Mad Money Machine

Follow-up to MMM-036

The Tool in the Crib for show 36 helps to determine if your mutual fund is an index fund in disguise, or so-called “closet index” fund. The Wall Street Journal on the next day had an article entitled “Professors Shine a Light Into ‘Closet Indexes’: Measurement May Help Investors See How Much of Their Holdings Are Actively Managed — And Not” by Tom Lauricella. They refer to this paper by Antti Petajisto and Martijn Cremers from the Yale School of Management, which will tell you more than you’d most likely want to know about another technique to gauge whether a fund is a closet indexer: the “Active Share” measurement.

Then, after I rebuked Leo Laporte’s hammering of Microsoft’s buyback, Microsoft announced a much larger share buyback and the stock rose some 4%.

On the Sound Investing podcast of 18 August 2006, they talked about show 36’s Guru, Bill Miller, and how he is in danger of not beating the S&P 500 this year. They mentioned that there is likely to be a tax hit to new investors in LMVTX in addition to the high expense ratio.

And after I had my Ten Rules of Active Trading, Cramer on his Real Money radio program had Cramer’s 10 Commandments of Trading.

Wow, I didn’t realize what an influence the Mad Money Machine had on the financial news world! (JUST KIDDING!)

MMM-036: Super Stock Spectacular

Download this show thru iTunes!

or, if you just can’t possibly deal with that then
Play show 36, right now 

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Proudly sponsored by Index Funds Advisors. Check out their OFFICIAL version of the 12 Steps podcast. RSS Feed

I’ve said it before but I have no problem saying it again, THANK YOU! for nominating the Mad Money Machine as the only investing show to be so nominated as Best Business Podcast at PodcastAwards.com!
But being nominated don’t mean a thing if I can’t continue bringing the goods!

The statelyCharles lends his voice to the MMM.

Congrats to Manager Tools for winning Best Business podcast! Good luck with the People’s Choice Award!

The download stats for this show have caught up.

Meet me at the Podcast Expo in Ontario CA on 29 and 30 September 2006.

This show is for all the Nightly Business Report watchers.

My Ten Rules for Active Trading!

I describe the chart that accompanies this show.

Leo Laporte of This Week in Tech (TWiT.tv) didn’t like Microsoft’s (MSFT) buyback plan. He’s wrong.

Apple (AAPL) is in a tug of war between buyers and sellers.

Microvision (MVIS) was once a bright hope.

Our Guru this week is a vaunted mutual fund manager.

The Portfolio Smackdown includes Ben Stein’s portfolio.

My take on Step 3 of the 12 Step Program for Active Investors: A Babbling of Fools

No, I’m not really selling a newsletter.

Our Tool in the Crib helps you see if your actively managed mutual fund is actually an index fund in disguise.

Doug Ashley won the book!

I’m an INTJ.

The luxury of podcasting is that we can change direction.

I’m on a journey and I invite you to come along with me, exploring the efficient frontier.

Next show: Step 4, the MMM Special touch on the 12 steps. But, I might not release it next week. Would that be a crime? How about if I just did a very Raw, unproduced show? Well, no assignment for book giveaways this week, other than go buy it.

Visit our sponsor: Index Funds Advisors

Download the show directly MMM-036.mp3

Music from the Podsafe Music Network:
Runaway Train – Under Feather
Babbling Of Fools – John Zielman and the Selves
Money – Theory in Motion

Music from IODA Promonet:

The Best Of Classical Music / Bach

Various Artists
Blue Pie Productions

• Buy at iTunes Music Store

• Download “Brandenburg Concerto No. 2 In F Major , BWV 1047 (Allegro Moderato)” (MP3, 192kbps)

J. S. Bach – Flute Sonatas – Philippa Davies – Maggie Cole – Alison McGillivary

Philippa Davies
AVIE Records

• Buy at iTunes Music Store

• Download “Sonata in b minor (Largo e dolce)” (MP3, 192kbps)

“Passionate Kiss” ~ Romantic Piano Music

Daniel Pollack
Four Winds Entertainment, Inc.

• Buy at iTunes Music Store

• Download “Beethoven: ‘Moonlight Sonata’ 1st Movement Op.27 No.2” (MP3, 192kbps)

MMM-035: Get My Investing Newsletter

Download this show thru iTunes!

or, if you just can’t possibly deal with that then
Play show 35, right now 

Standard Podcast [ 34:38 ] Play Now | Play in Popup | Download

Proudly sponsored by Index Funds Advisors. Check out their OFFICIAL version of the 12 Steps podcast. RSS Feed

I’ve said it before but I have no problem saying it again, THANK YOU! for nominating the Mad Money Machine as the only investing show to be so nominated as Best Business Podcast at PodcastAwards.com!
But being nominated don’t mean a thing if I can’t continue bringing the goods!

The lovely Crystal lends her voice to the MMM.

Interested in one of my old shows from the reel-to-reel days? (But WHY???) Click the Podcasts category then click on the show you want. In there will be a direct download link.

A long time ago, Jeremy Siegel was the Guru and in his book The Future for Investors he fretted about how when the baby boomers retire they will pull all their money out of the stock market. Read the GAO’s disagreement. BABY BOOM GENERATION: Retirement of Baby Boomers Is Unlikely to Precipitate Dramatic Decline in Market Returns, but Broader Risks Threaten Retirement Security

Music makes the world go round!

Meet me at the Podcast Expo in Ontario CA on 29 and 30 September 2006.

Won’t the 401(k) reform mean higher stock prices?

Fed keeps interest rates the same finally. Now what for bonds and inflation?

Fidelity says, “Find out if you’re as smart as you think you are.”

Have a look at IFA vs. Buffet

Get my investing newsletter! Hulbert looks at the 2nd year performance of 23 years of best-performing newletter portfolios vs. Wilshire 5000 index.

How about Doug Fabian’s bold claim! Hulbert’s take.

A stock tip NOT sponsored by Lipton Cold Brew Iced Tea.

Want a Cramer Bobblehead doll?

How to spot market tops!

My take on Step 2 of the 12 Step Program for Active Investors: I need something to just believe in!

Wanna hear me talk about TRADING stocks instead of INVESTING in stocks? Be here next week for the SUPER STOCK SPECTACULAR!

Jim Cramer said the following on Mad Money last Friday, 4 August 2006 (a repeat from 5 July 2005):

Got a prediction for you. If you dont’ have your portfolio set up the right way, if you’re not diversified — crystal ball — I see nothing but devastation in your future. Look, before you even get to the point you have the luxury of making the moves I mention on this show, you’ve got to have the dough. Don’t play with money you need! Don’t play with retirement money! We need discretionary funds to play around.

OK hot shot you got funds ready to go? [Plays horse racing theme.]

Here’s how we build — really start building our portfolio. Remember I’m talking about discretionary funds. So called Mad Money. And I’m talking about investing in stocks. Now of course you need to be more diversified than just holding stocks. This is a stock show.

Mad Money = Gambling Money

Our Tool in the Crib helps you answer one of the questions on your Financial Independence calculator.

DO NOT WAIT TO WIN A COPY OF THE BOOK. BUY ONE NOW. IF YOU WIN, GIVE IT TO A FRIEND.

Check out the chart on page 246. The red boxes are annualized returns for 12-year periods. Holy Cow Phil Town!

You guys that entered a comment on the previous show are now dubbed the Mad Money Machine Board of Directors! Thanks! About 2/3 of you found the show thru iTunes. About 2/3 listen on an MP3 player.

Tekneek won the book! It will be on its way to you.

BOOK GIVEAWAY! I’m giving away yet another copy of Index Funds: The 12-Step Program for Active Investors. Make sure you are registered then simply add a comment to this show that answers this question:

How did you (or will you) advertise or otherwise get someone else to subscribe to the Mad Money Machine? (Provide the link if you have one.) I’d really like to get some links on other popular blogs to help my Google rankings.

Next show: Step 3, the MMM Special touch on the 12 steps.

Visit our sponsor: Index Funds Advisors

Download the show directly MMM-035.mp3

Music from the Podsafe Music Network:
Runaway Train – Under Feather
See Right Through – Rasa 9
Fool – Tommy Brown
Swine – Slik Helvetika
Westbound Train – Slik Helvetika
Scream – Slik Helvetika
Torn Down – Sophia Ramos
Gut Bucket – James Brown (Yes! Podsafe!)
She Kills – Slik Helvetika
High On You – Slik Helvetika
Just Believe – Desiradi
Back to the Barbeque – Blood Bank
Ride – Slik Helvetika
Money – Theory in Motion
Two Gods – ATTRITION
Sitar – ???
$12.99 – Dave Potts

Don’t Worry About Harry Dent?

So… Harry Dent said in his book The Next Great Bubble Boom that the stock markets will fall when baby boomers retire and take their assets out of the stock market. So did Jeremy Siegel in his book The Future For Investors. But our gobmit disagrees. Yep, the Government Accountability Office (GAO) published a report entitled BABY BOOM GENERATION: Retirement of Baby Boomers Is Unlikely to Precipitate Dramatic Decline in Market Returns, but Broader Risks Threaten Retirement Security. Download a copy for yourself, read it, then read the two books mentioned. Then flip a coin to see which one you think will be right.

What if we bought Ben Stein’s Portfolio?

Ben Stein has a column at Yahoo! Finance and last October he detailed a portfolio of 9 Exchange Traded Funds (ETFs) in one entitled A Model Portfolio for Weathering Retirement.

So if we would have bought it for our Portfolio Smackdown instead of the ones I picked, how would we have done so far?

Up a whopping 8.4% as of close of trading Monday, 7 August 2006. Not bad Ben!

MMM-034: Sudden Dearth

Download this show thru iTunes!

or, if you just can’t possibly deal with that then
Play show 34, right now 

Standard Podcast [ 37:40 ] Play Now | Play in Popup | Download

Proudly sponsored by Index Funds Advisors. Check out their OFFICIAL version of the 12 Steps podcast. RSS Feed

I’ve said it before but I have no problem saying it again, THANK YOU! for nominating the Mad Money Machine as the only investing show to be so nominated as Best Business Podcast at PodcastAwards.com!
But being nominated don’t mean a thing if I can’t continue bringing the goods!

The Last Bull Market for Bonds?

The Bogleheads’ Guide to Investing.

How big would a folded sheet of paper be if you folded it over 50 times?
Illustrates the power of compounding.

I got a copy of Trading With The Enemy: Seduction and Betrayal on Jim Cramer’s Wall Street.

WHAT AM I SUPPOSED TO DO WITH MY MySpace.com ACCOUNT? My wife says I should join EONS.com instead.

Indexing is ALL THE RAGE!

A tip NOT sponsored by Lipton Cold Brew Iced Tea.

HOT pepper!

My take on Step 1 of the 12 Step Program for Active Investors: Please Rescue Me!

Our Tool in the Crib is a two-fer this time and they are on FIRE!

Jim’s been laughing a lot more recently.

PPH vs. PFE. And the Luxury Index.

Other changes to the Portfolio Smackdown.
And what if we had stuck with the original 10 stocks in the Cramer portfolio?

DO NOT WAIT TO WIN A COPY OF THE BOOK. BUY ONE NOW. IF YOU WIN, GIVE IT TO A FRIEND.

Andy won the book! It will be on its way to you.

BOOK GIVEAWAY! I’m giving away yet another copy of Index Funds: The 12-Step Program for Active Investors. Make sure you are registered then simply add a comment to this show that answers these questions:

1. How did you first find out about the Mad Money Machine?
2. How (and optionally where) do you listen to the show?

Our Guru had a folly that turned pretty jolly.

Next show: Step 2, the MMM Special touch on the 12 steps.

Visit our sponsor: Index Funds Advisors

Download the show directly MMM-034.mp3

Music from music.podshow.com:
Runaway Train – Under Feather
Let It Out – Federal Bison
The Truth – Rasa 9
vEverybody Loved You remix – Geoff Smith
Mystery – Waiting On One
HOT – enobi
The ENRON Song – Where Dat Money Go? – David Ippolito
Rise of the Machines – Angry Red Planet
Sitar

PFE vs. PPH

On Tuesday’s Mad Money, Jim Cramer said to buy PFE not PPH. PFE is Pfizer and PPH is the Pharmaceutical HOLDRs (an ETF). He said opportunity is knocking because of the big spike in prescription drugs. Since PPH is a drug index, you could buy that but you would get both the best and the worst of the drug stocks, according to Jim.

Instead, he recommended buying Pfizer saying that it has a good risk/reward possibility with 2 down and 10 up.

Naturally for you the reader/listener I have taken up the challenge and will report the results to you in the Portfolio Smackdown, near the bottom of the table. Seems like PFE might swing both higher and lower (greater volatility), but in the end PPH could do just as well in the long term with less risk.

PPH is composed 21% of Pfizer by the way.

Oh, and don’t forget to click on the video link on the Portfolios page while you are there.

Portfolio Plays Today

More changes in our Portfolio Smackdown…

We sold CitiTrends (CTRN) yesterday afternoon. Jim said on Mad Money that JCPenney (JCP) is the only retailer he’d buy, so SOLD to me at $63.53.

In other news, our secular softgoods stock is Chico’s FAS (CHS) which I’ve always been somewhat troubled owning since it is another clothier. Let’s do a tax-loss sell there and get into Pepsi (PEP) instead, OK?

Oh and BTW: it appears our short-term tax-losses are now larger than our short-term tax gains, so the accounting gets wacky now.

I guess we gotta go from CTRN

A not insignificant part of the Portfolio Smackdown is to gauge how a joe schmo like me would perform following Jim’s picks. I am supposed to act like Jim has all the calls on all the stocks and if I miss a show, that’s part of the game. Well, apparently I missed something on the 5 July show that said we should sell CitiTrends (CTRN). He referred to an email on his 7 July show about CTRN and talked about how he had a CitiTrends jacket on his chair and stabbed it like in Psycho. Wow, what an ambiguous call that is. How am I supposed to handle my money with hints like that?

Anyway, so like I was saying I am getting caught up on Mad Moneys and so I saw that and then went to theStreet.com and typed in CTRN and lo and behold, he said to sell it on 5 July. So playing Joe Schmo, I am going to sell it right now, 3:59 today at 27.84 per share. And since the market is just about to close, I don’t have time to figure out a stock to swap into yet. Perhaps JC Penny or ANF?

The good news, if any, is that we can take the short-term tax-loss and apply it to previous short-term tax gains to offset our taxes.

And if I had watched the show and sold it on the opening the next day? I would have possibly gotten $38 per share instead of the $27.84 per share we’re getting now. YIKES! The lesson: NEVER MISS A SHOW TO YOUR PERIL! 🙂

Cramer’s Luxury Index

Last Thursday on Mad Money, Jim Cramer introduced an index of luxury goods firms in order to track if the economy could be in for a recession.

He said if high-end consumers stop spending, the economy could be headed that way. So I took the 12 stocks he mentioned in his index and plopped them into a spreadsheet. I adjusted the prices so that the total amount of money invested divided equally amongst each one is $96,000 (because he said the index was at 96 that day — note that it is up to 98 this morning). Note that he said he wasn’t recommending to buy this index, it is just used for tracking.

Tonight I’ll add this to the Portfolio Smackdown page at the bottom.

MMM-033: Cannot Think of a Title

Download this show thru iTunes!

or, if you just can’t possibly deal with that then
Play show 33, right now 

Standard Podcast [ 37:56 ] Play Now | Play in Popup | Download

Proudly sponsored by Index Funds Advisors. Take the Risk Capacity Survey and also Benchmark your portfolio.

I’ve said it before but I have no problem saying it again, THANK YOU! for nominating the Mad Money Machine as the only investing show to be so nominated as Best Business Podcast at PodcastAwards.com! Don’t waste your time actually voting. Being nominated was the goal.

But being nominated don’t mean a thing if I can’t continue bringing the goods!

I went to the Money Show and heard Steve Forbes, Newt Gingrich, and Mark Skousen, among others. Newt is optimistic about the future.

Went to Deep Creek Lake, MD.

Way behind on watching Mad Money.

No, I have never been a radio announcer, but thanks.
And sure, I would LOVE to be considered as a replacement for PAUL HARVEY!

When everybody podcasts, who are you going to listen to? The Long Tail.

ITunes changed around its category rankings again.

A reviewer at iTunes says I play too much music. BAH!

I finished both Freakonomics and Fooled by Randomness. Are you a frequent stock-price watcher? Watch out!

Now reading The Tipping Point by Malcolm Gladwell. An experiment is reviewed. I guess I’m a Maven. Shake your head up and down for a minute. Now, would you vote for the Mad Money Machine at PodcastAwards.com?

I picked a date on purpose this time to compare how Jim’s picks did versus the S&P 500.

The Portfolio Smackdown is reviewed. We’re holding onto Haliburton. He said on today’s Mad Money that HAL is a buy here!

Have you signed up for the Investment Guru Challenge? The top performers are listed.

Our Guru has a job I would just love to have! Hey wait, I’m sort of doing that already.

My ideal job would be a combination of Paul Harvey and Mark Hulbert…. Hey, that’s the Mad Money Machine!

They Wayback Machine looks at Mad Money and the disclaimer at the beginning of the show. Do YOU need an advisor? Go to Index Funds Advisors at IFA.com.

THANK YOU for submitting your suggestions for this show’s content! See the comments from show #32 to read all the great ideas for yourself.

BTW: What happened on last Monday’s Mad Money TV show? The video was about 3 seconds ahead of the audio for a few minutes there. Wierd!

Check out Jim’s video at Amazon.com

Check out page 122 of Index Funds!

The Swede won the book! It is on its way to you in Lund, Sweden.

DO NOT WAIT TO WIN A COPY OF THE BOOK. BUY ONE NOW. IF YOU WIN, GIVE IT TO A FRIEND.

BOOK GIVEAWAY! I’m giving away yet another copy of Index Funds: The 12-Step Program for Active Investors. Make sure you are registered then simply add a comment to this show that answers this question:

What is something your have learned by going to the web site for Index Funds Advisors at IFA.com?

Next show: The MMM Special touch on the 12 steps.

Visit our sponsor: Index Funds Advisors

Download the show directly MMM-033.mp3

Music from music.podshow.com:
Runaway Train – Under Feather
Sunshine With The Shade – The Reverse Engineers
More Than Me – Rachel Keaggy
sitar – ???
The Wayback Machine – The Geargrinders
Rescue Me – Zach and Sarah