Things have been going well lately, and I now have a surplus of cash for the first time in a while. Err, rather, I have both a surplus of cash and some high consistency predictable future income. That's nice! I envy all you salaried people when I think about predictable future income. Having a decent chunk of cash, but no predictable future income means you don't really have a surplus of cash.
Anyways, I was thinking of what to invest a small bit of money in, and reading some papers and analyses and such. I'm reading a mix of finance, investment, politics, diplomacy, and history lately, which makes for a nice mix. It also has me interested in the topic.
Today, I read a really fantastically convincing argument, enough so that I was immediately ready to go buy a small amount of what the author was advocating.
Then I stopped myself! Wait, the author isn't necessarily correct - he's merely convincing.
I went back through the piece I was reading, which was quite a long piece. I started counting the number of premises the author had, and it went something like this:
If A, B, C, D, E, F, then G.
If G, H, I, J, K, then L.
Therefore, invest in L.
It was super convincing. But then it dawns on me, convincing doesn't mean correct. For instance, though the author doesn't explicitly state it, two of his premises are that the United States and Chinese economies, political leaderships, objectives, and currencies are going to be doing roughly similar things over the next 20 years to how they're doing now, maybe with a little bit of change but nothing drastic.
Perhaps that's not true! I don't know much about the current governmental leadership of China, who the next projected/potential leadership is, and their thoughts and objectives. Also, American economic, political, and monetary policy can change fast, and would it really surprise anyone if 2012 or 2016 brought in someone with significantly different monetary views than recently?
So, two of the author's biggest unstated premises are that China and America will behave roughly how we expect China and America to behave over the next 20 years. And if he's wrong, the entire analysis might fall apart.
It was a super convincing argument, but there's a problem with any argument that has a lot of premises chained together - if even one premise is wrong, then the whole conclusion might be faulty.
Convincing doesn't mean correct - it just means convincing. Stay skeptical. Keep researching.
John T. Reed claims that gambling and investing are just dictionary definitions that add up to the same thing.
When you move into to an environment that is chaotic enough for changing opportunities, then you can cheat the house if you play your cards right.
I'm pretty skeptical of whether researching investments is a good idea for non-professionals. Financial speculation is fun, but you are competing against specialists who have spent their whole lives studying the subject, have teams of researchers, and are betting so much that they can afford to buy the best computers, data, etc. I think almost everyone should just buy the Vanguard Target Retirement 20X0 fund.
The exception is if you're in the startup world & you know people who you trust & respect who are doing startups, angel investing in them w/ 10%-20% of your income makes sense to me. At worst you'll lose a little money & learn a lot about who to trust & how startups work. Another is if you know a city/region/country very well and want to own property there - ownership has advantages (ie we have done extensive customization of our cohousing community here in Mountain View) and since it's such a big asset it's definitely worth researching.
I came across your site a few days ago after a friend posted a link to your "What Skills Do You Need to be an Entrepreneur? Only Two" article. While I've read many different blogging sites about similar topics, there was something about your writing that has compelled me to stay on your site and read through dozens of your articles. In fact, of all the sites/blogs I have read, you are the first I have attempted to contact. You seem like a really interesting guy, and you have certainly inspired me.
Anyways, I read in one of your works that you aren't much a fan of small talk (nor am I), so I'll cut straight to my questions:
What are you thoughts on Ayn Rand? Have you read Atlas Shrugged or The Fountainhead? The reason I ask is because a lot of your writing seems to reflect some of the core points of her philosophy, at least on an individual perspective (as portrayed in The Fountainhead). I'm not sure how you feel about her philosophy for a society as a whole, as in Atlas Shrugged.
If you've never read her before, here is a good excerpt of her thoughts on money (to get an idea of what her books are like):http://www.capitalismmagazine.com/economics/money/1826-francisco-s-money-speech.html
So, I've been doing a good bit of reading lately. In addition to all of those Chris Van Allsburg children's books, there are three wonderful books that I have been plowing through. I finished a book called "The Thirteenth Tale" by Diane Setterfield last week. This one was a total page-turner. It is a story about a somewhat reclusive auther/biographer who is asked by a world-reknowned novelist to write her biography. I don't want to give anything away, but what happens as a result is a story full of twists, turns, and emotions running deep. As one of the best books I've read in a while, it is extremely well-written and has characters rich with depth and power. I absolutely loved it. A couple of weeks ago, I borrowed a book called 100 Cupboards for my nine-year-old nephew to read. Suffice it to say that he's not really into books, and so, I started to casually read it one morning while I was taking a break from working on my website. Within the first 10 pages, I was hooked. Since I new I had to finish "The Thirteenth Tale" first, I decided to hold off until that book was done. I am so glad I did because this book is a roller coaster ride in and of itself. It starts off on an unusual premise when a boy named Henry arrives in a small, sleepy town called Henry, Kansas. He arrives there to stay with his aunt and uncle because his parents were kidnapped while travelling in a South American country. He stays in the attic, and within his first couple of days there, he discovers something hidden behind the plastered wall that his bed leans up against. The rest of the story is imaginatively well documented, and I couldn't put it down . . . This book is all about adventure and non-stop action. Don't let the slow-paced opening chapter fool you. Once the story gets going, it won't let you go. If you liked the Harry Potter series, then you will love this one. What I liked the most was the main character named Henry. There is this dignity and humility about him that is all too intriguing. I kept rooting for him all the way through. Of course on the same day that I finished "10o Cupboards", I rushed off to the library to get part 2: Dandelion Fire. Within two days, I read all 466 pages of it . . . I was not disappointed. This book packed more of a punch than the first one. I am looking forward to the next and last instalment of the series when it comes out in January of 2010. Thanks to these books, I am now also a fan of their author N.D. Wilson. (www.ndwilson.com) He's really quite good, and I'm looking forward to reading more of his work in the future. Okay, so over the next week, I'm taking a break from reading and will return to my other passion--KNITTING!!! There is a brand new pattern I am itching to get started on. No rest for The Asian!!! Is reading better than chocolate? Hhhmmm, tough call. -gordo