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Category Archives: NASDAQ

When It Comes to Your Investments, Are You Smarter than a 14 year-old?

12 Saturday Oct 2013

Posted by wmosconi in asset allocation, Bernanke, bonds, business, Charlie Munger, Consumer Finance, Education, Fed, Fed Taper, Fed Tapering, Federal Reserve, finance, financial planning, GIPS, GIPS2013, Individual Investing, interest rates, investing, investing, investments, stocks, bonds, asset allocation, portfolio, investments, math, Modern Portfolio Theory, MPT, NASDAQ, personal finance, portfolio, risk, statistics, stock prices, stocks, volatility, Warren Buffett, Yellen

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Bernanke, bonds, books, budgeting, business, Charlie Munger, education, excellence, Fed, Fed taper, Fed Tapering, Federal Reserve, finance, financial planning, Govtshutdown, highered, intelligence, investing, investing books, investments, IQ, math, mathematics, retirement, Shutdown, statistics, stocks, success, thought leaders, thoughtleaders, Twitter, Twitter information, TwitterIPO, volatility, Warren Buffett, Yellen

That is a great question.  I will save you the suspense and give you the answer.  You are as smart as a 14 year-old when it comes to your knowledge of your investments.  What 14 year-old teenager am I referring to?  I am referring to myself.  I started investing when I was 13 back in November 1987.  (If you do the math, you can figure out how old I am).  After spending a year studying the financial markets, I had amassed quite a bit of understanding.  How does this relate to you?  Well, if you have been following my blog, I have not revealed any information that I did not already know by then.  Now my writing style has improved and I have incorporated innovations introduced after 1988, the topics I have written about are not that complicated.  Before you continue reading, I would like to state at the outset that I was not some sort of child prodigy when it came to finance.  I was good at math and retained what I learned.  I am no genius and have no delusions of grandeur.  As I sometimes tell my friends, “If I really knew what I was talking about, I would be running a $10 billion hedge fund”.

With that being said, you also have the good fortune of learning from approximately 25 years of mistakes in investing and misunderstanding about the financial markets and the impacts of exogenous and endogenous events.  I could go on and on about my mistakes; however, I will mention a few here.  First, I had the opportunity to invest in two shares of Berskshire Hathaway Class A (BRK.A) stock back in 1991 when it traded a little above $8,700 per share.  Of course, Berkshire Hathaway is the company run by the famous investor Warren Buffett.  As of August 5, 2013, BRK.A’s closing stock price was $177,300 or a bit over $350,000 if I would have purchased those two shares back in 1991.  Why did I miss out on this opportunity?  I did learn everything I could about Warren Buffett once my economics teacher talked about him and his investing paradigm.  It really made sense to me from the start.  Unfortunately, I pass up on purchasing the shares because I would only be able to own those two shares and one other mutual fund.  As a young man, I was hyped and yearning to pick a number of different investment choices.  Best Buy is one of the best performing stocks in the financial markets and trades over $30 now.  I purchased Best Buy about 7 years ago and paid $42.  I did sell quite some time ago, but I took a huge capital loss.     Second, I wrote a paper during my MBA program that talked about the risk management procedures of Citigroup.  As I look back on that paper written in 2005, it is curious to note that, besides AIG, Citigroup went through the pain of learning the limits of risk management and it had a bailout of epic proportions.  I guess my paper was not the best in retrospect.  Finally, I had a terrible habit of picking the current “hot hand”.  I tended to switch my mutual fund holding way too often when I was in my teens.  It was really attractive to calculate how much money I could earn in a mutual fund that made 20% per year.  Wow, I could double my money in less than four years!  As you always see now, past performance is not indicative of future returns.  I really ignored that statement and invested many times based upon hopes and extrapolation instead of rational thought.  My emotions got the best of me.

I did have quite a few wins along the way.  For example, I was invested in the famous Fidelity Magellan mutual fund when it was run by Peter Lynch.  Peter Lynch is a legend among mutual fund managers.  At one point in time, Fidelity Magellan had more assets than any other mutual fund in the country.  Oddly enough, that was its eventual downfall.  Another example would be that I was able to learn how to successfully manage my father’s 401(k) portfolio from 1988 to the present.  I have seen many bull and bear markets and never had his eventual retirement portfolio take a significant hit in terms of poor returns.  My experience investing over the last 25 years has shown me that there will be many times when the financial pundits say this time is different, new industries are going to blow away the Old Economy, or that news events should cause investors to reallocate investment portfolios dramatically.  Even though I have been investing for 25 years, there have been very few seminal financial market events, the global economy may be different but the laws of finance and economics still hold (or they eventually bring prices back to earth), and new industries tend to bring more innovation and tools for existing, mature industries.  An illustration would be the early Internet companies lost money and burned through enormous amounts of cash.  However, the technologies they introduced allowed existing businesses to use the Internet in unique ways to either generate additional revenue or improve productivity.  A direct example would be how airplanes revolutionized leisure and business travel, but the airlines have been a wealth-destroying industry.  On the other hand, there are a myriad of business that used the services of airlines.

My overall point is that if you take one hour per week for about four months, you will be able to get through the five books I recommended on investing.  Additionally, you can spend another 30 minutes looking at a few financial websites just to increase your knowledge of investment products, finance terms, and keep abreast of news in general.  As a reminder, the list of five books can be found here:  https://latticeworkwealth.com/2013/07/23/spend-20-hours-learning-about-investments-to-prepare-20-years-of-retirement-2/ .  As another reminder, some recommended financial websites can be found here:  https://latticeworkwealth.com/2013/08/04/todays-news-should-prompt-you-to-adjust-your-entire-investment-portfolio/ .

My entire goal with this blog is to save you lots of time.  Rather than being bombarded by disparate information regarding the financial markets and how to approach investing, I am trying to give you a shortcut.  I am hopeful that, if you have a roadmap that is clear, you will be more motivated to learn about investments and eventually become more comfortable with the process of building an investment portfolio to meet your financial goals, while ensuring that your emotions do not get the best of you.  At the end of the day, many individual investors pay fees to financial professionals to save themselves from enemy #1.  Who?  I mean that sometimes individual investors act rashly and keep buying and selling stocks and bonds at inopportune times just because a bad news event comes along or via peer pressure.  Remember that, if you have read all my previous posts, you are more than likely in the 90th percentile of individuals understanding of how the financial markets work.  Keep in mind there have not been that many posts to my blog, so I hope you realize that it is not as painful as you might have once thought learning about managing your investment portfolio and the financial markets is.

As an aside, please feel free to reach out to me if you have a recommendation for a topic I can discuss.  Please remember that this is a website geared toward individual investors who are novices or have not been investing for too long.   Thus, I am not looking to discuss how one might use ARIMA modeling to understand how macroeconomic variables affect the financial markets or individual stocks/bonds.  I appreciate you keeping it relatively simple.  With that being said, if enough people contact me in regard to one specific topic, I will definitely take a closer look.  Thank you in advance for your participation and time thinking about what would be more useful to you.  Furthermore, I am hoping that I cover topics that apply to everyone.  If the collective investment intelligence of the group steps up a few notches, I will cover the topic.  Please send me an email:  latticeworkwealth@gmail.com

A New Paradigm for Investing Available on Amazon.com

11 Friday Oct 2013

Posted by wmosconi in asset allocation, Bernanke, bonds, business, Charlie Munger, Consumer Finance, Education, Fed, Fed Taper, Fed Tapering, Federal Reserve, finance, financial planning, GIPS, GIPS2013, Individual Investing, interest rates, investing, investing, investments, stocks, bonds, asset allocation, portfolio, investments, math, Modern Portfolio Theory, MPT, NailedIt, NASDAQ, personal finance, portfolio, risk, statistics, stock prices, stocks, volatility, Warren Buffett, Yellen

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academia, academics, asset allocation, Ben Graham, Bernanke, bloomberg, bonds, BRK, BRK.A, BRK.B, BRK/A, BRK/B, Buffett, cnbc, cnbcfastmoney, cnbcworld, consumer finance, David Dodd, economics, economy, Fed, Fed taper, Federal Reserve, finance, financial advice, Govtshutdown, individual investing, investing, investments, Jim Cramer, madmoney, math, mathematics, MBT, Modern Portfolio Theory, personal finance, portfolio, retirement, Shutdown, statistics, stocks, value investing, Warren Buffett, Yellen

I am happy to announce that I have published another book on Amazon.com.  The book is another installment in my A New Paradigm for Investing series.  In this particular book, I focus on the use of Modern Portfolio Theory (MPT) as the primary tool by Financial Advisors to recommend portfolio allocations.  The theory is over 50 years old, and most of its assumptions have been shown to be less and less useful.  I explore the reasons why in my text.  I have tried to write in such a manner that you do not need a degree in mathematics or statistics to understand its contents.  Futhermore, you do not need to know about the intricacies of MPT in order to follow my logic.  You would find the same information in a college textbook but in a condensed format.

Note that this book is available for download onto a Kindle.  Additionally, there is a Kindle app for iPhones and Android devices which is free to download.  Amazon.com prime members can borrow the book for FREE. I have provided a link below to make it easier.   My email address is latticeworkwealth@gmail.com should you have any questions/comments/feedback.

The book is:

1)      A New Paradigm for Investing:  Is Your Financial Advisor Creating Your Portfolio with a 50 Year-Old Theory?:

http://www.amazon.com/New-Paradigm-Investing-Financial-ebook/dp/B00FQQ0CKG/ref=sr_1_1?s=books&ie=UTF8&qid=1381520643&sr=1-1&keywords=a+New+paradigm+for+investing+by+William+Nelson

I would like to thank my international viewers as well.  I also wanted to especially thank some selected followers of my @NelsonThought and @LatticeworkWlth Twitter accounts (each of whom I would recommend following for the content and insight):

Followers on @NelsonThought:

The Wealth Report @wsjexperts – #wsjexperts

The Royce Funds @RoyceFunds

Research Magazine @Research_Mag

Barron’s Online @BarronsOnline

Vanguard FA @Vanguard_FA

Cleveland Fed Research @ClevFedResearch

Pedro da Costa @pdacosta

Muriel Siebert & Co. @SiebertCo

Roger Wohlner, CFP® @rwohlner

Ed Moldaver @emoldaver

Sylvia Maxfield @sylviamaxfield

The Shut Up Show @theshutupshow

Berni Xiong (shUNG) @BerniXiong

Followers on @LatticeworkWlth:

Euro-banks @EuroBanks

Direxion Alts @DirexionAlts

Charlie Wells @charliewwells

AbsoluteVerification @GIPStips

Investment Advisor @InvestAdvMag

Gary Oneil @GaryONeil2

MJ Gottlieb @MJGottlieb

Bob Burg @BobBurg

Melody Campbell @SmBizGuru

TheMichaelBrown @TheMichaelBrown

Phil Gerbyshak @PhilGerbyshak

MuniCredit @MuniCredit

D.J. Rob-Ski @DJRobSki

A New Paradigm for Investing Available on Amazon.com

06 Sunday Oct 2013

Posted by wmosconi in asset allocation, Bernanke, bonds, business, Charlie Munger, Consumer Finance, Education, Fed, Fed Taper, Fed Tapering, Federal Reserve, finance, financial planning, GIPS, GIPS2013, Individual Investing, interest rates, investing, investing, investments, stocks, bonds, asset allocation, portfolio, investments, math, NailedIt, NASDAQ, personal finance, portfolio, risk, statistics, stock prices, stocks, volatility, Warren Buffett, Yellen

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asset allocation, bbc, bbcworld, bloomberg, bonds, budgeting, Buffett, Charlie Munger, cnbc, cnbcworld, consumer finance, economics, economist, Fed, Federal Reserve, Govtshutdown, investing, investments, Mungerisms, NailedIT, Naileditoftheday, NBCNightlyNews, personal finance, portfolio, retirement, Shutdown, stocks, theeconomist, Wall Street, Warren Buffett

I am happy to announce that I have published two books on Amazon.com that are available for download onto a Kindle.  Additionally, there is a Kindle app for iPhones and Android devices which is free to download.  Please feel free to check out the titles below.  I have provided links to make it easier.   The books explain how to select a Financial Advisor, and I provide a list of five books which can help you learn more about investing, respectively. I explain issues about investing as an individual in plain language and without the jargon normally associated with the financial markets. Please feel free to contact me should you have any questions/comments/feedback. My email address is latticeworkwealth@gmail.com.

The books are as follows:

1)      A New Paradigm for Investing:  Can Your Financial Advisor Answer These Questions?:

http://www.amazon.com/New-Paradigm-Investing-Financial-ebook/dp/B00F3BDTHW/ref=sr_1_1?s=books&ie=UTF8&qid=1381107823&sr=1-1&keywords=A+New+Paradigm+for+Investing+by+William+Nelson

2)       Spend 20 Hours Learning About Investing to Prepare for 20+ Years in Retirement

http://www.amazon.com/Learning-Investments-Prepare-Retirement-ebook/dp/B00F3KW9T2/ref=sr_1_1?s=books&ie=UTF8&qid=1379183661&sr=1-1&keywords=William+Nelson+Spend+20+Hours

The first book listed is normally $9.99 but available for a limited time at $7.99.  The other book is normally $2.99, but I dropped it down to $0.99 for the rest of October 2013.

I would like to thank my international viewers as well.  I also wanted to especially thank some selected followers of my @NelsonThought and @LatticeworkWlth Twitter accounts (each of whom I would recommend following for the content and insight):

Followers on @NelsonThought:

The Wealth Report @wsjexperts

The Royce Funds @RoyceFunds

Research Magazine @Research_Mag

Barron’s Online @BarronsOnline

Vanguard FA @Vanguard_FA

Cleveland Fed Research @ClevFedResearch

Pedro da Costa @pdacosta

Muriel Siebert & Co. @SiebertCo

Roger Wohlner, CFP® @rwohlner

Ed Moldaver @emoldaver

Sylvia Maxfield @sylviamaxfield

The Shut Up Show @theshutupshow

Berni Xiong (shUNG) @BerniXiong

Followers on @LatticeworkWlth:

Euro-banks @EuroBanks

Direxion Alts @DirexionAlts

Charlie Wells @charliewwells

AbsoluteVerification @GIPStips

Investment Advisor @InvestAdvMag

Gary Oneil @GaryONeil2

MJ Gottlieb @MJGottlieb

Bob Burg @BobBurg

Melody Campbell @SmBizGuru

TheMichaelBrown @TheMichaelBrown

Phil Gerbyshak @PhilGerbyshak

MuniCredit @MuniCredit

D.J. Rob-Ski @DJRobSki

Halting of the NASDAQ: No Worries for Readers of this Blog

22 Thursday Aug 2013

Posted by wmosconi in bonds, business, Education, finance, investing, investing, investments, stocks, bonds, asset allocation, portfolio, investments, NASDAQ, stocks, Warren Buffett

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bonds, business, education, finance, investing, investments, NASDAQ, retirement, stock market, stocks, trading

There was an outage at the NASDAQ around 12:15pm EST.  At the time of this writing, the NASDAQ is still down.  You will see the financial media and various news outlets making a big deal about this story.  While it is a big deal to traders and speculators, a long-term investor really does not need to worry.  In fact, the focus will go back to the meeting at Jackson Hole, Wyoming tomorrow.  Remember that this makes for good TV only.  If your time horizon is 5+ years, you have nothing to worry about.

My suggestion would be to read The Intelligent Investor written by Benjamin Graham.  The edition I would recommend would be the one with commentary by Jason Zweig.  You will learn about Graham’s discussion of the distinction between investing and speculation.  Wall Street was unaware of this over fifty years ago.  The financial media is still unaware of this dichotomy.  The book also will introduce you to the famed, Mr. Market as well.  It is a good way to start learning about behavioral finance.  Irrationality can prevail during times such as these.  A link to the book is as follows:  http://www.amazon.com/The-Intelligent-Investor-Definitive-Investing/dp/0060555661/ref=sr_1_1?ie=UTF8&qid=1377192202&sr=8-1&keywords=The+Intelligent+Investor.

I look forward to sharing more information with you in the future.  Note that I will rarely talk about current events.  As I have previously mentioned, you need to ask yourself if you will remember this story in ten years.  If not, you can just watch the news coverage for entertainment value.

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