Friday, September 23, 2011

Short Takes: Lottery Tricks of the Mind, Gold Mining Stocks, and more

Big Cajun Man has a clever explanation of why lottery wins seem more likely than they are.

Jason Zweig thinks that while gold may be in a bubble, gold mining stocks seem cheap. He observes that gold miners are only trading at 18 times earnings. However, if gold really is in a bubble, aren’t the profits of the miners inflated? Do we really need the earnings multiple to be inflated as well?

The Blunt Bean Counter runs through the top 20 things he doesn’t understand about income tax. It’s well worth a read to better understand different areas of the tax rules.

Andrew Hallam explains why he gave up stock picking and switched to indexing.

Money Smarts says homeowners should be cheering house prices down if they plan to upgrade to a bigger home.

Larry Swedroe explains why you should take a pass on absolute value funds.


  1. The Blunt Bean CounterSeptember 23, 2011 at 7:41 AM

    Thx for the inclusion Michael and your comment on why one of my suggestions could be flawed

  2. Thanks for the inclusion, enjoy your weekend.

  3. "Only" 18 times earnings? Since when is that cheap? Does the gold mining sector traditionally have higher multiples than this?

  4. @Patrick: I assume that the multiple is usually higher than 18, but I don't follow gold miners. Even if 18 is considered low, if we are in a gold bubble, then we can expect the miner's profits to drop when the bubble bursts. This would then cause the multiple to rise (until their stock drops).

  5. Thanks a lot for the mention.

    I stay away from gold and the miners. :)