Play To Win

Guru looking good

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Jade
At the beginning of round 2, I like Guru Investor. But he disapointed me in the end. He is up nicely this round. I will cross my finger to see if he can finally come through this round. In six month such short period of time, there are so many variables. I do hope strategy lab can continue to publish past participates' performance for a little big longer.

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Cash is still the king

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Health
Despite the disaproval from some fellow investors, I am still holding majority cash. My only tiny stock position continues to draw me down. From 2/1/2008 to date, my SLO2 fund is down 0.8%. In the same period, S&P500 is down about 10%. The market still did not turn around.

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bail out

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aid
Apparently Wall Street likes the idea that our government is bailing out Fannie Mae and Freddie Mac. When we sigh that in this society, profits are privatized and losses are socialized, maybe we should think this way: We are already paying high medical insurance premium because a few "shouldn't-be-practicing" practitioners' malpractice. But as a society we are better off paying the insurance than having no one to clean up the mess. IndyMac's failure and others in this quarter reduced the federal deposit insurance fund from $53 billion to $45 billion. This is again socializing losses of individual banks. But since Wall Street embraces this "socialism" whole-heartedly, why should we be questioning? I will NEVER be able to (even if I want to) conduct any financially irresponsible activity, I'm just too law-abiding and conservative. But I can't help but think: why didn't I just go ahead to buy that dream house and if I can't afford it later, let someone bail me out!

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Index fund is still the choice

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Instruments
Who is the the most successful mutual fund managers in the past decades? Many would argue that Bill Miller is one of them. After all his Legg Mason Value fund is the only one beating S&P index 15 years in a row. But would you put your money with him? I don't. Looking at the bigger picture. From 1986 to now, about 22.5 years span, LMVTX is up a littl less than 200%. This is like 3% annual return. You can do much better by just putting your money in CD. In the same 22.5 years span, S&P index is up about 500%. This is about 7.5% a year.

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Long Term Capital Management?

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Navigation
If you are Lehman Brothers' creditor or it's creditor's shareholder, wouldn't you be mad that Lehman's CEO's compensation (during the heat of subprime mortgage collapse) was $22 million plus triple that amount in stock awards in 2007 alone, let alone those lucrative years before the storm. That's just the CEO. What about my "envy-of-the-class" friend who joined Lehman as an analyst during its prime and whose bonuses have bought her properties in many corners of the world? They just have to look for jobs somewhere else, or, retire. If the bonus system continues, I don't see why when next bubble comes around, the executives of financial firms will be more cautious to avoid long term "mistakes".

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ML no more

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Jewelry
It might be a blessing for some that Merrill Lynch's founders didn't live to see the end of an era - The largest brokerage firm going down. The bull on Merrill Lynch's Logo has long symbolized Wall Street's optimism. Bull no more, a company that survived the 1929 stock market crash but not this time. Hmm, so is that an exaggeration to compare now to the Great Depression?

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Up and down

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Rhythm
The market was up and down like crazy in the past days. It is like shorten a whole year's flutuation into a couple fo days. It is a trader's dream coming true. But can anyone take advantage of it? From looking at strategylab players's performance, none of our players did. I see that most of them actually increased their cash position during this peroid. Are you really a trader? Do you want to be one?

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Can I afford an iPhone?

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iphone
An audience called in to ask Suzy Oman at the Suzy Oman show if he can afford an iPhone. You would think it makes more sense to call in to ask if he/she can afford a boat, a vacation home or a Harley. Unless someone is dead broke, an iPhone, even at a whoppy $499, whether one can afford or not is pretty much a priority issue. If you really need/want one, you can always give up some eating out, some movies, etc. The caller got his permission to buy an iPhone. But if his crave for an iPhone expands to something else, even if they are just of the same value, even Suzy is hard to tell if you can continue to afford.

But what perplexed me is that if someone had to ask Suzy if he/she can afford a small item like iPhone, how can he/she handle any financial decisions in his/her life. An iPhone seems like the least to worry about.

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