Money For The Rest Of Us

#240 What Henry David Thoreau can teach us about calculating costs, profits, benefits and living a life free of "quiet desperation." Thanks to Blinkist and LinkedIn for sponsoring the episode.For show notes and more information on this episode click here.0:23] Moving into a new house and considering the simplicity of Thoreau.[2:34] Preserving Ralph Waldo Emerson’s woods.[5:15] A two-year experiment living in the woods.[6:32] Calculating cost in terms of our life.[8:37] Distinguishing profit by the benefits.[10:59] Living in the present.[15:24] Using our extra time to pursue the walk.[19:45] The effects of social media and technology on millennials.[23:41] The importance of rejuvenating, unstructured time.

#239 Why successful trading of commodities futures, foreign currencies and options depends on exploiting novice traders. Thanks to Molekule and Sleep Number for sponsoring this episode.For show notes and more information on this episode click here.[0:20] Learning how to trade.[4:52] David takes a look at a trading school for himself.[9:15] Red flags in the trade school learning process.[10:32] Common mistakes in managing wealth according to the trade school.[16:29] Is the solution found in only trading and shunning the stock market?[19:48] The patented approach to trading success is based upon taking advantage of inexperienced traders.[25:09] Trading is a zero-sum game.

#238 How the U.S. mortgage market differs from the Danish mortgage market. Danish mortgage rates and defaults are lower than the U.S.. and unlike the U.S., the Danish government is not involved in protecting investors against mortgage defaults. This episode also explores how the mortgage broker industry has evolved since the housing crash. Thanks to ShipStation and The Great Courses Plus for sponsoring the episode.For show notes and more information on this episode click here.[0:23] The socialist catastrophe of Venezuela[1:42] Who is the most socialist in housing finance? Denmark or the US?[2:50] Meet Fannie Mae, Ginnie Mae, and Freddie Mac.[11:26] Danish mortgage securitization.[15:42] Why Danish borrowers actually pay less.[19:32] Who’s liable for the loan and why it makes all the difference.[22:09] Why do mortgage brokers exist, and should you use one?

#237 What can we learn from the difficulties the UK is having in negotiating an exit from the European Union. What happens next? Why there is always a conflict between globalization and national sovereignty.  Thanks to LinkedIn, Blinkist and The Great Courses Plus for sponsoring the episode.For show notes and more information on this episode click here.[0:32] Update on Brexit since the British Parliament Vote.[1:20] Basic Principles of Brexit.[3:58] The problem of the Irish border.[10:35] Debate over the withdrawal agreement leads to the current refusal of the deal.[12:49] Brexit Lesson One: long-held agreements are hard to break.[15:08] Brexit Lesson Two: choosing government sovereignty or globalization[22:08] Economic Unions will always be fraught with conflict.

#236 How heuristics, filters and reasonable stories help us cope with radical uncertainty and make investment decisions. Thanks to Netsuite and The Great Courses Plus for sponsoring the episode.For show notes and more information on this episode click here.[0:17] Investing is a world of radical uncertainty.[1:57] Risk vs. uncertainty.[6:01] Coping through the use of narrative.[10:39] Using filters to keep ourselves from being overwhelmed.[12:48] Staying shy of the consensus and “phantastic” objects.[16:04] Learning to tell ourselves reasonable stories.[17:01] Re-defining what makes a great decision.[20:52] Each individual’s decisions influence the future economy.[23:42] Investors aren’t alone: banks need coping mechanisms too.

#235 How to evaluate the purchase of a depreciating asset, such as buying a house in Japan where prices have declined 23 out of the past 29 years. Thanks to The Great Courses Plus, LinkedIn and Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[0:20] Unfortunately, there isn’t a magic formula for dealing with a housing bubble.[2:33] Making the decision to purchase a second home.[5:31] Japan’s declining housing market.[13:10] Another quirk of the Japanese house: it’s freezing.[20:28] Should we imitate the Japanese when making decisions regarding the housing market?[24:19] Keeping priorities straight: making a purchasing decision based upon what matters.

#234 How and when to use passive indexing strategies without following the crowd. Thanks to Masterworks and Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[2:25] Do all index investment followers herd?[4:13] Why it has taken so long for indexing to become established.[11:05] Comparing the statistic of active management to passive management.[16:14] Keeping your portfolio diverse while indexing.[19:54] Example of a return driver outside of indexing.[24:54] Steps to take to keep from following the herd.

#233 What is the cause of the economic crisis in Argentina and how likely is it that other developing nations will experience a similar financing crisis. Thanks to Policy Genius for sponsoring the episode.For show notes and more information on this episode click here.[0:20] Why the Argentine peso has decreased 47% in value.[3:41] 3 Reasons why Argentina is unique and has suffered such sharp economic decline.[10:23] What we can learn from Argentina’s funding crisis.[13:51] How to tell when the market is losing confidence.[19:43] Why are some emerging market economies thriving?[22:20] Emerging market economies are not destined to fail.[27:04] What Argentina can do to pull itself out of the crisis.[27:48] Why the US isn’t in the same fix as Argentina.

#232 Why investing in commodities such as oil and gold is challenging. What you need to know before you invest. Thanks to New Retirement Planner for sponsoring the episode.For show notes and more information on this episode click here.[0:18] Where do commodities help us in the economic cycle?[2:00] How to interpret the apparent statistical decline in commodities.[5:40] Are master limited partnerships (MLPs) helpful to your portfolio?[8:19] How the energy transition will affect the future of commodity investment.[11:43] Contango and how it affects the performance of your futures contract.[16:20] Looking back at the history of commodities may help in determining their future.[24:29] The benefits of investing in gold as a commodity.[28:11] Traders and psychology are really what determine commodity prices.[30:08] Cash flow should still be the foundation of your portfolio.

#231 Why different occupations pay differently or even the same occupation in different countries. Why the same occupation can pay differently for different companies that reside in the same city.For show notes and more information on this episode click here.[0:12] A bit of background on today’s question for Money For the Rest of Us[2:28] Why do certain occupations pay more than others?[11:36] Wages vary from county to country - here’s why[20:09] Even jobs in the same city pay different wages, and there’s a good reason behind it[25:52] You can do a few things to protect your own employability with respectable wages

#230 With RealtyShares and other crowdfunding platforms shutting down, should you invest on these platforms and if so how do you go about evaluating the investment opportunities. Thanks to Policy Genius for sponsoring the episode. For show notes and more information on this episode click here.[0:30] Check out this episode for David’s experience with real estate crowdfunding investments[2:35] Real estate crowdfunding platforms are comprised of this type of structure[6:57] You want to understand these considerations before making an investment[12:40] Issues began to crop up with David’s investment – learn from his story[18:41] David’s experience with these platforms have not led to a lot of transparency[25:07] There’s not a specific way to determine which real estate crowdfunding platforms are going to survive[30:08] Public and private REITs are another great investment option to consider

#229 Why modern portfolio theory is a defective way to build out an investment portfolio. This episode explains a better approach to asset allocation.For show notes and more information on this episode click here.[0:11] What is modern portfolio theory?[4:29] There are many downfalls to relying on this theory while investing[7:05] We should prepare for the worst possible outcome when investing, not the average positive outcome[14:08] The true goal of investing should be about “minimizing your maximum regret in the meta-game”[18:34] There isn’t the best “right answer” with your portfolio[25:15] Maximization of anything doesn’t work in today’s environment

#228 How distributed ledger technology and tokenized assets will increase liquidity, transparency and fractionalization, allowing investors to purchase very small, liquid positions in real estate, private companies, art and other assets. Thanks to LinkedIn for sponsoring the episode.For show notes and more information on this episode click here.[0:12] Stocks ownership used to be tied to paper certificates, but there’s a problem with electronic records as well[10:00] Proxy voting in trading can lead to complicated issues that are almost impossible to solve with certainty[17:40] Tokenization could be a solution to today’s convoluted trading system[22:38] A new type of distributed ledger would allow for asset-backed tokens[27:03] There are some challenges to tokenization that need to be addressed

#227 Here are four most important things to teach children about money and why showing is better than telling when it comes to kids and money. Thanks to CNote for sponsoring this episode.For show notes and more information on this episode click here.[2:58] Here’s how you can start teaching children about money[5:30] #1 - The right attitude about money comes with a balance of respect, understanding, and trust[8:40] #2 - Healthy relationships with money come with accountability and choice[11:38] #3 - Money is tied to work[20:25] #4 - Avoid the wrong kinds of debt[22:51] #5 - Teaching kids about money is often about “just in time” learning

#226 What are the characteristics of an asset bubble and how to invest when one exists. Are cannabis stocks in a bubble? Thanks to Blinkist and Policy Genius for sponsoring this episode.For show notes and more information on this episode click here.[0:10] Is the cannabis industry in an asset bubble right now?[4:41] Public conversation is often a sign of an asset bubble[8:19] Hopeful assumptions are often what drive an asset bubble environment[13:24] Tesla can be considered an example of a micro-bubble[21:57] You can handle an asset bubble in a variety of ways

#225 How to evaluate interest rate risk, credit risk and other factors when investing in bonds. Thanks to Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[0:11] Predicting interest rates can be tough - here are some things to consider[4:28] What determines the rate of return if you invest in bonds or fixed income securities?[7:00] Bond prices fluctuate as interest rates change[15:30] Data on default rates for bonds and other investment strategies[19:40] Consider this before deciding whether or not to hold bonds[23:13] Passive vs active investment strategies in bonds and other fixed-income securities[25:35] Why would you own a long duration bond?[34:19] There isn’t a single right answer when it comes to bonds and fixed income securities

#224 How to position your investment portfolio based on market cycles. Investing principles from Howard Marks' new book Mastering the Market Cycle. Thanks to CNote and LinkedIn and for sponsoring today's episode.For show notes and more information on this episode click here.[0:11] Howard Marks’ new book is the inspiration for this episode of Money For the Rest of Us[7:13] The first tool in learning how to invest during a market cycle[11:49] The second tool in learning how to invest during a market cycle[18:00] Successful investing involves a mix of skill and luck[25:30] There’s no way of knowing where the bottom of a market may be[26:30] We are not in a period of extreme risk or opportunity in today’s US economy

#223 How commission free ETFs, mobile apps and zero fee index funds make it easier to invest if you have little money. What are some examples of commission fee ETFs and funds for Vanguard, Fidelity, Robinhood and TD Ameritrade. Thanks to Blinkist for sponsoring this episode.For show notes and more information on this episode click here.Episode Chronology[0:14] Here’s how to invest when you have little money[4:26] How do brokerage firms make money if they don’t charge commissions? [11:37] What happens to investments if a brokerage firm goes bankrupt?</li> [18:14] Thoughts on investing with a very simple portfolio [27:35] A lack of money is no excuse to not invest

#222 How asymmetric information, price discrimination and the stories we tell ourselves contribute to artificial profits and income inequality. Thanks to CNote for sponsoring today's episode. For show notes and more information on this episode click here.[0:20] Rents, overpayments, and income inequality are all side effects of market distortions[8:55] Value-based pricing vs pricing based solely on cost[17:13] Pricing is inextricably tied to the stories we tell about ourselves and to others[22:30] Consumers need to consider these 4 things when evaluating the cost of goods and services 

#221 How the Great Financial Crisis changed how individuals and institutions invest, and why we shouldn't invest solely focused on the next crisis. Thanks to CNote for sponsoring today's episode.For show notes and more information on this episode click here.[0:40] Overview of how the 2008 financial crisis continues to impact investing today[6:48] Data on current investments and the stock market[8:40] How you invest depends on your experience in the 2008 crisis[11:41] Future investing is enveloped in big questions and unknown variables[16:10] The great financial crisis impacted both individuals and institutions[19:58] Should you invest in preparation mode for the next crisis?[26:00] Invest smartly by separating speculations from investments[28:40] Consider this when investing and thinking about the future of the market