I created a group at Facebook for the Mad Money Machine. The actual URL for it is HERE but the easiest way to pronounce it is “MadMoneyMachine.com/facebook” which redirects you there. I’m not really sure if creating a group is the best way to set it up. Should I have created an account called Mad Money Machine instead that a person could befriend? Or is it better to have group members like I’ve done? I also have a personal account at Facebook that I am keeping reserved for REAL FRIENDS, if you know what I mean.

Would you please take just a moment and do me a favor? Please nominate the Mad Money Machine as best business podcast at PodCastAwards.com. Go to PodCastAwards.com and under the “Business” heading enter “Mad Money Machine” as the Podcast Name and “http://MadMoneyMachine.com” as the Podcast URL.

Then go to the bottom of the page and enter your name and correct email address and a comment about the show and click the “Submit” button at the right of the comments area.

Thank you so much!

There is an interesting discussion thread at the Diehards.org/forum asking the question, ‘Has anyone retired in their 40′s or aspires to?’ Lots of folks answered in the affirmative and have some great tips on making it work, both financially and psychologically. Some recurring themes: live below your means, use a 3% or 4% safe withdrawal rate (SWR), and find something interesting to do.

A tale of two graphs -or-
Don’t believe everything you see

I’ll talk some more about this on show 65. But a caller wanted to know how to compare the performance of his ETF that pays dividends against other investments. The charts lie, basically. Yahoo Finance and other charts are dumb and just plot the stock’s price. They don’t take into account reinvested dividends to give a more accurate representation of the investment’s performance in your portfolio.

Fortunately, StockCharts.com’s PerfChart comes to the rescue. See the difference on the Vanguard REIT ETF (VNQ) below:

This is the Yahoo Finance chart showing the gain in the STOCK PRICE ONLY.

This is the StockCharts.com PerfChart showing the gain in the INVESTMENT including reinvested dividends.

Anyone know of another stock chart site that gives the correct chart?

First, the article by Clay Dillow I mentioned in the previous show.

Second, Cramer’s feature article in New York magazine.

I’m working on show 65 to be released next Tuesday, June 5th. See you then.

From winter straight into summer we have finally arrived at spring here in Northern Virginia. That means I am spending a little more time enjoying the outdoors and slightly less time working on things like, uh, podcasts. Show 61 will be out when it is good and ready. Keep checking.

But more importantly, I am working on a special feature for show 61. It is all about “SWR” which some refer to as Safe Withdrawal Rate and others as Sustainable Withdrawal Rate. But either way, it is all about how much you can take out of your investments annually and still keep enough in your account for all the other years you need to take out money too. When you consider factors such as the stocks vs. bonds mix, the rate of return on stocks, the inflation rate, the maximum drawdown, starting time and your longevity, etc, the SWR turns out to be much more complicated than simply saying “4%.”

For folks approaching or in retirement, the SWR is a critical piece of info to know in order to not run out of money and end up eating dry cat food (see below).

Even if you are nowhere near retirement, contemplating your SWR is a worthwhile exercise because, as Steven Covey of the 7 Habits of Highly Effective People fame puts it, we should “begin with the end in mind”. Young folks will understand the importance of saving and investing in concrete terms when they can figure their SWR. It can be a shocking exercise.

And finally, I will be taking our cat to the vet today to be, how shall I say, retired from his life on this earth. He has been with us for almost 15 years and in recent months has gone from being overweight to underweight; from being well trained in the scatological arts to being poorly behaved; from being frisky and athletic to being lethargic and crippled. He has been a good companion for us and we will miss him.

The Boyer Cat three years ago.
The Boyer Cat today

Cramer’s stocks of the year aren’t doing all that well so far. Eight months left to go.
A portfolio of his nine picks (now ten stocks with the divestiture of Kraft from Altria) is up only 2.4% while the IFA Indexfolio(tm) 100 is up 8.16%.

I assume a portfolio equal-weighted with each security. Starting with $100,000, this means $11,111.11 invested in each stock.The prices paid for these stocks were the opening prices on the day following his mention of them on his Mad Money TV show. Value stocks were bought Jan 4, Growth stocks Jan 5, and Speculation stocks Jan 8th. All prices as of mid-day Monday April 23rd and according to Yahoo! Finance.

Here are three podcasts on which John Bogle was recently interviewed.

The most extensive interview, lasting roughly an hour, was the April 9th interview on EconTalk. Some show notes are posted at the website.

Next up is The Index Investing Show‘s April 15th podcast release. Or here.

And finally, there is The Investing Revolution from March 23rd. Note that their most recent interview was with Eugene Fama. But, sadly, the interview cuts off after only a couple of minutes.

If you are a big follower of John Bogle or have read one or more of his books you may not learn much new from these interviews, but it is still fun to hear some Common Sense Investing from the master’s voice.

Also check out the March 23rd edition of Consuelo Mack WealthTrack.

Then there’s always his own blog.

I’ve gotten a few emails from Mac iTunes users who say that the Mad Money Machine podcasts are not being updated for them. One solution seems to be to unsubscribe and then Subscribe to the feed. Let me know if there are others.

Not sure what is going on with the MMM feed at iTunes. It works everywhere else. Conspiracy?

Henry Blodget says in his blog post “In Search Of: A New Name for ‘Passive’” that the name “Passive investing” is misleading and deflating. Who wants to be passive when we all know that being active is the way to make things happen?

He suggests alternatives that he says don’t work: Indexing, Rules-based investing, Factor-based investing, Dimensional investing, Quantitative investing, and Weston Wellington’s suggestion of “Equilibrium-based investing.” Dylan Ross suggests in the comments to the post to use “Efficient investing.”

I’ve always been curious about how some things get named. Why, deep down, is Illinois named Illinois? Where do people’s last names come from and are there any new ones being put into use? Who thought up “guitar” and why?

Some folks say that names don’t matter. I fall more into the camp that says they do matter and that having a perfect name is like a metaphor; a concise way to convey the essential truths about something. A name should neatly summarize what you are talking about. Passive investing suggests that your money is automatically direct-deposited into your 401K, not quite the point. So what is the point?

We are talking about doing things the right way, the way that the academic studies say we should do them. Intelligent investing, Smart investing, Simple investing, Sound investing, Common-Sense investing, Lazy investing. All of these names, while correct, are generic and unfocused. Other names come from guys who either write books or blogs and develop lazy portfolios with names like Coffeehouse, Couch Potato, Margaritaville, No-Brainer, and Yale. Useful as labels but not great names for the complete discussion.

More specifically, what we are talking about is opposites. The opposite of trying to pick stocks. The opposite of selecting a winning mutual fund manager. The opposite of trying to time the market. The opposite of selecting the hot sector. But “Anti-Active investing” doesn’t sound all that friendly.

But wait, there’s more. Other concepts to get across include Broad diversification across the globe, low Expenses, low Taxes, low Turnover, Exposure to risk, and Rebalancing. Try to fit all of that into one word! Perhaps we need an acronym. BETTER investing? Taken. Ironically, by the National Association of Investors Corporation, an active-trading community. Or we could drop an E and do the Web 2.0 thing and have BETTR investing. Nah. Perhaps we add a U like Uniformity or Ultimate-buy-and-hold and hijack the word burette (an extremely precise piece of laboratory glassware) and dub thee BURETTE investing or the calmer Burette investing. The problem with hijacked names, though, is they are not great for Googling. You try to search for more info on Burette investing and you get a screen full of laboratory beaker manufacturers.

So how about creating a brand new word? Creating a new name out of the blue either takes some significant authority or a viral campaign. The President could come on TV tonight and announce that “Passive” investing will henceforth be called “Bretter” investing. He could go on to describe that what he means by Bretter investing are the concepts listed above and from that moment onward Bretter would be the name for that style of investing. On the other hand, a viral campaign could start by some forum poster describing an investing style that is a “Broadly-diversified, Rebalanced, Expense-efficient, Tax-efficient, and Turnover-efficient Exposure to Risk.” And all replies to the topic simplify it to BRETTER for less typing. Seemingly overnight, bretter (not capitalized, just a word) becomes the shorthand for describing what was formerly called passive investing. Two approaches to naming. Top-down and bottom-up. Imposed or organic. Come at it from both directions.

Bretter Investing! Just humorous enough for the tongue-in-cheek crowd, playing off of “Better Investing.” Thoughtful enough for those demanding meaning. Unique enough for the Googlers. Bretter investing. Say it often. As in, “Since I adopted a bretter investing style back in 2007, I’ve never had to worry about my financial freedom.” Or, “The bretter investing crowd doesn’t believe in picking stocks; instead preferring to buy index funds.”

The bretter investing style. You could get used to it. You got used to Illinois didn’t you?

B roadly-diversified,
R ebalanced,
E xpense-efficient,
T ax-efficient,
T urnover-efficient,
E xposure to
R isk

“It’s definitely a bretter way to invest(tm).”

Full disclosure: In order to avoid being sniped or swiped or otherwise misused, I went ahead and registered the domain name BretterInvesting.com, not that anything will ever come of it.

If you browse iTunes and look at the details for the Mad Money Machine, it shows the most recent episode is only show 54. I have written to them twice today but no joy so far.

So if you get the episodes through the “Get Episode” link, here’s what you should do instead: Click SUBSCRIBE and then go into your subscribed podcasts lists and find the Mad Money Machine in there. Then, in the Windows version of iTunes, right-click the mouse and choose “Update Podcast” and you’ll see shows 55, Cramer in Crisis, and 56.

I’m with Leo Laporte: I don’t like Apple being the monopoly on controlling podcasts.