I saw a big typo in the headline by Greenspan. He said “The Fed is blameless on the property bubble“. Actually it should be “The Fed is SHAMEless on the the property bubble”.

Just thought that I should share my thoughts here:

If a ship (economy) goes down that quickly right after the captain took the lifeboat, isn’t the captain at fault in any ways (if not in all ways)?

A man who single-handedly created two biggest bubbles keep saying that he doesn’t know how to tell a bubble from a boom. So who is supposed to know more about economics other than Fed chairman?? So many wiser people before the bubbles burst have warned about tech and housing bubbles. But Greenspan denies even the possibility of recognizing a bubble from a boom. Go figure this man’s IQ. He is either too dumb, or too smart to lie to his low-IQ audience.

Greenspan keeps saying that property bubble was caused by a global glut of saving and global low interest rate. But he doesn’t remember that US economic policy has a big effect globally, and that if US interest rates are going so low (1%) AND so long (more than 1 years), it is very hard for other central bankers to keep both of their interest rates and foreign exchange rates unchanged. The only easy way to keep their economy relatively undisturbed is by following US economic policy (at least in the same trend). The result of a global property bubble only goes to show how much blame Greenspan was responsible for, rather than what he tries to do: confusing people with the results as the cause.

Frugal at 1stMillionAt33.com

Health or career or money or family? What should one choose if one cannot get everything? Life is always imperfect (click to read my only unpopular astrology post). On the other hand, if you don’t have much money or other areas, you probably have something else more than others. You are bound to have something good.

Anyway, so I told my doctor that I do like 3 jobs everyday:
1. From about 5 or 6am to 8 or 9am, I trade and invest stocks. Read all kinds of financial news.
2. From about 8 or 9am to 6 or 7pm, I commute and work at a full-time job that pays the bill.
3. From 7pm to 10 or 11pm, it’s my short family time.
4. From 11pm to 12am or 2 am, I blog.

Most of the time I just get 4 to 6 hours of sleep. Six hours of sleep is just GREAT for me. I can’t remember when was the last time that I sleep for 8 hours.

My doctor’s advice to me:
1. REST more.
2. RELAX more.
3. Exercize more.
4. Eat out less (so that I don’t take in too much salts).

Yes, I’m certainly too young to have high blood pressure. Not sure what the solution is. I never run out of ideas, but I always run out of time. REST & RELAX? Those are precious commodities to me.

I am going to start on number 3 first. I’m already doing number 4, because everyday I’m usually so busy at work, that I bring my own lunch, and finish my lunch on my desk within 10 minutes. When most people is out there enjoying their lunch, I’m watching my stocks, or multi-tasking through my work to speed up the progress, or usually both. I often do 3 things all at once anyway. So no big deal there.

I bought a blood pressure measuring device. After a few times, I stopped using it. It just doesn’t tell me the answer that I want to hear. It’s always high and never low. Isn’t that bad?

Boy, I need a good vacation.

Thanks to the reader westwest888, here is the Xmas party information for Freddie Mac. After losing billions of dollars and diluting shareholders’ stake, the GSE (government-sponsored enterprise) is throwing a Xmas party at the Ritz Carlton, McLean, VA.

I wonder how shareholders will receive this. Oh, and it’s in your S&P500 ETFs too.

Here is what westwest888 sent me:

It’s not a news story; it’s something I witnessed personally. Freddie Mac lost $2B last quarter and plans to lose another $2B next quarter on $9B in revenue (20% losses). To celebrate, they threw a decadent holiday party at the Ritz Carlton in exclusive McLean, VA. They had a laser printer that printed pictures on chocolate lollipops for the kids, hors d’oeuvres, entertainment. You’d think it was the Goldman Sachs partners dinner. Alas, it was a Government Sponsored Enterprise pissing away money right before they’re going to need a taxpayer bailout.

This year I still have about $2000 left for my charity giving budget. But I haven’t found a good charity to donate to. I only have about one month left to do it, because I will be traveling internationally to visit my parents at the end of the year.

The biggest problem that I have with charities is that their CEO is paid way too much. Many are paid north of $150K up to $200K. Some are even paid more than $300K to $500K. Charity Navigator did a study on 2007 CEO compensation study for charities. The average salary is $145,270. The charity may say whatever they want, but the fact is non-profit also means no-profit. A CEO (or superintendent for a school district) for non-profit organizations is after all very different from a for-profit organization. There is no gross margin or pricing issues for products. The only effect from a better paid CEO and/or less efficiently organization is that the target that they serve ends up with less money. Taking money out of what poor people would receive is much easier than taking money out from a competitive and capitalistic marketplace of products.

I’m sure the salary is justified for some of the CEO, but I don’t have time to sift through all the details. Furthermore, when I need to justify for why I’m not spending my $2000 on my wife for jewelries or on my kids for more fancy toys, I must really spend my charity money for a VERY GOOD purpose. Every year, I easily donate more cash to charity than my total spending on jewelries for my wife and toys for my kids. But my wife understands that charity donation is spent for good purposes. Departing from your own cash is difficult certainly, but it is just part of the process needed to learn the truth about how every human being is part of the God’s family.

If you can know a charity that is involved with children and/or hunger (the causes that my wife and I are most interested in), and that 95% of the money goes to non-admin and non-advertisement activities, and the CEO’s salary is about $100K or less, please let me know. I would really appreciate it. Many thanks.

I just got my new hat, and I love it. In fact, I’m obsessed with it. Here is the picture of it.

I’m wearing the hat everywhere I go. It’s so unlike me. I’ve never wear a hat constantly in my life. But I’m doing this to support the country.

Initially, when I tried to make my first donation, and found out that it is not tax-deductible, I really hesitated, especially knowing that Ron Paul may simply not make it to the final race. But then, I still went ahead.

Then I made my second donation doubling my amount of financial support. Then I spent about $27 for this hat (including shipping), expensive by my frugal nature. Then at the morning assembly of my kid’s school, I finally understood why I’m doing what I’m doing. It’s the pledge to the flag:

I pledge Allegiance to the flag
of the United States of America
and to the Republic for which it stands,
one nation under God, indivisible,
with Liberty and Justice for all.

Yes, I truly believe that Ron Paul will bring a better future for this country. And I love this country where I was not born, but lived for the last 15 years with all of my heart. And I am going to show it, not just by money, but also by voting in Republican primary, and in the daily actions of my life.

So even if Ron Paul will not make it to the 2008 presidential ballot, so be it. But I’m not going to be apathetic about the whole thing.

Rather, I’m going to stand up and fight for a better future for USA. Fight for the soldiers to come back home. Fight for the middle class people who may suffer from the yet-to-come inflation. FIGHT.

Yes, Ron Paul (and I) may lose with great possibility. But at least, deep down in my heart, I know I’ve tried my best in my own way to help this country go back to the right track.

Will you join me to love this country, even if you don’t agree to support the same candidate?

Here is some latest YouTube video on Ron Paul if you’re interested.

Before getting into different insurance products, first of all, we all know that life insurance companies are not non-profit organization. That mere fact simply means that on the average (almost like gambling), you are likely to lose from buying the life insurance than gaining from it (at least financially). However, there are rules, assumptions, and circumstances in every “game”. And if you study in more details, it is possible to at least tilt the winning odds toward your side.

A few years ago, maybe about 8 years ago, I remember that it was a good time to buy into life insurance. But that was in the past. What do I mean by “good time”? At that time, financial communities have a very unrealistic view on forward-going inflation rate which seemed to be low all the time, while the expected gain on financial investment (bonds & equities) seemed to be high. Furthermore, life insurance companies were in the more competition phase. Most of the things were in favor to insurance buyers. But things have changed, and some have made the turning point, especially inflation rate (& its expectation). Nowadays, it’s harder to find a policy that lock you into a lower fixed premium for a more extended period of time than before. If you have friends who bought insurance policy earlier, you could ask them what they are paying. I don’t think you can get the same deal anymore.

That brings the question of the pricing structure of life insurance. What are you paying for exactly? Life insurance if it’s term-only, is essentially a bet against yourself. It’s like buying put option against your stock holdings. It’s an insurance, that can potentially smooth out your finances when things go terribly wrong. If you lock into a policy with a fixed higher premium for a given number of years, the higher premium simply reflects how insurance company factors in the expectation of returns and inflation rate for that period. If you buy the whole life insurance or any other insurance with cash value, it is like buying a term life insurance plus a pension plan investment. Pension plan can also grow tax-free. Insurance however has the added advantage of totally tax-free for the pay-out.

I assume that once two products are combined into one, it becomes much easier for the salesman or the company to muddle with all the numbers and keep more for himself, and keep less for you. I’m sure you’ve heard the pitch from insurance agent such as “the policy will pay for itself after some years”. This is true, but it’s paying for itself because you paid for it. If you like forced saving, you can definitely consider such plans. But consider pension or annuity investment too.

However, all of above products have a characteristics of nice stable return, but FIXED. In other words, they are like bond-like investment for the people who don’t know much about how to invest in stock markets. For the long time readers on this blog, they should know very well that I would only recommend bond-like investment for people who simply have extra money to lose. Inflation going forward should be heightened. Any fixed payout is likely not going to serve your need. Therefore, I would suggest that unless there are other compelling reasons, it may be better to just buy a term life insurance and invest the extra dollars in the stock market for the long term.

There are still many different issues around life insurance. And others may disagree strongly with my outlook on inflation. However, I have tried to give you one opinion from my investing angle into life insurances. The correct answer is highly dependent on individual circumstances. And there are always some people who should have bought certain life insurance, and some who shouldn’t have. Unfortunately, it’s always after-thought. You should try to decide for yourself what you and your family need.

I just opened a bank and brokerage account last week. The banker that helped me opening the account was a young female. Because my wife and I had to take our young toddler with us to the bank, the account opening process was not very smooth. My kid was crying and wanting to leave the bank. So my wife and I were kind of rotating for babysitting throughout the entire process.

As with most of our accounts, I almost always open them in my wife’s name only, simply for additional financial security for my wife’s benefit. Because we also opened a brokerage account, we also had to disclose our total and liquid net worth as part of the standard questions for application process. I did not sense anything since I was busy calming my young toddler outside of the bank half of the time. But my wife later told me that she didn’t feel the due respect from the banker, and when she asked for a candy from the banker for calming the child, the female banker told her that “NO, it will only make the kid more hyper.”

I never heard any banker instructing clients on how to treat their children. I certainly think that it was simply not appropriate nor respectful. But I can see that it is just another example of competition among the same sex. Yeah, my wife doesn’t know many of the financial terminologies or the in and out of the the brokerage accounts because she spent most of her time taking care of our kids. So she must have asked several stupid questions. But what does it matter?

Certainly the people of same sex, especially for those who are closer in age, tend to have more competition whether consciously or sub-consciously. People will compete in all kinds of things, whether it’s personal appearance, cars, money, even kids’ school grades, or just social and financial status in general. But if you spend more time on actually doing things to improve yourself, rather than spending time on non-constructive activities, everything will come out much better.

I have always believed in simply competing against oneself, and never bothered about much of the office talk on cars, promotions, or anything related to other people’s money. I believe in everyone’s inherently innate value, and it is simply not right to compare people on an absolute basis.

Despite on whatever I believe in, the fact is that for most people, opposite sex attracts, while same sex competes. I guess next time, I shall use a male banker instead for my wife’s account.

I have been thinking of getting a new minivan because my old camry is getting really old, and things are starting to break down. With my friend’s help, we both each bought a new 2007 Honda Odyssey. Before tax and fees, we paid roughly $23,900 for the car, which has a price of $24,584 from carsdirect.com, an invoice price of $25,846 from Yahoo, and a MSRP of $29,330.

Why did I choose this car? I have been extremely busy at work, so I simply relied on my friends’ advice for the choice of car. In fact, I only spent part of the last 3 days shopping for the car. Because my friend told me that both Toyota and Honda have a promotion going on, with manufacturer rebating the dealer about $2000 if a sale is made before the end of September, dealers have more rooms to go down in price. And with Honda, you can easily request price quotes via internet at the honda.com website. So it made the price comparison much easier. At the end, my friend was able to solicit 3 different quotes all within $100 of each other. With the housing market slowdown, the inventory at dealers is definitely significant. Price concession is certainly easier, especially for 2007 models.

Certainly car prices have been going down after adjusting by inflation. I’ve paid almost the same amount for my old camry, some 10 to 15 years ago. And now I’m paying about the same price for a minivan. The power of technology brings deflation, and improves life quality. Relative to housing price, cars are getting quite insignificant these days.

P.S. I will adjust my net worth by the amount that I’ve spent on the new car through a period of a month or two. I will be putting a value of $0 for my cars, since I consider that is money spent already.

Just saw this from bigpicture.typepad.com, who got it from misstrade:

It’s hilarious, but probably not so funny for the people who are affected.

Of course, for all the Wallstreet genius, they thought they could pass off the hot potatoes in time, but I guess not.

I just went to a college reunion with a small group of my old college friends. After more than 10 years, it’s amazing how much has changed, and how much has not changed.

I’m the youngest among all, because I’m the book-smart guy who took the same classes with them, while at a younger age. In fact, half of my friends is older than me for this very reason since high school and college days. Being younger in your friends has the advantage of seeing things farther ahead at your age, while being out-of-touch most of the time except academics.

Among my college friends, one guy is 12 years older than me, but I always know him to be very smart. He is the street-smart type, and never paid much attention to class work. When he went to college with me, he only wanted to get a degree, but not really learn anything from it, only because he was so much older and his focus was not in academics anymore. Despite his lack of (interest in) book-smartness, I often relies on his advice (even now) for his street-smartness.

And by the measure of his financial success, he is far and beyond on what I may be able to achieve. Before the age of 45, he already made enough money and has retired for 4 years. Now he is back in (a different) business, aiming to bring a company to IPO, with two billion dollar revenue in a couple of years. Amazing, isn’t it?

This is not to say that book-smart is useless (at least, I’m a positive example of this category). Rather, being book-smart gets you to the basics, but it does not end there. However, if you hope to being street-smart and out-smart most people, you should stop hoping and take actions. No success can be built upon day-dreaming without doing your homeworks. One of the quality of success is that it is relatively infrequent or rare. And for obvious reasons, a rare event cannot happen without someone working hard to make it happen.

Whichever type you are, you should work hard. But know that statistically, being booksmart gets you to above-average lifestyle more easily, while only few percentage of the people being streetsmart goes far and beyond. So if I were making the plan for my children (or myself), I would always ask them to acquire the basics first before “going for the extra bonus”.