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Grossman’s Eleven

I AM AMAZED our schools don’t require kids to learn three important life skills: the basics of nutrition, a thing or two about parenting, and how to handle money. I’m no expert on nutrition and my parenting is a work in progress. But I do have a background in personal finance: When folks ask me what to read to deepen their financial knowledge, I have a ready list of titles.
Recently, however, someone asked me for a more advanced list—a “201”

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Four Questions

AFTER YEARS of handwringing, you finally concede that it’s all but impossible to beat the market over the long haul, so you shift your portfolio into index funds. Next up: the truly tough decisions.
Almost every writer for—and reader of—HumbleDollar is a fan of indexing, and there’s no doubt that index funds are a wonderful financial tool. But how will you use that tool? Let the bickering begin.
The differences of opinion show up among the articles we run on HumbleDollar.

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Rule the Roost

I AM AGE 57 and I’m planning to move, so you might imagine I’d be interested in the best states to retire. On that score, there’s plenty of advice available.
Bankrate says the best option for retirees is Nebraska, followed by Iowa, Missouri, South Dakota and Florida. Meanwhile, WalletHub gives the nod to Florida, with Colorado, New Hampshire, Utah and Wyoming rounding out the top five. Want a third opinion? Blacktower Financial Management puts Iowa at No.

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Nobody Told Me

I HAVE DEVOTED my entire adult life to learning about money. That might sound like cruel-and-unusual punishment, but I’ve mostly enjoyed it. For more than three decades, I’ve spent my days perusing the business pages, reading finance books, scanning academic studies and talking to countless folks about their finances.
Yet, despite this intense financial education, it took me a decade or more to learn many of life’s most important money lessons and, indeed, some key insights have only come to me in recent years.

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January’s Hits

AT THE BEGINNING of the year, many of us resolve to get our finances in shape, which means January is always a busy month at HumbleDollar. What were folks reading? Here are last month’s seven most popular articles:

First, do no harm: John Lim lists 12 deadly sins that every investor should strive to avoid.
Should you give up on the tried-and-true mix of 40% government bonds and 60% stocks because bond yields are so low?

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Great to Gone

ON THIS DAY in 1888, George Cope died at age 65. Two days later, he was buried in Anfield Cemetery in Liverpool, England, where his younger brother Thomas had been laid to rest 40 months earlier.
Together, in 1848, the two brothers had launched a successful tobacco company, which would be acquired more than a century later by Gallaher Group, then a major U.K. multinational tobacco producer. Gallaher itself would subsequently be bought by Japan Tobacco.

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Weight Problem

MICHAEL BURRY waited years to be rewarded for his bet against subprime mortgages. Actor Christian Bale, in the movie version of Michael Lewis’s book, The Big Short, portrays Burry curled up in the fetal position on the floor of his office. When the financial crisis finally hit in 2008, he made $100 million.
I’m no Michael Burry and the chance I’ll ever see $100 million is about 100 million to one.

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China Syndrome

INDEX DESIGNERS FTSE Russell and MSCI are jumping on China’s A train this year—and index-fund investors should watch out. There’s a $6 trillion wild-and-woolly domestic Chinese stock market slowly chugging your way, whether you like it or not. Yes, it may bring riches—and it’ll definitely bring huge risks.
In fact, your emerging markets index fund may already have 34% in Chinese stocks, and it could exceed 50% in years to come. Sound unnerving? For those with a position in an emerging markets index fund—or are considering one—good alternatives are hard to come by.

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Get a Life

IN MY ROLE as a financial planner, I hear a lot of stories. By far the most appalling and upsetting relate to life insurance. All too often, insurance salespeople leave clients with policies that are simultaneously overpriced, inadequate and inappropriate.
Are you evaluating a policy? Here’s a quick summary of the most important considerations:
What type of coverage should I have? Life insurance comes in two primary flavors: term and permanent. Term insurance,

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Don’t Tinker

“FOLLOWING the market’s recent banner year, should we just sell everything and get out?” I got that question recently, and it’s entirely understandable. Since hitting bottom in 2009, U.S. share prices are up fivefold, including the S&P 500’s 31.5% total return in 2019. 
Individual investors aren’t alone in asking this question. A few weeks back, at an industry conference, James Montier delivered a presentation in which he compared the U.S. stock market to “Wile E.

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Adding the Minuses

IT’S NO SECRET that mutual fund costs are critically important. In fact, when it comes to the performance of funds in the same category, they’re the single most important differentiator. In the words of Morningstar, the investment research firm, “If there’s anything in the whole world of mutual funds that you can take to the bank, it’s that expense ratios help you make a better decision.”
But how do you go about totaling up a mutual fund’s costs?

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Believe It or Not

TESLA FOUNDER Elon Musk is, to me, the ultimate investment Rorschach test. To his supporters, Musk is a genius without equal. As one Wall Street analyst put it, “If Thomas Edison and Henry Ford made a baby, that baby would be called Elon Musk.” But to his detractors, Musk is an erratic individual and the leader of a money-losing company whose bravado has landed him in hot water with the SEC. 
Last week, Tesla’s stock encapsulated those contrasting views.

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Portfolio Makeover

AT LEAST ONCE a week, I run across the sort of portfolio I like to call a “broker’s special.” While each is different, they typically include some mix of the following:

A handful of mutual funds with names like “New Economy” or “New Discovery” or “New Perspectives.”
Some commodity funds.
10 or 20 individual stocks.
Funds with names heavy on buzzwords such as “infrastructure” and “renewable energy.”
And, in some cases, master limited partnerships,

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The Wager Revisited

IN BERKSHIRE Hathaway’s 2006 annual report, Warren Buffett devoted several paragraphs to scathing criticism of the hedge fund industry. Their fees, Buffett wrote, were so exorbitant and so stacked against investors that they amounted to a “grotesque arrangement.”
Indeed, Buffett has frequently recommended that individual investors opt for low-cost index funds. To reinforce this point, he issued a public challenge in 2007: He would bet anyone $1 million that, over a 10-year period, a simple S&P 500-index fund would beat the performance of a portfolio of hedge funds.

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Seven Paradoxes

“THE INVESTOR’S CHIEF problem—even his worst enemy—is likely himself.” So wrote Benjamin Graham, the father of modern investment analysis.
With these words, written in 1949, Graham acknowledged the reality that investors are human. Though he had written an 800-page book on techniques to analyze stocks and bonds, Graham understood that investing is as much about human psychology as it is about numerical analysis.
In the decades since Graham’s passing, an entire field has emerged at the intersection of psychology and finance.

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