Closing '07 - '08

Closing the Books

Bo’s out of town for a soccer tournament, so I think I’ll surprise him by closing my books publically without seeking his advise first. This won’t be anything with a bunch of ‘Bofart’ in it. Just straight to the point.

So if you don’t know the story already, I am currently in debt of approximately 85 million Linden Dollars book value based on original share value, or $310, 000 USD at the rate of 275L per USD. But that’s just what I owe to Second Lifers. I also owe an additional $70,000 USD to real life commitments. So that’s how much I’m closing last year with, and my debt going into this year. However, there’s one catch – I can only do so if I have money – but I don’t. So first, I’ll tell you where the money went, then I’ll tell you what we’re starting with. Maybe I’ll get someone dumb like me to keep going and put in more money.

Second Life was only ONLY source of capital and income, so based on my SLW financials, the 17 Million personal debt can be considered my ‘salary’. So what did I do with this salary. My car is a ’94 Toyota Tacoma, so the money didn’t go there. In fact, while you’re driving, scan for how many cars on the road you see has lesser value than my car. You won’t find many – trust me, I do it often when I think about ‘what if …’ while I’m driving. So let’s just say I didn’t live a lavish lifestyle like everyone thought I did. But to those that still won’t believe me, just think that I ate real good.

So now we know what I owe to build my businesses. As we all know, I’m out of funds, so all of my SL businesses now sit idle and incomplete. On to my real life business. Here’s the link to the final numbers from trading. Unfortunately, I didn’t start keeping books until November, but our year starts at the end of August when Sports Arbitrage season begins. So it’s missing two months:

www.jtfinancials.com/Arbitrage Wise_PL(Final).xlsx

The numbers will show you that we made $130,000 last season. Remember that my only salary was the 17M, so take away my living expense, add in the additional real life debts, and that’s what our starting investment was. So assuming I had a salary of say $31,000 a year, our starting investment is $100,000. So our rate of return was 130%. Unfortunately, and a big unfortunately, one of our books went insolvent with about $170,000. So instead of making 130k, we lost 60k. I’m going to close the books there. It’s time to move on – can’t dwell about the past.

Here’s our new plan. For many reasons, disclosing this may be one of the most retarded things I going to do, but it’s my final bullet. I just recently applied for a job – given the job market and my lack of corporate experience, don’t expect to get much. We’re starting from the bottom. Since April, once I realized our profits were gone, I started grinding in poker. It was the last option that can provide us some income. I made about $10,000 – can’t complain since 90% of poker players lose, and it provided immediate revenue. About $1,000 of it went to personal expense since my fiancé was paying the bills (and she’s starting a new career, so not making much either). The rest went to pay debts and my partner’s venture – a poker bot. I’m not going to go into any details with it, except here are the stats so far:

www.jtfinancials.com/PlayaStats.xls

The only column you have to know is Column F on the Master worksheet since that tells you our total daily profits. We’re only on our first site, and are growing. You can’t believe there are poker bots out there? Don’t be so naïve.

With that, we open our books. A debt of $380,000, and two and one-half business: Bot, Juice, and half a Second Life. Second Life is at a standstill for now. Bot is slowly growing, but all profits minus what I really really need will be kept inside the business to keep it growing. Juice can make a lot, but not without any capital. I’m putting in $2000 and will do a daily report to see how we do.

I’ll most likely post a daily excel on Google Spreadsheets and on Twitter – I will post the Spreadsheet link once season starts:

www.twitter.com/arbitrage

But, I’m open to taking unsecured loans. Given what happened last year, I cannot make any guarantees, except that I’ll report the truth. I also know that given the nature of the business, there are some ‘personal risks’. But at this point, I’m willing to accept the consequences. Do I really have a choice given my debt?

In summary, this is what we have going into this year. If things go well, we’re on our way to getting back on our feet (again). But we as you will see from the Juice summary, we need a lot of help, aka, a lot of money. Hey, Donald Trump went broke once and owed the banks tons of money. Know what he did? He asked to borrow more. Don’t take my word for it, read the summary. You can contact me at arbitrage.wise@gmail.com if you like my ideas. If I have no takers, then I just have to hope for the best in poker and that I get hired.

Here’s a summary of Juice:

www.jtfinancials.com/juicetrading.ppt

Money DOES grow on trees...

Tom is a builder. He cuts down a tree and builds an extravagant house with it. Tom then goes to Bob, who is barely struggling to survive, and sells Bob the house.

"I can't afford to pay this house", says Bob.

"Don't worry Bob; my banker Mike will give you a loan. You do not have to put anything down, I'll give you a very low interest rate, and you only have to pay a small monthly payment to Mike for the first 3 years. After 3 years, your interest will double, so you'll have to pay Mike more. But before that happens, your house will go up in value and you can sell it and make some money," replies Tom.

Sounds like a good deal, so Bob bites. Tom made money by selling the house, and continues to do so doing the same thing.

Mike gives Bob the loan, then goes to Investment Banker Larry and sells him a bond.

"Look Larry, this bond is top quality grade A security. It has a fixed income backed by Bob's mortgage", Mike tells Larry.

Larry bites, and buys the bond and other similar bonds from Mike. Mike made money by selling the bond, and continues to do so doing the same thing.

Larry then goes to overnight lender Sue, and borrows money to loan to Beth so that Beth can buy a business from Amy. Larry makes money because Sue charges him an interest rate lower than what he will make off of Mike's bond, so he continues to do so doing the same thing.

Bob got a house! Tom made money building and selling houses! Mike made money from selling his bond! Larry made money from borrowing short and lending long! Sue made money from lending to Larry! Beth made money by owning a business! Amy made money by selling her business!

Oh Glory, money does grow on Trees! The trees Tom chopped down to begin with.

Three years later...

Bob's mortgage and interest is about to jump, so he goes to sell his house, like Tom suggested. However, since Tom told everyone the same thing, everyone already has a house. "Oh Snatz!" says Bob. "No one will buy my house now, so I better lower the price and sell it soon."

Too bad for Bob, everyone including the Dick's and Tard's of Shmucksville is doing the same thing, so now Bob's house is worth less than what he owes. Bob can no longer pay his monthly mortgage after it jumped, and has no reason to keep it since he owes more than what his house is worth.

Bob abandons his house, file bankruptcy, and move on, loosing everything he put into his house the previous 3 years.

Since Bob can't pay his mortgage, Mike's bond is worthless, which makes Larry's assets worthless, which means he can't pay Sue back for her loan, which disables Sue from making any more loans, which means people like Beth can't have any money to do business, and may have to fire people, which means those people won't have any money to buy things from similar businesses like Amy, so Amy can't sell her business...

Now everyone is broke! "Oh Snatz..."

(Of course, this isn't exactly how it happened, but is close enough...)

The Express Lane Bill

I was in the express lane today waiting to pay for a few grocery items when a man in front of me, who was just given his total amount, proclaimed sharply, "My Goodness....". I took a glance into his cart and there weren't many expensive items in there, mostly basic groceries such as eggs, bread, etc. Also, keep in mind that we were in the express lane - you shouldn't get that kind of reaction in the express lane.

Upon hearing him, I wonder if he, like most of the people I know, have any clue why their overall bills are going up. Did he know that the reason his bills and costs of living are going up was because the FEDS were literally 'stealing' from him? As I've said in my previous blog - with the government being able to control inflation, they have the ability to control how much money you have, by controlling how much it's worth. So with the FEDS constantly printing money to fund the war, and bailing out companies with the likes of Bear Sterns, your money is being stolen right from under your nose through inflations. Naturally, the ones who benefits from these are the rich and the elites, at the expense of people like us.

So the next time you're paying for gas or groceries and blame the increase of your bill on inflation, keep in mind that inflation is mostly a government controlled instrument to rob you.

For a more thorough explanation of this, CLICK HERE

Without the Feds

I'm a Ron Paul supporter. If you don't know how Ron Paul is, he's the 'unknown' candidate that America needs - but that's a whole different story. One of Ron Paul's platform if he gets elected is to abolish the Fed. Until this year, I never realized that the Fed was as federal as FedEx. But having read a few articles about the Fed, and about banking, I actually think this may be a good idea. When I told someone about this, their first statement (and I'm sure many have the same as well) was that without the Fed, no one would trust a bank because there's no FDIC to insure the deposit. But, I object...

Let's start off by discussing the hidden 'premium' that everyone is paying to get their accounts insured. With the Feds being in charge of the money supply, and ability to control interest, they in fact have the ability to control inflation. If they can control inflation, then they inherently are able to make you pay for having your money insured, by increasing the money supply, which increases inflation, which decreases your purchasing power by making your money worth less. So is this 'insurance' really necessary?

Let's look at things from a free market perspective. Without the Feds, most people think that everyone will be reluctant to use banks because they won't feel secure. However, in a free market, there will be companies that will come to fill that need. These companies will be responsible for making banks more transparent, by auditing these banks, and publishing their findings. This information will allow customers to read into banks and choose which bank is best for them.

A second possibility would be that a different kind of bank to be developed, a true bank, in the sense that the bank acts only as a money storage company to help facilitate commerce and transactions. These banks would not offer any type of interest, CDs, or investments. They will only store your money, and make their money off of fees. Under this business model, customers do not have to worry about the bank being illiquid, or having enough reserve for withdrawals since funds are never invested, and are always available. This is what a bank should really be, just a larger version of that the piggy bank we all grew up with, but more sophisticated. They should leave the investments and savings up to other companies, and focus on what they do best, storing money and facilitating commerce.

I wonder with all of these banks having liquidity issue and financial trouble, if this is a business model that a bank will eventually adopt.... would be interesting to see if this type of model for a bank would work.

"If I were" to run Vietnam...

I'm Vietnamese, so naturally, I have a slight bias towards helping my own country out. If I were to somehow be involved in running or developing the country, I wouldn't let it become a manufacturing country, which seems to be the road it's heading towards. Rather, I would turn it into a financial and tourism country. Vietnam has one natural competitive advantage that most countries don't - coastal access. I wouldn't let industrialization turn the water brown.

Rather, I would get the country to copy Macau's business model, and turn the country into one dedicated towards the gaming and entertainment. Start off by creating infrastructures and legislations that would allow legalized online gambling. It's a 13 Billion dollar industry and only growing - grab a piece of the pie! This may eventually lead to more online gambling sites moving their operations to Vietnam, where labor is still cheap, therefore enabling them to provide quality customer service at a discount - and if you know me, I'm a true believer that CS is what separates good companies from the ordinary ones.

As these businesses move to Vietnam, their demand for skilled labor in technology/computing should go up, which should create a demand for higher education/training. Once there is sufficient revenue from taxing the online gaming sites, Vietnam can improve it's public infrastructures that can lead to brick & mortar casinos. I'm confident that these casinos can offer better amenities due to the low cost of seafood as well as being near the coastlines.

I think that going this route will help better preserve Vietnam's natural beauty and resources, and could one day help turn it into a Green Country, with it's focuses on services rather than industrial.

So Vietnam, don't be a copycat... be a leader and stay ahead of the curve.

Blog Resumed

My blog started out as a blog dedicated towards my Second Life business. However, I'm starting to run out of things to say as our expansions have slowed down and we're now just in our 'steady growth' stage, within nothing new to say. I will continue to blog on SLReports.net with anything regarding Second Life, but need a blog that I can use to simply express my ideas about anything and everything (including non-SL related issues) - thus the desire to restart this blog.

I must forewarn that while I have many ideas rumbling through my head at all times, that many of what I discuss are mostly based on sub-conscious understandings of things with little indepth research. So just take what I say for what it is, a blog.

Blog Moved...

I will now post my blogs on SLReports: http://sl-virtual-world-news.com/content/blogsection/3/37/