Tuesday, May 26, 2009

Creating A Personal Strategic Plan

Creating Your Personal Strategic Plan

This post will help you create the document that could change your life -- your first personal strategic plan! Based on earlier posts, you've already described your dream/ideal future; your SWOTs have documented the obstacles that must be overcome to realize that dream, and the skills & resources you possess to overcome those obstacles. Now it's time to analyze your SWOTs and create a roadmap to the future you've dreamed of.

Your completed plan will contain your dreams, goals and strategies. It will list all of the critical goals that you need to achieve in order to realize each of your dreams. Not only that, it will remind you of the steps you need to take in order to achieve each goal -- what you need to start and stop doing, and by when. Finally, it will make clear why you need to take each step by linking each step to a goal and a dream. For example, you need to start giving yourself a weekly allowance (strategy), as part of your new annual budgeting process (goal), so that you can realize our dream of getting your financial affairs under control and retiring with $1,000,000!

SWOT Analysis

To get started, organize your SWOTs into groups, starting with one

Wednesday, May 20, 2009

Stock Market Rolling Returns vs. Price/Earnings (P/E) Ratio Graphs

In this post, we are going to continue our investigation of stock market rolling returns. In previous posts, we have looked at the range of stock market returns over periods of from one to 100 years, and drilled down to look at "rolling" returns from two to 50 years. The rolling returns series was fascinating, to me anyway, because I was surprised by the cyclicality -- especially by the regularity of the 10-year rolling returns cyclicality. In addition, I expected the cyclicality to wash out by the time we got to 50-year rolling returns. It did not.

The obvious question is what is causing the cyclicality?

Stock Market 10-Year Rolling Returns vs. Price-to-Earnings (P/E) Ratio Graph

Stock market history: price/earnings (p/e) ratio vs next 10-year returns
Dow Rolling 10-Year Returns vs. P/E

Above is a graph (click to expand) of the 10-year total return of the DJIA (Dow Jones Industrial Average) compared to the normalized P/E ratio. If there is a chart that I find even more fascinating than the 10-year rolling returns chart, it's this one. Each point on the rolling return graph represents

Thursday, May 14, 2009

A Personal Strategic Plan Example

Achieving personal goals through use of a personal strategic plan

Personal Strategic Planning Can Change Your Life

Not many years ago, a friend confided that she was less than thrilled with her life -- especially with her career. This came as a surprise to me since she was a young, up-and-coming professional earning a good salary. However, she confessed, her real dream was to become a doctor. This is probably not a career her college science professors would have recommended; she had not done well in their classes.

Three years later, after completing the required pre-med science courses (going to school at night), she was in med school. Four years after that, she was a doctor. She is now living her dream.

Why was she successful? She had a compelling dream; she worked hard; and, she had a personal strategic plan.

Example of Personal 5-Year Strategic Plan (high-level view)

Mind Map Diagram of Sample Personal Strategic Plan
Sample Personal Strategic Plan
In this post, I will sketch out the beginnings of a personal strategic plan to give you at least a general idea of what your completed plan might look like. The formats I'm using, while typical, are just "for example."  You can use any format that works for you.  And, you don't need any special computer software; it will work just as well with plain old pencil and paper -- which, by the way, is what my friend used for her plan.

I hope this example will make it easier for you to understand the purpose of each step in the planning process. The partially completed strategic life plan above is for an individual; however, the process works equally well for a family.

The above "mind map" was produced using SmartDraw (click on diagram to expand it); it supplements the discussion below. Here's the same plan using a more traditional format. (again, click to expand.)

Sample Personal Strategic Plan

Personal Strategic Planning Starts with Your Dreams

Let's assume that as you dream about the future you'd like to create 5 years from now, you decide that

Friday, May 8, 2009

Best & Worst Stock Market Returns for 1-100 Years

In my stock market database, the longer the holding period, the smaller the gap has been between the best and worst annual percentage return. However, the graph below may not mean what you think it means.
In recent posts, we have looked at stock market performance over rolling 5, 10, 20 and 50-year periods on a more or less stand-alone basis. However, it also makes sense to look at these returns as a group -- as a series. What can we learn by analyzing differences in performance as we go from 1 to 100 years? The most obvious place to start is with the range of returns.

Chart of Range of Stock Market (Dow) Returns Over 1 to 100-Year Periods

Chart showing best & worst stock market (Dow Jones Index) returns in history for 1-100 years
Range of Stock Market (Dow) Returns

The graph above (click to expand) shows the best, worst and average DJIA (Dow Jones Industrial Average) annual returns for holding periods ranging from one year to 100 years. The assumption is that

Sunday, May 3, 2009

Houston Rockets "Total" Production per-Minute

"Total" Production Per-Minute (A Simple Model)

A lot of people are surprised by Luis Scola's "emergence" during the National Basketball Association (NBA) playoffs. They wouldn't be if they had been looking at the stats that I track. You could make a strong argument that Luis has been the second most productive Rocket all season -- at least on offense. If you're surprised by the guy in first place, you haven't been paying attention.

The most reported measures of basketball productivity are points, rebounds and assists. Since these have been typically regarded as the primary measures of the contribution of a player, it makes sense that a reasonable first approximation of a player's total contribution is a combination of these three stats. However, normally the NBA reports these stats on a per-game or season-to-date basis. I prefer to look at these stats on a production per minute or per 40 minutes basis (my approximation of the results for a full game). This helps me adjust for the significant differences in minutes played -- especially by starters vs bench players. In the first post in this series, we looked at the Rockets' points, rebounds and assists per 40 minutes played.

Houston Rocket's "Total" Production Per-Minute

Below is a table summarizing the Rockets' "total" production per 40 minutes of playing time. The top 3 are Yao Ming (37.3 units of production per 40 minutes of playing time), Luis Scola (30.3), and Tracy McGrady (29.6). As I mentioned, the "surprise" is Scola in second place. If T-Mac had been healthy, it seems reasonable to assume that T-Mac would have come in second, given his 35.9 average last year. However, even in third place Scola would be a surprise to some.

The traditional NBA reported statistics essentially ignore defense -- primarily because a) it's not "sexy", and b) it's difficult to measure. In effect, this "total" metric assumes all of the players are equally effective on the defensive end. As a result, it undervalues players if a major portion of their contribution comes on the defensive end of the court. For the Rockets, this means it especially undervalues players like Chuck Hayes, Shane Battier and Ron Artest; maybe Yao as well -- though probably not relative to other centers.

Houston Rockets Offensive Statistics Per Minute Table
Houston Rockets Total Production Per Minute Statistics

Since the Rockets are about to go into the second round facing the LA Lakers, you might be interested in how Kobe Bryant stacks up against the Rockets using this metric. With 2201 points, 429 rebounds and 399 assists in 2960 minutes, he'd be first -- with a rating of 40.9 per 40 minutes of playing time.

Related links:

Houston Rockets "Per-Minute" Statistics (points, rebounds, assists)
More Houston Rockets "Per-Minute" Statistics (blocks, steals, FTAs)
The 10 Best NBA Players Ever calculates "total production" for some of the all-time greats.
The source of my data is nba.com

Last updated 2/15/2010