Meet me in Montauk...: January 2006

Investing made simple

This past weekend I rebalanced my 401K portofolio which I have neglected for about a year. Shame on me. And then I started to re-think about our non-retirement portofolio. I've been tracking an investment blog by another employee at my company for some time. His rationale for picking / exiting specific stocks are very sensible and easy to understand. It is important to note that he is not a "buy and hold" type. Impressed with his weekly results I even considered mimicing his short term strategies. But then I realized that he did not disclose the net effect of taxes and the brokerage fees on his short term gains. A quick calculation would show that if you factor in the taxes and fees it would pretty much erode the gains and bring his results much more in line with the Market averages. If you read his blog, you also wonder how much time this guy put in for his "research."

Investing is a fun conversation piece for me. It's funny that whenever I get into the topic with friends, my fixation of index funds becomes evident. But it's for good reasons...

First, my little anecdote above.
Second, I read in an article that if you keep up on the news, the press, magazines, internet, etc. you'd be exposed to at least 42,000 investing "tips" every year by "gurus / investment experts." I have yet to learn of many (or even a few) actively managed -portofolios- that beat a well diversified portofolio of index funds in the long term (5 - 10 years with exposure to bull/bear cycle). Anything less than 5 years, I'd question if you really are investing.
Third, year 2002 still burns me to this day. Being young, naive, greedy, I paid the price.

For the past few years I have always looked for Paul B Farrell's annual index fund results. From this year's article, I copied & pasted a variety of diversified index portofolios (aka "lazyman's portofolios") utilizing low cost Vanguard funds.

"The Aronson portfolio"
Vanguard Total Stock Market Index (VTSMX - 5%)
Vanguard 500 Index (VFINX - 15%)
Vanguard Extended Market Index (VEXMX - 10%)
Vanguard Small Cap Growth Index (VISGX - 5%)
Vanguard Small Cap Value Index (VISVX - 5%)
Vanguard Emerging Markets Stock Index (VEIEX - 20%)
Vanguard Pacific Stock Index (VPACX - 15%)
Vanguard European Stock Index (VEURX - 5%)
Vanguard Inflation-protected Securities (VIPSX - 10%)
Vanguard High-yield Corporate (VWEHX - 5%)
Vanguard Long-term U.S. Treasury (VUSTX - 5%)
Total portfolio 100%

Scott Burns' "The Margaritaville portfolio"
Vanguard Total Stock Market Index (VTSMX - 33.33%)
Vanguard Total International Stock Index (VGTSX - 33.33%)
Vanguard Inflation-protected Securities (VIPSX - 33.33%)
Total portfolio 100%

Dr William Bernstein's "The No-brainer portfolio"
Vanguard Short-term Investment Grade Index (VFST - 40%)
Vanguard Total Stock Market Index (VTSMX - 15%)
Vanguard Small Cap Value Index (VISVX - 10%)
Vanguard Value Index (VIVAX - 10% )
Vanguard European Stock Index (VEURX - 5% )
Vanguard Pacific Stock Index (VPACX - 5%)
Vanguard REIT Index (VGSIX - 5%)
Vanguard Small Cap Index (NAESX 5%)
Vanguard Emerging Markets Stock Index (VEIEX - 5%)
Total portfolio 100%

Bill Schultheis' "The Coffeehouse portfolio"
Vanguard Total Bond Market Index (VBMFX - 40%)
Vanguard 500 Index (VFINX - 10%)
Vanguard Value Index (VIVAX - 10%)
Vanguard Small Cap Index (NAESX - 10%)
Vanguard Small Cap Value Index (VISVX - 10%)
Vanguard Total International Stock Index (VGTSX - 10%)
Vanguard REIT Index (VGSIX - 10%)
Total portfolio 100%

"The Yale portfolio"
Vanguard Total Stock Market Index (VTSMX - 30%
Vanguard Total International Stock Index (VGTSX - 20%)
Vanguard REIT Index (VGSIX - 20%)
Vanguard Short-term Treasury Index (VFISX - 15%)
Vanguard Inflation-protected Securities (VIPSX - 15%)
Total portfolio 100%

It's interesting to note the similarities in fund types. We've been trying to slowly mimic the "The Aronson portfolio" which achieved ~ 11.5%. This easily beat the S&P500 ~4.7% for 2005. I personally prefer the "The Aronson portfolio" for it's granularity but each of the example portofolios above are easily winners in the long term.

Rest In Peace

A good friend's father recently past away. At the funeral, it was difficult to see the family in such pain. My only hope is that our presence was able to offer some level of comfort. I've always struggled with Christianity even to this day. But it's times like these that one can find comfort in believing that there is God & Heaven. And no, I do not mean having Faith only in times of need or convenience. Tragic events like this always induce some form of philosphical babble/mumblings in my head...I cannot help but remind myself of the following,

Life is short...for reals..
Make time for the people in your life.
Take time to stop and smell the roses.
Take calculated risks.
Work Life Balance.
Purpose: There has to be more to this life than the rat race. Sure I want "nice things" as much as the next person but I know "nice things" will ultimately not lead to self fulfillment.

CNNmoney.com / Fortune Top 100 Best Compensation -> "Man, I'm in the wrong dept!"

A good number of folks from various depts at my company were suprised by the numbers from this article. Many would agree the base salary is not typical but the total compensation package (401K matching, benefits, bonus, options, etc.) might amount to the number shown but the person would also have to have a good number of years of experience racked up. Our acquistions could also skew the numbers as well.

Super-Quasi Housewarming

"Bikes by Jimmy"

Sunday lunch at the Yard House in Victoria Gardens.. *sigh* no Ferrari's parked on the sidewalks today.

Jason supervising while the grunts do the work...

On Sunday, we noticed Jason's rear right tire was flat. It turns out Jason had a few nails on his rear right tire..we suspect a little bit too much off roading..so we helped the poor guy change to his spare tire.

Jim took this shot. This is how things start to look after you had one too many drinks.

Jim brought his tripod all the way down so of course had to make use of it.

Our given geography and different groups of friends makes a traditional housewarming very difficult. I had this idea of doing a quasi-housewarming this weekend with mostly Bruin alumni ie LA folks. The irony is that all LA area folks could not make it while friends from far away came...ah bugger.. but I was really grateful that Jason was able to come up from SD and Jim & SMC drove all the way down from SJ to visit. Small group get togethers are just as fun as you have more opportunities to talk to each other. SMC finally had the chance to try Shakey's Mojo potatoes. Argh, they were not as crispy as usual (ran out of batter??) but SMC still liked them a lot. haha..Look at Jason...red as usual. This weekend had the same feeling as the good old days at Tiverton. Some things never change.

Finally moving today

...our company stock. Those weasel analysts finally "got it" and upgraded us. We broke out of our 200 day moving avg. I had a very itchy trigger finger in Dec but so far I am glad that I did not dump my ESPP yet. Nonetheless I have my exit plan in place in case things turn for the worse. Looking at the bigger picture, hopefully this is a sign that large caps will do better this year.

My Top Five PC games of 2005

1) Warhammer 40K: Dawn of War + Winter Assault (above)
2) Battlefield 2 + Special Forces
3) FEAR
4) Need for Speed Underground Most Wanted
5) Call of Duty 2

I make no apologies for my love of PC games. I'm a bit of a "late bloomer" as I didn't get into these types of games til post college. It's a good thing as my grades were crap even without. Argh, I need a new rig to play games 2) - 4) at higher resolutions with AA & AF turned on. It's fun playing online with Josh and Nick. The repetitive voices of each character in Warhammer drives Viki crazy.. lol.

My Top Five Trance & Progressive tracks for 2005

1) Nicol Sponberg - Resurrection (Gabriel & Dresden Vocal Remix)
2) Coldplay - White Shadows (Gabriel & Dresden Bootleg)
3) Deep Dish - Say Hello
4) Niklas Harding Presents Arcane - Ice Beach
5) Martin Roth's Hands on Keane - This is the last time

Honorable mentions:
6) Above & Beyond vs Andy Moor - Air for Life
7) Paul van Dyk feat. Wayne Jackson - The Other Side (Deep Dish remix)
8) Jonas Steur - Silent Waves
9) Airbase - Escape
10) Ferry Corsten feat. Simon Le Bon - Fire (Ron van den Beuken remix)

This list was tough. There were so many good tracks this year. For those interested, you can find most of the tracks above in Armin's ASOT 2005 yearmix which can be downloaded here for a limited time (See link at bottom -> right click -> save link as) . Note the set is more of a "megamix" having condensed versions of each track.

My Top Five Films for 2005

1) Munich - Like Schindler's list, this is an important film to watch at least once. Credit to Spielberg for taking a break from the Hollywood machination and crafting a somberly heartfelt film like this.
2) Syriana - Previous comment. In the theater, I had to hold my pee for the longest time as to not miss a line.
3) 2046 - Previous Comment
4) Sin City - Previous Comment
5) Star Wars Ep III - Thank you George.

Honorable mentions:
6) The Island
7) The 40 Year Old Virgin
8) King Kong
9) March of the Penguins

My Top five Snack Alternatives for 2005

I thought it'd be fun to list a few of my Top Fives for 2005 and compare in the coming years. So here goes,

1) Apple
2) Low fat yogurt
3) Low carb shake
4) Low fat pudding
5) One cup of cereal w/ non fat milk (I tend to like sweetened cereal so this would be the vice..still better than ramen)

I still have a long way to go but I'd say this year I really made some postive changes on my eating habits. My in-house Physician lovingly reminds me the dangers of obesity -> diabetes, heart disease, high blood pressure, etc. Due to our work schedules, the gym is not as easy to go to anymore so I moved my treadmill down. It's not an expensive coathanger .