Everything You Need To Know About Investing In Cryptocurrencies

Are you still wondering what all the fuss is about?

Still think cryptocurrencies are the next tulip bubble?

This week we interview Paul Rosenberg about why everyone is excited about investing in cryptocurrencies. We discuss what is preventing widespread adoption, "stock to flow", privacy coins, and why you need to take a second look at how blockchain technology is going to change the world.

Paul Rosenberg investing in cryptocurrencies


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Today's Guest:  Paul Rosenberg

Paul Rosenberg is the author of the Free-Man’s Perspective newsletter, as well as a founder of a leading online privacy system, Cryptohippie. He has a broad range of interests and has been involved with cryptography projects since the 1990s

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Today's Panelists

Tiger 21: Learn The Secrets Of How Successful Entrepreneurs Preserve Their Wealth

Great interview this week with Michael Sonnenfeldt, founder and chairman of Tiger 21, a peer network of successful high net worth individuals. 

We discuss what it is like for successful entrepreneurs to have an successful exit, then deal with new wealth, how to raise kids around wealth, what surprises they encounter, how to deal with loss, why entrepreneurs have the opposite mindset of successful investors, and more.

michael sonnenfeldt tiger 21


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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Michael Sonnenfeldt

Michael Sonnenfeldt is the Founder and Chairman of TIGER 21, the premier membership network for high-net-worth individuals – helping them to navigate the challenges and opportunities that success creates.  The TIGER 21 experience centers on learning about and reflecting upon issues pertaining to investing, life, and family.  Central to this are TIGER 21 Group Meetings, with 12-15 Members meeting once per month led by a Chair who is an accomplished professional and experienced facilitator. TIGER 21 leads with a unique approach to wealth preservation that focuses on leveraging collective wisdom and engaging Members in an extraordinary community to enhance their personal and professional lives.

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Today's Panelists

Getting Financially Naked With Jackie Porter

We mix it up this week and get financially naked with Jackie Porter. This was a fun episode where Jackie bares all about how to get financially naked with your partner, how men and women treat money differently, you-me-we budgets, and more.

financially naked


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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Jackie Porter

Jackie is an awarding winning financial planner, best-selling author, and speaker who has helped thousands of clients grow their net worth, build a fortress around their finances and keep more of their cash in their pocket! She has been featured on CBC, The Agenda with Steve Paikin, Sun TV and BNN. Jackie is also a regular contributor to Investment Executive, Wealth Professional and The Globe and Mail.  Jackie recently named Mackenzie Female Trailblazer of the Year for 2019. Co-author of Single by Choice & Chance, Jackie is a leading expert in women and money, and a powerful voice in the world of women's financial empowerment

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Today's Panelists

Emerging Market Investing For 2020 and Beyond – Locating Opportunities With Tremendous Growth Potential

Did you know that most of global growth beyond 2020 is not coming from US, Europe, Japan, but rather from these emerging markets?

Most people are scared to invest outside their home country. It is called home country bias. Investors around the world have this same bias. However we want you to move beyond your comfort zone to look outside your home country at where the growth is happening for the next 80+ years.

We interview Kevin Carter and discuss emerging market investing and where he sees value in the world today.

Kevin Carter


The Rest of The World Coming Online…Right Now

By Kevin Carter

The Next Billion

The technological advancements born in Silicon Valley, are spreading across the world, and fast. Advanced economies have reached near saturation, yet the rest of the world and importantly most of the world is only just now coming online. As we live through one of the greatest leaps forward in economic growth and empowerment in history. EMQQ aims to raise it’s sails to this transformative wind and provide investors with targeted exposure to this remarkable growth story.

Macro Tailwinds in Emerging Markets

In a world where everything is relative, the top-down argument for emerging markets remains robust. The World Bank estimates 2020 real GDP growth for emerging and developing economies to be 4.6% vs 1.5% for advanced economies. Demographic advantages persist as emerging countries contain around 85% of the world’s population and its future, with nearly 90% under the age of 30. Comparing balance sheets, advanced economies are swimming in debt with a government debt to GDP of 105% vs emerging and developing countries at just over 50% leaving central banks with more policy options going forward.

These conditions do indeed create a positive foundation for future growth, however are not new, and fail to tell the whole story of the size and scale that emerging markets have grown.

To put in perspective, around the time Tim Berners-Lee, the British SCERN scientist, created the world wide web (1989), the average American was 24x wealthier than the average Chinese. Today, that number stands at only 3x, and falling. This rapid ascension of income and purchasing power, combined with populations in excess of one billion people, has given rise to an unprecedented wave of newly minted middle-class consumers. This rapidly digitizing consumer wave has now leveraged the very thing that Mr. Berners-Lee created on 30 years ago catalyzing what Ray Dalio, the founder of Bridgewater Associates described recently in Beijing as a “New world order”.


Source: World Bank

The Next Billion Shoppers

The first internet access for most of the world will not come in the form of a 10 pound, 16 inch deep desktop PC with a horribly slow dial up modem. It won’t be the foldable, thinner version that you could put in your lap, but it will come in the form of a supercomputer that fits in their pocket. This leapfrogging effect that most of the emerging world is experiencing, is allowing for, and in many ways promoting faster rates of adoption and innovation that has given rise to some of the largest and fastest growing ecommerce and tech companies in the world on par with or in some ways surpassed those in Silicon Valley. Yet the majority of the potential upside remains untapped as the average smartphone penetration rates in EM still today remain under 50% on average but rising fast. About every hour 4,000 people in India will get their first smartphone and begin messaging their friends, watch videos, order food delivery, rideshare and even use their phone to pay for it all. (Figure 3)

With connectivity spreading to all corners of the globe, tens of thousands of people are joining the online community every day and shifting their lifestyles online via their smartphone.

One needs to look no further than China’s ecommerce leader Alibaba and its singles day sales events to understand the scale and scope of this growing opportunity as it now spreads to other emerging markets. India’s leading ecommerce platform FlipKart has a similar shopping holidays in Big Billions Day & Diwali, Mexico has El Buen Fin, a shopping holiday that the Latin American ecommerce leader MercadoLibre capitalizes on, and even Africa’s leader Jumia joins the ecommerce holiday opportunity as they have tagged on to the wests originated Black Friday holiday.


Source: Brookings Global Report 2018

The Tip of the Spear: It’s All About the Consumer 

This rapid economic growth in emerging countries doesn’t come without growing pains. Undeveloped institutions, legacy infrastructure and inefficiency is still prevalent to put it mildly, resulting in uneven growth across different sectors of the economy. Visit nearly any emerging market economy and you will assuredly find reasons why it has stayed classified as emerging. Political instability, policy risk, corruption, inefficiency, poor education system, rule of law, runaway inflation, or a broken financial system, all of which are very real risks that investors should rightfully be wary of. The one consistent green shoot highlighted and promoted by nearly all politicians and forward looking businesses is the rapidly digitizing consumer. Whether it be on a metro ride in Delhi, a political protest in Buenos Aires, or a river walk in Hangzhou, the sight of young digital natives on their smartphones driving the digital revolution is inescapable.

The Investment Case

Investing in Emerging Markets as an asset class has slowly evolved over time, luring many to it’s promise of growth, yet historically left most disappointed. As most broad-based exposure results in heavy weightings toward Government Owned or State-Owned Enterprises, often ripe with inefficiency, corruption, and poor corporate governance, has weighed on long term performance and contributing to what many have described as a lost decade in emerging market investing. We believe these SOE riddled broad based vehicles should be avoided at all costs and overweight the true entrepreneurial engine behind the real growth in these burgeoning young economies in the new age consumer and the disruptive business models they are creating.

As the average financial advisor in the US allocates roughly only 6-8% of their portfolios to Emerging Markets, we feel the asset class is in desperate need of updating to more accurately reflect the actual size a growth of the emerging market economies and specifically the rising consumer.  We believe no well-diversified investment portfolio can afford to ignore the confluence of trends that has propagated one of the greatest economic growth stories of our lifetime and possibly in history and believe the internet & ecommerce segment offers the most promising chapter in that story.

Projections on Smartphone Growth:

2019 Avg Penetration Rates

Developed 73%

Emerging Markets 37%

2025 Penetration Rates

Developed 81%

Emerging 51%

Every Hour:

~4,000 Indians get their first smartphone

~3,000 Chinese get their first smartphone

~450 Russia

~375 Indonesia

~250 Brazil

~150 Germany

~150 U.K


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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Kevin Carter

Kevin T. Carter Mr. Carter is the Founder of The Emerging Markets Internet ETF (NYSE: EMQQ). He is widely considered an expert on investing in China and Emerging Markets. He has been a featured speaker for Columbia Business School, Bloomberg, Guggenheim Partners, Morningstar, and the CFA Society. Previously, Mr. Carter was the Founder & CEO of AlphaShares, an investment firm offering China-focused ETFs in partnership with INVESCO. Mr. Carter was also the Founder & CEO of Active Index Advisors acquired by Natixis in 2005 and the Founder & CEO of eInvesting acquired by ETRADE in 2000. Mr. Carter began his career in 1992 with Robertson Stephens & Co. 

Kevin's Online Presence:


Today's Panelists

The Doctor of Risk Management: Stop Loss, Volatility, Stock Picking, And More

This week we interview Richard Smith who has spent the last 16 years leveling the playing field for individual investors. We discuss some risk management secrets of professional hedge fund managers: how they manage risk in their portfolios, reduce volatility & protect wealth via stop loss strategies. This is a great episode for novice and professional investors alike. Join us to learn how to invest with less risk.

stop loss richard smith


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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Richard Smith

Dr. Richard Smith is the Founder of RiskSmith. With his background in mathematical theories of uncertainty combined with his own personal investing and trading experience, Richard has an acute sense of the critical role that risk and money management play in successfully navigating the financial markets. Richard is leveling the playing field for the individual investor.


When Dr. Richard Smith discovered that many of the world’s top private investment advisors and wealthiest traders had been using a mathematical formula to determine when to buy and sell stocks with incredible results, he decided to try it out. After running the numbers on his previous trades, the results were clear: no matter if the market went up or down, the investment formula he discovered would have earned him more money while taking less risk.


Applying this algorithm to an entire investment portfolio by hand was difficult, so Dr. Smith built one of the first online financial technology platforms in 2004 to help himself and others make more money and take less risk. Over the years the platform grew and additional algorithms were developed that alerted users to the precise time to buy or sell their stocks while helping manage their overall investment portfolio.

Richard had learned how to take the emotion out of investing, and the results were astounding! He formed a company around his new technologies and TradeSmith was born. TradeSmith soon grew to over 30,000 users who trusted a staggering 20 BILLION DOLLARS to his technology, and Richard became known as “the doctor of uncertainty.”


Richard is also CEO and Chairman of The Foundation for the Study of Cycles, an international research and educational institution for the interdisciplinary study of recurring patterns in all aspects throughout the world.

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Today's Panelists

Debbie Todd – Financial Literacy For Kids

Ever wondered why financial literacy for kids is not taught in school?

Me too...

We discuss why this is the case and how to make your kids financially literate. There are a number of techniques that are important to use in teaching kids about finance and not all of these methods are obvious.

financial literacy for kids debbie todd cpa

Financial Literacy For Kids: Money, Maslow and Magic…

By Debbie Todd, CPA

Do you believe the saying that “money makes the world go around” is real?  If you have doubts or haven’t thought much about it, simply spend a few minutes talking to a neighbor, friend or family member you love who is struggling with their money. 

What does their world look like - right now?  
Financial literacy

Are they going around happy?  Are they thriving and making a positive impact on the world? Or are they stressed, fighting with each other and getting continually backed into a corner of bad purchasing and borrowing decisions that will only make matters worse?  And how does that day-to-day money stress spill over into their relations with their significant others, their kids and others?  With you?

Let’s face it.  It costs a lot more to live today than it did 40, 20 or even just 10 years ago.   That makes it harder.

Whether its a viral pandemic, a natural disaster, an economic recession, death or divorce or even more insidiously, just having an “earn and spend more” mentality, these events or circumstances sure bring the value of simple and smart financial literacy to the forefront.  

Maslow’s hierarchy of needs comes to mind…and there are far too many amazing people getting and staying stuck at the bottom.

So now, let’s play a little and ask the question, “how much would life change if I (or my friend) could improve just ONE area of their money life?”  (Say saving $10 a paycheck). 

Then let’s really get into the fun…what if they improved TWO areas?  (Add setting up a budget for six months).  

What if they learned THREE smart money tools?  (Paying off a credit card or setting up an emergency fund.) Now what would life on Maslow’s hierarchy of needs scale look like?  For them?  For their family?  For you?  For the world?

It just takes one step, then another…but getting started is often the hardest part.

Why is that perhaps?

We believe it is three-fold: 

  1. Fear/shame 

  2. Lack of education over time (not taught in schools for nearly 20 years)

  3. Not knowing where to start making changes – while having a trusted mentor to guide missteps

In my experience as a CPA and community financial educator for over two decades, one of the biggest regrets I hear from people is they wish they had learned better money skills earlier.   Then they would be equipped to educate their kids and grandkids about money matters. So much preventable pain and sadness. 

Yeah, this is truly generational pain – and legacy trauma.  With sadness, its also true that folks more easily tell me they have had an affair or had a run in with the law before they’ll be honest with me about the real state of their finances.  

Larry, a military vet, an avid ballplayer and accomplished international training director for tech giant Oracle, knows all about starting things, and helping you reach success – in a way that is simple, yet extremely effective.  

He is the “logistics of money actions and tactics” man on the team.  Larry doesn’t throw any curve balls and calls it like he sees it.  

His goal for you:  

To win the game and find financial peace by helping you knock money problems out of the park!

financial literacy for kids


BUT…wishing it away won’t make it go away.  So now what do we do about it?  

One of our core beliefs is that lasting money wellness starts at the family level.  Why is this?  Think of when you decided to eat healthier…

When the rest of your family keeps bringing home chips, pizza, sodas and s’mores, how good does your salad look?  Well, the same concept holds true with getting your money house healthy and in shape.

Parents and grandparents are trying to trim costs and get ahead while the kids & grandkids are watching boatloads of shows and advertisements – to do what?  Get you to spend money on stuff.   There goes the budget…again and again.

This is where it gets FUN – yes, really!

When the entire family learns simple and effective money skills – AT THE SAME TIME, in their age group, and in their best learning language – MAGIC HAPPENS. 

Being smart about money does NOT have to be boring and drudgery – but it sure works better when those closest to you are supportive too.  Let’s go back to the eating healthier example.  

If everyone in the house agrees to limit junk food (even just a little bit), isn’t it easier to stay on track?  Meal times can be more enjoyable – and soon, everyone is feeling better about how they look and how they feel.  In many cases, it leads to even more healthy habits.  

When families commit to a healthier “financial eating plan,” everyone has ownership and can see their contribution to the their family financial strength.  Both short-term and long-term.   As debt drops, so does stress, worry, anger and the feeling of worthlessness.  As savings increases, so does confidence, peace, hope and family value.  

As money goals become a reality, all family members feel a sense of pride, accomplishment and confidence in taking the next step toward LIFELONG money wellness.  It’s MAGIC and it’s so DOABLE. 

You might be thinking right now – yeah, but this is a BIG issue and has been a problem for DECADES.  That’s true.  Again, wishing it away won’t make it go away.  So let’s talk about smart steps anyone can take TODAY to say goodbye to generational poverty and financial illiteracy.  

In our latest community-wide program offering, three families were successful in getting their money house in order and they were able to become first-time homeowners! Successfully using our tools and changing their mental “money confidence,” their dreams became REALITY - within a matter of months.

We believe true financial wellness starts at home with the whole family.  When Dollars and Good Sense – Family Fun Money Games™ happens, everyone in the house from age 3 to 103 can play, contribute and your kids and grandkids can grow to be Smart Money Commanders™ for LIFE! 

Imagine the money wellness gift you can give your kids – for the next 60 or 70 years of their life!  That is true legacy-building that can change the world.  In fact, this is a KEY aspect of what it WILL take to make our world better and safer – after all, our kids and grandkids ARE our future! 

financial literacy questions


We believe for a family to have financial success - they need simple tools, supported by experts who care about the ENTIRE family’s money wellness success.  This will drive success for today, tomorrow and the next 20+ years.

So, can you see how money really does make the world go around?  After all, financially healthy families are the heartbeat of healthy communities, of healthy states, healthy countries – and yes, vital to a healthy world. 

Debbie Todd

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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Debbie Todd, CPA

As the eldest child of a humble, yet proud and dedicated military family, Debbie grew up learning first-hand the value of not having enough, of making your money stretch…as well as understanding how quickly impulsive choices can get you trapped on the never ending cycle of the money madness roller-coaster!  


The first child in her blue-collar family to finish college in her early 30s while raising children of her own, Debbie knows it really is possible to change your circumstances and realize your dreams…one dedicated step and one focused decision at a time.  

With over 20 years as a licensed CPA in public accounting as well as nearly 14 years in public finance in the utility and healthcare sectors, Debbie was running the Treasury Department of a $2 billion a year academic medical center when the 2008 financial meltdown hit. 


While successfully navigating her team through “the Great Recession”, Debbie found an increasing number of families who were simply being devastated financially.  Her heart turned to channeling her money passion to holistically help families learn and grow in their core financial knowledge.


The single most common regret Debbie has heard clients and friends say is that they wished they had learned better money skills themselves so they could teach their kids and grandkids. She also believes that “tomorrow’s philanthropists and world-changers are sitting in booster seats today.”


It is the perfect backdrop for teaching practical, FUN and financially sound money habits.  If you can ENJOY “getting your money smarts hat on” as well, then so much the better, right?  


Imagine how simple and smart money choices can transform you and your child’s ENTIRE life…for 50 to 70 years!  That’s truly peace of mind.  It’s an investment that builds a legacy of hope and impact.  It’s amazing how just a few simple, FUN and effective tools can make this your reality. 


After all, it takes financially healthy families to build financially (and socially) healthy communities, states, countries and, ultimately, a financially (and socially) healthy world

Debbie's Online Presence:



Today's Panelists

How To Deal With An Economic Crisis (COVID 19)

How are you acting during this health and economic crisis?

Are you being reactive, proactive, or are you leading others to help your community?

Are you financially resilient?

statistically 10% or less people are leading and 80% are being reactive. learn why and what you can do in times of crisis to thrive and come out of the crisis more resilient.

economic crisis


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Sign up to be one of our Money Tree Ultimate Insiders. You will have instant access to new episodes, automatically have access to our monthly giveaways, and the potential to be a guest panelist on our show


Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.



Today's Panelists

Investing Legends: Steven Bregman – Value Investing In Uncertain Market Conditions

Markets around the world are overpriced. Value stocks have under-performed for over 10 years. If you are a value investor, where do you invest?

This is one of my favorite interviews. This week we  interview Investing Legend, Steven Bregman. He explains how he looks at the markets from a value lens, why value investing is important to overall market health, the danger of low interest rates, why you should worry about the indexation of markets, and the bond ETF bubble. We cover a lot in this episode, but if you are serious about investing, this episode is pure gold.

Value Investing

Value Investing - One Historical Extreme Among Many

Interest rates are now the lowest in the recorded history of mankind. Here is a sampling from across the scope of global history to give you a sense of what ‘normal’ rates are.

o   Over the course of 600 years through 100 BC, the ancient Greeks generally charged between about 6% and 12% for loans secured against real estate or to cities.[1]

o   During the 1300s, in Venice, long-term loans to States were generally in the 5% to 8% range.

o   In 1799, after Napoleon gained power, France issued 5% bonds.

o   In the 1860s, during the Civil War, U.S. Treasuries were largely in the 4 ½% to 5 ½% range.

o   During the entire 20th Century, there were only 3 separate years – all during the 1940s – when U.S. 10-year Treasuries declined below 2%. This reflected the government’s extraordinary mobilization of the economy for World War II. To understand the extremity of that environment, every American citizen was issued ration books, with coupons that were required for buying necessities ranging from gasoline to butter. Infractions were punishable by fines up to $10,000 – in 1940s dollars! That would be roughly $300,000 today.

[1] A History of Interest Rates, Sidney Homer, Rutgers University Press, New Brunswick, NJ. 1963.


Bonus Insight into YCharts Stock Screening Tools

Value Stocks Travel Industry
Value Stock Screen

 

The Path to Indexation Dominance of Modern Investing

The 2008/2009 Financial Crisis catalyzed an accelerated movement toward indexation:  no one wanted security specific or manager specific risk. They wanted a basket of securities.  The accumulation of over a decade of $100 billion+ annual flows into ETFs looks a little like this:

  • At March 2009, there were fewer than 100 ETFs in the U.S., today there are over 2,000.  This occurred even as the number of listed stocks in the U.S. declined by about 25%.
  • The ETF industry in March 2009 had total assets of $485 billion, today it’s $4 trillion. Just a single ETF, the SPDR S&P 500, now has over $300 billion. 

An ocean of buying power has been directed at an ever-smaller sub-set of mega-companies with sufficient share trading liquidity to serve index funds’ needs.  Last year, Indexed equities passed that critical 50% border: they are now well above 50% of all equities – the majority of the pool – and have been the marginal trade for a decade. They were supposed to be passive, just along for the ride, but it appears they have hijacked the clearing price mechanism.  If the clearing price mechanism of the marketplace is broken, how does one know what the fair or natural price is, what the ‘market price’ is?

==================

 

A Window into the Value of the Industrial Strength Trading Liquidity of Mega-Cap Companies

Microsoft is in 212 different ETFs.  This small sample might shed some light on why.  It’s in:

    • The Technology Select Sector SPDR Fd, as a 20.2% position.
    • Vanguard Growth ETF, 9.3%
    • JP Morgan US Value Factor ETF, 2.3%
    • iShares USA Momentum Factor, 5.4%
    • iShares Minimum Volatility USA, 6.1%
    • Invesco Dividend Achievers ETF, 4.5%

So, Microsoft is simultaneously a growth stock and a value stock.  It’s both a momentum stock and a low volatility stock. It’s also a dividend stock and, of course, a technology stock. The point is, there is an insufficient population of super large companies to go around.  If one of them really has industrial strength trading liquidity, and if a fund organizer is starting a new ETF, it will be shoehorned into that ETF if they can possibly swing it. 

Here are a few more Microsoft ETFs:

  • iShares USA ESG Select ETF (Environmental, Social, Governance), 5.5%
  • US Vegan Climate ETF, 5.3%
  • Impact YWCA Women’s Empowerment ETF, 5.4%

=================

 

ETF Truth in Labeling (or Flying Blind)

Someone who wanted diversified exposure to Spain would probably have bought the iShares Spain ETF (EWP), a popular asset allocation building block with $940 million of AUM.

Just two problems:

  1. The top 5 holdings account for over 50% of the ETF’s value, and the top 10 for over 70%.  So, it’s super concentrated, not diversified. Security-specific diversification is a basic tenet of passive investing, so that a disaster in any one or few stocks will not meaningfully harm the fund’s results. Rest assured, any active manager found to be that concentrated would immediately be dismissed by a consultant for taking excessive risk.  But an index can’t be dismissed; it merely represents ‘the market’, after all.
  2. These top 10 holdings get over 70% of their revenues from OUTSIDE of Spain!  Buy Spain, and get NOT Spain.

This is another reflection of the requirement by ETFs for large, liquid companies:  EWP can’t afford to traffic in modest-sized local companies that truly reflect the character of the local economy.  All but one of the top 10 are global multi-national companies. Buying Banco Santander is not so very different than buying Citibank in the U.S., and buying Amadeus, the airline reservation infrastructure system, is not so very different than buying Sabre in the U.S. 

Historical Risk

 

Compare & Contrast:  Indexed Bond Funds vs. a non-Index-Centric Bond Fund

Bond Market Bubble


 

iShares Invest. Grade Corporate Bond ETF (LQD)

BlackRock MuniHoldings Quality Fund (MUS)

Inception date

2002

1998

Assets

35 Billion

0.3 Billion

Yield to Maturity

2.6%

5.7%

Distribution Yield

2.6%

4.1%

Yield after Fed Taxes

2.0%

4.2%

Average Maturity

13 Years

25 Years

Average Bond Price

115

116

Credit Quality

 

 

AAA

2%

15%

AA

8%

36%

A

39%

30%

BBB

48%

14%

Leverage

0%

37%

Discount to NAV

0%

-9.0%

10 Year Annualized Return

5.93% (taxable)

5.97% (tax-exempt)

Closed End fund search tool: www.CEFconnect.com

Basically, the laws of supply and demand have never been healthier. If every institution determines to buy bonds through the index funds that traffic in the same large-tranche securities, they will be priced higher:  a 2% after-tax yield. If every institution ignores non-index-suitable bonds, even if in a fund format (but a non-standard format), they will be priced lower; in this case 4% after tax yield, plus the possibility of appreciation.

Footnotes:

[1] A History of Interest Rates, Sidney Homer, Rutgers University Press, New Brunswick, NJ. 1963.

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Today's Guest:  Steven Bregman

Steven Bregman - President, Co-Founder of Horizon Kinetics LLC

Steven is the President of Horizon Kinetics and is a co-founder of the Firm. He is a senior member of the Firm’s research team, a member of the Investment Committee and the Board, and supervises all research reports produced by the Firm. As one of the largest independent research firms, Horizon focuses on structurally inefficient market sectors, including domestic spin-offs, global spin-offs (The Spin-Off Report and Global Spin-Off Report), distressed debt (Contrarian Fixed Income) and short sale candidates (Devil’s Advocate), among others. Horizon Kinetics has also taken an interest in creating functionally improved indexes, such as the Spin-Off Indexes and the Wealth Indexes (which incorporate the owner-operator return variable). Steve is also the President and CFO of FRMO Corp., a publicly traded company with interests in Horizon Kinetics. He received a BA from Hunter College, and his CFA® Charter in 1989. Steve has authored a variety of papers, notably “Spin-offs Revisited: A Review of a Structural Pricing Anomaly” (1996) and “Equity Strategies and Inflation” (2012).

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Today's Panelists

Market Update – Our Panelists Opinions on Coronavirus, Supply Chain Disruptions and Oil Price Drop

Back by popular demand, Kirk Chisholm, Megan Gorman and Barbara Friedberg discuss a market update for today March 12, 2020.

Today we are discussing the coronavirus, the big oil price drop and the supply chain disruption… and most importantly, what to do with your portfolio now.

Listen to three experts tell you how to manage your investments during this market turmoil… And we do it without scaring you.

oil price drop

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Market Monday: How to Protect Yourself In This Market, The Coronavirus, Lebanon Debt Default, and Fed Manipulation – March 8 2020

Welcome to our first Market Monday where we discuss what happened last week, what to expect next week and to help put the market into perspective. Last week was a crazy one… just like the week before. Will this continue?

We talk about how to look at the market with an unbiased lens, how to not lost your mind while others are losing theirs, the bond market, the Lebanon bond default, the spike in the VIX and what it means, the coronavirus (COVID-19), economic conditions, black swan events, fed manipulation and more…

market mondaycoronavirus ytd returns

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Today’s Panelists