Interesting Articles For The Week 09-25

Some good readings from the internet:

  1. Have you seen Mad Money by Jim Cramer? An academic study showed that Cramer’s effect that makes recommended stocks jumped by 2% to 5%, and later reverted back to the original price, are because suckers bought into the Cramer hype at higher prices. Certainly the best way to lose 2% to 5% of your money.
  2. Fall in the gasoline price could be a conspiracy by Goldman Sachs! A tweak in the GSCI commodity index, widely followed by some mutual funds and institutions, coincide with the recent peak of gasoline price. Not sure how gasoline can go from 8.45% down to 2.3%. 2.3% sounds too little to me for a commodity mix.
  3. And Mark Hulbert does it again! He is the BEST columnist at Pretty much every article by him is an excellent analysis. Housing market isn’t necessarily a predictor of stock movement. I’m not sure why I fell into the trap last week. Probably I wasn’t paying enough attention. To have any such strong predictor on the stock market is simply impossible. Otherwise, someone could have made billions of dollars just from the predicted chart.

P.S. You probably guess it right. I’m exhausted from my work. So I’m putting up a reading list instead. I haven’t replied on some comments, not to mention that I have no time to blog. My work is close to a project completion, and I’m extra busy.

Carnival Of Business #21

Welcome to Carnival of Business #21 at So many quality posts with interesting ideas. Thanks to all those who participated, and thanks to Tim at MyMoneyForest to give me this opportunity to host.

If you’re on my site for the first time, I welcome you to take a look at my SiteMap or look through my categories and popular posts at the left column.

Onto the Business Carnival, posts are listed in the order of submission. I have highlighted the posts that I like by RED color. Please do note that what I like better may not appeal to you. Because this carnival has one of the above average submissions, I would advise you to read anything that interest you (post #3, #5, #7, #11, #13 are good too, but I stopped short of highlighting them by RED).

The best post that I like is by Christine Kane (post #6). Although you won’t get resource or information directly related to Business, you can find wisdom which is more rare. See my commentary here.

  1. By Advertising Age: Life Takes Visa. A commentary on how buying on credit has changed our life.
  2. By 21 secrets to becoming a millionaire. I went thru the 21 secrets, and I gave myself 17 full-point, 3 half-point, and 1 zero-point, total of 18.5 points out of 21 secrets. A fairly good list if you’re interested.
  3. By Empowering People Through Information:
    Google Reader: For Those Ahead of the Curve. A brief review on Google Reader, and comparison with other traditional means of gleaning information.
  4. By Building a successful business: 8 qualities of an expert. I concur with all 8 points.
  5. By Spare Change: Social Marketing vs. “Social Marketing” Smackdown. Comparing the contemporary usage and purposes of “social marketing” vs the old ways.
  6. By Christine Kane: Are You A Quitter?. This is one of the rare posts that you can come across.. I highly recommend this to any over-achievers or any people who are facing a difficult quitting decision. You will definitely find some pearl of wisdom in this article. Please see my post for further commentary. In summary, letting it go does not mean that you are being a quitter.
  7. By 3 personalities critical to explosive business. Three kinds of people you need help from in order to get beyond just the early adopters.
  8. By Bryan C. Fleming .com: Why Cash is King. Without cash, you cannot take advantage of an opportunity when it comes.
  9. By Passion, People and Principles: The Psychology of Waiting Lines. Very good summary and discussion how waiting line experience can be improved or exasperated.
  10. By Instigator Blog: The Secret to Successfully Delegating Work in 6 Steps. Delegating work is very important for a business to grow. Excellent article on how you delegate successfully.
  11. By Free the Drones: Promoting Your Boss to Advance Your Career?. Good counter arguments on why it may not be always a good idea. Certainly, it only works to some extent and only on some bosses.
  12. By help with everything: Compound interest. How compounding works.
  13. By Innovation Zen: Strategy and Resource Allocation. Using example from Intel to illustrate the importance of resource allocation and how one can go about doing it.
  14. By Rightmove and its web 2.0 competition. An observation on how Rightmove (a UK real estate website) may be falling behind the competition.
  15. By Stock Market Beat: Employment Clearly Slowing. A look at the recent release of employment figures.
  16. By the Pine Needle Lawn: Real Estate Reality TV – Good For Ratings, Bad For Industry. Commentary on how the TV show of Million Dollar Listing will affect real estate industry.
  17. By Life PBS: 10 questions to ask before you join a new job. Excellent post on the things that you should consider for your new job.
  18. By BloodhoundBlog: Securing the home-buyer’s place at the table: How two simple reforms can finally result in a full, uncompromised form of buyer representation. This post is a bit lengthy and not as focused, but good nevertheless. It talks about potential reforms that will finally, fully empower buyers as supervisory employers of real estate agents.
    It really angers me that the sellers and the agents just don’t know who comes up with the loan or cash to pay their bills. Real estate is probably the only industry that doesn’t respect fully the person who pays.
  19. By Jack Yoest at Getting business done on 9/11/01. A personal recount of closing a deal right before 9/11.
  20. By The Real Estate Tomato: New To Business Blogs? The 6 Steps To Getting Started. A guide to what things should be done or considered when starting a blog.
  21. By Trizoko: How to Complete Big-Ass Projects. A few good tips on how to do a big project.
  22. By Bizinformer: Why I Don’t Like Discounts. Discounts are admission of a bogus listing price.

That’s all folks. Thanks to all those that participated. Thoroughly enjoyed this carnival. Definitely one of the better carnivals that I’ve ever seen. Next week, the Carnival of Business will be hosted at FRAUDfiles Fraud Blog.

Replacement For Citi Dividend Platinum Select Card

Yes, Citibank Dividend Platinum Select card will no longer pay out 5% but 3% cashback on gasoline, grocery, and drug, starting October. I have found my replacement credit cards.

I have planned to cancel my cards, and have applied & received the following two new credit cards:

  1. HSBC Direct Rewards Platinum credit card: Flat 5% cashback on gasoline, grocery, and drug purchases. Up to 1% on other purchases. Because it has a tier structure on the cashback for other purchases, I won’t be using this card for other purchases. You also will get the cashback every 12 months, and it needs to be more than $10.
  2. Citibank Driver’s Edge Option credit card: 6% rebates on supermarket, drugstore and gas station purchases for 12 months, 3% after that. 1% rebates on other purchases. And $1 for every 100 miles you drive, :) . The downside is that rebate dollars must be spent through ThankYou network.

The best thing that I like about the old Citibank Dividend Platinum Select is that it pays cash, and you don’t need to wait for one year. Too bad that I will be settling for something else because the 5% rebate really adds up very quickly.

Here are the posts from other PF bloggers from whom I’ve found out about the above cards:

  1. From Consumerism Commentary
  2. From Blueprint for Financial Success

P.S. Today is a Thursday on which I normally don’t post. But I have decided to at least put out this short but somewhat important money-saving post. Because of the increase in traffics in the last few weeks, I have put in extra efforts for posting everyday except Sunday. Higher traffics certainly incentivize me to post more often. Not sure if it is an incentive for you to social bookmarking my posts by digg, reddit, del.ici.ous, any other sites or through emails. But in any case, I thank you for just visiting my website.

Different Ways For A Busted Refinancing Plan

I heard about many things on refinancing to get out of the coming ARM reset, and I talked about saving these reset by re-refinancing myself too. But such a successful refinancing depends heavily on the amount of home equity you built up (or the valuation of your home), and is only for people who did not abuse their home equity. If you are an over-leveraged real estate investor, and you plan to refinance your ways out, I think the doors will probably be shut for you. Here are some of the ways that you cannot refi without coming up with extra cash. The following examples use interest-only loan for illustration purpose. Qualitatively things will the about the same if you refi using the same type of loan. But if you go from 30-year fixed to interest-only, or interest-only to negative ARM, your cashflow situation (just for now) will probably look better.

Example #1 (increase in interest rate, with the same payment or affordability):
You need to come up with $49400 to settle the refinanced loan, plus any loan costs of about 0.5% of the property value.


Now Refi Term
House appraised value 700000.00 648000.00
DownPay/Home equity 5.00% 5.00%
35000.00 32400.00
1st Mortgage interest 6.00% 6.50%
Interest Only 80% loan 2800.00 2808.00
home equity rate 8.00% 8.50%
Home equity interest-only
loan 15%
700.00 688.50
Total monthly payment 3500.00 3496.50
Loan balance 665000 615600

Example #2 (No change in interest rate, but with a market down by 5%):
You need to come up with $33250 to settle the refinanced loan, plus any loan costs of about 0.5% of the property value.


Now Refi Term
House appraised value 700000.00 665000.00
DownPay/Home equity 5.00% 5.00%
35000.00 33250.00
1st Mortgage interest 6.00% 6.00%
Interest Only 80% loan 2800.00 2660.00
home equity rate 8.00% 8.00%
Home equity interest-only
loan 15%
700.00 665.00
Total monthly payment 3500.00 3325.00
Loan balance 665000 631750

Example #3 (Tightening in loan underwriting standard, and with a market down by 5%):
You need to come up with $68250 to settle the refinanced loan, plus any loan costs of about 0.5% of the property value.


Now Refi Term
House appraised value 700000.00 665000.00
DownPay/Home equity 0.00% 5.00%
0.00 33250.00
1st Mortgage interest 6.00% 6.00%
Interest Only 80% loan 2800.00 2660.00
home equity rate 8.00% 8.00%
Home equity interest-only
loan 15%
933.33 886.67
Total monthly payment 3733.33 3546.67
Loan balance 700000 631750

The above scenario assumes that you bought the property at the height. You can adjust the amount of the home equity/loan balance/home valuation in the Excel spreadsheet here. But the story is the same. If the home values go down, lending standard tightens, and/or interest rate increase, you will be looking at putting up extra cash for refi and/or an increase in payment. Certainly, if you bought your home earlier, the situation is different. But the only reason that it is different is because of the home valuation, not because of the rent collected can be much bigger.

If you are a real estate investor that holds multiple investment properties, the power of the leveraging will work both ways. You will need to multiply the amount of cash needed by the number of properties that you have. When housing market goes up, everything is great. When housing market goes flat or down, the leveraged players are the first one to go. Now instead of the cashflow generating machines, it will become a giant negative cashflow sucker. Until the point that you start to default on your very first loan, the refinancing game for the rest of your loans & properties will probably be over for you. The reason is that all the future refinancing terms will be dramatically worse for you after that.

I think the housing “correction” will have years to run. So any real estate investors in the bubble zone better start selling now, or hold onto any cash that you have. The most straightforward way to get out of a leveraged mess is to de-leverage (by selling).

Unfortunately, more likely there will be some appraisers and mortgage brokers going to jail along with real estate investors at the end. You can find tons of actual fraud reported here at the Mortgage Fraud blog. Yeah, people do go to jail for cheating on their loans.

I just received an investment package for shorting against these mortgages bonds from EuroPacific. Minimum investment is $100K, and minimum networth will probably be $1.5 million (I wish I qualify here). From their studies, here are some eye-popping numbers:
Percentage of option ARM and interest-only originated loans in California:
2002: 2%
2003: 18%
2004: 47%, 10.6% of people has 0% or negative equity in their home.
2005: 61%, 29% of people has 0% or negative equity in their home.
2006: ?

The Real Losers When The Housing Bubble Bursts

Let’s not argue about whether there is a housing bubble or not, or whether the housing bubble will burst or barely deflates. This post assumes a hypothetical scenario that is yet to happen (if at all).

So who do you think will be the losers? If the housing bubble does not burst, the losers are the renters obviously. If the housing bubble bursts, the real estate investors will suffer first, and then the homeowners who bought very recently, and then the other homeowners. But for those people who put down 0%, 2%, 5%, or 10% of their own money, they will probably try their best to walk away from a house when the deal is no longer profitable. Despite that due to deficiency judgment (click to see my post), they will be still liable for any losses besides the purchase loan (most likely 80% of the purchase price), you just cannot extract money from a dead beat who may or may not declare bankruptcy. The lenders may have their plans & risks calculated, but without any real assets to recover their loans from, a dead beat dried of money simply cannot magically pay back lenders any money. The “Assets”-back loans such as home equity loans are only good as long as the homes or the assets in this case are still valued at a lofty high price. Once the housing market moves south, these asset-back loans are more like credit card loans, backed by nothing, except lengthy legal recourses.

So not only the real estate investors are the dreamers here, who think putting 5% down means only liable for 5%, but also the lenders who think all the loans are “backed by assets”, and legal recourses if needed. When there is no money to be found, there is no money. It will simply be personal credits soured, debts written off, deflation of housing prices, and mortgage interest rate risen for everybody.

When the bank loses money, who do you think will be the real losers? It’s us, everyone of us, especially the ones who did not get benefited from the housing bubble. Banks are not charities. If they lose money, they will simply do what they do best, jack up the loan interests, and lower the bank deposit interests. So if you interact with banks (of course, you do), you will be looking at forking out more to patch up the banks’ bottom line, because all these would-be-millionaire real estate investors abandon and walk away from houses. Furthermore, the central bank lead by Bernanke, will print more money like crazy to counter the deflationary force by monetary inflation. When the general inflation picks up, everyone loses.

“Putting 0% down! Head I win, tail you lose! It’s OPM, Other People’s Money (who cares)!” When the banks in our nation reach such a low point in lending standard, as to encourage mass speculation and such moral hazard, there can never be anything good comes out of it. Throughout this crazy housing bubble or boom (whatever you want to call it), I have not partaken in any of the speculation. You can call me stupid, or but I just won’t walk away from a home under any circumstances, period! To the best of my ability, I will repay everything for any loans that I take out. My moral standard does not allow me to even consider such possibility even when it is legally allowed. To me, there was never “head I win, tail you lose.”

I couldn’t believe what Greenspan said in one of his speech: “price stability fosters economic growth” (sorry, I am certain that he said that in his speech, but I can’t google it out). This is THE MAN who single-handedly created moral hazards one after another by bailing out big financial fiasco, and have created the two biggest bubbles, NASDAQ in 2000, and housing market bubble since 2002. Greenspan, do you really understand what you said? I can’t agree more, except that Greenspan’s actions are probably the opposites. Without a price stability, speculation is heightened or encouraged. With speculation, there are big UP and big DOWN, both ramps hurting the psyche of the society. The society is filled with speculative thoughts, and speculative tradings that produce no real economic values. The good old moral values, to work and save diligently, are completely eroded by mass speculation. What good does it do for you to work and save diligently, when all of your neighbors who participated in the real estate frenzy or NASDAQ bubble, were getting paid big and easy money.

With the US saving rate staying in negative zone (when the asset returns fully cover any short fall), our society has turned into an asset-based society. Unfortunately, the real value of the asset is not how much money it is valued at, but rather how much utility and function it can bring about. Those later values are the true purpose for the assets, while how much money the asset is changes from day to day, or from month to month. Our asset-based society has truly lost its focus.

Truly the entire society loses, when the bubble began, not when the bubble bursted. A society in speculation is a society with time and resources mis-allocated for the wrong purpose. The job of the central bankers should be to minimize the magnitude of unavoidable speculation in capitalism. Instead, Greenspan has chosen to do patch work, encouraging moral hazards, and making every subsequent wave of speculation even bigger.

Truly the real losers are everyone of us. Our values on assets and money get trashed along with the creation and bursting of the housing bubble.

Why Investing Hypes Never Work

Do you know why the most widely accepted method of generating/earning more money or investing success will never work? If you understand that being rich is relative, then the reason should be a little obvious.

The following numbers are only for illustration. Assume that someone found a method of generating wealth that really works, or some investing software, rules, or stock symbols that can generate a lot of return like 25% every year. When 1% of the population participates in such activities, it may work very well. When 10% of the population participates, it may still work okay. When more than 50% of the population participates in it, I can tell you for sure that most likely it will not work anymore. Why am I so sure? Because if 50% of the population becomes millionaires, then a million dollar at such time will no longer represent the same relative money as before. Being rich is a relative term. Or better yet, relative to the purchasing power. When 50% of the population are all millionaires, how much do you think a nice meal at high end restaurant would cost? Since one in two waiters will probably be a millionaire in such scenario, he or she most likely will not work in the same job. Less low-wage labor equals wage inflation. And since lots of people have a lot of money, they may start buying all kinds of luxury goods. A luxury car will not cost the same money as before for sure. People will compete to get luxury cars. Less goods, more money, equals inflation again. When there are more people having more money, while at the same time, the Earth is still as big as before, and the amount of goods & services does not increase, it simply means that things will cost more.

Now, if you know that 50% of population investing in real estate, do you think that all these people doing the same thing will all become rich? Let’s forget about individual differences in the execution and quantities of their investing activities for a second. Let’s assume the participants of such activities have about the same money to begin with. If 50% of population all doing the same thing trying to become rich, getting 100% or 200% return on their investment, among all of them, relatively speaking, will not have too much differences in what they own. Since being rich is relative, and when relatively speaking in terms of asset classes, these participants all have the same thing. For certain, they cannot be all rich. Because if they’re all rich, then it will break the definition of being rich as being having relatively more money than other.

This is true for all investing activities. Whether it’s the next hottest IPO, or the next greatest Microsoft. Once enough people buys into it, regardless of whether it was working before or not, the method of generating wealth will simply stop working. If you put this in the context of Efficient Market Hypothesis, any temporary market inefficiency that can be exploited will be exploited very soon as to render such investing method to be no longer useful.

If you assume that money distribution is like a Gaussian bell-shape curve, most people are in the middle, while a few have a lot of money, and a few have very little money. Whenever the participants engage in certain money-related activities, the hidden force of the Market is to redistribute the money back to the same shape of Gaussian curve. So for certain as explained above, if too many people doing the same thing, then the result of such activities will most likely give you a mediocre result: not too good, nor not too bad, just below average (almost like index investing these days). With a below average result, the Market can be best to re-shape the money distribution curve back to Gaussian again. By the same token, if you are doing what no one is doing at all, probably there can be two kinds of results: either very good return, or very bad return for your activities. Make sure that when you’re doing something special, you’re doing the right thing for yourself. The special guy is usually the smart guy or the stupid guy, and seldom the average guy.

Unfortunately, the cruel truth is that not everyone or many people can become rich in money. Because part of the required definition for being rich (in money) is that there are only a few, and not many.

P.S. Let me give you a slight hint to become rich. When you are young and you can afford bigger loss, try to do something that not everyone may do, but select carefully from the million of special things that you can do. Taking a chance with careful selection of task may give you an outsized return.

Predicting Long Term Stock Market Return

Here is an article from on forecasting the stock market in year 2011. This is the second time that I’ve read about longer term forecasting in stock market. I think last time when I read about it was around year 2000. At that time, the forward 5 year prediction was not good.

To give you a summary, essentially using value line research, it has been shown that predicting stock market return in the next 3 to 5 years is actually “easier” than predicting the market in the short term. In the very short term, no one knows for certain whether the stock market will go up or down tomorrow. There are theories that stock market is more like random walk, and it is unpredictable. And if stock market is truly 100% efficient, there will not be any profitable opportunity that you can exploit, and therefore, you won’t be able to predict the short term direction of the market for profitable opportunities. Efficient Market Hypothesis (EMH) is almost golden in my opinion. But there are several cracks. One of which is exactly described in this article. It is simply easier to predict stock market for a longer timeframe, than a shorter timeframe. Why is that??

It means there are really information extractable from the current state of stock market and economy. While in the short term, you may not be able to predict the direction or amount of return. In the longer term, there are indeed investable information that you can extract. In my opinion, EMH has no concept of time, and I kind of agree that looking at every instant in the market, everything is indeed efficiently priced. But when you start to expand your time horizon longer, EMH will start to fail because there are some historical and current states in the market that can be extracted and extrapolated into the future, which cannot be reflected in the next minute or second.

Why do you want to invest (certain) stocks for the long term, instead of doing short term trading? This is the biggest reason that I believe. Because when you are able to identify and select certain stocks or sectors based on the current and past information, you will be able to outperform the market given enough time span for those information to unfold.

What was the prediction from the article for the stock market in year 2011 (5 years from now)? It appears to be not too good (go and read it yourself). I believe that US stock market in general is still in the secular bear market (but should have a short term rally towards the year end)? Currently US stock market is in the short cyclical bull market which is probably about to end quite soon in less than 6 months. Looking much further out, I don’t think the return adjusted by inflation will be great in the stock market. I don’t think index investing will make you rich in the next five or even ten years. You should be lucky to just preserve your buying power.

Just my two cents.

Housing Led Stock Market Correction

Have you seen the following chart? At a mathematical correlation of 0.79, it is scarily high. How much time do we still have before the bottom falls out? Or is it going to be a bullish 2007 with a great 4-year cycle election? With so many bulls arguing with 4-year election cycle, maybe this argument is a sign of desperation. Just some food for thought.

I think it is safe to say that there will be great uncertainty in 2007 due to the unfolding slowdown in the housing market. I would say, RUN at the first sign of a significant market correction. I am putting 2007 as another dangerous year like 2000 if not more dangerous due to the size of the current housing bubble. But I also think it is possible for Fed to work 24/7 already, blowing up commodity market, buying up treasury bonds & GSE bonds, to postpone the unfolding crisis to 2009. When the high-tech bubble bursted in 2000, Fed simply created another huge housing asset bubble to replace it. I cannot really imagine what would turn out eventually. The next wave of money flow is simply going to be bigger for sure.

Make sure you read the counter argument by Mark Hulbert for refuting the following chart. I agree with him completely.

Charts On Housing Markets US Economy

In my previous post “The real losers when the housing bubble bursts”, it appears that many people did not understand what kind of inflation that I’m talking about. Apparently, you don’t read my past posts, and are not familiar with were I stand on the US economy. I’ve pulled together three charts which I thought must be seen by everyone if you are reading any other blogs. The first chart is on the historical inflation-adjusted value of US housing prices. The second chart is what US Fed Reserve has been doing to our money supply. The third chart shows you how Fed is using housing market to prop up the economy.

On the above chart (originally by Robert Shiller and thanks to financialsense), the first question that you may ask is whether the housing prices will go back down. You may argue that this is a new era, and it just won’t fall. However, human history is littered with bubbles that went bursted. Every time, the participants believe in the new era argument, and every time we may do have a new era, but the “new era” becomes old, and newer things come. The prices eventually go back to historical norm. This is true for the South Sea bubble, 1928/29 US stock market bubble, Japanese bubble in 1989, NASDAQ high-tech bubble in 2000, etc. So many times, people have said, “this time is different”, and yet things are more of the same than you can believe.

I believe in learning lessons from the economic history. Past is the only thing that we can rely on in the attempt of divining the future. I believe in the historical out-performance of stock markets at , and therefore I have fully expected a lackluster performance of stock market since year 2000. It is my expectation too that housing prices will revert back to the past norm.

The second question that you may ask yourself is that do you really believe that the housing prices in general will fall 50% outright in the terms of nominal prices? If it does happen that way, it will do a big damage to the US economy for sure. What is more likely in my opinion is that the absolute prices will not fall that much, but the inflation-adjusted prices will nevertheless fall fully by 50%. The evidence is in what US Fed has been doing in chart #2, and what they will be doing, and what they don’t want to tell you and me. What does that mean to you and me? It means that the inflation will be higher than usual almost for sure.

If you use 200% as the peak in the chart #1, and assume that it will go back to 100%, then the amount of fall in absolute prices, must be compensated by the amount of inflation. Let’s assume a fall of 25% in the absolute price. In that case, total inflation must be 50% over that period, since 200% * (1-25%) / (1 + 50%) = 100%. How long the housing prices will deflate is hard to say? If the inflation-adjusted price bottoms in 6 years, then the previous numbers are telling you that in the next 6 year, US housing prices on the average fall 25% in absolute prices, but the inflation for the next 6 years will be compounding at 7.0% (to reach a total of 50%). You can use any other sets of number, and crank out a different scenario. But I think housing prices on the average will fall, and inflation rate will be high in general.

The “smartest” player in all these is of course US Fed Reserve. To avoid to be caught in action and seen in inflating money supply to create inflation, US Fed has stopped publishing M3 money statistics right before Bernanke takes over from Greenspan. They know very well that if all their repurchase agreements (repo) are exposed, and M3 money statistics is exposed, US dollar exchange rate will start falling like a rock. So instead of letting everyone know what they are up to, they want to operate in dark. Other governments around the world are not stupid either, and have been inflating their own money supplies at a heightened pace to combat the fall in the $US and maintain a competitive export business. But you will never hear from the government or the Fed that “hey, fellow citizens, I just printed another 10 billion US dollar today freely for the profligate US government to use, but will dilute the values of all of your US dollar based assets.”

Certainly, their intent in all of these is “benign” for the US as a whole and to save all the debtors, whether it’s consumers or US government. When the real inflation-adjusted value of US dollar is reduced, the real value of debt is also reduced. While I don’t know how smooth their operation can be, but historically government’s interventions in the capitalistic system only generated bigger waves of unbalances. The recent lowering of interest rate down to 1% is probably the best example. Yes, US Fed saved the US from any setbacks from a high-tech bubble, by simply creating the biggest housing bubble in the US history. I don’t know where all of these will end, but I think hyper-inflation may be likely towards the end.

So who may be the real losers in all these mess (that are yet to happen)?

I try to look forward 10 years plus. I do know for certain that if we do reach such bottom, I will not be pessimistic at all. At such bottom when I look forward 10 years plus, I will be more optimistic than ever, because after cleaning up, it will be prosperity awaiting for us. History teaches us that things go through cycles instead of a linear development. From excess to shortage, and from shortage back to excess. I try to take the contrarian view to plan and prepare for my future.

P.S. Here is the chart that shows housing market is becoming the US economy. One day if this trend keeps going (when housing reaches 100% of the GDP, wrong, just wasn’t thinking straight) , will everyone become a realtor, and have the illegal immigrants to do all the rest of work, from house cleaning to high-tech R&D, :) ? Sources taken from


The Only Credit Card Guide You’ll Ever Need

J.D. Roth at Get Rich Slowly has one of the best and comprehensive guide on credit card that I have ever seen. Any questions related to credit card probably can be answered here in his article. The article has collected the best sources of information from all of the PF bloggers, plus a lot of good information from government on legals, and resources from around the web.

Other articles that I think will be useful to many of you are:

  1. Ten Secrets of Success (for Entrepeneurship)
  2. 27 Money Tips for College Students
  3. Nine Tips For Young People Starting Careers

Check it out! This is My Digg of the Week.