Ignore the old guys; markets tough to predict

David MoonBlog

From 1,700 to 17,000. That’s where the Dow Jones Industrial Average (DJIA) has travelled during my seemingly brief investment career. During this 1,000 percent gain in stock prices, we’ve experienced three major price cycles, each commonly defined by the price collapse that preceded or followed it. And each of those price declines is commonly mischaracterized in some way. In 1987 we had The Crash. From August to October that year the DJIA dropped 1,000 points. On the October 19 afternoon of Black Monday, I sat with a group of really old stockbrokers (probably about 45 or 50 years old) and … Read More

Minimum wage debate only as good as the data

David MoonBlog

I spent the late summers and early falls of 1977 and 1978 walking through seemingly millions of acres of cotton fields, using a hoe to remove a specific weed that crop duster herbicide couldn’t kill. My compensation included the $2.65 an hour minimum wage and the motivation to do almost anything other than chop cotton as an adult. Measured by the consumer price index, my 1978 earnings lost a third of its purchasing power in the ensuing 35 years. Since 1968 the federal minimum hourly wage has increased 353 percent, compared to a 583 percent increase in the CPI. Numbers … Read More

Dear lottery winner: Make a plan, work the plan

David MoonBlog

Some advice for the winner of last week’s $259 million jackpot: You, Inc. is now a quarter-of-a-billion-dollar business, so act like it. Make a plan. Then work the plan. Decide where you want to be 20 years from now. Work backwards from there. If you were at that place today, what would you have been doing ten years ago? Then look back another ten years. What would you have been doing then? That’s what you should be doing now. When you identify your long-term goals, set aside specific buckets of money and other assets to fund each goal. Take a … Read More

Balancing your balance sheet, goals and fears

David MoonBlog

Inflection points are places in life where our direction can change—sometime dramatically and sometimes only slightly. Even small changes at an inflection point can eventually accumulate into a significant difference over a long enough period. Where you are today is, in part, a function of your decisions at life’s inflection points. Retirement is an inflection point. Small changes in your trajectory at the beginning of your retirement years will be magnified over time. To successfully manage the financial part of retirement requires that you consciously reconcile three things: your balance sheet, goals and fears. By the time you see the … Read More

More disclosure won’t protect clueless investors

David MoonBlog

There is a battle occurring between regulators in the investment industry and most individuals are completely oblivious to both the proposed processes and the problems with the current patchwork system of financial industry oversight. For years I’ve written about the different ways in which people who hold themselves out as investor-helpers are regulated. Stockbrokers, financial planners, investment advisers, trust department employees and insurance salesmen are regulated by a number of different—and competing—organizations, each with its own requirements. Each regulatory authority thinks its systems and processes are better than the others. Under the guise of improving overall regulation and seeking consistency, … Read More

Football camp not the best path towards big bucks

David MoonBlog

Thousands of youngsters across the US are attending football camps this month, many because their parents believe that proper instruction at a young age could lead to college scholarship offers, the NFL and vast riches. If a parent’s goal is to begin training a future millionaire (a questionable goal, at best,) football camp is the wrong place to be. His kid should be in biosciences or business camp, not quarterback or kicker camp. Last year’s 32 opening-day NFL rosters listed 80 quarterbacks, with an average salary of $1.9 million. That’s a bunch of money, but it’s less than what the … Read More

Don’t confuse a rising tide with competence

David MoonBlog

In 1929, Walter Miles published a paper in Scientific American Magazine titled “Sleeping with the Eyes Open,” in which he described a phenomenon we now refer to as “highway hypnosis.” During a period of relative and unchanging calm, we have a tendency to stare at something simple and almost meaningless, lulling us into a state of environmental unawareness. That is, we are asleep at the wheel. A related condition is velocitation, where, in the absence of impediments, we exceed an otherwise normal, safe speed. Both are happening today in the stock market. And like a 19-year-old boy in a 1967 … Read More

Avoid kerfuffles, start estate planning early

David MoonBlog

For almost a week, the adult children of 82-year-old Casey Kasem feared that their estranged stepmother had kidnapped the legendary disc jockey and long-time host of the American Top 40 radio show. Kidnapping is not a great estate plan. When I started my investment firm 20 years ago I naively thought this business was about reading annual reports and picking stocks. It is, but it is so much more. The three most intimate things in a person’s life are their spirituality, sexuality and money. And people will more quickly tell you what they think about God and who they’re sleeping … Read More