There are many different types of energy audits you can perform in your home.  I wanted to determine the cost of unused electronics, known as phantom energy use.  This includes both the cost of devices turned off, but still using power and those that are on (or in standby mode) despite not being used.

I focused my efforts on things that I could change with little or no impact to my life.  An example is the TV I have in my guest room.  Leaving it unplugged, versus plugged in but off, wouldn’t affect my life since that TV is only used when visitors are here.  Plugging it in before they arrive would take minimal effort.

The Device for Testing

For my testing, I used the P3 International Kill a Watt, model P4400.  This energy monitor allows you to measure the kWh (and more) of any devices connected to it.  By using a power strip, you can measure multiple devices.  Since it cost about $21, I was hoping to be able to identify

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Buy and Hold is Dead.  So reads the headline across blogs, discussion boards, and print media.  Before you send your condolences, let’s take a closer look at the rationalization driving the obituary and whether or not it warrants acceptance.

First, we have to remember that Buy and Hold means different things to different people.  For some, it means buying a stock you like and never selling it.  For others it means buy and homework (a Cramerism) meaning buy a stock you like and hold it until the reasons you liked it have changed.  Still others concede that since they can’t beat the market, they’ll buy low cost index funds to match the market for as long as they hold them.

With market indexes hovering around 10 year lows, I suspect that many people who say that Buy and Hold is dead mean that this last definition of Buy and Hold is dead.  Of course, using that definition, Buy and Hold can never be dead because even with the terrible performance of late, index investors still achieved their goal of matching the market.  Even so, let’s look a little more closely.

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Even with the gains in the stock market over the past week or two, we are still down considerably from the October 2007 peak and basically flat for many companies over the past decade plus.  This, coupled with the sagging economy and irrational pessimism towards the stock market, has caused some to claim that buy and hold is dead as an investment strategy.  I want to remind everyone of a common flaw in comparing recent performance to historical returns.

As John Bogle reminded us late last year, roughly half of the commonly touted 10% historical return of the stock market is comprised of dividend income.  You might look back on the last 10 years and say that we’re under-performing historical returns by 10% per annum, but when dividends are considered we’re not nearly that bad.

Consider the case of General Electric, a favorite among large-cap dividend investors.  GE has recently been trading around $10 a share.  It last traded around a split-adjusted price of $10 in September of 1995.  So you might conclude that an investment in GE for the last 13.5 years earned you a big fat 0% per annum.  Considering dividends changes that conclusion entirely.  Each share you bought for $10 in September of 1995 would have paid you

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For those interested, I can now be followed on Twitter as user richerbytheday. I plan to use Twitter for more interactive discussions and topics that don’t warrant entire blog posts. Twitter followers will also be eligible for free book giveaways and other promotions.  For anyone who hasn’t used Twitter, it is a social networking and micro-blogging service that enables its users to send and read other users’ updates known as tweets. Tweets are text-based posts of up to 140 bytes in length. Updates are displayed on the user’s profile page and delivered to other users who have signed up to receive them.  To create a free account, go to twitter.com.  Then you can go to my profile page and “follow” me to keep in touch.

This post is part of the latest Carnival of Personal Finance. Be sure to check out the other great entries as well.

Tough economic times, coupled with soaring gold prices, has led to a growing number of ways to sell gold.  Two particularly terrible ways to sell both share a common trait: convenience and a lack of comparison pricing.

The first, is online gold buyers like Cash4Gold.com, which had

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My post, Should the Penny Be Eliminated, remains one of the most popular of all time here on Richer by the Day.  With that in mind, I thought I’d cover whether the Dollar bill should be replaced by a Dollar coin.  Speculation is growing that the Dollar bill’s days may be numbered.  Previous efforts with Dollar coins, including the current Presidential series, are not likely to thrive as long as the paper currency remains.

Unlike the penny, which costs more than face value to manufacture, the production cost of a Dollar bill is only about 4¢.  Though Dollar coins cost about three times that amount (actual cost varies with spot metal prices) the much longer lifetime of coins makes them a more cost effective option.  The generally touted statistic is that Dollar bills wear out in an average of 18 months, versus 30 years for coins.  The estimates of cost savings from using coins vary, but a 2002 Government Accountability Office report put the number at $500 million a year in production costs.

Typically cited reasons for not changing include the weight and bulk of carrying coins, the costs to retrofit automated coin readers and vending machines, startup costs to transition to high volume coin minting, and the difficulty of discriminating the Dollar from other coins.  This last fact was a big problem with

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Bernie Madoff’s guilty plea today makes him the latest confirmed proprietor of a ponzi scheme, adding him to the long list dating back to the original namesake Charles Ponzi.  Charles himself wasn’t the first to use the technique, but his was the first large scale use in the US and so his name is infamously linked to the scheme.  So what exactly is a ponzi scheme and how do they work?

A ponzi scheme pays returns to investors either from their own money or the money of other investors rather than from profitable investments.  High returns in the scheme typically make early investors more likely to reinvest their returns and also attracts new investors.  As the scheme grows it becomes more and more difficult to maintain, since an increasing number of new investments or reinvestments are required to keep it afloat.  This is similar to a pyramid scheme except that ponzi schemes tend to have a flat hierarchy where the fraudster deals directly with victims and is the only one to profit.

Most ponzi schemes have at their core a seemingly plausible business or investment idea.  Investors are

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The market rally that began today after Citibank announced that it was once again profitable saw further gains after Rep. Barney Frank said he expects the uptick rule to be restored within one months time.  The uptick rule, which was instated in 1938 to regulate short selling of stocks, was eliminated in July of 2007.  To understand the uptick rule and its potential effects consider the definition and the following uptick rule example.

The uptick rule simply states that a stock cannot be sold short unless the sale price is above the last sold price.  The previous sale price can be matched if it was higher than the preceding sale price.  As a reminder, selling short is the practice of selling stock that you don’t own in the hopes of buying it back (covering your short) at a lower price later.  So if you thought a stock was going down, you could sell it short and still make a profit.  When a stock is declining, short sellers can push prices even lower in much the same way a rush a buy orders can send a rising stock soaring.

With the uptick rule in place, the downward pressure from short selling is supposed to be moderated.  As sellers outnumber buyers, the price of a stock would tend to fall.  Adding short sellers to the mix increases the shares available for sale, driving successive sale prices lower and lower.  With the uptick rule in place, the short sellers could not sell unless they could get a higher price than the last sale price.  So if a stock last traded at

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I’ve been feeling so at odds with most of the recent coverage of the stock market but was having trouble clarifying my sentiment.  Associated Press writer Rachel Beck finally helped to put some of my thoughts into words when she asked Are stocks facing ‘Irrational Pessimism?’.

To me, that’s an excellent way to describe the current situation. Why is it that so many of us continue to repeat the mistakes of the past? The market is in dismal shape, but isn’t that exactly what we should be hoping for as investors?  Lower prices now means that our gains will be even greater when the recovery eventually comes.  I’m not asserting that we’ve reached a market bottom or that things won’t get a lot worse before they get better.  But I do feel strongly that we’ll look back on current prices and kick ourselves for not buying even more.  That’s why I’m continuing to invest as much as possible.  I said as much when Mrs Micah asked her readers How the Recession Had Changed Their Spending Habits.

Unfortunately, many investors are taking a different approach.  I’ve been reading about people who have recently shifted to gold or cash to ride out the storm.  The trouble with such an approach is that it assumes you’ll be able to get back in just as things start to improve.  Few, if any, average investors can repeatedly time the market successfully.  More likely, they’ll get back in after clear signs of improvement are visible.  By that time, many of the gains will already have been made and the process of buying high and selling low will have begun again.  No, if you want to take full advantage of a recovery, investments must be made before signs of improvement.  A quick test of whether you’ll be able to get back in at the right time is to ask yourself this: “Did you get out of the market at the right time?”  If you answered yes, then you’ve probably been in cash for a long time and likely already started to buy again.  If you answered no, you probably sold more recently and are going to join the recovery too late as well.  Instead of chasing performance by watching lagging indicators, consider positioning yourself ahead of the curve for a change.  For me, that means investing more and more as the market remains where it it or declines further.

The lagging housing market makes competition for house listings intense.  Many realtors offer incentives to entice prospective sellers to choose them.  One of the most common marketing techniques is a guarantee to sell your home in 90 days, or less.  There are certainly many reputable realtors out there, but analyzing the home sale guarantee often leaves you questioning the realtor’s motives.  There are a number of ways these guarantees are structured, so let’s examine two common ones:

Sold in 90 Days or I Will Buy Your House

This one sounds great.  If the realtor is unable to sell your home, they will buy it from you.  You probably figure the realtor is motivated to sell your home since they’ll get “stuck” buying it otherwise.  The reality is that most of these guarantees stipulate a purchase price of below market value for your house.  20% is fairly common.  So if the realtor can’t sell, they get to buy at a 20% discount.   But it gets even better for them because of their commission.

Assume your house is listed at

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