The Amateur Financier

Have you ever had something you were writing get overtaken by events?  You know, you’re writing about how tensions between the United States and the Soviet Union are only going to get worse, when you turn on the TV and see that, hunh, the Berlin Wall is coming down, making everything you just wrote seem completely deluded.  Sound pretty familiar?

Well, something similar happened to me this weekend; I had a post in mind about what will happen if (actually, when, at that point) an agreement to raise the US debt ceiling was NOT reached.  Low and behold, as I was putting some of the finishing touches on the article, I saw in my Alexa toolbar something about ‘Agreement on Debt Ceiling Reached’.  I put my article, which would have gone up today, off to the side, and low and behold, in just a few short days, the politicians in Washington managed to do what they hadn’t in months of squabbling up to that point.  Since my original post is all but worthless now, let me try to sum up some of the feelings of my fellow Americans in the following rant (Warning: politics ahead; you may want to escape while you still can):

Well, well, well.  After months of squabbling, bickering, accusations, and general carrying on, the United States Debt Limit has been raised.  Yes, rather than screeching to a halt (or at least, finding themselves forced to make the sort of decisions about what programs should be funded and which should not, the sort of decisions that far too many families and other organizations WITHOUT the power to raise how much they can borrow at will have had to do), the government will keep right on rolling, doing…far too many things for me to cover in a single blog post.

I think now is as good a time as any for fireworks, don't you?

I could, I suppose, discuss more about just what a debt limit increase means, both for the economy (US and global) at large and for the government itself, but I’ve already covered most of the pertinent facts when I first discussed us hitting the debt ceiling, back in May (Yes, yes, it was ONLY back in May; I know it feels like they’ve been arguing this for well over a year, but it’s only been about two and a half months since we hit the ceiling and the REAL fun began.)  With all of that said already, I have only one thing to say on the subject:

What the heck, Republicans?

You managed to get spending cuts with no tax increases (or for that matter, decreases in the number of available tax credits (that whole ‘spending in the tax code’) that Obama talked about), thus managing to tackle the rising national debt WITHOUT having to increase taxes, AND put Obama in a position to shoulder nearly all the blame for even more debt limit increases next year.  That’s a political Hat Trick if ever I’ve seen one.  Yet, YET, to judge from some of your reactions (compiled below in helpful Daily Show format), you seem to think this isn’t enough, in spite of the fact that you’ve gotten just about everything you could have hoped for (and given that you control only one house of Congress and the President is a Democrat, you shouldn’t have hoped for nearly as much as you did in the first place), you STILL seem upset:

Look, I’m a Democrat (albeit a Libertarian leaning one), so we’re probably not going to see eye to eye on most subjects, but here’s the thing: if you really want that pesky national debt gone, or at least cut down to a more manageable size, taxes SHOULD at least be on the table.  Trying to balance the national budget (and generate a surplus) on spending cuts alone will require making some serious, deep cuts to many beloved programs.  Trying to get our national budget in order on spending cuts alone is similar to a household trying to get its budget back in order only by cutting down spending, with no thoughts to earning more money: possible, but potentially harder than it needs to be.

Now, perhaps you want to do this; heck, perhaps I’m greatly misguided and most of America WANTS you to cut down federal spending to almost nothing, but my gut feeling is that there are some things on the table that, while they might be trimmed, are unlikely to be completely cut anytime soon.  (Medicare and Medicaid, for example, strike me as things you don’t want to mess with too much; the controversy surrounding Paul Ryan’s proposed budget seems to prove that.  As a side note, since I’m talking to politicians right now anyway, I should tell you that anytime I see a proposal like Ryan’s that changes a major government program ONLY for people under the age of 55 (or any age selected from the 45-65 age block), I automatically assume that (a) it’s a horrible change, (b) if it affected current seniors from the start, none of them would approve of it, and thus, (c ) leaving the current seniors out of the proposal is a shameless ploy to keep their votes, and given how seniors are frequently the voters who vote the most, win the election even as you alienate every young person.  Just something to consider, from one twenty-eight year old voter.)  If that’s the case, please bear in mind that you will need SOME tax income to fund them, and perhaps finding ways to increase that tax income would be a good thing, after all.  (I’d recommend trying to make a flatter, still somewhat progressive income tax system, with a much lower amount of deductions, preferably one where everyone making more than poverty wages paid at least SOMETHING in federal taxes.)

There, my ranting and raving is done (for now).  To all my regular readers, I promise tomorrow I’ll be back to personal finance writing, and I’ll leave the politics to the political writers.  (It’s harder than it looks, anyhow.)

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I enjoy being a personal finance blogger.  It gives me a chance to expand my knowledge of personal finance and interact with many interesting people, most of whom have made me think in a new or different way about how I manage my money and my personal life.  I keep coming back (as much as my increasingly busy schedule allows.

But along with the good, thought provoking information, there’s also a lot of dreck out there.  If you’re familiar with how Adsense works, you’ve probably noticed the advertisements along the side of my blog (as well as in Google searches, and alongside Gmail entries, and everywhere Google has a presence, which is just about everywhere online nowadays).  The ads that get shown are related to the content of your search, a rather smart policy, allowing you to get ads relevant to your interests.  Nothing wrong with that.

The problem I have is that, since I am a personal finance blogger, I see a lot (I mean, a LOT) of ads that are related to money and investing (as well as blogging and similar services, but let’s focus on the money ads for the moment).  Many of them are good, high quality ads; I’ve seen ads for ING and Morningstar quite frequently, both of which are services I support.

But many of the other ads seem to be thinly veiled scams.  From offers to ‘Double your money in penny stocks in days’ to ‘Make thousands in online profits instantly’, from reading the ads (including, I’m willing to bet, the ads currently appearing on the side of this very blog entry, given the language I’m using), you’d think that you’d be able to simply download an app that pumps money directly into your bank account (after a small fee, of course).

Now, I probably don’t need to tell most of my readers that the promises made in these types of ads are at best, greatly exaggerated, and at worst, completely fraudulent.  A method that could really allow everyone in the country (or a sizable swath thereof) to be become wealthy with almost no time or effort put into the process would all but literally sell itself.  The creator of this system would end up on every morning talk show in existence, be known throughout the country, and live a lifestyle where having a late-night infomercial would not be seen as a major step up.  And that’s not even getting into the fact that, if these programs were half as easy and successful as the creators claim, they would be able to sit back and enjoy their fortunes, rather than spending their time trying to encourage others to follow in their footsteps.

My Modest Proposal

So, with all that in mind, here’s my modest proposal for every get-rich-easily guru out there: offer your programs for free.  No up-front fees, no annoying daily emails, gathering personal data to sell to the highest bidder.  Just share the method that you’ve gone on the record as claiming has made you hundreds of thousands, if not millions of dollars.

What have you got to lose?  You’ve gone on record saying that these systems have made you millions, and will continue to make you millions; what’s foregoing a few $77 Clickbank commissions to you?  The system only works if you limit the number of people who use it?  Well, I’d argue that offering it online to anyone willing to pay is not the best way to limit access to such a ‘fragile’ system, but hey, I’m not the millionaire guru.  There’s still plenty of ways that you can limit access without making a financial gain; offer it only to the first hundred, thousand, or ten thousand people to accept your offer, for example.  Your plan actually is ‘write an eBook or other other online program and sell it to thousands of dupes for a small fee each time’?  Well, I respect your honesty, but (a) that’s not much of a plan, let alone enough material to fill an eBook I’d actually pay money for, (b) there are plenty of free resources out there telling people how to do that already (and even more telling them how to be ‘affiliate marketers’ who make money by promoting such books), and (c) if you aren’t saying that in your ads, you’re not being that honest with your customers, and I’ve lost pity for you.

So, come on, millionaire makers, let’s see you put your money where your mouth is; if you aren’t offering your advice for free, I have a hard time believing your program will actually work as advertised.  So who’s with me?

*Sound of crickets chirping*

I thought so.

(Apologies to Jonathon Swift for ‘borrowing’ the title of one of his most famous books.  It just happens to be an excellent term for just about any discussion of ideas that just make you wonder, hunh, why isn’t that the way that things are now?  (As well as Swift’s original point, making an insane suggestion to show the ludicrous nature of current policies.)  Hopefully, I’ve done at least some justice to his work with this post.)

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I’ve now been working at Wal-Mart (or as a disturbing number of relatives, friends and passers-by insist on calling it, Wally World) for a little over a month.  I’ve gotten the basics of the job down pretty well, and have been working hard, even if the job is far from what I expected to be doing with my life at this point.

As I’ve gone about my daily work, I’ve noticed many things that, well, just plain annoy me.  So I’ve decidedthat the best way to change some of this behavior, is to note it in my blog.  What follows thenis a list of do’s and don’ts for Wal-Mart and other retail store shoppers.

DO Ask for Help When Necessary: The people working at Wal-Mart or other stores are there to help. I obviously can’t speak for every single retail worker in the country, but the ones I have met, are generally eager to help customers whenever possible.

DON’T Interrupt Other Work: That said, there are times when I and other Wal-Mart workers will be occupied with other tasks that require our attention (such as stocking high shelves with heavy objects).  If you require assistance during those times, please just wait for a moment or two while we finish doing what we were doing (or at least have set down anything we might drop on our own or someone else’s head), and then we’ll be glad to help you.

DO Ask If There Is More Of A Product In The Back: Try as we might, we can’t refill the shelves as fast as you, the customers, can deplete our stock; you simply have too much of a numerical advantage for us to win that game.  (Especially when there is only one person assigned to refill the shelves in a particular section, a situation in which I frequently find myself.)  If you ask (preferably politely), we can go into our store room, look through the products we have, and perhaps provide you with what you need.

DON’T Get Angry If We’re Completely Out Of Stock: Our backroom, alas, is not a magical tesseract that connects us to the production floors for all our items, effectively giving us an infinite amount of any item you want.  Sometimes, we’re just plain out of something.  In those cases, getting angry with the low level worker (such as myself) that you’ve encountered on the sales floor will do no good.  If you really need to acquire the item, the best chance you’ll have is to go to customer service desk and get a rain check.

DO Feel Free To Ask When The Next Shipment Will Arrive: If you do opt to get a rain check, or simply want to come back when we have more of the product in stock, you can ask when the next truck carrying that product will be arriving.  It might take a little digging, but we can usually find that information out easily enough.  (Just bear in mind that the time when the shipment arrives and when we are able to get the product out on the shelves for you to buy might be several hours apart, especially when, as mentioned, there’s few people doing the stocking of the shelves.)

DON’T Ask For Products To Be Put Aside For You: Generally, the rank and file (and frequently the managers) in a large retail store have no power to put aside items in the back for your future purchase.  Besides the fact that we can hardly guarantee that the products won’t go out on the shelves the moment we leave the store, you can hardly expect us to hold products for customers who may or may not follow through on their promise to buy it in the future.  You’re not completely out of luck, though; you can have products set aside in some cases (usually at stores that still offer layaway) or get a rain check that will enable you to purchase the item at the desired price when you want to in the future.  Either of those methods will have more success (and get the employee in less trouble) than asking someone to put aside a product for you under the table.

DO Ask About Any Specials: Employees can direct you to any possible savings in the store, showing you where the discounted products are kept or letting you know about any pending sales.  There might be ways to save money that you didn’t know about, which the employees can clue you in on.  Not everything will be on sale, though, which brings us to our next point…

DON’T Try To Pressure Employees Into Giving You A Discount: The average retail store worker has no incentive to overcharge you on your groceries or other goods; you’ll be able to pay the listed price on everything you purchase.  Trying to get the cashiers to give you an ‘employee discount’ or otherwise decrease your bill will not only annoy the cashier, but can lead to a big scene.  (If the employee does take advantage of their employee discount or otherwise illicitly decreases your bill, they’ll likely face disciplinary action and possible job loss; hence, the number of employees who’ll acquiesce to your desires is fairly small.)

DO Be Courteous: Remember that the people working at Wal-Mart or other retail stores are just like you: hard-working, capable and eager to help.  Treat them with the same level of courtesy you would treat those in your everyday life.  If you treat them well, they will do the same for you.

DON’T Be A Jerk: This should fall under ‘being courteous’, but it deserves its own mention.  There are times when things will go wrong on your shopping trip: the store is out of one of the items on your list, a sale expires, or you simply can’t find what you want to buy.  Taking out your aggression on the employees will do nothing to improve your shopping experience, and only make that employee much less likely to want to help you in the future.  Treat store employees as you’d want to be treated, and everyone will be much happier.

There you are, several tips on how to behave at retail outlets, from someone who’s spent more of his past month there than he ever intended.  Enjoy your next shopping trip!

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I have many pet peeves, from the oh-so common misuse of scientific terms (as any number of fellow Star Wars fans could point out to you in great detail, a parsec is a unit of distance, not time) to the need to include onions in almost every dish (I’m looking at my fiancee, Sondra, for this one).  One in particular that bothers me (and more to the point, has a rather negative influence on society in general) is the tendency to mix up correlation and causation.

In a nutshell, correlation is simply when two events are close together in time and space, whereas causation is when one event leads to the second event occurring.  Events can be correlated without having a causal link; just because you got hit by a car after losing your lucky penny, doesn’t mean that losing the penny caused you to get hit by a car.  There’s an tendency of the human brain to assume that all events, particularly bad events, are caused by something we or someone else did.  This is good in a way; if smoking really does cause cancer, for example, it’s good to know in order so you can avoid predictable problems in the future.

They don't call them 'cancer sticks' for nothing

The problem is that humans, as we so often do, tend to take it too far, seeing causes in places where there are none (or where the causes are subtle and difficult to discern, or where the causes are well outside of our control, etc).  A complete list of such situations could fill many pages on its own, but a short list can include:

• Any good luck charm, particularly when you’re trying to influence events in which you are not participating.  As much as you may think the outcome of the game you’re watching hinges on whether youare wearing your lucky underpants, trust me when I say that it doesn’t.
• Whenever some form of media is blamed for someone’s (usually a teen’s) bad behavior.  Cracked made a good point about video games and violence in a larger article about ways the news media distorts the news.  Pornography or other sexual explicit material is another area where this comes into play.
• An awful lot of scientific studies, particularly in the social sciences (psychology, sociology, etc.).  It’s hard to prove definitively that certain personal traits cause other traits or particular behaviors; at best, you can sometimes point out that two traits are often seen together, but that doesn’t tell you much about which one causes the other, or even if one is in fact a cause.  (To cite just two examples I’ve seen floating around, liberals are more intelligent and conservatives are more generous, if these studies are to be taken at face value.)

There’s many more examples that could be mentioned, but you’ve probably gotten the point: we humans have a tendency to ascribe as causes earlier events that just ‘seem right’, without proof that they actually caused the later events.

What Can We Do?

One of the best ways to protect yourself from falling into this fallacy of assuming correlations are causes is to be aware of the ways that one event that seems to cause another can be related in another way.  Let’s consider an example from the realm of the political and financial: On January 20, 2009, the day Barack Obama was inaugurated, the Dow closed at 7949; then, on January 20, 2010, the Dow closed at 10,603, an increase of over 33%.  A particularly smug Democrat might say, “Look, Obama boosted the stock market by a third in his first year.”

It seems like a logical conclusion; event A (Obama’s inauguration) causes event B (a rise in the Dow).  That’s how these things work, one thing causing another, right?  But there’s several other options besides the straightforward ‘A causes B’; that’s see what some of them are, as well as how they could explain our observation about Obama and the Dow:

1) A causes C, which in turn causes B: There’s frequently a series to events that occur.  One thing triggers another, causing another, and so on.  There might be an intervening event (or multiple events) that connects our ’cause’ and our ‘effect’.  In our example, perhaps Obama’s election caused such a rush on gun manufacturers, talk radio hosts, and bottled water makers that the resulting upswing in sales/listeners had a ripple effect through the economy, and the rising tide lifted all boats.

2) C causes both A and B: It’s always possible that there is a third event that leads to both of the events listed in your supposed causation.  So, the bad economic climate of 2008 might have cleared the way for Obama’s victory, and created circumstances that allowed the Dow to grow so robustly in 2009 (by knocking it down fifty percent or so from its high, giving it lots of room to grow).

3) A was one of (many) contributing factors to B: With most things in life, there’s not a single cause.  There’s frequently numerous events contributing to the final outcome.  So, the Dow rising might be attributable in part to Obama’s actions, but also to the actions of the Fed, of foreign bankers, of the media and of individual investors (among others).  It’s a group effort, even if one part of the group gets most of the credit.

4) C causes B, and A decreases the effects: This is probably the most counter-intuitive, but it can happen; rather than A causing B, A serves to decrease B.  In the video game/violence correlation mentioned earlier, maybe playing violence video games actually decreases the amount of violence we see in the real world, by giving those with a tendency for violence an outlet for their urges that doesn’t blow a hole in someone’s head.  (There’s a term in psychology called ‘catharsis’, where primal urges toward lust and violence are expressed in a socially acceptable way.)  Similarly, maybe Obama and his policies have actually slowed the recovery we’d see with a more hands off economic approach.  (A Republican retort to the smug Democrat might be, “Maybe, but we’d see an even better recovery if McCain was in office.”)

5) Event A and Event B have no direct relationship: One of the hardest relationships for us to accept is that, well, there simply isn’t a relationship.  Event A simply happened first and seems like it should be the cause (or at least, a cause) of Event B.  Maybe it’s sheer coincidence that one year after Obama was inaugurated, the Dow has risen significantly.

That covers many of the major relationships between events other than direct causation; there are more, of course, but these suggestions, alone or in combination, should help provide plenty of alternatives to consider.  Just remember that simply because A came before B (no matter what A and B are), doesn’t mean that A caused B.  Look for alternate explanations, and you’ll go a long way toward inoculating yourself against false arguments.

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