The Personal Finance Blog

While many financial experts are predicting a plunge in oil prices as the American economy takes a dive, a few are still expecting oil prices to skyrocket over the next year. Over 5,000 futures contracts have been bought for $200/barrel oil. These contracts allow the owners to "lock in" to that $200 price should the price of oil go over that mark. The difference between the actual price and $200 is the profit per barrel for that trader. If the price fails to reach that level, the trader is out the price of the contract, which fluctuates on the open market.
Futures Market Traders Bet On $200/Barrel Oil In 2008 : TreeHugger

Money, Matter, and More Musings has found what is almost certainly the worst credit car offer ever. Check out some of these great fees:
- $99 account setup fee
- $89 program participation fee
- $49 annual fee
- $120 account maintenance fee
- 19.92% APR
- $30 authorized user fee
- $25 credit increase limit fee
- $4 internet payment fee

After the fees are collected from the $300 limit, the actual credit limit of this card is $53. This card is not just targeted at subprime borrowers, it's aimed at subprime people who are too stupid to realize they are getting screwed. There is no reason why anyone would be better off in any way with this card. There are so many alternatives, it's shocking that any company would so brazenly screw over people like this.
Danger Will Robinson: The World's Worst Credit Card - Consumerist

Chinese government officials have hinted that they have discussed selling off the country's US dollar holdings in retaliation for possible trade sanctions threatened by the United States. The US wanted to impose those sanctions to force a revaluation of the yuan, which is being manipulated to peg it to the dollar.

The so-called "nuclear option" could cause a historic collapse in the value of the dollar. Such a collapse could send the US into a recession, and would almost certainly have devastating effects on the housing market.

The problem starts with China's pegging of the yuan to the dollar. The yuan has barely appreciated in the past couple of years, despite the fact that the Chinese economy is booming. China has done this on purpose, as keeping the value of its currency low will keep the price of their exports low, which ensures high demand for those goods and steady employment for its people. It also means competing foreign companies can't compete with low-price Chinese goods.

China has nearly $1 trillion in US currency and bonds. If they were to liquidate these, it would have disastrous effects on not just the US market, but also other world markets through the contagion effect, which means that all world markets are tied together in a way that causes them to collapse like dominoes when one strong economy goes sour.

US officials are seeking diplomacy in the matter, as the Chinese nuclear option is clearly not good for anyone, including China.
China threatens 'nuclear option' of dollar sales - Telegraph

Warren Buffett knows how to put on a show. For decades now, he has gathered shareholders of Berkshire Hathaway together in Omaha for the annual meeting. While this year's meeting featured a game of horse between Buffett and Lebron James and a special performance by Jimmy Buffett (no relation to Warren), the stars of the show -- as always -- were Warren Buffett and Charles Munger, who together manage the vast assets of Berkshire Hathaway.

Buffett and Munger participated in a 6-hour question and answer session, with shareholders asking questions about investing in general, along with questions about such issues as global warming.

Buffett encourages all investors to do their reading. Knowing all the opposing views to investing allows an investor to determine the pros and cons of buying into a particular company. As Buffett said, if you can't write an essay why it would be a good idea to buy the company at the current market price, then you shouldn't buy stock in it.

One surprise answer involved shorting stocks. Buffett said that he was fine with shorting, and even ok if people decided to short Berkshire Hathaway stock. That, of course, would historically be a very poor decision.

For inexperienced investors who don't want to put the effort into investing, Buffett and Munger recommend index funds. Low-cost index funds beat hedge funds in the long run, they claim (and everything I've seen indicates that they are right about that 100% of the time). Of course, I would recommend Berkshire Hathaway stock as an excellent investment that is a lot like an index fund without any annual costs. Although the A shares are now price in six figures (that's right, over $100,000 for a single share), B shares are basically a small piece of an A share and sell for a few thousand dollars. I won't quote exact prices, because it's better for you to look it up and get a little investing homework done for the day.
Warren Buffett: Try index funds: Financial News - Yahoo! Finance

Shares of Google (GOOG) dropped 7% after their quarterly revenue report fell short of expectations. Profits were $3.56 per share, $.03 lower than analysts had expected. It's the first time in 11 quarters that Google has fallen short of expectations.
FT.com / In depth - Google falls short of expectations

The Dow Jones made it past 14,000 points for the first time ever today before closing at 13,971.55. The Dow passed 14,000 at two different points during the day, showing resilience from a possible drawback at the end of an earnings season surge.
^DJI: Basic Chart for DOW JONES INDUSTRIAL AVERAGE IN - Yahoo! Finance

The Dow Jones Industrial Average is now within 50 points of reaching 14,000 after a gain today of over 43 points. The most recent stock surge is the result of a fantastic earnings season from many American companies. Many are predicting continued good numbers going into the 3rd and 4th quarters.
^DJI: Summary for DOW JONES INDUSTRIAL AVERAGE IN - Yahoo! Finance

The stock market brushed off fears of a looming recession and the weakening dollar today, as the Dow Jones Industrial average gained 283.86 points over its previous close, the biggest single day gain in 5 years.

It's reporting season, and today's report were clearly better than expected. Wal-Mart eased fears with a 2.4% increase in same store sales compared to last year.
Stocks soar to new highs on retail sales - Yahoo! News