Newt Gingrich and the Southern strategy

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Is this just Newt Gingrich being "condescending and dickish"? Is it just an old, wealthy, white Republican being clueless?

I guess I'm not as charitable as Jon Stewart. I think that Gingrich knew exactly what he was saying, and that he said it for political effect in an overwhelmingly white Republican Party in a southern state.

Anyone who'd be upset about implied racism wouldn't be voting GOP in the first place. And very few African Americans will be voting in the Republican primary. (Gee, I wonder why?)

All of the Republican candidates are trying desperately to appeal to the Republican base, and their notorious "Southern strategy" of deliberately appealing to white racists is which attracted those people to the GOP in the first place. So it's hard for me to believe that this wasn't also deliberate.

It's not that I don't think that Gingrich is clueless, generally speaking. But in this case, I think he knew exactly what he was doing: he was trying to appeal to the Republican base. And he was doing it in the same way Republicans have been wooing those people since the 1960s.

As Charles M. Blow says, "Playing to racial anxiety and fear isn’t a fluke; it’s a strategy that energizes the Republican base."

A system that doesn't work

Is this all true? How would we know? We don't take these people to court. We don't give them a trial. We don't let them have representation. Our government can do anything it wants and keep it all a secret. So how would we know?

Once they're taken to Gitmo, often on extremely flimsy evidence, that's it. And now they can take American citizens there, too. They can even take American citizens arrested on American soil. No trial. No habeas corpus. No rights at all. Whomever government officials want to lock up, they can.

President Obama did try to close Gitmo, I'll give him that. Of course, the Republicans wouldn't go along with it. The Republicans automatically oppose anything the president wants to do. And the Democrats themselves were too cowardly to support him in this. Big surprise, huh?

But Obama gave up pretty easily, too. You know, he should never give up. He's supposed to be a constitutional scholar, so let's see him stand up for the constitution!

Republicans are going to hate him no matter what he does, so why doesn't he stand up and fight for our side? I don't care if the rest of the Democrats are complete cowards. I don't care if it's unpopular. I don't care if Fox "News" goes ballistic. They will, anyway.

This was one of the great errors, one of the great tragedies of the Bush administration. We must close Gitmo! And if Obama can't close Gitmo, then he should never stop trying.

The fact that he failed doesn't bother me, not really. What bothers me is the fact that he gave up.

The American system of justice works. But what we're doing in Gitmo isn't American, isn't justice, and doesn't work.

My investment plan, pt. 3

This is the conclusion (here are Part 1 and Part 2) and the reason why I wanted to write this investment plan post in the first place.

Even before I retired, I'd been keeping notes on my investments, and afterwards, I've continued, every year or two, to review what has happened and record my current thinking. To me, this is a great learning tool, and I thought it particularly interesting to review at the end of last year.

Our memories are malleable. You may think you remember your worries and your expectations of a few years ago, but your memory is probably not completely accurate. Re-reading what you wrote years ago is likely to make you cringe, but it can be useful.

We have to remember our mistakes if we ever hope to learn from them. And even when you made the right decision, it's helpful to remember how difficult it was, how fearful you might have been, how uncertain you almost certainly were. Well, that's my opinion, anyway.

After I retired, I reorganized my investments - consolidating some of them, rolling over my 401-k and deferred compensation plans into an IRA, and moving my holdings to a fund supermarket. (When I was working, I invested directly with individual mutual fund companies, but retirement meant that I needed a simpler system to move money around.)

So this note was written almost a year and a half from when I retired, but only a year or so from when I got all that settled:

Nov. 1, 2007

So far, so good. The market has done far better than I expected this past year, even including the increasing volatility. I really don't expect this to last (I'm getting increasingly pessimistic), but my net worth has increased by xxx over the past year. Can't beat that! My biggest fund, xxx, has been my top performer, but even xxx has continued to do well. Oakmark Select is the only real dog this year, though I still have faith in the manager (xxx Real Estate has been weak, but that was entirely expected).

[Note that I'm censoring all of the financial details, and even the names of funds which did well for me. But I'll leave the ones which did really poorly, since I don't suppose you'll take that for a recommendation. :) ]

I spent more than xxx in the past 12 months, including taxes. That's considerably more than I'd expected, especially considering there were no big-ticket items this past year. I spent almost xxx on xxx, which had not been budgeted. This might slow down in future years, but it seems that this is an expensive hobby. Considering how well the stock market has done, income taxes (more than xxx) might tend to average less. But I'd rather make more and pay the taxes. Nothing else really stands out, but it feels like I've been spending money like water. It's hard to cut back, when you get away from pinching pennies. We'll see what happens when the stock market turns down.

My financial plan below still looks good, though I'm more concerned these days about the risk of a real meltdown, unexpected or otherwise (black swans, fat tails on the probability distribution, or however you want to put it). Bush has really been a disaster to our country, and it won't get better any time soon. I took my taxable dividends in cash last December, so I've been keeping almost xxx in my Internet savings account (interest rate has dropped to 4.75%). Though the market has gone up, I can't really feel that this was a mistake, and indeed I plan to do the same this year (hoping like crazy that the market stays high that long). Is that timing the market? Or just being prudent? I'm expecting huge mutual fund distributions again this year.

OK, this is exactly as I wrote it, emphasis and all, in 2007 (except where I excised the details, of course). I also added an addendum to my investment plan then, but that's not what I want to talk about here.

I was lucky. The first year and a half after I retired went really, really well. But note that I was already starting to stray from my investment plan, at least a bit. I'd told myself that I wasn't going to try to time the market, but only to take advantage of any irrational behavior.

But I was taking cash out of the market, not because of "irrational exuberance" - although prices had increased considerably - but because of my general pessimism. At least, that's how it seems to me as I read this now.

As it turned out, that was a very good thing. But was it a wise thing to do? I wasn't sure then, and I'm not sure now.

My next note was less than three months later:

Jan 28, 2008

Stocks have dropped considerably (though I suspect there's plenty more to come), so how do I feel about my plan at the start of a bear market? First, it's tough to see my net worth evaporate like this, even though I expected it. It's not easy, and it's never going to be easy. When I was working, I could at least figure that I was buying cheaper stocks during a downturn, but I don't have that consolation now. All I've got is my conviction in my strategy - a thin reed, indeed.

After taking dividends in cash again in December, I'm holding a lot more cash than usual (about xxx, not counting xxx in I-Bonds). The interest rate has dropped to 4.3%. I've still got the vast majority of my money in stock mutual funds, so if the market goes right back up (the least likely scenario, I'd say), then I'll be quite happy. If the market continues to drop, I'll be very glad to have cash (wishing I had more), though it will be difficult to know when to invest it again. And if the market goes sideways, I'll probably make as much income holding cash (though, admittedly, the tax treatment isn't as favorable). Some of America's best money managers hold cash for opportunity purchases, but I'm not sure I'm willing, or able, to give it that much attention. We'll see. So far, taking my dividends in cash hasn't been a bad move. And actually selling funds would really be trying to time the market.

My net worth increased by about xxx in 2007 - not bad, though down considerably from October. But I've dropped another xxx since then, wiping out most of my gains since I retired (though I've paid living expenses out of that, too). My mutual funds are down more than xxx in the past four weeks,... Most of my investments are quite volatile, and they've shown it. And as I say, I suspect we haven't seen the half of it yet.

For now, I'm sticking with my original plan, though I should make a few observations. My 'diversified' portfolio hasn't made the slightest difference, with stocks everywhere crashing at once (as I should have expected). And my hedges were far too small to have any impact. (Note, too, that Morningstar's Risk Analyzer is completely bogus. Just before this, it was showing a gain as my 25% risk chance in a down market.)

Going forward, I should feel more comfortable holding cash. You just never know. But I'd like to put more money in xxx, in particular, and really, nearly all of my funds still have my full confidence. Over the long term, I'm sure they'll do better than average. Nevertheless, I'm expecting this year to be bleak, indeed.

Heh, heh. I hadn't seen anything yet. The year was going to be far, far bleaker than I expected!

But I did expect that this was just the start of a bear market, and I was prepared for further losses (just, maybe, not such big losses). I was glad to be holding extra cash, and I was beginning to consider that as a deliberate policy.

But note the problem with timing the market, that you have to be right twice, once when you sell and then when you buy back in again. And if you're selling in a taxable account, you'll probably have to pay taxes on your gains (certainly if you're buying low and selling high). So you have to be very right to make it all worthwhile.

If I thought January was bad, how about October?

Oct 12, 2008

OK, things have become REALLY nasty. I've lost massive amounts of money - more than I made in most years - in each of the past two weeks. My portfolio has dropped to xxx, which means that I've lost nearly xxx,... so far. Except for xxx, which has been almost fully hedged, my mutual funds have lost between 21% and 55% YTD. Quicken shows a -38% average! And that doesn't include what I lost at the end of last year!

As I noted in January, everything has dropped at once. Value funds have been particularly bad this time, since banks are failing. (Washington Mutual, among others, went completely bankrupt, and 15% of Oakmark Select was in that stock, at one time.) xxx was a nice hedge (it's down only 4% YTD), but I didn't have enough in that fund to matter much. And xxx has done what it was supposed to,... but it's still down 21% YTD. My extra cash is the only thing that's saved me.

So,... now what? This has been worse than even I expected, and I have no idea how much longer the market will drop. The whole financial system is melting down, and there's panic everywhere. Well, I can understand that. But it's time to start buying more, I think. I'm transferring xxx to xxx, and I'll try to do that a couple more times over the next few months. (But I've got to live on something, so I'd better not be too eager.)

It's also a good time to move funds around, since I don't have to worry about taxable gains! Actually, I'm still happy enough with my selection of funds, though some have performed much worse than the market lately. But I think it makes sense to concentrate my picks. Spreading my investments around too much will tend to give me average performance, and I'd like to beat that. Of course, as we've seen this year, I will be risking underperformance, too. But I can't think that my managers have lost their abilities, even if they've made some big mistakes this year.

Bottom line: as bad as things look, companies are cheaper now than they've been in years. True, the near future looks horrible, and prices may continue to drop (and companies even go bankrupt), but that's why the prices are low. And at this point, what choice do I have?

PS. Note that deflation might be more likely than inflation right now. Yeah, energy prices are still very high (though much less than they were), but we're looking at a severe recession, if not a depression. And also note that my foreign holdings have crashed even worse than the domestic stuff, though they've both been disasters.

This was shortly after Lehman Brothers went bankrupt, and everyone seemed to be panicking (for good reason, no doubt). As I noted above, for two weeks in a row, I'd lost more money in the stock market than I'd made in most years. I'd known my portfolio was risky, but still, that was a shock.

But still, as Warren Buffett has said, be fearful when others are greedy, and be greedy when others are fearful. I had absolutely no idea if the stock market would keep falling, but with most people trying to sell, the price of stock looked cheap to me.

And I had my plan. I had enough in cash and other secure holdings to live for several years, at least. I was lucky enough to have some additional cash, and if I wasn't going to invest it then, when would I? Well, it sounds reasonable now, but it's harder when there's blood in the streets.

Mar 31, 2009

As planned, I transferred xxx on Oct 13, 2008, and another xxx ten days later, as the market continued to crash. I also sold three funds ... to concentrate on my favorite picks. (Note that all three funds had some taxable gains, but I expected to pay no taxes on long-term gains in 2008.)

I added to my holdings in xxx, but I put the bulk of the money into Fairholme, making it one of my largest funds. [Fairholme has been a disaster this past year, so I don't have to censor that one, I think!] It had done quite well YTD and over the long haul, and I didn't want to get too concentrated in my top holdings. In my roll-over IRA, I sold xxx (my holdings were too small to matter much), and added to xxx. Again, just concentrating my picks.

Without trying to "time" the market, I rather thought that things were oversold, and I expected that forced selling might abate at the end of the year. Well, the market turned around almost immediately and had a solid advance by the first of January. (Barack Obama was elected president, too, which probably helped.) In November and December, I took my dividends (no removing cash this year!) and another xxx in cash (getting mighty low now) and added to my holdings in xxx.

[Sorry, but my notes are full of details of individual funds - so I could remember exactly what I was doing - and I really don't want to share that. So I'm cutting a lot here.]

No big surprise, but the market turned south again almost immediately at the start of the year (so much for my idea about forced selling) and dropped back to the October lows - or even lower - by early March. I was really running short of cash, but I took the last of it and bought more of xxx. (This means that I'll have to sell [some of my emergency stash] to live on this year, since my bank accounts are completely depleted.)  I also sold xxx, my most conservative fund and one which has weathered the crash better than anything but xxx, in all of my accounts, and bought more xxx. I like the balanced fund, but I figured it was time to be really aggressive.

I made my last purchase March 9, and the market has boomed in the three weeks since then - up more than 20% (it had dropped more than 25% in the first two months of the year - this is a volatile market). It could easily be a bear market rally, of course, just like at the end of 2008. I hope not, but it wouldn't surprise me one bit. I can't ever hope to time the market in the short run. I doubt if anyone can, not reliably. And really, I've done surprisingly well (relatively-speaking) the last few months, generally buying at the very bottom. I've got no cash left at all, just xxx. That's about xxx years worth of living expenses (I'm cutting my spending to the bone), but it's probably not wise to invest any more money in stocks. Since I'm happy enough with what I've got (though Fairholme has done rather poorly since I bought more - just reverting to the mean, no doubt), I'll simply be sitting tight and seeing what happens now.

Currently, my biggest holdings (top down, 11% to 8% of my portfolio) are xxx. So I'm positioned VERY aggressively right now, even more than I have been. And I'm much more concentrated, with 64% of my portfolio in just these seven funds. We'll see.

I expect that the incredible volatility will continue this year, and we might even set new lows, but I think that the worst is behind us. I don't expect much, though - certainly not a quick recovery. But I should be able to live for about xxx years without taking anything out of the market, and I really do expect to be in better shape by then. The near-term danger is the backlash against "bailouts" and deficit spending. Well, most people are economic illiterates, if not [oh, that really wasn't a nice thing to say!].

I cut a lot of this, but I hope it gets the general idea across. I continued to buy as the market (for the most part) dropped, until I reached the point where I had nothing left to invest. I still had my emergency stash, of course. I expected that I could still survive until the market recovered, but I was about as aggressive as I could possibly get.

I had no idea that early March would be the market bottom, and certainly not that the market would scream upwards from there. That was pure luck. I was simply positioning myself more and more aggressively as stocks got cheaper and cheaper. If you're going to buy low and sell high, you've got to buy when no one else wants stocks.

Yet, it's easy to forget now (I think all Republicans have forgotten it), but when Barack Obama took office, the economic collapse seemed to have no bottom. And the stock market collapse, likewise. There was no telling just how far we'd drop or how bad things would get. It's not easy to buy at a time like that.

I'm not trying to pat myself on the back here, but just to point out that I was following my investment plan. And I had enough confidence in that plan to continue to follow it, even when things looked bleak. Maybe that was foolish. I mean, yes, it worked this time, but will it work the next time? There's just no way to know.

I was lucky. I was very, very lucky. I can't count on that luck the next time. So what I really need to ask myself is if my investment plan still makes sense. That's always what I need to ask myself, year after year. I can never stop asking it.

It was almost two years before I added another note (well, I did say that I was bad at consistency), and that was just recently:

Dec 31, 2011

OK, it's been a long time since I updated this. Briefly, my previous investments, in October, 2008 and March, 2009, were among the best investment decisions I've ever made. March was the absolute bottom of the market crash. At that point, my net worth had dropped in half. Well, I've always known I was taking a risk. But within a year and a half, I'd made it all back up and then some. It's been a wild ride!

I've been much less successful this year, so I've dropped back nearly to the net worth I had when I retired five and a half years ago. (Considering everything, that's not so bad, though.) The S&P 500 ended the year about even, but my holdings have done far worse than that. Partly, that's because I'm well-diversified globally, and international stocks have recently done much worse than American companies. And partly, it's because I'm still heavily overweight in small-cap - and especially micro-cap - stocks, mostly the result of xxx being so astoundingly successful for years.

But my biggest problem was owning so much of the Fairholme Fund, which really blew up this year. It ended the year down 32%, far and away my worst performing mutual fund. And it was one of my biggest holdings, too. Adding money to that in 2008 seems to have been a big mistake (admittedly, it did well until 2011). Well, that's nothing new. I'm used to making big mistakes. In fact, I've come to expect it. I seem to do OK anyway, or I have so far. One of the problems with concentrating my holdings is that when one blows up, it really, really hurts. Of course, when one does well, it makes a big difference, too. That's the same trade-off I accept when I invest in volatile funds. They tend to go down even faster than they go up - just, hopefully, not as often.

The combination - concentrated investing in volatile funds - requires an iron stomach. But, so far, I don't see any reason to change my investment plan significantly. I would never recommend it to anyone else, but it seems to work for me. On the other hand, my holdings are even more volatile now than they were when I retired. I took on more risk at the bottom of the stock market crash, and I still haven't managed to revisit that.

Going forward, I'm very pessimistic. I have no idea what the stock market is going to do, but I'm pessimistic for my nation. We don't seem to have learned anything from the mistakes of the Bush administration. But I have no idea what that means for my investments. I can't be optimistic, but I'm going to stick to my plan. In general, I think that stocks are relatively cheap right now, but not screaming buys. Given that Republicans are deliberately trying to sabotage our economy for their own political advantage, we could see another huge collapse in 2012. There is that risk. So holding a little extra cash might be prudent.

But interest rates are at record lows, so cash is making nothing right now. And bonds would seem to be extremely risky. Everyone is scared of the volatility in the stock market, so they're buying Treasuries like crazy. Following the herd is almost always a recipe for disaster. But I'm not sure if anything looks really cheap, either. Maybe I'll punt.

So that's it. As usual, I don't have a clue what's going to happen next. I don't see any especially good places to invest, but bonds and cash are paying nothing. I couldn't give you any advice if I wanted to, because I just don't know.

But what I do know is that following an investment plan has worked for me, so far. And being able to go back and read my notes (I've got notes from further back than this, and I keep excerpts from what other people are saying, too) has been very interesting - to me, at least - and valuable, too, I think.

Barack Obama sings Lady Gaga's "Born This Way"

Some people have too much time on their hands, don't you think? Still, it's kind of funny.

The New Hampshire primary

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So, the empty suit with "realistic" promises - smaller government, a balanced budget, and a massive military - won the New Hampshire Republican primary, as expected. Ho, hum.

But yeah, how about that Huntsman? He's really got a ticket to ride... home, doesn't he?

And it is pretty funny how the media dismisses Ron Paul, although, seriously, he's never had the slightest chance of actually winning the nomination. And he's still a complete fruitcake (although that's pretty much a requirement in today's GOP).

Anyway, I'll skip Ron Paul here, too, since I think I've written enough about him recently. Really, what else do you need to know? So let me go back to Huntsman again, just briefly.

The South Carolina primary is next, and guess which fresh Republican face is polling higher than Huntsman in South Carolina?  :)

Fox host Eric Bolling tells the truth

That's Fox Business host Eric Bolling saying, "We're all on board if Mitt's it [the Republican nominee], but until then, we just have to make sure he stays as far right as possible. That's my job."

Funny, huh? Bolling isn't even pretending to be a journalist anymore. He's admitting what everyone knows, that his job on Fox - everyone's job on Fox - is to elect right-wing Republicans.

Well, it's refreshing to see someone from Fox being honest, isn't it?

QOTD: a bipartisan consensus on health care

Quote of the Day:

Igor Volsky flagged a great piece from Nancy French, who reported the other day that Rick Santorum supported an individual health care mandate when he ran for the Senate in 1994. His primary opponent, Joe Watkins, supported the same policy.

French highlighted this report from April 1994:

Santorum and Watkins both oppose having businesses provide health care for their employees. Instead, they would require individuals to purchase insurance.

And this report, published a month later:

Santorum and Watkins would require individuals to buy health insurance rather than forcing employers to pay for employee benefits.

For those keeping score at home, that means there are six Republican presidential candidates, and four of them, at one time or another, supported an individual health care mandate — an idea GOP officials now consider an unconstitutional, authoritarian nightmare.

Given Santorum’s far-right ideology, does this news come as something of a surprise? Actually, no. Santorum’s position in 1994, and that of his primary challenger, was entirely in line with mainstream Republican thought.

In case anyone’s forgotten, this was a Republican idea in the first place. Nixon embraced the mandate in the 1970s, and George H.W. Bush supported the idea in the 1980s. When Bob Dole endorsed the mandate in 1994, it was in keeping with the party’s prevailing attitudes at the time. Mitt Romney embraced the mandate as governor and it was largely ignored during the 2008 campaign, since it was such a common GOP position.

In recent years, the mandate has been embraced by the likes of John McCain, Orrin Hatch, Bob Bennett, Tommy Thompson, Lamar Alexander, Lindsey Graham, John Thune, Scott Brown, and Judd Gregg, among many others. Indeed, several of them not only endorsed the policy, they literally co-sponsored legislation that included a mandate.

In the summer of 2009, Sen. Chuck Grassley (R-Iowa), one of the leading Republican lawmakers in the talks over health care reform, told Fox News, “I believe that there is a bipartisan consensus to have an individual mandate.” Did Fox News freak out? Did GOP leaders immediately distance themselves from the comments? Was Grassley forced to immediately backpedal? No, none of those things happened. Grassley said there was a bipartisan consensus to have an individual mandate because there was a bipartisan consensus to have an individual mandate.

But that was before Republicans decided they’re against the ideas they’re for, and this issue could be twisted into a political weapon to be used against the president. - Steve Benen

Warren Buffett calls the Republicans' bluff

(photo by Jim Ruymen, via TPM)

From Time magazine:

Warren Buffett is ready to call Republicans’ tax bluff. Last fall, Senator Mitch McConnell said that if Buffett were feeling “guilty” about paying too little in taxes, he should “send in a check.” The jab was in response to Buffett’s August 2011 New York Times op-ed, which made hay of the fact that our tax system is so unbalanced, Buffett (worth about $45 billion) pays a lower tax rate than his secretary. Senator John Thune promptly introduced the “Buffett Rule Act,” an option on tax forms that would allow the rich to donate more in taxes to help pay down the national debt. It was, as Buffett told me for this week’s TIME cover story, “a tax policy only a Republican could come up with.”

Still, he’s willing to take them up on it. ... So Buffett has pledged to match 1 for 1 all such voluntary contributions made by Republican members of Congress. “And I’ll even go 3 for 1 for McConnell,” he says. That could be quite a bill if McConnell takes the challenge; after all, the Senator is worth at least $10 million. As Buffett put it to me, “I’m not worried.” ...

Buffett doesn’t want to sound ungrateful, especially since McConnell and other Republicans have lobbied to keep taxes low for the über-rich, saving him between $6 million and $7 million this year. Oddly, though, conservatives can’t seem to make up their mind about taxes. On Wednesday in the Wall Street Journal, supply sider Arthur Laffer bashed Buffett for, among other things, shielded income, because he doesn’t pay taxes on unrealized capital gains (currently taxed at 0%) or charitable contributions (which are tax deductible). “Well, I had a net unrealized loss in 2011,” says Buffett. “But if Arthur has a plan for how he wants to tax unrealized capital gains, I’d love to hear it — it’s an interesting thing for a Republican to put forward!”

If Buffett had his way, he’d pay more than the 17% rate he currently forks over on his net adjusted income — and he’d have the government put that additional money to work by making sure that whatever portion of the 99% that isn’t thriving in the market economy gets some help. As Buffett wrote in Fortune a few years back, “I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions.”

I especially like that part about how taxing unrealized capital gains is "an interesting thing for a Republican to put forward." Heh, heh. No kidding!

Laffer - any Republican leader, I suspect - would sooner cut off his own arm than tax unrealized capital gains. And if he didn't, the rich would cut his throat. And he's actually criticizing Warren Buffett for charitable donations?

Well, that was clearly a desperate attempt to attack Buffett,... somehow. It's not real easy to attack a man with $45 billion, especially when that man is busy trying to get his own taxes raised, for the good of the country. And when he's a noted philanthropist, too.

I'd like to note, proudly, that Warren Buffett is a fellow Nebraskan. We're not all as bad as you might think from my state's political leaders.

Arrogant atheists and not collecting stamps

My investment plan, pt. 2

As I noted in Part 1, I wrote down a detailed investment plan before quitting my job at age 55. Well, I've known a lot of people who retired early and ended up looking for work again remarkably soon.

Sometimes, that was because they were bored with retirement. (Honestly, I can't understand that at all. Retiring early was one of the best moves I've ever made, and I seem to be busier now than before I retired. But people are different.)

For most, though, it was because they'd ended up in financial difficulties - often enough, in just a year or two. And so they went back to work, but in jobs that paid a lot less than the one they'd just quit. I didn't want that to happen to me!

But I'm wary of sharing the details of my own investment plan, because I don't want to give you financial advice, even by implication. For one thing, I'm not qualified to give you such advice. And if you're in the habit of taking investment advice from your neighbor or some random guy on the internet,... well, good luck with that!

Besides, I wouldn't recommend my own plan to anyone else. I'm certain that no reputable financial adviser would recommend it to anyone! After five and a half years, I'm still convinced that it works for me. But my situation is not yours.

Let me just leave it at that. I'm a very private person, and although I'm sure I end up sharing far too many personal details in this blog, I'm not actually comfortable with that.

But let me just say that I'm not wealthy. I could only retire at all because my expenses are low. But I was looking at years without Social Security or Medicare (indeed, retiring early will drop my eventual Social Security payments drastically), and certainly no pension. So it was a pretty significant step to quit my job and decide to live on my investments.

Now, I didn't actually expect the worst economic collapse since the Great Depression. You have to expect bear markets, but frankly, the reality exceeded my worst projections. Given all that, I can't be too unhappy at the results. I'm just slightly ahead of where I was when I retired, but that's after paying all of my living expenses for almost six years. Therefore,... so far, so good.

My written goal on my financial plan was very simple: "To survive without depleting my savings." (Remember, I said that my plan was far simpler than yours would need to be.)  My expectation: "That I can live on my earnings while growing my financial assets (after inflation)."

What I needed to know first was the amount of money I would need for living expenses each year, on average. Well, I've kept my financial records on Quicken for many years (and I've avoided paying cash, wherever possible, so I could tell where my money went).

It was easy enough to average my expenditures over the previous decade, even adding a little extra for inflation, but I needed to look into it a bit deeper than that. For one thing, I could subtract from that the amount I was adding to my investments each month, and I could subtract most of the amount I paid on income taxes, too. (If I did better than expected, paying extra taxes would not be a problem!)

My health insurance costs would increase dramatically, though. And I had to expect occasional big expenditures on home repair and car purchases. I thought I was being very conservative, but I've actually been spending more than I expected. However, I wasn't too far off, I guess.

From Quicken, I knew my net worth, of course. My house isn't a big part of that, but it still needed to be subtracted from the equation. (I wasn't going to get a mortgage just to invest that amount in the stock market.) But I was left with a very rough idea of what percentage return I would need, on average, just to survive.

As you might imagine, it wasn't that simple. First, in order to survive for long, that percentage return needed to be after inflation. When you're working, you can usually count on your pay increasing every year, to at least cover inflation, So it's easy to overlook that. But once you were retired for ten or twenty years, you'd probably be shocked at how inflation adds up. (I'm shocked already at the increased cost of food and health insurance.)

And all these were just averages, too. This past year, I've had some major home expenses. With any luck, it will be a few years before something like that happens again, but I still had to pay them now. And that money is no longer available for investments.

The stock market, of course, is notoriously volatile. That was obvious even before the recent crash. Volatility isn't a problem, unless you need to sell before the market recovers again. And that could take years. On the other hand, if you avoid volatile investments, you'll be lucky to even match the inflation rate (very lucky, right now), let alone make something above that.

My point is that there's a lot to think about. And you cannot reliably predict the future. No one can. As I said, I don't want to tell you the details of my own solution (really, I'm not giving investment advice here), but I will say that it's mostly stock investments (in mutual funds, for reasons I noted previously), with a large emergency stash, so I don't have to sell when those investments are down.

Anyway, after I set out my requirements in that investment plan, and looked at the risks, I decided how I wanted to apportion my money - how much I needed to keep in cash, for immediate expenses; how much I needed for an emergency stash, and where I'd keep it; how much I needed in more conservative investments, in case even that emergency stash wasn't enough; and how much I could truly think of as entirely a long-term investment.

In my case, the vast majority of it was in the latter category. Well, it had to be that way. I really didn't have any choice, because you pretty well need to accept volatility in order to get a return that's above inflation. Again, that's just an average return, and it might be a very long-term average, too. It doesn't help much if the stock market recovers after you've already gone bankrupt.

On the other hand, if you keep too much in "safe" investments, you won't make anything. Indeed, you'll probably lose money, after inflation.

Younger people, working people, don't have to worry about this. (I know, they have other things to worry about.) If the market crashes, they'll just be buying stock at a much cheaper price. Indeed, for a young person with a secure job, a stock market crash might be the best thing to happen. (But note that "secure job" part again.) When the stock market drops, that's when you want to put more into it. (Unfortunately, that's just when it's the hardest to do.)

But if you don't have a job, you won't have that income to be buying cheap stock during crashes. And sorry, but I don't think that anyone can reliably predict the direction of the stock market. Some people do get lucky, true. If you have a roomful of monkeys throwing darts at stock listings, a few of them, just by the laws of statistics, are going to look like investing geniuses. But they probably won't do so well the next time they throw those darts!

On the other hand, it's not impossible to recognize the extremes of either irrational exuberance or panic. It's just likely to be very, very hard to act as a contrarian at such times. When everyone you know is talking about how much money they're making from tech stocks, can you avoid the temptation to jump in, yourself?

What if it continues for two or three years, with everyone but you making money? How will you feel then? As... someone said, the market can stay irrational for longer than you can stay solvent.

When the whole country is panicking and there seems to be no bottom to the stock market crash, can you decide that stocks are just too cheap to pass up? Even knowing that they'll likely get cheaper, because you have no idea where the bottom is, either? "Buy cheap and sell high" is a nice slogan, but investors usually do just the reverse.

There's a good reason for that. It's hard to be a contrarian. And contrarians are often wrong. In fact, they're almost always wrong, at least at first. So how long can you stand to be "wrong" before deciding that, yes, you really were wrong? As it turns out, most people are contrarians right up until the worst possible time to change their mind.

And no, I'm not going to tell you what an investment genius I am. I'm just as human as everyone else. When everyone else gets afraid, so do I. When everyone else is irrationally exuberant, I feel great about my investments, too. It feels good to make money and it feels bad to lose it. It doesn't make any difference how much of a contrarian you want to be, you'll still feel those emotions.


Sorry, I get carried away. This post has not gone where I expected it to go. I thought I'd write more about my actual plan - if not the details, then at least some of the general advice I gave myself (like "Diversify - but remain skeptical of the latest fad"). But those things look more like obvious platitudes, now.

I thought maybe I'd talk about different risks - volatility (or market risk), inflation, deflation, recession, stagflation, terrorism - and my predictions of what they'd mean to different kinds of investments. There are risks in everything. Even government-secured investments have a great deal of risk (inflation risk, in their case). If something looks risk-free, think again. You can't eliminate risk, but you can try to manage it.

But much of that gets into the details of my plan - how I planned to manage those risks, as much as possible. And the details are just what I don't want to give. Seriously, my investment plan won't work for you. It might not even work for me, not for long. I just don't know. But I do know that I'm not qualified to give advice.

Yeah, this probably wasn't what you expected. Heck, even I'm bored by it.  :)   But I think you might enjoy Part 3 a little more. I'm going to look back at what I wrote in my notes, every year or two, and see how things actually turned out during the past five and a half years.

Well, it's been a wild ride, so you might find it interesting. I hope so.

___
Note: Here's Part 3.

Malice in blunderland

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Crazy, isn't it? I keep wondering how insane the right-wing can get, but they keep exceeding even my expectations.

Washington Monthly talked about this yesterday, too:

Even for conservatives, this is pretty thin. The White House did, in fact, host a Halloween party for the kids of military servicemen and women in 2009. Conservatives may have found the event needlessly showy — filmmaker Tim Burton reportedly helped decorate, and gave the party an “Alice in Wonderland” theme — but given that we’re talking about the White House doing something nice for military families, the right really shouldn’t raise such a fuss.

As for the notion of keeping this “secret,” White House spokesman Eric Schultz said yesterday, “If we wanted this event to be a secret, we probably wouldn’t have invited the press corps to cover it, release photos of it to Flickr, or post a video from it on the White House website.”

But the really funny part of this came yesterday when Dana Loesch warned that the entire story may well be a nefarious “set up” crafted by the White House. She wrote:

One could beg the question that the White House and media didn’t disclose this because they knew it was wrong. Why would it be wrong? Because of public reaction? This is where it gets sneaky. It’s a set up: The narrative will be that details weren’t released because the White House didn’t want folks freaking out over extravagances for military families provided by a Hollywood director and his actor/muse. The narrative will progress into a notion that conservatives are tight-fisted when it comes to providing military families with a nice Halloween, one that wasn’t even at the conservatives’s expense. It will reinforce the stereotype that conservatives and Hollywood will always be at odds, and can’t a film director throw a party for the military if he wants? GOSH. [emphasis in the original]

That east wing of the White House sure is sneaky isn’t it? In 2009, it looked as if officials were just doing something nice at Halloween for military families. But more than two years later, conservative media figures have gotten to the heart of the scheme — this was a “secret” and a “set up” intended to make the right look bad.

It’s increasingly difficult to understand how the right views reality.

Amen!

The Obamas handed out treats to local schoolchildren on the steps of the White House, then hosted a reception for military families inside. It was widely reported at the time, and they even posted a video on YouTube.

This is about as far from a secret conspiracy as it's possible to get, yet nothing stops the crazies on the right. It's just incredible, isn't it? What next?

How the debt limit debacle hurt the economy

(click image to embiggen)

From TPM comes this great graph that shows what last summer's debt limit fight did to our economy:

Last week’s surprisingly positive jobs report overshadowed another bit of good news for the economy: last November showed the biggest growth in consumer credit in 10 years. Typically that’s a sign that consumer confidence is up, banks are willing to lend, and demand is on the rise.

If you look back at recent monthly data, though, you’ll see that this particular green shoot should have poked through the ground months ago, but was stymied by the GOP’s debt ceiling hostage drama.

If you recall, that debt ceiling debacle was a completely manufactured crisis - manufactured by House Republicans - which ended up dropping America's credit rating for the first time in our history.

Raising the debt ceiling has always been a routine matter - if one which frequently gives rise to plenty of partisan rhetoric - under both Democratic and Republican presidents. Sure, both parties make political hay with it when they're in the opposition, but until now, there's never been any question that it would ultimately pass.

After all, it doesn't affect government spending in the slightest. This is just saying that we'll pay the bills we already owe. And if we defaulted, it would be positively disastrous for our country. Until now, politicians have tended to put America first, when it really mattered.

But a continued bad economy helps the Republicans. Partly, that's because the president is a Democrat, and no matter what, the president almost always gets the blame for a poor economy (even when he inherited an even worse economy, as President Obama did).

But Republicans also run as the anti-government party. So everything they can do to make Americans disgusted with their own government actually helps the GOP.

After three years of Republican obstructionism, only about 9% of the American people approve of Congress. But since Republicans campaign on how bad the government is, this actually helps them. Yes, it helps the very people who make Congress so dysfunctional in the first place. Ironic, huh?

In this case, we've been trying to claw our way out of the worst economic collapse since the Great Depression. As back then, this happened on the Republicans' watch. When Barack Obama took the presidency, the collapse was in full swing and appeared to have no bottom.

Well, he quickly stopped the collapse, although lagging economic indicators, like unemployment, continued to get worse for awhile. The deficit increased, too, because an economic collapse automatically increases expenses (like unemployment benefits) and decreases revenue (when incomes drop, so do income taxes). And although he gets no political credit from this, Barack Obama has actually been cutting taxes, mostly on the middle class.

But these things are working. We've been climbing out of this deep, deep hole. Unfortunately, the Republicans have been dragging their feet every step of the way, so it's been painfully slow. And in that graph, you can see the dent the debt limit fight did to consumer credit. It seems to have cost us a good three months of progress, minimum.

It also caused the stock market to crater, which certainly didn't help. And it could have - probably should have - increased our borrowing costs. However, the global economy is in such bad shape that interest rates are near zero (contrary to the regular forecasts of the right-wing). And the American dollar is still the soundest, the safest, and the most respected currency in the world - though maybe not for long, if this keeps up.

Because this is all deliberate. Republicans are desperately trying to sabotage the recovery, or at least to delay it until after the 2012 elections. As they've said many times, their #1 objective isn't jobs or even the deficit. It's to make sure that a Republican takes the presidency back this next fall.

It's hard to make much headway when one political party is actively trying to sabotage the recovery. As far as I know, this is unique in our history. And if Republicans aren't punished at the ballot box - indeed, if they're actually rewarded for this behavior - I fear for my country.

Rick Santorum on gays and bla.. people

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I blogged about this before - I mean, when Rick Santorum said, or certainly seemed to say, "I don’t want to make black people’s lives better by giving them somebody else’s money." (I mentioned the homophobia then, too, as well as here.)

Now, Santorum claims that he didn't say "black." He says he meant to say some other, unspecified word, but changed his mind and garbled it, so that it just sounded like "black." OK, maybe. But two things come to mind when I watch the video clip of his speech.

The first is that there's no hesitation when he says the word. Normally, when you garble a word, when you start to say something and then change your mind, there's a pause, a hesitation, a momentary break in your sentence. But I don't see anything like that here, do you?

It's true that the last consonant sounds a little weird, maybe a slight accent, maybe a bit of phlegm. But the "bla" part certainly seems plain enough. And that brings me to my second point, one that Stephen Colbert makes, quite humorously, in this video clip. If Santorum didn't say "black," he certainly meant to say it, before - possibly - changing his mind at the very last second.

If he wasn't deliberately saying - for political effect in the overwhelmingly white GOP base - that black people just get handouts from the government, from white people's tax money, then he must just assume that, himself. It must be his own automatic assumption, then.

So is this just a Freudian slip, where Santorum accidentally said something he really thinks, instead of what's "politically correct." Or was it actually a deliberately racist statement?

And either way, does it make much difference? Not that I can see.

The homophobia, well, that speaks for itself, doesn't it? "Even fathers in jail who had abandoned their kids were still better than no father at all to have in their children's lives." Yeah, even fathers who beat their children, who rape their children, are a good thing, huh? Because that's what God wants.

When I was in grade school, in my small Nebraska town, the father of one of my classmates would regularly get drunk and beat his wife and kids. Back then, that was just a thing everyone deplored, but did nothing about.

The kids in that family were little sociopaths themselves, as I remember from those childhood years. Much later, I heard that my classmate was in the state penitentiary, having been convicted of some violent felony (admittedly, I don't remember the details, if I ever heard them - it could have been just third-hand gossip).

But let's hope that he had kids first, huh? And that maybe he got to beat them around a little bit before the big, bad government locked him away? After all, kids need a father.

Kids need parents. Two is better than one, no doubt, but only if they're both good parents. That's saying nothing against the millions of single parents raising kids. I just suspect that parenthood is difficult enough that, ideally, two people sharing the duty might lessen the burden a bit (at least the financial burden, which is considerable).

But there are a lot of things that go into that, and in many cases single parenthood is preferable. In many more cases, it's just necessary. Being a single parent is difficult, but most single parents work hard to do it well.

Heck, it's tough enough even for a couple, I know. And all the studies I've seen indicate that children raised by homosexual couples - or biracial couples, for that matter - are just as happy and well-adjusted as those raised by white, heterosexual couples. OK, maybe they tend to be less racist and homophobic, if that's a problem for you.

Evidence, of course, means nothing to the faith-based. But how about this? It's none of your business! Yes, we all have a duty to see that children aren't abused, either physically or mentally. We all have a duty to see that children get a good education, that they get enough to eat, that they have a secure place to live.

But if your idea of what God wants is different from someone else's idea - whether or not they even believe in a god - that's none of your business. If two adults want to get married, that's none of your business. It's their business.

I don't want to return to the days when a drunk could freely beat his wife and children because it was no one else's business. But that doesn't mean I want the government in the bedroom, either, or local busybodies in charge of every detail of a person's life. There is a happy medium, you know.

Republicans seem to be so eager to run everyone else's life for them. Gee, that's real generous, I'm sure. But considering David Vitter, Mark Foley, Newt Gingrich, Ted Haggard, Larry Craig, Bob Allen, Mark Sanford, Ed Schrock, Rush Limbaugh, and many, many more, maybe these people should worry more about running their own life.

Back to the future in "moderate" New Hampshire

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Republicans take looking back at the past through rose-colored glasses to a whole new level, don't they?

Sure, the party generally targets the elderly, working to attract people who are easy to scare, gullible enough to believe Fox "News," and with social opinions formed when America was far more racist and homophobic. But the Magna Carta? Are they going after the vampire vote now?

But Stephen Colbert explains it: "Remember, the Magna Carta was written by angry rich men who believed their ruler was an illegitimate usurper." Heh, heh. Makes perfect sense now, doesn't it?

Note that this was Colbert's second segment of the night on the New Hampshire primary. The first is here. I didn't include it, because I'm shortly going to be posting yet another video clip from last night's show. Yeah, the Colbert Report is an embarrassment of riches.

Punishing success

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Indecision 2012 - Extremely Loud & Incredibly Wealthy
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It's funny to see these Republicans "punishing success," isn't it? (I almost used the quote "Republicans unite people" as the title for this post, but I was afraid your head might explode.)

This is almost as funny as Newt Gingrich's flip-flop on Super PACs. You reap what you sow. And although Republicans think that these things are just great when the rest of us are the victims, they think differently when it hits too close to home.

Yeah, it's hardly fair that wealth can dominate the election process, is it? But it's not fair for anyone, not just for Newt Gingrich (who's a wealthy man himself, if not as wealthy as Mitt Romney).

And now, seeing these candidates pointing at Romney's wealth - as if it's a bad thing, all of a sudden (what happened to "job creator" as the GOP alternative to "rich"?) - is really pretty funny. And these are the same people who want to eliminate estate taxes who are now pointing out that Romney was born rich. Gee, that's a bad thing now?

The sheer hypocrisy of this is breathtaking, don't you think? Of course, these are Republicans.

QOTD: The role of anger, ridicule, and passion

Quote of the Day:

There is a very important role that anger, ridicule and passion play in any social movement. While intellectual understanding is key to a movement that is well-grounded, it is the primary emotions that provide the impetus for social organization. Without this, atheism would simply remain an idea to be discussed in academia and in private settings.

Let me give you an example. Secular Humanism has been around for more than a century. Humanists often deride the ‘New Atheists’ for their bitterness. In fact, the argument from many humanists has been that their tactics are more effective! But how many people knew about secular humanism before the ‘New Atheists’? Their whole movement was an academic one, restricted to an elite group of people who had the time and inclination for such intellectualisms. While the humanists were debating about human rights and ethics for over a century, atheists continued to remain in the shadows, in a cultural environment where they were unable to realize many of their fundamental rights. The only community that was available to most atheists was society at large. As you may well know, one of the most important functions of religion is to provide a common cultural ground to enable a common morality and social code to bring together people and form a functioning and content community. We atheists did not have this - not until a few years ago. It is easy to ignore the freedoms (from the point of view of social acceptance) we have gained towards expressing our beliefs in public and for gathering in the name of reason. It is easy to forget that millions of atheists crave the kind of social contact that religions have traditionally provided. It is even more easy to forget the role that anger, ridicule and passion have played in creating this global community of freethinkers. Without the ‘new atheists’, secular humanism would have remained irrelevant in the public sphere. Today we can meaningfully talk about replacing religion with a secular morality derived from humanistic principles only because of the social impetus that the ‘New Atheists’ like [Richard] Dawkins have provided humanity with.

... Ideas die in a culture when it becomes embarrassing to hold on to them. Social conformity is achieved not through intellectual discourse as much as through the need to belong. If your ridiculous beliefs are laughed at, you begin to question them. This may not apply to you or me or many in this group, assuming that we are more evidence-based on our thinking, but this certainly applies to the majority of people on earth.

Do not think that I am advocating personal attacks. I am talking about ridiculing irrational beliefs, not people.

In fact, I do not engage in debate with believers any more. At least, I try not to. This is the least effective strategy for someone like myself, since many religious folk seem to be unable to make the distinction between personal attacks and criticism of ideas. I think that what really works is for atheists to be visible to the community at large. If religious people actually see that atheists are a happy, moral and well-organized community, obtaining the same social benefits from cooperation and emotional fulfillment that religious people do, that is more effective in making them question their own beliefs. In the process, let’s have some fun laughing at absurd and false beliefs, even as we expose them for the dangers that they represent. - Ajita Kamal

What we're losing

It's not just what we stand to lose, but what we're losing - more than a hundred species a day, by many estimates.

Not these particular species, not yet. But species that are every bit as wonderful. And it's not just the non-photogenic species which are at risk.

Tales of Maj'Eyal

This is a neat little game. I've been playing it lately, because it's so easy. (I've been trying to get started in Achtung Panzer: Operation Star, too, but that's so difficult and this game is just so easy to jump right in and play.)

I'm not normally a big fan of rogue-likes, but this game is different. For one thing, it's a graphical rogue-like. It might not be Skyrim, but it's not just ASCII symbols, either. (I can't even do ASCII with Dwarf Fortress.)

Also, permanent death is an option. You can't get unlimited lives, but you can die a few times, more as you advance in levels, without ending your character permanently, if that's what you want. I like that, because I get tired of playing the very beginning of rogue-likes, over and over again.

Tales of Maj'Eyal helps with that, too, since different races start in different locations. And it still maintains the advantages of rogue-like games, including the fact that it's free. Download it here. I did donate a bit to the developers, because I like to support such things, but that's not required. (Jef Major, in this video, says that donors can play in "adventure mode," but I don't know anything about that.)

ToME is still in beta, so you might run into problems with the game. But I haven't seen any, myself. I suspect that it's just not as complete as it will be, eventually. But if so, that's not obvious, either.

One of the neat features of the game is that not all races and not all character types are unlocked from the beginning. You have to play a little bit first, until you stumble across something special. For example, one of my characters had a random encounter with a hostile tree, which unlocked the "Summoner" class of character. That class is now unlocked permanently for me.

That's a neat idea, because there's always something new to try. You can play for awhile with the introductory classes, before the game opens up something you haven't seen before.

Well, try it for yourself. ToME is well worth trying, and the price is certainly right. Plus, as I say, it's very easy to play, even just for a short period of time. It's seductive, because that ease of play is just so tempting.

Achtung Panzer: Operation Star looks like it will be fun, but it's a bear to learn, and it's always going to be an effort to get started again. I'll get to it eventually, and I'm sure I'll blog about that one, too. But I'm pretty lazy, and ToME is really taking advantage of that right now. :)

My investment plan

The beginning of a new year - actually, the end of an old year - is a good time to review your financial plan. You do have a financial plan, right?

Of course you do! Sorry, I guess I lost my head there for a moment.

Well, my financial plan is a lot simpler than yours, I'm sure. I own my own house, I have no dependents, I don't need to finance an education (my own or anyone else's), and I don't even have to worry about losing my job, since I don't have one.

I do need insurance, of course, to guard against any (hopefully, rare) catastrophic events. But other than that, my financial plan is basically an investment plan. So that's what I'm going to talk about,... assuming that any readers are still with me at this point.

I didn't have a detailed investment plan until I started planning to retire - I mean, seriously thinking of quitting my job. My goal was always to retire when I turned 55 - that was about five and a half years ago - but I wanted to be absolutely sure before handing in my resignation.

But honestly, a written plan would have made a lot of sense long before then. I see that now. A written plan, especially in a computer file, so you can easily review and revise it as time goes by (and keep track of those revisions), would have been really valuable earlier in my life. Oh, well. That's not the only mistake I've ever made!

I actually started investing in the stock market - in stocks - in the late 1970s, if I remember correctly. I had a full-service broker, which was mostly all there were back then (Charles Schwab began in 1975, but I didn't know that), and costs were very high, especially for a small investor like me.

My idea at the time was that, since I had little money to invest, I needed to make a killing. Otherwise, any kind of tame return wouldn't make any difference to my life at all. Well, that was the first of my investment mistakes, though far from the last.

I did very well at first. I was enthusiastic, and I regularly spent some time at the public library doing research. (These days, you can do that from the computer, but back then, it required a trip to the reference department to look through paper documents.)

So at first, I did great. Maybe that was just luck, maybe not. But I have a lot of interests, and my enthusiasms tend to come and go. When I stopped paying a lot of attention, and just started listening to my broker, I lost money like crazy.

I spent years like this. I'd get enthusiastic again, and start doing my own research, and I'd do well. Oh, the stock market would still go up and down, but I'd make money over time. But inevitably, something else would catch my attention, I'd stop paying attention to my stocks, and I'd lose big-time. After ten years, I had relatively little to show for my efforts.

That was my first, and maybe my most important lesson: know yourself.  I find everything interesting, and I don't stick with anything for long. Frankly, it's been remarkable that I've stuck with this blog for almost two years now. You may be different, but if I was going to invest, I needed an investment that could run on autopilot when necessary.

So, about 1990, I started investing in no-load mutual funds. Mutual funds have some disadvantages, but they had some big advantages for me. (Please don't get the idea that I'm offering advice here, except the very basic idea of having a written plan in the first place - which, actually, I haven't really gotten to yet.)

Mutual funds probably weren't any easier to select than stocks, and it was at least as hard to know when to sell them, but I didn't have to watch them very closely. It was useful to check on them once a year or so, and to rebalance my holdings occasionally, but I didn't have to pay close attention. I still did, often enough. But there were other times when I got involved with other interests. (That's still the case.)

And I didn't need a broker to buy no-load mutual funds. I could buy them directly from the fund company with no sales charge. That was nice. Even better was that I could start investing with a ridiculously low amount of money.

At first, I started investing in funds which would waive their normal investment minimum if you set up an automatic investment of $50 a month. Yup, just $50 a month. Clearly, I was no Warren Buffett. :)

At $50 a month, it takes a long time to get anywhere. But in investing, time works for you (just the reverse of borrowing money, I'll point out). And I added to my holdings, sometimes adding new mutual funds, as my income increased.

I made a lot of mistakes. Well, they weren't always my mistakes. Sometimes, a mutual fund just wouldn't do what it claimed it was doing. Mutual funds, too, have investment plans. And I did a lot of research trying to find funds with an investing philosophy that seemed to make sense. Sometimes, I was wrong. But often enough, a fund wouldn't actually follow its own plan.

Well, that's how it seemed to me, anyway. And in those cases, I'm not sure if you can call it my mistake. That's something I've learned from my investment plan, too. Sometimes, you can do all the right things and still lose money. Of course, I did plenty of wrong things, myself, over the years. You have to expect that.

Today, I don't own any of those early funds I bought. In some cases, I sold them because I realized I'd made a mistake (and occasionally, it was probably a mistake to sell them). In other cases, I sold them for tax purposes. Investing in mutual funds doesn't get quite the favorable tax treatment as investing directly in stocks, but it's still far, far more favorable than if you actually have to work for a living.

Back then, of course, I did work for a living. And I used that income to invest in mutual funds. And I kept it up for years. That's where my first investment lesson really paid off. You don't actually have to make a killing in the stock market, because your earnings compound over time. You just have to have patience.

At first, especially when I was just investing $50 a month, it seemed like I might just as well blow it on lottery tickets. (No, I was never actually that dumb, not really.) But after awhile, things change. After awhile, you realize that you've started to accumulate a little nest egg.

I remember the first time I made more in my existing investments than I'd added to them during the year. That was a real milestone! Much later, there came a year when I made more on my investments than I'd made from my job. That was another memorable milestone. And it all started with just $50 a month.

OK, this is getting too long, and I haven't even made it past the introduction. Heh, heh. I'd planned to make this a two-part post, but I think it might have to be a three-part post, instead.

I suspect that most of you are horribly bored by this, if you've made it this far, but I'm enjoying the look back, myself. And that's what matters here. :)

But if you have any questions, please ask them in the comments. It might be something I'll get to in parts 2 and 3 (coming up soon, I hope), or it might be something I'm not qualified to answer. But there's a lot to this subject, much more than I'll be able to post here.

___
Note: Here's Part 2.

Newt's global warming flip-flop

An "amateur paleontologist"? Newt Gingrich is clearly relying on the fact that most Republicans won't have the slightest idea what paleontology is.

You know, I like dinosaurs, too. But that doesn't make me an expert in paleontology. And it certainly doesn't make me an expert in climatology, which is a completely different field of science.

Frankly, Newt isn't just relying on our ignorance of paleontology. He's also relying on our news media not calling him on this. Yeah, questioning why paleontology has anything at all to do with global warming would be showing bias, huh? Just another of those "gotcha" questions, like "what newspapers and magazines do you read?"

Like Romney, Gingrich is just flip-flopping to appeal to the increasingly anti-science Republican base (scientifically ignorant enough to not know what "paleontology" even means). Most of these Republicans were more rational even just a few years ago. But as fast as the GOP is rushing to the far-right, it's a struggle for their "leaders" to keep up.

OK, there's no point in continuing with this argument. Certainly, I've made it before. So maybe I'll just post a few links to recent articles I've noticed. I thought of blogging more about each of these, but it's not going to happen.

But maybe they'll give you something to think about.

From the New Zealand Herald:

Dramatic and unprecedented plumes of methane - a greenhouse gas 20 times more potent than carbon dioxide - have been seen bubbling to the surface of the Arctic Ocean by scientists undertaking an extensive survey of the region.

The scale and volume of the methane release has astonished the head of the Russian research team who has been surveying the seabed of the East Siberian Arctic Shelf off northern Russia for nearly 20 years. ...

Scientists estimate that there are hundreds of millions of tonnes of methane gas locked away beneath the Arctic permafrost, which extends from the mainland into the seabed of the relatively shallow sea of the East Siberian Arctic Shelf.

One of the greatest fears is that with the disappearance of the Arctic sea-ice in summer, and rapidly rising temperatures across the entire region, which are already melting the Siberian permafrost, the trapped methane could be suddenly released into the atmosphere, leading to rapid and severe climate change.

From USA Today:

The USA has endured 12 billion-dollar weather and climate disasters in 2011, breaking the record of nine set in 2008, the National Climatic Data Center announced this morning at a meeting in San Francisco. ...

In these 12 disasters, 646 Americans have been killed, the weather service says. In total, including other weather events that didn't reach the billion-dollar threshold, more than 1,000 people have lost their lives because of weather and climate events this year. ...

"We're having intense storms that I haven't seen before," weather service chief Jack Hayes said this week, adding that the cost of weather-related disasters has increased dramatically in recent years.

Scientists blame the disasters on a combination of global warming and freak weather.

From the Washington Post:

The underwater world on display in Disney’s “Finding Nemo” is teeming with a dizzying array of cheery creatures, from sea turtles to seahorses and mackerel to sharks. So a team of Canadian and U.S. scientists decided to assess the mythical ecosystem inhabited by the small clownfish and his friends to see how their real-world counterparts were faring.

It turns out that when it comes to surviving in a non-Pixar sea, being adorable isn’t enough.

Sixteen percent of the species associated with characters in “Finding Nemo” that have been evaluated face the threat of extinction, according to the study, which was conducted by the International Union for Conservation of Nature (IUCN) and Canada’s Simon Fraser University. The analysis of 1,568 species is not just a whimsical look at American popular culture and its cartoon characters. It reveals how humans treat some of the ocean’s most charismatic inhabitants.

“These are species that should be doing better because they are the ones we care about,” said Loren McClenachan, a post-doctoral fellow at Simon Fraser University.

From Clean Technica (because I didn't want to be unremittingly bleak):

With two years of the Obama administration, almost four times as much clean energy has been put on the grid on public lands as in all the previous 40 years.

All the renewable energy ever permitted on public lands totaled 1,800 MW by the end of 2008. In the last two years, the Department of the Interior has approved 6,600 MW of new projects.

Rapid and responsible fast track utility-scale production of clean energy is a solution to the climate destabilization caused by continuing the reliance on fossil energy. ...

Like all renewable energy projects, these 27 underwent extensive environmental review and reflect strong efforts to mitigate potential environmental impacts. ...

The Wilderness Society, which has long been lobbying the White House for reform on how electrical grids are planned, built and managed, supported the new approach to rapid deployment.