Powerful words on John Bogle

John Bogle, pioneer of index funds and passive investing, passed away this week. There are a multitude of online eulogies of Mr. Bogle. I just thought I'd put this quote up from Warren Buffet, arguably the greatest investor of our time:

“Jack Bogle has done probably more for the American investor than any man in the country.”
– Warren Buffett


Pitfall of investing in individual stocks

This story is a great reason why not to rely soley on analyst opinions in your stock picking. This is not to say big bank analysts are intenionally misleading, however there are a host of other factors you need to consider when buying a stock besides whether an investment bank analyst says something is a 'buy' or 'sell.' Incidentelly you will almost never come across a stock with a sell rating..and if you do and own it, it's probably too late.


Cash positions in American companies

Here's an interesting chart showing some of the largest cash holdings in Fortune 500 companies. Apple's level of cash is truly astounding. There is no way of knowing how long these companies will maintain such large positions, or how they will eventually deploy them..stock buyback, capital spending, tax repatriation, etc. 

In any case it's worth watching what these companies eventually do.



Gotta love Wall Street analysts

I came across two pieces out of Citigroup, both before and after the election. This isn't a Citi specific problem as you can find such examples across the industry going back..quite possibly forever. To me this demonstrates the importance of having a long term plan and not being swayed by the news cycle, however volatile it may be. 

Citigroup on Aug 25th

The election of Donald Trump as President of the United States could lead to chaos in markets and increased policy uncertainty that tip the world into recession, according to Citigroup Inc.

“A Trump victory in particular could prolong and perhaps exacerbate policy uncertainty and deliver a shock to financial markets,” writes a team led by Chief Economist Willem Buiter.


Citigroup on Nov 14th

"Citigroup Inc. views the 72-hour-old rotation into stocks following Donald Trump’s presidential victory as the start of something big.

Strategists led by Jeremy Hale raised the firm’s recommendation on global equities to overweight from underweight, meaning investors should hold more stocks relative to their benchmarks. They cut fixed income, saying government bonds and the credit market will underperform in the next 12 months.



Wells Fargo fraud

I've been reading up on the Wells Fargo fraud the last couple of days. All I can say is wow. It is hard to fathom such behavior from so many employees. This is a blatant example of misconduct, but throughout the industry you can find people who's actions are being impacted by their incentive structure. If the Wells employees have no incentive to open fake accounts, would they have done it? If the private REIT, annuity, or structured product salesperson did not receive a commission, would they be so keen on selling you questionable products?

It's one of the reasons why fee based advisors such as myself have grown in popularity. In my case I receive no compensation other than my fee. And I can assure you I will not be pressuring anytime to open up 6 different savings accounts anytime soon. For more info on the Wells Fargo findings: