Thursday, February 12, 2009

The government doesn't owe me a job

I have a job. I guess that means I'm among the lucky 92.4%.

The reason I have a job is that I have a skill that someone will pay me for. If that changed, then I would join the 7.6% who are currently unemployed.

My number should be up soon, Nancy Pelosi says that every month 500 million American jobs are lost. That means I've got three weeks, tops. Then again, politicians shouldn't be expected to tell thousands from millions, or even billions, with the kind of stimulus figures that get thrown around Congress these days. What's a couple orders of magnitude between friends?

But I digress. If I couldn't get paid for what I do, the only thing I could do is turn to the government, right? Ha! Not this libertarian. I'd starve to death before asking the government to steal from my neighbors. (Where do you think the government gets the money?) Just to show you why I don't want or need a safety net, let me run down some of the things I might try if my employment were negatively affected.

  • If my job was on the line, the first thing I would try is negotiate for reduced pay for reduced work. Because I live within my means (30% of my income is directed toward savings) I could at least live with that much less and live the same lifestyle.
  • Of course, no matter what, I would reduce unnecessary costs. Goodbye cable TV, thermostat down, sell one car, cancel the gym membership, reduce cell phone minutes, and cook at home more often. I'd probably keep the Internet access and Netflix as long as possible, but that would go if it keeps the mortgage paid.
  • Unemployment insurance. Yes, private unemployment insurance is not expensive, and if I lost my job, this would be my first line of defense.
  • I could become an auto or motorcycle mechanic. In this poor economy, people are not replacing their old cars with new ones, and the repair business is up. I can follow a diagnostic flow chart, and use basic tools. I could probably start as an apprentice right away, but it would probably help to get some education and certification. Good thing I bought unemployment insurance.
  • I could teach Spanish, thanks to my Dominican wife. Or I could teach English to Hispanic people. I could teach English overseas, too. Japan, for example, ships in native speakers to teach English in school. I've heard they pay well, and take good care of you. It would suck to be away from my family, but at list this would support them.
  • I could tutor. There's always kids that need help, and their parents will pay to keep them from falling behind in school. If I was willing to put in the effort, I could become a real teacher. It would take a lot of frugality to survive the half dozen years of education and training it takes to become a teacher, but I doubt the education industry will be going away any time soon.
  • I could be a handyman. I fix stuff around the house all the time, I'll bet someone would pay me $50 to fix their electric range instead of paying $400 for a new one. Maybe I should ask for $100. I can come to your house and change the oil in your car, or paint your dining room.
  • I could become a real handy professional, like a licensed plumber or electrician. I'd lean toward electrician, because electricity speaks to me more than pipes, but if the demand was for plumbers, I'd be a plumber.
I am a software engineer, but I don't see any of these jobs as beneath me. If no one will pay me for software engineering, then that means I have to find something else of value that I can offer to society. If no one will hire me to do the job, it means that the job doesn't need to be done, or someone is already doing it. And this list is not hypothetical, these are things I would really do if I needed food on the table. Everyone thinks (government included) that when you're out of work, you have to get a job doing the same thing you were doing before. This is the same reason that we should feel bad for buggy makers when the automobile gets invented. Look at all the jobs lost.

You see, it's not about having a job. It's providing value. That's why we have money, to measure the amount value you provide. And there's nothing that says you are entitled to a job doing what you want, or what you did before. But if someone hires you, it's because they think that's the best use of their money. Isn't that better than government pity?



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Sunday, February 8, 2009

The Motley Fool has jumped the shark

Act now! A chance of a lifetime! The secret that will make you rich!

Is this the latest infomercial? House flipping or selling time shares? Or one of those "work at home" ads stapled to a telephone pole?

No, it's the friggin Motley Fool!

I had some respect for these guys. In a world of get-rich-quick, and secrets of day trading, these guys tell you about index funds, and diversification, and the way that patient investors build wealth slowly and reliably. Sure, they'll tell you that this stock is better than that other stock, but it's usually backed up by some research into the company's financials, market changes, and whatnot. Overall, pretty respectable.

Now, every week I get an email from them about the one stock that's poised to pop. 3800% returns could be mine if I just knew. "Sign up now for this $169 newsletter, and we'll make you rich!"

Seriously, dudes. You're just like that timeshare guy on TV. If you've got such a sure thing, then milk it, and don't worry about your subscription revenue. You should be rolling in dough with your weekly 3800% secrets.

I'm conflicted because I read the damn site every week, and all of the analysis and advice seems good, but then I get these desperate pitches that look like they're on their last dime, I worry. Why the hard sell? Why can't we share investment advice without looking like a bunch of used car salesmen?

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Saturday, February 7, 2009

Can Mr. Smith Get to Washington Anymore?

I just finished watching the movie, "Can Mr. Smith Get to Washington Anymore?" (Instant watch on Netflix.) It's an enthralling documentary about one man's struggle from obscurity to becoming a real contender for his congressional district.

It reminded me of my brief introduction to politics, which has left me simultaneously disgusted and hopeful. Bonk the link below for my take.

I was involved in Steven Vasquez's 2008 campaign for the 21st Congressional district in NY. I was not in the core group, but I volunteered for some of the publicity events. We ended up with 30% of the primary vote, which is 20% less than we hoped for, but a good result with the odds stacked against us. I can tell you the feeling in the movie of running against a well-known well-funded opponent is the same as real life. I felt as though if people would just listen to the things that Steven was saying, it was a no-brainer to vote for him. Unfortunately the people don't listen, unless you're a celebrity or a career politician.

In the movie, Jeff Smith faced an uphill battle with the voters. A number of things didn't go his way:
  • People did not support him because they felt he could not win. What self-fulfilling crockery! Yes, right now, the people who can win are the ones corrupt enough to win the high-level endorsements, or rich enough to buy them.
  • People did not support him because he is pro-choice. Again, what a crock! The abortion matter has been out of Congress's hands for decades. If I was running, I would point out that The Constitution doesn't give Congress any authority on that issue, so my personal opinion on the topic is irrelevant.
  • His opponent was the son of a former governor of Missouri, which matters for some reason.
Surprisingly, funding was not a problem in his campaign due to his robust grassroots support.

Spoiler Alert

Stop reading if you're going to watch the movie.

In the end, his opponent squeaked out a narrow victory. Jeff Smith apparently applied the lessons learned, as he now serves as a Missouri State Senator. Maybe one day we'll see him in US House after all.

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Shopping for an online brokerage

I have some stock in my brokerage account at Vanguard. I opened my Vanguard account in order to take advantage of their low cost mutual funds, but the application form lets you check a box to get a brokerage account too, so I checked the box.

Well, after I got some stock in there, I started to think about the costs. $25 for a stock trade, $30 + $1.30 per contract for options. With a $10,000 stock position, that's a half-percent just to get in and out. I need something cheaper if I ever want to buy or sell anything. I have a stock position with 8600 shares, on which I occasionally write covered calls. That's $141.80 for a one-way transaction. Too much. It's time to switch.

I've narrowed down the choices to brokerages that have decent offerings for options trading, and have low commissions. Here the brokerages I'm considering:
Pros and cons time. A big pro of E*Trade was that I already had an account. Don't ask me why I didn't trust them with my large stock positions. They've certainly never given me any reason to be skeptical, but nowadays their prices are not competitive with newer brokerages. So let's keep shopping.

If my goal is to reduce costs, you can't go lower than zero. So Zecco's "zero cost commissions" were a real draw. They've recently changed their minimum balance to $25,000 to get free commissions, which I might be able to pull off, but I'm more interested in options anyway. Zecco's options commissions are competitive, and being able to buy and sell covered call positions with paying commission on the stock part is effective. Their web site is not awesome, and I still have some doubts about their business plan, but their trades are clean, and the price is right. If you want to try it out, I'd appreciate it if you use my referral link.

Trade King gets high marks from the press. I've been around their web site, and it does its job. The prices are very competitive with Zecco (if you've used up your free trades, or can't make the $25K minimum). Zecco is still cheaper, but Trade King will make a fine fallback.

Options House is really interesting. $2.95 stock trades, and $9.99 options trades. A subsidiary of PEAK6 investments, which means they might stick around, even if it takes them time to become profitable. The big draw is that they have no per-contract options commission. You pay $9.99 for 1 contract or 1000. Their website also has a "virtual" account, that you can use to trade in real time with "funny money." There are some bugs with the virutal account calculating my buying power that I trust are not in the real account. I've exercised their support department by making some mistakes in opening my account, and they've sorted it out nicely. If you want to sign up for an account, please use my referral link.

For now, though it means having three accounts, I'm going to keep my Vanguard mutual funds at Vanguard (a no-brainer), my small stock positions at Zecco (although I'll try to get up to the $25K minimum to get free trades), and my large options positions at Options House.

I'll let you know in the coming months how it's going.


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Another blog in the world

Everybody and their dog has a blog. Why not me? When I feel like ranting, I'll rant here, and maybe someone will read it and find it interesting.


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