Blog – Page 202

Small bites.

It’s officially our baby now. The Carnival of Wealth returns to its permanent home for another week of fun and finance. Again, these were either the most insightful or most entertaining personal finance blog posts of the last week. If you’re a writer, you can get in on this too. Just submit your entry here by midnight Saturday, and if it makes the cut you’ll find out by coming back here late Sunday. Maybe Monday morning if we’re having a particularly eventful night. Again, these are actual posts from actual bloggers:

Alright, not yet. Before we get started, one request.

Submitters, would it kill you to spell and punctuate properly? We’re not even asking for your content to be gripping, we just want the form to be something that approximates English. Makes it easier on us, and greatly increases your chances of getting selected. Thank you. On with the show:

An audio submission? That’s a curveball. Sirius gave Rosie O’Donnell a microphone, so why not give Matt Wegner’s podcast at Financial Excellence a listen? This week Matt talks about Standard & Poor’s downgrade of the U.S.’s credit rating, among other things.

Money Cone points out that the market recently took its biggest hit in a while on Monday (sure enough, he submitted that before the market’s big rebound on Tuesday, and the secondary dip on Wednesday, and the subsequent rebound on Thursday.) Short-term fluctuations aside, M.C. wisely says not to sell a stock until its fundamentals worsen. Warren Buffett’s advice is easy enough to articulate, but are you disciplined enough to follow it?

This might not directly be about how to make money, but we’ll make an exception for Jason at Live Real, Now as he explains how to register a domain and find a host without impoverishing yourself.

Marie has a guest post at Prairie Eco-Thrifter this week about how negotiation is slowly becoming commonplace in our prix fixe society. Fortunately, she correctly cites failure to negotiate as the primary reason women get paid less than men. Unfortunately, she repeatedly quotes the wisdom of that bald mustachioed dingbat Dr. Phil.

Dividend Stocks Online lists their 2 favorite dividends stocks this week, in a fairly technical post about growth vs. income.

If you’re thinking of killing your wife and reaping the rewards, even if you’ve got the perfect alibi and hire the same hitman Robert Blake used with such great success, think again. Brian at Testate Will explains how you first want to determine if you live in a community property state, then confirm that your wife isn’t carrying any debt, and only then kill her. And not one moment earlier.

This week’s “Infomercial Masquerading As A Blog Post” comes from Jesse Michelsen via Investor Junkie, who explains why you should use Zecco to day-trade your way to riches.

If you’re getting a tax refund, or worse yet, paying a preparer to get you a tax refund, at least don’t delay paying for the privilege. Eric J. Nisall at DollarVersity explains why you should remunerate your preparer ASAP. Those of us who send the IRS checks rather than letting them enjoy our money interest-free all year long would agree with that, but we’re too busy lighting cigars with $100 bills.

Money Spending Mommy shows a flair for locating profound arithmetical truths this week. We’ll let her describe it:

“Even though most people don’t retire in their forties, most of them are beginning to seriously think about whether they’re saving enough for retirement. Money advice in your forties may be similar to what you received in your thirties; however, you probably have fewer years to be planning and saving.“

Wait a second.

40s = years between 40 and 49
30s = years between 30 and 39.
40 > 39.

Hey, she’s right! You do (“probably”) have fewer years to be planning and saving in your 40s than in your 30s! Who says ladies are bad at math?

Yes, you can erect a flamboyance of plastic pink flamingos to stand outside and make your home more attractive to potential buyers. Or you can subscribe to The Family Wallet’s 20 slightly more sensible recommendations.

It’s been a while since the CYC principals worked in the regular world, which is why this post from Nelson at Financial Uproar inspired all sorts of cringing. It’s a scathing indictment of the performance review, that absurd song-and-dance in which a supervisor grades you while some pedantic whore from the human resources department offers her opinions on a topic she knows nothing about. If there’s any endeavor that should be graded pass/fail rather than in degrees, it’s employee performance. Either you’re good enough to stick around, or you should be fired. Instead, we’ve developed a formal system where at fixed intervals, your supervisor has financial incentive to tell you that you suck no matter how good you are.

D4L at Dividend-Growth-Stocks screened his database for stocks that’ll yield 10% in 10 years at current yield and dividend growth rates. Read his findings here.

It barely counts as an observation to point out that if you’re undisciplined with regard to the body God gave you, you’re going to be undisciplined in most other aspects of your life. Case in point is Reformed Chocoholic, which apparently is not a parody site but really does feature the musings of a morbidly obese woman with a ridiculous 41.2 body mass index who thinks that the world is dying to hear the details of her daily food consumption (“Breakfast: 1 scrambled egg, 2 pcs. Canadian bacon, 1 cup soy milk, 1/2 apple & 1/2 orange.” Ahem, bullcrap.) We’ll give her points for candor, though: she also admits to having $57,000 in consumer debt. YES, THIS IS THE KIND OF PERSON WHO SHOULD BE DISPENSING PERSONAL FINANCE ADVICE. Next week, Jani Lane will post about the evils of taking drugs.

Somebody good? Thank you. Neal Frankle at Wealth Pilgrim is routinely one of our favorites. His ability to cut through the nonsense and see things from a different perspective always gets our attention, and this week’s 7 Unconventional Tips to Become a Successful Entrepreneur is no exception.

We can’t very well ignore the guy who founded the Carnival, can we? Much like when R.E.M.’s retired drummer Bill Berry wants to jam with them on the occasional gig, we’ve left the kit permanently open for Arohan to lay down a few beats whenever he feels like it. This week his Value Stock Guide features a guest post from Shailesh Kumar on how to determine a stock’s book value.

Thanks again for coming. Let’s do this again a week from today.

A new adjective to describe the size of our government: gynecomastic.

Stock recommendation coming. But first, a rationale.

You might have noticed that there’s no disclaimer on ControlYourCash.com, the absence of which is yet another feature that sets us apart from almost every other personal finance blog.

There are at least 2 reasons for this. We never included a disclaimer because if you’re stupid enough to lose money on an investment just because we recommended it, that’s your problem, not ours, and we’re willing to argue that in a court of law should it come to that.

We hate the very fact that we had to mention that, which indirectly explains our other reason for the lack of a disclaimer. If we were to act out of defensiveness, submitting to the framework devised by the lawyers who run our nation, that would make us complicit in the problem. It’s the same reason why every time either of us checks into a hotel room, the first thing we do is take a pair of nail clippers and remove that sticker on the blow dryer that tells you not to immerse it in water. Along with the smaller sticker that proclaims that the state of California has determined that the cord is poisonous, therefore you should wash your hands after using it. That we’ve attributed the power of reason to a fictitious political entity, and that most people don’t seem to notice or mind, augurs horribly for the future of a nation in decline and an ostensibly free people.

So here’s the aforementioned stock recommendation. Well, more of an industry class recommendation. Stay the hell away from community banks and invest in the big ones. Because not only are the latter “too big to fail”, but their being too big to fail necessitates that the former must be too small to succeed.

Main Street Bank is, soon to be was, a small commercial and personal lender in the suburbs of Houston. Main Street is a modest little $45 million business (modest as bank sizes go) that’s about to go out of business.

The company’s financials are fine. It’s not being swallowed by a corporate raider and chopped up asset by asset. It didn’t lend more than it could afford to, nor is it the victim of executive malfeasance.

Does Main Street have a lot of bad loans? No. Main Street’s default rate is 31% below average. (That is, better than average, because defaults are bad and you want the numbers to be low.)

Main Street’s business largely consists of lending money to independent businesspeople who use the loans to buy equipment. The equipment ideally enables them to sell more of whatever it is they sell, or do so more efficiently, thus resulting in increased profits, which means the bank gets its loans paid back and everyone’s more successful than they were before the arrangement began.

Unless, of course, the federal government orders Main Street to stop lending so much. Not unlike the absurd CAFE standards for fuel economy, the government has decided what Main Street’s portfolio should consist of. 90% of Main Street’s loans go out to small businesses. The feds have determined that 70% of that outstanding money ought to be loaned out elsewhere.

Title IX is a federal mandate that require colleges to offer as many women’s sports as they do men’s. Ignoring that men like sports more than women do, the inevitable result is that most colleges just end up dropping enough men’s programs to get the numbers to match. In much the same way, Main Street honored the Federal Deposit Insurance Corporation’s orders by lending out less money. One fewer lender in the neighborhood means less choice for the suburban Houston small-business owner, which means the remaining lenders can raise rates and high-five over the handicapping of a competitor. Meanwhile, Citibank not only could “borrow” $45 billion from taxpayers, but practically had that loan forced on it by a complicit executive branch.

If you’re an investor, what are you going to invest in? Main Street was closely held by its founders and not open to independent shareholders, but the principle is the same for dozens of other banks. Given the choice between a bank ordered to shrink by the federal government, and another one ordered to grow by same, an investment in which has bigger potential?

Main Street’s CEO put it best:

“The regulatory environment makes it very difficult to do what we do.”

First, again we’re attributing human failures to institutions. It’s the regulators, actual people in the employ of the government, who are making it difficult for Main Street Bank to accept deposits and lend out money. And ultimately forced it to return its banking charter.
Given how many politicians of both parties have uninspiringly described the ongoing interminable financial crisis as benefiting “Wall Street over Main Street”, well, today’s story about a dying bank is ironic on a level that even a congressman should be able to understand.

Thanks to Robin Sidel of The Wall Street Journal for basically doing all the prep for us.

**This article is featured in the Carnival of Personal Finance #323-Better Late than Never Edition**

Carnival of Wealth – What Are We Getting Into? Edition

Too big to fail. Too small to succeed.

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