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Building a Boat in the Desert

Building a Boat in the Desert

There is a story in the Old Testament (or Torah) in which a man named Noah was instructed by God to build a large boat (called an Ark) in order to save himself, his family, and a lot of animals from a flood that would cover the entire earth.

Although it’s not clear exactly where Noah resided before the flood, and he must have had access to large quantities of lumber, there is reason to believe that he lived in a rather arid environment. We’ll call it the desert.

Put simply Noah was building a giant boat, on land, in the desert. He must have looked rather foolish. But Noah had good reason to believe building the Ark was a good idea and he built it in spite of what I can imagine would have been a lot of derision and mockery from his contemporaries.

Now, I’m not saying for a minute that the next financial crisis is going to be a biblical, extinction level event equivalent to the great flood in the bible. There are a lot of enterprising folks around the world and if the economy crashes and the government stays out of the way, entrepreneurs will be able to provide solutions to whatever problems ensue. Life will go on, even if it is painful for some or even many people.

But the point is, it sometimes takes courage to go against the common wisdom of the day and make some prudent preparations. If other people knew what Noah knew, I’m sure they would have been building boats as well.

As I’ve said before it’s important to have some moderation. After all, the excessive debt, spending, and general recklessness has gone on for some time, and could continue for some time to come. There is no reason to panic or go live in a bunker.

But some day, there will be a point in which governments will no longer be able to borrow and spend money beyond what the economy is producing. The United States in particular cannot continue to borrow money at low interest rates forever. When the marketplace equalizes and goes back to a normal level, a lot of the wealth people thought they had will no longer exist.

That’s why it makes sense to take some steps to consider building your own financial ark. I’ve written about various ways to do this, such as gold, value stocks, holding some cash and maybe even taking a chance on some cryptocurrencies, even though right now they are at the high side of their historic ranges. Silver, which I don’t write about that often, is also significantly undervalued in my opinion.

Some people will say owning gold is crazy. They’ll say cryptocurrencies are a large bubble or ponzi scheme (they could be right about that). They’ll say that buying stocks at all time highs is the only way to go. They’ll say that bonds are safe. They’ll say it’s impossible to beat the market and that if a stock is undervalued there is a good reason for it. They’ll say the dollar will always be relatively strong and that the US debt is manageable.

But that is head in the sand thinking. It’s dangerously naive. Being aware of the risks is important and it’s also important to take some practical steps to protect yourself.

Some people may think you’re silly for building an ark in the middle of the desert, but when the waters start rushing in, you’ll be glad you did.

Sanity in an Insane World

Sanity in an Insane World

I’ve written about problems with the United States dollar and the US economy.

I’ve been influenced by folks like Peter Schiff and Simon Black. To say the least these guys are not bullish on the US economy. I think they’re right and I think it’s wise to listen to what they say, be aware of the risks, and determine what course of action makes sense for your unique situation.

But while things aren’t great, particularly for those on fixed incomes without assets or investments, there hasn’t been a significant stock market correction and the US dollar is still relatively strong. Does that mean that people like Peter Schiff or Simon Black are wrong? Does that mean I’m wrong?

Things aren’t getting better. The underlying problems remain and only get worse. Governments have tremendous debt, interest rates are distorted, governments continue to spend recklessly, central banks are out of control and asset prices are inflated.

In the face of these problems I think there are two mains risks when it comes to behavior that fall on opposite ends of a spectrum. To willfully embrace either of these mindsets and their resultant behavior is, I think, crazy.

The First Kind of Insanity: Doing Nothing

Proud as a Peacock

On the one hand there is a person who does not take the risks seriously because they don’t think there are any significant risks.

People with this mindset believe that the United States can manage it’s debt. They laugh at anyone who suggests the recovery isn’t real or that the stock market growth isn’t based on sound fundamentals.

Subscribers to this attitude think the United States is the richest and freest and greatest country in the world and that $20 trillion in debt and trillions in unfunded liabilities is not a problem. They think the US government can just print money or increase taxes or grow the economy and everything will be fine.

Folks with this type of attitude hold their savings entirely in dollars and US-centered assets. They are comfortable being heavily invested in US stocks. They believe that government promised programs will be there for them when they most need them.

They can’t envision a world in which the United States isn’t the dominant world superpower. They can’t imagine the US dollar not being the world reserve currency.

This mentality is common in those who are blissfully unaware of the lessons of history and the facts of math.

This is the peacock mentality. People with this mentality strut around and deny there are any problems and so do nothing to protect themselves.

An Ostrich Hiding

Similar to the peacocks of the world there are people who realize there are problems with the economy but still choose not to do anything about it. Maybe they think there isn’t anything they can do about it. They think if the dollar falls and the stock market crashes then they have no choice but to go down as well. They’re either unwilling to learn about alternatives or simply don’t think alternatives exist.

They also might willfully ignore anything suggesting there are problems. If pressed they would concede that another 2008 or 2000 crisis are possible and that government debts won’t be repaid, but they really don’t want to think about it.

People with this type of attitude don’t have the misplaced confidence of the peacocks but they make the same choice not to take any decisive action to protect themselves.

They stick their head in the sand. This is the ostrich mentality.

A Second Kind of Insanity: Living Life around Anticipation of Crisis

But at the same time I think there is a risk of having a bunker mentality. This attitude that crisis is imminent and the sky will fall any day now. Individuals who think this way might go 100% into cash. Or go 100% into gold. Or go 100% into guns and food. Or they take huge risks trying to short the stock market.

A Turtle in it’s Shell

But I think this attitude of going into one’s shell is not particularly helpful. It’s hard to accomplish anything or live a fruitful life when you’re hunkered down and metaphorically looking over your shoulder all the time. This is the turtle mentality.

The Golden Mean

Aristotle and the ancient Greek philosophers spoke of a golden mean. The idea that the correct course of action or virtue is the middle path between two extremes. For example, courage is the golden mean between recklessness and cowardly inaction.

The key to sanity in an insane financial world is decisive, measured and purposeful action when it comes to preparation. Two extremes when it comes to investing would be on the one end of the spectrum shorting the S&P 500 with one’s life savings. On the other end would be buying a 3x bull S&P 500 ETF.

But just because I believe US stocks are in a bubble doesn’t mean I’m going to go with the extreme of shorting the market. It does mean that I’m going to limit my exposure to US stocks and be very selective about which stocks I own.

When it comes to dollars the two extremes would be 100% in dollars or 0% in dollars. But just because I think dollars are overvalued and will continue to lose value doesn’t mean I have to go to the extreme of 0%. It doesn’t mean I go 100% into gold or I only own precious metals and cryptocurrencies. I actually advocate holding some cash. Emphasis on some. I also earn money in dollars and invest in value stocks.

This applies to attitude as well. Being negative and pessimistic isn’t going to do anyone any good. Thinking everything is awesome and always will be isn’t a very good approach either. But there are still many great businesses in the US and there is lots of opportunity in the United States and in the world.

The United States has problems. Lots of economies around the world have problems too. There are going to be winners and losers. Many promises that have been made will be broken. But in the midst of all this there is tremendous opportunity. The important thing is to remain calm, take some practical steps to protect yourself and live your life.

Creating Value

The vast majority of money I’ve made has been working for someone else. Why were they willing to pay me? Because I created value for them. The work I did for my employer allowed the employer to make more money than would have otherwise been possible–even after paying for my labor.

That is really the key to wealth: creating value for others.

The vast majority of wealthy people have helped lots and lots of people. Sure there are exceptions, but most people who have wealth have created value in proportion to the money they’ve made.

So if you want to grow wealth, ask “How can I help people?” If you provide a product or service that helps people and it is available to them at an attractive price people will gladly pay you money for it.

I appreciate that can be hard to do.

But there are people and organizations (businesses) that have already figured out a product or service that people want and are willing to pay money for and they often hire others to help them run their business. That is of course the way that most people make money–by working for someone else. That is how I’ve made the majority of my money, by working as an employee.

But the value creation mindset is still there. I think that mindset helps me to be a valued employee. It prompts me to ask: What knowledge, skills and abilities to I need in order to help this company? How can I help make this business more successful? How can I help this business be more efficient and more profitable?

By creating value at a company and helping make the business more profitable I know that I’ll be rewarded as well. Does it always work that way? No. But it has worked that way for me more often than not.

I enjoy investing. Investing is a way to passively grow one’s wealth over the long term. But I need to make money to have money to invest.

The way to make money in business is by helping people. It’s by creating value. Wether you’re starting or running your own business or working for someone else creating value is the key to growing wealth.

Saying No

Taking the right steps to be successful is important. The right activities, actions, and attitudes are vital to success in all areas of life. Doing the right things is important. But it is almost just as important to avoid doing the wrong things.

And in order to avoid doing the wrong things that often means saying ‘no’.

Saying ‘no’ to thoughts, investments, invitations and anything else that isn’t going to bring people closer to their goals.

Saying ‘no’ is an important skill.

Saying ‘no’ to Some Demands on your Time

There are only 24 hours in a day and there are a myriad of competing obligations and demands on one’s time and attention. It’s important to reject those things that will prevent someone from being successful.

For example saying ‘no’ to staying up late because you need some extra sleep for an upcoming week that you know will be challenging. Maybe it’s saying ‘no’ to watching TV so you can read a book or learn a new skill. It could be saying ‘no’ to going out with friends if you should be spending that time doing other things. Or perhaps it is saying ‘no’ to spending money on something new that you don’t really need.

By saying ‘no’ to things that take you further away from your goals you can say ‘yes’ to those things that will help you achieve your goals.

Saying ‘no’ to Some Investment Opportunities

It’s important to say ‘no’ to mediocre or bad investing opportunities. When I was previously trading options I wasn’t always patient in waiting for the right setups, with the right combination of high implied volatility and option pricing. I needed to say ‘no’ to more of the bad option trades so I could make more profitable option trades.

It’s worth saying ‘no’ to investment opportunities that aren’t right so that one can pounce on the right investments.

Saying ‘no’ to Negativity

Attitude isn’t everything but attitude is still vitally important.

It is amazing what a change in attitude can do to even in the most horrific situations.

Being positive is something in it’s own right, but it’s also important to say ‘no’ to negative thoughts.

I find identifying negative thoughts I’m having, and working to replace them with positive thoughts is extremely helpful. It’s not suppressing negative thoughts, it’s realizing they are there and trying to find ways to reframe or re-evaluate a situation so that the negative thoughts are replaced by more healthy, realistic and positive thoughts.

Saying ‘no’ to negative thoughts can help foster a positive attitude.

I rarely enjoy saying ‘no’, wether it’s declining an invitation from a friend because it would interfere with something more important or not watching another episode on Netflix on Saturday because it’s time for me to go exercise. But it’s important to be able to say ‘no’ sometimes so that one is free to say ‘yes’ at the right time.

Ethereum Cloud Mining was a Waste of Money

Ethereum Cloud Mining was a Waste of Money

I wrote back in June of 2016 in an article Ethereum Cloud Mining is Not Profitable. Today is exactly 1 year since I purchased an Ethereum cloud mining contract at Hashflare.io. As I recapped in that article:

In order to simply break even ETH would need to trade up to around 18.7 USD.

I would also be better off if I had just bought ETH.

That article was written about 3 months after I had made the investment in Ethereum Cloud Mining.

I wish I had done the in depth analysis in that article before I made the investment in Ethereum Cloud Mining so that I would have known not to make the investment.

And that is the lesson I learned:

Perform your due diligence before making an investment!

An artist’s representation of how I envisioned Ethereum Cloud Mining would go

I attempted due diligence but I did not consider all the relevant facts. These relevant facts were available to me at the time if I had known to look for them.

Since my mining contract is up I want to recap what actually happened with the benefit of all the facts.

The main beneficiary of my bad experience is anyone who is newly considering Ethereum Cloud Mining: caveat emptor.

There might be other cloud mining services out there that are profitable but in my experience Hashflare.io was not one of them.

Ethereum Cloud Mining Recap

On 21 march 2016 I spent $561 for a cloud mining contract at Hashflare.io. Ethereum was trading at $10.81 at the time. In the one year of mining I mined 41.27 Ethereum. As of writing Ethereum is currently trading at $42.6.

Source: http://coinmarketcap.com/currencies/ethereum/

So that 41.27 Ethereum would be worth $1,758 if I had held onto all of them and then sold today.

This is a $1,197 gain which sounds nice but it really isn’t and I’ll explain why.

Why a $1,197 Gain Wasn’t Very Good

But what if the price of Ethereum had not gone up 294%?

An artist’s representation of how Ethereum Cloud Mining actually went

What if it had stayed the same price of $10.81. Those 41.27 Ether I mined would be worth just $446.

What does that mean?

It means: The gain was entirely due to the increase in the price of ETH–the mining itself was not profitable.

In fact, if I had taken $561 and just purchased Ethereum directly, I could have acquired 51.89 Ethereum, which at current prices of $42.6 would now be worth $2,210 or a gain of $1,649.

So other than sounding cool Ethereum Cloud Mining through HashFlare.io provided no value.

The Problem with my Analysis

The downfall of my analysis when initially evaluating the investment in Ethereum Cloud Mining was assuming linear growth in hashing power of the Ethereum network.

I explain this in more detail in my original article and I also provide a process for making more accurate predictions wether a cloud mining contract will be profitable or not. Using that process I predicted I would mine about 30 ETH.

This prediction was much closer to what I actually mined compared to the 120 ETH predicted using static models.

It was a tough lesson to learn but thankfully the amount at risk was relatively small at $561.

Do Resolutions Work? The Keys to Realizing Your Dreams

Do Resolutions Work? The Keys to Realizing Your Dreams

Everyone has dreams and desires.

Maybe it is a boat or a million dollars. Perhaps the dream is to lose weight or gain muscle. The dream could be a house in the fashionable neighborhood, or a relationship with the right person, or a promotion, or spending more time with one’s children.

Dreams are great. I think most people (myself included) would benefit by dreaming MORE.

But you can’t stop there if you ever want your dreams to become reality because you need goals to accomplish your dreams.

I can’t summarize it better than Harvey MacKay.

“A dream is just a dream. A goal is a dream with a plan and a deadline.” ― Harvey MacKay

Turn Your Dreams Into Goals!

Take some time early in January to set goals based on your dreams.

If you had goals in 2016, take some time to evaluate how they went.

Goals should be SMART. The definition of a SMART goal varies but each one should be some combination of: Significant, Motivational, Achievable, Results-oriented, and Trackable.

Write down your SMART goals, and share them with someone who will check in on you and keep you accountable.

But don’t stop there. You need to spend time figuring out HOW you’re going to meet your goals.

You need to have a detailed plan and proven approach to follow in order to be successful.

Another key factor is Motivation.

Find a WHY to Motivate you

Anything worth doing requires hard work and sacrifice. Hard work and sacrifice aren’t fun or easy.

You need a WHY.

WHY are you doing what you’re doing? What drives you to accomplish your goals?

In the morning what is going to get you out of bed and pursuing your goals? When you come to obstacles, challenges, and setbacks what is going to keep you striving and working hard?

You need a WHY.

Twenty Seventeen is the Year You Do It

“Do it.” – Art Williams

Let 2017 be the year you use your dreams to set SMART goals, write them down, find an accountability partner, develop a detailed plan and schedule that you’ll use to accomplish your goals. Define your WHY and think about your WHY every day to stay motivated.

My Goals for 2017

I have goals that fall into a variety of categories such as spirituality, fitness, relationships and finance.

I’d like to share a few of the goals I intend to accomplish by the end of 2017.

By writing down a goal and sharing it with others it mitigates the temptation to give up or change the goal.

Make $.75 per day in Bitcoin-related Passive Income

I currently make $.55 per day via the Bitbays arbitrage fund. By the end of 2017 that will have grown to ~$.62 per day.

I need to bring in $.13 additional cents per day to get to $.75. I plan to do this via Bitfinex margin funding.

Seventy-five cents per day might not seem Significant, but an extra $22 per month in passive income is helpful.

PLUS this is just the beginning.

Compound interest takes time, but it has a snowball effect and this goal is Achievable. I don’t think $20 per day in passive income is achievable at this time (that was my 2016 goal).

Grow my Trading Account by 8%

I lost money in my trading account in 2016. I don’t want that to happen again.

So I’m taking what I think will be a safer and more passive approach by selling covered calls on the value stocks I like.

“Many people fail in life, not for lack of ability or brains or even courage, but simply because they have never organised their energies around a goal.” – Elbert Hubbard

Stick to my Budget

I have a budget that details how much I plan on spending each month on food, rent, gasoline, etc. One of my goals each year is to stick to my budget.

I set up a revised budget in July of 2016 and I stuck to it. It helped me financially survive during my time of unemployment. I intend to keep to my budget for 2017 as well.

It doesn’t matter how much money you make or how much money you have: if you don’t live within your means you’ll go bankrupt.

Just look at Mike Tyson, who earned an estimated $400 million as a boxer, and who declared bankruptcy in 2004.

Wether you’re rich or poor you need a budget to ensure you live within your means, however modest or grand those means may be.

Make $1,000 Selling Coins

I made $1,868.66 selling numismatics in 2016. I hope to make about $1,000 in 2017 following similar techniques. This is something I’ve shared with my newsletter but I haven’t yet written any articles about it.

Grow HowIGrowMyWealth.com Audience to 500 Users per Month

Last year my goal was 1,000 users per month to this website. I didn’t hit that goal. My best month was September, in which I had 634 users. The average was 361 users per month. This year I’m setting a goal of an average of 500 users per month.

I’m going to accomplish this goal by continuing to create content on a regular basis as well as do more guest posts on other sites. I also promote my content on Facebook and Twitter.

Additionally I’m striving to increase the subscriber base to my newsletter. You can help me to do that by signing up!

My WHY

I have aspirations to marry and I want to be able to support a family.

I also want to be present to my family.

I don’t want to be reliant on a boss telling me when I can or can’t take a vacation. I want to have flexibility in when I work. I don’t want to miss out on my kid’s soccer games or ballet recital because a report is due. I don’t want to worry about paying bills or getting laid off.

I believe that if I work both hard enough AND smart enough I can achieve financial independence that will allow me to provide for a family and be there for them.