Category Archives: Personal Finance

How do you know Gold is in a bubble? Gold Vending Machines!


My Comments: In Germany you can now buy gold out of vending machines in the subway.  Gold is a funny asset that many people believe is the only real hedge against inflation.  The problem is you will always need willing buyers and sellers and during panics it usually goes up and during periods of normalcy everyone forgets about it.  It is the wrong asset to buy and hold for decades, but can provide some diversification benefits during periods of uncertainty.

Check out the article here.


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Filed under Asset Allocation, Commodity Prices, Economy, Humor, Inflation, Personal Finance, Stock Market

Bullish Investors Maybe Wrong or Premature

My Comment: As market observers we have to wonder how much of the jobless losses is factored into the economic data that is coming out.  I saw a statistic that for every 6-10 jobs lost adds up to one more foreclosure.  Also, the recently announced car dealership closings will have a serious negative impact on the jobs numbers.  It feels like the “crisis” may be over, but the economic pain may have a ways to go.  We may be in for a long recovery, if measured by jobs, home prices or wages.

Krugman Says Bulls Have It All Wrong

 By: Dan Weil


Nobel laureate economist Paul Krugman says financial markets have overestimated economic strength in their recent rallies. Continue reading

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Filed under Asset Allocation, Credit Crisis, Economy, Personal Finance, Stock Market

Will municipal bond buyers rotate into stocks?

2009 muni vs sp

The recent run-up in stocks have some investors wondering if municipal bond buyers rotate into stocks.  On balance, I don’t think so.  Granted, some investors used muni bonds as a “safe haven” while the stock markets declined, however, most muni bond buyers are long term buyers.  Munis remain attractive for the following reasons:

  • Personal income tax rate outlook (Taxes are going up)

  • Perceived level of safety (Lower volatility than stocks)

  • Competitive tax equivalent yields

  • Not as interest rate sensitive as some other types of bonds

  • Historically low default rates

  • Demographic reasons

Chart Source:

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Filed under Asset Allocation, Death and Taxes, Personal Finance, Stock Market

It looks like the FDIC limit will be permanently raised to 250K

With a little more than 6 months left in the year, the Senate yesterday took a vote on permanently raising the FDIC limit to $250, 000.  This piggybacks on a similar vote taken in the House doing the same.  The measure will now be reconciled by committee and presented to President Obama for signature. Expectations are that this bill will be signed into law by the end of May. Investors have been looking for this clarity for some time and while we need to be cautious until this measure becomes law, it is close.  There have been some questions raised related to a 2013 date – some are asking if this measure expires in 2013 and FDIC limits could go back to $100,000.  The answer is “No”.  The change is permanent.  The 2013 date is referencing a 5 year date for the $250,000 limit to be reviewed for possible increase based on inflation.  The 5 year period being referenced includes 2008 (original move to $250,000) through 2013.

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Filed under Credit Crisis, Economy, Personal Finance, Politix, President Obama

Republicans are smarter than Democrats on financial matters? So what, we are all under educated on these matters


Source: Pew Research

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Filed under Death and Taxes, Economy, Humor, Personal Finance, Politix, Stock Market

Retirement planning mistakes


 This economy is making it clear to more and more people that their retirement expectations will come up short.  Aviod the following mistakes and you will be much better off.

(1) Failing to start saving early.  It’s never too late to start.  The impact of compound interest is sexy!

(2) Failing to save enough.  Small sacrifices now can make a big difference when the law of compound interest is on your side.

(3) Planning on social security to replace the bulk of your income.  It’s more likely that over time benefits will see a decrease. 

(4) Depending solely on your company pension plans.  Most pension are designed to only replace a portion of your income.

(5) Being “recklessly agressive” or “uber conservative” in your investments before and during retirement.  The current market has shown us while being ultra agressive close to retirement can have life changing consequences.  Being too conservative can be a “safe strategy to go broke.”  Annuities, CDs and some fixed income typically don’t yield much over inflation rates, so investor’s purchasing power over time can be substantially diminished.

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Filed under Economy, Inflation, Personal Finance, Stock Market

Gallup Poll: Shocker, Americans more concerned about quality of retirement


My Comment: Investors concerns and euphoria follow the Dow Jones Industrial average.  It’s interesting the savings rate is finally starting to nudge higher, but I assume that has more to do with people’s concerns about the economy and losing their jobs than a long term change in savings pattern.  Once the markets and economy rebound, I think we will once again see the savings rate slide off a cliff.  However, we can hope this economy could be the wakeup call that changes the savings and consumption pattern of a generation.  We will have to wait and see.

Source: Gallup Poll

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Filed under Credit Crisis, Economy, Personal Finance, Stock Market