Author Archives: Money Reasons

About Money Reasons

A offbeat personal finance blogger that comes from the tech world.

Am I Focusing Too Hard On Investments?

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Since the beginning of this year, I’ve been focusing with laser-like intensity on the stock market… But I have to wonder if the extra time is worth it, or perhaps I am focusing too hard on investments!  It’s hard to draw a distinct line when it comes to making money.

There is a rule called “Pareto principle” that basically states that with 20 percent of your effort, you encounter 80% of your results.  So basically the more time you put into a situation, the less results you encounter.  When you put in a more time with less results, that’s called diminished returns.  And some people even claim that if you put too much time, the results actually go negative and you actually start to do damage to your goal.

RothIRAPerformanceSM

I think I might be at that point in time.  I’m thinking and putting in way to much time in the stock market, but the benefits are questionable.  Some things in life (like investing) requires time and patience.

I’m currently following the stock market like a hawk, trying to increase my returns.  My primary stock I plan to hold for at least 2 years, and maybe much longer.  Each day I’m checking up on the stock, reading the thoughts and commentaries about it.

But is that time really worth while?

Based the Pareto principle, it’s obvious to me that I’m putting way to much time into researching the stock.  I’ve done enough work to know that it’s a good investment, and the business model is such that it’s not a dynamic company that could be easily wiped out tomorrow.  It’s stodgy and predictable, so the extra time I’m putting into researching it, and watching the daily valuation of the stock price, is a total waste of time and life.  I could use the research time for new leads instead of watching my favorite stock.

All that I said above is true, and yet it is still so hard to “not” watch my favorite stock.

If you dabble in the stock market, do you find that you have similar issues?

Bests,

Don

Everything Goes Trash Night – Bizarro Christmas Year 3

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Once a year, our community has a special trash night were we are allowed to get rid of everything except mattresses.  Last year, I wrote about my community’s trash night in an article called “Everything Goes Trash Night – Bizarro Christmas Year 2”  where this special day is almost like a holiday for my wife and I.  It’s a great opportunity to get rid of clutter!

It’s the anti-thesis of Christmas where instead of receiving stuff, we get to toss stuff out!  Like last year, this year didn’t disappoint either!  We got rid of the following:

  • Old, slightly rusty grill
  • Plastic chairs and 1 soccer field chair
  • Snow thrower (my dad still calls them snow blowers, and so do I sometimes).
  • Razor scooter
  • Kid Toys

Interestingly, this year it was different!  In previous years, we’d put the stuff down at the bottom of the drive, and late in the night, people would come and pick things up, but this year they were early and everywhere!  First I wheeled down the grill, and while I was walking up the drive, someone stopped by and snagged it.  I went back down and asked if he needed help loading it, but he said he had a trailer with a ramp and he was going to wheel it up into his truck.  I watched and he did that right quick.

Next I put out the chairs, when once again when I got to the top of the drive a woman stopped and asked if she could have the chairs to which I said sure, I even ran up to the garage to get the soccer field chair for her.  She seemed happy.

Nothing was left down at the bottom of my drive, so I went backup and started to wheel down my biggest item… the snow thrower.  Once again, I got back up to the top of the drive when I heard a minivan stop.  Since this was the heaviest of the items and the minivan had a high gate, I walked back down to asked if he and his wife needed help loading it.  Since it was so heavy, I was afraid that this wife would have to help, and although I’m sure they could have done it… I was there already, so I offered.  Luckily for me, he had a buddy drive by with a pickup, and that was the perfect option.  We put it in the pickup, and away they drove.  They both thanked me and I wished them farewell.

I’ve lived at my house for 11 or 12 years now, but I just really started putting stuff down on “Everything goes trash night” starting three years ago.  Five years ago, I would have worked a bit harder to make the things I had last until they would totally break, and in fact, I did do that with my old lawnmower (Mean Green).  But this year, it was easy to part with my snow thrower and everything else.  I know that if I worked at it, I could have fixed the snow thrower, but it’s over 20 years old and there are much better models out now, so why not let someone else have it!  I’m sure it will make someone happy!

An hour later, I remembered that I wanted to get rid of my son’s razor scooter, so I rode it down and leaned it against the trash can.  Again, I was surprised when I heard a truck stop and just like a quick, cool breeze, it was gone!  Totally awesome!

Right now as I write this, I’m more content than on the real Christmas!  It’s funny how giving stuff (trash if you will) away can make you happy.  I know that I could have listed half of my old stuff on Craigslist and probably have made a bit off money, but this is even better!

Bizarro Santa

Bizarro Santa

Happy Bizarro Christmas, everybody…  It was another great year for me!

Don

Is A Millionaire Promise Wrong?

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I promised to be a millionaire when I was very young!  Here is my millionaire promise story…

My grandparents were in business, and in particular my grandmother was very business and finance oriented. As a young child (maybe 5 or 6 years old) I made a millionaire promise to my grandmother that someday in the future I would become a millionaire. She said surprised at my sudden “out of the blue” millionaire promise and said good and told me that she believe that I could do it if I tried hard enough. I remember her encouragement making me happy back then!

Rich Kid

rich kid

My grandmother enthusiastically encourage me in my new goal and steered me towards creating a target age for my new potentially elusive goal. So after some thinking, I decided on the target age of 25 years old. To me at that time, it was 4 to 5 times my current age, which naively seemed possible to me at my very early age. I was a little off guard when my grandmother chuckled a bit. I started to question my goal and thought that perhaps it’s not possible after all. My grandmother then tried to explain to me that 25 years old was too young to reach such a status. Instead she suggested an age range between 45 to 55 years old, and even then she said it would be hard but doable. Back then, those ages seemed way too old to me. I reluctantly agreed to her proposed age range with the 55-year-old target date being the limit. She has since passed away, but I still intend on keeping my millionaire promise!

Now with some real world experience under my belt, even the “55 years old max age” seems hard to reach, but a millionaire promise is a promise so now I better hop to it! The problem is with the path that I’m currently on is that it doesn’t seem likely that I’ll reach that elusive millionaire status even when I’m ready to retire at 67 years old. Time to rethink the path that I’m currently on. The path that I’m currently on is a good path and should enable me to reach the goal, but not soon enough.

So what can I do to meet my becoming a millionaire promise in the given age range?

  • Work both harder and longer at multiple sources, then investing the money earned so that it will grow passively and hopefully right quick!
  • Invest smarter.  With three brokerage accounts, I can experiment in each one to flush out the optimal investment strategies.
  • Save more money by purchasing more frugally. Instead of spending money eating out for breakfast and lunch, I should pack both (and I have done this in the past)!
  • Use credit card rewards more intelligently. I’ve done okay with my credit card rewards points, mostly buying house computers for the family, etc.
  • Think about finances more. The more you think about it, the more focused you are, and the more opportunities will be seen.
  • Buy Real Estate. If I borrow money for the purchase, in theory, this should be good debt and doesn’t hurt my current finances, at least if I can rent the property out.
  • Watch TV less, watching TV is a huge time and life waster in my option (except “Mad Money”). An occasional movie or maybe 1 or 2 shows a week is okay though.

Starting next month, if I really focus on the points above, I have a good chance of reaching my long ago promised goal of obtaining millionaire status.

We’ll see…

Don

Investing Is Like A Skill Based Game

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The more I think about it, the more it’s obvious that investing is like a skill-based game!

Like any skill-based game, the more you think about and practice with it, the better you become (hopefully).

I’m finding that in many ways investing is very similar to a game such as Risk, or even Chess.  Investing involves losing money as much as winning money. Much like skill-based games like Chess, you lose pieces, but sometimes you have great gains with one piece, and sometimes you hold onto that piece until the end of the game ends or at least for a long time.

A lot of people lose some money with stocks and get disillusioned with the entire process and quit.  But hardly anybody wins all the time with the stocks that they purchase.  It’s a matter of experimentation and experience.  I’ve had 6 bagger (stocks that increase their value 6 fold more than the purchase price), and I’ve had stocks that went to 0 (painful, but luckily it’s been just a few).

I’ve learned to look at more than just the financial statements, and I’ve learned to look at more than just the stock story.  I’ve seen some companies with incredible products that were brilliant go broke because the product was too expensive compared to competing products.  I’ve also seen a few stocks with rock solid financials but later it was revealed that the books were cooked, or at least questionable.  I’ve also seen a few stocks that were solid financially for many years, and that are now on the decline because of a changing business environment (think Pitney Bowes).

I’ve also learned that the management team (and especially the CEO), matters!  Look at Apple after Steve Jobs passed away for confirmation of a stock that looked like it would continually go up, and now has fallen quickly and some even believe has a questionable future.

I’ve also learned that I can’t do it like Warren Buffett.  His system is best done by him alone.  Considering he doesn’t even have a computer in is office at work really demonstrates that I won’t even invest like him.  That said, there are definitely techniques that I can learn from Warren, but in the end I would have to come up with my own system.

I have learned to diversify my stocks, and only put so much into each stock investment.  If I think I’m pretty sure a stock is a winner (much like Baidu was), then I invest more in such a stock, but those opportunities are rare for me.

I’ve just scratched the surface, there are many other facets to consider, such stock rotation during the year and other ever-changing strategies…

Bests,
Don