Index Funds Put the Fun in Fundamental Stock Investing

Next to Cat Fancy, I think The Economist is the best magazine on the stands. (Or "newspaper," as "Sir" would have it-- read the letters page sometime!) It's better-researched than anything, well-written, and even funny. And I think my mail carrier is reading my copy!

Usually I get it on Saturday, but this week's didn't arrive until Monday. The carrier had a mischievious grin on, too. I think he must have been jonesing on the Special Report all about asset management in this week's issue. It describes the radical changes in the mutual fund industry, explains hedge funds, demystifies some of the arcane jargon ("alpha" versus "beta"). Smart, smart, smart.

It also confirms what Bogleheads, those oddly-named devotees of John Bogle & Vanguard's indexing options, already know. Mutual funds are a loser's game, because you're paying for a fund manager who gets paid based on last year's performance, which may not be replicable. Even if the manager does well, taxes & fees will each up your profits. It's kind of scam, really.

Index funds just try to replicate the market. I have a core of my investments in Vanguard index funds, and then a (smaller) discretionary fund which I use for individual investing. Not at all sexy-- not at all something to boast about down at the club (if I were in the club!). But long term, it works.

And I feel smarter having read The Economist. Seriously, a couple of hours with this magazine is better than a week's worth of people yelling at you on CNBC.

Inclement Markets

Winter storms and housing crises. Looking for a safe place for your earnings is a lot like trying to find the stray cat you've adopted during a rampaging snowstorm.

Zooey usually hangs out around her house, my one extravagance (fortunately not foreclosed). In storms like today, though, she's not in her reliable places. Today I went all through the woods and down by the stream to see if I could find her. Nothing. Just some deer tracks & scat, and some beautiful steam rising off the stream as it cut through the snow.

Meanwhile, inside my nest egg has been taking a hit. I don't have a whole lot-- some index funds, a few stocks I bought on a hunch, an IRA. The housing crisis caught me off-guard, before I could move anything out into bonds, my MMA, or even hide it under the mattress. (I understand better now why my great-grandfather, he of the Depression, didn't trust banks.)

But then I saw some nice clues:


Namely, the Fed's recent aggressive cuts, their plans to forestall foreclosures, and Congress' thankfully fast action on this anti-recession drug. I was never convinced that the housing crisis was going to be that cataclysmic, anyway. We're a lot more intertwined with the rest of the world now than we were in 2001, even, so the way our economy goes does not necessarily mean gloom for the earth. Also, markets usually do better in election years. I'm trying to wait this one out, and hoping to find a few bargains out in the financial woods.

But I am no economist. I am but a humble cat owner, thankful to have a roof over his cat in her timeshare.

Get POOR Fast

How NOT to Monetize Your Cat: a Case Study.

Down the street lives Purrty Petey. He has a human named Anton he keeps with him, who's jumps from job to job, scheme to scheme.

The human tries to make money every which way. Rather than get DVDs from the library, he buys them, burns them for his collection, and then resells them used on eBay. Rather than invest in bonds or an index fund, he speculates on collectibles and eBay. (Mouldering Beanie Babies infest his rented storage unit.)

Worst of all, rather than invest in learning new skills for higher pay, he spends tons of time and money on Get Rich Quick schemes. You know them-- promising huge returns on real estate, Forex trading, options, or some "foolproof" product, they have infomercials and hotel conferences. Anton's been to a dozen of these things. He goes for the $1995! $995! $500! "free" seminar, but then they upsell books, CDs, home training courses and networking.

Dozens of these courses litter his apartment. Purry Petey uses them for litter. He has to. Anton's too busy chasing some other fake dream.

Worst of all, Purry Petey tries to tell him. He tears up the couch, he pukes in the undies drawer. (Once he was asleep in it, and Anton closed it on him. For a week after, he was a guilty "commando.") Anton won't sit down with himself long enough to see how he's wasting his time-- his life-- on some other empty promise. He could be monetizing his cat, building side streams of income, taking small steps to financial & feline freedom, but he doesn't read this blog.

Alas!

Cat Skills Assessment

As many of you know, my cat Zooey has decided to help out monetarily. But she's become discouraged after her initial enthusiasm. It is hard to find work in this world, especially when you're a cat.

Yesterday she threw up all over the deck. I was worried-- stress is pretty bad, and now the deck is too. I could hear her up late last night. When I woke up I found this on the computer screen:


What an amazing cat! As an outdoor cat, she must have had a copy of the housekey made when I wasn't looking.

She had gone through my self-help books, and opened up Loral Langemeier's Millionaire Maker's Guide to Creating a Cash Machine for Lifeto a self-help skills assessment early in the book. So we sat down this morning and worked through it to give her some direction. This is a short version of it, so you can have an idea of what it's like:

1. List your job responsibilities:

• eating
• coyness
• sleeping
• stalking through lawn & forest as mistress of all i survey

2. List the tasks associated with these responsibilities:

• monitoring small animals
• climbing trees
• somber frolic
  

3. List the industries and markets you have experience in:

• pets
• hunting
• food service

4. List the tasks you do at home:

• tongue-bathing
• resting
  

5. List the activities you find you do in spare time

• rubbing face against lawn furniture
• marking territory
• leering at Mr MacMuffin through his living room window, especially at night when the terror sets in

6. List the tasks others ask you to help them w/

• pest control
• relationship problems
• money problems
• emotional problems
• family problems

7. List the tasks you're good at & may take for granted

• sharpening claws
• furniture control
• consulting.
  

That's her list. Honestly, I'm a little surprised at some of her answers, but she is an outdoor cat, after all. And the Cash Machine book is interesting-- I'll have my full review up tomorrow!

Seth Godin's Cat Builds No Wealth

Kind of cloudy and overcast today, so I was snooping around in Seth Godin's blog. (I reviewed his book Meatball Sundae yesterday.) I found this post, which has some cobwebs on it, but raised some issues pertinent to my CATpitalsm plan.

Briefly-- read the post, though, it has some good points. In sum, Godin destroys my hopes, my dreams, Zooey's plans for gold-dust litter and braised rat pate. He refuses to monetize his blog.

He outlines good reasons for not doing so. Among them, the fact that one of his favorite blogs changed from being a nice place to hang out and read good ideas, into the e-version of the Vegas Strip. Ads, blaring out, carnival barkers touting the dude's new book, his bloated resume (this is the blog Godin describes, not Godin himself-- his blog is elegant and clean, and ad-free), so forth, dogs & cats living together. Just awful.

So yeah, I can see his point. But-- he's also a bestselling author with fourteen-odd books out. (I don't mean his books are odd! It's just English, for pity's sake!) So he doesn't seem to need to monetize his blog-- it's a loss leader, serving as an ad for his books, his speaking, his consulting.

Zooey & I don't yet have a catsulting service together. Or a speaking/meowing tour. Perhaps we will, after doing Zooey's skills assessment. But until that day, we'll have some ads. Maybe when we're raking in more money than Mr MacMuffin ever DREAMED of we'll demonetize the blog. And the cat. But until then...

And I want to reassure you (and myself, shamefaced after reading the post) we never changed! We were all about the boodle from Day 1! Cat-Daddy, Zooey-Monetization, so never mind that we have ads! Don't forgive us, enjoy our catpitalist path! Imitate it! Golden Land of Opportunity! My cat makes money! Your cat can too!