Wow, spectacular week of action as we saw volatility not seen since about one year ago when the whole financial system was on the verge of collapse! Here are some of the best readings I enjoyed this week:)

-EBay to begin a new advertising campaign @ WSJ
-You are not going to stay as a financial planner are you? @ TheFinancialBlogger
-Good analysis of the state of the S&P500 @ MyTradersJournal
-Cost of a future university degree: 92,369$ @ CanadianCapitalist
-A dozen or so ways to earn extra income @ GatherLittlebyLittle
-9 more banks being seized! @ Reuters
-5 reasons why RIM is a buy @ BuyMyStockPicks
-80$ oil is not justified @ TheStreet
-ING gets to make a profit @ Advantage US

On this blog, as well as on many others, inflation has became an important topic of discussions fears of inflation become more mainstream, especially because of the massive expansion of monetary supplies that were injected by the Fed in the past year. Ironically of course, many argue that the biggest fear is deflation. Today was a good inflation reminder as Norway became the first European country to raise interest rates in an effort to fight inflation. The problem of course is that many think the US will not be able to do such a move because its economy is too fragile. This would create an inflation friendly environment.

In any case, it is no surprise to see that a new ETF has just been launched whose mission to provide a solid “real return”, 2-3% above inflation. Of course, while inflation sits at current levels, the expected return does sound very low. But in a scenario where inflation could rise to 10% or more, such an ETF would provide solid protection.

The new ETF’s ticker is CPI, a convenient name given the fact that the CPI (Consumer Price Index) is the most known statistic that indicates inflation. It measures the cost of life. It does so by holding a variety of assets such as short term bonds, commodities and some currencies.

The idea can be good of course. But as I had said when I was discussing “Target Date Funds“, I don’t think it’s usually a good idea to buy “ETF’s of ETF’s“, because you do end up paying for an additional layer of fees while you could easily do it yourself. While I have never personally lived through a period of massive inflation, I doubt it is suitable for most investors to start allocating important portions of their portfolio to protect against inflation. It is not an overnight phenomenon and I would think that if it does become a problem, we will have time to reallocate our portfolios in consequence.

So no, I will not be buying any CPI, at least not as a long term investment. And given all of the fees involved, probably not as a short term investment either. It does have .48% of fees, but you must add to that the fees included in the underlying ETF’s, which could end up costing you close to 1% as constituents change… If you want to pay 1% of fees annually, buy a mutual fund:)

On a more serious note, having different type of assets (equities, commodities, and bonds) is a good idea to generate more solid inflation protection. While gold for example has generally been a good inflation hedge, it has not always been the case so the idea behind this ETF isn’t bad. But that is not enough to make me a buyer of CPI.

Do you plan on trying out this ETF? Don’t get me wrong, I love ETF’s, but I certainly do not think all ETF’s are good ideas, especially when considering each investor. I would much prefer slowly tilting my portfolio to become more “inflation resistant”

Good morning everyone! It was an interesting week in the markets with volatility picking back up, markets ending the week with 2 drops and oil back at 80$… bring back some memories? There continues to be a fairly large group that believes we are headed back for a major stock market drop..I’m not part of that group but the next week should be very interesting. In the meantime, here are some of the more interesting readings I enjoyed this week:

-TFB discusses the pros and cons of locking a fixed rate on your mortage. I don’t necessarily agree with the conclusion but it’s worth reading, you can give your thoughts.
-MDJ discusses why most financial planners do not plan finances!
-MTJ is selling some EEM puts, should make for an interesting trade:)
-Wondering how a good credit score can help you save money? No Longer:)
-Is oil being back up at 80$ a signal of upcoming inflation?
-Should you take that call even without knowing who is calling?
-5 ways to make sure you do not lose everything to the next Bernid Madoff
-Is Calpers too big too fail??

You might also want to check out this Carnival:

Carnival of Pecuniary Delights #29 Money and Songs Edition
Carnival of Money Stories
Festival of frugality

Tiger Woods is without a doubt the most famous athlete of a generation, if not of all times. Again and again, Tiger has proved how marketable he is and for that exact reason, an almost endless list of corporations are lined up to associate their name with the pro golfer. And thanks to that, he can command very very high prices from his sponsors.

Woods, now 33 years old, has now reached the billion dollars fortune according to Forbes magazine, becomming the first pro athlete to ever reach such an achievement. This came in a year where he made over $100 million in sponsorships which is now the average he is expected to receive. Even such stars as Michael Jordan as well Formula 1 driver Michael Schumacher never went beyond $70M in a year.

It is not quite clear what Tiger is doing with all of his money. He does have a foundation but he has been fairly secretive about what kind of investments he is making.  And at 33, it seems like there is almost no limit to what Tiger will be able to achieve in his career both on the golf course and in terms of earnings. He does hang out with other superstars such as Roger Federer but up until now, Tiger has been in a league of his own in terms of earnings. If even an athlete like Roger Federer, deemed the best of all time in his sport, is unable to even come close to Tiger’s achivements, it is difficult to imagine what kind of athlete would have the best shot.

Do you think other athletes will one day be able to surpass Tiger’s current records? Of course, with time, athletes have been getting better and better numbers but it is difficult to imagine an athlete that would be able to be big enough to generate as much interest from the corporate world.

You can see a nice slideshow that gives a breakdown of Tiger’s earnings here.