Mad Money Machine

Best Explanation of Credit Crisis

I just listened to an hour long podcast from This American Life that explains the current credit crisis by talking to some of the guys in the chain of the crisis. From the guy with No Income No Assets taking out a half million dollar mortgage, to the guy selling it, to the guy buying it, to where they are today. From $1000 bottles of champagne to asking daddy for money.

The episode is 355: The Giant Pool of Money and if you’ve got an hour, I definitely recommend it. You can either listen on your computer or thru iTunes. 

New look, does it work?

As you can tell, I have given the web site a new look today. Does it work for you?

MMM-110: Planned Obsolescence

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 [ 37:54 ] Play Now | Play in Popup | Download

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

Technical Analysis and Trend Following

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!

Lazy Portfolios Updated

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.

MMM-109: Green Acres

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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But, if you just cannot deal with that then go ahead and
Play the new show right now

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

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

MMM-108: A Coffee Mess

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.

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

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

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

Guess the Harvard Law Students

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.

MMM-107: Bermuda Shorts

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.

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

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

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

MMM-106: Not Yours to Give

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 [ 18:18 ] Play Now | Play in Popup | Download

What’s Up With Our Money?

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.