Investing Archives - Millennial Moola

Watching Silicon Valley Makes Me Realize How Stupid Tech Stocks Feel Right Now

Image result for jeff bezos Sorry I’ve be MIA for a while y’all. Becoming an accidental entrepreneur through my biz Student Loan Planner takes more work that I thought it would.

I was chillin’ at home with the new HBO subscription we got watching that Silicon Valley show with my friends. You know, the one with that guy from the Verizon commercial?

Anyway the show is based on a bunch of dudes holed up in an incubator house in the Valley working on this startup called Pied Piper. The company has this blockbuster algorithm and they’re trying to get users, scale, and make money. Continue reading “Watching Silicon Valley Makes Me Realize How Stupid Tech Stocks Feel Right Now”

FANG, Bitcoin, and the Housing Market All Point to an Irrational Market

Image result for zuckerberg

We’re all taught that markets are efficient. Yes there are times of irrational exuberance, but we can’t know when those times are, so we should keep investing and weather the storm no matter what.

I’m really concerned right now about the state of the economy and markets in general. The FANG stocks (hence my leadoff pic of Zuckerberg), real estate, and especially bitcoin are really ebullient right now. I look around, and everything I see points to danger. Continue reading “FANG, Bitcoin, and the Housing Market All Point to an Irrational Market”

Am I Missing Out on Investing in Startups?

We take kickstarter and other crowdfunding sites as facts of life now. However, that didn’t always used to be the case. The birth of crowdfunding was when President Obama passed the JOBS act in 2012. This piece of legislation made it easier for average people to invest in startups through crowdfunding. So now that investing in startups is a real consideration for most people, should you do it? Continue reading “Am I Missing Out on Investing in Startups?”

The Innovation that Could Kill Vanguard

A small startup named Wealthfront has created an innovation that could kill Vanguard, the company that popularized the index fund in the mid 1970s. Ever since, the investing world has never been the same. I saw a report that Vanguard had taken in more than 100% of the industry cash flow for 2016. That means that the ENTIRE mutual fund industry has fewer deposits this year in aggregate than Vanguard. That’s because customers are withdrawing their money out of high fee funds. Sitting atop trillions of assets under management, what does a behemouth like Vanguard have to fear? It’s called direct indexing. Continue reading “The Innovation that Could Kill Vanguard”

Active Management is the Anti Robin Hood

I recently read that New Jersey’s pension fund paid over $700 million in investment management fees in 2015, almost all to active managers. New Jersey’s pension is horribly underfunded, and over 800,000 middle class people depend on the system for a secure retirement. Somehow, the state has the money to pay active managers three quarters of a billion dollars to underperform the S&P 500 index fund. Essentially, active management is the anti Robin Hood. These folks take from the poor to make themselves richer. Continue reading “Active Management is the Anti Robin Hood”

Warren Buffett is the Greatest Tax Dodger of All Time

Warren Buffett is one of the most brilliant investors of all time. I personally admire him, so when someone as nasty as Donald Trump attacks him as he did in the second presidential debate, I want to come to the defense of the Oracle of Omaha. After all, Trump loves to make outrageously inaccurate accusations. However, one charge Trump leveled in the debate Sunday actually holds some water. He accused Warren Buffett among others of dodging taxes just like he does. Buffett responded that he had paid taxes since 1944 when he was a young teenager. THE TRUTH: Warren Buffett is the greatest tax dodger of all time. Continue reading “Warren Buffett is the Greatest Tax Dodger of All Time”

State Taxes Should Make You Want to Max Your 401k

If you currently live in a high tax state like California, New York, New Jersey, Georgia, or Missouri, if you’ve looked at your paycheck you see a ton of taxes going to the state government. What are the chances you remain in that state at retirement? They’re probably pretty low given that the average person moves almost 12 times during their lifetimes. I suggest taking a look to see if your 401k is tax deductible from your state’s income tax. Most likely it is, and that means you should max your 401k right away if you can afford to. Continue reading “State Taxes Should Make You Want to Max Your 401k”

An Open Letter to Trent Richardson on His Financial Problems

I was born in Pensacola, FL in 1990. So was Alabama’s former star running back turned NFL player Trent Richardson. Stories are all over the internet about how his friends and family spent $1.6 million of his money over 10 months as his career fell apart this past year. While others lived high on his dime, he spent as little as $300 over two weeks.

I went to Pensacola High School, the arch-rival of Trent Richardson’s Escambia High School across town. When somebody has success from Pensacola, everybody gets excited. When they struggle, people in Pensacola love you anyway. In that spirit, as a fellow Pensacolian, I want to submit this open letter to Trent Richardson. I will show how he can secure his finances against the leeches who have been living large at his expense. Hopefully it will inspire others who are struggling with friends and family who believe that your money is their money. I’ll first describe Richardson’s career and financial situation for those unfamiliar with his story, followed by my letter. Continue reading “An Open Letter to Trent Richardson on His Financial Problems”

Seriously Consider Replacing All Your Bonds With TIPS

The financial advice establishment will tell you that a broad index of diversified bonds make up an important part of a diversified portfolio. Just put 20%-40% of your portfolio in something like Vanguard Total Bond Index Fund, and the volatility you experience in your portfolio can go way down. I don’t believe in this advice anymore. With the 10 year treasury yield at 1.60% as of this past Friday, I don’t think normal US government debt protects you from anything but an extreme deflationary event. You should at least know about another option that might provide better protection for your portfolio going forward, the inflation protected Treasury bond. Consider replacing all your bonds with TIPS in tax protected retirement accounts. Continue reading “Seriously Consider Replacing All Your Bonds With TIPS”

Pay Down All Your Debt First Before Investing a Cent in Bonds

One of my best friends at work performed investment research for the company where we worked. I got to know him really well, to the point that we would exercise together, play basketball, and go to church. At some point, he became comfortable enough around me to share his financial picture. He had student loans with 6% interest, but he also owned the PIMCO bond ETF, which paid about 2% a year in interest before taxes. He had set up a negative arbitrage situation of -4% a year guaranteed! If a highly certified investment expert made this mistake, you will probably make it too because portfolio models never include the negative bonds you already hold in the form of loans. Pay down all your debt before making a single bond market investment. Continue reading “Pay Down All Your Debt First Before Investing a Cent in Bonds”