Friday, September 28, 2007

Why I don't like the stock market

To me, the stock market is like a soap opera for business people. People are glued to their TV watching and waiting to find out what the next big merger is, or which company has been upgraded to a buy. People watch like hawks experiencing the ups and downs emotionally, even though they're not even going to start taking money out for at least 10 more years.

Some people put so much energy into following the stock market I sometimes wonder - why not start your own part-time business and focus your energy on that? Surly if you attack your business with the same vigor as following the stock market, you must be successful.

Besides the fact that I think spending inordinate amounts of time in front of the TV wrong - no matter what the content - I do have some, what I think to be, valid reasons for disliking the stock market.

My biggest dislike stems from a lack of control. Stocks go up and down too often based on the whims of the masses. For example, if the Fed lowers rates and the masses wanted them to, stocks go soaring. Why is this? The Fed cutting the rate won't be felt by the economy by at least 4 months, yet there is an instant pick up based on the expectations of the rate cut. This is called gambling. What really gets me is that you could genuinely pick a good company, but the stock may not perform well because the whole market goes down. Why are individual stocks tied so heavily to the "rest of the market"? In the end, a stock goes up or down based on people's expectations and then later we find out if those bets were correct. Personally, I want my money on a sure thing.

A very close second is how companies are rewarded (what the expectations are based on). Why is it that Microsoft makes billions each year, but their stock is flat? Since when did it become not good enough to simply be uber profitable year after year? Instead, companies get rewarded for growth, and really only faster growth at that. These expectations are too high of a bar to sustain and eventually each company flattens out, and then it's stock drops a little and rarely recovers to those "glory days". Then, as an investor you have to run to the next potential up and comer instead of simpling enjoying the fruits of a successful company. It's almost like someone wants you to keep guessing.

Finally, I wouldn't mind the stock market so much if I could do more research. I want to learn about the leadership. What are they thinking? What are their plans for the future and how to do they plan to meet the market's ridiculous expectations? Alas, this isn't allowed because then I would be doing insider trading... So, since I can't get to know a company as well as I would like, to decrease my uncertainty, I am going to restrain myself from investing any more than I have to into the stock market.

What will I do instead you ask? Good question. I will focus my resources on areas where I have more control. I have a small business of my own and I'm invested in other smaller business. I will also invest in real estate. My goal is to create a cash flow stream that will pay my bills instead of having a huge nest egg somewhere in the clouds that I'll slowly eat away at later in life.

Thursday, September 20, 2007

A Second Monitor

I have come to a beautiful revelation. I REALLY like big monitors. Better yet, I like multiple widescreen monitors. While in grad school, I lived off of a 15.4" widescreen laptop. Typically, I opened programs half the width of the screen allowing me to have two files, or programs, viewable at once. This worked well. However, when I started work, they gave me another laptop - only 13.nothing inches - and a 21" monitor to use as an extended desktop. This is nice, believe me.

It took a little while to get used to because I had to remember to scan both screens. It was especially weird when I would click on something from the start bar ... and wait for it to open ... and wait. Then, almost giving up, look over to the other monitor to find the program patiently waiting for me. Nice. However, over the last few months I've gotten used to this feature and really like having twice the real estate. I have Outlook and Firefox open on my smaller screen while my work programs are on the larger monitor. Now when I get home and hop onto my 15.4" laptop, it really just feels like I'm missing something.

So, you guessed it. A widescreen monitor (a.k.a Cinema Display) has made it onto my wish list. Can you imagine the power of two widescreen monitors?! I'll be able to, like, have four word documents viewable at once. Yes! ... Four Excel sheets? ... maybe not ALL four ... Well, at the very least I'll be able to watch a TV show from my iTunes library, casually surf YouTube in conjunction with posting comments on my friend's Facebook pages after quickly making sure I still didn't get another email in the last 10 seconds.

At first I thought it would be cool to get Apple's 30" Cinema Display, but then I found out that they actually want both of your arms instead of just one. So... I looked into Dell's equivalent and found they're just as interested in taking just above the elbows as well. So, I might have to wait for one of those *cough* Christmas *cough*. Luckily, I work with a bunch of geeks who pointed me to many web resources for refurbished displays on the cheap. For a petty $190 I could have my own 19" flat panel monitor. Not bad. Actually, I think I'll wait it out until I find a widescreen just my style ... I do believe HP has some nice ones.

Sunday, September 16, 2007

What's Your $1 Idea?

I learned a great lesson about money in high school. In retrospect, I shouldn't even have gotten myself in this situation and I probably could have made it with $5 - but what are you going to do with high school logic? Never the less, the lesson is priceless.

One day I needed to get gas for my car, but had no money. I was running really low and probably could not have made it home. I wasn't even sure if I was going to make it to the gas station to be honest. I decided that morning that my only option was to borrow $10 from somebody, get gas and pay them back whenever my parents handed out money again. This seemed to be a fool proof plan. Who wouldn't give me $10? I was even will to pay $2 in interest! Furthermore, I was a trustworthy guy and everyone could depend on me.

That morning I set out and began asking all my friends if they had $10 I could borrow. Much to my surprise, nobody had $10 they were willing to lend. However, everyone made sure to reassure me that IF they had the money, they would surly lend it. Around noon, just before lunch, and my last real chance to ask people for money, I decided I needed a change in technique because at this point I was become desperate. I could see myself driving home and getting a mile away and having to push the car the rest of the way. I began to determine how much gas I could get away with. Would 1 gallon be enough? Would I need 2 or 3? After all, this was when gas was up to a gigantic $1.50, and I couldn't just pull up to the pump with pocket change! After much internal debate, I decided that a couple bucks would get me through one day and an opportunity to ask my parents for more money.

Once again I set out to ask my friends if I could borrow a couple bucks, anything really would work. I told them my problem, and how much it would help me. To my surprise (a day full of surprises), my friends suddenly had money on them. I had $3 dollars all of the sudden! The best part was that not a single one said I had to pay them back! That was when the light went off. I started asking more friends and people in class I rarely talked with. People started chipping in 50 cents, a dollar here and a dollar there. In the last two hours of school I managed to raise $9 - 1$ short of my goal. All of which none had to be paid back! Talk about a deal. I decided to ask one more friend who I hadn’t seen all day. I explained my situation, which was becoming much easier to do, and guess what. He gave me three dollars.

I ended up with more than I needed and didn't have to pay any of it back. I went home, after going to the gas station of course, and told my parents everything that I learned. I explained how the light bulb had gone off. It suddenly made since why my dad said, "You can become a millionaire two ways. You can either sell one thing for a million dollars, or you can sell a million things for one dollar. Either way works, but one way is much easier." Apple Computers tried to sell one thing for a million dollars. Microsoft decided to sell a million things for one dollar each. What are you using today? What are your friends using?

I tried to sell my gas problem to one person and got skunked. It was either all or nothing, and it was going to cost me more in the long run. I thank all of my peers for rejecting my plan and forcing me to learn and improvise. Here are some other examples of companies that decided to sell one thing for a dollar: McDonalds, WalMart and Ford with the Model T. What can you do a million times? What is your one dollar idea?