Search found 159 matches

by zblongladder
Sun Jan 09, 2011 3:20 pm
Forum: Personal Investments
Topic: Emerging markets - Index or active management?
Replies: 23
Views: 4240

If you already have Total Stock Market Index Fund, it's not necessary to have anymore other EM Funds. If you have ETF's -follow livesoft's advise. I don't know about that...it's possible that somebody (especially a young'un like myself) would want more exposure to risky EM funds than the Total Stock Market fund would give you. The thing about actively-managed EM funds is that they'll charge you an arm and a leg in ER...almost always more than 1%, often up around 1.4% or 1.5%. (Vanguard Emerging Markets ETF has an ER of .27%) That, and their turnover is going to be greater than an index...the two I was looking at as examples (NEWFX and PRMSX) aren't as bad as I'd thought (~36% for both), but those're still thrice the Vanguard fund's turnove...
by zblongladder
Thu Jan 06, 2011 9:09 pm
Forum: Investing - Theory, News & General
Topic: Irony...
Replies: 5
Views: 1091

Irony...

I'd been preparing for the ol' annual rebalance, and stumbled upon this article: http://www.forbes.com/2007/10/25/rebalancing-portfolio-stocks-pf-ii_dw_1025retire_inl.html This fellow is advocating not rebalancing AA owing to trading costs, "human factors", and the fact that his model (run over the period of 1987-2006) showed that the unbalanced portfolio got a (slim) advantage in return. Note that this was written in October 2007, and the rebalancing he's advocating skipping would be the last one before the market crash of September 2008...ironically, when selling off your "winners" was the very thing you'd want to have done, in hindsight. I wonder what his model would look like, adjusted for the 2008 crash and the subs...
by zblongladder
Wed Dec 29, 2010 1:17 am
Forum: Personal Investments
Topic: Vanguard Admiral vs ETF
Replies: 30
Views: 16582

Re: brokerage

It depends on whether you have a brokerage account or not. At Vanguard, there's no commissions for Vanguard's ETF's in a Vanguard brokerage account. If that's the case for you, an ETF would be great. But if you need to open a brokerage account, or you have an account with commissions/fees, then stick with the mutual funds. Yup, I've got a Vanguard brokerage account (that's where I'm keeping my two Vanguard ETFs, acquired before the Admiral limit was reduced to $10k). Now that the Admiral limit is so low, I really don't think there's much of a question in my mind as to which I'll do with the new investments, though. Why would the flash crash make you worry about ETF's? Are you planning to have stop loss orders? If that's the case, definitel...
by zblongladder
Tue Dec 28, 2010 11:54 am
Forum: Personal Investments
Topic: Vanguard Admiral vs ETF
Replies: 30
Views: 16582

Vanguard Admiral vs ETF

This's something I've been looking for an answer for for a while, but now it's becoming more of a practical concern. I got a larger Christmas present than I expected from my grandmother (she's trying to get rid of her estate), and I've got an underperforming active fund (that my uncle chose for me before I started investing). Those two, added to a CD that's maturing that I don't want to renew, come to the $100k to get an admiral-share holding in Vanguard Total Stock Market. However, the ETF version of that fund, VTI, has the same expense ratio (0.07%) as the Admiral Shares. Is there any reason to prefer the Admiral Shares over the ETF, or vice versa? I suppose I could more easily sell the ETF without risking losing admiral-share status (in ...
by zblongladder
Tue Dec 21, 2010 9:41 pm
Forum: Personal Consumer Issues
Topic: Wireless Security: How secure is your password
Replies: 31
Views: 4426

Re: Wireless Security: How secure is your password

All of this is assuming you use WPA2. Even a long-password with WEP is probably easily cracked by pretty much anyone who knows how to use Google just by collecting packets transmitted between the computer and router. The OP did mention he's using WPA2. Popular hacking codes actually use dictionary style attacks for WPA2 I think and not brute force, but if I guess your password is complicated enough dictionary attacks don't work as well... If your password isn't in a dictionary, a dictionary attack won't work at all . Take a random 18-character string using the printable ASCII characters: /r`^M[1>48'B=a6ec& No dictionary a hacker would use would contain any part of that string. Again, writing it down & keeping it in your wallet (or ...
by zblongladder
Tue Dec 21, 2010 3:35 am
Forum: Personal Consumer Issues
Topic: Wireless Security: How secure is your password
Replies: 31
Views: 4426

Re: Wireless Security: How secure is your password

I am using a router with WAP2 security and a password that is 18 digits long. I know the maximum password is 64 digits. Is a 63 digit password that much more secure than 18? The logical answer is yes but before I go to the trouble of changing, I wanted to confirm this from the tech gurus on the site. Also, any other suggestions for beefing up security with a wireless network? Thanks. Roosevelt. In theory, a 64-character password is much, much, much more secure from certain kinds of attack -- trying to guess the password brute-force, you've got about a 10^-35 chance of guessing an 18-character password (assuming you can use all 93 printable ASCII characters), but a 64-bit password you've got about a 10^-125 chance of guessing. Of course, as...
by zblongladder
Thu Dec 16, 2010 12:43 am
Forum: Personal Finance (Not Investing)
Topic: Great Grandpa in Nursing home - Is this common?
Replies: 42
Views: 6301

As for the $200/mo to the kids, it really depends on what they were doing for him. If he's a similar Alzheimer's patient to my granddad (who just passed away :(), then taking care of him would require quite a lot of time and commitment even before the onset of the disease, and, assuming the all shared the work, I'd think the $200/mo isn't unreasonable. I mean, sure, people ought to take care of their parents out of duty to elders, but a pre-Alzheimer's patient can be a full-time job. Of course, though, that depends on your great-grandfather's condition at the time and how much the kids were actually doing for him. As for long-term-care insurance, it's only been widely available since the late 80s...your great-granddad might've been in his 6...
by zblongladder
Thu Dec 16, 2010 12:22 am
Forum: Personal Finance (Not Investing)
Topic: best way to pay the IRS?
Replies: 50
Views: 5581

also always rank debt from most important to least 1. IRS Debt 2. Student loan debt 3. Mortgage debt 4. Unsecured debt (CC's) Never not pay IRS or student loan debt. From what I understand you can't go bankrupt to remove these types of debts. A little OP, but that's not quite the way I'd rank them.: 1. IRS Debt -- definitely. Heck, they can garnish wages. 2. High-interest debt (e.g., CC's). Yes, these go away on bankruptcy, but assuming you're not going with the nuclear option, you'll save a lot of money in the long run paying them off. 3. Private student loans 4. Mortgage 5. Public student loans If you don't have $3500 liquid and on hand, stop paying extra principle until you have an emergency fund . Having extra equity in the house is us...
by zblongladder
Thu Dec 16, 2010 12:05 am
Forum: Personal Finance (Not Investing)
Topic: Is AAA a good deal?
Replies: 20
Views: 3290

Re: Is AAA a good deal?

I'm 60 and have a bad back and a bad shoulder. Yesterday I had a cold and was driving in the rain and I thought about how hard it would be for me to change a tire if I had a flat. I thought about joining AAA. Is it a good deal, or are there better options? It depends. I've had nothing but good experiences thus far -- I'm an idiot about locking my keys in the car, and AAA was nothing short of miraculous getting me back in my car once. At midnight. On a Sunday. In the airport parking lot. When I was joining because my keys were already locked in the car . Heck, the basic membership isn't much more than a locksmith call, anyway. Of course, if you're less forgetful than I, it probably won't pay for itself the same way. Then again, I've had rel...
by zblongladder
Wed Oct 13, 2010 2:40 pm
Forum: Personal Finance (Not Investing)
Topic: Credit Card Dilemna
Replies: 12
Views: 2384

Well, the simple solution of paying off the cards, low to high, is probably the best. Don't close any (especially the oldest), since that *will* hurt his credit score, and pay the cards before working on the med school debt.

Also, is the med school debt government or private? Private med school debt before gov't (probably goes without saying).

Banks are still leery about credit, so getting a loan might be hard -- you're already trying a local banker, though a credit union, if available, might be more generous. If those don't work, you might have to try credit counseling -- it'll probably hurt the credit score, but should provide the needed consolidation.
by zblongladder
Tue Sep 07, 2010 2:09 pm
Forum: Personal Finance (Not Investing)
Topic: Restaurant tipping - cash or card?
Replies: 102
Views: 14072

Re: Restaurant tipping - cash or card?

Now, on Labor Day weekend, I read an article claiming that tips on cards are commonly "stolen" by management and that the "fair" way to tip workers is always cash. This is more common than you might think. A bar I used to frequent underwent a change in ownership. The new owner worked a few shifts, which is not uncommon. However, on busy nights when more than one bartender was needed, they pooled all the tips, and he received the same percentage as the others. Nevermind that the others were working for minimum wage, or that they rely on good nights like Friday and Saturday for the majority of their income. I stopped going to that bar when I learned of the practice. Since I've shared the story in disgust, it's become appa...
by zblongladder
Tue Sep 07, 2010 2:03 pm
Forum: Personal Finance (Not Investing)
Topic: Lottery Winners Just as Likely to Go Broke
Replies: 29
Views: 5496

V572625694 wrote:It would be a more interesting story if they'd focused on people who won, say, $1 million or more, and got it in the form of a "structured settlement"--i.e., paid out over a period of years. Or maybe compare the lump-sum recipients to the timed-payout set.
I don't know about studies on the subject, but I've heard that the structured-settlement winners actually end up in even worse financial trouble than the lump-sum winners, owing to the psychological impact of "winning" and suddenly being "a millionaire" and "rich" -- they start acting like they think millionaires are supposed to act without actually having the $1M yet to back it up.
by zblongladder
Wed Sep 01, 2010 11:30 am
Forum: Investing - Theory, News & General
Topic: Fed buys $360 million in TIPS buyback
Replies: 28
Views: 4785

xerty24 wrote:
trico wrote:the Fed would be buying treasuries to keep interest rates low so we can have a recovery.
If by "we", you mean people with over-extended mortgages/ARMs and banks holding lots of impaired assets with a license to borrow for free, then yes, "we" are recovering nicely. On the other hand, if by "we" you mean people trying to save for their retirement or live off of their interest and savings, "we" have had enough of the Fed's recovery plan!
If the economy crashes into another recession, nobody wins.
by zblongladder
Tue Aug 31, 2010 9:58 am
Forum: Personal Finance (Not Investing)
Topic: Free life insurace from CU
Replies: 17
Views: 3408

Free life insurace from CU

My credit union (of which I'm a satisfied customer) recently sent out a letter about a new perk--a small life insurance policy from The Hartford Group that's offered free to CU members. Now, I realize what they're doing--it's a loss-leader trying to get me to buy more life insurance from them down the road. But, from what I can tell, there aren't any strings attached.

I'm a young guy, I've got no dependents, and I really don't have any need for life insurance. However, it seems kinda silly to pass up something for free. Does anybody have experience with these free-with-CU-membership policies or know any reason not to sign up?
by zblongladder
Tue Aug 31, 2010 9:54 am
Forum: Personal Finance (Not Investing)
Topic: gmail
Replies: 16
Views: 4402

plannerman wrote:That is if you don't mind them reading your mail.

plannerman
Practically any company offering email services will do just as much snooping as Google--your best bet is to view your email as insecure and not transfer sensitive information using it.
by zblongladder
Thu Aug 05, 2010 2:44 pm
Forum: Personal Finance (Not Investing)
Topic: Your kids SS number and the nations credit at risk
Replies: 12
Views: 2312

jeffyscott wrote:
grabiner wrote:Sometimes, the answer is "none of the above"; I was asked where my mortgage was, and I didn't have one.
Might you have a home equity line of credit? We have one that has never been used but it still is recorded as a mortgage.
[never mind--I'd mistakenly thought this was directed at me]
by zblongladder
Thu Aug 05, 2010 11:49 am
Forum: Personal Finance (Not Investing)
Topic: Your kids SS number and the nations credit at risk
Replies: 12
Views: 2312

question: during the user authentication process the credit agencies have asked me questions about prior financial transactions (size of mortgage payment, who with, etc.) how do they authenticate little ones' ID when there is no history? I believe all we have for our kids is their SS cards. I've got a very thin file, and those quizzes come up all the time--they just make stuff up and you have to say "none of the above" or whatever the equivalent is. I can't say how many times it's asked me who I got my non-existent mortgage or car loan with. If they ask you about a fraudulent account...well...you'll probably have to call the agency and deal with that directly. EDIT: If this comes up over the phone, usually the rep won't mention t...
by zblongladder
Thu Aug 05, 2010 11:42 am
Forum: Personal Finance (Not Investing)
Topic: Good News for Cheap Shaving!
Replies: 35
Views: 6351

jeffyscott wrote:I use one cartridge costing about $2-3 for about a month
Lucky! I'm using them in no more than two weeks, more likely one if I didn't feel bad about replacing them at the proper rate. If I miss a day or two, I can clog up a cartridge in a single shave. Even still, I get pretty bad 5 o'clock shadow well before 5. Stupid thick beard...
by zblongladder
Thu Aug 05, 2010 11:36 am
Forum: Personal Finance (Not Investing)
Topic: Co-sign Question
Replies: 7
Views: 1873

Re: Co-sign Question

This past May I purchased my first car and subsequently signed my first auto loan. The catch is that I had to have a co-signer due to the fact that I'm 23 and I don't have a long credit history (not bad credit just short). I'd consider myself pretty debt adverse and so low to no interest financing was one of my main goals for the whole deal (which I ended up getting, 36 months 0% financing). The reasons I chose now to buy a car was because my mother needed a new vehicle and I 'needed' to build some credit (or at least that's what I'm told). I don't need a car since I'm working overseas and the company pays for my transportation here; and I had enough cash at the time of purchase to pay outright (apart from my emergency fund). So basically ...
by zblongladder
Wed Aug 04, 2010 11:12 am
Forum: Personal Investments
Topic: risk level/emergency fund for tenured teacher
Replies: 9
Views: 1842

livesoft wrote:Tenure won't help you if your school goes bankrupt or cannot make payroll.
That depends on where the OP have tenure. If it's a small, local college, then yes, that could be a problem. If they have tenure at, say, Amherst or Yale, then they're pretty well set. The OP is probably somewhere in the middle of those extremes--maybe not totally risk-free, but certainly far more secure than most jobs.

I'd still say that an emergency fund and reasonable AA are in order--there's still the possibility of leaving under extraordinary circumstances or getting disabled (or, for that matter, having a non-job-related financial emergency), and just because you won't get fired at age 65 doesn't mean you might not want to retire.
by zblongladder
Wed Aug 04, 2010 11:05 am
Forum: Personal Investments
Topic: Should I sell my iBonds?
Replies: 17
Views: 2881

I didn't think I-bonds were even marketable...
by zblongladder
Wed Aug 04, 2010 10:43 am
Forum: Personal Investments
Topic: Kids "sharing" a 529 account?
Replies: 21
Views: 3380

Thanks. I see what you are saying about the kids fighting over it, but my plan is to basically refer to the 529 as "college savings" and magically pay for college without the kids knowing the details on how the money is handled or managed. Are 529 plans held in the parent's name or the child's name? Beware of accounts in the child's name; I have fond memories of turning 18 & raiding accounts that I theoretically didn't know about. "Hello, Mr. Banker. I believe you may have something that belongs to me. Now what are we going to do about that?" Some kids intercept the household mail to look for underwear catalogs; I intercepted the mail to look for financial statements (also the catalogs). Another pitfall of the child...
by zblongladder
Wed Aug 04, 2010 10:39 am
Forum: Personal Finance (Not Investing)
Topic: Good News for Cheap Shaving!
Replies: 35
Views: 6351

jeffyscott wrote:
mickeyd wrote:If I ever went back to manual shaving, I'm sure that the blood would flow again.
Probably only if you went back to the 1970 style "safety razor"...as some here have (and I'm not sure what the attraction of that is, unless it is just to save a few pennies).
I can see the appeal--being able to get blades for $0.15 each is much nicer than cartridges for $1.00 each That's certainly more than "pennies".
by zblongladder
Wed Aug 04, 2010 10:36 am
Forum: Personal Finance (Not Investing)
Topic: Good News for Cheap Shaving!
Replies: 35
Views: 6351

mickeyd wrote:When I was a newlywed many years ago (1970) DW seemed to be upset that I cut myself shaving so often. I think it was only occasional nick, but to her it was a real bloodbath so she gave me an electric razor at the next birthday/Christmas.

I have been using one ever since.

I only shave a few times a week now and the electric gizmo still does the trick (I have replaced it several times since). If I ever went back to manual shaving, I'm sure that the blood would flow again.
I wish I could say the same--my beard is way too thick for an electric razor. It hurts like all get-out, and I'd have to shave two or three times a day to avoid having stubble (not just 5 o'clock shadow) by the end of the day.
by zblongladder
Wed Aug 04, 2010 9:52 am
Forum: Personal Finance (Not Investing)
Topic: Free meals for lump sum pension sales pitches
Replies: 59
Views: 10407

Re: Free meals for lump sum pension sales pitches

Ron wrote:Not to be "political" but average gubmint workers must be really on to something :roll: ...
You're not considering the government worker's risk of not getting the promised pension (e.g., pension fund runs out of money, the government they're working for stops or reduces their pension before they can collect, &c) and the years of lower earnings (on a strict payscale) to earn that pension. But yes, government benefits are very nice.
by zblongladder
Tue Aug 03, 2010 11:40 am
Forum: Personal Finance (Not Investing)
Topic: Accounts of insurance companies dropping
Replies: 13
Views: 2725

Re: Accounts of insurance companies dropping

BruceM wrote: Risk transferrance is not a right.
But it is an obligation--almost anywhere you go, you have to have at least liability insurance to drive a car, and many places you have to have a car to have a job.
by zblongladder
Tue Aug 03, 2010 11:27 am
Forum: Investing - Theory, News & General
Topic: Market Timing or Buy and Hold - what do you think?
Replies: 52
Views: 6189

Past performance is not a guarantee of future results. While I understand why Bogleheads are Bogleheads and I understand why they prefer indexing, I've never been a fan of that argument because it also makes the success of indexing moot. Basically nothing would matter. It is a rather nihilistic argument, but part of the Boglehead philosophy is to reduce the whole notion of investment to the barest of assumptions: that the market you're investing in will grow over time. If you don't believe that, you shouldn't be in that market in the first place (you'd just be gambling at that point), and if you do believe that, then you believe that an index of that market will also make money over time. Of course, none of this is a guarantee, but faith i...
by zblongladder
Sun Aug 01, 2010 10:33 pm
Forum: Investing - Theory, News & General
Topic: "Not your Father's Index Fund"
Replies: 18
Views: 4037

Re: Equal weighted vs. cap weighted costs

There is no good reason it (equally weighted index fund) should take more money to manage. Sorry, this is not correct. The stocks in a cap weighted fund are mostly just bought and held. The change in a stock price makes no difference. The stocks in an equally weighted fund must be rebalanced when their value change which results in higher turnover and higher cost. For example, the Rydex S&P 500 Equal Weight ETF has an annual turnover of 37 vs 12 for vanguard's cap weighted S&P 500. The Rydex Equal Weight ETF has an expense ratio of .40 vs .18 for the S&P 500 Index Fund. In my opinion, equal weight indexes are more expensive to manage. Hmm...that's quite correct. I hadn't thought of that. Again, I don't necessarily think they're...
by zblongladder
Fri Jul 30, 2010 11:12 pm
Forum: Investing - Theory, News & General
Topic: Explaining deflation and inflation
Replies: 21
Views: 2775

Is holding BND - a good thing because the dividends I get are worth more as the dollar becomes more dear, or This should happen, since bonds would be for fixed dollar amounts (think about a mortgage in deflation--you'd be owning the same number of more-valuable dollars every year. A bond's just being on the other side of that.) - a bad thing because the BND NAV will go down to compensate for the increase in real interest rates (despite no change in nominal rates), or This *shouldn't* happen, since deflation's contribution to the real interest would naturally apply to *all* bonds (and all cash, all CDs, all bank accounts...), no matter when they were issued. Typically, with nominal interest rising, old bonds would lose value b/c they're les...
by zblongladder
Fri Jul 30, 2010 10:24 pm
Forum: Investing - Theory, News & General
Topic: How to make 200K a year reading charts...
Replies: 24
Views: 5063

Re: How to make 200K a year reading charts...

Jacobkg wrote:...become a doctor?
Hey, that's just radiologists. ;-) (No offense meant to radiologists--just resentment from an internist's kid.)
by zblongladder
Fri Jul 30, 2010 10:20 pm
Forum: Investing - Theory, News & General
Topic: And how do you trade the Dow at 1,000?
Replies: 25
Views: 4174

Re: And how do you trade the Dow at 1,000?

hsv_climber wrote:
rcshouldis wrote: Sorry, You'll have lost your job long before DOW 1000. You savings will be worthless because a loaf of bread will cost $50 and your investments may possibly be worth 10% of what they are today. Pick your most favorite freeway overpass for your bed tonight.
If loaf of bread would cost $50 that would mean that Kraft (DOW component) would be making huge profits; thus, making it near impossible for Dow to be at 1000.
(the same could be said for McDonalds, which could sell hamburgers for $40 each if loaf of bread would be $50).
You're assuming they'd be selling the $50 bread. If bread were $50 and people's savings down, I doubt there'd be many takers.
by zblongladder
Fri Jul 30, 2010 10:08 pm
Forum: Investing - Theory, News & General
Topic: "Not your Father's Index Fund"
Replies: 18
Views: 4037

there are arguments that an equally weighted 500 stock mutual fund will often outperform particularly after a bull market has been in progress for awhile. This approach definitely worked better in 2000 when the tech sector was overpriced and although I don't have the records probably worked better in 1980 when energy was overpriced.Basically as a stock sector becomes the "in sector it increases its capitalization and weighting in the cap weighted index. I am uncertain of the least expensive equally weighted index fund but there is no good reason it should take more money to manage and it does avoid the overpriced sector problem which works for a while and then blows up. In theory, an equally weighted fund should take less money to man...
by zblongladder
Fri Jul 30, 2010 5:46 pm
Forum: Investing - Theory, News & General
Topic: "Not your Father's Index Fund"
Replies: 18
Views: 4037

Quick thought--if these became large enough, could they escape ultimately affecting market capitalization, and thus becoming what they're trying to beat? For instance, if an index weighted on P/E ratios suddenly got trillions of dollars of investment, it'd start affecting demand for its underlying securities in a big way, which would drive prices up on the high end faster than prices on the low end, so the companies at the top would end up relatively more capitalized than the companies on the bottom.
by zblongladder
Fri Jul 30, 2010 5:41 pm
Forum: Investing - Theory, News & General
Topic: "Not your Father's Index Fund"
Replies: 18
Views: 4037

The odd thing, of course, is that these faux indexes could be applied as cheaply as a traditional index, but they're not. If you're just tracking a weighted list of stocks using a computer, the computer doesn't care if it's tracking capitalization, P/E ratios, % of board members smarter than an orangutan...as long as there's a quantifiable comparison and a set of sorting & weighting rules, the work's exactly the same. Probably the reason that most of these new-world indexes aren't lower cost is size--the amount spent on computers and staff probably isn't proportional to the capitalization of the fund (it probably grows somewhere between O(log(n)) and O(n), but it's definitely under O(n)), so if these catch on, they'll probably become ch...
by zblongladder
Fri Jul 30, 2010 5:26 pm
Forum: Investing - Theory, News & General
Topic: "Not your Father's Index Fund"
Replies: 18
Views: 4037

From the other linked article: Here's the key: The Securities and Exchange Commission allows these products to be called index funds because the companies follow a published "rules-based method" for managing portfolios. Simply put, as long as a computer, rather than an individual or an investment committee is picking stocks, bonds and commodities, the SEC says it is OK to call it index investing. This makes me wonder what will happen once human minds can be perfectly transferred into digital form & run on computers. If a dying fund manager arranges for his mind to be uploaded to a supercomputer cluster so he could live on, his funds would then be run by something that is both an "individual" and a "computer&quo...
by zblongladder
Fri Jul 30, 2010 1:17 pm
Forum: Personal Investments
Topic: Tax question on cap gains and dividends
Replies: 10
Views: 1693

Re: Tax question on cap gains and dividends

selling all or parts of. That's an important distinction. If you're only selling parts of it and haven't sold anything from this fund before on an average-cost basis, you can request specific lots to be sold (which includes lots purchased with reinvested interest), which could have a big impact on your capital-gains tax. For example, if the fund is worth $100k and the average-cost cost basis is $50k, you'd owe money on the $50k gains. However, if you sold a $25k that was bought during the boom for $30k, you'd actually have a $5k loss that you could deduct. Of course, if you're liquidating the entire thing (or have used average-cost basis before) that doesn't make a bit of difference. Also, remember that any additions or dividends in the la...
by zblongladder
Fri Jul 30, 2010 11:48 am
Forum: Personal Investments
Topic: Including gold in AA
Replies: 25
Views: 2976

Re: Including gold in AA

SSSS wrote:
zblongladder wrote:Wouldn't people start trying to pass off pyrite or gilding non-precious metals, leading to massive gold inflation?
Gold has a specific gravity of about 19, pyrite has a specific gravity of about 5. Counterfeiting gold convincingly is non-trivial; very few things are as dense.
Counterfeiting gold is non-trivial in a steady, healthy economy where the only people buying gold have the resources and the expertise to deal with it properly. If the world economy ever went to barter the way some people theorize it will, large number of people and institutions without the equipment or expertise will suddenly have to deal in gold, and counterfeiting will become much easier.
by zblongladder
Fri Jul 30, 2010 9:46 am
Forum: Personal Investments
Topic: Building a Portfolio from scratch for a 20 Year Old
Replies: 14
Views: 3747

You really should keep it simple--large, complex portfolios can become confusing and wander significantly off from their target asset allocation (a term you'll see around the forms as "AA"). I'd second the recommendation of going with Vanguard Brokerage and using a Vanguard ETF--either VT (Vanguard Total World, a whole-world index) or VTI (Vanguard Total Stock Market, a US-only index). If you want to eventually branch out, you can, but I'd wait till you had more capital to work with (so you'd be able to allocate less than 5% to your "play money" investments--you don't want your mistakes wiping you out). Think of it like a vitamin--you start with a standard multivitamin (in this case, a low-cost total-market index) and, i...
by zblongladder
Fri Jul 30, 2010 9:38 am
Forum: Personal Investments
Topic: Some contradictions
Replies: 5
Views: 1397

Re: Some contradictions

Quick question. The boglehead philosophy largely revolves around buy and hold right? Stay the course. Don't sell low. 1) But then, there's the section on Anchoring that tells you not to be anchored to the price you bought at and feel free to sell even when it's down. The reason you don't sell low while staying the course is to avoid panic--to get the emotional reaction of "I must sell to protect my money" out of the equation, and avoiding selling at a loss when it doesn't make rational sense. Anchoring is another kind of emotional reaction--refusing to sell at a loss, even when it makes sense (e.g., when there's been a significant change to the security, like BP stock at the moment), because you're attached to the security's orig...
by zblongladder
Fri Jul 30, 2010 9:22 am
Forum: Personal Investments
Topic: In-laws bailing water financially. Options?
Replies: 47
Views: 7504

Re: In-laws bailing water financially. Options?

Two main issues: 1) What are the sister's options, vis-a-vis foreclosure/short-sale/debt consolidation or negotiation/bankruptcy? A lot of that has to do with what the lender is willing to consider, and banks have been somewhat notoriously unhelpful with renegotiations. I'd have them contact the bank to see what can be done--given how up the creek they are, I'd be most interested in a short sale or deed in lieu of foreclosure, if you can get it. They'd lose the equity on the house, but they'd lose significant debt as well, and they'd probably be better off renting a much cheaper place than trying to stay somewhere they just can't afford. 2) Should we help out financially? Latter question is more personal, and not primarily directed at the ...
by zblongladder
Fri Jul 30, 2010 9:08 am
Forum: Personal Investments
Topic: Including gold in AA
Replies: 25
Views: 2976

Re: Including gold in AA

But what if the emergency is that your "real money" no longer has any value and nobody is willing to barter with it anymore? I guess that depends on your definition of an "emergency fund", but my understanding is that it's traditionally considered to be money set aside for a personal financial emergency--e.g., losing your job, crashing a car, having a life-saving surgery after your insurer's dropped you. For those situations, you need sure, immediate access legal tender, which gold isn't. If you want to have a fund for macroeconomic emergency rather than financial emergency, then that's fine...do what lets you sleep at night. But calling it an "emergency fund" is confusing at best, and mixing its assets with y...
by zblongladder
Thu Jul 29, 2010 9:57 pm
Forum: Investing - Theory, News & General
Topic: Explaining deflation and inflation
Replies: 21
Views: 2775

Re: Explaining deflation and inflation

I tried to explain this to a co-worker and I just confused them. I just ended the conversation that either one is wouldn't be good. Can anyone explain why both these things are bad in layman's terms? And please refrain from talking about governmental policy. I do not want this thread to get locked. Thank you. Well, of course, inflation is when each dollar buys less stuff every year, and deflation is when it buys more stuff each year. The downside of deflation is obvious--when you just leave money in the bank, it goes down in value, so if you have an unmanageable level of inflation (I'm talking Weimar-Republic or Zimbabwe levels here), any liquid money you have is liable to become worthless before you actually spend it. The upside of inflat...
by zblongladder
Thu Jul 29, 2010 9:46 pm
Forum: Investing - Theory, News & General
Topic: Crisis-Era Muni Funds Haunt Brokerages
Replies: 7
Views: 1469

I didn't know losses could go that high...
by zblongladder
Thu Jul 29, 2010 9:43 pm
Forum: Investing - Theory, News & General
Topic: What if Wellington/Wellesly Mangers are wrong?
Replies: 17
Views: 4608

Re: What if Wellington/Wellesly Mangers are wrong?

What if one year the managers at Wellington and Wellesly make a moderate bet, perhaps putting 5% of their assets in the next Enron or BP. What if they make two such bets, putting 5% assets in one clunker and 5% assets in another clunker, and the culimination drove them to try to catch back up and make more risky bets. Still keeping within their 60/40 or 40/60 parameters, there is still betting that can go on. Does anyone worry about this? There's always risk, but Vanguard is better about this sort of thing that many other companies--so many funds always seem to have a little blurb in the back about "by the way, we can invest 20% of our money in whatever cuckoo-land financial product we want, despite what the fund's objective might say...
by zblongladder
Thu Jul 29, 2010 4:06 pm
Forum: Personal Investments
Topic: Including gold in AA
Replies: 25
Views: 2976

Re: Including gold in AA

I consider mine as part of my emergency fund. Gold would be awful for an emergency fund--it's not nearly liquid enough. If you have a financial emergency, you need real money, not shiny metal, and if gold's price is down (which it will be eventually), you'll lose money when you need to liquidate it. i consider it part of the fixed income allocation. fixed income generates dollars. dollars are always shrinking in value. gold helps offset this - But gold is, by definition, not fixed income. In fact, it generates no income at all. Bonds can be left to maturity and get your original value back, but gold is purely a matter of supply and demand, and if the demand were to crash, there's nothing you could do. In that regard, it's much more similar...
by zblongladder
Thu Jul 29, 2010 3:41 pm
Forum: Investing - Theory, News & General
Topic: Fed president says US is close to Japan-style deflation
Replies: 19
Views: 3847

Re: Fed president says US is close to Japan-style deflation

http://www.nytimes.com/2010/07/30/business/economy/30fed.html?hp Opinions at the Fed differ, but this may be of interest to investors. I read on another post here recently that Japan's equities market has sustained a very prolonged 75% drop in value (not sure if that post is accurate). Anyway, this may be something investors may want to consider when deciding their asset allocations. That Japanese stock market has still not recovered from it's crash in 1989 should give some thought for food for those that claim that it is too risky to invest abroad. Regarding the NYT article: I suspect that Krugman might release a very small sigh of relief. Valuations matter. As other posters pointed out, the Japanese stock market was way overvalued at its...
by zblongladder
Thu Jul 29, 2010 10:41 am
Forum: Investing - Theory, News & General
Topic: Academic research favoring active management
Replies: 30
Views: 5362

There is no way to tell if a portflio of index funds will beat fund X over the next Y years. Indexing means explicitly not trying to "beat" anything--you're sacrificing the potential of above-market returns to allay the risk of below-market returns, which, considering that it's statistically unlikely that you'll consistently select successful, above-market-returning funds, is a pretty good tradeoff. Looking back, it's easy to see that some managers beat the heck out of the market (e.g., Bill Ruane with Sequoia), but looking forward it's not so clear who those managers will be, and the risk of selecting a manager that'll either underperform the market or outperform the market in the short term only to underperform in the long term...
by zblongladder
Wed Jul 28, 2010 3:22 pm
Forum: Personal Finance (Not Investing)
Topic: I need a new visa credit card
Replies: 41
Views: 79630

superthan34 wrote:Charles Schwab Visa. 2% cash back on everyhting anytime. I have heard they might not be offering it to new customers anymore, but maybe someone has some more information on that.
I can't find any reference to it on the Schwab site other than a login for current cardholders, so I'd imagine that's the case.

Also, OP--how's your credit? CC lenders are getting a bit more generous again, but they're still a bit skittish with less-than-great scores. Building credit from scratch in this market is a PITA.
by zblongladder
Wed Jul 28, 2010 2:36 pm
Forum: Personal Finance (Not Investing)
Topic: Allan Roth's Skimp or Splurge - Millionaire’s Car
Replies: 72
Views: 13450

He wants great performance, great handling, non-FWD sport-coupe. I recommended that he buy the latest Porsche 911 Twin-turbo. He can't justify it, so he's considering a 335i ($140k vs $50k). It's all relative. I'm a bit puzzled what this anecdote is trying to convey...that the $140k Porsche is the only car with good performance? That the BMW is the same thing at nearly 1/3 the price? I'm not sure I get what the added utility of the extra $90k on the Porsche is supposed to be. Heck, for most peoples' purposes, I'm not sure what the added utility of the extra $30k of the BMW above the cost of a late-model Corolla or Prius is. I guess it is all relative, but I can think of a great many better uses for $126,000 dollars than marginally improvin...
by zblongladder
Wed Jul 28, 2010 11:54 am
Forum: Personal Finance (Not Investing)
Topic: Allan Roth's Skimp or Splurge - Millionaire’s Car
Replies: 72
Views: 13450

Anyways, I thought one of the reasons to save and passively invest all this money at low expense ratios was so that you could drive a Lexus while still having millions in ETFs. Am I wrong? Right. Somehow the term Boglehead has slowly morphed to mean someone who eats road pizza and grass clipping salads. I don't think it's fair to say that passing up a luxury car for a reasonably priced car of a similar performance and reliability is being that much of a cheapskate. This isn't about having millions in ETFs while your kids are eating Ramen and walking to school in the snow uphill both ways, it's about allocating money well to the most out of what you pay for. I've never understood how driving a Ford (or, in my case, a Toyota) was "hurti...