Rich Snail

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We have been chasing money for thousands of years. But the money we are chasing nowaday is quite different from the one used in the old days. As with everything human, we complexified the system over time. We started of with shells, precious metal, banknotes, and are now regularly using credit money. Money is part of our daily life & we often take its functioning for granted - which is good! After all, the system works thanks to the faith everybody hold in it (fiduciare anyone?).

So when I received this very simple and straight forward summary in a Credit Suisse article recently & wanted to share it here.

Money before Money
The use of proto-money may date back to at least 100,000 years ago with the use of Shell or red Auchre.

Payments in Precious Metals
The Code of Hammurabi in Babylonia includes laws governing banking operations. It describes payments in weighted amounts of silver around 1780 B.C.

Coins
The first coins are produced in Lydia (in Asia Minor) around 650 B.C. They were composed of a mixture of gold and silver (electrum be the geek term).

Derivatives
Aristotle mentions the use of a call option-like agreement with olive presses in his writings dating back to around 300 B.C. By deduction - Philosophs love deductions - we can assume that option-like agreements were common in ancient Greece.

Bank Notes
Chinese were the first to use bank notes. We have a first record mentioning a note from 1024. Swedesh were the first European to issue bank notes through the private company Stockholm Banco in 1661.

Bonds
The earliest-known bond was issued by the Bank of Venice in 1157 to fund a war with Constantinople.

Commodity Futures
Merchants began to finance their trading expeditions by selling goods they expected to receive before actually possessing them during the Renaissance.

Shares
The Dutch East India Company, founded in 1602, issued the first negotiable share certificates in 1606. These were traded on the Amsterdam stock exchange.

Financial Futures
The first financial futures contracts were traded in 1972. Their popularity surged with the abandonment of fixed exchange rates in the ’70s.

E-payments
Electronic payments exceeded cash transactions in the US in 2003.

By the way - the scientific study of money and its history is called Numismatics. To your surprise, I’m sure you know some Numismaticians. All coins collectors are considered Numismaticians

I just stumbled upon a very interesting graph on the US housing bubble taken from an August 2006 New York Times article: Read Between All Those For-Sale Signs. The articles is retrospectively very interesting, and hit a few nails on their head. The intro is particularly inspiring to me:

Real bubbles pop. They are fully formed one moment and gone the next. Financial bubbles rarely meet with such a definitive end, which has always been the biggest problem with the metaphor. They let out their air in unpredictable bursts, and it’s usually impossible to figure out whether they have finished deflating or are just starting to.

Good read !

Everybody is following the financial crisis in the US. What will happen to Bear Sterns? How does the “out of control” Federal Reserve Fed actions will be perceived by the markets today? Tomorrow? Will the developing countries continue to surprise us by their inner strength?

Times like these call for cautious decisions. The markets are volatile, and don’t really know where they stand. Many people I meet are reconsidering their investments. They don’t want to risk their hard-earned money. Who would blame them?

Yet, as most long term investors well know, the best opportunities arise over uncertain or difficult times. Seth Godin even wrote about the opportunity of a lifetime - Seth writes way better than I ever will - do read these inspired 10 lines !At the end of the day, we should take a step back and ask ourself what we really want to do in such markets.

Many will back-off and will look for safer opportunities. The long term investors will build positions over the next 2 to 3 years and wait for the markets to get back on track. They have time on their side. At the end of the day, they will be the ones who are rewarded for their boldness!

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful?” - Warren Buffett

Guy Kawasaki just launched a news aggregation sites called AllTop. Essentially, it displays all the news on a specific topic, aggregated from top publications and blogs. As Guy put it, it is close to an “online magazine rack”. They have a good personal finance category, and many renowned PF blogs are listed there. I like the concept, but still prefer to use an RSS aggregator. I see AllTop as a good way to browse through a topic, and select the read you will add in your Google Reader.

Another great read - and potential bookmark - is the “How to save money” page from Mahalo. The page does a great job at introducing the subject, and breaking it down in easy to chew pieces. It really be a great tool to get started, or find new ways, to save money.

Good discovery

I love reading The Economist. They advocate free trade & economic liberalism, and usually take a strongly argued editorial stand. I also love their witty & humorous, yet clear, English. Last but not least, their special reports always are very interesting & well documented.

I highly recommend reading their latest one on Asset Management: Money for old hope. Many of us are going to depend on the fund management industry for our retirement income; understanding how they work & operate is therefore very interesting…

For those who do not take the time to read, the audio discussion with Philip Coggan is a very good summary of this special report. Mr. Coggan is the Capital Markets Editor of The Economist.

Good read

So Warren Buffett is now the world’s richest man; I guess this proves he has been “walking the talk” since his Joy of Compounding demonstration back in the 60’s. Carlos Slim moved into second place on the list, pushing Bill Gates down to third. Mr Microsoft had been sitting in the comfortable No.1 position for the past 13 years. Would 13 be his unlucky number?