So this is what Cubs fans feel like?

Another playoff loss to the Jets, another choke on field goals by the near-perfect Nate Kaeding. Another Superbowl dream gone. Okay, it's not quite the 101-year drought of the Cubs, but it's starting to feel like it.

Obama's approval slipping, oh my!

The news headlines shout out that President Obama's approval numbers are at an all-time low, that he hasn't really done anything, and that he's dithering on Afghanistan. So he's not doing a good job as president, right?

I disagree.

Although the Republicans are whining about record deficits, Obama (and Bush before him) did what was needed to avoid a worldwide meltdown that would have lasted much much longer than the current recession. Greater than 10% unemployment doesn't win any president popularity, but with the economy limping back to life, this will change pretty soon.

In short, as this article states, he is in the process of preventing a depression, remaking America's global image, and championing universal health care. Not bad for a first year!

Investing in an inflating market

In a previous post I predicted that we would not be headed into another Great Depression, that there would be hopes for a recovery, and that the government would sacrifice the dollar to get out of this mess. It's looking like that prediction is coming true.

In another post I predicted that the market was at a bottom. I was a week early, but it was still a pretty decent prediction if I do say so myself.

I also put together a portfolio for this recovery that ended up returning 26.5% from Jan. 9 to today, while the S&P returned 20.3%. Again, not bad.

Will I quit my day job yet and become a Wall Street trader? Not quite yet. But I will make some new predictions.

I predict that with unemployment over 10%, Americans still struggling, and the shock of the financial crisis still on everyone's mind, the Fed will choose inflation over any threat of a recovery. All of the financial rags are predicting a resurgence of the dollar soon, but I predict over the next year a continuing decrease, and at some point the Fed will actually have to raise rates to keep inflation from getting crazy.

What does this mean for investing? Assets like commodities, gold, and energy should do well. Government bond prices should fall. All bonds will be under pressure from rising interest rates. Although Congress is looking at changing the health care industry, I still see this as a good long-term investment, as people are willing to spend more and more for their well-being. I also see a continued rebound in tech stocks and the NASDAQ.

At any rate, this is a good time to rebalance your portfolio. Here is my new BeeDub Index:

High-Yield Bonds (VWEHX): 5%

Intermediate-term Investment Grade Bonds (VFICX): 5%

2X Short Government Bonds (TBT): 5%

Emerging Markets (VEIEX): 5%

Health Care (VGHAX): 10%

S&P 500 Index (VFINX): 10%

NASDAQ 100 (QQQQ): 10%

International Stocks (VGTSX): 20%

US Small-Cap (NAESX): 10%

Gold (GLD): 5%

Energy (VGENX): 5%

Commodities (DBC): 5%

Real Estate (VGSIX): 5%

I'll keep these for the next 9-15 months before rebalancing. Let's see how this plays out!

Repudiation of Ayn Rand

This Slate article is the best counter to her philosophies (and what's becoming the philosophy of the far right) that I've seen.

CitiZombieBank

A little post-Haloween followup. I now get why Citi has jacked up rates to 29.99% on their customers (including me). This New York Times article describes the company as "desparate for capital", and paints the picture clearly:

While Citigroup has written down tens of billions of dollars’ worth of mortgages on its books, there are looming problems in its huge credit card portfolio. Of the company’s $1.2 trillion in credit commitments outstanding in the second quarter, $873 billion were credit card lines. A measure of the bank’s efforts to wrestle that problem to the ground is the interest it charges customers: in October, Citigroup raised interest rates on some credit card holders to 29.99 percent.

Chris Whalen, editor of the Institutional Risk Analyst, calls Citigroup “the queen of the zombie dance,” referring to the group of financial institutions that the government has on life support.

They are hoping that a combination of bank assistance and maximizing revenue and buying time will let them survive,” he said. “When I look at the whole picture, Citigroup is in the process of resolution. I continue to believe the equity is worth zero and that the company will have to go to bondholders for some kind of money to make the bank stable.”

This shows that the government has stabilized the financial system for now, but it's still very fragile. Is a second bailout around the corner?

Citibank - taking taxpayer money and sticking it to their customers

I got another letter from Citi (one of the government bailed-out banks if you remember) that my credit card terms had changed. I barely read these, but was shocked when I saw that they were jacking up the interest rate to the loan-shark rate of 29.99%.

I called and asked what was up (maybe a missed a payment or two?) and they said no, given the recent economic times, they needed to raise rates on everyone. But they were giving a 10% rebate on the interest you'd pay, and I could reject the terms and close my account if I liked.

You can be sure these terms will be rejected. Citi has taken taxpayer money to bail it out, is borrowing from the government at close to 0%, and in turn is screwing over their customers. I'm not sure the reason for this--it seems counterproductive, but there must be some grand plan they have.

Even though I don't carry a balance as a rule, I always like a credit card or two as a backup "just in case". So, at 29.99%, what would happen if you did carry a balance with Citi?

Let's look at a hypothetical case of a 20-year-old who is getting married and puts $10,000 on his card for his wedding, then lets the balance build at 29.99% (for simplicity, let's forget about minimum payments for now).

* In just two years and 8 months, this would double to $20,126
* In just 10 years, this would grow to over $137,000
* In 17 years, 7 months he would owe over a million dollars.
* Let's say he carried this on to retirement at 65. He now owes $1.3 BILLION dollars.
* And finally, crushed by a mountain of debt at 78, he dies owing $40 billion, more than the entire current revenues of Citi.

That's what 29.99% does, and that's plain ridiculous.

Kurt Rambis leaving the Lakers

Kurt Rambis has "verbally" signed a deal with the Minnesota Timberwolves for $8 million over 4 years. Sorry to see him go from the Lakers, but he knew that there was no way he'd be head coach as long as Phil Jackson was around. He'll always be a Laker to me...Goofy Rambis with hornrimmed glasses and great defensive skills.

With all the controversy about who the "Superman" moniker belongs to--Shaq or Dwight Howard, did you know that Chick Hearn dubbed Rambis "Superman" way before either of these two? That right...he looked just like Superman...when he was his alter ego Clark Kent.

He was always a scrappy underdog, someone that may not have been as talented as the superstars but one who tried twice as hard...and who can forget the toughness that Rambis exhibited after the Kevin McHale clothesline in the playoffs with the Celtics?