track records of GREATest investors of all time

These are the coolest data I have ever worked with, totally worth me working on it until now ... 3am+.

Basically these are all the greatest stock investors of all time, their actual perfomance vs Standard and Poor index ( pink line with square mark).  Click on the picture on view in full size.

Graph below shows that Warren Buffet stands out quite significantly as the best profit and also worst lost ( brown line with circle mark ).

Joel seems to perform quite well most recently but the pattern is also big gain big drop ( light blue with square mark )

However its easier to earn profit during bull run vice versa.  So the real good investor should out perform the index during good time and perserve capital during bad times.  So I minus out each great investor's return with S&P return to come up with a Net Return, as an indication of how well these investors out perform the market.

Ok, its still hard to see anything from this graph.  But basically it seems that even the greatest investors of all time didn't really out perform market that much at all !

Average return of all time among all greatest investors is 19.6% while the average of S&P is 13.13%.  So they really out preform market by 6.46% only !

Among them, the best out preformer is Joel by 19.72% and Warren Buffet by 15.6%

How much were you thinking you can out preform market by ?

Get Out Of Bad Debt

I briefly touched on how to reduce bad debt in a case study about a middle income guy.  And most of us are the Average Joe, so no doubt the questions of How to Get Out Of Debt persist.  Furthermore, there is a book saying that 21st century is all about Debt.

Ok, lets start with the boring, "You shouldn't have got into bad debt at the first place !"

Sorry but Honestly, personal bad debt is a pure mistake on greed and ignorance.  Bad debt is not a personal finance problem.  Its the opposite of personal finance.  As mentioned before, the only thing you MUST do in Personal Finance is to setup an automated saving system right after your income.  Bad debt is the reverse !  By using up more than your income even before the income comes in.

That would be the FIRST thing one must understand, realize and FEEL it !  Else it is not going to be any helps in reducing bad debt.  It will just come back again and again.

Secondly ofcourse we can blame it on the education we received.  Off the 12 long years of FREE and compulsory education, we didn't learn a single thing about bad debt, not to mention automated saving.  Although its not a personal finance problem, it is a global trend and it becomes a national problem where it affects our daily social life.  Crimes rate increase.  You lose job, I die.

Ok, now that we take responsibility of the problem and we get someone to share the burden, we can now look at it face to face.

The problem originates from Income, so the real solution is within income as well.  But before that, lets review some of the common advices :

1.  categorize debt by different interest rates

12-18%  Credit Card or Ah Long debt

4-8%  Car Loan ( car's actual rate is 1.9x of published rate )

5-7%  House Loan

2.  work on the highest interest rates category first

including transfer all the high interest rate loan to lower rate like using house loan to pay for credit card debt

3.  within the same category, pay off the smallest amount first !

4.  call up banks and ask for waiver or reduction

other than that, there are some uncommon methods and services offered by private agency.  Basically they work around these methods:

1.  Pay a little more monthly, cut down total number of years to save on total sum

2.  Instead of paying 18% to credit card, borrow from them and you pay only 16% etc.

3.  Changing interest calculation method from daily rest to monthly rest etc.

It is possible to have some businesses out there sincerely come up with plans to help people reduce debt.  Afterall, the ultimate benchmark for world best stock investors is only 15%.  So it makes more sense to run a Ah Long business than starting a company like Warren Buffect's  BERKSHIRE HATHAWAY

However there are more businesses out there taking opportunity out of these ignorant debtors and further exploit them to the limit by squeezing every penny out.  So my advice is approach these agencies with care, only work with those who can provide you clear figures / numbers how the system works and then you send the figures to me for verification.

Most countries have also setup proper agency to provide similar helps like above private ones.  That is a must know for poor debtors.  In Malaysia, you must go to AKPK personally and ask them to help you face to face.

Ok, lets get back to this blog.  Just a reminder that all above are the common methods debt adviser would have shared with you.  They are effective ... to contain the problem, not really solving it.  This blog stresses that personal bad debt is NOT a personal finance problem.  Its problem is from income and the solution is to work on income.

So what you really need is to focus on Getting More Income to pay off the debt.

No one can go back and change a BAD beginning 

but everyone CAN create a successful ending !

And you bet double the effort is needed to correct a small mistake.

Some may curse by now what a stupid recommendation. 

"If I could earn more money, I wouldn't be in this debt at the first place !!"

Well, thats why and how this article is written.  You must first admit and take resposbility for your own mistake, then you can also blame someone for it and now you should face it to solve it yourself.  Including thinking positively how every single suggestion comes in, despite how stupid some of them may sound.

Fortunately, there are proven methods on how to increase income to solve debt.  All you need is as mentioned above, expect double extra effort to come.

Statistically 3-5% of people who started a business end with great finance success.  The unique difference in this 3-5% of people is their smartness and ability to adapt to changes.  Lets face it, how smart we are is something imprinted within us.  Its not something we can change overnight.  By the time we are as smart as we should be, debt rate has already compounded to sky level.  Afterall, if we have the smartness in us, we wouldn't have reach this bad debt situation anyway, would we ?

On the other hand, people who 'join' a human network business has 20-30% success rate.  Off the other 70% who didn't make it even though they are in the same human network business as those who make it, is because they didn't spend enough effort on it.

A Human network business that you can 'join' includes multi level marketing, insurance and mutual fund agents.

If you are serious about solving your bad debt which you admit was a mistake on your part.  Then you better focus on increasing your income.  And if you don't know how to increase income on your own.  You better temporary forget about all your preception on MLM and insurance agents.  Join them and really spend a good amount of effort on it for 2-3 years.  I guarantee you will solve your current debt problems.

Forget about morale, forget the right thing to do, forget about helping others, you have to even forget about finance planning as a matter of fact.  Your focus should be on solving your debt and you are just 'working' toward it.  You don't have to 'like' your work in this case as long as it can get you off this bad debt which is killing you.  You probably don't like your current job anyway.  And since you are already in bad debt, you probably been brain wash by some incorrect ideas.  So what's wrong being brain wash by this MLM and insurance ?  While your brain is already filled with get into bad debt procedures.

After all, both income and bad debt is NOT a part of personal finance planning.  One is the pre-requsite and another is the oppositive.

Among the 3 choices above, insurance is the safest and best choice if you don't know which to pick.  

Although MLM is  perfect in concept but in practical world, MLM is still new and there are still a lot of bad apples in MLM industry.  Since insurance industry is older and better regulated, there are really no BAD insurance companies out there, there are only less good choices.  Mutual fund is more toward finance planning or investment ideas, immediate and short term reward on mutual fund sales are less encouraging.  So to sum all up, insurance industry is the most suitable human network business for people to join to reduce their debt.

Take an example to solve a $20,000 bad debt.  You probably need to make a total sales of $60,000.  Assuming each sale is $2,000 then you will need to make 30 sales.  In order to make 30 sales, you may need to make 150 attempts.  Assuming each attemp needs 4 follow ups, then you need to prepare for 600 sessions of work.  Assuming each session is 2 hours, you will need to spend 1,200 hours in order to solve your $20,000 debt.  Now, if you spend 3 hours a day, 7 days a week, your debt can be settled slightly after a year. 

If above example is not acceptable, then you will need to have the smart in you to entrepreneur about how to get the extra income you need.  But just to beware, the 'smart' you think you have in you may be is the 'smart' that gets you into bad debt at the first place.  Just beware ... but don't let any wild imagination stop you when pursuing income.

Lastly, if you setup an automated saving system, then you are more likely to solve your bad debt problem too.  Exactly why would probably require another long topic on human psychology.  But in short, setting up such a saving system implies you already solve the 2 most original fault in bad debt, greed and ignorance.

Good luck all, I know this is a tough topic and not many people will agree but nevertheless its already proven solving many bad debts again and again.  Although these people never come back and help me propagate the right finance planning ideas, but they did get their debts solved.

Real Financial Freedom

Almost all people who practice personal finance planning aim to achieve financial freedom.  Although this blog actually will claim that aim is actually a paradox, but in this article lets review what Financial Freedom is, really!



Usually freedom from something means no need to worry for it.  So Financial Freedom means no need to worry about finance in your life.  A big part of finance is money.  So perhaps not too many people disagree if I say financial freedom also implies no need to worry about money on a daily bases.

However, if you really understand money or you have read about my big bang finance theory, then you probably agree money isn't everything.  You cann't eat money, wear it, live in it and even ride on it.  You eat food, wear cloth, live in a house and transport on a vehicle.  Although money does buy food, cloth, house and cars but money by itself is almost no use at all.

So when one says 'no need to worry about money', he actually implies not to worry about what money CAN BUY !

So financial freedom would become "NOT TO WORRY ABOUT" ...

1.  What to eat
2.  What to wear
3.  Where to live
4.  How to get there

which means what you really want are  Food Freedom, Cloth Freedom, House Freedom and Cars Freedom. I want to be able to do whatever I want,
 whenever wherever however with whomever !
Eventually that may evolves into Time Freedom, Location Freedom etc.

So Financial Freedom could be one term, but what it really means could be very different at a personal level.  What does it really mean to you ?

What do you want to BUY without worries ?

Do you R E A L L Y need money to buy or achieve it ?

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A Haunting Picture

The Financial Times reported that cargo ships are being used as the storage place for new cars because: i) cars are piling up due to lack of demand; and ii) ships are idle due to lack of cargo. Two machines, expressly made for transporting commodities, are forced into a state of idleness – compound idleness, really, one inside the other.

This is beyond allegorical.

Motion is the form of the existence of the matter. It is also the form of the existence of capital; capital could only be understood as a thing in motion. A cargo ship is capital but only by virtue, and in consequence, of its capacity to move. A new car is also capital to the company that produced it. But for the profit to be realized, it must be sold. Unsold cars in idle cargo ships is capital laid to waste through and through. In a Capitalist system that functions on the basis of employment of capital, that is the picture of death on a grand scale, which is why a picture of idles ship is haunting. It is the out-of-ordinariness of a “walking, loitering, hurried” market in the age of destruction.

Palan-doozan who know nothing about these matters pressure the banks to lend. Banks do not need pressure to lend. They are in business for that very purpose. But there is no place for the capital to go, thanks to the destruction of its employment opportunities by speculative capital. Speculative capital moves in and withdraws rapidly, which means that it also destroys rapidly. Hence the suddenness of the current collapse and the unprecedented pace of the job losses.

The Education of a Reporter

To study the properties of sub-atomic particles, physicists use particle accelerators to smash the atoms at high speed. The ensuring destruction creates extreme conditions in which the particles reveal new properties.

The economic/financial destruction brought about by the speculative capital has likewise opened up opportunities to learn economics and finance, if only one is willing to look.

A while back, I wrote that the Financial Times’ Gillian Tett is among the keener observors of the global financial collapse. Recently, writing about the upcoming G20 summit in London where the main agenda is expected to center around containing the crisis, she commented on the difficulties of regulating the markets:

The past decade of frenetic financial innovation and globalisation has created a western banking system where numerous entities are entwined in some unpredictable and near-indefinable ways. Just think of the chain reactions unleashed by Lehman Brothers’ collapse.

Thus, the $64 trillion question now is whether the risks created by this “interconnectivity” can be effectively controlled – without simply banning all entrepreneurial activity or innovation from finance? It is a fiendishly difficult circle to square.

The driver of the “frantic financial innovation and globalization” is of course speculative capital. The “interconnectivity” Tett is referring to is the linkage of markets brought about by the arbitrage activities of speculative capital. Tett knows none of these but she has noticed the tension between regulation and the way markets operate. The financial system cannot be regulated without banning “entrepreneurial” activity and “innovation”, which she vaguely suspects and implies, is something bad.

Let us help this perceptive reporter with the problem, beginning with a clear statement of the case.

1. Capital must expand, not because expansion is “good” but because “expansion of capital is the condition for its preservation.”

2. Expansion of speculative capital takes place through arbitrage. Arbitrage opportunities rise randomly and must be exploited rapidly. Speculative capital is thus nomadic and mobile.

3. Speculative capital is self destructive; it eliminates opportunities that give rise to it.

4. To rein in the self-destructive tendency of speculative capital, its movement must be reined in. That means blocking the expansion of speculative capital and destroying the mechanism of its self-preservation.

So what is to be done? Let speculative capital destroy the markets or suffocate it through regulation? That is Gillian Tett’s $64 trillion question. She calls the problem fiendishly difficult because she realizes there are not good options.

We could eliminate speculative capital. Speculative capital dominates the financial markets in the sense that it imparts the mode and the consequences of its operations to markets, making them appear as markets’ own characteristics. Hence, the increase in volatility, decline in spreads, and the bias towards short-trading horizons that have become the feature of markets across the globe.

Quantitatively, however, speculative capital is a relatively small portion of the mass of finance capital in circulation. It is within the realm of possible to curtail and even eliminate it altogether. That could be done through prohibiting hedge funds, proprietary trading desks of banks, day trading, derivatives, cross-border and cross-market arbitrage – in short, all vehicle through which speculative capital operates.

But as I showed in Vol. 1, the rise of speculative capital is logical and not accidental. The rise in volatility and linkage of markets and products, for example, increase liquidity. The fall in spreads makes financial transactions cheaper. In consequence, the markets become “efficient”, i.e. relatively less costly, to traders and investors. Within the prism of cost-benefit analysis, this efficiency is an incontestable fact. It was constant emphasis on this point – and the chicanery of framing all the issues in the cost-benefit framework – that made hollow men such as Milton Friedman seem to “have a point”.

Returning to our subject, the choices are now more sharply defined. To prevent speculative capital from destroying markets, we can choose to eliminate it. But that would entail returning to the crude days of bygone eras and more costly financial markets. With the profit margins under constant pressure, that is hardly an option.

We have just run into a conceptual wall. The problem, as presented, is insoluble. Both alternatives lead to the same dead end.

The solution lies in the realization that the seeming no-way-out is the result of the development of a contradiction that existed within speculative capital and finance capital since their inception. It is part of their DNA, existing in the latent form and pushed into the surface as a result of the severe financial crisis.

“The limit of capital is capital itself,” Marx wrote. Until recently, few could comprehend this supremely theoretical statement. The statement is cryptic because it contains information that cannot be squeezed into a sentence. It could only be understood if it is arrived at; it cannot be given.

Gillian Tett not only comprehends it but discovers it. For that, we have the current crisis to thank. Not that she ever was a dilettante, but she could not have noticed the contradiction a year ago. That is how educators get educated.

Next, when she realizes that the crisis is not an aberration but a logical consequence of what came before, she will be well on her way to making a bonfire of finance and economic textbooks, the way a fellow blogger of hers recently suggested. That would place her on the course to solve the next and final piece of the mystery, which is the source of the original contradiction.

Conspiracy of Location, Location, Location !

Have you ever heard of someone telling you the 3 most important things in property investment ?  Then he repeated saying the word "Location" 3 times ?

Well I have!  I have heard that so many times since so young that it was imprinted in my head without proper judgment.  You know, say the lie 100 times and it would become the truth. 
A lot of people got into real estate and their first few years ended up paying high lesson fee TOTALLY WASTED on this so call principal Location, Location, Location !  A Conspiracy !

First of all, have you ever heard seller saying the location is not that good ?  And therefore they are selling the property at a lower cost ?  - - -  N O ! - - -  Every location "can be" a good location.

Do you know that sometimes property at the right side cost much higher than the left side even though at the same location, same build up, same type of buildings ?  - - - Yeap !  You Bet ! - - - Usually by 2 different developers.

Why is there always a few units in the Golden Location not able to sell out or always make a lost in resell ?

If Location is really the Number 1 factor in property investment, all the above should not happen at all.

This miss conception is originated from the developers.  Whenever developer launches new projects, they will make a big deal about the location.  No doubt at the time they promote the project, the location could be a great place.  However, eventually whatever highways promised earlier may not be built later.  Sometimes even after the high way is built, the effect is negative rather than value increase.

Even if nothing happens to the original location, but when the same developer is launching another new project, guess which is the better location ?  Yeap !  The new one !  Not your older location.

Hence, this location factor is purely a speculation in real estate investment.

Like any investment, what really matter is its real worth and its current price.  If the price is lower than its worth, its a good buy.  Else its a good bye !

No doubt location is a factor, but it is NOT an important factor at all !  Most of the times it is merely a Personal Flavor factor.



Prime location property is easier to rent and sell out but more expensive and usually not available.

Secondary location is cheaper and readily available but harder to rent or resell out.

So give and take, the pros and cons of different location even out each other and do you need to compare properties between two locations ? - - N O ! - -  Not really. 

Different locations carry different characteristics and require different investment methodology.  But the principals remain the same ;

1.  Identify, calculate and verify a property's real worth
2.  wait and buy the property at big discount
3.  ensure continuous net cash inflow ie. Rental - Repayment = positive
4.  appoint experience management or agents at that particular location

So if you purely treat real estate as an investment, you don't really need to worry too much about the location as long as the 4 steps above are strongly adhered to.


There are only 2 decisions that may be affected by location ;

1.  Get a location near you or a location that you love personally.  That way, should the investment goes south, you may temporary enjoy the non tangible personal qualitative returns - a personal flavor as mentioned above.

2.  Location can be the reason NOT to buy a property, but it should NEVER be the reason you put money into it.

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Over Obsess Cost Optimizing ... KFC example

Today the line in KFC is longer than usual. I got bored and started analyzing the menu.



click here to view the spreedsheet

So the unit price gets lower the more quantity you buy. And the rate of getting cheaper is quite consistent. Which is good unlike Pizza Hut and Burger King.

The queue was still long, so I had to dig further ...



There you go ! Although the rate of unit price cut is quite steady, but there is a small dip when purchase 5 pieces of chicken !

Now its the tricky part, what does this mean and what can I do about it ?

I think what it is, is that if you were indecisive between 4 to 7 pieces, then its best to get 5 pieces.

Great ! I was just thinking 3 pieces were too few.

So I ended up buying 5 pieces, as analyzed.

Actually the queue wasn't that long, the whole order process was only 5 minutes. But then they don't have change for $50 and it took another 8 minutes for them to get the right change. So much about fast food huh ? They never promised fast change.

Anyway, it ended up only 4 pieces were consumed. The last piece turned out to be my late night supper. And since we are not suppose to sleep 2 hours after meal, I blog about my obsess calculative experience with KFC .... :)

do you know that it is possible to take a bath in KFC dish washer ?

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