Good Investment Advice?

Gold set a new record today, closing at $1422. Back in September 2008, when the homeowner's bailouts were first being proposed, I highlighted Peter Schiff's cynical take on it - namely, recommending that people should stop paying their mortgage and use the money to buy gold. He pointed out that you could probably go a year or two without getting kicked out of your home, so why not take advantage of the situation. He was probably right about being able to last 2 years without losing the house - at least that seems to be what often happens. But as pure financial advice, how would it have worked out?

Well, not bad as it turns out. Let's assume you had a 5.5% mortgage with a $300k balance and a $2500 monthly payment, and you immediately took advantage of this advise and bought shares in the SPDR GLD ETF starting September 5, 2008, and continued to do so (on the first Friday of each month) right up thru last Friday, 12/3/10. You'd be up around 20k on the deal. Here's how it looks each month:
The above also assumes a $100 late fee for each month rolled into the mortgage and assumes no other interest penalties. Essentially, the mortgage cost is the value of the monthly payments plus late fees accumulated at the assumed 5.5% rate each month. Now as to whether this $20k bonanza would be worth trashing your credit rating I wouldn't know - but I'm guessing not, but don't really know what a credit rating is worth. I wonder if anyone literally did take Mr. Schiff's advice and took such a brazen move?

But even investing in the S&P 500 would have been fruitful - a plopping your mortgage into the SPY ETF would have garnered a $10k gain:

I Wonder If Tom Friedman Will Be Writing about This?

Our information overlords make it mandatory that in all public discussions it is understood that there is no such thing as "intelligence"; that if there were, it wouldn't be important to success anyway; and if it were, then it certainly isn't genetic; so all we have to do is implement a "race to the top" and "leave no child behind" and we'll have all the smart people we could ever need. Do you think the People's Republic of China fears engaging in these thought crimes? From Steve Hsu:

Some of the world's fastest supercomputers are being set up in Hong Kong to address the age-old mystery of human intelligence. It will survey DNA samples from 1,000 child prodigies from China's best high schools, comparing them with samples from 1,000 children of average intelligence, searching for genetic variations.

...By the end of this month, 115 of the world's fastest sequencers ...will be able to sequence the equivalent of 1,000 human genomes a day, and soon surpass the entire sequencing output of the United States to become the world's largest sequencing centre.

The study by BGI, which receives strong financial backing from the Shenzhen and mainland governments, will be the largest-scale examination of its kind. Ethical and privacy concerns have hindered such work in America and Europe...Ever since Nazi Germany misused science to support its murderous racist and anti-Semitic theories, Western societies have been extremely sensitive about linking genetics to IQ.

Ah yes, Nazi Germany, the gift that keeps on giving. Of course, China has its own murderous past, but of the opposite variety, when Mao forcibly starved tens of millions of his own people with his Great Leap Forward followed by his violent pogrom against modernism with his Cultural Revolution. So China feels no guilt pursuing a genetic understanding of intelligence. Indeed, China makes no apologies for its past whatsoever, as they currently showcase the now fully-discredited Mao as if he were George Washington (though come to think of it we proudly display Washington's image as if his vision of America were anything like what we have today).

Chris Christie

As a New Jersey voter, I feel obligated to comment on our YouTube-sensation Governor, Chris Christie. Christie strikes me as being similar in temperament to another prosecutor-turned-Republcan-star Rudolph Giuliani. Giuliani gained fame prior to 9/11 for his no-nonsense approach to street crime and his disdain for the various race-hustlers who tried to fight him. Christie's nemesis, the teachers union in New Jersey (NJEA), is only slightly more favorably viewed today than were street criminals in the early 90's.

A large part of what is driving Christie's crusade against the NJEA is just pure pettiness, I think. The NJEA went all out against him, and now it's payback time. And since professional teachers are suddenly the pariahs of public discourse, this is working out for him just fine. Of course there are very serious budget issues and something has to be done, and in particular promised pensions are not sustainable.

Christie doesn't strike me as having any real "conservative" philosophy. I think he has basically a traditional preference for private enterprise, limited government, law and order, and a skepticism toward liberal causes such as environmentalism and labor. So he surely stands on the right side of the Liberal/Conservative divide. But I suspect he's more of a neo-con. Education reform is a very neo-connish type of crusade, with its assumption that the holy grail of equality can be best achieved by the tough-love application of old-fashioned, conservative policies.*

Most alarming, he is apparently very soft on immigration. He's been careful not to come out with any position, but he seems to be open to the idea of amnesty. And he supported the firing of a NJ Transit worker who was caught on video tearing up a Koran on his day off at GZM protest a few months back. So, like Giuliani before him, he may be the darling of the right, but if he tries to take it national, I doubt he'll even make it to double-digits in the primaries once Republican voters see the whole package.

* Remember that that is the fundamental definition of a neo-conservative - one who promotes conservative policies to achieve liberal goals.