What’s New With Investing

Investing, particularly explaining what is going on with complicated things like cryptocurrencies and the impacts of the renewed market volatility, rising interest rates and tax law changes, led me to include some resources to help us strengthen our knowledge before imparting this wisdom on our students.  The “tutorial” type articles are marked with an asterisk: two from SeekingAlpha, one from Marketwatch and one from CNN.

Before we dig in, here is one from the “you’ve got to be kidding” department: A casual tweet from a Kardashian and Snapchat loses 6% or over $1 Billion in market value. 

Millennials and savings/investing

• LISTEN TO THIS CNBC interview with Kristi Mitchem, CEO of Wells Fargo Asset Management. (don’t just read about it).  Student loan debt, coming of age during the great recession, and while more educated than previous generations, the lack of financial knowledge have combined to negatively impact this generation.
• In a Wells Fargo survey, over half said they would never be comfortable investing...seems like the Great Recession and concurrent stock market decline is having a hangover effect. 
• Micro-investing is all the rage. Save your spare change, accounts with no minimums and personalized portfolios. Read about four of the leading apps that are garnering millions of millennial customers and giving them their first taste of the market. 

Behavioral Finance and Investing

• Find out why people continue to invest in penny stocks despite warnings from experts and even the knowledge that prices may be manipulated. It's kinda like the lottery. 
• Stock market optimism among investing professionals at highest levels in 32 years. Should we be worried about this overconfidence?  

Market volatility/Interest Rates/Tax Laws

• *This CNN article answers 13 questions about the stock market volatility.
• A financial advisor gives investment advice to his daughter.
• What happens when the market is dominated by a few stocks? This article unpacks market performance by segment.
• Last year’s rally was largely driven by five companies known as the FAANG stocks, which include Amazon and Netflix, along with Facebook Inc., Apple and Google parent Alphabet. But the latter three companies haven’t kept pace in 2018, following a batch of mixed earnings reports and increased pressure from regulators.

• *Higher interest rates were listed as one of the drivers of the market drop a few weeks ago.  For a detailed economics refresher on the impact of deficits and interest rates, I found this helpful.
• *What does market volatility and rising interest rates mean for bonds? Not much if you sit tight.
• Add limits to deductibility of mortgage interest and property taxes from the new tax bill to higher interest/mortgage rates and the real estate market is starting to feel the hit.

Bitcoin

• *Bitcoin has been around for a while, but since the run up (and subsequent drops, and ups, and drops) of its price late last year, it has been continuously in the news.  If you need to better understand what crypto-currency is, try this tutorial.
• If you don’t want to get into Bitcoin directly? How about an crypto-currency index fund instead?

Forget about the stock market convulsions in early February. Here's an great chart from finviz showing how individual companies in S&P 500 have done over past three months. Breathe in, breathe out...

About the Authors

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.