Party in Jerusalem

The U.S. recognized Jerusalem as Israel's capital. Celebration and outrage abound. The news is interesting, but will it change anything? I'm waiting to see whether the embassy actually gets moved. Recognition of reality and moving the embassy are completely different things. Even if the embassy is moved, it will almost have to be moved to western Jerusalem and not eastern Jerusalem that the "Palestinians" claim as theirs despite the fact that Israelis have been buying as much of it as they can, making it more Israeli all the time. At some point the "Palestinians" won't own enough of it to care about fighting for it any more.

And if the U.S. moves the embassy, will anyone else? I'm sure some nations will, but what about the ones who are moaning and screaming so much today? Are we going to have a situation where some embassies are in Jerusalem while most are still in Tel Aviv? That's a lot of driving back and forth. :)

I have a silly theory. Jerusalem is about twice as large as Tel Aviv. That means it's twice as happening and has twice as many parties. Partying is about the self not about God. The nations who don't care about God are into self. They'll go where the parties are.

Is He Still Alive?

I forgot to do Is He Still Alive? last week.

Martin Mull. Not just an actor with a long career but also an artist. Mull was born in 1943, which would make him 74. That's a borderline age for men. I remember him mostly from the 80s. He's in something that comes out in 2018, but is he still alive? Yes, according to Wikipedia, Martin Mull is still alive!

 Have a great weekend.

AoE and More Lottery Thoughts

This week I finished another pass through AoE. It was mostly polishing things and making changes based on feedback. I'm pretty much to the cover stage. I'm still not sure exactly what it will be. The other day I mentioned I paint a little as a hobby, but I'm not an illustrator. I'm also not good at painting the human figure and might want to put humans in the middle or background. Since it's a spy type book, I had a thought that maybe I could paint a figure with a hat pulled down low like you sometimes see on spy books. That way the jawline would be detailed, and that's a lot easier than a complete face. Another idea would be a silhouette of a side profile. A closeup side profile might work, too. I'm going to have to experiment and test something out and see if I can actually do it.

A few weeks ago I had a blog titled What If You Won a Fortune? that was a more realistic look at some of the taxes, challenges and expenses of wining a smaller amount like $5mil. I don't play the lottery, but I like seeing people win. I occasionally like to think about what I'd do if I won a fortune. Since that blog, I've watched some interviews with lottery winners to see what they had to say about their plans.

Some people don't know what they're going to do. I can understand that. Buying a house is a logical first choice as is traveling. How much travel? Would you want to buy a house that would sit empty for what might be weeks at a time? Is that safe? Where would you live? The choices would be endless. Would it make more sense to rent while deciding precise plans? It would be a huge adjustment with an overwhelming number of decisions.

I saw at least two winners who put the money into a trust. I'm not at expert on that, though it looks like it has some interesting options for transferring money to relatives. I saw a few winners who hired lawyers and a financial management company. The people who did that didn't claim the prize right away. They waited until everything was in place, which could take a number of days or weeks. I thought about that. They could have claimed the prize, put it into an interest-bearing account and set up the financial team while drawing interest. A winner in the UK said he was earning £800 a day from interest. Today that would be just short of $1,078 a day. That would make quitting work and driving around to meetings a lot easier while putting a team together.

Why wait to start earning money? In the blog I linked to, I referenced the federal tax rate on lotteries as being 39.6% with 25% due immediately and the rest at tax time with state taxes on top of that. A normal savings account(fraction of a percent) or money market account(1.24% perhaps) would pay a low return compared to an investment account(6% minimum). By waiting they're maximizing the interest payments and offsetting more of the taxes. Basically, they would get to keep more of the money and use the tax money they owe to earn interest in the meantime. Waiting a week or two to be able to keep more of the money makes sense to me.

So, if you ever won something, hiring a financial management company before claiming the prize would let you start earning good returns from day one while mitigating taxes. Even if you never win, learning more about what people who win do will enable to you better manage your money. It's worth it to look into a little. It gives you ideas and options you can use today you might not have known about.

Have a great weekend.

Tesla and Another Business Concept

It was another week of working on AoE. I've been doing another pass to polish the prose and fix miscellaneous details This one is more in-depth than the last one so it's taking longer. Nevertheless, I'm slowly getting ready to push it out the door.

Last week I mentioned Tesla is bankrupt on paper. I ran across an article this week that puts it in a more sophisticated way. They're structurally bankrupt. It doesn't mean they can't recover. With enough cash they could. It just means they're bankrupt today and for the foreseeable future including all of 2018. They keep making avoidable mistakes.

I remember when Amazon only sold books and couldn't make a profit either. They were able to turn things around. Tesla could do something like that. Theoretically. Amazon expanded to non-book products. Tesla is kind of stuck in the car/battery business. Although, I personally think they could sell riding lawn mowers like this well-rated Ryobi. Only three one-star ratings out of 182. Very solid. Unfortunately, Tesla makes lithium ion batteries. The Ryobi is lead acid, which is much cheaper. A Tesla mower would be around $4,000 or more like this lithium ion Cub Cadet. They wouldn't have to make the lawn mower. They could do a licensing deal and take a royalty or do a partnership deal supplying the batteries. Where they would get the batteries for all the lawn mowers I don't know. The current Gigafactory wouldn't be able to keep up with their car demand if they could figure out how to mass produce cars. It would never be able to do car and lawn mower batteries both. They've already been talking about needing more Gigafactories.

They could sell a lot more than cars if they really wanted to. The Tesla brand is powerful. People would buy things just for that alone. Golf carts, bikes, aircraft. Or premium batteries that last. Consumer lithium ion batteries use a liquid core that leaks and doesn't last. Tesla makes a solid core battery that lasts practically forever. It's a completely different experience than something like a cell phone battery. Instead of selling hundreds of thousands of cars, they could sell tens of millions of other things. They wouldn't make billions like they could on cars, but unlike with cars they would actually be making a  profit. The reason they don't is because the profit wouldn't be enough to offset the massive losses on the cars. Other products would not save the company.

So, I've been talking about wanting to start a business and throwing out some ideas. Here's another one. A lot of people sell things on Amazon. It's not a real business, but it can make a lot of cash. One way of doing it is to find niche products that sell well and source them from China. I had to go to the dentist last week, and the dentist recommended a water flosser. I looked at different ones on Amazon, including this one, this one, this one, this one and this one. You might be thinking they're all the same one with different brand names. You would be right. People have sourced this product from China and China and China for a minimum order of 500 pieces at $16.80 each going down to $14.80 for larger quantities. To even get started selling that flosser costs over $8,000. Many products are way cheaper than that, but the figure I've seen for getting started on Amazon with a product for a real business is around $4,000. It can be done fast and dirty for less, of course. The way to do it right is to start a real company with its own web site and use Amazon as an extension of that.

For American readers I hope you had a great Thanksgiving yesterday. For international readers I hope you had a great Thursday yesterday. :)

Have a great weekend.

AoE Progess and So Forth

Last night I finished the latest pass on the next book, AoE, going through it making fixes and changes based on feedback. I'll need to go through it at least one more time and also do a final read through. I still need to figure out a cover. I have two choices. I can pay for one, or I can paint one. Book covers are illustrations and not usually paintings. Paying is out, but I'm not sure my skills are up to a cover. I've been considering concepts that would look good but could still be a painting. The big problem is the human figure. I'm not very good at painting it. Putting people in the middle ground or the background might be doable. It would require fewer details such as facial features. I'm wrestling with it.

As previously mentioned, I've been looking at starting a business and mentioned artist's paints. Here's a video of a guy who does that. It gives a general feel of the equipment and space required. He makes oils. I would want to do acrylics. My impression now is that start up costs are too high, and it would probably be hard to scale up the business. Plus, I don't have the space.

Tesla. I've been following them for years. I was a huge fan until the Solar City bailout. That's when I put the Kool-Aid down. It made no sense. Solar City costs them an estimated $1bil a year. Mass production of the Model 3, which is necessary to save the company, hasn't happened yet. They won't be able to produce 5,000 cars a week until at least March. It looks like they'll be able to make around 180,500 cars next year unless something dramatically changes. That assumes the 5,000 per week starts March 1. Sometimes I read analyst's assessments of Tesla. From what I've read Tesla's either at or near the point that they wouldn't be able to make a profit even if they sold 200,000 Model 3s a year. They have too much debt, inefficiency etc. They're almost out of cash and are going to have to raise more very soon by borrowing or selling stock. I'm not an analyst, but I think they'll sell stock. They've already borrowed a lot and have sold corporate bonds. They can't keep doing that. Selling stock is much easier.

Tesla revealed a commercial truck last night. It's supposed to start production in the future. Where? They don't have a factory for that and don't have the money to build one. Same question for the new Roadster they revealed. Where would it be built? If they use the factories they already have, they would have to stop production on the other cars or only produce them part time.

I was a huge Tesla fan for a long time, but I'm having a hard time seeing how they can avoid bankruptcy. They're already bankrupt on paper. Even if I could afford one, I wouldn't want to buy from a company that's not profitable in the hope they'll make it. Assuming bankruptcy, would the new owner honor the warranty or alter it? I don't know. I don't know how long the bankruptcy procedure would last either. How would the car be serviced during that period? I'd love to have an electric car. Tesla's off the table until they can make a profit. The Chevy Bolt is off the table, because it's so ugly. That leaves the Nissan Leaf. The range isn't that great, but I know they'll be in business later.

Tesla's only chance seems to be to get production of the Model 3 closer to their 10,000 units a week goal. Right now they're doing about 260 a month. The longer they wait the harder it's going to be not go go bankrupt. There's going to come a point where even 300,000 units a year won't be profitable. The clock is ticking.

Have a great weekend.

What If You Won a Fortune?

What would you do if you won the lottery, the Publisher's Clearinghouse Sweepstakes or some other contest where the prize was millions of dollars? Chances are you already know. If you don't, reflect a few moments before reading on.

The cliché answer is buy a mansion or an expensive car or pay off bills or travel or retire, etc. Those aren't bad things. The problem is people don't usually think about the realistic details. Let's look at the reality of actually winning. More people win a million dollars or five millions dollars than a huge jackpot. A million isn't enough to buy a mansion or even retire. But what if you won $5,000,000?

The federal tax rate for a lottery win is 39.6%(25% due immediately and the rest at tax time). State taxes vary. In my state it's 6%. Combined taxes would equal 45.6% or $2,280,000. That leaves you with $2,720,000. Let's pretend you bought a miniature mansion, a new car, various sundries, gave to relatives and charity and so on for $1,000,000, leaving you with $1.7mil. That's not $5mil, but it's still a decent amount.

Figures for upkeep on a mansion vary widely from around $10,000 a month to the ten of thousands and include various things. Let's pretend you have an energy efficient bargain that costs $2,000 per month for the basics such as heating and cooling and grounds keeping and so on, costing you $24,000 a year. That would cost about 1.412% of your total winnings. Year two would start out at a cost of about 1.432%. And that assumes no other expenses at all, including food. After ten years you would be down to $1,460,000 with a cost of about 1.64%.

Even if the prices stayed the same, the percentage of the total would increase over time. Inflation would also eat away at your buying power. These examples do not account for inflation. A real mansion with maintenance of $10,000 a month would cost $1,200,000 in upkeep over ten years, putting you on the path to bankruptcy. And this doesn't include new cars, food, clothing, travel, life emergencies, home repairs and redecorating, etc. This is a glimpse into why so many lottery winners end up broke. They don't look at the $1mil upkeep bill over ten years. They probably just look at how much they currently have, think, "I can afford that," and buy the mansion. This is also a glimpse into why we see so many celebrity mansions for sale in the news. Their big deals only come for so long. If you hit the big time, I want better for you. How can you win and have it all, too?

The wealthy don't spend their own money. They spend other people's money. To have it all, you would need to do that, too. Let's say you won $5mil, spent a million for a decent house, a new car and all those other things and then wanted to live off the remaining $1.7mil. Most people would budget something like a set dollar amount per year: $30k, $40k, $50k, etc., and spend it like it was a salary. That's spending your own money, money that would run out over time. I want better for you.

The wealthy invest their money and live off the interest. Easy to say, but how exactly do you do that? If you wanted to buy a car, instead of paying cash you would make an investment that would make the car payments for you. At the end of 5 years, you would have the car and still have the money. That's the kind of mindset you need. You need to spend money on things that make money. There are various ways to invest, depending on your level of risk. A savings account is the wrong way. The interest will never keep up with inflation. You may have more money on paper, but you always lose buying power due to inflation. So, think back to the large number of celebrities you've seen who buy or start restaurants. It's easy to understand. There's good money in it. Another way is rental property. Vacation rentals make more money than a family home. Buying and renting out an apartment on a beach could work. The stock market is another way, but be careful. Starting or investing in businesses is a way. Find the niche that appeals to you. Lending money makes money. Places like Prosper.com and Lending Club allow you to loan as little as $25. Basically, you act as a bank sifting through loan applications and assessing risk. These are some ideas that work, but I'm not an expert. At the end of the day, you would need to do your own research or hire a consultant with a much broader perspective than mine who could give you percentages and risk assessments.

Six percent interest is very conservative. In the teens or higher is getting into more risk, depending. Let's say you decide on at least an 8% return and find areas in which to invest that you like. If you invested the entire $1.7mil, you would earn $136,000 per year. If you went with the miniature mansion and your home expense was $2,000, it would cost about 17.65% of your earnings. Most importantly, it would be 0% of the $1.7mil. If you spent less than your interest earnings, the $1.7mil would continue to grow and earn more and more allowing you a better and better lifestyle over time.

Instead of thinking, I have $1.7mil I can afford a $50k car, the thought process needs to be, This car costs $50k. How can I structure an investment that pays for it without losing capital? If you already have investments, you can think, What percentage of my budget will this cost? Is it really worth it? That's how the wealthy stay wealthy. They don't use their own money. If you ever hit the big jackpot, now you're better prepared to join the elite and stay elite.

Is He Still Alive?

Rich Little was born in 1938 and began his acting career in 1963. I remember him from the 80s, when he was the master of voice impersonations(see YouTube), mimicking presidents and celebrities to the delight of all. I hadn't heard mention of him in a long time until I ran across his name the other day. It made me wonder, is he still alive? According to Wikipedia, he is still alive! And still working. He will turn 79 on the 26th, just a few short days away.

Lying Fake News In Action

I don't do politics here very often, but a piece of fake news in The Washington Post caught my eye that was so heinous I had to post. The title of the article is "Trump, who urged people to 'hire American,' secures 70 foreign workers for Mar-a-Lago". The article says, "President Trump recently won permission from the Labor Department to hire 70 cooks, maids and servers to work at his ritzy Mar-a-Lago Club for the tourist season...He’s contributing to an influx of 2,159 immigrant workers snapping up the temporary jobs in Palm Beach County."

My goodness that sounds terrible. But hold on. The article has more to say. Speaking about July the article says, "Mar-a-Lago was applying for H-2B visas to hire non-American workers. Mar-a-Lago is only open during Palm Beach’s winter season, when members descend from colder climates." Speaking about Mar-a-Lago and an unnamed golf course, the articles states, "It’s unclear whether the Trump Organization had made an extra effort to try to fill the jobs."

Hmm, that's a bit confusing. The title says Trump himself hired foreign workers. The article says Mar-a-Lago did it while also saying the Trump Organization did it. That's three different entities. Which one of the three actually hired someone? If the reporter who wrote this article is a journalist, he should be aware of current events. Apparently, he isn't. As widely reported in the press, such as Forbes, Trump is no longer involved in running his businesses. He has placed them in a trust to be managed by others while he's president. Even as late as April, this trust was in the news. He became able to withdraw money from the trust, since he's not taking a salary from the government.

Despite the title of the fake news article, Trump did not hire anyone. He's no longer involved. Even if he was, he would not be involved in day-to-day hiring. Journalists know this. But what if Trump had hired those people? It would prove he's not a racist! It would prove he accepts anyone regardless of ethnicity. But we should already know he's not a racist from history. He won an Ellis Island Medal of Honor in 1986 and posed with Muhammed Ali and Rosa Parks. More about this award here. A partial quote: The Ellis Island Medals of Honor embody the spirit of America in their salute to tolerance, brotherhood, diversity and patriotism. And in 1999 none other than Jesse Jackson praised Trump for his lifetime of helping the African-American community. Video here.

The media accuses Trump of racism despite his history of helping minorities while at the same time accuses him of hiring minorities. Am I the only one who finds this kind of double-think weird? Is Trump the racist who loves hiring minorities? This article is a deliberate attack. It's basically hate speech. A liberal journalist hates Trump and spins an article in a way that makes him look bad to his base. This is happening in the media all the time. I don't know how many stories I've seen in the press that slant facts to create a fake version of events.

If journalists no longer have the integrity to report facts, they need to find a different job. This kind of hate speech has gone on long enough. They lost the election fair and square. It's time they got over it and moved on. It's time they stopped the deliberate lying. This is not real journalism. This is real hate.

A Concrete Business Example

I've been talking lately about starting a business without being too specific. One idea I've had for a while is to start a paint manufacturing company making acrylic artist paint. It would sell by the tube and by the jar for maybe $10 to $15.

Artist paint is made from various materials in the earth, pigments, and a binder. It's basically pigment and binder. To get just the right consistency or color, quite a few artists buy the raw materials and make their own paint. It's not difficult. I've identified an easily available pigment material that I've never seen used as a paint color. The idea would be to use it to make my own pigment and specialize in that color as a niche market. If I wanted to do other colors, I would have to buy the pigments and manufacture from those. Alternatively, for the other colors, I could use private labeling, a tool that's widely used for a variety of products.

One of the drawbacks is cost of entry. Not only would I have to buy paint manufacturing equipment, I would have to buy the equipment to grind raw material into pigment powder. A certain amount of the paint packaging side of it I could do by hand the same as others are doing for their own paints, but I would need real equipment for processing the pigment. I would also need a place to set all this equipment up and store containers and labels and pigment, etc.  And if I got a lot of orders, doing things by hand, while fine for getting started, would not be a realistic option.

I mentioned Shark Tank last week. I've still been watching it. One of the questions investors ask business owners is, What's to stop the big companies from doing the exact same thing and crushing you? That's a huge drawback to the paint idea. If it's successful, anyone else could mine this material and make the same color. I would be first to market, but they have huge name brands already.

On the other hand I might could make a decent business selling raw pigment to paint manufacturers. If I was established and already making the pigment, it might make sense for them to buy from me. The goal with either business would be to build it up to the point where a big player would have to buy it from me.

Let's talk money. According to the internet, the average yearly salary in the U.S. in 2016 was $44,148. Assuming 30%(not a real number) profit per paint tube sold, I would have to make $147,160 in sales to make that. If the price was $10 a tube, I would have to sell 14,716 tubes a year or 40.3 tubes a day. Realistically, I would have to put a certain amount of the profit back into the business. Equipment upgrades or repairs, a part-time employee, advertising, etc. Those kinds of sales would likely not happen the first year and maybe not for a quite a while. Starting out, I might sell only a handful at first.

When I talk vaguely about starting a business, this is the kind of thing I mean. I'm looking at things I could start small and then grow into something. This kind of gives an idea of how complex and slow the process of building something really is. I'm trying to find something that's relatively inexpensive to start that wouldn't drive me crazy while I worked at it. Some businesses require specialized knowledge or the right contacts. There are so many factors involved.

Is He Still Alive?

Is he still alive is a new segment to the blog. I saw an interview of Groucho Marx on The Dick Cavett Show. I was very surprised to learn that Groucho Marx died in 1977. Growing up, I had the vague impression he was somebody from the 1930s, which he kind of was. He was born in 1890 and made multiple movies in the 30s. I heard of him all the time as a youngster, and people did impressions of him a lot. Hawkeye, Alan Alda, on M*A*S*H, for example. I would see people doing the impressions but never see Groucho. I assumed he had died a long time ago. Seeing the interview made me wonder how many of the people I used to see or hear about so much are still alive.

He was before my time, but occasionally I would hear and still occasionally hear mention of Dick Cavett. Is he still alive? I assumed he was dead, but no. He's still alive! He's 80. Congratulations to him for beating the odds.

Have a great weekend.