Sunday, July 23, 2017

Bank AmeriDeals and Online Couponing

Why does Bank of America want me to click on these "deals"?

One of the strangest online offers I get on a regular basis are BankAmeriDeals®.  Since I have account with Bank of America and one of their credit cards, they're constantly sending me emails telling me I have all these great deals waiting for me.  They really are not so great.

If I go to the website, and click on the correct tab, there is a list of these deals presented as a number of icons as shown above.  The deals are usually 10 to 15% off for various retailers such as Starbucks, 1-800 Flowers, AutoZone, Ruby Tuesday's, Hilton, and something called Stitch Fix, whatever that is.

In order to get one of these deals, you must check off the box on the corresponding on the list.  There is no cost to you for checking off a box (nor does it obligate you in any way), so you can check off as many boxes as you want, or just all of them.   So initially, I was puzzled as to why they made us go to the website and check off these boxes on the deals we wanted, instead of just automatically offering us these deals.

And then I realized this is an example of incidental discounting.   Incidental discounting occurs when you offer a discount as an incentive to attract new customers, and one of your old customers obtains the discount as a matter of course.  You are not optimizing your overall income from each transaction.  You are giving a discount to someone who would have paid full price.

As we learned an economics class, in a perfect theoretical retail environment, each customer pays what they feel a product is worth. Thus, Mrs. I.M. Gottrocks will pay $500 for a new widget and think it is a good bargain.  Meanwhile Larry Witetrash will pay $100 as that's all he can afford.  If each person pays the maximum amount they feel is appropriate, then you sell as many widgets as possible and maximize your income stream.

It is like the situation with outboard motors as I noted earlier posting.  Back in the day Johnson used to make a V4 two-stroke outboard offered it in 3 horsepower sizes, 85, 100, and 115 horsepower.  Each engine was the same exact size externally the only difference being changes in bore and stroke and carburation.  The parts cost and assembly cost were identical. And yet the hundred 15 horsepower model sold for an awful lot more than the 85 horsepower model.

And this struck me as odd, as a young man, because I wanted the 115 horsepower model, but wanted only to pay for the 85 horsepower model.  But what was explained to me, was that they're not selling engine parts, they're selling horsepower. And when I was working at Carrier we had the same situation with industrial chillers with different capacities.  The parts count and components were largely the same, and the costs were largely the same.  However we were not selling blocks of iron to our customers we are selling tons of chilling capacity and if you wanted more chilling capacity paid more money.

Thus, there is this entirely irrational relationship between the price of things and the cost of things that most of us don't realize.  As consumers we think that larger things should cost more, smaller things should cost less, even if they both cost the same to make.  But not only that, we all expect the same pay the same price for goods in an egalitarian democratic society.  However from an economic point of view, it makes a lot more sense to sell rich people things at a higher price and poor people at a lower price.

And if you read that last sentence very carefully, you'll see one the keys to getting head in America as a middle class person.  Live what I call the Walmart lifestyle, buying things at the low price rather than paying the Whole Foods lifestyle price.  Yes, a surprising number of Americans prefer to pay high prices, as they perceive a status in shopping at certain stores.  And some people can truly afford to overpay for things as they are Millionaires or Billionaires.  But a lot more of the people shopping in these upscale stores are nearly strivers who want to appear to be wealthy and spend what little income they have on overpriced Goods.

But getting back to discounts and couponing, I wrote one of the original patents on internet couponing for a client and I learned it off lot about the couponing business.  Coupons have a number of uses.  One is to entice people to buy products that they might not ordinarily buy, either because they are really can't afford them, or they are not aware of the product.  Another use of coupons is to get people who cannot afford to buy your product to buy it on regular basis using the coupon.  In other words, coupons allow you to provide a range of pricing for different consumers.  A third reason is to obtain "conquest" customers who are loyal to other brands, who may be induced to switch by a coupon deal.

Mrs. I.M. Gottrocks goes to the upscale supermarket and buys her Tide laundry detergent and pays full price.  Larry Witetrash clips the coupon and buys the same Tide detergent, but pays a far lower price than Mrs. Gottrocks.  The net result is that Tide sells two boxes of detergent rather than one, even though they don't make as much money off of Larry, they still make more money than they would if the box just sat on the shelf and Larry bought store brand.

And this works fine in the paper coupon environment, as Larry has to go to the trouble of buying the newspaper, finding the coupons, clipping the coupons, saving the coupons, and presenting the coupons which is a hassle.  You make Larry work for that discount and he doesn't get the discount unless he does the work. Not only that, Mrs. Gottrocks doesn't get the discount because she views clipping coupons is beneath her and a waste of time (which is largely is). So she doesn't get the coupon discount.

With internet or online coupons, the problem arises that if you offer discounts to everyone via a simple click, that everybody will get the discount whether they really deserved it or not.  That's the incidental discount that arises where people like Mrs. Gottrocks end up getting a discount on items and services, and the retailer doesn't get the advantage out of the bargain as they had in the past.  Sally would have bought the product anyway, so they are not getting a conquest customer for another brand.  And Sally would have been happy to pay the higher price so they're not selling an additional box of detergent to Sally that otherwise would have sat on the Shelf, they were just selling it in the lower price and thus come out behind on the deal

How do you avoid this problem?  One way that Bank of America uses is to force you to go on to the website and click on the icons.  It seems like a pretty stupid waste of time until you realize that it forces the consumer to look at these deals and remember the physical act of clicking on them which creates a psychological tension in the brain.  Now, the next time the person drives by a Starbucks they will think to themselves, "Gee, I get 10% off on Starbucks! I should go in there and buy a cup of coffee even though I'm not really in the mood for coffee!" And you might laugh at that last statement but a lot of people actually think that way.

Even worse, Bank of America sends emails reminding of these deals are expiring, further prodding you psychologically to use these virtual coupons.  There are a lot of people in the world who feel they're missing out on a bargain if they don't use a coupon before it expires.  I recounted before how a friend of mine was at Michael's one day running around the store looking for something to buy because the coupon was set to expire that day.  She was going to buy things she didn't really need or want, just to take advantage of a perceived bargain.  This was a total of victory for the store.

So yes as stupid as it sounds, there are people who not only will click on the coupon for Starbucks and then get the coffee that they don't want because they perceived they are getting a value, but those who will think, "Gee I should use the Starbucks discount before it expires today, and buy a coffee even though I'm not in the mood for coffee!"  People are that stupid.

It's also a sneaky way for Bank of America to put advertising into their banking website and also spam you via email for third-party vendors.  Since you're not about to shut down emails and blacklist your own bank (you want to receive important notices from your bank)  you are allowing the flow of data into your life that advertises for other companies.  Moreover when you log on to their website, these advertisements - and they are advertisements - appear for these other companies in the form of these "deals" you are reminded about.  You go to the deal page, and click on these things and they know that you've clicked on them and tell their affiliated advertisers that you actually clicked on these physical icons showing an interest in the product.

It may sound like a trivial thing, but Bank of America probably makes enough money off of this to pay for the entire operation of their website, which by the way was crashed for almost four hours yesterday.  And by offering "discounts" they come across as the good guy finding and scoring deals for their loyal customers rather than as a heartless advertiser who is flinging commercial messages into their face whether they like it or not.  Pretty clever shit, that's why I own stock in Bank of America.

I did mention in passing earlier that couponing is a waste of time.  I covered this before with several postings on this site.  The reason why couponing is a waste of time is that Mrs. Gottrocks and Larry Witetrash might both by The Tide detergent, with Larry using his coupon.  However both of them could find a better deal by buying store brand detergent, which is often just as well and it's always priced lower than the name brand, even with coupons.

"But Bob, what about all these extreme couponers we see on television?\" They have garages full of food neatly stacked on racks they all got for free! Sometimes they even get money back!" That is indeed true, but these are often stunt buys.  They save up coupons over time and cash them all in at once at stores that offer double coupon days, coupon stacking, or other discounts and get amazing bargains.  However, in order to get any of these coupons, they actually had to buy product in the past. So you are not really getting a free bag of dog food if you had to buy 5 bags of dog food to get the coupons.

Moreover, the weird fascination these extreme couponers have with carefully storing and sorting their "coupon wins" in racks in their basement or garage is somewhat disturbing.  This is not so much shrewd purchasing as it is merely hoarding.  And it strikes me as odd that some of these people will obtain these products via coupons and then keep them displayed on these racks, but never actually use or consume the products.  I think the conquest part of the deal is the entire deal for them, and having racks of products and showing it off to their friends and bragging about how they got all this stuff for free is the real payback for them.  In other words it is a form of status seeking. A form of status seeking that actually costs you money like most forms of status you can, and could lead to hoarding disorder later in life.

Couponing in the internet age is an interesting sport. And it's interesting to see the techniques people are using to prevent giving discounts to people who were not seeking discounts.  And the way of granting coupon discounts and distributing them is also very complex.  I'm sure you've been to more than one website where at the checkout they say "please enter coupon code here."  And if you open another window and search online, sometimes you can find these coupon codes at various websites. Again, another example of incidental discount.  You are already in the process of checking out and willing to buy, and they just gave away 10% for no reason at all.

And possibly coupons and their ilk could disappear as a result of this.  Maybe we will go to a more egalitarian pricing model and perhaps we already have.  But so long as they are people willing to pay more for the same product than others will, retailers will continue to figure out ways to offer the same or similar products, for different prices for different buyers.

Your Service Drop and You

Hard to believe 220V power just lays out in the sunshine like this, but it does.

Today was an interesting day.  I went to sweep all the pine needles off the roof, which is a routine chore for our house (otherwise, you will have a garden growing up there).  Still sure owning a home is such a sweet deal?

Anyway, in the 90 degree heat, I am sweeping and something catches my attention.  The wiring on our electrical service drop is bare.  The insulation on the "hot" leads has cracked and peeled off, and more over, the neutral/ground lead has frayed and some of the strands have clearly been touching the hot leads - as evidenced by welding marks.  We had been having problems with lights periodically dimming, particularly in wind storms.  Now I know why - in the wind, the loose strands of the ground/neutral wire are touching the bare hot leads and making sparks.  Some fun, eh?

NOTE:  Do not even get NEAR your power drop.  If you slip and fall on your roof, you could end up touching these wires, and even a tiny crack in the insulation could cause you to be electrocuted.  If you didn't die right away, the fall from the roof would finish you off.   I am not suggesting that you attempt the repairs I have made, and indeed vehemently suggest the opposite - call an electrician.  I am not only an Engineer, but was trained in this kind of wiring at Carrier.  You could easily kill yourself doing this.  I am only discussing this repair to point out that home ownership is basically nothing but a series of repairs.  Which is why you never see your friends at the bar, once they buy a house.

By the way, this goes double for downed power lines.  Just stay away, period.
So I call Georgia Power, figuring I'd leave them a message and someone would come out next week and fix it.   They came out in under an hour.   The fellow glances at the wiring and says, "Well, we're gonna have to cut your power!"  and I replied, "to fix it?" and they said, "no, so you can fix it!"

Seems the power to the drop is their responsibility.  Anything from the splice blocks (those black square things in the photo above) onward is your deal.   I didn't mind them cutting the power in a heatwave, but did they have to seem so happy about it?

Once again, we are reminded that a house is just a machine for living - a complicated machine with a lot of expensive parts that break on a regular basis.   Appliances, maybe 15 years.  Air conditioners and furnaces, maybe 15-20.   Roofs, maybe 15-30 depending on type.   Main sewer connections, water lines, electrical service entrance - 40-50 years before problems develop.   Eventually all of these things have to be replaced or overhauled over time - even foundations.   And foundations get expensive, really fast.

Are you still certain that renting is a bad deal?  Because I'm not.  But I've owned a number of properties and had them for years.   So I've seen a lot of bad go down.  Leaky basements, tree-root clogged sewer lines, broken water mains, outdated electrical panels, and appliances, hot water heaters, and air conditioners, several times over.

A house is just a thing, and no it is not the American dream.

Fortunately, I am an Electrical Engineer.  But more importantly, I was a lab tech, and I used to hook up three-phase chillers with triple-ought copper wires, so the big wires don't scare me too much.   For you?  Hire an electrician.   I am serious about this.   There is no surer way to get killed that dealing with high voltage if you don't know what you are doing.

It is odd, that such a dangerous thing and such an important thing is left out in the open, exposed to the elements (where wind, rain, ozone, and sunlight degrade the insulation).  And also where falling tree limbs can damage it, or squirrels can nibble through it.   Just sitting right there on your roof, waiting to kill you the first time you accidentally put an aluminum step ladder up against it.  Odd, ain't it?

We drive to Lowes, which has 4/0 4/0 2/0 wiring which has four-ought for the power leads and two-ought for the ground/neutral.   This is what Georgia power uses, but for some reason the house is wired with 4/0 4/0 4/0.  So we go to Home Depot.   One advantage Home Depot has is they are staffed better, have a larger selection and are more helpful.  At Lowes, you have to press a button to get help, and then they act dumb.  At Home Depot, the fellow and the lady there were very helpful.

(Amazon offered to drone the wire to me, but then admitted that drone delivery was a fantasy).

We run into a Canadian at Home Depot who says, "Well, that's odd, in Canada, Hydro Quebec would come and fix that for me!"   Good for Canada.   But this isn't helping me, my friend! 

It took less an hour to replace the cable.  The meter box was full of skeletons of dead gecko lizards, who probably tried to rest on the hot and neutral leads at the same time.   What a bug-zapper that was.

I call Georgia Power and believe it or not, they agree to send someone out, on a Sunday, to hook the power back up.   He arrive just as nightfall is upon us, and within 30 minutes, he has crimped the new lines to the main power and we are back in business.   It is a lot easier to like the guy who turns on your power than the guy who turns it off.

Total cost, including some electrical tape I bought for other projects, was $55.11   I was lucky, as most electricians would charge "emergency service" prices, and probably not come out for hours, and we'd be looking at tomorrow before we were hooked back up to the grid.  I suspect it would have cost over $1000 for a service call.

And again, this is what I strongly suggest you do - call an electrician, as you are not me, and would likely kill yourself attempting such a repair.

Of course, the fun is not over.  I still haven't replaced my fire-prone Pacific Electric junction box, and probably should replace the rest of the main power lead when I do that.  Then there are carpets that are wearing out.   The garage needs painting.   After 12 years, probably every room the house needs painting.  Heck, we've already repaired a lot - remember the toilet flange job?

And it is not like we live in an "old" house - well, OK, it is 50 years old.  But it was basically gutted and remodeled 12 years ago.   Which means most of the appliances are about ready to fail in the next 5-10 years.

So what's the point of all this?   Well, if you buy a house and are "house poor" you will end up in trouble, as "unexpected repairs" are to be expected.   Even when you buy a newer home, these problems crop up.   And with a brand-new home, you might be covered with a home warranty from the builder, getting him to come back and fix things can be a nightmare.

Home Warranties are an interesting beast, and often sold to first-time buyers.    If you are stretched thin on your financing, it can be comforting to know that if you have a broken pipe or bad wiring, it will be covered.   And they are remarkably inexpensive.   I've never bought one myself, but Mark used to recommend them to buyers.   If you are not handy and skilled, then maybe such a thing is for you.

But for those of you renting, well, don't fret that you can't "afford" to buy a house or whatever.   I suspect you spend a relaxing Sunday at the park or beach, or just reading a book or going on a picnic.   You probably didn't spend it driving to lumberterias looking for four-ought cable, or standing out in the rain stripping cables and wrestling them into the meter box.  Some fun, being a homeowner!

Even worse would be trying to figure out where to put all the food melting in the freezer or where I was going to sleep tonight with no air conditioning or how to shower tomorrow with no hot water.  And for most people, that would be a real concern as well (and yes, hotel rooms and throwing out food is also expensive).   Fortunately, we have the camper as a back-up plan.

But this experience drove home to me that a house is just a thing, and expensive complex thing with a lot of components that break down over time.   When you buy a house, you are not buying a place to live,  just the repair rights.   The previous owner put in new windows, new doors, and a new A/C unit.  Now its your turn to replace the carpets, upgrade the kitchen, and rewire the fuse box.   Some fun, eh?

Keep that in mind before someone tries to sell you on the "dream" of home ownership.   It can also be a nightmare!

Fake Living Stingy Site

Someone is impersonating me!  I guess I should be flattered.

A reader notes that someone has obtained the "Living Stingy" domain name and copied my entire blog to it.   I notified Google and the content was removed.  The site remained blank for several weeks but today has new content (undoubtedly scraped from someone else's blog).

Most of the stuff posted is dreck - "50 ways to save money" for example, which suggests becoming a "secret shopper".   Most "secret shopper" deals are rip-offs.   They ask YOU for money, not the other way around.

Anyway, I could care less, other than someone might stumble upon that site and think I wrote it.

I did not.

UPDATE:  While the "50 ways to save money" page is kind of lame, some of the other stuff isn't too horrible, such as the "how to save" page after it.

The compound interest calculator is a nice touch as well.

I wonder whose blog they are stealing from now?   Some of it appears to be too well-written to be from some Indian blog farm.

Hmmmm...... maybe I should just cut-and-paste their content and put it here and retire.

Turnabout is fair play!

Oh, wait, a simple google search shows they cut-and-pasted it from a book:

Gotta love Indian blog farms! Or maybe not.

The Time Machine Conundrum

The problem with time machines is that they don't exist.

A reader writes that I am unduly pessimistic about emerging technologies, new companies, IPOs and "The Next Big Thing!"

After all, what is today's blue-chip company was yesterday's "Next Big Thing!" - right?   So why not invest in these hyped new stocks and become fabulously wealthy?

After all, if you bought Microsoft early on, you'd be rich by now, right?

Yes and No.  The problem is, of all the companies that are "The Next Big Thing!" maybe 1 in 100 end up staying in business for even a decade.  The rest fall by the wayside or are gobbled up by other companies or the re-morph into something else.   Or they limp off into slow-death mode.

Now, in retrospect, you can selectively look back and say which companies would have been good investments back in the day.

I can also, today, look back and realize that yesterday I could have played 05 32 44 53 60 09 on the Powerball Lottery and ended up with more than a quarter-Billion dollars.  In fact, that is a much better deal than buying stocks and waiting years for them to go up in value, right?

You see the fallacy here - that just because some stocks shot up in value over time, a stock you buy today in some speculative "dot com" company is guaranteed to shoot up in value over time.  Just because one set of numbers won the powerball doesn't mean all sets of numbers will or that it is a good idea to play the powerball.

But.... you could win big!   You are missing an opportunity here!

Perhaps.  But the people who "win big" at these emerging companies are the people who invest millions before the IPO is offered and then cash-out of their holdings by selling the stock to you.   And while you may think you are investing in the next Facebook, you may in fact be investing in the next Groupon - there is really no way to tell for sure.

What's more, this is a game you can't afford to lose.  And yet many people - particularly those in the middle class and below, tend to lose badly at this.   They don't invest their money, they gamble it.   They take long-shot bets like stocks, IPOs, gold, bitcoin, and whatnot, and then end up losing money.   And often these are the only things they are "invested" in other than their car, their cell phone, and their restaurant meals.

In other words, they aren't "investing" so much as they are spending money, and to them, an investment is just a way of spending more money - like going to a Casino.  And they are so used to losing in life, the fact their "investment" doesn't pan out doesn't even faze them.

Take these Elio "investors" and "depositors" - or anyone who "crowdfunds" someone else's dreams.  They've thrown away thousands of dollars on something that was never going to work out (and please, don't compare Elio to Tesla - his deposits are always refundable!) but they are unrepentant.   You talk to these folks and they say, "Well, I lost my $1000 deposit, but it was a dream and I really hoped it would have worked out!"

When you ask them how much they put into their retirement savings, they give you a blank stare.

The middle-class of America is shrinking not because anyone took our money away as Bernie Sanders and his ilk contend, but because we gave it all away.   The saving and investment mentality of our parent's generation never carried over to the present one.   Our generation seems to be obsessed with spending, acquiring the latest "gear" and pretending to be wealthier than we are.   Few save for retirement or think that saving money is even an option - after all, they are "paycheck to paycheck" because of the payments on their new SUV.

And maybe this is what drives this gold-rush mentality.   Since they have nothing saved, they believe they have to gamble big in order to win the jackpot.   As Jeff Foxworthy once said, "You may be a Redneck, if your retirement plan is to buy lottery tickets" or something to that effect.

The reality is, you can save up money for retirement if you get out of this get-rich-quick-scheme mentality and just put money away into normal and ordinary investments (not things hyped in the media) and then do this regularly for 30 years or so.   Over time, your money will double about every 7-10 years, and you could end up with hundreds of thousands of dollars, if not millions in the bank.

You can't pick winners in the market and strike-it-rich unless you have a working time machine.   Looking backwards and saying "well, such-and-such a company hit it big, so this new company will do the same thing!" is false logic.

And compounding this is the fact that many of these IPOs are really just excuses for the founders to cash-out of failing tech companies, selling dreams to small investors, who $100 or $1000 at a time, fill the bank accounts of insiders with millions of dollars.  Telling the crooked IPOs from the legit ones is nearly impossible.   So just avoid them all.   You can't expect to "win" every time in the market or be on every elevator going up.   If you try to do this, you will fail twice as hard.

Saturday, July 22, 2017

The Madness of Crowdfunding & Obama's Legacy

What will Obama's legacy actually be?

Early on the Obama administration, conservatives took umbrage at the government loaning money to Solyndra, the ill-fated solar company.  In case you missed it, Solyndra came up with a cockamamie design for solar panels using glass tubes which were sputtered like semiconductors.  It offered no real advantage over traditional solar and in fact cost a lot more.   Then, cheap solar panels from China flooded the market and the entire thing went bankrupt.   No one is selling tubular solar anymore.

Those on the Left argued that the government should subsidize energy alternatives.  At the time of the market crash, or more precisely just beforehand, we had a mini-energy-crises in the US, with gas shooting up to $5 a gallon briefly in 2008 and just as dramatically crashing in 2009.  The Energy loan program has, since then, managed to turn a profit.  But not before a few high-profile losses.

Nevertheless, many on the right argued that these kind of programs favored one business over another, which is something those on the right have no trouble with when the business being favored is theirs.   But it raises the question, how much should the government intervene in markets and try to influence technology?

Back in the 1960's, cars ran on carburetors and leaded gas.   Smog choked our cities and a "powerful" car might get 350 horsepower out of a 350 cubic inch engine - on a good day - and get gas mileage in the teens, if the owner was lucky.   Pollution controls and safety standards implemented in the 1970's caused cars to get horrible gas mileage and put out pitiful amounts of power - and run like crap.   But a funny thing happened.   By the 1980's horsepower was up, emissions were down, and gas mileage got better and better.  Today, you can buy a car that cranks out 300 horsepower out of 3 liters and gets 30 miles per gallon, and pollutes so little that you would be hard pressed to die of CO poisoning if you locked yourself in the garage.

Now, granted, much of this change was due to competition in the marketplace - particularly foreign competition.   When Japanese and European cars started putting out more power on less engine, the US automakers took note.   But our foreign counterparts didn't have the strict emissions rules we had here in the States - rules that today they have only relatively recently adopted themselves.   And the air today is cleaner as a result of these regulations - and cars get better mileage because of CAFE requirements as well.

So, it is possible that sometimes, government regulations can push an industry in the right direction.   But there is a huge difference between mandating that all players in the market behave a certain way and to loaning or giving money to selected players or selected industries, and the latter is what upsets conservatives.

Another legacy of the Obama administration was the JOBS act which created something called Regulation A - allowing startup companies to raise money through crowdfunding and issuing stock in a more informal manner.  In other words, with few regulations - the opposite of what Democrats are supposed to believe in.  While many hailed this as an advancement, allowing small-time entrepreneurs to get into the game, the record of crowd-funding has been spotty, to say the least.   As it turns out, a lot of money has changed hands and not a lot of product has been shipped.   And perhaps the poster boy for this has been Elio motors - a Regulation A company that is set to unwind the entire concept.

The Elio thing sticks in my mind because as an Engineer I cannot see how this concept could work - where so, so many others have failed.   The cost and mileage targets are insane, and well, we are seeing the whole thing melt down in slow motion, with thousands  of people losing money, in terms of non-refundable deposits ($60,000 people @ $1000 apiece is $60 Million!) or folks who bought the OTC stock that has now sunk to six bucks $4.50 a share.  The folks snookered into this deal are not sophisticated, but rather are being manipulated by a lot of hype and hoopla.

But hey, don't worry about Elio.  It's not too late to make a deposit on your air-powered car!

Sadly, both hyped vehicles will never see the light of day.  And the people plunking down money for imaginary cars are Externalizers - people who won't take action in their own lives until the world changes to suit their tastes.   When it was mentioned to one Elio believer that for the price of an Elio they could buy a nice late-model second-hand car with four wheels, doors, and seats, and drive it home today, their response was, "well, then you'd have to deal with an unreliable secondhand car!" - as if a three-year-old Corolla was some clapped out piece of trash.

Who are these people?  Not professional investors.  Not engineering types.  From what I can divine online, the typical Elio deposit holder or investor (other than the insiders, for the latter) is young, male, left-leaning, and harbors mild conspiracy theories about the oil companies, the "big three" and "evil corporations" in general.   They didn't so much invest in Elio as try to make a political statement.   This is a dangerous thing, I think, when people blend politics with investing.   Yea, sure, it would be nice to fund politically-correct industries, but if they end up losing money or are outright frauds, are we really saving the planet?

And moreover, doesn't this Regulation A filing thing seem like a really bad idea in terms of consumer protection?   We are not protecting the small investor, who is most likely to be harmed by sketchy or even outright fraudulent stock offerings - which are targeted at the small investor.  The whole crowdfunding thing is no different - asking people for non-refundable deposits on things that don't exist yet.   There is a reason that these types of "investments" were illegal at one time.

It seems odd to me that an administration that was obsessed with regulating Wall Street more, created a huge loophole in the securities field, that allows small shady companies to offer stocks to unsophisticated investors with little or no oversight.   The same administration that wanted to crack down on "the big banks" for financial sloppiness, was willing to allow crowdfunding and Regulation A stock issues, with little or no oversight.  And the latter was far more likely to rip-off the small investor than the former.

But then again, the administration got snookered the same way with Solyndra.  They wanted to believe it would work, without doing the requisite math.  They loaned money to a company that Wall Street and the Banks would not touch.   And maybe they should have listened to the professional investors before committing government money to the project.

What will Obama be remembered for?  Obamacare?  Solyndra?  The JOBS act and stock fraud?  It is hard to say.  But I think overall, his legacy will not be as spit-shined as some on the left want it to be.  Granted, Republicans never really gave him a chance at all.  But then again, he never really tried very hard to woe the few votes he needed to get some of his agenda passed.

I think even die-hard Democrats see the Obama years as a series of missed opportunities, and not just because the intransigence of the GOP.   And today, we lurch forward with a national healthcare plan that is a patchwork of Medicare, Medicaid, VA, private insurance, company insurance, and Obamacare "market" plans, all of which have flaws and need fixing - but no one wants to do the hard job of fixing, just destroying.

And sadly, a small minority of Americans (like me) are buying our own policies in the Obamacare "marketplace".   So the government feels it can shit all over the 10-20 million of us, because they can get re-elected, even if we vote.

No, I am not sure that Obama's legacy will be all wine and roses.

Soap is Soap

There really is no major difference between different brands of soap.
A reader asks whether I like the Foca brand of Mexican Soap.   Does it get your whites whiter?  What about ring-around-the collar?   Americans are obsessed with laundry soap, as we are bombarded with ads for laundry detergent on the television.  It is a billion-dollar industry, and huge corporate conglomerates have been built around soap brands - and the idea that one kind of soap is "better" than another.

I heard this ad so much as a child, I can recite it from memory.  "You try scrubbing them out, you try soaking them out..."   A lot of money was spent on saturation advertising of soaps.

And beyond soaps, there were add-ons, like water softeners and bleaches.   America's soap companies fueled this insecurity on the part of people about the cleanliness of their clothes.  And yes, I can recite this one from memory too, "My husband, some hot-shot, here's his ancient Chinese secret, Calgon!"

The reality is, of course, that the basic formulation of soap hasn't changed much since our ancestors rendered down bear fat in huge kettles and mixed it with fireplace ashes to form gray bars of caustic glycerine.  Soap allows insoluble particles to become soluble in water, so they can then be rinsed away.  There really is nothing else going on.  There is no "Miracle Additive X!" that makes "Whites Whiter, Colors Brighter!"  There is just soap and bleach, for the most part.

Of course, in the 1960's we did have a miracle additive called Phosphates, but some have argued these are bad for the environment and many soap companies have moved to "phosphate-free" formulations.

Concentration is one aspect of soaps.   In the 1980's and 1990's we started being hammered by ads for orange, lemon, or other fruit-flavored cleaners, sold in infomercials by hyperactive guy who, sadly, is dead today.  These cleaners work well, of course - I buy the generic "orange cleaner" version at Dollar Tree in the big spray bottle (or the even bigger refill bottle) and they even have a powdered version that would make gallons of the liquid.  It is basically just a really harsh detergent and it is great for degreasing things, taking out stains, cleaning countertops or taking a layer of skin off your hands.

It is magic?  No, not any more than dishwasher detergent is magic - it is just so powerful it can take paint off your car (or at least etch it).   The deal is mostly strength, or concentration of the soap.   And that is why I say that dollar tree laundry detergent (liquid) is not so good.  It is very watered down and it seems like you have to use twice the recommended amount to get anything clean.

Bleaching agents are the other "secret ingredient" in many laundry detergents to get your "whites whiter" - and they do so at the expense of longevity of your clothes of course.   But better to have a shirt you can wear, that has its service life slightly reduced, than one with a big pizza stain on the front, right?

Fragrance is of course a big seller, and one of the things most often advertised is how such-and-such a brand-name soap leaves your clothes smelling "springtime fresh".   But of course, most of these scents are overpowering and some people even have allergic reactions to them.   Others report that when you go for a hike in the woods, smelling "springtime fresh" tends to attract every bug known to mankind.   Detergents, shampoos, and body soaps with flower fragrances tend to attract bugs.   Myself, I detest overpowering perfumes and scents in anything.  It is not getting your clothes cleaner, but just making you smell like a tart's handkerchief.

"I've smelled that cologne before, and I smelled a rat!"

Americans are obsessed with the cleanliness of their clothes, which is reflected in the sale of $1000 and up washing machines, as well as the plethora of ultra-expensive laundry detergents.   And this is funny, as compared to our European friends, we do tend to wear shitty clothes - ill-fitting baggy stuff that we buy for cheap at the big-box store that is made in a sweatshop in Bangladesh.  And yet I get e-mails from readers who try to convince me that a $2000 LG front-loader washer is "worth it" because it is gentler on your clothes and will make them last longer.    And I guess if we had expensive clothes in America, this might make sense.

And if you had really expensive clothes, you'd have your personal assistant drop them off at the cleaners.   Don't have a personal assistant?   Stop playing pretend rich, then.

But the reality is, most of us wear pretty lame stuff, not something from a runway collection, and obsessing about what upscale detergent or fancy washer to use is, in my opinion, pretty idiotic.  Oh, and a good way to go broke, over time.  The poor obsess about brand names far more than the rich do, and maybe that says something right there.

Why do we need to clean clothes?   Well, if you are above the age of 10, you no longer worry about grass stains or mud on your clothes, as they posit in the detergent ads.   If you have blood stains on your clothing, maybe you have bigger problems than Tide can solve (plastic garbage bags, rubber gloves, a gallon of bleach, and a good alibi might be in order).  What is making your clothes "dirty" is your sweat and your dead skin cells, which you shed by the millions every hour.   Ordinary soaps will take out this kind of dirt and leave your clothes smelling fresh and feeling clean. 

But the point of this blog posting isn't about soap.   It's about the idea and how the idea gets planted in our brain, that one soap is "better" than another, and moreover that we should swear brand loyalty to a soap that is two to five times as expensive as another type, on the premise that it works better, when in fact, there really isn't much of a difference in performance, or if there was, it isn't noticeable.

Soap is soap.  Cars are cars.  Houses are Houses.  A pair of jeans is a pair of jeans.  Spending more isn't going to necessarily make your experience better, just more expensive.   And in fact, in terms of bang-for-the-buck, often the very cheapest and the most expensive are the worst options, with something in the lower part of the middle being the best value.  Or so it seems to be.

As I noted before, I found that the "brand name" detergents are just far too expensive and don't really get my clothes cleaner.   Super-cheap dollar-tree detergent is maybe too far in the other direction (but that does not mean everything they sell is no good, far from it).   I found a happy medium in this Foca soap.  Works for me - your mileage may vary.  I stopped worrying about "ring around the collar" when I stopped wearing shirts with collars, for the most part.

Oh, and by the way, this idea that some clothes are "delicates" seems odd to me.  I own a closet full of pure silk Hawaiian shirts, some of which are over 20 years old.  The shirt shown in my thumbnail picture, I still have (it is a poly blend) and it still fits and wears well after over two decades.   Silk is one of the most durable fabrics known to mankind.   I laugh when people call silk a "delicate" - it wears like iron.  Or at least quality silk does.

I should also note that it is possible to over-clean some clothes.  I lost a really nice Adolfo silk blazer that I bought for $99 at Marshall's - it fit like a glove!  But I kept taking it to be dry-cleaned, far too often, and I got it back one day with the lining shrunken and the shoulder pads wadded up like balls.  I loved that jacket, and it would have lasted a lot longer with less cleaning.   Underwear,  shirts, socks - yes, they should be washed after each use.  Jackets and pants?  Maybe less so.  Just my two cents.

 I really miss that jacket. 

UPDATE: A reader writes:

You wrote (in your blog),

"... the basic formulation of soap hasn't changed much since our ancestors rendered down bear fat in huge kettles and mixed it with fireplace ashes to form gray bars of caustic glycerine."

Not quite. Fat is basically a compound (an ester) of glycerine with any of various fatty acids (carboxylic acids). Soap is the sodium salt of the fatty acid part. The glycerine moiety of fats is not even always part of in the final product. [what about glycerine soaps?]

More than that, most laundry detergents are not made from fats or plant oils at all, but are sodium salts of sulfonic acids rather than fatty acids. (Somewhat better performance, especially in water with a high calcium content (“hard water”).)

There are a few actual laundry soaps still on the market — Fels Naptha, Ivory Snow. (Ivory brand bar soap was originally created as a laundry soap.) BTW, I’ve tried Fels Naptha just for the heck of it, and it does the job, but is a bit less convenient to use, as it needs to be dissolved first.

Most bath soaps are actual soaps, as they are milder on the skin than sulfonic acid detergents or other degreasers. (Ivory soap is actually very harsh and alkaline as bath soaps go, as, again, it was originally a laundry soap.)

However, your basic idea, that detergent is a relatively cheap product with little to distinguish the high-end brands, is probably mostly correct.

I have noted myself also that a smaller amount than recommended, as little as 1/8 of a cup by volume, of powdered detergent does as good a job as more does, on all but very heavily soiled clothes. For stains, the detergent for the entire load, can be applied directly to the stained part (as in those 1960s Whisk (TM) ads). I’ve also found that soaking clothes (either in a bucket, or just in the washing machine with the cycle interrupted) makes them come out a little cleaner. The washing machine spends most of its time sitting idle anyway!

All good points, if not a bit technical for me.  I have a bar of Fels Naptha as a friend says it is good for spot stain removal.   Sometimes the old ways are best.

Dead Cat Bounce

When something goes down in value, particularly for emotional reasons, chances are it will go back up.  Ditto for when things go up for emotional reasons.

A reader writes, asking me if I think it is a good deal to invest in Lowes Stock.   I do not give stock tips here, or engage in stock-picking.  I do buy and HOLD stocks, not day-trade or churn my own account.   But when I see a stock I think will do well for the long haul (years not months) and the price is artificially low, well, I buy it.

And the other day, when I saw these ridiculous stories about how Amazon is going to take over the Appliance Business because Sears decided to list a few washers and dryers on Amazon's e-Bay like site, it seemed like a good time to buy.   The market is stampeded by stories about Amazon, which is helped by the fact that Amazon owns one of the nation's largest newspapers.    So stories about Amazon "taking over" the appliance business from Lowes and Home Depot and Best Buy seemed a little far-fetched to me.

Besides, Lowes is more than appliances, which make up only 11% of its business.  They could exit that sector entirely and while it would hurt them a lot (it is a good mark-up, particularly the upper-end crap) they would still soldier on with lawn and garden (try getting your petunias and mulch delivered by drone - or UPS!) lumber, plumbing, and whatnot.

And granted, the "big box" stores have a lot to lose here.   I bought my LED light bulbs online, and yes, from Amazon, rather than buy them at Lowes, because it was far cheaper to buy them online.  However, how long these no-name Chinese bulbs last, is not clear.  And one set I bought was not dimmable.   Sometimes it is good to touch and feel the goods and buy brand names.   One set I did buy at Lowes did fail early - and I was able to take them back easily.   Brick and Mortar still has some legs left in it, if managed properly.

Anyway, after Lowes stock lost 5% in value from this Amazon "announcement" about Sears, I bought the stock and the next day, it went up 1.5%.  Now, that is an annualized rate of return of over 500%.   What this means, of course, is that a lot of people like myself, pulled back and realized that Chicken Little was once again running the stock market, but no, the sky wasn't falling quite yet.

Even dead cats bounce when you drop them.

Of course, I only bought about $3000 of the stock which is feasible in an era of free trades.   So if, by some far chance, Lowes goes bankrupt tomorrow and lumber starts droning its way across the causeway to my home, I don't lose a lot of money.  But somehow, I don't think that will happen.  And even if the stock goes down, I still have my dividends to comfort me.

Others take a different approach.   I see a lot of young people who "invest" by spending $1000 here or $10,000 there on something they heard about online or on the financial channels.   They don't have a lot of money to invest, and they aren't investing, but gambling - hoping to place a bet in the stock market and then clean up.   I tried that when I was young - it didn't work at all.

So you read online on a discussion group, a comment from a 20-something about how he put down $500 on the Groupon IPO.   But he wasn't "investing" - he was gambling $500.   Or another fellow who decides to throw $1000 at gold, because he heard good things about it.  Or these kids (65,000 of them!) who paid $1000 for a non-refundable deposit on a car that doesn't exist and never will.   You can buy a nice used car for not a lot more than that, you know.  At least it exists.

These people say, "Well, it's not that much money, and I can afford to lose it!" which really isn't true.  Hundreds or thousands of dollars is a lot of money, and while I can afford to lose it (and indeed, at this point in my life, my portfolio can gain or lose the cost of a new car, on a daily basis) someone in their 20's really can't, unless they are a Billionaire wunderkind.

And that, in a nutshell is how a lot of these "dot com" companies work.   They hope that thousands and maybe millions of the plebes each will chip in a little bit, on the premise they might hit it big investing in "the next big thing!" (which by the way, is literally the trademark of Elio).

Think about it.  There are 330 million people in the United States alone.  If you could get each one to give you a dollar, you'd be rich.   And each person can "afford" to lose a buck, right?   That basically is the business model of the modern dot-com "tech that is not tech" company.   Get a whole bunch of people to give a little each.  This is how crowdfunding works, and yea, it too is a bad idea.

But hey, it worked for Obama!  Too bad Hillary didn't try it.  You see, once people send in $10 to a candidate, they feel invested and are more likely to vote.   Big money from Hollywood and George Soros is fine and all, but it doesn't get out the vote.   Trump won because he sold MAGA hats, and with each purchase, he got a guaranteed vote.   But I digress....

So what is the point of all this?   Well, at least for me personally, my net worth didn't start going up until I started adopting a more mature adult form of investing.   When I started out, I thought I could "beat the market" by buying and selling stocks strategically.   I kept looking for "the next big thing!" and used the financial media as an information resource.   I found "the next big thing!" of course - and so did 330 million other people.    I bought high and sold low.   It was idiotic.

I finally grew up and realized that I wasn't going to beat the market, that I wasn't some financial boy-genius who was going to stock-pick his way to the top.   I realized that a better alternative for the amateur investor was to diversify my portfolio among a plethora of things - stocks, bonds, government bonds, mutual funds, insurance, and real estate.

I also realized that losing money was part of the game, at least some of the time.  And I realized that the idea that I would pick investments that would always go up in value (because I was such a smarty-pants, right?) was idiotic.   Things go up, and then they go down.   And the one huge mistake I didn't make was to dump investments in a panic when they went down - as a lot of people did in February of 2009.

And it may seem non-intuitive, but once I stopped looking for "The Next Big Thing!" and quick and easy profits, I started to make real money investing.   What it took was not more effort, but less.   Not more thinking but less thinking.   Not trying to score big, but just putting money away, diversifying and.... waiting.

That's all it takes.   If you try to "beat the system" the system will beat you.

Friday, July 21, 2017

Shitblogs and Internet Click-Bait Filler

The structure of the Internet and Internet Advertising results in some odd consequences.

I received an interesting e-mail the other day which exposed me to the seamy side of the Internet, which, let's face it, has a lot of seamy sides:
On Thu, Jul 20, 2017 at 7:20 AM, Olivier Jennes <olivier@******.***, wrote:
Hi Robert,

I was doing some research on portable air conditioners and I came across one of your pages:, which I found informative and well-written, so I was wondering if you wanted to have a quick look at an article about portable air conditioners we just published.

After doing weeks of independent research about all available brands of portable air conditioners, we published the results in a blog article. Please note: we are in no way connected to any of the brands, we are just a blog with a passion for art, design and everything to do with home.

Here is the article: http://******/the-best-portable-air-conditioners

It reflects a summary of the feedback from people around the world - I'd love to know what you think!

Feel free to send your thoughts by email, or, if you prefer, you can also leave your thoughts in the comment section at the bottom of the article. And if you like the article you would make us very happy with a mention on your website :-)

Best wishes and thank you,

Olivier Jennes
Twitter: @******************
I went on the site and was appalled by the article, which had so many factual errors, it wasn't funny.  The "reviews" of portable air conditioners appeared to be little more than recitation of their specs. Unwittingly, I wrote back to the "author" of this piece and acted as an unpaid fact-checker and proofreader
These two paragraphs are confusing in describing how these units work:

"Single hose units will pull the air from within the room, cool it, and send it back into the room. It then vents warm air and moisture out of the outtake hose that is mounted to the window with a simple removable frame. With single-hose units, this is where auto-evaporative technology helps keep the machine running efficiently by cooling the unit. For less consistent use, like in locations with warm afternoons and cool evenings, a single-hose air conditioner is generally sufficient."
The evaporative function is used to discharge the condensate that forms on the cooling coils.  It has little to do with "cooling the unit" and it appears you don't understand how these units work at all.   In addition, the evaporative function is present in both single and dual-hose units.
(when cold air passes over the evaporator coils, it falls below the dew point, causing water to condensate onto the coils.  This drips down into a drip pan.  In a house A/C unit, this would then drain outside via a hose.   In older portable A/C units, the drip pan or condensate pan would have to be emptied on a daily or even hourly basis, depending on how humid the environment was.   Modern units use the edge of the evaporator fan to splash this water onto the warm components such as the compressor, causing it to evaporate again, at which point it gets blown outside with the discharge air.  Some window units use this technology as well.  It also does serve to cool the compressor somewhat.  But that's not the point!  The point is to avoid having to drain the damn drip pan all the time!  Even with this technology, the drip pan may need to be emptied when the room is first cooled, before the humidity level is pulled down.  Once the room is cool, the need is less, which is why it is a good idea to leave these buggers on all the time, rather than try to turn them on and off during the day).

The problem with single hose units is that they are taking air from the room and discharging it outside.  You are taking the cooled air, using it to cool the condensor, and then discharging it.  This is less efficient.   But worse than that, if your home is tightly sealed, the fan discharging air may have to fight to push air out the hose, as there is no air coming into the room.  For this reason, they often recommend opening a window a crack to let air in, which again, negates efficiency.
"Double hose units have both an intake and an outtake house. Air is pulled into the interior intake (the unit itself), cooled by the coils, and then sent back into the room. As the machine warms up, the intake hose (hooked to the window) brings air from outside in order to keep the unit from overheating. The outtake hose then removes the heat and moisture just as it does for the single hose systems. In larger spaces or spaces filled with computers or other warm electronics, the two-hose system is ideal for optimum cooling and to ensure the longevity of the unit."

Again, this seems to illustrate that you have no fundamental idea of how air conditioning works.   While I suppose you could say this is technically correct that it "prevents the machine from overheating" it is really not accurate.   An air conditioner is a heat pump - it moves heat from point A to point B.   A reversible heat pump can pump heat in both directions, so it can heat or cool.
When you run an A/C unit - ANY KIND of AC unit, you are rejecting heat outside of the room.  The point of these ducts is to reject the heat (hot air) in this case, which is generated when the refrigerant is condensed in the condenser.   This is where a lot of people get confused about these units - they think you plug them in and the unit turns electricity into "cold".   No, it takes the heat out of the room and pumps it outside.   If you don't connect the ductwork, you are just pumping heat around in the same room.   The two-hose solution is more efficient than the one-hose solution, as you are using OUTSIDE AIR instead of INSIDE AIR to remove the heat.   So you are not cooling air (as in the single-hose unit) and then blowing it outside.   It has nothing to do with "overheating" but rather improved efficiency.
The ducts don't prevent the unit from "overheating" but allow the unit to function.  These units don't really "overheat" by the way, they would shut off if the flow of air to the condenser was blocked (the high pressure refrigerant switch would kick off).
All of the bolded statements in your article above are inaccurate.  I bring this to your attention in that you don't want to make yourself look foolish online.
I have not reviewed the rest of the article in detail.   I think you need to do some research on how air conditioners work, and in particular on how portable air conditioners work, before writing an article about them.
Good Luck!

A few days later, he wrote back:
Dear Robert,

Thank you very much for your reply and your feedback, that is very kind and helpful!

I full agree with everything you said there. We broke the contract with the copywriter who wrote this for us as after further inspection I agree the text is unclear and factual wrong in many ways. I now have my main copywriter reviewing and correcting the article (luckily she is amazing) and I will let you know once this is done. Thanks again for sharing your opinion, this is super helpful.

Best wishes,

Copywriter?   What the Fuck is going on here?  Welcome to the wonderful world of shit-blogs and Internet Click-Bait filler sites.

What are these sites?  They are the weird sites I have written about before, often containing scraps of text in broken English.  Sometimes they even incorporate postings from my blog - or copy my entire blog.   Others are articles so poorly written and lacking content and point-of-view.  For example, you might see one on auto leasing that sounds like this:
"Leasing a car is often a good value for some car buyers.  Others prefer to buy cars in the traditional manner.  There are advantages to both approaches.   People who lease cars like the convenience and prefer to trade-in every few years.  When you lease a car, you may be asked to sign a lease agreement and make a down payment.  Then, every month, you make a lease payment on the car....."
In other words, it is bland, inoffensive shit that really says nothing at all.   But if you search on "Is leasing a car a good deal?" this page might come up.   You click on it and the page owner makes a penny - or a fraction of a penny.   A million people click on it, he makes a few dollars.   If he has hundreds of pages and blogs like this, he might make enough to live on - in a third-world country.

What's the problem with shit-blogs?  Nothing really, other than they are the wad of paper towels clogging up the toilet of the Internet, causing shit to overflow everywhere, and someone has to clean it up eventually.

But this is a prime example of how people have so easily spoofed Internet Advertising, something I did not realize myself until I monetized this blog (which this month, made about $237, I'm rich!).  If you can create content that generates clicks, you make money.   How do you do this?
1.  Create controversial content:  My posting on RV Quality is controversial and gets a lot of clicks.  My posting on Fibromyalgia gets a lot of hits as well.   My recent Elio posting went ballistic when someone linked it from Facebook and Reddit.  The Elio "true believers" click twice as much as the skeptics, illustrating how they lost their $1000 deposits in the first place.

2.  Spread the word:  My most popular posting is on insulating your garage door for cheap which several people posted on Pinterest (thanks, guys!) and thus it gets a lot of hits.  Ditto for my Park Model posting.   Some people intentionally go out to discussion groups and cross-post to their blogs or sites, hoping for more clicks.

3. Create topical content:  People want to know about portable air conditioners (another one of my popular postings) or car leasing or getting mortgage, buying a home, getting out of debt, etc.   Write something about this or other topical content, even if you have nothing to say, and you will get clicks.  SEO (Search Engine Optimize) your postings, and watch the dollars roll in!

4. Political Content:  As the last election illustrated, people will click on "red meat" that disparaged Hillary.  Not so much on Trump, but I do note that some of my highest paychecks from Adsense were before the election when I made some political postings.
Again it doesn't matter if you are vilified or lauded.  In fact, the former is better than the latter.  People will click on a link on "Fibromyalgia Sufferers Page" when somene says, "can you believe what this asshole said?  He's implying our suffering isn't real!" and they all get their pitchforks, say awful things about me and then click on the link and make me money.   That was an interesting lesson for me about how the Internet really works and why outrage these days is a better internet currency that Bitcoin.   Bitcoin exchanges might crash, but outrage is money in the bank!

Which is why I say that being outraged is stupid and just profits other people so stop doing it.

It also illustrates that I could make a lot more money at this if I put my mind to it.  Other sites like the "X-treme Retirement" guy or the "Mr. Money Beard" monetize their blogs, run discussion groups (comments sections) and engage their readers more directly.   If I did this, I could gin up readership a lot - but of course, have to spend hours every day moderating.   Also, If I went out and whored more on the Internet, providing URLs and hot-links to my blog, I could generate more traffic.
If I SEO'ed my site to move it up on google, I could generate more traffic.  And more traffic moves sites up on google, which illustrates the fallacy of Google right there.  It is an endless feedback loop.   If I wrote outlandish content (moreso that I already do) that pissed people off, I could generate more traffic.  

It isn't hard to do, the question is, do I want to do it?   The reason these folks from third-world countries figured out how to spoof Google AdSense is that they desperately need the money.  They set up a site, generate some hits, make a few bucks and can then buy one of those three-wheeled tuk-tuks (which actually exist, by the way).   Who am I kidding?  Some kid in Macedonia is probably buying a new Mercedes with his click-bait money.

Google AdSense and other online advertising companies are clamping down on a lot of "fake news" sits and shitblogs.   But for advertisers, a click is a click, and a sale is a sale.  And people foolish enough to click on a shitblog sidebar ad are probably prime meat for them as they have already demonstrated gullibility.  This is why Bezos advertises on Breitbart.  Politics are fine and all, but money is money.

In a way, this is sort of a "brave new world" kind of thing.  You can post crap online and get paid for it.  Maybe you'll even become famous or at least internet famous and make a few dollars at it.   It is a more egalitarian system than in the past, where editors, producers, studios, publishers, and newspaper owners were the gatekeepers, keeping outsiders from putting up content, back in the days of paper and film.

Tenant Rental Scams

Do landlords intentionally scam their tenants?  Not often, but others will try to scam you as a prospective tenant.

A reader writes:
In your article tenant 101, you have mentioned scams committed by tenants.
I am in the lookout for a new place to stay as a tenant, can you tell me some of the scams committed by landlords?
This is an interesting question.  Scam artists usually thrive because they have no assets to attach, no fixed address, are out of the country, or have a corporate shell they hide behind.   You can't scam people very effectively if you have attachable assets, a business reputation to protect, and a name and address locally.   Of course, this doesn't stop a lot of people from trying.  Car dealers routinely rip-off people with the "put the tags on it tonight and negotiate tomorrow" scam - or at least they used to.   And yes, some landlords scam tenants merely by charging high rents, never doing repairs, and refusing to return security deposits.   We'll get to that later.

The really dangerous scams are often online and not perpetrated by landlords, but by people posing as landlords.   And usually, but not always, Craigslist and Western Union or prepaid debit cards are involved.

The classic Craigslist landlord scam is a posting for an apartment or house for rent, or a vacation rental.  The listing looks legit and has nice photos of the place for rent.   You've been looking high and low for an apartment or vacation rental and can't find anything in your price range!  Suddenly this listing appears and it sounds too-good-to-be-true.   And of course it is.  But you are blinded by the "deal" and want so much to believe that you get roped in.

You respond to the ad and a day later (again, with these cons, you make the "Mark" wait, as it builds tension).  The "Landlord" starts the "story" about why the property is so cheap.  They need to rent in a hurry, and they are out of the country for a while.   So if you want to reserve the property, you need to send money right away, by Western Union or Blue Dot prepaid credit card.

He may send you official-looking rental documents or leases.  He even might ask for a credit check (and sell your SS number to others to scam you later).  It all looks legit.

If you pay, the fun just begins.   For the vacation property, you fly out there and arrive at the destination, only to find that someone is living there and no, you can't stay.   It turns out the "Landlord" is in Nigeria, and he just scraped some photos of the place from a Real Estate Listing or VRBO.   You are now stuck with no place to stay, and no, you can't get your money back.

In other instances, the "Landlord" knows the property is vacant and tells you to move in, but that since he "lost the key"  you'll have to have the property re-keyed.   The real owners of the house come home from vacation and find you living in their house.   The nightmare is for them, of course, as they have to evict you, which they will do.

The fake "Landlord" may even show up at the property to show it to you - after he has broken in and changed the locks.  He collects a security deposit and first month's rent - and it is such a deal you overlook the fact he was insisting on cash.   He leaves and the real owners come back a month later.   This is especially true in areas with vacation homes which are occupied seasonally.   The gardener or lawn guy or maid may know the owners are out of town for two or three months, and they share this information with their cousin who just got out of jail.   Hilarity ensues.

For the tenant, these cons are easy to avoid.   If something sounds too good to be true, it probably is.  People asking for huge payments up-front are often cons.   Cash is always suspect.   You can check quite easily online, if you are unsure, by looking up the tax records for that county and seeing who the real owner is.   But bottom line, ads on Craigslist, sadly, are not to be trusted.   Every so often I go on there to look at stuff, and it never ceases to amaze me that in every category, there are listings for boats, cars, and RVs that don't exist, offered at low, low, prices, in ads that make no sense whatsoever.   And people keep sending in their money.   Real Estate is just another example.

By the way, people have been snookered in SALES of homes this way.   They see a house for sale and the price is too good to be true.  It is "for sale by owner" and the owner meets you in front of the house.  He writes up a contract and asks you for a large down payment - as he has another "prospect" ready to buy any minute now!   So to avoid losing this "deal" you hand over thousands of dollars to buy a house he doesn't even own.    Only later on, when you try to close the deal do you find out his cell phone number was a "burner" and he is no where to be found.   Oh, and by the way, six other people thought they bought the same house and also gave down payments.   The real owner, when they show up, are not amused or sympathetic.

Again, this is easy to avoid.  Stop believing in something-for-nothing.   Don't write a contract and hand over money until you see proof of ownership (and proof of identification).   Use a closing company or attorney, not some contract signed on a trunk lid.   Most "good faith deposits" are kept with the attorney or closing company, not the buyer personally.   Anyone asking for cash is a crook, period.

Those are obvious frauds and cons that are perpetrated by fake owners of properties.   But what about frauds, scams, or cons by real landlords?

Well, again, a real landlord has attachable assets and can be sued.  So they don't outright perpetrate fraud so much as they might just rip you off.   When I was younger, I had a landlord who refused to return a security deposit, claiming I had not provided sufficient notice when I left (the lease expired, and there was no notice provision in the lease).   I went to small claims court, won, and he never paid, and the amount was so trivial that I was never able to collect.   Not paying back security deposits is probably the most common rip-off.   Particularly if you left town, they will assume you won't take them to court, and just keep the money.

When in doubt, though, call first.  I had a tenant leave a property and a month went by and I forgot to send him his check.  He assumed I was trying to scam him, when I had merely forgot.  If he had just called me...   I gave him his deposit back, with interest, of course.

The landlord may, in good faith, believe that your damage may warrant keeping the security deposit while you may believe otherwise.  This may not be a rip-off so much as difference of opinion.   I had one tenant who decided to run his barbecue grill next to the vinyl siding.   He also let his dog urinate all over the house.   Well, he didn't let the dog do this, it just happened.    We reached an agreement on the security deposit, after I showed him receipts for the work done.   We were both reasonable about it.   Others, on both sides, are sometimes unreasonable.

Another rip-off are landlords who are slumlords.   Our cleaning lady had an apartment where the kitchen from the unit above started leaking water into hers.   I was appalled to visit her and find the entire ceiling of her kitchen was missing, and a bucket was in the kitchen catching drippings from the plumbing above.   And the landlord had no intention of fixing this.   This was in a 300-unit apartment complex that rented mostly to illegal immigrants (many six to nine to an apartment!).   We went to the rental office and the bored clerk basically intimated that if we didn't like it, too bad.  And by the way, she'd all the INS if we complained or took legal action.   They just assumed our cleaning lady was illegal, which she wasn't.

And while it may seem to be a "rip-off" some landlords charge onerous late fees and require tenants to pay by money order if their checks bounce.  I lived (briefly) in such an apartment complex, and they were very strict with the tenants, as it was a kind of shady place and the tenants needed a lot of discipline.  If you were late with the rent, it was a $50 fee and if a check bounced, they would no longer accept your checks.

When I was a landlord, I avoided this problem by offering a discount for early payment rather than a "late fee".   Same deal, really, but by offering a discount, I'm the hero, not the villain.   Smart psychology - people like a "deal" don't they?  And if they pay late, the tenant is not being "bad" but rather just paying the standard amount.   Again, psychology.  I am not the stern taskmaster punishing tenants.   Of course, if they were 30 days late, then late fees applied and eviction proceedings would start.   I'm a nice guy, not a patsy.

So some landlords do skirt the edges of the law, particularly when they think they can get away with it.  But outright, wholesale fraud?  A lot harder to do, as most States have Landlord-tenant laws, and tenants do have rights (in some States, extensive rights) and Landlords have attachable assets.

As I noted in my Tenant 101 posting, landlords are always looking for good tenants.   If you are a good tenant, pay your rent on time, and don't cause trouble or damage things, you are an asset and a resource to your landlord.   If you are late on the rent, cause the police to be called, annoy other tenants, break things, park your car in other people's spaces, leave your laundry in the community dryer for three hours and shit like that, well they just assume you left.

You do have a lot of control in this situation - more than you think.   The types of people who bend my ear about "asshole landlords" often have another side of the story they don't want to tell me.   But when I start asking pointed questions, well, another side emerges.

As a landlord, you don't make money with empty apartments.  In fact, you go broke.  Be a good tenant, and you will be in high demand.