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...]

You may think the phrase "speculative investor-driven home price bubble" sounds familiar. If so, you may be old enough to remember 2008, when an extremely low interest rate environment, encouragement by the government to lend, and yield chasing investors on Wall Street combined to tank the economy. Deja vu, right? Ryan Dezember reports in The Wall Street Journal: A bidding war broke out this winter at a new subdivision north of Houston. But the prize this time was the entire subdivision, not just a single suburban house, illustrating the rise of big investors as a potent new force in the U.S. … [Read more...]

One of my favorite investment themes is about investing like you don’t need the money. Because THE MARKET doesn’t care about your NEEDS. Time and time again it’s the investor who doesn’t need the market who ends up being as RICH AS CROESUS. I want you to think about your investments as lifetime positions that you don’t need to maintain solvency. Learn, like I do, from the rich and you’ll discover what TRUE investment success feels like. Konrad Putzier discusses Charles Koch and his company's real estate business, writing in The Wall Street Journal: Koch Industries Inc. is emerging as a … [Read more...]

Jack be nimble, Jack be quick. Jack jumped over the…you know how it goes. As investors stomp their feet because stocks are going down (the horror), let’s not forget what’s happening to bonds. Anyone who reached for yield on the 30-year Treasury is learning about duration—basically, for every one percent increase in rates, bond prices drop, in percentage terms, by the years of maturity. In other words, if rates go up, long-term bonds get killed by a factor many times worse than short-term bonds. It’s pretty easy to hold short-term bonds to maturity, in times like these, and handle the … [Read more...]

In Deep Survival, Who Lives, Who Dies, and Why, author Laurence Gonzales explains, “The events that we call ‘accidents’ do not just happen. There is not some vector of pain that causes them. People have to assemble the systems that make them happen. Even then, nothing may happen for a long time.” In 1960, when MIT meteorologist Edward Lorenz was modeling weather systems, he discovered a tiny change in the initial state (1 part in 1,000), explains Gonzales, was enough to produce totally different weather patterns. It became known as the Butterfly Effect, “the notion that a butterfly stirring … [Read more...]

You know that getting saving for your grandchild is the best thing you can do as a grandparent. You've read my recommendations on Roth IRAs and UGMAs for your grandkids. Christmas is a great time to save for your grandkids, but any time will do when you're funding a tax-free savings plan for your grandchild. In Kiplinger, Mary Kane lays out the basics of seeding a Roth IRA for a grandchild, writing (abridged): Contributions to Roth IRAs give grandchildren "a huge head start," says Jennifer Failla, a certified financial planner with Strada Wealth Management, in Austin, Tex. Grandchildren … [Read more...]

Happy Friday, it’s almost five o’clock. Hang in there. This week we have a lot to talk about, but first, I have to say time flies. With my daughter in college and a son almost there, I feel a little older. A client friend told me about a conversation he had on a milestone birthday. “Dad, I can’t believe I’m 65,” he said. “How do you think I feel?” His dad responded, “I have a son on social security.” Aren’t we always in our mid-thirties mentally? Time flies. (If you want it to slow down, try not drinking for a month, go on a diet, or go jogging.) When I was fresh out of Babson … [Read more...]

Are you aligned with a money gathering business, or are you aligned with a money manager? The money-gathering business is all about bigness. They tell you all about how big they are when all you care about is, “how are you going to help me?” Welcome to the world where being big—whether it’s big tech or big money—makes you just a cog in the wheel. Where, for example, you sign up for Facebook or use Google for “free” and come to realize, “anything that’s free means I’m the product.” They’re selling you out. It’s no different from when money guys look to upsell you down the river. Look at the … [Read more...]