Why picking stocks is a ‘Loser’s Game’

I just read Charles Ellis’s classic 1972 paper “The Loser’s Game“.  In plain English (and only 7 pages), Ellis deftly describes why professional investors fail, and will continue to fail, to beat passive indexes (which are my favorite investment recommendations.)

It’s a good read if you’re interesting in investing.  (If you ignore my and Ellis’s advice, here’s a brief primer on how to go about picking individual stocks.  Proceed at your own risk.)

Picking the perfect diamond – how to buy a wedding ring

 

While diamonds may be a girl’s best friend, shopping for them is many a man’s worst nightmare.  Combine bewildering choices, fickle female tastes (no offense ladies), high prices, and high pressure salespeople, and you have a recipe for a pre-marriage meltdown.  Thanks in large part to De Beers’ marketing campaigns, about 4 in 5 American women go with a diamond ring for their engagement hardware.

(Haters: if the idea of an expensive piece of jewelry as a prerequisite to declaring your everlasting love makes you feel slightly nauseous, you’re in the minority in America, but definitely not alone.  About 20% of women don’t get diamond engagement rings.  Here’s an article by a woman who makes a gender equity argument against expensive engagement rings.)

Buying an engagement ring is a big financial decision.  I’ve put together this guide to help you and your future spouse  get a high-quality ring without going broke in the process.  You might wonder what the heck a financial advisor knows about diamond rings, so let me give you my credentials: I spent some time in the appraisal and retail jewelry business in my youth, and have also been through the ring selection process prior to popping the question to my then-girlfriend and now-wife.

How to buy a diamond

Shape of main stone

 

 

The first thing to decide is what shape of diamond you’re looking for.  Traditional shapes include the ’round’ and square ‘princess’ cuts.  The more adventurous might consider a cushion, radiant or emerald cut.  (If you opt for the emerald, get a stone with high clarity; flaws show up much easier in this cut of diamond.)  While this is a personal decision (hint: if you’re a man, it’s not yours), you can’t go wrong with classic cuts like the round and princess, which should always be in vogue to some extent.

Also consider whether the future ring-wearer wants a ‘solitaire’ (one stone all by itself) or something with either small or medium-sized diamonds (or other gems like sapphires) surrounding the larger main stone.  The easiest way to determine what kind of ring you want is to go out with your betrothed and try on several of them.

The Four C’s

Everyone who has considered buying a diamond has probably heard of the four C’s.  While each may vary in its importance to you, I’ve given some ‘minimum’ guidelines for each ‘C’ to help you buy a high-quality diamond.

1) Carat often gets too much of the focus among novice diamond purchasers.   The carat determines the size (technically, the weight) of the stone itself.  Size is only part of what makes a diamond look nice.  Too big a stone, especially on a slender finger, can look gaudy (to me anyways.)  I recommend a smaller stone if it allows you to buy a higher-quality diamond in terms of the other C’s below.  A brilliantly cut, clear 3/4 carat stone will look nicer than a dull, flawed 1 carat.  To me, buying anything with a main stone weighing over 1 carat is overkill (but I’m sure more conspicuous consumers would disagree.)

Also, buy a stone that’s slightly under than the standard carat weight.  For example, if you’re looking for a 3/4 carat stone, buy one that’s 0.73 or 0.72.  Want a whole carat?  Go for 0.95.  This can save you a couple to several hundred dollars on an otherwise identical stone.  (When they ask you how big it is, go ahead and round up, no one can tell any differently.)

2) Cut helps light shine out through the diamond’s many surfaces and determines the stone’s brilliance.  This is one of the most important characteristics in a diamond, so don’t scrimp here.  You want that rock to sparkle!

‘Ideal’ (equivalently  ‘Excellent’) is the highest grade, reflecting nearly all the light that enters the stone.  ‘Very Good’ is a close second to ‘Ideal’, but at a lower price.  ‘Good’ reflects most of the light, and is much less expensive than ‘Very Good’.  For a high-quality minimum, stay at ‘Very Good’ or above (avoid the ‘Fair’ and ‘Poor’ categories.)

3) Clarity tells you how few and small the imperfections are within the stone.  These flaws fall into two categories: inclusions (inside the stone) and blemishes (on the surface of the stone.) Inclusions take various forms including ‘feathering’ (small dull lines in the stone) and minute black specs of carbon.  The clarity scale ranges from Flawless (no imperfections visible with 10 times magnification) to Included (imperfections visible to the naked eye.)  Grades are determined using a 10x magnification jeweler’s lens called a ‘loupe‘.

Source: Wikipedia

Very Slightly Included (VS1 or VS2) stones will generally not have any flaws visible to the naked eye, and it will be difficult to moderately easy to find any flaws at 10x magnification.  VS1  or VVS2 is a good reference point for a very high quality stone.  Going any higher than VVS2 won’t likely make any difference in how you (or your jealous friends) judge the ring.

You could go down to SI1 if you’re looking for something less expensive (but no lower, and look the stone over carefully with both your naked eye and a jeweler’s loupe before buying.)

4) Color determines just how ‘white’ the diamond is.  Lower-grade diamonds with yellowish-brown color traces were ingeniously marketed as ‘Champagne diamonds’ (not to be confused with ‘fancy colored’ diamonds like ‘Canary Yellow’ ones.)  While I’m personally not a fan of these off-color stones (except perhaps faint yellow ones for jewelry other than wedding rings), those who like their tint can find some good bargains. The highest color grade is D, and grades D – F are deemed ‘colorless.’  Grades G – J are ‘near-colorless’, and really look colorless for all practical purposes.

Stay at ‘J’ or above (anything less will have faint yellow traces to it.  You can often see this by looking at the stone while placing it flat against a white piece of paper.)   Use ‘I’ as your high-quality guideline.  Color has a pretty big impact on price, and anything above ‘I’ won’t make much (if any) difference in how you perceive the diamond.  For that reason, I recommend sticking with ‘I’.  You can go with ‘J’ if you’re on a tighter budget.  The difference between J and I can be about 10-15% in price, with a similar difference between I and H.

More information on the 4 C’s

BlueNile.com has a good guide to diamonds located here if you want more info (I used it in fleshing out the above descriptions.)

How much should you expect to spend on an engagement ring?

After you get an idea of what style of ring you want, think about what price range you’re trying to stay within.  Don’t pay any attention to the ‘two month’s salary’ industry-driven nonsense.  You can get a very nice 3/4 carat solitaire ring for about $3,000 at BlueNile.com, my preferred choice for diamond purchasing.

Think about what’s most important to you and your fiance(e): a larger downpayment for a house, extra money to spend on a wedding or honeymoon, or a bigger/nicer diamond ring.  Weigh these things when deciding how much to spend.  In general, don’t buy a ring that you’d have to finance.  If you can’t save up enough to buy the ring in cash, it’s probably too expensive for you (or you need to go back to financial basics.)

Diamond prices rise exponentially with size, meaning that you pay a big premium for a big rock.  See the graph below to get an idea of the price changes for stones of varying sizes (keeping quality constant):

Steps to making your purchase

1) First, go online and look at diamond shapes and settings to get an idea of what you want.

2) Then, go to jewelry shops to try on these types of rings until you know EXACTLY what you want (take notes and ask questions; anyone that really wants to sell you something will be very helpful.)  Figure out your ring finger size as well (your non-dominant hand fingers will be slightly smaller than those on your dominant hand.)

IMPORTANT: when you go shopping, tell yourself your are NOT going to buy yet.  (Leave your checkbook and credit cards at home if you don’t trust yourself.)

3)  Next, go to BlueNile.com and find the ring you want for a better price than you’ll get at any physical store.  You can easily search tens of thousands of diamonds by very exacting criteria.  They have a 30-day return policy in case you don’t like the ring once you actually try it on (but try to be very sure before you buy anyway.)  My wife and I bought her engagement ring through them and are very happy with it.  Amazon.com also sells diamonds online.

Why you should not buy a diamond at Tiffany

Jewelry carries a HUGE markup at physical stores, the most egregious of which is at Tiffany.  Yes, Tiffany has high-quality diamonds (and fantastic salespeople and marketing), but if you use high standards like the ones I’ve suggested above, you can get a diamond every bit as good (or even better) for a much lower price at online stores, or at Costco.  While Tiffany does everything it can to convince you that their round, VVS1, H color, Ideal cut diamonds are infinitely superior to Blue Nile’s round, VVS1, H color, Ideal cut diamonds, they are spouting nonsense.  (For the socially conscious, all reputable diamond sellers, including Blue Nile, guarantee that they sell only ‘conflict-free’ diamonds.)

The fact is that when held to equivalent, independent standards, diamonds are a commodity product which can be sold at a low markup by efficient operators like Blue Nile or Amazon.  Take advantage of this and get way more diamond for your money by buying online.

Settings (rings)

One exception to why you might buy something from a non-online store would be if you wanted a particular setting that was unavailable elsewhere.  I would recommend finding out if that ring-maker will set a loose stone (purchased online) and set the stone & sell you the setting separately.  If not, you may want to look elsewhere.  Settings typically come in gold (white or yellow; white being more popular for women today) and platinum (looks like white gold, but is stronger.)

For gold, the Karat determines how much gold is in the metal, and impacts the brilliance of the color.  For women, 14K or 18K (out of a total of 24K, which is essentially 100% pure gold) is typical.  18K is roughly 75% gold (18/24) and 14 is about 60%.  White gold is coated with rhodium to make it look truly white.  You may have to get it re-coated at a jewelry store for around $20 – $30 every couple of years if and when the rhodium starts to wear off (the ring will look duller and slightly yellow when this happens.)

10K is the lowest concentration used in the US for jewelry and is typically reserved for men’s rings as it is sturdier than higher karats of gold.

When you buy wedding bands, I recommend using the same online stores as above.  However, because you’re not buying a large diamond, you might consider some physical stores, like Ben Bridge, for your band if you don’t like the available options online.  Prices will be closer for plain gold or platinum bands, or for ones with small diamonds in them, when comparing physical stores to online ones.  Also, the quality matters much less for small diamonds (but make sure they are shaped nicely, clear, white and sparkle well.)

For men, decide whether you even care about having a precious metal band, or if you’d rather go for cheaper, sturdier metal (gold is fairly malleable and can get dented, especially at high carat levels like 14K or above.)  Tungsten is one popular alternative, and can be bought for about $60 (6 mm thickness) online versus $150 for a 6mm 10K gold band.  Gun-metal gray titanium costs even less than tungsten (and feels light and cheap in your hand as well…)

Should you insure your ring?

The general rule of insurance is if losing something would cause you great financial pain to replace it, insure it.  Factored into this should be how careful the lady will be with her ring.  Is she the type that’s constantly losing her keys, cellphone or purse, or will she always keep her ring cemented solidly to her finger wherever she goes?

I would say that if your ring would cost you less than $3,000 – $4,000 to replace (at today’s market prices), and if you can pony up that dough without being sick or missing meals, you could consider skipping the insurance.  Anymore than that and it’s probably wise to add it to your homeowner’s or renter’s policy.  (Make sure the coverage is high enough and covers all possible loss scenarios, not just theft.  Jewelry is often listed as a separate item on homeowner’s policies and given a low dollar limit, typically $1,000, as the default.)

Alternatively, or if you rent and don’t have renter’s insurance, you can purchase a separate policy for the ring alone.  According to this, insurance will cost you between $0.30 – $1 per $100 of insured value, with some minimum premium per year.

Another way around needing insurance is to tell your loving wife that this is the only engagement ring she’s getting, so she had better keep track of it…

(My wife and I each have inexpensive ‘travel’ rings that we wear when going on trips to avoid the risk of losing our ‘real’ rings in a foreign locale.  [I got a titanium one for $15 on ebay.]  We leave the expensive hardware, along with other valuables, locked up in a safe while we’re away from home.)

– Happy shopping!

P.S.  Don’t forget to get down on one knee when proposing, you cad.  And for God’s sake don’t do it at a football game or the sports bar where you first met.

UPDATE: Why We are Right to Rebuild Haiti or An Argument for Charity

UPDATE on 10/20/2010: Here’s a link to a good TED talk on how the vast majority (like, ~99% perhaps) of lives lost during the Haiti earthquake were due to poor building construction.  The speaker notes that what is required for better buildings isn’t more money beyond what’s already required to rebuild Haiti, but just more training for Haitian builders (at a minimal extra cost.)

I read a blog post called “If You Rebuild It, They Will Come” by a man named Paul Shirley.  In it, Mr. Shirley argues that we shouldn’t give/have given money to the Haiti relief effort due to the poor position they (he claims) put themselves in.  To me, even if the Haitian’s were entirely to blame for the damage the earthquake did to their country (I believe luck & history had a lot to do with it), such criticism is missing the point of an urgent relief effort.

Mr. Shirley’s criticism is a bit like giving a lecture to a badly injured speeding motorist, as he bleeds to death, on how he should have driven more carefully, rather than taking him to a hospital.  I’d prefer to take him to the hospital first, and give him the lecture later.  Mr. Shirley also seems to assume that the governmental and institutional failures of Haiti should be reasons to deny its citizens aid.  For starters, in no point in Haiti’s history do ordinary citizens appear to have be in a position to build up either the physical or intellectual capital necessary to privately look after their own needs beyond a subsistence living.  With regard to intellectual capital, schooling in the local Creole language did not even occur until 1922, less than 90 years ago.

(BTW: I’ve linked many of my sources, but if I state something unlinked/cited, it is from Wikipedia, the fount of all knowledge.)

Haitian civil unrest & violence

Mr. Shirley might argue that these citizens who are now victims of the quake are the very ones who caused the violence and civil unrest that’s been the source of so many problems throughout Haiti’s unstable history.  I suspect he would be wrong.  Let’s look at a parallel case in Afghanistan or Iraq.  You could blame the Taliban in Afghanistan for the poor conditions and civil rights abuses.  However, the Taliban are estimated to number in the tens of thousands in Afghanistan.  Let’s assume there are 100,000 of them.  The Afghanistan population totals about 28 million.  That means that only 0.36% of the population are Taliban, or 1 in 280.  You might counter by saying that yes, 279 out of 280 AREN’T Taliban insurgents, but since they outnumber them, why don’t they revolt and kick them out of the country if they don’t like the conditions caused by the Taliban?  I would suspect it’s the same reason I wouldn’t take up arms against the US government if it decided to become a totalitarian dictatorship tomorrow: I’d get slaughtered.  The Afghanistan people are poor, like the people in Haiti (who are even poorer.)  They lack education and military and financial strength.

Similarly in Iraq, there are roughly 100,000 – 130,000 insurgents.  If we divide 130,000 by the population of 31 million we get 0.42%, or about 1 in 240 people.  My point here is that a relatively small amount of people with guns and resources can control a much large number of people without one or the other.  Thus, blaming the typical Haitian citizen for not kicking violent organized groups out of the country is unrealistic.

Poverty and lack of financial & intellectual capital

“By most economic measures, Haiti is the poorest country in the Americas. It had a nominal GDP of 7.018 billion USD in 2009, with a GDP per capita of 790 USD, about $2 per person per day.[1]

However, of that ‘wealth’, about half of it is in the hands of Haiti’s richest 1%.  Thus, GDP per capita for 99% of the country is actually $1 per day.

“About 80% of the population were estimated to be living in poverty in 2003.[1] Most Haitians live on $2 or less per day. [72] Haiti has 50% illiteracy,[73] and over 80% of college graduates from Haiti have emigrated, mostly to the United States.[74]

So of those folks that DO get access to education (very few), 4 out of 5 leave the country for greener pastures. (And who could blame them?  Mr. Shirley certainly wouldn’t, unless they stayed behind to contribute to their home country’s economy and got crushed in the earthquake; then he’d blame them.)

Government & Corruption

I’ve established why I believe it’s ridiculous to assume that Haiti’s private sector could’ve been expected to prepare for the earthquake, which would’ve been relatively unaffordable, but what about the government?  Surely there must have been some capital stored up to build earthquake-proof houses etc for the masses?  Unfortunately, that is also not true, in part due to looting of Haiti’s coffers by corrupt officials:  “It is estimated that [a former Haitian president, his wife] and three other people took $504 million from the Haitian public treasury between 1971 and 1986.”

“Similarly millions was stolen by [former president] Aristide.[80][81][82][83][84] During the Aristide era, drug trafficking emerged as a major industry. Beaudoin Ketant, a notorious international drug trafficker and close partner of Aristide, confessed that Aristide “turned the country into a narco-country. It’s a one-man show. You either pay (Aristide) or you die”.[85] The BBC describes pyramid schemes, in which Haitians lost hundreds of millions in 2002, as the “only real economic initiative” of the Aristide years.”

Okay, so officials have been corrupt and have stolen hundreds of millions from the government over the years, but what about all the foreign aid that Haiti has received?

Foreign aid makes up approximately 30–40% of the national government’s budget. The largest donor is the US, followed by Canada and the European Union.[87] From 1990 to 2003, Haiti received more than $4 billion in aid.”

$4 billion might sound like a large amount of money, and it is, until you divide it by population.  Let’s assume the aid was spread out evenly over 13 years and that the population was, on average, 7.6 million.  That equates to $308 million per year, or $40.50 per person per year, which is about 1 month’s wages for most people in Haiti.  Could you rebuild your house on a sturdy earthquake proof foundation for $40 bucks, or even 1 month’s salary?  Or how about relocating to what might be a safer place (regardless of whether you can earn a living there)?

“In 2005 Haiti’s total external debt reached an estimated US$1.3 billion, which corresponds to a debt per capita of US$169. In September 2009, Haiti met the conditions set out by the IMF and World Bank‘s Heavily Indebted Poor Countries program to qualify for cancellation of its external debt. [94]

So until recently, the government was carrying debt equal to 18.7% of its 2008 GDP. That’s not a very strong base from which to run a deficit with large-scale public infrastructure projects.  To put it into comparison, the US’s record-high government debt is around 8% of GDP, only 43% of that of Haiti’s in % of GDP terms.

Who should rebuild Haiti?

Mr. Shirley states “I don’t know whose responsibility it is [to rebuild Haiti], either.  What I do know is that it is not the responsibility of the outside world to provide help.  [Ward’s note: which is basically saying it’s either Haiti’s responsibility or no ones.]  It’s nice if we do, but it is not a requirement, especially when people choose to influence their own existences negatively, whether by having too many children when they can’t afford them or by failing to recognize that living in a concrete bunker might not be the best way to protect one’s family, whether an earthquake happens or not.”

On the subject of family sizes in Haiti, for one thing, birth control is likely very inaccessible.  (If Mr. Shirley would then urge Haitians simply to not have sex, he would be severely overestimating the will power of all but a special class of human beings.)  Secondly, it may actually be in the economic self interest of Haitians to have large families (to say nothing of emotional self interests.)  Two thirds of Haitians support themselves by subsistence agriculture.  On a farm, more children equals free labor, so it may be rational for individual families to continue have larger families, despite their poverty.

Logically I can’t dispute whether or not better off people have a ‘requirement’ do help those much worse off.  Morally I disagree.  I believe those with way more money than they need to make them happy (the western world) has a strong moral imperative to better the conditions of those worse off.

How would you want the world to be if you were randomly placed in it?

There is a very simple thought experiment that I find helpful in defending the ideal that those with a lot should help those with a little.  Imagine that you were given a chance before birth to allocate all the resources in the world to various countries, regions, and peoples of the world.  You can do this however you want.  The catch is that afterwards, you will be randomly placed into that world population of about 6.5 billion.  Given income distribution in our world (as of the year 2000), you would have a 45% chance of living off less than $3/day (including a 23% chance of living off less than $2/day, the level that Haiti is at.)  2 out of 3 times you would be living off less than $14/day.  You would only have a 13% (1 in 8 ) chance of being relatively affluent & making at least $11,500 per year (1997 data), which is well below the poverty line for a family in the United States.  (The US median income per family is about $55,000 per year, making us extremely wealthy by worldwide standards.)

We live in a world where the richest 10% of the population owns 85% of its assets, and the poorest 50% owns 1%.  Would you choose to distribute resources as they are today, knowing that you’re most likely to live your life in incredible poverty (by US standards)?  Or would you choose to move things around a bit, giving yourself a chance to live comfortably no matter where you happen to be born?

Two times the wealth doesn’t equal two times the happiness

I would choose the latter, and I suspect many other people would as well for the following reason.  Pretend someone offers to let you flip a coin for your entire net worth.  If the coin lands heads, you double your wealth.  If it’s tails, you are utterly wiped out and have nothing: no house, no savings, no clothes/cars/iPhone etc.  Would you take the gamble?  I suspect 98% of Americans would not.  The reason?  Having twice as much wealth doesn’t bring us twice as much happiness.  The more money we make, the less valuable each dollar is to us.  Economists refer to this trait as being ‘risk averse.’  Losing what we already have hurts more than gaining an equivalent amount, so we pay for security in the form of insurance or diversified mutual funds.

Of course, in terms of the ‘where would you be born’ thought experiment, the results of birth misfortune are much more dire than simply losing your current wealth.   Not only do you have a 7/8 chance of making less than $11,500, you will likely lose your paths of opportunity to a better life: education, health, human rights, and physical security.

Incentives

One issue I haven’t addressed is the proper incentive system for people, not just “ideal” wealth distribution.  If someone does something harmful to themselves, you want to discourage them from doing so again.  I’ve already explained why I believe the vast majority of impoverished Haitian’s are NOT very responsible for their fate, thus, it makes little sense to punish them by withholding aid.

Where possible to do so effectively, the US & private donors should definitely make an attempt to reform Haiti’s government and provide citizens with better opportunities to help themselves.  That being said, we can do a lot in the mean time.

Conclusion

In closing, I urge thinking people to avoid assigning blame to people in trouble simply because they have had the misfortune to be born in a different part of the world.  This is an easy trap to fall into because it absolves the blamer of all responsibility to help.  It is also easy to forget how incredibly privileged we are in western Europe & the United States.

Fortunately, judging from the roughly $1 billion in private donations from the American charities to Haiti, the vast majority of people are ignoring Mr. Shirley’s callous and faulty reasoning and donating however they can to help the Haiti relief effort.  If you haven’t already, I urge you to do the same.

“Of all vulgar modes of escaping from the consideration of the effect of social and moral influences on the human mind, the most vulgar is that of attributing the diversities of conduct and character to inherent natural differences.”

– John Stuart Mill

Find out how much money your Seattle-area neighbors make

I stumbled upon a slick salary tool on the Seattle PI’s website:

http://www.seattlepi.com/data/databases/wage_comparisons.asp

 

Maybe this guy used a wage comparison tool to decide to get into that rap game

 

From the above link, just pick the job position you want to compare (i.e.: hip hop singer/song-writer) and get mean and median salaries.  They have all kinds of positions ranging from actuaries and accountants to veterinarians and writers.  The data is culled from the Bureau of Labor Statistics (currently May 2008 data, about 2 years old) and does NOT cover the self-employed.

This should be a good starting place for determining your worth and what you should expect for a typical salary in various jobs around the Seattle/Tacoma/Bellevue area.  Use it to motivate yourself for negotiating your next raise, or deciding upon a career change.

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Here’s some sample date for a couple of careers:

1) Metropolitan Area Seattle-Tacoma-Bellevue, WA
Occupation Registered nurses
Median Annual Wage $74,880
Mean Annual Wage $74,890
Employees in Region 29,940
Median Hourly Pay $36.00
Mean Hourly Pay $36.00
2) Metropolitan Area Seattle-Tacoma-Bellevue, WA
Occupation Engineers, all other
Median Annual Wage $92,560
Mean Annual Wage $90,650
Employees in Region 5,810
Median Hourly Pay $44.50
Mean Hourly Pay $43.58
3) Metropolitan Area Seattle-Tacoma-Bellevue, WA
Occupation Advertising sales agents
Median Annual Wage $49,290
Mean Annual Wage $57,680
Employees in Region 2,110
Median Hourly Pay $23.70
Mean Hourly Pay $27.73
4) Metropolitan Area Seattle-Tacoma-Bellevue, WA
Occupation Bartenders
Median Annual Wage $28,530
Mean Annual Wage $27,690
Employees in Region 6,460
Median Hourly Pay $13.72
Mean Hourly Pay $13.31

Updates to Words of Ward

Hi all – You may have noticed a few tweaks to my blog.  I’ve added a bunch of social media buttons on the right side of the blog (Facebook ‘Like’, Twitter, sharing on Facebook, bookmarking, etc.)  So, spread my wisdom and use the sharing options!
I’ve also added a quick and simple rating system (thumbs up or down) to each of my posts.  Let me hear the feedback!  This will give me a good idea about which posts people like (or don’t like) and may influence my future writing (or it may not; it’s my blog damn it!)

Thanks, hope the new functionality is useful!

Vanguard lowers fees again – switch to Admiral shares to save!

Index fund-pioneering mutual fund company Vanguard has a history of lowering fees.  Vanguard lowered the minimum amount investors need in a single fund from $100,000 to $10,000 to qualify for Vanguard’s lower-fee “Admiral” share class.

If you have Vanguard index funds with $10,000 more in them, convert them to Admiral shares and save!  (Or switch to Vanguard if you don’t currently use them and are looking for better investments at lower cost; they’re the best!)

I just converted my applicable Vanguard funds today to Admiral shares (and did the same thing for my clients.)  Go to your Vanguard account and click the ‘Convert to Admiral shares’ in your account view to see if you have any eligible funds to convert.

Here’s the news story that gives more details on this:

http://blogs.barrons.com/focusonfunds/2010/10/06/vanguard-cuts-fund-fees-40/?mod=yahoobarrons

NEVER EVER EVER buy anything from Toshiba!!!

Bad product + TERRIBLE customer service = unhappy customers; see below for more details:

I bought a Toshiba DVD player off Amazon.com for $40 (it had a rating of 4/5 stars; not bad.)  It failed after a measly 6 months of moderate to light use.  (It wouldn’t play ANY disc.  The Toshiba repair FAQ had one piece of advice: unplug it for 3 minutes, then plug it back in.  As brilliant as that repair sounded, it didn’t fix the problem.)

I emailed Toshiba and explained the problem, providing model numbers, purchase dates, etc.  They informed me that, since the item was out of the 90 day warranty, I could exchange the player for a new model for only…. get ready… $50!  SERIOUSLY?  $10 more than I paid for my original player and $20 more than what I could by the new player they were offering me on Amazon?  Okay, someone needs to take Econ 101 at Toshiba.

Anyway, they provided a customer service number for more ‘help’, so I called it.  After struggling through automated messages telling me to answer all the questions I already answered via email (with no ‘dial 0’ or ‘operator’ function to get a live human) for 20 minutes, I finally got a low-level goon on the phone.

I explained the problem and asserted that even though my unit was out of warranty, it would seem like the decent thing for Toshiba to either 1) refund my money, 2) send me a replacement DVD player or 3) fix the unit for free, given that their product completely FAILED after only 6 months.  Although the customer service woman agreed that 6 months was ‘not typical’ (I don’t really believe her since 10% of reviewers on the Amazon.com site appear to have had the same problem), she told me there was nothing she could do.

If you’ve ever dealt with telephone customer service, you know that only a ‘Supervisor’ can fix a problem, so she offered to connect me to a supervisor and I accepted.  After putting me on hold for another 5 minutes, she came back and told me that, because my item was out of warranty, NO SUPERVISOR WAS EVEN ‘ALLOWED’ TO SPEAK TO ME.  Que pasa!?  Seriously!?  I was stunned.  Toshiba won’t even allow customers with failed products that are older than 3 months TALK to a person that might potentially be able to solve their problem.

Never have I had a customer service group refuse to speak to me about a problem.  That’s their @#^%@ job!!!  Anyway, after I clarified one more time with this customer rep that Toshiba would rather lose a customer for life (and have that person tell everyone they know to avoid Toshiba products) than pony up a $30 DVD player, I hung up and ordered a Philips DVD player.  (The woman assured me that it ‘wasn’t the money’ that Toshiba was concerned about, so I assumed it was merely a policy of personally insulting customers by refusing to help them when Toshiba products fail.)

The lesson: AVOID TOSHIBA PRODUCTS LIKE THE PLAGUE.  Be very afraid of a company that has the unique business strategy of producing defective products AND failing to fix problems (or even allow empowered employees to speak to customers about fixing problems) when confronted with persistent customers.

Every company makes products that fail from time to time (some more than others), but the difference is made when good companies have policies in place to help customers with failed products or services.  Based on my experience, Toshiba is not a good company…

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