Apple Should Ditch the iphone??!!

Here’s a fun trip in the wayback machine: in March of 2007, technology columnist John Dvorak had some critical comments about the soon to be released iphone such as:

“its phone, even if immediately successful, will be passé within 3 months” and “If it’s smart it will call the iPhone a ‘reference design’ and pass it to some suckers to build with someone else’s marketing budget. Then it can wash its hands of any marketplace failures.”

There’s clearly an investment-related lesson here…

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Another Useless Prediction

On May 7th, Jeff Mortimer, CIO of Schwab’s investment management arm described the stock market low of March 9th as a “textbook bottom.”

Shame on you, Jeff. How hard is it to look back and see a bottom after a 36.4% two month gain (on the S&P 500)? And how do you know that the market won’t retreat to that level again? And what exactly does “buy the dips” mean anyway?

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Inflation: If You Wait Until it Arrives, You’ll be too Late

Despite the current benign inflationary environment, inflation poses a threat to your financial well-being as great as that of market volatility.

And if you think you’ll be able to see it coming and react fast enough to protect yourself, guess again. Like stock prices and interest rates (and every other financial or economic variable), inflation is unpredictable.

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Institutions Switch to Indexing

The investment strategy of indexing has been around a long time but in the wake of the abysmal performance of actively-managed funds in 2008, some very big institutional investors are adopting the strategy (again).

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Michael Jackson Dies Awash in Debt

The death of superstar Michael Jackson is terribly sad on so many different levels. Particularly, his insatiable desire for the material trappings of success: Jackson reportedly owed over $300 million and was spending $30-40 million more each year than he brought in.

Clearly, “wanting less” is a much better prescription for contentment than “getting more.”

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Jon Stewart v. Jim Cramer (Stock-Picking is a Loser’s Game)

Jon Stewart recently called out CNBC’s Jim Cramer on his stock-picking calls in the wake of the 2008 financial meltdown. The lesson here is that buying individual stocks subjects you to massively more risk than owning “the whole market” via low-cost index funds (to the degree appropriate for you). Does anyone really need more risk than the overall market offers? I don’t think so.

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A Primer on TIPs Bonds (Treasury Inflation-Protected Securities)

Inflation-adjusted Treasury bonds (TIPs) offer investors a nice inflation hedge, but they aren’t without risks. Namely, their total return will be affected by prevailing interest rates, supply and demand, and expected future inflation (not just actual inflation). Lesson: while appropriate in many portfolios, they aren’t a “silver bullet.”

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Don’t Bet the Farm on Bonds

Bonds are an important piece of most portfolios but the “great recession” has many investors moving money to bonds based on recent past performance.

The past isn’t necessarily prologue: the current interest rate environment and potential future inflation could cause this strategy to be “performance chasing” of the worst kind.

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“Forced IRAs?” Let’s Give People a Choice First

President Obama recently asked for $1 billion to create a program to force people (via their employers) to save their own money in IRAs. The $1 billion in question is “not an exact figure but we want to make sure we have enough.” (my words, but pretty close).

Here’s an idea: why not pass an extremely easy piece of legislation allowing people to contribute to IRAs (willingly) with the same tax advantage that 401(k) plans enjoy? We might have a pleasant surprise with the results and (wait for it…) we could SAVE the $1 billion…

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Which Side of His Mouth Should We Believe?

Nouriel Roubini (the economist known as “Doctor Doom” for his recent and accurate prognostication of the financial crash) said in a recent article that “investors should stay away from risky assets and the equity markets in 2009.”

Later in the same article it was noted that “Roubini still holds 100% of his retirement assets in equities, as he believes the long-term outlook for equities is positive.”

When it comes to free advice, I guess you get what you pay for.

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