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I came across this article, which I found interesting because I have suspected that many people are clueless regarding basic arithmetic.
Anyhow, I hope you enjoy it.
-Sapiens
Are you smart enough to do compound interest?
(You'll be shocked at how dumb some of you are!)
Silver Stock Report
by Jason Hommel, March 14, 2008
Everyone else out there is writing about how gold topped $1000/oz. Bor-ring! Besides, you don't need me to tell you that. How about some real insight into the gold and silver market? Here it is, if you can understand it.
This weekend, I went skiing up at my cabin in Tahoe. I had a blast, skiing on my semi-new two year old parabolic skis. Since I understand a little bit about the power of compound interest, and I try to apply it in my life in various ways, I have continued to lift weights to build my strength over the years, and I was skiing great, as I was stronger than ever, now at age 37! Unfortunately, my gut is compound growing, too!
While I was there, since gas is so expensive and my propane might have been running low, I was starting a wood fire with some old newspapers from last year. But I ran across a headline that literally stopped me cold: "Many people seem ill-equipped to responsibly handle money".
Ironically, I suppose that should be said of the large brokerage houses that are going bankrupt this year!
But the article itself was more shocking. It said only 80% of people could calculate that 10% of 1000 was 100. Wow. There are some real dummies out there if 1 in 5 can't figure that out. How do waitresses survive if 1/5th of their customers can't figure out how to tip 15-20%? Maybe the dummies can't afford to go out to eat? Sorry, I'm getting sidetracked.
Here's the real shocker from the article: Only 18% of people could calculate how much money you would have, if you started with $200, and saw it gain 10% twice in a row! (Answer below)
Again, only 18% of these people could correctly calculate that simple compound interest problem. Can you?
No wonder so few people ever save for retirement! They are too stupid to calculate the positive benefits of saving money, and investing wisely.
These people were not drunken college students, nor were they ignorant grade schoolers.
These were 1700 people in their early 50's, as measured by the University of Michigan's Health and Retirement survey in 2004! I'm not making this up! This article was in the Sacramento Bee, Sunday, March 11, 2007, on page D3.
Older people, not yet so senile that they might have an excuse, really are that stupid! People in their 50s, I know, are my main readers!
What the Devil is going on? Are people in their 50's all on Prozac or Lithium or something? I don't understand how they can be that dumb! Does that mean I'm the dumb one? My mind reels at the implications, and I contemplate the horror! But I score so well on IQ tests!
(But my most appreciative readers, I know, are far smarter than average, as I discovered recently, the average IQ of my paying subscribers was about 130, which means they are two standard deviations above the mean or average, which means they are very smart, smarter than 95% of other people!)
(Answer from above: 200 x 1.1 x 1.1 = 242)
So, I'm sitting there, dumbfounded by my new knowledge about how dumb people are, and I'm wondering what the implications are for the silver market. And I'm wondering what I need to teach people, because boy, are people dumb!
So here is my conclusion:
Look, if you are among those 82% of people who cannot do the compound interest problem, then you have no business buying stocks in companies. Ever. Not by my list, not from anyone. Never buy stocks if you can't do basic math, OK?!
It would be like trying to play solitaire without knowing the rules of the game! It would be like trying to play chess with no knowledge of how the pieces move! It would be like trying to run without legs! (No offence to amputees.)
If you can't do basic math, your only investment should be physical silver, or gold. Otherwise, people will just take advantage of you. As for me, nearly 35% of my net worth is in physical silver. My money in my IRA is in the mining stocks.
Here's some incentive for saving money: Every time you spend any money, you should ask yourself whether it is something you want or absolutely need to live. If it's a "need", then you must buy it.
But if it's a "want", then you should ask yourself regarding the cost of the item, "Would I rather have 100 times that money later on in life?" If your answer is yes, then don't spend, but rather, save the money, and use that same money to buy silver, instead.
That's the power of compound interest. They say that if you save about $10,000 by the time you are 18, then you will have 100 times as much, about $1 million, by the time you retire, as long as you make 10% (more than inflation) per year.
If you don't understand compound interest, (or even if you do understand it very well, and especially if you are a wise investor) then I suggest that you bookmark a compound interest calculator, as I have, and play with it often, as I do. See one of these:
http://www.smartmoney.com/compoundcalc/
http://www.moneychimp.com/calculator...calculator.htm
http://math.about.com/library/blcompoundinterest.htm
...
(You'll be shocked at how dumb some of you are!)
Silver Stock Report
by Jason Hommel, March 14, 2008
Everyone else out there is writing about how gold topped $1000/oz. Bor-ring! Besides, you don't need me to tell you that. How about some real insight into the gold and silver market? Here it is, if you can understand it.
This weekend, I went skiing up at my cabin in Tahoe. I had a blast, skiing on my semi-new two year old parabolic skis. Since I understand a little bit about the power of compound interest, and I try to apply it in my life in various ways, I have continued to lift weights to build my strength over the years, and I was skiing great, as I was stronger than ever, now at age 37! Unfortunately, my gut is compound growing, too!
While I was there, since gas is so expensive and my propane might have been running low, I was starting a wood fire with some old newspapers from last year. But I ran across a headline that literally stopped me cold: "Many people seem ill-equipped to responsibly handle money".
Ironically, I suppose that should be said of the large brokerage houses that are going bankrupt this year!
But the article itself was more shocking. It said only 80% of people could calculate that 10% of 1000 was 100. Wow. There are some real dummies out there if 1 in 5 can't figure that out. How do waitresses survive if 1/5th of their customers can't figure out how to tip 15-20%? Maybe the dummies can't afford to go out to eat? Sorry, I'm getting sidetracked.
Here's the real shocker from the article: Only 18% of people could calculate how much money you would have, if you started with $200, and saw it gain 10% twice in a row! (Answer below)
Again, only 18% of these people could correctly calculate that simple compound interest problem. Can you?
No wonder so few people ever save for retirement! They are too stupid to calculate the positive benefits of saving money, and investing wisely.
These people were not drunken college students, nor were they ignorant grade schoolers.
These were 1700 people in their early 50's, as measured by the University of Michigan's Health and Retirement survey in 2004! I'm not making this up! This article was in the Sacramento Bee, Sunday, March 11, 2007, on page D3.
Older people, not yet so senile that they might have an excuse, really are that stupid! People in their 50s, I know, are my main readers!
What the Devil is going on? Are people in their 50's all on Prozac or Lithium or something? I don't understand how they can be that dumb! Does that mean I'm the dumb one? My mind reels at the implications, and I contemplate the horror! But I score so well on IQ tests!
(But my most appreciative readers, I know, are far smarter than average, as I discovered recently, the average IQ of my paying subscribers was about 130, which means they are two standard deviations above the mean or average, which means they are very smart, smarter than 95% of other people!)
(Answer from above: 200 x 1.1 x 1.1 = 242)
So, I'm sitting there, dumbfounded by my new knowledge about how dumb people are, and I'm wondering what the implications are for the silver market. And I'm wondering what I need to teach people, because boy, are people dumb!
So here is my conclusion:
Look, if you are among those 82% of people who cannot do the compound interest problem, then you have no business buying stocks in companies. Ever. Not by my list, not from anyone. Never buy stocks if you can't do basic math, OK?!
It would be like trying to play solitaire without knowing the rules of the game! It would be like trying to play chess with no knowledge of how the pieces move! It would be like trying to run without legs! (No offence to amputees.)
If you can't do basic math, your only investment should be physical silver, or gold. Otherwise, people will just take advantage of you. As for me, nearly 35% of my net worth is in physical silver. My money in my IRA is in the mining stocks.
Here's some incentive for saving money: Every time you spend any money, you should ask yourself whether it is something you want or absolutely need to live. If it's a "need", then you must buy it.
But if it's a "want", then you should ask yourself regarding the cost of the item, "Would I rather have 100 times that money later on in life?" If your answer is yes, then don't spend, but rather, save the money, and use that same money to buy silver, instead.
That's the power of compound interest. They say that if you save about $10,000 by the time you are 18, then you will have 100 times as much, about $1 million, by the time you retire, as long as you make 10% (more than inflation) per year.
If you don't understand compound interest, (or even if you do understand it very well, and especially if you are a wise investor) then I suggest that you bookmark a compound interest calculator, as I have, and play with it often, as I do. See one of these:
http://www.smartmoney.com/compoundcalc/
http://www.moneychimp.com/calculator...calculator.htm
http://math.about.com/library/blcompoundinterest.htm
...
Anyhow, I hope you enjoy it.
-Sapiens
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