Archive for September, 2010

Your Nuclear Option at a Car Dealership

The single most powerful negotiating tool possible

By Kevin M

The single best tactic we could possibly use in negotiating a deal for a car is painfully simple and at our disposal any time we choose to use it. Here it is: If you don’t like the deal they’re offering, just get up and leave!

Call it your nuclear option, but it’s the one action that’s guaranteed to stack the negotiations in your favor no matter what else is happening.

When is the right time to pack up and leave?

When you feel pressured
When you feel confused
When you’re certain you’re paying more than you can afford, even though the dealer says otherwise
When you sense based on your research that you’re being given something less than the best deal available
When you feel like the sales staff is ganging up on you in the classic car dealership ambush
When that little voice inside is screaming “something isn’t right” (the little voice is never wrong)

Some Experts Are Starting to Tell the Truth About Stock Investing

Beyond Buy-and-Hold #6

By Rob Bennett

Last week we looked at Why the Experts Don’t Tell the Truth About Stock Investing. Let’s flip it! Set forth below are nine reasons for believing that the experts would like to shoot straight if only it didn’t mean saying the three hardest words to pronounce in the entire English language (“I” and “Was” and “Wrong”).

1) William Bernstein reported the safe withdrawal rate (SWR) accurately in his book The Four Pillars of Investing. I brag about being the first person to report the SWR accurately, but Bernstein actually beat my May 13, 2002, Motley Fool post by six weeks (I think my brag is a fair one, however, given that I have devoted eight years of my life to letting middle-class investors in on the secret while Bernstein has avoided publicizing the matter). On some level of consciousness I think he would like to see them get out or he wouldn’t have reported on them in his book.

2) Vanguard Founder John Bogle, Mr. Buy-and-Hold himself, has acknowledged that Valuation-Informed Indexing can work. He is not yet willing to put the knife in his Buy-and-Hold baby. But he’s thinking about it!

Others cannot set goals for you, only you can – “Goals” set by others are really “quotas”

By Dave Kelly, Professional Speaker

“I am in excellent, physical condition.”

So goes one of the affirmations that I tell myself on a daily basis. Yet, I must admit, it is not true—not now, anyway. Affirmations do not have to be true in the here-and-now to be valid, but they do have to be something we commit to making true in the future.

I have had people ask me how can I be a “motivational” speaker and not be in peak physical condition? Well, after all, there is a niche for everything and everyone! Actually, changing my physical status has not been a goal for me, until now. I believe in speaking things into being and also sharing your goals and dreams with others. By writing this post, I am committing myself to making some positive changes that you should be able to see very soon.

Why not before now? Because it was not a priority for me. It has not been a goal that I could or would truthfully pursue.

Are there Alternatives to College Careers?

By Kevin M

In the 1990s and early 2000s no one was seriously questioning the sustainability of large price increases in housing, or the integrity of the mortgages they secured. The same was true of the stock market in the 1980s, in the 1990s and again in the early 2000s. As we’ve seen in each case, that level of certainty is often the last step before a crisis.

A similar level of faith continues to exist in the assumed value of a college education and in the student loan debt commonly used to obtain it.

21st Century quandary: a college education has risks!

A college degree has value, and will continue to in the future—I have one myself. But the problem is that a college education today carries risks that it didn’t just a decade or two ago:
Read more »

Never Go Into a Car Dealership Alone!

By Kevin M

Most of us dislike confrontation. In fact, unless you’re certifiably neurotic you’d probably rather deliver a speech to a large crowd rather than engage in face-to-face confrontation. OK, that was a bit over the top, but I’m going somewhere with this…

Confrontation comes in many forms—disagreements, disputes, debates, arguments, and of course even fisticuffs. But nestled snuggly right up there with the rest of human conflict are contract negotiations. Only the stakes are usually quite a bit higher with contract negotiations, since you can be bound by the terms of the final agreement for years or even decades.

Most of us are keenly aware of this fact, though we might not ever admit it to ourselves in any direct way. We just prefer doing just about anything to negotiating a contract. Call it contract paralysis or what ever you like, but unless you do it for a living, there’s a part of most of us that prefers to shy away from wheeling and dealing. After all, we could lose…

Contract negotiations can run the gamut from simple and tame—like working with a tire dealer who wants to sell you a set of tires for your car more than you want to buy them—to the higher stakes variety where we feel overmatched. Perhaps nowhere are us mere mortal types more heavily outgunned than in a car dealership.

The car dealership ambush

Why the Experts Don’t Tell the Truth About Stock Investing

By Rob Bennett

Valuation-Informed Indexing offers long-term investors both higher returns and less risk than what they can expect while following a Buy-and-Hold strategy. It sounds good, of course. The trouble is — It sounds too good.

Many investors are skeptical of Valuation-Informed Indexing on grounds that it sounds too good to be true. Higher returns and lower risk both? If there really were a way to pull that off, everyone would be doing it. No?

I think that’s right. Eventually, everyone will be doing it.

For now, though, you need to dig to learn what works in stock investing. Most of the people generally viewed as experts in this field very, very, very much do not want average investors to learn what works.

There are nine reasons:

New Home or Existing Home – Which is the Better Deal?

By Kevin M

With the general fall in house prices in the past few years, new homes have come down substantially and present a real opportunity to purchase a relatively low maintenance home. But the over-supply of existing homes is a real chance to cut the best deal price-wise. Which one do you choose?

Now that home values are no longer on a steady upward path, the choice of home you buy has greater consequences than ever. In the recent past, a purchase mistake could usually be covered by rising prices. All you had to do was wait a few years and the moment would come when you could sell the mistake at a higher price than you paid, and move on to something else.

But buying decisions today look more permanent than they did a few years ago. A home purchased today might stay with us for 10 or 15 years before selling would even begin to make sense. Against that backdrop, do you go with a brand new home or an existing one?

Lower New Car Prices by Refusing Useless Options

By Kevin M

Ever notice how the advertised price of a new car is never the price that you actually get? Have you also noticed that once you settle on a price for a new car with a dealer, that it tends to creep higher and higher before he actually hands the keys over to you?

In previous posts I’ve discussed the dealer dog-and-pony show that’s designed to create enough confusion to weaken your resistance, and that’s a big part of the reason why you’ll pay more. But there are more tangible reasons too.

Is Timing the Stock Market Possible?

Beyond Buy-and-Hold #4: Long-Term Timing Is Not At All Similar to Short-Term Timing

By Rob Bennett

Buy-and-Hold advocates often advise investors not to fall for market timing schemes. I am not too crazy about timing schemes myself. I avoid them. But I do believe strongly in long-term timing, the timing approach employed by Valuation-Informed Indexers. This timing approach is different. This timing approach is not a scheme.

I don’t have confidence in this approach because the data supports it or because I think that it may work or that it is likely to work. I have confidence in this approach because it must work. It is not possible for the rational human mind to imagine a circumstance in which this timing approach would not work. Could I state it any stronger?

Short-term timing — all the timing approaches properly referred to as “schemes” fall into this category — involve guesses as to which way stock prices are going. Even in cases in which they work, they are tricky. I believe that it might be possible for a small number of sophisticated investors to succeed at short-term timing (changing your stock allocation with the expectation of seeing a benefit within a year or so). But I do not think that short-term timing is at all a good idea for the typical middle-class investor. I see eye to eye with the Buy-and-Holders re this one.

10 Things You Should Buy Used

By Kevin M

America is often described as a “throw away society”. We buy things—usually brand new—use them for a while, get rid of them in some form or fashion, then move on to the next thing.

This creates an enormous pile of stuff sitting somewhere—much of it of pretty good quality—and presents a real financial opportunity to anyone willing to invest some extra time and effort in buying what they need.

Why buy anything used? For one thing, new isn’t always better; sometimes we can get better quality merchandise second hand that we could never afford brand new. Sometimes, the item in question is one we don’t use that much, or won’t use for very long—why pay a premium for it?

But more important by far: any money we can avoid spending is money that can go either into debt reduction or directly into savings.

What are some items that are better bought used than new?

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Archive for September, 2010

Your Nuclear Option at a Car Dealership

Some Experts Are Starting to Tell the Truth About Stock Investing

Are pursuing Your Own Goals – or Filling Quotas Set By Others?

Others cannot set goals for you, only you can – “Goals” set by others are really “quotas”

Are there Alternatives to College Careers?

21st Century quandary: a college education has risks!

Never Go Into a Car Dealership Alone!

The car dealership ambush

Why the Experts Don’t Tell the Truth About Stock Investing

New Home or Existing Home – Which is the Better Deal?

Lower New Car Prices by Refusing Useless Options

Is Timing the Stock Market Possible?

10 Things You Should Buy Used

Financial Management