Thursday links take a different tack

By Felix Salmon
July 3, 2009

Morningstar’s John Rekenthaler defends target-date funds from my attack

Richard Florida celebrates the past and future decline in homeownership

Weird: the iShares California Municipal Bond ETF is up this year, even as the Aggregate Bond Fund is down

What is Seaweed Survival, how did it end up being owed lots of money by Crabtree & Evelyn, and why does it seem to have zero online presence?

How Goldman Sachs is like the delivery guy from Empire Szechuan


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I didn’t understand your misunderstanding of target-date funds; I just chatted with my girlfriend, and while she wasn’t under the impression that one was supposed to cash out on the retirement date, we kind of arrived at the thought that calling them “retirement-date” funds would be clearer; perhaps “target-date” sounds like I’m investing because I expect a big expense to hit on more or less that date, rather than simply the beginning of a long, gradual withdrawal over (hopefully) a couple decades following.

Maybe it’s a British thing; I remember strong pressure, maybe even regulations, to cash out your pension savings on retirement and buy an annuity.

It’s typical of Richard Florida to dance on the grave of homeownership. We should all be wandering minstrels in Floridaland, dancing from creative center to creative center as the whim strikes us.

But this is grossly oversimplified. I say this as someone who has moved frequently, but is semi-permanently planted now (“for the children”), while looking forward to someday flitting off again to greener pastures. In other words, sympathetic to the premise but not convinced.

First of all, frequently flitting is a major underlying cause of this economic crisis, in ways that are not yet acknowledged. People moving from one city or country to another have no real understanding of the local market, and tend to overpay. I don’t know how much this contributed to the bubble, but it was not insignificant. People moving or investing from overseas REALLY got gouged. Ordinary people are not good at currency arbitrage or real estate speculation, it seems. We got screwed.

Secondly, homeownership makes a huge difference in the level of commitment to local communities, schools, and institutions. What’s the old saw about no one in the history of the world ever washing a rental car? It’s not a good analogy–renters often care about the same things owners care about. But on the whole, the sheer “we’re in this together” mentality of owners makes a huge difference, especially in local politics where so much unacknowledged work goes on (for better or ill).

At the heart of the bubble years, if you were unhappy with the local schools, the crime rate, the traffic, etc. what did you do? Sold stake and moved. Today we are stuck in place. This sucks in so many ways, but one thing it improves is our commitment to fixing things where we are. That’s a silver lining, isn’t it? I think it is. Something to celebrate on this, the eve of our greatest national holiday.

Happy Fourth Felix, Fellow readers!

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