SUNDAY, AUGUST 22, 2010 PERSONAL FINANCE


Invest time to take stock of your portfolio


by Andrew Feinberg O


ne of the most valuable investing precepts is: “Know what you own.” For most people, this means doing basic


research on one’s holdings. For some, it means reaching for a cold Bud and thinking: “That’s my fifth one today. Maybe I should buy Anheuser-Busch InBev.” In my case, it means sitting in my easy chair and closing my eyes. I believe in meditation — I practice it daily — and every Saturday morning I print out my portfolio of 45 or so stocks and my sector weightings, look at them carefully, and then sit in a chair and meditate upon the data. I am not looking for divine guidance, although if it were offered, I believe I would accept it. In fact, what is most noteworthy about the process is that it produces some wonderfully mundane benefits. Watch the big picture. As a


hedge-fund manager, I study arcane details about my holdings all the time. But, overwhelmed by the hurly-burly of trading and research, I sometimes lose track of the big picture. Example: After I added to my position in Apple (symbol AAPL) this spring, the stock surged 9 percent in a week’s time. I was thrilled — until Saturday morning. That’s when I forgot about my outsize gains and focused solely on the fact that Apple now accounted for 8.5 percent of my portfolio. That was way too much, especially given chief executive Steve Jobs’s health problems. I cut my holdings in half. Apple’s surge coincided with a


lift-off in other technology stocks. I knew tech was my largest sector weighting, but I didn’t realize until my meditation that it represented 27 percent of my portfolio. Did I have that much faith in a resilient global economy? Actually, no. So I cut back on tech. And I bought some shares of Anheuser-Busch InBev — though not because I had just quaffed five cold ones.


Right before the BP oil spill, I began


Help your college student ace the money-management test


by Janet Bodnar


college is making sure they don’t overdraw their checking account or run up a credit-card bill they can’t pay off. Here’s how to help boost their financial GPA (and save big bucks on fees):


F TIM GRAJEK FOR THE WASHINGTON POST


selling energy stocks. When the spill occurred, I dumped my longtime position in Noble, an offshore driller. A smart move. Or was it? I didn’t realize until the next


Saturday that the sale had left me without a single energy stock. Given that I thought the ultimate impact of the spill would be higher rather than lower prices, this posture made no long-term sense. Although each sale of an energy holding seemed reasonable, collectively they put my portfolio at risk. After all, energy accounts for about 10 percent of the market’s value. If the sector rose 10 percent and I owned none of it, I would quickly lose one percentage point in relative performance vs. the market. The next Monday, I bought an exchange-traded fund that is a direct bet on higher oil prices.


I meditate on the individual-stock


level, too. For example, I added to my position in Motorcar Parts of America after it announced that quarterly earnings would be great, only to see the share price drop. Then Motorcar actually announced the earnings, and the stock soared. Go figure. So now, this company, which carries a market


value of only $75 million, accounts for 2.3 percent of my portfolio. Is that too much? Probably. You may not have to study your


portfolio weekly, but I think we all have blind spots when it comes to money management. We tend to ignore the dogs that have hurt our performance for years. Acknowledging them is just too painful. Well, meditating on your portfolio forces you to look at those dogs — and their fleas. Likewise, we can be so giddy about a big winner that we fail to notice that it has either begun to lag badly or that it has grown to encompass 25 percent of our portfolio. Both despair and euphoria can blind us.


So we need to do a mental, if not


literal, rebalancing of our investments much more often than once a year. To paraphrase Socrates, an unexamined portfolio is not worth having. A calm but rigorous look at what you own can work wonders. — Kiplinger’s Personal Finance


Columnist Andrew Feinberg writes about the choices and challenges facing individual investors.


Open a low-cost checking account in your child’s college town, especially if his hometown bank doesn’t have branches there. Pay close attention to the bank pitches you’ve been getting in the mail so that you can spot the best combination of low balance requirements and low (or no) fees. With a host of new regulations squeezing bank revenues, totally free checking will be harder to come by and may come with strings attached, such as a minimum number of required debit-card transactions. For help in searching for an account, go to Checkingfinder.com. Extra credit: Choose a bank with a


network of ATMs that is convenient to your child’s dorm or favorite hangouts. College kids are notorious for running up ATM fees by going to the closest machine, even if it’s not in their bank’s network. Set up an overdraft strategy. Students are also prime candidates for racking up charges by overdrawing their accounts with small purchases at the drugstore or coffee shop. As a result, they’re particularly affected by new rules that prohibit banks from automatically enrolling customers in pricey overdraft-protection programs. Now you have to actively select such a program or choose a less-expensive option, such as linking your child’s checking account to a savings account —or letting him suffer the embarrassment of having his purchase declined. Extra credit: Have your child sign


up to get balance alerts via e-mail or text message when his balance is low. Play down credit cards. New rules require that people younger than 21 have a co-signer when they apply for


orget tuition. Once that bill is taken care of, the biggest financial challenge you face when sending kids off to


a credit card. Don’t be too quick to sign, or even to make your child an authorized user on your card. Your student should first be responsible enough to manage a checking account. If he doesn’t overdraw his account, he may be mature enough to handle a credit card. But don’t rush it. Extra credit: Whether your child uses a debit or a credit card, he shouldn’t get in the habit of picking up the check for a group’s pizza or beer and expect to collect from everyone. That’s another big money pit for college students; even with the best of intentions, their buddies will rarely settle up. Guard personal information. This


is the Facebook generation, who will tell the world “everything but their underwear size,” as a friend of mine puts it. Better they should reveal the size of their skivvies than disclose their PIN or credit-card number, even to a friend.


Extra credit: Remind your kids


that when they’re shopping online, they should look for secure transaction symbols, such as a lock in the lower right corner of the browser window and a Web address that begins with “https.” Keep track of expenses. Student


services should be able to estimate how much the average student will shell out for entertainment, travel, food outside the dorm and other miscellaneous expenses. But your kid might not be average. He can monitor his own transactions via online banking. PNC offers a Virtual Wallet budgeting site for students (Pnc.com). Or you can buy your kid some bright green Post-its on which to jot down expenditures. Even if he doesn’t tally them, they provide a visual cue that his spending is mounting. Extra credit: Before your child


leaves home, make it clear which expenses you’ll cover and which are his responsibility. Hint: He gets to pay $300 for a football season ticket. — Kiplinger’s Personal Finance


More from Kiplinger Go to www.kiplinger.com


for more analysis.


KLMNO


G3


Why net-neutrality rules should be applied equally


Web firm and one of its biggest telecom firms teamed up two weeks ago to offer a joint proposal to end a prolonged debate over “network neutrality.” In that document, the firms


H


suggested that the government impose net-neutrality regulations on wired Internet connections but exempt separate, add-on services from those rules. The rules would also be waived for wireless services, although carriers would have to disclose what sites or services they hinder or prioritize. Many Web sites and telecom


firms would probably support the policies, but it’s odd that they are coming from these two in particular. Google has a long history of pushing for net-neutrality rules —the company and others persuaded the Federal Communications Commission to attach openness obligations to wireless spectrum freed up by the digital-television transition. Verizon, in turn, didn’t have a problem buying up new spectrum under those obligations. As a result, politicians, techies and other observers have reacted with a mix of confusion and anger. Not all the anger is justified.


Google and Verizon’s proposal features some reasonable ideas. Chief among them is requiring transparency about network- management practices. The insistence of telecom firms that they don’t — or no longer — discriminate against legitimate sites and services suggests that publicity alone might deter some abuses.


On wired services, Google and


Verizon would prohibit charging any one site or service for faster access — favorable treatment allowed in some definitions of network neutrality. The Google-Verizon proposal’s allowance for “additional online services” exempt from neutrality rules deserves a look, too, though it would help if the companies better explained what they have in mind. Some examples Verizon has thrown out, such as “smart grid” monitoring of electrical use, involve minimal amounts of data that shouldn’t need prioritized


ave Google and Verizon got a deal for you! The nation’s leading


ROB PEGORARO Fast Forward


service, while vague references to “entertainment and gaming options” require more details. Does Verizon want to sell a


separate, super-responsive connection for online gamers (most users don’t obsess over “ping times” the way they do), or would it charge extra for a guarantee of uninterrupted high- definition video streaming (when those video sites might compete with its Fios TV service)? In one way, the joint proposal earns its skeptical reception. Google and Verizon make a fundamental mistake in not treating wired and wireless connections alike. Wireless services do have special capacity issues, as anybody who tried to use a cellphone on the Mall on the day of President Obama’s inauguration can testify. But wired services aren’t immune from congestion; note the bandwidth quotas imposed by cable-modem providers Comcast and Time Warner Cable. What about the competitive


nature of wireless access, compared with the monopoly or duopoly of wired broadband in most areas? Verizon, Google and other advocates of keeping wireless unregulated neglect two factors that constrain competition. First, 3G coverage maps of carriers illustrate how many areas have just two or one choices for mobile broadband. Second, long-term contracts mean most users can vote with their wallets only every two years. The biggest reason to apply


net-neutrality regulations to wired and wireless alike is basic economics. Anytime the government applies one set of rules to some competitors in a market but not others, it distorts that market. And although wireless broadband hasn’t always been a real alternative to land-based cable, DSL or fiber connections,


faster 4G services make it a more viable option. That’s why the FCC’s broadband plans rely so heavily on providing more spectrum for over-the-air services. So why would we now want to


subject companies that use a cable or wire to provide broadband to stringent regulations and leave out competitors that use public airwaves? Just because the government plays favorites this way all the time doesn’t mean it should repeat that error. And remember, imposing


net-neutrality rules does not require surrendering to anarchy on our Internet connections. They just mean that Internet


providers could manage their networks only in ways that wouldn’t hinder or favor a particular legitimate site or service.


So if your Internet provider’s


connection gets clogged because some users are hitting one site, it couldn’t cut off access to that site. But it could, after providing fair warning, throttle back those users’ download speeds, cap their bandwidth or charge them extra. Straightforward usage limits would have the added benefit of being understandable to customers and companies alike —unlike a lot of federal regulations and corporate terms-of-service documents. And they would encourage Internet providers to build enough capacity to avoid subjecting too many customers to these limits.


robp@washpost.com


Living with technology, or trying to? Read more at voices. washingtonpost.com/fasterforward.


HELP FILE


Q: What are the right privacy set- tings for Facebook’s “Places” fea- ture?


A: The social network’s new op- tion, which lets U.S. users register their real-world locations by tap- ping a button in its iPhone appli- cation or on its smartphone Web site, could help you meet up with friends. Or it could publicize your presence to strangers. To reduce that risk, you should


change some settings. Log in to the Facebook site, click the “Ac- count” menu at the top right of the page, and select “Privacy Set- tings.” Then click the privacy page’s “Customize settings” link. First, click the menu to the right of “Places I check into” and select “Custom” if you don’t want every Facebook friend to see your check-ins. Instead, you can limit their visibility to particular pals and exclude others.


Second, click to clear the check box to the right of “Include me in ‘People Here Now’ after I check in” if it’s not already blank. This will stop strangers checking in at the same place from seeing you


listed there. Third, set the menu to the right


of “Friends can check me in to Places” to “Disabled” to make sure well-meaning friends can’t announce your arrival for you. Fourth, click back to the main


privacy page, look under the “Ap- plications and Websites” heading, and click the “Edit your settings” link under it. On that page, click the “Edit settings” link to the right of “Info accessible through your friends”; in that pop-up win- dow, click to clear the check box next to “Places I check in to” to stop friends’ Facebook applica- tions from using your Places data. You can watch a video clip demonstrating these changes on my blog. (Note that Post Co. chairman and chief executive Donald E. Graham sits on Facebook’s board of directors, and the newspaper and many Post staffers use Face- book for marketing purposes.)


Send questions to The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or robp@washpost.com.


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