DIY Annuity

Allan S. Roth writes in the April 2011 issue of Financial Planning a technique for a do-it-yourself annuity. Essentially, "buy the highest-paying long-term CD, investing just enough to ensure that the CD will grow to equal the entire pot of money you want to invest. [snip] Then invest the remainder in a low-cost stock index fund or ETF. Your clients are guaranteed to get back at least their investment." For example, with $100k to invest, put $72,629 into a 10-year CD with a 3.25% APY and the remaining $27,371 into the Vanguard Total Stock Market ETF (VTI). He sights the benefits being lower income tax, an Uncle Sam guarantee [but only up to $250k currently -- more than that you can purchase multiple CDs], lower withdrawal penalties, a free death rider [step-up tax basis on the stock ETF], and emotional peace of mind during market crashes. I think you could also create a CD ladder if you need income. Interesting...

"Set It And Forget It" In Retirement Doesn't Work In Bear Markets

In the April 2011 edition of Financial Planning magazine, Temma Erhenfeld writes in an article Outliving Your Money sights a study from T. Rowe Price that shows that those who retired in 1/1/2000 using the standard withdrawal formula of 4% of assets the first year with yearly 3% inflation adjustments would only have a 6% chance of success by 2011! This is with a typical 55% S&P500 and 45% Total US Bond portfolio. The study suggests the best option is to reduce withdrawals by 25% for three years after each bear market bottom (in which there were two in the period studied). Following this option brings your chances of success to 43% in 2011. Frankly that's still not good enough odds in my book. My suggestion would be, in addition to this suggested technique, to diversify the portolio even more (at least add foreign and emerging market stocks and bonds, REITs, and commodities) in addition to using Mebane Faber's timing model: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=962461. Furthermore, their study assumed a 10% stock return and a 6.5% bond return. That's really pushing it in my view. Without any bear markets, the expected chance of success under these conditions was 89%.

Director Alejandro Gonzales Innarritu on the Importance of Sound and Music in Movies

In the February 2011 issue of Post Magazine, Director Alejandro Gonzalez Inarritu states, "For me it's hard to overestimate just how important [sound and music] are to my films. I think there's a dictatorship of the image in all films, and I really like to challenge that. For me, sound is even more important than what you see on screen, in the way that it hits you. The emotional chords are much more sensitive to sounds than images, because they're more abstract, and like smells they can trigger a much deeper understanding of things. When you see images, they're very concrete. When you hear them, they're abstract in the way they trigger your own emotional baggage.

I spend a lot of time looking for just the right sounds and textures for my films, and I've worked with sound designer and [sound] editor Martin Hernandez, who has designed all my films since we were at college together. So he knows exactly what I like and want, and in this case we really pushed it, just as we changed the formats to get the visuals wider. So little by little I wanted to keep all the scratches and sounds of the lavelier mics to come up in the mix, which we did at Universal.

There's the scene where Uxbal embraces his daughter in the bathroom, saying goodbye to her, and you could hear their heartbeats in the laveliers, and the classic first session with the mixer is where he wants to erase all that.

I said, 'Wait -- this has to be pumped up, not removed!' Because this apparent technical mistake is for me a statement. This guy's hearing every heartbeat, every scratch their clothes make. So this hyper-realistic approach to the sound mix was very important to me, to make people aware of his journey and the hyper-sensitive last moments of his life.

The music is the same. I need to hear a film before I start it -- what are the sounds, what is the texture, what is the tone? A film for me always begins with a vague idea, often a bit of music, and this began when I was listening to Ravel's Piano Concerto in G Major."

THX pm3 Approved Equipment 2011

LOUDSPEAKERS

Blue Sky
SAT 6.5
SAT 12
SUB 12
SUB 15

Procella Audio
P8
P815
P18

Lipinski
L-150
L-707

Pelonis Sound
PPS12LF
PPS18LF
PPS110P
MODEL 215A

Genelec
1031A
1032A
1037C
1038B
1038BC

Dynaudio
M3F
Air-6
Air-15
Air-20
Airbase-2

Meyer
HD-1

MK Proffesional
2510
S150
SS150
MX350 MKII

Mackie
HRS-120
HRS-624MKII
HRS-824MKII

Yamaha
MPS10 STUDIO
MPS7 STUDIO

JBL
LSR-6332
LSR-6312P
LSR-25P
LSR-6328P

STUDIO MONITORING SYSTEMS

Yamaha
DM1000 V2
DM2000 V2
02R96 V2

Studio Technologies
Model 78/79

Stephen Frears on Film Music

In the November 2010 edition of Post Magazine, Director Stephen Frears says about Music Composer Alexandre Desplat, "He gives me what I don’t know that I want, because I haven’t a clue (laughs)." So many creative works from teams, whether it be movies or video games or what have you, would be better off if the principals had that attitude.

"Fair Value" Income Portfolio

Geoff Considine, another one of my favorite investment authors, wrote an article called Yield vs. Risk in the October 2010 article of Financial Planning. In it he provides a chart of the yield of various income vehicles as a function of risk:


Based on this chart, he later constructs a portfolio that he calculates will return 6.8% annually with volatility of 11.4%, less than half of that of the S&P 500:


He calls this the "fair value" income portfolio where its expected total return is what it's current yielding.

Note that Kinder Morgan and Enterprise Products are MLPs, and you can probably substitute any of the MLP ETNs or one ETF for it (although there has been some controversy over their effectiveness as investment products). You can probably also use utility and/or telecomm funds for Con Ed and AT&T.

This is probably a good starting point for a domestic income portfolio. I think to round things out, you've got to go international. Add in REITs, TIPs, and peer-to-peer as well.

The Mythical X-Curve

I remember reading this when I first stumbled across it maybe a decade ago. It's just as interesting and applicable now as it was then.

The Mythical X-Curve

This one speaks for itself. I'd love to actually experience a movie in one of John F. Allen's theaters. Too bad there aren't any in California.