THIS IS MY 163RD BLOG ON UNDERSTANDING MONEY
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April, 2019
My blogs are written with the premise that “it is far better
to teach someone how to catch a fish, than give them a fish”. We have all heard this from years past
however America does not apply it well, all the way through to today’s
teachings. With my intentions it
is to teach you practicalities in today’s business, give you hands on illustrations,
render basic vocabularies in various industries, and most of all make you
think! There is another old
saying: “I wish I knew then, what I know now”. These blogs are meant to teach you to analyze better “now”,
rather than viewing things superficially.
Perhaps it could save you a lot of time and money!
Let me point out how we have screwed up. With myself, it was my basic public
school education, grades 1 through 12, with learning from rote memorization, or
repetitive learning, and little free-thinking permitted. At some point a good
teacher needs to transfer memorized material into the practical that can be
used, and associated with each day to attract the student’s interest. I always wondered why a teacher should
be teaching a subject when I didn’t think they were the best at a subject, and
without free-thinking the subjects/topics were very boring to me.
As I state over and over, everything results from cause and
effect. Going back to my first
statement that it is better to teach people how to catch fish, let’s show a
prime example that exists today, from 150 years ago. Let’s go to slavery and president Lincoln in the white house
around 1861-65. Quite complicated,
however Lincoln believed that there should possibly be a re-colonization of the
blacks, and included would be to send the black slaves back to their indigenous
roots or a new colony. Money was
part of this solution, and also the problem as to why it did not happen.
Where am I going with this? With post-emancipation the Caucasian white people never
thought of teaching the African Americans/slaves how to be free, think on their
own, and teach them how to make a good living. (How to catch their own fish!)
We are paying for these downfalls today in society. It will get worse with the financial separation between the
upper classes and the lower class.
In parallels today, it is the shortsightedness of the
wealthy with greed and greater separation of classes. Right after WWII we did not have this and the middle class
worker made a good income, no longer.
This problem will only grow in magnitude over the next few years and
destroy our country. I am afraid
that either we correct the issues now, or our country will vote to change in
favor of socialism. That cannot
benefit this country as we are already too far in debt to make socialism work
satisfactorily.
In today’s education system, except for the schools in the
wealthy communities, I see the same problems that have existed for years, and
these kids are tomorrow’s leaders; ill prepared to take on the challenges. Few people care, therefore constructive
changes will not happen.
Now, let’s look at business. We have not created many good companies the past 20 years,
and become a service economy.
Investing has become gambling; so much money being tossed at mediocre
product. It’s not just new companies and the stock markets. Look at TV programs the last 20
years. Except for the news there
isn’t much on TV. Most programs
are designed for lower-middle IQ.
Music? In my eyes little great composed; perhaps the best coming out
from our “”new” country western.
The medical industry has improved however at an exceptional cost to
insurance companies and taxpayers.
Supposedly the $800 billion a year we spend on the defense budget has
brought forth some nice, new shiny weapons for mass destruction!
To rationalize an investment in a company we have gone from
a “bottom line”/pre-tax earnings analysis to a revenue based justification for
investment; no need to “make money”. (Take a look at the companies on the
NASDAQ.) Few companies make the
deans list these days. Apple made
the big come-back in the 1990s when Steve Jobs re-entered his company. The problem with growth they are
finding out is that not everyone needs a new I-Phone every year, nor a new
computer, so they are trying to see if they can lure their 1.3 billion past
customer base into other product lines.
Google is a winner.
Facebook, I gave as much hope for as the “pet rock”. They are gathering and selling your
private information, but as soon as you are totally sick of looking at your
friend’s animals and children’s portraits they should be gone. Twitter, etc.?
The company Lyft went public. Going public is the only way to make big money. It makes the insiders very wealthy, and
immediately. For today’s blog we
are going to size this up.
Hopefully, you aren’t one of the buyers of Lyft stock. Let me show you why. Uber is watching and most likely will
make an Initial Public Offering (IPO) in the not so distant future. First to look at Lyft’s financial
business composition. Both Lyft
and Uber run about the same in revenues and losses…not profits! For every dollar in revenue both
companies take in, they lose $.30, or 30% loss. They say they are a “share ride” business thus a “green
business” which sells to many a young person. Is this really accurate? I recently saw an ad for Uber drivers. It was the picture of a young male
“stud” standing next to a nice newer car.
The caption was drive for Uber guaranteed 300 trips of driving first
month for $2100. This perhaps
attracted many new drivers. Lyft
will pay $2500, this includes tips.
Let’s look at it from a “green perspective”. 300 trips is a lot of driving, much,
much more than a normal person would do; 10 hours a day, perhaps! So, this is
not shared ride driving, but being a “cabbie”; there goes the “green”
label. Next, let’s look at it
financially for the driver. If you take 300 trips of driving into $2100 it
comes out to $7./trip. Most
drivers after expenses come out netting about $3.50/hour. You’d be better off mowing lawns or
shoveling snow up north.
You can rent a car to use from Uber as low as $269/month or
use your own car. The government
states that it costs a person $.60/mile to drive a vehicle, amortizing all expenses
into operating that vehicle such as gas, depreciation of vehicle, maintenance,
insurance, etc. In the case above
with the Uber ad, if our average ride/trip is 10 miles that equates to 3000
miles per month, adjust for $.60/mile cost and that is $1800, that leaves you
$300 profit.
If you drive a year at this rate it is 36,000 miles per
year. Add into this your personal
driving of perhaps 12,000 miles per year and you get 48,000 miles. Cars essentially are worth nothing when
they hit about 75-80,000 miles on the odometer.
In addition, one must remember that you need to add on
“commercial” auto insurance to your personal policy for collision and extra
liability up and beyond what Uber or Lyft cover.
Personally, I don’t ever see this business being
economically viable for a business model.
Both companies are trying to eliminate the human driver, thus going
driverless owning their vehicles.
Now, you go from a taxi cab format business, (and losing money), into
the auto business. With extra
technology needed these driverless cars are going to be very expensive to
operate per mile thus further lowering profitability. Mass transit at a low cost that functions well and on a
timely basis is the only thing that makes sense.
I hope you got some meaning out of this blog. I am trying to get “you”, especially
younger people, to “think” on your own through life and business
entanglements. It is inevitable
that you will fail at times, but the object is to eliminate as many variables
as possible.
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