Category: Finance

Last year after Europe seemed to have been hammered pretty well, I decided to put my 2011 Roth IRA contribution in Vanguard’s Total International Index. This turned out not be so great because Europe continued to have problems and a tsunami clobbered Japan. US stocks (where the rest of my money is) stayed about the same, but it was a roller coaster ride. Continue reading “Roth 2012”

I keep a spreadsheet of my investments and one of my favorite things the spreadsheet does is track not just the average cost of the investments, but overall how much it is worth over the net amount of money spent on the investment (accounting for dividends and so forth). It also tracks reportable gains or losses using average cost or by identifying shares sold. As I held onto investments for longer periods of time, I wanted to get an average annual return, so I came up with a formula based on the date I first buy shares in something to set a timeline up to now. And it uses exponents correctly so it doesn’t just say that if you have a 50% gain over 5 years that you have a 10% annual return (it would really be more like 8.4% annually with compounding). The flip side of that is if I buy something and it goes up even a small amount after the first day (a tiny fraction of a year), it shows a ridiculous annual percentage increase. Now, I don’t like to brag about stock picks because I am losing money on the year, but I did buy some Bank of America one week ago (not enough to make a difference since most of my money stays in mutual funds). I bought at $6.50 a share and soon it was down as low at $6.01 a share. But then Warren Buffet made a play and it went up over 20% during one day (less than that by the end of the day). And my spreadsheet showed some ridiculous percentage increase. But it has kept going up for a couple of days. Usually by a week, the percent gain drops to something reasonable, but right now my investment (on paper) is up 28% in a week. In fact the percentage is so high that Excel just showed #######, meaning the number is too large to fit in the square (as an investor this is something that makes you feel pretty good, like on the Dukes of Hazzard when Boss Hogg was calculating how much some scam of his would make on his calculator. Once he pressed the equals button he hollered for delight. Roscoe asked him “How much will we make?” And he said with great glee: “This calculator don’t go that high!”). It turns out that if you take into account compounding, 28% in a week gives me an equivalent annual return of 34,753,785% which would make me a millionaire by the end of the year (really in almost exactly 28 weeks). Actually I won’t last nearly that long because I put in a sell order when it goes up by 50% (I usually do 20%, so this is almost certain to backfire).

Several years ago Dekalb County voters passed a freeze on property value assessments. So since that took effect, my house and land have had the same assessed value each year. Since the crash of 2008, however, property values have gone down, even in my snooty neighborhood and the freeze was only supposed to stop increases in assessments, not decreases. But this has never been reflected in my assessment, which has remained frozen . . . until this year. I got a notice last week that the value of my house and land has dropped 31.6%. The last time the assessment changed was back in 2006. The oldest form I could find was 2001, and the new value is 17.6% lower than that.

January is time to think about where to put my Roth IRA contribution. Last year, I split the contribution between Fidelity Contrafund and Vanguard Total International Stock Index. Previously I had done well with small caps and emerging markets so I was afraid they wouldn’t hold up. But actually those continued to do well (two different small cap funds were up 25% and 27% and an emerging market fund was up 20%) while large caps lagged (Contrafund earned 16%) and international stocks were troubled by Europe and the continuing recession (up 10%). Still, overall 2010 was a pretty decent year and just about everything did pretty well. I was thinking about looking for some mutual funds that lagged and therefore might do better next year, but I couldn’t really find anything that did that poorly. Japan has done really poorly for a long time, so I thought about putting money there, thinking they might be insulated from US and European economic troubles. I didn’t want to load up any more on small cap stocks, so in the end I put the whole thing into Vanguard Total International Stock Index again. Hopefully it will work this time.