Markets have once more been very volatile in the past few days, with GM going bankrupt and the US dollar tanking, here are a few of the good posts I read last week around the blogosphere:

-TFB presents: Is the US government going to lose its AAA rating?
-Leveraged ETF’s generate a lot of discussions, they are good investiment instruments, but not for all purposes: Understanding the math of leveraged ETF’s
-The recovery of the real estate prices, is it already time?
-Four Pillars discusses Peer to Peer lending, a look back since its debut
-MDJ is still on his way towards being a millionaire!!
-Zach discusses the tough quarter by Tiffani’s as consumers are buying less of the expensive diamonds during this recession…
-Where is Amazon heading? Take a look at Wild Investor’s view
-Should you be selling your energy stocks or is oil heading back to 100$, read a view here
-Funny post I thought about marrying a do it yourself husband
-TCT looks into the impact on your wife if you go bankrupt!
-And finally, always a good lesson, don’t spend tomorrow’s money today!

Facebook, the leading social network by many measures received a cash injection a few days ago by a Russian investment firm that purchased close to 2% of shares in exchange for $200M valuing the company at $10 B, which is less than it was a few months ago when Microsoft purchased its stake but given the market decline, that is actually a very decent valuation and still a healthy sign for a company that is increasingly facing competition from all kinds of different companies from LinkedIn to Twitter, Google and others. Can Facebook survive? It is certainly still growing and doing so through a more open website that allows for useful applications to be used, much like the Ipod. And in a way, Facebook is indeed remaining sticky and certainly an interesting investment for a company that is looking for eyeballs. But in pure financial terms? I’m not as convinced. While Facebook will probably not fade anytime soon even if it loses its “coolness” factor (MySpace is a great example of this), it is still not clear how the company will be able to generate much profit.

There is talk about more advertisements as well as possibly charging users for some features, but in the era of “free”, it’s not easy to see what these features would be and why a company like Google could not simply come in and offer that service for free. Of course, Facebook has the logistic advantage of c0nnecting friends that Google cannot quite compete with but the line between the two is not as big as it seems. Google would simply need to add a more “socially integrated” platform through its Gmail email system for many users to be able to forbid Facebook to keep in contact. It is not quite clear if Google will even attempt this but as it has itself admitted, live search is becomming more important and it will be difficult for Google to be competitive with Twitter and Facebook if it does not receive the same kind of user interaction..

All in all, I do think Facebook is a wonderful venture and would love to invest if I had spare money. But would I invest in it because it is the best investment, never… It is just not quite clear to me how Facebook would ever be able to generate the same earning power as a Google, Apple, Microsoft…

About 10 years ago, you could find magazine stores at almost every corner street in major cities and for a while it looked like there were no limits as more and more specialised mags came to the market. I was the first person who would enjoy walking into those stores to buy a few different magazines, learn about different subjects, etc. But with the internet’s growing popularity, the landscape has changed tremendously in many ways:

-First, with the internet, news comes out and it is about hours and minutes. How can a magazine that is written, published and sent out ever be up-to-date? Some newspapers have adapted and switched from a “news” perspective to more in-depth analysis

-Second, in a world where users can get almost unlimited content for free on the internet, it is more and more difficult to get them to pay to subscribe

And as if things were not already difficult, the tough economy has crushed the ad market and magazines such as “Wired” are suffering from ad rates half of what they were one year ago…For that reason, and for many others, several magazines are shutting down, more and more every month it seems.

The editor of wired said: ““This is the annoying question I get all the time, which is, ‘Is print dead?’ ” he said. “We need to do something that doesn’t exist online, and do it in a superior way. Otherwise we should just do it online.”

And so far, that has been the strategy employed by most magazines, getting more of their content online and either offering their content for free getting paid with ads, or offering the content to their subscribers only.

That is great and surely the best way to deal with the new landscape. The problem of course is that the competition is not comparable on the internet which makes it very difficult to be certain how things will turn out. The good part is probably that the overall survivors will end up being the ones that can generate the best content. Wired is one of those publishers that i think can survive no matter what the format, even if it were to become an online publisher only… Will the magazine industry survive? It will, but probably in a very different format than what it currently is..

I was recently reading “The Economist” and two articles caught my attention. Firstly, an article about a major scandal right now in Italy as it turns out that many banks and brokers sold products to investors that clearly did not read the fine lines before signing the papers as they did not buy. They either were not told or did not understand the downside risks of the contracts that they signed. While the recent market downturn and volatility in the markets (including FX) had not been predicted by many, it was a risk that clearly was not understood. I’ve read a similar article about similar things that happened in South Korea, on a much bigger scale. There are clearly many elements at stake here:

-Obviously, there should be regulation that explains clearly the risks involved before taking such contracts. Often, companies that want to hedge are clearly not specialised in finance and so understanding these contracts can prove to be quite a challenge.

-But also, how is it possible that these companies or individuals have signed contracts without understanding them completely

And to a certain extent, it is easy to imagine how companies can be fooled. Think about a fisherman that is costs in CAD$ and sells his inventory in the US. He will have a FX risk and might meet with his banker to offset this risk. Chances are that this fisherman does not have a deep knowledge of derivative products and that he might sign a contract that he is told will resolve his problem… and who could blame him?

That was bad but I figured that it was at least partially the investors fault for they signed up for these contracts.

But you might have heard about P2P, in this case Peer to Peer lending. This offers the possibility of investors and lenders doing business with less participants in the middle. And when a group of small visitors lend 5000$ to a student that has provided his credit history, motivations and plan for a business idea or for grad school, you can imagine that they have a good idea what the creditors are going up for. But now, with credit markets somewhat frozen, some banks are starting to unload these frozen assets through such P2P networks. This to me, sounds dangerous. If multi-billion banks have been saying for months now how difficult (i.e. impossible) it is to value such loans, that are often a group of loans on hundreds and thousands of lenders grouped together. There just seems to be no way for investors to know who they are lending to, and then how could you possibly sign up for that? But as these are geared towards mainstream investors, I have no doubt they will find a few people that will be more than happy to offer money since they will be receiving higer interest rates…doesn’t that sound almost criminal???

Good Saturday to all of you, how nice it is to finally have some good weather as well a nice weekend:) Before we go enjoy the sun, here are a few of the more interesting blog entries I read in the past few days:

No secret that I follow internet stocks and Netease is one of those less known ones because it operates in China, Zach wrote a very informative post here.

Interesting article from the Washington Post about life for the less fortunate in these tough times

The $1 million question, is the current rally a bear market rally or the return of the bull market? Interesting take by EveryDayFinance

Very interesting travel tips in “Travel Full-Time for less than 14,000$/year“.

Not easy and perhaps not always possible, but worth looking into; living on 50% of your income.

Interesting article by Four Pillars about not overlooking savings and investment opportunities….

Still hesitating about becomming an entrepreneur? Here is some good inspiration.

TheFinancialBlogger will be living off of one income for a while, look at his take on it.

How to deal with fraud on your credit card by CreditToolbox!

A few days ago, numbers by the OECD were released regarding the life satisfaction numbers, or “happiness” rankings. And no surprise, the US did not come out with flying colours. In fact, the US did not make the top 10 coming out in the 11th spot. Of course, you would expect that with its very liberal policies, it might rank less well than more social countries such as those in Northern Europe simply because it is more difficult for the less fortunate portion of the population to get access to health care and education. When discussing this with other Americans, I often get the response that this is a rather subjective matter and that it is has paid economically. I’m not sure it is that subjective but let’s say it is, let’s compare GDP.

Of course, I think it is fully justified to take the GDP per capita because that is what matters really isn’t it? And you might be surprised to hear that in that category, the US sits at #15! So no, things are not perfect! I’m not saying the US does not do some things right but I just find it ironic when some act as if the US was the example to follow. I think the US does many things right and is an example to follow in many ways. But I think this is one of the reasons why Barack Obama has been so embraced by the world. As he said. The US is perhaps the most powerful nation in the world, but it is ONE nation among many. And should act as a leader, not a dictator.

Just thought it made for an interesting post. Before you ask the most “happy nations” are:

1-Denmark
2-Finland
3-Netherlands

While the richest per capita are:

1-Luxembourg
2-Norway
3-Qatar

Now as we have written in the past we are generally right wing and thus not fans of taxes. But it is still interesting to see how the nations that do best in both of these statistics are generally nations that have higher taxes and are thus able to offer more equal services in terms of health care and education. I’m not saying that all nations should go on that road but I think we do need to look into such measures instead of simply refusing to even consider measures such as universal health care as many republicans wish for.

What are your thoughts on this? Would a universal model exist or does each nation have a different ideal?