A Color-Coded Look at the S&P Index 1926-2011
By JLP | February 3, 2012
This is my version of the “map of the market”…
The graphic should be pretty self-explanatory. The bottom line is that positive and negative months are random. Good luck trying to find a pattern.
Topics: Investing, S&P 500 Index | 4 Comments »
A Historical Look at the S&P 500 Total Return by the Month
By JLP | February 3, 2012
Many of you know that I have a spreadsheet with the monthly total returns for the S&P going back to 1926. I thought I would share with you a summary of that data. It’s pretty interesting (at least I think it is).
The best month, based on geometric average total return is December. The worst month, based on geometric average is September. The most volatile month, based on standard deviation, is April (April just happens to be the second best month based on geometric average total return).
Topics: Investing, S&P 500 Index | No Comments »
Unemployment Now at 8.3%
By JLP | February 3, 2012
Just saw a headline on WSJ.com about the latest unemployment figures.
Nonfarm payrolls rose by 243,000 last month, the Labor Department said Friday, marking the biggest gain since April. The jobless rate fell by two-tenths of a point to 8.3%, the lowest it has been since February 2009.
Both figures contradicted expectations of a slowdown in job growth to start the year. Economists surveyed by Dow Jones Newswires had forecast a gain of 125,000 in payrolls and that the jobless rate would remain at 8.5%.
The report also indicated that job growth was stronger in previous months than initially reported, with the economy gaining 60,000 jobs beyond the government’s preliminary figures for November and December.
The latest drop in the jobless rate, which is obtained from a separate household survey was largely because of genuine job growth rather than a reduction in the labor force, the report showed. The number of unemployed people fell to 12.8 million, a three-year low, and the jobless rate has fallen from 9.1% since August.
The way they massage the numbers, anything is possible.
I live in Southeast Texas. Things have never gotten too bad here. What about you? Do you see things improving in your part of the country? Personally, are you starting to see positive changes in your own finances?
Topics: Economic Indicators, Economics | 3 Comments »
State-by-State Median Household Income Growth 2007-2010 (It’s not pretty)
By JLP | February 2, 2012
I found the following quote from this WSJ piece interesting:
The District of Columbia notched the greatest increase over the 2007-2010 period, with an 8.1% jump in income, in large part because of federal-government employment.
It’s nice to be the government, I guess. I don’t know what else to say to that.
The rest of the country didn’t fare so well…
From 2007 to 2010, median annual household income fell across the country by 3.5% to $51,287. That’s according to an analysis of Census data released Wednesday by former Census Bureau officials Gordon Green and John Coder.
I’m thankful we live in Texas, which has held steady (median household income grew .8% 2007-2010).
Here is a state-by-state look at change in median income for 2007-2010.
Topics: Economics, Miscellaneous | 5 Comments »
Money and Kids: Teaching Kids to Save
By Lindsay | February 2, 2012
One of the most important lessons we can teach our kids is to save money. Teaching them to save incorporates many life lessons: waiting for what they want, preparing for the future, self-control, and many more. So what is the best way to teach your kids to save?
For younger kids, short-term results are very important. They need to understand the correlation between saving and spending. Hopefully as they get older, they are able to wait longer and longer to receive the payoff for their hard work. One major issue in the lives of teenagers and adults in America is delayed gratification. That’s why our nation’s credit card debt is out of control, why there are many people who can’t pay their light bill but still have an iPhone. Teaching kids self-control is a difficult task, but one that is essential for their success as adults.
There are two different types of saving lessons our kids need to learn: Saving for something and saving just to save. Both are valuable lessons. Younger guys have a more difficult time understanding the second one, so obviously those lessons need to be age-appropriate.
Saving for Something
This one has become automatic for our kids. On “pay day,” we break up their money into smaller bills. They are required to divide their money into give, save, and spend envelopes. They always have something they want to save for, so we’ve tried a variety of techniques to help them keep track of how much money they are saving and how close they are to achieving their goal. (Most of these are very visual – posters, thermometers, all kinds of charts.) Celebrating their achievement of that goal makes it even more meaningful when they can finally enjoy all of their hard work.
As our kids have gotten older, though, we’ve seen that they need an additional lesson. Kids need to learn to save for the future, not just just for a specific item.
Saving for the Future
So what is the best way to teach kids to save for the future? I don’t think there’s one right way that will work for everyone, but here’s what we’ve done. We opened a savings account for my son when he turned 10. We tried to make it a milestone (something the other kids could look forward to when they turned that age). He went to the bank with us to open the account, and they put his name on it. When he gets money for anything, he now has four categories to put his money into: long-term save, short-term save, give, and spend. (He still ends up having approximately the same amount of money as his siblings because we pay him a little more for the work he does around the house.) As he’s seen the balance in that account grow, he’s been more motivated to put money away. It’s also given him the chance to learn about a checkbook register, how to keep track of what you’ve put in the bank, and several other valuable financial lessons.
I’ve done a small amount of research into ING Savings Accounts for Kids and that is something we are considering as his balance grows. (In school, he’s starting to learn about percentages and higher numbers, so it might be a good time to introduce some investing concepts.)
This website lists software specifically for kids to learn how to keep track of their money and budget. I’m researching some of these products as well.
Bottom line – it’s our job as parents to teach our kids to handle money. We want them to be productive adults and to not repeat our mistakes. Hopefully being open with them about those mistakes and teaching them practical saving and spending habits will allow them to be better off as they enter adulthood.
Topics: Kids and Money | 1 Comment »
Total Returns for 2011 and January 2012
By JLP | February 1, 2012
I just realized that I hadn’t done a full year update on indexes I follow here at AFM. If you’re interested, those numbers can be found here:S&P 500, MidCap 400, SmallCap 600, & 1500 Performance (2011).
Now, here are the numbers for January 2012 (click on the graphic for a larger version):
January’s 4.48% return for the S&P 500 Index was it’s best return for January since 1997. The question is: What will it mean for the rest of the year?
Topics: Investing, S&P 500 Index | 1 Comment »
How Does $1.2 Billion Vanish?
By JLP | January 31, 2012
Have any of you been following the MF Global debacle? I have. At least what I have read in the Wall Street Journal (the latest here). It’s simply unbelievable. How does $1.2 billion in customer funds vanish? These are customer funds, mind you.
As I understand it (if I’m wrong, please correct me), these customer funds are no different from a customer brokerage account at say Merrill Lynch or Charles Schwab. So, it would be like going to check your account balance one day and your account being empty.
I’m not sure why John Corzine and the other executives are not behind bars right now. He and the other executives at MF Global should at least be required to sell all their possessions and put that money towards what they stole from their clients. That would go a lot further than Corzine’s “contrite” attitude about the whole deal.
Topics: Business News | 7 Comments »