Net Worth Numbers

If you ever want to deal with a statistical nightmare, try attaining reliable average and median net worth figures. Below are a smattering of net worth numbers, all vastly different:

From Boston Globe (2009, Jenn Abelson, "The Loss Generation"):

35 and under group: $76,400 (average)

From All Financial Matters (2006):

35 and under group: $14,200 (median) $73,500 (average)

From WSJ (2004, Kelly Greene, "Golden Years"):

34 and under group: net worth of $7,240, including home equity.

So just for the 35 and under age group, we have net worth numbers ranging from $7,240 to $76,400. You'd think there would be a researcher in 2009 who would publish reliable net worth numbers and compare the different numbers published by others, but I haven't seen such a study. If anyone who knows of such a paper, please post a comment and link.

Asset Allocation based on Mohammad El-Erian

Here is an interesting article regarding an asset allocation model:

http://www.thestreet.com/story/10464086/1/an-el-erian-fund-for-the-masses-using-etfs.html

The author bases his ideas on Mohammad El-Erian's proposed investment model. Mohammad El-Erian was Harvard's former endowment fund manager. The following funds/ETFs are mentioned in the article:

LBNDX MUE NVG IJR IGOV DBA IGF

Personally, I am surprised DBC and TIP are not on this list. I currently hold some DBC and TIP and am looking to buy more. Whenever TIP dips below 100/share, I consider buying more.

Update on July 2, 2009: following El-Erian's belief that commodities will steadily increase in value over time, I bought UNG, WPZ, USL, GSG, COP, and SLV. I don't see human populations declining, which means that more resources will be needed.

Natural gas, on the other hand, is a unique commodity that may experience dramatic price fluctuations. Unlike oil and gold, there's plenty of readily accessible natural gas, but if Americans shift from oil to gas, natural gas prices should slowly increase.

Update on July 7, 2009: I added to the July 2 positions except for USL and SLV and opened a small WMB position. What a wild ride this week has been for commodities. I am holding all of these shares in a retirement account to minimize taxes on any dividends/distributions.

Update on July 22, 2009: yesterday, I sold most of the holdings mentioned above--some of them increased 20% in less than a month. I am not a greedy man, and I am concerned that the market may decline when unemployment benefits start running out and CIT experiences liquidity issues again.

The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.

Bruce Lindsey Knows his Priorities

I love hearing about a fellow cheapskate:

"'Frugal' is not the right word for Bruce," suggested business professor Ed Westbrook, who befriended Lindsay. "He was real miserly."

And yes, those are affectionate words. Bruce Lindsey left millions of dollars to a small college. More below:

http://news.yahoo.com/s/ap/20090308/ap_on_re_us/university_donor

Ted Anthony on a "Numbed Nation"

The AP's Ted Anthony has written a haunting, beautiful article:

http://news.yahoo.com/s/ap/20090404/ap_on_re_us/numbed_nation_analysis

Senseless violence: Two centuries from now, if we're not careful, it could be an epitaph for our era.

Bill Maher's Religuous

I just saw Bill Maher's film, Religuous. I really liked it, although some parts came across as cheap. Michael Moore's films are much more polished, and Moore at least attempts to includes pieces of the other side (even if he leaves out a lot of information). But I suppose Maher, as a comedian, gets a pass, because he's doing it for comedy's sake. His main point is that non-religious persons need to fight against a rising tide of ignorance before its ill-advised passion overwhelms and destroys all of us.

While I enjoyed the movie, one "deleted scene" disturbed me. Maher meets Howard Bloom, who goes on a rabid rant against Muslims. Maher doesn't contradict Bloom and seems to agree that Islam is a) focused on taking over the world; and b) an inherently violent religion. Sadly, it was like watching Maher's version of Protocols of the Elders of Mecca.

Bill Maher and Howard Bloom are wrong for many reasons. First, they are on the wrong side of the economic tide. Muslims represent around one billion people and are therefore an ample source of trade. Increasing globalization--if done properly--will temper any cultural or religious issues. As Robert Wright points out in The Atlantic (April 2009, page 50), "When economics draws people of different ethnicities and cultures into mutually beneficial relationships, inter-ethnic and intercultural tolerance often ensues. (How many ethnic slurs are heard in transatlantic business class?)"

Second, to call Islam inherently violent means to ignore history and Quranic text. See The Atlantic (April 2009, page 52), which confirms that "the Koran's description of Christians and Jews as 'People of the Book'--adherents of Abrahamic scripture, like Muslims--seem[s] to provide a basis for tolerance." The Prophet Mohammad also stated, "There is no compulsion in religion." It's impossible to reconcile that statement with violence unless one is deliberately trying to be obtuse.

What about "jihad" and other scary-sounding names? That's something that happened after the Prophet Mohammad died. The concept of "jihad," didn't exist until the mid-seventh century, "after the death of of [Prophet] Muhammad." (Id.)

As for the modern-day war of words between Iran/Persia and Israel? That's brand-new and unprecedented. "In the case of ancient Israel, the empire in question was the Persian Empire, which Israel became a part of in the sixth century B.C. Previously, Israel's brushes with empires had been largely unpleasant. [You have to love the author's gift of understatement.] The Israelites were tormented by the Assyrians and, more famously, by the Babylonians, who forced Israel's elites into exile in 586 B.C. And the Hebrew Bible has the belligerent, xenophobic scriptures to show for these experiences...But after the Persians conquered the Babylonians and allowed the exiles to return home, Israel was on the inside, not the outside, of an empire, and a pretty congenial one--an empire that respected its subject's religious autonomy." (Id.)

What appears likely is that Islam's so-called inherent violence is a modern-day invention used to justify various agendas. First, countries need enemies to keep themselves sharp and moving--utopia is bad for progress. Second, the government, which includes the military, has no incentive to stop the flow of taxpayer dollars to themselves; therefore, any enemy is useful to rally the troops and to justify increased revenue. In fact, an abstract enemy, like a "War on Terror," is better than a tangible enemy (i.e., Iraq), because people might actually protest if you haven't defeated a tangible enemy after several years. In addition, abstract enemies are perfect to keep the money spigot flowing, because in a perpetual war, spending has to continue infinitely. Anyone who says otherwise just isn't a patriot, right?

America's decision to allow excessive military spending, has real life consequences (aside from the foreign civilians dying in wars). If we believed we had no real enemy, would we really allow our representatives to spend trillions on defense instead of health care, parks, infrastructure, teacher salaries, and other domestic spending? Of course not. Our failure to protest our government's spending decisions is causing us to forgo substantial benefits at home.

By the way, Bill Maher has been absolutely wrong before. See this funny rant ("Ode to Government"), where Maher praises the Post Office, saying he'd love our country to be like the Post Office:

http://www.huffingtonpost.com/2009/03/07/bill-mahers-ode-to-govern_n_172724.html

And then read this article, which will give you some insight into why the Post Office chief has said, "We are facing losses of historic proportion. Our situation is critical." (The Post Office lost lost $2.8 billion last year.)

Ouch.

A Teacher Speaks Out

A local California schoolteacher has singled out excessive benefits as one reason for the her district's budget shortfall:

http://www.mercurynews.com/opinion/ci_11967689

Poor district leadership and an inadequate state budget are not the only reasons for East Side's problems. The sacred cow of the East Side Teachers Association is medical benefits that cost over $27.3 million a year. East Side is the only district of its size in Santa Clara County that pays 100 percent of employee benefits. Although admirable, this extracts an enormous financial toll. Add paid benefits for each member of the board of trustees and medical coverage for retirees under age 65, and the cost skyrockets.

Teachers' unions have set up a pyramid scheme where the older teachers reap the benefits of the system and leave scraps for incoming and younger teachers. It's time for a change, and unless more tenured union members are willing to cut their benefits or make sacrifices, children will continue to suffer.

About Me: Superstitious Version

The Mouth of Truth apparently has these things to say about me:

You sometimes can't enjoy close personal relationships.

You are extremely sensitive and have fine taste.

You are deeply mystical and intuitive by nature.

You are sometimes over idealistic and you should learn to be more cautious to avoid disappointment.

Your success will give rise to envy; keep a sharp look out for the traps set for you.

Be very careful: you could be caught off guard by misfortune.

Well, I'll be damned. That Zoltar-lookin' thing might have me spot-on. Also, I score highest in "Health"; lowest in "Luck."