patrick.net

More wheels come off and the sparks from the rims are starting to show.

http://www.bloomberg.com/apps/news?pid=20601170&sid=alOjASNOLKcQ&refer=home

P.S. Regrettably, DinOR is completely wrong about index versus active funds. There is no evidence that active managers have any timing skills, nor is there any evidence that advisors have any timing skills either. Buy some low cost funds, appropriately diversified among asset classes, and sleep like a baby. If minor fluctuations bother you, then you need to be reminded that there is no such thing as a free lunch, expected returns come from taking some risks, and if you really cannot stand it, accept that you're going to get less buying CDs - spreading the money around if you've got more than $100k - or Treasuries.

"appropriately diversified among asset classes"

"sleep like a baby"

"no such thing as a free lunch" (yawns)

Actively managed funds/portfolios don't HAVE to outperform year in and year out to establish their value to clients. Even one break out year can have a meaningful impact to your net worth over time.

Punchbowl, since no one here has shared that they will be inheriting huge gobbs of cash is your position that if we were born without money then we weren't meant to have any? Younger investors SHOULD be more aggressive! Why is that such a revelation to you?

The media has the tail wagging the dog by being solely focused on expenses. If you think starting, operating and managing a COMPLIANT fund is THAT cheap I certainly invite you to do so. Good luck telling the NASD there's no need for auditing or compliance b/c afterall you're just a feel good index fund. Let me know how that works out.

My instinct tells me that a passive, buy-and-hope, index-investment strategy is not very good.

Peter P: You can try the similar route of buying a few good companies and ignore them for a few decades.

In a zero-sum game, you have to go out and (legally) snatch money from other market participants in order for you to have any real growth. Index-investing is quite far from that. True, you will be compensated for puting your money at risk, but that is merely compensation, not profits.

You can try the similar route of buying a few good companies and ignore them for a few decades.

That is not index-investment but a buy-and-hope strategy nonetheless.

Peter P,

I'm not by any means totally dismissing the value (or strategy) of indexing. There aren't a lot of "stock pickers" working at insurance companies. They need quantifiable, predictable returns to manage risk. So they definitely have their place.

Most of our discussions here (where money mgmt. is concerned) revolve around "post popping cash parking". That aside the last time I heard this much debate about the merits of CD's and mmkts I was giving a fixed income presentation at an old folk's home!

We have chocolate chip cookies and (warm) orange juice at the back!

They need quantifiable, predictable returns to manage risk. So they definitely have their place.

Do they invest in "disciplined" hedge funds with focused strategies (risk arb, long-short, etc.)? I think some HFs are very popular among university endowments.

Open Office has a decent spellcheck, it's quite different from Word so it takes some getting used to, especially with the autocomplete feature on.

Is it wrong to believe that a healthy portfolio should include at least some short positions?

astrid, are you a proponent of open source software? :)

Peter P,

I've never had a lot of luck penetrating that market. I've gotten a few appointments but you're never really sure if they weren't just being polite. Typically endowments have layers of fiduciaries and it can be tough to get to an actual decision. If they DO have HF exposure I'd be willing to bet that it was former grads that put together a HF for that EXPRESS purpose.

In that case, Punchbowl would actually be right. Management for the sake of management.

Peter P: Of course not; pretty much all of my positions in the last month or so have been puts. I'll resume buying for the long haul once the current fun sorts itself out.

Word 2007 seems to have contextual spell checking, which can be useful. But sometimes I can be too cheap to spend $200 for Word even though it worths every penny.

I tried WordPerfect last night and I hated it. I will try OpenOffice tonight and see how it goes. If I do not like it then Microsoft will get my business. :)

Err, make that all /new/ positions. My buy-and-hope shares are still around, though I did trim down some Chinese ADRs.

Peter P,

Well, nothing is necessarily "wrong" and even firm believers in trad. fin. architecture say that 3 to 5% can be adjudicated toward "speculative" positions.

Does that include shorts? In a lot of cases just by charter (articles of incorporation) charitable inst. and IRA's shorting isn't usually possible. However "I" see absolutely nothing wrong or counter productive if you have the stomach for it. In a generally appreciating market shorting has more peril to it than basically any other form of trading.

Btw, for those that haven't been over to SDCIA (San Diego Creative Inv. Assoc.) ALL talk has turned away from flips and 1031's to shorting builders and lenders. Weird huh?

In a generally appreciating market shorting has more peril to it than basically any other form of trading.

True. I remember reading Market-Neutral Investing : Long/Short Hedge Fund Strategies. Looks like Equity Hedge has been generating some pretty decent returns.

I know then from than, but something that properly checks for singular/plural and verb tenses would be very useful for me. I never quite gotten a hang of proper English grammar.

I prefer open source and web based applications. Faster updates and greater reliability, also sidesteps the stupid rights issue. I hate copyrights - I think they should get 15 or 17 years just like patents.

My short in CFC is the only thing that made money today. :D

I never quite gotten a hang of proper English grammar.

Human languages have difficult grammatic rules.

I prefer open source and web based applications. Faster updates and greater reliability, also sidesteps the stupid rights issue. I hate copyrights - I think they should get 15 or 17 years just like patents.

I like to be able to work offline. Otherwise, I will be coming here too often.

I think many EULAs allow installation on a desktop AND a laptop, which is still quite generous. I am fine with the current copyright laws. However, many people do not understand that they are not buying the software; they are merely buying a license to use the software.

I know then from than

I know loose from lose. :-P

I might be reading too much into this, but I suspect we'll see more stories like this as finances collapse around people's ears. :(

I'm obviously too educated and too old to ever breed.

They worked menial jobs to pay a townhouse mortgage, took in a boarder and had a few run-ins with the law, including a shoplifting arrest over children's clothing.

Theft is a crime of moral turpitude. They could have been deported.

I’m obviously too educated and too old to ever breed.

Huh?

I might be reading too much into this, but I suspect we’ll see more stories like this as finances collapse around people’s ears.

People are responsible for their choices. They should be held accountable for their choices. If they make the wrong choice, they better fact the consequences. If they choose the "easy" way out, they deserve no sympathy from me or any other reasonable person.

Contrary to popular belief, one cannot always breed his/her way out of a difficult situation. Is a child really a gift from God?

Fine, I am incapable of compassion. You can all hate me now.

astrid,

My oldest sister was unable to have children. As a result she saw all of the nieces and nephews more as "individuals" and people rather than "freakin' kids". I was always surprised how well behaved the kids were when we came to pick them up.

The world needs AUNTS too ya know! :)

The woman is younger than me and she has a 9 year old kid! Her kid would probably have had kids before most people in my high school IB class do.

The really freaky thing is that I knew someone just like this in high school (in Montgomery country, MD) who was a sophmore but 19 years older. At that time she had two kids, one was 3 or 4 years old.

But people like this make me never want to have kids, because this kind of gene pool for the next generation cannot end well.

Peter P

Such libertarian ideals are immune to the fundamental shift in perspective regarding children when one becomes a parent. This too is likely a natural thing and has ensured the survival of our species to this point.

After the first time gazing into your own child's genuinely innocent eyes you immediately realize that children are never "deserving" of any fate, regardless of the sins of their parents; regardless if their parents are deserving public hanging. It was not the child's obligation to mold their parents.

But people like this make me never want to have kids, because this kind of gene pool for the next generation cannot end well.

Well said.

After the first time gazing into your own child’s genuinely innocent eyes you immediately realize that children are never “deserving” of any fate, regardless of the sins of their parents.

I hear you. This is another reason why I am afraid of having kids.

Randy,

I don't think Peter P or I were suggesting the kids (or even the husband) deserved what happened to them. Rather, that those kids should not have been born at all because the parents were not morally or financially ready to be responsible parents.

DinOR,

Well, we'll see what happens. Right now, my cousins and my boyfriends siblings are all shaping up to be DINKs or just plain single. There might not be any kids in our future, just a lot of free time for poker nights, foreign travel, and bread baking.

There might not be any kids in our future, just a lot of free time for poker nights, foreign travel, and bread baking.

It will be much worse. People in underdeveloped countries will continue to breed at neck-breaking pace while educated folks are disincentivized to have kids. The result is that the would will be completely occupied by cavemen. Humanity will de-evolve.

People in underdeveloped countries will continue to breed at neck-breaking pace

This is exactly why I refuse to give to any charity sending food to third world countries without sending condoms. Which means I don't give to any of those charities.

My solution:

1. Modify foreign aid strategy, move from a need-based paradigm to a merit-based paradigm.

2. Improve access to education in the third world. Education is way more important than food.

3. Import techology into the third world. This should vastly improve quality of life over time.

4. Discontinue all need-based welfare systems in the developed world.

This is exactly why I refuse to give to any charity sending food to third world countries without sending condoms.

I agree with you.

Peter P,

Do keep in mind that the bulk of my family is in Shanghai.

Sad but true, the individuals in my family who are most likely to breed are also the dumbest of the bunch.

Peter, gc at yahoo.com was a fake email address. Try now.

Sent.