Nothing Is Normal

Been working on a new business book in the Success Paths series.  If you’re a regular reader, you know about my financial background; so along with mystery books, I have been writing about small business.  Now that the world has been turned upside down,  it could be years before the “normal” paths to success will have meaning.  Oh, sure the basics of making a profit will still exist; but much will change after this virus crisis—and never be the same again.

Survival mode becomes gut decision time.  I’ve worked with many businesses over the years that were dealing with a self-induced crisis, and almost always the owner had gone to a no analysis approach and trusted gut instincts to make short-term survival decision.  I have seen this reaction from small business and also giant corporations.  Big companies have the same instinct; reduce the number of people making decisions, and trust only yourself (owner or CEO). 

There’s logic in that; if a bad decision means your death, you sure the hell don’t give that decision to some dumb accountant, or consultant, or your brother-in-law. 

The local paper here, The Denver Post, announced in the last week or so that they were dropping a regular sports section due to the lack of sports activity.  I’m not an expert on the newspaper business but that sounded like one of the dumbest decisions they could make.  Have no idea what percentage of their readers consider the sports section a key reason they pay for the paper; but I would guess it’s pretty high. 

Almost all of their news coverage in available somewhere else, usually for free and delivered much quicker.  For many papers if there is a reporter who is known it is going to be a sports reporter.  So the most unique aspect of your paper will be dropped because there are no games to report.  Somebody does not understand sports.

Sports is gossip.  And gossip goes on with or with the games.  Trades, the drafts, predictions, player’s opinions about anything, guesses about who will start or not start—this stuff is endless.  A non-sports person would look at that and probably not believe readers would be interested; but that is the heart of sports, not the games.  It was a bad decision based on a crisis; no doubt, made by someone who didn’t understand sports and was looking to save some money. 

I canceled my subscription.  So what?  Well for one, I will now break the habit of reading that paper; and for sure it was a habit.  Almost all of the news was something I had already been informed about on television or on-line.  No doubt based on the response, the Post seemed to immediately back-track.  They can bring back the sports page with great fanfare; but the habit is broken.

This will happen with many businesses that are forced to close or reduce hours during the Coronavirus scare.  All humans are creatures of habit and if that habit is broken; humans will make new decisions about where they eat or shop.  Probably based on something new and flashy.

Another aspect of this latest business interruption will be that every bad business decision made over the last year will now be blamed on the Coronavirus crisis.  No matter how absurd the connection, businesses will find some way to justified bad business practices of the past on this current mess.  Blame shifting and cover-ups are definitely human qualities.

For me, this means the series of business books I was considering may not be relevant for a while.  If this shutdown or slowdown goes on for months who knows what the small business world will look like.  Some things will stay the same, but many aspects of business practices could change.

I have written one business book and part of a second.  Those will be put on a “wait and see” hold until there is an outcome of this troubling time. 

So rather than business answers, it will be murder mysteries for me.  The fictional world is a lot easier to deal with anyway.  There is no circumstance in the fictional world I can’t clean up in a chapter or two.  The real world, on the other hand, is a lot more difficult to fix.


Current mystery book projects include:  Durango Two Step, Dr. Hightower and Vegas Dead End.  DTS is easing towards completion, DH is confused and awaiting some inspiration and VDE is new and secret.  Yes, it is a secret book: not good for sales but I don’t have to be embarrassed if I don’t finish it.  Wait a minute, something seems wrong here.  Not to worry, if no one reads this week’s blog it will still be secret.

Audiobooks of Dog Gone Lies, Sky High Stakes and Four Corners War are moving along at a brisk pace.  DGL is complete and in review.  I’m confident all three audiobooks will be released by June or July.


Santa Fe MojoFree download today 3/27/20 on Amazon

Battling health issues, mostly reoccurring bouts of gout, Vincent Malone, tough-guy legal investigator, is looking for a quiet place to heal and wait for retirement.  Malone was once a promising hot-shot Dallas attorney, but booze and bad judgement brought that and his marriage to an abrupt end.  Since his fall from grace he has provided private investigation services to Denver lawyers, utilizing his legal background to a new advantage.  Malone just lost his last client due to his unreliability.  He was now headed south, not sure what the future would hold.  Malone takes a know-nothing job as a shuttle driver for a new B&B in Santa Fe and life takes a surprising turn.  The Blue Door Inn’s first guests are clients of a big-time sports agent out of LA who resides part-time in Santa Fe.  The meeting was supposed to be a celebration of success, but just before the meeting it was discovered that all of the money the agent was managing for his professional athlete clients is missing. 

Missing millions, sexual entanglements, troubling personal histories brews into murder.  Malone suddenly finds himself in the middle of a major murder case with the lead detective giving him the evil eye.  A surprise entrant to this mix is an aging gun-slinger attorney.  Malone and he team up to find the real killer and clear an innocent man.

Thanks for being a reader!

Holy Cow! What the Fudge!

If I didn’t know myself so well, I wouldn’t believe this next statement either; soon a Ted Clifton audiobook will be available.  Many of you may say, oh sure; I’ll believe that when I see it.  I wouldn’t blame you at all.  Some of you have followed the confusing story of the Santa Fe Mojo audiobook.  It started in October of 2018 and limped along all of the way through 2019 and finally died in 2020.   Up to the very last, I believed there would be an audiobook; but I was wrong.

The people I was working with are talented people who have done many things for me and have a vast number of skills.  How this got so delayed, and eventually canceled, is not completely clear to me, but what is clear is that it was nobody’s fault.  Anybody who has not experienced stupid bad luck just has not tried much stuff.  I know people who are totally risk adverse; but they are often the first to criticize someone for failing at something new.  Failing is a critical part of learning.

I think we live in a climate where if something goes wrong, the first order of business is to find someone to blame.  Some of this blame seeking is nothing more than an unwillingness to accept personal blame for anything.  There has never been a car accident where someone said; my fault.  When anything goes wrong the first impulse is finger pointing. 

Most things that fail are based on a combination of bad luck and numerous mistakes by almost all involved.  Nobody was pleased with the outcome of the SFM audiobook—there were no winners.  But, at least, it’s over.  The SFM audiobook project is officially dead.  Long live Dog Gone Lies audiobook.

Yes, the production of Dog Gone Lies, Sky High Stakes and Four Corners War has begun.  I’ve lost a lot of time in the audiobook arena so decided to do all three P&C books at once.  Now we will see how it goes.  I will be holding my breath for several months in anticipation of a successful project.  If it isn’t, at least there will be new people to blame.

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The world seems to be in a mess.  We’ve got hateful politics, terrible TV shows and COVID-19.  Is this the end of the world or just a bad season?  No matter the subject in America, there seems to be two sides taking opposing positions.  It’s a crisis; no, it’s a hoax.  Maybe, in some way, we’ve always been this way; but it does seem worse. 

This could also be impacted by our apparent need for enemies.  You can’t blame others unless there are others.  Enemies have become more important than friends.  The more enemies you have, the less responsible you are for anything.  All of the bad stuff is because of the evil enemies.

I tend to blame myself for everything.  The SFM audiobook was a total failure—my fault.  The world is going to hell—my fault.  Sure, I’ve got my pet enemies; who are screwing things up right and left; but mostly if it directly affects me—it’s my fault.

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My books are full of gritty language—profanity to some.  The majority of my bad reviews are due to the language, because it offends some.  I’m now wondering if that was a mistake; especially because I got into the habit of having a prologue which usually contains a concentration of these words.

From a creative point-of-view I think the language is appropriate and fits the story.  My stories involve gangsters, murderers, people under great stress and odd-ball characters who use foul language.  Wouldn’t the stories be different without those words?  I think so, but it has led to some rather unfriendly reviews.

The language issue came up with the new audiobooks.  I had requested auditions from narrators and received great responses from many talented people.  As part of the detail information it was stated that the books contain “gritty” language.  One of the narrators wrote back and said that they were offended by bad language; but if it was okay, they would substitute their less offensive words as they read.

I suppose there was some logic in that?  Here is a book you have spent hours, days and months writing and doing it in a particular way—choosing words that convey your story and characters in a fashion that makes sense to you; but someone else finds them offensive—is it okay to change them?  Of course, that was not acceptable.

The request to use different words than the author’s in narrating a book seemed to me to fit into the world where if it does not please me, then the world should change to match what I want.  My sensibilities must be protected.  The best way to accomplish that is to live in a bubble.  Only associate with people of my tribe, watch TV shows that reflect my views, shun all dissenting views and pretend I know everything—since I do.

I was almost tempted to have the person with their own non-gritty words do an audition.  I was curious to hear what words they would use in place of my well understood, time-tested offensive ones.  But then I decided that was not fair; so I advised that person that my project was probably not a good fit for them.  We both returned to our bubbles; secure in knowing we were right.

Thanks for being a reader (listener?)!

On The Other Hand

For lots of reasons, mostly beyond my control, still have not produced an audio book.  Was in the process with Santa Fe Mojo but that fell apart.  Have some discussions going on about Dog Gone Lies; and, hopefully, in a few months that ends up with an audio book version. 

One of the steps in this latest process was to ask for auditions for a narrator.  Somewhat overwhelmed by the response.  Not only was the number of respondents large, but the overall quality of the narration auditions was amazing.  There are some very talented people narrating audio books. 

I’ll keep you informed as this moves along; and hopefully, will actually end up with a real audio book.

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I have beat this drum before.  More “reading is good for you” thoughts from the Healthline web site.

“Research shows that regular reading:

  • improves brain connectivity
  • increases your vocabulary and comprehension
  • empowers you to empathize with other people
  • aids in sleep readiness
  • reduces stress
  • lowers blood pressure and heart rate
  • fights depression symptoms
  • prevents cognitive decline as you age
  • contributes to a longer life

That’s an impressive list.  And, of course, as a bonus you might enjoy whatever your reading.

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Just finished reading an author interview (no reason to mention his name), who was bragging about being able to write a book in a week.  Besides being an annoying individual, he seems to think he has accomplished something of value.  Let me be clear, I have not read this guy’s books, and it was not clear in the interview if these are 5,000 word “books” or if they are 70,000; but the idea that streamlined books produced in a matter of minutes has merit felt wrong to me.

I have mentioned on several occasions that the best path to success in the e-book world seems to be to have a large number of books all in one series –by large I mean 40, 60 or more.  So the annoying author in the interview is using his speed writing skill to take advantage of a market—I should admire him more, but I don’t. 

I’m a fast writer (when I can stay focused on one project) and would consider it an accomplishment to write a whole novel in two to three months; I can’t imagine how you can write an entire book in only a few days.  Of course, if you can, more power to you; but I don’t think I would brag about it.

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I have not read much about this, but as I was listening to auditions for a narrator for Dog Gone Lies, it crossed my mind:  would I have written differently if I was writing just for an audio book?  Reading a book out loud seems to change the feeling of the narrative.  Sometimes in good ways and sometimes in bad ways.  Thinking about incorporating reading my new books out loud as part of the editing process.  I think some authors do that; but I have not.  On the other-hand, if the book was written with a focus on how it sounds, would it become more of a play with author notes than a book?  All I know for sure is that the book sure sounds different with someone reading than with my voice in my head.

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One of the benefits of reading, as listed above, is “empowers you to empathize with other people”.  Understanding flawed characters in the context of their world does expand our sympathy for less than perfect humans.  In most of our lives there are very few people we get to know well enough to know their inner faults and still care about the individual.  In books, that is almost all characters of interest.  It gives us insight without the pain of dealing with a flawed friend. 

I have mentioned this before, all of my characters are flawed.  Not because I think all humans are like that; but a character in a novel would be very boring if they were perfect.  The flaws make them real. 

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Good to see March roll around.  I can definitely say I’m tired of winter.  Besides falling and breaking my arm while shoveling snow, I have been unusually blue this winter—and that is not smurf blue.  Very little writing going on.  When I’m not engaged with my writing everything seems slightly off.  Maybe warmer weather will lead to a productive year after all—and a more upbeat blog.

My goal for the year is still the same; two new fiction books– Durango Two Step (Vincent Malone #4) and a surprise second book along with a non-fiction business book.  Also very excited about the possibilities of some audio books for all of you non-reader readers (or is that listeners).  By the way those health bennies for reading are probably not the same for listening—but you could be jogging while listening, which would be a major health benefit.

Thanks for being a reader!

Writing for the joy of it; and a few peanuts

Mentioned last week that I might use repeats for the blog this week due to my arm injury; but, good news, writing (typing) is not causing me any complications.  Thinking is sometimes on the blink, but that’s a different problem.


This blog focuses on books and writing, especially indie books.  While writing is a passion for many authors, the money side of this activity is a big factor in what is written and what is read.  Keep in mind most authors write because it gives them something that is important, regardless of the money; but a little money would not hurt. 

A friend of mine passed along a white paper from the Author’s Guild titled “The Profession of Author in the 21st Century.”  Many pages of stats and interesting detail.  Let me summarize—it is bleak.  Most authors today cannot make a living just writing, much less only producing books.  If you are looking for a good paying profession, consider something else.

No big news to anyone associated with book writing and publishing.  A few top authors make tons of money, everybody else barely survives.  Publishers are only paying good advances to sure-thing celebrity (or at least famous [is that different?]) authors.  Tell-all political gossip books look lucrative.

The real world consequences of this is very possibly, almost nothing.  You can bemoan the fact that literature as a word may not have much meaning in the future—but who cares?  The readers?  The authors?  Literature means: written works, especially those considered of superior or lasting artistic merit.  Maybe that world has already gone?

The white paper places a lot of the blame on Amazon.  As an indie author I have a love/hate relationship with Amazon.  The publishing world was once totally controlled by a few people in New York (okay, it still is), who would not have given me the time it took to say no.  The business model of the major publishers (of which there are only five) incorporates a snobbery that’s more like royalty than anything relatable to “best practices” (or for that matter common sense).  The fact that the publishing world has become more challenging and less controlling of all things related to books is no doubt good news.  Or is it?  Or who gives a shit?  But why blame elitist publishers for the dark cloud over book publishing when you can blame Amazon and its computers?

Without Amazon my books probably wouldn’t even exist.  Self-publishing existed long before Amazon; but it was targeted to a different audience.  Self-publishers once offered personal attention and care for a price.  These vanity projects resulted in a few books being distributed by the author to their friends and family; not much impact on the “real” book world.  Amazon offered something new, a presence in the book market place to almost anyone who wanted it.  How you presented yourself in the market was up to you; but the market was open.  Amazon changed self-publishing from a small number of vanity projects to a large (way too many) number of indie authors who are producing a million plus books a year.  More books than can or will be read.

The downside of Amazon is the devaluing of books themselves.  There are many readers today who only read free or almost free books.  It is the same thing that happened to music.  Free sounds reasonable to the consumer.  Maybe the consumer is stupid and thinks these creative things just arise by themselves with no effort or cost; why shouldn’t they be free, or maybe the consumer says; if you, as the creative person behind these things, offers them to me for free—you’re the stupid person, not me.  The real stupidity is ever offering these creative works for free in the first place.  But when the competition is so intense for visibility in the vastness of millions of books, what are the options.  The only winner in any of this is Amazon, which, of course, is what creates the resentment and eventually the hate.

The ugly side of market dominance is that Amazon gets to make the rules.  Indie authors have no power and thus make little money.  There are exceptions; but they are few.  I’m not sure literature is dead, but I think it is seriously wounded.  The major publishers want proven winners or at least famous/infamous names, that leaves little room for serious, but unknown, authors.  The indie author’s path to success seems to be writing a large number of books with a new book every three months or so tied into an ongoing series; not exactly the path toward literature.  I tend to think that literature was dead a long time ago, we just didn’t notice; because there was no sizable audience for such writing.

My books have no pretentions towards literature, they are written to be entertainment.  Still they’re worth more than free; but that’s on me, nobody else.  When I started writing I thought I could make a little money writing and that is exactly what has happened; I make a little.  At least it’s not zero.

In the Author’s Guild white paper, they seemed to suggest solutions that had something to do with Amazon not having such a vice grip on the industry, they would probably return to the “good-old-days”, when snooty agents manned the gates to the publishing world; not sure that is better.  Maybe a guaranteed income to all creative people?  Why do I think that would increase the number of creative people; but not creative results.  

The only way to force Amazon to share more of the wealth would be if it benefited them; which it wouldn’t.  Every day there are thousands of new authors offering Amazon a consignment product and if it sells –giving Amazon a percentage. Plus, those same saps pay Amazon to advertise their books on Amazon, so Amazon can make money selling more books, and also make money not selling those books.  You’ve got to admire their system—it is designed to do one thing; make them money—and it works.

I will write another book or maybe two or –hell who knows how many; and will not make much money.  Why?  I think many creative people are masochists and I might be one.  Or they gain a sense of personal worth that has more value than just money—not sure about that either.  Before I wrote books I painted pictures—I’ve made ten times the money writing as painting—so I guess, I’m moving up in the world.  Thanks Amazon.

Thanks for being a reader!

A sad note. Clive Cussler died this week. I read many of his books over the years and while I found the circumstances on some a little over-the-top, I loved them. Always a fun read.

He lived in the Denver area (where I live) and on several occasions thought about trying to make contact; never did. Interesting that this week’s blog is about making money writing books, Cussler was supposedly worth about $120 million; now that is writing success. He will be missed.

Tumbles and Reading

Winters in Colorado can be mild or not so mild.  Snow and ice are normal, usually welcomed as part of this beautiful world.  However, along with this joy of white landscapes comes shoveling.  Until that big one shows up with heavy wet snow measured in feet, I kinda enjoy shoveling the snow.  It’s one of those little accomplishments that helps us feel productive.  But on an occasion there is an oops.  I had an oops.  Slipped on the ice and took a not so acrobatic tumble.  After some brief moments of “what just happen isms”, got up and managed to make it inside.  Falling on the ice comes so swiftly that there is no chance to anticipate or dread; one second you’re just fine; and the next, flat on your back with many areas of pain.  And, the worse part, there is no one to blame except yourself.

Net result, I broke my arm.  Writers do not need broken arms.  Good news is that my arm movements are only restricted– did not need a cast.  With a little office re-engineering and a lower table for my keyboard, I’m typing again; just a little slower. 

Obviously this causes some complications with this blog and my progress on current book projects.  I am able to write, just much slower and with many, many rest breaks.  This will have impact on the blog, newsletter and other writing for about a month (I hope no longer than that).  But none of that will stop completely.

This week’s blog (and probably next) will be reprints from past blogs.  After that, my plan is to get back to my normal pattern.  Thanks for your patience.


Fewer Readers Reading Less

I grew up in a household where reading was honored.  This was mostly based on my father’s love of books.  There wasn’t a lot of family discussion about books, but it was obvious they were important.  My father’s bookcase was held in high regard and given a prime location in the living space.  Both of my parents grew up in households that did not have a lot of possessions.  Books would have been a luxury.  My father in particular was raised in very humble conditions.  As his own new family became more prosperous in post WWII America he purchased books and they became his treasures, a luxury he had never experienced as a child.  Coming from this background reading became a habit and a source of great pleasure for me.  Reading books was something I just did, it was natural.

Taking an unscientific survey during Thanksgiving, it is apparent people are reading less and in many cases not at all.  I have read the stories about the decline in hours spent reading books and knew this was happening; but it is still kind of shocking to talk to relatives and realize the new normal is to not read; at all.  Not one book in years or maybe decades, I can’t imagine not reading.  Of course, I write books so I have lots of reasons to be shocked at this trend.

And it is a trend.  The decline in reading has been going on for a couple of decades.  Lots of factors but the most likely culprit is TV.  You would think the number of hours spent watching TV would have peeked somewhere in the past and leveled off, nope.  It is increasing.  People are watching more and more television.  Some of this, I’m sure, is due to the increased options being offered, streaming services and vast numbers of channels on cable.  With the average hours of daily TV watching increasing substantially in the last ten years; there is no time to read.

Reading, TV watching, smoking are all habits.  Once you stop some activity the habit goes away and usually something else fills that need.  TV apparently has filled the entertainment, information need of books.  Many people will think so what, entertainment and information from TV is just as good as books.  Maybe so; but most experts (whoever they are), say it is not the same.

In an article for The New Yorker, Caleb Crain observes: “In a culture of secondary orality, we may be less likely to spend time with ideas we disagree with,” (He) wrote. “I suspected that people might become less inclined to do fact checking on their own; forced to choose between conflicting stories, they would “fall back on hunches.”  Note– “secondary orality”—(is) a sociological term for a post-literate culture.

A post-literate culture–doesn’t that sound alarming?  To me it does.  Our brains function in certain ways and it matters how we get our information.  Reading seems to reinforce many good qualities about “thinking” that do not seem to transfer to such things as television watching.

I don’t have any answers to this trend of fewer readers reading less; but I do find it disturbing.  And not because of book sales.  I think it makes us less capable of deeper more complex thoughts.  I believe we lose the ability to digest nuances in all sorts of matters, from basic living circumstances, to politics to personal relationships.   I also believe we become more susceptible to misinformation; especially well-crafted propaganda.

Or maybe it is more simple than brain functions declining; it is that the love of books is disappearing.  It makes me sad.

Thanks for being a reader!

Bit of This and That

Last week I spent a little time discussing business valuations for both private and public companies as a lead in to my new SuccessPaths series of business “how to” books; no doubt, super boring.  Sorry, here’s a little follow-up.  Had some input from people asking about companies that are worth billions that have never made a profit—how can that happen?

The quick, easy answer is that it’s all bullshit.  Hype on a huge scale.  The more detailed answer is that it is based on an assumption about the future, best described as wild-ass guesses.  Take Uber for example.  Imagine being involved in the first presentations regarding Uber.  They were going to take on a tired, stale basic service industry that did not offer much service, the taxi industry.  With tech innovation they will improve the service, solve the labor issue and will be able to scale up at a rapid and massive rate.  Going from one city to thousands almost overnight using a vast labor pool; the general public.  By-passing regulation authorities with a combination of technology hype and political clout.  This model could go from zero revenue to billions in revenue in the blink-of-an-eye.

If you were concerned about profitability you were just an old-school, out-of-touch worry-wort of the past.  It will become so big; profits will just fall out by magic.  The magic didn’t happen; or if you believe the company, has not happened yet.

The company has a market value of $70 billion, revenue of $3.1 billion.  The founders and initial investors have made billions for themselves; so where is the problem?  It loses money; lots of money.  Without investment capital Uber would be bankrupt.  Somewhere in the future, those chickens will come home to roost.

This is speculation on steroids.  The value has no meaning other than the off chance that it can figure a way to profit from the massive size of the enterprise.  Much of the speculation about profits now centers on something never mentioned at the beginning; monetizing the vast data base and self-driving cars.  Or, in other words: magic.

Uber is one of many examples of the power of free money.  If you can entice investments on a large enough scale you can achieve a burst of “success” while failing.  With enough money almost anything can look plausible for a certain amount of time.  Much of the hype around innovative, new companies is that their business model has not been proven.  That also means it has not been proven wrong!  So most of the invested capital will be spent to prove the business “idea” works.  But by “works”, we mean can it make a profit?

Let’s go back to Uber.  Until the company can show a path to profits and then demonstrate that path is working there may not be any value there at all.  So a company worth $70 billion might be worth zero?  In the common sense world that would be true; but in the speculative world of crap shooting investments the value could climb to $100 billion on nothing but promise and hope.  So if you invested at $70B and sold at $100B, you’re very happy.

Is that wrong?  Of course not.  As long as investors understand the risk and freely chose to invest based on some future out-come; that is not wrong and is at the heart of most high-return investments and the speculation that drives them. 

Businesses exist primarily to make money, so profits do matter.  But with enough “free money” the business can survive while searching for those profits and everything will be great (someday); unless it isn’t.

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Back to books and writing.  Interesting reader review for Murder So Wrong.

Realistic read February 5, 2020

As a reader who grew up in Oklahoma City, the setting of the story, the detail is so realistic as to make one wonder if this is a lightly disguised report of true happenings. Either way, it seems real and reads well.

That was one of the best reviews I have read on any of my books.  Murder So Wrong is a story based on true events and to have a reader say it “seems real” is absolutely great.  While the basis of the books in this series is based on true events the stories are fictional; totally made up.  Writing non-fiction books about true events is much harder work; tons of research, fact checking, interviews etc.  My forte is just making stuff up; but still I want it to seem like it could have happened, even if it didn’t.  Thank you very much reader for your kind words.

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A few weeks ago I had some thoughts about the controversy surrounding the new book American Dirt.  One comment I made was that even with the massive negative reaction, all of the hype would only promote more books sales; and sure enough, American Dirt is number one on Amazons most sold list.

Interesting side note, number one on the most read list (digital subscription services) is Harry Potter and the Order of the Phoenix.

Controversy and celebrity will still sell a lot of books; but if you just want to read a good book, go back to a well written and entertaining story.

Thanks for being a reader!

Mysteries of the Business World

I write mystery books, usually murder mysteries.  My stories are not based on deep analysis of much of anything, other than human nature and a little common sense.  By design the characters are flawed, but interesting (I hope).  Perfect characters would most likely not be involved in murder and no doubt would not be very interesting; or at least would be hard (for me) to relate to.

In my other life, I’m involved in business.  Some of that activity is focused on financial analysis and forecasting.  I look at businesses’ data and try to determine the value of that on-going business.  This is taking historical numbers and placing a current value for the future prospects of the enterprise. 

Earnings (or profits, or cash flow, or some other measure) are a key to calculating value.  In my case I’m valuing non-public, mid-size businesses and the measure is usually something called EBITDA, earnings before interest, taxes, depreciation and amortization.  Whatever the particular measure, it is based on the assumption of profits—in the future.  Value is always a guess about the future.

This week’s blog might seem entirely off my normal subjects of books and writing; but I will connect the dots at the end of this article. 

The over-hyped and inflated value of the stock market has created an unreal (or unsustainable) expansion of market value.  Because I have a good sense of how non-public companies are valued, the public companies appear to be super over-valued.  The why of this is due to the vested interest by almost everyone in an over-valued market.  Politicians want a hot stock market so they can claim it is because of their wise policies, all of Wall Street wants a thriving market because they make money, investors want a growing market because, duh!  No one wants a down market (there are some marginal players who bet on a down market but are a relatively small group), so all of the hype is promoted by almost everyone.  No one suffers from an over-valued market, or so it seems.

Except, it is not based on any viable measure.  The most common measure on public stocks is price earnings (PE).  This is a common sense measure of the return in profits as a percentage of the price of the stock.  So what would be a good return on the stock; 10%, 20% or what?   The PE does not give you the percentage, but the number of times the stock is of earnings.  So earnings of $1 with a PE of 10 would be a stock price of $10.  A PE of 10 is a 10% return.  A PE of 20 is a 5% return.  A PE of 50 is a 2.5% return.  This is a list of some of the top companies selling at a PE of 50 or more (that is a 2.5% return or less):

  • Amazon.com (AMZN)
  • Liberty Global (LBTYA)
  • Salesforce.com (CRM)
  • Tesla Motors (TSLA)
  • Netflix (NFLX)
  • Vertex Pharmaceuticals (VRTX)
  • Twitter (TWTR)
  • Illuminata (ILMN)
  • General Growth Properties (GGP)
  • Prologis (PLD)

It is very unlikely a private company would sell at anything close to those PE ratios.  Because a large portion of that value is based on speculation.  Speculation is the anticipation that you as an investor can sell the stock you purchased at $1 for $10 in the future.  So that speculation is based on your perception of the rise in value of the stock, which is not necessarily tied to any kind of earnings.  You hope someday in the future an investor (sucker?) will pay 10 times what you paid knowing (mostly likely) that the company’s earnings or assets or any measure of value will mostly likely not grow all that much.  Your investment is a leap of faith based on market hype.  But, you might say, lots of people make a ton of money doing just that!  And, yes, they do; until they don’t.

In my private company mid-sized world, a common measure of value is a multiple of EBITDA.  In most industries the value of a business will be in a range of 4 to 6 times adjusted EBITDA.  There are exceptions of course, but on average that range will cover it.  The EBITDA multiple for public companies is readily available; so these are a few of the above companies EBITDA multiple:

  • Amazon  27
  • Netflix  64
  • Prologis  31
  • Twitter 22

In most cases public companies will always be worth more than private companies (no reason to get into that briar patch—no doubt you’re already wondering when this will end—soon.)  But if a private company’s higher end value is based on 6 times EBITDA; how can a company like Netflix be worth 64 times?  The simple answer is that under any normal economic measure, it isn’t.  What creates that higher value is speculation—the hope a future investor will pay you more for the stock you purchased—regardless of the underlining economic factors. 

At some point this overvalued reality will become evident and the whole mess will collapse.  The bubble will pop.  In case you’re wondering, I have no idea when that might happen; I just know it will.

This is an oddball way of letting you know that I’m in the process of writing some business books.  Some of you may be aware of my background (CPA, CFO and other initials without much meaning), and understand that a murder mystery writer penning business “how to” guides is not completely farfetched.

At one time when I was considering this, I thought about using a pseudo-name for the business stuff; so not to confuse readers of Ted Clifton’s mystery books.  After a little thought, decided that was just stupid.  So I write mystery and non-fiction business books, it may be odd to some but not to me; so I will use my real name and assume the readers can tell the difference.

The first book in the business series, which will be under the series name Success Paths, will not be out until the latter part of 2020.  These books will have little value to you unless you own a business or are starting a business.  Of course, there may be people who just buy business books for their entertainment value, but that’s got to be a fairly small group.  For those people, I would highly recommend my mystery books, easier reading and definitely more entertaining.  As the Success Paths business series progresses I will keep you advised. 

Thanks for being a reader!