Milton Friedman Day: The Power to Choose

In honor of Milton Friedman (July 31, 1912 - November 16, 2006), January 29 has been declared Milton Friedman day. Various activities will be held to recognize his life and work. While the main activities will be in Chicago, PBS will air a special documentary titled The Power of Choice; The Life and Ideas of Milton Friedman. Check your local PBS broadcaster for the the time for this documentary will vary with the local PBS broadcasters. You can also watch Milton Friedman's 'Free to Choose' documentaries that aired in the 80's and 90's online for free.

I would recommend watching this special documentary if you live in the US for anyone who wants to understand the thinking of Milton Friedman. It's a much watch for anyone who wants to understand the economic system of the US or live the American dream.

2007 World Social Forum Report Card

Attribute	Score	Comments/remarks
Participants/Audience	B	Diverse participants but few stakeholders represented
Organization	D	Lots of issue with activities, transportation
Expectations	E	low expectations prior to meeting
Agenda	B	Did not address issues adequately
Media Coverage	C	Minimal coverage/reporting outside Kenya
Outcome	F	None
Location	B	Lack of adequate facilities and infrastructures
Relevance	E	Funds could have been utilised elsewhere
Impact	D	Mainly benefited local communities

Final score C

The 2007 WSF did not live up to its promise though very little was expected from the forum. To the ordinary folks, it was just another talk shop. The lack of success can be attributed to ineffective leadership of the forum, non-existent governance bodies and fragmented membership.

While I have no time for socialism/leftists, I would like to see a more successful WSF because I believe their contribution can help make this world a better place. For the WSF to achieve success outside it's country of origin (Brazil), they need to go back to the drawing board and make the forum a force to reckon.

But First, a Message From Our Sponsor

Senator Barrack Obama's (D-Il) statement on his decision to form a Presidential Exploratory Committee.

John Githongo is my hero

Call him anything you want but make sure you call him 'effective and efficient crusader of anti-corruption'.

In the short period that he worked for the government, John Githongo single-handedly managed to stop the treasury coffers from being heamorrhaged as is always the case. It does not matter if his crusade was/is for selfish reasons because his actions have benefitted the whole nation.

Kenyans will forever owe him a debt of gratitude that can only be repaid by the prosecution and conviction of the perpetrators and beneficiaries of the Ango-Leasing Finance scandal.

E-z money 101: Get rich quick! Or die trying.

"Do you think these girls like me? No, they like my money!"

“Today I’m gonna show you how to drive a sports car. First, you need a lot of money!”

You've heard it on Radio and seen it on TV. Welcome to the land of unlimited opportunities and home to the informercials.

Tom Vu stands head and shoulders above all other informercials. His comical late night infomercials featured mansions, yachts, sports cars and lots of beautiful bikini clad blondes. He promoted his free seminar to learn the same secrets he used to make millions.

Tom Vu persuaded thousands that a rich playboy's lifestyle was in their grasp and it would all start by attending his seminar. Vu's strategy involved finding "distressed" properties like foreclosures, bankruptcies, divorces, tax liens, and selling them at a profit. He revealed at the free 90-minute seminar how to find these "distressed properties" or buy them without money.

The US government was not impressed by his tactics nor his exorbitantly priced seminars and shut him down. He eventually run into legal trouble and moved to Las Vegas to start a new career as a poker player. Hundreds of others have taken Vu's place and continue to tout various get rich quick schemes where they convince desparate people to attend their seminars and buy their books or dvds.

The irony of informercials is that there is easy money to be made in the land of the free and home of the brave from people desperate to become rich.

Going for Gold

No statement captures the importance of having Gold in your investment portfolio than Ben Stein's comments below;

"The decline of the dollar may have pauses and eddies, but for the long run it's going to continue. The US is importing so much more than we export that the world is awash in the dollars we've created to pay for them.

As when all commodities are in surplus, their price goes down. The dollar is the primary reserve currency for the world, so exporting nations must hold a vast amount of dollars. But the dollar need not be the reserve currency for the world forever.

Little by little, the petro-states and major Far Eastern exporters are starting to hold more of their reserves in Euros -- the currency of the Eurozone, which is most of western and central Europe. This will push the dollar down."

I read elsewhere that in January, most of the fund managers tend to re-balance their portfolio resulting in the strengthening of the dollar. This explains the current strengthening of the dollar. In addition there has been an across the board commodities sell-off with the declining oil prices. These two events have led to the largest decline in Gold and Silver prices since last summer.

For the disciplined investor, the current situation presents an opportunity to buy Gold. While most people prefer to own the Gold mining stocks some of which hold huge reserves, my preference is to buy Gold holdings. The main reasons are the rising operational costs of mining, the hedging of production and the lack of profitability by some miners.

Should the current decline in precious metals continue, I will double my allocations as I believe that long term investing in Gold holds below average risks while protecting your savings against inflation.

Buy low, Sell high...., Sort of.

With the proliferation of discount online traders in the US and now Europe and the availability of research information over the internet, it is now possible for anyone in these locations to buy and sell stocks.
The cardinal rule of trading stocks is buy low and sell high. And for the passive investor this translates to buy and hold. For the above average trader, this is not enough. In search for more profits, I have found out that there are ways of maximising or super-charging your profits.


Capital gains charity giving - This strategy is useful for people who make donations to charity. It's one of the best ways to avoid capital gains tax and at the same time making charitable contributions. With one move, you give to charity, avoid paying capital gains tax and also get a tax deduction from the IRS for your contribution and gains.

Flying horse trade - Forgive me for the lingo, but this one is akin horse rider switching horses in mid-air. To carry out this strategy, you will need to have extra funds in your account. Most stock-price moves are sector driven and it is not unusual to find stocks in the same sector trading in unison. Say, you bought Exxon Mobil, the day before the oil inventories are announced in anticipation of an upward surge. And to your disappointment the market reacts opposite to your expectation and you are now faced with a short term 'loss' of your principle. If the fundamentals are still unchanged, you sell Exxon Mobil and buy another integrated oil company like Chevron which also traded lower with Exxon. That way you incur a short term 'loss' knowing very well that your position will recover.

Dividend 'loss' - This move is only advisable if the fundamentals have changed and not because you want to avoid paying taxes. In this trade you sell a high yield stock less than a year after you bought it, if its loss in value is less than the dividend yield you have received. This works well for stable trusts that pay dividends monthly. Because they don't experience huge swings, should the price drop by say 5% of what you paid and have been receiving more than 10% yield you can sell it for a short term loss of 5% to offset short term gains made from other trades.

Loss selling charitable giving - You buy a stock and it later drops in value because of new disclosures or change in fundamentals. No need holding on to bad money. Instead of donating the stock to a charity, it is better to sell it at a loss and give the money to charity. This is a better move rather than giving out the 'good' money from your checking account as you get two tax deductions instead of one if you had given out money from your checking account.

Ex-dividend selling - With stocks that pay dividends quarterly or half-yearly, you may be better off selling after the ex-dividend date in order to maximize your profit. Some stocks sell-off after this date so be sure to check if this is not the case. Same with buying. Buy before ex-dividend date.

Averaging (not dollar cost averaging) - Its very hard to time the market and thus it makes sense not to buy or sell a stock all at once. While the tendency is to average down when buying, i.e. follow dead money, it is better to average up into (and out of) a position. Rather than follow dead money, buy on the dips as you average up. That way you minimize your losses or maximize your gains.

In and out trades - After a while you will realize that some stocks trade sideways in a range. Once you have identified such a stock, buy at the low range and sell at the top. Continue with the cycle. This works well for mature stocks that appreciate slowly.

Short selling - Sell high, buy low. This strategy works best for stocks that you are very familiar with. With the large appetite for buyouts, the risk associated with short selling has increased. My preference has always been to short sell over-valued mid to large caps. With small caps the upside is greater and therefore the risks are high.

Media Hype; Madness or Confusion?

In the last one week I have seen conflicting headline news on the Yahoo Finance website. This morning when the US equity markets opened the headlines read "Stocks push higher as oil tumbles" - AP via Yahoo! News.

Come lunch time (12:00 EST) the headlines had changed to "U.S. Stocks Lower as Oil Plunges" - MarketWatch via Yahoo! News.

It's rather obvious that no one can predict the direction of the market but why the conflicting reporting regarding falling oil prices? Well, the two headlines are aggregated from different media outlets with varying opinions of the effect of oil prices on the overall equity markets. However, the main reason is that various factors come into play in determining the direction of the market. Short-term movements in oil prices have less effects on the market when compared to other longer term indicators.

Most of the news from the media regarding the equity markets is just NOISE, given the conflicting nature of headlines from the media on the same issues. As an investor, it is better to filter out these NOISES because they only perpetuate confusion.

IMHO the best way of dealing with the markets is through a disciplined strategy. Getting information from economic indicator's and company earning's reports is a much better way of accessing accurate information rather than relying on dis-information from the media.

Anything Goes

This blog is to me an idea whose time has come. I will attempt to write my experiences, opinions and recollections on the fly. While my pet topic will be money or the lack of it, I will allow my environment and daily activities to freely influence my blog.

I welcome positive comments and opinions, and hope that readers and myself alike can learn from each other.