Amid the Fall of Wachovia and WaMu

I can safely tell the world that I definitely called this one. It's not that whoever laughs last laughs best, but rather that we shouldn't be laughing at one another's demise at all. As a finance guy, I have been following the current turmoil faced by our current economic status. I felt that despite Wachovia's hard work that they too would be subject to failure and that no financier, not even the undersecretary for the US Treasury could turn it around.

Wachovia was a little more susceptible than others because Wachovia for one, only had their cash flows to rely upon. Even there, their cash flows were like a stream that was drying up. I wrote about Morgan Stanley in a stock analysis a couple days back and stated that in the end, Wachovia would benefit more from a merger of equals than Morgan Stanley. Why? Because Morgan Stanley already had assets. Their assets were a few hundred billion. Even if Morgan Stanley went belly-under and had to liquidate everything, the fact that they could make back even as much as a few billion was enough to say that they were still going to be okay. Wachovia on the other hand ran into a situation where they only had cash flows, that is future cash flows, to rely upon. Be that as it may, a future cash flow in the accounting world is an asset by definition of FASB no. 7, but it is also a discounted asset making it worth less. From that analysis, I felt that Wachovia didn't have any real assets and were in a lot of danger if their debtors came knocking at the door. After all, how would you respond if the person who owed you $100 said they would pay you when they got paid?

I tried to warn people. That is, people that I knew and cared about. I told them that if they really wanted the opportunity to make money, they would have to go to the where the money would be, not where the money currently was. It makes perfect sense and yes, it was borrowed from Wayne Gretzky saying he got really good because skated to where the puck would be. Now, I think the puck is currently sitting around in precious metals and commodities. I, for one, would have made a lot of money on gold. However, due to my circumstances, I didn't. So did anybody I know make money off of gold? Yes. Mom, dad, aunt, uncles... They followed my advice. Well, sort of. My mom and dad didn't follow my advice entirely because my dad's Midas Touch turned gold into... well, success. They predicted the markets and played it well. He rode it out from when gold was $600 per troy ounce and is now enjoying himself in retirement. Previously, it was a forced retirement because nobody would hire him (in the US, others would consider it age discrimination).

Regardless, the ship has sailed. Where it will go to, that would depend. In these uncertain times, I am sure that figuratively speaking the ship will return to stocks someday, but for now, it is going to be in the commodities markets and will make it to the forex markets. How long it will stay in each, I honestly cannot predict. Yet.

Good Music :)

This is not mine, nor is it my channel. I found this off of YouTube and really thought it was quite entertaining, so much so that it gets a special place here in my blogger world! Yeah, I bet that if I ever meet a woman that can play this song (but in a different manner that is more passionate than this) I would fall in love with her. Yep. Read more about "The Perfect Woman" in one of my other postings from this same month.

Why Forex Makes Sense (Forex Trading to Make Oodles)

Mom and dad always taught me that having money can allow somebody to literally make money. Small quantities can become larger quantities, but larger quantities can create exponentially larger quantities. But in order to make money, sometimes you have to lose money in order to gain knowledge and experience. They also taught me that sometimes, one could easily make money by simply having that money change hands. They were right.

Implicitly, I guess I always knew. They introduced me to forex trading at a very young age with a very simple concept. Money will always be money, no matter what form it's in. If you had money and you sold it to a broker, then you'll get money in return. If you take money and sell it and then hold on to it until the demand for that currency you now have goes up, well, it'll just continue to go upwards. Right? That's the goal, but what if the currency goes in the other direction? Well guess what, so does your income tax and so often do the products and commodities of that country.

Take for example, Thailand, a beautiful country. I often exchange my currency for Thai Baht because if the US dollar strengthens against the Thai Baht, I can make a profit. If it gets weaker, that's still okay because the prices of basic things that I need have not. I can still purchase a shirt for cheap, I can still purchase a belt for a lower price than in the states (and still pay less by having it shipped to the States than purchasing it from Wal-Mart). Now, if by chance the currency goes up anytime soon, well that's just peachy for me and I can exchange it back. My gains are lower, but hey, so are my taxes.

If it gets to a point where it is very clear that the currency will continue to slide downwards and never go upwards and I have no needs for the products of that country, then I will exchange it. However, this is where the follies of many traders appear. You see, you don't need to convert back to US dollars. You can always exchange to British Pounds or the German Mark. Just as there are stocks with correlations, economies also have correlations. It's up to the trader to be educated about the currencies and economies. Generally though, this is pretty easy to find because you can just go to the major stock indices of each country and cross reference them over a 5 year period and see what kind of correlation is there.

Regardless of your decision, you will lose money but you will also gain money. You gain very little at a time and therefore you need to buy and sell either frequently or in large volumes. As for me, I do this frequently because I do not have a large volume of money. Well, I do not know how compelling this is to everybody, but you are more than welcome to comment and leave me your thoughts. I leave you with one final thought: this is my experience with currency exchange, and actually, I have been more successful in the past when technology was not so great. Nowadays, with things being so quick, I am not as able to take advantage of arbitrage opportunities like I used to so I have given that up. Hopefully, I will learn about new arbitrage opportunities and I will tell you about it all later.

Best of luck, cheers!

If You Can't Step Up, Step Out

So here's the deal, the financial institutions in the US have been wrought with turmoil this past week and everybody is confused. Everybody thinks the US stock markets will be on the rise tomorrow due to President Bush's intervention and I don't disagree with them. However, here's my two cents on the issue: we should have let these institutions go bankrupt!

Perhaps this is a moral hazard or an unethical action, but after all, "You reap what you sow," right? Why is it I can start up a company and have 500 employees and fail while these companies can have much, much more and not be allowed to fail? Well, because with them go the US economy, right? Wrong! What they did was inherently wrong and if they didn't save up their money like reasonably prudent people, they should not be saved with my money in my opinion. And this $700 billion bailout... well, chances are this is going to be financed by more taxes and increase our federal deficit. I am highly against this because I believe in free-market capitalism. At the rate we're going, we might even end up socialists!

Not to mention, what do you think is going to happen to the US dollar by this action? And inflation? We already had some problems dealing with inflation, how does adding $700 billion dollars help that? It doesn't. As far as I'm concerned, it should be survival of the fittest and so far, Goldman-Sachs is proving fittest (sort of). As I always said, "Step up or step out." In this case, it would be the right thing for multiple other investment banks to "step out" if you ask me. And what about their employees, you know, the good-hearted, hard-working folks? Well, have you heard of an "enabler?" I don't know how to define "enabler" to you other than to put it in context to a story. If Person A goes out drinking Sunday night and is unable to work on Monday morning, the enabler would be the person who calls the Person A's company and tells the company Person A is sick and unable to work or even call because they are extremely sick. Person A becomes used to being saved and continues engaging in activities that are unhealthy and the enabler, perhaps the kindest person on the planet, ends up cleaning up the mess.

I used to be an enabler. Maybe my story is different from the Person A story, but the fact is, I stepped out. I moved away from helping Person A and let Person A grow on their own because there was no other way. Now, Person A is a successfully retired person who is financially stable. Unfortunately, Person A no longer talks to me thinking I betrayed Person A, but let's face it, they are much better today than where they were years ago.

But I digress... The fact is the good enablers of these financial giants need to stop enabling these financial institutions from having their way with the world. If we let them sink, as we initially did with Merrill Lynch and Lehman Brothers, then the ones who worked hard and saved their money and made lunch to skip out on spending money one day will be rewarded most. After all, what's the point of working hard, saving, and being financially prudent if all we needed to do was say, "Bankrupt!" and have the government step in to save us? None at this point... but then again, maybe the lesson to be learned here is that "The meek will inherit the debts of the bold."

While we shall see, I am inherently apathetic to this issue because I worked hard and am not affected by the series of events from this. Furthermore, I did nto invest in stocks at all during this time period, rather, I had my money overseas.

A Demonstration of Integrity

At the beginning of this semester, I was concerned for my funding situation and a possibility of being unable to embark onto my final year of college. This concern was eventually quelled by a couple of scholarships that made this semester possible. Word did not spread so quickly though, despite having written several letters of appreciation. A previous and well-respected professor of mine remembered my situation and prepared to nominate me for a particular scholarship. I wanted to say accept the nomination, I really did. Not only would winning this scholarship allow me to continue into the next semesters, but the scholarship would provide a bit of extra money for books, parking, and the like. However, I refused.

If it were you and you were me, what would your decision have been? If you still think I was stupid for refusing, recall my life goal of establishing a scholarship in my parents name. Now, would it be right for me to take away another student's scholarship money when I already had enough to press forward? To me, I considered it a hypocrisy to claim a need for scholarship funding when I no longer needed the additional funds. I also took that to a higher level of extremity when I thought that it as stealing from the students that I wanted to help in the first place. I stuck to my guns and gave up that scholarship. Do I regret it? No. In fact, if I were truly where I want to be for my integrity, I should be assisting the people providing the scholarship to the students in terms of finding more funds or helping the awarding committee with making their scholarship process easier.

Airport Security

Yes sir, I was on another flight again today. Having gone nearly 3 full years without leaving Denver, I went on 3 different trips in the last five days. The vacations/work themselves were fun, but I will attempt to work harder to avoid any additional traveling in the near future.

What is going on with me? I was departing from Seattle just last Saturday. I checked in relatively early, and it all went well. The ticketing agent was attractive, might I add, but upon encountering security, my charm ran away. I started by handing my id and boarding pass to the TSA agent. She looked it over with a careful eye, looked up at me, and returned her gaze back to the id. This continued for what seemed like an eternity, as if she were thinking this guy's evil, but eventually returned everything, and with a stern voice, called out, "Have a good day," like it were an ominous warning rather than a positive adieu. I thanked her over my shoulder, and proceeded towards the metal detectors and x-ray machines. 

I removed my shoes, watch, cell phone, and necklace, and placed them in the plastic tray, alongside of my laptops and my bag. I walked through the metal detectors and then a TSA called out, "Who is the owner of this bag?" I looked over, and raised my hand calmly. "Sir, come with us," the agent beckoned. From there, my baggage was checked in an overly thorough manner, and I was checked too. As you can imagine, I passed all of the tests, but the problem was that because all of my belongings were strewn about the table, it was a burden to say the least to restore my belongings in their rightful places in my bag.

Now, an occassional check here and there is fine, but this is becoming ridiculous. I left for San Diego this morning, and despite the fact that I was running late for my flight today, I got pulled aside (again) and went through exactly the same process. On my return trip from San Diego, they did the exact same thing to me... this time without taking stuff out of my bag.

I am happy to report that security is positively doing the right thing, and the security agents certainly did not discriminate (as they called for merely the owner of the bag and did not single me out). However, what am I doing that is making these people think I am inherently diabolical? I carried two different bags with two very different sets of items inside, why is it I am being screened so frequently? The agents, as you know, do not look at ids AND THEN SCREEN, but they have two different sets of agents look at ids and conduct the tests. If the tests are random, what are the chances of me getting screened, 3 out of 4? Honestly, I am more annoyed than anything. I almost left my music player at the airport due to the perhaps excessive screening. What really tickes my feathers is that if I were more devious, I could still find ways around security given their tests that were conducted, but honestly, I think I will just avoid traveling for... the next 3 years or so.

Two Snakes, One Prey

Despite all of my work in development and leadership, I am facing a difficult strife in my life. Please understand that it is a personal issue, but that I am unable to move beyond this barrier and would really like to have input, feedback, and your advice to coach me and let me grow.

There are certain people that I know, just two really, that I have befriended since a while ago. Speaking analagously, I knew it then just as I know now that those two people would back-stab me and throw me under the bus when the situation fits their needs or when they are unable or unwilling to face the music. Spineless. 

Their presence has always been latent conflict. I accepted that.

For the past year and half, they have allowed me to grow mentally and emotionally. Their willingness to stab me behind my back (assuming I would never find out) has allowed me to time my actions and growth, filter the allocation of important information, and manage my relationships. They have also taught me the magnitude of the politics of socialization in my life. After all, these people have their uses to me, much like leeches that suck away the bad blood from my system and make me healthier, or like having a snake close by to keep me tense but relaxed to prevent the snake strike. I have learned a lot from both of them, but here comes the problem I am unable to pass.

I cannot stop myself from building animosity towards these individuals. My goal with them was to help them grow (a spine) just as much as they helped me grow mentally. I know it is only natural have disdain towards individuals that have proven two-faced, but I always knew that along about them. Also, instead of me growing further and learning to better manage things, I am beginning to foster ill-will towards them in all of their actions; some of their actions emanating a reflection of who I am, if you will. I have never been angry with the truth about me, but it seems that everything that they are doing just angers me. I need to get past that, but I do not want to sever all ties as I have stated that they have allowed me to grow.

But maybe it is time to sever ties and traverse in different directions, but that would be the same as removing an asset. All assets have their uses in different times, some assets can hurt if too much is invested into them. I prefer not to sever any ties, I also prefer to keep the snakes close because as quickly as they can lash out at me, the same could be about them to my enemies and other threats. Maybe that is my solution, keeping close but a touch farther away. I do not know, but the fact is, everything that occurs between them and me irritates the me. It is irritating so much so that I am beginning to lose over their actions. I am at a loss. With all that has been said, with so much more that has not, what would you do if you were in my shoes?