I’ve gone from poverty to having decent disposable income and it would take a lot to reverse all that effort. I have “loved” people who were dumb with money. It was very stressful and financial issues eventually overshadowed the positive aspects of the relationship.

@Little House
You sound like me. Each other’s company is so fun, and so priceless. But, we can do a lot of good for others with $100 million!

Check out the original Alexa challenge post. Seems pretty straightforward. If one can help others, eventually that help will be reciprocated. You’re welcome to join! Just follow the directions from the post.
admin´s last blog ..Tax Refunds Are Good For Most People, Because Most People Can’t Save

Congrats on your Alexa ranking. How do you do it?! Must be your controversial posts, always intriguing.
Little House´s last blog ..Cheap Motels

Your Samurai Challenge is going like gangbusters – you’re little cabal of blogs are really picking up traffic. This is really the best way for a lot of us to get ahead, way too much competition in the blogosphere to go it alone. Thanks again for the great idea.
David @ MBA briefs´s last blog ..5 Ways to be happier – guaranteed

You’re looking at individual securities, Sam. I’m looking at broad indexes. It’s not possible to effectively predict the long-term return of an individual security (unless you’re Warren Buffett). With a broad index, it’s easy.

Here’s what William Bernstein says about this in his book The Four Pillars of Investing: “Not infrequently, promising companies with large expected future dividend streams stumble and fall; nearly as often, companies given up for dead recover and provide shareholders with prodigious amount of future income. On the other hand, when you examine an entire market, consisting of hundreds of thousands of companies, these unexpected events average out. For this reason, the income stream of the market as a whole is a much more reliable calculation.”

The implications here are huge for the typical middle-class investor. Now that index funds are available to us, we no longer need to worry about the risk of stock investing. If we just look at valuations before setting our stock allocations, we avoid 80 percent of the risk that was present in the old days (and that is still present today for those following a Buy-and-Hold strategy).

I have a calculator at my site (“The Stock-Return Predictor”) that performs a regression analysis of the historical stock-return data to reveal the most likely 10-year annualized real return for stocks starting from any given valuation level. At the prices that applied in 1982, the most likely annualized 10-year return was 15 percent real. At the prices that applied in 2000, the most likely annualized 10-year return was a negative 1 percent real. Do you see why following a Buy-and-Hold strategy is going to delay your retirement by many years? There is no one stock allocation that makes sense both when your long-term return is 15 percent and when it is a negative 1 percent.

In January 2000, the choice was between stocks paying a most likely return of a negative 1 percent real for 10 years running and Treasury Inflation-Protected Securities (TIPS) paying a guaranteed return of 4 percent real for 10 years running. The investor who started with $100,000 was $50,000 ahead at the end of 10 years if he went with TIPS. The investor with $500,000 was $250,000 ahead if he was willing to avoid a Buy-and-Hold strategy. It’s the losses that we all suffered by following Buy-and-Hold that caused the economic crisis — when $12 trillion of wealth disappears from a consumer economy, spending dries up and the economy collapses.

I have spoken with numerous big-name experts, who have acknowledged that I am right about this (sometimes in direct words, sometimes in cagey language). The problem today is that The Stock Selling Industry made hundreds of millions promoting Buy-and-Hold. There is a feeling that it would “look bad” if these big-name millionaire “experts” were to acknowledge having caused the biggest loss of middle-class wealth in U.S. history. My thought is that it ends up looking worse when the continued promotion of Buy-and-Hold causes another crash, one that sends us into The Second Great Depression.

The wonderful thing is that middle-class investors now have the internet available to us. The Stock Selling Industry is not able to prevent us from sharing the realities with each other. My strong sense is that there are many in The Stock Selling Industry who would love to be able to tell people the truth about stock investing if only we would help them get out of this corner that they have painted themselves into.

We live in exciting times, eh, Sam?

Rob
Rob Bennett´s last blog ..My E-Mail to Yale Professor Robert Shiller, Author of Irrational Exuberance

Let’s say you put the entire amount into low risk investment that yields 4%
Letls do math… $100,000,000 *.02 = $2,000,000 annually, and with another 2% going back in to keep it growing…

I have to take the money elsewise I’d have to call my site AlmostMoneyReasons.com…
Money Reasons´s last blog ..Stop Waiting For Magical Moments To Happen

@David @ MBA briefs
Maybe we’ll launch a hedge fund mid year? Or, introduce 5 short positions. It might get complicated though!

@Charlie
Well, I’m not saying you will never have a girlfriend, but if you choose money, you will NEVER find the one. You can find the person you like, but not your soul mate.

I love old cars with no electronics. I especially love a 1956 Mustang!

@Roger
I tell ya, is it so bad to have $100 million and have a girlfriend you really like but do not love?

@Rob Bennett
Rob, what makes you think higher price securities means the security is more expensive? Their earnings could have more than increased by the increase in price change, making the security cheaper.

i.e. Google goes from $500 to $600, a 20% rise, but earnings go from $100/share to $200/share, or 5X earnings to only 3X earnings, hence much cheaper.
admin´s last blog ..Someone Always Farts In A Crowd

Thanks for the mention, Sam.

It’s not impossible! It’s thought to be impossible by some today in the way that getting a plane to fly was once thought to be impossible and indoor plumbing was once thought to be impossible and the curing of many diseases was once thought to be impossible. It’s viewed as “impossible’” because it’s never been done before, that’s all. Once we do it, there won’t be people saying that it’s impossible anymore.

Investing is like all other areas of human endeavor. We make mistakes and then, if we are smart, we learn from our mistakes. We’ve learned some amazing things over the course of the past 30 years. The problem has been that The Stock-Selling Industry has felt that it was better to keep pushing Buy-and-Hold because that brings in millions for The Stock-Selling Industry. Valuation-Informed Indexing takes away about 80 percent of the risk of stock investing while greatly increasing returns. And the internet gives us a way for us all to learn about it whether The Stock Selling Industry likes the idea or not!

He mentions price changes don’t matter, which I don’t understand at all. Do you?

If you own a broad index fund, price changes beyond those justified by the economic realities (which support an annual return of 6.5 percent real) are on net neither a good thing or a bad thing. A price increase makes your portfolio larger, which is a plus. But it also makes valuations higher, which causes your long-term future return to drop, which is a negative. It’s a wash.

Investors should be marking their portfolios up or down to their real value (the value they would have if stocks were priced at fair value) so that they know the true value of their portfolios. Otherwise, you’re making financial plans based on the phony nominal values. That can get you in a lot of trouble.

The nominal values were three times the fair values back in January 2000. If you had a nominal portfolio value of $300,000, the real (long-term) value was only $100,000. It’s the drop from $300,000 to $100,000 that all investors experienced that was the primary cause of the economic crisis. You can’t take $12 trillion (that’s the amount of overvaluation that applied at the top of the bubble) out of the economy without causing an economic crisis. If we let people know the realities of stock investing, stock price volatility could be reduced to a fraction of what it has been in the past. It’s emotional investing (Buy-and-Hold, or ignoring price) that causes volatility.

Those interested in these ideas might want to check out a Google Knol that I wrote recently entitled “Why Buy-and-Hold Investing Can Never Work”:

http://knol.google.com/k/rob-bennett/why-buy-and-hold-investing-can-never/1y5zzbysw7pgd/1

That article sums up eight years of work developing a new model of how stock investing works that we’ve ben doing in the Retire Early and Indexing discussion-board communities for close to eight years now. I’m pretty darn proud of that one!

Rob
Rob Bennett´s last blog ..My E-Mail to Yale Professor Robert Shiller, Author of Irrational Exuberance

(I suppose I could try to get all lawyerly, arguing that if I was with someone who wasn’t my ‘special someone’ but who was, to quote Weird Al Yankovic, ‘Good enough for now’, I could have a girl (perhaps not THE girl) and the cash, but I’ll take this more as a which do you value more type of question, instead.)
Roger´s last blog ..Financial Samurai’s Alexa Challenge

It’s pretty crazy about Toyota. Makes me appreciate older cars with minimal to no electronic parts that just did what they were supposed to. I don’t even use cruise control when I drive and plan to keep it that way.

TM sure deserves bad marks for their inability to manage the PR nightmare but the local dealer has opened service 24 hours a day until every car is repaired. That is commitment to the customers!

Thanks for the link Samurai-san!
LeanLifeCoach´s last blog ..Money & Time, How Others Waste It

Sorry about ABM, I had a talk with the board and told them to shape up or else. It’s down exactly one dollar since the start, but if you believe in technical analysis it’s looking like a bargain at $19.65 since it’s trading below the 50 day average and hovering around the 200 day average. The MACD is also trending up, and when it crosses the signal line that’s supposed to be the classic buy signal. The financials are solid and they’ve demonstrated an ability to generate earnings, so if I was the analyst I would rate it as a “hold”. As far as the price goes I think ABM has fallen victim to Mr. Market.

As far as Toyota goes if they can follow Tylenol’s example and do the right thing they’ll demonstrate to investors their commitment to their customers and stakeholders and come out a winner. If we were a real hedge fund we’d be looking for the bottom so we could make a cool profit when it bounces back. Matter of fact, we may have missed the bottom – it’s up about 4% already.
David @ MBA briefs´s last blog ..How to analyze stocks like a pro – part 5