Keeping Our Options Open (Part 2)

By |2019-06-24T10:44:48-04:00June 25th, 2019|Global Market Update|

Can we use options to invest? Illustration: Koltepranita. Source: Wikipedia Options are powerful. And there’s a lot to understanding them. Call options give us the right, but not the obligation, to buy something at a specific price within a certain time. They don’t cost as much as the underlying stock, but they benefit just as much when the price goes up. As a result, there’s a lot of implicit leverage in an option. An option on a $100 stock might cost you $3. [...]

Keeping Our Options Open (Part 1)

By |2019-06-21T14:08:55-04:00June 21st, 2019|Global Market Update|

What are options? Source: Pxhere. CC0 Strictly speaking, options are choices: the choice to buy, sell, or hold; the choice own or rent a home; the choice of what to plant in the garden. Having options means we have the ability to make – or not make – choices about our lives. Financially, though, options have a very specific meaning. An option on a stock or bond is the right, but not the obligation, to buy or sell the security at a specified price [...]

Window Dressing

By |2019-06-21T11:13:19-04:00June 21st, 2019|Global Market Update|

It’s almost quarter-end. Do you know where your sales are? Photo: Birgit Böllinger . Source: Pixabay When quarter-end rolls around, everybody wants to make things look nice. But new flowers in the window boxes won’t change the rot that may be hiding in the window casings. At quarter-end, many public companies try to dress up their financials. They increase the amount of cash on hand or pump up sales to show a better income statement. Even blue-chip companies get caught in this trap. [...]

Getting There

By |2019-06-20T05:59:53-04:00June 20th, 2019|Global Market Update|

What do you want to do when you retire? Photo: Lukas Taleb. Source: Picjumbo. Lots of folks have plans for what we want to do when we retire. It could be spending time with children, it could be travel, it might be settling into that dream-cottage by the lake or beach. While it’s good to have dreams, it’s just as important to have plans. And those plans need to be based on a realistic assessment of who we are, not the gauzy self-portraits we [...]

The Superstar Syndrome

By |2019-06-19T09:43:39-04:00June 19th, 2019|Global Market Update|

Do you believe in superstars? Michael Jordan in 1997. Photo: Steve Lipofsky. Source: Wikimedia. CC-BY-4.0 In basketball, a lot of fans focus on the stars, and with good reason. For the past 35 years, 11 players with multiple championships have accounted for 32 of the of those titles – over 90%. That’s unlikely to be a random happenstance. Whether it’s by providing points or assists or rebounds, star players are able to make an average hoops team excel. But are superstars [...]

The Culture Code

By |2019-06-19T09:46:38-04:00June 17th, 2019|Global Market Update|

Does leadership matter? Public Domain. Source: Flikr. Of course, it should. In the long run, a culture centered on client service and financial accountability will produce higher financial returns; by contrast, a culture with outsized rewards for managers who treat the firm like a personal piggy bank creates lower returns. But how do we measure leadership? One way is by reading the company’s annual report, especially the CEO’s letter to shareholders. This document is an unstructured, free-flowing description of what the chief thinks [...]

The Primacy of Planning

By |2019-06-14T05:57:20-04:00June 14th, 2019|Global Market Update|

Psst. Got any hot stock tips? Photo: Viktor Hanacek. Source: Picjumbo. CC0 Lots of people want advice about what stocks to buy or what the market will do. But what they really need is guidance on how to plan out their finances. Classically, finance has three major reports: income, assets, and cash flow. Each of these areas has inflows and outflows—positive and negative entries. An income statement covers income and expenses; a balance sheet shows assets and liabilities; with cash flow there are inflows [...]

Shaky Legs

By |2019-06-12T22:54:12-04:00June 12th, 2019|Global Market Update|

This is the time of year the baby fawns start come out. Photo: Bryan Hanson. Source: Morguefile. Fawns are adorable. They gambol and play and remind us of the cycle of life. But they’re shaky on their new feet. Like everything that starts fresh, the first few steps can be unsteady. In this, they’re a lot like small companies. Small stocks are a lot more volatile than big stocks. They can jump or drop by up to 20% in a day and no one [...]

Investing for the Future

By |2019-06-12T05:57:01-04:00June 12th, 2019|Global Market Update|

What is an investment factor? Photo: PublicCo. Source: Pixabay. CC0 Investment factors are a way to understand why stocks or bonds perform the way they do. Investments can be classified by the kinds of risks they take. Bond returns are driven by duration, credit, prepayments, the yield curve, and – for global portfolios – currency risk. Stock returns are affected by company size, industry, quality, and country. Real estate is impacted by location and the type of property. And everything is exposed to the [...]

Stupid Phones?

By |2019-06-11T05:50:10-04:00June 11th, 2019|Global Market Update|

How many apps are on your smartphone? Photo: Viktor Hanacek.. Source: Picjumbo Smartphones are essential to more and more of our lives, whether it’s checking in with Grammie or getting directions or buying boots or reminding us that we left the stove on. They’ve been around for just over a decade, but the computers in our pockets have become indispensable. We use them to buy and sell, entertain, and find our friends. They’ve altered the texture of everyday life. They’re often the first things [...]