Wacky In Walker!

I don’t know what it is about late June/early July up here but we had a real fire about a half mile from my house. I was on my way back from town on an errand that was in itself wacky, I smelled smoke, slowed down, saw a lot of fire that appeared to be two acres in size so I hauled the last little bit to my house. Joellyn was already getting ready, I got my fire gear and had a crew pick me up down just below the fire. I was initial attack and the first incident commander. I titled the fire the Snap fire because we anchored on Midnight Snap Road. I called for Forest Service support and air support and made a couple of other decisions that turned out to matter before ceding command to the Forest Service who changed the name (damn!) to the Midnight Fire. After ceding command I then tied in up top with a bunch of different agencies to mop up. I was there from about 3:30pm until about 8:30pm. I may have more pictures coming from a neighbor. On a personal note, I can’t believe Joellyn and I do this. Despite the intensity, it is very rewarding and fun. Onto some ETF stuff. Index Universe reports that ProShares has filed for inverse bond ETFs and inverse foreign ETFs. This has been a theme here of late that there will be more products to allow for some sophisticated risk reduction strategies or maybe just hog wild speculation. The filing includes short and double short EAFE, Emerging Markets, Japan and China. For...

$406 Billion?

According to this article from MarketWatch Russia’s foreign reserves are $406 billion. Obviously the country has been helped by strong prices and demand for resources. Russia has also benefited from a strong currency and generally positive economic trends. There are a slew of political issues that some view as very risky and still others view the various antics as more noise than anything else. I maintain a little exposure for just a few clients (and personally) with Lukoil. I believe the economy is a juggernaut that is becoming more globally relevant but anyone that adds it to their portfolio needs to realize they are adding volatility, even relative to emerging...

$406 Billion?

According to this article from MarketWatch Russia’s foreign reserves are $406 billion. Obviously the country has been helped by strong prices and demand for resources. Russia has also benefited from a strong currency and generally positive economic trends. There are a slew of political issues that some view as very risky and still others view the various antics as more noise than anything else. I maintain a little exposure for just a few clients (and personally) with Lukoil. I believe the economy is a juggernaut that is becoming more globally relevant but anyone that adds it to their portfolio needs to realize they are adding volatility, even relative to emerging...

Inflation

I first read about inflation generally following the price of a postage stamp in a book called The New Financial Adviser by Nick Murray. I don’t remember who Nick Murray is but he knows his stuff and the book is a great read. To understand what inflation can do to your financial plan, just look at this chart and think of all of your expenses as being the cost of a stamp. Over long periods this is what your expenses have done and this can serve as a template, with limits, to what the future might look like. It looks like a stamp cost $0.22 twenty years ago. Recently stamps just went to $0.42 (it was 42 cents right?), a gain of 90%. It is not crazy to think that twenty years from now that stamps could go up another 90% along with your expenses. Your portfolio will need to go up by at least that much just to run in place. Is this reasonable? On June 27th, 1987 (a Saturday) the S&P 500 stood at 307.16, it closed yesterday at 1506.34 which is almost a five-bagger. The last 20 years have included a crash, a bubble and a couple of wars and the stock market completely dusted inflation. If you bought a bond 20 years ago you are getting your principal back. From a numbers standpoint I think it makes no sense to own bonds. From an emotional wellbeing standpoint of course you need fixed income exposure but it is important to understand the numbers behind asset allocation so you can think properly about the long term. This...

Inflation

I first read about inflation generally following the price of a postage stamp in a book called The New Financial Adviser by Nick Murray. I don’t remember who Nick Murray is but he knows his stuff and the book is a great read. To understand what inflation can do to your financial plan, just look at this chart and think of all of your expenses as being the cost of a stamp. Over long periods this is what your expenses have done and this can serve as a template, with limits, to what the future might look like. It looks like a stamp cost $0.22 twenty years ago. Recently stamps just went to $0.42 (it was 42 cents right?), a gain of 90%. It is not crazy to think that twenty years from now that stamps could go up another 90% along with your expenses. Your portfolio will need to go up by at least that much just to run in place. Is this reasonable? On June 27th, 1987 (a Saturday) the S&P 500 stood at 307.16, it closed yesterday at 1506.34 which is almost a five-bagger. The last 20 years have included a crash, a bubble and a couple of wars and the stock market completely dusted inflation. If you bought a bond 20 years ago you are getting your principal back. From a numbers standpoint I think it makes no sense to own bonds. From an emotional wellbeing standpoint of course you need fixed income exposure but it is important to understand the numbers behind asset allocation so you can think properly about the long term. This...