The Young Investor's Guide - Monte Malhotra
Summary: Is the rally in the financials for real? Find out from the an expert, Meredith Whitney, who has by-and-large, been right through out this crisis.
Summary: Which cars are the best value? Find out from the experts at Edmunds.
"Don't get caught buying high in this rally"
Summary: After declining more than 25% to start the year, the markets have rallied more than 30% to break even for the year. Is this the time to buy?
"Don't overpay your property taxes this year"
Summary: CNBC's Carmen Wong Ulrich talks with Kiplinger's Jessica Anderson on what to do to make sure you don't overpay your property taxes.
Buy a copy of my book!
Learn more about personal finance and investing...including stocks, bonds, ETFs, mutual funds, and real estate!
Available in major retailers for $19.95, this your chance to get the author's discount of only $13.
Best,
Monte Malhotra
Summary: Yale professor Robert Shiller, author of "Irrational Exuberance," says a key metric for him indicates there is more pain to come. Read what he has to say.
Summary: Yale professor Robert Shiller, author of "Irrational Exuberance" and "The Subprime Solution," says house prices have only fallen half way to fair value. Read what he has to say.
Summary: In the 2001 tech bubble collapse, Buffett said he would begin to buy equities when the total capitalization of stocks reached 70-80% of US GNP. See why he is putting his money where his mouth is.
Summary: What are the 10 Worst First-Time Homebuyer Mistakes? Read so you know what not to do!
"10 Things College Financial Aid Offices Won't Tell You."
Summary: 10 Things College Financial Aid Offices Won't Tell You, because personal finance is the most important part of your portfolio.
"Gary Shilling's Predictions for 2009"
Summary: I wrote earlier about Gary Schilling, the man whose 2008 predictions seemed to ominously foreshadow the market. See what his 2009 predictions are.
Read his predictions for 2009!
"New Year Financial Resolutions"
Summary: Below are 7 tips to live by to become rich! In the new year, you should consider these your financial resolutions.
"The importance of good management when picking stocks"
Summary:Bad management can kill any company. Even if a stock is trading at a good discount below its intrinsic value, bad management will find ways to destroy value over time. Don't underestimate the importance of evaluating management when making decisions of whether or not to buy stocks.
"Market Advice from Charles Schwab's Chief Investment Strategist, Lizz Ann Sonders"
Summary: Read why she thinks current market conditions indicate a potential market bottom and why this might be a good time from a very long-term perspective to average into the market.
"Gary Shilling's Predictions for 2009"
Summary: Many economists and stock market experts missed the crash of 2008. See one man's predictions for 2009 who correctly predicted the calamity of 2008.
"My paper defending the actions of the Federal Reserve."
Summary: This is a paper I wrote defending the actions of the Federal Reserve, and why their actions clearly show they are worried about a long period of deflation in the US.
"Worried about deflation? You should be! What to be worried about and how to invest in a deflation!"
Summary: The actions by the Federal Reserve clearly indicate they are more worried about deflation than anything else. How should you change your asset allocation to protect yourself and benefit from this deflation? Read this post!
"How to Invest in a Crisis"
Summary: With the Federal Reserve announcing historic policy action yesterday, this could be the perfect time from a risk/reward scenario to average into the market. Read this article from theStreet.com on how to invest in a crisis.
"Having trouble keeping track of all the bailouts?
Summary:The government has now created over a dozen programs and committed over $1.3 trillion to the financial bailout. Where is it all going? This diagram by The New York Times breaks down the bailouts.
"Behind the Citigroup bailout "
Summary:The world's largest bank almost went bankrupt over the weekend. Watch what happened to Citigroup and how the government bailed them out.
"Read more about the new Treasury Secretary Tim Geithner "
Summary: Tim Geithner is the new Treasury Secretary for Barack Obama. He is going to be instrumental in getting the US out of this crisis. Wall Street has confidence in him since the stock market went up 7% after his announcement, but is he the right guy for the job? Read more about him.
"Malcom Gladwell on his book Outliers and how and why people become successful"
Summary: Malcolm Gladwell, author of 'Blink' and 'The Tipping Point,' discusses his latest best-seller, 'Outliers,' and explains why Bill Gates, the Beatles and President-elect Barack Obama may have been more lucky than good. Hear what it takes to truly become successful, and why you need a combination of luck and skill.
"Curious what Wall Street Bonuses look like this year"
Summary: Bonuses are down huge on Wall Street this year, but what does that mean relative to everyone else?Tax-payer bailout funded bonuses are still astronomical.
Take a look to see what the actual figures are!
"What is the President Obama effect on the stock market?"
Summary: Morningstar analyzes the effect of a President Obama on the stock market. Don't play the speculative alternative energy on hope Obama puts through alternative energy mandates. Look for health care companies, health care cost containment and manged care companies, and natural gas companies.
"Is a Roth 401(k) right for you?"
Summary: A number of employers are offering Roth 401(k), which are similar to how Roth IRAs work. Is opting for a Roth 401(k) right for you?
"Find out how to save thousands of dollars"
Summary: Personal Finance is the most important investment in your portfolio. In tough times, consumers are looking to stretch their dollars further. Here are six simple ways to save thousands.
"Want to know what to do in this market? Watch the Hedge Funds."
Summary: If you want to know what to do in this market, you need to watch the Hedge Funds. Some of the best Hedge Fund managers like Steve Cohen of SAC capital are sitting in cash. Some of the best like Mark Sellers quit and closed up shop.
"Be greedy when others are fearful, and be fearful when others are greedy!"
Summary: Warren Buffett said,"Be greedy when others are fearful, and be fearful when others are greedy!" Is this the time to be greedy?
"What's causing the volatility?"
Summary: What is causing all this volatility? Watch these videos to find out what is happening!
"10 Things College Financial Aid Offices Won't Tell You."
Summary: 10 Things College Financial Aid Offices Won't Tell You, because personal finance is the most important part of your portfolio.
"Warren Buffett's sage advice in the New York Times."
Summary: Warren Buffett wrote an op-ed piece in the New York Times Friday. Read what he had to say about the long-term strength of the US economy, and why you should be buying stocks right now in this downturn.
"The importance of good credit."
Summary:In this market, having good credit and good personal finance is even more important than in normal times. Without good credit, you aren't just paying a higher interest rate on your loans, you can't even get a loan at the moment.
"What now?"
Summary: The market has been on a roller coast ride downward over the last week. In fact, the Dow Jones is down over 1,800 points this week and is down more than 18.7%. What should we, the average investor, do next? Are we headed into the second Great Depression?
"David Winters gives an interview about the future of the markets."
"Ken Heebner of CGM funds and John Bogle's views of the markets"
Summary: Let's face it. These markets have certainly been difficult. John Bogle is a legendary investor, former CEO of Vanguard, and basically created index fund investing. Ken Heebner is an extremely smart mutual fund investor who's CGM Focus Fund and returns speak for themselves. Hear their opinions on the market.
"Why is there so much volatility in the stock market and how should you deal with it?"
Summary:Are you scared by all the volatility in the stock market? Wondering why the market is trading in integer percentages--up 3% one day, down 5% the next day? Read why there is so much volatility and see how to profit from it.
"Is Apple a buy?"
Summary: Apple is down from 180 to 100 per share in just a few short months. A stock that is loved by everyone; is Apple now a good buying opportunity. Listen to two divergent views.
"Buffett Strikes Again"
Summary: Warren Buffett strikes a killer deal to invest $6 billion in General Electric. He has put over $20 billion to work in the last 3 weeks and has another $30 billion to invest with. Watch out!
"WSJ article explaining Obama and McCain's tax positions"
Summary: A major part of your finances are how much you pay in taxes every year. Read this article in the Wall Street Journal explaining Obama and McCain's tax policies.
"David Winters letter to shareholders"
Summary: I think one of the best ways to learn about investing is to read the stock picks and opinions of great investors and try to adopt their mindset and how to think like them. Here is the latest letter to shareholders from one of my favorite portfolio managers, David Winters.
David Winters,Wintergreen Fund
"Why everyone should own Berkshire Hathaway in their portfolio"
Summary: Everyone should own Warren Buffett's company, Berkshire Hathaway, in their portfolio. The Class B shares trade at around $4,500, but are well worth every dollar.
"My interview on Big Dreamers"
Summary: I had an interview segment on Big Dreamers today. The clip is an hour long so you can pick which parts you want to listen to, but we cover a list of topics. Topics include:
- Tips on how people can reduce their personal financial risk.
- Small steps people can take in learning the basics of wealth management.
- What parents can do in preparing their children to become investment savvy.
- What busy professionals with 1-2 hours a week can do to manage their.
"An interview with famous value investor Mohnish Pabrai"
Summary: Mohnish Pabrai is a famous value investor. While his performance this year has not been released, a $100,000 investment in 1999 would have been worth over $700,000 at the end of 2007 in Pabrai Funds. He shares some of the basic tenants of his investing philosophy in this video. I always believe that hearing great investors and studying their investing picks makes me a better investor.
"How to Prevent the Next Crisis"
Summary: Joseph Stiglitz is a professor at Columbia University and Nobel Prize Winner in Economics. Read why he thinks we are in this crisis and how we can get out of it.
"Is Your Money Market Account Safe?"
Summary: Money market accounts are supposed to be super safe assets that are as good as cash. Many money market accounts have been affected by this market crisis and lost a lot of money. Is your money market account safe?
"Find Your Pain Threshold in this Volatile Market"
Summary: This is a volatile market. How should you navigate these markets? Find your pain threshold.
"Understanding the AIG bailout"
Summary: What happened to the world's largest insurance company, AIG? Watch the video!
"10 Worst First-Time Homebuyer Mistakes"
Summary: What are the 10 Worst First-Time Homebuyer Mistakes? Read so you know what not to do!
"How do you know when to buy stocks?"
Summary: How do you know you're right when you buy a stock? What do you do if your stock falls after you buy it? Let's look at what some of the best investors do in similar situations.
"How to solve the problems of this market..."
Today, Lehman Brothers became a penny stock trading at $3 per share, off from over $70/share earlier this year. AIG, one of the largest and well-known insurance companies had it's worst trading day in corporate history--it's selling at 30% less today than it was yesterday, and is off its highs of $70 per share earlier this year.
Many executives at these companies as late as March were saying everything at their company was fine and all that was happening was a market over-reaction. Now, they want a bailout worth billions of dollars to taxpayers.
If executives really want a bailout, all they have to do is one very simple thing.
AIG , CEO and Chairman Mr. Robert Willumstad is a new CEO, but the guy he replaced made about $10 million dollars last year. Pick up the phone, call your broker, and tell him to buy you 50,000 shares of your company at the market price. If your stock keeps on falling, do it again. Bust the short sellers who are betting against your stock and driving it down in price. Buy enough stock to soak up all the demand for people selling. You made $10 million, your stock is trading at t$12..put in one year's salary and buy 750,000 shares until you bust everyone that is betting against you, and install some confidence that the CEO is willing to put in $10 million of his own money back into the stock.
Until you are willing to bust the people betting against your stock yourself, don't cry for a bailout.
"What's new with YouTube?"
Summary: Google has taken a huge beating this year in terms of stock price and is trading at it's lowest price for the year. They currently make virtually no money off of YouTube, but the potential to make money is huge if advertisers switch from advertising on television to using YouTube. Hear what's in store for the future of YouTube from Chad Hurley, co-founder of YouTube.
"10 easy steps to creating your own Hedge Fund."
Summary: Ever wondered what you had to do to create your own hedge fund. The Guardian comes up with 10 easy steps.
"What is a Hedge Fund?"
Summary: Ever wondered what exactly a hedge fund was. The term is elusive and gets thrown around a lot. If your confused about what exactly qualifies as a hedge fund, read this.
"Can't afford a house? Think about becoming a Co-Ho"
Summary: It's becoming harder and more expensive to own a house. Want to take advantage of this soft real estate market but can't afford to buy a house by yourself? Think about becoming a Co-Ho!
"Why the rich get richer"
Summary: I read an article today in Reuters headlined: World's Richest got even richer last year. For example, the top 1% of all households owns 35% of the world's wealth. This used to anger my high school economics teacher, Mr. Dwyer. Instead of getting upset that the rich are constantly getting richer, why don't we strive to be like the rich and see why they become richer. A few simple habits can put you on the path to one day being that top 1%.
"Patience is the best virtue"
Summary: Everyone's parents stress the importance of being patient, but patience is a virtue above all others in investing. Hands down the #1 rule in investing is to wait for your opportunities with no pressure to put your money to work. Patience is key!
"10 Things Millionaires Won't Tell You"
Summary: I thought this article from SmartMoney.com was interesting. It talks through the psyche of being a millionaire, their habits, and common misperceptions. An interesting read for sure!
"The Importance of Free Cash Flow: A case study of WellPoint"
Summary: Free Cash Flow (FCF) is so important because it signifies the excess money you can take out of a company without hurting the business. As a shareholder of a company, you are most interested in the cash left in the register after all the expenses are paid. It's the only real thing you as an investor have. When investing, people naturally look at a company's earnings. Learn why a companies earnings can be deceiving, how to calculate FCF, why it's so important, and how to value companies using FCF.
"6 questions to ask your financial advisor"
Summary: Hedge Fund manager Doug Kass shares 6 questions you should be asking your financial advisor. If someone has your money, make sure you hold them accountable to be the best!
"Bailouts for Everyone!!"
Summary: In this last financial crisis, everyone has been bailed out..homeowners, home builders, and banks. Now, the Big 3 automakers, Ford, GM, and Chrysler are asking for bailouts. Should they be bailed out and see how much this fiasco will cost you now.
"Which banks are in trouble and why should be worried about the FDIC"
Summary: We've all heard the stories of various banks failing and the fiasco at IndyMac. Which banks are next? See a list of the top 10 banks in trouble. Also, we've all seen the FDIC insurance symbol at our bank. Read why you should be worried about the FDIC, and what that means for you and your bank in terms of higher fees!
"How the downfall of Freddie Mae and Freddie Mac impacts you"
Summary: Every day, you hear on CNBC and read in the Wall Street Journal about the prospects of Freddie Mae and Fannie Mac going bankrupt. These institutions have more than cute names..they have major functions in the mortgage markets that affect the real estate and banking industry. The government has recently passed a major bailout plan to save both of these organizations. Read what happens to you if these organizations go bankrupt and if the government bails them out!
"Paris Hilton: Great Business Woman?"
Summary: Paris Hilton may be the most polarizing person in America. You either hate her or you love her, but one thing you have to agree upon is that she is a great business woman. Read up on how Paris Hilton is building her fortune estimated to be worth $40 million.
Paris Hilton will be the first of many celebrities profiled here that are going above and beyond the realm of normal celebrity riches to invest their money intelligently.
Summary: Many of my friends tell me they can't invest because they only have a couple of hundred dollars in cash, and that isn't enough to buy individual stocks or invest in some of the top mutual funds that have thousands of dollar minimums. Do you want to know how you can started investing with just $50? Read this article.
Summary: Ken Heebner is literally America's hottest fund manager. Since he started his mutual fund in 1997, he has had only 1 down year. Since May 1998, the CGM Focus fund has an average annualized return of 24%, the best ten-year record of any US mutual fund, compared with only 4% for the Standard & Poor's 500. 2007 marked the fourth time since 2000 that the fund returned 45% or better. Ken is a great investor that know how to invest taking a macroeconomic approach. He analyzes which sectors he thinks will do best and buys heavily in those sectors, and similarly, he analyzes which sectors he thinks will do worst and short-sells those. Read more about him!
Summary: Bruce Berkowitz is one of the most talented fund managers working on Wall Street. Read his interview where he talks about his holdings, his investment strategy, and why he named the fund Fairholme. I wanted to post the relevant parts here: What Fairholme looks for in stocks, the importance of Free Cash Flow, and why Fairholme refuses to invest in most financial stocks despite the downturn.
I'll post highlights of the interview here. If you want to read the full article, click here.
What is your strategy for the fund? If I was to build a stock screen like Bruce Berkowitz, what would it look like?
We start with this basis: The only thing you can spend is cash. We want companies that generate significant cash in most times. That is how we start. We don't care much about what they make, but we have to understand it. The balance sheet has to be strong; we want to make sure there are no tricks in the accounting. Then we try and kill the company. We think of all the ways the company can die, whether it's stupid management or overleveraged balance sheets. If we can't figure out a way to kill the company, and its generating good cash even in difficult times, then you have the beginning of a good investment.
How important is management to you?
A bad person can cause you pain every time, no matter how good the company is. Management is important. They should have a paper trail of succeeding.
To read the full interview, click here.
Summary: Buffett's latest portfolio holdings. He has a new position in NRG Energy, added to his position in Sanofi-Aventis SA, and sold his stake in Anheuser-Busch Cos. Buffett has made confidential his stake in ConocoPhillips, which means he is either selling or adding to his position. If you are interested in the details, continue reading!
The title is one of my favorite quotes from The West Wing...When I was talking to one of my friends today about my blog, she told me money really wasn't her thing. She didn't really care about finance or investing. Now, I know the average person doesn't have the time to spend everyday watching hours of CNBC or Bloomberg and looking at their finances and investments, but her general apathy is indicative of why so many Americans face huge money management issues and large debt in life. Data from the VIP Forum in Washington D.C. breaks down credit card debt in America.
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Only 29% of households owe $1,000 or more on their cards.
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21% owe $2,000 or more.
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6% owe $8,000 or more.
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4% owe $10,500 or more.
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1% owe $21,400 or more.
If you want to be a successful investor, you only have to spend a few hours per week following general market news and researching your investments, more if you are invested in individual stocks. I hear my same friends who don't care about finance or investing talking about being rich one day. Working a normal job will not be enough money to make you rich. You have to invest to supplement your income and make you the additional money that is just impossible to make working because there are only so many hours in a day.
Almost all the wealthy people I've ever met were very disciplined savers. Most had the same things in common. They saved close to 20% of their income per year, even if that meant they had to live a very simple lifestyle early on, and they invested that money in a variety of asset classes such as stocks and real estate. You don't have to save that much if it doesn't suit the lifestyle you are trying to live, but you should make a conscientious decision about the lifestyle you are living and how they align with your future goals. The best thing about saving and investing is that it is completely flexible depending on what kind of lifestyle you want to live. You can't be indifferent about your money and hope everything just works out in the end. If you chose to save no money, its fine as long as you have thought it out and are aware of the consequences. Just look at the entry on August 11th, and you will realize just how much money a few years of not saving can cost you!
Make sure you think about your investment decisions.
Best,
Monte
Summary: Jason Zweig has written an interesting book on behavioral economics and how your brain can impact your portfolio. Figure out hot to overcome your natural instincts to ensure that you make money in the stock market.
1) Understand your investments and set a game plan for what to do if your stock goes up or goes down significantly.
2) Control the instantaneous fear response in your brain. Don't let fear control you and force you to panic sell.
3) Businesses evolve slowly. Stocks change quickly. Our brains are built for trading.
Summary: They say there is no such thing as a free lunch. Find out how to make a million dollars for FREE by doing absolutely nothing through the power of compound interest.
Summary: You want to buy investments when times are hardest. Currently, Real Estate is presenting as the most attractive investment. If you want to learn how to make money, keep on reading!
Summary: Want to know what you can learn from the Brett Favre debacle that happened earlier this season?
"Lessons From Expert Fund Manager Bill Miller"
Summary: I always find it interesting to hear how legendary investors got interested in the stock market. Hear the story of Bill Miller. Bill Miller has also built a streak of beating the market return from 1990-2005. Hear how he built that streak and defends his new 3 year streak of under performing the market.
"Tips from the Experts"
Summary: I think the best way to learn about investing is to hear how the best money managers invest their money. Hear two of the industry's best, Bruce Berkowitz and David Winters, talk about what they look for in stocks and their investment thesis on different investments.
Bruce Berkowitz David Winters
"Your Financial Guide"
Summary: Below are 7 tips to live by to become rich! You can consider it your guide to Personal Finance.
1) Save 10-20% of your income every year
Investing is just a more efficient form of saving. To be a successful investor and make money, you HAVE to save. Let’s face it, if you have debt and are paying 20% interest rates, you are better off paying the debt off because it is a guaranteed 20% investment.
2) Determine when you need your money
When you have money on hand, determine if you need that money in the next six months, one to two years, or next five years. Don’t just leave money in your checking or savings account for when you might need it; you can be throwing away a lot of free money! If you need the money in a couple of months, see if your bank has a money market account or a short-term Certificate of Deposit that you can keep your money in. This certainly beats the interest rate on most savings accounts and any checking account. Check out this website to see which banks are offering the highest CD rates: http://www.bankrate.com/
If you don’t need the money for at least a couple of years, look to see if you can invest that money in some kind of index fund or mutual fund in the stock market.
