Archives for December 2017

7 Tools to Streamline Your Business Operations

When you’re running your own business, every minute is valuable. You can’t afford to waste any time. But with so much on your plate and limited hours in the day, how do you make sure everything gets done – and done right?

The success of your business depends on your business operations. In his autobiography, “Iacocca,” business leader Lee Iacocca writes, “In the end, all business operations can be reduced to three words: people, product, and profits.” You need to keep all three organized and running smoothly for your business to operate effectively.

With the help of a few tools and technologies, it’s easier than ever to run your business with efficiency. And with operations under control and moving things along, you’ll be able to spend more time focusing on running your business – and boosting your bottom line.

Here are the seven tools you need to improve your business operations.

1. Trello

In her book, “The Outstanding Organization,” business consultant Karen Martin writes, “Chaos is the enemy of any organization that strives to be outstanding.” To combat that chaos, a project management tool such as Trello is necessary.

Trello allows you to organize and manage an entire project from start to finish. You create cards for each task needed and assign those cards to the task owner. You can assign deadlines, add comments and track progress as each card moves through to completion.

2. Slack

You could have a million business operations tools, but without open communication among your team, you’re going to have problems. Slack offers a user-friendly online chat that helps teams stay in contact all day – no matter where they are.

In Slack, you can create conversation threads on a specific topic, so when you’re working on a project, all the communication about that project will be in one place. This way, it’s easy to collaborate and make decisions quickly.

3. PandaDoc

Paperwork is a tedious part of business, and with so much going digital, it’s a hassle to still rely on paper for things like contracts, proposals and quotes. By using a document management software like PandaDoc, you won’t need to print and scan in documents. Instead, everything is handled digitally.

The tool allows you to create, send and track documents – all in one place. It also has the option of e-signatures. With everything streamlined in one tool, the time you spend on documents is greatly reduced, freeing you up for other important business tasks.

4. Freshbooks

According to a survey by the National Association of Small Businesses, the number one challenge of running a business is economic uncertainty. Managing finances can be stressful, especially if you’re doing it all on your own.

Freshbooks offers an easy and simplified system for managing your finances. You can track your expenses, send invoices and manage your books with minimal effort. Accounting is fast and secure, giving you more time to devote to other areas of your business.

5. ZenDesk

Customer service is a hot topic for businesses lately, and those that do it well are seeing abundant benefits. On Twitter, customer service expert Shep Hyken writes, “Make every interaction count, even the small ones. They are all relevant.”

ZenDesk is a help desk solution that will ensure your customers are satisfied with each interaction with your business. The tool allows you to connect with customers from anywhere – email, social, chat and phone – all from one dashboard.

6. Calendly

As the head of your business, your schedule is probably pretty packed. So scheduling any new meetings or phone calls in your already-busy schedule can be a pain. On his blog, Seth Godin writes, “You don’t need more time. You just need to decide.”

Calendly makes scheduling meetings and appointments easy by allowing you to coordinate schedules and avoid going back and forth over email trying to find a time that works.

7. MailChimp

When you’re looking to send a mass email, your typical email service provider, such as Gmail or Outlook, can only do so much. You need a marketing automation tool like MailChimp to better connect with your email list.

MailChimp allows you to create professional-looking emails, send them to your contacts and track your campaigns. You can also set up automated emails, which will save you the hassle of remembering to send. You just create and organize the campaign once, and MailChimp does the rest. Then, you can come back and gather data on how successful the campaign was.

What tools do you use to keep your business running smoothly? Let me know in the comments below:

Here Are 3 Things That Perpetuate Dishonesty, and 3 Ways to Thwart It

It’s a dog-eat-dog world out there. In the race to make it to the top, some values often get dropped along the way. Among these stands out one; namely, honesty.

Car salesmen. Stock investors. Overzealous entrepreneurs. We all know the cliches, and we’ve all heard the stories of scams and cover-ups.

But what is it that drives people to cross boundaries to the point of deceiving customers, employees, and the world at large? Additionally, knowing all the risks associated, why would anyone resort to fraud or cheating to succeed in business?

The answer is that people don’t think too much. We’d prefer to remain blind and be able to follow temptations. But do a bit of investigation, and you’ll quickly learn how to re-frame your mind to stay on the straight path of honesty. Below are a few points to get your gears turning.

1. We think honesty slows us down.

Come on, when was the last time anyone actually read all the terms and conditions? This world runs on a fast pace, and people simply don’t have patience to go through the motions of every task. When we can cut corners, we will.

But when you’re running a company, your decisions have a ripple effect on the market you’re serving. According to an October 2014 study by Cohn & Wolfe, a global communications and public relations firm, honesty is the number one thing consumers want from brands.

So if you don’t want your startup to become a statistic of the 90 percent that fail, on average, make sure to stick to the truth when it comes to your brand. It’ll set you up for success in the long run!

2.  We think we won’t get caught.

It’s midnight on a desolate rural road — who will see you run through a red light? Similarly, who would notice if you slipped an extra unlisted ingredient into a product, or told a customer half the truth, being that they wouldn’t be shrewd enough to pick up on it anyway?

These moral quandaries can be paralleled to the famous riddle: “If a tree falls in a forest where no one is around, does it make a sound?” Perhaps it makes a sound, perhaps it doesn’t, depending on who you ask.

But the tree fell, that’s for sure.

We’re beyond kindergarten. We shouldn’t be living our lives in fear of punishment from legal authorities; and conversely, in celebration of victories acquired through dishonest means. That’s a pretty juvenile mindset, and no corporation can stand on the feet of those tenets for long.

Maybe you won’t get caught at first. But repeat dishonest practices will ultimately stain your reputation, because people aren’t stupid and eventually things come to light. All it takes is one small suspicion and you’re doomed. At best, you lose a customer; at worst, you’ll wind up in jail, like Martha Stewart did in 2004.

3.  It’s the norm.

It’s the sad truth, According to a University of Massachusetts study led by psychologist Robert S. Feldman, 60% of people lied at least once during a 10-minute conversation and told an average of two to three lies.

However, just because everyone else is doing it doesn’t mean it’s right. Everyone can hold themselves up to higher standards — it just takes a conscious awareness, and a lot of effort to train oneself to be honest.

Honesty is (indeed) the best policy.

But refreshingly, it’s also quite common to find businesses that run according to the principle of honesty as the best policy.

Companies all over the world are starting to not just recognize the values of honesty, but live by them. “In our business, honesty and transparency is the oxygen of our existence,” states Mati Cohen of Pesach in Vallarta, a holiday hotel program.

This echoes of the founding principles of Buffer, a social media company that embraces the coined term ‘radical transparency’; all its salaries are public and there are no secrets amongst employees, which eliminates much of the animosity that is ever-present in many workplaces.

Tirath Kamdar, co-founder and CEO of jewelry and watch company TrueFacet, says that his company runs by these standards. “The alarmingly opaque nature of the luxury watch and jewelry market motivated us to create TrueFacet. Our goal is to bring transparency back to consumers. We set the standard for jewelry and watches at market value, allowing customers to obtain these products for the most fair price. This is why our customers return time and again.”

Developing Honesty.

Nurturing this character trait requires hard work and patience. Make it a point to recognize how often you utter even little white lies, and correct yourself when you slip.

Because, after all, honesty is the best policy.

***Liba Rimler contributed to this article

3 New Year’s resolutions for the cloud in 2018

I’m one of those people who takes time at the new year to define personal objectives for the forthcoming year, some of which I actually achieve. Enterprise IT should be doing the same thing for cloud computing.

Here are my three suggestions for IT’s cloud resolutions for 2018.

2018 cloud resolution No. 1:
Look at your cloud security approach and technology

When I find issues with enterprise cloud deployments in my consulting work, it’s most often around security. Clients often leave aspects of their cloud deployments unprotected or underprotected, and things that should be encrypted are not, while things that should not be encrypted are.  

While I’m not recommending that you gut your cloud security and replace it with what’s cool and new, I am recommending that you take some time to walk through the security solution architecture and ask yourself about where you can improve. Moreover, consider all the security technology in place, what needs to be updated?   What should be replaced?

2018 cloud resolution No. 2:
Look at your cloud training plan

There are two categories of cloud training:

  • Provider training that’s focused on a specific provider such as Amazon Web Services, Microsoft, or Google.
  • General training that provides a good overview of how to make cloud work in enterprises, and all that is involved with that.

You should have a mix of both, as well as some paths for your staff defined to get the skills of a cloud architect, cloud developer, cloud operations specialist, and cloud devops specialist, just to name a few roles. There should be training paths through both vendor and nonvendor  courses to get your staff members the skills they need to perform their duties (which of course must be clearly defined). 

2018 cloud resolution No. 3:
Evaluate your databases

Databases are sticky, and once enterprises have used a specific database, they are not likely to change it. Indeed, what many enterprises have done is just rehost their data on public clouds using the same database they used on premises.

Today we have many options in the cloud, including SQL and non-SQL databases. While there are native databases in public clouds such as AWS’s RedShift and DynamoDB, there are many other options from databases providers that support the public cloud and traditional platforms. Are you using the optimal solution?  

These are just a few suggestions; I suspect that you can name more. Whatever they are, pick a few and follow up. Have a great new year!

General Electric: The Crazy Ex-Girlfriend I'm Now About To Marry

I hate loving General Electric (GE), its like an ex boyfriend/girlfriend that broke your heart.

Each time you go back, you tell yourself it will be different… they have changed! Yet every time you go back, they break your heart again.

This has now happened to me twice with GE. In 2008, I was riding high, having bought GE in the mid 20’s in 2004, with the promise of an industrial revolution. The finance division was booming and I was up a cool 50% and thought I had found the one!

Then I found out they were cheating on me with someone named subprime! It nearly bankrupted the company, and Uncle Warren had to come to the rescue to save it.

I was frankly, lucky to get out when I did, selling mid panic in the low 20’s. The end result was a 4 year investment that returned roughly negative 20%. I vowed to never make that mistake again…

In early 2015, it was as if GE sent me a text saying… “I miss you… lets get lunch to catch up?” and unfortunately for me, I hit reply. And just like that, we were back together.

The stock had been consolidating all year, and Jeff Immelt had on his shiniest used car salesmen hat, singing sweet nothings into my ear of buybacks, the disposal of the finance assets and refocusing on core industrial operations.

Blah, blah, blah! Next thing I know, this pretty little stock I re bought at 24 and had me sitting on 35% gains, gets cut in half… Apparently the company had a nasty secret spending habit they hid for years and years.

GE data by YCharts

So I had a decision to make mid 2017, do I bail again and take another 20%+ loss? Is this stock destined to break my heart again and again until nothing is left?

I did some soul searching… deep in the woods. And had decided again to leave, never to return.

But as I was leaving the door, with my bags packed, and my prized, signed picture of the Jamaican bobsled team in toe, an event made me hit the pause button.

Jeff Immelt had decided to “step down.”

This left me in a holding pattern for months, until Nov 13th. When new CEO John Flannery issued 2018 guidance that was, lets be kind and just say disastrous. Lowering even the lowest of bars for 2018 to EPS of $1-$1.07.

So, why am I still a holder of GE stock?

To squeeze some more juice out of my “ex” metaphor, GE just checked itself into rehab!

It now realizes it has a serious problem, it has overspent and or had disastrous timing on virtually every major deal it has done in the last 10-15 years. Alstrom, check. Oil assets, check. Finance disposal, check. Buyback, check.

Mr Flannery appears to not need a second corporate jet to follow him around “just in case” unlike Mr Immelt. He also seems to be dead set on costs, which with GE in its current structure will keep him busy for a while.

Why not close your position?

You think I am crazy don’t you, why in the world would I consider keeping or perhaps doubling my position in a stock that has done nothing but hurt me?

The reason is pretty simple, all of the dirty laundry appears to be in the open now. No more secret spending accounts or ill researched / timed acquisitions (for now). Mr Flannery has all but told anyone that will listen that the rest of 2017 and all of 2018 will suck, and to not invest.

He didn’t “kitchen sink” an earnings report, he lit the whole house on fire.

Source: Meme Generator | Create Your Own Meme

Mr Flannery has called for a new approach to doing business at GE and more importantly to transparency, apparently not subscribing to Immelt’s pyramid scheme like approach to GE’s cash flow. He has acknowledged the pension shortfall, which I am sure will come up in the comments section of this article. Also shrinking the board from a frat house of 18 to a GE focused 12, preaching honesty (imagine that) and accountability in the new GE.

So far I am digging the new CEO and currently am in tacit agreement with his broad outline.

What was the new CEO given to work with?

I’m glad you asked! GE in my opinion has a very strong set of business’s to work with, below I have outlined the 6 major divisions it currently operates.

Power- GE’s power business is huge, with an installed base in every major country in the world. They claim to produce 1/3rd of the worlds electricity through gas, steam and nuclear turbines. This is a core division for GE, and one that recently has helped drive them directly into a ditch, as overcapacity, technical issues and in my view an ill timed Alstrom acquisition weigh on earnings at the division.

However, GE power does have many redeeming qualities. They are a technology leader in the industry whilst having deep relationships with customers in a field that honestly does not have all that many options. Near term however, look for deep cuts in expectations at the unit until the smoke clears.

Aviation- The companies Aviation segment has been a bright spot in recent results, with continued wins and new product introductions, for example LEAP, its new narrow body engine that from what I can find is truly state of the art, with a 15% fuel improvement, increased reliability, weighs 500 lbs less and is 3D printed (which, lets face it, is just cool!)

This division looks set to continue to preform well in the near term and may be looked at as an example for the rest of the company.

Transportation- The transportation segment is mostly composed of GE’s rail assets and is thought to perhaps be on the chopping block for divestiture. They build locomotives with a large portion of revenue coming from the services side of the business, which is something I like to see. They are a global leader in the industry and the mix of technology and services is impressive.

However the division has been lackluster of late and the strategic fit is questionable and thus may not make sense for them to keep. They did just win a 200 locomotive order from Canadian National Railway (CNI) but it may be prudent to offload this asset to focus on core business.

I sort of hate to see this business go, as it truly is world class. However GE hopefully will use proceeds here to either reduce debt or shore up the oft cited pension shortfall.

Healthcare- GE has a broad and diverse set of healthcare assets, providing imaging, healthcare cloud, cardiology, orthopedics and anesthesia equipment, among multiple other products and services.

This has been a strong performer for the company and what I would consider another core holding of GE, this division looks to be a good fit with its digital offerings and will likely continue to buoy the company during this current slump.

BHGE- This is a division that really makes me mad, and I struggle to remain calm in my writing. Jeff Immelts timing was so bad that it feels like it was on purpose. Immelt decided to buy a bunch of oil services companies, seemingly at the absolute top of the oil market. Grrr.

Anyways, GE Baker Hughes as it is now called is the 2nd largest oil services company in the world and to be fair is actually a very good company, and is a technology leader in the industry along side Halliburton (HAL). So basically it is the second prettiest girl in a leper colony.

Oil services, seem in my opinion to be stuck in a pretty serious long term rut and GE, I believe will look to dispose of this asset likely through a spin off off or divestiture of its stake rather quickly. Perhaps GE could offer Immelt a stake in this spin off in return for the GE stock he so graciously awarded himself during his charade.

Renewables- The renewables division is home to a world class wind energy turbine manufacturer, along with in my opinion is the most valuable part, its services segment. GE has established itself as the worlds number 2 wind turbine company behind Vestas Wind Energy (OTCPK:VWDRY). The company also has an emerging offshore wind and hydro power segment that are lacking scale currently, but hold long term promise.

The wind market this year has suffered from intense competitive pressures thus dragging results, however this also looks to be a core division for GE in the future.

So why am I sticking with GE this time – and may be looking to “pop the question” soon?

The companies potential is just so damn pretty! GE lines up well with my vision of the mega trends of the future.

In my mind, a company must both show an ability for growth, while possessing a solid balance sheet with operating discipline from which to build. Under Mr Immelt, GE, in hindsight obviously stood much closer to the crazy side of Mr Barney Stinson’s famed graph below.

Source: FANDOM

Mr Flannery seems to be dead set on adjusting the results of the above graph.

After the dust settles from the recent house fire Mr Flannery has set ablaze, I am envisioning 4 major divisions of GE remaining. Power, Aviation, Healthcare & Renewables.

All 4 remaining divisions fit into my vision- with 3 qualifying in my mind as mega trends. Power, Aviation & Renewables.

Healthcare I view as a great business as well but does not fit as a mega trend in my book with so many unknowns as to the future in the industry.

Power- Power is (obviously) a key need for the future as more and more countries look to move to gas powered plants and away from coal. With the world estimated to need an additional 50% more electricity in the next 20 years, perhaps adding dramatically to that if the electric car revolution is indeed realized.

GE is in great shape position wise in the industry and once the fat has been cut, along with a renewed focus on execution, this division should prove to be a key driver of profits for decades to come.

The below graph shows an estimate of the worlds need for energy into 2035.

Source: Breaking Energy

Aviation- This division looks to be in the midst of a multi decade run, as the world continues to be more interconnected. Importantly the Asian travel market is in the early innings of what looks to be a spectacular expansion. GE I believe is in the drivers seat in this industry, both in technology and services.

My one worry is the Chinese looking to enter this market with “homegrown technology” which I believe is code for stealing IP and re packaging it. However manufacturing jet engines is an entirely different animal from copying an iPhone and progress on a Chinese engine that is both safe and accepted is likely a few decades off.

Source: Airbus Home

Healthcare- This industry as a whole, especially preventative medicine in my view will swell massively in the next few decades. I am going to lose a few followers over this i’m certain but I believe universal healthcare in the United States is pretty much a sure bet sometime in the next 20 years. Which would be good news for GE!

Keeping costs down will likely be a key requirement of any future health system, and with GE’s expertise in imaging for preventative medicine and its emerging analytics and software offerings, it may be able to play an important role in the health systems future, however uncertainties do exist as to the nature of cost controls and the potential for margin compression in all things health related.

Committee for a Responsible Federal Budget

Renewables- I am firmly on the alternative energy bandwagon and GE’s positioning in this industry appears very ideal. Wind energy by most measures is already roughly equal in cost per MWh to current fossil fuel plants, this will likely get better with time, and with offshore wind and hydro picking up steam in both efficiency and scale for GE, will open further avenues of growth for this division.

Alternative energy is here to stay, and GE looks to be on a path that requires no subsidies, a major pitfall to solar currently. The downside to wind energy could be the commoditization of wind turbines, however I believe that GE has the technology and service capability to differentiate themselves in this rapidly growing industry for decades to come.

Source: U.S. Energy Information Administration (NYSEMKT:EIA)

So will I say “I do”?

GE has burned me… Badly in the past, and I must say I am rather gun shy about committing to a perhaps multi decade long marriage to the stock.

But she is so damn pretty!

Source: Meme Generator | Create Your Own Meme

My plan “as of today” is to keep my current position, roughly 2.2% of my equity portfolio in GE for the first half of 2018, to test the waters, if you will, of the new CEO. If I continue to like what I am seeing and the valuation seems fair, which I view it to be currently (a forward PE of 17ish) I may step up to the plate and double my position in the company.

Or maybe I won’t, and I will just run like heck and never come back!

GE: “Hey you, what’s up”

Me: …

Author’s note: If you enjoyed this article and would like to be notified of my future articles, please hit “follow” next to my name at the top of the article to receive notification of future articles I publish.

Disclosure: I am/we are long VWDRY, GE.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Will Artificial Ingenuity Threaten or Catapult our Human Creativity?

There is that future that never happened. You know the one, we are flying around with jetpacks and kids are riding their hoverboards. A future where smart glasses were ubiquitous and memory plants (a la Black Mirror) kept us all in check. Our homes we’re all going to be connected and 3D printers would sit pretty next to our microwaves. And let’s not forget the well mannered personal robots that were eagerly waiting to greet us at the door. Yeah, so much for that.

Big surprise that the future we thought would happen didn’t. But what occurred instead still constitutes a new era. We’re now in the age of the Centaur. Man and machine work beautifully (for the time being) in concert. Today we are planning and designing for the Centaur of tomorrow. This means the imminent rehaul of banking, healthcare, education, the military and beyond.

Perhaps the best illustration is the community-based navigation App, Waze. While its algorithms provide the traveler with information for getting where they want to go, humans provide the context with real-time traffic updates. And only recently have traffic police begun feeding the hungry Waze Centaur helping manage their workload, and of course, optimizing for safety.

The robots once reserved for our dull, dirty and dangerous jobs have evolved to infiltrate the creative industries. They dance, sing, paint, play, and write. They code, cook, laugh and cry too. Here’s some food for thought so you are poised to work with our mechanical friends as opposed to against them.

Creatively Collaborating in the Age of the Centaur

“We’re not meant to agree what Art is, that’s what drives it forward. And creativity is exactly the same” says computer scientist Simon Colton. His software, otherwise known as The Painting Fool, has been an ‘aspiring painter’ for years. The program come artist has exhibited in Paris and has been a media darling.

Another robot-artist dubbed AARON is said to have matched (if not to soon exceed) human artistic capability. Harold Cohen, it’s creator has been toying and perfecting AARON since the 1970’s. He muses that he may just be the first artist who might have a, “Posthumous exhibition of new works created entirely after his own death.”

One line of thinking is that much like a Renaissance workshop, the credit should go to the master and the apprentice. So in the case of Cohen, he would be credited as the master creator, and his disciple-robot merely carrying out his grand vision. The other line, of course, is that robots gain a sense of self, or consciousness, thereby approximating the human-eye or in this case the robot-eye. 

Only time will tell how which of these views sticks and if robotic art can make us feel the same way as human-produced works. If history is anything to go by, we will learn and adapt to work even more intimately with our robotic teammates.  Personally, I won’t have a problem hanging up an art piece produced and signed by Matisse2000.

Staying Human Amidst Endless Algorithms

Writer Gillian Terzis explains that, “Humans have long entertained the possibility of communing with the machines, exploring them as servants, or using them for sexual gratification. Drones already carry out deadly wars on behalf of governments. The fascination is not always with the gadget on the or the algorithm that powers it, but about the shifting definition of what it means to be human.”

This sentiment will continue to ring true. The brightest minds on the planet have come together at the Future of Humanity at Oxford to help map out the rise of our mechanical mates. They’ve made a myriad of predictions, one of which is that in about thirty years, 2049 to be precise, a robot will have written a New York Times bestseller. I’ll admit I’m a bit more concerned about this prospect than the robot-artist icon.

?Reframing Creativity and the Values we Value

The advent of machines will compel us to reframe our own creativity. Will we drop the ‘artificial’ in creativity altogether? Might the unpredictable and messy business of creativity move to be more of a steady and systematic one?  Perhaps, creativity is, after all, a staged process. What is for certain is that the next generation of robots will urge us to rethink our meaning and contribution to both work and society. And I think it’s going to make us a whole lot more human.

The Most Important SEO Strategies to Use in 2018 to Boost Your Business

Today, your website is your storefront. Even if you have a brick and mortar business, many people will find you online or check you out online because getting in their car. Sure, it’s nice to have a great website with content that makes you stand out, but that doesn’t mean anything if you’re not being found online. That’s where the real challenge is.

How do you ensure your ideal customer or client is find you? By making sure your website is optimized so search engines will push you to the front of the line, or search results. You need to pay attention to your SEO.

Focus on attracting long clicks

A long click means when people navigate to your page, they spend time digesting the content — reading the copy, clicking through to other internal pages, etc. instead of bouncing off the website.

According to Jeffrey Bumbales, Founder of JB Digital Solution, long clicks are future-proof. When people navigate to your page and stay, it means a few things:

  • The content is relevant to their search query

  • The content is valuable and so is the user experience

  • The content is current and up-to-date

 “Search engines use bounce rate, time on page, and hundreds of other metrics to assess value and relevance,” Bumbales said. “If you were previously attracting long clicks and notice that they are dwindling, it likely means someone else has released some content that is more thorough or more up-to-date.” 

Speed up your website

Business owners should make sure their website is mobile friendly and loads under three seconds on a mobile device.

“Google stated recently that 56 percent of sessions are abandoned if the website takes longer than three seconds to load, said Amine Rahal, founder and CEO of IronMonk Solutions, a Google Partners agency. 

Have good PR

Public relations is vital to SEO. When you are featured on an influential website with a high domain authority and your website is linked, it increases your domain authority by sending a message to the search engines that your website is important.

PR doesn’t only help your SEO. It provides benefits in other areas as well. For example, all the backlinks I’ve earned myself in popular media outlets helped get my Facebook, Instagram, and Twitter pages verified.

Make sure Google My Business is current

Businesses need to ensure they have up to date Google My Business listings.

“This means updated photos, responding to reviews, updating your hours for holidays, including a 360-degree virtual tour, and accurate phone, address, and name across their listing and site,” said Joe Sloan, a marketing and communications coordinator. “They need to do this because this is by far the most typical first impression of your business.”

This will help you rank higher in local searches and your website rank higher if your information is consistent on your site and your listing.

Pay attention to your metadata

Dani Benson, SEO Specialist at Talent Inc., suggests fixing duplicate metadata or creating it if there isn’t any. A study by Search Engine Journal found that 63 percent of website owners completely abandon any efforts to create a meta description and almost 54 percent of websites have duplicates.

“Duplicate content, even metadata, will prohibit the page from being indexed – meaning, it will lose the opportunity to rank for keywords and, therefore, not show up in organic search results. If the metadata is missing, it will result in a missed opportunity to describe this page is to the customer and explain why it answers their problem,” Benson said. “If you don’t write it yourself, the search engine will write it for you. Don’t you think you can market your product better than a computer?”

The more information you provide the search engine — and the customer — the more likely they are to trust you over your competitor. 

While Google’s algorithm is constantly changing, these tactics aren’t going to change anytime soon and will increase your chance of being found online.

‘Nobody Knows the Ultimate Value.’ Bitcoin’s Price Flops Back to $15,000

Bitcoin fell toward $15,000 after the cryptocurrency’s biggest rally in two weeks ended a rout that wiped more than $9,000 off the price.

The largest digital coin fell 4.6% to $15,214 at 10:08 a.m. in New York, having earlier climbed as much as 3.6%. Among rival digital currencies, ripple extended its gains to 9.6%, while ethereum and litecoin fell 1.2% and 6.2% respectively, according to data compiled by Bloomberg.

The relatively quiet day for bitcoin comes on the heels of a five-day slump that reached 44% at its depths and took the coin below $11,000 on Friday. Just four days earlier, it rose within striking distance of $20,000 after a torrid advance that started in early December.

Read: As Bitcoin Rebounds Past $16,000, Related Jobs Have Also Surged

Investors continued to snap up shares in companies often seen as a safer alternative to investing directly in the cryptocurrency itself. Digital Power rose in early trading after saying it’s boosting its computing infrastructure to mine digital coins. On Track Innovation also advanced.

Bitcoin futures on the CME Group exchange slipped 3.6%.

Read: 5 Reasons the Fed Needs a Bitcoin-Style Currency

Bitcoin’s volatility is adding to an ongoing debate about how to value the digital coin which has surged about 1,600 percent this year.

“Nobody knows the ultimate value of this underlying asset,” Edward Stringham, president of the American Institute for Economic Research, a Massachusetts-based research group, said on Bloomberg Television. “We cannot predict whether it’s going to be zero or $1 million or anything in between.”

Read: Bitcoin’s Real Value Could Be Zero, Morgan Stanley Analyst Says

For skeptics doubting whether individuals and businesses will truly start using bitcoin as a medium of exchange — as opposed to some officially backed digital currency — the short-lived rebound from the past week’s selloff portends further declines.

“It’s much more likely once you’ve made a big downward movement like the one we made last week that you have a bigger and more complex correction,” Ric Spooner, a Sydney-based analyst at CMC Markets, told Bloomberg Television. “Once a market like this one locks into those patterns it becomes pretty good” to follow via chart-based analysis, he said.

Spooner said it’s possible bitcoin could drop to $5,700 or $8,700 in coming months.

Bitcoin: Additional Suspicious Developments

In my previous articles, I talked about the surprising correlation between the supply of Tether and the price of Bitcoin. I encourage you to read both of them for some background. In essence, there are good reasons to believe that Tether Limited is issuing Tethers that are not backed by USD as promised in order to purchase Bitcoin through Bitfinex. After examining the flow of Tethers, which originate from Tether Limited and are then subsequently distributed to various other exchange all through Bitfinex, I believe that Tether’s correlation to Bitcoin is no simple coincidence.

It continues to baffle me why this issue is not the most talked about topic in the Bitcoin community (OTCQX:GBTC, COIN, RIOT, OTC:BITCF, OTCPK:BTSC, OTCQB:BTCS, OTCQB:MGTI). I can assure all stakeholders that just because you bury your head in the sand, the problem is not going to go away.

Since my last article (read Regulators Must Investigate Bitcoin), Tether Limited has minted another 350 million Tethers (that’s a rate of 13 billion per year). At the time of writing, there were over 1.2 billion Tethers outstanding. Meanwhile, no one actually knows or seems to care about where Tether Limited is holding the USD funds. If market participants truly care about the integrity of the cryptocurrency, this should be the most pressing issue at hand.

A lot of things happened since my last article, and today, we’ll see some new developments at Bitfinex and Tether Limited that further strengthen my belief in that Bitcoin is manipulated by the issuance of unbacked Tethers.

Bitfinex Developments

After my first article on the subject (read Bitcoin Only Has One Way To Go), Bitfinex instated a minimum withdrawal policy of $250 or equivalent, which according to my calculations, locked up 75% of its clients. Soon after, the exchange also completely stopped new account registrations until January 15th, 2018.


At first glance, halting account growth doesn’t benefit Bitfinex since an exchange typically wants more users. However, the implication here is that now, members of the media who want to investigate the platform will be unable to do so (luckily for me, I had signed up last year). In addition, manipulating Bitcoin through Tether doesn’t require new users in the short term. In fact, it may be harmful for the manipulators if we assume that new accounts would be buying Bitcoin on Bitfinex (i.e. trading with Bitfinex when fraudulent Tethers are used to buy Bitcoin, giving Bitfinex a higher cost basis). Certainly, over time, an influx of additional users is required, from whom Bitfinex can then purchase Bitcoin (or other cryptocurrencies) with unbacked Tethers, but that isn’t a concern in the near term since there are still many Bitcoins that are not owned by Bitfinex.

Many readers have urged me to forward my findings to relevant authorities, and it is interesting to note that a Bitfinex employee’s warrant canaries have disappeared. Warrant canaries serve as a warning mechanism that indirectly indicates to the public that the related entities have not been investigated. Their disappearance implies that he or the firm are being investigated by law enforcement.



Tether Limited Developments

On Wednesday, Tether Limited came out with a press release that included updated policies and a few paragraphs that directly addressed “conspiracy theories.” There were images of historical “audits” and the promise of another “audit.” But if we peel back the wordplay, predictably nothing of substance was said, and more importantly, the company revealed some new restrictions regarding the use of Tether.


Clearly, Tether Limited is following Bitfinex’s playbook of freezing customer funds, which isn’t surprising considering that the two companies are run by the same management.



An arbitrary redemption minimum will prevent small Tether holders from cashing out, meaning that they will be unable to redeem their tokens for USD in the event of a run on Tether. As I’ve mentioned in previous articles, it’s unclear at what point this will occur, but rest assured that it will happen at some point in the future as Tethers must be converted into USD for the holder to derive any utility from the tokens (i.e. so users can actually buy goods and services in the real world). In the meantime, these new policies give the uninformed and naïve traders reasons to continue to trust the Tether system. I believe that this game of confidence will inevitably collapse, but as with anything in a market, anything can be real as long as enough people believe in it.

In the hopes of calming investors about “conspiracy theories” of insufficient USD reserves, the company also posted pictures of bank confirmations for the periods prior to them losing bank access from Wells Fargo (NYSE:WFC) as a correspondent bank in April.

December 31, 2016

January 31, 2017

February 28, 2017

March 31, 207

Note that the above confirmations are literally just pieces of paper confirming bank balances (i.e. not a full audit). These pictures do not prove that the funds actually belonged to Tether Limited (e.g. could be funded by debt) nor do they show the flow of funds, which should match the Tether issuances visible on the blockchain. Furthermore, these confirmations were completed when there were merely 45 million Tethers outstanding at most; that number has now ballooned to over 1.2 billion. Most importantly, bank confirmation is pretty much useless in China (where the bank was located) because this flimsy piece of paper cannot only be easily doctored, the bank rep responsible for the confirmation can be easily bribed as well.

In addition to the bank confirmations, the company also stated that Friedman LLP is working hard on completing a full “balance sheet audit” for the periods going back to December 31st, 2016. Presumably, a balance sheet audit does not entail a full audit, which would verify the flow of funds, the key to identify (or deny) potential fraud. If the company produces an “audit” similar to the report produced earlier (i.e. not an audit as specifically stated by Friedman in the numerous disclosures as discussed in my previous article), then all of the efforts to come clean will be moot. In addition, due to the intertwined relationship between Tether Limited and Bitfinex, only a simultaneous audit of both companies over time can rid me of my doubts. This is important because Bitfinex could be supporting Tether’s balance sheet in the event of fraud, and vice versa. For example, even if Tethers are not fully reserved by USD, Bitfinex can easily move some of its funds into Tether Limited’s bank account to temporarily make up for any shortfalls.


It is astounding that mainstream Bitcoin media aren’t treating Tethers more seriously. Even exchanges (Chicago Board Options Exchange (CBOE), CME (CME)) are marching ahead with plans to introduce ETFs based on Bitcoin futures. Packaging a complex asset into futures then ETFs to create artificial liquidity, I wonder what could go wrong? Perhaps everyone is too busy counting their paper gains, but I must warn market participants that if my suspicions prove to be accurate, the wealth that is being created is just an illusion. It is in the interest of all stakeholders to ensure that manipulation does not stifle blockchain innovation, or worse, cause the next financial crisis should this be allowed to perpetuate.

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MORL's Yield Climbs To 23.2% As A Result Of The Highest Monthly Dividend In More Than 2 Years

Performance of MORL and Dividend Projection

For the one-year period ending December 22, 2017, UBS ETRACS Monthly Pay 2x Leveraged Mortgage REIT ETN (MORL) returned 35.7% based on a purchase on December 22, 2016, at the closing price of $15.55, the December 22, 2017 price of $17.49 and the reinvestment of dividends through to December 2017. It does not include my projected January 2018 monthly dividend of $0.7813. It might be noted that the 35.7% total return on MORL was considerably more than the 21.0% total return on the S&P 500 (NYSEARCA:SPY) over that same period.

My projected January 2018 monthly dividend of $0.7813 would be the largest monthly dividend in more than two years. Not since the July 2015 monthly dividend of $0.7853 has MORL paid a higher monthly dividend. The calendar impacts the monthly dividends. Most of the MORL components pay dividends quarterly, typically with ex-dates in the last month of the quarter and payment dates in the first month of the next quarter. The January, April, October, and July “big month” MORL dividends are much larger than the “small month” dividends paid in the other months, since very few of the quarterly payers have ex-dividend dates in that contribute to the dividends in the “small months”. Thus, the $0.7813 MORL dividend paid in January 2018 will be a “large month” dividend. However, even just comparing January 2018 relative to the two prior Januarys, MORL’s dividend shows improvement. In January 2017 the MORL dividend was $0.7375. In January 2015 the MORL dividend was $0.7196. While typically called dividends, the monthly payments from MORL are technically distributions of interest payments on the ETN note based on the dividends paid by the underlying mREITs, pursuant to the terms of the indenture.

Only three of the MORL components – American Capital Agency Corp. (AGNC), Orchid Island Capital Inc (ORC), and ARMOUR Residential REIT, Inc. (NYSE:ARR) now pay dividends monthly. The composition of the index of mREITs upon which MORL is based is such that all of the quarterly dividend payers had ex-dates in December 2017. Thus, all of the monthly and quarterly payers will contribute to the January 2018 monthly dividend. Only iStar Inc. (STAR), which does not currently pay any dividends, will not contribute to the January 2018 monthly dividend. Having all components except STAR contributing to the monthly dividend was also the case for the January 2017 dividend. However, in December 2015 there was one quarterly paying component, RAIT Financial Trust (RAS), that did not contribute to the January 2016 dividend, since it had a January 2016 ex-date. It might be noted that in December 2015 RAS was the component with the smallest weight in the index, with a weight of only 0.81%. RAS is no longer in the index.

My projection for the January 2018 dividend for MORL and its essentially identical twin UBS ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN Series B (MRRL) of $0.7813 is calculated using the contribution by component method. Market Vectors Mortgage REIT Income ETF (MORT) is a fund that is based on the same index as MORL and MRRL. MORT pays dividends quarterly rather than monthly. As a fund, the dividend is discretionary by the fund management as long as it distributes the required percentage of taxable income to maintain its investment company status. Thus, it does not lend itself to dividend projections as an ETN like MORL, which must pay dividends pursuant to an indenture. The table below shows the ticker, name, weight, price, dividend, contribution to the dividend and ex-date for the MORL components.

Five-year Review

I have owned MORL for a little more than five years. In my articles about MORL, I have included a statement to the effect that:

Aside from the fact that with a yield 23.2%, you get back your initial investment in less than five years and still have your original investment shares intact, if someone thought that over the next five years, interest rates would remain relatively stable, and thus, MORL would continue to yield 23.2% on a compounded basis, the return on a strategy of reinvesting all dividends would be enormous. An investment of $100,000 would be worth $283,377 in five years. More interestingly, for those investing for future income, the income from the initial $100,000 would increase from the $23,200 initial annual rate to $65,633 annually.

The numbers above are from this article, but previously, similar calculations were done using whatever the annualized compounded yield was at that time. Those five-year computations in my earlier articles have been the subject of numerous skeptical comments.

I did not precisely reinvest all MORL dividends, but have consistently added to my MORL position in various accounts using the dividends and some additional funds. I have paid prices for MORL as high as $32.07 and as low as $9.94. As the five-year anniversary of my initial MORL purchase has past and there are now actual five-year holding periods for MORL that can be examined, it may be interesting to see what the historic $100,000 five-year holding period return would be.

A hypothetical investment of $100,000 in MORL on December 24, 2012, at the closing price of $24.69, assuming reinvestment of all dividends, would be worth as of the December 22, 2017 price of $17.49, $205,211.10. It might be noted that a hypothetical investment of $100,000 in SPY would have grown during the same period to $207,787.70, again assuming reinvestment of all dividends.

Outlook For MORL and Reasons For Caution

In REM And The mREITs Outperform, But Risks Are Lurking, I discussed the extent that the mREITs have significantly outperformed the mortgage-backed securities that comprise much of the securities held by the mREITs. By definition, the basic reason for the outperformance of the mREITs relative to the securities in their portfolio has been the increase in the market price to book value that many of the mREITs have been trading at.

A Seeking Alpha article by Colorado Wealth Management Fund Quick And Dirty mREIT Discounts For December 18, 2017 indicates that for 25 mREITs, most but not all, held by MORL, the average market-to-book value was 97.37%. As the title of the above-mentioned article suggests, mREITs have generally been trading at discounts in the last few years. On 12/31/2015, the mREITs followed in the article traded at 78.19% of book value. This was a substantial 21.81% discount. The discounts narrowed until turning into premiums as shown by the 101.35% market-to-book value of April 27, 2017. From there, the market-to-book value fell to 96.22% on May 9, 2017. The sharp approximately 5% drop in the market to book value, which over that short period was essentially also a 5% decline market price, illustrates that buying mREITs or portfolios of mREITs such as MORL can be problematic when mREITs are trading at premiums to book value.

While the December 18, 2017, value of 97.37% is down from the September 30th, 2017, value of 100.57%, the average market to book value is much closer to the peak than it has been for most of the past few years. Thus, signaling caution. Additionally, when mREITs are trading at premiums to book value, issuance of new shares usually follows. Indeed some mREITs such as ARR and Annaly Capital Management Inc. (NYSE:NLY) announced sales of additional shares near the peak in market-to-book value.

While there are some factors other than interest rates that determine the outlook for MORL and the mREITs, interest rates are by far the most important factor. It could be said that the movement in the market price-to-book values for the mREITs are primarily a function of market participants’ expectation of the future path of interest rates. In theory, only the present level of market interest rates should influence the market prices of mREITs. This is because an mREIT in theory should not trade at prices significantly different than the book value because of the possibility of arbitrage.

Interest Rates are the Key to Future MORL Performance and the Tax Law Changes Will be a Factor

By far, the biggest risk for MORL and the mREITs is a sharp increase in interest rates. MORL and the mREITs can be considered to be somewhat like high-grade fixed income securities in terms of their returns relative to interest rates. However, mREITs can also be seen as businesses that generate income from the spread between long-term rates on mortgage-backed securities and the short-term rates at which they borrow to finance their holdings of mortgage-backed securities. Now that the tax bill has be enacted, we can have a better idea of the likely impact on various economic variables from the bill.

The recently enacted tax-bill does benefit mREITs in that they are now considered pass-through entities for tax purposes and holders of mREITs can pay lower taxes as a result. Dividends paid by ETNs such as MORL are interest for tax purposes and thus are not impacted by the tax bill. However, if the values of the underlying mREITs increases, the value of MORL will increase commensurately. This beneficial tax-related effect for mREITs is likely to be minor.

The tax bill will have an impact on the business cycle. The two major macroeconomic impacts will be: from a form of classic Keynesian deficit stimulus and the further widening of inequality. Prior to enactment of the bill, the top 1% paid about 39% of Federal taxes. If a tax bill that provided that 39% of the benefits went to the top 1%, were enacted, there would have been very little impact on the degree of inequality. However, the actual tax bill provides that 83% of the benefits will go to the top 1%. While only 17% will go to the rest of the 99%.

Conventional analysis of the impact of tax legislation on inequality makes a profound error. Many use the terms pretax inequality and after-tax inequality. This terminology misses the causal relationship. A hundred years ago, looking at pretax inequality and then estimating how much the tax code impacts inequality might have been logical. That assumes there are some significant nontax factors that are causing inequality and tax law can then increase or decrease the degree of inequality. There is at any given point in time a degree of pretax inequality. However, almost all of the variability of pretax inequality since at least World War I has been the cumulative effect of tax and other legislation.

Prior to enactment of the Federal income tax in 1913, all inequality was due essentially to nontax factors. The first Federal income tax in 1913 reduced inequality, since it was a tax of 7% of income above $500,000. At that time $3 a day was considered a good wage. Thus, originally only a minute fraction of the richest 1% paid all of the Federal income tax in 1913. At that time it was accurate to say that there were significant nontax causes of inequality. Changes in tax and social welfare laws after then would either increase or decrease inequality.

Obviously, wealth inequality, which is a function of cumulative prior income inequality, does cause income inequality. However, other than wealth inequality, there have not been any significant nontax causes of income inequality for at least the last 50 years.

As I explained in “A Depression With Benefits: The Macro Case For mREITs“:

.. Issues such a globalization, free trade, unionization, minimum wage laws, single parents, problems with our education system and infrastructure can increase the income and wealth inequality. However, these are extremely minor when compared to the shift of the tax burden from the rich to the middle class. It is the compounding year after year of the effect of the shift away from taxes on capital income such as profits, dividends, capital gains and inheritances over time as the rich get proverbially richer which is the prime generator of inequality…

The primary change that has fundamentally changed the economy can be best described by Warren Buffett, CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), who said, “Through the tax code, there has been class warfare waged, and my class has won,” to Business Wire CEO Cathy Baron Tamraz at a luncheon in honor of the company’s 50th anniversary. “It’s been a rout.”..

For at least 50 years, non-wealth and nontax factors had very little impact on pretax inequality. All of the factors that previously had some effect on pretax inequality, now merely take income from one group and may transfer it to others but do not impact pretax inequality. Increasing or decreasing the power of labor unions may have impacted pretax inequality in the past. However, the relative power or lack of power today of unions may determine whether higher paid unionized employees gain or lose relative to lower paid non-union workers and consumers, but that does not significantly impact inequality between the top 1% and the other 99%. Increasing the minimum wage would in many cases be just transfer money from those who eat at McDonald’s to those who work at McDonald’s and similar establishments.

Technological progress, globalization and free trade on balance makes almost all people better off. There will be some losers at times. However, any harm from technological progress, globalization and free trade is a likely to impact the owners of firms as much as employees of those firms. Thus, there is no impact on inequality. At one time lack of access to education may have significantly contributed pretax inequality. That is not the case today. The unpleasant truth is that today’s white non-college educated working class person is not your grandfather’s white non-college educated working class person.

Eighty years ago, there were many very intelligent people who did not attend college because of financial circumstances or because of discrimination against their race, religion or gender. Henry George, arguably the most brilliant American economist of the 19th century, left school at age 14. President Harry Truman was not a college graduate.

Today, with many exceptions, someone under the age of forty who was never interested in college probably is not very smart. That could reduce their wages. That also makes them vulnerable to the lies that got Trump elected. Even some with college educations are not able to understand that NAFTA and trade agreements in general increase employment and standards of living and that immigrants are not responsible for slow economic growth. However, lack of access to education, trade agreements and immigration are not the reasons why smarter people can generally earn more than others.

Ironically, if any Republican had been elected president, the shift in the tax burden from the rich to the middle class that Warren Buffett describes as having been “a rout” would have become the outright massacre that the new tax bill represents. This will not be great for the Congressional Republicans politically. Their prospects would be much better if no tax bill had been passed, and then they could run on the issue of “elect us and we will enact a middle class tax cut”. Many Congressional Republicans are probably aware that massively shifting the tax burden from the rich to the middle class is not necessarily a political winner. However, they want to pass legislation that does exactly that with the knowledge that as long as Trump is president, there is no way that their tax legislation can be repealed, even if Republicans lose control of Congress. Furthermore, as Obamacare and the Bush tax cuts have demonstrated, it is very difficult to change existing laws once they are passed. This is true even if the other party gains control of both Congress and the presidency.

While Trump would have no hesitancy in stating something to the effect that: “The middle class got a giant tax cut and the rich did not, don’t believe anyone who is telling you otherwise, especially the fake mainstream media, your accountant or H&R Block (HRB)”, other Republicans may be reticent to take that approach.

The political debate may now shift from how many middle class taxpayers actually will pay more or less under the Republican tax bill to the undeniable fact that there will be a massive shift in the tax burden from the rich and onto the middle class. The majority of middle-class taxpayers will see some benefit from the tax bill. However, even they might ponder the question of how much more they would have gotten from a tax bill that provided that 39% of the benefits went to the top 1%, and thus 61% of the benefits went to the other 99% as opposed to the 83% going to the top 1%.

The fact that the non-rich could have had greater tax cuts, if the rich had not gotten so much, is not the only political problem for the Republicans. The tax portion of the Obama stimulus program lowered taxes on everyone who paid social security taxes and gave some extra payments to those on social security and unemployment compensation. However, most people falsely believed their taxes had been increased. With the new tax bill, there will be many middle class losers, which was not the case in earlier tax cuts.

An old adage is that a family should buy the absolutely most house they can. Prior to 2007, buying more house than they could comfortably afford was a generally winning strategy as home prices usually rose. Even today there are many middle class households following the “absolutely most house they can” strategy, who are just barely able to afford their homes. A family in the New York City suburbs with an income of $150,000 may be just able to pay their bills only because they can deduct the $10,000 they pay in state and local income tax and the $30,000 they pay in real estate taxes from their federal income tax bill. Limiting the state and local deduction to $10,000 will mean that many in those circumstances will lose their homes.

In: CEFL has a 15.9% yield on annualized monthly compounded basis. I said a few weeks ago:

There are many different ways to categorize households as between those that are middle class and those that are rich. Likewise, there are a number of ways to measure how a change in the tax code impacts various sectors in the economy. There are also different methodologies used to calculated what percentage of Federal taxes are paid by middle class households as compared to the rich However, by any conceivable way of delineating the middle class from the rich, and measuring the impact of changes in the tax code, the tax bill enacted this year will be the most massive shift in the tax burden away from the rich and thus onto the middle class.

We have seen this story before. It is not just a coincidence that tax cuts for the rich have preceded both the 1929 depression and the 2007 financial crisis. The Revenue acts of 1926 and 1928 worked exactly as the Republican Congresses that pushed them through promised. The dramatic reductions in taxes on the upper income brackets and estates of the wealthy did indeed result in increases in savings and investment. However, overinvestment (by 1929 there were over 600 automobile manufacturing companies in America) caused the depression that made the rich, and most everyone else, ultimately much poorer.

The quandary for investors can be described as someone who has seen the first and last page of a book, but does not know either how long the book is or what happened between the first and last pages. We know that a massive transfer to the rich will happen. We know that the middle class has a much higher marginal propensity to consume than the rich. We know that initially the rich, or if you rather the job creators, use their additional after-tax income to invest. This extra investment initially boosts securities prices. The higher prices securities for securities enables investments to occur, that might have otherwise been undertaken. These can range from factories, shopping centers and housing. What we don’t know is the path that equity prices and interest rates will take between the enactment of the tax shift and the eventual financial crisis or other event occurs, at which time the massive excess of supply of loanable funds as compared to demand for loans will push risk-free short-term interest rates down to near the lower bound, as was the case during the 1930s, in Japan for decades and in America since 2008.

The length, path and magnitude of a tax-shift induced cycle is particularly important to investors in leveraged instruments, such as high yield 2X leveraged ETNs. No two overinvestment cycles are identical. This time the picture is cloudier since most of the shift in the tax burden from the wealthy to the middle class will be via reductions in business taxes. However, that does not mean that changing corporate taxes other than the rate cannot impact economic activity. Reducing taxes on corporations would not increase economic activity since a profit maximizing corporation will make decisions that relating to the level of production, wages and prices that maximize after-tax profit. Since corporate income taxes are a percent of pre-tax profits, the level of output, wages and prices that maximize pre-tax profits are also the same levels that maximize after-tax profits. This was explained in: Get 16.8% Dividend Yield, And Diversify Some ETN Interest Risk.

Allowing immediate expensing of capital expenditures or even just allowing vastly increased accelerated depreciation could bring forward capital expenditures that would have otherwise have taken place in the future. This can be particularly powerful as the immediate expensing or extra accelerated depreciation was set to only last for a specified period. Allowing immediate expensing of capital expenditures could even cause projects that would otherwise be not accepted on a net-present value analysis be undertaken as a result of now having expected internal rates of return exceeding the hurdle rate.

There is also a “geographical Laffer Curve effect” when different taxing jurisdictions cause activity to shift from higher tax jurisdictions to those with lower taxes. Generally, this is more pronounced the closer the different jurisdictions are. People driving from New York to New Jersey to pay less sales taxes when they shop are an example. Lower corporate taxes in the U.S. could shift some activity from other countries. Although, other countries could in turn lower their corporate tax rates, in return. Allowing repatriation of corporate profits now nominally held in other countries or just eliminating taxes on foreign earnings could boost the value of shares in multinational corporations. These would include Apple (AAPL) and possibly even General Motors (GM). Most major profitable multinationals have ample access to capital regardless of where their cash is located. Thus, very few multinational corporations are not undertaking any projects because of where their cash is located.

This time we may have a much shorter overinvestment period and go almost directly to the financial crisis period. This could occur if disruptions to specific sectors precipitate a financial crisis. Eliminating the Obamacare individual mandate will cause there to be 13 million less people with health insurance. Uninsured people spend less on health care than those with insurance. Most studies indicate a 25% difference. Thus, fewer insured people will result in less spending on health care than would have been the case otherwise. Other than the direct impact on GDP from lower expenditures, there could be financial distress as some firms in the health care become unable to pay their debts.

There is now a significant possibility that disruptions to specific sectors in the economy could be more important than the pure macroeconomic impacts of the Republican tax bill. The risks of defaults stemming from weakness in the housing-related sectors exceeds that of healthcare. The homebuilders are correct in their complaints that most of the tax advantages of home ownership will be eliminated by the Republican tax bill. As the homebuilders point out, many more middle and low-income people will no longer itemize since the standard deduction has increased and other deductions will be reduced or eliminated. Additionally, a lower limit on mortgage interest deduction for new home purchases reduces tax advantages of home ownership.

Thus, as the home-builders now argue, only a few relatively wealthy households that still itemize will get any benefit from the $10,000 deduction. For those wealthy households, a $10,000 deduction is not likely to be a major factor when deciding whether to buy a home. The net result could be a significant negative impact on home prices.

As I said in: With A 23.4% Dividend Yield Credit Suisse X-Links Monthly Pay 2xLeveraged Mortgage REIT ETN REML Now More Attractive

Another potential disruption from the Republican tax bill also stems from the reduction or eliminations of deductions for state and local taxes. As with the real estate impact, the impacts on the finances state and local will vary widely for different regions and locations. There are some jurisdictions that will be severely impacted the reduction or eliminations of deductions for state and local taxes. New York and California are the obvious examples.

Disruption caused by the Republican tax bill could result in various degrees of financial distress and defaults that could cause the Federal Reserve set short-term interest rates lower that what markets are now assuming. This would be a very good development for holders of agency mortgage-backed securities. Leveraged mREITs would benefit significantly. Long-term fixed income securities could also benefit from lower issuance of corporate bonds. Lower corporate income taxes reduce the tax benefits from debt and could give corporations additional funds to pay down debt.

Conclusions and Recommendations

With this much uncertainty regarding the future direction of both the fixed income and equity markets, what is an investor to do? If you are reading this, you probably are an investor in, or at least a potential investor in 2X Leveraged ETNs such as: MORL, MRRL, UBS ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN (NYSEARCA:CEFL) and UBS ETRACS 2xLeveraged Long Wells Fargo Business Development Company ETN (NYSEARCA:BDCL). In my article “BDCL: The Third Leg Of The High-Yielding Leveraged ETN Stool“, I said that BDCL is highly correlated to the overall market but may be a very good diversifier for investors seeking high income who are now heavily invested in interest rate sensitive instruments. Previously, I pointed out in 17.8%-Yielding CEFL – Diversification On Top Of Diversification, Or Fees On Top Of Fees? those investors who have significant portions of their portfolios in mREITs and in particular a leveraged basket of mREITs such as the ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN could benefit from diversifying into an instrument that was highly correlated to SPY.

That the mREITs are trading at elevated levels relative to book value and in some cases close to multi-year highs is certainly cause for caution. MORL has come down in price from the October 5, 2017 closing high of $19.16. Active traders might want to take advantage of this price reduction or conversely consider waiting until further price declines, possibly if deeper mREIT discounts return or fears of higher interest rates increase. In the past, mREITs trading at or close to premiums to book value have resulted in new issuance of mREIT shares which tended to push down mREIT prices. There is no reason to think that will not be the case now. The other lesson we can learn from the last few years is that waiting for price declines in high-yielding instruments like MORL can backfire as the large dividends forgone by waiting exceed the savings from a lower purchase price.

Taking all of this into consideration, I am still a cautious buyer of MORL and MRRL and have added during the recent dip. Sometimes, one of those can be bought slightly lower than the other one. The yields are still compelling. However, the uncertainty regarding tax policy and means that significant event risks exist in addition to the risks inherent with the ETNs’ use of leverage. This is in addition to the leverage employed by many of the components that make up the indices upon which these ETNs are based. I am diversifying with CEFL and BDCL since there is a small possibility of much stronger economic growth than I expect. If a major increase in protectionism is enacted or something equally catastrophic were to occur, it would be expected that the stock market would decline sharply, but MORL could do better as investors seek the safety of agency mortgage-backed securities and the Federal Reserve lowers interest rates.

Another addition to my 2X high yield leveraged ETN portfolio is REML, an exchange traded note that is based on the FTSE NAREIT All Mortgage Capped Index of mREITs. That is the same index used by the iShares Mortgage Real Estate Capped ETF. REML is followed much less than MORL. The volume and liquidity of REML is in the category of what some would derisively refer to as a “trades by appointment” security. There are reasons that one might consider REML rather than MORL or vice versa. As I discussed in: How Does REM Pay That 15% Dividend? the index upon which REM and thus REML is based contains more mREITs than the index upon which MORL and MRRL is based. As I explained in the article 30% Yielding MORL, MORT And The mREITs: A Real World Application And Test Of Modern Portfolio Theory, diversification can allow for higher expected returns without commensurate increases in risk. Just adding REML to a portfolio that previously only held MORL would make it slightly more efficient. A security or a portfolio of securities is more efficient than another asset if it has a higher expected return than the other asset but no more risk, or has the same expected return but less risk.

Even though MORL and REML include mostly similar securities, their portfolios are not identical. REML has more component mREITs than MORL. Additional diversification considerations are that MORL is an obligation of UBS while REML is an obligation of CS. It is highly unlikely that either UBS or CS will default in the foreseeable future. However, to the extent one has any concern over those major banks’ future solvency holding MORL and REML can provide diversification in that regard. Some have expressed concern regarding the call provisions in ETNs such as MORL. MORL can be redeemed at net indicative (asset) value by UBS if the value falls too low or too quickly. That is not really economic call risk. Since, unlike a call on a bond where the issuer has the right to buy back the bond at a specified price below the market value the bond would have without the call, the ability to redeem at net asset value has no intrinsic option value.

As I said in: With A 22.1% Dividend Yield, REML Is The Highest Of The ETNs, But New Risks Are Present

REML can be called or redeemed at net indicative (asset) value by CS at any time. This is also the case with almost all mutual funds where the sponsor can close the fund and return the net asset value to the shareholders. Normally, the only time a fund or an ETN would be closed if it was not economic to remain open. This could occur if it became too small. With leveraged ETNs, the sponsor would close it if the value of each share was so low that it posed a margin-type risk. This is the same reason a brokerage firm would liquidate a margin account if the equity relative to the amount borrowed by the account fell to low. In that respect, REML trading at a price close to double that of MORL has less of a prospect of being redeemed because the price per share falls too much. However, in terms of likely to be called because the entire size of the ETN is too low, there is a greater chance of early redemption with REML. In any case, early redemption is more of an annoyance than a risk. One can always use the proceeds from an early redemption to buy securities with similar risk/return profiles. With REML and MORL they would serve as good substitutes for each other in the event of an early redemption.

My calculation projects a January 2018 monthly dividend of $0.7813. The implied annualized dividends would be $3.675, based on annualizing the most recent three months including the January 2018 projection. This is a 21.0% simple annualized yield with MORL valued at $17.49. On a monthly compounded annualized basis, it is 23.2%.

Aside from the fact that with a yield 23.2% you get back your initial investment in less than five years and still have your original investment shares intact, if someone thought that over the next five years, interest rates would remain relatively stable, and thus MORL would continue to yield 23.2% on a compounded basis, the return on a strategy of reinvesting all dividends would be enormous. An investment of $100,000 would be worth $283,377 in five years. More interestingly, for those investing for future income, the income from the initial $100,000 would increase from the $23,200 initial annual rate to $65,633 annually.

Holdings of MORL and MRRL, Prices as of 12-22-2017









Annaly Capital Management Inc








American Capital Agency Corp








New Residential Investment Corp








Starwood Property Trust Inc








Blackstone Mortgage Trust Inc








Chimera Investment Corp








Invesco Mortgage Capital Inc








Apollo Commercial Real Estat








MFA Financial Inc








CYS Investments Inc








Two Harbors Investment Corp








Hannon Armstrong Sustainable Infrastructure Capital Inc








Pennymac Portgage Investment








ARMOUR Residential REIT Inc








Ladder Capital Corp








American Capital Mortgage Investment Corp








New York Mortgage Trust Inc








Redwood Trust Inc








Capstead Mortgage Corp








Anworth Mortgage Asset Corp








AG Mortgage Investment Trust Inc








Orchid Island Capital Inc








Western Asset Mortgage Capital Corp








iStar Inc






Dynex Capital Inc








Disclosure: I am/we are long MORL, MRRL, AGNC, RAS, BDCL. CEFL, REM, REML, ORC, CYS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Time for Tech Firms to Take Responsibility for the Havoc They Wrought in 2017

?As one of the earliest, and first, female investors in Twitter, I had great hopes for its potential to improve human connectedness and relationships. Today, it’s become clear it’s done the opposite—by becoming a thunderously divisive tool weaponized by the leader of the free world.



Susan Wu (@sw) is an entrepreneur, engineer, and angel investor. Susan is cofounder of a new educational movement focused on empowering children to thrive in the world of the future. She is also part of the founding team of Project Include.

Consider other harm caused by today’s major technology companies: The immense power wielded by Facebook in the 2016 presidential election and its complicity in stoking genocidal violence against the Rohingya people of Myanmar. The pervasive ethical shortcomings surrounding Uber’s business practices, and Airbnb’s sometimes devastating influence on neighborhoods. Not to mention revelations about workplace harassment and discrimination that occur in many corners of Silicon Valley (and beyond).

Our industry hardly needs more evidence that what constitutes success in the digital age urgently needs to be redefined.

Technology has recently played a positive role as well, with the long-awaited revelations of long-standing abuse by men amplified by #metoo, and in galvanizing a movement around longstanding racial inequities with #blacklivesmatter.

It’s crystal clear that Silicon Valley’s chief executives are no longer merely startup founders, product creators, and business executives. They’re societal leaders too, oligarchs shaping the very nature of our identities, communications, and relationships.

In a world where software and algorithms run most every part of our lives—where Google and Facebook control close to 70 percent of all digital advertising, and smartphone penetration is nearing 80 percent—creating innovative software and launching indispensable apps is no longer enough.

As basic social contracts across nearly every aspect of Americans’ lives are being dismantled by a voracious, so-called free market system and gluttonous political administration, citizens each have an even more urgent need to acknowledge our responsibility to one another. Today, racking up a stratospheric market valuation without significant consideration of the product or company’s broader societal impact is reckless and irresponsible.

Urgently, innovators must consider the massive ripple effects of their creations as part of their imperative. Being an innovation leader isn’t just about delivering quarterly shareholder results or hitting product launch dates. Genuine innovation isn’t just about making technological advances, but also about reimagining and understanding structural issues underlying society.

The tech industry can either design for and build positive externalities, or we can inflict many negative ones—job displacement, fracturing of neighborhoods, addictive behaviors, compounding isolation, fortifying tribalism, and widening income equality, to name a few.

As a veteran angel investor, engineer, and technology entrepreneur, I worked to popularize and commercialize the World Wide Web 20 years ago. The hope then was to revolutionize power structures, increase access to opportunity, and construct a level playing field for all.   The tomorrow I hoped for has not yet arrived: one grounded in engaged empathy and equality, where humanity and technology are synthesized and integrated in a new force, one that empowers people to thrive as whole human beings.

Achieving this requires a commitment to the belief that true progress and discovery is only possible by addressing the fundamental human needs of many, not just those fortunate to have a voice and a presence at the table. Though stratospheric income inequality may insulate the most privileged from the real-world impact of many of their decisions, there are some global crises that are inescapable, like climate change.

Harnessing the perspectives of women, people of color, and underrepresented communities, including the 80 percent of the world who lives on less than $10 a day, would offer a diversity of lived experiences that could propel genuine, structural innovation this coming decade. Imagine the types of platforms, products, and inventions that can be created when we expand the pool of entrepreneurs to welcome entirely new viewpoints.

Without thoughtful consideration of how technology interacts with structural and systemic issues in society, would-be innovators are inadvertently rehashing history, by moving around the same pieces on the same game board over and over.

Look, for instance, at the most likely probability that men hold well over 90 percent of the asset value of today’s techno-darling bitcoin, the latest example of merely shifting power from one group of privileged men to another.

Perhaps it’s time for an updated version of Maslow’s hierarchy of needs, one that underscores what’s essential not just for individuals to flourish, but for the greater good of society. Startups and management executives universally invoke this theory as an accepted canon for framing the human problems they’re trying to solve.

The problem is that Maslow’s framework pertains to individual, not societal, well-being. The reality is that individual needs cannot be met without the social cohesion of belonging, connectedness, and symbiotic networks. A revised design focused on a thriving civilization would have at its root empathy and ethics, and acknowledge that if inequality continues to grow at its current pace, societal well-being becomes impossible to achieve.

The very idea of what it means to be human is changing—and we who are leaders in technology are aiding and abetting that change. Let’s acknowledge and embrace the magnitude of that power—and our responsibility to put it to good use.

We must never forget that the innovations of today set the standards for the future: how we learn, socialize, enjoy, work, shop, mate, and navigate this tiny rock we call planet Earth. Great leaders in innovation understand that they’re continually earning the right to be leaders, effectively representing the needs of all communities, and empowering all of humanity to live ever better lives.

WIRED Opinion publishes pieces written by outside contributors and represents a wide range of viewpoints. Read more opinions here.