How Bonds Work When you purchase a bond, you are stepping into a contract wherein you are the lender of a certain amount of money to another party, and that party pays you an agreed upon amount of interest each period, with a plan to return the amount they borrowed at some agreed upon...
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Stock Buying: How All Roads Lead to Earnings
When it comes to stock strategies, I know you hear all about different metrics and strategies that don’t seem to be about earnings. I want to explain how as professional investors we connected some of the most often quoted strategies and metrics you hear about to the real root of all good stock pricing...
How To Forecast Stock Prices in 2017 and Beyond
Read this and you’ll be better equipped to forecast than 99% of the population. The Two Things That Drive Stock Price There are only two things that drive a company’s stock price. Ultimate Earnings: The first is ultimate earnings or profit potential. Notice that I did not say current earnings and profit, but...
Teardown: How Much Are Your Stock Options Really Worth?
If you are seeking your fortunes at a tech firm or as senior level management, odds are your offer letter comes with some allocation of stock options. This grant is supposed to buy your loyalty and entice you to stay in the long-term, but paradoxically employees are often given next to no information on...
Easy Data: Your Blindspot When It Comes to Investing Advice
Today’s post is about how data, as powerful as it is, limits the dialogues you see for how to invest your money and, more importantly, what to do about it. No one needs a post about how awesome data is. The most convincing argument for where to invest your money is to backtest a...
Why Real Estate Advice Is Dangerous: Hyperlocality
Everyone seems to have a gut reaction about real estate as an investment, and those opinions clash violently. I used to wonder about this – at family gatherings, my intelligent cousin would try and convince my equally intelligent uncle from across the country why real estate was an excellent bet, and my uncle would...
What Retirees Can Do About Today’s Low Interest Rate Environment
If you’ve read my last post, you understand why today’s environment is so difficult for aspiring retirees. Retirees want steady cash flow options, and that often means parking a big chunk of change in bonds. However, bonds are paying a ridiculously tiny 2-3% interest compared to the 7-10%+ interest rates of the last few...
Interest Rates: A Breakdown in Your Retirement Strategy
The name of the game as a retiree is cash flow. Because you are no longer generating annual income to pay your bills, investments that provide consistent cash flow start to look more appealing than their long-term, appreciation-based counterparts. This is why a lot of advice focuses on buying bonds before entering retirement....
Teardown: The Only Two Ways To Make Your Money Grow
When I was just starting out, I read pretty voraciously about how to invest and where I should put my money. The advice is varied and often piecemeal. For a few years, I dumped my money into a Fidelity target fund. It gave me an allocation of stocks and bonds based on my target...
Mortgage or All Cash For a House?
Owning a house is a central part of the American Dream. It is a bastion of security in a wild world to know your family will have a roof over its head no matter what may come. Somewhere along the way, though, particularly in the early retirement community, the American Dream became: own...