my initial buy points in each stock, and I buy low and sell high based on the stock's actual performance.

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Apple's "Baby Shaker" iPhone App - Bad Public Relations

Someone created an iPhone application called "Baby Shaker" as an attempt at black humor.

The application puts a virtual crying baby on your iPhone, and you have to quiet the baby by shaking the phone. Eventually, after enough shakes, the baby stops screaming and large red X's appear over the eyes.

It was released just in time for Shaken Baby Syndrome Awareness Week.

Needless to say, it became a bad case of public relations for Apple, which had to remove the application and offer an apology.

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Lessons and Inspiration From Obituaries

My wife thinks reading obituaries is kind of creepy, but I find that they can teach you a lot about history, and provide you with inspiration on human achievement.

Here are 2 obituaries I wrote about on this blog:

Civil War Widow Died Yesterday

RIP Richard Knerr - Thanks for the Business Lessons!


Here are 2 inspirational ones I wrote about on my Tao of Simplicity blog:

Sam Herscovitz

Thomas J. Maloney - An Inspirational Obituary

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Greatful Dead: Early Role-model For Branded Success in the Internet Age of Free Downloads?

The 1960's band "The Grateful Dead" have been in the news recently because the surviving members reunited as "The Dead" for Obama's campaign, and are now going on a concert tour.

This past Sunday's Chicago Tribune had an article on "The Grateful Dead" - arguing that, although definitely a part of the 1960's culture, they were also ahead of their time. They can serve as a role model for bands wanting to brand themselves and succeed in the Internet Age of free downloads.

In 1994, Esther Dyson predicted that, since digital content could be easily copied and distributed, copyright-holders would have to "distribute intellectual property free in order to sell services and relationships".

The Tribune article went on to say that "no band was better at selling 'services and relationships' to its fans, and no band understood better that free distribution of its music could be a pathway to building a better, more loyal audience that would reward the band's trust."

Here is what the "Grateful Dead" pioneered from 1965-1995:

1. Free Music - they were one of the first bands to encourage fans to tape and distribute their concerts. They set up special "tapers sections" near the sound stages.

2. Made the product unique - they emphasized live concerts over studio recordings, and did a lot of improvisation. As a result, fans would attend multiple concerts on the same tour, because they heard different shows.

3. Independent of record companies - Even though the Dead worked with major music labels, all the inner operations of the band were self-contained through a network of friends and associates that became a major corporation. Their mail-order service and (later) deadnet.com became a gathering place for their fans.

4. Sell direct to fans - they released dozens of concert archive recordings directly to their fans through mail-order and the internet.

5. Branding - they sold T-shirts, hats, flip-flops, gold gloves, Frisbees, mugs, board games, etc. - even baby clothes! They also branched into DVDs, books, and a radio show.

6. Remix and reinvent - the Dead were the original mash-up artists, experimenting and combining different forms of music. This contributed to their longevity.

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Blagojevich

So our former governor wanted to go on the reality show, but the judge said no. But he still wants to promote it and get paid. I'm not surprised that the judge said no - when you think about it from his perspective, its funny: "Judge, I'm being prosecuted on Federal charges, and I want permission to be parachuted into the Costa Rican jungle.  I'll come back for trial, though..."

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Bad Sign For Civilization?

Mexico is getting shut down by a swine flu pandemic and Pakistan is starting to fall to the Taliban...

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Bank of America CEO Says He Was Forced Into Merril Lynch Merger

According to USA Today, Ken Lewis has admitted that he and BofA were forced into the Merril Lynch merger by the government. According to a letter New York Attorney General Andrew Cuomo sent to lawmakers and transcripts of the testimony, Lewis said Treasury Secretary Henry Paulson told him "we would remove the board and management," if BofA decided to get out of an agreement to acquire Merrill. Also, he had to keep the shareholders in the dark: In his testimony, Lewis says he was instructed by Fed Chairman Ben Bernanke and Paulson not to inform shareholders. "I was instructed that 'We do not want a public disclosure,' " Lewis testified.

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Illinois Governor Tries To Eliminate Flat Income Tax

My state of Illinois is currently experiencing a fiscal crisis, and our new governor, Pat Quinn, wants to raise income taxes(Of course, a lot of people - including myself - would rather see him cut waste and expenses first).

His ideal scenario would be to replace our flat state income tax with a progressive tax (a tax with multiple rates - like the Federal income tax) so that he can shift more of the increase towards the "rich".

The problem is that a progressive income tax is not permitted by the Illinois constitution.

To get around this, he is trying to create a "de facto progressive" tax by increasing the rate 50% (from 3% to 4.5%), while tripling the exemption.

Currently, out of the seven states with flat state income taxes, Illinois has the lowest rate at 3%. A 4.5% rate would put us in the middle.

The IL flat income tax means that everyone, no matter what their income level, has to pay 3% of their income in taxes. There are no deductions - only a $2000 exemption per person. So, a family of four (husband, wife, 2 children) would have an $8,000 total exemption.

This makes filling out the return easy: just copy the adjusted gross income (AGI) amount from your Federal return, apply the exemption, and then multiply by 3%.

Now, it will still be just as easy to fill out the return (because its still a flat tax), but a family of four would now have a $24,000 exemption, and would be taxed 4.5% on anything over that.

If the family of four makes $50,000, they would pay $1260 under the current rate. Under the new rate/exemption, they would pay $1170 (about 7% less).

But, if the same family of four makes $100,000, their taxes would go up 24% (from $2760 to $3420).

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Good Article on Banks and TARP (Bailout) Money

Zackstocks has a good explanation about the latest idea of converting TARP loans to common equity.

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MuVChat: Combining Movie Theaters and Twitter

I read a story in the Chicago Tribune about a clever idea that lets movie theaters make money with cult classic movies (such as "Zoolander").

It's called MuVChat, which was created by Rien Heald, an inventor from the western Chicago suburb of Naperville, IL.

MuVChat is currently being used on 3 screens at the Charlestowne 18 theater, in St. Charles (another western suburb).

Audience members can text funny comments to a phone number, and the comments will appear on screen.

So, it is like mashing Twitter with "Mystery Science Theater 3000".

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A Great Interview With Billionaire Sam Zell

YouTube has a lot of heavily watched clips of Zell (CEO of the Chicago Tribune)swearing in front of reporters at townhall meetings.

But, only 40 people have viewed this interesting video of Zell being interviewed by the dean of UCLA Anderson School of Management:

http://www.youtube.com/watch?v=xH3LxFnEVXo

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Two Stock Ideas

Here are two stock ideas from Forbes Magazine:

1. EZCorp (EZPW) - They run 412 EZPawn stores in the U.S. and Mexico, as well as 477 EZLoan payday loan outlets. Its first quarter net income rose 18%.

Most of its stores are in Texas and Oklahoma, but they recently expanded through acquisitions into Colorado, Nevada, and Florida. They can eliminate redundant overhead from these newly purchased stores. They have a strong balance sheet: $42 million in cash and debt of only 7.6% of total capital.


2. Hansen Natural (HANS) - They make a popular brand of caffeine drinks called Monster. The stock rose from a split-adjusted 50 cents in 2003 to $68 in 2007. It went down to around $25 last October, but is now at $35 after signing a distribution deal with Coca Cola to sell its drinks in 20 U.S. states, Canada, and 6 European countries.

In December, they signed a deal with Grupo Jumex to distribute Monster drinks in Mexico. An analyst with UBS thinks they can capture $100 million in sales from these new markets by next year.

Later this year, they plan to enter Australia, New Zealand, and South America with distribution partner Anheuser-Busch InBev.

Monster's main competition is Red Bull. In Europe, Red Bull dominates the caffeine-rich market. In the U.S., Monster's market share went from 6.5% (in 2004) to 29.6% today, while Red Bull fell from 49.1% to 26.5%

Hansen trades for 20 times expected 2008 earnings and has almost no debt.

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Top 5 Popular downloads for Apple iPhones

Forbes had an article on Apple downloads, and they listed the top 5:

1. Pandora (free) - streaming music with "artificial intelligence" to figure out what
you want to hear.

2. Koi Pond (99 cents)- Animated fish swim calmly across your phone. The most
downloaded paid app.

3. Facebook (free) - iPhone version

4. Texas Hold 'Em ($4.99) - play against the computer or other players on the same
network.

5. Moto Chaser (99 cents) - tilt iPhone to steer the motorcycle around the track.

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Satyam Consulting Sold to Tech Mahindra

According to a Time Magazine article, Satyam, the Scandalized Indian outsourcing and consulting company, was sold to a smaller rival called Tech Mahindra.  Satyam almost collapsed when it was found that its founder had cooked the books.  He overstated the company's revenues and profits and reported a cash holding of approximately $1.04 billion that simply did not exist.

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The Engineer and The Golf Course

A pastor, a doctor and an engineer wait for a particularly slow group of golfers. The engineer fumes, "What's with these guys? We've been waiting for 15 minutes!" The pastor says, "Hey, here comes the groundskeeper. Let's have a word with him." "Say, George, what's with that group ahead of us? They're rather slow, aren't they?" the doctor asks. The groundskeeper tells them that the other golfers are a group of blind firefighters who lost their sight saving the clubhouse from a fire and that they come and play for free whenever they want. The group is silent for a moment. The pastor says, "That's so sad. I will say a special prayer for them tonight." The doctor says, "Good idea. I'm going to contact my ophthalmologist buddy and see if there's anything he can do for them." The engineer says, "Why can't these guys play at night?"

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The iPhone Application Gold Rush

Lots of would-be developers are going into iPhone development to strike it rich...

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Finally, an understandable explanation of derivative markets

Heidi is the proprietor of a bar in Detroit. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Heidi's drink now pay later marketing strategy and as a result, increasing numbers of customers flood into Heidi's bar and soon she has the largest sale volume for any bar in Detroit. By providing her customers' freedom from immediate payment demands, Heidi gets no resistance when she substantially increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes these customer debts as valuable future assets and increases Heidi's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank's corporate headquarters, expert traders transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then traded on security markets worldwide.

Naive investors don't really understand the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, their prices continuously climb, and the securities become the top-selling items for some of the nation's leading brokerage houses who collect enormous fees on their sales, pay extravagant bonuses to their sales force, and who in turn purchase exotic sports cars and multimillion dollar condominiums.

One day, although the bond prices are still climbing, a risk manager at the bank (subsequently fired due to his negativity), decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar.

Heidi demands payment from her alcoholic patrons, but being unemployed they cannot pay back their drinking debts. Therefore, Heidi cannot fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKIBOND drop in price by 90 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %. The decreased bond asset value destroys the banks liquidity and prevents it from issuing new loans.

The suppliers of Heidi's bar, having granted her generous payment extensions and having invested in the securities are faced with writing off her debt and losing over 80% on her bonds. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 50 workers.

The bank and brokerage houses are saved by the Government following dramatic round-the-clock negotiations by leaders from both political parties. The funds required for this bailout are obtained by a tax levied on employed middle-class non-drinkers.

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What happens in Vegas...

...doesn't stay sealed in divorce court, unfortunately for the Governor of Nevada.

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Students from "Engineering Entrepreneur" Program Develop Low-Cost TB Test

While other students in the program do projects related to things like cell phones or video games, these three worked in a neglected area - simple, low cost tests that can be administered by untrained personnel to diagnose poor, rural people. They designed a TB Test where you just need to put someone's spit under the microscope part, and then the attached computer screen will show white dots if there are any TB bacteria present. It seems like a simple invention, but almost 2 million people die of TB a year - mostly not from lack of medicine, but from lack of timely diagnosis.

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Gary Coleman "Disses" Midgets Vs. Mascots - Great Marketing on YouTube

The New York Post had an article about how Gary Coleman bad mouths his new movie "Midgets Vs. Mascots", which premieres at the Tribeca Film Festival in NYC on April 25. What they didn't realize is that this is a marketing stunt on youTube.  Coleman's "rant" was placed on YouTube by the same user that posted the main movie trailer: http://www.youtube.com/watch?v=lMgPUvvUwmk I always figure that "minor league" movies like this must be fun and less pressure to make and might have a good return on their micro budgets.

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Dog "Lost" Overboard, and "Survives" On Island for Four Months

On shows like "Lost" or "Survivor", people pretend to have to survive on a deserted island. In real life, a pet dog really did. The dog fell overboard off the coast of Australia, and its family thought the dog drowned. But, the dog made it to an uninhabited island, and survived for four months by hunting goats, until it was rescued by rangers and reunited with its family.

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