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Archive for March 25th, 2006

Pierre Omidyar on microloans

http://news.ft.com/cms/s/25bcd80c-b967-11da-9d02-0000779e2340.html

I agree with his view except I think microloans should be run like a business, where long term aggregate return should not be forgotten. It would be a company that will remain private to avoid the qualterly scruteny of wall street. (Here on using us to represent the theoritical company)
Loans can be conducted on a referral basis, following the current social network schema. If a person secured a customer who is in good standing with microloan, the customer will serve as his referral. If he is producing what people want at a fair price, he will be sucessful. We will aim at company or individuals with revenue less than $10K and average load size of $1000.
Marjority of the seed money will be spend on fraud detection and referral analysis to calculate a score, know as microloan score. We can then resell the algorthim back to the commerical banks as a service to offset our operation cost. Profit will be made by thhe returns generated from the initial pool at of seed money, at 5 times the Fed money factor as a proof of concept, at rate no more than prime + 5. Rate and money factor will be reduce gradually as the model is proven sound. Loan decision would base first on personal work ethics, then on business sound, as it will be part of the service to provide the business guidence that is much needed. To futher scale, we take no more than 50% of the aggregate loans to float paper on the street.

It won’t make you rich. But then again, my goal is to make millions not billions. When “enough” is a word is your dictionary, you can do a lot more meaningful things.

Add comment March 25th, 2006

global shift of wealth and art market

http://news.ft.com/cms/s/46eb5f3e-b968-11da-9d02-0000779e2340.html

FT.com art and weekend has this article out on the art market. What’s interesting to see is how the global shift of wealth changes the art market. But this is unfortunate as the art market is primarily a rich people’s playground. I found a watch the other day that I’ve only heard about, the Glashutte caliber 60. Knowing it’s rareness and the potential of the brand (own by swatch group to rival Lange & Sohne), I would have pick it up for under 18. It was listed for 50. Nonetheless, this baby is going to appreciate in 10 years. So in this case, for for someone in the lower-middle class like me, art as an investment is out of my reach.
If I am good and my jackpot rate is 1 in 5, putting your money in watches to generate a 10% annual return would take at least $500K, out of the reach for even a middle class American. One thing you could do is to wait for it to be popular enough for some mutual fund to be setup. But the point of investing in art is when they are NOT popular, not when they are popular. The rich always have it easy don’t they :)

Add comment March 25th, 2006


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