Thriving with Interest!

 Well well well, here we go.  The S&P 500 is up 14% this year, closing June at a record, while the Dow Jones Industrial Average has climbed 13%. This quarter will mark both indexes’ fifth consecutive quarter of gains, their longest such streak since a nine-quarter stretch that lasted through 2017. Where to from here?   It appears that we can now set our sights on a 5250 target! This is thanks to our Italian friend Fibonnaci: Why would this be the case? there doesn't seem to be any irrational exuberance (or any real semblance of a consensus) both growth and value stocks have done well this year which means that is not a major agreement about the future economic growth prospects earnings will continue to motor ahead (thanks to low base levels from 2020) consumer spending and cash on sidelines are at very high levels yes, interest rates are poised to rise, but not anytime soon and even if they do rise they are still going to be at very low levels for some time to co...

A staple of any Algebra 2 and Pre-Calculus curriculum will include a unit on Sequences and Series. I love teaching this as it allows me the opportunity to go over one of the most famous infinite series, the sum of natural numbers. Although it is clearly divergent in a traditional mathematical sense, by employing the Ramanujan summation we can arrive at a result of: 1 + 2 + 3 + 4 + ... = - 1/12 Surprising no? In so many ways: how does one arrive at a negative value only summing positive numbers? how does one arrive at a fraction only summing natural numbers? how does one arrive at a sum at all?!? Don't believe me? Here is a copy from Ramanujan's notebook entry: Another key surprise is that with one little approximation the proof become relatively trivial. In addition, this result is used in physics applications such as string theory. Here we have a graphical representation of such sum: source: wikipedia Now onto the simplified proof: Recall: our goal is to find the sum of the fo...

It's the summer, time for some reading that will help you pass time at the beach, the lake house, or simply at home. This one is quite a something. Well worth it.  Trump can get a little bit of credit for encouraging Operation Warp Speed. This helped get the vaccines across the line much faster than might otherwise have been the case. It's not 100% clear if this could have happened in an alternative universe without Operation Warp Speed. Unfortunately the majority of the good people that were in the Trump administration got muzzled or if they tried to talk realistically about the issues facing the nation, then they were eventually shown the door. Therefore on that front, Trump gets 0.5 points. Since then, the vaccines have been rolled out at warp speed and the US is a global leader in this race. As such, we are now getting closer and closer to normal, a lot faster than I would have imagined (see past blog post: https://thrivingwithinterest.blogspot.com/2021/05/how-quickly-do-we...

For the past week I have been teaching young men about finance. We have covered a whole range of topics from the origins and purpose of money, to stocks, from crypto to foreign currencies. However the one topic that seemed to blow most people away was the power of compounding. The genius himself even has a quote attributed to him: It's safe to say that teenage boys don't necessarily have retirement as the number 1 topic on their minds (I can take a pretty good guess as to what the top topic is for most). That being said, when we went through the concept of compound interest and how much money you can end up with if you are able to save a little bit each and every month while giving it a bit of time, the scholars' eyes lit up. I could almost see the "mind blown" word balloons pop up from most in the room. This is a summer class and not designed to be heavy on mathematical calculations. Therefore I relied on an online compound interest calculator to come up with the...

There is a lot of fear out there amongst Bitcoin (and other crypto) investors/traders. BT C broke below $30,000 for the first time since January is now down over 50% from the highs reached in April. As mentioned in earlier posts, we are well and truly in a correction ( https://thrivingwithinterest.blogspot.com/2021/05/testing-patience-crypto-correction-is.html ).  What have been the reasons for the most recent downturn? China cracking down on miners over the weekend. It's nice to be a centralized government where you can quickly make such decisions; Investors with leveraged positions are being stopped out (close to $1bil in liquidations have taken place recently); Dramatic slowdown in onchain activity; and From a conspiracy theory perspective, some might point to the fact that Microstrategy keeps on doubling down on BTC (they just issued another convertible bond) and traders are trying to cause additional stress. Where to from here?  My best guess is that we have another few m...

  This past week I have been involved with the Reach Academy Summer program that is taking place in partnership with Stanford Curious Cardinals. Here is the formal link to the program:  https://reachacademics.com/summer-academy-for-boys We have been offering young men courses covering a wide range of subjects from Debate, to Music Production, from Engineering to Public Speaking, not to mention my sessions on Personal Finance & Investing. It has been hugely rewarding talking to dozens of young men, who hail from all 4 corners of Los Angeles, about a topic that is near and dear to my heart. I also get to see the spark in their eyes after they complete their other sessions, taught by amazing instructors from some of the country's finest institutions of higher learning. What are some of the key takeways from the past week? curiosity resides in all of us, all it takes is some passionate correspondents to tickle that itch; strong friendships can be formed in a very short period ...

My son just turned 18 and as such he went out and got his first credit card. As it turns out, he has a pretty decent credit score already given he had been using one of my cards as a secondary member. Good start kid. What is interesting is that he done his research to see which were the best introductory cards, which cards offered the best rewards given his spending profile, and which ones would be most likely to accept someone with his profile. It worked well. One card he didn't have on his list however was the BlockFi. Here is a card that offers between 1.5% and 3.5% of Bitcoin on each purchase depending on category of spend. You always get a minimum of 1.5% back, then that rises as you spend more during the year. The introductory 3.5% Bitcoin rewards lasts for your first 3 months. As we know, timing purchase of crypto is fraught with danger and virtually impossible to do well on a consistent basis. Therefore the best strategy is to have a regular purchase plan, which can be done...

This is one of the topics that come up a lot when discussing crypto is Decentralized Finance (a.k.a., DeFi), as a potential disruptor to traditional finance. Democratization of finance ie helping bring financial services to millions/billions of people who have not had access to traditional finance. The point of this post is not to make an argument for or against DeFi, but rather to educate. Here goes: What is DeFi? It is a form of finance that allows anyone with an internet connect and device to trade, send and finance assets found on the Blockchain without having to rely on traditional financial institutions. Let's cut the middle man is the basic mantra of DeFi. As with other aspects of the blockchain, it is decentralized, open for all to see, and easily malleable to a person's specific needs. As more and more applications get developed, we should see the rise of more advanced financial services being offered as well. These are commonly called Dapps (or Decentralized Apps). In...

The folks at LinkedIn asked for an informed perspective on the changing landscape of the post pandemic work environment in 2021 and beyond. They are calling it #TheBigShift. We are possibly at a time of "Great Resignation" as more people might be looking to quit their jobs and/or move to start a new ones. A career chance is always daunting and nerve wracking, but in many ways this is a great time to pursue that as the number of job openings roughly matches the number of unemployed: back to the "new normal" of more jobs than unemployed? I made a big career shift not too long ago, as a middle aged man, living half-way around the world. So far so good (knock on wood). In addition, I have talked to and witnessed many of my peers in finance make a career shifts over the past 5-10 years. To answer the LinkedIn prompt: what are some of the key observations and pieces of advice that I have received during that time? Go back to school (and get a new degree if need be):  Whet...

During our final faculty get together of the year we paid homage to some departing teachers. One in particular was very near and dear to my heart; Jason. He was my mentor teacher when I first joined the school and then became much more. Based on the outpouring of love during yesterday's tribute, I could see something that we all already knew, he was beloved by all and touched so many of his peers (although none of us are truly his peer).  Jason, Here are things that I will take away: humor is paramount and a wonderful coping mechanism: teaching (and many other jobs/walks of life) can be stressful and one of the best ways to diffuse any potential tension is through laughter and some light hearted banter; listening is more important than talking: Jason always made sure to listen after asking questions. Too often someone poses a question and it is really a means of making it about them. Or they don't really assimilate what you respond. Jason did the polar opposite; he listened, as...

I haven't written much about the stock market of late because I have had this "Sell in May, Go Away" type of attitude: https://thrivingwithinterest.blogspot.com/2021/05/inflation-is-here-and-sell-in-may-its.html That b eing said, I have thought that Europe was a fertile place to find some buys: https://thrivingwithinterest.blogspot.com/2021/05/where-to-invest-now-europe-of-course.html By and large that has worked pretty well: European markets reaching new highs...  While the S&P is struggling to break out It appears that the S&P is on the verge of taking out new all time highs and resume its uptrend. Hence it might be time to get back in. I would still wait a bit, that being said, there is a stock of interest to me: SoFi. What is it? It's a newly listed Fintech company that recently went public via a SPAC deal. They offer some traditional financial services such as mortgages and personal loans, wealth management and credit, in addition to more advanced offerin...

  Earlier this week Propublica reported a story about how little in taxes some of America's richest men paid in taxes. In case you missed it, here is a summary of 4 culprits highlighted in the article: Although this isn't a very surprising, nor is there any claim from the article that these people broke any laws (because they didn't), it is still jarring to see how little they paid in taxes. Interestingly, Warren Buffett, who has long railed against the fact that he pays less in taxes (as a percentage of course) than his secretary, has the lowest actual percentage according to Propublica. Now this may largely be down to the fact that I assume his lifestyle is much more modest than that of his peers on this list and hence he doesn't need to take out as much money from his personal ATM that is his ownership of Berkshire Hathaway. What does this all reveal and what can be done? I will leave aside the fact that there was a leak and what are the pros and cons of Propublica p...

After posting yesterday about the importance of being able to master basic mathematical skills, and the best way of going about it (spoiler alert - it takes practice, practice, practice, similar to Simone Biles with her gymnastics routines), a number of reasonable people commented that children need to improve their numerical skills. As a result, I thought I would add a 3rd part in the series of math tricks after the guess the calendar date and squaring numbers. Here are those links: What day of the week were you born? https://thrivingwithinterest.blogspot.com/2021/05/fun-with-math-doomsday-rule-coolest.html How to square 2 digit numbers in your head quickly and easily: https://thrivingwithinterest.blogspot.com/2021/05/fun-with-math-part-deux-squaring-2.html Onto today's math trick... I feel comfortable saying that most of us would know if a number is divisible by: 2: if it's even 3: if the sum of the digits in the number is divisible by 3 4: if the last 2 digits of the number ...

Today I watched my beloved Rafael Nadal lose to the amazing Novak Djokovic. This coincided with the last day of our 2020/21 school year and a series of teacher meetings where we spent a considerable amount of time discussing how to improve our efforts going into the new school year. This is a tried a true part of the educational merry-go-round where we philosophize about how to get better at our craft. I have now been doing this for almost a decade, split between the formal training completing my masters program and teaching in the classroom. A common refrain from educational leaders is this, we need to find newfangled ways to get the materials across to our students, be it through project based learning, real world examples, spiraling of materials, and countless other means. I certainly agree with all of those things and one constant feedback that I get from fellow teachers who observe my classes, from current and former students, and from parents, is that my class is fun and ties in ...

Today's inflation rate was released and it showed the fastest rise since August 2008 with a reading of 5.4%. For the core CPI (excluding food and energy), the 3.8% rise was the largest jump since June 1992! Yet the stock market was up a bit today despite this news. This would seem to be an anomaly. Or is it? We have been in a relatively tight trading range over the past couple of months and are flirting with all time highs.  With inflation numbers such a the ones released the last couple of months, we would expect a bit more of a pullback. So why would the market simply shrug these off? Here are some possible explanations: Wrong base effect: maybe YoY comparisons aren't the ones we should be looking at given that May 2020 was a moment in time when things were at a standstill. We should probably be comparing with May 2019 or some period before the Covid-19 shutdowns (if we did that, the CPI rise would be about 1/2 of the current levels); Some stuff up, others less so: The larges...

Here we are, in the middle (or is it? more on that later) of a 6th Bitcoin price correction of 50% or more since 2012. The excellent graphic below from Visual Capitalist shows all of the major Bitcoin price falls over the past 10 years. The question that I get more often than any other is this: "Where to from here?" Obviously it's anyone's guess as to what will happen to the BTC price over the short term. Nobody knows (aside from the possible exception of Elon Musk who can make the price move with a simple 140 character tweet or meme). Although I am very positive on the price of Bitcoin over the medium to long term, and would encourage everyone to have at least a small portion of your investment portfolio allocated to BTC, ETH and some of the DeFi tokens, it's hard to know for certain what will happen over the course of the next few weeks and months. Based on what I have read, seen and heard I believe that the the short term price action will most likely be sidewa...

Rose Bowl, June 6, 2021, Milken Community School graduation. The picture above says a lot. Here are two people who didn't have to get along, who didn't have to build a loving/caring/sharing relationship, yet they did. Well done you and I am so happy that it turned out this way, as it very well could have been a very different story. On that teary eyed note, here are 21 tips I have for those of you graduating high school/college (in no particular order and with appropriate shout outs): Say thank you to those who help you, no matter how small the service (thanks Ned for reminding me of this one); Build meaningful relationships (both of friends and professional relationships - thanks Clement); Start saving now (thanks John); Understand the power of compounding (thanks Al); Own up to your mistakes (remember that "excuses are the nails that build a house of failure" - Thanks Lynn); Try something new on a regular basis (thanks Giles); Travel (Thanks Mom and Dad); Find somet...

A picture tells 1,000 words (or so they say). So what about 6 pictures? (Go - quick maths!). Much has been said about the many problems facing the US economy after our battle with Covid over the past year +.  Based on what I have seen/read, here are the top issues that seem to pop up over and over again in the financial press/media: government debt labor shortages/labor force participation inflation It is striking to me that in some respects the US is turning more and more into a clone of Japan. Most would push back and say no way. Our economy is much more vibrant and will continue to grow for years to come, unlike that of the Land of the Rising Sun. I beg to differ. Let us see how that could be the case in a couple of charts. First, we know that the US has had to print a tremendous amount of money over the past 12-18 months (close to $6trillion) in order to help us fight the economic devastation of the economic slowdown brought on by Covid 19. As such our Debt to GDP has risen to ...