“Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” —Warren Buffett
Our family's Spring Break trip to Florida in 2000 took place during the infamous dot-com bubble burst. I can vividly remember my dad's reaction to the news of the bursting of the tech bubble. He had some of his portfolio (I'm not sure how much) invested in dot-com stocks via the Nasdaq Composite Index, which declined by 25% that week of our Spring Break. It ultimately took 15 years for the Nasdaq to get back to its high from the year 2000.
As we’re in the midst of the COVID-19 health and financial crisis, you likely have been watching the stock market decline and worrying, “what does this mean for me?”
On Friday afternoon, March 27, President Trump signed the $2 trillion “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) into law. You can read the full 880-page bill here.
When advising our clients to stay the course (i.e. stay fully invested), our advice is not based on wishful thinking about the markets. The advice is grounded in historical reality, and in a hope for the future.
These past few weeks have seen extreme stock market volatility, the WHO declaring a pandemic, and the U.S. implementing travel restrictions and many other measures (with more to come, assuredly) to help combat the spread of the COVID-19 coronavirus.
Our thoughts on the current stock market malaise -- and accompanying Coronavirus fears.
There is no shortage of discount cell service providers these days. It's to the point where The Paradox of Choice and inertia set in, leading most folks to simply stick with the same cell provider they have always used. My wife and I switched from Verizon to Consumer Cellular in October 2017. The main only reason we switched was to save money. The tl:dr version of this post is that we really like Consumer Cellular.
I won’t tell you that skipping lattes will make you a millionaire (because I don’t believe that). I’m not going to spend-shame anyone in this post. But I will forever maintain that frugality is a darn-near surefire way of building wealth. If you spend meaningfully less money than you make (that is, saving 15% or more of your income), it necessarily follows that you will build wealth. That’s not an opinion; it’s math. If you can only save 10%, then start there. But ultimately, work up toward a 20% savings rate…and then move higher from there. We have multiple clients saving more than 50% of their after-tax income.
Statements you will hear outside TWG’s walls, but not inside them: “Money is really cheap right now.” “I get a tax deduction on this, so it’s a good deal.” “The dealership is providing interest-free financing on the new model, so I’ll buy new.” “We refinanced and are saving $300/month on our payments.”
My wife Krista told me a great story from her trip to Costco yesterday with our two sons, Ford (age 3 ½ ) and Teddy (age 2). Krista bought yogurt for each of the boys. Our younger son Teddy quickly finished his yogurt and immediately began to cry for more. Ford responded by feeding his own yogurt to Teddy, spoonful by spoonful. He did that without any prompting from Mom.
Amidst the politically-charged climate in which we live, we can lose sight of the progress mankind has made over time. We often remind our clients the U.S. stock market has handsomely paid patient, long-term investors over time. One simple method for gauging economic progress over time is to consider the evolution of the largest publicly-traded companies in the US. Of the ten largest companies in the US today, only four were founded prior to 1970 (JPMorgan Chase; Johnson & Johnson; Procter & Gamble; and Visa).
