What Tires to buy ?

So 2016 just started and we thought that we should take a different direction on this blog and not just write about finance and investments but also other things that are intricately linked with finance. Now, the top things that are non monetary but yet related to financial well being are a) Health b) Sleep quality c) Driving quality if you drive d) work quality.

Of these, the points a, b and d are for some other day. Here we focus more on c. Which is the quality of your drive. Now, the car one owns by most accounts should be rather minimal unless you are into cars. So that translates to getting a basic Toyota or a Honda or a Ford. If you are into electric then again Toyota or Tesla seems to be the top options. Once you get a car, it depends on how  comfortable you are with new vs used cars. For most parts, a used car is pretty good especially if you are relatively new driver or does not have much experience. A good car dealership or mechanic can vet your car and assure you of any internal rumblings. Then periodic oil changes and maintenance is all you need to make sure that the car easily tops the 200k mileage range that most cars post 1995 are capable of doing. But one thing that will require some annual check is the tire. If you do tire pressure check and constant air fill up, it should be good but there is also the whole tire rotation, re-balancing, winteriz-ation and summeri-zation and all seasons for the rest of the seasons. Now most people either go with all seasons tires or those with extreme weather take precaution to winterize the tires. That is entirely upto your local environment and it is not a bad idea to invest in these extra set of specialized tires to help you navigate the roads well. As a general thumb rule, if you are buying a set of tires or rather a pair or 2 pairs - go with something from different name brands and ideally go with 2 at a time. This gives some much needed diversification to the tires for your cars. However, there are also often advertised specials which cleverly give you 1 free tire if you purchase 3. I was always against such deals .. why not just distribute it evenly amongst the tires. Which is why I tended to stay away from brands which do such sneaky advertising practices. The top brands or rather their dealers do this very often. Of course the margin is very well built in:) . 

Now the top of the heap is the Michellin, Goodyear etc which are pretty good and also expensive. But if you are going to drive in a bumpy road with nails, it really does not matter much as to which brands you go for nor does the bumpiness get any smoother due to some extra quality rubber padded on the wheels. Next up there are the Fuzion and Sumohito - both from same companies and a myraid of other brands in this segment. More or less they are all same. Just like computers in similar 250-500 range, they are just slightly different specs with not much variations so to speak. Then there are newer entrants such as Lexani or Veento and many others who price in the 40s-70s because they are new and want to capture market. I would not overlook them just because. I had used Fuzion in the past with mixed results. Twice my cars got nails on them and the tires had to be replaced. The best process would be just call up local tires and get quotes from them for 2 or 4 and keep them all ready. And go with what ever makes sense but in the tire business cheap does not mean less quality nor does expensive brands like Michellin automatically guarantee better ride experience. Of course for the extra money you pay the thread guarantee is there for 90,000 or 70,000 miles instead of 40,000 miles. But choose wisely. Either way does not matter much. There is a lament here that the tire dealers do not give a test drive for different drive experience which would have given the consumers a better chance to experience before making a decision just like cars or electronics or anything else these days.

An adjunct factor for this decision is also install. Now with mount, balance, environmental disposal fee and this and that .. usually the per tire cost is about double the initial quote. Now most of these are standard and mandatory. Except installation fee. Here Walmart quotes are way better compared to others. Here is a quick comparison per tire installation across various places:

Walmart: $12 

Costco: $16

Sams Club: $15 with emergency assistance thrown in for free which is pretty valuable.

Average dealership: $12-$18 but these can be good and the quality and speed is often better than the above warehouses and you also get to know the mechanic better for oil changes and other work in future. With Walmart and Costcos do not expect a friendly service .. it is just assumed that you know what you are getting into.

The tires cost higher in Walmart and more so in Costco where they start in the 60s and 70s. Walmart and Sams carry from 50s. The others such as Sears typically fall in between. The install is higher with Sears at about 20 bucks but the quality is pretty good. I have had 4 tires brought and installed there in a specials promotions which Sears runs often. With that it is easier for Sears to beat its competition rather well. And in general they are very friendly and knowledgeable. 

Some better online tools help you compare such as Yelp, Google Maps or really any online maps, bbb or better business bureaus, auto repair shops which do not change tires also have good info on reliable stores. Then it is just cold calling them and getting quotes in advance and then just getting it fixed.

Jan 2016 newsletter

So 2016 came in swinging! Late 2015 had all the set ups with volatility, the late august downswings and then continued volatility thru last quarter. But 2016 just surprised everyone with no analysts out there predicting anything remotely close. Led by oil, global fears about various things etc. the first three weeks of Jan 2016 saw about 1500+ points downsizing of the DOW. Similar losses across the board in various sectors and indices followed. Now this blog had mentioned about some quality stocks, all American ones, like Fedex or MCD or WMT etc as core holding in the stock portfolio. These very stocks got burned just like the rest. XOM or AAPL or utility stocks-all of them had suffered. No fundamental, no CEO reassuring similar to what happened in 2008, no sector really performing well above expectations. 

A study done internally for the last 5 years showed that ETFs and low cost funds were better performers compared to individual basket of stocks - big or small .. we focussed on the big and blue ones but they fell short. A mix was a debatable option and overall some stocks are okay to hold in your portfolio but by and large, there is no point in holding too much of them or trading frequently. The study was done to also determine the usefulness of Bank of America Meril Lynch Edge brokerage program which gives $0 commission fee if you have more than 25,000 USD in assets with them. Basically, the idea was to stash 25k as solid winnings or core from so long and keep them on the side. But it fell short too and there are other CDs out there which give better interest rates, negates the need to have 30 free stocks per month. At max, I think one needs to cap free trades to about 10-20 or so per year. Anything more than that and likely you are wading into hedge fund territory from individual investor territory. Again these are numbers and different people have different strategies and limits and numbers so nothing wrong if you trade more than that and turn in a good return. But keeping in the basic philosophy of the blog about Vanguard/Bogle/Buffet and others from similar background, we would limit trading in stocks or etfs or mutual funds. Holding in Buy and hold has a reason and it is better to hold off for a longer terms and then sell in higher ranges and buy in lower ranges with new money flowing into cash positions. I think fundamentally the buy low sell high algorithm is the only sound strategy. Rest everything are just additional tools in the toolkits and salts on your algorithms which also test your resolve and patience. 

Oil is at multi year low and it could go lower than this or bounce back but certainly this qualifies as lower ranges and hence it is better to buy oil commodities or services. VDE from vanguard or XOM/COP etc are all good buys. XOM is still a tinge higher at 70s and could go lower to 60s at which point it would be a decent bargain. 

Interest rate hike

As anyone following the market must have seen by now, that the interest rates have been hiked by the Feds by about 25 basis points. Not bad for savers who were used to 0-0.25% to get that extra 0.25% likely in future. Expect to see some good hikes in the online savings bank world. The days of brick and mortar bank, just like radio shack or blockbuster or circuit city, are pretty much on the wane. Many of them, small and big, have right fully identified customer service as the key differentiator and one can see that only a handful are really surviving and rest are going to need a bailout in future if at all they make it. Anyhow, I think this will have broader impact on stock market. First off, today was a day of rally. Maybe the star wars: force awakens or whatever else is this temporary excitement, I think this is short lived. (Typical celebration in wall street maybe? ) Dont know what will be there in the long run but the indexes have pretty much tapered off and leveled off with the same ranges being breached repeatedly. If the sucker had to go up, it would have gone by now. Which means only one direction to go from here. Or maybe not. Who knows? :D.

Back to investment avenues, recently I had posted on having fixed set of investment avenues, bellweather pulses which help you identify them and create or augment them on the fly and maybe you can stick a range in which you are comfortable to buy, hold and sell them. I think that is a pretty good strategy for your ancillary holdings. Assuming your core holdings in index, this ancillary will be real turbo charge or not, and help you get some extra cushion. Various strategies here like dividend paying, growth stocks and so on, dual stocks, swingers etc can be employed for this space. But be very clear about the goals of this stocks set and how and when to convert them back to cash or index positions.

Avenues

It makes sense to go about in the market with limited avenues of investments. These tools are generally tied to the preferred mutual fund company such as American funds or vanguard or fidelity or t.rowe.price and so on. There are many small yet well performing companies too. Similarly, there are various aspects of these vehicles such as index funds or active funds or a balanced fund or target fund which are usually a mix of index and active funds. This post will try to give you a general sense of these tools.
Fidelity for instance is led by FCNTX and co. The rest of the funds are selected based on the prevailing factors. Similarly, Vanguard has VWELX, Wellesley and Wellington funds and general balanced funds on top of index funds. Note that many times, the vanguard funds do under perform active funds such as FCNTX but in the interest of diversification you never would want to stick to any one in particular. Similarly in stocks world, the pulse basket is good but you may want to whittle down that to just few stocks. Now, do not get attached to any one of them and hence it is good to blog in general. For instance, you may look at Pepsi vs coke but look deeper and you may be comfortable with Dr. Pepper. A home depot vs lowe might give you ideas about something else in this sector. Or just stick with REIT. Same with dual stocks such as CVS/WAG or AXP/COF or the famous, or rather the preferred one of this blog which is the FDX/UPS. They might give you a general sense of things. Most importantly, they will give you a sense of how to go about with these investments in the long run. That is very important. This gives you idea about how much to invest, when to get in and when to get out and when to stay put are the three most crucial decisions in the investment landscape. Now, most of us or many of us do not do this on a day to day basis for a living. We just want to safeguard and expand our nest eggs. So most important of all, this should be something that is very very low stress and low maintenance. Think of this as iphone or i* .. so your own iFund. That you are designing this iFund to take care of everything else. Some model is needed to better understand this. The upside of having this iFund would be you would become detached from it and look at it in whole as well as look at it in pieces. As with everything else in life this is a continous learning process. Finance as a whole is not as important as say health, or life, or relationships but they are all interconnected and better to have a stable one in all aspects rather than something that drags the rest down.

Case for Overheated market

The low market of August 24 is long gone. The market of November 2015 seems to be rallying back to dizzying heights though it is obvious that it is getting overheated in most parts.

Just take a look at the rallying components - for instance some of the bellweather stocks which measure the pulse of the market and it is obvious again that they are having greed written all over it. There is euphoria which reflects in the high and insane P/E for these stocks. Are these really justified at this point ? All the indicators - statistical ones seem to be pointing to an ok economy and ok numbers and revenues but certain companies seem to be simply going up for no particular reason.

Take Fedex for instance. It zoomed from 140 to 164 at the time of this writing. Why? Is there any really good news that came out from this sector or company? Oil got shellacked and yet XOM and Chevron and Conoco are doing rather decently well. Home Depot and Lowes are simply disconnected from the real estate market reports. Walmart got beaten up badly and compounded with Buffet selling stake on Walmart. Usually there are a bunch of followers who mimic what Buffet seems to do - hedge funds, individual investors etc. Does not make sense though. Target and Costco are up too though Target is closing stores. Apple is swinging and acting like a volatile startup rather than the biggest capped player in the market. Which probably explains the wild gyration of the market indexes. Same with Google and other tech stocks such as Facebook. MCD breakfast took it to the highest point it has witnessed in decades - which makes it even weirder. And some predictable news are bolstering some sectors and companies more than it needs to be.

Bottom line: stay put, hold on buying any new stocks or indexes or any kind of funds. Unless you are into swinging as the core strategy. But even then if for some reason the market were to turn suddenly downwards, you would held with the bag of stocks like the way folks were in 2007 upturn. The market is in heated to overheated mode - a widely held belief - and likely going to be in this mode until there is an anticipated change in interest rates.

Ting referrals

Ting is a pay as you go data and voice plan that is pretty popular these days with millenials and getting traction amongst masses. It is just ala carta menu instead of the buffet that the big carriers serve. It is a neat service, neat website and the cost seems less for folks who rely on wifi for most part but want the odd directions when then venture out. If you consistently go overage - which is industry term to denote that you go over 1 GB, then you are better off using a fixed plan such as AT&T which gives 2GB for $25 and there are myraid number of MVNOs - another industry term for secondary data providers .. which means these are private operators who offer the plans which run on the Sprint or AT&T or Verizon networks. Boost Mobile or Cricket or Metro PCS give $30 plan. There are a bunch more for $20 or so. These are better than the bigger ones such as T-Mobile.

My referral if you choose to use is https://zfhaib4h08c.ting.com/

This will give us both $25 each and now for a limited period of time, till September end, you can get a ting sim card for $5 with free shipping. The phone selections that they have is not half bad either!

Review of robo advisors

In this post, we will look at some automated rebalancers and robo advisors. These have exploded in the recent few years from 2011 till 2015, slowly picking up steam and investments. Many manage in the tune of billions. If you read my last post about tax loss harvesting, you will see that it is just a tool. A strategy which should be the side one and not the main or core one. It can be used to capture some value. But I would personally not pay a dime to get this in ETF. For stocks, I would stick to my algorithms and core values and beliefs and change them. The tax loss harvesting gives some money back from IRS to soften this blow and maybe serves as a reminder from them to diversify and not take this to heart. Instead, Uncle IRS is telling you to take a chill and maybe get a sandwich with that money and play it cool.

So here let us review all the available or leading players in the tax effeciency business and the final recommendations regarding it.

1) Wealthfront: free upto first $10,000

2) Betterment: 

It has dynamic pricing.

3) hedgeable: same as above, 0.35% - 0.75%

4) https://www.sigfig.com/site/#/home/am

First $10k is free. After that is 0.25%.

5) Wisebanyan seems free but I am not sure about their sign up process or investment strategy

6) Future Advisor: The most impressive in this list apart from Wealthfront. https://www.futureadvisor.com/content/pricing/retirement-advice .. their fees are free.

7) Charles Schwab Intelligent portfolios: Free. This looks good too.

8) Vanguard: New kid in the block and since most of the above funds leverage on Vanguard ETFs  anyway, it makes sense for Vanguard to look at their voyager clients, anyone with more than $50k in assets to use this service for 0.3% fee. I think this is an overkill and  might not be needed.

9) A whole remaining bunch: Personal Capital, Moneyfront?, RebalanceIRA, Liftoff, tradeking, motif?, what-have-you and so on. Even TD Ameritrade pitched me this about 8 years ago for some x% fee. 

Recommendations:

Split the amount between Future Advisor and Wealthfront. This is not a terrible investment to have and even might make you money. But make sure you put the taxable money in here since your IRAs are anyways tax -deferred and hence you might not really need to save the taxes there or take advantage of tax loss harvesting strategy. Second, in view of the tax loss harvesting do not lose sight of the fundamental strategy of buy low sell high. In 2015 the market is high and volatile. Be ready to sell quickly. It is fine to enter into the index funds in some way now and maybe exit if there is a popup. But still overall individual stocks or etfs, invest conservatively and in drops for now. Third, go all out 100% risk in such accounts. I mean, if you want to invest conservatively, you have your own bond funds or CDs where you can hold your money. There is also balanced funds which will do this for you. Vanguard Wellington and Wellesley funds come to the top. Apart from their balanced funds. So with this robo advisors - go 100% stock funds .. which basically is 100% stock etfs with Domestic and Emerging markets mainly.

Apart from the above two, go with the Charles schwab (https://intelligent.schwab.com/) if you want more assurance on the security front. In terms of loss harvesting strategy, basic rebalancing, I would not venture beyond the above three recommended ones. Maybe I will start with something small and gradually build up from there.

One cant fail to notice the way Schwab or Vanguard have structured their funds with minimum requirements of $5000 or $50,000 in their respective accounts. I think they might do a basic rebalancing along the lines of fixed time based or portfolio allocation based rebalancing. It is low fees to nothing for them. So just like at the outset of this research, I am not too sold on robo advisors. It is good to have some in your portfolio to optimize the tax loss harvesting in taxable account. But beyond that there are simply too many avenues out there to make this the core or central piece of your overall investment strategy.