Thanks for visiting. This Blog and is intended for individuals with Net Annual Income of $105,000 or more. Get Rich Slow + Get Rich Quick = Get Rich Slick. If you're new here, you may want to subscribe to my RSS feed.

Hurricane seasons is coming up and if one happens to blow through the Gulf of Mexico disrupting shipping, refineries, and production rigs during the summer what do you think the price of oil will hit?  If oil hits $150/bb this summer what will that do to the Dow?

I’m dreaming of dancing dollars and the sweet cha-ching of the register…..

Don’t say you weren’t warned……..

Bookmark to:

I have been on the verge of literally pulling all my money out of the banking system and moving into US Treasuries because every month, we keep discovering how deep the hole is in the financial system. We’ve gone from Bernanke telling us that everything was “well contained” back in August of 2007 to G7 intervention and the collapse of Jefferson County.

With the FOMC today, who knows what to expect next.  More interest rate cuts?  Higher rates?  Does it matter?

There are still billions more in losses to come so I’m skeptical that the CNBC talking heads and others claiming that we’re past the sub-prime problem is anything but realistic.

I’ll likely be out of town when this article posts so perhaps some new developments will negate my concerns but as I write this, I’m very skeptical and extremely concerned about the viability of some banks.

Bookmark to:

Let me officially state that Indexes probably do return 10% per year on average but that doesn’t mean you’ll be getting that return personally.    The assumption that is made is that a large lump sum of money is invested at period x and 30 years later that lump sum of money is worth x * 30 * 10% ^t.   The often quoted myth also makes certain assumptions about individual investors such as:

An investor will never touch the money invested in an index fund.

Let’s face reality, most people end up cashing out their 401k after they leave an employer.   Most people end up borrowing or withdrawing some of their money at some point in their life for a reason or two.

An investor will make consistent and permanent contributions to an index fund to dollar cost average over the long term.

Let’s face reality, most people will change their job at least four or more times over the course of a lifetime.   One 401k will get rolled into another 401k and the investment structure and fees are not always the same much less the “lost” time in between jobs.  Suppose you are unemployed for 6 months, not exactly dollar cost averaging are you?

So what’s my beef in with index funds?    I actually don’t have any problems with index fund except for one big fundamental issues:

Index Fund creators and sellers have a huge incentive into steering you into them.   The most valuable incentive is information arbitrage.   Let’s run through some bean counter math:

If you have a working population of 50 million people and we assume that 50% are making 401k contributions and we assume that each are contributing 6% of their salary which we assume is an average 50k/year then that means that:

Each week, an index fund manager can expect inflows of about $300 million biweekly.   There’s some math that can go into the withdrawals but let’s keep this simple.

So if you absolutely knew that you would have $300 million coming in every other week and you knew that the money would be destined for an index fund how would you arbitrage that information?

You can get a spreadsheet and use a pivot table to play out any scenario you want.   One scenario that I would definitely advise you to make is the one where 78 million boomers retire and stop contributing 401k money into the system.  I think when you do that in any number of ways the implications will terrify you.

Bookmark to:

I got an e-mail from Chase Bank regarding a change of terms and services and I simply couldn’t believe it.  It reads (emphasis mine),

Dear XXXXXXXX:

As part of our continued effort to enhance online security, we’ve changed the way we process online payments or transfers, and have updated our online terms and conditions to reflect those changes.

The updated terms and conditions will be available online and will take effect April 13, 2008.

Here’s a summary of what we’re changing:

We may delay or cancel a request to transfer or charge money back to the Pay From or other account at our discretion including if the payment:

* Looks suspicious or fraudulent
* Appears to have incorrect amount or recipient information
* Seems to duplicate another payment

You can review the latest Online Services Agreement For Consumer Customers with Checking Accounts online anytime by logging on and clicking “Legal Agreements” at the bottom of any page.

So Chase Bank may delay or cancel a request if they don’t like the way something looks huh?  I suppose that if I pay off some credit card arbitrage for say $25,000 it may look “suspicious” and Chase will not process the transfer or payment.  This philosophy will do wonders for your FICO score when payments don’t go through huh?

What really peeves me is they don’t write something like, “if a transaction look suspicious, we’ll call you because we’re watching your back” but no, they’ll simply not process a payment because they don’t like the way it looks.

Additionally, I actually do duplicate payments on occasion because I may be expecting an additional expense to an account but those may not get processed now because Chase doesn’t like duplicate payments.  I wonder if this applies to ACH transfers that might be setup to go to online accounts like ING.   Are those duplicate payments?

Needless to say, I’ll be closing my account with Chase bank soon.

Bookmark to:

PBS had a two hour show on taking care of elderly parents entitled Caring For Your Parents last night. The show featured different families in different scenarios all of which are having to take care of their elderly parents. Some interesting things from the show I gathered were:

1. It costs about $250,000/year to take care of an elderly parent when factoring in health care costs, nurses, specialty services and other expenses. State/Fed government helps pick up some of the tab but it’s still expensive.

2. It takes a “team” of people to take care of an elderly family member: nurses, doctors, specialists/therapists, chauffeurs, maids, wheelchairs, wheelchair modification to car, etc.

3. If you have a daughter, you are less likely to end up in a nursing home as your daughter will likely care for you instead. Contrast this with some Asian cultures where the son cares for the elderly parents.

On a personal level, I can attest the validity of these claims as my mother has been taking care of my grandfather for a year now. My grandmother passed away last year and once that happened, my mother moved my grandfather in with her. It does take a “team” of people to take care of my grandfather from state subsidized nurses, chauffeur, doctors and nurses to help take care of him. I’m not entirely sure how much money is spent on all these things and my grandfathers social security likely barely pays for much of it.

Now take the above scenario and multiply it by 80 million boomers and you begin to wonder what is going to happen to American society in the future. If it takes a team of say 5 people to care for one person then you’d need 400 million people to take care of the boomers. We’re short 100 million and this assumes that kids would chip in to help and all other jobs would be put on hold while we help take care of the elderly. Even if you assume that each person only had to volunteer 1 hour out of their day then you’re talking about 80 million hours of lost productivity in the economy.

I’ve been on this issue since this blogs inception and have written numerous posts on it:

Grey Haired Old White Men - What happens Next?

Do Markets Go Up Forever?

The Collapse of Health Insurance

Synthetic Financial Disasters - Boomer Armageddon

And I have yet to read any single solution that attempts to address these problems. Politicians don’t even touch the problem with a ten foot pole. The Fed has at least repeated acknowledged that there isn’t enough money to cover these problems and things will get ugly in the future but no one dares even suggest a solution. I honestly don’t think it’s a money problem either because if there simply aren’t enough people to care for the elderly then what’s going to happen to them?

Perhaps the 1973 flick Soylent Green wasn’t so science fiction after all given all the problems we have these days….

Bookmark to:

I’ve recommended that as a professional worker you should maintain memberships in trade associations and certifications in your career field and I recently attended a meeting for a professional association recently and I was struck by a few things that made me wonder.

The first thing that struck me as I entered this room was that out of the 50 or so people in the room approximately 45 were gray haired old white men. The remaining 5 were broken down by a person from India, one from China, two from Mexico and one from the Middle East.

It wasn’t the first time I encountered such a ratio in a professional trade setting. Actually, if you ever seem marketing material from either the Board of Directors or Executive Management group of most Fortune 500 companies, more likely you’ll see photos of about 90% white grey haired old white men. I’ve written extensively about the boomer population here, here, and here but I’m really beginning to wonder where all the future engineers, doctors, CEO’s and Board of Directors will come from because industry clearly hasn’t been investing in diversification & educating younger masses otherwise these meetings wouldn’t all be filled with grey haired old white men.

If you pay close attention, you’ll see it almost everywhere you go from John McCain (politics), Pat Buchanan, to newscasters on TV (Wolf Blitzer, Cokie Roberts, George Will). My doctors are all in their late 60’s too! Every time I fly, the pilot is usually a grey haired man as well.

I’m no sociologist so someone out there please tell me what the future holds for the US economy, finance, captital and our aging population; What happens after?

Bookmark to:

According to this article on ABCNews.com, it was “suspicious” financial transactions that initially led the Feds to take a gander at Spitzer’s extracurricular activities.  From the article,

The suspicious financial activity was initially reported by a bank to the IRS which, under direction from the Justice Department, brought kin the FBI’s Public Corruption Squad.

For those uninformed, there is a banking regulation/law that requires banks to report “suspicious” activity to the IRS as described at the OCC website.

Suspicious Activity Report (SAR) Program

BackgroundThis page provides a link that allows banks and other filers prepare and file Suspicious Activity Reports (SAR). Under 12 CFR 21.11, national banks are required to report known or suspected criminal offenses, at specified thresholds, or transactions over $5,000 that they suspect involve money laundering or violate the Bank Secrecy Act. Similar regulations by other regulators apply t