The Condescension In The Financial Industry Continues To Bother Me

In order to persuade someone of something, there are two things you have to do right: you have to have the right message, and you have to deliver the message in a persuasive way such that the person on the receiving end of what you are saying inevitably thinks, “Why yes, you are like me, and people like us do end up doing things like that.”

I’ve been spending part of my day watching Youtube videos of financial managers and planners talk about the advice that they give prospective clients, and while I don’t want to single any of them out, I will share with you my general impression: even though a lot … Read the rest of this article!

Time Diversification Is Important When You Sell A Business Or Receive An Inheritance

Other than people looking to get started investing, by far the most common correspondence I receive from readers is the profile of someone who received a significant amount of money either through selling a business or receiving some kind of inheritance, and is looking for help on what to do.

Most of the conventional wisdom that you can find on the topic just by doing a quick google search is quite good—take a few months to just chill out and *think* before rushing to do anything, don’t look to make any concentrated bets (which is a slightly different way of saying that you should diversify), and so on.

The one piece of advice … Read the rest of this article!

Annuities In 401(k) Plans Are A Terrible Idea

Susan Conrad, you get a gold star. When asked to comment on the new proposal to include annuity options in a 401(k) plan, Ms. Conrad said, “All annuities are not created equal, and that concerns me. Our industry is moving towards more transparency, and the introduction of annuities as a plan option could take us in the opposite direction.” Anthony Webb, you get a gold star, too. He added, “They’re not offering an inflation-indexed product, but if you are buying a product for 25-years into the future, you are going to be concerned about inflation.”

The argument in favor including annuities in a 401(k) plan, summarized by the St. Louis Post-Dispatch in this … Read the rest of this article!

Benjamin Graham And Jeremy Siegel on IPO Investing

I do not write about IPOs often. As far as I am concerned, there is only one privately traded company in the United States that would engender “must have” status if it became traded on the stock exchange, and that would be Mars Candy (the maker of M&M’s, Snickers, Twix, 3 Musketeers, and a handful of others). Out of all the IPOs in the only past generation or so, the only worthy of truly long-term holds that could not be bought through a similar proxy would be Google, Starbucks, and Visa. It’s not something that I think about all of that often, given the strong wisdom against IPO investing given by Jeremy … Read the rest of this article!

Should Morality Prevent You From Buying Blue-Chip Stocks?

One of the consequences of truly understanding what it means to invest in common stocks is that you come to appreciate that you are a part owner in the business that you select. Sure, someone with 100 shares of 100 Exxon Mobil won’t be able to show up at headquarters in Irving, Texas and successfully demand changes to the company’s capital investments, but he is one the many captains to whom the Board and management team is ultimately held responsible.

When you realize you are the part owner, the question naturally arises: Is what am I doing here moral?

I’m using Coca-Cola here as an example because it’s frequently pointed out that high … Read the rest of this article!