Stocks, bonds, real estate; don’t count on it. The best investment for 2009 is people.

I wrote about hiring employees last year. Its a pretty damn good thing to do irregardless of the economy. The difference is today high quality workers are being shed along with the low quality ones. As Google restrains hiring and the investment banks continue layoffs, you can bet it is getting easier to find highly skilled and experienced technical workers.

Downward price pressures (deflationary for now) mean better for cheaper. Not growing your company? Then this is a great time to clean out the underperformers and replace them with new hires. You can keep your costs constrained while increasing company performance. Hell, one really good programmer can automate & replace the jobs of 10 lazy workers.

In the past few weeks I’ve seen some pretty impressive resumes. My standards and expectations have dramatically increased, and so should yours.

As for a follow up on my “Killer Investment with a 100% ROI” from May 2007, I would say my return has been substantially more than that. In retrospect, the idea of putting that money to work in any traditional investment would have been absolute lunacy.

Aaron Wall has a great post summarizing some of the recent problems in the advertising industry for publishers.

I saw this one coming, which was why I flipped my focus from selling inventory (as a publisher) to buying is (as an advertiser.) I guess I should change the name of this blog.

Many in the online advertising side have business models involving selling overpriced garbage to their customers. One of my friends recently dealt with a major US bank’s online advertising campaign. Every question he asked them — what sites are your ads being shown on, which banner ads convert the best — resulted in the answer, “we have no idea.”

Here is why you should pay attention as a publisher. If you think things are bad for you, they may be worse for ad networks and agencies you deal with. Aaron highlighted a story over at Techcrunch — “Glam blames the economy and extends payment terms from 60 or 90 to 120 days.” If I heard that from any company I dealt with, I’d assume they were at risk of going bankrupt and count on never being paid.

As I pointed out previously this is no time to close up shop. Most of the decline in ad inventory prices may be from advertisers ignoring their ROI. That means better and smarter deals on inventory for now. Are you a publisher? Great time to expand your community base through advertising. Running an ecommerce site relying on Google’s free traffic? Start learning the ins and outs of performance advertising.

Recently I have been hearing stories about people having big problems with their American Express accounts. No, not from flagrant spenders but from people who are capable, and at times do, pay their balances daily. A story today from the AP says that American Express wants $3.5 billion of bailout money, presumably to stay afloat.

To be fair to American Express these people do spend large amounts of money. Having more than a few red flags raised is completely expected. However, these individuals were asked to do basically impossible things to keep their accounts — despite American Express owing them money. That is right, in the process of trying to keep their accounts active (two specific and unique individuals in this case), they over paid their balances by very significant sums.

One party was able to keep their American Express account open after a great deal of work above and beyond what should be required. The story as I heard it was American Express basically said, we are kicking you out, and that individual proceeded to contact as many people as possible while faxing American Express literally every page of financial documents they had.

Based on that story, it leads me to suspect part of American Express’s problem is internal. A combination of layoff threats along with an ever increasing workload created by defaulting clients appears to have caused a precipitous drop off in American Express’s employee quality.

This paints a very grim picture for American Express’s future. Their high processing fees cost businesses money. Many will not accept AMEX if they don’t have to. At the same time, big spending limits along with excessive rewards motivate business owners to run all of their businesses expenses through their AMEX cards.

Would there be any rational reason for American Express to shed highly solvent customers right now? From what I see externally, my opinion is either it is a hell hole to work for right now or they are getting close to going under. May be both.

This past summer’s advice: Its a great time to get a good deal on a car.

Today’s advice: Save your money.

Markets are self-reinforcing on the upside and down. Unfortunately this one has a very real problem. Right now the world’s central bankers are trying to put back together all the pieces of a very complex puzzle. There is a big problem, the puzzle had moving and unsustainable parts. Many of these parts regulators are working towards ensuring “never happen again.” Instead of a happy solution I suspect we are going to end up with a frankenstein.

The credit super cycle requires increasing amounts of credit not only to grow but to sustain itself. Consumers leverage their consumption. Businessmen and analysts make projections based on that consumption and they themselves use leverage to match it. The leverage and its influences permeate everywhere and are self reinforcing.

If you think that some government official can fix it, I suggest you study more.

If someone else has already pointed this out, please let me know. I have yet to see anyone anywhere make this point.

A lot of people are claiming the current credit crisis as a failure of the free market system.

Now, whatever your stance on the capitalist system is — good, bad, flawed, or perfect, right now that doesn’t matter. This post is here to make one point: the global financial sector does not operate as a free market.

How so?

The banking system operates under the direct support of the government. The US Federal Reserve, just like every other central bank, controls interest rates. Not only does the interest rate act as a price control mechanism, the capital flows & liquidity that are provided to the banking system act as a government subsidy. Without this level of government intervention there would be no business model.

Additionally, there is no historical basis for the long term stability of banking. Again and again government agencies are required to bail out banks, dating back hundreds of years. Nassim Nicholas Taleb pointed this out in his very, very timely 2007 book, The Black Swan.

Why does the banking system continually fail? Leverage. When you have no leverage riding out difficult times is achievable. The model of fractional reserve banking mandates the use of leverage. What kind of profits would banks earn if they could only lend out $1 for every $1 of deposits?

As I’ve said elsewhere, I think we may be facing a full blown end to a credit super cycle. It may happen rapidly, or it may be stretched out over the course of 10 years. I don’t know. With low overhead and nearly unlimited flexibility I am very happy to be in the business I am in. You should be too.

There could be a pretty good explanation for this.

I have made a conscious attempt to avoid posting financial advice or predictions. I do not trade stocks or actively invest in any non-digital assets. For me the return online is far too great to be distracted elsewhere.

That being said, I feel that I owe some advice to those still reading this blog.

The details of what has happened will not be covered here. If you read the Wall Street Journal, watch CNBC, or read/watch Bloomberg you know whats going on. If not, your probably in the dark.

Nothing that has happened was unexpected, new, or shocking. Last year I tore an article out of Portfolio magazine in whichthe end of at least one of the major investment banks was predicted. I stuck it in the bottom of my sock drawer. Out of all of the books, newspapers, and magazines I had read, it just made too much sense. It turned out to be conservative.

Here is what matters for you, as a business owner –

You have to ride out the storm. There just is no other option. It might be short, it might be long. It might clean out some of your friends.

In tough times only cash and the lack of debt or other long term liabilities provide the buoyancy that will keep you afloat.

The collapse of the dot com bubble destroyed online businesses and billions in wealth. Yet some, with more stable business models, made it through and came out roaring. In the aftermath, guys like Frank Schilling cherry picked prime dot com assets for dirt cheap. Similar opportunities may appear again. In fact, they are already showing up (start looking.)

A hurricane is here.

The US government’s attempted intervention could be the calm in the eye of the storm. Its not a bad opportunity to tighten ship; that is, if you haven’t already.

A huge congrats goes out to Markus Frind creator and owner of Plentyoffish –

“VANCOUVER, Canada, July 29 /PRNewswire/ — The latest comScore Media Metrix numbers now rank the free dating site Plentyoffish.com as the leading dating site in both North America (U.S.A. + Canada) and the United Kingdom.”

Take a look at his competition, they are spending millions of dollars a month on advertising. If they stop spending, no one would come close to touching Plentyoffish.

Its not all fun and games, Markus blogged “This morning I spent 30 minutes on the Phone with someone from the US Department of Justices Antitrust division.”

Webpublishing Blog probably over focused on Plentyoffish. Why? Because I loved the business model. Low overhead, simplification, automation, a hideous design to slide under the radar. To this day I have applied those basic concepts to nearly every one of my projects — and its paid off.

Unrelated, but yeah, this blog is officially dead. Though I reserve the right to post here if something interesting comes up.

Day to day tasks add up quick.

I’ve always said only do something if it makes you money or you really want to do. With a few exceptions, you should pay someone else to do everything else.

After a year of putting it off I finally hired a personal assistant a few months ago. Not having one has probably cost me a good six figures or more worth of income primarily in the form of bullshit breaking my work focus.

How much does it suck writing a to do lists? The other day I made one up before going to sleep, and when I got up 8 hours later everything was done (ok, ok, I wake up at noon and I wrote the list at 4 am.)

If you don’t have one yet, get one. Make a posting on craigslist offering generous payment terms and find a qualified college student without another job. You should have no trouble finding a smart employee with very flexible work hours.

My theory on the best investment ever has been proven correct once again.

A few years ago I took a wild shot and believed a guy named Markus Frind. He made some wild claims and quite a few people thought I was gullible because of it. Turns out I was right.

How do you know if someone really is who they say they are? The internet makes this judgment task exceptionally hard. There are no faces. You don’t even know if the person you are talking to is a female or a cross dresser who hasn’t showered in six weeks.

First, you need a base of experience yourself. Bullshitters can be caught quickly when nothing they say fits reality. If you don’t know a thing about the subject at hand, you are flying blind. US investment banks had an easy time hawking complex and overpriced financial services to municipalities. Con artists know making marks feel smart is incredibly powerful.

Second, look at motivations. Does this person have something to sell you or some deal to do? If they have blatant commercial intent, set your credibility meter to 0. People will say and do anything to make money. But hey, we are in business. I have something to sell and so does everyone else I know. The key is do they have something to sell you.

Third, be able to test what you hear. If a claim is untestable or unprovable then your best off ignoring it. You can immediately throw out cult leaders and instead spend your time focusing on reality.

I’ve met many people through the web. Some are genuine, others are clearly liars. Most I’ll just never know who they really are. However, I don’t really care. In general, I judge people based on the usefulness of the information they provide. If a get-rich-quick blogger who never made a dime in their life writes something, and I make $10,000 off it, wonderful.

Because I have been running my business for a while I have some sense of the accuracy of an individual’s advice (rule number one.) If 90% of what someone says is in line with what you already know is true, its a good bet the remaining 10% is true.

Just starting out? Then you need to build up some first hand experience before going all on based off of what someone else says.