Staying Positive In A Negative Environment

I think this is an important skill to acquire, more important for some than for others. Long ago, the Main Streeter published a post on how dwelling on mistakes can create a mountain out of a mole hill:

Now Eve is beginning to get really frustrated. "What is Adam really doing? Why hasn't he replied my message? Why didn't he pick up my call? He must be playing computer games with his friends again. Is he out with another girl? I guess that's quite unlikely. He's not the cheating type. If only I could see him. I made sure I left my schedule open this weekend just to see him. I even decided not to go to Jenny's birthday party because it was the premier weekend for Saw V. What is he doing? Where could he be? Maybe he is watching the movie with his friends. Why didn't he invite me along? Is he embarassed about me? Does he think I am too clingy? Am I too clingy? Should I give him more space? Why am I so frustrated? He probably just didn't see my message. But why would someone own a cellphone and not be reachable? Might as well not own a cellphone". 

As you can see, this thought process can go on and on and on. This is called "dwelling". To the unsuspecting guy (I guess he may or may not be innocent, but he would in no way suspect he was doing something very wrong), he will wonder what he really did wrong. All he did was just being late in replying an sms. Besides, his girlfriend has been late in replying his messages before too.

On the other end of things, Eve is all worked up, decides to give Adam a cold shoulder and demands to herself that she deserves to be treated better. So now, what is seemingly a small situation had been blown out of proportions because of an innocent mistake. Eve continues to give Adam the cold shoulder for a few days. Adam still wonders why can't Eve forgive him for replying an sms late. Eve has replied more texts late than he has, as far as he remembers. But of course Eve's reasons were "completely valid".

The Business Insider offers some useful advice on how to circumvent this:

You can choose to think about your business's best qualities, not the worst; things to praise your employees about, not things to curse them for; the beautiful way in which your customers buy your products and use your services, not the ugly few who demand a refund. 

For example, it is so easy for us to fill our minds with what we can't do. That's a never-ending list for me. 

Right now, I could say to myself, "There's always something I can't do. Now that I think about it, there's no reason in the world I should ever think that anyone anywhere on this planet would want to read a book about working positively. I don't know why I wrote it. I wasted all this time, energy and money on a book that was supposed to bring me speaking engagements and coaching opportunities so I can transform business people's negative lives into work positive lifestyles." 

See what I mean? Of course it's not just you and me who choose to focus on that "can't do" list. We all do at times. Since your mind focuses on something, anything, it will go to that never-ending list, especially in times of frustration or perceived failure. 

It's so much more empowering to focus your mind on what you can do. No, you might not be able to do correctly what you're attempting on the first try. However, finding something you can do related to the task and focusing on that accomplishment creates a positive perception in your mind. That positive perception then becomes the jet fuel that releases your imagination to work on the rest of the task that presents such a challenge. With that high-octane fuel, your imagination soars to new heights of accomplishment in your business. 

By exercising the positive muscle group of your mind and focusing on profit-enriching activities, pretty soon that which seemed impossible about your business becomes not only doable, but you say to yourself, "I can see my business this way all the time!"

Source: Business Insider

Volume 3 Issue 52: Intelligent Investing

The Loser's Game

What's the Losers' Game?

The game that 99.9% of the people who talk about investing appear to be playing: Namely, following global economics and markets and investment advice and trying to make smart decisions along the way.

That pretty much describes what happens to the Main Streeters. We love talking about it, boasting about whatever inside tips that we have, and asking for whatever tips or rumors on whatever hot stocks there are in the market.

Ever wonder where these "news" come from? If these rumors and tips are news that no one has heard about, what do you think is the more likely outcome? The news is not true, or the person from whom you got the news is in the loop? Quite often, it is the former, and that is an understatement. 

Here is more on why trying to beat the market based on just news, tips and rumors is quite simply, a Loser's Game:

Even if what you hear in the financial media occasionally proves to be "right," you should still ignore it. Because as you'll learn the hard way if you consume enough financial media, there will be no way to tell in advance which of the many things you hear will turn out to be right. And the ones that turn out to be wrong will cost you a lot more money than you will make from the ones that turn out to be right. 

... 

The second thing you need to understand if you want to invest intelligently is that if you choose to play this global sport, you will not be playing in a special Little League or low-stakes table with the folks like you who just aren't that good at it. You will play in the same league as the best professional players in the world. And you should expect to do as well against them as you would do against the PGA Tour players at the Masters or the Green Bay Packers in the Super Bowl or the Yankees in the World Series or grand masters in chess.

Because the third thing you need to understand is that the only way for you to make money trading versus investing intelligently (owning low-cost index funds) is to out-play these top professionals.

...

And when you soberly assess your competition--massive global institutional investors with decades of experience and tens of billions of dollars to spend on research, traders, trading systems, information, advice, access to companies and governments, and a hundred other advantages that you've never even heard of--you will (or should) gradually come to the conclusion that this competition is pretty fierce and that your chances of winning that alpha pot instead of contributing to it with losses are small. 

And if you don't begin to realize that, you should at least remember the old poker adage: 

If you don't know who the sucker is at the table it's you.

Click on the link the read the full article. And here is Carl Richards, the author of "The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money", with more:

Successful investing is hard. Not complicated, just hard. It’s hard because for the most part, we are wired to make the same mistake over and over again. We buy high and sell low because that’s what everyone else is doing. But like any problem that needs to be fixed, the first step is recognizing the problem and then coming up with a plan to prevent it.

Still interested in playing the Loser's Game?

Source: Business Insider

Volume 3 Issue 45: Intelligent Investing

Everyone Wants To Be A Billionaire

"I wanna be a billionaire so fucking bad" - Bruno Mars

After the so-called success stories of infamous college dropouts like Bill Gates, Steve Jobs and more recently, Mark Zuckerberg, a myriad of teeny-techies rushed to Silicon Valley to create names for themselves. The trend is still very much on-going, but it has spread beyond just the IT industry. More and more start-ups with brilliant ideas keep popping up. Just the other day, I posted a little story on Dropbox and how it became the Internet's hottest start-up.

The success stories of these "supposedly" normal people are very misleading. I mean, Steve Jobs was adopted, and lived a life full of bumpy roads before guiding Apple to be the biggest tech company in the world. So normal is hardly an understatement. But what is truly understated is the failure rate of start-ups. Every young adult dreams of owning his/her own company some day. It is sad to say, not all of them will succeed. Starting up a company is easy enough. Keeping it alive for more than three years, not so much.

Here is what Zuckerberg thinks about his startup, Facebook:

Zuck revealed a number of fascinating things about entrepreneurship, founding Facebook, and product development, but one of the more interesting (and surprising points) came at the end of the interview when Livingston asked him what he would do different if he could go back in time. Zuck replied: If I were starting now I would do things very differently. I didn’t know anything. In Silicon Valley, you get this feeling that you have to be out here. But it’s not the only place to be. If I were starting now, I would have stayed in Boston. [Silicon Valley] is a little short-term focused and that bothers me.

As I have said time and again. Having long term goals are not only essential, but is necessary. He added:

“There’s this culture in the Valley of starting a company before they know what they want to do. You decided you want to start a company, but you don’t know what you are passionate about yet…you need to do stuff you are passionate about. The companies that work are the ones that people really care about and have a vision for the world so do something you like.”

This mantra simply cannot be repeated enough. Steve Jobs has said it before, and now Mark Zuckerberg repeated it. Here is what Bob Parsons, founder of GoDaddy.com has to say about his 16 rules of success:

1. Get and stay out of your comfort zone.

I believe that not much happens of any significance when we're in our comfort zone.  

I hear people say, "But I'm concerned about security."  My response to that is simple: "Security is for cadavers." 

2. Never give up.
Almost nothing works the first time it's attempted.  Just because what you're doing does not seem to be working, doesn't mean it won't work.  

It just means that it might not work the way you're doing it.  If it was easy, everyone would be doing it, and you wouldn't have an opportunity. 

3. When you're ready to quit, you're closer than you think.

There's an old Chinese saying that I just love, and I believe it is so true.  It goes like this: "The temptation to quit will be greatest just before you are about to succeed." 

4. With regard to whatever worries you, not only accept the worst thing that could happen, but make it a point to quantify what the worst thing could be.

Very seldom will the worst consequence be anywhere near as bad as a cloud of "undefined consequences."  

My father would tell me early on, when I was struggling and losing my shirt trying to get Parsons Technology going, "Well, Robert, if it doesn't work, they can't eat you." 

5. Focus on what you want to have happen.

Remember that old saying, "As you think, so shall you be."

6. Take things a day at a time.

No matter how difficult your situation is, you can get through it if you don't look too far into the future, and focus on the present moment.  

You can get through anything one day at a time. 

7. Always be moving forward.

Never stop investing.  Never stop improving.  Never stop doing something new.  The moment you stop improving your organization, it starts to die.  

Make it your goal to be better each and every day, in some small way.  Remember the Japanese concept of Kaizen.  Small daily improvements eventually result in huge advantages. 

8. Be quick to decide.

Remember what General George S. Patton said: "A good plan violently executed today is far and away better than a perfect plan tomorrow." 

9. Measure everything of significance.

I swear this is true.  Anything that is measured and watched, improves. 

10. Anything that is not managed will deteriorate.

If you want to uncover problems you don't know about, take a few moments and look closely at the areas you haven't examined for a while.  

I guarantee you problems will be there. 

11. Pay attention to your competitors, but pay more attention to what you're doing. 

When you look at your competitors, remember that everything looks perfect at a distance. 

Even the planet Earth, if you get far enough into space, looks like a peaceful place. 

12. Never let anybody push you around. 

In our society, with our laws and even playing field, you have just as much right to what you're doing as anyone else, provided that what you're doing is legal. 

13. Never expect life to be fair. 

Life isn't fair. You make your own breaks. You'll be doing good if the only meaning fair has to you, is something that you pay when you get on a bus (i.e., fare). 

14. Solve your own problems. 

You'll find that by coming up with your own solutions, you'll develop a competitive edge.  

Masura Ibuka, the co-founder of SONY, said it best: "You never succeed in technology, business, or anything by following the others."  

There's also an old Asian saying that I remind myself of frequently.  It goes like this: "A wise man keeps his own counsel." 

15. Don't take yourself too seriously. 

Lighten up.  Often, at least half of what we accomplish is due to luck. None of us are in control as much as we like to think we are. 

16. There's always a reason to smile. 

Find it.  After all, you're really lucky just to be alive.  Life is short.  

More and more, I agree with my little brother. He always reminds me: "We're not here for a long time, we're here for a good time!"

And finally, here is Zuckerberg again:

“The biggest risk is not taking any risk…In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

Anyone up for a start-up?

HT: Business Insider, TechCrunch

Harvard Students To Walk Out Of Mankiw's Class?

The Occupy Movement has reached the classroom. Harvard students are planning a walk-out on Gregory Mankiw's class. Read here for the full story. Here is an excerpt:

Read the full email below: 

Feel upset about EC10 but don’t know how to show your discontent? 

Want to get involved in the Occupy Movement? 

Join our STUDENT WALK-OUT of EC10 on Wednesday, November 2nd at 12:15! 

Gregory Mankiw will be lecturing, and this a great opportunity to show discontent with the style/material/content of the class! 

We will be heading over to the higher ed march after the walk-out and anyone is welcome.
So help show solidarity with the Occupy movement by walking out of EC10 at EXACTLY 12:15. 

This is later than the general walk-out, but we are making an exception because it is such a symbolic class/instructor. 

Let’s show Mankiw that his lack of teaching, extremely high textbook cost, and biased instruction matter to the students!

HT: Business Insider

Being Krugman on Halloween

Krugman and the head of the Supply Side monster

Just awesome.

HT: Business Insider

Volume 3 Issue 44: Two-Cent Economics

Price of Women's Underwear

Simply amazed the kind of data you can get on the Internet. I don't know what this chart tells us exactly, but it is certainly interesting to note:

As you can see, the price of women's underwear has shot through the roof. It has far exceeded the price of outerwear and even the headline CPI, which includes the prices of fuel etc. It begs the question, why the heck are women's underwear so expensive? Well, breaking it down to supply and demand, I think it is safe to say that it is not due to the lack of supply. So, it must be due to higher demand.

So, what caused this higher demand? Well, we most certainly cannot attribute it to women's knack for shopping because the price of women's outerwear has pretty much stayed where it was. Here are my guesses based on principles learnt in Economics 101 (although I never actually took that class).

1. Price of related goods
I don't really know what are complements to women's underwear. Not sure what the substitutes are either. But the Business Insider guesses that it is possibly due to the increase in the prices of other luxury goods. For example, a cheap luxury handbag is still cheaper than an expensive bra. This is possible, but I don't think it is that likely. But women, if you are reading this, please let me know if I am wrong.

2. Personal disposable income
I also don't think personal disposable income has increased in the last four years, especially during a recession.

3. Consumer expectations about future prices and income
This suggests that women buy more underwear if they expect the prices of underwear to go higher in the future. It would seem a bit absurd. This would mean that they would be treating underwear like a stock. But then again, who am I to judge the female mind?

4. Tastes and preferences
This is the most likely scenario. Though, I think its a modification of that. I wouldn't say I have done extensive research into the variety of women's underwear, but I would venture that there is an increasing variety of exotic women's underwear. These days, you can find all kinds of visually enhancing, physically enhancing and emotionally enhancing underwear. If you think "emotionally enhancing" sounds a bit far-fetched, let me remind you of the advertisements that tell women that they can now "feel confident" by wearing a certain kind of bra. Not only that, now, there is now an increasing number of purposes for women's underwear, i.e. sports (remember Anna Kournikova's "only the ball should bounce" commercial?), bedroom sports, Halloween (!?) etc. With increased variety comes increased product differentiation. This allows certain companies to carve out a niche market (i.e. Victoria Secret).

5. New market?
This is not really one of the reasons given in Economics 101. What do I mean by new market? While e-commerce has been around for a really long time, I think previously, shopping online for clothing was usually a women's thing. I am being stereotypical, but men in general do not like shopping. In fact, I seriously doubt men would even shop for women's underwear. But e-commerce has facilitated that. Many men feel embarrassed about walking into a lingerie shop and picking out lingerie for their partners, mistresses and whatnot. But now, they can not only browse online, but make purchases discreetly. I don't know much about men who wear women's underwear, but I think it is increasingly popular that men buy underwear for their female partners. I guess the reason is that they buy what they would like to see their partners in. Kinda like women picking out shirts and pants for men. So, there is an entirely new market out there, but I really don't know if this is enough to boost the price up that high.

Another thing about shopping is that men do not know the actual price of these things. In fact, I would venture to say that men would even pay a premium for something that they like. Getting the best bargains is not really men's forte. Also, there really is a lack of alternative. As mentioned above, men generally shy away from walking into a lingerie store and grabbing something for their partners.

All in all, I think it is a combination of a few of the factors mentioned above. This is just an exercise and an application of economic knowledge in the real world. Please enlighten me if you find something that I missed out.

Perhaps, it could be as simple as the fact that women's underwear have been undervalued for a really long time and is only starting to realize its value.

HT: Business Insider

Volume 3 Issue 44: Intelligent Investing

Groupon Is A Disaster

Can't really say I didn't see this coming. Here is an earlier post on Groupon. In short, this is what I said:

A strong profitable company will still be around 5-10 years from now. It also does not need to make up a way to measure its own profitability. In other words, let the numbers speak for themselves.

It still holds true now. Read this:

Adding to growing customer discontent, Groupon, which was initially seen by small mom-and-pop shops as a way to drum up new business, was losing favor with some of them. Merchants began to do the cruel math on the daily deals. 

Restaurants offering $50 of food for just $25 only collect $12.50 -- not even enough to cover the cost of the food. Some businesses also complain that the deals for new customers anger long-time patrons. And some say that the bargains attract high-maintenance types who don't turn into loyal customers. 

"Your restaurants are full packed with people who aren't making you any money," says Paul Evans, a Kansas City marketing executive who advises clients against using Groupon. 

Take Jessie Burke, for instance, Last year, the owner of Portland's Posies CafA(copyright) offered a $13 coupon for $6. The cafA(copyright) was deluged with customers and Burke ended up having to take $8,000 out of personal savings to cover payroll. 

"It the single worst decision I have ever made as a business owner," Burke said in a blog post that quickly went viral. 

Andres Arango, founder of natural jewelry company muichic.com, had a similar experience. He sold 80 coupons -- $35 of jewelry for $15 -- in two days. But of that $15, he only got $7.50. And he still had to dole out $35 worth of jewelry. 

As far as customers? "They never came back," Arango said.

HT: Business Insider

Volume 3 Issue 24: Two-Cent Economics

The Downside of Being a High Achiever

This is one of the best articles that I have read recently. It is a very long article, so be forewarned. It is definitely worth the time.

Here is one of my favorite parts:

Focus on the Long Term

Major goals can withstand interim setbacks. When you are looking at the big picture, you often give yourself more latitude to make a few missteps.

One lawyer with a passion for civil liberties, Steven, told us of an experience writing a brief that was in an area of law that lay outside his experience. He was paralyzed by the prospect of looking incompetent to the members of the legal community he admired most. That the subject matter was only slightly out of his area of expertise made it all the more daunting—he felt he should know instinctively how to respond.

Steven realized that he had to grant himself the permission to be mediocre—an appalling prospect for achievers.

He weighed the possible consequences of a subpar brief against the broader benefits of expanding his expertise and making an influential contribution to the case. As it turned out, his work on the brief garnered him additional respect from his colleagues. It was a solid effort that demonstrated his ability to stretch beyond his comfort zone.

Long-term success requires some willingness to commit to necessary short-term risks. High achievers often let their fear of failure stop them from taking those chances.

That was the case with Rick, a respected professor but a dismal team player. His students loved him, but his peers were increasingly vocal about his refusal to contribute at an organizational level. He couldn’t be counted on to complete any work other than what was on his own to-do list. Rick consciously ignored his colleagues’ feedback, in part because he knew he was less talented at organizational tasks.

Mostly, though, he was just too self-absorbed to pay attention to anything other than his own teaching, research, and publishing agenda. Unfortunately, Rick’s inability to see the big picture was his undoing, and his contract was not renewed.

In his next position, Rick resolved to do things differently. He invested time and effort in shoring up his organizational abilities. Though he worried initially about not focusing his all energies on teaching, his farsightedness paid off: He’s now one of the most highly regarded professors in his department—on all counts. He still feels anxiety about his weaknesses—that’s who he is—and in a way it’s what makes him great. He’s never satisfied.

Doing the right thing poorly is painful for high achievers. It’s much more satisfying to do something well, even if it’s not the best use of your time.

Moving your A game to a new level or in a new direction takes humility, it takes practice, and it takes patience (not necessarily your strong suit). But it’s a necessary step on the road to doing the right thing well.

I have been preaching about long term thinking for a while now. This article just puts it aptly, among other amazing things.