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Saturday, June 05, 2010 09:13:49
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"Let me explain to you how this works: you see, the corporations finance Team America, and then Team America goes out... and the corporations sit there in their... in their corporation buildings, and... and, and see, they're all corporation-y... and they make money." (Video)
- Tim Robbins, as portrayed by a puppet (Team America: World Police) |
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Saturday, March 21, 2009 13:14:45
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A fun link showing what a trillion dollars would look like in cash. With all the talk of trillions of dollars with the economic "stimulus", it's an interesting concept to think about.
$1,000,000,000,000
http://www.pagetutor.com/trillion/index.html |
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Thursday, January 22, 2009 15:49:52
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On Tuesday, the "Pick 3" drawing in the Nebraska Lottery came up with the numbers 1, 9, and 6. The significance of this: those same three numbers came up in the same order the previous day. According to the Associated Press, this is some kind of a big deal. And of course, where AP leads, hundreds of other news sources follow - the same article was present in many other news sources, from local to national news.
From the article:
Lottery spokesman Brian Rockey says one of two lottery computers that randomly generate combinations picked the numbers 1, 9 and 6 - in that order - for Monday night's drawing. He says the other computer picked the same three numbers Tuesday in the same sequence.
The odds of such an occurrence? One in a million.
One in a million. If you read that quickly enough, you might actually believe it. After all, there's a 1/1000 chance of hitting 1,9,6 on day 1, so (1/1000 * 1/1000) is 1/1000000. But take a step back - they're not making a big deal that 1-9-6 was hit twice - they're making a big deal that the same number got hit twice. The odds of that: 1/1000, meaning it will happen on average every few years in every Pick 3 in the country. Hardly newsworthy.
If you're not quite sure, here are a couple different ways of looking at it:
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Day 1: Suppose you draw 3-4-5 on Monday. That's a given - it's already happened.
Day 2: What are the odds that you draw 3-4-5 on Tuesday? Answer: 1/1000.
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Here's the same problem on a smaller scale: Suppose instead of 1/1000 odds of winning, the odds were only 1/10. I have two buckets, each with 10 balls. By their math, then the odds of hitting the same win twice in a row are (1/10 * 1/10), or 1/100. Suppose I pull a ball from bucket 1. What are the odds that I pull the same number out of bucket 2? Clearly it's not 1/100 - it's 1/10, since there are only 10 balls in bucket 2.
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Now if you want to talk about the odds of the exact sequence 1-9-6 coming up twice in a row, then we're at one-in-a-million. If one individual person bought a ticket on Monday with 1-9-6 and another ticket on Tuesday with 1-9-6, then the odds from that individual person's point of view are 1/1000000. But that didn't happen. So there's absolutely nothing newsworthy about this story, other than someone is horribly bad at math. Either the lottery officials are bad at math (that's a scary thought), or the writer and editor at the AP are both bad at math, or they are having such a slow news day that they found something that they could trick people into reading.
By the way, I took a quick look at the numbers: This occurrence has happened twice in the last 3 years just in the Nebraska lottery. It's happened 3 times in the past 10 years in the Arizona Lottery. So when you consider how many "Pick 3" lotteries there are in the country, combined with how often this happens, it seems ridiculous to make this a national story.
Of course, you could say that me reporting on a non-story is just that much more meaningless. I'd have to agree with you. |
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Wednesday, October 29, 2008 21:27:24
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About a year ago, I signed up for a checking account with ING Direct. At the time, it seemed like a great deal - some of the features of this "Electric Orange" account were:
- 4% interest - a whole lot more than anyone else offered for a checking account, even a savings account
- overdraft line of credit, which works as a fee-free credit card so you don't need to always pay close attention to your balance
- free paper and electric checks
- easy online balance transfers to and from traditional checking and savings accounts
Things were going pretty well - I was using this account to pay rent with paper checks, with no issues, and using the check card for some other normal stuff. Then I realized that my checking account was no longer getting 4% interest - it's now down to 1.5%. Still high for a checking account, but nowhere near where it was - definitely nothing special anymore. But I figured it was still a good account to have, so I figured I'd keep it.
This morning they contacted me to tell me about a problem. On the 21st, I scheduled my December rent check to go out. I received an email telling me that the address was rejected, so the check was cancelled. I was pretty upset, since I gave the same information as I have for the last year, and I know my landlord has not moved. So I gave them a call to find out what happened. After a lot of back and forth with the customer service rep, they finally figured out what happened: They tried to convert my paper check into an electric check.
We talked for a few minutes about this - somehow ING has my landlord's bank information on file - I don't know how, since it wasn't from me. He thinks that another ING customer has sent them an electric check, so their account is in the system. Their policy is to send electric checks whenever possible, in order to save time and money. It makes some sense - electric transfers are significantly cheaper for them, and have less chance of mistakes, when done properly. But the end result is that my rent check was not sent - had this happened closer to the end of the month, I'd be looking at late fees for the rent, and if it happened on a check to someone else, like a credit card or mortgage, there would have been additional consequences.
My problem is that I never gave ING the permission to do this. I specifically requested a paper check, which is a service that ING supposedly provides. I'm not even concerned about the fact that the electric check transfer failed - success or failure doesn't matter, since I did not authorize the attempt. In my opinion, this is absolutely inexcusable. My bank has absolutely no business giving my money to someone that I did not tell them to.
Normally when talking to a CSR on the phone and you have a complaint, you complain to a manager and hope to work out some kind of resolution. But I was so angry at this point, I didn't have anything else to say, and there was absolutely nothing anyone could say to make it all ok. When a bank is handling my hard-earned money, I need to have 100% confidence that they know what they are doing. ING lost my trust this morning, and there's no going back. I'll be closing my account as soon as possible. I highly recommend staying away from ING Direct, so you don't face the same headaches I did today. |
Tags: rant money
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Saturday, October 25, 2008 21:37:30
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Over at A Slacker's Quest For His First Million is an excellent post summarizing the events leading up to the financial mess this country is currently facing. With so many factors involved, the situation can be confusing, especially if you haven't been following it since the beginning (defined as March 2000 in the article). The article is very readable, and provides a clear picture of some of the major elements of the mortgage crisis.
This is one of many excellent posts from the blogger known only as "D". Every few days is an informative and interesting entry on a variety of financial topics, from beginning investment advice to industry information to individual company analysis. Highly recommended for anyone interested in the stock market or the financial industry in general.
The link to the "How Did We Get Here" entry is below:
http://www.slackerwealth.com/2008/10/how-did-we-get-here-summary-of-credit.html |
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Thursday, August 21, 2008 08:35:06
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Last month, I wrote a short review on my initial experiences with LifeLock, a company that protects your identity by handling various tasks related to your credit, such as registering and renewing fraud alerts and removing you from junk mail lists, backed up by a million dollar guarantee. At the time, 45 days had passed since I had signed up, and I still had not received my credit reports.
About a week after that post, I received my first of three reports, and the second came in a few days later. However, here we are, 3 months after originally signing up, and I still have not received the third. A few days ago, I send a message to LifeLock informing them that I had not received my third report. As of this morning, they still have not even acknowledged my message. I guess this answers the "How's their customer service" question. Any legitimate company should send a follow up email within 1 business day, even if it's just something like "we're looking into it".
Based on what I've seen so far, it looks like at the end of this contract in May, I will not be renewing. There are plenty of alternatives out there, and I'll find one that actually delivers in a timely manner, and provides reasonable customer service. |
Tags: review money
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Saturday, August 02, 2008 01:00:12
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In a newsletter I recently received from my bank, there were a few tips on how to save money by conserving gas. Most were reasonable, but one kind of caught my eye:
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Fill up when you're almost out - Fill up your gas tank less often and you could save $100 a month since you'll be hauling a lighter load between fill-ups.
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I ran a few numbers:
At $4.25/gallon, a person driving 1,000 miles per month who gets 20 miles per gallon would have to improve to about 38 miles per gallon in order to save $100 per month.
If you drive 2,000 miles per month, your mileage would have to go from 20 to 26 to save $100 per month.
I find it just a little hard to believe that waiting until your gas tank is almost out before filling up improves your mileage that much...
But if you are crazy enough to drive 2,000 miles per month and only get 10 miles per gallon, you'd only have to improve to 11.3 in order to save $100. Still probably not realistic, but it least it's not totally ridiculous.
I'm not saying that it was bad advice - I'm sure there is some truth to their tip, but gasoline only weights about 6 pounds per gallon, and there's just no way that a few extra gallons can make that big of a difference. |
Tags: rant money
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Saturday, July 05, 2008 20:12:46
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I recently decided to protect myself against identity theft, the fastest growing crime in the country. I decided to go with LifeLock, a company that is well-known and seems to have a good reputation. LifeLock is famous for having its CEO freely give out his social security number to the whole world, since he trusts so much in his company.
LifeLock's services include setting fraud alerts with the credit bureaus (and renewing them every three months), removing you from the pre-approved credit card and junk mail lists, ordering annual credit reports, and several other features that are designed to prevent identity theft. While most of this can be done yourself, the work involved in handling all of this is what you're paying for. In addition, they give you a $1 Million guarantee, so that if all of these efforts fail, and your identity is stolen, they will fix it, and pay for any damages (accountants, lawyers, etc.), up to $1 Million.
I signed up for the service on May 21st. I signed up for one year, at an annual cost of $110 - a reasonable price to pay, considering the amount of money it would cost if my identity was stolen. On June 28th (38 days after signing up), I received an email from LifeLock stating that my credit reports have been ordered. Last time I ordered my credit reports myself direct from the bureaus, I got them immediately online. As of today, July 5th (45 days after signing up), I still have not received my reports either in the mail or over the web. In my opinion, this is unacceptable.
I have noticed a significant drop in junk mail, almost immediately after signing up. The only junk mail I seem to get now is the normal "resident" stuff, and ads from my own vendors (my banks, cable company, cell phone provider, etc.). While this alone isn't worth anywhere near the price of the service as some customers claim, it is nice to have.
If I move or request credit, I expect to receive a phone call requesting confirmation. Until then, however, obviously I won't know how well the service works.
It's too early to tell if LifeLock works as well as they say it does, but I feel better knowing that I'm now actively protecting my identity. I'm very unhappy with the length of time it's taking to receive my credit report, but if that's my only complaint, I suppose it wouldn't be enough to give a bad review. I will follow up on my review when I receive my credit report, and if anything worth mentioning happens over the next year. |
Tags: review money
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Friday, June 06, 2008 21:16:22
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The last 5 or 6 years, I've been dabbling in the stock market. I really haven't been very successful - my best year, I broke even. But it's been a very educational experience, and I've learned a lot about how the market works, and I've definitely learned what not to do. This year, I decided to expand my horizons a little, and look into options. I learned the basics back in college, and figured it was time to give it a try.
If you don't know what options are, you can learn all about them at the Chicago Board Options Exchange - there is a very good overview and tutorial. I went through this tutorial myself, and was very impressed.
If you want to skip the whole tutorial, here's a very basic explanation: An option is the right, but not the obligation, to buy or sell shares of stock at a given price at a given time. Buying an option gives you the right, but not the obligation, to buy or sell shares of a stock at a given price and time. Selling an option means you are now obligated to buy or sell shares of a stock at a given price and time. There are many different strategies, each with different risks and rewards. I want to focus on the strategy known as a "Covered Call". This is where you simultaneously buy shares of a stock, and sell options to buy those shares from you.
Options are based on sets of 100 shares, so in order to work with this strategy, you buy the stocks in an even increment of 100 shares. Here's a real-life example. At close of business today, GE is trading at $30.02 per share. So 100 shares would cost you $3,002. An option to buy GE in September (about 3 months from now) is trading for $1.25, so selling 100 shares will get you $125. When September rolls around, there are two possibilities: either GE is trading for more than $31, or not.
If it's more than $31, then you are required to sell your stock for $31. That's good news: You made $92 (minus commission) on the stock, and you made $125 (minus commission) on the option. That means you made about 6% return in 3 months, which translates to 24% per year, better than you can ever expect to do with regular stocks.
If it's at or less than $31, then the option just expired worthless - good news again: you still made $125 (minus commission) on the option, and you still own the stock. Just sell another option - you'll need to analyze your situation again to see which option to sell, depending on how far down the price went from $30. As long as GE doesn't go out of business, you're pretty much guaranteed to continue making money every 3 months, or however long you choose. If it stays in the vicinity of $30, then you're making about $125 every three months - if it drops too far down, you'll have to start selling less valuable options, so you won't quite be making that same $125 - but you'll still be making something - something is always better than nothing, especially when you consider that you'd be making absolutely nothing if you were just hanging on to the stock only. Eventually, the stock will probably get back to $31, and you'll sell and start over again.
Consider that last scenario - suppose you invested in GE stock only at $30, and it had a bad few years, then finally got up to $31 after a few years. You just made a miserable 3% total over the course of a few years. If you had gone with the covered call strategy, you would have made much more than 3%.
One more real life example - Delta Airlines, a company not nearly as stable as GE, is selling for $6.37 ($637 total). An option to buy Delta at $7.50 in January 2010 is selling for $4.00. If Delta goes out of business and the stock becomes completely worthless, then I only lose $237. In January 2010, if Delta survives and still trades at about $6.37, then that option expires, and I made $400 profit after only risking $237. If Delta is doing well, and trading at or above $7.50, then that number jumps to $513. So I'm basically betting that Delta will still be in business in 18 months - not a great bet, but the risk/reward ratio is too good to pass up.
There's basically only one thing that can go wrong in a covered call strategy: A stock can go way up - you still make money, but since you are obligated to sell at the strike price, there's a limit to how much money you can make, where owning just a stock allows you the potential for unlimited profit. Of course, you can buy back the option, at a big loss, and hope the stock continues to rise - but there's a good chance you won't make up the difference.
The covered call strategy is only one of many option strategies - it's the easiest to understand, and it's one that can be very profitable. If you limit yourself to safe companies like GE, Microsoft, or JP Morgan, then this strategy is pretty safe as well. It's a great technique, and I'll be using it whenever possible. |
Tags: money
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