An asset has no value absent three things: what people are willing to pay for it, what people can pay for it, and it's fundamental value (i.e. an NPV of all present and future dividends and costs)
With housing "ability to pay" is the only factor that matters - it either drives the rent price or the sales price. Rent is a fairly liquid market, so it is a good indicator of long term "ability to pay."
Here is how you can calculate the fundamental value of housing:
Start with income * percent allocated to housing = housing budget
Take housing budget, factor it by interest rates, percent loan and term and you have the maximum loan you can support.
Maximum loan + down payment = house price.
(in excel, use this formula to get maximum loan =pv(rate,years,yearly housing budget) )
Some notes:
- percent allocated to housing is complicated as it varies from person to person, but there are hard caps on what people will spend on housing - it is physically impossible to spend more than 100%, lenders usually won't allow you above 40%.
- down payment is complicated as well, since you have to assume the down payment was either saved or borrowed
- housing budget has two parts: investment + lost payments. Rent is 100% lost payments, mortgages start out mostly lost payments then switch over time to mostly investment. This helps explain why mortgages should be more expensive than rent for the same size place.
- since inflation increases salaries it should pass through to houses, so over the long term absent any increases in salary or other changes, housing prices will track inflation.
- amount you can afford doesn't respond to changes in supply and demand.
- what responds to supply and demand is the size of the space you can afford (so in NYC you pay more for square foot, and in places where there is lots of available land you get as much space as you can afford to build)
The only long term drivers of house prices are 1) inflation 2) increased wages and 3) increased demand without corresponding increases in supply.
Short term fluctuations can be caused by:
- Required down payments (or the converse, amount you can finance)
- Interest Rates
- Expectations and other noise
For many places in the US, housing prices have already equilibriated. But in Seattle (where I now live) they have not yet. Based on median income (I assume $63,856, and growth of 4% per year), long term average interest rates (7% for the past 15 or so years), and current house prices (~440 median price) - don't be surprised to see another 10 to 30% drop in Seattle prices -- no appreciation for 5 to 10 years -- or worse.
--
PS I know, I've been gone for a really long time. This deserves some explanation, but I'm not going to provide it right now.
Tuesday, October 14, 2008
Tuesday, February 14, 2006
Free $5 and a cool new payment system - Textpayme.com
I just read over at wired that somebody has created a payment system that uses text messages to send money - much like what paypal should be doing. The service is currently only available via SMS messaging, but I would be shocked if they don't offer a paypal esque system in the future.
If you sign up now, you get a free $5 signup bonus. Check it out here.
Full disclosure, if 36 people sign up using that link by the end of february, I get an xbox 360. I'm not much of a gamer, but I do like xbox 360s. So, help a guy out - sign up with that link.
If you sign up now, you get a free $5 signup bonus. Check it out here.
Full disclosure, if 36 people sign up using that link by the end of february, I get an xbox 360. I'm not much of a gamer, but I do like xbox 360s. So, help a guy out - sign up with that link.
Saturday, February 11, 2006
Call for submissions, carnival of debt reduction
I will be hosting the carnival of debt reduction this week. If you have posts you would like included, please email them to retireat30 ... at ... gmail ... dot ... com. Or, easier yet, use the submit form at conservative cat.
While you're at it, remember that Trader Mike is hosting the 9th carnival of investing. As always, you can submit articles to investingcarnival ... at ... gmail ... dot ... com.
While you're at it, remember that Trader Mike is hosting the 9th carnival of investing. As always, you can submit articles to investingcarnival ... at ... gmail ... dot ... com.
Wednesday, February 08, 2006
Go with ROTH
With your retirement accounts, if you can max them out or come close, you should go with a ROTH account.
The reason for this is simple: $15,000 after tax dollars is more than $15,000 pre-tax dollars (ditto for $4000 after tax dollars vs. $4000 pre-tax dollars).
Assuming the money is going to double & 10% taxes (for simplicity):
Post Taxed: ($15,000 * 2) * .9 = $27,000
Pre Taxed: ($15,000 *.9) * 2 = $27,000
In terms of after tax value put in:
Traditional: $15,000 * .9 = $13,500 after tax contribution
ROTH: ($16,666 * .9) = $15,000 after tax contribution
The more you make, the greater the difference is. Someone maxing out contributions in the 10% bracket only takes a 10% hit by going with a traditional program over a ROTH. Someone in the 38.6% bracket looses more than 1/3 of the potential value by contributing to a traditional IRA vs a Roth.
In the case of an IRA, you can only contribute to a ROTH account up to a certain level of income. In the case of a 401(k), you can only contribute to a ROTH account if your company offers it, but there is no income limit.
High income earners, welcome back to ROTH territory.
Info about:
401(k)s - IRS, Investopedia
ROTH 401(k) - IRS, Roth401k.com, Smartmoney
IRAs - IRS, Investopedia
ROTH IRAs - IRS, Rothira.com, Investopedia
The reason for this is simple: $15,000 after tax dollars is more than $15,000 pre-tax dollars (ditto for $4000 after tax dollars vs. $4000 pre-tax dollars).
Assuming the money is going to double & 10% taxes (for simplicity):
Post Taxed: ($15,000 * 2) * .9 = $27,000
Pre Taxed: ($15,000 *.9) * 2 = $27,000
In terms of after tax value put in:
Traditional: $15,000 * .9 = $13,500 after tax contribution
ROTH: ($16,666 * .9) = $15,000 after tax contribution
The more you make, the greater the difference is. Someone maxing out contributions in the 10% bracket only takes a 10% hit by going with a traditional program over a ROTH. Someone in the 38.6% bracket looses more than 1/3 of the potential value by contributing to a traditional IRA vs a Roth.
In the case of an IRA, you can only contribute to a ROTH account up to a certain level of income. In the case of a 401(k), you can only contribute to a ROTH account if your company offers it, but there is no income limit.
High income earners, welcome back to ROTH territory.
Info about:
401(k)s - IRS, Investopedia
ROTH 401(k) - IRS, Roth401k.com, Smartmoney
IRAs - IRS, Investopedia
ROTH IRAs - IRS, Rothira.com, Investopedia
Spend as much on crap as you can afford
Just don't spend more. Shocking as it may seem, you can be financially responsible and splurge on stupid things.
The $50 doggy vest, the $200 night out, even the $1,000 ski vacation are all acceptable and even healthy expenses IF they come from your disposable income. If they go on your credit card, you're living beyond your means.
Disposable income is the money you have left after you save for emergencies and long term goals and after you pay for your necessities. (income - necessities - savings = disposable income)
The future growth of our economy depends on people buying more unnecessary crap (and/or working less). As an economy, we covered our necessities (food, clothing, shelter) at least 100 years ago. You need look no further than the fact that only 1% of the US GDP is agriculture (and we are a net-exporter of food) to see that we're covering our necessities just fine (source: CIA World Factbook). We're still having some difficulty with the advanced social necessities of healthcare and education, but on the basics of living we're doing fine (with some unfortunate exceptions).
The biggest challenge is figuring out just how much of the money in each paycheck is disposable income. The easiest way to do this is the 60% solution: Keep fixed expenses to 60% of your income, put 10% to retirement, 10% long term savings (house, car, college) 10% to short term savings (health care deductibles, car maintenance, home maintenance), 10% to fun money. If you're going to do this, I would highly suggest setting up individual accounts for each of these (e.g. 60% for fixed in your checking, 10% to your IRA and 401(k) for your retirement, 10% to a brokerage account for long term savings, 10% to a high yield savings account like ING Direct, and 10% to a 2nd checking account and only use the debit card so you can't spend more than you have). By separating your money at the beginning of the month, you know just how much you can spend on crap that month.
The worst thing you can do is adopt an "It'll all work out in the end, so I'll just do nothing" mentality.
I don't follow the 60% method because I have a more detailed budget that I update at the end of every month (see my series Budgeting Made Easy) and I have a much more granular breakdown of my money (I have separate ING accounts for car maintenance, medical expenses, car insurance, etc. - separate post on that later). But I am anal retentive when it comes to most matters of money and I enjoy knowing where my money goes to the last cent.
Bottom line: Spending money on crap is not the problem. Spending too much money on crap is the problem. Limit your spending to your disposable income and it doesn't matter if you buy diamond encrusted trash-bags.
The $50 doggy vest, the $200 night out, even the $1,000 ski vacation are all acceptable and even healthy expenses IF they come from your disposable income. If they go on your credit card, you're living beyond your means.
Disposable income is the money you have left after you save for emergencies and long term goals and after you pay for your necessities. (income - necessities - savings = disposable income)
The future growth of our economy depends on people buying more unnecessary crap (and/or working less). As an economy, we covered our necessities (food, clothing, shelter) at least 100 years ago. You need look no further than the fact that only 1% of the US GDP is agriculture (and we are a net-exporter of food) to see that we're covering our necessities just fine (source: CIA World Factbook). We're still having some difficulty with the advanced social necessities of healthcare and education, but on the basics of living we're doing fine (with some unfortunate exceptions).
The biggest challenge is figuring out just how much of the money in each paycheck is disposable income. The easiest way to do this is the 60% solution: Keep fixed expenses to 60% of your income, put 10% to retirement, 10% long term savings (house, car, college) 10% to short term savings (health care deductibles, car maintenance, home maintenance), 10% to fun money. If you're going to do this, I would highly suggest setting up individual accounts for each of these (e.g. 60% for fixed in your checking, 10% to your IRA and 401(k) for your retirement, 10% to a brokerage account for long term savings, 10% to a high yield savings account like ING Direct, and 10% to a 2nd checking account and only use the debit card so you can't spend more than you have). By separating your money at the beginning of the month, you know just how much you can spend on crap that month.
The worst thing you can do is adopt an "It'll all work out in the end, so I'll just do nothing" mentality.
I don't follow the 60% method because I have a more detailed budget that I update at the end of every month (see my series Budgeting Made Easy) and I have a much more granular breakdown of my money (I have separate ING accounts for car maintenance, medical expenses, car insurance, etc. - separate post on that later). But I am anal retentive when it comes to most matters of money and I enjoy knowing where my money goes to the last cent.
Bottom line: Spending money on crap is not the problem. Spending too much money on crap is the problem. Limit your spending to your disposable income and it doesn't matter if you buy diamond encrusted trash-bags.
Overworked? Try too productive
Many Americans say that they are just too stressed, too overworked, and don't have enough time for themselves. It makes for great heart-wrenching human interest stories, but according to a new study highlighted in this week's Economist (Subscribe) we have more leisure time today than we did 30 years ago. (today 2/8 at&t is giving away a free day pass for watching a 30 second commercial if you aren't a regular subscriber, working paper available here)
We have more leisure time, but feel more overworked. The article poses two possible reasons: 1) we have a higher opportunity cost for our time, thus a walk in the park is more expensive than it was 30 years ago; and 2) since we are more efficient, we are able to do more in a day, and we over-commit (I am guilty of this one).
I've been very skeptical of the "overworked Americans" cry for years. If we're so overworked and underpaid how come there are ipods, tivos, satellite tv, new cars, etc. in every neighborhood? Granted, credit cards finance some of this purchasing, but credit card financing only lasts for so long and from what I can tell the trend towards more stuff has been going steadily for the past 20 years.
Now that we have higher opportunity costs for our time, how come so many people waste it watching reality tv?
We have more leisure time, but feel more overworked. The article poses two possible reasons: 1) we have a higher opportunity cost for our time, thus a walk in the park is more expensive than it was 30 years ago; and 2) since we are more efficient, we are able to do more in a day, and we over-commit (I am guilty of this one).
I've been very skeptical of the "overworked Americans" cry for years. If we're so overworked and underpaid how come there are ipods, tivos, satellite tv, new cars, etc. in every neighborhood? Granted, credit cards finance some of this purchasing, but credit card financing only lasts for so long and from what I can tell the trend towards more stuff has been going steadily for the past 20 years.
Now that we have higher opportunity costs for our time, how come so many people waste it watching reality tv?
Monday, February 06, 2006
Real returns might not be what you’re expecting
Today’s Wall Street Journal’s Money & Investing section had an excellent article by E.S. Browning on measuring investments by real-world returns. He quotes this research by Thornburg Investment Management. (The Journal article quoted numbers through 2005, I could only find the 2004 Thornburg article so I’m using 2004 numbers to avoid confusion)
The example discussed in the article is the S&P 500 since 1926.It is common knowledge that the S&P has returned about 10% per year since then. Put another way one dollar invested in the index in the start of 1926 would have appreciated to $2,531.44 at the end of December 2004. This annualizes out to a rate of 10.43%.
Thornburg after running the numbers net of inflation, taxes, and fees and found a starkly different story. That same $1 in real (post tax, fees, and inflation) terms would only be worth $44.80. Which only annualizes out to a rate of only 4.96%. They assumed fees of .2% of assets yearly, inflation of 3.04%, and then you can work out that they assume taxes to average out to 2.23% of assets per year. Since we’re talking about annual rates, we can use simple arithmetic to calculate the effects on returns so long as all percentages are in terms of assets per year. APY is implicitly a percentage of assets.
In an IRA, things fare quite a bit better since you get to add back in some or all of the value lost to taxes.
With a Roth IRA, since you’ve paid taxes on the money already, you get to add back all of those taxes and you get a historical return of 7.19%.
With a traditional IRA or 401(k) things are a bit more complicated. You have to deflate the real value of your money by the tax-rate when it is withdrawn. You get to compound at 7.19% yearly, but you have to take out taxes on the back end, and the amount of taxes you’ll take out depends on 1) the amount of income and 2) the tax rate at that time (for me, that’s about 42 years from now).
I ran the numbers simplistically, assuming a 33% tax on withdrawals and a withdrawing everything at the end of 20, 30, and 40 years. This Resulted in effective rates of 5.06%, 5.77%, and 6.12% respectively. Bear in mind, that this is a simplification and because you’re only withdrawing a small amount per year.
The example discussed in the article is the S&P 500 since 1926.It is common knowledge that the S&P has returned about 10% per year since then. Put another way one dollar invested in the index in the start of 1926 would have appreciated to $2,531.44 at the end of December 2004. This annualizes out to a rate of 10.43%.
Thornburg after running the numbers net of inflation, taxes, and fees and found a starkly different story. That same $1 in real (post tax, fees, and inflation) terms would only be worth $44.80. Which only annualizes out to a rate of only 4.96%. They assumed fees of .2% of assets yearly, inflation of 3.04%, and then you can work out that they assume taxes to average out to 2.23% of assets per year. Since we’re talking about annual rates, we can use simple arithmetic to calculate the effects on returns so long as all percentages are in terms of assets per year. APY is implicitly a percentage of assets.
In an IRA, things fare quite a bit better since you get to add back in some or all of the value lost to taxes.
With a Roth IRA, since you’ve paid taxes on the money already, you get to add back all of those taxes and you get a historical return of 7.19%.
With a traditional IRA or 401(k) things are a bit more complicated. You have to deflate the real value of your money by the tax-rate when it is withdrawn. You get to compound at 7.19% yearly, but you have to take out taxes on the back end, and the amount of taxes you’ll take out depends on 1) the amount of income and 2) the tax rate at that time (for me, that’s about 42 years from now).
I ran the numbers simplistically, assuming a 33% tax on withdrawals and a withdrawing everything at the end of 20, 30, and 40 years. This Resulted in effective rates of 5.06%, 5.77%, and 6.12% respectively. Bear in mind, that this is a simplification and because you’re only withdrawing a small amount per year.
Wednesday, February 01, 2006
Car Insurance: High coverage leads to low premiums?
I am in the process of getting car insurance for myself, and I after about two weeks of getting quotes intermittently I have stumbled upon a very odd thing - the more coverage I currently have, the lower my future premiums are.
How I found this out.
I have been getting quotes from GEICO, Progressive, and a number of other companies (Allstate, 21st century, and using online engines to run searches across many companies). I am currently covered under my parent's policy, but I didn't know what my coverage currently was, so I have just assumed that I had the lowest liability coverage - $25/50/25 (basics of car insurance, numbers in thousands).
When I was assuming that, my best quote was from Drive Insurance at $706 for 6 months. This beat the roughly $820 that GEICO and Progressive were quoting me.
However, when I found out today that my parents had me covered for 100/300/100 the premium went to $593 (this is for $25/50/25 with 25/50/25 for underinsured motorists).
Finding this out, I promptly raised all of the quotes to 100/300/100 and my premium went to $691.
I was curious to find that with higher previous coverage, I get lower current rates so I looked into the quotes a little bit more. Here are the detailed premiums:
What was most interesting is that going from 25/50/25 to the same cost MORE than going from 100/300/100.
It appears that the higher your coverage, the lower the amount of risk you present to the insurance company. The lower the risk you present, the lower your premiums.
Now I've definitely got to get my hands on some actuarial tables. This stuff is just too weird.
How I found this out.
I have been getting quotes from GEICO, Progressive, and a number of other companies (Allstate, 21st century, and using online engines to run searches across many companies). I am currently covered under my parent's policy, but I didn't know what my coverage currently was, so I have just assumed that I had the lowest liability coverage - $25/50/25 (basics of car insurance, numbers in thousands).
When I was assuming that, my best quote was from Drive Insurance at $706 for 6 months. This beat the roughly $820 that GEICO and Progressive were quoting me.
However, when I found out today that my parents had me covered for 100/300/100 the premium went to $593 (this is for $25/50/25 with 25/50/25 for underinsured motorists).
Finding this out, I promptly raised all of the quotes to 100/300/100 and my premium went to $691.
I was curious to find that with higher previous coverage, I get lower current rates so I looked into the quotes a little bit more. Here are the detailed premiums:
| Coverage | Limit (in 1,000 $s) | Premium w/ 25/50/25 prior | Premium w/ 100/300/100 prior |
Liability: | 25 person/ 50 accident/ 25 property | $316 | $247 |
| Personal Injury (medical) | $35 for 10k | $40 for 35k | |
| Underinsured Motorist | 25 person/ 50 accident | $18 | $15 |
| Underinsured Motorist Property Damage | 25 each accident | $21 | $15 |
| Comprehensive | $500 deductible | $72 | $64 |
| Collision | $500 deductible | $244 | $182 |
| Totals | $706 | $593 |
It appears that the higher your coverage, the lower the amount of risk you present to the insurance company. The lower the risk you present, the lower your premiums.
Now I've definitely got to get my hands on some actuarial tables. This stuff is just too weird.
Monday, January 30, 2006
Carnival is up
The 7th edition of the carnival of inveting is now up at Canadian Capitalist's site.
Check it out here
Check it out here
Wednesday, January 25, 2006
Advertising isn't dead, but it is dying
The new york times just ran this article entitled "Advertising Is Obsolete. Everyone Says So."
Advertising is dying because it is being replaced by better methods. The death of advertising is going to be a good thing.
First step: Why does advertising exist in the first place?
My theory: Advertising bridges a fundamental gap in human's ability to gather and process information. We can only gather and process a finite amount of information.
Why is this important? Because commerce at its most basic level is the fulfillment of our wants and needs. In the modern world hundreds or millions of people come together to create every good or service; there are hundreds of potential means to fulfill our needs; and, an almost infinite number of potential desires. With this many potential products to consume or use, we can't possibly consider the full set of possibilities before making our decisions.
In the pre-modern world, this was less of a problem because we had less choices. We had the natural world around us and our own work to fulfill our needs. In this situation we could reasonably understand most of the world around us. Further, we created very little surplus and therefore had very little wants to worry about.
Currently, I believe 2% of the US workforce is involved in producing food (and we are a net exporter) I don't know what percentage covers shelter and clothing, but I assume it is less than half. That covers pre-modern needs. Then you need to add in education, communication, and transportation to cover modern pre-requisites of participaiton. Once you have totaled up all of our pre-modern and modern needs, there is still an amazing amount of surplus that can either be consumed as leisure or that can go to fulfill our "wants." Long story short, there are a lot of things to consume and each of us has the ability to consume a lot of things.
What the hell does this have to do with advertising?
Near Infinite Amount of Things that can be Conssumed --> Near Infinite Amount of Information
Near Infinite Amount of Information + Limited Ability to process that information --> Information Overload.
We simply cannot process all of the potential information.
Enter advertising. In a world where all possible information cannot be processed, it is efficient to take some shortcuts.
Advertising is a shortcut. It is efficient for producers of products to advertise that these products exist to create either: the desire to use the product to fulfill their needs; or to consume the product as part of their leisure consumption.
(digression) The line between want and need isn't completely clear, and I think it is very possible that advertising can create the illusion of their product as fulfilling a need when it doesn't really. (end digression)
So, advertising is a solution to the problem of information overload, and it has been a decent solution but not one without problems. (to begin, see digression above) The most important reason why advertising is an incomplete solution is that it connects people to the products that producers want people to buy, not the products that are going to make people the happiest.
Thus, my elation at the impending death of advertising. It's not here yet, but it is on its way. The NYT story that sparked this diatribe mentions as one of the key new advertising tricks the impetus to try to get word of mouth advertising by creating "evangelizers." Put another way, they have to create noteworthy products that people like enough to tell their friends about. Put another way, they have to spend their 'advertising' dollars into making their customers happier.
But, that's only the beginning of the change. Word of mouth advertising is basically people saying "We're similar, we usually like similar things, I like this, you should check it out." Instead of the producers of products overcomming the information problem, people who like the product share the information with other people like them.
Word of mouth, however, is not a complete solution to the problem. The collection and processing of information is spread among more people, tens or hundreds instead of only one. This is progress, but not enough to analyze all potential possible information.
But, if you take a quick look at amazon.com, you'll see how computers, reviews, and a thing called collaborative filters (a.k.a. the find good things algorithm) is going to put the next and near final nail in the coffin. Computers take and process more information than humans ever could.
Collaborative filters and "find good things" for the uninitiated: Basically, it works like this. Imagine that there are two people - Jack and Susan. Jack likes things 1, 2, 3, and 5. Susan likes things 1, 2, 3, 4, and 6. Looking at the similar tastes Jack and Susan have for 1, 2, and 3; there is a good chance that a correctly programmed computer could recommend 4 and 6 to Jack and 5 to Susan. By looking at patterns of prefferences collaborative filters can find things people will love that they didn't know existed. In many ways, it is a huge system of "word of mouth" refferals aided by a computer.
But, advertising isn't dead yet and collaborative filters aren't quite ready to step in and sort our information and prefferences for us. As I see it, there are two barriers to getting to this better system:
I give it 5 to 10 years. Amazon has already made significant inroads and everyone loves their book suggestions. Claria (the people who brought you Gator and GAIN advertising systems - the height of annoyance, but the pinacle of effectiveness - Behavioral targeting is king) is working on a search engine based on this (although it could probably be gamed). And I am sure some company I've never heard of has already secured millions of dollars from venture capital firms to build just such a system.
The death of advertising is going to be good for consumers because it is going to be replaced by a system that will help us find things we actually want. The ability to force shoddy products onto people with cleaver advertising and brilliant marketing is going to dissapear, and the only way to move your product is going to be: create the most value for consumers.
Sure it's not going to evolve exactly like this. But expect the death of advertising as we know it. It is currently the best sollution to a problem of information, and a better solution is on its way.
Advertising is dying because it is being replaced by better methods. The death of advertising is going to be a good thing.
First step: Why does advertising exist in the first place?
My theory: Advertising bridges a fundamental gap in human's ability to gather and process information. We can only gather and process a finite amount of information.
Why is this important? Because commerce at its most basic level is the fulfillment of our wants and needs. In the modern world hundreds or millions of people come together to create every good or service; there are hundreds of potential means to fulfill our needs; and, an almost infinite number of potential desires. With this many potential products to consume or use, we can't possibly consider the full set of possibilities before making our decisions.
In the pre-modern world, this was less of a problem because we had less choices. We had the natural world around us and our own work to fulfill our needs. In this situation we could reasonably understand most of the world around us. Further, we created very little surplus and therefore had very little wants to worry about.
Currently, I believe 2% of the US workforce is involved in producing food (and we are a net exporter) I don't know what percentage covers shelter and clothing, but I assume it is less than half. That covers pre-modern needs. Then you need to add in education, communication, and transportation to cover modern pre-requisites of participaiton. Once you have totaled up all of our pre-modern and modern needs, there is still an amazing amount of surplus that can either be consumed as leisure or that can go to fulfill our "wants." Long story short, there are a lot of things to consume and each of us has the ability to consume a lot of things.
What the hell does this have to do with advertising?
Near Infinite Amount of Things that can be Conssumed --> Near Infinite Amount of Information
Near Infinite Amount of Information + Limited Ability to process that information --> Information Overload.
We simply cannot process all of the potential information.
Enter advertising. In a world where all possible information cannot be processed, it is efficient to take some shortcuts.
Advertising is a shortcut. It is efficient for producers of products to advertise that these products exist to create either: the desire to use the product to fulfill their needs; or to consume the product as part of their leisure consumption.
(digression) The line between want and need isn't completely clear, and I think it is very possible that advertising can create the illusion of their product as fulfilling a need when it doesn't really. (end digression)
So, advertising is a solution to the problem of information overload, and it has been a decent solution but not one without problems. (to begin, see digression above) The most important reason why advertising is an incomplete solution is that it connects people to the products that producers want people to buy, not the products that are going to make people the happiest.
Thus, my elation at the impending death of advertising. It's not here yet, but it is on its way. The NYT story that sparked this diatribe mentions as one of the key new advertising tricks the impetus to try to get word of mouth advertising by creating "evangelizers." Put another way, they have to create noteworthy products that people like enough to tell their friends about. Put another way, they have to spend their 'advertising' dollars into making their customers happier.
But, that's only the beginning of the change. Word of mouth advertising is basically people saying "We're similar, we usually like similar things, I like this, you should check it out." Instead of the producers of products overcomming the information problem, people who like the product share the information with other people like them.
Word of mouth, however, is not a complete solution to the problem. The collection and processing of information is spread among more people, tens or hundreds instead of only one. This is progress, but not enough to analyze all potential possible information.
But, if you take a quick look at amazon.com, you'll see how computers, reviews, and a thing called collaborative filters (a.k.a. the find good things algorithm) is going to put the next and near final nail in the coffin. Computers take and process more information than humans ever could.
Collaborative filters and "find good things" for the uninitiated: Basically, it works like this. Imagine that there are two people - Jack and Susan. Jack likes things 1, 2, 3, and 5. Susan likes things 1, 2, 3, 4, and 6. Looking at the similar tastes Jack and Susan have for 1, 2, and 3; there is a good chance that a correctly programmed computer could recommend 4 and 6 to Jack and 5 to Susan. By looking at patterns of prefferences collaborative filters can find things people will love that they didn't know existed. In many ways, it is a huge system of "word of mouth" refferals aided by a computer.
But, advertising isn't dead yet and collaborative filters aren't quite ready to step in and sort our information and prefferences for us. As I see it, there are two barriers to getting to this better system:
- Integration of more information. This is a three-part step. To be truly effective at finding hidden value for people, there needs to be 1) an integrated centralized system for all the information to be gathered in, 2) all potential products and services need to be agregated, and 3) a sufficent number of expressed prefferences for the algorithms to work.
- Improvement of the algorithms.
I give it 5 to 10 years. Amazon has already made significant inroads and everyone loves their book suggestions. Claria (the people who brought you Gator and GAIN advertising systems - the height of annoyance, but the pinacle of effectiveness - Behavioral targeting is king) is working on a search engine based on this (although it could probably be gamed). And I am sure some company I've never heard of has already secured millions of dollars from venture capital firms to build just such a system.
The death of advertising is going to be good for consumers because it is going to be replaced by a system that will help us find things we actually want. The ability to force shoddy products onto people with cleaver advertising and brilliant marketing is going to dissapear, and the only way to move your product is going to be: create the most value for consumers.
Sure it's not going to evolve exactly like this. But expect the death of advertising as we know it. It is currently the best sollution to a problem of information, and a better solution is on its way.
Monday, January 23, 2006
Carnival of Investing #6 is up
This week's carnival is being hosted by Jim at Blueprint for Financial Prosperity. There are twenty quality posts this week for your entertainment and procrastination pleasure.
Sunday, January 22, 2006
Expected Value: the Lottery and Insurance
At dinner the other night my little brother said that he was going to start buying one lottery ticket a week. I told him this was a bad idea, that he should put $1 into a sharebuilder account each week and once a year buy $48 worth of an emerging market index (china this year, india next, malasia in three, etc.).
I explained to him that emerging market stocks are psychologically very similar to the lottery - some weeks you're up double others you're down by half (extreme example, not how much they actually fluctuate on a regular basis), and that you have a reasonable expectation that your money is going to increase over time. More on this expectation and emerging markets in a future post.
I further explained that with the lottery, every ticket you buy has about a $.50 expected value for every dollar spent.
He looked at me like I was crazy and said "an what value?" I realized he had never been taught expected values, and without that information the chance of winning the lottery seemed good - or at least worth a shot.
Expected value is the sum of (the value of each possible outcome * the probability of getting that outcome). But that is likely not clear at first.
Expected value is best explained using an example:
With the lottery there are thousands of possible outcomes, but the approximate result is that you can expect on the average $.5 for every dollar spent.
If people are only getting $.5 back for every dollar spent, then they have to be getting something else as well for that dollar. You can then say that the fantasy of winning is worth at least $.5 to someone playing the lottery. And, in all likelyhood that fantasy is worth more than $.5. (this has to be true because people only trade $1 for something if they believe that they are getting at least $1 in value back) When I play the lottery (which I do to the tune of about $5 a year), I consider all of the money to be an entertainment expense. If I win, that's fun, but if not, oh well. That's why a lottery ticket almost always has a kind of a game as you scratch it.
With the lottery you are buying: Expected value + (Entertainment or a Fantasy) >= $1.
Then the conversation turned to the fact that I had bought an extended warrany on my new car. I explained that I was on the average going to loose money there as well. (I recognize that being a personal financial blogger, this is a sin unparrallell - I've entered into a transaction where I expect to loose money. Let me explain)
If an insurance company is offering you something, You are loosing money on the average. That's how insurance companies make money. If you haven't already, get your mind around that - it will help you accurately anylize insurance.
In spite of this fact, Insurance is often a very good deal!
Just like in the lottery, for every dollar you spend on insurance your expected value is less than $1. I don't know the numbers exactly, they could be computed easy enough, but I don't have the time right now. So let's say that the expected value of an insurance policy is $.75 per dollar spent.
If you're going to be loosing money on the average, how is insurance a good deal? Insurance companies act like risk brokers. They buy risk from you and millions of people like you for more than the actual cost of that risk. Put another way, they sell you security for more than the average cost that security is going to have for them.
With Insurance you are buying: Expected value + value of Security >= $1.
For the Insurance company: Expected value of risk < $1.
Thus on the average they will make money, and they are doing thousands or millions of these transactions a year so they enjoy the statistics of large numbers - namely regression towards the mean.
Back to my extended warranty. I had originally budgeted $62.5 a month to put into a "car repairs & maintainance" fund so that if something goes wrong I have a reserve. The cost of an 80,000 Mile, 5 year waranty ended up being $24 a month for the life of my loan (that is 80,000 miles and 5 years from today). I will still have maintainance like oil changes, tires, etc. But I don't have to worry about the cost of many other problems. I bought a Nissan and all I have to do if something that is warantied breaks is take it to a nissan dealer and they'll take care of the rest. That security is worth much more than $6 a month ($24 * .25 gap from expected value to the price I paid), the security alone is worth $24 a month to me.
I did, however, have a small victory when I was deciding to purchase the warranty. The salesman at the dealership was saying "If you use it once for something like the air conditioning, that's $2000 (on $1,200 total), and it pays for itself. It is a good investment." I looked him straight in the eye and said "No it's not. If the insurance company is selling it to me, it is a bad investment. I am going to loose money on the average if I buy this thing." He looked at me, blinking, as I continued "What I'm trying to decide is if the security is worth the cost." He then promptly calculated the cost and changed his sales tactic to "For only $24 a month you don't have to worry about any major repairs. That's not a lot of money for that assuredness." Car salesmen have an amazing ability to turn sales tactics on a dime.
Upshot: Realize that in the lottery and insurance you're going to be losing money on the average. Knowing that, ask yourself if the entertainment/fantasy in the lottery or security in insurance is worth the money you're going to lose.
I explained to him that emerging market stocks are psychologically very similar to the lottery - some weeks you're up double others you're down by half (extreme example, not how much they actually fluctuate on a regular basis), and that you have a reasonable expectation that your money is going to increase over time. More on this expectation and emerging markets in a future post.
I further explained that with the lottery, every ticket you buy has about a $.50 expected value for every dollar spent.
He looked at me like I was crazy and said "an what value?" I realized he had never been taught expected values, and without that information the chance of winning the lottery seemed good - or at least worth a shot.
Expected value is the sum of (the value of each possible outcome * the probability of getting that outcome). But that is likely not clear at first.
Expected value is best explained using an example:
If you and five buddies put $1 each into a pot and then draw straws to take home all of it, what is your expected value of this game?The expected value is then: (.2 * $5) + (.8 * $0) = $1. You get $1 because nobody is taking a profit from this game.
The good outcome:
What is the probability you'll get the pot assuming the game is not fixed and completely random? Answer: 1 in 5
What will you get if you win the pot? Answer: $5
The bad outcome:
What is the probability you'll get nothing? Answer: 4 in 5
What will you get if you get nothing? Answer $0
With the lottery there are thousands of possible outcomes, but the approximate result is that you can expect on the average $.5 for every dollar spent.
If people are only getting $.5 back for every dollar spent, then they have to be getting something else as well for that dollar. You can then say that the fantasy of winning is worth at least $.5 to someone playing the lottery. And, in all likelyhood that fantasy is worth more than $.5. (this has to be true because people only trade $1 for something if they believe that they are getting at least $1 in value back) When I play the lottery (which I do to the tune of about $5 a year), I consider all of the money to be an entertainment expense. If I win, that's fun, but if not, oh well. That's why a lottery ticket almost always has a kind of a game as you scratch it.
With the lottery you are buying: Expected value + (Entertainment or a Fantasy) >= $1.
Then the conversation turned to the fact that I had bought an extended warrany on my new car. I explained that I was on the average going to loose money there as well. (I recognize that being a personal financial blogger, this is a sin unparrallell - I've entered into a transaction where I expect to loose money. Let me explain)
If an insurance company is offering you something, You are loosing money on the average. That's how insurance companies make money. If you haven't already, get your mind around that - it will help you accurately anylize insurance.
In spite of this fact, Insurance is often a very good deal!
Just like in the lottery, for every dollar you spend on insurance your expected value is less than $1. I don't know the numbers exactly, they could be computed easy enough, but I don't have the time right now. So let's say that the expected value of an insurance policy is $.75 per dollar spent.
If you're going to be loosing money on the average, how is insurance a good deal? Insurance companies act like risk brokers. They buy risk from you and millions of people like you for more than the actual cost of that risk. Put another way, they sell you security for more than the average cost that security is going to have for them.
With Insurance you are buying: Expected value + value of Security >= $1.
For the Insurance company: Expected value of risk < $1.
Thus on the average they will make money, and they are doing thousands or millions of these transactions a year so they enjoy the statistics of large numbers - namely regression towards the mean.
Back to my extended warranty. I had originally budgeted $62.5 a month to put into a "car repairs & maintainance" fund so that if something goes wrong I have a reserve. The cost of an 80,000 Mile, 5 year waranty ended up being $24 a month for the life of my loan (that is 80,000 miles and 5 years from today). I will still have maintainance like oil changes, tires, etc. But I don't have to worry about the cost of many other problems. I bought a Nissan and all I have to do if something that is warantied breaks is take it to a nissan dealer and they'll take care of the rest. That security is worth much more than $6 a month ($24 * .25 gap from expected value to the price I paid), the security alone is worth $24 a month to me.
I did, however, have a small victory when I was deciding to purchase the warranty. The salesman at the dealership was saying "If you use it once for something like the air conditioning, that's $2000 (on $1,200 total), and it pays for itself. It is a good investment." I looked him straight in the eye and said "No it's not. If the insurance company is selling it to me, it is a bad investment. I am going to loose money on the average if I buy this thing." He looked at me, blinking, as I continued "What I'm trying to decide is if the security is worth the cost." He then promptly calculated the cost and changed his sales tactic to "For only $24 a month you don't have to worry about any major repairs. That's not a lot of money for that assuredness." Car salesmen have an amazing ability to turn sales tactics on a dime.
Upshot: Realize that in the lottery and insurance you're going to be losing money on the average. Knowing that, ask yourself if the entertainment/fantasy in the lottery or security in insurance is worth the money you're going to lose.
Things I learned buying my car
There are a couple of interesting things that I have learned after buying my car. Here they are in bullet point format:
- There is a difference between revolving credit history and installment credit history. You need to build both. (see this post)
- Dealerships will finance anybody. They don't always take a scalper's wage either (I got 6% vs. best possible at my credit union of 5.75%), especially if they finance you through a credit union.
- Some credit unions consider new cars to be anything from the last 3 years.
- If you're buying used, you should do so in a millitary town. Millitary people buy nice cars, treat them well, don't drive a lot (especially if they are overseas or on a ship), and then trade them in cheap. I almost don't want to share this tidbit, I don't want it getting out into common knowledge and raising the cost of my next used car - so please don't re-post this one on your blog.
- If you finance a car, you have to carry Comprehensive and Collision insurance on your vehicle with a minimum of a $500 deductible. (this raised my insurance $100/month over my initial estimates - I just didn't know)
Bad debt leads to good credit?
I have just finished buying my first car (used 2003, very low miles). In doing so, I followed my car salesman friend's advice and went to a credit union to get pre-approved for a loan. The conversation went something like this:
Me: I'd like to get a car loan for up to $20,000.
CU: OK, fill out this paperwork.
CU: My, you have the lowest debt-income ratio I've seen in a long time - 4%.*
Me: Yeah, I try to avoid taking on debt, I've had to recently because my job was only paying equity.
CU: That's a good reason.
CU: Ok, you've got a decent FICO score (650 from them, up to 750 other places - good to excellent if you don't know much about FICO scores), and you're asking for a loan that is less than what you can afford.
CU: Hmm... Do you have credit history.
Me: Yes, I've been building credit history for 5 years. My credit card limits have been increased steadily from $500 to $20,000 because I always pay on time.
CU: That's interesting, because it came back "denied due to lack of credit history"
Me: $20,000 in available credit is "lack of credit history" are you sure they aren't concerned with the amount of my un-secured credit lines?
CU: No, that's not a problem. Have you ever bought anything on installments? Do you have any installment payment history?
Me: No.
CU: That's the problem. There are two kinds of credit: Revolving and installment; you only have installment history. Thanks for comming in, perhaps you'll have better luck elsewhere or at a dealership.
Me: Thank you, goodbye.
* Debt/Income is calculated as: All Monthly Obligations (minimums on cc's)/Monthly Pre-Tax Income.
As I walked out of the credit union I kept pondering the fact that I could buy a car with the space on my credit card, but I couldn't get a secured loan for the same amount.
The upshot: Having, using and paying a credit card responsibly is not enough to build a good credit history! As you are building credit (i.e. as you are starting college), you should buy something on installments. Your computer, a digital camera, a mini-fridge, whatever. Something small that you can make monthly payments on easily to also build installment payment credit history.
The ideal situation would be that you could buy it cash, put that money into a high-yield savings account, and set up auto-payments each month. In effect you will have paid a little bit more for your camera, but far less than the high-risk premium you would otherwise end up paying to get a car loan once you graduate.
In the end, I got my financing through a dealership at 6% (a deal when you consider that t-bills are at 4.5% - that's the risk free rate; and when you consider that inflation is running at about 3%; thus the effective real interest rate on my car loan is only 3% and they think I warrent only a very low 1.5% risk premium). This is only .25% more than the best rate the Credit Union could have gotten me.
Me: I'd like to get a car loan for up to $20,000.
CU: OK, fill out this paperwork.
CU: My, you have the lowest debt-income ratio I've seen in a long time - 4%.*
Me: Yeah, I try to avoid taking on debt, I've had to recently because my job was only paying equity.
CU: That's a good reason.
CU: Ok, you've got a decent FICO score (650 from them, up to 750 other places - good to excellent if you don't know much about FICO scores), and you're asking for a loan that is less than what you can afford.
CU: Hmm... Do you have credit history.
Me: Yes, I've been building credit history for 5 years. My credit card limits have been increased steadily from $500 to $20,000 because I always pay on time.
CU: That's interesting, because it came back "denied due to lack of credit history"
Me: $20,000 in available credit is "lack of credit history" are you sure they aren't concerned with the amount of my un-secured credit lines?
CU: No, that's not a problem. Have you ever bought anything on installments? Do you have any installment payment history?
Me: No.
CU: That's the problem. There are two kinds of credit: Revolving and installment; you only have installment history. Thanks for comming in, perhaps you'll have better luck elsewhere or at a dealership.
Me:
* Debt/Income is calculated as: All Monthly Obligations (minimums on cc's)/Monthly Pre-Tax Income.
As I walked out of the credit union I kept pondering the fact that I could buy a car with the space on my credit card, but I couldn't get a secured loan for the same amount.
The upshot: Having, using and paying a credit card responsibly is not enough to build a good credit history! As you are building credit (i.e. as you are starting college), you should buy something on installments. Your computer, a digital camera, a mini-fridge, whatever. Something small that you can make monthly payments on easily to also build installment payment credit history.
The ideal situation would be that you could buy it cash, put that money into a high-yield savings account, and set up auto-payments each month. In effect you will have paid a little bit more for your camera, but far less than the high-risk premium you would otherwise end up paying to get a car loan once you graduate.
In the end, I got my financing through a dealership at 6% (a deal when you consider that t-bills are at 4.5% - that's the risk free rate; and when you consider that inflation is running at about 3%; thus the effective real interest rate on my car loan is only 3% and they think I warrent only a very low 1.5% risk premium). This is only .25% more than the best rate the Credit Union could have gotten me.
Radio Silence, where have I been?
It has been about a week and a half since I have posted, and I'm going to put up a few short posts today and likely have another short period of radio silence before I can begin posting regularly again.
If anybody has been curious, or cares for that matter, the explanation is as follows:
If anybody has been curious, or cares for that matter, the explanation is as follows:
- I'm changing jobs,
- moving cities (and countries for that matter),
- taking an intensive pre-work course for my new job,
- renting an apartment
- buying a car, and
- having a baby.
Sunday, January 15, 2006
Which path will lead to YOUR early retirement?
Motley fool writer Rex Moore has just put up a piece on how to retire faster in three easy steps. I'm going to add two more, because I think execution is crucial.
This is the cost-cutting approach to a faster retirement. Another approach, and the one I prefer, is to keep costs stable and grow income. Some ways to do this (and please share others if you can think of them):
Just like in spending less, when you are creating value to accelerate retirement: Capture is essential. You have to somehow make sure that you don't start thinking of this extra money as spending money. I like completely separate accounts, and tracking this money as either investment or property in Quicken (if it is cash flow, then there is a chance it is going to flow out again).
If you want to retire earlier, you have two options: Live more frugally, or create more value. Obviously these can be combined, but most people it seems focus more on one or the other. While I have now started watching my Lattes, I am unwilling to compromise my standard of living too much to meet my goals. Thus, I'm left with creating more value.
Which path are you taking to meet your goals?
- Sit down. He suggests sitting down with family or friends to make it an easier and more pleasant activity.
- Brainstorm ways to cut $100 in expenses.
- Capture those methods and put them into an IRA.
- R@T Addition: Write down your expected savings and goal. Put these in a place you will see every day. A written goal you see every day becomes a contract with yourself that is much more likely to be fulfilled.
- R@T Addition: Check back at least every year to see how you did on your goal (this is going to be much easier if you automate tracking of your finances with Quicken)
This is the cost-cutting approach to a faster retirement. Another approach, and the one I prefer, is to keep costs stable and grow income. Some ways to do this (and please share others if you can think of them):
- If you are paid hourly, work a few more hours a week and put that money into your IRA.
- Invest in education applicable to your current or future job (the education has to have a Return on investment, otherwise it isn't an investment in future income it is a leisure activity). Example: Getting an MBA vs. Taking a class on sushi cooking. Unless you're going to use your sushi skills to bring in money somehow, that's leisure not investment.
- Start a side company or business. If you can't work more hours for more pay, you can always start a side business to generate extra income. If you start spending your leisure time becoming an expert in something, and studying how people make money there, and more importantly where arbitrage opportunities exist (If you study vintage clothing for long enough, chances are you could turn an hour into a thrift store and $30 into $100 on eBay).
- Create more value for your boss, and the company you work for. Then, ask for a raise based on your increased importance to the company. At the end of the day you create $X in value at your job, you are paid $Y. $x - $Y = $P the amount of value you have created for the company after they have paid you your salary. If you increase $X, then there is more $P and $Y for you and the company to share. This, of course, doesn't always work. But even if you can't get a raise in your current job, this will put you in a better position to get a promotion or to get a better offer at a competitor. As a general rule, the more value you create, the more you get paid.
- Next time you get a raise, forget you got it and put that money into your 401k, or IRA.
Just like in spending less, when you are creating value to accelerate retirement: Capture is essential. You have to somehow make sure that you don't start thinking of this extra money as spending money. I like completely separate accounts, and tracking this money as either investment or property in Quicken (if it is cash flow, then there is a chance it is going to flow out again).
If you want to retire earlier, you have two options: Live more frugally, or create more value. Obviously these can be combined, but most people it seems focus more on one or the other. While I have now started watching my Lattes, I am unwilling to compromise my standard of living too much to meet my goals. Thus, I'm left with creating more value.
Which path are you taking to meet your goals?
Thursday, January 12, 2006
Retire at 30 subscriptions top 50
As of last night there are 50 people subscribed to the RSS feed from this site.
I know for a lot of personal finance and investment bloggers out there 50 is just a drop in the bucket, but for a newbie like myself, it's something to get quite exited about.
To everyone who reads my blog, thanks! Before starting this I never knew how enjoyable anonymously blathering on about personal finance and investment could be.
If anyone has any suggestions or criticisms about the blog, I would love to hear them. Post a comment if there is something you would like me to write about, anylize, do better, etc.
Whoo hoo!
I know for a lot of personal finance and investment bloggers out there 50 is just a drop in the bucket, but for a newbie like myself, it's something to get quite exited about.
To everyone who reads my blog, thanks! Before starting this I never knew how enjoyable anonymously blathering on about personal finance and investment could be.
If anyone has any suggestions or criticisms about the blog, I would love to hear them. Post a comment if there is something you would like me to write about, anylize, do better, etc.
Whoo hoo!
Wednesday, January 11, 2006
The Stupidity Tax & Flesh Eating Bacteria
I'm fully expecting click throughs from rss readers to skyrocket with this post.
The expected value of every dollar spent on the lottery is $.50 (or a 50% loss). If that isn't enough to convince people not to waste their time, Jeffery over at personal finance advice offers this tidbit:
The expected value of every dollar spent on the lottery is $.50 (or a 50% loss). If that isn't enough to convince people not to waste their time, Jeffery over at personal finance advice offers this tidbit:
"the odds of winning the lottery are 18 to 120 times less than dieing from flesh eating bacteria"For more of Jeffery's take on the famed stupidity tax, see his full post here.
Penny Stock Spam Performance
Just read an article on Kiplinger's about the performance of penny stocks that you get spam email about http://www.kiplinger.com/personalfinance/magazine/archives/2006/01/pennystocks.html.
In the article they claim that Joshua Cyr tracked their performance over about a 6 month period. Net result: Down 52% during which time the Russell 2K was up 12%.
This begs the question, why are people spamming these stocks if they are going to plummet? Spammers aren't usually malicious people, they are usually people trying to make a quick buck - so my bet is that stock spamming is a pump and dump tactic.
So, the expected performance is:
Pre spam price = x
Post spam price = y
6 month price = z
Thus, knowing that they are spamming, it is rational that x < y. But it doesn't make sense to me why z would be less than x. It makes sense that z < y because the price change is driven by an artificial increase in demand and not improving fundamentals.
Great article, but i am left wanting more. I think I will just have to set up my own spamfolio to track the stocks I get spammed about and see what the results are.
If there is a definite discernable negative pattern to the performance of these stocks, then hot stock spam tips might just be the best contra-indicator you can find. I don't know much about short selling, but if 60% negative over 6 months is a generalizable phenomenon, I would kiss the idiots buying the stocks and the assholes sending this spam. Looks like I have two new projects for my to-do list.
If anybody who reads this is familiar with this topic, please post a comment with your knowledge. I know nothing about this beyond what I just read.
In the article they claim that Joshua Cyr tracked their performance over about a 6 month period. Net result: Down 52% during which time the Russell 2K was up 12%.
This begs the question, why are people spamming these stocks if they are going to plummet? Spammers aren't usually malicious people, they are usually people trying to make a quick buck - so my bet is that stock spamming is a pump and dump tactic.
So, the expected performance is:
Pre spam price = x
Post spam price = y
6 month price = z
Thus, knowing that they are spamming, it is rational that x < y. But it doesn't make sense to me why z would be less than x. It makes sense that z < y because the price change is driven by an artificial increase in demand and not improving fundamentals.
Great article, but i am left wanting more. I think I will just have to set up my own spamfolio to track the stocks I get spammed about and see what the results are.
If there is a definite discernable negative pattern to the performance of these stocks, then hot stock spam tips might just be the best contra-indicator you can find. I don't know much about short selling, but if 60% negative over 6 months is a generalizable phenomenon, I would kiss the idiots buying the stocks and the assholes sending this spam. Looks like I have two new projects for my to-do list.
If anybody who reads this is familiar with this topic, please post a comment with your knowledge. I know nothing about this beyond what I just read.
Carnivals for week of 1/9/06
Carnivals are up.
- The Carnival of Investing is hosted by Free Money Finance, and contains my post Value Investing Ideas Site
- The Carnival of Personal Finance is hosted by All Things Financial, and contains my post Budgeting Made Easy 2 - Buy Quicken
- The Carnival of Debt Reduction is hosted by Personal Finance Advice, and although I didn't submit it, Jeffery was kind enough to include my post Budgeting Made Easy 2 - Buy Quicken
- The Festival of Frugality is hosted by Okdork.com
- The Carnival of the Capitalists is hosted by The Social Customer Manifesto
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