UNLA Pump and Dump Spam
In the last week or so, I received a series of spam e-mails promoting a stock. Peculiarly these spam e-mails were sent to an e-mail address I only use with Vanguard. I have my own domain name; I issue an e-mail address for each place I do business with.
Because these e-mails are targeted at investors and Vanguard is the only financial institution that has this e-mail address, it’s likely that a spammer got hold of a list of e-mail addresses of Vanguard customers. Other people on the FatWallet Finance forum also reported the same problem. The common theme seems to be Vanguard: not all Vanguard customers received the these spam e-mails, but those who reported receiving the spam e-mails are Vanguard customers.
That’s not good, to say the least. I expect Vanguard to guard customer information more carefully. Of course if Vanguard customers’ e-mail addresses were obtained by the spammer, the compromise doesn’t have to happen at Vanguard itself. It could be that a marketing vendor Vanguard uses got hacked.
Explore TIPS: A Practical Guide to Investing in Treasury Inflation-Protected Securities
Long time readers know I have a special interest in TIPS, the inflation indexed bonds. At one of my annual reader surveys, a reader asked why I wrote about TIPS all the time. I like TIPS because they are truly unique – the only investment with a guaranteed return above inflation.
I wrote everything I know about TIPS into a book called Explore TIPS: A Practical Guide to Investing in Treasury Inflation-Protected Securities. I published the book this month.
The book is exactly what the title says: a practical guide to investing in TIPS. Everything in the book comes from my actual experience in investing in TIPS myself. It takes a beginner who knows nothing about TIPS to knowing everything necessary for investing in TIPS. If you are a regular reader of this blog, you know my style. I leave no stone unturned. You will not find that level of details anywhere else. Please click here for a detailed table of contents.
3.8% Medicare Tax on Unearned Income in Health Care Reform Bill
[Updated on April 1, 2010. The proposed legislation has become law.]
Reader Chuck asked about the 3.8% Medicare tax in the health care reform law.
"Does the 3.8% tax on unearned income kick in all at once? You could be looking at an infinity percent marginal rate if you have, say $199,999 in wage income, and $50,000 in capital gains if one extra dollar of income costs $1900 in tax, for example."
Health Care Reform: What’s In It for Me?
I admit I did not get myself emotionally attached to the health care reform one way or the other when it was being debated in Congress. I keep myself loosely informed from reading my friend Austin Frakt’s blog The Incidental Economist. Now that the final legislation is passed, everybody inevitably asks "What’s in it for me?" So do I.
I read the excellent timeline summary from Austin and the tax summary from CCH Group. I’m not too surprised to see that the vast majority of the items have absolutely no direct benefit to me. I have health insurance from an employer, which is not a small business. I do not cover an adult child as a dependent. HIPAA has covered pre-existing conditions for nearly 15 years. I’m not on Medicare, nor its Part D.
Of the few items in the health care reform that do affect me, unfortunately all are negative. If you happen to be in a married two-earner household working in a high cost-of-living area, you have been selected as a potential revenue source for the new law. The $250,000 married-filing-jointly tax threshold is not indexed to inflation. If you haven’t crossed it yet, eventually you will, just like the AMT thresholds.
Last Train for Mortgage Refinance
On March 16, the Fed announced it would stop buying mortgage-backed securities effective March 31. Instead of going up, the mortgage rates reached a new low on the next day. As a result, I’m doing another no-cost refinance to lower my rate by a quarter of a percentage point. I think this really will be my last refinance.
I’ve been following a step-down-the-ladder approach for mortgage refinancing. Whenever I can lower my rate for at least 0.25% with no closing cost (credit from the lender covers closing cost), I would do it because I have nothing to lose. Every time I do it, I save hundreds of dollars a year, every year.
The Fed purchased $1.25 trillion in mortgage-backed securities. The purchase has kept the mortgage rates low. When the life support is withdrawn, the rates won’t necessarily jump up immediately, but I don’t see how the rates will be lower without the support than with the support.
Opportunity Cost and Paper Loss
Is an opportunity cost a real cost? That’s the question I have been pondering.
I was deciding whether to buy an air ticket a few weeks ago. I saw a good price when I did the search in the morning. I was at work at that time and I decided to make the purchase that evening. When I searched again in the evening, the good fare was gone. The price had gone up by $70. I paid $70 more than I could have.
According to Wikipedia, an opportunity cost is "the next-best choice available to someone who has picked between several mutually exclusive choices." The opportunity cost of waiting until the evening is locking in the low fare right then and there. Its economic value turned out to be $70. This example shows an opportunity cost is every bit real. It cost me real money out of pocket.
In the world of investing, opportunity cost is present at all times. The opportunity cost of investing in bonds is investing in stocks that turn out better, or vice versa. The opportunity cost of investing today is investing on a different day when the price is lower. The opportunity cost of holding on to an investment is selling it before the price goes down.
TFB Invitational Update – March 2010
Back in January I created a virtual trading game on Investopedia called TFB Invitational. 13 other people joined me in this game.
Two months into the game, I’m surprised to see that I’m currently in first place. My virtual portfolio is up 3%. I made two purchases, both profitable (so far), one for a US stock ETF, another for an international stock ETF. Right now I’m 50% in stocks, 50% in cash.
How to Shop for Furniture?
The furniture I bought during the New Year’s holiday finally arrived. By the time they arrived, I almost forgot what they looked like. I’m so used to comparing products online. Buying furniture proved to be an entirely different experience.
Although many stores sell furniture, there is actually very little information online. Many furniture stores don’t put their inventory on their website. Those that do omit meaningful information. They give the furniture a nice-sounding name: a “Madison Park” collection or a “San Marco” dining table. Who makes it? They don’t tell you the name of the manufacturer. What’s it made of? “Select hardwood and veneer.”
When I buy shoes from Zappos or Endless, I see them in six different angles. When they show furniture that costs many times more, I only get to see one picture. How tall are the drawers? They don’t tell you.
The Need for a Consumer Financial Protection Agency
Lately I received some comments on two related old posts: $10,000 Lesson On Variable Universal Life (VUL) and What Is WFG and What Does It Do? I’m pretty sure most of you don’t monitor the comments on old posts like I do. I’m using these to lead a discussion on the need for a consumer financial protection agency.
From Jaymz on Variable Universal Life insurance (VUL):
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The Little Book of Main Street Money by Jonathan Clements
