July 11, 2008

New York's First Environmental Problem

Was it the automobile? Was it lead from paint? Was it poor water conditions? Nope – it was horses!

That’s right. Horse manure and horse carcasses filled the streets of New York, Chicago, and other major cities in the US at the end of the 19th century. In the 1880s, NYC had 1,206,299 people, and about 170,000 horses for transportation. Because they were overworked and abused, the average streetcar horse had a life expectancy of only two to four years. They’d die on the street, where they were left or dumped into nearby rivers or bays.

In 1880, New York City removed 15,000 dead horses from the street. Chicago removed 9,202 horse carcasses in 1916.

Moving the 1,300 pound carcasses was no easy task – special trucks that hung low had to be made. An 1886 article in the Atlantic Monthly described Broadway as congested with “dead horses and vehicular entanglement” — and we think today’s traffic is bad.

And the manure! It’s estimated that each horse produced 15-30 pounds of manure per day. That means the 170,000 horses in New York and Brooklyn created 3-4 million pounds of manure EACH DAY. In 1894, the Times of London estimated that every street in the city would be buried 9 feet deep in horse manure by 1950. A New York editorial estimated that horse manure would rise to Manhattan’s 30 story buildings by 1930 — imagine that skyline! Also, each horse produced about a quart of urine daily. That makes about 40,000 gallons per day in NY & Brooklyn.

From horse pollution to car pollution: In 1898, the first international Urban Planning Conference was held in New York. The topic: how to deal with horse pollution. Luckily for them, the automobile was just beginning to usurp the horse’s role for transportation. Experimental motor cars had been around for quite some time, but cities had previously banned them or limited their use for reasons varying from cars frightening children and horses, to cars being “rich men’s deadly toys.” The most well known regulation was Britain’s Red Flag law which required all cars to be preceded by a man of foot carrying a red flag. That’s pretty interesting.

The horse pollution crisis in the 1890s ignited fears of pollution, traffic jams, coupled with the rising prices of hay, oats, and urban land, and ultimately led governments and urban city dwellers to embrace the automobile. By the early 1900s the horse had become unprofitable and a great environmental hazard. The car, the modern-day environmentalists’ nemesis, was, at the time, a savior. I wonder what will be ours.

Watch the Growth of Walmart Across America
*Note: FlowingData has updated its version to include the year.

Wow. I’d love to see this for other companies like McDonald’s, Starbucks, etc. Per the creator (originally this guy), the database used did not include opening dates for these other companies. In fact, it only had about 1/3 of the opening dates for Walmart stores. That’s why there’s a “flurry” at the end, representing all stores without a listed opening date.

Here’s a similar map that shows property development throughout time for select areas in the US.

(via zachklein via superamit via Kottke)

July 9, 2008

The Cheapest Stocks Around

The market is down. Woe as us, right? Well not if you’ve got some money to invest, because now’s the time to check out some cheap stocks.  Luckily the Motley Fool did this so I didn’t have to. Here are their cheap stock finds:

  • Coca cola (NYSE:KO)  hit 52 week low*
  • Northrop Grumman (NYSE: NOC) hit 52 week low*
  • Microsoft (NASDAQ: MSFT) lowest PE since 1992
  • Hansen Natural (NASDAQ: HANS) stock price has been halved
  • Whole Foods (NASDAQ: WFMI) stock price has been halved
  • Eastman Kodak (NYSE: EK)
  • Electronic Arts (NASDAQ: ERTS)
  • General Electric (NYSE: GE)
  • Eli Lilly (NYSE: LLY) 23% off a 52 week high*
  • AT&T (NYSE: T) 23% off a 52 week high*

So before jumping the gun, you have to look into why these stocks are low. Is is just volatility? The current economic downturn? Or the company itself?

The listed stocks have seen decline due to either rising input costs (Hansen’s, Coca-Cola, GE) a messy acquisition (potentially Microsoft) competitive concerns (AT&T, Whole Foods, Northrop Grumman), regulations (Eli Lilly), or general recession-fueled fears.

The key is to find situations where the stocks have fallen, but the company’s business fundamentals are unchanged or have improved. That’s the key to loving volatility. The Motley Fool recommends Buffalo Wild Wings (NASDAQ: BWLD), who is building a national presence and has seen annual revenue and earnings growth despite rising chicken costs, but is trading 43% off its 52-week high.*


*What does trading __% off a 52-week high mean?  It’s just a way of measuring a stock relative to where it was traded in the past year. You can gauge a stock’s performance based on its highs and lows of the past 52 weeks. So “43% off the 52-week high” means that if BWLD was trading at $100 at some point in the past year, it’s now trading at $57. That means it is likely undervalued. It’s helpful to look at this to determine if the stock is low and undervalued (=buy), or high and overvalued (=short). Note that there are many other considerations when assessing a stock, so maybe only put HALF of your savings into Buffalo Wings.

July 8, 2008

t minus one month

With the Olympics just one month away, it’s crunch time for Beijing. It promised eco-friendly “Green Games” for the summer 2008 Olympics, but it certainly doesn’t look like that’s going to happen. The green part, at least. Since the smog in Beijing is reported as being five times over the international standard, per a TimesOnline study. Even the Chinese government’s official air pollution index is double the levels of developed cities in the West and the level recommended by WHO. And the sea where the sailing games are to be held is overrun by algae, a result of pollution. And the World Bank reports that at least 460,000 Chinese people die prematurely each year from breathing polluted air and drinking dirty water.

So definitely not the “Green” part. Although in its defense, Beijing has banned 1 million vehicles from the road for two months starting July 20 by restricting cars with even and odd-numbered license plates on alternate days. Beijing is also closing coal-powered plants, steel mills, and cement plants in order to curb emissions and pollution during the games. Though that is leaving thousands on smaller salaries and temporarily idle. And as for the water, authorities are stepping up the country’s waste water treatment capacity by 12 million tons this year, with the aim of making sure all waste water in 36 major cities is treated by the end of next year. It’s also banning plastic bags.

But perhaps not the “Games” part, either. Since athletes are dropping like flies for fear of, well, dropping like flies from horrible air quality. And since the construction of the city, new subway lines, and the redevelopment of Tiananmen Square is being frantically prepared just one month before the opening ceremony. And the torch, which faced protest obstacles throughout the world because of the situation in Tibet, barely even made it through the relay without incident. And per China’s deputy security minister, China faces three types of threats – those from international terrorists, domestic attackers, and organized crime syndicates.

Instead of “Green Games,” the slogan for the 2008 Olympic Games seems to be “Olympics Without Incident.” Signs with the slogan have been posted throughout Beijing and other cities that will host events, assuring the community everything will go according to planned. Hopefully.

July 7, 2008
July 3, 2008

What is Microfinance?

Microfinance is a movement to provide poor households permanent access to financial services. It is the act of lending small loans to poor or low-income people who normally don’t qualify for traditional banking credit to help them start or grow their small business.

While there are many ways the loans are structured, the business model relies purely on community and relationships. While in Chile, I met with a microfinance institution (MFI) and was given the run-down on how one business model actually works. And I was blown away! See below..

A group, usually between 5 and 10 neighbors in a small rural community, gathers and appoints a loan manager within the group. That loan manager receives the loan from the MFI and distributes the money to the group members. The individuals then then use the money to invest in supplies for her business. These loans are repaid weekly in this scenario, though repayment schedule varies.

If anyone in the group does not pay back her loan, the rest of the group must make up the difference that week. The group will not be awarded further credit unless it delivers total repayment. Thus, if one person does not repay, she affects the business and lives of her neighbors. It is peer pressure and reliance upon one another that allows the model to work.

I say ‘her’ because most MFI’s target women. The women, they have found, are the most likely to give money back to the family. Additionally, access to financial services also helps to improve the status of women within the family and the community. In some areas with strong microfinance programs, there have even been reports of declining levels of violence against women. Economists actually found that the reason microfinance even works is because in these rural areas there is a a market for male labor, but not for female labor. Credit, therefore, is a catalyst for women to become economically productive when they otherwise would not be. Without this factor, microfinance doesn’t make economic sense.

Muhammad Yunnus began the movement in 1976 after a devastating flood in Bangladesh. He loaned $27 to 42 women in a village in Bangladesh who made small items and furniture. Each woman made a profit of 2 cents on the loan. By 2007 his Grameen Bank (village bank) had issued $6.38 billion to 7.4 million borrowers. Yunnus won the Nobel Peace Prize in 2006.

There are now thousands of MFI’s, including big banks who were initially not interested in making small loans to the poor because of the high default risk. They now recognize the viable business model. Microfinance has also grown to include not just credit, but insurance and fund transfer services.

Many believe microfinance is the force that will single-handedly defeat poverty. Some believe otherwise, citing the lack of measurement of macro effects, the evidence that some women give all of the money to their husbands, and the lack of efficiency of the model with the poorest of the poor.

It could certainly be a driving force in defeating poverty. That is if all microfinance institutions were socially driven. However, recent reports of extremely high interest rates, questionable tactics to ensure repayment, and soaring profits indicate they may not all be so. Case in point, CompartamosBanco, a Mexican lender to the poor whose interest rates are at least 79%, went public last year, listing its shares for over $1 billion. In the company’s Letter to Our Peers, it explains that by pursuing profits it will be able to lend to many more people more quickly than if it were to act as a charity. Yunnus, on the other hand, believes a MFI that charges more than 15% above their operating costs should face penalties.