Nick's Blog

Obviously no one can say for sure, but there are three factors at play that could put downward pressure on property values in the near term.

1. Supply. Nationwide, lenders are sitting on a backlog of approximately 1 million foreclosed homes.  Under pressure from Uncle Sam, and in the interest of minimizing their own losses, they’ve only been releasing a few at a time.  As a result, the current supply of for-sale homes is incredibly (and artificially) low.  If this huge volume of foreclosures were to somehow break loose and flood the market, prices would fall sharply.

2. Demand. For the past year, the government has been artificially inflating demand with low-down payment loans and generous tax credits.  The tax credit offer expires April 30th.  Without that incentive, demand will drop and prices could fall.  In the car business, this is known as “incentive hangover;” you might sell a lot of cars during “cash for clunkers” or “employee pricing,” but the next few months are going to be rough.  Will they let it expire, or extend it again?

3. The Price of Money.  Interest rates remain near historic lows.  Any increase in interest rate reduces the borrowing power of would-be buyers.  On a $300,000 loan, a 1% increase in interest rate can raise the cost by around $200 per month, which obviously limits how much house potential buyers can afford.  Many so-called experts think that interest rates will rise in the near term, pushing prices lower.  Of course, only cash buyers benefit from an interest-rate-increase-caused price drop.  For everyone else, the sticker price may be lower, but the carrying cost remains the same.

You don’t see many cars with The Club anymore, now that more high-tech anti-theft devices and alarms are so prevalent.  But this guy parked in our neighborhood isn’t taking any chances with his circa 1991 Geo Metro:

I understand this fine piece of machinery just screams “steal me!” to would-be car thieves, but keep in mind this is Livermore, not Oakland.  Better safe than sorry I suppose.

Did You Know?

During the summer of 2008 when gas prices rose over $4/gallon, used car buyers flocked to cheap subcompacts like the Geo Metro.  Blue book values for some models rose 400% in just a few months, in large part due to positive word-of-mouth regarding their 50+ mpg performance.

So if gas prices spike again, The Club is a sound investment to protect this little hot commodity!

As a chronic over-analyzer of things, I was intrigued by the subtitle of the book Hare Brain, Tortoise Mind: How Intelligence Increases When You Think Less.  I sure wouldn’t mind thinking less, I thought.  Maybe this book can help me out, I thought.

Unfortunately, the very act of reading the book required way too much thinking.  It was far too academic for me, and I couldn’t make it past the first few chapters.  With a title like that, I was expecting something more along the lines of Malcolm Gladwell’s Blink, or a series of stories about people “trusting their gut” to get great results.  Didn’t happen.

Maybe it gets better once you get into it, but I couldn’t stick around to find out.

When Chrysler launched the PT Cruiser as a year 2000 model, they might not have seen the huge success story the car would turn into.  They built it off the platform for the underwhelming Dodge Neon, and that’s why I’m calling it a redesign.

In January 2001, the PT Cruiser won Car & Driver’s Car of the Year award, and went on to sell nearly 1.4 million units over the next decade.  I’d say that’s a pretty impressive return on investment, essentially just from a re-badge and a change in how they “bent the metal.”

Personally, I’m not a huge fan of the car, but I can certainly admire it’s success.  The PT Cruiser ushered in a short-lived renaissance for Chrysler, that included the Pacifica crossover and the Chrysler 300.  I believe the PT Cruiser also inspired a number of other retro-styled models including the Chevy HHR, SSR, and Camaro, the Toyota FJ Cruiser, the Ford Thunderbird and Mustang, the Chrysler Prowler, and the new retro Dodge Challenger.

Over the past year, Target has been replacing their store brand products with redesigned and re-branded “Up & Up” products.  The previous store brand products very clearly took their design and color schemes from the brand leader they were imitating.  For example, their old bottle of ibuprofen closely resembled a bottle of Advil.  This is the tried and true method of packaging store brands: copy the leader’s design as closely as you can without trademark or copyright infringement.

Now, the new Target ibuprofen bottle bears no resemblance to Advil.

From the b-school perspective, this is an attempt to create brand equity and customer loyalty in the Target “Up & Up” brand, rather than just mooch of the brand equity of Advil and other “name brands.”  On the one hand, it’s a good long-term play that tells consumers there is inherent value in the Target brand, not just in being a cheaper knock-off, and it allows them to maintain a unified design look throughout the store.

But it’s a risky strategy that could backfire.  If customers don’t take to the new look by even just a small percentage, it could cost millions.  To mitigate their risk, I’m sure Target did plenty of due diligence in market research and A/B testing.

Store brands are big business.  They’re generally more profitable for the retailer than selling the name brands, and companies like Target even employ third party “testers” to make sure their quality is on par with the name brands.  If we start to see some design or color tweaks to the Up & Up packaging, we’ll know they weren’t performing as well as desired.

Yesterday I received a letter from the United States Department of Commerce:

“About one week from now, you will receive a 2010 Census form in the mail.”

Are you kidding?  I mean, thanks for the heads up, but why not just send the form?

Assuming every one of America’s 114 million households received this letter, and the Commerce Department has a special 50% discounted rate with their friends at the Post Office, they just wasted $25 million of OUR money!  What’s worse, the figure is probably closer to $30 million given the Postal Service’s recent inability to operate profitably.

Unbelievable.  And I’m not even counting the Census TV commercials, one of which aired during the Super Bowl.  Will any of these tactics really improve response rate?

Husky fans, back me up on this.  Every time you see a headline about the movie Hurt Locker — and there have been a lot lately — your brain only processes those keywords and assumes QB Jake Locker has been injured somehow.

Haven’t seen the movie, but already don’t like it for that reason.

I had a chance to see my first NHL game this week.  On Tuesday, the San Jose Sharks played the New Jersey Devils at the HP Pavilion.  Fresh off the Olympic hockey finale, we were ready for more icy action.  We even got an up-close-and-personal view of Sharkie the mascot as he gave a bag of goodies to a kid in the row in front of us.  I’ve decided that hockey is a lot like soccer — there’s not a lot of scoring, but a goal could come at any moment, which makes it interesting.

Except in this game there was plenty of scoring.  The Devils took a 4-0 lead in the 3rd (final) period to completely deflate the Sharks crowd.  It would be basically like being down 28-0 halfway through the 4th quarter of a football game.  There’s always a chance for a miracle comeback, but it’s probably not going to happen.  People started to leave.

But then the Sharks scored.

And then they scored again.

And again.

Three goals in three minutes!  The place was going nuts.  The giant shark head hanging from the rafters that blows smoke after goals barely had time to be reset.

The Sharks then pulled their goalie out to have an extra man on the ice, in a last ditch effort to score again and tie the game.  Ultimately they fell short, but it was definitely exciting.  I’d go back.

I saw these posted on an online marketing blog and thought they were great and applicable to everyone:

1. What should I stop doing?

2. What should I start doing?

3. What should I keep doing?

4. What could I do with less effort?

The other night I was playing Dr. Mario on the Wii online when I notice my opponent has chosen to give her Mii a double chin.  Why, I ask, would anyone go out of their way to create an unattractive digital avatar version of themselves?  If you were playing against people you’re never going to see, wouldn’t you “round up” a little?

Bryn’s response: “Maybe in real life she has a triple chin.”

OK, maybe she was rounding up.

Now there are plenty of “ugly on purpose” Mii’s, designed for the purpose of getting a laugh, and I’m all for those.  It’s just the brutally honest folks that feel the need to give themselves a double chin, a huge nose, or bags under their eyes.  I guess I can admire their attention to detail, but I guess I’m surprised how people depict themselves when given a blank canvas.

Meanwhile, while I was getting philosophical about the perceived digital body images of random strangers, double-chin lady was kicking my ass.