Nice Month!

We just closed a record month in the market just two minutes ago. The Dow Jones had its best two month gain since November 2002! And its best one month gain since October 2002. That’s when we finally started coming out of the post-September 11 mess. And this in the middle of swine flu, bankrupt auto companies, real estate in the toilet (but in some places showing signs of a bottom), fears of inflation, continuing high unemployment, in other words still a mess!

But the market is used to predict the future. As I mentioned the other day, consumer confidence shot up in April. That’s key to helping turn things around. On the TV this morning “foreclosure boat trips” in Florida bringing investors in to buy foreclosed homes. And on.

Let’s hope a client I spoke to today is wrong and this is all not “fake.”

The President’s Press Conference

Well you have to hand it to the guy. Our President is wicked smart, articulate and very careful about the words he chooses (almost all the time). He and the American people are having a love affair with each other (mostly) and this is now his third prime-time talk to us in the first 100 days, which he and his staff decried as a “Hallmark holiday” but then spent two weeks celebrating. In his first four years in office, President Clinton gave a total of two prime-time speeches.

Whether you agree or disagree with his policies and direction, and it is clear that more than a few disagree, we all need our President at certain times. With regard to the swine flu, which for some reason has been renamed with letters and numbers (does that make us less concerned?), so far I think he is doing a very good job of increasing our vigilance and preparation without panicking anyone. Yet. He even complimented the Bush Administration for putting so much Tamiflu on ice in case of an event like this. But clearly the government is very worried. When the President of the United States needs to remind us to wash our hands, and then also says a school should consider closing if it has even one case, this is a real concern – especially for us here in NY which for the moment seems to be the epicenter of infection.

As to other stuff, many believe that energy, health care and education should be the top priorities of government while also trying to stabilize the economy. Others focus more on defense and shrinking government. To me, energy is one of those things both sides should be able to work on. We all want to eliminate dependence on foreign oil. We don’t always agree on how to get there, but pretty much all agree that alternative energies are a good thing. So for bipartisanship, Mr. President, maybe move there?

Customer Satisfaction with Online Financial Services Improves Despite Sagging Economy

Customer satisfaction with online financial services improved over the last year even as the financial sector of the economy deteriorated, according to a new report from ForeSee Results and Forbes.com released today. The 2009 Online Financial Services Study, the fifth report since the inaugural study in 2003, shows that despite a weak economy, bank bailouts, and tighter credit, financial institutions are using their websites to increase customer loyalty, account activity, and positive word of mouth. The study, which employs the methodology of the University of Michigan’s American Customer Satisfaction Index (ACSI), measured satisfaction with online banks and credit unions, credit card websites, and investment websites.

Banks continue to lead online financial services, improving 1 point to 83 on the ACSI’s 100-point scale. Very few service industries ever break the barrier of 80. Credit card websites made the largest jump, soaring 7 percent to 80, while investment websites climb 4 percent to 78.

“It’s not an easy environment for financial institutions to do business. Given all the problems that these companies are having, we might expect satisfaction to slip,” said Larry Freed, president and CEO of ForeSee Results. “But the basic blocking and tackling that these companies are doing online is proving effective. They don’t need to reinvent the wheel or their website strategy just because the economy is in crisis. Focusing on the right fundamentals makes a big difference to the customer experience over time. And it turns out that online satisfaction actually has huge implications for the whole industry.”

The improvement to online satisfaction is good news for financial institutions because websites have a fairly large impact on multichannel operations and future financial success. Satisfied online customers are more profitable, more loyal, and more likely to engage in positive word of mouth. Highly satisfied customers are significantly more likely than less satisfied customers to purchase additional services and open more accounts, increasing share of wallet. Also, highly satisfied customers are more likely to increase engagement with the website for information or transactions, introducing cost savings by establishing a user preference for the most efficient service channel.

Online financial services companies still have room for improvement. The research identified site performance and functionality as areas where banks and credit unions could maximize return on investment. Functionality and portfolio management are priority areas for investment websites to improve satisfaction, while improving transaction processes and bill payment features are top priorities for credit card websites.

Customer confidence remains a problem, and roughly one-third of survey respondents are less confident in the stability of their financial institution. Additionally, only one in five online banking customers and one in three online investors recall seeing any communication or reassurance about their institution’s financial stability, indicating that companies could do more to quell perceptions that these companies and industries may be in trouble.

The study explored mobile applications from financial institutions for the first time this year. Among online investors with mobile phones, 27 percent use them to access investment websites, compared to only 13 percent of online banking customers. The small pool of respondents who use mobile apps appear to be more satisfied than those who do not, indicating another opportunity for financial service companies to strengthen their relationships with customers.

“Consumers want control of their finances no matter where they are, adding yet another dimension to a 24-7 world, and mobile technology is transforming how consumers interact with financial institutions,” said Freed. “So it is incumbent upon banks, credit cards, and investment firms to optimize their websites for the mobile platform, as smart phones become the next frontier for providing online financial services.”

Consumers..Take Us Out of This!

Marketwatch reports the key gauge of consumer expectations shot up in April almost 50% from where it was the prior month. That’s the fourth largest one month gain ever- and the biggest since Baghdad fell back in 2003. And that’s after the second lowest level ever in March.

What’s happening? The Marketwatch site believes it’s the “green shoots” theory suggesting that even though the economy remains weak, there are some signs of things turning around. They taught us at Wharton that consumer expectations are a huge contributor to the growth or contraction of the economy. If consumers expect things to get better, they start spending a little more, which improves the profits of the retailers and manufacturers, which leads to more jobs, which leads to more consumers, etc. etc.

Since the Fed is virtually out of tricks, foreign governnments don’t look too ready to help and it looks like Obama will have a tough time getting any more stimulus money, it’s up to us shoppers to start making a difference here. Just don’t tell my wife (just kidding honey)!

Will Swine Flu Kill the Rally?

According to Marketwatch, it would take a full pandemic of swine flu to have a big impact on the markets. But things are getting  a little crazy. Six countries have announced a ban on US meat and pork, even though there is no way to get swine flu from meat or pork. At first I thought it a little weird that a nationwide emergency was declared with only 40 people infected, and most of those very mild cases. I thought that Obama just doesn’t want to take even the slightest risk of this  becoming his Katrina.

But I’m now thinking something else. I remember seeing documentaries about the beginning of the AIDs epidemic. There was initially a “pooh pooh” attitude by the government. I am thinking, this time around, CDC and others are telling Obama more than they are telling us. I have this feeling that they strongly believe this is going to get much worse before it gets better, despite their pleas of remaining calm. So while we wait, wash those hands, cover yourself when you sneeze, and get right to the doc if you feel any symptoms..let’s hope this is not the next SARS…

Green is the New Black

Regardless of the economic climate, people want to lead a greener lifestyle according to an informal survey of ecomii.com visitors and Debatables participants. ecomii is the #1 green lifestyle resource on the Internet (according to comScore). Lack of information and consumer understanding as to how to be greener remain an impediment according to the survey.

“We decided to tap the collective knowledge of our community to demonstrate to the world that being green happens not only Earth day,” said Colton Dirksen, Environmental Director and co-founder, ecomii.com. “Earth Day is not about a single big gesture to be quickly forgotten, it’s a day to think about daily habits and the consequences of actions. It’s about making resolutions and real, even small, meaningful changes in the way we live our lives.

“Our polls show people are clearly inspired and ready to take action, but many just don’t know where to start. And we found that there is a perception that going green means spending more, which makes it especially difficult for people to motivate in this economic climate. But when you allow people to find solutions that fit their lifestyle, they realize they don’t have to sacrifice their comfort, and that it’s possible to even save money in the process,” added Dirksen.

ecomii sees many opportunities for growth in green markets over the next few years as environmental consciousness grows. In particular, ecomii’s survey found that green products are perceived as stylish and of better quality and those buying them are being viewed as cool. According to the survey:

• Organic and natural clothing are considered better quality: 89% of respondents agree that, “natural materials are more comfortable than synthetic materials”
• “In-the-know” consumers are pushing back on manufacturers: 74% believe chlorine bleach should be banned from cleaning products
• Going green is not just a current trend: 37% disagree that “people will lead a less green lifestyle with the current financial crisis”
• Gardening is cool again: 84% say “growing your own vegetables is worth the time and effort”

Additional findings from the ecomii survey include:

• Not enough education: 89% say “schools are not doing enough to educate our children on environmental responsibility”
• Many consumers are not clear how to recycle everything: 75% of respondents say “it is too difficult to recycle electronics like cell phones and computers”
• Detroit needs to reclaim its territory: 78% believe “U.S. automakers can catch up and lead the green car revolution”
• Government misspending: 87% day the “U.S. should focus it’s stimulus dollars less on the auto industry and more on public transportation like trains”

Long Island’s Latest Ponzi Schemer

37-year old Nicholas Cosmo of Lake Grove, Long Island, was indicted a few days ago and charged with running a $413 million Ponzi scheme. The AP reports that he had over 6,000 investors who were promised returns of over 80% a year on bridge loans. He had been arrested back in January and intends to plead not guilty.

Folks, if it sounds too good to be true – it almost always is! Do your due diligence when you think about these investments, including seeing real proof of the investments themselves. If they hesitate to give you information, run, don’t walk, away from the opportunity.

Madoff’s #2 is Squawking

Frank DiPascali was Bernie Madoff’s loyal right hand man for many years. I’m sure old Bernie assumed he would remain loyal through the investigations. Turns out he was wrong. DiPascali is now singing to authorities about all the bad stuff that went on, according to CBS News. Apparently he got nervous when Madoff’s accountant David Friehling was arrested last month. Supposedly Friehling is also busy cutting a deal.

CBS reports that DiPascali may not have incriminating information about Madoff’s brother and sons, but will be able to tell much about the criminal operation, including how they created phony brokerage statements. And the wall continues to crack around Bernie. Next shoe to drop, according to CBS, are the funds that invested with Bernie.

And Then There’s Maude…

Sad news learning that actress Bea Arthur died today at age 86 from cancer. Those of us of a certain age remember the ground-breaking TV show Maude, in which she played a modern feminist ruling the roost and eliminating one after another male chauvinist pig. Maude was also the first show to tackle some very tough social issues never discussed on TV, including when she decided to have an abortion. Others remember the sweet show Golden Girls which she starred in. That was also ground-breaking in that it proved for the first time that senior citizens can be the stars of a successful TV show without losing key demographics for advertisers. Our family still enjoys the reruns. Some older than me remember her starring in great Broadway shows like Mame and Fiddler on the Roof (she is a Tony award winner). Maude spun off of the even more iconic All in the Family in which Maude originally played Edith Bunker’s cousin. They constantly battled as Archie showed his racist ignorance and Maude always exasperated and frustrated.

What does this have to do with President Obama, the legal industry, scammers and Wall Street? A little. These shows helped shine a bright light on bigotry and sexism and helped pave the way for change in America that made possible, for example, the election of our first African American President. And it was one of the small things that helped in our legal industry broaden its horizons in its hiring practices. Is Archie Bunker the throwback warehouse foreman partially responsible for some of the loss of power of our labor unions in the last few decades? Not clear. But with the American economy still mostly in the toilet, seems like everything is on the table these days. Thanks for helping shake things up Bea. Rest in peace.

“Crowd Funding” Starts Gaining Traction

I was a speaker on a panel sponsored by www.ibreakfast.com yesterday on “alternate funding sources.” Most of you know I have written a book on reverse mergers and other alternatives to traditional IPOs as a way to take a company public and help move it to the next level. In these difficult times, it is interesting to look at alternate ways to find capital and grow.

Several of the speakers are involved with websites where groups of investors or lenders individually agree to give some money to a company. One site, www.loanio.com, specializes in “peer lending.” As a lender you can go on and offer to lend as little as $50. If you are a borrower, you can set your terms and different lenders bid on the right to lend you the money. It’s a very cool idea. They have suspended operations while they get SEC approval of the securities they issue. But keep an eye on that one.

Another speaker does something similar with receivables at www.receivablesxchange.com. You upload your receivables and well qualified investors buy them, providing 80% of the face amount of the receivable immediately and the rest upon collection. The buyer gets about 1% per month on the money, and a small fee to the site. Much simpler than doing factoring or other ways to finance receivables. Very very interesting.

Thanks to my law colleague Larry Langs for helping arrange the talk.

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