Random Roger

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2018-06-27T09:59:00.003-07:00

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Tiny Houses and Financial Simplification

2014-04-10T16:06:00.002-07:00

My latest post at Alpha Baskets is titled Tiny Houses Can Help Grow a Huge Portfolio and looks at financial and life simplification including something called the Tiny House Movement. The post also explores the role that a simplified portfolio can play in a financial plan.

From the post;

While the idea of living in 200 square foot house growing your own kale may not resonate as a desired lifestyle most people can find ways to cut back and many legendary investors extoll the virtues of keeping investments simple and obviously ETFs play a huge role in a simplified investment portfolio.

Please click through to read the rest.

The Sundance Fire

2014-04-08T10:17:00.000-07:00

Walker Fire had its first and hopefully last wildfire of the season yesterday; the Sundance Fire (someone at the Forest Service gave it that name).

We were dispatched for a smoke investigation a few minutes before the market closed (relatively good timing), the Forest Service was also dispatched at the same time. We responded in our Patrol 80 which is a Type 6 Brush Truck with three firefighters aboard. The initial call was that it was near Senator Highway (it is not a highway) and Walker Rd, to the west of that intersection.

We headed that way and saw smoke at the top of a ridge at what looked like was 1000 feet straight up a cliff. We figured that there would be a road of some sort that would get us at least a little closer. We found our way to a point where we thought we could hike up some and then across the ridge line to the fire and that turned out to be correct. We had about ten minutes of incredibly steep hiking and then just a couple of minutes across to the fire.

We tied in with a FS supervisor who got there at the same time and who told us that the Prescott Hotshots were coming along with one engine (a second engine arrived later). We had our Patrol 85 and Tender 81 staged below until we found the fire. Groom Creek Fire (neighboring department) also staged, standing by to help if needed.

The fire itself was about half an acre we were quickly able to get a line dug around it and get Patrol 80 to it as a water source on a two-track type of road. We shuttled Patrol 80 back down to the Water Tender a couple of times as needed to refill.

Bigger logs were dragged into the middle of the burn area and allowed to burn down while the rest of the burn area was mopped up to make sure nothing else was burning.

The local paper had a very small writeup as well.

It ended well, we got there fairly early and there was little to no wind. Luckily this turned out to be more of a training exercise than anything else. Thanks to all of the Forest Service resources, State Forestry and Groom Creek for responding.

What Wildland Firefighting Teaches About Investing

2014-04-08T06:25:00.000-07:00

My latest at Alpha Baskets is titled What Wildland Firefighting Teaches About Investing and draws a comparison between firefighting and investing, a popular topic here for a long time.

From the post;

Just as it is important to refresh on wildland firefighting it is also important to refresh on investing, more specifically your chosen investment approach. And just as it is important for what we know about fighting fire aggressively to evolve as we learn more (the increased danger between 1400 and 1630 is new information for our department) so too must what we know about investing and markets evolve as well as our engagement with markets.

Please click through to read the rest.

Coincidentally, after writing this post over the weekend we had our first (and hopefully last) fire of the season yesterday. I'll put up a separate post about the fire with some more pictures that might be interesting.

People Make Their Finances More Complicated Than They Need To Be

2014-04-01T09:22:00.000-07:00

This week's Alpha Baskets post is titled People Make Their Finances More Complicated Than They Need To Be and features a list of simple investment rules written up by Morgan Housel at The Motley Fool.

A huge theme for Random Roger posts has been the importance for financial simplicity. Obviously plenty of people have written about this and while I generally believe everyone realizes on some level they should keep things simple, avoid excessive debt and all the rest it becomes very difficult to do in practice.

Housel begins by noting that with the tens of thousands of finance books and billions words in those books, it all boils down to “work a lot, spend a little, invest the difference.” That will seem familiar to long time readers of Random Roger where I’ve talked about living below your means and the importance of a high savings rate because that is far more within your control than investment returns.

Please click through to read the rest.

The picture is from Crater Lake in Oregon.

The Media’s Incomplete Coverage of the Active/Passive Debate

2014-03-27T06:46:00.000-07:00

My latest for Alpha Baskets is titled The Media’s Incomplete Coverage of the Active/Passive Debate. Basically, media coverage of this topic doesn't circle back what different types of clients need. For example, for some folks (quite a few actually) managing volatility is a bigger priority and that is not typically part of the passive equation.

From the post;

All advisory firms have clients that cannot emotionally endure the normal ups and downs of the stock market cycle. Holding on to market cap weighted index funds no matter what may not be ideal for these clients.

Please click through to read the rest.

The picture is from Yellowstone National Park

The Minefields of Stock Market Content

2014-03-26T06:19:00.000-07:00

My latest for Alpha Baskets is a bit of a departure; titled The Minefields of Stock Market Content. Lately there has been bit of a dust-up about anonymous content on Seeking Alpha and paid content on some more traditional stock market websites involving micro/small cap biotech stocks or as I have referred to them before; lottery ticket biotechs..

From the post;

A reader’s odds of stumbling across a bad actor or two probably increases dramatically if they read a lot of articles about lottery ticket-biotech stocks written by anonymous authors.

Please click through for the rest of the post.

The first picture is from the ghost town of Lowell, AZ which is essentially a one block town about a half mile from Bisbee. Specifically this is the one of the couple of store fronts with anything going on--it is a motorcycle repair shop. Much of the block is motorcycle themed as quite a few of the other store fronts have old bikes in the windows as shown below.

A Properly Diversified Portfolio is Only Part of the Solution

2014-03-21T08:34:00.000-07:00

My latest post at Alpha Baskets is titled A Properly Diversified Portfolio is Only Part of the Solution and brings together some real world examples of two concepts that we've explored before. One is the extent to which you, reading this blog, are likely the go-to person in your various circles for financial advice and also an example of monetizing a hobby.

From the post;

The first two conversations were along the lines the most basic elements of portfolio construction in terms of equity exposure versus fixed income and how an emergency cash balance fits in. I discussed the extent to which every so often the stock market goes down a lot scaring the hell out of a lot of people but that it always comes back–the variable being how long it takes to come back. I also talked about how certain bond funds will likely get crushed if interest rates ever go back to normal levels.

Please click through to read the rest.

The picture is from the road to Hana on Maui. There is what amounts to a shopping center a mile or two before town. There are three or four shacks with stores including this little espresso house.

What If Grantham is Right?

2014-03-19T06:51:00.001-07:00

My latest post at Alpha Baskets looks at a couple of dour expectations for US equity returns, not so much whether to agree or disagree but think about what to do if these expectations turn out to be correct.

It is easy to dismiss diversifiers after a truly epic rally but they will matter again at some point...and then after that there will be another truly epic rally.

From the post;

No matter what markets end up doing, advisory clients and do-it-yourselfers still have financial plans that likely require some amount of growth over time in order to have a chance of succeeding without something, such as desired lifestyle or working longer than hoped for, having to give.

Please click through for the entire post.

Wacker Drive (I think).

Barron's ETF Roundtable

2014-03-18T08:05:00.001-07:00

This week's Alpha Baskets Market Update includes a look at the Barron's ETF Roundtable including the following great quote;

This is Amazon versus Barnes & Noble. The mutual fund companies are brick-and-mortar Barnes & Noble, trying to figure out how to compete with Amazon. This is just the continued death rattle of mutual funds.

While "death rattle" probably isn't quite right it is a funny quote.

Please click through to read the rest.

The picture is of the Gardner, MT entrance to Yellowstone National Park.

IPO's Are Hot Again & The Weekly Update

2014-03-11T18:44:00.001-07:00

A twofer of posts over at Alpha Baskets.

First up is a look at the hot IPO market. I found some interesting stats but I would add that there won't be a repeat of 2000 (we are below new issuance levels from back then), the next crisis or plain old bear market will be caused by something else but the IPO market could be looked back at having been a warning.

From the post;

Last week the Wall Street Journal gave a rundown of what has been a very hot IPO market. The Journal reported that there were 42 listings in the first two months of 2014 compared to 20 from the same timeframe in 2013 and keep in mind 2013 was a very good year for IPOs.

Please click through to read the entire post.

The other post that went up was the weekly market update which usually covers both market related items but also a couple lifestyle things as well.

From the 'interesting reads' section;

More interesting than the story about the cabin was the embedded opinion that there is a “tiny house movement where people are living with a smaller financial, environmental, and physical footprint.”

You can read the rest here.

As for the pictures, over the weekend I worked at the Arizona Wildfire Academy with the team running the academy in the logistics section. Logistics provides stuff on incidents including radios and the first photo is if the radio cache.

The second picture is of a Type 6 engine from the Tonto National Forest. Coincidentally I just started using Instagram and both pictures have effects applied to them.

Investment Go-Bag

2014-03-07T06:34:00.000-07:00

My latest for AlphaBaskets revisits Jason Bourne's safety deposit box inspired from a WSJ article that considered the argument for blending active and passive together in a portfolio.

From the post;

Earlier this week a friend posted a link on Facebook to a fun article about how to assemble a bug-out or go-bag. It included things for fire, water, shelter, food and protection. In a similar vein, on the Random Roger blog we’ve often had fun looking at the contents of Jason Bourne’s safety deposit box with all the passports, currencies, Sig Sauer and other spy stuff. The appeals to guys on some emotional level in the belief that we can all be self sufficient, having everything we need at our disposal in a backpack.

Please click through to read the rest.

Site Redesign Coming!

2014-03-06T13:18:00.000-07:00

Next week we will implementing a site redesign that will include the kind of double R ranch style logo and the updated banner that looks like something from The Big Bang Theory.

And an unrelated picture from Baldwin Beach Park on Maui.

Getting in Front of Changing Retirement Dynamics

2014-03-04T19:44:00.000-07:00

In my latest post for Alpha Baskets I delve into how to monetize a hobby using my firefighting as an example. The idea here, beyond the financial importance for a lot of people, are the layers of potential to convert hobbies and volunteer work into some sort of modest (or not so modest) income stream.

Like many things in life, the desired outcome will likely be driven by going above and beyond what is expected.

From the post;

MarketWatch ran an article the other day that was another reminder of how under-saved the vast majority of Americans are for their retirements. Net-net these articles are a positive to the extent they promote awareness in a financial literacy context. I would note though that the article was off in one respect in that savers/investors need to think in terms of covering expenses not multiples of salary saved.

Please click through to read the rest.

The picture is the one I refer to in the full post. A friend from our FD was at the Sprint Cup race at Phoenix International Raceway (PIR) over the weekend. These are two PIR firefighters and the Toyota Tundra in the background is their vehicle. Tough to see what sort of equipment they have but just using water won't cut it for a vehicle fire. Amusingly the picture was sent to me while I was actually writing the post and was not something I had ever thought about before.

Stanford Wonk Argues In Favor Of Levered Equity Funds

2014-02-28T14:05:00.001-07:00

My latest for Alpha Baskets looks at a kind of unique idea for portfolio construction that includes liberal use of levered ETFs. The idea is similar to ideas from some other people that we've looked at before--specifically from Nassim Taleb and Zvi Brodie.

A long-time reader sent a link to an article from Forbes titled Leverage Your Way To A Richer Retirement. The article considered research done by Jason Scott at Financial Engines which looked at completely revamping the 4% rule (the 4% rule pertains to the optimal withdrawal rate for a retiree take from their portfolio without exhausting their funds). Scott’s portfolio is called the floor leverage rule and the basic idea put forward is to put the vast majority of the portfolio into bonds or perhaps TIPS to guarantee some minimum level of income from the portfolio. The suggested allocation was 85%.

Please click through for the entire post.

Jerome, AZ

2014-02-22T19:41:00.003-07:00

Drove over to Jerome for lunch today.

Investor Refresher (An Intersection of Investing and Firefighting)

2014-02-20T14:06:00.000-07:00

My latest post for Alpha Baskets looks at an aspect of behavioral finance with an example from the firefighting world that popped up when I took my EMT refresher. It's the type of behavior we've all had at some point even if not with investing.

Like many firefighters I am an EMT. EMTs are on a two year cycle where they must accumulate 48 hours of continuing education and go through a 24 hour refresher class. Earlier this month I took the refresher with two other firefighters from our department. The process turned out to be far more involved than we realized. Essentially we crammed the entire EMT semester (the class people take when they first become an EMT) into three days of classroom time and then took the same final exam required after that semester-long class.

Please click through to read the entire thing.

The picture is of Walker Fire Water Tender 82 and Prescott National Forest Engine 930 staged for mopping up the Green Gate Fire last may.

If You Can’t Retire at 30 Then How About 38?

2014-02-19T10:57:00.001-07:00

As a followup to the post from a couple of weeks ago about a couple in Colorado who recently retired at 30, we look at a couple now 61 who retired at 38. Although they still probably have many years left, so far their strategy is working.

MarketWatch then found another couple, Billy and Akaisha Kaderli, now 61 who “retired” when they were 38. There are some similarities in the two stories; both couples live frugally and both couples figured out early on what they wanted their lives to be and had the discipline to make it happen.

Please click through to read the rest.

The picture is from a car show we went to when we were back east in September.

Weekly Market Update

2014-02-18T08:44:00.001-07:00

One of my regular blog posts for AlphaBaskets is a Weekly Market Update which looks at macro events moving markets, ETF industry news and then a couple of what are hopefully interesting items that are not necessarily market related but can be.

The week we looked at the suspended debt ceiling and the speed skating suit controversy at the Olympics.

You can click through here to read the whole thing.

The picture is from Yosemite National Park.

What Harvard Can Teach Us About Portfolio Management

2014-02-14T07:41:00.002-07:00

My latest at Alpha Baskets is titled What Harvard Can Teach Us About Portfolio Management. The endowment was featured in Barron's and the results lately have not been so great. The comments drew a lot of comments with the theme being that an SPY/AGG combo would have been better. In hindsight, for certain periods that is true and for others it isn't.

An excerpt;

Like many similar pools of capital, the fund allocates a large portion of its assets to illiquid investments like private equity and hedge funds but is doing less of this type of investing after a particularly bad experience in the financial crisis.

Please click through to read the entire post.

The picture is not quite Cambridge (although it is in the background across the river).

A Decline In January Draws Attention to Portfolio Protection

2014-02-05T09:00:00.000-07:00

My latest for Alpha Baskets looks at funds that sell short one way or another. Whether the current decline will turn out to be something meaningful or something we very quickly forget it is true that investors do start to revisit the idea of portfolio protection.

An important reminder is that the idea should probably be protecting an equity portfolio with a couple of diversifiers and maybe some sort of exit strategy as opposed to owning a portfolio full of diversifiers that is protected with a couple of equity holdings.

January was a bumpy month for domestic equities as the S&P 500 declined by 3.5%. Perhaps the decline was influenced by the even larger decline in emerging markets, an earnings season that was viewed by some as disappointing or for no reason at all (markets don’t always have a reason for what they do).

Please click through to read the rest.

The picture is from Bryce Canyon.

Bear Markets: Different Ingredients, Same Market Behaviors

2014-02-04T07:07:00.001-07:00

My latest for Alpha Baskets looks at the extent to which markets are relatively more complex this year than last year and a reminder that bear markets may start for different reasons but create the same or very similar market behaviors.

While it is logical that markets are complex, the reality is that the level of complexity changes over time. The level of complexity started to increase last year when now former Fed Chairman Ben Bernanke first introduced the idea of what has come to be called tapering.

Please click through to read the rest.

The picture is from Newport, Oregon.

Do Portfolio Diversifiers Belong In Your Portfolio

2014-01-29T07:41:00.002-07:00

My latest for Alpha Baskets is posted and titled Do Portfolio Diversifiers Belong in Client Portfolios? Over the years I have obviously been a proponent of using funds that tend to not look like the stock market but that this needs to a dynamic process. Stocks go up most of the time so most of the time you don't need a lot of exposure.

An excerpt from the post;

While no one can know with any certainty when the next large decline is coming we do know that at some point as a function of normal market behavior there will be another very large decline and it will again scare the hell out of clients. And when that occurs, clients will be looking to their advisors to try to protect their portfolios from the full brunt of that large decline.

Please click through to read the rest. The picture is from Deep Cove in Vancouver.

We Were NOT Jacked Up By Obamacare

2014-01-28T18:54:00.001-07:00

Just about every year I write a post about the annual increase in our health insurance (my wife and I). We've had what I thought was the same HSA plan for many years although we have increased our deductible a couple of times so I was not sure whether we were grandfathered or if our insurance would get canceled, sending us to Obamacare.

When I called our insurance company a couple of months ago to find out, they didn't know. All they could tell me is that my renewal date would be pushed back to March instead of the usual November but they weren't sure why.

Today we got the thick envelope from them and the news was surprisingly good. We were not canceled and our premium only went up 10%. We were braced for far worse. A 10% hike is as low as it has ever been. A couple of times it went up 20% and one time we had to double our deductible to keep the same premium.

From Facebook, I saw that quite a few of my self employed friends were indeed getting canceled so maybe we were grandfathered in or we got lucky somehow.

That said, yet another 10% increase reveals that there are still serious problems with health related costs. Quite clearly Obamacare is not going to be repealed but the execution continues to be laughably poor.

It is widely accepted that there are not enough people in their 20's who are signing up. Apparently the age at which "children" can stay on their parents' has gone up from 26 which itself was an increase a few years ago. Oops.

The President set out to improve a wildly flawed system (I don't buy into the theory that he knew ACA was doomed from the start) but arguably made it worse for all the unintended consequences and issues that were clearly not well thought out.

The picture is from Custer City, SD from our trip to the Black Hills about a year and half ago.

How To Retire at 30!

2014-01-28T06:32:00.002-07:00

That is the title to my latest at Alpha Baskets which you can read here. This came from an article at MarketWatch about a couple who actually retired at 30 nine years ago. While that title certainly has a Money Magazine air about it there are actual lessons in their story that are useful for everyone.

MarketWatch had a very thought provoking post about a couple in Colorado who retired when they turned 30 (they are 39 now). In 2011 they took their story to the blogosphere with the very popular blog Mr. Money Moustache.

Their story is a combination of a high income when they were young, a very high savings rate, a very low spending rate and time spent becoming financially literate in terms of things like the 4% rule and other crucial building blocks of investment understanding.

Please click through to read the rest. The picture is obviously from Fenway Park.