ericabiz

Newsweek had a great interview this week with David Lereah (author of the “Boom Will Not Bust” book (in the article, they comment on the “unfortunate title”.) He’s seriously changed his tune since quitting his job.

http://www.newsweek.com/id/135724

“Wall Street has an intense interest in [this], because they’re looking for when is the recovery going to come, and at what point does the cycle turn,” Lereah told me.

His answer: not yet. “We’re not at the bottom,” he says. “[People] want it to be near the bottom, but we’re not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low … There’s still supply out there in abundance … This thing is going to get worse before it gets better.”

Ruh roh!
-Erica

Pierre

Regarding ‘we’re not yet at the bottom’:
I just passed-up a relocation-mortgage benefit of ~100k (50k in direct subsidy plus 50k in low-interest loan, to be realized over a 3 year period) due to the High Risk to Benefit ratio. I counted the risks: Anticipate continuous decline in house prices, unknown political affects of Proposition 98 on SF Bay housing, potential for broad-changes in my industry (biopharm) and potential to lose capital in the short-term due to potential for another relocation, unstable larger economy (as in higher prices), etc; Versus the benefits: potential for long-term asset appreciation (over renting), tax incentive on mortgage interest, ‘rewards of home ownership’, etc. Objective was to live and raise kids in SF. I do not yet make the state (~193k) or city (~220k) definitions of ‘middle class income’, but am likely to next year or the year thereafter. Would you have made the same choice?

Graham

I might be, contact me via email and we’ll talk. And don’t get me wrong, I love your stuff – I just with there was more of it!

foo

Yup, the quality/ frequency of posts is decreasing. Spending too much time on your book?

Brandon

Frist I love your blog and read it several times a week.

As to the purpose of this post. JPL shows you how to save tons of money by investing for yourself.

I read over this article and have to say that it should be taking with a grain of salt. He left out alot of factors when he did the math to figure out the savings on not paying a broker. The most important snafu in his article is the assumption that both investment plans will yeild the same returns. Not only is this very unlikely. It is nearly impossible. Much more likely is the one recommended by the broker who has a great deal more research and experince doing this type of thing will return much more than the other. The fees that he showed are also incorrect. Most investors do not end up costing that much with different refunds and other sliding scales that are in use. I hate to say it, on the surface this seems like a great article but it really is poor advice unless you are very far into the know how on this type of thing. Of course if you are. You didn’t need that article.

Spread betting trader

I just came across your blog and read your article on poor portfolio allocation decisions.

Unfortunately, the illusions that you refer to are ingrained in the minds of people who came into the markets in the giddy days of the dot com mania!

Just reading the comments above suggests that many people still just do not get it. Studies after studies have demonstrated conclusively that the primary determinant of portfolio returns over a long investment horizon is asset allocation with little benefit ascribed to stock selection.

That is not to say that there is no room for short term trading or stock picking – just that it should represents a small potion of ones overall portfolio.

Besides, a key issue here is transaction costs and a major factor in favor of mutual funds is the very low expense ratios that they incur. One of the comments above advocating that people create their own index fund obviously fails to realize this crucial fact.