| Home | My photos | Forex | My trading | Contacts |
|
|
|
|
Free Download Jim Cramers Real Money Sane Investing In An Insane World Cramer pdf | ||||
|
"Winning isn't everything, it is the only thing."
This quote is misattributed to legendary Green Bay Packers' Coach Vince Lombardi who actually said, "Winning is not everything—but making effort to win is." It is an odd quirk of history that Lombardi is most remembered for something he didn't say. What he did say on a variety of topics is great, and much of it is relevant to investing. Among my favorites is, "Winning is a habit. Unfortunately, so is losing."
When it comes to economic growth, productivity isn't everything, it is the only thing. Even though Coach Lombardi probably never said this either, it is a mathematical fact.
Contents Of Real Money Sane Investing In An Insane World Jim Cramer Cramers
Free Download Jim Cramers Real Money Sane Investing In An Insane World Cramer pdf
Introduction: The Art of Stock lnvesting
Staying in the Game
Getting Started the Right Way
How Stocks Are Meant to Be Traded
Some Stock lnvesting Basics
Spotting Stock Market Moves Before They Happen
The Importance of the Fed
Stock-Picking Rules to Live By
Creating Your Discretionary Stock Portfolio
Spotting Bottoms in Stocks
Spotting Tops
Advanced Strategies for Stock Market Speculators
EpilogueThere are two roads to wealth: One is to work harder, and the second is to work smarter. Obviously working smarter is the preferred route; productivity measures the economy's ability to work smart. Thus productivity becomes the key to long-term economic growth.
Optimists can make a good argument based on U.S. productivity as shown in Figure 4.5.
This young decade has had higher U.S. productivity growth than any other in the post-WWII era.
Is productivity really higher now than in the past and can the good news continue? It seems possible. Some economic historians make an analogy between the Industrial Revolution and the information technology revolution. It took many decades to learn how to harness machines effectively. Thus the benefits from the Industrial Revolution were not immediately visible.
We may just be getting to the time when information technology is being understood well enough to make us richer. If so, it is possible that the recent high productivity will not only continue, but could even accelerate.
Is the recent rise in productivity really a big deal? Yes, because of the magic of compound interest. My favorite example of compound interest comes from Charles Darwin. In Chapter 3 of the Origin of Species, he writes: TD Sequential countdown | Intraday Charts
The elephant is reckoned to be the slowest breeder of all known animals, and I have taken some pains to estimate its probable minimum rate of natural increase: it will be under the mark to assume that it breeds when thirty years old, and goes on breeding till ninety years old, bringing forth three pairs of young in this interval; if this be so, at the end of the fifth century there would be alive fifteen million elephants, descended from the first pair.
Darwin was calculating compound interest. If something grows at just over 2.3% a year, it doubles in 30 years. The magic of compound interest means that even with slow rates of growth, given enough time, the overall growth is stunning. The inability of the world to support so many elephants was an important step on Darwin's intellectual road.
To appreciate what different productivity rates mean, let's take Keynes at his word. What are the economic possibilities of our grandchildren? In particular, let's contrast the wealth of our grandchildren under two possible scenarios. In the high-growth scenario, productivity grows at the 3.62% average of this decade. In the lower-growth scenario, productivity grows at the 1.72% average of the period 1970 to 1999.
Does it matter much for your grandchildren which of these two productivity rates exists for the next 40 years? Let's test your intuition. How many hours per week will your grandchild work to have the same lifestyle as could be earned by working 40 hours now? Here are four possible answers.
(4) 9.6 hours per week.
• 20.2 hours per week.
• 15.9 hours per week.
• 9.6 hours per week.Pick an answer for each of the two productivity scenarios—high growth and lower growth. If the world turns out as in (2), your grandchildren will be roughly twice as rich as you for each hour that they work. That means twice as many cars, TVs, fridges, and vacations per hour of effort.
Before we get to the correct answers, let's take a step back and understand that even a productivity growth rate of 1% is remarkable and rare.
What is the productivity growth rate for our closest living ancestor, the chimpanzee? This may seem like a strange question, but the answer is easy to calculate. Take a modern-day chimpanzee, and calculate the number of hours of work to obtain a fixed amount of food.
To calculate change in productivity, compare the modern chimpanzee's workload with the comparable figure for a chimpanzee from a thousand or a million years ago. Of course, we do not have any historical data on chimpanzees, but the answer is clear. The productivity growth rate for chimpanzees (and all other animals) is zero. Animals, even those with culture, show no progress across generations.
The economic opportunities of the grandchildren of modern chimpanzees will be no higher than today's chimpanzees (and probably far worse because of environmental destruction). Perhaps it is obvious that animals have zero productivity growth. Less obvious is the fact that the human rate of productivity growth throughout much of history has also been almost exactly zero! Through most eras, humans have done no better than chimpanzees or even bacteria for that matter. Keynes makes this point in his grandchildren essay noting, "the absence of modern technical inventions between the prehistoric age and comparatively modern times is truly remarkable."
The archeological record reveals that Keynes's observation applies to most periods. For most of human existence, the rate of technological change was essentially zero. Our modern ability to create more material goods per unit of effort is nothing short of amazing.
Let's return to our grandchildren. The answers are 20.2 hours per week for the lower-growth case and just 9.6 hours per week for the high- growth case. If the next 40 years look like the period 1970 to 1999, our grandchildren will have to work half as hard as we for the same material outcome. Alternatively, if productivity grows at the rate of the last few years, our grandchildren will only have to work one-quarter as hard as we do. If the high productivity path happens, our grandchildren could work Keynes's 15 hour weeks and be considerably richer than we. Note that productivity growth doesn't just mean more TVs, it also allows for better medical care and education.
Robert Kiyosaki - Rich Dad, Poor DadIn terms of economic wealth, small improvements in productivity translate into big improvements to our lives and those of our children and grandchildren. When it comes to economic wealth, productivity is the only thing. Thus, our economic wealth depends almost entirely on the rate of productivity growth.
There are, of course, a number of important caveats to this productivity argument that go beyond the scope of this book. First, average economic wealth may mean very little if it comes in a world that is environmentally damaged. Second, the distribution of wealth may be more important than its total. Third, and most fundamentally, there is scant evidence that increases in wealth make people any happier. In fact, studies from around the world suggest that while most of us believe money will make us happier, wealth does not cause happiness. 10 All of these are important topics, but not for this book, which is dedicated to the mission of helping investors make money.
Conclusion: If the last few years of extremely high productivity are a sign of good times to come, we will be much richer, and our large debts will not be a problem.
We started this chapter by asking what path the United States will take. Will it be Keynes's vision of examined leisure created by information technology, or will we stumble down a painful path similar to that taken by post-bubble Japan ?
Those who believe that these are the worst of times are right to recognize the U.S. financial hangover from the bubble years. The aftereffects of the 1990s are clearly visible in shaky consumer finances, idle factories, and large government deficits. However, those who believe these are the best of times are right to recognize the central importance of extremely high productivity growth.
Thus, productivity is the key. If there is to be a happy financial ending for the United States , it must come through information technology and productivity growth. For investors, this converts to simple advice. Watch the productivity figures. If productivity can stay above 3% for the coming years, then like my talented running teammate, the United States should be able to work through its hangover. If productivity drops substantially, however, the pain of recovering from the excesses of the 1990s will be much greater.
| ©2007 Olesia l l1 l2 l3 l4 l5 | Home • My photos • Forex • My trading • Contacts |
Currency Converter - Discount-Currency-Exchange.com offers discount foreign exchange, and historical foreign exchange rates
bravenet.com