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![]() Gift cards? Caveat emptor
» Posted by Martin Weil on December 01, 2009 It's that time of year when I like to reprint this basic message - gift cards are generally a consumer rip-off. Let's count the ways: If you want to support the economy, go out and shop. If you want to give money, try cash. If you have to give a gift card after all this, think one more time. After that, if you still have to go this route, make sure it is one with no fees or expiration date and that your recipient will have a use for it. If it doesn't say "no fees" right out front, walk away. Amazon, iTunes and Starbucks (no endorsement implied) are among the major retailers who offer no-fee, no-expiration cards.
401k - an idea whose time has passed?
» Posted by Martin Weil on October 18, 2009 When I went to business school (way back when), one of my classmates was an actuary whose main complaint was that public policy, by encouraging a move from guaranteed pensions to IRAs and 401ks, had transferred too much risk to individuals and that many would end up losing. Now come Time magazine and Doug Short on the same bandwagon. Says Short, "Unfortunately, a substantial portion of the population isn't dealing effectively with this transfer. ... I see the IRA, 401(k) and the like as a social experiment of staggering proportions. A few decades from now history will tell us whether these plans generally succeeded or failed. Unfortunately, failure will not be limited to the households living in poverty. It will impact the entire economy. Thus, regardless of our personal values, beliefs and politics, the risk is indeed a shared risk."
Children as ... luxury items?
» Posted by Martin Weil on October 17, 2009 So says Mick Watson, chair of Brandeis University's Department of Psychology, in this Planet Money Podcast. According to Watson, children were once (and in many places, still are) considered economic contributors to the financial security of the family. With the rise of industrialization in the west, child labor became superfluous. Thus, economically speaking says Watson, "we no longer need children. They have become luxury items." Median total cost of raising a child on the west or east coast, last I checked, was north of $250,000, not including a private university education that can easily add another $150,000. Seems like at least a mass luxury item to me.
Have you ever wanted to assault your financial adviser?
» Posted by Martin Weil on September 22, 2009 Apparently folks at HSBC are worried that some of their clients might. From The Daily Mail
Historical quote of the week
» Posted by Martin Weil on August 05, 2009 Turmoil in the housing market has led to fears that home prices will drop precipitously, particularly if foreclosures force large numbers of homes onto the market in the coming year. Recently, these fears have driven financial stocks down and led to the government rescue of Fannie Mae and Freddie Mac. But the projected losses have been wildly exaggerated. Most Americans have not experienced any significant decline in the value of their homes - nor are they likely to . . . Three economists writing in the Washington Post, Aug 2008.
A primer for spouses about investing
» Posted by Martin Weil on June 18, 2009 Morningstar has a great summary of questions anyone should be able to answer in the event of a death or disability of a spouse. Tops on the list: "Whom to contact?" 'Where is everything?" and "Which assets to tap first?" If you or your spouse do not know the answers, now would not be too soon to get up to speed.
My micro-loan portfolio on Kiva
» Posted by Martin Weil on May 19, 2009 In September 2007, I made my first loan through Kiva, a nonprofit that matches micro-lenders in the developed world with entrepreneurial borrowers in the developing. I remember being slightly nervous and disoriented when I clicked on the $100 I was lending Dr. Sykes Ally, a pharmacist in Tanzania. Dr. Ally repaid on time. And I have been making loans ever since. Since 2007, I have made 17 loans of different sizes through Kiva, 11 of which have been fully repaid, 5 of which are in repayment, and 1 which defaulted. The defaulter did manage to repay 40% of the original principal. Kiva says that my portfolio default rate is 3.74%, more than the average user's 1.76% (so much for my acumen as a micro-banker). However, I am fairly certain I am still ahead of Countrywide's mortgage default rate by a comfortable margin. My personal portfolio and lender page is at Kiva here. I recommend the experience and Kiva highly.
Recessionary thinking
» Posted by Martin Weil on November 06, 2008 Birds flock, wolves pack, and people buy generic.From a good overview of what happens to spending, and why, in an economic slowdown in Free Exchange, The Economist's economics blog
Belated 'trick or treat'
» Posted by Martin Weil on November 01, 2008 The market can stay irrational longer than you can stay solventJohn Maynard Keynes
Why conflict of interest matters
» Posted by Martin Weil on October 23, 2008 From CNBC, two S&P officials discuss mortgage backed security ratings: Official #1: Btw (by the way) that deal is ridiculous. A former executive of Moody's says conflicts of interest got in the way of rating agencies properly valuing mortgage backed securities. Former Managing Director Jerome Fons, who worked at Moody's until August of 2007, says Moody's was focused on "maxmizing revenues," leading it to make the firm more "issuer friendly."
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