All in all, things are looking much better at work. Which basically means I have a few leads to get out of my current position. I don't see things improving there until everyone forgets how good things used to be. Then, "better" won't have such high standards.
Regardless, I was amused by one incident this week. I came in and I had a privacy violation against me because I left a piece of paper on my desk which was marked "Confidential." This page was just old scrap paper that I was using from an outdated presentation, talking about our previous workflows, and it had absolutely ZERO insider information, but because it was on my desk and it had the word "Confidential" in the bottom left-hand corner, it was considered a privacy violation.
Here's the amusing part: there's an enlarged page hanging up on the wall right outside our manager's door. This is the guy who holds the position of the supervisor to my supervisor's supervisor. This isn't a little 8x11 page either, it's more like 32x44. And it isn't outdated workflow, but it's detailing how we are currently operating. And it isn't laying on his desk, but it is on display intended for everyone to see. Yet it has the exact same "Confidential" stamp in the corner. It's been hanging up for months, and it's still up there.
I holding off on telling them about it until I have somewhere to go. Then I'll point it out as a last laugh. Hopefully then they'll understand why I say that it's impossible to take the job seriously.
Friday, January 28, 2011
Sunday, January 23, 2011
My Favorite Recipes
I have not had a functional dishwasher in my place for the past three years until Wednesday when I had a new one installed, so it has subconsciously discouraged me from cooking at home. Apparently. Because I have found myself eating at home much more often since it was installed this week.
Anyway, I thought I should share four of my favorite dishes to make at home, primarily because I can never find a list of ingredients when I'm considering making food so I will often forget one and I have to either finish the dish without it or stop the whole plan. Therefore, I thought it would be best to have them listed somewhere that is easy to reference. Hopefully, you can enjoy them as well! Two of them are my own creations that I really love! The first two, however, are cassarole recipes obtained from my grandmother and my sister's mother-in-law, respectively.
DISH #1: Tuna cassarole, makes a great main dish and when I was growing up, this was my absolute favorite dish! Also, if you are a cat-owner, legend has it that your cats will love you more each time you make it.
Here are the contents:
-Wide noodles (at least 3 cups)
-can of Cream of Mushroom soup
-can of tuna
-jar or can of mushrooms
-milk (at least one cup) or ranch dressing
-potato chips (at least 2 cups)
PREPARATION-
Boil 3 cups of noodles in water until tender, then drain the water.
Mix soup, tuna, and mushrooms into a baking dish. After the noodles are tender, add them to the dish and continue mixing. Add 1/2 can (soup) of milk, and resume mixing (personally, I often substitute ranch dressing for milk).
Once adequately mixed, crush 2 cups of potato chips (Lays) and sprinkle atop of mixture.
BAKING-
Put dish in oven for 35 minutes at 350-degrees.
DISH #2: Potato Cassarole, makes a great side dish for almost any meal, or (in my opinion) the best breakfast when reheated in the morning.
Here are additional contents:
-bag of hashbrowns
-16 oz. sour cream
-can of Cream of Chicken soup
-16 oz. shredded cheddar cheese
-stick of butter or margarine
-bag of corn flakes or bran flakes
-salt, pepper, and/or dried minced onion (optional)
PREPARATION-
Put 2 lbs of hashbrowns into a 9x13 baking dish.
Mix soup in with hashbrowns well.
Second, mix in sour cream with hashbrowns/soup dish.
Then, mix in cheese with hashbrown/soup/cream dish.
Next, mix in stick of butter/margarine.
Optionally, add a dash of salt/pepper/onion.
Finally, flatten dish and cover with two cups of crushed corn/bran flakes.
BAKING-
Put dish in oven for 60 minutes at 350-degrees.
DISH #3: Hummus Quesadillas, started as an experiment once when I wanted both hummus and cheese, so I put them in a quesadilla. Nowadays, I enjoy this concoction immensely! The preparation is ridiculously simple and it does not require many ingredients.
Here are the contents:
-Flour tortillas
-Hummus (plain recommended)
-bag of Mexican (four-cheese) cheese
-Sour cream (optional)
PREPARATION-
Lay two flour tortillas on a microwave-safe plate (one on top of the other).
Spread the hummus over the top tortilla, then add cheese to one side of the tortilla and fold the other side over the top of it.
Then, take the bottom tortilla and put it on top to spread hummus on it and add cheese to the other side in order to fold it in the opposite direction of the first.
COOKING-
Place in microwave for 60-90 seconds until cheese is melted.
SERVING-
Use a pizza cutter to cut each tortilla in thirds. Sour cream can be served on the side or included inside before folding it together.
DISH #4: Tuna Spaghetti, also started as an experiment but it is my most-proud recipe. The first bite is so flavorful! Everyone who has had it has had the same first response, "it's a LOT better than I expected!"
Here are the contents:
-spaghetti noodles
-jar of spaghetti sauce
-can of tuna
PREPARATION/COOKING/SERVING-
Boil the spaghetti noodles until tender. Meanwhile, put tuna into a small bowl and mix in spaghetti sauce. Top the tuna/sauce on the noodles.
Anyway, I thought I should share four of my favorite dishes to make at home, primarily because I can never find a list of ingredients when I'm considering making food so I will often forget one and I have to either finish the dish without it or stop the whole plan. Therefore, I thought it would be best to have them listed somewhere that is easy to reference. Hopefully, you can enjoy them as well! Two of them are my own creations that I really love! The first two, however, are cassarole recipes obtained from my grandmother and my sister's mother-in-law, respectively.
DISH #1: Tuna cassarole, makes a great main dish and when I was growing up, this was my absolute favorite dish! Also, if you are a cat-owner, legend has it that your cats will love you more each time you make it.
Here are the contents:
-Wide noodles (at least 3 cups)
-can of Cream of Mushroom soup
-can of tuna
-jar or can of mushrooms
-milk (at least one cup) or ranch dressing
-potato chips (at least 2 cups)
PREPARATION-
Boil 3 cups of noodles in water until tender, then drain the water.
Mix soup, tuna, and mushrooms into a baking dish. After the noodles are tender, add them to the dish and continue mixing. Add 1/2 can (soup) of milk, and resume mixing (personally, I often substitute ranch dressing for milk).
Once adequately mixed, crush 2 cups of potato chips (Lays) and sprinkle atop of mixture.
BAKING-
Put dish in oven for 35 minutes at 350-degrees.
DISH #2: Potato Cassarole, makes a great side dish for almost any meal, or (in my opinion) the best breakfast when reheated in the morning.
Here are additional contents:
-bag of hashbrowns
-16 oz. sour cream
-can of Cream of Chicken soup
-16 oz. shredded cheddar cheese
-stick of butter or margarine
-bag of corn flakes or bran flakes
-salt, pepper, and/or dried minced onion (optional)
PREPARATION-
Put 2 lbs of hashbrowns into a 9x13 baking dish.
Mix soup in with hashbrowns well.
Second, mix in sour cream with hashbrowns/soup dish.
Then, mix in cheese with hashbrown/soup/cream dish.
Next, mix in stick of butter/margarine.
Optionally, add a dash of salt/pepper/onion.
Finally, flatten dish and cover with two cups of crushed corn/bran flakes.
BAKING-
Put dish in oven for 60 minutes at 350-degrees.
DISH #3: Hummus Quesadillas, started as an experiment once when I wanted both hummus and cheese, so I put them in a quesadilla. Nowadays, I enjoy this concoction immensely! The preparation is ridiculously simple and it does not require many ingredients.
Here are the contents:
-Flour tortillas
-Hummus (plain recommended)
-bag of Mexican (four-cheese) cheese
-Sour cream (optional)
PREPARATION-
Lay two flour tortillas on a microwave-safe plate (one on top of the other).
Spread the hummus over the top tortilla, then add cheese to one side of the tortilla and fold the other side over the top of it.
Then, take the bottom tortilla and put it on top to spread hummus on it and add cheese to the other side in order to fold it in the opposite direction of the first.
COOKING-
Place in microwave for 60-90 seconds until cheese is melted.
SERVING-
Use a pizza cutter to cut each tortilla in thirds. Sour cream can be served on the side or included inside before folding it together.
DISH #4: Tuna Spaghetti, also started as an experiment but it is my most-proud recipe. The first bite is so flavorful! Everyone who has had it has had the same first response, "it's a LOT better than I expected!"
Here are the contents:
-spaghetti noodles
-jar of spaghetti sauce
-can of tuna
PREPARATION/COOKING/SERVING-
Boil the spaghetti noodles until tender. Meanwhile, put tuna into a small bowl and mix in spaghetti sauce. Top the tuna/sauce on the noodles.
Tuesday, January 18, 2011
In With the New Year: January
I realized very recently that if 2011 works out the way I think it will, then by the time it ends, there will be very little remaining from the way my life was at the beginning of 2007. The changes have already started, and there are lot more on the horizon that will affect my current lifestyle, for better or worse. Not that I have any real complaints about my current life, but there are a few things that will absolutely need to change (and a few others that I want to change, and maybe a couple that I cannot prevent from changing).
Let's keep track of what changes I've made and what changes will happen.
There have been a couple notable changes this week already, perhaps most notably my brand new driver's license, which replaces the one that I got in April 1998, before I was even 21 (and back when I still had long hair). The main reason I kept the license for as long as I did without updating it (aside from the fact that it expired in 2037) is that my picture was one of my favorite photos of all time. Happily, this new photo (which was taken within an hour of having my hair cut) is also an excellent picture, so I'll be happy with it through 2042.
Additionally, I just had a new dishwasher added to my condo, which will be the first time since 2007 that I have had a dishwasher. As I recall, things were a lot easier to keep clean when I had a functional dishwasher, so hopefully, there is a connection there. Maybe I can return to an era when I kept my place remotely tidy: one that looked more like a bashelor pad than a pigsty.
Also today was the first time in six years that I called out of work. There were a few reasons for it, none I will get into the details of yet, but it was mostly unavoidable, so it was the first time I had an unscheduled absence since November 2004.
Another big change on the horizon is the fact that Amy is planning to move back to Illinois. She moved out here in September 2007, so it has been about 3.5 years that she lived out here with Jeribear and Princess Kaena. Also, my beloved feral stray Alison (a.k.a. Owlison) lives with her (or in her surrounding areas), so I have spent a good amount of time at the Ray Kitty Ranch since we broke up in June 2009. Amy also has high speed Internet (on a super-slow computer, so it takes forever to load) and digital cable, so if she moves, then I may have to consider upgrading my cable since I don't have Versus. Even as I write this entry, I am on her computer watching Montreal at Buffalo (they're leading 1-0 in the first). I imagine if they have another good run in the Stanley Cup, then my only two choices are to upgrade my cable or to frequent Pranksters during the playoffs.
Let's keep track of what changes I've made and what changes will happen.
There have been a couple notable changes this week already, perhaps most notably my brand new driver's license, which replaces the one that I got in April 1998, before I was even 21 (and back when I still had long hair). The main reason I kept the license for as long as I did without updating it (aside from the fact that it expired in 2037) is that my picture was one of my favorite photos of all time. Happily, this new photo (which was taken within an hour of having my hair cut) is also an excellent picture, so I'll be happy with it through 2042.
Additionally, I just had a new dishwasher added to my condo, which will be the first time since 2007 that I have had a dishwasher. As I recall, things were a lot easier to keep clean when I had a functional dishwasher, so hopefully, there is a connection there. Maybe I can return to an era when I kept my place remotely tidy: one that looked more like a bashelor pad than a pigsty.
Also today was the first time in six years that I called out of work. There were a few reasons for it, none I will get into the details of yet, but it was mostly unavoidable, so it was the first time I had an unscheduled absence since November 2004.
Another big change on the horizon is the fact that Amy is planning to move back to Illinois. She moved out here in September 2007, so it has been about 3.5 years that she lived out here with Jeribear and Princess Kaena. Also, my beloved feral stray Alison (a.k.a. Owlison) lives with her (or in her surrounding areas), so I have spent a good amount of time at the Ray Kitty Ranch since we broke up in June 2009. Amy also has high speed Internet (on a super-slow computer, so it takes forever to load) and digital cable, so if she moves, then I may have to consider upgrading my cable since I don't have Versus. Even as I write this entry, I am on her computer watching Montreal at Buffalo (they're leading 1-0 in the first). I imagine if they have another good run in the Stanley Cup, then my only two choices are to upgrade my cable or to frequent Pranksters during the playoffs.
Monday, January 10, 2011
Introducing "Wiser Time"
This is the fifth and final entry in the subject of finance in this blog. The reason being that I am starting a separate blog exclusively for my financial entries. On this new blog, entitled "Wiser Time" (thank you, TBC), I plan to delve further into the economic world like I used to do, specifically in responding and sharing things that cause intrigue or outrage.
Additionally, I have copied over my prior entries from this blog as well as older entries from my original financial blog on to the new blog, so it will provide the most comprehensive view of my financial lifestyle.
And, unlike my entries on this blog, I am going to permit comments on the new blog (which could be a bad decision since my comments are often politically charged). But, most importantly, I am going to share, maybe even promote, this new blogspot with most of my friends, colleagues, acquaintances, and strangers, so I can keep this one very casual and maybe even more personal, in order to make the new one somewhat professional.
If you enjoy reading about my financial life, then follow it further on http://www.thefullmoney.blogspot.com/.
Additionally, I have copied over my prior entries from this blog as well as older entries from my original financial blog on to the new blog, so it will provide the most comprehensive view of my financial lifestyle.
And, unlike my entries on this blog, I am going to permit comments on the new blog (which could be a bad decision since my comments are often politically charged). But, most importantly, I am going to share, maybe even promote, this new blogspot with most of my friends, colleagues, acquaintances, and strangers, so I can keep this one very casual and maybe even more personal, in order to make the new one somewhat professional.
If you enjoy reading about my financial life, then follow it further on http://www.thefullmoney.blogspot.com/.
Saturday, January 1, 2011
Wiser Time: Double Bubble Trouble
Happy New Year!
If I could suggest one New Year's Resolution to the world (at least the English-speaking portion of it), it would be for everyone to find another insult to replace "retard" in all forms. That word is very offensive to actual politicians.
But seriously, if you were an investor who was slammed 10 years ago by the Tech stock bubble and/or a buyer who was slammed by the housing bubble a few years ago, then odds are that you're considering investments in either bonds or gold for this year.
Honestly, it's quite interesting to me because I'm not sure which one is going to pop. Most experts expect bonds to have a below-par 2011. For some reason, I was leaning towards gold and precious metals as the next bubble to burst. Then, I considered the unique possibility that 2011 could see a "double bubble." If there's ever been a scenario like it in the past, then it was before I had a portfolio (maybe even before I had a savings account), so it would all be new to me, but so much has changed in the past 20 years that a lot of scenarios that seasoned investors or financial experts would dismiss as "unfeasible" could have a higher probability than mere potential.
I started in the financial industry in June 2000. By October, I had a stable entry-level job servicing retirement plans, at which point I noticed an in-flow of participants moving to bonds because the performance of stocks were horrid. Bonds were more than holding their own, in fact it would be fair to say they were flourishing. But easy $ come, easy $ go, and bonds retreated. Hard. Nothing like the year-end returns from stocks in 2008, but for a more conservative investment, any loss is amplified.
Therefore, I remembered that fact when the market crashed in October 2008, so I focused a larger portion of my holdings into bonds the next year. Not because of their superior returns at the time (a mild 5%), but to create a solid hedge for my asset allocation. Additionally, I boosted my payroll deferral percentage (PDP) and one year after February 10, 2009, the date of my first financial blog entry, my 401(k) balance had doubled. More than doubled.
Honestly, 2010 wasn't too shabby for my 401(k) either. Of all the funds offered in my 401(k), one of my funds was the second highest performing fund! And it wasn't a fund where I hold 5% or 10%. It was my fund where I allocate 30%.
Having seen one full cycle first hand already, I feel better equipped to make the right choices in future markets. What's the "right choice" in terms of investing? Knowing yourself and how you will react to the rises and falls to invest in vehicles with the most bearable risk. Obviously, more press is given when the markets react negatively so it seems like more mistakes are made then, but I think the rising markets bring out more stupidity (if not more, then just as much).
For me, investing in individual stocks is out for me. I'm too loyal. I'm too conservative. And quite simply, I don't like paying fees (including taxes) on my strategic moves. Besides, I don't need them. There's a lot of negativity towards "buy & hold," but I think that's misleading. "Buy & hold" is still an extremely effective strategy. It's just that instead of buying and holding one company's stock ("hold-and-hope" as Mo Ansari would say), you need an "all-in-one" mutual fund that will do complex investing for you.
This is where age-appropriate retirement funds excel. If you want to "buy & hold," or "get & forget," then find a fund with your retirement year and buy that fund. If your actual retirement year is in between two available funds, then you can buy the two closest funds. One thing to avoid is buying more than two of these funds! These mutual funds are "funds of funds," which is to say that they are a mutual fund investing in other mutual funds, which are the ones with the individual holdings.
Let's take a quick look at these levels of investment. First come individual stocks, and everyone should know what they are. They are publicly companies traded on the stock market, so when you think of "Corporate America," these companies come to mind. Almost every chain retail store is traded on the market either under its own name or through its parent company. Shares of ownership trade in units of stock. To have a diversified stock portfolio, you would have to invest in dozens of different companies to cover several industries of business, and that does not even include bonds.
Conversely, mutual funds exist as a single investment where a group of investors have pooled their money together in order to have a professionally managed stock portfolio invested in several dozen companies. The benefit is that each dollar stretches a lot further than it would outside of the mutual fund. Without mutual funds, you need to invest $400 to own a single unit of stock in 10 different companies each priced at $40 (and that's negating any other costs, as well as the uselessness of owning a single share in a company). With mutual funds, you invest in infinitely more companies with less money upfront.
Another type of mutual fund available are indexed mutual funds. They are basically the same thing, sans the professional management. Instead of relying on a fund manager's expertise (i.e. "intuition"), the fund manager uses the money to mirror an index, like the S&P 500 Index for example, so if one of the 500 largest companies in America today falls in value tomorrow, the fund manager will sell that stock and invest in today's 501st largest company tomorrow. Vanguard founder John Bogle championed index funds as "the only investment that guarantees you will capture your fair share of the returns that business earns." Note the underlined text, because these funds eliminate any opportunity to "beat the market." Small price to pay, in my opinion, for an investment eliminating the risks of individual stocks, market sectors, and manager selection, so that only market risk remains.
Even indexed mutual funds come in many different forms, each with an intentionally different purpose. There are indexed mutual funds for bonds just like there are indexed mutual funds for stocks. There are separate mutual funds for small-cap markets, large-cap markets, and mid-cap market. Therefore, investing in a single mutual fund would not fully diversify your portfolio.
Enter "all-in-one" or "fund of funds" mutual funds. These funds exist as a single investment where the fund manager invests in several different mutual funds. The most popular (and arguably, most successful) funds-of-funds are "balanced" funds invested in both stocks and bonds. In short, the fund managers would be required to maintain a set allocation, such as investing 70% in stocks and 30% in bonds. Therefore, the focus of these funds is on the asset allocation of its investments, which, after full consideration to both time and money, is the most successful way to invest.
The most popular forms of "all-in-one" mutual funds today are age-appropriate retirement funds. These are so popular that Congress has recently approved their assignment as the default fund in qualified retirement plans. This is a huge shift from the previous requirement of having a stable money market as the default fund. Instead of a guaranteed return protected against losses, this fund invests money in such a sophisticated manner that as retirement approaches, the fund itself becomes a more conservative and less risky investment.
Having these funds as a default fund has its pluses and minuses. If you were a 25-year-old whose first corporate job lasted only 2 years, then you may have a 401(k) in which you put 4% of your money with a 50% match on the first 3% and if, knowing nothing about investing, you were placed in a Target Retirement fund, then you could be looking at a 401(k) where you put in $500 of your own money and got $400 back in February 2009.
So my only problem with these "all-in-one" funds as a default fund is that investing could be grossly misrepresented to an unsophisticated investor by one bad situation. Otherwise, these funds are true gems! If "buy-and-hold" (or "get-and-forget") is all the more effort you can put into your portfolio, then this investment is perfect for you! Just be aware that risk exists in these investments so losing in the market is almost as likely as gaining. Also, and almost equally importantly, be aware that these funds will be invested in an identical fashion to recommendations from a seasoned professional if you were able to pay someone hundreds of dollars each year for that amount of attention.
For the record, the strongest argument against my cited issue with these funds as a default fund in qualified plans is that the person in my above example could have gotten $1,000 or more back in February 2010 by working 3 years instead of 2, and then that person would be more likely (maybe even motivated) to invest in a qualified plan at the next job. I believe this argument is how its supporters got these funds approved by Congress, and it is perfectly valid.
Compare this investor who did nothing (except NOT cancel his/her participation in the qualified plan at work) and gained 100% to an investor who heard about the .com stocks and moved into a tech fund just in time for it to fall 50% and then heard real estate was on the rise and moved into a REIT fund just in time for it to retreat. Now, that investor has probably heard that gold is on the rise. Guess where that is headed in 2011.
Abhay Deshpande (First Eagle Investment Management) voiced his guess on a recent Money.CNN.com article: "We have no view on the future direction of the price of gold. Generally speaking, in a fiat-money world we believe it's almost a mathematical identity that the value of gold will go up. Gold ETFs, such as GLD (GLD), have of course risen. GLD may be the fifth-largest holder of gold in the world, after the central banks of the world. So people from the ground up have chosen to put some of their reserves in gold as a hedge against the currency. To me, it doesn't feel like speculation like in the late 1990s with Internet stocks, or the credit bubble. This seems to be rational behavior. Whether we're ahead of ourselves temporarily or not, I have no clue. What we've said for ages is keep 5% to 10% of your assets in gold, just in case."
Although, James Swanson (MFS Investment Management) quickly voiced concern with maintaining any percent of assets in gold: "(Presume I pay) $1,400 for gold today because I hope someone will pay more for it next year. And what will they do with it? They hope someone else will (pay more). Eventually you end up with a psychological asset class that I'm not comfortable with. Even if they're devaluing the currencies of the world, you have to ask yourself, where does this end? And I do know the price can fall. It does when the Fed funds rate rises above 2%. So I'm not a fan of gold. I don't know how to value it."
We will know the reality of what the 2011 markets were like in 365 more days, but whether the DOW is up or down (I think it will be up less than 10% myself), successful investing is measured in years and decades. I myself just happen to enjoy watching the day-to-day. I will have a quarterly update in mid-February!
Ref: http://features.blogs.fortune.cnn.com/2010/12/13/5-experts-where-to-invest-in-2011/
If I could suggest one New Year's Resolution to the world (at least the English-speaking portion of it), it would be for everyone to find another insult to replace "retard" in all forms. That word is very offensive to actual politicians.
But seriously, if you were an investor who was slammed 10 years ago by the Tech stock bubble and/or a buyer who was slammed by the housing bubble a few years ago, then odds are that you're considering investments in either bonds or gold for this year.
Honestly, it's quite interesting to me because I'm not sure which one is going to pop. Most experts expect bonds to have a below-par 2011. For some reason, I was leaning towards gold and precious metals as the next bubble to burst. Then, I considered the unique possibility that 2011 could see a "double bubble." If there's ever been a scenario like it in the past, then it was before I had a portfolio (maybe even before I had a savings account), so it would all be new to me, but so much has changed in the past 20 years that a lot of scenarios that seasoned investors or financial experts would dismiss as "unfeasible" could have a higher probability than mere potential.
I started in the financial industry in June 2000. By October, I had a stable entry-level job servicing retirement plans, at which point I noticed an in-flow of participants moving to bonds because the performance of stocks were horrid. Bonds were more than holding their own, in fact it would be fair to say they were flourishing. But easy $ come, easy $ go, and bonds retreated. Hard. Nothing like the year-end returns from stocks in 2008, but for a more conservative investment, any loss is amplified.
Therefore, I remembered that fact when the market crashed in October 2008, so I focused a larger portion of my holdings into bonds the next year. Not because of their superior returns at the time (a mild 5%), but to create a solid hedge for my asset allocation. Additionally, I boosted my payroll deferral percentage (PDP) and one year after February 10, 2009, the date of my first financial blog entry, my 401(k) balance had doubled. More than doubled.
Honestly, 2010 wasn't too shabby for my 401(k) either. Of all the funds offered in my 401(k), one of my funds was the second highest performing fund! And it wasn't a fund where I hold 5% or 10%. It was my fund where I allocate 30%.
Having seen one full cycle first hand already, I feel better equipped to make the right choices in future markets. What's the "right choice" in terms of investing? Knowing yourself and how you will react to the rises and falls to invest in vehicles with the most bearable risk. Obviously, more press is given when the markets react negatively so it seems like more mistakes are made then, but I think the rising markets bring out more stupidity (if not more, then just as much).
For me, investing in individual stocks is out for me. I'm too loyal. I'm too conservative. And quite simply, I don't like paying fees (including taxes) on my strategic moves. Besides, I don't need them. There's a lot of negativity towards "buy & hold," but I think that's misleading. "Buy & hold" is still an extremely effective strategy. It's just that instead of buying and holding one company's stock ("hold-and-hope" as Mo Ansari would say), you need an "all-in-one" mutual fund that will do complex investing for you.
This is where age-appropriate retirement funds excel. If you want to "buy & hold," or "get & forget," then find a fund with your retirement year and buy that fund. If your actual retirement year is in between two available funds, then you can buy the two closest funds. One thing to avoid is buying more than two of these funds! These mutual funds are "funds of funds," which is to say that they are a mutual fund investing in other mutual funds, which are the ones with the individual holdings.
Let's take a quick look at these levels of investment. First come individual stocks, and everyone should know what they are. They are publicly companies traded on the stock market, so when you think of "Corporate America," these companies come to mind. Almost every chain retail store is traded on the market either under its own name or through its parent company. Shares of ownership trade in units of stock. To have a diversified stock portfolio, you would have to invest in dozens of different companies to cover several industries of business, and that does not even include bonds.
Conversely, mutual funds exist as a single investment where a group of investors have pooled their money together in order to have a professionally managed stock portfolio invested in several dozen companies. The benefit is that each dollar stretches a lot further than it would outside of the mutual fund. Without mutual funds, you need to invest $400 to own a single unit of stock in 10 different companies each priced at $40 (and that's negating any other costs, as well as the uselessness of owning a single share in a company). With mutual funds, you invest in infinitely more companies with less money upfront.
Another type of mutual fund available are indexed mutual funds. They are basically the same thing, sans the professional management. Instead of relying on a fund manager's expertise (i.e. "intuition"), the fund manager uses the money to mirror an index, like the S&P 500 Index for example, so if one of the 500 largest companies in America today falls in value tomorrow, the fund manager will sell that stock and invest in today's 501st largest company tomorrow. Vanguard founder John Bogle championed index funds as "the only investment that guarantees you will capture your fair share of the returns that business earns." Note the underlined text, because these funds eliminate any opportunity to "beat the market." Small price to pay, in my opinion, for an investment eliminating the risks of individual stocks, market sectors, and manager selection, so that only market risk remains.
Even indexed mutual funds come in many different forms, each with an intentionally different purpose. There are indexed mutual funds for bonds just like there are indexed mutual funds for stocks. There are separate mutual funds for small-cap markets, large-cap markets, and mid-cap market. Therefore, investing in a single mutual fund would not fully diversify your portfolio.
Enter "all-in-one" or "fund of funds" mutual funds. These funds exist as a single investment where the fund manager invests in several different mutual funds. The most popular (and arguably, most successful) funds-of-funds are "balanced" funds invested in both stocks and bonds. In short, the fund managers would be required to maintain a set allocation, such as investing 70% in stocks and 30% in bonds. Therefore, the focus of these funds is on the asset allocation of its investments, which, after full consideration to both time and money, is the most successful way to invest.
The most popular forms of "all-in-one" mutual funds today are age-appropriate retirement funds. These are so popular that Congress has recently approved their assignment as the default fund in qualified retirement plans. This is a huge shift from the previous requirement of having a stable money market as the default fund. Instead of a guaranteed return protected against losses, this fund invests money in such a sophisticated manner that as retirement approaches, the fund itself becomes a more conservative and less risky investment.
Having these funds as a default fund has its pluses and minuses. If you were a 25-year-old whose first corporate job lasted only 2 years, then you may have a 401(k) in which you put 4% of your money with a 50% match on the first 3% and if, knowing nothing about investing, you were placed in a Target Retirement fund, then you could be looking at a 401(k) where you put in $500 of your own money and got $400 back in February 2009.
So my only problem with these "all-in-one" funds as a default fund is that investing could be grossly misrepresented to an unsophisticated investor by one bad situation. Otherwise, these funds are true gems! If "buy-and-hold" (or "get-and-forget") is all the more effort you can put into your portfolio, then this investment is perfect for you! Just be aware that risk exists in these investments so losing in the market is almost as likely as gaining. Also, and almost equally importantly, be aware that these funds will be invested in an identical fashion to recommendations from a seasoned professional if you were able to pay someone hundreds of dollars each year for that amount of attention.
For the record, the strongest argument against my cited issue with these funds as a default fund in qualified plans is that the person in my above example could have gotten $1,000 or more back in February 2010 by working 3 years instead of 2, and then that person would be more likely (maybe even motivated) to invest in a qualified plan at the next job. I believe this argument is how its supporters got these funds approved by Congress, and it is perfectly valid.
Compare this investor who did nothing (except NOT cancel his/her participation in the qualified plan at work) and gained 100% to an investor who heard about the .com stocks and moved into a tech fund just in time for it to fall 50% and then heard real estate was on the rise and moved into a REIT fund just in time for it to retreat. Now, that investor has probably heard that gold is on the rise. Guess where that is headed in 2011.
Abhay Deshpande (First Eagle Investment Management) voiced his guess on a recent Money.CNN.com article: "We have no view on the future direction of the price of gold. Generally speaking, in a fiat-money world we believe it's almost a mathematical identity that the value of gold will go up. Gold ETFs, such as GLD (GLD), have of course risen. GLD may be the fifth-largest holder of gold in the world, after the central banks of the world. So people from the ground up have chosen to put some of their reserves in gold as a hedge against the currency. To me, it doesn't feel like speculation like in the late 1990s with Internet stocks, or the credit bubble. This seems to be rational behavior. Whether we're ahead of ourselves temporarily or not, I have no clue. What we've said for ages is keep 5% to 10% of your assets in gold, just in case."
Although, James Swanson (MFS Investment Management) quickly voiced concern with maintaining any percent of assets in gold: "(Presume I pay) $1,400 for gold today because I hope someone will pay more for it next year. And what will they do with it? They hope someone else will (pay more). Eventually you end up with a psychological asset class that I'm not comfortable with. Even if they're devaluing the currencies of the world, you have to ask yourself, where does this end? And I do know the price can fall. It does when the Fed funds rate rises above 2%. So I'm not a fan of gold. I don't know how to value it."
We will know the reality of what the 2011 markets were like in 365 more days, but whether the DOW is up or down (I think it will be up less than 10% myself), successful investing is measured in years and decades. I myself just happen to enjoy watching the day-to-day. I will have a quarterly update in mid-February!
Ref: http://features.blogs.fortune.cnn.com/2010/12/13/5-experts-where-to-invest-in-2011/
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