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Financial Planning

Know What You Are Buying

 June 1 2017     Matt Woebkenberg
I've got a deal for you.  You give me $290, and in exchange, I will give you $200.  In fact, I will let you take this deal as often as you want.  We can trade over one hundred thousand times a day if you so choose.  Shockingly, I have not yet had any takers on my offer.  But, this is an actual deal that exists in the marketplace.  It is the Bitcoin Investment Trust (Ticker: GBTC).The Bitcoin Inves...

Tulipomania

 May 31 2017     Matt Woebkenberg
If you were asked to name famous market "bubbles", you might quickly identify the Tech Bubble of 2000 and the Housing Market Bubble of 2008-2009. Did you know about the tulip bubble that took place during the 17th century in the Netherlands? I bet not.But if you did, good for you. Tulip Mania, or Tulipomania as it has been dubbed by some, is a fascinating case of investor/trader psychology amidst ...

Teenagers Don't Get It

 May 30 2017     Matt Woebkenberg
Recently the Programme for International Student Assessment (PISA) elected to study the financial literacy of 15-year-old students across several countries.  To (presumably) no one's surprise, the results were unimpressive.  According to a Bloomberg article on the study "56 percent of students have a bank account but two out of three don't have the skills to manage it and can't interpret a bank st...

Friday Financial Terms: Efficient Markets

 May 26 2017     Matt Woebkenberg
There is an ongoing and immensely popular (in finance circles) academic debate about the efficiency of markets.  It is an important question because it essentially answers the question about whether or not active investors can outperform the market over time.There are 3 forms of efficiency in markets: weak-form, semi-strong form, and strong form. Weak-form efficiency states that all past stock per...

Financial Advice on an Index Card

 May 25 2017     Matt Woebkenberg
In 2013, a professor at the University of Chicago made the claim that "the correct basic financial advice for most people would fit on an index card."  He proceeded to make that index card and it quickly became popular because of its simplicity and accuracy.  Today's post is simply to direct you to that index card (here).

Millennial Saving Habits

 May 24 2017     Matt Woebkenberg
A recent article from PlanSponsor notes that despite only 8% of people believing that Millennials are doing a good job at saving, Millennials are actually saving 36% more of their annual salary than previous generations.  The perception does not quite match the reality.  The article goes on to say that Millennials are not necessarily saving for retirement however, they are saving for "financial fr...

Luck is Important

 May 23 2017     Matt Woebkenberg
Today's post is being outsourced to Of Dollars and Data simply because I do not have much to add to the post.  The above linked post shows the performance of a few portfolios over 20 and 40 year time horizons to demonstrate that when you begin investing makes a huge difference.  In the investment industry, we have a tendency to talk about historical averages, but this post makes it very clear that...

Expect a Market Crash

 May 22 2017     Matt Woebkenberg
The stock market is going to crash.  You will watch your investment portfolio fall by 50% or more.  What will you do?  The best answer: nothing.I guess I should clarify that this is not a prediction that a crash is imminent, but rather a realization that you will likely experience another crash in your lifetime.A recent article in the Financial Times titled "How to plan for a future stock market c...

Friday Financial Quotes: Buffett and Munger

 May 19 2017     Matt Woebkenberg
In lieu of financial terms this week, I thought we would try a few famous financial quotes.  Quotes today will come from the best investors of all time: Berkshire Hathaway's Warren Buffett and Charlie Munger.Warren Buffett - "Rule #1: Never lose money.  Rule #2: Never forget rule #1.We have spoken a few times about the importance of compound interest (here, here, here, here, here, etc.), and that ...

Earnings Season

 May 18 2017     Matt Woebkenberg
Earnings season, or the time when publicly traded companies announce their quarterly earnings results, is a closely watched period in the stock market. Many different types of market participants become more engaged during this period as the financial results of companies and their forward expectations are ultimately what drives the direction of markets over the long-term. Simply put, stocks follo...
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