Slumping, but still smooth.

This is Eugenio Velez. He’s a utilityman for the Buffalo Bisons*, the AAA affiliate of the Toronto Blue Jays. (He joined Buffalo only a couple of weeks ago, and we couldn’t find a picture of him in his Bisons digs.) Velez played for the San Francisco Giants for 4 years before joining the Los Angeles Dodgers for the 2011 season, and ended that year by stretching his streak of hitless at-bats to a major league record 46. He’s been in the minors ever since. Hopefully his slump will end one day, as ours does now. Presenting our first good Carnival of Wealth in quite some time. All it takes is one hit.

Home run, out of the gate. From Paula Pant at Afford Anything. Paula introduces us to the Diderot Effect, observing that a shiny new toy can be more trouble than it’s worth once you buy all its requisite accessories. Those adjustable digital-fit mudflaps won’t do unless you have a Mercedes-Benz G63 AMG to put them on.

PKamp3 at DQYDJ.net goes back-to-back. A dozen more like these two and we’d rule the world. He shows us the very real but rare phenomenon of lotteries with a positive expected value, which would seem to contradict the very purpose of holding a lottery. Of course, there’s more to determining whether a lottery is worth playing than adding up all the possible ticket combinations, dividing into the total of possible prizes, and coming up with a quotient > 1. You need to read this.

If you want to give to a charity but don’t know if it’s bogus, Lynn at Wallet Blog tells you how to determine a charity’s authenticity. If you then want to give to a legitimate charity but can’t decide which one, do like us and cut these folks a check.

A new entrant, James Powell at Tax Credits.net. If you live in the UK and want to know how the latest round of tax changes will affect you, James has some surprisingly candid answers from the Chancellor’s office. Even though Lady Thatcher’s dead, chances to suck at the public teat remain plentiful in the mother country.

A couple of weeks ago Darwin’s Money called Bitcoin the worst investment of all time. Harry Campbell at Your PF Pro isn’t convinced. He likes the idea of a non-traceable and non-governmental currency, but wonders if this particular one isn’t due for a bubble. (We’re more inclined to agree with Darwin, largely because Bitcoin’s founders aren’t exactly forthcoming.)

We’ve been saying for months years longer than we ever imagined that the double nadir of interest rates and home prices can’t last forever. In other words, there’s never been a better time in history to buy a house. Or houses. Ross Garner at Wallet Hub seconds that. We’ll ignore his use of the superfluous phrase “moving forward” moving forward.

Have an annuity and want a lump sum that’ll be nowhere near the time value of your money? Brad at Structured Settlement Quotes can’t wait to cut you a check for pennies on the dollar. But hey, you’ll have cash in hand and you’re now armed with PKamp3’s lottery strategy, so you can’t possibly lose. Shady businesspeople masquerading as bloggers, thanks for giving us the opportunity to bash your services week in and week out. Promise us you’ll always be there for us to make fun of.

“Give people incentive to produce by adopting a diagonal income tax system (universal flat deduction, universally applied fixed percentage on the rest.)” That’s our answer to John Kiernan at Card Hub, who asked several experts “What one policy change would you make to fix the federal deficit?” Not sure why he left us out. WARNING: This post contains a photo of Alice Rivlin.

Bryan Chau at Success Pen Pal wrote a bunch of words in a tiny font about critical thinking.

Speaking of critical thinking, that sentence shows the shortcomings of English syntax. Obviously the font wasn’t about critical thinking, so how to rearrange the sentence? “…wrote a bunch of words about critical thinking in a tiny font”? No, that has pretty much the same problem as the previous version. How about “…wrote, in a tiny font, a bunch of words about critical thinking”? Technically that one will do, but we were trying to put the spotlight on the length of the piece. That last version buries it after the secondary feature, the size of Bryan’s font. We’re putting Bryan on notice, because he’s getting close to Peter J. Buscemi territory:

[I]t is vital that people effectively analyze and evaluate data prior to finalizing on any decision.  Through critical thinking and the efficient filtering of data, people could quickly determine if certain hypotheses are accurate, thus aiding in the decision-making process.  This in turn would assist critical thinkers in enormous ways because they would be less likely to be manipulated because of the ability to think more independently based on the facts gathered.

In addition, critical thinking helps to enhance the rationality of decisions by raising the pattern of decision-making to the level of conscious and deliberate choice.  By putting more time and thought into the decision-making process, critical thinkers consistently reflect on their thought process, thus making better decisions.

Looks like someone has an 8th-grade book report due on “critical thinking” and is still a few hundred words short.

Another one on taxes in the UK? From TaxFix, David de Souza shows one of the many differences between disclosure customs in Great Britain & Northern Ireland, and those in the United States. Some Members of Parliament don’t want their tax records made public, leaving open the question of why those MPs chose such careers in the first place. Our suggestion, making the House of Commons a volunteer organization (and the House of Representatives too, for that matter) has yet to be tabled.

How to allocate your assets in retirement? Michael at Financial Ramblings says there are psychological and financial factors to consider, and (alas) he listed them in that sequence. Forget about mindlessly adopting the 80/20 rule and be rational. Michael admits to being able to tolerate more risk than most people, a characteristic that goes hand-in-hand with his own financial success. He also uses the phrase “deplete my ‘human capital,'” which is the most depressing euphemism for aging that we’ve ever heard.

We’ve said it before. It’s almost all we ever say, in varying ways. Emotions have no place in personal finance. Save them for your relationships instead. Darwin’s Money rejects the very concept of a “dream home”. If it’s the subject of your dreams, chances are pretty good that you’re not concerned with whether it’ll impoverish you or not. Darwin wrote a sentence that we were all set to challenge, but on 2nd reading it kind of makes sense:

In most [real estate] transactions, someone gets really screwed – either the buyer or seller.

No! Capitalism is all about reaching mutually agreeable deals that benefit both parties. Otherwise they’d never make the deal, right?

Sure they would, if one party is thinking with its heart instead of its head. Someone, in real estate transactions usually the buyer, gets attached to the deal and loses (or never had any) interest in how to negotiate. Again, look at each transaction from the other party’s perspective. Only when you’ve done that should you imagine watching your kids play in the back yard, having your neighbors come over for barbecues, and borrowing a few thousand more from the lender.

Jason of Hull Financial Planning is funny, erudite, conscientious, and generous in his application of pro wrestling analogies. He also speaks fluent German. Bookmark his site, but before you do make sure you read how he changed his mind on reverse mortgages. Borrowing against the equity in your home so you can buy heart medication? It might make sense, depending on how much longer you’ve got on this planet. Bonus: includes a new euphemism for dying, “peeling the garlic.” Maybe it’s not new, but we’d never heard it before.

Andrew at 101 Centavos recommends that you step back before entering the dangerous world of retail for neophytes. Your dog bakery (excuse us, “barkery”) isn’t going to make you rich, or even solvent. If you insist on being a shopkeeper, ply your trade in something time-tested. Better yet, own the building and lease space to the merchants.

Finally, Dividend Growth Investor is one of our most consistent and thorough contributors. He (we’re assuming it’s a guy, because we’re sexist pigs) buys and holds, but not forever. What would propel him to ever sell a stock that pays him consistent and increasing income? Buyouts, overvaluation, and at least a couple more.

Thanks for reading. Same time tomorrow.

*The plural should be “Bison”. So should the name of the city itself, come to think of it.

If you haven’t got a backbone, a ribbon will do

“Strong” in this context means “kept in terror by a single teenager.” It’s fun to recite platitudes, and sing a 17,565-voice a cappella version of “The Star-Spangled Banner,” especially when elected representatives and their muscle are busy clamping down on citizens’ freedoms. How does a Carnival sound?

Batting leadoff is the remarkable Jason of Hull Financial Planning, who reminds us that plotting an Erik & Lyle Menendez on your parents just isn’t worth it.

Kevin Mulligan at Free From Broke says you should automate your finances, but still keep an eye on them.

The prolific Michael at Kitces.com says that canceling your whole life or universal life insurance policy is stupid. Is it as stupid as buying said policy in the first place? Tough call. Michael’s argument is that such policies give you a good internal rate of return.

From Dividend Growth Investor, a confession. Every time he says there’s more to dividend investing than yield, he gets pushback. Not coincidentally, that pushback always comes from old people. One more time, and this is something you should have learned when your 2nd-grade teacher introduced you to division. A large fraction, e.g. one representing dividend yield, can mean a large numerator. It can also mean a small denominator.

Investors who make a mistake and get lucky are actually much worse off than investors who make a mistake and pay for it.

Indeed.

Lynn at Wallet Blog lists ways to save money on groceries, methods that go beyond couponing. Christ, we just used “coupon” as a verb. You should probably find another carnival, one written by somebody literate. Fortunately, this computer’s spell check doesn’t recognize “couponing”. Nor does it recognize “miniscule,” which we thought was an oversight but it turns out we’d been misspelling it all these years. It’s actually “minuscule,” as contrasted with “majuscule.” Now you know.

Are we filibustering? Of course we are, it’s a sparse CoW this week. Lynn’s filibustering too. She says you should shop around, and peppers her post with laughably bogus quotes:

The average person made 2.2 weekly trips to the store in 2012, up from 1.7 in 2011, according to the Food Marketing Institute.

Folks, this is what’s called innumeracy. A superlative that sounds suspicious on the surface, and cannot possibly be true. They’re talking about “the average person,” and issuing declarations about his grocery-buying habits that border on the insane.

Here we have two numbers each ratiocinated to a single decimal place. Understand that “2.2” here doesn’t mean exactly 2⅕. It means a range of anywhere from 2.15 to 2.25, rounded to the nearest tenth. Same deal with 1.7, which can mean anywhere from 1.65 to 1.75. So by the most conservative interpretation possible, the Food Marketing Institute argues that the average person went to the grocery store 23% more often (2.15/1.75) in 2011 than in 2010. Possibly as much as 36%.

Grocery buying is far too unchanging an activity for its frequency to jump that much in one year. Use the reciprocals of the Food Marketing Institute’s numbers, and they say that as a nation we’d each gone from shopping for groceries once every 4.1 days to once every 3.1 days. Over the course of one year. If you were doing this, you’d notice. You’d notice to the exclusion of everything else in your life. It’s a lie. Americans obviously don’t make exactly as many grocery trips per capita in one year as they do in the next, but we’d be willing to bet that the national average didn’t differ by  one part in a million, let alone one part in 3. Also, Lynn wants you to buy in bulk and look at the price tags. Fantastic.

[Post rejected because it’s 11 months old. We’re thin this week, but we’re not desperate.]

Harry Campbell at Your PF Pro says that if your portfolio consists of nothing but stocks (and/or commodities, options, and mortgage-backed securities), you’re asking for trouble. Instead, diversify with some bonds. Less return, less risk. Bonds are the perfect investment for the dull and unimaginative.

Peter J. Buscemi hasn’t come around since the CoW in which he killed 5 hookers, so it’s up to Edgar at Degrees & Debt to be our new obligatory schlimazel submitter. Edgar wants you to work from home, and how can you say no when he phrases his ideas so stirringly?

Another category of part time jobs from home are based on affiliate marketing, social media marketing, eBay or Amazon marketing or even digital marketing. You can do all these tasks on a part time basis and if you see huge success and able to maintain the income then you can adopt the profession on regular and permanent basis. This is how many individuals start their self employed lives. By starting part time you maintain your full time job stability until the supplement income surpasses your full time job.

Let’s read that one sentence again.

You can do all these tasks on a part time basis and if you see huge success and able to maintain the income then you can adopt the profession on regular and permanent basis.

Read it aloud, get the full effect. Then read Edgar’s bio, in which he claims he’s working on his master’s degree. Yes, that’s what America needs. More time in the classroom will maintain our nation’s status as an economic juggernaut.

We don’t ask for much, submitters. Just no garbage. Wait, maybe that is asking for too much.

PKamp3 at DQYDJ.net saves our bacon yet again. He presents the latest in his series of calculators, this one measuring gold prices over the last 40-odd years – since Richard Nixon permitted the public buying and selling of gold. Yes, from the 1930s until the early 1970s selling gold was as illegal as selling cocaine is today.

We’ll never quote Tony Robbins again, but one thing that resounded with us from Awaken The Giant Within was his axiom that Quality always costs less. Andrew at 101 Centavos got 4 bids on a landscaping job, went with the most expensive one without batting an eye, and slept happily that night.

On Friday we wrote about a guy who visited Guatemala. Pauline Paquin at Reach Financial Independence did too, and decided to stay. And to raise some cattle, for good measure. She turned a modest profit when she sold 50 head at market, largely because she knew her numbers going in instead of hoping for the best. Why can’t everyone be as diligent as Pauline?

Last-second addition from newcomer Albena Neyra at Bobby Finance. How financial statements work, for the unfamiliar.

An easily digestible piece from Bryan Chau at Success Pen Pal on the different types of business entities: sole proprietorship, partnership, et al. If you’re serious, get an LLC and have it taxed like an S corporation.

Finally, Michael at Financial Ramblings returns after a brief hiatus and explains the concept of chained consumer price index. To “chain” the CPI means to take substitution effects into account. If the price of tile flooring goes up, but the result is that everyone switches to linoleum instead, should that really count as that drastic of a price increase if it doesn’t really impact anyone’s ability to buy flooring? Michael thinks that the chained CPI will reduce cost-of-living adjustments for Social Security, tax brackets, etc., and let the federal government tax us more by the most insidious of means. Bad times!

And on that note, that’s it. New stuff tomorrow. And every day. Thanks for reading, as always.

Suckers all

Local TV news departments of America, we’ve got a great and original idea for you: Send a reporter down to the main post office tonight to interview people who are mailing in their tax returns at the last minute. We’ve got a similar idea for the day after Thanksgiving, but details on that one will have to wait.

If you’re one of the many who are indeed mailing in their returns today, 2 things:

• They have this thing called e-file now. It uses computers.
• Don’t think you got one over on the IRS by waiting this long. Check your pay stubs throughout the year and notice the difference between gross and net if you don’t believe us.

Instead, set up an LLC or an S corporation, pay yourself a nominal reasonable salary, and let your profits pass through so they can be taxed as capital gains instead of ordinary income. If only part of this makes sense, buy our book. Now onto the CoW:

Nobody knows the Canadian energy markets like Mich at Beating the Index does, or at least no CoW submitter knows them like he does. This week he analyzes Spyglass: a company wrought forth from a tripartite merger, one that’s already paying a dividend despite engaging in a costly PR battle with one shareholder that owned a smaller chunk of the company than Jay-Z does of the Brooklyn Nets. With that problem behind them, Spyglass management is ready to built on its gas and oil operations throughout Alberta and surrounding provinces.

Our latest man-crush here at CYC is Nassim Nicholas Taleb, author of Antifragile and other works. We like him because he’s not only eloquent and detailed, but because he has a rabid intolerance for fools and frauds. Also, he’s that rare college professor who first made a shipload of money in the private sector instead of sauntering his way through academia.

Taleb’s main argument is that there are certain drastic phenomena that by definition you can’t anticipate, thus you have to make yourself as robust as you can against them. If we’re reading him correctly, we shouldn’t have an airline industry that’s susceptible to catastrophe at the hands of Muslim terrorists, coupled with an outmoded hijacking defense strategy that recommended ceding to the attackers’ demands so that no one gets hurt. And if thousands of people end up dying, precipitating a trillion-dollar war, maybe you shouldn’t have prohibited the airline captains from carrying guns in the first place.

Taleb didn’t submit to the CoW (we wish), but noted wag Jason at Hull Financial Planning did. He doesn’t dispel Taleb’s arguments, but rather explains that his contrarian market philosophy involves more than just waiting for outliers to appear.

3 consecutive good submissions to lead off the CoW? Come on. That’s never happened before. Andrew at 101 Centavos avails us of the news nugget that the United States is the fattest country in the world. No wait, it’s Mexico. (Well, they do have Manuel Uribe.) Hold on: upon further review, it’s Nauru.

A note about any authoritative UN proclamation about national predilections. Whomever’s sampling the data:

1. has an agenda
2. thinks “social science” is not oxymoronic.

Nauru has barely 9,000 people, so maybe the World Health Organization indeed measured them all. But they certainly didn’t measure 112 million Mexicans, nor 300 million Americans, nor a representative sample. Anyway, the fat leaderboard is weighted heavily (hey-oh!) toward South Pacific islanders, in case you thought a diet of taro paste and Spam® was healthy. Some of the commenters took the easy way out and blamed America and the availability of cheap and nutritionally dubious food. Others might wonder what a nation expects when it rewards obesity. Why do fat people in wheelchairs get better parking spaces than the able-bodied? Shouldn’t we put the former in the worst spaces, force them to burn a calorie or two? The way it stands now, we’re just exacerbating the problem.

Don’t sit there all high and mighty, Canada. Not without reinforced chair legs, anyway. You’re in the top 25 in the same survey. Canadian Budget Binder gives us his take on what it means to be retired, why plenty of people continue working when they don’t need to, and why his parents are afraid of the toaster and think the Roomba® is an instrument of Satan.

Bitcoins sound great in theory – a currency that Ben Bernanke and Jack Lew can’t ruin. Darwin’s Money thinks the benefits don’t compare to the risks of intangibility. “The dumbest investment ever,” in case you thought Darwin was one of those people who likes to temper his opinions. Darwin also has something to say about people who buy Bitcoins because of what doing so represents. It’s similar to what we had to say about the Facebook IPO suckers:

[T]here’s nothing that bothers me more than people “making a statement” with their investments.

(Post rejected because it came from a site called “2011Taxes.org.” Guys, come on.)

We’re a little thin this week (unlike those corpulent Nauruans, amirite?) so we welcome a rookie: Glen Stephenson of the horrifyingly titled Monster Piggy Bank. Another in that exhausting line of first-person confessional posts: here’s what I want to do with my life but haven’t yet, here’s my debt load, I handicapped myself by having a kid but I’m still holding onto my dreams of traveling the world, etc., etc.

Our sitting CYC Woman of the Year regards time as something you buy, whereas Glen has the opposite tack: “The most obvious thing that I am sacrificing for money is my time”. We’ve never had a face-to-face conversation with either, but we’re confident in guessing which one leads the more rewarding life. On the other hand, Glen’s grammar is a jewel.

Glen Craig at Free From Broke points out that well over 99% of Americans didn’t declare bankruptcy. For the rest of you – and do you mind if we refer to you as “the 1%”? – Glen explains that bankruptcy will leave your credit rating a bloody and bruised mess, crying in the shower and wondering what time the rape crisis center opens.

“If not completely satisfied, see us for a full refund.” Sounds great in theory, but are you really going to mail your proof of purchase to Del Monte because your can of cling peaches was a little cloying? Okay, how about a $150 hotel stay? Now you’re talking. Harry Campbell at Your PF Pro ran into a bitchy desk clerk at the Hilton Garden Inn in Albany and ultimately got satisfied.

The remarkable Dividend Growth Investor steps aside from general dividend stocks this week and instead breaks down a specific kind of dividend-paying vehicle: real estate investment trusts. We’ve touched on REITs before, but Div does so in greater detail with 3 specific examples. Does he invest in them himself? Read the article. We’re not going to spoil the ending.

What with cooking, cleaning, sewing, and talking-about-your-feelings jobs evaporating throughout the economy, it’s getting harder for a gal to make a buck. Fortunately, CoW newcomer Bryan at Gajizmo has dusted off the same tired factoids (women make 19% less than men do, women make less than men do coming out of college and what they studied along the way isn’t important, etc.) before listing 5 occupations in which women can do just fine. #2 on his list is Chief Executive Officer, and there’s a picture of Marissa Meyer. So there you have it, gals: get a job as as the CEO of Yahoo! It’ll be so much more lucrative than that sales position you were thinking of taking.

Jamie’s Money Advice is the only personal finance blog we’ve ever seen whose contact page provides a mailing address. This week Jamie uses his Rutgers MBA to explain how interest works. But not, alas, how paragraph spacing works.

Lynn at Wallet Blog says there are pros and cons to home warranties. For her, one of the “cons” was failing to read the agreement, which meant she paid a contractor a $100 deductible only to find out that the work she wanted done wasn’t covered. Reading is hard!

PKamp3 at DQYDJ.net got in just under the threshold. His latest research includes 2 stark findings. First, spending on cigarettes is relatively inelastic to income, although such spending does decrease past a certain point. Second, the more you make, the more you spend on booze. (In raw dollars, that is. Obviously, winos spend a greater ratio of their income on alcohol than hedge fund managers do.) The CYC household percentages for both? 0 and 0. Yes, we’re better than you. But we’d love to see where we stack up when PKamp3 does a similar chart for spending on unimproved real estate.

Finally, Charles Davis at Wallet Hub explains what title insurance is and why you’re insane (and possibly violating the law) if you own a home yet don’t have it.

That’ll do it. See you tomorrow for more fun and adventures.