Yearly Archives: 2013

Book Review: Tribes by Seth Godin


tribes by Seth GodinI listened to this book on my phone and I feel that I did a great disservice to the book. The book was packed with information and I felt compelled to stop what I was doing to take notes. That doesn’t work well when I’m at the gym or when I’m riding my bicycle. I loved the message, but I felt that the ideas could have been better organized or explained in a more digestible manner.

The theme of the book is leadership. We all have the capability to be leaders, to initiate a tribe and get followers. A tribe is any group of people, large or small, who are connected to one another, a leader, and an idea. If you don’t desire to be a leader, then you can still be part of a tribe as a follower and enjoy all the benefits of being a tribe member.

In the past tribes were restricted by geography, but since the arrival of the Internet, time, cost and distance are no longer an impediment to create or to be part of a tribe.

Some of the characteristics of a tribe are:

  • to be passionate and
  • to enable followers to stay connected.

Ever since the industrial revolution, people have learned to be “Sleepwalkers,” that is, obedient and fearful employees. Ever since we enter grade school, we are taught to conform to the group and to be like everybody else. Whereas at one time conformity used to be a desired personality trait, nowadays it is quickly becoming a liability.

Today we have the tools to create our own future. We can gather around a group of like minded-people, create a following and earn a living while creating art. Today we have the tools to write a book and publish it in 20 minutes; to create our own YouTube channel with almost $0; to create a podcast and make it available to million of people.

Mr. Godin encourages us to become heretics, that is to go against the established belief or custom, to have the courage to express our ideas and share them with the world. At the same time he acknowledges that a leadership position is neither easy to occupy nor comfortable to stay in, but it is much preferable to be a leader than to blindly follow the status quo.

 

Book review: Fooled by Randomness by Nassim Nicholas Taleb


Fooled by RandomnessHow many of the financial market millionaires have amassed their great wealth by skills and how many have been just lucky? After reading this book you will asking yourself the same question.

There are many things that I like about this book. One of them is that Mr. Taleb properly labels the business news as entertainment that creates stories out of any market noise. Mr. Taleb reminds us that journalists are entertainers, masters at compressing ideas into six second sound bites that can pique the interest of the public. After all, we – the public are the product and the advertisers are the clients who pay the bills. The journalist’s goal is to retain the attention of the public long enough to show them the advertisements.

Another concept that I enjoyed was the concept of alternative realities. We get the hypothetical example of the 25 year old person who gets paid 10 million dollars every year for playing Russian roulette. We might even feel admiration for that person if he is still alive after a few years, even to the point of forgetting the alternative reality, the reality that he had one in six chances of death. Mr. Taleb reminds us that even if the probability of getting that bullet in the head is a distant probability, the probability is still there and it could happen at any time. Mr. Taleb uses this analogy to portray what really happens in the financial markets every day. Traders tend to forget that there is always a small chance of having big losses. The financial crisis of 2008 is the most recent example, but history is full of these unforeseen financial catastrophes.

At the beginning I had a hard time getting into the book. It seemed to be a bit too intellectual for me, but later on I got used to the style of Mr. Taleb and at the end I ended up enjoying the book. I found it dry at times, but hey, how exciting can you make a book about statistics? Overall, I learned a lot. I learned to prepare for the unexpected, to always have an exit strategy and never to gamble more than what I can afford to lose.

Book Review: The 48 Laws of Power by Robert Greene

the 48 laws of powerOnce again, I listened to the book on my Android phone and after many hours of meditation, I’m still not sure whether the author wanted us to absorb his message literally or if he was highlighting the absurd.

Mr. Greene tries to teach us how to obtain power by cunning, manipulation and  lying. He states his 48 laws of power and then uses historical examples to show  a “transgression of the law” and an “observance of the law.” The historic examples are taken from three thousand years of history from leaders of ancient China and Greece to our present days. Many of the stated laws are distilled from the teachings of well known philosophers such as Machiavelli, Sun-tzu and a few others.

I belief that Mr. Green purposely showed the most shrewd ways to gain power and ignored the many ways that people can obtain power by honesty, by giving, by showing gratitude and by serving others; the bookstores are already full of those books. Mr. Green found a fantastic way to differentiate himself in a crowded market.

It is my believe that obtaining power by deceit and cunning is way more difficult than obtaining power by honesty and by a desire to help others. At a given moment, the mask becomes too heavy to carry and if you manage to carry it all the time, you obtain power by giving up your true self. It is not different from the professional who becomes rich by working so many hours that he never gets to enjoy his wealth. Is it worth it?

All that being said some laws make perfect sense:

“5. So Much Depends on Reputation – Guard it with your Life.” This is my own interpretation of the law: You might be loyal to your spouse all you life, but it only takes one incident of infidelity in order to destroy your reputation as a faithful spouse.

9. Win through your actions, never through argument.” This one is self evident, every action that we take speaks louder than words.

Some of the laws totally disgusted me. Here are two examples.

7. Get others to do the work for you, but always take the credit.” This law it way too common in the corporate and politics world. Sure, this law helps us obtain power, but do we feel good about ourselves?

14. Pose as a friend, work as a spy.” People pose as your friend just to find out what you are doing, how they can take advantage of you and how they can betray you when the time is right. This is what Mr. Greene teaches us to do.

Overall, I enjoyed the book. The writing is delicious and I recommend it even if I don’t agree with most of the content. The book is entertaining and a great history lesson.

Book review: “The Four Hour Work Week” by Timothy Ferriss

The Four Hour Work WeekI have been hearing about “The 4-Hour Workweek” since it came out in 2007. Unfortunately I waited until now, almost 7 years later to listen to  it.

The book was engaging from the beginning. I listened to the book on my Android phone and at times I found myself paralyzed, refusing to move one inch in order to better absorb segments of the book. Right after listening to the book I bought the kindle version which I intend to read in the near future.

I find this book one of the most motivational and inspiring books that I have ever encountered.

Tim explains how he went from $40,000 per year working 80 hours per week to $40,000 per month working only 4 hours per week, and he shows the readers how they can set up a similar system for themselves. I believe that his method was oversimplified. Just getting traffic to a website seems an impossible barrier for most businesses. Nevertheless, this process has worked for enough people to keep the dream alive.

Tim explains in detail how to outsource your business and your personal life. He explains how to find and train a virtual assistant for a fraction of the cost of a North American employee.  I believe that Tim is in part responsible for the increased awareness of the existence of virtual assistants in the Philippines and other Asian countries.

Tim shares with us many traveling tips. In fact, he makes us aware that we don’t have to be millionaires to spend 6 months in Argentina or the many other exotic places that he mentions. Traveling and living abroad is within the reach of many North Americans and less complicated than we make it out to be.

The part I enjoyed the most, was the concept that we don’t have to wait until age 65 to start enjoying life. That there are alternative lifestyles to the typical 9 to 5 and that work for the sake of work is idiotic. Do we really want to spend most of our lives in a cubicle worrying about satisfying one more customer, or do we want to start living our lives, spending more time with our families and traveling to faraway places?

Overall, I highly recommend this book. You might not agree with everything in it, or you might find that some ideas are out of your reach, but in one of its 400 pages, you will find some nuggets of wisdom which could be applied to your life.

Book review; Atlas Shrugged by Ayn Rand

Atlas Shrugged by Ayn Rand is the kind of book that you cannot put down. It will be 3:00 am and you will feel compulsed to read a few more pages.

Atlas Shrugged book coverWhat would happen to the world if the government increased regulations over every business and the creator of those businesses just quit, disappeared, retired?

Business people are denounced as bloodsucking leaches who feed on the weakness of others, but what would happen if those peoples just stopped innovating? Society as a whole would regress.

In Atlas Shrugged, the regression of society is taken to an extreme where society can no longer function. Those entrepreneurs who risk their lives and well being for their own self interest are a fundamental part of society and without them we are back to dark ages.

I cannot recommend this book enough.

 

Working in Canada (Icebreaker at a toastmaster’s meeting)

Dancing Tango
Dancing Tango

My name is Alain Guillot and I was born in Colombia, South America.

Many years ago, I was reading an issue of National Geographic magazine. The main story was the Quebec referendum (the possible separation of Quebec from Canada). The Fleur de lys was displayed on the front cover with photographs of thousands of people on either side of the debate waving their flags. It was at that time that the idea of coming to Quebec was planted in my head. If history was to be made, I wanted to be there.

I applied for a student visa even if I didn’t have enough money to sustain myself as a student. I was ready to leave the certainty of my present life to leap into the unknown of a different language, of a different culture, of a different country, of a different life.

I went to Concordia University and I started resenting my university studies from the first semester. I found myself during many hours, days, weeks and month memorizing stuff, not to learn but to pass a test. As soon as the test was passed, I would empty my brain in order to create space to memorize more stuff.

During every class, I would try to find the direct relationship between what I was memorizing and the practical applications in real life. At that time, I found very little relationship. Today I find almost none.

Eventually I graduated at the end of 2001. Yes… Let’s find out what is the real value of this piece of paper.

With a name like mine, Alain Guillot, a French name due to my grandfather’s decision to immigrate to Colombia, I was granted many interviews.

When I was sitting across the desk from my prospective employer, they would try to figure out why someone with a name like mine would have a Spanish accent. Many of them asked me if I had changed my name. A few were honest enough to tell me that they needed someone to speak to clients and that my French was not good enough.

After three months of searching, finally one of the top financial institutions hired me. My new title was “Financial Advisor”. My real job was to push financial products.

I had a utopian idea; that the real job of a financial advisor was to help clients get the most for their savings, and that if I could help them get an extra dollar for their investment, or if I could help them save money on unnecessary expenses, my mission would have been accomplished.

However, there was a conflict of interest. In order for my employer to earn more money and for me to earn a higher commission, I was supposed to sell the products with the highest service fees, the highest expense ratio, even if I could offer a similar financial product for a lower cost.

I give you an example. Mutual fund A and Mutual fund B are almost identical. However, one has and expense ratio of 2% and the other one of 0.25%. If I wanted my employer to make money and if I wanted to have money to pay my rent, I would sell mutual fund A and get a higher commission. If I wanted to help my client to the best of my knowledge, I would sell mutual fund B and get almost no commission.

Many of my first clients were my friends and family. And the inner fight would go inside of my head. Do I want to eat, or do I want to offer the best possible product to my clients. Sometimes I opted for one; sometimes I opted for the other one, depending on how desperate I was.

Our sales department was composed of many teams. I was always the lagger of my team. My supervisor was upset at me because our team didn’t earn enough points to win another sales trophy, another pen, another watch, another trip to Cuba or whatever the incentive there was for that particular month.

Eleven months after being hired, the words “I quit” escaped from my lips. I tried to grab those words and swallow them back, but it was too late. It was out there in the open and I didn’t take it back. I returned my laptop, my keys and I walked out of my job a free man.  Free from an education that I considered inept and free from a job that made me feel dishonest.

During my university years I used to dance as a hobby and I decided to earn my living as a dance teacher.

I posted flyers on the walls of the university, the copy centers, the book stores and all the restaurants that would give me permission. Finally, I had one student, then two, then three. At the peak of my teaching career I was seeing 200 students every week. I was hosting monthly dance parties with more than 100 dancers. I felt that I was selling happiness and that I was giving great value for the money of my students. I was earning a lot more than when I was a financial advisor and I felt honest. In addition, my Spanish accent was not an inconvenience to hide and get rid of, it was a pleasant bonus.

My last eight years have been dedicated to a school called Dance Conmigo, which means Dance with me. I gave myself completely to this school. I gave my heart and soul. I knew that I gave my best and there was never a conflict of interest. The happiness of my students was my happiness.

Last Sunday I closed the doors of my school. I gave the keys to new tenants. After eight years, I walked out of my job with pride and satisfaction.

Today, I stand in this room wondering what will be the next chapter of my life

Income Inequality

economics-trickle-downThis video is the biggest reality check about income distribution in the U.S. that I have ever seen. 1% of U.S. Citizens, possess 40% of the U.S. wealth.

As I meditate on this video, a few ideas come to my mind.

1. That the 1% has so much power because they have expanded their reach on a global scale. Take for example Google, Facebook, Microsoft, or Apple. Their clients are no longer confined to the U.S.A., their clients are all over the world. So of course their revenues are collected from the whole planet, not from a single nation.

2. Many of these people who are now part of the 1% were part of the 99% in their youth. Steve Jobs (C.E.O. of Apple) was not able to afford university classes, so he used to sneak into different classrooms hoping that he would not be caught. The creators of Google, Larry Page and Sergey Brin where the sons of poor immigrants. The creator of Facebook, Mark Zuckerberg was part of the middle class.  Bill Gates created his company in his garage when he was 15 years old. Warren Buffett had humble beginnings. Michael Dell created Dell Computers from his dorm room. There is a great  list of entrepreneurs who were dead-poor or just middle-class folk when they created something that the rest of the world considers valuable and gladly pays for it.

3. As the world becomes more global, the opportunities to become insanely rich continue to multiply and the opportunities are everywhere.  One guy became rich by creating the iphone app I-fart. Can you blame him if millions of people want to give him money for this silly thing? He took a small risk that paid out big. He came out with an idea and took action. I believe that if a person wants to become rich, the opportunity is there. With the internet, people can find clients for their product and services all around the globe.

4. At the same time that some people’s income is raising crazily fast, some other group of people are seen their income evaporating. As technology improves, robots and machines are slowly taking over the jobs that at one time belonged to humans. A car assembly line is practically ran by robots. The same goes for so many industries (metals, paper, etc.) that at one time were labor intensive, now they are robot intensive. With so many people displaced from their perceived secured jobs, it is normal to see more people unemployed living below the poverty level.

5. Many people believe that income inequality can be fixed by increasing taxes on the rich. Well, once a government starts taxing more than 50% of one’s revenue, rich people simply move to a different country. Remember Eduardo Saverin, one of the co-founders of Facebook? He simply renounced his U.S. citizenship, packed his bags and moved all his millions to  Singapore. How about Canadian businessman Frank Stronach who simply renounced his Canadian citizenship and moved to Switzerland. A simple wire transfer and now all his millions are under another jurisdiction. If government squeezes all the rich people too hard, they can simply get their private jets and go away and we will finally achieve income equality because only the poor people will remain. I have to point out that after the government takes about 50% of the rich people’s income, many of the rich  give away the other half by way of the charity institutions of their choice in ways that are a lot more efficient than government could ever do. Bill Gates has made it his life purpose to help poor people with their education and to cure diseases in Africa. Richard Branson and Oprah Winfrey have created hundreds of organizations in Africa and other under developed countries. The Rockefeller and Carnegie  foundations are still helping people long after their founders are dead. The list goes on and on.

6. Government has a lot of responsibility for this inequality. During the financial meltdown of 2008, government came to the rescue of the big banks at the expense of the taxpayers. What a bad move. The government taking away money from the taxpayers to give to the rich. Still today, 2013, the government continues taking from the poor to give to the rich by keeping a zero interest rate policy. When the poor savers have no interest return for their hard earned cash, they are forced to “invest it”. They are forced to buy stocks in the stock market, which is the equivalent of giving their money almost for free to the big corporations. The government wastes precious resources by fighting wars that break the country financially. Vietnam, Iraq, Syria. I am sorry, I don’t support the troops. These soldiers go to other jurisdictions as mercenaries,  killing people or being killed to support someone else economic interest.  Many of these wars were not in self defense. These wars represent the aggression of a North American government looking to get an economic gain. Also, the government has wasted millions of dollars and lives fighting the war on drugs instead of offering assistance to drug users. Finally, The U.S. government has more people incarcerated than communist Russia.

What is the solution?

There is no solution. There will always be inequality, but there are ways to take better care of the people who are struggling.

1. For all of those people who have lost their jobs to robotics or to outsourcing, there should be programs that would re-educate them and reintroduce them to the labor force. As some opportunities closes in one industrial sector, other opportunities open up in another sector.

3. The government needs to stop intervening. Bailing-out dying industries is a form of stealing from the poor to give to the rich. Taking tax money to save dishonest banks, saving badly run car companies, participating in wars to help the defense industry. The government continues getting involved in the market, always benefiting the rich to the expense of the poor. Government should stop getting involved. Let the market do its self cleansing.

4. People who are in difficult economic situation can do some things to improve their fate. We have to stop this Television culture, Netflix’s shareholders  becoming rich out of people television addition. People need to stop eating junk food and develop healthy eating habits. Stop smoking for god sakes, smoking kills you, it gives you lung cancer.  Stop playing the lottery. People need to get off Facebook (me included) and use that time more productively. People need to take responsibility for  themselves and start using this wonderful tool called the internet to continue educating themselves . The world is so full of opportunities. Really, all you have to do is extend your hand and pick one.

Become richer, stop watching the news

making up newsAs individuals we trade two major currencies: cash and time. Today I intend to make you richer by asking you not to spend any time watching, listening or reading the news. It’s all a waste of time. Here’s why:

1. The purpose of the news is to sell advertising time. If you are not the client, you are the product. Take any regular event and you’ll see it magnified by the media, you’ll see those sound bites being played and played again. Whether the news is true or not is not even relevant, the media will twist the truth in a way that will create a bigger drama. If they get caught lying, this is good too, they get to come back, admit the lie and that will increase their ratings even more. The main purpose is to retain your attention so that later on they can sell the advertising spots. You are the product; advertisers are the client.

2. Other than entertainment, the news has no real value. We are told about all these terrible things that happen every day, in our neighborhood or far away. “Someone had a car accident and two people died”, how does this enrich your life? “A man gets his hand cut off in the middle east after stealing some food,” “A woman get 100 slashes for being raped”. All these stories add no value to your life (in fact you would be so much better off if you never heard them), yet you get emotionally involved. When Princess Diana died, so many people cried real tears for her. Thousands of other people die every day and we are totally indifferent. Wouldn’t you have been better off not knowing about all these things that are irrelevant to your life?

3. The News is bad for your health. Bad news sells more advertising than good news. When you get the constant avalanche of bad news every day, the murders, the rapes, the nature disasters, it brings you down morally. When you are down morally, your immune system is weakened to the point that you can get sick very easily.

4. The news is bad for our personal finance. We become prey for advertisers. Inevitably advertisers will sell us soft drinks, junk food, luxury items, etc. Ads are created by very smart psychologist that know how to turn wants into needs. I have seen how many people are controlled by the apple advertisers. They spend $2000 for the latest “Mac”-something because somehow, Gmail, Facebook and YouTube look better on a mac than a pc.

5. The news will take away your civil liberties. All of you remember President Bush saying that Iraq had  weapons of mass destruction even though he knew that it wasn’t true. The people were totally manipulated into backing a war for false reasons. There were many other “real” reasons that were never reported in the news. People were sold lies and later, excuses that gradually chipped away their civil liberties. Now, in the U.S.A., the land of the free, people know that their email and web browsing are being monitored by their National Security Agency. Novelists like John le Carre and Tom Clancy used to portray communist Russia as the only government who would do this kind of thing to their own people, well now North America has its own version.

What to do about it

Just go cold turkey. Eliminate all news from your life. If some piece of news is really important it will eventually find its way to you. It will be filtered down from the pile of irrelevant news that has nothing to do with your life. Here is where to start.

1. The best gift that you can give to yourself and your family is to throw away that television that you have in your living room, don’t dare give it away. You will be creating harm to someone else. All of a sudden, you will have more space in your living room, you will be forced to have real conversations with other members of your household and you will have all this extra time to think, read, learn or be creative.

2. Don’t pick up that newspaper. The headlines are written by expert copywriters who have honed their craft over many years in order to be able to capture your attention and sucker you into reading one more irrelevant story with some advertising on the side.

3. Don’t listen to the news on the radio, listen to nice music, a podcast or an audiobook.

4. Don’t read the news on your computer,

Good luck. Please let me know if you are succeeding or if the news habit is more powerful than you.

Hard times for small investors

investment choicesTraditionally, people who didn’t have much knowledge about investments would buy secure government bonds and allow the magic of compound interest to take over. Slowly but surely their investment would grow over time. Today, however, the government has reduced interest rates to practically 0%. Nowadays, you can consider yourself lucky if you find any safe investment that pays more than 1%. At these rates savers would have to have a few million dollars in the bank in order make a living out of their interest revenues, and then they would be highly taxed on those revenues.

Central bank screws people

In short, the government has decided to screw the small people, the mom-and-pop savers, the grandmothers with their retirement accounts, to benefit big business and government. Now businesses and government can borrow tons of money at interest rates of almost zero. What surprises me is that hardly anyone complains about this new reality. We have been domesticated to such a level that we don’t question the actions of the government. The voices of big corporations and government have overwhelmed the million little voices of the small savers.

When the banks of Canada, or the bank of the U.S.A. lower the interest to such a low-level,  savers have no other alternative but to put their money in high-risk investments. The most popular high-risk investments that gets pushed down our throat are stocks or mutual funds in the stock market. But how is a person who has never seen a financial report supposed to decide where to allocate their hard-earned money?

Financial institutions want a piece of you

So what do you do? Go to a local bank to ask for some advice? Make an appointment with a financial institution?

Unfortunately finance, for the uneducated, is a loser’s game. It seems that everyone wants a piece of you. No matter what you do, you will be saddled with commissions and service fees. Your money will have to overcome a big hurdle just to break even. Savers could lose as much as 50% of their capital even if they are placed into conservative investments; in fact, in the stock market there is not such a thing as a conservative investment.

Here is how they take your money

If you do some research you’ll notice that most financial advisors make their money from commissions. That means that their main objective is to get you to do a transaction, any transaction, it doesn’t matter which. They’ll get paid for the number of transactions and the amount of funds under management. They never get paid for the accuracy of their advice. We’ve all seen the television shows in which all the experts scream frantically; “buy”,”hold.” But you will never hear them say “sell.”  It’s as if that word doesn’t exist. Another interesting thing is that those experts never come back the following month to admit they were wrong.  Of course everyone is getting paid a commission for creating those additional transactions.

Other conflict of interest

Here are some of the conflicts of interest that you have to face when you see a financial advisor:

Credit cards Have you ever been pitched to get the latest credit card? Even if you already have more than one? Financial experts get nice commissions from pushing yet one more credit card.

Front end mutual funds The expert gets a nice upfront commission for just getting you on board for the latest mutual fund. Those commissions come out of your pocket. After they get the commission, they couldn’t care less what happens to your money.

Mortgage or line of credit insurance They will push hard to sell you this product. The last time I bought a property this insurance was pushed on me four times during our transaction. If you decide you need insurance, make sure that the beneficiary is your family and not the bank

Conflict of interest in other ways. I have seen this often. The expert advises you to borrow money from the bank to invest in the bank’s investment product. You’re not guaranteed to make a profit from your investment, but the interest you’ll have to pay on that loan is very real.

I just want to make you aware

Unfortunately, at this moment, I just want to make you aware of the many problems you are facing. I don’t have a solution to propose in this article. I will propose alternative investments in future blogs. For now, I’d like you to be skeptical of everything and everyone. Always ask yourself, “How is this person screwing me? How are they getting paid?” It’s not a healthy way to live, but this is the world we live in.  If we cannot change it, we might as well be aware of it.

Our dysfuntional education system

education-systemThe success of all my school years, from grammar school to university, has been measured on  how well I can memorize a particular section of a textbook. As soon as I passed any given exam, all that stuff was be deleted from my mind. I had to make room for more stuff. I spent years of my life inside a library, cursing myself for memorizing stuff that I would never use.

I never dared to ask why I was memorizing all these dates, formulas, phrases, etc? How was all that information applicable to real life? What was the world going to gain from me memorizing one more chapter? “Is this going to be in the test”? I would ask, because if it wasn’t, why would I even bother listening to it.

Still to this day very few people ask these questions. We continue mortgaging our life, with money and time, for an education that only has marginal value. The opportunity cost is just too high not to question what we are doing. What is the net value of our time and money and how does it compare to other alternatives? What is the opportunity cost?

Today we are at liberty to abandon the social script. We have to wake up and realize that we can craft our own way, decide where we want to go and how we want to go there. There are millions of free resources out there. We can learn what we want, when we want, for free or for a fraction of the cost of traditional education.

Of course, if you’re a brain surgeon, as a patient, I’ll feel more comfortable knowing that you have a diploma on your wall. But for most professions, do they really need to take all those classes? If you are studying programming, why would you be obliged to take electives such as Spanish or history? Shouldn’t you have an alternative?

The system is what it is, and there are many forces that will fight to keep it this way. It might be too late for you, as it is too late for me, we have already been processed by the system. But if we’re aware that there is another ways to get educated, perhaps we can inform future generations that there are many alternatives out there.