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Dreaming up perfect 401(k)

Johnny Carson once described himself as having "a low threshold of boredom." Me too. But fortunately, whenever I feel a touch of boredom, my mind wanders toward what I envision as the perfect 401(k) plan. I start building that castle in the sky. Assuming you're curious, here's how it would look:

First, it would have some pure no-load investments chosen for all the right reasons -- low cost, high performance, a broad selection of investment types and a routine review to make sure the investments are meeting the quality criteria.

Instilling work ethic benefits everyone

I was trying to get some inspiration for a birthday present for my wife, so I wandered into Boswell's Party Supply Store -- one of my favorite places to shop for special occasions.

I thought I might surprise her with one of those grass skirt and coconut halter kits.

The next thing I knew, I was in casual conversation with Luke Boswell, who owns all four of these great local stores and who somehow manages to keep track of that amazingly entertaining and eclectic inventory.

The beauty of 401(k) loans

Way back in the early 2000’s, the irony of loans from 401(k) plans was that they were the best performing investment choice for most participants. Anyone who had effectively become their own banker by borrowing from their 401(k) account was earning 7% on their loan as a plan investment, and this was a winner compared to money market rates of about two percent and stock mutual funds that, on average, lost about 35% over a few years.

Project shows success in microcosm

I recently spent a contemplative weekend at the bottom of Concord's Nautilus Aquatics' 12-foot pool struggling to qualify for my scuba diver's certificate.

The exercise in which the instructor deliberately turns off the air reminded me of running a small business. Business on a small scale offers decisionmaking with an immediate cause-and-effect relationship.

Not the same game as the '60s

'Don't confuse brains with a bull market."

I was reminded of that aphorism the other day when an acquaintance mentioned that they had a friend who was offering to manage their 401(k) money with monthly moves between cash and equity funds.

This self-styled "advisor" was suggesting that they move everything out of international funds for the moment until "international funds became more reasonably priced ... possibly in a month or so."

Be optimistic, yes, but have insurance

"It's dangerous to make predictions -- especially about the future."

Everyone from Mark Twain to Yogi Berra is given credit for that line. Meanwhile, what a difference a week makes.

Last week, I was just a nattering nabob of negativism with regard to the economic impact of rising interest rates. Searching for good news to lift me out of my funk, I found plenty of offsetting optimism in columns like that of Paul Lim in the New York Times, as well as the informative bulletin from the ubiquitous Ken Fisher. Then, there's always Bob Brinker and Norm Fosbach.

Rising bond rates give and take

Uh-oh. The headlines are bewailing the fact that interest rates are rising in the bond markets. This could be trouble.

Of the many factors that influence stock prices, bond interest rates have the most influence.

Rising rates make it more expensive to borrow, and companies paying more money in interest have less profit dropping to the bottom line. Homeowners with adjustable rate mortgages have less money to spend on "stuff."

Market rises 'on a wall of worry'

We all need a friend in the box business.

Mine happens to be John Tatum, whose collection of companies includes a fully-automated corrugated cardboard assembly line that operates like something out of Willie Wonka and the Chocolate Factory.

A slurry of recycled paper at one end comes out as fresh new cardboard about 100 yards away. John says that cardboard box sales are slowing down, and that's a forward indicator of future economic conditions.

Here comes private equity

How do they rip us off? Let me count the ways.

Who is the "they" in they? Call it what you will; the Establishment, Big Money, guys waiting to tee off at a restricted country club.

And then there's today's granddaddy of them all, "private equity."

Private equity is coming out of the woodwork these days and snapping up major chunks of publicly-owned corporate America. This is not all bad, I hasten to say, but here's the rub.

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