RobinJerauld.com
Recent Posts
Volatility Gremlins and Leveraged ETF's (7/12/08)
Double-long and double-short ETF's sound like they should deliver twice the return of the underlying index. It doesn't work out that way over the long-term. The math of constant leverage ensures that a double-leveraged ETF will only return 130-150% of the long-term underlying index performance rather than 200%, but with much higher volatility.
That Which is Seen, and That Which is Not Seen (7/12/08)
Much of modern economics is based on the theory that a brick through a window is a good thing. The repair work creates a job for the glazier. The glazier spends the new found money at the baker's, the baker spends the money at the shoe store, etc., creating a virtuous spending cycle that ripples through the economy. Property destruction, especially war, is therefore good for the economy. And we can all get rich borrowing money against our houses.
How to Lie With Statistics, Part 54 (7/12/08)
Proving that doctors are 9,000 times more dangerous than gun owners.
You Really Think It Will Be This Obvious? (7/12/08)
The Foreign Intelligence Surveillance Act amendment is signed into law, legalizing spying on American citizens. RIP 4th Amendment: 1791-2008. Fascism manifests itself not with soldiers marching down your street one day, but gradually over time as government and corporations work together as one without anyone really noticing. Government spying, sponsored by AT&T, to protect our freedom. Oh look, the new iPhone is on sale.
In Search of a Pure-Play Timber Investment (7/6/08)
Timber is arguably the perfect asset class. Trees don't care about interest rates, recessions, or foreign wars, they just keep growing. Over the last few decades timber has provided greater returns than stocks with lower volatility. The problem is that it is hard to find a pure-play timber investment. The two "timber" ETF's that recently listed in the U.S. have almost zero correlation to actual timber returns.
He's Back (7/6/08)
Ross Perot, the master of scary charts from early 1990's, is back with a new round of charts. And yes, we're all still screwed.
How to Tell When Housing Prices Have Bottomed (7/5/08)
When buying 100% financed real estate to rent out generates positive cash flow from day one of ownership. We're not there yet.
The Price of a Pint (7/5/08)
Want to know how the cost of living really compares between countries? Forget the government statistics, just look at the price of beer.
16 Things I Wish They Had Taught in School (7/5/08)
The 80/20 rule, Parkinson's law, batching, 80-90% of your fears will never happen, etc.
The Dow in Pickles (7/5/08)
In dollars the Dow Jones Industrial Average is about even over the past 10 years. Measured against gold, commodities, food, and most major foreign currencies it is down significantly. Even pickles have outperformed the Dow over the past decade.
Boomernomics and Housing (7/5/08)
When people hit their mid-sixties they tend to sell rather than buy housing. The first wave of baby boomers turn 65 in 2011. In other words, just as the mortgage crisis is scheduled to start abating, a whole new supply of housing is likely to start coming on the market. Keep renting and get popcorn, should be fun.
The Economics of Foreign Aid (7/5/08)
Providing free food to starving people sounds like a noble idea. The reality is that doing so destroys local farmers (how do you compete against free?), creates dependency, then causes famine once the aid runs out. Trade, not aid, is the answer.
Hyperinflation? (7/5/08)
It is the path of least resistance to "paying off" the trillions of dollars in national debt. Unfortunately it tends to wipe out the middle class in the process.
Bill of No Rights (7/5/08)
Article III: You do not have the right to be free from harm. If you stick a screwdriver in your eye, the tool manufacturer is not obligated to make you and your relatives independently wealthy.
The Equity-Indexed Annuity Scam (5/21/07)
There are no free lunches. If you want someone to assume investment risk for you, expect to pay dearly for it.
How to Really Invest Like Warren Buffett (5/21/07)
Just invest in the same stuff he's invested in. It's public information.
The de facto Flat Tax (5/21/07)
Add up income tax, sales tax, property tax, Social Security, Medicare, etc. and most people, whether they make $20,000 or $500,000 per year, end up paying about a 40% marginal tax rate.
Savings Rates and the Case for Optimism (5/21/07)
The statistics on Americans' savings rate make things sound worse than they are.
Hilarious and Completely Incorrect Predictions of the Past (5/21/07)
From some very smart people. One of my favorite stats is zero: the number of times the word "Internet" is mentioned in the 1995 book "The Road Ahead" by Bill Gates, a book about the future of computer technology.
The Global Warming Investment Bubble (5/21/07)
I remember the good old days when it was just a boring political debate. Now Wall Street is trying to market investment products around global warming.
The Case for Renting (5/21/07)
It can make you wealthier.
Ignoring the Lessons of 1929 (5/21/07)
I've read that history tends to run in roughly 80-year cycles. Without knowing the context, it would be easy to conclude that Frederick Lewis Allen's classic book "Only Yesterday" was describing 2007 rather than the late 1920's.
College Fraternities vs. the Textbook Industry (5/21/07)
My money is on the frats. Good luck trying to sue a bunch of broke college students.
Overvalued, Overbought, Overbullish (1/25/07)
The yield curve is inverted, stocks are on the expensive side, market volatility is the lowest in over a decade, and the majority of advisors are bullish. Historically this set of conditions is not good for the stock market.
Mean Reversion and Momentum in Asset Classes (1/25/07)
This article outlines a hypothetical investment strategy using the principles that 1) asset classes tend to mean revert if they had negative returns two and three years prior, and 2) Negative returns in the prior year tend to result in poor returns the following year. This strategy produced (on paper of course) annual returns of over 14% with a standard deviation of a little over 8% from 1973-2005. The worst down year was -1.25%. Interestingly, following the strategy now would put half your assets in cash.
Real Estate and The Tall Building Indicator (1/25/07)
Adjusted for inflation, real estate doesn't appreciate over the long term near as much as most people tend to think (less than 1% per year in real terms). Even if you don't believe the statistics, just look up. As land prices go higher, buildings get taller because the higher price of real estate makes it more profitable to build taller buildings. Most major U.S. cities built skyscrapers between 1914 and 1933, but after that it took on average over 40 years for the height of the tallest buildings in 1933 to be exceeded.
The Long Term Case for Water (1/25/07)
Water is everywhere, but clean water is a different story. The U.N. estimates that over 1 billion people lack easy access to drinking water, and that number will grow to 2.7 billion people in 2025. Water quality is worst in some of the world's fastest growing economies. Therein lies the opportunity for companies involved in water infrastructure, and now there is a relatively easy way for investors to ride the trend as well.
How the Harvard and Yale Endowments Beat the Market (1/25/07)
Mainly by ignoring conventional asset allocation (60% stocks, 40% bonds), and probably their economics faculty too.
The Perils of Performance Chasing (1/25/07)
Unfortunately it doesn't work. If it were that easy, all the big institutions would do it.
What Belongs in Your Safe Deposit Box? (11/5/06)
Or fire-proof safe. Don't wait for your house to flood or catch fire before figuring out you need one of these.
The Dilbert 9-Point Financial Plan (11/5/06)
Just about everything the average person needs to know about personal finance in under a page.
The Case for Abolishing the Penny (11/5/06)
The obvious reason being that it now costs more than a penny to manufacture a penny.
Taking Passwords to the Grave (11/5/06)
As more people store their financial information online, the risk increases that this information may never be recovered by beneficiaries in the event of unexpected death.
How Fast is Dubai Growing? (11/5/06)
Amazing photos of Dubai in 2005 vs. 1991. Hard to sum up the investment potential emerging markets offer much better than this.
$.12 Hamburgers and $600 Cars (11/5/06)
What prices would likely be if the money supply had remained fixed since 1959.
Top Options for Commodities Exposure (8/10/06)
It keeps getting easier. The jury is still out, but the new Exchange Traded Notes from Barclays appear to be the most tax-friendly option so far to gain commodities exposure.
Why Inflation is Inevitable (8/10/06)
In short, it is the easiest way for politicians to tax the population without losing votes.
Tax Benefits of 529 Education Savings Plans Become Permanent (8/10/06)
The main tax benefit of these plans- no federal income tax due on earnings in the account as long as the money is used for qualified higher education expenses, was set to expire after 2010, but has now been extended indefinitely. See here for more on 529 plans.
Fun With Email Disclaimers (8/10/06)
I received an email the other day with a 4 paragraph disclaimer. Give me a break. Here are some fun parodies of typical email disclaimers. (No animals were harmed in the posting of this link).
Timesheet Codes for the Real World (8/10/06)
How we really spend our time at work.
Strategic Asset Allocation and Commodities (6/22/06)
2006 Ibbotson study analyzing the effects of commodities on portfolio returns and volatility, concluding that relatively large portfolio allocations to commodities, up to 25%, have historically improved returns and lowered portfolio volatility. (Article requires Acrobat Reader)
Approximately Right or Precisely Wrong? Common Sense vs. Asset Allocation Software (6/22/06)
A computer program will spit out a precise asset allocation recommendation based on the average historical correlation (say over 30 years) between different asset classes. The likelihood of that correlation holding in the near future is slim, as the relationship between investment asset classes is inherently unstable over time. Most conventional asset allocation relies on relationships in the past staying the same in the future. That isn't how it works in the real world. Things change, and as a result investing is often as much art as it is science.
How to Write Off More of Your Home as a Deductible Business Expense (6/22/06)
Kind of bold for the author to name a tax shelter after himself, but this is a useful strategy for some business owners.
S&P 500 Below 800? (6/22/06)
Before you laugh this off as impossible (the index is currently in the mid 1200's), consider that using the actual growth rate of 5.7% annually for S&P 500 dividends since 1940, the implied value of the S&P 500 is just over 600. The market has had a decent run the past several years, and drops of over 30% are not uncommon historically. Of course, no one knows which way the next couple hundred points in the S&P 500 will go, but after several years without even a 10% drop in the market, it's easy to forget that markets do correct suddenly and sharply every so often.
Buy Gold, Sell Goldman? (6/22/06)
Goldman Sachs appears to be on top of the world. Their CEO was just picked to become the next Treasury Secretary, the company recently posted record profits for the financial industry, the talking heads on CNBC love the firm, etc. But what kind of world is it that Goldman Sachs would be on top of? What are the chances it will stay that way? On the other side of the fence, gold appears to have finally completed the 20%+ slide it was probably due for (although it's still up about 14% for the year).
Which is the Safer Bet? (6/22/06)
1) That the United States, with its over $8 trillion of federal debt and $800 billion annual trade deficit, will maintain its current economic lead over the rest of the world in terms of stock market capitalization, or, 2) That the emerging markets of the world will start to catch up economically over the next 20 years as more than two billion people who have been stuck in socialism for over half a century start participating in global capitalism? Seems obvious, right? Would it also make sense that if the emerging market economies grow faster than the United States over the next 20 years, so will their stock markets as compared to the U.S.? Then why does the mainstream investment community recommend a 0-3% portfolio allocation to emerging markets versus over a 50% allocation to the United States?
The Overlooked Problem With Social Security (6/22/06)
It's not just that Social Security taxes have to rise in the future to keep the system going- they've already risen dramatically in the past. A middle-income worker's share of Social Security taxes has risen at a compound rate of 10.2% annually since 1949. If the history of Social Security funding increases is any indication of the future, those of us in our twenties, thirties, and forties would be wise to find alternatives to earned income (e.g. wages and Schedule C income) that is subject to Social Security taxes. There just aren't enough young people statistically to keep the old folks from voting away the majority of our paychecks once the 78 million baby boomers become old enough to collect Social Security from us.
The Job Cult (6/22/06)
Go to school, rack up lots of debt to pay the tuition, get good grades, participate in lots of impressive sounding extracurricular activities and get a diploma from a good school so you can get a good job with good benefits where you get to spend 40 to 80 hours of your precious time per week doing something you don't care about mainly for the sake of fitting in and buying things you don't need that you must spend all your time working to pay for. To top it off, the government is going to take up to 50% of your paycheck. Who's in?
How Student Loans Can Destroy Dreams (6/22/06)
We've all heard the story of the law student who wants to do good but ends up working for the large, evil, downtown law firm for 10 years in order to pay off the huge student loan debt he incurred to attend law school. After a decade traveled down the conventional path, how many people have the courage to turn back? Here are several tips to avoid the student loan trap.
The 100-Year Dow Jones Chart (6/10/06)
A reminder that stocks do not rise evenly at 10.2% per year, but rather move in cycles generally consisting of 10-20 year bull markets followed by 10-20 year bear markets where stocks either decline or go nowhere.
Overview of Cost Segregation (6/10/06)
How to take faster depreciation deductions on rental real estate. Each $100,000 of assets reclassified from a 39-year recovery period to a 5-year recovery period results in approximately $16,000 in net present value savings, assuming a 5% discount rate and a 35% marginal tax rate. This technique can also work with real estate acquired in a 1031 exchange.
Have Commodities Topped Out? (6/10/06)
Historically, most everything in an asset class makes a new all-time high before a bull market ends. Currently, silver is 75% below its all-time high, gold is 30% below its high, corn is 50% below, cotton is 60% below, coffee is 75% below, etc. Given the dismal historical record of mainstream business publications in predicting the direction of the market, the recent negative cover story in Forbes magazine on gold and commodities could be interpreted as a positive sign.
Global Stock Returns Over the Past Century (5/19/06)
During the 20th century, whatever investment strategy was successful in one decade rarely worked the next. Even what was true throughout the 19th century (zero inflation, most stock returns came in the form of dividends rather than capital gains, bonds and stocks provided roughly the same returns) was not true at all by the end of the 20th century (high inflation, most investors counted on capital gains rather than dividends, and stocks vastly outperformed bonds). How reliable will the investment assumptions we make today prove to be over the next century?
Jim Cramer Versus a Monkey (5/19/06)
Cramerwatch.org pits the investment recommendations of television's most popular stock analyst against a monkey. Guess who wins?
How to Short the Housing Market (5/19/06)
It's about time something like this came out.
Gold Over $700: Too Much, Too Fast? (5/19/06)
Probably in the short term, not in the long term. For an investment to reach true bubble status it usually needs to land on mainstream magazine covers, become the talk of cocktail parties, take up lots of shelf space in the investment section of Borders and Barnes & Noble, and involve everyday people who have no business investing in it. That hasn't happened yet with gold.
The Zombie Debt Collector Scam (5/19/06)
It's hard to believe people fall for this, but apparently enough do that it has become a huge industry.
The Case for Renting (4/22/06)
Second thoughts on 43 reasons commonly given for buying a house.
Are Precious Metals in a Bubble Market? (4/19/06)
The price of gold has jumped almost $100/ounce over the last month, and doubled over the past several years. I appreciate the long-term case for gold and commodities- that historically commodities bull markets last 15-23 years, and we're only about 7 years into this one- but when gold articles start popping up in the mainstream press forecasting that this is "just the beginning", when questions like "should I sell my gold jewelry?" start getting asked, and people no longer laugh at me like they used to three years ago when I tell them I keep a small portion of my investments in gold, it starts to feel a little like the NASDAQ circa-1999.
Think Your Taxes Are Bad? (4/17/06)
Check out Belgium, France, Germany and Hungary. Chart of tax burdens by country.
Presidential Tax Returns (4/17/06)
See copies of actual income tax returns filed by current and former presidents.
The Truth About Tax Reform (4/14/06)
Tax reform is meaningless without spending reform. Do you really want a 40% flat tax or a 50% sales tax on everything you buy? Individual income taxes account for approximately one-third of the federal government's revenue. The proposed 2007 federal budget is $2.7 trillion. The budget for 2000 was under $1.8 trillion. In other words, if the government could spend only what it spent 6 years ago, we could eliminate the individual income tax entirely and do away with the endless debate over whether we should have a flat tax, sales tax, etc. Does anyone seriously think the federal government wasn't large enough 6 years ago?
CPI is a Joke (4/14/06)
Ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? Inflation as measured by the pre-Clinton era Consumer Price Index (CPI) methodology is currently running closer to 7% rather than the 3% reported by the government. This article explains how the government has altered the CPI methodology over the years to report lower inflation, allowing it to pay out less in Social Security benefits and generate rosier economic reports. The lesson here is not to invest in securities such as TIPS or I-Bonds whose returns are tied to the government reported rate of inflation.
Asset Allocation on a Shoestring (4/6/06)
How to get started investing with as little as $100 through exchange traded funds. Using a discount broker like ShareBuilder to build up your portfolio can reduce your trading costs significantly.
Avoid the DMV (4/6/06)
Time is money, and life is too short to deal with this red-tape hellhole. Turns out a lot of DMV functions can be handled quickly and painlessly through your local AAA office instead. If you have to go into an actual DMV, avoid the Los Angeles offices like the plague.
The Housing Bubble Meter (4/2/06)
Amusing examples of tulip-mania across the country.
Unusual Business Ideas That Work (4/2/06)
Real life stories of people who make money online and how they built their businesses.
Is Portfolio Rebalancing Overrated? (3/15/06)
Diversified investment portfolios can be remarkably self-balancing. Rebalancing usually results in increased taxes and transaction costs, and doing it too often can actually hurt your investment returns.
The Cafe Question (3/6/06)
Any given weekday you can stroll by coffee shops in the city and see dozens of people milling about, casually sipping and eating and reading; and it's noon on a Tuesday and you think, don't these people work? Don't they have jobs? They can't all be students and trust-fund babies and cocktail waitresses and drummers in struggling rock bands who live at home with their moms. Is there a better alternative to 9 to 5 in your cubicle?
To What Extent Does Money Buy Happiness? (3/6/06)
Depends who you ask. Some studies find that more money makes people happier up to about $50,000 of annual income, after which more income provides little if any increase in happiness. Other studies put the number at slightly over $100,000. One study found that the people on the Forbes 400 list of wealthiest Americans were not as a group any happier than the Maasai people of East Africa who have no electricity or running water and live in huts made of dung. The problem appears to be reference anxiety- instead of asking, "does this house meet my needs?", people ask themselves, "is this house nicer than my neighbor's?" People making $50,000 per year try to emulate the consumption of those who make $70,000, who in turn try to emulate those making $100,000, etc.
The End of Dollar Hegemony (2/22/06)
The attempts of oil exporting countries to switch their pricing of oil from dollars to Euros have thus far been met with attempted regime change (e.g. Iraq), but eventually these countries will succeed, causing demand for the dollar to fall long term. Be sure the currency exposure of your investment portfolio is adequately diversified.
The E-Bay of Loans (2/13/06)
A new service called Prosper matches individuals who need small loans with willing lenders. It cuts out the middlemen, banks and payday lenders, allowing anyone with a few hundred bucks to earn 6% and up from a diversified portfolio of loans made directly to individuals. E-Bay made people realize they could safely do business over the internet with people they didn't know. It will be interesting to see whether Prosper accomplishes a similar feat for lending.
8 Things Your Financial Planner Might Not Tell You (2/13/06)
A small fraction of people calling themselves "financial planners" have earned the Certified Financial Planner mark. Many are not paid the way their clients think. True fee-only planners are a rare breed, with most advisors receiving some or most of their compensation from commissions.
The Five Deadly Business Sins (2/7/06)
Worship of high profit margins, encouraging competitors by charging what the market will bear, cost-driven pricing, slaughtering tomorrow's opportunity on the altar of yesterday, and feeding problems while starving opportunities. Article by Peter Drucker.
Living Without Television (2/5/06)
Easier said than done, but chances are you'll spend less money, free up your time, become more productive, and live a fuller life from improved relationships with your spouse, children, extended family and friends. Here is one man's account of how he and his family made the conscious choice not to live out their lives watching other people live.
Avoiding California Residency (1/31/06)
The top marginal income tax rate in California is 9.3% (10.3% if you count the supplemental tax on incomes over $1 million). The top marginal rate in Nevada is 0%. Las Vegas is about a 5-hour drive from Los Angeles, which makes a lot of Californians wonder "what if?".... This article gives an overview of the tests that must be met to claim Nevada residency and avoid California tax.
The Case for Gold (1/30/06)
It isn't to build wealth, it's to have wealth. The dollar can collapse, the Fed can inflate to the heavens, the U.S. can invade more countries, World War III can break out, the world can lapse into a deflationary depression, stocks can crash or climb to the sky........ Gold will still represent wealth.
Is Atlas Shrugging? (1/29/06)
Few young people want to become accountants it seems. At the last CPA conference I went to I was the only guy under 30, and one of only a few under 40 out of hundreds of people. It felt like an AARP convention. It may be a seller's market in the CPA practice market at the moment, but demographics are going to turn this into a serious buyer's market over the next 10 years as the aging partners find there are not enough qualified associates to take over their firms. I'm saving my money.
Most standard interview questions are so cliché they might as well be from beauty pageants where the girls are asked what they want most and each one responds with "world peace".
AICPA Receives Citation of Excellence from the IRS
Something doesn't seem quite right here. Would you accept a citation of excellence from Hitler, Stalin, or Mao? When an agency with a long history of inefficiency and taxpayer abuse gives you an award for excellence, is that something to be proud of?
Talked about, but rarely seen: the IRS eliminates the second extension request forms. While this is a step in the right direction, if the first extension is "automatic", why require a form at all in cases where there is no tax due?
Avoiding the "Free" Credit Report Scam
The credit bureaus set up confusing sister sites advertising "free credit reports" that require you to pay. For a while, AnnualCreditReport.com, the only place to get a free credit report online, didn’t even make the first page of search results on Google for visitors who typed in "free credit report". The credit bureaus intentionally sabotaged the site's rating by refusing to allow links to the site so that their imitation sister sites (e.g. freecreditreport.com) would rank higher in the search engines. Under pressure the bureaus finally caved, but the imitation sites still rank high. Don't fall for the FICO score report scam either: after you get your truly free credit report from AnnualCreditReport.com, estimate your FICO score for free (and not just for "free") using myFico's FICO score estimator.
The Unimportance of Mission Statements
Necessities are not objectives. Satisfying your customers’ needs, providing a quality work environment for your employees, and increasing shareholder value are not missions any more than breathing is a mission for an individual. If the everyday work environment doesn’t reflect the goals of the business, the process of hiring consultants, holding committee meetings, and harassing employees with surveys in order to put a bunch of vague words on fancy paper and frame it is unlikely to help.
If you want a mission, pick a client at random, go back to the drawing board and figure out all the ways you can save that client money that you haven't been. Next, implement those ideas. Then repeat, client by client. In the meantime, here's a thought: “Our mission is to stop wasting company resources on developing mission statements.”
4,000 days ago the web went commercial. AT&T never saw it coming. Will radio, cell phone networks, cable and satellite television survive the next 4,000?
The average Barnes & Noble carries about 130,000 titles, yet more than half of Amazon's book sales come from outside its top 130,000. Rhapsody users stream more songs outside the top 10,000 each month than from the top 10,000. 60% of rentals on Netflix come from recommendations, and a nearly out-of-print book, Touching the Void, became a bestseller due to the recommendations feature on Amazon. With the Internet's ability to overcome the limitations of physical space, the future is in the niche markets.
What Your Favorite TV Characters Really Make
We try to imitate the lifestyles we see on television, but our favorite characters would be bankrupt in the real world.
The Likelihood of Below Average Stock Returns
The stock market's long term average return since 1926 has been 10.4%. But that was starting from a p/e ratio of 10 and a dividend yield of 4.5%. The market's return consists of three components: dividend yield + earnings growth + percentage change in p/e ratio, which at today's valuation levels gets you to a best case scenario of around 6% going forward (before inflation).
And hello BitTorrent.
Leverage & The Fountain of Youth
If leverage is so profitable, why does the average partner in the CPA industry earn less than their hourly billing rate multiplied by hours billed annually? Where are all the supposed profits from the staff people the partner is “leveraging”?
What Your Clients Really Think
Don't answer questions with "it depends", don't keep shuffling the staff on my account, don't nickel and dime me with bills for $100 and charges for phone calls and copies, give me a package price instead of one based on hours, stop sending me stuff that doesn't apply to me, don't market to me based on fear, ask me what I think in person rather than sending me surveys, show me where you're adding value, make my life easier.
Benchmarking, Fear and Keeping Up With The Joneses
The whole point of competition is to obtain a competitive advantage based on a strategy of differentiation. You can't achieve that by trying to copy other firms, at least not firms within your industry. This letter is in response to an article called "Your Firm's Score" from a mainstream accounting publication alleging the wonders of benchmarking.
100 Ways to Be a Better Entrepreneur
A nice checklist for running a successful business.
The practical alternative to work. The partners at this one firm I know once devoted almost an entire partner meeting to debating whether the gum in the break room should be stored in the packs it came in, or individually unwrapped in order to prevent people from taking too much gum at one time. For a time the firm actually paid someone to unwrap the gum into individual sticks.
The case for just being honest with people.
Cool Software Features We'll Never See
Someone forwarded me this in an e-mail.....
Abolishing Performance Appraisals
Performance appraisals impede genuine feedback, and there's no solid evidence that they motivate people or lead to meaningful improvement. To the contrary, they are more likely to destroy human spirit and turn motivated employees into demoralized ones.
Kurzweil's Law and The Accelerating Rate of Change
We are likely to see as much progress in human knowledge and technology over the next 20 years as we saw all of last century.
Capitalization weighted indexes allocate a larger portion of their assets to the highest market cap stocks in the index. The problem is that the highest cap stocks tend to under perform the rest of the index going forward. This creates a 2-4% annual drag on index returns.
Innovation has historically been the almost exclusive domain of the young, and the aging CPA industry is not innovating. The last truly new service produced by the CPA profession was the Statement on Standards for Accounting and Review Services, effective in 1978. All the other new services the profession has offered are merely extensions of services offered by others. Great article by Ron Baker on age, innovation, and implications for the CPA profession.
Hurricane Relief or a $200,000 Check?
The ridiculous economics of government bail-outs.
War, Taxes, and What People Voluntarily Will Pay For
Americans generously give over $250 billion to charity but volunteer only $600 in response to the president's plea for cash to support the occupation of Iraq.
A recent survey of accountants says that nearly 70% would leave their employer. What keeps the other 30% loyal?
The modern office is home to as many as 350 different volatile organic chemicals released by building materials, furnishings and office equipment. Putting in workaholic hours in a drab cubicle under fluorescent lights while breathing recycled air and wearing uncomfortable office attire is not healthy. We humans were not designed to spend our lives this way. Not to mention the fact that billions of dollars are lost each year in reduced productivity and increased illness as a result of attempting to work in the typical office environment. Why do we do this to ourselves?
Most companies will probably continue to stick their heads in the sand on this one, but the evidence is clear: multitasking significantly reduces productivity and quality, creates unnecessary stress, and in the case of e-mail and instant messaging, appears to lower IQ even more than smoking pot. Check out these tips to prevent e-mail from screwing up your day. They missed the most obvious ones though: turn off Microsoft Outlook and set your instant messenger to appear offline. Attention is a finite resource.
Count Your Capitalist Blessings
Soap is cheap, food and clean water are abundant, we live better than our parents did, Email is free, everyone has indoor plumbing, you can find out almost anything you want instantly on Google, cars are universal, you don't have to watch commercials anymore (Tivo), you have more than a king 300 years ago could have dreamed of.....
Usually, but not for the reasons most people assume. College is an employment-screening device, not a training device. Get your degree fast, cheap and on the job. An expensive school is not likely to help you earn more than a regular school.
The $3 Federal Election Box on Your Tax Return
Only about 10% of people check "yes". I like the author's suggestion: "Check here if you would rather just keep your money."
How Employee Stock Options and Related Equity Incentives Work
Covers the basics of incentive stock options, non-qualified options, and employee stock purchase plans. Also check out this site's overview on phantom stock plans, restricted stock, and other issues related to equity compensation.
How to Set Up Internal Controls for Your Small Business
Small businesses typically have weak internal controls, exposing themselves unnecessarily to fraud. Adopting proper internal controls can help your business to safeguard assets, ensure financial information is reliable, and generally assist in achieving the objectives of the business. Download the Adobe document on this site and check out pages 8-10 for how to set up the proper controls for your business. This site also has a good list of basic internal controls to implement.
You Might Be In a Housing Bubble If....
A 10-foot-wide shed with no ground floor windows sells for $269,100.
Should You Move to a Free Country?
The case for Mexico.
Covers how long to keep income tax returns, bank statements, contracts, correspondence, etc.