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My results from the second month of my Passive Versus Active Portfolio Experiment are now in.  They are as follows:

Month 2 Results

Passive: I had one transactions this month; a dividend reinvestment. My passive portfolio increased by a total of 10.32%. This gain includes the commission that would have been charged had I liquidated my position at the end of the month.  My dividend reinvestment is not subject to a commission.

Active: I had five transactions this month; 3 purchases and 2 sales. My active portfolio increased by a total of 1.91%. This gain includes commissions, including the one I would have been charged had I liquidated my third position at the end of the month.

Benchmark: During the same time period, the S&P 500 increased by 1.97%.  For the first time, one of my investment portfolios (active) failed to beat the benchmark for the month.  My passive portfolio significantly outperformed the benchmark this past month.

Overall Results to Date

After two months, my passive investments have taken the lead in profitability.  Both my passive and active investments have beaten the benchmark return of the S&P 500.

Passive Return to Date:  21.56%

Active Return to Date:   13.99%

Benchmark Return to Date:  10.69%

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The Cash for Clunkers law is intended to jump start the auto industry by inspiring people to purchase new cars.  Touted secondary benefits include aiding consumers in new car purchases and various environmental benefits.  The program offers vouchers towards the purchase of a new car when an older, lower MPG car is traded-in.  The restrictions of the law make the program much less effective than it could have been and most consumers may be better off skipping the program entirely.

The voucher you receive would start at $3,500.  Your passenger car clunker must be at least 8 years old and have fuel efficiency at least 4 MPG worse than the new car.  If it’s 10 MPG worse, then you could get the larger voucher, worth $4,500.

If your car is at least 8 years old, congratulations.  Owning vehicles for a long time is a favorite technique of the frugally minded.  Driving a more fuel-efficient car sounds like a money savings potential as well.  So what’s the problem with the Cash for Clunkers program?

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At different times in our lives we may be lacking in friends, money, or both. While money is certainly important, you may often find that a friend is much more valuable.

Friends can provide lasting support and help us to endure periods with less money. They may allow us to find happiness in life even though money can rarely do the same. A life flush with money without a friend to enjoy it with doesn’t seem all that desirable. To be rich and lonely seems like a pathetic existence.

What is a friendship worth? Consider the support a friend provides during a tough time. In that sense, you can put a price on the value of a friendship. What amount of money would it take to help you endure a situation alone, without the benefit of a comforting friend? Even in a desperate financial situation, such as a recent layoff, you’ll probably find that the value of a friend remains high. A $10,000 windfall may help you to get by for a few more months, but a friend could provide value for an entire lifetime.

You might conclude that the best situation would be to have friends and money. That certainly seems rational. Then you’d have the resources to do the things you’d like to do and people with which to do them. Unfortunately, that situation can be difficult to achieve. Assuming the alternative is to have one or the other, would you rather have close friends or lots of money?