This week a (stereotype alert) gapped-toothed hillbilly from Missouri won a $250 million lottery jackpot. I've got nothing against bad teeth, hillbillies, Missouri, or jackpots, but let's take a closer look at how this happened.....
The GTH (gapped-toothed hillbilly) bought his $5 ticket at the end of his shift at the convenience store where he worked. In the same purchase he also bought himself some cigarettes, so let's just say that was another 10 bucks.
Seems innocent enough - until you factor in the GTH 1) was also way behind on his electric and gas bills; 2) had less than $30 in his bank account; 3) owed $1,000 to a friend on a truck he recently bought, and 4) apparently has three children to support, along with his girlfriend's two children.
A quick analysis - the GTH had no money to pay bills or to care for his kids, and was deeply in debt to a friend, but still figured he'd spend half his life savings on a lottery ticket and cancer sticks. ARE YOU SERIOUS!?!
The moral of the story is, even if you are a deadbeat GTH who should be paying bills instead of gambling, you could still win the lottery. Also, lending practices in this country are even more lax than we thought, since this GTH found someone dumb enough to loan him $1,000 he could never repay - unless he won the lottery.
I can only think of one good thing to come of this - we've got one less person/family who will be using the social services saftey net. As the GTH might say, "Yippee!"
Friday, April 23, 2010
Thursday, April 15, 2010
Managing The Madness
The NCAA men’s basketball tournament recently gave us many exciting moments, with unexpected wins by some teams and unexpected losses by others. It truly was March Madness.
In many ways, the NCAA tournament parallels my view of the stock market. It’s clear the tournament as a whole has been a solid and successful venture for college basketball for decades, regardless of the teams involved. The same is true of the broad stock market, which has also been a successful venture for investors for decades, regardless of the stocks that comprise it.
However, as with individual stocks, the success of individual teams in the NCAA tournament cannot be so easily predicted. Each year, many ‘experts’ predict that higher-seeded teams will be winners based on recent past performance…..but each year unforeseen events occur that result in those teams losing, ‘busting brackets’ across the country. Similarly, each year many ‘experts’ predict which stocks or mutual funds will be winners based on recent past performance…..but each year unforeseen events occur that cause those stocks/funds to be losers, busting investment portfolios across the country.
Despite this proven randomness, many investors still try to follow the trends, outfox everyone else, and beat the market. The truth is, no one can actually pull that off over a long period of time. Some may get lucky with a few picks. Some may even enjoy a sustained run. But in the end, the market tends to be a bust for investors who misjudge its fickle swings.
Much like the NCAA tournament, the market is a creature that defies predictions. While it may seem logical to buy into a team (Stock A) that has better recent results, there is no guarantee it will be a better choice going forward than another team (Stock B) with recent losses. Put another way, “Has done” is no guarantee of “Going to do.”
The better way to invest is to recognize the market’s unpredictability, and use that knowledge to increase the likelihood of higher long-term performance. To that end, my investment philosophy takes an extraordinarily broad-based and low-cost approach, thereby avoiding any built-in biases toward the current ‘favorite’ stock or market sector. In essence, I invest in the tournament, not the teams!
When it comes to the NCAA tournament, people should enjoy the Madness. When it comes to investing, however, people should stop the Madness, and get the predictability, performance, and peace of mind that comes from a more certain approach.
In many ways, the NCAA tournament parallels my view of the stock market. It’s clear the tournament as a whole has been a solid and successful venture for college basketball for decades, regardless of the teams involved. The same is true of the broad stock market, which has also been a successful venture for investors for decades, regardless of the stocks that comprise it.
However, as with individual stocks, the success of individual teams in the NCAA tournament cannot be so easily predicted. Each year, many ‘experts’ predict that higher-seeded teams will be winners based on recent past performance…..but each year unforeseen events occur that result in those teams losing, ‘busting brackets’ across the country. Similarly, each year many ‘experts’ predict which stocks or mutual funds will be winners based on recent past performance…..but each year unforeseen events occur that cause those stocks/funds to be losers, busting investment portfolios across the country.
Despite this proven randomness, many investors still try to follow the trends, outfox everyone else, and beat the market. The truth is, no one can actually pull that off over a long period of time. Some may get lucky with a few picks. Some may even enjoy a sustained run. But in the end, the market tends to be a bust for investors who misjudge its fickle swings.
Much like the NCAA tournament, the market is a creature that defies predictions. While it may seem logical to buy into a team (Stock A) that has better recent results, there is no guarantee it will be a better choice going forward than another team (Stock B) with recent losses. Put another way, “Has done” is no guarantee of “Going to do.”
The better way to invest is to recognize the market’s unpredictability, and use that knowledge to increase the likelihood of higher long-term performance. To that end, my investment philosophy takes an extraordinarily broad-based and low-cost approach, thereby avoiding any built-in biases toward the current ‘favorite’ stock or market sector. In essence, I invest in the tournament, not the teams!
When it comes to the NCAA tournament, people should enjoy the Madness. When it comes to investing, however, people should stop the Madness, and get the predictability, performance, and peace of mind that comes from a more certain approach.
Thursday, April 8, 2010
The Masters.....Of Hypocrisy
There are many words one might associate with what is possibly the most famous tournament in golf, The Masters: Golf, green, jacket, Augusta, patrons, Jones, magnolia, etc etc. But now we a have new one - hypocrite.
The day before this year's tournament started, August National Chairman Billy Payne decided to call out Tiger Woods for generally being a bad role model. There would be little disagreement with that from anyone, but consider the source - the chairman of an exclusive club that does not allow women as members, and only allowed its first minority member in the late 20th century.
I suppose a club (that doesn't get tax exemptions) is entitled to discriminate as it sees fit. To hear it preach to others about conduct, however, is a joke.
Really Billy Payne? Really, you are calling out others for not being role models, when your club has long-standing discriminatory practices? Really?
Leave it to The Masters - a tradition like no other.
The day before this year's tournament started, August National Chairman Billy Payne decided to call out Tiger Woods for generally being a bad role model. There would be little disagreement with that from anyone, but consider the source - the chairman of an exclusive club that does not allow women as members, and only allowed its first minority member in the late 20th century.
I suppose a club (that doesn't get tax exemptions) is entitled to discriminate as it sees fit. To hear it preach to others about conduct, however, is a joke.
Really Billy Payne? Really, you are calling out others for not being role models, when your club has long-standing discriminatory practices? Really?
Leave it to The Masters - a tradition like no other.
Subscribe to:
Posts (Atom)