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How Are 2011’s Sure Things Faring At Mid-Year?

Tuesday, July 19, 2011 - 7:36 AM
Investors often put too much faith in "sure things". This CBS MoneyWatch Wise Investing blog post has a good mid-year review of 10 investment expectations at the start of 2011 that were viewed as "sure things". Only 2 of the 10 are inline (marginally) with early-year expectations.
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Ken TuminKen Tumin5,467 posts since
Nov 29, 2009
Rep Points: 124,996
1. Tuesday, July 19, 2011 - 2:32 PM
Ah, hubris. There is only one "sure thing" in investing, and that is hubris. Having been handed my head on a plate more than once, I can suggest but humility. E.g.,

(a) When something you are fortunate enough to own is "up" over 7% in 6 weeks, harvest your gain (I did just that earlier this year when I cashed in some of my Vanguard stuff and bought that yummy, FDIC-insured Dime 15 month 2.5% IRA CD). At the time, folks were skeptical. Since then, the "market" has been nuts. I suspect it will end the year right where I cashed out that "some", meanwhile I will have banked that righteous 2.5% month-by-month on the amount harvested.

(b) If you are fortunate enough to have enough to ensure (insofar as possible) a comfortable retirement, and still wish to "play" the market, never use retirement funds to do so. "Play" only with that you can afford to lose, because you most assuredly might.

(c) If you watch any cable-TV "business channel", kindly use the "mute" button, or, alternatively, watch "Pawn Stars" instead. "Pawn Stars" is a better barometer for economic reality. Buy high, pawn low, go to the tables, go broke.

(d) When anything, anything, hits an all-time high, think tulips. When G. Gordon Liddy is hawking gold in infomercials, well, enough said. I'm old enough to remember Watergate.

Just my $.02

Bozo
8
BozoBozo137 posts since
Feb 14, 2011
Rep Points: 937
2. Tuesday, July 19, 2011 - 7:00 PM
Bozo, well said.
2
loulou541 posts since
Aug 3, 2010
Rep Points: 3,388
3. Tuesday, July 19, 2011 - 8:59 PM
Lou, from time-to-time serendipity coincides with the market, but it's rare. Back in February, I came up for my yearly re-balance (which is when I compare my age-appropriate asset allocation to my various aggregate balances). If my age dictates I'm too "heavy" in equities, then I sell an appropriate amount of equities and buy bonds/cash, in order to re-balance. Well, back in February, the snap-back in the stock market got me out-of-whack (too heavy in stocks). It was about then that Ken posted the information about Dime's 15 month 2.5% CD IRA. It so happened that the amount I needed to re-balance fit nicely within the FDIC-insured limits, and the yield (2.5%) was about as good as I could expect from a bond fund, especially when one considered the principal risk in bond funds from rising interest rates (which all we lemmings thought were a no-brainer back in February; dang, were we wrong or what?).

Now, I have a major CD coming due at USAA (end of August)(an IRA), and I'll be biting the bullet. Probably a bit in PenFed, a bit in Alliant. But it will drag on my effective overall yield. What's a Bozo to do? I keep waiting for Ken to post some magical, wonderful, only-known-to-readers-of-Ken's-blog IRA CD with wonderful terms. Alas, it appears serendipity goes only so far.

Bozo
2
BozoBozo137 posts since
Feb 14, 2011
Rep Points: 937
4. Tuesday, July 19, 2011 - 9:55 PM
Bozo, we could hope for an August Penfed 5% promotion like last year. I have the same problem in Sept and am also waiting for some miracle to happen.
1
loulou541 posts since
Aug 3, 2010
Rep Points: 3,388
5. Wednesday, July 20, 2011 - 12:35 PM
Lou, gosh golly, I'd be happy with a PenFed promo rate of 3.5% (which is where my PenFed IRA CDs are now). It's hard to make a buck these days on fixed-income. Sigh. I guess the good news is that, with a laddered portfolio of CDs, eventually things will turn up. Eventually. Treading water I am.

Glub, glub, glub.

The sound of Bozo treading water.

Glub.

Bozo
1
BozoBozo137 posts since
Feb 14, 2011
Rep Points: 937
6. Friday, July 22, 2011 - 9:17 AM
The only way these days to hit any FDIC guaranteed interest number in the 3's is to be in a 5 year cd AS LONG AS you are lucky enough to live in a state that has that rate available. Look at Shiloh Credit Union of Virginia - a 1 year interest rate special of 5%- (IF you are a member of their church).
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sabre82afsabre82af20 posts since
Mar 25, 2011
Rep Points: 56
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