Permanent Portfolio

The WSJ posted an article on Permanent Portfolio, which I mentioned a few weeks ago.

Article on the Greek debacle

I had never really gotten a handle on exactly what happened with Greece over the past year. This week, Vanity Fair posted an excellent article on Greece. It is not technical, and in fact, there are few instances of numbers at all. It details more the Greek way of life and just how bad things are. I think Greece will not be visitable for tourism for quite some time. This is one trip that I will have to put off for several years.

Market Strategies Update

I last posted about the financial markets in early July. The market proceeded to rise 10%, but then gave most of it back. Since then the financial news coming out has been poor. Time for a new strategy.

My retirement account is unchanged, in that it is still almost exclusively bonds.  I keep saying this, but it gets harder every month to find good (6%+ yielding) bonds. All you can do is check at least once a day to see what shows up. Sometimes I get lucky, sometimes I’ll go for weeks without finding anything. One new addition is PRPFX, the first mutual fund I’ve purchased in years. Here is the 5-year chart:

PRPFX vs. S&P500 over 5 years

While it won’t generate massive returns, my hope is for a steady, consistent return.

This leads into my strategy change for my taxable brokerage account. Long story short, the 2008-2009 extreme market volatility was been a blessing for selling options. Volatility cratered this year, so I switched back to buying stocks directly. (I’ll go into more detail someday). I’ve decided that this no longer works for me.

The real question is “What do I want?”. I want a good return on my cash. I believe the best I can safely do is PZA, which pays ~4.3% tax-free. Compare with my other ETF, BIV, which 3.85% before taxes. Neither of these is acceptable for a goal of early retirement. What I’m doing now is selling options, but not being greedy about it. I used to try for a 30% gain in less than 3 months. Now I’m going for 10% every 6 months.

1. Find a stock that looks undervalued.
2. Find the Put options that are 10% below the current price.
3. Sell the one that nets me about 10%.

So if you have a $10 stock, look for the Put option of $9. Then sell it for 90 cents or more. Lots of missing details, I know. The numbers won’t always line up, so sometimes you have to work on it or wait the stock gets cheaper. This will also cut down on my commission fees tremendously. This won’t net big returns, but should provide peace of mind. For instance, my IRA doesn’t earn much, but I don’t have to worry about it either. Following these rules ensures that even if the stock drops 20% from my entry point, I will not have lost any money.

You can repeat this with ETF’s, but they are much less volatile. To do a 10% return, expect your timeline to widen to 10 months instead of 5-6.

I’m using Schwab’s option scanner to find candidates. Fidelity has one, but it is very buggy (as with their stock scan) and it does not allow you to save the criteria. Ameritrade’s is not worth mentioning. I’ve not a found a free one that will let me include conditions on the underlying stock, such as P/E.

Mint.com needs transparency

A couple of times now I’ve looked into Mint.com as a replacement for Quicken. Quicken, if you’ve never used it, is a terrible piece of software. Ranks up there with QuickTime and iTunes. MS Money was unfortunately discontinued, which leaves no real competition for Quicken that I know of. Thankfully, Quicken 2009 is better than 2006, but not by alot.

For the most part, I’ve read good stuff about Mint, but I’m not comfortable with how their system works. This is in large part due to not knowing how it works. If they would publish clear information of how the system works, I would be more willing to try it. As it stands, do you want to trust a company that says:

At no time do we ask you for information that would be required for a hacker to steal your identity, such as your full name, bank account numbers, credit card numbers, billing address.

And in the very next sentence says:

Your bank account and credit card numbers are stored securely.

Elsewhere, Mint gives the impression that because they store only your username and password, you’ll be safe even if someone gets access to that data. Not true. If you have that info, you can login to the account and do whatever you want. Now granted, you would have to link the account info to the related financial institution, which is a large hurdle from my understanding. However, this doesn’t negate the fact the username and password are no less powerful than an account number. Plus, what if your username is your account number? Or, how many people include personal info in their username?

I think some of these concerns could be easily addressed if Mint was more transparent. Some of them may not be problems, but due to the lack of information we don’t know. For more information, check out the following links:

• Mint.com in 2010 – Is it Safe?
• How I Would Try To Hack Your Mint.com Account
• Should You Trust Mint.com?
• Making A Mint

Single Digits to Credit Cards

Yeah I know, the title makes no sense. Deal.

Last week we took a week-long snowboarding vacation to Squaw Valley. Short version is the first two days were marred by heavy snow and high winds so we were stuck on the bunny slope. This gave me some much needed practice, so it worked out well. It was a very relaxing trip, which I needed. As I’ve mentioned before, our trips are typically marked my doing too much in too little time.

I wanted to go back to credit cards again. The Charles Schwab 2% cash-back card I got last year has worked out quite well, though it was a big pain to get set up. Normally this would be the only card I carried, but I also got the Marriott “Black Card” for Marriott points. I was leary of it, because it is done by Chase, whom I’ve heard nothing good about. Right on there. The promotion applied to my account was to receive Marriott bonus points after the first $1000 spent on the card. The problem is that this was not the promotion I used when applying for the card. I did bonus points after the first purchase. A few phone calls later, Chase refuses to correct their mistake. What happened to the customer being right?

On the other hand, I also applied for the Hilton Amex. In contrast to Chase, this went perfectly. Instant approval, no problem with the bonus points. Travelocity also offered a $75 gift card when booking our trip using Amex. Score!

A quick note about shopping. Alot of online loyalty programs offer a shopping portal where you will earn bonus points if you buy something via their portal. For example, American Airlines will give you bonus points if you use their link to buy something from the Microsoft store. Anyway, these points can take a very long time to post. I made a purchase in mid-November and it took over 3 months to post my AAdvantage account.

With the weather warming up, we are starting to venture outside again. A couple of weeks ago, we discovered a young Great Blue Heron in the creek behind our apartment. I don’t think any of the photos were worth posting but I haven’t really taken the time to check. I expect to head out to the Pedernales bird blind this weekend and the Zilker Botanical Garden, soon. I hear there is a rare hummingbird in the gardens.

Sorry, no links today. I’m typing on the netbook, so it’s kind of a pain to link. Full Squaw Valley report later and some photos. :)