Money For the Rest of Us: Recent Episodes
J. David Stein
A personal finance and investing podcast on money, how it works, how to invest it and how to live without worrying about it. J. David Stein is a former Chief Investment Strategist and money manager. For close to two decades, he has been teaching individuals and institutions how to invest and handle their finances in ways that are simple to understand. More info at moneyfortherestofus.com
David shares how thieves recently tried to smash and grab his luggage from his car while he was still inside it. He then explores property crime trends, whether they are increasing or decreasing, and why.
Topic covers include:
- How thieves have stolen luggage from the same gas station multiple times per day
- What have property crime rates been in the U.S. over the past few decades and since the end of the pandemic
- What are reasons property crime rises and falls
- What is inventory shrink and how is it impacting retailers
- What can we do to reduce the risk of being a crime victim
Show Notes
Chevron Oakland Hegenberger Rd—Yelp
Myths and Realities: Understanding Recent Trends in Violent Crime by Ames Grawert and Noah Kim—Brennan Center for Justice
Reported property crime rate in the United States from 1990 to 2021—Statista
Pandemic, Social Unrest, and Crime in U.S. Cities: Year-End 2022 Update—Council on Criminal Justice
CATALYTIC CONVERTER THEFTS NATIONWIDE SURGE ACCORDING TO NEW REPORT—Cision PR Newswire
What the data says (and doesn’t say) about crime in the United States by John Gramlich—Pew Research Center
Oakland’s crime rates are surging. Here’s how they compare with S.F. and other Bay Area cities by Susie Neilson—San Francisco Chronicle
OAKLAND NAACP CALLS ON POLITICIANS TO CRACK DOWN ON CRIMINALS—California Policy Center
Money under the mattress: economic crisis and crime by Eleni Kyrkopoulou, Alexandros Louka, and Kristin Fabbe—SSRN
What Caused the Crime Decline? by Lauren-Brooke Eisen—Brennan Center for Justice
What’s Behind All This ‘Shrink’? by Jordyn Holman—The New York Times
Retail Theft Costs US Merchants Like Walmart and Target $100 Billion a Year—PYMNTS
Retailers battle nearly $100 billion in shrink by Jason Straczewski—National Retail Federation
2022 Retail Security Survey—National Retail Federation
US Retail Workers Are Fed Up and Quitting at Record Rates by Devin Leonard and Diana Bravo—Bloomberg
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Three additional insights to help you confidently invest in fixed income. First, what are the different measures of bond yields, and which is best? Second, how to estimate the return for a bond ETF or fund and how long do you have to own it to achieve that annualized return? Finally, we explore a bond type that yields more than U.S. Treasuries, has never defaulted, and has the implicit guarantee of the U.S. government.
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- How badly has China's stock market performed except for one remarkable decade
- What are the economic and governance factors that contributed to the underperformance
- Why it's too soon to write off China despite the structural headwinds
- What are the factors that contribute to economic growth and a robust stock market, and which emerging market countries display those factors
- What are some ETFs to invest in countries with favorable economic tailwinds
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Show Notes
State-Owned Enterprises Going Public: The Case of China by Xiaozu Wang, et al.—SSRN
A Model of China's State Capitalism by Xi Li, et al.—SSRN
Has China given up on state-owned enterprise reform? by Nicholas Borst—The Interpreter
China Regulator’s New Slogan Fuels Buying Spree in State Firms by Bloomberg News—Bloomberg
Investors sour on Beijing’s bid to boost state-owned enterprises by Sun Yu—The Financial Times
China’s 40-Year Boom Is Over. What Comes Next? by Lingling Wei and Stella Yifan Xie—The Wall Street Journal
What just happened: Storm clouds loom for China’s economy by Sebastian Mallaby, et al.—The Washington Post
Imminent end of ‘demographic dividend’: Share of India’s working age population set to fall by 2036 by Tca Sharad Raghavan—The Print
What’s Holding Back India’s Economic Ambitions? by Shan Li and Vibhuti Agarwal—The Wall Street Journal
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From raging wildfires to devastating floods, how are these natural events reshaping our financial landscape? What if anything, should we be doing with our investments as a result?
Topics covered include:
- The devastating Maui wildfire: What are the factors that led to one of the deadliest wildfires in US history.
- Global wildfire trends: Are they really increasing? The data might surprise you.
- The role of insurance companies: Learn how the giants of the reinsurance world, like Swiss Re and Munich Re, are navigating the increasing number of natural disasters.
- The complex interplay of climate change, urban expansion, and human choices
- Why IPCC is not highly confident regarding some weather impacts of climate change due to the natural variability in weather patterns.
- What should individuals do when there is a lack of details regarding a long-term potential threat?
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Masterworks Disclosure:
“net IRR” refers to the annualized internal rate of return net of all fees and costs, calculated from the offering closing date to the sale date. IRR may not be indicative of Masterworks paintings not yet sold, and past performance is not indicative of future results. See important Reg A disclosures: Masterworks.com/cd
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Show Notes
Why the fires in Hawaii have been so bad—The Economist
CAMS: monitoring extreme wildfire emissions in 2022—Copernicus
A human-driven decline in global burned area by N. Andela et al.—Science
Seasonal Trend for Europe—Copernicus
Insurers rack up $50bn in losses from natural catastrophes this year by Ian Smith—The Financial Times
World insurance market developments in 5 charts—Swiss Re Institute
When Disaster Strikes: Preparing for Climate Change by Seán Nolan and Krishna Srinivasan—IMF
California insurance market rattled by withdrawal of major companies by Michael R. Blood—AP
Rising Temperatures Are Wreaking Havoc Year-Round by Zahra Hirji, Rachael Dottle, and Denise Lu—Bloomberg
Climate Change Information for Regional Impact and for Risk Assessment by Roshanka Ranasinghe, et al.—IPCC
The Science Before Science
CO2 emissions (metric tons per capita)—The World Bank
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We share five things we have learned about stock index valuations, earnings, currency, and why value investing isn't dead.
Topics covered include:
- How index providers divide the stock universe into large and small, growth and value
- The difference between the price-to-earnings ratio and earnings yield and which is better
- How earnings volatility can impact annual earnings growth and what to use to estimate future earnings
- How value stocks often grow earnings faster than growth stocks
- How value has outperformed growth in the last three years
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Show Notes
Asset Camp
Money for the Rest of Us Plus
Related Episodes
102: What It Takes To Be A Value Investor
261: Is Value Investing Dead?
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Given climate change and other risks, how should you invest for the next forty years?
Topics covered include:
- What predictions from the last forty years came true and which didn't
- Why the next forty years will have a lot of similarities to the last forty years despite the promise of AI
- Why the scale and complexity of the world make big transitions away from oil, cement, and natural gas unlikely
- Why economic growth and consumption will likely continue leading to positive investment returns
- How should our portfolios and lifestyle be structured to build resilience
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Show Notes
The Third Wave by Alvin Toffler—Penguin Random House
Parcel shipping index 2022—Pitney Bowes
America Is Drowning in Packages by Amanda Mull—The Atlantic
How to Spend Way Less Time on Email Every Day by Matt Plummer—Harvard Business Review
World Population Prospects—United Nations Department of Economic and Social Affairs
Global Climate Change Vital Signs—NASA
Congestion Pricing Plan in New York City Clears Final Federal Hurdle by Ana Ley—The New York Times
New Jersey Sues Over Congestion Pricing in New York City by Ana Ley—The New York Times
How the World Really Works by Vaclav Smil—Penguin Random House
Does Sam Altman Know What He's Creating? by Ross Andersen—The Atlantic
The Economic Cost of Houston’s Heat: ‘I Don’t Want to Be Here Anymore’ by Rachel Wolfe and Amara Omeokwe—The Wall Street Journal
SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors—U.S. Securities and Exchange Commission
SEC’s Climate-Disclosure Rule Isn’t Here, but It May as Well Be, Many Businesses Say by Richard Vanderford—The Wall Street Journal
Market Myopia's Climate Bubble by Madison Condon—Boston University School of Law
What Really Happens to the Clothes You Donate by Oliver Franklin-Wallis—GQ
OpenAI's Sam Altman launches Worldcoin crypto project by Anna Tong—Reuters
Worldcoin’s premise is a disturbing one by Tabby Kinder—The Financial Times
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In 2005, Congress debated giving U.S. workers private savings accounts to invest their Social Security contributions in the stock and bond markets. Sixteen later, we review how that would have worked out for workers.
Other topics discussed include:
- How the public and private sectors are both critical for a functioning social security systems
- Which countries pay the highest social security benefits
- How have other privatized social security plans worked out around the world
- How workers prefer defined contribution plans even though they are worse off than if defined benefit plans were still widely available
- How worried should we be about aging populations and rising dependency ratios
- Why Social Security won't go away
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Show Notes
Greenspan "There is nothing to prevent the government from creating as much money as it wants."—YouTube
Estimated Financial Effects of the "Social Security Personal Savings Guarantee and Prosperity Act of 2005" by Stephen C. Goss—Social Security Administration
Social Security Quick Calculator—Social Security Administration
The average 401(k) balance by age by Pau Deer—Empower
CBO’s 2022 Long-Term Projections for Social Security—Congressional Budget Office
Policy Basics: Top Ten Facts about Social Security—Center On Budget and Policy Priorities
Evaluation of Four Decades of Pension Privatization in Latin America, 1980-2020: Promises and Reality by Carmelo Mesa-Lago—SSRN
Population Age Structure and Secular Secular Stagnation: The Long Run Evidence by Joseph Kopecky—SSRN
Does Human Capital Compensate for Depopulation? by M. Siskova, Michael Kuhn, Klaus Prettner, Alexia Fürnkranz-Prskawetz—SSRN
How Much Do Public Employees Value Defined Benefit versus Defined Contribution Retirement Benefits? by Oliver Giesecke and Joshua D. Rauh—SSRN
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How to mitigate the risk of investing on crowdfunding platforms where there is little transparency on the underlying financial health of the platform company.
Topics covered include:
- What is the platform economy
- How blitzscaling and an over-reliance on venture capital funding led to Peer Street's bankruptcy
- What happens next for investors on Peer Street's platforms
- How individuals and businesses can mitigate the risk of investing or conducting business on platforms
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Show Notes
Amazon: Independent Sellers In The U.S. Sold More Than 4.1 Billion Products in 2022 by SGB Media—SGB Media
PeerStreet
LinkedIn Post by Brett Crosby—LinkedIn
Crowdfunding platform PeerStreet files for bankruptcy by Flávia Furlan Nunes—Housingwire
AI Was Q2’s Big Hope To Reverse The Global Venture Funding Slowdown. It Wasn’t Enough by Gené Teare—Crunchbase
VC finds its footing as headwinds weaken by James Thorn—PitchBook
PitchBook-NVCA Venture Monitor—PitchBook
Cases FAQ—Stretto
Real estate debt marketplace PeerStreet files for bankruptcy by Matt Carter—inman
BlockFi Bet Big on FTX and Alameda Even After Seeing Infamous Balance Sheet, Creditors Say by Jack Schickler—CoinDesk
Related Episodes
253: Are IPOs the New Ponzi Scheme?
301: Use Caution with Alternative Investments
393: What Happens If Your Brokerage Firm Goes Bankrupt
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AI models like ChatGPT could lead to massive productivity gains, accelerated economic growth, and higher stock returns. Here's how to invest in AI.
Topics covered include:
- How workers are already using AI models like ChatGPT to boost productivity
- Why ChatGPT is better at search than Google for certain queries
- How AI models will change the economic narrative
- What are ways to invest in AI, including specific ETFs
Sponsors
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Masterworks – invest in contemporary art
Masterworks Disclosure:
“net IRR” refers to the annualized internal rate of return net of all fees and costs, calculated from the offering closing date to the sale date. IRR may not be indicative of Masterworks paintings not yet sold, and past performance is not indicative of future results. See important Reg A disclosures: Masterworks.com/cd
Show Notes
Sarah Silverman Sues OpenAI and Meta Over Copyright Infringement by Zachary Small—The New York Times
ChatGPT saw its first-ever user decline in June by Igor Bonifacic—Engadget
A New Chat Bot Is a ‘Code Red’ for Google’s Search Business by Nico Grant and Cade Metz—The New York Times
How to get a handle on AI’s many implications for economies and markets by Neil Shearing—Capital Economics
Lessons From the Catastrophic Failure of the Metaverse by Kate Wagner—The Nation
To Drive AI, Chip Makers Stack ‘Chiplets’ Like Lego Blocks by Yang Jie—The Wall Street Journal
Investments Mentioned
iShares Semiconductor ETF (SOXX)
Roundhill Generative AI & Technology ETF (CHAT)
Robo Global® Artificial Intelligence ETF (THNQ)
iShares Robotics & Artificial Intelligence Multisector ETF (IRBO)
iShares Exponential Technologies ETF (XT)
Vanguard Total World Stock ETF (VT)
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How to create and sustain a life of freedom and happiness you don't want to retire from.
Topics covered include:
- What are the physical and mental aspects of living like you are already retired
- What is the good life, and what are the basic goods that contribute to it
- How we handle time is the key to the good life and living like we are already retired
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Show Notes
Politics by Aristotle
How Much is Enough? Money and the Good Life by Robert Skidelsky and Edward Skidelsky—Penguin Random House
Cormac McCarthy Had a Remarkable Literary Career. It Could Never Happen Now. by Dan Sinykin—The New York Times
Soloing: Realizing Your Life's Ambition by Harriet Rubin—HarperCollins
Saving Time: Discovering a Life Beyond the Clock by Jenny Odell—Penguin Random House
An Early Resurrection: Life in Christ Before You Die by Adam S. Miller—Deseret Book
Four Thousand Weeks: Time Management for Mortals by Oliver Burkeman—Macmillan Publishers
Time Surfing
Related Episodes
19: Live Like You’re Already Retired
117: The Retirement Journey
371: Find Your Retirement Investing and Living Style
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We review the performance and investment prospects for carbon, SPACs, silver, convertible bonds, and frontier markets.
Topics covered:
- What has been the performance of these five asset types since they were discussed on the podcast two to three years ago
- What are the underlying performance drivers and expected returns going forward
- Which asset types are most and least attractive
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Show Notes
Initial Public Offerings: Updated Statistics by Jay R. Ritter—Warrington College of Business, University of Florida
Two SPAC ETFs Close in One Month, Suggesting End to Wall Street Boom by Emily Graffeo—Bloomberg
Investments Mentioned
Vanguard Total World Stock Market ETF (VT)
SPAC and New Issue ETF (SPCX)
iShares Convertible Bond ETF (ICVT)
iShares Silver Trust (SLV)
ProShares Ultra Silver (AGQ)
iShares Fronter and Select EM ETF (FM)
Kraneshares Global Carbon ETF (KRBN)
Related Content
318: What Are SPACs and Should You Invest in Them?
330: Is Silver the Next GameStop? How to Invest in Silver
A Complete Guide To Investing In Convertible Bonds
The Opportunity and Risk of Frontier Markets
What You Need to Know About Carbon Investing and its Effect on Climate Change
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How to decide whether to rent a house or apartment or purchase a home or condo. What has been the financial return from owning a house?
Topics covered include:
- How much have home prices increased in major cities since 1980
- What drove the greater than 50% jump in home prices in some U.S. cities since 2020
- Why there aren't more new starter homes
- What will it take for the housing shortage to abate so houses can be more affordable
- Why now could be a more advantageous time to rent versus buy
- What academics estimate the long-term return is for owning a house, and why the calculations are incomplete
- How to determine what your total cost of ownership is for buying a house in order to compare it to renting
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Show Notes
The housing theory of everything by John Myers & Ben Southwood & Sam Bowman—Works in Progress
Irish property: the boom that shows no signs of slowing by Jude Webber—The Financial Times
Whatever Happened to the Starter Home? by Emily Badger—The New York Times
The Housing Revolution Is Coming by M. Nolan Gray—The Atlantic
In Today’s Housing Market, It’s Timing Over Location by Joe Pinsker—The Wall Street Journal
The Rate of Return on Real Estate: Long-Run Micro-Level Evidence by David Chambers, Christophe Spaenjers, and Eva Steiner—Oxford Academic
The Rate of Return on Everything, 1870–2015 by Òscar Jordà, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, and Alan M. Taylor—National Bureau of Economic Research
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What are the best options for safely investing cash.
Topics covered include:
- High-yield savings accounts
- Certificates of Deposits
- Government Bonds
- Money Market Mutual Funds
- When should you invest in long-term bonds
- Why some savings apps try to look like banks but they are not
- What happens when central banks lose money
- Where not to deposit cash for safety
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Camden and David converse with Asha Mehta, Managing Partner & CIO at Global Delta Capital about the bullish case for emerging and frontier market stocks as well as the risks.
Topics covered include:
- How to go about investing in emerging markets
- Should you invest in China
- Where are the most promising emerging and frontier markets
- Why aggregate emerging markets earnings have been lackluster
- How to balance quantitative analysis with subjective reasoning
Sponsors
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Show Notes
Power of Capital by Asha Mehta
Global Delta Capital
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How the bankruptcy of FTX, the world's third-largest crypto exchange, undermines trust in cryptocurrency and decentralized finance, making it even more difficult for crypto to ever be taken seriously as a monetary alternative.
Topics covered include:
- How FTX squandered its customers' deposits
- How FTX is another example of a private money bank run
- How traditional securities lending works and why it is very low risk compared to the highly speculative nature of cryptocurrency lending platforms
- How FTX's demise is impacting numerous entities including Voyager, BlockFi, Bitcoin miners, venture capitalists, and many others
- How should individual investors store cryptocurrency, and does it even make sense to continue to own it
For more information on this episode click here.
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Show Notes
Don't Miss Out on Crypto: Larry David FTX Commercial
The spectacular implosion of crypto’s biggest star, explained by Emily Stewart—Vox
Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His Trading Titan Alameda’s Balance Sheet by Ian Allison—CoinDesk
FTX held less than $1bn in liquid assets against $9bn in liabilities by Antoine Gara, Kadhim Shubber, and Joshua Oliver—Financial Times
FTX balance sheet, revealed by FT Alphaville—Financial Times
FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall by Vicky Ge Huang, Alexander Osipovich, and Patricia Kowsmann—The Wall Street Journal
After FTX: Rebuilding Trust in Crypto’s Founding Mission by Noelle Acheson—CoinDesk
How Sam Bankman-Fried’s Crypto Empire Collapsed by David Yaffe-Bellany—The New York Times
Exclusive: At least $1 billion of client funds missing at failed crypto firm FTX by Angus Berwick—Reuters
Investors Who Put $2 Billion Into FTX Face Scrutiny, Too by Erin Griffith and David Yaffe-Bellany—The New York Times
FTX signs deal with option to buy BlockFi for up to $240 mln by Niket Nishant and Aditya Soni—Reuters
Voyager Digital and Voyager Official Committee of Unsecured Creditors Provide Update on Reorganization Plan—Cision
Crypto lender BlockFi says it has significant exposure to FTX by Manya Saini and Shailesh Kuber—Reuters
Coinbase Quarterly Earnings
Related Episodes
393: What Happens If Your Brokerage Firm Goes Bankrupt
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How the International Monetary Fund, the world's economic firefighter, works for global monetary cooperation and prosperity while using its own made-up currency, the SDR.
Topics covered include:
- What was the Bretton Woods monetary system that led to the formation of the IMF and the World Bank
- How the World Bank and IMF differ
- What does the IMF do
- How the IMF creates its own money out of thin air
- Why does Argentina, the IMF's largest borrower, keep defaulting on its debt obligation including those to the IMF
- Why the IMFs negotiating tactics are controversial
For more information on this episode click here.
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Show Notes
Creation of the Bretton Woods System, July 1944—Federal Reserve History
The World Bank
International Monetary Fund
Sterling devalued and the IMF loan—Cabinet Papers, The National Archive
Total IMF Credit Outstanding, Movement From November 01, 2022 to November 07, 2022—IMF
Why you can’t technically default on the IMF by Izabella Kaminska—Financial Times
Implications of the IMF's SDR Allocation for Australia and the Global Economy by Ben Hollebon and Kate Hickie—Reserve Bank of Australia
The IMF cannot solve Argentina’s dysfunction—The Economist
IMF Executive Board Completes Second Review of the Extended Arrangement Under the Extended Fund Facility for Argentina—IMF
The IMF: The World’s Controversial Financial Firefighter—by Jonathan Masters, Andrew Chatzky, and Anshu Siripurapu—Council on Foreign Relations
Related Episodes
233: Is An Emerging Markets Crisis Imminent?
322: Why Currency Exchange Rates Matter?
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How to survive in a world where luck and randomness play a pivotal role.
Topics covered include:
- What are power laws
- What are the narrative fallacy and hindsight bias
- What are examples of domains where randomness has contributed to success
- What are ways to distinguish investing skill from luck
- How sixth-century philosopher Boethius had an accurate view of chance
- What are ways we can benefit from good luck while protecting ourselves from bad luck
For more information on this episode click here.
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Show Notes
Redacted messages to and from Elon Musk—Delaware’s Court of Chancery
Elon Musk’s Texts Shatter the Myth of the Tech Genius by Charlie Warzel—The Atlantic
Talent Versus Luck: The Role of Randomness In Success and Failure by Alessandro Pluchino, Alessio Emanuele Biondo, and Andrea Rapisarda
Susan Alexandra
Welcome to Susan Alexandra’s Dream World by Sophia Herring—Clever, Architectural Digest
The Fashion Set Can’t Get Enough of Susan Alexandra’s Colorful, Kitschy Designs by Noah Lehava—Coveteur
Quantifying the evolution of individual scientific impact by Roberta Sinatra et al.
What's in a Surname? The Effects of Surname Initials on Academic Success by Liran Einav and Leeat Yariv
Middle names make you look smarter—University of Southhampton
Admission to Selective Schools, Alphabetically by Štěpán Jurajda and Daniel Münich
It Pays to Be Herr Kaiser: Germans With Noble-Sounding Surnames More Often Work as Managers Than as Employees by Raphael Silberzahn and Eric Luis Uhlmann
The relative-age effect and career success: Evidence from corporate CEOs by Qianqian Du, Huasheng Gao, Maurice D. Levi
The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb
Were Those Great Returns the Result of Skill — or Just Luck? by Julie Segal—Institutional Investor
Related Episodes
323: The Economy Is Not A Machine
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How to use laddered inflation-indexed bonds (i.e., TIPS), CDs, fixed annuities, and fixed index annuities to meet retirement living expenses while worrying less about running out of money.
Topics covered include:
- How individuals can use liability-driven investment strategies
- Why now is the best opportunity to buy Treasury Inflation Protection Securities in 15 years
- How to use bond ladders
- How deferred fixed and deferred variable annuities work
- How to analyze fixed index annuities
For more information on this episode click here.
Show Notes
Worry-Free Investing by Zvi Bodie and Michael J. Clowes
Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis, Inflation-Indexed—FRED
Market Yield on U.S. Treasury Securities at 5-Year Constant Maturity, Quoted on an Investment Basis, Inflation-Indexed—FRED
New 5-year TIPS auctions with a real yield of 1.732%, highest in 15 years—TIPSwatch
Complete List of Multi-Year Guaranteed Annuities (MYGAs), October 26, 2022—ImmediateAnnuities.com
Safety-First Retirement Planning: An Integrated Approach for a Worry-Free Retirement by Wade Pfau
A Complete Guide to Investing in TIPS and I Bonds—Money for the Rest of Us
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Related Episodes
279: Why All Retirees Should Consider an Income Annuity
326: The New Math of Retirement Spending and Investing
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In Episode 406, David and Camden visit with Annie Duke about how to better manage our investment portfolios including when and what to sell. We also discuss a number of behavioral finance topics such as mental accounting, sunk costs, and goal myopia.
Annie Duke is an author, speaker, and consultant in the decision-making space, as well as Special Partner focused on Decision Science at First Round Capital Partners, a seed stage venture fund. Annie’s latest book, Quit: The Power of Knowing When to Walk Away, was released on October 4, 2022. Her previous book, Thinking in Bets, is a national bestseller, and is highly influential on the investing philosophy of Money for the Rest of Us.
As a former professional poker player, she has won more than $4 million in tournament poker, won a World Series of Poker Bracelet and is the only woman to have won the World Series of Poker Tournament of Champions and the NBC National Poker Heads-Up Championship. She retired from the game in 2012.
Prior to becoming a professional poker player, Annie was awarded a National Science Foundation Fellowship to study Cognitive Psychology at the University of Pennsylvania.
These days, Annie loves to dive deep into decision-making under uncertainty. As can be seen from her new book, her latest obsession is the topic of quitting.
For more information on this episode click here.
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Show Notes
Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts by Annie Duke
Quit: The Power of Knowing When to Walk Away by Annie Duke
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What is volatility and what causes it to rise and fall? How volatility itself contributes to more volatility such as in the example of the chaotic UK government bond market where long-term yields have increased by 4% in 2022.
Topics covered include:
- How the role of volatility has changed in financial markets
- What caused UK interest rates to spike and long-term bond investors to lose 50%
- What is liability-driven investment
- What drives increases in volatility and volatility spikes and spillovers are more frequent
- How to earn income from shorting volatility and what are the risks
- What we can learn when financial securities blow up
For more information on this episode click here.
Episode Sponsors
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Policygenius
Show Notes
The volatility virus strikes again by Eric Lonergan—Financial Times
How ‘Liability-Driven’ Pension Funds Triggered UK Bond Panic by Loukia Gyftopoulou and Greg Ritchie—Bloomberg
UK government debt and deficit: December 202—UK Office for National Statistics
Markets are more fragile than investors think by Robin Wigglesworth—Financial Times
Volatility and the Alchemy of Risk: Reflexivity in the Shadows of Black Monday 1987—Artemis Capital Management
What Caused the Volatility “Volmageddon” on 5-Feb-2018 by Vance Harwood—Six Figure Investing
Gamma Explained—Merrill
Delta Explained—Merrill
Inside Volatility Trading: Is VIX Backwardation Necessarily a Sign of a Future Down Market? by Scott Bauer
Investments Mentioned
WisdomTree CBOE S&P500 PutWrite Strategy ETF (PUTW)
Simplify Volatility Premium ETF (SVOL)
Related Episodes
159: What You Need To Know About Volatility
283: Why You Should Care About Carry Trades
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What has caused the U.S. dollar's currency exchange rate to be the strongest in twenty years? How a strong dollar leads to slower global economic growth and falling asset prices.
Topics covered include:
- Why a strong dollar is a no-win situation for the rest of the world
- Why have inflation and interest rates increased
- Why recession risks are rising as central banks combat inflation
- Why asset prices fall when interest rates rise
- What would cause the U.S. dollar to weaken from these levels
- How to protect against currency fluctuations
For more information on this episode click here.
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Show Notes
Wall St blames missteps at FedEx as parcel service fails to delivery Steff Chávez and Andrew Edgecliffe-Johnson—Financial Times
The Global Dollar Cycle by Maurice Obstfeld and Haonan Zhou, BPEA Conference Drafts, September 8–9, 2022—Brookings Papers on Economic Activity
Monetary policy challenges posed by global liquidity by Hyun Song Shin—BIS
Dollar beta and stock returns by Valentina Bruno, Ilhyock Shim and Hyun Song Shin—BIS
Wonking Out: The Mysteries of the Almighty Dollar by Paul Krugman—The New York Times
Rents Drop for First Time in Two Years After Climbing to Records by Will Parker—The Wall Street Journal
Stop looking for a bogeyman to explain sterling’s collapse by Kate Martin—Financial Times
British Pound / US Dollar Historical Reference Rates from Bank of England for 1975 to 2022—Pound Sterling Live
Related Episodes
215: Is A Dollar Collapse Coming?
338: The National Debt, Inflation, and the U.S. Dollar—What Could Go Wrong?
364: Should You Hedge Your International Stock Exposure Against Currency Fluctuations?
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How risk perceptions and actions have changed over several years of the pandemic. How the pandemic's impacts continue to affect politics, the economy, financial markets, how we invest, and our personal lives.
Topics covered include:
- Is the pandemic really over?
- What percentage of people continue to isolate at home
- How behaviors such as eating out and visiting friends have changed throughout the pandemic.
- How work has changed with the pandemic
- Has pandemic stimulus changed beliefs about the sustainability of the national debt leading to structural inflation
- How productivity improvements could improve the national debt burden
- What investment lessons has David learned from the pandemic
For more information on this episode click here.
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Show Notes
Biden’s claim that ‘pandemic is over’ complicates efforts to secure funding by Dan Diamond—The Washington Post
COVID-19 Dashboard—The Center for Systems Science and Engineering at Johns Hopkins University
Axios/Ipsos COVID-19 Poll – Wave 70, September 9–12, 2022
Study: 163 Million People Dine Out at Least Once a Week—QSR Magazine
U.S. Return-to-Office Rates Hit Pandemic High as More Employers Get Tougher By Peter Grant—The Wall Street Journal
Reassessing Constraints on the Economy and Policy; Panel Topic: An End to Pre-Pandemic Trends or Just a Temporary Interruption? by Valerie A. Ramey
Inflation as a Fiscal Limit by Francesco Bianchi and Leonardo Melosi
Related Episodes
333: How The Covid Shock Nearly Destroyed The Financial System
400: What If High Inflation Doesn’t End?
Investments Mentioned
Simplify Interest Rate Hedge ETF (PFIX)
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the drivers that lead to higher student loan balances? Why a one-time student loan forgiveness program doesn't solve the problem of increasing student debt. What are some more viable longer-term solutions.
Topics covered include:
- How big is the Biden Administration student debt forgiveness plan
- How big has the student debt burden grown
- Why are borrowings for students increasing
- Why Baby Boomers spent so much less on college
- How are student loans accounted for by the U.S. federal government
- What is the impact on the deficit and potentially inflation of forgiving billions of dollars of student debt
For more information on this episode click here.
Show Notes
Student Debt And The Federal Budget | How Student Loans Impact The U.S. Fiscal Outlook, November 2021—Bipartisan Policy Center
What the Student-Loan Debate Overlooks by Ronald Brownstein—The Atlantic
See the Average College Tuition in 2022-2023 by Emma Kerr and Sarah Wood—U.S. News & World Report
Biden’s Student-Debt Plan Could Chip Away at the Racial Wealth Gap by Sheelah Kolhatkar—The New Yorker
If your federal student loan payments are high compared to your income, you may want to repay your loans under an income-driven repayment plan—Federal Student Aid
What Does Student Debt Cancellation Mean for Federal Finances?—Committee for a Responsible Federal Budget
Government payments by program—Economic Research Service, U.S. Department of Agriculture
Projected Lifetime Earnings by Major by Douglas A. Webber, December 1st, 2019
Related Episodes
245: Is College Worth It?
307: Income Share Agreements—Good for Students or Investors?
327: Is Student Loan Forgiveness A Good Idea?
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Warren Buffet said, "Diversification makes very little sense for anyone that knows what they’re doing." He also said, "Diversification is a protection against ignorance..." Most of us need that protection against ignorance, yet diversification often makes us feel bad when some of our holdings don't do as well as others. We make the case why we should diversify anyway.
Topics covered:
- Warren Buffet says it's crazy to own more than 30 stocks, but Berkshire Hathaway owns 48 stocks
- What does it mean to analyze a business
- How have U.S. stocks performed relative to non-U.S. stocks long-term
- What has driven the outperformance of U.S. stocks and what has to happen for it to continue
- What are examples of diversification plays just in case the U.S. falters
For more information on this episode click here.
Show Notes
Warren Buffett and Diversification—GrahamValue.com
The Complete Berkshire Hathaway Portfolio by John Divine U.S. News
The Business Cycle Is Different Than The Economic Cycle - Crestmont Research
EU Natural Gas—Trading Economics
Related Episodes
254: Should You Be 100% Invested In Stocks?
275: Are You Over Diversified?
364: Should You Hedge Your International Stock Exposure Against Currency Fluctuations?
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How economic wars, pandemics, and worker shortages could lead to years of high structural inflation. What needs to happen to avoid this dire inflation scenario.
Topics covered include:
- What are the three inflation lessons Federal Reserve Chair Jerome Powell shared
- What is inflation anchoring
- What caused the current period of high inflation
- How China and Russia contributed to low inflation and why those trends have reversed
- How behavior changes and productivity improvements can contribute to lower inflation
- How to invest for an extended period of high inflation
For more information on this episode click here.
Thanks to Policygenius for sponsoring the episode.
Show Notes
Monetary Policy and Price Stability, August 26, 2022, byChair Jerome H. Powell—Board of Governors of the Federal Reserve System
Fed's Kashkari: 'happy' with market reaction to Powell speech by Ann Saphir and Matthew Lewis—Reuters
War and Interest Rates by Zoltan Pozsar—Credit Suisse
2nd Quarter Market Commentary, July 2022—Horizon Kinetics
BP Energy Outlook 2022
Investments Mentioned
Invesco DB Commodity Tracking ETF (DBC)
Horizons Kinetics Inflation Beneficiary ETF (INFL)
Related Episodes
342: Is Another Great Inflation Coming?
384: Has a Commodities Bull Market Supercycle Started? If So, How Do You Invest in It?
395: How Population Trends Will Impact Growth, Inflation, Investing, and Well Being
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We explore examples of positive and negative unintended consequences, what causes them, and how to navigate a world where unanticipated things happen all of the time.
Topics covered include:
- What leads to unintended consequences
- What are some unintended consequences of QE and stimulus, price controls, tax incentives, gun legislation, and marijuana legalization
- How positive unintended consequences and order can arise from the bottom up
- How recent climate legislation could lead to unintended consequences
- Why customers don't always know what they want
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Show Notes
Large rent increases squeeze metro Phoenix tenants by Associated Press—The Journal Record
Unintended Consequences by Karras Lambert and Christopher J. Coyne
The Seen, the Unseen, and the Unrealized: How Regulations Affect Our Everyday Lives byPer L. Bylund
Norway reconsiders electric car privileges by Chris Randall—electrive.com
More Guns, More Unintended Consequences: The Effects of Right-to-Carry on Criminal Behavior and Policing in Us Cities by John J. Donohue, Samuel Cai, Matthew Bondy, and Philip J. Cook
Marijuana Legalization and Fertility by Sarah Papich
Japan’s latest alcohol advice: please drink more by Leo Lewis and Kana Inagaki—Financial Times
The Poverty of Historicism by Karl Popper
How the New Climate Bill Would Reduce Emissions by Nadja Popovich and Brad Plumer—The New York Times
Democrats Designed the Climate Law to Be a Game Changer. Here’s How. by Lisa Friedman—The New York Times
Economists’ Statement on Carbon Dividends; The Largest Public Statement of Economists in History—Climate Leadership Council
Why We Don't Have a Carbon Tax by Paul Krugman—The New York Times
Lean Startup and the Business Model: Experimentation Revisited by Teppo Felin, Alfonso Gambardella, Scott Stern, and Todd Zenger
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We analyze two listeners' portfolios. One who is close to retirement and considering hiring an outside money manager. The second is 45 and just sold a business and is trying to decide whether to fire Schwab's robo-advisor service and manage his portfolio on his own.
Topics covered include:
- What elements are part of a financial plan
- What to consider when researching an investment advisor
- What is a core-satellite investment approach
- Why Schwab was fined $180 million for misleading its clients about the cash balance in its Intelligent Portfolios service
- How to decide if an investment advisor is a good fit
- Why no portfolio can be on autopilot, but they can be as simple as two ETFs
Sponsors
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This episode edits and remasters two earlier episodes on investing based on cycles to focus on timeless investing principles.
Topics covered include:
- What are different types of cycles
- Why do cycles have subjective start and end dates.
- Why do coincidences happen so often.
- How to position investment portfolios based on cycles.
- How luck and skill play a role in investing.
- Why it is better to invest based on calibrating risk rather than prediction.
Show Notes
Weiss Research
Weiss Research SEC Action
Foundation For The Study of Cycles
Fluke: The Math and Myth of Coincidence by Joseph Mazur
A Spectral Analysis of World GDP Dynamics – Andrey V. Korotayev and Sergey V. Tsirel
Howard Marks – Yet Gain?
Mastering The Market Cycle by Howard Marks
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Why it is challenging to distinguish a legitimate multi-level marketing company from a pyramid scheme as hedge fund billionaire Bill Ackman found out in his losing campaign against Herbalife. How Forsage has taken pyramid and Ponzi schemes to a whole new level, and why the regulators can't shut it down.
Topics covered include:
- What are multi-level marketing companies and how most MLM distributors are unsuccessful
- What is the difference between a pyramid scheme and a Ponzi scheme and what are some examples
- How hedge fund Pershing Square Capital Management took on Herbalife and despite FTC and SEC actions, Herbalife continues to thrive.
- Why Forsage, a pyramid and Ponzi scheme on the blockchain, continues, despite SEC regulatory actions
- Why Bitcoin isn't a Ponzi scheme
Sponsors
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Money For the Rest of Us Plus
Show Notes
Herbalife Settlement With F.T.C. Ends Billionaires’ Battle by Matthew Goldstein and Alexandra Stevenson—The New York Times
Multi-Level Marketing Businesses and Pyramid Schemes—Federal Trade Commission
Herbalife International Settlement Complaint
Herbalife Settles With S.E.C., but Too Late for Hedge Fund Investor by Matthew Goldstein—The New York Times
Consistency is Key! Make Money Podcasting by Elsie Escobar—Libsyn
November Stats From Rob Walch—Podcast Business Journal
Federal Trade Commission Returns More Than $149 Million To Consumers Harmed by AdvoCare Pyramid Scheme—Federal Trade Commission
Federal Trade Commission Returns More Than $23 Million To Consumers Deceived by Online Business Coaching Scheme MOBE—Federal Trade Commission
FTC Shuts Down Credit Repair Pyramid Scheme Financial Education Services, Which Bilked More Than $213 Million from Consumers—Federal Trade Commission
Investor Alert: Ponzi Schemes Using Virtual Currencies—U.S. Securities and Exchange Commission
What is Forsage?—Forsage Support
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How slowing population growth and an eventual population peak will lead to competition for foreign workers, potentially higher inflation, and ultimately the need to transition to a steady-state economy rather than one based on constantly producing more.
Topics covered include:
- How longevity and birthrates impact population growth
- What areas of the world are seeing population increases versus declines
- Why high income countries will need more immigrants in order to sustain their population levels
- When is global population expected to peak and at what level
- Will greater dependency ratios lead to higher inflation
- What is the difference between growth and development
- How slowing population growth will impact investments
- Why the world will need to transition to a steady-state economy focused on well-being rather than growth
Sponsors
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Show Notes
World Population Prospects 2022: Summary of Results—United Nations Department of Economy and Social Affairs
Five Key Findings from the 2022 UN Population Prospects by Hannah Ritchie, et al.
Germany Plans to Simplify Immigration Rules to Combat Labour Shortage—Schengen Visa
High Cost Deters IT Gurus from Filling Luxembourg Jobs by Kate Oglesby
Another Beautiful Italian Town Is Selling €1 Homes—This Time, No Deposit Required by Cailey Rizzo
Will Inflation Make a Comeback as Populations Age? by Olli Rehn
The Great Demographic Reversal: Ageing Societies, Wanting Inequality, and an Inflation Revival by Charles Goodhart and Manoj Pradhan
The Enduring Link Between Demography and Inflation by Mikael Juselius and Elöd Takáts
Unions Are Now a Lifestyle Choice for Some Young, Aspirational Workers, Says Walter Olson—The Economist
Economics for a Full World by Herman Daly
This Pioneering Economist Says Our Obsession with Growth Must End by David Marchese
The Environmental Kuznets Curve by David I. Stern
Small Is Beautiful: Economics as if People Mattered by Ernst F. Schumacher
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Five ways we can better take and manage risk.
Topics covered include:
- How likely is it that China will invade Taiwan and the stock market will fall 80%
- Why experts tend to be humble and don't make specific predictions
- What is the difference between risk and uncertainty, and between loss capacity and loss aversion
- What factors impact our degree of loss aversion and loss tolerance
- Why the economy needs more risk takers rather than rentiers
For more information on this episode click here.
Sponsors
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Show Notes
Investor Risk Profiling: An Overview by Joachim Klement, CFA—CFA Institute Research Foundation
Looming Large or Seeming Small? Attitudes Towards Losses in a Representative Sample by Jonathan Chapman, et al.
The Global Impacts of Climate Change on Risk Preferences by Wesley Howden and Remy Levin
Does Mood Take the Front Seat in Determining the Financial Risk-Taking Propensity of Individuals? Evidence from India by Crystal Glenda Rodrigues and Gopalakrishna B. V
Venture Capital AUM at Record High of $2tn—Preqin
10 Key Facts About the Capital Markets by Katie Kolchin, CFA—SIFMA
Related Episodes
What Is Risk vs Uncertainty?
268: How To Better Manage Risk
350: How to Invest in Startups on Equity Crowdfunding Platforms?
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How protected are you if the brokerage firm where you hold your stocks, bonds, and crypto assets files for bankruptcy? Why you shouldn't store your crypto assets with an online broker.
Topics covered include:
- How traditional brokerage firms protect their client assets in case of bankruptucy
- How cryptocurrency brokers, such as Voyager, mistreat their clients in bankruptcy proceedings
- What is the safest way to hold cryptocurrency
For more information on this episode click here.
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Money For the Rest of Us Plus
Show Notes
Voyager To Acquire Circle Invest Retail Digital Asset Business From Circle Internet Financial—Cision
Welcome, Circle Invest! Voyager Acquires Circle Invest's Retail Customers—Voyager
Crypto lender Voyager Digital files for bankruptcy by Shivam Patel, Sinead Cruise, and Tom Wilson—Reuters
Crypto lender Voyager addresses customer anger in first bankruptcy hearing by Dietrich Knauth—Reuters
If a Brokerage Firm Closes Its Doors—FINRA
Crypto Broker Voyager Digital Says Three Arrows Capital Hasn’t Repaid $666 Million in Loans by Vicky Ge Huang—The Wall Street Journal
From $10 billion to zero: How a crypto hedge fund collapsed and dragged many investors down with it by MacKenzie Sigalos—NCBC
Ropes & Gray
Update on Customer USD and Crypto—Voyager
Investors lament potentially lost ‘millions’ on Voyager bankruptcy by Brian Quarmby—Cointelegraph
Coinbase Quarterly Report
CFTC Charges MF Global Inc., MF Global Holdings Ltd., Former CEO Jon S. Corzine, and Former Employee Edith O’Brien for MF Global’s Unlawful Misuse of Nearly One Billion Dollars of Customer Funds and Related Violations—Commodity Futures Trading Commission
Related Episodes
387: Why Most Money Fails
392: What Is Money and How to Use It
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David and his son Camden conclude their conversation about money.
Topics covered include:
- A review of money principles discussed in Part 1
- How money is created
- How money is energy
- Why bank runs occur
- How cryptocurrency fails as money
- How money is debt backed by debt
For more information on this episode click here.
Sponsors
Policygenius
Money For the Rest of Us Plus
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David and his son Camden hold a conversation about money, its attributes, how it's created, and how money differs from investments.
Topics covered include:
- How our earliest money memories impact our views on money
- The difference between public and private money
- What are the two primary attributes of money
- Why money should be accepted with no questions asked
- How some countries use more cash than others
- How money differs from investing
- Why private money can be risky
Show Notes
Free email course and PDF on how to beat inflation
Sponsors
LinkedIn – Post your job for free
Real Vision
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Three things investors can do to survive this bear market and thrive in its aftermath.
Topics discussed include:
- What are bear markets, how often do they occur, and how long do they last
- How the current bear market differs from previous ones
- How severe have losses been for various asset classes
- How have asset class long-term expected returns changed since last November when the sell-off began
- What actions can investors take to make it through this bear market and take advantage of opportunities
Episode Sponsors
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Show Notes
US Leading Indicators, Updated: Friday, June 17, 2022—The Conference Board
Investment Mentioned In this Episode
The Vanguard Total World Stock Market ETF (VT)
ARK Innovation ETF (ARKK)
iShares Edge MSCI Intl Value Factor ETF (IVLU)
Vanguard Total Bond Market ETF (BND)
iShares 20+ Year Treasury Bond ETF (TLT)
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This week on the show, David shares some investing lessons from fly fishing and introduces our new course on How To Invest in Closed-End Funds.
Between now and the end of June get 25% off the course. You can learn more here.
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How big index fund and ETF providers have increased their sway over publicly-traded companies while potentially discouraging competition. What can be done about it?
Topics covered include:
- How market share for assets under management has become increasingly concentrated with big fund complexes like Vanguard and BlackRock
- What is a fiduciary relationship and how do asset managers serve as fiduciaries
- Why do investors in index funds and ETFs have no input as to how fund sponsors vote on shareholder proposals
- What percentage of outstanding shares do Vanguard and BlackRock own of publicly traded companies like Apple, Target, or gun manufacturers
- How Vanguard and BlackRock use engagement and voting policies to influence publicly traded companies, particularly when it comes to climate risk and diversity
- How ownership by Vanguard and BlackRock in publicly-traded companies in the same industry could discourage competition.
- What can be done through regulation or through individual action to reduce Vanguard and BlackRock's influence
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Show Notes
What BlackRock, Vanguard and State Street Are Doing to the Economy by Farhad Manjoo—The New York Times
Investment Company Fact Book
World's Top Asset Management Firms—ADV Rating
West Virginia Treasury Drops BlackRock Over Stance on Climate Risk by Alicia McElhaney—Institutional Investor
How an Organized Republican Effort Punishes Companies for Climate Action by David Gelles and Hiroko Tabuchi—The New York Times
The Future of Corporate Governance Part I: The Problem of Twelve by John C. Coates, IV
Larry Fink’s 2022 Letter to CEOs: The Power of Capitalism
BlackRock's gun money by Dan Primack—Axios
Investment Stewardship 2021 Annual Report—Vanguard
Proxy Voting Policy for U.S. Portfolio Companies
Anticompetitive Effects of Common Ownership by José Azar, Martin C. Schmalz, and Isabel Tecu
Common Ownership and Industry Profitability: A Crossindustry View by Haifeng Wang, Jan-Carl Plagge, James Rowley, Roger A Aliaga-Diaz
How ESG investing came to a reckoning by Harriet Agnew, Adrienne Klasa and Simon Mundy—Financial Times
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We explore whether long-term and short-term single-family home rentals are contributing to higher rents, higher home prices, and a housing shortage. What are the options for investing in this space and should we?
Topics covered include:
- What is financialization
- What are examples of how financialization and government policy has impacted housing
- How homeownership rates vary around the world
- How much of a presence do equity REITs have in the single-family home rental space
- How a housing shortage and more vacation rentals show up in vacancy rates
- How short-term rentals can magnify the housing shortage
- What are options for investing in single-family home rentals
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Show Notes
Financialization and the World Economy by Gerald A. Epstein
Housing Vacancies and Homeownership (CPS/HVS)—United States Census Bureau
List of countries by home ownership rate—Wikipedia
The Evolution of Homeownership Rates in Selected OECD Countries: Demographic and Public Policy Influences by Dan Andrews and Aida Caldera Sánchez—OECD Journal: Economic Studies
Best Places to Invest in Vacation Rentals in 2021 & 2022—AirDNA
Airbnbs Outnumber New York City Apartments in Hot Market by Michael Tobin—Bloomberg
AIRBNB Airbnb Enables “Split Stays” to Ease Inventory Woes by Mitra Sorrells—WIT
Amid Tucson housing shortage, Airbnbs fill up whole apartment buildings by Carol Ann Alaimo—Tucson.com
Vacation Rental Industry Statistics—iPropertyManagement.com
Average Airbnb Occupancy Rates By City [2022]—AllTheRooms
Investments Mentioned
American Homes 4 Rent (AMH)
Invitation Homes (INVH)
Sun Communities Inc (SUI)
Arrived
Roofstock
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How financial markets and the economy performed last time the Federal Reserve took away the punch bowl by raising its policy rate and pursuing quantitative tightening. Things worked out fine that time. Will it be different this time?
Topics covered include:
- Where did the phrase take away the punch bowl come from
- How central bank actions can slow the economy and lower inflation.
- The difference between having cash and having wealth
- How quantitative easing and quantitative tightening work
- What happened last time the Federal Reserve pursued quantitative tightening
For more information on this episode click here.
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Show Notes
Address before the New York Group of the Investment Bankers Association of America on October 19, 1955, by William McChesney Martin, Jr.—FRASER
M2—Federal Reserve Economic Data
Assets: Total Assets: Total Assets: Wednesday Level—Federal Reserve Economic Data
Assets: Securities Held Outright: U.S. Treasury Securities: All: Wednesday Level—Federal Reserve Economic Data
Americans Reported Strong Personal Finances Late Last Year, Fed Finds by David Harrison—The Wall Street Journal
270: Repo Rates Soared—Here’s Why It Matters
Related Episodes
270: Repo Rates Soared—Here’s Why It Matters
295: Federal Reserve Insolvency and Monetizing the National Debt
312: What the Federal Reserve’s New Policies Mean For Your Finances
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How should you approach money given most of it either collapses or loses its purchasing power due to inflation.
Get our free six-day email course on how to beat inflation.
Topics covered include:
- How supposedly safe savings apps collapsed, wiping out users' savings
- Why algorithmic stablecoins keep failing and why they are not black swans
- What it takes for money to be successful
- How money differs from investments
For more information on this episode click here.
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Show Notes
Intellabridge
Power Women: Maria Eagleton, Mastercard-incubated Blockchain Company, is setting An Example For Women in Cryptocurrency by Shruti Sood—Morning Lazziness
@kashdefi, Twitter post, May 7th, 2022 7:54 AM
@kashdefi, Twitter post, May 8th, 2022 10:42 AM
Terra
Cryptocurrency TerraUSD Plunges as Investors Bail by Caitlin Ostroff, Elaine Yu, and Paul Kiernan—The Wall Street Journal
Cryptocurrency TerraUSD Falls to 11 Cents, Creator Announces Rescue Plan by Paul Vigna—The Wall Street Journal
@kashdefi, Twitter post, May 9th, 2022 8:57 PM
@kashdefi, Twitter post, May 9th, 2022 9:07 PM
@kashdefi, Twitter post, May 12th, 2022 11:01 PM
Intellabridge Announces Kash 2.0 and Kash Treasury Product Update—Intellabridge
There are 99 problems and Tether ain’t $1 by Bryce Elder—Financial Times
Tether cuts holdings of commercial paper, says majority of exposure in Treasuries -CTO—Reuters
Investors withdraw over $7 billion from tether, raising fresh fears about stablecoin’s backing by Ryan Browne—CNBC
Related Episodes
333: How The Covid Shock Nearly Destroyed The Financial System
373: Are Stablecoins Safe? Should You Own Them?
384 Plus: Survey Follow Up, A Stablecoin Collapse, and Trying to Analyze Ripple (unlocked for non Plus members)
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What are examples of when it makes sense to pay more than the usual price or fair value for an item or asset?
Topics covered include:
- Why we are willing to pay a premium for convenience, scarcity, status and to avoid waste
- What is the difference between net asset value and book value
- Why business development companies can sell at a premium
- Why farmland REITs sell at a premium
- Why closed-end funds sell at a premium
- How to decide whether to pay a premium or not
For more information on this episode click here.
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Show Notes
The Fall of Netflix and Overlooked Assets W/ David Stein—The Investor's Podcast 445
Hercules Capital
Gladstone Land Corporation
The Gabelli Utility Trust—Gabelli Funds
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With many of the largest tech stocks falling over 20% year-to-date, is now the time to invest? Has the market changed to where tech investing is a safe bet?
Topics covered include:
- What happened to Netflix
- What contributed to the astounding performance of large tech stocks since 2013
- How the largest contributors to overall stock market performance are always changing
- Why the largest tech companies could fall even more from today's level
- What are the valuations and sentiment toward large tech stocks
- What is complexity economics and how does it influence technology
- How younger investors and fractional trading have influenced the stock market
- Why stock splits are less effective today in driving up share prices
For more information on this episode click here.
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Show Notes
Netflix stock plunges as subscribers quit by Julianne Pepitone and Aaron Smith—CNN Money
Netflix Explores a Version With Ads as Subscriber Base Shrinks by Joe Flint and Denny Jacob—The Wall Street Journal
No, you did not see the Netflix mess coming by Robert Armstrong—Financial Times
FANMAG: Because FAANGs Are So Yesterday—Dimensional
Complexity and the Economy by W. Brian Arthur
Rising Risk of Stagflation by Chris Brightman—Research Affiliates
"Fractional Trading" by Zhi Da, Vivian W. Fang, and Wenwei Lin
"Attention Induced Trading and Returns: Evidence from Robinhood Users" by Brad M. Barber, Xing Huang, Terrance Odean, and Christopher Schwarz
Retail Raw: Wisdom of the Robinhood Crowd and the COVID Crisis by Ivo Welch (NBER Working Paper No. 27866. September 2020, Revised October 2020)—National Bureau of Economic Research
Related Episodes
261: Is Value Investing Dead?
298: The Stock Market Is Not the Economy
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What causes secular bull and bear markets in commodities. What factors suggest a new commodities bull market has started and how can investors participate. What are the risks.
Topics include:
- What is a bull and bear market
- How long have earlier commodity bull and bear markets lasted and what were the returns
- What led to the current commodity bear market that began in 2011
- How shareholder revolts and ESG mandates have contributed to reduced investment in the commodities space, contributing to the rebound in commodity prices
- Why natural gas prices are so much higher in Europe than the U.S.
- How the shift to electric vehicles is driving the demand for commodities
- What are five ways to participate in a commodities bull market
For more information on this episode click here.
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Show Notes
Jeff Currie on the 'Volatility Trap' Keeping Commodity Prices So High - Odd Lots - Bloomberg
NGP Energy Capital
Research—Strategas Securities
The Energy Blame Game and Other False Narratives—Energy Income Partners
Related Episodes
296: Why Negative Prices Exist and What Can They Teach Us
340: Climate Change, ESG, and What Should Investors Do?
351: How to Profit From Carbon Investing While Combatting Climate Change
382: Is A Famine Next? Food Inflation, Food Riots, and Investing in Commodities and Other Real Things
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How contrarians combine value and momentum to take positions opposite what the consensus believes. What is the consensus view in today's financial markets and how are contrarians positioned.
Topics covered include:
- Five attributes of successful investors
- Why does the consensus expect stagflation
- How central banks have performed in previous tightening cycles
- Three reasons central banks tightening results in a recession
- When have interest rates peaked in prior tightening cycles
- How stocks tend to do well when investors get extremely pessimistic
- What are examples of contrarian investments in the current market environment
- How contrarian opportunities involve both value and momentum
- What are some additional examples of being contrarian outside of the investment arena
For more information on this episode click here.
Sponsors
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Show Notes
Weekly Market Pulse: Time To Get Contrarian? by Joseph Y. Calhoun III—Alhambra Investment
BofA Says Fund Managers Most Gloomy on Record on Recession Woes by Nikos Chrysoloras—Bloomberg
Hot Economy, Rising Inflation: The Fed Has Never Successfully Fixed a Problem Like This by Jon Hilsenrath and Nick Timiraos—The Wall Street Journal
Tightening risks recession but inaction would be worse by Neil Shearing—Capital Economics
Seeing What's Next: Using the Theories of Innovation to Predict Industry Change by Clayton M. Christensen, Scott D. Anthony, and Erik A. Roth
Related Episodes
261: Is Value Investing Dead?
266: Using Momentum Investing and Trend Following
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Why food costs are soaring and what we can do about it. Why inflation rates could start to drop. Why commodity futures, including agriculture futures, have been lousy inflation hedges, and what has worked better.
Topics covered include:
- Previous investment recommendations by Money For the Rest of Us to combat inflation
- Why commodity futures hedge against unexpected inflation but have underperformed inflation over the long-term
- A recommended ETF for investing in commodity futures
- What is causing the jump in food prices and fertilizer
- Why the risk of food shortages is increasing and what are remedies to solve it
- Why agriculture price increases don't always lead to higher food costs at the store
- Why inflation rates could slow in the coming months
For more information on this episode click here.
Episode Sponsors
Composer automated trading platform
Policygenius
Show Notes
Ukraine War Threatens to Cause a Global Food Crisis by Jack Nicas—The New York Times
Russia’s invasion of Ukraine is causing record-high food prices—The Economist
As sanctions bite Russia, fertilizer shortage imperils world food supply by Tom Polansek and Ana Mano—Reuters
All That’s Stopping a Full-Blown Food Crisis? Rice by Javier Blas—The Washington Post
Packaged-food firms are running out of room to raise prices—The Economist
Prospective Plantings, March 31, 2022—USDA
Related Episodes
232: Is It Time To Invest In Commodities?
309: Investments to Fight Financial Repression
312: What the Federal Reserve’s New Policies Mean For Your Finances
336: Own What Is Real
338: The National Debt, Inflation, and the U.S. Dollar—What Could Go Wrong?
342: Is Another Great Inflation Coming?
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We review the ten asset categories that trade on major stock exchanges, many of which are smaller niches in which individual investors have an edge over institutional investors.
How to invest in business development companies, a small segment of the markets that has returned 9% annualized with dividend yields of 8%.
Topics covered include:
- How securities trading has changed and why are there so many trading platforms
- Why do institutions still pay trading commissions
- When did stock exchanges start and which are the largest
- What are direct and indirect investment vehicles
- What are the ten asset types that trade on stock exchanges
- How to invest in business development companies (BDCs)
For more information on this episode click here.
Sponsors
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Show Notes
New York Stock Exchange (NYSE)—Corporate Finance Institute
Off-Exchange Trading To Continue To Grow In US by Shanny Basar—Traders Magazine
How We Analyzed Wall Street Block Trades by Liz Hoffman, Corrie Driebusch, and Tom McGinty—The Wall Street Journal
U.S. Institutional Equity Trading Commissions Jump 25% to $8.9BN in 2021, According to Bloomberg Intelligence—Bloomberg
Largest stock exchange operators worldwide as of December 2021, by market capitalization of listed companies—Statista
Total Market Value of U.S. Stock Market—Siblis Research
ETFGI reports the ETFs industry in the United States ended 2021 with record high assets of US$7.21 trillion and record net inflows of US $919.78 billion—ETFGI
REIT Industry Financial Snapshot—Nareit
Mortgage REITs—Nareit
Closed-End Fund Assets and Net Issuance—Investment Company Institute
Investor Bulletin: American Depositary Receipts—U.S. Securities and Exchange Commission
What is an ADR?—Stock Market MBA
Direct Lenders in the U.S. Middle Market by Tetiana Davydiuk, Tatyana Marchuk, and Samuel Rosen
Business Development Companies (BDCs)—Levin Law
Related Episodes
318: What Are SPACs and Should You Invest in Them?
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Stories determine economic and financial outcomes, both our own and the world in aggregate. Here's how to craft and follow stories that will lead to better financial outcomes and greater happiness.
Topics covered include:
- How financial narratives give us the confidence to take action in the face of uncertainty and potential loss
- How the greater the stakes, the more we rely on anecdotal evidence rather than statistics
- Is the world more stable and predictable or in a constant state of disorder
- How stories determine what we buy and aspire to and how marketers try to influence those stories
- How stories of fear and greed influenced economic outcomes in the 1920s and 1930s
- How more precise stories lead to greater confidence and potentially to manipulation.
- How to get off the hedonic treadmill in order to be happier
Thanks to OurCrowd and Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
Joseph Campbell & The Hero’s Journey by Tamlorn Chase—Odyssey Online
Panarchy: Understanding Transformations in Human and Natural Systems by Lance H. Gunderson
Horisaki Design & Handel
Optimizing SKU Selection for Promotional Display Space at Grocery Retailers by Pak Et al.
The Role of Sentiment in the Economy of the 1920s by Kabiri Et al.
Monetary Policy and the Management of Uncertainty: A Narrative Approach by Bank of England Publications Et al.
Impressed by Numbers: The Extent to Which Novice Investors Favor Precise Numerical Information in a Context of Uncertainty by Batteux Et al.
When poignant stories outweigh cold hard facts: A meta-analysis of the anecdotal bias by Freling Et al.
Narrative Economics: How Stories Go Viral and Drive Major Economic Events by Robert J. Shiller
Walgreens replaced some fridge doors with screens. And some shoppers absolutely hate it by Nathaniel Meyersohn—CNN
Supermarket Facts—FMI
How To Want Less by Arthur C. Brooks—The Atlantic
Related Episodes
294: How Stories Go Viral and Drive Economic Events
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This week, we revisit a classic episode released five years ago. In a newly recorded introduction, David shares the background on the episode and why he chose to release it again in its newly edited form.
Topics covered include:
- The availability heuristic and confirmation bias
- How to deal with extreme events when most days are just like the day before
- How chaos and unpredictability is used as a leadership strategy
- Why do we need a point of view to guide our actions when investing
- How to manage financially in a increasingly complex and risky world
Show Notes
Uncertainty – Lawrence M. Krauss – Edge
Regression To the Mean – James J. O’Donnell – Edge
Excerpts from Seth Klarman’s 2016 year end letter to his clients as quoted in the New York Times
Messy: The Power of Disorder To Transform Our Lives – Tim Harford
Seth Godin Course on Presenting To Persuade
Ultra-Easy Money: Digging The Hole Deeper? – William R. White
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How societies have functioned without leaders, including leaderless megacities that survived over 800 years.
Topics covered include:
- Is geopolitics more like chess or poker
- Why analysts think Putin will soon agree to a settlement with Ukraine
- Do most development occur from the top-down or bottom-up
- What are some examples of leaderless societies and organizations
- How social capital and enforcement mechanisms allow the world to function without leaders telling everyone what to do
- How companies are struggling with the workplace of the future and the role of leadership
- Why do we need more leadership and fewer bosses
Thanks to Mint Mobile and Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
The Next 100 Years: A Forecast for the 21st Century by George Friedman
Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts by Annie Duke
Possible Outcomes of the Russo-Ukrainian War and China’s Choice—U.S.-China Perception Monitor
Why Is Leadership Important? by Eric Beato—Babson Thought & Action
Do We Need Leaders? by Jimmy Guterman_Harvard Business Review Home
3 Reasons Why We Need Leaders—Jonathan Sandling
If We’re All Talented People, Why Do We Still Need a Leader? by Angelina Phebus—Lifehack
Trust, Associational Life and Economic Performance by Stephen Knack
Is hybrid work the worst of both worlds?—The Economist
The Dawn of Everything: A New History of Humanity by David Graeber, David Wengrow
Related Episodes
203: Is Investing More Like Poker or Chess?
280: Travel and the Trust Economy
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Will the world experience both inflation and subpar economic growth at the same time?
Topics covered include:
- What is inflation and what causes it
- What have been the largest contributors to recent high inflation
- Why does not everyone experience inflation in the same way
- Why inflation measures are subjective
- What are long-term deflationary forces faces the global economy
- What is stagflation and what causes it
- How do we monitor stagflation to see if it is coming
Thanks to FarmTogether and LinkedIn for sponsoring the episode
For more information on this episode click here.
Show Notes
Consumer Price Index News Release February 10, 2022—U.S. Bureau of Labor Statistics
Alternate Inflation Charts—John Williams' Shadow Government Statistics
OPEC chief says there's 'no capacity in the world' that could replace Russia's 7 million barrels a day in oil supply-Adam Morgan McCarthy—Markets Insider
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What can we do to prepare if the Russian-Ukraine war gets even worse?
Topics covered include:
- How risk and uncertainty differ as does how we manage them
- What we can learn from Ukraine and Russian citizens on dealing with uncertainty
- What will be the financial impact of the sanctions against Russia and the ruble collapse
- Why and how we should all prepare for potential cyberattacks
- Why now is the time to make sure you have an appropriate asset allocation
- How holding dollars, euros, or stablecoin can help protect against currency collapses
- What we can do to help Ukraine
Thanks to Masterworks and Policygenius for sponsoring the episode
For more information on this episode click here.
Show Notes
JPMorgan Says Selling Stocks Now Carries Too Much Risk by Nikos Chrysoloras—Bloomberg
Ukraine conflict: Dread in Kyiv as huge Russian convoy advances by Lyse Doucet—BBC
Russia launches fierce rocket attack on Ukrainian city of Kharkiv by Guy Chazan, John Reed, Max Seddon, Henry Foy, John Paul Rathbone, and Demetri Sevastopulo—Financial Times
How new sanctions could cripple Russia’s economy—The Economist
Russian c.bank orders block on foreign clients' bids to sell Russian securities - document—Reuters
Ukraine invasion: Russians feel the pain of international sanctions by Anastasia Stognei and Simon Fraser—BBC
The dire predictions about a Russian cyber onslaught haven’t come true in Ukraine. At least not yet. by Joseph Menn and Craig Timberg—The Washington Post
Hackers Breached Colonial Pipeline Using Compromised Password by William Turton and Kartikay Mehrotra—Bloomberg
‘Yes, He Would’: Fiona Hill on Putin and Nukes by Maura Reynolds—Politico
Related Episodes
229: Tail Events and Tail Risk
332: What Is Risk vs Uncertainty?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How to decide the investing scale and timeframe that works best for your temperament.
Topics covered include:
- How stocks perform in the days and weeks following catastrophic events
- What are some potential financial impacts of Russia's invasion into Ukraine
- How complex systems operate at different scales and timeframes
- What are examples of different scales and timeframes for investing
- How tactical asset allocation strategies work
- Why schema and rules of thumb develop and how do they get passed on
- How to decide on which investment approach works best for you
Thanks to Mint Mobile and LinkedIn for sponsoring the episode.
For more information on this episode click here.
Show Notes
Nikkei 225 Index - 67 Year Historical Chart—Macrotrends
Panarchy: Understanding Transformations in Human and Natural Systems by Lance H. Gunderson (Editor)
Allocate Smartly
Protective Asset Allocation (PAA): A Simple Momentum-Based Alternative for Term Deposits by Wouter J. Keller and Jan Willem Keuning
Trying Not to Try: The Art and Science of Spontaneity by Edward Slingerland
Related Episodes
203: Is Investing More Like Poker or Chess?
266: Using Momentum Investing and Trend Following
374: Lifecycle Investing, Risk Parity Portfolios, and Why Stocks Are Riskier in the Long Run
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Key takeaways from one of the greatest personal finance novels of all time.
Topics covered include:
- Why it is easier to keep doing the same old thing
- Why partners should discuss their finances
- Why debt can be suffocating
- Why leverage can be dangerous
- One of the most satisfying ways to give away wealth
Thanks to OurCrowd and Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
Middlemarch by George Eliot
Middlemarch Book Summary—Stonory
Rebecca Mead/"'Middlemarch' and Me"—The New Yorker (Video)
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How lifecycle investing and risk parity portfolios can assist you in having sufficient assets to retire. What are the two types of time diversification and why is one flawed?
Topics covered include:
- What is settled work and what are some examples
- How does lifecycle investing work and should you consider it
- Why investing in stocks and other volatile asset classes is riskier over longer holding periods
- What are risk-parity portfolios and how to evaluate them
Thanks to Masterworks for sponsoring the episode.
For more information on this episode click here.
Show Notes
The moral calculations of a billionaire by Eli Saslow—The Washington Post
Life-Cycle Investing and Leverage: Buying Stock on Margin Can Reduce Retirement Risk by Ian Ayres and Barry J. Nalebuff
Lifecycle Investing - Leveraging when young, Forum Discussion by Steve Reading on bogleheads.org
What Practitioners Need to Know… About Time Diversification (corrected March 2015) by Mark Kritzman—Financial Analysts Journal Volume 71, Number 1
Wishful Thinking About the Risk of Stocks in the Long Run: Consequences for Defined Contribution and Defined Benefit Retirement Plans by Zvi Bodie
Pension Obligation Bonds: Know Their Appeal and Pitfalls by Todd Tauzer—Segal
Shrinkage Estimation in Risk Parity Portfolios by Nabil Alkafri and Christoph Frey
Portfolio Charts
How to Invest in Closed-End Funds—Money For the Rest of Us
Related Episodes
How to Invest in Closed-End Funds
Why You Should Rebalance Your Portfolio
306: Three Approaches to Asset Allocation
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How stablecoins are similar and different from other monetary assets. What are stablecoin risks. Why central bank digital currencies are one of the biggest threats to stablecoins.
Topics covered include:
- Why the Federal Reserve and other central banks are exploring issuing their own digital currencies
- What is the difference between public and private money
- How deposit insurance and central bank actions prevent runs on private money
- How money market mutual funds are a type of stablecoin
- How true stablecoins and algorithmic stablecoins differ
- What is driving the demand for stablecoins
- What are the risks of stablecoins
Thanks to LinkedIn and Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
Money and Payments: The U.S. Dollar in the Age of Digital Transformation January 2022—Board of Governors of the Federal Reserve System
Taming Wildcat Stablecoins by Gary B. Gorton and Jeffery Zhang
Money Stock Measures - H.6 Release—Board of Governors of the Federal Reserve System
Top Stablecoin Tokens by Market Capitalization—CoinMarketCap
Transparency—Tether
Report on Stable Coins, November 2021—Various US Agencies
Built to Fail: The Inherent Fragility of Algorithmic StablecoinsDr. Ryan Clements
The Quest for a Truly Decentralized Stablecoin by Brady Dale—Coin Desk
Cryptocurrency Doesn’t Amount to Much by Steve H. Hanke and Matt Sekerke—The Wall Street Journal
Related Episodes
319: Here Come Central Bank Digital Currencies
339: How To Make Money with BlockFi, Dai, and the Evolving DeFi Ecosystem
333: How The Covid Shock Nearly Destroyed The Financial System
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
We explore four reasons to sell an asset with a focus on the Ark Innovation ETF, Bitcoin, and equity REITs. We also put the current stock market sell-off into historical perspective.
Topics covered include:
- What are lousy reasons to sell an investment
- What is a sell discipline
- What are four good reasons to sell an investment
- Why and why not to invest in the Ark Innovation ETF (ARKK)
- Why growth stocks are getting crushed in the current market sell-off
- How frequently does the stock market correct by more than 10%
Thanks to Mint Mobile for sponsoring the episode.
For more information on this episode click here.
Show Notes
Bitcoin Bounces Back After Falling Below $33,000 by Anna Hirtenstein—The Wall Street Journal
Selling Out, Memos From Howard Marks—Oaktree Capital Management
Here's Cathie Wood's advice to her fund's investors after a 58% sell-off in Ark's flagship ETF by Matthew Fox—Markets Insider
Related Episodes
291: How To Survive the Coronavirus (COVID-19) Shutdown
302: Investing is Not Knowing
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the pros and cons of the four approaches to managing retirement savings. How to implement a bucketing or time segmentation retirement investing approach.
Topics covered include:
- Why it takes time to find a retirement pattern that fits
- How retirement investing is a balance between safety-first and probability-based as well as maintaining optionality and committing.
- How total return investing differs from a safety-first approach
- What are products allow for a risk floor but also provide some potential growth
- How a time segmentation or bucket approach to retirement investing works
Thanks to Policygenius and Masterworks for sponsoring the episode.
For more information on this episode click here.
Show Notes
Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success (The Retirement Researcher Guide Series) by Wade Pfau
A Model Approach to Selecting a Personalized Retirement Income Strategy by Alejandro Murguia and Wade D. Pfau
The Four Approaches to Managing Retirement Income Risk by Wade D. Pfau
Build Ladders With iBonds® ETFs—iShares
Related Episodes
279: Why All Retirees Should Consider an Income Annuity
306: Three Approaches to Asset Allocation
326: The New Math of Retirement Spending and Investing
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Small and mid-cap stocks have underperformed large-cap stocks for over a decade. Is now the time to increase your allocation?
Topics covered include:
- How big are small and mid-cap stocks
- How have small and mid-cap stocks performed relative to large-cap stocks
- How have active small and mid-cap managers performed relative to indexing options
- Are bigger IPOs contributing to small and mid-cap stocks underperformance
- How expensive or cheap are small-cap stocks relative to large-cap
- What is the capital asset pricing model and how do academics use it to identify outperforming factors
- How value, momentum, and quality drive small-cap stock outperformance
- How to invest in small and mid-cap stocks
Thanks to Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
The Morningstar Active/Passive Barometer
Initial Public Offerings: Updated Statistics January 5, 2022, by Jay R. Ritter—Warrington College of Business, University of Florida
The Nexus of Anomalies-Stock Returns-Asset Pricing Models: The International Evidence by Rahul Roy and Shijin Santhakumar
The Cross-Section of Stock Returns before 1926 (And Beyond) by Guido Baltussen, Bart van Vliet, and Pim van Vliet
Factor Timing: Keep It Simple by Michael Aked—Research Affiliates
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
We answer listener questions in our final episode of 2021.
Topics covered include:
- Estimating financial market returns in the next thirty years
- Investing in art
- Whether stocks will no longer exist
- How to start investing
- Fidelity's new Bitcoin ETF
- How mutual funds are priced
- How to teach family members about investing
- Volatility versus drawdowns
- How to face the uncertainty of crashing stocks, rising interest rates, and numerous other economic and financial threats
- David's four most recent investments he made in his personal portfolio
Thanks to Policygenius and OurCrowd for sponsoring the episode.
For more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What is Web 3.0 and how will it transform the world? How you can invest your time and money in decentralized autonomous organizations and other Web3 projects.
Topics covered include:
- What are Web 1.0, Web 2.0, and Web 3.0 and how do they differ
- What are decentralized autonomous organizations (DAOs)
- How DAOs operate and what are some examples
- How to register one's Web 3.0 user name
- How the Ethereum network, a major part of Web3, is changing
- How to participate and invest in DAOs and other Web3 projects
Thanks to LinkedIn and Commonstock for sponsoring the episode.
For more information on this episode click here.
Show Notes
Decentralized autonomous organizations (DAOs)—Ethereum
State of the DAOs #0 | Oct 6th, 2021 by BanklessDAO Writers Guild—BanklessDAO
Decentralized Autonomous Organizations;The New Coordination Frontier by Calvinme—Medium
Organization Legos: The State of DAO Tooling by Nichanan Kesonpat—Medium
OpenOrgs.info
Snapshot
DeepDAO
ENS
Uniswap Protocol
Gas and Fees—Ethereum
Ultra Sound Money
Proof of Stake (PoS)—Ethereum
What Is the Metaverse, Exactly? by Eric Ravenscraft—Wired
Chris Dixon and Naval Ravikant — The Wonders of Web3, How to Pick the Right Hill to Climb, Finding the Right Amount of Crypto Regulation, Friends with Benefits, and the Untapped Potential of NFTs (#542)—The Tim Ferris Show
Related Episodes
339: How To Make Money with BlockFi, Dai and the Evolving DeFi Ecosystem
NFTs—Money For the Rest of Us Topic Index
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How different asset classes and investment strategies have performed during periods of unexpectedly high inflation. While trend and momentum strategies have performed the best, what are some of the challenges with implementing those strategies.
Topics covered include:
- What has led to today's high inflation environment and why it is unique
- How current demographic and technology trends are disinflationary
- How many inflationary regimes have there been in the past
- How stocks, residential housing, commodities, collectibles performed during high inflation environments.
- How trend following and momentum have been the best performing strategy during high inflation environments.
- Which trend following and momentum approaches have worked best for individual investors.
- How managed futures strategies work
Thanks to OurCrowd and Egnyte for sponsoring the episode. Here is more information on Money For the Rest of Us Plus.
For more information on this episode click here.
Show Notes
US Budget Deficit Hits $2.77 Trillion in 2021, 2nd Highest by Associated Press—U.S. News & World Report
India says nationwide birthrates drop below key ‘replacement rate’ by Gerry Shih—The Washington Post
The Best Strategies for Inflationary Times by Henry Neville Et al.
Trend Following: Equity and Bond Crisis Alpha by Carl Hamill, Sandy Rattray, and Otto Van Hemert
AQR hedge fund suffers $10bn in outflows by Laurence Fletcher—Financial Times
Is There a Replication Crisis in Finance? Theis Ingerslev Jensen, Bryan T. Kelly, and Lasse Heje Pedersen
Related Episodes
266: Using Momentum Investing and Trend Following
342: Is Another Great Inflation Coming?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
With oil, natural gas, coal, and gasoline at the highest prices in eight years, we consider if there is an energy crisis due to an over-reliance on renewable energy sources.
Topics covered include:
- How high have prices risen for oil, gasoline, natural gas, and coal
- Why rising energy prices is a multifaceted problem as illustrated by coal
- How the global energy mix has changed for power production
- Why investment capital is flowing to renewable energy projects rather than fossil fuel projects
- Why a clean energy transition leads to more volatile fossil fuel prices
- How higher oil prices lead to greater adoption of electric vehicles
- How renewable energy combined with battery technology will create lead to energy on-demand solutions
Thanks to Egnyte and Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
US coal prices jump to highest level since 2009 by Myles McCormick—Financial Times
China’s Energy Crisis Complicates Its Plans for Climate Announcements Ahead of COP26 by Sha Hua and Keith Zhai—The Wall Street Journal
China’s Coal War With Australia Fuels Shortage at Home by Chuin-Wei Yap—The Wall Street Journal
China’s Coal Shortage Threatens Farmers in India and Truckers in South Korea by Jiyoung Sohn in Seoul and Vibhuti Agarwal—The Wall Street Journal
The Gregor Letter
President Jimmy Carter - Report to the Nation on Energy (Video)
Share of renewables, low-carbon sources and fossil fuels in power generation, World 1990-2019—IEA
Oil 2021: Analysis and forecast to 2026—IEA
Coal—IEA
Statement on recent developments in natural gas and electricity markets—IEA
Renewable energy firms warn of difficult conditions amid slow winds by Jasper Jolly—The Guardian
Global EV sales rise 80% in 2021, as automakers including Ford, GM commit to zero emissions: BNEF by Robert Walton—Utility Dive
Everyday Driver
In 1900, Ladies’ Home Journal Publishes 28 Predictions for the Year 2000 by Josh Jones—Open Culture
Here’s what’s in the infrastructure bill that Biden signed today By Emily Cochrane, Christopher Flavelle, and Alan Rappeport—The New York Times
Battery Storage in the United States: An Update on Market Trends—U.S. Energy Information Administration
Metals may become the new oil in net-zero emissions scenario by Lukas Boer, Andrea Pescatori, Martin Stuermer, Nico Valckx—Vox EU, CERP
Related Episodes
346: Should You Buy an Electric Car or Truck?
What You Need to Know About Carbon Investing and its Effect on Climate Change
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What conditions need to be in place for an asset bubble to continue and how that applies to stocks, cryptocurrency, and houses.
Topics covered include:
- How to determine if there is an asset bubble
- What are microbubbles and anti-bubbles
- How the cannabis stock bubble burst
- What is required to sustain an asset bubble
- How the current runup in home prices differs from the housing bubble in the mid-2000s
- What structural changes have led to the high valuations for U.S. stocks
- What is the Great Wealth Transfer and will it impact stock prices
Thanks to Commonstock and LinkedIn for sponsoring the episode.
For more information on this episode click here.
Show Notes
All-Transactions House Price Index for Oakland-Berkeley-Livermore, CA (MSAD)—Federal Reserve Bank of St. Louis
S&P/Case-Shiller CA-San Francisco Home Price Index—Federal Reserve Bank of St. Louis
What Pops Stock Market Bubbles? Only Surprises, Rob Arnott Says by Vildana Hajric and Michael P. Regan—Bloomberg
Yes. It's a Bubble. So What? by Rob Arnott, Bradford Cornell, and Shane Shepherd—Research Affiliates
Bubble, Bubble, Toil and Trouble by Rob Arnott, Bradford Cornell, and Shane Shepherd—Research Affiliates
What's really going on with San Francisco Walgreens closures? by Eric Ting—SFGATE
SF ranks high in property crime while it ranks low in arrests by Phil Matier—San Fransisco Chronicle
Zillow’s Algorithm-Fueled Buying Spree Doomed Its Home-Flipping Experiment by Patrick Clark—Bloomberg
In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis – Xavier Gabaix and Ralph S.J. Koijen
The Great Wealth Transfer—Cerulli Associates
How Does Intergenerational Wealth Transmission Affect Wealth Concentration? by Laura Feiveson and John Sabelhaus—Board of Governors of the Federal Reserve System
Related Episodes
226: How To Spot Asset Bubbles and What To Do About Them
234: Index But Don’t Herd
329: Meme Stocks, GameStop, Short Squeezes, and Bubbles
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How to decide whether it is worth it to hedge currency exposure when investing outside of your home country.
Topics covered include:
- How currency exchange rates impact investment returns
- What factors impact currency exchange rates
- What are carry trades and how do they influence exchange rates
- How currency forward contracts work
- How ETFs and funds hedge currency exposure
- What to consider when deciding whether to hedge foreign currency exposure
Thanks to Egnyte and Quartr for sponsoring the episode.
For more information on this episode click here.
Show Notes
Rising U.S. yields push yen to lowest in nearly 3 years by Saikat Chatterjee—Reuters
Cutting Volatility in Foreign Stocks While Remaining 100% Invested: Hedge the Currency? by Jeff Weniger and Jeremy Schwartz—WisdomTree
Carry Trade Comes Surging Back With Biggest Gains Since 2016 by Robert Fullem and Brody Ford—Bloomberg
Related Episodes
209: Why Bother Investing Internationally?
283: Why You Should Care About Carry Trades
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How New York City and other metropolises will overcome the pandemic economic shock. Why do some cities thrive while others devolve into chaos? How we can develop the resiliency of thriving cities.
Topics covered include:
- How New York and other cities have dealt with the pandemic economic shock
- Why the city of Port au Prince in Haiti is struggling
- Why do cities fail less frequently than companies
- How we can replicate the rhythms and cycles of cities
- How most cities can evolve in response to the pandemic and we can too
Thanks to Felix Gray and Alto CryptoIRA for sponsoring the episode.
For more information on this episode click here.
Show Notes
Local Area Unemployment Statistics - New York City— U.S. Bureau of Labor Statistics
Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies by Geoffrey B. West
The Office Sector in New York City by Brian McElwain, Anita Yadavalli, and Amar Mehta—Office of the New York Comptroller
Desperate Haitians suffocate under growing power of gangs by Dánica Coto and Alberto Arce—The Associated Press
California’s approach to gendered toys says a lot about the state’s political direction—The Economist
HB 389: Poor policy, poorly written, bad for rural Idaho by Geoffrey Wardle—Idaho Business Review
Human History Gets a Rewriteby By William Deresiewicz—The Atlantic
The Dawn of Everything: A New History of Humanity by David Graeber and David Wengrow
Four Thousand Weeks: Time Management for Mortals by Oliver Burkeman
Related Episodes
171: The Extraordinary Impact of Cities
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Why the new U.S.-based Bitcoin ETFs are a bad idea and will underperform Bitcoin.
Topics covered include:
- What fund and ETF options are available for investing in Bitcoin
- Why the U.S. has only authorized Bitcoin ETFs that invest in Bitcoin futures even though there are closed-end funds that hold Bitcoin directly
- What is there a regulatory battle surrounding cryptocurrencies?
- How closed-end funds differ from ETFs
- How Bitcoin futures work
- Why Bitcoin ETFs that invest in Bitcoin futures will lag the performance of owning Bitcoin directly
- Why investors should avoid the new U.S. Bitcoin ETFs
Thanks to Policygenius and Justworks for sponsoring the episode.
For more information on this episode click here.
Show Notes
SEC Set to Allow Bitcoin Futures ETFs as Deadline Looms by Katherine Greifeld, Vildana Hajric, and Benjamin Bain—Bloomberg
U.S. SEC Chair Gensler calls on Congress to help rein in crypto 'Wild West' Katanga Johnson—Reuters
Bitcoin Strategy ETF—ProShares
Purpose Bitcoin ETF—Purpose Investments
Grayscale® Bitcoin Trust
Osprey Bitcoin Trust
Jacobi receives approval for "world’s first tier one" bitcoin ETF—Funds Europe
Remarks Before the Aspen Security Forum by Chair Gary Gensler—U.S. Securities and Exchange Commission
Coinbase abandons lending product after SEC pushback by Hannah Murphy and Stefania Palma—Financial Times
Coinbase calls for creation of dedicated crypto regulator by Hannah Murphy and Stefania Palma—Financial Times
First bitcoin futures ETF to make its debut Tuesday on the NYSE, ProShares says by Tanaya Macheel—CNBC
Rustication by Dennis J. Pogue—Mount Vernon Ladies' Association
Is Thomas Jefferson’s Monticello Constructed of Rammed Earth?—Earth Architecture
What is Roll Yield and How It Impacts Bitcoin, Commodity, and VIX ETF Returns—Money For the Rest of Us
Related Episodes
355: Which Money Is Crazier: The U.S. Dollar or Bitcoin?
319: Here Come Central Bank Digital Currencies
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How the economics of timeshare vacation rentals work, and why they can be a great fit for some individuals.
Topics covered include:
- When were the first timeshares introduced
- What are the different timeshare ownership models
- Why timeshares don't appreciate but fall in price after purchase
- What are maintenance fees and why do they keep increasing
- Who is the target market for timeshares and how do timeshare companies market to them
- How timeshare companies make money
- How to sell your existing timeshare
- How to buy a new timeshare
Thanks to Quartr and LinkedIn for sponsoring the episode.
For more information on this episode click here.
Show Notes
The ABC’s of PUD’s (Part II): The Basics of Timesharing—American Bar Association
Second Quarter 2021 Earnings Conference Call July 29, 2021—Marriott Vacations Worldwide
Investor Presentation July 2021—Marriott Vacations Worldwide
SellMyTimeshareNow, LLC
Firm to Pay $2.6M, Stop Making False Timeshare Claims—Claims Journal
Related Episodes
24: Timeshares, Preppers and Permanent Portfolios
57: Live Like A Local When Traveling
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why the U.S. is closing in on both a debt default and a government shutdown.
Topics covered include:
- How a government shutdown differs from a debt ceiling crisis
- Why hasn't Congress passed legislation to fund the government and raise the debt limit
- How refusing to increase the debt ceiling could impact Social Security
- How big is the national debt and who owns it
- Why we never know how much federal debt is too much: Japan vs the U.S.
- How federal debt is used and how it has led to financial innovation
- Why countries default on their debt
- What are some of the challenges with central banks pegging interest rates and monetizing the debt
- What could cause the U.S. dollar to crash and inflation to soar
Thanks to Alto CryptoIRA and LinkedIn for sponsoring the episode.
For more information on this episode click here.
Show Notes
America’s debt ceiling is a disaster, though fiscal rules can help—The Economist
Treasury Bulletin, September 2021—Bureau of the Fiscal Service
Major Foreign Holding of Treasury Securities—Department of the Treasury/Federal Reserve Board
Fed official warns of ‘extreme’ market reaction unless debt ceiling raised by Lauren Fedor, Colby Smith and James Politi - The Financial Times
Republicans Are Playing a Dangerous Game With Debt by Michael R. Strain—The New York Times
Explainer: What happens when the U.S. federal government shuts down? by Jason Lange—Reuters
Janet Yellen Says Treasury Could Exhaust Cash Reserves by Oct. 18 if Debt Limit Isn’t Raised by Nick Timiraos and Kate Davidson—The Wall Street Journal
Janet Yellen: Congress, Raise the Debt Limit by Janet Yellen—The Wall Street Journal
Devin Carroll on YouTube
In Defense of Public Debt by Barry Eichengreen, Asmaa El-Ganainy, Rui Esteves, and Kris James Mitchener
Different Types of Central Bank Insolvency and the Central Role of Seignorage by R. Reis
How do central banks control inflation? A guide for the perplexed by Laura Castillo-Martinez and Ricardo Reis—London School of Economics and Political Science
Can the Central Bank Alleviate Fiscal Burdens? by Ricardo Reis—London School of Economics and Political Science
Related Episodes
295: Federal Reserve Insolvency and Monetizing the National Debt
338: The National Debt, Inflation, and the U.S. Dollar—What Could Go Wrong?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What is causing the shortage of goods and workers? What should we do about it?
Topics covered include:
- How a tree pandemic killed billions of American Chestnut trees
- How a massive increase in demand has crippled the global supply, leading to an eight-fold increase in shipping costs
- Why there are so many job openings and people quitting their jobs
- Why the free market doesn't work as well for child daycare
- How stimulus payments during the pandemic reduced poverty rates
- What is the lying flat movement
- How everything is in place for an extended period of high inflation even though the bond market still anticipates inflation will be transitory
- Why we should own real things and plan more downtime
Thanks to Policygenius and Masterworks for sponsoring the episode.
For more information on this episode click here.
Show Notes
The Demise and Potential Revival of the American Chestnut by Kate Morgan—Sierra Club
U.S. Imports to Increase by 20% by End of 2021—Material Handling & Logistics
The largest port in the US hit a new ship-backlog record every day last week, as 65 massive container boats float off the California coast by Grace Kay—Business Insider
The World Is Still Short of Everything. Get Used to It. by Peter S. Goodman and Keith Bradsher—The New York Times
‘Just Get Me a Box’: Inside the Brutal Realities of Supply Chain Hell by Brendan Murray—Bloomberg Businessweek
Rising Shipping Costs Are Companies’ Latest Inflation Riddle by Thomas Gryta—The Wall Street Journal
Income, Poverty and Health Insurance Coverage in the United States: 2020—United States Census Bureau
Employers Are Baffled as U.S. Benefits End and Jobs Go Begging by Katia Dmitrieva and Olivia Rockeman—Bloomberg
Job Openings and Labor Turnover - July 2021—U.S. Bureau of Labor Statistics
‘Lie Flat’ If You Want, But Be Ready to Pay the Price by Allison Schrager—Bloomberg
‘Can’t Compete’: Why Hiring for Child Care Is a Huge Struggle by Claire Cain Miller—The New York Times
Treasury Releases Report Showing U.S. Childcare System Overburdens Families and Causes Shortages Due to Inadequate Supply—U.S. Department of the Treasury
Related Episodes
323: The Economy Is Not A Machine
331: Why Do We Work So Much?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
A regulatory crackdown and ideological campaign by the Chinese government has upended the Chinese stock market, which comprises close to 40% of emerging market indices. We evaluate what is going on and what investors should do.
Topics covered include:
- How has the Chinese stock market performed in 2021
- Why has Cathie Wood and Ark Invest dramatically cut their Chinese stock exposure
- What are examples of regulatory changes in China
- Why the stocks of Chinese online tutoring companies that trade on the New York Stock Exchange fell 90% this year
- What are variable interest entities (VIEs) and why they are a risky corporate structure for Chinese companies
- How a high private sector debt burden could lead to a banking crisis or contagion in China
- What are ways investors can invest in emerging markets while having a smaller allocation to China
Thanks to LinkedIn and Simplify ETFs for sponsoring the episode.
For more information on this episode click here.
Show Notes
Cathie Wood’s Ark cuts China positions ‘dramatically’ by Leo Lewis and Thomas Hale—Financial Times
Beijing to break up Ant’s Alipay and force creation of separate loans app by Sun Yu and Ryan McMorrow—Financial Times
China’s dodgy-debt double act—The Economist
China’s bid to stabilise its property market is causing jitters—The Economist
Related Episodes
218: Is China or the U.S. More Vulnerable?
249: Should You Invest in India?
328: Are You Underweight Chinese Stocks? Pros and Cons of Investing in China
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the demand and supply drivers of home prices? What is the current status of those drivers and do they suggest a housing price crash is imminent, particularly given mortgage forbearance programs are ending?
Topics covered include:
- How much have home prices appreciated in the past year compared to historical rates
- What has driven the demand shock for housing
- Why U.S. houses are so much more affordable compared to earlier periods
- How big is the housing shortage in the U.S.
- What could cause home prices to crash
- How housing supply and demand drivers apply to local real estate markets
- How to purchase a home in a hot housing market
Thanks to the Modern Finance podcast and Simplify ETFs for sponsoring the episode.
For more information on this episode click here.
Show Notes
In a forgotten town by the Salton Sea, newcomers build a bohemian dream Rory Carroll—The guardian
For One Weekend a Year, a Tiny Town on the Salton Sea Becomes a Mecca for Artists and Partiers by April Wong—Los Angeles Magazine
Electric vehicles need batteries. Those need lithium. That’s where the Salton Sea comes in. by Elliot Spagat—Chicago Sun-Times
A shock is headed for the housing market by Lance Lambert—Fortune
Housing Supply: A Growing Deficit—Freddie Mac
Related Episodes
235: What If Home Prices Always Declined
258: How Financialization Pushes Up Home Prices
317: How To Buy In A Hot Housing Market
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Why bother rebalancing your investment portfolio and what is the best method for doing so.
Topics covered include:
- How a target asset allocation can get out of line if a portfolio is not rebalanced
- What is positive skewness and why it matters to portfolio investing
- What is volatility drag and how it can lead to lower end of period wealth
- What are the costs of rebalancing
- Which rebalancing method if any has been the most effective
Thanks to Felix Gray glasses and Mint Mobile for sponsoring the episode.
For more information on this episode click here.
Show Notes
Long-Horizon Stock Returns Are Positively Skewed by Adam Farago and Erik Hjalmarsson
Positively Skewed Distribution—Corporate Finance Institute
Prospect Theory and Stock Market Anomalies by Nicholas Barberis, Lawrence J. Jin, and Baolian Wang
Strategic Rebalancing by Sandy Rattray, Nicolas Granger, Campbell R. Harvey, and Otto Van Hemert
Portfolio Rebalancing: Tradeoffs and Decisions by Xing Hong and Philipp Meyer-Brauns
Diversification Returns, Rebalancing Returns and Volatility Pumping by Keith Cuthbertson, Simon Hayley, Nick Motson, and Dirk Nitzsche
Getting back on track: A guide to smart rebalancing by Jenna L. McNamee, Thomas Paradise, and Maria A. Bruno—Vanguard
Safe Haven: Investing for Financial Storms by Mark Spitznagel
Related Episodes
313: No One Is Entirely a Buy and Hold Investor
341: How to Overcome Investing Fears
354: Now Is the Best Time Ever to Be an Individual Investor
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
We compare the U.S. dollar with Bitcoin on their key attributes to determine which is better for transactions and preserving wealth, which is most absurd and which has serious flaws.
Topics covered include:
- How are new U.S. Dollars and Bitcoin created
- How much has the supply of each currency grown
- How both the dollar and Bitcoin have had rule changes
- Why Bitcoin transactions are faster than non-cash U.S. dollar transactions
- Why both the dollar and Bitcoin require add-on layers to facilitate transactions
- How tax treatment of a currency can encourage or discourage its use for payments
- Why divisibility is a critical attribute of any currency
- Why Bitcoin has been as volatile as the Russian ruble
- Why Bitcoin is energy inefficient while having built-in incentives to use renewable energy
- What will determine the long-term viability of Bitcoin and the U.S. dollar
For more information on this episode click here.
Sponsors
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Policygenius
Show Notes
Federal Reserve Statistical Release: H.4.1 Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks, August 19, 2021
Check Processing—Federal Reserve Bank of New York
Gold Reserve Act of 1934—Federal Reserve History
Creation of the Bretton Woods System—Federal Reserve History
Financial Accounting Manual for Federal Reserve Banks, July 2021: Chapter 5. Federal Reserve Notes—Board of Governors of the Federal Reserve System
Financial Statements: Federal Reserve Bank of Kansas City; As of and for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report
A Complete Guide to Understanding and Protecting Against Inflation—Money For the Rest of Us
Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto—Bitcoin
What is a fork?—Coinbase
Mapping the Major Bitcoin Forks by Ashley Viens—Visual Capitalist
Total Circulating Bitcoin Chart—Blockchain
There’s Enough Bitcoin For Everyone by Paul Opoku—Nasdaq
Lightning Network: Scalable, Instant Bitcoin/Blockchain Transactions
Crypto Crime Summarized: Scams and Darknet Markets Dominated 2020 by Revenue, But Ransomware Is the Bigger Story—Chainalysis
Americans' Spending on Illicit Drugs Nears $150 Billion Annually; Appears to Rival What Is Spent on Alcohol by Beau Kilmer—RAND Corporation
39% of PoW mining is powered by renewables – Cambridge University Cryptoasset study by Gareth Jenkinson—The Daily Chain
Bitcoin Energy Consumption Index—Digiconomist
The Bitcoin vs Visa Electricity Consumption Fallacy by Carlos Domingo—Hacker Noon
El Salvador Readies Bitcoin Rollout With 200 ATMs for Conversion by Michael D McDonald—Bloomberg
Related Episodes
316: Paper, Rocks, or Digits—What Makes the Best Money
335: Are Non-Fungible Tokens (NFTs) Good Investments?
339: How To Make Money with BlockFi, Dai and the Evolving DeFi Ecosystem
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the advantages and disadvantages individual investors have relative to professional investors. How individual investors can capitalize on their advantages without being overwhelmed by too many choices.
Topics covered include:
- How much have fees and commissions dropped for individual investors in the past two decades
- How the overall objective of individual investors differs from professional investors
- Why the smaller scale at which individual investors operate provides an advantage relative to professional investors
- What are some advantages that professional investors have relative to individual investors
- How having constraints and rules of thumb allow individual investors to generate better returns and be less overwhelmed
- What are some examples of rules of thumb that collectively form an investment philosophy and process
Thanks to Streak CRM for sponsoring the episode.
For more information on this episode click here.
Show Notes
Trends in the Expenses and Fees of Funds, 2020—ICI Research Perspective March 2021 // VOL. 27, NO. 3
Morningstar's Annual Fund Fee Study Finds Investors Saved Nearly $6 Billion in Fund Fees in 2019—Morningstar
The Reel Deal: The Stacked Benefits of a Reel Mower by John K. Hix and Simone Bailey—Rochester Reginal Health
How to Invest in Closed-End Funds—Money For the Rest of Us
Portfolio Visualizer
The Beauty of Everyday Things by Soetsu Yanagi
Noise: A Flaw in Human Judgment by Daniel Kahneman, Olivier Sibony, and Cass R. Sunstein
Related Episodes
313: No One Is Entirely a Buy and Hold Investor
332: What Is Tail Risk and Are You Taking Too Much Of It?
341: How to Overcome Investing Fears
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How permanent life insurance can be an effective tool for retirement planning.
Topics covered include:
- What is the difference between term and whole life insurance
- How many people let their life insurance policies lapse each year
- What are strengths that insurance companies have that are beneficial to individual investors
- What are the benefits of whole life insurance policies
- How the infinite banking concept works and who should it be used
- How asset allocation should differ when investors have a whole life insurance policy
- What are concerns with whole life insurance
- How an integrative approach of using whole life, immediate annuities, and investments can lead to higher retirement spending levels
Thanks to today's sponsors: Simplify ETFs and the all-new electric MINI Cooper SE
For more information on this episode click here.
Show Notes
Arthur L. Williams Jr.—Wikipedia, Aug 10, 2021
ACLI 2020 Life Insurers Fact Book—The American Council of Life Insurers
Pros And Cons Of Life Insurance For Children by Cameron Huddleston and Amy Danise—Forbes
The Four Approaches to Managing Retirement Income Risk by Wade D. Pfau
Safety-First Retirement Planning: An Integrated Approach for a Worry-Free Retirement (The Retirement Researcher Guide Series) by Wade D. Pfau
Integrating Whole Life Insurance into a Retirement Income Plan: Emphasis on Cash Value as a Volatility Buffer Asset by Wade D. Pfau and Michael Finke
Related Episodes
279: Why All Retirees Should Consider an Income Annuity
326: The New Math of Retirement Spending and Investing
349: Forward and Reverse Mortgages: When To Take Them Out and When to Pay Them Off
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How owning fewer, more permanent things can lead to greater freedom and continued economic growth.
Topics covered include:
- How a railroad company issued a bond that matured in 999 years
- Why land and gold are the most permanent investments
- What is the oldest currency in use
- Why fiat and cryptocurrencies are potentially worthless
- Why permanence is freedom and constantly craving more things limits freedom
- Why do quality goods cost more
- How the volume of trash generation and the number of storage units are increasing
- Why reducing the number of things we own is so difficult and how to go about doing it
- How the economy could change as people own things longer
Thanks to Felix Gray Glasses and LinkedIn for sponsoring the episode.
For more information on this episode click here.
Show Notes
Business & Finance: Freak Finance
Back to the future with long-term bonds by Franky Leeuwerck—Franky's Scripophily BlogSpot
ELMIRA AND WILLIAMSPORT RAIL ROAD COMPANY 500$ BOND, 1863—WorthPoint
The Power of Gold: The History of an Obsession by Peter L. Bernstein
How much gold has been found in the world?—USGS
The oldest living thing on Earth by Marnie Chesterton—BBC
What is the world's oldest currency?—CMC Markets
Bitcoin, Currencies, and Fragility by Nassim Nicholas Taleb
Small Is Beautiful: Economics as if People Mattered Bby E. F. Schumacher
Evan Kinori
Glasswing
Want to Make It Big in Fashion? Think Small, Like Evan Kinori by Guy Trebay—The New York Times
Artists of Theory: Evan Kinori Interview by Isaac McKay-Randozzi—Theories of Atlantis
National Overview: Facts and Figures on Materials, Wastes and Recycling—United States Environmental Protection Agency
Basic Information about Landfill Gas—United States Environmental Protection Agency
The Great Markdown Disaster w/ Evan Kinori—Corporate Lunch
Minimum by John Pawson
Evan Kinori, Clothing Designer by Sean Hotchkiss—Faculty Department
Storage Wars—Seeking Alpha
France Gave Teenagers $350 for Culture. They’re Buying Comic Books. by Aurelien Breeden—The New York Times
Related Episodes
278: You Have Permission to Spend
262: Better Not Bigger, Circular Not Linear – How the Global Economy Is Changing
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How the carbon emissions allowances and carbon offset markets are structured and how to invest in them.
Topics covered include:
- How much greater are the levels of carbon dioxide in the atmosphere and how much have average temperatures increased
- Why industries and companies are seeking to cut their greenhouse gas emissions
- How cap and trade emissions trading systems work
- What are the demand and supply dynamics of tradable emission allowances
- What has been the performance of tradeable emission allowances
- How ETFs invest in tradable emission allowances
- How the voluntary carbon offset market is structured and what are the demand and supply dynamics
- Why do companies make voluntary pledges to reduce their carbon footprints
- What are the types of carbon offset projects
- Why it is more difficult to invest in carbon offset markets and how that is changing
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Show Notes
Vital Signs: Carbon Dioxide—Nasa
Global Energy Perspective 2021—McKinsey & Company
Climate Change: Global Temperature by Rebecca Lindsey and LuAnn Dahlman—NOAA
2030 Climate Target Plan—European Commission
FAQs Carbon Markets & Indices—Intercontinental Exchange, Inc.
Carbon trading: the ‘one-way’ bet for hedge funds by David Sheppard—Financial Times
KRBN KraneShares Global Carbon ETF—Krane Shares
The Regional Greenhouse Gas Initiative, Inc.
Corporate Carbon Reduction Pledges: An Effective Tool to Mitigate Climate Change? by Stephen Comello, Julia Reichelstein, and Stefan Reichelstein
Carbon offset prices set to increase tenfold by 2030 by Michael Holder—GreenBiz
Carbon offsetting is essential to tackling climate change—The Economist
Cheap cheats—The Economist
Future Demand, Supply and Prices for Voluntary Carbon Credits – Keeping the Balance—Trove Research
Carbon offsets gird for lift-off as big money gets close to nature by Susanna Twidale and Shadia Nasralla—Reuters
CBL Global Emissions Offset Futures – Constract Specs—CME Group
CBL Nature-Based Global Emissions Offset (N-GEO) and CBL Global Emissions Offset (GEO) Futures ‒ Frequently Asked Questions—CME Group
CME Announces Global Emissions Offset Futures by Filipe Wallin Albuquerque—Nordic Sustainable Investment Platform
Related Episodes
251: Impact Investing and Intentionality
262: Better Not Bigger, Circular Not Linear – How the Global Economy Is Changing
340: Climate Change, ESG, and What Should Investors Do?
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The risks and opportunities of investing in startups on equity crowdfunding platforms.
Topics covered include:
- Why do individual investors now have more access to startup investments
- What has been the historical performance of venture capital funds
- How most startups fail, leaving only a few startups to offset portfolio losses
- What factors to consider when deciding on which startups to invest
- Why do startups have so many different share classes
- What platforms are available for individuals to invest in startups
- Why indexing by investing in every credible startup deal can lead to better performance than hand-selecting a few startups
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Show Notes
Squaring Venture Capital Valuations with Reality by Will Gornall and Ilya A. Strebulaev
How Do Venture Capitalists Make Decisions? by Paul A. Gompers, Will Gornall, Steven N. Kaplan, and Ilya A. Strebulaev
What Are SPACs and Should You Invest in Them?—Money For the Rest of Us
First Quarter 2021 Private Capital Quarterly Review—Fund Evaluation Group
Fourth Quarter 2020 Private Capital Quarterly Review—Fund Evaluation Group
The Pervasive, Head-Scratching, Risk-Exploding Problem With Venture Capital by Kamal Hassan, Monisha Varadan, and Claudia Zeisberger
Venture Outcomes are Even More Skewed Than You Think by Seth Levine—VC Adventure
Venture Returns With Abe Othman of AngelList by Collin West—Kauffman Fellows
Paul Kedrosky
Related Episodes
253: Are IPOs the New Ponzi Scheme?
321: How to Analyze Complex Investments
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How to decide when to take out a home mortgage and whether to pay it off early. How reverse mortgages can be a helpful retirement tool.
Topics covered include:
- Why it is more difficult to get a mortgage today
- How federal government mortgage guarantees lead to lower mortgage rates
- How to analyze whether to pay off your mortgage early
- The differences between personal risk, market risk, and aspirational risk
- How reverse mortgages work and how they can be useful as a retirement income tool
- What are the costs of reverse mortgages
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For more information on this episode click here.
Show Notes
Quarterly Report on Household Debt and Credit 2021 Q1—Federal Reserve Bank of New York
Selling Guide: Lender Letter LL-2021-03, Impact of COVID-19 on Originations (03/11/2021)—Fannie Mae0
Overreliance on Fannie and Freddie Violates Their Federal Charters by Norbert J. Michel, Ph.D.—The Heritage Foundation
Mortgage Debt and Asset Allocation, Video by Ben Felix
Plus Episode 329: Robinhood, Mortgages and ETF Transparency—Money For The Rest of Us
Beyond Markowitz: A Comprehensive Wealth Allocation Framework for Individual Investors by Ashvin B. Chhabra
How the HECM Program Works—U.S. Department of Housing and Urban Development
Incorporating Home Equity into a Retirement Income Strategy by Wade D. Pfau
Related Episodes
44: Should You Pay Off Your Mortgage?
238: The U.S. Is More Socialist Than Denmark Regarding Home Mortgages
317: How To Buy In A Hot Housing Market
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We answer over a dozen questions from listeners on investing, housing, retirement, business, podcast production, and more.
Topics discussed include:
- The Endowment Model
- Teaching children about investing
- 4 influential investing books
- The difference between being an entrepreneur and investing
- The balance between too much and too little efficiency and productivity
- What we learned about investing from the Covid crash
- How asset allocation changes as one gets older
- The state and future of cryptocurrency
- Is now the time to buy individual stocks given high valuations for indices
- Donor-advised funds
- FDIC insurance
- Money For the Rest of Us production time and expenses
- Is it possible to have too much invested in one ETF
- Is a house and investment and will there be a housing crash
- How to worry less about money
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Related Episodes
211: How To Navigate A Housing Bubble
306: Three Approaches to Asset Allocation
317: How To Buy In A Hot Housing Market
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What are the risks and opportunities of investing in frontier equity markets?
Topics covered include:
- What are the criteria used to determine whether a country's stock market is considered a frontier, emerging, or developed market
- Why some countries aren't included in any MSCI stock index
- How large are frontier markets in terms of population, economic output, and equity markets
- How frontier market's favorable demographic profile make them attractive, but might not lead to higher investment returns
- What are the risks of investing in frontier markets
- How expensive or cheap are frontier markets
- What have been frontier market's historical returns, volatility, and maximum drawdowns
- What are ways to invest in frontier markets
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Show Notes
MSCI Market Classification
MSCI 2020 Market Classification Review
Kuwait’s Move from Frontier to Emerging Market—MSCI
Frontier markets Longer Term Investments (LTI) by Corinne de Boursetty—UBS (PDF download)
Frontier Markets: A Comparative Analysis by Cliff Quisenberry—Investment & Wealth Institute
Urbanisation and Economic Growth: The Arguments and Evidence for Africa and Asia by Ivan Turok and Gordon McGranahan
Why globalists and frontier-market investors love Vietnam—The Economist
The Effects of Board Structure on Corporate Performance: Evidence from East African Frontier Markets by Yilmaz Guney, Ahmet Karpuz, and Gabriel Komba
Related Episodes
233: Is An Emerging Markets Crisis Imminent?
328: Are You Underweight Chinese Stocks? Pros and Cons of Investing in China
341: How to Overcome Investing Fears
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What are the pros and cons of owning an electric vehicle (EV) compared with an internal combustion engine (ICE) vehicle. Are electric vehicles worth it?
Topics covered include:
- What is the total energy consumption for EVs versus ICE vehicles including energy expended to produce the vehicles and energy used to produce the electricity and refine the gasoline that run the vehicles.
- What vehicles weigh the most, ICE, EVs, or hybrids
- How the mix of renewables and coal in the power grid impacts the energy impact of electric vehicles.
- What is the total cost of owning an electric vehicle compared with a similar model ICE vehicle.
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Show Notes
The Gregor Letter
The Greenhouse gases, Regulated Emissions, and Energy use in Technologies Model—Argonne National Laboratory
Vehicle Cost Calculator—Alternative Fuels Data Center
EV vs. Gas: Which Cars Are Cheaper to Own? by Roberto Baldwin—Car and Driver
Batteries For Electric Cars Speed Toward a Tipping Point by Ira Boudway—Bloomberg
Show Notes
The Gregor Letter
The Greenhouse gases, Regulated Emissions, and Energy use in Technologies Model—Argonne National Laboratory
Vehicle Cost Calculator—Alternative Fuels Data Center
EV vs. Gas: Which Cars Are Cheaper to Own? by Roberto Baldwin—Car and Driver
Batteries For Electric Cars Speed Toward a Tipping Point by Ira Boudway—Bloomberg
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What are ways to invest in water and is it an attractive investment?
Topics covered include:
- How water rights work and how they have been overallocated in the Colorado River basin.
- Why agriculture uses the vast majority of water in the southwestern U.S. while contributing only a few percentage points to the region's gross domestic product.
- Why hedge fund manager Michael Burry invests in farmland instead of water rights.
- What ETFs are available to invest in water
- What have the historical returns been for water stock investing, what are current valuations, and what is the expected long-term revenue growth.
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Show Notes
Beyond the Signing by Laura Paskus—Water Education Colorado
Where the Water Goes: Life and Death Along the Colorado River by David Owens
What Happens When The Colorado River Runs Dry—Science Friday
Editorial: There is no drought by The Times Editorial Board
New Mexico’s coming megadrought highlights farmers’ control of water by Cody Nelson, Capital & Main—New Mexico Political Report
Arizona | The Economic Contributions and Impacts of U.S. Food, Fiber, and Forest Industries—University of Arkansas Department of Agriculture
U.S. Southwest, Already Parched, Sees ‘Virtual Water’ Drain Abroad by Diana Kruzman—Coyote Gultch
Brazil’s Worst Water Crisis in 91 Years Threatens Power Supplies by Walter Brandimarte and Gerson Freitas Jr—Bloomberg Green
Does Arizona really use less water now than it did in 1957? by Andrew Nicla—azcentral.
Arizona’s Groundwater Management Act at Forty: Tackling Unfinished Business by Kirsten H. Engel, Esther Loiseleur, Elise Drilhon
Michael Burry, Real-Life Market Genius From The Big Short, Thinks Another Financial Crisis Is Looming—by Jessica Pressler—Intelligencer
Global water crisis: Investing in water—Fidelity
Related Episodes
301: Use Caution with Alternative Investments
334: How To Invest In Farmland
336: Own What Is Real
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Half of the global financial system is made up of shadow banks. You have probably already used one. What are shadow banks and what to be wary of when using them.
Topics covered include:
- What are the roles of shadow banks
- What are examples of shadow banks
- How two shadow banks, Greensill Capital and Archegos Capital Management, contributed to billions of dollars in losses
- How China's massive use of shadow banks differs from the rest of the world
- How individuals investors can benefit from the careful use of shadow banks.
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Show Notes
Q+A-What is shadow banking and why does it matter? by Michelle Martin—Reuters
What You Need to Know About the Shadow Banking System Now by Craig Kirsner—Kiplinger
Global Monitoring Report on Non-Bank Financial Intermediation 2020—Financial Stability Board
How fintech will eat into banks’ business—The Economist
Why is supply-chain finance, as practised by Greensill Capital, risky?—The Economist
Tokio Marine defends governance over Greensill exposure by Leo Lewis, Kana Inagaki, and Ian Smith—Financial Times
Related Episodes
304: A 15% Guaranteed Return? Lending on the Fringes of Finance
305: Are Banks Safe?
333: How The Covid Shock Nearly Destroyed The Financial System
339: How To Make Money with BlockFi, Dai and the Evolving DeFi Ecosystem
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Why productivity growth is key to creating wealth. Why U.S. productivity growth is slowing, and what we can do to increase business and personal productivity.
Topics covered include:
- How productivity is measured and how it relates to GDP, inflation, and living standards
- How productivity growth has led to more food, better health, better housing, and more consumer goods.
- What are potential reasons why productivity growth is slowing
- Evidence that work from home has led to lower productivity
- What individuals and businesses can do to increase productivity
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Show Notes
The Slowdown in Productivity Growth and Policies That Can Restore It by Emily Moss, Ryan Nunn, and Jay Shambaugh—The Hamilton Project
The technology-employment trade-off: Industry, automation, and income effects by Gene Kindberg-Hanlon—World Bank Blogs
Will productivity and growth return after the COVID-19 crisis? by Jan Mischke, et al.—McKinsey & Company
Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals by Michael Gibbs, Friederike Mengel, Christoph Siemroth—Becker Friedman Institute for Economics
The Work of the Future: Building Better Jobs in an Age of Intelligent Machines by David Autor, David Mindell, and Elisabeth Reynolds—Massachusetts Institute of Technology
How to Stop Worrying and Love the Robot Apocalypse (Ep. 461) by Stephen J. Dubner, Produced by Zack Lapinski—Freakanomics
Is working from home bad for productivity? by Claire Jones—Financial Times
A World Without Email: Reimagining Work in an Age of Communication Overload by Cal Newport
Effortless: Make It Easier to Do What Matters Most by Greg McKeown
Related Episodes
142: Why Are Some Nations Wealthier Than Others?
231: What Determines How Much You Make
300: Ray Dalio and the Changing World Order
331: Why Do We Work So Much?
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How today's inflationary environment is similar and different from the great inflation of the 1970s. What are the best assets to protect your portfolio if the next great inflation is here.
Topics covered include:
- How is inflation measured and why the pandemic made calculating inflation difficult
- What causes inflation
- Why is inflation increasing currently
- What caused the great inflation of the 1970s
- Which assets are best to own to protect against inflation
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Show Notes
A Complete Guide to Understanding and Protecting Against Inflation—Money For The Rest of Us
Great Inflation 2.0? Lessons from the 1970s by Simon Macadam—Capital Economics
When it comes to inflation, how much fortitude does the Fed have? by Sebastion Mallaby—Financial Times
If Inflation Is Coming, Here Is What to Do About It by James Mackintosh—The Wall Street Journal
A Complete Guide to Investing in TIPS and I Bonds—Money For The Rest of Us
334 Plus: A New Inflation ETF, Inverse ETFs, and Excess CAPE Yields—Money For The Rest of Us
IVOL ETF Analysis and Review—Money For The Rest of Us
What is Roll Yield and How It Impacts Commodity and VIX ETF Returns—Money For The Rest of Us
DIVIDENDS: THEORY AND EMPIRICAL EVIDENCE—Aaron Brask Capital, LLC.
Related Content
A Complete Guide to Understanding and Protecting Against Inflation
A Complete Guide to Investing in TIPS and I Bonds
IVOL ETF Analysis and Review
What is Roll Yield and How It Impacts Commodity and VIX ETF Returns
336: Own What Is Real
337: Why in the World Would You Own Bonds?
338: The National Debt, Inflation, and the U.S. Dollar—What Could Go Wrong?
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Seven ways to manage fear in order to improve your investing. How fear can be beneficial.
Topics covered include:
- Why fear can be both helpful and harmful
- Why expected investment returns are lower from a year ago
- What are the drivers of asset class returns
- What is a bucket approach to investing and why it can be helpful
- What are ways to automate investing
- Why getting an investment second opinion can be valuable
- Why we can never avoid investing mistakes
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Show Notes
“How do I get rid of the fear?” by Seth Godin—Seth's Blog
The Gift of Fear by Dharmavidya David Brazier—Tricycle: The Buddhist Review
Related Episodes
254: Should You Be 100% Invested In Stocks?
306: Three Approaches to Asset Allocation
326: The New Math of Retirement Spending and Investing
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How businesses, households, governments, asset managers, and investors interact in unpredictable ways to address the risks and opportunities related to climate change and other global trends. Why ESG investing goes beyond just buying an ESG fund or ETF.
Topics covered include:
- What are incentives, constraints, opportunities, and risks faced by businesses, households, governments, asset managers, and investors when deciding what to do.
- What is ESG and sustainable investing
- What are the different levels of sustainable investing practiced by investors and asset managers
- How investors can benefit from emerging technologies to combat climate change
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For more information on this episode click here.
Show Notes
The Beauty of Everyday Things by Soetsu Yanagi (affiliate link)
Darmstadt Definition of Sustainable Investments by Johannes Hoffmann, Gerhard Scherhorn, Timo Busch (eds.)—Wuppertal Institute
FACT SHEET: President Biden Sets 2030 Greenhouse Gas Pollution Reduction Target Aimed at Creating Good-Paying Union Jobs and Securing U.S. Leadership on Clean Energy Technologies, APRIL 22, 2021—The White House
CDP Climate Charity
Drawdown Framework—Project Drawdown
‘I Will Get Very Serious About ESG — But Not Yet,’ Allocators Claim by Amy Whyte—Institutional Investor
How Sensitive are Optimal Fully Renewable Power Systems to Technology Cost Uncertainty? by Behrang Shirizadeh, Quentin Perrier, and Philippe Quirion
Techno-optimism, behaviour change and planetary boundaries by Adair Turner—Keele World Affairs Lectures on Sustainability
Activate Your Money: Invest to Grow Your Wealth and Build a Better World 1st Edition by Janine Firpo (affiliate link)
Making Sense Podcast 244 - Food, Climate, and Pandemic Risk—Sam Harris
Why Invest in Disruptive Innovation?—Ark Invest
Related Episodes
77: Does Ethical Investing Outperform the Market?
118: Are Renewable Energy ETFs a Good Investment?
140: How Climate Change Could Impact Your Investments and Your Life
251: Impact Investing and Intentionality
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What is decentralized finance and how it is seeking to solve the shortcomings of centralized finance. How BlockFi and MakerDAO, early entrants in the DeFi space work. How to earn up to a 9% yield with cryptocurrency lending.
Topics covered include:
- How centralized finance differs from decentralized finance (DeFi)
- What are the shortcomings of centralized finance and why decentralized finance is more inclusive
- What are the key elements of DeFi
- How Ethereum smart contracts work
- How MakerDao and Dai work and replicate many aspects of the modern financial system
- How BlockFi operates using overcollateralized and undercollateralized loans
- What are the risks of cryptocurrency lending using BlockFi and Dai
Thanks to LinkedIn and Truebill for sponsoring the episode.
For more information on this episode click here.
Show Notes
Crypto Lending Interest Rates for April 2021—DeFi Rate
DeFi and the Future of Finance by Campbell R. Harvey, Ashwin Ramachandran, and Joey Santoro
Millions Lost: The Top 19 DeFi Cryptocurrency Hacks of 2020 by Anton Tarasov—Crypto Briefing
Bitcoin Lending & Borrowing w/ BlockFi’s Zac Prince & Mark Yusko—Bitcoin Fundamentals by the Investor's Podcast Network
BlockFi lands a $350M Series D at a $3B valuation for its fast-growing crypto-lending platform by Mary Ann Azevedo—Tech Crunch
BlockFi Hacked Following SIM Swap Attack, But Says No Funds Lost by Graham Cluley—Tripwire
Maker Protocol Full Guide: How to Make Money with DAI by Evan Ezquer—Asia Crypto Today
DeFi Leader MakerDAO Weighs Emergency Shutdown Following ETH Price Drop by Brady Dale and William Foxley—CoinDesk
Celsius Network Interest Rates, Explained—Celsius
What Crypto Lender Celsius Isn’t Telling Its Depositors by Nate DiCamillo—CoinDesk
Related Episodes
304: A 15% Guaranteed Return? Lending on the Fringes of Finance
319: Here Come Central Bank Digital Currencies
335: Are Non-Fungible Tokens Good Investments?
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With a ballooning U.S. federal budget deficit, a growing national debt, and double digit increases in the money supply, is it time to bet against the dollar?
Topics covered include:
- What is driving the double digit increases in U.S. home prices
- Why hasn't inflation spiked in line with rising home prices
- What is the velocity of money and why is it falling
- What are three schools of thought regarding what causes inflation
- What is the average interest rate and maturity schedule of the U.S. national debt
- How the Bank of Amsterdam is an example of how central banks can go insolvent and shut down
- Why the dollar has an exorbitant privilege
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For more information on this episode click here.
Show Notes
Where Did Americans Move in 2020? by Janelle Cammenga—Tax Foundation
Velocity of M2 Money Stock (M2V) Chart—Federal Reserve Bank of St. Louis
Federal Surplus or Deficit [-] as Percent of Gross Domestic Product (FYFSGDA188S) Chart—Federal Reserve Bank of St. Louis
How the CPI measures price change of Owners’ equivalent rent of primary residence (OER) and Rent of primary residence (Rent)—U.S. Bureau of Labor Statistics
Consumer Price Index – March 2021—U.S. Bureau of Labor Statistics
Table 1 (2017 – 2018 Weights). Relative importance of components in the Consumer Price Indexes: U.S. city average, December 2020—U.S. Bureau of Labor Statistics
Inflation and Debt by John H. Cochrane, Fall 2011—National Affairs
US Government Finance: Debt by Dr. Edward Yardeni and Mali Quintana—Yardeni Research, Inc.
Can the Central Bank Alleviate Fiscal Burdens? by Ricardo Reis—London School of Economics and Political Science
BIS Working Papers No 902 An early stablecoin? The Bank of Amsterdam and the governance of money by Jon Frost, Hyun Song Shin, and Peter Wierts—Bank of International Settlements
EXCHANGE ARRANGEMENTS ENTERING THE 21ST CENTURY: WHICH ANCHOR WILL HOLD? by Ethan Ilzetzki, Carmen M. Reinhart, and Kenneth S. Rogoff
Related Episodes and Content
A Complete Guide to Understanding and Protecting Against Inflation
287: What Causes Hyperinflation and How To Prepare For It
295: Federal Reserve Insolvency and Monetizing the National Debt
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With interest rates rising does it still make sense to own bonds? Yes. This episode explores the role of bonds including why they are more effective at hedging stock losses than protective put options.
Topics covered include:
- David's business and investment philosophy
- How bond funds have performed in 2021
- Three disparate views on the direction of interest rates from Capital Economics, Ray Dalio, and Hoisington Investment Management Company
- How to invest in China bonds
- Why owning bonds is cheaper and more effective at hedging stock market losses than put options
- How covered call strategies work
- How to decide on your allocation to bonds versus stocks
Thanks to Mint Mobile for sponsoring the episode.
For more information on this episode click here.
Show Notes
What I think, not what I thought – Jason Fried
Why in the World Would You Own Bonds When… – Ray Dalio
Explainer: Foreign access to China’s $16 trillion bond market – Reuters
The True Cost of Hedging S&P Downside - Movement Capital
Revisiting Covered Calls and Protective Puts: A Tale of Two Strategies – Bryan Foltice
Pathetic Protection: The Elusive Benefits of Protective Puts – Roni Israelov
Related Episodes
302: Investing Is Not Knowing
255: With Interest Rates Falling, Why Do You Own Bonds?
225: How To Invest in Bonds
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
There has never been this much money in the world. Now is the time to own real property.
Topics covered include:
- How to buy something with Bitcoin
- How cryptocurrencies are similar and different from fiat currencies
- What is legal tender
- Why there has never been this much money in the world
- Why central banks can control interest rates but not inflation
- What real property should investors own
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For more information on this episode click here.
Show Notes
The Power of Gold: The History of an Obsession by Peter L. Bernstein
IRS Virtual Currency Guidance Announcement 2014-21—Internal Revenue Service
Legal Tender Status—U.S. Department of the Treasury
India to propose cryptocurrency ban, penalising miners, traders - source by Aftab Ahmed, Nupur Anand—Reuters
Executive Order 6102—Requiring Gold Coin, Gold Bullion and Gold Certificates to Be Delivered to the Government by Franklin D. Roosevelt—The American Presidency Project
Total Circulating Bitcoin—Blockchain Charts
Federal Reserve statistical release: Factors Affecting Reserve Balances, March 18, 2021—United States Federal Reserve
Money Stock Measures – H.6 Release, March 23, 2021—Board of Governors of the Federal Reserve System
M2 Money Stock/Gross Domestic Product—Federal Reserve Bank of St. Louis
Monthly Budget Review: Summary for Fiscal Year 2020—Congressional Budget Office
A Fed With No Fear of Inflation Should Scare Investors by James Mackintosh—The Wall Street Journal
Biden Administration Officials Put Together $3 Trillion Economic Plan by Ken Thomas and Andrew Duehren—The Wall Street Journal
Turkey faces a currency crisis after Erdogan sacks his central banker—The Economist
Related Episodes
295: Federal Reserve Insolvency and Monetizing the National Debt
316: Paper, Rocks, or Digits—What Makes the Best Money
322: Why Currency Exchange Rates Matter
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How do non-fungible tokens work, what are the risks, and how do NFTs fit within the landscape of investments.
Topics covered include:
- Investing in physical art versus cryptoart
- How NFTs work on the ethereum blockchain
- How Ethereum differs from Bitcoin
- What is the purpose of investing and are NFTs investments
- How much energy do cryptocurrencies and the financial system consume
- What are the risks of NFTs
Thanks to Amazon Pharmacy and SmartAsset for sponsoring the episode.
For more information on this episode click here.
Show Notes
Want to Buy an NFT? Here’s What to Know by AmberBurton—The Wall Street Journal
From Crypto Art to Trading Cards, Investment Manias Abound by Erin Griffith—The New York Times
NFTs, explained by Mitchell Clark—The Verge
HERE IS THE ARTICLE YOU CAN SEND TO PEOPLE WHEN THEY SAY “BUT THE ENVIRONMENTAL ISSUES WITH CRYPTOART WILL BE SOLVED SOON, RIGHT?” by Everest Pipkin
39% of PoW mining is powered by renewables – Cambridge University Cryptoasset study by Gareth Jenkinson—The Daily Chain
Cambridge Bitcoin Electricity Consumption Index
Bitcoin Energy Consumption Index—Digiconomist
Ethereum Energy Consumption Index (beta)—Digiconomist
The Bitcoin vs Visa Electricity Consumption Fallacy by Carlos Domingo—Hacker Noon
How much would you pay for a virtual sofa? by Anne Quito—Quartz
The Wisdom of Finance: Discovering Humanity in the World of Risk and Return by Mihir Desai
Techno-optimism, behaviour change and planetary boundaries by Adair Turner—Keele World Affairs Lectures on Sustainability
Related Episodes
167: Is Bitcoin Better At Money Than The Dollar?
182: Was Tulipmania Just Like Bitcoin?
228: How Tokenization Will Radically Change Investing
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How much can you earn investing in farmland and what are the risks? What are the ways to invest in farmland?
Topics covered include:
- What determines farmland investment returns
- How much has U.S. farmland appreciated historically
- How much income does farmland investing generate
- Why the amount of U.S. farmland is shrinking
- Has another commodity supercycle started
- Why U.S. farmers are dependent on exports
- What are farmland investing risks
- What farmland investment vehicles are available
- How to evaluate a farmland investment opportunity
Thanks to LinkedIn and Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
Farmland Values, Land Ownership, and Returns to Farmland, 2000-2016 by Christopher Burns, Nigel Key, Sarah Tulman, Allison Borchers, and Jeremy Weber—United States Department of Agriculture
Land Values 2020 Summary—United States Department of Agriculture
Farming and Farm Income—Economic Research Service United States Department of Agriculture
Agricultural Markets and Prices: Towards 2025—Organisation for Economic Co-operation and Development
U.S. Agricultural Trade at a Glance—Economic Research Service United States Department of Agriculture
Why Invest In Farmland?—AcreTrader
FarmTogether
Farmland Index Posts First Negative Return in 19 Years by Mike Walsten—Pro Farmer
NCREIF Farmland Property Index
Lumber Prices Are Soaring. Why Are Tree Growers Miserable? by Ryan DezemberandVipal Monga—The Wall Street Journal
Pistachio industry looks to reposition product amid supply boom by John Cox—The Bakersfield California
Related Episodes
218: Is China or the U.S. More Vulnerable?
232: Is It Time To Invest In Commodities?
328: Are You Underweight Chinese Stocks? Pros and Cons of Investing in China
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Why the Federal Reserve had to step in again to sop runs on money market mutual funds and keep the financial system from imploding.
Topics covered include:
- What are the differences between shocks and vulnerabilities
- What are the four main vulnerabilities the Federal Reserve monitors
- How deleveraging and demands for liquidity lead to market stresses
- What are the types of money market funds and how were they impacted by the Covid 19 shock
- How was Treasury bond trading impacted by the Covid shock
- Why the Federal Reserve stepped in to stop the market contagion from spreading
- What are the downsides to central bank interventions
- What individual investors can do to protect against future shocks
Thanks to Mint Mobile and Truebill for sponsoring the episode.
For more information on this episode click here.
Show Notes
President’s Working Group on Financial Markets Releases Report on Money Market Funds—U.S. Department of the Treasury
Report of the President’s Working Group on Financial Markets: Overview of Recent Events and Potential Reform Options for Money Market Funds, December 2020—U.S. Department of the Treasury
U.S. Credit Markets Interconnectedness and the Effects of the COVID-19 Economic Shock by S.P. Kothari, Dalia Blass, Alan Cohen, Sumit Rajpal, and SEC Research Staff—U.S. Securities and Exchange Commission
Financial Stability Report November 2020—Board of Governors of the Federal Reserve System
How Vanguard Overhauled a Prime Money Fund by Bernice Napach—ThinkAdvisor
Overnight Index Swap by James Chen—Investopedia
Cash Viewpoint: What do Variable Rate Demand Notes do for Your Money Market Fund—Invesco
Related Episodes
270: Repo Rates Soared—Here’s Why It Matters
291: How To Survive the Coronavirus (COVID-19) Shutdown
305: Are Banks Safe?
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When should you protect against rare, but extreme events? When should you self-insure? Under what circumstance should you sell tail risk protection to others?
Topics covered include:
- How tail events differ from tail risk
- Why volatility is not the best measure of risk for individuals
- What does it cost to protect against large stock market losses
- Why younger investors can take more risk due to their human capital
- How does the profit wheel options strategy work
- How the catastrophic power outage in Texas exemplifies tail risk
- Why individuals need to build more reserves because the economic system is too efficient and vulnerable to breakdowns
Thanks to SmartAsset and Babbel for sponsoring the episode. Use code DAVID for Babbel to get three months free.
For more information on this episode click here.
Show Notes
Average Weather in San Antonio Texas, United States—Weather Spark
Update on the CBOE BuyWrite and PutWrite Option Indexes, October 2018—Asset Consulting Group
The Texas Freeze: Why the Power Grid Failed Katherine Blunt and Russell Gold—The Wall Street Journal
His Lights Stayed on During Texas’ Storm. Now He Owes $16,752 by Giulia McDonnell Nieto del Rio, Nicholas Bogel-Burroughs, and Ivan Penn—The New York Times
When More Is Not Better: Overcoming America’s Obsession with Economic Efficiency by Roger L. Martin
Related Episodes
250: Investing Rule One—Avoid Ruin
283: Why You Should Care About Carry Trades
321: How to Analyze Complex Investments
323: The Economy Is Not A Machine
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How to structure employment so workers are more creative, productive, and happier.
Topics include:
- What percentage of employees work at home due to the pandemic
- How many hours per week do men and women work in both paid employment and unpaid caregiving
- How workers have been allocating the time saved by not commuting
- Why the economy would still prosper if we worked only four hours per day
- What is the cult of efficiency
- What is the difference between leisure and amusement
- Why employers reward busyness at work
- How work can be more satisfying and create
Thanks to LinkedIn and Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
60 million fewer commuting hours per day: How Americans use time saved by working from home by Jose Maria Barrero, Nick Bloom and Steven J. Davis
Mental health: C-suite struggles in the pandemic by Rachel Ranosa—Human Resources Director
Deep Work (Rules for Focused Success in a Distracted World) by Cal Newport
In Praise of Idleness by Bertrand Russell—Harper's Magazine
Do Nothing: How to Break Away from Overworking, Overdoing, and Underliving by Celeste Headlee
Aristotle's Nicomachean Ethics by Aristotle translated by Robert C. Bartlett and Susan D. Collins
Rest: Why You Get More Done When You Work Less by Alex Soojung-Kim Pang
The Art of the Siesta by Thierry Paquot
When More Is Not Better: Overcoming America's Obsession with Economic Efficiency by Roger L. Martin
Related Episodes
107: Work, Freedom and Leaving A Legacy
184: Massive Job Losses Are Inevitable But There Will Still Be Work
323: The Economy Is Not A Machine
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Why has silver jumped to its highest price in eight years. What you need to know to invest in silver.
Topics covered include:
- What drove the huge spike in silver purchases
- How silver differs from meme stocks
- How hedge funds are positioned with regard to silver
- What are three ways to invest in silver
- What is the annual demand and supply for silver
- What are the reasons to own silver
- How good has silver been as an inflation hedge
- What is the gold-silver ratio and how to use it
- What happened when the Hunt brothers tried to corner the silver market
- What evidence is there that the silver market is manipulated
Thanks to Mint Mobile for sponsoring the episode.
For more information on this episode click here.
Show Notes
Silver Prices Surge to Eight-Year High Amid Reddit-Fueled Frenzy by Eddie Spence, Jake Lloyd-Smith, and Yvonne Yue Li—Bloomberg
r/wallstreetbets
Silver price retreats rapidly in blow to new retail buyers by Henry Sanderson and Neil Hume
‘What’d You Miss?’ Full Show (02/01/2021)—Bloomberg
Silver Price Chart—BullionVault
Silver Supply and Demand—The Silver Institute
Understanding Futures Expiration & Contract Roll—CME Group
Silver $50: Three Years After the “Shortage” by Miguel Perez-Santalla—BullionVault
JPMorgan Admits Spoofing by 15 Traders, Two Desks in Record Deal by Tom Schoenberg and Matt Robinson—Bloomberg
CME Hikes Silver Margins After Prices Surge to Eight-Year High by Yvonne Yue Li
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How coordinated buying by retail investors has turned the table on Wall Street. Are there signs of a market bubble?
Topic covered include:
- What are meme stocks
- Why GameStop's stock (GME) has soared to over $300 from $17 in less than a month
- What are short squeezes and gamma squeezes and how they can push up a stock price
- How short-sellers including hedge funds are losing big against individual investors on the wallstreetbets subreddit
- Is coordinated buying of options and stocks by individual investors illegal?
- How market flows into stocks are taking precedence over fundamental data
- Is the stock market in a bubble and how does the current market environment compare to the 1999 Internet bubble and the 2006 housing bubble?
Thanks to Truebill for sponsoring the episode
For more information on this episode click here.
Show Notes
r/wallstreetbets
FOR POSTERITY—Almost Daily Grants 1.25.21
GameStop can’t stop going up by Jamie Powell—Financial Times
Reddit: bull attack by Jamie Powell and Philip Stafford—Financial Times
How WallStreetBets Pushed GameStop Shares to the Moon by Brandon Kochkodin—Bloomberg
Submit Your Pick for the Next Meme Stock Here posted by u/AssPowers 2/18/20—r/wallstreetbets
17 CFR § 240.10b-5 - Employment of manipulative and deceptive devices.—Legal Information Institute
How'd You Guys Manage to Win so Big it Made These Old Guys Drown in Their Tears? posted by u/bawse 1/24/21—r/wallstreetbets
Five Things You Need to Know to Start Your Day by Cormac Mullen and Tracy Alloway—Bloomberg
Tweet by Paul Kedrosky (@pkedrosky) on 1/25/21
Baupost’s Seth Klarman compares investors to ‘frogs in boiling water’ by Ortenca Aliaj and Eric Platt—Financial Times
US stock rally drives ‘ludicrous index’ towards dotcom era heights by Eric Platt—Financial Times
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Most global stock ETFs, funds and indices have only about 5% invested in China even though China has the second-largest economy in the world. What are the pros and cons of increasing your allocation to Chinese stocks.
Topics covered include:
- Why has China's economy rebounded faster than other countries
- What are Chinese A-share stocks
- How large are China's economy and stock market
- What are four threats that could derail the performance of Chinese stocks
- How individuals can invest in China's stock market including A-shares
Thanks to SmartAsset for sponsoring the episode.
For more information on this episode click here.
Show Notes
Chinese shares: should you increase the amount in your portfolio? by Sam Dickens—IG Group
China A-Shares Definition by Troy Segal—Investopedia
China’s Economy Powers Ahead While the Rest of the World Reels by Stella Yifan Xie, Eun-Young Jeong and Mike Cherney—The Wall Street Journal
China Still Grew and Fueled Its Rise as Covid-19 Shook the Global Economy by Jonathan Cheng—The Wall Street Journal
With Americans Stuck at Home, Trade With China Roars Back by Ana Swanson—The New York Times
Buffett Indicator: China Stock Market Valuations and Expected Future Returns—GuruFocus.com
MSCI Deletions Trigger Rush to Sell Chinese Telecom Stocks by Jeanny Yu and Sofia Horta e Costa
Executive Order on Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies—The White House
Non-SDN Communist Chinese Military Companies List as of January 08, 2021—U.S. Department of the Treasury
MSCI ACWI Index (USD) December 31, 2020—MSCI
How China Lost Patience With Jack Ma, Its Loudest Billionaire by Lulu Yilun Chen and Coco Liu—Bloomberg
China Clampdown on Big Tech Puts More Billionaires on Notice by Zheping Huang and Coco Liu—Bloomberg
China’s College Graduates Can’t Find Jobs. The Solution: Grad School. by Vivian Wang
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Should the U.S. cancel $10,000 or more of student loan debt per borrower? What would be the economic and financial impact? Why the student loan system is broken and how to fix it.
Topics covered include:
- How large and what is the growth rate of U.S. student loan balances
- What are the projections for student loan losses
- What are the pros and cons of forgiving student loans
- What would be the impact on federal finances of canceling student loans
- Why the U.S. government is already technically insolvent
- How student loan programs should be restructured
Thanks to LinkedIn and Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
Student Loans Owned and Securitized, Outstanding—Federal Reserve Bank of St. Louise
Senate majority gives Biden path to student loan forgiveness by Sylvan Lane—The Hill
Schumer pressures Biden to bypass Congress to cancel $50,000 in student debt per borrower by Annie Nova—CNBC
Biden will call on Congress to forgive $10,000 in student debt for all borrowers by Annie Nova—CNBC
Outreach From Borrowers Could Overwhelm Student Loan System When Pandemic Pauses End by: Sarah Sattelmeyer and Lexi West—PEW
Financial Report of the United States Government FY 2019
Warren makes case to Fed chair for canceling student loan debt by Naomi Jagoda—The Hill
Student Loan Losses Seen Costing U.S. More Than $400 Billion by Josh Mitchell—The Wall Street Journal
Final Monthly Treasury Statement Receipts and Outlays of the United States Government For Fiscal Year 2020 Through September 30, 2020, and Other Periods—U.S. Department of the Treasury
Average Student Loan Debt at Graduation by Mark Kantrowitz—Savingforcollege.com
Profile Of The Labor Force By Educational Attainment by Vernon Brundage, Jr.—U.S. Bureau of Labor Statistics
Millennial life: How young adulthood today compares with prior generations by Kristen Bialkin and Richard Fry—PEW Research Center
Forgiving Student Debt Isn’t a Great Stimulus Plan by Noah Smith—Bloomberg
Average annual salary of bachelor's degree recipients employed full time 1 year after graduation, by field of study: Selected years, 1976 through 2001—National Center for Education Statistics
NACE Salary Survey Winter 2020—National Associations of Colleges and Employers
Australia’s student loan problem is a teachable moment for the U.S. by Jason Delisle and Alex Usher—Brookings
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How should individuals invest and spend in retirement with interest rates so low, stock valuations high, and inflation uncertain. Why retirement managed payout funds and income replacement funds failed.
Topics covered include:
- How managed payout and income replacement funds compare to immediate annuities
- Why Vanguard and Fidelity changed the objective of their retiree focused income replacement and managed payout funds
- How fixed annuities work
- How retirees should combine annuities with multi-asset class portfolios to ensure a successful retirement
- Why the 4% retirement spending rule is not appropriate for all investors all of the time.
- Why inflation is the biggest determinant of how much retirees can spend
- Why is there so much controversy over the current and future inflation rate
Thanks to Mint Mobile and Truebill for sponsoring the episode.
Show Note Links
Vanguard Throws in the Towel on Its Managed Payout Fund by Daren Fonda—Barron's
Generating Retirement Income Isn’t Easy, Even for Vanguard by Reshma Kapadia—Barron's
Today's Best Multi-Year Guaranteed Annuities (MYGAs)—ImmediateAnnuities.com
Opinion: The inventor of the ‘4% rule’ just changed it Brett Arends—MarketWatch
The Price of Tomorrow: Why Deflation is the Key to an Abundant Future by Jeff Booth
Alternate Inflation Charts—John Williams' Shadow Government Statistics
Americans Are Richer Than We Think by By Phil Gramm and John F. Early—The Wall Street Journal
For more information on this episode click here.
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How convertible bonds work, why they gained 50% in 2020 and outperformed stocks over the past five years. Why Vanguard shut down their convertible bond mutual funds.
Topics discussed include:
- How big is the convertible bond market
- Why companies issue convertible bonds
- How convertible bonds work and how to analyze them
- Why convertible bonds have performed so well
- What is a reasonable expected return for convertible bonds and what are the risks
- What are ways to invest in convertible bonds
Thanks to Netsuite for sponsoring the episode. Take the Money For the Rest of Us listener survey.
Show Notes
A Plunge and a Recovery Drives a Top-Performing Year in Convertibles by Andrew Bary—Barron's
Convertible Bond Indices: An Overview by SPDR EMEA ETF Strategy Team—State Street Global Advisors
CONVERTIBLE SECURITIES: Structures, Valuation, Market Environment, and Asset Allocation by John P. Calamos, Sr with contributions from Eli Pars—Calamos Investments
Tesla, Inc. 2.00% Convertible Senior Notes due 2024 (the “Convertible Notes Offering”) Issuer Free Writing Prospectus—U.S. Securities and Exchange Commission
Risk and Return in Convertible Arbitrage: Evidence from the Convertible Bond Market by Vikas Agarwal, William Fung, Yee Cheng Loon, and Narayan Y. Naik
The Fluctuating Maturities of Convertible Bonds by Patrick Verwijmeren, and Antti Yang
Convertible Bond Arbitrage by George Long—Eureka Hedge
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A review of how the pandemic, financial markets, and government policy evolved in 2020 to make for an unforgettable year.
Topics covered include:
- Why the Covid-19 pandemic ranks as the second worst in modern history
- What is the difference between risk and uncertainty and how our investing should be different when dealing with uncertainty
- What portfolio changes did David make in 2020 and how should he have invested if he had perfect foresight
- Why speculative assets such as gold and cryptocurrencies have performed so well in 2020
- Why high savings rate and pent up demand provides a tailwind for the economy
- How to invest and live when the future is unknowable
Thanks to Policygenius and LinkedIn for sponsoring the episode.
Show Notes
286: Coronavirus and the Financial Impact of Pandemics
291: How To Survive the Coronavirus (COVID-19) Shutdown
Madame Vivelda—Saturday Night Live
What Is Risk vs Uncertainty?—Money For the Rest of Us Guide
299: Has the Pandemic Changed You?
Personal Saving Rate—Federal Reserve Bank of St. Louis
302: Investing is Not Knowing
310: Why the Stock Market and Economy Are Rebounding So Quickly
How 700 Epidemiologists Are Living Now, and What They Think Is Next by Margot Sanger-Katz, Claire Cain Miller, and Quoctrung Bui—The New York Times
Paul McCartney Is Still Trying to Figure Out Love by David Marchese—New York Times Magazine
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How the drive for efficiency leads to greater wealth concentration and threatens capitalism. What can be done about it.
Topics covered include:
- Why income growth has slowed for the middle class
- Why the economy now follows a power-law distribution rather than a normal distribution, leading to skewed outcomes
- Why the economy is a complex adaptive system rather than a machine
- How the type of job you have and the company you work for affects your income
- Why greater efficiency increases the risk of catastrophic collapses
- What are ways to balance efficiency with resiliency
Show Notes
Changes in U.S. Family Finances from 2016 to 2019: Evidence from the Survey of Consumer Finances—The Board of Governors of the Federal Reserve
How America Banks: Household Use of Banking and Financial Services—Federal Deposit Insurance Corporation
When More Is Not Better: Overcoming America’s Obsession with Economic Efficiency by Roger L. Martin
How The Economic Machine Works by Ray Dalio—Video
For more information on this episode click here.
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How a nation's balance of payments impacts its currency exchange rate as evidenced by Turkey and other countries.
Topics covered include:
- What is a nation's balance of payments, its current account, and its capital account
- How an individual's personal financial flows are similar to those of a country
- What is causing the currency crisis in Turkey and Lebanon
- Why gold imports have increased by 150% in Turkey
- What is the Triffin dilemma or paradox and how does it impact the United States
- What individuals can do to manage currency risks
Thanks to The Great Courses Plus and Policygenius for sponsoring the episode.
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How to determine whether you should invest in a complex investment such as an actively managed ETF that uses option strategies.
Topics covered include:
- A recent investment David made that he shouldn't have
- What is the volatility risk premium and how to invest in it
- Why there have been over 200 new ETFs and ETNs launched in the U.S. in 2020
- Why some ETF sponsors launch lower cost versions of ETFs that compete with their existing offerings.
- What questions to answer as part of analyzing a complex investment
- Why there is always a catch to ETFs such as the Innovators Stacker and Ultra Buffer ETF series that can make them seem too good to be true.
- A simpler way to lower portfolio risk without using complex option-based ETFs.
Thanks to Netsuite and LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
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As we await the U.S. presidential election results, we review the results of the Trump Administration's economic policies to see if Americans are better off financially than they were four years ago.
Topics covered include:
- Why pollsters and election models can be wrong
- Why the state of the economy often drives election outcomes
- What has been the economic impact of the 2017 Tax Cuts and Jobs Act
- What has been the impact of the U.S. trade war with China
- How have poverty and health insurance costs changed under the Trump Administration
- What has been the growth of federal regulations under the Trump Administration
- How have stocks performed during the Trump Administration
- Why we shouldn't let whoever wins the presidency ruin our life
Thanks to Policygenius and Tempo for sponsoring the episode. Use code David with Tempo for $100 off
For show notes and more information on this episode click here.
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How central bank digital currencies would work, what is the motivation to create them and what are the risks.
Topics covered include:
- What percentage of central banks are working on a digital currency and plan to issue one soon
- What are the two kinds of money that central banks currently issue and how would a central bank digital currency differ
- How central bank digital currencies would be similar and different from Bitcoin and other cryptocurrencies
- What are the benefits and risks of central bank digital currencies
- What are the design principles that major central banks proposed for their digital currencies
- What percentage of central banks currently have the legal authority to issue their own digital currency
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For show notes and more information on this episode click here.
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How special purpose acquisition companies work, what their performance has been and what are the ways to invest.
Topics covered include:
- How much money has been raised in SPAC initial public offerings and who are some of the better known sponsors
- What are the benefits of a SPAC acquisition compared to a traditional initial public offering
- How SPACs work from the initial IPO to the acquisition of a private company
- How have SPACs performed so poorly
- How a new SPAC ETF is structured
- An intriguing way to invest in SPACs that potentially could outperform
Thanks to Tempo and NetSuite for sponsoring the episode. Use code David to save $100 on Tempo.
For show notes and more information on this episode click here.
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U.S. home prices are on fire and sales are skyrocketing. Here are 8 rules of thumb for buying a house in a hot housing market when there are multiple bidders over the asking price.
Topics covered include:
- What are the latest metrics on U.S. home sales, prices, and valuations
- Why are homes sales increasing and prices soaring and how likely are they to fall
- Why David is buying a different house (again) in a hot housing market
- What are rules of thumb that can help us find the right house without paying too much
Thanks to The Great Courses Plus and Policygenius for sponsoring the episode.
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This episode is an interview that Fund Evaluation Group LLC held with David as part of their FEG Insight Bridge podcast series.
Topics covered include:
- What David did and learned at FEG
- What goes into making the Money For the Rest of Us podcast
- Central banking and the Federal Reserve
- Investing in gold and cryptocurrencies
- Current investment conditions
- Favorite investing books
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What are the elements of a successful monetary system.
Topics covered include:
- The stone currency of Yap
- The fiat currency of ancient China
- Why money requires trust, accounting and tokens
- Why too much money can lead to inflation and too little to deflation
- Why the best money is useless other than as money
Thanks to LinkedIn and Candid for sponsoring the episode.
For show notes and more information on this episode click here.
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How ultra-low interest rates support higher stock market valuations but also make the investment environment more challenging. Is there a stock market bubble?
Topics covered include:
- How expensive are stocks on an absolute basis and relative to bonds
- What are examples of individual investor enthusiasm for stocks
- Why stock valuations and prices increase when interest rates fall
- Why lower interest rates make it more difficult for central banks to support stocks during a downturn
- Why TIPs might be a better choice for a long-term bond allocation
- Why deglobalization is a reason to increase the geographic diversification of stock portfolios
- How investors can make invest decisions without having an informational edge
Thanks to Masterworks and Policygenius for sponsoring the episode.
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What are four principles individuals can follow to achieve their financial and career goals this decade despite the rough start in 2020.
- Why we have to be willing to share our journey with others so that they are vested in our story
- Why it's important to focus on areas where we have momentum
- How to prudently use leverage in order to build an asset
- The importance of urgency, hope, and putting on an event so that we can achieve our business goals
- How asset allocation and portfolio holdings differ depending on the time horizon for the pool of money
- Why we need more control of investing outcomes when the time horizon is short
Thanks to NetSuite and Trends for sponsoring the episode.
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What are the numerous decisions individuals have to make in managing their investments portfolios.
Topics covered include:
- Why individual investors in order to build and preserve wealth should invest like family offices and university endowments
- Why even buy and hold investors make portfolio changes
- What are examples of the numerous decisions individuals have to make in overseeing their investment portfolios
- How badly has value investing underperformed growth investing
- How are mindset should change when it comes to investing
Thanks to Policygenius and Chili for sponsoring the episode.
For show notes and more information on this episode click here.
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The Federal Reserve just updated its policy tools. What impact could that have on inflation, interest rates and your investments.
Topics covered include:
- Why is the Federal Reserve more transparent in its communication than it used to be.
- What are the Federal Reserve's Congressionally mandated goals.
- What are four economic developments that has caused lower inflation and motivated the Fed to adjust its strategy for achieving its goals.
- Why inflation could be higher than the Fed's 2% target
- What might the Federal Reserve do now that it has adjusted its strategy
- What will it take for inflation to increase?
- What can individuals do financially in a low return, low yield environment
Thanks to LinkedIn and Candid for sponsoring the episode
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How did ETFs function during the 2020 market sell-off and did the indexing bubble burst? What ETF structures failed the stress test and which passed.
- Why were some investors, like Michael Burry, concerned about an indexing bubble
- What are ETF risks such as flash crashes
- How did equity ETFs function during the spring 2020 sell-off and how they can act as shock absorbers
- What were some of the challenges that bond ETFs faced in March 2020
- How the rise in bond ETFs is leading to changes in how bonds are traded
- Why leveraged ETFs and oil-linked ETFs failed the stress test
- What caused the dysfunction in the U.S. Treasury market in March 2020
- What are the advantages of ETFs and why they are still a good product for long-term investors
Thanks to The Great Courses Plus and Chili for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How the current global recession differs from the Great Financial Crisis and why the recession is probably over.
Topics covered include:
- Why the current recession has no debt and banking crisis
- Why lower-income workers are disproportionally harmed by the current recession
- How the federal government and central bank responses differed between the current recession and the 2008-09 recession.
- Do increased unemployment benefits disincentivize workers
- Why the recession is probably over, but it could take months or years to recover the lost output
- What factors will determine the impact a Covid-19 vaccine will have on the economy
Thanks to Chili and Trends for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are some investments that can generate a cash yield greater than inflation in an era when central bank policies keep government bond yields lower than the inflation rate.
Topics covered include:
- How low are interest rates around the world
- What have inflation rates been and what causes inflation and deflation
- What is financial repression
- Why are central banks keeping short-term interest rates so low
- What determines interest rates
- How I-bonds work
- Why active bond mutual funds can be helpful
- The pros and cons of preferred stock
- How to harvest the volatility risk premium
- How dividend-paying stocks can help fight financial repression
Thanks to NetSuite for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What is the cause of the current U.S. coin shortage and when have there been other shortages. Why is there a push to get rid of both the penny and the hundred dollar bill.
Topics covered include:
- How many coins does the U.S. Mint produce each year and why hasn't it been enough to avert a coin shortage in 2020.
- How the U.S. coin shortage in the early 1960s differs from today.
- How much profit does the U.S. Mint make producing coins even though it loses money minting both pennies and nickels.
- How often and under what circumstances do U.S. consumers pay with cash.
- Why the U.S. penny should be discontinued.
- Why companies and individuals are hoarding cash, mostly in one hundred dollar bills.
- Why the existence of one hundred dollar bills would impede the effectiveness of negative interest rates in the U.S.
- Why has the U.S. mint sold 300% more ounces of gold coins in 2020 compared to last year.
Thanks to Chili and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the pros and cons of income share agreements for partially funding higher education. Are investing in ISA's a viable opportunity?
Topics covered include:
- How do income share agreements (ISAs) differ from student loans for funding higher education costs.
- Are ISA's really a partial form of slavery or indentured servitude
- What are the components of an ISA contract.
- How adverse selection, differential pricing, moral hazard, and a lack of regulation pose challenges to income share agreements.
- What is an internal rate of return and why is it the best metric for estimating the return of investing in ISAs.
- How students should evaluate ISA's relative to loans.
- What are some pricing examples for specific ISAs
- What options exist for investing in ISAs.
Thanks to LinkedIn Jobs and Trends.co for sponsoring the episode
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the three primary ways to allocate assets and build a portfolio when saving for retirement or living in retirement.
Topics covered include:
- How saving for retirement and living in retirement differ.
- What are the expected return and risk of the Permanent, Golden Butterfly, and All Season portfolios.
- What are the pros and cons of a role-based permanent portfolio.
- What are the pros and cons of a strategic portfolio mix, such as the Bogleheads Three Fund Portfolio
- What are the pros and cons of an adaptive asset garden portfolio.
Thanks to NetSuite and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Is a bank collapse coming due to bank exposure to collateralized loan obligations as defaults increase?
Topics covered include:
- What are collateralized loan obligations (CLOs), how are they structured, and what has been their historical default rates.
- How much exposure do banks have to CLOs and will it impact your bank savings and investments.
- What are bank capital ratios and how are they calculated.
- How banks are more conservatively run due to the adoption of the Basel III regulatory framework.
- What are bank stress tests and how have they performed.
- Why the Federal Reserve just capped dividends for the largest U.S. banks.
- How many U.S. banks have failed during the pandemic crisis compared to the Great Financial Crisis.
Thanks to Simplifi and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
An analysis of the returns and risks of different lending platform options including asset-based lending, unsecured peer-to-peer lending, cryptocurrency lending and a cash advance company that promises to pay a 15% annual percentage yield.
Topics covered include:
- U-haul Investors Club and other asset-based lending options
- DriverLoans Investor Club that promises a 15% guaranteed return
- BlockFi - cryptocurrency lending with yields over 8%
- LendingClub and why returns are only 4% to 5%
- The economics of cash advance and payday loan lending businesses
Thanks to LinkedIn and Aspiration for sponsoring the episode. Text the word David to 64000 to open an Aspiration Save and Spend Account.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why individuals should use a more agile approach to investing and financial planning.
Topics covered include:
- How to incorporate low probability catastrophic events in your financial plans.
- How traditional financial planning differs from agile financial planning.
- Why we need to test-drive our financial plans.
- How too much efficiency can lead to a lack of resilience.
- How David's portfolio is allocated using a role-based flexible bucket approach.
Thanks to Policygenius and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How successful investing requires judgment and humility not accurate forecasting ability.
Topics covered include:
- Why pretending to know when you don't is harmful.
- Why true experts admit their limitations.
- Why David recently increased his allocation to stocks in his portfolio.
- How the number of new retail brokerage accounts has exploded.
- How the stock of the bankrupt company Hertz is a great example of how not to invest.
- What is privilege and what should we do about it.
Thanks to NetSuite and Aspiration for sponsoring the episode. To open your Aspiration Spend and Save cash management account, text DAVID to 64-000
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How alternative investment opportunities, such as venture capital, private equity, real estate and real assets, are increasing for individuals. Why these opportunities differ from what is available to institutional investors and how to evaluate them like a pro.
Topics covered include:
- What are alternative investments and how are they structured.
- What are 5 factors that determine alternative investment returns.
- Lessons from three recent alternative investment deals including one that defaulted.
- How to evaluate alternative investment opportunities.
Thanks to Simplifi and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the forces that lead to the rise and fall of nations. Why does the U.S. appear to be in decline and what investors can do to prepare.
Topics covered include:
- An overview of Ray Dalio and Bridgewater Associates' investment process
- Why human productivity is the most powerful force for creating wealth.
- Additional forces that contribute to nations increasing in power and wealth.
- Why being the reserve currency is an exorbitant privilege.
- What are factors that indicate a nation's influence and power is in decline.
- What are 5 important monetary principles all investors should understand.
- What are the questions you should ask to gauge your economic well-being.
- What investments should you own to prepare for a changing world order.
Thanks to LinkedIn Learning for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
A look at growing patterns consumers and businesses are adopting as a result of the Covid-19 pandemic.
Topics covered include:
- Two constants in a radically unpredictable world
- How removing things is more powerful than adding things
- How airline travel will change, leading to more local travel
- Why bicycle sales are soaring
- How our social interactions are changing
- What is local maxima
- How the forces of money, trust, technology, and climate change have played out in the aftermath of the pandemic.
Thanks to The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How the stock market differs from and can perform differently than the economy while remaining highly dependent on the economy for its success.
Topics covered include:
- Why the stock markets in countries with lower economic growth performed better than the stock markets in countries with higher economic growth.
- How the top 5 stocks in the S&P 500 Index have the largest weighting in 30 years and what will it takes for these stocks to outperform the market.
- What are the largest contributors to U.S economic growth, most of which are not publicly traded.
- How the U.S. government and the Federal Reserve saved the stock market.
- How have stocks performed during economic recessions.
- Why it is risky for investors to be dependent on the financial prospects of the largest technology stocks.
Thanks to Grammarly and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How to protect your savings from monetary threats like devaluation. Why high yield savings accounts exist, and are they worth it.
Topics covered include:
- Why Lebanon defaulted on its national debt and announced it will devalue its currency by 57%.
- Why some depositors in Lebanon will probably lose some of their bank savings.
- What investors can do to protect themselves from currency devaluations.
- What are stablecoins and why are they useful.
- Why some online banks pay above-average interest rates on savings accounts.
- Why banks need to attract new deposits even though they create deposits when they make a loan.
Thanks to Mint Mobile and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why the oil price fell below zero and what are other examples of negative prices. What lessons can we learn from negative prices.
Topics covered include:
- How oil futures work and why the oil future prices fell below zero for the first time ever.
- Why has the United States Oil ETF (USO) lost so much money.
- How ETF authorized participants create new shares only so they can be shorted.
- How storage problems for oil and electricity can lead to negative prices.
- How negative interest rates are another form of negative prices.
- Why sellers will pay buyers to deliver a service to them.
- What financial lessons can we learn from negative prices.
Thanks to LinkedIn Learning and The Investor's Podcast for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How central banks can become insolvent and why it can lead to hyperinflation. What are four ways the Federal Reserve and the U.S. Treasury could monetize the national debt.
Topics covered include:
- What are the major asset and liabilities of the Federal Reserve
- How does the Federal Reserve make a profit and what happens if it suffers a loss.
- How has the Federal Reserve has significantly expanded the types of assets it will hold and what are the risks.
- What could cause the Federal Reserve and other central banks to become insolvent.
- What are the constraints central banks face.
- What are four ways the U.S. national debt could be monetized.
- How investors can protect themselves against central bank insolvency.
Thanks to The Great Courses Plus and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How the stories we tell ourselves lead to economic change. What are current pandemic related narratives that are impacting financial markets and the economy.
Topics covered include:
- Examples of mathematical models for epidemics.
- What are the risks when the global economy is opened again.
- Under what circumstances do individuals rely on anecdotal evidence rather than statistics.
- What are some propositions that underly how economic narratives spread.
- What are some examples of major narratives that impact the economy.
- How humans have a bias toward action and how to deal with that when the best course is to stay in place.
- Should investors be increasing their stock exposure now that the markets are rallying and central banks are taking aggressive action.
Thanks to Policygenius and LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What is the difference between risk and uncertainty and how our decision making approach should differ under each scenario. Why pandemics are highly uncertain and should be treated as such.
Topics covered include:
- How the coronavirus pandemic is far worse than other pandemics this century.
- How humans have a difficult time accepting that things won't return to normal.
- What is the difference between risk and uncertainty.
- How we make decisions should differ if something is uncertain versus risky.
- What is the minimax regret approach to making decisions under uncertainty.
- How stories help us deal with uncertainty.
- How the story driving financial markets has changed.
- What is the duration and severity of bear markets during a recession and how large have bear market stock rallies been.
- What will it take for the pandemic to end and to be more confident about the future.
Thanks to Mint Mobile and Grammarly for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What central banks such as the Federal Reserve and federal governments are doing to counteract the negative impact of the pandemic related economic shutdown. What are the risks of this massive monetary and fiscal stimulus and how to mitigate those risks.
Topics covered include:
- How central banks have the capacity to create an infinite amount of money.
- How the Federal Reserve is using its money-printing ability to stabilize the financial system and reduce the negative impact of the pandemic related economic shutdown.
- What are the mechanics of quantitative easing.
- What are examples of stimulus programs during the Great Depression that didn't work because they were too focused on social engineering.
- How massive central bank and government stimulus could lead to inflation or deflation.
- How inflation-indexed bonds such as Treasury Inflation Protection Securities can help reduce inflation risk, and why owning individual TIPs is particularly attractive right now.
- Why it's okay for investors with a long time horizon to ride out the current market turmoil without reducing risk.
- What are current and leading economic indicators suggesting about the severity of the economic shutdown and the potential for recovery.
Thanks to LinkedIn Learning and Rad Power Bikes for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How to avoid ruin and help others avoid ruin as the economy shuts down to slow the spread of the coronavirus.
Topics covered include:
- What is the precautionary principle and how can it help us make important decisions with regards to the coronavirus pandemic.
- How many people could be infected with Covid-19 in the next 30 to 60 days at the current daily growth rate.
- Why investment managers are selling assets to reduce their market exposure.
- Should individual investors be increasing or reducing their exposure to the stock market in the current market environment.
- How recent actions by the Federal Reserve suggest they think a U.S. recession is imminent.
- What can individuals locked down at home do to survive mentally and emotionally.
- What we can do to help businesses avoid ruin during the pandemic crisis.
Thanks to Netsuite and Rad Power Bikes for sponsoring the episode. Text the word RAD to the number 64-000 to get a free accessory with the purchase of a bike.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why closed-end funds are David's favorite investment vehicle, particularly during market panics. What are the unique characteristics of these funds and what are successful strategies for investing them.
Topics covered include:
- How closed-end funds differ from open-end mutual funds and ETFs.
- Why most closed-end funds are bond funds and use leverage.
- Why closed-end funds can sell at large discounts and premiums.
- What are managed distribution programs.
- How to evaluate and select closed-end funds.
- What is the Income Factory approach to closed-end fund investing.
Thanks to LinkedIn and The HPScast for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why most investors practice both market timing and time in the market. Why it is okay to reduce stock exposure given the coronavirus pandemic threat.
- What would a stock portfolio return that misses the best or worst days and how likely is that.
- How do rolling 30-year stock returns differ depending on the starting point.
- Why are stocks likely to outperform bonds over the next 30 years.
- What is sequence of return risk.
- What is market timing.
- Why long-term investors should never move completely out of the stock market, but it is still okay to adjust stock exposure based on market conditions.
- What are some additional rules of thumb for market timing.
- How the coronavirus pandemic has increased financial and economic risks and what to do about it.
Thanks to Policygenius and Mint Mobile for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Almost half of Millennials want to retire early. Will that hurt economic growth? There were similar concerns in the 1920s that early retirement would wreck the economy. In fact, there was significant pushback against retiring at all due to fears retirements would destroy the economy. Yet, the Great Depression still came. In this episode, we consider what ended the Roaring Twenties, caused the Great Depression, and how early retirements impact the economy.
Topics covered include:
- What is the paradox of thrift and how does it apply to early retirement.
- Why the 1920s were called the Roaring Twenties.
- Why the work culture in the 1920s was for workers to not retire, but "die in the harness."
- What caused the Great Depression.
- How economies and job markets adapt over time.
- How waves of early retirements could change the economy.
Thanks to LinkedIn Learning and Vistaprint for sponsoring the episode. Use promo code David to get free shipping from Vistaprint.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What factors lead to hyperinflation, why it is so devastating, how hyperinflation can be overcome and what can individuals do to be prepared for hyperinflation.
Topics covered include:
- What causes inflation and how do central banks manage it.
- How the causes of hyperinflation differ from more normal levels of inflation.
- What is the biggest challenge of living in a country with hyperinflation.
- How Zimbabwe and other countries were able to overcome hyperinflation and how Venezuela is slowly taking steps to combat hyperinflation.
- Why Zimbabwe is again experiencing high inflation.
- How individuals can protect against inflation.
- What individuals can do to prepare for hyperinflation in case it comes.
Thanks to Netsuite and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How pandemics have impacted the economy and financial markets. Where does the coronavirus rank in severity compared to other pandemics. What portfolio changes, if any, should investors make in response to the coronavirus pandemic.
Topics covered include:
- Definition of a pandemic
- The worst pandemics in the 20th and 21st centuries
- What are the factors in determining the severity of the coronavirus' impact
- What are the economic ramifications of the coronavirus.
- How did financial markets perform during previous pandemic episodes.
- Are there portfolio changes investors should make in response to the coronavirus
Thanks to Policygenius and LinkedIn Jobs for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How most money, such as currency, bank deposits, money market mutual funds, and repurchase agreements, is really short-term debt, often backed by other debt. As a result, money is subject to runs when investors lose confidence and don't want to own it. That can lead to financial crises.
Topics covered in this episode include:
- How counterfeiting currency works.
- Why most money is debt backed by debt.
- How a loss of confidence in money leads to bank runs and other financial crises.
- How demand for U.S. Treasuries as collateral is keeping interest rates low even though the U.S. federal budget deficit is growing.
- Why the Federal Reserve is considering capping interest rate yields on U.S. Treasuries and what are the risks of doing so.
- What can individuals do to protect themselves against financial crisis caused by runs on banks and financial securities.
Thanks to Vistaprint for sponsoring the episode. Use promo code: "david" to get free shipping. Also thank you to The Bouqs Company for sponsoring the show. Use promo code: "david" to get 25% off.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How to protect against financial hardship and assist others who are struggling financially.
Topics covered include:
- Why are so many families leaving Central America and seeking to enter the United States.
- How have U.S. immigration patterns changed.
- Why immigration leads to higher economic growth.
- Why unsheltered homelessness is increasing around the world and what strategies have been effective in reducing homelessness.
- What can individuals do to assist the homeless and others who are in financial distress.
Note: The original audio file stated that "oftentimes they [the ayslum seekers] wouldn't ever show up for their court case." That is an inaccurate statement. Most asylum seekers attend their court hearing. The audio has been modified to remove the inaccuracy.
Thanks to The Bouqs Co. for sponsoring the episode. Use code: david. Also thanks to Policygenius for being a long-time sponsor of the show.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How investors make money with carry trades, how central banks encourage such trades, and what are the dangers to financial markets and the economy when carry trades get too big.
Topics covered include:
- What are the attributes and examples of carry trades.
- Why do carry trades exist even though investors can suffer massive losses.
- What was Volmageddeon and Francogeddan.
- How central banks are the largest carry traders and their actions encourage even more carry trades.
- Why carry trades are deflationary and lead to systemic risk.
- What should individual investors do about carry trades and how to take advantage of carry crashes.
Thanks to Robinhood and NetSuite for sponsoring the episode
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What factors determine the well-being of an individual or nation and why gross domestic product is an inadequate measure of prosperity.
Topics covered include:
- Evidence many Americans are poorer than before the Great Recession.
- Why life expectancy in the U.S. is falling.
- How satisifiedare U.S. citizens.
- What is GDP and why is the U.S. Bureau of Economics developing a new methodology
- What are the flaws with GDP and why does it fall short in measuring well-being.
- Which countries around the world are the most and least happy and what are the factors that contribute to that happiness.
- Why were U.S. founding fathers worried about too many luxuries.
- How the U.S. in the 19th century followed the same manufacturing model that China does today.
Thanks to Policygenius and LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How climate change, money, trust and technology will interact to impact financial markets and the economy in the coming decade.
Topics covered include:
- Why we change much more over a decade's time than we predict.
- What is the best approach for transitioning to a new career.
- What have stocks and bonds returned over the past decade and what are reasonable return expectations for the decade ahead.
- Examples of how the impact of climate change is being priced into financial transactions.
- Why Ray Dalio thinks the world has gone mad and the system is broken.
- Why uncertainties regarding the creation, use and borrowing of money will be reflected in interest rates.
- How trust and technology will impact global trade and productivity growth.
Thanks to Cove and Sleep Number for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How is it the global economy still functions even though most individuals do not trust brands, public institutions or each other.
Topics covered in this episode include:
- The low level of interpersonal trust around the world
- What is social capital and how it facilitates a trust economy.
- What are the incentives that encourage individuals and businesses to produce goods and services rather than steal from each other.
- How does trust impact economic growth.
- Does traveling harm or help local residents.
Thanks to Masterworks and LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How a safety-first retirement approach using income annuities is more predictable and takes less money than depending entirely on your investment portfolio to fund your retirement.
Topics covered include:
- The difference between a safety-first and probability-based approached to retirement.
- How income annuities work.
- Why setting a sustainable retirement withdrawal rates requires planning for below average market returns and above average life expectancy.
- How using an income annuity and other guaranteed income to fund basic living expenses means not having to set a sustainable withdrawal rate.
- How long can retirees expect to live.
- Why most retirement portfolios are not as liquid as retirees think.
- Why are retirees hesitant to use income annuities and how to overcome the fear of doing so.
Thanks to Policygenius and Vistaprint for sponsoring the episode. Use code David50 for Vistaprint.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Two Money For the Rest of Us podcast listeners are struggling with spending money. The first listener is 22 and lives in Canada. He feels as if his money is going everywhere such as saving for a house, car, and retirement, but very little goes to things he enjoys.
The second listener is 46 with a $2 million net worth, but in his case, he finds he doesn’t enjoy spending money on himself. He is willing to spend money on his wife and two children, but he still finds himself feeling tight, fearful and worried about money and his business, even though he has plenty of wealth and is close to his goal of financial freedom.
In this podcast episode, we consider the standard to use to determine how much to spend on ourselves.
Topics covered include:
- The most difficult part of figuring out how much is enough.
- What is the Voluntary Simplicity movement and how it can help us decide where to spend our money.
- What is the difference between comforts and luxuries.
- What is the difference between joy and pleasure.
- What is a simple filter we can use to determine where to spend money.
Thanks to Masterwork and NetSuite for sponsoring the episode.
For show notes and more information on this episode click here.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How regulatory changes could lead to a boom in new ETFs, including actively managed ETFs. Why ETFs continue to be one of the most innovative, cost effective and tax efficient investment vehicles.
Topic covered include:
- How big is the ETF market relative to mutual funds.
- What are the benefits of ETFs that have allowed them to gain market share from mutal funds.
- What are some of the negatives with ETFs.
- What has changed to make it easier for sponsors to launch new ETFs.
- How do non-transparent actively managed ETFs work.
- What are some examples of more complicated, outcome-based ETFs.
Thanks to LinkedIn and SleepNumber for sponsoring the episode.
For show notes and more information on this episode click here.
- [2:45] The benefits of ETFs
- [8:40] Challenges with ETFs
- [12:50] The rules that have changed
- [15:25] What is an AP Representative?
- [18:40] Should you invest in actively managed ETFs?
- [21:30] All about outcome Based ETFs
- [26:20] Understand what drives performance
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How to find your unique work that can bring satisfaction and income before and during the traditional retirement years.
Topics discussed in this episode include:
- What is settled work.
- Why you need time and space to find and do your best work.
- What is a commonplace book and why it can be helpful.
- How filters and saying no can help us control our time.
- The important role of serendipity in finding our path.
Thanks to The Great Courses Plus and Vistaprint (use code David50) for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] An antique lamp store in Phoenix
- [3:10] The concept of “Settled Work”
- [5:30] How do we find our settled work?
- [7:40] David’s commonplace book
- [12:15] Why we need settled work
- [15:00] Take time to reflect
- [16:05] Take back control of your time
- [18:00] The art of saying “no”
- [21:00] Capturing Serendipity
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Is it possible to be too diversified and how can you tell? Why Warren Buffet thinks diversification is protection against ignorance.
Topics covered include:
- The skills you need to be able to select individual stocks.
- How have active managers outperformed relative to passive indexing products.
- How much diversification is too much and a test to determine if one is over diversified.
- What is factor investing and which factors have worked over the past 200 years.
Thanks to LinkedIn and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
- [2:22] Exploring the concept of over-diversification
- [5:25] Should you pay for an investment advisor to select individual stocks?
- [8:05] An individual investor should choose index funds
- [11:10] Determining how much diversification is enough?
- [13:37] Weighing the cost against the benefits
- [16:10] When being over diversified is possible
- [17:05] Analyzing the listener question regarding over-diversification
- [20:20] A Fascinating study analyzing 200 years of factors
- [25:08] Layer on additional value factor
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
David's book Money for the Rest of Us: 10 Questions to Master Successful Investing is now available (at least the e-book version). To celebrate, here is a bonus episode with excerpts from the forthcoming audiobook.
Please enjoy the Introduction and Chapter One.
Also, as part of the book launch, David will be hosting an Ask Me Anything (AMA) on Reddit on Wednesday, October 30, 2019 at 1PM Eastern time. Please join us.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the timeless principles we can follow in order to become better investors.
Topics covered in this episode include:
- How a book's permanence makes it different from a podcast.
- How David's book got written and published and why his publisher just recalled the hardcover version of the book.
- What are the 10 questions we should answer before we invest in anything.
Thanks to NetSuite and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] How David decided to write a book.
- [3:00?] The right book can change your life.
- [4:20] The art of writing a book.
- [7:00] The extensive process of writing a book.
- [9:57] Recording the audiobook.
- [11:32] Question 1: What is it?
- [13:36] Question 2: Is it investing, speculating, or gambling?
- [14:32] Question 3: What is the upside?
- [15:54] Question 4: What is the downside?
- [16:42] Question 5: Who is on the other side of the trade?
- [18:06] Question 6: What is the investment vehicle?
- [18:58] Question 7: What does it take to be successful?
- [20:20] Question 8: Who is getting a cut?
- [21:03] Question 9: How does it impact your portfolio?
- [22:05] Question 10: Should you invest?
- [23:06] What happened to the book launch
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the benefits and risks of investing in exchange-traded notes (ETNs) compared with ETFs.
Topics covered include:
- How big is the market for ETNs compared with ETFs.
- How ETNs can do a better job tracking their target index than ETFs.
- Why ETNs can be more tax-efficient than ETFs..
- How ETNs have counterparty risk, pricing risk, and liquidity risk.
- Under what circumstances would an ETN be preferred over an ETF.
Thanks to WIX and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:21] ETPs, ETFs, and ETNs—which is the most popular?
- [3:10] Exchange-Traded Notes exhibit low tracking error.
- [5:28] ETNs are vastly more tax-efficient than ETFs.
- [6:14] Examples of Exchange Traded Notes.
- [10:16] Should there be a default-risk discount on ETNs?
- [13:34] Why there is issuance and closure risk with ETNs.
- [17:21] Clarification on the term “Net Asset Value” when referring to ETNs.
- [17:58] The issues of illiquidity risks and high fees.
- [20:46] Exchange Traded Notes are a niche product.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why some analysts believe the Consumer Price Index formula understates inflation while others believe the CPI formula overstates inflation. What really matters to us individually when it comes to inflation.
Topics covered in this episode include:
- What is inflation and what causes it.
- How is the Consumer Price Index calculated and how has the CPI formula changed over time.
- What are examples of different CPI measures.
- Why do some analysts believe U.S. inflation is higher than what CPI states while others believe inflation is lower than what the Consumer Price Index shows.
- How inflation calculations impact the measurement of other economic data such as the rate of poverty and the growth in real wages.
- What are consumer attitudes toward inflation and why do central banks worry about changes in household and business inflation expectations.
- How individuals can monitor and improve their cost of living.
Thanks to Sleep Number and Money For the Rest of Us Plus for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:18] Traditional methods of measuring inflation.
- [4:00] The CPI has changed from a fixed-basket approach to a consumer-representative approach.
- [6:39] The controversy concerning the accuracy of CPI measurement.
- [9:11] Is inflation overstated because of how the CPI-U is calculated?
- [11:23] Rwanda case study: the connection between inflation and poverty.
- [15:17] Why governments care so greatly about the public’s view of inflation.
- [17:31] How inflation expectations are measured.
- [18:52] How do we calculate the desired standard of living?
- [20:41] The CPI isn’t an accurate depiction of the standard of living.
- [24:20] Are you satisfied with how you spend your money?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why true financial independence means eliminating financial vulnerability including not being overly reliant on stock market appreciation.
Topics covered in this episode include:
- What does it mean to be financially vulnerable.
- What are the two paths to financial independence.
- Why we shouldn’t stake our financial independence and early retirement on the historical performance of stocks and bonds.
- What are the rules of thumb we can use to develop reasonable assumptions for stocks and bonds and how those assumptions will lead to lower portfolio balances compared to using historical returns.
- What has historical earnings growth been for U.S. stocks.
- Why stock buybacks will be less in the future due to high debt balances unless companies grow their revenues and overall earnings.
- How are actions lead to financial independence even when it is difficult.
Thanks to Vistaprint and WIX for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:17] Being financially independent begins with a decision.
- [2:33] Protecting yourself against financial vulnerability.
- [4:14] Should you solely rely on investment returns for financial stability?
- [7:52] Estimating the returns of asset classes.
- [13:40] Earnings per share drives the returns of the stock market.
- [17:31] Build an active and flexible strategy for financial stability.
- [22:49] Uncertainty doesn’t negate the positive effect of small actions.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How a liquidity crunch in the short-term lending markets sent interest rates soaring. Why this is a huge blunder on the part of the Federal Reserve, and what it means for us as individual investors.
Topics covered in this episode include:
- What are repurchase agreements and how are they used to finance U.S Treasuries.
- How outflows from money market funds and hoarding by banks led to a liquidity crunch that caused repo rates to spike to 10%.
- Why banks are hoarding reserves held at the central bank even though there are over $1.4 trillion of them, up from $20 billion in 2007.
- How quantitive easing increases reserves and quantitative tightening reduces reserves.
- How the Federal Reserve was able to stop the disruption in the repo market, even though the central bank was caught off guard and could have prevented it.
- How individual investors can protect themselves from unintended consequences arising from the unconventional policies and experiments being conducted by the Federal Reserve and other central banks.
Thanks to The Great Courses Plus and LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] The Fed loses control over policy rates, and repo interest rates soar.
- [2:19] What is a repurchase agreement (repo)?
- [5:02] Why the big players in repos pulled back on Sept. 16th.
- [8:38] Banks need more liquidity because of regulations.
- [12:53] Why reserves have fallen so low.
- [17:43] How does the reserve balance get reduced?
- [19:23] The Fed may have shrunk it’s balance too far.
- [21:36] What can be done about the reserve shortage?
- [24:17] What can we learn from the repo rate raise?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why most state and municipal pension plans are underfunded and why that could lead to higher taxes and reduced government services. Why participants in state government retirement systems have greater protection against benefit cuts than participants in municipal retirement systems.
Topics covered include:
- How defined benefit plans work.
- Why there is more subjectivity regarding valuing a pension plan's liabilities compared with its assets.
- What does it mean for a pension plan to be underfunded, and why are so many public sector pension plans in that situation.
- Under what circumstances can a pension plan cut benefits to beneficiaries.
- Why underfunded pension plans will most likely lead to higher taxes and reduced government services.
Thanks to WIX and Peloton for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:18] The crisis of underfunded defined-benefit state and city pension plans.
- [2:32] Calculating the financial value of a public pension plan.
- [4:46] What rate of return should public pension plans use?
- [8:44] Why public pension plans are highly underfunded.
- [11:34] Kentucky’s 13%-funded pension plan raises red flags.
- [13:37] Failing to meet the needs upfront causes a funding crisis down the road.
- [15:33] Why states cannot go bankrupt but cities can.
- [17:52] How do public sector pension plans affect tax-payers?
- [20:18] How states and cities are trying to solve the crisis.
- [21:45] Considering underfunding when deciding what to invest in or where to live.
- [24:09] How private-sector pension plans could possibly affect tax-payers.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the three steps to better manage risk and get what you really want.
Topics covered in this episode include:
- Why goods and services that lessen risk tend to cost more.
- What is the three-step process for assessing and managing risk.
- Why defining the risk-free option or asset is critical to managing risk.
- Why immediate annuities are the retirement risk-free option rather than a conservative investment portfolio.
- What are the two types of risk and how do we mitigate them.
- What is the difference between hedging and insuring against risk.
Thanks to Dashlane and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:17] Weighing the risk and knowing how to make a decision under uncertainty.
- [5:00] Three steps for assessing and managing risk.
- [9:11] Finding the risk-free asset in a retirement plan.
- [14:36] Idiosyncratic & systemic risk.
- [16:40] De-risking and using hedges to create a risk buffer.
- [20:22] Identifying a sound insurance operation.
- [23:36] Using flexibility as a risk management strategy.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How inequitable business models like those in the gig economy can lead to a financial crisis, more regulation, and doubts about the viability of the free-market system.
Topics covered in this episode include:
- What is the expanded role of corporations according to leading chief executive officers.
- What is the gig economy.
- Takeaways from David’s recent experience delivering restaurant meals for Doordash including the huge liability many independent delivery drivers are unaware of.
- Who covers the shortfall when the cost of operating a business is less than what consumers are willing to pay for the goods and services the businesses offer.
- How more regulation results from businesses unfairly passing on costs to others.
- How income inequality and debt can lead to a financial crisis.
Thanks to Policygenius and Sleep Number for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:18] Is Capitalism still working for everyone?
- [2:12] David’s disappointing gig economy experience.
- [6:53] The hidden cost of insurance in gig jobs.
- [9:04] Who pays to close the financial gap created by gigs?
- [14:27] The pitfalls of the gig economy.
- [16:17] What makes capitalism work?
- [19:29] Income inequality is a drag on the economy.
- [23:09] The importance of calculating the entire cost.
- [25:36] How your decisions can impact the health of the capitalist economy.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How momentum investing works, what are some of the challenges in implementing it, and how can individuals use momentum in their investment portfolios.
Topics covered in this episode include:
- What is momentum investing and why does it theoretically deliver excess return.
- Why do momentum strategies suffer through periods of horrendous losses.
- Why high trading costs and selling a position can be challenges to successfully implementing momentum strategies.
- What are examples of momentum oriented funds and ETFs.
- How momentum can be used for making asset allocation decisions and adjusting portfolio risk.
Thanks to The Great Courses Plus and Netsuite for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:18] Momentum investing consistently outperforms the market.
- [5:04] Why does momentum investing work?
- [7:31] The three challenges of the momentum investing phenomena.
- [12:50] What happens if investor behavior changes?
- [14:24] Tactics for implementing momentum into your own portfolio.
- [20:02] Using dual momentum to move in and out of asset classes.
- [23:55] Utilizing momentum investing as a swing vote.
- [28:01] How David uses momentum investing in his portfolio.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How the composition of Tesla's autopilot software gives clues to how we should invest, recognizing there are no perfect algorithms for driving or investing.
In this episode you will learn:
- Why Americans are afraid of self-driving cars.
- How autonomous automobile software works.
- Why people reject even the best possible algorithms.
- What are examples of safety features and rules of thumb we should build into our investing process.
- Why does everyone think a recession is coming soon even though there is little evidence currently.
Thanks to WIX and Dashlane for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:17] The pervading fear of self-driving cars, despite their safety features.
- [3:33] Why do people fear algorithms and prefer human decision-making?
- [7:45] Algorithmic decision-making has proven to be most accurate.
- [10:10] Automating your investing is like choosing an automated vehicle.
- [12:06] Keeping within the guardrails of investing strategy.
- [15:44] How to diversify your portfolio as an additional guardrail.
- [17:31] Is a recession really looming on the horizon?
- [20:16] Don’t maximize for perfect answers.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are negative interest rates, why they could come to the U.S. and what investors can do about it.
In this episode you will learn:
- How negative interest rates are even possible.
- How longer life spans, central bank actions, changing time preferences and the FIRE movement are contributing to negative interest rates.
- What is the paradox of thrift.
- How investors can earn a positive return on bonds even if interest rates are negative.
- What are some indicators to watch for that could signal imminent negative interest rates in the U.S.
- How individuals need to adjust their lifestyles in an era of negative interest rates.
Thanks to Peloton and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] Germany government bonds go negative for the first time.
- [2:38] Understanding savings: the paradox of thrift.
- [6:35] The concept of the individual choice and the perceived expense of saving.
- [11:05] The savings glut could lead to negative interest rates in the U.S.
- [14:40] Three reasons one would invest in negative-yielding bonds.
- [18:38] Central banks are influencing the spread of negative-yielding bonds.
- [20:29] What could happen to the U.S. economy if interest rates fell.
- [22:11] Three factors David is looking at for an indication of falling interest rates.
- [25:49] What we can do if U.S. interest rates go negative.
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With gold at a six-year high, is now the time to invest? What determines the price of gold and what are ways one can invest in this precious metal? We also explore whether gold is an effective inflation hedge and store of value.
In this episode you’ll learn:
- How has gold performed as an investment over different time periods.
- How gold has outperformed inflation, but has not been a great inflation hedge.
- What are the challenges to gold being a safe haven
- How gold’s performance is driven by fear and momentum
- Why gold is a speculation and not an investment.
- Why Ray Dalio and Jim Grant recommend gold but Warren Buffett is more skeptical.
- How to invest in gold via an ETF, physical coins or the gold futures market.
Thanks to WIX and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:18] Gold may not be as strong as it used to be.
- [2:03] The performance of gold depends on when you bought it.
- [3:46] Why do people own gold?
- [4:15] Is gold actually a good inflation hedge?
- [8:07] Using gold to build a safe haven.
- [9:56] Investing in gold because it’s under-owned.
- [10:46] The supply and demand characteristics of gold.
- [12:25] The bandwagon effect of gold.
- [17:00] Gold is a speculation—not an investment.
- [19:10] Which asset will do best in an inflationary and distrusting economy?
- [22:44] How should you invest in gold?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How a less energy intensive and more regenerative economy will allow the developing the world to advance without breaching ecological boundaries.
In this episode you’ll learn:
- What is the difference between circular and linear supply chains.
- What is doughnut economics?
- What are adaptive preferences and how they led David to trade in a BMW 650i for a Toyota Prius.
- How electric vehicles and the proliferation of solar panels are leading to a less energy-intensive economy.
- How the reduction of litter is an example of changing culture.
Thanks to NetSuite and Dashlane for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] Creating a global economy that is better—not bigger.
- [3:18] A circular economy is better than a linear one.
- [6:20] The growth constraints of a circular economy.
- [9:08] Being wise in our aspirations.
- [12:55] David’s Tesla experience changed his perspective on investments.
- [14:52] The power of energy transitions.
- [18:02] Making more economical choices concerning energy transitions.
- [20:04] How are we judging our well-being?
- [23:07] Redefining what we consider beautiful.
- [24:17] Making a better global economy begins with you.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why has value investing underperformed growth investing for over twelve years and how to position your portfolio for the eventual rebound in value investing.
In this episode you will learn:
- The difference between growth and value investing and why value investing outperforms growth investing over the long-term.
- How value and growth indices are constructed and how they differ from fundamental indexing.
- What are the risks and opportunities of investing in concentrated, deep-value managers.
- Why value investing will eventually rebound.
Thanks to WIX and Sleep Number for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:18] What is value investing?
- [2:07] A historical look at growth vs. value yields.
- [5:41] The return of the value stock in the early 2000s.
- [11:07] The twelve and a half years of underperforming value stocks.
- [13:09] The sectors controlling the performance of value and growth stocks.
- [15:01] Better understanding the indices.
- [20:31] Using fundamentally weighted indices to balance your portfolio.
- [23:10] Are underperforming managers struggling because of poor skills or because of unfavored strategies?
- [29:20] While value may be difficult to predict, it isn’t dead.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Has the off-shore dollar market in terms of dollar financing and currency hedging gotten so big that it can dictate Federal Reserve monetary policy including the expected short-term interest rate cut by the Fed at its July 2019 open market committee meeting? In other words, has the Federal Reserve lost its ability to conduct monetary policy and control interest rates as it sees fit and is now in search of other tools?
In this episode you’ll learn:
- Why the Federal Reserve is puzzled by how U.S. interest rates are behaving.
- How the large but opaque off-shore dollar lending and currency hedging market could be strengthening the dollar, slowing the global economy and pushing down interest rates.
- What is leading to a global dollar shortage.
- Why the Federal Reserve is researching other policy tools.
- What investors can do to protect against uncertainty regarding the dollar
Thanks to ButcherBox and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] The suspected outcome of the Federal Reserve Committee Meeting on July 30th and 31st.
- [3:04] Is the Federal Reserve’s inconsistency, in this case, something to fear?
- [6:31] The influence of offshore U.S. dollars on the Federal Reserve.
- [9:10] The issue of undocumented offshore dollar-denominated debt.
- [12:06] The ramifications of the inability of the global supply chain to access the dollars they need.
- [15:21] Banks are less willing to lend dollars while also demanding more “pristine” collateral.
- [18:36] The complexity of the global U.S. dollar matrix.
- [21:06] Steps to take to cushion your portfolio against any ramifications of a lower Federal Reserve interest rate.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Will Facebook's Libra Cryptocurrency transform money as we know it or is it "the most invasive and dangerous form of surveillance devised thus far?" How does the Libra compare to Bitcoin and the U.S. dollar in terms of the attributes of money.
In this episode you’ll learn:
- What is the Libra and how does it differ from Bitcoin.
- What are the different attributes of money.
- What is proof of work and proof of stake for cryptocurrencies.
- What is the difference between permissionless and permission-based systems for cryptocurrency.
Thanks to WIX and Peloton for sponsoring the episode. Use code MONEY for Peloton.
For show notes and more information on this episode click here.
- [0:17] Praise and criticism of the Libra.
- [1:56] What defines money, and does the Libra match up?
- [3:53] Proof of work vs. Proof of stake: Libra vs. Cryptocurrency.
- [9:52] The role of Libra BFT: creating a permission-less and sustainable currency.
- [12:30] Libra’s claim that it has intrinsic value by being backed by assets.
- [16:00] Measuring the reserves and political power of Libra.
- [17:46] How new money is created by Libra compared to other currencies.
- [21:05] Who makes up the Libra validators?
- [22:36] Possible issues with taxes and regulation.
- [24:42] Comparing libra to other cryptocurrencies and the U.S. dollar.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How the demand by corporations and individuals to turn single-family homes into rental units is pushing up home prices, making it more difficult for first-time homebuyers to purchase a house.
In this episode you'll learn:
- Why the United Nations is accusing certain countries and corporations of treating housing as a tradable financial commodity rather than a human right.
- Why Blackstone believes it is helping to solve the housing crisis by buying and renting single family homes and that the United Nations is wrong in its accusations.
- How the drive by corporations and individuals to own rental housing is pushing up home prices, but not necessarily rents.
- Why the U.S. has a chronic affordable housing shortage and what can be done about it.
Thanks to Vistaprint and WIX for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:17] The concern of the U.N. with houses being treated as a commodity vs. a right.
- [2:27] The rise of rent-backed securities and the debated role of Blackstone.
- [8:20] The impact of single institutions on the national rent average.
- [9:59] House flipping vs. renting.
- [11:34] Buying a home to rent through a company.
- [12:56] David’s personal experience with being outbid on a house.
- [14:25] Why financialization is driving up home prices—not rent.
- [19:48] The housing crisis for those with low income.
- [22:53] Possible solutions for the rental housing crisis.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How the power of compounding applies not only to wealth, but influence, expertise, and creativity. How non-monetary investments can lead to greater monetary wealth and satisfaction.
In this episode, you will learn:
- Why the rule of 72 and the power of compounding are hindered by portfolio losses.
- Why the sequence of returns impacts investment performance, but also our expectations.
- How what we experience in the world is made up of separate glimpses and events.
- What are non-monetary things that compound with time and why there are no short-cuts.
- How to focus our attention on things that compound.
- How non-monetary investments of our time can increase our monetary wealth.
Thanks to Vistaprint and Sleep Number for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] The dangers of oversimplified compounding schemes.
- [4:30] Our experiences influence what we expect to happen.
- [7:57] A picture made up of pictures taken through time.
- [11:26] There are no shortcuts to forming experience.
- [15:05] Influence is created by passing through time—not by purchasing it.
- [18:32] Expertise, polish, perfection are all built by passing through time.
- [19:41] Taking the time to invest in creative work through time.
- [22:01] Time brings age—and that is okay.
- [23:11] Passing through time brings wisdom and experience.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How does artificial intelligence and machine learning work and what are some examples of how individual investors can use AI in their investing.
In this episode you will learn:
- What is artificial intelligence, machine learning and deep learning.
- How is AI being used by different industries.
- How are AI models built with supervised and unsupervised learning.
- What are the components of a quantitative trading model and why it is insufficient to have an AI based stock ranking service.
- What are examples of AI based investment services and AI ETFs available to individuals.
- Why using AI to make investment decisions is so difficult.
Thanks to Warby Parker and WIX for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] The two types of AI: rules-based & deep learning.
- [3:35] Some examples of artificial intelligence.
- [4:59] How machine learning systems work.
- [6:10] Supervised learning vs. unsupervised learning.
- [9:10] Training deep learning AI models.
- [12:46] Complications with how deep learning models come up with their answers.
- [14:31] The role of AI in predicting interest rates.
- [17:16] Understanding the different factors and components of AI models when it comes to investing.
- [19:43] David’s personal experience with an AI-based investing service.
- [23:29] The Equbot and investing in ETFs.
- [25:46] The difficulties of using AI as an individual investor.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How an asset class such as bonds can play different roles in your portfolio depending on your investment philosophy.
In this episode you will learn:
- What are bonds and how can they be used in investment portfolios.
- What is interest rate anticipation.
- Why individuals have an advantage over institutions because they don't have to worry about outperforming a benchmark when it comes to bonds.
- Why U.S. interest rates could rise and fall from current levels.
- Why China is unlikely to sell all of its U.S. Treasury bonds.
- Examples of higher yielding strategies other than bonds that can benefit from falling interest rates.
Thanks to LinkedIn and Policygenius for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] Generating a return on bonds.
- [2:22] David explains why his own portfolio has not seen huge success in bonds.
- [3:56] What is the role of bonds in your portfolio?
- [6:41] A historical analysis of bonds.
- [9:55] The advantage of being an individual investor.
- [10:59] Speculating whether or not interest rates will go up or down.
- [14:50] The effects of the global economy on US bond behavior.
- [17:12] Strategies for diversifying your portfolio.
- [20:49] What to focus on as an individual investor in bonds.
- [22:19] Comparing the story of the carpenter and the tree to the life of a bond.
- [24:23] Deciding which path to choose for the use of your bonds.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What are the pros and cons of having your entire investment portfolio invested in stocks versus a multi-asset class portfolio.
In this episode you’ll learn:
- What are some investment options if you want to be 100% invested in stocks.
- What attributes do you need as investor to have an all stock portfolio.
- Why it is difficult for active managers to outperform.
- Why an all Japanese stock portfolio has severely underperformed for 25 years and how it is possible a U.S. stock portfolio could suffer the same fate.
- What are the pros and cons of a multi-asset class portfolio.
- Overview of The Simple Path to Wealth by J.L. Collins
- Overview of Investing at Level 3 by James B. Cloonan
Thanks to WIX for sponsoring the episode. You can find show notes and more info on the episode by going here. You can learn about Plus Membership here.
For show notes and more information on this episode click here.
- [0:19] Can investing really be as simple as investing 100% of your portfolio in stocks?
- [4:16] Can diligent analysis actually outperform the index?
- [8:50] Understanding the difference between risk and volatility.
- [14:24] Knowing the risks associated with investing 100% in stocks.
- [19:17] The influence of the crowd and the misjudgments of investors on the market.
- [23:25] The benefits of diversifying your portfolio.
- [26:43] Investing 100% in stocks is viable, but it will come with ups and downs.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How venture capital funded startups run up massive losses while justifying premium valuations using creative profitability metrics. These private companies are now going public allowing early investors to cash out with sizable gains. Meanwhile, these new publicly traded companies are added to equity indices, forcing passive managers to purchase them for their index funds and ETFs.
In this episode you will learn:
- How venture capital and initial public offerings work.
- How many venture capitalists are there and how have they performed.
- Why do startups stay private for longer and then go public while still incurring massive losses.
- What is blitzscaling.
- How startups use creative profitability metrics to attract investment capital at premium valuations
- How the current venture capital regime contributes to income inequality.
- How to get an allocation to an initial public offering.
Thanks to Policygenius and TripActions for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:19] What are IPOs?
- [2:12] The growth of new venture capital firms.
- [5:22] Blitzscaling and the willingness of venture capitalists to initially lose money.
- [8:33] How start-ups are choosing to exit.
- [11:18] The cost of going public at premium valuations.
- [13:26] The social and economic repercussions of blitzscaling.
- [18:16] How money-losing firms try to create a profit.
- [19:38] How unprofitable companies convince investors to buy at high valuations.
- [21:20] How individuals participate in venture capital without investing in an IPO.
- [24:08] Possible solutions to IPO’s problems.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
The three-step plan for becoming financially wealthy and how to be wealthy without the money.
In this episode you’ll learn:
- The results of two recent surveys on wealth, investing and retirement planning.
- How much money do people believe they need to consider themselves wealthy.
- How is wealth distributed across the U.S. population and how wealthy are Americans?
- Why you need a simple financial plan.
- What are the three steps to becoming financially wealthy.
- How to live like you are already wealthy.
Thanks to WIX and Sleep Number for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:16] Schwab and Stash survey results.
- [2:49] Saving vs. living paycheck to paycheck.
- [4:29] How much does one need to be considered wealthy?
- [7:44] The value of social security.
- [9:23] The historical distribution of the country’s overall wealth.
- [11:33] The importance of having a plan.
- [13:38] Step One: increase your income.
- [15:10] Step Two: increase your savings percentage.
- [16:44] Step Three: increase your investment returns.
- [23:57] It’s not about optimization. It’s about diversifying and learning.
- [25:20] How to live like you are wealthy today.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How individuals can have a positive impact while earning a good return investing. What are some examples of socially responsible and impact investments and platforms.
In this episode you’ll learn:
- What is the difference between impact investing, ESG and SRI?
- What are examples of socially responsible exchange traded funds.
- What are green bonds.
- What are some examples of impact investments and platforms.
- What are three ways we can have a positive impact as individuals.
Thanks to Blinkist and LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:18] What is impact investing?
- [5:25] How impact investing is different from socially responsible investing.
- [8:50] Different opportunities to invest in a socially responsible way.
- [10:49] The impact that just one individual can have.
- [16:08] Keeping from negatively affecting the social and environmental fabric.
- [18:53] Generating positive impact with our investments.
- [20:01] Analyzing opportunities for truly impactful investments.
- [21:06] Impact Investing in the secondary market.
- [24:55] We each have to decide in what ways we will intentionally invest.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How reducing exposure to a catastrophic event, such as running out of money during retirement, is a better strategy than trying to accurately predict a catastrophic event.
In this episode you’ll learn:
- How repeated exposures to low probability events can lead to ruin.
- How bonds have outperformed stocks over long stretches of time .
- How the success of retirement spending rules depend on the market environment and why a flexible approach to retirement spending makes the most sense given the wide variety of risk factors.
Thanks to WIX and Policy Genius for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] Celebrating 250 episodes - thank you for listening!
- [1:51] 3 individuals who have greatly influenced David’s passion for good investing.
- [2:37] The sequence of life - and how you are affected by it - matters.
- [9:21] Defining risk and modifying exposure.
- [9:53] Case study: bonds vs. stocks.
- [15:34] The conditions for premium dividend yield.
- [18:00] Spending rules for retirement.
- [23:04] Considering worst-case scenarios.
- [26:10] Best strategies for retirement planning.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why respected investors and economists believe India will be the fastest growing economy and potentially best-performing stock market over the next two decades. What are the risks that could prevent that from happening?
In this episode you will learn:
- Why the economy in India hold so much promise and what are the risks.
- What is a reasonable return expectation for the India stock market.
- What are passive and active options for investing in India.
For show notes and more information on this episode click here.
- [0:18] What others are saying about Indian investments.
- [1:53] How India’s culture influences its investing.
- [5:41] A simplified glance at investing in India.
- [7:19] Current politics in India.
- [11:15] Positive aspects of India’s economy.
- [13:00] The challenges to consider.
- [16:59] What to invest in within India.
- [18:59] A look at active management in India.
- [21:07] In conclusion…should you invest in India?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Here are precautions we can take to avoid ponzi schemes and not become victim to investment fraud.
In this episode you’ll learn:
- What are sources to determine the background of individuals and firms who are selling investment products and advice.
- What is the difference between registered investment advisors, registered investment companies and registered securities.
- How to analyze performance and fees to make sure they are acceptable before we invest.
- Why we need to be more wary if securities are not registered.
Thanks to LinkedIn and Sleep Number for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:17] Personal stories surrounding fraudulent investment schemes.
- [2:38] The importance of authentic registration.
- [4:28] Who you are working with, and what are they promising?
- [6:34] Registered securities and registered investment companies.
- [8:41] Disclosing information properly when being compensated.
- [12:07] Deciphering performance claims.
- [16:37] Understanding what the fees are paying for.
- [18:37] Precautions to implement against fraud.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
How the increase in indexing is leading to the creation of more stock indexes, most of which are used by active managers. How more indexing makes it more difficult for active managers to outperform even though managers are getting more skilled.
Thanks to TripActions and WIX for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:22] Definition of “alpha.”
- [0:49] Why there are so many indexes available.
- [4:35] The business of indexing.
- [7:01] The criteria that index providers use.
- [8:04] The cost of change in the index.
- [10:27] How some companies create ETFs.
- [12:44] Understanding the complexity of indexes and ETFs.
- [15:30] The influence of passive management on active management skills.
- [20:42] Understanding all the underlying facets of an index.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Why an inverted yield curve is disconcerting given such low interest rates. Why those low rates could lead to radical central bank policies during the next recession. Thanks to Policy Genius and Blinkist for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:23] Yield curve inversion has generally led to a recession.
- [3:00] Stock market behavior during a recession.
- [5:19] Why has the yield curve inverted?
- [7:04] Understanding who controls and defines the policy rate
- [14:42] Why can’t the economy support higher interest rates?
- [20:08] Fear of the lower bound.
- [22:15] Tools to keep inflation growing.
- [25:31] What we should be doing to protect against what the central banks don’t know.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
245 With more and more college degrees being granted and higher student loan balances, when does it make sense to go to a highly selective college or to college at all? What can increase earnings more than just having college degree? Thanks to TripActions and Shipstation for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:17] The price paid by parents for their children’s prestigious degrees.
- [3:28] David’s college experience.
- [5:14] Does ambition or a selective school earn more?
- [7:44] The influence of family background.
- [9:32] The importance of college networking.
- [10:30] Overcoming discrimination.
- [12:12] College degrees as hiring filters.
- [15:45] How much student debt should you take on?
- [20:28] Student loan forgiveness.
- [23:36] Is college worth it?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
244 How we can use filters to better manage how much we spend and make sure our spending has a meaningful impact on ourselves and the world. Thanks to EveryPlate and LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:16] The FIRE movement and how much you need to retire early.
- [1:23] What are we supposed to be seeking?
- [3:23] How do we define the “bare necessities?”
- [8:58] The superfluous things in life are what we spend our money on.
- [11:12] Finding joy vs. chasing pleasure.
- [13:51] Skills to reduce spending in order to retire early.
- [15:41] Establishing filters to lessen our spending.
- [18:51] Rethinking materialism.
- [21:01] There will always be more.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
243 What are the key metrics to determine if you have reached financial independence and can retire early. How major stock market losses can derail early retirement plans and what to do about it. Thanks to Sleep Number and Blinkist for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:19] Interview opportunity with Suze Orman.
- [1:15] FIRE: Financially Independent Retire Early.
- [2:06] Suze’s response to the FIRE movement.
- [3:36] Controversy over the motives driving FIRE.
- [6:42] Understanding the math of early retirement.
- [12:46] How a market loss would affect your early retirement plan.
- [17:26] Would the FIRE community be better prepared for a market crash?
- [19:03] Modeling out different paths to help prepare against catastrophe.
- [22:28] Utilizing different portfolio drivers.
- [23:53] Viewing early retirement success in terms of probability.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
242. Does it make financial sense to buy Berkshire Hathaway stock and let Warren Buffett and Charlie Munger manage your money? We evaluate Berkshire Hathaway's people, investment process and performance to determine what to do. Thanks to ShipStation and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
- [00:19] Berkshire Hathaway as a money manager.
- [1:49] Looking at the people to determining who to hire as a money manager.
- [3:37] What is the succession plan of the founding partners?
- [5:57] Berkshire Hathaway’s process - a two-pronged approach.
- [11:49] Understanding the mistakes that Berkshire Hathaway has made.
- [16:18] Comparing the performance of Berkshire Hathaway to the SP 500.
- [20:29] Taking the red flags into consideration.
- [21:51] Warren Buffett’s investment philosophy.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
241 Why modern monetary theory isn't worried about federal budget deficits, why budget deficits never go away and what are the risks if budget deficits get too large. We also explore what else proponents of modern monetary theory believe.
For show notes and more information on this episode click here.
- [0:22] What is Modern Monetary Theory?
- [3:20] Taxes create demand for fiat money.
- [5:32] Taxes and government bonds don’t finance the federal government.
- [8:56] Budget deficits increase the net financial assets of the
- private sector.
- [13:16] Taxes destroy money.
- [13:46] The private sector determines the size of the budget deficit.
- [14:58] The concerns of crowding and losing faith.
- [19:08] Even government spending has to be constrained.
- [20:02] The dangers of the Federal Reserve controlling interest rates.
- [21:45] Modern Monetary Theory is correct in terms of how the economy actually works.
- [23:25] Do federal budget deficits matter?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
240 What Henry David Thoreau can teach us about calculating costs, profits, benefits and living a life free of "quiet desperation." Thanks to Blinkist and LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
- 0:23] Moving into a new house and considering the simplicity of Thoreau.
- [2:34] Preserving Ralph Waldo Emerson’s woods.
- [5:15] A two-year experiment living in the woods.
- [6:32] Calculating cost in terms of our life.
- [8:37] Distinguishing profit by the benefits.
- [10:59] Living in the present.
- [15:24] Using our extra time to pursue the walk.
- [19:45] The effects of social media and technology on millennials.
- [23:41] The importance of rejuvenating, unstructured time.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
239 Why successful trading of commodities futures, foreign currencies and options depends on exploiting novice traders. Thanks to Molekule and Sleep Number for sponsoring this episode.
For show notes and more information on this episode click here.
- [0:20] Learning how to trade.
- [4:52] David takes a look at a trading school for himself.
- [9:15] Red flags in the trade school learning process.
- [10:32] Common mistakes in managing wealth according to the trade school.
- [16:29] Is the solution found in only trading and shunning the stock market?
- [19:48] The patented approach to trading success is based upon taking advantage of inexperienced traders.
- [25:09] Trading is a zero-sum game.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
238 How the U.S. mortgage market differs from the Danish mortgage market. Danish mortgage rates and defaults are lower than the U.S.. and unlike the U.S., the Danish government is not involved in protecting investors against mortgage defaults. This episode also explores how the mortgage broker industry has evolved since the housing crash. Thanks to ShipStation and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:23] The socialist catastrophe of Venezuela
- [1:42] Who is the most socialist in housing finance? Denmark or the US?
- [2:50] Meet Fannie Mae, Ginnie Mae, and Freddie Mac.
- [11:26] Danish mortgage securitization.
- [15:42] Why Danish borrowers actually pay less.
- [19:32] Who’s liable for the loan and why it makes all the difference.
- [22:09] Why do mortgage brokers exist, and should you use one?
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
237 What can we learn from the difficulties the UK is having in negotiating an exit from the European Union. What happens next? Why there is always a conflict between globalization and national sovereignty. Thanks to LinkedIn, Blinkist and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:32] Update on Brexit since the British Parliament Vote.
- [1:20] Basic Principles of Brexit.
- [3:58] The problem of the Irish border.
- [10:35] Debate over the withdrawal agreement leads to the current refusal of the deal.
- [12:49] Brexit Lesson One: long-held agreements are hard to break.
- [15:08] Brexit Lesson Two: choosing government sovereignty or globalization
- [22:08] Economic Unions will always be fraught with conflict.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
236 How heuristics, filters and reasonable stories help us cope with radical uncertainty and make investment decisions. Thanks to Netsuite and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:17] Investing is a world of radical uncertainty.
- [1:57] Risk vs. uncertainty.
- [6:01] Coping through the use of narrative.
- [10:39] Using filters to keep ourselves from being overwhelmed.
- [12:48] Staying shy of the consensus and “phantastic” objects.
- [16:04] Learning to tell ourselves reasonable stories.
- [17:01] Re-defining what makes a great decision.
- [20:52] Each individual’s decisions influence the future economy.
- [23:42] Investors aren’t alone: banks need coping mechanisms too.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
235 How to evaluate the purchase of a depreciating asset, such as buying a house in Japan where prices have declined 23 out of the past 29 years. Thanks to The Great Courses Plus, LinkedIn and Sleep Number for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] Unfortunately, there isn’t a magic formula for dealing with a housing bubble.
- [2:33] Making the decision to purchase a second home.
- [5:31] Japan’s declining housing market.
- [13:10] Another quirk of the Japanese house: it’s freezing.
- [20:28] Should we imitate the Japanese when making decisions regarding the housing market?
- [24:19] Keeping priorities straight: making a purchasing decision based upon what matters.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
234 How and when to use passive indexing strategies without following the crowd. Thanks to Masterworks and Sleep Number for sponsoring the episode.
For show notes and more information on this episode click here.
- [2:25] Do all index investment followers herd?
- [4:13] Why it has taken so long for indexing to become established.
- [11:05] Comparing the statistic of active management to passive management.
- [16:14] Keeping your portfolio diverse while indexing.
- [19:54] Example of a return driver outside of indexing.
- [24:54] Steps to take to keep from following the herd.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
233 What is the cause of the economic crisis in Argentina and how likely is it that other developing nations will experience a similar financing crisis. Thanks to Policy Genius for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] Why the Argentine peso has decreased 47% in value.
- [3:41] 3 Reasons why Argentina is unique and has suffered such sharp economic decline.
- [10:23] What we can learn from Argentina’s funding crisis.
- [13:51] How to tell when the market is losing confidence.
- [19:43] Why are some emerging market economies thriving?
- [22:20] Emerging market economies are not destined to fail.
- [27:04] What Argentina can do to pull itself out of the crisis.
- [27:48] Why the US isn’t in the same fix as Argentina.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
232 Why investing in commodities such as oil and gold is challenging. What you need to know before you invest. Thanks to New Retirement Planner for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:18] Where do commodities help us in the economic cycle?
- [2:00] How to interpret the apparent statistical decline in commodities.
- [5:40] Are master limited partnerships (MLPs) helpful to your portfolio?
- [8:19] How the energy transition will affect the future of commodity investment.
- [11:43] Contango and how it affects the performance of your futures contract.
- [16:20] Looking back at the history of commodities may help in determining their future.
- [24:29] The benefits of investing in gold as a commodity.
- [28:11] Traders and psychology are really what determine commodity prices.
- [30:08] Cash flow should still be the foundation of your portfolio.
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
231 Why different occupations pay differently or even the same occupation in different countries. Why the same occupation can pay differently for different companies that reside in the same city.
For show notes and more information on this episode click here.
- [0:12] A bit of background on today’s question for Money For the Rest of Us
- [2:28] Why do certain occupations pay more than others?
- [11:36] Wages vary from county to country - here’s why
- [20:09] Even jobs in the same city pay different wages, and there’s a good reason behind it
- [25:52] You can do a few things to protect your own employability with respectable wages
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
230 With RealtyShares and other crowdfunding platforms shutting down, should you invest on these platforms and if so how do you go about evaluating the investment opportunities. Thanks to Policy Genius for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:30] Check out this episode for David’s experience with real estate crowdfunding investments
- [2:35] Real estate crowdfunding platforms are comprised of this type of structure
- [6:57] You want to understand these considerations before making an investment
- [12:40] Issues began to crop up with David’s investment – learn from his story
- [18:41] David’s experience with these platforms have not led to a lot of transparency
- [25:07] There’s not a specific way to determine which real estate crowdfunding platforms are going to survive
- [30:08] Public and private REITs are another great investment option to consider
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
229 Why modern portfolio theory is a defective way to build out an investment portfolio. This episode explains a better approach to asset allocation.
For show notes and more information on this episode click here.
- [0:11] What is modern portfolio theory?
- [4:29] There are many downfalls to relying on this theory while investing
- [7:05] We should prepare for the worst possible outcome when investing, not the average positive outcome
- [14:08] The true goal of investing should be about “minimizing your maximum regret in the meta-game”
- [18:34] There isn’t the best “right answer” with your portfolio
- [25:15] Maximization of anything doesn’t work in today’s environment
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
228 How distributed ledger technology and tokenized assets will increase liquidity, transparency and fractionalization, allowing investors to purchase very small, liquid positions in real estate, private companies, art and other assets. Thanks to LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:12] Stocks ownership used to be tied to paper certificates, but there’s a problem with electronic records as well
- [10:00] Proxy voting in trading can lead to complicated issues that are almost impossible to solve with certainty
- [17:40] Tokenization could be a solution to today’s convoluted trading system
- [22:38] A new type of distributed ledger would allow for asset-backed tokens
- [27:03] There are some challenges to tokenization that need to be addressed
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227 Here are four most important things to teach children about money and why showing is better than telling when it comes to kids and money. Thanks to CNote for sponsoring this episode.
For show notes and more information on this episode click here.
- [2:58] Here’s how you can start teaching children about money
- [5:30] #1 - The right attitude about money comes with a balance of respect, understanding, and trust
- [8:40] #2 - Healthy relationships with money come with accountability and choice
- [11:38] #3 - Money is tied to work
- [20:25] #4 - Avoid the wrong kinds of debt
- [22:51] #5 - Teaching kids about money is often about “just in time” learning
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226 What are the characteristics of an asset bubble and how to invest when one exists. Are cannabis stocks in a bubble? Thanks to Blinkist and Policy Genius for sponsoring this episode.
For show notes and more information on this episode click here.
- [0:10] Is the cannabis industry in an asset bubble right now?
- [4:41] Public conversation is often a sign of an asset bubble
- [8:19] Hopeful assumptions are often what drive an asset bubble environment
- [13:24] Tesla can be considered an example of a micro-bubble
- [21:57] You can handle an asset bubble in a variety of ways
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225 How to evaluate interest rate risk, credit risk and other factors when investing in bonds. Thanks to Sleep Number for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:11] Predicting interest rates can be tough - here are some things to consider
- [4:28] What determines the rate of return if you invest in bonds or fixed income securities?
- [7:00] Bond prices fluctuate as interest rates change
- [15:30] Data on default rates for bonds and other investment strategies
- [19:40] Consider this before deciding whether or not to hold bonds
- [23:13] Passive vs active investment strategies in bonds and other fixed-income securities
- [25:35] Why would you own a long duration bond?
- [34:19] There isn’t a single right answer when it comes to bonds and fixed income securities
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224 How to position your investment portfolio based on market cycles. Investing principles from Howard Marks' new book Mastering the Market Cycle. Thanks to CNote and LinkedIn and for sponsoring today's episode.
For show notes and more information on this episode click here.
- [0:11] Howard Marks’ new book is the inspiration for this episode of Money For the Rest of Us
- [7:13] The first tool in learning how to invest during a market cycle
- [11:49] The second tool in learning how to invest during a market cycle
- [18:00] Successful investing involves a mix of skill and luck
- [25:30] There’s no way of knowing where the bottom of a market may be
- [26:30] We are not in a period of extreme risk or opportunity in today’s US economy
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223 How commission free ETFs, mobile apps and zero fee index funds make it easier to invest if you have little money. What are some examples of commission fee ETFs and funds for Vanguard, Fidelity, Robinhood and TD Ameritrade. Thanks to Blinkist for sponsoring this episode.
For show notes and more information on this episode click here.
Episode Chronology
- [0:14] Here’s how to invest when you have little money
- [4:26] How do brokerage firms make money if they don’t charge commissions?
- [11:37] What happens to investments if a brokerage firm goes bankrupt?
- [18:14] Thoughts on investing with a very simple portfolio
- [27:35] A lack of money is no excuse to not invest
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222 How asymmetric information, price discrimination and the stories we tell ourselves contribute to artificial profits and income inequality. Thanks to CNote for sponsoring today's episode.
For show notes and more information on this episode click here.
- [0:20] Rents, overpayments, and income inequality are all side effects of market distortions
- [8:55] Value-based pricing vs pricing based solely on cost
- [17:13] Pricing is inextricably tied to the stories we tell about ourselves and to others
- [22:30] Consumers need to consider these 4 things when evaluating the cost of goods and services
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221 How the Great Financial Crisis changed how individuals and institutions invest, and why we shouldn't invest solely focused on the next crisis. Thanks to CNote for sponsoring today's episode.
For show notes and more information on this episode click here.
- [0:40] Overview of how the 2008 financial crisis continues to impact investing today
- [6:48] Data on current investments and the stock market
- [8:40] How you invest depends on your experience in the 2008 crisis
- [11:41] Future investing is enveloped in big questions and unknown variables
- [16:10] The great financial crisis impacted both individuals and institutions
- [19:58] Should you invest in preparation mode for the next crisis?
- [26:00] Invest smartly by separating speculations from investments
- [28:40] Consider this when investing and thinking about the future of the market
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220 How to evaluate cash savings options at banks, credit unions and brokerage firms. Why are yields on cash savings so much higher than a few years ago. How to tell if your bank or credit union is in experiencing financial difficulties. Thank you to Blinkist for sponsoring this week's episode.
For show notes and more information on this episode click here.
- [0:10] All about banks, credit unions, and the pros and cons of cash savings
- [4:47] How can banks and credit unions become financially unstable?
- [14:25] The Federal Reserve is setting a new short term interest rate target
- [15:55] What tools does the Federal Reserve have to keep short-term interest rates in line with its target?
- [19:20] There are other options for investing your cash savings
- [25:49] Is it really worth pursuing multiple investing options for your cash savings?
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219 How fewer publicly traded companies, less stock shares outstanding and more intangible assets have led to higher earnings growth for U.S. listed companies and ultimately stronger stock market performance. Thanks to Circle Invest for sponsoring today's episode.
For show notes and more information on this episode click here.
- [0:08] Observations on the current state of the US stock market
- [4:01] What if there’s something going on within the US market that suggests continued outperformance is coming?
- [7:23] Why the number of publicly listed companies, particularly small companies, is shrinking
- [14:52] The impact of intangible assets within small companies
- [18:21] Increased amounts of buybacks are leading to a shrinking stock market
- [20:38] Multiple factors are contributing to higher shareholder profits, yet lower wages for employees
- [26:05] What are the investment implications of low wages due to monsopony?
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218 What are the headwinds facing China that could slow economic growth, but still could lead to China growing faster than the U.S. Also, what is going on with Turkey and are other emerging market countries vulnerable to the same plight? Thanks to Circle Invest for sponsoring today's episode.
For show notes and more information on this episode click here.
- [1:07] Is China or the US more vulnerable to economic downturn?
- [4:55] Why have emerging markets done so poorly recently?
- [8:51] The concept of balance of payment is reviewed and examined in a case study of Turkey
- [16:20] Emerging markets are doing better than in previous years
- [20:35] The 3 reasons why China is more vulnerable than the US
- [22:25] What China has to do in order for their economy to continue growing quickly
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217 Which rebalancing strategy is best or should we even bother rebalancing? Should we just exit stocks completely, especially given how overvalued the U.S. stock market it is? And why do companies split their stocks? In this episode, we answer these and other listener questions.
For show notes and more information on this episode click here.
- [0:30] Why this episode of Money For the Rest of Us is a bit different than previous ones
- [2:15] Is rebalancing your portfolio really necessary?
- [12:43] Can you use valuations for timing the market?
- [23:17] Is it possible to use exiting stocks as a way to increase revenue?
- [33:39] The idea behind doing investing on a sector neutral basis rather than a capitalization weighted basis.
- [36:20] What factors do companies consider when doing stock splits?
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216 Why peer-to-peer lending on platforms like Lending Club and Upstart is no place for individuals to invest given higher defaults, lower returns and competition from institutional investors.
Thanks to Circle Invest for sponsoring today's episode.
For show notes and more information on this episode click here.
Episode Chronology
- [1:04] There are a lot of issues going on with the global P2P lending market
- [5:34] How the P2P lending environment has changed over the past few years
- [11:24] Why advertised returns are higher than actual returns
- [15:35] How are these P2P lending platforms surviving?
- [21:26] How these 3 credit enhancements impact the P2P lending market
- [25:51] Individual investors don’t do as well in P2P lending environments - here’s why
- [30:00] Here’s the bottom line on why you should avoid P2P lending investments
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215 Will stagflation cause the dollar to crash and be a bottomless pit when the next recession hits? That is what Peter Schiff is predicting. We look at where he is right and where he seems to be off the mark when it comes to the U.S. economy and a dollar collapse. Thanks to Haven Life and Wunder Capital for sponsoring today's episode.
For show notes and more information on this episode click here.
Episode Chronology
- [0:33] Is a dollar collapse imminent?
- [3:07] Economic expansions don’t die of old age
- [5:22] How tariffs and imports impact the US economy
- [10:44] If the dollar has to crash, it does so relative to other currencies
- [14:01] The relationship between the Federal Reserve and interest rates
- [19:11] Bank deposits, savings, loans, and interest rates all contribute to the US economy today
- [24:29] The relationship between money supply and inflation is essential to understand
- [33:08] Why David doesn’t believe a dollar crash and economic ruin are on the horizon
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214 How the foreign exchange market works and how George Soros made more than a $1 billion shorting the British pound in 1992. Why currency trading today is more like gambling than when Soros made his billions. Why trading closed end funds can be more profitable than currency trading. Thanks to Wunder Capital and Blooom for sponsoring todays' episode. Use code DAVID on Blooom for your first month free.
For show notes and more information on this episode click here.
- [0:35] David introduces the listener question for this episode, “Should You Trade Foreign Currencies?”
- [2:24] Why David would never invest in Forex strategies
- [6:56] How trading works on platforms such as Darwinex
- [8:43] Investing through trading currencies is like gambling
- [11:40] The George Soros story and how governments can balance the economy through interest rate control
- [24:20] Betting against the exchange rate of foreign currencies isn’t reliable
- [27:50] The benefits of investing in closed-end fund markets
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213 How health insurance isn't really protection against a catastrophic illness but prepayment of routine healthcare consumption, leading to overconsumption of healthcare and over treatment by medical professionals that drive up costs. What would it take to reform the health insurance marketplace so it is more fair and functions more like life insurance or homeowners insurance. Show notes and links can be found here. Thanks to Circle Invest for sponsoring today's episode.
For show notes and more information on this episode click here.
- [0:57] Why pay $20 for a doctor’s visit, when health insurance is $36,000 a year?
- [4:03] Digging into the fundamental flaw in health insurance
- [9:10] Why does health insurance pay for “routine maintenance” on our health?
- [13:20] The pros and cons of employer-based health insurance policies
- [19:35] Health insurance is a mess because it doesn’t primarily insure against a catastrophic health event
- [21:42] The current setup for health insurance limits healthcare choices and encourages overconsumption of services
- [24:50] Health insurance is an artificial market
- [27:00] The over-consumption drives the cost of health insurance
- [29:02] Here’s why you can’t figure out what medical procedures actually cost
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212 How a complex global trade system has reduced poverty, raised incomes, increased productivity, and lowered prices while a trade war will reverse those trends. You can find show notes and links here. Thanks to Blooom and Wunder Capital for sponsoring this episode.
Episode Summary
President Trump recently unveiled new tariffs on trade with China, and many fear this decision could lead to a trade war. This 25% tariff on $34 billion worth of Chinese imports into the U.S. and an additional $216 billion of announced tariffs will change the trade landscape in the coming months. On this episode of Money For the Rest of Us, David explains why trade wars tend to increase the prices of goods and the poverty rate. He discusses the consequences attached to global trade tariff decisions and outlines why healthy global trade is successful in reducing poverty. To hear informed information about the complexities of tariffs and global trade, be sure to give this episode your full attention.
Why does the US run such a large trade deficit with China?
In 2017, China exported over $500 billion worth of goods to the US. In that same year, the US exported $130 billion to China, resulting in a trade deficit of $375 billion. Why is this figure so high? There are three main reasons why the US has such a large trade deficit with China:
- China has a lower standard of living and pays workers lower wages
- Technology and the internet has reduced the risk to US businesses when importing from China
- At times, the Chinese yuan is too weak relative to the US dollar
Healthy global trade reduces poverty - here’s why
Countless economists and writers have examined why healthy global trade reduces poverty. In 1981, the percentage of the world’s population living in extreme poverty was holding at 42%. Since then, the number of people living at that level of income has fallen by 1 billion. And in 2013, the most accurate data puts the world’s population living in extreme poverty was 10%. This figure has fallen so dramatically because of trade, specifically because China has significantly ramped up its manufacturing capabilities and exports, increasing household income through higher wages.
From 1820 to 1920, in Great Britain the percentage of the population in extreme poverty fell from 40% down to 10% from the 1820s to 1920s. From 1870 to 1970, Japan did the same - taking their poverty population from 80% down to nearly 0%. China is on course to reduce extreme poverty even faster. To hear more about the relationship between poverty and trade, don’t miss this episode of Money For the Rest of Us.
Global tariffs can lead to unintended consequences
Trends show that both the US and China are wealthier because of trade. However, trade wars have the power to reverse those trends and increase the level of global poverty once more. There are 2 types of unintended consequences: those that are positive and natural, and those that are negative and disruptive. Positive consequences include developing powerful and beneficial global relationships between countries producing various goods. However negative consequences could destroy a complicated global supply network that has been slowly built, year by year, into the powerhouse that it is today.
Companies and industries are adaptable when tariffs are imposed. However, there’s only so much flexibility a company can handle before having to make sacrifices. Moving production facilities, cutting wages, or increasing prices when faced with steep tariffs. These consequences should never be overlooked when considering new tariff plans and laws.
Trade wars aren’t the solution to unfair trade practices - but THIS is
Trade wars caused by broad based tariffs are not the solution to unfair trade practices. In order to remain globally competitive and productive, US companies need trade deals that recognize the strength that comes from global operations and supply chains. Trade wars are a complex subject, and this need-to-know info is best understood by listening to this podcast episode. Check it out!
Episode Chronology
- [0:42] The Trump administration's recent tariffs could lead to a trade war, increasing prices and poverty
- [2:24] Why does the US run such a huge trade deficit with China?
- [6:47] Historical data on tariff rates across the decades
- [8:38] Trade reduces poverty - here’s why!
- [11:12] Measuring the wealth of a nation is important in the trade wars discussion
- [15:51] Reducing trade deficits cannot be solved through trade wars
- [19:08] There are 2 types of unintended consequences
- [23:30] Companies will adapt to trade tariffs, no matter the circumstances
- [28:24] Broad-brush trade barriers don’t work!
- [33:40] So what is the solution to unfair trade practice?
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211 Why housing bubbles can last such a long time and what to do if you really want or need to buy a house in a frothy market. More information, including show notes, can be found here.
Episode Summary
Navigating a housing bubble is often on everyone’s minds. With changing family needs, balancing multiple incomes, and varying environmental factors, finding a great house is a struggle most families face. On this episode of Money For the Rest of Us, David responds to a listener’s question of how to navigate a housing bubble. He explains the idea of “economic gravity,” outlines factors that are influencing the global housing market, and offers solutions to the housing bubble crisis.
A housing bubble cannot break free from economic gravity
David discusses the idea of “economic gravity” on this episode. Simply, over the long-term housing prices can't be disconnected from the ability of households to service a level of mortgage debt - to successfully make those payments every month. Nobel prize-winning economist Milton Friedman explains, “When (corporate) earnings are exceptionally high, they don’t just keep booming - they can’t break loose from economic gravity.” The same concept applies to home prices. When prices are high, they can boom for an exceptionally long time. But they cannot break free from this underlying economic concept.
Factors that are driving up the global housing market
Housing bubbles are being created across the globe because of a few major factors. Low interest rates, offshore demand for domestic property, influxes in immigration, and interest only loans are all contributing factors to the housing bubble discussed in this episode of Money for the Rest of Us. David draws many parallels between the US housing market and those in Australia and Canada.
Housing markets don’t always align with growing family needs
Joe, the Money For the Rest of Us listener that submitted the question for this episode, is seeking different housing for his family as it grows and shifts. But he’s finding that unfortunately, housing markets don’t always align with growing family needs. Better school districts, larger homes, easier commutes, etc. are all factors that millions of Americans are seeking for their prospective homes. David encourages listeners to consider what type of housing their family can reasonably afford and still maintain the type of lifestyle they desire. You never want to purchase a house that you cannot comfortably afford. To hear more about the housing market in the US today, data on current housing prices across the country, and even more great information, don’t miss this episode.
3 ways you can respond to rising house prices
After considering all the data related to the housing bubble and overall market in your area, you essentially have 3 options:
- You can stay put
- You can move to a cheaper locale
- You can buy, while being patient and prudent
In order to make the most of the housing opportunities for your family, David encourages every listener to consider their personal affordability and examine their ability to handle unforeseen financial stress (loss of a job, medical emergencies, etc.) Navigating a housing bubble is challenging, but this episode of Money For the Rest of Us can help you make sense of all the angles. Be sure to listen.
Episode Chronology
- [1:05] A listener poses a question about how to handle a housing bubble in his area
- [6:47] Current data on the American and international housing bubbles
- [10:02] Is the current housing bubble starting to break?
- [10:57] What factors are driving the home prices in Australia, for example?
- [12:41] Comparing the Canadian housing bubble to Australia’s
- [15:45] So what should you do during a housing bubble?
- [18:09] Housing markets don’t always align with growing family needs
- [21:36] How to combat the factors driving up housing prices
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210 Why fair markets require uncertainty for both the buyer and the seller, and why sellers don't need to disclose everything they know to the buyer. More information, including show notes, can be found here. Thanks to Wunder Capital for sponsoring this week's episode.
Episode Summary
A recent listener of the Money For the Rest of Us podcast posed the question, “Are there always winners and losers when trading?” This question is the focus of this episode of the podcast. David explains an age-old thought experiment created by Cicero and how it relates to modern financial decision making. The key differences between concealing and simply not revealing information are discussed and how trading decisions can be ethical for all involved. David also explains how high-frequency trading bots exist outside the parameters of conscious decision making and how they can impact market volatility. It’s an episode full of great insights and should not be missed, so be sure to listen.
There’s a key difference between concealing and not revealing information
In Cicero’s thought experiment, there is a grain seller that has imported foreign goods during a period of domestic hardship. Is the seller required to disclose information of additional shipments coming into the market soon? Or is he able to sell his stores at a higher price, without telling the buyers what he knows? David explains that technically it would be an ethical sale since there’s not a defect in the grain he’s selling. The seller isn’t concealing critical information, he’s simply using the current market conditions to his benefit. To hear David’s full summary of this scenario, be sure to listen to this episode.
The outcome of a transaction should be unknown for all parties involved in order to be ethical
Simply put, the outcome for any transaction must be equally unknown to all parties involved in order to be considered ethical. David explains by saying, “If they (buyers and sellers) go in not knowing exactly what's going to happen, and there isn't a defect that is being concealed, then that's just how markets work.”
These schools of thought differ between normal commerce and financial markets
In normal commerce, where a buyer purchases a product from a seller at a specific price point, there is an exchange of currency and value. The buyer loses money but gains function and value from the product. The seller reaps financial benefits from the transaction. Even if the seller then drops the price, it’s ethical because there wasn’t a defect in the product at the original price point. For financial markets, there generally will be a winner and loser because the price WILL change. The key is both buyers and sellers go into the transaction with a level of uncertainty.
How could high-frequency trading bots influence market volatility?
In this episode of Money For the Rest of Us, David also explains how high-frequency trading bots can increase market volatility, or the level of risk involved in transactions. Human traders have a point of view, a position, and a set of moral ethics. Bots based on algorithms do not. That’s why when “shocks of unknown origin” crop up in the market, most bots will simply sell or back out entirely. This can result in a negative feedback loop leading to even less liquidity from high-frequency traders and multiple flash crashes. David says that “There is a risk of higher volatility because here markets have changed. Most trading in stocks is no longer an investor with a fundamental view. It's an algorithm, and we could have more downside when the next bear market comes along.”
Episode Chronology
[0:44] Discussing the idea of “winners and losers” in investing and financial markets
[4:45] Is full market disclosure recommended? Is keeping some information private immoral?
[10:35] The difference between concealing and not revealing information
[13:17] This is why laws come and go, but ethics stay
[16:04] The outcome of a transaction should be unknown for all parties involved in order to be ethical
[19:10] Why could high-frequency traders (bots) increase market volatility?
[24:33] The difference between value and knowledge in normal commerce and financial markets
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
209 Is it worth investing outside your home country given the risk? Should you hedge currency risk? What is the impact of Chinese "A" share listed companies being added to emerging market indices. More information, including show notes, can be found here.
Episode Summary
Should you be investing internationally? What are the benefits to having foreign stocks in your portfolio? Do the currency risks outweigh potential returns? On this episode of Money For the Rest of Us David considers these questions and more. Comparing different markets, understanding expected stock return projections, the benefits of hedging international stocks, and more are covered on this insightful episode – be sure to listen!
Why would anyone WANT to pursue investing internationally?
Many investors focus solely on domestic markets. Why? Because it’s familiar! They know historical market patterns and there’s no currency risk. Why then should you consider investing internationally? There’s one main reason – because your returns could be higher! To hear why investors are branching out into foreign markets, and some considerations you need to understand before taking the leap, be sure to listen to this episode.
This is why you can’t simply compare one country’s market to the next
When comparing international markets it’s essential to remember that you have to understand their differences in terms of sectors. For example, the US market is comprised of 26% tech stocks, while the world ex-US contains only 6.5% tech. The tech sector and its percentages in varying global markets is only one example why comparisons cannot be made simply. If you adjust your research to accommodate varying sector percentages, you can start to get an idea of which markets are more expensive than others – but these numbers are never set in stone.
Should you invest in hedged international stocks?
If you choose to invest internationally, should you hedge those investments? Hedging international investments can remove the currency exchange risk. Many investors find success in partially hedging their portfolios. It can reduce the amount of volatility associated with currency rate swings. However, in some market conditions, it can actually reduce your returns. For more information on the pros and cons of hedging while investing internationally, be sure to listen to this episode of Money For the Rest of Us.
Yes, there is risk in investing internationally – but there is opportunity as well!
No matter how much research you do before investing, there will always be risks involved. Any investing market, domestic or international, carries currency, political, and human factor risks. Just because one market has dominated in the past does NOT mean it will continue to prosper. No matter in which markets you choose to invest, always remember that diversification is key, timing is everything, and risk management is essential.
Episode Chronology
[0:45] Should you even bother owning international stocks?
[3:50] The importance of questioning our underlying assumptions
[8:24] There’s only one reason why you should invest outside of the US market
[9:06] How investing internationally affects the 3 drivers of asset class performance
[11:57] This is why you can’t just simply compare countries’ markets
[14:08] Expectations for stock returns over the next decade
[19:24] The importance of currency exchanges when investing internationally
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208 How a Chinese ban and careless recycling habits by households and businesses led to a market collapse in recyclables. More information, including show notes, can be found here.
Episode Summary
The biggest market crash facing the United States today isn’t entirely economic in nature. It’s actually surrounding the idea of recycling and recyclable goods. Recycling is a service that most communities require and demand. But is it economical? Why has the market crashed in recent months? What are the solutions? This episode of Money For the Rest of Us will answer all that and more, so be sure to listen.
What are the current values of recyclables, given the market crash?
Most types of recyclable products have fallen steeply in price. Mixed paper prices have fallen 98% in the past year. Corrugated cardboard has fallen 48% and plastics ranked 1 to 7 have fallen 78%. Co-mingled plastics, aluminum, and steel have been holding steady or even increasing, however, the vast majority of recyclables aren’t bringing in the high returns they used to. In areas such as the Pacific Northwest, you even have to pay a company to take it off your hands. What changed? Be sure to listen to this episode to find out.
What has caused this massive market crash?
The biggest influencer in the recyclables market crash was China’s decision in January 2018 to ban imports of 24 different types of recyclable materials. Americans recycle 66 million tons of material each year, and much of this material used to be sent overseas to be sorted, cleaned, and processed. However recyclable exports to China fell 35% in the first 2 months after the ban, and future rates aren’t looking favorable. Now, all of this recyclable material has nowhere to go. To get the full story behind the China ban and how it impacts the US recycling industry, be sure to catch the full audio for this episode.
The 5 main ways we can improve our recycling habits
To solve the market crash issue, Americans need to rethink their recycling habits. The problem with “aspirational recycling,” or thinking everything can be recycled just because we want it to, is a contributing factor to this complex issue. 5 ways to combat the recyclable market crash and current mindset about recycling are featured on this episode of Money For the Rest of Us. Here they are:
Understand that recycling isn’t going away
Consider recycling rate stabilization funds
Consider banning certain materials at specific plants to reduce contamination and mixed goods
Revamp educational programs about recycling
Develop recycling markets right here in the US
What’s the real solution to the recycling market crash issue?
Even with all the great strategies discussed on this episode, simply recycling in better ways isn’t enough to solve the true issue. Everyone has to start considering the life cycles of the products we use every day. Changing the way countries around the world handle waste and preventing it from entering our waterways and contaminating our land is the real solution – basic recycling is just a temporary fix to a much larger issue.
Episode Chronology
[0:42] Why the recycling business is currently crashing and collapsing
[4:28] The current value of recyclables, given the market crash
[8:09] What has caused this crash in recycled goods?
[9:32] The problem with “aspirational recycling”
[14:38] Why we have to do better at recycling
[22:05] The true heart at the of the recyclables market crash issue
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207 Why the mega rich don't have magical investing powers, but there are some investing attributes they possess that we can emulate. More information, including show notes, can be found here.
Episode Summary
A new listener of Money For the Rest of Us inspired the question for this episode: how do the mega rich invest? Forbes reports that there are 585 billionaires in the US and most of them utilize a family office/professional management structure. But do they have some magical, secret way of making more money than the general population? Do they become exponentially richer by allocating their money in certain ways? These questions and more are explored on this episode, and it’s one not to be missed.
What are the major differences in how the mega-rich invest?
While the mega-rich, also known as ultra-high net worth individuals, don’t have any secret ways of making exponentially more money than the rest of us, they do invest in different ways. The biggest difference in investment strategies falls within the area of alternative investments such as venture capital, private real estate, energy investments, hedge funds, etc. Ultra-high net worth individuals invest as much as 46% of their portfolios in these areas, which is significantly more than many other investors. The mega-rich also hold more cash, combatting the illiquidity of their alternative investment strategies. These strategies are available to all investors but are more easily accessible to people with more funds at their disposal.
Don’t be fooled, mega-rich investors DO make mistakes
Even though the mega-rich invest in slightly different ways than typical investors, they are liable to make the same mistakes as everyone else. Many ultra high net worth individuals have fallen under the allure of hedge funds, but have generally been disappointed with performance. For example, a study CEM Benchmarking found hedge funds overall have been underperforming customized benchmarks with similar volatility at a rate of 1.3% annually, and they have been since 2000. Returns have also been especially disappointing in the long-short equity space.
Do mega rich investors achieve the same rate of return as typical investors?
Ultra-high net worth investors DO receive the same rate of return as other investors, however, they benefit from compounding. It’s simple math. If you’re able to put more money into a certain type of account that compounds in a beneficial way, you’ll come out on top faster than those who cannot invest as much.
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206 Why the leveraged loan market (i.e. bank loans) is becoming more risky. What are collateralized loan obligations and how do they influence bank loans. Why I will sell my bank loans fund when the economy turns. More information, including show notes, can be found here.
Episode Summary
Just as you need to be “bear aware” when traveling in the backcountry, you also need to be aware of the risks and benefits when investing in asset classes such as bank loans. What may seem harmless on the surface could backfire within your portfolios if not treated with the appropriate level of caution and knowledge. On this episode of Money For the Rest of Us, David examines bank loans, also known as floating rate or leverage loans, and the various risks associated with this type of asset class.
What are bank loans and why don’t they have interest rate risk?
Bank loans or leveraged loans represent loans made by banks to non-investment grade companies. They have variable interest rates because the interest paid by the borrower is tied to short-term interest rates that are connected to LIBOR – the world’s most widely-used benchmark for short-term interest rates. For bank loans, as interest rates go up, values don’t go down. Bank loans also hold seniority when it comes to bankruptcy payback.
Bank loans are getting more risky as investors move away from high yield bonds
During the week of May 13-19, 2018 the net inflow to bank loan mutual funds reached $925 million – the largest intake in 55 weeks. The past 11 weeks have also had extremely high levels of bank loan intakes. Comparably, high yield bond funds had $1.3 billion during the same week in May 2018. The increased demand for bank loans from investors and from collateralized loan obligations is pushing up prices for bank loans, lowering their yields. The increased demand is also prompting more issuance. The bank loan market now exceeds $1 trillion – double the amount in 2010.
Protections to those investing in bank loans are lessening
There are more leveraged loans in the system as companies take on more debt. However, lender protections are weakening. Many bank loans are “covenant-light loans,” meaning they don’t have as strong of legal protections for creditors. Bank loans also have more flexibility regarding definitions of default. 82% of all leverage loans were considered covenant lite as of April 2018, compared to 60% in 2015. The lax lending standards should definitely cause investors to pause and consider the risks before investing in the asset class.
Collateralized Loan Obligations
David profiles the characteristics of the largest buyer of bank loans: collateralized loan obligations, also known as CLOs.
Episode Chronology
[1:02] What are bank loans and why do you need to be “bear aware” of them?
[8:30] The price of bank loans can fall as spreads widen as investors worry about potential defaults
[10:06] What yield are you receiving over LIBOR?
[11:32] There indeed is a strong demand for loans in today’s market
[14:12] High demand for bank loans has led to more issuances, but caution is necessary
[22:38] Collateralized Loan Obligations are the largest purchaser of bank loans
[27:55] A summary of things to look at when considering an asset class
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205 If the Federal Reserve has printed over $2 trillion dollar and given it to banks to lend, why is U.S. inflation still low? More information, including show notes, can be found here.
Episode Summary
Many people wonder if the Federal Reserve is really printing money. Varied schools of thought exist behind the value of money, how it gets injected into a country’s economy, and how it impacts the private sector. On this episode of Money For the Rest of Us David offers insights into this complex subject, all while giving you the best information regarding the Federal Reserve, its open market operations, bank reserves, and why we aren’t experiencing hyperinflation. It’s sure to be an educational episode that you don’t want to miss.
Can the Federal Reserve create money without printing it?
The US Federal Reserve is not able to produce physical money in the form of coins or bills. That’s the responsibility of the US Treasury, their Bureau of Engraving and Printing, and the US Mint. The Federal Reserve, however, can “print money” when it purchases U.S. Treasury bonds with money it creates by adding to its member bank reserves.
Kimberly Amadeo, a writer at The Balance, explains this buying/selling of US treasuries by saying, “One of the Fed’s tools is open market operations. The Fed buys Treasuries and other securities from banks and replaces them with credit. All central banks have this unique ability to create credit out of thin air. That’s just like printing money.”
How do banks create money for individual borrowers?
Contrary to what many believe may happen, banks do not transfer money from a different account or withdraw it from a central vault for loans. Rather, David explains that banks “create money out of nothing” and withdraw it when loans are repaid. Thus, excess central bank reserves are not a necessary precondition for a bank to grant credit and therefore create money. Banks typically only have to have 10% of all accounts in reserves. If a bank lacks the reserves to cover the payments, it can be borrowed from an inter-bank market or central bank system.
Why haven’t we seen hyperinflation due to these processes?
The United States hasn’t seen an influx of hyperinflation because the private sector hasn’t been willing to borrow enough funds to strain the current capacity of the economic machine. David further explains the lack of inflation by using the two money aggregates that exist in the US: M1 and M2. M1 is composed of currencies, paper, bills, notes, traveler’s checks, and checking accounts (demand-deposits). M2 is made up of everything in M2 plus savings accounts, CDs, retail money market funds, etc. In March 2009, at the height of the recession, M1 levels were around $1.6 trillion. As of April 2018, the M1 was at $3.7 trillion – a 130% increase! Does this mean households are wealthier? Not necessarily. The majority of them simply have more liquidity, because Treasury Bonds were sold to the Federal Reserve in exchange for checking account deposits.
Episode Chronology
[1:15] Is the Federal Reserve really printing money?
[6:40] Two ways to address this question
[11:50] So how do individual banks create money for borrowers?
[21:20] Monetary aggregates in the US and how they indicate the level of wealth and liquidity
[23:50] Why hasn’t this led to hyperinflation?
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204 How low real interest rates contribute to low returns for stocks and other risk assets. How real interest rates are determined. More information, including show notes, can be found here.
Episode Summary
Low investment returns are never the best news for financial investors. On this episode of Money For the Rest of Us, David examines the relationships between real interest rates and investment return, who or what is driving real rates, and offers historical information on previous periods of low rates. His insights will shed light on this concerning issue, so be sure to give this episode your full attention.
The US and the world are in a period of low real interest rates and real returns
University endowments, retirement funds, and individual portfolios are currently affected by low-interest rates and low investment rates. If this continues, overall portfolio values could decrease after adjusting for inflation and spending. In the United States, we have seen an average 6.5% real return on stocks since 1900. The global average for real return rates has been hovering around 5.2%. However, these rates have been lower in the past 2 decades than they have been in the previous 80 years.
There’s a linkage between real interest rates and subsequent asset class returns
David delves into research on the relationship between real interest rates and subsequent investment returns on this episode of Money For the Rest of Us. He explains that when real rates were higher, the returns were much higher. For example, when real rates reached 9%, real returns on stocks were as high as 10.8%. Today, the real rates hover around 0% or even dip into the negative percentages. The real return for stocks at these rates have historically been just over 4%.
What drives these low real rates?
After hearing all of this information, listeners may be asking, “So who or what is driving these low real rates? And can they be manipulated to be higher to produce higher returns?” David quotes Former Federal Reserve Chairman Ben Bernanke who explains, “But what matters most for the economy is the real, or inflation-adjusted, interest rate. The real interest rate is most relevant for capital investment decisions, for example. The Fed’s ability to affect real rates of return, especially longer-term real rates, is transitory and limited. Except in the short run, real interest rates are determined by a wide range of economic factors, including prospects for economic growth—not by the Fed.”
Essentially, no group or institution can manipulate these rates. What DOES influence these rates is the balance between those who save and those who borrow. Currently, the world is in a period of high savings and less borrowing, resulting in lower interest rates and lower returns. The tides for these rates will change, in time.
Very long periods of time are required to balance out the good and bad luck for investment returns
Keep in mind that all of the data discussed in this episode of Money For the Rest of Us are for relatively short periods of time. A recent historical analysis shows that countries have seen periods of negative real returns for as long as 16, 54, and 55 years in the US, France, and Germany, respectively. Still, the long-term historical record shows positive real returns for stocks. It just takes patience.
Episode Chronology
[1:00] Why are investment returns so low?
[11:00] The correlating relationship between real interest rates and subsequent returns
[15:40] Who or what exactly drives real rates?
[27:17] Returns can deviate from these low interest rates
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203 How to make better investing and life decisions. More information, including show notes, can be found here.
Episode Summary
David asks the question, “Is investing more like poker or chess?” on this episode of Money For the Rest of Us in order to help you better understand why investing is inherently unpredictable. The book, “Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts” by Annie Duke inspired this episode. David ponders big ideas such a reflexive vs. deliberative thinking and why the differences between causation and correlation must be considered. If you’ve ever wondered about how to improve your investing decisions while combining analytical research with skilled intuition, this episode will answer many of your questions.
Investing and life are like poker – not chess!
Many investors approach financial decisions like a game of chess, where there are correct and incorrect moves. However investing, and real life, are more closely related to poker, a game of uncertainties. Duke explains in her book that a term known as “resulting” drives poker games. “Resulting” is the belief that the quality of a decision affects the quality of the outcome. However, David explains that a great decision is a result of a great decision-making process, regardless of the end outcome. Learn how to improve your decision-making process by listening to this episode.
Don’t assume causation when there’s only correlation
One of the biggest threats to a good decision making processes it the belief that there is always a direct causation linking the process and the end result. Even with the best knowledge and highest levels of skill, investing still contains an element of uncertainty. Sometimes there aren’t any connections between the decisions investors make and the end goal. For example, if you purchase a house, fix it up, and sell it 3 years later for a 50% profit, does that make you great at real estate investing? Maybe. But it could also have been a result of an overall uptick in the housing market, and any buy/sell transaction would have been profitable. David wants his listeners to know that correlation between good investing decisions and profitable outcomes do not always mean the same result will occur.
How can you improve the quality of your investing decisions?
Since investing is strongly related to the uncertainties and variables found in a game of poker, there are never surefire ways to ensure every decision will be profitable. But there are ways to increase your chances of succeeding. Duke explains that “The quality of our lives is the sum of our decision quality plus luck.” Investors can enhance their decision-making skills by considering market trends and understanding that no one knows for sure what market variables are going to do. David shares more tips for improving the quality of your investing decisions on this episode.
Deliberative thinking vs reflexive thinking and the idea of wu-wei in investing
David outlines two main patterns of thought on this episode: reflexive (fast) and deliberative (slow). Responsible investors utilize both methods on a continual basis. Always reacting to the market and going off of intuition is not a sustainable way of making investing decisions. However, utilizing only deliberative thinking could result in missed time-sensitive opportunities. That’s when the idea of wu-wei comes into play. David explains that wu-wei is “A state of perfect equanimity, flexibility, and responsiveness that is unrestrained by the conscious mind because it does not attempt to predict variables.” Essentially, it’s the idea of embracing the unknown and keeping the balance between fast and slow thinking.
Episode Chronology
[0:57] Is investing more like poker or chess?
[7:02] Investing, and life, are like poker – not chess
[12:05] Don’t assume causation when there’s only correlation
[13:38] How do we improve the quality of our investing decisions?
[18:45] 2 ways of thinking about investing: fast & slow
[23:00] The idea of wu-wei and how it relates to investing
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202 What are the impediments to the mass adoption of electric vehicles. More information, including show notes, can be found here.
Episode Summary
Over the past few months David has been traveling across the country and throughout the trip, he’s covered thousands of highway miles and seen countless vehicles. This inspired him to ask the question, “Will my next car be electric?” On this episode of Money For the Rest of Us he outlines how the vehicle market is changing, the benefits of electric vehicles over gasoline-powered vehicles, main factors prohibiting widespread adoption of electric vehicles, and the impact governments can have on consumer buying decisions. Conversations behind renewable energy and reliable transportation abound, and you’ll want to listen to this episode for the latest information on this heated debate.
Cars are changing: they’re safer, but we’re purchasing less of them
In 2017 there were 40,109 reported motor vehicle deaths, down 1% from 2016 figures. The number of deaths per 100 million vehicle miles traveled has been on a downward trend for decades. This is due in part to enhanced motor vehicle safety laws but also refined manufacturing techniques. Cars are getting safer! However, consumers are purchasing fewer vehicles than in years past. Vehicle sales peaked at 17.9 million for the year ending in March 2018, compared to 18 million in the prior year. In 2017 electric vehicles surpassed 1% of the entire market – a nominal figure compared to future projections of 25% of the market being comprised of electric vehicles by 2040.
Electric cars are extremely efficient compared to gasoline-powered vehicles
Perhaps the most common argument in support of electric vehicles is their efficiency. Popular models such as the Ford Focus Electric and Chevy Volt top the list of efficiency on a kilowatt-hour (kWh) to miles per gallon (MPG) scale comparison. These two models boast 19-20 kWh used per 100 kilometers driven. Conversely, a traditional gasoline-powered vehicle that achieves 20 MPG efficiency requires 131 kWh of energy to travel 100 kilometers. As the world moves towards cleaner, greener, and more renewable sources of energy, efficiency will become an even more important factor in the debate.
What’s preventing electric vehicles from being widely adopted?
Since electric vehicles are far more efficient than their fossil-fuel powered counterparts, what’s preventing their widespread adoption? David outlines 4 main reasons on this episode of Money For the Rest of Us:
High upfront cost
Cost of battery
Production limitations
Limited infrastructure for charging stations
New electric vehicles start at around $30,000 and only go up from there. While battery costs are down from $1,000 per kWh of storage to $200, the cost is still prohibitive for many consumers. Battery replacement (while extremely uncommon) could have a price tag of over $5,000. Production lines are currently unable to mass produce electric vehicles at scale, which is an issue that must be corrected if the vehicles are to have a mainstream place on our highways. Finally, drivers must have reliable and widespread charging stations at home, work, and travel destinations in order for electric vehicles to be convenient.
How governments can encourage consumers to focus on electric vehicles for their next car purchase
Putting data and costs aside, one of the biggest questions David poses on this episode is, “Do consumers want electric cars?” There are many differences between traditional and electric vehicles that consumers will have to adjust to, such as the lack of engine noise, differences in braking, charging routines, etc. For example, David explains that even though the Chinese government offers financial incentives to purchase electric vehicles, consumers are still more interested in gasoline-powered SUV-style vehicles. Countries such as Norway, India, France, and the UK are all making progress towards mandating electric vehicles, and legislation can encourage manufacturers to pursue cheaper and faster production methods. Electric vehicles are here to stay, now it’s a matter of determining how many of them and for how much.
Episode Chronology
[0:35] David asks the question, “Will your next car be electric?”
[4:18] Why are cars safer?
[6:44] Cars are changing
[7:39] What’s preventing electric vehicles from becoming widely adopted?
[22:43] Do consumers want electric cars?
[26:58] Government policy can encourage or prohibit adoption of electric vehicles
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201 Why most conventional portfolios make huge and often unintended bets on the stock market. How role based investing can lead to a more balanced portfolio. More information, including show notes, can be found here.
Episode Summary
Having a balanced portfolio is a key to financial success. It offers a secure future and provides a level of security to your day-to-day lifestyle. On this episode of Money For the Rest of Us, David considers the question, “Is your portfolio unbalanced?” A new member of Money For the Rest of Us Plus introduced him to the book “Balanced Asset Allocation” by Alex Shahidi and it was the inspiration behind this podcast episode.
4 main reasons behind market volatility
Shahidi writes, “The ultimate goal is to capture excess returns over time, with as little risk as possible. The more volatile the return, the greater the risk of capital loss.” David explains that there are often unintended consequences of single-track investment strategies and that having too much of your portfolio invested in one asset class is not a good strategy.
Here are three main reasons as to why the market is volatile:
A shift in the economic environment
Shifting risk appetites
A shift in expectations of future cash rates (future path of short-term interet rates)
Every market segment has inherent biases in various economic environments
The key to avoiding market volatility is to hold multiple asset classes. These various types of assets will allow you to benefit in any type of market. For example, slowing economic growth is better for traditional bonds, while accelerating growth is better for stocks. TIPS and commodities do better when inflation is increasing. Even though most investors have a heavy bet on economic growth because of their stock-heavy portfolio, the arguments outlined in Shahidi’s book encourage otherwise.
Don’t be in the unenviable position of not receiving returns on your portfolio
The single most important takeaway from this episode of Money For the Rest of Us is this: Don’t rely on any single asset class to provide financial returns. Shahidi writes, “Own asset classes that are as volatile as stocks, but that perform better in different economic regimes.” Shahidi recommends 30% in long-term Treasury inflation-protected securities (TIPS), 20% in commodities, 30% in long-term bonds, and 20% in stocks. Collectively, this type of portfolio could generate excess returns above cash, although many investors might find the volatility of the underlying segments unsettling.
Why David DOES believe you can identify shifts in the market
Investing will never be 100% predictable, it’s the nature of the game. But David does believe, contrary to what Shahidi writes in his book, that you CAN identify shifts in the market. Before a shift occurs there are often red flags that can be identified and researched, even if it takes a dedication to objectively watching market conditions.
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200 Joshua Sheats from the Radical Personal Finance podcast and I discuss our different views regarding the national debt and the severity of the U.S. government fiscal situation. More information, including show notes, can be found here.
Episode Summary
Navigating a housing bubble is often on everyone’s minds. With changing family needs, balancing multiple incomes, and varying environmental factors, finding a great house is a struggle most families face. On this episode of Money For the Rest of Us, David responds to a listener’s question of how to navigate a housing bubble. He explains the idea of “economic gravity,” outlines factors that are influencing the global housing market, and offers solutions to the housing bubble crisis.
A housing bubble cannot break free from economic gravity
David discusses the idea of “economic gravity” on this episode. Simply, over the long-term housing prices can’t be disconnected from the ability of households to service a level of mortgage debt – to successfully make those payments every month. Nobel prize-winning economist Milton Friedman explains, “When (corporate) earnings are exceptionally high, they don’t just keep booming – they can’t break loose from economic gravity.” The same concept applies to home prices. When prices are high, they can boom for an exceptionally long time. But they cannot break free from this underlying economic concept.
Factors that are driving up the global housing market
Housing bubbles are being created across the globe because of a few major factors. Low interest rates, offshore demand for domestic property, influxes in immigration, and interest only loans are all contributing factors to the housing bubble discussed in this episode of Money for the Rest of Us. David draws many parallels between the US housing market and those in Australia and Canada.
Housing markets don’t always align with growing family needs
Joe, the Money For the Rest of Us listener that submitted the question for this episode, is seeking different housing for his family as it grows and shifts. But he’s finding that unfortunately, housing markets don’t always align with growing family needs. Better school districts, larger homes, easier commutes, etc. are all factors that millions of Americans are seeking for their prospective homes. David encourages listeners to consider what type of housing their family can reasonably afford and still maintain the type of lifestyle they desire. You never want to purchase a house that you cannot comfortably afford. To hear more about the housing market in the US today, data on current housing prices across the country, and even more great information, don’t miss this episode.
3 ways you can respond to rising house prices
After considering all the data related to the housing bubble and overall market in your area, you essentially have 3 options:
You can stay put
You can move to a cheaper locale
You can buy, while being patient and prudent
In order to make the most of the housing opportunities for your family, David encourages every listener to consider their personal affordability and examine their ability to handle unforeseen financial stress (loss of a job, medical emergencies, etc.) Navigating a housing bubble is challenging, but this episode of Money For the Rest of Us can help you make sense of all the angles. Be sure to listen.
Episode Chronology
[1:05] A listener poses a question about how to handle a housing bubble in his area
[6:47] Current data on the American and international housing bubbles
[10:02] Is the current housing bubble starting to break?
[10:57] What factors are driving the home prices in Australia, for example?
[12:41] Comparing the Canadian housing bubble to Australia’s
[15:45] So what should you do during a housing bubble?
[18:09] Housing markets don’t always align with growing family needs
[21:36] How to combat the factors driving up housing prices
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199 How a bank panic led to the creation of the Federal Reserve, and why having diversified sources of money can protect us in case we have a bank panic today and can't get access to our bank deposits. More information, including show notes, can be found here.
Episode Summary
Asking the question “What kind of money is it?” may seem a bit unnecessary. Everyone knows what money is, what it does, and why it exists. However, on this episode of Money For The Rest Of Us, David explains the different types of currency, why the bank panics of the 19th and early 20th centuries defined American banking today, and why it is so important to diversify your types of money holdings.
How the Panic of 1907 defined the American banking systems we see today
Thousands of Americans sadly learned that grand architecture could not shore up failing banks during the Panic of 1907. Massive amounts of money were lost due to failing institutions, party because only 5% to 25% of all deposits were held in cash. When citizens caught wind of the failures and wanted to immediately withdraw their holdings, the banks and trust companies could not fulfill their requests. A similar situation happened during the financial crisis of 2008 when the liquidity for banks lending to Wall Street dried up. David takes these complex scenarios and breaks them down into manageable ideas.
Why were bank panics so common in the 19th century?
Events such as the Panic of 1907 were common in the 19th century because there was not a central bank that could provide liquidity in times of crisis. Each state and national bank had their own currency. This proved to be unstable. The U.S. central bank, the Federal Reserve, was created as a reaction to the original Panic of 1907, and the US dollar as issued by the Federal Reserve began in 1914. The original gold standard lasted until 1933 when Americans could no longer redeem their notes for physical gold at the Federal Reserve.
The 7 main characteristics of money, no matter the type
There are seven main characteristics of money that tie different forms of currency together. They include the issuer, the form, the accessibility, the transfer mechanism, the availability, interest-earning capabilities, and the level of anonymity. Different types of currencies have some or all of these characteristics and each has a varying level of liability attached to it. David weighs the pros and cons of bank deposits, cash, central bank reserves, cryptocurrencies, and gold.
Diversification in your money is important for those “just in case” scenarios
David and many other investors are strong proponents of diversifying the different types of money you hold. Understanding that no system is fail-proof, and having different types of money that you can access at different times, will ensure your financial survival in the event of a financial crisis. While a panic that approaches the level of severity of the 1907 crisis is uncommon, nothing is impossible. Smart investors have a backup plan that could support their livelihood in the event of a system disruption.
Episode Chronology
[0:14] David introduces his topic for this episode, “What kind of money is it?” and discusses the Panic of 1907
[6:10] The financial crisis of 2008 as it relates to the 1907 crisis
[8:25] Why were financial panics so common in the 19th century?
[11:12] Hoarding gold resulted in a complete shift in how money is backed during the Great Depression
[15:43] The main 7 characteristics of money
[23:16] Using gold as a currency
[23:53] Cryptocurrency and its taxonomies
[25:12] What happened during the Panic of 1907?
[26:00] Why diversification in your money is so important
[29:13] What’s coming up on the 200th episode of Money For the Rest of Us
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198 Why save for retirement if capitalism is going to collapse and/or universal basic income will be available. How millennials can lead the next work transition. More information, including show notes, can be found here.
Episode Summary
Capitalism, universal basic income, socialism, and artificial intelligence are all tied together in America’s current economy. Today’s millennials are asking big questions about the future of the national economy and what place AI has in the job market. On this episode of Money For the Rest of Us, David tackles these questions and contemplates the idea of a universal basic income. The keys to successful capitalism and fulfilling employment are also discussed.
Why aren’t millennials saving for retirement?
David explains on this episode of Money For the Rest of Us that 66% of millennials have nothing saved for retirement. Why aren’t millennials investing in their own future? Some aren’t committing to a savings plan for retirement because they don’t believe capitalism will exist by the time they retire. Some even think socialism could it be a great retirement plan. There are, of course, many different degrees of socialism, including some that emphasize a market economy. David shares some of the negative consequences of state controlled socialism as practiced in Venezuela and Cuba.
Artificial intelligence is not going to take over the world, but it will lead to a cultural shift and a consideration of universal basic income
Why artificial intelligence is accelerating rapidly, AI is not going to take over the world as in some dystopian horror story. AI machines do not have the ability to be creative or complete multifaceted, complex tasks. So-called “weak” AI that is currently available can only complete one-track tasks, all of which must be pre-programmed. However, AI machines will eliminate the need for humans to complete repetitive and routine tasks. Since millennials are already shirking these factory-like positions, the only thing that will change in today’s economy once artificial intelligence becomes mainstream is the way we think about employment and entry-level positions. Since AI is set to potentially replace 50% of jobs over the next 20 years, significantly increasing the productivity of the economy in terms of the ability to produce goods and services with less resources, businesses, households and governments will need to grapple with how people will get income to pay for the ample supply of goods and services that will be available.
State controlled economies should be feared, not something to look forward to in the American economy
A top down, state controlled economy lacks the bottom up, creative dynamism of capitalism, although even capitalism has rough edges that need to be addressed in terms of an adequate social safety net. David explains what is currently occurring in Venezuela. The Venezuelan government has completely destroyed their nation’s economy, with 50% of the GDP collapsing since 2012. High-ranking politicians are using food vouchers as incentives for reelection votes and basic human needs are being preyed upon for political success.
Capitalism occurs when passion, creativity, and market needs intersect
Capitalism flourishes when people unite their creative passions with market needs. David explains that when people “have their soul in the game,” projects take off and success comes much easier. It starts small, often grows into a full-fledged business, and can grow exponentially from there. But creativity is often dampened in a state-controlled environment. Individuals need to feel fulfilled and excited by their work. While universal basic income could serve as a safety net within the broader scheme of capitalism, it cannot be the only option.
Episode Chronology
[0:42] David introduces his topic for this episode, “Capitalism is Creation”
[1:55] Why aren’t millennials saving for retirement?
[6:07] Why artificial intelligence is not going to take over the world
[8:45] Massive job decimation due to artificial machines and the idea of universal basic income
[11:34] How constrained capacity is eliminated through AI
[12:27] Why state controlled socialism is something to fear and the Venezuela case study
[16:04] Unique, fulfilling work often starts with an idea and a passion to create
[22:40] Investing, just like capitalism, starts small and grows
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197 Why having less things and activities gives us more freedom and happiness. Why low probability risks are unacceptable if the consequences affect all of us. More information, including show notes, can be found here.
Episode Summary
The inspiration behind this episode came from the idea of the power of local and less, from Nassim Nicholas Taleb’s book Skin in the Game. David discusses the power behind experimenting at the local level in order to avoid systemic risk, as well as why less is more when it comes to happiness.
Living in a via negativa mindset can set you free
Taleb writes extensively about “via negativa” in his book, which explains that “The act by removing is more powerful than acting by addition.” If having nice things means working long hours at a job you hate while sacrificing time with your loved ones, then perhaps having nice things shouldn’t be the end goal in life. If you’re not concerned with physical “stuff,” then you are free to live your life and pursue your greatest joys without the burden of material goods. David argues that if you’re not happy with less, then you certainly won’t be happy with more.
By removing the negative aspects of your life, you can increase your level of overall happiness.
A simple landscaping example illuminates this idea perfectly. If a wonderful hotel has impeccable landscaping, but the surrounding grounds are littered with trash and clutter, then the only thing one must do to improve the overall situation is to remove the clutter – not add more landscaping! Since via negativa states removing unnecessary or unwanted parts of your life will result in greater levels of happiness, it only makes sense to conclude that adding things will not give you the same result. People spend decades collecting items that they do not need or truly want. And the more they seek, the less happiness they find. For true happiness, one must appreciate all the good things in life and simply live day to day in a joy mindset.
Why taking action against climate change is so critical, due to the precautionary principle
While seemingly unrelated to via negativa, the second major principle discussed on this episode is just as critical. The precautionary principle is what drives Nassim Nicholas Taleb to take action against the global threat of climate change. Taleb argues that If an action could potentially destroy the planet, it is on those who pollute to show a lack of tail risk. So much of the controversy regarding climate change is about the accuracy of the scientific models, but what would the correct policy be if we had no reliable models? We only have one planet. Even a risk with a very low probability is unacceptable when it affects all of us – there is no reversing a mistake of that magnitude. If we don’t fully understand something, and it has a systemic effect, we should avoid it completely. This episode of Money For the Rest of Us makes an undeniable case for why every single person should care about climate change, and you need to hear it.
How to change the world at the micro level, starting with a single business
Changing the world on the macro-scale sounds romantic, but it is simply not feasible for the vast majority of people. To truly do good in the world and make a difference, David urges his listeners to simply start at the local level. Start a business in your community and spend freely at other local businesses. Get to know your neighbors and care about their lives. Take bounded risks, don’t attempt to change the entire system, and tinker at the micro level until you see some good come from it. All this and more is covered on this encouraging episode of Money For the Rest of Us.
In This Episode You’ll Learn
[1:00] David introduces his topic for this episode, “the power of local and less”
[2:12] The first main idea for the episode, via negativa, is discussed
[6:47] So how do we solve this pursuit of unreachable happiness?
[9:29] A second example of living through via negativa
[12:45] David shares a third example of a via negativa lifestyle
[15:51] Why David and author Nassim Nicholas Taleb believe in taking action against climate change, due to the precautionary principle
[21:20] How to change the world by starting a business
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196 Why relying on averages is dangerous given our fate is often determined by extreme events and how we react as financial markets, the economy and our own lives evolve. More information, including show notes, can be found here.
Episode Summary
As people age, one of the most common questions asked is “how can I survive financially?” The world is filled with unpredictable markets, unforeseen circumstances, and lifestyle events that may impact your ability to be financially secure. On this episode of Money For the Rest of Us, David explains some key concepts for fiscal survival long into old age. You don’t want to miss his insights, so be sure to give this episode your full attention.
How you can survive financially even throughout a long lifespan
David begins this episode by describing a man he met that is in his 101st year of life. This man has survived long past the median lifespan prediction for the United States and he is still living independently while being financially secure. In order to live happily into old age, you must first survive. You cannot begin to plan for retirement without first having your basic necessities taken care of. After you have secured the main pillars of survival, there are ways to have an investment portfolio last 40 to 50 years of retirement. David explains that “time removes the fragile and keeps the robust.” The longer your portfolio survives, the likelier it is to continue surviving.
What truly matters is how you react to the unpredictable risks that enter your life
Even the best financial consultants and investment specialists cannot predict the minutiae of life. Markets will rise and fall, family dynamics will shift, and your personal circumstances will always be ebbing and flowing as you age. Long-term financial success comes from understanding how much risk you are willing to take with your investments, evaluating the potential returns, and understanding that “the world cannot be solved, it must be lived.” David encourages his listeners on this episode to be self-aware and understand how to handle dramatic shifts in circumstances. Learning how to properly mitigate negative changes to ensure your financial security is also critically important.
So how can you combat these unforeseen variables?
In addition to being self-aware and knowing your own decision-making strengths and weaknesses, David explains that there are multiple ways to protect your financial future. You can mitigate the tail risks of stocks by investing in the following different areas: public securities, public entities, gold, land, and single premium immediate annuities. The added layer of Social Security is also a good thing to keep in mind, however, it should not be solely relied upon.
The 4% spending rule and the importance of having multiple streams of income
Perhaps the biggest idea to take away from this episode of Money For the Rest of Us is the 4% spending rule, as explained by David after he read the article “Does The 4% Rule Work Around The World?” by Wade Pfau. Pfau explains that historically with a US-based portfolio, one could live comfortably financially by spending 4% of your portfolio for the first year of retirement and then adjusting that percentage for inflation in every subsequent year. However, given the high valuations for stocks and the low yields for bonds, a spending rule of less than 4% would be more appropriate, especially considering the possibility of a 50 year retirement. By combining the a conservative spending rule, multiple streams of income, and a high level of self-awareness regarding your tendencies, you can protect your financial future and survive well into retirement.
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195 Why duties and other actions are necessary to address trade disputes, but across the board tariffs are a blunt instrument that can lead to a devastating trade war and global recession. More information, including show notes, can be found here.
Episode Summary
With President Trump recently unveiling new tariffs, many investors and economists are asking the question, “has a trade war begun?” On this episode of Money For the Rest of Us, David Stein explores this idea and explains the new tariff plans, the potential impacts on the steel and aluminum industries, and why there are better solutions to the complex trade system than just blanket tariffs.
Why new tariff plans were created and the concern surrounding national security
When President Trump unveiled his new tariff plan and claimed via Twitter that “trade wars are good and easy to win,” the stock market fell 2% and people across the world began asking countless questions. Are these tariffs going to apply to every single country, even longstanding US trade partners? How will this impact the US economy? To answer these questions, David explains that trade investigations regarding steel, aluminum and oil imports have occurred several times in the past, and one of the main goals is to determine if competition from imports is having a negative impact on national security. National security goes beyond just national defense and include impacts on the overall domestic economy.
Recent findings and insights on the 2018 aluminum report
The January 2018 report on the aluminum industry found that there is a connection between the economic welfare of the US and national security because of the loss of skills, higher amounts of foreign investments, the unemployment rate of US forces, and many other reasons. Since the US aluminum industry is only operating at 43% of capacity, and aluminum imports comprise 90% of consumption and are up 60% from 2012, the Department of Commerce determined that aluminum imports are directly impacting national security. The report found domestic aluminum production was becoming unstable and nearing a point where US forces would be unable to respond to a national emergency that would require an increased level of production.
How do the findings on the steel industry differ from those of the aluminum industry?
When compared to the findings of the aluminum study, the US steel industry and the impact of foreign steel are not nearly as dramatic. While imports have increased due to foreign competition, there’s no shortage of domestic steel. Imported steel only makes up approximately 30% of US consumption, and the Department of Commerce recommendation for taking action was because steel imports were weakening the U.S. economy rather than there being insufficient steel to meet national defense needs.
Additional solutions that could prevent a trade war and why trade needs to be viewed as a complex system
After reviewing the latest findings on steel and aluminum in the United States, David explains why there are more effective solutions to global trade and imports than just blanket tariffs. Even if tariffs are deemed to be the best solution, they should be addressed on a country-by-country basis. Existing legislation such as the Defense Production Act of 1950 and the Buy American Act of 1933 already address the issue of foreign imports. Across the board tariffs could negatively impact longstanding trade partners, and U.S. exports could be taxed at a much higher rate in the coming months. While it is normal to want to protect a nation’s workforce and industries, it cannot be done in such a way that jeopardizes a country’s ability to interact with other countries’ economies. Global trade is a complex system that must be viewed as a whole, rather than individual parts. The long-term impacts of these recent developments are sure to spark continuing conversations, but to hear a stellar synopsis of the trade issue today be sure to listen to this podcast episode of Money For the Rest of Us.
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194 Four investment lessons from Berkshire Hathaway's fiscal year 2017 Shareholder Letter with additional insights from Howard Marks and Seth Klarman. More information, including show notes, can be found here.
Episode Summary
Every year, Berkshire Hathaway releases a letter written for their shareholders filled with information on their performance, portfolios, and investments. On this episode of Money For the Rest of Us, David digs into the 2017 letter and discusses four investment lessons Warren Buffet shares. It’s filled with great insights that any independent investor shouldn’t miss, so be sure to check out this informative episode.
Investment Lesson #1 – Use debt prudently
Buffett writes in this letter, “Investing is an activity in which consumption today is foregone in an attempt to allow greater consumption at a later date. ‘Risk’ is the possibility that this objective won’t be attained.” On this episode of Money For the Rest of Us, David encourages his listeners to utilize debt in such a way that maximizes future opportunities while also managing the risk that comes with taking on debt. He discusses the idea of “float” money, how one investor could have avoided losing half of his portfolio, how to manage margin calls, and why you have to be confident in your decisions as an independent investor.
Investment Lesson #2 – Keep your eyes open and focus on a few fundamentals
It takes patience, but independent investors can focus on the leading edge of the present and invest in ways that major corporations may not be able to do. One must simply be aware of the opportunities that are occurring right now as well as focus on a few fundamentals: valuations, economic trends, portfolio drivers, asset classes, etc. David quotes Buffet on this episode and explains that “Though markets are generally rational, they occasionally do crazy things. Seizing the opportunities then offered does not require great intelligence, a degree in economics or a familiarity with Wall Street jargon such as alpha and beta. What investors then need instead is an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals. A willingness to look unimaginative for a sustained period – or even to look foolish – is also essential.”
Investment Lesson #3 – Stick with easy decisions and avoid excessive trading
Unfortunately, trying to outsmart the market can lead to short-term gains but longer-term mediocrity in investing. David outlines a bet that Warren Buffett made with Protégé Partners and how Buffett learned that sticking with the big, easy decisions often pays off more than getting caught up in the minutia of constantly buying and selling. By making infrequent, larger decisions an independent investor can make better progress in their portfolio.
Investment Lesson #4 – Be willing to be early and look foolish
Investing is never a guaranteed game. All investors have a fear of looking foolish after making a decision, but Buffett explains that “A willingness to look unimaginative for a sustained period – or even to look foolish – is essential.” David talks about the importance of gaining experience, not becoming caught up in the crowd mentality, and understanding that the “dust never settles” when it comes to finances. There will always be risks to take, and timing can be unpredictable. But with considerable risk comes comfortable reward. For more great information on the 2017 Berkshire Hathaway Shareholder Letter, be sure to listen to this episode of Money For the Rest of Us.
Episode Chronology
[0:46] David introduces the topic for this episode, Four Investment Lessons from Warren Buffett
[2:15] Lesson #1 – Use debt prudently
[12:46] Lesson #2 – Keep your eyes open and focus on a few fundamentals
[17:17] Lesson #3 – Stick with easy decisions and avoid excessive trading
[24:00] Lesson #4 – Be willing to be early and look foolish
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193 How planning helps us avoid catastrophic errors while maintaining flexibility and margins of safety allow us to thrive even if our plans don't work out. More information, including show notes, can be found here.
Episode Summary
There are two sides to the “why plan if life is so unpredictable?” debate that David talks about in this episode of Money For the Rest of Us. Some individuals believe you should plan even though countless variables exist, and others insist on not planning for even the slightest event. David has found that in every aspect of life, the only predictable idea is the fact that nothing is 100% predictable. He also believes that there must be a healthy balance between planning for the future and living life day by day. To hear David’s solutions to this age-old dilemma, and to learn how to maintain a healthy level of financial flexibility, be sure to listen to this episode.
Is failure an option? Or are minor mistakes irrelevant as long as the bigger picture is intact?
David discusses two companies in this episode that perfectly illustrate the question “why plan?” NASA is famous for operating under the “failure is not an option” mindset. After the devastating loss of the Challenger Space Shuttle in 1986, redundancy and extra precautions were built into every level of operation. While avoiding catastrophic mistakes is certainly of great importance, NASA’s high level of caution often leads to inflated costs and drawn out construction timelines. In a recent article published by Financial Times, John Thornhill writes about another aerospace company called Planet. Planet has deployed the world’s largest fleet of private satellites that circle the globe taking photos of Earth’s every inch. These nanosatellites known as CubeSats are not high-resolution cameras and they can cost as little as $20,000 to create. If one (or even a handful) of Planet’s satellites fail, it may be considered a failure but it does not threaten the operation of the entire network. Planet operates within the idea of failure being acceptable, as long as the greater goal is still being accomplished.
Determining the right timing for action is often the most challenging part of financial planning
Once you have decided that small failures are okay for your own financial decisions, you must then determine how to know when to act. When deciding when to sell, buy, or invest you should wait until the time is right, but understand that life happens and things will come up when you least expect them. For example, David explains how he used the tool Portfolio Visualizer to model retirement planning outcomes but the success depends on the assumptions used and the range of potential outcomes is wider than what we are typically comfortable with as individual investors. We are often taught that there is a single right answer to investment questions and not a range of correct answers that occur in actuality. It’s important to remember that there will not always be a clear path or “correct” decisions when planning for your financial future and that you often must simply go with your best guess and avoid catastrophic failures at all costs.
Why there are no mathematical shortcuts for the variables of life and the importance of being flexible when planning for your future
Unfortunately, there is not a tool that allows us to peer into the future to see how decisions will play out. Richard Bookstaber has stated so thoughtfully that “The world cannot be solved, it must only be lived.” There are no concrete answers for financial planning, but one thing is certain – life always comes with a level of unpredictability. Being able to have multiple streams of income and having a healthy level of concern over decisions while still moving forward are all critically important concepts.
Why plan for your financial future? To know how to survive another day
We plan for our futures because it helps us avoid disastrous errors that threaten our ability to survive financially. We play the game of finances while selecting which moves allow us to “lose the slowest” and survive to see another day. We plan to avoid the fundamental mistakes, but we live day by day in order to be flexible.
Episode Chronology
[1:42] David introduces the topic for this episode, “Why plan if life is so unpredictable?”
[5:27] The idea of disruptive innovation, and why balance is key when planning your life
[8:38] David explains multiple portfolio simulations while planning for a variety of variables
[13:49] Insights on return model expectations from a recent paper on the Occam’s Razor Redux
[15:53] Getting our timing right can be the biggest part of the challenge
[18:58] Why there are no mathematical shortcuts for the variables of life
[22:18] You have to use flexibility and care when planning for your financial future
[26:01] It’s impossible to live in such a way that you won’t get damaged at all
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192 In this episode we explore scarcity. Artificial scarcity created by laws and real scarcity created by our evolving lifestyles and economy. We'll see that most physical products, with drinking water being an exception, are becoming less scarce while trust and attention are becoming more scarce. More information, including show notes, can be found here.
Episode Summary – Is Anything Scarce Anymore?
Scarce goods and services have been a topic of debate since the original intellectual property (IP) laws were created. Products are getting cheaper to produce, but high-quality services are still in demand. On this episode of Money For the Rest of Us, David tackles the issue of scarcity with clear explanations and timely resources that are sure to help you understand this complex idea. You don’t want to miss his insights, so be sure to listen to this episode.
The history of economics, scarcity, and why intellectual property laws are outdated
David explains on this episode that the original purpose for IP laws was to ensure people would continue to create quality ideas and content. While these laws worked in theory, they created a level of artificial scarcity. Mark Lemley of Stanford Law, explains that “IP rights are designed to artificially replicate scarcity where it would not otherwise exist. In its simplest form, IP law takes public goods that would otherwise be available to all and artificially restricts their distribution. It makes ideas scarce because then we can bring them into the economy and charge for them, and economics knows how to deal with scarce things.” While certain protections should be given to creators, scarcity needs to occur in an organic way in order for it to be effective. David illuminates this concept through the lens of TED talks and conferences. TED is able to publish all of their talks online – with full audio, video, and transcripts – because tickets to the physical conference cost hundreds or thousands of dollars.
How free content can still be turned into a money-making venture
David features Cory Doctorow’s work on scarcity on this episode, and quotes him as saying “Although it’s hard to turn fame into money in the arts, it’s impossible to turn obscurity into money in the arts.” Essentially, even if a creator produces exceptional content, no one will know about it if they’re 100% obscure and protected. Technically speaking, this aversion to positive externalities permits the creator to live in fear of someone benefiting from their work for free. Without digital and word-of-mouth exposure, you won’t make money – period. Thus, the free content you produce and distribute can drive interested parties towards your other content, such as books or fee-for-service courses. There will always be paying customers for quality work, even if you have to get them to the door with free content.
What elements are actually scarce in the 21st-century marketplace?
While physical goods and products aren’t as scarce as they once were, scarcity is still widely prevalent in intangible elements such as trust, attention, and time. David features Seth Godin’s work on this episode of Money For the Rest of Us as he explains, “Trust is scarce because it’s not a simple instinct and it’s incredibly fragile, disappearing often in the face of greed, shortcuts or ignorance. And attention is scarce because it doesn’t scale. We can’t do more than one thing at a time, and the number of organizations and ideas that are competing for our attention grows daily.”
The connections between automation, scarcity, and value in today’s society
It’s much easier to automate a vehicle assembly line than it is teaching a child to read. This simple idea of product versus service connects to the broader idea of scarcity because even though it’s much easier to produce goods efficiently and cheaply, most services could never attain that level of automation. David explains that for each episode of Money For the Rest of Us, he spends 8 to 10 hours in pre-production, recording, and post-production work. For as long as he’s been podcasting, this timeframe has not considerably shrunk. This is because quality services and products that require human creativity cannot be automated. Scarcity is found in these areas, and it’s not going anywhere. The solution to true scarcity is simple: create something unique, it will earn attention and trust organically, and that’s how you grow your customer base and build a business in the 21st century.
Episode Chronology
[0:11] David introduces the topic for this episode, “Is anything scarce anymore?”
[3:30] The history of economics and scarcity viewed through a TED talk lens
[6:01] How “free stuff” can still be turned into a money-making venture
[8:07] What elements are actually scarce in today’s market
[10:43] Why there’s always an audience that’s willing to pay for quality content
[13:20] How automation is determining scarcity and value in today’s society
[21:08] The true scarce physical item – drinking water
[22:30] The delicate dance between trust and attention
[24:19] Net neutrality as it relates to scarcity
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191 Why interest rates are rising and what could happen to bonds, stocks and the economy if rates returned to more normal levels. More information, including show notes, can be found here.
Episode Summary – Has A Bond Bear Market Begun?
On this episode of Money For the Rest of Us, David Stein walks you through the complex idea of a bond bear market. He explains that a market consisting of losses of 20% or more are considered a bear market type loss and that this type of loss is possible even in the bond market. David states that “It’s important to understand what drives interest rates, how high they could get, and what the ramifications of that are.” Be sure to listen to this full episode to fully understand this idea and to hear some of David’s suggestions for investing in a rising interest rate environment.
When was the absolute low in interest rates and the beginning of the bond bear market?
After the Brexit vote, in early July 2016, ten-year treasury bonds were yielding 1.37%. Today, they’re yielding 2.85% with an annualized return over that period of approximately negative 4.5% annualized. Ray Dalio, the founder of the hedge fund Bridgewater Associates and author of “Principles,” explains, “A 1% rise in bond yields will produce the largest bear market in bonds that we have seen since 1980-1981.” Investors around the globe are asking big questions about what these changes in interest rates mean, and David does a great job of explaining the issues on this episode of Money For the Rest of Us.
The simplest way to dissect the complex idea of interest rates
With a discussion of the bond bear market comes many moving parts. David seeks to explain the concepts while utilizing the analogy of cutting an apple. An apple can be cut in many different ways, and each method uncovers a new way of looking at the apple and its pieces – in this case, interest rates. There are two main interest components that are discussed in this episode of Money For the Rest of Us: inflation expectations and real rates (i.e. your return after inflation.)
Analyzing how high interest rates could rise by decomposing the nominal yield into the expected path of future short-term interest rates and term premiums
Not only does David explain the idea behind a bear market on this episode of Money For the Rest of Us, he also examines nominal yields and how they can be dissected into the expected path of future short-term interest rates and term premiums. While the drivers behind climbing interest rates cannot always be observed directly, these two main factors shed light on just how high interest rates could climb in the coming years. Also, learn how the Federal Reserve estimates the path of short-term of interest rates and why term premiums are countercyclical and tend to rise when there is a great deal of investor uncertainty.
How do supply and demand factors impact these interest rate scenarios within a global market
As with many other industries, the reality of supply and demand impacts every aspect of the financial market. It is predicted that in 2018 the United States Treasury will have net new issue of $1.3 trillion in treasury bonds and the national debt will continue to rise. This new influx of debt will need to be purchased by the market, but the Federal Reserve is reducing the amount that it’s purchasing – their bond holdings will decrease by 10% over the next year. International buyers will become an even more important cog in the wheel, and David comprehensively explores the global supply and demand structure on this episode of Money For the Rest of Us. You also don’t want to miss his bear market investment suggestions, so be sure to listen.
Episode Chronology
[0:38] David poses the question for this episode, has the bond bear market begun?
[3:59] When was the absolute bottom in interest rates and the beginning of the bond bear market?
[5:29] The simplest way to dissect interest rates into their subcomponents.
[7:41] How much higher could these rates get?
[15:02] The question is, in a bond bear market, how high could interest rates go?
[20:21] How global supply and demand could impact the bear market scenario
[22:48] What do we do about all of this?
[25:35] Why markets are becoming worried about these interest rate changes
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190 What investments are best for maintaining purchasing power relative to inflation. Using the pencil as an example, how inflationary and deflationary forces work together over decades to determine the price of product. More information, including show notes, can be found here.
Episode Summary – How To Keep Up With Inflation
Businesses and individuals are asking questions such as “How can we protect our earnings and purchasing power? How do we invest smartly while keeping inflation in mind?” On this episode of Money for the Rest of Us, David Stein takes an in-depth look at inflation and the causes behind it by examining the issue through the lens of a case study on pencils. You don’t want to miss out on his thorough explanation, so be sure to listen to this episode.
Forces that contribute to inflation and deflation as viewed through a case study on pencils
The simple pencil is an extraordinary example of the inflationary and deflationary factors that influence nearly every aspect of consumerism. In 1844, U.S. made pencils sold for $0.75/dozen, or $6.25/dozen in today’s dollars, but pencil costs did not keep up with overall inflation rates. With the invention of pencil-making machines, the world soon saw a drastic increase in the number of pencils being produced, but consumers already had an “anchored price point” in their minds. Their understanding of what a pencil was valued at and what it should cost did not reflect the actual costs. Essentially, cost savings were not passed onto consumers.
Why great selling environments for pencil manufacturers didn’t last long
Even though the demand for pencils was drastically increasing in the early 20th century, manufacturers were quickly plagued with a number of issues: decreasing amounts of American red cedar wood, a large influx in foreign orders, and a variety of other capacity constraints. As the industry began to examine the possibility of using secondary wood sources and increasing the productivity power of machines, price points for pencils continued to shift.
Additional inflationary and deflationary factors that impacted pencil production
As the pencil industry began to move into the 21st century, there were many factors that greatly influenced its path. Deflationary pressures such as imports from low cost countries and quality and productivity improvements led to lower pencil prices. However inflationary factors such as rising raw material costs, capacity constraints due to increased demand, and higher wages also greatly impacted the industry.
Consumer behavior as it relates to inflation and investment suggestions to combat inflation rates
With the story of the pencil’s journey in mind, David shares his top suggestions for ways to invest to keep pace with inflation. Inflation not only affects hard facts and figures but influences the mindset of American consumers and businesses. Because there is no guarantee that current inflation rates will stay low, having inflation hedges in your portfolio can be helpful, including stocks, real estate, raw land and gold. Inflation indexed bonds such as treasury inflation protected securities (TIPS) are also good options even though they currently have low yields. Exchange traded funds that invest in commodities should ideally also keep up with inflation, but in the episode David explains some of the drawbacks to investing in commodity futures via ETFs.
Episode Chronology
[0:15] David introduces the topic for this episode, how to keep up with inflation
[4:02] Forces that contribute to inflation and deflation viewed through a pencil case study
[13:58] How a quality improvement to pencils changed the mindset on cost, value, and inflation
[17:34] Why good times for pencil manufacturers didn’t last for long, due to capacity constraints and rising commodity prices
[20:10] How the pencil cost continued to decrease because of additional wood sources
[22:15] Why cheap imports continued to impact the industry
[23:31] Summary of the deflationary and inflationary pressures
[24:35] Consumer behavior as it relates to inflation
[28:16] How stocks can be an effective inflation hedge
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189 Will increasing the minimum wage help or harm workers and businesses? How many U.S. workers are paid at or below the minimum wage? More information, including show notes, can be found here.
Episode Summary – Should The Minimum Wage Be Raised?
Nearly every employee in the United States has grappled with the minimum wage question at some point in their lives. High schoolers, recent college graduates, and older workers all ask themselves, “Can I survive on an hourly job making the minimum wage?” Professors, industry leaders, and government officials debate over if the national minimum wage should be raised, and if so, by how much? Join David Stein as he sheds light on this challenging episode and uncovers truths behind the minimum wage in the United States today, where the workforce is headed in the future, and some creative potential solutions.
The current state of the minimum wage in the United States
The minimum wage was initially created in the 1930s to prevent employers from forcing workers to work for pennies on the hour. Businesses and governments at every level were asking themselves, “Can companies survive if they are forced to pay workers a set amount?” Today, that same question is being asked. While the minimum wage has come a long way from the original $0.25/hour amount – the current national minimum wage is $7.25/hour – a large portion of the workforce is still being paid hourly. According to the Bureau of Labor Statistics, 80 million workers aged 16 and up work hourly, with 701,000 making exactly $7.25/hour and 1.5 million earning less than minimum wage. For more statistics on the current state of the minimum wage workforce, be sure to check out the full episode.
What is the impact on the workforce if the minimum wage is raised?
There are countless short and long-term impacts on the American workforce that would arise from raising the minimum wage. While short-term impacts are nearly indistinguishable from not changing the minimum wage at all, many jobs will be lost in the long run as a result of raising the minimum wage. As explained in the “Wage Shocks and the Technological Substitution of Low-Wage Jobs” research article, automation is quickly substituting humans in routine cognitive jobs – and contrary to popular opinion these jobs are not being lost to offshoring either. To hear more about the varying impacts from raising the minimum wage, be sure to listen to this episode of Money For the Rest of Us.
Three enlightening findings from the most recent study on the minimum wage
According to the article “Industry Dynamics and the Minimum Wage: A Putty-Clay Approach” there are three major findings surrounding the minimum wage that employers need to be paying attention to. The first discovery found that the exit and entry of low-wage restaurants in the marketplace increases in the year following an increase in the minimum wage rate. But, over time, the low-wage restaurants were substituted with more capital-intensive establishments. The article also explains that in every case study examined, the cost of higher minimum wages were fully passed onto consumers in the form of higher prices. Finally, the article demonstrates that the impact of minimum wage increases grew over time.
Why raising the minimum wage isn’t the solution
David explains that essentially, raising the minimum wage increases the level of automation in the workforce, while simultaneously increasing the level of vulnerability for hourly-paid workers. It’s no longer enough for companies to simply work to maximize their own profits. Industry leaders must begin to ask themselves questions such as: “What role do we play in the community? How are we managing our environmental impact? How are we helping our employees adjust to an increasingly automated world?” Your personal ability and your company’s ability to help create a fair work environment for all will greatly benefit from listening to this insightful episode of Money For the Rest of Us.
In This Episode You’ll Learn
[0:15] David asks the question for this episode, should the minimum wage be raised?
[5:44] Current state of minimum wage in the United States
[8:33] What is the impact on the workforce if the minimum wage is raised?
[11:07] Three major findings from “Industry Dynamics and the Minimum Wage: A Putty-Clay Approach”
[13:33] “People Versus Machines: The Impact of Minimum Wages on Automatable Jobs”
[17:01] David shares his personal experience surrounding minimum wage jobs
[21:24] Why raising the minimum wage isn’t the solution
[24:30] The call-to-action for employers and industry leaders
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188 How our net worth is more than our financial capital but includes our lifetime earning capacity or human capital. What role does debt play in investing in human capital and how our human capital impacts how we allocate our financial investments. Why stocks aren't less risky in the long-term. How to invest a lump sum payment and how I recently did so in today's market environment. More information, including show notes, can be found here.
Episode Summary
At some point in our lives, we all have to deal with the issue of debt. It’s a specter that hangs over our heads and gives us an uneasy feeling until it is gone. Debt has a cost, naturally so because it demands interest all the time. A question that comes up often is whether or not it is better to pay off debt immediately, primarily because it IS debt, or if a better return can be achieved, should available money be placed into investments instead? You could run the numbers and figure out what looks best on paper and go with that. But the answer is honestly not that simple. This episode is designed to walk you through many of the issues that should be considered when answering the question.
If it costs you less numerically to pay interest on loans than you could make on investments, you should invest instead of paying off debt, right? Maybe it’s not that simple
Let’s do the math. If you are paying 5% for your home mortgage and have a lump sum of cash available to pay it off, but you also have the opportunity to lend the money to a real estate crowdfunding platform with a guaranteed return of 9%, isn’t it true that you would make 4% more by investing in the crowdfunding platform than you would if you paid off the mortgage? Yes, that’s what the numbers say, but there’s more to be considered. You want to think about things like human capital, the nature of the debt, and the mental cost you bear for having the debt hanging over you.
Most people should try to do both: invest and pay off debt. Here’s why-
When it comes to the choice between paying off debt with available funds or investing those funds elsewhere, there is no cut-and-dried answer that fits everyone. But after doing his research in thinking through the issue, David feels that most people should try to do both. While there is a psychological benefit to paying off debt, there is also the knowledge and discipline that comes from investing.
In This Episode You’ll Learn
[0:46] Welcome to the show – and could you help spread the word?
[1:55] Should you pay off student loans first or put your cash into investments?
[4:20] We’ve got to consider the cost of developing “human capital”
[9:40] What is debt and how does short-term VS long-term debt apply
[12:45] How do human capital issues impact how we invest?
[16:13] Why most people should try to do both: invest AND pay off debt
[22:50] Should a lump sum be invested all at once or dollar cost average it?
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187 Why opportunity costs should be our primary frame for deciding what to buy instead of anchoring, mental accounting or whether we pay with a credit card or cash. More information, including show notes, can be found here.
Episode Summary
When David noticed that a new book by Dr. Dan Ariely and Jeff Kreisler was actually titled, “Dollars and Sense,” he couldn’t believe his eyes. That’s one of the most tired and overused phrases when it comes to financial writing and publication. Yet, there it was, a best seller on Amazon. The title wasn’t enough to keep him from reading the book and he’s very glad that he did. This episode highlights some of the concepts expressed in the book including the difference between investment and speculation, what it means to do malleable mental accounting (which is not a good thing), and why we need to consider opportunity costs when making purchases. If you want to have sense in the way you use your dollars, this episode is for you.
This episode is about spending dollars while maintaining your common sense… and why many of us are not able to do it
All of us fall into strange patterns of behavior when it comes to spending money. We can either be far too stingy and refuse to spend money for things we legitimately need, or we can convince ourselves that a purchase we desire to make is for our good or in our best interest when the facts reveal something different. David has a great way of explaining why those kinds of things happen and on this episode uses his own back and forth experience when buying furniture to demonstrate the good, the bad, and the expensive of making purchases for both good and bad reasons.
Be careful that you don’t convince yourself that a purchase is an investment when it’s really nothing more than speculation
As David and his wife were shopping for furniture they came across many beautiful but expensive antique pieces. The outcome of their furniture shopping is quite ironic because David started out feeling a bit of pain about having to spend money at all – and he wound up purchasing some of the most expensive pieces they found in their shopping adventure. How did it happen? One of the ways was that David convinced himself that the purchase of antiques was actually an investment because the value was likely to increase over the years. But according to all rational definitions, that is not investing, it is speculating.
Malleable mental accounting: How you convince yourself to spend money for reasons you never intended
If you want to truly use common sense when spending your dollars, you need to understand a phenomenon called malleable mental accounting. It describes the way we convince ourselves that a purchase makes sense when it actually doesn’t make sense according to the budget. It’s a way we justify or convince ourselves that the purchase we are making is a good one when actually it may not look good on paper at all. Find out how David struggled with his own form of malleable mental accounting when he and his wife were purchasing furniture for their new home.
Are you aware of your own confirmation bias? If you can be you will grow in your ability to change your decision making for the better
Many times after we make a purchase, we begin searching for ways to convince ourselves that it was actually a smart decision. In David’s case, he began researching the price of antique furniture similar to what he had purchased in an effort to show that he did not spend as much money as he could have, and to that end he was successful. But that’s not the point. What he was doing had nothing to do with whether or not his furniture purchase was truly a good decision, it had to do with making himself feel better about the large amounts of money he had spent. David contention is this: If we can become aware of the reasons we spend money the way we do, we can begin to change our decision-making for the better. That’s the lesson David wants to teach you through his own furniture buying experience.
In This Episode You’ll Learn
[0:18] Dollars and Sense – isn’t that the most “typical” and uncreative title – yet there are MANY books by that name
[2:38] How furniture illustrates how irrelevant anchoring can influence decisions wrongly
[8:30] Weighing opportunity costs instead of getting anchored to a number
[11:49] Why we should not consider sales prices or source of funds, or ease of payment
[18:00] Is an antique furniture purchase an investment? No, it’s speculation.
[22:21] How credit cards seduce us to purchase things when we normally wouldn’t
[25:16] Are you aware of your own confirmation bias?
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186 Why paying taxes has very little to do with funding the federal government. We also explore the potential impact of the U.S. tax reform on households, businesses and the economy. More information, including show notes, can be found here.
Episode Summary – Why Do We Pay Taxes?
They say the only things certain in life are death and taxes. While that’s probably true it’s also likely that many people who have resigned themselves to paying taxes don’t truly understand why taxes are necessary. In this episode, David covers the issue extensively in light of the new Tax Cuts and Jobs Act the U.S. Congress has passed. If you take the time to listen you’ll not only understand the recent tax legislation better, you’ll also understand why you have to pay taxes in the first place, and what it does for the nation. Consider it a 30-minute lesson in economics and government spending that actually applies to your life.
Comparing the U.S. tax system to other countries like Denmark makes you wonder why taxes have to be so complicated
One of David’s friends lives in Denmark. In a recent conversation, this friend mentioned that it took him less than 10 minutes to prepare and file his taxes. Really? It’s true. But there are other things about the tax system in Denmark that might not be so attractive, like a 36% to 52% tax rate. When David started looking over his tax liability in light of the recently passed Tax Cuts and Job Act, the contrast between the two systems was obvious. After 45 minutes David couldn’t understand the implications of the legislation so he asked his tax accountant whether he’d get a tax cut or not. The answer? Maybe. It’s complicated. In this episode, David explains some of the basic principles behind how our economy and national budget work, including why taxes are necessary at all.
One reason we pay taxes is to prevent inflation. Here’s how it works:
When a government spends more than it takes in, it runs a deficit and then issues debt in order to balance its accounting books. If the federal government spends and spends and spends, the capacity of the private sector to produce goods and services is constrained and prices rise. That’s how inflation happens. Paying your taxes can help prevent inflation because it can keep federal government from overspending, particularly during a period when the economy is growing quickly. As the economy expands, households and business get more income, which means they have to pay more taxes, which keeps the federal budget deficit at a reasonable level.
What will be the overall impact of the 2017 Tax Cuts and Jobs Act?
It’s expected that the new tax legislation for 2017 is going to stimulate the economy by encouraging more production and creating incentives for more workers to join the workforce. Lower taxes mean more money for households and businesses to spend and invest. But it also means the government receives less tax revenue – which will cause the national debt to increase. Nobody knows exactly how much either of those things will grow, but David has some insights to share about the legislation’s impact, on this episode.
The new tax code is expected to impact businesses in a positive way
There are many arguments for why the new tax code passed in 2017 should benefit business. First off, corporate taxes were cut from 35% to 21%. That will make the U.S. more attractive for business to operate in. The next positive aspect for businesses is that the new legislation establishes what is called a territorial system where businesses will no longer be taxed on their overseas earnings. Previously, U.S. businesses were taxed on any earnings they made overseas if they brought those earnings back into the U.S., and businesses want to keep their tax bill as low as possible, so they kept that money overseas to the tune of $2.6 trillion dollars worth. Now they can bring that money back into the U.S. economy through a one-time repatriation tax of 15% for cash, and for other things like property, it’s 10%. David covers a handful of other benefits businesses should experience into the new tax code on this episode.
In This Episode You’ll Learn
[0:51] Residents of Denmark are able to prepare and file their taxes in 10 minutes – Wow!
[1:40] Are you going to get a tax cut from the recent legislation that was passed?
[4:01] Foundational principles about why we pay taxes in the first place
[8:44] Assessing the new tax laws after the fact: They were trying to simplify. But does it?
[17:32] What impact is the new tax legislation going to have on the economy?
[21:10] Corporate income taxes have changed from 35% to 21%, and no more taxes on overseas earnings
[27:39] Technicalities that still need to be worked out regarding the recent tax reform
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There is no regular episode of the podcast this week, but there is a new podcast you can subscribe and listen to: Topics by Money For the Rest of Us. This is a seasonal show released monthly that categorizes existing episodes into topics with a newly recorded introduction. Please subscribe so you automatically get the seasons as they are released.
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A wide ranging discussion on retirement math, sequence of return risk, investing buckets, scaling exposure to Bitcoin and gold, and creating a lifestyle business.
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185 How Illinois and other states can suffer a debt crisis like Greece but why it wouldn't lead to an economic depression similar to what Greece suffered.
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184 Why technology eliminates jobs but doesn't increase the level of unemployment even though for more than 50 years that has been the worry.
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183 What to look for when investing in public real estate investment trusts ("REITs), private REITs and direct real estate deals on crowdfunding real estate platforms. What are current valuations for REITs and commercial real estate.
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182 What caused tulip mania in the 17th century in the Netherlands and how is it similar to Bitcoin?
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181 What is the economic impact of illegal immigration. What would be the cost and impact of mass deportation.
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180 Why have college endowments underperformed a simple three fund Vanguard portfolio? Should you mirror a simple two or three fund portfolio or invest more like an endowment with multiple asset classes?
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179 How a concern about interfering in markets and trade may have contributed to over one million deaths during the 19th century Great Famine in Ireland.
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178 How a country’s working age population growth impacts economic growth and stock returns. What Japan can do about its population decline.
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177 How high profits and low investment by business in R&D and workers lead to income inequality. Why the current situation is unsustainable and what can be done about it.
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176 What percent of Americans are insolvent and what makes data trustworthy.
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175 What attributes should you look for in analyzing an investment advisory firm, financial planner, investment partnership, crowdfunding platform or other investment related offerings.
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174 What the Amish can teach us about adopting new technology without being overwhelmed.
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173 What are some of challenges of investing using long-term economic cycles.
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172 Why your personal data will be compromised if it hasn't already been, and what to do to protect yourself from the consequences of identity theft.
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171 Why cities are the primary driver of economic growth and why do they outlive companies.
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170 Why investment markets can be both efficient and inefficient depending on the environment, and how that should impact your investing.
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A short episode on the August 2017 solar eclipse as it happened.
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169 What could happen if the U.S. Congress doesn't raise the debt ceiling and defaults on U.S. financial obligations, and why does Congress wait until the last minute before it acts on these things.
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168 How being a millennial is both different and the same from young adults of earlier generations.
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167 Why bitcoin is a compelling speculative diversifier and how it has been a better store of value than both the U.S. dollar and gold.
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166 Why enterprises, industries, and economies can't grow at all costs but need to enrich humanity and strive for permanence and sustainability through regeneration.
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165 How corporations evaluate and use investment capital provided by individuals. Why companies find it easier to buy back stock rather than invest in capital projects.
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164 How to use the asymmetric payoff of options, trial and error, and commitments to better yourself financially and in other areas of your life.
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A conversation with Roger Whitney about retirement investing, asset allocation, active versus passive management, luck versus skill, behavioral finance the difference between investing, speculating and gambling.
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163 How an indexing bubble is manifest, why most active managers underperform and how individuals can structure their own quasi index fund that outperforms the market.
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162 What causes inflation and why do central banks allow it to persist instead of having a 0% inflation target.
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161 How retirement planning and retirement spending calculators work and what are some of their flaws. Why figuring out how much money you will have when you retire and how long it will last is a lot like the work hydrologists do to figure out whether Phoenix or Los Angeles will run out of water.
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160 How cost, complexity and an unachievable standard keeps us from consuming ethically while the stories we tell ourselves make us feel good about our purchases anyway.
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In this interview with Michael Port, we discuss asset allocation, business, healthcare, minimalist investing, roboadvisors, our emotional relationship with money, and selecting a financial advisor.
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159 What is volatility, what determines it and how to invest in it. But should you?
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158 How reserves, slack and simple rules of thumb help us deal with radical uncertainty. Why the next financial crisis is unlikely to be like the last one. This episode of Money For the Rest of Us is sponsored by Health IQ, an insurance company that helps health conscious people get special life insurance rates. Go to healthiq.com/david to support the show and learn more.
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157 Why the likelihood of a future fiscal crisis sparked by the national debt depends on whether there is a limited or an unlimited supply of money. Is it possible the federal government's endless borrowing could crowd out the private sector and harm the economy?
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156 How to gain a personal competitive advantage in an evolving job and business environment. This episode of Money For the Rest of Us is sponsored by Health IQ, an insurance company that helps health conscious people get special life insurance rates. Go to healthiq.com/david to support the show and learn more.
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155 How panic caused the great financial crisis and what to look for to see if it is happening again.
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154 How a transitioning economy, government regulation and tax policy have contributed to stagnating wages, rising housing costs, and homelessness.
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153 Why Social Security will not collapse and the four actions government can take to make sure it won’t.
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152 How simple rules, just-in-time learning and checking your understanding can help you make better financial decisions.
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151 How even index fund investors have a big stake in the Amazon revolution.
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150 How to navigate matching markets where price alone doesn’t determine the outcome.
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149 How to estimate how long your assets will last in retirement and the steps you can take to take make them last longer.
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148 Why some financial advisors must show undivided loyalty to you while others can have undisclosed conflicts of interest. How to tell the difference.
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147 How to invest in infrastructure assets and why there is a perpetual infrastructure "crisis".
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146 How to optimize your purchase decisions and why eliminating negatives can increase happiness more than buying more stuff.
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145 Our view of the world dictates how we should and should not invest.
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144 What causes trade deficits and how they can both help and hurt a country's economy.
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143 What is the difference between investing, speculating and gambling. Why binary options trading is gambling.
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142 Poor nations work harder than rich ones. Why then are they still poor?
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141 How to overcome the second law of thermodynamics in investing and living.
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140 Is there a carbon bubble whose bursting could lead to financial instability?
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139 How to design a life, pursue a career, and build financial security without acting out of fear.
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Conversation with Brian Bain of Investor In the Family at the Fincon financial media conference about what we learned investing in 2016.
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138 How to make decisions in the face of uncertainty and why deciding to sell stocks should be based on feelings of regret rather than gut feelings about what we think will happen with financial markets and the economy.
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137 Are private equity buyout activities contributing to income inequality and the death of the American Dream?
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136 How framing and filtering by asset classes makes investing easier. How to invest in preferred stocks.
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135 Why we need to control the chaos while embracing messiness in living and investing.
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134 Why we should be indifferent toward money and what are the risks of a dollar shortage.
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133 Here are four investment strategies investors can use to avoid losses due to rising interest rates.
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132 What should you do about Trump presidency? And how the truth was the real loser in this presidential election.
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131 How hedge funds and pension plans earn 20% a year buying life insurance policies from unwary individuals. Why it's better to keep your permanent life insurance rather than sell it.
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130 How changes in financial circumstances, property markets, zoning rules and personal taste can make owning an illiquid vacation property a risky proposition, but why we bought our dream place anyway (and then sold it).
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129 Why we need to embrace complexity in order to find lower cost, less stressful solutions to challenges including with investing. Plus is investing moral?
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128 How holding onto goods longer before replacing them and a global savings glut impact the economy, interest rates and stock returns.
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127 Investing is like exploring an unknown territory. What are the tools to help us navigate.
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126 Why cutting federal spending and trying to lower the national debt reduces household income and spending, potentially causing a recession.
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125 How to thrive in an ever changing, increasingly complex economy.
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124 How to balance developing new skills, learning new things and becoming an expert.
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123 How pharmaceutical companies use of maximum pricing power is leading to double digit annual increases for prescription drug prices and health insurance premiums.
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122 How negative interest rates increase volatility and lower future investment returns. What can you do about it.
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121 How more and more indexing via ETFs leads to market fragility, lower diversification and herd behavior, but why most investors should index anyway.
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120 What ancient Chinese philosopher Lao-Tzu can teach you about living and investing. Plus two contrasting views of today’s market environment and what to do about it.
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119 The primary role of investing is to preserve your wealth not grow it. How then do we grow our wealth?
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118 Does the significant growth of solar and wind energy mean companies in the space are attractive investments? Show notes at http://moneyfortherestofus.net/mny118-invest-renewable-energy-etfs/
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117 Why lower retirement spending rates means most retirees will need to work some during their retirement years. Show notes at http://moneyfortherestofus.net/mny117-retirement-journey/
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116 Will China's growing debt burden lead to a banking collapse? How would that impact investors globally, and what should you do about it. Show notes at
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115 Why we can't not invest due to fear and uncertainty. Plus how to tell if the stock market is overvalued and what to do about it. To get the U.S. stock market valuation charts, text the word "charts" to 44222
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There is no regular episode this week due to the 4th of July Holiday and the Stein Idaho family reunion. Instead, here is the audio from a conversation that Brian Bain of Investor In the Family and I had on investing in family relationships. In the interview, we discuss work and family and balancing the two. We also discuss career transitions and the challenge of raising children.
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114 Two outcomes from the Brexit vote is money got cheaper and politics got scarier. What should you do about it. Plus we profile a man who never retired and was still working at 87. Show notes at http://moneyfortherestofus.net/mny114-money-cheap-freedom-expensive/
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113 Does immigration harm or benefit a country’s economy? And should the UK leave the European Union?
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112 How productivity increases due to robots and other technology enhancements should lead to both higher wages and higher investment portfolio returns, allowing workers to save enough to eventually retire. Show notes at
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111 How to be a minimalist both in life and investing. To get the Portfolio Charts summary sheet, text the word PORTFOLIOS to 44222. Show notes at http://moneyfortherestofus.net/mny111-minimalist-investor/
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110 What are bail ins and how to protect yourself from them. Show notes at http://moneyfortherestofus.net/mny110-protect-bail-ins/
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109 How to shift money from the present to the future and vice versa in order strike an equitable balance between our present and future selves. Show notes at http://moneyfortherestofus.net/mny109-money-time-machine/
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108 What to consider when investing in commercial real estate via crowdfunding platforms. Show notes at http://moneyfortherestofus.net/mny108-investing-real-estate-crowdfunding-platforms/ To sign up for the free Insiders Guide, text the word INSIDER to 44222
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107 How to find the balance between work, freedom, meaning, and leaving a legacy. Show notes at http://moneyfortherestofus.net/mny107-work-freedom-financial-peril/
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106 Why some nations are at risk of default on their national debt and others are not. Plus why the U.S. national debt will never be repaid. Show notes at http://moneyfortherestofus.net/mny106-national-debt/
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105 What drives corporate profits over time and how they contribute to long-term stock returns. Show notes at http://moneyfortherestofus.net/mny105-corporate-profits-drive-stock-returns/
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104 When a country runs a trade deficit is that a good or bad thing? It depends. Learn why in this episode. Show notes at http://moneyfortherestofus.net/mny104-possible-win-trade/
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103 Here are the three things you need to coax yourself back into the stock market if you are on the sidelines. Plus, why short-term market declines are difficult to accurately predict but bear market declines can often be anticipated and avoided. To get a U.S. stock market decline frequency and magnitude summary sheet, text the word "DECLINE" to 44222. Show notes at http://moneyfortherestofus.net/mny103-reenter-stock-market/
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102 Why the value style outperforms growth investing, and what are the attributes of successful value investors. Show notes at: http://moneyfortherestofus.net/mny102-takes-value-investor/ To get the article on growth investing mentioned in the episode, text the word "BUBBLE" to 44222.
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101 How memes, stories, people, systems, goods and services mix and interact to create an expanding economic web that is ceaselessly creative and radically unpredictable. To sign up for the Insiders Guide, text the word INSIDER to 44222.
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100 How to invest and live in a radically unpredictable, low investment return world. Show notes at http://moneyfortherestofus.net/mny100-navigating-negative-carry-world/ To sign up for the Insiders Guide, text the word INSIDER to 44222.
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99 How money originated and why our relationship with money is driven by the stories we tell. Show notes at http://moneyfortherestofus.net/mny099-money-story/To sign up for the Insiders Guide, text the word INSIDER to 44222.
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98 How a lifestyle business can offset the impact of lower investment returns and contribute to a more sustainable economy. Show notes at http://moneyfortherestofus.net/mny098-need-lifestyle-business/ To sign up for the Insiders Guide, text the word INSIDER to 44222
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97 What caused the great financial crisis and how the lessons learned apply to our own financial lives. Show notes at http://moneyfortherestofus.net/mny097-great-financial-crisis/ To sign up for the free Insider's Guide, text the word INSIDER to 44222
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96 Rumors are always circulating about economic collapse. How the stoic philosopher Seneca would handle these predictions of calamity. To get the Seneca's 5 Wealth rules and supporting quotes, text the word "SENECA" to 44222. Show notes at http://moneyfortherestofus.net/mny096-five-wealth-lessons-stoic/
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95 Steps to take to keep investing simple. Plus how changes in China are having spillover effects for global economic growth and asset class returns.
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94 How federal governments allow banks to create the vast majority of the world's money supply, and why that erodes the value of money over time. Show notes at http://moneyfortherestofus.net/mny094-money-created-destroyed/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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93 Why uncertainty and failure is necessary for a functioning economy and why Cuba is embracing both in its struggle to reform its economy. Show notes at http://moneyfortherestofus.net/mny093-capitalism-complexity-cuba/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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92 How do the leading robo-advisors compare in terms of their recommended portfolio mixes, fees, expected returns and risk. To get summary sheet of my robo-advisor review and sign up for the Insider's Guide text the word ROBOADVISOR to the number 44222.
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91 How the number of retirees compared to workers impacts economic growth, inflation and stock returns. Show notes at http://moneyfortherestofus.net/mny091-demography-rules/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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90 Knowing what things truly cost can help us live like we are already retired. Show notes at http://moneyfortherestofus.net/mny090-trust-cost-takes-retired/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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89 How using smart beta and timing economic regime changes can lead to market outperformance. Show notes at http://moneyfortherestofus.net/mny089-outperform-market/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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88 Our total wealth includes both financial and human capital, which is the value of our future employment earnings. How to consider both in your asset allocation. Show notes at http://moneyfortherestofus.net/mny088-stock-bond/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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87 How long-term trends in inflation, stocks and climate changed are hidden by short-term countertrends, creeping normalcy and myriad moving parts. Show notes at http://moneyfortherestofus.net/mny087-normal/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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86 How not to be a commodity even if you work in a commodity business. Plus, an update on commodities and master limited partnerships. Show notes at: http://moneyfortherestofus.net/mny086-commodity/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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85 Why you should invest outside of your home country. Show notes at http://moneyfortherestofus.net/mny085-home-country-biased/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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84 Why money requires trust and cooperation in order to function. What happens when trust disappears. Show notes at: http://moneyfortherestofus.net/mny084-money-trust/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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83 Why individuals need to save more for retirement and how to figure out how much more you should save. Show notes at: http://moneyfortherestofus.net/mny083-please-save/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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82 How have various asset classes performed when the Federal Reserve begins tightening by raising short-term interest rates. Show notes at: http://moneyfortherestofus.net/mny082-assets-return-fed-raises-rates/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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81 What are the early warning signs a boom has turned to a bubble or the boom / bubble is about to burst. Case study: Australia. Show notes at http://moneyfortherestofus.net/mny081-booms-turn-bust/
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80 Don’t be overwhelmed or play it too safe when it comes to investing and living. Show notes at http://moneyfortherestofus.net/mny080-investing-means-getting-lost/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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79 Is it better to dollar cost average or invest a lump sum? And what type and how much life insurance should you buy. http://moneyfortherestofus.net/mny079-lump-sums-life-insurance/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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78 How a zero-growth economy would impact investing, employment and lifestyle. It depends on whether the economy is flat lining due to population shrinkage or a willful choice to be less productive. Show notes at http://moneyfortherestofus.net/mny078-economy-stopped-growing-permanently/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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77 Why ethical investing will underperform the stock market unless consumer behavior changes. Show notes at http://moneyfortherestofus.net/mny077-ethical-investing-generating-higher-returns/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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76 How peer-to-peer lending works and what annualized return should you expect. Show notes at http://moneyfortherestofus.net/mny076-lend-peers/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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75 The biggest challenge facing Money For the Rest of Us listeners is how to allocate their assets in order to be able to retire. Show notes at http://moneyfortherestofus.net/mny075-invest-somewhere/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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74 How investment capital seeks out the most attractive opportunities, and why that is causing China to dump some of its U.S. Treasury bonds. Show notes at http://moneyfortherestofus.net/mny074-capital-flows/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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73 How trading differs from allocating and why human traders have lost their edge to trading bots. Show notes at http://moneyfortherestofus.net/mny073-shouldnt-trade/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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72 How robots and information technology are replacing humans at work and what we can do about it. Show notes at http://moneyfortherestofus.net/mny072-will-robot-takeover-job/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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71 When the stock market is falling, understanding market history and current conditions can help us make objective, less fear-driven investment decisions. Show notes at http://moneyfortherestofus.net/mny071-please-dont-panic/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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70 Should you invest like Warren Buffet? How your temperament, experiences, interests and skills influence how you invest. Plus why most passive index investors unknowingly make active investment decisions. Show notes at http://moneyfortherestofus.net/rule-1-investors-journey/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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69 What to do when you feel financially hopeless. Show notes at http://moneyfortherestofus.net/mny069-feeling-financially-trapped/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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68 How technology and too much free stuff is undermining the middle class. What can be done about it. Show notes at http://moneyfortherestofus.net/mny068-middle-class/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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67 I share with you what questions to answer to decide whether you should sell, hold or buy more of an underperforming investment. Show notes at http://moneyfortherestofus.net/mny067-investments-lose-money/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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66 Why focusing too much on the future and too little on the present can be dangerous. Show notes at http://moneyfortherestofus.net/mny066-impermanence-winning-losing/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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65 How the Greek depression and the euro crisis started with Greek citizens just wanting to buy a decent car. Show notes at http://moneyfortherestofus.net/mny065-greece-really-caused-crisis-never-ends/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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64 Should you invest in a rental property? Here are some things to consider and pitfalls to avoid. Show notes at http://moneyfortherestofus.net/mny064-pitfalls-private-real-estate-investing/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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63 Why economic alarmists are dangerous, and what has to happen for the financial system or economy to collapse. Show notes at http://moneyfortherestofus.net/mny063-alarmists-economics-collapse/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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62 The link between honey bee colony collapse, asset bubbles and income inequality. Show notes at http://moneyfortherestofus.net/mny062-income-inequality/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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61 Why your retirement spending rate should vary over time based on individual and market circumstances. Show notes at http://moneyfortherestofus.net/mny061-retirement-spending/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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60 What is the difference between hoarding and investing. Most people do both. Show notes at: http://moneyfortherestofus.net/mny060-hoarding-investing/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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59 What are the three attributes of money and does gold have them? Show notes at http://moneyfortherestofus.net/mny059-gold-money.html To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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58 What are the hidden risks of ETFs and passive investing. Sow notes at http://moneyfortherestofus.net/mny058-etfs/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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57 Hacks to live like a local when traveling including how to rent homes through Airbnb.com. Show notes at http://moneyfortherestofus.net/mny057-travel/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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56 How we can thrive amidst volatility and not become complacent due to a false sense of stability. Show notes at http://moneyfortherestofus.net/mny056-volatility/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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55 How to gauge your financial fragility or vulnerability and how to be the opposite of fragile. Show notes at http://moneyfortherestofus.net/mny055-antifragile To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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54 Why you don't need money to have more freedom and happiness. Show notes at http://moneyfortherestofus.net/mny054-live-work/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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53 What you need to know about bitcoin in order use it and invest in it. Show notes at http://moneyfortherestofus.net/mny053-bitcoin/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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52 What factors determine interest rates and why interest rates matters to the economy and your investment portfolio. Show notes at http://moneyfortherestofus.net/mny052-interest-rates/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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51 The world is flirting with deflation. How GDP growth, debt, population changes and exchange rates will determine whether a Great Depression like deflation is coming. Show notes at http://moneyfortherestofus.net/mny051-gdp-deflation/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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50 Navigating early retirement is less about money and more about allowing space and time for your true path to emerge. Show notes at http://moneyfortherestofus.net/mny050-early-retirement/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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49 Is monetary collapse imminent as some pundits say? Plus another look at gold and how to tell if a government's debt burden is unsustainable. Show notes at http://moneyfortherestofus.net/mny049-money-dying/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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48 How fear of another market crash may be causing you to keep your stock market allocation overly conservative despite evidence global stock markets are in a secular bull market. More info at http://moneyfortherestofus.net/mny048-secular-bull/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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47 Why individuals should follow the lead of endowments and foundations and focus on total return investing. Show notes at http://moneyfortherestofus.net/mny047-income-total-return/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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46 How to begin investing and discover your investment style. Show notes at http://moneyfortherestofus.net/mny046-investment-style/
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45 With student loan default rates soaring, what are some education funding models besides debt. Plus is college even worth it? Show notes at http://moneyfortherestofus.net/mny045-education/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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44 How a home mortgage can help you build real wealth. Plus what factors to weigh if you are considering paying off your mortgage. Show notes at http://moneyfortherestofus.net/mny044-mortgages/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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43 What investment return should you expect for your home and what leads to housing booms and bust. Show notes at http://moneyfortherestofus.net/mny043-home-prices/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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42 Why all federal governments are insolvent but investors still line up to buy government debt at low interest rates. Show notes at http://moneyfortherestofus.net/mny042-insolvency/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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41 Why overworking is so dangerous and why leisure is on a completely different plane from work. Show notes at http://moneyfortherestofus.net/mny041-overwork/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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40 What you need to consider before investing in oil and other commodities. Two schools of thought regarding the direction of oil prices. Show notes at http://moneyfortherestofus.net/mny040-commodities/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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39 Why currencies fluctuate, what are the impacts and should you hedge against currency movements. Show notes at http://moneyfortherestofus.net/mny039-currency-exchange/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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38 What are hedge funds and how can individual investors apply strategies from top-tier hedge funds to their own portfolios. Show notes at http://moneyfortherestofus.net/mny038-hedge-funds/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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37 Why and how to invest in gold. Show notes at http://moneyfortherestofus.net/mny037-gold/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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36 Wealth can be measured in more than money. Wealth is also time and mobility. Show notes at http://moneyfortherestofus.net/mny036-wealthy/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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35 Power laws, fractals and investor psychology. Why security prices behave like they do. Show notes at http://moneyfortherestofus.net/mny035-investment-returns/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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34 Why simple investment rules are more accurate than complex formulas. Show notes at http://moneyfortherestofus.net/mny034-rules-of-thumb/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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33 The simple formula to sustain an early retirement without running out of money. Show notes at https://moneyfortherestofus.com/mny033-mind-the-gap/
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32 How to deplete most of your assets before you die by using single premium immediate annuities. Show notes at http://moneyfortherestofus.net/mny032-broke/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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31 How luck and skill intertwine to make you successful. Show notes at http://moneyfortherestofus.net/mny031-role-luck-success To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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30 How to tell if your investment portfolio is really diversified. Hint: Don't focus on correlation. Show notes at http://moneyfortherestofus.net/mny030-diversification/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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29 Why quantitative easing is both a financial placebo and an unpredictable game of musical chairs. Show notes at http://moneyfortherestofus.net/mny029-quantitative-easing/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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28 There are no hard-and-fast financial rules other then don't cause yourself irreparable financial harm. Show notes at http://moneyfortherestofus.net/mny028-own-rules/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
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27 The right price for something is dependent on our state of mind. Anchoring, mental accounts and other behavioral tricks we rely on when buying. Show notes at https://moneyfortherestofus.com/mny027-right-price/
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26 How stories drive the financial markets and why markets are currently declining. Show notes at https://moneyfortherestofus.com/mny026-stories/
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25 Why paying more for what you buy not only helps the economy but enriches your life. Plus why we prefer things that are wabi sabi. Show notes at https://moneyfortherestofus.com/mny025-materialist/
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24 What are the economics behind vacation timeshares, how to implement a permanent portfolio and has the stock market ever taken decades to recover from a major sell-off? Show notes at https://moneyfortherestofus.com/mny024-permanent-portfolios/
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23 What is the difference between beta, smart beta and alpha when investing. Plus, what are the different ways to index a portfolio, and why it's easier to be a successful investor by focusing on things that won't change rather than trying to predict what will. Show notes at https://moneyfortherestofus.com/mny023-smart-beta/
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22 What causes interest rates to rise and fall, and what can you do to adjust your investment portfolio when interest rates begin climbing. Show notes at https://moneyfortherestofus.com/mny022-interest-rates/
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21 I share my own portfolio as an example of investing without a map. Plus why I don't use peer-to-peer lending platforms such as the Lending Club and Prosper. Show notes at https://moneyfortherestofus.com/mny021-no-map/
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20 What you need to know about asset allocation, including the flaws in modern portfolio theory. Show notes at
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19 A traditional thirty year retirement will be out of reach for most people. Here's how to live like you're already retired. Show notes at https://moneyfortherestofus.com/mny019-retired/
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18 How do closed end funds, open end mutual funds, exchange traded funds ("ETFs") and exchange traded notes ("ETNs") differ and when should you use each one. Show notes at https://moneyfortherestofus.com/mny018-investment-vehicle/
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17 How China's stunning economic growth impacts everything from how much you pay for gas and burgers to what you can earn investing. Show notes at https://moneyfortherestofus.com/mny017-china/
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16 What is risk and how do you manage it so you can protect against the downside and capture the upside. Plus, why the world is more risky and what to do about it. Show notes at https://moneyfortherestofus.com/mny016-risk/
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15 Discover the four things you can do to stop worrying about financial calamities. Show notes at https://moneyfortherestofus.com/mny015-market-crash/
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14 Has the Federal Reserve and other central banks led you to be complacent about risk? Plus, I share an investment strategy with surprisingly good returns. Show notes at https://moneyfortherestofus.com/mny014-complacent-investors/
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13 How to know if you are saving too much or too little for retirement. Show notes at https://moneyfortherestofus.com/mny013-saving-enough/
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12 What you need to know if you want to trade currencies. Also, will the dollar collapse? Show notes at https://moneyfortherestofus.com/mny012-currency/
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11 How bank runs were a leading cause of the global financial crisis and why it could happen again. Show notes at https://moneyfortherestofus.com/mny011-repo/
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10 How to live like your rich without the money. Show notes at https://moneyfortherestofus.com/mny010-rich/
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9 Expected portfolio returns are currently very low. Why that is and what should you do about it. Plus learn how to calculate the expected return for your portfolio. https://moneyfortherestofus.com/mny009-expected-return/
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8 We can have sustainable economic growth and a thriving stock market while working less and enjoying life more. Show notes at https://moneyfortherestofus.com/mny008-four-hours/
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7 Is it possible to successfully predict the future? Every investor has three choices. They can ignore the future, predict the future, or react as the future unfolds into the present. In this podcast, we'll take a close look at each of these strategies and what it takes to be successful at each one. Show notes at https://moneyfortherestofus.com/mny007-predicting/
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6 Most people don't understand what the economy is, how it grows and what causes recessions. Nor do they care. This episode describes in simple terms how the economy works and why you should care so you can influence the quality of economic growth and its impact on the Earth's limited resources. Show notes at https://moneyfortherestofus.com/mny006-care-about-economy/
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5 The price of something does not always reflect its true cost, both to ourselves and to society. Through the eyes of Henry David Thoreau and a discussion of why I no longer shop at dollar stores, you'll discover the true cost of a thing. https://moneyfortherestofus.com/mny005-true-cost-of-a-thing/
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4 If you understand how a seesaw works, then you'll be one of the few who understands why we need both federal budget deficits and the national debt. Show notes at https://moneyfortherestofus.com/seesaws-budget-deficits-and-the-national-debt-004/
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3 Why investing in individual stocks can be so intoxicating and dangerous. What you should know before you try. Show notes at https://moneyfortherestofus.com/should-you-invest-in-individual-stocks-003/
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2 Studies show most people have no idea what inflation is and what to do about it. Don't be one of those people. Show notes at https://moneyfortherestofus.com/what-causes-inflation-and-deflation-002/
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1 How banks and governments create money out of thin air, and what you should do about it. Show notes at https://moneyfortherestofus.com/what-is-money-001/
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