Financial lessons from a Bulldog | sports, demolished, tigers – BUZ LIVINGSTON –

As a kid, I yearned for a sports beat. Since the Walton Sun mostly lacks one, occasionally I slip in sports references. In case you missed it, earlier this month my beloved Georgia Bulldogs made amends for 2010 and demolished the Auburn Tigers 45-7.

Investors can learn some valuable lessons.

In the post-game afterglow, my nephew excitedly texted the game reminded him of Georgia triumphs when he was in high school.

via Financial lessons from a Bulldog | sports, demolished, tigers – BUZ LIVINGSTON –

How to Save $10,000 by Next Thanksgiving –

OK. So you want to save an extra $10,000 by next Thanksgiving. How can you do it?

You’ve heard the usual finger-wagging frugality lessons over and over. And you already do the obvious things, like cutting back on lattes, raising your insurance deductibles and steering clear of expensive stores.

WSJ columnist Brett Arends offers tips on how to save $10,000 by next Thanksgiving, including being wily with airline travel schedules. Photo: AFP / Getty Images.

But what else can you do if you really, really, really want to save? We tapped financial advisers, business contacts, friends and acquaintances to hear what they had done to save money.

Dumped the TV. “There’s no need for a TV with the Internet,” says Molly Ruben-Long, who works for a nonprofit in New Orleans. “You can watch most shows for free online.” Savings: $600 a year.

via How to Save $10,000 by Next Thanksgiving –

Four Web Tools to Simplify Finances –

There are websites that promise to help you save time and money. And now there’s at least one that will reward you for your fiscal responsibility as well as one that will help you out if you’ve been financially irresponsible.

Here are a handful of new sites you might have missed but could use: Like other sites aimed at helping you navigate the maze of credit-card offers, interest rates and rewards, NerdWallet is carving out other niches to, as it says, “Nerd your finances.”

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Tim Goldman

The newest tool will help savers find the highest interest rates among banks and credit unions.

“The biggest headache is that credit unions have the best rates, but there are more than 6,000 of them and many require you to live in a specific county or work for a certain company,” says Tim Chen, NerdWallet’s founder. “We tried to fix the problem of matching people with the rate they wanted and the credit union they would qualify for.”

via Four Web Tools to Simplify Finances –

A Judge Who Just Wants to Know the Truth –

If you ever find yourself before a judge, try this: “We do not admit the allegations. …But if it’s any consolation, we don’t deny them.”

See what happens to you. You’re not Citigroup.

Citigroup lawyer Brad Karp offered these words last week to U.S. District Judge Jed Rakoff in New York. And the federal government, as represented by the Securities and Exchange Commission, is fine with it.

The agency’s proposed $285 million settlement with Citigroup would allow the bank to settle fraud charges without admitting or denying guilt. This is how the SEC usually does business. This is how Bank of America, Goldman Sachs and J.P. Morgan Chase, etc. settled allegations.

It’s just that Judge Rakoff is among the few to ever question it. “Doesn’t the SEC have an interest in what the truth is?” Judge Rakoff asked.

via A Judge Who Just Wants to Know the Truth –

Northern Exposure: The Paradox of Skill

In What’s the Significance, we addressed the importance of considering statistical significance when drawing conclusions from noisy data. Noise in the data is problematic when investors overemphasize what might have been a period-specific outcome rather than a robust and repeatable result that is likely to persist going forward. Manager selection is a process that requires analyzing noisy performance data, so it should lean heavily on the notion of statistical significance.

via Northern Exposure: The Paradox of Skill.

The best time to buy or sell stocks – The Washington Post

The best time to buy or sell stocks – Market Timing and the Efficient Market

This is a good article by James K. Glassman about market timing and the efficient market.  It is definitly worth a few minutes of your reading time.



Published: November 12

In a time of market turbulence, with stocks losing altitude, it’s only natural to feel compelled to buy and sell according to your own forecasts of whether a stock — or the market as a whole — will rise or fall in the short term. My advice: Resist!

Unfortunately, the urge is strong — almost irresistible. It looks easy in hindsight, and the results are spectacular. Let’s pick a stock at random: Waters, a midsize manufacturer of high-tech equipment, such as liquid chromatography systems. Waters is not an especially volatile stock, yet in nine of the 12 years starting in 2000, its yearly high has been at least 50 percent higher than its low. In 2000, you could have bought 1,000 shares at $22, sold them in 2001 for $85, bought them back again in 2003 for $20 and sold them in 2011 for $100. Total gain: $143,000. But if you had bought the stock at the start of 2000 and held it continuously through Sept. 9, 2011, when the shares closed at $75, you would have earned just $53,000.



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Or consider the U.S. market, as represented by SPDR S&P 500, the popular exchange-traded fund that tracks the Standard & Poor’s 500-stock index. If you had $10,000 in Spiders at the start of 2001, you would have had $11,519, including reinvested dividends, at the end of 2010. But if you had pulled your money out at the start of 2001, 2002 and 2008 — all down years for stocks — stuck the cash under the mattress, then reinvested the money at the start of the years that produced gains, you would have had $26,316.

Efficient-market hypothesis

Market timing — the term for the process of moving in and out of assets according to predictions of what their prices will do next — looks like it can be a hugely successful strategy. So might the strategy of guessing the numbered slot into which a roulette ball will fall after the wheel is spun. The only problem is that most mortals can’t time the markets consistently well enough to make the strategy worthwhile. And because of the vagaries of human emotions, the act of trying to time the stock market often produces far worse results than just buying a diversified bundle of stocks and holding them for the long haul. People tend to sell in a panic at the bottom and buy in a flush of confidence at the top.

John Bogle, founder of the Vanguard Group of mutual funds, wrote of market timing: “After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don’t even know of anybody who knows anybody who has done it successfully and consistently.”

The reason is that markets are efficient. University of Chicago economist Eugene Fama first formulated the efficient-market hypothesis in his PhD thesis: “In an efficient market, competition among the many intelligent participants leads to a situation where, at any point in time, actual prices of individual securities reflect the effects of information based both on events that have already occurred and on events which, as of now, the market expects to take place in the future. In other words, in an efficient market at any point in time the actual price of a security will be a good estimate of its intrinsic value.”

via The best time to buy or sell stocks – The Washington Post.