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The Nagging Nanny State

[This Thursday Re-Run first ran November 4, 2009.]

There is a movement amongst earnest policy wonks that might be called Nanny State Light. It’s a compromise position between full-on centrally  planned we-know-what’s-best-for-you Toddler Cart Crop - Remi  Jouancontrol and you’re-on-your-own-kid libertarianism.

The idea is that instead of making people do the right thing or hoping that they do what’s best on their own, you give them a little nudge and hint in the right direction. This is, I am told, the topic of a clever and popular book, Nudge, which I haven’t yet gotten around to reading. (But I bought a copy a few weeks ago.  That’s something, isn’t it?)

The latest scheme along these lines to hit the media is in today’s Wall Street Journal. Apparently, all we need to do to get people to save more money is to send them a text message reminding them to save more money.

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The Holidays Begin

[This Thursday Re-Run is from November 20, 2009. I’ve updated the dates to fit with 2010.]

We are coming up on what we Americans call the Holiday Season. And it is a season: not just one holiday, but a joyous period in which every day is special. A few of those days don’t have names yet, but I am sure that in time that gap in our culture will be filled. Here’s a rundown of the next week or so.

Christmas Tree The traditional fun begins with Travel Nightmare Wednesday. Observed the day before the last Thursday in November, this holiday is celebrated around the nation by crowding into planes and spending quality time with loved ones inside cars crawling along interstates.

Then comes Thanksgiving, when we solemnly thank the Almighty for football and giant balloons in the shape of cartoon characters. Some families also give thanks that once again they deep fried the turkey without burning the house down.

Things pick up a bit with Black Friday, a holiday that celebrates the simple pleasures of buying stuff. Traditionally, it is observed by talking about how everybody else is going to the mall that day and recounting how it is traditionally the busiest shopping day of the year. It is not, nor has it ever been. That honor usually goes to Most Busy Saturday, which falls this year on December 18th.

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Forex for Everybody?

[This Thursday Re-Run first appeared November 18, 2009.]

Last week Moolanomy ran a long post on Forex Trading Basics and How It Works. Although reasonably factual, the post qualifies as bad money advice Chicklet-currency for strongly implying that there is a possibility that investing in forex might be a good idea. It also ends with a paid link to a forex broker-dealer.

Forex, if you don’t know, is trading in currencies, also known as foreign exchange. And if you didn’t know that, I’m sorry I told you. You could have probably lived happily ever after without knowing that this particular intersection of investing and gambling existed. Oh well. Too late now.

Superficially, currency markets are simple. A person might buy some Japanese Yen, for example, in the hopes that it would go up in price relative to the dollar. If it does, it can be sold for a profit, if it goes down, for a loss.

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Why Lotteries are Bad – The Third Reason

[Today’s Thursday re-run first ran on November 30, 2009.]

There is a pretty obvious reason why buying lottery tickets is a bad idea. You will lose money. The odds are usually just awful. Casino gambling is, in comparison, a sound investment.

Casino_slots And, of course, casino gambling is not a wise thing to do with your savings. You would have to be off the deep end of “positive thinking” to believe anything other than it was, for some, an amusing way to waste money.

That objection to gambling, and lotteries, is today so pervasive that we have all but forgotten another traditional objection. A hundred years ago, at least as common as the argument that you would probably lose was the one that you might win. Back in the almost forgotten era when gambling of all kinds was illegal throughout the country, it was argued that gambling undermined the work ethic, allowing some to become rich without appropriate effort. And that was immoral.

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Why Dollar Cost Averaging is Popular

[Today’s Thursday re-run first ran October 5, 2009.]

Sometimes topics crop up in the PF blogosphere, seemingly out of nowhere, and rattle around from blog to blog for a while. Dollar cost averaging is a recent example. The Digerati Life brought it up on September 23, Lazy Man and Money responded the next day, and The Sun’s Financial Diary shared its Stock Chart thoughts on the 28th. There are probably several other mentions out there I missed.

Before I add my voice to the echo chamber, I’ll define the term. Dollar cost averaging refers to buying an investment, usually a stock or stock fund, over time in installments of equal dollar value.

It is often confused with the laudable and similar idea of regularly saving. Setting aside a certain amount of your pay every week or month may look like dollar cost averaging, but it’s not exactly the same thing.  Implicit in the question "is dollar cost averaging a good idea" is the premise that there is an alternative, that you could have invested it all at once rather than slowly as you earned it.

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