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I assume that most readers of this blog don't believe in astrology, since there is no scientific evidence whatsoever to support it. But do you believe investors should rebalance their investment portfolios every year?

Suppose you start out with a balance of 70% stocks (in broad market ETFs) and 30% bonds, which for some reason you think is right for you, and your stocks have a good year. Now you're at 80% stocks and 20% bonds. Should you rebalance?

I think we can all agree that if something happens to change your overall financial circumstance, such as nearing retirement or winning the lottery, you might need to rebalance your portfolio. But what if the only thing that happened was that you aged from 35 to 36 and your stocks had an unusually good year? Do you rebalance then?

I think most financial experts would tell you there is a magical number that each investor should try to maintain in terms of portfolio balance. Your first indication that something is fishy is that experts will come up with different magical numbers. Your second sign of trouble is that the experts have a naked self-interest in getting you to rebalance more than you might need to because your irrational belief in rebalancing is 90% of the reason you think you need a financial expert in the first place.

If you have a link to scientific evidence that annual rebalancing makes sense, and it isn't written by someone who has a financial self-interest, please include it in your comment.

On a semi-related note, do you believe yesterday's stock market plunge was a "mistake" as some say, or was it a case of manipulation by someone who made a fortune on it? Ten years ago I would have said it was a mistake. Today that sounds naïve.
 
Did you see the story about the Chinese man who died after his friends inserted a live eel into his rectum as a practical joke when the man was asleep?

http://www.practicalfishkeeping.co.uk/content.php?sid=2778

This tragic situation, which I think we all agree is not funny, raises many questions.

 1. With friends like that, who needs enemas?  

2. How low did this man set the bar for friends?  

3. What were his friends imbibing when they came up with this idea, and how can I get some of that?  

4. How difficult is it to insert an eel into a rectum? Did they straighten and freeze the eel a little bit first? Otherwise it seems like trying to push a rope through a keyhole.  

5. How did the man sleep through it? 

In my own life, I have a strict rule for determining who to call my friends. Rule 46 states that any person who tries to insert a live eel into my rectum is automatically disqualified. If the eel is dead, obviously that's just good fun. I'm not a killjoy.

As a conspiracy enthusiast, I have to wonder if the friends were trying to cover up an even more embarrassing violation of the presumably drunken victim's hindquarters.

Friend 1: "Uh-oh. When he wakes up, he's going to know what we did."

Friend 2: "Not if we put a live octopus in his rectum. That should cover our tracks."

Friend 1: "That's insane! You can't put a live octopus in a rectum!"

Friend 2: "Live eel?"

Friend 1: "Fine. Remind me to never be the first one who falls asleep in this crowd."

 
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Investing is scary because the world of finance is the ultimate confusopoly. There are so many options from which to choose that many people are willing to pay perhaps 1% of their portfolios per year for experts to manage their money. And those experts might invest your money in managed mutual funds (managed by yet other experts) that charge you another 1% to pick stocks for you. And this is despite the fact that on average, experts can't beat a monkey with a dartboard when it comes to picking stocks. Every study has shown this to be true. As far as I know.

Worse yet, actively managed funds will generate more tax liability for investors than necessary because managers need to churn stocks to maintain the appearance of usefulness.

There once was a time when most experts agreed, roughly, in how a typical portfolio should be allocated. If you were young, you should own mostly stocks. If you were nearing retirement, you should have mostly bonds. But lately, even that assumption is being questioned. Some experts now say you need a healthy percentage of stocks even if you're nearing retirement, because you might live another 30 years.

This made me wonder if you and I could come up with the world's simplest portfolio that is better than what the average money managing expert might concoct. I'll toss out some suggestions here, and you can improve on them in the comments section, keeping within some simple guidelines.

First, let's assume the hypothetical money is invested entirely for retirement, so we don't need to worry about keeping any of it liquid for college or buying a house. That assumption is just to keep things simple.

Second, we're only talking about investments up to 10 years prior to your planned retirement. When you near retirement, you would typically and gradually convert as much of your stock portfolio into bonds as necessary to get the monthly income you need. That's a more complicated scenario than what I want to discuss here.

I suggest, as a starting point for our discussion, that a perfectly adequate simple portfolio for young(ish) people might involve putting 50% of your money in an ETF from Vanguard (VTI), which captures the entire Wilshire 5000. In other words, you'd buy one financial instrument and own a little bit of just about every public company in the United States. That's all the diversification you can get within one country, and the U.S. is still considered a relatively safe place to invest even if it doesn't have the best growth potential. The fees for the ETF are a low .015% per year, and because ETF managers don't do much buying and selling within the portfolio, it doesn't generate much taxable income to pass along to investors.

I picked 50% to allocate to this investment because I contend that no expert has a good reason for picking a different figure. Some experts might tell you 25% is the right allocation for U.S. stocks, and some might say 75%. I contend that most allocation recommendations of that sort are no more defensible than horoscopes.

For the remaining 50% your investments, let's say you buy the Vanguard Emerging Market ETF (VWO) with a .27% expense ratio. That gives you a play on the best companies in emerging markets around the world, at low cost, with excellent diversity, and low taxes.

Disclosure: Vanguard has licensed Dilbert in the past. I don't have any financial interest in them now, nor do I have any investment with them. I only use Vanguard as an example because they are a familiar and trusted name, in case you aren't familiar with ETFs and you wonder if they are sketchy. ETFs are as close as you can get to a commodity, and there are lots of companies from which you can get them.

Now it's your turn. How could my sample simple portfolio be any better than 50% in VYI and 50% VWO? You have to defend your viewpoint. No fair just telling us what you do now. Tell us what data you have to suggest you could do better with a different portfolio than I described.

And remember that your suggested portfolio needs to be simple enough for the average person to understand and obtain without expert advice and without excess risk.

(I should note here that it would be extraordinarily unwise to base any of your investments on what you read in a cartoonist's blog. This is just a mental exercise.)
 
French researchers offer some insight into why you actually can walk and chew gum at the same time, but when add a third task, things go balls up.

http://news.bbc.co.uk/2/hi/health/8622137.stm

Upon seeing this report, I immediately thought of those of you who are single. You can add this concept to your seduction tool bag. For example, always phrase your romantic offers in the form of multiple choices instead of yes/no questions.

Don't: "Would you like to go to dinner with me tonight?"

Do:  "Would you like to go to dinner with me, or to dinner and a movie, or maybe just a movie? What movies would you like to see anyway?"

I can't vouch for the research, but I will say this is a standard technique that you might learn in either a sales or hypnosis training class. I think it passes the sniff test. For example, when Ralph Nader ran as a third party candidate in the U.S., it created a multiple choice situation in which the research suggests that a lot of people voted in a way that they knew would not serve their own best interests. Check!

This, by the way, is the reason I refer to music as brain pollution. I enjoy music, in its place, but it adds a task to your brain when you're probably already juggling at least two others. Personally, I've noticed that I can't do a complex task, particularly writing, while music is playing. But music is great if I'm just going for a run because the extra mental task puts me into irrational mode, and I really need that to silence the rational part of my brain that keeps whispering "Nothing is chasing you. Stop running."

Remember to ask your boss today if he'd prefer to give you a raise, a raise plus a promotion, or a promotion with a raise at your next performance review. Let me know how that goes.

. . . . . . .

On a completely different topic, what home page do you use, and why? I'm curious if the readers of this blog gravitate toward the same few starting points. I'll bet the answer is yes.
 
One of you humorously suggested that I write a Dilbert Cookbook. My initial reaction was that a Dilbert Cookbook would make as much sense as Dilbert lingerie. It's simply a bad match. But the more I thought about it, the more I realized I would use a cookbook that was designed for a Dilbert sensibility.

For starters, the Dilbert cookbook would be in the form of a website and an app. That gives you a chance to solve the first and biggest problem of all physical cookbooks: the tedious texty interface. If you're reading this, I assume you already have a laptop or an iPad for your kitchen. If you don't, you will.

The Dilbert Cookbook would include lots of optional links to quick video clips explaining every non-obvious step. Dilbert readers tend to be self-taught in a lot of areas, and no one is born already knowing what blanching means. Cooking lingo needs to have links for explanation, so the cookbook acts as both a recipe guide and an optional tutorial as needed. 

A large part of this digital cookbook would be dedicated to the chemistry, physical skills, and gadgetry of cooking. Personally, I'm fascinated by the engineering aspect of cooking, but I get bored when the interesting parts are ruined by all the talk of food.

I'd love to see all of the little rules of cooking assembled in one place, so I could study them in the abstract. For example, at what stage of cooking is it best to add spices, and why? What is the role of moisture in microwaving? How do you keep something warm without drying it out? And how do you get the onion smell off your hands? Time-wise, what is the point of diminishing returns for simmering or marinating? What food can I freeze and thaw without ruining? I assume there are hundreds more of these little rules.

I'd also like to know when I can get away with store-packaged ingredients. Is the garlic from a jar just as tasty as smashing up your own cloves, or does that depend on how long a dish is cooked? In other words, I want a ranking of what sorts of engineering steps with food preparation are more important than others.

I believe that flavor can also be reduced to a set of engineering guidelines. Specifically, I think you could categorize most flavors the way you categorize music, with high notes and low notes. Garlic and onions and pepper feel like low notes to me, whereas lemon and cilantro are like high notes. I've noticed that the best food has a combination of both, just like music. I'll bet an experienced chef could categorize most flavors in a way that would allow you to know if you were breaking any rules, such as cooking with all low notes. And I'll bet the high notes can't be more than say 10% of what you experience, in some subjective sense, without overwhelming the flavor.

Don't get me started on the gadgetry of cooking. I could spend hours learning about the best types of bottle openers, the best sauté pans, and the difference between convection and regular microwaving. When we were shopping for a refrigerator for our new home, I totally geeked out learning about how some fridges circulate air between the freezer and the regular fridge, which is apparently suboptimal for freshness. If you've read this far, you know what I'm talking about. Cooking tools are way cooler than the food itself.

I want my cookbook to show me different views of the task ahead, including a picture of all the ingredients laid out, so I can visualize, and another view of just the pots and pans and measuring cups and whatnot so I can assemble them all in one step instead of continuously running back and forth to cupboards.

How about sorting and filtering recipes? I want a search capability that lets me optimize for timeline, budget, nutrition, special diets, level of cooking difficulty, and estimated clean up time. You aren't really doing your spouse a favor if you cook a wonderful gourmet meal and then expect him or her to be your pot scrubber for the next four hours.

I'd also like to see my recipe steps arranged by timeline, with each dish for the meal overlaid. I made the mistake recently of trying to cook a meal in which everything would need attention at exactly the same time. The Dilbert Cookbook would let you filter against that problem, so each step is properly times. And perhaps the cookbook could act as your stove timer as well, so you have a visual representation of how done things are, on the computer, ahead of the alarm.

I want my Dilbert Cookbook to suggest what meals I can make from the stuff that's already in the fridge. And I want to set preferences for each family member and dinner guest so I only need to look at recipes that everyone will enjoy.

If I'm planning a potluck, it would be great to integrate my Dilbert Cookbook with my e-vite, so guests are constrained to dishes that will be complementary with everyone else, and the right size.

Obviously there are already lots of online recipe websites. None of them were designed with any sense of Dilbert-like efficiency in mind. There's a huge gap between where cookbooks are and where they could be. This is another example of where doing an old thing better (cookbook design) would completely change the experience. In the future, I can imagine each family preparing just one dish per night and using some sort of social website to arrange weeknight potlucks with friends.

 

 
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Don't get used to it, but here's another unfinished comic that would have gone stale if I waited to publish it in newspapers.


 
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Two questions I am often asked:
  1. How far in advance do you work?
  2. How quickly can you publish a comic on a current event?
Today I will indirectly answer both questions by talking about something else entirely. I assume you've all been following the story of the Apple engineer who left a prototype 4G iPhone at a beer garden. I found this story too delicious to resist, but I worried that the story would become stale before my comics would work through the pipeline. I think the soonest I can get something published is in about a month, perhaps a bit sooner, but I've never tested it.

I drew two comics while considering my options. In the end, I thought it wasn't worth the extra friction to push them to the front of the line. And it would be June 18th before they ran in their normal position, which seemed too far in the future. So here now, exclusively for you blog readers, the totally unfinished first drafts of those comics.  You will never see these in newspapers.





Take a moment to marvel at the fact that I didn't need to add anything to the story as it has been told in the media. All it really needed was Wally. I don't think any of us will ever know what really happened. I based the comic on the media's speculation of events. Remember that I'm in the parody business and not the truth business.



 
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The Geek Tingle
Apr 22, 2010 | Permalink
Possibly the most geeky thing about me, if I can pick just one thing, is that I get all tingly when I hear about new business models. For example, I got a tingly feeling the first time I heard about iTunes. I get the same feeling every time I buy a book in less than a minute from Amazon.

I'm also fascinated when an improved user interface causes an entirely new product to be created from something old. For example, auctions have been around forever, but eBay made it so easy that they created an entirely new way of doing business.

I get shivers when I see stuff like that happening, and I don't know why. Business models haven't been around long enough to affect human evolution. I have to wonder what genetic defect I have that causes me to enjoy learning about business models as much as I enjoy food or laughing.

Maybe you noticed a new button below the Dilbert comic on the home page labeled "License Me." Now you can search for a particular strip by key word or date, click a few buttons to describe how you want to use it - for anything from a PowerPoint presentation to a web site to a publication to a coffee mug - enter some credit card information, and you're all legally licensed in minutes. For example, you can license Dilbert for your business presentation for as little as $19.99, which is the same as free if your boss is paying for it.

The old way of licensing Dilbert was so cumbersome that I spent a lot of time convincing people they shouldn't even try. My end of the conversation usually involved something like "Just use it without permission and don't tell me about it." When pressed for an explanation as to why doing such a seemingly simple thing would be a nightmare, I launched into my explanation of copyright protections, lawyers, contracts, approval processes, and all the phone calls, faxes, e-mails, and cursing involved to get a tiny license for a limited use. It was a good way for me to experience self-loathing with a dollop of someone else loathing me at the same time.

In recent years, United Media streamlined the process, but it still involved e-mails, sometimes phone calls, explanations, contracts, and too much time. It was never as easy as common sense demanded.

As a consequence, Dilbert was probably in second place for the most stolen item of the past 20 years, at least by businesses. (Money was in first place.) And who could blame anyone for using Dilbert without permission? I would have done the same thing. Humans have some sort of hardwired sense of rightness, and stealing something that's too much of a hassle to purchase legally feels okay to most people. I feel exactly the same way.

The License Me button is for the benefit of companies that prefer to be legal in all things. It sets a good example. And at long last, it is easy to be legal. I call that a new business model.

It makes me tingle. I swear it does.

(Note: Dilbert will always be free for personal use, such as hanging on your wall or emailing to friends.)

 
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Shelly and I invited some good friends and their young son over for dinner and a movie last Friday. Earlier that week, while pretending to be an extra-wonderful husband, I told Shelly, I would "do everything." I wanted her to relax and enjoy the evening for a change. Normally Shelly would be the project manager and main operative for this sort of event. The only condition of my offer was that Shelly would need to accept a lower-than-monkeys-can-do-it standard of quality for the evening. She unwisely accepted.

By way of background, you should know that I have never tried to plan and execute a dinner party. I usually do the fetching, cleaning and chopping. As it turns out, despite the vastness of my fetching, cleaning, and chopping experience, I have learned nothing whatsoever about planning and preparing a meal.

I'm also not observant. If I eat a wonderful dinner, my memory is something along the lines of I think plates were involved. So I couldn't rely on any form of my experience to pull this event together. But how hard could it be? I figured I could use the Internet to teach me everything I needed.

Yeah, I own a restaurant. But that would be cheating.

I started by Googling "tri tip" because Shelly had helpfully mentioned that as an easy thing to cook on the gas grill. I didn't have time to research what parts of the steer comprise the tri tip, but obviously the tips are its horns, nose, tail, and penis. As a vegetarian, I didn't want to know which three of the five possibilities were involved in the tri tip. That was none of my business, frankly.

I Googled and Googled until I had some idea of what I wanted for the side dishes. I drove to Whole Foods and loaded up my basket with red potatoes, green beans, garlic bread, and an unidentified part of a dead mammal. I also bought a small basket of fruit for my own dinner. There was no way in Hell I was making two separate dinners just because one of us was a vegetarian.

The roasted red potatoes called for rosemary. I couldn't find any in the spice rack, but I remembered we had planted an herb garden out back. I didn't have time to Google an image of rosemary, so I grabbed the first thing that I couldn't positively categorize as "not rosemary" and hoped for the best.

In the end, I produced a tri tip that had the look and texture of Ty Cobb's baseball mitt, some undercooked potatoes flavored with an unidentified weed, over-spiced green beans, and some cupcakes from the store. The garlic bread never made it to the table.

I tried to cook the garlic bread on the grill but that turned out to be a tragic miscalculation. As soon as the bread touched the grill it went up like a Taliban weapons depot. If I ever decide to fashion a crude bomb, I plan to make it out of garlic bread.

I kept track of my hours spent for the planning, shopping, cooking, and cleaning. It took me about 12 hours to produce a very bad meal for five people. On the plus side, don't expect to see The Dilbert Cookbook anytime soon.

 
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[Warning: This post uses vulgar language because it involves the manly activity of assembling mechanical devices.]

The other day I tried to assemble two outdoor heaters that Shelly and I bought online. This is exactly the sort of project I would pay someone else to do, if such a person existed. Specifically, what I need is a man with four testicles so that when we team up we have, on average, enough to get a job like this done.

Did I mention that the heaters use liquid propane? Or that they come with angry warnings guaranteeing you will die in a giant fireball?  Maybe the manufacturer has to say that sort of thing for legal purposes, but I took it as a death threat. My fight-or-flight response went straight into overdrive. I picked up a screwdriver and started going all knife fight in every direction in case the heaters had accomplices.

So, now imagine my complete lack of mechanical skill applied to a situation in which a mistake will catch my shirt on fire, but I won't care because by then the rest of me will be scattered among the neighbors' burning trees. That's the image running through my head as the beads of my sweat smeared the ink on the barely helpful heater assemble instructions.

At some point in a project like this, inevitably, I run out of patience with a screw that should go straight into a hole but insists on going all squirrelly. I suppose the proper method involves continuous trying until you are sure the screw is properly straight before tightening. My method involves getting pissed off on the 27th attempt and then tightening the shit out of the screw until it is halfway in, like the Tower of Pisa, and the Phillips head is so stripped it looks like a tiny bowl. On most projects I have the option of simply living with my poor craftsmanship. With these heaters, one bad screw might be the difference between dying in a giant fireball and dying in an even gianter fireball.

The assembly directions estimated it would take 30 minutes. That's about how much time it took me to get everything out of the box, and to vacuum up the shitstorm of Styrofoam debris. I carefully arranged all of the pieces on the ping pong table and hoped something was missing so I could give up. But no luck, it was all there.

I have noticed that the people who write assembly directions often assume too much of the buyer. Those direction-makers have a lofty idea of my powers of deduction, assumption, and anticipation. But let me say to you direction-makers as clearly as I can: If you don't put it in the directions, I'm not going to fucking do it.

The gap between my literal interpretation of the directions and the proper assembly process soon became a problem. One component had an ever-so-slight bend, but seemed to fit no matter how you screwed it in. To my credit, I noticed after the sixth try that something wasn't quite right. But before I noticed, I stripped one screw in an attempt to make brute force a perfect substitute for proper assembly. That's when I noticed that the vendor shipped two extra screws for just that one part of the heater. In other words, I assume enough people had made the same mistake I did that some engineer decided to throw in a few spares. I guess that was cheaper than fixing the directions. Still, you can never be totally comfortable with leftover parts. No one wants his last words to be "I wonder why I have these two extra screws. OH GOD, NO! SHUT OFF THE VALVE! SHUT OFF THE..."

Amazingly, three hours into the project, I had assembled both heaters. Now I had to figure out how and where to buy the fuel tanks. Someone suggested Walmart, but I think you can see where this is headed. Walmart did indeed have some liquid propane fuel tanks, but I needed confirmation that they were suitable for my heaters.

Yeah, I tried to ask a technical question at Walmart.

Now, I don't want to say unkind things about the fine folks who work at Walmart. But I wouldn't object if you use your imagination to fill in the blanks. You might even want to get out of your chair and mime the expression and posture of the person to whom I asked my question. I'll bet your impression won't be far off. Anyway, since I didn't want to die because of something I learned at Walmart, I decided to try Home Depot.

You can ask a Home Depot employee just about anything and get a satisfying answer. I might ask, for example, "How many times would I need to pound this particular nail with a 3-pound hammer to get it in?" The Home Depot guy would look me in the eye and ask, "What kind of wood?" And then I might say, "There are different kinds of wood?" Then the Home Depot guy would put a tape measure around my forearm, shake his head, and say, "For you, about 435 hits." And he'd be right! So it was no surprise that he pointed me to exactly the right liquid propane tanks. As far as I know.

On the way home, I noticed that the minivan needed gas. I filled the tank and realized that along with the liquid propane bumping around in the back, I had enough explosives to take out a strip mall. All I needed was a spark. And the town was full of sparks. Sparks are pretty much everywhere. When a police car rolled by, all sparky, I tried to look as un-terrorist as possible, which is hard to do when you're sitting on a weapon of mass destruction and a turtle is trying to burrow out of your ass.

Back home, I carefully connected the tanks to the heaters, and followed the directions to use soapy water to test for gas leaks. The directions didn't say how much soapy water I was supposed to use, and I didn't want to err on the side of too little. I'm nervous that way. I just kept adding soap and checking for leaks. Shelly finally sent our dog into the giant soap mountain to find me and lead me to freedom.

The hardest part was trying to turn on the heaters. The process involves turning a knob several thousand times while absolutely nothing fucking happens. Except that maybe you are forming a giant invisible gas cloud around your general vicinity that will ignite if and when a spark is ever generated by all of your knob-turning. It's not a good place to be.

The directions even predict the product won't work. They include a workaround that involves sticking a lighter into a hole when all else fails. Finally, Shelly came out and offered to help. She had a theory about hearing some sort of hissing sound and guessing it meant something good was happening. While I could accept that hypothesis as being potentially correct, the competing hypothesis involved a giant fireball. So I split the difference and told her to explore that hypothesis while I positioned myself between the heater and the pool. I figured the explosion would propel me into the water and, with any luck, extinguish my flames.

But in the end, Shelly got the heaters started. Now I worry that the connections will come loose before we use them next time. I'll need to buy more soap.
 
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