The Stock Market Plummets! What Should I Do?


I’ve been behind.

That’s why, this week, I found myself sorting through old papers that somehow still haven’t been looked at from late last year. I’d tucked them into a file folder called “read later” I’d apparently invented in December, popped it up on the shelf, and never looked at it again.

Until now.

So, it’s now funny to see that on December 23rd the AP headline was Investors Expect Higher Stocks in 2015. As that wordsmith Dr. Phil says,

“How’s that workin’ out for ya now?”

Stocks have bounced all over so far this year (and got CRUSHED last week), and if you were to poll investors today I bet you’d have a much different answer to the question, “Where do you think stocks are headed in 2015.”

In fact, it makes me wonder why investors expected anything in 2015. Don’t we get burned by that every year?

Investors, two years ago, expected the Federal Reserve to begin notching up short term interest rates. Bonds plummeted because of the news….and then nothing happened. Janet Yelin has insinuated that we’d have higher rates coming soon, but current events always turn “sooner” into “later.”
Investors expected emerging markets to be a horror story in 2014. However, this lagging area of the market proved resilient in 2015, as long as you stayed away from betting on specific countries like Russia.
Investors last year expected the market to begin dropping, yet we had another 11% year for stocks (a horrible year for those of us who played contrarians in investment games).

It appears that “expecting” is bad for your portfolio’s health, doesn’t it?

What’s better about this AP headline? The subheader reads, “S&P 500 has more than tripled from its March 2009 low.”

This is where I run into trouble. When I read sub headlines like that juxtaposed against the headline of Investors Expect Higher Stocks….I begin to see irony and think “There’s no way that could be right.”

In fact, plenty of people like me see those types of headlines and begin to bet against the market. I’ve been reading about bearish traders for over two years now, and I’m sure this headline will help create a brand new crop of “It Can’t Go Up Forever” investors.

The problem with thinking the market will turn

If you bet against the market, you’re playing a losing game. Why? Because you don’t have to be right once, you have to be right twice to win.

You have to call when the market will actually fall. Sure, you know the market is going to plummet….so did people two years ago? Are they still hanging on?

In 1998 I met with a guy named Dave who had a massive gold investment. In reply to my question about why, he said that in 1992 he was sure that the Iraqi war would plummet the stock market. When that didn’t happen (and gold prices didn’t rise), he always had a reason to keep it. While the stock market rose BIG TIME in the 1990’s…Dave held on tight to his gold, a contrarian position, which did zippo.


If you guess when it’s going to fall and buy your contrarian investments, then you have to guess AGAIN when it’ll return to it’s normal path. If you don’t, you’ll erode what are sure to be some spectacular short term gains.

Maybe I think you can be right once, but twice? I seriously doubt it.

Here’s a better strategy:

Bet that the market will go up, even if you think it’ll sink in the short run. A bet on the market is a bet that the economy, in some form, will continue to operate at least in a semi-healthy manner.
Dollar cost average into a sinking market. Sure, you could try and call the bottom of the market, but if you instead break up your funds into smaller chunks and just keep buying as it sinks, you’ll spread your risk.
If you’re going to bet at all, as the market sinks bet that it’ll return and up the risk in your portfolio. I tend to prefer NOT to bet at all, but the chance that you’ll be right some time in the future with long term money by betting that it’ll come back is much better than trying to call the bottom.

I love old newspapers. You see a view of the world from a point in time when we didn’t know any of the information we have today. While I love reading about how awesome the market will be in 2015, I think I’ll continue to bet that my ability to call ANYTHING is horrible, at best.


Get This, Not That: A Guide to Proper Father’s Day Gifting

While your dad might be one of the most important people in your life, he is undoubtedly also one of the hardest to buy for. When it comes to Father’s Day, the challenge of gifting your dad the quintessential gift can be a struggle. How do you get your dad something that conveys your appreciation, gratitude and love? More importantly, how do you get him something he will actually appreciate and hopefully not exchange? Here are some perfect gifts to make any dad feel like #1 on Father’s Day.

Techie Dad

If your first memories with your dad involve something like disassembling a radio just to see how it was put together, then your dad is probably techie. As with most tech fanatics, buying them a gift that will impress them is tough. They already own the computer, the SLR and every edition of PhotoShop. Due to their extreme devotion, they also own the brand new iPad, the MacBook Air and all the accoutrements. But, do they own the new Apple iWatch? While yes, this may be a little spendy (prices start at $399), you might consider amending the spend considering he put up with your teenage years. Just think about how incredible it will be to give your tech dad the one gift he wants, but won’t buy for himself. Yes, you’ll win best child of the year.

father and daughter in the park

father and daughter in the park

Grill Master

If you dad is less of a tech fan and more a fan of being outdoors with his grill, impress him with the Napa Jack’s Barbeque Blast Gourmet Gift Basket from FTD. This awesome collection includes sauces, rubs and BBQ-themed snacks and is certain to dazzle anyone who enjoys spending their time perfecting their grilling technique. With its grill case and reasonable price, this is a gift that makes an impact without hurting your wallet.

Golf Dad

Golf dads might seem like they’re easy to buy for: a box of golf balls, a new polo, a round at his favorite course. But step out of the box this year and get dad something a bit more creative. Pro or not, everyone loses golf balls. And dad would probably appreciate some help finding them. These golf ball locating glasses from Hammacher Schlemmer are less than $40 and offer the tech advantage that will get your dad extra excited to hit the greens.

Beer Lover

What dad isn’t a fan of beer? While every dad has his own set of discerning tastes, it is easy to get a smile out of your beer-loving dad with a case of his favorite, or even a selection of new beers from around the world. This year, try the unexpected with a gift that keeps on giving. Gift your dad a subscription to a beer of the month club for only $40 a month, not only will dad get to try a new beer every month, he will feel the love all year long. If your dad is more the hands-on type, try a beer making kit (starting at $70) that will allow him to create his very own distinct brand of brew.

How To Find Money Management Success – Create a Dashboard

I just answered a question on the Stacking Benjamins Facebook page about a recent podcast interview featuring some bill pay app creators. My interviewees had discussed just how difficult it can be to quickly and efficiently pay bills. “I don’t understand the problem these guys are presenting,” the poster said (I’m paraphrasing….). “I just go to my bank and use their bill pay app every other week. No problem.”

I wish it were that easy for everyone.

Let’s face it. Most of us have one big problem with our financial profile: we’re disorganized. After 16 years in the financial trenches, I’ve seen it far too often to think it’s anything other than a widespread problem. Most of us pay bills on sixteen different sites and have two old 401k plans with former employers, our current job’s plan AND different 529 plans for each child. It’s impossible to manage everything. I’d ask people with all of these different investments and bill paying problems how they juggle everything, and the answer I most often heard was, “I manage it very poorly.”

Yet moving investments to a single provider is a scary proposition. We’ve all heard of Bernie Madoff and don’t want to trust one person with our money. We also have all heard of diversification. Having different plans ensures that I won’t have all of my eggs in one basket.
So we have two problems: safety and diversification….and the fact that by having your assets spread out it’s impossible to track. How do we reconcile these two ideas?

It’s easier than you think.


Could you drive a car with three different dashboards?

Think About Driving A Car

When you drive a car, do you have one set of gauges or several? Of course, you only have one set of gauges. It’d be impossible to drive if you had five different dashboards. Imagine! Yet, when you think about your car, it’s a diversified collection of inputs, all working independently. However, when you put it all together, these gauges make your car easier to drive. You get the right data at the appropriate time.
That’s what we’re looking for with money management success….we don’t want to get rid of diversification. Our goal is to create a single dashboard.

In Your Personal Life

There are three areas you should look at with your money:

Budget and bill tracking. Budgets fail when you’re making decisions about spending without knowing where your money goes each month. Items like a mortgage or rent payment and grocery bills are easy to track, but how much do you spend each week on entertainment? If you don’t track your expenses, it’s difficult to project the future or find any money management success. The gauge you’re looking for to help with daily money management is an app like Mint or Yodlee, that will automatically track your expenses so when you’re planning next week’s expenses you know how you’ve spent money in the past.

For budgets, Mint will allow you to set up alerts so that you’re notified when going over budget categories. YNAB (paid subscription) will help you think differently about your budget and keeping every area in check. People who like the old-fashioned envelope system may be attracted to MVelopes, an automatic way of instituting envelope budgets so you don’t have cash sitting around your home.

Investments. Many apps will help you track your investment life. In particular, Mint can create a pie chart of your overall diversification so you can easily make investment decisions. Companies like Jemstep allow investors to input their goals and then recommends investment shifts. FeeX will look at all of your investments across platforms and tell you how much you’re paying in fees….an important gauge to see when investing. Zillow has a cool app that will track any real estate properties you own. NVestly is a social media site that not only helps you see results across your whole portfolio, but also makes investing social (you can see others investment pies…but not the amounts of money they have in any investment). While each of these is different, using a couple of these apps can help you make better investment decisions without worrying about having too much money at a single brokerage account.

That said, brokerage houses all offer a diversified collection of investments through different companies. Just because your portfolio is housed as Fidelity, for example, doesn’t mean you have to have all Fidelity investments. They work with a wide range of providers….and you only have to visit one brokerage site to see everything. One dashboard but still diversification!

Big Picture. You should be able to see how your net worth is growing at a glance. Mint and Yodlee, among others, will give you that quick at-a-glance overall picture.

With Your Business or Side Gig

If you’re self employed, you’re even more crunched for time. You have your personal books AND business metrics to track. As a fan of the excellent management book The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, I know that the keys to business success are in systems and data. How much data you have and how quickly you can use that data to your advantage are important. That means three things:

Platform. If your business or side-gig project isn’t build on a solid footing, you’re hurting. A web presence built by experts like means that you won’t have to worry about the “bones” of your business being difficult for customers or employees to navigate.

Reporting. Using your bank’s application to track inflows and outflows (as well as setting up a Mint or Yodlee account for your business) can help you stay on top of business expennditures and inflows. Ask your accountant about great business tracking apps and software that they recommend.


Staying diversified doesn’t mean having money scattered all over. By focusing on systems, building a dashboard, and reliable business help, you’ll find that you’re able to more quickly make financial decisions that move the needle. That’s how you build long-term wealth!


Photo: Steve Jurvetson

How To Choose the Best Investment For Your Goal

Here’s the most-asked question I get asked at parties: where do you put your money to make it grow best?
It seems like an easy question but the answer is complicated, isn’t it?
Gurus who want to keep you in the dark use labels for investing like “hard” and “difficult”….and it can be. However, on the most basic level, it also can be the easiest thing in the world. You just need to start.
But why don’t people start? Most people I worked with were worried they be wasting their money on horrible investments. They were frozen and couldn’t choose the right path. I can see their point: the last thing anyone wants to do is invest all of their money and lose it quickly.
The good news? It is’t too late to start. At any age you can let your money start making you money. If you don’t want to go it alone, let’s talk about how to choose investments and finding good help.

Lots of Reasons To InvestInvesting

To us all, the idea of investing seems foreign at first. “I put my money in this thing and it makes money on it’s own? How does that work?” At first, ideas like “bonds”, “stocks”, “REITs” and others are like reading a new language.
That’s why you don’t start with the types of investments.
Start with your goals. Some people invest to make money quickly in the stock market while others are trying to make money slowly over time. Once you know your goal, then determine your risk. Different options offer different risks/rewards, so starting with what you want out of an investment drives the decision of where to invest. Investors with large sums might choose to invest in individual businesses while smaller investors can pool their money by buying into a mutual fund or exchange traded fund.

How Should You Invest Your Money….Personally?

Here’s the deal: I don’t know.
Since there are so many investment options and an unlimited number of goals you could be trying to achieve, you might decide to hire a consultant. Good helpers in your corner can help you decide what is best for what you want and the time-line you are looking at. When I was an advisor, I’d limit the choices to the ones that really mattered so my clients could focus on making money instead of worrying about just how many choices there were. Skilled advisors don’t just throw investments your way….they think of strategies that you may not have considered. Investing decisions might need to happen quickly, and if you don’t monitor your investments you could end up not only losing money but losing confidence in your strategy, which is even worse.
How do you find a good firm? I’d talk to friends first. Conduct interviews with advisors using some great tools like this checklist from FINRA. Good investment firms expect to be asked about their performance, how they work with clients and specifically what you’ll need from them. A good firm should feel like you’re hiring a partner more than buying a sales pitch.

What Else Can An Investment Company Provide?

I was always surprised when people would only want to deal with me for one or two investments. In fact, I became adamant that I knew about your whole portfolio, whether I was helping “babysit” your money or not. Every company is different, but many offer more than just investment consultation. Instead of finding someone to help you invest (something you can do on your own), look for someone to help you monitor your investment, give you advice along the way, and help you manage your tax liability, estate planning and budget issues. Not only should your advisor help you make the right decision based on your wants and needs, but they should make sure that you manage your portfolio well when markets turn sour (and they will).  Without a firm hand on the rudder, you might spend too much time looking at your investment and trying to determine if it is going well. Investment statements and prospectuses can also be ugly beasts as well and a good company can help decipher what’s important information and what’s garbage.
Ultimately, your investment decisions are up to you but a good pro can add to the bottom line. Find a company that can earn your trust and start letting your money make money.

5 Benefits of Investing in Real Estate Through Private Lending

Real estate investing is a key ingredient for creating a long-term investment plan that will maximize your wealth and can even lessen your risk. But it seems like there are limited options available to you, considering most investors don’t have the necessary time or experience to do it successfully. You can:

Purchase your home. Although this is considered more consumption than investment, this is still an investment in real estate with potential appreciation.

Purchase rental property. Most people have heard about the ups and downs of owning rental properties, but collecting monthly rent from tenants is great way to generate income. The downside is the need to manage the property yourself or hire a property manager to directly handle tenant and property issues.

Purchase REITs. Similar to purchasing stocks, a real estate investment trust is a corporation that raises money by trading on major exchanges, and it pays investors 90 percent of its taxable profits via dividends.

Buying real estate doesn't necessarily mean dropping a ton of cash into the ground.

Buying real estate doesn’t necessarily mean dropping a ton of cash into the ground.

Besides these options, there’s another that the majority of real estate investors are unaware of: investing in real estate through private lending. As a private lender, you essentially become the bank. You lend your money to other investors (borrowers) and charge an appropriate interest rate for the use of your money. Here are some of the benefits of real estate private lending:

1) Monthly cash flow: The borrower pays you interest every month, which is typically between 8 and 15 percent.

2) Security: Your investment is secured by a lien on a tangible piece of real estate. That gives you collateral when lending your money, aside from just the soundness of the borrower. Typically, you shouldn’t loan more than 75 percent of the property’s current market value, giving you some cushion in the event that the property’s value decreases.

3) Diversification: Real estate private lending gives you the ability to diversify your portfolio — and not only from a real estate perspective. If you want to create current income, it’s another fixed-income option.

4) Lower volatility: You can better manage the market risk if you keep your real estate loans short term.

5) Passive investment: Instead of learning the nuances of real estate development, construction, management, etc., you can lend to other experienced real estate investors who do all the work. You just act as the bank and receive interest payments, and your money is returned at the end of the investment.

Being a real estate private lender is a great way to get exposure to real estate without doing all the work. But you still have to understand some of the risks involved. The market value can cause properties to quickly increase or decrease in value due to local and national factors.

Borrower credit can also be volatile; you need to make sure the borrower is in stable financial condition and can pay back the loan. Also, verify that the borrower’s investment strategy is solid.

Finally, make sure you have good legal representation to draft loan documents, coordinate the transaction, ensure your loan is properly recorded, and see that agreements are in place to protect you as the lender.

Real estate private lending is a great way to get exposure to real estate and generate passive income for your investment portfolio. As with any investment, you need to understand the risks involved and do your homework before jumping in headfirst. But if done right, real estate private lending can generate some of the best risk-adjusted returns in the marketplace.

Jeff Carter is the managing director and founder of Grand Coast Capital Group, where he oversees all aspects of the business. Grand Coast Capital Group is a national private lending firm based in Boston that provides creative short-term financing to real estate investors, builders, and developers across the country.

Evaluating a Single UK Stock–a Beginner’s Walkthru

I recently discovered a the UK stock Playtech, so I looked it up at (link). Imagine my surprise when I saw this:

Screenshot 2015-04-17 13.30.16


Wow! So, is this a good company? Well, there are some issues I need to look at, especially since I’m in the US and this company is in the UK. First, I discussed in a post today over at Stacking Benjamins the importance of evaluating the macro conditions that exist around a stock….like the economy and how the sector’s performing as a group. Besides that, I also need to dig into the numbers and see how this stock would look in my portfolio.

Before I actually begin digging into this company, traded on the London Stock Exchange, I also need to evaluate something else: my experience with this stock is going to be different than that of a UK based investor. Why?

Because I’m investing dollars and not British pounds.

Trading dollars for this company makes my transaction a little more complicated. I could actually have a horrible return even though the stock performs well if the dollar falls in value against the British pound. Many investors who jump on international companies forget that this is an important part of success or failure over the short run when choosing international positions.

….so, let’s take a look.


The Dollar Is Strong

Let’s take a quick look at free site to measure how the dollar compares:

Screenshot 2015-04-17 13.53.40


As you can see, the dollar has been strengthening. According to this interesting piece on, it appears that any Fed move should make the dollar even stronger. That’s good news for international investments, and especially in this case for an investment in the UK if I’m an American investor.


The Company – A Profile

According to their website, Playtech is the world’s largest provider of online gaming solutions. They work with many different gaming companies, from big names like Sky and Titanbet to much smaller firms.

Because we already looked at gaming companies from a macro level in our Stacking Benjamins piece, let’s dive into the numbers.


Fundamental Analysis

Looking at the numbers is called “Fundamental Analysis” by investors. That means we’re going to research how the company makes money and evaluate just how sound things are financially. Just like you know more about a family by looking at their budget, cash flow and debt, we’ll get a better feel for how this company performs by looking at this data. Most probably, we’ll create a list of questions we should ask ourselves before we invest. I’m always surprised by my digging….it feels a little like financial CSI. Ha!


How To Look For Fundamental Data

If you’re just going to take a cursory look at a company (the scope of today’s article), many people like using Yahoo! Finance. I don’t. Why not? Because what I’m interested in are trends. I want to see revenues improving. I also want earnings to be improving, and I want to compare debt levels against prior years. These numbers will tell me a quick story about the company. I may not get the full story, but just a set of current data at Yahoo! doesn’t help me at all.

Instead, I went to my brokerage site, which happens to be TDAmeritrade. I also have an account at Scottrade. Let’s compare.

First, it’s difficult to make sure that you’ve got the right company when you’re looking at foreign investments. At TDAmeritrade, they show two different stocks:

Screenshot 2015-04-17 14.04.59

Luckily, I know, these are actually two ways you can buy the same company. We’ll go into that another day…..but for now, I want to use the one that gives me the most data. Clicking the depositary receipt investment gives me no data. The other gives me what I’m looking for.

At Scottrade, when I ask for Playtech, it actually shows me three…..and I go with the Grey Market one (middle). It’s the same company.

The middle one is our winner!

The middle one is our winner!


At Scotttrade I also can look at prior year data…..I just prefer the graphs at TDAmeritrade that Scottrade omits.

While this gives me all the data...I love graphs. Yum.

While this gives me all the data…I love graphs. Yum.



So What Do We See? Good Stuff?

Revenues will show us if the company is making more money every year. We want a company that’s growing sales. Is that the case for Playtech?

You can see above, that revenues have grown year for the last four years. That’s good news.

In many cases your investigation will spur questions. In this case, it’s “if revenues are going up, are expenses staying in check?” We’ll need to find an answer to that before investing.



One quick way to look at expenses is through the eyes of earnings. Revenues are “top line” numbers. It’s money coming in the front door. But if a company spends all that revenue and doesn’t make a profit, who cares? We don’t want more sales alone….we also want to see more money going to investors. We can monitor that through looking at earnings. If a company grows sales they might have acquired another company that had solid sales or they may have hired a ton more people. If earnings don’t rise also, we have a problem.

Let’s switch over to TDAmeritrade to look at earnings. Here it is:

Earnings last year were down. Hmmm....

Earnings this year are expected to be down. Hmmm….


As you can see, earnings are good so far, but next year they expect them to drop. That gives us MORE questions….why is the stock so hot if everyone expects the company to earn less in the future?



While I don’t see debt as a negative all the time, just like it can sink your personal financial situation, too much debt can sink a company. Let’s take a look:

Where the heck did that debt come from?

Where the heck did that debt come from?


Where did this new “long term debt” line item come from in Q4 of last year? The stock is up AND there’s new debt AND analysts expect earnings to drop? There’s clearly something going on.

…and So On….

We’re not nearly done, but can you see how we’re forming questions about the stock as we read the numbers? Sharon Lechter (co-author of Rich Dad Poor Dad) told me on our Stacking Benjamins podcast that numbers tell a story that you want to learn how to read. In this case, I go to the news on Playtech and find this: Playtech Enters Foreign Exchange Market. Investors clearly like the synergy that this might create, even though over the short term they think the company will have lower earnings and had to take on debt for the transaction.


So Do I Buy?

In this case, I’m going to hold. The inconsistent earnings growth and new acquisition frighten me. There’s too much up in the air about how successful Playtech can be marketing Forex trading to it’s online gambling clients. I don’t think they’ll fail….I just don’t know…..and that’s enough of a reason for me to look elsewhere.


What’s the Difference Between Rich and Wealthy? #Podcast with Paul Sullivan


On the Stacking Benjamins podcast today: Paul Sullivan (New York Times columnist and bestselling author) shares stories about people who can’t save on $2M incomes….what’s the difference between rich and wealthy? He shares inspiring AND train wreck stories.

Link to SHOW NOTES at Stacking Benjamins.


5 Tips to Prepare for Retirement

You may be young, but it’s never too early to prepare for retirement. According to a study via the National Retirement Risk Index (NRRI) and the Retirement readiness Rating, 43% to 52% of Americans are not going to live their retirement years in the standard they’d hoped, according to their current living standards?

So what’s the best way to be prepared for the life you want to lead when you retire?  Start planning now. Check out the following five tips to do so.

1.      Contribute to an IRA or Your Employers 401(k)

So you’ve started working for an employer who has a 401(k). You may feel you don’t have the money to spare to contribute, but you’re losing out on more by not contributing. For one, it’s an excellent tax deduction, reducing your taxable income. Also, most employers offering this plan offer some matching contribution. Don’t leave behind that free money on the table. These savings plans handcuff you from quickly accessing this money, so saving it up is a breeze.

2.      Save Up Automatically

Here is another way to start saving towards retirement. You can use this in combination with putting money into your IRA. Start saving money into a savings account by having it pulled automatically from your paycheck each pay period. Talk to your human resource or payroll department about taking a specific dollar amount or percentage, and deposit it into this designated account. This is a guaranteed way to get it in monthly.

3.      Live Healthy to Save More

It’s said living healthy is costly, especially if you eat organic foods. However, organic products aren’t the only road to good health. There are other things you can do such as regular exercise, cut down on your fat intake, and stop smoking. The results: you reduce the chances of developing cardiovascular or lung diseases and live longer. This helps you save by eliminating excess doctors’ visits, hospital stays, prescriptions, and as a bonus you’ll also save on not purchasing excess, unhealthy items.

4.      Start Eliminating Debt

Getting rid of debt now will help you prepare drastically when you retire. Not having to worry about a mortgage, car note, or credit card bills help you have money for future lifestyle and vacation plans. The sooner you pay these off, the faster you can start saving for an emergency fund to use instead of your retirement savings for emergencies.

5.      Start a Side Business

In a study called Work in Retirement: Myths and Motivations, they studied 7,727 adults regarding their position on returning to work after retirement, 30% said they would go back to work. Instead of working for someone else, prepare now to work for yourself. This will help you enjoy your retirement years as you want, when you want.

Don’t feel it’s too late to prepare for retirement. Implement the above five tips now and keep on target for future goals.

Is That College Degree REALLY Worth It?


Lydia Frank from joins us to talk about their new college ROI survey. College is an expensive investment. You might have to go into debt to graduate. Doesn’t it make sense to find out first whether that degree is worth it?

If you aren’t worried at all about college, don’t worry….we’ve got stuff for you, too. PK is here discussing politics and investing. What’s the lesson we can learn from Chicago elections? You’ll find out. Joe & OG not only talk about old 401k plans and what to do with them….they also discuss more people suing their 401k provider AND take a letter from a listener whose advisor recommended moving money out of the market. Good or bad idea? We’ll weigh in.

Thanks to for sponsoring our podcast.

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