Eddie Vedder advice on the market?

For David, Kristy, Kodi, and the infamous Dusty (who likes to run the Alaska rivers with Iditarod sled dogs) in Seattle this weekend, pulling a boat with a wounded 4Runner filled with stuff from the cabin in Virgina, enroute to their cabin in Glennallen (I spelled it right this time Kristy!)Alaska. If you see Mr. Vedder say hi! This is also for all the investors out there trying to hold in with a market whipsawing all over the place.

Are you getting a fair price for your bond?

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Individuals are piling into bonds, and some are buying individual bonds rather than ETFs or bond funds. I don't condone this because it is time consuming, difficult to diversify, and almost impossible to determine if bid or offer is fair . But if you have the time, the resources, and the knowledge and insist on buying individual bonds, it is worthwhile following the price of active bonds in the Wall Street Journal. This is a free resource.
Active bonds
Go to www.wsj.com...click "Markets"...click "Market Data"...click "Bonds. Rates, & Credit Markets"...scroll down and find on the right-hand-side "Corporate Bonds: Most Active" and click...scroll down and find the list of actively traded bonds.

You hopefully have noticed that we have navigated through a lot of useful bond market information.

Search for meaning

Inspiration from one of the greats: Victor Frankl, a survivor of the Nazi death camps and author of "Man's Search For Meaning".

Jodi Beggs gives advice on how to become a behavioral economics nerd

Here's the link.
http://www.economistsdoitwithmodels.com/2010/05/25/reader-question-how-do-i-become-a-behavioral-economics-nerd/

Behavioral economics is important to pay attention to for all investors. It has to do with how we make decisions and especially concentrates on situations where people are irrational.

Benchmarks revisited

I had earlier produced a post on the importance of benchmarks. This is important in the kind of markets we are experiencing now. I have just finished watching a video where the owner of the firm bragged that since the 2007 peak the clients' performance has been down but it has beat the performance of the S&P 500. Guess what? Most of the clients are in models that are 70% stocks and 30% bonds. The question is not whether they beat the S&P 500. The question is did they beat a passive portfolio of 70% stocks and 30% bonds. The clients should ask: why are you showing me results against an all stock index? Secondly, the index isn't very well diversified. It doesn't hold small cap for example.

Hopefully this helps clients ask the right questions.

I saw another video of a manager who invests in multiple asset classes. This manager argued that, because of their investment style, they shouldn't be compared to a benchmark.

Is it no wonder that so many just throw up their hands and do-it-themselves?

DIY Investor - Completion Index

Problem: You are looking at your portfolio holistically, as you should, and you seek to invest a determined percentage in a total stock market, lost cost, etf or fund. Your choices available in your 401(k), however, are limited to a S&P 500 Index fund. What to do? Assuming you have other investable assets, the workaround is achieved by using what is called a "completion index" etf.
Two examples are:
VEXMX from Vanguard, expense fee .3%
WXSP from Claymore, expense fee .18%, note that WXSP is relatively new
The completion index tracks the 4500 stocks in the Wilshire 5000 except for the S&P 500. Thus, if you want 40% of your assets invested to track the total stock market as represented by the Wilshire 5000, invest 20% in the S&P 500 in your 401(k) and 20% in a completion etf outside of your 401(k).
The completion index etfs are useful tools for the DIY investor.

Think you or your advisor can beat the market?

Mike Travaglini is the executive director of the Massachusetts employee retirement system-one of the largest pension funds in the country. Pension funds of this size have huge staffs of very smart analysts searching the world for the most talented investment managers. They had hired Bill Miller of Legg Mason, manager of the Value Trust Fund which had beat the S&P 500 for 15 consecutive years. They fired him in 2006 after his luck ran out and "...decided to get out of actively managed U.S. stock funds and stick with passively managed funds..." Mike Travaglini went on to say "The extra cost to hire a money manager didn't seem worth it." "If Bill Miller can't do it on a consistent basis, then nobody can".
If you think you or your investment advisor are smarter than Bill Miller and have as much information as Bill Miller and can actively manage assets to beat the market, then go for it. It goes without saying that Bill Miller at one time could pick up the phone and talk to the CEO of any major company in the U.S. Do you or your advisor have that kind of access?
The end result is that, according to an article on the front page of the Baltimore Sun today, Legg Mason is making major cuts in its work force.
This is just another piece of evidence supporting the thesis that individual investors should go with low cost index funds and stop paying self proclaimed "gurus" excessive fees to try to beat the market.