As the market fell by 900 points midday yesterday, here’s what you and I were talking about: You called to let me know your son and daughter-in-law are interested in becoming clients, and to expect a call. That call came within the hour. We’re setting up the accounts. You were working on new account paperwork, but you had a question about the transfer process and were emailing me a quick question, then it was off to golf. You emailed me income projections on a spreadsheet for us to review in our next call. You are sending me an account statement to transfer your a 403b, and then … [Read more...]
You Invest, They Win
Why Vanguard is Too Big: Part X: A Lesson from My Father About Paying Too Much
Your Survival Guy learned how to be a successful real estate investor from my dad. He taught me that price always matters, but he also understood the magic of time. If you need to pay a higher price to be in the game, you get in the game, especially when you’re young. When Becky and I were buying our first home, my dad couldn’t believe how much we were paying. But he also realized that when you’re young, you have a better chance of surviving if you happen to pay too much. You have time on your side—and a job—and nothing focuses the mind like a mortgage. But what if you don’t have time? Price … [Read more...]
How to Hire Investment Counsel: This is the Way
Real quick. You’re interested in hiring a financial advisor—one who’s held to a fiduciary standard by law, not some silly suitability one. You know you need help, but you just can’t make it happen because there’s resistance: No time, no real interest in digging into it, or you don’t know enough to explain to a loved one why you need it. “We’re fine, aren’t we?” She might ask. OK, here are summaries of two calls I had yesterday with prospective clients that will help you gain some perspective. The first one was with a prospective client whom was referred to me by a client I’ve been … [Read more...]
Chelsea, MA Gives $300/Month You’ll Eventually Pay For
The Sunday Boston Globe explains that the town of Chelsea, MA, will begin testing a program giving about $300 a month in supplemental income to families of need. A local billionaire is providing a chunk of the money (through her foundation thanks to the family’s online furniture business). Is it guilt money? And what happens when she gets bored and moves to another crusade? Because once the government starts giving money, it never stops. The article points out it will be given with credit cards to avoid the stigma of government assistance. You and I know the end game is for the … [Read more...]
New Update! Why Vanguard is Too Big: Part IX: It’s NOT Different this Time
Your Survival Guy’s boiler room is stacked with buckets of 30-day survival food sprinkled with Spam and other canned delicacies. My son tells me he can’t wait to try some of it. Other members of my family tell me they’d rather starve. Your Survival Guy also has a weakness in the canned goods aisle. Cans of BOGO tuna and sardines magically jump into my cart like fish out of water. “We’re good on the canned fish,” I’m told. Who knew the term “value” could be so subjective. Last month investors believed Apple was worth eight percent of the market. (They’ve since re-thought that). As I’ve … [Read more...]
Joe Died Suddenly, What If It Were You?
What if you die suddenly? It’s a question that’s been on my mind because it happened to a long-time client of mine. We’ll call him Joe. He was the friend who would send you political emails at all hours of the night. We all know someone like him. He kept you in mind as he fumed about the direction of the country, and he was on your mind because he was clogging up your inbox. This was Joe’s way of taking his mind off of other things. Yes, he was fed up with what was going on in politics. It made him angry, but it also helped mask his sadness. You see, Joe’s only child, his son whom he loved … [Read more...]
Where Money Goes to Die
As you’ve seen in this table, the amount of money in the Vanguard Total Stock Market Index family is enormous. It’s where money goes to die, and is perhaps one of the greatest bubbles no one sees. You have advisors recommending this index approach until they’re blue in the face. They give presentations to the investment committee of pensions, foundations, LLCs, hedge funds, you name it, and say, “Well Bob, with this fund, you have a slice of the stock market.” A good follow-up question is how much of the total is dependent on just ten stocks? Action Line: Lots of careers are … [Read more...]
Why Vanguard is too Big: Part VIII: You Can’t Know What You Don’t Know
Let’s clear something up real quick. If you’re invested with Vanguard and it’s a major undertaking to shift your portfolio to Fidelity Investments—there are worse places to be stuck. In an industry littered with terrible, high-cost products, you’re lucky to be at low cost, no front or back-end load Vanguard. But what you might own at Vanguard and seeing how its assets continue to expand is concerning. As an aside, Vanguard has had some great managers retire such as the GNMA fund’s Michael Garret, from sub-advisor Wellington Management. You never hear about his retirement party. It makes it … [Read more...]
How Low Rates Can Be a Killer
Investors have a short-term memory—they forget what losing money feels like. Do you remember how everyone was reaching for yield leading up to the real estate crash? I do. A lot of wealthy investors lost big time money trying to lock in a few measly points more than what the risk free treasury was (not) paying. Then the crash hit, and they not only didn’t get those extra points, they lost all of their principal. I’m talking big money. Then, like clockwork, came the Monday morning lawsuits. Investors cried that they should have been made more aware of the risks they were taking. Some … [Read more...]
Why Vanguard is too Big: Part VII: What Do You Have to Lose? A LOT
You wouldn’t believe the conversation I had yesterday with a prospective client. It’s as if he’s done everything we’ve recommended over the years and we were set to talk yesterday—after all of those years later—to see how it all turned out. I’m here to tell you, quite well, indeed. This gentleman is wealthy beyond his imagination and I bet, having not met him face to face yet, I wouldn’t be able to pick him out of a lineup. That’s the beauty of quiet wealth: You control how you move about the world with no pressure to live up to some silly image. Long ago, my new friend and his wife … [Read more...]