My 1st Million At 33 – yes, you can do it too

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  • Archive for March, 2011

    Market surprise coming?

    Posted by Frugal on 31st March 2011

    The stock markets have bewildered many. I kept thinking that markets around the world will take a dive towards summer/fall time, but due to Japan earthquake, it appears that a lot of frothiness and overbought conditions have been temporarily resolved. It almost looks like markets can push higher without pulling back in the very short term.

    The biggest concern that I have on markets is still PIIGS in European region. I think the problem would turn worse before getting better. However, it is really hard to predict when PIIGS will hit the market, and my projected timeframe (was from Apr to Jul) appears to be pushed further into future (May/Jun to Sep/Oct).

    Although everyone’s crystal balls are quite fuzzy (including Mish & Barry Ritholtz who is about 50/50 in stock/cash), two things from the Japan earthquake and the mini-crash in May 6th, 2010 has shown that there are (or were) many people who will head to exit in an instant at any signs of troubles. The good thing is that the more we get those mini-hits, the less people would sell out in the future. In fact, maybe the coming market surprise is that there is not going to be a surprise after all, and we stay sort of flat throughout the whole year (with occasional but very few ~10% pull-back or so).

    Best luck,

    Frugal at

    Posted in Market Pulses | Comments Off

    My Mom was a Tiger Mom

    Posted by Frugal on 30th March 2011

    With all the buzz around Chinese Tiger Mom, it is no doubt a shock to American culture on parenting. I myself know firsthand from the experience of being raised as a “Tiger Kid”, although in a less demanding way relative to what Amy Chua (the Tiger Mom) demanded from her two daughters. However, the two most important questions that need to be asked is whether the kid can become more (financially) successful and happier in life.

    My mom certainly didn’t (need to) demand me as much in my academics because I was a self-motivator. I did well in my regular school curricula, and pretty much ranked top 3 in my class from grade 3 and up. However, it was that every long summer vacation that my mom really excelled in her Tiger Mom’s style of parenting. I can almost say that I was busier taking all kinds of classes during summer vacation than regular school sessions. I had to learn painting, piano, literary compositions, swimming, math, English, science, etc. when most of my classmates were out playing, having a real summer vacation. And of course, piano lessons were throughout the year and not just in summer.

    What did I gain from all the extra-curricular lessons? Unfortunately, I have to say that except having mastered the basics of each subject, I didn’t excel in most of them at all. And I was certainly not happier due to all the extra stress from being asked to perform at the levels that were beyond my age. In fact, I actually cried from hours and hours of practicing piano. I didn’t like it.

    Fortunately, my mom was sensible and didn’t push me for too many years. She even tried to help me learn more on the subject (science) that I was more interested in too. I was actually trying to learn college level physics (electromagnetics) when I was 11th grade through a tutor. But because my parents knew little about science, they couldn’t help me properly to follow a correct course of curriculum. You know, you just can’t learn electromagnetics without learning enough about Calculus. But my parents didn’t know, and nor did I.

    From this personal experience, I think that unless the kids are interested themselves in the subject, there is no use of pushing kids to the extreme. Sure, some push are needed only because human nature is to lay back and being lazy, but going to extreme is simply not healthy. In fact, my wife’s nieces whom I personally tutored Calculus when they were still in high school got fed up by their Tiger Mom so much, such that the daughter swears to never go back home to see her parents (for many years now), and the son has a mental disorder from all the undue stress and dropped out from university. Both of them went to Stanford and Harvard, the best schools that you can ever hope for, but lives were literally destroyed from this process. Such can be the Tiger Mom’s “rewards”.

    Therefore I must conclude that between Tiger Mom’s style of ruthlessly push and western style of praising mediocrity, there must be a subtle balance. Tiger Mom may or may not bring financial success, but it’s almost certain that it can easily bring unhappiness.

    Posted in Uncategorized | Comments Off

    Oversea markets collapsing

    Posted by Frugal on 14th March 2011

    Japanese stock market went down 20% in 2 days. Dow Jones, S&P, and Nasdaq futures are off by 3%. Tomorrow we will have a mini-crash.

    What should a investor do now? If you haven’t sold, I suggest not to panic. But I would sell the bounce at near 1290 level at S&P. As for Japanese stocks, I’m actually looking towards buying a little (EWJ). Japan as a country won’t be defeated by this earthquake. It will come back.

    Tomorrow is also a Fed meeting day. Expect Fed to be lenient for sure. If Fed surprises positively, this correction could find a short-term bottom. However, I’m more worried about markets “expecting” the positive surprises, and yet finding not enough.

    As I have said several times, I expect a mid-year stock market correction, and expect QEn to kick in working overdrive after that to arrest an economic slowdown. General inflation will rise after that, and bonds are on a short-term buy (till July), and long-term sell.

    Posted in Market Pulses | 1 Comment »

    I’m not donating to American Red Cross for Japan’s Earthquake

    Posted by Frugal on 13th March 2011

    The earthquake disaster in Japan has been terrible. My prayers go to all the suffering victims. I have been trying to find a good charity for the earthquake in New Zealand, and unfortunately there comes another one, and bigger.

    On Yahoo’s news, it listed 8 charities for donation. American Red Cross is one of them. However, after some research digging at and google, I won’t be giving my money to American Red Cross.

    Most of the American charities could be as corrupted as other big institutions. Majority of all big charities have a CEO that gets paid for $300K to $600K annually. If you find a charity CEO that is only paid at about $200K, it’s pretty good already. American Red Cross pays its CEO $446,867, with the highest salaried at $566,629. What bothers me the most is that the past poor handling of American Red Cross in Katrina and Haiti. In fact, there seems to be a consistent record of such at Red Cross.

    While I don’t want to put any final words or judgment on American Red Cross, I plan to give my money to Americares or Convoy of Hope. All of the amount of my donated money is hard-earned, and I want to share it with the poor victims, not the highly salaried CEOs.

    One day when I can retire from my day job, I hope to start a charity. I would not take any payment from doing it because that was how naive I have always thought how any charities should have been run.

    Posted in Estate & gift | 1 Comment »

    Amazon lives off sales tax revenue?

    Posted by Frugal on 8th March 2011

    I have watched AMZN rose 4 fold from 40s, but I still hesitate to buy into it today. My biggest problem with AMZN has always been with its sales tax advantage.

    The pricing of goods at AMZN is extremely (anti-)competitive. It actually changes real-time against ongoing sales at various stores. The moment that there is a sale at Target or Walmart for a particular item, Amazon will lower its price correspondingly. I have observed this phenomenon through my past shopping experiences on HD camcorders, camera, etc. Sounds like a good deal at Amazon?! NO, unfortunately. The price that they lowers to always ranges from about a tiny saving of 3% to actually spending more by 3% after adding shipping. This is after considering the no-sales-tax “benefit”. Am I going to save just $5 to $10 on a $350 to $500 item, just to fatten Amazon’s employees and shareholders wallet, and short-change my local state/city government? I’m sure that many people would, but I won’t.

    Therefore, I’m not surprised at all hearing that Amazon will cut ties and move out of states that threaten to recover the sales tax. The fact of matter is that when you look at the financial income statements at Amazon (for example 2010), you will see that if Amazon starts to pay a 8% sales tax out of its revenues, there is absolutely no profits left. Instead of 1.15 billion profit, it would be 1.38 billion loss. Please note that taking out 8% sales tax from the revenue is obviously not the right approach. But if the pricing is 8% higher, consumers may choose not to transact at all. Likewise, if the cost is 8% higher for Amazon, Amazon may choose not to sell the goods at all. The end result is likely to be a lot less profitable sales and shrinking revenue.

    I would like to see a fair playing ground for all companies versus the internet-only companies. And I am an advocate of a federal sales tax for a reduction in income tax. In this age, there is no longer any boundaries between states, and having different sales tax rate across states simply don’t work anymore. A flat sales tax to replace all income tax would encourage savings instead of spending. A fixed percentage of the collected sales tax should go to the local state, and each state can further impose different income tax structure to supplement any necessary shortfalls.

    Although the day for a flat national sales tax may never come, I hesitate to buy the stock of a company that simply lives on sales tax. I think internet business is good for certain products, but not all. Making the market to be free from all anti-competitive practices would give consumers the best stores & final prices.

    Posted in Stock Market | 1 Comment »