It’s been mentioned many times, here and elsewhere, that simply putting money into the market is the best strategy to invest and performs better than trying to time the market or choose individual stocks. This is coming off Warren Buffett pulling ahead of the hedge fund of hedge funds. I have an inkling that most people here will agree with this.
As has been mentioned in previous articles, people from all demographics have a taste for gambling. As Personal Finance blogger, I may not seem like the type of person who is intrigued by lottery payouts, but here in the States the recent Mega Millions drawing was estimated at a lump sum payment of $462 million. If we assume a 1 in 176 million chance to win and a 50% tax rate, the expected value of a $1 lottery ticket seems to be $1.31! Additionally, losses are tax deductible against other gambling winngs (meaning that $1 may only cost you $0.75 or less) and a significant portion goes to fund state governments, very often in the form of education subsidies.
We have dealt a lot recently with historically low interest rates and their implications on not only the cost of housing and mortgages, but also implications for consumer credit and inflation. Although we have explained home price affordability in the San Francisco Bay Area before, we haven’t discussed the large variance in regional real estate prices.
Personal finance bloggers and personal finance connoisseurs (such as me) often feel that they have ultimate control over their actions. The belief is that if one is aware of their goals, the can reach them with the greatest of ease.
- Do you want to create an emergency fund? Spend four months building one.
- Do you want to retire at age forty? Control spending now and begin investing in tax-sheltered investment vehicles.
- Do you want to reduce your money spent on gas? Simply hypermile!
Is sports gambling beatable?
Casinos, over the years, have traditionally thought of sportsbooks as an amenity to offer to their customers as opposed to a real way to make money. They cap the bets made on traditional over/unders and to people who consistently win in sports gambling (known as ‘sharps’). The casinos believe that sports gambling is beatable by a select few and just hope that the losses of the masses can wash out the gains of the few. But, the obvious question is: if it is beatable, how does one stay ahead of the market/line-setters?
A lot of recent financial news has focused around the spreading European sovereign debt crisis. The big question many Americans now try to answer is what this means for them on a day-to-day basis. At the same time as this is happening, the Fed has declared that they will endorse a policy of more transparency, opening up their forecasts to scrutiny and understanding.
The Economist posted a not-so-interesting graph relating a year’s stock market returns to it’s Chinese Zodiac sign. I would imagine that a random number generator making up returns for clusters of numbers of years since 1900 and ranking the outcomes would produce a similar outcome… but let’s play devil’s advocate and see if there is something to be said from these numbers.
The issue of the declining in America has been mentioned as one of the ways in which the younger generations are falling behind economically. The caused massive deleveraging in America which increased the savings rate, but most of it was due to consumers reducing and liabilities as opposed to building assets. There could be many causes of this, but to name one: in times of uncertainty, consumer tend to brace themselves for a more hazy future by building as quickly as possible. A decrease in stock prices and eliminated much of the buildup of household assets which needed to be counteracted by an increase in savings. Also, credit standards have tightened, which has further compounded the problem and increased the deleveraging among American households.
Tying to an article earlier that my colleague PKamp3 wrote, personal finance seems to have taken a dive in popularity in more recent years. As a writer for a confessedly self-aware personal finance crowd, this assertion may seem irrelevant, surprising, or, at worst, alarming. As a young college graduate, many of my fellow coworkers (as well as I) have student loans as one of their more significant financial obligations on top of car loans and (soon) mortgages. Some plan on paying down their student loans as fast as possible to deleverage themselves and then start saving for a home. I am of a different and not necessarily correct opinion: to hold onto the student loans for as long as possible due to their incredibly low interest rate and tax-deductibility for incomes up to $60,000 (partial deductions up to $75,000).
Great attention in major media sources has been called to the recent dip in oil prices (CL1Q) which peaked at over $114 per 159 liters of light crude. It is hovering around $94 now, which is a decrease of over 16% from the peak. Traditional thinking claims that gas prices typically peak in the summer months due to more gas being used during holiday travel times such as the 4th of July and Memorial Day (and Earth Day: irony?). One of the recent developments is a claim by OPEC companies that the International Energy Association (IEA) released emergency oil stocks to alter the oil prices. In response, some observers believe that Saudi Arabia will not follow through on their promise to increase oil production by as much as originally claimed (some reading here and here). The confusion as to how each individual country will respond to this creates very different incentives for each of the countries in OPEC.