My Hats Off for Bill Gates!!

One of the goal of Bill Gates in his early years was to see a computer on every desk and in every home, presumably running Microsoft software. That sort of vision, put forth in a time when very few people knew about computer. But by the year 2000, just 25 years after its founding, Microsoft had achieved that improbable goal, at least in the developed world.

What would you do if you defined the most ambitious goal you could imagine, and then achieved it at age 42? And what if you had done so while still relatively young? That's the position Gates found himself in just a decade ago. Most people when they find they achieved the goal they set another and never stop. And so did Bill Gates. But wait.... different goal and in different world.

How about curing AIDS? Or ending the spread of malaria? What about improving life expectancy and quality of life for the poorest people in the world? I have to point out that sense of thinking "Okay, we won -- what next?" is extremely unusual.

And here is Bill Gates answered that question with Philanthropy. Every person in the poor world should have option to treat their disease. He is going to dedicate the rest of life in achieving this new goal.

My hats off for Bill Gates for his new impossible Goal. Goodbye and Welcome.

Here is the nice article which explains "What money can buy?

Where do you keep your money?

When the stock market, housing market, bond market, real estate market goes down. One question that everyone's mind is, what to do with the money I saved and where should I keep?

Here is the possible ways people do it with outcome:

Hard cash, stuff it under your mattress: If nobody steals it, over the long haul inflation will destroy the value of your money.

You could buy CDs or invest in a money market fund: After inflation you will do just a little better than hiding the money in your mattress.

You could buy bonds: You stay just ahead of inflation, with very little capital appreciation potential.

You could buy real estate: You subject yourself to the unpredictable situation of the real estate market and take a huge risk for a very uncertain return.

You could give it to a hedge fund operator or invest in an actively managed mutual fund:
80% chance you will lag the performance of most good passive strategies.

You could buy individual stocks: You subject yourself to uncompensated risk, which probably results in under performance.

You could attempt to time the market: You will fail like all the other poor saps that think they can do it.

You could stay the course: Eventually your perseverance will most likely be rewarded by returns that exceed those of all other commonly known investment strategies.

The problem with all the other potential strategies is that none have been demonstrated to be superior to your strategy. So, hang in there, time is on your side and you will succeed.
Also, stop listening to the market reports, they aren't providing you with any useful decision making information; they are just fueling your angst.

Merger and Acquistion

Since 2001, when Alan Greenspan lowered the interest rate, Merger & Acquisition increased significantly compared to last decade. The main reason is the borrowing cost is very low which makes Corporate America to achieve high Return on Equity. At the same time, Leverage Buyout also increased; there are many companies than before which become private by LBO. It makes sense because raising capital was very easy.

There are many reasons for a Company to go for M&A. Here are the few:

1. To increase the Revenue: When they see there is not much growth left with the existing product line, for a company, it makes sense to buy company that adds the revenue and profit to show the growth. It shows value to the investors and Wall Street.
2. To gain the competitive edge: Companies often does not have the products and services that are different than competitors. They want to distinguish from their competitors by adding more offering on the shelf.
3. To eliminate the competitors: Competitors are tough; sometimes it makes sense to buy the competitor rather than competing against them.
4. To increase the market share: Market share are very important for a company to show the credibility. They use the new customer base to up-sell and cross sells other products.
5. Market Cap and Cash on hand: Some companies have lot of cash on their balance sheet and what to show more growth. It makes sense to utilize those cash to find the companies whose market cap is lower than other company.
6. Brand: Company often lacking the brand; even though they have better products than Branded Company, it is very difficult to create the brand. So the buy the company to take that brand. Often times they have to pay the premium to do that.
7. To increase the footprint into the other market: Some company focus on a region for their products and they want to increase their footprint to other market such as other countries.
   

Oracle has acquired nearly 50 companies in last 4 years. Lately they acquired BEA System for all of the above reason. Pfizer acquired Pharmacia for adding more products. P&G got Gillette for Brand. Cisco has acquired more than 100 companies so far to show the growth. eBay acquired European company iBazar to enter in European Market. Symantec acquired Veritas to enter in corporate market. There are many more examples to list here.

Most recently, Microsoft attempted to buy Yahoo because they want their brand and nothing else. Microsoft has everything what Yahoo has to offer, but the users do not recognize Microsoft. However, the user do recognizes Microsoft in the desktop platform but not in the internet platform. So Microsoft is struggling to get into the internet platform. They realize this too late and that is the reason they have to pay the premium.

In technology sector, if company does not have new products and services that competitor has to offer or they do not increase their footprint to other market then the future of that company is not good. Many companies in the technology sector could not survive because of this.

For an investor this is something not to ignore.

Why inflation is bad?

Inflation is caused when demand increases relative to the supply of goods. In United States, Inflation is usually coming from the Geopolitics and Lower Currency (dollar).

Let's take an examplie of inflation in Oil; it usually comes through Geopolitical risks of the commodity, which control the supply. For instnace, Mr Chavez does not want to supply and tighten the grip on foreign partner, a likelyness of Israel strike on Iran. So the supply shortage from this event shrink and Saudi Arabia or Russian cannot make it up, as a result price go higher and hence inflation.

The weak dollar also contributes to the Inflation. Commodities such as Gold, Grain, goes up when dollar falls and you sill see the price increase (inflation) in related products. Why weak dollar is a sperate topic to talk later.

Both of the above examples (largely oil) will eventually make price of other goods and services higher. Oil has significant impact on Transportation (and Travel) industry, which is backbone of the American Economy. In short time you may not see the impact, but gradually you will see the prices will go up everywhere due the rise in oil price.

So why is inflation matters? Inflation has a certainly more effect on your investments. If more inflation means higher interest rate, and that make borrowing cost more, which turn less profit for company. It certainly freaks old people who are retired or near the retirement, because they have a fixed income. It will kill them.

Inflation reduces the purchasing power of money. If inflation is 4% then in 7 years the purchasing power of 100k can reduce to 81k. So if you cannot make 19k more in 7 year (after tax) then you forced to reduce your lifestyle. If the inflation rate is higher in the future, a higher investment return will be required to maintain or increase the purchasing power of a portfolio.

The only benefit with the high

er inflation is when you have larger mortgage with lower interest rate. You pay the same amount with cheaper dollar. That is the reason why you should not pay off the mortgage.

Historic Election in 21st Century

Let’s be clear: Barack Obama may indeed be different from most politicians. Not only will he be the first African-American nominee of a major U.S. political party, but also he is truly gifted with rare communications skills and charisma. Obama brought out millions of new voters — most black, white liberals and young — attracted by his persona, his calls for change and rated as the most liberal in the U.S. Senate for 2007.

I think the new voters he inspired in the primaries will go to the polls in November, and will offset any weakness among the white working class. Historically Black never come this far, but I think that history does not always predict the future. The other reason possible he could win is -- Bush’s legacy may be that he turned so many against voting Republican. I think most folks realize our county cannot handle four more years of Bush policies.

He is a unique figure in U.S. history, who–win or lose– will be a reference point for how America evolved in the early 21st century.