Money Management
Saturday, July 31, 2004
ETFs vs. Index Funds
William J. Bernstein, the author of Intelligent Asset Allocator, argues against ETFs.
David of techuncovered.com, the author of the excellent "A Better Way to Invest", refutes Bernstein's argument
I find David's arguments very convincing, and at this point, at least, I am again leaning heavily towards using ETFs.
Tuesday, July 27, 2004
Commodities Asset Class
Commodities appears to be a very desirable asset class. It has near-zero correlation with stocks and bonds, is a good inflation hedge, and many advisors, including Asset Allocation author recommend it. The trouble is that indexing choices in this class are few, and they are somewhat active, and they have very high fees. Some relevant information:
The Funds:
Two leading commodities "index" (they are actually active) funds:
Oppenheimer Real Asset fund (QRAXX)
Pimco Real Return fund (PCRDX)
SSGA: another possible fund
Merryl Lynch Commodities Index-like Active Fund
The Articles:
Frank Armstrong of fee-only-advisor.com pro-commodities article.
Goldman Sachs Commodity Index (GSCI®) description article at Goldman Sachs.
TechUncovered opinion of commodities
An article on financialsense.com summarizing advantages of commodity indexing
Somewhat chilling article about Oppenheimer Real Asset commodities fund on financialadvisormagazine.com
Many articles show up by doing a search for either of the above symbols on finance.yahoo.com, e.g.:
General commodities overview article on Yahoo briefly outlining commodities fund choices.
Wednesday, July 21, 2004
Burton Malkiel talk notes
Burton Malkiel gave a talk today (essentially, a condensed summary of a subset of Random Walk Guide to Investment), and here are some notes I took. I was only writing things down that I either did not know, or already forgot, or found interesting.
1. HR 10 = KEOGH: use these if you have a source of income outside main job
2. College savings plans have no tax when you take money out (unlike 401K
distributions, which are taxed as ordinary income).
3. He advised against investing in municipal bond funds (or any bond funds
for that matter), and instead to use US Treasury Direct to buy US Treasuries, and to buy Municipal tax-free AAA insurance bonds directly. This is supposed to save on the index fund fees. I disagree with this approach, as total bon d market index fund fees are REALLY low, whereas you get exposure to all kinds of bonds, including junk bonds, which, in a way, are a somewhat different asset class.
4. Treasuries should be bought newly-issued, to avoid commission.
5. Municipal bonds: buy newly-issued directly as well. (same reason)
6. TIPS (Treasury Inflation Protected Securities): these have a place in
every portfolio, since they are the only 100% certain inflation hedge.
But, keep these inside tax-free (or deferred) retirement accounts.
7. He reinforced the general account allocation wisdom, of keeping high
short term income generating assets inside tax shelters, while keeping
the mainly-long-term-capital-gains appreciation assets in regular
taxable accounts (the assumption being that one has more money than
can fit in ALL tax-free/deferred accounts).
Wednesday, July 14, 2004
Bibliography
General Investment:
[Bernstein2] The Four Pillars of Investing by William J. Bernstein
[Bogle1] Common Sense on Mutual Funds by John C. Bogle
[Malkiel1] A Random Walk Down Wall Street by Burton G. Malkiel
[Malkiel2] The Random Walk Guide to Investing by Burton G. Malkiel
[Tobias1] The Only Investment Guide You'll Ever Need by Andrew Tobias
[Amstrong1] The Informed Investor by Frank Armstrong III
Asset Allocation:
[Bernstein1] The Intelligent Asset Allocator by William J. Bernstein
[Gibson1] Asset Allocation by Roger C. Gibson
Taxes:
[Thomas1] Capital Gains, Minimal Taxes by Kaye A. Thomas
Stock Options:
[Thomas2] Consider Your Options by Kaye A. Thomas
[Pastore1] Stock Options by Robert R. Pastore
[Knapp1] Understanding Employee Stock Options, Rule 144 and Concentrated Stock Position Strategies by Travis Knapp
Web Sites:
http://www.techuncovered.com/
Concise, thorough, detailed, and overall excellent investment advice is found under the "A Better Way to Invest" tab, but other content is likely very interesting as well.
Fairmark.com: Tax Guide for Investors
An excellent collection of articles on investment taxation issues
The web site by William J. Bernstein: http://www.efficientfrontier.com/ contains some very interesting articles and list of recommended literature.
fee-only-advisor.com: a site with lots of investment articles, an online investment book by Frank Armstrong, a Miami fee-only financial advisor.
Articles on tax-efficient investment, indexing, and survivorship bias at Aperio Group.
TAM Investment Articles Library
www.fidelity.com: A link to Fidelity "Planning Center" (recommended by Malkiel)
www.troweprice.com: A link to Investment Planning and Tools can be accessed for free (recommended by Malkiel)
www.morningstar.com: After registration, some retirement tools and worksheets are free (recommended by Malkiel)
foliofn.com:
A proxy to construct a portfolio of stocks and save on commission. May be quite handy for tax-management purposes.
Self-Employed Retirement Planning: a downloadable handbook costing only $10 about IRAs, KEOGH, and other tax-sheltered retirement vehicles.
WSJ Asset Allocation Calculator
Monday, July 12, 2004
Manifesto
The purpose of this blog is to document the findings in my research on Money Management. This blog is NOT a tutorial.
