Archive for January, 2011

What Is An Index Fund?

Posted in Money Monday on January 31st, 2011 by Phil Ferguson – 3 Comments

NOTE:  This post is part of an ongoing education series.  This information is for educational purposes only.  This information does not constitute investment advice.  No rational person would make investment decisions based on a blog post.  Please consult with your financial advisor before taking any action.  If you think it is OK to make investment decisions based on a blog post, then for the love of the FSM – Stop reading this blog.

Money Monday

A nice place to learn about investment terms is Investopedia.  Here is there definition of an Index Fund.

A type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.

Good… but I’m not sure what they mean when they say, “… is said to provide…”.  An Index fund actually does these things.  Unless, you get a very specific type of index fund that focuses on a small market segment.  Let’s look at an S&P 500 Index Fund.

Broad Market Exposure

This index fund invests in 500 stocks.  500 different US companies.  This is very broad exposure.  If one of those 500 stocks goes to $0.00 in just one day it will only bring down your portfolio 0.2%.  The whole market can move more than that in a day.  You will never even notice the loss.  This also works on the upside, if one of those 500 stocks double it will only give you a 0.2% bump.  This broad market exposure effectively reduces your volatility.

Low Operating Expenses

If you are in a 401(k) or a 403(b) you may see index funds with expense ratios as low as 0.5% to 0.8%.  The average mutual fund has an expense ratio of around 1.6%.  The extra 1% savings could make a big difference over time.  If you go to Vanguard, you can get index funds with expense ratios lower than 0.2%.

Low Portfolio Turnover

If you are in a taxable account this can really pull down your performance.  If a stock is held for more than a year than you will only pay capital gains of 15%.  However, a stock sold in less than a year can be taxed as high as 35% – Ouch!  An S&P index fund may change only 2-4 % of the funds in a given year.  A managed fund can change 100% or more (sell twice) in one year.  Even if your managed fund beats the market you may get killed on taxes.

One of my investment rules…. By Index Funds whenever you can!

Bill O’Reilly Explains The Tide But Can’t Explain The Moon…

Posted in Idiots on January 31st, 2011 by Phil Ferguson – 3 Comments

I thought he was being a jerk when he pulled out the tide thing when talking to Dave Silverman.

I was wrong.  It’s because he is a total nub!

Currencies

Posted in Finance on January 30th, 2011 by Shawn – 5 Comments

*Post by Shawn*

This is going to be the first of two pet peeves of mine and both concern the conclusions people jump to based on what they hear or read without really knowing much about a situation.  This one is about currency valuations and how people suddenly conclude that it’s a bad thing that the dollar is weak.  I understand that ‘weak’ has negative connotations and ‘strong’ has positive ones, and for that, I blame whatever economist first used those words to explain currencies.  The important thing to note is that those terms represent only how much of one currency you can buy with another (e.g. how many pounds sterling I can buy with 1 USD) and is always relative (i.e. there is no objective good or bad valuation).  The common misconception is that when the dollar is weak, that is bad.  What most people don’t understand is that within the US (not traveling and only from a US perspective), the value of the dollar relative to other countries is essentially irrelevent – i.e. your money in your bank account isn’t losing value.  In fact, a weak dollar can actually be a good thing.  This makes US products cheaper abroad and thus will increase exports, creating more American jobs and raising our GDP.  This does make imports more expensive, but this will again drive domestic production and jobs.  This is why the US has a problem with the Chinese since they keep their currency artificially low in order to strangle imports and promote exports.  And it’s important to note that currency valuation is what I like to call a secondary indicator of the economy and has no meaning in and of itself.  So, if one wants to change the value of the dollar, direct currency intervention isn’t the way to do it; instead change the underlying fundamentals – i.e. if you boost the economy and make it more attractive it will naturally raise the view of the dollar.  This is only a surface-scratching view of a very complex subject, which, I guess is really my point.  One should be very careful jumping to conclusions without having a good understanding of a complex situation.

How To Love One Of Them Gay People – From A Christian

Posted in Uncategorized on January 30th, 2011 by Phil Ferguson – Comments Off

uh…so…. If you let them be gay they will die?  I wonder?  Do any straight people ever die early?

What a douche!

Congressman Jack Kingston (R-Ga) Gets Pwned On Real Time.

Posted in Creationism, Global Warming on January 29th, 2011 by Phil Ferguson – 2 Comments

Comic gold.  Kingston tries to explain that scientists can’t agree about global warming.

D.L. Huhgley (actor) and Kim Campbell (Former Prime Minister of Canada) try to explain facts to Mr. Kingston.  Then D.L. Huhgley goes off the rails and says we come from gOd not a monkey – DOH!

After all of the stupidity is New Rules!

So Here’s The Deal….

Posted in atheists, religion on January 29th, 2011 by Phil Ferguson – 10 Comments

Two weeks ago I told you how I was going to be on a christian radio show….

Then I told you that they show host called me and said that station management said I could not be on.  It appears that they were afraid of what I might say.

I have been contacted again by the host.  I think he is trying to work something out but, now I’m not sure it’s a good idea.  The station manager suggested that we do a 30 minute phone conversation and then they take pieces out to use over the next several weeks.  I am afraid that they will pull small pieces of the conversation out of context to either make the atheist look bad or allow them 15-20 minutes of air time to perform apologetics on something I said.  What do you think?

Please give me some suggestions.