Predicting Economic Crashes Through Architecture
Posted by Steven Friedman on
January 14, 2010
An interesting story came out recently in The Christian Science Monitor. According to research by Mark Thorton, an economic crash in a particular country or region can be predicted by a spate of ‘world’s tallest buildings’ in that area. It seems tallest buildings are usually a result of factors often leading up to economic slumps - interest rate and price distortions, and a feeling that things can only ever keep on improving.
Known as “The Skyscaper Index”, this chart reveals that such an analysis isn’t foolproof - but it does get things right more often than not.
Source: The Christian Science Monitor
This may be a classic case of Warren Buffet’s maxim, “Be fearful when others are greedy. Be greedy when others are fearful”. Time to short against China, anyone?
The $5 Trick to Saving $5,000
Posted by Steven Friedman on
January 13, 2010
I was speaking with an investment adviser the other day, and he let me in on this little tip to save $5,000. For lack of a better name, we’ll call it the $5 trick.
A woman recently walked into his office with $5,000 cash, and asked him for advice on putting it on the sharemarket. She explained that she was on welfare benefits, with two small children, and wanted a nest-egg that could eventually help her own her own business. My friend was impressed - it is difficult for many of us even on full-time incomes to raise $5,000 for investments. If she didn’t mind him asking - did she do it on welfare payments?
Easy, she said. Each time she was given a $5 note in change, she put it aside, in a special place she wouldn’t spend it. It wasn’t long before $5 became $100 (only 20 notes), then $500 (100 notes), and then $2,500. Before she thought it possible, she had raised the desired amount.
This trick worked firstly because she had a goal amount and a purpose for the money. Her plan also worked because we have to break larger bills every day, and chances are you will receive a $5 bill on most days. $5 is small enough that you won’t miss it - yet large enough to make a difference (if you are on a higher income, why not try this with a $10?). If you can do this most days of the year, you will have $1750, without breaking a sweat. Combined with other saving tips, like automatically reserving a section of your paycheck, that $5000 investment fund is looking closer by the minute.
