Thursday, October 19, 2006

Self-Esteem

What is self-esteem? In a broad sense, self-esteem is the way in which someone sees themselves as positively or negatively. In more depth, it is composed of three parts:
  • Internal locus of control. Defined by your sense of internal "cause-and-effect" and orientation toward your own personal responsibility. It is the degree of control that we feel we have over our own lives. Someone lacking in this area could possibly see life as a series of accidents or things that happen where they feel they have no control.
  • Sense of belonging and acceptance. The degree of which you feel accepted as part of the group and also how much you like and accept yourself. Someone lacking in this area usually has a compulsion to please others.
  • Sense of competence. Relates to how "good at things" you think you are. Someone lacking in this area usually has a need to brag or show off or they give up on things very easily.
If you feel you are lacking in any of the categories, do something to fix it. Read books, find new people to hang out with, do things you are good at or improve on things you aren't, keep a positive attitude and accept responsibility over where your life is going, etc.

If anyone is ever rude or cruel to you, they have low self-esteem for that moment. If they had high self-esteem they would be positive and not have the need to be cruel to you. If you point out someone's low self-esteem, you are doing them a favor. Maybe they didn't realize it and because you said something, they may want to try to fix it.

Wednesday, October 18, 2006

Influential Forces That Changed My Life

These are some of the major events or things I have done in the past few years, which have been instrumental in changing my life. I have always been a happy and positive person but apparently you can take life to new heights and these are a few of the things that have helped.

The Breakup
  • Separating from my girlfriend of 5 1/2 years had a huge impact on my life. It made me look at my life and decide what I really wanted for myself. I realized what I had become is not what I wanted or saw myself as (I'm not saying I was a horribly bad person, it's just not what I wanted). I spent too much time and energy on making money and school, leaving less time for other things in life.
Books
  • Reading books have opened my mind to new ideas. I usually read about relating with people, finance, business, management, leadership and anything else interesting.
College
  • Where do I start? College is an eye-opening experience. Partying, meeting new people, joining clubs, responsibility (at least the school part), being broke, I could go on forever. There's going to be no other place like it and the experiences and people that I have met there are priceless.
Interviewing
  • It really makes you brag about yourself. I am not one to talk about myself or think I am better than anyone. When it comes to interviewing, you are forced to. You have to convince someone that you are the best person for the job. It forces you to organize your thoughts about what you have done in the past, want to do in the future and what you are now. It's a great way to look at yourself in a new light.
Career
  • Interviewing for a career is challenging enough, getting the job is another story. I needed a job that was challenging, fast paced, changing, and rewarding. I wanted a job where I would fit in perfectly with the people and wanted my limits tested everyday. I got lucky and found something fitting and it has shaped me and will continue to in the future.

Thursday, October 05, 2006

Eddie Lampert - I Like This Guy's Style

I've posted previously about Eddie Lampert as one of the businessmen I would love to meet. Looking into what he did with the Kmart turnaround, he's good at making money and I like his style. As chairman of Sears Holdings Corporation (SHLD), Sears Holdings currently owns Kmart, Sears America and Sears Canada. I believe he is going to keeping strengthening SHLD into the future (somewhat like Berkshire Hathaway's plan).

What I like about Eddie
  • Excellent manager / top-investor
  • He writes to his shareholders quarterly
  • Long-term, value-investing
  • Doesn't pay himself a salary
  • Big thinker / hard worker
With economic indicators showing a slowdown for the U.S., retail is usually safe bet in these times. I'm throwing some money into SHLD for the long-term and can hopefully keep adding to my position later. Lampert will probably be looking at other business targets in the future and I have faith in his ability to make money. Will Eddie be the next Warren Buffett?

Wednesday, October 04, 2006

Investing in Gold

I have been contemplating the thought of investing in gold over the last few months and have decided to turn down the idea for a while. Gold has had a recent run-down in price as a result of what many people think is profit-taking. Gold is up near a 80% gain this year and has pulled back about 35% in the last month (these are approx. figures).

Where is the upside?
Some think it's time to get in... I'm going to wait. The Fed recently held interest rates steady so does this mean inflation is dwindling? It's possible. Gold is great to hold when there are strong economic inflationary powers because it's a great hedge against it. The Dollar's strength is also stable or increasing - another downside for gold. I'll wait to invest in gold, the risk is larger than I am comfortable with, while the upside doesn't look very promising.

Monday, October 02, 2006

What I Do - Business Valuation

It's tough to explain to some what I exactly do for work. I work in the area of Business Valuation. Business Valuation is a broad category but the general idea encompasses estimating a market value for a financial asset or liability. Asset valuations include stocks, options, business enterprise values, or intangible asset valuations including trademarks, patents, customer relationships, etc.

The Purpose of Valuations
  • Uses: Investment analysis, capital budgeting, merger and aquisition transactions, financial reporting, tax related events and litigation
  • Since the values of things fluctuate over time, valuations become necessary. Some things are simple to value, for example, a piece of machinery. Intangible assets (brand names, patents, etc) become more difficult - how do you put a price on something you cannot see or touch?
There are multiple ways to do an analysis and each case is always uniquely different. Market methods and income methods are the traditional approaches. Many assumptions go into valuing complex assets like intangibles. Assumptions can be made as long as you have adequate support for what you are assuming. Support can be past transactions in the market, government rates, or historical performance of the company, projected into the future, etc. It sounds complicated but it isn't really that difficult. Once you learn something it sticks with you for a long time and as you work repetitively on similar projects, it becomes very easy, as with anything in life.

First Month of Work

I have just finished my first month of working already, it has flown by fast! I couldn't be happier with my job. The people here are great and the work is challenging. I've worked a few late hours some nights but it doesn't get to me at all, I'm happy as long as I'm learning. I enjoy waking up everyday to goto work and there is really a lot to be said about that. I have been contemplating over taking the Chartered Financial Analyst (CFA) Exam lately which will be difficult but I am up for the challenge.