It’s called credit, not free stuff.

Some people are pretty upset about the recent rise in credit card rates.  I can understand how this would be a major drain on finances at a time when money is tight.  I understand it as a legitimate worry.  Still, I can’t help feeling that it’s a situation that you bring on yourself.  True, the credit card companies make it really easy to slip into debt with them.  But that’s exactly what it is – debt.  You owe them money.  They have the right to charge you interest.  And they have the right to change those rates, or sell that debt, to someone else.

Personally part of my view of the situation may be driven by the fact that I don’t pay credit card interest.  I don’t let my credit card balance accrue.  I use credit cards, but at the end of the month, I pay what I owe.  No interest charge.  Why do I use credit cards then?  Convenience.  Perks.  Cashback bonuses or airline miles or other things that accrue to my advantage because that credit card company wants you to spend.  They earn money through your debt’s interest.  That’s how it works.

But you don’t have to take part in the system.  Debit cards are now just as easy to use as credit cards.  The money can come directly from your bank account with no interfereing rates in between.  Or, you could actually budget your paycheck.  You know, don’t spend money you don’t have.

I don’t mean to come down hard on anyone.  Many of us have basic needs we are struggling to meet.  Many of us feel that big business and rich concerns have overshadowed our own freedoms.  I know it’s hard, very hard at the moment.  But I look at other places, or at other less fortunate times in this country, and I see plenty of people who made do with less.  And that makes me question exactly what it is we’re complaining about.

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Thank goodness for Belgians

I don’t know much about this small European country.  I know even less about Bavaria.  And I have never tasted what I would call an ‘authentic’ brew of either.  But if you asked me to pick between Anheuser-Busch and InBev, I prefer the taste of the latter.  Because of this, I have no hesitation in saying I’m glad A-B sold out.

It’s true that there will be some negative consequences for Saint Louis as a result of the merger.  Jobs are going to be lost.  A city that has been on the decline for some time is most likely going to sink further into its depression.  Philanthropic dollars of the merged company will most likely be spend elsewhere.  While the Budweiser name might remain, the Anheuser-Busch tradition will be one step further removed from that trademark.

Still, all is not lost.  The Clydesdales will most likely still be around for your visiting pleasure.  There will still be free samples given out at the brewery.  The names of Anheuser and Busch will still continue to adorn public buildings for some time.  And, finally, there may be a beer on the market available almost anywhere in the US that I actually like.

Swindle them blind.

There’s a nefarious evil pervading our culture that I was unaware of until today.  It’s worse than the dryer monster that steals one sock from a matched pair.  It’s worse than the Fuzzo Makers who stuff lint into the pockets of innocent passers-by.  It’s even worse than coins that feel like dimes in your pockets, but somehow turn themselves into virtually useless pennies on the way out.  The Evil?  The U.S. Treasury, a last stanchion against the rights of blind people everywhere U.S. currency is held.

While I personally have no problem with our current bills, even if they are in pastel tints, I can see the problems they might cause for someone who can’t see.  Checking the change you receive (and let’s face it, everyone makes mistakes, even cashiers) becomes a problem.  A simple comment of ‘You only gave me ten” could lead to self-doubt and possible self-esteem issues.  In addition, it makes people easier to cheat, leading those people perhaps into bitter, sheltered lives.  And nobody likes that, except for swindlers.

Honestly, it surprises me that the question hasn’t come up earlier.  Sure, the current suit started in 2002, but with all the access ramps for wheelchairs and other equalizing activities going on in the 1990s, you’d think someone would’ve spoken up.  What really irks is that the Treasury hasn’t actually just insituted something new that addresses this problem.  I mean, you’ve had 6 years.  You knew you were going to lose.  It could even be a way to save some of the loads of money you’re losing on minting new coins, if you planned it out right.  So get to it!

That makes me think – there should definitely be a movie (or spoof?) about a blind man who breaks a money laundering/counterfeiting ring.  Kinda like that blind swordsman Asian movie, with less blood and more spy.  I definitely see the blind guy doing the slide across the hood of his car at least once, possibly missing it or falling off the edge if he does it more than once.  Oh yeah.

What the Aussies are doing right.

I read this article this morning about the true value of the U.S. penny.  According to the article (I could not find the exact numbers myself from the U.S. Mint), it costs 1.26 cents to make a penny.  This number is down from the end of 2007 figure, which was 1.67 cents.  Still, it costs more to make the thing than its actual face value.  In 2008, the mint will produce 1,536 million pennies, according to the Mint.  That’s $3,993,600 we’re losing, annually, just from making pennies using the current method.

Congress and the Bush administration are busily trying to come up with a new, cheaper method for penny making, as the value of metals increases.  I have a better idea – get rid of the penny.  We would save about $19 million this year, which could be used to offset the debt we’re incurring from producing nickels.  Australia did it in 1991, abolishing both the 1 cent and 2 cent coins from circulation.  Vendors were given the option of rounding prices up or down to the 5 cent mark.  They haven’t economically drow0ned – we should be able to, as well.  It might even force some of our retailers to gain a better grasp of basic math. Better yet, let’s kill the nickel, too.  Bigger coins don’t cost more than their value to make, so why not kill the little ones?  Will we miss them?  Really?

Old Dog, New Tricks

    So, I thought I would write a little bit about how the big money-manager guys play the investment game, at both the more immediate manager level, and the more removed school endowment level.

First, the more immediate manager level.  These are the guys who work for mutual funds or other specific types of money managers.  They operate on one basic principle: knowledge = good investing.  Basically this means a particular mutual fund or other mixed organization of individual stocks has a specific, narrow investment area.  This could be one industry, or country or region, or one category of goods such as commodities or raw materials.  And these professionals know everything about that area.  They have strong contacts with a variety of professionals working at companies in that area.  They know the latest and greatest developments that are coming.  Most especially, they are watching the supply and demand chains for a variety of corporate entities related to their area.  Basically this broad spectrum of knowledge in a narrow part of the investment pie is supposed to help them make intelligent and informed decisions about what companies will do well and should be invested in by the larger portfolio.  Of course this sometimes breaks down – even the best, most informed guesses are not correct.

How this relates to you:  These are the same types of people you will be working with to manage your money, so this does give you a better sense of how they operate and why they can probably do a better job picking stocks than you can.  But how do you really tell the difference between one service provider and another?

On to the next topic: how endowments pick their money managers.  Basically, endowments have begun to follow the philosophy of judging their managers not on returns, which can be misleading, but on something less quantifiable – the way they think.   The idea here is that an intelligent and informed manager will make an advantageous investment decision 8 or 9 times out of 10.  In addition, the same philosophy of knowledge = good investing is used to pick managers.  Opinions are collected from other investment firms, previous co-workers and associates to individuals within the firms, and other investors in the firm.  Most importantly, face-to-face meetings are arranged so specific questions or issues can be addressed, and the general intelligence and knowledge of the group be evaluated.

How this relates to you: Obviously, the majority of the evaluation techniques are not open to the individual.  How then, if past performance is not always a valid indicator, can you choose one specific investment firm over another?   Key principles remain the same.  More knowledge means better investment judgment, and a certain amount can be discovered publicly.  Check out the key individuals in a firm – read articles about them.  There are tons and tons of publications about which industry or area should be invested in – check some of these out, and see how they compare to your own evaluation of current market conditions.  Absorb as much as possible in areas familiar and comfortable for you, and see where ti takes you.  Of course, investing in a range of industries is important, but if you know more about one area, that’s where your particular knowledge is going to give you an edge.  Don’t be afraid to use it by weighting your portfolio in that direction.

Big Change

I was reminded by another blog that money is something we think about alot today. Specifically how much money. I would like to turn that idea on its head a little bit today, and instead as the question of how big money.

Now, some of you might say, all dollar bills are the same size. True. However, there are interesting discrepancies of size if you look smaller. A one-dollar bill is smaller than all coins, at least in the first two dimensions. All coins have more depth than the papery dollar. However, a dime has greater monetary worth (I won’t argue intrinsic value) than a penny, but a shorter diameter and shorter depth as well. Why should this be? And why is a quater almost exactly the same size as a dollar coin, whether silver or gold? That’s just silly, especially considering that the size of coins and thir shape and outer ridges are supposed to help identify individual coins. Don’t tell me we made the dollar the same size as a quarter to make things easier for blind people.

Which brings me to my all-time favorite coin, the largest of the pack – the half-dollar. This wonderous little monster is adorable in its size.  Yet nobody uses it.  Is it because we’ve moved to carrying less change, and thus have smaller pockets?  IS it because nothing is worth 50 cents anymore?  Or was it never in wide circulation?  Why even have a half dollar?

One of its most interesting uses is in soccer matches, to determine who gets the first kickoff.  This is because soccer is played on grass – you can use a smaller coin, like a quarter, but it’s much more difficult to find.  The nice, big half-dollar shows up easily between the blades.  Unfortunately, because of the large surface area, the half-dollar is also the most unfair coin.  The dime, because of its tiny surface area and thus much smaller additional weight on the ‘heads’ side, is the statistically fairest.  I learned that little factoid direct from Michael T. Weiss of Pretender fame.  Anyway, conclusion is – if you want a fair toss, use a dime.  Even if you lose it afterwards.  Who can’t afford to lose 10 cents once and awhile, anyway?