Investing Memes Explained

There's just no escaping it, people like internet memes?!?

And apparently, they really like investing memes as explained by J. Bradford Investment Management!! This is an edited re-post from a prior blog.

Type "investing memes" into Google and voila, there we are on page 1!

If we can explain memes, imagine what other complicated financial matters we can help explain and solve!

We also do pretty well on Google for more serious searches. If you search for a "Nashua investment manager", there we are! Yeah us!

The effort that businesses of all sizes put into Search Engine Optimization to get onto page 1 of Google and Yahoo search results is enormous and we're really proud our content is resonating.

So, we've added some new investing memes, and new explanations, because really, investing memes can get a chuckle out of accountants and financial advisors, but the rest of you are probably just shaking your collective heads...

Let's start with one of the originals...

Now, as an investment advisor AND a Star Wars fan, I find this pretty darn funny.

But I suspect many people don't get the full reference. Most people probably do remember the famous scene in Return of the Jedi where Admiral Ackbar leads his troops into the Emperor's trap as Luke watches from the deck of the Imperial Star Destroyer with his father in the background. When the Admiral discovers their surprise attack is not a surprise, he utters the famous line "It's a trap!"

But what the heck is EBITA and why is this funny?

EBITDA is an accounting term that stands for Earnings Before Interest, Tax, Depreciation and Amortization. Which is a fancy way of saying revenue minus operating expenses. It's a figure that many believe represents the core profits of a company, a true figure of profitability. Revenue minus basic expenses, it's simple and elegant. There are no adjustments (or some may say manipulations) that can come into the EBITDA.

And that’s the trap. It seems like because those possible manipulations and adjustments are EXCLUDED, we are lulled into using EBITDA as a virtuous measure of profitability. In many cases, yes, that’s true, but there are still many ways EBITDA can be manipulated that financial analysts need to consider. As analysts, we know that, but those that don’t, fall into the trap...

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Here’s another one:

I chuckle here too.

This refers to the quest all investors and investment professionals are on to determine when a stock, stock market index or other investment is at the very lowest point in its valuation cycle. In some cases, the bottom or the lowest price of a stock is the price you’d like to buy the investment if you think it will subsequently rise in price. Finding that price is very elusive and even with highly sophisticated tools and analytics, the best investment analysts are often wrong.

This meme is funny because we know how hard it is to analyze and determine when a stock or index has hit bottom and we all likely regret times we’ve been wrong trying to time the market.

In most cases, investors are better off not trying to time the market. The most prudent strategy is often pursuing an approach of dollar cost averaging and holding a diversified portfolio that is periodically rebalanced.

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If we're going to hit Star Wars, we should hit Star Trek too...

Value investing generally refers to buying stocks that are currently out of favor in the market, hoping and predicting that they will rebound. We've all heard the saying, "buy low, sell high". But much like calling the bottom, determining when a stock is truly a value and when it's on a permanent downward slide is difficult. This is why value investing can at times look very much like the scenario described and the people doing it without skill, well, the meme is spot on.

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Finally, we have our obligatory investing meme with a pet. This one’s a little more straightforward. I’m of to a tennis lesson myself right now, we'll see how my rate of return compares to Fido.

Do you need something explained? We'd love to chat, answer questions or discuss any financial matters or topics in this post.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Look At All Those People Protesting High Fees!

It’s great to see so many protesters in Washington D.C. protesting the high fees charged in the financial services industry!

Or, I suppose they may be there protesting something else...

And sure, protesting high fees in your 401(k) or with your advisor is probably pretty low on the list of lamentations under protest these days, but, it’s actually worth paying some serious attention to.

There is a great calculator on the Vanguard website where you can model how big of an impact fees can have on your return, particularly over long periods of time. You can access a link to that calculator and other great tools and calculators from 3rd party providers on our External Tools Page.

Here’s the bottom line. If you model a pretty typical managed account and you have average fund fees of say 1%, and then a 1% wrap fee on top of that, you’re looking at a 2% total fee. If you model that fee over 25 years at an average return of 6%, you can see the net accumulated lost returns is 43%! It’s actually pretty shocking.

That’s a lot of your pie that you’ve turned over to your investment manager. Now, if they were able to earn above average, market exceeding returns over time, and also provide other unique or value added services that are needed and reasonable to pay for, then you may assess that it was worth it.

However, many studies have shown that consistent, market-beating performance over time is very difficult to achieve and for most, many common financial planning and analysis services can be obtained through lower cost or fixed rate mechanisms.

OK, so low fees are important. Anything else? Yes, plenty, but it can be hard to keep all of the advice, tips, tricks and recommendations straight.

We’ve got a nice chart that summarizes seven of them, but at all of our workshops and seminars, we typically stress two key points:

·      Ask if the person giving you advice is a fiduciary, and if not, why not.

·      Ask how they are paid and how they keep fees low for core services.

The answers to those questions will either give you some pause or give you some comfort that your advisor is on your side.

There’s also an excellent and humorous tirade by John Oliver on 401(k) fees that’s worth watching. You can find the link to that video on our Video Series Page.

If you would like an assessment of your portfolio and the fees you are paying, we can provide a free consultation to give you the insight and transparency that can be hard to determine on your own. We can also provide no obligation alternatives.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Investing 101 Class -- now with emojis!!

I'm excited to be partnering with the Coalition for a Better Acre to deliver my revamped Investing 101 workshop on Tuesday, October 18th in Lowell, MA.

Now with emojis!!

I’ll be presenting in the 1st floor community room at 517 Moody Street from 6:30pm – 8:00pm.

The workshop is free, dinner will be served and you’ll have a chance to win a $25 Target gift card! Plus you’ll get 90 minutes of Jason unplugged.

I’ll answer questions and try to give practical, actionable advice in a pressure and judgment free zone. I hope you can join us.

You can check out the presentation slides, catch up on my blog posts or explore other educational videos that might help you formulate questions for the session.

Hope to see you there!

Guess what asset has increased over 50% in the last month?

The teaser image may have given it away, but if you guessed Bitcoin, you are correct.

According to www.coindesk.com Bitcoin was trading at $454.82 on May 13th, closed at $675.35 on June 12th and has moved between $663 and $719 as of midday trading on June 13th.

What should we make of this?

Well, first, we must understand that Bitcoin regulation is still very nascent and emerging, second, that Bitcoin is used predominantly by those engaged in nefarious activities and third, that it has a history of extreme risk and volatility. So, generally Bitcoin is not suitable for investment purposes, but it’s still worthy of some attention and analysis.

Can we explain through economic analysis why such an increase is justified? The short answer is not really.

According to a recent press release covered by www.coindesk.com “The US Department of Homeland Security (DHS) has awarded as much as $600,000 in grants to six companies working on blockchain applications for the government” and there have been other recent stories and press releases related to increased interest in the underlying blockchain technology. So the increase certainly may be partially driven by media interest and more companies looking for innovative ways to use and leverage distributed database technology. Another factor may be the increased difficulty in mining bitcoins, thus increasing their scarcity. And technical factors such as volatility and sentiment that we typically use to measure other more traditional currencies also help explain the run-up.

But over 50% in one month? It may make sense to those who track and follow the hyper volatile bitcoin market and virtual currencies, but many of the rest of us still have trouble connecting the dots of increased prices in the currency to the economic rationale. That’s not to say good reasons don’t exist and aren’t justified, they are simply not as obvious and accepted as say the price increase of a stock based on their intention to merge with another company.

Making sense of this new currency and technology can be confusing, so if you would like to learn more about the basics of Bitcoin and Blockchain, please like our Facebook page and plan to attend our free virtual webinar on Facebook Live Streaming, tomorrow, Tuesday June 14th at 12:00 Eastern.

https://www.facebook.com/jbradfordinvestments/

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

5 Quick Tips for Summer Financial Fitness

Memorial Day is in the books and summer is officially on!

School will be wrapping up in the next few weeks and we will shortly be consumed with excitement over summer vacations, beach trips and camp reunions. Before the summer gets away, here are five simple tips for summer financial fitness.

1)   Double-check your 2016 tax withholding.

Getting a Federal tax refund may feel good, but it’s really more like giving the government an interest free loan. It’s equally bad to owe the government at the end of the year as you may have to pay a penalty on top of the tax that you owe.

Just like Goldilocks and the three bears, you want to get your tax bill just right. You can use this free tool from the IRS to see where you stand and then with the six months remaining in the year, you have time to adjust your W-4 or make estimated tax payments to ensure you end the year on target.

2)   Double check your employer match and 401(k) maximization.

Just like getting your taxes planned out perfectly, you’ll also want to make sure that you’re not on a path to miss out on employer match dollars in your 401(k). This can happen if you contribute the individual maximum of $18,000 before the end of the year. An easy check is to simply divide $18,000 by the number of pay periods you’ll receive during the year and make sure you aren’t contributing over that amount. Your individual situation can get complicated with employer specific match rules and bonus payments, so charting it out in Excel may be required, but like your taxes, if you plan it out now you’ll have several months to course correct if needed.

3)   Do one outsourced household task yourself this summer.

Summer is all about relaxing and spending quality time with family and friends. But “time is precious” and “time is money”, so many of us will work with vendors and service providers so that we can more thoroughly enjoy our time and money. Fair enough, but if you pick just one task, like mowing your own lawn, and do it yourself for the 12 weeks of summer, you’ll be able to goose your retirement or college savings more than you might realize.

4)   Save on flights with Hipmunk and try a VRBO

Here are a couple of websites to help with your summer or winter travel planning that you may not have tried yet. For flight planning, I like Hipmunk. The feature that I like best is that Hipmunk assigns every flight an “agony” rating and then you can sort the flights from least awful to most awful. I also really like their graphical view of layovers.

Instead of hotel rooms, I like VRBO/Homeaway. With this site, you book directly with property owners across the country. They typically provide many more photos than hotel properties and you can get the exact amenities and situation you are looking for, often at a much lower price.

5)   If you are staying local. Use Parking Panda and Gas Buddy to save on parking and gas.

Finally, if your summer plans are more modest, try Parking Panda and Gas Buddy. Parking is always a pain for those big city trips, but Parking Panda lets you make a discounted parking reservation in advance in most major cities across the U.S. and Gas Buddy will help you keep tabs on the lowest gas prices in the area.

If you have any questions about these products, services or strategies or would like a second opinion on the products, services or investment strategies you are using, please use the link to schedule a free consultation.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.