End of Iron Curtain: Start of Free Market… Sort of…

I was 15 years old when Berlin wall dismantled and I was not very keen to follow the events. Those protests eventually ended “socialist” era to make a new way to start free market, capitalist era. But out of curiosity I asked to my dad and other elders that, so the communists going to out of our area also, no more strikes, so my friend’s dad can go back to factories which was closed for years etc…etc. None were provided a clear cut answer and unfortunately communists able to survive in our area, I would say it become stronger in 2 states. After end of iron curtain, communists started thinking about a new perspective of their philosophy, they become capitalist orientated may be lessons learned from modern China which is good for all of us.

20 years later after end of iron curtain, fall of Soviet Union, and free markets, are we well off with this system? Is this world become a better place to live? What are the advantages? Obviously this world become a flat, trade and investment flowing across nations, there is no border for goods movements, new inventions, new products discovered and the role of governments become less but private company’s role become bigger, rich people become richer and poverty rate of some countries were reduced, all are happy, smiling, everything is colorful.

If I stop this post now, definitely I’m looking only the glass half full, there are something missing.

• Aren’t we putting all eggs into one bucket? For example, India the whole economy depends on 5 richer people, what will happen if they decide to disinvestment from India?
• Aren’t we polluting our earth faster than before?
• One cell company controlled almost 4% of GDP of a country. What will happen if they show 4 continues quarter’s loss and decided to lay off people?
• Do we know how to survive without working for 1-2 years? Are we teaching our kids how to farm a land and make it useful for cultivation?
• What will happen if the same happening happens in Detroit to all of our other cities?

But there are always some flaws with all the system, the system we have now is excellent one but as long as we all are honest and utilizing the system how it should work then no issues. Go Free Market.

The Hitchhiker's Guide (2) to the Liquidation

Here are the steps to become liquidate in layman terms.

For Starters
Save Money in to saving account -> After it grow 5K -> Move to a money market account -> After MM account Grow 10K -> Move 5K to Mutual funds(step by step) -> After Mutual fund grows 25K -> Move to Stock market (Remember diversify) -> After stocks grows at least 100K -> Invest in real estate

For Pros
Sell second home for gain -> Move 50% to again Mutual funds -> Buy an other home at upcoming places(like Idaho, Montana) full or partial down payment(or internationally) -> When Mutual fund grows some move into stocks -> Sell stocks at 50% gain -> Buy 3rd home some where at North Carolina or Texas -

For Retirees
Sell all home -> buy a home at Big Island -> move all 401K to money market account -> NO MORE LIQUIDATION.

It was easy for me to draw the above map but it is really very hard to progress. The main issue is, we are all prone to unexpected expense. But I believe a solid plan and use of latest technology we can avoid all. I’m a super user of Quicken since 2000, on a single click I can render number of reports and n number of “What if” scenarios. The meticulous planning and not emotionally attached to anything are the key for anything.

Polished and whisked

I’m still researching on my second series of liquidation, in the mean time here is a new blog about polished, diplomatic communication and straightforward communication patterns.

A friend of mine discussed with me a long time ago that why Americans are so successful at marketing and selling more cars than Germans, but Germans are very good at mechanics and engineering [This discussion happened several years ago, at that time Ford and GM outperforms Benz and BMW at almost all markets in sales]. The friend visited 16 countries and he has more international experience than me, he concluded that Americans always smile and Germans keep stiff face and they are not good at talking and marketing, more than that they are straightforward (plain) talking what they are thinking in the mind. But I was not convinced at all because he was making a generalization statement. One of the great examples of plain communication is Joe Biden, USA’s current vice president who lost all previous bids of USA”s presidency even though he is talented, honest senator with foreign relations and high IQ, EQ and experience.

The following are the main reasons why plain communication fails,

1. Actually we want to hear always good things about us, we don’t want to hear anything negative about us. Most of times plain communication misses the sugar coating.
2. Context wise implied meanings are very hard to understand for common folks, since sometimes plain communication labeled as contradiction.
3. Plain communication sometimes hurt other’s feeling, even though it was not intended. Plain communications sometimes gives not enough explanations and context and full sentences. Hence we often take it seriously. For example, I went to a BMW car shop and salesman said that here cars are little expensive, so you made your mind. This was very plain and he might imply that i can’t buy the car or he is just warning me before hand since I give him a sense that I just came to this country. This required some analytical from our side.
4. Trust or mistrust, once we trust others we can easily communicate very plainly, sometime we thinks that we are in some trust but the communication receiver was not that trust as producer.

I think how to communicate and what to communicate also now become an art, one size doesn’t fit all. But we can communicate freely and plainly with progressive minded friends because they want to progress with our honest feed back or understands the fully about context, but with others we have to use polished and diplomatic way of communication.

The Hitchhiker's Guide(1) to the Liquidation

As I said before, nowadays making money is very easy, if you aren’t then government gives you some [Just Kidding]. The point is, comparatively with earlier generations, because of global economy and free trade and so many things make money available to everybody now. As long as, we have a decent education with IQ over 100 can get a decent salaried job for most of the people in this world [An idealist statement though]. Now we have money and how to manage it and how to spend it wisely and what to buy and what to avoid and where to invest and how to liquidate and rebuild the wealth is big questions. A common average human doesn’t know that hence we need a intelligent MBA grads to manage our wealth. The last decade’s extraordinary demand for a top notch business school MBA grades also because of we don’t know how to manage our own money. The downturn and economical instability also because of us, each individual doesn’t know how to manage it properly. All money going to one direction for a long time and then stops is the main reason for recessions, in other words we are putting all of our eggs into one box and let other’s decide what to do with that with the pool of money.

As far as I know people loosing money because they don’t know how to build a wealth and then liquidate it wisely at correct time and rebuild it. We average human tend to become greedy when we involve with money, we try to emotionally attached with it, and we don’t know how to treat money as a commodity and work with it as professional manner. In capitalism, liquidate an old business and rebuild a new a business is common one. I’m not here talking about a compulsory liquidation or some sort business related. Just how we manage our portfolio and how to sell stocks, assets, or other investments at right time to rebuild our wealth.

130 Years ago my great-great grandfather bought some land for Rs 200.00.Now the land value is Rs 2 million (9999% growth). Are we a good investor? I would say no, Indian stock market soars from index 1 to index 17,000(19999%) with in the same period of time because Indian stock market was created on around the same period when my great-great grandfather bought the land. Either my great grandfather or my grandfather should have been sold some of the land (liquidate) to reinvest with stocks. Imaging my inheritance amount would be Rs 200 Million [I’m not greedy just proving my point]. Let’s see how to liquidate and some important points at next post.

Why we prefer shortcuts or short term benefits?

A longtime ago i read from some book that the new young generation of USA school kids wants to make money by fame in other words they want to become a super athletics or movie star or music career. Some of them, very few want to do hard work to become a doctor or engineer, which was very low percent to compare with earlier generation. This is not a USA’s problem, now this culture spreading across globe. I was sitting on the fountain at Aurora Fox valley mall, a kid like 3 years old throw a coin towards fountain, before that he wished that he want to earn 1 million dollar. Every where and every one want to make money but prefer some short cuts. I think we elders are responsible for this attitude of young generation. We want to achieve financial freedom by using our kids are the main reason or we are pushing our kids towards something fancy career like athletics, entrainment industry. There is nothing wrong to dream something bigger and working towards it but going sidetracked and prefer shortcuts are the bigger issues.

In front of kids, we used to prefer always shortcuts, route A is short but speed limit is 25 and route B is little long but speed limit is 50, but we unconsciously select route A. Home cooking takes 1 hour to eat, fast food is 15 mins, we select fast food but home cooking is obviously healthier than fast food. Strip mall shopping takes 3 hours but mall shopping takes 1 hour but little expensive, we select mall shopping since we want to go home early. If we aggregate each and every thing, we unconsciously prefer short cuts. Guess what, who is watching and learning from us? Our kids and we ultimately spoiling their mind. As per my opinion, we do select short cuts because of peer pressure or our brain used to do so or both.

In India, the corruption is epidemic and i don’t want to tell you that people prefer short cuts to attain something since we have mammoth corruption. Actually if we decided to go straightforward also gives good result but time consuming. Based on my experience, the short cut like giving money to achieve something would take 1 day vs straight forward to take 1 week ( of course i’m speaking relative terms). If we plan ahead and prepare for all paper work correctly, everything can be done with out giving any money. I used to go those government places and they obviously ask money to do that, i used to follow all procedures and fight with them to get it without money. First they show mean face and then they used to ask all unnecessary paper works, if you have all, you can get things done but each one took me 3-5 days instead of 30 mins if i prefer to do it by short cuts. All required is precious plan and common sense that what might need to get something done.

Book Review : Refactoring by Martin Fowler

Brilliant book and must read one for Software engineers and Java developers. Why i emphasis this book? This book would help us to communicate efficiently. When i start reading Gang of 4 book and Head First Design Patterns, i start wondered that "hey, we did that 2 years ago and it should be called "Factory Pattern" etc etc. Giving an industry standard name for an activity is really important and it is the progression of IT industry. Once we are all familiar with naming and concept then our job is very easy to perform and make quality software. Here after i no need to explain moving method from a class to other class because of blah blah reason, just refer Martin Fowler refactoring pattern "Move Method(142)". Through out the book, i was excited to see Martin Fowler captured everything in detail related to refactoring which we facing in our day by day activity.

Nowadays IT industry code development become static, thanks to current economic downturn and baby boomer's retirement. But the software usage is exploding year by year. The software which developed during IT boom period early this decade is still in use but not scaling up with demand. The only solution now available is to refactor it and make it scalable. Not all of them afford to write a new software from scratch again thanks to economic downturn.

Refactoring by Martin Fowler gives you feeling that he is directly talking with you as a Java Architecture or a team mate. One main thing of refactor is "pairing teams" and "solid test suite". Why pairing teams is important for refactoring, we have to discuss in detail about what kind of refactoring make lot of sense. Based my experience, we have to move step by step process to achieve solid refactoring and always keep it simple.

This book gives you a in depth knowledge of refatoring and most of it, we already heard from our senior team members and architecture, i mean we already followed it because of our experience. But this book consolidated all of them and give them a name and giving some other techniques to refactoring also. Again a must read...

Public Health Insurance

A soft spoken, intellectual liberal's thought process is, our country is world's super power, rich country but 50 million people are without a basic insurance, 18,000 people dying without a proper insurance per year, hmm..what is the solution? As always, liberals want to address this by providing a government sponsored, a well funded, a perfect public health care to all citizen. In long run, they want to integrate all into one universal insurance, 100% funded by government.

A well mannered, easily spark towards any new reforms conservatives, opposing this plan on every town hall meeting. They are getting a sizable support from senior citizens and business people. They are pointing out the source of funding, already U.S government spent trillions of trillion for economy and deficit is higher than any other time, GM and some banks are under government watch. The situation is not good for any reform for now and 180 million citizens are happy with current plan so do senior citizen with current Medicare plan. I didn't understand why they are comparing this reform with Nazi Germany and Hitler.

The PHI is getting very complicated and even President Obama start talking about his grandmother's death because of without proper insurance. As far as my experience with health care system here at U.S.A, it is very expensive like any other countries. But here due to the lawsuits, the defense tests and treatment cost is very higher than any other countries. For example, if you go to emergency room for a headache you end up paying more to just some CT scan/x-ray, blood test etc, which are not required for a headache.

I think the solution for this is a compromise between right and left. We can't always achieve 100% on everything, so a semi public company like Freddie Mac is answer for this. The insurance can be continue purchased from a primary market (Aetna, Blue Cross etc) but they can sell to secondary market(a Freddie Mac kind of company). In order to qualify for public health insurance, employers and individuals have to pass some basic requirements. In other words, with the current choice of HMO,PPO etc, insurance companies can offer PHI. This sounds less complicated, aren't they?