Financial Planning

Quarter in Review

 April 1 2017     Matt Woebkenberg
Apologies for the email Saturday morning with no post.  Turns out they won't write 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 ...

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...
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