At some point in our species' prehistory, a brilliant entrepreneur had a revolutionary idea for a new business.  They went up to rich people and said "give me all your money."  Then they poked the rich dude in the eye with sticks until they got their money.  They called their new profession "highway robbery", and it may actually predate the world's oldest profession.

Later in prehistory, a scrawny but equally malicious dude wanted to take a rich dude's money, but was not jacked enough to do so by force.  So he walked up to the rich dude and said "give me all your money," and then smiled politely.  The rich dude complied, giving birth to the profession of "bankers".

Banks already have a bulletproof business model.  They just have people fork over all their money, and in exchange they promise to protect it from stampeding cowboys.  This didn't work because it just gave the stampeding cowboys a centralized location at which to plunder from multiple people.  But people still kept giving their money to banks.  (Nowadays, the phrase "kid with ethernet" replaces "stampeding cowboy".)

Over the past thousands of years, banks were content to have all the money on the planet.  At some point in the last hundred years, they found that despite having all the money, hedge funds still somehow had even more money.  This is why they've had to stay competitive by charging us fees on money they already have.  Stop doing that, you already have all our money!

This concludes my understanding of our ownership society.

Most Fans Paid $0 for Radiohead Album screams Drudge.  Typical attempt at character assassination on his part, which is one of many reasons I love reading him.

Don't get me wrong.  Radiohead sucks.  But their album distribution idea was brilliant.  The people who paid $0 probably wouldn't have paid to listen to the album anyway.  Radiohead gets to reach a lot more ears this way.

More importantly, even if they only average $6 per album sold, this is a great deal for them.  I don't know what share of album sales they get in the store, but I bet it ends up at under $2.  They effectively tripled their take-home on this.  And nothing goes to middlemen.

Of course, I didn't bother to download it, even for free.  Your dastardly scheme won't work on me, villainous Radiohead!

Sorry... allow me to explain. As I'm finding right now, riding on a train is a fun way to travel. Ben took one across the country. Even if you don't go anywhere, Darjeeling Limited is a thoroughly good substitute.

And trains are only going to become more and more common as we pass Peak Oil and oil prices shoot up meteorically (like they're doing now). Trains don't need as much lubricant to get going. So industrialists are going to get more and more use out of our nation's infrastructure.

Warren Buffett, who knows how to make money by betting wisely on the future, is buying up stock in train companies. Think this is a coincidence? Or do you think he's betting that trains are going to pay off in the long run. He's going to die, but his protege is going to make some serious $$$ on this seemingly old-fashioned means of transport.

I can attest that the Acela is the best way to travel from NY to DC. And this Thanksgiving trip to Philly is so wonderful, I might go back to NY and do it again.

They say investing is a douchebag's sport.  (Actually, "they" don't say it... I say it).  As resident douchebag here at the 2log, I'm here to throw in a couple of cents, hoping they turn into three.

My advice is geared towards people like me.  People who (1) live frugally and basically just put all their money in savings and, (2) don't come from terribly wealthy families with helpful experience on the subject.  Since most of my friends are artistes, I assume I'm writing this to nobody... ONWARDS!

As with everything I've 2logged about, my advice is not to follow my advice.  If I can do it well, y'all can probably do it even better.

But do it well I have.  For my first year in, I started with no clue about what to do and made some horrible mistakes.  Yet, even despite the market volatility of late, it's safe to say at this point that I've handily defeated it in my first go-round.  So now that I have a year of experience, next year I'll probably be more confident and tank heavily.  C'est la vie.

Here's some quick thoughts I had to get off my head going into the end of the year:

• To quickly roll through the basics: pay off debts first, keep a bit in a high-yield savings account, max out your Roth contributions first (probably with index funds or cheap mutual funds), then look for stocks that pay dividends and buy for the long-term.
• If you can, drop cash in the market now.  November through April tends to outperform the rest of the year.  This is a fact that drives believers in the free market crazy.  After all, if it was common knowledge that November through April actually outperformed, shouldn't this have been factored in to stock prices already?  But it doesn't matter.  Every year, people on Wall Street get unbelievably lopsided bonus checks.  They have to put that money somewhere, so they dump it into the stock market and they ain't shorting.  Take advantage of our Gilded Age if you can.
• I got the juiciest plunder outside the States.  BRIC!  Only sans the R, because throughout multi-thousand year history of Russia it's consistently been a frostbitten failure.  And throw in some sexy S & M.  I'm afraid of C right now... so I guess it actually becomes SMIB!  I won't say exactly which SMIBs, because my friends have consciences and may berate me.
• Speaking of cement... how I wish I had some spare money, because Cemex (CX) is cheaper than free.  A Mexican cement company.  Boring, right?  Not if you're a math nerd like me.  They're about the smartest-run company on the planet.  They implemented the Domino's pizza strategy... get a truck full of of pipin' hot cement delivered to your door in under thirty minutes.  Turn a commodity into a service.  They just bought out the Australian cement giant Rinker (for cheap, at that).  Although Rinker's currently biggest in the States, just ask yourself where Australia is geographically close to?  Here's a hint, it has skylines dominated mostly by cranes, a billion people, and has secret ancient wisdom about taking a bus anywhere for under $15.  CX is being suffocated because of the subprime crap, but once people see that Cemex's bottom line is unaffected (most of its business comes from outside the states), it'll go on a tear.

Ben Stein has been making news lately.  Real news, not nooze.  Let's dissect:

Expelled
Having finally taken the time to examine it, his upcoming Expelled is not a parody, as I previously 2logged, but seems to be a creationist propaganda film in the vein of Michael Moore.  While I certainly don't believe in the utter crap spewed by so-called "creation scientists", I'm still intrigued by this movie for a number of reasons.

• It has atheists fuming.  Even the pope's latest encyclical didn't get them as hot and bothered.
• It reveals the hypocrisy of the left.  We were downright smug when Fahrenheit 9/11 came out, but when ambush documentary is used against our side... well that's completely unfair! 
• University campuses are pillars of close-mindedness, so anything that lays siege to the ivory tower can't be half-bad.

I'll probably Netflix it at some point, because I love watching movies that challenge my worldview.  Unfortunately, like Fahrenheit 9/11 and An Inconvenient Truth, it'll be the kind of movie that only energizes and reinforces the beliefs of one side of the battle.

Whistle-Blower?
He recently penned a column for the New York Times investigating Goldman Sachs, which has turned into a minor scandal.  Here's a little background.

Anybody who's been following financial news lately knows that everybody's been panicked about this whole "subprime" thing.  A number of companies have been hit, and its driven Wall Street crazy.  Most financial companies have seen major losses for the year, demolishing their stock price.

Except Goldman Sachs.  The company that may as well own the copyright on the term "money" is actually up 10% for the year.  What manner of deceptive genius could have caused this?

Enter Ben Stein, who's been a leading voice in calling the subprime mess overblown.  He investigated a memo written a Goldman higher-up named Jan Hatzius, in which Dr. Hatzius used some junk math to monger subprime fear, then circulated the memo among other financial companies.  Why would Goldman push junk math?

Because they were betting on a crisis that they were helping to manufacture.  While most of Wall Street was losing gobs of money, Goldman Sachs was making shzillions by betting against their hurting buddies.  On top of that, they were guaranteeing that their buddies would be losing this money by helping to manufacture the subprime panic.  It's like they bought an insurance policy on a house of cards, then blew on it.

Ben Stein's calling for investigation, and Chris Dodd has picked up on it.  It's not likely to go anywhere because this scandal, much like Chris Dodd, is not sexy.  If you're looking for a sexy scandal... try Pimp C.

A lot of buzz around the blogs about Google's new Wikipedia killer called Knol.  Google is peeved that Google searches just go straight to Wikipedia pages, because Google doesn't get any cheddar from serving ads on Wikipedia pages.  So they're coming up with their own Wikipedia that they can push to people when they run Google searches.

It's vaguely like Squidoo, in that it gives editors ownership of their "knol" and a financial incentive to get people looking at it.  It also contains Google's favorite trick with Adsense: getting people to compete against each other.  As many people who like can write a knol for any given topic, but the only way to rake in cash is to be the king of the hill.

I think this story has two interesting angles.  The first is Google stock.  I've got a lengthier post on Google stock back in the woodshed, so I don't want to go too much in depth on this subject.  The idea is certainly a financial winner for Google, since it's a solid analytic play.  But people around the web are lashing back.  Over at TechCrunch, they're running a poll entitled "Did Google Go Too Far?" in which a slim majority say "yes."  A sign of shifting waters for "Do No Evil" Google.  Can Google afford to piss people off?  Easily.  But much of its company is organized around paying people less in exchange for stock options.  If a Google backlash manifested itself in the form of a minor stock crash, Google could find the rug swiftly yanked under their feet.

I don't begrudge Google for this latest move.  Instead, it raises the more interesting question "Why has Wikipedia had its head in the sand?"  Jimmy Wales is allowing one of the greatest web innovations since Google to simply slip through his fingers.  A site with so much credibility and page views could have easily monetized itself and turned into an industry giant like Google and Yahoo before it.  Instead he just asked people for donations.  Not a great business model, and it's relatively unsurprising that Wikipedia may soon find other companies doing an end run around it.

Fortunately, as the giants on the web are busy slugging it out, you can trust Ao2 to remain unassuming, unaligned, and unread.

No.  Google (GOOG) stock will not hit a googol.  That's just crazy.  Even if it doubled every year, it would still take 324 years to hit Googol.  Get out of here.  Although at that rate, it could hit a mole in our lifetime.

If you listen to the financial experts, however, you might expect that Google will hit a googol.  They recommend, in one unanimous chorus, that you buy, buy, buy.  If that sort of dogma doesn't make you cautious, then you've got a bad case of herd mentality.  Take a deep breath, watch School of Rock, and catch a case of stickittotheman-itis.

Since right as Wall Street types get their bonus is the best time to buy stock, a better question is, should one buy stock in Google right now?  First, let's weed out the terrible arguments people make about Google.

• Google is a verb!  Great.  So's Xerox (XRX).  Verbing didn't go so well for them.
• It's the King of Search!  A couple weeks back, Sam and I were looking something up.  We turned to Wikipedia first.  As Sam pointed out, "That way, you learn a little bit at the same time."  Google's search was impressive when it first came out.  It's still good for some things.  But it ain't the be all and end all of the web.  Ask a Chinese person... they prefer Baidu.  Ask 2loggers, and we prefer Wikipedia.
• They're relentless innovators!  Honestly, they've been in a rut lately.  Gmail is about to turn four, and is still stuck in beta.  Google Reader is a great new invention (especially for keeping up with 2log).  But Google Docs ain't there yet.  Blogsearch, Spreadsheets, Finance... it all sucks.  They've kinda moved from "innovate" mode to "buy-up" mode.  It's as if their engineers are spending too much time eating their gourmet lunches and forgetting to do any work.
• It always goes up!  It's completely different from the last Web boom!  Mmmmm.... tastes like bubble.

Strip these away, and Google is still a great company.  But not for the hocus pocus reasons people attach to it.  Looking strictly at the dollars and cents, it's because they have a simple core product that they keep a razor sharp focus on.  All their money comes from their crappy, irrelevant text ads.  They have revolutionized the advertising industry because people can click on ads in a way they can't click on TV commercials.  Their real competitors are behemoth dinosaurs, like WPP Group (WPPGY) and Omnicom (OMC).

So back to the question... should you plunk your '07 IRA contributions into some white hot Google stock?  It ain't a bad idea.  They're not going anywhere over the next twenty years.  But be aware that their stock is priced to factor in hefty growth.  Their market cap is listed at 207 billion.  The market cap for the entire remainder of the advertising industry is 49 billion.  Wow.  What a disconnect.

Is internet ad revenue really worth four times the traditional ad industry combined?  Maybe.  But in my humble opinion, it's bonkers.  Sure, over the coming years, they'll maybe be able to double their ad revenue when they successfully push into wireless, and maybe even double it a couple more times with their penchant for getting companies to compete against each other for ad spots.  However, try as they might, there comes a point where they can't squeeze any more money out of advertising.  The ceiling ain't on Google's innovativeness, but on the actual amount the rest of the world's businesses are willing to budget for advertising.

So personally, I wouldn't buy Google unless I saw evidence that they were successfully moving into a field other than advertising.  Otherwise, their stock will have to correct (i.e. plummet) at some point in the next five years.  When that inevitably happens, that's when I'll buy.  Then, or whenever they started paying dividends.  Until then, my heart is overseas.

This is the only fun time in the aught acht presidential election.  As the estimable Sean Carey put it... it's more exciting watching 8 teams destroy each other in the playoffs than the Super Bowl itself.

Nobody knows what's going to happen, but people are willing to bet on it.  Intrade runs what they call a "prediction market," and what the rest of us call an offshore gambling site.  It's fluid, though, so you get a nice up-to-the-minute tally of what people are thinking, and pretty charts of the history.  The so-called "wisdom of crowds" often gets things wrong, but it's worth seeing how things stack up when people are willing to put their money where their mouth is.

For Iowa, it's good news for Skinny Man.  Obama's at 59% odds of winning this thing, with Clinton at 30% and pinhead John Edwards at 17%.  The funny thing is, if I was a betting man, I'd be putting my money on Edwards.  Historical charts as of last night: Obama's on the left, Clinton's on the right.

For New Hampshire (expect this to fluctuate wildly after tomorrow), we see Clinton at 60%, Obama at 25%, and Edwards at a dismal 2%.  South Carolina is main man Barack's at 55%, Clinton at 40%, and Edwards crying himself to sleep.

With all these, Gore is stuck at at dismal .1%, tied with elder statesman Mike Gravel.

The sad news is that people's faith that Hillary triumphs in the end is unshaken.  Hillary's now at 64.5% odds to take the Democratic nomination.  Completely unaffected by Barack's surge.

Hillary wins the Dem nomination... is this what inevitability looks like?

On the Republican side, Huckabee's favored over Romney to take the Iowa primary (57% to 40%).  McCain has come from nowhere to become the odds-on favorite in New Hampshire, at 60%, with Romney at 25% and Huckabee barely registering.

Live Free or Die Hard... McCain comes to life in New Hampshire.

The gamblers have no idea who's going to take this in the end, though.  Right now Giuliani is at 27.5% odds of becoming the Republican nominee, with Romney at 23.9%, McCain at 24.8%, Huckabee at 11%, and Paul at 7%.  It's anybody's guess, although they put Huckabee at 23.4% odds of being the vice presidential nominee on the R ticket.  I mean, he does play bass in his band, so it's not like he's cut out for leading man status.

With no ballots cast, who do the gamblers think will be in the White House in a year's time?  40.6% chance of Hillarycare, 16.8% chance of an Obama-nation, followed by the unholy trinity of Giuliani, McCain, Romney at 11.3%, 9.2%, and 7.5%.

Year 1
Developer: Let's get rid of that Mom + Pop store, since we can make more money with condos!
Tenants: Wow!  Condos in such a great neighborhood!

Year 2
Developer: It worked well last year, let's get rid of more Mom + Pop stores, since we can make so much money with condos!
Tenants: Great people, good neighborhood... where do we sign?

Year 3
Developer: I don't understand... we razed the neighborhood and put in nothing but condos.  Why won't you idiot tenants buy them?
Tenants: Well duh, there's nothing in the neighborhood but condos.

The fact that a cute little Mom and Pop store brings up the value of a neighborhood is called a "positive externality".  The Mom and Pop store adds value to the neighborhood, but doesn't get anything in return.  It instead suffers from higher rent, and eventually goes out of business.  If there's a lesson here, I suppose it's something like "life sucks" if you're a realist, or "good deeds actually do get noticed" if you tend to look for the optimistic spin.

On the subject of real estate, it turns out it's actually less expensive to rent than to own if you live in an expensive neighborhood (hat tip I Will Teach You To Be Rich).  Probably not the case if you used the same broker/robber-baroness as did Sam and I.

Having bored people with other $$$ talk, I thought I'd offer up a little something something that helps everybody, whether rich or poor.

Beyond a shadow of an earthly doubt, the greatest website I have ever seen is Yodlee's Moneycenter.  Better even than Scrabulous, Audience of Two, Second Avenue Sagas, GodTube or YouPorn.

In a nutshell, Yodlee is Mission Control Central for anybody who's ever found their financial life overwhelmed by a plethora of bills, credit cards, bank accounts, loan payments, stocks, insurance, IRAs, frequent flyer accounts... whatever sort of grown-up stuff you might want to keep track of because it's making you poor or rich.  Yodlee automatically keeps tabs on everything and slices it into easy and helpful reports.

And it's all automatic.  Using Yodlee is easier than smiling.  It automatically categorizes your spending.  It automatically updates your accounts.  It automatically alerts you if it detects weird activity.  It automatically lets you know if you have bill payments due.  Yodlee makes it so that any Type-B hippie can be mega-responsible without having to do any actual work.

Take a look at some of these reports it automatically builds for you:

Whoa there, Tim The Toolman Taylor!  Buying too many Binford 6100s!

Once you've entered everything, you'll get a $ value for your net worth.  You can tell, exactly, whether you're worthwhile or worthless.  This guy here is climbing his way out of a hefty amount of debt.

The big question I always get is, "Is it secure?"  I mean, yes it's secured by Thawte and RSA, has a detailed security policy, and is used by a number of banks.  But there's still the nagging fear of keeping all your accounts in one place.  It's up to you to decide, ultimately.  Discussing with my co-workers (who all use it), here's the arguments that swayed me on security:

• It's likely that all this information, if not more, is also stored in your email account.
• If you check the site daily, you'll be able to easily detect and fight any security breach before it gets too severe.
• In any instance of identity theft, you're only as secure as the financial institution's protection.
• Because Yodlee aggregates accounts you may not otherwise check daily, it gives you the added security of monitoring accounts that may not otherwise monitor.

If you take the plunge, I'd recommend making as many payments by debit or credit card as possible, as you can then take better advantage of Yodlee's automatic categorization.  Otherwise, live as normal and be happy.

We've brainstormed creative ways to use Yodlee here at the office, but my favorite was when a co-worker used it to track exactly how much his girlfriend was costing him.  Unfortunately, there's no way to have it display "priceless".