Clipmarks | Kore7's Finance collection

Where to Put Your Money

Sun, 30 Sep 2007 18:10:27 GMT

clipped by: Kore7
clipper's remarks: From an article on the author of Unconventional Success: A Fundamental Approach to Personal Investment, a summary of professor and star investor David Swensen's advice for how individuals should be investing in markets driven by full-time professionals like him. While perhaps unconventional, Swensen would certainly seem to have the authority to advise on such matters.

Yale University recently announced a 23 percent return on its investments, swelling its endowment to a whopping $18 billion. The man behind that investment success is David Swensen, one of the most gifted investors in the world. He's made an average 16 percent annual return over 21 years — better than any portfolio manager at any other university.

Clip Source: www.npr.org

Beware of the Mutual Fund Myth:

for-profit mutual funds have an inherent conflict of interest. They make money by charging fees that suck profits away from investors in the funds. In fact, over time -- when you factor in the fees, taxes and other costs -- he says your odds of beating the market in an actively managed fund are less than one in 100.

Invest in Nonprofit Index Funds:

mutual funds that are organized on a not-for-profit basis don't have the same conflict of interest as for-profit funds, and they charge lower fees.

Pick the Right Investment Mix and Keep Your Money There. Don't Move It Around!

Don't, for example, try to decide when to buy U.S. stocks and sell a lot of bonds, in an effort to predict which way those markets are heading. If you do that, he says, you're going to lose over time, because you'll be competing directly with professionals like him.

Rebalance Your Portfolio:

Adjust Your Portfolio as You Near Retirement:

Where to Put Your Money

Tags: investment, market, mutual funds, advice, fees, personal, finance, portfolio, risk, money

A Brief History of Economic Time

Sat, 16 Jun 2007 15:53:30 GMT

clipped by: Kore7
clipper's remarks:

The underlying expectation -- that the present is supposed to be better than the past -- is a new phenomenon in history. No 18th-century politician would have asked "Are you better off than you were four years ago?" because it never would have occurred to anyone that they ought to be better off than they were four years ago.

(Also see Living in the Age of Abundance.)

Clip Source: online.wsj.com

A Brief History of Economic Time

Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Well, not quite nothing. There were wars, political intrigue, the invention of agriculture -- but none of that stuff had much effect on the quality of people's lives. Almost everyone lived on the modern equivalent of $400 to $600 a year, just above the subsistence level. True, there were always tiny aristocracies who lived far better, but numerically they were quite insignificant.

Then -- just a couple of hundred years ago, maybe 10 generations -- people started getting richer. And richer and richer still. Per capita income, at least in the West, began to grow at the unprecedented rate of about three quarters of a percent per year. A couple of decades later, the same thing was happening around the world.

Tags: prosperity, progress, america, economics, income, money, poverty, capitalism, history

Living in the Age of Abundance

Tue, 12 Jun 2007 23:17:00 GMT

clipped by: Kore7
clipper's remarks: Puts the marvel of modern American life in perspective. Review by George F. Will of Brink Lindsey's new book, The Age of Abundance: How Prosperity Transformed America’s Politics and Culture.

Ever since mass affluence, a phenomenon without precedent in the human story, exploded upon postwar America, social and political theorists have wondered, and worried, about the moral and even the spiritual consequences of material conditions. Putting scarcity behind us has been pleasant, but has it been good for us — meaning good for our souls?

(Also see How Rich are You?)

Clip Source: www.nytimes.com

Land of Plenty

By GEORGE F. WILL

Until very recently, he notes, when people prayed for their daily bread, they often were praying for just that. Not so long ago, many ordinary lives of quiet desperation ended especially dismally: about 10 percent of burials in New York City in 1889 were in potter’s fields.

In 1900, 1.75 million children between the ages of 10 and 15 — almost one-fifth of all children in that age cohort — were in the work force. Children provided one-fourth to one-third of the incomes for working-class families, which spent more than 90 percent of their household earnings on food, shelter and clothing.

In 1900, Americans spent nearly twice as much on funerals as on medicine, and less than 2 percent of Americans took vacations.

Tags: prosperity, children, income, money, culture, economy, materialism, america, capitalism, history

Enron, intelligence, and the perils of too much information - Malcolm Gladwell

Wed, 03 Jan 2007 05:07:38 GMT

clipped by: Kore7
clipper's remarks: Malcolm Gladwell on the qualitatively different natures of "mysteries" and "puzzles" from an information theoretic point of view. Among other things, Gladwell implies that entities like Enron and Al Qaeda were allowed to thrive not despite the public nature of their operation but because of it.

If things go wrong with a puzzle, identifying the culprit is easy: it’s the person who withheld information. Mysteries, though, are a lot murkier: sometimes the information we’ve been given is inadequate, and sometimes we aren’t very smart about making sense of what we’ve been given, and sometimes the question itself cannot be answered. Puzzles come to satisfying conclusions. Mysteries often don’t.

Clip Source: www.newyorker.com

OPEN SECRETS

by MALCOLM GLADWELL

Issue of 2007-01-08

Posted 2007-01-01

The national-security expert Gregory Treverton has famously made a distinction between puzzles and mysteries. Osama bin Laden’s whereabouts are a puzzle. We can’t find him because we don’t have enough information. The key to the puzzle will probably come from someone close to bin Laden, and until we can find that source bin Laden will remain at large.

The problem of what would happen in Iraq after the toppling of Saddam Hussein was, by contrast, a mystery. It wasn’t a question that had a simple, factual answer. Mysteries require judgments and the assessment of uncertainty, and the hard part is not that we have too little information but that we have too much. The C.I.A. had a position on what a post-invasion Iraq would look like, and so did the Pentagon and the State Department and Colin Powell and Dick Cheney and any number of political scientists and journalists and think-tank fellows. For that matter, so did every cabdriver in Baghdad.

The distinction is not trivial. If you consider the motivation and methods behind the attacks of September 11th to be mainly a puzzle, for instance, then the logical response is to increase the collection of intelligence, recruit more spies, add to the volume of information we have about Al Qaeda. If you consider September 11th a mystery, though, you’d have to wonder whether adding to the volume of information will only make things worse. You’d want to improve the analysis within the intelligence community; you’d want more thoughtful and skeptical people with the skills to look more closely at what we already know about Al Qaeda. You’d want to send the counterterrorism team from the C.I.A. on a golfing trip twice a month with the counterterrorism teams from the F.B.I. and the N.S.A. and the Defense Department, so they could get to know one another and compare notes.

Tags: secrets, mystery, mysteries, puzzle, puzzles, information, science, nazi, wwii, enron, finance, al qaeda, 9/11, intelligence, gladwell, malcolm gladwell

Total Federal Spending Per Household, 1962-2006

Thu, 19 Oct 2006 03:29:23 GMT

clipped by: Kore7
clipper's remarks: This chart from the Heritage Foundation's 2006 Federal Revenue and Spending report shows the sudden increase in federal spending unleashed as soon as the Republicans took over Washington in 2002. It hasn't slowed yet.

(Via the Daily Dish.)

Clip Source: www.heritage.org

Chart S-3. Total Federal Spending Per Household, 1962-2006

The past four years have seen the sharpest growth in spending per household since the Johnson Administration, when the Great Society programs were enacted.

* Data are inflation-adjusted in 2005 dollars.

Tags: spending, household, federal, revenue, government, republicans, congress, conservative, heritage, politics

Dilbert's "Unified Theory of Everything Financial"

Wed, 18 Oct 2006 01:53:34 GMT

clipped by: Kore7
clipper's remarks: "Everything you need to know about personal investing," according to Scott Adams, from his book "Dilbert and the Way of the Weasels." What do you think?

Everything else you may want to do with your money is a bad idea compared to what's on my one-page summary. You want an annuity? It's worse. You want a whole life insurance policy? It's worse. You want to invest in individual stocks? It's worse. You want a managed mutual fund instead of an index fund? It's worse. I could go on, but you get the point.

Clip Source: www.marketwatch.com

Make a will
Pay off your credit cards
Get term life insurance if you have a family to support
Fund your 401k to the maximum
Fund your IRA to the maximum
Buy a house if you want to live in a house and can afford it
Put six months worth of expenses in a money-market account
Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement
If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio

Tags: financial, investing, investment, will, credit cards, insurance, 401k, ira, house, money, broker, portfolio, financial planner, dilbert, scott adams

The Rich Get Richer - James Kurth (The American Conservative)

Sun, 24 Sep 2006 02:39:24 GMT

clipped by: Kore7
clipper's remarks: Wide-ranging article by Kurth exploring the historical rise and fall of first-world financial inequality through the lens of globalization, foreign policy, and the rise of Islamism.

Clip Source: www.amconmag.com

The American Conservative

September 25, 2006 Issue

Growing income disparity doesn’t presage a new labor movement at home — but it may signal more terrorism for us abroad.

by James Kurth

Tags: globalization, history, politics, conservatives, socialism, communism, marxism, interest, war, finance, rich, taxes, government, inequality, world, terrorism, islam

The 400 Richest Americans (2006)

Fri, 22 Sep 2006 13:45:52 GMT

clipped by: Kore7
clipper's remarks: Google Guys, Sergey Brin and Larry Page, shot to #12 and #13 this year with no signs of slowing down.

Watch out, Wal-Mart heirs: The Google Guys are zeroing in on a few of your spots in the Top 10 of The Forbes 400. Both Brin and Larry Page has seen his net worth soar 250% in 2 years; meteoric rise in wealth far outpaces early years of Bill Gates, Larry Ellison. Both have sold off more than $2 billion worth of shares in past 2 years.

Full list.

Clip Source: www.forbes.com

America's 400 Richest

09.21.06, 6:00 PM ET

Clip Source: www.forbes.com

Complete List

Clip Source: www.forbes.com

A nine-figure fortune won’t get you much mention these days, at least not on these pages. This year, for the first time, everyone in The Forbes 400 has at least $1 billion. The collective net worth of the nation’s wealthiest climbed $120 billion, to $1.25 trillion.

Tags: forbes, 400, rich, richest, americans, usa, wealth, money, finance, billionaire, billionaires, list, bill gates, sergey brin, larry page

Kill-the-penny bill introduced

Tue, 18 Jul 2006 21:51:04 GMT

clipped by: Kore7
clipper's remarks:

The move is in part a reaction to the rising cost of zinc - the penny's main ingredient - which at current prices brings the cost of making the coin to 1.4 cents each.

Last time I clipped this, the cost of making a penny was only 1.23 cents. Pennies are spiraling out of control!

Clip Source: money.cnn.com

Citing spiraling zinc costs, Rep. Jim Kolbe continues his quest to eliminate the 1-cent piece.

The Currency Overhaul for an Industrious Nation (COIN) Act would force the rounding off of all cash transactions to the nearest 5 cents, making the penny coin useless for everyday transactions.

The move is in part a reaction to the rising cost of zinc - the penny's main ingredient - which at current prices brings the cost of making the coin to 1.4 cents each.

"The penny has been a nuisance for years," said Kolbe (R-Arizona) at a press conference on Tuesday, "but now that the cost of a penny exceeds its value, the landscape of the debate has completely changed."

Over half of the U.S. Mint's coin production comes in the form of pennies. At current prices, the Mint would spend some $44 million producing pennies this year, nearly $14 million more than in 2005.

As with the 2001 bill, the new one calls for rounding down any cash transaction that ends in in 1,2,6 and 7 cents; totals ending in 3,4,8, or 9 cents would round up.

A recent Gallup/USA Today also indicates a tough road ahead for the bill.

Fifty-five percent of respondents consider the penny useful compared to 43 percent who think it should be eliminated. More telling, 76 percent of respondents said they would pick up a penny if they saw it on the ground.

Tags: penny, pennies, mint, cost, zinc, copper, jim kolbe, coin

US 'could be going bankrupt'

Tue, 18 Jul 2006 17:25:39 GMT

clipped by: Kore7
clipper's remarks: It's like the elephant in the room that no politician wants to mention.

Expecting a fix now is probably asking too much of short-sighted politicians who have no incentives to do so.

Clip Source: www.telegraph.co.uk

The United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country's central bank.

A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.

According to his central analysis, "the US government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds''.

Prof Kotlikoff, who teaches at Boston University, says: "The proper way to consider a country's solvency is to examine the lifetime fiscal burdens facing current and future generations. If these burdens exceed the resources of those generations, get close to doing so, or simply get so high as to preclude their full collection, the country's policy will be unsustainable and can constitute or lead to national bankruptcy.

The figure is massive because President George W Bush has made major tax cuts in recent years, and because the bill for Medicare, which provides health insurance for the elderly, and Medicaid, which does likewise for the poor, will increase greatly due to demographics.

The scenario has serious implications for the dollar. If investors lose confidence in the US's future, and suspect the country may at some point allow inflation to erode away its debts, they may reduce their holdings of US Treasury bonds.

Prof Kotlikoff said: "The United States has experienced high rates of inflation in the past and appears to be running the same type of fiscal policies that engendered hyperinflations in 20 countries over the past century."

Tags: us, usa, bankrupt, bankruptcy, government, federal reserve, economy, debt, deficit, bush administration, gdp

Brain-Damaged Traders Prevail in High-Risk Investing Situations

Thu, 16 Mar 2006 22:27:18 GMT

clipped by: Kore7
clipper's remarks: Dramatic studies show human emotions can get in the way of profit maximization.

As the rounds progressed, the "normal" participants passed, becoming cautious and concerned about conserving their winnings. Those with lesions did not, and ended the game with an average of $25.70, almost $3 more than the "normal" group.

Clip Source: www.investing-news.com

In a study of investors' behaviour, the team from three US universities suggest that people with brain damage can make better financial decisions than the rest of us.

The experts found that emotions can make investors play it too safe. They claim the emotionally impaired are more willing to gamble for high stakes.

The US team found that people with certain brain injuries which suppress their emotions could make the best stock market traders. They took a selection of 41 people of normal IQ, 15 of whom had suffered lesions on the areas of the brain that affect emotions, and made them play a simple investment game.

Those with brain damage significantly outperformed those without, the researchers from Stanford Graduate School of Business, Carnegie Mellon University and the University of Iowa found.

The key was the fear that stopped those with "normal" brains from taking even the most sensible of risks.

As the rounds progressed, the "normal" participants passed, becoming cautious and concerned about conserving their winnings. Those with lesions did not, and ended the game with an average of $25.70, almost $3 more than the "normal" group.

The study is relevant, the authors say, to the "equity premium puzzle" that has bemused financial experts.

This is the tendency of large numbers of investors to prefer to invest in bonds rather than equities, even though the latter have historically always provided a much higher rate of return.

Emotions lead people to avoid risks even when the potential benefits far outweigh the losses, a phenomenon known as myopic loss aversion that scholars have concluded can explain, for example, why people invest in bonds over historically higher-performing stocks.

Tags: invest, investing, trade, trading, markets, risk, economics, emotion, brain, neurology, neuroscience