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How to exploit casinos, 30-somethings are poor, gasoline arbitrage, and a $145 dinner for $50

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HOW TO EXPLOIT CASINOS: Casinos are very good at exploiting people, but a lot of people don’t realize it’s possible (it’s not necessarily easy, but it’s possible) to exploit them right back. Via FWF, we found a website called BJ21.com full of advice on how to tip the odds in your favor. A sample of the site’s philosophy:

…Since the casino’s actual edge over the payer is so small, if a player can inform him/herself as to how to improve one’s odds, oftentimes the tide can be turned. Blackjack, video poker, poker, progressive slot machines, sports betting, horse betting, and casino tournaments can all be beaten if the player really learns the mathematical principles behind playing these games. Not to mention, money can be made off casinos in other ways, such as receiving free dinners, show tickets, hotel room, and even airfare, and by taking advantage of coupons and promotions that casinos are offering. Some people play an even-money game, and let the casinos pay for their entire vacation.

If games of chance appeal to you, there’s a lot of good stuff here.

30-SOMETHINGS POORER THAN THEY USED TO BE: There’s an interesting article over at Atlantic Cities discussing how the young ‘uns these days are worse off than they used to be. A couple of charts worth looking at shows that net worth has plummeted, in large part due to the housing market:

…while student loan debt has skyrocketed as well:

The whole article’s worth a read.

GASOLINE ARBITRAGE: Some interesting stuff from Venezuela:

In Venezuela, some of the fuel largess leaks across borders. Regular gasoline in next-door Colombia costs about $4.70 a gallon, more than 100 times the Venezuelan price at official currency exchange rates, and more than 400 times under the widely prevailing informal exchange rate.

The result: Every day at the Venezuelan border town of San Antonio del Táchira, thousands of cars, buses and motorcycles freshly loaded with gasoline head to the bridge over the Táchira River into Colombia, spending hours in traffic jams to get across.

Once in Colombia, they have their fuel siphoned off by freelancers known as pimpineros—from the word for gas can—who pay them about $2 a gallon and resell the gasoline or diesel fuel to Colombians for a few cents more.

Many of the cars crossing the bridge are big 1970s and early-1980s models like Ford LTDs and Chevrolet Caprices. For a car carrying 20 gallons, it is a quick $40 profit.

In Cúcuta, a bustling Colombian city of 630,000 near the border, the sale of contraband fuel is part of society’s fabric, employing thousands. A pimpinero who goes by the nickname Camuro makes about $25 a day trading fuel, enough to feed his family. “We depend a lot on [Venezuela],” he said.

Instead of bank-subsidized gift cards, it’s government-subsidized gas. If you know any of these guys, tell them to get in touch with us–we’re trying to staff our Caracas bureau right now and they’d fit in well.

BP’S NEW LOYALTY PROGRAM: Speaking of discounted gas, BP has launched a new loyalty program, called Driver Rewards, which will give you a slight discount on your gasoline purchases. Following every two or more transactions with a minimum of 20 gallons purchased, you’ll get a discount of 5 cents per gallon on your next purchase, up to a maximum of 20 gallons. In other words, it’s a dollar off every three fill-ups. We can’t see any loopholes to have fun with, but if there’s a BP station you already frequent, this might be worth your time.

MMMMM… STEAK: Thanks to some stackable promotions, Fleming’s Steakhouse is offering $145 worth of food for $50. Here’s a summary:

1. Get an offer for a $50 statement credit when you spend $100 at Fleming’s by logging in to your Amex account and/or doing the Amex Sync offer via Facebook.

2. Fleming’s is also awarding a $20 dining card (valid ONLY from 5/13/13 to 7/15/13, it’s not quite as nice as a gift card) when you buy a $100 gift card. So you’ll want to buy a gift card, then use the gift card to pay for your meal.

3. If you have an Amex Blue card, there’s another promotion at Amex Blue Savings that will give you a $25 Fleming’s bonus card when you spend $100 at Fleming’s.

We recommend buying your gift card in a restaurant, not online, to ensure you get all the bonuses.

And it gets better: Fleming’s is part of a company called Bloomin’ Brands, which also owns Carrabba’s, Outback Steakhouse, and Bonefish Grill, so your gift cards should work at those restaurants as well. Bon appetit! (H/T: Slickdeals)

 

Supreme Court rules for textbook arbitrageurs! Also: the worst graduate school in the world

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THE WORST GRADUATE SCHOOL IN THE WORLD:Congratulations, Columbia Journalism School! You’re the winner of the Personal Finance Digest Worst Graduate School in the World Award. The cost of the school’s one-year degree is $84,000, which includes a whopping $58,000 in tuition costs. As Matt Yglesias at Slate notes, this is worse than working for free, and as journalist Brian Fung notes, “So what you’re telling me is, a year of Columbia J-school costs more than what many of its graduates will ever make in a year.”

Why would anyone do this? The traditional employers of j-school grads are dying and/or dead. If you shell out big bucks for an MBA degree–which, like a journalism degree, is not particularly valuable outside of the networking opportunities– at least you’re paying for something that, at worst, maintains your employability. If you shell out big bucks for law school, you can at least point out that it’s otherwise impossible to get admitted to the bar. But journalism school? $84K? Seriously?

There are two types of people who would go for this: the wealthy, and people with poor math and/or long-term planning skills. Apparently this is the self-selecting population we draw from in the selection of our nation’s media elite.

What do you get for your j-school degree? From the school’s website:

Graduation Day: 74 percent of the students (262) were going into internships, fellowships, full-time jobs or other part-time employment such as freelancing, or continued in academics.

…which is a nice way of saying that 26% of the graduating class could not–after shelling out $84K for one year of school–land even a part-time job, a freelance gig, or an unpaid internship.

We also enjoyed this bit of hilarity from the Career Services FAQ:

If I don’t have experience before entering school, how can I develop a writing portfolio during the year so I have something to show during the job search?

Are Columbia j-school students really this dim-witted? Can they really not think of any sort of medium in which they could see their writing published? Do they really not grasp that the way to develop a writing portfolio is by writing?

In any case, congrats again to our winner for separating suckers from their money even more efficiently than law schools do! New Dean Steve Coll, please let us know where to send your Applebee’s gift card.

SPEAKING OF COLUMBIA JOURNALISM SCHOOL CAREER SERVICES: Domino’s is offering 50% off any pizza at menu price! Use offer code 9413 when ordering online. (H/T: Slickdeals)

NEGLECT YOUR PARENTS, GET FINED: A fascinating story out of China:

From July 1, parents in China can sue their kids who don’t visit often enough, under a broadened law mandating children take better care of the aged. With China’s elderly population forecast to more than double to 487 million in the next 40 years, the government needs to try and limit the cost of caring for seniors.

The issue here is that China is getting old fast, and is doing so before getting rich. The United States is looking at similar issues, though not as pronounced. China’s solution certainly wouldn’t go over well here, though it is interesting to see it tried.

A VICTORY FOR THE LITTLE GUY: By an uncomfortably close 6-3 decision, the Supreme Court has ruled that it’s legal to buy textbooks in one country and sell them in another. The headline reads, “Supreme Court upholds first-sale doctrine in textbook resale case,” but it may as well read, “Supreme Court rules it’s okay to buy something and then sell it later.”

Some background is in order: almost every company attempts some form of price discrimination, and some forms are more effective than others, but textbook publishers have a somewhat unusual policy of pricing textbooks by country. So the same econ textbook that costs you $100 here may cost, say, $20 in India.

An obvious arbitrage opportunity. Naturally, textbook publishers don’t like that as it eats into their profits. So rather than adjust their policies, they sue:

Textbook maker John Wiley & Sons sued a Thai student-entrepreneur named Supap Kirtsaeng, who had been buying cheaper (but non-pirated) versions of various textbooks in his home country, bringing them to the US, and selling them to his fellow students stateside on eBay. The price differentials were so big that there was quite a bit of money to be made; at trial, the publishing company’s lawyers hammered home the fact that they had counted up $1.2 million in receipts over the life of Kirtsaeng’s business.

Wiley argued those profits should be barred by copyright law. Their right to control prices abroad was actually part of their copyright grant, they argued. The textbook company won a jury verdict against Kirtsaeng, which was upheld by the US Court of Appeals for the 2nd Circuit, and Kirtsaeng appealed to the Supreme Court, arguing that his business was protected by the “first sale” doctrine.

Today’s decision vindicates the “first sale” doctrine, which allows the owner of a particular copy of a work to do whatever she wants with it after purchasing it. It overrides first sale losses in both the 9th and 2nd Circuits and makes it clear that digital commerce can flourish in the Internet era, even when it crosses borders.

The 6-3 opinion was authored by Justice Steven Breyer, perhaps the justice most skeptical of intellectual property rights. The dissent was authored by Justice Ruth Ginsburg, who has long favored powerful copyright privileges. Justices Antonin Scalia and Anthony Kennedy also joined the dissent.

The decision throws out a $600,000 damages award that was granted to Wiley.

It is good to see justice prevail, though again, we would have preferred a margin larger than 6-3. It’s a no-brainer that if you buy a book, you ought to be able to sell it at a garage sale. Or on ebay, or anywhere else you please. The battle is not over yet, however:

Today, first sale won out, but this is not a victory that is necessarily built to last. Between the three dissenters, and the Kagan-Alito concurrence suggesting that Congress change the law, that’s five justices that believe copyright law should allow for price discrimination strategies to be enforced in court.

But while price discrimination is certainly lauded by the companies that rely on it, it’s not at all clear that having courts perpetuate such pricing schemes benefits anyone beyond shareholders of those companies. This battle is sure to move to the legislature, with the content industries pressuring Congress to try to recover some of what they lost today. They will be opposed by a newly empowered coalition of retailers, tech companies, libraries, and consumer rights groups.

Forbes has a big scoop, and Wells Fargo scores a fatality

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OH NOES!!!!!: Forbes has a big scoop:

Many people who have attempted to utilize frequent-flier miles to obtain free or upgraded travel in the past few years, and who had also done so years earlier, have experienced tremendous inflation. Even in situations in which point requirements for a specific flight have not officially inflated – that is, prices expressed in terms of miles needed have not officially risen – the addition of fuel surcharges, cash co-pays for upgrades, “premium” mile requirements for specific fares, and other fees and/or extra-point-requirements have become commonplace, dramatically reducing the de-facto buying power of frequent-flier miles.

Well, duh. Points in any loyalty program will ultimately lose value, and there are two reasons why:

  1. Inflation of the underlying currency. Rewards are often given in the form of x points for every y dollar spent. We know the dollar experiences inflation, so obviously the points have to experience inflation as well, otherwise the cost of issuing them would be come prohibitive.
  2. Inflation induced by excessive supply of rewards points. Sometimes the marketing department finds they can goose short term results in whatever metric they’re being measured on by making points easier to get. This results in a nice window of opportunity where points are plentiful and reward costs are relatively low. Until its recent devaluation, Hilton HHonors was in this zone.

Inflation is just one of the rules of the game, and you take it into account when you play. The author of the article does have some good advice:

One important lesson for the future – the points in frequent traveler accounts do not earn interest or dividends, but they do lose value to inflation. Banking points over time is likely a losing proposition. Keep this in mind when deciding whether to spend points or dollars on a specific trip. Even if the point-price seems a bit high relative to the cash cost, it may pay to save and invest your money, and to spend your points.

Not only that, but when you set out to earn points in any reward program, you should have a specific goal in mind. Points are nice, but they don’t do you any good just sitting there and they’re more likely to get used if you know exactly what you’re going to do. If you sign up for a credit card bonus, have a clear idea of exactly what those points will be used for.

SIGH: A sad story out of California:

On the morning of Dec. 19, 2012, in a Torrance courtroom, Larry Delassus‘ heart stopped as he watched his attorney argue his negligence and discrimination case against banking behemoth Wells Fargo.

His death came more than two years after Wells Fargo mistakenly mixed up hisHermosa Beach address with that of a neighbor in the same condo complex. The bank’s typo led Wells Fargo to demand that Delassus pay $13,361.90 ­— two years of late property taxes the bank said it had paid on his behalf in order to keep his Wells Fargo mortgage afloat.

But Delassus, a quiet man who suffered from the rare blood-clot disorder Budd-Chiari syndrome and was often hospitalized, didn’t owe a penny in taxes.

One of his neighbors, whose condo “parcel number” was two digits different from Delassus’, owed the back taxes.

In a series of painfully tragic events, Wells Fargo relied on its typographical error to double Delassus’ mortgage — from $1,237.69 to $2,429.13 — as its way of recouping the $13,361.90 in taxes Delassus didn’t owe. Delassus, a retiree living on a $1,655 check, couldn’t meet the mysteriously increased mortgage. He stopped paying, and soon was far behind on his mortgage.

Delassus and his attorney did not discover until May 2010 that a mis-entered number had dragged Delassus into this spiral. As court documents obtained by L.A. Weeklyshow, after admitting its error, Wells Fargo foreclosed on Delassus anyway and sold his condo.

The systems set up by banks are, in some cases, inhumane in the sense that they are set up to run without an actual human being thinking about what’s going on. Those of us who sign up for credit card bonuses exploit this fact for our own benefit, but unfortunately people like Delassus–through no fault of their own–suffer if they get on the wrong side of a financial behemoth.

BOGO AT STARBUCKS / BARNES & NOBLE: Here’s a printable coupon good for buy one, get one free Starbucks espresso beverage at Barnes & Noble. And here’s $10 off $30 at Kohl’s (requires a mobile device). (H/T: Slickdeals)

 

What’s wrong with the investment industry? Also: triple your Amex fun, and free doughnuts

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IT’S NOT YOU, IT’S THE INDUSTRY: Barry Ritholtz has a nice summary of what’s wrong with the investing industry. We really don’t have anything to add, so without further ado here’s Barry:

• Simplicity does not pay well: Investing should be relatively simple: Buy broad asset classes, hold them over long periods of time, rebalance periodically, get off the tracks when the locomotive is bearing down on you. The problem is its easier in theory than is reality to execute. And, it is difficult to charge excessive fees for these services.
• Confusion is not a bug, its a feature: Thus, the massive choice, the nonstop noise, confusing claims, contradictory experts all work to make this much a more complex exercise than it need be. This is by design.
• Too much money attracts the wrong kinds of people: Let’s face it, the volume of cash that passes through the Financial Services Industry is enormous. Few who enters finance does so for altruistic reasons.
There is a difference between normal greed (human nature) and outright criminality. This is why strong regulators and enforcement cops are required.
• Incentives are misaligned: As I’ve written previously, too many people lack the patience to get rich slowly. Hence, not only do the wrong people work in finance, and some of the right people exercise bad judgment.
• Too many people have a hand in your pocket:  The list of people nicking you as an investor is enormous. Insiders (CEO/CFO/Boards of Directors) transfer wealth from shareholders to themselves, with the blessing of corrupted Compensation Consultants. Active mutual funds charge way too much for sub par performance. 401(k)s are disastrous. NYSE and NASDAQ Exchanges have been paid to allow a HFT tax on every other investor. FASB and Accountants have doen an awful job, allowing corporations to mislead investors with junk balance statements. The Media’s job is to sell advertising, not provide you with intelligent advice. The Regulators have been captured.
Guess what the net impact of all this is on your investments?
• The Financialized US Economy: The above list reflects nearly half a century of the financialization of the broader US economy. Instead of serving industry, finance has trumped it. This led in part directly to the financial crisis and economic collapse of 2007-09.
• Human Nature: Then there is your own behavioral issues. On top of everything else, you are governed by a brain that simply wasn’t built for this.

As always, we recommend Barry’s blog for inquiring minds.

TRIPLE YOUR FUN WITH AMEX: Rapid Travel Chai has an interesting post, wherein he reports that when you request a credit line increase from Amex, the maximum they will award you is three times your current credit limit. Asking for more than that does not hurt you, as far as we know, though it won’t help either. And it’s a soft pull, not a hard pull, so no harm to your credit score.

MMMM… FREE DOUGHNUTS: We like free stuff, and we like doughnuts, so we’re especially big fans of free doughnuts. Thankfully, Krispy Kreme is awarding a free dozen doughnuts in exchange for signing up for their newsletter. (H/T: Slickdeals)

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