The benefit of diversification
Why Robert Kiyosaki’s "Rat Race" Cashflow game is more harmful than useful in Vietnam market:
- Most available passive income sources (dividend yield, coporate bond rate, deposit rate, insurance rate) can’t beat real inflation. Relying on passive income is a gradual decay, a timed death.
- An illiquid corporate bond market plus an extremely risky equity market (read: not for moms and pops) means very few choices of instruments are available to retail investors.
- The personal wealth management industry is underdeveloped. Many lucrative assets that are expected to yield passive income are not available to retail investors.
- Authority: the visible wealth of Kiyosaki comes from selling self-help / motivational books, not from trading financial assets. A question on the authority and validity of his methods exists, at least from a finance professional perspective.
Why harmful? Because in finance, doing nothing (max loss = inflation – deposit rate) is less worse off than doing the wrong thing (max loss potential = 100% capital).
Image source: http://dilbert.com/strips/comic/2008-12-13/
Hull J., Options, Futures, and Other Derivatives, 8th Edition http://www.amazon.com/Options-Futures-Derivatives-DerivaGem-Package/dp/0132777428/
Jorion P., Value at Risk: The New Benchmark for Managing Financial Risk, 3rd Edition http://www.amazon.com/Value-Risk-Benchmark-Financial-ebook/dp/B001O2S5BE/
Holliwell J., The Financial Risk Manual: A Systematic Guide to Identifying and Managing Financial Risk (Financial Times Series), http://www.amazon.com/Financial-Risk-Manual-Systematic-Identifying/dp/0273624180/
Satyajit D., The Swaps & Financial Derivatives Library: Products, Pricing, Applications and Risk Management, 3rd Edition, http://www.amazon.com/Swaps-Financial-Derivatives-Library-Applications/dp/0470821760/
Hunt B. & Terry C., Financial Institutions and Markets, http://www.amazon.com/Financial-Institutions-Markets-Ben-Hunt/dp/017013301X
The fist Starbucks store in Vietnam will be open next to New World hotel.
When opened Starbucks will solve:
- Trung Nguyen’s issue: inconsistency across stores in the chain
- Coffee Bean and Tea Leaf’s issue: [menu] most drinks are overly sweet
- Gloria Jean’s issue: [menu] tasteless cakes
- Paris Baguette’s issue: the design is too metallic
- Highlands’ issue: humdrum atmosphere, depreciated furniture
- NYDC’s issue: food is overpriced, unsuitable for business
- Tous les Jours’ issue: the focus is on breads and cakes, drinks are not that good
- Local style coffee shop: no non-smoking area, tedious menu