Tesla Does Not Compete With Chevy and Nissan

by
tesla model 3 vs leaf and bolt

Here, they come. It looks like the Nissan Leaf will be cheaper than a Tesla, so you know what that means. More articles where so-called analysts decry the prospects for the Tesla Model 3, because Chevy Bolt, and now Nissan, have cheaper electric cars available before the Model 3. This is dumb. Comparing Tesla Model 3 to Chevy Bolt is dumb. Comparing Tesla Model 3 to Nissan Leaf is dumb. Worrying about Tesla stock because less desired offerings are coming out with still less desired new models is dumb. (If you want to worry about Tesla stock, worry about the fact that they are always slower and later than they say. — Although I wouldn’t sell my stock…) The Spec Sheet Falsity Once upon a time, Consumer Reports poorly reviewed the Apple iPad. The reason? It compared specification sheets with other tablets, and the iPad had lower specs. Of course, this completely and utterly missed the point. Turns out that Consumer Reports always does this. I found out the hard way when we bought one of their “best buy” stoves only to find out that despite the great temperature readings they got on their laser thermometers, the flame pattern was …

Read More

What Is a Cashier’s Check?

by

I’m going to do a whole series on this based on some questions I keep getting, but for now, here is the short version. A cashier’s check is a check drawn on the bank’s funds, instead of a person’s funds. As a result, such a check would never bounce, or fail to clear for insufficient funds. However, there is a rash of scams out there involving fraudulent, or fake, cashier’s checks, so always call the bank to verify a cashiers check before accepting it.

Why You Shouldn’t Worry About a Market Top

by
market top plan

Worried about whether or not the market is overvalued? Did the markets set ANOTHER record? You aren’t alone. Seemingly every day, a major financial website or magazine publishes an article about how the stock market is overvalued, how this is a top, and that you should feel very, very scared. But, should you even bother worrying about a market top? Not if you aren’t talking about short-term investments. If you are talking about a 401k , an IRA, or any other form of long-term investing, you should ignore all the market top talk. What To Do For a Market Top The biggest problem with a market top is knowing WHEN it is going to happen. Remember, the stock market does not move based upon absolute truth. Rather, the stock market is a popularity contest where people vote for companies, or their shares, by buying them, and vote against companies, or their shares, by selling them. It is driven entirely by people (and computer programs made to anticipate people’s reactions, but that is another article). What that means, is even  if the market really is truly overvalued, right now, today, it still does not mean that the sell off will begin …

Read More

Betterment IPO a Distant Future?

by
is betterment a good investment

Betterment, one of the robo-advisor firms, raised an additional $70 million in financing this month (July 2017), according to Bloomberg and others. This values the company at $800 million, although such valuations on pre-market companies are largely meaningless. (Mental note: Write article about the so-called valuations of pre-exit startups.) Is this additional Betterment investment a good idea? It all depends on if they can shove a Betterment IPO down unsavvy investor throats. Check out how Betterment works at this Betterment review. According the article, the company has nearly $10 billion under management, which begs the question why they need to raise more money. Update: There is a new CEO. Is the new CEO’s purpose to get the company to an IPO? Check out my Digit app review. A money management company with $10 billion under management should be profitable. The need to raise another $70 million suggests the company is not profitable, and that begs the second question. At what level CAN the company be profitable? An can a Betterment IPO happen fast enough? If you’re interested in Betterment vs Wealthfront vs Robinhood vs Acorns vs Stash I have that here. Can Stand Alone Robo-Advisors Survive? Obviously, as an add-on …

Read More

Understanding How Beneficiaries Work

by

As a financial advisor, I used to review client’s paperwork when they came in for an appointment. Among many other things, I always made sure to go over was to review beneficiaries of my client’s accounts. Or, more to the point, I TRIED to review the beneficiaries on my client’s accounts. All too often, they had no idea who the beneficiaries were, or how to find out. Even worse, they often just decided to assume that they knew the beneficiaries on their accounts. Out of date beneficiaries is one of the most common financial problems people have when they start financial planning. What Are Beneficiaries When someone dies, there are a series of laws that determine exactly how your assets get dispersed among the living. These laws are long and complex. They are collectively referred to as estate law, and it is complicated enough to be an entire specialty for attorneys. The primary instrument for distributing your assets as you see fit, rather than as how the law dictates, is your will. However, there are several kinds of accounts that do not fall under this process, unless you do not properly designate your beneficiaries. In this context, a beneficiary is the …

Read More

Mortgage Rates Climbing

by
rising mortgage interest rates

Mortgage rates have ticked up in the this month. Despite stories saying that rates have “jumped” the rise has been rather tepid, and still hasn’t taken rates back to their post election highs in the 4.25% range. Rates had peaked back in January when some analysts still suspected that Crazy Trump was all an act and that the newly elected President would settle into the office as a regular business-friendly, regulation-busting, Republican. However, the Russia scandal has plagued the administration and health care has twice stalled out, pushing any pro-business legislation off. As a result, rates have basically trended eastbound and down, if you will. Do Mortgage Rates Really Matter? It’s always dangerous to say, “This time it is different,” in the world of finance. Such sentiments are typically used to justify things that should not be justified. However, is the world really different this time around with regards to mortgage interest rates? Consider that rates are still historically low, and that they will continue to be so long as they stay below the 5.0% to 5.5% range. A full percentage point is several Fed interest rate hikes away (a year… two?), or an economy that shakes off its slow …

Read More

Another Stock Market Record

by

For the past year (and longer) we’ve been reading article after article about how the stock market is set to implode, and yet, here we are… another intra-day record high for the Dow Jones Industrial Index. The Market Will Go Down… Eventually The truth is that the stock market will go down sooner or later. It always does. And, when it does, many of the people writing these now year-old doomsday articles will attempt to claim credit for “predicting” the market crash. (Although, there may not be a crash. A simple months-long 5% correction would take care of a  lot of the market’s pricing issues.) What they won’t do is tell you how much money they would have cost you if you had listened to them while the run up continued. Consider this: The Dow is up over 17% for the 1-year period. In other words, if you had gotten out when last year’s alarm bells started ringing, you would have missed a 17% increase in your investments. That 17% increase would have a very large cushioning effect on any sort of coming 10% correction, or even a 20% crash. In other words, if you had been listening to these …

Read More

Is Bitcoin For Real?

by
bitcoin investing

Recent headlines have started getting people to come out of the woodwork about bitcoin. Go to Market Watch today, and one whole side above the fold is bitcoin articles including one with the headline: “What delivered the best return of 2017’s first half?” – The answer is bitcoin (and ethereum, another digital cryptocurrency). How Is Bitcoin Worth Anything? Alright, this is a little complicated, so stay with me here. First, although you may have stopped thinking about it long ago, American dollars aren’t “real.” In reality, all a dollar bill is, is a special, paper-like fabric, printed with an intricate design in green and black. That’s it. You can’t eat it. You can’t use it as transportation, or for housing, or for anything really. It’s not even good as paper since there is almost no blank space. Dollars exist as currency, only because we as a society agree they represent value. That value is created by a limited supply regulated by the Federal Reserve, for something we give value. In other words, the only thing that makes money valuable is a limited supply that can be exchanged for goods and services. Bitcoin, works in pretty much the same way. Bitcoin …

Read More

What Interest Rate Hikes Mean for Young People

by
interest rates young people

I got an email excitedly saying that I should be explaining how interest rate increases will affected younger investors and the personal finances of young people. I didn’t really think that was necessary, but it keeps popping up elsewhere with even more breathless writing copy, so it’s time for a real recipe for Federal Reserve interest rate hikes. Interest Rates and Young People Let’s start from the beginning. Neither interest rates, nor money, nor investments, care how old you are. It all works the same for every age. That being said, it is true that interest rates have been so low, for so long, that anyone under 35 probably has never experienced higher interest rates. So, let’s go over what higher rates are like. History of Interest Rates First, remember that while the Fed has raised interest rates several times since December 2016, they have all been small 0.25% interest rate hikes. The current rate is 1.25% (technically, the Fed sets a range of 1.0% to 1.25%, but for graphing purposes, you’ll see 1.25%.) This is not remotely “high.” In the 1980s, the Fed Funds rate was an astounding 18% to 20%, as they tried to reign in inflation, and …

Read More

The Uncorrectable Housing Shortage

by
low cost housing density home

Here in Colorado, there is a housing shortage, especially near the bigger cities where the majority of people live, like the Denver metro area, Boulder, Ft. Collins, Loveland, Colorado Springs, and so on. The problem is in many ways self-inflicted. There are only so many buyers looking for houses above $500,000. There are many more buyers looking for houses below $500,000, and even more looking for houses below $300,000. A subdivision of homes priced between $200,000 and $250,000 would likely see a months-long waiting list in just hours. Why No One Builds Lower Priced Homes Anymore During the last housing crunch, buyers (like me) lined up to by houses from builders based on models. You put your name in the lottery for a lot, and then got to customize the house. The downside was that you had to wait the better part of a year to actually move into your new home while they were buying it. Back then, different builders built to different price points on large tracts of land. If you couldn’t afford the houses being built by one builder, you went with a different builder in that development. Check out my WalletHub review. Today, most builders are …

Read More