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Financial Planning

Domestic Politics: Taxes

 April 5 2017     Matt Woebkenberg
After an unsuccessful bid to re-shape Health Care, the Republican led government appears to be turning its attention to the tax code.  The tax code is an enormously important factor for businesses and thus for the domestic economy as a whole.  There are wide-ranging issues to be addressed in any restructuring of the tax code, but one of the most important is the high rate of corporate taxation.As ...

Investor Returns vs. Fund Returns

 April 4 2017     Matt Woebkenberg
When investors are selecting a fund to invest in, they inevitably look at the performance history of the available funds.  Though it has been repeatedly proven that past performance is a terrible predictor of future performance, investors always look at performance.  An often overlooked piece of performance information however, is investor returns vs. fund returns.  Investor returns are what actua...

Human Capital - Investing in Yourself

 April 3 2017     Matt Woebkenberg
Outsourcing today's blog post to Of Dollars and Data.  Please visit the linked post because it does an excellent job explaining the importance of human capital in understanding your own financial well-being.  Your human capital is the value of your future earnings and this obviously decreases with age.  Saving and investing, then, are necessary to replace your income once your human capital runs o...

Quarter in Review

 April 1 2017     Matt Woebkenberg
Apologies for the email Saturday morning with no post.  Turns out they won't write themselves...so here is your actual Quarter in Review.The S&P 500 ended the first quarter of 2017 up 5.53% (on a total return basis, meaning dividends included, the S&P 500 was up 6.07%).  As we mentioned in our pessimist vs. optimist series, markets look expensive by almost every valuation metric, but expensive mar...

Friday Financial Terms - Inflation

 March 31 2017     Matt Woebkenberg
Inflation at its very basic economic definition is "the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling", per Investopedia. For example, if my weekly grocery bill for my regular cart of goods was $100 last year and this year that same grocery cart of goods costs $105, the $5 increase is inflation. The reducti...

Robots in the Workplace: Lawyers

 March 30 2017     Matt Woebkenberg
Previous articles have focused on the potential for technology to upend industries full of manual labor, but it is important to clarify that the risks go well beyond "blue-collar" jobs.  A recent article from the New York Times details how artificial intelligence is changing the workplace for many large law firms.  As one lawyer notes, "A big patent case then (1999)... might have needed the labor ...

The Importance of Gradual Improvement

 March 29 2017     Matt Woebkenberg
Outsourcing today's post to Michael Batnick who reminds readers of an important Bill Gates quote, "Headlines, in a way, are what mislead you, because bad news is a headline, and gradual improvement is not."  Focusing on the gradual improvement of the economy can be difficult, but it is important for any long term investor.

How Many Zeros In A Trillion

 March 28 2017     Matt Woebkenberg
The U.S Federal Budget for fiscal year 2016 equals $3,650,000,000,000, or $3.65 trillion. The problem with numbers as large as a trillion, it is difficult for the mind to deduce any type of relationship to the number and reality. So when one says the government's budget is $3.65 trillion and the annual budget deficit is $741 billion, or $741,000,000,000 how does one put this in everyday terms? Bel...

Thinking Global in Investing

 March 27 2017     Matt Woebkenberg
Investors tend to have a home-country bias in their chosen investments.  That is to say, readers in the U.S. most likely over-represent the U.S. in their investment allocation and thus under-represent international companies.  This phenomenon can be found across both countries and time periods.  Ben Carlson wrote an article for Bloomberg discussing the growth in U.S. stock market representation fo...

Friday Financial Terms - Interest Rate/Yield Spreads

 March 24 2017     Matt Woebkenberg
Interest rate/Yield spreads are quite simply an attempt to isolate and quantify one component of fixed income pricing.  Spreads are used to analyze how much interest investors are receiving for taking on various types of risk.  Two of the most commonly cited spreads are the Treasury Spread and the High Yield Spread.The 10 to 2 Year Treasury Spread measures how much added interest investors demand ...
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