401 nay?

Looks like some senators are talking about radically changing the 401(k), eliminating tax breaks, and possibly leading to the ultimate demise of the 401(k).   Spooky stuff, and hard to find much info about at this time.  Here’s the best info I’ve located so far.

Abolishing the 401(k)?

Feel free to comment with additional info and links and I’ll keep following these disturbing developments.

Until mañana.


A stark title for another strange week in finance.  873.29 is the closing value of the S&P 500 Index today.

I hear that leaders from the top 20 countries in GDP are converging on Washington for a financial summit.  Gordon Brown is making it his mission to push for greater regulation of the financial world.  It is with the greatest reservation I follow the forceful Brown.   I’m not a Brit so I haven’t followed Mr. Brown much until the last several months.   I’m a big believer in financial cooperation and discussion.   What chills my financial bones is the prospect of a global financial regulatory body.  Treaties are good (especially if they have expiration dates).  But I’m leery of international “bodies” and “agencies”.   Perhaps I’m getting ahead of myself with speculation.

Having greater transparency is generally good.  This is especially important in the derivatives and “counter-party” contracts.  First of all there should be a market.  That is the beauty of standardized options… there is a market (CBOE for example).  There are standards, there are market valuations, and there are contingencies for when options traders cannot make good on their promises.   Such safeguards are not as robust (or totally non-existent) for credit default swaps, ETNs,  and similar derivatives.

My bottom line is…

  • Greater transparency is good.
  • A clearing-house requirement (open market) is potentially good.
  • New disclosure regulations uniformly agreed to by treaty is good.
  • Creating a new international bureaucracy is BAD!
  • Oh yeah, dialog is good too.  As is cooperation and short-term agreements and statements.

Enjoy the weekend.  Chances are you’ve earned it.

Plug it in…

Press Release

Oct 13, 2008

I’m soon to be named CFO for a new start-up Endress-Analytics.com.  Similarly, I will be naming the President of Endress|Analytics to be the CIO of Balhiser LLC.  This alliance will serve to help both businesses leverage the complementary strengths of the other.

Other announcements related to this venture and other developments can be found at the Endress-Analytics Blog.

This press release (and this site) contains forward-looking statements.  Such statements should be taken with a grain of salt… preferably from off of a margarita glass.


Most days I’m a value investor.  I haven’t made any substantial adjustments to my core holdings in years, nor in recent days.

With my play money I’m on a playing hunches, whims, etc.  Today I sold half my remaining BCS at a loss (sold at $9.98 a share).  This is eating crow for me but it tasted good.  I’ll try to keep the 50 shares around for a half-arsed value play.  I closed the old call for pennies and wrote an SPY NOV 95 call for $500.

Note:  I’m not recommending any of these mad money actions!  I’m just sharing my experiences in real-time for the amusement of my readers (all 5 of you!).  Any recommendations I make can be identified  by these characteristics:  1) boring, 2) uses words like balanced/diversified, 3) adjustable asset allocation based on time-horizon and risk-tolerance, 4) low-cost (no load), and finally, 5) Did I mention boring?

Best Investing wishes for today!

P.S. Bottom line: “Mad money” Closing balance $20,602.

Bonds, James, Bonds

I spent a semester studying bonds, and I was just scratching the surface of the subject.  However, rather than regurgitating a bunch of facts and boring data, lets keep it simple and start with Bond Funds.  I recommend a few:
1) PIMCO Total Return

2) Vanguard Total Bond Funds  VBMFX, VIPSX, and others:  Vanguard Bond Link

The question used to be “why buy bonds?”  Lately the question is “why didn’t I own *more* bonds?”

Either way, I seldom recommend sudden large changes to portfolios.  Assuming you’ve been beaten up by stocks (I have) and have lost some of the risk tolerance you thought you had, maybe its time to consider looking at bonds.   Rather than moving funds around, why not just change your allocation of new funds. If you have a 401(k) consider changing your new investment elections.

Bonds and bond funds can help you sleep better at night.  Especially Treasury Bonds and TIPs.

Another bond-like investment is a CD (certificate of deposit).  The FDIC insurance (now up to $250K) helps peaceful slumber.  The wrinkle is getting them into your retirement account.

Bottom line: Any portfolio should contain bonds (or bond-like) investments to be considered balanced.

P.S.: Today’s Fun money update: $21,066. Decreases in my SPY call are approximately offsetting decreases in my SPY underlying.  (Yes, that sentence is correct.)

Grats Nassim!

Congratulations to my favorite finance writer: Nassim Taleb.   Not only is his portfolio up big time, but he appeared on CNBC Power Lunch.  It was fun to see him in person… a man who I only knew by his writing.

After that I found an even better, more in-depth, talk by Nassim Taleb. Sadly the videos were not persistent.

Universa Site


Party LLC

Last night’s Halloween party was a blast.  Of course I talked some investing with folks.  I learned that one of my friends had not one, not two, but three LLCs.  What interesting is he’s using one LLC to do technical  contracting/consulting work.  Apparently it is much easier to do contract work via and LCC and with and EIN (Employer ID number).  The EIN makes it clear that the contractor is an independant contractor who can in no way be construed as an employee of the business with which the constractor is doing the consulting. (Boy that was a mouthful).

Also, play money balance update: $21,120.  The option writes are working decently (bought SPY 87 to close call, and later wrote SPY 95 call).  I’m getting slammed on my 100 shares of BCS, though, which are down $1,152 since purchase.