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Paisley

@pai291

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Gross Domestic Product (GDP)
  • This is the most basic indicator of the overall market value of a nation's finished domestic goods and services and the country's health and size.
  • There are two types of GDP: real and nominal. The former is the economic output after inflation is factored in while the latter does not take inflation into account.
  • The GDP is important because it gives us an idea of whether the economy of the country is growing or contracting.

@pai291

GDP vs. GNP: What's the Difference?

investopedia.com

In order to calculate the GDP you must add all of these components:

  • Consumer spending: this is the value of the consumption of the goods and services of the country's households; this is the largest part of the GDP
  • Government spending: ALL consumptions, investments, and payments made by the government for current use
  • Capital spending of businesses: Expenditure on purchases of fixed assets and unsold stock by private businesses
  • Net exports: represents the country's balance of trade
  • This is the metric used to measure a country's economic output that is produced by all the citizens of a country regardless of their location.
  • It represents how its nationals are contributing to the country's economy.
  • In order to calculate the GNP, you must add the same components above along with the net income by domestic residents and businesses from overseas investments, then subtract it from the net income earned by foreign residents and businesses from domestic investment.
Wealth In The Modern World

Investing is about 9 percent theory, 1 percent execution and 90 percent emotion management.

Not everyone becomes a multimillionaire, at least not in the short run. The good news is that there are a lot of financial opportunities in the world, and it is possible to build wealth using public markets as a long term investment. Investment requires managing our emotions, and not to be bogged down by the ups and downs of the volatile markets.

The Stoic Path to Wealth: An ancient investing strategy for the modern world

dariusforoux.com

Stoicism is a life-survival strategy, a way to protect one’s sanity while facing the ups and downs of life. It helps us focus on what we can control and to let go of the stuff we cannot control.

While not many are aware of this, stoicism embraces money and wealth, and advises a person to make money with honesty, dignity and trustworthiness.

No matter how little you earn using income-generating skills like writing, speaking, coding or managing, you can get started with investing by simply earning more than your expenses.

One needs to focus on the income-generation part and create value out of nothing, using one’s skills.

We all have loss aversion, preferring to avoid losses even with the opportunity cost of gaining profits. Losing money, in fact, is a necessary rite of passage that most are not okay with.

The best investors are the ones losing money, but who are smart enough to never lose more than 10 percent of their investment by applying diversification and other investment philosophies.

Stoic investors make smart, balanced bets. Most of us invest in secure funds with low returns. Investors looking at bigger returns opt for index funds. If you are okay with losing money, that does not mean that you should.

The 90/10 investing thumb rule states that we should put 90 percent of our money into stock investments in index funds with moderate to high returns. The rest of the investment money should be used to speculate on the short-term risks like currencies, Bitcoin etc, that offer a high upside.

Budgets and holiday celebrations

The holidays are usually filled with joy, celebration and the giving of gifts.

Having a financial plan in place will enable you to be less stressed and get through the holidays with your finances intact.

How to Get Through the Holidays Without Going Broke

hbr.org

Our emotions are often more intense during the holiday season. Marketers are experts at using those feelings to make you buy things.

  • Make a rule for yourself: If an ad on the internet suggests a product to you, don't buy it.
  • Treat your emotions as if they are people. It can help you to detach from that emotion and be more mindful when you buy gifts.

Ask yourself what you think a realistic amount is to spend on gifts for yourself and others. It should be a number that you can realistically afford without dipping into your savings or creating credit card debt.

Then do your best to stick to your budget without getting caught up in consumerism. One strategy could be to use your travel funds. If you've cancelled a trip, you could redistribute a portion of those dollars for gifts.

For those who are able to see your family in person this holiday season, you can save money by doing a white elephant gift exchange instead of buying gifts.

Another fun activity is cooking a special meal or playing old fashioned charades.

Experiences often stand out over possessions in our memories. You can explore a nearby park or nature center with your friends and family, ice skate, ski, visit a zoo, or any number of other activities.

Online, you can host a talent show or take a virtual craft course. The memory of doing a tutorial together and the funny mistakes you made, will stick for a lifetime.

In 2009, Domino's ad campaign focused on a blind taste test for its new oven-baked sandwiches, claiming that its sandwiches beat Subway 2-to-1.

The people at Subway disagreed, and sent Domino's a cease-and-desist letter. Domino's CEO personally responded in a new ad. The feud died down a couple of months later.

The 12 Most Intense Marketing Wars Ever

businessinsider.com

Verizon ads compared the companies' superior 3G coverage to AT&T's with "There a Map for That." AT&T hit back with a series of TV spots attacking Verizon network's inability to browse the web while talking on the phone.

Then AT&T sued Verison over the accuracy of its 3G ads, which led to a countersuit. Both lawsuits were dropped.

The 12 Most Intense Marketing Wars Ever

businessinsider.com

Wealth Is A Relative Term

The definition of wealth is personal. It may mean something different to everyone.

To some people, wealth is always going to mean money. But it's not that straightforward. 41% of people feel "wealthy" if they have meals out or food delivered. Services such as Netflix, Spotify, or Amazon Prime made life feel richer for 33%.

The Definition of Wealth: What It Really Means To Be Wealthy

listenmoneymatters.com

According to a Modern Wealth Index Survey, the amount needed to be comfortable in America is $1.4 million. To be wealthy, you'll need a net worth of $2.4 million.

An average pre-tax yearly salary of $389,436 is needed to be in the top 1%, although it varies by state.

We all, rich or poor, have the same 24 hours in a day. But we can use our money to buy more time. For example, by eating out, you don't have to decide what to cook, shop for ingredients, cook, and clean it all up.

If you can carve out more time for yourself, you can use it in other ways that will improve your life. You can start a side hustle, exercise, read, or spend time with family and friends.

By 2020, 65% of all jobs will require postsecondary education and training beyond a high school diploma. But with the cost of college education, this is out of reach of many people.

A college degree has increasingly become something only available to the wealthy. The rest have to take out a student loan which makes it harder to amass wealth.

Some people view wealth in terms of prestige and not dollars. They would rather have a job that requires years of education than learning a trade, even though they may earn less with their Master's or Doctorate degree.

But less than half of those who start college finish - they don't have a degree, only a student loan debt. They may have been better suited to a trade. As 70% of construction companies have trouble filling jobs and robots take over more white-collar jobs, it might be wise to attend trade school rather than college.

Housing should be no more than 30% of your income. Warren Buffett's house is worth .001% of his total wealth.

The possession of things differentiates the rich from the wealthy. Wealthy people don't flaunt their money; they save and invest it.

If you just want to have a comfortable life, it is increasingly out of reach. If you earn the minimum wage of $7.25 an hour, you can't afford a two-bedroom apartment anywhere in the US. In 1963, wealthy families had $6 for every $1 of families in the middle. By 2016, it was $12 to $1.

It is very easy not to "look poor." If you have access to credit, you may be poor because you're in debt, but you can buy the same things rich people have, iPhones or vacations. When people can hide being poor from themselves, they don't demand change.

Money can actually buy happiness. It takes less than you think and it depends on what you buy.

It takes between just $60,000 -$75,000 for emotional well being and happiness. Earning more than that can make you unhappy, because you have more demands on you, more hours spent at work, and less time doing things you enjoy. Buying experiences also make you happier than buying things.

Living and enjoying life is not dependent on money. Some of the happiest states in America are also some of the poorest.

For example, Lafayette, at the heart of Acadiana, which is better known as Cajun country, is said to have delicious food and drink, which makes things like fairs and festivals more fun.

Two of the biggest innovations

Two of the biggest innovations of modern times are cars and airplanes. At first, every new invention looks like a toy. It takes decades for people to realise the potential of it.

  • Adolphus Greely, a brigadier general, was one of the first people outside the car industry to consider the usefulness of a "horseless carriage." He bought three cars in 1899 for the U.S. Army to experiment with. It was envisioned to be used as transportation of light artillery such as machine guns, to carry equipment, ammunition, and supplies.
  • The Wright brothers saw the prospects of their new flying machine to be used as a reconnoitering agent in a time of war. The U.S. Army purchased the first "flyer" in 1908.

When The Magic Happens

collaborativefund.com

There are three types of incentives:

  1. "If I don't figure this out, I might get fired." It will get you moving.
  2. "If I figure this out, I might help people and make a lot of money." It will produce creativity.
  3. "If we don't figure this out now, our very existence is threatened." Militaries deal with this, and it will fuel the most incredible problem-solving and innovation in a short time.

During World War II, there was a burst of scientific progress that took place. The government was in effect saying that if a discovery had any possible war value, then it had to be developed and put in use, regardless of the expense.

The biggest innovations seldom happen when everyone's happy or safe. They happen when people are a little panicked and worried, and when they have to act quickly.

In 1932, the stock market fell by 89%. It was an economic disaster where almost a quarter of Americans were out of work. However, the 1930s was also the most productive and technologically progressive decade in history. Economist Alex Field writes that in 1941, the U.S. economy produced almost 40 percent more output than it had in 1929, with little increase in labor hours or private-sector capital input.

  • While the 1920s were the era of the automobile, the construction of roads took off in the 1930s with multilane engineering marvels, including the George Washington, Golden Gate, and Bay Bridges, cutting travel times.
  • Electrification surged in the 1930s. Power was brought to farms. Electricity turned from luxury to a necessity.
  • Electricity became a servant to washing machines, vacuum cleaners, and refrigerators, freeing up hours of household labor.
  • The first supermarket opened in 1930.
  • Productivity growth in the 1930s took place in utilities, farming, wholesale trade, retail, transportation, mining, and communication.
  • More young people stayed in school because they had nothing else to do, resulting in a surge in high school graduation and college graduates.

The big technical leap of the 1930s could not have happened without the devastation of the depression. However, there is a limit to stress-induced innovation: The foundations of the economy itself should remain intact to support new ideas and innovations.

This balance between a disturbance in the economy, while the foundations of the economy remain intact, has only happened a few times in modern history: the period from 1930 to 1945 and in 2020.

Innovations usually begin with an attempt to solve a specific problem, but they end up triggering other changes that would have been very difficult to predict. An innovation in one field ends up encouraging changes in different domains.

  • Right now, many biotech companies are focused on finding a solution to one virus. It could create a fertile ground for new medical discoveries, new manufacturing and distribution methods, a newfound respect for science and medicine.
  • A shift to remote work could make cities more livable and rural areas more prosperous.
  • The value, price, and product of education have fundamentally shifted, creating new opportunities in delivering affordable education.
Winning A Lottery

Human beings are not wired to grasp the concept of probability. A chance of winning a lottery, sometimes 1 in 175 million, is not something that bothers us.

The Lottery ticket, selling in billions per year, remains a popular sport in the world, and is something whose appeal has increased during the recent recession.

Why We Keep Playing the Lottery

nautil.us

The steady appeal of the lottery is due to various psychological tricks by the marketers: suspension of logic and reason and the dreams that it sells.

Using the variable rewards concept of psychology, the marketers ensure that people keep buying their tickets for years, by introducing smaller wins with much better odds. This helped lottery buyers experience the thrill of a win.

The odds to win are so small that winning does not even feature in our decision matrix of buying a ticket. The game of lottery isn’t played on logic, or for investment, but for entertainment.

For as little as two dollars, a person dreams of getting a chance to win thousands of dollars, and that dream is worth the price of the ticket. The bigger the jackpot is, the more the dreams are fed.

Different price points, themes and designs of lottery tickets provide variety and reduce player burnout.

The creative concepts keep things fresh and exciting for regular players, making them experience a sense of possibility. Having lottery tickets placed at ubiquitous points facilitates impulse buying by reducing friction.

  • The odds of winning are so low in the lottery business that it becomes irrelevant and marketing the dream of winning becomes possible.
  • The brain relies on crude calculations, and cannot comprehend infinitesimal odds. The winning fantasy activates the same area of the brain as a real win would.
  • Religion and superstition go hand in hand with the lottery game, each being uncertain and based on intangible odds, often rooted in fantasy and old beliefs.
  • The depiction of winners in a limo, covered in gold coins target one's basic instincts.

Many lotteries play to the basic psychological error of the brain which correlates a near miss with better luck.

They allow players to choose a combination of four or five numbers and players experience an illusion that they almost won. In reality, the odds of winning keep getting worse with each successive number batch.

Players, and shoppers in general, think myopically about the purchase being made.

If they spend $1 buying one ticket while waiting for their turn at the supermarket checkout counter, they may buy five or six tickets in a month. However, if they ‘bracket’ their purchase together and consider buying five tickets with the $5 that they have, they are not likely to buy them all together.

The framing of the winning amount (You could win a hundred million dollars!) creates an anchor in the player's mind and the focus becomes the large sum of money.

The price of the lottery ticket (a dollar) seems inconsequential in front of the large figure already anchored in the minds.

The human mind is sensitive to loss, and has a natural feeling of comparison towards those who have more, fueling the emotions of fear and regret.

In the Netherlands, a ‘postcode’ lottery which awards participating residents of a certain winning postcode every week, made use of the non-participating residents feeling of jealousy and loss due to being left out of the win to further advance their ticket sales.

Saving Money May Be Worthless

The mere act of saving money by itself does not make one rich, or wealthy. Saving is not the magic sauce of retiring early and enjoying life to the fullest.

Wealth comes from investing. It is a direct effect of what we do with the money we save. Saving may well be the first step.

What's your money's purpose? No one ever got rich by saving money

thinksaveretire.com

Early Retirement can be summed up as:

Money Invested In A Purpose + Our Motivation = True Freedom

The key is to make the money work for you, not you working for money. One has to invest money, not just not spend it and feel as if everything will be taken care of.

  • Know where your money is going and check for invisible leakages.
  • Understand that your current scenario needs to change for the better and you have to get into your dream life.
  • Invest in something worth the time and money, while ensuring it is given an ample amount of time.
  • Be persistent and patient towards your investments.

Slack makes it possible for tens of millions of employees to have online conversations, ask questions, share information, make decisions. The platform reproduces the culture of the open-plan office by combining smartphone text messaging with the ability to separate and chronicle streams of workplace communication.

In 2020, there was an increase in number of people working from home and universities canceled in-person classes. Monday, March 9, 2020, Slack’s worldwide connected users hit an all-time high.

'We were made for this': How Slack became king of the remote-work world

fastcompany.com

Slack became indispensable

Investors had been wary of Slack since it went public in June 2019 because of its slowing growth, lack of profitability, and competition from Microsoft's competing product called Teams.

But as business swerved to avoid contagion, people were flocking to Slack's product to cope with disaster. Slack became a critical service, like Wi-Fi or electricity.

Although Slack also runs on Slack, the company had a work-at-office culture. As the company closed its offices in March, the executive made a series of decisions to make its mission clearer: Slack would take care of its people first during this crisis. In turn, those employees would take care of their customers.

  • They offered to reimburse each employee up to $500 for whatever equipment they needed to do their jobs at home.
  • When the schools closed, they advised people to work when they could.
  • They encouraged their employees to log out and take care of their kids and families.
  • They offer to pay employees their full salaries.

A lot of people are relying on Slack at this moment. They ensure that offices can keep on functioning.

"There's a feeling inside that the company was made for this crisis," says Slack's CTO, Cal Butterfield.

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