The Dim-Post

March 29, 2010

The tool is not exterminated by the machine

Filed under: blogging,finance — danylmc @ 1:53 pm

Stuff are doing something almost shockingly admirable and worthwhile with one of their blogs. Greer McDonald is writing about financial planning and literacy from the POV of a person swimming in debt.

I’m not sure why more business and finance journalists don’t write about consumer finance: if you go to the bookstores the shelves are groaning under the tomes about financial planning (the most popular are the worse than useless Rich Dad Poor Dad series, which dispense advice that will actively destroy your wealth) indicating high public interest in the subject. And there is plenty of research into optimum finance and investment choices for ordinary people (Marginal Revolution links to all the best papers: apparently we should never purchase extended warranties, buy expensive wine (quality encounters dramatically diminishing returns > $50) or invest in individual shares).

But most business journalists prefer to tell us which individual shares we should buy or write open letters to the Reserve Bank governor advising him on what to do with the OCR. Nice for Bollard (possibly) but not as relevant to the rest of us, esp for the younger readers Greer’s blog is clearly aimed at.

About these ads

18 Comments »

  1. There is Mary Holm though. Very Kiwisaver focused but since that’s probably about the extent of a lot of people’s ‘finance’ dealings it’s probably justified.

    Comment by StephenR — March 29, 2010 @ 2:41 pm

  2. Good to see NZ could do with a huge upgrade of its knowledge about opportunities. Here is one for free – there is a fortune to be made with an NYSE listed ETF that triple shorts US Treasuries, google it but not for widows or orphans. FYI an etf is an exchange traded fund and shorting is when you are betting on a price decline, the price of a bond has an inverse relationship to the interest rate.

    Comment by David — March 29, 2010 @ 5:53 pm

  3. “(the most popular are the worse than useless Rich Dad Poor Dad series, which dispense advice that will actively destroy your wealth)”

    If anyone doubts this you might like to read this

    http://www.johntreed.com/Kiyosaki.html

    Comment by Simon — March 29, 2010 @ 7:11 pm

  4. I’d recommend “A Random Walk Down Wall Street”.

    I’d have said we were quite overburdened with financial advice, but most of it is rather sad.

    The worst of it is telling twenty-somethings that they need to pay off their credit card, open a Kiwisaver account and start saving for a house deposit. FFS, you have all of your life to make money, but you’re only 20 once!

    [Anyway, in 30 or 40 years time, global warming and globalisation will destroy the "wealth" that's kept capitalism going these past 120 years. When that happens, anyone with surplus cash will have it confiscated (lenient version) or be lowered feet-first into a giant shredding machine (full-on version)].

    Comment by Rich — March 29, 2010 @ 8:41 pm

  5. For me, quality encounters dramatically diminishing returns > $9.95. Hic.

    Comment by Clunking Fist — March 30, 2010 @ 1:01 pm

  6. Greer McDonald
    I thought her blog was better when it was just a voyeristic look at young single people shagging each other.

    never… buy expensive wine (quality encounters dramatically diminishing returns > $50)
    That’s probably a fair point, but generally speaking there is a substantial quality jump in NZ grown wines from $15 to $20 a bottle, certainly more so than for, say, $10 to $15.

    International wines: you really need to be willing to pay $30 a bottle at least to be confident you’ve got a good one. Such is the cost of living in a small country at the end of the earth, where shipping costs can be very high.

    Comment by Phil — March 30, 2010 @ 1:58 pm

  7. I wish I could find the wine paper I’m referencing. They found that increase in quality (determined by blind taste tests) rose dramatically from $10 to $20, even more steeply from $20 to $50, but then flatlined, to the point where experts ranked $1000 bottles evenly with $50 bottles.

    Comment by danylmc — March 30, 2010 @ 3:24 pm

  8. Could I outsource finding the “don’t invest in individual shares” one to you then?

    Comment by StephenR — March 30, 2010 @ 3:27 pm

  9. …or was the gist just that ‘normal’ people can’t hope to do as well as professionals?

    Comment by StephenR — March 30, 2010 @ 3:28 pm

  10. the worse than useless Rich Dad Poor Dad series, which dispense advice that will actively destroy your wealth

    Oh dear – when I was working for a US Army library this book was in huge demand by soldiers wanting to know what to do with the money they were getting for risking having bits blown off them in Iraq. That, and the “Left Behind” series (bangs head on desk). I didn’t know Kiyosaki’s book was as fictional as the Left Behind ones at the time.

    Comment by Psycho Milt — March 30, 2010 @ 3:35 pm

  11. FYI: There actually is a group called the American Association of Wine Economists

    http://www.wine-economics.org

    Comment by Phil — March 30, 2010 @ 4:08 pm

  12. …or was the gist just that ‘normal’ people can’t hope to do as well as professionals [at investing in shares]?

    If you’re up against high frequency traders you’re pretty much sunk.

    Comment by Repton — March 30, 2010 @ 5:39 pm

  13. Nice link. Yes I did recall that now trading companies (if those are the correct words) try to locate their computers as close as possible to the stock exchange ones – yikes.

    I suppose people have a chance, but they’d have to simply be in their individual stocks for the long term. ‘A Random Walk Down Wall Street’ sounds like a good read though.

    Comment by StephenR — March 30, 2010 @ 7:48 pm

  14. note difference between investing and trading. try reading up on that first.

    Comment by golden — March 30, 2010 @ 8:22 pm

  15. Could I outsource finding the “don’t invest in individual shares” one to you then?

    The gist is that ‘ordinary investors’ should put their money into investments that are (a) robust and (b) diversified. If you’re buying individual stock then you’re only a CFO with a gambling problem away from losing your whole investment. If you’re buying enough individual stock to be diversified you’re spending a lot of time doing research and diligence to protect your investment, at which point index funds are a much smarter buy.

    Comment by danylmc — March 31, 2010 @ 9:17 am

  16. Would tend to agree. Did read Rich Dad Poor Dad too – boy am I glad that wasn’t the only source of financial info I took in!

    Comment by StephenR — March 31, 2010 @ 11:59 am

  17. If you’re buying enough individual stock to be diversified you’re spending a lot of time doing research and diligence to protect your investment, at which point index funds are a much smarter buy

    Index funds are generally creaming a fat commission off the top, for really doing fuck-all.

    Personally I think you’re overestimating the costs and time involved in research and dilligence. I would say that a wet-weekend of effort in front of the PC would be enought to cull the NZSE down to maybe 5-10 stocks worth considering, for an individual investor with a moderate understanding of their financial needs. Another couple of weekends for the ASX, and suddenly you’ve got a solid portfolio of 20 stocks you can trade as you please from an ASB account at the click of a mouse.

    Comment by Phil — March 31, 2010 @ 1:37 pm

  18. You’ve done that, Phil?

    Comment by StephenR — April 2, 2010 @ 6:43 pm


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

The Rubric Theme. Create a free website or blog at WordPress.com.

Follow

Get every new post delivered to your Inbox.

Join 350 other followers

%d bloggers like this: