Independent, Fee-Only Financial Advisor

Independent, Fee-Only Financial Advisor

Thursday, January 28, 2016

The Debt Hangover - Midday Money on WLBT

This afternoon, Nancy was on WLBT's Midday segment, and she discussed debt.  Watch the video here:  The Debt Hangover!

Saturday, January 16, 2016

blue chips

"Is there still such a thing as a Blue Chip stock anymore?"

It used to be considered a fairly sound investment strategy to just put your money in a couple of "Blue Chip" stocks and call it a day. Stocks have always been rightly viewed as risky, but the term Blue Chip lent comfort to investors. The designation differentiated large, well known, stable companies from smaller, risky companies that had not established themselves in the market. These were large companies with wide moats that could fend off competition and continue profitable growth into the foreseeable future. The term Blue Chip conveyed a sense of safety, a protection against permanent loss.

Picking a few Blue Chip companies is not a strategy that makes sense anymore. Blue Chips do not exist anymore, not because competition is too fierce and risk is too high, but because they are simply not needed.

The arc of human history is towards a growing population with growing wealth. Businesses are levered to this growth. Economic growth is ultimately growth in sales, masking the tumultuous fight for profits at the companies that make up the economy. No matter how steady a company appears, or now large their moat is, with individual companies there is always the risk of permanent loss. If you selected a small list of individual companies right now, you may find that they do not all exist in a one, ten, or forty years. If you happened to have selected the wrong ones, your investment might be worthless. If instead, you just bought everything, there would be some losers, but you would expect the winners to make up for that and still provide growth on your investment. Individual companies may fail, but it is exceedingly unlikely that the entire market fails.

The equivalent today of investing in Blue Chip stocks is being a passive index.

Now you can capture the market return effectively with index funds. There is less need for the stalwart individual stocks when you can capture a similar expected return with lower expected volatility in an index fund. Company management in a reasonably free economy have demonstrated time and time again a fantastic propensity for making money. Ride the wave of human history and just buy everything out there.

Blue Chip companies may be dead, but investing in stocks is still the best way to grow your investments over the long term.

Friday, December 18, 2015

Christmas Cookies!

A friend who is currently in Germany recently asked for christmas cookie recipes. This one is full of memories for me, so I shared it with him, and decided to share it with everyone!

First, story time: When Geraldine Ferraro was the Democratic VP candidate in 1984, she stopped at a blueberry farm in Mississippi on the campaign trail. She asked the farmer if he had any good blueberry muffin recipes. He looked her in the eye and said "ma'am, down here, men don't cook". This inspired my mom and dad to solicit recipes from Mississippi men and make a cookbook, titled "Down Here Men Don't Cook" of course. This recipe for "Southern Sand Tarts" comes from Charles Balch and Gus Liveakos in Tupelo. Dad made these every year around christmas time and my joy was getting to put them in a big bag with powdered sugar and shake them until coated. I probably got clouds of powdered sugar on everything, but I can still smell the sweet buttery cookies now...

Now, recipe:

Southern Sand Tarts. From Down Here Men Don't Cook. Recipe by Charles Balch and Gus Liveakos of Tupelo.

2 c (250g) plain flour
1 lb (450g) confectioners sugar
1.5 c (180g) pecans, chopped
1 TBSP (15mL) vanilla extract
2 sticks (220g) butter

Lay out butter to reach room tempo. Sift 2 cups flour with 7 tablespoons powdered sugar. Blend flour mixture with butter. Add vanilla, mix well. Add chopped pecans. Mix well. Place in covered bowl and refrigerate OVERNIGHT or longer.

Roll chilled dough into neat balls. Place on lightly greased cookie sheet and bake at 325F (162C) for 20-35 minutes until slightly brown (DO NOT OVERCOOK)

Remove from oven. Leave to cook 7-10 minutes. Gently roll all cookies at once into remainder of powdered sugar which has been sifted into a heavy paper bag. Cookies will absorb most all of the surge. Store in a sealed container once completely cool.

Yields 110-118 cookies.