Quicken 2012 sucks

I haven't had much time to post, but this piece of software enrages me.  It can't even do reconciliation of accounts properly: in particular, it seems to have buggy end-date checking.  Waste of money.

Charity Navigator

It's that time of year again: making donations to charities.  In case you haven't seen/used it, Charity Navigator is an excellent resource for evaluating the effectiveness of your donated dollars.

Health Care Costs

Read these slides.  They are a great source of information about the American health-care system.

Taxes

I've spent a bunch of hours figuring out the maze of tax forms I need to report the so-called "nanny tax" as a household employer in NY State. In case this is useful to someone else, I thought I'd post that information here:

Federal:

1. one-time: get a federal EIN by filing an SS-4
2. quarterly: pay estimated taxes
3. file W-2 and W-3 yearly
4. Form 1040: file Schedule H

NY State:

1. one-time: register as a new employer www.labor.state.ny.us
2. register a new hire within 20 days of employment www.nysnewhire.com
3. quarterly: file NYS-45
4. Upon termination of employment, give employee a NYS IA 12.3

Microsoft Money replacement

Hey, now this is incredibly useful...a way to keep using MS Money after Microsoft is done supporting it...

This post has gotten a lot of hits, so let me clarify. The link takes you to a python script that you can adapt to download quotes into MS Money. You have to understand a little bit of programming (and Python, in particular) to be able to use it, unfortunately. If you have that knowledge, this is a great way to work around the end of MS Money.

Enough

John Bogle founded the Vanguard mutual fund company, and has made his life into a battle against entrenched interests. "Enough." is his latest broadside against the financial industry, although it also contains diatribes against the deterioration of America's moral fiber. An entertaining read, although not as to-the-point as his other books. He's got quite an ego, and it shines through brightly in this book; and certainly he admits it.

Iceland

This Vanity Fair article about the financial meltdown in Iceland is fascinating. Definitely an interesting read, both for the historical perspective and the stories of what is happening in Iceland right now.

A Splendid Exchange

William Bernstein's history of trade is a fascinating read about how people have always sought to make money through trade. The historical information is wonderful (who would have known that global trade was pervasive in the 1650's?), and some of the analysis in the final chapter (which summarizes some of modern economic theory) is pretty interesting. Well worth reading!

Predictable Irrationality

Another book about psychology and economics, which is all the rage. This book was entertaining, but not that well written: it jumps from pretty sensible conclusions about some experiments to over-generalized statements about public policy. And some of the experiments just seem silly. For example, the author placed cans of Coke in student refrigerators at MIT (I wonder if it was in Burton House?): some of them wound up being drunk. However, when he placed plates with dollar bills on them in refrigerators, the dollars were not taken. From this he concludes that people treat $ different from objects. Which may be true, but in the context of this experiment I'd say that having a plate of dollar bills in your refrigerator is an unusual enough sight that most people would consciously avoid the bills.

Still, some amusing stories. Probably the best one is where he explains the experiments where students fill out some surveys while they are sexually aroused.

Economics humor

The video presentation of this paper is pretty funny, and worth watching.

The author, Yoram Bauman, apparently has given up a tenure-track position teaching economics, and now is a standup comic. Or, as he puts it, a "standup economist". You can see some of his routines on the web, of course!

Knowledge and the Wealth of Nations

Knowledge and the Wealth of Nations by David Warsh is a fine read. It covers the history of economics from the point of view of interrelationship between economic growth and the advancement of knowledge. Apparently it was not until the early 1990's that the development of knowledge was explicitly modeled by economists as an important part of the real economy: prior to that, knowledge was outside of economic models (partially due to tractability of the models, I guess).

In any case, this book is an exciting intellectual tale of how economics developed; I recommend it highly.

Economics for dummies

Naked Economics by Charles Wheelan is an entertaining explanation of economics for the lay person. I recommend it as a good starting place to read about the basic principles of economics.

Value vs. growth

An interesting article aboutmutual fund risk! The theory is that value companies are exposed to more risk of bankruptcy (no surprise there), which is more "dangerous" (presumably insufficiently compensated-for) than growth companies. So investors should not just invest in value companies (which is not too much of a surprise).

Markets

Economic markets, that is. John McMillan's book Reinventing the Bazaar covers a lot of the modern economic theory (albeit in a practical manner) about markets. I like his statement that "liberals" oppose the free market and some of the best ideas about how to help poor people, and "conservatives" love the free market so much that they love ideas that would destroy proper market functioning. McMillan keeps coming back to the idea that markets depend on proper government regulation in order to function best: his best example of this is the comparison between Russian shock therapy in the 1990's and China's unprecedented growth during the same time period.

I enjoyed his description of the Tsukiji fish auction in Japan, where $25M of fresh fish is auctioned every morning. My friend Mike Epstein has said that it is quite a sight!

The Paradox of Choice

I read through The Paradox of Choice by Barry Schwarz. It talks about how we humans do poorly with too many choices, as we appear to be driven by regret or the anticipation of regret. For example, too many choices can lead to paralysis, possibly due to the fact that the sum of the opportunity costs goes up with the number of choices. Overall, this book covers a lot of the same material that is covered in Stumbling on Happiness by Daniel Gilbert. The latter was more entertaining; the former more analytical. Of course, as both authors discuss, memories are hardly reliable, so I could be wrong in this comparison!

Bond investing

The Only Guide to a Winning Bond Strategy You'll Ever Need: The Way Smart Money Preserves Wealth Today by Larry Swedroe has a decent overview of the bond markets for lay investors. I skimmed through it quickly: it doesn't actually provide a real "strategy": just the information necessary to formulate a strategy. So the book could be considered a necessary but not sufficient condition towards developing a reasonable strategy for investing in bonds.

Crazy money advice

Robert Kiyosaki has an interesting post here about money. Unfortunately, most of his "advice" doesn't make sense. And his math doesn't either: he estimates that $25000 in 40 years will be equivalent to $250 today. What kind of inflation rate gives a 100-fold decrease in purchasing power in 40 years? Even a 10-percent rate of inflation would only give a 45-fold decrease in purchasing power.

Liars and crooks

This is an interesting interview with two financial crooks. There are lessons to be learned.

Money mistakes

I skimmed through Why Smart People Make Big Money Mistakes & How To Correct Them, by Gary Belsky and Thomas Gilovich. It's an interesting book about behavioral economics, and how some common irrationalities that we all exhibit can affect our behavior with money. Some of the issues:

• We tend to keep separate mental accounts for our money; don't let these mental accounts affect your spending patterns.


• Losses affect us more than gains hurt us, so we get more reckless in trying to avoid losses.


• Sunk costs do not matter.


• We are affected by how issues are framed: reframe issues so that you see them both as gains and losses.


• Don't ignore small numbers, such as mutual-fund fees.


• We tend to anchor on irrelevant information, and we treat events that are likely to be the result of change as non-random; don't pay attention to such irrelevant information.


• Don't be overconfident about your abilities if you have little training.


• Avoid "confirmation bias", which is our tendency to treat information as though it confirms our decisions.


• Don't follow the herd.


• Avoid too much information. Information can cause us to act emotionally.

Wealth

Wealth is by Stuart E. Lucas (a descendant of the founder of the Carnation company). I've been reading this on and off for the last month; it is an interesting book. The author's family has a lot of money, and he talks about the challenges of managing it. The interesting parts for those of us with less money:

• He advocates index investing for almost all investors.


• He suggests viewing one's career as a form of investment that can be used to balance passive investing.


• He views the government as a "silent partner" in one's investing. The government actually takes more of the burden when one realizes losses, and only shares in gains. This is an interesting view of capital-gains taxes.

He talks about some of the interesting challenges of raising children (especially in the context of a great deal of money). Some of the more generally applicable pieces of wisdom: "fair does not mean equal", and good parents try to help their children realize their own personalities.