From Fox Business.
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My analogies on healthcare reform protest
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My wife asked me why there are so many outraged people on those congressmen/senators townhalls (she reads that from WSJ). I used an analogy. Imagine the metro (or buses) during rush hours in Shanghai (I used to take a bus almost every Monday morning in early 1990s, from my brother’s place to my working place, a 1.5-2 hrs journey). Suppose you are the guy (or the lady) already on a bus, the bus is packed and the driver requested everyone move inside “a little bit” so that more people can squeeze in.
In this case, many old people protest against the reform because they are already covered in Medicare and they fear their coverage will be less generous, as you and I know, this country is running out of money. There is few such thing as win-win, or free lunch these days. More people got covered, but coverage will be less generous overall. Doctors will see more patients, possibly with less income (profit). Blah blah blah.
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Eliot Spitzer also endorses index fund
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Hmm, interesting. Note Eliot is not licensed financial advisor. But many investing gurus (including Warren Buffett, John Bogle, Yale endowment fund head David Swensen) said index is the way to go for individual investors who don’t have time or don’t want to spend time to do own research.
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Was talking to this to a close friend yesterday. My rationale of “not selling all at once” is because: it’s usually happens a stock (or something else) will go up in price after a person sells it. Very simple.
Appearently that’s what happened to some Tongkang Zijin shareholders in recent years (FT article “Woes after a windfall“). The story is a bit long, so let me summerize. Apprearently in June 2001 the residents in Tongkang villiage (in Fujian Province) received around Rmb1,338.85 ($196, £117, €138) Zijin stock for the compensation of their land use right. At the time Zijin was not in good financial shape and its stock was not listed. Eight years later, after the public listing at Hongkong and Shanghai (and fundamental change of the business), the stock is worth Rmb 800,000. Obviously not everyone kept the stock. Quote FT:
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imbalance. Article here. This reminds me Wang Jianshuo’s latest article “I am a rich person?”
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I started Financial Times subscription this week. Last week, I took advantage an offer (or a bait) of $49 for 6 months subscription. I have subscribed and read FT in the past (a few years ago when I did not know much about finance). The main reason is my WSJ and Barrons subscription are expiring, Barrons expires on Aug, WSJ on late Sept. While I enjoyed reading those two newspaper, I found the quality of those two paper are declining fast. Some obvious mistakes include printing same sentence twice (WSJ), paper becomes thinner and thinner (WSJ). As to Barron’s, they more or less get into what I would call “stock picking” business (guess the winners in the stock market, which is OK except they only show what they got right afterwards).
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Financial education for the kids
of course, learn from the grand master is the best way. Here it is, buffett’s secret millionaire’s club cartoon.
This is a more systematic approach, which includes a lot different concept on personal finance and investing, such as saving, rate of return/capital expenditure (modeled after See’s Candy), etc.
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Stocks for kids
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I remember once my Accounting instructor told his father bought him a Kansas ulility stock when he was a kid (maybe 10 years old or so). The interesting part is everyday he would read the stock section of newspaper and check the price of his stock. One reason he chose accounting as his profession. I also believe everyone remembers his/her first stock purchase clearly, for me that’s also my first employer (a large state owned manufacturer decided to go public in early 1990s). For my kid, I am think of the follow stocks for “buy and hold”. Note this is mostly for fun, not trying to making money for kid’s college fund. That being said, those companies have excellent fundamentals and will be in the business for a long time, I think.
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Shanghai housing price heated up again recently, according to famous Shanghai blogger Wang Jianshuo. It’s no secret the stock market (Shanghai composite index) rebounded from 1,700 in last Oct. to 3,400 in last couple days, an 100% increase.
CNN had an article How to say bubble in Mandarin. Video below.
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WealthTrack Notes
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David Swensen (head of Yale endowment management)
Individual should be responsible to educate themselves if they actively manage their portfolio or just go passive: investing in index fund (this is echo to Buffett, Bogle). There is nothing in between (in other words, he thinks doing something in between can not bring good performance).
David is not a big fan of mutual fund because: 1) Only 15% of mutual fund outperform the market; 2) Survival-ship bias (10,000 out of 30,000 mutual funds fold in 20 years); 3) Even if individual investors luckily find the 15% good mutual fund, many buy “high” and sell “low” on the funds.
Another interesting point David made was we went from an ownership (everyone being shareholder) society to an agent(let someone else to manage asset) society, and now to fiduciary society. The following is an excerpt of his talk on Apr 23 at Youtube. Both his Apr. 23 and July 24 talk are available at wealthtrack web site.