Financial Samurai

On Wednesday, January 18th large internet companies such as Wikipedia blacked out their sites in protest of the Stop Piracy Act Bill (SOPA).  The nice-sounding bill threatens to destroy creativity and freedom of speech on the Internet by allowing the US Department of Justice and copyright holders authority to attack sites who enable or facilitate copyright infringement.

Imagine Financial Samurai sharing a piece of useful information on how to prevent credit card theft online, and the original creator is from some giant corporation who has a propensity to sue despite linking back and giving credit.  I will probably never bother to share this useful content in fear of having some overly paranoid lawyer sue me for SOPA infringement if this bill passes.  Our society is already litigious enough!

I’m proud of the Internet community for speaking out against SOPA.  The government, despite all its “good intentions” should not be in the business of regulating what we can share and say online.  Sure, there is a limit to what we can and should do, especially if someone is being untruthful, but for the government to get involved with what I can and cannot say on my own site is wrong and I am fiercely against SOPA and more government regulation!

You would think that those who are against big government would also be against big government who discriminates based on income, gender, and sexual preference, but you’d be mistaken.  To many, discrimination is OK, so long as they aren’t being discriminated against.

THE HYPOCRISY OF INCONSISTENCY Read more…

Deru kugi wa utareru is a Japanese proverb that means, “The nail that sticks out gets hammered down.“  In other words, stand out too much and you become a marked person.  I wholeheartedly agree with this proverb, and live by it until it’s time to make a move.

Unless you are an egomaniac who just can’t get enough attention, in almost every scenario it’s good to be the underdog.  You can walk around freely and nobody will ever notice you.  As the underdog, you always have the chance of surprising on the upside as well.  Nobody expects you to do amazing things coming out of community college.  However, if you go to Yale University and spend your parent’s $250,000 to get that degree, you better do something great, or else!

Let’s go through some common scenarios and discuss why it’s great to be the underdog.

ON THE JOB

When you first start off at a new job, there is a tendency to show how knowledgeable and great you are.  Don’t.   It’s important to pay your dues and keep your special opinions to yourself until you have the complete trust of your colleagues.  If you’re a low level employee driving to work in a fancy car, don’t.  Why on earth would your boss ever promote and pay you if you seem to have all the money in the world?  Your colleagues are going to be jealous and push you down.  Instead, drive a beater or take public transportation.

You might know more than your senior colleagues, or at least think you know, but do not try and outshine them.  Instead, use your knowledge to help them shine. Read more…

Happy New Year Everyone!

The Dow closed up 5.5% in 2011 vs. a prediction of up only 5%.  A 50 basis points differential is a critical error that needs to be rectified if I want to get beyond a “B” grade given to me by a reader.  Apologies for my negligence!  At least the direction was correct.

Several people have asked whether I’m involved with the CIA given the prediction of Kim Jung Il’s passing came true.  I can neither confirm, nor deny.  You don’t want to know because it’s for your own safety.  Meanwhile, others asked how I knew some of the bigger blogs in the PF space where all owned by larger companies almost a year before the news broke.  It’s obvious folks.  The writing is different, the original founders no longer interact with their readers, or comment on other sites, and the allure of money is too great to deny.

Making predictions is fun.  More bloggers should make them as it gives readers an idea of whether you are crazy or not!  Who cares if you’re wrong?  What matters is the reasoning, as nobody gets it right all the time.  With clear thoughts come clear decisions.  I encourage everyone to sit down in front of the computer and write down how they think the world will pan out in the next 12 months and plan accordingly.

This year’s predictions are somewhat tame compared to 2011′s predictions.  The reason is because after so many shocks, nothing really surprises anymore.  Furthermore, the more you get right, the less there are to make.  Please enjoy!

PREDICTIONS FOR 2012 Read more…

On January 2, 2011 I came up with the below predictions for 2011.  The idea behind making predictions is to test the mind and exercise some logic.  It’s important that everyone have some sort of opinion on politics, economics, and the markets to make informed decisions.  With predictions, you can then asset allocate, invest, and focus accordingly.

2011 has been a trying year by any measure.  We didn’t go to the depths of despair like we did in 2008, but we really didn’t have any sort of euphoria either.  The year felt as if we were running in place, making little-to-no progress on any front.

Let’s go through the predictions and see what happened shall we?

PREDICTIONS 2011 RECAP Read more…

As we come to the end of the year, now is the time for reflection.  I generally don’t have many regrets because what’s the point?  I’m an optimist who likes to keep moving forward.  In fact, I have no idea what my top misses and hits are for 2011 until I start writing this post.

The economic backdrop has been difficult for many, including myself.  With interest rates so low, it’s very hard to generate relatively safe returns that have any meaning.  Even if you have $100,000 in the bank, you’re only making roughly $2,000 a year in risk free passive income given where the 10-year US Treasury is.

Given all the economic and financial problems today, we must focus on improving our own financial health every single day.  If you find yourself not working towards a brighter economic future, you’re slowly becoming a prisoner to the European Union, the Federal Reserve, President Obama, Congress, Corporations, and anybody more powerful than you who can make or break your future.

Here are some of my misses and hits for 2011.  Hope you can share some of yours as well!

TOP 5 MISSES Read more…

If you’re a regular ‘ol person, the answer is, “There’s more to life than just money.“, and “If you don’t sleep, you’ll die.”  Those are fine answers that are not very insightful.  Since you are a personal finance reader who by virtue is interested in money, let me go a different route.

After coming home from a 14 hour day at 9:30pm due to a client dinner, I got back to work, online work that is.  A conference call with Mumbai was scheduled for 11:30pm and another was scheduled with London at 6:30am the next morning.  Normally, I would be OK with these one-off conference calls, however, this was the 8th consecutive workday in a row I was getting home after 8pm and I was beginning to tire.

I was pissed because the guy who was supposed to call me at 11:30pm didn’t call until midnight.  I hate egregiously late people.  It’s disrespectful.  Meanwhile, my conference call at 6:30am went 30 minutes over and I had to then go to work.  My client wasn’t willing to stay 1 minute past 5pm in London (9am PST) to resolve an issue and pay for my services.  As a result, I didn’t close the deal, which left me annoyed.  He said that I’d have to wait until Monday which was baloney since I bent over backwards to accommodate his schedule.  I will likely never work with him again given how painful the process was.

Why can’t people be on time and do what they are supposed to do?  Why can’t folks just provide a little bit extra?  If everybody did their duties well, the world would be a much better place.  But, you know what?  I’d rather have something going on than nothing.  Things were too quiet for a week during Thanksgiving and I was itching to get back into the fray.

There’s a saying that “Money never sleeps” since money can always be working for you no matter what time of day.  Money will also find itself in the most lucrative of investments and flee from the most horrific.  Since money never sleeps, and you want to make money, why should you sleep either?

MAKE IT COUNT WHEN IT RAINS Read more…

The Mediterranean is chilly in the Fall, ranging from 48-75 degrees Fahrenheit.  Anybody coming from San Francisco will feel right at home.  The cruise ship was packed with a couple thousand explorers.  Not only that, there were three other ships just as large following a similar itinerary.  Pretty good for the tail-end of the season in a supposedly difficult economy.

One of the best ways to travel is via a really large boat.  Every other day you’re waking up to a new city.  There’s never a need to pack and unpack your bags.  Meanwhile, the amount of activities on board is endless.  If you like service, food, travel, and a variety of entertainment, then cruising is for you.

Another positive about cruising is that you really have to time to observe your surroundings.  You’re captured, with nowhere to go, except for perhaps the tennis court on the top deck and the buffet line right below.  When you’ve had your second helping of peach cobbler ala mode and are relaxing in the jacuzzi tub, all you’re doing is contemplating.  In addition to coming up with a mercurial plan of writing full-time from a cruise ship for $12,000 a month, I learned a lot of things that I’d like to share with you.

LESSONS LEARNED AFTER 12 DAYS AT SEA Read more…

There’s a tremendous battle in Congress regarding balancing the budget.  The Democrats want to raise taxes and remove deductions for the highest income earners while the Republicans want to just cut spending without raising taxes on the richest Americans.  There has to be a combination of higher taxes and lower spending in order for there to be an agreement, otherwise the US economy will fall back into a recession since nobody will have any confidence to spend.

Given it’s the holiday season, one of the most perplexing issues is why the President and his party wants to remove charitable deductions for those in the highest two income tax brackets: 33% ($212-$380,000) and 35% ($380,000+).  There’s no doubt that the main reason why people give is to help people, however, the elasticity of giving is not vertical mind you.  There will be incremental negative consequences.

It’s estimated that roughly $300 billion of charitable contributions happen each year, with the large majority of donations coming from the wealthiest citizens.  The top 10% of income earners pay 70% of all taxes, despite earning 46% of all income.  The statistics for contributions are roughly the same for charity.

With the enactment of asymmetric policy against high income earners, some have estimated there will be a decline of roughly 2%, or $6 billion in charitable contributions per year.  2% sounds quite conservative, but regardless of the amount, there will be a decline in charity exactly during a time when charities need the money the most!

The poor have already suffered enough, let’s not make them suffer even more.  With the economy growing at an inadequate pace to soak up the ever increasing number of unemployed, we will see an increase in those falling under the poverty line.  More people needing assistance increases the financial burden on the government and a negative cycle ensues.

What the government needs to do is incentivize people to give even more, not less.  Individuals are much more efficient at identifying causes that need the most help, not big organizations.  I urge everyone to write, call, and speak up for the poor by denouncing the removal of charitable deductions for those who donate the most.

We should fight for the less fortunate always, and not just during the holidays.  Give what you can give to what you believe in.  We never know when we’ll need help, so until that day arrives, we fight for them.

Happy Holidays,

Sam

PS: Having issues containing your shopping beast?  I just wrote a new post on Yakezie.com called, “Controlling Spending The Fun And Easy Way“.  Go check it out!