Stepping Back
Adam M. Grossman | Oct 14, 2018
AS YOU NO DOUBT noticed, the stock market took investors on a wild ride last week. On Wednesday, the Dow industrials dropped more than 800 points. On Thursday, the Dow lost another 546 points. Friday was better, up 287 points, but there was still plenty of stomach-churning volatility. At times like this, I'm reminded of Warren Buffett's motto: “You want to be greedy when others are fearful, and you want to be fearful when others are greedy.” While that certainly sounds logical, Buffett is also a multi-billionaire. He can afford to be serene when others are stressed. What should ordinary investors be doing? Here are five thoughts: 1. Don't let the headlines scare you. Since 2009, the U.S. market has quadrupled in value, delivering positive performance every single year. We are now in the longest bull market on record, and this has experts like Nobel Prize winner Robert Shiller cautioning that the market is dangerously overvalued. Things might indeed get worse. But be careful when listening to market prognosticators. It's still anyone's guess which way things will go from here—and one piece of news could easily change the market's direction. While the U.S. stock market has ended each of the past nine years on a positive note, it experienced a midyear decline of more than 10% in six of those nine years, before rallying once again. 2. Don't react, but do reassess. Because of the market's unpredictable track record, I would avoid reacting to its short-term movements. But I would use it as an opportunity to reassess your portfolio’s risk level—not just from a financial standpoint, but also from an emotional one. While your financial situation might suggest you can weather short-term losses, you also need to sleep at night—and those aren't necessarily the same thing. My suggestion: If you're feeling rattled by last week's…
Read more » Portfolio Insurance
Adam M. Grossman | May 30, 2021
A TEL AVIV WOMAN named Anat decided to surprise her elderly mother with a gift. Noticing that her mother had been sleeping on the same worn-out mattress for decades, Anat replaced it while her mother was away from the house. She then took the old mattress out to the curb. It wasn't until the next morning that her mother noticed the change and asked what had happened to the old mattress. Anat explained that she had put it out with the trash, which had since been picked up. This sent her mother into a panic. It turned out she had hidden her life's savings in the old mattress—more than $1 million. According to news reports about the 2009 incident, they searched three different dumpsites across the city but never found it. When I mentioned this story to a colleague, he described something similar. When his grandfather passed away, he helped clean out his house. In the freezer they found several packages labeled “fish.” These packages caught his eye because, he said, “there were a lot of them, and they didn’t look like fish.” As you can probably guess, when he opened them, he found piles of cash. These stories are both funny and not funny at the same time. They’re also not unusual. According to a Marist College poll, people hide money in all kinds of places. More than 10% hide cash under the mattress. Even more hide money in the freezer. Other popular spots include the sock drawer and the cookie jar. There's also the backyard. I don’t recommend keeping cash in your home like this—unless it's in a safe—but I understand the emotional appeal. A pile of cash is tangible in a way that a bank balance isn’t. Especially in a volatile world, it's comforting to have a stable asset. But…
Read more » Yielding No Advantage
Adam M. Grossman | Aug 25, 2024
DIVIDENDS ARE a seemingly mundane topic. But like many areas of personal finance, it’s one that still generates debate. The most common question: All else being equal, if one stock pays a dividend and another doesn’t, shouldn’t an investor prefer the one that pays the dividend? We’ll examine this question, and then broaden the lens to look at dividend strategies more generally. To better understand how dividends work, let’s look at Procter & Gamble. Last year, it generated $84 billion in revenue and $15 billion in profit. This year, it’ll deliver a bit more. With those profits, P&G’s management has a number of options. It could reinvest the money back into the business by, say, building a new production plant. Management could acquire other companies. It could buy back shares. Or it could simply keep that cash in the bank for another day. But if there’s still a substantial amount of cash left over, management could distribute it to shareholders. That’s what a dividend is—a share of a company’s after-tax profits. In the case of Procter & Gamble, it chose to distribute about 60% of profits, or $9.4 billion, to shareholders this year. Since there are 2.35 billion shares outstanding, that works out to $4 per share. So, in addition to whatever price gains P&G’s stock delivers, shareholders will also receive $4 in cash for each of their shares. It’s this dynamic that often leads investors to ask a question: If P&G shareholders receive that $4 regardless of whether the stock goes up or down, isn’t it preferable to own P&G shares rather than the stock of another company that doesn’t pay a dividend? To answer this question, let’s consider a thought experiment: Suppose another company was exactly like Procter & Gamble in every way except that it didn’t pay…
Read more » Taking Sides
Adam M. Grossman | Jun 6, 2021
WHEN IT COMES TO financial questions, there are two common reasons people disagree. Sometimes, they disagree about the facts—whether, say, interest rates are headed higher. But sometimes, people disagree for another reason: They see the world through different lenses. Last week, I mentioned that Ray Dalio, a prominent hedge fund manager, had recently said that bonds “have become stupid.” I disagreed, but not because of the facts. There’s no disputing the impact of today’s low rates. But I think the wisdom of owning bonds depends on what you’re trying to accomplish. If you’re a hedge fund manager like Dalio, your objectives will be different from those of an individual investor. For a hedge fund, maybe bonds are stupid. But for an individual investor, they might make a ton of sense. It’s a matter of perspective. Below are five other issues that I also see as matters of perspective. 1. Asset allocation. Investment advisor and author William Bernstein is often quoted as saying, “When you’ve won the game, stop playing.” In other words, if you’ve already accumulated enough savings to meet your needs—or if you’re on track to—then you should dial back your portfolio’s risk. There’s no sense continuing to take risk when you don’t need to. Warren Buffett has expressed the same sentiment: “It’s insane to risk what you have and need in order to obtain what you don’t need.” Suppose you’ve saved $5 million for retirement and only need $100,000 on top of Social Security to meet your expenses. With these numbers, implying a modest 2% withdrawal rate, you’d be in great shape. If you took Bernstein’s approach, you would manage your portfolio conservatively to avoid jeopardizing that strong position. But some might reach precisely the opposite conclusion, reasoning that with $5 million in the bank and modest needs, you could afford to take more risk. What’s the right…
Read more » Manic Meets Math
Adam M. Grossman | Mar 8, 2020
“HOW BAD WILL IT get—and how long will it last?” In my last article, I mentioned that many people had asked me those two questions. This past week, amid the continuing stock market tumult, some folks have been raising a third question: “Should I even bother investing in the stock market? It just seems crazy.” It’s a fair question. On Monday, the market was up 4%, before dropping 3% on Tuesday. On Wednesday, it was up 4% again, but then lost 3% on Thursday and another 2% on Friday. Think the stock market is crazy? You aren't alone. Warren Buffett calls it “manic-depressive.” Howard Marks, one of the clearest thinkers when it comes to investing, has observed that investor sentiment tends to oscillate between the extremes of “flawless” and “hopeless.” With the market’s extreme behavior over the past few weeks, it’s hard to refute these characterizations. So should we simply write off the market as crazy and unpredictable? To answer this question, it’s worth taking a step back and looking at what drives share prices. As I see it, there are three major factors: Corporate profits, including expectations for future company earnings. External events, including political news, economic developments and, of course, health scares. Investor sentiment. From day to day, the share price of each individual company reflects some combination of all three factors. In recent weeks, however, there's no question that Nos. 2 and 3 have been in the driver’s seat. The coronavirus is almost entirely responsible for the market’s drop. But over the long-term, it’s No. 1—corporate profits—that has the largest impact on stock prices. If that's the case—if corporate profits matter most over the long term—then how much should we really worry about the stock market's decline? To put it another way, is the market’s recent drop warranted or is this…
Read more » A Lifetime of Wisdom
Adam M. Grossman | Jan 14, 2024
CHARLIE MUNGER, WHO died recently at age 99, always had a colorful turn of phrase. But entertaining as he was, his comments were also invariably full of wisdom. In fact, taken together, Munger’s ideas offered investors a masterclass in investing. Here are some highlights: Choosing an investment strategy. Munger, along with his partner, Warren Buffett, often commented on the limits of his knowledge. But this wasn’t false modesty. What Munger was saying was that the universe of investments is too broad for any individual to fully master. That’s why he suggested investors limit themselves to a “circle of competence.” This is how he put it: “Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.” Munger cautioned investors: “The easiest way to avoid mistakes is to avoid anything you really don't understand.” And though Munger and Buffett were for many years able to beat the market with their stock picks, they went out of their way to communicate to everyday investors that they shouldn’t try to do the same. Munger knew his playbook was one that wasn’t easily copied. At the same time, he offered investors an alternative: If stock-picking isn’t your expertise, “you’re best served investing in a diversified portfolio of low-cost index funds or exchange-traded funds.” Avoiding potholes. While Munger acknowledged that there was more than one way to make money, he was quick to criticize things he believed were truly harmful. At the top of that list in recent years was bitcoin. Munger addressed the topic in a number of interviews, including this particularly entertaining one. “I regard the whole business as antisocial, stupid and immoral,” he said. That was for two reasons: He didn’t accept bitcoin as a valid investment because it lacked tangible…
Read more »
For 30 years, Dan Smith was a driver-salesman and local union representative, before building a successful income-tax practice in Toledo, Ohio. He retired in 2022. Dan has two beautiful daughters, two loving sons-in-law and seven grandchildren. He and Chris, the love of his life, have been together for two great decades and counting. Check out Dan's earlier articles.
For Richer, For Poorer: 37 Years of Compounding
Mark Crothers | Apr 28, 2026
Happy 50th!
Rick Connor | Apr 27, 2026
The Vision, the Babe , Einstein and the Q
mflack | Apr 25, 2026
Note to HD Writers and Contributors
Elaine M. Clements | Apr 3, 2026
The IRA Decision That Affects Your Kids
David Lancaster | Apr 17, 2026
Is saving really that hard? Nope, not for the great majority of Americans.
R Quinn | Apr 28, 2026
Around the Obstacles
ArticleDan Smith | Apr 25, 2026
- My continued employment as a delivery driver would likely have left me on Social Security Disability (SSDI) by age 55.
- I was very interested in personal finance, and knew many people in that field who would help me get my foot in the door.
- I had acquired bookkeeping, payroll, and tax prep skills through my involvement with my local union, though I never pictured myself as the type to sit behind a desk, in a dimly lit office, crunching numbers beneath the glow of one of those green shade banker’s lamps.
- As a last resort, I could fall back on my truck driving skills, using my commercial drivers license to get a job hauling ‘no-touch’ freight of some sort.
- Last but not least, I needed a place to live. “Hello, mom and dad, I need my room back”. Sleeping on the twin mattress I gave up 25 years earlier, was not part of my plan.
- I was determined not to let my occupation as a beer truck driver dictate my future job prospects.
Where did I want to be?- Where to live? Living with the folks was never meant to be a long term thing. After three months of that, I signed my first ever apartment lease as a lessee, as opposed to a lessor. That lasted two years, until a very large increase in the rent caused me to buy a duplex, and become a lessor again.
- Where to work? I continued my work as a delivery driver for three more years. My position as the local union president, and my five paid weeks of vacation actually kept me off of the truck much of the time. That enabled me to tolerate the maladies that would eventually force me out of that job. Having absolutely no desire to spend the balance of my life languishing on SSDI and a minimal IRA balance, I set off on the path to becoming a financial services guy. That did not work out, and if you want more information on that, here’s a link.
- To make ends meet, I turned to my last resort; driving a truck. Piloting an 18-wheeler was not how I envisioned my remaining working days. And although the freight was ‘no touch’, driving 600 miles every day in a Kenworth tractor is still pretty hard on your vertebrae. But sometimes you have to do what you have to do to survive and to keep your eye on your finish line. My heart goes out to full time drivers, that job is no walk in the park.
- And what about love? My preference was to be in a relationship, but not any relationship. I wanted a good partner, I wanted to be a good partner as well. What qualities would I look for in a new partner? Independent, established, confident, and nice. Was I asking too much?
Making it All Work Finally, preparation collided with opportunity. In other words, I got lucky. Remember when I told you I didn’t picture myself as ever being a bean-counter? Two established financial services guys set me up with free office space and began funneling tax prep clients to me. What began with me preparing taxes for about three dozen of my union brothers, instantly turned into over 100 clients. There I was, a bean counter of sorts. I kept that truck driving job for several more years. And remember that duplex I bought after the rent spiked at my apartment? Well, there was this girl living next door. Enter Chrissy. We became best friends. She is no longer my neighbor. She is now my spouse. Of course, at the time we met, aside from being a nice guy, I wasn’t much of a catch. Man, she took a chance on me. As my client count went up, my days driving the big-rig went down. When the client count got to about 400, I retired forever from driving. No more trips to Chicago, Des Moines, Snow Shoe PA, or Jersey City. Chrissy and I began pounding 40% of our gross pay into savings. It would take until I was 70, but working together, we got to a place each of us only dreamed we would be. By living within our means, and keeping lifestyle creep to a minimum, we surpassed our goals. Chris retired at 64 and helped me during my final three years as a tax preparer. Lucky for me, Federal Wage and Hour never found out that I violated the minimum wage laws by never paying her in the first place. I sold the practice at age 70. I prepared 650 tax returns in my final year. It’s important to note that during our journey, we did not starve ourselves of food nor fun. We counted 27 trips during our first ten years together. Chris was great at finding great deals to various destinations in the Caribbean, and we turned several of her business trips into mini vacations as well. It’s important to prepare for the future, but have some fun along the way as well. I hope this piece inspires someone who is still on the road, dealing with similar obstacles, and wondering if there was a way around them.Investing Fundamentals: A Simple Guide for Beginners
W.D. Housley | Apr 24, 2026
The great COLA debate-maybe not the expected solution.
R Quinn | Apr 26, 2026
A Life You Build
Jeff Peck | Apr 19, 2026
How much to provide a college student monthly?
Chris | Apr 25, 2026
Live a little
greg_j_tomamichel | Apr 25, 2026