Thursday, July 3rd, 2008
Entenmann’s Bakery is having a “Summer Movie Moments” Giveaway where you have a good chance at winning a free movie ticket. I say a very good chance because my sister, my wife, and I all won free movie tickets on the first try. Perfect for the holiday weekend. Thanks Julie!
One entry per person. You may need to use a different computer and/or different IP address for the 2nd person. You print out a customized gift certificate with your name and 16-digit code. Good for up to $12 at these participating theaters (seems like most Regal and Cinemark theaters qualify). Mine expires 10/31/08. From the fine print:
Upon visiting sweetmoments.com, the customer may register to win a free video camera (make and model to be determined), a free movie ticket coupon (up to $12.00 value), a free concession cash coupon ($2.00 value), or a cents-off coupon for Entenmann’s product ($0.55 value). [...] You must be a legal resident of AK, AR, AZ, CA, CO, HI, ID, KS, LA, MO, MS, MT, ND, NE, NM, NV, OK, OR, SD, TX, UT, WA, or WY to be eligible to participate in the Summer Movie Moments promotion.
Posted in Deals & Offers | 25 Comments »
Tuesday, July 1st, 2008
A co-worker of mine disclosed today that she moved her entire 401k to cash and bonds last week. She is older than me and has what must be a sizable balance because her reasoning was “I couldn’t stand it anymore, all my contributions for the last year have disappeared! Why did I bother?”
I thought that it was an interesting - albeit dangerous - way of measuring returns. I can see how it can be depressing if you start with $100,000 at the beginning of the year, keep putting away $1,000 every month for a year, and then at the end of year… you still have only $100,000 due to market drops. It can be easy to view it as simply throwing money away. I miss the safety of cash!
But this is dangerous because comparing absolute changes in your entire account to your current contributions would seem to greatly magnify any gains or losses in your account. For example, if you start with $100,000 put in $1,000/month for a year in a bull market, you might end up with $124,000 at the end of the year. You put in $12,000, but your balance grew by $24,000! Feels great, maybe I need more stocks! But in reality this is basically the above scenario in reverse, and nowhere near a 100% return.
This way of framing losses reminded me of the popular behavioral finance book Your Money & Your Brain. Are our brains just wired poorly to deal with the swings of investing?
On the other hand, perhaps this should also serve as a reminder to properly assess your appetite for risk. Going back and forth between lots of stocks and zero stocks is highly unlikely to return in better overall returns. Numerous academic studies have shown that even professional money managers don’t do market timing well at all. Simply picking something in the middle and sticking with it actually turns out better. We can try to use these gloomy times to try and find that balance where we won’t be tempted to go either way in both good times and bad.
Posted in Investing | 56 Comments »
