Year: 2014

But first . . . this chart perhaps says it all about FOX News:

If it’s not immediately clear why this graphic is not “fair and balanced,” click here.  And by the way?  With all the folks rushing to make yesterday’s deadline, and still in process this coming week, it’s not inconceivable we’ll actually hit the 7 million target.  Despite those awful first few weeks.  And despite a concerted effort from the other side to discourage people from buying coverage.

(Amazing, no?  I can see someone opposing a law that requires you to wear seat belts — hey, personal freedom!  Don’t tread on me!!!  But once it passes, actually spending time and energy to try to persuade people not to wear them?  Really?  Seriously?  To me that’s not much different from what the Republicans have been doing here.  What a horrible thing it would be if people who wanted health insurance bought it!  Or if we extended Medicaid in Republican-controlled states to cover more struggling families!  They can do that in Massachusetts — sure.  And in the rest of the developed world — sure.  But not in today’s Republican’s America.  No way!)

And speaking of health . . .

HOW LONG WILL @YOU@ LIVE?

The answer is not guaranteed, but just going through these 13 questions every so often should boost your resolve to be health-smart.  Way better than someone’s nagging at you (though nag at you I will).  At the end of the exercise, Northwestern Mutual offers a raft of other free calculators, some designed to steer you toward the purchase of whole life insurance.

I could not resist taking the financial literacy quiz.  I answered all 14 questions correctly (well, please!) — and scored a B.

They docked me for missing two questions.  The first:

2: What is the best way to minimize losses in your investments when the stock market declines?

Your three really bad choices?

(a) Have a diversified portfolio.

(b) Don’t buy stocks in the first place.

(c) Be the first to sell at the slightest hint of a downturn in the market.

(A)  Is incorrect because — while diversification is always good — if the market declines 20% (say), your diversified portfolio is likely to decline about 20% as well.

(B) Was my choice, because if you want to avoid that 20% decline, this is a guaranteed way to do it.  It’s a bad investment strategy, of course, because over the long run (which can be very long), stocks will outperform all other asset classes.  But that wasn’t what they were asking.

(C) Is actually a good choice in a sense, because, as with (B), if you own no stocks you’ll experience no decline.  But it’s wildly impractical.  What are you supposed to do — sell everything any day the market drops a little?

The best answer would be (D):  “If your investment horizon is long-term, and your investments sensible, just hold on.”  The stock market will always go up and down, but over long periods — and especially in a taxable account — you are almost sure to be more successful paying no attention to market fluctuations than trying to “time” them.

But they didn’t offer that answer.

They said (A) was the right — though it’s clearly NOT a way to avoid a decline in the market.  (It would be a fine answer to this question:  “What is the best way for the average stock market investor to minimize risk?”)

The other question I got wrong was about whole life insurance:  You are supposed to check off which of six really great benefits it provides.  Northwestern Mutual (a good company, by the way) sells whole life insurance.  For 150 years, that’s been its bread and butter.  Not surprisingly, I checked off all six.  I wasn’t born yesterday.

I scored wrong on this because, yes, the first five should have been checked off, but the sixth — “You can change who the policy insures whenever you want” — is incorrect.  It should be “whom the policy insures.”

Bad grammar offends me, too, but it shouldn’t count in a financial literacy quiz.  And of course that wasn’t their real reason for saying I got it wrong.  I had assumed they meant you can change whose financial security the policy assures at any time — i.e., you can change beneficiaries.  What else could they possibly have meant?

Apparently, they were being more literal, to weed out those financial illiterates (of whom there are actually none on the entire planet) who believe you can buy a $1 million life insurance policy on yourself, aged 27, and then transfer it to cover your mother, aged 103, dying in the next room.   Really?  Seriously?

Anyway, I got a B.

I’d still make bold to suggest that you buy competitively priced renewable term life insurance — not whole life — and only to the extent you need life insurance at all.

And I’d ask you this:  For what you pay for the advice on this page, do you even deserve A-rated talent?

HEALTH CARE QUESTION

Sarah: “Dumb question, maybe.  What if people lose their job or change jobs to a company which doesn’t provide health insurance?  Is there a ‘deadline’ that they have to take into account in order to sign up for health insurance?”

☞ Good question.  Nope.  Here and here.  Also, FYI, the next open enrollment period is November 15, 2014, through February 15, 2015.  Republican leaders, the Kochs, and Fox News hope it will be a terrible failure.  They just wish they had controlled more states in time to deny Medicaid to even more struggling poor and low-income “takers.”  Like that lazy woman who got up at 4am to take the bus to work to clean your hotel toilet.

(Too shrill? Then how do you account for the 25 states that have willfully, purposely chosen to eschew all that federal money offered to cover 100%, and then 90%, of the cost of providing coverage to the poor?)

HEALTH CARE PITCH

From my inbox Friday:

I am a staunch Republican, a self-proclaimed Fox News addict, and I didn’t vote for the President. And I’m here to tell you that Obamacare works. I’m living proof.

I’m a chemotherapy patient, and was previously paying $428 a month for my health coverage. I was not thrilled when it was cancelled.

Then I submitted an application at HealthCare.gov. I looked at my options. And I signed up for a plan for $62 a month.

It’s the best health care I have ever had.

So right now, here’s what I want to tell anyone who still needs health insurance, or knows someone who does:

Sign up. Follow the instructions on the website. Apply, and look at your options. You still have time, and take it from me: This is something you want to do.

I wrote a letter to President Obama this past February to tell him about my experience with the Health Insurance Marketplace. I hoped he’d read it, and he did.

I may not be a supporter of the President. But now, I get mad when I see Obamacare dragged through the mud on television.

And even though I regularly tune in to conservative pundits, I’d like to tell them they’re getting it wrong. Obamacare works.

So one more time: If you still need health insurance, you have just three days to get it. Do what I did. Go to HealthCare.gov, submit an application, and pick a plan that works for you.

It just might change your life.

Mark D. Bearden, Ph.D.
Monroe, North Carolina

You no longer have three days.  But as I understand it, if you start the process today, it’s still not too late.  Spread the word.

HOBBY LOBBY QUESTION

If corporations are people, my friend, answer me this: are bankruptcy courts death panels?

NORTH BY NORTHWEST

Even if you’ve never seen the 1959 classic, though surely you have, you will enjoy these three minutes.  (Thanks, Mel!)

Yesterday I posted Gary’s story — Obamacare gave him the freedom to retire early and gave a young person his job.  Both were thrilled.  Jobs and freedom — you would think that would be a good thing.  But the Republican echo chamber continues to double down on how awful Obamacare is.

Never mind that hundreds of millions of people will have greater health care security for decades — no more lifetime caps, no more fear of developing a pre-existing condition that precludes them from switching jobs or from obtaining coverage if they’re laid off.  The only thing that matters is the botched first few weeks of the roll-out . . . since fixed.

Our estimated 45,000 fellow citizens who’ve been dying each year for lack of health insurance?  If those “takers” had wanted health insurance, they could have just not been so lazy.  Or simply not have had pre-existing conditions.

Listen:  No one likes a sarcast.*  But in certain situations, sarcasm is unavoidable.

Mitt Romney didn’t realize Romneycare/Obamacare would destroy the best health care system in the world (well, the 37th best — please tell me you’ve seen the Aasif Mandvi clip) and bankrupt the country (except the CBO says the Affordable Care Act will reduce the deficit) when he signed it into law in Massachusetts.  He said he hoped it might prove a model for the country.  The idea had, after all, sprung from a conservative think tank.  And it has worked in Massachusetts.  But he saw the light the minute he needed to win the Republican primary.

There’s so much to be sarcastic about.  Have I even mentioned Jesus, whom the right have more or less appropriated as their own, and who would surely have favored cuts in food stamps, the lowest possible minimum wage, and denial of Medicaid expansion for the poor — not to mention bombing Iraq and tax cuts for billionaires?

But rather than sink any deeper into this, I give you Chris Hayes from Wednesday, on the latest Republican rant:

It seems so many people want to sign up at the last minute that those who start the process but can’t finish by the stroke of midnight Monday will get a few more days.  This is horrible, say the Republicans — George W. Bush would never have allowed something like this (oh, except he did); Vladimir Putin — the right’s latest role model — would never accommodate customer demand this way (well, no, actually, he wouldn’t).

Worse still, we will actually trust applicants to be honest about whether they had started applying before March 31.  The G.O.P. is not foolish enough to trust the American people.  As you’ll see in the Chris Hayes clip, they mock that notion.  What if everybody claimed to have started the process before March 31 and got health insurance a few days past the announced deadline? Then where would we be? Everybody who wanted to buy health insurance coverage would be allowed to! What a nightmare!

Stop listening to me; watch Aasif Mandvi, if you haven’t already, and Chris Hayes.  The first half of the clip is edifying.  The second — where a woman from the right comes on to espouse the G.O.P. view — is so depressing, as they scream at each other, one really fears for the country . . . until one’s happy gene quickly kicks back in.

Have a great weekend!

*Not a word but should be.

GARY’S RETIRED!

Gary:  “Here’s the brief rundown on my new life.  I have been contributing to my 401k account for decades and it is flush.  My name has been on the lease of a rent-stabilized New York City apartment where I have lived for 29 years (the equivalent of having a paid-off mortgage in the rest of the country).  The only thing stopping me from retirement was the prospect of having to buy an individual health insurance policy, which can be quite expensive for a 61-year-old male.  Obamacare provided that last element in the retirement equation.  My policy, purchased through New York’s state exchange, costs me a manageable $365 a month.  (I had seven policies from which to choose and my primary care doctor is in the networks of three;  I comparison-shopped on the New York State of Health website among those three.)  There is now a 30-something in my old job.  I am enjoying every day of my retirement.”

☞ So one guy gets the freedom to live the life he wants; another, younger, guy gets a job.  Freedom and jobs.  Seemingly, a win/win. Why are the Republicans so against this?

My guess: they’re not. What the Koch brothers, et al, don’t like are the higher taxes on dividends and capital gains (on taxable income above $250,000), which — though still lower than the rates Ronald Reagan signed into law — are what allow Obamacare to offer so much more health care security while modestly lowering the deficit.

MANAGE YOUR RISK – AND YOUR PSYCHE

Ron H.: “I have discovered that I do not have the right psychological makeup to hold speculative holdings that bounce up and down on no news (actually I don’t mind them bouncing up, just down). Although I never invested more than I can easily afford to lose, I have now sold all but a truly trivial number of shares of BOREF.  I am just more comfortable owning index funds and  leaving it at that (although I am sure I will be mad at myself if BOREF becomes the standard on all airlines and soars to the moon).”

☞ Investing only works when you’re comfortable with what you’re doing.  In my case, it makes me crazier to miss a home run than to strike out.  So I diversify widely, even with that portion of my money that I can truly afford to lose.  (Which is a big portion, because I don’t have a car a plane or a boat and I don’t eat.)

Diversifying lets me sleep easy even amidst the strike outs.

Dan: “With regard to your MONT short — you should pleeeez put a stop-loss buy order on it, or at least buy out-of-the-money calls since — as with most stocks everyone is shorting (evidenced by the difficulty in borrowing it) — some enterprising 28-year-old hedge fund trader will come along and start buying as many shares as his position limit will allow . . . overnight, off exchange, any silent way he can . . . in a broker or custodian account he has set up with restrictions on stock lending. Actually, he and a few pals at other hedge funds will do this together because, hey, they all belong to the same sailing club and what a cool way to make some money!  Then, when your broker and that of everybody else who’s short goes into the stock loan market one day to borrow the stock again (they have to do this every day since most brokers borrow money only on a daily basis…or did yours find someone who they can provide your stock to for a longer loan, like maybe as long as you want to be short…or do you even know?) . . .  Anyway, you get the drift.  Stocks with a lot of short-interest usually go up 50-100% in a flash one day before finally crashing so hedge fund guys can get bigger bonuses. Meantime all the shorts, put owners, and call-shorters are wiped out. The time to short a stock is AFTER the short squeeze which, the odds are overwhelming, will come.  I speak from experience, of course, having lost a small fortune — overnight — in a short squeeze.”

☞ Good advice, if you understand it; even better advice if you don’t — because that tells you you really have no business shorting stocks.  My own sense is that short squeezes are not as common as Dan says (“the odds are overwhelming”???).  But that’s no reason not to worry.  I have two short-selling friends who were literally rich one day — serious millions — and wiped out the next.

CHEW YOUR FOOD

Gray Chang:  “Your advice to ‘eat less’ makes perfect sense: look better, feel better, save time, save money, save the environment, and so on. Many folks understand this but have great difficulty putting it into practice.  Here are two relatively easy steps that can help:  1. Sharply reduce or eliminate sugary beverages. Drink plain water, tea, or coffee instead. Reason: Liquid calories do not satisfy your hunger like solid food. Switching to plain water is the easiest way to reduce calories without feeling hungry.  2. Eat mindfully. This means not doing other things at the same time such as working, driving, watching TV, or using the computer or smartphone. Look at the food, think about how it was prepared, and enjoy the taste as you chew and swallow it. This goes both for meals and for unhealthy snacks. Reason: When you eat mindfully, you get greater satisfaction and naturally stop sooner.  It’s fine to enjoy conversation with someone sitting with you at the table, because when you’re talking, you’re not eating. However, you should avoid talking on the phone, as it draws your mind away from what’s in front of you.”

TED

Do you ever get bored?  Who can these days, if she or he has a smart phone?  Even waiting in line is now fun.  But . . . just in case . . . you should keep the new, improved TED site bookmarked.  So many great talks, like the ones I was posting about last week.  (Here is the astronaut who went temporarily blind while outside the Space Station.)  They even now have playlists, and a “watch later” feature, which help impose some order on the otherwise potentially overwhelming set of choices.   All free.

MONT

If you’ve never shorted a stock, don’t start now.  For a whole lot of reasons, it’s a particularly difficult, dangerous way to make money.  And the problem with buying “puts” instead is that — although they do, crucially, limit your loss to whatever you bet — you often pay a wide premium for that protection.  With puts, you not only have to be right, you have to be right by enough to more than offset that premium.  And your being right has to be reflected in the stock price before your put expires.  That last detail is particularly galling.  You were right!  You put your money where your mouth was!  And, sure enough, the stock did collapse!  But only three days after your puts expired, meaning that you lost your entire bet.  God I hate that.

That said, I’d give pretty high odds that shares of Montage Technology will be lower at some point.  Being blessed with money I can truly afford to lose and a certain amount of experience with short sales, however rueful, I have shorted MONT and — on a lark — bought wildly-out-of-the-money puts.  So — full disclosure — I am very much not a disinterested party here.

That said, I’ve found few investment managers as talented, thorough, or cautious as Aristides’ Chris Brown, and — while this could easily fit into the “famous last words” category, because no one’s right 100% of the time — he sure thinks MONT is headed lower.  As per this extensive post on Seeking Alpha.  So if you are that rare reader who has the resources and experience to take risks like this, well . . . misery loves company.  (Ameritrade had no shares available to short yesterday but Fidelity put through my order fine at $20.23 a share, and — because it’s hard to borrow — is currently charging 9.5% interest on the position.)

THE SELF-WINDING CELL PHONE

After a long day of cell phone use you may not be sweaty, exactly, but you’ve expended finger power.  Why waste it?  Reader George Mokray links us to technology that may allow you to charge your cell phone by typing and swiping.

THE SELF-PROPELLING SOLAR PANEL

George links us as well to this update on solar roads — filled with enthusiasm, which I share, but devoid of numbers, which I would love to see.  Like: what would it cost to make, install, and maintain these things?

(One of many costs would be transporting the panels from factory to road bed.  Some people imagine stacking them on rail cars designed to expose them to the sun as they travel, helping to propel the train.  This strikes me as a little silly, adding potentially just a few days of power generation — and then only from those panels exposed to sunlight on the journey — when the panels themselves are meant to generate power for, I hope, decades.)

(Another fun but I assume silly idea is that, once installed, the road ways would even generate power at night — not from moonlight, but from headlights.  Yes, okay, sure: but a meaningful amount?)

Here’s one attempt at some numbers, with each 12-foot square costing $10,000 (so $17.6 million per mile for each four-lane roadway), and lasting 20 years.  (But will they?)  The authors — who are in the solar roadway business — conclude that solar roadways will make sense.  I found their FAQ fascinating but not entirely compelling.  (They calculate that the aforementioned $17.6 million mile would produce enough electricity to power 428 homes — $41,000 per home.)   But completely intriguing.  Especially starting out with new roads being built in sunny climes.  The solar roadway replaces power plants, replaces transmission lines (they are transmission lines, running right up to your driveway), replaces the not inconsiderable cost of traditional pavement, and eliminates the cost of fossil fuel that might otherwise have been burned to produce the same power.

To say I am no expert in any of this would barely begin to describe my inadequacy.  But I love it anyway.

THE RUSSIANS

Ken Doran:  “I commend your effort to spotlight how the Ukraine situation looks from the Russian side; I don’t think very many in the West are doing that as much as we should.  I commend also this Peter Beinart article from the Atlantic for valuable perspective.  I would add a point that Beinart does not emphasize: Russia has large and crucial military assets in Crimea, and the potential of that becoming part of a western-oriented, NATO-friendly Ukraine must be terrifying from that side.  I believe of course that Ukraine would be wise to attach itself to Western Europe, with democratic and economic systems to match, and should be able to do so.  However, what we are seeing here is less a recklessly aggressive Russia than a wounded and frightened one.  We need to be smart about this dangerous situation; I am optimistic that President Obama and Secretary Kerry are sound on this, but they need more help.”

This is getting almost surreal.  Yesterday at TED I got to shake hands with Will Smith, sit next to a paleooncologist — she studies cancer in mummies — watch a cake being 3D-printed with sugar “ink,” listen to Jimmy Wales describe his project to put Wikipedia within reach of 500 million Third-World children (Jimmy Wales, Wikipedia tells us, founded Wikipedia) . . . listen to NSA Deputy Director Rick Ledgett respond to Edward Snowden’s remarks from Tuesday . . . hear Ray Kurzweil (himself!) predict that within 20 years we’ll access the Cloud via nanobots in our brains (at which point “know-it-alls” actually will) . . . and Mellody Hobson‘s story of arriving early with then-Senate-candidate Harold Ford, Jr., for an editorial board lunch and being asked where their uniforms were (being black, it was assumed they were the cater-waiters, not the candidate and chair of the Board of Trustees of the Ariel Funds) . . . learn what would happen if a ball were pitched at 90% of the speed of light (it involved a mushroom cloud) . . . hear from a convicted murderer whose 19-year incarceration included 7 in solitary confinement but whose home base is now the MIT Media Lab . . . and from a man who four weeks earlier had completed a 105-day 1,795-mile round-trip walk from the edge of Antarctica to the South Pole . . . and lots more.  (For example, I now know way more than I did about parasites, fireflies, and black holes.)

But yesterday’s highlight for me was going up to this troubadour — a musician so cool you might think we’d both just vanish when we shook hands, as matter met antimatter (look at him! now look at me! I went to Harvard Business School! he used to fake his death every Halloween!) — and my saying, “Hey, you were great!” and his saying, “Andrew Tobias’ Managing Your Money!”

Apparently, he had had it on his Apple ii when he was 12.

I just had to tell you.

#

Daniel:  “My kids and I enjoyed the French towel dancers you linked us to; and I loved 2Cellos so much that I went out and bought both of their albums.  So, now it’s my turn to contribute to the exchange.  Herewith, I give you a TED talk that has truly been life changing for me.  Well, okay, not changed in a big way but changed nonetheless.”

So today at TED we had cosmologists and philosophers speculating on why the universe exists . . . a conversation between Charlie Rose and Google co-founder Larry Page . . . a talk on virtual and augmented reality by NFL Punter Chris Kluwe . . . a hot fashion New York model tell about her start as a beauty pageant winner in the Philippines (and coming out on stage for the first time as transgender) . . . Bjorn Lomborg endorsing a carbon tax . . . a progress report from the founder of Khan Academy (which has now touched 140 million students) . . . and — among much else — an MIT researcher in short pants (so we could see his prosthetic legs), talking about his goal of an end to disability, mentioning the exo-skeletons that may become available to the rest of us (finally, I will be able to run a 4-minute mile), and concluding his talk with a photo of a ballroom dancer who lost her leg in the recent Boston Marathon bombing.  He and his team were able to fashion a new one — and out she and a partner came to dance for us on that leg, beautifully, with tears in her eyes and ours.

What a world we live in, if we don’t screw it up.  (Larry Paige talked of leaving all his money to someone like Elon Musk, whose plan for manned space flight to Mars would effectively make that planet “humanity’s backup.”  You know:  In case we ever destroy this one.)

DRUG PRICES

John Seiffer: “In regards to last week’s posts on Crazy Drug Prices, there’s a great book by TR Reid which I may have recommended to you before: The Healing of America.  He took his shoulder with a long-term injury to every industrialized country plus India and reported on A) what they recommended and B) how the healthcare system works in that country.   No surprise, all but India have universal health coverage; and all have better health outcomes and lower cost per capita than the US.  Big surprise (to me anyway), they all had different systems, different mixes of private/government/insurance that are involved. But one thing all the ones with private insurance had in place was a limit on the profit that insurance companies could make providing basic health insurance. I think that is at the root of our problem in the US. As much as I like Obamacare (despite my own premiums almost doubling) I don’t believe it will even address the problems of the insurance companies’ contribution to the mess.   Another surprise — India was the only place that made his shoulder feel better.”

So, I’m at TED.

In the opening talk, Nicholas Negroponte suggested that 30 years from now, if you wanted to learned a language, you’d take a pill.  By the next day, the vocabulary and grammar would have been absorbed through your bloodstream and delivered to the correct parts of your brain. Mon dieu!

We heard from a six-month resident of the International Space Station what lift-off and re-entry were like, but also how to overcome your fear of spiders and what it was like to go temporarily blind while outside on a space walk, with no way to rub your eyes to clear your vision when you’re in a space suit.

I saw some really interesting slow-mo cockroach video . . . heard Stewart Brand’s progress report on de-extinction (before too awfully long the woolly mammoth may roam the tundra once more) . . . heard encouraging news on wind and solar from Amory Lovins and on fission and fusion from Taylor Wilson (19) and plasmophysicist Michel Laberge, respectively.

Edward Snowden appeared from an undisclosed location in Russia.

I had dinner with a wonderful young Egyptian-American who has dedicated his life to repudiating the approach of his father.  (His father blew up the World Trade Center.)

Also with a Brit who’s spent the last two years in Kenya restoring sight to the blind.

There are hundreds of TED talks available on-line.  Enjoy!

THE RICH ARE DIFFERENT FROM YOU AND ME: THEY ARE ACCREDITED INVESTORS

Matthew Gattuso:  “What does a wealthy persons portfolio have that isn’t available or can’t be had by your average person?  What I mean by wealthy is a millionaire or white collar individual making in the 100s of thousands range and average individual would be below that.  I would think an example would be private equity or venture capital investments? Is that it or is there more?

☞ Well, maybe the most important things — even though this isn’t what you meant — are the wealthy person’s ability to diversify and to take risk.  If you’ve got $3 million, you can spread it across different asset classes and have a chance to protect yourself against, say, deflation OR inflation.  And still have something left for smart speculations to be made only with money you can truly afford to lose.

More to your point, there are enticing mutual funds — GENIX and GONIX are two I like (half in each, hold for the long-term) — that require high minimum investments.  And there are, as you say, hedge funds, venture funds, private equity funds with, often, much higher minimums than that.  And specific individual deals you make directly — you buy a strip mall or you invest in an outfit that makes homes more energy efficient or you put up the money to launch a new fashion line or in an off-Broadway show.

Of course, if you’ve seen “Blue Jasmine” (see it!  I saw it on the plane out to TED), you know this is not always a good thing.  And in one of my books I had a chapter called, “Trust No One,” with example after example of ways one could lose 100% of his money, as I several times did, in deals unavailable to the average guy.

So really, I’d put more emphasis on the first paragraph, above, than the second.  Over time, a good non-market-weighted index fund of the type I describe in my book is likely to do as well for you as — or quite possibly significantly better than — a lot of the investments available only to the wealthy.