• Renters v Buyers: Who's More Nervous


    You will find more statistics at Statista

    According to this new infographic, homeowners are less likely than renters to feel anxiety over the cost of housing each month. Perhaps it has something to the population of folks who rent v those who buy.  And it could be the geographic location of most existing homes v. most existing rentals.

    According to the Gallup survey that investigated this question:

    • 49% of renters and 25% of homeowners worry about paying for housing
    • More renters than homeowners worry at all income levels
    • Gap in owner-renter worry growing for the middle- and upper-income

  • How to Save Money

    Do you buy your lunch? Do you lose your spare change? Do you have too much taken out of your paycheck in taxes only to get a refund at tax time?

    The video above offers you some simple tips to save more money.

    For more tips to help you grow your savings, take a look at this Bankrate.com article, where you'll find reminders to contribute to your 401k.

    For discussion:

    What tips can you add to the list of ways to save money?

  • Saving Your Tax Documents

    Now that taxes have been filed, what should you do with your documents?

    The infographic below offers some advice on how long and how to save the receipts you need for the tax man.

    Source: What to Do With Your Documents After Tax Time via H&R Block

    For discussion:

    What is an IRS audit? How should you prepare for an audit?

  • The New Face of The $20 Bill

    The face of the $20 bill is changing. What used to feature the face of Andrew Jackson, will soon feature Abolitionist Harriet Tubman who helped lead many slaves to freedom.

    From the NY Times (Calmes, 20 Apr 2016):

    Treasury Secretary Jacob J. Lew on Wednesday announced the most sweeping and historically symbolic makeover of American currency in a century, proposing to replace the slaveholding Andrew Jackson on the $20 bill with Harriet Tubman, the former slave and abolitionist, and to add women and civil rights leaders to the $5 and $10 notes.

    Mr. Lew may have reneged on a commitment he made last year to make a woman the face of the $10 bill, opting instead to keep Alexander Hamilton, to the delight of a fan base swollen with enthusiasm over a Broadway rap musical based on the life of the first Treasury secretary.

    But the broader remaking of the nation’s paper currency, which President Obama welcomed on Wednesday, may well have captured a historical moment for a multicultural, multiethnic and multiracial nation moving contentiously through the early years of a new century.

  • How Is Apple Doing?

    What should investors expect from Apple? According to the Motley Fool, key variables to watch are

    • iPhone sales
    • revenue guidance
    • dividend announcements

    From the Motley Fool article (Cardenal, 23 Apr 2016):

    The iPhone generates almost 70% of total revenue, so this segment is absolutely crucial for Apple in terms of financial performance. The company is facing considerable challenges in this key business, and analysts will closely scrutinize iPhone sales volume and prices in different geographies. 

    [read the full article here]

    For discussion:

    What are some of the trends in Apple's industry that will drive the value of the share price?

    Would you buy, sell, or hold Apple stock? Why?

  • 2015 Fed Survey on Mobile Banking

    When is the last time you entered a brick-and-mortar bank to deposit or withdraw cash? Years ago, the innovative technology was the ATM which allowed consumers to do their banking at a machine and not spend time in a bank. Though skeptical of security at first (what if the machine swallows my check and I can't get it back?), many consumers became accustomed to the convenience of 24 hour banking.

    When internet banking then came on the scene, convenience grew as did security concerns. It didn't take long before we found fewer and fewer reasons to enter the traditional bank branch.

    For discussion:

    Based on the Fed report referenced in this video, what are the trends in mobile banking?

    What concerns, if any, exist as mobile banking continues to grow?

  • Diamonds Are Still a Girl's Best Friend

    Back in 1940, Shirley Temple's father bought a blue diamond ring for $7,200 (a fortune back then). Today, it is estimated at $35 million at least, and may go for more because it used to belong to Shirley Temple.

    The beautiful stones have a history of sky high valuations. But what makes them worth so much?

    For discussion:

    Based on this video, what factors drive the value of a diamond? Why might the celebrity ownership drive the price even higher?

    How can one know what a diamond is "worth?"

  • The Tax Burden


    You will find more statistics at Statista

    According to the recent report by the OECD:

    After increasing each year since 2011, the tax burden on the average worker remained at 35.9% in OECD countries for the second consecutive year in 2015. The tax burden or tax wedge is measured by taking the total taxes and social security contributions (SSCs) paid by employees and employers, minus family benefits received as a proportion of the total labour costs for employers. Thi measure provides an analysis of how these levies and cash benefits combine together to impact on net household income.

    [find the full report here]

    For discussion:

    What is the likely impact on GDP of higher personal taxes? What is the likely impact on the stock market?

  • Should You Buy Phone Insurance?

    Many financial experts will tell you it is never wise to buy the extended warranty on your small appliance. For the most part, small appliances like laptops, cameras, tablets don't fail and rarely need to be replaced or repaired. However, the evidence suggests that the extended warranty market is active and profitable--that is, profitable for insurance providers.

    The reasons that consumers buy extended warranties have been explored in the academic literature for years. From Voss and Ahmed (1992):

    Empirical evidence suggests that consumers view extended warranties as insurance to reduce perceived risk (Kelley and Conant 1987, 1991). Risk associated with consumer purchase includes dimensions of performance, financial, psychological, social, convenience loss, and physical risk (Kaplan, Szybillo and Jacoby 1974). An extended warranty specifically attenuates three of these dimensions: performance risk (Will it work properly?); financial risk (Will it cost too much to maintain it?); and convenience loss (How much time, convenience, and effort will be required if the product does fail?).

    The popularity of extended warranties is curious. After all, is it rational to insure an asset that is soon obsolete, has a low probability of failure, and is relatively low cost (in the grand scheme of things, a $500 tablet is a relatively low cost asset). Meanwhile, do these same consumers properly insure their other, much more valuable, assets?

    More recently, Browne, Knoller, and Richter (2015) examine the insurance for "high-probability, low-consequence" (HPLC) events compared with "low-probability, high-consequence" (LPHC) events.

    Our analysis provides evidence which is consistent with a preference for insurance for HPLC risks over LPHC risks: we find that many more policyholders purchase add-on coverage to their homeowner’s insurance to cover the risk of bicycle theft than to cover the risk of loss due to flooding.

    So should you buy insurance on your cell phone?

    The answer depends on risk.

    If you are likely to drop your phone in water with some high level of probability, then phone insurance may be for you. If you typically don't damage your phone, then take the money you would have spent on the insurance and put it away for the unlikely event that you need to buy a new phone before your contract renews. In so doing, you are "self-insuring." And who knows, you may end up with a nice savings account in the end.

    For discussion:

    How often have you taken advantage of the extended warranty on any small or large appliance that you've purchased?

    Do you currently have phone insurance? If you buy a new phone, are you likely to buy insurance on it? why or why not?

  • What Happens When Gamers Stop Buying Videogames?

    Well, gamers haven't stopped buying games, exactly. Rather, they've shifted their purchases away from brick-and-mortar stores and increased their purchases online. This is the trend faced by Game Stop, which has suffered a declining stock and, as described by Jim Cramer in the clip below, is one of the most heavily shorted stocks around.

    For discussion:

    What are some changes at Game Stop that can save the company? Would you buy, sell, or hold this stock?

  • The Brexit Debate Explained

    Being part of the European Union or EU is an economic decision but it's also a political decision related to sovereignty of a nation. The UK is faced with this decision yet again as it debates whether it will remain in the EU or whether it will exit.

    The issues surrounding the potential British exit or so-called Brexit, are nicely and succinctly explained in this Bloomberg video. After watching this video, consider the following questions:

    1. What are the arguments in favor of remaining in the EU?

    2. What are the arguments against remaining in the EU?

    3. What impact is a Brexit likely to have on U.S. markets? (Read more about the impact on the U.S. in this MarketWatch article)

  • It's Not What You Make. It's What You Save.

    It's not what you make. It's what you save.

    That's the lesson shared with professional athletes in this WSJ article.

    Yes, we have all heard the horror stories about pro athletes being separated from their money—seven, eight, sometimes nine-figure earnings wiped out by bad purchases, bad allies, bad investments. Some of it is youth. Some of it is irresponsibility. A lot of it is human. If I were a No. 1 draft choice, I would be the guy who bought a Ferrari, and then a Ferrari for my Ferrari so it didn’t get lonely.

    That’s not the way to do it, of course. Athletic careers can be perilously short, especially in a workplace like the NFL, with your lifetime earnings peaking in your 20s, and if you’re lucky, 30s. With players bombarded by team commitments and financial advisers eager to take their business, it’s easy for them to become disconnected from the day-to-day of their money.

    [read the full article here]

    Really, saving is common sense. From Bankrate.com, here are eight principles to save when you're on a tight budget:

    • Shop smarter
    • Keep the change
    • Pay yourself first
    • Save with purpose
    • Make it automatic
    • Stop using credit cards
    • Create a budget
    • Stay committed

  • The Family Balance Sheet

    Companies are not the only ones with balance sheets. Families and individuals also have balance sheets that describe their debt, assets, and net worth.

    The infographic below shows the American family balance sheet:

    source: find the original infographic here

    A 2014 study reported that household net worth had declined in the U.S. (Bernasek, 26 July 2014, NY Times)

    The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

    [read the full article here]

    For discussion:

    What does your personal balance sheet look like? How will it look when you graduate from college? How would you like it to look in 10 years? 20 years? At retirement?

  • Benefits of Short-Term Options

    Options give the holder the right to buy (in the case of a CALL OPTION) or the right to sell (in the case of a PUT OPTION) an underlying asset at a predetermined price (called the STRIKE PRICE) on or before a prespecified EXPIRATION date.

    This video from the CMEGroup explains how hedgers can use short-term options to protect their investments.

    For discussion:

    What type of short-term options are offered by CMEGroup? What are the benefits of short-term options?

  • The Fiduciary Standard

    Not all financial advisors are bound by the fiduciary standard where the client's needs must come first. At the moment, brokers are bound by the "suitability" standard, in that they must only sell you an investment that meets our risk and return profile.

    This CNBC video explains what the fiduciary standard is and how it affects investors.

    From the Department of Labor fact sheet in 2015:

    A system where firms can benefit from backdoor payments and hidden fees often buried in fine print if they talk responsible Americans into buying bad retirement investments—with high costs and low returns—instead of recommending quality investments isn't fair. A White House Council of Economic Advisers analysis found that these conflicts of interest result in annual losses of about 1 percentage point for affected investors—or about $17 billion per year in total. To demonstrate how small differences can add up: A 1 percentage point lower return could reduce your savings by more than a quarter over 35 years. In other words, instead of a $10,000 retirement investment growing to more than $38,000 over that period after adjusting for inflation, it would be just over $27,500.

    In February, the President directed the Department of Labor to move forward with a proposed rulemaking to require retirement advisers to abide by a "fiduciary" standard—putting their clients' best interest before their own profits. And today, the Department of Labor is taking the next step toward making that a reality, by issuing a Notice of Proposed Rulemaking (NPRM) to require that best interest standard across a broader range of retirement advice to protect more investors.

    [read the full announcement here]

    For discussion:

    How does the fiduciary standard affect investors? Is there any downside to the investor?

  • Most Popular Investments

    The Most Popular Securities in Investor Portfolios, by Age

    From Visually.

    Peter Lynch is known for the "Invest in what you know" strategy and wrote the famous book, One Up On Wall Street (Simon & Schuster). The book was a hit and was embraced by many. From a Seeking Alpha article (South, 5 Jan 2015):

    [Lynch] outlined his strategy in two highly popular and widely read books, One Up on Wall Street and Beating the Street, and many investors since have adopted the strategy. I also find this strategy very appealing simply for the fact that I can use the products and services that I already consume on a regular basis, but get the added satisfaction of contributing to the success of a company I partly own. However, today I find that Lynch's philosophy is difficult, if not impossible, for many to profit from due to growth chasers and other investors who believe so strongly in a company that they are willing to pay any price for its stock. Buying a company simply because you like it is enticing and easy, but can lead to sideways performance, high volatility, or huge losses.

    [read the full article]

    For discussion:

    Why is investing in what you know not necessarily a wise investment strategy?

  • How Math Matters to Finance

    Math matters to finance. According to this blog post on DTCC's site by Michael Bodson:

    Today’s modern financial system depends on information technology to perform tasks large and small, while mathematicians and physicists provide the quantitative analysis to develop trading and risk management programs. Today, two-thirds of jobs in banking and finance require substantial math and technology skills, and over the next 10 years those types of positions will generate more than three-quarters of the projected job growth, according to industry research.

    The article goes on to describe how women and minorities are largely underrepresented in the financial services that require quantitative skill and training.

    Clearly, creating greater diversity in STEM education will be critical for the financial industry, and it is absolutely crucial for firms like DTCC, which provides post-trade services and innovative solutions that automate, centralize, and standardize the processing of more than $1.6 quadrillion in financial transactions globally.

    [read the full post here]

    For discussion:

    What are some of the math skills needed for a successful career in financial services? How can more diversity in financial services be encouraged?

  • America's Best Employers

    What makes a great employer?


    You will find more statistics at Statista

    According to the Forbes (Dill, 23 March 2016),

    Working with online statistics provider Statista, Forbes asked more than 30,000 U.S. workers employed by companies with more than 5,000 staff members to determine, on a scale of zero to 10, how likely they were to recommend their employer to someone else. Further, how did they feel about the other employers in their industry?

    For discussion:

    How important is salary and fringe benefits to employee satisfaction?

    What are some of the other factors driving employee satisfaction? Can dissatisfaction in "other" areas be overcome by increased salaries? Why or why not?

  • How to Succeed on Wall Street and Anywhere

    Some call it grit. Others call it hard work or "stick-to-it-ness." Either way, it's the quality that sets winners apart from the rest of the pack.

    In the video above, a young Goldman Sachs employee describes her journey from undocumented worker to success on Wall Street. Her determination and hard work make her an example of how to succeed if you're willing to put a little muscle into it.

    From a Huffington Post article (Davis-Laack, 8 Oct 2014):

    The recipe for success is about much more than smarts and talent. Grit is a powerful trait to cultivate in those you lead and teach and is worth focusing on as early as possible in your career. 

    [read the full article here]

    For discussion:

    What can you gather about the requirements of an entry-level position in investment banking? What does it take to succeed at Goldman Sachs or other investment banks like it.

  • Should Millenials Buy A Home?

    With the threat of higher interest rates and continued low home prices, now may be the time for millenials to buy a house.

    From MarketWatch (Fottrell, 27 Oct 2015):

    Millennials have received a lot of criticism for holding back the housing market by not buying as many homes as economists (and would-be sellers) would like. Five years into the economic recovery, many continue to live at home with their parents: There were 71% of adults aged 18 to 34 (excluding full-time college students aged 18 to 24) living independently in 2007 versus just 67% in 2015, according to a recent study by the Pew Research Center. Although 74% of millennials expect to buy a home, more than half plan to wait until 2018, a separate survey last month of 6,000 millennial renters by Apartmentlist.com found.

    For discussion:

    How does buying a house compare with renting at the moment?

  • What Drives Apple?

    Apple turned 40 on April 1st, and the hunt for revenues is on to keep the computing giant collecting cash for another 40 years.

    From a WSJ MarketWatch article (Booton, 2 Apr 2016)

    It has been an up-and-down four decades for the company, with Apple  struggling through an identity crisis in the late 1980s and then emerging reinvigorated, surging in the years since the introduction of the iPhone in the late 2000s toward its current status as the world’s most valuable company.

    As it enters middle age, Apple is once again suffering an identity crisis as it struggles to innovate beyond mobile phones and finds itself in an increasingly competitive marketplace. The company is at risk for its first year-over-year decline in iPhone sales in the current fiscal quarter.

    This infographics tells the timeline of Apple from its humble beginnings to the powerhouse it is today:


    You will find more statistics at Statista

    For discussion:

    What are the major drivers of revenue? Of profit? What about the share price value?

  • Impact of Mobile Phones on Banking

    Has the widespread use of mobile phones changed the way people bank, shop, and live?

    This Fed survey shows that consumer use of mobile banking has increased by four percentage points from 39% to 43% since last year, and is now nearly double what it was in 2011.

    For discussion:

    When is the last time you stepped into a bank? Do you prefer to bank using your mobile phone? Why or why not?