The reason to become wealthy

Optimism helps -- within reason.
A 2007 study by economists Manju Puri and David T. Robinson found that optimists do better financially than pessimists -- but extreme optimists don't save as much as moderate ones. After all, why pinch pennies today if tomorrow will be fabulous?

A child born into the wealthiest 20% of families has a 55% chance of staying in that quintile, according to research by Duke sociology professor Lisa A. Keister.
A child born into the poorest fifth, by contrast, has a 9% chance of reaching the top; one born in the middle, a 13% chance

Chronic health problems hurt.
Diabetes, arthritis, Crohn's disease -- these kinds of disorders are associated with less wealth.

Intelligence helps, to a point.
A study by Ohio State researcher Jay Zagorsky found that people with IQs of 130 or higher (the top 2%) earn $6,000 to $18,500 more a year than people of average intelligence. But those smarties can have trouble hanging on to their dough, Zagorsky says: "Their intelligence doesn't seem to help them delay gratification when it comes to spending."

Education pays.
Over a lifetime, the average college grad will earn about $450,000 more than a peer with only a high school education, according to a 2007 College Board study. Getting a grad degree adds another $120,000.

A 6-foot man earns, on average, $5,525 more a year than one who's 5 foot 5, according to a 2003 study. Hotties are twice as likely to make an above-average income as their homelier peers. And slim people have a higher net worth than heavy ones. Life is unfair.

Parental attention and resources are finite; the effects last through adulthood. The more brothers and sisters, the poorer you tend to be. Singletons have the best shot at affluence: They wind up with double the net worth of people with three siblings. Firstborns also have an advantage, in part because parents are likelier to pay for their college education.

Ohio State's Zagorsky found that boomers who got and stayed married accumulated 93% more wealth per person than their unhitched counterparts, partly owing to economies of scale. Divorce reduces wealth by 77%.

Married couples sans children have a median net worth of nearly $200,000; those with just one child, $134,000. Solo parents have it rough: The net worth of a typical divorced dad, for example, is no more than a third that of a married dad.

One survey shows that 50% of affluent people exercise two to three times a week, vs. 26% of poorer folks. And smoking hurts. The lifetime cost for a 24-year-old man is $183,000, calculates Frank Sloan and colleagues at Duke University and the University of South Florida.

Personality counts.
Persistence pays off, literally, in higher pay. Niceness, not so much: Being too agreeable leads to lower earnings. People who aren't very materialistic tend to be better savers, according to a study in the Journal of Economic Psychology.

Sexist men are wealthier.
Gloria Steinem may gnash her teeth, but a study by University of Florida researchers found that men with "traditional" views on gender earn about $8,500 more a year than those with a more egalitarian outlook. Egalitarian women earn about $1,500 more a year than their traditionalist sisters. Women in general are at a disadvantage: The typical woman makes 80¢ to a man's dollar and must stretch her nest egg over a longer life.

Entrepreneurialism is associated with wealth.
Families that own businesses are more affluent than others, according to research by University of Southern California economics professor Vincenzo Quadrini. The more established the business, the bigger the boost.

Risk lovers risk losing dough.
Though one study found that adrenaline junkies earn more than their cautious counterparts, there is a strong link between thrill-seeking behavior and poor investing decisions such as frequent trading and risky stock picking. Conversely, playing it too safe can hurt.

According to a 2009 study by American Express and Harrison Group, 84% of millionaires hunt for bargains. (FYI: Answer A describes Nicolas Cage, who makes millions per movie yet has lost several homes to foreclosure. Answer B describes -- you guessed it -- Warren Buffett.)

If you are one of the wealthiest...

If you wanna know, less than 1% of all households, held 38% of the world's wealth last year, up from 36% in 2008.

Charlie Peabody of Portales Partners “deconstructed” an internal memo of Vikram Pandit, Citi’s CEO, on the bank’s repayment of the TARP loan:

Citigroup: “Today we announce a series of transactions to repay the $20 billion of TARP outstanding and terminate the asset guarantee we received from the U.S. Government.”

Translation: I am sick of working for $1 per year.

Citigroup: “Today we are strongly capitalized…”

Translation: We have diluted the shareholders by a factor of six.

Citigroup: “… efficient…”

Translation: We have cut the company in half.

Citigroup: “…and created a strong foundation for the future.”

Translation: We are working on a strategy.

Citigroup: “There are still economic challenges ahead…”

Translation: Forget about any kind of bonus.

Citigroup: “Over the past few months, I have visited many of you in the U.S and around the world…”

Translation: I am trying to avoid the home office.

How to buy on eBay

I am continually amazed at how many people incrementally bid up an item they want six days before an auction is over. It’s like watching someone walk around with a switch unknown to him flipped permanently to stupid. It’s easy, really. All it requires is patience, knowing what you want, what it is worth, what you are willing to pay for it, and then, again, and this is the important part — waiting.
Step One:
Find the product you want.
Step Two:
Save the product to your watch list.
Step Three:
Wait.
Step Four:
Just before the item ends, enter the maximum amount you are willing to pay for the item.
Step Five:
Click submit.
Did you win? If you put in an amount you would be comfortable paying for it, you did. At the very least, you did not:
Signal your intention to every jingjang from here to your momma who might be interested in the item.
Bid up the item to what you wanted to pay for it days before the auction is over.
In the final frenzy talk yourself into spending more for it than you were willing to pay.
Follow these rules and you’ll be happy and end up with most of the items you bid on. But be warned, the next time you see two hoopleheads bidding up an item six dollars at a time twelve days before the auction is over, you’ll want to poke your eyes out with a stick.

Hong Kong to U.S: Please Don’t Blow our Bubbles

The head of the Hong Kong Monetary Authority challenged San Francisco Federal Reserve President Janet Yellen on U.S. monetary policy, suggesting that low interest rates and quantitative easing are creating big headaches for Asian economies.

“The question one really has to ask is to what extent quantitative easing is necessary. Is the dosage right, because $2 trillion is a lot of money in the banking system, it’s high power money,” said Norman Chan, monetary authority chief executive. He and Ms. Yellen were at a forum sponsored by the Institute of Regulation & Risk. Ms. Yellen gave a speech that touched on how policymakers should address future asset bubbles.

“In Asian economies, Hong Kong included, we have seen a very massive inflow of funds that is explainable by the very low global interest rates and coupled with this huge amount of quantitative easing,” Mr. Chan said. “This question of potential risk of asset bubbles forming if this is to continue for a long period of time is a big challenge for us,” he said to Ms. Yellen.

Ms. Yellen responded that the measures the Fed took were necessary to avoid a “black hole of deflation,” and that the economy seems to be on the mend. But moving too quickly could endanger the recovery.

“I am well aware of the concern you have here, and that many Asian economies have, about the capital inflows and agree that low interest rates are triggering capital outflows,” she said. “Asia has recovered more quickly than the U.S. has, and it’s logical you’d see more impact on your asset prices.”

She promised that “we need to at a minimum monitor developments in asset markets much more carefully than we did going into the crisis.”

But she denied that quantitative easing made things worse in terms of asset bubbles than simply lowering interest rates to zero. “The impact on Asia and on capital flows will be identical,” she said, with or without the Fed purchases of long-term mortgage and government debt.

Mr. Chan was so insistent he asked Ms. Yellen about the topic twice, and later called the issue “very contentious.”

Hong Kong has seen property and stock prices rebound sharply over the past six months, worrying some that new dangerous price bubbles are forming even at the early stages of the economic recovery.

“I’d feel a more comfortable at the present price levels if U.S. interest rates were at 2% or 3% for depositors,” Mr. Chan said. “I don’t have a very vigorous model to justify that kind of thinking. I just have a gut feeling,” he said.

Hong Kong’s currency has long been pegged to the U.S. dollar, which means Mr. Chan has effectively no control over interest rates here. The Hong Kong Monetary Authority’s chief task is simply to maintain its peg to the U.S. dollar.

“It doesn’t help us in Hong Kong where we have no independent interest rate policy instruments. Our hands are tied,” he said. The HKMA has tightened mortgage loan requirements to cool the housing market. Mr. Chan said those efforts have been successful.

But he says the bubbly situation isn’t much better in Asian countries that can adjust target interest rates. That’s because raising rates will attract even more money from international investors seeking higher yields than offered in the U.S., driving asset prices higher still. That’s already happening in Australia, which has raised rates twice in recent months.

An audience member who identified himself as from Morgan Stanley asked Mr. Chan how Hong Kong could justify the peg to the U.S. dollar given that Hong Kong’s economy is so much closely tied to China’s. There was applause at the question.

“One has to be very careful,” Mr. Chan said. “Monetary stability is like your personal health, you don’t appreciate it until you lose it.” He also said that Hong Kong’s stock market has risen the same amount as other Asian markets including Singapore’s, South Korea’s and Malaysia’s which have more flexible currency regimes. Thus it’s not the peg that’s to blame for possible bubbles.

Mr. Chan took over for the long-serving Joseph Yam in September. Mr. Chan hosted meetings today with Ms. Yellen and her Fed colleague Kevin Warsh.

Oxford Word of the Year 2009: Unfriend

verb – To remove someone as a ‘friend’ on a social networking site such as Facebook.

Ex. “I decided to unfriend my roommate on Facebook after we had a fight.”

A list of new words:

Technology

hashtag – a # [hash] sign added to a word or phrase that enables Twitter users to search for tweets (postings on the Twitter site) that contain similarly tagged items and view thematic sets

intexticated – distracted because texting on a cellphone while driving a vehicle

netbook – a small, very portable laptop computer with limited memory

paywall – a way of blocking access to a part of a website which is only available to paying subscribers

sexting – the sending of sexually explicit texts and pictures by cellphone

Economy

freemium – a business model in which some basic services are provided for free, with the aim of enticing users to pay for additional, premium features or content

funemployed – taking advantage of one’s newly unemployed status to have fun or pursue other interests

zombie bank – a financial institution whose liabilities are greater than its assets, but which continues to operate because of government support

Politics and Current Affairs

Ardi – (Ardipithecus ramidus) oldest known hominid, discovered in Ethiopia during the 1990s and announced to the public in 2009

birther – a conspiracy theorist who challenges President Obama’s birth certificate

choice mom – a person who chooses to be a single mother

death panel – a theoretical body that determines which patients deserve to live, when care is rationed

teabagger -a person, who protests President Obama’s tax policies and stimulus package, often through local demonstrations known as “Tea Party” protests (in allusion to the Boston Tea Party of 1773)

Environment

brown state – a US state that does not have strict environmental regulations

green state – a US state that has strict environmental regulations

ecotown - a town built and run on eco-friendly principles

Novelty Words

deleb – a dead celebrity

tramp stamp – a tattoo on the lower back, usually on a woman

Notable Word Clusters for 2009:

Twitter related: Tweeps Tweetup Twitt Twitterati Twitterature Twitterverse/sphere Retweet Twibe Sweeple Tweepish Tweetaholic Twittermob Twitterhea

Obamaisms: Obamanomics Obamarama Obamasty Obamacons Obamanos Obamanation Obamafication Obamamessiah Obamamama Obamaeur Obamanator Obamaland Obamalicious Obamacles Obamania Obamacracy Obamanon Obamalypse