From an investment point of view, most of us say good riddance to 2008. The economy for 2009 is shaping up to have a rocky start, but I’m optimistic that stocks will rebound at some point. Don’t take that as a prediction, though. I don’t want to be just another commentator whose predictions are wrong half the time.

For anyone fascinated by Warren Buffett and his extraordinary investing career, Alice Schroeder’s The Snowball: Warren Buffett and the Business of Life is a must read. At over 800 pages, it adds much detail to the scattering of facts that most people have about Buffett’s life. Any attempt to summarize this book in a few paragraphs would be hopelessly superficial: he was young, then middle aged, and then old. So, I’ll focus on one aspect: the perception that he is a simple folksy person who doesn’t know much about newfangled things like computers and the internet. In some ways this perception is accurate. He does tend to live simply, except for flying around in private jets to meet the rich and famous. He also has the ability to explain things simply and briefly. However, the work he puts into his investing is neither simple nor brief. He has spent most of his life consuming and analyzing financial data. He is well-known for avoiding technology stocks. He explains that he ...

At the close of financial markets for 2008, mutual funds must take a snapshot of themselves and disclose it publicly. Here is a short list of the main information that they will disclose: 1. 2008 return (or loss in most cases). 2. Main investments held. 3. Comparison to a benchmark. You might not think that there is much that mutual funds could do to paint a rosier picture, but mutual funds have a few ways to paint over the rust. 1. Painting the tape. Mutual funds inflate returns by buying more shares of stocks they already own at the end of the last day of trading. The extra demand drives up the price that gets reported for the end of the year. The price usually drops back down on the first trading day of the new year so that the fund actually loses some money doing this, but it has the desired effect; the reported 2008 returns will be slightly higher. 2. Window Dressing Who wants to find out that their mutual fund bought a bunch of bad investments? Some mutual funds...

I’ve been a fan of Scott Adams’ Dilbert cartoons for many years. I spent most of my career in a small cubicle lined with cloth, and his cartoons captured the essence of my work-related frustrations and fears with humour. Many of his cartoon-based comments on financial crises over the years have been right on the mark. However, Adams’ latest blog post misses the mark by a wide margin. To be fair, Adams doesn’t always believe the things he says on his blog. He likes to throw out half-baked ideas and stir the pot. Consider my pot to be stirred. Here is the essence of Adams’ argument about stocks: 1. People aren’t smart enough to pick their own stocks. 2. People should be limited to investing in indexes or special regulated funds run by experts. He also wants stock prices to be set by “some sort of regulating board.” To borrow from a well-known quote about democracy, capitalism is the worst way to run an economy except for all the other ways. One of the core benefits of democra...

I haven’t had much luck with Bell’s customer service until recently. I’ve had some crazy battles with Bell including being made to pay the same bill twice many years ago and a more recent running battle to get their internet service to work. A problem with my telephone sent me back to Bell’s customer service. It all started Friday when I started getting calls where the caller would hang up after one ring. My first thought that some kid was just having fun proved wrong when a friend sent an email asking what was wrong with my phone. It turned out that callers got one ring followed by static. My strategy at this point was to “hope the problem goes away.” By Sunday, it was clear that I would have to try another solution. Ever since Bell “gave” every customer the wiring inside their homes, we have to pay for any repairs. I had visions of having a Bell technician in to mess with the wiring for $100 and not fix the problem. This is what happened the last time a Bell technician came t...

The U.S. Office of Thrift Supervision has developed new rules to put a stop to some nasty practices of credit card issuers. The fact sheet they put out describes the major changes. This is good news not only for consumers but also for the credit card issuers who were already following these rules because their competition will be forced to play on a more level playing field. Most of the new rules are self-explanatory. Interest rate increases must take place at defined times with adequate notice for card holders. Consumers must be given at least 21 days to make a payment. A fairly substantial change is the rule ending double-cycle billing where the average balance over two months is used to calculate interest. This practice causes interest to continue for another month after you pay your bill in full. Now interest will be based on just the current month. The last new rule places restrictions on predatory high-fee subprime cards. These are high-fee, low-limit credit cards gi...

There are many times when you have to choose whether to “do it yourself” (DIY) or hire someone to do a job. This choice comes up with house repairs, investing, landscaping, to name a few instances. We tend to think of the choice as binary: either DIY or hire someone. However, there is a middle ground. Let me use an example to illustrate my middle ground approach. I have a large natural gas pool heater that became flaky after about two years. I have no training with these heaters and had little choice but to call a repair person. It turns out that fixing natural gas heaters is specialized work and calling in the repair person wasn’t cheap. I always had to pay for some minimum time plus the cost of some expensive part that had to be replaced. The repair person would get the heater working, but the flakiness never went away. During the fourth service call in two years I did my usual thing of watching the repair guy and asking questions. This guy happened to mention that the contro...