Should Your Retirement Account(s) Be Invested in Gold?

How does the idea of a gold IRA or gold 401k sound?

These days, a lot of people are buying gold - pushing it to record highs - because they are worried about inflation, U.S. debt, and the soundness of the U.S. dollar. People are spooked that the dollar is weak versus other currencies, and that grains, commodities, oil, and metals are soaring to new price highs.

Fixed deposits (CDs, savings accounts, treasuries, etc.) are paying almost no interest, and many people are still wary of the stock market.

It's no surprise, therefore, that there is interest in investing retirement assets in gold. People want their retirement assets protected from loss and inflation. Rightly or wrongly, they trust gold to accomplish these tasks.

An online company called GoldCoinsGain.com is glad to help them. They can set up IRA gold and 401k gold accounts. They can even handle gold TRA transfers.

Trading With Charts and Technical Analysis Is A Good Way To Go Broke!

Every day, thousands of people decide that they want to "trade stocks and make millions". Unfortunately, there are no shortage of snake oil salesmen willing to encourage them, and sell books, and fancy technical indicator and charting software.

The truth is that if you approach the stock market with a small amount of capital, and expect to get rich quickly, you are setting yourself up for failure:

1. You might gamble a large percentage of your money on one or two risky trades.
2. Pay too much in expenses (commissions, fees, books, software, DVDs, seminars, etc).
3. Use technical analysis and charting.
4. Get involved in futures and options.

The stock market is a fantastic way to make your money grow and work for you, but you can't expect it to triple or quadruple a small stake. Instead, count yourself as a good trader or investor if you can reliably generate between 10 - 20% per year consistently.

Please do not buy into hype about technical analysis and charts. Now, you do need to use technical (i.e. price based) rules for deciding buy and sell points, but these are about managing risk and taking profits from positions determined through fundamental analysis. But, you need to beware of depending on charts and technical indicators to predict when stocks will go up or down.

Most of these technical indicators have been recycled and sold since the 1970's, when computers and calculators were available for the first time. "Trading gurus", who make more money from selling systems than actually trading, found they could create indicators that sometimes gave reliable signals, and then could cherry pick these examples for their sales pages.

Chart patterns and technical indicators are seductive because most people - especially successful professionals from other fields - think in an employee mentality - rather than an entrepreneurial mindset. In other words, they want a consistent paycheck and reliability. They want a boss to give them instructions. In this case, the trading guru gives them a well defined job - buy when this line crosses this, or sell if this chart pattern occurs. They don't want to think for themselves, take risks, and invent their own systems.

This is why many doctors, lawyers, and engineers make lousy traders and business owners.

I never consistently made money with traditional technical analysis. I only became consistently successful when I turned unconventional and developed my Stock Trading Riches system.

The Stock Trading Riches formula is technical, in that it works on price, and it is as easy to apply as a moving average or oscillator. But, it is not trying to predict when to buy or sell a position, or trying to predict the market. It's a tool for managing a position - lightening up when the position has increased and bulking up the position when it is down.

I found the secret to trading a stock is not to jump in and out. The key is to always hold core position and mathematically adjust the number of shares, depending on a formula.

The Value of A Good Online Broker

One of the things you need to be a success at Stock Trading (besides a winning system that suits your personality) is a good Online Broker.

In today's world, there is no reason to use a full service broker that you need to call on the phone. The preferred methods for placing trades are through Online Trading and Mobile Trading. This way, your buy and sell instructions are transmitted instantly and clearly - without the possibility of mis-communication, while you hold down on commission costs.

With so many choices of online brokers, which one is the right one? The answer is the one that feels right for you. You need to feel comfortable with their execution performance, website navigation, order placement, and trading tools.

I recently learned about an online broker called First Trade Securities. Their website looks promising because it has a simple and clutter free design - exactly what you need from your broker. You want to focus on placing the trade, so the site should be in the background and work intuitively.

First Trade lets you inexpensively trade / invest in stocks, options, ETFs, mutual funds, and bonds. You can even open IRA Accounts.

Even Al Qaida is No Match For The Chicago Commodity Pits

The Department of Justice said that an Al Qaida operative used $27 million to trade commodities - and lost $20 million in 8 months. The DOJ filed a lawsuit to recover the money.

This was commodities trading - which makes even the riskiest stocks look like savings bonds.

Commodities fluctuate less than stocks, but commodities contracts are insanely leveraged - which means that, even if you have a winning trading strategy, you can get wiped out by random fluctuations.

For example, with as little as a $500 deposit, you can trade one corn contract. At a recent price of $6.50 1/4 per bushel, one contract has a value of $32,512.50 (6.5025*5000). That means, using the minimum margin, a 1.5% drop in price would wipe you out.

Of course, you could deposit the full amount ($32,512.50) or even the 50% margin allowed in stocks ($16,256.25) but, in practice, nobody does this because corn prices fluctuate a lot less than a stock price.

The experienced traders in Chicago know that individual traders look at charts and, due to heavy margins, have little tolerance for fluctuations against their positions. So, market makers will buy and sell large quantities to make trends choppy, causing little traders to exit at a loss.

Accounts get depleted quickly through getting "chopped" - repeatedly buying high and selling low - "Death by a thousand cuts".

I've been a full time trader, and I've been burned enough by commodities to stick with stocks, where you can get an edge. The only ones who succeed at trading commodities are insiders whose fathers and grandfathers traded in the CME and CBOT pits.

It's OK To Splurge Once In A While

I did something impulsive on Wednesday.

I took our 2002 Camry for servicing, and they gave me a 2010 rav4 (small suv) for a loaner. My son and I fell in love with it and got my wife to agree to trade the Camry for it - plus we paid maybe $12k (and an extra $1400 to upgrade to leather seats).

We have the car now, but will drop it off on Monday to get the leather seats installed (they will give us another loaner for 2 days).

This rav4 is now only the third car I've owned.

I owned my Celica for 19 years (1990-2009), so part of me feels like I'm wasting money changing the Camry when it's only 9 years old.

But, I justify the purchase for two reasons:

1. We are pretty frugal in general.

2. Life isn't always about saving money. Sometimes, it is nice to actually spend and enjoy your hard-earned money. I feel good when I drive my new car, and enjoy looking at it.

Who Is To Blame For The United State's High Level of National Debt?

There is plenty of blame to go around for our present debt situation:

1. Under Bush, we cut taxes and started 2 wars - and Obama continued this while
adding another 1/2 war (air strikes on Libya). During WWII, the folks at home made sacrifices, such as rationing, etc. that made them feel connected to the war effort. While we no longer need rationing, we should have ended the tax breaks after 911 - when we went to war.

2. The bottom line cause of the financial crisis was Greenspan pumping too much money trying to lessen the effects of the dot com crash. Booms and busts are a natural cycle in capitalism, and we keep trying to use the government to smooth out the down cycles.

3. Finally, we have had historically low interest rates for the last few years. While responsible homeowners locked in low, fixed rate 30 year mortgages, the government is still mostly stuck with short term debt. We should have been issuing less short term bonds and lots of 20, 30, and even 50 year bonds.

Shop Around For Money Market Rates

The government has kept interest rates low for an extended period of time in an attempt to stimulate the economy out of a recession. They are hoping that people and companies will be able to borrow money cheaply and put it to work growing businesses and jobs.

The problem with keeping interest rates low is that it hurts fixed rate investments such as CDs and money market accounts. People who put money into these types of accounts want the safety and reliability of a constant rate of return but, at the current low rates, many of these accounts are actually losing money relative to inflation.

In other words, if the account gains 0.1% for the year, but inflation was at 3%, then the account balance will lose 2.9% of its spending power.

Fortunately, even though we as individuals can't increase interest rates, we can compare money market rates online. There are a lot of money market funds that have taken a chance by avoiding having real world store fronts and advertising. Instead, these companies use the savings to offer higher interest rates and depend on word of mouth and internet searches for customers to find them.

This is a gamble that is paying off because, in recent years, a larger percentage of people are now web savvy. They are comfortable with doing the legwork to compare money market rates online, and find the companies offering better rates.

So, it's still possible to get somewhat decent money market rates if you are willing to invest a little effort.

Learning About Business by Surfing Around

Sometimes it's fun to explore the internet without any plans - just following links and "googling" interesting phrases.

This morning, I started off reading an article about an American sumo wrestler who set a world record for heaviest finisher of a marathon.

One of the comments was a joke that the sumo guy would cause a shortage in Gold Bond medical powder - in other words, a joke about chafing.

I remember hearing commercials for Gold Bond years ago so, feeling nostalgic, I googled it and went to the Wikipedia site.

From there, I learned that a lot of cool products from the past - like Gold Bond, Icy Hot, Selsun Blue, etc. are made in Chattanooga Tennessee by Chattem, a 100 year old company.

The Chattem Wikipedia entry mentioned that they are a subsidiary of French drugmaker Sanofi-Aventis, which sounds very interesting. An old time Chattanooga company owned by a French drugmaker.

It makes me think of the "Beverly Hillbillies"'s Jed Clampett mingling with a French aristocrat. So, I googled the merger.

Turns out that Sanofi bought Chattem in 2009 on December 21 (my brother's birthday). They paid $1.9 billion - offering $93.50/share, which was a 34% premium over the closing price.

From an analysis point of view, it looks like it was a good deal. Chattem is in the top 10 for consumer products in the U.S. (and has a higher profit margin than leaders Johnson & Johnson and Proctor & Gamble), but they don't have much market overseas. Sanofi is losing patent protection from many drugs, and wants the stable earnings from consumer products to make up the lost income. Also, they want a sales network to sell an over-the-counter version of Allegra in the U.S.

So, it was a win-win deal for everyone.

Finally, I saw an interesting article on the Wall Street Journal that 2 French businessmen in Brussels got charged by the SEC for insider trading on the Sanofi-Chattem deal. They found out about the deal before hand, bought options (expiring on Jan 15) on Chattem stock, and sold the options right after the merger was announced for a $4.2 million profit.

So I had a fun and educational "surf session" all because of a Sumo running (actually walking) a marathon :-)

Fw: Bank of America Foreclosed on

A couple who had no mortgage on their home got erroneously served with foreclosure by Bank of America.  They won their case and were awarded about $2500 for lawyer fees.  BofA wasn't paying, so they got a foreclosure order from court against the local branch and showed up with sheriff's deputies...

http://news.yahoo.com/s/time/20110606/us_time/httpmoneylandtimecom20110606homeownerforeclosesonbankofamericayesyouheardthatrightxidrssfullnationyahoo

"22,000 Tears" Visa Blunder - Should the U.S. Give Visas Through A Diversity Lottery?

Today, Yahoo had an article about how this year's diversity lottery experienced a computer glitch and awarded 90% of the first 22,000 (out of 50,000 openings) to people who applied in the first couple of days.

These people were elated that they won, and then crushed when the State Department said they will re-run the lottery. Immigration lawyers say they should honor these 22,000 results and randomly award the remaining openings from people who applied later.

I think that, since the government messed up, they should let these 22,000 people have their visas, remove their names from the pool, and re-run the lottery fairly (picking a new 50,000 from the left over pool).

But, like usual, I find the comments on Yahoo to be just as interesting as the articles. In this case, a lot of people think the whole idea of a random lottery to be dumb.

I actually like it and posted my own comment defending it:

Immigration to the United States has been a big factor in us being the world's only super power. In fact, there are some who argue that, going forward, our biggest competitive advantage against China and India is that we welcome immigrants and new ideas.

I think the Visa lottery is a good idea because:

1. It involves a relatively small amount of visas compared to those given out by other programs, that target skilled and/or wealthy immigrants.

2. The visas from those programs end up going to immigrants from just a handful of countries.

In other word, you can't centrally plan creativity and innovation. I think we are richer if we give artists, poets, dreamers, etc. from other countries a shot at 5% of the visas, rather than letting them all go to high tech companies bringing in computer workers and engineers from India, China, etc.

From my comment, please don't get the idea that I don't like computer consultants from India. My point is that they are well-represented. But, it is in the best interests of the U.S. to distribute a small percentage of visas randomly to people from countries that are under-represented from other visa programs, to diversify the pool.

This way, we increase our chances for allowing in someone who ends up contributing to our society, but would never have had a chance competing against skilled workers.