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  • XLU Will Pay For 30% Of My Car  [View article]
    Why not allocate the money to your current diversified portfolio (whatever it may be), since it reflects the investment choices that you feel will best help you hit your goal? We had initially saved up cash for the purchase, but then decided to do essentially what you suggest when we bought my wife's car and took out an 0.9% loan. I used the money to help add to some different portfolio positions and rebalance things a little.

    If you must have yield, I think the dividend growth theme that shows up on SA a lot protects you the best. There was a fairly recent article here on the topic of DG ETFs:
    I prefer to buy individual stocks and went with HRL, AFL, DD (which fit the div story) plus WFM, NVDA and a gold coin last october when we bought our car.

    Anyways, good article. Your thinking is sound.
    Nov 6, 2013. 09:34 AM | Likes Like |Link to Comment
  • XLU Will Pay For 30% Of My Car  [View article]
    I didn't mean the interest rate risk on your loan, but rather how XLU behaves in a rising interest rate environment. It is essentially a bond replacement and will behave more or less the same way. Look at what the price of XLU did back in May when Treasury yields started to creep up. If you think ZIRP and QE forever can keep yields down over the full 6 year term, then maybe your plan works out, but it is far from risk free. If bond yields rise to the point where XLU is only attractive to buyers at, say, a 5+% div yield then the share price will drop pretty hard. A bond holder in a similar situation could at least hold to maturity and get all of his principal back. In your proposed case you're forced to eat this loss to make the monthly payments. You'll need to sell more shares than initially expected every month to make each loan payment meaning smaller dividend gains later on and potentially a net loss.

    The safest way to make $10k off of your $30k car? Sell it and buy a $20k car.
    Nov 5, 2013. 01:56 PM | 8 Likes Like |Link to Comment
  • XLU Will Pay For 30% Of My Car  [View article]
    It may sound like a good plan on paper, but watch that interest rate risk.
    Nov 5, 2013. 12:27 PM | 1 Like Like |Link to Comment
  • VIX - Options Volatility Sonar: Tuesday Recap  [View article]
    Thanks for the reply, it helps to see the "forensics" that you posted in the instablog. I was just going from cboe data/charts, which isn't quite as detailed.

    Good work on the daily recaps by the way, I find them to be a nice balance of the numbers/stats and concise analysis.
    Mar 14, 2012. 08:38 AM | Likes Like |Link to Comment
  • VIX - Options Volatility Sonar: Tuesday Recap  [View article]
    Since you mentioned AAPL, I'll ask for a professional opinion- What happened in the April 540/560 strikes at about 2:15? The 560 premium spiked up and 540 spiked down suggesting to me that someone put on a big bear put spread betting on a retracement to 540 by April. (Today's volumes in these 2 were 40k higher than nearby strikes) Do you think I'm reading this right or is something else going on?
    Mar 13, 2012. 07:19 PM | Likes Like |Link to Comment
  • Time To Open Japan Back Up  [View article]
    Interesting note on some of the cultural aspects of the situation. If financial push came to shove, I'm not 100% convinced that any cultural inclination would be enough to overcome an overwhelmingly bad situation. As an additional comment on your arguments - shame is a very strong concept in Japanese culture. I have to believe that the level of national shame that would come with a default would simply not be tolerated. I would anticipate a strong, collective response to do whatever was needed to avoid such an event. In short, Japanese austerity would likely be easier to implement than Greek.
    Jan 24, 2012. 12:45 PM | Likes Like |Link to Comment