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

Let’s discuss income taxes. A progressive income tax system is clearly discriminatory.  Why does someone making over $380,000 have to pay not only a higher percentage of their taxes to the government (35% marginal tax rate), but also a much higher absolute amount of taxes vs. someone who makes $80,000 (25% marginal tax rate)?  Are the roads and libraries that much better for the wealthy?  After a certain minimum income standard above poverty, we should be treated equally with a flat tax.

There are people who believe it’s OK to vote on further raising another group’s income taxes, while not having to pay more taxes themselves.  How can we give people and the government this authority?  Imagine if one of the 40-50% of Americans who pays zero federal taxes votes for a President who wants to raise taxes on a group that already pays the most taxes.  The goal is to steal from one group to subsidize his/her own group.  This is shear hypocrisy.  We need to ALL pitch in if we’ve decided tax increases is the only way!  Just like we all need to accept lower services if cuts are to be made.

What about sexism?  We can all agree that sexism is wrong.  Men and women should have equal rights and equal pay for equal work.  So if everybody agrees that sexism is wrong, why aren’t more people up in arms about the government’s desire to tax couples making over $250,000 when they are targeting singles making over $200,000?  Why doesn’t $200,000 + $200,000 = $400,000?  The government expects inequality of one spouse upon marriage, that’s why!  Is one spouse suddenly supposed to go from making $200,000+ to $50,000 just because s/he got married?  This is nuts!

Very few people give a shit about the way government treats gender rights because very few couples make over $250,000.  But I’ll ask you again.  Is discrimination OK if you are not being discriminated against?  The answer is HELL NO.  Discrimination is never OK.

What about gender preference?  Why is the government in the business of regulating who we can and cannot love and what we can and cannot have if we marry?  Gay couples and straight couples should have the same rights.  Does being born gay make you a lesser being?  Does standing under 5 feet 8 inches tall make you a lesser man?  Should you have to pay more taxes just because you were born with red hair?  Of course not!  So why the hell is the government discriminating against gays and lesbians?  Why should a  straight man or woman dictate how a homosexual man or woman should live?  They shouldn’t.

If you studied American history, you will know that discrimination based on sexual preference is akin to racial discrimination in the 50′s and 60′s.  The government shouldn’t be in the business of relationships.

IF YOU ARE OPPOSED TO SOPA, PLEASE ACT CONSISTENTLY

If you are opposed to SOPA, you are against big government getting into your business of telling you what you can say, share, and write about online.  Since you are against big government, you should be against a government who practices discriminatory tax policy against people who already pay more than their percentage of income earned.  If you are are not subject to paying more taxes yourself, you have no right to tell another group of people what they should pay.  Yes, this includes those who say, “They can afford it” and other oblivious statements.  Instead, you should be fighting for equality in our taxation system.

If you are opposed to SOPA, you are against big government telling others who they can and cannot marry.  You are opposed to the government dictating the love of others and imposing sanctions against their rights because of their sexual preference.  Maybe you or your children will one day be targeted by the government, you never know.  Are you going to love your children less for being gay?  No, you will love your children unconditionally.

If you are opposed to SOPA, you are against big government penalizing you because of your sex.  You believe as an independent woman or man, you have the right to continue earning your income even when you get married.  You do no believe it is fair that $200,000 + $200,000 = $250,000 in the government’s eyes because of their sexist ways.

It’s OK to disagree, be it for moral, religious or personal reasons.  Just don’t impose your will on others, since they have a right to their liberties as well.

Alas, I know people will always vote for what’s in their best interests, even if it means screwing other people in the process.  Hence, despite all the noise about being against big government on the internet, we will have bigger government in the near future.  Forget studying hard in school.  Forget working 80 hours a week.  Forget starting a business on the side.  Forget one love and harmony.  Let’s just vote on politicians who will spoon feed us success and hurt others to better our own positions.  It’s much easier that way.  Oh yeah, and tell your representative to vote no on SOPA!

Readers, why do you think there are opponents of SOPA who also vote for big government?  Do people really just conveniently vote for what’s best for themselves?  Is discrimination OK if you aren’t being discriminated against?

Regards,

Sam

Photo: Iguana In Darkness, Yucatan Peninsula, 2010.  Sam.

If you are not a racist or bigot, and believe in equal rights for all please sign up for my RSS Feed or E-mail Feed to keep in touch.  If you are a racist, sexist, bigot who believes in inequality, and conveniently believes in policy that will only benefit yourself at the expense of others, I’d love to hear your reasoning why in the comments.

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.

YOUR WEALTH

If you are making a substantial amount of money, or at least more so than your friends or colleagues, don’t ever tell them how much you make.  Many a solid relationship has been lost over the knowledge of one’s income.  It’s human nature to compare yourself to others, and if you’re making twice as much as your friend, your friend’s resentment will fester.

Instead, it’s important to give the impression that you make less than everyone you know.  You will garner sympathy and nobody will see you as a threat.  People will root for you, and when you offer to buy lunch, they will be extremely touched.  If you’re wealthier than them and don’t offer to pay, they will resent you.

SPORTS

Unless you have obvious physical attributes which can’t be hidden i.e. 7 feet tall, make your opponent feel at ease and downplay your own skills.  Talk about the injuries you’ve sustained as well as your embarrassing losses.

Do not mention that you train 5 times a week, played competitively in college, and can run a 4 minute mile.  Instead, just mention that you’ve been playing for a long enough while to develop some seriously bad habits.  When you’re going out with clients to play golf or tennis, for example, they will truly appreciate your humility and recognize your striking skills for what they are.

RELATIONSHIPS

When you’re going out with a girl, never speak to her about your conquests (women, work, or otherwise).  Obviously stay charismatic and confident, but downplay your success.  She will find out your fantastic attributes eventually, making you more desirable since you didn’t have to brag about them in the first place.

For women, guys don’t want to hear about your conquests either!  We don’t want to hear about how popular your are, or how many Facebook friends you have.  We certainly don’t want to know that your ex-boyfriend was some hunky tycoon, well maybe.  We just want to hear about you and your ambitions and dreams.

ONLINE

Let’s say you run a relatively popular blog that has over 100,000 page views a month.  You will likely be inundated with e-mails and requests from people you don’t know, wanting you to pitch something on your site that you don’t care about or “guest post”.  You’ve reserved the vast majority of your guest posts for friends in the community and you’ll get tired of politely declining random strangers.

By not revealing much about the statistics of your site, you’re able to spend time doing what you want to do and writing what you want to write.  For people who really enjoy writing, this type of streamlining is what it’s all about.  The advertisers will have tools to figure out what your metrics are, so don’t worry about income if you have this type of traffic.

INTELLIGENCE

If you are naturally witty, received straight A’s, and got a perfect SAT score, you are an anomaly.  Given you are a rare breed, you will probably be more frustrated than average when people are slow to pick up things.  Your intelligence will rub the average person the wrong way if you aren’t careful, and people will start thinking you’re arrogant, where in reality, you’re just born smart and can’t help it.

The good thing about being more intelligent than average is that you can dial your intelligence down to the appropriate setting.  It’s harder to do the other way around.  Try and lower knowledge to equal the rest of your peers even though you know more.  For example, if you are an investment professional with a CFA/MBA with 15 years experience and some young gun is preaching to you about investments, just nod and smile.  Of course if they are asking you for advice/help, feel free to help them out as much as possible.

YOU ARE SECRETLY THE “OVERDOG”

You may be stronger, smarter, faster, wealthier, better-looking than average, but your ego is kept in check and you don’t let anybody feel that you know you are in a superior position at the onset.  Eventually they will find out, as they always do.  However, in the meantime, you are busy doing your own thing and keeping humble.

The next time you feel like bragging about your great accomplishments think twice.  Make sure you include others in your successes so as to deflect out-right self promotion.  It’s often better to let your actions speak for you, or better yet, let others speak for you.  When the time is right, make sure you do ask for what you want if you feel you are not being recognized.

Be the “overdog”, but act like the underdog.  You’ll garner more success and feel more free if you do.

Readers, do you think there is an inverse relationship with self-confidence and how well you are doing vs. how often and loud you brag?  What are the times when it’s beneficial to toot your own horn?  What are some cultures, besides the Japanese culture, which encourages humility?   Is there a solution to getting ahead, without bragging if you start from nowhere?

Photo: Sleepy Dog by Sam.

Regards,

Sam

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

1) President Obama wins a second term.  Political pundits and online betting sites are completely clueless and gutless in their 50/50 predictions.  They talk about how the stock market and unemployment needs to do well for Obama to get re-elected.  Nothing matter folks!  Republicans have nobody worthy of beating President.  Barring an Obama illness, nothing really matters.  The economy is improving, unemployment is going lower, and personal balance sheets are strong.  If you know anybody who is delusional enough to think a Republican will win in 2012, bet them as much money as you can afford to lose.  When Obama wins, you’ll get a nice little year-end extra bonus.  If anybody would like to bet me that Obama does not win, I’m open for business!

2) The unemployment rate drops below 8%.  Just like that, the unemployment level breached 9% to 8.6% in the latest reading.  And just like that, at some point in the 2nd half of 2012, unemployment flirts with 8% and then busts on through.  Have you seen the holiday spending figures yet?  En fuego!  Nobody spends money on stuff they don’t need if they don’t have money and aren’t confident about their job prospects.  Simple logic folks.

3) There is no inflation.  Despite tuition, food, and energy costs all going up, the government says we have no inflation, therefore the 10 year yield stays handsomely below 3%.  We have become a nation of blindly following our leaders and letting them get away with whatever they want.  One blogger friend in a previous post highlighted an Obama scandal he’s pissed about, and when I asked him to write about it on his site, he said “he doesn’t talk politics on his blog”!  If that’s not government omnipotence, I don’t know what is!  Our leaders would not be here if we did not believe in them.  Hence, there is no inflation because they say so.

4) The US markets have a banner year.  Everything is relative.  Given the 10-year yields no more than 3%, any return more than triple the 10-year yield is an amazing return.  As of now, we’re talking about a 6% return, however, may I be so bold to forecast a greater than 10% return on the S&P500 in 2012.  That’s right, we’re talking S&P 1,400.  Because the consumer is fine and spending again, corporate earnings continue to grow at a healthy clip.  The S&P 500 dividend yield is equal to the 10-year yield at 2%, and investors start asset allocating back into equities.  Buy underlying shares of gold and oil as I believe they have an even better chance of being up 10% in 2012.  International equities catch a bid as well and outperform the US, especially Brazil and the larger Asian markets.  If I am up 10% in my overall portfolio at any point this year again, I will sell almost all my holdings just like in 2011.

5) Online advertisement spending surges, therefore blogging becomes that much more lucrative.  Some people worry blogging is a unsustainable stream of income.  Clearly, they see the world through dark lenses.  With the continued improvement of the economy, the Olympics in the summer, and the Presidential elections, advertisement spending and industries that rise and fall with who gets elected are a boon to anybody with media property.  There’s no better time than right now to own a blog as more and more advertisement dollars get spent online.  If you have a chance to buy a blog for less than 2X yearly revenue, do so with abandon.  In the same token, there will be richer valuation acquisitions of personal blogs by big corporations due to the increased value of media properties.

6) Five more Members of the Yakezie Network give it a go as full-time bloggers leading to a flood of followers.  The longer you have your blog, the more valuable it becomes.  With one more year under each Member’s belt, coupled with the increase in advertisement spending all year, each Member sees their income rise by another 30-50% on average.  Earning $50,000+ a year through their sites becomes common place, as Members know how to leverage the Yakezie Network and brand to their own advantage.  We’ve launched our Yakezie Blogger Services for those interested in starting a blog as well.  All are great people who provide competitive pricing and do solid work.  The problem with these financial success stories is that many more will fail because they think it’s so easy, enriching the “how to make money online” marketers even more.

7) The Yakezie Network closes its doors to new Members.  This isn’t exactly a fair prediction, since I technically have full control over the outcome.  However, the whole reason why I started the Yakezie Network was because I wanted to build great friendships online who all enjoy helping each other out.  It’s more rewarding to have a tighter group of quality relationships who believe in the greater good.  Some Challengers have never left a comment here or connected over e-mail, Twitter, or Google+, leaving me no choice but to deny admission.  There’s also been some unnecessary drama which is counterproductive.  If I go the other route, I will go big and figure out a way to also keep the small community feel.

8) Social Media is one of the worst performing sectors. You’ve already made a triple in Twitter in 2011, now it’s time to cash out. The amount of competition in every single space is obliterating returns quicker than a Congressman’s mistweet. Social Media fatigue sets in, and there’s no more desire to “check-in” at your favorite bar due to stalkers. You resist tweeting your delicious meal due to an unknown follower compiling a compendium of what you eat. And you no longer update your Facebook page due to story after story about someone not getting a job thanks to what they posted. Privacy becomes King.  The company who maximizes privacy insurance, or enables privacy insurance wins big.

9) US housing is one of the best performing investment classes. After five years of softness and pent up demand, US housing finds a strong footing. The US homebuyer shakes free from paralysis, and the international homebuyer takes the plunge given how incredibly more expensive housing is in Moscow, London, Hong Kong, Singapore, Beijing, Shanghai, Singapore, and even Canada now. A $25,000 rental income stream used to be valued at $500,000 on a cap rate of 5%. Now it’s worth $833,000 based on 3%, but prices have barely moved, yet.  People do the math and wisen up.

10) Mobile technology becomes the place to invest and work.  The market for mobile software surges to some $20 billion dollars in 2012 from just $4 billion in 2011.  Companies can’t find mobile designers and software engineers fast enough as there is no doubt mobile computing is here to dominate.  Starting salaries for 24 year old graduates with 2 years of experience easily surpasses $100,000 a year, which begs the question: If you want a job, and want to get paid, why wouldn’t you just get good grades and learn some programming skills?  Venture capital pours into the mobile space like it did in the social media space and new mega fortunes are made.  Google, Facebook, and Twitter is so 2011!

BONUS: You will find love, fortune, and a flatter stomach.  2012 is a year to stop making excuses as to why you can’t find a suitable companion, why you still don’t have a road-map to financial freedom, and why you still aren’t as fit as you like.  If you’ve seen the show The Biggest Loser, you know losing weight can be done if you want it.  If you observe carefully, even the least attractive and poorest of people find great love.  Meanwhile, people are getting rich every single day.  I strongly believe that if you continue to read Financial Samurai and Yakezie all year, you will read informative articles that will help you get there.  Writing about relationships, career, and fitness are favorite topics here.

TO A BETTER TOMORROW

I hope you enjoyed reading my predictions for 2012.  Of course you should always do your own due diligence before making any investment decisions.  I’m an optimist by nature, but I am one of the most focused realists you will find.  Please share some of your thoughts and predictions as well!

PS There are several other very controversial and seemingly improbably predictions that will come true.  But, I’ve decided to keep them under wraps after some deep discussions with The Committee.  Warning: do not attempt to find The Committee.

Best,

Sam

Photo: Church in Santorini, 2011. Sam.

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

BLOGOSPHERE / INTERNET

* Social giving networks such as Yakezie.com start popping up all over the web.  People want to be a part of something bigger that also does good.  Sometimes it’s hard to feel like your donations make a difference.  Through a social giving network such as Yakezie.com, your combined donations become big donations which go directly to the recipients, rather than through various levels of bureaucracy where the end recipient only gets a fraction of the original amount.  Yakezie.com is unique because you can participate in the process by commenting, voting, and creating campaigns for your favorite applicants.  Furthermore, you will join a thriving network that will help you jump-start your own goals.  I hope other blogging networks surpass Yakezie.com so that even more deserving recipients can benefit.

Reflection: I can’t think of any collaborative social giving networks that have sprouted up.  In fact, Love Drop just gave its last donation recently, partly because one of the co-founders found a great job in Southern California, and partly because giving takes a lot of time and effort!  For 2012, we’ll be launching the Yakezie Writing Contest in 2Q and 4Q, and leave 1Q and 3Q for new Yakezie Members and their Member Posts.

* The lifestyle design movement takes a breather as the economic recovery allows more people back into the work force. Not only are people let back in, people get more opportunities to choose what they really want to do and are happier.  Remember, nobody quits a job they love.  It’s hard making a decent living as a lifestyler while saving for retirement and supporting a family, hence many who hopped on during the downturn give up.  Ironically, thanks to the recovery, advertisement revenue in the personal finance space grows, allowing for more personal finance bloggers to go full-time.

Reflection: I’ve seen numerous lifestyle designers give up and *gulp* get a job given earning a living from freelancing and blogging isn’t as easy as it seems.  It’s sad to see Jacob from Early Retirement Extreme retire from retirement and get a job as a quant analyst.  That said, it’s hard to live comfortably off only $8,000 a year, even if you do have a working spouse.  I’m glad Jacob is putting his PhD to good use!  Good luck mate!  Just read that Erica from entrepreneur site Erica.biz also found a job in Texas, partly so she can get a W2 to qualify for a mortgage.  Congrats!  There are many more examples from much smaller sites.

* MozRank (see websitegrader.com) becomes a standard ranking system for the best blogs on the web as Google Pagerank no longer bothers to update or provide transparency. Google’s stock loses investors money in 2011 as it becomes too arrogant and too big for its own good.  Google cannot stem mass departures to the likes of Facebook and Twitter.  The brightest graduates no longer want to work for a stodgy corporation where they are surrounded by uninspired millionaires.

Reflection: Every single advertiser I know recognizes mozRank as a legitamate and more efficient ranking system than Google Pagerank.  I’d like to think it’s part of the movement the Yakezie Network created earlier this year to publicize a PR alternative given PR hadn’t updated in 10 months at the time.

* More big personal finance blogs lose their voice and become unrecognizable because the main blogger no longer writes a majority of the content.  The blog loses its personal feel and turns into a newspaper which loses the most ardent fans, but gains even more new subscribers.  It’s a sad trend for original fans, but one that is done out of business.  The trickiest situation is for those PF bloggers who started off years ago in debt and with a modest income and are now making way more than ever before.  How does the blogger continue to write about debt and saving money when s/he doesn’t need to anymore?  How does the blogger not look like an impostor to his or her readers who may still be struggling financially?  The solution is hiring staff writers and focusing on non-financial goals such health.

Reflection: If you haven’t figured it out by now, a lot of the largest personal finance blogs are owned by larger, publicly traded companies like Quinstreet.  I congratulate all bloggers who’ve sold their sites.  I just hope that some of the blogs continue to maintain the voice we’ve learned to know and love.  How do you talk about frugality and clipping coupons as legitimately now that you’re a multi-millionaire, but your readers are still just chugging along?  You don’t, and hire staff writers.  It’s hard to keep up the momentum after you’ve cashed out, so I understand if not.

* There will be six WordPress updates which will do absolutely nothing for your blog. In fact, one update will certainly mess up at least one of your plug-ins and cause you a big headache.  You’ll also have some uncontrollable urge to continue to tweak your blog’s design until it also breaks.

Reflection: I think there were more than six WP updates as we’re now on version 3.3.  Supposedly each update has served to make WP more efficient and safe.  Thankfully, FS or Yakezie.com has not crashed yet due to an update.

* There’s a disproportionate increase in blogs that blog about blogging and how to make money blogging. Again, the economic recovery leads to more advertisement revenue opportunity and the blogging world continues to grow.  Although, after the 1,000th post or eBook on how to make money blogging, the market gets over-saturated.  I can save you some time and money.  Just get to know supportive people and write good content.

Reflection: There are tons of blogs that blog about blogging and how to make money blogging.  Yakezie.com has plenty of articles on blogging given we are a network of personal finance and lifestyle bloggers.  We haven’t sold a Yakezie blogging product on blogging yet, but maybe we will.  I’d love to use the proceeds to donate to charity or support the Yakezie Writing Contest.

* Video blogging backfires. We’re used to seeing professional actors, announcers, and newscasters perform on TV.  Hence, unless we are incredibly attractive and talented, the audience will find the video too boring, and too slow and switch off.  We’d like to think we are sexy good presenters, but the reality of it is, we aren’t.  But then again, if you are, you are going to milk your looks as much as possible in your Twitter, Facebook, and blog profiles and it works!  Focus on podcasts and work on your speaking voice.

Reflection: Video blogging has not taken off because frankly, people have realized they aren’t that good looking, and aren’t that eloquent.  It’s just a fact of life that only about 5% of the population is attractive, and that 5% is probably not blogging for a living or a hobby.  The bloggers who do video blogging probably think they are more handsome or prettier than they really are.  Power to them.

* Twitter’s valuation doubles from $3 billion to $6 billion. Despite Twitter not being profitable, internet fever is back.  Facebook’s valuation grows from $45 billion to $60 billion and then decides to go public.  Unfortunately for the investing public, they are getting very late into the game and are buying at internet bubble valuations that rely only on the greater fool theory.  Pandora is one of the best internet companies to either go public or get acquired in 2011.

Reflection: Prince Alwaleed’s $300 million investment in Twitter for a 3% stake now values Twitter at $9-10 billion.  Pandora and Zynga actually IPOed, and some say Facebook is now valued at $100 billion.  You still hesitant on coming to the SF Bay Area?  Money is raining from the sky!

* Increased collaboration between corporate blogs and personal bloggers. As blogging goes mainstream, corporations realize the power of individual blogs and the writers behind them.  As a result, more personal bloggers get recruited to do lucrative freelance work for bigger websites.  Corporations get that they need to introduce a personal element to their sites with individual authority figures to add color and credence.  The use of Twitter overshadows Facebook in terms of spreading corporate messages.  As a result, those who not only have a blog, but a relatively large Twitter following will get the most amount of opportunities.

Reflection: I’ve had numerous contact with corporate blogs and corporations in general who are trying to figure out how to collaborate with personal bloggers and the Yakezie Network.  It’s still something to figure out given the rigidity of corporations on what they can say, and the freedom of what personal bloggers can say.  What I am pleased with is the increased business collaboration with the Yakezie Network on larger PR, SEO, and media companies. 

ECONOMY & MARKETS

* US unemployment drops to under 8.8% from 9.8% currently as cash-rich corporations with severely stretched employees start hiring again. There is a massive war for talent in the 1st half of the year as CEOs are overly optimistic about the trajectory of the recovery.  All I see is 2.5-3% GDP for the year.  That said, unemployment will surprise on the upside for the better.  The government will continue to roll out incentives to encourage corporations and small businesses to hire.

Reflection: US unemployment’s latest reading is 8.6%.  Things are humming along fine.

* Gold prices rise by 10% to the $1,400 range as the economy remains sluggish and monetary stimulus continues.  Gold viable long term investment so long as our government and our Federal Reserve keeps printing money.  Real assets are what should continue to do well as everything is relative.

Refection: Gold prices rise by more than 25% as the dollar continues to remain weak, and the global markets remain volatile.

* The Dow Jones corrects by 500 points at some point in the year, but still ends the year up a lousy 5% to close at 12,180. Besides the correction in the Dow, 2011 will be relatively uneventful floating evenly between negative and positive territory.

Reflection: The Dow Jones did correct by 500 points this summer and is up about 5%.  Bingo.

* Inflation remains very tame and the 10-year yield does not breach 4% as a result. The economic recovery isn’t strong enough to narrow the output gap efficiently to cause inflation to breach 3.5%.  If the 10-year yield gets to 4%, investors will pile into Treasuries in a hurry and drive rates back down.  Let cheap money reign all year.

Reflection: Inflation is non-existent and the 10-year yield drops to 1.75%! 

* Bank of America becomes the most assailed bank in the world thanks to information released by Wikileaks. It’s unfortunate because there are many good people at the organization, but the e-mails that come out of BoA via Wikileaks outrage the public so much that money pours out.  Perhaps it’s just natural payback when they stood me up for a mortgage refinance and failed to apologize in 2010 so I took my business elsewhere.

Reflection: There is no bank more hated on than BoA in 2011.  BoA has had a PR nightmare and even assailed bloggers such as Henry Blodget for dipping below $7.  It’s now hovering around $5 a share.  There are some great posts all over the web discussing how bad BoA’s service is.  Why do you treat me so bad Bank of America?

POLITICS & WORLD AFFAIRS

* There is a big scandal in the Obama administration that becomes a national outcry.  Republicans capitalize on the scandal and beat their chests loudly by taking credit for the economic recovery, even though they just came to power in the House and haven’t done much of anything at all.  Pundits start predicting a 2012 Republican President, but I doubt that will happen since unemployment continues to improve, and President Obama should get all the credit.

Reflection: President Obama is as clean as a whistle, except for the fact that he’s still doing nothing about Congressional insider trading and not showing strong leadership to get bills passed to help the American people!

* Nobody cares about the European debt crisis anymore as Latin America has a blow up. For all the political jockeying Germany has done about threatening to pull out of the Euro if their neighbors don’t implement austerity measures, Germany ends up bailing everybody out and staying.  Although Europe stops being a menace to world financial markets, global investors reduce their holdings in European equities and reallocate to Emerging Markets where balance sheets are strong and growth is much faster.

Reflection: Wrong like Donkey Kong.  The European Crisis has paralyzed the world for at least half a year.  I’m getting sick and tired of it, and so are others.  Expect the EU Crisis to be on the backburner for 2012.

* The world loses both Fidel Castro and Kim Jong-Il. Neither Cuba or North Korea benefit from more foreign aid and improved trade relations because their offsprings continue to follow the ways of their fathers.

Reflection: It is unknown whether Fidel is still alive, given the prominence of his brother, and Fidel’s dark silence.  Dear Leader is no longer around, and his son Kim Jung Un has assumed power as of December, 2011.

So how’d I do?  Any of your predictions go horrible wrong or terrifically right?  Would you like me to make more predictions for 2012, or keep them to myself? 

Photo: Windmills of Mykonos, 2011.  Sam.

Regards,

Sam – “Slicing Through Money’s Mysteries”

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

* Career. Not seriously considering a new job opportunity at the beginning of the year that would have paid 60-80% more.  There’s a lot of sacrifice and risk involved in moving, but the monetary payout might have been worth it given how bad compensation will be in 2011.  If only doing was as easy as saying.

* Health. Not resting my body more.  I’ve had tennis elbow for the past 11 months and it won’t go away because I keep on playing.  I fear that if I keep going, I will permanently damage my right arm.  Because I try and compensate for my elbow, my shoulder is now strained.  I need to take a break.  Hurry up and rain everyday already!

* Online. Not being more aggressive.  I’ve probably left six figures on the table because I’m not focusing hard enough on instituting a business plan and proactively asking for more business.  Instead, I’ve been quite passive about monetization, focusing on my writing and making sure the Yakezie Network is moving in the right direction.  Part of the reason why I’ve been so passive is because I hate what money does to people.  At some point, I need to focus a little bit more on income.

* Friends. Not spending more time with old friends.  When I quit one tennis club to join another tennis club, I stopped playing tennis and hanging around with about 5 guys I normally hang around with.  I spent so much time at the new club that I didn’t develop the old friendships further and I miss those guys.  Time to start e-mailing them to play some doubles again.  I also haven’t made as much effort as I would like getting to know new people.  Too much blogging perhaps.  Maintaining friendships take effort!

* Family. Not being more patient with my mother.  Conversations with my mother are generally her speaking 80% of the time, so I have to be very patient and choose my words carefully due to my small window.  I went to visit my parents for a third time this summer and I inadvertently made my mom cry.  She was going through a lot of stress with the house and her mother’s illness, and I wasn’t sensitive enough to know or understand.  I didn’t realize how bad grandma’s illness was until my mother bought a last minute plane ticket for the next week.  Sorry mom.  Next time we see each other I’ll give you a big hug and take you out for your favorite vegetarian meal!

TOP 5 WINS

* Travel.  The Mediterranean cruise was fantastic, seeing new cities such as Santorini, Mykonos, Delos, Kortula, Venice, Delos, Olympia and more.  I also visited the fastest growing industrial city in China for a week.  Boy was that place humming, but oh so polluted!  I got incredible food poisoning for 2 days and it was 98 degrees every day.  Good life experience that makes me appreciate western comforts and toilets!

* Financial Safety. Developed enough income online to quit my day job and live a modest lifestyle.  If you would have told me I could quit my day job after a couple of years blogging, I’d say you were crazy.  It’s very gratifying to know hard work and consistency pays off.  That said, for some reason I’m not excited to reach this goal, probably because I enjoy my day job.  Working without having to work is that much more fun!  It’s just like going to business school part-time.  When you go to school for the sake of learning, and not getting good grades, it becomes that much more rewarding.

* Stock Market. Asset allocated the 401K and stock portfolios correctly.  Selling most of my equities at the end of April and going long a majority of my portfolio in November helped bring overall performance +14% at the time of this post vs. the S&P 500 0%.  The amount of money in the portfolio is significant enough where I will feel the pain of losing 10%.  I can’t pick stocks for crap, therefore I don’t try anymore.  I’m focused on capital preservation, asset allocation, and low-risk growth.

* New Friendships.  Made new friends off-line and on-line.  I consider everyone in the Yakezie Network and other bloggers outside of the network to be friends.  We welcomed the Yakezie Gamma Class in the summer, and we will welcome a new class in the early part of 2012.  The Yakezie Network has been an incredible resource of help, fun, and camaraderie.  Off-line, I made at least four new good relationships at the tennis club I joined back in January 2011 and a couple more non-tennis related friends.

* Family.  Spent good quality time with loved ones.  I set a goal to see my parents 3-4 times this year vs. just seeing them only once or twice a year on average.  I was able to see them three times this year and was about to do a 4th, but a last minute ticket was $1,400 from $600 usually so I decided Skype was perhaps a little more reasonable..  I really feel that time is accelerating and I want to spend as much time with family as possible.

NO BIG SURPRISES

2011 saw no big surprises on the upside or downside.  In fact, 2011 was pretty average.  Every year for the past five years I’ve been tempted with new job opportunities which I’ve always turned down.  Traveling to a new city or country for vacation has been an accomplishment every year for the past 10 years.  Meanwhile tennis and blogging is now an integral part of my life for 3 years now.

I’m coming to grips that I’m getting older and my hair is thinning.  There’s no gray yet, but I know they’re waiting to sprout when I least expect.  Crows haven’t walked around my eyes yet either, although I sense their presence.  As I come to the end of this article I realize that getting old and having a body that no longer stays healthy are some of my biggest worries!  It’s sad to physically fade away so quickly.  We must make do with what we have for as long as possible!

What are your hits and misses for 2011?

If you’re curious, you can read my Goals And Resolutions for 2011.  I specifically failed in my guitar and tennis endeavors, while I didn’t take more financial risk than I’m accustomed to.

Photo: Sailing Away From Santorini, 2011, Sam.

Regards,

Sam

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

Everything ebbs and flows.  You can be on “the bench” for months, and suddenly you’re staffed in a faraway place working 12 hour days for 6 months straight.  This is what happens to consultants from firms like Accenture and IBM Consulting.  It’s important to understand business cycles such as the beginning of the month when new budgets are created and at the end of the year when pressure is on to sell.

It’s during robust periods and peak seasons where you’ve got to work full throttle to generate business.  In many businesses, the peak season is what makes or breaks the year.  The hotel leisure business is a great example.  Given my site is still in the growth phase, it always seems like there’s something to do.  This is a problem for the long run if I am to do everything myself.

It would be great if we could all balance our workloads out more evenly.  It’s part of the reason why I’d LOVE for everybody to work just a couple hours on the weekends as well.  That way, there’s not this massive rush on Monday and cessation on Friday.  Instead, we can spread things out more evenly, and lead more balanced lifestyles!  The best time to work to maximize your profits and boost your career is when nobody else is working!

ONE DAY BUT NOT TODAY

The music will stop eventually, therefore I try and seize the moment as much as possible.  I will never forget starting with nothing, therefore I will never take any opportunities for granted.  I will give it my all and schedule these crazy midnight and crack of dawn conference calls because at the very least, I know my clients don’t work weekends, and I’ll have these two days to unwind once done.

Some of you may think I have trouble saying no, but I say no all the time and so should you.  There are literally too many things to do once you build your momentum.  You become a rolling magnet that gathers up more and more little magnets until you turn into this giant rolling ball of attraction.  You’ve got to pick and choose the most interesting, helpful, and lucrative projects.  For those things you can’t handle, know that there is someone else who would probably find value.  Refer your friends to your clients!  It’s a way of paying things forward.

There won’t be failure due to lack of effort.  I encourage you to hold the same belief.  Money, success, love are all there waiting for you to grab it.  Do it for yourself and have no regrets.

Readers, what do you do when things start getting crazy busy?  What are some bend over backwards things you’ve done for your clients?  How do you handle the stress, and what are the things you do to get everything done?

Photo: Sleepy Farm Cat at Kuoloa Ranch, Hawaii by Sam.

For more of my writing, go to Yakezie.com and check out my thoughts on getting passed over and not paid, and what to do.

Best,

Sam

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

• Rules and old habits die hard. During formal night, we sat next to a well-dressed couple in their late 60’s. They were from Indiana and it was clear Diana wore the pants. Diana’s husband Bob wanted to eat the final morsels of meat on his lamb chops by hand like I did, instead of by silverware.  Diana wouldn’t let him, so he methodically and obediently listened.  Fifteen minutes after I had already finished my lamb chops, Bob finally exhaled a sigh of relief. It was as if he burned more calories trying to eat than he consumed!  He still looked hungry.

• There is no substitute for good service. When we checked into our room, we were greeted by Deden, our porter assigned to our particular wing of the ship. He told us that if we needed anything, to not hesitate and give him a ring. He brought us fresh fruits and a copy of the latest New York Times and Financial Times every morning without fail. Deden also even helped look for our missing Croatian Kuna that was mistakenly left at home. Deden was cheerful every single day. He showed me that it doesn’t matter what we do, so long as we do it with grace and good attitude.

• Waiting until we are old is a mistake. Over 70% of the passengers were over 60 years old. Several were in wheelchairs and many had walking canes that also served as expandable stools. At each city, we spent 5-7 hours walking. We were exhausted, but we were constantly smiling given there was something different to see at each turn of the corner.  I kept thinking to myself how I’ll be able to walk around so sprightly when I’m 65. My knees won’t be able to go more than 100 steps! Don’t wait until you are old to see the world. You might not be able to do it.

• Where are all the younger folks, protesting? I often wondered where the rest of the demographics wandered. On the island of Kortula, Croatia, we met three such people in their mid 20s. A teacher, a writer, and a marketer. Together, they were vacationing from London, just a short 2.5 hour flight away. Their friend had a house in the hills overlooking the ocean and had never considered going on a cruise. They had no idea about all the restaurants, shows, activities, and educational classes one could take.  Now they know and are thinking of planning a cruise next year.

• Going on strike is counter-productive. Our ship of 2,000 couldn’t dock in the port near Athens because the dockworkers decided to go on strike. Each of us would have spent on average $50, which would amount to $100,000 injected into the local economy. Multiply $100,000 by the five other ships who wanted to come visit, and that’s $600,000 a day. Given the strike lasted 2 weeks, that’s $8.4 million dollars in lost revenue for the Greek who depend on tourism money to survive. The protesters are only hurting themselves as the money is diverted to another city of workers who are working hard for their money.

• The older we get, the more we are aware of our mortality. I started talking to an elderly lady about politics in the live jazz lounge one evening. She said, “I’ll be gone in 10 years, so I don’t care so much about what happens to me. But, I fear for my children and the debt our government has put us in.” To be able to come to grips with the reality that one might not be around in 10 years is both courageous and frightening. I know I will die one day, but I never assume that it will be within 10 years. It’s all fine and dandy to say that we should live today as if it were our last, knowing full well that it likely wont be since we’re only in our 20s, 30s, and 40s. It’s another thing to say those same words in your 70s.

• Having money buys you freedom and happiness. A 12 day cruise costs around $2,000 for higher floor room, in the center of the ship with a private balcony per person. Given that you’ll likely go with someone, let’s double that expense to $4,000 and add on another $2,000 for tours and special events. Double the total again, a couple could live an adventurous life with one child on about $12,000 a month or $144,000 a year after tax.  Two people each making $5,000-$10,000 a month in passive and active online income is very feasible if you spend 20-30 years trying to get there.  Some do it in way less time.   Take it from someone who just 2.5 years ago had $0 online income.

• Going on vacation isn’t a license to be stupid with your money or your health. I can put on 10 pounds, in just one week if I’m not careful. Given this was a two week cruise, I was being extra mindful of what I ate until someone told me, “You’re on vacation, just go crazy!” Of course the person telling me was super skinny. Easy for you to say, I thought to myself. The same thing goes with money. I was at the poker table when a husband whipped out two $100 bills and gave them to his wife. “We’re on vacation, so go have fun playing craps. But remember, only on vacation!” It makes no sense to go way outside your normal spending and eating habits due to the repercussions when you return. Someone has to pay off the bills and go spend 100 extra hours at the gym. It’s not worth going too far outside the norm.

• Only fit people work out at a cruise gym. There aren’t a lot of healthy looking people on a cruise. Age + an abundance of all you can eat food does that to waistlines. Yet, it’s only the fit that I see at the gym. I sat down for a “Secrets to a Flatter Stomach” seminar, conducted by this beefy South African fella. He reminded us to avoid processed foods, caffeine, coffee, tea, desserts, sodas, alcohol, and basically anything that puts the liver into overdrive. We should eat anything we can “Pick, Skin, or Pull”, letting our liver process that fat into sugar, and allow our metabolism to speed up and our muscles to eat. Eat more seaweed he told us. It’s the best alkaline base food one can consume to counteract all the acid and toxins we eat.

• Some things are worth spending on. There were two things I spent money on which I would probably cringe spending on if I were back at home. The first thing is $100 for 250 minutes worth of “high-speed” satellite internet access. That comes out to $0.40 a minute, which equals $25 an hour. I spent 45 minutes on average a day for 12 days = 6 hours of use for $225. I felt it was important to somewhat stay in touch with the community (bet you couldn’t tell I was gone!). The second thing I splurged on was the 12 day spa access for two for $295. The spa contains an indoor heated pool, massage jets, multiple whirlpools, steam room, sauna room, heated beds, all the fruit and juices you can drink, and a private place to just relax. There’s nothing better than getting into a hot tub after walking for 7 hours!

• Everybody works hard. I spoke to our waitress Angely from Indonesia and she says she puts in 11 hour days. I asked her how many days a week she works, and she said, “From Monday to Monday, every day sir!” Wow, hardcore! She responded it’s a lot of hard work, but she was also glad to be able to send money back home to her family in Jakarta. She gets to vacation two months a year, and she’s not complaining.  The cruise director said he works 9-12 hour days depending on if the ship is docked or not and takes no days off either.  In fact, nobody gets a day off, just time in between shifts to unwind.  Yes, I do not believe there are people who work 40 hours a week or less and complain why they can’t get a head. Thank you Angely, Deden, John, and the entire staff for reminding us to up our game and take nothing for granted!

SPEND YOUR MONEY, ENJOY YOUR LIFE

There’s no point making money if all you’re going to do is hoard it. All those long hours working on your company or at your job should be balanced with pleasure. You don’t want to be 70 years old with all your accumulated wealth and look back and say that you should have spent more time enjoying life. You might have bad knees and be unable to hike up the hills of Mykonos. You might get glaucoma and no longer be able to see the canals of Venice.

You have a right to enjoy your life as long as you aren’t hurting babies and welching on your debt. Don’t let anybody tell you otherwise. There will always be people who try and make you feel guilty about your success. They just don’t know what it took for you to get there. Until the next vacation!

Photo: St. Mark’s Square, Venice from the room’s veranda. Sam.
Photo 2: Santorini Crater, Sam.

Regards,

Sam

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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!