John Bogle Preaches Simplicity on Wall Street

Monday's Chicago Tribune business section had a quick interview with the legendary John C. Bogle - the man who popularized investing with cheap index funds when he started Vanguard.

He has a new book out ("Enough: True Measures of Money, Business, and Life") and talked about how Wall Street has taken too much in cost vs. value added.

He also said there was too much speculation and not enough simplicity.

"It doesn't take a genius to figure out the more the financial sector makes, the less investors take home".

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Four New Blogs

I recently started work on four more blogs. I haven't listed them on my profile yet. I'm waiting until they are more established.

They are:

1. Gridiron Madness - where I write about and express my interest in NFL football.

2. Fun, Humor, and Comedy - where I share some of the internet humor and jokes that pass through my inbox.

3. Simplicity in Politics - This is where I express my frustration with the complexity and selfishness of politics and contemplate simple, elegant solutions to make the U.S. strong, safe, sane, and secure.

4. Talking About Real Estate - I discuss real estate investing, home ownership, financing, etc.

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Reader Included Stock Trading Riches in Their Amazon List of Recommended Trading Books

A reader on Amazon included my book "Stock Trading Riches" in their list on formula investing books.

They even tested my system:

"When using Puri’s spreadsheet and making one trade on the S&P 500 ETF (Ticker: SPY) on the first trading day of each year from 2001 to 2008, the result is that his system did beat Buy & Hold. The compounded annualized return of buying and holding the SPY index only, was 1.7%, while Puri’s system delivered 2.0%. Better results may be had with individual stocks, other ETFs, or closed-end funds."

I am grateful for the review. Also, I recommend not using a general index fund because it will lack volatility because the fluctuations of the individual components will cancel one another out.

Instead, my system works much better with a portfolio diversified among stocks and/or sector funds. The "Stock Trading Riches" formula would then be applied individually to each stock or fund to generate a better return by taking advantage of each position's volatility.

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Why The City of Chicago Pension Funds Are In Trouble

Last week, the Chicago Tribune had a two-part investigation into the city of Chicago's pension plans. The article is really disheartening because it shows how we have let incompetent individuals run things.

The whole country has probably heard that the state of Illinois is broke, and has unfunded pension liabilities. But this is about the city of Chicago itself. It has unfunded pension liabilities of either $20 billion or $40 billion (the politicians say $20 billion, but that is assuming an 8% average annual return, while the average return this decade of the pension funds has been around 4%).

The problem is that the politicians did not make required contributions to the pension funds - while also raising the employee's salaries and benefits. The politicians took the short-term, easy way out. They wanted to keep labor happy NOW, and who cares about decades from now, when they might be out of office?

The Tribune article looked at the example of the Chicago Teachers pension plan. Back in 1995, the plan was founded 100%. Then, in 1995, Mayor Daley took over control of the Chicago public school system, and he lobbied Springfield to allow property tax income (that went directly into the pension funds) to go to the school system's general fund.

In 1996, his administration went one better and got the law changed so that they didn't have to make a payment as long as the retirement fund was at least 90% funded. Because of the bull market, they didn't have to pay in for 10 years.

In 2006, they had to pay because the fund was below 90%. They contributed a little, then got the law changed again to let them make reduced payments for the next 3 years. Their excuse? Even though they didn't need to pay into the pension plan for 10 years, and thus got to keep an extra $1.5 billion, the school system spent it and was running a deficit.

Now, the fund is only about 73% funded and, by 2033, they will need to contribute $1 billion a year.

Some of the other pensions are even more seriously underfunded. Municipal workers are at 47%, police at 37%, and the fire fighter's pension is only funded for 30%.

Does this mean that the workers might lose their pension benefits? Maybe - but the Illinois state constitution was amended in 1970 to require that pensions to unionized government workers have to paid. So, slashing benefits may be unconstitutional. So, tax payers may be on the hook.

By the way, I don't think the workers are to blame. The main problem is the financial irresponsibility of elected officials.

Why do we have such incompetence?

I think the problem is that life is really hectic these days - people work long hours, then sit, burned-out, in front of their televisions at night.

Then, when it comes to voting, they either don't, or else just vote for the incumbents.

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The Stock Trading Riches Message Board on iHub

I've created a new message board on iHub to discuss and answer questions about my book, the Stock Trading Riches system, trading and investing, stock picking, etc:

http://investorshub.advfn.com/boards/board.aspx?board_id=19287

The board is open for all, and it is free to read and post!

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Orson Welles On The Dean Martin Celebrity Roasts

Director / producer / actor Orson Welles was a gifted speaker with a genius, dry sense of humor: Here Orson Welles Roasts Dean Martin http://www.youtube.com/watch?v=VlKR0i-51S4&feature=related Here, Orson Welles pays tribute to Jimmy Stewart: http://www.youtube.com/watch?v=GMKxTS4_FJM&feature=related

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Tic Tac Toe (So Cool)

YOU GOTTA TRY THIS AT LEAST ONCE!!!!! IT'S GREAT.
Tic Tack Toe

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