Putting a Price on Fun

Putting a Price on Fun

By: Carl Richards A few years ago, my wife and I considered buying a boat. We both grew up water-skiing on the lakes here in Utah, and some of my best memories involve being on the water. I was talking about this with my friend Eric, because he has a boat, and he introduced me to his “cost per units of fun” concept. “Over the years,” he said, “I’ve looked back carefully at the things we’ve done that have been the most fun for our family. Above all else has been our trampoline. It cost us considerably less per unit of fun than anything else I could think of. In second place were our motorcycles. Then way down on the list, like a long way down behind motorcycles and trampolines, was the boat.” Now, whether you agree with that hierarchy or not (or their particular choices or tastes), the concept itself is extremely cool. We have seemingly unlimited options for fun, which is great. But we all have limits on the time, energy and money we have. Even if you are a millionaire retired at age 40, there are still only 24 hours in a day. We are constantly faced with decisions on how we spend these limited resources. Whether you are aware of it or not, you are doing those calculations all the time. We all are. To continue reading, click...
What Warren Buffett Isn’t Doing

What Warren Buffett Isn’t Doing

By: Dan Solin I don’t know Warren Buffett. I didn’t interview him for this article. But I’m pretty sure I know what he isn’t doing to cope with the worst first four trading days in history for the S&P 500 index to begin a calendar year. Buffett isn’t listening to pundits on TV The financial media loves market crashes. They create fear and anxiety, which in turn increases their ratings. Ratings mean more revenue. The securities industry is a major source of advertising revenue for the financial media. And it has an economic self-interest in the dissemination of “advice” that causes investors to panic and dump stocks. More trading means more commissions. The financial media serves these advertisers especially well during periods of extreme market volatility by circulating an endless loop of misinformation contradicted by an overwhelming amount of academic data. I seriously doubt Buffett pays any attention to it. You should follow his lead. To continue reading, click...
Avoid Investment Depression

Avoid Investment Depression

By: Larry Swedroe As the holidays conclude and the calendar turns into a new year, depression can become an all-too-real possibility. After all, the daylight hours are shorter, and what seems like the longest and coldest (at least in some places) stretch of winter is still ahead. It’s a common time of year for depression, which is frequently described as feeling unhappy, miserable or down in the dumps. Many people have felt this way at one time or another for brief periods. It’s normal. Most of us, however, are able to prevent a snowballing effect, and we can avoid sinking into clinical depression. Clinical depression is a mood disorder in which feelings of sadness, loss, anger or frustration interfere with everyday living for weeks or more. It is caused by a downward spiral into worry and anxiety, rendering our brains unable to right themselves. To continue reading, click...
The Financial Benefits of Buying What You Love

The Financial Benefits of Buying What You Love

By: Carl Richards Eleven years ago, I needed a new bike. At the time, I rode a lot. I was in a big group of relatively competitive riders, and we’d often put hundreds of miles on our bikes each week. I agonized over what bike to buy, but I kept coming back to one made by a company called Moots, a Colorado company that builds titanium road and mountain bikes by hand. The father of a good friend of mine had a Moots bike when I was growing up, and it made me salivate. The problem was, they were really expensive. Like, “far more money than I ever considered spending on a bike” expensive. Maybe $5,000 or so back then. But the more I looked into it, the more I was convinced I had to have this bike. After putting myself through the painful process of shopping around, comparing prices and looking at models that I didn’t really want, I pulled the trigger. To continue reading, click...
Why Investors Need to Embrace Bear Markets

Why Investors Need to Embrace Bear Markets

By: Manisha Thakor Suppose you had a friend whose lifelong dream was to travel overseas. But this friend was deathly afraid of experiencing turbulence on an airplane. So he decided to forego his trip until a new plane was invented, one able to guarantee with absolute certainty that passengers would never feel turbulence. You might be thinking, “Good luck with that strategy. It’s just going to keep you from going anywhere at all!” Yet investors who view bear markets as something that must be avoided at all costs are falling into exactly the same type of limited thinking. Here’s why the best way to make it through current market volatility is to actually “befriend the bear.” A core concept of basic economics is that risk and expected return are related. The most common benchmark in the U.S. for a “riskless” investment is the one-month Treasury bill. Because stocks are considered riskier than one-month T-bills, the only reason a rational person would ever take on that extra risk is if they could reasonably expect (over the long run) to receive higher returns than what they would earn in the riskless investment. To continue reading, click here. By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. The opinions expressed by featured...
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