Archive for April, 2006

Women: the engines behind global growth

Business & entrepreneurship, Corporate finance, Current events

In the past 10 years, the increase in female employment in developed economies has contributed more to global growth than China. Does that surprise you? , an article in this week’s magazine (4/15/2006), highlights the positive and impactful role of women’s participation in many things economics, financial, and corporate. Some of the other interesting (and perhaps controversial) items mentioned:

  • A basket of Japanese stocks selected by Goldman Sachs because they ought to benefit from women’s greater purchasing power outperformed the Tokyo stockmarket 96% to 13% over 10 years
  • Corporations with more women in senior positions earn a higher ROE than those that have fewer
  • A found that women make better investors than men
  • Countries with higher female employment rates have higher fertility rates than those with lower participation
  • The best way to boost prosperity in developing countries is to educate girls

This article is sure to draw letters from readers in forthcoming issues. I love articles that question mainstream thought and am a woman in finance myself.

But with so many of the items above mentioned just in passing in the article, I really would have liked to have seen references and details on the specific studies and points mentioned in the footnotes, especially coming from the Economist.

The NPV of this site is -$28.34

Experiglot's valuation

I wrote when I started this site that it was going to be an experiment in many ways, and part of that was to see if it could become self-sustaining or better, even though I never held any high expectations. Well, you know how people are always asking about whether they can make money off of blogs. So, in true finance geek fashion, and to go along with the theme of this site, I decided to calculate what the of this blog would be as if it were a potential project under consideration for investment*.

I’ve added a little graphic to the left sidebar for fun. Now, don’t get excited — it doesn’t update in real time with your clicks and visits or anything, but it’s something I’ll update each month to show how things are going. Right now it just plots the money I get (all from so far) less the amounts I paid for registering the domain and for hosting service each month at . In other words, I don’t include labor costs. (I also plotted traffic visits for fun.) So after four months, the NPV comes to -$28.34. On the other hand, at least my cash flows are less negative each month.

Now, if you’re wondering whether a blog is worth pursuing if you take your time and energy into consideration, I’m afraid the answer is pretty clear in most cases: assuming $10 an hour for 4 hours a day and 20 days a month, the NPV of this blog changes to -$3,196.02!

Compelling evidence to argue that your blog is just your hobby, right?

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On the folly of following hot sectors

Personal finance, Value investing

A picture is worth a thousand words, and here’s one that really drives its point home. It shows how the % returns of the different for the last 14 years have been unpredictable and how the top and bottom performers for one year seldom repeat in the following year.

So keep this in mind the next time you hear an “expert” rave about next quarter or year’s hot sector to invest in. Remember how many of them also predicted last year would be the year large caps would finally outperform small caps? (Click image below for full size.)

Salon training nights: look stylin’ while saving money

Tips for saving money

barber's chair

I just got a free haircut at one of the very best places in San Francisco, , after finding out that they give free haircuts on their Wednesday training nights and are always looking for “models” (which just means anyone who wants to get their hair cut). During the cut, stylists-in-training are closely supervised by master hair stylists, which means the process takes a little longer (about 1 1/2 to 2 hours), but other than that, there’s really no downside.

You get a consultation at the beginning and input into how you would or wouldn’t like your hair to be cut. In this case, I was pleasantly surprised that they actually took about 30 minutes of that time to scrutinize and come up with ideas for cuts that would fit me personally, which in all honesty is probably more time spent than all the other times combined that I’ve ever been to a stylist. To give you an idea, regular haircuts for women at this salon start at $70 and go up, and I’m pretty sure a cut by the stylist who supervised my trainee would have easily run into the three figures. Joseph Cozza also does coloring on Wednesday training days for $25 as well.

It turns out that if you live in a big city, there are probably several high-end salons that offer this kind of opportunity. Here are a few links:

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Simple proof that dollar cost averaging works

Personal finance, Value investing

One of the proven and advocated tenets in value investing is , and it goes hand-in-hand along with the idea that matching market performance is easy (just buy the index), but beating it is hard. But does it work?

Here’s a simple calculation to show that it does. I downloaded monthly historical prices for SPY and compared returns if I had arbitrarily decided to invest $100,000 on April 2, 2001 and hold SPY for five years, or invest $5000 over the next twenty quarters (for a total of $100K) instead. Below are the returns:

Method Value on Jan 3, 2006 % return
$100,000 invested all at once on
April 2, 2001
$107,817.70 8.49%
$5,000 invested at the beginning of every quarter for 20 quarters $123,108.60 23.11%

The results work in a down market too. You’ll lose less by dollar cost averaging than without it:

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