Companies that make you go Wow!

Companies that make you go Wow!

No BS Weekly Update - November 14, 2011

In This Issue

Performance

Headlines

Recipe

Health Tip

One of the interesting things about the market turmoil of the last few years is that it gives us a chance to witness the "Gales of Creative Destruction". This was a term coined by economist Joseph Schumpeter in his 1942 book "Capitalism, Socialism, and Democracy".

What is creative destruction?

It is the process by which capitalism drives growth. Innovation allows new companies to grow even as it destroys the value of old established companies.

Those changes seem to come faster and faster these days. Technology is driving a lot of the change. Just think of some of the changes that technology has brought about in the last few decades. Whole job classifications and industries have been eliminated. Let's look at a couple of examples.

Typing pools and secretarial pools. These used to be very common. Now days most people type a lot of their own stuff. With computers it's just quicker and easier. Or even better we can use technology like Dragon's Naturally Speaking to dictate all of our typing chores to the computer. The computer then turns our spoken word into typed text. Pretty cool!

Another example is vinyl records. A whole industry pretty much gone. Then came CDs. That is an industry that was born in the 1980s and is already becoming obsolete. It's being replaced by digital music that you can download right over the internet. Same thing with video rental stores. Already becoming obsolete because of high speed internet downloads.

So why am I telling you this?

Because I want to call your attention to a story that I ran across today about a company that is doing something that I think is quite innovative. Now I want to be perfectly clear here that I'm not commenting in any way on this company as an investment, neither pro nor con. My purpose in bringing this company to your attention this that I think there is a lesson to be learned here. Take a look at the story and then I'll talk about the lesson.

(Click here to view article)

What is the lesson?

That because of technology, now more than ever before, there are people out there unleashing the "Gales of Creative Destruction" every day. There are today, and quite frankly always have been, people that just don't think the way the rest of us do.

What do I mean. Let's take Ben Milne for example. Here is a guy that thinks differently. Here is a guy that sold stuff through a website. He got tired of paying the fee that he has to pay to accept credit cards. Typically 2-3% of the sale plus a transaction fee.

Most of us would look at that and go "oh well, not much we can do about it". We might start shopping different credit card processing companies to try to get a slightly lower rate but the savings will be marginal. How many of us would think that it would be possible to start and build a whole new payment processing system here in the US, especially when you don't have a background in banking and finance at all? In addition you are going up against Visa/Mastercard and American Express. And there hasn't been a new payment system built in this country in over 30 years. Wow!

What is he doing? Charging a flat 25 cent per transaction processing fee no matter how big the transaction. So as an example instead of paying $14.80 to process a $500 transaction through PayPal, you as a business person could process that transaction through Ben's company for only 25 cents.

Let's say your company processes 10 transactions like that a month. Over $140 falls to your bottom line as profit. Suppose you have 1000 transactions a day. That's $14,000+ in additional profits. Suppose you are a Best Buy that on average would have about 273,000 transactions that size per day. That translates to an extra $4 million or so per day in profit for Best Buy. Can you see why retailers would be interested in Mr. Milne's service?

Would I have thought that this company had any chance to be successful? Nope. But the fact that they are processing $30 million to $50 million in transactions per month tells me that they may have a chance and bear watching.

I need your help!

Here is where I could use your help. I believe that there are many people like Ben Milne out there. People who think differently. People who aren't willing to accept doing things a certain way just because they have always been done that way. People who aren't afraid to challenge conventional wisdom and try the impossible. I need your help identifying these people.

We all have different backgrounds and spheres of influence. If you see a company that is doing really extraordinary things in your industry or sphere, please bring those companies to our attention.

And again let me be clear, I don't want you to bring them to our attention from the standpoint of whether they would be a good investment or not. That analysis comes later.

What I want to know about are companies that are just blowing people away with their outside the box thinking like Ben Milne has demonstrated.

As we have said over and over, there are tremendous opportunities created in times of crises for those who are prepared. This is one of the ways to be prepared!

Thank You Veterans!!!

On Friday I sent out a thank you to all of our veterans. I want to again say Thank You and offer this video tribute to all who have served. I saw this video at church on Sunday and knew I had to share it. If you can watch this without getting a tear or two you are way tougher than I am! Please click the graphic below and it will take you to the video which is being hosted on my site. It's a little over 4 minutes.

(Please click to view video)

ECONOMIC CALENDAR:
Tuesday - Producer Price Index, Retail Sales, Empire State Manufacturing Survey, Business Inventories
Wednesday - Consumer Price Index, Industrial Production
Thursday - Housing Starts, Jobless Claims, Philadelphia Fed Survey
Friday - Leading Indicators

Performance

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not available.

Headlines

Moody's Investors Service is reviewing the risk to Penn State's reputation and finances in the wake of a child sex abuse scandal that has rocked the university. In coming months, the credit rating agency will evaluate whether the university should be downgraded. Penn State carries the second highest credit rating, reflecting very strong student demand and a strong national academic brand. The university has about $1 billion in rated debt. [5]

Dubai's fast-growing airline Emirates kicked off the Middle East's biggest airshow Sunday with a huge order for 50 Boeing 777s, marking the U.S. aircraft maker's biggest-ever single order in dollar terms. [6]

The Securities and Exchange Commission admitted Friday that it had disciplined eight employees over their handling of the $50 billion Bernard Madoff Ponzi scheme without firing any of the workers. The disciplinary actions, which drew jeers from some victims of the investment scandal, prompted a ninth individual to leave the agency before the punishment was finalized. The actions were meted out over the past year and weren't disclosed by the agency until an article on the actions was published online Friday by the Washington Post. [7]

"If you want to feel rich, just count all of the things you have that money can't buy."
- Unknown

Amazing Bacon-Wrapped Jalapeno Shrimp

Ingredients:
1 quart vegetable oil for frying
32 peeled and deveined medium shrimp, tail-on
1 (4 ounce) can pickled jalapeno peppers, cut into slivers
16 slices bacon, cut in half
32 toothpicks

Directions:
1) Heat oil in a deep-fryer or large saucepan to 350 degrees F (175 degrees C).
2) Cut the shrimp along the back, nearly through to the front. Stuff each shrimp with a sliver of jalapeno, then wrap with half a slice of bacon. Secure with a toothpick. Repeat with the remaining ingredients.
3) Cook the shrimp in batches in the hot oil until the bacon is crispy and golden brown, 2 to 3 minutes. Drain on a paper towel-lined plate before serving.

Eat Breakfast

We've all heard that breakfast is the most important meal of the day, but did you know that breakfast eaters are usually leaner than those who skip their morning meal? High-fiber cereals are central to breakfast's health benefits, and can help reduce the risk of heart disease, stroke, and diabetes. Adding nonfat milk and fruit increase the benefits to your health!

Share the Wealth of Knowledge!

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Securities offered through Foothill Securities, Inc. Member FINRA/SIPC.
Reames Financial is not an affiliate of Foothill Securities, Inc.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Google Finance is the source for any reference to the performance of an index between two specific periods.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Reames Financial and not necessarily those of Foothill Securities, Inc., and should not be construed as investment advice. Neither Phil Reames, Reames Financial, nor Foothill Securities, Inc. gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

By clicking on these links, you will leave our server as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.

[1] http://money.cnn.com/2011/11/10/news/international/greece_papademos.cnnw/index.htm?iid=EL
[2] http://money.cnn.com/2011/11/12/news/economy/italy_austerity.cnnw/index.htm?iid=EL
[3] http://www.imf.org/external/index.htm
[4] http://abcnews.go.com/blogs/business/2011/11/italys-debt-crisis-why-does-it-matter/
[5] http://money.cnn.com/2011/11/11/news/economy/penn_state_downgrade/
[6] http://www.washingtonpost.com/business/fast-growing-airline-emirates-plans-to-add-50-boeing-777s/2011/11/13/gIQAto6AHN_story.html
[7] http://online.wsj.com/article/SB10001424052970204358004577032280966055886.html

Phil Reames

Reames Financial

1856 Skyler Dr.

Kalamazoo, MI 49008

269-349-3966

preames@reamesfinancial.com

http://www.reamesfinancial.com