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How Accurate Are My Predictions of 2007? Part 1: On Earned Income

Contributed by mm | December 7, 2007 5:31 AM PST

dartaccuracy.jpgOne benefit of blogging is that you keep a written record of your life so you can always rewind to re-learn yourself. One year ago, when I plan for our financial life in 2007, I made 9 predictions. Now that the year is almost over, how is my batting average? We are going to review them one by one in this three-part series:

First on my forecast on earned income:

Prediction #1. Job Income from my daily job will be steadily growing at an annual pace of 8-10%.

What I Said One Year Ago: I have full confidence I will continue to perform at the top of the pack in my company, and expect 1-2 raises throughout the year. I also count on more employee stock option and stock award income. On the balance, some of my expatriate benefits will not grow as fast.

Result: Excluding stock option income, job income increased 15%, although 6% gain is attributed to stronger Chinese Yuan vs. US Dollar. Barring the foreign exchange gains, the real gain is about 9%. Bingo!

Prediction #2. Employee stock option appreciation will be a wild card as MSFT is priced for perfection at $30.

What I Said One Year Ago: I have been seeking an exit strategy for my employee stock option inventory since November. While we did finally launch Windows Vista and Office 2007, there seems to be no catalysts that will drive the stock price higher from this point. $30, or 15x current earnings, sounds like too high to me for a company this big.

Result: The wild card ended up as a great card. I was wrong in saying MSFT was fully valued at $30. MSFT's appreciation from $30 to $37 at one point of time in October delivered over $70,000 in net worth gains, although some of that was given back in November. Also, I did exercise 1/3 of my stock option at the top at $36.60. Not a good call on MSFT valuation.

Prediction #3. Our family business income can continue to grow at an annual pace of 10-15% with time investment and smart monetization.

What I Said One Year Ago: We are very surprised that the gross income from our business grew from $39,000 in 2005 to over $70,000 in 2006 with minimal care. Still, we do see some opportunities to grow the top line -- as a starter, we completed our first price hike in about a year in early December and so far customers have been very receptive.

Result: Our flagship business Perfect Future Publishing Co. experienced phenomenal growth in the 1st half of 2007 but faced some headwinds in the 2nd half. Overall, it is likely to end 2007 with an annual revenue growth of 14%. Our new business Expat Service Co. grew over 350% thanks to expansion of product lines and customer base. Overall, our family business income achieved over 20% year-over-year growth! It appears we were conservative in evaluating our 2007 opportunities.

To be continued on debrief of other 6 predictions ...

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This Post Has Received 4 Comments. Share Your Opinions Too.


J.C.'s Money Commented on December 7, 2007

Congratulations on the nice raises and bonuses, as well as 350% expat service business growth!

According to Alexa.com, your traffic increased quite a bit from 2005 to 2006, then steadily decreased over 2007. Can you correlate that to posting less frequently due to your expat assignment, or to what do you attribute this "head wind"?

Or is lower site traffic eventhe cause of your "head wind"?

Have you increased the amount of time you spend researching equities, since your investment portfolio is so much bigger and has the biggest impact on your net worth growth?


Reggie, another kid with good credit Commented on December 7, 2007

Once again your posts are inspiring.


MM Commented on December 7, 2007

JC Money: You asked several good questions.

1) Yes, of course less posting, less foot traffic;
2) But it is not the headwind I mentioned. I don't really want to discuss the headwind in details but I can say it is an industry wide headwind in terms of monetizing personal finance blogs. If you don't know, you don't have to know about it.
3) Yes, I am spending more time thinking about investment now.


J.C.'s Money Commented on December 8, 2007

Hi MM,

Thanks for your responses. I understand your not wanting to divulge too much information... I'm continually surprised about the details you do give out. But it sure does make for interesting reading!

I don't expect to make too much money from my blog directly, but I would like to do it, in order to keep much better track of my finances. I want to make sure I can make a logical argument for any financial decisions I make, and I think a personal finance blog should be a good way to do it. Any revenue is a nice bonus then...



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