wealthymatters

Testing Gold the Archimedes Way

February 13, 2011 18 Comments

I’m sure most people have heard the Archimedes story.He was the Greek guy who got out of his bath tub and ran,naked, down the street,shouting Eureka!Eureka ! I’ve Found It !

Just to refresh memories,here is the story:

Archimedes was a Greek scientist who lived in ancient Syracuse . The King of Syracuse wanted a gold crown made. So he gave some gold to a goldsmith to have one made. After few days, the goldsmith brought the finished crown to the King. The King had the crown weighed. He found weight of the crown to be equal to the weight of the gold he had given the goldsmith . However the color of the crown made the King suspicious. He believed that the goldsmith had pocketed some of the gold he had been given for his own personal use. The King wanted to find out the truth. So he asked his court scientist Archimedes to find out how pure the gold in the crown was.Obviously Archimedes could not melt down the new crown to determine its purity.So to find a solution Archimedes thought about the problem day and night. One day,while he was preoccupied thinking about this problem, he proceeded to take a bath. He was so preoccupied that he failed to notice that the water in his bathtub was already full to the brim.So as he got into into the bathtub ,a large quantity of water flowed over the rim . Archimedes noticed this and had a brainwave . He was so excited to have at last found the solution to the King’s problem that he jumped out of the bathtub,and ran naked down the street, shouting, “Eureka! Eureka!” Eureka in Greek means ‘I have found it.’ Read more of this post

Filed under Precious Metals, Tool Kit Tagged with 22 Carat Gold, 22k gold, Archimedes, Caratage, Fake Gold Alloy, Gold, Gold Alloy, Gold Density, Gold Plated Tungsten, Gold Purity, Investing In Gold, RandomBlog2011, Testing gold purity, Titanium, water displaced

Why Not Teach People How To Become Wealthy?

February 13, 2011 6 Comments

This post is in reply to this post http://goodnewsforisla.wordpress.com/2010/12/11/day-58-billions/ and other articles in a similar vein.

To quote from the above post:

Here are a few facts about billionaires and the wealthy (taken from ‘The Hole In Our Gospel ‘by Richard Stearns).
1) Today’s 1,123 billionaires hold more wealth than the wealth of half the world’s adult population.

2) The wealthiest 7 people on earth control more wealth than the combined GDP (Gross Domestic Product) of the 41 most heavily indebted (poor) nations.
3) The poorest 40 percent of the world’s population accounts for just 5 percent of the global income. The richest 20 percent accounts for three-quarters of the world’s income.

These facts are staggering when you consider the disparity between the wealthy and the poor. If only those that were extremely wealthy would share their wealth, perhaps the poor wouldn’t be as poor. The sick could be cured. Thirst could be quenched, and hungry tummies fed.

Please consider the following points:

(1) Billionaires hold about one percent of the world’s house hold wealth( source:http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108&subsecID=900003&contentID=254950).So what would happen if all the world’s rich gave away their wealth?Something like this…..The world’s richest man Carlos Slim Helu has a estimated networth of less than US$60billion.There are some six billion souls on earth.So if we were to distribute his money amongst all the people of the world,each person would get an additional US$10.And if instead of all the people if we were to give the money to only the poorer 50% ,each person would get US$20.Still money but not that much….. Read more of this post

Filed under Philanthropy Tagged with asset creation, Billionaires, book, How to Become Wealthy, income disparity, indebted, Philanthrophy, poor, Richard Stearns, Teach People How To Become Wealthy, The Hole In Our Gospel, wealthiest, World Vision

Poor Charlie’s Almanack

February 12, 2011 7 Comments

‘Poor Charlie’s Almanack – The Wit and Wisdom of Charles T. Munger’ is a compilation of essays, memoirs, interviews, and speeches regarding Warren Buffett’s closest friend and business partner, Charles T. (Charlie) Munger , edited by Peter D.Kaufman.

Charlie Munger is an admirer of Benjamin Franklin,and the book’s title is a tribute to Franklin’s ‘Poor Richard’s Almanack.’

This is a big’ heavy coffee-table book with well over 500 pages.It’s pretty heavy reading and best left in the library.Reading the book cover to cover is only for serious Munger fans.

Thumbing through the book I figured that the only solid take-aways I could get without knocking myself out by tackling this formidable book were (1)Mungerisms,(2)The concepts to be mastered to apply the Multiple Mental Models to think better and (3)A checklist of investing principles. Read more of this post

Filed under Tidbits Tagged with Best Financial Books, Big Ideas from Big Disciplines, book review, Investment Book, Lollapalooza Effect, Multiple Mental Models for Decision Making, Peter D. Kaufman, Poor Charlie's Almanack-The Wit and Wisdom of Charles T. Munger, Stock Pari-Mutuel System

An Investing Principles Checklist

February 12, 2011 1 Comment

This is an investing principles checklist from ‘Poor Charlie’s Almanack’.I think it bears reading at frequent intervals just to ensure we aren’t doing something incredibly stupid or failing to do something basic that could better our investment records.

Risk – All investment evaluations should begin by measuring risk, especially reputational

Incorporate an appropriate margin of safety
Avoid dealing with people of questionable character
Insist upon proper compensation for risk assumed
Always beware of inflation and interest rate exposures
Avoid big mistakes; shun permanent capital loss

Independence – “Only in fairy tales are emperors told they are naked”

Objectivity and rationality require independence of thought
Remember that just because other people agree or disagree with you doesn’t make you right or wrong – the only thing that matters is the correctness of your analysis and judgment
Mimicking the herd invites regression to the mean (merely average performance)

Preparation – “The only way to win is to work, work, work, work, and hope to have a few insights”

Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day
More important than the will to win is the will to prepare
Develop fluency in mental models from the major academic disciplines
If you want to get smart, the question you have to keep asking is “why, why, why?” Read more of this post