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God is an insurance broker!

November 20, 2014

God is not just the best insurance broker, God is the best broker of everything under the sun since the big bang. I know it because I asked Him and He said, “Elior, I am happy you talk to me directly, everyone else talk to me through a middleman, a spiritual broker who tells them what to say. I hate that.” I just saw a TV commercial by the Association of Insurance Brokers. The commercial did not explain how important is the CONCEPT of brokerage (that is my job). These folks that paid for the commercial are the professionals who for a small fee will find for you the best insurance plan for the money based on your protection needs. Not bad, ah? They plug your data into their computer and the bot finds for you the program they think you need. Simple? Then why am I making the fuss over brokerage services, all the way to God!

Here are the rules you need to get sophisticated and improve your life tremendously:

1. Everything in your life can be obtained directly by you or indirectly though a broker (middleman). I was a college professor of psychology, not an investor, when my dad passed away in 1991 and left me a small mutual fund account at Morgan Stanley brokerage. A broker handled my money-making at about 5% per year profit (minus a fee). I had to untill I learned to buy and sell shares myself and pocket about 25% per year (without a fee) every year! Conceptually, I moved from indirect behavior to direct behavior . 65% of the investors in the US and 75% of the investors in Canada use a middleman to invest and never move to direct investing behavior. Like with purchasing insurance or anything else they either don’t have the time to study the market, are bored by the topic, or they are not smart enough to do as well as a broker does.

2. Everything in your life can be obtained directly by you or indirectly though a broker (middleman). I  mean everything, get it? Everything! There is no stigma to it except that most people who do everything in life indirectly through a broker would think you are nuts.. “What do you mean God talks to you directly without a middleman? Don’t you need a rabbi, priest or minister to get through to Jesus or Moses?” What do you mean you cured your cancer? What does your oncologist say?” (“He said I was lucky.”). My friend said, “I know your wife, she is beautiful, how did you find her directly without any help? No problem, I administered a compatibility test called the EPPS to 500 women and she came 96% compatible with my personality” You are serious, aren’t you? Jesus, can anyone “dial a life” for himself without a middle man to broker things?

Yes, you can, but my advice to you is don’t! Don’t even try direct living unless you have a passion to be 100% independent, you believe in yourself 100%, you have all the time, you are self actualized, a maverick dude and you get a big kick out of carving your own path while people are looking. I hear my friends and family say repeatedly, “Elior, her is the luckiest crazy son of a gun.”


Share price: Earning is inflated and expenses are deflated.

November 6, 2014

There are 2 kinds of investors; professional and amateur. There are more amateur investors than professionals. The total money invested by the amateurs exceeds the total money invested by the professionals, although the amount invested by each amateur investor is much smaller than the amount invested by each professional. The amateurs usually make less money in a Bull market than the professionals and when the market is Bear usually lose more money. BLASH (Buy Low And Sell High) is my goal, a term I invented and use in my 2 books on investing for amateurs.  My job as an amateur investor who makes as much money as a professional investor is to help my co investors make money or at least not lose money to the professionals, which is usually the case.

Let’s look at Alibaba, the new heavy-set kid on the American block. I bought shares of BABA near IPO and I am making inflated dollars. I am not under the illusion that BABA’s first quarter’s earning after the IPO is really the reported 45 cents per share. It is more like 25 cents per share when you consider the unreported expenses for the quarter as true expenses, which they are! It is legal to inflate earnings by not including as expenses employee compensation, paying salary with stock options, inflating share price with buybacks that raise the value of existing shares (supply and demand). What it does, it sells extra shares by these artificial means in the short run untill the market catches the gimmick in the long run and prices go down. By then the professionals have already cashed in their profits and the amateurs are struck with low price shares they brought at the short-term high price. The fact that the analysts were fooled too by the first quarter estimates is no consolation to the amateur investors who were fascinated by P/E more than cash flow before they bought. The solution is what I did with BABA. I bought the shares for the long run because the short run has in it the hidden inflated price(HIP) on any new stock! It is not hip at all to buy high in the short run and sell low in the short run because companies play shenanigans with how they define their calculated defined expenses.

Two business deceptions Immigrants to the U.S. have to watch for.

November 5, 2014

1. Sales companies that pretend by name to be affiliated with the government: I remember being drafted into the army as a medic a year after landing in the U.S. as an immigrant in 1960. I was at Fort Dix and then at Fort Hood. A pretty girl sales person representative of a company called Federal Encyclopedia was standing next to my company commander telling us the virtue of American life, selling us as set of poor quality 24 book encyclopedia Americana. I bought the set, thinking it was required by the Federal government in Washington. My friend Michael Lewis, born in New Jersey, didn’t buy. Later, he told me that many private companies sell products on army bases. They are allowed to sell products on army basis as long as they get permission from the captain. In 1961 I was a high school dropout from Israel, not a psychologist (yet) so I couldn’t see the mimic or gimic in naming a company Federal Books, Bank of America, American Express, Union Bank, U.S. Surplus Uniforms or any other name that could fool immigrants who are afraid of deception in the new land and think the U.S. Government is protective. I paid $10.00 per month for 36 months for poor quality paper that had the pages “aging” with brown spots and discolored edges before I finished paying for the set. My English in 1961 was so poor that I didn’t even open the first encyclopedia book until I was at UCLA in 1965 and took English remedial. Caveat Emptor, sweet immigrants, a “book by any other name is still a book” and a company with a name that smacks of being government is still just a private company that is hacking its products to yet-to-get-sophisticated new Americans.

2. Companies that contract with demographic business organizations. Roll time forward to 2014, 54 years later! I am a U.S. citizen for half a century! I shop at Costco using its affiliated American Express card. I am a VISA customer (I like the company’s service). I use AE only for Costco purchases. I grew to like American Express but not enough to continue with that credit company when their contract with Costco ends in December 31, 2014! This week I signed up with Costco next credit card partner, Master Card. reluctantly, remember I am a VISA man. The last time a company I didn’t like signed a contract with a demographic business organization was an insurance company that signed up with American Association of retired People (AARP). The insurance policy was almost attached automatic to my membership card but I declined and terminated my membership with AARP – although I was a retired gentleman. Army time was over. at 62, retired, no company I like could “impose” on me a to belong to a company I don’t like – untill now! On January 1, 2015 I will start using Master card with my Costco picture on it and see what happens. I will test Master Card, a company I don’t like, that contracted Costco, a company I like, and see what happens.

The above are 2 business deceptions immigrants to the U.S. have to watch for. The reason I am not concerned with it that much anymore is that I am not an immigrant anymore. I am a sophisticated U.S. citizen now for half a century! I can simply change to an executive Costco card and drop the Master Card altogether if I don’t like their credit approval process, billing services or customer relations.

Immigrants, remember, your goal is to become a sophisticated American!

Are Twitter shares going up or coming down?

October 24, 2014

A bombsell may be hidden in my psychological analysis of Twitter today. Why? Because of  Twitter’s new Application Programming Interface (API). CEO Costolo’s decision-making process did it wrong again. His decided to introduce this major business changing model to Twitter appearing to me as a desperate Kahneman System 1 heuristic decision in a complicated psychological area of information processing where there is not enough research data to show what the public will do to a company that makes it more difficult rather than easier to connect. Introducing a restrictive Application Programming Interface that will require tweets to be all Twitter’s or forcing you to go through an app that may or may not allow you to add data in your tweet from other sources (Imagine being unable to readily tweet because you added a picture of your kid from Instagram).

The world of electronic communication is cluttered with too many new rules, umpteen mini commercials on social media sites, ID requirements, passwords needed around every computer corner, and more and more minds that are becoming less and less curious about even personal messages. Piaget is losing the battle of enticing people to seek information by giving out a “teaser” sentence, e.g., “Your wife left an important message… You can find out by joining this retail website.” Dr. Daniel Kahneman in his book Thinking fast and slow says about people, “They tend to be lazy.” Do you think Twitter’s API will streamline tweeting or restrict the flow? If 50% of tweeters quit, you’ll see it in your next quarter’s earning’s loss.  People won’t tweet because they can’t effortlessly attach external data to the tweet, that is my psychological analysis. They will quit tweeting, what will Twitter do then? Go back to R&D for something else to beat the market? There are 2 type of CEO attitudes, the one that makes naturally System 2 decisions to grow and the one that bullies itself into the market with System 1 decisions. Guess who is who?

Monday, October 27 is the day you will know that Twitter shares gained a penny or two more than analysts expected. The fourth quarter will be a bit better than the third that was a bit better than the second. This is a snail parade for the eternal optimists that catapulted Twitter to $50 per share on loses of $2.40 per quarter. This is not my first blogging on Twitter. I don’t like to say it but the internet is getting less free. You can’t read anything today without a requirement to joining something.

Interesting that I just received an email from a friend. The email said, “You have to join the website free to get your friend’s message.” Needless to say I deleted the message from my friend without opening it. My curiosity level has reached zero. How about you? I know that most of my friends still will join something to get the picture of the kid on a tweet or to find out what a friend wrote in an email. Not me, I am happy with Facebook and Google that keep my social life easy.

A Coup D’etat at AAPL

October 22, 2014

Decisive actions don’t happen in business as often as in politics, but what Apple did this week is an economic coup d’etat and I don’t mean just the popularity of the new iPhone 6. Let’s look at the incredible app that come with it. Apple is now in the retail PayPal business that may transfer more billions from hand to hand than the value of Apple itself (600 billion). Poor newbie Plastic that appears with a good idea to replace your multiple credit cards with just one super card, “Jack of all trades” for a fee, and poor newbie Coin that wants to streamline your payments. Do these 2 midges fighting a giant know their psychology? They charge $100 entrance fee to their unknown gadget show expecting to win the race against the Apple horse, ridiculous! Are they aware that delaying their entrance til next year gives Apple a huge head start that it actually doesn’t need. Don’t plastic and Coin realize that getting 10% of the retail market for each of them won’t cut the mustard to avoid folding up? Yah, consumers are attached to their plastic credit cards but is that a strong enough force against the Apple app in the cloud? The iPhone is more intimate and personal than any card, it’s your baby!

Let’s do a serious psycho-analysis of the economic coup d’etat at the Apple store:

1. Likert scale has a -2 – 1  0  +1 +2. Solving a problem gets you from -2 to -1. Improving gets you from +1 to +2. These are good changes. But, crossing from -1 to  0 to +1 is transformation. Is Apple sending a billion financial transactions to the cloud? They will be the fastest in the business of numerical living in the fast lane.

2.  Is Apple going to dominate the business of paying for products and services? 10%, 25%, 50%, 75%, 100% What do you think?

3. I don’t know about you, but to me this electronic horse race to the cloud is exciting to watch. I think Apple will win because CEO Cook that replaced CEO Jobs with fitness and skill is swell. And, for Seeking Alpha or other blogs that sometimes quote me, please don’t do it this time. I may be biased because I own a cart of apples since 1997!

Behavioral economics: Can Africa get out of poverty? Telling it like it is!

October 16, 2014

Let me be psychologically blunt. The Chinese are invading Africa for its natural resources and cheap labor and the Africans who are not educated to handle the influx, will be lucky if they get 10 cents on the dollar invested in that poor, diseased, authoritarian bloody continent.  Sure, economic imperialism by the West in Africa was more blatant in previous centuries, but it happening again in more subtle ways? Why are the Africans, whether they live in Africa or in American, always get the short end of the economic stick? Well, it is a touchy subject enough for most writers to appear politically correct, but not this writer. African will continue to be exploited economically untill it gives up its “culture of poverty.” They have to start teaching western education in Africa. This is a tough problem for all cultures that can’t produce the good life. Some find oil and live well for a hundred years. Some find donors and live well for a generation. Some, the great ones, say “we need to give up the part of our culture that doesn’t work.” These leaders get assassinated because culture, whether good or bad, is cherished by its people. That is why most immigrants to the west spread their culture of poverty in rich countries. The Bible says you have to wait a whole generation to get free to achieve, but the truth is that it takes many generations because the parents WILL teach their kids how to stay poor in the name of the old tradition. The only reason that Japan is now a prospering democracy is that they got conquered by the west. The only reason that Germany today is no more fascistic and free to achieve the good life is that it was conquered by the west. Who will conquer Africa with the blessings of the poor? No one!

Behavioral Economics: Why China cannot be innovative?

October 12, 2014

This is my response this morning to the BBC program I just watched saying that “we don’t know if China can become an innovative society.” For my readers who want to predict economics better than the BBC the answer is Yes, we do know why China can’t afford be an innovative society and stop copying others. The reason is that China must continue to have control over society and control prevents Chinese people with innovative ideas from implementing their ideas, i.e.,  going bank shopping for a loan (government controls the banks in China). I have been watching China and India for ten years, 2 giant economies, one overly permissive (India) and one strict (not overly strict), China. Let me give you the Likert Behavioral Attitude Scale (L-BAS) of economic and cultural development. It runs from overly permissive to permissive, neutral, Strict and overly strict. India is overly permissive, almost any behavior goes in its economy, although now with a new right-wing conservative prime minister (Narenda Modi) India is bound to move to permissive from overly permissive which would be ideal for a less chaotic development. China, on the other hand, will not move from strict to neutral because it does very well now copying innovations from the United States which is an overly permissive society and very innovative. There are 2 overly permissive societies on earth, Israel and the U.S., the 2 most innovative societies in history. China in now moving into a strong economic relationship with Israel, which shows not only how smart the Chinese are but how skillful in copying others. They know that they can’t give up control (see what is happening in Hong Kong), and the next best thing is copying those 2 countries that gave up control over their societies in favor of innovative spirit that requires psychologically to not have fear of the authorities (requires also permissive fathers at home). If the Chinese gave up control over their society the next generation would become the most innovative – and chaotic – place on earth. They can’t do that, but the Indians, they can and will. expect India in the next few decades to come up with new technologies (apps) that will boggle the mind. The future of innovation belongs to the US, India and Israel. The economic future in general belongs to China because they don’t have to spend a fortune on R&D to get the future app goodies!


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