Random Thoughts in Marketing

HTC Thunderbolt 'Ergonomics' Review

noreply@blogger.com (Andrew Finkle) — Wed, 23 Mar 2011 15:41:00 +0000

I have been dyeing for Verizon Wireless to offer 4G (LTE) phones since late last year's announcement of their coming availability. For the past few years I have been using the Motorola Droid. Though I have seen phone's that I thought were better become available, I didn't see anything revolutionary coming up short of a phone that took advantage of the 4G network. Even 4G by itself is not revolutionary, but I considered a 10x increase in speed to be enough of an incentive.

The question I posed to myself last week was do I buy the HTC Thunderbolt just released ($250 with two year plan), or wait for Samsung's 4G entry (rumored to be available in April), or summer when Motorola's dual core monster becomes available?

Well, I eliminated Motorola out of my equation all together. The deciding factor here is that I learned that they somehow were hardcoding (locking down) the bootloader, such that I would not be able to root the phone (important to me, not necessarily to you).

Long story short, I didn't want to wait any longer, and plunked down the $250 for the HTC Thunderbolt. The following is a review of the HARDWARE/ERGONOMICS only - a the operating system is mostly what I had used on the Motorola Droid (Android).

Because I had been used to my Motorola Droid for a long time, it will likely take me some time to get used to the new form factor (in all fairness to HTC). Depending on whether or not you had previously been using one of the so called *Hummer* phones might have it feel different in your hands.

My initial reaction to the HTC Thunderbolt's feel in my hand is that the weight of the phone feels heavy, but in a good way - as not to feel cheap. Though it's size is big enough as to be slightly uncomfortable. Again, in fairness to HTC - this might simply be that I was using a smaller phone for so long...time will tell. Another, and bigger complaint that I have with the HTC Thunderbolt is their choice of placement of the locking button (this is one of only two physical buttons on the phone, located on the top, and top of right side). One of the nicest thing about a really great smartphone is the ability to use it entirely one-handed. If they had only moved this one button further to the right along the top, this would have gone a long way to making it much easier to use with one hand (I can still use the phone one-handed, but it is awkward). I know you're going to think that such a minute detail is knit-picky, but isn't the 'devil in the details'?

The same 'one-handed ability' has only come up one other time - equally annoying - if not more so. This is when I tried to use the camera with one hand. With my Motorola Droid, there was a choice for me to click the shutter. I could either 'tap' on the screen, or as I preferred to, click on a physical button located on the outside of the phone. The HTC Thunderbolt only allows for you to 'click' the camera's shutter by tapping on the screen. Again, not impossible to do one-handed, but just awkward.

The biggest form-factor (ergonomic) mistake on the HTC Thunderbolt is simply unacceptable, as it makes no sense. The HTC Thunderbolt ships with a very cool kickstand built into the back. This would be a perfect *self-dock* however, The HTC Thunderbolt has it's USB (power-input) jack on what would become the bottom surface, should you use the kickstand. This makes using the Kickstand simply not possible while powering the phone.

The first HTC Thunderbolt I received was defective. Specifically, when I held it to my ear, and people were speaking to me on te phone, their voices were coming through tin-ny / scratchy as if the speaker somehow had a small tear in it. The replacement phone fixed that issue, however it brought up something else of interest to me.

That first HTC Thunderbolt that I had for 2 days prior to returning it had really crummy battery life in my opinion. Certainly not what I had been lead to believe from other reviews, and the products own documentation. On the replacement phone, the battery goes all day, and then some!! I am not sure if I was just unlucky with my too issues, or HTC Thunderbolt has quality control issues. Time will tell.

Many have asked me if they should buy the HTC Thunderbolt. Having used it for only a week, I would suggest they at least wait one month for Samsung's 4G phone to come out. Having at least two phones to choose from makes sense considering the (few) cons I have pointed out above.

Stealth Mode?

noreply@blogger.com (Andrew Finkle) — Sat, 18 Sep 2010 16:49:00 +0000

This post is in reply to a Tweet by Fred Wilson (AVC) - who suggested that Stealth Mode is dead (or perhaps never should have been). His comment was basically that no company should be in stealth mode, nor does it help them in any way.

I will make this post short and too the point...Stealth Mode SHOULD remain alive and well. There are many reasons why Stealth Mode might make sense for your start up. In this day and age where no space is cost prohibitive to enter one should expect MANY clones. From the day you (publicly) launch, expect no less than one dozen students somewhere in India to clone your entire business just to get credit for writing their thesis.

I would ask the uber smart Fred Wilson this - When you are considering investing in a startup, do you post it publicly on your blog, or Twitter stream? I imagine not, as this would alert other (competitors) VC's to perhaps push you out of the round.

Apple ITab - 'There's a dock for that'

noreply@blogger.com (Andrew Finkle) — Thu, 21 Jan 2010 16:07:00 +0000

If 'There's an app for that' has been synonymous with the Apple IPhone, then the new tagline for the Apple IPad should be 'There's a dock for that'.

For some the Apple IPad will be their ereader. Fred Wilson just tweeted that he will likely mount it on his elliptical trainer. I have personally always wanted a WiFi enabled flat monitor to put on my kitchen refrigerator. When it is not showing the families shared calender, it might be my needed grocery list as bar codes flash in front of it from my fridge.

My Dashdock will mount it in my car...well you see where this is going. But what's really cool about mobile computing (I put this in the category, because it's really a 'smart' monitor) is what you can and will do today (that no one does yet);

My prediction is that within one year a combination of a smartphone and an 'ereader' type device will replace a desktop and or laptop computer for some. Apple IKeyboard coming next ....

Lastly, likely the most important item of news about the IPad is the repercussions it has for the Kindle. No- I don't think this is a Kindle killer, however expect Kindle 2.0 Powered by Android .....

What will you use your IPad for?

You can follow me on Twitter here.

How to set the blinking clock on a VCR

noreply@blogger.com (Andrew Finkle) — Sun, 17 Jan 2010 15:17:00 +0000

Software developers - You have a problem. Having had my hand in product development (as a non-developer) while at RoboForm , ToneThis , Avant Browser I learned something about software developers. Most of them think in different terms than us (the consumer). This IMO is one of the biggest mistakes that startups make early on - no non techies involved with the product.

This became clearer to me yesterday in not one, but two software install experiences. My friend Steven Groves was over my house watching the Cardinals get slammed yesterday, and we were exchanging recommended apps for our Android phones. At some point, Steven recommended 'Bump' as a method to exchange business cards. While I do think Bump will be an excellent solution, I found it's productecture to be horrible. At some point in the installation, I accidently 'told it' that I was someone else (I tapped on one of my contacts when trying to teach it my profile). This is actually VERY easy to do when you are using a haptic keyboard. Further, Bump decided that it likes a gmail email address & profile better than anything else that you have. Final outcome? It took me a half-hour (as well as a total uninstall/re-install of Bump) to teach Bump who I am. Still have not been able to teach Bump that I do not want to use my Google (GMAIL) profile - but at least I won $5 from Steven when I bet him he could not correct that.

The second piece of software was MindMap. MindMap was given to me (It's not an inexpensive piece of software) by someone whom I had done some bizdev with years ago, who works with the company. I have always been impressed with the very cool looking Mind Maps created with it, and had been pumped to make my own maps. Regretfully, after several tries I just could not figure it out. While it seemed to me that the intuitive way to create a new 'box' within MindMaps would be to simply right mouse click (apparently Mac users don't do this), MindMap takes no advantage of context menus, and instead uses keyboard keys such as 'Insert' that I never even knew existed (again pointed out by my friend Steven).

Moral of the story here? Consider having real human beings along for the ride during your development process - not just software engineers. Consider also having a video (ie Youtube) of your product being used. Video is the new product manual.

You can discuss this with me further on Twitter here.

Google Superphone ( Nexus One) ramifications

noreply@blogger.com (Andrew Finkle) — Tue, 05 Jan 2010 20:25:00 +0000

I watched Google's media event today announcing their new Nexus One Superphone. There was one large surprise - That it will be available on Verizon spring of 2010. Make no mistake about it this is a HUGE hit to RIMM's Blackberry phone franchise.

The Nexus One (and other Android phones/devices) will keep Apple's Iphone honest. This is great news for consumers who have a love/hate relationship with Apple. By offering a competitive device (a better device in some regards), Apple will now have to speed up it's product roadmap that has always remained closed, and proprietary. Possible changes that might be forced on Apple include - Allowing for the consumer to add memory, and swap out their battery as wanted/needed. Better and more powerful camera. A faster and more powerful processor. Ultimately, I believe Apple will need to license their Iphone OS - or face the same single digit market share they have VS Windows in the PC space.

For Motorola, Apple Palm and anyone else in the Smartphone space - this is the 'first shot across the bow' in commoditizing the Smartphone space, just like low end cell phone space has become. With an Open Source OS platform (Android) product differentiation becomes more difficult. Going forward the only way for Smartphone hardware guys to differentiate themselves will be via faster processors, better battery life, better cameras.

For wireless carriers (Verizon AT&T TMobile and Sprint) - Android has nasty mathematical consequences. For the first time, your customer is not necessarily locked into your network. More importantly, Android will accelerate the "ramp" to Superphone devices - which are HUGE consumers of data - hence Bandwidth. The amount of *new* CAPEX to keep up will not mirror the new revenue streams as new Superphone users come online.

Now for the suckiness.... As a consumer, expect to see the Wireless Carriers to start implementing tiered pricing (no different than the Cable companies have). If your streaming music or video, or doing all those fun things that Superphones allow for - get ready ...Your bills gonna be a lot more expensive in a year. All you can eat data will be dead.

You can discuss this with Andy further on Twitter

The Browser - It's all about being EVERYWHERE

noreply@blogger.com (Andrew Finkle) — Wed, 16 Dec 2009 13:37:00 +0000

The most recent Browser Market Share numbers came out today.

Microsoft's Internet Explorer 63.62%
Firefox 24.72%
Safari 4.36%
Chrome 3.93%
Opera and others - negligible

Having spent 6 years in the Web Browser / Toolbar space - it became apparent to me, that whatever company (Microsoft, Google, Firefox...) owns the browser - has won the game. The browser is after all, not only the first thing that you see when you go online, but it goes everywhere you go be it on your desktop, Mobile device, and very shortly, your TV.

Owning the browser space gives tremendous power. More and more searches being done directly from within a browsers toolbar (Think Google's entire revenue stream at stake). With the rise of Social media, it is only a matter of time before your Facebook, Twitter et al all travel with you - right in your browser (some are already there).

Today we are seeing all of these platforms (Web,Mobile,TV,etc) converge. There is a chess game developing amongst the giants to own the browser. Google, Apple,Microsoft and Firefox all recognize that not only must they own the desktop browser, but all of your browsers. The company that can provide a 'like' experience across all your digital platforms will be in the winners circle. Should you own a browser that is NOT in all of these different spaces, your toast. It's not just about having a similar UI across platforms - it's about moving all your data, experiences, likes and dislikes from one device to the next.

The *NEW* browser is on the desktop, laptop, mobile, TV and lastly, will be in the cloud as well. To the victor go the spoils...let the games begin.

You can chat me up on this further on Twitter- here.

Google Phone - Is an Iphone erghhh ITouch Killer

noreply@blogger.com (Andrew Finkle) — Tue, 15 Dec 2009 14:14:00 +0000

I have been giving a lot of thought to Google's forthcoming launch of their phone - as well as their disruptive model. I just don't see Google pricing themselves out of the market - so expect a VERY subsidized phone. If anyone thinks this phone is a threat to Blackberry or as everyone alludes to - Iphone, don't.

What no one is seeing though is that the Google phone WILL be a category killer...just not in Smartphones. What you are looking at IMO is an Itouch killer.

1) Will be priced competitively with an Itouch (I am guessing sub $200).

2) Can do everything an Itouch can

3) Can do what an Itouch can NOT ie Compass...GPS...Accelerometer... (everything an Iphone can do).

4) does NOT require a carrier (can be used WiFi only just as an ITouch can)

Don't get me wrong, I understand that this is not Google's intent, and they are looking at 'bigger picture' things. Just saying that the Itouch/Ipod franchise will be disrupted as an unintended consequence.

Anyone who does NOT see the real threat has their head in the sand.

Want to discuss this further? '@' me on Twitter here

I-Stage Phoenix

noreply@blogger.com (Andrew Finkle) — Fri, 09 Oct 2009 22:57:00 +0000

On October 19th, The CEA (Producers of Consumer Electronics Show -CES) will be Holding their I-Stage event here in Phoenix Arizona. The following start-ups have been announced as finalists in the competition;

Cubicvue LLC, CubicVue 3D Filter
Entourage Systems Inc., The eDGe
Immerz Inc., KOR-FX
Meld Technology, WholeHomeHD™
Regen Inc., ReNu™
Tenrehte Technologies, PICOwatt
Thinkeco Inc., the modlet
Thinkoptics Inc, iWavit™
Valencell, Healthset®
Zagg Inc., ZAGGbox
zero1.tv Gmbh, VooMote

After learning more about these companies, I will be following up on with - What they are doing right - and What they are doing wrong ... ala Business Strategy - Business Development and Marketing ...stay tuned. If you want to explore for yourself, and have a comment - please @ me on Twitter, or on this blog.

Apple Iphone & ITouch the NEW Point of Sale

noreply@blogger.com (Andrew Finkle) — Wed, 12 Aug 2009 15:44:00 +0000

Don't just think of the Iphone as a smartphone - more importantly do not think of it's baby brother the ITouch as a personal entertainment device. Start thinking outside the box.

These are the NEW Point Of Sale (POS) devises. For those not familiar with the term, POS - think of a cash register in a store, or one of those terminals where you swipe your debit card. In the future, the salesperson will ring up your order right there on the sales floor. Think I am talking years off ? -

I was in Las Vegas this past week, and possibly the coolest amenity the Casino/Hotel offered me was a free ITouch to use during my stay. Using the ITouch I am able to request more towels, order room service - even request my car from the valet. Check out? ...all via ITouch

If you like business, stocks and especially Marketing consider following me on Twitter here.

MORE Twitter Spam - From ME & U!

noreply@blogger.com (Andrew Finkle) — Sun, 26 Apr 2009 19:09:00 +0000

I recently posted about a *NEW* type of Twitter spam that will be a problem going forward (see my previous post) . This post is about an altogether DIFFERENT type of Twitter spam, and one you, me and especially Brands need to be aware of.

If you know my background, I am all about making products, and campaigns viral. But there is a proper way to do this, and a SPAMMY way. The devil is all about the details.

If you are part of the Twitterverse, than you already are likely familiar with needing to share your Twitter credentials with third party applications in order for them to function. Most of the time, this is safe. Some of these third party applications, in an attempt for them to become more viral are Tweeting on your behalf. One example is www.wefollow.com WeFollow is a simple directory of people who Tweet, that you can add yourself to. After adding yourself to WeFollow they REQUIRE that you Tweet to your followers that you have added yourself. I would prefer that they allow you to Opt-out from this, however at least they make it clear that you will be tweeting a message. So it is my (your) choice in the end, if you want to stop the process in order not to send out their viral Tweet.

A few days ago, I had the misfortune of entering a contest for a Hyatt Hotel in Chicago. They had hired a third party application to run their contest, "Twitter-Contest.com". Twitter-Contest did NOT make it clear to me that they were going to Tweet on my behalf. WORSE, and this makes me furious, They continued to Tweet their message to MY follows, using MY credentials every two hours, non-stop. To stop this, I was forced to change my Twitter password, so their spam app. could no longer Tweet their spam using my Twitter ID.

Spam apps. like Twitter-Contest.com RUIN it for the apps. (majority) that do NOT abuse using your Twitter credentials. As more and more third party Twitter developers make an attempt to be viral, be VERY careful about this *new Twitter spam*.

You can follow and discuss this with me on Twitter, I am @A_F

Twitter SPAM - It's coming

noreply@blogger.com (Andrew Finkle) — Wed, 22 Apr 2009 00:24:00 +0000

First you need to know, I am not picking on Twitter - nor am I singling them out. If you have distribution - email,IM,Social Network - ANYWHERE there is a mass audience you can be certain the spammers will get there. Now I have been threatening to do a post on how Twitter is all about the "Soft Sell" , and this STILL is not that. But this is how they will spam you, and why it is a threat to Twitter.

As an experiment, to prove a point - I threw out a bunch of random Tweets, with Keywords that I thought might be bait for opportunists.

[NOTE I had intended to upload a Photo to post HERE showing my random Tweets - but got a message from Google that I had exceeded my limit <---guess Google is doing belt tightening]

Bingo! Within 5 minutes of my Tweets I was followed by no less than 5 new follows - all having bios and links to websites that pertained to my different keywords.

While this is not a big deal now, Twitter WILL, no MUST address this and cut it off before it hits. We know that within the next few months, the same coders who sold spam it yourself programs in the 90's - will write programs that automate the process of spam-following. Then expect to see HUNDREDS of new follows a day - all trying to sell you something.

How do you think Twitter should address this? Agree? Disagree, have ideas? Please let me know - I am @A_F on Twitter

SMALL BIZ - U have the MOST to gain from Twitter

noreply@blogger.com (Andrew Finkle) — Tue, 21 Apr 2009 16:09:00 +0000

I am certain I wasn't the 1st to discover Twitter, but if you do a search on this blog for "Twitter" I certainly think I was one of the 1st to highlight how it would/could be used. What does surprise me though is that small biz has thus far been so slow to adopt.

Small business - Twitter offers you a tremendous opportunity. Here is how I recommend you use it (everyone can use it differently, the following is only ONE suggestion...I realize not everyone shares my views).

1) If you are a brand (ie a restaurant or retailer), I personally believe (like) your logo to be your avatar (not a picture of you personally).

2) For your Twitter name (not to be confused with Twitter ID), I like it when it is a 'human' name, but perhaps associated with a brand. Examples are Phil from Cisco. If you are a restaurant, perhaps your name might be John the Chef.

3) I personally do not like when a brand uses Twitter to only broadcast their specials, and news. It is not only OK for some of your Tweets to be conversing about things NOT at all related to your business. Want to tell me you walked your dog this morning? That's not only ok, it is recommended.

4) If you're a local business, there are ways to build a local following. When I recently moved to Phoenix, from New York, I used lots of great tools/websites to discover and follow people local to me.

5) Have fun in your tweets! People love to see your human side. If you're able to poke fun at yourself once in a while, that's a bonus. No one makes more fun of me, then me!

6) LISTEN - There are many tools that make it very easy to 'mine' Twitter for a potential new customer. As a real life example, I once Tweeted that I had a meal at Tarbels (a Phoenix restaurant that locals rave about), and did not enjoy it at all. It was not long after that I received a Tweet from the owner of another (competing) restaurant. This other restaurateur did a few things that made me want to visit. First, they defended Tarbels, indicated they knew Tarbels owner personally, and that my bad meal muse have been a fluke. Then they GENTLY (Twitter is all about the soft sell, but that's a future post by itself), suggested I might like their steak Au jus (I forgot the actual meal they recommended).

7) Once you have built your following (you should always be looking to build it continuously), consider having contests. The devil is in the details, but I like one's that add a charitable component. Don't make it to difficult, but suggest a few simple components to qualify;
1) They need to follow you
2) They need to RT a message (i.e Follow @RAYPIZZA RT - I love Rays Pizza - To win free Pizza for a month).

8) Hold Tweetups. This works best for a bar or restaurant, but if you're creative ANY business can do this. A Tweetup is telling people there will be a joining of other local Tweeple at a certain venue, on a future date. Consider offering SOMETHING to those who attend the Tweetup (i.e. 1st 10 people who show up get a free... or ALL who attend will get 25% off ...etc).

Please tell me YOUR story of how you use Twitter in your business. If you do not own a business, please tell me of your experience with a business that you follow.

BTW if You are new to Twitter, or have not yet read - This is a MUST READ:

Twitter Ten Commandments:

You can talk to me here on Twitter.

Twitter - Congratulations on your STARS (Here's Why!)

noreply@blogger.com (Andrew Finkle) — Sat, 18 Apr 2009 20:23:00 +0000

There is a lot of *noise* on Twitter lately with Ashton Kutcher hitting the 1,000,000 follows. Some people like it, some do not - most don't care.

But when you have the rockstars on Twitter (Kutcher, Oprah , Ellen Degenerous , SnoopDog , John Mayer, etc) and the follower counts are in the six-seven figure ranges you get something else. Stellar demographics from the sociosphere!. As just an example in it's simplest form, let's assume that I am an agency that will be launching an upcoming Rap Star, and his newest single. I will easily be able to data mine the social networks for not only 'mentions' of like artists, and other profiling - but sociographics that also include information like who I follow. I know this is only one more new piece of information, but in it's entirety, we finally have enough to create intelligent algorithms.

As I have alluded to in an earlier post (Facebook - Google's real competition), Social Networks will soon start to realize their true inerrant value. If you look underneath the hood at Twitter and Facebook, there's "Gold in them thar hills!".

Dude where's my Twitter?

noreply@blogger.com (Andrew Finkle) — Fri, 17 Apr 2009 03:11:00 +0000

OK - I have to admit that as someone who has been tweeting for a year, I was not threatened by Ashton Kutchers recent challenge (Calling out CNN that he would be the 1st to achieve 1,000,000 followers on Twitter). After all, I (we) can limit all the 'noise' by simply following who we want... If I want nothing to do with Ashton, I simply don't follow right? WRONG...

I am learning a few things that trouble me. First, I am hearing from MANY Tweeple that once you follow Ashton (as well as CNN), you can NOT unfollow. I am certain that Twitter will blame this on a bug, but come on! Wake up and smell the roses. @EV has a big announcement coming tomorrow... Anyone not yet realize yet that it is their first user to break the 1 million follower - and that this will not be broadcast on OPRAH?

It bothers me that we (The ORIGINAL TWEEPLE) have followed REAL people... yes, even celebs like @the_real_shaq who "@" you back - have a conversation, follow you, and are REAL. Now, all of a sudden with "Twitter goes to Hollywood" we are going to start seeing all these false celebs...many who have hired ghost writers, and the ones who ARE real...simply using Twitter as their tool to spam their fans.

The reason it bothers me, is that I am already experiencing a sea-change in the 'spamminess' of followers lately. EVERYONE has something to sell! I guess it is just the maturation of Twitter, but come on @EV do you have to be in bed with the whole scheme?

You can follow me (if your not a fraud) at Twitter, HERE

Twitter Sponsor Space confirmed

noreply@blogger.com (Andrew Finkle) — Thu, 16 Apr 2009 00:31:00 +0000

If you blink - You might miss it:

Acknowledged by @Twitter as a "bug" *WINK* .... But certainly points to a future revenue stream - at least in their thoughts

You can follow me on Twitter here

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To Mark or not to Mark....

noreply@blogger.com (Andrew Finkle) — Mon, 30 Mar 2009 23:35:00 +0000

CNBC would have you believe that investors want to eliminate the FASB accounting rule - 'Mark to Market'. This would allow our insolvent banking system to not have to raise additional capital - at a prohibitive / dilutive stock price - where the only likely investor to have that much cash would be the government ( totally socialiing our banking system). That thinking is, and would be wrong.

I myself, have been calling for FASB to "relax" mark to market rules since last year. Do not mistake relaxing mark to market with eliminating it. The market needs two things;

1) They want clarity, and accountability (mark to market is supposed to have provided this in theory).

2) They want marks that reflect HOW a company is holding an asset on their books (if they are holding an asset to maturity, and that asset is still paying as scheduled, it should not need to be markeded to market).

In reality, what the market wants (and what I hope we get from FASB) is both. We do it now with GAAP vs non-GAAP earnings... Think about it - Gaap vs non-Gaap allows us to view earnings per share for what they REALLY are (diluted via potential stock option conversions vs earnings without all those additional shares).

So FASB please give us what we want (and need);

1) Require banks to post a number on their Q's that reflect the CURRENT market for their assets - but only for the purpose of "clarity and honesty". From a capital requirement, let them mark it to a realistic date that they expect to hold that asset.

What do you think they should do? Let's discuss it on Twitter.

Banks! Misunderstood STEAL of the CENTURY

noreply@blogger.com (Andrew Finkle) — Tue, 24 Mar 2009 00:59:00 +0000

I first blogged about why if you did not believe in Armageddon you MUST be in bank stocks back in late November of last year (right when the XLF bank ETF bottomed that year in the mid 9's). Checking my stocktwits feed, you would read that I was at that time "nibbling in" using the XLF as my proxy for the banking sector.

Fast forward toa few weeks back, and you would see that I became VERY aggressive on the secotr, and I Stocktwit'ed that I was now in FAS (FAS is a Direxion "3X" levered ETF), a VERY agressive bet for anyone.

I really DID put my money where my mouth is (Pic below is an actual cut and paste of my Etrade account showing my FAS Position which I bought in the 2's and still own).

NOTE: I am NEVER a Pig (Bulls and Bears make money...Pigs get slaughtered) - But even being up 150% in my FAS position Banks are still CHEAP!

This is the perfect storm for banks. Unless you're from Mars, you HATE banks. No one understands banks. Last year, banks lost BILLIONS (each). So why buy banks? Well the first reason is the same one I reasoned back at the end of last year, and still maintain... Without Banks there IS no economy, without banks there IS no stock market, and without banks, there is ONLY Armegeddon. Think about this for a moment...No matter what you do either as a consumer, or as a business the banks have their hand in your pocket every step of the way.

Reason #2 - All those BILLIONS of dollars in write downs last year? ... Most will be reversed. Now that FASB/SEC is rethinking a more reasonable method for banks to Mark then Mark to Market, MOST of the previous write downs will materialize in the next few years as "write ups".

Reason #3 - Geithner "et al" have outlined a plan to get all of those toxic assets off the books of banks. Having traded markets professionally for 15 years, I believe this is tantamont to "sell on news" ... in other words, banks will rally at least all the way up till they actually rid themselves of these toxins.

Reason #4 - Forget the 10-20% of toxic bank assets and focus on the 80-90% of the GOOD ones... THINK for a moment... rats have NEVER been lower. Think you will not refi your existing mortgage, or loan? This is REAL $$$$ right in the bank's pockets!

Reason #5 - The Gov't has already spent over a TRILLION dollars, and will be spending TRILLIONS more... What sector (*hint it's investment banking) do you think will have it's hand deep into this stimulas?

Reason #6 - Expectations, think about it everyone is tuned to believe the banks will never ever earn another dime. This thinking could not be farther from the truth.

Reason #7 - Fatter then Oprah, One would think that the banks represented the epidimy of 'layoffs' but go into any bank branch and you will see that there are at least 3 customer servive reps available for every banking customer in line (what line?)! There is TREMENDOUS headcount that still will and can be cut at banks.

Reason #8 - Take reason #7 one step further...do we really need our bank to have a branch on every corner?? Expect to see many banks close many branches over the next few years (we still have over 85k + banks in the US, and we likely need not even half that number).

Reason #9 - Now that the market is closer to showing that a likely bottom has been put in, expect to see an uptick in corporate M&A's - Investment banking fees anyone?

Reason #10 - DON'T FIGHT THE FED!!! I know this last one is cliche, but really think about it... Money has never been cheaper, and the fed will continue to do everything in it's power to reflate... No industry benifits more from cheap money than the banking sector.

So does this mean straight up? No, obviously after I have made 150% being long FAS (Banks up an average 50%) a pullback would be expected. A good entry point now might be to start looking (entering) from a 50% replacement of today's move...perhaps low 9's for XLF or 7ish for aggresive FAS traders ( Look at the bigger picture though, and there is NO other asset class poised to move higher (percentage wise) from here than the banks. If I am wrong and the banks make a new low? ... God help us all.

Think I am off my Ghord? No Clue? Bring it...Leave YOUR comment or shoutout to me on Twitter:

@A_F

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Twitter (and Twitter Businesses) BE VERY AFRAID!

noreply@blogger.com (Andrew Finkle) — Fri, 20 Mar 2009 16:27:00 +0000

I was shocked to read about a Harvard Economist's study recently (Article is actually a hoax but read on - ). The study implies that the downturn in the economy is DIRECTLY correlated to a drop in productivity and tied directly to increased use of Twitter by people in the workforce.

While I completely laugh at this notion, if you have a vested financial interest in Twitter (either as an investor in Twitter, or perhaps you have/or are building a business based on the Twitter API), you need to know the history of Pointcast.

I first saw (used) Pointcast in 1996 and was blown away by it (as were most everyone else). Pointcast was a screensaver that "broadcast" news of interest to you into the screensaver. In 1997 Pointcast was all the rage. It's ubiquotous popularity reminded me of exactly the popularity and attention that Twitter is recieving now. Pointcast was gaining in numbers and popularity so quickly in fact that New Corp. very quickly made an unheard of (at the time) offer at that time of almost a half billion dollars to acquire Pointcast.

Fast forward a scant 2 months latter, and Pointcast is making headlines everywhere. Not because the service it offers is so cool - but because of all the corporate bandwidth (at the time bandwidth was both expensive and precious) the application was using. One by one until there was a groundswell, network admins. started blocking access to Pointcast. In short order the majority of corporate America had blocked access, and usage fell off a cliff. News Corp subsequently withdrew their offer, and Pointcast got sold on the cheap...going out on a wimper.

So for those whose financial lives depend on the Twittersphere...be aware, and never let go the lessons of history.

(BTW - I do not think Twitter and other social networks will be banned behind the firewall - but one should always be aware of risks that come out of nowhere)

Let me know what YOU think - You can find me on Twitter here.

Twitter - it's NOT "What you are doing?"

noreply@blogger.com (Andrew Finkle) — Sat, 14 Mar 2009 16:13:00 +0000

I have said in much earlier posts that Twitter needs to do a better job of explaining themselves better to new users. I recently saw a stat that as many as 68% who sign up (or visit) Twitter never come back. And recently as this morning I saw an CNN anchor poking fun (she didn't understand WHY anyone would want to know that you just choked or coughed while having lunch).

Twitter at some point in the past few months must have read one of my older blog posts - and subsequently, they posted a video on their home page to explain how Twitter works for new
users.

.

Though this is a good first effort, they should realize that the TRUE value of Twitter is not always asking or answering "What are you doing?". While anyone is certainly free to use Twitter how they want - I can not help but think that for me the better Q&A is "What do I find interesting" or "What do other people in my 'trust' network find interesting?"

There is a key difference between the two, and though I welcome both, I tend to 'filter' out the noise. Once you build your Twitter network you will find that it becomes an invaluable source and wealth of information.

Using my own network as an example of this - I follow other people within my range of interests (Entrepreneurs , Marketing , Venture Capital , and Phoenix Arizona (since I now live here). How has Twitter helped me?

Using Twitter, I immediately know of almost every industry, or conference event. When I can not attend them, people I follow usually do - and do a fantastic job of "micro-casting" the event. It is almost as good as being there.

Using Twitter, I actually feel like I know people here in Phoenix. I have only attended a few network events - but there are MANY TWEETUPS and if you ever get the opportunity to attend, you will likely find as I have that 'face to face' the same people you have been tweeting with are just like friends you might have made using other methods in the past (i.e. childhood friends,school friends,etc).

Brands on Twitter are only beginning to scratch the surface of how they can use Twitter. If formally they marketed by sending out a press release - their new press release will be TWO WAY, VIRAL, and interactive.

Small business likely has the largest opportunity of all to leverage Twitter - and this will be the focus of my next post... You can be *alerted* when I blog next by following me on Twitter

Tricks to finding employment

noreply@blogger.com (Andrew Finkle) — Fri, 13 Mar 2009 16:59:00 +0000

Everyone who is, or has looked for a job (especially in this tuff economy) already knows job sites ... i.e. craigslist , Hotjobs , Monster , Careerbuilders , etc (Indeed is the best).

If Twitter is one of the tools you are using, you likely already know some of the key players there i.e. - @employerbrander @jobangels @jobshouts @ @jobhuntorg @jobsnob etc.

So These three tips will hopefully be an "extra" that you might not have thought of in your job search.

Tip ONE:

A picture really does say a thousand words, and most recruiters and HR people now days will LOOK at your online profiles - even if they request a resume. Consider spending a few dollars to have head shots taken professionally. If you can not afford professional head shots you at least need to make certain that in one of your online profiles (i.e. LinkedIN or Twitter) you look not only well groomed and professional but MOST importantly SMILE. I see a lot of online profile pictures that even though the intent might have been to look serious and professional - appeared to look "glum". NO ONE wants to hire a downer...even if you're feeling down about your employment situation make CERTAIN YOU DO NOT SHOW IT!

Tip TWO:

The early bird gets the worm. Here is a clever method to locate businesses that WILL be hiring BEFORE THEY EVEN POST THE POSITION!! Every city should have a business paper, or magazine (Here in Phoenix Arizona they have "Arizona Business") with all the listings of new business incarcerations as well as newly leased commercial space. [ I am certain there must be online services that provide this-if you know of any PLEASE leave the link in my comments section] These listings provide an excellent source of both newly forming businesses and businesses that are opening up new locations - or perhaps expanding. This will usually give you a multi-month lead time over other job seekers. Once you "filter" which businesses might be relevant to your experience put it to work using the next tip.

Tip THREE:

I am a hunter by nature (having worked as a stock broker for 15 years) and now with the advent of the Internet you have NO EXCUSE for not being able to locate a company insider. When all else fails try out Jigsaw (An online repository of business cards that you can search via location/title/company/etc) a "pay per business card" website.

Do not just hunt for "HR" people - but search within those companies for your peers as well. So as an example, if you are in sales - hunt down not only other sales persons - but the sales manager as well. Once you have located some goto guys - use the next tip.

Tip FOUR:

When I actively searched for a job, I would send out as many as 20 cover letters, resumes or introductions daily - ALL BY EMAIL. There is a better way. First thing you should do with those "goto guys" you earlier located is to search for them on the various social networks. LinkedIN is the best resource, however Twitter and Facebook can also work. LOOK and SEE if you have any common friends - after all NOTHING works better than being personally introduced when it comes to getting an interview.

Even if you do not find an "introducer", take note of their personal info (ie. there interests and hobbies) and see if you can find a commonality there. Once you have taken these steps consider the next (and last) tip.

Tip FIVE:

Remember earlier I mentioned I had sent out all my introductions and cover letters via email. That is ok, however please consider that for every position available there are likely HUNDREDS of others that are sending their resumes via email. Think about that...the odds are stacked against you right from the start. DO NOT BE AFRAID TO GET ON THE PHONE AND CALL THEM HUMAN TO HUMAN. I know that may sound strange, but many will appreciate that you made the extra effort to call. Especially if you are in a sales related position (many are) - they will appreciate that you are not afraid of the phone.

Good luck to all of you - I have been unemployed and it is not fun, and this time it is likely more difficult than ever. You will need to do EVERYTHING you can to get an edge.

PS - Don't forget to say "Hi" to me on Twitter.

The WallStrip Edge - Book review

noreply@blogger.com (Andrew Finkle) — Tue, 03 Mar 2009 17:57:00 +0000

If Investors Business Daily's William O'neal (famous Momentum Investor) & Warren Buffet ("Buy what you know") had a bastard child - It would be Howard Lindzon.

In this blog post, the simplest of summaries, this is Howard Lindzon's secret to successful investing in his recently published book - The Wallstrip edge - Using Trends to Make Money- Find Them, Ride Them, and Get Off.

The Wallstrip Edge is only the second investment book I have ever read. I found it comforting that the one book that Howard Lindzon highlights in his book is that one investment book that I had read (I read it immediately upon receiving my Series 7 right before the crash of 1987). Reminiscenses of a Stock Operator The Jesse Livermore story penned back in the 1920's and also a MUST READ.

The Wallstrip Edge explains the how and why to;

1) Identify a trend that you are PERSONALLY familiar with (examples include Google,Apple,etc).

2) Wait till the underlying stock price makes an all time high - only THEN get on board.

3) Ignore valuation - (Howard makes an excellent and compelling commentary of why valuation does not and SHOULD not matter) and instead "ride the trend".

This is the formula Howard uses that enables him to find those rare winners that are able to move THOUSANDS of percent. The book goes on to explain his method for exiting a stock (gradually selling into the strength over time so as not to be a *pig*).

The only points in Howard Lindzon's book I did not personally agree with were his opinion that investors should not "short" stocks (downtrends are trends after all). I also do not share his view of not using technical analysis. But it is refreshing to learn that Howard Lindzon is part of a *new* breed of investors - not because of his investment philosophy but because of his real time transparency via Stocktwits. If you have been able to utilize Howard Lindzon & Soren Macbeth's excellent Stocktwits - you will see that the REAL Howard Lindzon trades both long and short. He also shows that his natural instincts for entering and exiting stocks is superb. This is something that can ONLY be learned from experience- It is an "art", not a science and it is here that Howard Lindzon shows that he is a true artist.

I highly recommend this book to anyone who has any vested interest in successful investing. Everything that Howard Lindzon explains in his book just makes sense.

Let me know what you thought of the book - "@" me on Twitter

Open Letter to Twitter

noreply@blogger.com (Andrew Finkle) — Sat, 21 Feb 2009 00:10:00 +0000

Twitter will be the most successful NET company EVER. Let me say that again... Most successful ever. They will be the largest digital infrastructure (see an earlier post re Twitter is the Train Tracks of the 21st century) with the exception of the Internet itself.

I am writing this open letter because I believe that Twitter is successful in spite of itself. Management (IMO) has made some assumptions based on THEIR expectations - that are just wrong. When reading this, you might not agree, or you might agree with one point but not another. Regardless - I would LOVE to hear your comments or your Tweets either way.

This started when after following my 2000th person, and trying to follow #2001 I was unable to. There was no explanation...I just clicked on the follow button and nothing happened. This is fail #1...If you block at 2000 follows HEY at least send me to a screen telling me WHY I can not follow. For a week I was emptying my cache, reinstalling browsers, etc wondering why clicking the button did not work.

Fail #2 - Once I realized this was an intentional policy, I just assumed this was in some way to stop spammer accounts. I also assumed that whatever their "algorithm" for this was just flawed, and would improve over time. You should note, that up until last week my follow to follower ratio was around 1000/1500. Not a profile of a spammer. I also note that my perception (whether or not you agree) of accounts where there is a 1/10 follow/follower relationship is that the person has that "rock star" image of themselves and that they Tweet mostly to feed their ego...not for me, but I guess that works for others.

Me? I like to follow who I want. It is a RARE occasion when I would not follow someone back immediately (If after following I did not find benefit, I would simply unfollow). One of the best parts of Twitter (up till now) is that I can control WHO and WHO I DON'T want to follow. <--- This to me is the BEAUTY of Twitter, and surprisingly (I was FLOORED) that Twitter management doesn't get this! This was my email to @EV:

"...I do MANY charitable things on Twitter, as recently as this past week via Twestival – and next week I am bringing a campaign live on twitter (I am doing this free) representing a 12 year old blind boy who will be climbing Mount Kilimanjaro. You have no bigger fan who RT's and Tweets all the good stuff. Witness my latest blog post "10 Commandments of Twitter" which must have been good because it has been RT'd like crazy...OK so this is what I need from you. I have a 2000/1500 follow to follower ratio …I am OBVIOUSLY not a spammer …please grandfather me in until you offer it as Freemium. Bad to just lock me up..."

@EV 's Reply:

"...We don't remove that for anyone anymore. It sounds like you want to follow more people to get attention for your account. The follow limit is there exactly to restrict that kind of behavior. People do not appreciate being followed for that reason. Sorry. ..."

Ev.

WTF? FAIL #3 is who cares WHY I want to follow someone? Twitter has thrived on being OPEN - Yet you dare to DICTATE what/who/why people choose to follow someone? Since when does Twitter management speak on the behalf of their Tweeters? The beauty of Twitter is that if I found someone followed me just to "get attention for their account" AND I decided that I did not like that - I have MY OWN choice to simple unfollow that person.

FAIL #4 Twitter is not a governemnt - There is no and SHOULD NOT be a "lower class" "middle class" and "upper class" So please explain to me why MANY on Twitter aka the "Twitteratti" follow 10's of thousands i.e. jowyang , chrisbrogan,etc <---(Disclaimer they have done nothing wrong I only mention them because they are in my network and I am aware of how many they follow ).

For any of you who want to know why I want to follow more than 2000 you should note how I (everyone of us is differant) use Twitter:

1) I originally followed anyone I could find in the Social Media space ... This is an interest of mine, and also my proffession.

2) I also follow my personal friends and family...think of this as yet another group.

3) I recently found myself moving to Phoenix (where I knew nobody) from NYC - So I reached out via Twitter and followed everyone in Phoenix that I could. Had I not been able to do this, I likely would not have the new friends hear, nor proffesional oppertunities I have created via Twitter.

So I ask YOU to leave your comments here if you agree - more importantly if you think I am wrong. Most importantly if you DO agree, please Tweet @EV @Jack @biz and @Twitter:

"Let my Tweeple Go" #donttellmewhotofollow" - and PLEASE RT (if you agree)

I can't follow U back, but you r welcome to follow me @A_F

Twitter 10 Commandments

noreply@blogger.com (Andrew Finkle) — Tue, 17 Feb 2009 17:17:00 +0000

I saw God the other day - he had just come down from the mountain (OK, so it was Camelback Mtn) and Tweeted to me in my sleep. He told me he had come to bring me the 10 Commandments of Twitter Here they are (in no particular order):

First Commandment

OK, for those who are Newbies on Twitter - you're forgiven, but only on day one. Twitter gives you a really ugly brown Twitter avatar by default. Change it, this goes a long way toward showing a "personality" behind a Tweet. I personally like real pictures of you however in some cases logos can work better for a brand.

Second Commandment

OK, the point of this one as I interpreted it is that you should never take yourself to seriously. It's ok to have typos on Twitter. It's ok to let your guard down and show emotions that you experience in real life. Let your Twitter network know the person behind the Tweets.

Third Commandment

Ya, ya I know some of you don't agree with me - but I follow very few people that have more than a 1 to 10 follow to followers ratio. One of my favorite aspects of Twitter is the engagement. If I can not have a TWO way conversation with you, your probably all about "you" anyway. Use an email list or blog instead.

Forth Commandment

When God shared this one with me, I think it was advise for a brand (be it personal or professional). It is very easy for people to "put you on the defensive". Even more so on a social network like Twitter. If someone tells you your brand (product) is crappy, or they experienced crappy service - LISTEN and learn. Although it is easy to just defend i.e. - "My product is not crappy, you must have just been having a bad day." Try asking them why, or what about their experience they found unsatisfactory.

Fifth Commandment

Ya I know, this sounds just like the fourth and Fifth commandment, but trust me it is not. This one is about how you interact with other's Tweets. If someone "@'s" you, reply. If someone you do not know Tweets about a topic you find of interest - join in the conversation. It does not matter that you know them or not - you'll likely find that you'll make a new friend.

Sixth Commandment

More than any other social network I know of, Twitter is FULL of charitable people. Lot of times Twitters are getting behind a cause. They use Twitter to either raise awareness, rally behind a cause or even raise money (Twestival is a great recent example). Not in a position to donate any money? Hey how long does it take to at least Re Tweet it to YOUR followers - perhaps they would want to donate.

Seventh Commandment

I took this one in vain for months! I signed up for a few services that would alert me when someone unfollowed me. Looking back it's like something I did when I was a little kid asking a girl on a date ("Oh ya, you don't want to go out with me? Well I think you are ugly!). Hey if you want to unfollow someone because they're no interesting, or offensive that's one thing. But think before you unfollow. If you followed them in the first place, it is likely because you found value in their tweets. Unfollowing them does nothing other than soothing a bruised ego.

Eight Commandant

OK this one is my favorite. Everyone want other people to Re-Tweet their Tweets. It is a could feeling to be popular, this is how you meet new people (who likely share your view or interest). The same way YOU like it so won't others. So Re-Tweet some of your favorite Tweeters.

Ninth Commandment

This one speaks for itself. After all, this is not some cult, and you are not some cult leader. It doesn't sound like you are really welcoming a new follow when you Tweet this - it just sounds dumb and somehow self serving...get over yourself.

Tenth Commandment

Everyone sells something on Twitter, whether you are supporting your brand, or a blog post,etc. You need to walk a fine line. It is very ok to promote something, just not all the time. Try mixing it up. Tell me about your kids or your dog. It's OK, I will be MORE likely to learn about your product or blog after I get to know you anyway.

Now before you forget these 10 commandments, start by practicing the 8th and please RT this blog post :-)

@A_F

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10 Years of Pain

noreply@blogger.com (Andrew Finkle) — Thu, 22 Jan 2009 16:03:00 +0000

Don't be a Chump!

It has been a very frustrating (not being as digitally connected as I would like) the past few months. I am only now back online (Thanks Cox Cable for a miserable experience getting Internet) due to my major life move (from New York City to Phoenix AZ). I am finally settled in enough though that I can start to blog again.

This post should serve as a wake up call to all you who might still be living under a rock. You need to know that I am not a pessimist (though you will find this post pessimistic in it's predictions). If anything, I am an optimist, and VERY bullish on my personal outlook. So before reading further make certain that you are aware - Everyone is in charge of their own destiny. We make our own fortunes in life.

I almost shed a tear with pride when I viewed just how many people piled in for Obama's inauguration. Another when I realized how great his popularity is outside of the USA. One gets a sense that his popularity is more of a metaphor with people - Obama = "Hope" & "Change".

Now this is not an attack on Obama (whom I personally like as much as any president), but more a realist's view of the world today. Economically speaking, the mess we now find ourselves in is the result of 40 + years of becoming a debtor society. 40 years of ANYTHING can not, and WILL not be unwound anytime soon. I do not care how many trillions of dollars you throw at the problem. So if your looking for Obama or the Trillions to rescue you (or the economy) you need to wake up and get real.

Think the stock market having declined over 40% is cheap? I did, but now am realizing that I too must have drank the "markets come back" Kool-Aid. We are in the 3rd inning of this debt-pression. You need to start thinking of the economy like a dying cancer patient on life support. The organs start to fail, one by one. The first economic organ to die was (is) residential real estate. Do NOT underestimate just how important of an organ this is. That past 40 years of debt was almost entirely based off of residential real estate. Now you have little or no equity in your home, so you stop consuming. Ya, I know you still need to eat. But many will "brand down" and what needs to be consumed will be commodity items that compete on price, not brand. When you stop consuming, these brands (the life-force of our GDP)lay people off. When you get laid off, not only can you not afford your mortgage, but you can not afford to pay your credit cards. When you can not shop with credit cards retailers go out of business. When the retailers go out of business the shopping malls go under. When the shopping malls go under a municipalities major tax base goes under. When the tax base goes under, the town/municipality is bankrupt. When the major towns (think NYC) go bankrupt, the states go under. When the states go under, the US is bankrupt. Lastly, when the US goes bankrupt, the world goes bankrupt.

...And so the economic ponzi begins.

I warned you that this post was going to be "gloomy-doomy" but I also mentioned that I am optimistic about my future. So while I do not think there is money to be made in the stock market (being a long term bull, or buying index/mutual funds)there is money to be made trading and/or being short.

Economically speaking,follow the money. If you worked for (and got laid off from) a company that made widgets, consider now working for a company that makes less expensive (or better ROI) widgets. If you sold stocks...consider now selling credit consulting services. If you sold real-estate, consider now selling refi's. Point here is that there will always be a growth area, and you need to identify now what those growth areas will be over the next ten years.

Health care, and more importantly HealthTech will be a place to be over the next 10 years. "Green" companies will be a place to be over the next 10 years. Companies that replace old infrastructure with "green" infrastructure will be hot (unlike green companies that make solar for example - think here like an Intel that will ultimately enjoy their next major sales up cycle by providing chips that consume way less power).

So in summary, even though we as a society are fucked - you don't have to be. Just follow the right road, and you will find your own prosperity. Good luck to everyone.

Andy

The Great Debtpression

noreply@blogger.com (Andrew Finkle) — Sat, 22 Nov 2008 11:49:00 +0000

This blog is normally reserved strictly for my business strategy and marketing ideas for startups,entrepreneurs and VC's. I think that what the government is doing right now however (destroying capitalism as we know it) is horribly flawed, and important enough that I want to share my ideas on what they need to do now!

I originally alluded to my idea on Stocktwits (Created by Soren Macbeth and Howard Lindzon). Since all the bigwigs in Government, On Wall St, and at the Fed read Stocktwits, I am certain they saw my idea earlier. For those not familiar, Stocktwits is the first vertical on Twitter to be wrapped up and aggregated. It allows you to view and share ideas, and investment strategy along with some of the smartest investors out there. If you have not seen or tried Stocktwits yet, I suggest you do. Even if you do not have an interest in stocks, it should give you entrepreneurial types ideas on just what you can do on the Twitter platform, and what you can build for just a few pennies.

OK now to the meat of this post. See the graph above? What you are looking at is the DJI during the 1929 Crash and subsequent "Great Depression" overlayed with a graph of the NASDAQ starting from the 90's bubble and subsequently the current "Great Deptpression".

The experts will all point to how it is much different today, because we have learned from out lessons of the past (after the 1929 crash government tightened up credit). I say BULLSHIT, it is exactly the same, and the overlayed charts echo that sentiment.

While the Government IS doing things differently in reacting to this crisis, it is still doing it wrong. The Fed is pumping BILLIONS of liquidity into the markets. The Fed is (will) spend over (at least) one TRILLION dollars on recapitalizing the banking system before this is all said and done. This is KEY to the failure. Even in the face of all this money, we are watching the Banking system as we know it fall into the abyss one by one. While I recognize that the over 80,000 banks in the US is too many - Letting them all fail in this manner is just bad for everyone.

Without our banking infrastructure, there can be no economy. Let me state that again NO BANKS = SOUP KITCHENS AND FOOD LINES!

The reason that TARP and the recapitalization (socialazation) of our banking system is a failure is a result of their recent capital structures. Banks have (had) been leveraged and allowed to loan against there asset base way in excess of their capital base. That worked fine until the FASB changed the rules and instituted "Mark to Market", and underlying assets plummeted in value "the perfect storm".

For those who might not know, this is how it works. Banks are required to have a certain percentage of assets in relation to the amount of money they loan. Mark to Market requires a bank to carry those assets on their books at their CURRENT value. For the purpose of this post, look at a typical asset as someone's house. Let's assume that the bank made a loan for someone to buy this home a few years ago, and lent $500,000. Now, that same home is only worth $400,000. So that $500k asset on the bank's books needs to now be written down to "market value" - or $400k. As banks write down all of those underlying assets to reflect the current downturn in the housing market - they fall below capital requirements and technically become insolvent.

On top of the dozens of large banks that have already failed as a result, Citibank (once the worlds largest bank) is trading as a pennie stock ($3 per share). Though a Citibank failure by itself will not bring down the entire banking system, it is just the latest one to do so. The stock market as a result can and will do NOTHING but go down, as long as the ailing financials keep failing.

The government needs to immediately STOP the TARP and bailout. Even if this was effective (it is not), they are simply printing more money = Dangerous implications for the value of our currency (US Dollar), and the inflationary pressure that will ultimately result.

What the government can and SHOULD do is change/remove the "Mark to Market" rule that is currently in place. When I pose this idea to friends, they all suggest that somehow this is simply pushing the problem out to the future. To which I say RUBBISH!

Let's revisit our earlier example of a bank that lent out on a $500k asset now worth only $400k. Yes, we have been in a housing bubble, and yes the values can decline even further but hey - What do you think that home will be worth at the maturity of the loan (30 years)? You would be hard pressed to find anyone who thought that it would not be worth AT LEAST $500k, if not more.

So Government get rid of Mark to Market, and let the banks Mark to Maturity. Any bank marking to maturity should subsequently be required to hold that underlying asset until either it is sold at par, or till it's maturity.

This action will allow banks to recapitalize organically, and without further socialising our banking system and most importantly without printing Trillions of new dollars in the process.

How would you fix the banking system? Please leave your comment.

Do you agree with the logic of my argument, if you do please consider DIGGING it.

You can follow and be followed on Twitter here.

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