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