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Tuesday, December 18, 2007
Friday, November 9, 2007
ADA: Finance Is Like A Simile
Alternate Dimension Andy (ADA):
Good personal finance habits are like eating your vegetables: you can know that it's good for you. You can know that it's something you need to do. It's not always fun and sexy. But if you want to be healthy, it's something you just have to do.
No, wait, that sucked. Good personal finance habits are more like a diet. Peeps complain, "I'm sooooo fat. OHGODI'MFAT!!! I wish this situation would resolve itself!" But listen up, bitches: you gotta exercise and eat right, and that's it, plain and simple. You can't wish away your problems; you actually have to work at them.
Dammit, no. That example makes me a hypocrite. Okay, let's try this: Finance is like an automobile. It's a very complex machine, but if you want to use it to your advantage, you really don't have to learn that much. But it does require some learning. And there are both safe and unsafe ways of handling it. And it requires maintenance, and gas... like, you have to take care of it and shit. And sometimes it bursts into flames, but if you waste your life worrying about that shit, you're not going to have a very happy life. Better to at least learn the basics, though.
Pathetic. Slashdot-post-worthy. Let's come up with a good one: Finance is like a delicate apple tree sapling. You have to plant it and take care of it, but when it grows up, you have free apples for life. FOREVER. Until the tree dies. But, like, if you want to, you can take some of those apples and plant them and get more apple trees, you can do that too. Yes, okay, excellent. And some people want to come onto your property and pick apples and shit, even if you're all, "TRESSPASSERS WILL BE SHOT SURVIVORS WILL BE SHOT AGAIN LOL." So take care of that tree!
What a fucking waste. If you can go back in time to un-read that, please do, then just skip to this one. This one will be the crown jewel of personal finance similes. Ready? Okay, finance is like a simile: it's like a metaphor, except that it uses "like" or "as."
Sucked. Money management is like learning to use a spreadsheet. Most people think they'll never have to do it, and that it looks hard. But then one day, they learn how and they're all, "Oh, wow, that wasn't that hard." And then they've enriched their lives because now they know how to use Excel.
No. Also sucked. Personal finance is like a blog: if you don't post for months, people will still probably read it. Just get some articles out there, and it'll sort of take care of itself. But it's way, way, way, so much fucking better if you blog regularly. I mean, if you really want to succeed, you have to set up a schedule.
How about this? Watching your finances is like Super Mario Bros. for NES. It looks hard, but then you meet someone who knows what they're doing and you're like, "What? There's fucking warp zones?" And still, the game is kind of hard, but it sure did help to learn from someone who knew what she was doing.
Jesus, no. Okay: your portfolio is like a D&D party. You can't just have all wizards, 'cause at low-levels, you'll blow all your magic missiles on the first encounter. Then what? Probably get slaughtered by a goblin. A fucking goblin, for Christ's sake. And if you have all rogues, sure, great, sneak attack the fuck out of shit, until you fight a golem (amirite???). And at high levels with only fighters? You may as well get a t-shirt that says, "I AM A FUCKING WUSS." You need a balanced party.
Yeah. Your portfolio is like a D&D party.
Good personal finance habits are like eating your vegetables: you can know that it's good for you. You can know that it's something you need to do. It's not always fun and sexy. But if you want to be healthy, it's something you just have to do.
No, wait, that sucked. Good personal finance habits are more like a diet. Peeps complain, "I'm sooooo fat. OHGODI'MFAT!!! I wish this situation would resolve itself!" But listen up, bitches: you gotta exercise and eat right, and that's it, plain and simple. You can't wish away your problems; you actually have to work at them.
Dammit, no. That example makes me a hypocrite. Okay, let's try this: Finance is like an automobile. It's a very complex machine, but if you want to use it to your advantage, you really don't have to learn that much. But it does require some learning. And there are both safe and unsafe ways of handling it. And it requires maintenance, and gas... like, you have to take care of it and shit. And sometimes it bursts into flames, but if you waste your life worrying about that shit, you're not going to have a very happy life. Better to at least learn the basics, though.
Pathetic. Slashdot-post-worthy. Let's come up with a good one: Finance is like a delicate apple tree sapling. You have to plant it and take care of it, but when it grows up, you have free apples for life. FOREVER. Until the tree dies. But, like, if you want to, you can take some of those apples and plant them and get more apple trees, you can do that too. Yes, okay, excellent. And some people want to come onto your property and pick apples and shit, even if you're all, "TRESSPASSERS WILL BE SHOT SURVIVORS WILL BE SHOT AGAIN LOL." So take care of that tree!
What a fucking waste. If you can go back in time to un-read that, please do, then just skip to this one. This one will be the crown jewel of personal finance similes. Ready? Okay, finance is like a simile: it's like a metaphor, except that it uses "like" or "as."
Sucked. Money management is like learning to use a spreadsheet. Most people think they'll never have to do it, and that it looks hard. But then one day, they learn how and they're all, "Oh, wow, that wasn't that hard." And then they've enriched their lives because now they know how to use Excel.
No. Also sucked. Personal finance is like a blog: if you don't post for months, people will still probably read it. Just get some articles out there, and it'll sort of take care of itself. But it's way, way, way, so much fucking better if you blog regularly. I mean, if you really want to succeed, you have to set up a schedule.
How about this? Watching your finances is like Super Mario Bros. for NES. It looks hard, but then you meet someone who knows what they're doing and you're like, "What? There's fucking warp zones?" And still, the game is kind of hard, but it sure did help to learn from someone who knew what she was doing.
Jesus, no. Okay: your portfolio is like a D&D party. You can't just have all wizards, 'cause at low-levels, you'll blow all your magic missiles on the first encounter. Then what? Probably get slaughtered by a goblin. A fucking goblin, for Christ's sake. And if you have all rogues, sure, great, sneak attack the fuck out of shit, until you fight a golem (amirite???). And at high levels with only fighters? You may as well get a t-shirt that says, "I AM A FUCKING WUSS." You need a balanced party.
Yeah. Your portfolio is like a D&D party.
Monday, July 23, 2007
Free: Zecco
Alternate Dimension Andy (ADA):
As I mentioned before, Skeletor is being beaten out by brokerages that do not charge $25 per trade:
ADA, there's way more to it than just how much these brokerages charge per online trade. You have to do your own research and a cost-benefit analysis and all that. I'll give you some of what I came up with when I was doing research:
May you piss off Skeletor in all investments you make.
As I mentioned before, Skeletor is being beaten out by brokerages that do not charge $25 per trade:
- Scottrade charges $7.00 per online trade.
- Charles Schwab charges $12.95 per online trade.
- TradeKing charges $4.95 per online trade.
- ShareBuilder charges from $4.00 to $15.95, and may have a subscription fee involved.
- Zecco charges $0.00 per online trade.
ADA, there's way more to it than just how much these brokerages charge per online trade. You have to do your own research and a cost-benefit analysis and all that. I'll give you some of what I came up with when I was doing research:
- Scottrade has a decent user interface and lots of products: stocks, bonds, mutual funds, etc.. $7.00 is not steep, but you can definitely do better.
- Charles Schwab is expensive, but if you're doing well, it may be worth it. The fact that you can do all your banking and all your investing from the same site is a bonus. It's also a very usable site, considering how powerful it is.
- Trade King gives me warm fuzzies. It's a very simple site with almost as many investment vehicles as Charlie. It's much less expensive than Schwab. It has a beautifully sparse UI, which makes this self-proclaimed usability expert all tingly.
- Sharebuilder's monthly subscriptions are, in my mind, bullshit. For my taste, they also charge a bit too much for commissions.
- Zecco has been described in the media as "The MySpace of online brokerages." Considering the horrible user interface and overwhelming ads, I would say that that is a spot-on assessment. The blogs suffer from a problem I've talked about before. What bothers me the most is that there is that they only offer stock and options trades online; if you want to buy a mutual fund, you have to send them something in the mail.
But no-commission trades? Huge deal.
May you piss off Skeletor in all investments you make.
Sunday, July 22, 2007
ADA: Commissions Kill
Alternate Dimension Andy (ADA):
I have a math problem for you. Fun, huh?
Suppose you want to buy 100 shares of Horace's at market price, $10. How much will it cost?
As usual, whenever I ask a stupid fucking question like this, I'm trying to trick you into giving an obvious answer that is wrong. So, if you said, "Fuck you Andy, I'm not doing your math problem," you were right!
At first, it sounds like 100 shares that each cost $10 should go for $1000. But no, that would make too much goddamn sense. Instead, when you want to buy and sell shares of stock, there's usually an extra fee involved. This fee is called a commission.
Here's how it works. You call up your broker, Skeletor, and say, "Yo, dude, I AM IN NEED OF STOCKS PLEASE." And he's all, "I will hook you up." Skeletor looks at all the active trades going on at the exchange (probably the NYSE, in your case), finds someone selling the stock you want and handles all the bullshit that goes on with the trade. After some blackbox voodoo, you are the proud owner of the shares of your choosing.
But Skeletor does this for a living, not out of the goodness of his heart. I mean come on, he's fucking Skeletor for Christ's sake. So in addition to whatever you paid for the shares, Skeletor charges you an additional commission for facilitating the trade. These days, commissions for phone orders are usually in the neighborhood of $25 - $40 a trade.
It's super-sucky that this shit happens per-trade. I mean, if you wanted to buy those 100 shares at $10 every week, and the commission was $25, you'd end up spending an extra $1300 a year. Bullshit, I say!
But a-ha! The very same technology that makes this interwebal personal log ("ibalplog," I believe it's called) available to my millions of readers can be used to facilitate these trades. After all, the stock exchanges are all run by computers, and we don't need as many human eyes and pieces of paper to make trades happen. Computers handle it for us.
Nowadays, in addition to phone trading, you can also make your trades online, via an online discount brokerage. Usually, these charge more in the neighborhood of $5- $15 a trade. Skeletor is fucking pissed about this shit.
I'll talk more about these brokerages in another post, but here's a list (in no particular order) to peruse for the time being:
Skeletor hates them all.
I have a math problem for you. Fun, huh?
Suppose you want to buy 100 shares of Horace's at market price, $10. How much will it cost?
As usual, whenever I ask a stupid fucking question like this, I'm trying to trick you into giving an obvious answer that is wrong. So, if you said, "Fuck you Andy, I'm not doing your math problem," you were right!
At first, it sounds like 100 shares that each cost $10 should go for $1000. But no, that would make too much goddamn sense. Instead, when you want to buy and sell shares of stock, there's usually an extra fee involved. This fee is called a commission.
Here's how it works. You call up your broker, Skeletor, and say, "Yo, dude, I AM IN NEED OF STOCKS PLEASE." And he's all, "I will hook you up." Skeletor looks at all the active trades going on at the exchange (probably the NYSE, in your case), finds someone selling the stock you want and handles all the bullshit that goes on with the trade. After some blackbox voodoo, you are the proud owner of the shares of your choosing.
But Skeletor does this for a living, not out of the goodness of his heart. I mean come on, he's fucking Skeletor for Christ's sake. So in addition to whatever you paid for the shares, Skeletor charges you an additional commission for facilitating the trade. These days, commissions for phone orders are usually in the neighborhood of $25 - $40 a trade.
It's super-sucky that this shit happens per-trade. I mean, if you wanted to buy those 100 shares at $10 every week, and the commission was $25, you'd end up spending an extra $1300 a year. Bullshit, I say!
But a-ha! The very same technology that makes this interwebal personal log ("ibalplog," I believe it's called) available to my millions of readers can be used to facilitate these trades. After all, the stock exchanges are all run by computers, and we don't need as many human eyes and pieces of paper to make trades happen. Computers handle it for us.
Nowadays, in addition to phone trading, you can also make your trades online, via an online discount brokerage. Usually, these charge more in the neighborhood of $5- $15 a trade. Skeletor is fucking pissed about this shit.
I'll talk more about these brokerages in another post, but here's a list (in no particular order) to peruse for the time being:
Skeletor hates them all.
ADA: Don't Take Advice From the Newspaper
Alternate Dimension Andy (ADA):
Now you're all, "Sweet! I'm totally gonna make a hojillion effing dollars in the stock market!" and I'm all, "Sweet! How?" then you're all, "By following all the hot tips in Money Magazine!"
Oof.
I want you to stop and think this through. What is Money Magazine's ultimate goal? Or Fortune? Or Forbes? Or the Wall Street Journal? Mad Magazine? Ans: All of those publications are owned by businesses who want to make money.
How do they make money? Ans: They sell ad space; the larger their readership, the more they can charge. (They also sell magazines or newspapers, but the points I'm about to make apply to all media, even free websites and television shows.)
How do they increase their readership? Ans: With cover stories like "Stock Picks So Good They Will Fuck You Up For Life," not cover stories like "Research and Due Diligence Are Key."
In reality, financial journalists are doing research; they're not intentionally lying or anything. But:
Consider this too: suppose that one morning you open the newspaper to the business section (see how much credit I'm giving you ADA? I've assumed you're literate!) and read an editorial or some shit that says, "Horace's has announced plans to sell their products in France, goatee capital of the world; OMG BUY NOW." Holy balls! Sounds like a good time to go out and buy some shares of Horace's!
Of course, this was announced in the newspaper, and there will be lots of people who have read the same editorial. They'll want to buy too. (In Economics, that's called an increase in demand. When demand increases and supply remains the same, price increases. This concludes this month's installment of Facts You Already Clearly Understand.)
And pretend you were on the other end: you own shares of Horace's when they make this announcement. If the announcement means that Horace's is 50% more valuable (thereby making the shares 50% more valuable), would you sell your shares for anything less than the new price? (Ans: No.) Hell, even if you didn't think the shares were more valuable, the fact that you know a lot of people are going to be trying to buy it might be a good excuse to overcharge.
After reading the editorial, if you go out and buy shares right away, chances are good you're either going to get them at fair market value or be overcharged for them. Chances are quite bad that you will buy them at discount, then turn around to make a 50% profit in the next week.
ADA, you can't listen to the financial media for "hot picks"... or "hot pics," for that matter. They have failed us in both departments. Most of the time they're just trying to sell ad space. Not to mention that if a story creates a crowd, there's pretty much no way you're going to make money off of it.
You're going to have to find a different strategy for picking stocks. I hate to say it, but you may have to think for yourself.
Now you're all, "Sweet! I'm totally gonna make a hojillion effing dollars in the stock market!" and I'm all, "Sweet! How?" then you're all, "By following all the hot tips in Money Magazine!"
Oof.
I want you to stop and think this through. What is Money Magazine's ultimate goal? Or Fortune? Or Forbes? Or the Wall Street Journal? Mad Magazine? Ans: All of those publications are owned by businesses who want to make money.
How do they make money? Ans: They sell ad space; the larger their readership, the more they can charge. (They also sell magazines or newspapers, but the points I'm about to make apply to all media, even free websites and television shows.)
How do they increase their readership? Ans: With cover stories like "Stock Picks So Good They Will Fuck You Up For Life," not cover stories like "Research and Due Diligence Are Key."
In reality, financial journalists are doing research; they're not intentionally lying or anything. But:
- the journalists don't have a crystal ball.
- if a journalist did have a crystal ball, she likely would not be making her money as a journalist.
- if a journalist can't find anything with a really predictable trend (hint: nothing is predictable in finance), she's still obligated to write an interesting story.
- if a journalist actually finds a good stock and gives a SWEET PRO TIP, her story will be indistinguishable from the filler.
Consider this too: suppose that one morning you open the newspaper to the business section (see how much credit I'm giving you ADA? I've assumed you're literate!) and read an editorial or some shit that says, "Horace's has announced plans to sell their products in France, goatee capital of the world; OMG BUY NOW." Holy balls! Sounds like a good time to go out and buy some shares of Horace's!
Of course, this was announced in the newspaper, and there will be lots of people who have read the same editorial. They'll want to buy too. (In Economics, that's called an increase in demand. When demand increases and supply remains the same, price increases. This concludes this month's installment of Facts You Already Clearly Understand.)
And pretend you were on the other end: you own shares of Horace's when they make this announcement. If the announcement means that Horace's is 50% more valuable (thereby making the shares 50% more valuable), would you sell your shares for anything less than the new price? (Ans: No.) Hell, even if you didn't think the shares were more valuable, the fact that you know a lot of people are going to be trying to buy it might be a good excuse to overcharge.
After reading the editorial, if you go out and buy shares right away, chances are good you're either going to get them at fair market value or be overcharged for them. Chances are quite bad that you will buy them at discount, then turn around to make a 50% profit in the next week.
ADA, you can't listen to the financial media for "hot picks"... or "hot pics," for that matter. They have failed us in both departments. Most of the time they're just trying to sell ad space. Not to mention that if a story creates a crowd, there's pretty much no way you're going to make money off of it.
You're going to have to find a different strategy for picking stocks. I hate to say it, but you may have to think for yourself.
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