Social-Tech Buzz Terms

We come across these terms in things we read. Some commonly used buzz words. I’ll add to this as I think of them:

API – Application programming interface

CMS – Content management system

Enterprise 2.0 – Enterprise social software, such as Jive and Yammer

Gamification – Assigning point values and rating usage to encourage adoption of social / collaboration solutions within an organization by its employees.

GIF – Graphics Interchange Format (a picture file)

SEO – Search engine optimization

SMS – Short message service (text messages)

SSO – Single sign on

Wiki – A collection of web pages

Dave Ramsey’s Money Rules

I came across Dave Ramsey’s basic plan for managing your money. I think he calls this the money pyramid and the idea is to move through this list by completing them in this order:

1.] Build a $1,000 emergency fund that is always accessible for life’s little unknown needs.

2.] Pay off your non-mortgage debts starting with the smallest loan balance first. Then, as each loan is paid off, apply the extra payment to the next loan to be paid so that you can accelerate its payoff.

3.] Build a savings fund equal to 3 to 6 month’s worth of living expenses as a buffer against job loss. The number of months your cushion fund should be is based on your job security, and whether there is more than one job-holder in the household.

4.] Save 15% for retirement. Roth IRA is best vehicle because it provides future tax-free withdrawals. The 401k up to the match level is next best.

5.] Save for your kids’ college. This one is huge and you should start as early as you can!

6.] Pay off your house ASAP.

7.] Give and save any excess equally.

Managing Money Guidelines: Home Budget

How much should you spend on a car? A home?

Here are some general guidelines experts have when you are planning a home budget as expressed as a % of your income:

15% – Transportation
25% – Life expenses
15% – Debt service
35% – Housing
10% – Savings

I would definitely plan to save 20% or more if you can swing it. Most folks retire without adequate savings; so save as much as you can.

What rate of withdrawals on retirement assets should be used in planning?

When you are planning what your retirement income stream will be, advisors typically recommend factoring in a 4% annual withdrawal rate from your retirement assets. Presumably, this will ensure you will not deplete your assets over your remaining years.

Recently however, advisors have been rethinking this axiom. Experts now see two conspiring factors that make a 2.8% withdrawal rate as more appropriate. Those factors are:

1.] A longer life expectancy means you and I could be spending, on average, 30 years in our golden years. Therefore, we need to stretch out our savings by withdrawing less of it each year.

2.] Future investment returns could be lower than assumptions used to arrive at the 4% withdrawal rate. If for no other reason, taxes are expected to be higher for everyone as the US and state governments pay down massive accumulated debts and expanding budgets. This will eat into after-tax returns.

In terms of estimated savings needed to generate $50,000 of annual income in retirement, you need:

> $1.8 million using the 2.8% savings withdrawal rate, or
> $1.25 million using the 4% rate

The difference is significant. The solution is, of course, work longer and defer retirement plans.

Whole Life Insurance doesn’t pay

Like many other parents at the time, my parents were trying to do the ‘prudent’ thing when they decided to purchase a small $1,000 whole life policy when I was born “years” ago.

Over time, the policy had a cash value of about $750 which my parents were forced to borrow when my father lost his job. Sadly, every bit of money – even only $750 – was important to support a household of seven kids.

The first of my parents to pass away was my mother. She died of emphysema caused by years of heavy cigarette smoking. Five years later and my father died. It was then that I found this small policy (and its loan balance) on my life among the papers I sorted through to settle their estate.

Anyway, reviewing the policy and tiny loan repayments my mother scratched out from time to time left me feeling sad for their struggles to provide for a large family. And the more I looked at this policy, the more I felt that I should just go ahead and repay it for them. I didn’t have to. There was a small cash value to simply close the account, but I decided to make a series of small loan repayments. By doing so, I felt connected to what my mother was feeling when she made the small payments.

Once it was all repaid, the insurance policy had a cash value of about $1,650 (and death benefit of under $1,950). Factoring in the many years this policy has been outstanding, and the very modest accrued value, I have estimated that the annualized rate of return was less than 2%. Conclusion is obvious. It was (is) a bad investment and it didn’t even keep pace with inflation. But it is my link to my parents, and that’s certainly priceless.

A rib breaks

A cautionary tail about the unintended consequences of an innocent act:

A couple of weeks ago, while sitting on my office chair, I reached down to the floor to retrieve a piece of paper that had fallen. I stretched and tried to nab that paper. As I stretched, I pressed my ribcage ever tighter against the arm of the armchair.

Then I heard a ‘pop’. And felt a twinge of pain.

I thought “What was that? Did I just pull a muscle?” I rubbed the spot and knew that muscle soreness would take a week or more to go away.

I went about my life. The dull pain was with always present in the background, but I ignored it because it was pretty ‘dull’. I continued to hit the gym and jog, which only inflamed the pain temporarily. But it was tolerable.

Then, on Sunday, I stooped down to tie my shoes. That was tough to do for some reason and required an extra stretch. It seemed to inflame the pain, but I went about my business.

That night I slumped back in the coach and watched TV, but my posture seemed to bring an added sharp stinging pain from the area of my suspected muscle pull. Any move was greeted with excruciating pain. I could not get up from the coach. I also had a great deal of trouble breathing. Only short shallow breathes were possible because deep breathes were accompanied by sharp pain. A bit panicked at this point and unable to ever get up, I wanted for the pain to subside and the breathing to become less labored. I contemplated calling ‘911’ but really couldn’t reach the phone.

I had my iPad with me; so I decided to Google ‘fractured rib symptoms’. All that I was enduring were consistent with this type of injury. I really couldn’t believe it.

As the pain subsided and I was able to delicately rise from the couch, I walked – shuffled really – around the room still gasping to catch my breath, which I eventually did.

That night was tough. I couldn’t lay down to sleep and It was difficult to find a painless position on the couch to prop myself so that I could rest without pain. I nodded off from time to time, but it was a very difficult night. I was so worried about tweaking that pain and setting off the whole thing over again. I think the breathing difficulty was the most troubling and I thought hard about driving over to the ER. But by that time it was 3:30 am and I was managing to keep things contained.

Besides, WebMD and other sites all said there is nothing to do but rest and use basic pain medicine if needed. And this could last for 6-8 weeks! (so much for the summer and my plans to get in running shape for a few 10K’s!)

The next day seemed better. By being still that night, I seemed to be a bit more mobile (ever so gingerly though) and went over to my brother’s for a BBQ. He had broken some ribs years ago and could sympathize with all that I was going though.

Unfortunately, as I explained how this thing happened – along with gesturing the moves I made to trigger the stinging pain – it happened again! And I was unable to catch my breathe as I writhed in pain. He helped me up from the couch and I shuffled around the room to regain my breathe.

It settled down again, but this is what I have in store for a few days or weeks as my ribs slowly heal.

Last night (night 2 of the “incident”), I again slept propped up on the coach. I’m happy to report that I awake to only general stiffness from the way I was resting, and not sharp stinging chest pain. I’ve been careful of my movements today to avoid tweaking the rib. So far, so good. And it will be tenuous day by day I suppose.

A couple of tips:

1 – don’t reach over the air rail of the chair to pick something up!
2 – avoid watching comedies on TV because laughing definitely WILL trigger a sharp stinging pain.
3 – do rest alot

10 Highest Paid CEOs in 2012

As reported in WSJ from analysis provided by Hay Group:

Listed by $millions / CEO / Company / Shareholder ROI in 2012:

$94.6M – Larry Ellison / Oracle $ORCL / -22% — a company he founded 35 yrs ago. Did you know he is buying up Malibu?

$58.8M – Les Moonves / CBS / 42% — content is king

$36.3M – Bob Igor / Disney $DIS / 76% — an empire with Star Wars and Marvel added to the Mouse House portfolio

$33.9M – Mark Parker / Nike / 30% — global going gangbusters and Tiger Woods is back

$33.1M – Philippe Dauman / Viacom / 41% — another entertainment conglomerate

$29.5M – John Donahoe / eBay / 68% — Wall Street expects dominance in electronic payments through PayPal

$27.7M – Omar Ishrak / Medtronic / -6% — Will Obamacare be good or bad?

$26.8M – Rex Tillerson / Exxon / 5% — oil is relevant to the economy; as it recovers, I assume oil earnings will move higher

$26.3M – Kent Thiry / DaVita Healthcare / 46% — Obamacare beneficiary

$26.3M – Howard Schultz / Starbucks / 38% — This guy is the real deal

World QE may mean currencies will race to the bottom

We in America are fairly familiar with the FED’s monetary actions since the financial crisis began in 2008.

Long story short: Dubbed ‘Quantitative Easing’, the FED has steadily pumped money into the financial system (through purchases of mortgage-securities) in an attempt to liquify the lending markets. This has kept interest rates near zero, which has benefited both the US (in lower debt service costs) and borrowers. The FED says they will continue with this policy until the economy picks up and unemployment drops under 6.5%.

The results so far have been mixed. The housing market has picked up, helped by the low lending rates (if you can get a loan with current tighter lending standards), and, employment and the economy are slowly mending. Its debatable if QE is responsible for this of course. But the economy is definitely mending. So that’s good.

In recent months, the Bank of Japan (BOJ) has announced and implemented their own version of QE in an attempt to stir improvement in their economy’s multi-decade sluggish pace. And on May 3, 2013, the European Central Bank (ECB) cuts its key lending rate to 1/2% and hinted at a stimulus package. I’m sure the BOJ and ECB are looking at the economic rebound underway in the US and decided to implement the same medicine in their economies.

So QE is the flavor of the day worldwide. And with it is the expectation that inflation will result from the flood of new currency being pumped into economies. The outcome should then be a devaluing currency base.

So far? No inflation, which is counterintuitive, yet might be the result of slack consumer demand for goods as evidenced by very slow economic recoveries underway around the globe. Without much demand, prices are held in check.

Many hedge funds were betting on inflation through commodity investments. However, without the inflation threat, even gold and other commodities are dropping (see GLD, the ETF for Gold, which is in steady decline). The so-called smart money may be incurring losses for now in those bets.

Still, it seems logical that eventually, inflation will rear its head as currencies race to devalue. Economic recovery or not, devaluation should mean hard assets (commodities) will win out as a hedge against inflation.

Silicon Valley VC Observation

There is a publicly traded “VC” firm called GSVC which has put about $250-$300M in 30-40 private company investments, mostly in the Silicon Valley.

I came across this when Facebook was going public and GSVC was mentioned in an article as a way to get in on Facebook before the IPO “pop” (which didn’t come of course). So I looked into this company and generally liked the idea of buying into private companies using a publicly traded stock.

However, I didn’t buy any, which was a good thing since the GSVC stock was trading on the FB hype and that premium has since evaporated. The stock trades in the $8 range vs a NAV in the $12 range (NAV being what mgmt. thinks its portfolio is worth, which is open to interpretation). I’m not sure it’s a good buy, but I’m keeping an eye on it.

GSVC’s top 10 holdings include Twitter, Dropbox and Facebook. I am a big fan of twitter, but twitter says it’s not interested in going public yet. So that value may take time to be unlocked.

Anyway, I watch this VC / company to get an insight into VC activity and trends. I was interested to know that the composition of their portfolio because includes a healthy dose of education-tech holdings. See the slideshow from their 1st quarter 2013 investor presentation on their website (

Their biggest sectors make up 82% of their portfolio and they are:

• Education-Tech 32%
• Social mobile 24%
• Cloud / big data 26%