Money For the Rest of Us

What are the three steps to better manage risk and get what you really want.Topics covered in this episode include:Why goods and services that lessen risk tend to cost more.What is the three-step process for assessing and managing risk.Why defining the risk-free option or asset is critical to managing risk.Why immediate annuities are the retirement risk-free option rather than a conservative investment portfolio.What are the two types of risk and how do we mitigate them.What is the difference between hedging and insuring against risk.Thanks to Dashlane and The Great Courses Plus for sponsoring the episode.For show notes and more information on this episode click here.[0:17] Weighing the risk and knowing how to make a decision under uncertainty.[5:00] Three steps for assessing and managing risk.[9:11] Finding the risk-free asset in a retirement plan.[14:36] Idiosyncratic & systemic risk.[16:40] De-risking and using hedges to create a risk buffer.[20:22] Identifying a sound insurance operation.[23:36] Using flexibility as a risk management strategy.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How inequitable business models like those in the gig economy can lead to a financial crisis, more regulation, and doubts about the viability of the free-market system.Topics covered in this episode include:What is the expanded role of corporations according to leading chief executive officers.What is the gig economy.Takeaways from David’s recent experience delivering restaurant meals for Doordash including the huge liability many independent delivery drivers are unaware of.Who covers the shortfall when the cost of operating a business is less than what consumers are willing to pay for the goods and services the businesses offer.How more regulation results from businesses unfairly passing on costs to others.How income inequality and debt can lead to a financial crisis.Thanks to Policygenius and Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[0:18] Is Capitalism still working for everyone?[2:12] David’s disappointing gig economy experience.[6:53] The hidden cost of insurance in gig jobs.[9:04] Who pays to close the financial gap created by gigs?[14:27] The pitfalls of the gig economy.[16:17] What makes capitalism work?[19:29] Income inequality is a drag on the economy.[23:09] The importance of calculating the entire cost.[25:36] How your decisions can impact the health of the capitalist economy.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How momentum investing works, what are some of the challenges in implementing it, and how can individuals use momentum in their investment portfolios.Topics covered in this episode include:What is momentum investing and why does it theoretically deliver excess return.Why do momentum strategies suffer through periods of horrendous losses.Why high trading costs and selling a position can be challenges to successfully implementing momentum strategies.What are examples of momentum oriented funds and ETFs.How momentum can be used for making asset allocation decisions and adjusting portfolio risk.Thanks to The Great Courses Plus and Netsuite for sponsoring the episode.For show notes and more information on this episode click here.[0:18] Momentum investing consistently outperforms the market.[5:04] Why does momentum investing work?[7:31] The three challenges of the momentum investing phenomena.[12:50] What happens if investor behavior changes?[14:24] Tactics for implementing momentum into your own portfolio.[20:02] Using dual momentum to move in and out of asset classes.[23:55] Utilizing momentum investing as a swing vote.[28:01] How David uses momentum investing in his portfolio.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How the composition of Tesla's autopilot software gives clues to how we should invest, recognizing there are no perfect algorithms for driving or investing.In this episode you will learn:Why Americans are afraid of self-driving cars.How autonomous automobile software works.Why people reject even the best possible algorithms.What are examples of safety features and rules of thumb we should build into our investing process.Why does everyone think a recession is coming soon even though there is little evidence currently.Thanks to WIX and Dashlane for sponsoring the episode.For show notes and more information on this episode click here.[0:17] The pervading fear of self-driving cars, despite their safety features.[3:33] Why do people fear algorithms and prefer human decision-making?[7:45] Algorithmic decision-making has proven to be most accurate.[10:10] Automating your investing is like choosing an automated vehicle.[12:06] Keeping within the guardrails of investing strategy.[15:44] How to diversify your portfolio as an additional guardrail.[17:31] Is a recession really looming on the horizon?[20:16] Don’t maximize for perfect answers.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

What are negative interest rates, why they could come to the U.S. and what investors can do about it.In this episode you will learn:How negative interest rates are even possible.How longer life spans, central bank actions, changing time preferences and the FIRE movement are contributing to negative interest rates.What is the paradox of thrift.How investors can earn a positive return on bonds even if interest rates are negative.What are some indicators to watch for that could signal imminent negative interest rates in the U.S.How individuals need to adjust their lifestyles in an era of negative interest rates.Thanks to Peloton and The Great Courses Plus for sponsoring the episode.For show notes and more information on this episode click here.[0:20] Germany government bonds go negative for the first time.[2:38] Understanding savings: the paradox of thrift. [6:35] The concept of the individual choice and the perceived expense of saving. [11:05] The savings glut could lead to negative interest rates in the U.S.[14:40] Three reasons one would invest in negative-yielding bonds. [18:38] Central banks are influencing the spread of negative-yielding bonds.[20:29] What could happen to the U.S. economy if interest rates fell.[22:11] Three factors David is looking at for an indication of falling interest rates.[25:49] What we can do if U.S. interest rates go negative. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

With gold at a six-year high, is now the time to invest? What determines the price of gold and what are ways one can invest in this precious metal? We also explore whether gold is an effective inflation hedge and store of value. In this episode you’ll learn:How has gold performed as an investment over different time periods.How gold has outperformed inflation, but has not been a great inflation hedge.What are the challenges to gold being a safe havenHow gold’s performance is driven by fear and momentumWhy gold is a speculation and not an investment.Why Ray Dalio and Jim Grant recommend gold but Warren Buffett is more skeptical.How to invest in gold via an ETF, physical coins or the gold futures market.Thanks to WIX and Policygenius for sponsoring the episode.For show notes and more information on this episode click here.[0:18] Gold may not be as strong as it used to be. [2:03] The performance of gold depends on when you bought it. [3:46] Why do people own gold?[4:15] Is gold actually a good inflation hedge?[8:07] Using gold to build a safe haven. [9:56] Investing in gold because it’s under-owned. [10:46] The supply and demand characteristics of gold. [12:25] The bandwagon effect of gold. [17:00] Gold is a speculation—not an investment.[19:10] Which asset will do best in an inflationary and distrusting economy?[22:44] How should you invest in gold?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How a less energy intensive and more regenerative economy will allow the developing the world to advance without breaching ecological boundaries.In this episode you’ll learn:What is the difference between circular and linear supply chains.What is doughnut economics?What are adaptive preferences and how they led David to trade in a BMW 650i for a Toyota Prius.How electric vehicles and the proliferation of solar panels are leading to a less energy-intensive economy.How the reduction of litter is an example of changing culture.Thanks to NetSuite and Dashlane for sponsoring the episode.For show notes and more information on this episode click here.[0:20] Creating a global economy that is better—not bigger.[3:18] A circular economy is better than a linear one.[6:20] The growth constraints of a circular economy.[9:08] Being wise in our aspirations.[12:55] David’s Tesla experience changed his perspective on investments.[14:52] The power of energy transitions.[18:02] Making more economical choices concerning energy transitions.[20:04] How are we judging our well-being?[23:07] Redefining what we consider beautiful.[24:17] Making a better global economy begins with you.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Why has value investing underperformed growth investing for over twelve years and how to position your portfolio for the eventual rebound in value investing.In this episode you will learn:The difference between growth and value investing and why value investing outperforms growth investing over the long-term.How value and growth indices are constructed and how they differ from fundamental indexing.What are the risks and opportunities of investing in concentrated, deep-value managers.Why value investing will eventually rebound.Thanks to WIX and Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[0:18] What is value investing?[2:07] A historical look at growth vs. value yields. [5:41] The return of the value stock in the early 2000s. [11:07] The twelve and a half years of underperforming value stocks. [13:09] The sectors controlling the performance of value and growth stocks. [15:01] Better understanding the indices. [20:31] Using fundamentally weighted indices to balance your portfolio. [23:10] Are underperforming managers struggling because of poor skills or because of unfavored strategies?[29:20] While value may be difficult to predict, it isn’t dead.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Has the off-shore dollar market in terms of dollar financing and currency hedging gotten so big that it can dictate Federal Reserve monetary policy including the expected short-term interest rate cut by the Fed at its July 2019 open market committee meeting? In other words, has the Federal Reserve lost its ability to conduct monetary policy and control interest rates as it sees fit and is now in search of other tools?In this episode you’ll learn:Why the Federal Reserve is puzzled by how U.S. interest rates are behaving.How the large but opaque off-shore dollar lending and currency hedging market could be strengthening the dollar, slowing the global economy and pushing down interest rates.What is leading to a global dollar shortage.Why the Federal Reserve is researching other policy tools.What investors can do to protect against uncertainty regarding the dollarThanks to ButcherBox and Policygenius for sponsoring the episode.For show notes and more information on this episode click here.[0:20] The suspected outcome of the Federal Reserve Committee Meeting on July 30th and 31st. [3:04] Is the Federal Reserve’s inconsistency, in this case, something to fear?[6:31] The influence of offshore U.S. dollars on the Federal Reserve. [9:10] The issue of undocumented offshore dollar-denominated debt. [12:06] The ramifications of the inability of the global supply chain to access the dollars they need. [15:21] Banks are less willing to lend dollars while also demanding more “pristine” collateral. [18:36] The complexity of the global U.S. dollar matrix. [21:06] Steps to take to cushion your portfolio against any ramifications of a lower Federal Reserve interest rate.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Will Facebook's Libra Cryptocurrency transform money as we know it or is it "the most invasive and dangerous form of surveillance devised thus far?" How does the Libra compare to Bitcoin and the U.S. dollar in terms of the attributes of money.In this episode you’ll learn:What is the Libra and how does it differ from Bitcoin.What are the different attributes of money.What is proof of work and proof of stake for cryptocurrencies.What is the difference between permissionless and permission-based systems for cryptocurrency.Thanks to WIX and Peloton for sponsoring the episode. Use code MONEY for Peloton.For show notes and more information on this episode click here.[0:17] Praise and criticism of the Libra. [1:56] What defines money, and does the Libra match up? [3:53] Proof of work vs. Proof of stake: Libra vs. Cryptocurrency.  [9:52] The role of Libra BFT: creating a permission-less and sustainable currency. [12:30] Libra’s claim that it has intrinsic value by being backed by assets. [16:00] Measuring the reserves and political power of Libra.[17:46] How new money is created by Libra compared to other currencies. [21:05] Who makes up the Libra validators?[22:36] Possible issues with taxes and regulation. [24:42] Comparing libra to other cryptocurrencies and the U.S. dollar.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How the demand by corporations and individuals to turn single-family homes into rental units is pushing up home prices, making it more difficult for first-time homebuyers to purchase a house. In this episode you'll learn:Why the United Nations is accusing certain countries and corporations of treating housing as a tradable financial commodity rather than a human right.Why Blackstone believes it is helping to solve the housing crisis by buying and renting single family homes and that the United Nations is wrong in its accusations.How the drive by corporations and individuals to own rental housing is pushing up home prices, but not necessarily rents.Why the U.S. has a chronic affordable housing shortage and what can be done about it.Thanks to Vistaprint and WIX for sponsoring the episode.For show notes and more information on this episode click here.[0:17] The concern of the U.N. with houses being treated as a commodity vs. a right. [2:27] The rise of rent-backed securities and the debated role of Blackstone. [8:20] The impact of single institutions on the national rent average. [9:59] House flipping vs. renting. [11:34] Buying a home to rent through a company. [12:56] David’s personal experience with being outbid on a house. [14:25] Why financialization is driving up home prices—not rent. [19:48] The housing crisis for those with low income. [22:53] Possible solutions for the rental housing crisis.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How the power of compounding applies not only to wealth, but influence, expertise, and creativity. How non-monetary investments can lead to greater monetary wealth and satisfaction.In this episode, you will learn:Why the rule of 72 and the power of compounding are hindered by portfolio losses.Why the sequence of returns impacts investment performance, but also our expectations.How what we experience in the world is made up of separate glimpses and events.What are non-monetary things that compound with time and why there are no short-cuts.How to focus our attention on things that compound.How non-monetary investments of our time can increase our monetary wealth.Thanks to Vistaprint and Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[0:20] The dangers of oversimplified compounding schemes.[4:30] Our experiences influence what we expect to happen.[7:57] A picture made up of pictures taken through time.[11:26] There are no shortcuts to forming experience.[15:05] Influence is created by passing through time—not by purchasing it.[18:32] Expertise, polish, perfection are all built by passing through time.[19:41] Taking the time to invest in creative work through time.[22:01] Time brings age—and that is okay.[23:11] Passing through time brings wisdom and experience.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How does artificial intelligence and machine learning work and what are some examples of how individual investors can use AI in their investing.In this episode you will learn:What is artificial intelligence, machine learning and deep learning.How is AI being used by different industries.How are AI models built with supervised and unsupervised learning.What are the components of a quantitative trading model and why it is insufficient to have an AI based stock ranking service.What are examples of AI based investment services and AI ETFs available to individuals.Why using AI to make investment decisions is so difficult.Thanks to Warby Parker and WIX for sponsoring the episode.For show notes and more information on this episode click here.[0:20] The two types of AI: rules-based & deep learning.[3:35] Some examples of artificial intelligence.[4:59] How machine learning systems work.[6:10] Supervised learning vs. unsupervised learning. [9:10] Training deep learning AI models.  [12:46] Complications with how deep learning models come up with their answers.[14:31] The role of AI in predicting interest rates.[17:16] Understanding the different factors and components of AI models when it comes to investing.[19:43] David’s personal experience with an AI-based investing service. [23:29] The Equbot and investing in ETFs.[25:46] The difficulties of using AI as an individual investor.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How an asset class such as bonds can play different roles in your portfolio depending on your investment philosophy. In this episode you will learn:What are bonds and how can they be used in investment portfolios.What is interest rate anticipation.Why individuals have an advantage over institutions because they don't have to worry about outperforming a benchmark when it comes to bonds.Why U.S. interest rates could rise and fall from current levels.Why China is unlikely to sell all of its U.S. Treasury bonds.Examples of higher yielding strategies other than bonds that can benefit from falling interest rates.Thanks to LinkedIn and Policygenius for sponsoring the episode.For show notes and more information on this episode click here.[0:20] Generating a return on bonds. [2:22] David explains why his own portfolio has not seen huge success in bonds.[3:56] What is the role of bonds in your portfolio?[6:41] A historical analysis of bonds.[9:55] The advantage of being an individual investor.[10:59] Speculating whether or not interest rates will go up or down.[14:50] The effects of the global economy on US bond behavior.[17:12] Strategies for diversifying your portfolio.[20:49] What to focus on as an individual investor in bonds.[22:19] Comparing the story of the carpenter and the tree to the life of a bond.[24:23] Deciding which path to choose for the use of your bonds.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

What are the pros and cons of having your entire investment portfolio invested in stocks versus a multi-asset class portfolio.In this episode you’ll learn:What are some investment options if you want to be 100% invested in stocks.What attributes do you need as investor to have an all stock portfolio.Why it is difficult for active managers to outperform.Why an all Japanese stock portfolio has severely underperformed for 25 years and how it is possible a U.S. stock portfolio could suffer the same fate.What are the pros and cons of a multi-asset class portfolio.Overview of The Simple Path to Wealth by J.L. CollinsOverview of Investing at Level 3 by James B. CloonanThanks to WIX for sponsoring the episode. You can find show notes and more info on the episode by going here. You can learn about Plus Membership here.For show notes and more information on this episode click here.[0:19] Can investing really be as simple as investing 100% of your portfolio in stocks?[4:16] Can diligent analysis actually outperform the index?[8:50] Understanding the difference between risk and volatility.[14:24] Knowing the risks associated with investing 100% in stocks.[19:17] The influence of the crowd and the misjudgments of investors on the market.[23:25] The benefits of diversifying your portfolio.[26:43] Investing 100% in stocks is viable, but it will come with ups and downs.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How venture capital funded startups run up massive losses while justifying premium valuations using creative profitability metrics. These private companies are now going public allowing early investors to cash out with sizable gains. Meanwhile, these new publicly traded companies are added to equity indices, forcing passive managers to purchase them for their index funds and ETFs.In this episode you will learn:How venture capital and initial public offerings work.How many venture capitalists are there and how have they performed.Why do startups stay private for longer and then go public while still incurring massive losses.What is blitzscaling.How startups use creative profitability metrics to attract investment capital at premium valuationsHow the current venture capital regime contributes to income inequality.How to get an allocation to an initial public offering. Thanks to Policygenius and TripActions for sponsoring the episode.For show notes and more information on this episode click here.[0:19] What are IPOs?[2:12] The growth of new venture capital firms.[5:22] Blitzscaling and the willingness of venture capitalists to initially lose money.[8:33] How start-ups are choosing to exit.[11:18] The cost of going public at premium valuations.[13:26] The social and economic repercussions of blitzscaling.[18:16] How money-losing firms try to create a profit.[19:38] How unprofitable companies convince investors to buy at high valuations.[21:20] How individuals participate in venture capital without investing in an IPO.[24:08] Possible solutions to IPO’s problems.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

The three-step plan for becoming financially wealthy and how to be wealthy without the money.In this episode you’ll learn:The results of two recent surveys on wealth, investing and retirement planning.How much money do people believe they need to consider themselves wealthy.How is wealth distributed across the U.S. population and how wealthy are Americans?Why you need a simple financial plan.What are the three steps to becoming financially wealthy.How to live like you are already wealthy.Thanks to WIX and Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[0:16] Schwab and Stash survey results.[2:49] Saving vs. living paycheck to paycheck.[4:29] How much does one need to be considered wealthy?[7:44] The value of social security.[9:23] The historical distribution of the country’s overall wealth.[11:33] The importance of having a plan.[13:38] Step One: increase your income.[15:10] Step Two: increase your savings percentage.[16:44] Step Three: increase your investment returns.[23:57] It’s not about optimization. It’s about diversifying and learning.[25:20] How to live like you are wealthy today.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How individuals can have a positive impact while earning a good return investing. What are some examples of socially responsible and impact investments and platforms.In this episode you’ll learn:What is the difference between impact investing, ESG and SRI?What are examples of socially responsible exchange traded funds.What are green bonds.What are some examples of impact investments and platforms.What are three ways we can have a positive impact as individuals.Thanks to Blinkist and LinkedIn for sponsoring the episode.For show notes and more information on this episode click here.[0:18] What is impact investing?[5:25] How impact investing is different from socially responsible investing.[8:50] Different opportunities to invest in a socially responsible way.[10:49] The impact that just one individual can have.[16:08] Keeping from negatively affecting the social and environmental fabric.[18:53] Generating positive impact with our investments.[20:01] Analyzing opportunities for truly impactful investments.[21:06] Impact Investing in the secondary market.[24:55] We each have to decide in what ways we will intentionally invest.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How reducing exposure to a catastrophic event, such as running out of money during retirement, is a better strategy than trying to accurately predict a catastrophic event. In this episode you’ll learn:How repeated exposures to low probability events can lead to ruin.How bonds have outperformed stocks over long stretches of time .How the success of retirement spending rules depend on the market environment and why a flexible approach to retirement spending makes the most sense given the wide variety of risk factors.Thanks to WIX and Policy Genius for sponsoring the episode.For show notes and more information on this episode click here.[0:20] Celebrating 250 episodes - thank you for listening![1:51] 3 individuals who have greatly influenced David’s passion for good investing.[2:37] The sequence of life - and how you are affected by it - matters.[9:21] Defining risk and modifying exposure.[9:53] Case study: bonds vs. stocks.[15:34] The conditions for premium dividend yield.[18:00] Spending rules for retirement.[23:04] Considering worst-case scenarios.[26:10] Best strategies for retirement planning.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Why respected investors and economists believe India will be the fastest growing economy and potentially best-performing stock market over the next two decades. What are the risks that could prevent that from happening?In this episode you will learn:Why the economy in India hold so much promise and what are the risks.What is a reasonable return expectation for the India stock market.What are passive and active options for investing in India.For show notes and more information on this episode click here.[0:18] What others are saying about Indian investments.[1:53] How India’s culture influences its investing.[5:41] A simplified glance at investing in India.[7:19] Current politics in India.[11:15] Positive aspects of India’s economy.[13:00] The challenges to consider.[16:59] What to invest in within India.[18:59] A look at active management in India.[21:07] In conclusion…should you invest in India?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Here are precautions we can take to avoid ponzi schemes and not become victim to investment fraud. In this episode you’ll learn:What are sources to determine the background of individuals and firms who are selling investment products and advice.What is the difference between registered investment advisors, registered investment companies and registered securities.How to analyze performance and fees to make sure they are acceptable before we invest.Why we need to be more wary if securities are not registered.Thanks to LinkedIn and Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[0:17] Personal stories surrounding fraudulent investment schemes.[2:38] The importance of authentic registration.[4:28] Who you are working with, and what are they promising?[6:34] Registered securities and registered investment companies.[8:41] Disclosing information properly when being compensated.[12:07] Deciphering performance claims.[16:37] Understanding what the fees are paying for.[18:37] Precautions to implement against fraud.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

How the increase in indexing is leading to the creation of more stock indexes, most of which are used by active managers. How more indexing makes it more difficult for active managers to outperform even though managers are getting more skilled. Thanks to TripActions and WIX for sponsoring the episode.For show notes and more information on this episode click here.[0:22] Definition of “alpha.”[0:49] Why there are so many indexes available.[4:35] The business of indexing.[7:01] The criteria that index providers use.[8:04] The cost of change in the index.[10:27] How some companies create ETFs.[12:44] Understanding the complexity of indexes and ETFs.[15:30] The influence of passive management on active management skills.[20:42] Understanding all the underlying facets of an index.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Why an inverted yield curve is disconcerting given such low interest rates. Why those low rates could lead to radical central bank policies during the next recession. Thanks to Policy Genius and Blinkist for sponsoring the episode.For show notes and more information on this episode click here.[0:23] Yield curve inversion has generally led to a recession.[3:00] Stock market behavior during a recession.[5:19] Why has the yield curve inverted?[7:04] Understanding who controls and defines the policy rate[14:42] Why can’t the economy support higher interest rates?[20:08] Fear of the lower bound.[22:15] Tools to keep inflation growing.[25:31] What we should be doing to protect against what the central banks don’t know.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#245 With more and more college degrees being granted and higher student loan balances, when does it make sense to go to a highly selective college or to college at all? What can increase earnings more than just having college degree? Thanks to TripActions and Shipstation for sponsoring the episode.For show notes and more information on this episode click here.[0:17] The price paid by parents for their children’s prestigious degrees.[3:28] David’s college experience.[5:14] Does ambition or a selective school earn more?[7:44] The influence of family background.[9:32] The importance of college networking.[10:30] Overcoming discrimination.[12:12] College degrees as hiring filters.[15:45] How much student debt should you take on?[20:28] Student loan forgiveness.[23:36] Is college worth it?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#244 How we can use filters to better manage how much we spend and make sure our spending has a meaningful impact on ourselves and the world. Thanks to EveryPlate and LinkedIn for sponsoring the episode.For show notes and more information on this episode click here.[0:16] The FIRE movement and how much you need to retire early.[1:23] What are we supposed to be seeking?[3:23] How do we define the “bare necessities?”[8:58] The superfluous things in life are what we spend our money on.[11:12] Finding joy vs. chasing pleasure.[13:51] Skills to reduce spending in order to retire early.[15:41] Establishing filters to lessen our spending.[18:51] Rethinking materialism.[21:01] There will always be more.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#243 What are the key metrics to determine if you have reached financial independence and can retire early. How major stock market losses can derail early retirement plans and what to do about it. Thanks to Sleep Number and Blinkist for sponsoring the episode.For show notes and more information on this episode click here.[0:19] Interview opportunity with Suze Orman.[1:15] FIRE: Financially Independent Retire Early.[2:06] Suze’s response to the FIRE movement.[3:36] Controversy over the motives driving FIRE.[6:42] Understanding the math of early retirement.[12:46] How a market loss would affect your early retirement plan.[17:26] Would the FIRE community be better prepared for a market crash?[19:03] Modeling out different paths to help prepare against catastrophe.[22:28] Utilizing different portfolio drivers.[23:53] Viewing early retirement success in terms of probability.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#242. Does it make financial sense to buy Berkshire Hathaway stock and let Warren Buffett and Charlie Munger manage your money? We evaluate Berkshire Hathaway's people, investment process and performance to determine what to do. Thanks to ShipStation and The Great Courses Plus for sponsoring the episode.For show notes and more information on this episode click here.[00:19] Berkshire Hathaway as a money manager.[1:49] Looking at the people to determining who to hire as a money manager.[3:37] What is the succession plan of the founding partners?[5:57] Berkshire Hathaway’s process - a two-pronged approach.[11:49] Understanding the mistakes that Berkshire Hathaway has made.[16:18] Comparing the performance of Berkshire Hathaway to the SP 500.[20:29] Taking the red flags into consideration.[21:51] Warren Buffett’s investment philosophy.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#241 Why modern monetary theory isn't worried about federal budget deficits, why budget deficits never go away and what are the risks if budget deficits get too large. We also explore what else proponents of modern monetary theory believe.For show notes and more information on this episode click here.[0:22] What is Modern Monetary Theory?[3:20] Taxes create demand for fiat money.[5:32] Taxes and government bonds don’t finance the federal government.[8:56] Budget deficits increase the net financial assets of theprivate sector.[13:16] Taxes destroy money.[13:46] The private sector determines the size of the budget deficit.[14:58] The concerns of crowding and losing faith.[19:08] Even government spending has to be constrained.[20:02] The dangers of the Federal Reserve controlling interest rates.[21:45] Modern Monetary Theory is correct in terms of how the economy actually works.[23:25] Do federal budget deficits matter?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 wagesSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 considerSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 environmentSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 addressedSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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” learningSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 waysSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 securitiesSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 economySee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 investSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#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 marketSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#220 How to evaluate cash savings options at banks, credit unions and brokerage firms. Why are yields on cash savings so much higher than a few years ago. How to tell if your bank or credit union is in experiencing financial difficulties. Thank you to Blinkist for sponsoring this week's episode.For show notes and more information on this episode click here.[0:10] All about banks, credit unions, and the pros and cons of cash savings[4:47] How can banks and credit unions become financially unstable?[14:25] The Federal Reserve is setting a new short term interest rate target[15:55] What tools does the Federal Reserve have to keep short-term interest rates in line with its target?[19:20] There are other options for investing your cash savings[25:49] Is it really worth pursuing multiple investing options for your cash savings?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#219 How fewer publicly traded companies, less stock shares outstanding and more intangible assets have led to higher earnings growth for U.S. listed companies and ultimately stronger stock market performance. Thanks to Circle Invest for sponsoring today's episode.For show notes and more information on this episode click here.[0:08] Observations on the current state of the US stock market[4:01] What if there’s something going on within the US market that suggests continued outperformance is coming?[7:23] Why the number of publicly listed companies, particularly small companies, is shrinking[14:52] The impact of intangible assets within small companies[18:21] Increased amounts of buybacks are leading to a shrinking stock market[20:38] Multiple factors are contributing to higher shareholder profits, yet lower wages for employees[26:05] What are the investment implications of low wages due to monsopony?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.