People write a lot of things on the walls of a public lavatory. Some consider this to be vandalism. To me it's occasionally a source of inspiration.
This morning, while in a sedentary position at our office's facilities, I came across the following message:
Think about the future
I'm not sure what the person was thinking when they wrote it, but it got me thinking about a lot of things.
Firstly, how often we think about our future really depends on our age.
If you're in your 20's you probably don't think too much about your future; you're too busy spending money to worry about not having enough of it once you get older.
If you're in your 30's you're probably thinking about nothing but your future; who you're going to be with and how much money you're going to need.
Once you're in your 40's what you do tomorrow is as important as what you're doing today.
In your 50's the future is now.
In your 60's the past has caught up with you.
Above 70 and you're enjoying the moment like you were 21 again.
You're probably going to live a very long life; at least until you're 70, hopefully longer.
You don't know exactly when you're going to die and that's a problem.
It's a problem because you don't know how much you're going to need to see you through. Given this dilemma people tend to overcompensate and put a 'little extra' away. How much extra is determined a great deal by your culture.
***************************
After reading the message on the wall I also though about how much we should be thinking about the future.
Should we always be thinking about the future? Probably not.
Should we never think about the future? Not unless you're over 70.
What if we don't think about the future enough? What then?
I know I don't think about the future as much as I should. But how do I know that? When is it enough?
I fear that it will never be enough. It's hard enough to manage my life right now, let alone my future as well.
***************************
My future is becoming increasingly important as each day passes and so the less I think about the future each day the more costly it's becoming.
I should probably do something about it. Maybe tomorrow...
Thursday, July 29, 2004
Tuesday, July 27, 2004
Tax rant
A quick back of the envelope calculation:
-- A single person earning $110,000 loses about $27,000 to taxes.
-- A single person earning $52,000 loses about $10,000 to taxes.
-- A couple earning a combined $185,000 lose about $47,000 to taxes.
-- A couple earning a combined $130,000 lose about $30,000 to taxes.
-- Anyone earning above $288,350 loses 38.6% of each dollar to taxes.
Do these numbers make sense? Do you see a problem here?
John Kerry does. Why?
The thrust of his argument goes something like this:
"The U.S. economy is being undermined by a rising budget deficit, the prospect of ballooning interest rates, unfairly high taxes on the poor and unfairly low taxes on the rich."
His solution: tax the rich more and tax the poor less. Put the proceeds into public healthcare and education. There will be plenty to go around. Share the wealth!
Firstly, why is the budget deficit rising? Didn't Clinton sign a balanced budget not long ago?
The point here is that in 2001 the economy went into a tailspin for the first time since Clinton was in power. The stock market lost a lot of ground and the 9/11 terrorist attack left investors gob-smacked. Is it any wonder why the fundamentals of the U.S. economy are so out of sync?
What is easy to forget is that when an economy is performing badly the government is the first to suffer. The less people earn, the less they spend and the less the government receives in tax revenues. The upshot is a rising budget deficit. The government is borrowing to cover it's spending commitments; commitments made when the economy was doing a lot better than it is now.
The irony of all this is that the economy is being run by people who remain in office for a short period of time. This is usually part of the problem, not the solution. What we have now is a situation where things look bad and will probably get better. They will get better irrespective of who is in power. Anyone who thinks otherwise is kidding themselves.
The only lasting difference those in power can make is in the distribution of income. Some might say this is government getting in the way. Others might say it's the government righting wrongs. The truth of the matter is, as always, somewhere in between.
**********************
What is crucial is that government not intefere excessively.
What I see when I look at the calculations above is a situation where a moderate redistribution of wealth is taking place already.
-- A single person earning $110,000 loses about $27,000 to taxes.
-- A single person earning $52,000 loses about $10,000 to taxes.
-- A couple earning a combined $185,000 lose about $47,000 to taxes.
-- A couple earning a combined $130,000 lose about $30,000 to taxes.
-- Anyone earning above $288,350 loses 38.6% of each dollar to taxes.
Do these numbers make sense? Do you see a problem here?
John Kerry does. Why?
The thrust of his argument goes something like this:
"The U.S. economy is being undermined by a rising budget deficit, the prospect of ballooning interest rates, unfairly high taxes on the poor and unfairly low taxes on the rich."
His solution: tax the rich more and tax the poor less. Put the proceeds into public healthcare and education. There will be plenty to go around. Share the wealth!
Firstly, why is the budget deficit rising? Didn't Clinton sign a balanced budget not long ago?
The point here is that in 2001 the economy went into a tailspin for the first time since Clinton was in power. The stock market lost a lot of ground and the 9/11 terrorist attack left investors gob-smacked. Is it any wonder why the fundamentals of the U.S. economy are so out of sync?
What is easy to forget is that when an economy is performing badly the government is the first to suffer. The less people earn, the less they spend and the less the government receives in tax revenues. The upshot is a rising budget deficit. The government is borrowing to cover it's spending commitments; commitments made when the economy was doing a lot better than it is now.
The irony of all this is that the economy is being run by people who remain in office for a short period of time. This is usually part of the problem, not the solution. What we have now is a situation where things look bad and will probably get better. They will get better irrespective of who is in power. Anyone who thinks otherwise is kidding themselves.
The only lasting difference those in power can make is in the distribution of income. Some might say this is government getting in the way. Others might say it's the government righting wrongs. The truth of the matter is, as always, somewhere in between.
**********************
What is crucial is that government not intefere excessively.
What I see when I look at the calculations above is a situation where a moderate redistribution of wealth is taking place already.
Wednesday, July 21, 2004
Financial market truisms
On average, the following are true (corrolory in italics):
Stock prices move up and down for all the wrong reasons.
You can't anticipate the reason why a stock price will move next.
With currencies, all you know is what just happened.
You can't predict the direction in which a currency will move next.
Bonds and stocks are being traded by the same dumb people.
All traders are not as smart as they should be.
Tomorrow's news is today's news.
Don't trade on news you read in the printed press.
Taking risk is inevitable.
Don't expect to see your initial investment again.
Time is the hardest thing to buy.
Use all of the time you have to your advantage.
The only information that matters is private.
Don't trade on something you read about in the public domain.
Always confirm what your instincts tell you, never trust them.
Think, then act!
Read all the news, even the made-up stuff.
Be aware of what everyone else knows.
Don't do the same thing you did yesterday.
Avoid making systematic errors.
Stock prices move up and down for all the wrong reasons.
You can't anticipate the reason why a stock price will move next.
With currencies, all you know is what just happened.
You can't predict the direction in which a currency will move next.
Bonds and stocks are being traded by the same dumb people.
All traders are not as smart as they should be.
Tomorrow's news is today's news.
Don't trade on news you read in the printed press.
Taking risk is inevitable.
Don't expect to see your initial investment again.
Time is the hardest thing to buy.
Use all of the time you have to your advantage.
The only information that matters is private.
Don't trade on something you read about in the public domain.
Always confirm what your instincts tell you, never trust them.
Think, then act!
Read all the news, even the made-up stuff.
Be aware of what everyone else knows.
Don't do the same thing you did yesterday.
Avoid making systematic errors.
Monday, July 19, 2004
Vote for Blog!!
I'm going to try and make this point as concisely as I can. It's a point I think needs to be made and it's a point that might seem obvious once it's been made.
My point is this: we no longer need a single political leader to run our country. In fact, we no longer need politicians. We can govern ourselves. How?
We will be (self-)run by Bloggers. The collection of thoughts and writings of people around the world will help shape the society in which we live.
Blogs will be organized into specialized communities. Each community will comprise individuals who specialize in a particular field. They will decide and vote on laws. The debate and the final vote will rest on each seperate individual, not on individuals who represent the interests of others.
What I'm trying to say is this: it's become easier for us to go online and be involved in a debate that we will finally vote on than have someone do it for us. This gives us a far greater incentive to get involved in the debate than to just sit on the sidelines and let others decide for us. Apathy is not an option.
Doctors, teachers, police will all be organized by experts in their field. Changes to the way they are run can be debated and decided upon by an all-inclusive discussion and final vote.
**************************
There needn't be a reluctant choice for President, Prime Minister or Mayor. They are someone who we don't entirely trust.
We are capable of running our own society, determining our own future. This is something that most people are willing to work towards.
Change is now really possible.
My point is this: we no longer need a single political leader to run our country. In fact, we no longer need politicians. We can govern ourselves. How?
We will be (self-)run by Bloggers. The collection of thoughts and writings of people around the world will help shape the society in which we live.
Blogs will be organized into specialized communities. Each community will comprise individuals who specialize in a particular field. They will decide and vote on laws. The debate and the final vote will rest on each seperate individual, not on individuals who represent the interests of others.
What I'm trying to say is this: it's become easier for us to go online and be involved in a debate that we will finally vote on than have someone do it for us. This gives us a far greater incentive to get involved in the debate than to just sit on the sidelines and let others decide for us. Apathy is not an option.
Doctors, teachers, police will all be organized by experts in their field. Changes to the way they are run can be debated and decided upon by an all-inclusive discussion and final vote.
**************************
There needn't be a reluctant choice for President, Prime Minister or Mayor. They are someone who we don't entirely trust.
We are capable of running our own society, determining our own future. This is something that most people are willing to work towards.
Change is now really possible.
Saturday, July 10, 2004
Imaginary trivia about Wesley Fogel, successful Hollywood actor
Married to Marisa Tomei, 13 years his senior. They don't have any children.
His birthday is on December 8th.
Likes to go scuba diving in the pacific.
Bought the basketball court on University Plaza and 10th street in Manhattan.
Has apartments in London, Tokyo and New York.
Is afraid of heights.
Only buys champagne that costs at least $1,000 a bottle.
Doesn't like going to parties.
Invited Steven Spielberg to his apartment in Tokyo to talk about making a movie there.
Always wakes at 7am in the morning.
Wants to fly to the moon one day.
Lacks any strong religious beliefs.
Works out 2 hours a day in the gym.
Always eats at the same restaurant when he's in Tokyo. It's called 'Qahwa'
Has had corrective laser surgery three times.
Never had plastic surgery.
Has his teeth whitened once a month.
His favorite color is magenta.
Doesn't like dogs. Loves cats. He has no pets.
His best friend is Brad Pitt.
Buys all his shoes from Prada.
His birthday is on December 8th.
Likes to go scuba diving in the pacific.
Bought the basketball court on University Plaza and 10th street in Manhattan.
Has apartments in London, Tokyo and New York.
Is afraid of heights.
Only buys champagne that costs at least $1,000 a bottle.
Doesn't like going to parties.
Invited Steven Spielberg to his apartment in Tokyo to talk about making a movie there.
Always wakes at 7am in the morning.
Wants to fly to the moon one day.
Lacks any strong religious beliefs.
Works out 2 hours a day in the gym.
Always eats at the same restaurant when he's in Tokyo. It's called 'Qahwa'
Has had corrective laser surgery three times.
Never had plastic surgery.
Has his teeth whitened once a month.
His favorite color is magenta.
Doesn't like dogs. Loves cats. He has no pets.
His best friend is Brad Pitt.
Buys all his shoes from Prada.
Thursday, July 08, 2004
Follow the money
"Don't get too excited about the Japanese economy just yet."
Who said that?
Was it you? A billionaire investor? The government??
None of the above.
It was... the money supply (the red line).
"What's that??"
Who said that? Was that you? I thought so...
*************************************
The money supply is the blood pumping through the veins; the lifeblood of the economy. Without good blood circulation the body withers and dies.
Japan's economy has been suffering from bad circulation for a while now. Money isn't working it's way through the system as it's supposed to. Much of this is down to structural problems; banks have been so heavily indebted that paying off their dues has distracted them from getting on with what they do best: making money.
How does a bank make money?
Easy. It creates loans or 'promises.' The more that people promise to pay back the bank in the future the more money that is being spent today. That's how money is created, literally out of thin air.
*************************************
The trouble with Japan has been a lack of confidence. People don't have the confidence to go up to the bank and say "gimme as much as I can carry and I will be back this time next year with that and more, much more." Instead, they shy away from the risk, choosing to hide what they have under the pillow.
This won't do.
The Bank of Japan can only do so much to help. Much like a drip being applied to a patient, it's not enough to get the body on it's feet again. It requires not just other methods of treatment but also belief on the part of the patient that a recovery is truly on the way.
I'm optimistic but not yet convinced.
Look at the growth of the money supply again. When it takes off you'll know the patient will have found it's feet again.
** Afterthought **
If you were to compare with a chart for the United States you will see an example of a much healthier economy. This patient is well on the road to recovery. All of the cheap money the Fed has been supplying the U.S. economy is finally being used for the purpose it was originally intended: the creation and circulation of more money. Long may this blood lust last!
Who said that?
Was it you? A billionaire investor? The government??
None of the above.
It was... the money supply (the red line).
"What's that??"
Who said that? Was that you? I thought so...
*************************************
The money supply is the blood pumping through the veins; the lifeblood of the economy. Without good blood circulation the body withers and dies.
Japan's economy has been suffering from bad circulation for a while now. Money isn't working it's way through the system as it's supposed to. Much of this is down to structural problems; banks have been so heavily indebted that paying off their dues has distracted them from getting on with what they do best: making money.
How does a bank make money?
Easy. It creates loans or 'promises.' The more that people promise to pay back the bank in the future the more money that is being spent today. That's how money is created, literally out of thin air.
*************************************
The trouble with Japan has been a lack of confidence. People don't have the confidence to go up to the bank and say "gimme as much as I can carry and I will be back this time next year with that and more, much more." Instead, they shy away from the risk, choosing to hide what they have under the pillow.
This won't do.
The Bank of Japan can only do so much to help. Much like a drip being applied to a patient, it's not enough to get the body on it's feet again. It requires not just other methods of treatment but also belief on the part of the patient that a recovery is truly on the way.
I'm optimistic but not yet convinced.
Look at the growth of the money supply again. When it takes off you'll know the patient will have found it's feet again.
** Afterthought **
If you were to compare with a chart for the United States you will see an example of a much healthier economy. This patient is well on the road to recovery. All of the cheap money the Fed has been supplying the U.S. economy is finally being used for the purpose it was originally intended: the creation and circulation of more money. Long may this blood lust last!
Tuesday, July 06, 2004
A pointless exercise in money-making
If this were a financial market report you would probably stop believing everything that's being said right about now, since at this point the story is supposed to give a reason for why the market is moving in a particular direction.
I use the present continuous form 'moving' since market reports are written during active trading.
Markets trade continuously. When one market closes another opens. The money never stops flowing. Neither does information. But information can lose it's value as quickly as it was gained. The person who finds the information first can make money from it. Other traders are left guessing and sometimes their instincts can be as reliable as the information itself.
So where does the journalist fit into all of this?
A journalist is supposed to report the facts. These facts are supposed to help explain why prices rise and fall. Better still, they may help to explain why prices may rise or fall in the future. But prices move on information. Where is this information coming from?
Remember, a journalist is not supposed to trade. They must remain neutral observers to the market. This means they won't have ready access to the type of information market participants do. So how can someone who is not in the market know what's moving the market? They ask someone who's in the market. This is where the problems start.
Any single individual in the market, no matter their size, will make darn sure not to reveal their information to other traders. Most important of all, THEY DON'T TELL JOURNALISTS! What they do tell journalists is 1) what they want to tell the journalist and 2) what the journalist wants to hear, i.e. something believable. This is why market reports should not be believed and certainly not traded on.
I use the present continuous form 'moving' since market reports are written during active trading.
Markets trade continuously. When one market closes another opens. The money never stops flowing. Neither does information. But information can lose it's value as quickly as it was gained. The person who finds the information first can make money from it. Other traders are left guessing and sometimes their instincts can be as reliable as the information itself.
So where does the journalist fit into all of this?
A journalist is supposed to report the facts. These facts are supposed to help explain why prices rise and fall. Better still, they may help to explain why prices may rise or fall in the future. But prices move on information. Where is this information coming from?
Remember, a journalist is not supposed to trade. They must remain neutral observers to the market. This means they won't have ready access to the type of information market participants do. So how can someone who is not in the market know what's moving the market? They ask someone who's in the market. This is where the problems start.
Any single individual in the market, no matter their size, will make darn sure not to reveal their information to other traders. Most important of all, THEY DON'T TELL JOURNALISTS! What they do tell journalists is 1) what they want to tell the journalist and 2) what the journalist wants to hear, i.e. something believable. This is why market reports should not be believed and certainly not traded on.
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