Where does all my tax go?
This is an attractive site showing how all our hard earned tax is spent by the government. You can click each year to break it down into more detail although I can't see one for MP's expenses. Have a play with it here.
This is an attractive site showing how all our hard earned tax is spent by the government. You can click each year to break it down into more detail although I can't see one for MP's expenses. Have a play with it here.
All of sudden I appear to be a successful fund manager, albeit in a fantasy league. I entered the JPM Fantasy Fund Manager and currently stand in 31st place out of 8,000+ entries. My portfolio has adopted a 'shoot the lights out' objective with a risk profile of 'highly likely to crash and burn' but it seems to be doing OK so far. Wondering if I could sneak this model into a real client's portfolio.
Judge for yourself from the picture above taken of him when he was 21 and commuting to work as a trainee, but ultimately unsuccessful, financial adviser. This is actually taken from a great set of previously unseen photos of the young Elvis which you can read about on the Telegraph's site here.
I get lots of Christmas messages via email each year (thanks) and, so far in 2009, this is by far the best one produced by Team Spirit. To see it in all its glory, click here.
Nice use of imagery, terrible message.
In the investment industry, we think risk equals standard deviation. Therefore, risk can be measured, and the amount of risk we take can be controlled. It's a nice, clean way to fit risk into our models. If clients can handle more risk based on their answer to our "risk tolerance" questionnaire, we just turn the dial, and increase their allocation to equities.
The problem is that when real people, in the real world, think about risk, I am almost positive they don't ever use the term standard deviation. Can you imagine a client losing sleep because they are thinking about the high level of standard deviation in their portfolio?
Real people lose sleep because they are worried about not having the money to fund their most important goals. They lose sleep thinking about not having the money to send kids to collage or retire. To real people, risk equals not meeting their financial goals.
We are measuring their tolerance for fluctuation, while they are worried about running out of money.
Now, maybe you can make the claim that standard deviation (using Monte Carlo analysis) is one way of quantifying the possibility clients have of not reaching their goals. However, if you use a "risk tolerance" questionnaire WITHOUT the context of the client's goals, how would you know?
The startup world is full of people addicted to work. The addiction often carries a heavy toll of lost friendships, broken relationships, bad health, and a dearth of other interests. All that matters is the next high from work. The next deal, the next milestone, the next round of funding.
If you had a similar addiction to cocaine or alcohol, people would call you sick and ask you to get help. But in the startup world, this addiction is praised by many. You’re a hero for putting in all your chips of life for that off chance that you’ll hit a royal flush.
What’s worse is that most of these addicts know intellectually that plowing through 14 hour work days is not actually a very productive way to get ahead. That more time doesn’t mean more valuable work done. Jason Cohen addresses this in Sacrifice your health for your startup. He recognizes that sleep deprivation is not helpful, but still sees it as a badge of honor. That the extra work is probably not quality product, but somehow still needs to happen.
He talks the talk of reason and but walks the walk of an addict. Desperate to find a justification for his ways: You need to be nothing but work because you have to wear many hats. You need to have a single-tracked obsession with work because the nirvana of “financial freedom” is just a few highs away.
Being addicted to your work might be slightly better than a coke habit, but it follows the same pattern of abuse and escapism. And most importantly, it is not a requirement for success. You do not have to become an addict to run a startup. Be passionate, be obessed, but don’t let it be an excuse for consuming your life.
Interesting article once again from 37 Signals.
Richard Allum // This is my blog where I talk about my experience of paraplanning and financial services as well as pretty much anything else I want to write about. You can view our main site at www.paraplus.co.uk where you can also find how to get in touch.
