Ahhh, The Arrogance!

All in to throw the first stone, none caring to heal anything.
Hell is paved with good intentions!” we are taught. Yet, so many amongst us, some intelligent, keep on believing that they have the key to the Paradise and it’s made of… you guessed: good intentions! After all, is common sense, isn’t it?! But then again, the old saying “common sense is not so common” is always true in the case of others. Ahhh, the arrogance of thinking that good intentions amount to the worst of plans.
In the hardest of times as well as in the best of times, good intentions trump reasoning. Politicians do it wrong, corporations are to blame, welfare and health care are off the hook or they are not enough. What a blessing it must be to have a simple mind which sees everything as very simple and the choices that we have as being between good and bad! How simple must be everything when Jews or evil corporations or lazy bums are to be blamed for everything! People can straighten all the evils of the world in just 2 hours, over a pint of beer of glass of wine.
Now we are going through a deep economic crisis and people who went happily for the ride when this crisis was being cooked in the oven, are screaming and calling for heads to roll and throwing generous ideas as plans for recovery. Who is to be blamed for this crisis? THE OTHERS as poor Sartre was saying. Who are THE OTHERS? Bankers, corporations, politicians. Right?! WRONG!

(I am not really sure who am I writing this for because those who understand the situation, know it already, those who scream in the street, don’t care much and are too blinded by passion to give my words a second thought. Yet, here it comes.)

Bankers/Corporations – CEO and upper management are making money. Sure. With disregard to the deep social implications which most probably they didn’t give too much thought. Indeed. But, people – THIS IS THEIR JOB. They need to make money, to create profit and to reward the stockholders. If they don’t, they are kicked out on the spot. Check out what happens now on the market (not that you screamers ever bother to check the S&P, understand economy etc.) – if a company misses their PROFIT target, the share price goes down, most of the times ending with the company having to do massive layoffs. I repeat – even if they ARE making profit, just not as much as last year. Are these people making good money?! Of course they are but they argue that they did what they were supposed to do: profit, and deserve to be compensated. Did you ever refuse a pay raise?! They are greedy – of course they are. Would you stay 12h/day at work, travel extensively far from your family and dear ones, if you were paid 20-50% more than if you were to have a comfy 9-to-5 job?!
Smaller ranks, clerks need then to be at fault. After all it wasn’t the CEO of Bank of America who was forcing them to give the loans to UNQUALIFIED people, bad payers, poor people. What sane and good person would give 500,000$ mortgage loan to a family who earns 50,000$ (BEFORE taxes)?! They must be evil! But do you think they were giving it a second thought?! Upper management decided that the price of housing can only go up, so mortgage loans will always be paid, gave bonuses/commissions to those who could bring in people interested in buying a home. As long as your 50-60,000$/year salary becomes 80-90,000$ salary and what they were doing was not only legal but encouraged by their bosses, who would have said NO?! After all, one could argue – I am giving their house, their very own place to live to poor people, I am doing them a favor.
(This pertains to another discussion – what is the real good, is being gentle and permissive momentarily the same one with being good and doing good?)
Stockholders – so stockholders with their lack of patience and desire for quick profit are the ones pushing for more profits. To hell with stockholders! After all, who are they?! Business people wanting to speculate the pain of the working people, living a lavish life with their proceeds, people like Bill Gates, Richard Branson, Warren Buffet… Right?! WRONG. We are ALL – ALL who know and (most important and more) ALL who don’t have a clue. In N America, people can’t rely on government pensions so they invest, save for that future in which they are too old to work. Mom and pop, after working a lifetime, they are happy when their 100,000$ saved over 20 years becomes a 4-500,000$, allowing them a peaceful old age. If their 100,000$ becomes 2000$, we hate the ones we hate now anyway: they entrusted their money to people who were supposed to make them a profit, grow their initial investment. Would you accept a banking account which “gives” you a negative interest?! Let’s say it takes 10% of your savings for whatever reason: to feed the hungry, to keep jobs in your country, to save the whales, or pure and simply to squander it in bad investments? Would you open a “Big-Heart Account” or “Incompetence Account”?
In Europe and other places, people rely pretty much on the government to care for them in their old age. But how is government able to do that?! Print money?! Yes, they are doing it and that is why we’re in such a shitty place now. But is it feasible and logical to think that 1-200 EU/month you contribute to pension will generate in 20 years 1000EU/mo which will last another 20 years? How could this happen unless that money is INVESTED and, more so, it brings PROFIT? Government pension funds need to obtain profit, lots of it, to be able to sustain Social Services, so generous in Europe, to be able to pay for pensions. That or print money. So either you know/accept you are a shareholder or you have no clue, it’s a very good chance you or your loved ones depend on PROFIT to get by.
Politicians – Why haven’t the politicians done anything?! They are surely to be blamed. But a politician – I am not talking about the scumbags from poor countries – react (like all of us) when bad things are happening. What was bad before the crisis broke, before 2008, to require their reaction?! Corporations and banks were making sh*tloads of money, government was raising wonderful taxes on these piles of cash, people were happy either because now, magically they could afford a house to call their own (instead of, more appropriately, “the bank’s until the mortgage is paid”), or maybe because their house doubled in value in 3-4 short years. Workers had jobs sustained by construction, equity loans based on the house equity were flowing and eternal sunshine was glaring over the country, over all countries to an extent. This wealth, as rotten as it was, was fueling discretionary spending – more TVs, stainless steel fridges for everyone, 2-3-4 cars and vacation houses. “WE DESERVE IT ALL” – I hear this line from people “lost in shopping”, all the time. We do deserve it all – everything that happens to us is only OUR fault.
And when the crisis hit, what you would have done?! It would have been a sensible thing to let GM and Chrysler go bankrupt, let the banks go bankrupt because they deserve it. But it is estimated that auto-industry sustained 800,000 jobs and millions of people who depended on these jobs. If you are not living in a state where 20% of the jobs depend on automotive industry, you can say “let them die for the crappy job they did”; but if your constituents livelihood depends on these jobs how can you say “Go to hell!” ?! Come on, do-gooders, how can you tell some guy who tightens the same screw for 20 years (and does it badly) that he will have to get new skills and look for a new job and still expect to have him vote for you?! So, you save the few million NOW , hoping that someone else, not YOU will give tens of millions to the dogs when the seeds you planted NOW will reap the huge crisis. You print money and you pretend that happy times will be back in a jiffy… when in fact they are not coming back soon.
Government should have had control over the banks and companies and regulations. Indeed – but if you ever worked in the government, you know what a waste there is – people paid with 80-120$/h (160-240,000$/year), doing jobs for which they would have been paid 50K/year in a private company. 5 persons barely taking care of the workload of a single person – why?! Because of the damn regulations and damn comfort of the job they are in. Government is a black-hole and EU is a good example how regulations can stifle economy, growth, profit and thus jobs, pensions, stability.
I could go round and round and round but the fact is SIMPLE, if only the simple minds would accept this assessment: no one can cast the first stone, because we are ALL to blame. The arrogance, the gull of some idiots who take it to the market armed with good intentions but otherwise without a plan where everyone can win will not convince me. Do I want to live in a world where profit is balanced with the needs of the people? Do I want to live in a clean, eco-friendly world? Do I want to enjoy the benefits of modern healthcare and technology and what have you? OF COURSE I DO. I simply know that revolution is NOT the answer. Good intentions are NOT the answer. Big-heart is NOT the answer. We need BRAINS and careful information, we need an action plan which mediates between the interests of ALL segments, we need balance, not hippies shouting Mao’s lines, who – invariably – will end up being upper management in large companies. If we use our hearts and not our brains, we simply end up pave the hell.
There is a lot of GOOD to do. How can we do that?! Think and identify the LEAST of EVILS – because that is what GOOD in this world is.

Self-destructive

Fear! Fear is one of the most powerful driving engines of human psyche. It conditions us as much as, for example, love… and sometimes even more. Fear of being abandoned, fear of being cheated, fear of being laid off. It can seem a primitive instinct and maybe it is but it doesn’t seem to have anything primitive about it. In fact, the more intelligent and educated one is, the more fear one will feel – because one can envision much more ways of being hurt.
Hurt?! Well, that is the big idea – that we fear only bad things. Not necessarily true – sometimes, when we get too close to something good, very good, extraordinarily good, we fall into the eternal too good to be true and we start digging, investigating, analyzing, just to find out what is wrong with that close-by success. If there is nothing we can find wrong, we make-up something just to certify that nothing can be that good. I had good things a couple of times within my reach and I managed to sabotage myself with this self-destructive attitude.
It is as if – instead of being happy for a while but facing a probable misery, I am afraid of this happiness that will not last and I am ready to sacrifice it, so I don’t grow wings, so I don’t go close to the sun, so I don’t find out later that the sun is just a light bulb and that I am not Icarus but a moth.
There are places where the mind is of no use and where faith is all one needs. Faith is the only one that can keep the fear in check – not blind faith but a warm faith placed on the right to happiness we most probably have.

Depression – Part 2

As I promised, but later than I wished for, here is the follow up. “The pickle” with all my advices, the most important, the critical aspect I left for now. Nothing is worth a dime without the most important one of all –WILL/DETERMINATION. And, hey, that is exactly where depression attacks – the WILL. Most of us, let’s be honest, are lacking this in the best of times.

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Investing DIY – 5 – More details about stock evaluation

I thought I should capture some economic indicators that can help you make an informed decision when buying stock. These indicators and theory can be found in many places but it’s easier if they are in the same place, eh?! None of these indicators are an ultimate factor but each gives you a picture of a company – the more positive findings, the better the investment. These are the ones I used but each investment school thinks some others are more important. It might be so but one needs to walk before running.

Indicators to identify a bargain stock

  • P/E (Price/Earnings) Ratio – I discussed it before. A good investment has a lower/much lower P/E than its competitors/sector/industry. It shows how quickly, keeping up the earnings the same, the stock will be paid off from these earnings. A company with a P/E of 30 but with a 80% annual growth for the last 3 years most probably is a much better investment than one with a P/E of 25 but with 20% annual growth. Rule of thumb is that one should be very cautious with companies with P/E over 30-40 (they might still be a very good investment but please check carefully)
  • Price-to-book Ratio – How much the company is valuated on the market compared with the declared assets. A Price-to-book below 1 seems like a real bargain (in theory, if the company would be liquidated, you would get more money than if you were to sell your share on the stock market)… but be wary! Corroborate with all the other aspects, with its competitors/industry to find out WHY it is so undervalued. Below 2 should be still be fine.
  • Price-to-sales Ratio – Share price divided by revenues per share. It is useful when evaluating how quickly the company is growing and how fast it is growing its sales/revenues. Smaller is better – useful when comparing companies in the same sector. A company might be growing very fast, becoming quickly competitive, yet it did not attract yet the attention of the analysts, investors.

Financial Strenght (debt evaluation)

  • Quick Ratio – this is a quick look at the cash flow, the power of the company to cover its short-term debts with the money it generates. Above 2 is a sign of financial strength.
  • Debt-to-Equity Ratio – Total liabilities divided by equity of the shareholders. A high ratio here means the company is financing its growth by borrowing and that the growth would not be sustainable in time. (Sort of a person taking 10K from a line of credit and then bragging “I have 10K all the time in my chequing account”). It should be checked within the industry range. Capital intensive industries might have such a ratio as high as 2, while others have a normal range of below 0.5. Should be looking for those below 0.5.
  • Dividend Payout Ratio – This is the yield (money paid out) vs earnings per share. When we chose a company for the reason it pays dividends, we want to make sure they will continue to pay those dividends. Remember – dividends can be suspended at any time. Beside the length of time the company has a solid dividend paying record. Each recommends a different threshold – some people recommend a ratio of below 50%, others like it to be a little big bigger (70-80%), because it means the management is committed to having performance of the company high. In any case, any dividend payout ratio over 80-90% is a red flag. There are companies paying over 100% but, in long term, that is not sustainable (they pay more than they earn). Mind you – some investments – like REITs – are forced, by law, to distribute more than 90% of their income to investors, so it is ok in those cases to have a payout ratio of (let’s say) 95%.

Growth

Earnings-per-share, Sales, Dividend Growth Rates – all these, when compared to the competition/industry average, show how fast the company is growing. A company with traditionally not so good indicators – which makes it stay below the analysts’ radar – but with low debt and big growth in the late 1-2 years – might allow you to be an early investor in a success story.

Emotional

Beta – discussed before. It is an indicator of price change. Not so important in economic terms but important for your risk-tolerance. The higher the Beta, the more the price of the shares fluctuates. If you are easily unnerved, avoid anything above 1.

Others

There are many other indicators for the solidity of a company. Some are composite indicators I.e. GER Analysis is another composite indicator which combines some of these indicators and some others: P/E, Debt-to-Equity, Return-to-Equity, Price-to-Earnings-vs-Growth, Growth rates, Earnings-per-share, Revenues to provide a composite number 0 (weak) – 100 (strong).

Good-Bad

For a very long time I wished to be good… and that strong desire made me become bad many times. I would speak my mind – giving many times “cutting” opinions, made people feel bad and then feel bad about myself for pointing them what their inner self tells them too but don’t want to admit. Feeling bad about yourself is the sure way of behaving nasty toward the others. What is worse is that while in time I learned to be more diplomat with people I don’t care much how they live their life, I kept on giving my truth to people dear or close to me, the ones with a future I perceived intertwined with mine. In other words I scold only the people I care for, just like I scold myself.
No, I am not a good person. Not in this definition: telling people what they want and what they need to hear. I do good deeds – many times I was told that too much out of my way to help people, even to get away from their own mistakes, but I can’t help telling them what they did wrong. And that is wrong – because people know what they did wrong, they know why their lives are not what they want them to be. They simply would not admit it. And that is why attending lifestyle-gurus conferences don’t make one bit of a difference – people don’t need to be told what is wrong, they just need will to fix what they are doing wrong. Unfortunately, I am so impatient that I keep on forgetting that one is never a prophet in his/her own country and I believe that a simple demonstration would (as it should) be taken for what it’s worth.
People spend too much and then complain publicly about the state of their finances. Do you think they need to hear me pointing out the errors of their budget (or lack of)?! People make wrong emotional choices – hanging on too long on a destructive relationship… do you think it makes any difference if I point out the futility of expectation of love and care where it didn’t happen in 1-2-3 years?!
I remember how angry it made me when my ex told me that she is with a man who is “good”. It seemed so unfair! He paid for 2-3 dinners, told her that she is the most beautiful, accomplished woman he ever knew and had become good. I, on the other hand, to consider only the Canadian period, sustained her financially for 4-5 years. But during this time I told her what I considered is wrong: that taking Computer Science during the layoffs in the technology sector is dumb, then she should chose the stable job, not the exciting one… and unfortunately I was accurate as a soothsayer and she resented me for this. I pushed her to make a credit history, a driver license, forced her to become autonomous so in case of my death, she could continue to be on her feet and take care of Gabriel. That is why I became “mean” and a stranger who didn’t help in any way in her becoming was “good”.
No, I am not a good person. I am just like a horrible Jiminy The Cricket… the voice of conscience, telling people “That is wrong “… but they already know it and just do what they were programmed to do. In the end I resent myself too because I think I am a complete idiot expecting the pig to fly, the eagle to dig the soil, the chicken to kill and so on. What I build with dedication and hard work, I destroy in a moment with my damn mouth.

Money, Life, and Happiness

It’s just my life philosophy that I am trying to share with you. Everyone is completely free, in what I am concerned, to decide how to spend their money. The issue that I have is with the unhappiness money generates. I always believed that while money doesn’t bring happiness, they help preserve it. Well, it’s not true. Families with incomes of 150,000$ or more end up unhappy, in debt. I see them trading their long term peace of mind, relaxation for the “cheap” thrill of unwrapping NOW that desired gadget or car or thing that somewhat complicates their life and makes it less happy.
Money is meant to be spent. I agree. Up to a point. All?! Even money one doesn’t have? How much borrowed money do we need for our happiness?! Pretty much none. I did it, don’t get me wrong – even my motorcycle was financed with borrowed money. Yet a measure must exist – you pleasure yourself, then I believe you should take a break from pleasuring yourself… for a while. I have even witnessed the idiotic vicious circle: I am in debt, can’t make ends meet, I am unhappy sooo… I will buy myself some knick-knack that will make me feel better. What is even more infuriating is that the people will feed you wise sayings such as “life is more about being and less about having”.
As I was saying, happiness is much simpler and cheaper than you think. Renovating the kitchen with 600$ and some work – change handles, paint it, some spots, new window covers – will make you happy in ways a 12,000$ renovation made by some contractor will never be able to do. At the end of 2 years that you have been saving money, purchasing that set of living-room furniture you dreamed of will reward you infinitely more in joy than living with the dangling sword of 5000$ loan taken right before losing the job. What is wrong with saving and letting the Joneses get into bankruptcy?! The 10000$ invested when you are 30 that becomes 20000$ at 40, will buy you that peace of mind that the quick thrill of shopping never can.
The common point seems to be this desire for perfection NOW. Purchased a new home?! What kind of dream-home is that which doesn’t have hardwood floors, interlock patio, new furniture?! And the sad truth is that when we achieve our dreams we don’t fill fulfilled but EMPTY. We reached our goals. And now what?! Now we should mess our lives: get more toys, a bigger house, get in debt, break the marriage over accumulated debts, blame the other for decisions we helped take.
We need goals in life. Most of us don’t have Earth-shattering goals: to build a pyramid, to circumnavigate, to compose a symphony. So I believe that we should spread our goals over a longer period of time. Instant gratification doesn’t work. Not for those who seek peace and happiness.

Doomsday

We hear in the background – IMF and EU offer 78 billion EU bailout to Portugal, US debt reached 14.3 trillion $ (BBC Source), Greece has close to 500 billion EU debt and pays 13% interest rates on 10-year government bonds (BBC Source) … Still very few people stop to ponder what does this means for them?! Even fewer see the writing on the wall. It’s in our nature to believe that we can make any kind of excesses and that we’ll never pay for them. US, a country ridden by debt, this is the first year when people are allowed to pay their due taxes using a CREDIT card.
What does it mean 14.3 trillion $ in debt ?! It means that each American – old, young, newborn, making 12,000$/year is liable for close to 48,000$. And this doesn’t include the personal debt! Right now the Federal Reserve keeps the interest on this debt artificially low, close to 0%. What if US would have to pay 7% (less than Portugal pays right now and almost half of what Greece pays)?! That would mean 1 trillion $ in interest only, every year.
So why should one care?! Well, to finance these huge debts that countries run without much worry, the printing machines are running hot. US is financing this huge debt by printing money. All our monetary system is pegged onto USD so we are all liable to pay for it when The Reckoning Day arrives. Many people are completely oblivious about what it means inflation, not the real one or what is called hyperinflation (BBC Source). Yes, prices are rising but what if they increase by 3000% per year as it did in Brazil in 1994 (BBC Source)?! The bread that costs 2$ today would be costing 60$ in a single year and 1800$ in the second year. Do you think that your salaries or the ones on which you depend to live your life would increase at the same rate?! Yes, people will make strikes, pressure on the governments would increase (as we have seen in France, Greece, Portugal etc.) and actually by creating an unstable political system it would become worse. Soon. Very soon. Can you see this future with 20-30% unemployment, with public sector continuous strikes, with interest rates of 80-90-120%?!
But this will not happen, some would say, because US can continue to manipulate the currency and make the games. It is not so. For years now, they are having a hard time convincing the world countries to keep USD in their local reserves. Pressures on Saudi Arabia, made them change their mind in 2009 about leaving the current system. Last week, Mexico purchased gold worth 4 billion USD. Chinese government, stuck with huge loads of USD (close to 1 trillion $) that they acquired by financing American splurge, is on a shopping spree to make use of these reserves which soon might become worthless.
Not scared enough?! How bad can it be? In 1923, 1 USD was worth 4 trillion German marks! Prices were doubling every two days! In 1985, Bolivia suffered inflation of 12,000% for 1 year.
What is there to do?! Surely there will be life after the crash of USD. Maybe not as we know it but there will be. We have to minimize the risks. Go back to basics: live without (or as little as possible) debt, save and invest, learn to do more with less and… don’t forget to enjoy life. Who remembers that old saying “Best things in life are free”?

Tomorrow

Try to ignore these depressive thought. They are just an emtpy howling to the moon. I still feel the need to lay them down so here they are…

Tomorrow will be better. Through how many tomorrows can one survive?! A tomorrow that will be better and never is. Sometimes it seems that that tomorrow when things are good, peaceful, meaningful, is just around the corner. Then, without a warning, those hopes crumble. How many times, do you think, Phoenix can rise again before it becomes a simple chicken and remains in the flames to get roasted.
I use to be immortal. Full of dreams, hopes, always postponing the greater purpose I thought I was meant for. And I could dream and achieve if only it served somebody. A random one like in the old sophism “The meaning of life is to give it a meaning”.
Then life throws upon one days like this, when one is in doubt.
I lived in 40 years what most people live in 80, if they are lucky. It wasn’t because I was special but because I had eyes to see what I have been living. I lived not only my life but also the lives of the ones surrounding me: my grandparent’s lives, my parents’, Brindusa’s, Gabriel’s and of all the other interesting people who have touched my life. And somehow, despite this great burden placed on my soul by this continuous introspection and understanding, I managed to find a purpose to all this absurd game that my life was. Yet now, more often, I find myself without an aim, erasing one after the other all those beliefs that guided me, that gave my existence a meaning. Gabriel?! He’s a great kid and would probably be better feeding on the image of a father who tries, who told him so many stories, who guided him, than the one of the father going through life like a ghost. My parents?! They never thought I had a purpose. Myself?! I am disappointed with myself – just a fly pretending to be an eagle, who managed to accomplish good things but never extraordinary ones.
I will pull up now the dark but soothing blanket of forgetfulness and I will sleep. Good night, Andi!

Watcha gonna do?!

The lack of logic frustrates me. It frustrates me deeply. I can’t help the feeling of being helpless when I am confronted, for example, with a mother complaining about her child’s weight and 10 minutes later encourages him to have a snack and use lots of mayo. Or somebody complaining about the debt burden and then, right away, proposing a long, expensive vacation.
People are not stupid. Not THAT stupid, anyway, yet they seem to not exercise any control over their live. Mostly everyone agrees that we are trashing this planet but most don’t see anything wrong throwing 2-3 years old electronics just for the sake of latest fashion, replace the car every 4-5 years, buying more junk to fill their closets. Everyone says financial responsibility is very important but when you point out their debt, they say “well, everyone has debt”. Most of the people deplore the technology invading their lives, but if one waits a few minutes you will hear “Ohhh, I am adicted to my blackberry/iPad”. All the media is filled with articles about the decline of knowledge – high-school graduates not being able to be functional even in the most modest jobs, inculture of the most shameful kind, yet somehow the main idea of the education system is to not push the children to achieve more, do more. We are surrounded by a “whatever” generation and yet many of us replace parenting with friendship and expect teachers to do our “dirty” work… but without being stressful on the children in any way.
Most people know what is good for them, know what is the correct thing to do yet they indulge themselves into doing what they want, when they want it. Of course, everything has a justification. “The more you buy, the more you save” or “we need confort” or “carpe diem”. Nobody accepts the fact that our perverse mind can rationalize anything and give a justification even to the most unjustifiable things.
Caught up in hedonism, preferring immediate, superficial pleasure to deep, long term satisfaction, we ignore willingly common sense. Of course it is hard doing the right thing, it takes self control, it takes tough standards applied to ourselves but not everything that is hard is bad. So very few children love math – yet should we remove it from curriculum just because it’s unpleasant? Does anybody want a surgery and the long recovery?! Then why don’t we just say to the surgeon “Please, dude, don’t do it because it will be, like, hard on me and, like, totally unpleasant
Why don’t I simply accept and ignore it, enjoy life?! But I do and I apply what is right mostly to me and those that I hold dear. “Whatcha gonna do?!” say all with a shrug. Spread the word, make yourself and people confront their own failures , adjust and try – to the best of one’s abilities – to live by the principles you have. And NEVER accept pre-digested thoughts just because they make your life easier.