GMB Ep #82: Debunking Investing Myths #2: It’s Dangerous to Invest At All Time Highs

A few weeks ago we started a series of podcast episodes dedicated to debunking popular misconceptions around investing. In today’s episode, we’re continuing that discussion by covering another investment myth: that it’s too dangerous to invest new money at market highs.  Buying low and selling is an obvious objective for any investor, but avoiding the markets simply because they’re breaking new highs is a common mistake for many.  Throughout the episode, Grant dives into why this concept is a myth and data from a few studies conducted by reputed organizations that show the potential dangers of the delay in waiting till the markets fall. 

 

 

Show Notes

[04:56] Historical Data – We often use historical data to assist our investment decisions. While it is a good starting place, it comes with a lot of shortcomings. Grant reviews why we need to look beyond historical data to make savvy investment decisions.  

[06:33] Study on S&P 500 Returns – Grant dives deep into a study that analyses the returns of the S&P 500 companies right before the dot com bubble crashed and after the market crash. 

[11:13] Investing on Random Days vs. All-time Highs  –  Last year, the investment firm JP Morgan conducted a study to compare the returns of investing on any random day versus selectively investing only on the days when the markets reach certain points. Grant dives into the findings of this study and how they relate to the misconception. 

[16:20] Risks – The risks associated with investing in financial markets and some of the methods we can use to mitigate the risks and the limitations.  

[18:31] Looking at a Wider Dataset – Grant reviews a chart from Dimensional Fund Advisors, which uses a wider data set, a total market index, and a longer time period than the previous studies. He shares his thought on why this chart contradicts the other two studies and what investors can learn from it. 

[21:23] Dividends and Distributions – How dividends and distributions can reduce the impact of a market crash and significantly increase your returns if the markets do not crash.  

[24:37] Dollar Cost Averaging – How dollar-cost averaging helps us reduce risks associated with investments.  

 

Resources

Is it too late to get invested?
jpmorgan.com/wealth-management/wealth-partners/insights/top-market-takeaways-is-it-worth-considering-investing-at-all-time-highs 

The beauty of doing nothing:
jpmorgan.com/wealth-management/wealth-partners/insights/the-beauty-of-doing-nothing 

GMB Ep #81: There Are Only Three Ways To Make Money In Crypto

The popularity of Bitcoin and other cryptocurrencies has exploded over the last few years, and many investors are asking about the various ways they could make money investing in them.  A few months ago in episode 65, we talked about how cryptocurrencies work. In today’s episode, we’re extending that discussion and sharing the only three ways to make money with cryptocurrencies. Throughout the episode, Grant reviews how some of the money-making methods of the gold mining era relate to cryptocurrencies and three methods you can use to make money in the cryptocurrency space.

 

 

Show Notes

[02:11] Understanding Cryptocurrency – Grant reviews a framework that he’s been using to shape his understanding of the inner details of cryptocurrency and the ways to make money in the cryptocurrency world. 

[06:45] Risks Associated with Crypto – Compared to rare minerals like gold, cryptocurrency does not have a long history yet. Grant explains the risks associated with cryptocurrencies due to their relatively short history and the high volatility. 

[07:46] Process of Mining – Grant takes an in-depth look at how a network of computers carry out cryptocurrency mining and transaction tracking.  

[12:52] Profitability of Mining – Why the awards for mining go down over time and how it affects the ROI of mining. 

[15:45] Speculating – How cryptocurrency investors can make money by speculating cryptocurrency prices. 

[18:11] Regulations – Grant reviews some of the regulations that are in effect in Europe due to the highly volatile nature of the cryptocurrency world and some of the instances that prove that cryptocurrencies aren’t completely out of the reach of governments. 

[22:47] The Levi’s Approach – How investing in platforms that enable people to interact with cryptocurrencies can become a way to make money in the cryptocurrency arena. 

[27:32] Smart Contracts – How smart contracts work, how they’re related to the technology used in crypto, and some of the investment opportunities related to smart contracts. 

 

Resources

 Ep# 65 – My Take on Bitcoin & Cryptocurrency: 
growmoneybusiness.com/podcast/episode65

GMB Ep #80: Digging Into Healthcare Costs With Sailee Bhambere

The healthcare system in the United States is extremely expensive compared to other developed countries, and it has escalated to a point where healthcare costs have become a major financial burden for many people. In today’s episode, we have a distinguished guest who specializes in public health. Sailee Bhambere, a medical doctor with a master’s degree in Public Health from Harvard University, joins us today to talk about why healthcare is so expensive in the United States. Throughout the episode, we dive deep into Sailee’s research on the issues of the US healthcare system, why it’s extremely expensive, and how it could be improved. 

 

 

Show Notes

[02:28] Sailee’s Background – We start the conversation with a brief review of Sailee’s work in the healthcare industry and how her research contributes to improving the quality of healthcare.  

[05:56] Studying the Healthcare System – Sailee shares with us what she focuses on in her research to identify issues in the healthcare system. 

[09:00] Why Healthcare is Expensive – Sailee shares her take on how expensive the US healthcare system is and some of the contributing factors to these high costs. 

[14:00] Preventive Healthcare and Personal Responsibility – How our personal habits contribute to our health over a long time and how preventive healthcare could be improved in a way that makes it easier for citizens to develop healthy personal habits. 

[17:12] Free Market Capitalism and Healthcare – Grant and Sailee discuss their views on how the free market environment in the United States influence the healthcare system and how other developed countries have taken measures to reduce healthcare costs. 

[23:00] Most Important Policies – Sailee shares her thoughts on what policies she’d put in place if she had the authority to do so. 

[26:00] Complexities – Why the US healthcare system is extremely complex and how the policymakers can approach reducing the complexities. 

[31:40] Administrative Costs – The administrative costs in the US healthcare system are significantly higher than they are in other developed countries. Sailee shares her thoughts on the reasons that cause this discrepancy. 

[36:34] Burnout – One of the major issues healthcare professionals are facing across the industry is burnout, which is a result of overworking as well as complex administrative tasks embedded into their workload. Sailee shares her thoughts on how this affects the performance of the healthcare system.  

 

Resources

Connect with Sailee: linkedin.com/in/sailee-bhambere 
Sailee’s Research: www.researchgate.net/profile/Sailee-Bhambere 

GMB Ep #79: The Sacramento Startup Climate With Cameron Law

In recent years interest in entrepreneurship has been steadily increasing around Sacramento and around the country, leading younger generations to explore self-employment as a career option.  In today’s episode, we have a distinguished guest who specializes in educating entrepreneurs and guiding them toward success. Cameron Law, Executive Director of the Carlsen Center For Innovation & Entrepreneurship in Sacramento, joins us today to talk about the startup climate in the region. Throughout the episode, we dive into how Cameron’s organization helps entrepreneurs, common mistakes entrepreneurs make, trends in the startup arena, and what entrepreneurs should know about creating successful business ventures. 

 

 

Show Notes

[01:40] Cameron’s Background in Startups – Cameron shares how he got into the business world, his work in the venture capital arena, and his contribution to helping entrepreneurs thrive. 

[06:18] Cameron’s Organization – Cameron dives into the mission of his organization, Carlsen Center for Innovation and Entrepreneurship. 

[10:50] Generating Interest – Cameron’s organization works with students and people who are already in business. He talks about what his organization is doing to generate interest in entrepreneurship and to make its programs more accessible in the region. 

[15:30] Evolution of Entrepreneurship – How the mindset of entrepreneurship has evolved over the years in the region and how recent trends in the markets and technologies have influenced it. 

[28:48] Avoiding Mistakes – Common mistakes Cameron sees entrepreneurs make in their startups and bits of advice Cameron has for entrepreneurs to help them avoid their mistakes. 

[35:39] Taking Risks – Entrepreneurs often have to take risks to make their new products or services successful. Cameron shares his take on what entrepreneurs should keep in mind about creating solutions that successfully solve a problem. 

[38:11] Blockchain – Cameron shares his take on how cryptocurrencies and blockchain technology are being adopted in the region. 

[46:05] Sports – Both Grant and Cameron were baseball players in college. They talk about how sports fit into their lives and how experiences from sports have influenced their professional skills. 

[52:47] Get Involved – Cameron shares how you can get involved in entrepreneurial communities in your region and how you can utilize the resources available at the Carlsen Center for Innovation and Entrepreneurship. 

 

Resources

Connect with the Carlsen Center for Innovation and Entrepreneurship: 

Website: www.csus.edu/center/carlsen
LinkedIn: linkedin.com/company/carlsencenter 

GMB Ep #78: Investing Myths Debunked #1: Rising Rates Will Crush Your Bond Portfolio

Recently, we’ve seen quite a few myths and misconceptions about investing circulating in popular media and amongst investors. Today’s episode is the first of several episodes we plan to publish with the focus of debunking these myths. Throughout today’s episode, Grant debunks the misconception of negative effects on bond portfolios caused by increasing interest rates on bonds. Stay tuned until the end of the episode, where Grant shares his take on how to get the best outcomes from bond portfolios. 

 

 

Show Notes

[01:58] Understanding Bonds – Grant reviews how bonds work and how they’re different from stocks. 

[07:30] Interest on Bonds – The structure of interest for bonds and how the concept of duration comes into play. 

[10:35] Fluctuation of Prices – Grant shares his thoughts on why fluctuation of bond prices does not have a significant effect on long-term investors. 

[13:18] Interest Rates – Grant reviews how increasing interest rates affect long-term portfolios, using an example of a worst-case scenario. 

[18:39] Path to Success – Grant shares his thoughts on why consistently applied strategy and long-term focus are the keys to the best outcomes for bond portfolios. 

[20:33] Unlikely Outcomes – Why it’s highly unlikely that we’ll see a huge rise in interest rates in the next five to ten years based on how our current monetary system is structured. 

 

Resources

What is the Worst Case Scenario for Bonds?Cullen Roche:
pragcap.com/what-is-the-worst-case-scenario-for-bonds 

Bond Duration:
en.wikipedia.org/wiki/Bond_duration 

Don’t Ditch Those Bonds
aarp.org/money/investing/info-09-2013/dont-ditch-those-bonds.html 

GMB Ep #77: Investing in an Inflationary Environment

Last week, The Bureau of Labor Statistics released some metrics that indicate we might be experiencing a higher rate of inflation than the federal reserve and other stakeholders have been expecting. We dedicated today’s episode to exploring what inflation is and why we should be concerned about it. Throughout the episode, Grant dives into how inflation occurs, how it influences the economy, how to measure inflation, the role of the federal reserve in keeping the economy stable, and what investors should keep in mind about maintaining a healthy portfolio in an inflationary environment.

 

 

Show Notes

[04:45] Understanding Inflation – What inflation is, why it happens and why we should be concerned about it.  

[07:25] Measuring Inflation – Grant reviews some of the methodologies and indices that are used for measuring inflation and how these measurements indicate recent changes in the prices of consumer goods and services. 

[13:25] Inflation and Deflation – Grant shares his take on why the two extremes of the spectrum can cause adverse effects on the economy and why maintaining a stable rate of inflation is better for the economy. 

[16:58] The Federal Reserve – How the federal reserve maintains its policies in order to keep the economy stable. 

[22:25] Inflation and Investments – How inflation affects investments and how different asset classes perform in inflationary environments. 

[25:14] Pricing Power – Why companies that offer products and services with higher pricing power can adapt better to inflation.  

[28:00] Diversification – Grant reviews some of the ways you can diversify your portfolio by taking advantage of assets that are less affected by inflation in the United States. 

[35:48] Real Assets – Grant shares his take on how real assets, including real estate, perform in an inflationary environment and what investors should keep in mind about investing in hard assets. 

 

Resources

Consumer Price IndexU.S. Bureau of Labor Statistics: 
www.bls.gov/news.release/cpi.toc.htm 

GMB Ep #76: Business Succession Planning With M&A Expert Michael Vann

The succession of a business or exiting from a business is an important and intimate event most business owners will have to plan at some point in their journey. We dedicated today’s episode to exploring what business owners should think about when planning their succession or exit, even if they don’t anticipate it anytime soon. Today, our guest is Michael Vann, an author, certified scale architect, and the president of The Vann Group LLC. Throughout the episode, we explore the process of succession, how relationships and emotions come into play, how taxation applies to succession, and what Michael has learned through his extensive experience in the mergers and acquisitions market.

 

 

Show Notes

[01:35] Michael’s Background – We start the conversation with a brief review of Michael’s background, from being in the corporate environment to working on his father’s business. 

[04:51] Acquisitions – While working in the corporate world, Michael gained lots of experience in acquisitions. He shares some of the important strategic planning points of acquisitions for buyers. 

[10:21] Family Business – Once Michael left his corporate job, he started working on his father’s business. Michael talks about the work he did there and how the business evolved under his influence. 

[15:44] Business Transitions – Michael’s family business has been going through a phase of transition from his father to Michael and his siblings. Michael dives deep into the process of transitioning and the emotional aspect of it. 

[18:02] Process of Successions – The typical flow of business succession, deciding between different options for succession, and managing financial matters. 

[23:38] Relationship Dynamics – Business transitions may get a bit more complex when they’re between family members or people with close personal relationships. Michael talks about some of the obstacles that may come up in these sorts of transitions and how to overcome them. 

[27:12] COVID and the Industry – How the pandemic impacted Michael’s line of business and the new trends that emerged from it.  

[33:19] Taxation – Michael shares his take on how the newly proposed tax reforms may affect buyers and sellers in the mergers and acquisitions arena. 

[39:11] Michael’s Vision for Future – Michael dives into some of the possible avenues for his business to expand and grow, and some of the interesting concepts covered in the book Michael coauthored with his father. 

 

Resources

Michael’s Book: amazon.com/Buying-Out-Boss-Successors-Succession

Website: vann-group.com
LinkedIn: linkedin.com/in/michaelvann 

 

GMB Ep #75: The Biden Proposal to Raise Long Term Capital Gains Rates & Eliminate the Step Up In Basis

President Joe Biden’s new proposal for tax reforms has been getting lots of media attention in the past week. It contains provisions to substantially raise the tax rates on long-term capital gains and eliminate the step up in basis. This substantially limits some of the tax planning opportunities investors and business owners have enjoyed for a long time. In today’s episode, Grant reviews the new changes President Biden has proposed, what they mean for investors, and some of the planning opportunities that come with the new updates.

 

 

Show Notes

[01:26] New Tax Plan – Grant reviews some of the key goals of President Biden’s new tax plan and what they mean for the general public and investors.

[05:32] Long-term Capital Gains – How long-term capital gains work, how they’re different from their short-term counterparts, and how taxation comes into play.

[08:53] Proposed Rates – Grant reviews the new tax rates proposed in President Biden’s tax plan and new planning opportunities that come with the new changes.

[13:48] Selling a Business – Selling a business is one of the instances where a business owner can end up paying substantial amounts in tax according to the proposed tax rates. Grant shares his take on How business owners can work around this.

[18:30] Step Up in Basis – Step up in basis is a tool widely used by financial planners to minimize the tax impact, and President Biden’s new proposal substantially limits this opportunity. Grant shares his thoughts on how we can adapt to these proposed changes.

[25:47] Estate Planning – How the elimination of step up in basis affects estate planning and how to minimize the tax impact for people who inherit assets.

 

Resources

Reviewing the Biden Tax Plan
www.abovethecanopy.us/reviewing-the-biden-tax-plan/

 

GMB Ep #74: Animal Spirits & Consumer Confidence

“Animal spirits” is a term coined by the celebrated economist John Maynard Keynes, which describes the financial decision-making behaviors of people in times of uncertainty. The behavior of animal spirits has a clear relationship with consumer confidence. In today’s episode, Grant dives into how we can measure animal spirits and consumer confidence and what these concepts mean for the financial markets, our lifestyles, and portfolios.

 

 

Show Notes

[01:03] Background – Grant reviews how the term “animal spirits” was coined, the historical background of it, and what constitutes the concept of animal spirits.

[05:19] Consumer Confidence Index – How consumer confidence can be quantified with an index, how it reflects the economic impact of global events, and what it can tell us about the status of the economy.

[10:00] Mergers & Acquisitions – In the last few months, there’s been a big surge in mergers and acquisitions. Grant shares his thoughts on the reason for this surge and how this trend relates to animal spirits.

[15:52] Other Examples – Grant reviews some of the other trends in the economy that relates to animal spirits, such as non-fungible tokens and cryptocurrencies.

[18:15] Consumer Confidence and Predictions – High consumer confidence is a clear indicator of good economic growth. Grant shares his thoughts on what the current status of consumer confidence tells us about the next few months.

[22:22] Negative Possibilities – Grant shares his take on what challenges we may have to face if the economic rebound does not go as expected.

 

Resources

Understanding the Consumer Confidence Index:
investopedia.com/insights/understanding-consumer-confidence-index

Animal Spirits:
investopedia.com/terms/a/animal-spirits.asp

Market Review: Q2 2021

Market Update: Q2 2021

Even though the global stock and bond markets feel relatively calm as I write this, there’s been a whole heck of a lot that happened in Q1.  In no particular order, we saw:

  • A mob breach the capitol building
  • The entire GameStop saga
  • Virtually all crypto currencies post massive gains
  • A $1.9 trillion stimulus package passed
  • U.S. interest rates spike
  • An NFT (piece of digital artwork) sell for over $69 million

Perhaps my senses have dulled a bit over the last year, because that’s a whopper of a list for feeling relatively calm.

We are at a crossroads in the financial markets right now.  Stock prices continue to climb higher and break records, as investors have priced in a substantial economic recovery over the coming 18-24 months.  If the global economy is able to deliver that rebound the march upward should continue.  But any misstep or hiccup could send us into correction territory at the drop of a hat.

Here’s this quarter’s market review.

Market Review: Q2 2021

Market Review: Q2 2021 Market Review: Q2 2021

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