Financial Planning

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 ...

Robots in the Workplace: Drivers

 March 23 2017     Matt Woebkenberg
As a follow up to our Tuesday posts, we wanted to look at one of the jobs that will be hit the hardest by automation in the workplace: Truck Drivers. As the below chart from NPR shows, Truck Driver is the most common job in many of the states in the U.S.Self-driving vehicles are right around the corner (in terms of technology, who knows how long requisite regulation will take), and with that over ...

Criticality and a House of Cards

 March 22 2017     Matt Woebkenberg
I've often tried to explain to friends and associates that the core challenge of investing is not so much identifying potential issues, but rather timing the changing attitude towards these issues by the markets.  As identified by that first sentence, I have struggled to eloquently explain this phenomenon.  Luckily, a recent post at Farnam Street Blog succeeded where I have repeatedly failed by in...

Robots in the Workplace: Meet Flippy

 March 21 2017     Matt Woebkenberg
One of the biggest costs for any business is employees.  Companies need employees, but they also want to make as much money as possible.  The result: companies try to use as few employees as possible.  In our previous post on robots and employment we showed that robots/technology in general have enabled companies to increase production while simultaneously decreasing employment.  Hard fact: for ma...

The Special Earnings Test

 March 20 2017     Anna Pfaehler
A client recently received a 5-figure bill from Social Security requesting that he pay back all benefits paid to him last year within 30 days. Such a notice will make anyone apoplectic. Luckily, we were able to sort out the confusion and eliminate the client’s bill.  According to the Social Security administration, our client had violated the earnings test. If you are under full reti...

The U.S. Economy is Huge

 March 20 2017     Matt Woebkenberg
Another picture from Visual Capitalist.  This one shows U.S. states renamed for countries with similar GDP's.  Click picture to view bigger version.

Friday Financial Terms - Fed Funds Rate

 March 17 2017     Matt Woebkenberg
A consistent topic in financial media is that interest rates are abnormally low around the world right now due to the various policies of the central banks throughout the world.  In the United States, our central bank is the Federal Reserve (often simply called the Fed).  The Fed has the power to set one very short term interest rate called the Fed Funds Rate.  Changing this short term interest ra...

Pension Plan vs. 401(k)

 March 16 2017     Matt Woebkenberg
There is a constant debate on the merits of pension plans vs. 401(k)'s.  A quick google search will find you plenty of results, but my favorite is a Wall Street Journal article about how even the "creators" of the 401(k) regret what they created.  The widespread 401(k) dislike comes largely from the fact that all reports on retirement saving in the U.S. are negative.  People quite simply do not ha...

We're RICH!!!

 March 15 2017     Matt Woebkenberg
2016 was the richest that U.S. households have ever been. The above chart from Scott Grannis at Calafia Beach Pundit shows that household net worth has reached a new high due in large part to the growth in financial assets.  This growth can be quickly unwound in a recession (see 2008 drop off), but for now, everyone enjoy being rich.
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