There’s Money in Them Thar Mortgage REITs… Or so It Would Seem

* "a substantial amount of ARMs"  ... hehehehe

Set a Google Finance stock screen for a few fun parameters like high profit margin, and you're in for an enjoyable afternoon of sieving through balance sheets and income statements.  Fun for people like recovering PF bloggers looking to write a semi-coherent post on how plunk down a few thousand on a steadily profitable, high-net margin, dividend-paying equity. Right, then... Set the control criteria for a Net Profit Margin of 20% to 50%, a 52-week stock price change of no more than -10% to an upside of 35%, dividend yields from 2% to 15%, and a price-to-earnings ratio varying from 10 to 15.  Throw in a market capitalization range from $40M to less than $1 Billion - because we believes that small-caps are more nimble and profitable … [Read more...]

Be A Modern Magician

Magician Costume - Design for Stravinsky's ballet "Petrushka" - 1957 - Alexandre Benois

  To be a modern magician, there are no requirements for pointy hats or chanting incantations of arcane magical lore.  Just spend some time on Investopedia, pore through a couple of investing tomes (preferably Benjamin Graham's The Intelligent Investor), and prepare to let concepts such as debt-to-equity ratios, free cash flow, and EBITDA seep into your noggin. The process can be as thoroughly boring as fourth-grade New Math or an Al Gore stump speech.  The rewards?  Seeing the eyes of ordinary allocate-and-forget 401K savers glaze over, and then yield the floor to you, O Knowledgeable One. You Can't Beat The Market Sure you can't. That old saw about most mutual fund managers under-perform the general market, is … [Read more...]

Obscure Senators Intrude on your 401K

Some of our overlords in DC are at it again, waggling their tut-tutting nanny fingers at us.   (This kind of stuff just drives me nuts, so rant alert!) A Senate Bill (The SEAL Act) recently introduced by money-grubbing Senators Herb Kohl (D-WI) and Mike Enzi (R-WY) would limit regular peasants Americans from accessing the funds in their 401K’s for emergency loans. I’ve written on this blog about the pros and cons about taking out loans on the 401k, here and here.  It’s not for everyone, and not for every need, and in fact, most uses of 401K loans are ill-advised.  But it’s a personal decision, left to the individual, and not for two douchebag senators to decide. Senate bill Would Limit Savers using 401Ks as Rainy Day … [Read more...]

Mainstream Financial Media vs. PF Bloggers: 401K loans

I am constantly struck at the poor advice or below-average research and information put out by the mainstream financial media, and how badly it compares to the good to great writings out out by personal finance bloggers.  Admittedly, I'm a little biased, but still.... One subject I took an interest in recently was taking a loan from a 401k plan.  We were considering doing just that, and  I wrote a blog post on the pros and cons.  Well, we did eventually take out a relatively small loan, and used it as part of a total cash purchase on rural acreage.  For us, it was a good decision and it's worked out.  The loan will be repaid in full by this time next year. In revisiting this topic, I compared some of the sources I used to … [Read more...]

Diversification in a 401K Plan – Part 2

Part 1 of this series of posts looked at whether 401K plan choices in general were adequately diversified. I linked to a formal study that examined what good selections should look like ("The Adequacy of Investment Choices Offered By 401K Plans") For myself, in our company k401K plan we have what actually seem at first glance to be diverse choices of index funds, mostly Vanguard and Blackrock managed.  It generally meets the criteria set forth in the study for diversified 401Ks. A couple of bond funds, a smattering of index funds, international and emerging market indexes. Bonds OK, so let's look at the bonds offered in our 401K.  One is a US bond index and the other a TIPS index. The mission statement of the Total US Bond Aggregate … [Read more...]

Diversification in a 401K Plan – Part 1


Do 401K retirement plans offer adequate choices, or are you getting taken for a ride? There was a formal academic study done a few years by  Martin Gruber and Edwin Elton of New York University's Leonard N. Stern School of Business, and Christopher Blake of Fordham University's Graduate School of Business.  The authors proposed that a good 401K plan should offer varied choices like: International stock funds and International bond mutual funds high-quality and/or high-yielding domestic bonds Large-Cap growth and Large-Cap value mutual funds Small-cap and Mid-cap growth funds and value funds Well, I haven't been with many employers, but in speaking with friends and family, some 401K plans at larger companies may offer all of the … [Read more...]

401K Loans: good idea or bad idea?

Is taking out a loan against your 401(k) retirement plan a good idea, or a daft looney-tunes crackpot personal finance move? A short web search will disgorge dozens of articles that argue for the latter.  There are some advantages, but the general conclusions is that the cons outweigh the pros. Advantages include no credit checks (you're borrowing from yourself), the interest rate is usually low, about one or two points above prime, and perhaps the nicest thing, the interest you're paying is to yourself, it goes right back into the 401K and is tax-deferred until withdrawal time.    Read More .... … [Read more...]