Sales people asking you if you want insurance at a counter leans on your anxiety and often leads you to end up buying it. Should you? Well, if it is rental car insurance, Vox says no and does so persuasively, here: Why rental car insurance is usually a rip-off – Vox.
Two other places I see people wasting money on insurance is toys and video games. Toys R Us used to push insurance on me all the time. Before you buy it, consider how your child plays with a toy. Chances are, the insurance doesn’t buy you anything. If it is the only toy you are going to buy your child and the only one they will play with for a long time, then sure. But most children will play intently with a toy for awhile and then the interest drops.
Likewise with video games. Perhaps your child will play with it for a year and it will be their favorite game. Most times, I’ll bet they play intently for awhile, and then the interest drops. During that time, the chance of damage is very slight.
The insurance for toys and video games is low, but it buys you next to nothing. If the store said: do you mind if we charge you an extra 5-10% on this item, you would laugh and say “no!”. Yet that is what they are doing with insurance.
Skip it and use the few bucks to treat your child to a sweet or yourself to a coffee or give it to someone in need.
I didn’t expect a positive review of Janet Yellen in the wsj, but this piece, linked to below, is really positive. Here’s a sample:
Steering central bank policy depends more than anything on assessing where the economy is heading. Yet, central bankers, surprisingly, are seldom picked for their forecasting acumen. More often they are former public servants, bankers or academics.
Then there is Janet Yellen.
Her forecasts as a Fed official have been strikingly accurate, as the release of 2009 transcripts to the Fed’s deliberations make clear. If she worked on Wall Street, she’d be a “hot hand.” This does not mean as chairwoman she is necessarily right; but it does suggest her forecasts deserve the benefit of the doubt.
via Janet Yellen, Forecasting Ace – Real Time Economics – WSJ. A really good piece.
Posted in money
Tagged economics, money, WSJ
The one company? Apple. How dependent are the hedge funds? According to Bloomberg Business:
A group of companies representing the most popular long positions for hedge funds is up just 0.2 percent in 2015, compared to a 2.3 percent gain for the Standard & Poor’s 500 Index, data compiled by Goldman Sachs show. A 19 percent year-to-date increase for Apple, which is owned by one in every five hedge funds and is a top-10 position for 12 percent of them, has provided a needed boost, the firm said.
That’s a bad thing. A similar thing happened in Canada when fund managers held large holdings in companies like Nortel and RIM. It didn’t end well.
For more, see this: The Performance of Many Hedge Funds Just Comes Down to Owning Apple – Bloomberg Business.
This came out awhile ago (As Boom Lures App Creators, Tough Part Is Making a Living – NYTimes.com) but if you are thinking about writing apps for a living, then you should read it.
If you have a great idea for an app and a passion to develop it, you should. Just finish the above piece in the Times and keep it in mind.
You’ve likely heard lots about bitcoin. You may have heard of some of the other alternatives, such as dogecoin. If you finally decided: “I should try and understand more about this”, I recommend this article in the Washington Post. There is lots changing with this technology, but this will give you a good grounding.
I think bitcoin is a highly speculative financial instrument and I’ll continue to think it is a very risky thing to participate in. Still, it looks like it is not going away, and so I think it’s time to share some of the better pieces on the topic.
Over at bloomberg.com is a very simple explanation of how the subprime problem works it’s destructive effect:
Joe Ripplinger took out a $184,000 mortgage in 2006 and makes his payments every month. Now he owes $192,000. The 66-year-old Minneapolis house painter has a payment- option adjustable-rate mortgage. It allows him to write a check for $565 a month even though he owes $1,300. The difference is added to the mortgage, and when his total debt reaches $212,000, or after five years have passed, he said his monthly minimum could jump to about $2,800, which he can’t afford. “We’re barely making it right now,” Ripplinger said. The estimated 1 million homeowners with $500 billion of option ARMs are beyond the help of interest-rate cuts by Federal Reserve Chairman Ben S. Bernanke. While subprime borrowers face an average increase of 8 percent or less when their adjustable- rate mortgages reset, option ARM homeowners may see their monthly payments double after their adjustments kick in. “We call them neutron loans because they’re like a neutron bomb,” said Brock Davis, a broker with U.S. Express Mortgage Corp. in Las Vegas. “Three years later the house is still there and the people are gone.”
ARMs are fine for speculators who know what they are doing and can handle the risk. For people like Joe Ripplinger, they are anything but fine. And there are alot of people like him out there. See: Bloomberg.com: Exclusive
The whirlpool that is the sub-prime mortgage disaster in the U.S. continues to get bigger and suck more things into it. But not everyone.
At kottke.org, the excellent Jason Kottke has some good references to smart people who have managed to see the problem coming and avoid it (for now). For more details, see his entry: Yay! Today is sub-prime mortgage day on kottke.org, I guess. The… (kottke.org)
Also, check out the site n+1 — he referenced earlier — that has an interview with a Hedge Fund Manager that not only talks about this problem but problems in the world of high finance generally. An eye-opening interview.