One of the terms most often heard in the world of finance is “risk” as in "investment risk." Often, people think of risk as something dangerous and to be avoided. There are many circumstances that determine how people view investment risk.

Below are some interesting ways to think about investment risk. 

The Uber IPO is a hot topic among investors today. Uber Technologies, Inc’s IPO is expected to be priced Thursday and to start trading Friday.

Even on the secondary market, with no profits and based on other analytics, it is a company that we would consider to be speculative in nature.

That isn’t to say it won’t do well for a period of time…as some bets do…but the fundamentals would not put it on our buy list at this time. Without further ado, here are the 10 reasons we feel that the Uber IPO is a sucker’s bet. 

Baseball season is upon us and Spring has sprung so here are some interesting thoughts/observations:

Positive Mental Attitude

A recent study from Frost Bank revealed a direct correlation between optimism and improved financial health. Frost worked with researchers at Carnegie Mellon University to develop a methodology to measure optimism. They found that 62% of optimists had better financial health which was about 7X higher than pessimists who came in at 9%. Optimists were more likely to discuss financial matters with family and friends and were interested in learning more about money management versus pessimists. Below are some financial habits of optimists:

Recently, you’ve probably heard much noise about new congressional proposals regarding stock buybacks. Before I get into the nitty-gritty, it is probably good for a quick refresher on the what and why of stock buybacks.

What are stock buybacks?

Stock buybacks are when a publicly traded corporation purchases their own shares in the public markets. They announce either the dollar or share amounts they will repurchase and it is to the discretion of the Board of Directors and management to determine this amount and when to make such purchases. The cheaper companies can buy their stock back, the more they can repurchase.  Corporations are known for poorly timing their share repurchases as indicated in the chart below where repurchases hit a low in 2008-2009 as stock prices were near generational lows in the Great Recession:

There is a popular child’s game called Chutes & Ladders you may have played with a child or grandchild.  A key part of the strategy for the game is to climb ladders to the top and avoid going down a slide/chute that makes you lose ground. 

"Chutes and Ladders" could be an apt metaphor for the current interest rate environment. 

After a slow and steady rise in interest rates (i.e., climbing the ladder), the recent volatility resulted in a fairly quick drop in yields (i.e, down the chute). 

It is very likely you have heard of the book, The Life Changing Magic of Tidying Up, or seen the recent Netflix series, Tidying Up. This popular system for organizing your house and office, the KonMari Method, was created by Marie Kondo.

What brings you joy?

Kondo and her writings have become incredibly popular both through her engaging personality, practicality of advice, and her simple but deep message.     

The last few months have not been an easy ride for equity investors.  The S&P 500, Nasdaq and Russell 2000 all went into bear markets, which is typically defined as a decline of 20% from their all-time high.  Combing through some data, I thought  I’d share some interesting anecdotes I learned and what it could mean moving forward.

Investors ran for the exits

Below is a chart from Ned Davis Research that shows that December 2018 had the highest monthly outflow for equity funds (includes ETFs) in the last 20 years. In the simplest sense, investors were probably selling any kind of exposure that had to stocks.

Typically, when I’ve written blogs, they’ve focused on a specific topic, theme or issue. I thought it would be good to switch things up a little bit and share some interesting statistics and thoughts about the financial markets.  

The case for active management

I recently came across the chart below which shows the total returns of the “buy and forget” stocks that in 2000, Fortune Magazine predicted would last a decade:

The last few weeks have been a little unnerving for those invested in the stock market. The media constantly bombards you with reasons (trade wars, higher interest rates, China) as to why the market is falling. Of course, it’s important to know why but understand that we have little control over the variables that make markets move.

This week in the financial media, there have been many articles and stories written about the 10th anniversary of the financial crisis of 2008. The bankruptcy of Lehman Brothers, sale of Bear Sterns to JP Morgan and the near collapse of the U.S. financial system were all very scary and taught us a lot of lessons. I was just getting started “in the business” during this time and I remember watching on TV the House of Representatives voting down the initial $700 billion bailout bill (which would later be passed). I won’t forget seeing the Dow Jones Industrial Average plunge hundreds of points in just a matter of minutes after the first failed vote. This was a very difficult time as many people lost their jobs, saw their retirement account values decline dramatically and most importantly, shook the confidence of many.

The after effects of the financial crisis are still felt today as people remain worried about when “the next shoe will drop” so to speak. I’ve had more conversations with clients and individuals about