Two Reasons for Life Insurance
A reader wrote to me: I periodically read your blog and it seems like you have a strong grasp of the insurance industry. As well, given your background as a life actuary I imagine you might have some valuable insights on whole-life products. I am having a baby in the late spring and have been...
Life With Wife
My wife has only given me financial advice twice in my life. She was totally right both times. Now, she doesn’t have a financial bone in her body. She was raised in a household where she never lacked anything, with non-materialistic parents where the father earned a lot as a nuclear physicist. She was a...
The Gold Medal Gold Model
Eddy Elfenbein is a clever guy; he put together a model of gold prices that fits the data very well. Tonight, I will share my own variation on the model, and try to give an intuitive explanation of why it works. Ask yourself this: where does investor put his money if he wants to stay...
Improve the Position
It’s hard to take a loss. But taking losses is necessary to avoid even larger losses. This is prompted by Barry Ritholtz tweeting to me a piece he wrote 3 months ago called, Take The Loss. Good piece, worth a read. What I suggest to you today is that there is a better way to...
On Penny Stocks (2)
Yesterday, I received a pitch in the mail for a penny stock. They should put a big red X over my address, but alas, they don’t. Now for all of my prior penny stocks that I have been written about, all have done horribly. Bonanza Gold GTX Corp Bioneutral Uniontown Energy Inc. Obscene Jeans Corp...
The Big Picture for the Week of September 4, 2011
Earlier in the week someone tweeted a link to this article where a behavioral finance guy chopped down some of what the financial advising business is all about. I believe this can be useful to both financial advisors and do it yourselfers because do i...
Build the Buffer
When young couples come to me and say, “What should we do financially?”one of the first things I say to them is something like, “Build the buffer.” You should have 3-6 months of expenses saved up. I sometimes phrase it like this: use the stoplight rule. Less than 3 months expenses in the savings fund?...
Book Review: The Era of Uncertainty
Many fundamental investors have been shaped by Peter Lynch. Invest from the bottom up. Analyze companies, not the economy. Time spent on analyzing the economy is wasted time. This book takes the opposite approach. If you understand the economy, and think you know how GDP growth and inflation will go, you have a better...
Take Prudent Risk
This post is for average 401(k) investors. I’m going to let you in on a secret that is not so secret, but does not get talked about much. It’s a simple idea as well, and would be common sense, if sense were common. 401(k) investors tend not to change their allocations often, except to panic...
The Costs of Illiquidity — II
I thought it was bad enough to try to dissuade people from buying life contingent cash flows. Now I get to talk about Non-Traded REITs. This is the first time I heard about them. Doing a little digging, there is controversy around them. But let’s talk about the benefits first: You receive a high and...
Cash Versus Valuations
From reading your blog, it isn’t clear whether you are a value investor or a valuation based investor. When you wrote that you would sell something only if you had a better opportunity, it sounds different from a traditional value investor (buy at a discount to fair value and sell when it approaches fair value,...
Silent as Night
When I worked at a life insurer that was in the pension business, we would sometimes get asked to quote on business where termination of the existing plan would result in a surrender charge. Now no plan sponsor would ever want to deliver a loss to participants — the effect on morale would be huge,...
