cmflex84

I understand that 2 mutual funds could be negatively correlated and both could be making positive monthly gains, but 2 funds could not increase return from the previous month and be negatively correlated.

Month 1: A is up 1% B is up 2%
Month 2: A is up 2% and B is up 1%

For the one month return A would be up 100% from last month and B would be down 100% from last month making them perfectly negatively correlated even though they are both moving "up"

Wouldnt you agree that B has to have a lower return in month 2 and A has to rise for them to be neg. correlated?

Senario 2
Month 1: A is up 1% B is up 2%
Month 2: A is up 2% B us up 4%

Wouldnt this be a perfect positive correlation?

magician

You've got it. (Although, to be fair, with only two data points, the correlation is going to be either -1 or +1; there aren't any other possibilities.)

DryCycle

Once you have a job:
Consider that people's salaries vary widely, and yet most people manage to stay alive. Take a temporary vow of poverty.

Step 1:
Find a place to live where you'll be the best compensated guy in the neighborhood.
If you're a competitive type, this will make you feel better.
You'll save on property taxes.
Fear of your neighborhood means that less people will come by to eat your food.
You'll stay single longer.
You'll have money for step 2.

Step 2:
Contribute the maximum amount to your 401K. This is 15,500 per year. If there is a company match, you can still contribute 15,500 per year.
You'll save money on income taxes
You'll spend less
If you don't know anything, use one of those age-indexed funds. When you know more, change your mind if you want.

Step 3:
Save money in your savings account until you have 3 months of expenses saved, and then change your Direct Deposit to a money market account, and write a check to your bank for your anticipated expenses every month.
Since the rational thing to do is to not spend your entire check every month, your balance will accumulate over time, which should save you from consumer loan hell.

Step 3:
When you get a raise, start an IRA with the incremental income, and keep dumping your raises in there until you run out of kinds of IRA's.

xfiremd

Consider placing the money in a Variable Life insurance policy. You can invest in several mutual funds, the account balance will grow tax defered and you can take Income from the policy tax free.

aralls

Horrible advice until he has at least maxed out his IRA and 401(k)

Chicos

25-30% a year, are you kidding me???

Going after these kinds of returns in unrealistic unless you are taking huge risks. This means you will probably have some -50% years as well to factor in.

Cthree if you really have those kinds of skills you should be a very wealthy man on Wall Street.

magician

[QUOTE=Chicos,Dec 15 2006, 12:55 PM] 25-30% a year, are you kidding me???

Going after these kinds of returns in unrealistic unless you are taking huge risks.

SD_S2K

Max out an IRA with $4000 and put some into growth funds (Vanguard Index 500) and use some for playing with stocks like Cthree advised.

I would put a good chunk into a Variable Life insurance policy or VUL. For those that bashed it already, go online and research them, and ask some advisors. They are not for everyone, but they are very attractive tools. I know two solid financial advisors who do this and get great returns. You can also pull the money out at any time to buy a house, car, kids tuition.

Chicos

Good luck cthree, and get used to the idea of losing 10s of thousands.

Nobody can guarantee those kinds of returns. If it is too good to be true it probably is!