Don't Quit Your Day Job…

Don’t Quit Your Day Job is a site which varies between many types of articles – Personal Finance, Politics, Investing, Economics, Random. One of those categories, Investing, has been given short shrift in order to make way for more articles in the other categories. Today we plant a stake; ‘Investing’ will now have a featured article monthly, where we’ll use options to try to determine the outlook for the S&P 500 in the near future. Since this is the first article, let’s discuss the method we will use to predict movement.

The Economist posted a not-so-interesting graph relating a year’s stock market returns to it’s Chinese Zodiac sign. I would imagine that a random number generator making up returns for clusters of numbers of years since 1900 and ranking the outcomes would produce a similar outcome… but let’s play devil’s advocate and see if there is something to be said from these numbers.

You’ve got an IRA, right? This site has been preaching the tax benefits of both traditional and Roth IRAs since the beginning… and we aren’t going to stop now. So hopefully you’ve been diligently saving in your IRA, with the hope that some day you’ll have a couple million dollars in there (or at least a good amount of funds you can tap in retirement).

Mitt Romney, it was revealed in financial disclosure documents, has an Individual Retirement Account worth somewhere between $20.7 and $101.6 million dollars. Note that IRAs have a small limit when compared to 401(k)s and other employer retirement accounts, so this came as somewhat of a shock to people with IRAs. How did Mr. Romney achieve such an impressive sum in his retirement account?

Ahh, New Year, new resolutions, and new stocks for stock-picking competitions. We are a web site ostensibly about Personal Finance and investing, so I’d be remiss if I didn’t enter a few contest this year. I already discussed my picks for the Money Pros Stock Picking Competition, but this time I’m entering a 4-stock contest run by Nelson at Financial Uproar. As always, just because I picked stocks here doesn’t mean I’m telling you to buy them – so do your own due diligence!

A municipal bond, known as a “muni”, is a fixed-income instrument that is issued by a local government, city, township or agency. Municipal bonds are debt securities; meaning that a municipality (i.e. the city or city agency that issues the bonds) is effectively taking a loan for a specified purpose such as an infrastructure project, long-term investments or for general financial and cash flow management purposes. Municipal bonds have various maturities ranging from short-term, less than 1-year, and long-term issues that can be 30-years or longer.

Greece – let’s call it what it is: a beautiful country with some horrible systemic problems. If you’ve been living under or behind a human-sized rock for the last few years, Greece is in the midst of a huge, solidarity-threatening fiscal crisis related to the fact that they have a debt much larger than their GDP- in 2011 those numbers are estimated at 354.7 Billion Euros of debt, or 161.8% of their GDP. Those are some hefty ratios for a sovereign entity to be carrying around – the equivalent of $161,800 of debt for someone making $100,000.

Greek has worked itself into a situation which is quickly coming to a conclusion. Greece pretty much has two options: either (when I say Greece, I mean the people of Greece – the aforementioned referendum was canceled) accept austerity measures handed down from the rest of the European Union nations, or leave the Eurozone, default on their debt, and bring back the drachma. Neither is very enticing: the first isn’t guaranteed to work (think: it might just keep Greece on life support until the next crisis), and the second, defaulting on debt, is never a fun situation since foreign investment will quickly run dry.

When it comes to guaranteed returns, there is a list of investments perhaps as numerous as your fingers.  The most famous example is the 401(k) with an employer match.  In order to charm you into investing some of your money in the company’s 401(k) account, most employers tend to put up a bit of their own money as an incentive.  The return is immediate, guaranteed, and something that should be captured.  The bottom line is – in almost all instances you should make sacrifices elsewhere in order to receive the full employer match.

Last week, we gave you an interesting chart on political donations from Wall Street firms by election cycle, dating back to 2004. This week, we’ll follow it up with an equally interesting chart on the amount of investments in Wall Street firms (again, ‘Securities & Investments‘ from Open Secrets) by Democrats and Republicans. Read on to find how much the two parties invest in Wall Street!

We recently covered a lot of the fallout from Standard and Poor’s recent downgrade of the debt of the United States. The United States has 50 states which also issue their own debt, and get their own credit rating from the credit ratings firms. Luckily (this time) the legwork has been done, and I’m able to just link you to the primary source, the Tax Foundation! So view on to see the credit ratings of the states.

On August 15, 1971 something very interesting happened in the world of currency – the United States, under President Richard Nixon, removed the dollar from the gold peg.  Foreign traders were able to redeem their dollars for gold at a rate of $35 per ounce.  Nixon dropped the gold peg in the face of rising inflation and in response to other nations also leaving the gold standard set up in 1944 at the Bretton Woods meeting in New Hampshire.  The event, known as the Nixon Shock, instantly devalued the debt and left the dollar as a fiat currency – with nothing backing it up.  However, the dollar also found itself in a unique position as the reserve currency which other nations used to back up their own currency.