Pragmatic Capitalism, What every investor needs to know about money & finance by Cullen Roche

isbn: 978-1-137-27931-6
copyright 2014
Palgrave MacMillan, a division of St. Martin's Press LLC, New York, NY
http://pragcap.com/

This is an excellent book. This is a book that I would like financial advisers to read before they try to sell me their products or service

It explains that money is basically a medium of exchange, a tool that gains us access to goods and services. That we live in a macro, global economy and need to look beyond our local area.

Most of us are savers that put our savings (unconsumed income) into stocks and bonds. Savings (unconsumed income) are set aside in financial assets for specific future requirements and must be available at specific dates in the future. Need to protect from purchasing power loss and permanent loss of funds.

Investment provides capital to fuel/help maximize future production. We need to invest (spending not consumed for future production) in our primary area of expertise to generate the highest personal return; such as education, job training, job certifications, side businesses, entrepreneurship. We are the cash flow generator


He goes through and debunks several financial myths that you still hear and read elsewhere: You too can become Warren Buffett, High fees mean good value; Focusing on either technicals or fundamentals is the optimal strategy; passive portfolio management is better than active portfolio management; stock market will make you rich; You have to beat the market; the next big thing will make you rich; stocks for the long run is the best approach (but unplanned life happens); commodities are investments; your house is a great investment; modern portfolio theory explains proper portfolio construction.

Financial risk is not being able to meet our financial goals and is not the same as volatility.

Proper portfolio construction is about process. Two biggest threats to meeting goals are purchasing power loss and permanent loss of capital. Key tools to achieving risk optimization:

1. methodology- process & plan.
2. Strategic diversification- fixed core portfolio with many different cash flow streams to achieve balanced and stable return.
3. Tactical diversification- reduce exposure to uncertainty and tail risk

Financial Goals spectrum ranges from
Protect against purchasing power loss (when in asset accumulation phase of your life)

1. Emerging market equities & developed market small cap equities
2. developed market large cap equities
3. hi yield corporate bonds, preferred stocks & REITs
4. Foreign Emerging Market Corporate Bonds & Foreign Emerging Market Government Debt
5. Investment Grade Corporate Bonds & Municipal Bonds
6. TIPs, Long-Term Developed Market Government Bonds  Intermediate  Term Developed Market Government Bonds
7. Money Market Funds, Treasury Bills, Bank Deposits & cash

to Protects against permanent loss. (when in asset protection phase of your life)

Steps:

1. Establish methodolog
2. Strategic diversification for core portfolio (passive index fund? bets on long term growth?)
3. Tactical diversification to protect against uncertainty and tail risk (stocks-expansion exposure, bonds-deflation protection, cash-recession protection; precious metals-inflation protection) (monitor credit cycle, business cycle)

Fees are your enemy; don't chase returns; don't play microeconomic (local) game; set realistic goals/expectation; create process/methodoolgy you can track; automate plan; contribute to plan; keep simple; remember you accumulate money so can live, Not live to accumulate money.

improvements in standards of living provide us with ultimate form of wealth-more time to do things [for] fullfillment.

Understanding the impact of the credit cycle http://pragcap.com/howard-marks-understanding-the-impact-of-the-credit-cycle

The US government is a contingent Currency Issuer http://pragcap.com/why-the-usa-isnt-going-bankrupt

http://pragcap.com/why-the-usa-isnt-going-bankrupt

Creative Block, Get unstuck, Discover New Ideas by Danielle Krysa, the Jealous Curator

Advice and Projects from 50 Successful Artists
isbn: 978-1-4521-1888-8
copyright 2014

Some web info about her
http://www.thejealouscurator.com/blog/ (really interesting)
http://www.krysa.com/inprogress/
http://www.thejealouscurator.com/blog/2014/09/19/collage-a-peek-a-project-a-give-away/

It was interesting how each artist answered the same set of questions and what they came up for the Creative unBlock Project.

These artists are more modern type of artists. It's good to look at different art rather than plein air, landscapes, urban sketching, and traditional portrait. It's interesting to see the different mediums used and be exposed to different types of art.

I'd like to try some of the Creative unBlock Projects: Draw a quote a day; Cut a big piece of paper into 25 or more random sized/shaped pieces; replicate natural object in unnatural way; draw self as an animal; alter copied b/w drawing in 50 plus ways; blind contour drawings; take painted paper, cut into shapes arrange and collage; Draw/paint/represent an interesting object in 100 different ways in one sitting; Found rocks, trace them & shadow on paper, observe & accurately write down rocks colors, leave rock cairn for others to discover; catalog medicine cabinet; 10 doodles & their recurring motifs, 20-30 inspiration images & similarities, to discover what and why you like; crop from larger image & enlarge cropped piece for new composition; cut something in half and connect it to something else to form a new whole; Find 3 unfamiliar books at library adapt their images into a single artwork; draw a daily object.

Some artists kept everything, some reused their old art and some threw their art they didn't like away. One theme was experiment, OK to make bad art. Some people kept reworking until it worked while others stopped when it was obvious it wasn't working.

Get Up! Why your chair is killing you and what you can do about it. by James A Levine, MD

isbn: 978-1-137-27899-9
copyright 2014
Palgrave Macmillan, a division of St. Martin's Press LLC New York, NY

I've read his previous book. This book is entertaining too. It really motivates you to get up from the chair to incorporate movement into your daily life. Like just walk around when you talk on the phone instead of sitting still.

He told stories from his life. I learned that walking for 15 minutes after a meal will help control blood sugar and help prevent fat from forming. He also wrote about offices and schools that incorporated NEAT, Non-Exercise Activity Thermogenesis http://www.shapefit.com/exercise/burn-calories-neat.html

7 Steps to Financial Freedom in Retirement by Hank Paarrott ChFC, AEP, RFC

Estate & Financial Strategies, Inc.
isbn: 978-1-118-09528-7
copyright 2011 by Hank Parrott
John Wiley & Sons, Inc., Hoboken, NJ

I really liked this book. I like his approach of assessing every aspect of a person's financial situation; holdings and expenses, then determining what was needed to live comfortably. I like a lower risk approach as we get older. We have less time to recover from stock market reverses.

He has some interesting articles on his blog http://www.hankparrott.com/blog/

He recommends an holistic adviser to look at all parts;

• investments- don't just consider highest return for your volatility tolerance. Also consider financial situation and retirement.
• Need to consider taxes to maximize return
• Instead of trying to minimize taxes for current year, it may be better to take steps to decrease for future years.
• Also need to consider estate planning
• Insurance can be used to minimize risk but are not a complete solution

He asks questions to help you look towards the future of when you will need the money from your IRAs and how long do you expect to live.

CDs, Annuities, and some Bonds can help protect your retirement savings and also be blended with equities to provide additional growth against inflation and a more stable income stream. You have to balance Safety/Protection against Inflation/Taxes with Potential/Growth.

I've read about CD ladder. He gave an example of 6 months apart for the next two years.

I'd like financial advisers to read p88. I agree with the book that it is better to design your portfolio around needed rated return while minimizing risk, primarily by choosing and appropriate ratio of equities and low-risk fixed investments. NOT by designing a portfolio that maximizes risk based on perceived risk tolerance of the investor derived from a questionnaire. (Side note: I have not yet met a financial adviser that is able to live off their investments. Therefore, I think the purpose of investing for amateurs should be to protect your savings earned from your livelihood.)

I think Markowitz Efficiency Frontier is about asset allocation where certain asset classes of stocks and bonds with a negative correlation are blended to get desired market return while minimizing risk. http://edinformatics.com/investor_education/ talks about allocation. 3 factors are Market(Stocks/bonds), Size (Small/Large Cap), & Value (Growth/Value)

He discusses estate planning and why it is important. http://www.hankparrott.com/helpful-documents/

Show Your Work, 10 ways to share your creativity and get discovered by Austin Kleon

isbn: 978-0-7611-7897-2
copyright 2014 by Austin Kleon
Workman Publishing Co., Inc.
New York, NY
workman.com

This is a very accessible book, quick and easy to read. Very motivating.

Somethings I took away from it are the following:
p. 14 Be an amateur
p. 16 ...contributing something is better than contributing nothing
p. 19... get started on the path to sharing your work...think about what you want to learn, and make a commitment to learning it in front of others...pay attention to what others are sharing...what they're not sharing....fill [voids] with your own efforts...Share what you love...
p.47 send out a daily dispatch...p. 48 shows what we're working on right now.
p.76. Where do you get your inspiration?
p.77 Your influences are all worth sharing because they clue people in to who you are and what you do...
p.90 work doesn't speak for itself -
p.93 Human beings want to know where things came from, how they were made, and who made them.
p.117 The minute you learn something, turn around and teach it to others...reading list....reference materials....tutorials...pictures, words, video....step-by-step through part of your process..."Make people better at something they want to be better at."
p. 196 Start Over begin again
p. 197 When you throw out old work, what you're really doing is making room for new work.

I actually got rid of a stack of old drawings and paintings to be be more free before I read this book.

This book inspired me to step back and practice sketching dailyish.

Life has been very busy. I've still been reading books but haven't taken the time to post.