I’m paraphrasing a cliché, but if it walks like a duck, quacks like a duck – it’s a recession for the U.S. economy.

Just by going through the American pf blogsphere, you can read numerous articles on the rising cost of everyday goods. The American dollar is falling, inflation is rising, homes are foreclosing and the latest news is the sale of investment bank Bear Stearns to JPMorgan Chase due to the sub-prime mess.

Admitting to the term recession is very clinical and academic. According to Wikipedia: “a recession is a decline in a country’s gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year.”

Let’s also define GDP. Again from Wikipedia: “GDP is defined as the total market value of all final goods and services produced within a given country in a given period of time…”

But, if you look up the 2007 fourth quarter GDP for the United States, you’d find that it actually rose 0.6%.

So how do you make sense of the numbers when for all intents and purposes, most economists would admit the American economy is in a recession?

In an article from the Economist, it suggests that looking at GDP growth per person is a better indicator of economic performance than crude GDP. Immigration and population growth should be factored into economic progress as you take into account the output of each individual.

The following graph shows how slow growth population countries like Japan would actually be seen as more productive than the U.S. in recent years.

This could also explain why despite what the GDP says, the average American knows that individually, he isn’t any better off.

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Warren Buffett is rich.

Some news flash, eh?

According to Forbes 2008 World’s Richest People list, Buffett made it to number one this year at an estimated fortune of $62 billion. Mexican telecom tycoon Carlos Slim Helú takes the number two spot at $60 billion and poor Bill Gates has to settle for third with $58 billion after thirteen years of dominance at the top.

How did this come about?

Class A shares of Berkshire Hathaway shares rose 25% between July and the time Forbes compiled this list. This is exactly the timeline of the sub-prime crisis when ABCP and the credit crunch came to the forefront of mainstream media. So, you can say that in times of recession in “Warren Buffett We Trust”.

This is in stark contrast to the early days of the dot com era and entering the new millennium. At that time, Buffett was blasted for being old fashion and out of touch with his technophobia.

I guess Buffett is having his laugh now – not a belly laugh but maybe a chuckle.

Despite the fact that 2007 was a glorious year for Berkshire, Buffett proclaimed in his latest letter to shareholders that the “party’s over” for the insurance business. And the insurance business is the corner stone of Berkshire.

The property and casualty business runs in cycles. Obviously, no one can predict catastrophes but when things are calm, the vigilance declines and so does insurance premiums as companies compete for new business of first home buyers.

Buffett is warning of “lower insurance earnings during the next few years”.

While Class A shares are cost prohibitive for most investors, Class B shares are more attainable – pegged at 1/30 of Class A shares. But would buying now be overpaying for Berkshire’s intrinsic value given Buffett’s warning?

An article published in December’s Barron’s magazine entitled “Sorry, Warren, Your Stock’s Too Pricey” certainly seemed to think so. But keep in mind this was when the Class A shares were trading at over $140,000. Its bottom line calculation was that for fair value, the shares should trade at $125,000 to $130,000. Therefore, the Class B shares should fall within the range of $4167 – $4333.

As you can see by the first graph above, Berkshire is still overpriced according to the Barron’s article. But, as we’ve also seen recently in the last decade, never count out Buffett.

When bond insurers like Ambac Financial Group and MBIA were struggling to keep their triple-A bond ratings, Buffett seized the moment to set up Berkshire Hathaway Assurance – his own bond insurer for municipalities. And I’m sure Buffett’s keen eye has spotted other opportunities as well.

So while the tech era was not made for Buffett’s investing style, this recession certainly is in his wheel house. As always, it will be interesting to track his investments as it might be his last hourrah.  When you want to learn to invest money, there’s no better person to follow.

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I came across an interesting article about iPods being responsible for the recent rise in U.S. crime rate. There is no doubt that iPods have become very mainstream and the telltale white earphones can be seen dangling from a lot of ears just by walking down the street. Here are some stats:

In late 2004, Apple had sold about 5 million iPods. By the end of 2005 that had ballooned to 42 million, and in 2006 the number neared 90 million.

But is the surge in iPod popularity responsible for the jump in robbery rate?

FBI statistics show the robbery rate went from 137 per 100,000 people in 2004 to 141 per 100,000 in 2005 and 149 in 2006.

How very Freakonomics.

Well, I really don’t know if this is a huge jump or if there’s a strong correlation but I do think people pay less attention to their surroundings when they are absorbed with their gadgets.

It happened to me once.

A few years ago, I was on the bus on my way home from work. It was still light out and I was sitting by the door playing with my PDA with my little knapsack/purse on the ground by my feet. The bus stops and this punk ass kid swipes my bag from behind me and rushes out the door. The wheels in my brain turned as I had a little internal dialogue with myself. Should I run after him? I had no money in my purse and the most expensive thing I had was already in my hand. It would be a bitch to replace the ID though. What the hell, let’s go for a run.

The dude had taken off but I still had my wits about me even under stress: I looked both ways before I crossed the street running after him. No sense in being roadkill.

It had been awhile since I ran track in school but I can get a move on. Still, after only a block, I started feeling resentful. Dumbass was making me run. And why was I wasting my breath this way? Changing tactics, I did what any normal woman would do under the circumstances. I let a blood curling scream: STOP THIEEEEEEEEEEEEEF!

That made him drop my purse real fast.

I picked it up and he continued running. I made my way back to the bus which was waiting for me after I had stormed off. The driver asked if I wanted to report it but I said no. I only got the back of his head anyways.

That’s my story about gadgets and crime. The incident did leave a lasting impression on me: keep the music volume down and always be aware of your surroundings. I was a robbery attempt statistic but I needn’t have been if I had been more careful.

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I suspect the latest Warren Buffett annual letter to shareholders will be dissected ad nauseum over the next few days but I wanted to pay my respects to the dead horse by writing its obituary.

I don’t think Buffett offers any new investing lessons that he hadn’t preached before, but it is a reminder on Berkshire’s rules for investing:

a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag

On page 5 of the letter, Buffett explains once again the concept of moats to protect a business. For the buy and hold investor, this is a must read over and over again. It might be hard to find companies that meet all these criteria but look at the patience Berkshire maintains with its $44 billion in cash.

If you don’t have the chops to pick stocks yourself, take heart. The chances are that most investment advisers don’t either. Here are some interesting observations made by Buffett on the concept of compound returns…

The Dow had an annual compound gain of 5.3% in the 20th century – advancing from 66 to 11,497. In order to match this return by Dec. 31, 2099, the Dow would need to hit 2,000,000. Is it possible? Sure, anything is possible but beware of the investment adviser who promises double digit returns as here are the numbers:

people who expect to earn 10% annually from equities during this century – envisioning that 2% of that will come from dividends and 8% from price appreciation – are implicitly forecasting a level of about 24,000,000 on the Dow by 2100.

And this is not taking into account the percentage taken by management fees.

We are 8 years into the new millennium and the Dow is hovering around 12,300.

You’ve got to hand it to Buffett, he has a way of putting things into perspective.

This is not to say you shouldn’t invest in stocks but beware of the fees involved and have realistic expectations. If you’re a “regular” investor, you might be better off with low cost index funds.

There are just so many more observations and fun anecdotes that Buffett provides but it’s for an educational purpose as well. Warren Buffett’s 2007 annual letter to shareholder is a must read for all investors.

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I got tagged by Nancy Zimmerman, Canadian Money Coach on this personality trait meme. Sure, why not?

Here’s the blogger behind Money Relations.

According to my birth month traits, this is me…

Kinda. Sorta. Not.

MARCH:

Attractive personality. Sexy. Affectionate.

If you’ve got it, blog it. Yes, yes, and yes.

Shy and reserved. Secretive.

Er, maybe, why do you ask…?

Naturally honest, generous and sympathetic.

I am incapable of on the spot lying.

Loves peace and serenity.

Yes, so STFU!

Sensitive to others.

Sorry, STFU please?

Loves to serve others.

Heheh. No.

Easily angered.

Got a long fuse.

Trustworthy.

Trust me, I am.

Appreciative and returns kindness.

Always.

Observant and assesses others.

… yeah, nice shoes.

Revengeful.

Ooooh, I never forget.

Loves to dream and fantasize.

Sorta… but I’m pretty grounded.

Loves traveling.

I like it when I actually get there, but it takes awhile to get me going.

Loves attention.

I’m shy and reserved. See above.

Hasty decisions in choosing partners.

Please, I have taste.

Loves home decors.

… which someone else decorated.

Musically talented.

Sorry, tone deaf.

Loves special things.

Er, doesn’t everybody?

Moody.

Not in the mood to answer this one.

But if you’re in the mood to play, I tag everybody!

Continue the meme with these rules and agree/disagree with your traits.

1. Mention the person who tagged you and create a link back to them.
2. Pick your month of birth.
3. Copy-paste the traits for all the twelve months (see below).
4. Highlight the traits that apply to you and if you would like write some wit or not.
5. Tag 12 people and let them know by visiting their blogs and leaving a comment for them.
6. Let the person who tagged you know when you’ve done it!

JANUARY: Stubborn and hard-hearted. Ambitious and serious. Loves to teach and be taught. Always looking at people’s flaws and weaknesses. Likes to criticize. Hardworking and productive. Smart, neat and organized. Sensitive and has deep thoughts. Knows how to make others happy. Quiet unless excited or tensed. Rather reserved. Highly attentive. Resistant to illnesses but prone to colds. Romantic but has difficulties expressing love. Loves children. Loyal. Has great social abilities yet easily jealous. Very stubborn and money cautious.

FEBRUARY: Abstract thoughts. Loves reality and abstract. Intelligent and clever. Changing personality. Attractive. Sexy. Temperamental. Quiet, shy and humble. Honest and loyal. Determined to reach goals. Loves freedom. Rebellious when restricted. Loves aggressiveness. Too sensitive and easily hurt. Gets angry really easily but does not show it. Dislikes unnecessary things. Loves making friends but rarely shows it. Daring and stubborn. Ambitious. Realizes dreams and hopes. Sharp. Loves entertainment and leisure. Romantic on the inside not outside. Superstitious and ludicrous. Spendthrift. Tries to learn to show emotions.

MARCH: Attractive personality. Sexy. Affectionate. Shy and reserved. Secretive. Naturally honest, generous and sympathetic. Loves peace and serenity. Sensitive to others. Loves to serve others. Easily angered. Trustworthy. Appreciative and returns kindness. Observant and assesses others. Revengeful. Loves to dream and fantasize. Loves traveling. Loves attention. Hasty decisions in choosing partners. Loves home decors. Musically talented. Loves special things. Moody.

APRIL: Active and dynamic. Decisive and hasty but tends to regret. Attractive and affectionate to oneself. Strong mentality. Loves attention. Diplomatic. Consoling, friendly and solves people’s problems. Brave and fearless. Adventurous. Loving and caring. Suave and generous. Emotional. Aggressive. Hasty. Good memory. Moving. Motivates oneself and others. Sickness usually of the head and chest. Sexy in a way that only their lover can see.

MAY: Stubborn and hard-hearted. Strong-willed and highly motivated. Sharp thoughts. Easily angered. Attracts others and loves attention. Deep feelings. Beautiful physically and mentally. Firm Standpoint. Needs no motivation. Easily consoled. Systematic (left brain). Loves to dream. Strong clairvoyance. Understanding. Sickness usually in the ear and neck. Good imagination. Good physical. Weak breathing. Loves literature and the arts. Loves traveling. Dislike being at home. Restless. Not having many children. Hardworking. High spirited. Spendthrift.

JUNE: Thinks far with vision. Easily influenced by kindness. Polite and soft-spoken. Having ideas. Sensitive. Active mind. Hesitating, tends to delay. Choosy and always wants the best. Temperamental. Funny and humorous. Loves to joke. Good debating skills. Talkative. Daydreamer. Friendly. Knows how to make friends. Able to show character. Easily hurt. Prone to getting colds. Loves to dress up. Easily bored. Fussy. Seldom shows emotions. Takes time to recover when hurt. Brand conscious. Executive. Stubborn.

JULY: Fun to be with. Secretive. Difficult to fathom and to be understood. Quiet unless excited or tensed. Takes pride in oneself. Has reputation. Easily consoled. Honest. Concerned about people’s feelings. Tactful. Friendly. Approachable. Emotional temperamental and unpredictable. Moody and easily hurt. Witty and sparkly. Not revengeful. Forgiving but never forgets. Dislikes nonsensical and unnecessary things. Guides others physically and mentally. Sensitive and forms impressions carefully. Caring and loving. Treats others equally. Strong sense of sympathy. Wary and sharp. Judges people through observations. Hardworking. No difficulties in studying. Loves to be alone. Always broods about the past and the old friends. Likes to be quiet. Homely person. Waits for friends. Never looks for friends. Not aggressive unless provoked. Prone to having stomach and dieting problems. Loves to be loved. Easily hurt but takes long to recover.

AUGUST: Loves to joke. Attractive. Suave and caring. Brave and fearless. Firm and has leadership qualities. Knows how to console others. Too generous and egoistic. Takes high pride in oneself. Thirsty for praises. Extraordinary spirit. Easily angered. Angry when provoked. Easily jealous. Observant. Careful and cautious. Thinks quickly. Independent thoughts. Loves to lead and to be led. Loves to dream. Talented in the arts, music and defense. Sensitive but not petty. Poor resistance against illnesses. Learns to relax. Hasty and trusty. Romantic. Loving and caring. Loves to make friends.

SEPTEMBER: Suave and compromising. Careful, cautious and organized. Likes to point out people’s mistakes. Likes to criticize. Stubborn. Quiet but able to talk well. Calm and cool. Kind and sympathetic. Concerned and detailed. Loyal but not always honest. Does work well. Very confident. Sensitive. Good memory. Clever and knowledgeable. Loves to look for information. Must control oneself when criticizing. Able to motivate oneself. Understanding. Fun to be around. Secretive. Loves leisure and traveling. Hardly shows emotions. Tends to bottle up feelings. Very choosy, especially in relationships. Systematic.

OCTOBER: Loves to chat. Loves those who loves them. Loves to take things at the center. Inner and physical beauty. Lies but doesn’t pretend. Gets angry often. Treats friends importantly. Always making friends. Easily hurt but recovers easily. Daydreamer. Opinionated. Does not care of what others think. Emotional. Decisive. Strong clairvoyance. Loves to travel, the arts and literature. Touchy and easily jealous. Concerned. Loves outdoors. Just and fair. Spendthrift. Easily influenced. Easily loses confidence. Loves children.

NOVEMBER: Has a lot of ideas.Difficult to fathom.Thinks forward. Unique and brilliant. Extraordinary ideas. Sharp thinking. Fine and strong clairvoyance. Can become good doctors. Dynamic in personality. Secretive. Inquisitive. Knows how to dig secrets. Always thinking. Less talkative but amiable. Brave and generous. Patient. Stubborn and hard-hearted. If there is a will, there is a way. Determined. Never give up. Hardly becomes angry unless provoked. Loves to be alone. Thinks differently from others. Sharp-minded. Motivates oneself. Does not appreciate praises. High-spirited. Well-built and tough. Deep love and emotions. Romantic. Uncertain in relationships. Homely. Hardworking. High abilities. Trustworthy. Honest and keeps secrets. Not able to control emotions. Unpredictable.

DECEMBER: Loyal and generous. Sexy. Patriotic. Active in games and interactions. Impatient and hasty. Ambitious. Influential in organizations. Fun to be with. Loves to socialize. Loves praises. Loves attention. Loves to be loved. Honest and trustworthy. Not pretending. Short tempered. Changing personality. Not egotistic. Take high pride in oneself. Hates restrictions. Loves to joke. Good sense of humor. Logical.

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