Financial Samurai

If you look carefully around the web, you’ll read scores of articles about the desire to retire early.  Yours truly wishes to finish up no later than 45, as I believe working for 20 or so years is a long enough time.  I’ve done the math with various living and return scenarios and it can be done.  But the question is whether it’s a good idea?  Perhaps not.

Now that the economy is in recovery mode, it’ll be interesting to see how attitudes change towards early retirement.  Will those who’ve short circuited their careers feel the pull to return to full time work and maximize their earnings potential again?  I believe so.  What about all our “lifestyle design” and “digital nomad” friends who had a rough time landing something stable they truly love?  Possibly they’ll come back too.

Those who are able to retire early are often cherished.  I certainly admire those who are able to cut down their desires to the bare bones and live a very frugal lifestyle.  I also admire those who’ve been able to strike it rich very early!  That said, perhaps early retirement isn’t a good idea for the large majority of people.  Let’s explore several reasons as to why people want to retire early, why they exist, as well as understand why it may not be a good idea.  Someone has to argue the other side, so it might as well be me.

WHY PEOPLE WANT TO RETIRE EARLY (IT ISN’T THAT OBVIOUS!) Read more…

Congratulations to the Democrats for passing a smaller, less corrupt version of Obama’s health care plan to cover the 30 million+ Americans who are uninsured.  I’ve read numerous articles about the pros and cons of this plan, and I still can’t figure it all out.  An Associated Press article writes, “Obama practically needs a spreadsheet to tell people what’s going on and when.“  That said, progress has been made.  I’d like to go over some of the basics, and end with a discussion.

LOOKING OUT FOR EACH OTHER Read more…

The luckiest people on earth are those who don’t make a lot of money.  They’ve got very little downside and can really pursue their childhood dreams.  Imagine if from the moment you graduated college, you landed a plum corporate job that paid just enough to keep you motivated, but not enough to enjoy your freedom.  The longer you work the more you realize there’s really no escape, because there’s simply too much at stake.  This is the problem that plagues my friend, Lyndon.

THE STRATEGY CONSULTANT WHO MAKES BANK Read more…

The Yakezie Challenge

There’s a fun hypothesis saying that you are the average of the closest five people around you.  I believe this to be true, do you?  What’s interesting about the blogosphere community is that anybody with enough intention can start a website.  Some are interesting, some are not, but regardless we can all compete with the ProBloggers and the Huffington Posts of the web in our own niche way!

Alexa is a dynamic website ranking and information company owned by Amazon, which has over 40 million users world wide.  The tool bar is free, and easy to download.  The Yakezie Alexa Ranking Challenge is straight forward.  If you’re outside of the top 200,000, get in the top 200,000 within 6 months.  I can’t even name 100 sites, let alone 199,999 sites.  Can you?  If you’re already in the top 200,000, get in the top 100,000.  And if you’re already in the top 100,000, get in the top 50,000.

There are some who poo poo the Alexa ranking system, and I recognize their two main arguments:  1) The system only tracks visitors who have the Alexa Toolbar installed, and 2) There are cases where some websites with bazillions of users have a worse ranking than sites with less users.  We don’t know why, because we don’t fully know what goes into the calculations.  It may be because readers don’t visit and just read off their RSS.  That said, the Alexa ranking system continues to grow, and is the best system we got.  At least 40 million webmasters around the world think so, and there has to be something to it if Google, Facebook, Yahoo and YouTube are ranked #1, #2, #3, and #4, respectively.

Since starting this site, I’ve been rejected as a guest poster, didn’t even get responded to, let alone make it as one of the 7 finalists for one site’s staff writer tryouts, denied admission to a personal finance blog network, and even got my first carnival submission rejected.  But through all the rejections, I took comfort in my friend, Alexa, who is always by my side motivating me to keep going.  I’m sure many of you have been rejected as well.  Here’s your chance to create our own network of powerful friends by joining in on the challenge!

BENEFITS OF BEING IN THE TOP 200,000 Read more…

If I read one more biased article pushing people to convert to a ROTH IRA I’m going to lose it!  Not to be melodramatic or anything, but the lack of unbiased analysis is like seeing a sea of zombies instructed to walk off a cliff. Wake up zombies, wake up!  Don’t make a decision without seeing what lies down below.

The ROTH IRA conversion idea is that those who have pre-tax funded retirement accounts such as a 401K or Traditional IRA pay taxes UPFRONT in 2010, so as to not pay taxes when you retire.  This is just absolute hogwash donkey dumb for a large majority of people out there.

Proponents of the ROTH IRA conversion argue:

1) Tax rates are low and are just going to go up in the future.

2) You will likely make more money in your retirement years, and hence pay more taxes.

3) Paying taxes now improves performance in the long run all else being equal.

THE SAMURAI REBUTTAL: Read more…

Searching For Fortune On The Fund's Yacht

With great pleasure, I announce the launch of The Samurai Fund!

Thesis: Through random selection based solely off permutations of reader’s names (personal or site title), we are able to create a long-only mutual fund that will outperform the S&P 500 index!

Fund Details: $1,672,003 billion launch, $100/share NAV, with 17 positions equally weighted.  Concentrated multi-strategy portfolio with defensive names in the alcohol and utility space, as well as higher beta names in technology and health sciences.  Small caps and large cap names included.  S&P 500 start value 1,115 benchmark.

Investment Outlook 2010: The stock market continues to rebound, but at a slower pace.  Inflation and interest rates remain benign, leading to a re-emergence of consumer spending.  Housing stabilizes with 30-year mortgage rates staying below 6.5%.  The government maintains record spending to stimulate the economy and the unemployment rate begins to fall in the second half of the year.  The S&P 500 increases by 10-15% with a blue-sky target of 1,322.

Duration & Rules: One year.  The bottom 3 performers will be up for review every quarter. To stay in the fund, one must write a convincing argument as to why we should not cut our losses.  Picks down more than 20% also will be re-evaluated.

Goals: To have fun, learn something about the stock markets, prove a theory that luck plays a big part in performance, and to build better relationships with the community.

Contributors: Please retweet and spread the word to any of the social media sharing sites below.  We need all the support we can get to outperform the professionals!  Contributors are encouraged to provide updates and commentary as the months progress.  If anybody wants to do a portfolio analysis below, please feel free to do so!

*** STOCK PICKS SUMMARY WITH CONTRIBUTORS *** Read more…

Raging against the machine is in my nature.  It annoys me to no end when I read about injustices such as government raises during our recent implosion.  I once skipped a morning of work to demonstrate against an apparel company which used racist slogans.  Up yours Abercrombie!  As I age, I’m discovering a more peaceful side that just accepts things the way they are.

There’s a lot of messed up things in the world such as war, poverty, and corruption.  Some things we can try to explain, and some things we can’t.  And yet, I wonder if every irrational thing has a rational reason?  Let’s look at some examples and decide for yourself.

The Kid Who Just Wants To Have Fun

Everybody knows that grades start accumulating in the 9th grade, and without good grades and SAT scores, the chances of getting into a good college, and therefore landing a desirable job goes down.  Is it really so bad that Johnny High doesn’t go to Yale, and become a rich physician?  What’s so bad about community college and working for $20,000/yr at a dead end job which he enjoys?  Nothing at all!

Johnny High’s decision to not study hard in high school is perfectly rational.  He chose to have a whole lot of fun, while other kids were miserable studying and participating in extracurricular activities to boost their resumes.  When he’s 35 years old and still working at his job with the same salary, he’ll think back at all the fun he had in high school and smile.

Who’s to say that being a multi-millionaire physician and going to Yale is good anyway?  He could end up incredibly miserable, with tremendous amounts of anxiety everyday as a doctor. Instead, Johnny High chooses to live a more relaxing life, and doesn’t care about money.  If he did care about money, he would have studied harder.  And if Johnny starts to care about money, he may go to grad school and give himself another shot.

The Lady Who Loves To Eat Read more…

Art by Daryl Cagle

People have been freaking out lately by a weak US dollar.  I’m here to tell you it doesn’t really matter.  Did you know that 60% of Americans have never left the country and less than 25% of Americans own passports?  Most of the 40% who leave come back, so it’s only a temporary amount of time when their purchasing power may be relatively hurt.

An even better statistic states that only 20% of Americans speak a foreign language.  Hence, where the heck are the 80% of Americans going to go if they can’t communicate with the locals?  Ok, so they may understand what “I want a double quarter pounder with cheese please” in English means, but we aren’t going very far if we can’t speak another language.  Sure a vacation is fine, but it’s not like we Americans are suddenly going to relocate overseas and establish roots.

If you are an American who makes a US$ denominated salary, buys US$ denominated assets like property, consumes Levi’s jeans, and never plans to leave the country, what are you freaking out about? The US Dollar can depreciate by 90% against the Euro, and it still wouldn’t really matter. Read more…

Unless you’re perfect, there will be times when things don’t go your way.  You’re last to be picked in PE class, Yale says, “thank you, but no thank you”, and your girlfriend/boyfriend dumps you for another man/woman.  Do you start sulking?  Or do you get up, get angry, and prove to yourself you’re worth it?

Some people are so afraid of rejection, they never put themselves out there.  They reject themselves before even giving others a chance!

Lame Excuses:

“Why would this school accept me?”

“Why would she want to talk to me?”

“I don’t deserve a raise so I’ll never ask.”

“I’m not good enough to work for this firm, so I won’t bother applying.”

“What if everybody thinks what I say is stupid?”

“My writing is horrible, why would anybody want to read anything of mine?”

These types of thoughts crush dreams, lead to low-self esteem and mediocrity. 

Change the way you view rejection with these 5 strategies: Read more…

GTGTTBR (Got To Go To....)

For some reason, I generally get stuck in a middle seat close to the bathroom every time I go on a business trip.  It’s probably because I leave so little time between take off and check-in that I usually end up screwed!

The worst is when you’re just about to fall asleep and you get nudged by your neighbor for hogging the arm rest.  Come on neighbor, I’m stuck in the middle, the arm rest is mine!  The second worst thing is inhaling the lovely toilet aromas every time someone walks in and out.  Finally, add a crying baby next to you, and air travel is just lovely.

Despite my constant bad fortune on airplanes, the one thing I do recommend is sitting close to the bathroom at work. We discussed strategic seating in business school one day, and if you think about it, sitting closest to the bathroom, whether you have a cubicle or office is the absolute best place to be.  No matter how senior or junior someone is, they must go to the bathroom and walk by your desk at least a couple times a day!

Unlike the mysterious guy sitting in the corner who everybody thinks is surfing the internet all day, you get a constant stream of opportunities to develop relationships with your colleagues and bosses if you sit near the loo.

“Hey Jim, how about Mark Sanchez of The Jets the other day huh?”

“Hey Pete, so sorry Colt got injured against Alabama.  You still owe me lunch sucker!”

“Nancy, I just love your new hairstyle!  Where you get it done?”

“Susan, want to grab a coffee this afternoon?  I have something to share.”

“Christine, any tax consultant suggestions?  I can’t for the life of me figure these numbers out!”

BINGO!  All easy lines to develop your relationships internally.

The biggest risk for employees during recessions and promotion season is to be out of sight, and therefore out of mind. By sitting near the bathroom, you are unavoidable and everyone must acknowledge your presence.   Just don’t stop folks who have visible pains on their faces!

Readers, how is your work environment set up and can you think of any other strategic, no effort office strategies to keep up your profile?

Keigu,

Sam Samurai – “Slicing Through Money’s Mysteries”

Follow me on Twitter @FinancialSamura and sign up for our RSS feed.
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Fight Inequality Forever

Can someone please give us a rational argument why implementing a Flat Tax system in America is not fair?  We don’t know if we can continue posting without thoroughly understanding this issue first.  From a percentage basis, each person pays an equal amount of their income towards taxes, and from an absolute basis, richer people pay more!

Why don’t we just start taxing people according to height?  The shorter you are, the more you have to pay!  Brilliant idea, thanks.  Here’s a commentary from Money Bluebook that really got me thinking about the word “comrade” and the phrase “melt your pots for bullets.”

“Those of you rich folks in the top 35% tax bracket ($373,000 and higher) need to stop whining. You don’t get to whine. I hope this administration taxes the beejesus out of you all…it’s time you paid your fair share and get with the program. It’s only fair the wealthy pay more out of their millions and billions of dollars to subsidize the rest of us who need it the most. We are struggling in this recession and it’s time to fix the problem – by taxing the rich!”

Gee whiz, last I checked, we live in America not North Korea.  Why people believe it’s fair to tax one class of citizen a higher percentage than another confuses us.  Is this not a pure form of discrimination?  Fine, let’s agree that anybody below the poverty line of $25,000 for a family of four ($10,000 for a single person) are exempt from all income taxation. Read more…

Maximum Yield Cabbage

When we first bought our $1,200 HDTV six years ago, we told ourselves never to go to the movies again until we watched enough DVDs to pay for the purchase.  Every time we went to the movies, we’d have to pay on average $20 for tickets.  A promise was made that only after we watched 75 DVD rentals ($1,500 bucks in movie tickets saved – $300 for Netflix fee), would we treat ourselves out to the theater. We reached our goal within two years, and in the four years afterwards we’ve only gone to three movies!

We realized that once we went through the initial 6 month waiting period for the latest movies to come out on DVD, all was fresh again.  We’re now programmed to watch movies with a 6 month lag, bringing us the same opening night excitement.  The annoyance of someone sitting right in front of you in an empty theater and jabbering away is no more!  Furthermore, a 52″ screen and six point surround sound system sure helps replicate the big screen experience!

THE DVD METHOD OF CD INVESTING Read more…

There is current controversy stirring because a British Conservationist believes we should let pandas go extinct and “put them out of their misery” because they are “stupid” and possess poor survival skills.  My question is, if the Panda looked like Golem from Lord of The Rings, would there still be an uproar?  The Black Rhino and Beluga Sturgeon are equally as endangered but you never hear about them.

I was at an MBA recruiting fair the other day and I noticed several of my fellow corporate representatives spend a disproportionately longer time with one particular candidate.  Where average conversations last 3 minutes, conversations with this one candidate would last 10+ minutes.  Coincidence this candidate was probably the most physically attractive person there?  I don’t think so. Read more…

One Big Family

Someone once said, “nothing is certain except pressing the reply all button by mistake and taxes.” How true the saying as we face rising taxes under the new administration.  Supposedly 32% of Americans filers pay ZERO TAXES!  I doubt this statistic sits well with the other 68% of files who pay taxes.   I also doubt the percentage of non-tax payers could be that high, but either way, even 15% is a lot.  The good thing for high income earnings is that the highest marginal tax rate has come down by almost half  since the 70′s.  Furthermore, generally if you are paying no taxes, your adjusted gross income is less than $8,350 as a single, or $16,700 as a married couple.   Wouldn’t you rather make more money and pay taxes than make little money and pay nothing?

Given we don’t blog for a living, and several readers asked me this afternoon “whether I think higher taxes lead to Socialism in America, Yes or No only”, my answer and thesis is therefore: “Yes, higher taxes do lead to socialism in America.” Read more…

Back in the last downturn from 2001-2003 I had incredible back pain. I couldn’t sit for very long, and my legs were going numb. Doctors told me I had sciatica, a pinched nerve down my spine that spread to the tips of my toes. Even the process of driving wore me out so I decided to stop driving altogether. One day, my colleague and I were walking towards a restaurant to meet a client and he collapsed. Apparently, he was suffering from the same symptoms I was going through. However, in his case, he had a family to take care of with his newborn child, and he was losing much more than me (“Less You Have The Less You Lose”) in the downturn.

I was the junior guy, and he was the senior guy. When rumors came a long that our compensation was going to be slashed in half, I hoped out loud that I would outperform since I didn’t make much in the first place. Half of nothing is still nothing I reasoned. When my bonus was slashed in half like everybody else, I was not a happy camper and asked my mentor how pitiful was I? I didn’t complain too loudly due to the rounds of layoffs, but I couldn’t help feeling disappointed in myself. He explained to me in a funny way I will never forget. He said, “Sam don’t worry, you don’t make much so it doesn’t matter anyways!” He went on to say, “Look at me. I have a big mortgage, a new family to support, got cut in half too and I make A LOT more than you do!” Gee thanks! At the time, I didn’t really appreciate his brutal honesty, but fast forward 7 years later, I know exactly what he’s talking about. My mentor’s absolute income likely declined 10X my amount, and he was so stressed out his fear and anger manifested itself into debilitating back pain.

About two months after his collapse, he told me he was entirely pain free. The markets still weren’t great, and I remember having to fork out $700 bucks for a brand new Herman Miller Aeron chair because I couldn’t sit. He gave me a copy of “Healing Back Pain,” by Dr. Sarno. There was NO WAY after seeing him crumble to the cement pavement that day, and limping around for weeks after that his back pain was healed. I was skeptical that an easy to read, 180-page paper back book could do wonders and get him to go out golfing with clients again. None of the massages or chiropractic visits did anything to help my pain so what’s a fluff book going to do for me?
Read more…