5 Secrets of Innovation

Seem to notice the Steve Jobs picture everytime innovation is the subject.

FIVE KEYS TO INNOVATIONResearchers say they have identified five skills that drive innovation:

Associating: The ability to connect seemingly unrelated questions, problems or ideas from different fields.

Questioning: Innovators constantly ask questions that challenge the common wisdom. They ask "why?", "why not?" and "what if?"

Observing: Discovery-driven executives scrutinize common phenomena, particularly the behavior of potential customers.

Experimenting: Innovative entrepreneurs actively try out new ideas by creating prototypes and launching pilots.

Networking: innovators go out of their way to meet people with different ideas and perspectives

Online Mentoring

One of the sure things to have a more successful life is to have a mentor. Horsesmouth is a site for would-be mentors and mentees.

It's a free site, so offering and receiving advice would be easy if you're really up to it. The site gives categories or topics for mentoring like changing careers, work-life balance, relationships, talents, etc.

US economy charts 2009

GDP, housing, spending, inflation, manufacturing seems to be improving over time for the US this 2009. However the biggest factor remains to be unemployment which remain relatively high.

People seem to be spending more as shown by the GDP, housing and spending charts. However most that I've read so far point to unemployment as the last but most important piece of the US economy recovery puzzle. If companies hire people again, consumption, which is the biggest chunk of the US economy, will follow and rise and will see the US out of recession.

Warren Buffet Anecdote

Several of the outstanding characteristics of Buffet while reading his biography were the ff:
1. He is obsessed with accumulating money
2. He is a very calculated risk taker and that he managed risk by way of reading financial statements, Moody's Manuals almost, if not everyday. He doesn't like to lose money especially his client's.
3. He leveraged his talent by borrowing other people's money as shown below

At the time, Warren Buffet probably understood the potential of money management to beget more money better than anyone on Wall Street. Every dollar added to a partnership would net him a share of what he earned for his partners. Each of those dollars, reinvested, would generate earnings of its own. Thos earnings, reinvested, would beget still more earnings. The better his performance, the more he would earn, and the larger his share of the partnerhsips would grow, enabling him to earn even more. His talent for investing could exploit that potential of managing money to the hilt.. Even though he was nearly invsible in the ivesting world, the snowball was starting to roll..

From the Chapter Hidden Splendor of The Snowball, Warren Buffet and the Business of Life
by Alice Schroeder

Power of Association

Am surprised to see this post in a swimming blog but nonetheless it applies not only in swimming but to life in general as well. Below is written by Shelly Taylor Smith, a 7-time World Champion and 5-time winner of the mighty 48km Manhattan Island Marathon Swim.

I was about to delete the email with the post below as I was cleaning up my Inbox when I decided to sample one of the mails. Good thing I clicked on the 'right' mail or was it fate?


The most profound influence from the "outer world" is most certainly OTHER PEOPLE.

The people you allow into your life and who you spend the most time with, are the greatest external factors to the direction your life will take. Yes, external influences are that powerful.

It is known that you will be the combined average of the 5 people you spend the most time with; you will have the combined lifestyle, health practices, thinking processes, expectations and income.Think about it. Whatever is consistently entering your experience ends up becoming your reality.

Similarly, whoever is consistently in your experience is bringing dominate thoughts, attitudes and actions to your reality.

Who we spend our time with determines what conversations dominate our attention and the observations, attitudes and opinions we are repetitively being introduced to.

Eventually, we start to eat what they eat, talk like they talk, read what they read, watch what they watch, treat people how they treat people, even dress like they dress and think like they think.

All the while this may not even be a conscious transition.Your associations don't shove you in a direction; they nudge you ever so slightly over time.

The take-away here is to form a team around you that will help you achieve your goals. Try to be in their circle, befriend them, or get someone to introduce you to them. Get someone or have a friend who is an 'expert' to help you in the following areas: health, finance, career, interests, travel, family, etc.

Thanks to Swim Smooth Blog

Benefits of Education and Specialization

Some posts in Economix about the above topic

1. Correlation of a country's educational investment and GDP. The higher investment in education the greater the economic growth. Typically an extra year of schooling increases earnings from 6 to 14 percent.

2. Specialization brings more income and productivity to a person.
The advantages and disadvantages of specialization in the adult world are readily seen in the medical field. Research has shown, and pay scales confirm, that highly specialized medical doctors are more productive – make better diagnoses and fewer mistakes – than do general internists and general practitioners.

Who am I meant to be?

As my previous post has mentioned, asking who we are meant to be is one of the most difficult questions one faces in his lifetime. It's not that we couldn't really find out what our true calling or purpose is but we are most of the time, if not always, compromised by trying to please others, trying to be better off than others, trying to figure out how financially secure we must be, coping with our insecurities, etc.


After taking the quiz on O Magazine, below is my striving syle. This validates the strengths I found I have before.


YOU ARE STRIVING TO BE KNOWLEDGEABLE
You are an intellectual: As a leader, you're often ahead of your time. As an employee, you try to surpass the competence level of peers, even managers. Incisive and curious, you're driven to deeply understand how things work. But that's things, not people. Oh, your family and friends are important; it's just that you don't need to spend hours engaging with them. Social validation isn't your goal—you're secure enough in your cerebral pursuits.

What to watch out for: When you can't find a way to be the expert, you may withdraw or simply withhold information, which can make you seem smug or arrogant. If you feel yourself retreating into your own world, seek a friend's help to pull you back. Also balance your cerebral tendencies through physical activities like jogging, hiking, or dance.

Looking ahead: You discover who you are meant to be through accumulating insight and knowledge. So follow your curiosity. Are you drawn to learning Mandarin? Join-ing a philosophy society? Studying and practicing Buddhist meditation? Delving into the complexities of computer programming? Writing a historical book? Pursuits that place you near the leading edge of technology, science, psychology, academia, or business are good bets. But any situation that allows you to work independently with freedom to investigate and innovate will fuel your drive.

Who you are meant to be?

This is one of the more difficult questions to ask of oneself but it is one of the most worthwhile and important to ask. Good thing I stumbled upon The Oprah Magazine, November 2009 issue. There are several articles there focused on answering just this question.

Blogless

This is how far or serious the recession has hit.

Seen at Freakonomics

Winds of Change

When things are not so stable in our life, we become more receptive and welcome to change.

In a new study, Moore School of Business marketing professor Stacy Wood suggests that it’s in times of upheaval that we’re particularly inclined to leave our comfort zone and try new things.

On first thought, this sounds counter-intuitive. You would think that upon losing our job or girlfriend, we’d be more intent on crawling under the sheets with a favorite book or movie and lying low for a while – not deciding that now’s the time to quit smoking or take up sky-diving.

It seems that when we are confronted with one disruption to our daily routine, we become more open to other change. Or, to put it differently, when things break, we enter the right mind-frame for breaking our old habits as well.

When it comes to our recessionary times, then, it appears that now is a good time for us to embrace all kinds of change. A tighter budget or shorter hours at work might be that catalyst you need to reevaluate your daily shot of Starbucks espresso or your aversion toward exercise. To paraphrase President Obama, (and for somewhat different reasons) now’s the time to believe in change.

Complete article here.

How Good is Jack Welch?

Read this article and came out with these conclusions:

1. The company's stock valuation is not a direct measure of how good its CEO is. The stock valuation or more specifically, its P/E is more a function of the market's perception of the company or of the economy as a whole -i.e. in good times, stocks perform better.

2. The economic environment, rather than the decisions its management make or specifically the decisions made by its CEO, is a much more a factor in shaping a company's future or its valuation.

Thanks to Economix

Wealth and Poverty Defined

I had to rethink my views on how poverty, and thus its opposite -wealth, are defined after reading the below excerpt.

By nature, I'm an inward looking person but from now I should also be looking for ways on how to connect with others.

I can directly relate with this on how I got my present job - through a personal connection. I have applied and sent my resumes to a job-search site but had zero success, so far. I've previously had a job interview, not because I applied directly, but a former colleague referred me.

There was once a study discussed when I was still taking up MBA -How does an MBA education benefit someone? The result of the study told not much. The main benefit however was having an expanded network of friends, colleagues.

The key therefore in the long term in raising his/her net worth is on how well he leverages his newfound network.

In hindsight, I should have maximized my time in getting and establishing a solid network of future friends and partners instead of just burning my eyebrows studying case studies.

-------------

I seemed to have learned something long before I arrived in Cambridge that it seemed many of my peers had not.

As a kid, I caddied at the local country club for the homeowners and their children living in the wealthy town next to mine. It made me think and hard about those who succeed adn those who don't. I made an observation in those days that would alter the way I viewed the world.

..I watched how the people who had reached professional heights unknown to my father and mother helped each other. They found one another jobs, they invested time and money into one another's ideas, and they made sure their kids got help into getting into the best schools, got the right internships, and ultimately the best jobs.

Before my eyes, I saw proof that success breeds success and indeed, the rich do get richer. Their web of friends and associates was the most potent club the people I caddied for had in their bags.

Poverty, I realized wasn't only a lack of financial resources; it was isolation from the kind of people that could help you make more of yourself.

-------------

..a classic 1974 study by sociologist Mark Granovetter that surveyed how a group of men in Newton, Massachusetts, found their current job. The study, appropriately titled "Getting a Job" has become a seminal work in its field, and its findings have been confirmed over and over again.

Granovetter discovered that 56% of those surveyed found their current job through a personal connection. .. 19% used ..traditional job-searching routes like job listings and executive recruiters. Roughly 10% applied directly to an employer..



Excerpt from never eat alone by Keith Ferrazi with Tahl Raz

What's your Mission

If you follow your bliss, you put yourself on a kind of track that has been there all the while, waiting for you, and the life that you ought to be living is the one you are living.

The 'blue flame' is where our talents and desires intersect. When that blue flame is ignited, it is a powerfulforce in getting you where you want to go.

Excerpt from Never eat alone by Keith Ferrazzi with Tahl Raz

Comparative Advantage

I can walk faster than my secretary. Yet on those occasions when I need a document hand delivered quickly somewhere on campus, I send her to deliver it. The reason is that, although the amount of time that it would take me to deliver the document and to return to the office is less than the amount of time that my secretary requires to do the same task, the value of my time is greater than the value of her time. That is, the value of the output that I would forgo producing were I to deliver the document myself is greater than is the value of the output that she forgoes producing when she delivers the document.

So I have a comparative disadvantage, relative to my secretary, at hand-delivering documents — meaning she has a comparative advantage over me at this task. Because she can perform this valuable task at a cost lower than I can perform it, we both gain — I by paying her to relieve me of the cost of performing this task, and she by being paid an amount sufficient to compensate her for performing it.

Click on the title for the full article.

About Jobs

Going for the high paying job would almost be a certainty but it won't guarantee that you'll be happy in that job. However, the same goes for the opposite argument. But which would you aim or prioritize first? a high paying job or a job that you like? This seems to be a no brainer for some. The smart answer would be go for both but would you be willing to compromise?

As a side note..The one good thing about not watching TV is that I could think a lot -which I like doing by the way. I think I need an environment where I could think a lot - perhaps a job like that.

Getting paid to do what you like

Am currently rethinking my goals, the things I want to achieve in life. The one definite thing that I do want to happen or accomplish from now is to get paid by doing the things that I like. I think that is one measure of success that I'll use when I come across people.

Poker Lessons

It's not about the hand you're dealt, but how you play it.

1.You've got to know when to hold 'em ...

2.Know when to fold 'em ...

3.Know when to walk away. And know when to run.

4. You never count your money when you're sitting at the table.

Click on the Title for the source article

A Good Question Always Beats A Good Answer

Some questions we need to be asking ourselves:

1. Why are we doing this in the first place?

2. What gets you up in the morning? What keeps you up at night?

3. How can I capture the world's imagination?

4. What are you working on today?



From the Book Rules of Thumb by Alan M. Weber

Rules of Thumb

This passage in the book made me buy it:

Rule #7
The System is the Solution

It's the first discipline in Peter Senge's great book on creating change, The Fifth Discipline.

It's deeply embedded in almost all of Michael Porter's work on strategy.

And it's the kind of thinking you'll need to learn if you want to compete and win in the new world of work.

----------------------

A quote from the book:

"What is hateful to you, do not to your fellow man. This is the law: all the rest is commentary." -Talmud, Shabbat 31A.

Nudge

N -centives

U -nderstand mapping

D -efaults

G -ive feedback

E -xpect error

JK Rowling Quote

How would you like to be remembered?

"As someone who did the best she could for the talent she had"

-JK Rowling

The End of Retirement

Retirement ends as life expectancy increases and cost of retirement becomes greater than social security or pension accounts can bear. This is the case for rich countries, however it will not be long before we follow suit.

Breaking It Down

Most of the time when a task becomes too complex, I often have this presure within to finish the jobbut at the same time I become almost unproductive as I don't know where to begin and can't imagine howI'm going to finish all that lay ahead.

Of course, my thought process begins with visualizing what the final state will be or what the specificproject will look like after. Comes next is the thinking part of how all of these will happen or bea ccomplished.

The problem arrives when it now comes to the details of doing or completing the tasks. I often think a lotso there is always a lot of rethinking that nothing becomes fixed for a long while. Somehow I manage tofinish a complex task but the timeline seems to be very long.

The weakness I think comes on how to break down the tasks so that they will be manageable. Anyway, just thoughtof putting this down so when a big task comes along, I'll come back to this mental note.

What is Love?

Can you just 'know' love when it happens to you?

I guess love is a journey where both parties survive the transition from intense and unpredictable(yet exciting) to a moderate and more predictable relationship.

Maybe it's better to define it thru example than by trying to capture what it means.

Launching a Business in Web2.0

“There’s zero incremental cost for digital goods?whether its a music track, an article or an app?so now anyone can put up a piece of content and sell it to a billion people,” he said. “That makes it much easier to start and reach a massive market.”

With channels like social media, apps and online video, you have multiple ways to grow a very specific audience very quickly?which is far more attractive from an advertising point of view.
The secret is really finding a business model to lay across those features that someone creates.

From Business Opportunities Weblog

The Future

2029
1. Have P15M
2. Am working for myself

2014 (5 years from 2009)
1. Have a business
2. Have skills to freelance and to become a consultant

Quote on Having

"What is yours will always return to you. What you take will always be taken from you.."

From Seraphim Falls

10-10-10 Rule

Visited a nearby bookstore and found the book 10-10-10 by Suzy(?) Welch.

It's about thinking about the consequence of your decision 10 mins, then 10 months, then 10 years later. It's a very simple decision making process but one that puts your decision in a short, medium and long-term perspective. It helps us avoid the hardwired biases and sometimes unhelpful information filtering our brain usually does when we make a decision.

Next time, before making a decision, think of the 10-10-10 rule.

3 Investing Principles by Warren Buffet

• A stock is the right to own a little piece of a business. A stock is worth a certain fraction of what you would be willing to pay for the whole business
• Use a margin of safety. Investing is built on estimates and uncertainty. A wide margin of safety ensures that the effects of good decisions are not wiped out by errors. The way to advance, above all, is by not retreating.
• Mr. Market is your servant, not your master. Graham postulated a moody character called Mr. Market, who offers to buy and sell stocks every day, often at prices that don't make sense. Mr. Market's moods should not influence your view of price. However, from time to time he does offer the chance to buy low and sell high.

I think most investors forget about the last bullet, and that every investor, including myself should have a measure of what the right price of a certain stock must be.

Taken from The Snowball Warren Buffett and the Business of Life by Alice Schroeder

Insider Entrepreneurs

Link above tells how can still be entreprenurial inside your company.

"An intrapreneur doesn't quit her job to do her own thing. Instead, she develops a new process, product or service within the context of a larger organization. Using the resources and capabilities of the larger firm, an intrapreneur transforms a good idea into a profitable venture"

Marketplace Whiteboard

Here is I think a very good resource for explaining current economic terms and trends.
Marketplace Whiteboard explains hedge funds, toxic assets, leveraging and deleveraging via video.

I tried to watch the video for hedge funds -something that I tried to understand for sometime now- and I think those who would try to watch the videos here must first have some basic knowledge of economics and investment tools to really appreciate the concepts being explained.

If your curiosity is already piqued, go ahead and watch. :)



Tip to Visualizing Economics

What's Wrong With This Picture?

I work in one of the top pharmaceutical companies in the country. I have worked in an electronics company before and besides the industry, one of the main differences between the two is how it motivates its people.

The company that I work for now has a way of motivating its new hires that I find a little disturbing. In the few times I have talked with my boss regarding my future at work, he has always told me that I will be sacked or fired if I didn't perform well. To be fair, he says he likes me but there is always that warning in the end if I don't do well.

Is it just me or is there something just wrong in there? I guess it's just right to be straightforward to an employee, given that this company is in a very competitive industry, all employees need to be on top of their game and management has the right to remove all non-performing employees. However, so is my previous company and yet I didn't hear that sort of thing from my boss, nor from myself whenever I talk to our new hires about their future.

For being the local market leader in its industry, my present company sure has some machiavellian way of motivating its people. Management by fear is what I'll call it. This mention of being sacked is the only (dis)incentive that really bothers me. For one, this kind of policy doesn't encourage risk taking or innovation for who would want to take risks if he/she fears getting sacked if they make a mistake? Maybe this company just doesn't want risk taking or innovation. If so, what kind of fun is left in work?

Another thing that bothers me is the word 'boss'. I always hear that word nowadays. For an american company which supposedly has a flatter organization than asian companies, 'boss' just reinforces the distance and heirarchy.. I remember writing an essay while I was still studying, about the differences between a 'boss' and a 'leader'. In the 21st century, does 'boss' really have a place in the organization? Anyway, this is another story.

Any company, however great it may be, is never perfect. In its evolution, the policies in place either have stood the test or time, or currently the most effective in leading and controlling its people. If its the former, then is management by fear the true way to lead? I hope it's not entirely so. For like I said before, I have this gut feeling that it's not just right. There must be a better way.

Semphil Chip Resistor

An article I wrote in 2006 for our company newsletter.
Click on the image to magnify.

The Collapse of Manufacturing

The article (click on the title) argues that, in light of the current financial cris, the manufacturing industry doesn't need to be saved because primarily of low demand.

If sectoral aid is wasteful, why then save the banking system? Not for the sake of the bankers, certainly; nor because state aid will create an efficient financial industry. Even flawed bank rescues and stimulus plans, like the one Barack Obama signed into law this week, are aimed at the roots of the economy’s problems: saving the banks, no matter how undeserving they are, is supposed to keep finance flowing to all firms; fiscal stimulus is supposed to lift demand across the board. As manufacturing collapses, governments should not fiddle with sectoral plans. Their proper task is broader but no less urgent: to get on with spending and with freeing up finance.

From The Economist.

Price of Everything Excerpts

Economics is not about prices and money. Economics is about how to get the most out of life.

Never confuse a person's identity or value as a human being with his/her job title. They have nothing to do with each other.

From The Price of Everything by Russell Roberts

Marriage and Fat

"Married individuals weight more on average than non-married individuals. We suggest that exiting the dating market decreases one’s incentive to maintain their appearance and thus leads to an increase in body weight"

Complete article here.

Tip from Marginal Revolution.

Wealth Quote

"Wealth consists not in having great possessions, but in having few wants"

-Epicurus, ancient Greek philospher

Bank Bonuses

An interesting look at the incentives behind banks and how these failed to create value for their shareholders.

This somehow made me skeptical in investing in 'blue-chip' banks.

From The Economist.

American gangster

"You're either a somebody or a nobody."

What Frank Lucas did in the illegal drug business was innovate the way how business is done by going straight to the supplier. Seems commonsense and obvious these days with the available technology and ease of moving goods around. But in Frank Lucas' time in the late 60s, cutting out the middle man was challenging the norm of doing business.

We all know that both seller and customer will end up with more value by directly dealing with each other but the more important lesson here is to challenge the accepted way of doing business and then do it differently.

"The most important thing in business is honesty..."

Another thing Lucas did was to grow his business. This he did by hiring people he knew he could trust - his brothers. Trust is a much taken-for-granted prerequisite in doing business. Without it you cannot prosper and you cannot grow.

"More important than in any man's life is order."

Much as Lucas was the most successful drug dealer of his generation, what brought him down was his love for his wife. Lucas was a very low-key businessman but one time his wife bought him an extravagant fur coat which he wore at a boxing match, and that is how Richie Roberts, the cop who would later put Lucas in jail, first caught attention of him. Roberts took the first picture of Lucas that time. And the rest was history.

A must-see movie.

Outliers Review

Have posted this review in Amazon for the book, Outliers by Malcolm Gladwell

Engaging in Battle

"Don't engage your enemy too long for he will soon adapt to your tactics."

From the movie Lions and Lambs

Shopping Cart Cash

Been busy for the past 2 weeks familiarizing myself with online shopping carts. There is an abundance of information in the Internet on how one can start an e-commerce site from scratch.

Anyway, I have written several introductory posts on the subject and they can be seen here in Shopping Cart Cash.Com. Check them out.

Tips in Hard Times

Some tips given by a clinical psychologist when facing economic difficulty or when out of work:

• Don't panic;
• Find a support group, even if it's just an informal group of friends;
• Seek employment counseling when available;
• Be professional in your job hunt;
• Network with other professionals;
• Take time to exercise during hard times;
• Spend valuable time with your family.

From this article in CNN.

Retooling

Whenever there is a recession or a technological change, job losses as well as job creation is an inevitability. The choices for those who are affected are either to stick it out in their chosen field or to retool or retrain themselves in another field, which hopefully will land them new employment . See related article here. Either choice is difficult to make as both choices involve sacrificing time and money.

Sticking it out might mean running but not hiding from a shrinking field or profession. In manufacturing, though the world cannot go without it, I envision jobs in this field to be broken down into bits and pieces of simple procedures that soon anyone can do it. Ergo, manufacturing jobs will soon be very automated and/or given to those who sell labor the cheapest. Depending on the industry, a manufacturing company can afford to pay premium labor, but it wouldn't be long before jobs would be shifted to cheaper labor.

Retraining oneself in another field is also a big gamble, though it would be the better choice in the long term. As long as one can afford to retrain, I think one should go for it. Of course, this is easier said than done. It's one thing if one is already laid off and then forced to retrain himself. It's another when one is still on his job but thinks his future is not that bright and is contemplating whether to quit then retrain himself.

Dealing with Recessions

An interactive link from the New York Times showing US economic policies during recession and telling what worked and what didn't.

About Wordpress

When starting out this blog, I came across Wordpress from this post in Daily Blog Tips. Anyway, as a newcomer to blogging I stuck it out with Blogger. Curiosity about Wordpress did not end there however.

Worpress sites are much more versatile, judging from the hundred of themes available online. See here and here. Many are free but some are professionally designed and come at a price.

Fascinated with how much better my blog will look like, I got a free Wordpress blog in Wordpress.com. I had confused this with Wordpress.org which caters to publishers who (will) have a separate host for their content. For hosting in another site, you need an FTP program to transfer your content.

After having registered my new blog, which is just a mirror of my Blogger blog, I then went for several days to research on free Wordpress themes online, only to find out that I cannot use them at the Wordpress.com site. Also, I haven't found yet a Google adsense widget which can make my blog earn money.

Some cool widgets though are Top Posts and Calendar, which I'd like to have in Blogger.

Overall, if one is really serious into blogging and its better aesthetics and wouldn't mind paying for a host, then I'd really recommend using Wordpress.

What's in a Scent?

There is a new and more convincing reason why men should wear scents.

A study found out that men who wore commercial fragrance compared to those who didn't, were considered more attractive by women. After seeing short silent videos, the women considered those who wore fragance more attractive because these men exuded more self confidence in their actions. The same women were not able to distinguish men when they were just shown still photos, suggesting it was the men’s movement and bearing, rather than their physical appearance, that was making the difference.

Another finding is that we choose a perfume or scent to further promote or enhance our natural smell. In 2001, another study found that there is a correlation between the perfume a woman preferred and her own natural scent.

The correlation is with the genes of what is known as the major histocompatibility complex (MHC)...It turns out that one of the most important aspects of mate choice in mammals, humans included, is to make sure that your mate’s MHC is different from your own.

This implies that you choose a mate whose scent is more different than similar to yours. So when choosing a perfume, the one you select might not really be the choice of your (potential) mate. You're better off choosing for someone related to you.

Complete article here from The Economist

Hard Work

Hard work is a prison sentence only if it does not have meaning.

-Malcolm Gladwell, Outliers

The Negative Side of Tax Cuts

The rationale of awarding tax cuts by the government is to give an incentive to people to work harder for their money. That is because, the more work and the more money they make, the government will take less than before. Thus, tax cuts can also work as a stimulus in increasing productivity in particular and the economy in general.

Another argument for tax cuts is that people know best how to spend or invest their own money. Instead of government spending the people's money on another government building or another road, people would rather spend that money on something else, like investing in equities, buying real estate or just buying something for themselves.

This spending or investing will encourage the right industries to prosper. Spending will encourage employment and fan the growth of the economy.

As long as there is a sound tax system in place, I've never seen any negative side to giving tax cuts, until now.

I saw a Global Public Service (GPS) program in CNN reporting that the biggest mistake of George W. Bush during his term was not invading Iraq, but granting tax cuts to high income(?) Americans.

After Bill Clinton's term, the US forecasted in 2001 a budget surplus of around $5.6 Trilion spread out in the next 10 years. In 2002, a year after Bush was elected, 2/3 of that surplus evaporated. Now, the US is expecting instead a budget deficit in the trillion of dollars.

After the tax cuts, the US, according to host Fareed Zakaria, could have saved for the future. These savings could have been invested or put into businesses. Instead, Americans, particularly the high income earners, spent most of the money on high-end luxury goods.

Right Place Right Time

We all have this stereotype of people who achieved extreme greatness or acquired extreme wealth through their sheer perseverance, genius, talent and determination. However, the book Outliers by Malcolm Gladwell strips down this stereotype and attributes success to external circumstances as much as personal effort. Your birth date, birthplace, your race and your local environment provides as much impact to your success as how much effort you put in to your career or work.

The book gives several examples to illustrate these. Canadian league hockey players, and Bill Gates among others were given as examples to illustrate how being born in a certain month or year determines one's success.

Canadian league hockey players for instance are mostly born on Jan to March. This is because given a certain age requirement to play; those born earlier in the year have several months’ edge over others who were born later in the same year.

Look at these birthdates of people who built the foundations of the information age as we now know it: Bill Gates – 1o/28/1955, Paul Allen – 1/21/1953, Steve Ballmer – 3/24/1956, Steve Jobs – 2/24/1955, Eric Schmidt – 4/27/1955.

For a young would-be lawyer, being born in the early 1930s was a magic time, just as being born in 1955 was for a software programmer, or being born in 1835 was for an entrepreneur.

As a side note, interestingly, Gladwell doesn't put much credit to genius though you do need to be intelligent enough to be successful. He compares IQ to having a certain height to play professional basketball. Once you are over a height threshold: 6’1”-6’3”, you have a good chance of being able to play professional basketball, but your edge in height over other pro players will only give you little marginal success. So in the real world, once you have a certain IQ: >100, you are assured that you have a good chance of being successful in your chosen field, but any further increase in IQ will not give you much of an edge over others.

The flipside to all of this is that given that one is at the right time and at the right place, (though he wouldn’t know it yet until later), one has to have put in thousands of hours in a certain skill or craft to become extremely successful: 10,000 hours to be more specific according to Gladwell.

More important than how the number 10,000 came up, is that people who logged these long hours on a certain skill or task before they became famous or rich didn’t know what lay ahead of them. I’m sure Bill Gates didn’t know he was going to be the richest man in the world when he was still writing code in high school.

Bill Gates, before he dropped out of Harvard and later found Microsoft, already had access to computers when he was still a teenager –which was very uncommon during his time. With this rare access, he then logged thousands of hours programming and writing code.

These long hours were logged out of one's own interest, and encouragement from others. These people then just happen to be at the right time and place when opportunity came.

“It’s not that those guys were smarter… than anyone else. It’s that they had a skill they had been working on for years that was suddenly very valuable.”

However random and fickle fortune may now seem to be, the takeaway here is not just to sit and wait but to heavily invest one's time in something that interests him and constantly seek opportunities in the ever-changing environment where one can apply and leverage that skill.

Best Job in The World

If this isn't the best job, then it sure is very close.

An Australian state is offering internationally what it calls "the best job in the world" -- earning a top salary for lazing around a beautiful tropical island for six months. The job pays 150,000 Australian dollars (105,000 US dollars) and includes free airfares from the winner's home country to Hamilton Island on the Great Barrier Reef, Queensland's state government announced on Tuesday

[The candidate] will be expected to have as much fun as he or she can -- soaking up the sun, swimming, snorkelling, sailing -- and report to a global audience via weekly blogs, photo diaries and video updates.

The successful candidate -- who will stay rent-free in a multi-million-dollar three-bedroom beach home -- must be over 18, a "fantastic and charismatic" communicator, and able to speak and write English.

Applicants for this post have been so many that it overwhelmed and crashed the website running the ad.

Skill and Multiple Income Streams

In order to generate more wealth, one must have at least 2 things going for him. One should be a specialized skill for which he is getting paid for -e.g a dayjob that one really enjoys, a private practice, etc. Another should be other income generating streams that supplement or enhance the money he is presently getting.

When one invests in a skill, which so happens to be rare and in demand, then one can demand a premium for delivering his skills to others. However, to become really good in a skill, one must invest a lot of time at it and he should have the natural knack or proficiency for it.

Having a natural proficiency for a skill is requisite in order for him to really enjoy practicing that skill and to have a (competitive) edge over others.

As a contingency or in case one's particular skill is not good enough to bring him enough wealth, one must also have other income streams. For that, he needs to have money working for him in the form of investments like equities, property. Also he should network with other people to bring him to new wealth generating opportunities.

Networking is also a must because one should constantly seek out opportunities to wealth. Opportunities don't just come to someone. One must be proactively seeking out and the only way to do it is to network.

Reference: The Rules of Wealth by Richard Templar

Does Higher Income Increase Happiness?

Tip from Visualizing Economics

Timeless Predictions from Warren Buffet

More of Warren Buffet. Here are his timeless predictions for 2009.

1. Recessions can't be avoided forever.
2. We'll survive future and current recessions just as we've survived past problems.

3. Recessions will create opportunities. -"I made by far the best buys I've ever made in my lifetime in 1974. And that was a time of great pessimism and the oil shock and stagflation and all those sort of things. But stocks were cheap."

4. All stocks won't be cheap. ..a successful investor waits for the right stock at the right price, and it doesn't happen every day. "What’s nice about investing is you don’t have to swing at pitches."

5. The crowd will make mistakes.
6. Investors will mistakenly think falling stock prices are bad.
7. Good times will prompt bad decisions.
8. There will be more dancing at another wild party followed by another painful hangover.

Click here for the full post.

Lotto Lessons

An unexpected big up-front cash, as in the case of lotto winnings, delays but doesn't prevent bankruptcy.

There are many theories why this is so but one of the authors who did this study thinks that this is more of a self-control issue. I think that spending money, as much as earning it, is a discipline we all should learn.

See whole article here.

Warren Buffet on Management

Warren Buffet came to be the second-richest man in the world by investing in companies through his company, Berkshire Hathaway. He describes his involvement in these companies this way:

“Charles T. Munger, Berkshire Hathaway’s vice-chairman, and I really have only two jobs,” he once said (Charles T. Munger being his long-time closest associate). “One is to attract and keep outstanding managers to run our various operations. The other is capital allocation.” That includes setting the compensation of the chief executive.

Complete article from the Economist.

Being a Better Entrepreneur

The primary motivation of people who start their own business is not that they have a great business idea, but they just don't like working for other people. That is according to Scott Shane in The Illusions of Entrepreneurship.

New businesses often reflect what their founders want. People who start businesses to avoid working for others tend to want autonomy, not money, and as a result, they tend to accept lower financial performance in their businesses.

In addition, the profile of the typical American entrepreneur is not the likes of Bill Gates and Michael Dell who were college dropouts but who made it big nonetheless. According to Shane, he is one who change jobs often, has been laid off from his previous job and is now unemployed, and has made less money in his last job.

The person who is often unemployed is more likely to start his own business than one who has a stable day job. This is quite logical because for the chronically unemployed, getting employed is more unstable in that he is more likely to be fired or he is more likely to quit.

Given the above motivation and profile, many (American) entrepreneurs generally fail rather than succeed, hence the dismal statistic of successful businesses. Perhaps this also applies to other nationalities who venture into their own businesses.

Among the common advice one hears or reads in order to succeed in starting up a business are the ff: Never start a business alone, Keep things simple, Have persistence. These sound logical and seem to be common-sense but actually they won't get you very far.

Common business start-up origins
Starting businesses at a small size
Having small capitalization
Being a sole proprietorship
Starting a business on a part-time basis
Starting a business from scratch
Starting a business on your own
Having the wrong motivation
Being in the wrong industry
Competing on price
Not focusing on a single product
Not emphasizing on marketing

Improving the chances of success of your start-up business
Larger start-ups are better.
Large capitalization; capitalization of $100K are 23% more likely to succeed than those with funds of less than $5K.
Corporations outperform proprietorships on almost every possible measure.
Full-time entrepreneurs acquire more capital; hence they are more likely to survive.
It's better to purchase a business.
New businesses founded by teams are better.
Compete on service, quality.
Aim for making money, not autonomy.
Know your industry and its profitability.
90% of fastest growing private companies sell to businesses.

Before buying into the above, one should ask himself about his financial goals for his business. One doesn't need to go into being a corporation if he is already content with the income derived from being a micro-business. However, if one really wants to make it big, then the above tips from the book should help.

Love That Lasts a Lifetime

News from CNN reports of scientists confirming through brain-scans that love can last a lifetime. However, the probability seems small, only 10% of tested mature couples, exhibit the same chemical reactions in their brains which are found in newly formed couples.

Success in [Whatever]

Two tips from WorkHappy.net about being successful in something:

1. Be undeniably good
2. Dedicate at least 10,000 hours (quoting Malcolm Gladwell in Outliers: The Story of Success)

Happiness by Association

We become happy when we are in the company of happy people.

Seems common-sense but this post from the Undercover Economist mentions of a study proving this statement.

Negotiating Tip - Settlement Escrows

The key to the below negotiating tip is having an impartial third party.

Asking for a little gets you a little, and holding out a lot may get you nothing.

The problem is not with the players, but with the game..University of Chicago Business School professor Rob Gertner and NYU law professor Geoffrey Miller may have come up with a better game to play..They call their negotiation method "settlement escrows"..

Here's how settlement escrows work. The buyer and seller agree to bring in a neutral third player to act as a mediator. The seller tells the mediator, in private, a price at which he'd be willing to sell. Likewise, the buyer lets the mediator know, again in private, a price at which he'd be willing to buy. The mediator checks to see whether the two prices cross- that is, whether the buyer's offer exceeds the seller's bid. If so, the mediator calculates the midpoint price, and seller and buyer transact at that price. If the two prices don't cross, the mediator doesn't reveal either price. Neither side learns't the other's bid, and the two parties can go on negotiating without prejudice..

Settlement escrows allow people to negotiate from behind a veil...You can say what you really need without giving away much information. When the parties in a negotiation feel safe enough to make reasonable demands, they're much more likely to reach an agreement..

From Co-opetition by Adam Brandenburger and Barry Nalebuff