Mad Money Machine

Ping.

Paul Douglas Boyer — Thu, 25 Jun 2009 03:03:38 +0000

Hey folks, I’m still here. Been doing a lot of golfing, amusement park going, beach combing, etc. I love summer and hot weather and don’t want to waste it by being indoors. This is just a ping to let you know everything is fine and that you can expect a show 161 probably next week. It would help if we got a rain day or two.

MMM-160: Prosperity, Apocalypse, or Just Muddle Along?

Paul Douglas Boyer — Fri, 29 May 2009 17:33:15 +0000

Sell off in bonds. Hyperinflation is certain? Fat Head the movie. Word of the Week: Redoubtable. TOOL: Toodledo.com. REHAB: IFA Returns Matrix

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

10-yr bonds selling off. What is the impact?
Marc Faber is 100% sure of hyperinflation in US.
We don’t like deflation?
Watch Fat Head .
Gold up, Dollar down.
GM: Government Motors
Word of the Week: Redoubtable.
TOOL: Toodledo.com
Not TOOL: RecessionBlocker.com
REHAB: IFA Returns Matrix
Royksopp: What Else Is There?

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

MMM-159: The Gone Fishin’ Portfolio

Paul Douglas Boyer — Fri, 22 May 2009 17:48:48 +0000

Outliers says you need to do something for 10,000 hours to be great at it. I’m up to 80. MMM Match Play Golf Classic. Gold vending machine. Stock Pickin’ Blues

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Opening Music: Covert Operation by Deathgunn
Outliers says do something for 10,000 hours to be great.
MMM Match Play Golf Classic (From Feb 2007)
A Gold vending machine .
Someone restocked our Geocache!
Stock Pickin’ Blues
GURU: Alexander Green and his Gone Fishin’ Portfolio
REHAB: IFA’s amazing Flash charts.
Emails from Rob, Martin, and Kevin.

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

MMM-158: Avoiding the Cartel

Paul Douglas Boyer — Fri, 15 May 2009 18:05:41 +0000

HR 1207 is moving! Word of the Week: Cartel. Should you invest with IFA? Warren Buffet. Buying Puts on FAS.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

HR 1207 is up to 162 co-sponsors. Make the Fed Cartel more transparent.
MMM Word of the Week: Cartel
Email from Ed that I answer on this show:
Hi Paul,
I’m a long time listener to your podcast. Thanks for putting out such great shows.

I’m looking for a place to set up an IRA account and transfer my old 401-K plan. I looked at IFA’s web page and I have a couple questions.

1. In the unlike event that IFA goes belly up will my investment be protected?

2. Why should I go to IFA instead of signing up with a better known company like Merrill Lynch (yes they’re still around offering IRAs) or directly with Vanguard and cut out the middleman?

Thank you
Ed
REHAB: I take you on a tour of IFA.com/Step1
GURU: Warren Buffet says buy index funds.
Didn’t hear today’s Paul Boyer Show? How to get it in iTunes: Go to the Podcasts section. Find Mad Money Machine. Click it. Then click Settings. Check Every Day. Don’t use Default. When New Episodes are Available: Download All. Episodes to Keep: ALL. Press OK.
Then use the triangle to expand Mad Money Machine and if any are greyed out, press the Get button.
My Active Investment Relapse: Puts on FAS.
TOOL: Bloomberg on iPhone.

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

Paul Boyer Show, 15 May

Paul Douglas Boyer — Fri, 15 May 2009 18:05:19 +0000

Got my Radius earphones. Want wireless ones though. Google Tasks outliner improvements. Losing weight. Podshifter.com works. Our geocache got muggled. HP MediaSmart backup server.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

My replacement Radius earphones arrived. Love ‘em. I used electrical tape to reinforce the junction points of the wires to the connectors.
I’m looking forward to getting WIRELESS stereo earphones for my iPhone. (AH, I just now remembered, it needs to have a microphone too!)
Google tasks keeps getting better. Now larger screen, hotkeys, calendar support. Need EXPAND/COLLAPSE though! Is there offline support?
New Year’s Resolution: Lose 30lbs. I’ve lost 18 so far… SmartForLife.com is the place for info. Costco.com is the place to purchase (cheaper).
PodShifter.com is working again. I like it.
Our geocache got muggled.
HP MediaSmart EX487 is great. Not perfect. But adding a 1TB drive to it was dumb-simple.
We bought a portable screen room. Poor Man’s Florida Room.
And more…

Music from music.podshow.com from Theory in Motion’s songs Perfect Day, Wake Up. Kean Spiraling. Snow Patrol Take Back the City.

Got Feedback? Try any one of these methods:

email: Paul AT PlanetBoyer DOT com
voicemail: 571-366-7121
Twitter me at Twitter.com/PlanetBoyer (And send a message that includes @PlanetBoyer to let me know you’re not a direct marketer)

MMM-157: The SIMPLER Portfolio

Paul Douglas Boyer — Sat, 09 May 2009 08:06:20 +0000

This show goes into lots of fun topics. Don’t miss this one! SIMPLER Portfolio. Harry Browne. REHAB. Etc. on and on and on forever.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Do you really need show notes? Lemme know if you miss ‘em!

Small Cap: VB

International: VSS

Micro Cap: PZI or BRSIX

Precious Metals: GLD

Large Cap: VTI

Emerging Markets: VWO

REITS: VNQ

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

The Paul Boyer Show for May 8th, 2009

Paul Douglas Boyer — Sat, 09 May 2009 02:28:18 +0000

Earthbox update. Harry Browne. Great Music. Interesting Topics. Where’s the flu? Government, bah. Montana guns. Repeal the income tax amendment.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

Do you really need show notes? Lemme know if you miss ‘em!
And more…

Music from music.podshow.com from Theory in Motion’s songs Perfect Day, Wake Up. Kean Spiraling. Snow Patrol Take Back the City.

Got Feedback? Try any one of these methods:

email: Paul AT PlanetBoyer DOT com
voicemail: 571-366-7121
Twitter me at Twitter.com/PlanetBoyer (And send a message that includes @PlanetBoyer to let me know you’re not a direct marketer)

MMM-156: Investing in Smith & Wesson

Paul Douglas Boyer — Fri, 01 May 2009 22:10:43 +0000

The impact of Swine Flu. An additional quote from Dollar Crisis. GURU: G. Edward Griffin tells us where the money comes from to pay the bank’s interest. GoogleFinance function.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Another quote from Richard Duncan’s The Dollar Crisis .
GURU: G. Edward Griffin: Where does the money come from to pay the bank’s interest?
the impact of the Swine Flu pandemic alert.
Survivalblog.com and Barrons’ both have a "BUY" on Smith & Wesson (but for different reasons).
REHAB: Riskese takes a look at the THREE factors that explain stock returns.
TOOL: =GoogleFinance(EWZ)

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

The Paul Boyer Show - PlanetBoyer

Paul Douglas Boyer — Fri, 01 May 2009 22:09:52 +0000

Running Barefoot. Buying a Chevy. A trip to the dentist. iPhone earphones reviewed. A tip for your iPhone microphone.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

What TWiT sounds like to me
Running barefoot, more healthy? Check out the Vibram Five Fingers running shoes.
Buying a Chevy?
Superglue my Tooth?
iPhone Earphones
iPhone Earphone Microphone tip
And more…

Music from music.podshow.com from Theory in Motion’s songs Perfect Day, Wake Up, and Devil’s Playground.

Got Feedback? Try any one of these methods:

email: Paul AT PlanetBoyer DOT com
voicemail: 571-366-7121
Twitter me at Twitter.com/PlanetBoyer (And send a message that includes @PlanetBoyer to let me know you’re not a direct marketer)

MMM-155: Dollar Crisis

Paul Douglas Boyer — Fri, 24 Apr 2009 09:24:04 +0000

Solin vs. Cramer. Toxic Leveraged ETFs. Efficient Markets. Marylin answers. iPhone tool. GURU Richard Duncan.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Dan Solin vs. Jim Cramer
Ben Stein says , "I DON’T blame Mr. Cramer for trying to act as if he knows the future. That’s his gig. But the most that economic seers can do is apply broad, generally acceptable principles to current situations and try to go from there. When I stray far from that, I hope that thoughtful readers will call me to account."
Leveraged ETFs are Toxic. See my mathematical proof . But of course, they work in your favor if the underlying index does nothing but go your way.
REHAB: What does Efficient Market mean?
Subscribe to Index Funds Advisors podcast to get the DFA "What Should Investors Do Now?" episode?
Marilyn answers, "Where did the money go?"
Thomas Woods from his book Meltdown explains why the amount of gold we have can cover it all.
TOOL: Get WSJ app in your iPhone.
GURU: Richard Duncan’s The Dollar Crisis .

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

090422 PlanetBoyer

Paul Douglas Boyer — Wed, 22 Apr 2009 17:29:24 +0000

NY Times losing $$. Texas Secession. Susan Boyle. Baptist checkpoint crosser. FRE CFO. Pirate advice. Twitter. iPhone radar. Golf adventures.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

Advice for the NY Times.
Checks and Balances: Texas is checking Federal power.
Baptist preacher stopped at checkpoint, beaten.
Susan Boyle is a staged event.
Freddie Mac CFO found dead.
What is this Twitter thing all about anyway?
Garage door update. Strange sounds.
Golf adventures.
iPhone Tech Tip: i.wund.com and click on Interactive Radar. When that full page radar appears, click + at the bottom and say Add to Home Screen. An icon will appear among your iPhone apps to get you there quickly.
See you Friday on the Mad Money Machine.

Music from music.podshow.com from Theory in Motion’s songs Perfect Day, Wake Up, and Devil’s Playground.

Got Feedback? Try any one of these methods:

email: Paul AT PlanetBoyer DOT com
voicemail: 571-366-7121
Twitter me at Twitter.com/PlanetBoyer (And send a message that includes @PlanetBoyer to let me know you’re not a direct marketer)

Levered ETFs are Toxic. Here’s Why.

Paul Douglas Boyer — Mon, 20 Apr 2009 14:29:10 +0000

Leveraged Exchange Traded Funds (ETFs) such as FAZ, FAS, and SKF are designed to multiply the DAILY PERCENTAGE change of the underlying index by factors of 2 or 3. They are thus toxic to your wealth and must not be held. Here’s a simple explaination of why. Take the FAS which is the 3X of XLF, the Financials fund. When XLF rises 1% in a day, the FAS is supposed to rise 3%. When things are going your way, everything is fine. But when the XLF drops, very bad things happen to FAS.

Have a look at this table:

On day 1, XLF rose 10% so FAS rose 30%. Great, you’re in the money.

But on day 2, XLF dropped back down to its starting price of $10.00, a decline of 9.09%. The bad news is that FAS declined 3X this amount or -27.27%. This takes its share price down to $9.45 instead of the $10 that you might expect.

So whereas XLF is unchanged after 2 days, FAS is down 5.45% after those same two days.

Why? The power of daily compounding instead of cumulative compounding. The leveraged ETFs are structured in a way that they compound on daily percent changes, not cumulative price changes. The day 2 decline of FAS should only be 23.08% to take it back to its original $10.00 per share price. But because it is 3X of XLF’s daily change, instead it declines 27.27%.

Said another way, the leveraged ETFs operate on the daily percent change not on the price of the underlying index.

Definitely not a buy and hold type of ETF! Not even for one day. Traders: set tight stops!

MMM-154: Marked to Market?

Paul Douglas Boyer — Fri, 17 Apr 2009 09:42:36 +0000

Boosting the S&P 500. Fooled by Randomness. Grandpa Lapin. MUST SEE TOOL. How about our portfolio being marked to market? We need a bailout too!

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Don’t like the future prospects of the S&P 500 index? Change it!
Active Investor Rehab: Fooled by Randomness .
GURU: Rabbi Daniel Lapin. Listen to show 107 from Lew Rockwell’s podcast at the 2009 Austrian Scholar’s Conference.
TOOL: MUST SEE: Dimensional’s presentation What Should Investors Do Now?
Do we have to mark our stock portfolios to market? Where’s our bailout?
Mad Money 100th episode: who cares?

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

090415 PlanetBoyer

Paul Douglas Boyer — Wed, 15 Apr 2009 23:20:36 +0000

Celebrating Life, Liberty, Health, and Property. Coming to you from the Belly of the Beast in the DC Metro Area.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

Celebrating Life, Liberty, Health, and Property.
Government should do what only government can do.
Golf is not a game for athletes.
I am now a certified hunter in VA.
Socialism? Fascism? Totalitarianism? Progressivism? Tyranny? We need to re-inject Liberty.
Dark clouds are not really dark.
How to make your garage door work smoothly again.
For the first time in 30 years, more people are selling gold jewelery as scrap instead of buying new items.
April issue of Wired has an article on the board game Settlers of Catan. Great game. Also Puerto Rico and San Juan are great.
Update on my diet.
I am now officially an OLD MAN. Listen to find out why (18 minute mark)

Music from music.podshow.com from Theory in Motion’s songs Perfect Day and Wake Up.

Got Feedback? Try any one of these methods:

email: Paul AT PlanetBoyer DOT com
voicemail: 571-366-7121
Twitter me at Twitter.com/PlanetBoyer (And send a message that includes @PlanetBoyer to let me know you’re not a direct marketer)

MMM-153: Encouragement

Paul Douglas Boyer — Fri, 10 Apr 2009 10:38:01 +0000

THANK YOU! I am in debt to you for your words of encouragement. Buy-and-hold dead? SIMPLER Portfolio! IOUSA now online. VSS. Rehab. PlanetBoyer.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Roubini Lashes out at Cramer
Does dollar-cost-averaging matter after 10, 20, 30 years?
Is Buy-and-Hold dead? Only if your capacity for risk changed. Can you sleep at night knowing how you’re invested?
SIMPLER Portfolio
We need a single world currency: GOLD! MSNBC article doesn’t cut it.
I.O.U.S.A. is out on Google Video
New Vanguard ETF: FTSE All-World Ex-US Small Cap fund (VSS)
Active Investor Rehab: Stock Pickers
Stay subscribed to the feed and this site to get the All New PlanetBoyer podcast next week. If you see this sign in iTunes: (!) then listen to one of the new shows (with the blue dot) for a few seconds at least, then you’ll get the newest shows again.

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

MMM-152: Last Episode?

Paul Douglas Boyer — Fri, 27 Mar 2009 10:59:17 +0000

Is this the last episode of the Mad Money Machine? It is all about Financial Freedom.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Where Did The Money Go by 54-40 .
You still own the same number of shares, but what people are willing to pay has gone down.
Discussion of how and why to keep this show going. With the underlying central theme being "Financial Freedom." How do I deal with discussions of threats against our financial freedom?
Another look at dynamically adjusting one’s risk capacity.
How do I talk about preserving our Financial Freedom without talking about the threats to it? And I may not be up to that task.
So the Mad Money Machine podcast may (continue to) change.
For Sale: MadMoneyMachine. Make offer.
Good movie: Deep Impact (1998). Substitute Financial Meltdown for Comet Impact and watch it.
Can the Free Market work in the USA?
Subscribe to the Index Funds Advisors podcast in iTunes and get their Quote of the Week.

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

MMM-151: Gold for Bread

Paul Douglas Boyer — Fri, 20 Mar 2009 09:02:49 +0000

Gardening. Gold for bread. Out of ammo. Heh, gold, guns, and grub. Online bill payment woes. Mutual fund charts. Making it in America. MU Sponsorship. 2nd Step of Rehab. Cookie Diet.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Trying to build our own "self-contained gardening system"
Gold for bread . Get yours before you have to go panning for it.
Bass Pro Outlets: out of handgun ammo.
Online bill payment woes.
Fernando wants to know if mutual fund fees are in the charts.
Making it in America . Who will advocate frugal living?
How’s it feel, Mr. and Mrs. US Taxpayer, to sponsor Manchester United?
Active Investor Rehab: the second step is knowing there are higher powers to help you.
The Cookie Diet . Helps you realize how many calories you actually eat.

Got Feedback: Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

Music from music.podshow.com:
X-RAY Dogs - Alta Plaza

MMM-150: Boyer vs. Stewart vs. Cramer

Paul Douglas Boyer — Fri, 13 Mar 2009 13:19:04 +0000

Boyer vs. Stewart vs. Cramer. Active Investor Rehab. Grooveshark.com. Pneumonoultramicroscopicsilicovolcanoconiosis. 100 Free Trades.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Stewart vs. Cramer .
Active Investor Rehab: the first step is knowing that you’re an active investor and what that means.
TOOL: GrooveShark.com

Got Feedback: Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

Music from music.podshow.com:
Runaway Train - Under Feather

See All Three Rounds Here

Paul Douglas Boyer — Fri, 13 Mar 2009 09:09:34 +0000

Here’s the link to see all three parts, including some that did not appear on TV, of The Daily Show’s Jon Stewart and Mad Money’s Jim Cramer.

I’ll discuss on show 150.

Guru Smackdown Tonight

Paul Douglas Boyer — Thu, 12 Mar 2009 18:06:46 +0000

Yeah, Cramer v. Stewart . I’ll be watching (once my DVR has finished recording it). Thanks Barry for doing the compilation. I especially like #3.

MMM-149: Roulette System

Paul Douglas Boyer — Fri, 06 Mar 2009 09:04:45 +0000

How to win at Roulette. Buffet. Harvey. Bauer. Cramer. Paul. Clinton. Getting paid to throw snowballs. Tool. Guru. Kindle. Best and worst year? I’m available to take Paul Harvey’s slot.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Warren Buffet
Paul Harvey
(ABC Radio: I am available to take Paul Harvey’s slot. Call me at 571-366-7121. And hey, my name’s Paul too!)
Jack Bauer
401K to IRA = 100 Free trades. What to do with them?
Roulette System
Voice talent gets up to $300/hour.
Reboot the Bill of Rights.
H.R. 1207, Federal Reserve Transparency Act
Getting paid to throw snowballs.
Jim Cramer says buy Silver.
I’d like to see Cramer, Buffet, and Ron Paul talk for an hour (or a day!) and come to an agreement.
For all my ranting, I really haven’t personally been all that affected. Perhaps it is just fear of what’s to come.
TOOL: RecessionJunction.com
Take a class to learn how to trade ETFs for only eighty four ninety five. $84.95? Nope. $8495!
GURU: Bill and Hillary sold .
Kindle for iPhone let’s me read the 3 books I bought.
Learning Earning: When did the worst and best 1-year rolling returns happen?
Subscribe in iTunes to "Index Funds Advisors " podcast to hear me do the Quote of the Week!a

Got Feedback: Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

Music from music.podshow.com:
Runaway Train - Under Feather

MMM-148: Woke Up With A Gasp

Paul Douglas Boyer — Fri, 27 Feb 2009 09:01:46 +0000

Woke gasping. Sovereign states? Time-saving show (for me). Buy and Hold vs. Lazy Portfolios. Cramer says buy gold. Says SKF is evil. What about silver? Rich Dad’s education. Rolling periods now include great depression. Restaurant.com. Glenn Beck. EarthBox.com.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

Woke up with a gasp: This is really happening!
IFA has the best way to invest.
Save me some time on this show
Buy and Hold vs Lazy Portfolios, yes there is a difference!
Jim Cramer said, "Buy Gold." Does that mean it is time to sell?
Is SKF non-correlated to XLF like Cramer says?
What about silver?
Rich Dad’s chapter 2 is out: The Conspiracy of Education
Learning Earning: Rolling Period Returns now include the Great Depression.
TOOL: Restaurant.com buy coupons to save money
GURU: Glenn Beck war gamed worst-case scenarios.
Grow your garden this year: EarthBox.com
Scott, a pilot, geocaches and recommends these podcasts: Podcacher, Icenrye Videozyne, Cache-A-Maniacs and Cachers of the Round Table. I was even interviews on Cache-A-Maniacs, show #103. http://www.cacheamaniacs.com/index.php?post_id=409919

Subscribe in iTunes to "Index Funds Advisors " podcast to hear me do the Quote of the Week!

Got Feedback: Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

Music from music.podshow.com:
Runaway Train - Under Feather

Cramer says SKF doesn’t work right. Is he right?

Paul Douglas Boyer — Wed, 25 Feb 2009 23:21:29 +0000

On Jim Cramer’s Mad Money show on Monday February 23rd, Jim said about SKF , the 2X UltraShort Financials ETF:

"…they don’t even perform as expected. The index the SKF tracks is down 14% over the past three months, so you’d figure an ETF that double or triple shorts that index would offer great returns, right? Wrong. The SKF is down 28% over the same time period.

I took a quick calculation of XLF vs SKF to see if he is right. I brought weekly historical quotes from Yahoo finance into a spreadsheet, inverted the SKF’s weekly returns and divided by two and charted it. Here’s the chart, you decide if he’s right.

MMM-147: What Title To Pick?

Paul Douglas Boyer — Fri, 20 Feb 2009 10:15:39 +0000

Titles. Up? Gmail calendar sync. Eliminate Cable TV? Rick Santelli. Why airports have metal detectors. Short the UltraShorts? Why have an advisor? We know where the interest comes from. iTunes trick. StockTwits.com. Ben Bernanke, inflation, and a portfolio. Podshifter.com

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

The Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com

Topics in this week’s show include:

00:00 What title to pick? Gotterdammerung? Emergence thru Emergency? Gunga la Gunga? On the Brink? Tipping Point?
03:10 Anyone think stocks can rise from here?
03:40 Thanks for your Birthday greetings
04:05 Please support IFA.com
04:20 Show table of contents
04:50 Gmail Calendar and Contact Sync. I discovered how to turn my iPhone into a Blackberry (with push email).
05:34 Can I get rid of my Cable TV?
06:50 Guru: Rick Santelli and his rant
09:05 The real reason the have metal detectors in airports.
10:00 Short the UltraShort ETFs! A guaranteed win?
12:30 Why hire someone to manage your financial freedom?
16:42 Finally, we know where the interest comes from thanks to Trey.
19:19 iTunes trick for sorting by Artist, then album chronologically
20:39 TOOL: StockTwits.com is the community to join if you are a Twitter user and like to talk stocks, investments, or the economy.
24:25 Ben Bernanke talks about inflation. He says when it starts to get out of control, he will control it. (I’m paraphrasing there.) I talk about the correlation between assets and inflation. Read about it from a previous posting here .
34:37 Podshifter.com can speed up your podcasts and add hours to your week.
38:04 Tell a friend about the Mad Money Machine podcast.

Subscribe in iTunes to "Index Funds Advisors " podcast to hear me do the Quote of the Week!

Got Feedback: Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
voicemail: 571-366-7121
Comment for all to see at drop.io/MadMoneyMachine
Twitter me at Twitter.com/MadMoneyMachine
Skype me at MadMoneyMachine
Take the MMM Survey

Music from music.podshow.com:
Runaway Train - Under Feather

Investments for Inflationary Times (to Come?)

Paul Douglas Boyer — Thu, 19 Feb 2009 14:37:34 +0000

The Austrian economists anticipated the present crisis. Should we listen to them when it comes to their predictions about what comes next? In one voice they are saying we will experience inflation unlike we’ve seen in the USA in over 100 years. Inflation is defined as the increase in the supply of money and credit. We are certainly experiencing an increase in the supply of money at present. But the draw-down of credit is counter-acting the monetary inflation and we are hovering in inflationary stasis at present.

Fed Chairman Ben Bernanke said the same thing on February 18th:

Some observers have expressed the concern that, by expanding its balance sheet, the Federal Reserve will ultimately stoke inflation. The Fed’s lending activities have indeed resulted in a large increase in the reserves held by banks and thus in the narrowest definition of the money supply, the monetary base. However, banks are choosing to leave the great bulk of their excess reserves idle, in most cases on deposit with the Fed. Consequently, the rates of growth of broader monetary aggregates, such as M1 and M2, have been much lower than that of the monetary base. At this point, with global economic activity weak and commodity prices at low levels, we see little risk of unacceptably high inflation in the near term; indeed, we expect inflation to be quite low for some time.

He acknowledged that they are inflating. But he threw a red herring into the mix by talking about weak economic activity and low commodity prices (Heh, except gold, right Ben?) trying to infer that they are somehow the cause of inflation. No, they are the result of inflation. Next, he went into how they will correct their inflation:

However, at some point, when credit markets and the economy have begun to recover, the Federal Reserve will have to moderate growth in the money supply and begin to raise the federal funds rate. To reduce policy accommodation, the Fed will have to unwind some of its credit-easing programs and allow its balance sheet to shrink. … However, the principal factor determining the timing and pace of that process will be the Federal Reserve’s assessment of the condition of credit markets and the prospects for the economy.

Bernanke recognized that the plane is in a nosedive and at the last minute he plans to push on the stick and go airborne again. I hope it is not a cloudy day when he has to judge how far the plane is from the ground. He wrapped up his thoughts on inflation and how to avoid it:

As we consider new programs or the expansion of old ones, the Federal Reserve will carefully weigh the implications for the exit strategy. And we will take all necessary actions to ensure that the unwinding of our programs is accomplished smoothly and in a timely way, consistent with meeting our obligation to foster maximum employment and price stability.

What do *you* think the chances are that the Fed will get all of the necessary actions right? Have they gotten the necessary actions right up to this point? Let us examine a scenario where they are not able to get it right and we do indeed experience undesirable inflation, which I will define to be anything above 5% annually.

How might the various asset classes be affected in times of inflation? To answer this question, I utilized Simba ’s spreadsheet for back-testing portfolios (which I imported into Google Spreadsheets) to do a correlation between CPI (Consumer Price Index, the government’s official inflation number) and various stock fund, bond fund, and gold returns. The data in the spreadsheet uses annual returns of Vanguard index funds along with the yearly closing price of gold from the years 1971 - 2008. The spreadsheet already calculated the cross-correlation between each of the mutual funds and it lists the annual CPI index. So it was very easy to drop the CPI into one of the mutual fund slots and instantly see the correlation between every asset class and inflation. Here are the results, sorted by correlation:

Asset Class	Ticker	Correlation
T-BILL (money mkt)	VMPXX	0.63
GOLD	GOLD	0.52
Long Term Govt Bnd	VUSTX	-0.40
Short Term Trsry	VFISX	0.28
Commodities	PCRIX	0.25
5 Yr T	VFITX	-0.24
Wellesley Fund	VWINX	-0.21
Wellington Fund	VWELX	-0.16
Small Cap Grwth	VISGX	0.13
Total Bond	VBMFX	-0.12
Small Cap	NAESX	0.11
EAFE Dev	VDMIX	-0.10
Europe	VEURX	-0.10
Intl Value	VTRIX	-0.10
EAFE85/EM15	EAFE/EM	-0.09
500 Idx	VFINX	-0.09
Large Cap Grwth	VIGRX	-0.07
Total Market US	VTSMX	-0.06
Simulated TIPS	S-TIPS	0.06
Pacific	VPACX	-0.06
Emerg Mkts	VEIEX	-0.06
Large Cap Value	VIVAX	-0.04
Small Cap Value	VISVX	0.04
REIT	VGSIX	-0.01
Windsor Fund	VWNDX	-0.01
Mid Cap	VIMSX	-0.01
Micro Cap	BRSIX	0.00

The table shows those asset classes that were most closely correlated with the CPI at the top. Note in the third column that a value of 1 would mean the asset is perfectly correlated, -1 would mean perfectly correlated inversely (it went down exactly as CPI went up), and 0 means there was no correlation: it was random.

So we see that those assets that were most highly correlated with CPI were T-bills, gold, long-term government bonds (inversely), short-term Treasuries, and commodities. Everything else was below 0.25 correlation. Interestingly, micro cap stocks were totally uncorrelated with inflation.

So how did a portfolio of those assets perform during the years 1973-1981 in which CPI was 8.7, 12.3, 6.9, 4.9, 6.7, 9, 13.3, 12.5, and 8.9%?

I constructed a portfolio along the lines of the Harry Browne Permanent Portfolio (HBPP invests 25% each into total US stock market, long-term bonds, money market, and gold) but I added some small cap value, micro cap, and eliminated the long-term bond fund. I then back-tested that portfolio during those inflation years. Here is the portfolio what I came up with:

The Inflation Portfolio:

VISVX (Small Cap Value) 15%
BRSIX (Micro Cap) 15%
PCRIX (Commodities) 10%
VMPXX (Money Market) 45%
Gold 15%

The "Inflation Portfolio" had a CAGR (Compound Annual Growth Rate) of 15.5% and a risk (as measured by standard deviation) of 10.5%. Plotting that on a chart, here’s what it looks like compared with some other portfolios and the assets themselves:

The chart shows plots for various portfolios during those inflation years. The plot point directly above HBPP simply substituted BRSIX for VTSMX in the HBPP. The major components of the Inflation Portfolio are also plotted separately showing how volatile gold and BRSIX were themselves. When tempered together with VMPXX, the risk came down considerably while retaining significant returns. You can see all of the rest of the details in the Google spreadsheet that I created for this scenario and you can test out other hypotheses yourself.

The Inflation Portfolio worked from 1973 through 1981. If we see inflation return, would it work again? Some folks are discussing these findings at the Bogleheads forum if you want to chime in.

Please note this is not a recommendation to invest your net worth in the Inflation Portfolio!

Corrected 12 Month Rolling Returns

Paul Douglas Boyer — Sat, 14 Feb 2009 16:51:57 +0000

In a previous posting , I calculated the 12 month rolling returns for all IFA portfolios.

That posting is in error (that I do not believe was my fault). I have corrected it. It turns out that Feb 1, 2008 thru Jan 31, 2009 was not the worst 12-month rolling period, but it did come close.

I’ll be watching to see what happens at the end of this month.

Here is the corrected chart.