Barbara Friedberg
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Barbara Friedberg Barbara Friedberg Presentation Transcript

  • Barbara Friedberg, MBA, MS http://barbarafriedbergpersonalfinance.com How to Get Rich; Wealth Building Guide for the Financially Illiterate (available at Amazon)
  •  What Bob Friedberg, PhD teaches in his child therapy course!
  •    Today’s topics: Efficient Market Hypothesis (EMH) & Modern Portfolio theory- only research supported strategies! Who the H-ll am I and why should you listen to me? How I started investing-Homework Research Rules- look at the data
  •      What are the most well researched investing methods? How to separate the noise from the proven investing approaches. How to integrate investing information into your site. How to boost your own investing knowledge. Where to look for inspiration and information.
  •      The research is clear! Over the long term, only approximately 30 % of professional investors beat the market! Of those 30%, few repeat year over year You can try to beat the markets, but it’s a losers game! Index mutual fund or ETF in diversified asset allocation-in line with your risk tolerance.
  •  What is the efficient market hypothesis?  How do I implement?  Background◦ Asset classes-Stocks, Bonds, Cash, Real Estate?
  •      The Dow Jones Industrial Average Index Investing: The Standard & Poor's 500 Index Index Investing: The Nasdaq Composite Index Index Investing: The Wilshire 5000 Total Market Index Index Investing: The Russell 2000 Index
  • •Risk averse: Zvi Bodie & Mike Piper •Sleep at Night Guide to Risk •Search “risk tolerance quiz”
  • Invest $1.00 in the S & P Index in 1926  In 2003, your dollar is worth $2,285 That’s about 10 % per year return!  Now try some market timing:  Invest $1.00 in the S & P Index in 1926  Trade out of the market during the 37 months with the best returns – during 1926-2003.  In 2003, your dollar is worth $17.42 Miss the best 37 months during that 77 year period and your return drops to 3.78 percent per year.  Source: Investment: Analysis & Management by Charles P. Jones
  •  Albert Einstein called compound interest "the greatest mathematical discovery of all time"
  • Costs Matter!  Low Cost Index Mutual Funds  Great sample portfolios: http://www.marketwatch.com/lazypor tfolio 
  • http://www.marketwatch.com/lazyportfolio
  • Sample Lazy Portfolio 10 Year return of 7.9% beats S & P 500 return Of 7.65% with less risk (volatility) S & P 500
  •       Investing for Newbies Difference between a stock, bond, and mutual fund What is asset allocation? How does risk tolerance relate to investing? What to do when the market tanks? Should I invest in individual stocks and bonds or mutual fund?
  •  1. News Jacking 2. Read to write ◦ Get ideas and inspiration from reading 2 Ideas for Inspiration Read investment related publications such as; Money Magazine, WSJ, CNN Money, Kiplingers etc. Use these 2 writing prompts: 1. List takeaway from article: 2. What are the implications for investors?  Use this model
  • “Fed officials voted to keep short-term interest rates near zero, where they have been pinned since late 2008…..expect to make the first rate increase in 2015 or later.” “Central Bank Stays Course on Easy-Money Policies”, Wall Street Journal, September 19, 2013  Interest rates will likely be low for the next year or two. Takeaway from Article
  •    Investing in low interest rate environment. Tips for savers: ◦ Step up notes ◦ Mid term bonds & bond ladder Tips for borrowers: ◦ Borrow now for appreciating assets (home)
  •   Be critical You’re not going to make money trading in and out of the markets  Avoid “hot tips”  Avoid “hot funds” Noise    Long term economic information-can be helpful Use research supported approaches Narrow your information consumption window Not Noise
  •     “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”Paul Samuelson "The individual investor should act consistently as an investor and not as a speculator." - Ben Graham "If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks."-- John, founder of Vanguard and the index fund "Investors should always keep in mind that the most important metric is not the returns achieved but the returns weighed against the risks incurred. Ultimately, nothing should be more important to investors than the ability to sleep soundly at night."-- Seth Klarman
  •     The best way to own common stocks is through index funds... - Warren Buffett, Berkshire Hathaway Inc. 1996 Shareholder Letter "Most of my investments are in equity index funds." BusinessWeek & The Parable of Money Managers William F. Sharpe, Nobel Laureate in Economics, 1990 "Most individual investors would be better off in an index mutual fund." Peter Lynch So investors shouldn't delude themselves about beating the market? "They're just not going to do it. It's just not going to happen." Daniel Kahneman, Nobel Laureate in Economics, 2002;
  •   Market Forecasts-Can Strong Fundamentals Predict Stock Market Returns? http://barbarafriedbergpersonalfinance.com/market-forecasts-fundamentals-predict-stock-marketreturns/
  •  Spend time educating yourself.  Designate only a portion of your investment portfolio (some recommend 10%) to speculating.
  • Email me with your questions. Use Contact form on the site http://barbarafriedbergpersonalfinance.com
  •         Wall Street Journal Money Magazine, Kiplinger’s, Smart Money The Elements of Investing, by Charles D. Ellis & Burton G. Malkiel A Random Walk Down Wall Street, by Burton G. Malkiel AAII-American Association of Individual Investors Free: 20 Minute Guide to Investing, by Barbara Friedberg (http://forms.aweber.com/form/00/151654000.htm) Free: Investopedia (http://www.investopedia.com/) Yahoo! Finance (http://finance.yahoo.com/), MSN Money (http://money.msn.com/)