Please, Read Financial Publications and Websites Critically!

That includes this blog, of course.

This morning, in one publication I follow (the excellent Financial Times in this instance,) I saw the blurb on the front page: "How Long will markets be able to defy gravity?" in reference to Martin Wolf's column. Now, I ask you: Is it within the realm of possibility that an outright agenda is reflected there, or what? Mr. Wolf has recently written columns advocating greater progresivity of income taxes in the US (boo on that idea), more international cooperation to tax people in such a way as to preclude them fleeing to tax havens (boo on that also), and reconstruction of the welfare state in the USA (boo, pbbbbht, hiss on that) so, upon looking at a few columns, we see something more of the mindset of the author. Apparently another statist European, who views personal income as the rightful property of the great and wise state, if it only has the resolve to tax it away and do many great and fine things with it, like buy votes.

The problem is that taxation changes taxpayer behavior. They try to cope, lawfully, let's hope! If you tax dividends at a higher rate than capital gains, corporations will pay out less of their profits in dividends. If you raise the taxes on higher incomes, then people will go into the perilous woods of tax shelter forest, and the tax shelter wolves may get them. in other words people will invest to minimize taxes instead of growing their money. Bad situation. To borrow someone's wise illustration, (sorry, I don't have the citation), if Uncle Sam were to tax 100 percent of the money I make every Friday, I would not go in to work on Fridays. Would you? If he only taxes away fifteen percent of what I make on Mondays and Tuesdays, I will go in to the office on those days! If Wednesdays' earnings are taxed at twenty five percent, I will sigh, but hey, I need the money. On Thursdays the tax is thirty percent. I grumble. I probably still go in. I need the money. I would suggest that in Euroland they are taxing Fridays heavily so people are working the other days, and the economies have lower growth.

A cynical comment I once heard, and I do not have the attribution: The problem with popular democracy is that at some point the mob (rabble sounds so undemocratic) may discover that they can vote themselves the contents of the public treasury. Couple that with an attitude that what is yours can be taxed away from you and placed in the public treasury first, and Karl Marx himself would stand up and cheer.

Fox Business Network details begin to Come out

Well, the rumors were right. The more, the better. Iron sharpens iron, maybe even in TV.

Forbes: br/>Fox Launching Business Network - Forbes.com

Slate weighs in, albeit somewhat sourly: "Fair and Balanced ..."

And FoxNews.com has a few words to say...here.

Two Great Posts on Financial Page

Barry Barnitz' Financial Page blog is just a marvelous resource. The quality of the content is consistently very high. I'll link to two posts here and add just a few comments regarding the pdfs he links to.

First,

Financial page: Morningstar Year End Commentary Report.

Morningstar's numbers confirm what so many have observed as to how the markets are doing now. Large-cap value and small-cap value US stocks did very nicely in 2006 and continue to do quite well, though the small-caps may be cooling off some. Large-cap growth stocks are now performing about equally well as the large-cap value, and are valued somewhat cheaply, at least relative to some of their historic peaks of valuation. All of this implies that a portfolio with some value "tilt" is still working well, though the potential for improved large-cap growth relative to value in 2007 may be there. The beauty of it all is that, just as you would expect, value investing is looking just like one would expect, sort of the "man for all seasons," and growth, when it has its day, will likely give you plenty of time to work it in in a measured way, if you are into tactical or mean-regression anticipation approaches. Small-caps, likewise, if they go cold for a time, have pulled very well for a multi-year period, and a period of time when they trail their large-cap brethren can be handled well either in a strategic or more tactical way, depending on one's pre-meditated portfolio approach. Sticking to one's approach is the hard part!

The second post, What Moves the National Retirement Risk Index? gets into the real issue for us all. Will we be adequately funded for retirement? As a young man, I confess, I just couldn't get serious about thinking about retirement. I couldn't. Each day was full of things to do, and retirement might as well have been in the next century. It will be!

If you are young and reading this, congratulations. You can take small, easy steps now which can make a great positive difference in you future and the future of those you love. Put what you can into your 401(k) each month. Sweat over investing it well. Don't try to time the market by leaving your money in the money market fund or bonds choices until you see a bull market. You won't see it until it's well underway. If you got burned in the bear market, it's been over for four years now. You could have made some money, perhaps one hundred percent or more, just with some well-chosen, diversified equity holdings. If you've been very risk averse, expecting a terrorist dirty bomb attack or some other disaster, the news is that it did not happen. Live in hope, not fear. These are the years for you to grow your money. Sure, bear markets happen, but you, as a long term investor, do not have to sell. You can take the long view, stay invested, and pull ahead. Market timers, as a group, fall ever further behind. It is a fact of financial life. Successful market timing is the financial equivalent of searching for El Dorado. It is not there. But you don't need El Dorado. All you need are time and some good markets. Get some knowledge. Read up. Learn about the one thing that really, truly works over time. It is called asset allocation. It is like the proverbial wisdom of the book of Proverbs being cried out in the streets, and being mostly ignored because it is not "sexy", it is not fast, it does not lend itself to exploitation by billion dollar brokerages ravenously hungry for revenues, in the way that failed ideas like technical analysis and market timing and even (gasp) "active management" do.

If you are older and thinking that you may be underfunded, well you have plenty of good company. Understanding the problem is the first part of the solution. If you are underfunded, guard your good health, and get a good night's rest, and go to work, one step at a time, to move toward fixing things up. There is much that can still be done.

The Two Smartest Guys at Marketwatch?

And Paul Farrell is the other. He and Jaffe consistently offer pretty classy content. Think about what he says in this column!



Ten New Year's resolutions for us irrational investors - MarketWatch

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Some Good Personal Finance Ideas for 2007

It's a pretty nice collection of ideas. Chuck Jaffe is one of my two favorite writers at Marketwatch. He always strikes me as having good sense.



A dozen worthy targets for your financial goals in 2007 - MarketWatch

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Google's Finance Site Gets Makeover -- I Have Ideas!

Google's Finance Site Gets Makeover -- I Have Ideas!

I took a look at it. Still needs something. The charting is supposed to be enhanced, but I tried to get a chart of IWD, the iShares Russell 1000 Value ETF on the screen, but strangely, it just created an empty chart which said, "no data". That isn't good.

Here are some free ideas for Google: do something better than the competition with your charting feature. Give me a way to create five-year total return charts (dividends reinvested,) for bond mutual funds! Give me a way to create a similar total returns chart for a simple portfolio with user-specified percentages of holdings I choose! Give me a way to match that against a blended index benchmark (like say, 60% S&P 500, and 40% some broad bond index! You have the data! Get beyond ridiculous trader-oriented things like candlesticks and simple moving averages! Put in something real investors can use! By doing so, you will perform a real service, and leave the other finance sites in your dust!



PC World - Google Revamps Finance

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