A PF Blog with a Difference

This guy lives in a van while doing a masters degree at Duke University. I read an article by him before but just discovered he now has a blog. He seems to annoy a lot of people.

Article on NetWorthIQ in NYT

Interesting article on NetWorthIQ in NYT. The article takes a negative angle on net worth tracking. Personally, I get a feeling of security to some degree from the net worth number when it is heading in the right direction and when it's not I know something needs to be done... I think it is essential to know how much you are saving and whether you can meet retirement and other financial goals. For these purposes, tracking net worth is necessary.

SMH Series on the Aussie Housing Market

The Sydney Morning Herald is running a series on the Australian residential property market. It looks like it will take a skeptical tone.

How Millennial are You?

How Millennial are You?. I only scored 19%. Which is exactly the expected score for my age (45). Having two blogs and LinkedIn and Facebook pages etc. didn't help me :( And I didn't read a newspaper in the last 24 hours. I did watch more than 1 hour of TV though. Snork Maiden scored 53% which is a year or two below the average for her age (34).

Wikinvest Data Platform

Wikinvest have a new finance data platform. It looks pretty nice in terms of graphics etc. though they exaggerate how much this improves things over platforms like Yahoo. Yahoo does have a competitors analysis as well as an industry page that provides some context of how a company compares to others in the industry. To tell the truth though I mainly have used it just to find alternative potential investments.

Take an Economics Test

U.S. High School "Advanced Placement Economics Test courtesy of the New York Times. I got 18/18 but for a couple of questions that was because I knew all the other answers had to be wrong rather than I knew the one I selected was right. It's all macro-economics questions.

Flash Drives and Trees

I just got an e-mail about a new social media things called Academia.edu. The organizers state:

"Academia.edu was founded by Richard Price and a team of people from Stanford and Cambridge University. The aim is for the site to list every academic in the world, together with their university and department affiliation."

But like LinkedIn, I'm not yet sure whether it is really much use for anything else but being seen to be there. From a quick look around, it's overwhelmingly graduate students who are members despite the claim that: "Stephen Hawking, Richard Dawkins, Noam Chomsky, Paul Krugman and Steven Pinker have all added their names to Academia.edu's tree recently, and so have 70% of the Nobel Prize winners for 2008."

I'm settling into my office - all my books and stuff are now there and my computer is set up and I have an appointment scheduled for today to check my ergonomics.

I'm trying to decide on the best system to always have the most up to date version of my data (i.e. all my computer files excluding applications etc.) with me whether I'm working at the University or at home. In the past I've used an external hard drive with all the data on it, which I've then plugged into my home or office computer. I had the applications residing on the computers and used the computers as backup for the data (where usually an external drive is considered the backup). The only problem is the long cable to the drive is awkward when using a laptop and gets easily disconnected. I know that there are networking solutions like Apple's MobileMe but I can see where that will very quickly exceed my internet download allocation at home or I'll still need to use the hard drive to make backups. So the solution I'm coming to is getting a 16GB USB flash drive instead. It's big enough for all my data. I have a 2GB one at the moment Kingston Data Traveller but it is very slow when copying lots of small files as some users note. And too small for even my e-mail database. From what I read there is no reason why these things should be slower than hard drives. Maybe the next one I get will be faster?

Annual Australian Tax Statistics 2006-7

The annual report on Australian tax collections has just been published by the ATO. It's just crazy that "the vast majority of people use a tax agent" to submit their tax return in Australia. The Moomin household is in the 11.8% who submitted a paper return (well we didn't pay tax in 2006-7 of course, so in 2007-8 that percentage would likely be even lower). That's because e-tax only runs on Windows (and I think you also needed to have submitted a return in the previous year).

Otherwise, I'll confirm that we don't live in either the richest or poorest postcodes mentioned in that article :) In our neighborhood mean taxable income was $61,000 which was more than taxable income, let alone mean taxable income (see Moom's taxable income and Snork Maiden's taxable income - there is no such thing as a "joint return" in Australia). The raw data is available here.

Australian Unemployment Rising, But Still Low

Chart at Peter Martin's blog.

Bounce in the Baltic Dry Index

As is the case for non-US crude oil prices there's been a bit of a bounce in the Baltic Dry Index of shipping costs. Of course, it could just be a case of a technical bounce following overshooting to the downside.

LinkedIn

I just joined LinkedIn. I don't really understand how it works or whether it is useful, but figured it is yet another portal to channel people to my professional website. I wish I could post a link here, but sorry that would blow my cover completely :) I'd appreciate any tips on how to use the site more effectively.

BTW in the last month this blog got 14 times as many visits as my professional site. But then there are more than 900 posts for people to hit on the blog and maybe 10 pages on the professional site.

Credit Suisse Yearbook

Great report from Credit Suisse on global equity returns.

Why Petrol Has Gone Up in Price Though Crude Hasn't

I've noticed that petrol (gasoline) has gone up in price from a low of $A0.99 a litre ($US2.41 a gallon) to around $A1.25 a litre ($US3.04 a gallon) while the US crude oil futures contracts have gone nowhere and neither has the Australian Dollar. Even the Ford dealer tried to distract me by talking about the price of petrol when I complained about the price of Ford parts. Yahoo has an interesting article about the issue, explaining that the price of other varieties of crude oil has risen above that of West Texas Intermediate Crude, which remains depressed. Could this be a sign of economic recovery elsewhere in the world?

When You Have $60 billion, Losing $4 Bllion isn't so Bad!

The Future Fund reported its results for the last quarter of 2008

Rear View Mirror Retirement Allocation Advice

Christopher Joye in an article in the Business Spectator today performs a retirement portfolio optimization using historical Australian data for 1982-2008 much like I did in in this post. But while I was asking what portfolio would have performed best in the past he is using the results to recommend the portfolio that superannuation (retirement) funds should adopt in the future. His conclusion - allocate heavily to residential property (a property class that no institutions in Australia invest in apparently for tax reasons) - government bonds, and cash. These asset classes have had the best risk adjusted performance in the past. If we know anything about investment theory it is that mean reversion is likely and that equities and commercial property will probably perform better in the next decade than in the last, while government bonds and Australian residential property perform worse.

Man to Sue over Madoff

Man Investments will sue over its Madoff related losses. Don't know if it will do any good but that's better than nothing.

Wordle

This is a graphic of this blog created using Wordle. I posted a couple of these created by Paul Kedrosky earlier.

Breaking the Buck was the Problem

A discussion of Bernanke's speech yesterday argues that it was the impact of the Lehman collapse on the Reserve Money Market Fund and the consequent run on all money market funds that caused the September-November collapse in financial markets and that the other impacts of the Lehman collapse were not significant.

Duration and Stock-Bond Allocation

Interesting discussion from John Hussman about changes in "duration" and the optimal allocation between stocks and bonds in a portfolio. Duration for bonds is the sensitivity of the bond price to a change in interest rates. Bonds with distant maturities are much more sensitive than short-term bonds and therefore more volatile. Hussman also talks about a duration for stocks which is the sensitivity of stock prices to changes in the discount rate applied by investors to company's cash flows. He argues that this is equal to the reciprocal of the dividend yield.

Anyway, the lower the duration of an asset the more an investor with a given time horizon can allocate to it. Given the increase in stock yields and the fall in US Treasury yields recently investors should allocate more to stocks and less to treasuries. This is an alternative argument for valuation based market timing.

BTW I checked the CREF Bond Market Fund's holdings and less than 10% is in long-term treasuries. So there is no reason to dump that fund based on the high prices of long-term U.S. bonds.

SIPC Testimony on Madoff and Lehman Brothers

SIPC actions and testimony look like good news for small investors with Madoff. The SIPC sent out claim forms to 8000 Madoff investors. So they should get at least $500,000 back. More than that has been identified in assets of the brokerage firm that is being liquidated. This says nothing explicit at all about investors in the feeder funds. I suspect they (including my exposure of about $A50) get nothing?