Ricklee's Wealth Journal

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RICKLEE
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Which Teacher Did You Choose after Graduation?

Postby RICKLEE » Fri Aug 12, 2011 4:47 am

In high school and university I was free to choose my teachers. I would audit and choose the lecturing professor who was best able to communicate ideas and support my learning of the curriculum.

After university, life continued to offer a curriculum and a set of professors which I could choose. It is not formal nor explicit. The professors? The people I chose to spend time with. The halls of learning? Wherever I spent the most time. The books? Whatever I most laid my eyes upon. The assignments? Whatever challenge I chose for myself. The degree? Life Mastery - it's still a work in progress.
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Things I Learned Yesterday

Postby RICKLEE » Fri Aug 12, 2011 4:59 am

1. If I never give up, I will eventually succeed
2. Calling the bottom of a stock trend is difficult and unnecessary
3. Knowing what is right to do is not the same as Doing what I know is right
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The Wisdom of James Grant re INFLATION

Postby RICKLEE » Wed Aug 17, 2011 8:30 pm

I was watching Consuelo Mack interview James Grant on WealthTrack, an online show. In the interview, James introduced an idea that counters the norm of most thinkers in the civilized world. He is opposed to the notion that inflation is normative. He is offended that the Federal Reserve and the Bank of Canada, by setting an inflation "target" of 3 % per year, institutionalizes an erosion of wealth.

He offers the argument that in a world with a baseline of billions of people, if you add several million more people ready to offer their hands and minds to enhance labour, creativity and technology, what should be normative is prices FALLING not rising. We go to Walmart to get "Every Day Low, and Lower, Prices" because that is what should happen.

And what about jobs? As prices fall due to technology, jobs get displaced. When electricity and the telephone were invented and put to use in society, there was a staggering loss of jobs. Those persons had to look for employment elsewhere, and they found them.

His other gems of thought were too numerous for me to record, and I will have to review the episode to process all of them.
RICKLEE

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Working at a J.O.B. again

Postby RICKLEE » Tue Aug 23, 2011 7:53 am

Signed up to work the summer as a blackjack dealer. Went to a casino school to learn how to do it. The pay? Minimum wage. The hours? Night shift. The experience? Invaluable.

This is the first J.O.B. that I've taken since I became an entrepreneur in 2004.

I am at a crossroads in my life. After eight years learning to count cards, I am in a slump in my blackjack earnings. Playing blackjack I have earned just over $5000 year-to-date, at a rate of around $11 per hour tax free. I've earned over $100,000 playing the game over the past 8 years for an average rate of just under $30 per hour.

I am ready to find a new challenge. I am getting my mind ready to go back to work.

One of my mentors told me that in between business ventures, he would have to go back and get a job for a salary until he had saved enough money to seed his next business idea. I will do the same.

I learned yesterday that my personality type is a "Sensitive Doer". I will find a job doing what I love while leveraging my personality.
RICKLEE

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Two New Ideas from Jim Cramer, Teacher Of Stocks

Postby RICKLEE » Wed Aug 31, 2011 2:19 pm

His show Mad Money has become one of my favorite sites from my free internet TV service. For anyone wanting to start becoming rich from the stock market, Jim Cramer is an excellent resource.

Today I learned the following new concepts:

New Idea #1: Growth At a Reasonable Price (GARP).

The P/E multiple in relation to the Growth Rate is:
Cheap if it's less than 1
Expensive if it's more than 2
For example, if the PE of Microsoft is 10, and the growth rate of its EPS is 14%, the stock is CHEAP.

New Idea #2: Compute the Upside / Downside
The Upside is the price where the PE is 2x the Growth Rate. That is the maximum that stock traders that are GROWTH INCLINED would bid up the stock. That acts as a "ceiling" to the stock price. e.g. If the PE is already at 2x the Growth rate, the Upside would be zero.
The Downside is the price where the PE is 1x the Growth Rate. That is the price that stock traders that are VALUE INVESTORS would buy up the stock. That is a "floor" to the price.

I appreciate Jim Cramer and Mad Money for his stock knowledge.

RICKLEE
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More Jim Cramer Wisdom Nuggets

Postby RICKLEE » Thu Sep 01, 2011 7:53 pm

When buying in a falling market, you don't know how to call the bottom. Jim recommends scaling in rather than doing all the buying at once. For example, you want to buy $6000 or 600 units of stock.

FIXED SCALES
Step 1: Buy $1000 or 100 units of the stock.
Step 2: If the price falls a point, buy another $1000 or 100 units of the stock
Step 3: Continue with each point down until you bought $6000 or 600 units.
Step 4: If the price rallies, stop there and enjoy the ride even though you did not get all the shares you wanted.

WIDE SCALES (a.k.a. "The Pyramid")
Step 1: Buy $1000 or 100 units of the stock.
Step 2: If the price falls a point, buy another $2000 or 200 units of the stock
Step 3: If the price falls another point, buy another $3000 or 300 units of the stock. A Double Down.
Step 4: If the price rallies, stop and enjoy the ride with whatever shares you own.
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The Tension Between The Rich and Poor

Postby RICKLEE » Wed Sep 14, 2011 3:47 pm

My questions: Why do the poor remain among us? Is wealth a result of noble effort or a circumstance of something more sinister? Is there a better way of life than the pursuit of riches? Does education solve poverty?

Among all of my friends, I have exactly one friend who is depressed. She is the poorest financially. She is the least fit physically. She is the most bereaved family-wise. She is the most journeyed spiritually. She is the most starved for affection. But I was comparing "among all of my friends". If I compared her with an orphan in Sudan, a bereaved mother in Ethiopia, a prisoner of conscience in a regressive regime, she would be the richest among them.

We are both rich and poor at the same time. In my conversations with her, I want to help her raise her own perspective and find her own hope.
RICKLEE

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Re: The Wisdom of James Grant re INFLATION

Postby VinTek » Wed Sep 21, 2011 1:57 pm

RICKLEE wrote:I was watching Consuelo Mack interview James Grant on WealthTrack, an online show. In the interview, James introduced an idea that counters the norm of most thinkers in the civilized world. He is opposed to the notion that inflation is normative. He is offended that the Federal Reserve and the Bank of Canada, by setting an inflation "target" of 3 % per year, institutionalizes an erosion of wealth.

He offers the argument that in a world with a baseline of billions of people, if you add several million more people ready to offer their hands and minds to enhance labour, creativity and technology, what should be normative is prices FALLING not rising. We go to Walmart to get "Every Day Low, and Lower, Prices" because that is what should happen.

And what about jobs? As prices fall due to technology, jobs get displaced. When electricity and the telephone were invented and put to use in society, there was a staggering loss of jobs. Those persons had to look for employment elsewhere, and they found them.

His other gems of thought were too numerous for me to record, and I will have to review the episode to process all of them.

Most economists disagree with James Grant on this matter. Why do you think he's right?
Michael Bordo, professor of economics at Rutgers University wrote:Between 1929 and 1933, prices fell on average by 15 percent." This deflation was driven by a decline in output, demand, and credit—too little money and wages chasing too many goods and workers. The Depression-era cratering of wages and prices was disastrous because it rendered.

Joseph Gagnon, senior fellow at the Peterson Institute for International Economics wrote:Experience shows that a rate of inflation around 2 or 3 percent helps the economy to perform at full potential with maximum sustainable employment

Daniel Gross, Slate Magazine wrote:Borrowers with fixed-rate loans—like the government, many businesses, and homeowners—will cheer for inflation and worry about deflation. When wages and prices grow modestly each year, it's easier to stay current with existing debt. And when there's lots of unused economic capacity—shuttered factories, large numbers of unemployed people—a little inflation can be just what the doctor ordered. Continually falling prices act as a disincentive to investment and risk-taking.

VinTek
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Re: Two New Ideas from Jim Cramer, Teacher Of Stocks

Postby VinTek » Wed Sep 21, 2011 2:03 pm

RICKLEE wrote:For anyone wanting to start becoming rich from the stock market, Jim Cramer is an excellent resource.

I appreciate Jim Cramer and Mad Money for his stock knowledge.

CX Advisory Group tracked Jim Cramer's recommendations for 10 years and gave him an accuracy rating of 47%. Average score for all the financial advisers they tracked was 48%. Why do you think Cramer is so great?

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Re: The Wisdom of James Grant re INFLATION

Postby RICKLEE » Thu Oct 06, 2011 5:05 pm

VinTek wrote:
RICKLEE wrote:I was watching Consuelo Mack interview James Grant on WealthTrack, an online show. In the interview, James introduced an idea that counters the norm of most thinkers in the civilized world. He is opposed to the notion that inflation is normative. He is offended that the Federal Reserve and the Bank of Canada, by setting an inflation "target" of 3 % per year, institutionalizes an erosion of wealth.

He offers the argument that in a world with a baseline of billions of people, if you add several million more people ready to offer their hands and minds to enhance labour, creativity and technology, what should be normative is prices FALLING not rising. We go to Walmart to get "Every Day Low, and Lower, Prices" because that is what should happen.

And what about jobs? As prices fall due to technology, jobs get displaced. When electricity and the telephone were invented and put to use in society, there was a staggering loss of jobs. Those persons had to look for employment elsewhere, and they found them.

His other gems of thought were too numerous for me to record, and I will have to review the episode to process all of them.

Most economists disagree with James Grant on this matter. Why do you think he's right?
Michael Bordo, professor of economics at Rutgers University wrote:Between 1929 and 1933, prices fell on average by 15 percent." This deflation was driven by a decline in output, demand, and credit—too little money and wages chasing too many goods and workers. The Depression-era cratering of wages and prices was disastrous because it rendered.

Joseph Gagnon, senior fellow at the Peterson Institute for International Economics wrote:Experience shows that a rate of inflation around 2 or 3 percent helps the economy to perform at full potential with maximum sustainable employment

Daniel Gross, Slate Magazine wrote:Borrowers with fixed-rate loans—like the government, many businesses, and homeowners—will cheer for inflation and worry about deflation. When wages and prices grow modestly each year, it's easier to stay current with existing debt. And when there's lots of unused economic capacity—shuttered factories, large numbers of unemployed people—a little inflation can be just what the doctor ordered. Continually falling prices act as a disincentive to investment and risk-taking.


Thanks for the quotes. I too have been raised to believe what most economists claim regarding inflation. James Grant's line of reasoning, which I outlined in my original post, was compelling enough for me to rethink the whole idea.
RICKLEE

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Re: Two New Ideas from Jim Cramer, Teacher Of Stocks

Postby RICKLEE » Thu Oct 06, 2011 5:10 pm

VinTek wrote:
RICKLEE wrote:For anyone wanting to start becoming rich from the stock market, Jim Cramer is an excellent resource.

I appreciate Jim Cramer and Mad Money for his stock knowledge.

CX Advisory Group tracked Jim Cramer's recommendations for 10 years and gave him an accuracy rating of 47%. Average score for all the financial advisers they tracked was 48%. Why do you think Cramer is so great?


I like Jim Cramer because his comments stimulate my thinking. I didn't realize there was a website that compared his prediction accuracy against others. Thanks for the link Vintek.
RICKLEE

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Re: The Wisdom of James Grant re INFLATION

Postby VinTek » Thu Oct 06, 2011 8:19 pm

RICKLEE wrote:Thanks for the quotes. I too have been raised to believe what most economists claim regarding inflation. James Grant's line of reasoning, which I outlined in my original post, was compelling enough for me to rethink the whole idea.

Yes, I read your original quote but I don't buy it and here's why. During most of the times we saw prices decline at places like Wal-Mart, we were still seeing a positive rate of inflation in the overall economy, which was pretty healthy.

And yet when we look at Japan, which has experienced significant deflation over a long period of time, we see that their economy has been sick for a very long time, about 2 decades in duration. Reality trumps theory.

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Re: The Wisdom of James Grant re INFLATION

Postby RICKLEE » Fri Oct 07, 2011 3:52 am

VinTek wrote:
RICKLEE wrote:Thanks for the quotes. I too have been raised to believe what most economists claim regarding inflation. James Grant's line of reasoning, which I outlined in my original post, was compelling enough for me to rethink the whole idea.

Yes, I read your original quote but I don't buy it and here's why. During most of the times we saw prices decline at places like Wal-Mart, we were still seeing a positive rate of inflation in the overall economy, which was pretty healthy.

And yet when we look at Japan, which has experienced significant deflation over a long period of time, we see that their economy has been sick for a very long time, about 2 decades in duration. Reality trumps theory.


Interesting points. If you wish to discuss economics further, please send me a PM.
RICKLEE

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Re: The Wisdom of James Grant re INFLATION

Postby VinTek » Fri Oct 07, 2011 11:27 am

RICKLEE wrote:Interesting points. If you wish to discuss economics further, please send me a PM.

I'll decline that, thanks. If you find it an interesting topic, you can start a thread on it in General Discussion so we can hear the opinions of other people. In the context of your journal, I'm just trying to understand why you're placing so much faith on what is essentially a minority opinion among economists. It's kind of like listening to the small number of scientists who don't believe in global warming. They're out there, but there aren't many of them.

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Re: The Wisdom of James Grant re INFLATION

Postby RICKLEE » Sat Oct 08, 2011 4:18 am

VinTek wrote:
RICKLEE wrote:Interesting points. If you wish to discuss economics further, please send me a PM.

I'll decline that, thanks. If you find it an interesting topic, you can start a thread on it in General Discussion so we can hear the opinions of other people. In the context of your journal, I'm just trying to understand why you're placing so much faith on what is essentially a minority opinion among economists. It's kind of like listening to the small number of scientists who don't believe in global warming. They're out there, but there aren't many of them.


Revolutionary ideas interest me. But I apply a broad continuum between learning and placing faith.
RICKLEE


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