Posts Tagged “money”
Ross • 1st Mar 2010 • Uncategorized • air miles, airmiles, arbitrage, california, economics, finance, hacks, money, pudding, reward, saving, usa
Why the museum of arbitrage? Well, because if arbitrage existed now, I would be doing it rather than writing this.
In 1999, UC-Davis civil engineer David Phillips was grocery shopping when he noticed something peculiar. Healthy Choice Foods was offering frequent-flyer miles to customers who bought its products. But a 25-cent pudding would bring 100 miles — the reward was worth more than the product itself.
Recognizing a good thing, Phillips bought 12,150 servings of pudding for $3,140, claiming he was stocking up for Y2K. Then he enlisted the Salvation Army to help him peel off the UPC codes, in exchange for donating the pudding.
He mailed his submission to Healthy Choice, and to their credit they awarded him 1.25 million frequent-flyer miles, enough for 31 round trips to Europe, 42 to Hawaii, 21 to Australia, or 50 anywhere in the United States.
There’s no downside. Phillips also got Aadvantage Gold status for life with American Airlines, which brings a special reservations number, priority boarding, upgrades, and bonus miles. And he got an $815 tax writeoff for donating the pudding.
Lifted wholesale from Futility Closet.
Ross • 9th Nov 2009 • Learning, Living • finance, investing, money
I sold out of Tesco in October at 407, having bought them at 321 exactly a year previously and enjoyed two dividends in addition to the 26% rise in share value. It was my first investment. Of course, commissions took their toll from my profit: although I try to keep these as low as possible, I’m playing with hundreds rather than thousands, so it’s hard not to lose a few points to the brokers. However, perhaps that’s a good thing as it discourages frequent trading, a sure fire way of making brokers rich at your expense. The asymmetric brokerage costs that I now have arranged (£1.50 flat to buy, £10 flat to sell) are a good incentive to stay in the game too. Despite this, not staying in the game is my first investment mistake. Tesco passed 420 today, making 321 seem even more of a steal.
Ross • 6th Aug 2009 • Living • credit cards, finance, money
On the back of a general crackdown on credit card benefits, American Express have just changed the cashback rates on their Platinum credit card. Running the numbers, the new rebate schedule looks like this:
You now need to spend £4.5k per year to make the card pay. This is quite difficult if you play multiple cards off against each other, especially given that AmEx are probably the least widely accepted (after Diners’ Club?). I think that these changes will lose them a lot of smarter customers: good for them, bad for me. Note also the new £20 dormancy charge. Putting the card in the back of the wallet is not an option.
Ross • 5th Aug 2009 • Thinking • economics, finance, money
Will Wilkinson seems to have sparked off an interesting debate on the value of money, which I picked up thanks to The Economist’s Free Exchange blog. I should really read Will’s blog directly, but although the posts are generally high quality, they are too long for my blog-browsing habits, so I dip in only when interesting questions here are picked up elsewhere.
The interesting question in this case is:
Suppose you made a million dollars last year and put all but $50,000 of it in a shoebox. Now imagine you lose the box. What good did the $950,000 do you?
I have spent only ten minutes thinking about this, but I would evaluate access to cash as having ‘real option value’. In other words, the value of the shoebox is the value of the options it gives you: to retire, to start a new business, to travel the world.
This real option value will vary from person to person. $950k won’t increase the real options available to Bill Gates, but it would make much more of a difference to the options open to me (even at $1.70 to £1). Therefore, I figure that the value of money to an individual will vary in real option terms.
Real options will have value, even unexercised. That’s why people pay more for flexible travel tickets. As such, the money in the box has value… up to the point you lose it. Afterwards, no value. However, I don’t think the eventual loss of the box means that it was never worth anything. Okay so the money was sitting in the box, but it wasn’t doing nothing. Even in the box, it was storing value and holding open potential options – that is the unglamourous job of money. Its loss matters.
Ross • 18th May 2009 • Thinking • advertising, banknotes, economics, finance, money
An idle thought: apart from the vulgarity, would there be any disadvantage to allowing advertising on banknotes, and might this note help government fund printing them? Advertisements could be restricted to a small, standard area, so as nobody could be in any doubt as to them corrupting the general recognition of the note, and the frequency with which such advertisements changed may even prevent fraud, by forcing fraudsters to change their designs regularly. I know that in many places (like Scotland and Hong Kong) private banks issue notes bearing their logos – so why not go all the way?
Ross • 20th Jul 2008 • Learning, Thinking • charity, development, finance, money
I have been a long-term lender on Kiva, an innovative microfinance portal that matches entrepreneurs and their projects in the developing world with charitable people (generally) in the more developed world. I like their model. In just over two years, I have funded almost 20 businesses across three continents. I have earnt no interest on these loans – but have seen it as a creative and sustainable means of charitable giving. The three great things about Kiva are that I choose who benefits from my money; that recipients have no incentive to request more funds than they need; and that I am constantly updated about the entrepreneur’s progress. I have never had any defaults. This last sentence may not hold true for much longer. (more…)
Ross • 1st Jan 2008 • Learning • finance, investing, investment, money
Three rules from John Kay, in the January edition of Prospect:
- Pay less [primarily commissions, fees, etc.]
- Diversify more [between asset classes and within them, remembering that indexes are not diverse]
- Be contrarian
These may be my financial New Year’s resolutions.
