This morning I have had to cram in, also, the stuff for February 29, 30, and 31. Way too much to read, so pick just ONE of the topics.

But don’t miss the last one, about your house.

YOUR STOCKS

APC closed Friday at $77.73, up a further 10% or so for the week and CMM closed at $19.60, up about 20%. When I begin to get giddy (I was noticeably by giddy Friday afternoon), it’s often time to sell. Except when it’s not. Having only a slight clue which time is which, I’m holding on to both.

As to CSPLF, Jim Karn kindly sent this from SafeHaven.com by Charles Meek:

Canada Southern (CSPLF, 6.80) announced Thursday night that the well they are drilling in the Yukon Kotaneelee field has encountered the gas bearing zone (the “Nahanni” formation) which it failed to hit last month, sending the stock south. This brightens the outlook for this company, which was reflected in the stock’s price on Friday. It now appears likely that they will have a producing well. Whether it is a good well or not depends on several factors, including whether the section of the zone that they are in has too much water, whether the area is fractured enough to allow the gas to flow to the well bore, and whether there are mechanical problems as they now drill ahead horizontally into the zone. Horizontal drilling technology significantly increases the chances that a well like this will be good. A horizontal well can contact more of the pay zone than a vertical-only well. And it can stay high up in the zone to minimize the water problem. This is only the sixth well in this field in which two of those six wells were among the top ten gas wells ever in north America.

It is very difficult to guess where this stock may go from here. This a very expensive well and if it is not a good one, shareholders will be disappointed. But in addition to the well in the Yukon, they have a deep gas exploratory well nearing completion in British Columbia on the so-called Mike/Hazel prospect, as well as a nearby oil well at a shallower depth. There is certainly a chance that nothing good will come of these wells. But they have spent a lot of money on 3-D seismic at Mike/Hazel which they related in their 2003 annual report as very promising. The likely scenario is that the news in the next month will be positive. And there is a chance that this drilling could transform this company – and that the stock could rocket higher. If you happen to have a lot riding on this stock, you might trim it back if we see prices approach $10. But if the news is good, hope for much higher prices than that. We put the stock on our list at $4.60 a year and a half ago.

CSPLF is a lot more speculative than the other two, but I’m holding it, also.

Finally, one of you rightly pointed out that YUKOS, suggested here August 23, has been obliterated by Vladimir Putin. But we ditched it October 15, before it cratered.

As always, it’s important to note that, being human, I tend to note these things only when the news is good. (Have not been crowing much about my Google puts; and ARC is, thus far, a loser also.) The smart thing for most folks is not to invest in stocks until many other bases are covered – e.g., paying off those credit card balances and building up a rainy day fund – and then to but stocks via a steady program of monthly investments in U.S. and foreign index funds, at Vanguard or elsewhere.

YOUR REBATES

Gary: ‘The information regarding rebates explained several occurrences: 1) CompUSA – I was told something I was encouraged to purchase was covered by a rebate. I complied with all the rebate requirements only to be rejected. I will no longer shop at CompUSA. 2) Gillette – I mailed in all the rebate paperwork and was notified that I had not. I have not bought a Gillette product since, and that was many years ago. 3) Nikon – Nikon handles rebates themselves. I bought an expensive piece of equipment. I threw away the box. I then went to fill out the rebate claim and found out I needed the box. I called my camera dealer who told me to call Nikon. I explained the situation. They told me to mail in what paperwork I had with a note. I did. They mailed me a large rebate check. I now think even more highly of them.’

The Great Rebate Scam
By Carol Vinzant
Posted Tuesday, June 10, 2003

I was recently lured into a Verizon Wireless store by a Web ad for a fancy Audiovox cellphone – only $50 after a $100 rebate. I really only needed a junky $50 phone to replace one I’d put through the wash, but for the same price, why not get the Audiovox with color screen and Ghostbusters-themed ringer? The Web site said the rebate offer lasted three months, and the only catch seemed to be that I had to send them my old phone.

I sat down the next day with the rebate forms, pleased with my own consumer diligence. I felt I’d skirted a major obstacle when I saw that the form had to be returned within two weeks, not three months. Then I realized I’d made a rookie mistake: I’d thrown out the box with the UPC code. I called up the store and started to explain my predicament. The clerk cut me off: “You threw out your box, didn’t you?” Apparently they’d seen my kind before.

I was out of luck-even though they knew for sure I had the phone, since it was on their service. That, however, wasn’t the point of the rebate. They were trying to thin out the rebate pool; they succeeded.

Over the last five years, rebate volume has been skyrocketing. The actual volume is hard to pin down because it is only tracked by guesstimaters in the industry. One of those guesstimaters, Michael Leonard, vice president of marketing at Continental Promotions Group, says the volume of rebates is about $4 billion today. Back in 1999 it was reported at just $1 billion.

Rebates are surging not because of manufacturers but because of retailers. You only have to visit an electronics store or leaf through a Sunday newspaper insert to see how far rebate-mania has gone. In a recent Best Buy ad, about one-third of the merchandise came with rebates.

When a manufacturer offers a rebate, you needn’t be too suspicious. The manufacturer wants to lower the price temporarily (to move an old product or combat a competitor’s new low price), but doesn’t have faith that the retailer will pass on the savings. But if it’s a retail store that is offering the rebate, ask yourself a simple question: Why isn’t it just on sale? The store doesn’t have any good reason to offer a rebate, since it could just as easily have a sale-if it in fact wanted you to have the product at a lower price. It doesn’t, and that’s the point. When you see that a store is offering you a rebate, remember that back at HQ some executive is betting against you, rooting for you to slip up, calculating the odds that you will lose the receipt, go on vacation, write in a wrong number.

A store offering a rebate must pay a fulfillment center anywhere from 40 cents to $1.75 to process each claimed rebate. When you figure in that extra cost and hassle for the store-not to mention the shopper’s inconvenience and irritation-how can rebates be worth it? Economically, they make sense only if stores can count on not actually giving the rebate to a large portion of consumers. “They can get all the benefits of advertising a lower price without necessarily having to deliver on that price to everybody,” explains David Aron, assistant professor of marketing at DePaul University.

Even with the most attractive rebates, 10 percent of consumers fail to get their act together to turn in the form. Often the failure rate tops 90 percent. Women are better at closing the rebate deal than men. The success rate goes up as the rebate gets more valuable.

Stores use secret actuarial calculations to figure out what kind of rebate they can offer. And, increasingly, they employ brutal tricks to prevent shoppers from cashing in. It’s fair enough for retailers sit back and hope consumers trip themselves up. But stores are erecting ever-more-elaborate obstacles to screw consumers out of their discounts. Many rebates, such as my Verizon one, lure people in with the claim that the rebate offer will last a leisurely several months. Only if they read the fine print do consumers realize that they have only days after the transaction to send the forms in. (For another recent rebate, the store delayed sending me the right forms for so long that I only had one day to get them postmarked in time.) Some rebates require you to cash the check almost the minute you get it.

Other stores offering rebates don’t manage to send the check at all, perhaps relying on the forgetfulness of the customer. If you do remember that the check hasn’t come, and you contact the store, it will often respond that it has no record of your rebate application. You’re thinking, “Here comes that tip to be cautious and keep copies.” Well, no, because often the rebater specifies it won’t accept copies. (The super-aware who return their rebate forms by certified letter or Fed Ex are often out of luck, because many companies won’t accept those deliveries.)

Many rebates demand multiple kinds of documentation (forms, receipts, UPCs) or require you to complete elaborate forms for each component (printer, monitor, desktop). Sometimes you have to circle a date or price to get your cash back. Many rebaters refuse to give the discount to more than one person in the same household. Some insist on access to your credit record before they’ll give you the discount.

Perhaps the most notorious consumer rebate was one offered by Microsoft last year for people upgrading to Visual Studio or Visual Basic. [Note: Slate is published by Microsoft.] To get the $300 rebate, customers had to send in part of the box-from the original program bought years before. One small rebate company ran a program for stores that required the consumer to send in forms by registered mail every six months for three years, an exercise they call a “memory test.” After complaints, they now only demand a form at the beginning and end of three years.

. . . All of this hoop-jumping fuss-the paperwork, the postmarking, the sales slips-is quite unnecessary, says Leonard. Fulfillment centers can now do it all online-whether or not the purchase was online, with a credit card, or with cash. They don’t need the UPCs or the old phones or any such nonsense. The sales receipt could contain a unique code number that the consumer could enter into a Web site. Think of that the next time you are dissecting a box to get a lousy UPC code.

Carol Vinzant has covered Wall Street for Fortune and the Washington Post.

YOUR LINT

Pieter Bach: ‘Regarding the film that collects on the lint filters in driers – that is the build-up of resins that are released by the little sheets of fabric softener that you put in with your clothes, if you do that. They don’t actually soften the fibers so much as they coat the fabric with oils and resins that make it feel silky to your hand. That’s why a bath towel that’s been washed and dried with dryer sheets several times is no longer as absorbent as it was when you bought it. The best way to remove or reduce the build-up on clothing is to wash in the hottest water the fabric can stand and then put a really good slug of plain white vinegar in the rinse water. This helps neutralize and release the oils/resins and restores absorbency to things like towels and sheets. I don’t mind a few wrinkles here and there – I generally snap things out as I remove them from the dryer and I remove them as soon after they’re dry as I can.’

YOUR TIVO

Dave White: ‘With TiVo and DirecTV service you can simultaneously record two programs, watch a prerecorded program from TiVo and, in my case, pay about $12 a month less than cable. It’s why I ditched Comcast over a year ago and haven’t missed it at all since.’

Liz: ‘If you get a TiVo with two tuners, you can record two live shows and watch a recorded show. We have two TiVo’s in our house and would not live without one EVER! They have truly changed our lives.’

YOUR HOUSE
MICHAEL KINSLEY ON THE REAL ESTATE BUBBLE

I couldn’t have said it better myself. With Kinsley, that’s always the case. To wit:

Bye-Bye, Housing Boom
By Michael Kinsley
Sunday, February 27, 2005; Page B07

Pop!

That is the sound of the real estate bubble bursting. And it’s a good thing.

It is obvious to me that today’s real estate prices are a speculative bubble that is bound to burst. Of course, this has been obvious to me for about three decades and wrong almost all of that time. Nevertheless. One piece of evidence is the Dinner Party Index. The boom is over when more people are bored by real estate anecdotes (“My next-door neighbor got three times her asking price before she even put it on the market, from a professional mind reader who divined that she was thinking about selling. . . .”) than have new ones.

Another reason the value of your house is about to plunge is that the Los Angeles Times, the New York Times and The Washington Post all say that it isn’t. A recent L.A. Times article reported that the median price of a local house had gone up only 17 percent in the past year. Headline: “L.A. County Home Prices Cool Slightly.” Subhead: “Slowdown may not last.” To describe a 17 percent annual increase as a “slowdown” assumes that annual gains of 20 percent or more are the norm. And the evidence for “may not last” is quotes from real estate agents whistling in the dark.

You’ve got a bubble when today’s prices assume large future increases. If you think prices will be 20 percent higher in a year, you’ll be willing to pay 19 percent more today. But if others share that belief, today’s price will already be 19 percent higher. Betting on appreciation makes sense only if you are even more optimistic than other buyers. That is hard to be right now.

In Washington, where house prices have doubled in five years, The Post says, “Experts Predict Steady Gains in 2005, but More Moderate Than in Past Years.” But whatever “experts” say, it is not the nature of price explosions to segue gracefully into more moderate growth. When today’s run-ups are based on beliefs about tomorrow’s run-ups, the self-feeding frenzy goes into reverse when those assumptions are dashed.

The New York Times also must be talking to experts. “In Housing Sales, Frenzy is Giving Way to Balance,” it says. And it reports from suburban Westchester County that “Housing Market Is Still Going Strong.” In 2004 the median sales price rose from $564,000 to $645,000. “More and more families are seeing the residential real estate market as the best and safest place for their money,” a real estate agent says. And the article adds chirpily, “Even the ongoing problem of a lack of houses for sale in Westchester eased somewhat last year.”

Like a roller coaster, a financial bubble has a moment of eerie stillness at the top. Buyers have adjusted, sellers haven’t. So sales dry up. When the New York Times spins a surplus of unsold houses as a sign that “the ongoing problem of a lack of houses for sale” has been solved, it means that you had better not count on the Times to tell you when it’s time to bail.

Let’s step back a moment. All the housing in the United States is worth about $14 trillion. If the value of existing housing (not counting new construction) goes up 7 percent this year, which is the recent national average, homeowners will seem to be about a trillion dollars richer. But will the nation be a trillion dollars richer? No. These are the same houses, in the same place. That trillion dollars comes partly from non-homeowners, who must pay more to buy in. And it is partly illusory. If many current homeowners tried to cash in, the drop in prices would quickly wipe out that trillion.

When the price of something goes up, two things happen: the economy starts to produce more of it, and existing units are worth more. For most of what we buy, the first effect overwhelms the second and constrains it. A rise in the price of a can of tuna fish does not produce many self-satisfied anecdotes from people who have a third of their net worth in Chicken of the Sea. But real estate is different, mainly because it requires land. As the cliché goes, they’re not making any more of it.

Perusing the real estate ads like pornography and imagining what our houses are worth is the great American pastime. But a real estate crash, if it came, would have some advantages. The 19th-century American Henry George explained how rising real estate values harm the economy by operating as a tax on both labor and capital. Money for labor makes people work harder. Money for capital makes people save more. Both make the country richer. Money for land just makes the owner richer. There are all sorts of complications and qualifications, but the basic point is a good one.

People do foolish things under the impression that they are getting richer because their houses are worth more. They save less, they spend more. Egged on by television commercials, they “consolidate their debts” (i.e., buy a new boat) with a second mortgage. And who really gains from soaring house prices? First-time buyers don’t. Nor does anyone who plans ever to trade up. The only beneficiaries are those who are selling their last house, after a lifetime of appreciation. The bigger the house, the bigger the windfall. This is yet another thank-you from America to the so-called Greatest Generation. I’m not sure it’s necessary.

And I’m not sure it will continue. I’m pretty sure it won’t. So I’m going to sell my house before it’s too late. Right?

Are you kidding?

The writer is editorial and opinion editor of the Los Angeles Times.

 

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