Financial

Did Enron kill Kenneth Lay?

Former Enron founder and CEO Kenneth Lay died of a heart attack yesterday in Aspen, Colorado while awaiting sentencing in the aftermath of his conviction on multiple counts of corporate fraud.  Lay was expected to serve up to 20 years in prison for his crimes.  When I read about his death last night, I initially thought, What did you do, Ken?  Commit suicide?  It would not have been surprised if he had committed suicide prior to sentencing.  No, I later read, he died of a heart attack.  Did Lay die of a broken heart? I wondered.  Not a broken heart in the sense of a jilted lover, but rather from the physical torment caused by stress and anxiety brought on by knowing that your world has fallen apart and you have nothing to look forward to in the next two decades except facing worldwide condemnation and perpetual incarceration. 
 
The courts ruled that Kenneth Lay, with the help of his trusted underlings, killed Enron.  Could it also be that Enron killed Kenneth Lay?  Did Lay orchestrate his own ending by succumbing to the pain and anguish brought on by Enron’s collapse?  Ken Lay will now go down in history as a tragic figure who elicits public sympathy for his sudden, traumatic death.  The world will now look upon him more favorably because of his untimely passing.  Former CEO Jeffery Skilling and former CFO Andrew Fastow will not be treated so kindly in the court of public opinion.  Both will face ongoing tarring and feathering by society, long prison sentences, marginalization, and eventually, death.  Lay’s life is over, but he unwittingly mitigated two realities that would have plagued him for the rest of his life–punishment for Enron’s demise and public hostility.  Enron’s role in Lay’s death will mute some of Lay’s guilt.  Perhaps Lay planned it that way.  Rest in peace, Kenneth Lay. 

Financial Indie: Blogging Your Net Worth

The other day I read an article in BusinessWeek Magazine about bloggers who write openly about their financial net worth.  Many are in search of wealth and want to broadcast their pursuit online.  Some seek financial security and enjoy sharing their financial insights.  Virtually all of them enjoy showing off the size of their wallets.  I surfed over to NetWorthIQ.com, a website featured in BusinessWeek that is devoted to showcasing your net worth.  It’s an interesting website.  I opened an account and added our own statistics.  BusinessWeek raves that it is a social networking site a la MySpace, but that’s much too generous.  NetWorthIQ has a long way to go to match MySpace’s networking capabilities.  For example, I couldn’t find any way to contact anyone else who registered on the site.  NetWorthIQ allows you to see user’s net worth and check out their external blog and/or home page if they have one, but that’s about the only personalization the site offers.

American culture is paradoxical when it comes to financial matters.  Americans don’t like to publicly discuss personal finances (e.g. divulging their salaries or annual income).  Many Americans moralize about wealth, associating the pursuit of wealth with “good” or “evil.”  Moralizing about money complicates discussions about financial matters.  Few parents sit down with children and discuss financial discipline because it’s a touchy subject akin to talking about “the birds and the bees” (sex).  Either the parents guard their own financial status closely, or they don’t know enough about the subject to talk about it.  Instead, they assume that their children will learn fiscal responsibility through osmosis.  Many children never do and perpetuate a cycle of financial ignorance when they become adults.

Despite any misgivings about money, Americans generally try to “keep up with the Joneses,” the Jones family being a theoretical peer you find yourself constantly comparing you to in terms of material consumption.  If Mr. or Ms. Jones buys a new BMW, then you must buy a Mercedes to keep up with him or her.  The open scene of the movie “Fun with Dick and Jane” captures this concept so well.  Dick’s neighbor shows off his voice-activated Mercedes to Dick (Jim Carrey), and Dick responds by ordering his older BMW parked in his driveway to “sit” and “play dead.”  The parked car obeys his commands.  Americans typically display wealth through big-ticket items purchased at the level they can afford–a nice home, car, boat, a big-screen TV, or luxury goods, even a $5.00 cup of Starbucks coffee.  A smaller cabal of Americans prefers to build wealth quietly and live modestly, saving and investing whenever possible.  Some of us view material consumption as a liability; that is, if you buy something that costs money to maintain, it’s a liability and should be avoided.  We prefer to limit consumption and build assets, avoiding consumption that drains our wallets.  We need to purchase necessities that may cost money, such as a home, but we prefer to minimize these liabilities.

NetWorthIQ is valuable in that it allows you to benchmark your investment portfolios against others’ portfolios.  “Benchmark” is a newfangled word that means you compare your investment portfolio to Mr. or Ms. Jones’ portfolios to build investing insight.  The site has a great feature that allows you to compare your investing habits with others across many demographics, including geography, age, income level, and occupation.  I find this information helpful in deciding which investment strategies to pursue.  For example, according to NetWorthIQ users, higher net worth individuals typically own more liquid investments than retirement funds, and they invest more money in stocks than in bonds.  Most also own real estate and “other” assets.  Certainly, these types of comparisons can lead to a tendency to show off or an excessive desire to earn money.  Nevertheless, when used correctly, they can help you build your net worth and gain positive insights into managing personal wealth.

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Miscellaneous updates

Dear Reader, I needed to take a break from writing yesterday to tend to some other pressing matters last night.  We will be leaving for China in just three short weeks and for the U.S. one week later.  We will be away from Seoul for almost half of the month of April and half of May.  While I welcome the opportunity to travel and see family and friends (and give you some new destinations for a change), my blogging frequency may suffer a bit.  I don’t know what computer arrangements I will have and whether I will be too busy at nights to post entries.  I will do my best to keep blogging while I am away and keep you updated on our journies.
 
Our noraebang (karaoke) outing a couple nights ago was a smashing success.  Many more people attended than I ever expected.  In fact, the next day a few acquaintances I ran into said they wish they had been invited.  Oops, sorry about that–it was very difficult choosing attendees.  I promised those who were left out that I would invite them to the next noraebang outing tentatively planned for next summer.  17 of us met for dinner and noraebang in Apgujeong, a neighborhood south of the Han River in Seoul.  As I mentioned in my previous entry, I was fortunate to have had assistance from a local who found a noraebang that could affordably and comfortably fit so many people.  "Affordably" is a key word–there are karaoke joints with spacious rooms inside many upscale hotels, but these typically cost upwards of $1,000 to rent.  We weren’t about to spend that much money, even if we could split the cost between 17 people.  We ate grilled samgyeopsal, or uncured slabs of ham, and drank soju, a Korean rice liquor.  It was absolutely delicious–the tastiest samgyeopsal I’ve eaten.  Eating samgyeopsal, drinking soju, and singing karaoke at a noraebang is my favorite pasttime in Korea.
 
Today we took a small step in a new financial direction–we invested in a startup company.  It’s a small stake, but it’s a start.  My plan is to invest in new, promising business ventures and build the foundation of an investment firm.  I can’t talk about the startup and won’t divulge much about the investment firm yet, but I will as it takes form.  Stay tuned.  My 15-year plan is to develop a business plan and join forces with some equity partners interested in venture capital, angel investing, and private equity investing.  To do this, we had to liquidate some bond funds, moving some of our assets from stable, liquid funds to a longer-term, less liquid investment.  The startup offers far greater potential risk–and return.  Fortunately, it is not a true "startup."  The company has been around for 10 years with plans to dramatically expand this year in a promising new direction.  I believe it will be successful and am in it for the long haul.  This is yet another piece of our financial puzzle.  I am leery of having too much money tied up in one investment type (e.g. housing), and this is a key way to diversify.  Too many people have too much money tied up in one large investment, such as in a house or retirement account.
 
My wife and I will soon begin a study with two other families.  "Bringing Up Boys" by Dr. James Dobson and Focus on the Family is a study on raising boys.  We all have young boys, so we thought that the book and video would be a great way to collaborate and learn more about raising rambunctious male children.  I’ve read a couple of chapters and have enjoyed the insights on raising boys over two years of age.  It’s uncharted territory for us.  I’m just glad that my son isn’t as wild as the boys highlighted in the book.  We tried to get together last Friday evening, but things did not work out as planning because of insufficient babysitting arrangements and illnesses.  Getting together with other parents to talk about children without children around is a logistical challenge.
 
I signed up for another six months as chair of the community association.  I didn’t plan to do it, but no one wanted to step up and take over.  They apparently know how much work it is and how much effort I’ve put into it.  Now that I’ve been chair so long, it’s not as much work as it was when I first started.  The continuity is good for the association, but during the next six months I am determined not to let it play such a big role in my life.  After I return from the United States in May, my focus must shift from Seoul activities to preparing for my next post, including arranging our relocation and studying Spanish.  I enjoy the business aspect of the association, but I don’t like the headaches and frustration that crops up all too frequently.
 
Alas, not all is going well.  I had to quit the community choir–for a couple of reasons.  For one, the choir director scheduled our concert the same day I return to Korea.  Because I will be gone virtually the entire month leading up to the concert, I don’t think it makes any sense to continue.  Plus, I have just been too busy to continue such a big time commitment.  It’s a shame–I was really enjoying it.  The community choir has a new web site–have a look.