25 April 2009

Big Sugar

I have just watched a documentary on Google Video called Big Sugar. I have embedded the video above.

Big Sugar talks about how important sugar is as a commodity. The documentary also looks into how sugar suppliers corrupt politicians in the United States. Also highlighted is the poor labor conditions that workers face in sugar plantations.

I have always dreamed of owning a large plantation where I could grow coffee, sugar, or some other important crop. I believe that the best way to help the poor is to give them a job. Poor people tend to be unskilled and less education, so a simple job, usually in agriculture or manufacturing, is best. How much to pay workers and how well to treat them is a tough issue. If you pay workers too little, some people may see this as unethical or cruel. If you pay workers too much, your business may no longer be profitable, which means you cannot expand the business, which means fewer people are employed.

Harry Browne's Permanent Portfolio

How should you invest your money? I'd like to talk about what I think is the best way to invest your money. It is called the permanent portfolio and it is invented by a libertarian named Harry Browne. The permanent portfolio is simple. Divide your money in the following way:

25% in cash
25% in gold
25% in government bonds
25% in stocks.

The rationale for this is that you have investments that perform well in any economic environment. Government bonds performs well during deflation, gold performs well during inflation, cash performs well during bear markets, and stocks perform well in bull markets.

When I explain to other people why this approach makes sense, I like to use a medical analogy. The discipline of medicine exists to protect people from death and pain, which are caused by diseases. In order to be healthy, an individual takes steps to immunize himself from various diseases. To immunize yourself from the flu, you take flu shots; to immunize yourself from obesity, you exercise and eat less; to immunize yourself from calcium deficiency, you drink milk; and so forth.

Investing is the same. You invest to protect yourself from death or pain from poverty. Poverty is caused by economic diseases, such as inflation and stagflation. To immunize yourself from inflation, you hold gold; to immunize yourself from deflation, you hold cash; to immunize yourself from a bear market, you hold government bonds; and so forth.

How do you move from the economic theory and actually implement this permanent portfolio in practice? Here in Australia you can buy government treasury bonds from the Reserve Bank. It may be simpler, however, to just allocate your superannuation fund in such a way so that the right amount is in fixed-interest investments, e.g. read MTAA's website about diversified fixed interest. To invest in cash, there are various funds that invest in short-term money markets, e.g. Vanguard Index Cash Plus Fund. Another alternative is to use your super fund to invest in cash or simply put your money in your bank's savings account, which at the moment is government guaranteed. Investing in stocks can be achieved easily using a mutual fund, e.g. from Vanguard or Colonial First State. You can also use ETFs if you're comfortable with it, e.g. from iShares or State Street Global Advisors. Gold is more difficult. Buying physical gold, in my opinion, is dangerous. You can buy gold certificates from the Perth Mint. Your deposit at the Perth Mint is guaranteed by the Western Australian government. Another way you can protect yourself against inflation, I think, is to buy energy and mining stocks, e.g. buy up BHP stock. Even investing in most Australian or emerging markets mutual funds, I think, gives you adequate exposure to energy and mining companies, so maybe gold is not necessary.

Frugality at Work

Last Friday, three other co-workers invited me out to lunch with them. We went to a restaurant and ate. To convince the restaurant that I was not a parasite using up their space without paying, I purchased a Coke Zero to drink with my sandwich. While I ate the sandwich, everyone else ate lasagne, chips, and lettuce purchased from the restaurant.

Even though I saved money by not buying food from the restaurant, I felt as if I was not fitting in to the organization's culture and that this might have adverse long-term effects. Everyone else had plates, cutlery, and fine food while I was eating a simple sandwich prepared from home.

This issue applies not only to the food I eat at work. I am frugal in many other ways. For example, I wear a $30 wristwatch and I have a $500 suit that's slightly too big for me but I am reluctant to change it because of the costs.

Over the weekend, in order to save money, I usually just sit at home and read things on the Internet. I also exercise. On Monday, when I return to work, co-workers usually ask me, "What did you do over the weekend?" I usually tell them I did nothing and they usually have a look of disappointment on their face. Conversations are harder to sustain when you seem like a boring person. I have thought about inventing stuff up and lying to co-workers, telling them that I go rockclimbing, bushwalking, etc. However, being a Christian I remember that the Bible says, "Lying lips are an abomination to the Lord." I therefore have to be honest.

13 April 2009

Capitalism Magazine Praises James Bond

Capitalism Magazine's article Why Do We Love James Bond? praises the character James Bond in the movie Casino Royale.

In case you're wondering why a capitalist is praising a public servant, here is one reason the author, David Gulbraa, gives: "Bond is a good guy, fighting on the side of freedom and Western values."

Capitalism Magazine supports a political ideology similar to libertarianism, which states that government interference in citizens' lives should be minimal. Government should protect the lives and property of individuals and should not be e.g. protecting them from themselves, going to war with other countries, etc. James Bond, as a character, has a license to kill, so already this is a violation of libertarian ideology. A license for one person to kill or murder also seems to go against freedom. So much for the idea that Bond fights on the side of freedom.

For anything, James Bond is the personification of socialism. He is the ultimate example of effective government interference.

If you read David's article, you'll notice that he doesn't really address this issue. Rather, he seems to be more preoccupied by the idea that the Bond character looks good, does great stunts, drives great cars, etc.

11 April 2009

Stocks Going Up?

After so many months of dismal stock performance, it looks as if things are getting better. March this year saw the All Ordinaries rise by about 17 per cent or so. Some say it's the bottom while others say it's a false dawn. Nevertheless, my net worth has increased to about $45,000. I have been receiving dividend payments into my bank account. All up I receive on average about $160 per month in dividends, which is about $5 per day. I think this is enough money to feed myself if I ever lose my job.

Losing my job is a possibility because I only started 2.5 months ago and the 3-month probationary period is almost over, which means my employer might decide to get rid of me. I am quite worried because being unemployed during an economic recession won't be easy, and even though I have enough passive income to cover my food expenses, I don't have enough passive income to put a roof over my head. If I do end up unemployed, I will have to continue living with my parents, which will be very shameful if I am unemployed because I'm sure no parent wants to be around unemployed adult children.

I think one of the worst parts about unemployment is the shame, which means that if I am to be unemployed, I would want to be in a position where I have the ability to hide myself from society. If I am able to isolate myself, there is no shame since feeling ashamed requires an audience.

Gore: Ultimate Soldier

I am so glad it is Easter! This means I get a four-day weekend. Today I downloaded the game Gore: Ultimate Soldier. The ISP iiNet allows me to download this game through their freezone, which meant I didn't pay for bandwidth costs. The game is free.

Gore is a first-person shooter. It has a single player mode as well as multiplaying capabilities online. I tried the single player mode and thought it was enjoyable. The graphics were good, the control was good, and the weapons were good. I am currently stuck at a level at the moment, so it is quite frustrating. I find that the game is quite difficult. At this level at which I am stuck, I don't seem to have enough ammo or health.

The Gamespot review for this game claims that Gore is a plain and ordinary FPS.

05 April 2009

Overcoming Status Anxiety

I have just watched episode one of Status Anxiety on Youtube. The first 10 minutes of the documentary is below. I have also provided links further below of the rest of the first episode as well as the next two episodes (episode two and episode three).

As the title suggests, the documentary is about how many people are so preoccupied with their status in society. The documentary claims that the average American does not compare himself to people like Bill Gates. Rather, they compare themselves to people like them or near them, e.g. neighbors, friends, relatives, etc. If they are doing better than people like them, they feel successful.

How successful we feel depends on what our expectations are. If we compared ourselves to Bill Gates, we will probably never be satisfied. On the other extreme, if we compare ourselves to the most unfortunate people in the world, e.g. people who live in poverty with disabilities, then the average person can always feel satisfied. Too much satisfaction can lead to gluttony and inaction. There needs to be a nice balance between the two extremes.

I do admit that when I interacting with other people in society, I too feel some status anxiety, and I suspect it's a normal human emotion. When I tell other people that sometimes I feel status anxiety, they tell me things like, "Don't worry what other people think about you." Many other people tend to believe that what others think is trivial, but many people also try hard to look good in the eyes of others, so that seems like a contradiction. Instead of downplaying the magnitude of your own vanity, I think the first step to curing status anxiety is to admit that you feel it and that you are vulnerable to it.

My expectations are fairly low. I think that all you really need in life is about A$100,000. This amount of money should be enough to cover your food and accommodation needs. I get status anxiety when I am around other people. The two areas where I am in contact with others is mainly at work and at home. At work there are those people who earn more than me, and I don't get along too well with them. I merely do what they tell me to do because they are in a more senior position. But I do get along well with people who are paid my salary. These people tend to be just like me, that is, they are in their twenties, recently graduated from university, etc.

Once I am able to save up $100,000 then this should cover my food and rent. I will then be able to live without going to work and without living with my parents. In other words, I will be independent. Being independent and having the freedom to not be around other people means that other people cannot look down upon me. Many people think that by moving away from their parents they are becoming independent. However, many of these people have jobs and because they move away from their parents to buy their own homes, they usually have mortgages they have to pay to the bank, which means that they must keep working to be able to afford these mortgage repayments. Hence by moving away from parents they are not independent but rather they have become dependent on their employment. At their place of employment they are exposed to co-workers who can then give them status anxiety.

Overcoming status anxiety then requires true independence from all social circles. You must have the ability to pull out when you notice that the social environment is giving you anxiety. I don't think that pulling out of all social circles is a good idea because social isolation can lead to other forms of anxiety.

Status Anxiety Part 1 (1 of 5) [Above]
Status Anxiety Part 1 (2 of 5)
Status Anxiety Part 1 (3 of 5)
Status Anxiety Part 1 (4 of 5)
Status Anxiety Part 1 (5 of 5)

Status Anxiety Part 2 (1 of 5)
Status Anxiety Part 2 (2 of 5)
Status Anxiety Part 2 (3 of 5)
Status Anxiety Part 2 (4 of 5)
Status Anxiety Part 2 (5 of 5)

Status Anxiety Part 3 (1 of 6)
Status Anxiety Part 3 (2 of 6)
Status Anxiety Part 3 (3 of 6)
Status Anxiety Part 3 (4 of 6)
Status Anxiety Part 3 (5 of 6)
Status Anxiety Part 3 (6 of 6)