Tuesday, February 28, 2012

Permanent Portfolio ETF

In the past I have offered a bit of financial advice, mostly related to my philosophy of living below your means and saving for a rainy day. I generally stay away from offering exact investment advice as I do not believe I am good at predicting the future and have any sort of clue about what investment are likely to work out for you in the long run. With that said, a big influence on my investment strategy was the late, great, Harry Browne. He developed what he referred to as the "Permanent Portfolio", this was basically a plan that said you should allocate your savings with 25% bonds, 25% stocks, 25% cash, and 25% gold, for your investment portfolio and this will give you the most stable returns possible. Over time his plan has worked, it is what I base my investment strategy on. However, even though his plan is simple, some people still find some of the details complicated, like the re-balancing aspect of the plan. So I am happy to see this new ETF, I like what I see in it so far, and think if you are looking to invest in an ETF or mutual fund with the goal of low volatility this is one to look into. Of course you will want to consider all your options and decide what is best for you, as every circumstance is different.

BTW- I have no dog in this race. I just think this looks like a good way for those interested in doing the PP to get into it without having to do much work.

Tuesday, February 21, 2012

Having guns pointed at you, now normal part of life in US Police state

As I am driving to get lunch I see some guy pointing a gun at me! He was alone on a sidewalk. He was in all black and wore sunglasses, pointing a large gun. Creepy as fuck.

As I got right up on him, I could see around the corner from where was standing and could see down a small side street and I was able to figure out that the lone crazy with a gun aimed at me, was not actually alone, but part of a larger more pervasive violent gang. He turned out to be a cop with a radar gun. However, until I was right at the corner he appeared to be a lone shooter. Once I could see down this little side street, I could see that there were several cop cars hidden from view on the main street and they were flagging people and having them drive onto the side street to be terrorized and threatened with various forms of kidnapping, abuse, and extortion. Are we supposed to think that a guy who appears to be alone on a sidewalk pointing a gun at people as they drive by is perfectly acceptable? I found it creepy as hell. Luckily I was in a crowd of cars and not one of the stragglers they appeared to be picking off. Go police state, make the creepy and scary a daily part of life in America.

Wednesday, February 1, 2012

29% of Coloradoan's have no savings

This morning there was a news story that said 29% of Coloradoan's have no savings, they cannot weather an unexpected expense. This type of story saddens me tremendously. But these stories also piss me off! They piss me off because the blame is always put on the poor person who doesn't save. To some extent this is where the blames lies, but to a large extent the blame truly lies with the failed monetary policies of the federal reserve and the government.

Currently on Bankrate the highest one year CD earns 1.08% with a 25k minimum! What kind of idiot thinks that investing in savings is a worthwhile mechanism for maintaining or growing wealth? Even by the governments own distorted accounting, inflation is closer to 3% which means every dollar getting a 1% return is losing 2% in purchasing power, and frankly the government is lying about the inflation rate and the true inflation rate is much higher. The incentives are all wrong. If interests rates were higher it would encourage more savings, but the government is forcing interest rates lower than inflation, which encourages more debt and less savings. This policy works out great for those who don't save and have access to borrow at these absurdly low rates, but poor people cannot get into this game, their debt comes mostly in the form of high interest credit card debt, which means the credit card companies are borrowing from the federal reserve at rates at 1% or below and then using that money to pay off their customers credit card charges, and then charging their customers 10-30% interest rates on that money they also borrowed, it is a scam of magnificent proportions.

In a free market interest rates are determined by the availability of money. The more savings that are available to be lent out, the lower interest rates will be, the less savings available to be lent out, the higher interest rates will be.

At the end of the article, they also suggest putting money in savings through a company 401k, this defeats the entire concept of the rest of the article which focuses on the need for savings in the case of emergency. Money saved in a 401k is not useful if your car breaks down, or you have an unexpected medical issue, or lose your job. For these kinds of expenses you need a more liquid form of savings.