Updated. As noted in my post on best online brokers, my favorite option in the now-crowded “robo-advisor” category is now M1 Finance. Here’s a quick rundown of what makes them different: Fully customizable. You pick your own target asset allocation “pie”. (You can add ETFs or individual stocks.) You can simply copy one of the many model portfolios out there, or customize it as you like. You have full control! M1 handles the boring stuff, like rebalancing or dividing a $100 contribution across 8 different ETFs. Here is my pie which I named the My Money Blog Portfolio. No commissions. Free stock/ETF trades with a low $100 minimum account size for taxable accounts and a $500 minimum for retirement accounts. 0.00%… [Read More...]

Michael Burry became famous (at least in investing circles) due to his bold bet against mortgage-backed securities in 2008 that was chronicled in The Big Short by Michael Lewis (later a movie). He’s been pretty quiet since but has resurfaced recently on Twitter due to his strong opinions on the pandemic lockdown. Due to his reputation as an independent thinker, he was also asked to share his recommended book reading list by user @thesis_11. I like to collect book recommendations and add them to my Amazon wishlist, so here’s his response in case it gets deleted later (I added the links): Intelligent Investor by Graham Common Stocks and Uncommon Profits by Fisher Why Stocks Go Up and Down by Pike Buffettology by Buffett and Clark … [Read More...]

2020 meeting live on 5/2 Saturday, 4pm Eastern. Instead of the usual bonanza, the 2020 Berkshire Hathaway Annual Shareholder Meeting will only include a private, brief Q&A session with Warren Buffett and Greg Abel (the likely next CEO), with questions from three selected journalists. As with last year, it will be streamed live on Yahoo Finance. The meeting starts at 4pm ET on 5/2 and the Q&A starts at 4:45 ET. There should be a recorded playback available afterward as well. Yahoo Finance is the exclusive online host of the 2020 Berkshire Hathaway Annual Shareholders Meeting which takes place on Saturday, May 2nd. Live coverage begins here at 4:00pmET. Investors and non-investors alike can witness history, live, as Berkshire Hathaway Chairman and CEO Warren Buffett shares his unscripted views on… [Read More...]

Many investing articles basically keep telling you “Don’t worry! stocks always go up!”, but I appreciated the added perspective from the Morningstar article What Prior Market Crashes Can Teach Us About Navigating the Current One by Paul D. Kaplan and The Risk of a Lost Decade For Stocks by Movement Capital. Here is the growth of $1 in the US stock market since 1871, adjusted for inflation. The first takeaway is that severe stock market drops are not uncommon. Having the emotional fortitude that the drops are not permanent is important. This historical stock market return data provides clear evidence that market crashes aren’t as unique as one might have thought. The term “black turkey” is more apt, since they appear every so often—and today’s … [Read More...]

While we see the live price of the S&P 500 index everywhere, there is much less talk about its dividends. Dividends are an important component of the total return from stocks. I love seeing my quarterly dividend payments arrive every quarter, and combined with our reduced work income, they are enough to cover our household expenses. How reliable is the income stream from owning an S&P 500 index fund (or similar total market fund)? Here is the growth of the 12-month dividend per share of the S&P 500 on an inflation-adjusted basis (source). Looks pretty good overall, but how bad were those drops? Inside this Movement Capital article about managing sequence-of-return risk, I came across a helpful chart showing the historical drawdowns of dividends … [Read More...]

I’ve been sitting on this post for a week, but I’ll feel better just letting it out. When we talk about investing, a lot of it is about long-term thinking and exponential growth. There are many charts showing that the person who starts saving early and stops completely after 10/15 years does better than the person who waits around but eventually saves twice as much per year. Once the ball starts rolling, it’s hard to stop. Here is one example from ForUsAll.com: This is the power that comes from forced savings (pensions) and automated savings with default contributions (401k/403bs). Along the same lines, here’s a chart of Warren Buffet’s net worth over time from ValueWalk. Most of his money … [Read More...]

XCKD’s latest comic is about stock picking and the efficient market hypothesis: The hidden hover text goes on – On the news a few days later: “Buzz is building around the so-called ‘camping Roomba’ after a big investment. Preorders have spiked, and…” XKCD is finding humor in the idea that stupidity can be made profitable. But highly efficient markets really do take away the effects of stupidity, because the prices are already adjusted accordingly. You can’t be convinced to buy Apple at $500 a share when it’s trading at $320. On the other hand, if you find success in picking stocks, it’s really hard to separate luck and skill. Humility is in order. I would also extend the idea … [Read More...]

The financial prediction industry is simply mind-boggling to me. There is zero long-term memory or accountability. You can make all the predictions you want about the stock market, gold prices, and interest rates, and nobody remembers your bad calls. You get a contrarian call right, and all of a sudden you’re on all the TV interviews and news articles. Allow me to remind you of what the Wall Street Journal’s panel of economists predicted in January 2019 as to what interest rates would look like the rest of the year (WSJ source). I have updated the chart with the current rates (click to enlarge). This was less than 10 months ago! Apologies for the sloppy graphics, but you can see that 10-year rates dropped down … [Read More...]

I am always curious about the nitty-gritty details of how real-world financial planners guide their clients. Krueger & Catalano has shared some unique insights on their website, including the topic of creating retirement income in How Much is Enough?: Financial Freedom occurs when multiple streams of income exceed all expenses (needs and wants), and can last until the age of 100. They call this “mailbox money” – stable sources of income that show up reliably and automatically at predictable intervals. Here are four different streams of income that they include: Social Security: Optimize to best navigate hundreds of claiming rules Pension: Either corporate pension or a personal pension Municipal & Treasury Bonds: Safest most liquid form of mailbox money Dividends: Inflation beating mailbox money You’… [Read More...]

As noted in my post on best online brokers, my favorite option in the now-crowded “robo-advisor” category is now M1 Finance. Here’s a quick rundown of what makes them different: Fully customizable. You pick your own ETF asset allocation “pie”. (You can add individual stocks too.) You can simply copy one of the many model portfolios out there, or tweak it as you like. You have full control! Here is my pie which I named the My Money Blog Portfolio. No commissions. Free stock/ETF trades with a low $100 minimum account size for taxable accounts and a $500 minimum for retirement accounts. No management fee. Most robo-advisors charge an annual management fee of 0.25% to 0.50% of assets (or … [Read More...]

One of the biggest problems in retirement planning is turning a pile of money into a reliable stream of income. I have read hundreds of articles about this topic, and I have not yet found a perfect solution to this problem. Everything has pros and cons: stocks, high-dividend stocks, bonds, annuities, real estate, and so on. The imperfect (!) solution I chose is to first build a portfolio designed for total return and enough downside protection such that I can hold through an extended downturn. As you will see below, the total income is a little under 3% of the portfolio annually. I could easily crank out a portfolio with a 4% income rate, or even 5% income. But you have to take some additional … [Read More...]

After posting about Vanguard’s most recent expense ratio drops on selected ETFs, I had skipped over the part that said this:: The growing size and scale of our funds have helped fuel operational efficiencies that lower our costs to serve clients, particularly ETF shareholders. As a result, the ETF share class of these ten funds is now lower than their Admiral™ share class counterparts. For example: Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) at 0.11% Vanguard Total International Stock ETF (VXUS) at 0.09% Vanguard Emerging Markets Stock Index Fund Admiral Shares (VEMAX) at 0.14% Vanguard FTSE Emerging Markets ETF (VWO) at 0.12% I thought it was just a matter of the reporting dates being staggered and the Admiral Shares expense ratio would soon be … [Read More...]

I’m one of the many folks who like to keep up with Warren Buffett content to see if there is any wisdom to be gained. After the release of the 2019 Berkshire Hathaway shareholder letter, Buffett did a 2-hour interview with Becky Quick of CNBC. While I don’t like when CNBC encourages average folks to treat investing like sports betting, I do appreciate that they offer up the entire interview online along with a full transcript. Here are my personal notes after both watching (listening, actually) and then reading the text as well. If you don’t DIY, the person who manages your money should invest it as they would their own family’s money. Most of Buffett’s and Munger’s family money is invested … [Read More...]