|
|
| November 17, 2009 |
Issue 25 | |
|
|
"Preparing you for the financial road ahead" | |
|
|
|
Business: The Netflix Model for.. Dresses? |
|
Two recent Harvard Business School graduates, Jennifer Hyman and Jennifer Carter Fleiss have just opened Rent the Runway. They're hoping to make high-end fashions much more accessible and almost as easy as renting a movie at Netflix. Ms. Hyman got the idea for the business last year after watching her younger sister agonize over whether to buy a new expensive outfit for a wedding. The rentals run from $50 to $200 for a four-night loan and are shipped directly to the customer. The mail-order service allows women to rent dresses from notable fashion designers for roughly one-tenth of the cost of the dress in a retail store. After wearing the dress, the customer puts it in a prepaid envelope and drops it in the mail. The founders say that more than 20,000 women have already signed up for the service. Even so, there are several big risks for the business. Fashions change quickly, there is no guarantee that the company will be able to rent each dress enough time to cover its costs, fitting for dresses is much more difficult than films, and it will be critical to make sure a customer gets a specific dress for the night she needs it. Rent the Runway is a recession-era twist on the Internet rent-by-mail model, which has been used for film, textbooks and video games. Actually, Netflix's original business model is well on its way to obsolescence for movies, since in the new age of fast downloads, it simply does not make sense to mail DVDs back and forth. It will be interesting to see if this business prospers. It's difficult to rent or buy clothes without trying them on. And fashion is a notoriously fickle industry. At any rate, it will be interesting to watch the larger trend that this business represents. Recessions are a time of vicious creative destruction in which old businesses are destroyed and new ones created. It would be ironic if Netflix's core business failed yet inspired copycats that revolutionized other industries. For more information, click here | |
 |
| Quick Links |
|
220 N. Smith Street
Suite 410
Palatine, IL 60067
847.359.6262
Suite 210
Charleston, SC 29401
843.577.2463 |
Click here to be added to our mailing list!
Please be assured that your e-mail address will only be used for the delivery of your newsletter.
Thanks | |
|
|
Investing: Inside the Global Gold Frenzy |
|
Gold prices continue to march higher, setting a record $1,117 per ounce last Friday. Many of you recall that we provided our report "Going for the Gold" six months ago in our May 2009 Sherpa Insight. Gold was $900 per ounce then.
Certainly the 24% increase in six months reflects the current gold frenzy. Multi-billion dollar hedge funds, wealthy speculators and governments have all been rushing in to stock up on the precious metal. As we pointed out in May, gold historically has been more of a crisis hedge rather than an inflation hedge. The US dollar has continued to steadily weaken, budget deficits have expanded in the US and Europe and central banks have pumped trillions of dollars into weak economies. The fears of another asset bubble that will pop have created a potential crisis which is pushing the frenzy.
The appeal for gold has broadened. Harrod's is now selling gold bullion and coins. The 100 gram bar has been the most popular. In the US, there are buyers everywhere on TV, in shopping malls, and even Tupperware-like parties. More than 100 people each day come to sell their gold at Perry's antique store in Charlotte, N.C..
Last week, the Reserve Bank of India stepped in and bought 220 tons of gold from the IMF for $6.7 billion, a sign that other central banks may move away from dollar-denominated assets like Treasury bonds in favor of gold. China has already doubled its gold reserves in the last six years.
In addition to the global economic crisis providing anxiety about the future, the recent crackdown on international tax havens, according to the New York Times has caused large international investors to consider assets that can be hidden from the "prying eyes of tax collectors". This has added to the gold frenzy.
As we pointed out in our May article, assuming one concludes that they would like to invest in gold, this can be accomplished in four basic ways: 1) Exchange Traded Funds like GLD, 2) gold coins, bullion and bars, 3) gold mining stocks, and 4) within a precious metals asset class investment.
We continue to believe that one of the best ways to get exposure to gold is through a precious metal ETF or mutual fund. You get more diversification because the ETFs and funds typically also include silver and platinum. And, during the recent metals rally, silver and platinum actually outperformed gold. Finally, because of the volatile nature of gold and other precious metals, we recommend such investment be handled in a tactical manner, not as a long-term strategic investment. As you know, our DTIS strategy has been invested in the precious metals asset class most of the last twelve months.
If you have any questions, about gold or gold frenzy, please give us a call.
For more information from our May, 2009 DWM newsletter, click here .
For more information on tne New York Times article, click here. |
|
Income Taxes: Consider These Year-End Tax Moves |
|
Year-end tax planning always makes sense. Here are some especially relevant areas:
Go Green. The federal government is offering incentives for taxpayers making home improvements to help keep energy cost down. If you add insulation or install energy-efficient replacement windows, doors or skylights in your principal residence by year-end, you'll qualify for a tax credit of 30% of the cost, up to a maximum of $1,500.
For larger items, there's no cap. Solar water heaters, solar panels, small wind-energy systems and geo-thermal heat pumps also qualify for a 30% of purchase price credit, with no cap. Credits for these improvements are available through 2016, but you must claim them for the tax year in which you made the purchase.
Buy A House. Congress has just extended and improved this benefit, which was originally due to expire 11/30/09. The new provision extends the first time homebuyers credit for up to $8,000 for 10% of the cost of the house until July 1, 2010.
The new law also authorizes a similar $6,500 credit for buyers who already own a home. It too is a refundable credit for 10% of the purchase price of a house costing no more than $800,000. To qualify, the buyer must have owned and lived in the same home for five of the eight years preceding the new home purchase and must use the new home as the buyer's principal residence. The new law also provides more generous phase-outs, used for reducing the credit for high income taxpayers.
Take Profits Tax-Free. All taxpayers should review their realized and unrealized gains and losses for 2009. Capital losses may be matched dollar-for-dollar against other long-term capital gains. If you have a net loss, you can offset up to $3,000 of ordinary income with capital losses.
As a reminder, DWM provides its clients with realized and unrealized gain and loss information in late November/early December each year to facilitate this review.
Meet with your CPA. We encourage all clients to meet with their CPA before year-end to review the above, along with other possibilities such as Roth conversion (only for those with MAGI below $100,000 in 2009), deferral of income, acceleration of expenses, charitable gifts, sales tax on new car purchases, and other matters that your CPA would suggest.
For more information on the Kiplinger article, click here
For more information from the Wall Street Journal, click here |
|
|
| -Market Update- |
 |
We appreciate your feedback!
Let us know what you think...
|
|
|
|
|
|
