Darwin

We’re Installing New Windows and the ROI from Energy Savings is HORRIBLE

As a diversion from all the government shutdown lunacy, consider a very common home upgrade in America – full window replacement.

We’re putting in new windows. Our home is about 15 years old and the original windows are the typical lousy builder’s grade from that period. Many have since cracked or have condensation between the panes and the manufacturer is out of business so no replacements under warranty. I know in the summer we’re losing money on cooling costs and in the winter, there’s a ton of money going out the windows – literally. I can feel and hear wind whistling through some of the windows when it’s real windy and at night I can feel the draft. That being said, for such a large undertaking like a full window replacement, you’ve gotta run the numbers, right?

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ROI on Window Replacement

The reality is that even though the windows are terrible and new windows would be much more efficient, I will never make my money back on this “investment”. Let’s be honest. Most people want new stuff and justify it to themselves by claiming they’re saving all this money on energy. Buying a new Tesla? You’ll never break even if you drive it for 100 years vs just buying a small, cheap fuel-efficient conventional vehicle. Putting solar panels on your roof in the Northeast? Doubt it. We have a family member that paid thousands of dollars to convert their house from electric to gas – and they’re moving within a couple years. Horrible, total waste of money.

So, let me show you my assumptions and calculated ROI (return on investment) and NPV (net present value) – both are negative.

…Continue Reading what a Horrible Investment New Windows Are.

“Expert Advice” on How Much Retirement Savings You Should Have At Your Age

There are a lot of articles and financial firms that give varying forms of advice on how much retirement savings you should have at a given age. Recently, there was a report put out by Fidelity, a major 401(k) player outlining their advice in the table below. We’ll take a look at their suggestions and then I’ll share some thoughts on why broad cookie-cutter advice may be way off (primarily because their assumptions are wildly unrealistic for most Americans today) and how to appropriately plan for your retirement needs based on your individual circumstances.

According to this popular article at MarketWatch, based on your current salary, you should have about 1X salary saved by 35, 2X by 40, 3X by 45 and so on. This may seem like a laudable goal, but some of the assumptions leave something to be desired. First off, they assume you continue saving at the prescribed rate until age 67. Who’s Really Going to Work Until 67? – First off, many Americans actually NEED to work well into their 70s because of the financial situation they’re in. But that doesn’t mean they have the choice to just keep on working their current high-paying job. Someone half their age, overseas, or a robot will be doing it…

Continue Reading Why Most Retirement Advice is Wildly Unrealistic

Why Raising the Minimum Wage is a Terrible Idea

The biggest problem with Americans today, and the politicians that pander to them, is that they make choices based on emotional effect and not on data. This is why there’s no outrage over the budget-busting compensation of public sector employees like teachers, firefighters and police (yes, they all do important jobs, but the free market should dictate their salaries and compensation, not union thuggery and fleecing of the taxpayer), why nobody cares about all the stupid stimulus bills that had no impact other than to further increase our national debt (and hence, debt servicing costs), why people think price gouging is bad (gouging is GOOD) and of course, why Americans love a minimum wage. To add insult to injury, Obama used emotional platitudes to highlight why America needs to raise the minimum wage yet again. It is a terrible idea; here’s why:

Forced Overpayment for Labor – I’m sorry, but someone should be paid what they’re worth to the employer. If it’s an absolutely zero skill job that just requires a body, why is the government mandating you pay them any set wage rate at all? Think like an employer. Consider a dishwasher. There’s no prior experience required, no special skills and easily replaced. Many restaurants use illegal immigrants for this type of role anyway, but let’s say they’re by the books and paying the full wage, payroll taxes (people forget about all the additional expenses business incur when something like this is proposed) and all the other costs associated with employing someone…

…continue reading Why Raising the Minimum Wage is a Terrible Idea

Committing Financial Adultery – Lurid Examples, Gray Areas and Your Stories

Financial adultery is a newer term you’re probably going to be hearing a lot more about. This recent survey indicates that HALF, yes, half the people surveyed have committed financial infidelity. As the economy languishes and people continue to struggle with low-paying jobs and increasingly burdensome amounts of student debt, this notion of couples hiding money secrets from each other is becoming increasingly common. Just within our circle of family and friends, we’re aware of several stories along the continuum from outright financial adultery or perhaps innocent sins of omission. I’m curious what your take is on these situations and what stories you have to share. Since some people we know read my posts, I’ll try to anonomize the accounts as much as possible, but here we go:

Wife Hiding Credit Card Debt on New Cards – So, we have a friend that confided that she’s been paying off credit card bills for various department stores and whatnot with money from her job. She pays all the bills so he has no idea. She said he’d be mad if he found out about the credit card bills she’s run up shopping. The unfortunate thing, I assume, is that since he’s a relatively high earner and probably putting money away from his salary into various accounts, they could probably be using his extra money to just pay off the credit card debt if he only knew about it. Think about it, rather than earning, say, whatever the stock market does, or 1% in a savings account, his wife’s income is paying probably 20% + on credit card interest.

… continue reading more real-life examples of financial adultery and share yours!

THE ONLY STOCK I’VE BOUGHT IN MONTHS – AND IT’S A BEAST

I haven’t been a very active “trader” in the past few years; I’ve started to focus more on low cost investing (if you’re looking to save money on trading costs and get a $100 bonus to boot, OptionsHouse is the way to go-use link for promo code), the occasional market inefficiency trade (pairs trades, hedging gas prices, etc) rather than trying to beat the market with picking stocks since the reality is even the best and brightest in the world (while being paid millions per year) cannot do so over a prolonged period. As such, I’m the first to admit I’m a mere mortal and don’t focus much effort on individual equities like I did in my earlier days. However, occasionally, I pick up on a secular trend I see. This would be something larger than a typical “hot stock” or “tip”, but rather an emerging trend in society, a company with a lock on a truly innovative product or something along those lines. Examples include the 200%-500% gains I’ve made over the past few years in stocks like Apple (I sensed the iPhone would change the world, and it did), Netflix (back when they were the only game in town and before Reed Hastings drove them into the ground with dumb pricing and strategic decisions), Chipotle (when they were opening up stores on every corner) and BIDU (the Google of China). That’s not to say I haven’t had my fair share of losses to balance them out, but you get the point. If you pick some real game-changers, or even just one, it may well be worth hanging on to.

The Future is 3-D Printing

Starting this summer, I’ve been routinely tweeting about 3-D printing and how it’s a real gamechanger. I’m not going to rehash what I’ve written, tweeted previously and it’s all laid out much more eloquently here – Makers: The New Industrial Revolution. But I view this as a revolutionary technology that’s finally ready for the masses (“Rapid Prototyping” and 3D printers have been used in industrial settings for decades now but they used to cost 6 figures; now home hackers and high school science clubs are buying them for a few hundred bucks). All the time, I think of something that I’d love to have but isn’t widely demanded enough by the masses for someone else to have put it into mass production. Now, you can copy your kids’ friends toys, create your own tools, design your own jewelry, fix your own stuff rather than buying new again and they’re even making guns which is kind of scary (not just because they’re guns, but they probably don’t function very well for the owner just yet either). The bottom line is that the future is now for 3-D printing and this stock is up 285% in the past year.

Continue Reading on How I Invested in 3D Printing

How to Invest in 3D Printing

Robots and Automation Are Taking American Jobs – Think Your Job is Safe?

You’d think the same headline would be the prominent theme of every year since the 1800s. After all, we’ve seen a decline in the need from everything from lamplighters once electricity was invented to farm workers once farming equipment, tractors and trucks came along. However, for various reasons throughout 2012, there’s been a steady debate brewing over modern day robotics and algos overtaking jobs that were once unthinkable.

Where Employing Humans Makes No Sense

There are a lot of parts of the economy where humans continue to perform functions that can and should be performed completely by automated means. By continuing to employ humans, it’s just an unnecessary cost on society and frankly, prevents people from being freed up to do something that adds more to US productivity, output, and possibly, their own career/income. Here are some examples:

Toll Takers – I don’t know what they call it where you live but in the Northeast, we have an “EZ-Pass system which allows your car to drive straight through an overpass that detects your car’s pass. Usually, there are a couple EZ-Pass only lanes and then there are a few human operated lanes. It continues to confound me why they still exist. And what is even more perplexing is why Americans still voluntarily sit on each toll line 5 minutes or more instead of flying through an automated lane. I could see an international traveler or very infrequent driver that doesn’t bother, but for 99% of drivers, why would you wait? Aside from that, the people performing these jobs aren’t really using their potential, at all. They stand in a booth all day taking a ticket and handing out change. They are often subject to insults and rude behavior, but more importantly, they are subject to hazardous fumes for a lifetime that must surely result in a higher prevalence of health issues later in life, and they are paid above-market rates for completely non-skilled labor due to their labor arrangement. They don’t really help with anything else outside of toll-taking. For instance, years ago, my car broke down going into the toll booth. What great timing! My car was stuck right at the damn entrance to the booth and I looked at the guy and shrugged, like “what now”? I said, “you wanna help me push this up a bit so people can get through?” He said no since if he hurt himself outside the booth, he wouldn’t be covered under the rules. So, I was on my own. I started pushing the car myself which was ridiculous since it was 2000 pounds and there was nobody to steer it. I wasn’t having much luck, but fortunately, a guy stuck behind me got out of his car to help me push. In essence, it makes no sense that these jobs still exist in the numbers they do. States should do more for force (or entice via incentives like a 10% discount) drivers to switch completely to EZ-pass type systems.
Gas Station Attendants – …

Continue Reading Robots and Automation Are Taking American Jobs

INSIDER TRADING SHOULD BE LEGAL? A SERIOUS WTF

In what may be one of the dumbest articles to grace the front page of CNBC’s website, a so-called author Carol Roth advocates for the legalization of insider trading. This piece of excrement was published here, but within, you’ll find a point by point rebuttal of this screed. Here’s a sneak peak “what I am saying is that it is time to do away with the laws against insider trading entirely.” Ms. Carol makes the following points which are followed by my common sense and fact-based rebuttals to each point:

I do want to clarify that my argument focuses on the legality of trading on insider information. It should be noted that I do also believe that those with access to information should ethically and morally respect confidentiality agreements and fiduciary duties with the companies where they are accessing the information, but that is a separate civil, not a criminal, matter.

OK, so she clarifies that this should be solely a civil matter, not criminal. That doesn’t lessen the stupidity of this argument in any way. Should Bernie Madoff not be behind bars, but only have been sued for recovery of the funds he embezzled? This is moronic. I mean, where is the deterrent? It would be insider trading gone wild. If every executive, CFO and low-level admin or analyst with access to insider information prior to publication knew that the worst penalty they’d face is to simply return some or all of the ill-gotten gains they just cheated from the retail investing public, we’d see insider trading activity skyrocket. Sharing a cell with a large man named Bubba is much more of a deterrent. It works. While insider trading cases in the US make big headlines, if you think about the sheer number of major mergers and acquisitions, earnings beats and misses, material events that companies release to the public and more, it is truly remarkable how little we see insider trading, volatility prior to public announcements and options activity and the like.

Here’s where she touts how Insider Trading actually benefits us all. Oh thank you, may I have another!? WTF. Read on for a complete point by point takedown of:

An Ode’ to Insider Trading from an Imbecile

How Much Can You Make Garbage-Picking in Suburbia?

Maybe you’re above trash-picking, but the guy who drives around my neighborhood on trash night isn’t. Going back a few months, I remember a guy pulling up and picking up some old baby stuff we were tossing. We usually donate or try to sell a few things on Craigslist, but this stuff was really bottom of the barrel – old toys that were passed on to us to begin with, old plastic games missing pieces, an old crib that I half ripped apart to get it out of the baby’s room, etc. Well, as I was in my garage, a pickup truck pulled up started packing the stuff up into the back. He noticed me in the garage and waved and smiled. I didn’t mind, I was glad it was being recycled really, instead of ending up in a landfill. I remember the distinct noise his junky old truck made, as it reminded me of the trucks my dad used to drive us around in growing up.

Well, fast forward to tonight and as I was walking the dog, same loud old junky truck pulled up and was sitting outside my neighbor’s house for a while. I was halfway up the block and was wondering why a truck was sitting outside my house for that long and then realized what he was up to. The guy was loading up some stuff my neighbor threw out. As I got closer, I could see what he was actually picking up. I guess my neighbor did some remodeling and the guy was snagging an old door. And of course, that turned into one of those life events that was destined to be a blog post. This got me thinking about a few things:

Continue Reading About Making Money Trash-Picking and the whole sub-culture I discovered online.

HERE’S WHAT HAPPENED TO DIVIDEND STOCKS AND MUNIS SINCE OBAMA’S WIN [CHART]

I haven’t done much with my portfolio over the past several months because I anticipated that regardless of who won the election, the fiscal cliff and its associated hikes in dividend tax rates would be resolved in short order and the market shouldn’t react too much one way or the other leading up to it. Our Congress has been so adept at just kicking the can down the road and continuing to delay any hard decisions, that we’d probably see more of the same. I figured markets would anticipate that and we wouldn’t see substantial market moves one way or the other due solely to the fiscal cliff issue. I was wrong on that judging by market reaction since Obama won the election. Markets have been down, but to be fair, I think the implosion in Europe has something to do with it as well. Trying to keep up with which of Petraeus’s mistresses was involved in what has distracted news organizations from reporting real news, but in case you’ve missed it, the situation in Europe continues to worsen (anti-austerity protests rock Europe).

Regardless, since Obama’s election win, and rhetoric out of the Whitehouse, it looks as though they’re going for political gold. There was much talk today about tax hikes on the wealthy, increases in “revenue” of more than double what was previously discussed ($1.6 Trillion over 10 years vs. $800 million) but no real discourse at all around reigning in entitlement spending. So, stripping out politics and focusing solely on the tax issues for investors, that could potentially spell higher rates for dividend paying stocks. A high net worth investor, if paying federal taxes on dividends at the 39.6% top bracket rate, could end up paying taxes of about 44% due to the added burden tied to Obamacare’s “fee” on investments for high net worth individuals as well. So, dividend investors used to paying 15% now and that could triple. It should come as no surprise then, if dividend stocks do sell off from high net worth individuals. I’d like to think that there would be enough investors under the income cap that would see the value in dividend payers (or, people that are shielded from taxes in their Self-Directed IRA like me), but only time will tell.

Here’s What Happened in the Week Since the Election (Continue Reading)….

Frankenstorm: Bringing Out the Best and The Worst. And the Dumbest.

With the East Coast gripped in fear from Hurricane Sandy AKA Frankenstorm, I thought I’d share some of my personal observations and experiences as an East-Coaster as we brace for the storm of the century (of the year; ya know, cause each year there’s a storm of the century).

People Wait Until the Day Before a Storm to Buy a Generator. And then Curse the Stores that are Sold Out – This is the same absurd dark comedy that plays out each and every storm. People that somehow escaped prior storms unscathed (or didn’t) decide that 1 day prior to landfall is the optimal time to finally buy a generator. I happened to have a completely non-storm related issue going on with my dishwasher today. I was in search of discharge hoses for a Bosch dishwasher and to my chagrin, learned that there’s nothing “standard” about those German bastards. Everything is custom… even though Lowes sells Bosch and told me over the phone they had what I needed in stock. So, while I was in Lowe’s I couldn’t help but notice the frenzied look of fear in peoples’ eyes running around the store stocking up on flashlights and batteries. I saw 2 different people hoarding 5 Gallon gas cans. They had 2 in each hand for a grand total of 20 gallons of gas storage. When Lowe’s didn’t have what I needed, I tried calling an ACE Hardware since they sometimes have a more eclectic mix of hardware. After several attempts due to busy signals, I finally got a fanatical pickup where she literally yelled into the phone, “Ace, We’re Out of Generators!”. She then paused, presumably waiting for me to hang up. I said, “That’s how you answer the phone?”. She repeated that they’re out of generators. It’s all about generators these days even though there was ample supply a week ago. Incidentally, I bought one a few years ago out of season on a 40% off sale at Lowes. So, if you somehow make it through this storm and missed out, keep your eye on sales in the Spring!
Gas Stations Out of Gas – This is another one that confounds me.

Continue Reading About Frankenstorm Bringing Out the Best, the Worst and the Dumbest in People

How Obamacare is Costing My “Middle-Class” Family More in 2013

Obama’s medical insurance legislation that was first billed as not being a “tax” (hilarious given the number of “fees” and “surcharges” it levies; even the Surpreme Court could not pass up the opportunity to classify it as such), and also claimed that the plan would be “revenue neutral” (which it clearly won’t be if you look out a few years) also gave the impression that the costs would be primarily borne by business and the rich. Well, middle class Americans are bearing quite a burden as well, regardless of what you read in the ever-adoring mainstream media. See, in anticipation of the pending legislation, healthcare costs have skyrocketed leading into and shortly after it’s passage. It’s hard to believe, by my insurance costs (company sponsored by a large blue-chip) zoomed by 43% this year. Unbelievable huh?

Now, some critics will say that the cost increases had nothing to do with Obamacare and that they were increasing before hand. While I don’t think that is the case, let’s check out some of the other non-plan related hard costs our family is seeing since its passage. We make well less than the $250,000 per year that Obama calls the top of the middle class, so I’m not being hit with some of the surcharges and fees that more wealthy Americans are. But here are a few spots where I’m paying more out of pocket for medical coverage than I would have prior to Obamacare:

…continue reading How Much Obamacare Costs Middle Class Families

State Sends Illegal Immigrants Packing. And Nobody Wants the Jobs [Law of Unintended Consequences]

In yet another case of the law of unintended consequences (which virtually anyone could have predicted), Alabama’s HB56 law was meant to drive illegals out of the state to purportedly “free up jobs” for native Alabamians. Well, guess how that worked out? They don’t want the damn jobs. See, it’s too easy to live off Uncle Sam. If it’s a choice between 99 weeks of working a real job or 99 weeks of free checks from the government, what do you think people are going to choose more often than not?

According to this recent BusinessWeek article, employers simply can’t find enough workers to fill the roles traditionally employed by illegal immigrants, so the next best option is to import legal immigrants. Refugees from Africa…

Continue Reading What Happens When You Fire all the Illegal Immigrants