In a recent tennis game, a passerby who was on the other side of the fence felt I need coaching when the ball hit the net on my serve. He said aloud, “Hit the ball over the net!” I turned my head to see who said this. He was a complete stranger, probably someone who hasn’t hit a tennis ball in decades. Rather than confront the stranger, I ignored the “noise” and moved on with my game.
Noise cannot be controlled, but you can control your reaction to it. Noise is only a nuisance if you listen to it. Accept noise as part of the game. It is like the wind blowing the ball away from you or the bright sun in your eyes when you look up at the ball.
Noise is everywhere.
The business of business media on TV is noise. Message boards for stocks are full of noise in the form of false information, hype, relentless bashing, and non-material information blown out of proportion. . Noise accounts for much of the daily trading.
There is external noise and internal noise. Internal noise are found in counterproductive thoughts. Because internal noise is often accompanied by negative emotions, it is easier to gain a foothold over you than external noise. Recognize the counterproductive thoughts as noise, and let it drift away like a cloud.
MLB (Major League Baseball) keeps statistics for everything you can put a number on. Numbers tell the long history of the game; and numbers tell the story of a particular game on a single sheet of paper. No other sport has a deeper appreciation for its history, and this is due in part to its love of statistics.
Statistics are equally important with the stock market. For good reason: statistics help determine valuation of the stock, provides information on price history, the composition of ownership, and the financial condition of the company. Fortunately, we can find key statistics for a stock on a free web page. Just type in a ticker symbol at Yahoo! Finance and click on “Key Statistics”. This saves a great deal of time for screening stocks. I never buy a stock without viewing this first.
“Baseball fans are junkies and their heroin is the statistic.” – Robert S. Weider
I am not a long-distanced runner. If I run, I’m chasing a ball or someone with the ball. I associate running with playing, not an exercise regimen. Recently, I asked a long-distance runner, “How do you keep motivated to run?”
He explained, “I don’t run in circles, around a track or a lake, unless I’m timing myself. My mind is not stimulated in seeing the same things over and over again. I like to run toward a destination and then back. When running is a journey, I’m invigorated.”
Many of us live our lives “running in circles”, preferring the comfort of a risk-free, known daily routine rather than explore new knowledge and experiences. Investors are also encouraged to “run in circles” with a mindless system of buy-and-hold, dollar cost averaging into the stock market, regardless of market conditions.
Granted, everyone should not be a stock picker. It is wiser for most to invest in index funds. But rather than set aside a monthly fixed amount into an index fund and hold until retirement, consider setting aside a monthly fixed amount (or better yet, a percentage of income) into a flexible portfolio. Adjust your portfolio according to market conditions. In a down market where P/E ratios are below the historical average and dividend yields are higher than the historical average, increase equities (stocks) in your portfolio. In an up market where P/E ratios are far above the historical average and dividend yields are much lower than the historical average, decrease equities in your portfolio.
This macro approach is simple and should outperform the average results from dollar-cost-averaging.
Living in poverty in the 3rd World with no soccer ball does not stop the poor from playing soccer. They innovate with a makeshift soccer ball, such as cloth stuffed with hay.
When my father was a kid, he grew up in Brooklyn and played stickball. There were not enough baseball fields to play on. So, the kids took the game to the streets. With a soft ball for a baseball and a stick for a bat, stickball was a popular sport in the city.
Poor people create solutions with imagination. These solutions may be crude, but they are functional. Nevertheless, living in an under-capitalized environment severely restricts human potential.
2006 Nobel Peace Prize winner Muhammed Yunus made it his life mission to provide poor entrepreneurs much needed capital. Through Grameen Bank in Bangladesh, Yunus offers investors a way to finance farm activities and small businesses for the poorest of the poor with microcredit (micro loans).
Investors can ask their brokers about microcredit funds and should follow-up with proper due diligence. A microcredit fund in a portfolio provides diversification into essentially a different asset class. More importantly, through microcredit investors can help people help themselves.
It is a blessing to be financially rich but a shame to not invest in the betterment of the lives of the less fortunate. Return-on-investment should not be considered strictly a quantitative matter.
Goober
by “pastamanvibration” (Ao)
(Copyright 2008)
Goober is a perfect friend! He never says “It’s mine. Not yours!” He never says, “I’m bored.” Best of all, he’s always ready to play cars with Sean.
But not for one second would Sean’s Mom and Dad call Goober a perfect friend. Goober never says “hello” or “goodbye” to anyone, except to Sean. In fact, Goober never says anything to anybody, except to Sean. And he always hides from everyone, except from Sean. Only Sean knows where Goober hides.
Last year on April 15, Sean and his Mom and Dad celebrated Goober’s 5th birthday. Goober did not blow out the candles. And he did not eat one bite of the birthday cake. All of this did not surprise anyone, because Goober is Sean’s pretend friend.
Exactly one year later, the doorbell rings. Sean runs to see who it is. Flinging the door open, he meets a boy with a smile stretched ear to ear. The boy raises his arms and says, “Howdy, partner! It’s me, Goober.”
“Huh? Goober?” says Sean, scratching his head. “You look like Goober, my pretend friend. He has red hair, big brown eyes, and freckles just like you. And he also wears a red shirt and white pants just like yours. Weird!”
Goober laughs. “I WAS your pretend friend! But now I’m a real boy!” He points at Sean’s untied shoelaces and says, “Don’t tie your shoelaces!”
“Goober! It’s really you!” Sean shouts. “You’re the only person in the whole wide world who tells me, ‘Don’t tie your shoelaces!’ Everybody else says, ‘Tie your shoelaces.’”
Sean’s Mom and Dad hear all this noise. They come to the front door and meet the real Goober. Mom puts her hands on her cheeks. Her mouth is wide open. She says, “Ai Yi Yi!” Dad paces the floor, rubs his chin, and says, “Hmm. Is someone trying to trick us?”
Then Mom touches Goober’s arm and says, “You’re real, all right! Where do you live?”
Goober smiles. His two front teeth are missing. He says, “I live here with you!”
“Here?” Mom asks. “Why don’t you and Sean play in the family room? Dad and I need to talk.”
Sean and Goober play with Sean’s toy cars. They are having lots of fun until Goober crashes Sean’s favorite car. “Hey! You never did that when you were my pretend friend!”
“I’m sorry, Sean. I guess it’s easy to make mistakes when you’re real,” says Goober.
Now Sean’s parents come to the boys. Mom says, “Goober, we’re going to take you to your family. If you don’t know where you live, we’ll take you to the police to help us find your family.”
“But you’re my family, and today’s my birthday!” Goober cries. “If you don’t believe me, I’ll leave now.”
Mom and Dad shake their heads no, because they don’t believe him. Goober’s hands and ears and nose and red hair start to disappear. Sean reaches out to pinch his nose, but it is gone! Watching Goober disappear makes him feel so dizzy, he wobbles to the floor.
Mom pulls her own hair and says, “Ai Yi Yi” again.
Dad has no hair of his own to pull, because he is bald. He pulls his ears and shouts, “Okay, Okay, we believe you! Please come back, Goober!”
Goober’s hands and ears and nose and red hair slowly reappear.
“Yippee!” yells Sean.
Mom’s knees are shaking. She is nervous, but hides this with a fake smile. “Welcome back, Goober. Let’s go celebrate your birthday in the park.”
In the car, Daddy plays the radio. Goober sings every song.
Sean frowns and says, “I wish you would stop singing, Goober. You sound like a penguin.”
Goober giggles and replies, “You should make penguin noises, too.”
For the rest of the trip, Sean and Goober sound like penguins.
At the park, Mom and Dad sit by the lake. The boys race to the swings, but there is only one swing free. Sean reminds Goober how his world ought to be, “Always me first! ”
Goober argues back, “No, me first! It’s my birthday.”
Sean grabs a coin out of his pocket and says, “Life’s most important decisions are made with a toss of a coin.” He tosses the coin, “Heads, I win. Tails, you win.” The coin lands on tails. Sean stomps his foot. “I need a coin with heads on both sides of the coin!”
Next, the boys play catch with a baseball and mitts. Sean can catch well when he keeps his eyes open. But when Goober throws the ball fast, Sean closes his eyes because he is afraid. The ball hits his lip. Sean cries.
“Sorry I gave you a fat lip. I didn’t mean to,” Goober apologizes.
“Hey boys! Let’s go to the movies,” Dad suggests.
In the movie theater, the boys laugh. Goober snorts like a pig when he laughs. Sean doesn’t care, but the lady sitting next to Goober raises her eyebrows every time she hears it.
After the movie, the family goes to the bakery to buy a chocolate cake and six candles. The baker writes on the cake, “Happy 6th Birthday, Goober! Our REAL pretend friend!”
On the way home, Sean asks Goober, “Why did you become a real person?”
Mom and Dad are listening, because they want to know why, too.
Goobers explains, “I just want to play with you — for real.”
For dinner, Mommy serves spaghetti. Goober eats with his mouth open. He stains his shirt with tomato sauce. No one had ever taught him how to eat properly.
After dinner, Mommy brings the cake to the table. Together, they sing the happy birthday song with penguin voices. Goober then makes a secret wish before he blows out the candles and gulps a piece of cake. Then he wipes off a mustache of milk and cake smeared around his face and says, “Thank you! I had so much fun! But now I have to go.”
Sean holds Goober’s arm and says, “Don’t go! Stay forever!”
“I’m sorry, Sean, but I can’t. Please don’t cry,” said Goober.
The family hugs Goober as he waves his hand goodbye and disappears.
“I’ll miss that kid,” says Mom and Dad.
“I hope I see him again someday,” says Sean. “He’s not perfect, but he’s a real friend.”
“Rocket. Rabbit. Rodent,” croaked Abbott the frog.
“No. No. No!” cried his father. “It’s ribbit. Not rocket! Not rabbit. And certainly not rodent! Ribbit. R-I-B-B-I-T. Ribbit! No other croak will do!”
“But I can’t croak r-r-readit,” Abbott said meekly, his head bent down.
“Practice. Practice. Practice!” his father advised. “Practice until you cannot croak anything but ribbit. It is very strange for a frog to croak anything but ribbit.”
All night long Abbott croaked. He croaked, “Midget.” He croaked, “Widget.” He croaked, “Fidget”. And he croaked “ Fixit” and “Mixit”. But no matter how hard he tried, he could not croak ribbit.
Abbott’s croaks annoyed the frogs tremendously. The next morning not one frog mouth smiled. They gathered together, each sitting comfortably on their own lily pad. Frankie the big bullfrog pointed his fat frog finger at Abbott and yelped, “Who can sleep with HIM croaking nonsense all night? It hurts my frog ears. I say Abbott must go!” At once all the frogs but Abbott’s best friends and family croaked, “Ribbit!” But this ribbit was not a friendly ribbit. It was grunt. And it made Abbott shiver.
The frog king of the pond flung out his sticky tongue to catch a fly. The fly disappeared into his mouth as though being flushed down a toilet. Then the king cleared his frog throat and said, “Only the hiss of a snake sounds worse than Abbott’s croaks.” Then he turned to Abbott and barked, “Croak ribbit this instant or leave this pond.”
Abbott the frog jumped on center stage, a lily pad in the middle of the pond. His skinny frog legs trembled. His small frog heart beat as fast as a hummingbird’s. He took a deep breath to calm down. Air swelled his throat in the shape of a ball. His eyes bulged and gazed at the crowd. Then in the loudest croak he could muster he croaked, “Racket!”
Now tears began to fall from his eyes, like leaves falling off a tree in a rushing wind. He murmured, “As you wish, I will leave.” And his mother wiped his tears with her frog belly.
Before he could say, “Farewell, my fellow frogs,” his mother tied a sack with all his belongings to the end of a twig. She handed it to him and said, “Go west young frog! Hop west until you come upon a dragonfly. When you see the dragonfly, follow it wherever she leads. Do not fear. You are a big frog who can go off on his own. Someday you will become known as a great frog, Abbott. In every pond frog folk will tell your story for a thousand moons to come.”
But Abbott did not feel like a great frog. Instead, he felt like a forsaken frog from his first long leap away from the home pond. He leaped westward over grass and weeds and dirt and rocks. For seven days he leaped westward. His limbs grew weary, and his frog feet blistered. He felt he could not leap another inch even if chased by an alligator. He rested under the shade of a weeping willow tree. It was there he saw a dragonfly circle above his frog head. Suddenly, Abbott forgot about his weary legs and blistered feet and sad frog heart. He jumped blissfully over bushes to follow the dragonfly. And the dragonfly led him to a shimmering waterfall cascading into a pond.
“Home!” he said with much relief.
Night after night, Abbott croaked alone all sorts of sounds. He croaked joyfully new sounds like “exhibit” and “inhibit”. No frog was there to complain – that is until one night a young frog lady from some unknown place introduced herself with a toothless smile, “Hello. I’m Bridget.”
Abbott the frog’s face blushed. A frog’s face could blush no more, which – by the way – isn’t very much. He stared at his frog knees and introduced himself. Then in a low voice he said, “I cannot croak r-r-rip-it.”
Bridget laughed, but not at him. She replied, “That’s okay. I can’t say r-r-rip-it, either!”
In that very moment Abbott and Bridget became frog soul mates. Abbott had not been this happy since he was a tadpole. And it was not long before he himself became a father of dozens of tadpoles.
However, during this happy and hot summertime, not a drop of rain fell from the clouds. By the last days of summer the pond shrunk to half its size, while Abbott ballooned into a giant bullfrog, even bigger than Frankie the bullfrog. So loud was Abbott’s croak, little frog ears could hear it hundreds of frog leaps away.
One night as Abbott and Bridget were croaking “inhabit”, familiar frog faces appeared. Among these frog faces were those of Abbott’s mother and father, which glowed in seeing their beloved son. Other frog faces were the king’s and Frankie the bullfrog’s, which showed shame.
Now Abbott was very happy to see his family and old friends. He was even happy to see Frankie and the king. He jumped high off his lily pad and splashed into the water in a belly flop. This hurt his belly, but he did not care. He said, “What brings you here?”
Abbott’s father replied, “Our pond has become dry as a dead bone. First we dug burrows with our webbed feet and hid in the mud from the hot sun. But no rain ever poured and the mud turned hard as a turtle shell. We have been leaping for days to search for a new home pond. But everywhere we leaped was on dry land.
His mother finished the story, “Last night from a great distance, we heard a frog croak loudly, ‘Drink-it’. I shouted, ‘Abbott! Only my boy Abbott croaks ‘drink-it’! Follow his sweet sound!’ And so here we are.”
The frogs bowed to Francis and Bridget and pleaded, “May we live in your pond?”
Now Abbott and Bridget took a giant leap toward them. The frogs flinched, afraid Abbott’s heavy belly might land on them.
Bridget said with open frog arms, “Welcome!”
Abbott added, “Here you are free to croak anyway you please.”
From then on, frogs throughout the world croak many sounds besides ribbit. Some even croak “Abbott” and “Bridget”.
(While rewriting the story I was listening to Ziggy Marley’s “Dragonfly”, which you can hear by clicking below.)
Much action in sports and investing occurs unseen…within the mind. Unlearn that which tosses your emotional being to and fro. Relearn to steady the mind, the rudder of your being.
Random thoughts about living with peace of mind:
1. A man of laughter who lives in a bungalow is richer than a distressed man who lives in a palace.
2. Life is too short to rush through it.
3. The alchemy of turning a mistake into a gift happens when you accept responsibility for it.
4. Rise above your circumstances or be ruled by them.
5. Action reveals the subconscious mind.
6. A day without surrendering is a day of defeat.
7. Reach a mountaintop through the breath.
8. Be like grass, although cut again and again it never ceases to grow.
9. From the center all senses are sharpened.
10. How to turn work into play: work with passion.
Basketball is all about match ups. A team should not expect an easy victory over Team X under the rational of “Team Y slaughtered team X, and we beat Team Y with our bench!” Team X may match up much better against your team than Team Y.
A basic function of financial planning is to match investments most suitable for you. We are all unique. And we have different levels of tolerance for risk, although most of us overestimate our own risk tolerance. To get an idea of how you should invest, first recognize what mode you’re in and then act in a prudent manner from that mode. My tennis instructor classifies these modes as: Survival, Defense, Neutral, and Offense. He says, “In a tennis game, we always hit the ball from one of these four modes.”
Survival: I return a difficult shot anywhere over the net just to keep the ball in play. My body is not positioned for good court coverage. I hope my opponent makes an error or I’m able to get back into a defensive move.
Those who are on Survival mode have the greatest need to secure cash. They are in no position to put their money at risk. They must only invest in their well being by putting food on the table and shelter over their heads.
Defense: My opponent is in command of the rally, moving me left and right. I am not trying to hit winners. I am keeping the ball in play. My court coverage is solid.
Many of the elderly are on Defense mode. They don’t have the luxury of “time on the market” to wait for stock prices and real estate prices to rebound from a down market. Their goal is preservation of capital, not return of capital.
Neutral: Both my opponent and I are keeping the ball in play. We hit the ball over the middle of the net to minimize errors.
Those who are on Neutral mode have cash on the side and wait patiently for better investing opportunities. Until the market becomes more conducive to investing, they remain on Defense mode before transitioning into Offense mode.
Offense: I am in command of the rally. If my opponent continues to return my shots, he probably will tire and lose the point.
Those who are on Offense mode are aggressively putting cash into equities and/or real estate to make higher returns. They have timed the market when market prices are below intrinsic value.
The horse stance in Kung Fu is a tool of endurance training, strengthening the quads and the muscles in the back. Beyond its physical benefits, the kung fu practitioner mystically feels “connected to the earth” or “grounded”. From the earth, he draws power in his stance, punches, and kicks. Without being connected to the earth, his opponent can toss him like the wind.
It is equally important for investors to feel “connected to the earth”. By doing so, he does not allow himself to get carried away with projections of medium-term and long-term future earnings. He knows with the passage of time too many variables come into play. Of these, some of the hapless ones no one preconceived.
To be grounded is to dwell on “WHAT IS” more so than what will be. “WHAT IS” has certainty. What will be has no certainty.
To be grounded with both feet is superior to grounding with only one foot. The right foot represents the asset side of the ledger, while the left foot represents the liability side of the ledger. To be grounded with both feet is to increase assets and decrease liabilities simultaneously. Many are very adept at increasing assets with corresponding increasing liabilities. All is well with this until asset prices depreciate. While your assets depreciate in market price, nobody forgives your liabilities.
Bankers and their US Treasurer stooge, Paulson, had schemed for taxpayers to bail them out by paying above market prices for their worst “mortgage-back securities (“assets”). Now that the Western European governments had taken the lead in taking equity for recapitalizing their banks, the US government felt more at ease to follow suit with as much as $250 billion. Paulson conceded to the equity stake plan only to get money into the banks faster.
To begin 9 U.S. banks will get a total cash infusion of $125 billion. It’s a good deal for taxpayers. No one pays a lower rate for the cost of capital than the federal government (the US pays low interest rates for issuing Treasuries). Since this will result in positive cash flow, I’d call this an investment for taxpayers. This investment will provide a dividend yield of 5% for the first 5 years and 9% thereafter on Preferred Shares. Banks are projected to be more financially stable in 5 years to buy back the Preferred Shares rather than pay the 9% dividend.
All is not great about the revised plan, however. The Bush Administration still intends to buy $100 billion of those worst mortgage-backed securities. You didn’t think Wall Street wouldn’t get its “cake and eat it too”, did you?
