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Old 02-19-2009, 01:55 PM   #21
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samclem, so what do the neighbors think of your Checker?
They love it! I sublet the trunk to them, they use as a living room.
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Old 02-19-2009, 03:07 PM   #22
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300.00 1.06
318.00
.
.
.
907.68
Are you saying inflation has been 6% over the last 20 years?
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Old 02-19-2009, 03:12 PM   #23
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Are you saying inflation has been 6% over the last 20 years?
Depends. Are we talking about electronic gizmos or health care?
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Old 02-19-2009, 03:13 PM   #24
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I was thinking waistline.
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Old 02-20-2009, 07:49 AM   #25
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We have become a buy cheap wally world throw away when it breaks society! We need to go back to appreciating quality and get out of this short term mentality. It's hurting American workers and I honestly believe that it is not good for us as consumers!
Perhaps not good for the consumer (doubtful but maybe) but I fail to see how everyone making a single one-time purchase of everything consumer goods would benefit the American "worker." Just imagine how many people that would put out of work having production dependent solely upon population growth (and, I suppose, breakage and hoarding).
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Old 02-20-2009, 08:49 AM   #26
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Are you saying inflation has been 6% over the last 20 years?
No - showing how 300 = 900 growing 6% compounded over #yrs

6% is the opportunity cost growth rate
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Old 02-20-2009, 09:59 AM   #27
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I think the OP is way, way, way off the mark. Far too much generalization. Far too much just plain wrong.

Just to save typing, I'll be blunt and not bother to sugar-coat this one: "You Get What You Pay For" - that is about as useless as most political bumper stickers. In fact, it is more wrong than right. This crowd is pretty shrewd when it comes to value, how many here drive a Rolls Royce or Lamborghini? Those are expensive, and you know "You Get What You Pay For". In more general terms, price is poorly correlated with quality.

Plus, it is far too "One size fits all". If I need to buy a tool for a one time project, I will buy the cheapest I can get away with. If I'm going to rely on that tool for my livelihood and use it everyday, that is a whole different story. But even then, a "throwaway" makes sense sometimes. I was amazed that my FIL carpenter-contractor had a cheap table saw to use on jobs. He said, it's lighter than the fancy professional ones, when it burns out, I buy a new one. I can buy eight of these for one "pro" tool, and they last long enough for me. Plus, if it is stolen I'm not out that much.

You can't equate "solid wood" with "high quality" and "veneer /plywood" with "low quality". There is junk made from solid wood, and marvelous furniture made from veneer and plywood. The Egyptians invented veneer and plywood and used it on the sarcophagus of the Kings. You think they were trying to cut corners? "Hey, we ran over-budget on that damn Pyramid, break out the veneer!". No, you can do things with veneer you can't do with solid wood. Some artisans have used it to great effect.

I like to have options. We bought some "cheap" furniture for the kids dorm room. I'm glad it was an option, I sure wouldn't want to have to pay "heirloom" prices for that! The fact that it could be "knocked down" was a plus on moving day. That's tough with double-blind dovetail construction.

We also furnished our 3-season room mostly from IKEA. We bought the better stuff there and I think we got an excellent value. And I fully expect it to last as long as we live here. Why spend more?

Electronics? If stuff were made in the old "arts & craft" style, no one could afford a DVD player, and it would be the size of your living room. They fit a couple hundred solder joints in one square inch - no human could solder that by hand.

Now, here's one thing I think the electronics industry could do to avoid some of the "throwaway" economics. I think products could be made more modular. So if something broke, you don't go in and "fix" it, but you could replace the module. For example, the DVD or CD mechanism itself should be something that the user should be able to swap out (they are fairly generic components) themselves with just a screwdriver. Or have done for $20 if they are total klutzes. An approach like that would save a lot of stuff from the trash. This is something the environmentalists could push. And you still get much of the economy of scale from mass-production of the module. In fact, the thread I started about standard charger ports on cell phones plays into that idea.

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Old 02-20-2009, 10:05 AM   #28
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I usually buy the cheapest crap I can find that I expect to perform adequately. I try to focus on life cycle costs as well. For example, I may be able to buy a $20 pair of slacks or a $20 shirt that will wear out in 4-5 years but will be unfashionable in 3-4 years. Paying $80 for an article of clothing that will last twice as long but still be unfashionable in the same length of time is an example of something I would not do.

The $60 I save on that article of clothing can be put to better uses elsewhere. Either invested, used to buy goods or services that I value more highly, etc.
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Old 02-20-2009, 10:13 AM   #29
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Now, here's one thing I think the electronics industry could do to avoid some of the "throwaway" economics. I think products could be made more modular. So if something broke, you don't go in and "fix" it, but you could replace the module.
Other candidates:
- Standardized laptop batteries. The sub-cells inside the things are standardized, there's not reason there couldn't be 3-4 standard laptop batteries. They are electrochemical reactors which wear out faster than the other laptop components, and I'm sure many people ditch their 4 YO laptops rather than pay $90 for a new proprietary battery. Standardized batteries would not only encourage folks to hang on to their laptop computers longer, the greater efficiencies in rebuilding a few standardized battery styles would encourage recycling of the batteries. Rebuilding them with new cells might be a good US-based business, as the high weight/high dollar value might make it more profitable to do it domestically.
- Modular laptop screens. The display is a significant part of the cost of laptop computers, and I think the technology is fairly mature. I'd like to have the option of buying less expensive laptop (or one with more features) and re-using the screen.

You are rtight, this is an area where the two "green" constituencies (environmentally conscious consumers and those who are careful about spending their "green") are allied. It would seem that a company could exploit this.
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Old 02-20-2009, 10:15 AM   #30
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No - showing how 300 = 900 growing 6% compounded over #yrs

6% is the opportunity cost growth rate
I don't hold with that philosophy. If you want opportunity cost why stick with 6%? Where does that magic number come from?

If you had bought $300 worth of microsoft in '89 you'd have $14,700. So really that purse cost $736 a year if you are going to look at missed opportunity as a metric.
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Old 02-20-2009, 10:27 AM   #31
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I don't hold with that philosophy. If you want opportunity cost why stick with 6%? Where does that magic number come from?

If you had bought $300 worth of microsoft in '89 you'd have $14,700. So really that purse cost $736 a year if you are going to look at missed opportunity as a metric.
You have to include an opportunity cost to do an honest appraisal. We can differ as to the %, but 6% seems very reasonable. From Jan 1970 through Dec 2008, the avg return of the S&P 500 (incl reinvested dividends) was 9.7% .

I'm sure you are using some estimate for future growth of your retirement funds, right? What APR are you using?
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Old 02-20-2009, 10:54 AM   #32
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Other candidates:
- Standardized laptop batteries. The sub-cells inside the things are standardized, there's not reason there couldn't be 3-4 standard laptop batteries. They are electrochemical reactors which wear out faster than the other laptop components, and I'm sure many people ditch their 4 YO laptops rather than pay $90 for a new proprietary battery. Standardized batteries would not only encourage folks to hang on to their laptop computers longer,
What, and deny pc makers the un-PC commerce of selling you the latest googleflop machine with a new microshaft OS. And thus reducing their profits? Why that is anti-business.
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Old 02-20-2009, 11:03 AM   #33
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You have to include an opportunity cost to do an honest appraisal. We can differ as to the %, but 6% seems very reasonable. From Jan 1970 through Dec 2008, the avg return of the S&P 500 (incl reinvested dividends) was 9.7% .

I'm sure you are using some estimate for future growth of your retirement funds, right? What APR are you using?
Might want to check your numbers again. Looks like you're using a playbook from the turn of the millennium. or maybe by average you mean median and not actually realized returns. The total shareholder return on the S&P since 1970 is only 5.79% as of last night.

I have an array made up in Spreadsheet which shows growth from 0% to 15%. I don't depend on more than 3% even though I've been getting around 10% the last couple years.
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Old 02-20-2009, 11:28 AM   #34
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Might want to check your numbers again. Looks like you're using a playbook from the turn of the millennium. or maybe by average you mean median and not actually realized returns. The total shareholder return on the S&P since 1970 is only 5.79% as of last night.

I have an array made up in Spreadsheet which shows growth from 0% to 15%. I don't depend on more than 3% even though I've been getting around 10% the last couple years.
I don't have the figures "as of last night", but as of Dec 2008, Bloomberg listed total returns (incl dividends, as I said) for the S&P 500 from Jan 1970 through Dec 2008 as "approximately 9.7%. " They say they got their info from S&P.

So, alert S&P to the mistake you've found in their data, I'm sure they'll be thankful. Or, maybe they'll find you didn't include dividends, etc.
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Old 02-20-2009, 12:37 PM   #35
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I don't have the figures "as of last night", but as of Dec 2008, Bloomberg listed total returns (incl dividends, as I said) for the S&P 500 from Jan 1970 through Dec 2008 as "approximately 9.7%. " They say they got their info from S&P.

So, alert S&P to the mistake you've found in their data, I'm sure they'll be thankful. Or, maybe they'll find you didn't include dividends, etc.
Yeah that was without dividend reinvestment as that wasn't readily available. In that case they're only down to 9.31% average as of last night.
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Old 02-20-2009, 12:41 PM   #36
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Yeah that was without dividend reinvestment as that wasn't readily available. In that case they're only down to 9.31% average as of last night.
Accepted.
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Old 02-20-2009, 12:46 PM   #37
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I don't hold with that philosophy. If you want opportunity cost why stick with 6%? Where does that magic number come from?

If you had bought $300 worth of microsoft in '89 you'd have $14,700. So really that purse cost $736 a year if you are going to look at missed opportunity as a metric.
Sanclem gave a very good response.

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Old 02-20-2009, 02:11 PM   #38
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Frugality of Apathy,

If your discount rate is really around 3% nominal, then you'd be best off just plunking your change in TIPS or some government bond and accepting returns way higher than your discount rate. Heck, TIPS are yielding around 3% real right now.

Either that, or you have a higher discount rate, opportunity cost, or whatever you want to call it. 6% sounds like a good conservative number.
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Old 02-20-2009, 03:44 PM   #39
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That's always the toughie, figuring out where the cost/benefit curves intersect.

I won the bet on a 20" Honda lawn mower, $600 in 1986. It still runs fine, starts on the first pull, but I keep up the scheduled maintenance on it. Only repairs have been two springs for the self-propelled engagement and one blade that simply wore out from too many sharpenings.
That kind of quality is hard to find. The perfect design for that person. It makes a task feel like a joy.
You don't really know how good it is until you've owned it for a while. That's why I value personal recommendations so highly. Especially on this forum.

I can count on one hand the products / services that I like as much as Walt likes his mower. Cost of the item does not assure it will meet your definition of quality. Low cost is more likely to ensure that it will not meet you satisfaction.

Items of high quality are a rare thing.

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Old 02-20-2009, 06:40 PM   #40
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Items of high quality are a rare thing.

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I think that is selective memory.

Remember having to change the points and plugs on a car every 10,000 miles? Hope it starts in the winter if you can finagle the "choke" just right and not "flood" it (terms our kids do not even know)? Took a picture of the odometer when it hit 100,000? Common nowadays, with little maintenance and 1/1000th the pollution due to ECM and catalytic converters.

Remember floppy disks that would lose your paltry amount of data on a pretty regular basis? Now a 4GB thumb drive is $12, and I've never had one fail.

Remember having to adjust the Horizontal and Vertical on the TV, and slowly adjust the tuning knob on your radio to bring in the station? Now, just push a button and it is locked on.

Remember "mouse balls" gumming up with lint and dirt and skipping? Now they are all optical tracking.

And it's not just high tech stuff- I re-sided the back of my house with cement-board siding. Rot proof, insect-proof, holds paint 4x longer than wood, doesn't crack, knots don't fall out, the woodpeckers ignore it, hail won't damage it, and it looks great.

Yeah, rare.

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