Tires: the most important components on your vehicle (edited 10 January 2022)

THE MOST IMPORTANT COMPONENTS
If asked what they think the most important components on their vehicle are, most people will answer 'the engine' or 'the engine and the transmission' or 'the brakes'. I would argue that the most important components on any vehicle are the tires, and specifically the four tiny contact patches (or two on a motorcycle) on the tires that touch the road. Why? Because any input - acceleration, braking, steering - go through these four tiny contact patches. Here is a link to the subject of The Tire Contact Patch at the Vehicle Dynamics Institute.

ORIGINAL EQUIPMENT (the tires that came with your new vehicle)
Have you recently bought a new car, or are you in the market for one? Then you should know that Original Equipment (OE) tires, the tires your automobile manufacturer put on your new vehicle are usually CRAP - they're noisy, harsh-riding, short-lived, and poor-handling, especially in wet weather and snow. 

For example, let's say you recently purchased a new 2022 Honda Pilot EX-L AWD. The tire size is 245/60-18 and according to TireRack.com the OE tire is a Bridgestone Dueler H/P Sport AS which is a Crossover/SUV Touring All-Season tire, a light truck tire. This tire gets 3 out of 5 stars from TireRack users. So, how good is it?

Click this link for the Crossover/SUV Touring All-Season tires survey by TireRack customers. Notice that the Bridgestone Dueler H/P Sport AS tire ranks close to the bottom of this table.

You would never buy these tires at retail as replacement tires. What would you buy? Well, one of my favorites is the Grand Touring All-Season tire which is a passenger vehicle tire.

If you're a Costco customer, the simplest thing to do is to use TireRack to find BFGoodrich, Bridgestone and Michelin tires available at Costco for your vehicle. There are several Grand Touring All-Season tires to choose from, and my favorite is the Michelin CrossClimate2.

SIPING
So, what can you do about the mediocre Original Equipment tires that you have on your new car? Well, you have three choices: (1) live with them until you wear them out, (2) replace them immediately with good tires, or (3) for $80 or so have them dynamically balanced and siped. Siping improves quietness, tread wear and handling. I would NOT sipe high-quality replacement tires because (1) it will void the warranty and (2) the tires don't need it, but I usually sipe the Original Equipment tires when I buy a new car. Here is the link to Les Schwab for siping information.

The two kinds of market losses we can incur...

In any market, there are only two kinds of losses we can incur... loss of capital and loss of opportunity.

In other words, we can lose part or all of our capital (investment) by being IN the market when we should be OUT OF the market, or we can lose out on the opportunity to make a profit on our investment by being OUT OF the market when we should be IN the market. 

Personally, I would rather be OUT of the market wishing I were in, than IN the market wishing I were out.

To paraphrase Will Rogers: The return OF my investment is more important than any return ON my investment.

A financial advisor who always urged his clients to remain fully invested in the market once observed that, since 1900, there has never been an eighteen-year period in which the stock market did not fully recover its loss. The classic example is the 1929 stock market crash which did not recover until 1947, eighteen years later.

This brings up an interesting point. The two most important things we need to know about ourselves before investing are: (1) our tolerance for risk, and (2) our time horizon. If we are young, taking on risk is not a problem because we have time to wait for a market recovery. If we are retired, we may not have an eighteen-year time horizon to wait for a market recovery, so we are forced to become more conservative in our investment philosophy.

"The Richest Man in Babylon" by George S. Clason

The Richest Man in Babylon [Paperback]
George S. Clason (Author)

Read by millions, this timeless, easy-to-read classic holds the key to personal financial success. It's been hailed as the greatest of all inspirational works on the subject of thrift and financial planning. This celebrated bestseller offers an understanding of personal money management. It reveals the secrets to acquiring money, keeping money, and making money earn even more money.

My comment:
This is one of the best books I have ever read on the subject of personal saving and investing. As of Jan. 9th, 2011 it is rated on the Amazon.com bestseller list as follows:

Amazon Bestsellers Rank: #2,207 in Books (See Top 100 in Books)
# 2 in Business & Investing > Personal Finance > Money & Values
# 4 in Business & Investing > Business Life > Ethics
#19 in Business & Investing > Mgmt & Leadership > Motivational

"Rich Dad, Poor Dad" by Robert Kiyosaki

Rich Dad Poor Dad: What the Rich Teach Their Kids About Money - That the Poor and the Middle Class Do Not! Robert T. Kiyosaki (Author)

As of Jan. 9th, 2011:
Amazon Bestsellers Rank: #516 in Books:
# 1 Business & Investing > Personal Finance > Financial Planning
# 3 Business & Investing > Investing > Introduction
#10 Business & Investing > Skills

My comment:
Many years ago I read Rich Dad, Poor Dad by Robert Kiyosaki, and learned some valuable lessons.


Rich Dad Lessons: The Quick Reference Guide To Wealth

This quick reference table is very interesting... especially the point about real estate: you make your profit when you buy, not when you sell.

Rich Dad Lessons: The Quick Reference Guide To Wealth - Money Making Online

Inflation and Hyperinflation

Every financial asset is also a liability. Let's read that again: Every financial asset is also a liability. What does this mean?

Suppose you have a bank savings account, or a bank CD. You regard them as assets, but for the bank they are liabilities. If the bank goes bankrupt, they no longer have the liability, and you no longer have the asset, unless your account is insured by the FDIC.

What about insurance policies? You have homeowners or renters insurance, auto insurance, health insurance, life insurance and/or long-term care insurance. You may think of them as assets, even if they have no cash value. But to the insurance company or companies, they are definitely liabilities. And what happens to these policies if the insurance company goes bankrupt?

Corporate bonds, preferred stock and common stock are assets to you, but liabilities to the corporation that has issued them. And what happens to the value of your assets if the corporation goes bankrupt?

If you own a home, with a mortgage, the home is your asset, and the mortgage is your liability (but it is an asset to the finance company holding the mortgage). If you go bankrupt, or your home is foreclosed, what happens to the value of the mortgage?

The point is that every financial asset is also a corresponding liability. But what about real assets that are unencumbered, that have no corresponding financial liability? If you own your home free and clear, with no mortgage, it is a real asset without a corresponding liability. Any real property or personal property asset that is not leveraged, that has no lien or mortgage or encumbrance, is an asset without a corresponding liability.

What about currency... is it a real asset, a financial asset or neither? Prior to 1971, when the U.S. was on the gold standard, our currency was backed by gold, and could be redeemed in gold. So one could argue that currency was a real asset. Today there is no backing for our currency. It is worth only what it can be exchanged for in goods and services. It is not backed by anything of value. If we try to redeem currency at the U.S. Treasury, they will give us an interest-bearing U.S. Treasury security of some denomination and maturity.

The conclusion we must come to is that our currency is only worth what it brings in the marketplace. As the U.S. government prints and circulates more currency, we will have more money chasing fewer goods and services... this is the definition of inflation. At some point nobody will want U.S. dollars... this is the definition of hyperinflation, and it could happen gradually, or very, very quickly.

At that point we will enter a barter economy, trading goods and services directly. Nobody will trust paper money; it will have become worthless.

This is why it is good to have a portion of your wealth in real, physical assets.

16 of the most overpriced products you should avoid

16 overpriced products to avoid

www.Edmunds.com True Cost to Own

If you're thinking about buying a car or truck, check out this Edmunds.com feature, called the "True Cost to Own". It works for new and used vehicles, for the current model year as well as five previous model years.

www.Edmunds.com True Cost to Own