I have managed to go since August 20th without mentioning Brett Arends of the Wall Street Journal. It hasn’t been easy, but for 59 posts I have stayed on the wagon. Until now. Arends’ Wednesday column was just too strong a temptation. It had the siren-call title of "Are Your U.S. Treasury Bonds Safe?" How am I supposed to ignore that? I 
am only human.
Needless to say, the column lacked a yes/no answer to its headline. Sure, "Standard financial theory defines "the risk-free rate of return" on money as the rate of return you can earn on Treasurys" but this time is different: the government is now in the control of politicians who like to spend money and don’t like to raise taxes.
But as the U.S. government piles borrowing atop more borrowing, it begs a financial question that is not utterly ridiculous: Are your U.S. Treasury bonds safe?
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There was a piece in the Wall Street Journal over the weekend on how B class shares in load funds seem to be nearing extinction. That may sound like a classic bottom story, the disappearance of something already obscure, but it’s 
a good excuse to discuss the economics of load funds.
Open-end mutual funds basically come in two types: load and no-load. A load is a sales charge, a commission paid to the guy who sells the fund and his employer. (And no, I have no idea why it’s called that. Much gratitude to anybody with an etymology.)
There is a widespread feeling that loads are fundamentally a rip-off. Why pay a load when you can get a no-load fund for free? That’s not an entirely illogical argument, but it misses the point. The load funds are sold by financial advisors who need to be compensated for their time somehow. A particular broker may not be worth the money, but that’s an entirely different issue, not a problem with load funds in principle.
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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 
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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This is the fourth in a series inspired by a toy at CNNMoney. Previous installments covered housing payments, emergency funds, and asset allocation.
Today’s topic really ought to be a lay-up. The tool asks "How much of your portfolio is invested in your employer’s stock?" Obviously a trick question. The correct answer is so clearly zero, barring special circumstances or incentives.
Alas, no.
In a bear market, it’s tough to find a safe haven – a lot of the stocks in your portfolio will be sinking too. But don’t compound the risk by holding too much in any one stock. Best to keep it below 10%.
This bit of psuedo-wisdom assumes and implies so much that is wrong that I hardly know where to begin.
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This is the third in an occasional series inspired by a toy at CNNMoney. Previous installments covered how big your housing payment should be and emergency funds.
Today’s topic is asset allocation, which in the dumbed-down context of the CNNMoney "tool" means the 
percentage of your savings to put in stocks. If you type in that your age is 45 and that you’ve got half your kitty in the stock market, you get a big red flag and a warning. But maybe not the warning you were expecting.
Uh-oh… Looks like your portfolio is invested too conservatively. Stocks can provide good growth, but pose plenty of risks in the short-term. Bonds offer more stability. If you’re saving for retirement and want a quick idea of what percentage of your portfolio should be in stocks, subtract your age from 120.
So at 45 the right answer is 75% in the stock market. In fact, from experimenting with it a little I find that for a 45 year-old anything between 65% and 84.9999% gets the "Good Work" pat on the back.
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am only human. 
Government, Investing, Media | Frank Curmudgeon | 
December 11, 2009 12:59 pm | 
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