Yeah. We're definitely going to disagree if you're going to counter "basically nobody beats the market" with "Warren Buffet can beat the market therefore poker players can beat the market."

http://freakonomics.com/podcast/stupidest-money/

Edit: I just took a closer look at the Yahoo article. Admittedly, I just glanced at it really quickly and assumed what was happening. (Then I felt bad and went back to it.) I don't even think the article supports your statement.

He's comparing investing in indexed funds with commodities. That's nothing like beating the market by picking individual stocks.

1. You need more neutral good / chaotic good friends and fewer lawful neutral / lawful evil friends.

2. It's super funny how you reject the idea of listening to insider friends and cite articles written by insider strangers.

You realize that the authors of those articles have friends, and give their friends at least the same advice they post on the Internet?

3. I don't want to belittle the work you've put in, but I do want to remind you that just a few posts ago you didn't understand why anyone would make an EV- bet at blackjack. The financial world is both more complicated and more opaque than blackjack. Despite your best intentions, really, your argument boils down to trusting articles that show up on Google because your friends can't be trusted.

This is an excellent example of what I mean.

1. It is great advice to stay away from actively managed funds.

2. That isn't to say the managers aren't beating the market. It means they aren't beating the market by more than they take in fees. Or, as alpha implies, they are beating the market but not on a risk-adjusted basis (0arallel to CE in the blackjack insurance example).

3. If you could pool together a bunch of experts from different fields, and convince them to work for free for you, you could probably beat the market. The problem at some level is that experts end up being entangled by insider information and are unable / unwilling to work outside their direct industry. Also experts want a lot of money.

Maybe, maybe not. Again, I reject the idea that a "friend in financial services" is automatically qualification for why you should trust them with advice regarding your credit score. Financial services is a broad industry, and it's not always evident that what they're doing is related to the thing you're actually needing.

And the fact that I don't know authors personally is pretty irrelevant to me. I work in a world where our best information comes from strangers all the time (academia). What I look for is data and evidence, not just "my friend told me..."

Meh -- I don't claim to have *ANY* serious background in blackjack. So that I wouldn't immediately see something in that only shows that I'm somewhat ignorant when it comes to blackjack. Though the situation where insurance is -EV and bet sizes are relatively large isn't about opacity as much as it is about rarity.

I'm sure that there's *somebody* out there for which whole life insurance is the right decision. That doesn't mean that advising people away from whole life insurance is bad advice.

And your ability to accurately portray my argument shows more about your desire to prove yourself right more than it is a meaningful argument against the position that I've put forward.

I've never claimed that nobody beats the market. And despite the title of the article, if you actually read it you would see that it doesn't say that, either. But good luck accurately identifying the ones that will.

As I said, if you have friends that looked at your credit report and then advised you on things you can do to help your credit score, that's probably good advice. If they just generically told you to cancel credit cards without any knowledge of your credit history, that's questionable advice at best. Maybe it worked out for you, and now you feel an increased sense of community and loyalty to them. Good for you. That, on its own, doesn't negate a single thing that I've put forward with regards to the quality of the advice that was given.

Damn, I could've started a hit thread in BFI!

You missed your calling as an instigator.

I had a funny experience attempting to buy a new car with cash a couple months ago. After I had negotiated everything and told them I’d decline the financing, they offered me $1k off the purchase price to finance it. After confirming there were no catches like early payment penalties, I took it and paid off before the first interest payment kicked in.

I don’t remember exactly but the interest rates were something like 4.9% over three years, 5.9% over four years and 6.9% over five. Yikes...

But most people only care about their monthly payments. Because again, people are idiots.

So instead of, for instance, asking me exactly what capacity my friend works in what financial industry, your advice is to not trust him? (FTR, not going to answer the question - I just noted with some irony that you didn't seem to care.)

If you truly believed this, you'd point out that my friends - who are strangers to you - would be of equal stature to strangers, not worse.

Like if my friend made a webpage, would you suddenly believe him?

You have some serious background in poker, no? You couldn't think of a situation in poker where you'd rather lock up a certain win at EV- over gambling for more?

It is bad advice if you've ignored the Bayesnian priors on whether it might be the right decision.

For example, if someone stopped you on the street and asked you whether they should buy whole life insurance, answering it's a bad idea is good advice. You have zero priors.

If your friend asked you the same question and you used the samr priors to formulate a response, you're a bad friend.

Your position is ignorant, in the sense that you are deliberately limiting your information. It's the equivalent of answering a poker question with, "you should quit poker, 90% of players lose money outright and 90% of players who win money would have had more had they done something else."

The statement is factually true, but if you answered every question with that statement you'd be unhelpful.

The real 'yikes' is that the dealership must come out better than $1K if they convince you to take the financing.

Well, I could just quote myself...

You can decide for yourself whether I've specifically told you not to trust your friend.

It depends on the level to which I can verify the information from alternative sources. I've noted with a fair level of detail as to how closing credit cards can actually hurt your credit score. I've also detailed ways in which it may not have that effect.

It's easy to think of lots of situations once I had a clear sense of what you were actually proposing. (Edit: And there are zero circumstances in cash games that I would even have such a proposal on the table.)

I don't know if you're aware of how whole life insurance works. It's *really* hard to find a way to make it a good thing to spend money on. The relatively good news for people is that the only people who buy it tend to be people of means and so it's not predatory on the poor.

Meh. You're free to keep trying to make your point. But it's clear that you felt personally affronted when I suggested that not everyone in "financial services" would give good advice for how to raise your credit score. Maybe the honor of your friend was diminished or something. I really don't care at this point.

It could be a couple of things. They could be gambling on this:

Maybe in the next month you might change your mind and think that you can do more with the cash and end up making payments.

Alternatively, they were possibly trying to make a quota for some sort of bonus.

Quota bonus sounds right.

this might be my favorite line thus far! clearly you would never stoop to attempting such a dastardly thing! do you have a debating background?

Or perhaps you lost interest when it became clear you weren't the only person who thought they were smarter than everybody else.

In case it's not clear, I have zero interest in talking up my friends. They're not financial consultants looking for gigs, nor salesmen looking for customers. They're not your friends, they're mine.

But I suspect you have people like my friends in your life whose advice you're either not soliciting, or worse yet actively ignoring, because you're convinced that they don't have your best interests in mind. (And maybe they don't, they're your friends, not mine, so you get to make the call.)

There are lots of things in life - things that matter - on which you won't be an expert. You should learn to accept it, and use the "phone a friend" option. And if you don't have a good friend to phone, I agree the Internet is better than asking a dumb/evil friend or not doing research.

Like for instance, I have all my money in index funds, despite knowing people who can probably actively manage funds greater than index.

No. I lost interest when it became clear to me that you're more about trying to prove me wrong in some way than you are about looking at the thing being analyzed.

I stand behind my central claims that started this 100%.

* Closing credit cards can lower your credit score, and it often will.
* Someone telling you to close credit cards you don't use to raise your credit score without knowing information about your credit history is offering generically bad advice.

I could elaborate on both of these, but that would just be repeating things that have already been said.

That's fine. I don't think I ever asked to become friends with your friends, nor have I expressed interest in their advice, services, and/or wares. And I find it to be really, really weird that you've even made this statement.

You can suspect what you will. I suspect your assumptions about me are pretty irrelevant.

Indeed. I don't claim to be an expert in everything and have leaned on people plenty of times as I've needed it. But again, what you assume about me is pretty irrelevant.

Good for you.

I'm amused at the mystique you've created around your friend. Twice telling me that you're not going to reveal information (when I've clearly given no indication of interest in that information) makes it sound like you're begging to be asked about it.

Due to the proliferation of consumer pricing guides in the internet era, dealerships can no longer make decent margins on the front end.

So besides service (which has become a sales game), they depend on their F+I dept to make up in the back end what they no longer make in the front, like they used to in the 90's.

A talented finance manager can sell people warranties, remote starters, lo-jack, prepaid service packages, other accessories, and payments based on an interest rate which is multiple points higher than what the bank has issued. So when the dealership tells you, "good news, we were able to find a bank willing to give you 4.9% x 48 or 5.9% x 60", what they are really doing is getting your loan approved for like 3.25% and marking it up. I've seen many deals with a negative front end gross and 5k profit in the back.

When the finance mgr (pro) gets HU w an unsophisticated customer (fish) they are able to bust the fish by the end of the 1 hour match. Kinda like poker I guess.

Pro tip: let the dealership believe you will likely finance and ask about warranties, explain how you will prob need to buy one - when you're negotiating price. Then, once the price has been agreed to and the P+S has been signed by the manager, tell them that you've decided that you can just pay it in cash and rebuff their warranty options.

Financing cars and buying extended warranties (which rarely cover anything you need fixed) is for suckers. The 0.9%-1.99% x 36 or 48 mos that manufacturers offer for those w top tier credit on new cars might be one of the few exceptions.

Awesome. Negotiating car prices is one of my absolute favorite things to do, because it's like a HU deathmatch with the dealer where you hold all the cards and they literally have nothing. On the other hand, I hate negotiating anything else in life. That Pro Tip is amazing, thanks.

Almost any non-rookie salesman will ask you cash or credit in the first 10 minutes, and usually whether you have your own credit or will use theirs. Usually the deal sheet includes the financing too. You can try to pull out of the financing at that point but the offer is null if not executed as on the sheet.

Here's another pro tip: Don't go car shopping when you're sick and your brain is foggy. I ended up buying a "security" system at closing. They said it was in the car and couldn't be removed. Only a thousand bucks, and I'll be thankful if my car ever gets stolen. After I'd gotten over my cold I get a call from the security system installer to make an appointment. Hmm... Much arguing, pleading, threatening, and whatever else I could think of with asst and general managers gets me absolutely nowhere. A little googling finds me a govt consumer protection agency in San Jose, a quick letter, and a few days later, an email from the dealership asking when I can stop by to pick up my thousand dollar check.

Another pro tip (different car): Be poor, leave your ego at home. They try to butter you up, you can easily afford that, right? Ten bucks more a month. ANYONE can afford that. Not me, I'm broke. After quite a few hours of me just saying no over and over, we'll have to ask the manager, we'll have to ask the owner, we'll have to ask God, I got my new car for 3 dollars a month over what my payment was at the time.

And yes, I'll borrow all the money you have at .9%. If I can't beat that in the market it's time to quit trading.

Do any of the financing deals have prepayment penalties? If not, you should still be able to get the better deal for loan and then just pay it off immediately.

MacauBound just taught me the car dealership business in a few paragraphs, well done!

Yeah - exactly my point. On a $25k car nonetheless...

That is what I did. I don’t think prepayment penalties are even a thing but I could be wrong?