Traffic Congestion
As long there’s no crash that is backing up traffic on 43-N heading out of Milwaukee, I’ll typically take it back to my apartment. If there is substantial traffic, then I tend to take Lake Dr north along Lake Michigan. That is a really scenic drive with a number of really cool houses.
Even when traffic is flowing well there almost always is a temporary backup at the Silver Spring/ Bayshore Mall exit. This Is likely due to the Silver Spring traffic entering right where the interstate is going from three to two lanes. However, I think a big contributor to the slow down are the idiots who feel they can drive in the lane that is ending (which they know because of all the signs) and then cut in right at the last second. This forces everyone else to brake and allow them to cut in.
The offenders tend to drive expensive cars and, I’m assuming, feel otherwise privileged because their time is so much more valuable than the rest of us. I tend to forgive some people that cut in at the last second because they may be from out-of-town or the lane-ending sign may come up quickly. But in the case above, the sign occurs plenty early. I’ve even seen people try and use the ending lane to pass a few cars and then cut back in.
It would make me feel really good if all the sign abiding folks just didn’t allow these other drivers back in (done safely, of course). Make ‘um hang out on the side of the road for awhile until they get the idea.
There is some research that may back up my traffic congestion theory: Traffic Jam Mystery Solved By Mathematicians
Yield on Cost and Other Investing Terms
I’ve previously talked about the Dividend Reinvestment and Dollar-Cost Averaging spreadsheets that I made available on Google Docs.
Today I made additions to them, including a Definitions sheet describing some of the more technical terminology that I’ve used. As always, remember that I’m trying to do my best to make sure the investing information is accurate, but please do your own research as well.
Compound Annual Growth Rate: The year-over-year growth rate of an investment over a specified period of time. CAGR isn’t the actual return, but rather the rate at which an investment would have grown if it grew at a steady rate. It is calculated by taking the ratio of the ending value beginning value and raising it to the power of 1/(# of years invested), then subtracting 1 from the resulting number. This helps you compare growth rates of various stocks over an comparable timeframe. For example, a 30% increase sounds great. But that kind of a gain over 2 years is much different than if that gain took 10 years. Source: http://www.investopedia.com/terms/c/cagr.asp
Yield on Cost: The income yield on past investments. It is based on the price you initially paid for a stock. Each share purchases the same amount of dividend per share. However, the only way for the yield on cost to be identical is if the shares were purchased at the same price. As the dividend increases, the yield on cost goes up. Let’s use imaginary company ABC as an example. In 2005 the annual dividend was $0.80. With its current share price then of $40, its yield would be 2%. Okay, but not the greatest. ABC has grown by 3% per year for the last 6 years. It also has a 25 year history of increasing its dividend and the last 6 years have been no exception; ABC has increased its dividend payout by 8% per year. By 2011, ABC’s stock is at $46.37. Its annual dividend is $1.18. Current yield is $1.18/$46.37, or 2.54%. If I were to buy the stock now, that is what I could expect. However, my yield on cost is quite a bit better. Remember, it is based on my original cost of $40. Yield on cost is current annual dividend / price you paid. $1.18/$40, or 2.95%. It is calculated separately for each lot of shares purchased. A great source of information on this topic is available here: http://seekingalpha.com/article/229816-how-yield-on-cost-works
Yield on Total Capital Invested: This is something more specific to reinvested dividends. It makes the assumption that dividends are essentially “free money.” This obviously isn’t true. Dividends count as capital gains and contribute to the cost basis. This formula should not be used when calculating capital gains or losses for tax purposes. That said, if you think of dividends as free money then the total capital would be the stock purchases other than those that came from dividends. It shows the effective yield putting the compounding power of dividend reinvestment into display. It is calculated by the total # of shares * current annual dividend / capital investments. The capital gains from dividends are specifically not included. http://seekingalpha.com/article/229816-how-yield-on-cost-works#comment-1255168
Update on credit card
Just got a call from the Bank of America fraud alert. Someone in China tried to buy $700+ dollars at a boutique store and $90 at something called “Noapple” today. The crazy thing was that this card number was getting changed anyway (re: my last post). I guess this just forces my hand earlier to update the auto-payments. The good news was that Bank of America had declined these transactions so the scammers didn’t steal anything. Hopefully Bank of America catches these horrible people.
Reminds me of a story on heard on 620 WTMJ yesterday and this morning: Police in downtown Milwaukee shot and killed a bank robber after he opened fire on them during his escape. While his cousin claims that he was a “good guy,” turns out he was actually on parole for robbing the exact bank that he robbed again yesterday. Police also have video of him robbing two other banks over the last few months in the greater Milwaukee area. Milwaukee-Journal Sentinel article here.
Time to find a new credit card
I’ve been fortunate enough to have used the Schwab Invest First Visa credit card the last few years. (Schwab stopped offering the card and transferred its management to FIA Card Services back a little more than a year ago. Incidentally, FIA Card Services has been owned by Bank of America since 2006.) It was 2% cash back on everything with the cash being deposited, regardless of the amount, to your brokerage account each and every month. There was no talk about accumulating points or only being able to receive the cash back in increments of $25. It was perfect. I had auto-pay set up so I never had to remember to pay (just had to make sure I had enough cash to cover the balance!). As an example, if I spent $405.23 in a month, $8.10 would be automatically deposited at the end of the billing period. Sure, a little amount, but still, I’d rather have that $8.10 earning interest for me. With my old Citi 1% cash back card, that $8.10 would just sit there until it reached $50 exactly. I’d then be able to receive a check for the $50 and anything over that would accumulate until it again reached $50. However, the Citi card was great in that you actually got true cash back rather than points that you redeemed for cash. With the true cash back the company can’t suddenly say: ‘by the way, that $50 that you have…it’s now only worth $25.’ With points, however, I have a feeling that something like that could more easily happen.
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Marie Curie: Why her papers are still radioactive
Many library collections use special equipment, such as special gloves and climate-controlled rooms, to protect the archival materials from the visitor. For the Pierre and Marie Curie collection at France’s Bibliotheque National, it’s the other way around.
That’s because after more than 100 years, much of Marie Curie’s stuff – her papers, her furniture, even her cookbooks – are still radioactive. Those who wish to open the lead-lined boxes containing her manuscripts must do so in protective clothing, and only after signing a waiver of liability.
Marie Curie: Why her papers are still radioactive
Here’s a really interesting story about how naive the early pioneers of radiation were. Amazing work that these pioneers had accomplished.
Update, Finally!
I’m finally going to start updating my blog again. Issue number 1 was dealing with the tons of tabs on dividend investing that I had open. I curated those down to two new pages on investing.
My Investing Approach and Dividend Income
My Investing Approach will remain relatively static and will only be updated as I purchase new stocks, ETFs, or mutual funds. Dividend Income will be more dynamic, showing the amount of dividends that my portfolio is bringing in each month.
Dollar-Cost Averaging (DCA)
The question that everyone is asking is “Does it really work?”
The idea behind dollar-cost averaging makes sense: buy more shares when the price is cheap and less when the price is high with the hope of lowering your average cost per share. This is compared to the idea behind lump sum investing: the longer you have your money in the market, the more money you will make. This strategy works best if you have the money available as a lump sum. Lump sum investing is probably the best investment strategy because historically the market has risen substantially over time.
For those of us who do not have a lump sum available to invest (like me…since I just started a job), dollar cost averaging, while maybe not the greatest strategy for everyone, significantly beats leaving the money in a money market or checking account until you get to a “lump sum.” It also is important to make the monthly investment without commissions, be it a mutual fund or an ETF or a stock through a dividend reinvestment plan. Investing $50 a month into a stock with $8.95/trade cost would cause you to effectively lose greater than 17% of that investment each month to commissions.
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DRIP/DCA Spreadsheets
I’ve added two spreadsheet templates for public use on Google Docs. I use these exact ones to track my DRIP in General Electric stock that I’ve had since 2004. It hasn’t done the best (through no fault of these spreadsheets), but I’ve been able to significantly lower my average cost per share by buying when the stock has been low. Now that I have an income I’ve been contributing a little bit each month. It will be fun to see the dividends keep increasing!
Dollar Cost Averaging Calculator
This template gives you the ability to project anticipated value of a stock over a 20 year period if dividends are reinvested and allows for factoring in additional monthly, quarterly, or annual contributions. Great for tracking scenarios where dollar cost averaging would be advisable, such as with frequent contributions to an Individual Retirement Account (IRA) or a dividend reinvestment plan (DRIP).
Dividend Reinvestment Program (DRIP)
This template provides the framework for tracking a stock owned in a dividend reinvestment plan (DRIP). Also, includes a sheet which projects anticipated value of a stock over a 20 year period if dividends are reinvested.
Atrix 4G Phone
Can the Atrix 4G really become your next PC?
You know that advertisement where you see the guy trying to explain to airport security if his phone is a computer or a phone or both? Visit the above link to read a review of it. Seems kind of like a cool idea until you learn some of the details: Turns out you’re not actually running the computer from your phone. The computer portion is running its own version of Linux. A quote from a Slashdot article, Can the Atrix 4G Really Become Your Next PC?, explains it the best:
So I was reading the article and thinking “$400 for the laptop module? $200 + peripherals for the dock? Those are the equivalent of a cheap laptop/PC” Then I got to this tidbit:
“When you dock the Atrix, the Firefox browser and other dock-provided services aren’t running from the Atrix but instead from a stripped-down Linux PC inside the dock. A real post-PC device would run everything from the smartphone or tablet, and it would use the dock to add more processing or take advantage of peripherals.”
What? Why the heck am I buying this thing? All you’re selling is an ultra-underpowered, crippled Linux computer that only works when a weird phone is plugged in for no particular reason. Syncing open tabs in FireFox is nice, but that’s not enough. A simple app could do that. At home, I can keep a computer no problem. On the go, I still have to keep your laptop dock thing, so no space savings there.
Then there are other downsides. I’m guessing it drains the battery faster to use the laptop dock thing. The pictures of the laptop dock make it look really easy to snap the phone off the back accidentally and break the phone/dock. It’s nice to know the reviewer doesn’t think the thing feels secure in the dock.
This seems to be where computers will go for most people, but this first implementation clearly sounds more like a beta product than a first generation.
Publicly owned Green Bay Packers
Right before the Green Bay Packers won the Super Bowl I found this great article that explains how a NFL team in a city of 102,000 people manages to survive and thrive.
And here’s a snippet from a New Yorker article: Those Non-Profit Packers
The Packers’ unique setup has created a relationship between team and community unlike any in the N.F.L. Wisconsin fans get to enjoy the team with the confidence that their owner won’t threaten to move to Los Angeles unless the team gets a new mega-dome. Volunteers work concessions, with sixty per cent of the proceeds going to local charities. Even the beer is cheaper than at a typical N.F.L. stadium. Not only has home field been sold out for two decades, but during snowstorms, the team routinely puts out calls for volunteers to help shovel and is never disappointed by the response. It doesn’t matter how beloved the Cowboys are in Dallas; if Jerry Jones ever put out a call for free labor, he’d be laughed out of town.