Welcome To Josh's Blog O' Thoughts: Business

I'm sure you've seen the massive amount of new headlines stating that the economy is headed for the hole. Well so have thousands and thousands of investors. The result is a massive flock of scares shareholders selling off all their investments because they think the stock market is going down the tubes. Well, I got news for them: YOU'RE CAUSING THE DECLINE!

By over saturating the market with sell orders, the demand for these shares diminishes and so does the selling prices. Other investors see their stocks going downward and they decided to jump ship also which only enhances the downward spiral. Smart investors (the people that get rich off of times like this) are just waiting for the right time to start snatching up all of these stocks at discounted prices. Once these big time investors start buying, the little guys will say "Hey, they know something I don't so I will follow their lead and buy also." And low and behold, demand increases and stock prices go back up. The people who made the most money were the ones who bought in at the bottom and started the upward climb.

So, to those of you who are private investors, don't dump your declining stocks just based on outlook. Don't be part of the problem. Hold on to those stocks. If it's a decent enough company the price will come back. In fact, many of you may want to pad your investments by buying some more of these companies at discounted prices. I know I will be looking heaving at this.



Disclaimer: I'm just an amateur investor and have had no formal training. Please do your own research on a company before deciding to invest wisely. I can not be held responsible if you lose money on the stock market.

A company by the name of Hybrid Technologies is taking current production cars, such as the MINI Cooper and the Chrysler Crossfire, and replacing their combustion engines with hybrid or fully electric engines. I think this is an absolutely great idea because people will be able to see themselves in an electric car if the car is already a model that they are familiar with.

That said, the most interesting part of that article is when it mentions that the company will soon be selling some of these cars through Wal-Mart retail stores. What's more is that these cars may be available at Wal-Mart as early as 2008! What a way to bring electric car technology to the everyday American. If anyone can get something proliferating, it will be Wal-Mart.

Unfortunately, the price will be a little steep to begin with. We'll just have to hope for Wal-Mart to put a smiley face roll back sticker on them!

After recycling yet another of the countless mass marketing mailings I get from the local cable company (Mediacom), I reaffirmed to myself why I don't have cable television. In my area of the world, the basic cable television costs about $40+ per month. To me, it's outrageous to pay this amount of money just to watch TV. Especially when you are paying for 5 channels that you'll watch and 70 channels that you'll just flip through. The same can be said for the dish companies although their plans are at least cheaper than our local cable.

For many people like me, the majority of the shows that are watched are on a handful of channels. For me, it's mostly the major networks. I currently get over the air reception which usually works pretty darn well depending on the station. But there are times when it would be nice to have a clearer picture. And I have also thought about how it would be nice to have a few of the cable channels (Discovery for example). But I can't bring myself to pay $40 per month compared to my current $0 per month for these small upgrades.

What I think would be ideal, is if the cable or dish companies could figure out a way to provide a-la-carte channel purchases. Basically you'd pay a monthly service fee and then you'd pay a fee for whatever channels you wanted. Some channels would be more expensive than others I'm sure. But I could then buy cable service for CBC, ABC, NBC, PBS, and Discovery. A 5 channel cable bill would have to be cheaper than the full 75 channels.

Just think of the new found sense of ownership the consumers would have if they could choose exactly what they wanted to buy. I think they'd be able to gain quite a few customers that would otherwise never think of getting "basic" cable.

And as an added benefit, maybe we'd completely eradicate some of those little-watched cable channels that are just taking up bandwidth.

Last Friday night, I watched 20/20 on ABC. The program was an hour-long special by John Stossel on what is wrong with the American health care system. His view was not that the problems were related to the fact that there are millions of people without health insurance, but rather, that our problems stem from the fact that so many people DO have health insurance.

Surprisingly, a lot of what he presented in his program mirrored a lot of the thoughts I have posted in previous blog articles:

Doctors Should Give a Satisfaction Guarantee
What Happened To Competition?

In my blog posts, I complained about how nobody shops around for health care services. We simply do what the doctors tell us regardless of cost. Most of the time, the doctors don't even give you an idea of what the cost of a procedure might be. Stossel said the same. He said that people with insurance are more likely to have procedures/tests done without thinking about costs because "insurance will pay for it". And when customers don't care about costs, prices go up. Why? Because they can. Health care providers are in business to make money and anyone who thinks they are just good Samaritans is completely wrong.

My posts had suggestions of have a "menu" of prices for different procedures and tests. According to Stossel's report, some private clinics already do this. They do it because they have to. They don't take insurance because of all the paperwork headache, and since their customers are no longer using insurance, they are more likely to shop around. Thus competition has caused them to advertise their prices and to lower prices in response to more competition in the market.

Although a lot of the information in the program mirrored my own posts, it was still refreshing to see that some of this stuff DOES, in fact, exist.

This just goes to show you how much prices are based on speculation and worry. Over the past few years we have seen oil and gas prices skyrocket from hurricane activity in the Gulf of Mexico. Hurricane Katrina is a prime example. Now with Hurricane Dean going through the area, oil and gas prices have fallen. Once news broke that Dean would miss U.S. oil operations in the gulf and on the gulf coast, oil prices began to fall.

It's almost as if the price was just waiting for news one way or the other. If Dean were going to affect U.S. oil operations, then worry would probably drive prices to new highs. However, the price level is breathing a sigh of relief that this is not going to happen.

It's almost funny to watch how the price responds so drastically to news like this. In the aftermath of Katrina, I didn't notice any gas stations running dry in my area. I guess there WAS enough supply left to fuel the country. However, you wouldn't have guessed it by the price levels. Price levels should be determined by SUPPLY and DEMAND. After Katrina, I've heard that demand actually decreased because people thought they'd do their part to help conserve our "low supply". So if demand decreased and price skyrocketed, supply must have taken a HUGE nosedive, right? But if that were true, wouldn't we have seen lines at gas stations, or stations that were running out of gas? I don't remember seeing any of this. It appears that the price levels of oil and gas are based more on fear than actual economics.

A while back I griped about the lack of free market competition in the medical industry. Well, it occurred to me the other day that this goes ever further than I originally posted about.

Not only do doctors like to recommend and perform procedures without giving us the option to "shop around", but they often get paid for not doing anything at all? Have you ever gone to the doctor with a problem that the doctor did not resolve? You still had to pay full price for your visit/procedure/operation didn't you? How about you've gone to the doctor with an ailment and they couldn't even diagnose it? Or they keep telling you what they think it is, but they must be wrong because the cures for those things aren't working?

I think perhaps it's time that doctors started offering satisfaction guarantees. If they can't fix you or figure out what's wrong with you, you shouldn't have to pay full price. Maybe a discounted rate would be available. Even the cheapest discount stores offer some sort of satisfaction guarantee (even if it is just a return policy).

One of the big political issues for the next election appears to be the rising costs of health care for normal Americans. Well, perhaps if we start running the medical industry as a business where we are the customers and the "customer is always right", perhaps costs would go down. Perhaps doctors would realize they no longer have the right to charge us for incomplete solutions. They'd probably work a little harder to resolve our issues in a timely manner because it would mean happy customers. Now, the incentive just doesn't seem to be there.

In a recent story, it was reported that some employers are going to begin implementing programs which will charge overweight employees a higher insurance premium. This move is hopefully an inventive for these people to lose weight and lead a healthier life thereby reducing health care costs in the long run. Other companies are going to use programs which give incentives to healthy people.

I doubt that this will have much effect, unless the penalties are VERY steep. One thing I learned in the book Freakonomics is that incentives or disincentives have to be very high in order to cause change in behavior. Without this, people will likely continue their behavior and pay the fine, because the cost of the fine is outweighed by their enjoyment of their current lifestyle.

Anyway, it's an interesting idea. We'll see how much people complain about the companies infringing upon their rights.

I just finished reading a very good book called Freakonomics. The authors shed some light on some unknown correlations between everyday information. This is all done through the perspective of economics, but is written in a easily understood, yet informative way. I would highly recommend this book to anyone.

Among the correlations and conclusions drawn is the apparent cheating of school teachers for pay incentives, the correlation between legalized abortion and lower crime rates, nature versus nurture in regards to a child's school test scores, and the importance of having the 'right' name. These topics bring to light some interesting correlations while putting others to rest as myths. For instance, children who watch more television do NOT do worse in school than children who do not watch a lot of television. There is no correlation between the two.

Now then, I'd like to relate some of this to my own blog entries. If you've been here before, you know that I have taken issue with the rising price of gas. So a good economic question to ask is "Are gas prices too high?". The answer, surprisingly, is No. From an economic stand point, price points are set based on the balance of supply and demand. Since the price point of gasoline has been increasing with no major change in demand, it can be said that gas prices are not too high, and that gas was, in fact, under priced before. If people are able and willing to pay $3.00 a gallon, the laws of economics would say that this is an appropriate price point.

This, however, contradicts posts that I have made griping about these rising costs. But, in my view, just because the laws of economics say that these are fair price points, doesn't mean I can't complain about them.

One of my biggest pet peeves is a business that doesn't have a website. If I had my own business, I'd be putting as much information on the web as I possibly could. The expense of having a website for your small business is extremely low, especially when compared to other forms of advertising. More often than not, one or two sales will easily provide you with your Return On Investment (ROI). Granted, that is for simpler sites. Highly complex sites like Walmart.com or Amazon.com would cost MUCH more to build. But then, those are usually the companies that have a lot of money to start with.

Anyway, for businesses that DO have a website, there is generally an email address listed that can be used to contact the company. My questions is, if you are going to go through the trouble of creating this line of communication, then why would you not capitalize on it and respond to the messages you get from prospective customers? I have had this happen on several occasions. I generally prefer to use email because I can be very precise in the information I am sending/requesting. Unlike a phone conversation, there is nothing that gets 'lost in translation'. Additionally, you have a documented record of the communication.

So, all you business owners out there, please respond to your customers when they contact you via email. Email contacts are just as important as phone contacts.

PS - If you are a small business owner and need a website, I can be contracted. ;-)

Apparently, men are doing more grocery shopping these days. Most people wouldn't think anything of it, but retailers could actually be losing money because of this. Guys are unlikely to ask for help in finding a product, and are ulikely to buy a substitute product if they can't find what they are looking for. This can lead to lost sales for the retailer. But how can they fix this problem?

I know. Incorporate something that guys love: gadgets. Give shoppers a PDA-style device that would let them browse through products in a categorized way, and allow them to type in a product keyword to search for the product. The device could tell them the price and location of the product. They could make this even better and allow access to this system over the Internet so you could create your shopping list and have the system organize it by physical location. The ultimate solution would also include putting RFID (radio frequency id) tags on the shelves so the hand-helds could direct you to the product you're looking for.

I could see this being very helpful in any store that has thousands of products. Probably cost-prohibitive though.