The Big Picture For The Week Of September 10, 2006

It is raining like crazy here on the mountain today. I can't remember such a wet summer here as this one.

There are a bunch of comments from the last couple of days to catch up on. One reader left a comment about starting to shift more to fixed income as a function of retiring. This is tricky. I have touched on this in the past and I always get comments disagreeing. If you are 60 years old and think 90 is a realistic possibility (here, note that most people live longer than their parents and medical innovation is accelerating) being too conservative will yield the same result as being too aggressive; your money won't last as long as you need it to.

The price of a postage stamp mimics inflation over a period of years. The Elvis stamp from 1993 cost $0.29; thirteen years later a stamp costs $0.39 which is 34% increase. In 2020 your expenses might be 35% more than they are today. Your portfolio needs to keep up with that.

I believe the Elvis stamp came out in February, 1993. On February 28, 1993 the S&P 500 closed at 443.38. Today it is at 1298.92 which is almost a triple. These are numbers. In my experience with conveying this to people, this will click right away or it won't click at all.

One reader asked how I find correlation of different assets. There is a site called PortfolioScience.com that I use. It costs about $20 per month. The site is quirky though. It does not work well with FireFox, I often need to load a page twice and it times out very frequently like your bank's website might do but the info is very useful.

One reader mentioned he owns Duke Power and wanted my opinion on a best of breed utility sector ETF. Well, here's the thing; Duke is heavily weighted in four different utility ETFs I looked at. The only one I found that doesn't have a lot of Duke is from PowerShares (PUI) but the yield looks like it will come in very low and it may own Duke in the future so I'm not sure what to tell you. I have four individual utility stocks in my ownership universe; three of them are very docile and yield close to 5%. There are more than three utilities that match this description if that is what you are looking for.

One reader left a comment that an unnamed blog mentioned a fund that allows investors to participate in (as I read the comment) the yen carry trade. If that reader is reading this please leave the fund name, the blog name or both. The idea here is not so much that I think I need to own the fund (if it is that type of fund) but more about learning about something that sounds innovative. There are people that poo-poo every new thing that comes along ("you don't need it") which seems completely upside down. Investing will evolve along with the markets. If one out ten new things that come along is right for you and will help you get better results (nominally or risk adjusted) then learning about the other nine you won't ever use is worth the effort. Here I am assuming most folks reading a site like this one are more interested in their investments than picking four OEFs to rebalance once a year.