Earlier this week, I wrote to you about the pitfall of environmental, social and governance investing, or ESG. Thousands of investment firms have signed a pledge to follow ESG and abide by a United Nations sponsored statement of principles. The problem here is multifold. First, your investment advisor should act as your fiduciary not an environmental activist with your money. Second, the number of state pensions that have signed this pledge is appalling. Not only are these pensions underfunded, but the administrators are using other people’s money (retired teachers, police, and firemen … [Read more...]
Wealth Management: Year-End Planning
One of the “must dos” for any serious investor is to make sure your investment house is in order as year-end quickly approaches. Ensuring that you have the best technology is an important way to do that, and I have found through years of experience with different custodians that Fidelity has always been the industry's technology leader (this is not a paid endorsement, just the truth learned from my experience). Fidelity's technology leadership began in its earliest days, pushed on by former Chairman Ned Johnson's passion. I recently wrote about Johnson's focus on technology that "He … [Read more...]
RAGE Gauge December: Big Monthly Uptick in Risk
Don’t look now but Vanguard GNMA is up close to 2% over the last four weeks and is even on the year. Remember, half the time you’re going to hate GNMA and half the time you’re going to love it. As the market has struggled, GNMA has performed well. The stock market has been volatile, and my RAGE Gauge is signalling increased risk in America. With an investment like GNMA, which has had no big down years in the last 15, you may be able to create some counterbalancing in your portfolio. This month I am increasing the RAGE Gauge from 80 to 100 to reflect the increased risk in the economy. Now … [Read more...]
Wealth Management Pitfall: ESG, Part I
Your wealth manager should act as your fiduciary, plain and simple. Sounds easy. But in reality it’s not. Today, I want to help you overcome one of the more absurd obstacles you may face. It’s called environmental, social and governance investing, or ESG. Thousands of investment managers have pledged to follow ESG—a pledge to abide by a U.N.-sponsored statement of ESG principles. Investing in fossil fuel stocks, for example, would likely be on the “no go” list of companies available for investment. You can forget those juicy pipeline yields. “It isn’t only student activists but the … [Read more...]
Cryptocosm and Life After Google Part V
Operations Management? When I was at Babson College one of our core curriculum courses was Operations Management. And, at the time, I didn’t see the vast opportunities that would unfold from this course. Who wants to spend a career figuring out how to piece together a supply chain or re-tool a factory? Then, when I had an internship at an online grocery delivery start-up, I recognized how fruitful a career in Ops could actually be. Fast forward to today and if you’re an Ops wizard, companies like Walmart or Amazon want to talk with you. Sometimes it’s hard to see the forest through … [Read more...]
Inflated Assets for All and to All a Good Night
Looks like the Fed is keeping the punch bowl full for the holidays with a cheery: “Inflated assets for all and to all a good night.” We’ll see how this plays out when the going gets tough next year. The Fed is already in the danger zone. … [Read more...]
My Concerns as Money Piles Up at Vanguard
Last week Vanguard founder Jack Bogle spoke out about the dangers of index funds, something he helped pioneer. Take a look back at this piece I posted on October 12, 2017 for more depth on the issue. Let the good times roll? Great lyrics from the Cars but it’s a song I can’t get out of my head thinking about the money piling up by the truckload at Vanguard’s back door. We’re talking nearly $300 billion in the first nine months of this year alone. All of that money unloaded and stacked up with the rest of the $4.7 trillion at the firm. That’s a lot of confidence in one company. And maybe … [Read more...]
Is There Anything Better than This at Christmas?
As Christmas approaches is there anything better than an ice-cold oyster and a sip of Prosecco? For me, it’s the combo that reminds me of Summer while Newport is frozen. It’s the counterbalance that makes it fun and it’s the Prosecco that keeps more money in my pocket for compounding. Understanding both concepts, counterbalance and compounding, are key for us all as I explain here: Yesterday’s trashing in the stock market offers us a chance to review the arithmetic of losses and the value in a counterbalanced strategy. Technology shares as represented by the Nasdaq composite index lost … [Read more...]
Vanguard GNMA Up, Nasdaq Drops 3.8%
Yesterday’s trashing in the stock market offers us a chance to review the arithmetic of losses and the value in a counterbalanced strategy. Technology shares as represented by the Nasdaq composite index lost 3.8% on the day. Let’s say, for example you began the day with $10,000 in Nasdaq. By late afternoon, when the market closed, it was worth $9,620 or down 3.8%. You now need (not a good word in investing) a gain of 4% to get back to even. Now, imagine a string of ten days like yesterday, or a 38% decline. A 61% gain is needed just to get back to even, or where you began with … [Read more...]
Rich Man, Poor Man and the Greatest Generation
You may have read Rich Man, Poor Man—one of my favorite pieces ever written by the late great investment writer Richard Russell. It’s one of those timeless pieces that makes me feel like he’s still with us. And with the passing of President George H.W. Bush, I’m reminded of the sacrifices of the “Greatest Generation” and their unique perspective on life. You see, Richard Russell served in World War II, like President Bush, and knew what it felt like to worry about survival. He knew what it felt like to not know if he’d get out alive. And he remembered, for the rest of his life, those who … [Read more...]