Most of my vacation were spent making decisions and crunching numbers. I now have a clear set of strategies that I am going to employ next year for my portfolio. Unfortunately, I haven’t fully transitioned to an income generating strategy yet, so I still can’t spend like a trust fund kiddie for the year 2010 and instead will focus on capital growth as well as cash hoarding. I really don’t like to hoard cash because I am tempted to use it every time I see my bank account.

What became really obvious during this short stint is that I now have a hard time understanding how I managed to survive without lengthy researches like these. I have to conclude that I’ve just been lucky till today in my bets and thank god I employed risk protection strategies. The more I analyze, the more time I need to analyze the next target of the domino effect what came out as a surprise for me though is how I enjoyed spending time doing this.

I was supposed to spend the rest of my holidays trying to release my game, now that there’s only one day left, I think I will have to put that aside. Once I get back to working my 9 to 5 job, it’s Taxes until February. I can see the pain like a train heading straight at me. I made at least 100 transactions this year and everyone of them has to be documented.

So since that realization, I’ve tried everything I can to live everyday differently. But there’s something else…

At one point in my spiritual growth, I stopped asking people what they thought life is for. I stopped asking when everyone started giving the same answer: “I don’t know.” Then I met a few people who actually have incomplete answers and what they told me was pretty interesting. There is no complete answer to this question, only partial answers. You must have one if you are alive, otherwise, you’d see the pointlessness of living and just die. So I got curious again and started asking the same question in a different way…

Myself, I noticed that life is like an avalanche. Things pile up until it reaches a critical state like in the chaos theory. You see this in traffic patterns, in the stock market, in crowd movements and basically everywhere you go. Our brain probably function the same way as a critical yes vote by all the neurons in our brain decides our action.

It does not completely rebuff the change theory, but acts rather as an evolution that gives more insight into how the “gray” area of life behave. Nothing and nobody is purely bad neither can they be purely good. That’s just your perception.

I am too industrious for this.

But I am going to do it this year. The idea still hasn’t hit home yet. I still woke up this morning around 9AM thinking that I should be up and about doing something productive. But alas, the stress so far has made me prosper. You can say it’s a culmination of all my efforts since 2003. So this year, I am going to reward and pamper myself. Another idea that I haven’t quite gotten used to.

I will be flying out September 1st. I even gave myself a few day to slowly pack. Hopefully the world wouldn’t change too much and there isn’t any emergency that requires my attention. For once, I want the world to stay boring for a while so that I can come back and jump right into the action again. The fear of opportunity will keep me connected to the net for at least 30 minutes each day. The opportunity cost of missing a major event this year will probably mean getting wiped out or missing that next chance to triple my net worth. On the other hand, I wouldn’t be surprised if something great happened and I ended up totally disconnected from civilization for a few days.

I consider that exchange very valuable and it is one of the more enlightening moments of my life because the message and the ensuing internal debates that followed. It was her matter-of-fact way of stating her thoughts that made me realize just how different my basic assumption is from that of the western society.

I was raised in a culture of saving everything you have in preparation for armaggedon, because my previous generation lived in armaggedon scenario and the government isn’t there to ensure that you live a healthy life.  So cost cutting and saving for me is as natural as breathing. Just like bartering and asking for discounts.

What that exchange really drove home is the fact that being cheap here in a western world, is not looked upon as a good trait. It is also not part of the value that the opposite sex look for. No, in a culture where you have a hard time killing yourself even if you want to, we’ve effectively taken away any incentive to cut cost. Instead the focus is on how much you can output and consume.

Trap of saving and cost cutting

At the moment of discovery ( which means when I reached my conclusion of this debate), I realized that saving and being cheap is detrimental to a person’s life in a western society. What you are effectively doing is subsidizing money with more time spent. The poorer you are, the more you pay for things with time. I realized then that I need to spend in order to expand and that I cannot hold back. So the only option for me is to somehow make my cash worth more while not having to waste time bartering and debating about price all the time.

That’s when the concept of automatic cash back hit me. If I can make my money’s buying power worth more than it is, I not only save time, but also money. And if I can do that on the smaller items while leaving bartering purely for the larger items, it will be even more cost effective.

Optimized state

So now that I don’t always practice for armaggedon scenario I started to see what I call the optimized way. The trick to life, is to be able to recover from any disaster and put all my efforts to get back to the optimized way instead of getting caught in a downward spiral in a state where I am at a disadvantage. So it is worth while to evolve a most efficient way of life for myself, based on my personality. I inspected my life closely to discover that there are a few core things that I spend most of my time and money on repeatedly. If I can reduce the cost and time by even 1%, the savings over the span of my whole life is enormous. For me, I concluded the following:

• Transportation
• Cooking/food
• Mortgage/rent
• Electricity

What to consider

There are a lot of other things to optimize, such as phone, internet etc but I usually stops when the calculation shows that I will only be able to reap the benefit after 7 years of usage. The reasoning behind this is that almost every 7 year, something doubles. Whether technology or population, but the effect of doubling is a game changer and will most likely throw whatever plan you have in place out of whack. So I considered my options and determined that there’s absolutely nothing I can do about electricity.

Other things that are easier to change are transportation, cooking food and mortgage. It is important to practice any skills involved so that it take the least amount of time as possible. The skills don’t have to be a physical things, it can be the process of something that you can improve. These are skills that requires an initial investment of time, but don’t need to be constantly honed. I suggest you get it down as soon as possible in your life. The first step is to know the price by scouring and taking inventory of price levels of major items at different places. I realized that I will not be able to do this while moving from city to city all the time. So part of the reason I settled down is so that I can enjoy this benefit. The advantage of knowing the city inside out and having a network of people is required in order to gain the price advantage.

Here are some examples of what I’ve done in terms of skills:

Gas: Figure out the time of the day with the least amount of traffic (50% reduction in time stuck in traffic), observed the price cycle of gas stations (10% cost reduction), figured out the fastest lane of every stretch of a highway (~5% reduction in time)

Cooking/Food: Mapped out 10 dishes that I will constantly cook and improve on (30% reduction in time). Reduced cost by figuring out the cheapest place to acquire ingredients (10% cost reduction) and planted some rarely used spice+plants so I don’t have to buy and discard spoilt food for one time use only.

Mortgage/Rent: This part is very hard to improve on, because it involves a lot of money management and credit arbitrage. Basically doing due diligence in market research and timing the interest rates. The result of these efforts are usually out of my control due to market condition. I did my shopping around, bartering the house price and reduction of the unnecessary services that my bank tries to push onto me. I will say that I have at least reduced the cost by 1% so far due to canceling some double insurances and credit arbitrage.

Increasing the worth of my cash

This part is the no brainer and represent only an initial cost of 1 week’s time. After the research, I am able to improve my money’s buying power overall by at least 3%. The key to this success lies in 6 things.

• MBNA Smart cash credit card
• Starwoods Preferred Guest credit card
• The great canadian rebates
• Visaperks
• Aeroplan
• Gift cards

In order to stay the course and not stir away from the core intent of this post, I will only list the cost reductions I’ve been able to reap in my life.

• Groceries 5%
• Gas 9%
• Home improvement 5%
• Some restaurants 5%
• Clothing 5%
• Everything else 2%

These are in addition to the sales and bartering I do. So real results are significantly better.

Our relationship is getting better now, but from time to time, he still lapse back into his old ways and use that disapproving yet condescending tone on me over the phone. It’d always leave a bad taste on my mouth when I hang up feeling angry of the intrusion. The disrespect on my judgment and most importantly, the lack of support for a decision that I arrived at. It also explains why there’s such a big cultural difference between the races.

It wasn’t until I left home and started dating people from other culture did I understand that there is another type of parental love. Families where parents actually cared and asks about what the children wants instead of having an imaginary “future” shoved down the kids’s throat. I envy most of you and am appalled when I learned about how teenagers lash back. Too much of what dad cared about is saving face. To have an outstanding kid is the reason why Asian parents constantly pressure their kids to fit that image of a professional money making machine. It is shameful when your kids turn out bad and they seem to lose their standing within the family structure if they do.

Often, I’d try to bring up certain interesting people I meet and my dad would harrumph as usual before dismissing those people as the garbage of society or certain hobbies as a waste of time… but really, what on earth isn’t a waste of time in the end? There is no curiosity, no sense of exploration. Just the usual: “You better not do that, because I’ll look down on you.” Till this day, it still have limited effect on me for a short period of time. I’d just end up doing whatever he disapprove of anyway, but because I have to struggle against this long established habit, it leaves me more vulnerable compared to people who never had to.

I hated him when he opposed my first passion in dancing, threatening to cut all financial help for school. I showed him my way by working part time and paying my own bills until I started flunking classes due to lack of sleep and time. He cared more about my education than I did, which was the only reason I won the fight between us. That is probably when I realized that what he wanted me to grow up to be, is very boring. Was he jealous that I did what I wanted without constrain because he couldn’t do it when he was young? Was I threatening his illusion of absolute authority and control that he felt he needed to reassert his position? At one point in time, I realized that I have surpassed him in terms of the evolution of my spirit. Asians, I find, don’t spend much time on improving their spirituality.

Amongst the numerous negative traits passed down to me from our relationship, condescension is the one I am having the most trouble getting rid of. It’s something that I have to struggle in order to hold back. The control slips from time to time when I wasn’t checking and is especially obvious when I drink too much coffee.

Dad has probably realized some of what I wrote also. He is a more humble person now, perhaps through realizing his own mortality, he’s able to see what I see. I forgive him for what he did, but it still hurts. I only wish that I turned back in time so I can still change while I am not too set in my ways yet. I hope in doing so, dad can learn and transcend his own faults through watching me.

That leads me to the question that rests on my mind right now. The answer of which has no clear cut winner, probably because I am so detached from my feelings in a normal setting. There are a few things that I’ve been passionate about in my life. Dance, Engineering, Gaming, Finances, Travelling etc. Just like exes, I loved them passionately at certain moments, but in retrospect,  each love is different. None of which says that this is the one and proceeds to overwhelm my senses completely.

The problem, I find,  lies in the fact that none of them has an absolute end goal. I had one, but I achieved it and ended up just going after the next level, and the next, and the next without end in sight. I stop because I can’t see myself married to the passion for the rest of my life. I stop and I move on. So now that I’ve had “an interesting life” according to a few people, I can look back and see, which ones I’d marry for life and which ones I won’t. Now that I am more mature, I am not afraid of admitting the reasons I got into these passions in the first place. First step towards the acceptance of self.

I decided to write this as I reflect them because I believe I over edit some of the more emotional posts. That is not me, I can only be great with words if I am allowed to speak in all 3 languages at the same time. So forgive me for any clunkiness you read.

Dancing is pretty obvious. It’s for serving woman. It’s nice, but a wrong reason to be passionate about something. 99% of the man starts wanting to dance to bed woman and 1% are born into a champion dancer’s womb. After all, that is why dancing is there. Somewhere along the line, I found other reasons to go on and get better. In the end, it can be summed up to wanting to please any woman in my arms. I have achieved that goal long ago and gone way beyond that.

Engineering was just because it was the hardest. Also a bit of goading by my dad who is actuely aware of my competitive nature. By implying and hinting about how difficult and sought after this domain is, he managed to sway me into that direction. I remember that one of my choices of program was an visual art degree when I applied for university. Don’t get me wrong, I got a lot out of this. I can fix anything with a copper wire in it, but I am never passionate about it. Now that I have tamed my competitive nature, it is no longer of important value in my eyes.

Gaming never got serious until I immigrated to New Zeland and then Canada. It is a sort of replacement for friends after I experienced a sudden vacuum in my surroundings. The loneliness compounded my addiction until it became one with my life. I still play it from time to time, but it cannot fulfill me anymore. Real life has gotten very interesting. A game, it seems, is just a dumbed down version of little parts of real life. If you want to show your 1337 skills, do it in real life since it has the “NIGHTMARE” seetings selected. I do however want to improve gamer’s life by making games integrate into social life. I know the addiction, I feel bad for people who are in it and I want to help their lives while keeping the fun of games intact.

Traveling and Finances go hand in hand. I had never knew why I suddenly want to become a millionaire 3 years ago until I realize that I can sustain myself without working. I asked myself what is the first thing I’d do when this is a solid fact instead of a 80% possibility, the answer came back pretty obvious. I’d travel. Getting past $2 million is of no interest to me since you can live off the interest indefinitely with $1 million. (less if you are in a 3rd world country). A fellow backpacker who’s been traveling for 30 years taught me this.

So with this finally figured out. I know what I love now and I have a purpose.

High school educated people who are old and don’t own any current iphones coming down to Apple and telling Steve Job how cheap they should sell the iPhone for and who they need to sell it to. Leaving the design to Apple.

Just my opinion. Not to say that they are only high school educated. But their technological expertise in the field is equivalent to that. Same for Finances.

For the past two weeks and for unknown reasons, I’ve been in this punch drunk high state. It usually fades away after two days so I wasn’t worried at first. It’s when it lasted for a week that I started getting worried. The whole time I was in the rush, I have this impending feeling of doom on when it eventually subsides. The higher you climb, the harder you fall so to speak.

And that’s what happened.

How I got to the final concept. Zania’s universe is steampunk heavy hence the style.

And here is my game with a fully functional physics engine with placeholder graphics for now.

zania

A and D to turn

W to move forward S to move backward

Space bar to shoot bullets.

What I especially love to do for now is shooting bullets at the sun and watch it bounce off.

The focus of this game is on gravity so emphasis is placed on making the physics emulator right. I am just now getting into the game play part after learning the ways of game programming. Mainly the aggregator class to prevent inheritance bloating, singletons for rendering engine and how to reduce the load on a computer.

As a challenge, see if you can maneuver the ship into orbit. Or better yet, shoot a bullet at just the right angle to launch it into orbit.

I always chuckle inside when someone comes to me 6 months later to tell me that they’ve finally sold everything. I know that I shouldn’t laugh, but these people seems to have missed my point… and the timing. Granted maybe I shouldn’t have thrown them off by stating that I am going to play through this turmoil for experience, giving them the impression that I am trying to rip them off of their profit. No, when I say something, I seriously mean it and it’s their fault for not believing that I state truths (with possibility of exaggerating by 1.5 times). I wanted to know how to invest in a depression like crash. Trial by fire, is the only effective way I know of learning something (and the most adrenaline filled one, feeding my addiction).

How I see things

Forecasting the market for me is a matter of seeing all the possible routes as parallel probabilities and honing my skills at timing when the effects actually reflects in the real world. Simple time lags for example is the 6 month delay of Canadian economy vs that of a US economy and the 2 minute delay in the reaction of TSX S&P vs S&P 500. Over time, the delay should shorten as information gets passed along faster, but you can always count on new groups of people joining the stock market that has slower access to information.

There is one characteristic of my personality that I believe is key to my being able to see the possible outcomes. The fact that I do not judge any event as good or evil tuned my mind to the point that they are today. Take for example the view on God. Since I do not believe that God is the absolute good and that my way is that of seeing both side, I force myself to see the point of view of Satan. This is especially turned on when reality is weighed heavily towards one side. (Some people accused me of being cruel because of this).

All this to show you how I arrive at my conclusions and that I am serious in what I am about to say.

The message

Inflation is coming.

There are $900 billion US dollars in circulation. US GDP is approximately $14.2 trillion. So far, all the agency combined have spent $12.8 trillion to combat this crisis where around $350 billion is what we call Quantitative Easing (printing money) with others that are close, but can’t be categorized as such. Recently, the US PPIP pledged $1 Trillion to buy toxic assets and the IMF pledged $1 Trillion to stimpack the world economy. Finally, interest rate is at or near 0%.

And this inflation is good for you…. Well, some of you.

From the reaction I get when I speak to people, I understand that nobody believes me. I agree. I don’t want to believe it either. BUT! I am at least sure that there won’t be deflation. Which really forces my hand in the strategy department.

At the moment, the economy is completely dictated by the US government and to preserve your capital, you have to be aware of what they are doing.

What does 0% interest mean?

When the interest rate is reduced to 0% or close to 0% it gives the FED and other entities certain power that it does not have before. When interest rate is a non zero value, the FED has to service and pay people who buys their debt issues. However, when it reaches zero, there is no consequence of borrowing anymore. You can literally make money out of thin air for as much as you want. The same thing can be said for other entities that have access to this interest rate. I am pretty sure that they will have some creative ways to take advantage of this and print their own money disguised as something else.

Which leads to…

Inflation

Definition of which means the decrease in the buying power of your cash or increase in the price of anything you buy. Which led ME to…

Fully invest in the stock market

Why am I not trying out how to hold cash over inflation like the way I am investing through depression? Because I already know the outcome of that and there is absolutely nothing I need to learn from it. So I am warning people and also leading by my own action.

Probabilities

There is a possibility that the US government will be able to manage it properly and reduce the amount of money in circulation as the economy recovers. There’s also the possibility that this won’t arrive for some time  and that another severe 50% downturn in stock prices could happen. Still, taking all these cases into account, the benefit of being fully invested severely out weights holding cash or any GIC less than 3% when it does happen. Since I don’t know the time span till it happens, I opt to do it when I see it.

The administration

The US administration seems to want to make a stand at this level. If it falls more, it will be 30 years of pain. They are getting a second chance at managing the depression and they are dead set on doing it the other way around this time. You only have to read the fed chairman Ben Bernanke’s doctorate thesis to know what he’s going to do. The only thing that can stop this, is public outrage. Which, if happens just means that we, as human, are too stupid. However, this does introduce a random dice into the scheme of things. We are in an unknown territory that does not have any example in history. Hence my confusion on what to invest in. What happens when a government throws $13 trillion at the economy? Interesting question.

A quick crash first

For records sake, there is a very big chance that a crash will happen after April’s earnings season. Truth is, factory orders from my sources in the front line of manufacturing have not improved. They have been the same from January to March and consist mainly of emergency orders for one month to replenish depleted inventories. The current rally in the market is due to excessive money that people have saved up, but have nowhere to put. I am not the only person that noticed the fact that bank only gives 1~2% return. There is absolutely no incentive for people to keep it in secure assets and every incentive for people to put it in the stock market.

The crash will most likely be triggered by the bankruptcy of GM in 2 months. Yes people have time to prepare for it, however, just like the Lehman Brothers meltdown people will bet and write CDS against the bankruptcy and ended up having to pay too much again.

If you are fully invested, you don’t necessarily have to sell during the crash. The upcoming effect of all the trillions of dollars invested will be enough to heal anything. Wiping out $800 billion dollars (Total money supply) will not cause a dent in $12 trillion dollars (of future committed government spending).

If you have cash on the sideline. You still have time to invest when you start hearing that factory orders are back to normal. i.e. the bookings are done for 2 to 3 quarters at a time. I will let you know when it happens.

The effects of inflation

Fixed rate vehicles that does not adjust its rate to inflation will take a big hit. Pensioners and people retiring will see their buying power reduced. Debt will be easier to pay off as the national income increases (Probably not this year or next for individuals as it will take time to trickle down). We are screwing over the older generation’s cash hoard and piling debt onto the next generation. It is the perfect time to be a working and contributing adult.