Archives For January 2013

I know most AFM readers don’t care about this stuff but I love crunching numbers and sharing the results. For this study, I looked at 1-year rolling total returns. I began with January 1926 – December 1926 and then February 1926 – January 1927, all the way through January 2012 – December 2012. There were a total of 1,033 1-year rolling periods. Here is a summary of my findings:

As you can see, the returna are all over the place. But, the data seems to gravitate to the 5% to 20% range. Notice that the returns were negative 26.23% of the time (31.66% after inflation). One-year holding periods are quite volatile.

Now, for those of you who like the numbers, I put together a PDF of my findings. Feel free to download a copy. It’s 10 pages of mind-numbing fun (just click on the graphic to download the PDF).

An AFM reader sent me an email and asked me to update the 20-year rolling period returns for the S&P 500 Index. Here they are:

S&P 500 20-Year Rolling Total Returns 2013

I received our six-month auto insurnace renewal yesterday. The premium is going up 9.79%! We added our oldest son last March. Our rates basically doubled. They didn’t change much at our July 2012 renewal. Yesterday’s renewal came as quite a shock. We haven’t had any issues. So, I called our provider yesterday and one of the first things he told me was, “I know rates have gone up in Texas.”

This is the breakdown of our rate increase (click on the graphic to see a larger view):

This is what irks me about insurance. If you purchase insurance and get into an accident or have to file a claim, they jack up your rates. Then, if you don’t use your insurance, they jack up your rate via rate increases at the state level.

So why did the rates go up in Texas? I did a little research and found two reasons:

1. Cost increases at auto body shops.


2. High numbers of uninsured drivers.

The second one really bothers me. Responsible people have to pay increased insurance rates to compensate for the lowlifes (yes, if you are driving without car insurance, you are a lowlife).

I put in an email to our agent to see if they can shop around. I’m not hopeful.

Oh, and get this: in about 6 months we’ll have teen driver number 2. I guess we’ll stop saving for retirement so we can pay for car insurance. Our monthly premiums are already about the same as a car note.

Times are Changing

January 25, 2013

My oldest son started working at a local grocery store chain last Spring. He’s actually working for the same store manager I worked with when I was worked in the grocery business in the mid 90s.

Anyway, with his first job, came his first income tax filing.

I have to say it was kind of fun teaching him how to file his taxes. Fortunately, they’re really easy to do. He was even able to file for free via the H&R Block website (I’m sure all tax preparers offer free filings). And, because he has a checking account, he was able to get electronic deposit.

A few days later, he told me that he told a classmate and fellow coworker to bring his W-2 and iPad to school and he helped him file his taxes in their physics class. I thought that was pretty cool (as long as they weren’t supposed to be doing something else). It also sounded like something I would have done in high school.

All of this got me to thinking about how different things are than they were back when I was a kid. We had to file paper returns and wait several weeks to get the refund if there was one. Now they can be filed online and the money deposited directly into a checking account.

I have always tried to be proactive in helping my teenage boys learn about finances. I took them to get debit cards before they were teenagers. Then, as soon as they became teenagers, I took them to get their own checking accounts. It’s kind of funny because most of their friends do not have debit cards so they will pay my boys to order stuff for them from

Over this past Summer, both boys worked to save up money for the new iPhone. As soon as they came out, both of them were able to order their phones and pay for them with their own money. Their friends at school were asking lots of questions about how they were able to do all that without their parents’ help.

Yeah, I’m bragging. It’s this part of parenting that I like.

I’m hopeful that they’ll be able to function financially once they’re out in the real world. They still don’t do everything the way I wish they would but that’s part of growing up.


I read this piece from Fortune on Apple’s valuation last night. Great piece. It shows the impact of recency bias.