What risks do certain "family" offices pose to outside investors, considering most, if not all, of the money is the "family’s?” Well, as it turns out, quite a bit. The most recent one making headlines is Archegos, where the family office of Bill Hwang burned banks to the tune of $10 billion. The WSJ reports, the losses are felt far and wide, not just at his dinner table. The battering to Wall Street banks from Archegos Capital Management topped $10 billion after UBS Group AG and Nomura Holdings, Inc. reported fresh hits caused by the fund’s collapse. Archegos, the family office of Bill … [Read more...]
Timeless Wisdom from Vanguard Founder Jack Bogle
With few guarantees in the investment world, here’s one: Avoid companies growing their client base through acquisitions. It’s happening all the time, thanks to consolidation within the industry. But bigger isn’t better, especially when it comes to knowing your customers. Legendary investor and Vanguard founder Jack Bogle spoke about this when he was alive, and I’ve never forgotten it. What Bogle was referring to was the relationship between an investor and an advisor. But that sacred bond was muddled when a bigger company acquired a smaller one simply by writing a big check. Bogle understood … [Read more...]
You Are Why Serious Investors Join Me
Here’s some thoughts as you dive into your weekend. TGIF. The seasonally high traffic on a recent sunny Saturday in Newport, RI suggests it’s going to be a busy summer. Selling ice-cold bottled water from a cooler at Newport’s famed Cliff Walk works as well as selling binoculars at a National Park gift shop. I asked a prospective client how his spouse would handle their portfolio if he got hit by a truck. He said, “Huh, I never thought about that.” Don’t stand too close to the road, I thought. For all you boaters, you know the challenge of leaving or approaching the dock. … [Read more...]
Where Are We With This Stock Market? Well…
When legendary Dow Theorist Richard Russell was still alive, he wrote about the three phases of a bull stock market. He’d write to his valued readers that you know you’re in the third phase when everyone’s talking about stocks (or dogecoin, or bitcoin, etc.). The third phase of a bull market is full of FOMOs—buyers with a “fear of missing out” on the next best thing, like lemmings jumping off a cliff. The third phase is crazy, fueled by emotion, with a narrative that goes something like this: It’s different this time. Well, yes, every day is different. And there are plenty of stories telling … [Read more...]
When Stocks Drop by 33.9%, 49.1%, or Even 56.8%
There’s a time when you’re most vulnerable as an investor. It’s not when you’re knee-deep in work, with retirement waaay off in the distance. It’s when, as you dream about retirement, you look at your statement and do some mental math: when can I retire? You realize, hmmm, I’ve got some money, but I need “X” dollars to retire. I need to make “X” percent on my portfolio to get there. Now, with this dream in mind and a portfolio full of stocks, your palms get a little sweaty when the market drops by 800 points or so. You’re paying a little closer attention to the down days. Maybe a little too … [Read more...]
What Is Your Purchasing Power Going to Be?
What is purchasing power? Well, if you bought your house in the 60s or 70s, you know exactly what it’s not today—it’s not power. It’s more like weakness. Take a look at the median income and median real estate sales through the years, and you tell me what’s happened to purchasing power (weakness). Remember, the “median” eliminates the big outliers that can skew the average. Median is the middle number. For example, in a sample of 30 houses, the 15th house is the median. You can see on the chart that from 1963 on, the growth of the median price of a house has outpaced the growth of the … [Read more...]
There Are Plenty of Ways to Invest in This Market
You have plenty of ways to invest in this market if you’re A) dividend-centric (I am) and/or B) looking for a proxy to some of your bonds. Take a look at the charts below and understand what’s happening in the market today. Stocks by Dividend Decile Here you see a breakdown of stocks by dividend yield decile. The 8th Decile, not the tenth, had the better performance from 1975-2020. Caitlin McCabe reports at The Wall Street Journal on today's bull market: A greater number of stocks have been propelling the U.S. market higher lately, a signal that—if history is any … [Read more...]
How Did You Save So Much Money? I Really…
When I ask you, “How did you save so much money?” your answer tells me a lot about you. Because, when you respond, “I really don’t know, to tell you the truth, just hard work and saving like crazy,” I know it’s not what you did to save money, but what you didn’t do. Yes, you had to work. How else were you going to put food on the table? And yes, it would have been easier to do nothing. But that’s not how you roll. Yes, winning the lottery would have made things easier for sure. But, most of you made your money slowly, year after year, and it never got easy. After a while, you realized … [Read more...]
NJ Deli $35k in Sales, $100 Mil Valuation
In times like these everyone looks like a winner. What could possibly go wrong? Investors have driven the market valuation of an over-the-counter traded company that owns one deli in Paulsboro, New Jersey to $100,000,000. The deli only generated sales of about $35,000 in the last two years. Recently, hedge fund manager David Einhorn used the stock as an example of the mania taking place in markets today. CNBC's Jesse Pound reports: The Paulsboro, New Jersey-based Your Hometown Deli is the sole location for Hometown International, which has an eye-popping market value despite totaling $35,748 … [Read more...]
The Three Bubbles Threatening Your Portfolio Today
OK, it’s time to talk about bubbles. Investor Jeremy Grantham of GMO fame has called a few bubbles over his stellar career. He sees three today: Bonds, stocks, and real estate. Your Survival Guy, not famous at all, fought through the live-fire of managing client money during two brutal bubbles already in this young century. It wasn’t easy, but we got through it. That’s what I see today. Knowing how to survive the worst of times is an acquired skill, and I’ve seen my share of it. When I think about a real estate bubble, I think about you. What can you do today or in the next few years to ease … [Read more...]