Financial Advice???

OK, two posts in one day?  Yeah, it's not the Don you know and put up with.  But this really called for a post.  After I posted this morning my wife and I go out to our local Chinese-Thai restaurant for lunch.  It's a nice enough little place so we have lunch and are given fortune cookies at the end of our meal.  My wife read hers out loud then I opened mine.

REALLY?  A way out of a financial mess as if by magic?  And it is the same for us both.  If I believed, I'd be searching high and low to see if we are in a financial mess that I don't know about.  Or maybe it is for our country?  I'd love a way out of THAT mess.  Well, here's hoping.  Take care!

Life in the slow lane!

The visiting family wandered off last Sunday so I'm finally catching up with the blogs I read.  It's really amazing how much time I can spend reading about other people’s lives.  You’d think I didn’t have one of my own; life that is.  As it is I’m driving myself nuts trying to figure out what to do with some of our mutual funds.  I know I want to move more into index funds; it’s just that there are so many to choose from!

I can see why some people prefer to have a professional manage their money.  It’s a lot like work.  Fortunately I enjoy it.  Yahoo Finance is my friend.  Our brokers, Fidelity and TD Ameritrade, each have research available as well so if Yahoo doesn’t have the information I want there are other sources I can use.  One of the things I like to check is what companies are owned by the fund.  For example, we own Fidelity Contrafund (FCNTX).  One might think that they would hold stocks that might be out of favor with the intent of making lots on them when they recovered.  Well, you’d be wrong.  They own Apple, Google, Wells Fargo, Coca-Cola, Walt Disney – how much more mainstream can you be?  It gets really fun when you go into the ‘Basic Tech. Analysis’ section and compare the last years price chart of FCNTX vs SPY (an index fund for the S&P 500).  That is when you find that FCNTX sometimes tracks the S&P 500 really closely and sometimes, like now, it falls behind.  So now I’m paying extra for a managed fund that isn’t doing as well as an index.  Grrrrr!

When I’m not grinding my teeth over stuff like that I sometimes get out to work in our yard.  This is weed time in the desert so pulling the big ones and spraying the little ones is my lot these days.  At least it is good exercise.  It’s not very satisfying because they seem to spread faster then you can get rid of them.  There are a couple of guys in our yard that we like:  two cacti that we actually planted.  I’ve started watering them; you are supposed to let them be over the winter.  Here is a photo of the results; new growth.  I’ll try to get more photos after the growth becomes something more.

I guess that’s all the news that’s fit to print.  Thanks for reading.  Have a good one.

Getting on...

We are still getting used to the new normal of no dog.  It will be a long while before one of the other of us goes a week without thinking we see or hear her but it will happen.  In the mean time we just need to get over it.  We got her almost twelve years ago and were separated from her for a total of 16 days in that time.  When we had her put down there was absolutely nothing wrong with her aside from the mess that was her cancer.  However.....

I was reading RandomRoger (famous financial blogger) a few weeks ago and he pointed out that there are a LOT of funds and ETFs that mimic the SPY ETF; which is supposed to mimic the S&P 500.  Since I read that I've been trying to find funds that will give us diversification while keeping charges low.  The problem is the HUGE universe of products almost generates an inability to make a choice.  I've read of this condition but now it's got me.  In the end, I know what I'll do.  I'll go for large products and just go along for the ride.  We certainly won't get famous or particularly rich but we'll do ok.

We have decided on a new way to spend money; well, new to us!  Viking River Cruises have been sending my wife their brochures for some time.  Right now they are giving 'special' rates if you book a 2014 cruise now.  We just couldn't say 'no'.  It is weak of us I know but what are you going to do?  Take it with you?  We have signed up for a China river cruise that includes flying around to some sites that aren't on the river.  It is one of those drag you around by the hand things where you are either on one of their ships, one of their planes or in one of their buses.  It is going to be really weird but we are both intimidated by not knowing the language or even the script.  We don't go for over a year but are already getting excited.  It will be the first time we've been out of the country since 2000.  Amazing!

Somehow I managed to watch much of President Obama's inauguration.  I thought it was ok as such things go; the poem that was written for the occasion seemed longer than the President's speech!  It will be interesting to see what he does with a second term.  His first seems to have polarized the country even more than it was before.  I'm afraid he isn't a man who learns cooperation easily and the Republican party seems pretty divided so I'm not so sure anything much is going to happen.  I hope he doesn't take the back door approach to things and start proclaiming Presidential Privilege all over the place.  That crap will stick us in the ass.  The Constitution did a great job of defining three parts of our government; having some fool try to jimmy the definitions on the fly for his own ends is not good for any of us. 

Have a good one.  I'm going to work on it too!

Quiet before the literal storm

We are having some quiet days but the forecast for the next few is cold with precip. possible and gusts to 50 mph (80 kph).  It makes staying home a lot more reasonable. 

Yesterday we put a bunch of fiberglass insulation up in the attic.  There are places were we had very little and didn't realize it.  I believe the house is warmer; we'll see what happens to the electric bill.  We have these two small openings to the attic, maybe 2 ft x 3 ft (.6m x .9m), and we have 10 foot (3m) ceilings.  You would have laughed at me trying to get up the ladder with a roll of insulation that would only just go through the opening.  For some reason the builder managed to put the ceiling openings right next to a doorway so it isn't possible to get the ladder in a good position.  I was crawling up the ladder holding on with one hand with my stomach right against it carrying the roll of insulation off to the side in my free hand.  It was pretty funny.  My wife rolled the stuff out while I fed it to her.  By the time we were done with just four rolls, we were both soaked with sweat and definitely in need of a shower!

We did take the dog to the local vet for some blood work.  The oncologist wanted to be sure she was accepting the pain meds. without any problem.  The blood work came back fine so her only problem is that she has this huge cancer on her chest that we can't do anything about.  Here is her photo from 12/28.

And the following is what it looked like yesterday.

The cancer is just growing like crazy.  She has been pretty good about leaving it alone but this morning we caught her licking at it.  NOT good, so now she is wearing an old tee shirt to keep her tongue off it.  This is not a good news story.

I've been trying to adjust some of our investments to keep my mind off the dog.  It is embarrassing how long it's been since I've done this.  Some investments are doing fine but too many of our mutual funds are in Morningstar's 2 Star category.  Gotta change them out or put up with below average yields.  There are just way too many choices but I'll get there.  Happily there are only half a dozen positions that are really crap.

Speaking of crap, the charger for my DROID phone died; how tough is it to make something that will last a couple years without breaking?  Especially since this isn't a terribly complex article.  Guess I should be thanking my lucky stars that it is the charger and not the phone.  Nah, I'm still torqued; not that anyone is going to care. 

Anyway, have a good one.  If you keep putting one foot in front of the other, you'll get there.  Good luck!

Finances - and the cliff

This time of year I always find myself thinking about our finances.  I should probably think about it more often but the end of the year it is pretty much guaranteed.   Tax season will be upon us next quarter so that is part of the reason.  Of course everyone wants to know how they have done over the last year so that’s another reason. 

This year I’m planning on giving up some of the mutual funds we’ve held for many years and going to more index-based products.  The amazing Random Roger posted a graph a couple months ago showing the correlation between various large funds and the index they follow; it was amazing!  The correlation is really strong, as I guess you would expect, so why pay for a managed fund if you aren’t getting any extra return?  Guess I’m kind of slow to have this dawn on my after all these years but what can I say?  Better late than never? 

I’m still a fan of ownership if specific companies.  I think you can get a better overall return even if there is statistically more risk.  I don’t like to admit it but we do have one investment that is way too large a proportion of our portfolio.  It is a company I used to work for and I just let the investment grow rather than sell parts of it off during my years there.  Aside from that, most of our individual investments are 2-5% of our net worth.  Over the years we’ve lost 100% of our investment in a couple companies but when you are talking that size investment it’s hardly a bump in the road. 

This year I have an additional challenge in that Number One Daughter has asked me for some investment advice.  She has a 401k that she wants to roll over to something else.  That will be a challenge because she isn’t very patient so a 5% yearly increase isn’t going to make her happy but losing money will make her even less happy.  It will be a learning experience for us both I’m sure. 

I wish I could get the old crystal ball shined up but it is just as cloudy as ever.  About the best I can say is that I don’t think the sky is falling quite yet.  Even if we do go over the fiscal cliff, which I certainly hope those idiots in Washington manage to avoid, I imagine things will keep moving in the same general direction.  Paying more and getting less is not a new idea.  It has been happening pretty much my entire life.  Lots of us were driving when we paid $.30 a gallon for gas.  Doesn’t anyone else remember when the Post Office delivered more letters than advertising fliers?  (As an aside, I was talking to a guy who has a little local magazine.  He said it is $.14 a copy to flood the town with his magazine.  Really!  And a postage stamp costs $.44, right, that's clever.)

Speaking of the fiscal cliff, I’m going to write emails to a bunch of folks in Washington including the Pres, our state representatives and the leaders of the House & Senate.  I wish LOTS of people would drop them a line explaining what idiots they will be if they don’t get something going.  I’m going to be stressing the statesmanship aspect of their jobs rather than the partisan politics that they all seem to prefer.  It probably will just be a waste of time but I’d feel really dumb not doing anything.  So get out there & write!

And have a good one!

What do I do???

I had a doctor's appointment the other day with a doctor other than my usual GP.  He was a guy about my own age and asked 'what do you do all day'?  I suppose he associates 'retired' with 'old, useless and discarded'.  I'm not sure what words I would use but relaxed and perhaps too comfortable are part of the answer. 

For example, there is absolutely no reason I shouldn't work out for say 30 minutes a day.  I'm unlikely to make it to the Olympics but that's not the point.  Good health requires some movement and unfortunately I don't make it happen.  We do walk out in the desert four or five days a week for half an hour or forty-five minutes.  When we go places like a museum I can tell that I don't get tired from the walking.  Now when we go someplace like Colorado I sure notice 1) the hills and 2) the altitude.  That would be tough to train for around here but I definitely need to incorporate some strength training into my day. 

Another area that needs some work is our portfolio.  I was checking today and a couple mutual funds that were rated as three-star (by Morningstar) have been downgraded to two-star.  I wasn't happy about having the funds at three-star but I've had them for a long while and thought they might recover.  For them to fall farther is not a good thing.  Generally I don't care much about the prognostications of 'experts' but when there is a calculated reduction in return,  I'm thinking there is a trade in my near future. 

Finally I want to spend less time on this computer and more time 'doing things'.  Like what?  Well, I bought lumber for a bat house but haven't built it.  I'm an amateur cook, that would certainly be a place I could improve!  Ditto with my photography.  I've wanted to learn to juggle for years, why am I not learning?  Finally, there are plenty of places where an unpaid volunteer might make a difference for people in the valley.  I need to raise my hand!  The fact that we are gone for a month or two a year should not be keeping me from the work in the first place. 

Ok, I'm motivated.  I'm going to go work out for a while.  Hope you are having a good one and, you too, can make time to work out.  Take care.

Quiet Day

Went out to get the paper this a.m. and got a weird photo.  It looks like a plane flew along and disturbed the cloud formation.  Like some kind of reverse contrail.  You tell me.

Had a pretty quiet day today.  Started off with breakfast at the casino.  It's ok, cheap but not amazing.  Tried our luck at gambling; after a while my wife got back to even so we quit, I was down $1.  So for the 15 minutes of wildness, she was even and I was down 20%.  Guess that should be ok with the gambling gods. 

Spent most of the rest of the morning talking about our intended changes.  As I expected the two middle guys are our favorites; each seems to bring something different to the table.  One drew a nice plan of what was wanted which comforted us that we were all on the same page.  The other talked about building a much more sturdy platform with more rebar and all.  We still haven't really made a decision but I told both that we'd do it tomorrow. 

We did find a goose at the store today that was reduced in price after the holiday.  We were looking at them before Christmas but a 10 lb (4.5 kg) goose was $60.  No, that wasn't going to happen.  Now it is down to $15 so we couldn't say no.  Well, actually, it's my wife who is all crazed to try cooking a goose.  I understand it is all a dark meat; not my fav.  But I'm willing to give it a shot.  By tomorrow night I should know whether or not I can managed eating goose.  Should be interesting.  She had 4 recipes (!) but we decided on one with thyme and peppercorns.  Maybe for once I might get a photo of dinner!  We'll see.

I've spent the last couple days looking at our portfolio.  Some of our mutual funds have gone into the lower echelon of their type.  I'm going to be moving money into some that are a bit better.  Our stocks are doing better; some aren't 'star of the moment', like Southern Co (SO) but the company is strong & the dividends are secure so I'm ok with that.  It's odd but I seem to have better luck selecting individual stocks than mutual funds but I'm not as comfortable having $50K in a single stock as I am in a mutual fund.  WTF, it's all a mind game. 

Gotta go.  Have a good one.

Lazy? Me?

Fraid so!  Well, at least I sure was yesterday.  We started out the day watching the Brazilian GP and then segued into doing pretty much nothing for the entire rest of the day.  Watched a lot of tv, read a bit, heck, I was even too lazy to surf the web!  I would have had to either walk into the den and sit upright at my desk or carry the computer into the living room. What with one thing and another, we have not taken our daily walk in almost a month.  We are planning on changing that today.  It's such a good habit for us and we need to get back into it.

I'm wishing for a crystal ball right about now.  This whole Euro zone foolishness is driving the whole world batty and I'd sure like to know what's going to happen.  Honestly I cannot see any country leaving the Euro simply because logistically they don't have a pile of any other currency laying around.  But whatever they are doing is sure wrong.  There isn't an easy answer so I imagine there will be a few more governments brought down and a few more months of crisis.  Whether the Euro disintegrates or whether it becomes a much more unified area seems to me to be the choices available.  Time and the bond markets will tell until then I'm thinking 'bouncy ride'.  Here's hoping it isn't too long.

Have a good one!

Gamble or not

I had a couple comments on investing in the stock market is much the same as gambling at the casino.  Well, I don't really agree.  At the casino there are mathematical odds in-favor or against the player in every position.  Not so in the stock market.  In the market you are making a reasoned choice; maybe your reasoning is good or faulty but the market itself is not inherently, mathematically against you.  

RandomRoger has a great post regarding illegal behavior in the markets.  He suggests that there are always cheats and only some of them get caught.  He's suggesting that it is simply part of life that people are always looking for an advantage.  If they can get an advantage legally, they are called 'good traders'; if it's illegal then they get called 'crooks'.

Steve Jobs - RIP

Yahoo's finance editor has done a nice job of commenting on the importance of Steve Jobs, I recommend it if you are interested though I'm sure every news outlet has a similar piece.  I was glad to find that I wasn't the only one who couldn't put a finger on his genius.  It will be interesting to see what happens to Apple now that he is no longer there.  I've told the story of my iMac; it started falling apart about a day after the warranty ended.  That combined with their total proprietary attitude killed it for me. 

We had a gray day yesterday with overcast and a 'Seattle rain' for most of the day.  It inspired me to make the Cajun Roast from Justin Wilson's cookbook.  It's a chuck roast basically.  You cut slits in the roast and put a slice of garlic, jalapeno and shallot in each slit.  Next salt & cayenne pepper the outside and put in it a roasting bag.  Add potatoes, onions, carrots to make it a traditional pot roast, then comes the trick.  Use a cup of red wine and a cup of white wine and some bitters for the liquid.  I add either water or broth to bring the level of the liquid up to the top of the meat.  Close the bag and cook at 350F for 3 hours.  (That's a medium-low setting.)  The darned thing starts smelling pretty good after about 45 minutes so it's tough to leave it alone but it's worth it in the end.  It's spicy but not hot, the vegies, if you've cut them intelligently, still have a bit of a crunch, and the juice is fantastic.  Of course the alcohol would have cooked off probably before it started smelling good, but the remaining flavors are great.  Let's just say, my wife doesn't eat very much bread but she'd send me back to the store to get rolls if I tried to serve this without them for soaking up the juice!

Have a good one!

Trying to invest

I spent most of today looking at investing options.  I make most of our investing decisions and rely on various sources for ideas.  One of the sources is RandomRoger; he's pretty definite that the U.S. is facing some financial headwinds that maybe other countries might be avoiding so he likes investing outside the U.S.  I'm pretty much convinced that he's right about our headwind problem so I look elsewhere as well.  It's just that it's a heck of a lot of work!  LOL

Looking at individual companies in this country is easy; when it is overseas it gets more difficult fast.  So I turn to ETF products that are focused on either the area or the industry that is of interest.  You know, there is still a world of choices out there.  Anyway, my head is spinning from all this stuff.  So I'm taking a day off.  You know 'when the going gets tough, the tough get going' - well, I'm going to Vegas!  The hell with it.

Actually, it's just another normal shopping trip that will include dinner with our daughter.  She's cooking!!!  This woman (she's 40 for heavens sake, can't call her a girl) has NEVER made us a meal.  She's done lots of salads and stuff but to actually cook a meal; nope.  Should be interesting.  "Food TV", "The Cooking Channel" and all the rest have a lot to answer for.  If you don't hear from me for a couple weeks, you'll know it didn't go too well.
 
As an aside, I got a flier from one of our brokers the other day that had articles on options and on currency trading on the FOREX.  Jeez, I know I'm more conservative than most but I consider both of those ideas to be about as useful investing ideas for the ordinary person as the video poker machine down at Terribles.  I'd be willing to sell covered puts I guess but that's about it.  Some day-trader playing with a bank's money can probably do pretty well most of the time but I'm certain the rest of us would be losing big time.

Have a good one.

MIA all over again

Well, I've fallen off the 'regular blogger' wagon again.  No particular reason except a distinct lack of thought on my part.  We've been having record high temps lately.  Las Vegas broke 4 or 5 high marks and the low temps were also hotter than usual so the weather guy has been having fun.  Missing out on Irene didn't hurt anyone's feelings.

This morning we walked our 2.5 miles (4km) then showered.  We had the radio on and when we got out of the shower the announcer said it was 85F (29.4C).  By the time I'd shaved and brushed my teeth, he announced it was 89F (31.6C)!  That's just silly.

In an article on Yahoo taken from The Street a guy from Standard & Poors is saying that the stock market will remain volatile for at least September and probably this is a new normal situation.  "Who or what deserves the blame? High frequency trading, hedge funds, inverse and leveraged ETFs, take your pick," he says.  Well, doesn't that just make you feel all warm and fuzzy!  He's probably right though.  All these new products that weren't available in the past (except hedge funds) have got to be changing the rules.  It's up to the investor to sort out ways to deal with the new reality.  So far my response has been to buy something I like and hold it for some time.  It's kind of a head-in-the-sand approach but as long as I'm diversified and can take some profits when they appear it should work.  At least I hope so! 

One of the new rules requires mutual funds to identify individual purchases of stock so for a fund like Fidelity's Capital Appreciation (FDCAX), Yahoo Finance shows 3 holdings of UAL, 2 of VMED.L and 2 of CVX in their top 10 holdings!  Well, isn't that just helpful.  Google isn't quite so stupid but I usually prefer Yahoo Finance.  Looks like I'll have to change my habits there as well.  Good thing I'm not totally stuck in the mud.

Gotta go.  Real life calls.  Have a good one!

Summer Roller Coaster Ride

Yahoo carried an article from 'The Street' suggesting that the wild gyrations that the market has been making lately may be less serious than they sometimes appear.  Here is a link; the guy points out some similarities to last summer and suggests some possible stabilizing influences that may or may not happen.  Certainly it is reassuring to thing that there might be a logical end to this foolishness; whether it is true or not I have no idea.  I really DO like the last line of the article:  "Although we expect volatility to continue, we foresee a more muted level than last week's market roller-coaster ride and a climb over the months ahead. In general, we advise investors to do what they normally do on a roller coaster: hang on tightly, grit your teeth, scream if you need to, but do not jump off."

It may be beating a dead horse but every investor should understand that the market is no place for money you are going to be needing soon.  The market does have liquidity but being able to sell something doesn't mean you'll like the price you receive.  That's one of the reasons I place as much emphasis as I do on dividend paying stocks; it makes waiting out the market easier if you get regular checks!  It is also good if you have read Benjamin Graham and are careful about paying as little as possible when you are buying.  Needless to say, that can be tough to implement.

Have a good one!

Innocent until proven guilty

The local paper has a story about some guy who has been charged with growing pot.  It's tough to get a job in the valley these days; apparently there are alternatives!  It's nice to hear about entrepreneurs in any field.  When we were in Colorado the papers were full of stories about cracking down on medical marijuana growers.  Apparently they weren't keeping good records about how much they grew and to whom they sold it.  The authorities suspect that maybe some was reaching an illegal market.  Hmmmm.

I would like it if we just did away with all drug laws for adults.  Clearly society has a responsibility to look out for children but if an adult wants to do virtually ANY drug; it's fine with me.  Do meth for a couple years and you won't have any teeth and then maybe things get bad.  But, you know, I've never tried it; don't want to.  The folks who DO want it can find it.  Why not just legalize it and tax it.  Companies would provide clean, probably cheap, product of known consistent quality.  The user would have a better experience.  The drug cartels of South & Central America would be out of business.  The drug gangs in the U.S. would be out of business.  Hell, even the lawyers, jail keepers and police would have to find something to fill their empty hours.   Nah, we can't do that, it almost makes sense.

Speaking of making sense:  Yahoo's sports page had a link to the Mark Cuban blog post that I quoted the other day.  They are giving him credit for warning about the stock market collapse; I read it that what was happening in Wall Street is uncontrolled and needs new rules, simpler rules to draw lines between investing vs trading.  He did say that what is going on now will lead us to a crisis.  He also said Australia has better rules; well, we can't learn from anyone else!  That's un-American!

Off to dinner this evening.  Last time the food was pretty awful.  Wish us luck!

Happy, warm times

Given all the foolishness in the stock market these days, it's great to be most of the continent away.  Hopefully it helps keep a clearer vision of the real world.  I've just been introduced to the blog of Mark Cuban, the owner of the Dallas Mavericks and an investor.  Here's a great post he wrote a year or so ago and recently re-posted asking what business is Wall Street actually in?  He's got some very interesting thoughts!

We are getting on enjoying our summer.  In Las Vegas the temperatures for August 10 were high of 106F (41C) and low of 81F (27C).  We get a little break out here for some reason.  On the same day our thermometer looked like this at 07:18 in the morning.  The upper numbers are the humidity and temp for outside; second row is humidity and temp of inside; third row is the time; fourth row is the date and the seconds value for the time.  (I didn't design it!!!)

Only 64F (18C) - it allows us to open the house and get some fresh air in the place!  Usually, by the time I go to bed about midnight we've got the windows open.

In the heat of the day, it was only 100F (38C).  It doesn't sound like a huge difference but it really does make quite a difference in your comfort (and electric bill!).  Here in the West, it just keeps getting warmer all day unlike Florida, for example, where the high would be about 15:00 then it would cool off a bit in the evening.  I took the photo at 17:04 obviously.  We do have our heat pump set to keep the house at 77F; apparently it was just about to turn on.

I do question the percent humidity that this thing shows.  In the lower photo it shows 10% outside and 2% inside; that's just tough to believe! 

Have a good one!

Well, I warned you!

Hope everyone is ok with the DOW falling by 512 points.  I told you I can't foretell the future. Guess we'll just have to stick around and see what happens. 

JoeinVegas suggested that the two parties will just bicker and blockade each others ideas all next year.  I'm hoping he's wrong but he's probably right.  Especially since it seems as if both parties are out of rational ideas.  In our travels this summer we saw a lot of road repair; at least those guys & gals are working.

We saw a number of things that had been created by the CCC during the Great Depression.  Maybe we need some of those socialistic 'make work' projects to get things going.  Yeah, I can see that passing the congress!  The Tea Party folks wouldn't be the only ones coming unhinged. 

Gotta go.  Have a good one!

Is the sky falling???

Since the news about the 'wonderful' budget compromise that lifted the debt ceiling, the markets are falling all over the world.  So, is the sky falling?

My take is that it depends on your immediate needs.  If you are looking to sell something this week, well, maybe you're screwed.  If you have a longer view, maybe you aren't in so much trouble actually.  I agree with commentators who suggest that there are healthier economies out there than our own.  The problem is that the U.S. is still the big dog in town.  I've got a few investments in Canada, Norway, Australia; I imagine most investors do.  (I've avoided China; I've just got a personal problem with trusting their numbers.)  So should you bail on investing in the U.S.?

Our economy is not well.  Our markets are dropping.  Sounds like leaving might be a good idea.  There are two sides to this though.  If 'everyone' were to abandon the U.S. markets: 1) share prices would drop like rocks leaving whoever was last out the door holding nothing much; 2) the huge profits of the U.S. corporations, and they are making money, would make P.E.s of 5 common; 3) the inrush of money would raise the P.E. of stocks in, say, Canada to about 50.  None of these ideas are worthy of Newton or Einstein but people who are afraid of a crash aren't really thinking calmly either. 

The U.S. and it's currency are still the world standard.  Not to say that other countries (like the three named above and several others) aren't doing better at economic control but finding a place to invest that offers safety, transparency and sufficient size is tough.  China has size; transparency might be questionable.  Norway, even Canada, is small.  Australia, well, I hope you like natural resources! 

Me?  I'm still about 85% in the U.S.  I'd like a bit more money overseas but it takes me a long time to move.  I'm also not in immediate need so if we have another downturn in view; it's ok for me.  Will I enjoy my paper losses?  Hell, no!  But paper losses like words in general don't hurt.  'Sticks and stones' and all that still holds true.  So hang in there & don't be frightened by the talking heads on tv.  (Remember that Mr. Murdock & Co. like spreading bad news even if it's invented.)

There is one final thought I'd like to share.  This is the year before the U.S. election.  The President, a third of the Senate and the entire House of Representatives will be running for re-election next year.  Do you think that will motivate them to do everything they can to make this a good year?  Just a guess, of course, but I think they will be motivated.  Whether their motivation is enough to make them worth a damn is another question.

Have a good one! 

(Disclaimer:  I know nothing about the future, the stock markets or monetary policy.  If you take my words as advice you are way dumber that a human being ought to be!  Don't do it!)

I don't get it...

I was catching up reading some of RandomRoger's blog posts and there's something about the way he implements his philosophy that I just don't get.  He's a financial adviser and clearly a pretty smart guy.  He is constantly saying that he doesn't require that his portfolio go up as much as the market in a bull market as long as it doesn't go down as much in a down market.  That's cool, I suspect many of us would be happy with that sort of performance.  He offered some of the Rydex Managed Futures Funds as an example of something he uses to bring stability. 

Let me summarize about these funds.  Over the past 2 or 3 years they have varied between $24 & $28.  Their beta, measuring price volatility, is very low.  The annual expense ratio is just shy of 2%.  The last dividend paid was at the end of 2008.  To quote Yahoo:  "The investment seeks to match the performance of the Standard & Poor's Diversified Trends Indicator(R) (the "benchmark" or the "S&P DTI"). The fund invests substantially all of its net assets in commodity, currency and financial-linked instruments whose performance is expected to correspond to that of the benchmark".

I'm going to jump to the assumption that they are doing a reasonably good job and do actually track the index.  My problem is that I've given these folks my money for 2 years and haven't received anything in exchange except some stability.  Not only that but depending on the timing of my purchase, I may have lost some money.  So what's wrong with a CD?  Or even a savings account?  At least I don't have to pay the bank 2% (yet!).  The index is supposed to have a commodity component but I'm sure not seeing it reflecting the way the price of copper or gold has changed in the last couple years.  So I guess I just don't understand.  I like some stability in my portfolio but this seems a strange way to obtain it.

Have a good one!

Nice walk

We took a nice walk this morning.  It was pretty much our usual walk taking about 45 minutes.  We saw a quail, a couple jack rabbits and, unusually, a coyote.  The parcel of land that we use for our walks is probably 100 acres (40 hec.), maybe more, I'm not good with knowing the size of an area.  There are other odd empty pieces of land but they are more lot sized, 1 acre or 4,000 sq. m.  Given that there is little vegetation, it doesn't seem like a lot of land for a coyote.  Happily this guy just wanted to be left alone so took off in a direction opposite from us. 

Read a very interesting article about value investing the other day but I didn't make note of the address so can't find the stupid thing.  The whole point was that some university professor made a study of what would happen if you invested in 'value' companies vs 'growth' companies.  In this country and overseas the result was that the value investments were more successful than the growth style investments.  Now this was simply an article written for a magazine or Yahoo Finance or something equally un-rigorous so there weren't actual numbers.  Not to mention, the professor has probably got, and needs, half a book full of charts to support his thesis.  Nor were the terms 'value' and 'growth' defined.  Do I agree with 'value' beats 'growth'?  I guess so.

It seems to me that to be a 'growth' investor almost requires one to be a pretty active trader.  Constant growth is pretty unusual.  As an example, look at Google.  In the last year it's share price has varied between $450 to almost $650 and is at about $525 now.  There are no dividends so the way to make money is by trading; seeing a buying opportunity at $450 and selling at $550 would work if you can do it.  So you are going to have more turnover in a 'growth' environment; and I'm not sure how many swings of up-a-third you are going to find.  Apple did even better, it went from $240 to $320 over that same year.  Another great performance but again, the only way you get money in your pocket is by selling.  Apple's gain was less choppy than Google so the date of purchase was less important but if you bought in the last six months you are only looking at a 10% gain. 

For me it's better to buy value and hold it for some period.  In my experience as a trader, I make a good loser.  I don't know if my basic stock choosing is too influenced by things I read or if there is some other reason but my timing stinks.  What can I say?  I just don't do timing well.

Have a good one!

Personal Finance

I was out on the net getting my RandomRoger fix today and he referred to a Wall Street Journal article about five things a high school graduate should know about finances.  Then he went on to suggest that financial education is not supplied and as a result we are financially illiterate.  I'm not so sure that formal financial education is the answer.

First of all, personal finance is different for different people.  We have friends (our age & income group) who live in a house that is twice the size of ours.  Building that house was a choice they made; it was where they wanted to put their money.  It isn't something that I would be comfortable doing but it works for them.  Education isn't going to change their desire for the large house nor my desire for more diverse investments. 

The brand of personal finance that works for my wife and myself doesn't work for either of our children.  I suspect this is because my wife and I were brought up by parents who had lived through the Depression and WWII.  The deprivation and sacrifice that those two events brought about made our parents thrifty to say the least!  Both of our mothers re-used aluminum foil, for example.  Our children were brought up in the relatively affluent 70's and 80's.  My wife and I both worked and the kids pretty much got whatever they wanted within reason.  We 'educated' our kids to have what they wanted; happily we also educated them to work for it!

I suspect there a LOT of people who basically don't know how to handle money but I'm not sure it's something you can teach but rather it is something that must be learned; learned by living life.  I know that when I was 22 I made some mistakes; wasted quite a lot of money as a matter of fact.  Lost on my first few investments as well.  The problem is when people are living so close to financial disaster that any loss, however small, is debilitating.  If that happens when you are 25 you have plenty of time and hopefully the resilience to recover; if you are 55 your options are more limited.  It's why I'm 100% in favor of governmental old age pensions.  My wife and I are fortunate enough not to need it but there are millions who are not so fortunate.

RandomRoger talked about a couple who lives near him who have no stocks, no bonds.  But they did understand fixing houses and renting them out and saving money.  It's a different type of personal finance but it worked for them.  That's really all that matters.  If it works for you then it works.  There are no wrong answers as long as it works.

Have a good one!