You don’t build a company such as Fidelity Investments, with more than $2 trillion in assets, overnight. It takes constant focus and improvement, day by day, or kaizen—a Japanese philosophy of daily improvement espoused by former chairman Edward C. “Ned” Johnson III. When I worked at Fidelity, back in the mid-90s, Mr. Johnson encouraged us, through his memos, to apply the philosophy of kaizen to all aspects of our lives. Mr. Johnson paid particular attention to kaizen as it related to the firm’s investment in technology. He wanted to make sure Fidelity was second to none. That … [Read more...]
Your Questions, My Answers: Custodial Accounts and Gifts to Minors
Your Question: My mother is planning on gifting my children some money this year. Since there is enough in their 529 accounts, I thought I would open custodial accounts for them to take care of this money, and start them on the road to retirement saving and learning about investing. In your opinion, is a custodial account the best option in this situation and if so, is Fidelity a good place to do it? My Answer: Yes. I like custodial accounts and have them for my children. You can establish a Uniform Gift to Minors or a Uniform Transfer to Minors referred to as UGMAs or UTMAs. A custodial … [Read more...]
Your Retirement Life: Is Owning a Second Home a Good Idea?
Should you buy a second home? Take a look back at this piece I wrote on October 17, 2018 for some insight into whether or not you should invest in another house. One of the sticky parts about owning a second home is property taxes. You can't escape them. Even my favored "live free or die," New Hampshire, by example, has the third highest property taxes in the country. California, perhaps surprisingly, has a much lower rate, coming in at #34. But, the median price of a home in California far exceeds that of New Hampshire. My advice to anyone considering a second home is to rent first or to … [Read more...]
Your Retirement Life: College Towns
In isolated rural areas, college towns can be an oasis of culture. Restaurants, food, events, and more come to college towns thanks to the concentration of young people willing to spend their money on such fare. College towns can be a boon for more than students, though. Retirees can often find themselves comfortably at home in college towns located in states where their money is treated well. In areas with low taxes and low costs of living, a great retirement can be had with access to the sports events, entertainment, and cultural amenities offered by college towns. At US News & … [Read more...]
Going to WAR with Your Stock Portfolio
You can stack the odds in your favor. At its root, buying above average yields means the “market” or index yields less. Your task is to root out the higher yields, a contrary stance, and pick the winners from there. Your work has just begun. Because relying simply on the highest dividend yields is a fool’s errand. If the top dividend payers were always the top performers then investing would be easy. You and I know that’s false. What Dick Young has taught you, and tens of thousands of investors like you, is that a large part of investing involves art, not science. In baseball, there’s … [Read more...]
Cryptocosm and Life After Google Part III
You instinctively know something evil is going on when a company’s motto is “Don’t be Evil.” As we learned in parts I and II when Google offers you “free” services (Gmail for example)—you’re the product. Will Google be able to compete against a cryptocosm several orders of magnitude larger than it could ever become? At the heart of the matter is big data. Googlers feel big data has all the answers—but big data is no match for human touch and emotional intelligence. Would you trust software to drive your family today? At the heart of self-driving cars is a battle of software (Google) vs. … [Read more...]
Cryptocosm and Life After Google Part II
What we learned in Part I is there will be Life After Google as explained in futurist George Gilder’s book by the same name. Because when we use Google’s products for free, you and I give them a free pass to do what they will with our data. Who are we to complain if Google mishandles security of our data? “You fools it was free,” they counter. But what if there’s a universe, a cryptocosm, that provides search on a much larger scale where we own our data through a blockchain? Imagine musicians, artists, and other creators whose work has been essentially stolen by the “everything is free” … [Read more...]
Warning: Avoid Mutual Fund Year End Distributions
You don’t need to worry about year-end distributions with individual stocks. But with mutual funds you absolutely need to worry. It’s why at Young Research we favor individual stocks in both our Retirement Compounders and Maximizers investment strategies. Here’s a primer on year-end distributions courtesy of Fidelity. Pay particular attention to tax strategies for mutual funds, or avoid it all together by owning stocks. Fidelity writes: Mutual Funds and Taxes Distributions from mutual funds occur for several different reasons and are subject to differing tax rates. Many mutual … [Read more...]
Is Computerized Groupthink Endangering Markets?
Markets have become more volatile in 2018 than they have been for some time. I hope you'll reread this post I wrote on September 7, 2018 and reevaluate the risk in your portfolio today. I have written to you before about my unease with program trading, especially stop losses (see here and here). Add to that the algorithmic groupthink of computerized trading and it's a nasty brew. Today the Wall Street Journal's Stephanie Yang reports: On Feb. 5, the Dow Jones Industrial Average suffered its worst one-day point-decline in history amid a tumultuous week for global markets. Although the … [Read more...]
Are You as Comfortable with Your Stocks as You Are Your Home?
The DJIA was up 545 points the day after midterms. The takeaway is that you should be comfortable with your portfolio on good days and bad. Think about where you live for example. Your home. Do you call your real estate broker when prices drop (see Zillow) for the month? Probably not. If you do, perhaps it’s a spec investment rather than a home to raise your family in. Consider your portfolio as you would your home or your family—it's something you nurture and allow to grow over your lifetime. Investing takes strength and conviction as do parenting and home-ownership. They're not for the … [Read more...]
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