Links: Hilarious real-estate bubble seekers, investing yourself (not through a broker), clueless friends and asset allocation

May 8 12 Comments latest by Spread betting trader

Down to the last two weeks of my book manuscript, so things are going to be a little quiet around here. For now, here are some interesting links I’ve been reading.

Amazon book comments on a book titled Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them. Sadly, this book was written by the former head economist of the National Association of Realtors. The 5-star reviews from 2005 are sad, hilarious, cheerleader-ish comments for the real-estate boom.

Story about someone who had to cut his brother off because he kept asking for money.

JLP shows how you can save TONS of money by investing yourself instead of paying a broker.

How women look for men who have their financial house in order. It is wildly misconstrued by clueless commenters who are determined to miss the point.

His friends insist that long-term investing is “boring” but then have improperly allocated portfolios. With good math examples. Remember, asset allocation is the most important part of your portfolio, not the individual investments you choose.

See all my links on my del.icio.us feed and twitter.com/ramit.

(1 votes, average: 3 out of 5)

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12 Comments latest by Spread betting trader

Why the lady sitting next to me should pay $2,000 for a computer class

April 22 29 Comments latest by Tip #29: Stop being a loser and pay money to save money | I Will Teach You To Be Rich

I’m sitting at my neighborhood coffee shop listening to two women talk about their careers. Yes, I eavesdrop.

One of them is complaining about her job, but says that she can’t get another one because she’s uncomfortable with her computer skills. Which led me to this post.

If you take a $2,000 computer class and it lets you get a job with a $10,000 salary bump, you should do it. No question.

If you buy one book per week, for $20 each, that’s $1,000 per year. If you get one good idea per week, my friend Paul told me, it’s worth it. If you apply that idea, I can’t even guess how much it would be worth.

If you buy a new car for $8,000 more than a used car, it can sometimes be worth it.

Put the numbers in context and look at value, not just cost. A $2,000 conference sure sounds like a lot. But if you make $80,000 off it, it sure looks like an investment. (Which is exactly what another friend, Erica, just did.)

Of course, the excuses will come. I don’t have that kind of money. (Answer: Save up.) How do I know if the class will get me that better job? I could probably take the same class for $100 somewhere else. All this stuff is free online, anyway.

You don’t know. That’s part of deciding what’s valuable and what’s simply a cost. But remember, buying something is not just about a number. If the value exceeds the cost, do it.

(5 votes, average: 4.6 out of 5)

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29 Comments latest by Tip #29: Stop being a loser and pay money to save money | I Will Teach You To Be Rich

The worst financial advice from around the web! (Today only)

January 22 44 Comments latest by Richard

[Updated below! 10:58am PST 6:14pm PST]

Today is going to be awesome. As you may have seen, stock indexes are dropping all over the world. That means that the kooks are coming out today! There will be lots of pundits mouthing off about what this world is coming to. Oh, doom and gloom!

Image from the New York Times.

As you know, I have a very low opinion of Chicken Little Kooks and the media’s horrible performance at predicting economic performance. And I’ve previously written about how hilariously frantic the media behaves during “global corrections.”

So today, I’m going to catalogue the worst financial advice from around the web. If you see something, add a comment!

From this thread on Reddit:

When you buy things like index funds and mutual funds, what do you think you’re really getting? Both the good AND the bad companies, all piled together, with no way for you to separate them. The whole point of buying individual stocks is to minimize the number of bad stock in your portfolio.

Let’s say you buy an index fund, and you also know that there’s a company within the index that is not only terrible, but where you know that they’re about to completely go out of business. You’re watching their stock, and it’s tumbling, day after day. You know what you, as an index fund investor, can do about this? NOTHING! You just sit there and watch that bad stock flush your money down the toilet.

Or let’s say there are 3 industries within the index (manufacturing, technology, and retail), and you know without a shred of doubt that the retail industry is going to take a severe beating for the next several years, and you wish you stopped owning all those bad companies. You have no power! You’ll just watch your money burn, while hoping that the other two industries in the index pick up the slack.

Now, sure, in the end the good stock may outweigh all the bad apples in the index. But the fact that you can’t get rid of the bad apples is also the reason why the profits on these things, while generally consistent, are so low.

If you have the time and the inclination to perform detailed research into where your money is going, and if you’re smart enough to read books on how to do this correctly and minimizing the risks, then buying individual stocks is a great idea, and sticking your head in the ground and buying an index fund or ETFs becomes a gigantic waste of your money.

This Marketwatch column, by Mark Hulbert, is so incredible that I just decided to paraphrase it for you. I strongly encourage you to open it in another window and follow along.

‘Now and 1987 were very similar.

Of course, things are different.

To be sure, I am not sure what I am saying (and I use double-negatives to confuse you into thinking I am writing something coherent).

Now I am going to quote someone who says something inconclusive.

I will add some quotation marks now.

The “expert” I am quoting says things are pretty good.

But even if they go bad, they won’t be bad.

Ahh, my work here is done.’

[Updated, 10:58am] From this forum (forums are the best for these kind of quotes):

As the bubble market bursts, I predict a recession with an extra added bonus of inflation running close to 10% - before the end of 2008…If Bush continues to shovel shit on the dollar right up to the end of his term in January 2009, the inflation rate could hit 15%-20% by 2010.

[Updated, 6:14pm] Ahh, Fortune, you never fail to tell me your kooky forward-looking predictions. In this delightful article on real estate (”Real estate: Buy, sell, or hold?”), they say the following:

Our exclusive calculations can help you figure out what your house will be worth in coming years.

“Exclusive?” Really? This sounds promising! Only a few lines later, they write this:

Take a deep breath. We can’t tell you what your house would fetch tomorrow. But we can help you through the fog of whipsawing prices and vacillating views to develop a clear picture of what your house will most likely be worth in five years or so.

The key word is likely. See, I can predict anything to be “likely” if the time horizon is long enough. For example, I predict that you will likely gain weight in the next 20 years. I furthermore predict that you will likely have gray hair and that you will likely need to take some sort of medicine! HOW DID I DO IT??! I AM A GENIUS!!!!!!!!!!!!

Please add more horrible financial advice you find to the comments. I’m especially interested in finding people who recommend buying gold and tin cans full of oil and butter. They are the best.

(3 votes, average: 5 out of 5)

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44 Comments latest by Richard

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