Last week, Morningstar published a report on the use of 529 accounts for college savings. It found that only 16% of families with young children are using 529 plans. While this number is not necessarily shocking, it is unfortunate that families are leaving money on the table. Morningstar’s report, authored by Head of Behavioral Science,…
We Only See a Version of the Truth
A few years ago, I attended a presentation by Terrance Odean, Berkeley Professor and famed researcher on behavioral finance. In the middle of his presentation, Professor Odean played a video and asked audience members to count the number of times the players in white shirts passed a basketball. I vigilantly went about the task, putting…
Calendar Years are Arbitrary
Time is a human invention. Sure, the Earth orbits to Sun every 365 days and rotates every 24 hours, but humans developed the concept of time. Whether it is dark or light outside, my alarm clock rings at 5:50am each morning. That wasn’t the case for humans two hundred years ago. They structured each day…
Mega Billions
There was no winner in last night’s $1 billion dollar Mega Millions drawing, so the projected jackpot for Tuesday at $1.6 billion. That’s Billion with a B. What’s even more shocking is that the mega ball last night was lucky number 7. Tuesday’s jackpot is a new record, surpassing the $1.586 billion dollar prize in…
Diversification Means Saying Sorry
One of the oldest adages in investing is to diversify. “Don’t put all of your eggs in one basket.” On the flip side, being diversified means you always own something that underperforms. I am not the first person to write that “diversification means always having to say you’re sorry”. For more great articles on the…
The Allure of Private
Prospective clients are sometimes surprised when I tell them we invest in mutual funds and ETFs (exchange-traded funds). Some think we are stock pickers because Josh is on point in discussing companies on CNBC. Others have enjoyed outsized returns in large cap growth darlings Apple, Amazon, or Facebook. But a third group, those with more…
Advisors Earn their Stripes in Down Markets
It’s too early to call this market selloff a down market. Stocks are only 5-6% below all-time highs. But a two-day decline of 5% is jarring, even to the most hardened investors. We know that investment losses hurt two times more than gains feel good. Even though portfolio values are higher than they were a…
Why Not Women?
I spend a lot of time wondering why there are so few women working as advisors, or at least why the numbers don’t change year after year. I think about the signals we give to young girls about money. Somehow these girls received the message they can be anything they want to be; doctor, lawyer,…
Gatekeepers
Underfunded pension obligations are a large, looming problem in almost every state in America. Decades of overpromising and underdelivering coupled with intense political pressure to kick the can down the road results in the perfect storm of burgeoning future costs. States and municipalities are using unrealistic return assumptions, but reducing these assumptions forces them to…
Call a Spade a Spade
I remember the first time I sat through a product pitch I could not understand. It was a sales presentation for the equity tranche of a subprime mortgage CDO (collateralized debt obligation) back in 2007. You may have read about these products, and how they almost brought down the global financial system. This pitch was garbage, to put it…
