Archive for November, 2008

“Feel like jumping”

November 29, 2008

After Peter Tosh and Bunny Wailer left Bob Marley and the Wailers in 1974, the I-Threes filled the gap. The I-Threes were female vocalists: Marcia Griffiths, Rita Marley (Bob’s wife) and Judy Mowatt.

Marcia Griffiths also sang her own reggae tunes, including Pasta Man Vibration’s faves, “Feel Like Jumping” and “I Shall Sing”.

Listen and feel irie!

Practical practice (The Financial Athlete #76)

November 27, 2008

Practice never draws a large crowd to watch. Nothing is sensational about repetitive drills, jogging laps, and calisthenics. However, without practice no game would be worth watching as a spectator sport.

Everyone knows a championship must be preceded by enduring practice. Even a fool is clever enough to not believe in get-championship-quick schemes. Everyone should know the path to financial success is also through enduring practice, but many fall prey to get-rich-quick schemes.

Enduring practice has the power to transform you. It molds average people into athletes, or craftsman, or savvy investors. Someone who practices a sport long and hard is hardly the same person who had led an inactive life. The “return on investment” from the practice of a sport extends beyond the benefits of greater coordination, strength, flexibility, and athletic prowess. On or off the playing field, the athlete distinguishes himself as a man of action and confidence.

All forms of enduring practice are investment-driven. An artist “invests” in creating. A world traveler “invests” in new, mind-opening experiences. A student “invests” in knowledge. An attentive parent “invests” in a loving relationship. Someone who exercises moderately and eats nutritious food “invests” in health. All of these activities enrich life.

The narrow purpose of investing money is to increase wealth, while the broad purpose of investing is to enrich life. Never place greater importance on the narrow purpose over the broad purpose. Those who do may grow financially rich but also more miserable. Take the time for enduring practice to invest in whom and what is most precious to you.

Bump on the field (The Financial Athlete #75)

November 25, 2008

“Be the first to cross the finish line,” my 5-year-old brain told the rest of my body. This was my first competitive event in my life, a mere 25-yard dash against other little, new people. And it was the first time I felt those so-called “butterflies” congregate in my stomach. Admission is free for the “butterfly” spectators who never fail to show up in the stomachs of participants during competitive sports.

Indeed, this race was somewhat serious. A grown-up on each end held a blue ribbon to mark the finish line. Meanwhile, on the starting line another grown-up said in an official voice, “On your mark. Get set. Go!” And go I did, as fast as my scrawny legs could move. With less than 10 yards to go, my head turned left and right. I smiled to find myself way ahead of the pack of human cubs! Would this be the first in a long series of athletic victories? Suddenly…THUMP. I tripped over a bump and fell flat on my face. One by one the other participants passed me by. Shortly after the race my older brother took my hand to lift me up and said some encouraging words. Then a grown-up pinned a 1st Place, 2nd Place, and 3rd Place ribbon on the shirts of those who placed accordingly. There was no ribbon to pin on my shirt. I didn’t need one. I had grass stains on my shirt to remind of finishing last.

Surely, this race has been long-forgotten by those who had winners’ ribbons pinned on their shirts. Why did this repressed memory of mine resurface? I had speculated on a small company. I loved the idea of the product. I loved the management. I loved the rapid market acceptance. The speculative investors became jubilant, expecting to make a 10 bagger (10 times the original investment), I among them. Then … “THUMP!” The economy sours. The company fails to raise sufficient capital in the midst of a severe credit crisis. Raising cash would have been a “sure thing” in a normal economic environment.

Nothing keeps greed in check better than awareness of unknown “bumps”. Always be prepared for those bumps hidden in the grass or darkness. Have the emotional fortitude to rise up after you have fallen on your face.

“I don’t care how long you’ve been around, you’ll never see it all.” – Bob Lemon

Explosive kick power (The Financial Athlete #74)

November 22, 2008

A martial artist thrusts her hip for explosive power in a sidekick.  A tennis player thrusts her hip for a “cannonball serve”. Although a natural movement, power generated from the hips is underutilized.

An underutilized, natural power…the same can be said of passion.

Rediscover the uninhibited passion of a child
It is the wellspring of deep curiosity

The discipline born of passion is pleasant
Its burden lightened with laughter

But the burden of discipline externally imposed
is heavy and unpleasant

Effortless progress blossoms from passion

To live a full life, passion cannot be repressed
Color your world with passion

by ao (pastamanvibration)

The bird dog beholds a secret to success (The Financial Athlete #73)

November 21, 2008

To begin the bird dog stretch, place your hands and knees on the mat, the hands under the shoulders, the knees under the hips. Then raise and fully extend the opposite arm and leg. Be sure to not raise the hip with your leg. Tighten your abs. Keep the spine neutral (flat). The arm feels pulled by a magnet in front of you while the leg feels pulled by a magnet behind you. In this posture, you body simultaneously experiences opposing forces.

Do this exercise regularly to lengthen the back muscles and strengthen the abdominals. On a deeper level, you may gain consciousness of the power of duality of opposing forces.

The mind of an advanced investor maintains consciousness of opposing forces. He is both skeptical and open minded. One eye is set on opportunities, the other on threats. He visualizes the big picture without neglect for details. He considers strengths alongside weaknesses. All of this requires a conscious effort.

In contrast, the mind of the untrained investor veers to one direction and stays the course. Later, he often wonders how he could have been so blind. Only by embracing the opposing forces can he come to more accurately perceive the wholeness of the situation.

Farewell, “W.”

November 19, 2008

You won’t be missed. You won’t be forgotten, either. Historians will rank you as the worst U.S. President in history. Then in a decade, revisionists will write books to tell us you really weren’t as awful we believe. Don’t take comfort in the revisionists rescuing your reputation. They write books to make money, not really because they believe you were a “swell” President.

In only 8 years your administration got America into an unnecessary and costly war in Iraq, restricted Americans’ personal liberty with the Patriot Act, tarnished America’s image with “cowboy diplomacy”, doubled the national debt, deepened the economic crisis by failure to rein in the CDS (Credit Default Swap) market, wrecked the Republican party which once stood for fiscal responsibility and smaller government, and….

Quite a resume! No one will ever accuse you of being a do-nothing President.


Dawn Penn in concert sings her classic tune: ‘You Don’t Love Me (No, No, No)’

Don’t bailout the Big 3 beggars

November 19, 2008

Let the Big 3 beggars (GM, Ford, and Chrysler) go bankrupt. These companies have been mismanaged for years and can’t compete against foreign manufacturers which make superior products.

The role of the government should not be a panacea for failing big business with one exception: banks. Credit is the life blood of the economy, and the government would stand to lose more by not bailing out the banks because of FDIC insurance.

All hope is not is not lost with corporate bankruptcy for manufacturers. Major companies often survive after filing Chapter 11. It’s the shareholders, pension plan beneficiaries, and creditors who stand to lose the most. Some say the Big 3 won’t survive if the government doesn’t bail them out. I say a bailout would be like keeping someone in comotose on life support knowing the chances of freeing him to a normal life is next to nil.

Of the essence (The Financial Athlete #72)

November 16, 2008

Years ago I learned how to ski with a beginner’s 4-point ski lesson: 1) For the legs, keep your feet parallel (unless you want to snowplow) and always bend your knees; 3) For turning, shift weight on left foot to move left or right foot to move right; 3) For balance, keep chest aligned with hip or for advanced skiers squat to increase speed; 4) For rhythm and balance and to begin movement, use the poles.

Since then I have only skied a few times. Because of the 4-point lesson, which encapsulates the essence of the mechanics of skiing, I can still ski well enough to slalom down the hill.

This bring to mind the question: why do some investors experience consistent gains while others tend to lose? Those who experience consistent gains have firm grasp of the essence of successful investing, while those who tend to lose do not.

Here is the essence of successful investing:

1) invest for positive cash flow (passive income) from multiple revenue streams

2) invest at or below intrinsic value

3) reinvest a substantial percentage of after-tax dividends and distributions

4) analyze trends to gauge when to buy and sell.

“Think big, even if you’re small.” – Ao (pastamanvibration)

Walk Wednesday! (The Financial Athlete #71)

November 15, 2008

Not long ago I was briskly walking through a local beach town. On my way to the beach, I passed by the town’s only elementary school. A large banner hung on the front building. Big, bold letters on the banner implored: “WALK WEDNESDAY!” Apparently, the school was on a campaign to get the kids to walk to school in the morning and back home in the afternoon every Wednesday. I thought, “WALK WEDNESDAY” would make a great national campaign to get people to exercise. Communities would organize these walks by simply establishing a predetermined hour and place for the start time, the walking route, and then allowing people walk at their own pace. This would not be a novel idea. In Germany the 10 kilometer Volksmarch (people march) is a popular outing for families.

Let’s face it: the majority of adults don’t participate in sports or any form of rigorous exercise because they don’t want to. An organized weekly walking event, on the other hand, would be a fine way to socialize while exercising mildly and safely. To walk alone may too boring, but to walk with others you hardly notice you’re exercising.

Now let’s face another fact: most people don’t want to commit the time and effort to become astute investors any more than to become athletes. These people should “walk” with their money, instead of
“run” with it. Rather than invest discretionary income into individual stocks or properties, it’s a wise choice for them to pay down debt including the principle of their home mortgage. It takes less financial education to decrease liabilities than to increase assets. All you do is pay off the debt with the highest interest rates first and shun new debt. To focus on reducing the liability side of the ledger also helps you to control unnecessary spending on consumer items. When you are done paying off debt, then your attention turns to compound interest…earning interest on the principle and interest income.

In the end, you probably won’t be as wealthy as your neighbor who made investing his hobby, but you should live a financially comfortable life into retirement without worry of market gyrations. This is similar to the person who walks daily for exercise. She does not have the physique of an athlete who regularly bikes, runs, swims, or plays sports, but she is healthy and content.

“Jozu!” (The Financial Athlete #70)

November 14, 2008

A batsman for cricket has to be “jozu” (skilled) with the bat to drive and hook and cut and pull the ball.

I love the sound of the word “jozu” and the importance the Japanese place on its meaning. In Japan “jozu” is heard frequently. Little wonder then Japan is world renown for manufacturing quality products.

To be “jozu” often requires use of a tool. As the tool of a cricket batsman is a bat, an investor’s tool is information. An investor must be selective with his sources of information. It must be current and reliable. Otherwise, it’s like stroking a ball with a cracked bat.

The internet has made information readily accessible. Here are some useful websites for information on stocks. Be mindful of the difference between facts and opinions.

“FACTS”:

For SEC filings: sec.gov

For SEDAR filings (Canada): sedar.com

For definitions: investopedia.com

Check your broker’s website for a stock screener.

OPINIONS worthy to consider:

For research reports: morningstar.com

For news: wsj.com and barrons.com

For transcripts of conference calls: seekingalpha.com