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.

Steroids, Big Mac, and the Hall of Fame

Today I am going to switch gears and talk a little bit about that most Intellectual of sports: baseball. The wonderful thing about baseball is that it seems to lend itself to high-minded, philosophical debates. Maybe it is because the statistical orientation of it followers. Maybe it is because of the game's long and illustrious history. Whatever the reason, there seems to be something about baseball that attracts the most erudite of minds.

Recently, the Hall of Fame voting results have been announced, and the big story has been Mark McGwire's failure to attain enough votes to be elected into the Hall. Prior to the whole steroid scandal, it seemed like he was a lock to make it into Cooperstown. However, now that the cloud of suspicious is hovering over him in the wake of his disasterous Congressional appearance, it seems as if the voters have soured on him. McGwire makes a nice target for the collective wrath of the sports world. Fans feel as if baseball's resurgence during the 90's via the exploits of the great home run sluggers was based upon a lie aided and abetted by artificial means. Now is one of the first opportunities that we have a chance to take out our anger on one of the perpetrators of this lie, and McGwire is the first victim of this lynching.

One of the few writers who seems to have really given this issue some thought is ESPN's Jayson Stark. Stark is a veteran baseballl journalist and a Hall of Fame voter. In a recent column on ESPN.com, Stark explains why he decided to vote in favor of McGwire's induction. Although he is certainly in the minority, his words represent one of the view logical and dispassionate opinions on this subject. Rather than try and paraphrase his arguments, I will let you read the article for yourself.

The interesting thing to me is how he tries and separate the feeling of betrayal that he must feel as a baseball fan from the duty he has a steward of baseball's most cherished institution. Voting against McGwire would be an emotional choice and an easy one to justify in a sound bite. However, he took the hard road by actually thinking about the issue in a considered manner and making his choice knowing full well that his explanation would not fit into your standard 30 second talk show blurb.

The more I read his article, the more I see the wisdom of his choice. The truth is that we have no evidence about how widespread steroid use was, so it would be unfair to condemn a few people while letting others get a pass. Who knows? Maybe Cal Ripkin Jr used steroids and that is why he was able to play in so many consecutive games? Do we give Cal the benefit of the doubt because he wasn't a home run guy, and he seems like a "nice guy"? What about Roger Clemens in a couple of years? There is speculation about him, but does it rise to the level where it would cloud his candidacy? Who sets the standard anyway? Unless we are willing to apply some consistent standard across the board, then we cannot pick and choose who to hang at gallows of public opinion.

Also, if we accept the premise that "hundreds" of players were using steroids during the 90's, then we have to remember that players like McGwire were competing against other similarly juiced players. One criteria for induction is to choose the players who were the "best of their era". Certainly McGwire's accomplishments stand out, even in the steroid era. There were other players who juiced but most of them never came close to the level of performance that McGwire did. Yes, he was the best of a bunch of cheaters, but he was still the best. The only other choice is to not induct ANYONE who played during the 90's, since there is no way to distinguish between the cheaters and the non-cheaters. Yes, it may be sad, but there really isn't any other sane choice.

I know I said I wasn't going to paraphase Stark's article, but it feels like I just did, doesn't it? I guess I am just internalizing his arguments for myself.

Rich Getting Richer?

I came across an interesting financial column today which argues that mutual funds are lousy long term investments. The author, Robert Kiyosaki, writes a column for Yahoo! called "The Rich Get Richer", and he seems to be some sort of professional real estate investor and self-proclaimed "rich guy". I guess as someone who is rich he feels that he has earned the right to lecture the rest of us on getting rich, too. His articles seem to be a cross between Dale Carnegie (folksy, pragmatic storyteller) and Donald Trump (money-hungry real estate mogul), and he appears to have some strong opinions about the validity of some widely-held investment beliefs. Feel free to read some of his other articles to get a taste for his mindset.

[Note: It appears as if he is also the author of a best-selling book called Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not!. The title is vaguely familiar as being one of the many "pop-finance" books that graces the shelves these days.]

As someone who has been educated in the value of mutual funds, the efficient market theory, and the advantages of diversification, this article had me shaking my head violently. However, after my initial reaction, I started to think about his words, and I found that there is some truth to his assertion.

The author's basic premise is that the ongoing fees charged by mutual funds greatly erode your earnings, while adding no value to your investment. After all, he continues, you are putting up 100% of the money and taking 100% of the risk, so why should the mutual fund company take any of your earnings away from you at all! He gives some cooked example of how the fund companies end up taking 80% of your earnings, but the numbers he uses don't seem to be realistic. It is probably more in the range of 30%, which is still a non-trivial amount, but nowhere near the panic-inducing number that he gives. Still, the question still remains as to what you as the investor is gaining from this transaction.

I think the key is to understand the distinction between what the author calls a "passive investor" and an "active investor". A "passive investor" doesn't have time or inclination to dedicate to investing, so he or she is quite willing to hand over the reigns to a mutual fund or financial advisor. Meanwhile, an "active investor" has the time and inclination to take a more active role in evaluating investment opportunities. In this other article, Mr. Kiyosaki seems to be making a value judgment on which type of investor is better. The "passive investor" is described as being ignorant, unfocused, and amateur. On the other hand, the "active investor" is just the opposite: knowledgable, focused, professional, rich, and successful. I think that this value judgment is what propels him to call mutual funds lousy investments. After all, when you invest in a mutual fund, you are admitting to the world that you are not focused enough to make your own detailed investment decisions, so you are willing to accept the crutch of diversification. In his eyes, this somehow makes you a lesser investor.

Personally, I freely admit that I am a "passive investor". Unlike Mr. Kiyosaki, I do not think that this term has negative connotations. If I wanted to become a "active investor", I would have to dedicate a lot more time and effort to such a task, and frankly, I would rather spend my time and effort in other areas of my life: my career, my family, my community. I do not want to spend my days chasing down investment opportunities, researching their pros and cons, and micromanaging my investment holdings. Being an "active investor" is a full time job, and while it may be more profitable than my current job, it isn't something that I would be enjoying.

That is what mutual funds are for. They are for people like me who understand that we do not have the time to do the research in order to gain a competitive advantage in the investment market. Instead we would rather give up some of our gains so that we can "diversify" our investments in order to compensate for our "ignorance". I am good with that!

One thing that I should mention is that I totally agree with his advice that if you ARE going to invest in a mutual fund, invest in a low expense index fund. Most actively managed funds end up underperforming when compared to a comparable index fund, so why pay extra fees for a smaller return? On that point, Mr. Kiyosaki and I agree.

Is the War Lawful?

There is a thought-provoking interview up on Yahoo! with a U.S. Army Officer who is refusing an order to deploy to Iraq based upon his belief that the war is unjust. He has obviously given his decision a lot of thought, as evidenced by his responses to some tough questioning by the interviewer. After reading his words, I firmly believe that this gentleman is following his conscience, rather than seeking to escape the dangers of war. I do sympathize with his situation, even though I might not agree with it. However, my gut feeling is that his conscience will send him to prison.

The first issue is whether or not he will be found guilty of the charges leveled against him by the military. Of this, I have no doubt that he will be found guilty. If he is exonerated, then he will be providing others with a roadmap for skirting their military obligations. Sad to say, there may be some unscrupulous people who could use the same defense for the sole purpose of avoiding the dangers of combat. If people could pick and choose whether or not they enter a combat zone, we could end up with a situation where large groups of people end up refusing to go to war at a time when the need is greatest. This is a situation that the military will not allow.

You could say that the military already has a loophole like this through the "conscientious objector" status. However, in the era of the volunteer military, anyone who would qualify for this classification probably isn't going to be enlisting in the first place!

The second issue is whether or not someone has the right to refuse an order based upon its perceived lawfulness. The obvious answer to this question is "yes". If the order is unlawful, then the order can and should be refused. This principle was in full display during the Nuremberg Trials, where the "I was following order" defense was no defense. This is an established doctrine in US military law, so if the officer in question's order to deploy is not considered lawful, then he has every right to refuse it.

Therefore, the third issue is whether or not an order to deploy to Iraq during the current conflict is lawful or not. Reading the officer's statements in the interview, it seems to me like he is confusing "unlawful" with "I do not agree". The two are not necessarily in agreement much of the time. While I certainly do not agree with the justification for the war in Iraq, I am willing to acknowledge that it is a lawful war, according to the letter of the law. The Constitution grants the President, as Commander-In-Chief, authority over the armed forces. As a check to this power, the Constitution also grants Congress the power to "declare war". Although the Congressional authorization for the use of force may not be a true "Declaration of War" by historical standards (i.e. it does not use the phrase "Declaration of War" in the language of the legislation), a majority of Congress did authorize the current conflict, so this Constitution check on the President's power was maintained. In addition, Congress has authorized budget expenditures to carry out the war, so it has maintained its approval. Given the fact that the President and Congress followed the Constitutional formula for initiating a war, it would seem as if the war in Iraq is "lawful" by U.S. legal standards.

One argument that is brought up is the fact that the justification for the war was based upon a "lie". It has certainly come to pass that there isn't WMD present in Iraq. However, if Congress believes that there was deception on the part of the President, they are free to end the conflict and hold the President accountable (i.e. impeach and convict him). That is how the Constitution works. The President is accountable to the people through Congress and through the Electoral College. To date, neither group has done so. Until that time, we can only go by the assumption that the war is not illegal. If that is the case, I am afraid that the young officer in question should be prepared to sacrifice his freedom for his beliefs.

As a personal note, I have the utmost respect for Lt Watada. He is willing to stand up and be held accountable for what he believes in. He isn't one of these cowards who goes into hiding or runs to Canada when the going gets tough. He is willing to fight for what he believes in and accept the consequences for his actions, however wrong those consequences may be. I hope that he becomes the catalyst for the movement to declare the war unlawful through lawful means.