Unlucky 7

House rejects $700 bn bailout package
Dow plunges 777 points
That is 7% drop in one day
Largest in two decades
Lucky 7? Not really!
Does 777 remind you of something?
Yes our emergency service number
Well one thing for sure
Let's hope the rescue to the Dow does not take forever!
Happy Eid everyone.. At least it's memorable!

Your Zakat

“WE RUN a business here—but instead of selling cars or candy to kids, we’re selling hope and leadership,” says Nancy Lublin, the chief executive of Do Something, a non-profit group which promotes volunteerism by teenagers. On September 17th she is launching an initial public offering (IPO) to raise the $8m needed to double Do Something’s activities by 2011, by which time it plans to be engaging with around 21m of America’s 32m teenagers.

The business of giving | Non-profit capitalism | The Economist

In the month of Ramadan and as we approach Eid, Muslims feel charitable and pay large sums in the form of Zakat or charity. But did you ever think where your money goes? Does your Zakat or charity even reach the people it is intended to? Do our non profit organizations have a clear mission and are they held accountable to it?

Bait Al-Zakat, which is a government entity, is the most credible organization and they publish annual reports on their activity. But still there is no real verification process. What we lack are two things. The first thing is the interest of the donor to follow up on their money and that it actually went to the right people. Often donors just pay and to them the good deed is done. Second is the existence of independent verification agencies that give ratings and accreditation to charitable organization. This way people will have some comfort when giving to Zakat or charity.

Happy Birthday Mohammad

Mohammad my nephew turns (72 or 73 according to his mom!) today. 

Dear Mohammad,

I wish you the best on this day.

Here are few words I don't expect you to follow,

but I sure hope you live your life to the fullest,

and not just follow.

As I write those words,

the world is in trouble.

Financial markets tumbling,

cause of the burst of the bubble.

Some thought the US was the greatest.

How could the empire be brought to its knees?

The Dow took a nosedive,

and Nasdaq started to sneeze.

Now let me tell you the difference between us and them.

Around here they don't let you fail.

Simply because you are born this way.

Whether you are young and strong or old and frail.

We live in a land where failure is not an option.

Neither is success.

Conformity is the rule.

Collective failure is the result. What a mess!

Don't let my words discourage you.

Go on to succeed or even fail.

Always remember to be positive.

In the end you will prevail.

Secret of Success

Men who grow up thinking women should stay at home may be labelled "old-fashioned" - but could end up well ahead in the salary stakes.

A US study, published in the Journal of Applied Psychology, suggests that they will consistently out-earn more "modern-thinking" men.

On average, this meant an extra $8,500 (£4,722) a year.

BBC NEWS | Health | Men with sexist views 'earn more'

This explains the success of Islamic finance! For the "old-fashioned" they perceive the world in white and black so I guess the decision making process for them is much easier. This makes them better decision makers, even when wrong, and therefore earn more. While those who are liberal minded see the different aspects of an issue and the decision making process is much harder, even though they are closer to reality. That's why they make better writers and artist; less so business people. That is at least my theory to explain the income gap.

Too Little Risk

The most acute long-term risk is, in fact, too little risk. Unless you’re saving a huge chunk of your income in cash, you’ll need consistent exposure to more risky investments like stocks to produce a suitable retirement balance. Keep your stock allocation lower if you must for a few months to sleep at night, but don’t get rid of it altogether.

Your Money - Taking Control of Your Financial Risks - NYTimes.com

Perhaps after last week you want to forget all about stocks. This is a reminder that in the long term the risk is justified. Aside from expecting the government or your family to care for you, saving is the first step to securing your financial future. Once you built up your saving, investing wisely is the second step. While taking on too much risk is not advisable, too little risk could be as bad. One rule of thumb for allocation to stocks is to subtract your age from 100 and use the result as upper limit. So if you are 30 do not exceed 70% in stocks, with the rest in bonds or other asset classes.

Oil Pirce and Nasdaq

Perspectives Research Magazine. 3rd quarter 2008. Article by Jacob Schochli.

Interesting corollary showing the similarity between oil price and the Nasdaq index in the 1990's. Will oil price follow the same path of the tech bubble burst? It seems to be heading in that direction.

Moral Hazard

"We've re-established 'moral hazard,'" said a person involved in the talks, referring to the notion that the government should eschew bailouts, since financial firms might take more risks if they're insulated from the consequences. "Is that a good thing or a bad thing? We're about to find out."

Ultimatum by Paulson Sparked Frantic End - WSJ.com

This was in reference to the Federal government in the US allowing one of Wall Street's major financial institutions, Lehman Brothers, to fail and file for bankruptcy. Financial markets tumbled all over the world.

In Kuwait the stock market did not fare any better tumbling for the past days wiping out gains accumulated over many years. One culprit is the extension of the international financial crisis resulting from the burst of the housing bubble in the US. This led many foreign institutional investors to cash out of emerging markets in an attempt to solidify their financial position, which led to this sharp decline among other reasons.

No one is enjoying this mayhem but there are important lessons to be learned. Most important is the concept of moral hazard. People put their money in high risk expecting no downside. If things go sour they expect the government to intervene as they do now. This encourages risky behavior. However, if they get their fingers burnt, more than fingers at the current rate, then they will behave more carefully in the future. When the wind is blowing even turkeys fly. It's time to come back to earth.

War and Peace Vol.1 cont.

Continuing from previous post, I would like to highlight some aspects I enjoyed in the first volume. I am no literary critic so I will not do the subject justice. As I embarked on reading I was eager to find depth and meaning somewhere in the many pages of this book. I was not disappointed.

"Tout comprendre, c'est tout pardonner."
To understand all is to forgive all.

This books deals with numerous characters - one of the book's challenges. Those characters come in different shapes and forms. Friends and enemies. Young and old. Heroes and villains. Rich and poor. As we get to understand the different characters, somehow the divide that keeps them apart seems to disappear. I feel this is one of the tenets of this book.

It is our understanding of the basic human elements behind people that shatters the perception and unite us in our humanity. Even though the book was set in a different time and place than ours, the author succeeded in making a connection. Maybe I could not relate to 19th century European social or war scenes, but I definitely made a connection with the human traits so articulately displayed.

As Tolstoy himself admitted, history has heroes and villains, yet work of art should only have people.

The blurring of the divide extends beyond personalities. As the plot shifts between the social and the war scenes, the psychology of the characters go in the opposite direction. In the social scene you feel anything but peace. And in the middle of war you get peace:

"the thought that he could be killed or painfully wounded did not occur to him. On the contrary, he felt ever merrier and merrier."

So we find war in peace and peace in war. Such is the irony of life that comfort could breed discontent, while happiness is born out of hardships.

Games at Work

In a forthcoming book called “Changing the Game”, David Edery and Ethan Mollick argue that many skills and lessons from the gaming world are applicable in the business world. The smartest firms, the authors argue, will not only allow game-playing in the workplace, but will actively encourage it.

Business.view | Playing for profit | Economist.com

Who said playing games at work is a bad thing?! And if you happen to be stock trader perhaps it's better to play games than play the market and lose your shirt!

King of Queens

What a way to end the season! Roger Federer wins the 5th consecutive US Open title in Flushing Meadows, Queens NY after a tough year, at least by his own standards. This is the first major title for Roger this year compared to three major titles last year (13 overall).

Earlier he lost the long held number 1 ranking. Many started counting him out. He proved them otherwise. Still the best!

Research Suggests

Telling someone you fancy 'I really like you' could make him or her find you more attractive, research suggests.

BBC NEWS | Health | Declaring love boosts sex appeal

If you are ever bored at work, just think that researchers actually conduct studies to come up with conclusion such as this. Before researchers beat me to it I'm going to come up with few groundbreaking results of my own:

- Research proves that if you are nice to people there is a good chance they will be nice to you.
- Extensive research finds that when you compliment someone this could lead them to blushing.
- Research suggests that humidity could lead to discomfort (influenced by the weather).
- If you don't have anything to blog about just come up with bogus research.. research suggests.
- Research shmesearch someone tell those people it's called Common Sense!