The Fly Or Die Commerce Report: What Americans Spend Their Money On

According to Money magazine, the Bureau of Labor Statistics states that Americans currently spend most of their money on housing and transportation.

The Bureau of Labor Statistics breaks down the average percentage of annual spending as follows:
33% on housing
17% on transportation
13% on food
10% on retirement
10% on miscellaneous
7% on health care
5% on clothing and personal care
5% on entertainment

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The Fly Or Die Commerce Report: Rule 72

“There is a law called Rule 72 (72 divided by interest equals the number of years to double investment) which most people have never been taught. It’s also unfortunate that in America you can receive an elementary, high school and college education and never be taught Rule 72. If you earn 1% on your money, it will take 72 years for $1.00 to become $2.00.

Rule 72:
1%= 72 years
4%= 18 years
5%= 14.4 years
6%= 12 years
10%= 7.2 years
12%= 6 years
18%= 4 years
24%= 3 years

At a 12% return, $10,000 becomes:
$20,000 in 6 years
$40,000 in 12 years
$80,000 in 18 years
$160,000 in 24 years
$320,000 in 30 years
$640,000 in 36 years.” -From, “Black Economics: Solutions for Economic and Community Empowerment” By: Jawanza Kunjufu

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The Fly Or Die Commerce Report: “Air Pocket Stock” Defined

According to Investopedia: An Air Pocket Stock is: “A stock that experiences a sudden drop, similar to a plane hitting an air pocket. Air pocket stocks are usually the result of investors reacting to negative news…An air pocket stock isn’t necessarily in dire straits. More often than not, the abrupt, drop caused by disgruntled investors is usually the end of the correction.”

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The Fly Or Die Commerce Report: The Billion Dollar Black Hair Care Industry Edition

While perusing an old issue (May 2008) of Ebony Magazine, I came across an interesting article. The article entitled, “Koreans Capitalize On Black Beauty’s Big Business” By: Adrienne P. Samuels discusses the billion dollar hair care business that is bolstered by Black dollars.

According to the article, Black people spend “between an estimated $1.8 billion to $15 billion a year” on hair care (according to 2008 figures).Here are some thought provoking quotes from the article:

1) “As Blacks found more interesting ways to switch up their hairstyles, the beauty supply stores were more than happy to stock the products needed. Of course most of them brought their products from Korean distributors, thereby keeping all the money in the nationality.

One of those distributors is 7-Dollar Beauty Supply of Dallas. For them, says owner Jun Lee, the Jheri curl was the introduction of the glory years and a portent of great things to come.

‘Business was really good back in the 80s and early 90s and that’s when you needed the curls,’ says Lee, who sells so much product that one of the world’s largest perm manufacturers gave him gift tickets to the 2008 Super Bowl. ‘People used a lot of activator and men were involved so we had a lot of product we were selling. And the most beautiful thing is they were washing it down the drain.'”

2) “According to market research company Mintel, Blacks make up ‘only 13 percent of the American population, but account for 30 percent of hair care spending.’

Our hunger for hair wares started in the 1880s. Madam C.J. Walker (a Black woman) became the nation’s first self-made female millionaire via popularizing the use of the hot comb to straighten Black hair. Fast forward 100 years, to the 1980s, when many Black-owned, Chicago-based companies became the primary manufacturers of Black hair care products, including relaxers. Many of those old-school companies sold themselves to White companies. Today, only a handful of Black-owned manufacturers and distributors exist, such as the Atlanta-based Bronner Brothers and North Carolina-based Dudley Products Company.

Black manufacturers have been largely replaced with White-owned groups such as SoftSheen-Carson, L’Oreal and Proctor & Gamble- all companies that tend to advertise heavily to Black audiences.”

3) “Hamilton, who also owns a beauty supply store in Waukegan, IL, says that Koreans don’t necessarily keep Blacks out the game. It’s more of a supply and demand issue, she says. The distributor makes a contract with every store and the distributor agrees to not sell the same products to any store that opens within say, 5 miles of the first store. This way, everybody make more money with less competition.

Of course, if competition does find a way to enter they block, someone- usually the Korean- will lower his or her prices.

‘If somebody comes next door to me and oepns a beauty supply, they’re not going to get my brands,’ says Hamilton. ‘It doesn’t matter if they’re Korean or not. A lot of times we sign contracts saying for so many square miles you can’t sell.’

However, documentary filmaker Aron Ranen isn’t buying it.

Ranen’s 2006 DVD, entitled ‘Black Hair: The Korean Takeover Of The Black Hair Care Industry,’ bills itself as an expose on how Koreans took over the ethnic beauty supply arena and conspire to keep all others out of the business.

In the film, which has been viewed over 250,000 times on YouTube, Ranen suggests that Korean distributors only sell products to Korean stores, thereby canceling out the opportunity for new, and Black entrepreneurs to sell products. Ranen also suggests that Korean storeowners are not likely to sell products produced by Black companies.

‘I don’t think people understand the magnitude of this issue,’ says Ranen, 46, who is White and originally from the New York area. He decided to make the documentary after hearing a few comments from friends. ‘This is a global thing. It’s not about the local store. It’s about stores around the world.’

Language is also a factor, Ranen says, since the largest Black hair care trade magazines are printed in Korean. Also, a quick visit to many web sites for distributors will show the pages printed in Korean with an option to view in English.

While creating the documentary, which was filmed in part in Chicago and California, Ranen came across several Black stylists and other entrepreneurs who felt the situation was unfair. They created the Black Owned Beauty Supply Association, or BOBSA.”

4) Everyone- no matter their race- at this point has learned to work together, says Clyde Hammond, president of Summit Laboratories and chairman of AHBAI [American Health and Beauty Aids Institute]. Hammond, who is Black, runs a Chicago-based company that produces hair care products. He understands how much of the business got away from Blacks. However, he said, it would be nice to see more Black owners and distributors.

‘I wish we could find some African Americans who would step up and say, I want to be an entrepreneur,’ says Hammond. ‘We would work to support them and back them.'”

The above quotes gives the reader a lot to think about, including: The reasons for the dearth of Black distributors in an industry that is mostly funded by Black consumers, how Black consumers decide where and how to spend their dollars, and how our images of ourselves and what we consider beautiful play into our spending habits- to name a few.

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The Fly Or Die Commerce Report: Hyperinflation

Hyperinflation is a condition in which the rate of inflation is in an uncontrollable advancing state. When inflation exceeds several hundred or several thousand percentage points, hyperinflation is in effect, and a country’s money becomes greatly devalued. In this state, the price of goods also rise sky high, causing a currency’s purchasing power to plummet.

The U.S. dollar has yet to fall victim to hyperinflation.

When a country is hit with hyperinflation, the barter system is likely to become more beneficial than the standard medium of exchange.

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The Fly Or Die Commerce Report: FUBU Founder Discusses Business

One of the founders of FUBU, Daymond John, gives advice on how to build a business; how to cater to your customers; how to invest in, and flip, companies; making his first million dollars; raising capital for your business vs. giving up ownership.

“You always just have to be somebody who really loves what you’re doing and make an affordable step forward, and then learn, and then repeat.” -Daymond John

[SIDEBAR: This video is interesting when you read in between the lines of the hierarchy of a business and analyze who is the worker, who is the owner, and who is the money-maker.]

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The Fly Or Die Commerce Report: Taking Advantage Of Low Interest Rates

Interest rates are at an all time low. Economists have said that the interest rates have never been so low for so long. Real estate buyers are at a great advantage with a 40-year low rate. Fixed-rate mortgages are recommended in this type of economic environment. This type of mortgage will lock the interest rate in. According to Money magazine the interest on a 30-year fixed-rate mortgage was 3.48% in November 2012.

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The Fly Or Die Commerce Report: Short Selling Defined

According to the online business dictionary, short selling can be defined as follows: “Profiting from an anticipated drop in the price of a commodity, financial instrument, or security by: (1) borrowing and selling it now, or by (2) selling a firm promise (futures contract) to deliver it on a later date at the current (or a specified) price. In either case, the seller counts on buying the item at a cheaper price to return (with a fee) or deliver it. A short seller is a ‘bear.’ Also called selling short.”

Wikipedia defines short selling by stating: It “is the practice of selling a financial instrument that the seller does not own at the time of the sale. Short selling is done with the intent of later purchasing the financial instrument at a lower price. Short-sellers attempt to profit from an expected decline in the price of a financial instrument. Short selling or “going short” is contrasted with the more conventional practice of “going long”, which typically occurs when a financial instrument is purchased with the expectation that its price will rise.”

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The Fly Or Die Commerce Report: Bank Of America May Be Seeking To Sell Off Their Mortgages

As more mortgage holders become delinquent on their loans, and as foreclosures continue to increase in certain regions, loan providers are seeking to sell off their rights to collection. Some financial institutions are deeming the collection of mortgage payments to be too costly.

Less than an hour ago, Reuters reported that Bank of America Corporation is seeking to sell the rights of collection for over $100 billion of the mortgages that they own.

JP Morgan Chase is also rumored to be interested in selling off their mortgage servicing rights. According to Reuters, JP Morgan Chase services a total of 7.4 million loans worth $1.1 trillion.

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