Sunday, December 23, 2007

So many cures

Every once in a while I think, why should I even bother writing a money blog, I'm not a professional, I have no CFP certification. All I can do is quote Suzie Orman in my sleep. Well, today I am rejuvinated and so am writting another post. The reason is the book that Kevin Trudeau published called "debt cures".
Most of you probably recognize Kevin from his other book "Natural Cures".

Kevin backs up his books with those paid tv spots where he talks about all the secrets he reveals in the books.

Now, I looked at Natural Cures, and it was a long list of all the natural remedies that exist and he recommends the all. Overall though, after flipping through the page I felt like I was going to die any second now because I don't see my chiropractor every month and have never done a "cleansing"

But fine, the book is ok as just a big list of things you could do for yourself. But here is what I am amazed at.

Now he has come out with a book about debt! He went from an expert in natural remedies to being an expert in debt. (in between he also actually published a book on weight loss) What this means is that this guy is just a marketing genious.

For me it proves once again that anyone can become a money guru. Look for my next book tour!

Tuesday, December 11, 2007

Random Personal Productivity Idea

Here it is, short and simple:
Break down huge scary task into really, really small tasks so that you can do each in 5 minutes.

That way, in a year you can complete a whole project if you work 5 minutes a day. Without the list, the task may appear too daunting, or you might spend your 5 minutes just figuring out what to do.

With this plan, you just get your 5 minutes, and do whatever the next task is.

Ok, now take this idea and go make a million!

Monday, December 3, 2007

Financial Wisdom Might Be Part of an Information Cascade. BEWARE!!

Here's a fact:
When CNBC mentions a stock with good news or bad, its price goes up. Effectively making an excellent stock trading strategy.

The assumption people are making is:
If CNBC thinks it is good, it must be good.
But wait, that implies the listener actually heard more than the ticker symbol and would not explain why bad news also causes the stock to go up. So the real assumption people are making is:
If you see or hear a stock mentioned on CNBC, BUY IT!!!!

That's right, there are millions of people just watching CNBC and then calling their stock brokers. The question I ask here is: Are you one of those millions?

But even if you don't buy stocks the behavior I described should cause you to evaluate your own decisions. Before I get to that, let me explain what might be causing the CNBC listeners to behave the way they do.

Wisdom of Crowds says the CNBC phenomenon is a kind of "information cascade." An "information cascade" is a kind of "group think" where people follow the group's decision without evaluating the facts for themselves. For example, I buy a stock because you think it's good, and my friend buys a stock because he sees me buying it, and my friend's friend sees my friend buying the stock so he buys it, and on and on. This can result in a group that does not have diverse points of view and thus makes some really bad decisions.

Alright, now this is all very interesting, so here's a fact that might really disturb you:

The most effective way to maximize your portfolio return is to diversify your investments among many loosely correlated asset classes.

I could have easily said "Save 15% to 20% for retirement" or "If you have 5-7 years to invest, do not worry about fluctuations in stock prices because the average return over the time period will be greater" or even "Don't save, invest in real estate!"

Admit it, how many times have you heard these statements? Have you analyzed the data yourself? Have you thought about these concepts? Have you considered alternative strategies?

Are you just participating in a long standing information cascade or is the wisdom really correct?

Outsourcing, "4-hour Work Week" and You

Greg and I were chatting about the subject, and he asked me to summarize the content in this space.

Fact 1: outsourcing, hate it or love it, has been with us for a long time, and will be here for our whole lives.
Fact 2: you can accomplish many ambitious projects, if you're good at outsourcing the grunt work - see "The 4-hour Work Week"
Fact 3: is one of many, many existing sites that offer an enormous pool of talent at very reasonable rates

Some more about : from my experience with it, you can get quality work delivered to you for very low rates. the reason for this is that freelancers from all over the world are bidding for your projects. from some of the bids i've read, it seems there are 5 grad students in an emerging country, huddled around 2 computers, ready to crank out PHP code in a couple of hours for 50 bucks.

Of course, it doesn't always go smoothly, and even if you rely on the site's rating system, you're still not guaranteed success. but so long as you provide very specific description and instructions, and you're not going with the lowest bid, it's pretty doable.

what's the point, you ask? the point is that you're freed from grunt work, and can deal with higher-level things, like interpreting your vision into a tangible design, coming up with architecture, or brainstorming up a radical paradigm shift. then, bid out the grunt work to ready-and-willing freelancers. the only restriction on how ambitious you can get is the amount of seed money you have. oh, and also, don't create projects like "need a myspace clone, $200". be realistic.