How can you properly determine if your investment have met your expectations?

Watch “Proper Benchmarking and Alpha” for a lesson on measuring risk against a complete set of important factors. These videos are based upon IFA’s Quote of the Week Issue #82.

Part 1:

Part 2:

If you have any questions about Harry Browne’s Permanent Portfolio, head over to the Permanent Portfolio Discussion Forum that CraigR just started over at CrawlingRoad.com. Experts there have studied it from all angles and can help you get it implemented yourself.

And here’s the book you need to read:

I have had a number of emails from people trying to get into the Harry Browne investment radio show archives. The links at the original site appear to be down, but fortunately Craig at CrawlingRoad blog has a mirror that you can use. I’ve recently listened to all 44 investment shows and am now going through his political shows starting back from 2002. (I have my own personal mirror of those.)

The voice sounds familiar…

I just remembered a web site that was a Tool many many shows ago. This tool will help you benchmark your portfolio or to test out a new portfolio. It will allow you to compare it against another benchmark and it will calculate returns, standard deviations, and also Sharpe ratios.

The web site is http://www.icarra.com

Get over there and create an account and try it out. They have really made some nice improvements since I last used it.

Here’s an easy to digest journey through the 12 Step Program for Active Investors. The 12 steps span four videos. Be sure to watch all four!

FOR BEST RESULTS, AFTER YOU CLICK PLAY, CLICK THE ARROW BUTTON IN THE BOTTOM RIGHT THEN SELECT "HQ" TO GET EVERY OUNCE OF INDEXING JOY FROM THESE VIDEOS!!!

Steps 1-3

Steps 4-6

Steps 7-9

Steps 10-12

This was a lot of fun to put together. I used Keynote and then exported the show to iMovie to render the video. Images and diagrams are from ifa.com. For backtested performance information go to ifabt.com.

So Skype emails me and wants another $60 for my phone number for a year. Bah! The way I figure it, this is not just the "Information Age" but the "Free Information Age." I mentioned on show 141 that I was probably not going to pay. Well, leave it to a listener to remind me of a better (free) way. RalfX called on Skype (actually a Skype-to-Skype call too, so I didn’t need the incoming phone number) to say that he wrote a blog post on five ways to get a free phone number . I read it and was reminded that a long time ago I set up a GrandCentral number. I never used it because I already had too many phone numbers in my life. Well, now that I have one fewer number, I can add this one back in. 571-366-7121. Call it and leave a voicemail.

I noticed one feature that GrandCentral has that Skype does not: the ability to DOWNLOAD the audio file! No longer do I have to go through hoops rigging up some audio hijack software to play and record the Skype message. Nice. I also like the fact that I get emailed immediately upon receiving a voicemail. I don’t have to have an application running on my computer to get the voice message too.

Maybe someday I will merge all my numbers to this one number, once I really get my contacts put in there correctly. It supposedly allows you to allow calls through from people you know while routing others to voicemail.

Check this out. NYTimes, with its unlimited budget (ha) has gone and done my pitiful "Table of What it Takes to Get Back to Even " several times better. Theirs is an interactive graphic (in Flash no less) where you can enter what you once HAD, what you now HAVE, and your expected return rate (ha again!). It will tell you how long you’ll have to wait to see that same amount of money again.

http://www.nytimes.com/interactive/2009/01/06/business/20090106-comeback-graphic.html

What’s neat is that if you put in a negative inflation rate, say -3%, you can get your money back in a few years even at 0% Annual return!

We have a stack of gift cards. Literally, a stack. I used to carry them around in my wallet so that in the event we were out and about and happened to stop at one of those stores, I’d have the card with me. But my wallet got so thick with these things that it became difficult to fit into my back pocket. So I moved them to the glove compartment. Today we had an opportunity to use a couple of them. First, dinner at Panera Bread. I actually had *two* cards for them. So I asked the cashier how much was on each. The first one had about three dollars. The other one was filled up with $25. Our order came to only $19 though, so I am still stuck with a card with nine bucks on it. Next up a visit to Trader Joe’s grocery store. I figured that the card for them was also $25 so I wanted to go in and pick up about $25 worth of stuff. As it turned out, we loaded up the cart with over $75 worth of stuff and I ended up having to pay to get out of the place.

That’s kinda the idea behind gift cards, isn’t it? You are always going to spend an amount in excess of what is on the card. So the next time we want to use up our Panera Bread card with only $9 on it, we will end up paying another $10 out of our pocket.

I personally don’t like these gift cards. I prefer coins or Federal Reserve Notes. Doesn’t matter the denomination. Dimes, quarters, dollars. These are gifts that don’t depend upon any specific store remaining in business. If giving money as a gift is too crass, then a candle will do. Please don’t buy the overpriced Yankee Candles either.

I’ve been doing a lot of reading about various backup strategies. It is one of my 2009 New Year’s Resolutions, remember? Here are my requirements:

1. OS Agnostic. Don’t want it to be tied to Mac or Windows. Want it to be able to do anything.
2. Yet, I want it to be Apple Time Machine compatible to take advantage of its ease of use.
3. Must be automatic. Don’t want to think about it.
4. Don’t want large recurring costs, no large monthly fees. $5 a month at most.
5. Must be large enough to hold everything.
6. Want to be able to access resources from any computer on the home network and store stuff on it not just backups.
7. Failsafe!

• External USB or Firewire hard drives, both with A/C plugs and those with only USB power
• Mirrored hard drives
• Drobo backup system
• Online web backups like Mozy.com, Backblaze.com, GetDropBox.com, Mesh.com, etc. (Must encrypt the contents)
• Network Attached Storage systems

The one solution I am attracted to at the moment is the new HP MediaSmart Server. It just won the MacWorldMagazine Best of Show award. The attractiveness of this device is that it can solve items 1, 2, 3, 4, 5, 6, and hopefully 7 above. I do not know how failsafe it is. I think that is a key feature of Drobo: you can actually remove one of the hard drives in the thing and your data is still there. I don’t think the HP does that, instead I think it allows you to do mirroring. 

But, you can also sync the MediaSmart server with an online backup solution, such as Amazon S3. So you have both network attached access to your data as well as an offsite backup. Having worked in information security, I appreciate these things. I am looking at the EX487 model which starts with 1.5TB of capacity in two hard drives. I think I can probably find one for about $725. Another neat thing about it is that supposedly I can move my iTunes music (and podcasts?) to it and access it from any PC on our home network.

I’ve been using outliner software since the 80′s. What’s it do? It helps you keep lists. Nested lists as outlines.  Like this:

1. Things to buy
   1. Milk
   2. Eggs
   3. Fish
   4. Backup software
2. Things to do Today
   1. Wash car
   2. Mow lawn
   3. Go to the store
3. Books to get from the Library
   1. Index Funds
   2. The Revolution
   3. The Left, the Right, and the State

I’ve found Mac outliners, web outliners, iPhone outliners, PC outliners and some combinations of these but I cannot think of one that does three and certainly not all four. Yes, if I could find one I would trade Federal Reserve Notes for it!  I will keep checking http://www.outlinersoftware.com/ for ideas.

I like Bonsai on the PC. I like OmniFocus for the Mac. I like Google Docs for the web (even though it does not do outlines). I have not found a really great web-based outliner. The iPhone outliners don’t seem to show enough rows of data on their screens; I’d need to see more than a half dozen things at once.

Is anyone out there developing such an application? Please email me and let me know, otherwise I may have to write them myself!