Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Wednesday, March 31, 2010

Friday's Employment Report

Graph by Haver Analytics (Click to enlarge). Friday's employment report is expected to show an increase of between 75,000 and 300,000 non-farm jobs (Bloomberg estimates). The upper end of this range would be good to see since job creation has been the bugaboo of this recovery. Some attention will be paid to the government sector where,on net,jobs have been lost despite hiring tens of thousands of census workers.
One concern do-it-yourself investors sometimes express to me is their weakness in understanding the macroeconomy. With that in mind I present an explanation of the unemployment rate calculation by Salman Khan. If you are not familar with his work you are in for a treat. You can practically get a college education viewing his youtube videos.

Tuesday, March 30, 2010

Tip for DIYers

In 2000, I left the world of pension fund investment management for semi-retirement, teaching part time and managing my own money. Life became more leisurely and more carefree. I even coached some athletic teams. But my heart was still in the markets. There was a problem however. I was slowly losing track of the markets. I was talking to someone about investing in bonds, and I was asked what the yield was on the 10-year U.S. Treasury note and how it compared to the yield on the 2-year issue. I didn't know what these yields were. I was dumbfounded. There was a time when you could wake me in the middle of the night and I could rattle off the yields all along the Treasury yield curve as well as the corporate bond yields along with their respective spreads.

I needed a way to formally stay in touch with the markets. I began keeping a weekly data piece (actually 4 pages) that tracks yields, a couple of currencies, economic data and a few other things that I like to look at. I also write a short summary on the market. I update it every day--which only takes a few minutes. Sometimes, in the summary, I write down where I think stocks and/or bonds are headed or I make some other prediction.

I have found this to be a useful exercise and recommend it. I find it interesting to go back and see what I once believed. I've become convinced that investors are biased in what they think they once believed. This exercise keeps me up with the market, and it even keeps me up with making tables/cutting and pasting in Word etc.

If you are interested in the data I collect, drop me a line and I will email you the most recent piece. This is not an ongoing offer; it is intended to show you concretely what I am talking about. The data you will want to collect will obviously be different from what I collect.

Monday, March 29, 2010

Keynes v. Hayek

Need a quick refresher on the debate between the Keynesians and the Austrian school of economics?

Sunday, March 28, 2010

Truth in humor

From Jodi Begg's site (Economists Do It With Models) via the Washington Post.  Toles tells it like it is.

Saturday, March 27, 2010

Global Bond Yields

Globally, bond yields tend to move together as traders arbitrage by trading the debt of various countries. This past week (as shown below), the yield on the 10-year U.S. Treasury rose sharply while yields on the same maturity in other countries were mixed. Given the poor results of the past week's auctions, and the data from the Treasury International Capital Report, this may be another indicator that the long-awaited rise in rates has started. Investors in bonds need to be cautious.

                                   3/5       3/12     3/19       3/26
10 yr.German             3.16      3.17     3.11       3.15
10 yr. Italy                 3.95      3.96     3.95       3.92
10 yr. UK                  4.06      4.1       3.95       4.04
10 yr. Japan               1.32      1.35     1.37       1.38
10 yr Australia            5.48     5.69     5.68       5.75
10 yr.U.S.                  3.68     3.7       3.69       3.85

Friday, March 26, 2010

I Wanna Be a Money Center Bank

“If I could come back as any corporate entity in my next life it would be as a money-center bank,” said Kiesel, who oversees $300 billion of credit investments from Newport Beach, California. “You can borrow money at virtually zero, you make prudent loans and you basically earn that spread.” (Mark Kiesel, global head of corporate bond portfolio management at Pimco).

Duh! Not only are you privy to a sizeable subsidized spread but also, if the risks don't play out, the American taxpayer bails you out and even pays your bonuses! Come on, what's not to like?

Thursday, March 25, 2010

Two views on retirement planning and online calculators

This short video is worth watching because it gives differing views on doing the calculations for retirement planning. Kotlikoff's approach is a bit different from the typical planner in its application of economic theory - especially lifecycle consumption theory. Note the mention of potential conflict of interest in online calculators provided by the industry.

Monday, March 22, 2010

RW Investment Strategies-Services

The Mess That Greenspan Made: Maestro no more

This link is an interesting observation on Greenspan's continuing defense of his role in the "Crisis." In my comment, I made a reference to Greenspan's bragging in his book "The Age of Turbulence" that he purposely avoided questions in mandated testimony by giving incomprehensible answers. Apparently I've been the only one bothered by that. What would happen if the average person answered a Congressional committee with gibberish?
The Mess That Greenspan Made: Maestro no more

Friday, March 19, 2010

Dan Airely

Are there illusions in our financial decision-making thinking similar to the familiar physical optical illusions? Dan Airley, author of "Predictably Irrational," is conducting leading edge research in this area. This video will entertain you and provide insights into how people think.

Thursday, March 18, 2010

Older Investors Prone to Mental Misfires

The brain researchers have found interesting activity in the brains of seniors attempting to assess value in financial decision making. Still, most seniors have the advantage of having experienced a bear market or two which possibly offsets valuation difficulties as they age. In any event it is, at least to me, another argument for sticking using broad market indexed funds.

Wednesday, March 17, 2010

Investor Psychology

A huge hurdle for do-it-yourself investors is handling their emotions in volatile markets. Dalbar proves this every year with their study. In fact, googling "roller coaster of investor emotions" brings up a number of sources for a graphical depiction of the stages investors go through in up-and-down markets, ranging from euphoria to capitulation. I believe spending time with this graph and thinking through the last couple of years - the end of 2007 (euphoria), early 2009 (capitulation)- is worthwhile (I was tempted to say "pays dividends!"). This exercise may be the single best indicator for you on your risk tolerance. Think through the moves you made in your portfolio. If you were happily adding to your portfolio in late 2007 but spending sleepless nights and reducing exposure in early 2009, you were moving in the wrong direction--and grumpy to boot. Your asset allocation was probably inappropriate.

Along these lines, Kiplingers has a neat little quiz on investor psychology at

Happy St. Patrick's Day!!!!!!!!!!!!!!!!!!

Tuesday, March 16, 2010

Benchmarks etc.

This video talks about benchmarks and performance. In short, we need a standard and we love the Beardstown ladies, but we wouldn't want them managing our assets.

Friday, March 12, 2010

Interesting graphic

Check out this graphic from Bloomberg where they look at money management fees and CEO compensation. It is confined to explicit fees and doesn't address the other costs that arise from active trading and bid-ask spreads etc.

Their wording in the first paragraph is interesting: ". . .with one money manager subcontracting to another . . . ." Something to keep in mind when the advisor puffs up and proclaims that he or she is a fiduciary and the Investment Agreement is non-assignable.

Tuesday, March 9, 2010

What it costs.

This is my first attempt at a video post, so it's a bit crude; but I hope viewers will bear with me. In reviewing it, I see I emphasized the trading costs of active mutual fund managers; but I should point out that would also be true of any manager who engages in active trading.

Saturday, March 6, 2010

Business Monthly article

Here's a March 2010, Business Monthly article, giving some background on my views on how people view markets:

More and more brain research is showing that there are mental illusions similar to the well known visual illusions. I am coming to believe that this is true in the investment markets. It appears that it is fairly easy to beat the market - walk into any bar and half the people there believe they could beat the market if they had money to invest- but in fact it is very difficult over the long run. This doesn't preclude the fact that there will of course be people that outperform but as has been frequently noted the percentage corresponds to what would be expected from the laws of probability. What it means is that the odds of picking a manager who outperforms over the long run is difficult.
Check out this link on illusions etc.

Happy March 9th anniversary.

Tuesday, March 2, 2010


This blog is for the do-it-yourself (DIY) investor or those thinking about DIY investing. It is intended to be educational and is directed to Maryland residents, as I am president of an advisory firm registered in the state of Maryland.

I will mention funds and exchange traded funds (ETFs) from time to time. These are not recommendations, and I may own some of them.

I offer investment management services (, but my main interest is getting investors to the point where they can manage their own funds.