Ramit Sethi’s Fool’s Gold

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The following is a comment that was recently written on our blog post:

The Real Review of Ramit Sethi’s Earn 1k Program

“Thank you for this blog post! One of my friends purchased the Earn 1K course and I am waiting to hear back on how much he liked the product. Separately, Ramit is now offering a Dream Job program for people who want assistance in finding their dream job and executing on that plan. That product is $12,000. After reading your post, it helped me realize that I’m thinking about spending money to de-risk my dreams. Basically, there’s a feeling of, if I spend this amount of money, I’m almost guaranteed success in this endeavor! That’s a great security blanket for those of us with the resources to buy it… but without a single real impartial review out there on the internet, how can you really believe that it’s going to work?”

Doing Something, Anything: RIP Steve Jobs

(CNN) — Steve Jobs, the visionary in the black turtleneck who co-founded Apple in a Silicon Valley garage, built it into the world’s leading tech company and led a mobile-computing revolution with wildly popular devices such as the iPhone, died Wednesday. He was 56.

The hard-driving executive pioneered the concept of the personal computer and of navigating them by clicking onscreen images with a mouse. In more recent years, he introduced the iPod portable music player, the iPhone and the iPad tablet — all of which changed how we consume content in the digital age.

More than one pundit, praising Jobs’ ability to transform entire industries with his inventions, called him a modern-day Leonardo Da Vinci.

“Steve Jobs is one of the great innovators in the history of modern capitalism,” New York Times columnist Joe Nocera said in August. “His intuition has been phenomenal over the years.”

View a time line of Steve Jobs’ work

Jobs’ death, while dreaded by Apple’s legions of fans, was not unexpected. He had battled cancer for years, took a medical leave from Apple in January and stepped down as chief executive in August because he could “no longer meet (his) duties and expectations.”

Born February 24, 1955, and then adopted, Jobs grew up in Cupertino, California — which would become home to Apple’s headquarters — and showed an early interest in electronics. As a teenager, he phoned William Hewlett, president of Hewlett-Packard, to request parts for a school project. He got them, along with an offer of a summer job at HP.

How Steve Jobs grew up

Jobs dropped out of Oregon’s Reed College after one semester, although he returned to audit a class in calligraphy, which he says influenced Apple’s graceful, minimalist aesthetic. He quit one of his first jobs, designing video games for Atari, to backpack across India and take psychedelic drugs. Those experiences, Jobs said later, shaped his creative vision. more…

Category: Investing  949 Comments
Andrew Luck Who? GO BILLS!

The Investment World Needs It’s Own Charlie Sheen
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Why Do Heavy Drinkers Outlive Nondrinkers?

Written by John Cloud: Originally published in Time Magazine

One of the most contentious issues in the vast literature about alcohol consumption has been the consistent finding that those who don’t drink tend to die sooner than those who do. The standard Alcoholics Anonymous explanation for this finding is that many of those who show up as abstainers in such research are actually former hard-core drunks who had already incurred health problems associated with drinking.

But a new paper in the journal Alcoholism: Clinical and Experimental Research suggests that — for reasons that aren’t entirely clear — abstaining from alcohol does tend to increase one’s risk of dying, even when you exclude former problem drinkers. The most shocking part? Abstainers’ mortality rates are higher than those of heavy drinkers.

Moderate drinking, which is defined as one to three drinks per day, is associated with the lowest mortality rates in alcohol studies. Moderate alcohol use (especially when the beverage of choice is red wine) is thought to improve heart health, circulation and sociability, which can be important because people who are isolated don’t have as many family members and friends who can notice and help treat health problems.

But why would abstaining from alcohol lead to a shorter life? It’s true that those who abstain from alcohol tend to be from lower socioeconomic classes, since drinking can be expensive. And people of lower socioeconomic status have more life stressors — job and child-care worries that might not only keep them from the bottle but also cause stress-related illnesses over long periods. (They also don’t get the stress-reducing benefits of a drink or two after work.)

But even after controlling for nearly all imaginable variables — socioeconomic status, level of physical activity, number of close friends, quality of social support and so on — the researchers (a six-member team led by psychologist Charles Holahan of the University of Texas at Austin) found that over a 20-year period, mortality rates were highest for those who were not current drinkers, regardless of whether they used to be alcoholics, second highest for heavy drinkers and lowest for moderate drinkers.

The sample of those who were studied included individuals between ages 55 and 65 who had had any kind of outpatient care in the previous three years. The 1,824 participants were followed for 20 years. One drawback of the sample: a disproportionate number, 63%, were men. Just over 69% of the abstainers died during the 20 years, 60% of the heavy drinkers died and only 41% of moderate drinkers died.

These are remarkable statistics. Even though heavy drinking is associated with higher risk for cirrhosis and several types of cancer (particularly cancers in the mouth and esophagus), heavy drinkers are less likely to die than people who don’t drink, even if they never had a problem with alcohol. One important reason is that alcohol lubricates so many social interactions, and social interactions are vital for maintaining mental and physical health. As I pointed out last year, nondrinkers show greater signs of depression than those who allow themselves to join the party.

The authors of the new paper are careful to note that even if drinking is associated with longer life, it can be dangerous: it can impair your memory severely and it can lead to nonlethal falls and other mishaps (like, say, cheating on your spouse in a drunken haze) that can screw up your life. There’s also the dependency issue: if you become addicted to alcohol, you may spend a long time trying to get off the bottle.

That said, the new study provides the strongest evidence yet that moderate drinking is not only fun but good for you. So make mine a double.

Haters Gonna Hate: Why “You Want to Practice Being Foolish and Stupid” with your Financial Decisions

I suggest watching the whole presentation – however, you can fast forward to minute 18 if you are short on time.

Cowboy Hats and Velcro Sneakers
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Personal finance IS A GAME! Playing a game does not mean participating in an irresponsible or deceitful manner. Games consist of rules, code of conduct, risk assessment, strategy, preparation, evaluation, and determination. When it comes to managing your personal finances why would you not want these attributes to lead your personal wealth?

Question 1 – What type of emotion does the headline “Here we go again: Another big down day for Dow” trigger for you?

Question 2 – If people are profiting from the current market conditions, which emotion do you think that they are experiencing?

“Emotional circuits deep in our brains make us instinctively crave whatever feels likely to be rewarding – and shun whatever seems liable to be risky… That’s why knowing the right answer, and doing the right thing, are very different.”

~Jason Zweig, author of Your Money and Your Brain

Maybe We Should Be Painting Fences Second? – Tackling Underemployment vs. Unemployment.
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I am not a political person and my record of never voting can vouch for that. That being said, I feel that one major economic topic that is being ignored by both sides of the political fence is underemployment.

We get hit with this large unemployment number everyday and the strategies moving forward to lower it, however, nobody is addressing the quality of these jobs.

This begs me to ask, how important is lowering this unemployment statistic? It seems to me that lowering the unemployment number comes at the expense of people becoming consensually grateful for “having a job” below what they are capable of doing. This hardly seems like a first-rate strategy for the future quality of life in our country.

I won’t try to be convincing about things that I know very little about, however, it seems to me that fences that don’t need painting are getting painted – and other lower income jobs are being created in order to address the current unemployment frustration. I can’t help but think that we should be a little more patient in trying to lower the unemployment number if it comes at the risk of settling for a lower long-term quality of employment.

Kate Hudson-ing it all morning with KIOR IPO

I sat around for 50 minutes waiting for the KIOR IPO to open – this is how it went down.

The following is what was going through my head – take what you want from this trade.

TD Ameritrade will not let me put in a Limit sell price to take advantage of a spike while at the same time having a Stop Limit sell price to protect against a large loss – it’s either one or the other – so I was actively flip-flopping them based upon where the price was.

You may ask, why not just have a sell price and a trade trigger? I feel that using a trade trigger or an “if than” strategy cannot be adjusted as quickly, nor is it as exact. To me, creating a trade trigger based upon an “if than” bid or ask  has less control than an activation price on a Stop Limit. I could be wrong on this – and I hope that I find out soon that I am.

In the right situation, I will experiment further to fine tune how precise I can be. Below are the details on a very flat, but in hindsight a very low risk opportunity to make 2.5%. I left the trade making a little more than the transactions costs of the trade.

Notes:

  • The estimated open was $15, which, it opened and closed at
  • The down rallies refused to drop below $15 all day long

Pandora’s (P) IPO – Better than Morning Sex

This is what Wednesday’s Pandora (P) IPO looked like…

This is how I played it:

  • 9:33 – (P) opens at $20
  • 9:34:07 -  I filled my buy order for 200 shares @ $20.605 (from a bid of $20.77)
  • 9:35:31 – I sold 200 shares @ $24.15 (from an offer of $24)

Profit Summary:

  • Gross profit before fees: $708.94
  • Return on investment: 17.2 %
  • Time Spent: 1 minute 24 seconds

Additional Notes:

  • Several minutes before the open CNBC reported that the expected open would be around $20 – well above the expected $14-$16
  • The stock was trading for what seemed like 30 seconds prior to CNBC reporting that it had just opened
  • While it felt amazingly quick, I had over a minute to adjust my bid to buy and from there had over a minute and a half to put together a sell order


Can Charlie Hoehn Help Us With Options Trading?

We can’t help but ask - is LinkedIn Monster (2)?

LinkedIn might be a similar volatile options opportunity that Monster was.

Charlie Hoehn is a pretty interesting guy whose e-book I stumbled upon, Recession Proof Graduate, provided the following insight…

As I was saying: Career Builder, Monster, and Craigslist are

the sites most graduates will use to search for jobs. And,

what a shock, none of the offerings look very interesting.

That’s because these

three sites are where

mediocrity thrives.

Anyone who expects great results from these websites is an

idiot (admittedly, I was one of these idiots for a few weeks)

Boring companies with unattractive offers lure stupid

graduates like us into applying for their lame jobs

because it seems like there’s nothing better out there.

The truth is that these sites are intended for the masses –

they have crappy listings by default.

While we believe that there will be many short opportunities in the next year with all of the web 2.0 IPO’s – we are not exactly sure what to think about LinkedIn.

Is LinkedIn just as lame? We would love to have Mr. Hoehn, who is a model example of what a real doer is, provide us with his expert insights on this company.

Category: Investing  One Comment
The Facebook Effect on Wall Street
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David Kirkpatrick, author of The Facebook Effect provided a good introduction into what the company Loyal3 does and the affect it will have on the company Facebook.

One of the most interesting companies I’ve seen in a long time launched today. Loyal3’s business is to enable companies to sell their own shares to customers, through something called a Customer Stock Ownership Plan (CSOP). This is an emblematic company for the new era of individual empowerment. And it could also help answer the question, which many are asking, of how Facebook–the social phenomenon most reinforcing that empowerment of people–might both go public and retain its independence and innovativeness, without being crushed by Wall Street’s shortsighted pursuit of quarterly profit.

There’s a fundamental injustice at the heart of modern consumerism— the individual does not share in the value created by his or her buying behavior. Remember that quaint early 20th-century notion about the workers (read:consumers) owning the means of production? Maybe it wasn’t so irrelevant after all. So now we have a company that subtly undermines the conventional notion of what a “company” is.

more…

Making More Money and Traveling More Often are No Secrets
Young African American business woman been bri...

Where you make your money matters, it matters a lot! Everyone knows that some areas of the country make more than others but it is often understood to be nullified by the higher cost of living. Seth Godin wrote recently on his blog,

“At the largest Lexus dealer in New Jersey, they’re sold out of many models, with a waiting list. In some towns in Missouri, the unemployment rate is twice what it is in your town. In the tech industry, the rate you can charge for developing killer social apps on a tablet is high and going up.”

The people who say that they don’t want to live in New Jersey are stuck on living in one place. It used to be only the super wealthy who were able to “summer” in different places – but those times are changing. Timothy Ferriss in his book The 4-Hour Workweek believes, “Being bound to one place will be the new defining feature of the middle class.”

We have had a guest post before about geo-arbitrage, but this is different and more practical. Sue Shellenbarger of the Wall Street Journal recently wrote an article titled, Name Your Own Vacation. I would have provided a link to it but I have the “search engine redirect virus” currently and can’t search for it.

I digress, but the idea in her article is that companies are shifting towards taking away set vacation days and allowing employees to take off whenever they want as long as they get their work done. For the employee, think of how much time is wasted in the office anyway. For the employer, you can now hold your employees accountable for producing more so than just putting in hours or effort.

Nobody is going to hand you more money and ask you to travel more, it is something that you have to believe is possible and go get it small steps.

Dot.com Bubble 2.0

I was watching CNBC like many others this morning as LinkedIn’s stock opened at $83 – up huge from its original price of $45. This stock had a high of 122.70 and closed the day at $94.25 up 109.44%. While far from an original thought, I couldn’t stop thinking all day… “Here we go again,” and this time I WANT IN… on the downside.

Consider this:

Dot.com Bubble

1.       Companies’ stock prices sky rocketed by simply adding an “e” prefix or a .com to the end of their company name.

2.       Market confidence was based upon number of clicks even though a majority of those clicks did not result in any revenue.

3.       P/E ratio thrown out the window

Dot.com 2.0 (social media) Bubble

1.       Companies’ stock prices acting similarly by adding social media to their description

2.       Market confidence based upon user count, even though many users visit once a month or never at all after signing up.

3.       Our first case study LinkedIn had a first day high of $122.70 – a nonsensical 1,460 times earnings.  As one writer put it, “[LinkedIn]has pets.com blushing in it’s grave.”

With all of this speculation, one thing is sure – SPF will continue to follow the dot.com 2.0 bubble closely and share our thoughts on it.

An Apology to Credit Card Companies and their Responsible Customers

Upfront I want to make sure that by no means are these thoughts politically driven.

In 2010, this administration gave in to public demand and created larger restrictions on the credit card industry – this is was the overwhelming cry of the public. Well the credit card industry has changed to a great extent and people are appreciative that actions have been taken.

I beg to ask though, whose credit card situation has gotten better? Credit card companies are in the business of making profit, and will adjust accordingly to whatever rules they must follow. When credit card companies (banks) adjust so that they can continue to create profit, the allocations of benefits is actually happening to the consumer and not to the credit card industry. Consider this question…

Were the people who wanted credit card reform those who paid on time every month and accumulated rewards points, or people who felt victimized by penalty fees (perceived fair or unfair) for not following the borrowing agreement that they agreed upon.

Almost certainly it’s the latter that drove the public consensus into thinking that credit card companies were acting unfairly. That being said, if this group of irresponsible credit users are benefiting from the new regulations and the credit card companies have adjusted to maintain profits, who do you think loses… that’s right, the responsible credit card user.