Yesterday, the US Federal Open Market Committee (FOMC) met and cut both the discount and federal funds rate by half a percent to 5.25 and 4.75% respectively. The streets rejoiced. Hallelujah! But if you ask any person on said streets, can they explain what exactly are these two rates? What’s the difference?

Let me take a stab at it through layman’s terms:

The discount rate is the interest rate charged to banks who borrow from the Federal Reserve Bank.

I then cheated and looked at what Investopedia had to say:

This type of borrowing from the Fed is fairly limited. Institutions will often seek other means of meeting short-term liquidity needs. The Federal funds discount rate is one of two interest rates the Fed sets, the other being the overnight lending rate, or the Fed funds rate.

Onto the federal funds rate. Again from Investopedia:

The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight.

Okay, ungeek the speak. By law, depository institutions (lets say banks because it’s easier to type) need to keep a percentage of funds in reserve. If they don’t have enough funds, they borrow from other banks with excesses to meet this overnight requirement at a certain interest rate. This is the federal funds rate.

When the Fed cuts rates, the markets generally cheer as the cuts eventually trickle down to us common folk to encourage spending and economic growth. I’m sure the next few days will be filled with opinions on whether the Fed did the right thing for the long term.  I hope you enjoyed this explanation as it relates to stock market for beginners!

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I don’t often pay attention to what goes on with the stock markets on a day-to-day basis but even I know that the US Federal Open Market Committee (FOMC) will meet this afternoon. It is widely expected that they will cut the fed fund rate by .25 to 5% in order to increase economic growth.

As a long-term investor, this has little bearing on me in the long run. However, I still want to be aware of high profile market events when I enter/exit a position in a stock. I can thus avoid external market conditions influencing the target stock price. Therefore, I’ve bookmarked the MarketWatch site as it provides an economic calendar of Canadian and American events. How you wish to play it is up to you

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Plonkee Money recently asked whether a having a career plan matters.

Aaah, a topic that I always struggle with in my career section. I make a good living doing what I do and to be honest, I’m way over qualified and I’m often bored at work.  However, I don’t seek out new opportunities because I’m not exactly that motivated.  I also feel like but my career progression is stalled because I didn’t go to grad school when so much was expected of me as a child.  I do have quite an ego and I also feel a pressure that you’re supposed to change jobs every 5 years so you don’t get stale. I’d hate to have someone say to me, “you’re still there“?

So why am I going through this self reflection?  Someone I went to school with at uni I found out is an IT director at where I work.  WTF?  If you ask him, he’d freely admit I kicked his ass in the courses we took together.  Oh well.  I can’t remember what his background is but he is a few years older than me so more experienced in the work force.  And he’s more “organized and institutionalized”.

So, I waffle back and forth whether I should go back to school to get some sort of accreditation or grad degree.   Maybe a project management professional but to me it’s only a title as a lot of PMPs I’ve worked with were totally incompetent.

In the end, I believe that my extra earning potential won’t be worth the time and tuition spent. Although I can afford the tuition without taking a loan, I’d rather keep my money invested.

As for the time factor, I project that the extra hours spent at school would only continue in a higher paying job with greater responsibilities and pressures. This is not always the case but regardless, I don’t need this type of invasion in my private life. Also, by getting better at investing, I can make up this difference in salary through a passive income source.

The only reason why I’d go back to school would be to network but I feel that this is an extension of your personality especially as a mature student. Your social skills have already been developed. If you are gregarious by nature, it will always be easy to network. If you’re a wallflower, it will be difficult to maintain these new contacts.

Given my reasoning, I still question myself whether I’m making excuses and if my arguments are really justified. I just feel that at this point in my life, I believe that climbing the corporate ladder would only placate my ego.

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My friend and I were talking about Britney Spears yesterday, when oddly enough, the subject of crazy bitches came up. Later, I spot an article written by Ben Stein regarding how the chaos in the markets is causing a ripple effect into unhappy marriages. What a coincidence as that’s my topic for today too!

My friend just happens to know a crazy bitch who is divorcing her husband of two years because of the credit crunch. This is the second marriage for both of them and the husband is a wealthy salesman of some sort while the wife is a low ranking government employee. They have a lavish lifestyle and a beautiful home, cottage, paintings, etc. Can you guess the outcome? The husband is losing his job and the wife is bailing. Hmm, gold digger, much?

And so, I come home and read Ben Stein’s article about how one woman jokes that she is leaving her husband to look for a richer one. As my story shows, these things really are happening. I sincerely hope the situation is not as cut and dry and there are extenuating circumstances involved. However, this is yet another example of how finances can strain an already fragile marriage. I know I’m keeping my financial house in order so I won’t have to deal with these issues in a marriage. And yeah, I’ll make him sign a pre-nup too

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Yesterday, I checked my comments to find a pingback from Pingblogs who had aggregated the buzz generated amongst the blogging community for the Million Dollar Wiki. For new readers, I had blogged about my reasons for buying the Stock Picks page at MDW. You will also note that I have a fascination with entrepreneurs and people who think outside the box. I bought the page specifically because I wanted to learn about monetizing strategies and experience the effects of viral marketing. A case in point: when John Chow blogged about the Million Dollar Wiki and his Make Money Online page, it resulted in the purchase of 70 pages for Graham Langdon, MDW’s site owner. When ShoeMoney said he bought Free Ringtones, it generated another rush of 150 pages being bought in one day! At $100 per page that’s 15k! Can these two big name bloggers be wrong about the Million Dollar Wiki? I don’t think so. They will make their money back and more as these bloggers have the vehicle to drive visitors to their pages for whatever they are selling. Now, what about the rest of us? John Chow is an affiliate of MDW so you can bet he will continue to promote it. That’s a bonus for other page owners hoping to get a spill over effect.

The next question, of course, is have I received any benefits in the increase of traffic? Well, I have enough honesty to say no. I’ve only made $1.10 but I’m also very inexperienced. However, by buying the page and having a stake, I have learned a lot which is invaluable to self-progression. I have learned that just like WhateverLife.com for MySpace, the trick is to tap into the community itself. Why do people want to buy a MDW page? To make money. Guess what gets hit? Making Money Online and all the other keyword variants. You can check their progress in the Money page. How do you design a web page? Get the design guy to do it for you. How do you market your page? Well, what do you know… there’s a marketing guy too! And let’s talk about the whole thing in the MDW Forum. Graham said it himself in the MDW FAQ:

The Million Dollar Wiki is a micro-economy of pages filled with informative, entertaining and resourceful content.

The keyword is micro-economy.

I still intend to provide better content on my Stock Picks page as it forces me to learn about investing and it can serve as a tool to cross-promote my blog. It’s still a very good keyphrase. However, now that I know more, I might purchase a “fun” word or a word that will service the wiki community itself. Therefore, in the short term, I believe you can make money from the hype. Afterall, if all goes according to plan, you have 10,000 built-in customers.  As for the long term plan, that’s up to you and how you evolve your page.

If you want to buy a page, there’s still time to enter John Chow’s contest that by ends by this month. Details below.

John Chow dot Com is holding another evil blog contest. He’s giving away a 24? wide screen LCD monitor and a signed copy of the best selling book, The 4-Hour Workweek! Find out how to enter here. The contest is being sponsored by The Million Dollar Wiki. Use coupon code JohnChow to save $10 on a page.

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