Category Archives: Dreams Come True

Launching a New Business

Recently I launched a new business. It allows people to find their favorite Kindle books at a big discount.

Why?

Why bother launching a new business? One day, suddenly the idea came to me. When shopping on Amazon, I noticed that the price of a book can fluctuate wildly from one day to the next. The price could be $12.99 one day, and free the next.

Launch business like a rocket

Who has time to check the price every day? Wouldn’t it be great if there were a way to be notified when the book is on sale? That was the idea. And then I created the site.

If you are interested, you can check it out at Librosso.com. I would love to hear your feedback about how the service can be improved.

After launching the site, I began thinking about the different steps to business success. And that there is only one way to get from one step to the next: Action.

The Value of Action

It always amuses me when people talk about their bright idea like it is a valuable asset. Everybody has great ideas. But 99.99% of the time they don’t do anything about it.

So I came up with the 6 Stages for Business Success Continue reading

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The Most Popular OIAI Post of All Time

After analyzing the traffic for the Online Investing AI blog, I became curious about the most popular post of all time. It turns out to be Rich Dad’s Cashflow Game is Now Free!. This got me thinking: why is this post so popular? Of all the Rich Dad posts, why do people love this one?

 

Rich Dad's Cashflow Game

Rich Dad’s Cashflow Game

Perhaps it is because of the high price of the board game. When I last checked it cost over $100, compared to perhaps $20 for most board games. Does the Rich Dad game cost more to produce? No, it costs more because it is worth more.

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Contempt of Customer

Recently I ordered from an up-and-coming online food delivery service. It was the first time using their service, and although doubtful about their value prop, I thought “Let’s see how it goes.”

Well, to put is nicely, the food sucked. It was cold and unappealing.

I contacted their customer service and expected a prompt refund and a note saying, “Sorry you didn’t like it. Please give us another chance.”

But no. They said, “No, you can’t have a refund.” So they would rather have my $26 than a happy customer.

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New Years Resolutions

Since today is Jan. 1st, I started thinking about New Years Resolutions. And what better way to start the new year than by creating a blog post?

 

One thing that is funny about New Years Resolutions is that most people have them. And 99% of the time they have completely forgotten all about them by spring. This useless goal setting system is completely broken. Yes nearly all people use it. Then they lament that they “failed” in following through.

 

The #1 New Years Resolution is going to the gym. I wish I owned some gyms. Perhaps 95% to 98% of the members never go. And those that do go only use it a few times per month. Ever wonder my gym membership is so cheap? Because the cheaper it is the easier it is to lie to ourselves.

I don’t want to cancel it because I am going to try to start going.

I wonder why people think it is such a great idea to get drunk and party on New Years Eve. Why? What’s so great about it? It’s just another year that went by. Did you achieve your goals? Did you get rich? Did you even go to the gym? If I answered no to those questions, then I wouldn’t be partying. I would be pondering.

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Is Investing Really a Zero-Sum Game?

Zero-Sum Game ContraryBrin

Zero-Sum Game ContraryBrin

Investing — in anything stocks, bitcoins, goat futures, whatever — is a zero-sum game, according to most critics and proponents of investing.

Someone buys, someone sells. Someone wins, someone loses.

In a very broad sense, this is true, but if we look a little more closely we can see that the zero-sum game does not exactly fit investing because of the timescale involved. In fact, investing is rarely a zero-sum game.

We like our models. No, not super models. Humans use models to improve the efficiency of thinking. Guesswork, it turns out, is what being intelligent is all about. That’s why when we one of our investments sours, we immediately equate that to a game, like baseball or football. We struck out. We lost.  But baseball and football — or whatever game you’re into — have finite time limits: innings, quarters, periods, etc. But many investments do not.

Take a stock trade. You may buy stock in a company and the price begins to go down. You sell your stock and someone buys it. According to the zero-sum model, you lost: you bought high and sold low. And the other guy bought it lower, so he won.

However, you have yet to hit the ninth inning. What if you take that investment and buy another stock and it soars? What if the winner in this trade — the investor who bought your stock — finds that the company continues to underperform and its value continues to crater?  These trades — that seemed to be a winner-loser type of thing — can be seen as only one play in a much longer, much more complex game that we call the “market.” The buying and selling of an investment are usually seen as “the game.” As we can see in the above scenario, they are not. They are just plays within the game.

Only finite limits define a zero-sum game and, as long as people are in the market and companies are being created and sustained — then, the zero-sum game heuristic does not fit. In fact, it can be debilitating. People who fail at certain investment strategies immediately exit the game.

In other words, investing isn’t so much a zero-sum game as investors are zero-sum thinkers.

Obviously, there are much better examples of the zero-sum model in investing. Off the top of my head, I see that options — which can expire at a certain time and be essentially valueless — is a type of zero-sum game. If you don’t exit in time, or the underlying security doesn’t perform to your expectation, then your investment goes to zero. You lose. (However, I would point out that option trading has become a thing-in-itself and not what the strategy is most ideally intended — as a hedge to non-zero-sum game trading. You should use options to guard against risk on your main options.)

There are probably other types of investing that are better understood in the zero-sum model.

The point I would like to pass on is to be careful of our models. They become self-fulfilling prophecies — and not just for us. They can spread and infect other people’s thinking. They can lead to the most horrible type of model-making called “policy changes.” A policy change is when a government entity decided to make bad heuristics into the law of the land and there is only one true law in this case — the law of unintended consequences.

What do you think? Do you think zero-sum investing is still a good model? Do you know of other investment models, or perspectives, that have similar faults?

 

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Is this the Start of the next Bitcoin Bubble?

Bitcoin has started to rise again, and it looks like it might be the start of the next Bitcoin bubble. Although many people have known about Bitcoin for years, most people have not purchased any coins and do not understand it.

Image courtesy bitcoincharts.com

Image courtesy bitcoincharts.com

How is this bubble different?

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The Next Step for Bitcoin

Bitcoin has gone through its second bubble, and it is interesting to see how it survives. Although many people thought that the price would crash to a small fraction of its high of $262, it seems to have stabilized in the $100 to $120 range.

Image courtesy BitcoinCharts.com

Image courtesy BitcoinCharts.com

The popularity of Bitcoin has exploded over the last 6 months, and it was clear that the bubble would burst. However, it seems that Bitcoin has gained enough traction to make it survive through the price crash. The chart looks quite strong at the moment, but only time will tell if Bitcoin continues to rise in value.

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The Luckiest Unluckiest Generation

The National Journal makes the point that the Millennial Generation is the unluckiest generation.

Sorta.

Because it is also the luckiest.

The Millennial Generation is loosely defined as the generation of Americans born in the 80s or 90s. Obviously, a lucky generation wouldn’t have the exact date of their creation, right? Just like every tool becomes a weapon and every weapon becomes a tool, technology has shaped this generation’s limitations and opportunities as no other.

The National Journal’s main point — although they’re a little wishy-washy about it — is that technology has replaced a lot of the jobs that former generations could access. Computers have increased production and automation has totally transformed the job market. That’s all true, too. And this is just beginning. We haven’t seen nothing yet.

However, the article stumbles a bit on just what advantages that technology has introduced. After all, Millennials have more computer power in their pockets than most university computer labs had in their facilities just a few decades ago. The technology has created turmoil, but every period of massive change has a transition period.

Technology is also starting to break the chains of wage slavery for this next generation of workers. More Millennials can create their own businesses online. They have access to apps and tools that give them the power of dozens of corporations at their fingertips. There are also more ways to earn money–blogs, websites, app development, affiliate businesses, etc.. We can’t forget, either, that  more Millennials can arrange their work in ways that just was not possible in previous generations.

The jar is definitely half-filled for Millennials.

Or is it half-empty?

What do you think?

 

 

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A Brief History of Money

Bitcoin has had an interesting history. Launched in 2009, it was revolutionary in combining cryptography with money. Perhaps the motivation for this idea was to create a system that distributes financial resources to those who have computing power.

Image courtesy of BitcoinCharts.com

Image courtesy of BitcoinCharts.com

We may never know the motivations behing Bitcoin. The mysterious creator, Satoshi Nakamoto, cut off communication in 2011. The name appears to be a pseudonym and he has never been identified. It has been theorized that he is not even a single person, but a group of people who have opted for anonymity. If this is the the case, they have succeeded.

Has Bitcoin revolutionized the way that humans use money?

Consider the following 4 phases of money:

  1. Barter
  2. Money
  3. Fiat Currency
  4. Cryptocurrency

The first phase of human exchange predates the first villages. It was simply the exchange of x amount of one good for y amount of another good. For example, “I’ll give you 3 apples for 2 pears”. Although this worked, it was cumbersome because there was no simple way to value a given good.

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Can Investing Be a Spiritual Exercise?

tradingbeyondI’m reading Van Tharp’s latest book, Trading Beyond the Matrix. I just started it so this will not be a complete review — expect that in the future, though.

But I am already intrigued.

Tharp believes that you don’t trade or invest in the market; you trade or invest in the beliefs of the market. Those beliefs are yours to control, or to allow them to control you. Hence, trading for Tharp is almost a yoga, a mental connection between brain and spirit. Indeed, there are yogic paths that stress mental exercises and meditation exercises.

But we don’t think of trading as a spiritual act. In fact, it’s treated almost as an act of defilement. Our society has twisted views on wealth and earning wealth. We praise and hate the practice. The structure of our tax system treats earning money as a sin by punishing — not rewarding — you for earning more money. It’s the ultimate sin and deserves the ultimate sin tax. Notice: there’s no progressive sales tax on cigarettes or alcohol based on use or over-use.

Tharp though approaches it almost as a Zen philosopher, who sees the extraordinary in the ordinary and the ordinary in the extraordinary. By consciously watching your thoughts and beliefs, the trader is learning about himself. As he learns about his mind, he is learning about the universe.

I sort of saw this coming from Tharp. The last book of his that I read — Super Trader — contained the prerequisite number of charts and graphs, along with trading tips, but did not shy away from spiritual matters. Tharp believes they are closely connected.

Once I’m finished I’ll try to post a review, or summary, of Trading Beyond the Matrix.

 

Resources:

Tharp Institute

Trade Your Way to Freedom

Super Trader

 

 

 

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