Opportunities For Innovation

What comes to your mind when you think about innovation?

For most people the focus in innovation is always on products while for businesses, it is core processes and product performance. However, innovation encompasses much more than these.

While people have no problem defining innovation, it would come as a surprise that innovation encompasses much more than products and processes. The chart below best captures the areas of opportunities when thinking of innovation in a business setting.

For proprietary reasons, I've had to strip some information from the chart. But all in all, I think it is very self explanatory.

To Refinance Or Not To Refinance?

It's now almost 5 years since we moved into our current home and in 2 months time, my mortgage rate will re-adjust. We had planned on staying on the property for a maximum of 5 years but with the U.S. economy on it's knees, we have not only decided to stay put but also not to trade-in my missus' 5 year old car which we also bought then.

My current interest rate, which expires after my April payment stands at 3.875% and is tied to the 1 year LIBOR plus 2.25%. At time I was pre-approved, the 1 year LIBOR stood at 1.41% as opposed to 1.9% as of the writing of this post. My rate can not re-adjust by more than 2% and therefore I am looking at the rate resetting to no more than 5.875% which is a much higher rate than what banks are offering for standard mortgages.

At the current LIBOR, which has been steadily falling owing to the current aggressive monetary policy, I expect my mortgage to re-adjust to around 4.25%. Compared to the 5% interest rates that banks are offering for longer term mortgage, I'm at a dilemma as to whether to lock in my rate for the next 5 years or let it re-adjust to the new rate for the next 12 months.

The way my current adjustable rate mortgage works is after the initial 5 year period, it re-adjusts after every 1 year to no more than 8.875%. I've called Wells Fargo and they offered me a choice of another 5 year ARM at 4.75% or a 30 year fixed rate at 5.5% with no closing costs for both options.

While it is possible that the LIBOR may fall further, especially if the government agrees to take over some of the bad loans there is a risk that the opposite may happen. It may be that rates will not fall further and this is the best rate that may come my way for a long time to come. On the other hand, the housing market is dead and banks may have to lower their rates even further to attract new home buyers.

And should I choose to refinance, Wells Fargo may offer me a lower rate than they have quoted if I take out part of my equity and sign up for a bigger loan. But it also gets more interesting. I have a unused home equity line of credit that offers me a 3% interest rate as it is tied to Prime Rate which currently stands at 3.25%.

Which makes me want to take out the money from my home equity line, pay down my mortgage and then refinance my mortgage. That way, I'll have 2 loans. the primary mortgage at around 4.25% and a secondary mortgage at 3%. And in both cases the mortgage interest is tax deductible.

I have the next 30 days to figure out what I will do.

On This Day; April 11, 1997

This has got to be one of the most painless bear markets. Just when everyone had about given up on the bulls, then comes the most marauding of all bears. Not many would have thought that we would be revisiting the 1997 highs 12 years later. The DJIA closed today at May 7, 1997 levels.

Trading volume was on the mid high, still short of last year's super selling levels. I didn't get a chance to monitor the closing volumes but this new low has caught everyone with their pants down. Even the perma-bears are lost for words.

I've read in the press that the valuations are still high owing to on-going demand destruction and consensus for the forward estimates still need to be revised downwards.

Most of the technical indicators don't seem to be in line with the current market performance which makes it even more puzzling. All I can say is that the trading rules are being re-written as the old rules have ceased to be of any significance.

Greetings From Belgium

According to Google, or is it my laptop, I am currently not at my desk in the United States of America but somewhere in Europe. I am in the Kingdom of Belgium to be specific.

I've got Google homepage book-marked as my start page and it is opening up as Google Belgium and the text is in German. The same applies to Blogger but not my Google reader or Gmail services.

A quick check of my IP fails to reveal my exact where abouts though some IP tracers have me located in Europe. I experienced the same issue when I was in Kenya where I noticed that my browser opens up Google.co.ke when I was on vacation.

The down side to this, is that I sometimes get the wrong listings on the sponsored search because my IP address is usually different to my physical location. Many a times when I am searching for a product or service or browsing pages with Google Ads, I notice adverts for other cities which means that Google has me at a different location.

Another Day, Another Bottom

You'd expect a better day in the stock market than today because it's not everyday that you get the President to sign into law an Economic Stimulus Package as Obama did today.

As they say, no good deed goes unpunished. It certainly takes more than $787 billion to impress Wall Street.

Today's trading volume at the NYSE was on the lower end of the upper range. And if you consider that the markets were closed on Monday, the significance of the high volume diminishes. The same could be said of the NASDAQ.

On the NYSE, the market bested (or is it worsted?), last November 20th low close though we were 2 billion shares short of the high trading volume. If we are to breakthrough last year's lows, we'll need a big push which calls for higher volumes than we have seen today. Frankly, I don't know what it means if we break through on light volume but it may mean that the worst is still to come.

Surprisingly, the volume at the last hour of trading was not high, which means that institutional investors are not bailing out and it is probably the dumb money (retail investors) who are bailing out.

This Property Is Not For Sale

As you travel around Nairobi, especially in the suburbs, you will come across empty parcels of land bearing a sign that the piece of property is not available for sale. Unlike the 'For Sale' "For Lease' or 'To Let' signs that are a common feature in cities across the world, this new type of signage may be a sign of a property bubble in Nairobi.

Not many people of my age realize that real estate in Kenya has not always been hot as it is today. At the turn of the century, just as the dot com bubble was bursting in the West, the real estate market almost ground to a halt in Nairobi. It's hard to believe that property owners were having a hard time selling their property less than a decade ago.

Fast forward to 2008, and sellers are turning away buyers with the hope of making more money from the next prospective buyer.

Con men having noticed the desperation of buyers have taken to selling other people's land. With the help of a broken land registry system and corrupt civil servants, it's not unusual for a piece of land to be fraudulently sold to several buyers. It is for this reason that 'This Land Is Not For Sale' signs are springing up all over the country.

All this makes me wonder at what inning is the real estate market in Kenya or Nairobi to be specific.

Many have quickly forgotten the NSE IPO mania and the numerous pyramid schemes that were a feature of the yester-years and continue to argue that real estate will always appreciate in Nairobi and it's environs.

One thing that I am sure of is that there will be plenty of bag holders, in this case land lords, when the property market in Nairobi starts to cool owing to the over supply of property. What's more is that the current infrastructure can barely support the mushrooming of apartments that are being built by over-zealous property owners.

And if you think I'm dreaming this up, look up what is happening in the Sunny State of Florida that was the dream place to live for a lot of Americans and Europeans.

Too Busy To Blog

It seems like forever since I last blogged. Unlike previous years, this year started on a high note for me.

With my business off the ground, I've been spending most of my free time on my venture. Little did I realise how time consuming moonlighting can be.

Even worse, most of what I'm doing involves new technology which has seen me join two professional groups in my locality with a view to getting myself acquainted with the technologies.

On the other hand, I am trying not to take my eyes off the stock market. Never mind the fact that I still haven't finished reading all the financial newspapers/magazines subscriptions that were delivered while I was on vacation. And in this pile there are also journal subscriptions from my line of work.

Even though I may not blog much or at all in the coming weeks, I will continue to be an active participant in the blogs that I follow.