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Our Wealth Position
On this section, I am using Edgeworth box to illustrate how we can grow our wealth in terms of net worth. At this point, good knowledge of consumer theory and general equilibrium is required. To have rough idea what Edgeworth box is, you can refer to this blog post I made two years ago back: click the link
Edgeworth box is used mainly for the topics of welfare economics/general equilibrium and international trade. Microeconomists tend to focus on the distribution of income/wealth or goods exchange in respect of consumers. Here, I make use of financial market to change the wealth position. Points A, B, C, D, E are where every two indifferent curves of 'Me' and 'Other market participants' intersect each other. This implies Pareto efficient such that wealth of 'Me' and 'other market participants' are allocated in the most efficient manner.
Suppose that you, being graduated from your education course, are on point A with little savings. If you don't involve in the financial market, you will be struck at point A. If you have found a job that pay you decent wage and you spend, leaving no saving, you will also be struck at point A with no involvement in the financial market. In addition, you participate in the rat race, rendering you either at point A or point B with some luck of progressing on the career ladder. It is tough fight, draining out of your effort. It is really lose-lose situation for participating in the rat race. Usually, people who have good EQ and excellent networking skill can easily improve from point A to point E via career ladder over a decade or more. Unfortunately, this kind of people is about 5% of the world's population. It is only rough estimation.
It is quite unfortunate that there are some people who think that investing (strictly different from trading) is equivalent to gambling with any understanding of the investment philosophy. The most logical investment philosophy comes from Benjamin Graham. Today, there are not many people who read Benjamin Graham's work.
To improve wealth with sufficient effort that can be proportionate or less than the size of rewards you receive, you need to participate in the financial market with sufficient prudence and careful analysis. I highly recommend equity market because equities have no maturities unless the companies are being wound up. If the company has good business model that is likely to generate positive earnings at constant and gradual growth or increase its net asset value, you will be likely to have higher chance of making profit by taking long position. With no maturity, there will be bound where the market align the market price of the stock with your perceived value of the stock one day. Therefore, your wealth position can very well be improved from point A to B, C, D, or E in any time. It will only happen if you carefully remember and correctly apply the advice from Benjamin Graham.
If you choose to 1 out of 1 million chance activity of making profit like lottery tickets like Toto, 4D, big sweep (Singapore's legal-authorised betting activities), you, as a working person, is likely to be struck at point A with no luck. When compared with equities, these kind of activities have time limit such that they will expire at certain point of time. When the time is running out, the chance of winning never remain on the same ticket till the end of maturity. If you buy equity with careful analysis and prudence, you are likely to make a profit with infinite maturity. Please take note that it occurs only when you take a long position with no margin trading rather than short position.
When your wealth position improved from point A to point E by participating in the equity market arming with investment philosophy given by Benjamin Graham, this indicates that the other market participants are giving their money to you. It occurs when you make profit. That is how the life works out.
My Career
I think I failed to get the chance to get in investment management industry after having email conversation with a value investing firm. My friend from US told me that it is very difficult to get in the investment management industry if I am not taking the traditional route. I want to get in this industry because I can spend more time on brushing my investment skill before I go solo as a full-time investor. In this current situation, I have little time to analyse each company.
Now and then, if I cannot find a job that let me in investment management industry, I will create one for myself in a decade time. If I do this, I must spend a lot of time to observe how the firms function during my financial/accounting-related career.
Meanwhile, I will write more investment thesis here very often on my blog. If you think it is good, please let me know. In addition, I will be grateful if you, the reader of my blog can introduce me a job in the investment management industry. If you do, please let me know via chat box so that we can contact by email if needed. Well, at this moment, I am taking time to check unknown investment firms whose names the public never heard of and then check their job vacancy.
Movies and Dramas
The Adjustment Bureau (Hollywood Movie 2011)
Synopsis:
A group is controlling a person. It wants this person to be president of USA. One day, this person realises that he is being controlled. He finds way not to be controlled. The clue is to be with a lady he has met during the dinner.
Rating:7/10
Remark: fine story. The message behind this movie is to grab hold of your own destiny.
Detective Conan Movie 2011 (Japanese Live Action 2011)
Synopsis:
Kudo Shinichi and Mouri Ran were on the trip to a rural province in Japan as Ran's mother was invited by her client to that place. Unfortunately, there were upcoming planned murderers in that place. This time, it is the mystery how victims are killed by being on top of the tree.
Rating:7/10
Remark: Decent story but interesting way on how to kill people without using your hands dirty.
BOSS 2 (Japanese Drama 2011)
Synopsis:
This drama resumes from BOSS 1. The head of the team wants to nail down the true culprit of the so-called terrorist group. Can this team achieve the goal?
Rating:6/10
Remark: Decent.
Lincoln Lawyer (Hollywood Movie 2011)
Synopsis:
It is mainly about lawyer defending the defendants of the case. This time, the defendant picked him for some reason. The defendant wanted the lawyer to prove that he was not the culprit of the injured victim in the case. Along the way, the lawyer began to discover shocking truth.
Rating:8/10
Remark: Great story. I like this lawyer.
True Grit (Hollywood Movie 2010)
Synopsis:
A 14 years old female is finding ways to get revenge for her father's death. Before she starts her quest, she had to send his father's body back to her hometown with the aid of her maid. After that, she makes preparation to get the money that is needed to hire someone to catch the murderer.
Rating:7/10
Remark: Incredible girl. She persists to catch the murderer regardless of where the murderer is. Good story.
Tony Del Piero wrote and posted at at 11:44 pm
