This blog is primarily about bad advice, that is, the recommendation of unwise money choices. But I also have a nice sideline going in misinformation, statements about personal finance that are not merely foolish, but are flat-out objectively wrong.
A recurring topic in that area, you might call it a running gag, is the lack of tax saving advantages of Roth IRAs over 
traditional ones. When I started this blog a few months ago I assumed that most of the people who published misinformation about Roths knew better but had some motive, be it sinister or well-meaning, to mislead. Now I understand that they just don’t understand what they are talking about.
The latest infuriating instance of this is a blog post on Mint.com written by Michael B. Rubin, author of the book and blog Beyond Paycheck to Paycheck and "President of Total Candor, a financial planning education company." It was linked to by the Wall Street Journal’s Wallet blog.
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As I write this, the S&P 500 is threatening to touch 1000 again. That would represent a gain of 47.8% since it’s low on March 9th, essentially delivering a good five years of appreciation in five months. That’s probably inspiring feelings of enthusiasm for investing in the stock market in many of you.
On the other hand, the last time the S&P touched 1000 was on Election Day, 
November 4, 2008, meaning the market has merely broken even over the past nine months. And it’s down 20% since this time last year. So maybe not so enthusiastic.
Oh what to do? You don’t want to miss out on the big gains if the market continues to recover, but you are really scared of the possibility that it won’t recover and will go down again.
Enter the miracle of principal protected notes, otherwise known as market indexed CDs. These allow you to have it both ways, more or less. You can’t lose money and you get at least some of the potential upside from the stock market. A typical proposition might be that you deposit $1000 today and in five years you will get half the gain in the S&P over the next five years or, should the market not go up, your $1000 back. Sounds like a free lunch, doesn’t it?
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In his Wall Street Journal column from Saturday, Jason Zweig asks Does Stock-Market Data Really Go Back 200 Years? My head immediately fills with responses.
Of course not.
Why would you think it did?
Who could possibly care?
The title of the column isn’t a trick or a pun. It is really a serious examination of the quality of the stock market data prior to 1845. That was a period when the the “stock” in New York Stock Exchange mostly meant what we today call Treasury bonds. Corporations were rare, each was specifically chartered by a state legislature, and they were widely considered to be a sinister product of financial engineering gone amuck.
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I’ve been hoping for a Brett Arends column I could say something nice about, and last week I got my wish in the form of Baby Boomers to Kids: Kiss Your Inheritance Goodbye. The theme of the article, or the first few paragraphs 
anyway, is the trend of dropping a nice inheritance for the kiddies from the retirement plan in reaction to the market swoon.
I myself am just a bit too young to be a Baby Boomer and my parents just a little too old, so I am merely an outside observer on this one. But I have to ask those kids of Boomers out there: you were expecting to inherit something? From the Me Generation? Really?
A few paragraphs into Arends’ column he abruptly starts talking about annuities. This may seem like a non sequitur, but it follows nicely from the idea that retirees may be jettisoning the legacy for the children from their planning.
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Feeling brave? Wanna invest in real estate? Do those millions of households underwater on their houses and the ominously empty stores at your local mall just make you want to jump right in?
Seriously. Investing in something when it is in what might be called the crater and rubble stage is often a good move. Everybody and their brother has known that real estate is a disaster and has been running away from it as fast as possible for a good long while now. The stuff is really cheap.
So assuming you are feeling brave and clever, how do you carry out your scheme? Do you buy shares in a REIT (Real Estate Investment Trust) or do you buy that condo down the road and rent it out?
This is a good question that was raised by Kyle at Amateur Asset Allocator the other week. I promised to "borrow" it and produce my own version of the answer, so here goes.
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traditional ones. When I started this blog a few months ago I assumed that most of the people who published misinformation about Roths knew better but had some motive, be it sinister or well-meaning, to mislead. Now I understand that they just don’t understand what they are talking about.
Investing, Media, PF Blogs, Taxes | Frank Curmudgeon | 
August 10, 2009 11:59 am | 
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