I was relayed a story from my sister that I thought was worth mentioning. She was at Best Buy a few months ago, and purchased a CD. At the register, she was asked if she would like eight free issues to Rolling Stone and Entertainment Weekly. “They’re free?”, she asked, and was told yes, they were free, no strings attached. So she signed her name on the computer pad to pay for CD, and left.

I am sure you can tell what is coming next. A week ago, she sees two bills totaling $60 on her credit card for subscriptions to Rolling Stone and Entertainment Weekly.

Now you could argue that she should have read through the small fine-print receipt she received more carefully, but I feel as though the fact that you are agreeing to a recurring magazine subscription should be made painfully clear to the consumer.

Almost worse though is the way Best Buy employees sell these subscriptions, often straight up lying to the consumer in order to sell more magazines. It is also difficult to hold them accountable, two months later and often without the receipt which might show the employee’s name.

Here is the important part of the story: My sister was able to call both companies and have them charge back the $60 to her card by complaining about the way she was sold the magazine. So if you or someone you know is involved in a similar situation, do not underestimate what you might accomplish by calling the company and giving them an earful (politely, of course).

At the beginning of this week, the investment advisory service I worked for posted this notice to their subscribers:

“We believe yesterday’s deeper-than-expected Fed rate cut, along with the market’s super-strong reaction, has kicked off the market’s next bull run. What impressed us most was the significant power shown in the broad market; up volume on the NYSE totaled nearly 30 times that of down volume, while advancing stocks outnumbered decliners by more than 9-to-1. (We get our figures from the Wall Street Journal, FYI.)

These are highly unusual readings … and history tells us they’re very bullish. Jason Goepfert of sentimentrader.com wrote that there have only been seven other times when up volume swamped down volume by 25-to-1 or more. Three months after these seven occasions, the S&P was up an average of 9.4%, and better yet, there was minimal drawdown during that time (read: the market didn’t pull back much at all after those big up days; it usually continued higher).”

At the end of the week, the markets closed – ending the best week of gains for 2007. And what a week it was! One of my core holdings, Baidu (BIDU), the “Google of China”, is up over 12%. In fact, because of its strong performance, my portfolio nearly doubled in value and is now up 22% for the year. I am sure I’m not the only one who benefited that much from this week either.

I am a huge fan of money management software. Believe it or not, one of the highlights of my day is coming home from work and updating my finances in Quicken. Unfortunately, Quicken has not improved much over the years, and still leaves a bit to be desired. It’s somewhat bloated and can run a bit slow, especially with online updates, and the reporting features are not as intuitive as they should be. One of the most annoying changes to Quicken recently was how they started charging banks for the direct connect feature, meaning that for most banks you have to log in and download your recent transactions manually.

So not surprisingly, I was excited when I was invited to the beta for Mint, a new online money management site in a similar vein to Yodlee and Wesabe. I have been using it for a few weeks now, and with the public launch yesterday am excited to publish my review for it.

Mint isn’t necessarily a competitor to Quicken, but instead tries to approach money management from a different angle. The basic premise of Mint is getting a handle on your current money situation, whether it be your bank balance or recent spending habits, all from a single internet portal. By just doing that, it already has a huge leg up on actual software in that it’s accessible from anywhere. It does not attempt to act as the be all and end all of money management, so don’t expect it to necessarily replace the current juggernauts Quicken and Money so much as to serve as a supplement to them.

Overview
So let’s get down to the details. When you log into Mint, you are taken to an overview screen that lists your “financial health” on the left (your cash accounts versus your debt accounts), with alerts, spending trends, and ways to save on the right. This screen alone is a good way to get a quick snapshot of your finances. One of the greatest benefits of Mint is consolidating all of your financial information, so that you can spend ten seconds logging into Mint instead of ten minutes visiting all your banks and credit cards to get the same information.

Mint’s Alerts function takes advantage of the fact that this is indeed online money management, in that it constantly monitors your accounts for low balances or credit limits. My favorite feature was alerting me whenever a transaction over a certain amount occurred (either for a single transactions or for the day), which is a great way to get an instant notice if anything suspicious is occurring to your accounts.

Transactions
The next page in Mint is the Transactions page. This page, not surprisingly, lists recent transactions from all of your accounts. You can also tell it to display transactions from only specific accounts. Each transaction is automatically assigned a category, based on either a guess by Mint itself (which is usually fairly accurate), or on what you last categorized that transaction as. Categories are very important to accurately assess your spending habits, so it’s also important that Mint provides easy means to categorize transactions.

Mint has a list of about 100 categories to choose from. While the categories and subcategories make sense for the most part, it’s a bit frustrating to not be able to create new categories. If you do need to mark something in a way that you can’t through categories, Mint does provide the means to label transactions anything you want. This is also the closest Mint comes to providing classes. For instance, you may have a category for meals, but want to label some meals as business expenses.

Spending Trends
The Spending Trends page starts by showing a pie graph of your recent expenses, for which you can change the date range easily. It also shows bar graphs on your spending in select categories, such as entertainment and shopping. The simplicity of this page is its strength, as it gives you a very good overall view of your spending habits. On the other hand, it is the extent of Mint’s reporting features, but to be fair I don’t know if I could expect much more out of online money management.

Ways To Save
The next tab is Ways to Save. I like the idea behind this, and I understand it being a great way to draw people in to use the system, but after spending thirty seconds looking it over the first time I used Mint, I haven’t gone back. It did give some solid advice, such as saving money by using DSL instead of Cable, but I already knew everything it was suggesting. It also incorrectly reported that I was getting 0 interest in my online checking, and 0 rewards from my credit card, but those just may be kinks that are being worked out.

Accounts
The last tab, Accounts, is where you can add, remove, and configure your checking, savings, and credit card accounts. This is a very straightforward process, as adding an account simply requires you to enter your current login information. You never have to input your credit card number or checking account number.

Mint supports more than 3,000 banks and credit cards. In other words, if you use a major national chain chances are they are supported, while it may be more of a flip of a coin for local branches. I had no trouble adding my accounts for HSBC Direct and American Express. Citizens Bank and Chase were different matters though. One of the challenges online money management sites have faced recently is the increased security implemented at banks. Citizens Bank has a multi-step login process which includes image verification, and sites like Yodlee and now Mint seem to have trouble stepping through that. I also had trouble getting my most recent transactions from my Chase credit card, though according to their help forum they were working on that.

The site as a whole functions fairly well. The interface is very well done in that it is intuitive to use and looks beautiful. However, the delay switching between tabs can be very frustrating at times, with it taking five to ten seconds to load a new tab (the site is extremely slow at the moment due to the public launch, but this was an issue during all of the beta).

Security
Most people are worried about the security, and that’s understandable as your entire financial life is now accessible from one site. However, the main security issue is the password you use to log in with, which is a concern at any site. Even if a hacker does gain access to your account, all they can do is view only the same information you see at Mint. None of your financial information is stored at Mint, but is instead sent to online banking powerhouse Yodlee. Yodlee is used by a huge number of financial institutions, so it is possible some of your banking information is stored there even if you don’t use Mint. Overall, I feel comfortable with the security methods Mint uses.

Wish List
Mint has been in development for a long time now, and has a very good number of features built in. However, there is a very long wish list of features, some of which you could argue are essential to money management. The first, I would say, are personalized alerts. Mint does a good job of telling you when your bank account is low, or when a credit card is due. However, it can’t remind you of bills to pay. As I have nearly a dozen bills each month, my main use of Quicken is for it to keep me updated on which bills are paid and which are coming up. This sole missing feature alone would prevent me from using Mint as my main source of money management.

I also would require some type of export utility before I ever replaced Quicken with Mint. I backup Quicken daily, and feel secure knowing I have a categorized history of my finances for the past seven years. All I would need is some sort of standardized backup option (such as a comma separated) for my peace of mind.

Other wanted features include splitting transaction categories, renaming accounts, manual transactions (such as cash), importing data (such as old Quicken accounts), and most notably budgeting. It is somewhat odd that they decided to not include budgeting into a product features ways to save and spending habits.

Conclusion
Will I use Mint? Assuming they fix Chase credit cards, and are able to keep page loads under five seconds, then yes. Unlike Quicken, it requires minimal upkeep, and even if I completely ignore the categories I can at least get a quick overall view of my finances and transactions. However, like I mentioned above, I will have to use it as a supplement to Quicken until, and if, they add in some additional features. For some people, Mint may do all they need. Other people may already be using Yodlee or Wesabe, and continue to. I’ll be checking Mint during lunch at work, updating Quicken after dinner, and still looking for the quintessential piece of money management software that will make that part of my life easier.

All screenshots are from Mint’s feature page, not my actual accounts

As you can probably tell, things have appeared quiet here for the past few weeks. This is due to several reasons. First, I am launching the new website at my company in three weeks, which has been a eight month project. So as you can imagine, the last three weeks are fairly hectic!

Second, to be honest, I just haven’t come across much newsworthy information on the personal finance or investment front recently. Sure, I could post about the dangers of credit cards, or how not buying coffee every day can save you one zillion dollars (check out KMC’s wonderful post about how this subject has been beaten to death), but I really feel as though those subjects have been squeezed dry by the personal finance blog community.

While I haven’t written about it much about it, you can believe that I’ve been following the stock market with a close eye ever since the massive drop in late July. However, I am happy to say that my tiny blip of a portfolio is doing wonderfully, up 14% since I started the portfolio over at Zecco on June 12.

So how’s an equal investment in the S&P 500 index, say the VFINX (Vanguard 500 Index fund) doing? It’s up 0.1%. In terms of real dollars, it’s up fifty-six cents since June 12th. My portfolio has gained $70. That means the portfolio is outperforming the index 125 fold. Not bad!

What does this mean? Am I the next Warren Buffet? Are index funds complete scams? I’d have to say a powerful “no” to both of those. First, a lot of my strong stock selection is thanks to the genius market analysts I work for at this investment advisory service, and I am lucky to get such information for free. Second, as you can see from the graph below my portfolio is extremely volatile, and a month or two ago I wouldn’t have been singing the same tune.

In any case, it’s incredible to see the difference between two hypothetical investments like this.

One last thing: I would like to thank everyone who remained subscribed to the RSS feed during the past few weeks. I had anticipated finding only two subscribers when I checked for the first time today (my wife and my mother of course), but instead there were even more than a few months ago. I appreciate it!

Things have been quite busy around here! My wife and I are still in the process of starting our new business, which I hope to reveal and discuss the details of within a week (which is when we hope to receive our first shipment of products).

In the meantime, I thought I would mention our decision to go nearly completely to internet banking for all of our finances. Currently, we have two checking and a savings account at Citizens Bank, a decent sized bank in New England. Overall, I don’t really have any complaints about them. The only actual problem I had was with duplicate Quicken transaction downloads, which in actuality is a severe hindrance for keeping accurate records in Quicken. It seems as though Citizens Bank posts ATM transactions twice to their online banking, as Quicken detects two different entries. Besides that issue though, we also aren’t completely happy with the ATM’s we live near. Also, our savings account there is useless due to its paltry interest rate.

Since we needed to open a new account for our business anyway, we decided to take this opportunity to move all of our accounts. The biggest benefit to this change is that we will have every account (sans credit cards and brokerages) at the same location - HSBC Direct. That will include:

• My personal checking
• Wife’s personal checking
• Business checking
• Emergency savings
• Long-term savings

All accounts will be joint. We did decide to maintain separate checking accounts though, as we still don’t feel comfortable with combining our purchases onto one account – though we do trust each other’s spending habits.

So far, the process of opening the account at HSBC Direct has been very positive. I called with a half-dozen questions and had them immediately answered by a representative who picked up my call immediately. The online account opening process was straightforward, and the ability to save the application definitely helped.

The only oddity was when my wife was asked to fax or email a document confirming her address. We’re not sure why this happened, but after emailing this document this morning I received confirmation that our application had been approved only two hours later!. Usually this “processing” tends to take several business days, so I was very impressed to receive a response so quickly.

So why did we choose HSBC Direct?

• Multiple online checking accounts!. Originally I was planning to open these accounts at ING, but to my dismay I found out you can only have one Electric Orange checking per overall account. Thus, we would not have been able to consolidate all of our finances.
• 3 reimbursed ATM transactions per month, at any ATM. This is a really big benefit. Not having to worry about what network your ATM is in will be a great freedom. As long as the 3 transactions are per specific account, then we shouldn’t have a problem as I rarely use the ATM more than 3 times a month.
• Decent interest rates on checking and savings. The checking is 2.5% interest, which is lower than, say, ING, but higher than the 0% we get now. Also, we don’t tend to leave that much in our checking anyway, as we funnel extra money into savings. The savings gets 5.05%, which is good enough for us.

The investment advisory publisher I work for has both a value (buy and hold) and several growth (average 4 month hold time) publications, and both do well and have at least outperformed S&P every year. Their current emerging markets publication is up 55% this year, a lot of which was due to their ability to move a fair amount of holdings into cash about two weeks ago.

Both strategies work. Sure, you can time badly and “miss the best 50 days of trading and lose 10% of your portfolio!” I love how buy-and-hold people throw that argument out all the time, because half of what market timing people do is watch the market to make sure they don’t miss those days. Not to mention the opposite side of that argument: being IN the market for the worst 50 days, is rarely, if ever, brought up!

Personally, I just find growth investing more exciting. Waiting two years for Home Depot to go up 10 points just isn’t very thrilling. Chasing CROX and First Solar up 150% is though. Both strategies are viable, but people defend or insult them like they’re talking about religion.

In other news, the lack of updates has been due to me coming home from work and working with my wife on starting our new small business, for which we hope to sell our first product in two weeks. I’ve been writing some pieces on the process of starting a business like this, but would rather wait until that process is complete before publishing anything.

The 113th Carnival of Personal Finance was released today at My Open Wallet. I am pleased to have been chosen as one of the editor’s top picks with my post, Cleveland versus Boston: A study in housing costs.

On that note, my wife and I made a short jaunt up to Salem and Nashua, New Hampshire this weekend to look at housing up there. We had noticed online that the houses there are quite a bit more reasonable than nearly anywhere on the east coast of Massachusetts. The major downside I saw was increasing my daily commute ten-fold (as I live in the same town where I work, it would take me instead nearly an hour if I lived in New Hampshire).

Unfortunately, we soon realized that these New Hampshire towns were far from suburbs. While we weren’t able to fully explore the area, what we mostly came across were rural areas spotted with strip malls.

This weekend, we are instead going to look at Durham, New Hampshire, home of the University of New Hampshire and hopefully an area closer to what we are looking for.

I could leave it at that chart, which is a chart of the S&P 500 (specifically the Vanguard 500 Index) over the past seven years, but I’ll delve deeper. I have to first admit that I am biased. I work at an investment firm who focuses on market timing, which is as close to the antithesis to buy and hold as you can get, so I am constantly surrounded by proponents of timing.

What is buy and hold? According to Wikipedia, “Buy and hold is a long term investment strategy based on the concept that in the long run financial markets give a good rate of return despite periods of volatility or decline. This viewpoint also holds that market timing, i.e. the concept that one can enter the market on the lows and sell on the highs, does not work or does not work for small investors so it is better to simply buy and hold.”

Often, the same people who advocate investing nearly all your portfolio in an index fund and leaving it at that (you can read my rebuttal to that approach here) also are fans of buy and hold. However, even one of the most well known investors who has preached the buy and hold strategy in the past has this to say:

“In a USA Today interview some years ago, Warren Buffet was asked what he thought of the “buy & hold” strategy as a viable strategy for the less sophisticated stock market investor. He said in short that it was absurd. He went on to name a long list of companies, most of their names were household words, whose stock price had collapsed 20 years ago and had yet to recover.

He summed up his warning to would-be buy & hold investors as follows. If you want to buy and hold stocks, you had better have a buy & hold portfolio. He went on to explain that unless you had real bargains to begin with in your portfolio, the odds of time making you whole were low at best.”

Source: http://www.worldchiropracticalliance.org/tcj/2002/oct/oct2002l.htm

I do believe that certain buy and hold strategies can be successful, but this involves much more than simply buying a stock that you like at an arbitrary date and holding it forever.

Personally, I just have a hard time swallowing the fact that it is impossible to predict where the market is going. Two weeks ago, when my company’s indicators started pointing to market volatility, news headlines were screaming about credit and mortgage concerns, and a large number of stocks were hitting new lows, they started moving more of their portfolio into cash. On the two days the Dow dropped several percentage points, they were nearly 40% in cash. At certain points in the bear market at the beginning of the century, they were a full 100% in cash.

It is just hard for me to watch the stock market plummet day after day, to see all the signs that the market is weakening, and yet let my stocks sit there and take a beating.

It is true that if you time the market badly, you can hurt your portfolio even worse. Buy and hold supporters are fond of saying how if you missed 5 months of the best days in the stock market over two decades, you would have lost several percentage points worth of gains to your portfolio. Of course, you would have to be pretty terrible at market timing to miss five entire months worth of gains.

Earlier this week I was spending my last evening at home with my family, which includes my younger, twenty-one year old sister who just graduated from college. She was using her laptop to check her bank account when she noticed a charge from the United States Postal Service for $54.10 from two weeks ago.

She knew she had been to the post office on that date, but at first couldn’t remember what she could have gotten for $54.10. Then, she remembered buying a ten pack of 41 cent stamps. Yet the post office had apparently added $50 to the charge.

She immediately became outraged, frustrated and depressed. I didn’t blame her either. The post office employee had apparently charged her an extra $50, either out of error or with a malicious intent by getting $50 cash back for themselves.

After trying to calm her down, my first question was whether she had the receipt. She said no, but again I couldn’t blame her, as I wouldn’t have kept a receipt for a $4.10 purchase either. I then asked if she remembered actually signing the receipt for that amount, but all she could remember is the clerk telling her it was a total of $4.10.

I have to admit that I had to bite my tongue at this point. What I really wanted to ask her was why she was using a debit card in the first place. As I’ve mentioned before, I personally find debit cards way too risky. With all of the issues I have had in the past with incorrect charges to my credit card, I shudder to think how I would have felt if those charges were immediately deducted from my bank account. I’ve had enough issues with deductions from my bank account already, thank you very much!

It was especially problematic for my sister as, being a recent college graduate, as she only had a hundred or so dollars in her account and was worried about checks bouncing. She started searching for her bank’s phone number, in order to start the process of getting her money back. At this point, my father casually mentioned that if it wasn’t an accident, the clerk may have just used cash back to take $50 for himself.

My sister stopped dead. A guilty smile formed on her face, and she said “Um … I just remembered, I got $50 cash back.” My relief over her not actually losing the $50 overcame my disbelief at her having somehow completely forgotten about this small detail, and we had a nice laugh about it. My father and I both put away our wallets at this point, as we coincidentally were both about to give her $50 to help her feel better about the whole ordeal.

The lesson of this story still holds true though. I consider debit cards to be a dangerous form of transaction. If anything, credit cards give the consumer a great deal more protection, as well as giving them more power when it comes to negotiating questionable charges. It is well worth learning the challenges of controlling spending habits for all the benefits a credit card offers.

Well, the past couple weeks sure have been an interesting ride. I was on vacation, and only had slow, limited access to financial news. So imagine my horror when I find that the bottom fell out on two of my stocks, Jones Soda (JSDA) and The9 (NCTY). In fact, Jones Soda fell so much that my automatic 20% loss stop order was placed for me, preventing me from feeling the full impact of the stock’s drop to $10. Good to know those work – thanks Zecco!

Since my last update, I have sold Fuel Tech (FTEK), Loop Net (LOOP), Jones Soda (JSDA), and The9 (NCTY). Part of this was trimming my portfolio due to the volatile market, and part was selling stocks that had weakened dramatically.

Like most investors, I am still unsure of where the market is heading, and am listening closely for advice from the advisory newsletters I subscribe to. For now, I am holding some extra cash in my portfolio and waiting before buying any new stocks.

Gain as of 08/07/07: 2.1%
Gain of S&P 500 for the same funds: -0.1%
Current Cash Held: 28%
Bought: None
Sold: Fuel Tech (FTEK), Loop Net (LOOP), Jones Soda (JSDA), The9 (NCTY)