The priceless lesson about Foreign-Exchange Risk

I finally found the news about how Warrent Buffet tripped over the dollar. Although in the long term Buffet is right, we can still learn from him that "trying to time the market" is always the most dangerous bet in this risky financial world.

Here is the news from Jerry Bower (03/14/2006 )-
"Buffett's Billion-Dollar Boo-Boo"
In his annual letter to the shareholders of Berkshire Hathaway, Warren Buffett acknowledged that his bet against U.S. currency had collectively cost them almost $1 billion. Buffet wrote, "My views on America’s long-term problem in respect to trade imbalances, which I have laid out in previous reports, remain unchanged. My conviction, however, cost Berkshire $955 million pre-tax in 2005. ..."

In recent years, Buffett has increasingly used his platform as an extraordinarily skillful mutual fund manger to criticize the economic performance of the country under President Bush. In last year's letter he announced that he had been significantly increasing his position against the dollar, citing a growing trade deficit as the reason. Buffett's statement that America was moving from being an ownership society to a "sharecropper’s society" and other criticisms received quite a bit of media attention.

As the chart shows, rising trade deficits cannot be presumed to cause a falling dollar. The data show the dollar strengthening against the euro at a time when trade deficits are rising. This also happened during the Reagan Administration. It is consistent with supply side economics, which sees the value of the dollar determined by the tightness or looseness of our central bank. A free flow of goods, services and capital across borders does not seem to have had any negative impact on the value of the dollar.

The power of compounding

"The most powerful force in the universe is compound interest." ~Albert Einstein

Cyst operation

Just had derma-cyst operation yesterday. The lump had been growing on my back for probably over ten years, but it had recently been swelling to the size of a 5 NT dollar. This surgery took nearly 40 something minutes, which was longer than I expected. Hopefully, I would be able to play basketball again next weekend!

Run, Ronnie, Run

"Hate it or love it!"...This flick is so stupid; that's why it got my all attention. Everyone need a good laugh, but what a pity that I don't think women in their right mind would accept a comedy like this one-too bad!

Recently watched movies

I thought I was making my life too busy these couples of months because of job relocation; however, I still find some spare time watching lotsa stuff.
1. Hoodwinked (12/3)
2. The mind of married man (first season-1~10 episodes)
3. White chicks (11/18)
4. Failure to launch (11/13)
5. The smartest guys in the room
6. Metal-A headbanger's journey
7. Friedrich Gulda (Mozart for the people)
8. My favorite Broadway
9. Jewel Live at Humphrey's-By the bay
10. NBC Studios- The '70s
11. Click (on the airplane-9/30~10/8:trip to L.A.)
12. Nacho Libre (on the airplane)
13. The Break-Up (on the airplane)
14. The Devil Wears Prada (on the airplane)
15. Nuremberg Trial
16. Run Rola run (9/23)
17. Fahrenheit 9/11 (9/22)
18. Jerry Seinfeld- comedian
19. 61 (A Billy Crystal film)
20. Night on earth(Jim Jarmusch) (8/13)

Sweet November- A new record

Even though I couldn't keep playing basketball in the last couple of days due to weather condition, I survived from taking any migraine drugs in a whole month. Well..I did drink a lot of coffee(just one or two in one day) to prevent from triggering headache beforehand. Hey, it works. It's better than taking pills, I suppose!

Investing is not a science

I quite agree with what Bogle said about investing, because it involves too many kinds of human behaviors like fear, greed,irrationality and a lot of emotions. Financial market has long been too complicated. No one can easily single out any factor to determine how much influence on the market, especially on the psychological side of investor behaviors. So, until now, there is still no clear evidence to precisely predict the short-term volatility of the market through any scientific methods.