Stages of Knowing

This framework is based on the work of the Harvard psychologist Dr. William Perry.

Stage 1: The Garden of Eden
Stage 2: Anything Goes
Stages 3: Thinking Critically

Stage 1: The Garden of Eden
- See the world in black and white, right and wrong
- To determine what is right or wrong is based on authorities
- There is no possibility of compromise or negotiation

Stage 2: Anything Goes
- To reject the dogmatic, authoritarian framework
- Reasoning : If authorities are not infallible and we can't trust their expertise, then no one point of view is ultimately any better than any other
- There is no way to determine which way is better

Stage 3: Thinking Critically
- When people achieve this level of understanding they recognize that some viewpoints are better than other viewpoints, not simply because of authority say so, but because there are compelling reasons to support these viewpoints.
- People are open-minded toward other viewpoints, especially those that disagree with theirs.  They recognize that there are often a number of legitimate perspectives on complex issues, and they accept the validity of these perspectives to the extent that they are supported by persuasive reason and evidence.
- To examine life our lives thoughtfully and honestly (Socrates).  To live a life of reflection and action, of open-mindedness and commitment, of purpose and fulfillment, is not a simple endeavor.  It requires the full development of our intellectual abilities and postive traits of character, a lifelong journey.

Finance - The Motley Fool Investment Guide

The Dow Dividend Strategy

1) Picking all 30 stocks in Dow will give you 10.5 percent return;
2) Dow top 10 yielders will be 17.23%
3) The Dow 5 - Michael O'Higgins in Beating the Dow proposed narrowing the list down to the five-lowest priced stocks of the group of ten as he believed that investors ought to take advantage of the extra vaolatility tied to lower-priced issues. This will give 21.1% growth
4) The Foolish Four - 2-2-3-4-5. Pick the top 10 highest yield, and the sorting the price. Pick the #2 stock to #5.

Finance - Stop Working - Derek Foster

Why retire early? It does not mean do nothing but financially free to do chase after my own's dream. Come up with a list "things to do before I die", such as write a book, make a personal relationship with God, practice piano.

Answers from the Three Wise Men

Warren Buffett - rule of investment
rule#1 don't lose money;
rule#2 remember rule#1;

Investing in what you don't understand is risky.

Peter Lynch - Beating the Street/One up on Wall Street
1) Pick stock that made it onto the "High Dividend Achievers" list
2) Don't invest in a company that a little kid can't understand/Focus on stock that you know and understand well

Picking stocks with good dividend yield in retirment planning will improve cash flow so that we will live through the dividend instead of selling the stocks. This is similar to eating the fruits of a tree instead of cutting down the tree.

Intelligence - Seven Habits of Highly effective People

The Seven Habits -- An Overview
Habit 1 Be Proactive: Principles of Personal Vision
Habit 2 Begin with the End in Mind: Principles of Personal Leadership
Habit 3 Put First Things First: Principles of Personal Management
Habit 4 Think Win/Win: Principles of Interpersonal Leadership
Habit 5 Seek First to Understand, Then to be Understood
Habit 6 Synergize Principles of Creative Communication
Habit 7 Sharpen the Saw: Principles of Balanced Self-Renewal

Finance - Derek Foster's rule

1. Invest only in companies you understand.
2. Invest only in companies that pay a dividend (preferably a rising dividend).
3. Look for companies that are selling cheaply (the old adage of buy low, sell high).
4. Invest in companies that are "recession-proof."
5. Don't focus on foreign companies.
6. Invest only in companies that are dominant in their industry (or that cannot be seriously hurt by a larger competitor).
7. Invest only in companies that have displayed a long history of strong performance.
8. Invest only in companies that have a strong brand loyalty among their customers.
9. Once you've bought the perfect company, never sell it!

Finance - Philip Fisher Tips on investing

Philip A. Fisher’s 15 Points to Look for in a Common Stock

1. Does the company have products or services with sufficient market potential to make possible a sizeable increase in sales for at least several years?
2. Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?
3. How effective are the company's research and development efforts in relation to its size?
4. Does the company have an above-average sales organization?
5. Does the company have a worthwhile profit margin?
6. What is the company doing to maintain or improve profit margins?
7. Does the company have outstanding labor and personnel relations?
8. Does the company have outstanding executive relations?
9. Does the company have depth to its management?
10. How good are the company's cost analysis and accounting controls?
11. Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company will be in relation to its competition?
12. Does the company have a short-range or long-range outlook in regard to profits?
13. In the foreseeable future, will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholders' benefit from this anticipated growth?
14. Does the management talk freely to investors about its affairs when things are going well but "clam up" when troubles or disappointments occur?
15. Does the company have a management of unquestionable integrity?

Finance - Investing to be Millionaire

Mr. Buffett believes in buying good businesses at good prices and staying with them as long as they remain good. Don't try and figure out what the market is doing, figure out businesses you understand, and concentrate. Diversification is protection againist ignorance, but if you don't feel ignorant, the need for it goes down drastically.

Law of Wealth:
1. Pay Yourself First - set aside a regular chunk of money and will compound over time.
2. Set goals and write down the plans. Automate the saving plan.
3. Don't afraid to take risk, but do your homework.

Wealth creation = Time + Rate of Return + Tax

Benjamin Graham - Security analysis
An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. (margin of safety)

Philip Fisher
He believed superior profits could be made by:
1. Investing in companies with above average potential; and
2. Aligning oneself with the most capable management (fortunate and able). The company was "able" because the founders of the company were people of great ability. The company was also "fortunate" because events outside mangement's immediate control were having a positive impact on the company and its market.

Ability means:
R&D -to produce a better products and more efficient services
Sales - help customers understand the benefits of the product or services (bridge/link between the marketplace and the R&D unit)
Generate profits - its dedication to maintaining and improving profit margins, and finally, its cost analysis and accounting controls.

A company with a low breakeven point, or a corresponding high profit margin is better able to withstand depressed economic environment. No company will be able to sustain its profitability unless it is able to break down the costs of doing business while simultaneously understanding the cost of each step in the manufacturing process. In order to do so, a company must instill adequate accounting controls and cost analysis. This cost information, enables a company to direct its resources to those products or services with the highest economic potential. Furthermore, accounting controls will help to identify snags in a company operations. These snags, or inefficiencies, act as an early warning device aimed at protecting the company's overall profitability.

Superior companies possess not only above-average business characteristics but, equally important, are directed by individuals who possess above-average management capabilities. These managers are determined to develop new products and services that will continue to spur sales growth long after current products or services are largely exploited. The above-average manager simultaneously has the ability to implement the company's long-range plans while focusing on the daily operations of the company.

For a business to be successful, management must develop good working relations with all of its employees. Employees should genunely feel that their company is a good place to work.

Life - Principles

1. Everyone Manifests - Everyone thinks that the principal thing to the tree is the fruit, but in point of fact the principal thing to it is the seed. You are the fruit of the thoughts you have planted and nourished. If you want a better harvest, you must plant better thoughts. Poor thoughts will not produce prosperity. Thoughts are things and every though has a consequence. Each thought is a pebble dropped into the pond of your life - the ripples are real. Te more intense the thought, the more powerful the outcome.

2. Live life above the line, learn it - If we get beyond blaming and justifying (Example will be "I would have gotten the job done except that I had travelled all night yesterday and I was too tired to focus on the project today." This is just another form of blaming), there is another level of suboptimal learning. Instead of blaming another person or the circumstance, we blame ourselves. This too reduces the opportunity of learning. Life is a succession of choices. As much as possible is learned from each situation. As a result, the next choice is more likely to be wiser.

3. Abundance is the nature - The universe is fundamentally abundant. There is no shortage, except in our own mind. Who can absorb all the abundance of a magnificent sunset? Abundance means great supply, plentitude, sufficiency, more than enough. Once you own the principle, the results that follow must be abundant. Abundant thinking multiplies, magnetizes, and magnifies whatever is focused upon. As abundance is the nature, nobody can consume all.

4. Givers get - He which soweth sparingly shall reap also sparingly, and he which soweth bountifully shall reap also bountifully.

5. Wealth is freedom - Life is a seminar and you were enrolled at birth. You can't get out of it, even by dying. So enjoy it.
i) Time freedom - Your work is your play and your play becomes your work. You feel comfortable and calm taking time off.
ii) Relationship freedom - You and your loved one will have love and time to explore it.
iii) Spiritual freedom - You can discover and who you are in God and who God is in you.
iv) Physical freedom
v) Ultimate freedom - the ability to pursue your real genius.

6. Big dream with a life of balance: financially, spiritually, socially, physically.

7. Repeat your top six goals daily:
i) Body: physical goal
ii) Brain: intellectual goal - the books you read, the amount of daily study
iii) Being: spiritual goal - time spend mediating or praying, etc
iv) Time: organizational goals
v) People: concerning the most important people in your life
vi) Money: financial goals

7. Passion list - It is much easier to ride a horse in the direction it's going. To become rich one minute at a time requires that you do what you love doing and you are passionate about it.

8. The size of question determines the size of the result - think high so that you can get more.

Finance - Rules for affluent parents and productive children

1. Never tell children that their parents are wealthy - As children was constantly told their parents are wealthy, they tend to think they should live the high-status/high-consumption life-style.
2. No matter how wealthy you are, teach your children discipline and frugality - Teach them by example. Children are exposed to good role models whose lives are characterized by discipline and frugality.

The King's Rule poster:
i) Be tough ... life is. In other words, there is no promise of a rose garden.
ii) Never say "poor me" .. [or] feel sorry for yourself. Stay positive.
iii) Don't walk on the back of your shoes ... Waste not, want not. In other words, don't abuse your belongings. They will last longer.
iv) Close the front door ... Don't waste your parents' money letting the heat out.
v) Always put things back where they belong.
vi) Say "yes" to those who need help before they ask.

3. Assure that your children won't realize your're affluent until after they have established a mature, disciplined, and adult-life style and profession - Set up trust to distribute money to the children until they are forty years of age or older.
4. Minimize discussions of the items that each child and grandchild will inherit or receive as gifts - Never make light of verbal promises: "Billy, you will get the house; Bob, the summer cottage; ..." especially in a group setting. This will create expectation for the child to get the heritage for free.
5. Never give cash or other significant gifts to your adult children as part of a negotiation strategy.
6. Stay out of your adult children's family matter - Let them run their own lives; ask permission even to give advice.
7. Don't try to compete with your children - Never boast about how much money you have accumulated. This sends a confusing message. Children normally can't compete with their parents on this basis.
8. Always remember that your children are individuals - subsidizing underachievers tends to enhance differences in wealth, not reduce them.
9. Emphasize your children's achievements, no matter how small, not their or your symbols of success - teach your kids to achieve, not just to consume.
10. Tell your children that there are a lot of things more valuable than money - Good health, longevity, happiness, a loving family, self-reliance, fine friends, reputation, respect, integrity, honesty, and a history of achievements. Money is the icing on the cake ... You don't ever have to cheat or steal ... don't have to break the law ... cheat on your taxes.

Time - More effective

Tips to have you do more:

1. Focus on the top 85% - Work on the most critical things by focusing to finish 85% from your priority list.

2. Reward yourself for doing the right things - The things that get rewarded get done.

3. Do your feared things first - once the most difficult task is done, it will be much easier afterward

4. Plan for your day and write out the goal daily.

5. Exercise keep you energize.

6. Use of waiting time and multi-tasking - Do two things at once, like listen to tapes while exercising, driving, or standing in line. Ask yourself "Is this the most productive use of my time?"

7. Say "No" to what is not important.