Thursday, December 31, 2009

Three Types of Interpersonal Power

WASHINGTON - JANUARY 20:  In this handout phot...Image by Getty Images via Daylife
Dr. Blaine Lee in his book "The Power Principle", have identified 3 types of interpersonal power, i.e. how does one person gain influence over another. This has tremendous implications for everybody, not just managers, but also investors, or even people in general. The three types of power are:

* Coercive power: you will do so because... I am telling you so! (and if you don't, something bad may happen to you or others!)

* Utility power: you will do so because... I can do something for you! (i.e. quid pro quo, backscratching, and so on)

* Principle-based power: you will do so because... You believe in what I believe (or stand for, or hope to achieve)

The powers can be used for good, or evil. That is not the point tough. Let us analyze each type of interpersonal power, and see how each one works, and how you can tap them.

Monday, December 28, 2009

Three Types of Work in Getting It Done, or GTD

David Allen, author of "Getting Things Done", or GTD, is one of the best known "productivity gurus" known today. GTD itself is a well-thought-out system that deals with every aspect of work, from optimizing the process to optimizing output, this got it all.

So how can GTD help you get rich? Let's analyze some aspects of GTD. Please note that this is NOT an attempt to teach GTD, but rather how GTD can be applied here, and everywhere.

GTD defines three types of work:

* work that has been defined (in other words, a "to do" list)
* unplanned work (i.e. sudden interruptions, minor emergencies, etc.)
* defining work (in other words, figure out what must be done)

Depending on your responsibilities, the mix will be different. If you're an employee, you'll have mostly defined work. If you have more responsibility, like supervisor or manager, you'll do more defining work for self and others.

And this "work" is anything that needs to be "worked on", not just "job" work, but work in general. To buy wife flowers is work. To get car's oil changed is work. To pick up daughter after sports is still work.

The problem with the three types of work is that the mind tends to AVOID "defining work". We often consider that sort of time as "wasteful" "not doing something", even though it's actually often the MOST productive time possible, but we'll get to that later.

Thursday, December 24, 2009

Investment lessons from Warren Buffet and Bill Gates

Public Broadcasting ServicePBS Logo via Wikipedia
PBS played "Buffet and Gates goes back to school" the other day, and there are a lot of good lessons for investors. These are not in particular order, and are NOT the exact words uttered, but the meaning is accurate.

Gates: Warren [Buffet] taught me this, "Be good at saying no."
Buffet: Save "yes" for important stuff.

Investment-wise: Buffet had said it before, you don't need to invest on every "good" stock that comes by. There is no need to "swing" at every pitch. They meant time management, but it works for investment as well.

Monday, December 21, 2009

Public Speaking Confidence

More realistic Image via Wikipedia
Most people communicate just fine, yet most are extremely uncomfortable speaking in front of crowds. This is usually caused by two problems: presentation, and confidence. There's a third cause, topic, but usually you don't get to choose that. Howeve,r you can often make up for a boring topic by having a good presentation, and a lot of confidence.

Presentation includes a lot of things, from having the right "hook", to a bit of theatrics, humor, involving the audience, and so on. Most public speaking courses focus on presentation techniques, and you can pick up plenty of books on that topic, such as "scan the room in concentric patterns, slowly, from outside in", "present the proper body language", and so on. While they are important, they are practical skills. In terms of the military, presentation techniques are tactics: what you do DURING the battle. You also need to have the proper strategy: what you do BEFORE the battle. That's where confidence comes in.

Thursday, December 17, 2009

Peter Lynch's 6 Stock Archetypes

View of Wall Street, Manhattan.Image via Wikipedia
Peter Lynch classifies all stocks into roughly 6 categories: slow growers, stalwarts (mid-growers), fast growers, cyclicals, asset plays, and turnarounds. Later, he also gave some human equivalents.

Why human equivalents? Human beings are a lot like businesses. Businesses, like human beings, even if they haven't earned anything, have the POTENTIAL to earn. A 12-year old child has more potential to earn (mow lawn, lemonade stand, etc.) than probably some 80 year old in a nursing home, even though the 12-yr old has no history of earning, while the 80-year old have a very long record. Add up the assets, and the liabilities, and you end up with book value (or in human terms, "net worth").


Slow Growers

Slow growers are extremely stable, like utilities are now (they were fast-growers back in the 1960's). If it pays a generous and regular dividend, it's probably a slow grower. Figure, 2-5% growth per year, right about rate of inflation. [In general, companies pay dividend because the managers can't think of a way to expand their business using their profits, but it doesn't want to buy back its own stocks either, so they give the profit back to the stockholders as dividends to enhance the company prestige and goodwill instead.]

Monday, December 14, 2009

Three Types of Market Leadership

Reading the book "The Discipline of Market Leaders" by Michael Treacy and Fred Wiersema is very interesting... it defines the three ways to achieve market leadership: operational excellence, product leadership, or customer intimacy. Each goes after a different way of perceiving "value" by the customers.

Operational excellence

A market leader of operational excellence has a business that is run extremely efficiently, all in operation and execution of business functions. They often promise lowest prices and/or hassle-free service. They don't innovate, and they don't offer one-on-one customer service. What you get instead is a very smoothly run operation with low operating costs, which enables them to lower prices while consistently delivery quality in either products or service.

One example is PriceCostco. They stock less than 5000 items, compared to over 50000 items in a typical supermarket, but they are as large or LARGER than most supermarkets. You don't go there for the selection; they already selected the "best stuff" for you, and they say on on their newsletters / magazines. The lack of selection to them is an asset, not a liability. They buy in bulk of the best sellers to lower the prices, and pass on the savings to you. They move a LOT of merchandise, and the result shows.

Friday, December 11, 2009

Achieving Great Work, not just Good Work

Productivity Magazine (http://www.productivitymagazine.com) has an article about Michael Bungay Stanier, one of Canada's best productivity coaches, where he discusses the concept of bad work, good work, and great work.

Bad work is pointless work, work you need to avoid, no politeness needed. If you have read the cartoon strip Dilbert (tm), he's almost always doing "bad work". Organizations tend to assign bad work. Actual examples would be having you fill out detailed time logs and expense reports that nobody ever reads.

Good work is familar and useful work you do and do well. You have the training, you have the education, and you enjoy the good work. This is good, but it's just that, "good". You do the normal work that you do well.

Monday, December 7, 2009

More than just IQ

Cover of
Everybody knows what IQ is, but that's just one number. People are good at different things, so why is it that we only ever hear about IQ?

Howard Gardner, in his book "Frames of Mind: The Theory of Multiple Intelligences", wrote that there are actually SEVEN different intelligences, and who'd be good in them

* linguistic -- linguists, polygolots, writers, speech-writers, etc.
* Logical-mathematical -- mathematicians, theoretical physicists, philosophers
* musical -- musicians and singers
* bodily-kinesthetic -- athletes
* spatial -- pilots, architects, team-sports athletes etc.
* interpresonal -- salespeople, teachers, etc.
* intra-personal -- this is an exception: this is more about self-worth and self-image. If you have high intra-personal intelligence, you're described as confident, sure of oneself

Mr. Kiyosaki mentioned him in multiple books, esp. "Increase your financial IQ".

Friday, December 4, 2009

The Gold Bubble

The ratio of the Dow Jones Industrial Average ...Image via Wikipedia
As gold prices rises to unprecedented levels, one does start to wonder about how it actually rates as an investment vehicle, and what are its long and short term trends. Just as Dec 5,2009's reversal shows, gold has very few reasons to keep going up.

US public weren't allowed to hold gold as result of Great Depression and the ban is only lifted in 1975, we have to start then. As the gold prices did fluctuate a bit, we will take the gold prices at the end of February 1975 as the starting point, which is... 187 per ounce

http://66.38.218.33/charts/historicalgold.html

Bonds can be risky too!

Most people thought that government bonds, those issued by the Feds, State, or Municipalities are about as safe as they come, and often TAX FREE, making them very attractive in bad economical times when stocks are too volatile, but keep in mind that not all bonds are created equal, and bonds CAN be risky.

Forbes Magazine, October 5th, 2009 issue, page 30, has an article called "Potemkin Village". For the whole thing, you'll have to read the magazine, but I'll summarize for you... Some so-called "municipal bonds" are actually community development district bonds. The CDD bonds are issued by a conglomerate of bankers, land owners, home builders, and developers, with approval of local government, to build expensive communities with golf course, tennis courts, country club, lots of houses, roads, and so on. When the real estate market went bust, it took out a LOT of CDD bonds with it, because the builders won't build houses any more, seeing no profit in it, and without houses, the whole thing goes kaput.

Friday, November 27, 2009

Stock trading and computer assistance

Technical analysis
Investors generally three kinds of tools: toolbox, black box, and gray box when it comes to computer asistance.

Or as Alexander Elder puts it... "Toolboxes are for serious traders, black boxes are for people who believe in Santa Claus, and gray boxes are in between."

So, which group do you really belong to?

Toolbox has a whole set of tools for you to apply as you wish. A good charting program, for example, with a full complement of drawing tools, markers, flags, trends, as well as full set of technical indicators, RSI, Stochastics, Moving Averages, envelopes and bands, or even write your own, is a toolbox. You choose which tools to apply, and apply the tools your way. The tools do NOT force their views on you. They just process data, spits out some numbers / charts. You decide if they are good signals.

Monday, November 23, 2009

Pros and Cons of Momentum Investing

Stock chart showing levels of support (4,5,6, ...Image via Wikipedia
There are a LOT of myths passed around by various investment advisors, and some involve timing the market.

I've actually heard one speaker at a seminar who actually claims that "Santa Claus Rally", "Sell in May, Stay Away" and so on, are valid advice. You probably heard some others as well. And a lot of months have a myth attached to them. There's the "January Effect", "October Surprise", "Take Profit Just before St. Patrick's Day", and so on.

What I can say is... What utter... nonsense! If trend exists, then you can bet money on someone anticipating it, thus destroying the myth.

Friday, November 20, 2009

Real Estate Owners: watch out for squatters

PALMDALE, CA - FEBRUARY 25:  Real estate broke...Image by Getty Images via Daylife

If you have a property for sale now that is empty, watch out for squatters. Install alarm system if you have to. As a Bay Area man found out the hard way.

A Bay Area man had a property on the outskirts of town, and it's a pretty nice house. However, his economical situation no longer permits him to keep the house, so he moved to a smaller place, and asked his realtor to sell the house. His realtor lined up a buyer, except when they went to check out the house, there's someone living there.

Welcome to the reality of squatters.

Thursday, November 19, 2009

Stock investing goal, style, and strategy

Plot of S&P Composite Real Price-Earnings Rati...Image via Wikipedia

Most people when investing simply have this nebulous idea of "make money". But the "goal" is more than that. The goal affects the style, and you can't have an investment strategy without considering all of the above.

First, let us define the goal.

What is your investment goal? It is a monetary figure, but it also depends on your risk level AND your reward level. Risk is linked to reward, there's no way around it. The risks varies from US Treasury Bonds (guaranteed return, virtually risk free) to super-volatile tech and such stocks (extreme risk). So, what are your goals?

Creativity and Education


Just watched Sir Ken Robinson giving his TED speech in 2006. (All videos are available for download at TED.com, go see for yourself). In it, he talked about a lot about how all are born creative. However, it seems that the educational system, designed in 19th century to produce workers to work the factories in the industrial age, is actually designed to STAMP OUT creativity. Thus, it may be time to rethink the educational system.

When you think about it, what exactly are we doing to prepare our children for the future? The only things we can give them are money, education, and some love. However, love doesn't put food in the stomach, and money is worth less every day. So it must be education. However, the public education system is invented in the 19th century to feed workers to work the machines of the Industrial Revolution, and has not changed much. So what exactly are we teaching our children to cope with the future? Will what we be teaching them be useful, or not?

Friday, November 13, 2009

Peter Lynch vs. Efficient Market Hypothesis

The corner of Wall Street and Broadway, showin...Image via Wikipedia

Peter Lynch is the legendary stock picker of the Fidelity Magellan Fund, worked in Fidelity for over a decade, and worked his way from the bottom up. He took over the fund with 20 million in 1977. By the time he handed over the fund to his successor the fund is worth 13 BILLION. He averaged 29% per year growth during those years.

Yet according to "Efficient Market Hypothesis", someone like Peter Lynch cannot exist.

Efficient Market Hypothesis claims that the prices on the traded commodities already reflect all the information known, and as new information arise, price(s) of affected items will quickly reflect the new information by changing (up or down). Thus, it is NOT possible to consistently outperform the market by using information that the market already knows, except luck and cheating (insider info).

This sort of hypothesis is something the academia, I mean, the eggheads, dreamed up, because it uses impossible premises. It assumes that every trader knows EVERYTHING there is to know about what they are trading (buying or selling).

Tuesday, November 10, 2009

Business plan: what, and why?

SWOT analysis diagram in English language.Image via Wikipedia

A business needs a business plan, which basically defines a business's misson, and the systems in place that clarify the procedures, as well as define the metrics that are critical to the operations of a business. We will go into What is a busines plan? why you need a plan, what would be in a plan, and how you write a plan.

== WHAT IS A BUSINESS PLAN? ==

A business plan is basically a blueprint of your business, defines what go where, what materials to use, and so on. To take the blueprint metaphore a bit further, you don't need the specific details, like what wallpaper to use and such, but at least a general outline, like "earth tones".

A business plan should start with a mission, and it better NOT be "make money". Even businesses that sell things are there to fulfill needs. After all, people buy things to fulfill needs. This "mission statement" should be left relatively simple.

Ford's mission was "automobile for the masses". Before Ford Motor Company (FoMoCo) and Henry Ford came along, automobiles are very rare, very expensive, very unreliable, basically playthings of the rich. Henry Ford believed that he can build cars by the masses cheaply, but sell a lot of them. He's out there to fulfill a need.

Friday, November 6, 2009

Do you really know thyself?


To achieve any goal, it's not enough simply to work hard. You first have to get the right mindset (i.e. get rid of the negativism), define the goal properly, then take stock of what you have to work with, formulate a plan that use the resources that you have efficiently, plan for contingencies that will deal with any weaknesses and/or problems, then execute the plan.

We have talked a lot about the proper mindset, and it goes by different names. We have discussed paradigm shifts, thinking like the rich, memes and excuses, and so on.

Defining the goal may be abstract like "get rich" or "be financially free", but you need to write a plan. However, the Rich Dad's Guide to Investing talks about all that. So I won't repeat it here.

We will talk about resources, and take stock of what you have to work with. Thus, you will gain insight into yourself, and how to apply those talents and resources most efficiently.

I've read a book called "Strengthfinder 2.0". In it the author talks about a movie called "Rudy". Any one seen that movie?

Tuesday, November 3, 2009

Money, and evil

In Christianity, Satan is considered the being...Image via Wikipedia

Ever wonder why do people consider money to be evil? There are three primary reasons people consider money evil.

1) Their religion tells them so

2) Their political belief tells them so

3) They don't have it, so they decided to vilify it. In other words, "sour grape" mentality


ARE THE REASONS LOGICAL?

Why are some religions against money? It's hard to say.

Regarding the Judeo-Christian faith... As far as I can tell, Jesus was not against money, but he did preach to the poor and was prosecuted by the rich. Others in the Bible, like Moses, are the same: Egyptian Pharaoh, the ultra rich, vs. the poor Israelites.

St. Augustin,e at the beginning of the Dark Ages, about 6th and 7th Century AD, also preached against money. By then, Roman Empire was falling, Vandals and Goths were teeming at the borders. Civilization was almost doomed. Augustin, then bishop, later St. Augustine, was preaching that one must abandon the cities, and live in the countryside, and go back to subsistance farming and such. This world and its possessions, including money is worthless, transient. Only the hereafter mattered.

But they're not really AGAINST money.

Buddhism and Hinduism placed little emphasis on money. Hinduism stressed castes and the afterlife and reincarnation. Buddha used to be a prince until he received enlightenment. Neither was particularly enthused about money, but neither are they against money.

I am afraid I am not sufficiently familiar with Islam to determine if they regard money as evil, but I will guess that they do not.

There goes 90% of world population!

Friday, October 30, 2009

Where Did You Get Your Financial Education?


Just as a guesstimate, I'd say 98% of us got our financial education from our parents, and not directly. It's more from their attitudes toward money, and what they want you to become. The other 2% are either lucky enough to have a Rich Dad (tm) like Mr. Kiyosaki or found a way to get financial education themselves. And I do NOT mean a degree in finance.

Your parents probably wished you to become the richest people they know personally. Very often, they'd be doctors, lawyers, engineers, and so on. The exact choice will depend on their profession, but the result is about the same: your parents wish you to become S-quadrant (self-employed or small-business owner) esp. if they were E-quadrant (employees) all their life. They don't really understand B (big business) or I (Investor) quadrants, so they would not recommend it to you. They are going by their own experience.

How many parents, besides Donald Trump's parents, and Donald Trump himself, tell their kid, "Son, I want you to become a big-deal real estate investor"?

I doubt Bill Gate's parents tell him when he was young, that "Son, get rich by starting a software company."

I know for sure that Michael Dell's parents told him to stop wasting time on computers and get good grades in school. (see "How Dell Does it" )


Tuesday, October 27, 2009

Professionals May Be Anything But...

Most people have the idea that professional investors, such as fund managers, really know what they are doing. Frankly, the truth is nowhere as pretty. And it is Peter Lynch, who blew the whistle, so to speak, in his book, "One Up on Wall Street".

Think about it... Professional investors are a tight-knit lot, read the same news, talk to the same people, no wonder they have the same mindset... pretty homogenous lot.

Also, the investor community in general are risk-averse. They want returns, but not the risk. Thus, if a fund manager picked a seemingly "safe" investment, and it lost money, the shareholders will not fault you for picking it. However, if the fund manager picked a risky startup as investment, and it lost money, the fund manager gets blamed. Thus leading to another famous Wall Street Myth: "You can't get fired for recommending IBM (even if it loses money)". Or put it another way: if you pick IBM and it lost money, people blame IBM. if you pick some noname dotcom and it lost money, people blame YOU.

Furthermore, people love to compare notes. If A invests in fund X and B invests in fund Y, then A and B talk and A found out fund X has underperformed fund Y by about 10% (even though X is doing 20% and Y is doing 30%, both are darn good yields), A will likely do either of two things: 1) yell at the fund X manager for NOT investing wise enough, and how he could have done better with fund Y. (very powerful if A is a large investor in fund X) or 2) simply pull his money out of fund X and put it into fund Y.

The net effect is fund managers are given an "approved list" to invest from, supposedly safe investments, usually big caps, and as a result, they will give similar yields... LOW yields.

Friday, October 23, 2009

Investment Styles

The cover of Benjamin Graham: The Memoirs of t...Image via Wikipedia



There are a variety of investment styles. Some of which is not good for you. We will discuss several here, and hopefully help you spot some bad habits and fix them.

Growth oriented vs. value oriented

Growth-oriented investors go after companies that are growing rapidly. Tech, bio-tech, pharmaceuticals, etc are recent favorites. They are going for "potential", "future growth". As a result, they tend to concentrate on small caps and mid caps.

Value-oriented investors go after companies that are underappreciated, or just suffered some bad news, and their stocks are low, but the fundamentals are sound, just temporarily out of favor. They are after "bargain". As a result, they go after mid cap and large cap companies.

The two are not mutually exclusive, but they are two fundamentally different philosophies.


Tuesday, October 20, 2009

Mind Over Money

Prescription placebos used in research and pra...Image via Wikipedia

We said it time and time again... Your mind is your most powerful tool. Many of my observations are on this very topic, and here is one more... The power of the mind over money, and many other things.

Any one have arthritis, bad knee, that sort of thing? Any one know how much the knee surgery, irrigation, removal of some bad cartiledge, that sort of thing? A lot. Right.

Any one heard of the placebo effect? Right. If you believe it's medicine, then the sugar pill is almost as effective as real medicine? Right.

But did you know placebo effect applies to surgery as well?

In "Biology of the Mind" by Dr. Bruce Lipton, he discussed a study. Three groups of patients needing knee surgery were selected. One group got the full treatment, one group got the minimal treatment, and the third group got PLACEBO treatment (complete with water slushing sound to simulate irrigating the knee). To everybody's surprise, the placebo treatment did nearly as well as the other two groups. In other words, the surgery itself is NOT a factor. At least one patient, who had to use crutches before the "surgery", was able to play basketball after rehab. And to prevent skewing the results, the placebo group were not told they actually received NO treatment until two years later.

In other words, it really is like psychic surgery.  Except, this is real.  This is the power of the mind over body.

Friday, October 16, 2009

Paradigm Shift


I've talked about paradigm shift before. This is about WHY you need a paradigm shift.

So what is paradigm shift? Paradigm shift is best described as when you suddenly get a whole new perspective on the entire situation, that completely shifts your world view.

Steven Covey, in his book "7 Habits of Highly Effective People", gave the following example:
In a New York subway car, one man is sitting, his elbows on his knees, his head held up by his hands. His eyes are blank, as if starring a thousand yards away, in his own world. Around him, several children are running around, wild, screaming, pushing each other, generally behaving badly. The other passengers gave them a wide berth, many with disapproving glares. Finally, one of them approached the man and spoke up.

'Sir, are these your kids? They are absolutely out of control! Don't you think you should do something?'

The man blinked, and took him several seconds to refocus his eyes on the disapproving passenger... Then he replied slowly...

'Oh, yeah... right. Sorry. I guess I should. We just came from the hospital... Their mother just died...'

By this time the disapproving passenger is hoping for a hole to crawl into.

That is a paradigm shift: one piece of information was gained, and sudden the perspective on the entire situation changed.

Tuesday, October 13, 2009

You in the Mirror

Spherical mirror (actually a cinema) in :en:Mi...Image via Wikipedia

Consider the following question: who is easier to change, you or your best friend / wife / partner? I think we would agree that it would be YOU. If you answer the other one, you may need your head examined, unless your best friend is a dog. (Cats are impossible to change)

Think about it, you know yourself best, so anything you do to yourself would be more effective than being done to someone else, no matter how close you are to them.

The only thing getting in the way is your ego.

Why would your ego resist change? Here are the basic reasons:

* I don't NEED to change (I'm fine the way I am)
also goes by: I don't see any benefit in change

* I don't WANT to change (I fear change)

* Change takes too much effort (I am TOO LAZY to change)

* I don' thave the ______ needed to change  (so I will do nothing)

* It goes against my principles


I am NOT here to be a lifecoach. I consider most of that . There is no technique that will suddenly turn you rich with no work on your part. THERE IS NO SHORTCUT. I cannot fix your ego by waving a magic wand or offer you a magic pill. I will just point out a few things that may be painfully obvious to some of you.  Let's examine these reasons one by one

Friday, October 9, 2009

Know Your Investment

NEW YORK - JUNE 26:  Billionaire financier War...Warren Buffet Image by Getty Images via Daylife




Rich Dad's advice regarding investment is know how to run a business, so that you know what works in a business, and is that business you want to invest in actually doing it (and is it avoidng the bad things).

If you think this is too hard, consider that this is what Warren Buffet does. That's right, Warren Buffet of Berkshire Hathaway. He doesn't invest in things he does not understand. And Warren Buffet have invested for a LONG time, ran many businesses, including Berkshire and Hathaway. Where did you think he got the name for his investment firm? Not all of his investments was successful, but he's good enough that he picked the right businesses to invest in by going after those companies with a lot of value, and now he's the most famous investor in the world.

Remember what Rich Dad said... Profit when you buy, not when you sell. He meant real estate, but it applies to stocks as well, but the point is you have to know your investment to know how much it is really worth, and thus, when to buy it cheap.


Tuesday, October 6, 2009

Know vs. should-know

Robert T. KiyosakiRobert T. Kiyosaki via Last.fm


Chinese has an expression, "If you live near red ink factory, you'll be red. If you live near black ink factory you'll be black." What it actually means is you hang with people similar to you. If you hang out with lambs, you'll be a lamb. If you hang out with wolfs, you'll be a wolf.

Or as Rich Dad would have put it, "Average people hang out with average people, and average people aren't rich."

Mr. Kiyosaki, in one of the seminars in Canada via telephone, said something similar: "One way for an average woman to appear beautiful is to hang out with three ugly women. Most people hang out with people equal or worse than they are. To become rich, you need to hang out with people who are BETTER than you."

In other words, you need to raise your standards. If you hang out with "losers", you sink to their level, and your intellect will NOT be challenged much. If you hang out with "winners", you will eventually RISE to their level, and you will learn many things.

This has far more implications than you think, as are most "simple but profound" truths.

Friday, October 2, 2009

Memes and Excuses

Richard Dawkins' The Selfish Gene first public...


Just the other day PBS airred a special by Dr. Wayne W. Dyer, called Excuses Begone! There's a seminar, the DVD of the program, or the book. In that, he discusses two other books, "Biology of Belief" and "Virus of the Mind". It is the latter that is of particular interest, as it is VERY relevant here.

Remember we mentioned before a lot about you must alter your reality in order to be rich? Dr. Dyer goes into WHY you have problems altering your reality. It's all due to something called a meme (pronounced "meem").

Meme can be thought of as a thought virus. A meme is basically an idea / belief. If it gets to you, it will infiltrate and influence your thoughts, then you start repeating the meme and pass it onto others, and if you had the meme long enough, you can no longer distinguish it from your own thoughts without a long examination.

In other words, everything you were TAUGHT are memes. As are anything you pick up or learn. For example, my grandma is a packrat. She lived through the Japanese invasion of China and World War II. As a result, she refuses to throw things away. She buys things, then packs them away. Then she forgot where they are, so when something's needed, she need to buy them AGAIN. She grew up in despearate times, and she had retained the desperation hoarding "meme" even now. Even now, I can count over a dozen glass jars, all washed and sealed. I ask her what are those for, she said it's for Chinese soup she plan to cook. I said but we have pots and such for those, and do we really need a dozen when only four or five will do? Then she gets defensive and things get downhill from there. :D

Tuesday, September 29, 2009

Risk, and stock insurance

President Reagan being sworn in for second ter...Reagan being sworn in as President (1985) Image via Wikipedia


Just imagine this... You don't bring knives to a gunfight, do you? Or race your family wagon at the Indy 500?

A lot of people have some deep core values that take a LOT of effort to reprogram. And until you update them to reflect current trends and needs, you will have a very hard time succeeding.

Your mind is a tool, YOUR tool, except your mind can be updated... If you want to. And your mind is the most important investment tool of all. And you would want the best available, right?

When it comes to investment, most people can't see beyond the word RISK. So let's update your mind about what really is risk.

Friday, September 25, 2009

Shift your reality and think rich


Mr. Kiyosaki's conversation with Rich Dad about the different "realities" of rich vs. non-rich is very illuminating. Without rehashing the entire story (You can read that in "Retire Young, Retire Rich") I'll just start by... what is greed, and what is generosity?

Your core programming affects almost everything you see, do, and perceive. You see the world through its filter. In other words, your reality is affected by your core programming. And very often, the first thing you need to change is your core programming, which will update your "reality", or as Stephen Covey put it, a "paradigm shift".

== Greed, Generosity, and Paradigm Shift ==

Most people think of greed like Michael Douglas in "Wall Street", whose famous line: "Greed is good" is so simple and so succint, it almosts make you want to adopt socialism (not!). Others have the concept of Uncle Rich in the Disney cartoons, or even... Ebenezer Scrooge, people so stingy they will gladly squeeze their employees in sweat shops just to put an extra dime in their own pocket.

Generosity, on the other hand, is usually thought of as giving things away, esp. money. Give to charities, give to the poor... etc.

So let us consider this... When you work at a job, you "expect" a raise at the end of the year. Correct? Why? WHY do you "deserve" a raise, if you are doing the same job? Are you better at your job? Are you doing more now than before? If you moved onto a more important job, you absolutely deserve a raise for the increase in responsiblity. But why should you expect a raise just because you've stayed at a job for a year?

Tuesday, September 22, 2009

Leverage by any other name

:en:NASCAR drivers :en:Mike Skinner (NASCAR) (...Image via Wikipedia
In "Retire Young Retire Rich" (Rich Dad book 5), Mr. Kiyosaki used the word "leverage" a lot, and indeed, it is a big topic. He is not only talking about financial leverage (i.e. OPM, "other people's money"), he also talks about how to use other types of leverage as well. Indeed, leverage can be found almost anywhere... if you look close enough.

In military, the equivalent term would be "force multiplier". Basically, it is an advantage you enjoy against the opposition.

For example, if you have machine guns, and they don't, you have a force multiplier. Having machine guns lets you hold ground with a much smaller force than the enemy, all other stuff being equal. Intelligence (as in gathering information, not IQ) is another force multiplier. If you know what the enemy is doing, you can anticipate his moves, set up ambushes, and so on, and defeat him with a smaller force. Basically, a tool no one else has that allows you superior SOMETHING (mobility, information sharing / coordination, firepower, and so on) makes your force more effective, and that is the definition of a force multiplier.

Friday, September 18, 2009

Mistake and Teamwork

Thomas Edison's first lightbulb which was used...Image via Wikipedia
One of the core values you need to update is regarding "mistake".

In school, you are taught that mistakes are bad. If you make enough mistakes, you FAIL the quiz/test/assignment/whatever.

That is NOT the way it works in the real world.

When it comes to mistakes, the famous people made a lot MORE mistakes than the average Joe. It was said that Thomas Edison (in reality, it's probably his team of inventors working for/with him) one THOUSAND tries to find the right filament material for his electric bulb that had the right qualities. Andrew Carnegie was once nicknamed "Dry Hole Carnegie" until he finally hit that one well that made it big and made his fortune.

Yet we are taught mistakes are bad. You are not supposed to make any mistakes. 100% is good. Any thing less is not as good. We marvel and admire any one who scores the full 1600 on the SAT test. We hold public tests of children and flunk them for making a single mistake (They are called spelling bees). We do the same for adults and air them on national TV ("Who wants to be a millionaire?") But is that really what we should learn?

The lesson what we *should* have learned is that one must LEARN from one's mistakes. Any attempt to blame others, blame circumstances, or in any way deny responsibility, is a waste of learning opportunity.


Friday, September 11, 2009

A short intro about the "Rich Dad" series

SHANGHAI, CHINA - DECEMBER 12:  Visitors look ...Image by Getty Images via Daylife


Mr. Kiyosaki has had an interesting life where he received a lot of lessons that took many much longer to accumulate, and now he had decided to share the lessons with us. There are a whole series of books:

  • Rich Dad Poor Dad -- the book that started it all
  • Rich Dad's Guide to Investing -- investor controls to minimize risk, different levels of investors
  • Rich Dad's Cashflow Quadrant -- the four types of earners: employee, self-employed, business owner, investor, and how/why one side gets rich
  • Retire Young, Retire Rich -- power of leverage, in various areas
  • Rich Dad's Prophecies -- why the stock market will crash (and it did) and what you can do about it
  • Rich Dad's Success Stories -- how dozens and dozens of people turned their financial life around thanks to Rich Dad
  • and the boardgames, Cashflow 101 and 202 -- teaches you how to get out of the rat race and get onto the fast track by investing in real-estate
        and many many more

What does it all really teach? Here are the main points, and it's really not a secret:

Friday, September 4, 2009

Introduction

I am Meeting Robert Kiyosaki Next Week!



Welcome to Rich Dad (tm) Observations, a blog about one guy's path toward financial freedom, and the insights he has gained from various sources, including the Rich Dad (tm) products from Mr. Robert Kiyosaki's company.

The one guy is me, Kasey Chang, currently 39, in a nearly dead-end job, but have a bit of time to get out of the rat race.

There are some things in Rich Dad Poor Dad that I do not completely agree with, but most of Mr. Kiyosaki's advice are sound, and simple to understand. I was able co-relate lot of what I learned with a lot of personal experience and other teachers for even fuller insights.

As this is a discussion about various things in Rich Dad (tm) books, I will have to discuss some of the contents of the books. I will try to link to the books in question.

The blog has a lot of advice on various investment related topics, from motivation to stock picking, from entrepreneurship to company re-engineering, and more. So stay tuned.

There will be two postings per week, unless something really messes up my schedule. 

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Book mentioned:
Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not!
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