The world is full of nice people trying to give you advice

I'm lucky enough to have the opportunity to periodically get together with travel hackers around the country, whether it's at organized DO's, subscribers-only meetups, or spontaneous get-togethers while I'm traveling.

Almost invariably, the subject of affiliate bloggers comes up and someone will turn to me and say, "it was funny what you wrote about View from the Frugal Points Time, but when you meet him in person he's actually really nice."

I've heard this enough times now that it might be worth clearing some things up.

I'm not very nice (and I don't give advice)

I have met some nice people in my life, and I am somewhat in awe of them. You probably know the kind of person I'm talking about: people who always think before speaking, who are unfailingly polite, who seem to move through life leaving as small a wake as possible.

I'm not like that. I make snap judgments, I don't give people the benefit of the doubt, I take Donald Trump both literally and seriously. When readers offer to buy me a beer it doesn't occur to me to reciprocate.

I'm a jerk!

I also don't give advice. I go out every day and try to find ways to make myself and my readers miles, points, and cash. But all I know about my readers is that I don't know them well enough to give them, or anyone else, advice. So I don't.

I work for you

I suppose it must come across as corny to some readers, but when I say I work for you I'm not trying to be cute, I'm just explaining how this site works. I don't have affiliate managers breathing down my neck to get my conversions up. I don't have compliance managers telling me what I can and can't write and what font the terms and conditions have to be in. I get paid when people like my site enough to visit and subscribe.

The world is full of nice people trying to give you advice

Your Merrill Lynch stockbroker is a nice guy. He takes you and his other high-net-worth clients out for dinner (two entrée choices) a couple times a year to talk about market dynamics and the risks he sees in the year ahead. Then he churns your account and generates another commission.

Your insurance agent is definitely a nice guy. He listens very carefully to all your concerns about your health, your children's education, and your concerns about downsizing to a smaller house. Then he sells you a variable indexed annuity.

So it doesn't surprise me in the least that your affiliate blogger is a nice guy. He carefully responds to your questions and comments. He shakes your hand and looks you in the eye at Frequent Traveler University. Then he sells you a Chase Sapphire Preferred.

Being nice isn't enough

It may sound like I'm calling "being nice" some kind of stratagem or ruse people working on commission use to gain the trust of their clients in order to take advantage of them. But while there's some of that in the world, I don't profess to have any insight into the deepest recesses of either your stockbroker's or your affiliate blogger's soul.

The fact is that in the best case scenario your affiliate blogger is a nice guy who just happens to be in a line of work that requires him to put his interests before yours. Likewise there are coal mining engineers who got into coal extraction because they like being outdoors, not because they have anything against the ice caps.

I don't need to know anything about someone's heart of hearts to assess the impact of their choices on the world around them. 

Disclosure isn't enough

Your stockbroker, your insurance agent, and your affiliate blogger are all required to disclose their conflicts of interest, and do so dutifully. The problem is that disclosure of conflicts of interest does not have any impact on the quality of the advice provided, and may perversely lead you to trust the conflicted party more, not less.

Let me be clear: the logical response to "I may be compensated based on your choice of mutual fund/insurance product/credit card" is not to discount the advice given by 10%, or 20%, or 50%.

The logical response is to discount the advice given by 100%.

If you are not the customer, you're the product

It's tempting to say that some bloggers are "ethical" while others are "unethical," but I personally find the question of ethics orthogonal to this discussion, since the requirements of ethics may be satisfied by "full disclosure" without improving the observed result of too many readers signing up for credit cards that benefit the affiliate blogger rather than the reader.

No, the problem of affiliate bloggers pounding the drumbeat of constant, mounting urgency each time a particular card or issuer offers them an increased payout can't be solved by resorting to ethical considerations. It can only be solved by judgment.

So I'm judgmental. Which, along with being rash, brash, and cheap, is yet one more reason why, unlike your favorite affiliate blogger, I'm not a very nice guy.

What I'm thinking about headed into 2017

Good morning from Portland, Oregon. If you're traveling for the holidays, I hope your flights are safe, comfortable, and on time and your roads are clear. As 2016 staggers towards a close it's natural for thoughts to turn to the new year. Here's what's on my mind.

Manufactured spend

Last week I read a post-mortem on 2016 that claimed manufactured spend was either dead or dying, and I assume there are parts of the country where that's more or less true. In other parts of the country the amount of spend you can manufacture is limited only by the time and attention you're willing to dedicate to the task.

As 2017 starts I'll be moving spend back to my Delta Platinum Business American Express to start running up the score on Medallion Qualifying Miles and towards a Medallion Qualifying Dollar waiver. I don't chase high-level Delta status anymore, but do enjoy the free checked bags and decent seat selection I get as a Delta Silver Medallion. The real reason I manufacture spend on that card, though, is the 1.4 SkyMiles per dollar I earn at the $25,000 and $50,000 spend levels. Since I value SkyMiles at more than 1.5 cents each, that's more valuable to me than putting the same spend on a 2.105% cash back card.

In the last couple months I loaded up on spend with my Chase Hyatt credit card in order to hit the $40,000 spend threshold, but my expectation is I won't be putting any spend on that card in 2017. The annual Category 1-4 free night award will still justify paying the annual fee, for now.

The biggest change to my manufactured spend practice is that thanks to some current opportunities I expect to spend much more time in drug stores and much less time in Walmarts in 2017.

Blogging

In the 2-and-change years I've been writing this blog, it's changed in a lot of ways. When I started I spent a lot of time documenting and describing the tips and tricks I was reading about on other blogs and FlyerTalk. As time went on I became more focused on exploring new opportunities and, as I put it, explaining "how things really work." Recently I've become more focused on optimizing strategies for particular goals, and I've become even more cynical (if that's possible) about the parasites who put their own interests above those of their readers.

I've lost some readers as my focus has shifted over the years, and I've also gained readers who appreciate my newer content more than the older. This blog will never be all things to all people, but it'll always be independent.

In 2017 I hope to write some more book and podcast reviews, since I read a lot and listen to a lot of podcasts, and I enjoy the opportunity to collect and distill my thoughts about them.

Subscribers-only Newsletters

In the last few months I've stepped up the tempo of the periodic Newsletters I send out to monthly blog subscribers. Partly that's because there's been a surge of new deals towards the end of this year, and partly it's because I enjoy the opportunity to write unconstrained from fear of "killing" somebody's favorite deal.

I'll always maintain this public blog because I think it's important to have as many unbiased voices available as possible as a counterweight to the mercenary affiliate bloggers flooding the internet. But deals and ideas that might be threatened by widespread exposure will continue to go in my Subscribers-only Newsletters.

And by the way, if you enjoy this blog I hope you'll consider supporting it with a monthly blog subscription in 2017!

Gambling

During the Great Financial Crisis, the federal government took the two main federal home loan insurers into conservatorship. For a range of technical and legal reasons, however, they did not force them into bankruptcy and did not wipe out the existing shareholders. And, strangely enough, those shares are still traded for just under $4 on the over-the-counter markets.

I think there's a non-trivial chance the new Administration will stop sweeping the GSE's profits into the Treasury, and those shares will become 10-100 times more valuable. So I bought some!

This isn't advice, just something I'm looking forward to in 2017.

Travel

2017 will be my year of Hyatt stays. After March 1, as a World of Hyatt Globalist I'll be eligible for suite upgrades on award stays. Plus, since I won't be trying to requalify as Globalist for 2018 I'll be free to redeem Hyatt points for all my stays and not be constrained by the availability of Points + Cash awards.

Already in the works are trips to Jamaica to stay at the Hyatt Zilara Rose Hall and to Lexington, Kentucky for the April races at Keeneland. Beyond that, the plan as always is to keep my eyes open for international travel opportunities, as well as shorter weekend trips domestically.

"The Black Swan" is not a very good book

This is a review of "The Black Swan" by Nassim Nicholas Taleb. You can find all my previous book reviews here. If you're interested in buying a copy, I hope you'll consider using my Amazon Associates referral link.

"The Black Swan" captured the imagination of the reading, writing, and investing public the moment it was published in 2007, and sprang to even greater prominence as the global financial crisis ran its course over the following years. While I'd been looking forward to reading the book for some time, last month I finally found the time to plow through it.

I was disappointed.

"The Black Swan" is a book about one interesting and true observation

Taleb has one main point, which he approaches from a variety of angles: the impulse to apply Gaussian (bell curve) statistical distribution models to real-world phenomena is based on the ease of applying them, and not on their accuracy in describing those phenomena.

I took introductory statistics in college, and in my experience this is precisely correct: introductory statistics professors teach statistics as if the goal of the science is to acquire a large enough sample to discover the correct Gaussian distribution. If your sample doesn't follow a bell curve distribution, then you need to collect more samples until you discover the true, underlying bell curve.

Taleb argues convincingly that there is no reason to believe "social" phenomena have bell curve distributions. Wealth and income are not physical phenomena which become increasingly rare the further you move from the average; on the contrary, an arbitrarily large amount of income or wealth can be concentrated among an arbitrarily small number of people.

Nassim Taleb is not entirely hinged

Once you realize that Gaussian distributions are not entirely, or even not particularly, applicable to the real world, then it's natural to draw unusual conclusions.

If stock market performance is random but not Gaussian then "unusually" large stock market moves will occur far more often than would be predicted by models based on the bell curve (see: 2000 and 2008).

If success in business is random but not Gaussian then risky bets will produce extreme wins and losses more often than a bell curve would predict, so exposing yourself to those extreme wins while protecting yourself from extreme losses (Taleb's so-called "barbell" approach) will produce higher returns than a consistently mediocre portfolio.

Unfortunately, Nassim Taleb does not confine himself to his area of obvious expertise: trying to profit from large advantageous market moves while protecting himself from large, irrecoverable losses.

Taleb thinks black swans are everywhere

Taleb accidentally makes an interesting point about the difference between predicting the behavior of individual subatomic particles (completely impossible) and predicting the behavior of large grouping of subatomic particles, i.e., physical objects. He asks why, if his coffee mug is composed of subatomic particles moving in unpredictable ways, his mug doesn't leap off the desk into the air. The answer, of course, is that subatomic particles in large groups behave according to extremely predictable rules. Mugs don't jump off desks.

What Taleb gets wrong is that more human institutions are like coffee mugs than like subatomic particles.

For example, in chapter 11 Taleb advances his idea of "academic libertarianism:"

"[T]he problem with organized knowledge is that there is an occasional divergence of interests between academic guilds and knowledge itself. So I cannot for the life of me understand why today's libertarians do not go after tenured faculty (except perhaps because many libertarians are academics). We saw that companies can go bust, while governments remain. But while governments remain, civil servants can be demoted and congressmen and senators can be eventually voted out of office. In academia a tenured faculty is permanent — the business of knowledge has permanent 'owners.' Simply, the charlatan is more the product of control than the result of freedom and lack of structure."

Academia, of course, is an educational system much more like a coffee mug than a subatomic particle: the objective of higher education is to educate at a level as consistently high as possible. When people don't have control over the quality of education they receive, making it as consistent as possible is a perfectly reasonable goal.

Taleb has nothing to say about the large, functional systems we depend on

The subtitle of Taleb's book is "the impact of the highly improbable." The tendency since the book's release is to refer to any unforeseen event as a "black swan." This tendency is largely Taleb's fault, because while he has since become extremely protective of the term, in the actual text of the book it's barely defined at all. Taleb says a black swan must be "rare, impactful, and predictable in retrospect but not prospectively."

What event does that not apply to?

The fact is that vast majority of the systems actual people rely on are extremely resilient against "black swans," and virtually impossible to "hedge" against the failure of.

• Social Security is a system virtually all American workers pay into and which pays out checks to the retired and disabled.
• Medicare is a system virtually all American workers pay into and which pays out checks to doctors, hospitals, and pharmacies.
• The Department of Education's Direct Loan Program collects information on students and disburses funds to their institutions of higher education.

We can break these systems by electing politicians dedicated to destroying them. But that is not a "black swan," that's the unfortunate outcome of a process of collective decision making.

Conclusion

The solution to Gaussian, bell curve fantasies is not this sprawling 400-page tome of artistic criticism and intellectual wankery. It's reality.

Don't take out an interest-only mortgage with a teaser rate and balloon payment — the domestic housing market isn't Gaussian.

Don't invest money you can't afford to lose in a single car company, bank, or oil company — disasters are unpredictable.

And don't ask more out of your investments than they're capable of giving you. Buying a low-cost total stock market mutual fund from Vanguard will give you exposure to the total stock market. Buying a bond fund will give you a stream of income. Buying a bunch of Beanie Babies will give you exposure to the 90's hobbyist market.

But there's no added value to thinking of a collapse in the US stock market, a rise in interest rates, and people realizing Beanie Babies aren't worth anything as "black swans," outside "the normal distribution." They're all guaranteed to happen eventually.

Trying to develop resilience against these events is worthwhile, but doesn't require any additional intellectual framework beyond:

1. Don't risk more than you can afford to lose;
2. Don't take risks you don't understand;
3. Diversify what you can afford to lose among risks you understand.

Gut-checking the latest and greatest opportunities

Starting today, it should in principle be possible to sign up for the Popular Credit Service Avianca LifeMiles credit cards. Signup bonuses are constantly fluctuating up and down, but it's not every day that we get a brand new credit card to evaluate. With that in mind I thought I'd share my simple framework for looking at new offers like this when they come around.

What do I already know, and what do I need to know?

A quick glance at my airline alliances page shows that Avianca is a Star Alliance member. I already know that I hate flying United, so Avianca won't be useful for domestic itineraries, but it might be useful for international itineraries.

On Star Alliance partner airlines, there are no obvious sweet spots. Economy awards to Europe, for example on Lufthansa or Turkish Airways, cost 60,000 LifeMiles roundtrip, the same as United MileagePlus miles. In Business class on a Star Alliance partner you'll pay 126,000 LifeMiles roundtrip, somewhat better than the 140,000 MileagePlus miles United would charge.

To North Asia, LifeMiles will charge the same 70,000 miles roundtrip as United, but 10,000 miles fewer (150,000 LifeMiles versus 160,000 MileagePlus miles) for Business class. So in terms of redemption value, LifeMiles are certainly competitive with MileagePlus miles for travel on Star Alliance partners.

This is the sort of simple calculation you can glance at to anchor the valuation of a new currency compared to ones you're already familiar with. LifeMiles seem to be a pretty good Star Alliance rewards currency, at least competitive with MileagePlus miles.

Do I have a redemption plan?

Some readers seem to think that I'm some kind of maniac who insists there's no point in earning a mile you don't already have budgeted for a specific trip, on a specific flight, on a specific day, with a specific co-pilot leaving from a specific gate.

That's baloney! All I've ever said is that the least valuable point is the one you don't redeem, and that the point of travel hacking is to pay as little as possible for the trips you want to take.

If the trip you want to take is "Lufthansa First class to Europe," then having a slew of reasonably-priced Star Alliance miles lying around is a natural solution — a perfect solution! On the other hand, if the trip you want to take is "summer in Europe" then you may well have been better off waiting for a fare sale like the ones we saw last week where roundtrip economy fares were in the low 3-figures.

Knowing the kinds of trips you're likely to take, whether you're likely to pay for them with cash or with miles and points, and knowing which miles and points are well-suited for the job is a simple way of calibrating whether a brand new deal is spectacular or a dud.

Is it scalable?

There are two kinds of offers: one-of-a-kind opportunities like a 100,000-point signup bonus from a bank with good risk controls, and opportunities with potentially unlimited upside. Into the second category fall things like churnable credit cards, unappreciated reselling opportunities, or gift card liquidation mechanisms no one else has thought of.

A scalable opportunity is worth more than a one-off opportunity because once the background research has been done each iteration produces close to pure profit for as long as the deal lasts.

For example, while the US Bank Club Carlson credit cards offered the last night free on award stays, there was no limit to the number of 2-night stays you could book at half price. Along with a partner you could book any integer multiple of 2 nights at a top-tier 70,000-point property for 35,000 points per night, or $7,000 in otherwise-unbonused credit card spend per night.

In the case of the Avianca Vuela credit card, which is supposed to offer 2 LifeMiles per dollar spent at gas stations and grocery stores, the question is whether you'll be willing to earn 2 LifeMiles per dollar at the expense of other rewards currencies. There's no obvious answer to that question — it'll depend on your own circumstances. At grocery stores, 2 LifeMiles per dollar spent may be worth more than 6 HHonors points, or more than 2 Flexpoints, or more than 2 Membership Rewards points, or it may not.

In short: a lucrative bonus category can turn a so-so credit card, or a decent signup bonus, into a scalable opportunity — but whether it does or not will depend on your own circumstances.

What will I do with the remaining points?

After signing up for a Avianca Vuela card, and meeting the spending requirement, you'll be the proud owner of 60,000 LifeMiles. Say you jump on a 50,000-LifeMile First class award from North America to Hawaii. Now you're the proud owner of 10,000 LifeMiles.

You can either accept that you got a 50,000-mile signup bonus, instead of a 60,000-mile one, or you can start conniving and contriving to redeem your remaining 10,000 LifeMiles, or start doing your utmost to earn more until you get to another redemption threshold.

I don't give advice, and don't care which response you have.

But knowing which response you're likely to have before you get there is a key to long-term mental health and regret-minimization in this game.

Conclusion

Let me stress again that there's no reason that "maximizing" the cash value you get from each travel hacking technique should be the only goal of your practice. But it does provide a general framework that at least lets you calculate, within general parameters, what the tradeoff is between fixed-value and flexible rewards points, between hotel points and airline miles, and between manufactured spend and signup bonuses.

What is a nation?

I am an American. My parents were born in Oklahoma City and San Francisco. I was born in Arkansas. I was raised in Montana. I may be just slightly less American than apple pie, but only because I prefer strawberry rhubarb.

I'm not an Irish-American, I'm not a German-American, I'm not an Italian-American, I'm not even an Anglo-American. My whole life, I've only ever been an American.

Until I went to Russia. In Russia, "America" is a state (государство), but not a nationality (нация). In Russia, if you don't know what nationality you are, you're generously assumed to be a lying Jew (spoiler: my family enjoys prominent noses).

In my youth, I could simply never understand what was a "country," what was a "nation," and what was a "state." That's because in my mind America was all three: a country (purple mountains majesty, sea to shining sea, etc.), a state (government, Constitution), and a nation (all of us Americans).

Donald Trump, along with his supporters and enablers, have one vision of the American nation, which they'll have the opportunity to implement in the coming presidential term. But it is not the vision of the American nation expressed by actual Americans on November 8, 2016, a majority of whom voted for Hillary Clinton, one of the finest, most dedicated public servants in the history of the Republic.

I am an American, and my identity has nothing to do with the peculiarities of the Electoral College. I believe this is a nation, country, and state filled with people with a keen sense of justice. I'm full of pride for how the majority of the American people voted, against all the bigotries represented by Donald Trump.

I'm also a Christian. Religion is not an excuse to check out from the world we live in and focus on the world to come. Christ certainly didn't. The example Jesus set wasn't just of dying: it was also of absurd generosity to the most needy. That's the model of generosity we should all aspire to.

The next four years will be frightening in a lot of ways. The devastation about to be inflicted on the welfare state will send millions of people into unspeakable poverty. The return of "pre-existing conditions" to the American lexicon. The abandonment of any effort to fight climate change before hope is completely lost for the survival of low-lying communities and nations.

But I am an American. I love my country, my nation, and my state. The next four years aren't an experience I'm looking forward to, but for good or for ill we don't get to pick the obstacles we face in our lives. We just have to face them one at a time.

My taxonomy of travel hackers

Last weekend I took a quick trip down to Dallas to meet up with blog subscribers, and also managed to fit in a Friday happy hour with folks in town for the latest Family Travel for Real Life gathering.

Getting together with likeminded folks, or at least folks likeminded enough to travel from all across the country to swap tips, tricks, and stories, is always fun, and there are now lots of options. The Ann Arbor Art Fair DO is a longstanding annual gathering, Trevor at Tagging Miles has started running daylong get-togethers focused on reselling, and there are the aforementioned Family Travel for Real Life conferences focused on family travel, including (very) large families.

In my experience at these events, I've noticed a few basic attitudes towards travel hacking that differentiate how people — even people using the same credit cards, loyalty programs, and techniques — think about what they're doing.

The Hobbyist

No one I have ever met in this game calls travel hacking "The Hobby." But in a bizarre piece of stunt journalism, Rolling Stone used that term in its profile of rich weirdo Ben Schlappig, and we've been joking about it ever since.

I'm reclaiming it here to use it without criticism or calumny. Trevor at Tagging Miles is also what I would call a Hobbyist: he takes 1- or 2-day trips all around the world, flying in international first class and business class cabins to spend a little bit of time in Sydney, Taiwan, or Bangkok.

A Hobbyist really is the kind of person who would benefit from what Frequent Miler once called "opportunistic hoarding." If you want to hop on a plane at the last minute to take a short trip to the other side of the world, then having as broad and deep a portfolio of loyalty currencies is essential. Every route you want to fly requires a different calculus: distance-based or region-based; with or without fuel surcharges; stopovers allowed or prohibited.

Hobbyists are the kind of travel hacker willing to buy points or miles "when they're cheap" and who pursue every new signup bonus as a "painless" way to diversify their portfolio.

The Family Traveler

Another "type" I meet all the time is the Family Traveler. This is the guy or gal who wants her children to see the world, but quickly realizes how expensive seeing the world (or even the country) is if you have to pay for it out of pocket.

Here you typically see a keen focus on the bottom line: mom and dad will both earn Southwest Companion Passes, each select a different child, and then exclusively fly to destinations served by Southwest.

A family traveler has both constraints and opportunities that other travelers don't. Opportunities include companion tickets like those offered by the American Express Delta Platinum and Reserve personal and business credit cards, which become more valuable than they would be to a solo traveler, since they partially obviate the need to find award space when booking multiple tickets. Constraints include the near-impossibility of regularly finding 3 or 4 award seats on the same flight.

The Budget Traveler

As I have joked in the past, before I learned about travel hacking I still traveled all the time — I took busses, I flew Spirit, and I stayed in hostels. I don't travel more since I became a travel hacker, but I pay less and I get more. That slots me into the category of Budget Traveler.

From a Budget Traveler point of view, locking in higher-than-average rewards at lower-than-average prices is the point of travel hacking. That makes rewards currencies like US Bank Flexpoints and Hilton HHonors points into priorities, since they offer outsized rewards on easily manufactured spend. You'd be crazy to fly to the Maldives with Flexpoints, but they offer a big discount off retail for a range of domestic and international economy flights, and thanks to price compression are also an easy way to get seated up front on domestic flights and accelerate your progress towards elite status.

The Sucker

Of course, no taxonomy of travel hackers would be complete without mentioning the Sucker. The Sucker mostly reads affiliate blogs, follows affiliate authors on Twitter, and gets excited each time a signup bonus spikes from 40,000 to 41,000, as long as it's the highest offer ever. They jump on every deal, store up points in every program, and writhe in agony at the announcement of each devaluation of the points they've earned and will never, ever redeem.

The Sucker has 105,000 Membership Rewards points, because they met the minimum spend requirement but have no idea what to do with their signup bonus. The Sucker has hundreds of thousands of Club Carlson points, Wyndham points, and Choice points, even though there's no earthly reason for a single person to have points in all three tertiary programs.

I don't care if you're a Hobbyist, a Family Traveler, or a Budget Traveler. But please, don't be a Sucker.

The Scam Economy: ScoreBig edition

It's natural for travel hackers (and their concerned family members) to wonder, who really pays for what we do? The obvious answer is, "everybody else." There are enough people buying low-denomination gift cards with cash to make it worthwhile to sell high-denomination gift cards with credit cards. Enough people get trapped under high-interest-rate credit card balances to make it worthwhile to incentivize purchases made with credit cards for those who pay their balances in full and on time. Wells Fargo appears to have simply been a basket case, but they undoubtedly had something similar in mind when they launched their aggressive cross-selling strategy.

I've long wanted to write a book about that economy: the scam economy. I got to thinking about the subject again when I saw Anita's post at Frequent Miler about ScoreBig's current financial difficulties. We can get used to travel hacking, reselling, and extreme discounting, but it's worth taking a step back to really appreciate that the overwhelming majority of these companies are simply scams, and more and more we live in a scam economy.

What the real economy looks like

In the real economy, Lin-Manuel Miranda had an idea for a musical, wrote it, raised some money from investors, hired some actors and musicians, and started selling tickets.

Hamilton was a huge success, and will run on Broadway for years, then close just so it can reopen and also win the Tony for Best Revival.

Add capitalism's secret sauce

People have been putting on shows for a long time, from Russia's traveling skoromokhi to Shakespeare's Globe.

What advanced market capitalism adds is that Lin-Manuel didn't have to put this show on by himself. He didn't need to build a theatre (the Richard Rodgers Theatre opened in 1924), he just has to rent it out. He didn't need to negotiate a contract with his actors or musicians, since they belong to unions (Actors' Equity and Associated Musicians of Greater New York, respectively) that handle those negotiations for all of Broadway. He didn't even need to handle tickets sales, since Ticketmaster has deep experience collecting money from patrons and handing it over to production companies, minus a reasonable fee.

Enter the scam economy

What does ScoreBig add to this equation? Well, for a variety of reasons Lin-Manuel chose to sell his tickets for less than the price that would attract only the number of customers capable of filling up the theatre. Economists call that the "market-clearing" price or the "equilibrium" price, but in the real economy, people set all sorts of prices for all sorts of reasons.

If Lin-Manuel wants to sell tickets for a price low enough that working-class families could conceivably someday afford to attend his show, rather than perform for oil sheikhs and Russian kleptocrats all week, that's his prerogative — it's his show, after all.

It also happens that sometimes people buy tickets that they ultimately don't use for themselves. Maybe they have an emergency that keeps them from the theatre; maybe they bought them speculatively in the hopes they'd go up in value. ScoreBig and sites like it allow owners of unused tickets to sell them to those who were unable to buy tickets at their face value, since the show is sold out months in advance.

But Anita's experience shows that this isn't the function ScoreBig was performing. They weren't moving tickets from willing sellers to willing buyers:

"there may be an issue regarding the continued validity of the tickets you purchased"
"ScoreBig’s email advised that only the seller of the tickets could confirm the validity of the tickets"
"The CSR said...'If it makes you feel any better, we aren’t getting paid for these.  We made a decision as a company that we are honoring the tickets because it is the right thing to do.'”

What the hell is going on here? I can't say for certain, but here's one version:

• Someone wrote a script that was able to purchase a block of Hamilton tickets at their face value;
• After successfully booking the tickets, they sold them on at a markup to a large broker;
• That broker listed the tickets for sale on a variety of platforms, including ScoreBig;
• In order to attract a larger market share, ScoreBig aggressively offers discounts through cashback portals, gas discount programs, and other extreme couponing techniques;
• ScoreBig collected money from Anita for the tickets, but doesn't pass it on to the broker until some time after the tickets are delivered;
• ScoreBig uses the money it collects from Anita to cover its operating expenses, debt, and to pay brokers for tickets that have already been delivered;
• ScoreBig doesn't make enough money doing this, so faces a liquidity crisis and has to renegotiate its capital structure, stiffing its vendors and leaving them on the hook for Anita's tickets.

Let's call this exactly what it is: a scam. And it's a scam whether or not ScoreBig stays in business, and whether or not they ever made any money doing it.

I don't have anything against reselling tickets, whether it's on the pavement in front of the theatre or online. I don't have anything against buying tickets speculatively in order to resell them. I don't have anything against middlemen stepping in to facilitate those sales.

But when you borrow money to start a company that requires an increasing number of customers funneling money in through the front door to cover your operating costs, liabilities, and to pay your vendors, and then when the money coming in the front door ends up not being enough to cover those liabilities you stiff both your customers and your vendors, you are running a scam, pure and simple.

Obviously there's a connection between ScoreBig's business model and the financialization of the American economy in general. If private equity bankers can raise billions of dollars to purchase profitable companies, load them up with debt, strip them of assets, and distribute the cash to themselves and their partners, who am I to complain about ScoreBig's business model?

And maybe that's right. Maybe if we want Lin-Manuel to be able to raise the money he needs to put on the greatest show of the 21st century, we have to tolerate the ScoreBigs of the world ripping off their customers and vendors.

But that doesn't mean we should get jaded about the scamification of our economy. If you want to bet big on ScoreBig, or Uber, or AirBNB, or any of the other criminal enterprises masquerading as technological innovations, go ahead, and just pray you're not the last one left at the party, holding the bag.

Overdiversifying, underdiversifying, and practicing what I preach

I recently had the pleasure of redeeming 30,000 American AAdvantage miles for a $290, one-way domestic plane ticket, which gave me an excellent opportunity to reflect on some travel hacking wisdom I never get tired of preaching: the least valuable point is the one you don't redeem.

The real risk of underdiversifying is paying cash

The point of travel hacking should be to pay as little as possible for the trips you want to take. I'm absolutely indifferent to whether you want to travel domestically or internationally, by plane, train, or automobile, with your family or alone, in first class or in steerage. I just want to help you spend as little money as possible to do it.

Diversifying your points balances is a way of achieving that. With no rewards currencies at all, you'd pay the retail cost for all your travel, minus any savings achieved by booking through online portals, paying with discounted gift cards, taking advantage of best rate guarantees, and the other techniques we have available.

With a single rewards currency, you can start to save money when you're able to find award space with that loyalty program. If you only collect Hilton HHonors points, you're in good shape as long as you're visiting a city with a Hilton property, and that property has award space. You'll still pay cash for your airfare, but hotels can often be the biggest expense on a trip, so the savings there can quickly add up.

With multiple rewards currencies, you can start to bring down your costs considerably. If you earn Ultimate Rewards points with an Ink Plus card, then you'll be able to save money by redeeming Hyatt Gold Passport points when you visit a city served by Hyatt, and by redeeming United, British Airways, Flying Blue, and Southwest points when those airlines and their partners make award space available. Even better, when award space isn't available, you can still get a 20% discount on revenue flights by redeeming Ultimate Rewards points at 1.25 cents each.

I won't belabor the point: having more rewards currencies reduces the chance that you'll have to pay retail for your travel. As long as those rewards currencies are acquired cheaply enough, that means each redemption saves you money on your travel, which, again, is the point of the game.

The real risk of overdiversifying is unredeemed balances

Many travel hackers and bloggers believe that "earning and burning," or keeping points balances as low as possible by redeeming award currencies roughly as quickly as they're earned, is the best approach. The reason normally given for this is that regular devaluations decrease the value of earned miles and points, so your balances will never be worth as much in the future as they are in the present.

Meanwhile, I spend no time thinking about devaluations, and don't think you should either. Your travel hacking practice should be giving you big enough savings on each redemption that even substantial devaluations won't affect the calculus of redeeming miles versus spending cash.

But the logic of diversifying your points balances really can be taken too far!

Above I said that when you don't have the right currency to pay for the trip you want to take as cheaply as possible, you run the risk of having to pay cash and not save any money at all. One way to react to that possibility is to accumulate high balances in as many programs as possible, to ensure that you always have enough of the right currency for the job.

The problem with that approach is that it exposes you to the real risk of overdiversifying: unredeemed balances. From hundreds of interactions with readers and friends in the community, I have come to believe that accumulating large, unredeemed balances is the single biggest mistake made by even experienced travel hackers.

There's no mystery to how it happens: a new credit card is launched, or refreshed, or suddenly has a much higher-than-usual signup bonus. Once the credit card affiliate bloggers get their links, you see two or three weeks of blanket coverage online. Sometimes the coverage even runs over into the mainstream media. Even those who are disgusted by the orgy of profiteering start talking about the orgy of profiteering, bringing the offer in front of even more eyeballs.

And then, like clockwork, people start asking: "I have all these Wyndham/Membership Rewards/Amtrak/Choice/Trump Shuttle points. What do I do with them?"

The answer, unfortunately, is usually "nothing."

Pay as little as possible for the trips you want to take

Without travel hacking, most of us couldn't afford to spend a week in the Maldives. But even without travel hacking, many of us could afford to fly home for Thanksgiving.

Paying $150 for a $600 plane ticket you'd otherwise pay cash for is a savings of $450.

Spending $2,500 for a trip someone else paid $15,000 for is an expense of $2,500.

I've heard that the Maldives are lovely, and I'm sure I'd enjoy visiting. But speculatively accumulating huge balances at random as signup bonuses change and cards are launched or discontinued, instead of targeting programs that save you money on the trips you want to take is a way of spending money, not saving it!

Again, this says nothing about the merits, or lack thereof, of the Maldives, of your favorite Park Hyatt, or of Emirates First Class. I'm sure they're lovely. But being talked into taking someone else's idea of the perfect trip is an expensive mistake — travel hacking just makes it less expensive.

Conclusion: my fantastic AAdvantage redemption

All of that brings me to my 30,000-mile, $290 one-way American Airlines ticket. If you believe that the goal of travel hacking is to get the highest dollar value from each redeemed mile, this is a preposterous redemption — less than a penny per point!

But I had a different problem: an unredeemed American Airlines balance. I'd earned the miles cheaply, through Barclaycard US Airways anniversary miles, a negative-interest-rate loan I took out, and some experiments I'd been running through the American Airlines shopping portal, so I was certainly saving money on the ticket compared to paying cash.

But even more importantly, I judged ridiculous the idea of paying $200 (the cash value of the 20,000 US Bank Flexpoints I'd need to redeem) or $232 (the cash value of the 23,200 Ultimate Rewards points I'd need to redeem) when I had more than enough AAdvantage miles sitting in my account unredeemed. I didn't have a plan for the miles because I had earned them more or less accidentally: I had overdiversified into AAdvantage miles, and was sitting on a balance of miles that were, unredeemed, worthless to me.

The point of travel hacking is to pay as little as possible for the trips you want to take. I wanted to take a $290 flight and $5.60 in taxes and fees was as little as I could pay for it. Mission: accomplished.

On thought leadership

As regular readers know, I'm a podcast fanatic. The only thing better than being able to conveniently manufacture spend is being able to listen to great audio content while you do.

One podcast I've given a few chances to, but haven't yet been blown away by, is the Ezra Klein Show. Klein is a great interviewer but has the absolute worst taste in guests to have on the show, which makes most of the interviews ultimately boring unless you're personally interested in the area the guest specializes in.

Back on April 19, 2016, Klein interviewed Ben Thompson on "how to make it in media in 2016." Well heck, I'm trying to make it in media in 2016! So I thought I'd give it a listen.

If you don't know who he is (I didn't), Ben Thompson is the motive force behind Stratechery.

Ben Thompson is a Thought Leader in Technology

About halfway through the Ezra Klein interview, Thompson begins talking about what makes people willing to make a site a "destination," and how to build an audience willing to sign up for subscriptions to get even more content (Thompson seems to have the same model I do, providing lots of free content as well as subscribers-only access to his inner-most musings).

Thompson's theory is that when you have a single, internally consistent vision of the topic you write about, it makes it easy to fit new information into your worldview, allowing you to generate "fresh" content based on the news without taking the time or effort to actually examine the facts on their own terms.

Listening to this interview, I immediately recognized the genre he was talking about, because travel hacking has its own Thought Leader, right in our very midst.

Gary Leff knows one big, stupid thing

When you visit View from the Wing, you are immediately informed that you're in the presence of a Thought Leader In Travel. And after listening to Ben Thompson cooly describe the anatomy of the Thought Leader, it's obvious what Gary Leff's single, internally consistent vision of the loyalty industry is: loyalty programs are the single greatest invention in the history of marketing, and travel companies tinker with them at their peril.

There are many reasons this is stupid, and I encourage you to come up with your own.

But the lowest common denominator explanation for why this is an incorrect world view to drive thousands of words per week is this: if loyalty programs can, through public signaling to one another, devalue more or less simultaneously, then all the programs can individually and jointly spend less on marketing expenses without ceding a marketing advantage to any other program.

And, amazingly, this is precisely the pattern we see in the real world, where the rest of us live.

I know a bunch of small, true things

Clearly, I'm not a Thought Leader in the terms Ben Thompson described. I don't have a single overarching philosophy, and I don't try to cram every new piece of information into my preconceptions. Instead, I know a handful of small, true things. For example:

• Compare every earning choice you make to cash, since you can spend cash on anything;
• Statement credits are worth (much) less than cash;
• Price compression makes more convenient, more comfortable flights more affordable;
• It's possible to beat the house, but only through math, not through magic;
• Pay as little as possible for the trips you actually want to take;
• Every deal dies eventually;
• There will always be more deals.

What are Thought Leaders good for?

This post isn't meant to be an attack exclusively on Gary Leff (although, of course, also on him), but more generally to call into question the species of Thought Leader as a whole.

What is the point of using an overarching philosophy to interpret facts when you have the actual facts in front of you?

On the one hand, Gary Leff really is invited to attend, and even host(!), awards galas and loyalty conferences.

On the other hand, his insistence that the loyalty programs are sabotaging their own success through devaluations and a focus on revenue seems to fall on completely deaf ears, possibly because a graphomaniac internet enthusiast has no influence over the business practices of massive global enterprises.

Conclusion

Looking around today, it's clear that the future of the internet belongs to the Thought Leaders. Mr. Money Moustache is a Thought Leader in Financial Independence. Meb Faber is a Thought Leader in Value and Momentum Investing. Tyler Cowen is a Thought Leader in Condescension.

I imagine there are lots of reasons why people find these Thought Leaders comforting. They repeat the same nostrums over and over again, building a cushion of the familiar, the wise, the sensible. And who doesn't want to live in a familiar, wise, and sensible world?

But there is an alternative to Thought Leadership: taking the world on its own terms. Understanding that loyalty programs will continue to devalue, with or without notice. Understanding that passive, low-cost investing is the only method yet devised that will secure as much of the market's return as possible. Understanding that Tyler Cowen is a twit.

A big, false theory may be comforting, but a small, true fact is even better.

Quick hit: my content around the web

Although my posts this week have had a little bit of a focus on the personal finance side of travel hacking, I primarily use this website to write about the travel side of travel hacking. But if you're interested in hearing my take on topics both near and far from travel hacking, there are a few other places where you can find me thinking out loud and otherwise.

Saverocity Observation Deck

I (famously) listen to podcasts while I run my travel hacking errands, and it's especially fun to listen to podcasts about travel hacking while I do so. The Saverocity Observation Deck podcast has been hospitable enough to invite me on to contribute to episodes 11, 15, 26, and 38. Listen to those, and other episodes, and you'll be able to decide for yourself if you like it.

Saverocity Forum

While I personally feel that travel hacking and personal finance hacking are closely related, I know not all of my readers do, so my tendency is to post my reflections on personal finance hacking over at the Saverocity Forum. You have to create an account first, but then you should be able to use this link to find all the threads I've created there.

Twitter

Twitter is the greatest invention since flying cars, and I'm always on Twitter. I find it pretty difficult to find Twitter users worth following, but the good news is that the more worthwhile Twitter users you follow, the more likely you are to find additional worthwhile Twitter users.

My Twitter handle is @Freequentflyr. Incidentally, that's arguably an even better way to get in touch with me than e-mail, as long as you're not asking or disclosing anything you'd like to keep private.