Mad Money Machine

Steel pennies, really? Ten WORST GAMES. Budget tightening. Photo Story. Negative comments! Symbiosis. Planned Obsolescence in investing?

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 MMM-110: Planned Obsolescence [37:54m]: Play Now | Play in Popup | Download (1074)

The Mad Money Machine is proud to be
sponsored by Index Funds Advisors at ifa.com.      

Topics in this week’s show include:     

• Congress doesn’t have the cents to get rid of pennies.
• Out of 4461 (and counting) games, what are the Top Ten WORST BOARD GAMES? How do you think Monopoly and Battleship rank? Try a highly-ranked game.
• I’m tightening our budget. Gone to Vonage instead of FiOS. Dropped the sports package. And even dropped the Wall Street Journal. Can I survive? I’ll let you know.
• Also planning to eat in a lot more. Both to save money and to save health. Tell me some place you can go and order kale.
• Did you look at the previous posting? Still think the market has no where to go but up?
• Our Tool this week is another money-saver. Coupons.com.
• Next birthday or retirement party, use Microsoft Photo Story. to create a movie from a collection of old photos. It is easy.
• I review the Lazy Portfolio Smackdown thru April.
• Tim sends me and email with two negative comments. I LOVE IT. Send me yours at Feedback [at] MadMoneyMachine [dot] com.
• Realize the Google ads here are not hand picked by me. Click at your own risk. But do click if you want to help support the MMM!
• IFA and MMM have a symbiotic relationship.
• IFA doesn’t make their money by trading in your account. They are there to help you. Let ‘em!
• And yes, I do like DFA over Vanguard.
• Razors. Toothbrushes. Mutual Funds. What do they have in common? Planned Obsolescence!

Music from music.podshow.com:
Alta Plaza - XRAY DOGS
Runaway Train - Under Feather

Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

I have a question for you trend followers. You chart watchers. You technical traders. Have a look at this chart and tell me if it is time to buy or time to sell.

Looks like the momentum is up on this baby right? Time to buy? Here’s how it worked out for you…

The first chart was from roughly May 1998 thru April 2001. The second chart was from about April 2001 thru March 2003. The trend definitely wasn’t your friend if you thought we had bottomed in April 2001 and were headed for nothing but up.

Now take a look at this chart:

Anything familiar-looking about this chart? Is it the same chart as the top one?

Nope. This chart is from April 2006 to present. For everyone who says we’ve seen the bottom. Revisit chart #2.

I wish I’d never seen a stock chart and I wish I didn’t have easy access to charts like I do now because I get sucked in to thinking that there must be patterns in prices like there are patterns in nature. I am always wrong when I think that. Studies have shown that there actually is *some* momentum, but I really don’t think anyone can consistently profit from it. Here’s a better chart if you must look at charts.

Twenty years of Index Portfolio 100 from IFA.com.

I’m just sayin’. Set it and forget it. For twenty years!

I have updated the Lazy Portfolio Smackdown page for results through the end of April. Realize that not all dividends may be included yet. We’ll get things worked out at year end. Things have really changed since last month. Remember when mudfud ruled? Now guess where [he] ranks? Dead last. Also look at the professional lazy portfolios. Harry Browne was in the lead last month. Now old faithful Scott Burns Six Ways from Sunday is on top once again. Wow, what a portfolio.  I’ve added in my Mr. Sharpe portfolio. I designed this portfolio based upon the Sharpe Ratio of funds I included along with strong performance. I got the idea from the Six Ways from Sunday portfolio. Looks like a [non-diversified] winner.

Mr Drucker’s inflation. Green Haze? Purple Acres? The Revolution. Gold standard. Tan ear buds. Evolution of wealth. Stuck in a Keogh? Clean out the tool crib. Portfolios.

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 MMM-109: Green Acres [35:58m]: Play Now | Play in Popup | Download (3719)

The Mad Money Machine is proud to be
sponsored by Index Funds Advisors at ifa.com.    

Topics in this week’s show include:     

• Mr. Drucker can’t believe gas is up to $0.13 a gallon.
• The President says we should drill in Anwar. Will that really lower oil prices? I think there is more to it than just supply and demand of oil. I think we should also consider the supply and demand of dollars.
• Remember, the definition of inflation is an increase in the supply of money. Rising prices are the result of inflation.
• Green Haze? Purple Acres? Jimi Hendrix is spinning.
• I spent my HD-DVD rebate. Got the books. Finished reading The Revolution: A Manifesto. It is #1 at Amazon!
• Gold standard simply means adjusting the supply of money so that its value is fixed in proportion to gold. Right now we have an interest rate standard, which moves up and down of course.
• Why can’t I buy earbuds for my iPod in tan color?
• Our Guru is Eric D. Beinhocker, the author of The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. Fascinating synthesis of advanced computer science and economic thinking.
• Richard says I’ve converted him from an active investor to a passive investor. Wonders how to deal with his Keogh plan and the actively managed mutual funds in there.
• Cleaning out the Tool Crib this week. You can read Reminiscences of a Stock Operator by Edwin Lefevre for free. Covestor.com is a curious ranking of stock pickers. What we really need is a web site that ranks the winners of the roulette wheel and shares their "secrets."
• We review some of the portfolios at Foliodex.com, specifically the Cramer *Stability* portfolio and the Hard Times portfolio as suggested by Agorafinancial.
• Dave in Canada joins Active Investors Anonymous and says check out Poker Smash for the XBOX 360. Financial Freedom means doing what you love and maybe even still making some money doing it.

Music from music.podshow.com:
Alta Plaza - XRAY DOGS
Runaway Train - Under Feather

Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

Schpoonleeka. Add cream and sugar first! Three RCSes. What if you missed just the 40 biggest gain days in 10 years? Pundit batting averages. Which 401K statement do you want? Amazon rebate.

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 MMM-108: A Coffee Mess [24:25m]: Play Now | Play in Popup | Download (4002)

The Mad Money Machine is proud to be
sponsored by Index Funds Advisors at ifa.com.   

Topics in this week’s show include:     

• Schpoonleeka!
• Why do people put in cream and sugar in after pouring the coffee?? Why not put it in first and eliminate the need to stir it?
• Starbucks has the long wooden stirrers. Lick the end and put it back.
• Burnt coffee.
• Pike Place Roast.
• Where’s the $0.50 coffee?
• Take one of THREE Risk Capacity Surveys RIGHT NOW!
• John Bogle says now doesn’t seem to be a good time to either buy or sell stocks. He should read Step 4.
• What if you missed just the 10 top trading days in a ten year period? Instead of 8.4% annualized gain it would be a 3.4% annualized gain. OUCH!
• 

• Which 401K financial statement would you rather have at age 65?
  Plan A: $1,244,260 or
  Plan B:  $766,694
  The difference? Only 1.5% year in fees in Plan B!
• Do you have an old 401K Plan lying around after having left an employer? TRANSFER IT TO AN INDEX FUNDS ADVISORS IRA TODAY!!!
• Musical interpretation of Step 4: Time Pickers.
• READING NOW
• Ron Paul: The Revolution
• Craig Karmin: Biography of the Dollar
• Ludwig von Mises: Human Action

Music from music.podshow.com:
Alta Plaza - XRAY DOGS
Coffee Man - Calvin Owens
Runaway Train - Under Feather

Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

Here’s a fun little game. Can you guess the identity of the two Harvard Law students shown in the photo to the left? Especially the guy on the left and the guy in the middle. The guy on the right we don’t care about.

You may want to read Patrick Byrne’s (of Overstock.com) description of Jim Cramer. It is kinda long, so I’ll have to read it some time later this week myself.

IFA Ads work! Stories from Bermuda. Guns, Cocaine, Brothels. Shipwrecks. Coin shortages. Unlimited food. Miracle Fruit. John Adams. Cramer’s Stability portfolio. Google stockscreener. LPS updated.

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 MMM-107: Bermuda Shorts [38:10m]: Play Now | Play in Popup | Download (4328)

The Mad Money Machine is proud to be
sponsored by Index Funds Advisors at ifa.com.   

Topics in this week’s show include:     

• IFA Advertising on MMM is WORKING!
• Stories from our Bermuda cruise
• Guns, Cocaine, and Brothels
• Bermuda tattoo
• Bingo
• Shipwreck.net, scratched gold coins
• coin shortages
• Unlimited food
• Dread fruit: the opposite of Miracle Fruit?
• HBO’s fantastic John Adams
• Cramer’s 2008 *Stability* Portfolio includes DOW, PBT, WWE, CPL, and HCP
• Tool is Google Finance Stockscreener
• I’ve updated the Lazy Portfolio Smackdown to include March dividends.

Music from music.podshow.com:
Alta Plaza - XRAY DOGS
Healthy Eating - Dan Elson
Money - Theory in Motion
Runaway Train - Under Feather

Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

Congressman David Crockett, yes Davy Crockett, on charity and the US Constitution.

I was celebrating 15 glorious years of marital bliss (yes, with my wife) in Bermuda this past week. So in lieu of a normal show, I read this wonderful story about congressman Davy Crockett. I hope you enjoy it. I’ll be back to the normal routine next Friday and tell you all about my trip.

 

 MMM-106: Not Yours to Give [18:18m]: Play Now | Play in Popup | Download (4839)

I wish I would have made this video. It summarizes nicely what I’ve been saying on my show recently. The US dollar is dropping and has been for 100 years. It is the inflation tax.

April is a bad month to speculate. Proof that past stock prices don’t predict their future price. I’m asking you to delete that picture. Tons of pennies. I love Portal. Review Lazy Portfolio Smackdown.

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 MMM-105: Tons of Pennies [29:14m]: Play Now | Play in Popup | Download (5207)

The Mad Money Machine is proud to be
sponsored by Index Funds Advisors at ifa.com.   

Topics in this week’s show include:    

• April is a bad month to speculate on stocks. I list the other bad times also.
• Jim Cramer has to be right 4 times to beat the market: Which stock & when to buy, which stock & when to sell. Multiply that by 10 years. Crazy.
• Our Tool this week is Inspectd.com which helps prove to yourself that you can’t pick a winning stock based upon its past stock price.
• IGotCramered.com is back in action now.
• Law enforcement official "asks" you do do something?
• Some guy stores tons of copper pennies in his garage.
• I loved playing Portal. Definitely recommended!

Bohemian Financial Rhapsody

Is this the real price? Is this just fantasy?
Financial landslide No escape from reality

Open your eyes
And look at your buys and see.
I’m now a poor boy (poor boy)
High-yielding casualty
Because I bought it high, watched it blow
Rating high, value low
Any way the Fed goes
Doesn’t really matter to me, to me

Mama - just killed my fund
Quoted CDO’s instead
Pulled the trigger, now it’s dead
Mama - I had just begun
These CDO’s have blown it all away
Mama - oooh-hoo-ooo
I still wanna buy
I sometimes wish I’d never left Goldman at all.

(guitar solo)

~~~

I see a little silhouette of a Fed
Bernanke! Bernanke! Can you save the whole market?
Monolines and munis - very very frightening me!
Super senior, super senior
Super senior CDO - magnifico

I’m long of subprime, nobody loves me
He’s long of subprime CDO fantasy
Spare the margin call you monstrous PB!
Easy come easy go, will you let me go?
Peloton! No - we will not let you go - let him go
Peloton! We will not let you go
(let him go !)
Peloton! We will not let you go - let me go
Will not let you go
let me go (never) Never let you go - let me go Never let me go – ooo
No, no, no, no, No, NO, NO ! -
Oh mama mia, mama mia, mama mia let me go
S&P had the devil put aside
for me
For me, for me, for me

~~~

So you think you can fund me and spit in my eye?
And then margin call me and leave me to die Oh PB - can’t do this to me
Just gotta get out - just gotta get right outta here

Ooh yeah, ooh yeah
No price really matters
No liquidity
Nothing really matters - no price really matters to me
Any way the Fed goes…..

• Matrix Rhapsody & Bohemian Matrix
• Economic Stimulus? Can we please get the gobmint out of the business of "managing" the economy?
• Can we please get back to using REAL money?
• I review the results of the 2008 Lazy Portfolio Smackdown sponsored by Index Funds Advisors. The bears are leading the charge, so far…

Music from music.podshow.com (and from YouTube.com):
Runaway Train - Under Feather
Money - Theory in Motion
Bohemian Financial Rhapsody - Geoff Smith

Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

I have updated the Lazy Portfolio Smackdown page to show the March results for both the game entries and the professional lazy portfolios. I’ve moved the composition breakouts for the Professional Lazy Portfolios and the Game Entries to two new pages to help make the results page more readable.

A reader at Diehards.org/forum asked me to add Harry Brown’s Permanent Portfolio to the professional entries. His portfolio is made up of 25% each of the Vanguard Total US Stock Market (VTI), iShares Lehman 20 yr Treasuries (TLT), Cash or short-term Treasuries (I used ticker symbol VFISX), and Gold (GLD). The portfolio is up 1.58% YTD.

You can see graphs of the all of the portfolio results for several different time periods by going to Foliodex.com. One group is for the Lazy Portfolio Smackdown Game Entries and another group holds the Professional Lazy Portfolios, although it is polluted with more portfolios than I am currently tracking.

Total return leaders YTD for the Professionals is Harry Browne (up 1.6%) and Scott Burns Five Fold (down 0.8%).

Total return leaders for the game entries are mudfud, with his 2X China Bear fund, up 25.5% and Tex Williams with his UltraShort funds up 14.6%.

Note that the leading YTD return portfolios are not the kind of buy-and-hold portfolios that are most frequently recommended by the sages at the Bogleheads Forum.

It seems to me that if someone is in the accumulation phase of their long term investing career that these times where stock prices are significantly off of their highs may make it more appealing to continue to add to their portfolios.

What lost decade? A novel of financial collapse. Fed comic books. Another guru says buy gold. Say goodbye to pennies, nickels, and quarters.

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 MMM-104: Finding the Lost Decade: Play Now | Play in Popup | Download (4999)

The Mad Money Machine is proud to be
sponsored by Index Funds Advisors at ifa.com.   

Topics in this week’s show include:    

According to the Benchmark Your Portfolio tool at IFA.com, while it may have been a "Lost Decade" for the US Large Cap stocks, turns out it was a "Boss Decade" for a broadly diversified portfolio of index funds such as the Index Portfolio 100.

Results are adjusted for inflation.

• You got Rickrolled!
• What lost decade? Indexfolio 100 is up 130%
• I read "Full Faith & Credit" a novel about financial collapse.
• Reading now:
• The Creature from Jekyll Island by G. Edward Griffin
• The Dick Davis Dividend
• The Disciplined Investor by Andrew Horowitz
• From Wall St. to the Great Wall by Burton Malkiel
• Gold: The Once and Future Money by Lewis
• Check out the Index Funds Advisors quote of the week.
• Find me at Twitter: MadMoneyMachine
• Our Tool isn’t IGotCramered.com because it apparently got Cramered.
• Our Tool instead is a series of comic books about the Federal Reserve.
• The musical interpretation of Step 3: Stock Pickers
• I review the Fox Business panel’s stock picks for 2008
• We went to the Dollar store and got 22 things. Will it go the way of Motel 6?
• Penny Dreadful says they talked about rounding to a nickel. Bogus! Round to the dime by simply dropping a decimal place. Then eliminate production of pennies and nickels (and quarters).
• Lost faith in Capitalism yet? Read Ten Days that Changed Capitalism.
• Our Guru says the price of gold is a reciprocal of confidence in Ben Bernanke and folks like him.

Music from music.podshow.com (and from YouTube.com):
Never Gonna Give You Up - Rick Astley
Runaway Train - Under Feather
Money - Theory in Motion

Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

Here’s a post from Naked Capitalism just now proving that yes, in fact, the Plunge Protection Team did act last week:

 Are the Feds Manipulating the Stock Market?

from naked capitalism by Yves Smith

This message came from an investor who has provided me with some very useful research from time to time:

"Mike Belkin, who writes a weekly technically-based look at lots of markets—the only technical service to which I subscribe—notes today that last week equity fund flows netted to a $22.9 billion inflow, broken down as $3.3 billion of mutual fund outflow, and $26.2 billion of ETF inflow. His inference is that the Fed/Treasury is buying ETFs. Just so you know, Mike is an ultimate insider, although he views things with a very jaundiced eye, and views them from Seattle. He ran a Salomon prop desk for years, and is the opposite of a conspiracy theorist or a perma-anything—he’s very good at noting crosscurrents and catching shorter term countertrend moves within broad longer term trends."

The reason I consider this credible is that I was told back in 2000 by my derivative trading buddies that the Fed, known as the Turk, would place orders in S&P futures. Note that the Fed has no responsibility for the health of the stock market despite what its actions would lead you to believe.

I find this all rather hard to believe. Surely neither the Fed nor the government would intervene in the workings of the free market. What would they do if their bet lost? Who would pay?

Hahaha, Fox Business channel took out an ad in the NYT and WSJ that bashed Cramer on his Bear Stearns call. Pretty funny. Hat tip CrossingWallStreet.com

Did the Plunge Protection Team save the markets this week? Our Guru says active investors spend $100 Billion per year trying to beat the market. Our Tool measures the implosion. Cramer’s recommendation on BS.

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 MMM-103: Plunge Protection Team [29:00m]: Play Now | Play in Popup | Download (4973)

The Mad Money Machine is proud to be
sponsored by Index Funds Advisors at ifa.com.   

Topics in this week’s show include:  

• How are you doing? What a wild market. I think this one has more uncertainty in it than the dot com crash.
• Perhaps not paying attention to the market is the best idea? These are indeed interesting times.
• I detail my active trading failures.
• EconTalk was great this week. Catch the interview with Tyler Cowen about the Fed and the gold standard. Good stuff. Russ needs to read up about why gold makes good money though.
• Christopher says to say hey to Rikard in Japan.
• If the market prices in all that is known about the markets, why does it keep going down?
• I don’t think Jim Cramer was saying stay in Bear Stearns stock, I think he meant to keep your account there if you had one. Nonetheless, people are up in arms.
• And don’t forget to visit the Cramer Crap auction.
• Ron Paul asks John McCain about the Plunge Protection Team. John sounds like Miss Teen SC. Read the article about the PPT in the WaPo. Here’s someone saying the PPT bought stocks last Tuesday. Here’s an article refuting the PPT as an urban myth.
• Our Guru says active investors are spending a whopping $100 Billion per year trying to beat the stock market. Mark Hulbert takes up the story in the NYTimes.
• I read the Kindergardner’s Guide to the Credit Crisis
• Our Tool helps you keep track as the popcorn kernels pop.
• Check out the Index Funds Advisors quote of the week.
• Find me at Twitter: MadMoneyMachine

Music from music.podshow.com:
ALTA PLAZA - XRAY DOGS
A Rush of Air DiscoBalls Mix - monotommy

Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

Got an email from Jim (not THAT Jim) saying they are auctioning off some of the props used on the Mad Money show. Since I’m a statesman like Cramer, I won’t call it "Cramer Crap." You can see video clips of the props being used on the show and then put in a bid on the auction to buy them. Got some golden bobbleheads, got some bulls, the hazmat suit, and a Rembrandt.

Interesting how the auction works: If a bid is submitted within the last 5 minutes of the auction, the auction is extended another 5 minutes. That’s what eBay should do to shut down the snipers!

Inflation… or DEflation? Shutting down the FED. Where to invest now. Guru says go for the gold. Tool helps calculate worth of money. Gold inches toward sextillion.

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 MMM-102: Whip Inflation Now [29:21m]: Play Now | Play in Popup | Download (5498)

The Mad Money Machine is proud to be
sponsored by Index Funds Advisors at ifa.com.   

Topics in this week’s show include:  

• Is it time to Whip Inflation Now? I actually remember having one of these buttons. I didn’t know at the time, nay, I didn’t learn until about 30 years later, that inflation was caused by the government creating more money and not buy greedy businesses, as was told to us all along.
• Are we headed for inflation? OR Deflation? OR BOTH AT THE SAME TIME?
• According to the Resource Investor podcast, gold does good during both inflation and deflation.
• Jim Rogers says if he were Fed chairman, he would shut it down and then resign. I wish I would have listened to him and bought commodities.
• So, where do we invest now?
• One thing is for certain, picking individual stocks won’t beat the market. Instead, buy the WHOLE market using low-cost index funds.
• Our Guru said that a gold standard is the only way to protect us against the welfare statists.
• Congress is taking up HR 5512 to try to modernize our coins. They instead should just eliminate them.
• Our Tool helps you calculate how much your cash is worth today.
• Stock pickers don’t use the proper benchmark. They compare themselves to cash instead of to a portfolio of index funds. And even then, they don’t calculate the risks they are taking.
• Relax and listen to some music.
• Gold goes over $1000.
• Warren Buffet says our country is experiencing widespread pain.
• He also admits a mistake in his investments. 
• But, he says America will still prosper.
• How can someone who becomes a state governor be such a fool? Isn’t there any good politician?
• Don’t join the fool’s brigade. Take the Risk Capacity Survey and fight for your financial freedom.
• Find me at Twitter: MadMoneyMachine

Music from music.podshow.com:
ALTA PLAZA - XRAY DOGS
Good as Gold - Admiral Twin
The Fools Brigade - Admiral Twin

Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

Here now for a self-fulfilling prediction: I said you’d be seeing more of Jim Rogers in 2008 as commodities and China take the headlines. Here now is Jim on CNBC the other day in an interesting (sometimes funny!) interview in which he says the Fed is doing a poor job, throwing gas on a raging fire. The other central banks around the world are doing much better. At least they *acknowledge* there is inflation.

If you want to take his advice and buy agriculture and currencies, you may want to do some homework on DBA, FXY, FXF, and FXA. Possibly DBC as well. Oh, and SKF!

Gold reached $1000/oz today, as I predicted.

It’s really easy to write to your congressman these days. Simply go to house.gov, enter your zip code, and click on the send email link (at least it was for MY congressman). So, here is what I wrote to mine this morning. Please join me in calling for the elimination of the penny, nickel, and quarter.

Congressman Wolf,

HR 5512 is considering coin modernization. Instead of merely replacing zinc pennies with steel pennies, I recommend eliminating the production of pennies, nickels, and quarters. Then continue production of dimes and half dollar coins.

Eventually, retailers will drop a decimal place from prices, such as from $14.95 to $14.9, and the penny, nickel, and quarter coins will be undesirable.

By discontinuing production of pennies, nickels, and quarters, we will save hundreds of millions of dollars each and every year.

Thank you,
Paul Douglas Boyer
MadMoneyMachine.com

Congress held a hearing yesterday to consider replacing zinc pennies with steel pennies. Ron Paul was there and made a statement about how the penny was worth the equivalent of $0.47 in the early 20th century.

You can watch a video of the hearing. But nobody is talking about the solution that makes sense: drop a decimal place in prices and eliminate the penny, nickel, and quarter. What do I gotta do to get my proposal to congress?