Free Garmin Nuvi GPS, Oursourcing, and the Role of Speculators
Here are some links that I found interesting this week.
Free Nuvi with TD Ameritrade deposit (The Financial Engineer) – Open a taxable account with TD Ameritrade, transfer $50,000 and receive a Garmin Nuvi 660 GPS (~$330). I can use a Nuvi. Very tempting to do an in-kind transfer and just hold the positions there for a year. Link to offer .
Economics of Shared Living: Estimated Savings From Having Roommates (My Money Blog) – Renting a larger place with roommates saves money.
OC Register to outsource some editing to India (AP) – How do you like your local newspaper edited and laid out by people in India? We should know by now even the traditional white collar jobs are subject to direct competition from abroad.
TIPS Auction Step By Step: Know the Schedule
[An updated version of this article appears in my new web site Explore Bonds, together with many other articles on investing in bonds.]
There will be two auctions for Treasury Inflation Protected Securities (TIPS) in July. I will follow these auctions in a series posts. This is the first post in this series. Other posts in the series include:
- TIPS Auction Step By Step: Read the Announcement
- TIPS Auction Step By Step: Place Order
- TIPS Auction Step By Step: Read the Results
Book Review: The Smartest Investment Book You'll Ever Read
This is a book review for The Smartest Investment Book You'll Ever Read by Daniel Solin. The book has an arrogant title. The title is also a knockoff from the popular book The Only Investment Guide You'll Ever Need by Andrew Tobias. Andrew Tobias didn't say his book was the smartest. He only said it was the only investment guide you'll ever need, meaning you'll be OK if you just read that one book but everything else will be extra knowledge. I first came across this book last year while browsing at Barnes & Noble (I wrote about the misleading chart in the book). So the arrogant title worked as intended. It grabs people's attention.
Now that I had a chance to read the whole book, it isn't too bad. This is another book about investing in index funds (or ETFs). Basically another person "discovered" indexing. If you are a regular reader of this blog, you probably won't find anything new in this book. For someone new or who didn't pay much attention to investing, the book conveys that a simple strategy can be very effective and stress-free. For people who are still trapped by brokers and advisors (it's hard to believe, but there are still so many!), this book can be refreshing. The author Dan Solin is a securities arbitration lawyer. You can tell he has big problems with brokers and advisors because more than half of the book is about what not to do, i.e. don't listen to brokers, advisors, or the media. It says if you just invest in 3 broadly diversified mutual funds (U.S. stocks, International stocks, and bonds), you will be all set. The portfolio construction comes down to answering just one question:
Who's MERS and What Do They Have To Do With Me?
I received a notice yesterday from my county recorder's office. It has something to do with my recent mortgage refinance. Here's what it says:
"KNOW ALL MEN BY THESE PRESENTS, that certain Deed of Trust described below provides that the holder of the Note secured by said Deed of Trust may appoint a successor Trustee to any Trustee thereunder appointed; and,
Book Review: While America Aged
I'm a fan of author Roger Lowenstein because he is able to turn complex business issues and events into something everybody can understand. I already reviewed and recommended his other books When Genius Failed and Origins of the Crash. Roger Lowenstein published a new book While America Aged in May. Once again, this new book lived up to the high standard I come to expect from him.
The book is about the challenges of private and public pension and retiree health care programs. It consists of three long case studies: General Motors, New York city subway system, and the City of San Diego. It showed how there is such a big gap between the funding and the benefits liability in the pension and retiree health care programs. The book chronicled how the gap was formed. It also gave some recommendations on how to reduce or eliminate the gap.
If you'd like to hear the author tell the stories himself, here's a video of a book talk he gave to a small audience at a bookstore. More than half of the 37-minute video is Q&A's, which are excellent.
Misery Index, Zappos and Expensive Loans
I'm catching up with some reading because I've been busy with work lately. Here are some interesting articles I liked:
Hedonically-Adjusted, Well-Spun, Nominal Misery (The Big Picture) – Are the reported inflation and unemployment numbers artificially low compared to what were reported years ago? Maybe. But what can you do about it?
Credit/Debit/ATM Cards and Foreign Exchange (FlyerGuide Wiki) – All you want to know about spending money and getting cash when you are in a foreign country.
Farmers Market and Brown Eggs
I don't know why I missed out for so long. I visited the farmers market in my town for the first time last weekend. What a pleasant experience! There are a lot of vendors selling produce. The fruits and vegetables don't look as neat as those in the grocery stores but they taste a lot better. You are buying what's in season, not fruits stored in a warehouse for six months. And you can shop different booths and compare quality and prices. When I shopped from grocery stores, I just go to one and buy everything there. It doesn't make sense to drive to different stores for different things. At the farmers market, everybody is at one spot.
One thing I'm not sure of is that whether the vendors are actually farmers or are they just small resellers who buy from the farmers and sell at the farmers market. Does anybody know? I guess it doesn't really matter that much because even if they are not real farmers I'm still getting fresh local produce. Just curious.
One vendor was selling eggs. Large white or brown eggs for $2.50 a dozen. It's a good price. If I didn't have enough eggs in my fridge already I would've bought some brown eggs because I thought brown eggs are better than white eggs and he was selling them for the same price. I never really knew what the difference is between brown eggs and white eggs. All I knew was that brown eggs are more expensive in the stores. So I searched on the Internet. It turned out that it's just the breed of the hen. Some breeds lay white eggs and some breeds lay brown eggs. Other than that, there is really no difference. According to the American Egg Board,
Bought 20-Year TIPS
I bought more TIPS today. For people not familiar with TIPS, they are inflation indexed bonds. See previous post TIPS: Inflation Linked Bonds for more information.
Like everybody else, I feel the threat of higher inflation. A tank of gas cost me $58 last week. For the longest time it was $30-35. I still remember the exact gas station where I filled up when it crossed $40 for the first time a few years ago. Pretty soon it will be over $60. I don't even have a big car.
The price for inflation protection actually came down lately. The following chart shows the yield on 20-year TIPS (click on it to enlarge). A higher yield means a lower price.
Book Review: The Two Income Trap
A few weeks ago Jonathan at My Money Blog posted a video presentation by Harvard Law School Professor Elizabeth Warren, The Coming Collapse of the Middle Class. It turned out to be a summary of her book The Two-Income Trap. The video presentation piqued my interest so I got the book and read it.
Professor Elizabeth Warren specializes in studying personal bankruptcies. She often appears before congressional hearings against credit card companies. She's also in the documentary Maxed Out. She and several other law professors blog at Credit Slips which I read and sometimes comment on. The subtitle of the book is "Why Middle-Class Mothers & Fathers Are Going Broke." The basic premise of her book is that families go bankrupt at a higher rate today because housing, health insurance, and education have become much more expensive than they were a generation ago in the 1970s. Families commit two incomes to these expenses today. Therefore they are vulnerable to any disruption of their income, like job loss, illness, and divorce. In the previous generation, the stay-at-home mom served as a valuable reserve. If dad lost his job or became ill, mom could enter the labor force and the family would survive without having to file bankruptcy. Today's two-income families don't have this reserve. They are worse off than the one-income families a generation ago. Hence the title of the book "The Two-Income Trap."
Because Professor Warren studies personal bankruptcies all the time, she probably developed great sympathy toward the families involved. In this book, she and her co-author (her daughter) spent a lot of time dismissing the myth of over-consumption, saying that families today don't spent more on unnecessary stuff than families did in the 1970s. After adjusting for inflation, the spending went down in many categories. It's the big item expenses — housing, health insurance, cars, and education — that are throwing these families over. And the reasons people file bankruptcy are dominated by the big three causes — job loss, medical problems, and divorce or separation. Although the authors didn't necessarily say it out loud, I get the impression they are saying it's not these families' fault because it's out of their control. I'm not convinced. Here's my naive view of personal bankruptcy:
How Do You Find Good Home Improvement Contractors?
This is a question for my readers who are also homeowners. Help me out here. How do you find good contractors for home improvements and repairs?
I know the standard answer is "ask your friends and neighbors." But how do they know if someone is good? I've used a few different people for different things for my home but if someone asks me, I will have to say "I'm not sure" because I have no basis on which to evaluate their quality of work or whether their prices were reasonable. For each kind of work, there are perhaps hundreds of service people in my local area. For example my garage door opener broke a while ago. I found somebody on Yahoo! Local. He fixed it and charged me $120. It's working now — that I can tell. But did he use a cheap part that's likely to break again in a year or two? Could another person have fixed it for $60? I have no idea. Yes you can get estimates from a few people for comparison, but how do you know if the few people you get estimates from are not all well above average? To borrow an analogy from investing in mutual funds, if you only look at prices from Merrill Lynch, Smith Barney and Putnam, you may think you are paying a fair price. You will never know you should invest with Vanguard. And if materials are involved, how do you know if you are comparing apples to apples? How do you know if the low bidder is not short-changing you with shoddy materials? I feel like I'm totally in the dark when I hire service people for my home.
I know there are a few places people rate and post reviews on service providers. Angie's List is one of them. Even there the providers typically don't have many reviews. Should I hire someone based on only 10 reviews? I question whether the reviewers are qualified to give a review if they are in the dark just like I am. It's like blind leading blind. I also have a problem with having to pay Angie's List in order to read reviews. I'm so used to people sharing information for free. That's what the Internet is about, right? That's why I sometimes looks on Yahoo! Local and Yelp.
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