Saturday, December 28, 2013

Me, Eddie Murphy and Trading Places...We all have something in common. See here what that is...

I was watching "Trading Places" the other night, for the 1,000th time, and saw something I have never seen before. In the scene on the train where Eddie Murphy plays the foreign exchange student "Nanga Eboko" he is wearing a bag hanging from his neck.  See it below in the left.

I have one almost identical to it! There is some variation because they are handmade. It was given to me in 1983 by the drivers in the motor pool at the US embassy in Bamako, Mali (Northwest Africa) as a going away gift. I was a very young US Marine security guard stationed at the embassy.

It is one of my most prized possessions.  The drivers do not make a lot of money but they pooled some and got me this from the local market.

The movie came out in 1983, so the wardrobe people REALLY did go for authenticity in dressing Mr. Murphy.  Wow...1983...30 years ago....Feeling old BUT having warm thoughts of the many Malians I met long ago...

Thursday, December 26, 2013

"The Post Office is Dead. Long Live the Post Office". The price of a stamp is increasing in January. Send an e-mail, text or instant message to tell all your friends! Oh, wait...

On Christmas Eve, the governing board of the US Postal System approved an increase in the price of a first class stamp.

Postal Service Raises Price Again but Says It’s Not Forever

The cost of first-class postage stamps is going up by 3 cents — but only until the Postal Service makes up losses that it has estimated it accumulated during the recession. The increase — to 49 cents from 46 cents will go into effect on Jan. 26.
The Postal Regulatory Commission announced the increase on Tuesday, but it stressed that it would “last just long enough to recover the loss.” The commission determined that loss to be $2.8 billion, caused by a substantial drop in mail volume, totaling about 25.3 billion pieces, between 2008 and 2011.
That is a 6.5% price increase in the price of an individual First Class stamp.

Here is a look at the price changes of stamps since 2002:
Source: HERE
In 2002 the price was $.37.  At the new price of $.49 that means the price of a stamp has increased 32% in 10 years.

Since 2002 the volume of First Class mail has gone from 102,378,632 pieces to 66,700,419 (Fiscal Year 2013--Source HERE).  The volume of First Class mail has DECREASED by 35% in 10 years.

Here are the year over year changes in the volume of First Class mail since 2002 (source HERE):

2002-2003  -3.2%
2003-2004 -1.1%
2004-2005  +.1%
2005-2006  -.5%
2006-2007  -1.6%
2007-2008  -4.8%
2008-2009  -8.6%
2009-2010  -6.6%
2010-2011  -6.4%
2011-2012  -5.6%

2012-2013  -4.2%

Pre and Post Recession(s) all (except 2004-05 with a slight increase) have negative percentage changes.

I believe the Post Office is in a no win situation. First Class mail as a business is in decline as a result of differing forms of communication (e-mail, text, fax, etc).  It cannot decrease prices in hopes that it can win over market share. They could offer free mailing and I don't think it would much stem the declines in the numbers you see above.

All they can do is milk the current segment of the market that is relatively insensitive to the change in price. But even that segment will drift away as they move to some other form of communication. The presence of substitutes is a cruel master in the market place!

My opinion is the US Postal Service will eventually have to "spin-off" the delivery of First Class mail and cede ownership of it to the Federal Govt where it will reside forever more and not have to worry about making a profit.  The Post Office is a creature feature of the US Constitution (Article 1, Section 8--an explicit power) so its basic function of delivering mail will not cease.

Monday, December 23, 2013

Used car mileage and pricing. What is so magic about the 10,000 mile mark when it comes to the value of a used car? I need help on this one...

We behave in strange ways as consumers when it comes to numbers.  The graph below is from a study on the sale of used cars (HT: Priceonomics).  On the vertical axis is the average sales price of a used car at auction.  On the horizontal axis is the mileage of the cars sold.

As expected, there is an inverse relationship between the price of the car and the mileage:  The higher the mileage the lower the price.

However, the study noted an interesting trend. Look at the vertical bars along the horizontal axis representing the mileage at 10,000 mile increments.  Notice the drop off in the price of the car RIGHT AT the 10,000 mile increment (arrows pointing).

If the mileage is just short of the 10,000 mile mark the vehicle gets a significantly higher price than if it has 100 or so additional miles OVER the 10,000.  Otherwise the relationship is pretty smooth BETWEEN the 10,000 mile increments.

If you want to get the highest possible price for your car, given its mileage, the best time is to sell it BEFORE it rolls over the the next 10,000 mile mark.  Otherwise you will be out some money!  If you are a buyer then look at cars that just cross the threshold.

There is one interesting point on the graph. Look at the RED arrow.  At the 30,000 mile mark the pattern is noticeably interrupted.  There appears to be no price "cliff" at that threshold.

Any guesses as to why (1) the noticeable drop off in prices at all  but one (really more at the very high mileage level) of the 10,000 mile increments, and (2) why the absence of one at 30,000 miles?
Source HERE (I modified the original by inserting the arrows)
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