Kill all the lawyers?

One of the most famous lines from Shakespeare is "THE FIRST THING WE DO, LET'S KILL ALL THE LAWYERS." It is amazing how a line written 500 years ago so powerfully resonates with our modern society. The public's perception of lawyers is quite complex. On the one hand, there is this idea that lawyers are the root of all evil in America, with their crazy lawsuits leading to all sorts of consequences from dumb disclaimers ("hot coffee is hot") to rising insurance and health care costs. On the other hand, lawyers are idealized in pop culture with a myriad of works glorifying their profession. Arguably, lawyers have surpassed doctors for the title of the #1 "power" profession.

When I was a boy, my grandmother urged me to become a doctor, and why not? Doctors had prestige, financial security, ability to set their own hours, Wednesday golf outings, etc. However, thanks in part to lawyers and insurance companies, the medical profession isn't what it once was. HMO's, PPO's, malpractice insurance, high student loans, and the like have made the medical profession less desirable. Certainly there are very few doctors who are on welfare. However, the medical profession just ain't what it used to be.

Lawyers, on the other hand, seem to have it all, if you believe what you see on TV. Meaningful jobs, lots of sports cars, lots of intra-office romance, and the utmost respect of society (except maybe for divorce lawyers). The interesting thing is that the truth doesn't quite match up to perception.

Exhibit A: A few years ago, I was at a wedding where I was talking to an old buddy from school who had gone on to become a successful attorney. From talking to him, it sounded like his whole live was consumed by his job: 80 hour weeks, no time for vacation, no time for a social life, etc. I'm sure he was making a good amount of money doing what he was doing, but unless you absolutely love what you are doing, you can't live like that without some sort of drug addiction.

Exhibit B: Everywhere you turn, you hear about lawyers who have dropped out the profession to go into less "stressful" or more "meaningful" careers. The lawyer who went back to culinary school to become a chef. The lawyer who bought an old Victorian and turned it into a B&B. The lawyer who started a home-based business selling quilts. The examples of this sort of thing are endless. Maybe it is because there are so many lawyers that there are a lot of ex-lawyers, but you rarely hear about doctors doing the same thing. So maybe there is something to my grandmother's advice to become a doctor. Yes, maybe it isn't the same as it was decades ago, but at least I would be happier than the lawyer down the street.

[Editor's Note: I am neither a doctor nor a lawyer, and no doctors nor lawyers were harmed during the writing of this post.]

Investing Made Simple Part IV - Getting Started

When people want to jump into investing, they often are overwhelmed by the amount of different options available to them. This "information overload" can result in "information paralysis". The endless possibilities are enough to render the most intelligent investor numb with inaction. Fear washes over you as you become afraid to take that first step - afraid that the first step will be a misstep. Never fear - your humble host is here to provide you with some advice of things that you MUST do to get started investing.

1. If you are eligible to contribute to a 401(k) plan that offers a company match, contribute at least enough to get the FULL match.

A 401(k) plan is a employer sponsored investment plan. In a nutshell, you can have some percentage of each paycheck deducted and put aside for your retirement. There are rules and restrictions, but the main things to know are:

A. You do not pay tax on the money that is deducted. Taxes are postponed until you withdraw the money.
B. You cannot use this money until you are 59 1/2 years old (although there are some circumstances where you can access this money sooner). The money is intended to be used for one's retirement.

Some companies offer to "match" your contribution as an incentive to get its employees to save for their retirement. For instance, the company that I work for has a 3% match. What that means is that they will match your contribution up to 3% of your salary. So if you have a paycheck of $3000 and you have 3% deducted to go into your 401(k) plan ($90), the company will also contribute $90. If you only contributed 2%,the company would also contribute 2%. If you decided to contribute 4%, the company will contribute 3%, since your contribute goes beyond the maximum that they will contribute.

Basically, you want to be contributing AT LEAST enough so that your company contributes its maximum. So in the case of my company, you want to be contributing at least 3% to your 401(k) plan.

The reason why is simple: this is the one of the only investments where you can IMMEDIATELY get a 100% return on your money. In my example above, if you are contributing $90 and your company is contributing $90, you will immediately double your money. You have invested $90, but $180 shows up in your account! That is a rate of return of 100%.

Not all companies match your contributions dollar for dollar. Some will only match 50%. That's okay. A 50% return is still a great return. Other companies don't match anything. In that case, a 401(k) might still be a good investment for you, but then it isn't the "no brainer" that it would be if your company did have a match.

401(k) plans offer a variety of "funds" in which you can invest your money. How you should invest your 401(k) money probably the subject of another posting, so stay tuned for that! However, I'll give you a little preview....

If your retirement is many years away, you want to invest most of your money in a stock index fund (S&P 500 index fund is a good one to start with if you aren't sure). As you get closer to retirement, you will want to shift money out of stocks and into some sort of a fixed income option.

2. Get a checking account and a savings account with a bank.

If you have any sort of job, chances are that you already have a checking account. A checking account provides a way to have easy access to your money when you need it for your day-to- day bill paying. Checking accounts are not investments, per se, since you usually MAKE money from having a checking account (Yes there are checking accounts that pay interest, but they usually have a very low rate of interest, so they is hardly investments). However, a checking account is a convienent place to park money that you will need for your daily needs.

When you are looking for a checking account, here are some things to consider:

A. Get an account that is federally insured (FDIC or the credit union equivalent). FDIC is a government insurance program which protects your money that is deposited at the bank if the bank goes out of business. If that happens, the government guarantees that you will get your money back, up to $100,000.

B. Get an account that has as low a minimum balance as possible. Many checking accounts have a minimum balance requirement. Unless you keep X dollars in the account at all times, you get charged some fees. Some banks will waive this fee if you have some other relationship with the bank (ex: you have money in some other account, you have a mortgage with the bank, etc). Your goal is to get an account that has as low a minimum as possible, and of course you want to make sure you keep that amount in the account so that you avoid any fees. Fees are BAD and should be avoided at all costs.

C. Get overdraft protection. If you write a check for more money than what you have in your account, you get hit with even more fees. These fees can eat away your hard earned money. To avoid this possibility, you want to get some sort of overdraft protection. This can take the form of a "line of credit" (sort of like a credit card where the bank lets you write the check but then charges you interest until your account is "in the black" again - the interest is sort of a fee, but it is usually cheaper than the overdraft fee), or the form of a transfer from a "linked" savings account that you have with the bank.

Other things that you might look for are ATM locations, online banking capabilities, friendliness of the bank staff, etc. I didn't list those are "musts" since those are personal preferences.

In addition to a checking account, you should also get a savings account where you can park extra money. A savings account is different from a checking account in that you can't write checks to access your money, but you earn a higher rate of interest than you would in a checking account. This account serves two purposes:

A. You can stash your emergency fund in this account. An emergency fund is money for those unplanned, unbudgeted expenses from time to time. Normally, you won't be touching this account except in an emergency (hence the name emergency fund), but if you DO need this money, you want to be able to access it at a moment's notice.

B. You can park extra money here that you will be investing at some point in the near future.

You want the money to earn interest so that at least the money is "working" for you, but you also want the money to be easily accessible for when you need it.

Since your savings account will be at the same bank as your checking account, the bank is already chosen for you. Most banks will have a variety of savings account choices. Usually the difference in accounts boils down to the following characteristics: minimum balance and interest rate. Accounts that have a lower minimun balance usually have the lowest interest rate. Choose the savings account that has the highest interest rate for the amount of money that you will be keeping in the account. You want to avoid going below the minimum balance at all costs.

There are various "online banks" that offer money market funds, which are essentially savings accounts. In many cases, the online banks offer higher interest rates than the interest rates at your local bank. Because they can be linked to any checking account, some people will have a checking account with a local bank and a savings account with one of these online banks. However, I prefer having my checking and savings account with the same, local bank for the following reasons:

A. Having accounts at the same bank allow me to transfer funds between checking and savings accounts, and have the funds available immediately. Transfers between institutions often take a day or two to clear.

B. Banks often use the total of all accounts with the institution to see if you meet the minimum balance requirements.

C. You can get perks when you have a ongoing relationship with one bank. For instance, my bank offers services for "preferred" customers, such a free travellers checks, notary services, discounts on safety deposit boxes, etc.

D. As mentioned above, you can use your savings account for overdraft protection to save you from paying fees or interest.

E. Call me old fashioned, but I like to be able to have someplace where I can talk to someone, face-to-face, when I have a problem.

So in closing, if you want to get started investing, make sure you get your company's full 401(k) match, and make sure that you have a checking account for your day-to-day spending along with a savings account where you can park your emergency money.

The Problem of "Identity Theft"

We have all heard horror stories about people whose credit ratings have been damaged by unscrupulous individuals who obtain credit using a person's Social Security Number. There is a cottage industry around providing services that allow people to monitor their credit report and get a jump on those scumbags who would ruin their good name. The sad part is that there are so many ways to prevent this type of fraud that it is not even funny. The problem is that nobody seems to want to do anything about it, because it is cheaper for the financial industry to just ignore the problem.

First, it seems outdated to rely so heavily on a Social Security Number. For whatever reason, a SSN is the golden ticket that allows you to identify yourself to creditors. However, there doesn't seem to be any check on whether the person providing the SSN is who they say they are. Banks are happy to loan you money as long as you provide a SSN of someone with a good credit rating, even if you are not that person. Now if I were a business person and someone came to me asking for a loan based solely upon them providing me with a nine-digit number, I would be foolish to trust them, wouldn't I? However, banks don't seem to care. If somebody de-frauds them, they just write off the loss, saying that it's part of the cost of doing business. They forget that the reputation of whoever is being impersonated is forever tarnished, because those losses are erroneously attributed to him or her. Tha bank just reports the person to the credit agency irregardless of the fact that the person was being impersonated. That, to me, is akin to somebody spreading nasty, false rumors about a person.

If I were to go around saying that person X is a deadbeat dad - repeating that rumor despite evidence to the contrary - then person X would most likely be very upset (and rightly so). In legal terms, I would be guilty of slander, which is "an untruthful oral statement about a person that harms the person's reputation or standing in the community". This is essentially what banks are doing when they wrongly report to the credit agency that you are a deadbeat. They are making an untrue statement about your character that harms your ability to find credit.

So what should banks do? For one, they should not just accept that nine-digit number as proof of your identity. There are a myriad of ways to further validate one's identity: digital signatures, RSA tokens, fingerprints, retinal scans, etc. The problem is that all of these solutions are expensive, so banks just write off the fraud and leave the consumer holding the bag. However, if banks were forced to endure some type of additional monetary loss for improperly identifying a person, then they might feel moved to change their lending practices. Not only should they be fully on the hook for any monetary losses, but they should bear the cost of making sure that the person's reputation with the credit reporting agencies is restored, AND they should pay a fine every time they wrongly put a black mark on someone's credit. By giving banks an additional incentive to check, double-check, and check again everyone's identity, you will see the crime of identity theft become obsolete.

What a Country!!!

Back in the 80's there was this comedian known as Yaakov Smirnoff (I hope I spelled that right because I am too lazy to look it up!). He played the part of a recent Russian immigrant to the U.S., and his whole act was based upon the culture shock he felt when he compared the New World to his old homeland. He would often exclaim the phrase "What a Country!" in reference to his excitement over things in the U.S. which we took for granted, like supermarkets with stocked shelves for instance.

While Mr. Smirnoff's observations were meant to be humorous, he did illustrate the serious point about how lucky we all are to be living in a free and prosperous society. Of course, that not only applied to the U.S., but to many other "first world" countries as well. Since I am a biased resident of the U.S., I will use that country as an example, but I do not want to exclude other fine nations which are equally free.

Many times you hear about people who bemoan their "bad luck". They complain about how fate has conspired against them to somehow limit their opportunities. They feel sorry for themselves that they haven't achieved the success that they believe that they deserve. To them, I say this: stop looking for pity, grow up, and make some different decisions in your life.

I don't care if you weren't born into a rich family. I don't care if you are a single parent. I don't care if you have credit card debt. I don't care if you have some other perceived disadvantage that you feel holds you back. It is all in your mind. You are living in the United States - the so-called Land of Opportunity. You can make your life better. You can be a success. All you have to do is to want to change. The old song about New York says that if you can make it there then you can make it anywhere. If the song was about the U.S, the words would be slightly different:

"If you can't make it here, you can't make it anywhere!"

So you weren't born into a rich family. So what? I wasn't born into a rich family, at least from a monetary standpoint. However, I worked hard in school and did well enough to get accepted to Princeton University. I went to a public school, and not even the best public school. It was a middle-of-the-road public school. There were other classmates of mine who went to even worse public schools than me who had a harder road to travel. However, they made it to Princeton, too. I had one classmate who went to a school that I would consider to be in a "tough neighborhood". His family were immigrants from another land who barely spoke English. However, this was a person who worked very hard to get the most out of his public education, and he ended up getting a full scholarship at the world's elite university. Today he is an doctor with a very successful and rich life, in terms of his happiness. Here was a person who had the deck stacked against him, but he didn't feel sorry for himself. Instead, he decided to work hard, and he was rewarded. Was it luck? Not a chance! It was determination. What a country!

[And if you think that he was just lucky to be smart enough to get accepted to Princeton, you may be right about that. However, there are plenty of successful people from poor backgrounds who went to other colleges, too.]

So you are a single mother? Yes, you made a bad decision by letting yourself get pregnant. I am not going to sugar-coat that. However, that doesn't mean that your life is over. First, you have a wonderful child whom I am sure you would not trade for anything. Second, we live in a generous country. There are plenty of opportunities to get help to better your life. There are programs in place to help with child care so you can get yourself an education and learn a trade. My mother used to teach electronics to "disadvantaged" adults. This program paid for the classes, provided child care if necessary, and provided job placement once the program was completed. Some of her students were there only because otherwise they would lose their unemployment or welfare benefits. They goofed off, cut classes, and ended up regretting it. Then there were others who took this opportunity and ran with it. They soaked up the knowledge that was being provided to them, realizing that this could be their ticket to success. Those that embrace the program are now off the welfare rolls and making a better life for themselves and their children. There are countless programs like this, both public-funded and privately-funded, that you can take advantage of if you have the desire. What a country!!

If you have credit card debt, then the solution is well within your means. Either you have to stop spending or start earning more. Unfortunately, we live in a cosumer society where we are judged by our possessions. This causes some people to spend more than they can afford to keep up with their friends. However, if you get caught up in this trap, you have nobody to blame but yourself. On the other hand, the solution is at hand. Spend less!! Do you really need that iPod or those $150 sneakers? Probably not. However, if you really want those things, then go back to school and earn a degree or learn a trade (see above). Can't afford school and don't qualify for a special program? Then you will just have to work and go to school at the same time. Many companies offer programs to employees to pay for a degree. Will it be hard to work and study? You bet! Is it possible? You bet! Thousands of people do it every year. Another plus is that you won't have time for all that partying and spending, so you won't be running up those big credit card bills. Take advantage of community colleges, which are the best deal around. Your tax dollars are subsidizing them, so use them! What a country!!

For generations, people have come to this country with nothing more than the clothes on their backs and the change in their pockets, and they have found a way to succeed. My family alone has many such stories like that. If they can build a comfortable life for themselves with nothing at all, then why can't everyone? After all, living here already we have a built in advantage. The only thing that we are missing is the drive and determination. Walking out my door, I see all sorts of "immigrant" small businesses run by people who aren't afraid to work hard at something. Sure it isn't glamorous running a convienence store, a cleaners, a gas station, a cleaning service. However, sometimes you have to use a little elbow grease to get ahead.

If you are lazy and sitting on your backside feeling sorry for yourself, think about the people who live in Darfur, or in Gaza, or in many other places in the world where the opportunities are limited. If you told them that you are feeling sorry for yourself, their response would be, "Why are you feeling sorry for yourself. You live in a great land of hope and promise. I would trade places with you in a heartbeat".

So PLEASE remember that you are living in a great country where you can achieve whatever you want. All that is required is hard work and dedication.

Are Seat Belt Laws a Good Idea?

I am sure you have all heard about how the Governor of my home state, the great state of New Jersey, was seriously injured in a car accident because he failed to buckle up. As expected, the incident has reinforced the support for the mandatory seatbelt laws that we have in NJ and in other states as well. Personally, I never go anywhere in the car without wearing my seatbelt, and I always insist that my passengers wear them as well. Quite frankly, it seems idiotic to NOT wear a seatbelt given the fact that there is no downside to wearing one. Anybody who doesn't wear a seatbelt ought to have their brain checked for extreme stupidity. Despite this, I firmly believe that most of these mandatory seatbelt laws should be eliminated.

The only seatbelt law that I am in favor of is one that mandates that children under the age of 18 must wear a seatbelt (or sit in a car seat or booster seat, as appropriate). As minors, parents have an extra obligation to protect them, since they are (in theory) unable to make choices for themselves. However, if an adult feels the need to not wear a seatbelt, who am I to stop them? Not wearing a seatbelt does not impact society as a whole. If somebody else isn't wearing a seatbelt, does it make me more likely to get into an accident? Well, maybe if I am dodging the flying body or something, but that is a danger that I don't lose any sleep over.

Part of living in a supposedly "free" society is that we are supposed to lean towards giving people the freedom to be an idiot, especially when a person's idiocy does not directly impact anyone else's freedom. We accept the fact that people might be idiots in exchange for the ability to live our lives the way that we please. Sure it can be messy when people don't make what society views as being the right choice, but that's the price that you pay for living here.

One might argue that not wearing a seatbelt DOES impact society through added medical costs, cost to support the orphans who are left behind, etc. However, I find that argument to be somewhat disturbing.

The first way I can approach that argument is to say that, if we are going to go down the path of accounting for the "costs" to society, then it is only fair to offset the costs with the "benefits" to society as well. Yes, it sounds morbid to think that the death of somebody has a "benefit" to society, but if you really want to be a real accountant, you have to be dispassionate about such things.

So what are the benefits, you might ask? Well, for one thing, now there is one less person that our society has to support through things like public assistance, Social Security, and the like. That is one less person who is wearing down our roads, and emitting greenhouse gases into the air. That is one less person we have to produce food for. And so on and so forth. I agree I am being insensitive here, but it only seems fair to point out the benefits if some politician is going to point out the costs.

The second way to approach the argument that there is a societal cost is to wonder if seat belt laws are going to send us down a "slippery slope" towards a more socialist society. On the one extreme you have anarchy, where the rights of the individual trump the rights of society. On the other extreme you have socialism, where the rights of society trump the rights of the individual. Our society in America is supposed to be somewhere in the middle, with some leanings away from the socialist side. In theory, we have a lot of latitude over how we live our lives, even if that means we live them in a way that might not be "optimal" from a societal standpoint. For instance, society might have a shortage of pharmacists, but the government isn't going to step in and tell John Doe on the street that he has to become a pharmacist instead of a lawyer, just because the country needs more pharmacists and fewer lawyers.

Laws mandating the use of seat belts tend to push our society towards the socialist end of the spectrum, where our individual rights are curtailed in favor of what is "perceived" as being best for society as a whole. Taken to the next level, I can see where our government might pass other behavioral laws using this same justification. Maybe they'll pass a law to tell us what we can eat or where we can go. Now we are starting to move away from being a "free" society and moving towards a centrally controlled society where the government dictates more and more of what we can and can't do.

You might say that I am being an alarmist. After all, seatbelt laws seem so harmless. However, it is not the law itself that I am against; it is the principle. The sad fact is that our legal system is based upon the concept of precedences - meaning that the past is used to justify the future. It is not far fetched for some politician to point to the seatbelt law as a justification for passing another law that restricts our freedoms in a slightly more intrusive way. And then that law is used to pass an even more intrusive law. And so it goes...

Subprime Mortgages, Redux

In my last post, I talked about how stupid this whole concept of a subprime mortgage bailout is. Today I read an article talking about how lenders are now less likely to loan money to people who are questionable credit risks. Of course, that is a good thing. The interesting thing to me was near the end of the article, where they describe the situation of a young woman who qualified for $600,000 worth of mortgage loans on an income of only $20,000 per year!

Why would anyone in their right mind loan someone making near the poverty line that much money?! And why would anyone in their right mind take on mortgage payments of $5000 a month with an income that low?!

Now I understand that there was some rental income from tenants that probably helped out, but come on. One of her tenants was her mother who was on disability, and unless her home was a mansion, I don't see how she could rent it out for enough to make up the difference. I feel no pity for the borrower, and I especially feel no sympathy for the lender who will probably end up taking a big loss on the transaction.

As an aside, I always found it somewhat funny that lenders will charge bad credit risks HIGHER rates of interest on loans. These people already have a questionable ability to make payments, so it would seem silly to make them pay more than the average person, thus decreasing their chances of meeting their obligations even more. Now I understand that the reason has to do with the fact that lenders need to be compensated for taking on a credit risk, but it still seems a little funny to me.

The Idiocy of a Subprime Mortgage Bailout

As you know based upon some of my past posts, I have a disdain for politics in general. The whole reaction to the subprime mortgage situation provides me with another example why I HATE politicians so much.

For those of you who aren't familiar with what the subprime situation is, I will endevor to summarize what it is. Basically, the number of mortgage loan defaults (i.e. "I can't pay my mortgage bill") is increasing, especially in the area of "subprime" loans. A subprime loan is a mortgage loan given to a person who is a high credit risk. This person might have some questionable items on his or her credit report, or they might be asking for a loan that might be too large for their given income. Some lenders will steer clear of such people; however, there is a group of lenders who are willing to look past these blemishes and still give a person a mortgage loan. Usually, they will lend the money by charging a higher interest rate, or they might have an adjustable rate which starts out low but then adjusts based upon the market conditions.

Now these subprime lenders are finding that the number of people who are defaulting on these loans are on the rise, and so our politicians are sounding the alarm bells. There is one proposal in particular that is being put forth by Senator Charles Schumer of New York (a democrat - what a shock!) which would provide government assistance to people who are in danger of defauling on their mortgage loans. There are still some details to work out, but it seems as if this proposal could cost taxpayers anywhere from $120 million to $17.6 billion. That is a lot of money by anyone's accounting.

The question in my mind is this: should the good taxpayers of this country be spending money helping out people who are defaulting on their loans? I believe that the answer is a firm NO!

First of all, the people who took out these loans should be held accountable for their decisions. It's not like anybody forced them to take out these loans. Having taken out a mortgage myself, I know that there is tons of documents, disclosures, and so forth that you have to read and sign in order to complete the transaction. If somebody did not read and understand these disclosures, then shame on them. If somebody took out a loan that was beyond their means, shame on them again. Why should they get a gift from the government to help them avoid foreclosure when responsible citizens like me do the right thing and take out a loan that we are able to pay comfortably every month? I know it sounds harsh, but if the government provides these people with subsidies for being irresponsible, then all it does is encourage people to be reckless with their money. After all, if they screw up, they will know that Big Brother will be there to bail them out.

You might say that our goverment is just being "paternalistic", meaning that the government needs to protect its citizens because the government somehow "knows better". I absolutely hate that assertion. The word "paternalistic" is derived from the Latin work for "father". Now if you are a parent, are you doing your child a favor by constantly bailing your child out of trouble, without letting him or her face the consequences of his actions? Of course not! A good parent is often called upon to dispense "tough love", because this is often the best way for a child to learn some important life lesson.

The problem with the "paternalistic government" philosophy is that it is bad parenting, plain and simple. Why should we tolerate that philosophy in our government when we wouldn't tolerate it in our own lives.

Along those same lines, subprime lenders should be held accountable for their actions as well. Lenders often loan money to credit risks in an attempt to make money for themselves. They can charge higher fees and interest rates to such borrowers, and so there is an obvious risk-reward tradeoff. They are hoping that enough borrowers will pay back these loans to offset the ones that default. In most cases, lenders make money in aggregate. However, there are times when lenders get too aggressive in their underwriting, and they end up taking on too many bad credit risks. If the government bails them out, then the lenders aren't learning any positive lessons either. Lenders will keep on making bad loans because they know that the government is going to step in and make sure that these loans won't default. If lenders were forced to take a loss because they made too many bad loans, then they might be so short-sighted and greedy with their lending practices.

Despite all this, I have no doubt that our government will probably pass some sort of bailout bill, because it makes for good press on the evening news. That is just another reason why I hate politics so much.

Two Secrets to Success in the Service Industry

I recently came up with Two Secrets to Success (tm) for business owners in the home-service industry (electricians, plumbers, house cleaners, contractors, etc). A competent service provider who implements these two techniques will be GUARANTEED to make LOTS AND LOTS of money. The amazing thing about these secrets is that, even though almost nobody knows about them, they are so simple to implement. I personally certify that any service provider who uses these techniques will immediately have more business than they know what to do with!!

Since I am not in the home-service industry, however, I cannot take advantage of these secrets. As such, I am offering to divulge these secrets to you, for free, right here, in my blog.

Secret #1: When you say that you are going to show up at a particular time, show up at that time!

Secret #2: If, for some reason, you cannot show up at your scheduled time, let your client know ASAP.

If you follow these rules, you will be able to set yourself apart from the competition (because very few people seem to know about these rules it seems), you will get repeat business and referrals (which is the lifeblood of any service business), and, most importantly, you will make LOTS AND LOTS OF MONEY!!!!

If you do decide to use my secret, please feel free to send me a modest donation as a token of appreciation....

Don Imus Isn't the Only Bad Guy Here

By now, everybody knows about this whole Don Imus flap. He insults the Rutgers Women's Basketball team with some racist and sexist remarks. There is a firestorm of outcry. He tries to recant with a somewhat hollow apology, and then he is fired. Obviously, Mr. Imus was way out of line with his comments, and he probably deserves all of the criticism that he gets. However, I am even more upset with this supposed moral indignation shown by many of his critics.

Let me start out by saying that, for a time, I was a regular listener to the _Imus in the Morning_ show. During the mid to late 90's, his show was part of my wakeup and morning drive routine. At times, I found it to me an interesting show. For those who don't know, the Imus show is a mixture of political and media interviews, combined with bathroom humor which probably earned him the "shock jock" moniker. Very powerful and influential people from politics and the media were frequent guests on his show, and he had an interesting way of disarming his guests with his questions in such a way that they would lower their guard and maybe divulge facts that they wouldn't normally mention on your typical interview show.

That was, of course, the highlight of the show.

Mixed in to the high-brow stuff was a lot of content which I found to be questionable and borderline offensive. He would often launch into tirades laced with personal attacks against people who disagreed with him or slighted him in some way. I don't remember any specific examples of him being racist or sexist, but I do recall times when I felt extremely uncomfortable with his words. While these attacks might have been part of some attempt to bring humor to the show, I found them to be quite un-funny to say the least. Eventually, I grew tired of this aspect of the show, and I decided to tune elsewhere in the morning.

My point here is that Imus has always been "on the edge". While you can argue over whether or not he had stepped over the line in the past, he is certainly comes across as being an insensitive adolescent on the radio. Nevertheless, many powerful people in the media and politics still went on his show, and CBS radio and MSNBC continued to give him a forum for his words.

It seems very hollow for the very same people who supported and enabled him all of these years to all of a sudden distance themselves from Mr. Imus and the content of his show. That includes both his employers, and the guest who, by appearing on the show, gave their tacit approval to his insulting ways. They act so shocked and so moral now, but it's not like his show hasn't always been like this since back when I listened to the show. His show has been filled with insensitive remarks and tirades for a long time. It just so happened that this one caused a public outcry of epic proportions. Mr. Imus just happened to insult the wrong person and the wrong time, but it is not like he hasn't been insulting for his entire career.

I am especially disappointed at CBS radio who thought it necessary to fire him ONLY AFTER all of the bad publicity. He probably should have been fired years ago, and he most definitely should have been fired the moment those words left his lips. However, by firing him almost a week later, it is just an act of cowardice, in my opinion.

I hope that Mr Imus rides off into the sunset to retire on his little ranch in the desert. However, I have no doubt that somebody out there will give him a radio show (maybe on sattelite?), so I am sure we haven't heard the last of him.

Health Care and Politics

Now that the Presidential Election cycle is starting up again in earnest, we will no doubt be bombarded with schemes on how we can "improve" our ailing health care system. Candidates will come up with all sorts of amazing ideas of how we can both provide coverage for everyone while at the same time reducing the cost of health care in this country:

I have a dream. I have a dream of a nation where health care is a right... just like our rights to life, liberty, and the pursuit of happiness. I have a dream of a nation where the everyone will have access to all of the advanced medical procedures that this great country has to offer, without some insurance company telling them what they can or cannot have covered. I have a dream of doing this without raising the cost of doing business in this nation, so that our companies and employers aren't forced to move labor offshore due to rising health insurance premiums.

Of course, that is the type of snake oil which sounds good on the campaign trail but has about a snowball's chance in hell of happening. So you are going to provide better health care to more people while spending less money? Sounds like you are living in a dream world.

There is a metaphor in engineering known as the "tradeoff triangle". It is a triangle that has three sides labelled "schedule", "cost", and "quality". You have the ability to control two of the three sides. However, once you choose two of the sides, the third side is determined for you by the geometry of the problem. For instance, you can choose a schedule (ex: "I want it done by the end of next month") and a cost (ex: "I want it to cost less than $1 million"). However, if you do that, then your quality will suffer. On the other hand, if you want to choose a schedule and a quality level (ex: "Must work perfectly the first time"), then it will cost you a lot to meet such a schedule and level of quality. This is a classic trade-off when designing a system. Normally, a smart project manager will ask his users: "You can have schedule, cost, or quality. Pick two."

Health care has a similar tradeoff triangle: "coverage", "cost", and "quality". You can choose two of these properties, but once you do, the third is determined for you. If you want to give everybody the highest possible level of care, then you can expect that the bill for this will be very high. On the other hand, if you want to give everybody coverage for a reasonable price, then you might have to lower the quality by rationing health care. Unless there is some sort of miracle breakthrough, the fact of the matter is that you cannot give everyone high quality care at a low price. Something's gotta give!

Unfortunately, it is very tempting for politicians to promise just that when they are on the campaign trail. It is an appealing message that is certain to get votes. However, the discerning voter (which are very few and far between it seems unfortunately) will see through the smoke and mirrors to see this empty promise for what it is.

Battlestar Galactica Finale.... WOW!

I am not a big TV watcher, but there are a few shows that I have programmed into my Tivo. One of them is the Sci-Fi Channel version of Battlestar Galactica. This past Sunday was the season finale of Season 3, and let me just say that my mind nearly exploded by the time the end credits rolled across the screen!

First of all, let me just say that BSG is probably one of the BEST shows on TV, regardless of genre. Yes, it is on the Sci-Fi channel, yes it is set on a spaceship. Those two facts are enough for the majority of the TV-watching populous to ignore the show, including the Emmy voters. However, if you look past your prejudices, you will find a show that is brimming with great acting, innovative directing, and scripts which are thought-provoking in so many ways. Most impressively, unlike Star Trek, it is gritty and realistic and it doesn't have plot resolutions that hinge upon either time travel or pseudo-particle physics ("let's reconfigure the deflector dish to emit a tachiyon pulse at the resonant frequency of the big bang"). Most of the episodes deal with the struggles of individuals and societies dealing with the moral problems caused by a near-genocide of the human race. It is a human story that happens to be taking place in space. In fact, that sci-fi element of the show allows the writers to deal with contemporary issues without the baggage that would otherwise accompany a more "realistic" setting.

Now that I am done preaching to the unconverted, the rest of this post will talk about the aforementioned episode. If you haven't seen it yet, I would suggest that you skip the rest...

First, I will have to say that Lee's testimony at Baltar's trial was the high point of the episode. The past few episode's I really thought Lee got shafted by everyone. Here he is helping to make sure that the most hated man in the fleet gets a fail trial and a vigorous defense, which is certainly a noble, if misguided, gesture on his part. Nevertheless, his father, whom I used to admire, called into question his integrity, and his wife actually leaves him (and it is amazing that she chose that moment to leave him after all of his other transgressions). And don't forget about Roslin who used to adore young Lee like a son (and he may end up as her stepson when all is said and done), but who now probably will never talk to him again. Lee had been crapped on over and over again leading up to that moment, and finally he got his opportunity to stick it to everyone in very impressive fashion. After his speech, I would have voted "not guilty" too, just like his dad eventually did. I hope Papa Adama swallows his pride and apologizes to his son for doubting his honor and integrity.

Second, the whole thing with the music was just mindblowing. When they started quoting lyrics, I turned to my wife and said, "they are totally ripping off _All Along the Watchtower", which of course they were! I am still in shock that crazy Saul, Anders, and Chief are supposed to be three of the Final Five Cylons. I've had my doubts about Tori all along, so I wasn't THAT surprised about her. Personally, I am a little let down that the Final Five are just additional humanoid Cylons. I was hoping that there would be a more spiritual explanation for the Final Five. I thought they were going to be shared deities between the Cylons and the humans, or something like that. I didn't think that they would be actual Cylons. I was hoping that they would be misinterpreting hearing the song, and it didn't really mean that they were Cylons. However, I came across an interview with Ronald Moore which states that they are, in fact, Cylons. That, of course, means that Chief and Cally's kid is a hybrid, too, I guess. I am holding out hope that there is more to this reveal than what meets the eye, but we'll see. I have my own pet theories on the Final Five, but I will save those for another day.

Finally, we have the return of Kara Thrace, a.k.a. Starbuck. A few episode's back she appeared to meet with an untimely demise, much to the chagrin of her legion of loyal watcher-fans. Now, she returns suddenly to tell us that everything will be okay, she has been to Earth, and she will take everyone there. Obviously, this is quite a cliffhanger. What happened to Kara when she supposedly died? How did she end up on Earth? What the frak is going on here?! My own pet theory is that she is some sort of mind projection that Lee is seeing, not unlike the way that Baltar sees visions of Six. I would hate to think that the writers would pull some supernatural stuff to bring her back from the dead, or send her through some wormhole that convienently sent her to Earth. That seems too pedestrian for the writers of this intelligent show, so I hope they come up with something a little more creative than that.

Anyway, there is enough content in that last episode to keep we fans of BSG speculating for months to come. Certainly that is all that we will have to keep us busy since the next season doesn't start until 2008!

Promotion From Within - Pros and Cons

The company that I currently working for has a strong tradition of "promoting from within". What that means is that most (is not all) of the management and leadership positions are filled by internal candidates. The people who now hold leadership positions in the middle and upper ranks of the company often have 15, 20, and even 30 years of tenure with the company. When the company publishes bios of its leaders, it goes to great lengths to point out how each of these individuals started at the bottom as young pups and eventually worked their way up into the roles that they have today. For most of these folks, this company was their one and only employer during their working life.

I am something of an oddity within the ranks. Unlike most of my peers, I have spent a siginificant amount of time working for a variety of other companies before landing here (four to be exact). Even though I have five years of service with the company, I am still considered the "new guy" because I probably have the least amount of tenure of somebody at my level of experience. Recently, I was pondering whether my employers emphasis on seniority and longevity when it comes to advancement is a good thing. Selfishly, being a relative outsider, this policy hurts me in a way, but I am trying to separate my own situation from what it good for the company.

Obviously, perferring people with long tenure has its advantages. There is a certain continuity that comes from having people with a lot of years of service in leadership positions. By the time they get into those roles, they have a good understanding of the "nuts and bolts" of the company and how things work. This can only be an advantage when it comes to decision making.

In addition, people who have been around a long time have been acclimated to the "culture" of the company. While this concept of company "culture" might seem quaint, it does have a practical benefit. It does give people a sense of community - of being a part of something great than oneself. People with a long tenure develop an emotional attachment to the company. They "care" about the what happens to the company moreso than an outsider, and this feeling of attachment is only enhanced by the company's culture. Obviously, there is also attachment from the fact that most employees also own sizable chunks of company stock, so money is a big motivating factor.

However, the main downside of this emphasis on tenure is the danger that its leaders suffer from a "group-think" mentality. Because many of the company's managers "grew up" in the company, they have all been indoctrinated in the same point of view and the same way of doing business. New ideas aren't introduced into the intellectual ecosphere, and the ones that do get introduced might have a hard time of gaining traction. This can lead to the same old ideas being trotted out when their time has come and gone. After all, if you have only experience things in a certain way, then you will always tend to gravitate towards those same tried and true methods that you are familiar with.

The other issue with valuing tenure is that it tends to harm bright, ambitious people who might be otherwise qualified for leadership positions but who haven't built up enough equity in the company. In a true meritocracy, you would place the best person from the job in each position, regardless of their years of service. If you have some young go-getter who has management potential, why hold them back just because they don't have seniority. There should be a way to fast-track people like that without making them wait to pay their dues. Otherwise, that high-flier will end up leaving the company for a better position rather than wait for their turn.

At the risk of sounding vain, this is the situation that I feel like I am in. I see people above me who are in their positions because they have been around for a long time. Don't get me wrong. Many of them are good people. However, there are a few who have taken advantage of their longevity, to put it mildly.

How does a company balance the continuity that comes from valuing tenure without becoming an insular organization? Obviously, tenure should be taken into account because, all other things being equal, a person with seniority is preferred over someone who isn't. However, that should stop the company from also advancing people who might have less company experience, or even bringing in people from the outside in certain situations in order to benefit from cross-pollination. While I am not advocating totally de-valuing tenure with the company, I think there needs to be a healthier balance here to ensure that, for every position, you have the best person for the job doing that job.

Investing Made Simple - Part III: Inflation

It's been almost two months since the last installment in my "Investing Made Simple" series. In order to end the suspense which must be permeating cyberspace by now, I will unveil my third attempt to educate the masses in the art of investing. Today's article discusses the diabolical concept known as Inflation.

Simply put, inflation is the general increase in the cost of goods over time. It is measured by comparing the price of things at two points in time. The annual inflation rate is the percentage rise in the cost of goods over a one year period. For instance, let's say at beginning of the year a particular commodity cost $100. However, by the end of the year, that same item now costs $105. In this case, we can say that the annual inflation rate for that particular good is 5%, since it rose by that percentage over a one year period.

Obviously, different items will rise in price at different rates over a one year period. When economists calculate the annual inflation rate for the entire economy, they estimate it by examining the combined prices of a "market basket" of items. A "market basket" is a set of items that they feel that the average household will buy and consume over the course of a year. This includes food, clothing, gas, transportation, and so forth. Obviously, this is an approximation, but it does provide a useful view into how much prices are increasing.

The impact of inflation is that a dollar tomorrow is worth less than a dollar today.

This is a very important concept to understand when it comes to managing your money. What is means is that, over time, the value of the dollars in your wallet are eroding. Yes, a dollar is a dollar is a dollar, no matter how much time goes on. However, that dollar buys less and less every year. Consider that when I was a youngster, the price of a movie ticket was something like $5. Today, that same movie ticket is almost double that (moreso at some theathers!). When my father was a boy, that same movie was something like 25 cents (at least if you believe the stories that he tells!). It's not that dollars suddenly turn into quarters. It's that the world around them gets more and more expensive with each passing moment.

One of the goals of investment is to put those dollars to "work", in a manner of speaking, so that in the future they maintain their purchasing power. If things are getting more expensive at a rate of 3% per year, then unless your dollars are earning at least 3% interest, you are losing purchasing power. After a year, $100 worth of goods now costs $103, so if you have $100 today, then you will want to have $103 a year from now in order to make that same purchase. If you don't, then your $100 will be buying less than they were last year.

If 3% doesn't sound like a lot, then imagine what that 3% per year will be after 20 years. In the last installment of this series, I talked about the power of compound interest. Well compound interest can work against you when it comes to inflation. After a year, your $100 worth of goods now cost $103. After 10 years, it costs $134. After 20 years, it costs $181. If today you had $100 and you just stuck that money in a cookie jar, you'd still have $100, but because things cost more, you have lost money. On the other hand, if you invested that money at a modest 3% annual interest rate, you would have $181 so you can still buy the same market basket of goods.

In summary, inflation has the effect of eroding the value of your money. A dollar today is worth more than a dollar tomorrow. Therefore, unless your extra dollars are earning interest, you will find that the dollar sitting in your wallet will end up buying less than they did in the past.

The Iraq Paradox

It isn't a stretch to say that Iraq is the biggest foreign policy issue facing the United States today. In fact, it wouldn't be outrageous to say that Iraq is one of the biggest domestic policy issues facing the U.S. today. The question facing the new Congress is what to do about Iraq. Do we "cut and run"? Do we set our exit criteria? Do we prepare to stay there for the long haul? Or do we just make Iraq the 51st state and be done with it?

In my opinion, Iraq was a huge mistake that will tarnish the Bush legacy for generations to come. Regardless of whether you are a Democrat or a Republican, you have to admit that the Bush administration's actions leading up to the war were highly questionable, bordering on impeachable. Whether or not they manipulated or fabricated that intelligence data is up for debate, but AT BEST they were incompetent in the way they interpreted this data. To compound their mistake, they have changed their tune to say that the justification for war was to topple a dictator and bring democracy to the region. That, of course, is ridiculous given the fact that there are so many other dictators to whom we have turned a blind eye. It is clearly a lame attempt to hide the fact that their original justification didn't pan out.

After reading the above paragraph, you probably think I am some sort of bleeding heart liberal or something. However, I consider myself to be a libertarian who was once a registered Republican but who is now unaffiliated with any party. What I really am is a person who calls them like I see them, regardless of the party involved. If the situation had been reverse and it had been the Clinton administration who began this war, you can be darn certain that Republicans would be standing on every street corner screaming about how morally corrupt the Democrats are for dragging us into this conflict based upon a questionable justification. If you think otherwise then you are a part shill or just plain ignorant.

As an aside, the biggest problem I have with politics today is that politicians, for the most part, seem more concerned with positioning themselves and their parties as the "good guys" and the other party as the "bad guys". If one party said "black", the other would immediately come out with a stern rebuke of "white". If the party came out the next week with a press release of "white", the other would change their tune and sing the praises of "black". Ocassionally, one party will come out with some diatribe about how politicians have to put aside the rhetoric and come together for the good of the country. Usually, though, that message is spoken by the minority party who desperately wants to become relevant again. A few years down the road when they are the majority again, those high-minded ideals of inclusion and such are thrown out the window. The whole thing is quite sickening.

Anyway, back to the main point of this posting, which is Iraq. As much as I detest the war and how we got involved in it, I am faced with a problem. On the one hand, this is a war that we shouldn't have gotten ourselves into in the first place. On the other hand, now that we are at war, "cutting and running" seems like it would do more harm than good at this point. That is what I call the "Iraq Paradox" - we shouldn't be there in the first place but now that we are there, we have to stay.

If the U.S. were to leave Iraq, there is no telling what type of chaos would fill the void that we would be leaving behind. Without our troops policing the country and propping up the government there, it is possible that factional fighting would break out between the Shiites and Sunnis. Afters years of oppression under the Sunni minority, it isn't beyond the realm of posibility that the Shiites will take the opportunity for some payback. It is also possible that Iran would step in and install a fundamentalist regime sympathetic to them, or even invade Iraq outright. It is possible that Al-Queda would take advantage of the chaos and set up a base of operations there. The bottom line is that the situation would be unstable and the outcome of that instability would likely leave the region worse off than when the U.S. first invaded. For all of Saddam's faults (and they were many), he was "the devil we knew" and he was pretty much contained within his own borders. Now that he has been toppled, "the devil we don't know" may end up being worse and we may not be able to contain that devil.

So what is the solution then? In the near term, I think we are obligated to keep a military presence there until some sembalance of law and order can be established that has at least a decent chance of filling the power vacuum. How long will that be? Who knows? However, "cutting and running" right now doesn't seem like it would do anyone any good.

The Importance of Conceptual Integrity

Recently, I had the opportunity to re-read one of my favorite books on software engineering and design, The Mythical Man-Month. There are so many interesting nuggets of wisdom in that book, but the one that resonated with me this time around with the idea of "Conceptual Integrity". This is the idea that successful software projects are the result of the vision of one person, one mind. In that way, the design of the software reflects a consistency with all of the features fitting together a logical fashion.

The opposite of a design with "Conceptual Integrity" is a piece of software that is designed "by committee". In this situation, you have competing visions battling to insert features into the design. When this happens, it is inevitable that compromise and miscommunicaton will take place. It is difficult for all the members of the committee to agree on the same vision, so everyone will have their own ideas as to what the design should look like. What you end up with is a piece of bloatware that is confusing to use and often full of bugs. A lot of mass market software suffers from this malady. I'm sure we can all think of pieces of software that are burdened with tons of little features that are confusing to use because they don't seem to fit together.

I see this happen all the time at my Fortune 500 company. Often you have different groups going off and designing programs and systems without consideration with how they fit into the overall strategy of the company. One example of this is something as simple as the design of a logging system. Every group as its own vision as to what should be logged, where it should be logged, and how it should be logged. Therefore, everyone ends up building their own logging component that reflects that vision. Obviously this is a problem because now you have applications with log files in different places, in different formats, and with different user interfaces. Aside from the duplication of labor issue, it becomes hard to support systems that have applications with different logging "visions".

The solution was to try to build a common logging component. Of course, the common component reflected a totally different vision that was often incompatible with everyone else's vision. As a result, nobody wanted to use it!

The underlying problem is that there is nobody who is the overall technical architect with the authority to set the vision for the entire company. That person would have been able to say, "this is what the logging component vision should be, and my vision is that everybody should use it." Thus, the systems at my company would have some semblance of Conceptual Integrity.

Obviously the role of that one overall architect becomes very crucial, and you don't want to give that power to just anybody. That is why it is important for companies to identify promising software designers, cultivate them, and keep them happy. Their performance can make of break a company's software product so it is an investment that is worthwhile. The alternative is to continue to design by committee and keep designing software that makes no sense!

In Defense of Programmers Everywhere

Recently, someone I work with sent me a link to a news article entitled _Programmers to Blame for Hard-To-Use Software_. The article has several quotes David Platt, who is author of a book _Why Software Sucks... and What You Can Do About It_. His basic premise is that programmers think "differently" than the rest of the population, and the faults in modern consumer software are caused by these differences. Reading the article, my knee-jerk reaction was to think that this guy was an idiot. After all, I am a programmer and he is pointing the finger of blame squarely in my direction. However, after some consideration, he does raise a few good points; however, I still think he is an idiot.

My main objection is that he seems to imply that programmers are solely responsible for the content of modern consumer software. That, of course, is a total farce. As someone who has worked in the software industry, I can tell you that a software package is the result of the collaboration of many different groups of people: user reps (who try and figure out what the public will pay for and who sign off on the final product to make sure it meets the needs of the public), business analysts (who translate the marketing "wants" into a list of requirements for consumption by the techies), programmers (who turn the requirements given to them into an actual piece of software), testers (who verify that the software doesn't have any "bugs"), and managers (who have oversight over the product and makes sure that everyone does their job).

Gone are the days when a lone programmer could write a major piece of software and exert total creative control over the end result. Today's modern programmer only holds so much sway over the final result. This is actually a good thing in the sense that programmers DO have a different aesthetic than the average person. That is why you have user reps who are supposed to be in tune with users, and that is why you have business analysts who can translate "user-speak" into "techno-speak". If anything, those are the ones whom you should be blaming, since it is their job to be in touch with the user.

Some of the other specific points he makes are utterly crazy. He complains about the "do you really want to delete?" message box as being a bad feature. He makes the analogy that your car doesn't ask you whether or not you really want to start your engine when you turn the key. That is an ignorant analogy. Deleting a file is a destructive step that can be irreversible (or at least require some work to recover). It makes sense for the computer to make an operation like this require multiple clicks. Starting a car, on the other hand, is not something that will destroy or harm the car (at least I would hope not). On the other hand, if turning your ignition key caused your tires to deflate, I would hope that there would be some confirmation before this destructive action is taken.

He also makes the assertion that programmers prefer control as indicated by the fact that they tend to prefer manual transmissions. I certainly have no performed a statistical study on this subject, but my own observation among my co-workers suggests that programmers are no more likely to drive sticks than anyone else. The only co-worker that I know who drives a stick is not a programmer but one of the aforementioned "business analysts", so I am not sure what that means.

He also blames extraneous features like "moveable toolbars" for crashes and security breaches. While it may be true that feature-creep in general is bad because it adds complication, I think he is being somewhat flippant to suggest that toolbars cause crashes and breaches. I have never heard of toolbars causing security holes in an application! This type of grandstanding harms what would otherwise be an actual point.

Finally, he has some rant about how the Starbucks website allows you to search for a Starbucks within 5, 10, or 15 miles. He claims that most people just want to know where the closest Starbucks is to their location. I happen to agree with this point. However, it doesn't really rise to the level of annoyance in my mind. In fact, until he brought it up, I never really thought much about it. Most sites, including the Starbucks store locator site will default to the smallest radius, and then the results will sort by distance, so for most cases, this is good enough for me. Of course, I live in a major metro area. I suppose if I lived in the "boonies", I might be annoyed by having to change the radius to 50 miles every time, but honestly, this isn't a big deal to me.

He does bring up some good points though. Bad error messages, flash web sites... These are the bane of my existence as well. However, these points are overshadowed his seeming preconceived notions about programmers and the software industry in general. While he claims to be a computer science consultant (or something like that), his words seem to make me feel like he does not know what he is talking about. My impression is that he is just trying to sell books through his grandstanding rather than actually trying to engage in an actual dialogue to improve the state of the industry.

Why I Like _Starship Troopers_...

In my formative years, I read a lot of Science Fiction. This is partly due to the fact that I grew up what could be called a "Golden Age" of Science Fiction movies and TV, from the late 70's and through the 80's. Star Wars brought about a whole slew of Science Fiction, both good and bad. However, I loved it all. When I couldn't get enough on the big screen and the little screen, I turned to the written word. One interesting thing was that I seemed to be drawn to the "masters" of Sci Fi: Bradbury, Clarke, Asimov, Herbert. However, the one book that I loved more than any other during my teen years was Starship Troopers, by Robert Heinlein.

I must have read that book at least a hundred times! I remember one summer where I would take that book out of the library almost continuously. After a month of reading it, I'd return it to the library and then go back the next day to take it out again! At first, I was drawn in by its portrait of the military of the future: the men, the training, the weapons (I LOVED those powered jumpsuits!), and especially the battles on futuristic worlds. At that time in my life, I was fascinated with the military, as many young men are before they encounter Born on the Fourth of July, so this book seemed like the ultimate bible of future warfare.

However, after a couple of readings, I started to gain some more insight into the philosophical and political aspects of the book. While I still do not agree with all of these ideas, Heinlein does give you a lot to think about, if you are open to the experience:

The most controversal idea is that only people who have participated in "Federal Service" (i.e. the military) should be allowed to vote. Heinlein's idea is that only people who have "proven" that they are willing to put the welfare of society above their own should be entrusted with the right to vote. This idea seems controversal to us since we have been raised in a society which values democracy and "the will of the people". Any governmental structure which would disenfranchise a majority of its population unless they put their lives on the line seems anti-thetical to this notion. However, his idea does have some merits, even if you don't totally agree. Currently, the percentage of people who exercise their right to vote is quite low, and those who do vote often do so without much thought ("Oh, Clinton is soooo dreamy, so I will vote for him!"). The idea that people should have to prove their worthiness to vote doesn't seem so bad, all things considered. I don't know if "joining the army" is a suitable proof, but it is an idea that shouldn't be thrown out via a knee jerk reaction.

Another controversial idea is that corporal punishment should be expanded in order to deter crime. In the book, even the most minor infractions are punished by having to endure the whip. The rationale is that the pain and embarrassment of this sort of thing leaves a lasting impression on both the punished and those who witness the punishment. Thus, it acts as a powerful deterrent. In a way, it sort of reminds me a little bit of Rudy Guliani's crackdown on minor, "quality of life" crimes. While his crackdown was met with resistance and anger, you can't argue with the results. Is Heinlein simply taking this concept to the next level? From an emotional standpoint, my initial reaction is to strongly opposed this expansion of corporal punishment. After all, I find spanking and the like quite distasteful. However, from a logical standpoint, there is some common sense to this approach. Certainly, if people were whipped for speeding and other traffic offenses, our highways would be much safer! Although I am not sold on Heinlein's idea, his vision certainly gives one food for thought.

One final idea that permeates this book is the role of violence in society and nature. Heinlein's idea is that war and violence are a natural part of the universe that we live in. After all, nature is ruled by "survival of the fittest", where species need to adapt to their environment or die in favor of a stronger species. In the _Starship Troopers_ universe, the human race has encountered a variety of other life forms, some of which are bent on our destruction. If we decide to just throw away our weapons and live peacefully, we would be wiped out and become a tiny footnote in the history of the universe. If we want to survive, we have to wage war, because that is the "law of the jungle". This idea is also an interesting one, although I strongly disagree with it. In nature, it isn't always the strongest who survives. Species adapt to the presense of more aggressive species in a variety of ways that don't involve violence. Why can't this principle be applied to relations between so-called "intelligent" species? This principle certainly applies when the other species is ourselves!

This is just a taste of some of the thought-provoking ideas that brought me back to _Starship Troopers_ again and again. While I may not agree with all of Heinlein's ideas, he does have a way of forcing you to question the beliefs which you may take for granted. In the end, you might still hold those beliefs, but at least you have taken the time to consider another point of view. And isn't that what good literature (both Sci-Fi and non Sci-fi) is supposed to do?

Investing Made Simple - Part II: Investing and the Power of Compound Interest

As promised in an earlier post, I am going to write a set of articles on the subject of investing aimed at the novice. To start things off, I am going to start with some of the basics of investing.

You probably know what investing is, but I will try to define it anyway. At its essense, investing is the act of taking your money and commiting it to some enterprise in the hopes of making even more money. Basically, you are telling your money to go out and "get a job", in a manner of speaking. This is inherently a risky activity. Sometimes, investing works and you will end up with more money than you started out with. However, there are times when investing doesn't work and you end up with less money than you started out with. Obviously, you would rather invest in some enterprise where you end up with more money.

There are an infinite number of different "enterprises" that you can invest in. Here are some examples:

• You can loan your money to a bank (by depositing it in a savings account) in return for the bank paying you "interest" in return for letting them use your money.

• You can loan your money to the U.S. Government (by buying a savings bond) in return for the government paying you "interest".

• You can buy part-ownership in a company (by buying stock in the company) in the hopes of sharing in the profits of the company.

• You can buy a house in the hopes of being able to sell the house for a higher price in the future.

Again, the main theme here is that you are setting aside some of your extra money in some way so that, hopefully, you will earn even more money than you started out with. The amount of money that you initially invest is often referred to as the principal. If you invest $100 in a particular stock, then your principal is $100.

Investors measure the performance of their investments by quoting a statistic called the rate of return. This is the amount of money that the investment has earned, as a percentage of the principal. Let's say that the stock that you bought for $100 earns you $10 in profit. Then your rate of return for this investment is 10%, since $10 is 10% of $100.

Usually investors look at the rate of return per year. This is referred to as the annual rate of return or the annual effective yield. What this means is that, over the course of a one year period, the investment is earning a rate of return of X%.

An annual rate of return of 10% may not seem like a lot at first. On first glance, you are only getting $10 for every $100 you invest. If you are an instant gratification type of person, this might not seem like much of return for your troubles. You want to get rich quick. However, there is a powerful concept in investing known as compound interest, which will get you rich if you show a little bit of patience. If you can only learn one thing about investing, then this is the one thing that you need to understand.

Compound interest is a very simple concept. What it means is that you earn a return on your past returns. For instance, let's say that after a year, your $100 stock has earned $10. Now you have $110. Let's also say that your stock earns another 10% in year 2. That isn't just 10% of your original $100 investment. That's 10% of your $110. At the end of year 2, you will have earned $11, so your total balance is $121.

So what, you say. $11 in year two isn't much more than the $10 that I earned in year 1. However, as the years go by, you are earning 10% on a ever growing pile of money. After 10 years, you will have $259.37. After 20 years, you will have $672.75. After 30 years, you will have $1744.94. As you can see, the rate at which your money is growing is accelerating! In the first 10 years, you made $159.37. In the next 10 years, you made $413.38. In the final 10 years, you made $1072.19. Now in year 31, your money is going to row $174.49, which is almost 2 times your initial investment of $100 - all in one year!

You can see how powerful compound interest can be, if you just can be a little patient.

The practical application of this is when you have to invest for some long term goal, like retirement or a child's college education. The amounts of money that you need for those things seems so large and unattainable that it is hard to motivate oneself to start saving for them. However, if you remember that even a little money saved now can turn into big money 20 or 30 years down the road, those goals don't seem quite so insurmountable.

The important thing to remember is that as time goes on, your earnings will accelerate because of the power of compound interest. Therefore, it is crucial to start investing as early as possible. When you are 25 years old, retirement seems so far away, so you may not be motivated to save for it. However, if you wait until you are 35 to start saving for retirement, you will have lost a lot of money, since now your investments have 10 less years to grow. 10 years may not seem like a lot. However, with compound interest, you can get a lot of earning acceleration in that extra decade.

Here is some motivation for you. You say that you don't have money to set aside for retirement. However, if you really try, you can probably squeeze $100 a month out of your budget to invest. It isn't hard to do. You may have to give up your daily latte, and you might have to pack a lunch instead of dining out every day, but those aren't big sacrifices to make once you read what I am about to tell you.

Let's say that you take that $100 a month and invest it in some mutual fund that earns an 8% rate of return per year. That is a pretty conservative rate of return, but I'll use it anyway for illustrative purposes. Here is what your retirement account will look like at various points in time:

• After 10 years, you will have $18,294.60.
• After 20 years, you will have $58,902.04.
• After 30 years, you will have $149,035.94.
• After 40 years, you will have $349,100.78.

Those are some pretty amazing amounts of money, just from giving up lattes and lunches out!

Note how much of a difference those 10 years make. Starting at age 25 instead of 35 translates into an extra $200,000 when you retire! I don't know about you, but if somebody offered me $200,000 just for giving up lattes and lunches for 10 years, I am taking it with both hands! The amazing thing is that people will sell their souls to the devil (err...reality TV producers) for a lot less money than that. However, judging by the lines at McDonalds and Starbucks, people aren't too interested in that $200,000 payday.

There are two things you should take away from this example. First, even a little bit of money, invested regularly, can turn into a big amount of money with the power of compound interest. Second, the earlier you start investing, the more powerful compound interest becomes!

Management vs Technical

Anyone who has worked in engineering or technology knows that one question that you are inevitably asked on the job is "management or technical". That is, do you want to pursue the "management" career path or the "technical" career path? At my current job, we have periodic "career discussions" with our supervisors, and usually the discussion centers around this question. Up until now, I have always thought of myself as more of a "technical" type of person. I naturally lean more towards the introverted side of the spectrum, I love the hands-on problem solving aspect of technical work, I love learning new things, and I am not a big fan of all of the politics that the "management" folks have to deal with. Besides, I am a darn fine techno-geek! Therefore, I didn't really see any reason to stray from the technical path.

Recently, however, I have been toying with the idea of going down the management path - going over to the "dark side" so to speak.

Why do I want to set sail in that sea of politics known as "project management"? First, I really think that I would actually enjoy mentoring and managing technical people. Recently, I have had the opportunity to take the "lead" on several small projects. This involves directing and managing a couple of others. I find that I really enjoy interacting with junior level techies, directing their work, and teaching them a thing or two about software that I have picked up in my years of programming. Also, there is a certain rush about getting people to do your bidding. There is a certain empowerment in getting work done through delegation, and you often can get more done by spreading the work to multiple people than if you had to do everything yourself.

The second reason is that I think I have a knack for managing projects. Managing a project seems to be a combination of planning, prioritization, and seeing the big picture. Those are all skills that techno-geeks have in spades. Programming is all about seeing abstractions and interconnections, organizing them, and using them to build a system. Managing a project follows a similiar pattern. You have some task or goal, a set of resources, and you have to figure out how to get from point A to point B through organization, planning and execution. In fact, it is somewhat amazing to be that more techies don't gravitate more towards management roles. Actually, it really isn't that amazing given that techies seem to more comfortable with the logical behavior of bytes and circuits, versus the unpredictability of the human computer.

The third reason is that I really feel as if I can do some good as a manager. While there are a lot of good technical managers that don't have a strong technical foundation (which may be why they went into management in the first place), I feel that having that strong foundation would make for an even better technical manager. After all, having been in the trenches as a coder can only help a manager to understand the issues facing a software project, as well as understand the geeks the manager is trying to manage. I have noticed that a manager with a strong technical background has more credibility than a manager whose programming consists of setting the timer on the VCR (I mean, come on, who actually owns a VCR anymore). One of the roles of a manager is to mentor, develop, and inspire people. It is hard to be truly developed and inspired by someone who hasn't walked in your shoes!

Even though I have three reasons why I would go over to the "management" side of the house, the one main reservation that I have is the politics. One big component of being a manager is that you have to "massage" the system in order to get what you want. I find that good managers spend a lot of time trying to portray themselves and their people in the most positive light. That involves a lot of "face time" with the right people at the right time. My personality doesn't really lend itself to that sort of backroom bargaining. That is not the way I am wired. My fear is that either I would have to develop that skill, or I might suffer as a manager.

All that being said, I think I have come to the conclusion that I really shouldn't be looking to choose between "management" or "technical" in the first place. Why can't I do both? If you look at sports, the all-time greats are the ones who excel at all facets of the game. Michael Jordan started off as a great "off the dribble" player, and he was an all-star player. Then he developed an amazing jump shot. And then he turned into one of the top defenders. Whenever he had a hole in his game, he worked hard to turn that deficiency into a strength. Eventually, he ended being considered one of the greatest of all time.

Why not strive for the same sort of greatness in our own lives? I am not suggesting that I am going to be the Michael Jordan of software development. However, it is certainly a worthy goal to at least reach for. Therefore, I think I am going to develop both my "technical" skills and my "management" skills and see where that leads me.

Leadership Models

Recently, I was thinking about the essense of what it takes to be a good leader. You see, as I get older (and hopefully wiser), I find that I am being thrust more and more into a leadership role mainly because of my age and experience. To be honest, I am starting to relish this role and the prestige that comes with it, so to say I am "thrust" into this role may not be accurate assessment, as it implies that it is role that I do not want. I do want it, even though it is not something that I necessarily seek out.

Anyway, if I am going to do anything, I want to do it right. Therefore, I have been thinking about what it takes to be a good leader. At its essense, a leader is somebody who directs the actions of others. Therefore, a good leader is good at directing the actions of others - getting them to do what you want. From my observations, there are three different general models of leadership: authoritative, trust, and collaborative.

"Authoritative leadership" is where one uses one's position in the management hierarchy to lead. People follow you by virtue of your position within the organization. In this model, there is usually some force of law, written or unwritten, that helps to enforce the authority of the leader. The military, for instance, makes it a crime to not follow the lawful order of someone of a higher rank. This ensures that the leader is able to exercise his or her authority. In the workplace, authority is not necessarily a matter of law, but it is enforced by the company's culture. For instance, not following order may be punished through bad performance reviews ("he is not a 'team player'"), smaller raises and bonuses, or outright termination.

At its heart, this model of leadership has the potential to marginalize the opinions of the subordinates. People may be ordered to do something that they feel is not the correct course of action, so they may choose to give the minimum amount of effort to satisfy the order. This "passive, aggressive" stance may lead to mere compliance rather than a whole-hearted effort. Therefore, it would appear to be a sub-optimal leadership model. It seems like inexperienced leaders rely solely on this model, but an experienced leader will seek out other models in order to get more than just compliance.

A second model of leadership is what I call "trust leadership". It is the next step up from "authoritative leadership". The leader's authority is backed up by a trust in the leader, based upon the leader's experience and past track record. The subordinates may not totally understand or agree with the leader's order, but they are willing to follow because they "trust" that the leader knows what he or she is doing. Even though the subordinates may not have a complete picture behind the leader's reasoning, they have confidence that the leader's orders will make sense eventually. This has the potential to bring about more compliance through blind faith, but it still may be sub-optimal since the subordinates do not have ownership over the actions. In a sense, the subordinates are still just pawns in a game that they do not fully comprehend.

The third model of leadership is what I call "collaborative leadership". Under this model, the leader convinces the subordinates that his or her orders are the correct course of action. Rather than just being directive to be followed blindly, they are actions that make logical sense. On the surface, they sounds like "leadership by consensus" which is another phrase for "chaos". However, the leader becomes the driver of that consensus through either force of personality or logic. The advantage of this is that the orders don't seem like orders, because the subordinates have been convinced, in their heart, that they are doing the right thing. In a sense, they are taking "ownership" of the orders, so they don't feel like orders. When people have this level of commitment, they are naturally more productive.

One other side benefit of "collaborative leadership" is that it opens the possibility for the leader to solicit the team for their views. It is rare that the leader knows everything, so a good leader listens to his experts before blindly barking orders. Also, the subordinates may have a similar opinion to the leader as far as the course of action to take, so the order feels more like it came from the "bottom-up", increasing the "buy-in".

My conclusion is that to lead, one must not rely on authority alone. A good leader needs to be able to elicit compliance by cultivating a enviornment of trust and a sense of ownership.

As an aside, people often point to Donald Trump's The Apprentice as some sort of pop-culture MBA course. While there may be some merit to this opinion, it seems like 24 could be a better TV show to study if you want to get management insights. Every show is packed with decision making under pressure, risk assessment, contingency planning, and other MBA-style lessons. Maybe Jack Bauer is a better mentor to emulate than The Donald? Then again, Trump lives in opulence, surrounded by beautiful women. On the other hand, Jack spent the last two years in a Chinese prison...

Investing Made Simple, Part I

Investing is defined as setting aside a sum of money in order to gain a financial return in the future. It is amazing to me how there exists so much ignorance with regard to investment advice. Actually, I really shouldn't be amazed since common sense seems to be not so common these days. Here is a case in point: my mother.

My mother is a reasonably intelligent woman, so I don't want you to get the wrong idea about her. However, she does seem to have a streak of ignorance when it comes to investing. To begin with, she tends to be very conservative when it comes to investing. That itself is not ignorant. Everybody has different levels of comfort when it comes to taking risks. Each person needs to assess their own choices in order to determine what will allow them to sleep at night. Most of her excess money is kept in CD's and savings accounts, which are relatively safe investments. However, she has two strange attributes when it comes to investing.

First, for some reason she has a soft spot for investing in coins, which generally aren't the safest of investments. She isn't what you would call an coin collector in the sense that she doesn't spend her off-hours going to coin shows and such, so she doesn't derive any joy out of her coins. Basically what she does is every year she takes a chunk of money, buy some US Mint Proof sets, and hides them away in a closet. Now it usually isn't a large chunk of money, but it is still odd behavior for someone who keeps all of her savings in FDIC-insured accounts.

Second, for some reason she also has a soft spot for one particular local bank stock. This is the only stock that she has ever owned to my knowledge, and she has quite a big stake in this stock. Investing in stocks is inherently more risky than putting your money in a CD, so that seems out of character for her. However, buying one stock and one stock only seems adds to the mystery to me. I have tried to ask her why she feels "safe" investing in this one particular stock, but not safe investing in, say, a S&P 500 index fund where she would be holding shares of 500 of the biggest companies. Usually, her reply is that this particular bank stock always seems to do well, so based upon this track record, she feels safe holding onto it.

Like I said, she is an intelligent person, but when it comes to investing, she seems to become irrational.

To be fair, this behavior is not exclusive to her. I have stories of people who have invested in all sorts of crazy ways which defy reality. In my younger days, I myself plunked down $200 to buy shares in a company that was building french-fry vending machines. I had somehow convinced myself that this was the "next big thing", but I have yet to see a single french fry vending machine anywhere in my travels.

The interesting thing about the french-fry stock was that I was sold on it by a friend of mine from high school who ended up working for a Boiler Room type brokerage which employed a "pump and dump" strategy spearheaded by a bunch of wide-eyed kids seduced by the allure of making money. My friend ended up getting out of that situation once he realized what was going on, but not before he had convinced himself and some other people that french-fries from a vending machine was the next Microsoft. In fairness, he lost a few hundred bucks on the stock too, which is why I don't hold the loss over his head. The Vin Diesel movie certainly does portray this brokers quite accurately from what I can, by the way.

Anyway, the fact that these "Boiler Room" outfits even exist is a testament to the general ignorance of the population with respect to investing. In the coming weeks and month, I am going to attempt to rectify the situation through the application of education and logic. Now I am not hopeful that I was succeed since people will continue to be irrational when it comes to the pursuit of wealth. However, I feel as if I have an obligation to share my knowledge about this topic.

If you cannot tune in to future blog postings, I urge you to read the most sensible and down-to-earth investing guide I have ever come across. It is called The Only Investment Guide You'll Ever Need, by Andrew Tobias. This isn't a "get rich quick" type of book, so if you are looking for a quick windfall, you won't find it here. However, it gives realistic and practical advice on how to invest and manage your money.

By the way, if you ARE looking to get rich quick, my observations tell me that the best way is to publish and sell a book on how to get rich quick. People seem to eat these types of books up, regardless of their validity. After all, anyone who really has a way to get rich quick is going to be saving that knowledge for themselves, and not selling it for $20 a pop to anyone who can read.