Things I like about New Year's Eve:
The [insert pop culture item here] Year in Review lists.
Bowl games!
Tomorrow = holiday and more bowl games!
Guilt free consumption of food and beverages.
Things I don't like about New Year's Eve:
Drunks.
The cold.
Tax season starts again the next day.
It will be 5 months to the next holiday weekend. (Unless you are a civil servant in which case you get a holiday weekend roughly every four weeks of the year!)
Thursday, December 31, 2009
Saturday, December 26, 2009
More Evidence On The Failure Of Active Investing
From an article in the 12/3/2009 Wall Street Journal on a study done by two of the world's smartest academics in field of investing:
It's impossible to tell whether actively managed funds that beat the market do so out of luck or skill, according to a new study by the professors who've championed passive/index investing for years.
The claim means that investors can't know for sure how good their active manager is, say the professors, Eugene Fama and Kenneth French. The latest Fama-French study is another piece of ammunition to support their view that most active managers can't consistently beat [passively managed] funds, which track the market. Underpinning that is the efficient-market hypothesis, developed by Mr. Fama in the 1960s, that states that assets are appropriately priced since the market has all available information.
Mr. Fama and Mr. French, professor of finance at Dartmouth College's Tuck School of Business, ran 10,000 simulations of what investors could expect from actively managed funds.
This was based on data for 3,156 stock funds from January 1984 to September 2006. They found that outside the top 3% of funds, active management lags behind results that would be delivered due simply to chance.
The study, "Luck Versus Skill in the Cross Section of Mutual Fund Returns," included mutual funds that were liquidated and any fund launched before September 2001 that reached more than $5 million in assets. (Find a copy of the report at the Social Science Research Network.)
"The simulations tell us that for the vast majority of actively managed funds, true [abnormal expected return] is probably negative; that is, the fund managers do not have enough skill to produce risk-adjusted expected returns that cover their costs," wrote the professors.
The fact that some funds in the professors' study beat the simulations does suggest that by picking the right funds investors can consistently outperform the market. But there's just one problem, according to the professors: The "good funds are indistinguishable from the lucky/bad funds that land in the top percentiles."
Given this evidence, why do most investment advisors continue to use actively managed funds? I covered this in an earlier blog (http://streffblog.blogspot.com/2009/10/simple-yet-inevitable-wealth-creation.html), but in short, it's because that's how they get more of your money.
MORAL: Only use advisors who believe in the passive/index approach.
It's impossible to tell whether actively managed funds that beat the market do so out of luck or skill, according to a new study by the professors who've championed passive/index investing for years.
The claim means that investors can't know for sure how good their active manager is, say the professors, Eugene Fama and Kenneth French. The latest Fama-French study is another piece of ammunition to support their view that most active managers can't consistently beat [passively managed] funds, which track the market. Underpinning that is the efficient-market hypothesis, developed by Mr. Fama in the 1960s, that states that assets are appropriately priced since the market has all available information.
Mr. Fama and Mr. French, professor of finance at Dartmouth College's Tuck School of Business, ran 10,000 simulations of what investors could expect from actively managed funds.
This was based on data for 3,156 stock funds from January 1984 to September 2006. They found that outside the top 3% of funds, active management lags behind results that would be delivered due simply to chance.
The study, "Luck Versus Skill in the Cross Section of Mutual Fund Returns," included mutual funds that were liquidated and any fund launched before September 2001 that reached more than $5 million in assets. (Find a copy of the report at the Social Science Research Network.)
"The simulations tell us that for the vast majority of actively managed funds, true [abnormal expected return] is probably negative; that is, the fund managers do not have enough skill to produce risk-adjusted expected returns that cover their costs," wrote the professors.
The fact that some funds in the professors' study beat the simulations does suggest that by picking the right funds investors can consistently outperform the market. But there's just one problem, according to the professors: The "good funds are indistinguishable from the lucky/bad funds that land in the top percentiles."
Given this evidence, why do most investment advisors continue to use actively managed funds? I covered this in an earlier blog (http://streffblog.blogspot.com/2009/10/simple-yet-inevitable-wealth-creation.html), but in short, it's because that's how they get more of your money.
MORAL: Only use advisors who believe in the passive/index approach.
Monday, December 14, 2009
Tiger And His Mistresses (Allegedly)
I golf. I watch TV. And sometimes I watch Tiger Woods golf on TV. This absolutely qualifies me as much as anybody to blog about the Tiger Woods affair. (No pun intended.)
Let's first get the obvious out of the way. Tiger has become a morally bankrupt person, as it seems are many other celebrities and politicians. Apparently this is what fame and fortune does to some people - it corrupts them to the point they think they can do anything with little or no accountability. They lose their moral compass, if they had one to begin with. Tiger is a dispicable person.
That said, there is at least one angle to the story that I think has been under-covered by the media, related to Tiger's many alleged mistresses. Specifically, if their allegations are true, then why aren't they being called out for their part in all of this? They're getting a lot of attention, but not much disdain. They knew Tiger was married, and more recently with children. Why didn't they just say no?
Because they are whores.
Literally, Merriam-Webster's dictionary defines a whore as 'a promiscuous or immoral woman' and 'a venal or unscrupulous person'. And literally, some of his alleged mistresses were adult film stars. Either way, the definition fits.
Let's get real - these aren't nice girls. They don't say no. It's their job to profit from others' fame and fortune. They might end up selling their story, or better yet, have an illegitimate child and then they've really got it made. They might be called many other names, but they are, accurately, whores.
Saying this doesn't make Tiger a better person. Saying this doesn't make what Tiger did right. But saying this does put some perspective on the kind of people - immoral people - Tiger hung with. (This time, pun intended!)
Let's first get the obvious out of the way. Tiger has become a morally bankrupt person, as it seems are many other celebrities and politicians. Apparently this is what fame and fortune does to some people - it corrupts them to the point they think they can do anything with little or no accountability. They lose their moral compass, if they had one to begin with. Tiger is a dispicable person.
That said, there is at least one angle to the story that I think has been under-covered by the media, related to Tiger's many alleged mistresses. Specifically, if their allegations are true, then why aren't they being called out for their part in all of this? They're getting a lot of attention, but not much disdain. They knew Tiger was married, and more recently with children. Why didn't they just say no?
Because they are whores.
Literally, Merriam-Webster's dictionary defines a whore as 'a promiscuous or immoral woman' and 'a venal or unscrupulous person'. And literally, some of his alleged mistresses were adult film stars. Either way, the definition fits.
Let's get real - these aren't nice girls. They don't say no. It's their job to profit from others' fame and fortune. They might end up selling their story, or better yet, have an illegitimate child and then they've really got it made. They might be called many other names, but they are, accurately, whores.
Saying this doesn't make Tiger a better person. Saying this doesn't make what Tiger did right. But saying this does put some perspective on the kind of people - immoral people - Tiger hung with. (This time, pun intended!)
Monday, December 7, 2009
Active Investing Is Worse Than Gambling
You wouldn't know it by the number of people who gamble, but most gamblers know that the odds are stacked against them. The house is always favored. But even though most people are going to lose, they still gamble because it's exciting, and hope springs eternal.
This same concept applies to active investing (ongoing market timing and stock picking), except that people don't realize the odds are stacked against them. Little do investors know that the 'house' - their commission-based reps and the financial services firms and funds for which they work - is always favored due to the structure of the expenses they charge.
In a way, active investing is worse than gambling - at least the risks to gamblers are obvious. But active investors assume (wrongly) that past performance should be an indicator of future performance. Imagine a coin flipper landing on heads 75 out of 100 times. Gamblers know that is 'luck', but for active managers that means a solid 'performance'. In truth, that does not mean the next 100 flips will have the same outcome, and stock pocking performance has been shown to be similiar.
So why do people keep utilizing active investing with commissioned brokers? Same as why people keep gambling - it's exciting (more than buy-and-hold) and hope springs eternal. But there's another reason - they don't know there is another way to invest besides the traditional financial services model. [See prior posts.]
There is another way. Take the fee-based passive approach. It levels the playing field. It makes investing more than just a roll of the dice. It's a proven winner.
Don't be a sure loser - don't gamble with your money by partaking in the traditional active model.
This same concept applies to active investing (ongoing market timing and stock picking), except that people don't realize the odds are stacked against them. Little do investors know that the 'house' - their commission-based reps and the financial services firms and funds for which they work - is always favored due to the structure of the expenses they charge.
In a way, active investing is worse than gambling - at least the risks to gamblers are obvious. But active investors assume (wrongly) that past performance should be an indicator of future performance. Imagine a coin flipper landing on heads 75 out of 100 times. Gamblers know that is 'luck', but for active managers that means a solid 'performance'. In truth, that does not mean the next 100 flips will have the same outcome, and stock pocking performance has been shown to be similiar.
So why do people keep utilizing active investing with commissioned brokers? Same as why people keep gambling - it's exciting (more than buy-and-hold) and hope springs eternal. But there's another reason - they don't know there is another way to invest besides the traditional financial services model. [See prior posts.]
There is another way. Take the fee-based passive approach. It levels the playing field. It makes investing more than just a roll of the dice. It's a proven winner.
Don't be a sure loser - don't gamble with your money by partaking in the traditional active model.
Monday, November 30, 2009
Too Much Government, Politicians, and Taxes
A few days ago the Des Moines Register published a lengthy article detailing how public employees' (taxpayer funded) benefits are far better than what private employers offer. Among other sources, the article referenced a well-known Iowa benefits survey done by a colleague and friend of mine.
This is another brick in the wall of why taxes are generally evil, and too high. We end up paying too much (in this case, compensation) to too many (in this case, public employees) without the invisible hand of the market to control it.
That's not even the point I want to make here. The point is, the article also quoted some politicians (in this case Iowa Democrats) who said they didn't feel they could do anything about it since the benefits are bargained for in good faith with state employee unions. But guess who's supposed to be on the taxpayer's side in those negotiations? Those same politicians and/or political appointees!
To be a state legislator and make the argument that you can't do anything to curtail state employee compensation is about as asinine an argument as you can make. That's like saying you murdered your parents, but can't be held accountable because you are now an orphan.
To add injury to insult, all of this is going on while Iowa has a $1 billion budget deficit thanks to those same politicians. Sure, there may be other bigger and better ways to cut spending, but to say this is off limits is nothing but pandering to the political left.
I'm a political independent - and proud of it - but if the Iowa Republican Party wants to win back the legislature and executive office, all they really need to do is get off their social conservative loser-of-a-horse and start focusing on the tried-and-true message of lower spending and taxes. But since Republicans have their own pandering issues, I suspect we'll just see more of the same.
This is another brick in the wall of why taxes are generally evil, and too high. We end up paying too much (in this case, compensation) to too many (in this case, public employees) without the invisible hand of the market to control it.
That's not even the point I want to make here. The point is, the article also quoted some politicians (in this case Iowa Democrats) who said they didn't feel they could do anything about it since the benefits are bargained for in good faith with state employee unions. But guess who's supposed to be on the taxpayer's side in those negotiations? Those same politicians and/or political appointees!
To be a state legislator and make the argument that you can't do anything to curtail state employee compensation is about as asinine an argument as you can make. That's like saying you murdered your parents, but can't be held accountable because you are now an orphan.
To add injury to insult, all of this is going on while Iowa has a $1 billion budget deficit thanks to those same politicians. Sure, there may be other bigger and better ways to cut spending, but to say this is off limits is nothing but pandering to the political left.
I'm a political independent - and proud of it - but if the Iowa Republican Party wants to win back the legislature and executive office, all they really need to do is get off their social conservative loser-of-a-horse and start focusing on the tried-and-true message of lower spending and taxes. But since Republicans have their own pandering issues, I suspect we'll just see more of the same.
Tuesday, November 24, 2009
I'm Thankful For This, But Not For That
It's Thanksgiving Week, my favorite holiday time, and like many others I am very thankful for the love and good health of my family and friends. The contrarian in me, however, chooses to blog today with a list of things for which I am not thankful:
Bad drivers.
Far right wing media personalities and outlets. (I exclude the far left wing media because I can't even confirm they exist.)
Snow.
The NFL's commercial-kickoff-commercial advertising strategy.
Techno-phobes.
Taxes that do not secure the blessings of liberty.
Alternative rap.
Anyone incapable of critical thinking.
Monday, November 16, 2009
Not Golfers, You Great Fool! Gophers!
Sandy: I want you to kill every gopher on the golf course!
Carl Spackler: Correct me if I'm wrong Sandy, but if I kill all the golfers, they're gonna lock me up and throw away the key...
Sandy: Not golfers, you great fool! Gophers! The little...brown...furry...rodents!
Carl Spackler: We can do that; we don't even have to have a reason. All right, let's do the same thing, but with gophers!
And later.....
Carl Spackler: License to kill gophers by the government of the United Nations. Man, free to kill gophers at will. To kill, you must know your enemy, and in this case my enemy is a varmint. And a varmint will never quit - ever. They're like the Viet Cong - Varmint Cong. So you have to fall back on superior intelligence and superior firepower. And that's all she wrote.
Carl Spackler: Correct me if I'm wrong Sandy, but if I kill all the golfers, they're gonna lock me up and throw away the key...
Sandy: Not golfers, you great fool! Gophers! The little...brown...furry...rodents!
Carl Spackler: We can do that; we don't even have to have a reason. All right, let's do the same thing, but with gophers!
And later.....
Carl Spackler: License to kill gophers by the government of the United Nations. Man, free to kill gophers at will. To kill, you must know your enemy, and in this case my enemy is a varmint. And a varmint will never quit - ever. They're like the Viet Cong - Varmint Cong. So you have to fall back on superior intelligence and superior firepower. And that's all she wrote.
Tuesday, November 10, 2009
Traditional Investing Is A Sure Loser
The following is an excerpt of a white paper about the secrets that traditional investment shops don't want people to know:
Let’s start by revealing how the traditional approach to investing almost inevitably results in worse outcomes. First, it must be understood that most investment advisors have learned their investment philosophy from the firms by which they are employed. What makes one financial advisor choose Mutual Fund A and another choose Mutual Fund B is largely determined by which of those respective fund companies has cut a better revenue sharing deal with the investment firm. Proof of this is readily available in firm annual reports.
It is a generally accepted business practice that clients will then own what funds or fund families a broker/dealer has the best revenue sharing agreements. This “pay to play” business model is disclosed to clients in the bowels of an annual report and little light is shed on this fine print. Herein lays the first of many identifiable conflicts of interest issues inherent inside the financial services industries.
The traditional investment approach used by most financial advisors is also an ‘active’ approach. In the mutual fund world where most investments are made, this means the industry is trying to own the ‘right’ mutual fund at the ‘right’ time.
Active investing, or picking the ‘best’ securities or funds, is in fact centered around the concept that advisors can beat the market by accurately predicting the future. This traditional approach wants you to ignore the fact that the aggregate market is a zero-sum game – and therefore ignore the mathematical certainty that any one individual’s gains must be matched by equal losses by other players.
This zero-sum game conclusion is even worse than it sounds. Factoring in the marketing, administrative, and other fees charged by most mutual funds (estimated to be more than $100 billion annually for just domestic equity mutual funds) investing actually becomes a negative-sum game. In other words, the very act of buying and selling of securities reduces the size of the pie that is destined to be divided equally among the various players. And the more frequent the buying and selling, the smaller the pie gets.
The traditional investing approach not only wants you to ignore the zero/negative-sum game fact, it also wants you to ignore the overwhelming academic research proving that few fund managers beat their long-term respective benchmarks. Here again, that fact is actually even worse than it sounds; statistically speaking, fewer managers beat their long-term benchmarks than would be expected to simply by chance. (In other words, they aren’t even good coin-flippers!)
So what's the alternative? The answer is an independent and passive investing approach, which is a blog topic for another day.
Let’s start by revealing how the traditional approach to investing almost inevitably results in worse outcomes. First, it must be understood that most investment advisors have learned their investment philosophy from the firms by which they are employed. What makes one financial advisor choose Mutual Fund A and another choose Mutual Fund B is largely determined by which of those respective fund companies has cut a better revenue sharing deal with the investment firm. Proof of this is readily available in firm annual reports.
It is a generally accepted business practice that clients will then own what funds or fund families a broker/dealer has the best revenue sharing agreements. This “pay to play” business model is disclosed to clients in the bowels of an annual report and little light is shed on this fine print. Herein lays the first of many identifiable conflicts of interest issues inherent inside the financial services industries.
The traditional investment approach used by most financial advisors is also an ‘active’ approach. In the mutual fund world where most investments are made, this means the industry is trying to own the ‘right’ mutual fund at the ‘right’ time.
Active investing, or picking the ‘best’ securities or funds, is in fact centered around the concept that advisors can beat the market by accurately predicting the future. This traditional approach wants you to ignore the fact that the aggregate market is a zero-sum game – and therefore ignore the mathematical certainty that any one individual’s gains must be matched by equal losses by other players.
This zero-sum game conclusion is even worse than it sounds. Factoring in the marketing, administrative, and other fees charged by most mutual funds (estimated to be more than $100 billion annually for just domestic equity mutual funds) investing actually becomes a negative-sum game. In other words, the very act of buying and selling of securities reduces the size of the pie that is destined to be divided equally among the various players. And the more frequent the buying and selling, the smaller the pie gets.
The traditional investing approach not only wants you to ignore the zero/negative-sum game fact, it also wants you to ignore the overwhelming academic research proving that few fund managers beat their long-term respective benchmarks. Here again, that fact is actually even worse than it sounds; statistically speaking, fewer managers beat their long-term benchmarks than would be expected to simply by chance. (In other words, they aren’t even good coin-flippers!)
So what's the alternative? The answer is an independent and passive investing approach, which is a blog topic for another day.
Sunday, November 8, 2009
Pet Lover Hater
I do not own a pet. This does not mean I do not like pets; I could see owning a faithful dog one day. But I'm not really a pet lover.
Moreso, I'm not a pet lover lover. I have a long list of gripes with people who act like their pets are human. I'm not just talking about the owners that let their pet crap on the grass and not pick it up. I'm talking about the owners that dress their pets in cutesy outfits, feed them with designer food, buy insurance on them, and take them along wherever they go. That's a little weird, and a little pathetic.
Excessive pet love has infiltrated the media, too. This past week the top story on two local TV stations was about a sheriff's deputy who shot and killed a neighbor's dog after allegedly being threated by it. Who knows what the truth was, but WHO CARES, a pet story should never be the top story on TV news! And that happens fairly often. If there aren't any better stories about human joy or suffering in central Iowa or the nation to report on that day, then just go with a half-hour of weather.
It also kills me how many people literally compare taking care of their pets as being similar to taking care of children. Really? Do they feed and diaper their pets as babies? Do they kennel their children when they're gone? Do they educate - I didn't say 'train' - them? Gimme a break. Show me someone who makes that comparison and I'll show you someone who's never had kids. Or is out of their freaking mind.
Look, pets can be great companions, givers of unconditional love even. I'm down with that. But in addition to controlling the pet population, let's start controlling the pet lover population.
Moreso, I'm not a pet lover lover. I have a long list of gripes with people who act like their pets are human. I'm not just talking about the owners that let their pet crap on the grass and not pick it up. I'm talking about the owners that dress their pets in cutesy outfits, feed them with designer food, buy insurance on them, and take them along wherever they go. That's a little weird, and a little pathetic.
Excessive pet love has infiltrated the media, too. This past week the top story on two local TV stations was about a sheriff's deputy who shot and killed a neighbor's dog after allegedly being threated by it. Who knows what the truth was, but WHO CARES, a pet story should never be the top story on TV news! And that happens fairly often. If there aren't any better stories about human joy or suffering in central Iowa or the nation to report on that day, then just go with a half-hour of weather.
It also kills me how many people literally compare taking care of their pets as being similar to taking care of children. Really? Do they feed and diaper their pets as babies? Do they kennel their children when they're gone? Do they educate - I didn't say 'train' - them? Gimme a break. Show me someone who makes that comparison and I'll show you someone who's never had kids. Or is out of their freaking mind.
Look, pets can be great companions, givers of unconditional love even. I'm down with that. But in addition to controlling the pet population, let's start controlling the pet lover population.
Monday, November 2, 2009
Real Men of Genius
For almost 10 years now, Bud Light has run a series of mostly radio commercials called 'Real Men of Genius.' These ads sarcastically glorify an unsung hero for a particular invention, or occupation, or just something they do. These are the funniest radio ads ever, hands down. Even the titles are funny. (Check the Wikipedia entry for Real Men of Genius for more about the ads, a list of every ad, and a link to the audio for each.)
Included in these Bud Light ads are spots about unappreciated inventors/inventions, like books on tape, or jean shorts. (Some inventions are better than others.) I've been thinking about these ads over the past month, the result of conversations I've had with people about great inventions that 1) are not fully appreciated, and 2) should have been discovered long before they actually were.
For example, the wheeled cooler. A fantastic and simple labor-saving invention. But decades ago we had wheels, and we had coolers, so why did it take so long for somebody to come up with wheeled coolers? Here's another: In-line roller skates. Think how that would have revolutionized roller derby! And in the food catagory, kudos to the walking taco inventor. There will be no royalties, but the dude who invented that has immeasurably improved our lives.
If you're reading this, I'd love to hear your 'Real Men of Genius' nominees in the inventor catagory. In the meantime, you should listen to those ads on the internet, and get ready to laugh.
Included in these Bud Light ads are spots about unappreciated inventors/inventions, like books on tape, or jean shorts. (Some inventions are better than others.) I've been thinking about these ads over the past month, the result of conversations I've had with people about great inventions that 1) are not fully appreciated, and 2) should have been discovered long before they actually were.
For example, the wheeled cooler. A fantastic and simple labor-saving invention. But decades ago we had wheels, and we had coolers, so why did it take so long for somebody to come up with wheeled coolers? Here's another: In-line roller skates. Think how that would have revolutionized roller derby! And in the food catagory, kudos to the walking taco inventor. There will be no royalties, but the dude who invented that has immeasurably improved our lives.
If you're reading this, I'd love to hear your 'Real Men of Genius' nominees in the inventor catagory. In the meantime, you should listen to those ads on the internet, and get ready to laugh.
Tuesday, October 27, 2009
A Dirty Little Secret About Insurance
When it comes to buying goods, almost everyone would agree that you get more bang for your buck if you buy wholesale instead of retail. Basically you're buying direct; you're cutting out another layer from which a third-party would seek to profit from your purchase.
Simple concept, right? Then why do people still buy insurance from agents rather than buying direct?
Here's the deal: Insurance companies will sell you most types of coverage direct from them. But they prefer you not go about it that way. Why? Because they'd rather you buy through their retailing agent, who is more likely to bring them bunches of other business. Oh sure, it costs you more, but insurers don't want you to know that, because it's more profitable for them to keep their agents happy and bringing them more business.
That's the dirty little secret that you'll never hear. Instead the insurer will tell you that it's important to have a local agent to help you with the purchase, and with claims service, blah blah blah. It's bullshit. Insurance agents don't want to spend time giving you service, they're on to the next sale, that's how they make money. Your claims issues can and will be handled by somebody else in their office, or perhaps a nameless, faceless person at claims headquarters.
Unless the insurer uses a direct-to-consumer model (the most famous is probably Geico), no insurer is going to tell you they'll sell to you direct. But they will, and it will save you a lot of premium dollars to do so - money that might otherwise be paid to the agent for no good reason. And no worries if you have a claim, you'll just end up dealing with the same cliams people you would if you used an agent.
So caveat emptor! If you need to buy insurance for your auto or property, or maybe even medical insurance, do some research and go direct. Your local agent will survive - by selling insurance to the vast majority of people who don't know how this scam really works.
Simple concept, right? Then why do people still buy insurance from agents rather than buying direct?
Here's the deal: Insurance companies will sell you most types of coverage direct from them. But they prefer you not go about it that way. Why? Because they'd rather you buy through their retailing agent, who is more likely to bring them bunches of other business. Oh sure, it costs you more, but insurers don't want you to know that, because it's more profitable for them to keep their agents happy and bringing them more business.
That's the dirty little secret that you'll never hear. Instead the insurer will tell you that it's important to have a local agent to help you with the purchase, and with claims service, blah blah blah. It's bullshit. Insurance agents don't want to spend time giving you service, they're on to the next sale, that's how they make money. Your claims issues can and will be handled by somebody else in their office, or perhaps a nameless, faceless person at claims headquarters.
Unless the insurer uses a direct-to-consumer model (the most famous is probably Geico), no insurer is going to tell you they'll sell to you direct. But they will, and it will save you a lot of premium dollars to do so - money that might otherwise be paid to the agent for no good reason. And no worries if you have a claim, you'll just end up dealing with the same cliams people you would if you used an agent.
So caveat emptor! If you need to buy insurance for your auto or property, or maybe even medical insurance, do some research and go direct. Your local agent will survive - by selling insurance to the vast majority of people who don't know how this scam really works.
Wednesday, October 21, 2009
Reasons Why Major League Baseball Sucks Right Now
Don't get me wrong, there are some nice things about baseball, especially Little League and Minor League Baseball. But here's a list - by no means an all-inclusive list - of why Major League Baseball sucks:
It's slow, the games are way too long.
There is no salary cap or effective revenue sharing, so 1) the teams in the biggest cities and media markets make the highest revenue, which they 2) use to get the best players, which means that 3) the same teams are good/bad every year.
No instant replay. And as verified by this year's playoffs, the umpiring is not that great.
It's boring. Incredibly, the post-season is actually more boring than the regular season, because people care more about football in the Fall, and again, it's always the same teams in the post-season.
Three words: Performance enhancing drugs.
It's slow, the games are way too long.
There is no salary cap or effective revenue sharing, so 1) the teams in the biggest cities and media markets make the highest revenue, which they 2) use to get the best players, which means that 3) the same teams are good/bad every year.
No instant replay. And as verified by this year's playoffs, the umpiring is not that great.
It's boring. Incredibly, the post-season is actually more boring than the regular season, because people care more about football in the Fall, and again, it's always the same teams in the post-season.
Three words: Performance enhancing drugs.
Thursday, October 15, 2009
Simple Yet Inevitable Wealth Creation
It goes like this.....
Facts:
1. Investing costs money.
2. Most people invest their money in mutual funds, either directly or wrapped in a more costly and not understood insurance or annuity product.
3. Mutual fund managers typically charge fees of 1% or more (deducted from return) for attempting to buy and sell the right securities at the right time.
4. For every security bought, there is a seller who believes exactly the opposite as the buyer at the same price and time; in total, it's a zero sum game if you had no fund fees, but a negative sum game with fund fees.
5. Countless academic studies over the past two decades have proven that no one in the history of investing has been able to outperform the market (net of expenses) over a long period of time by correctly picking securities or timing the market. If someone could do it successfully, they would not be doing it for you.
Conclusions:
6. It's dumb to pay fund managers to do something that has proven to be impossible to do.
7. The best rate of return one can hope for is the broad market return.
8. Investors should try to capture as much of the broad market return as possible.
9. Passive investment funds are the best way to capture the market return because they are the most inexpensive and broadly diversified.
10. Investors should use passive investment management with proper asset allocation.
TA-DA!
Facts:
1. Investing costs money.
2. Most people invest their money in mutual funds, either directly or wrapped in a more costly and not understood insurance or annuity product.
3. Mutual fund managers typically charge fees of 1% or more (deducted from return) for attempting to buy and sell the right securities at the right time.
4. For every security bought, there is a seller who believes exactly the opposite as the buyer at the same price and time; in total, it's a zero sum game if you had no fund fees, but a negative sum game with fund fees.
5. Countless academic studies over the past two decades have proven that no one in the history of investing has been able to outperform the market (net of expenses) over a long period of time by correctly picking securities or timing the market. If someone could do it successfully, they would not be doing it for you.
Conclusions:
6. It's dumb to pay fund managers to do something that has proven to be impossible to do.
7. The best rate of return one can hope for is the broad market return.
8. Investors should try to capture as much of the broad market return as possible.
9. Passive investment funds are the best way to capture the market return because they are the most inexpensive and broadly diversified.
10. Investors should use passive investment management with proper asset allocation.
TA-DA!
Sunday, October 11, 2009
Tell Me What You've Actually Done
You live long enough, you meet all kinds of people. These people all have different personalities, some of which you get along with better than others.
I get along with most people, but one of most annoying has to be the person who tries to build their reputation on what they are going to do. Not on what they've done, mind you, but what they presumably will do in the future.
You know the kind. You see them around offices all of the time, especially in the marketing area. Dilbert has been exposing these people for years - and it works so well because they are jokes! (To be fair, I see them in the investing area a lot as well, mostly because they'd be ashamed of their past performance.)
Ideas mean nothing without execution. Words mean nothing without execution. If you want to take credit for ideas or words, you should consider being a full-time blogger, or maybe even a politician! Otherwise, go sit in the corner. I only want to be around people who actually get things done.
I get along with most people, but one of most annoying has to be the person who tries to build their reputation on what they are going to do. Not on what they've done, mind you, but what they presumably will do in the future.
You know the kind. You see them around offices all of the time, especially in the marketing area. Dilbert has been exposing these people for years - and it works so well because they are jokes! (To be fair, I see them in the investing area a lot as well, mostly because they'd be ashamed of their past performance.)
Ideas mean nothing without execution. Words mean nothing without execution. If you want to take credit for ideas or words, you should consider being a full-time blogger, or maybe even a politician! Otherwise, go sit in the corner. I only want to be around people who actually get things done.
Sunday, October 4, 2009
Leveraging Twitter
I've been a Twitter-user (http://twitter.com/streffbuddy) for a couple of months now. I say this not to advertise, but to answer all those who simply ask me, and others who use Twitter, "Why?"
Although Twitter markets itself as something that lets others know what you are doing, I've discovered that there are better and more practical applications. Twitter allows people to pass along very brief thoughts and opinions that occur to them at random moments. These might be original, or 're-tweets' that come from other sources.
In a very short time, and while only following a few others on Twitter, I've read a lot of great information and material, much of it very funny, that I never otherwise would have. Most of it is interesting stuff to me, which partly goes to the fact that I'm only going to follow the Tweets of people whom I choose.
In the future I can surely envision using Twitter for business purposes, to remind contacts of what I'm doing or about something newsy in the investment world. In a similar vein, I've used it in the past to let people know that I've made a new post to this blog.
Of course, the catch is to get those people to follow my Tweets. Now that might take some advertising.
Although Twitter markets itself as something that lets others know what you are doing, I've discovered that there are better and more practical applications. Twitter allows people to pass along very brief thoughts and opinions that occur to them at random moments. These might be original, or 're-tweets' that come from other sources.
In a very short time, and while only following a few others on Twitter, I've read a lot of great information and material, much of it very funny, that I never otherwise would have. Most of it is interesting stuff to me, which partly goes to the fact that I'm only going to follow the Tweets of people whom I choose.
In the future I can surely envision using Twitter for business purposes, to remind contacts of what I'm doing or about something newsy in the investment world. In a similar vein, I've used it in the past to let people know that I've made a new post to this blog.
Of course, the catch is to get those people to follow my Tweets. Now that might take some advertising.
Monday, September 28, 2009
Don't Blame The Lunch Ladies
This weekend The Des Moines Register (motto: Pay No Attention to the Tax Behind the Curtain) called out some Iowa school districts for taking a hard line on collecting overdue lunch money. The schools have informed anyone who reaches a certain point on credit that they'll only get a PB sandwich until they get the account up to date.
Even though some public schools have hundreds/thousands of dollars owed them in lunch account receivables, the Register thinks these schools should just keep feeding the kids the hot lunch meal and worry about collecting the money later. EARTH TO REGISTER: Public schools = taxpayer funded - why should taxpayers subsidize, and potentially be on the hook to eat (no pun intended) these overdue bills!?
If we were talking about overdue corporate taxes or income taxes, The Register would be having a fit about them not being timely paid or collected. But with public schools, they either don't make the taxpayer connection, or they think it's OK to spend or forgive any amount without accountability.
As so often is the case, the tax and spenders have it backwards. Collecting the money later is the problem, not the solution. So, you go, lunch ladies! Thanks for your support of Iowa taxpayers!
Even though some public schools have hundreds/thousands of dollars owed them in lunch account receivables, the Register thinks these schools should just keep feeding the kids the hot lunch meal and worry about collecting the money later. EARTH TO REGISTER: Public schools = taxpayer funded - why should taxpayers subsidize, and potentially be on the hook to eat (no pun intended) these overdue bills!?
If we were talking about overdue corporate taxes or income taxes, The Register would be having a fit about them not being timely paid or collected. But with public schools, they either don't make the taxpayer connection, or they think it's OK to spend or forgive any amount without accountability.
As so often is the case, the tax and spenders have it backwards. Collecting the money later is the problem, not the solution. So, you go, lunch ladies! Thanks for your support of Iowa taxpayers!
Thursday, September 24, 2009
Taxes And Your Public Library
Generally speaking, we pay too much tax. Income tax, property tax, sales tax, you name it, we pay too much of it. It doesn't take a rocket scientist to figure this out, just pick up the paper any day and you will read about some sort of local, state, or federal goverment fraud and abuse of taxpayer money. Taxpayer money wouldn't be wasted if there wasn't too much of it.
Having said that - and having made it clear that I am nothing if not a warrior for the taxpayer - there are some services for which I don't mind being taxed. Police and fire protection, utilities, that sort of thing. Basically, if we need it to establish justice, ensure domestic tranquility, provide for the common defense, or promote the general welfare, that's cool. Otherwise, we should not be taxed for it.
Which brings me to the topic of public libraries. Now, I don't think public libraries are evil. My family has benefitted in countless ways from the availabily of a nice public library. But let's get real: They are in many ways a multi-million (billion?) dollar taxpayer boondoggle.
Look, we don't need a nice public library in every stinking town. I travel Iowa a lot, and I'm telling you, damn near every little town has at least one bar, one convenience store, and one library. That may seem nice, but the thing of it is, neither the bar nor convenience store are taking money out of people's pockets whether they use them or not. And no - not every suburb in every city needs one either. Ever heard of sharing services?
Also, we don't need public libraries to be everything to everybody. These days they are all apparently required to have computers with internet access, DVD movies, and perhaps even a little coffee shop. What ever happened to just being a quiet place to read or to loan out books? Oh, and they don't need to be housed in multi-million dollar buildings, either.
So where's the outrage for the over-abundance and over-indulgences of these taxpayer funded libraries? I suppose it's a little bit like kicking a cat - while many people may want to do that, it isn't going to be a real popular target with most folks. And let's face it, there are worse expenditures of tax money.
But let's at least be honest - we could find less expensive ways to promote the general welfare.
Having said that - and having made it clear that I am nothing if not a warrior for the taxpayer - there are some services for which I don't mind being taxed. Police and fire protection, utilities, that sort of thing. Basically, if we need it to establish justice, ensure domestic tranquility, provide for the common defense, or promote the general welfare, that's cool. Otherwise, we should not be taxed for it.
Which brings me to the topic of public libraries. Now, I don't think public libraries are evil. My family has benefitted in countless ways from the availabily of a nice public library. But let's get real: They are in many ways a multi-million (billion?) dollar taxpayer boondoggle.
Look, we don't need a nice public library in every stinking town. I travel Iowa a lot, and I'm telling you, damn near every little town has at least one bar, one convenience store, and one library. That may seem nice, but the thing of it is, neither the bar nor convenience store are taking money out of people's pockets whether they use them or not. And no - not every suburb in every city needs one either. Ever heard of sharing services?
Also, we don't need public libraries to be everything to everybody. These days they are all apparently required to have computers with internet access, DVD movies, and perhaps even a little coffee shop. What ever happened to just being a quiet place to read or to loan out books? Oh, and they don't need to be housed in multi-million dollar buildings, either.
So where's the outrage for the over-abundance and over-indulgences of these taxpayer funded libraries? I suppose it's a little bit like kicking a cat - while many people may want to do that, it isn't going to be a real popular target with most folks. And let's face it, there are worse expenditures of tax money.
But let's at least be honest - we could find less expensive ways to promote the general welfare.
Monday, September 21, 2009
So I Got That Goin' For Me, Which Is Nice
My current work/life attitude is best summarized in the immortal words of Carl Spackler from the greatest movie of all-time, Caddyshack:
So I jump ship in Hong Kong and I make my way over to Tibet, and I get on as a looper at a course over in the Himalayas. A looper, you know, a caddy, a looper, a jock. So, I tell them I'm a pro jock, and who do you think they give me? The Dalai Lama, himself. Twelfth son of the Lama. The flowing robes, the grace, bald....striking. So, I'm on the first tee with him. I give him the driver. He hauls off and whacks one – big hitter, the Lama, long – into a ten-thousand foot crevasse, right at the base of this glacier. Do you know what the Lama says? Gunga galunga....gunga, gunga-lagunga. So we finish the eighteenth, and he's gonna stiff me! And I say, "Hey, Lama, hey, how about a little something, you know, for the effort, you know." And he says, "Oh, uh, there won't be any money, but when you die, on your deathbed, you will receive total consciousness." So I got that goin' for me, which is nice.
Thursday, September 17, 2009
A Benevolent or Malevolent Society
Years ago in a college interview I was seriously asked "If you could be an animal, what animal would you be?" (Yeah, it was a psych major who asked it. By the way, there is a correct and an incorrect answer to this question if you are asked. Say you would be a horse - both powerful and graceful, and possibly either tame or wild. Do not say a jellyfish - no spine.)
Over the years I've come to ask my own more conversation-making philosophical question: Do you believe we live in a benevolent or a malevolent society? I've always said America is basically a benevolent society. The vast majority of us will go out of our way to avoid trouble and confrontation, not seek it out.
Unfortunately, I'm about ready to change my mind in at least one or two areas. For example, it's hard to look at the behavior of people in today's political and media environments and say they are benevolent. Many of those folks are just publicity hounds and therefore almost always malevolent by design. Their confrontation and rhetoric sells, and can make them rich and famous.
But they are simply warts on our otherwise generally docile and civilized behavior. We're not malevolent, we're benevolent. I said benevolent, dammit!
Over the years I've come to ask my own more conversation-making philosophical question: Do you believe we live in a benevolent or a malevolent society? I've always said America is basically a benevolent society. The vast majority of us will go out of our way to avoid trouble and confrontation, not seek it out.
Unfortunately, I'm about ready to change my mind in at least one or two areas. For example, it's hard to look at the behavior of people in today's political and media environments and say they are benevolent. Many of those folks are just publicity hounds and therefore almost always malevolent by design. Their confrontation and rhetoric sells, and can make them rich and famous.
But they are simply warts on our otherwise generally docile and civilized behavior. We're not malevolent, we're benevolent. I said benevolent, dammit!
Friday, September 11, 2009
Taxes Are Evil
This week there were a couple of Des Moines suburban referendums on new tax levies for school buildings and/or or maintenance. Although not in our school district, I was pleased to see these were voted down. It never made any sense to me that people would vote to tax themselves to begin with, especially when others are taxing them just fine, thank you very much.
I believe in having nice school building and grounds, but the state of Iowa has already lost its collective mind in using sales taxes to raise money for schools. Here in Polk County it started years ago with the passage (on the third try) of a 1 penny sales tax with a so-called 10 year sunset provision. Most counties eventually did this, but then just a few years later, the Des Moines school district wanted to extend that 10-year period, because school districts were burning through the money too quickly. Now all of that is moot, because the state went ahead and just made the extra penny part of the permanent statewide sales tax.
Just like any tax, there is no end to how people will ratchet up the spending to meet the revenue the tax generates. It's completely backward, and as time goes by the addiction for more tax money only gets worse. It's why taxes are basically evil. The spending monster created by taxes doesn't need to be fed, it needs to be starved. I hope these recent votes mean that more people in the city, school district, county, state, and country where I live are starting to figure that out.
I believe in having nice school building and grounds, but the state of Iowa has already lost its collective mind in using sales taxes to raise money for schools. Here in Polk County it started years ago with the passage (on the third try) of a 1 penny sales tax with a so-called 10 year sunset provision. Most counties eventually did this, but then just a few years later, the Des Moines school district wanted to extend that 10-year period, because school districts were burning through the money too quickly. Now all of that is moot, because the state went ahead and just made the extra penny part of the permanent statewide sales tax.
Just like any tax, there is no end to how people will ratchet up the spending to meet the revenue the tax generates. It's completely backward, and as time goes by the addiction for more tax money only gets worse. It's why taxes are basically evil. The spending monster created by taxes doesn't need to be fed, it needs to be starved. I hope these recent votes mean that more people in the city, school district, county, state, and country where I live are starting to figure that out.
Monday, September 7, 2009
Blogging Isn't Easy
Random thoughts to catch up on the past week:
- Note to self: If you're going to have a blog, you have to update it at least once or twice a week.
- It's very hard to be an above-average golfer. If you only play once a week, it's almost impossible.
- Late summer / early fall is the best time of the year. Especially in a non-election year.
- Regarding Obama's planned speech to school children.....If parents don't want their kids watch it, OK, but let's have some perspective here. How many of those same parents take no interest (or have no clue) in what else their kids watch on TV or their computers? Answer: Most of them. That is the definition of hypocrisy.
- I seem to have a lot less time to do things during football season.
- How do people who call themselves 'life coaches' or some other cheesey name actually earn a living? It seems all smoke and mirrors to me to begin with, and in this economy, how can anyone afford to pay someone else to be motivated?
- I don't remember the last time I wasn't at least a little bit tired.
Tuesday, September 1, 2009
Investment Rules And Where To Invest
In an interview earlier this summer, Berkshire Hathaway CEO Warren Buffett was asked for his top three pieces of advice for Americans who want to grow their savings and keep their money safe. His answers:
1. If it seems too good to be true, it probably is.
2. Always look at how much the other guy is making when he is trying to sell you something.
3. Stay away from leverage. Nobody ever goes broke that doesn't owe money.
People should be especially aware of #2 (literally and figuratively). That's why you don't want to work with a commission-based investment advisor - they usually care more about what they make than they do about what's best for the investor.
One more nugget from this Buffett interview had to do with his views on education. He said, "Generally speaking, investing in yourself is the best thing you can do. Anything that improves your own talents. Nobody can take it away from you. They can run up huge deficits, the dollar can become worth far less, your can have all kinds of things happen. But if you've got talent yourself, and you maximize your talent, you've got a terrific asset."
1. If it seems too good to be true, it probably is.
2. Always look at how much the other guy is making when he is trying to sell you something.
3. Stay away from leverage. Nobody ever goes broke that doesn't owe money.
People should be especially aware of #2 (literally and figuratively). That's why you don't want to work with a commission-based investment advisor - they usually care more about what they make than they do about what's best for the investor.
One more nugget from this Buffett interview had to do with his views on education. He said, "Generally speaking, investing in yourself is the best thing you can do. Anything that improves your own talents. Nobody can take it away from you. They can run up huge deficits, the dollar can become worth far less, your can have all kinds of things happen. But if you've got talent yourself, and you maximize your talent, you've got a terrific asset."
Friday, August 28, 2009
Caveat Emptor Applies to Financial Advice
Assuming the quality of the item is the same (or even better), is there anyone out there who wouldn't want to save thousands of dollars on an investment in a big ticket item like a car or boat or house? I didn't think so.
Then why don't some of those same people care about saving thousands of dollars on maybe the biggest ticket item in their lives, their assets/investment/savings?
Folks, it's just this simple: If you work with a commission-based financial advisor, you will likely pay thousands more for financial 'advice' than you would if the advisor is fee-based, and the commission-based advisor will be of no better quality.
Make no mistake, in a commission-based environment, the investor pays the commissions, often as high as 5%. It may be an upfront charge, as in the case of a commission-based brokerage account, or it may be buried in fees and happen over the course of a few years, as in the case of many different insurance products the 'advisor' purchases for you within the account. (That's why such products, notably annuities, have big annual fees and multi-year surrender charges - you can't leave until you reimburse the financial institution for their costs.) Regardless, the investor pays more in this financial model.
On the contrary, if you work with an independent fee-based registered investment advisor, your investing costs will be far less, and the quality of the advice is likely to be far superior. The fee-based advisor isn't required to sell you something to keep making money. Your success is their success. And if you aren't happy with the results you can just leave and not have to worry about surrender charges or other fees. It also helps if the person is a Certified Financial Planner - they don't cost more, and at least you know they have the professional credentials to do what they do.
Save yourself thousands. Don't just accept the local only-guy-in-town or the friend of a friend. Find, interview, and use an independent registered investment advisor.
Then why don't some of those same people care about saving thousands of dollars on maybe the biggest ticket item in their lives, their assets/investment/savings?
Folks, it's just this simple: If you work with a commission-based financial advisor, you will likely pay thousands more for financial 'advice' than you would if the advisor is fee-based, and the commission-based advisor will be of no better quality.
Make no mistake, in a commission-based environment, the investor pays the commissions, often as high as 5%. It may be an upfront charge, as in the case of a commission-based brokerage account, or it may be buried in fees and happen over the course of a few years, as in the case of many different insurance products the 'advisor' purchases for you within the account. (That's why such products, notably annuities, have big annual fees and multi-year surrender charges - you can't leave until you reimburse the financial institution for their costs.) Regardless, the investor pays more in this financial model.
On the contrary, if you work with an independent fee-based registered investment advisor, your investing costs will be far less, and the quality of the advice is likely to be far superior. The fee-based advisor isn't required to sell you something to keep making money. Your success is their success. And if you aren't happy with the results you can just leave and not have to worry about surrender charges or other fees. It also helps if the person is a Certified Financial Planner - they don't cost more, and at least you know they have the professional credentials to do what they do.
Save yourself thousands. Don't just accept the local only-guy-in-town or the friend of a friend. Find, interview, and use an independent registered investment advisor.
Tuesday, August 25, 2009
Stupidity Is Easy
As I do on a lot of weeknights, late last night I was flipping the TV back and forth between The Tonight Show with Conan O'Brien and The Colbert Report (with Stephen Colbert). Two funny guys with great shows - but not my point.
Conan's first guest was Bill Maher, the politically opinionated comedian. They talked about a recent controversy involving comments Maher made about Americans being stupid, and a piece he eventually wrote to defend that opinion. It's a must read at
http://www.huffingtonpost.com/bill-maher/new-rule-smart-president_b_253996.html
Of course, it's inflammatory and an over-generalization to say Americans are stupid. But statistically speaking, it has the element of truth. As I've said before, we are in many ways a nation of sheep, allowing other people to tell us what to believe in or what is good for us without thinking about it for ourselves. It sort of comes naturally to us over time, as each generation learns to do what is easy and avoid what is hard. And it's a lot easier to know nothing than it is to know something.
America survives and will continue to thrive because unlike so many other countries, individuals have the freedom and tools to reach their potential, however limited that may be. As Carl the groundskeeper says in the movie Caddyshack, "So I got that going for me. Which is nice."
Conan's first guest was Bill Maher, the politically opinionated comedian. They talked about a recent controversy involving comments Maher made about Americans being stupid, and a piece he eventually wrote to defend that opinion. It's a must read at
http://www.huffingtonpost.com/bill-maher/new-rule-smart-president_b_253996.html
Of course, it's inflammatory and an over-generalization to say Americans are stupid. But statistically speaking, it has the element of truth. As I've said before, we are in many ways a nation of sheep, allowing other people to tell us what to believe in or what is good for us without thinking about it for ourselves. It sort of comes naturally to us over time, as each generation learns to do what is easy and avoid what is hard. And it's a lot easier to know nothing than it is to know something.
America survives and will continue to thrive because unlike so many other countries, individuals have the freedom and tools to reach their potential, however limited that may be. As Carl the groundskeeper says in the movie Caddyshack, "So I got that going for me. Which is nice."
Thursday, August 20, 2009
Medicine And Marijuana
The Iowa Pharmacy Board is presently holding open hearings around the state to determine whether or not to make a legislative recommendation to legalize medicinal marijuana, as 13 other states have done.
Only 13 other states have done this? What is everybody waiting for? We definitely should make pot legal as a means to reduce physical pain and suffering, as we often do with other controlled substances. The question isn't whether we should legalize pot for medical needs, the question is whether we should make it legal, period.
If we wouldn't be such a repressed society, we'd decriminalize pot altogether. It's no more mind altering or addicting than alcohol, or for that matter certain prescription drugs. Let's legalize it and regulate it, just like we do with with so many other mind-altering substances, and stop incarcerating users who are not a threat to society. As for those disingenuous people who argue that we'll become a nation of stoners if pot is legalized, please - I don't see those same folks arguing that we've become a nation of alcoholics.
If Iowa is progressive enough to allow gay marriage, we surely ought to be progressive enough to allow medicinal marijuana, and we probably ought to be progressive enough to legalize it, period.
Only 13 other states have done this? What is everybody waiting for? We definitely should make pot legal as a means to reduce physical pain and suffering, as we often do with other controlled substances. The question isn't whether we should legalize pot for medical needs, the question is whether we should make it legal, period.
If we wouldn't be such a repressed society, we'd decriminalize pot altogether. It's no more mind altering or addicting than alcohol, or for that matter certain prescription drugs. Let's legalize it and regulate it, just like we do with with so many other mind-altering substances, and stop incarcerating users who are not a threat to society. As for those disingenuous people who argue that we'll become a nation of stoners if pot is legalized, please - I don't see those same folks arguing that we've become a nation of alcoholics.
If Iowa is progressive enough to allow gay marriage, we surely ought to be progressive enough to allow medicinal marijuana, and we probably ought to be progressive enough to legalize it, period.
Tuesday, August 18, 2009
A Great Investing Webinar
There is an awful lot of information (and a lot of awful information) out there now about the investment marketplace. Lots of opinions from lots of media outlets, and much of it not substantiated by facts or credentials.
However, for a straightforward look at the effects of recession and government policy on stock prices, how the current market stacks up to previous downturns, and the capital markets in general, go to the webinar found at this link:
http://www.dfaus.com/share/whatshou/
This particular version was posted by a fund company I often work with, and it’s approximately an hour long but separated into six shorter parts. It’s interesting, it’s calming, and perhaps most beneficially, it’s likely to return people’s focus to time rather than timing.
However, for a straightforward look at the effects of recession and government policy on stock prices, how the current market stacks up to previous downturns, and the capital markets in general, go to the webinar found at this link:
http://www.dfaus.com/share/whatshou/
This particular version was posted by a fund company I often work with, and it’s approximately an hour long but separated into six shorter parts. It’s interesting, it’s calming, and perhaps most beneficially, it’s likely to return people’s focus to time rather than timing.
Sunday, August 16, 2009
A Tax On Fat People
In the first 15 minutes of our visit to this year's Iowa State Fair, my wife made an all-too-true observation: Out of the thousands of people there, 9 out of 10 were overweight, and plenty of them would fit the description of obese. It's a very bad thing.
Forget about the obvious physical issues for these folks. Their lack of self/health discipline also burdens others via their lower production and higher health care costs. They are not going to reach their potential as individuals, and we are not going to reach our potential as a country, by being fat. Put into that perspective, it sort of ticks me off.
So how do we get very overwieght people to care more? How do we motivate them to lose weight? I've always advocated a tax on higher fat foods and ingredients. We all know money motivates people. We tax tobacco (as we should), surely we can do it for food.
I suppose that may be treating the symptom and not the disease. In the end, the answer lies in why fat people don't care about how they feel or look. When someone figures that out, please call me. I'll be somewhere exercising.
Forget about the obvious physical issues for these folks. Their lack of self/health discipline also burdens others via their lower production and higher health care costs. They are not going to reach their potential as individuals, and we are not going to reach our potential as a country, by being fat. Put into that perspective, it sort of ticks me off.
So how do we get very overwieght people to care more? How do we motivate them to lose weight? I've always advocated a tax on higher fat foods and ingredients. We all know money motivates people. We tax tobacco (as we should), surely we can do it for food.
I suppose that may be treating the symptom and not the disease. In the end, the answer lies in why fat people don't care about how they feel or look. When someone figures that out, please call me. I'll be somewhere exercising.
Wednesday, August 12, 2009
Health Care Reform and Sheep
To put it nicely, people are showing a lot of passion at these congressional 'town hall meetings' on health care reform. I think it's funny for two reasons:
First, when politicians schedule these things, they think they're going to draw a few mostly friendly folks to chat, just so they can say they met with their constituents, maybe even pickup a campaign contribution or two. You're going to see a lot fewer town hall meetings in the future.
Second, and this is more sad than funny, I'll bet if you asked any of these angry folks against health care reform, you'll find that almost none of them understand how their existing health plan works. Outside of the premiums they pay, they have no clue what a deductible is, or how coinsurance works, or ultimately how much they'll have to pay for a hospital stay. So how can they possibly know if change will be more expensive?
That's right, they don't know. It's just that someone else told them it was that way, either in person or on TV or the internet, so they believe it. (See my first post, lather and rinse.) We are a country of sheep, and there are currently more wolves than any shepherd can handle.
First, when politicians schedule these things, they think they're going to draw a few mostly friendly folks to chat, just so they can say they met with their constituents, maybe even pickup a campaign contribution or two. You're going to see a lot fewer town hall meetings in the future.
Second, and this is more sad than funny, I'll bet if you asked any of these angry folks against health care reform, you'll find that almost none of them understand how their existing health plan works. Outside of the premiums they pay, they have no clue what a deductible is, or how coinsurance works, or ultimately how much they'll have to pay for a hospital stay. So how can they possibly know if change will be more expensive?
That's right, they don't know. It's just that someone else told them it was that way, either in person or on TV or the internet, so they believe it. (See my first post, lather and rinse.) We are a country of sheep, and there are currently more wolves than any shepherd can handle.
Saturday, August 8, 2009
For Atheists, There Is A God (Of Common Sense)
This week's big Des Moines area scandal involved ads on the sides of metro buses that questioned the existence of God, sponsored by an atheist group. Apparently some people (one? ten? fifty?) complained and succeeded in having the ads pulled. Even our intellectually-challenged, political-pandering governor weighed in to say he was disturbed by the ads.
(An aside here. This is the same governor standing in the way of allowing Iowans a referendum vote on whether to overturn the legalization of gay marriage. Now, I don't have a problem with gay marriage, but I have a huge problem with a governor who determines his morality based on whether it wins him support within his party. Like so many politicians, the guy doesn't stand for anything, he only stands for what wins him votes.)
In the end, the god of common sense rose up and defeated the small-minded fools who think their religious beliefs are the only ones protected by free speech. The ads were allowed again, the religious bigots crawled back under their rocks, and the sun came up in the east. Oh, and people were again reminded that while this country was founded on Christian principles, 200 years of evolution later we have a religiously diverse country where not everyone believes in the same thing.
(An aside here. This is the same governor standing in the way of allowing Iowans a referendum vote on whether to overturn the legalization of gay marriage. Now, I don't have a problem with gay marriage, but I have a huge problem with a governor who determines his morality based on whether it wins him support within his party. Like so many politicians, the guy doesn't stand for anything, he only stands for what wins him votes.)
In the end, the god of common sense rose up and defeated the small-minded fools who think their religious beliefs are the only ones protected by free speech. The ads were allowed again, the religious bigots crawled back under their rocks, and the sun came up in the east. Oh, and people were again reminded that while this country was founded on Christian principles, 200 years of evolution later we have a religiously diverse country where not everyone believes in the same thing.
Wednesday, August 5, 2009
Too Much To Do Central Iowa
I get a kick out of people who say it's so boring in Des Moines or Iowa or the Midwest. Usually the whiners are the twenty-somethings who don't have enough nightclubs, or the outdoor adventurers who don't have mountains or beaches. Those folks should move. The fact is, at least for everyone else in central Iowa in the summer, we have more entertainment options than we can handle.
We have festivals every week encompassing things like music, food, the arts, and even hot-air balloons. We have recurring sporting events like triple-A baseball, auto/horse racing, and arena football. We have plenty of golf courses and bike trails and swimming pools and parks. And of course week have the 10-day long Iowa State Fair, which is kind of like everything I just mentioned all rolled into one.
So please, spare me the 'there's nothing to do here' line. If you feel that way, just stay at home with your DVDs and video games - smaller crowds at this stuff would be nice!
We have festivals every week encompassing things like music, food, the arts, and even hot-air balloons. We have recurring sporting events like triple-A baseball, auto/horse racing, and arena football. We have plenty of golf courses and bike trails and swimming pools and parks. And of course week have the 10-day long Iowa State Fair, which is kind of like everything I just mentioned all rolled into one.
So please, spare me the 'there's nothing to do here' line. If you feel that way, just stay at home with your DVDs and video games - smaller crowds at this stuff would be nice!
Monday, August 3, 2009
In Warren Buffett I Trust
I've been a long-time admirer of Warren Buffett, chairman of Berkshire Hathaway and one of the world's wealthiest people. He happened to be in Des Moines last week for the grand re-opening of a furniture store owned by one of Berky's companies, which I attended.
(I attended not because I cared about the furniture, or because I thought he might say something profound, or because I'd never seen him in person. Mostly I attended because I thought there might be a chance to have him autograph my copy of his authorized biography "The Snowball." Didn't happen.)
As I watched the proceedings, I was thinking about how most of the people there simply look at him as this super-rich fellow. They have little knowledge or understanding about his charitable work, his sense of humor, or his often Democratic-leaning opinions about investing and government policy.
Rather than try to summarize that here, everyone should read his annual letters to Berkshire Hathaway shareholders. They can be found at http://www.berkshirehathaway.com/letters/letters.html. These letters are not full of technical financial jargon. They are more like witty short stories on investing, capitalism, and America - and how people sometimes manage to gum them up.
Given his credentials, I'd think people would listen to more of what Warren Buffett has to say. In the end I suppose it's to my advantage. Let everyone else listen to talk radio and its blustery hosts with unsubstantiated opinions. In the meantime, I'll be following the opinions and advice of someone who is perhaps America's greatest success story.
(I attended not because I cared about the furniture, or because I thought he might say something profound, or because I'd never seen him in person. Mostly I attended because I thought there might be a chance to have him autograph my copy of his authorized biography "The Snowball." Didn't happen.)
As I watched the proceedings, I was thinking about how most of the people there simply look at him as this super-rich fellow. They have little knowledge or understanding about his charitable work, his sense of humor, or his often Democratic-leaning opinions about investing and government policy.
Rather than try to summarize that here, everyone should read his annual letters to Berkshire Hathaway shareholders. They can be found at http://www.berkshirehathaway.com/letters/letters.html. These letters are not full of technical financial jargon. They are more like witty short stories on investing, capitalism, and America - and how people sometimes manage to gum them up.
Given his credentials, I'd think people would listen to more of what Warren Buffett has to say. In the end I suppose it's to my advantage. Let everyone else listen to talk radio and its blustery hosts with unsubstantiated opinions. In the meantime, I'll be following the opinions and advice of someone who is perhaps America's greatest success story.
Wednesday, July 29, 2009
Investors Need Independent Advisors
In today's Wall Street Journal there's a very good article headlined "Wary Investors Are Seeking Out Objective Voices" by Anne Tergesen and Jane Kim. It essentially summarizes the merits of using independent financial advisors (like me) instead of people affiliated with financial institutions. The full article can be found at
http://online.wsj.com/article/SB10001424052970204423804574288130378749314.html#articleTabs%3Darticle
As noted in this article, Independent Registered Investment Advisors (RIA - again, like me) are held to a higher fiduciary standard to work in a client's best interests. They must fully and transparently disclose their costs and how their firm operates. Most provide a full range of financial planning advice for a percentage fee of assets under management and/or an hourly charge.
In contrast, brokers (affiliated people may call themselves financial 'advisors' or 'consultants' but in truth they are brokers) are in the business of selling their firm's preferred brokerage products to make commissions. They may not be working on a client's behalf but rather their own, and believe me, I've seen that happen dozens of times over the years. Of course, brokers do a great job of burying these commissions from sight through a variety of hidden fees.
I've said it many times: It will take an independent fee-based advisor years to make the same compensation that a broker makes with one product sale commission. Who do you think is more likely to want to establish a thoughtful, long-term client relationship?
The article also recommends people look for advisors who have the Certified Financial Planner credential (again - like me!) The testing, ethics, and experience required to obtain that designation are good indications that you'll be working with someone you can trust.
This article is a must-read and must-report-on for someone in my line of work. And to find out more about changing the way people invest, contact me at VW Advisors, West Des Moines, IA Phone 515-223-6068!
http://online.wsj.com/article/SB10001424052970204423804574288130378749314.html#articleTabs%3Darticle
As noted in this article, Independent Registered Investment Advisors (RIA - again, like me) are held to a higher fiduciary standard to work in a client's best interests. They must fully and transparently disclose their costs and how their firm operates. Most provide a full range of financial planning advice for a percentage fee of assets under management and/or an hourly charge.
In contrast, brokers (affiliated people may call themselves financial 'advisors' or 'consultants' but in truth they are brokers) are in the business of selling their firm's preferred brokerage products to make commissions. They may not be working on a client's behalf but rather their own, and believe me, I've seen that happen dozens of times over the years. Of course, brokers do a great job of burying these commissions from sight through a variety of hidden fees.
I've said it many times: It will take an independent fee-based advisor years to make the same compensation that a broker makes with one product sale commission. Who do you think is more likely to want to establish a thoughtful, long-term client relationship?
The article also recommends people look for advisors who have the Certified Financial Planner credential (again - like me!) The testing, ethics, and experience required to obtain that designation are good indications that you'll be working with someone you can trust.
This article is a must-read and must-report-on for someone in my line of work. And to find out more about changing the way people invest, contact me at VW Advisors, West Des Moines, IA Phone 515-223-6068!
Monday, July 27, 2009
Vehicle vs. Pedestrian
Des Moines has recently seen a rash of transit bus-pedestrian accidents. In most of these the bus driver has (allegedly) been at fault, and both the driver and transit authority have been the objects of scorn and condemnation.
Without making judgements as to blame, it would seem prudent for people to simply heed the warning I've given my children since they were young: In the battle between the vehicle and the pedestrian, the vehicle always wins. So always assume the vehicle has the right-of-way.
Establishing fault in a vehicle-pedestrian accident might be an important future legal item, but it isn't a major concern to the victim lying in a hospital bed - or coffin.
Without making judgements as to blame, it would seem prudent for people to simply heed the warning I've given my children since they were young: In the battle between the vehicle and the pedestrian, the vehicle always wins. So always assume the vehicle has the right-of-way.
Establishing fault in a vehicle-pedestrian accident might be an important future legal item, but it isn't a major concern to the victim lying in a hospital bed - or coffin.
Sunday, July 26, 2009
The Idea
The world would be a better place if more people made their own decisions. Don't you agree? Whoops!
Too many people simply believe what others tell them, with the unfortunate consequence of allowing those who control the message to also control them.
Follow the idea, not person who communicates it. Think about it, then make up your own mind.
You can start with this blog.
Too many people simply believe what others tell them, with the unfortunate consequence of allowing those who control the message to also control them.
Follow the idea, not person who communicates it. Think about it, then make up your own mind.
You can start with this blog.
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