Author Archives: Lauren Tivnan

The Collapse of the American Net Worth

Many of you are painfully aware of how many friends or family members are out of work, now under-employed, or who have lost their homes. Geoff Considine, a leading contributor to the Portfolioist, provides his take on what we’re calling the “collapse” in household net worth, starting with a recently published report released from the Federal Reserve called the “Survey of Consumer Finances” (SCF).

This study, performed every three years, provides an analysis of household income and wealth across America, and the results will astound you. The SCF is well-worth reading if you want to get a handle on the state of Americans’ finances—especially if you want to see how those same finances have changed dramatically in just three short years. Continue reading

The High Cost of the July 4th Cookout

Many Americans will be feeling the effects of higher commodity prices this 4th of July.

If you have been to the grocery store lately, you’ve probably done a double-take at the register as your outdoor grilling essentials are being scanned. Steak and ground beef prices are up almost 6% over the last 12 months and a persistent drought in the mid-West is driving corn prices up dramatically. USDA recently reported that the average price that Americans pay for food will be up between 2.5% and 3.5% vs. what we paid in 2011.

However, before you ration the hot dogs and burgers and put a hold on serving steaks at your BBQ this year, lets take a look at the long-term history of food prices in the U.S.

Don’t Blame Inflation This Time

The good news is that Continue reading

Safety Not Guaranteed

Guest post by Contributing Editor, Robert P. Seawright, Chief Investment and Information Officer for Madison Avenue Securities.

I haven’t seen it yet,  but I love the conceit behind the indie film Safety Not Guaranteed, which has opened to excellent reviews.  The words of the title are found in a mysterious classified ad in a local paper seeking a partner for time travel.  The ad also states that applicants will need their own weapons and, ominously, “safety not guaranteed.”

That’s a pretty good metaphor for investing and for life in general. Continue reading

Why Doesn’t Everyone Use Passive Investing?

Guest post by Contributing Editor, Lowell Herr, ITA Wealth Management. Lowell is a subscriber to the Portfolioist and his investment philosophy is similar to ours.  Enjoy.

If passive investing is so successful, why is it that so few investors actually use this approach to construct and manage their portfolios?

Good question and one that likely has a score of answers.

Here are a few to consider:

1.  There is a large collection of investors who are confident they can beat the market.  Ego certainly enters into this thinking.  Why would I be investing if I did not think I could outsmart the majority of other investors?

2.  Index investing does not have “water cooler” appeal.  For some reason, Continue reading

We Have Met The Enemy And He Is Us

Guest post by Contributing Editor, Robert P. Seawright, Chief Investment and Information Officer for Madison Avenue Securities.

Psychologist Walter Mischel’s famous 1972 marshmallow experiment, was designed to study children’s ability to defer gratification.  In the actual experiment, the researchers analyzed how long each child resisted the temptation to eat a marshmallow placed in front of them in order to obtain a second marshmallow later and whether or not doing so was correlated with future success. The kids’ struggles  to hold out for the extra marshmallow is poignant and hits home with all of us (watch kids re-create the experiment in this video).

Over 600 children who took part in the original experiment. A small minority ate the marshmallow immediately. Of those who attempted to wait, less than one-third deferred gratification long enough to get the second marshmallow. The others struggled to resist temptation and held out for an average of less than three minutes. Any of us struggling to diet or just to eat right will surely relate. For most of us, a bird in the hand is better than two in the bush, no matter how likely we are to acquire the two later.

As it turned out, those children who waited and got the second marshmallow did better later in life.  A follow-up study in 1988 showed that Continue reading

What’s Driving the Price of Oil?

Gas prices are not keeping Americans at home this Memorial Day weekend. AAA projects that 34.8 million Americans will travel 50 miles or more this holiday weekend.

Here at the Portfolioist, we thought the start of Memorial Day weekend would be a good time to re-examine what drives the price of oil. This article was first published by Geoff Considine on May 4th.

From all of us at the Portfolioist, have a happy and safe Memorial Day.

There’s lot’s of talk right now about the price of oil and, particularly, gasoline, and it looks as though the price of a gallon of gas will be a significant political topic for the election this year.  President Obama recently proposed new rules for limiting the influence of speculators on the oil market.  Politifact, a media group that fact checks the truthfulness of political statements recently ran a piece on public statements about oil prices.  Their conclusion is that much of what is being claimed with regard to the causes of high oil and gas prices is, at best, based on half truths. Continue reading

What You Need to Know Before You Invest in an IPO

In light of all the discussion surrounding Facebook’s IPO, we thought we’d repost one of our most popular articles that explores the characteristic performance of IPOs.  This article was previously published in June of 2011, but the narrative feels very timely today.

It shouldn’t surprise you that investors have had a long history of enthusiasm for IPO stocks. But has this enthusiasm ever paid off over the long-term?

To answer this question, you first must do the research.

Do Your Due Diligence

There is a substantial body of research that examines how and why IPO stocks perform the way they do and there are two major themes that emerge Continue reading