[00:00] Introduction from Bryan J Busch [00:41] Interview with Patrick van der Voorst
– [00:55] How ValueMyStuff works
– [01:44] What are people asking for values of?
– [02:23] People appraise things for selling and insurance
– [03:04] Why art is considered an investment
– [04:54] Comparing other investments to precious metals
– [05:36] Patrick’s predictions for values going up
– [07:24] Why certain items lose value overnight
– [08:58] Valuable works of art as part of a retirement portfolio
– [10:34] Older computers and iPods are now collectors’ items
– [11:33] How to get the best estimate at ValueMyStuff.com [13:17] Interview with Ralph Pinto
– [13:26] Chase’s Drive to End Hunger Campaign with AARP Visa Card
– [15:19] Older Americans and food insecurity
– [16:05] Success of the AARP Visa Card campaign
– [17:07] Chase’s involvement and components
– [18:45] Why older Americans donate more to charity
– [19:42] Signing up for the AARP Visa Card
– [20:28] Making donations directly to the campaign
– [21:02] Partnership with AARP and NASCAR [21:56] End
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This isn’t the first time smart professional investors have considered abandoning the buy-and-hold strategy. Most of the controversy has surfaced following the recession. I asked whether buy-and-hold was still a good investing strategy a few years ago. Investors who had been following the buy and hold strategy — forgoing active trading in favor of buying stocks for the long term and sticking with a philosophy of patience — saw the values of their stock-heavy portfolios plummet, following the stock market at large.
This kind of catastrophe shocks investors to the core and gives people a chance to challenge their assumptions and choices. The leading argument against the buy and hold strategy for investors going forward focuses on volatility. Judging from market performance through and after the recession, stocks seem to be riskier than they have been in the past. Some investors believe that the fundamentals that made buying and holding stocks for the long term work in the past, providing an 8% average annual return over 30 year periods, have changed.
Markets are more volatile now because the bulk of investing activity isn’t done by humans making purchasing and selling decisions based on available information, most trading is accomplished by computers reacting to market changes in microseconds. Complex investing instruments like derivatives and hedge funds make it possible to take advantage of economic situations generally inaccessible via stocks.
In an interview with CNN Money, economist Andrew Low has this to say about buy-and-hold:
Buy-and-hold doesn’t work anymore. The volatility is too significant. Almost any asset can suddenly become much more risky. Buying into a mutual fund and holding it for 10 years is no longer going to deliver the same kind of expected return that we saw over the course of the last seven decades, simply because of the nature of financial markets and how complex it’s gotten.
Think about how that person earned 4%. He lost 30%, saw a big bounce-back, and so on, and the compound rate of return over the period was 4%. But most investors did not wait for the dust to settle. After the first 25% loss, they probably reduced their holdings, and only got part way back in after the market somewhat recovered.
His argument is that buy-and-hold doesn’t work because investors don’t follow the guidelines of the strategy. Carl Richards pointed out in his recent book, The Behavior Gap, that investor’s actual returns don’t match “investment returns” because people are human and react like humans. When they do react, the often do so improperly, like reacting to a high-flying stock by buying at a high price and selling when the market sinks the stock’s value. If buy-and-hold doesn’t work, it’s not a failure of the strategy, it investors’ failure to properly follow the strategy thanks to their human brains.
Do you plan to use a buy-and-hold strategy for your investments in the future, and do you expect the long-term returns in the stock market we’ve seen over the last century continue in the future?
All signs are pointing to Apple releasing the latest iteration of its popular tablet this coming week. I gave in last year and purchased the original iPad, and I made this decision just days before the iPad 2 was announced. Now, tech geeks are expecting the iPad 3 to hit to streets this week. The iPad was my first Apple-branded product. I’ve never been a fan of Apple’s computers, with my objections stemming from everything from the keyboard layout to the graphical user interface. Nevertheless, I’ve used the iPad almost daily.
I won’t upgrade yet I’m satisfied with my original iPad, so I see now reason to spend money on the latest device.
Are you planning to buy an iPad 3?
Here are a few articles I’ve discovered recently that I’d like to share.
Neal from Wealth Pilgrim has reviewed the social lending website, Prosper. Peer-to-peer and social lending is an intriguing idea. I think tools like Prosper, helping borrowers and lenders work with each other without layers of third parties like banks, are needed. It’s slightly more efficient, but not free from regulation. Without a trusted party between borrowers and lenders, large-scale borrowing and lending would be risky. At the same time, most financial institutions have too much overhead.
Social lending isn’t perfect. I couldn’t loan money to a friend at a decent rate through either Prosper or Lending Club because the state in which he lives has anti-usury laws that prevented a loan at the interest rate he qualified for. I couldn’t easily and directly invest in a basket of loans through a service because the state in which I live wasn’t ready to allow this type of investment opportunity.
Jim from Bargaineering explains how to print USPS postage at home for free. I didn’t take this approach a few years ago when I was selling old text books online through Amazon.com; media mail rates was not available for online printing. Now that media mail rates are available, it is easy to save money printing postage online for those who ship books, CDs, and video often.
For the last few days, I’ve been testing the new version of Quicken Home and Business. While most people who track their finances have moved to online services like Mint.com, some of us are holding out until the online software offers the same advanced features as the desktop Quicken software. I enjoy my ability to track my investments, create and customize reports, export information into Excel, and look into the future with planning tools.
Quicken 2012 is set to be released on October 10, 2011 and offers several new features, particularly in that last category. The programmers at Intuit have refreshed and improved the Budget Planner and the Debt Reduction Planner, available in all flavors of Quicken 2012.
Quicken 2012 Budget Planner
The new Budget Planner is a combination of the budget planner from previous versions of Quicken and the spending planner. When creating a new budget, you have two choices. The “Automatic Budget” looks at your recent spending to determine the five most important categories for budgeting. Quicken estimates the amount for each category on a monthly basis and presents its suggestions to the users for customization. The “Advanced Budget” invites the user to select the categories to be used in the spending and income plan.
Each line on the budget is configurable by period. You could, for example, assign a budget of $300 a month for Food and Dining (overall, which includes specific categories like Groceries and Restaurants) and set a budget of $10,000 per year for Property Taxes. If your annual salary is $60,000, you can enter this. Automatically, Quicken will assign the average monthly budget in this category to $5,000, but if you are paid bi-weekly, you don’t receive the same amount of income each month. You can edit the individual months if you like.
One drawback to Quicken’s budgeting tool is that it does not include a rollover feature. For example, if you budget for an expense of $200 in groceries each month, but you only spent $150, the extra $50 is lost. In real life, and in other budgeting software, that $50 would be available to add to the following month’s spending on groceries, but Quicken does not automatically handle surpluses. Rather than focus on these details, you could change the budget view in Quicken from monthly to quarterly to get a better overview of how you spend when expenses cross months. This is also helpful for those infrequent expenses that are often forgotten when you look at a budget on a monthly level.
Each Quicken file can contain multiple budgets, so you and your spouse could maintain separate measurements of spending, even including the same accounts.
If you’re just getting started with budgeting, consider these resources:
The new Debt Reduction Planner in Quicken 2012 has been completely redesigned. The focus here is on credit card repayment, but the planner can be easily configured to include student loans, a mortgage, and any other debt that is destined for elimination.
If your credit card issuers support it, Quicken downloads the interest rate and minimum payment information directly through the internet. If all the information isn’t available for automatic download, users will need to enter it manually from the latest statement or by accessing the account online. The interest rates and minimum payment amounts are important because Quicken needs this information to calculate the payoff plan.
Quicken’s programmers have decided that the Debt Avalanche method of paying off debt is the most appropriate philosophy for prioritizing debt. This means that the Debt Reduction Planner advises users to pay minimum payments to all debts, and any left over cash available for debt repayment should be directed to the one loan or credit card with the highest interest rate.
This is the fastest, cheapest, and most efficient way to pay of debt. The Debt Reduction Planner creates a chart and reminders to keep borrowers focused on paying the correct amounts to the appropriate debts.
Although Quicken defaults to prioritizing debt by interest rate, any user who prefers to follow the Debt Snowball approach, where debt is prioritized by size to payoff the smallest debt first, taking advantage of the psychological “quick win,” can apply this philosophy with one click. Furthermore, if there is a reason to customize the order of debt accounts due to some other reason, such as the desire to eliminate a low-interest loan from a family member before tackling an otherwise important credit card debt, users can easily manipulate the list.
Once users and the software agree on priorities, Quicken uses a visual approach to illustrating the debt payoff plan. This slider can be moved back and forth to represent the total cash available to pay off debt. While moving the slider, Quicken updates the target date for complete debt repayment and the total amount of interest paid over time.
The screen also includes a monthly chart to show the payment amounts that should be directed to each debt to stay on track. I’ve included a video capturing how the new Debt Reduction Planner feature in Quicken 2012 works, in action.
Quicken 2012 bugs
Since upgrading to Quicken Home & Business 2012 from the 2011 version, I’ve noticed that the “One Step Update” frequently doesn’t complete without causing the application to become unresponsive. This was an occasional problem with all prior versions of the software, and forcing the application to close and restarting the program usually solved the problem despite the inconvenience. With Quicken 2012, more often restarting the program does not fix the problem.
I can avoid this problem by avoiding the One Step Update function and downloading transactions for each account separately. I’ve always liked the convenience of downloading transactions across all accounts at once, so I would like to see this fixed in one of the many patches Intuit is sure to release.
If you discover any additional problems with Quicken 2012, such as calculations that don’t seem correct, let me know by leaving your comments below.
Other questions
In addition to the above, Intuit has been busy adding more financial institutions to the “Direct Connect” or “Express Web Connection” features, so transaction information can be downloaded directly into the software with as little manual entry as possible. With Quicken 2012, I’ve found that the software much more intelligently assigns categories to new transactions.
Quicken 2012 offers a new feature, good for users with high-definition screens. A toggle allows users to switch to a larger font, making the information much more legible. This follows the design trend leading towards larger text on the web. You may find the large text more appealing. Also, the account bar now features new icons, supplementing the familiar red flag. The new icons help to identify whether there are downloaded transactions to accept into the register, upcoming reminders or bills, or any other issue needing attention.
The latest development of Quicken is available only for computers running the Windows operating system. Apple users with the Mac OS will need to continue using Quicken Essentials for Mac for the near term, or use the Windows version in a virtualization.
For some people, finding the right career is easy. During formative years, perhaps one skill outshines all others, directing someone to develop that skill over time. Perhaps there is one particular area that develops into a passion, and the only choice is to follow that passion regardless of the income potential. In my formative years, ... Continue reading this article…
For several years, many states offer sales tax holidays, several dates set aside during which merchants will not charge customers sales tax. Each year, the dates and the participating states change. I’ve updated this list for 2011 as we’re approach the back-to-school shopping season. Consumers should take advantage of the few days their state offers ... Continue reading this article…
Imagine this: You, accompanied by the sheriff’s deputies, walk into your local Bank of America branch. You tell the sheriff to remove cash from the tellers’ drawers and seize the branch’s furniture and computers. It’s like a dream come true, especially for someone who has been on the receiving end of a bank’s foreclosure. Now ... Continue reading this article…
According to the government’s figures, inflation was a modest 2.7 percent over the twelve months ending in March. The Consumer Price Index (CPI) is the Bureau of Labor Statistics’ popular measure of economic changes affecting typical consumers in the United States. It’s a figure we often compare to after-tax savings interest rates, reminding us that our ... Continue reading this article…
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[00:00] Introduction from Bryan J Busch
Markets are more volatile now because the bulk of investing activity isn’t done by humans making purchasing and selling decisions based on available information, most trading is accomplished by computers reacting to market changes in microseconds. Complex investing instruments like derivatives and hedge funds make it possible to take advantage of economic situations generally inaccessible via stocks. 
Are you planning to buy an iPad 3?
