Wednesday, December 23, 2009

Marry Christmas, Happy New Year!

Have a wonderful holiday season and a great next year!


PS. I didn't know you can buy wine online... not that I ever would...

Tuesday: Home sales up, Wendsday: Home sales down

Manipulated headlines?

Yesterday: November home sales soar 7.4 percent

Today: November new home sales sink 11 percent

And markets expectedly seesaw. Obviously these aren't the same data points, one refers to resale of existing homes, the other to sale of new homes by home builders. One would expect some correlation between the two though.


Tuesday, December 22, 2009

GDP projections too optimistic, only 2.2%

On the bright side (not that it would help in case of repricing markets), growth is positive. (or is it?) So for now, it's a validation of prevailing recovery.

Economic Growth at 2.2%; Well Below Original Projections
The U.S. economy grew at a much slower pace than previously thought in the third quarter, restrained by weak business investment and a slightly more aggressive liquidation of inventories, data showed on Tuesday.

The Commerce Department's final estimate showed gross domestic product grew at a 2.2 percent annual rate instead of the 2.8 percent pace it reported last month. Analysts polled by Reuters had forecast the report to show GDP, which measures total goods and services output within U.S. borders, unrevised at a 2.8 percent growth rate in the third quarter.

It was still the fastest pace since the third quarter of 2007 and ended four straight quarters of decline in output. The resumption of growth in the July-September period probably ended the most brutal recession since the 1930s.

Growth was boosted by government stimulus programs, including the popular cash for clunkers and tax credit for first-time home buyers, and debate continues to rage over the sustainability of the recovery once government support wanes.

U.S. financial markets were little moved by the report.

Data such as retail sales, business inventories and the trade balance strongly indicate the economic growth pace picked up speed in the fourth quarter.

Happy Holidays, Merry XMax, Cheers!

Saturday, December 19, 2009

Reviewing risk measurements on portfolios, Update: Released EzBacktest 0.9.3

Update: Sharpe and standard deviation added to EzBacktest, released today at version 0.9.3
Original Message:
While adding the risk measurement feature to EzBacktest, I'm reviewing several risk measurements and samples. If anyone has an opinion, please leave a comment:

Investopedia: Modern Portfolio Theory Stats Primer, Also: Measure Your Portfolio's Performance

Some blog: Calculate Your Own Portfolio’s Standard Deviation

Wikipidia: Sharpe ratio

Another blog, with an excel sheet: Risk Adjusted Return - Sharpe Ratio using MS excel sheet free

OK, so here's where things stand: I'm a bit confused. Generally - you'd calculate the standard deviation using years of sample data - however, you might only be presented with 1, 2 years or just months worth of data. The excel sample uses annualized std of monthly returns - which I ran through code - and it isn't the same as yearly. Also, some document the expected ratio as calculated from AVERAGE yearly returns, others from ANNUALIZED yearly returns. And I need to add that ANNUALIZED MONTHLY AVERAGE returns are simply completely different.

So there you have it, the feature is nearly complete - but I'm left with some statistical doubt regarding the results.


Thursday, December 17, 2009

Thanks to Paul Douglas Boyer for mention of EzBacktest on his podcast

Like mentioned in a comment he left, he thinks the software needs to improve in measuring risk - and I did respond, I'll get to it by next release...

To listen to the podcast: Mad Money Machine

To try EzBacktest yourself: EzBacktest download page.

Answering questions:
* The results are based on the adjusted stock prices, that means - non realistically reinvest on day of ex-div. So all dividends are taken into account.


CRISIS WATCH: New jobless claims rise unexpectedly


New jobless claims rise unexpectedly
The number of newly laid off workers filing claims for unemployment benefits unexpectedly rose last week as the recovery of the nation's battered labor market proceeds in fits and starts.

The Labor Department said Thursday that the number of new jobless claims rose to 480,000 last week, up 7,000 from the previous week. That was a worse performance than the decline to 465,000 that economists had expected.

The four-week average for claims, which smooths out fluctuations, did fall, dipping to 467,500, the 15th straight decline, viewed as an encouraging sign that the labor market is gradually improving. The four-week average is now at its lowest point since late September 2008, the period when the financial crisis was hitting with full force.

As one late night show joke said about two years ago: We can't have a great depression, because not enough people wear fedora these days as they stand in line for soup.

Tuesday, December 15, 2009

Government tries to sneak in a massive 38 Billion bailout of Citigroup through IRS

And bloggers expose them in the act.

Washington Post, via Huffington Post:
Citigroup gains massive tax break in deal with IRS

Another day, another big bank being bailed out.

The only interest this blog has in this issue is that obviously - the crisis is still alive and kicking, and the economy is on life support.

400 Billion more to rescue Fannie/Freddie?!

How much? Can this pass the current political climate - or are we at this point all saying 'whatever - who cares?'.

MISH'S Global Economic Trend Analysis:Fannie Freddie May Need Another $400 Billion Taxpayer Assistance

Are we at the last phases of this financial collapse - or is it going to get worse?


Last days of internet freedom of speech

It started in oppressive regimes like China and Iran, will definitely continue to western world if not enough protest is made.

Australia will try to censor the Internet
THE AUSTRALIAN GOVERNMENT has decided that the land Down Under will become the only Western Democracy to attempt to censor the Internet.

Despite warnings that the government is committing political suicide and the technology will not work, the Rudd government is screaming for the same controls over its citizens as Communist China.

It is insisting that filtering a blacklist of banned sites will be accurate and won't slow down the Internet.

The Communications Minister, Stephen Conroy, said today that he will introduce legislation just before next year's elections to force ISPs to block a government blacklist of "refused classification" (RC) websites for all Australian Internet users.

The website blacklist is a 21st century version of book burning, featuring everything that good decent citizens should not like.

The Australian Government claims its list only includes things like child sex abuse, sexual violence and instructions on crime. However the list will be compiled using a public complaints mechanism, Government censors and URLs provided by 'international agencies'. Of course no one can imagine how anything could go wrong with that.

Conroy said that most good decent cobbers know there is a some Internet material that is not acceptable in any civilised society and it is important that all Australians, particularly young children, are protected from this material.

Of course good decent cobbers will be asking the government to tell them what is bad for them and this is where it will all go pear-shaped.

The Government's top-secret list of banned sites was leaked onto the web in March, revealing the scope of the filtering could extend significantly beyond child porn and other bad things.

About half of the sites on the list were not related to child porn and included poker sites, Youtube links, regular gay and straight porn sites, Wikipedia entries, euthanasia sites, fringe religions, fetish sites, Christian sites and bizarrely a tour operator and even a Queensland dentist.

It is starting to look, however, like the Rudd Government's Internet censorship initiatives are being watched closely by other democracies.

Enjoy your last days of freedom of speech online.

Monday, December 14, 2009

Sad Christmas for families hurt by recession

This is how it was titled on : Yes, Virginia, there is a Santa Claus, and the recession's farked him over, too [sad]

The article on SF-Gate: Recession increases holiday toy shortage

Luis Osorio was very good this year.

The 6-year-old San Francisco boy was nice to his little sister, never complained when his family lived in a van for seven months, and even learned to write - a valuable skill at this time of year.

"I love you Santa because you are good and I like you," Luis wrote, in a note that hangs on the Christmas tree in his family's South of Market neighborhood apartment.

"I've been a good boy. Can you bring me a toy and cars? Baby Stephanie wants a doll. From Luis."

The wishes of Luis and thousands of other children around the Bay Area, though, are in jeopardy because of a severe shortage of toys collected by charities for the poor.

The recession, apparently, has struck the North Pole.

"A lot of people who donated last year are now in lines to receive help," said Sally Casazza, chair of the San Francisco Firefighters Toy Program, the largest toy drive in the city and, at 60 years, one of the oldest. "This is our worst year ever."

Donations to the firefighters' toy drive are down 60 percent from last year. In the East Bay, the Mayor's Holiday Toy Drive in Oakland has seen donations plummet by half.

"It's been a rough season," said Paul Rose, spokesman for Oakland Mayor Ron Dellums. "It's the economy. We've been doing this for 30 years, and this has been our greatest year of need."

In San Francisco, demand over last year is up almost 20 percent, from 270 to 319 families a day receiving toys. Of particular need are gifts for girls between ages 9 and 12: lip gloss, hair barrettes, backpacks, bubble bath.


Friday, December 11, 2009

Greece in midst of financial collapse

Just in case you haven't notice, Greece is falling apart financially while the EU is standing back making statements.

EU's Barroso - Confident Greece Will Tackle Problems
European Commission President Jose Manuel Barroso said on Thursday he was confident Greece would overcome its debt problems.

"After talks with Greek Prime Minister George Papandreou, I am fully confident that Greece will be fully successful in that endeavour," Barroso told a news conference after the first day of a summit of EU leaders.

Greek debt and stock prices have taken a beating after a downgrade from rating agency Fitch this week because of the country's huge budget deficit and public debt.


Global crisis continues...

Wednesday, December 9, 2009

Burn your savings, invest in micro-cap ETF-s

Should be called Mega-Crap, not Micro-Cap. H/T to Abnormal Returns.

4 ETF-s to replace your favorite Casino: IWC, PZI, FDM, STH
The Best Micro-Cap ETF
A lot of investors have an interest in small-cap stocks; for them, it’s not all about the S&P 500. In small-cap territory, they assume, there’s more growth potential.

That’s even truer of stocks that fall below the usual small-cap cutoff point. One could make the argument about so-called micro caps that there’s nowhere to go but up (or possibly blipping out of existence). After all, as of Sept. 30, the Russell MicroCap Index had an average market capitalization of $268 million, and its largest component was $983 million.

But for the index ETF investor, micro caps are a problematic asset class simply because there are not a lot of vehicles that provide focused exposure—just four ETFs in all.

The largest by far is the iShares Russell Microcap Index Fund (NYSE Arca: IWC), which has assets of roughly $290 million. It was launched in August 2005.

IWC’s underlying index covers 2,000 stocks. It consists of the smallest 1,000 stocks in the well-known Russell 2000 Index and the 1,000 stocks falling below those in market capitalization. However, the fund’s portfolio has been optimized to hold 1,317 stocks. The largest holdings are in Dana Holding Corp., 0.47 percent; Schweitzer-Mauduit Intl. Inc., 0.44 percent; Veeco Instruments Inc., 0.39 percent; First Financial Bancorp, 0.32 percent; and ArvinMeritor Inc., 0.32 percent.

IWC charges 68 basis points.

First-Mover Status Is Key

The PowerShares Zacks Micro Cap Portfolio (NYSE Arca: PZI) is a distant second to IWC in terms of assets, with just $47.8 million. Like IWC, it was launched in August 2005, just a few days later, which goes to show how important the first-mover status really is and perhaps how helpful a well-known brand name can be.

PZI tracks an index from Zacks and holds 400 different companies. That’s fewer than IWC, but still, a broad number in the micro-cap space. Interestingly, PZI has an average market capitalization among its components of $355 million, while IWC has an average of $229 million. So IWC clearly skews a bit smaller in its focus.


OK, not that holding a portfolio with all 4 ETF-s makes any sense - but I did use EzBackTest to produce the following Chart of 2 years of equally allocating the ETF-s.

Amazingly, the results are very close to S&P 500.


Tuesday, December 8, 2009

EzBackTest 0.9.2 Release

I'm proud to announce new release of my freeware EzBackTest. Experiment and verify your investment portfolios with EzBackTest, download here.

* Improved selection and measurement tool over graph
* Minor bugs
* Link to open yahoo quotes web page for viewed portfolio
* Allow hiding legend in graph
* Allow reviewing error messages for failed quote downloads


Time to reconsider bullish/bearish outlook for next year?

While going into 2009 with extreme bearish outlook, and seeing an even lower low than in 2008 - for investors who stayed in the game and didn't go bankrupt with the March low, 2009 was a really good year. The rally was impressive and record breaking (well, somewhat - see research houses reports).

There are many big questions ahead:
* Will unemployment reverse course?
* Will gold continue to rally?
* Will we see commodity prices go up or down? Inflation? Stagflation? Deflation?
* Will we see double dip recession?
* Will political optimists prevail over political pessimists - is it all just rhetoric? (I'm sure everyone has an opinion here)
* What'll be the effect of government action thus far and in the 3 years ahead?
* Where is a good place to hide with your money considering 0.01% yield in Money Markets and the inherent risk in everything else.

Well - to crap on our glorious rally parade - opinion by Meredith Whitney:
Government 'Out of Bullets'; Consumers in Trouble: Whitney
The government is running out of ways to help the economy as the US faces major issues regarding credit and employment ahead, banking analyst Meredith Whitney told CNBC.

"I think they're out of bullets," Whitney said in an interview during which she reinforced remarks she made last month indicating she is strongly pessimistic about the prospects for recovery.

Primary among her concerns is the lack of credit access for consumers who she said are "getting kicked out of the financial system." She said that will be the prevailing trend in 2010.

Despite being able to borrow at near-zero percent interest, banks are not taking that money and putting it back into the marketplace. The Federal Reserve said Monday that consumer lending dropped 1.7 percent on an annualized basis in October, the ninth straight monthly decline.

With consumer spending making up about 70 percent of gross domestic product, the inability of even credit-worthy consumers being able to be able to borrow could put a severe crimp in future growth.

"What's so frustrating is you have an administration that is arguing such a populist (ideology) and not appreciating all the unintended consequences that the consumer and small businesses have far less credit," Whitney said.

"You're going to get a situation where you revert from a consumer standpoint," she added, "where those that had bank accounts for the first time, credit cards for the first time, homes for the first time get kicked out of the system and then fall prey to real predatory lenders."

The problems taken together also will pose difficulties for investors.

"I have 100 percent conviction that the consumer is not getting any better and there's not more liquidity," Whitney said. "So if everything touching the consumer is going to be represented in the S&P, then the S&P is going to be under pressure."

The solution, she said, is for the government to take proactive steps that will give consumers more money to spend.

"I don't think you can cut taxes enough to stimulate demand," Whitney said. "For a 2010 prediction, which is so disturbing on so many levels to have so many Americans be kicked out of the financial system and the consequences both political and economic of that, it's a real issue. You can't get around it. This has never happened before in this country."

Trouble ahead.

Cheer up, 2009 was a rally to celebrate for decades (until it all goes away in next bubble bust).


Sunday, December 6, 2009

Site update

I'm in the process of editing and republishing older posts from my older blog. That blog has died - and is linked to a lot from my "how I budget" page. Many articles have been reposted here today, remaining ones include:
* Setting Goals
* Things Investments Shouldn't Be
* Frugal Investor Seeks Low Fees


Reading - Improving Myself, for Cheap

Article restored from original posting at within-my-means on Aug-15 2008

Regardless of where I am at life, I always feel humbled and a need to know more and seek better and greater success. I am quite proud of my achievements thus far but I know that life is a journey, and through that journey I strive for more. The obvious path to acquire more knowledge is to seek what others have discovered through reading. And reading a lot is what I want to do. I wish I did read a lot more. Most of the time, when I plan to read, I stack up a queue – and set myself up for failure by doing time wasting things. Things like watching TV, playing computer games and reading news and commentary on the web. Having a family (I love you guys) doesn’t help that goal. Kids require our attention as parents and my wife rightfully expect us to communicate at our leisure time, not to bury our faces in books (or blogs) most of the time. Getting tired or unmotivated at times can also be a challenge.

Since books are our window to further improve ourselves, we like to cheaply possess more and more, to give us a chance to know more. Buying new books all the time at the store as soon as they arrive is only good if you can’t wait. You might HAVE to buy right now – if you are boarding a long flight and have not stocked up in advance with entertainment or books for the flight.

Here are a few ways we reduce the cost of books we read:

  • Join the local Library and borrow. You already finance it through your taxes – make use of it. You can usually order new books you want and are unavailable yet. You might also be able to reserve a book online as well.
  • Sign up for a book club. I would especially recommend a paperback book club.
  • Buy paperback editions, or wait until the paperback is out. It’s usually cheaper
  • Buy used at Amazon’s marketplace (or Ebay’s
  • Buy on special sales at the library. Our library makes such a sale once a month and we stack up with many excellent classics and children literature at those sales.
  • Buy at Amazon discount sales and have it ship for free – still much cheaper than the store.
  • I don't know about you - I don't like reading e-books although I do have a laptop. There are many free e-books sites out there...
  • When you are in college, consider swapping books with other students. Also, try - it seems to provide a lot of benefits for students beyond books exchange.

Being frugal and enjoying visits to the book store gets tricky. My wife and I, as well as the kids, enjoy the occasional visit to the book store to browse through the new selections. We sometimes do indulge our selves – when the budgeting is right – and buy something.

I wanted to write a post about buying books on the cheap, but when I began my preamble – I got carried away with my personal story. If you are still interested, the following was written subsequently after the first paragraph.

More about reading and striving for knowledge…

When I studied for my graduate degree online I was married and already had our first child. I was working full time and I dedicated the night hours to studying. Usually between 10:30pm to 2am. It was a fully packed day and only because I was driven by a schedule and homework deadlines did I read and finish my tasks. As graduation approached, I felt a void in my time was forming – such voids are easy to fill with nonsense – but combined with a New Year resolution I expressed a desire to fill that void with a desire for knowledge.

At first I set my sights on learning a new language - French. There’s something romantic and exciting about new languages. I bought a book, some CD-s and began learning without restriction of a framework pressuring me to reach results. I played the Fifa soccer game on my laptop while listening to “learn French” audio content daily for about 20 minutes each day. I put a CD in the car and listened at the car for a while. I peeked and read about 3 of the first chapters of the French for dummies book (I find the name of the book series insulting, but the content superb). I wouldn’t call that experience a success or a failure – it’s a work in progress, and after about 3 years of studying I think my ability is akin to studying in class for the second year.

Next, came my desire to understand money better. As it was for many others, the need to understand how to manage your own money comes out of immediate necessity. We earn money, we spend money, I wanted to save some of it as well and reach a balance together as a family. We bought two books together and have been following a plan for 2 years now which should take us to where we want to reach together.

Starting to accumulate savings in different forms (retirement, college fund for kids, money market account and others) is what drove my next big curiosity. Now that we will have taken charge of our financial destiny – where should we steer our funds? Should we just stuff it under a mattress? Just let it lay there in a bank (in a dark cold safe, all alone without a hug from crusty crab)? What would be a risky choice or a safe choice? Budgeting and savings is only the first step – the next step relies on making money management decisions.

I began watching CNBC. I think that at some point in life in America, most people do. I took interest in Cramer. His show was loud and he tried very hard to grab attention by joking around. I bought his books too. Two of them. I’ve also finished reading those two books. Because of the time of day the show is on, I gradually watched less and less of that show. All the while, I did not take his advice – and did not invest in stocks. I assumed (correctly) that I don’t know enough – and jumping in the water head first is dangerous (especially when the pool is half empty).

As mentioned in my post about not watching CNBC (soon to be restored) – Cramer is a complicated man (link to CEO’s thoughts on Cramer). I assumed that much way before it was proven. I still respect his advice – but I take the CNBC disclaimer very seriously. It’s an entertainment/educational show. It’s not the gospel – and for investments it is only the starting point of a research.

I moved on. I might watch CNBC, but I just have enough reasons not to. Right now I have a queue of books on investments, options, trading and self improvement (a book from the 60-s!). The hard part is finding the time to delve in. And once that time is found and dedicated, staying focused. As my wife says – how can you read that? It sounds so boring? Well it might be, and sometimes it is and I take breaks. The problem might be what I do with these breaks (guitar, PC games, TV, movies, family time – anything but return to what I dedicated the time for).

Since we discovered the book sales at the local library, we have accumulated quite a bit of classical literature as well. At some point I do intend on enriching my culture and not just my knowledge. I still intend to finish reading our O’Henry stories collection. It seems we will probably won’t buy a new book for a while… we do need to buy some new bookshelves though.

L’Chaim! (Cheers!)

A frugal single can be a distressed married couple

Originally posted on within-my-means, restored article

It is reasonably easy as a single person to restrict your own self to a tight budget so that you can achieve some goal like pay down a mortgage, go on that dream vacation, reach a golden number to identify yourself as rich, or simply reaching a comfortable financial safety cushion. If as a single person you find yourself unable to contain yourself from spending, get a book, get some help, use software and always ask yourself what it is you are giving up on in the near future for the momentary gratification of immediate spending. It can and is done by many.

Once you get married your financial future is intertwined. Regardless of having a joint or separate checking accounts, what you spend and what you keep matters to both of you. You can no longer keep your own personal goals selfishly, you must share those goals. If as a single person you spent some months eating very little and very cheaply, your spouse might never agree to such restrictions. If you used to shop for clothes once a year (or less), you should not be surprised to find out how such behavior might be completely unacceptable on your partner’s behalf.

People have different views of what fun is, as the former frugal single that is in a relationship you must acknowledge that your wife or husband enjoys an occasional Sunday shopping. Just walking around in shopping centers and picking up things. As a single person you might never have done that, especially not in distressed months. Now you bite your tongue and smile and say how lovely the new shirt is and how the kids definitely need all these new shoes for next year.

Trying to raise the issue of being in a financial hole can often lead to vocal arguments regarding the purpose of recent shopping. Who is the selfish one when one buys for the family based on needs and on sales and discounts, and the other wants to put money aside for vacations and other things? It gets even worse if the frugal mind fails to write down what those mysterious future needs are and then gets into a corner in the argument – accused of being cheap for the sake of being cheap.

You might think you are having a great relationship, you communicate and the love between the two of you is still blooming – you are probably right. There’s still something you should do. To become frugal as a couple, to succeed financially as a family, you must dream together. You must know what it is you want and your spouse wants to achieve financially in the near and distant future.

Dreaming of a better future is the first step. The next is getting back to reality. Those dreams should be translated into attainable goals. You should not be surprised to find out you could probably reach an annual or semiannual well funded family vacation. You should probably know that you could live rent or mortgage free if you do certain things.

Now that you share some dreams and goals look into your current joint financial situation. List out your income sources and expenses and agree to live by a budget. You may consider the budgeting system I propose here, but there are many worthy others and you must agree to adhere to that budget together.

Now that you have shared goals and agree to adhere to a budget together, begin allocating small sums into future goals. Now is the time to exercise your spreadsheet abilities (or seek some help) to see what will happen if you save so and so, and how much could you spend on your goals each year.

Speaking out of personal experience, doing exactly what I described above enhanced our mutual frugal sentiment and brought some excitement to it. We began planning annual vacations, writing destinations and budgeting costs. Every few years we plan on big ones like going to Disney world, abroad, visiting back in Israel (someday…). I bring the vacation thing again and again because that’s the easiest and most common goal. There are many other such goals and to each couple their own.

Be fiscally concerned, not cheap and remember that you need to always keep a balance between staying happy as a couple in the present and building up your even happier future.


Spending Less Than You Earn

Not very much in a nutshell - as I originally titled this post when publishing it on about 2 years ago.

We've all heard about getting rich slowly techniques. The key point in trying to do so is spending less then you earn. Once you have achieved that, you can start eliminating debt, growing your savings; start investing and possibly some day get rich.

At the time I initially wrote this post, without delving into my personal story, before generalizing my spread sheets, I thought it might be proper to lay out in a simple way what it is we do to spend less than we earn - and thus meet our goals and live richly.

Before you plan and implement what I suggest here, imagine spending a couple of days a month living like the poorest man in your neighborhood. Imagine you have no money for the next couple of days and you need to spend the last 100$ you have in your pocket to stock up for basic things you and your family can survive on. For us, this means always having piles of the cheapest rice and pasta. If we don't have enough money to buy a thing, we can still cook some white rice. Like the title says, I'm fiscally concerned.

Now start asking yourself some questions about what you earn, and how it is spent:

  1. Write down all of the expected annual income your family makes, and divide it by 12 regardless of the month to month fluctuations due to number of working days or other variables. This sum should include the amounts you get after tax deductions.
  2. Write down all of the recurring expenses you cannot control. Including monthly-quarterly-yearly bills. This includes home (mortgage or rent),cars' license plate renewals, average cash withdraws from ATM, loan payments, existing credit debt payments (above minimum - enough to pay off someday). This does not including any items for which you go to a store for, or which you can choose to skip for months. Again, reach a yearly sum and divide it by 12.
  3. Subtracting the monthly recurring expenses from the average monthly expected income - the remainder should be considered the living expenses you still have some control over. This is the sum where we will exercise our flexibility. I will refer to this sum as "available flexible living sum", or "the living sum".

I'll pause here and stress something out, you have to be honest with yourself and write real numbers. If the sum you reach at item 3 is less than 900$ then I think you should consider ways to reduce your "uncontrollable expenses". This is your food and gasoline money and you have to be able to pay for it. Cancel some home services, relocate to a cheaper place, get another job or a raise - because whatever you do, you need to have enough to get by - and that money must be earned, not borrowed.

Only from here can we start cutting the income pie:

  1. Dedicate a fixed amount into your deferred goals. Take some percentage off the living sum and put it into some savings. I'll leave the discussion of such saving to some other time... for us, it goes into a high yielding money market - and we spend a fixed amount of it annually to vacate. We also allocate it for other goals... again, I'll discuss this elsewhere. On our long term plan we plan on increasing this amount and have detailed why such an increase will happen (raise, stop some fixed payment, buckle down).
  2. Split the remainder into 3 sums, and allocate those sums to 3 parts of the month, typically 10 days each, except the last third of the month which could be longer. Be strict with yourself, you can buy or spend that third of the flexible living sum however way you want, but when that 10 days budget is used up enforce virtual abstinence and don't buy a thing.
  3. We use a single credit card we pay in full each month. Every purchase me or my wife makes we record on an online excel sheet, and compare it to the card's online records so we can't really miss out and lie to ourselves.

What?! Wait - what did I just say? Well, that's the point - you need to think of your money like cell-phone minutes, you can carry them over, but over usage should be considered very punishing.

You need to prepare yourself as a family to a situation where there could be 3 to 7 days where you "virtually" don't have any money - even if the bank statement says you do. Use canned food - store bulk products and live like a cheap bastard. For only a short number of days, it can definitely be done.

And that's the "secret". We do and buy whatever we want. It's not a question of "if", it is a question of when. We don't buy when we can't, but only a few days away we assure ourselves that we can.

Notice I didn't budget for expense types. It doesn't matter if we go to a theatre and dine out every night, if we can - it's our privilege to enjoy what we earn. If we want to buy a sewing machine, we can - but if it takes away from the 10 days budget - we have to limit our selves after the purchase and wait until our self placed budgetary restrictions are met. No money means no money, even if the bank says otherwise.


Communication - The Key to a Happy Marriage and Financial Equilibrium

Originally posted at - which is no longer live

Since starting to post on my blog - about a week before writing this article - my wife's been frowning at me. I sit too much time in the evening in front of the laptop and I'm not talking enough. I agree honey - and I'm sorry. I believe that communication is the key to a successful marriage. One of the examples given in the book "Dealing with people you can't stand" is of a mature couple where the husband says nothing and the wife is frustrated. It seems that for many married couples, that situation is at least the perception of reality - if not the reality itself. The book gives a good strategy on how to improve upon the situation by engaging in inquisitive conversation and insisting on getting answers. A conversation has two sides, and if you think your partner is not saying much - be assertive and muscle out some answers. If your partner is drowning in his newspaper, book or laptop and you feel left out, reach out - touch - and stare at his/her face from a short distance. You will get that kiss your face is demanding and it is the right opportunity to talk about something. Don't hesitate to start the conversation.

At our first years as a couple - finance was a touchy subject. Whenever I raised the issue I came out as a villain and as cheap. I avoided talking about it altogether and I silently observed as our tiny savings account shrunk further and further. We didn't have a plan, we didn't agree, we spent on what we thought we needed. It wasn't selfish; whenever my wife would buy something she would feel guilty and try to explain to me how it is for the family. We struggled for years to reach an understanding between us on our money.

About two years ago I did something very sneaky. We both enjoy going to book stores and browsing through the selection. Our kids scan through their section and we take turns on looking for what might interest us. I picked up two personal finance books - "Smart couples finish rich", and "The automatic millionaire". I suggested to my wife that we each read one book, and when we are done we exchange and read the other. The result was stunningly good. We both learned more about managing our money and we finally began thinking together on how we should plan and execute together. My wife came up with the program discussed in my blog post "How to spend less than you earn, in a nut shell" and I added the electronic part to it - "How to spend less than you earn, part II".

The books introduced us to the idea of setting goals. For me it was always a given that we should save money. Even if we don't get rich, money would be there for us when we need it. My wife, coming out of Russia and seeing how inflation and political turmoil can render yesterday's money worthless always assumed that money is there for us to use now. We now have an understanding of why we save and how we will use the money in the future. Money isn't accumulated so that we could count it greedily - it is there for a purpose and we have already seen the fruits of that strategy. Before - we would charge our credit and I would act frugally. We have begun taking annual vacations with money we save each year and we enjoy it so much more.

Since then, we regularly discuss where we stand on a fiscal basis. My wife no longer feels guilty she buys things when I don't. We have turned the corner and have begun saving more. As long as our income and health do not change - we know where we are heading financially and are pleased with it.

Communicating about money between couples is key to a happy marriage.

Communication in general and expressing fondness and love is what ties it all together.

Friday, December 4, 2009

Friday Funny: Hilarious NSFW Frosty Promo

Only down side, I thought this was a spoof, turns out its actually CBS - what if the kids see that? Not a great idea. They should have let it be published on satire sites, not themselves.


Thursday, December 3, 2009

Save on groceries, Save-a-lot offers $5 off next purchase of $20+

A nationwide chain, which I'm happy to report I've found a location not far from where I live - is offering $5 off purchases over $20

Check them out: Save-a-lot thanksgiving coupon

More to follow when I get a chance to visit the store.


Looking for some dividends?

One well known investing technique is buying the momentum leading to dividends ex-date, and selling a day before. Another is, buying a month before, selling only after a certain percentage above purchase after ex-div date - which could be several months. In any-case, if you are trading and this fits your style consider these two links: Free Ex Dividend Calendar

TheStreet.Com: Dividend Calendar


Wednesday, December 2, 2009

Permanent Frugality? Not so fast

Consider the following article:
As consumers cling to wallets, some analysts say it's permanent
The New Normal.

It's a phrase used in recent months by analysts who see slower growth and lower expectations for business for years to come.

But other observers reject that, saying the U.S. will see a strong recovery with few lingering effects from the recession. They point to the stock market's rebound as justification of that optimism.

What they do agree on is that this year's Christmas sales will be an early signpost for the future.

So far, it's been a tough year for retailers. People largely stopped buying in the spring and summer, but local shop owners are reporting that people are starting to relax a bit.

Dawson Grimsley, chief executive of Wichita's Davis-Moore Auto Group, has his own barometer of buyer anxiety: He sold two 425-horsepower Dodge Challengers one day last week.

That tells him there are a few people out there who aren't worried about the economy anymore.

As for the rest, it will take time, he said, but they will be back.

"It will take time to be back to normal," Grimsley said. "But when it does get back to normal, they will buy - they love cars, they love clothes, they love to eat out."

Consumer confidence really is hanging in the balance, said Michael Stead, Bank of the West's head economist and director of capital markets.

Overall, he's fairly optimistic that most indicators are moving up and that unemployment will start dropping soon.

But, he said, consumer spending is 70 percent of the economy. How much people spend this Christmas could say a lot about how the nation recovers next year.

"If I see another drop this Christmas, it will mean consumers are getting their debt levels down, and that puts a little damper on economic growth. ... My hope is that if we come in flat versus '08, we will continue to move forward in a reasonable manner."

Continue Here>>>

One cannot make a prediction focusing only on today, this month, and next year. A new consumer generation is created with every college graduation. That means, every year. While the party might seem to be over, it cannot be an absolute analysis. The next boom cycle might be just around the corner. This could still be no more than a momentum contraction in consumption triggered by a recession. I'm not very optimistic, but just suggesting that at a slightest sign of prosperity - those who can might jump on the affordable opportunities presented to them by the recent slump.


Tuesday, December 1, 2009

Smart move? Gold miner eliminates hedges, expect only higher gold prices

Remember the oil bubble of 2008, the hedges, the producers drunk on unimaginable returns - which culminated last week with the default of Dubai?

So how smart is it to drop all hedges in a business relying on fluctuating prices of trade-able goods? Yes - many analysts would suggest that the outlook for gold prices is great, does that mean its time to bet the farm?

Is this move temporary? Simply eliminating OLD and losing hedges?

What does it mean to the private citizen? Time to buy the commentary and be a 'gold believer'? Are we at the first leg of a long rally in Gold, or at final stages of a bubble? (Think about it)

Barrick Gold eliminates all gold hedges
Barrick Gold Corp. on Tuesday said it completed the elimination of all gold hedges in an effort to fully gain from surging gold prices.

Gold hedges are contracts to sell gold ounces in the future at a fixed price. By eliminating its gold hedges, Barrick sets itself free from past commitments to sell gold at prices that now seem unusually cheap.

Gold has become a safe haven for investors moving away from the weakening dollar, a shift that has pushed gold prices to record highs. The Canadian gold mining company wanted to benefit from these climbing prices -- as it expects gold to remain strong -- so it unwound its gold hedges.

"Our positive view on the gold price led us to accelerate the elimination of these contracts ahead of the schedule we had established," said Aaron Regent, Barrick's CEO.

In September, Barrick announced its plan to eliminate all of its gold hedges within 12 months. It estimates a final $300 million fourth-quarter charge as a result of the change.

Looking ahead to 2010, the company expects gold production to grow between 7.7 and 8.1 million ounces, with lower total cash costs than 2009.

Doesn't this news bit at least eliminate the 'peak Gold' theory? (which is a part of the rally)

My opinion: Gold is a multi decade hedge, never to be owned at more than 15% of net worth. When markets collapse, gold goes with them - and most trades eventually unwind into Dollar. Economists have pointed out to the risk of a 'Wall of Money', carrying away from current trend of betting against the Dollar - and causing huge rise in worth of Dollar - despite Governments' irresponsible debt and expenditures.


Friday, November 27, 2009

Forget about awkward camcorders, the future belongs to mini-HD, only $99

Forget about awkward camcorders, the future belongs to mini-HD, only $99, Just don't forget to buy insertable memory card.

I still own a DV camcorder I paid more than $500 for. Those mini cameras sure beat the old tape ones on so many criteria, including image quality, color, tape noise, requiring video capture to computers, editing... publishing. Seems like much of the process is so much easier with the new mini cameras.

For your convenience I'll quote a good post on Amazon's review which looks at several different such cameras:
The camcorder SHOWDOWN: I've done the product comparisons for you
By A. Chandler "ArtistAlana"
If I'm going to spend more than a hundred bucks on an item or somewhere around there, I do extensive research first to know I got the best bang-for-the-buck and, consequently, dodge any potential future buyer's remorse.

I've realized that the time I spend doing my product comparisons is often time that others don't have so I may as well share what I can.

I'll start by saying that you'll see my "Verified Amazon Purchase" on the Flip HD Ultra Camcorder review because, obviously, that's the one I wound up buying and I'll share with you why. But what I like in a camcorder may not suit your own needs so I'll break it down and let you decide what's best for you via what I found out:

Here are the pocket camcorders I compared:

Flip UltraHD (will be referred to as "F")
Flip Mino HD 2nd generation (Will be referred to as "M")
Creative Labs Vado HD 8 GB 2nd generation (Will be referred to as "CL")
Kodak Zi6 Pocket HD (Will be referred to as "K")

Why HD cameras only? Brighter colors and better images, wider images

F: 120 minutes.
M: 120 minutes
CL:120 minutes
K: 25 minutes with batteries they included, 120 minutes if you buy an SD card

F: 8 GB
M:8 GB
CL: 8 GB
K: internally only 30 MB recording space but it has 32 GB expandable SD/SDHC card slot. Because it comes with such small recording space you really need to buy an SD or SDHC card to maximize its potential, but the potential is really good and this will increase your ability to shoot longer.

All 720p which is excellent, just one step below the top 1080p format.

F:Premier AAC audio. Best sound quality but still not great in winds
M:Premier AAC audio. Best sound quality but still not great in winds.
CL:Poor sound quality; had issues with sound and picture not being in sync.
K:Poor sound quality

F: 2x
K: poor quality zoom on the one I tried but I still think it's 2x. It has a great macro focus for very close-up objects if, for example, you see a bumble bee and want to shoot it on a leaf a few inches away! Kinda cool.

F: 6.2 x 3.1 x 3.1 inches ; 11.2 ounces
M: 2 x 0.7 x 3.9 inches ; 1 pound
CL: 3.3 x 7.9 x 6.3 inches ; 11.2 ounces
K: 4x 5x 2.5" 2.4 lbs

F: USB cable pops out of the back so you don't need to keep up with a separate cable. Comes with Flip Video rechargeable AA battery pack (recharges when connected to USB); also supported by standard AA batteries. Note: Some sets come with the HDMi mini included and others come with the rechargeable battery pack on Amazon. Looks like one or the other but of course if you need both you can buy the other.
M: USB cable pops out of the back on this one as well. Has child safe button to prevent accidental deletion of videos. Internal lithium ion battery recharges through built-in USB arm
CL: USB cable in camera, Included in box are HDMI cable, (nice) USB extension cable, (nice) silicon skin (cool) & rechargeable battery.
K: Included in box are HD and AV cables and wrist strap and rechargeable batteries and battery charger. Has built in USB arm.

F: 30 frames per second.
M: 30 frames per second
CL: 30 frames per second
K: choice of 30 frames per second or 60 frames per second.

VIEWING SCREEN: All 2" except the Kodak was the largest at 2.4"

F: Best low-light performance for the mini cameras (though not perfect at all) and least amount of blurring and dropped frames in my opinion. You can get an underwater case for this one! Though that may sound crazy for a Texan, we use the camera non-stop on vacations and even when we aren't IN the water, we are around the water...on boats, in the sand with sea mist, etc. Then we can dive in and record the fish. Comes preloaded with flipshare software...just plug in to computer and it pops up.
M: Colors don't appear as good on the Mino as the other cameras. Thinnest camera. Make sure you get the one that only comes in the color aluminum or brushed metal. If it comes in any other colors it is the 1st generation MinoHD and they improved upon that one in the newer models. Great audio. Better shooting in low light than most mini cameras. Camera comes preloaded with FlipShare software. Can get still images through flipshare software.
CL: Decent filming in low light. Software is preloaded in camcorder.
K: What appears to be metal in picture is actually a chrome colored plastic. That said, this had the largest viewing screen of all of them. 2.4" Very poor in low light and seemed to have far more shaking and blurring. It also takes still pictures but they are really really poor quality...same as a lesser-quality cell phone pictures but good in a pinch if you want a still shot and have no cell or camera I s'pose. Heaviest for a pocket camera. Software is not preloaded in camcorder but a cd comes with it.

And, finally, the reviews of the Flip Ultra HD from experts swayed me quite a bit:

Fast Company: "Flip Ultra HD is Pure Digital's "Best Pocket Camcorder Yet." 6-09

USA Today: "New Flip Ultra Video Cameras Might Flip Your Switch" 4-09

Business Week: How do you Invigorate a Recession? Look to i-phone, Flip, Kindle, and Zip Car For Answers

There were lootttts more I came across when researching the Flip Ultra HD but those are some of my favorites.

CONCLUSION: Clearest picture and sound was important to me, expert reviews that pointed to the Flip UltraHD as well and I liked the built in software and the case I can get to shoot underwater. It is the number one selling camcorder as well. So that was my personal decision-making process. However, keep in mind that if you need reading glasses none of that will matter if the 2" screen is too small for your viewing the shots easily for playback in which case you may wish to get the Kodak if that's important to you..

Also: No matter which one you get, you will probably want a mini tripod if you ever want to be in the shot yourself do don't forget those.

Hope my obsessive comparing and contrasting for my own purchasing assistance helped you as well even if what you wanted in a camera was different from me. :-)


Hey banking titanic, major iceberg ahead

Let's all put our money on an artificial island off the coast of a desert country. See how that works for out banking system.

Dubai Crisis May End in ‘Major’ Default, BofA Says
Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said.

“One cannot rule out -- as a tail risk -- a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s,” Bank of America strategists Benoit Anne and Daniel Tenengauzer wrote in a report.

Wife says: 'well, shit happens'.
Dubai debt crisis: Now British banks face fresh crisis after investing billions
* Barclays, RBS and HSBC face losing billions
* Wall Street plummets by 2 per cent after late opening
* FTSE falls by 1.5 per cent before stabilising
* Banks see £14billion wiped off market value in one day
* Dubai may consider selling QE2 to tackle debt

British banks were teetering on the brink of a fresh meltdown today after it emerged they had invested heavily in crisis-hit Dubai.

An $80billion debt default in the emirate has already reawakened the spectre of a global 'double dip' - that the first shoots of recovery could be wiped out by a second wave of recession.

But the level of exposure that the crippled British banking sector faces is now under renewed scrutiny.

The crisis was prompted by Dubai World, the development company behind three palm shaped islands as well as an off-shore replica of the globe , defaulting on its debt.

Read more:

Personal note: still recovering from food coma from Thanksgiving feast. Thanks to wife for great home cooking. Turkey should last us for about a year....


Wednesday, November 25, 2009

Where to find black friday deals?

You really shouldn't, you know that right? If you still do - be civil.

Here's a list of sites to get your troupes ready as you storm the stores this Friday, trying to squeeze a smile from little Johnny next month.

Of course, there's always the stores sites too: (most links directly to ad pages)
Some people... well, I know it's a shock to you - but some people don't buy anything at all until AFTER Christmas, when everything is on clearance sale. At quarter price of black Friday. Of course, I'm not referring to electronic deals - just general toys and gifts.


Tuesday, November 24, 2009

FDIC in the red, US growth numbers were made up, no one pays attention due to holiday

Optimists were all liars?

Economy's rebound not as strong as first thought
The economy is growing modestly, with consumers too wary about spending to invigorate the recovery.

That picture emerged Tuesday from reports on the nation's economy and the confidence of consumers, who power 70 percent of it. The economy grew at a 2.8 percent rate last quarter -- less than originally estimated. And forecasts for the current quarter are for similarly slight growth before a drop-off next year.

The main reasons are that consumers remain reluctant to spend, commercial construction has slipped and imports are dampening U.S. growth.

The Commerce Department's new reading on gross domestic product was weaker than the 3.5 percent growth rate for the July-September period estimated just a month ago. The GDP, which measures the value of all goods and services produced in the United States, also was a tad weaker than the 2.9 percent growth rate that economists surveyed by Thomson Reuters had expected.

‘Problem’ Banks at 16-Year High in Third Quarter
U.S. “problem” lenders climbed to the most in 16 years and the Federal Deposit Insurance Corp.’s fund protecting customers against bank failures slipped into a deficit in the third quarter, the agency said.

Shouldn't the situation at FDIC get everyone, including cash holders - scream with anxiety?
U.S. Fund for Bank Deposit Insurance Falls Into the Red
The government-administered insurance fund that protects depositors fell $8.2 billion into the red for the first time since the fallout from the savings-and-loan crisis of the early 1990s as the pace of bank failures accelerated in the third quarter.

Bank customers, however, should remain confident that their deposits would be protected since the bulk of that negative balance reflects money the agency has set aside to cover future bank failures.

Federal Insurance Deposit Corporation officials warned in October that the deposit insurance fund had been depleted, but Tuesday’s third-quarter report card on the banking industry marked the first time that hard numbers had been released. Even amid early signs that the economy is recovering, the report suggested that the country’s 8,100 lenders remain in fragile condition.

In its state of the industry report, the F.D.I.C. reported that banks posted a $2.8 billion gain in the third quarter, after a $3.7 billion loss in the previous period. Meanwhile, the number of “problem banks” that run the biggest risk of collapse increased to 552, from 416 in the second quarter. Bad loans of virtually every stripe — credit cards, mortgages, small business and commercial real estate — continue to grow, albeit at a slower pace.

No one's in doubt - if there's enough non-existing money to stimulate to the sum of 800 billion, and non-existing money to fund new legislation and social plans - I doubt the government would let FDIC fail and let everybody's cash savings at banks disappear. If that day would ever come, you'd see real blood in the streets.

Have a joyous family time this weekend. Try to make it about family and giving thanks, not about shopping... frugal cheers!

Monday, November 23, 2009

Report says: Consumers in a frugal holiday mood

Who wants to spend every penny he doesn't have when the fear of losing your job, and/or increased taxes while reduced medical benefits looms? (still doing my best to avoid political opinion here)

Survey: Consumers in a frugal holiday mood
A new survey shows consumer spending likely will be lower this holiday season, as U.S. households will spend an average of $390 on Christmas gifts this year compared to $418 a year ago.

The survey of Christmas spending intentions, conducted for The Conference Board in November by TNS, included 5,000 U.S. households.

“Consumers are approaching the holiday season very cautiously,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a written statement. “Job losses and uncertainty about the future are making for a very frugal shopper. Retailers will need to be quite creative to entice consumers to spend, both in stores and online this holiday season.”

In addition to being frugal, another study found that nearly a quarter of shoppers are expected to pay cash when holiday shopping this year.

Thriftiness trend continues among American consumers. Will this generation return to frugality as a permanent lifestyle? Consider that each period of unimaginable boom in the past has lead to such situation.


Paul McCulley, managing director at Pimco:"Raise cash!!!"

The gist of the article: Everything has risen way too much and nothing is screaming cheap. Therefor PIMCO expects a correction, and whoever doesn't sell now to protect his gains is a sucker. You got that sucker?

Don't Be A Sucker, Take Your Gains
Nothing is screamingly cheap.

The easy money has been made in both equities and fixed income. From the low point in March, it seems you can't pick an asset class that hasn't gained something in the area of 60%. That was some fear discount back in March.

During this universal recovery, as in most post-recessionary periods, lower-quality high-yield bonds have outperformed quality issues, and lots of smart guys who had the guts and money to buy them at the depths are cashing out--convinced that risks of continued exposure outweigh possible rewards of staying long.

"It's past the time to lighten up, no reason to chase risk assets from currently lofty valuations," says Paul McCulley, managing director at Pimco. "To the contrary, the time has come to begin paring exposure to risk assets, and if their prices continue to rise, paring at an accelerated pace."

That's what Guardian Life Insurance chief investment officer, Thomas G. Sorell, has been doing with his $30 billion portfolio after unexpected gains of 50% in high-yield bonds and leveraged bank loans that he purchased at distressed levels. The problem is that the yield on cash is zero. Cash is trash right now, and promises to continue to be.

Jim Oberweis bought at $79, at $16. Click here for the latest recommendations on these two stocks and two dozen more small caps and Chinese stocks in the Oberweis Report.

Money market funds, according to latest numbers, are down half a trillion on the year. Stock mutual funds have drawn a measly $5 billion, while taxable bond funds have drawn almost $250 billion, and municipal bond funds $60 billion.

The big winners since the stock market bottomed in March have been emerging-markets stocks, up a stunning 99% on the iShares MSCI EAFE Index ( eem - news - people ). Corporate junk bonds are up 50% as measured by the iShares iBoxx High Yield Corporate Bond ( HYG - news - people ) ETF, while the iShares iBoxx Investment Grade Corporate Bond ( LQD - news - people ) fund is up a comparatively modest 21%.

...(continued here)

Exit question: Isn't cash a risk asset these days? Particularly dollar.


Thursday, November 19, 2009

Hold on to your seats, Roubini says worst is yet to come

My only question, as a private non-rich person, where does one find these days financial security?

More of my humble opinion after Roubini's version of 2012 script.

The article:
The worst is yet to come: Unemployed Americans should hunker down for more job losses
Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.

While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.

Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.

So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.

There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.

The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.

This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.

Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.

Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.

The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double dip recession.

As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures.

The damage will be extensive and severe unless bold policy action is undertaken now.

Back to my question, as a private non-rich person, where does one find these days financial security? Keeping your tiny wad in cash? Gold? Real estate (most everyone in a hole on that one).... Markets? Dividend aristocrat stocks? Where? If everything falls - then it falls in relation to what? Last crash - just a year ago - everything crashed in relation to the dollar. Including gold, oil, shipping costs, Asian markets, China's market - everything.

Now - where's safety? You hold on to cash, and within years, months - perhaps days in case of hyper inflation - that cushion of security can't buy you what you had it stashed for...

I guess if you truly have nothing, those questions don't bother you. Back to clipping coupons and counting pennies in the little piggy.


Analyst: Wells Fargo Needs TARP Money More Than It Admit

Flow of news this morning makes me suspicious regarding who choses to publish what and when. I've commented before about the correlation between bad news and market moves (only after move was made - such news is published), and vice versa. It was 3 days ago when the business media was oh-so-optimistic. That being said, I'm not doubting the sincerity or honesty of the report.

First, consider todays comment on Zacks Profit from the Pros newsletter:
Don't believe most of the nonsense that was discussed in the investment media Wednesday. They always want to create a cause and effect relationship between that days economic news and the direction of the market.

So yes, both the Consumer Price Index [CPI] and Housing Starts reports came out Wednesday. Yet the substance of each had nothing to do with the market being in the red. So why were we in the red? Because it can't be in the green everyday as it has been of late. Until proven otherwise, the trend has been our friend for 7 months. The day to day gyrations and the stories that come with it are just fluff.

And with that, let's go to the bad news:
Wells Fargo Needs TARP Money More Than It Admits: Jonathan Weil
When it comes to giving the U.S. taxpayers their money back, it’s time for Wells Fargo & Co. to put up or shut up.

Ever since Wells accepted its $25 billion of federal bailout assistance last year, its bosses have been complaining that the San Francisco-based bank never needed the money, didn’t want it, and shouldn’t have been forced by the government to take it. They keep saying they want to pay it back, too.

During a Sept. 1 Bloomberg Television interview, Wells Chief Executive Officer John Stumpf said the bank planned to return the cash “shortly” and in a “shareholder-friendly way.” On Oct. 21, Chief Financial Officer Howard Atkins said the injection under the Troubled Asset Relief Program “has served its purpose, and it’s time to repay the money.”

Wells still hasn’t bought back the $25 billion of preferred shares it issued to the government, though. And I’ve got a pretty good idea why: It can’t afford to -- at least not without selling a lot more common stock first. The numbers tell it all.

Start with the bank’s tangible common equity, a bare-bones measure of net worth often used by investors for evaluating a bank’s financial strength and ability to cope with losses.

Tangible common amounts to a company’s shareholder equity, minus preferred stock, which is left out because it acts a lot like debt. Tangible common also excludes intangible assets such as goodwill, which is a bookkeeping entry left over from past acquisition sprees, and mortgage-servicing rights, which represent the estimated value of future income from collecting and processing loan payments.

Taking Account

Wells had about $37.4 billion of tangible common equity as of Sept. 30, by my math. Yet even that number is frothy, because it doesn’t take into account the fair-market values for most of the bank’s financial assets and liabilities, which the company discloses in the footnotes to its quarterly reports.

Factor in those adjustments, and Wells’s tangible common equity falls to $14.3 billion, or just 1.2 percent of the bank’s tangible assets. The main reason for the difference is that Wells said its loans as of Sept. 30 were worth $22.1 billion less than the carrying amount it showed on its balance sheet.

How can Wells repay its TARP money, when its capital cushion on a fair-value basis remains so thin? A Wells spokeswoman, Mary Eshet, responded to that question by saying: “We will work closely with our regulators to determine the appropriate time to repay TARP while maintaining strong capital levels.”

She added that “our capital position is improving,” which is true, even using the bank’s fair-value numbers. So far this year, Wells has raised $8.6 billion in a common-stock offering, reported a $4.9 billion increase in retained earnings, and slashed its common dividend.

Take it as it comes. New crash leg? Je ne sais pas.


Hmmm...Goldman Sachs shorting Wells-Fargo, Mastercard and AIG?

Recovery? Not according to Goldman Sachs:
Goldman Sachs (NYSE:GS) Shorting Wells Fargo (NYSE:WFC), Mastercard (NYSE: MA), PNC (NYSE: PNC) and AIG (NYSE: AIG)
I learned a long time ago to not listen to what people say but watch what they do, and in the case of Goldman Sachs (NYSE:GS), their net shorting of Wells Fargo (NYSE:GS), Mastercard (NYSE: MA), PNC (NYSE: PNC) and AIG (NYSE: AIG) reveals they’re not buying into the assertion that we’ve started to enter a period of economic recovery; on the contrary, they’re betting against it.

In their recent quarterly filing, which is called a 13F, Goldman asset managers revealed their largest positions in specific companies, and within those parameters, the largest short and long positions they have. That simply means what stocks they believe will go up or down in price going forward.

As far as the strategy Goldman is employing, they’re investing in shorts and longs, but when the smoke clears they’re net short on the four stocks mentioned above. Without getting into what that strategy means as far as how it protects from losses while promising the best gains, let’s look at what it means from Goldman’s current view of the economic crisis.

It’s simple really. Goldman is saying by their actions that the financial industry is still in shambles, and we are far from entering an economic recovery. You don’t offer net short positions unless you absolutely believe that. Consequently, Goldman believe the future doesn’t hold a lot of promise for these four financial stocks. I’m sure Citigroup (NYSE:C) would have been part of this as well, but shorting a $4 stock doesn’t leave a lot of room to make money.

As of the release of the report from their asset managers, the net short position of the four companies are this: Goldman has shorted Wells Fargo by $289 million, Mastercard by $266 million, PNC by 202 million, and AIG by $152 million. Together that’s over $900 million. Not a strong support for an economic recovery at all.

One interesting side on all this is Goldman itself is one of the most exposed financial companies in the world to derivatives, and when measured by derivatives as a percentage of assets, is over 8 times more exposed than their nearest competitor in the U.S. I wonder if Goldman shorted themselves?

I’ve been talking for some time on American Banking News on why the recession is far from over and the idea of recovery being a reality is ridiculous. Here’s another proof that others, within the industry itself, understand that as well.



Wednesday, November 18, 2009

Free Stocks Ticker development update

11/20/2009 update: changes made...

original post:
Of the few items listed recently as a wishlist, I have already implemented on my machine the following:
* Turn on AppBar, so that maximized applications consider existence of tickers
* Keep on top option (currently Bottom-Most as forced bottom most )
* Fixed: When taskbar is on top, can't see ticker forms

* Hide default Foxnews/Cnn feeds
* Interactivity option (turn clicks on/off - turn tooltip on/off)

Next release, probably next weekend... to download latest version, click here.


Monday, November 16, 2009

Consider this, there are fundumental reasons to get bullish on the market

Based on earnings and valuation, not just hope. And it's not Joe Six pack - me - saying it. But just in case, yes I am popping one beer can right now.

What's the Stock Market Worth Now?
By Jeremy Siegel, Ph.D.

Operating earnings for the S&P 500 Index for 2009 are projected to be about $56.00 per share, which, at current levels of the Index (1070), puts stocks at about 19 times earnings, higher than the long-term historical average of 15.

But basing stock values on 2009 earnings is inappropriate. 2009 marked the bottom of the worst recession since World War II. What is relevant for determining stock values are future earnings, not past earnings. Next year's operating earnings on the S&P 500 Index are projected to be $74.34 a share, marking the index at 14.4 times earnings. And early earnings estimates for 2011 are at $89 a share, puts stocks at about 12 time earnings.

Furthermore, stock values are not based only on 2010 or 2011 earnings but also on earnings in 2012 and beyond. And because of productivity trends , there is good reason to be optimistic about long-term earnings. Productivity growth has been on a tear, increasing at a 6.9 annual rate in the second quarter and a blow-out rate of 9.5 percent in the third quarter. This is the fastest two-quarter rise in productivity in 40 years.

Productivity gains boost profits because productivity measures how much more output can be produced for a given labor input. Since labor costs are the lion's share of most firms' expenditures, raising output through productivity growth means more revenue for given labor costs, and it raises earnings. If rapid productivity growth continues, stocks could quickly surpass their record high $91.73 level reached in 2007 before the recession began.


I've provided only a short excerpt out of an article with several more bullish acceptable economic measurements.

Should we accept this? The market is about to sky rocket, Wall-Street and CEO-s are about to bask in huge financial glory again on the backs of the 10+ percent unemployed?

Don't bet the farm on it. Yes - unemployment is an issue, and with high unemployment consumer recovery is in doubt. The first stage out of the massive recession is inventory replenishment. We are witnessing that. In a good scenario, this will start a snow ball rolling of profits for the big corporations who would in turn rehire to keep up with demand. Which will then restart the private consumer appetite.

On the bad scenario... well - try watching Fox-News at 5PM eastern. See how you feel about the market and the economy after that. Not accepting or endorsing any point of view, simply stating that it's there.


Making your Fire-Fox confuse the heck out of you-Dressing as a chrome/explorer hybrid

Let's face it - while Firefox has become slower and clunkier - and its competitors have become so much lighter and safer - you stick with it for a few essential plugins.

For me - it's the adBlock plus plugin. Pages load faster and are more readable without flashy crappy commercials. Animated ads drive me insane. So I stick with it, and hope they fix the clunkiness ASAP. Another version and another reduction in speed of interactivity would be the death of FireFox.

Well, in addition to that, FireFox as a product was left behind on the UI advancements. Both Explorer and Chrome reduced as much buttons/bars and menus - leaving you with mostly the browsing area. Then of course, Microsoft pushed their MSN toolbar on you, and I hope for your sake you did your best to uninstall/hide as many bars as possible. Because that's the point - the modern acceptable UI removes as much 'less used' components as possible.

After last week I found the 'magic' of disabling 'Windows Defender' real time scanning and the wonders it does to your startup process and how it removes the choke hold from most applications performance; I decided to take it all a step further. Let's see what I can do to make FireFox more Chrome/IE - and much less FireFox.

So without further ado, here are the downloads/extentions/themes and persona I used to make my FireFox a Chrome/IE hybrid lookalike:
Auto hide menu plugin
Personas plugin
Vista-aero theme
Chrome Persona

And there you have it - a new breath of life to the aging FireFox. Hopefully, the fire-fox team can make these changes the default and fix whatever they broke when advancing to 3.5.


Sunday, November 15, 2009

Free Stocks Ticker getting some attention, wishlist ideas accepted

I'm grateful to two blogs for providing positive review of my freeware free-stocks-ticker today. I've so far gathered some wish list items and I'll try to incorporate them into a new version soon enough:

* Hide default Foxnews/Cnn feeds
* Interactivity option (turn clicks on/off - turn tooltip on/off)
* Turn on AppBar, so that maximized applications consider existence of tickers
* Keep on top option (currently Bottom-Most as forced bottom most )

Reported bug to be resolved on next update:
* When taskbar is on top, can't see ticker forms

The relevant two external blog posts reviewing the application:
* Free Stock Ticker: display a real time stock ticker on your desktop
* BARRY'S BEST COMPUTER TIPS: Free Stocks Ticker - Put a scrolling stock and news feed ticker on your desktop

To download latest version of Free Stocks Ticker, click here.

Friday, November 13, 2009

Return of Friday funny: Flowchart of Hey Jude

I've had this on my facebook page - thought I'd share the laughter.

Flowchart: Hey Jude



Windows Vista shows Defender Errors? Microsoft says reinstall operating system - what?!

Defender is without a doubt the worst piece of software ever written and imposed on users. It never detects or help remove real malware. Only real anti-viruses and adAware do the job properly. Still it was included in Vista as part of the OS and lucky me: It started messing up on windows startup at my work machine.

After my company's IT guy basically gave up - I eventually found this Microsoft support page:

Error message when you try to start Windows Defender on a computer that you recently upgraded to Windows Vista: "Application failed to initialize"

Well - I didn't recently upgrade. But I suspect some anti-virus the IT guys imposed on this machine caused some mess-ed registry and defender just goes belly up after I log-on. It would be great if one could just un-install it and never see it again.

But - no, Microsoft says reinstall Windows.

So let me get this straight, an unnecessary piece of software in the OS cannot be removed, bugs you with messages - and instead of allowing us to remove it all together the suggestion is to waste several hours, if not days in computer down time and potential lost data?


Tuesday, November 10, 2009

Who's the genius? 18 Button Mouse

If someone loses his job at Sun for this idiocy - he shouldn't be surprised (unless it was meant as a joke - and shareholders don't mind burning money)

18-Button Open Office Mouse Makes A Keyboard Look Minimal

One button. One button. One button. So goes the mantra at Apple, chanted before and after the compulsory morning yoga sessions, watched over by Steve Jobs in his cube-shaped glass office as he meditates on the minimal over steepled fingers.

Over on the free-software side of the world, things are a little different. If the phrase “design by committee” ever sent an icy pang of fear into your heart, then look away now. The Open Office organization, behind the splendid free MS Word alternative of the same name, have come up with a mouse with not one button, but 18, all of which can be double clicked, if you can actually contort your fingers to reach them.


One of those stands out: “PDF export of profile button assignments”. A mouse so complicated that you need a cheat-sheet to use it. What’s more, it is butt-ugly. looking like somebody cut holes in a generic dime-store mouse and inserted the plastic leftovers of pill-bottle lids.

The saving feature, if indeed this thing can be saved, is the analog control stick, very similar to the Nintendo 64 controller’s mushroom stick. Unlike the nodule on the mighty mouse or the tipping, clicking scroll wheels of any other mouse, the stick is on the side, under your thumb. This strikes us a dead handy.

The pictures you see are either mockups or prototypes, and the actual mouse should be available in February for $75. It’ll work with Windows, OS X and of course, Linux.

Somehow I imagine some Linux people using it... ooh cool - when do I get my 27 keys mouse? Yikes.


Friday, November 6, 2009

Wow: Vista sold more PCs than Windows 7 did

Well - could it be because more people believe simply buying the upgrade and discarding Vista is a better solution to buying yet another PC? Doesn't it say more about the PC market than about the OS?

Or perhaps it has more to do with the economy in general?

Vista sold more PCs than Windows 7 did
Microsoft moved a lot of install disks, but hardware makers got a bigger bump two years ago

When Microsoft (MSFT) launches a new operating system, as it did two weeks ago, PC manufacturers like Hewlett Packard (HPQ), Dell (DELL) and Acer are supposed to reap the benefits. And everything seemed to be in place on Thursday Oct. 22 for that to happen.

"Never before has the industry launched such a variety of new form factors, price points, technology upgrades, and design innovations at one time," wrote NPD's Stephen Baker just before Windows 7's release. "This past weekend I happened by a Best Buy store and there was not one single PC for sale with Vista on it. Lots of Windows 7 machines, however, all of which were marked 'not for sale until October 22.' Someone did a great job in the supply chain making this happen. This will give Win 7 a tremendous boost out of the gate." (link)

Two weeks later, Baker is singing a different tune. Microsoft got a big boost according to NPD's weekly tracking data, racking up sales of Windows 7 that were 234% higher than Vista's during its first few days of sales. (More on that below the fold.)

But PC makers didn't make out quite as well. Although they had a relatively strong week, with unit sales up 49% year over year and 95% from the week before, it was nothing like Vista's launch in Feb. 2007. Then, sales soared 68% year over year and 170% from the week before.

In related(?) news, Microsoft announced a new wave of job cuts.


Unemployment rate hits 10.2%, worst since 1983

And market goes up?

Unemployment rate hits 10.2%, worst since 1983
The nation's unemployment rate rose above 10% for the first time since 1983 in October, a much worse jump than expected as employers continued to trim jobs from payrolls.

The reading, reported by the government Friday, is a sign of the continued weakness in the labor market even though the economy grew in the third quarter following the longest and deepest downturn since the Great Depression.

The government reported Friday that unemployment rate spiked to 10.2%, up from 9.8% in September. It is the highest that this rate has been since April 1983. Economists had forecast an increase to 9.9%.

There was also a net loss of 190,000 jobs in October, according to the Labor Department, an improvement from a revised estimate of 219,000 job losses in September. However, economists surveyed by had forecast a loss of only 175,000 jobs in October. This was the 22nd straight month of job losses.

Government efforts to end job losses have had limited effects, although the Obama administration estimated last month that 640,000 jobs were created or saved by the federal stimulus package passed earlier this year. But that's modest compared to the 7.3 million jobs that have been lost by the economy since the start of 2008.

Friday's report comes one day after Congress voted overwhelmingly to extend unemployment benefits by up to 20 weeks. There are now a record 5.6 million people who have been unemployed for six months or longer, as the average time an unemployed person has been out of a job hit 26.9 weeks.

Prior to this report, most economists had believed that the unemployment rate would keep rising and that job losses would continue into next year. But the jump in unemployment in October took it to levels worse than what many previously had expected to be the peak.

According to a survey of top forecasters by the National Association of Business Economics last month, the consensus estimate among economists was that unemployment would hit a high of 10% in the final three months of this year and the first quarter of 2010.

The five economists with the most bearish forecasts had expected unemployment to rise to 10.2% in the fourth quarter of this year before hitting 10.5% in the first half of next year.

Another headline said jobs will return in..... 2012?!

Is the future brighter? What would be the 'bottom' of the job market? Will it continue deteriorate along side the housing market?

Je ne sais pas.


Thursday, November 5, 2009

Goverment making Fannie Mae delinquent home owners become permanent squatters?

Brilliant idea alert - turn foreclosure distressed neighborehood to public housing calamity.

You know what I'd do? Give the home to the government and flee those soon to be slumps neighborehoods before it's too late.
Fannie Mae to rent out homes instead foreclosing
Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday.

The government-controlled company, through its new "Deed for Lease" program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that.

The program will "eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities," Jay Ryan, a Fannie Mae vice president, said in a statement.

But the effort is likely to affect a relatively small number of homeowners. In the first half of the year, Fannie Mae took back about 1,200 properties through this process, known as a deed-in-lieu of foreclosure. That pales in comparison to the 57,000 foreclosed properties the company repossessed in the period.

While neither option is particularly attractive for the homeowner, a deed-in-lieu does less harm to the borrower's credit record.

The rental program is designed to help homeowners who don't qualify for a loan modification under the Obama administration's plan, but still want to remain in their homes. Fannie Mae is not planning to market the homes for sale during the one-year rental period.

Fannie Mae has hired an outside company, which officials declined to identify, to manage the properties

This is by far the biggest political statement I made on this blog.


Trying to avoid that.