Sushi Money

This past week I’ve been traveling with little opportunity to post, but what a dynamic week it has been.  Markets have been volatile and subject to the usual economic whims, but especially of the oil trades and the weather.  And two candidates, like ‘em or not, debate the energy issues with very different views for the nation’s future. 

I’ve had the chance to drive almost 2,000 miles throughout the central and northern U.S. the past week, and I can say firsthand that people are frustrated, dismayed, upset and bewildered by how fuel prices have skyrocketed so far this year.   So many families are hurting, and the higher costs of fuel take that money away from the family budget.  It’s real, it’s painful, and it’s changing how we live and drive in this nation.  I’ve seen dozens of small gas stations and other shops closed in smaller towns because they didn’t recieve enough business to pay the bills.  Tourism is way down in so many areas, and the locals are struggling.  I’ve paid for fuel from the high $3.90’s up to well past $4.25 per gallon on the trip, and never cease to find someone else at the pump groaning.  Do most of these people think alternative energy is the way to go?  Yes, if we can afford it and it doesn’t hurt the economy.   Right now, that’s not the case.

Most of these same people seem to wonder why we don’t simply produce more oil at home, and do more to get oil prices down.  It’s as simple as that.   Why are we sending trillions of American dollars to nations in Latin America and the Middle East? 

Personally I think the only way ahead for the nation to become energy independent without crippling the American family and economy further over the next 10 years is to robustly drill for more oil at home, and find new ways to generate power without using oil from foreign sources.   Senator McCain cites nuclear energy as one solution in addition to drilling more here at home.   That’s fine with me.   Senator Obama says we can end oil dependence in our lifetimes.  That’s fine with me too.  But are we going to destroy the American family and economy while keeping that smiling Green face on?   I really wish our political leaders would work harder to find a way ahead…. and we still need that Energy Summit.

Mortgage fraud arrests? The news says hundreds swept up in mortgage fraud. Hundreds? Wow.. amazing but a little late, huh? Well in a difficult economy it looks like the lawyers will have plenty of business.

While it looks like the Feds are finally announcing results of their investigations, it’s not just the mortgage brokers who are being looked at. Hedge funds are also now prime targets for investigation as to their role in the subprime mess. And two former Bear Stearns executives were arrested this morning. Seems at least one of these gentlemen may have been secretly withdrawing his own money from a failing hedge fund while smiling to other investors about how well they were doing.

After touring southern California last week it was amazing to see how prices have come down. Builders are still building, but are also scrambling to close deals on various houses and subdivisions. I even saw one sign: “Any Offer Accepted.” They probably left out the word reasonable.

I talked with several people who were seeing 40% reductions in the valuations of their homes. They sighed acknowledging that in addition to supply and demand, it was primarily an income qualification issue for how much of a home people can really afford. Reality was coming home to roost.

But during the hey day of the real estate boom, it wasn’t just the mortgage brokers leaning towards fraud. Many speculators and home buyers fudged their applications with exotic loans just to buy a property. Of course the speculation and application fraud is mostly history as more stringent mortgage qualification standards are now in place. But amazingly enough, mortgage fraud is still a problem across the nation.

I wonder if there’s any fraud in the oil or refining industry? Well maybe fraud is a bit strong of a word, but how about rampant oil industry speculation?

“As business and consumers consider the implications for them of crude oil selling at US$130-plus per barrel, they should bear in mind that, at a conservative calculation, at least 60% of that price comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York Nymex futures exchanges and uncontrolled inter-bank or over-the-counter trading to avoid scrutiny.”

We’ve been through the dot.com boom and the real estate boom. If this is the oil and gas boom, does that mean prices will come down later too? More importantly, what’s the next boom? I’d like to get in on that one…

While traveling to California this week I’ve actually had the opportunity to put gas in the car at $4.69 per gallon. The sum of money it takes to drive a vehicle around now is incredible to me, and it looks like people are cutting way back. Several times this week I’ve seen folks putting just a few gallons in the car at a time because they didn’t have enough money to fill it up, or to top off what they had already. Even with cutting back however, there’s a lot of cars on the road.

I really don’t believe the nation can sustain these fuel prices economically. Costs are going to continue to soar and consumer spending is simply going to shut down. Think America had a low savings rate before? Now we’re putting that little extra in the fuel tank.

I’ve called for an Energy Summit before, and I still believe we need to gather the experts and political leadership to develop a way forward. Certainly when the nation faces a threat to its people the government responds. Yet from an economic perspective the government has been slow to respond to the mounting pressures we see in the food and energy sector. And another round of rebate checks is going to help? Well tax rebates have helped soften the blow of reduced consumer spending so far, but it’s not a sustainble way to strengthen the economy.

As The Black Gold Rush continues, many people and companies are looking for ways to increase petroleum production. This is almost like the dot com internet bubble in many ways, but there’s little reason to think demand for oil will decrease over the short term. Over the long term, these prices are not sustainable especially as automakers finally produce viable hybrid vehicles en masse. Alternative everthing is all the craze and I think a lot of folks are going to change their spending and driving behaviors over the next decade. Which may prove essential to our future. OPEC is not going to help us if we don’t take charge of our own energy destiny.

Yet the oil boom has been good for some investors, and not so good for others. But prices have simply gone too far too fast. It’s hard to escape from the effects of oil no matter where you look. Most of the mutual funds in our IRA’s, 401(k)’s and pension plans are chock full of oil stocks or related companies. At some point their valuations will come down, but realistically that should be better for the stock market as a whole. If we can get past the inflationary pressures of higher food and energy prices, then the economy just may hang in there.

In other alternative news, we’re going to see a lot of change in the food industry as people demand better food products. When we read about Sumo Chickens and Tainted Greens on financial sites, you know it’s rapidly becoming a mainstream issue. This week I’ve been surprised by several relatives’ interest in consuming raw milk as a more healthful alternative to pastuerized store-bought milk. The food issue will be a biggie over the next decade, and there’s probably some key investing opportunities there as well.

We’re traveling around the country this week visiting family and I’ve enjoyed the time off. I was curious to see, at least from the road, how the economic challenges are affecting people. But it’s hard to see that there are any real economic changes simply from the number of cars on the road, or people eating out at restaurants or shopping. If the nation is verging on a recession, you can’t tell it from where we’ve traveled in the western U.S. But it’s amazing to see how high gas prices are in some states! I saw diesel fuel over $5 per gallon for the first time this week. It must be taking a huge toll on the independent truck drives which is a shame.

So most Americans seem to be going about business as usual. Of course some of us have cut back driving, and reduced spending. Even for this trip we have modified our travel plans based on fuel prices. It’s obvious that some of our weekly spending that would have gone towards discretionary expenses such as entertainment or household goods are now being diverted towards expenses for fuel and food.

Yet even with a struggling economy from a national perspective, there’s growth and building still taking place, especially in the commercial arena. While home builders are sitting idle and struggling for sales, the foreclosure markets are heating up. And the commercial builders are still making new plazas and storefronts for mini-restaurants and niche stores.

Is the nation getting ready for the next leg up in the business cycle? In some places it appears that way. But so much depends on where we go from here. It’s kind of like waiting for the other shoe to drop. Will we start back on the road towards growth or do we continue a long slide towards recession?

It’s good to see the dollar strengthening on comments from Bernanke, but not so good to see that Sen. Obama wants to tax the oil companies . All for the national good right? But someone tell me how those costs are not going to be passed on to consumers? Ultimately that will be a tax on you and me.

Can Sprint reinvent itself and reverse the loss of their customers?  It would seem millions are flocking to other carriers and Sprint is challenged to stem the tide.  Business Week writes about Sprint Nextel’s Last-Ditch Weapon- a new phone, plan and corporate image.  Which may be a bit melodramatic, but it paints a challenging picture for a once high-flying cell phone company.

Is Business Week right and is Sprint really on the ropes?  Their CEO Dan Hesse is making the case that Sprint finally ”gets it” and will give subscribers what they want:

“People want the whole package,” Hesse said during a keynote address at an annual conference held by CTIA-The Wireless Association. “They’re saying, who’s going to give me what I want, when I want, and make it easy to use. They’re all the building blocks of the wireless company of the future.” 

 Sprint now offers an all-in-one plan for $99 that gives you as many minutes, internet, picture and video stuff that you could ever want.  They’ve got a new phone line-up and soon will offer the Instinct, a sheik touch-screen cell phone that has the iphone look to it and all the bells and whistles.

But the biggest problem for Sprint is their customer base, and former customers.  This was the cell-phone company whose customer service execs must have gone to the Trump School of Business… last year they told some customers You’re Fired! presumably because they called customer service too much.

 You know what?  Every time a customer calls for help or assistance, that’s the time to sell the company (and your products) once again. In fact, you have to do that. If you don’t- they’re going to leave.  In Sprint’s case, they’ve been leaving by the millions.    What did You’re Fired! say to all the other Sprint customers?  It told them “Don’t call us because we don’t want to hear it… look what we did to the other guys.”

Realistically that wasn’t really the problem.  The greater problem in the past was Sprint’s customer service was simply not up-to-par compared to other companies.  It was difficult to get a rep on the phone, and they often didn’t know how to help.

Yet personally I think they’re getting a bad rap these days.  I’ve been a Sprint customer for over 5 years, and have been very pleased with the phones, coverage and even customer service.  They even have the best cell tower coverage in the area where we live.  I love the phone and plan I have.  But I’m wary based on other people’s experiences.  And as much as I might consider a new phone, I dread going in and haggling with the customer service rep because the plans were historically so complicated and expensive.  It shouldn’t be that way, and maybe now Sprint “gets it” enough that I’ll choose a new phone and plan.

But I started wondering:  How many companies realize that a bad customer service experience can lose a customer- not only for the short term, but sometimes for life?!  It’s true… make the experience bad enough, or hard enough, and they’ll never come back.  

My own example:  Do you know why I’ll never have a Discover card?  Because when I was younger they sent me this wonderful invitation to get a credit card with them.  I had used credit very little in the past, and was careful with my money and credit history.  So I called to apply because it sounded good. I was a college graduate with steady employment with a government agency and that would have been my first credit card.  Then the customer service rep gave me such a hard time over my lack of credit experience, and then denied my application, that it was humiliating.   I hung up, applied with American Express and received a card the next week.  I’ve appreciated the Amex customer service ever since.  That was two decades ago.   I tear up invitations from Discover almost weekly now.  From what I’ve read, people are not that happy with Discover card these days either.

A corporate reputation takes a long time to build, but like any reputation, it can be destroyed in very short order.   I recently read where Sprint lost an enormous business contract because a rep at the store didn’t give the time of day to an innocent request to fix or replace a phone.  A phone that had insurance on it, you know- the monthly $4 fee?  The individual was accused of dropping the phone in the water and they refused the request.  Good grief… the last thing you need when you need help is for the company you pay to give you a hard time.   That individual had been a subscriber for over 10 years, and left the same day.  All because of one clueless service rep.

It’s like the police officer I was talking with the other day (professionally!).  He said he hardly ever wrote tickets, but when he did- those folks were asking to receive a ticket because they just made things worse for themselves, argued, and gave him a hard time.  Sprint is finding out that poor customer service is like asking your customers to leave. 

Now Sprint is asking customers to come back, or give them another shot.  Given enough time and quality service, they may have enough credibility to rebuild the company.  I’ll stick with them for now based on my overall positive experience, and to their credit they offer a lot more choice and flexibility these days.  They’ve even made contracts simpler and you can try out a plan risk-free for 30 days.   My instincts are telling me to take another look… and when the new Instinct comes out I may do just that.

Over the past few months we have really changed our driving habits due to rising gas prices.  I didn’t think it would affect us so much, but psychologically I find myself doing the frugal dance and calculating how much it would cost to make a trip here or there.  A short roundtrip to the gym or Wally World can cost $3 to $5 for us depending on the vehicle used.

So admittedly gas prices definitely have influenced our choices and habits at home.  We drive the fuel efficient car much more often to work, and don’t take as many trips.  When we need something at the store, we save it for a list or call each other and someone picks it up on the way home.  All normal stuff to be sure, but we are a lot more conscious of our gas expenditures now.  Honestly it kind of crept up on us, because I didn’t really think about our habits until I read that nationally over 50% to 60% of people have said they’ve changed their driving habits too. 

Lets take an unscientific poll and see what you think (this poll only works on the SushiMoney.com homepage, not in the feed).  Here’s the question:

Have You Changed Your Driving Habits Because of Gas Prices?

• No, not at all.
• Yes, a little.
• Yes, a LOT!
• I've stopped driving...

View Results

Of course high gas prices are nothing new over the past few years.  Here’s a chart showing the past 12+ years of gas prices.  Remember the good old days when we didn’t even think about it?  I wonder what kids in high school do these days… it would cost too much to do a lot of driving!

 

With the current national average well above $3.00 per gallon, it seems consumers really may be affected at home.   Yet over the past couple of days the price of oil has come down a bit based on weaker demand and economic concerns, so maybe reduced driving habits are making a difference in demand?  And maybe the rampant speculation by energy investors will taper off for a while.  Keeping prices lower over time would be nice, but the oil pundits are forecasting higher prices for the next decade and beyond. 

What can we do?  Some folks create a personal hedge and buy into an energy mutual fund or oil company stock (that quarterly dividend feels pretty good when you’re at the pump), but realistically we’ve got to modify our behavior.  I’m not ready to give up the ‘ole car yet, so aside from driving less, thinking about how we drive can help as much as anything.  Here’s an older, but excellent review of What Really Saves Gas at Edmunds.com.  What makes a difference for me?

• Turning the car off if sitting somewhere for more than 2-3 minutes.  Idleing the engine can really lower fuel economy.  It’s a winter habit for many of us, but spring is here!
• Don’t “mash on the gas” when driving (unless I’m really late for something!).  Gentle acceleration and coasting to stop lights at times can improve mileage and saves on brake wear.
• Keep the tires properly inflated. Low tire pressure puts more rubber on the road, and takes more “energy” aka fuel to make the vehicle go. 
• Maintain the car properly, and change the air filter on schedule.  The harder the engine must work, the more gas it uses.
• Slow down!  I don’t drive 70+ mph on the highway nearly as often anymore.  Somewhere between 55 and 65 mph appears to yield the best fuel economy.   Even some of the long-haul truckers are slowing down to improve mileage.
• Get a different vehicle!  Anybody for a Smart car or a bicycle?  Maybe in a different color…

We’re all going to have to get used to driving, and “consuming” more efficiently in the years ahead.  I’d love to hear how gas prices have affected your habits and family… what else are you doing to drive less or improve your gas mileage?  

And have you checked out GasBuddy.com before?  It’s a nice site to check out prices in your local area.  Often they’re pretty close to each other and it may not make much difference.  But sometimes you can find a station .3 to .4 cents cheaper, and I’m all for that!

I’ve always been an early adopter when it comes to technology. At least until I realized how much money I was spending and became a dedicated investor and saver a few years ago. I still love new technology, but try to wait a little longer before trying a new product. That’s what I did with GPS, but now it’s time to think about getting a unit for the car. GPS navigation has finally gained widespread adoption and is hitting the mainstream much like computers about 10-15 years ago. Oh… what is GPS? Well, GPS stands for Global Positioning System:

“The Global Positioning System (GPS) is a U.S. space-based radionavigation system that provides reliable positioning, navigation, and timing services to civilian users on a continuous worldwide basis — freely available to all. For anyone with a GPS receiver, the system will provide location and time. GPS provides accurate location and time information for an unlimited number of people in all weather, day and night, anywhere in the world.”

I like the free part… just buy a GPS device and you get pinpoint navigation whenever you want!

Many folks think the adoption and use of GPS is much more widespread, which it is among commercial users worldwide (Thanks to the USA!). But millions of people across the world haven’t even considered using GPS until recently. The leading U.S. gps navigation manufacturer is Garmin with a 56% market share according to ChangeWave Research. That’s a huge percentage among worldwide competition, and Garmin appears to have some cool products coming in the future.

Garmin (GRMN) may be a great company to invest in as well, although the stock price has been hit pretty hard lately after huge gains last year. Almost a 60% drop, but I suspect it will do pretty well next year. Another Apple in the making? Could be, at least for a few years. But the stock is hugely volatile… not an investment for the faint of heart.

But with products like Garmin’s cool Nuvi line of navigation devices, people really like what they see. I used to own a Garmin product about 8 years ago. It was a small portable gps that I used for outdoor recreation such as hiking. It was pretty neat but not nearly as intuitive and user-friendly as the products out now. I’ve held off purchasing another one while these products matured but I think it’s finally time.

So I’m going to purchase an “in-car” navigation device in the next few weeks. Why now? Two reasons:

1. To save time and money! Which is often the same thing…

2. For a summer travel vacation around the country

But think about it… the less time we spend driving from point A to point B, the less gas we use. Big “duh” right? But really, how many times have you driven somewhere and made the wrong turn, or needed to go a different way for something? With the cost of fuel prices these days, if you drive a car for your job you almost can’t be without one of these devices now. For someone doing a lot of driving to new places, a gps unit could save a lot of money in both fuel costs, and in terms of time.

I like the axiom “Time is money.” If a gps unit helps me save gas and time, then it will probably pay for itself within the year. More than that, the units they have out now are kind of fun and for a family- it makes traveling a little safer and more secure… you know you’ll get where you want to go.

Garmin nüvi 660 4.3-Inch Widescreen Bluetooth Portable GPS Navigator

My only problem now… which one do I get?! Costco has some great prices, but so does Amazon and I don’t have to pay sales taxes. Do you have any recommendations? I’m leaning towards the Nuvi 680 or the 750 models based on price. I’m kind of looking forward to having someone (else!) tell me where to go while I’m driving…