Daily Intent

Santa Barbara, CA
If you are a regular reader of the Market Street Report, you may have picked up on my intense enjoyment in finding opportunity when others are seeing doors, walls, fortresses and everything negative.  Moreover, you may have picked up on my desire for Americans to rid themselves of entitlement, enrich our lives in knowledge, and sharpen our financial astuteness.

This week’s focus on innovation and opportunity centers in on gift cards: a world that we have all come to love and hate.

As a gifter, there is no easier way to ensure the recipient gets what they want.   There are only two decisions to make — location and price. Pottery Barn or Restoration Hardware?  $50 or $100?

As a recipient, grandma’s taste of what sweater you’ll be wearing over the next four frigid months of winter might be just slightly different than your fashionable taste.  The gift card has been a way of solving such generation gaps.

Adam Smith would pat you on the back for gifting in such a manner.  Free market.  The one that knows best of their needs is the individual.

But what happens if grandma thinks you will like a sweater from Sears and you wear nothing but the finest Lululemon?  Or, you are like me, and you are walking down State Street, meander into Barnes and Noble, find a book you want, then realize you have a gift card at home to cover the entire cost.  Now you are a little angry because this is the third time you’ve bought a book at Barnes and Noble while your gift card has been on the shelf at home.

Oh, but wait.  The fourth time you remember your card.  The card value, $25.  The book value, including tax, $22.50.  Excellent.  Entire cost is covered.  But what about the $2.50 remaining?  You could buy a bookmark with feather, strings and a dream quote or leave money on the table.  Tough choice.

Might there be a better way?

These businesses sure hope not.  They are make a killing on gift cards for doing nothing.  In 2007, $97 billion worth of gift cards were purchased.  It is estimated that 2 - 10% of these sales go unused.  That means retailers profit $9.7 billion in one year of gift card sales.  No product was made.  No product was sold.  Just a plastic card that 10% of the time gets shoved away in some drawer, along with many others.

Pain.  This is where ingenuity and opportunity come in.  Cue Plastic Jungle.  http://www.PlasticJungle.com

Plastic Jungle allows you to buy, trade, and cash in on gift cards.  That Sears card grandma gave you?  Yeah, you can trade it or get cash for it.  How about a small remaining balance? Cash it in.

The use of this site might not lead to millionaire status, but it will sure have you looking better and saving more.  …you may want to include them on your list of things for which you’re grateful.  Happy Holidays!
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LEARN
Buzzword: David Hasselhoff Index
“A stock index comprised of companies associated with actor David Hasselhoff.  Investors might correlate the popularity of David with increased sales surrounding his related products.  Firms involved with Hasselhoff endorsements, advertising, movies or productions are included in the index.

Compnaies included in the index include General Electric, which is the parent company of NBC in which Hasselhoff stars on America’s Got Talent.  Firms in this index generally show consistent growth due to the ‘Don’t Hassle the Hoff’ Factor.”  -Investopedia.com

  Six Points to Ponder:

   1. Four Fs Flat.  The Markets are flat coming off a short week stuffed with friends, family, football and food.   - The Dow is trading  at 10,455, S&P 500 at 1108 and the Nasdaq stands at 2188.  Oil is level at $77/bbl.
   2. Sustainability Stagnation.  Private sector job cuts were down, but not as much as projected.  The economic recovery continues to appear on its way, but rather slowly.
   3. 30,000 Soldier Surge.  President Obama announced today we’ll be taking aggressive steps over the next 18 months to end the Taliban pursuits in Afghanistan.
   4. Australia Says No to Cap-and-Trade.  An attempt to be one of the first countries to adopt a “cap-and-trade” system to lower green house gas emissions failed by narrow margins.  The leading opponent said they should wait to adopt until America does so.
   5. California Tax Deflation. Come January, for the first time in 30 years, California will allow property tax bills to reflect property deflation.  Homeowners cheer, but schools lament.
   6. Two pounded and one took a beating.  The Santa Clara Broncos dominated the UCSB Gauchos, in Men’s Basketball.  The New Orleans Saints weren’t a very gentile host to the long-standing throne bearers, New England Patriots.  And Tiger Woods  woke up in a food coma daze, or was it?

Positives:

    * Consistency.  Going into the holidays, consistency of the markets is much better than seeing your portfolio dwindle.  Consistency should allow you to budget properly.  Lowering job cuts will give you more confidence in your near term future and, thus, ability to plan.
    * The WCC Men’s Basketball conference is proving to be the most surprising division of the year.  Portland walloped UCLA then won a respectable tournament.  Gonzaga nearly brought down the number two team in the nation Michigan State, then later won a solid tournament in Maui.  Now Santa Clara made UCSB, previously undefeated, look like a high school team.  Go Broncos.
    * The Saints and Colts continue rolling.  Both remain undefeated heading into the home stretch of the NFL season.  Drew Brees is playing out of his mind.   No longer are they the “aints”, they’re god’s team, the “Saints”.

Negatives:

    * I’m indifferent to sending more troops.  I can see the positives and negatives.  I give this one a negative for the sole reason of the first deployment of the 30,000 troops will begin this month.  They will be leaving their families behind during the holidays.   Be grateful.
    * Cap-and-Trade would offer many great benefits to the Australia.  They stand to be affected more than most countries by global warming.  It appears politics played the biggest role in it not passing rather than economic reasoning.  The idea behind it is giving a set number of credits for pollution.  If a company needs more credits, they have to buy them.  In buying them, they are faced with the decision of whether the extra pollution is worth the extra expense.  As demand grows, prices are driven higher.  The ultimate belief by Libertarians and most economists, is this is the best system to incentive businesses to limit their pollution.
    * It was a sad day hearing anything negative could surround Tiger Woods.  It is a good reminder that he is just as human, outside the golf course, as any of us.

GET INVOLVED
Local:

Santa Barbara International Marathon and Expo.  This weekend!
Where: The Expo is at SBCC.  Race Start is 1 mile West of Home Depot in Goleta.
When: Expo - Saturday, December 5th. 9am - 6pm.  Race - Sunday. 8am.
Cost: Expo is free.  Race is $130
Why:   Marathon Expos always have discounted athletic attire.  Buy holiday gifts.  Come visit me at booth 311.  And the marathon race days are always full of energy and excitement.
For other fun ideas, go to www.lovemikana.com

Live and Be Well,

Jeff Bochsler