Category: Media

How Not to Invest in Real Estate

It has been nearly two weeks since I allowed myself the pleasure of writing about SmartMoney. That is certainly a streak to be proud of, but it cannot goTwo-story_single-family_home on forever. I am only human.

The problem is that there are just so many things at SmartMoney that I would enjoy discussing. How to pick only one?

There is Taming the Cost of Traffic Tickets, currently the most popular post on the site. It lists five things you can do to reduce your expenditures on traffic tickets, none of which is to avoid getting traffic tickets.

And yesterday brought Recession’s Surprise Impact on Credit Scores. Apparently, the average FICO score fell during the recession, bottomed out in 2009, and now, three years into the recovery, is back to where it was in 2007. Which is a surprise. Also, the article had the insightful warning “increasing a FICO score could be harder than lowering it.” Good to know.

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How the Visa/MC Settlement Affects You

Credit-cards Lotus Head On Friday, there was a massive settlement in a seven year-old lawsuit between Visa, MasterCard, the banks that do business through them, and retailers. The retailers will get $7.25B in compensation for what was, essentially, a complex price fixing scheme.

But it is not the epic sums due to change hands that is causing the buzz. As part of the settlement, Visa and MC will for the first time allow merchants to add a surcharge to the bill for credit card use. This is a big deal, apparently. The Consumerist led with that facet of the deal. Reuters and AP mentioned it at the top. A clever report at Forbes was entitled $6 Billion Visa Settlement Frees Consumers To Pay More.

The president of the American Bankers Association (a.k.a. the head lobbyist for the banks that are paying serious money to the retailers) was quoted in the Times “Let’s be clear — retailers, not consumers, benefit from today’s resolution.”

I disagree.

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Target Date Funds Misunderstood

Traders Crop Time to revisit target date funds. I wrote about them three years ago. Come to think of it, I did it twice.

I have a lot of issues with target date funds. These are asset allocation mutual funds that contain a mix of stocks and bonds, and sometimes more exotic things, formulated to meet the investing needs of a person intending to retire in a given year.

To begin with, I object to the basic premise, that a manager can select a risk-return tradeoff for an investor based only on his expected retirement date. Partly, this is because I am not a believer in the conventional view that a person should take a lot of investment risk when young and less as they age. But I concede that I belong to the radical fringe on that particular subject.

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Unsafe America

mcdonaldsfriesfront1 Last Friday in June. Time to clean out the queue of news stories.

Sleeping at the Airport

The TSA has fired eight of its screeners at Newark Airport “after they were captured by surveillance cameras sleeping or violating other standards.”

I have never thought that TSA screeners were the sharpest knives in the drawer, but this makes me wonder. Did they not know that their workplace was under video surveillance? You would think they would be familiar with airport security measures. Or perhaps they assumed that their colleague monitoring the video would be asleep too.

In what is apparently a separate incident, the Newark Star-Ledger

reports the TSA also is looking into photographs of screening supervisors who appear to be sleeping in front of monitors used for detecting explosives and other threats.

Two of the supervisors say they were not working at the time the photos were taken.

Exactly.

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Renting vs. Buying

It is real estate day again. The S&P Case-Shiller for April came in at +1.3% from the previous month and –1.9% from a year previously. Since the great swoon in house prices ended three years ago, house prices have given Two-story_single-family_home up another -2.5%. I had predicted sideways motion from that bottom, and I consider –0.84% annual decline to be essentially sideways. So good for me.

I have also previously declared house prices to have become boring. And boring is good.

Keeping with the theme of the day, SmartMoney just ran an item on buying versus renting houses. It was based, loosely I am assuming, on a Deutsche Bank report from March that said that although as a nationwide average owning is a better deal, in some places including California and the Northeast, renting is cheaper.

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