Thursday, April 22, 2010

Password Protection with Password Card

This is a bit of a stretch of topic for this blog, but identity and password protection is important in the modern age, when one must be vigilant in protecting one's assets. Weak passwords (basically, anything less than 8 characters) are not that hard to guess, and most people fall into simple patterns like birthdays and such. However, people cannot remember the really tough passwords. Here's a little help, called Password Card.

Password Card is a card filled with gobbledygook that makes no sense to anybody, but it is really a password reference. Go to the website and it will randomly create a card for you. The chance of someone else getting the same card is infinitesimal. You will need to guard the specific "key" (which is the number above the card) in case you need to recreate the card.

How you use it? For each account you need to make a password for, pick a specific combination of symbol and color. Yes, you will need a color printer. Then pick at least 8 characters from the starting point, going any direction you choose, left/right/up/down/diagonal. That is your password. As long as you remember the combination, like smiley/pink or diamond/blue, and you used a consistent direction that you recall, you know your password, that is nearly impossible to guess. EVEN if you lost the card, as long as you did not leave any hints on the card itself (finger smudges, pen marks...) it is useless to anybody except you.

You can use this for multiple accounts, and it should vastly increase your password strength.
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Wednesday, April 21, 2010

Tenant paying your mortgage? Is it possible again?

Picture of the "Gingerbread House" i...Image via Wikipedia
AP just did a week-long study of major real-estate markets, and they are pinpointed a lot of markets where it is cheaper to OWN a home instead of renting one. While this is usually good news to the renters (who want to become owners), it is also a golden opportunity for those who have the down payment available to pay down house, and get a tenant to pay the mortgage for you.

This is that Robert "Rich Dad" Kiyosaki promotes in his books and his Cashflow game: find a property with "net positive cashflow", and according to the AP study, some markets have rent HIGHER than that of mortgage (esp. in foreclosure-ravaged areas), and that is without counting any special benefits like tax credits and such that only owners can benefit from.

If you currently rent, it is a great time to buy, esp. in those markets. Even if you already own your home, you may want to look into what credits and loans you can get for investment property (non-owner-occupied) and if you can generate any positive cashflow from it. When the home prices go back up in a few years, you will be raking in money... maybe.
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Tuesday, April 20, 2010

China's Real Estate Bubble is a sign of MAJOR economic problem

A quick comparison between China's real estate bubble and the American real estate bubble of 1998-2005 shows that China's bubble is growing at TWICE the rate of the American bubble. During the bubble, the average price index of the American home grow by about 80 percent in 7 years. China managed to do 60% real estate price increase in just THREE years, and it is STILL going up.

You can see the details at

And the Chinese government is FINALLY taking notice. They are cracking down on special promotions and such prohibiting "advance sales" on properties not even finished yet. This is causing a huge CRASH as all the various real-estate holders dumping their inventory on the market. And who will lose most of the money? Those who already own their houses and cannot sell, but have taken out loans on them for other uses.

Not all "experts" are convinced. Some claim that China has already clamped down on bank lending, thus the money supply is tighter. What those American analysts are NOT realizing is most Chinese do NOT borrow from banks, but instead from friends and relatives. So the actual number cannot be measured through bank lending.

And people are noticing all around the world, even CNN Money. And when the real estate bubble actually crash (more than twice as hard?) it will destroy the the mirage of "leader in economic recovery" that China is sprouting, and hold back the "real" global economic recovery that everybody is eager to enjoy.

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Sunday, April 4, 2010

What goes in a business contract?

A contract is something everybody needs, especially business. But there are legal aspects of a contract you must be aware of to make the whole thing enforceable. Keep in mind that individual jurisdictions may have additional legal requirements that supersedes some of the following aspects of the contract. Also, as I am not a lawyer, I can only write in very generic terms. You should consult a legal self-help book, such as those published by Nolo Press, for the exact verbiage, or check an existing contract used by your competitor(s).

A contract is composed of these major components:

* Names Clause
* Signature Clause
* Standard Clauses
* Dispute Resolution Clauses
* Attachments (if any)
* Amendments (if any)

The CANSLIM investment strategy

CANSLIM is a stock trading/investing strategy created by William O'Neal, who also created Investors Business Daily. CANSLIM is an acronym, which really stands for
Current quarterly earnings per share
Annual earnings growth
New products, New Management, New Highs
Shares outstanding
Leading industry
Institutional sponsorship
Market direction

Pros and Cons of Diversification

The New York Stock Exchange on Wall Street, Ne... New York Stock Exchange, Image via Wikipedia
Diversification is a risk management technique, that mixes a wide variety of investments within a portfolio. The idea is summarized by the adage: don't put all your eggs in one basket.

The problem is, most people are doing it wrong. Either they are NOT diversified when they think they are, or they think diversification will minimize their risk, when it does not, because they don't really understand what they are giving up when they diversify.

Let me give you an example: Say you have a dozen eggs. You decided to put each in one basket on the table. Now you have a dozen baskets, each with one egg. You are diversified, yes, as one basket tipping over will not ruin all of your eggs. Right?

Right, until someone tip over the whole table.

When the economy went into a recession, all baskets on the table are affected. No amount of diversification will save you, if you leave everything on the table.

Most people, when they hear the word diversification, they think investing in stocks of different sectors... If you remember the 6 stock archetypes from earlier, they'll put some in fast grower, and some in stalwarts, with some risky stuff in cyclical, turnaround, and maybe asset play. The really safe ones may put some in bonds and mutual funds. The problem is... These are all PAPER ASSETS. What's worse, mutual funds are just "diversified" stock investments: the fund manager invests in a bunch of different stocks. So investing in diversified stocks and investing in a mutual fund is the same thing. Also, while the bond market usually moves opposite that of the stock market, it does NOT always do so. Thus, relying on it always do so is rather foolish. Therefore, investing in all paper assets is NOT diversification.