Text Message


Friday, February 14, 2020

Why Kobe Bryant's Death Was A Wake Up Call

Kobe Bryant's premature death was hard for many people, including me.  I'm not a Lakers' fan, but while attending UC Santa Barbara in the late '90s, I got to see the Lakers scrimmage at the Thunderdome (the Gaucho's event center).  This was early in Kobe's career, but already he was a superstar.  Living in Santa Barbara also enabled me to catch many Lakers games when they played my team, the Golden State Warriors.  Despite my support of the "Dubs," I was a Kobe fan.

Image result for kobe bryant

As we know, Kobe Bryant didn't die alone.  His daughter, Gianna Bryant, as well as other people, tragically met their end when the helicopter they were flying in crashed.  It's been a few weeks now since the tragedy.  The Kobe Bryant Memorial Services are next week at the Staples Center.  The last I read, it appears the event will be huge.  Kobe was loved.

There's an inherent flaw in all of personal finance.  I've read countless articles on topics galore relating to PF.  The authors of countless blog posts and books (myself included) all assume one thing: that you will make it to retirement.  Those who are proponents and practitioners of the FIRE (Financial Independence Retire Early) have one thing going for them, early retirement.  In other words, by saving half their income or more, and investing mostly in safe vehicles like mutual funds with great track records (so they preserve capital), these individuals want out of the workforce by their 30s or 40s.  Done!  About the only thing I personally like about the FIRE movement is being young at retirement.

But no one is safe from the Grimm Reaper.  This is why Kobe's death was a wake up call to all of us.  Sure, young people die all the time.  Some from natural causes, and others tragically.  Some of these deaths make the news.  We may lament and feel awful for the surviving family members.  But the impact Kobe made in life magnified 100 times over or more, his premature death.  Kobe was not only a Hall of Fame NBA player, he was a successful businessman with quite the fortune.  Kobe had all of his affairs in order.  No doubt.  His family won't have to deal with extended family or quarrels.  But for every Kobe, there are 60 people who die every day without a Will or a Living Trust.

Image result for estate planning

According to a 2017 AARP survey, 6 in 10 Americans haven't done a will yet.  I'm one of them!  My wife, Jessica, and I were at our annual tax appointment with our EA yesterday.  We asked him about his Living Trust service.  It's going to cost us $1,500 to set up a Living Trust, and $175 for each rental property transfer.  Ouch!  Oh well.  Whereas a will goes into effect upon your death, a trust goes into effect as soon as it's created.  Another key difference between a will and a trust is that a trust avoids the courtroom, saving everyone time and money.  You have to figure out what works best for you.  A living trust works best for my family.

Okay, so you may be doing great saving for retirement.  That's not the norm in the U.S. as many people struggle just to make ends meet.  But I bet you haven't considered your death or potentially failing health, as much as you should.  Do you have a health care power of attorney?  Do you have term life insurance so your loved ones don't struggle without the loss of your income?  Do you have a trust?  You don't?  Then what the heck are you waiting for?

Do you think Kobe thought he was going to die at 41?  Obviously, no!  My wife and I go out on date nights, leaving the kids with a babysitter.  What if we get in a car accident and die together?  The what?  We feel incredibly fortunate to have several rental properties as assets and our residence here in coastal CA to leave to our two kids, but we feel like idiots for not having a living trust yet.  We left the EA's office with the forms in hand and are going to sit down this Presidents Day weekend to start working on them.  Perhaps it's time you talk estate planning with your significant other too.  Do it for Kobe!  Mamba Mentality. 

Friday, January 31, 2020

What's A Value Investor To Do In This Market?

I'm sick of this market!  And my attitude is so garbage right now that some days I wish the market would get Coronavirus.  But it seems that the bull is immune to everything.  Back in late 2018, I thought for sure the end of the bull had arrived, only to see Trump convince the Fed to lower the Fed Funds rate (several times).  But the Fed went beyond the call of duty, doing Quantitative Easing (Q.E.).  The latter has been kept hush, hush, to the public at large, but if you want to know what truly turned the market around in early 2019...it was Q.E.!!!

And now we are here in 2020.  When I say, "we," I'm referring to value investors.  Hey guys, remember when you could find lots of stocks with growth rates higher than their P/E's?  Yeah...neither do I.  In the strict sense of the word, value implies finding shares who have future growth rates higher than their current P/E multiples.  This was something that could be done with ease at times, but these days, your stock screener will turn up dead crickets when you search with those parameters.

Don't take me wrong, there are plenty of stocks with P/E's between 10 and 20 out there to choose from.  But having a low P/E doesn't make a stock a pure value play.  You might have to turn to mid-cap or dare I say, small-cap stocks to find value.  There are some value stocks in beaten down sectors like Financials, but then you're going Contrarian because rates don't seem to be budging up any time soon.  So long as Trump can scream at Fed Chief Powell with a bombardment of critical Tweets, the Fed will not hike.  This brings me to another point, is Trump a systematic or unsystematic risk?  I can't quite tell.  Or you can try the energy sector.  But gasoline is so 20th century.

4,000 plus days and counting.  Some people are just beginning to march along the bull as if they were in Spain.  Are they nuts?  No!  It's the usual FOMO (Fear Of Missing Out) effect.  It happens at the tail end of each bull market.  I sold the stocks I owned in my taxable Brokerage account yesterday, realizing a $300 loss for the year.  But it's only January!  I know.  I'm a value investor and I'm at a loss for ideas.  I still own stock in my 403b by way of an Index Funds: Vanguard's Total Stock Market, allocated at 65%.  So if the bull should keep strolling down the street, I'll still be making money.

It may not be the best time to jump into the stock market for the very first time.  In fact, it's one of the worst times.  But, it's the perfect time to invest in your financial education!  My latest book, Stock Market Investing for Minority Teens & Friends is out and live at Amazon!  It's a beginner's guide at heart, written for teens and young adults, but the information is perfect for all beginner's.  You can now read the front matter and the first 1.5 chapters using the Look Inside Feature.  Here's a picture of the book with a link to the page.  Thanks for reading!!


Sunday, January 5, 2020

Stock Market Investing for Minority Teens & Friends Book Coming Soon!

I've just finished writing my latest book: Stock Market Investing for Minority Teens & Friends.  My target audience are all low-socioeconomic and underprivileged teens, especially ethnic minorities.  However, the book's other audience includes the allies of my target audience, or basically, any non-ethnic, i.e., white teen who hangs out with my target audience at school, etc.  Basically, any lower or working class teen ages 14-19.

This is the image that will grace the front cover.

If you're wondering why I chose this audience...well, there are zero books on beginning stock market investing that cater to the one audience that really needs a book on this topic!  The wealth/income inequality gap is huge.  I don't need to justify a book like the one I've written.  Clearly, more Americans should be investing in stocks, but especially Americans of color.  If you're upset or think this is some sort of race baiting, get over it! Every other book written on stock market investing is for a white consumer.

If you don't mind references to school, video gaming, the occasional use of the word, "white person," or "white man," and you want to learn about stock market investing, then my book will break down the toughest topics and distill them into pure understanding.  After all, as a teacher, I'm accustomed to helping students learn incredibly complicated science content, e.g., Newton's Laws and Einstein's general relativity.  So I can definitely help a beginner make sense of stocks!

The book is currently being reviewed by some critical friends of mine.  After I get back their editing tips, etc., I will fine tune the document and publish the book at Amazon.  It will be between 95 to 100 pages total.  Every chapter will have section exercises so that you can practice the skills of stock evaluation.

If you're a parent or guardian of a teen, and you know nothing about the market, please, please, look out for this book.  You have absolutely no idea how much of a disservice it is to teens of color to lack even the basics about stock market investing.  Let me tell you that you may as well as be setting up your child for financial failure if they never learn to invest in stocks.  So be on alert!  Peace.