Saturday, February 28, 2009
Tonight I am making my second minor pro hockey debut out of New Jersey men's league. That's right, tonight I will be playing for the Danbury Mad Hatters of the Eastern Professional Hockey League (EPHL). Ned Braden how I feel thy pain. Besides the comedic value of the situation, it really is a mixed bag of feelings tightening up the chinstrap again and hitting the ice in a competitive game.
Last year I played a few games with the Valley Forge Freedom of the Mid Atlantic Hockey League and it was a similar situation. Playing division I hockey for the Air Force Academy Falcons hockey team was the culmination and realization of a life's worth of work and dedication, and I wouldn't have traded it for the world. Between the world class people involved, the high level of competition, and the experiences that I went through it truly was one of the highlights of my life. With the commitment to the Air Force Academy came a commitment of a 5 year active duty service commitment upon graduation. What does that mean for a division I athlete? Well it basically means that professional hockey is out of the question. If you don't believe me google Army Football and Draft and read about how Caleb Campbell was drafted and ordered not to attend the NFL training camp a day before it started. For someone like myself whose draft status waved goodbye quite along time ago the chance of playing professional was even more slim. This didn't really bother me too much because I never really thought I had a chance of playing professionally. It was always my dream to play division I hockey and I achieved that dream. Looking back on my lifelong hockey career and knowing what I know now, I wish it would have been my dream to play professionally. Who knows if I could have accomplished it, however I know now that I was in essence holding myself back by writing off that dream a long time ago. One of my best friends and fellow linemate for many years always held onto the professional dream and never looked back, he is now playing for the Buffalo Sabres.
But you already said you will be making your minor pro debut for the second time tonight? Doesn't that mean you did achieve the goal of playing professional hockey? Well, I guess to a hockey outsider it could look that way. And truthfully these two experiences do help ease some of the pain of not knowing what could have been had I attended a different division I program. But I like to tell people that any "professional" league that has to remind people that they are professional by adding it within the title of the league, probably isn't a league I personally would consider professional. I guess it meets the bare minimum standard of paying people to play hockey, but the MAHL (now defunct from the area and moved to the Midwest) didn't have too many things about it that I would classify as professional.
The MAHL had some talent. The games were a good tempo and surprisingly (as well as thankfully) the league wasn't a total gong show with a fights every two seconds. However, there were plenty of low end guys in the league that wouldn't have made my junior A hockey team and there were a few that in my opinion probably should have taken two weeks off and quit for good. But like everything else in my life it was a great experience and one I learned from. Which is why I am heading out tonight.
Here are some quick life lessons and tidbits I learned from my last stint in semi pro hockey:
- Competition is great. Real competitors always crave it and seek it out in most things they do.
- Ego is a funny thing. I have always wanted to be good enough. Not for anyone else, but for me. However you have to keep things in perspective.
- Speaking of perspective, my experience in the MAHL was great to help me hone mine. I was probably the only guy in the league with an actual career. I told the coach upfront no practice, no road games and that if they need a guy to fill in I am here. They said that was fine and so I always kind of felt like an outsider to the whole lifestyle and experience. Some of these kids seriously think they are going to play in the NHL. On one hand I respect anyone who sticks to a dream and never quits. But like I said before you need perspective. Here I am coming out of a year and a half of beer league hockey a few times a week and stepping in getting a point or two a game. These kids are practicing every day, making $100 a week living with 5 guys in a hotel room, and I am thinking to myself "wow that 5 year active service commitment is hurting a little less right now.:
- As great as competition is, it doesn't not quench the thirst of a true competitor without the addition and joy of playing on a true team. These semi pro settings seem more like a glorified men's league with guys rotating in and out than a true team. Nothing can replace the feeling of having 25 driven, overachieving, word class human beings by your side all working towards a common goal.
- Just have fun. As someone who wants to succeed and achieve my goals and expectations, I am very susceptible to placing a lot of pressure and undue stress on myself. Sometimes I just need to concentrate on having fun and trusting in my ability. Life is a balance.
- When you keep your goals and long term vision of your life in your sights then everything happens for a reason. Setbacks and unforeseen twists and turns are just new chapters in your life that serve that ultimate vision. Put your head down and skate and have faith that you will end up exactly where you should end up.
Friday, February 27, 2009
I am adding a new blog to my list of blogs that I follow. The site is called The Personal MBA. Go to the site and read the manifesto. It's very cool and I think it will strike a chord in a lot of the people who read my blog.
I am a big proponent of education, especially education you are interested in. Growing up I would say I was an average student. I am not exaggerating when I say I do not remember even taking tests in high school. I can remember taking the SAT's and that is about it. I was much more focused on hockey, jamming in my band Mask of Sanity, and chasing girls. I always just kind of showed up, did my homework, tried to keep myself sane in class by joking around and managed to get fairly good grades. It wasn't until I got to college that I actually got interested in educating myself.
Not withstanding all the benefits of formal education, I have really become intent on furthering my personal education. Sometimes I feel as though I have actually learned more since I graduated college than when I was there. Nothing replaces my college education and the foundation it set for my capability to continue learning on my own. However I feel as though I have learned so much through reading books, watching/learning from TV, scouring the Internet for knowledge, and viewing my everyday life through a learning lens, that I place at least equal importance on the value of personal growth and education.
It comes as no surprise that when I stumbled across The Personal MBA I was stoked and ready to begin the journey. I am always blanking when I go to the library or to Borders. Eventually I just end up picking books based more on their marketing than on a suggestion or the actual content. I think this list will help me focus my reading on quality, tested books while actually branching out from some of the business books I have been gravitating towards. I have read some of these great books already but I am honestly going to try and complete the personal MBA suggested reading list in its entirety again. I also watched an interview online at Think Different TV with, coincidentally, the founder of the Personal MBA where he discusses with Ben Casnocha the benefits of taking notes or jotting down concepts. I have never been good at this but they suggested using a 3 X 5 notecard as a bookmark that doubles as notes. I might give it a try.
My advice is to check out the site. At the very least check out a book, any book, and keep learning!
Thursday, February 26, 2009
Money Tips - Well I thought that I offered some good advice with my earlier money tips posts, and thought that it was a good foundation to start with. If I had it to do over again I would start with this post. I want to address and share my definition of rich and how you can use it to reach your goals and develop a mindset that will be a catalyst to your success. This is hardly something I created on my own, but its what I subscribe to in my personal life based on all the experiences I have had, books I've read, etc. Keep an open mind with this and as always take it for what its worth and build your own beliefs.
I think that I am rich. How can this be you ask? You are in the military, you are only 26 years old, you haven't started your own business, you don't work on wall st, and you aren't on the cover of Forbes. Well its because I believe that these are symptoms or outcomes of being rich. I think being rich is a combination of your mentality and your action.
If I had to put it as simply as possible I would define being rich as "keeping more than you spend." Wow. Very anticlimactic. But think about it. If you keep more than you spend you are in essence rich. It then becomes a question of how rich are you.
This leads me to the mental aspect of being rich. Many people don't like to talk about money. In fact it is grouped right in with other touchy subjects that you aren't supposed to bring up around people who don't think exactly the way you do (religion, sex, politics, MONEY). I fall into this trap quite often. We don't even teach about money in our public education system! I think it is because people are thinking about money all wrong. It has been described as the root of all evil. You are viewed as shallow and vain if you quest money. I think its quite a paradox to think that way. Money affects everyone and we all need money to one degree or another, so why is it so taboo. I think that a lot of people project there insecurities and inadequacies towards money and those who have it.
I view money in a very different way. The statement "time is money" is one of the greatest quotes there is. We really only have one currency and that is our time on this earth. When you view money as a personal stock of time you will change how you think about it. I want more money so that I can choose how I spend the rest of my time on this planet. Your values are reflected in how you spend your time. That is why people who are drunk on money never find happiness. They are consumed by making more and more, and spending what they have on 'things'. I like nice things like the next guy, but I think the real joy would be spending more time with my family, seeing different parts of the world, giving back something to this earth that would stand the test of time, improving myself as a person. Can you see the difference between the two definitions of rich?
So if you and your current lifestyle were picked up and plopped on a deserted island, how long could you sustain your current lifestyle until you ran out of money? For example, if you spend roughly $30k in expenses a year and you have $30k in savings/investments then you are depending completely on future income; you have no real wealth. This is what most people do (or worse). If you had $120k in savings and investments you would be able to survive for about 4 years. As you can see, how rich you are quickly turns from money to time (real currency). I would say at this point I am about 1 year rich (my wife and I together = Team Badski). The more rich I become the more options and choices I have regarding my life.
So as I said before, being rich is merely a mentality coupled with the practice of keeping more than you spend. When you keep more than you spend it is only a matter of time until you reach your financial goals. How long it takes to reach your goals is the only unknown. That is why in my previous posts I encourage people to start saving/investing anything, even if it is 1% of your income. Then once you get comfortable with that amount you can ratchet it up to 5%. Or you can find ways to make more money which will adjust the percentage of your income you are saving. Once you get past the barrier of keeping more than you make the only way to go is up.
Change your mind and keep more than you spend, how rich you become is up to you.
Wednesday, February 25, 2009
As business minded professionals we are always attempting to move forward, progress, get better, get ahead, etc. One great way to do that is to draw on help from the people you know. The formal term for this is 'networking,' but it really comes down to interpersonal relationships and having a sincere interest in other people's lives.
Many of my friends know me as Renaissance Rammer. I think this stems from my ability to walk into a room of complete strangers and leave the room an hour later with a few new friends. One of those new friends might be someone you go grab a beer with or catch a game with in the future. Another might be someone who will end up playing a crucial role in you being accepted to a top tier B-school or land you that perfect job you've been waiting for for years. The ability to do this comes natural to some and must be studied and learned by others. Here are a couple tips:
-Knowledge. Often we know a lot about one subject. It's something we've studied and we are engaged in that topic every day. For initiating contacts in a completely unfamiliar place you must know a little about a lot. In large gatherings people will usually section off into groups of two three or four. You have to be able to walk up to a group of strangers, withstand a few odd looks at first, gather info in only a few seconds about their conversation, then either contribute something interesting about that topic, or ask an insightful question to the person who seems to be the expert of the group. Your ability to know a little about a lot can be improved by reading books on all topics and publications as well as drawing on experiences in your life that might apply to the conversation.
-Ask questions, shut your mouth, and listen. Often life is about the questions that are asked, not the answers that are given. If you can ask a meaningful question to someone on a topic they know in depth you are on your way. You will build up their confidence and allow them to elaborate on their expertise. You then listen closely and find a way to tie your expertise into theirs. Then you've made them feel good and they will be more willing to listen to what you have to say. If they are a good communicator they will respect your ability to listen and return the gesture.
-The follow on. Rarely do you accomplish your goal in this first meeting with a new person. You have to find someone with whom you connected well enough to continue the conversation at a later date. It's important you always have a business card or other means to leave your contact information with someone. Also, it's helpful to keep the ball in your court and let them know that you plan on contacting them to grab a coffee/lunch/drink in a week or two. This allows you to be the one who takes control of the future meeting. You don't want to wait around for someone else to get back to you. In the mean time, do your homework on that person. See what their company does. Google them. Read their blog. Read a book they've read. This will allow your conversation to flow naturally on topics which you now have in common.
Now, I've only focused on a narrow part of networking: working an unfamiliar room to find the few key people who you can bring into your network in order to help you achieve your goal and help them achieve their goal. Sometimes it'll be a large group sometimes you will be faced with a one on one situation. Either way, you can't be afraid to jump in, stick your hand out, and meet a new face.
Other areas that you should look into are: managing your network and contacts, helping others develop their network, and making links between different networks you have (for example, alumni network and business networks and extracurricular networks). I have some great stories that I'll have to share on later posts (how I saved myself from being stationed in the middle of nowhere for my first assignment in the AF, how I funded a trip to Switzerland to play hockey in high school, how I got a premier parking spot in downtown Boston for 4 months for free, and how I plan to wheel an MBA from Harvard Business School on someone Else's dime, while getting paid full time).
I want to thank Matt for asking me to say a few words about networking. I hope I can contribute more down the road. He is a charismatic guy who has his hand in many unique and hard to infiltrate networks. I am excited to see where he goes and what he does.
Tuesday, February 24, 2009
Huey Lewis and the News "Greatest Hits" - I have a confession to make. Most of you know that I am a huge metal fan and that it will always be my true love when it comes to music. However, I must confess I have been on a huge 80's binge lately. I have always loved the cheesy 80's jams but within the last year or so it's like I have been working my way backwards from the tunes I like today. I don't know if its the fact I was born in the 80's, that a lot of my precious childhood memories and photo albums are straight out of a cabbage patch kids commercial, or that I find hilarity in all things 80's. I just know that I have a soft spot in my heart for the era.
To feed my 80's music cravings I have been checking out CD's at the local library. What a treat. Its amazing the things you can find at a local library (including badass metal CD's). My latest pickup was an album I have contemplated buying for a very long time, Huey Lewis and the News greatest hits. I should have heeded the advice "don't wait until tomorrow the things you can do today," and picked this thing up ages ago. This album is a straight beauty! I always knew Huey Lewis kicked ass, but I cannot believe how many instantly recognizable hits these guys had. I think that is the best representation for what 80's music was all about; instant recognition. The 80's jams are the kind of songs that come on in the car and you can stumble your way through the chorus even though you haven't heard the song since the days when MTV actually had videos. I love tunes like that. Maybe its because I listen to such an obscure and unrecognizable genre (metal) that I need the balance of a band like Huey Lewis and the News. Or maybe its the fact that Huey is so cool that Michael J. Fox plays The Power of Love on guitar in the battle of the bands 80's edition during Back to the Future! Classic!
I love Huey's voice as well. This guy has the all American voice. Not to flashy, has a gruff working man's tone to it, and complements the News endless hooks. I saw a behind the music on Huey Lewis and the News a few years back and Huey's story is pretty incredible. What I find most fascinating is that a ton of record labels told Huey he wasn't any good; more specifically that his voice wasn't good enough! Shows you why the music business is in shambles, because those that do the business don't know anything about the music side of things.
Check out this track listing. Even the tunes I didn't recognize by name have the classic Huey charm and become catchy pop classics. Every song is a hit. If you don't believe me go get it! My personal faves are The Power of Love, Do You Believe in Love (classic video!), and Couple Days Off.
This has been another installment of From the Closet. I hope you have enjoyed and if you have any suggestions for future installments I would love to hear them.
Friday, February 20, 2009
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
Also check out this article I found at the Economist that addresses some very similar issues covered in my original Housing Crisis post.
Have you ever stopped to look back on your life? Thought about certain things that you've experienced and how they had a profound impact on your life? Maybe you learned the valuable lesson of taking nothing for granted after living through the 2003 Cub postseason or Brant Brown's gaff in 1998. Perhaps you were taught a lesson on how to be a Class Act by worshiping guys like Andre Dawson, Guy LeFleur, and Walter Payton growing up. Quite possibly you learned to never give up after watching Jim Valvano's speech or simply by watching Stallone, Pele, and Michael Caine in "Victory". Yes, sports and pop culture have the power to teach us valuable lessons that will help us all on our journey through life. One of the greatest things I've learned in my 30 years from television is how to fight off a boner. And I have Chris Isaak to thank for that.
When Wicked Game was shown on MTV in the early 90's, I was but a lad trying to transition from elementary school to Junior High. You remember, don't you? All of the girls were starting to get breasts and wearing bras while you sat there with a few whiteheads, your hair chock-full of Dapper Dan, parted on the side, sporting "The Wave" hairstyle that Tyler from "Life Goes On" had (sans mullet, of course). Hypercolor shirts were taking precedence over your Rude Dog shirts from 6th grade. Those were the bomb, but could do little to suppress the stiffy you got from staring at your partner's chest in Spanish Class. Something had to be done, and quick. You couldn't possibly sit cross-legged all the time. Sure baggy shirts were in, but what if you got called up to the chalk board? You can't hide that thing.
Luckily Chris Isaak helped me out. This was back when MTV actually showed videos (a novel concept). My family had exactly one TV in the house so consequently, we watched it together as a family. Perhaps I was being punished by God, but Wicked Game seemed only to come on while I was watching TV while my parents were around. Talk about awkward. Hopefully my parents were distracted reading the paper or playing Jenga, because watching Helena Christiansen rolling around on a beach half naked was a bit "off-putting" to view in the presence of your parents, to say the least. Changing the channel was out of the question, you couldn't bring attention to it, and goddamn, that was one video that was too steamy to leave. Nevermind the fact that Chris Isaak looked like he was stuck in the 50's with his get-up, that guy quickly became my hero. It was a video you watched over and over, thinking perhaps you missed a nipple slip the first 100 times you watched it. It made good conversation in the lunchroom, bragging up your machoness by saying jugs, tits, rack, set and the like. As a good friend of mine states, "Any male between the ages of 22 and 32 remembers EXACTLY where and when they saw the Wicked Game video for the first time." This was life-altering stuff. Once I found that I could get through that video while still managing to hold back "The Glory", I pretty much had Junior High figured out. No longer would I feel that slow dancing with a female was impossible. Teen Night at the YMCA swimming pool? Bring it on. Walking on a nude beach in Cancun as an 8th grader? Well...okay, just like the Pull-Out Method of birth control, it isn't 100% effective, but it's better than nothing.
Chris Isaak - a champion of the people. It sure was a groundbreaking experience for me. And I'll be damned if I've ever seen a video since that leaves me more uncomfortable when in the presence of family. Christ, that's saying something when you're 30 years old. God bless you, Chris Isaak. Now, if we could only get your show back on the air and more of you on Leno...
Thursday, February 19, 2009
"Bair also said that the huge expenditure won't halt an avalanche of foreclosures, conceding that there are millions of homeowners who are now so far "underwater" -- their homes now worth less than their mortgages -- that they will inevitably lose their homes."
I have heard this underwater remark inexplicably linked to foreclosure quite often and I just don't get it. I am not tracking how being underwater in your mortgage automatically means you are going to lose your home to foreclosure. I will let you delve into the innermost personal world of the Badski as I illustrate what I mean. I bought my condo as the boom was cooling off, and right before the floor fell out of the housing market. I used the VA loan which is a no money down loan for military members. I bought my condo for roughly $230K. If I was to try and sell it today I would likely get around $210K-$215K even with the improvements done to the place. I have about $8K in equity in the condo so as you can tell I am technically "underwater" in my condo. Is it a good situation to be in? Not really. Am I bitter about it? No. Why you ask. Because as I have stated in my previous Money Tips posts gains and losses are only realized when you sell! Being underwater so to speak is only a temporary evaluation of your property's worth in the market. So my options are limited by being underwater but I will just have to utilize the right strategy for the right market. If I had to move tomorrow I would probably try to rent the property until values increased, or lease option it, or even raffle it off (not sure if its legal in NJ). The point is you are in control and must use the right strategies in the right market (read Dean Graziosi's book on my bookshelf for an excellent description of this concept). OK so how does this apply to the underwater/foreclosure connection? Well that is my question too. As long as you pay your mortgage there is no reason why being underwater in your mortgage should cause you to go into foreclosure.
OK so we have established that the only way to be foreclosed upon is by not paying your mortgage. Well first and foremost you must have a job. This is the vicious cycle that is hitting our economy so hard right now. As the economy gets worse more people lose their jobs and in turn more foreclosures occur. Which in turn floods the market with available properties, ultimately lowering property values (supply/demand 101). Another problem is the large amount of adjustable rate mortgages or ARMs. These loans typically start with enticingly low rates which shoot up to a much higher rate at a set date in the future. Many people are unable to afford their mortgages when the loan adjustment kicks in. Mortgages are securitized (packaged together in large bundles) to supposedly mitigate risk and are then sold in the market. The problem is that these were extremely difficult to value. This starts to lead into the credit and banking crisis so I will stop there.
I like to read the comments people leave on articles, which is one of the reasons I read a lot of articles on ABCNews.com. I like the comments because the people who post are typically on opposite ends of the political spectrum. It exposes the most passionate arguments on both sides of the coin. DISCLAIMER: Most of these people are complete morons. With that being said it is a cross section of what people across the country are thinking (which is a bit scary). When I read the comments on this article the two sides arguments are largely based around the following: "I pay my mortgage on time for a house I could afford...where is my bailout?" and "This crisis affects everyone. Many of these people were preyed upon to take on mortgages they didn't understand and couldn't afford. You should feel blessed it is not you and help out those who are in need." That is a big generalization, but is the gist of the opposing sides of the issue.
First off, every argument has some valid points and some elements of truth or else so many people wouldn't feel that way. But in this case I think we spend so much time bickering and pointing fingers that we push aside or skip over some things that need to be said. The elephant in the room if you will. When people go with the whole "Dude where's my bailout" approach they are missing the point. From my posts you can probably determine that I am generally against most bailouts. However, its not because I wont be getting what I consider to be my fair share of the benefit. It is because I acknowledge that the funding has to come from somewhere. There is no such thing as a free lunch and the government, much like a corporation, is merely a conduit that passes on financial burden to the consumer or in this case the taxpayer. So the mentality should not be what I am getting, but the question of what behaviors are we encouraging/enabling and at what future cost? The mindset that many of the foreclosure cases were due to people being preyed upon is another view that kills me. I think it's a total cop out. Like I said, I bought right before the market crashed at the height of the "creative mortgage application" craze. Incomes and debts were not validated and there are stories of lenders encouraging applicants to put down whatever it took to get them qualified. I don't doubt those stories are true and I know from experience that I didn't provide too much information validating the numbers that I gave my lender. But guess what? The numbers I gave my lender were accurate. Whether the lender encouraged you to lie/stretch the truth or not, it is still ultimately you who must tell the lie. And guess what? It is ultimately you who must foot the bill. No matter how much you wished your income was the amount you told the lender it was, you are only able to pay your mortgage with your actual income.
I think that many of these housing crisis issues would be addressed with the following acknowledgement from our government and its people. Owning a home is not a right! Just because you were born or reside within a free country doesn't entitle you to own a home. Owning a home is a privilege that comes with responsibility. There are always unavoidable situations that will cause people to go into foreclosure, and I don't want to sound insensitive to those people or their hardships. Who knows it might be me some day. However I think it is evident by the national housing crisis this was not the case. What the crisis has illustrated is the right to enter into a bad agreement. That is the price of living in a free country. If you hold yourself personally responsible it is so much easier to accept and to avoid! If you want the privilege of owning a home make sure to acknowledge the right to enter into a bad agreement. Make sure you can pay the mortgage, to the best of your ability ensure that you will have a job, in the event you are laid off, injured, etc. make sure that you have the ability to continue paying the mortgage until you can either sell the home or recover. When you take personal responsibility for your life everything else falls into place.
Tuesday, February 17, 2009
Monday, February 16, 2009
Rogue Dead Guy Ale - We all love to bitch about bad service, bad products and the miserable experiences we have had as consumers. However, I have been inspired by Ashton Kutcher's I pledge campaign (insert sarcastic laugh here and check out my post on the I pledge campaign) to be a better citizen so I have decided to start a new segment on my blog that highlights outstanding experiences I have had as a consumer. So welcome to Badski's Consumer Report!
Thursday, February 12, 2009
Wednesday, February 11, 2009
Money Tips - This edition of money tips is all about gaining perspective on investing. First and foremost read a great post at the link above regarding the volatility of the stock market complete with a slide show presentation. Did you check it out? Good. I think the post does a great job at showing how quickly you can get into trouble by trying to time the market. For even more proof look at my picture above detailing 100 years of the market. What do you see? Do you see all the peaks followed by tremendous losses? What would happen if you bought there and how would you know if you were buying at a peak? Pretty depressing isn't it? Not so fast. What else do you notice about the last 100 years of the market. Step back from the screen. It has an upward trend over time. This is great news for you, especially if you are starting young.
The first thing I want to throw into the fray is a concept that many people fail to grasp. You only lock in losses, or gains for that matter, when you sell. You have purchased shares at a current market value when you buy stock or mutual funds etc. I am always hearing people say, I have lost 40% of my retirement in the past year, or I lost $2k in the market this month. Well have you sold your shares? No? Well then technically you haven't lost anything. These are merely paper losses (theoretical losses assuming you sold at that point in time). Currently the market just values your holdings less than it previously did when you bought them.
So now you grasp this concept, the question is how can you use it to your advantage? Well the answer is simple. First off always view your success in investing through the right lens or perspective. You are in it for the long haul. The goal is to achieve your financial goals (see previous Money Tips post) and those aren't going to happen overnight. You aren't destined to become the next Wall St Wonderboy or girl. Your perspective should be long term and should be through the eyes of the eternal optimist. The market is rising, great your share are becoming more valuable and you are building paper gains. The market is falling (like the last two years) even better. Why? Because the assets you are purchasing are on sale. Just because you bought XYZ Co last year for $5 per share and today you can get it for $1 per share, is not bad news. Assuming that you buy! Lets say you can now buy 5 share at $1 a piece so you have $5 worth of XYZ Co this year but now you have gained five times the shares for the same price. If shares were suddenly flat screens, or clothes, or beer you would be ecstatic so treat investing in the same way.
A simple way to buy low sell high is dollar cost averaging, or buying the same dollar amount of assets each month (or any time period). If you consistently buy $100 worth a month you naturally be purchasing less shares when they are highly valued (buying high = bad) and more shares when they are on sale (buying low = good).
I actually have been pulled back lately from investing in the market, however it is not due to aversion to perceived losses.....I just said things are on sale! I have been pulled back to build more liquid capital (cash equivalents in money market funds) in order to posture myself to achieve some of my other financial goals, which in this case is buying an investment property. That being said, I have almost reached my target for cash savings and then I plan to aggressively take advantage of a nations assets that are on sale.
What should I buy you ask? Well I plan on covering asset allocation within Money Tips soon that will give you some insight into what I have set as my strategy (see previous Money Tips) which may allow you to vector in on a strategy of your own. I'd love to hear comments and suggestions regarding the Money Tips posts and the message they are sending so post under comments or send me some hate mail in my profile. So start to buy because now is a great time to buy....wait it's always a great time to buy!
Monday, February 9, 2009
From the Closet - From the closet is a new feature I intend to update every so often. I am a huge fan of cheesy pop culture.....especially stuff from the 80's. I intend to have the from the closet feature bring to the forefront of our minds music, shows, events, phenomena, and musings from days past. Enjoy.
My first From the Closet post is highlighting a classic 80's video. Not only is "Hot for Teacher" by Van Halen (not Van Hagar) the best song ever written by the band, it might just be one of the best videos to come out of the 80's. In an era where music videos have become all but irrelevant (if you don't believe me tune into the horrific mass of staged dating shows that is prime time MTV), it is refreshing to see such a bad ass video from the glory days of MTV. Check it out on my video feature or watch it on YouTube, it is 5 minutes that is very well spent.
This video has it all. A funny back story, kids fantasizing about their teacher, a hot stripper/teacher, variety show dancing, hot rods, and a 5th grade representation of Van Halen. It's a classic. I think Diamond Dave (David Lee Roth) was at his prime in this video. This guy was the man in this video. He is the walking embodiment of every high school male's interests and dreams. You can tell that these guys were just living the dream when they made this video. I bet it was hilarious when Diamond Dave brought in his lyrics with all the over the top sexual innuendos, which is highlighted by "I got my penciiiiil! Give me somethin' to write on man!" I can just imagine the gears turning in these guys heads at the fun they could have given the relatively new medium of music videos based on the concept of the song. It must have been exciting times brainstorming ideas. And frankly it worked. Between the chemistry of the band at the time, the song, and all the cool ideas they came up with this video truly is one of the greats to emerge from the closet.
Friday, February 6, 2009
Thursday, February 5, 2009
Well I have already established that we are constantly bombarded with different books and articles with flavor of the week "get rich" approaches, all claiming that they have the only way to successfully achieve your financial goals. I have friends who are as interested, if not more so, in the topic of finance than I am and we get confused, frustrated, and overwhelmed with all the different advice. However, it seems to me the underlying question on most people's minds is "what should I be doing right now?" My advice to the already overwhelming mass of information out there is....it depends.
It depends might sound like an answer built for Washington, but I can truly say that I think this might be the most beneficial concept I have grasped in my quest for knowledge surrounding finance. Are we to assume that a 60 year old about to retire should follow the same strategy as a 20 something young professional just starting out? I think not. My advice is simple. 1.Know where you are. 2. Know where you want to go. When you tackle these two critical pieces of financial introspection you will be well on your way to rejecting the thousands of end all be all financial freedom formulas. Most importantly, you will be able to answer the simple but important question "What is your strategy?"
My first Money Tip post is a perfect start to discover where you are financially. Check out my first post and go to Mint.com to see where you are at. Create a budget that will allow you to successfully start saving/investing your some of your income. The second step of where you want to go can be addressed by a simple exercise. Write down your financial goals! There are plenty of ways to do this. For example 5, 10, and 25 year goals or short and long term goals. Whatever approach you use is less important that the fact that you actually write them down and refer to them. This keeps your actions focused on your goals and begins building your own strategy.
So now you know where you are and where you want to go...now what? Here are some important components that you should consider for your strategy as well as some lessons learned from my own tribulations and triumphs through the personal finance journey.
1. Save. Even if you start at 1% just start saving something. Choices include savings accounts, money markets etc. If you are struggling with this read The Richest Man in Babylon which is on my Bookjetty list on the side of my blog. The classic book clearly illustrates a concept often lost in today's world of business and politics. You must save more than you spend. In fact, the book goes as far as to declare that if you save just 10% of income you will be wealthy, period, dot, DO IT!
2. IRA's (Traditional vs Roth), 401K's, retirement planning in general is the foundation of your investment portfolio. Its hard to invest now for something so far down the road. Just do it! You can't rewind life and with the power of compounding interest every day you wait is opportunity lost. If your employer matches then max out your 401k to the extent they match. This is free money and there is no excuse for not taking it. If you are employed by Uncle Sugar like myself then you are not so fortunate. My next advice would be to max your Roth IRA. Although your contribution is after tax (taxed on the way in), any earnings you build will be tax free upon retirement (tax free on the way out). My little rule is if you are young choose Roth as time is on your side. If you are older and/or you need to reduce your tax burden now then the traditional may be a better move. Once again it all depends.
3. Passively managed index and mutual funds. These allow you to mindlessly invest with historically higher gains than money markets or savings accounts and lower expenses than actively managed funds. Read A Random Walk Down Wall Street or the Intelligent Investor if you are wanting to have a broker actively manage your money, especially if you aren't wealthy. I personally haven't made any money in this realm for the 6-7 years I have been investing. In fact I am pretty sure that over the life of my portfolio I have lost money (this is now becoming easier to track with Mint.com). Am I bitter? A little. No not really. I have learned a lot and my strategy is a long term purview. Remember that losses are only true losses when you cash out. I am still accumulating shares that in theory will continue to rise in value over time.
4. Real estate. I find that the business and finance community constantly downplays the benefits and hypes the risks of real estate. Do you think that it has something to do with the fact that brokers, analysts, financial planners etc. don't make any commission off of real estate (except REITS). However, the more I read the more I am vectoring in this direction. Between tax benefits, access to capital (OPM), and the general tangibility and control of the asset I really don't think anything else comes close. Like I said though it all depends and this post is about determining your strategy. So get reading and get learning and find out what is your favorite vehicle.
Obviously this list is not totally inclusive and to be honest it is beyond general. However, I intend to dissect individual topics as my Money Tips posts continue. Here are a few additional motivational tidbits to help get you on your way:
1. Read. Read everything you can. Even if you don't fully understand or agree, learn something from everything you read. These are your tools to start building your own strategy.
2. Learn from every action you make. Put on your learning goggles and never take them off. You are only bettering yourself in everything you do.
3. Error on the side of action. Don't time the market. There is never a bad time to invest only the wrong approach at the wrong time.
4. Don't compare yourself to anyone else. Only compare yourself against your own goals.
5. Don't lie to yourself. People often do this when saving. They say they need something when it is not a need....it is a want. Your personal discipline is key to your success.
6. Become rich. To me, rich is a mindset. If you are saving more than you are spending you are in essence rich. From that point on there are only varying degrees of rich. If you couple this with a learning mindset you will achieve what you set out to achieve. Be rich.
7. Have fun. Make saving fun. Make investing fun. If you win and make money, great that is fun. If you lose some money (as I have done a lot of since the day I started investing) great, what did you learn, because learning is fun.
8. Keep perspective. In the long run we all end up exactly where we are supposed to be and only you can take responsibility for that. We all have good luck and bad but in the long run you are exactly where you have earned to be. Think long term, work hard, and react positively to any external event and you will be happy and be where you deserve to be.
Wednesday, February 4, 2009
A link to the excellent metal blog over at Metal Injection. This story is pretty awesome even if you don't listen to metal. The band Acrassicauda is an Iraqi metal band that gained fame within the last year or so. They were filmed in a documentary called Heavy Metal in Baghdad. I haven't seen the film in its entirety but I have seen substantial footage in separate clips. These dudes truly exude the human spirit at its finest. In a country where religious persecution and government corruption threaten even a normal existence, these guys formed a metal band that threatened their very lives! No joke. They had to dodge bombings and shootings to get to practice to play and create the music they loved. Pretty cool story. The fact that they are now in the states living the dream with one of metal's founding fathers is awesome. I also think it puts our country in perspective as well. People always complain about how bad our country is, and how Bush should be tried for war crimes, and every other thing we fault our country for. But these guys could have been killed (if my memory serves me correctly I think one of the original members was) just for playing this kind of music in a Muslim country. Check out their story.....very uplifting, and very cool in the sense that nothing could be more metal than risking death in the name of metal.
Tuesday, February 3, 2009
Monday, February 2, 2009
The article answers some of the questions that many of us have regarding the stimulus that congress and our president are pushing to pass. Some of the answers are very interesting, but take them for what they are worth. We are wading into uncharted territory and the truth is that no one knows what will work and what will not. Politicians and economists alike can make educated guesses on what will or will not work based on past experiences but as Dr. Ian Malcom illustrated in his beautiful Jurassic Park crash course of chaos theory no two experiences are ever truly the same.
Those who know me know where I sit on this issue. My stance is that the whole stimulus is bogus. When the government is involved the name of the game is incentives. What is the incentive to pass a stimulus? If you are really crass you could say that government officials are throwing our tax dollars around like candy at a parade to any corporation or special interest group that has sufficient lobbyist influence. Is this happening? I think the character revelations of our recent crop of politicians confirm that this is most definitely happening. Is it the largest incentive to pass the stimulus? The optimist in me says probably not. I think it is way less JFK conspiracy theory than that. I call it the chicken little syndrome. From a political standpoint, when something is going wrong or poorly it is much better to have done something than to have done nothing, even when history and common sense reveal that it only added to the mess. I think this is clearly evident by the way the politicians are pushing action. Hence the term chicken little..."the sky is falling the sky is falling". All we have heard throughout the passing of the first stimulus and the multiple bailouts is that we need to act quickly, something must be done now, the consequences of failure will be dire, etc. etc. But what has happened. Nothing. The economy still sucks and we have bolstered our ever growing national debt in the process. One could argue that we don't know where we would be had action not been taken. OK point taken. But this assumes that implementation of our government policy worked and I would ask when has the government truly been effective at implementing any decision of this scale throughout history. Is that a cricket I hear?
I think the first few questions and responses in the article are also interesting about savings and spending and how much direct impact the stimulus would really have. Now I was actually opposed to the stimulus the first time around even when I knew I was going to get a $1200 check. A lot of it was based on arguments that those stimuli in the past have yielded luke warm results at best, but most was due to the fact that it is a huge assumption of debt that is a temporary band aid. I am a free markets guy that thinks that eventually rates and home values or what have you eventually reach a point where those with cash or access to it can't resist sitting on the sidelines any longer. This assumes they have jobs. Which is why the new buzzword or catchphrase is job creation. But look at the package and a lot of the spending has nothing to do with creating jobs or getting money into the hands of consumers. The money that does likely will not make its way into the system so to speak for a matter of years in some cases. Are we willing to take on the, by some estimates, trillion dollar debt to carry out this stimulus? I am not. I think the luke warm taxpayer disbursement would be a better play especially since it would amount to $9,000 (I know if I instantly pocketed 9k that not all of it would be saved and I am probably more financially disciplined than most. Imagine all the new Iphones out there.).
None of this discussion even addresses the biggest problem I have with bailouts and stimulus.....the principle of the whole thing. Who is the government to decide who deserves to get a piece of the action? If you analyze this scenario it is a very slippery slope. Those who have read the greatest book of all time Atlas Shrugged can find themselves about to vomit at the prospect of this stimulus. An example would be, we NEED to bail out the banks because they are essential to working markets, but now the auto's are in trouble and they are essential to jobs in America. Well lets say that chicken farmer's are hurting as well. Well they NEED assistance as well. Are they as essential as the previous two? Lets say we decide not to help them out. Why? They NEEDED it just as much as the last two. You get the point. In an effort to cut this post off before it becomes a novel I am going to get back to work. But I would love to hear some counter arguments and views on this. Control what you can control and get your own finances in order because you never know what your elected officials might be planning with your money!