Tag: finance

What NFL Players Can Really Do to Help the Inner-Cities


One has to wonder if the NFL players who are upsetting fans and driving down TV ratings ever took an economics class while they were in college.  Perhaps then they might understand that regardless of what their contract says, unless there are people willing to pay to go to their games, buy their jerseys, and watch their games on TV, they will not be making millions of dollars per year that they have in the past.  They only command a high salary because the demand for their services is high.  If that demand decreases, so will the amount of money they can make.

Hopefully, while they were in college, they received a real degree, instead of just getting credit while they never actually attended classes as it seems some college athletes do.   If things continue as they are now, with NFL revenues imploding, the players may need to use whatever skills they learned in college to find a different line of work.

While political expression is fine, people don’t generally want to have your political views thrust upon them while they are at your place of business.  You would not want your server in a restaurant giving you a speech on the need for single=payer healthcare while you were trying to order your meal.  You would not want your accountant going on about right-to-carry while you were handing in your tax paperwork.  And you would not want your doctor lobbying for a larger military while you were getting your yearly physical.  There is a place for protests and there is a time for speeches, but it is not when customers have decided to use your services.

People watching a football game want to be entertained.  They want an escape.  Even if they agree with your points, they do not want to be lectured when they have come to watch a game.  The game is held for the entertainment of the fans, not so that football players would have a place to play a game.  Certainly not so that players could use their captive audience to lecture them.

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Just by virtue of being on a big stage each week with a big audience, NFL players have a big microphone.  Players could call a press conference whenever they wished and have TV crews show up, eager to hear what they have to say.  Sports Illustrated would probably publish their comments on whatever they wished to talk about.  They could do a lot of good for the inner-cities, and do so in a manner that would not hack off a lot of their fans.

If players really want to help those in inner-city neighborhoods – places where they would not dream of living once they become stars – there are many ways they could help using their celebrity.  Things they could say include:

1.  Most people won’t get into the NFL or NBA, so kids had better make sure they get a good education.  Of the tens of thousands of kids who play in Pop Warner football or grade school teams, only a couple of dozen will make it to the pros.  NFL starts could encourage kids to make sure they go to class, do their homework, and go to college or a good trade school after high school, just in case the Raiders don’t call.

2.  Parents should demand teachers teach, principals maintain order and safety in their schools, and that students are respectful and put in the work needed to learn.  Inner-city school, despite costing thousands of dollars more per pupil than many of their suburban counterparts, have dismal records when it comes to the number of students who can read and write by the time they graduate.   NFL players should encourage parents to get involved with their school and if they are going to protest something, they should demand a better learning environment.  That will often require that other parents do their job when it comes to raising their kids.

3.  Clean up your communities.  Rather than attacking the police officers who patrol inner-city neighborhoods, NFL players could work with residents and law enforcement to get rid of the crime and violence that causes residents to come into contact with law enforcement in an adversarial fashion so often.  The more often police are called in to investigate a shooting or remove drug dealers, the more likely it is that innocent people will be swept up in the confusion (or non-innocent, but minor offenders will perform an action that causes them to be shot or hurt during the excitement).

4.  Choose your partners well and wait for the situation where you would welcome children before having sex.  (This is something that people in virtually all communities could learn.)  One of the greatest causes of poverty is having a child before finishing an education.  The lack of a parent in the home leads to children who grow up unsupervised, making them targets for gangs and trouble, and leading to future generations of uneducated, single-parent homes.  NFL players could encourage girls to wait for a male partner who is willing and able to support a family.  They could encourage boys to be “real men,” wait to have sex until they are in a position to raise children, and be there for their wives and their children.

 


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5.  Become teachers, firemen, police officers, military personnel, and business owners.  If the police departments truly are racist, the easiest way to change things is for those in inner-city communities to join the force.  They could also take on roles that would enrich their lives and their communities.  Instead of complaining about “the man,” open a business yourself and serve others.  Instead of disrespecting those who sacrificed themselves to protect the freedom the NFL players enjoy, the players could encourage youth to join the military and protect their country.

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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Comparing Returns Against the Markets


This has definitely been a great time for stocks.  Ever since the election in 2016, stocks have been heading up.  The Dow Jones Industrial Average, an index often used to judge the returns fo the markets,  has risen about 25% since election day.  The S&P 500 index, a common index used to determine the performance of large US stocks, is up about 15% (16.7% if you reinvested dividends).

While I’m only really interested in long-term returns, I still like to periodically review how I am doing against the major indices to get some perspective.  I tend to invest a good portion of my money in individual stocks that I think will do well over long periods of time.  If I were to consistently get lower returns than I would have just investing in index funds, I might just shift to index funds since that would be simple and require very little effort.  In the very least, I might rethink how I invest and in what I invest in.

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Looking at the returns of the S&P500, I see that it has returned 14.32% since the start of the year.  Over a 1 year period, it has returned about 15.7%.  Looking at my IRA account, it has increased by about 18% since the start of the year and 31% over a 1-year period.  I have a second account that unfortunately hasn’t done quite as well, rising 12% since the start of the year and about 19% over a 1-year period.  It is outpacing the returns of the S&P 500 for the full year but lagging a bit year-to-date.  The Russell 2000 has returned 10.3% year-to-date, so the smaller stocks have not been doing as well as the larger companies.

Be sure to check out this month’s book, The Bogleheads’ Guide to Investing.  

I’m investing long-term, so returns for a short period aren’t as important as the financial performance of the companies I own in general.  I believe that if I pick stocks that consistently see earnings grow in the 12-15% per year rate, I should see returns on that order over long periods of time.  Sometimes the price will fluctuate up or down due to other, unrelated factors, but eventually the stock price will return to the fair value dictated by the earnings and dividend growth of the company.


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Note, a great site to determine the return of the S&P 500 for any given period is at: https://dqydj.com/sp-500-return-calculator/ .  The nice thing about this calculator is that you can pick any period you want, and it also includes the effect of reinvesting dividends.  If that is included, my returns look even worse since the S&P 500 return with dividends reinvested is 8.3%.

Have a question?  Please leave it in a comment.  Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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The Small Investor Book Club Reviews Bogleheads’ Guide to Investing – Professional Money Managers


Do you need a professional money manager?  Chapter sixteen of The Bogleheads’ Guide to Investing does a great job covering this question.  A couple of months ago I asked folks to read The Bogleheads’ Guide to Investing with me so that we could discuss it.  This was really a good book, deserving of many posts.  Today I wanted to talk about the discussion of professional money management provided in the book.
 

The Bogleheads’ Guide to Investing

The first thing the book covers is all of the different designations that you can use without any sort of financial training or education.  These included things like Accredited Financial Counselor, Chartered Asset Manager, and Certified Financial Planner.  (I’ll confess that this gave me hope, since I am entirely self-taught through experience, so I’m happy that I could hang out my shingle as a “Wealth Management Specialist,” and help people set up an investing plan without needing to do a lot of coursework.)  Apparently, the only certifications that mean anything are Chartered Financial Advisor and Certified Financial Planner.  The chapter then goes on to describe the types of money managers, along with how to select someone who generally is there to help you as opposed to someone who will just try to sell you the financial products offered by the firm.

One of the other things that you pick up from the book, however, which you will also pick up from this blog, is that it is really easy to learn to invest, particularly in index mutual funds as recommended by the Bogleheads.  Basically, it is a just a matter of developing an asset allocation strategy, investing regularly, and then rebalancing once or twice a year.  Since financial advisors will charge you a fee to manage your money for you, which gets added to the mutual fund fees, having someone invest your money for you also goes against another Boglehead principle of keeping your expenses low.  Let’s look at each of these activities, through the eyes of the Bogleheads.

Asset Allocation

Asset allocation, as described in Chapter 8, is determining what percentage of your money to put into equities (stocks), and bonds.  It also includes deciding how much to put within the subcategories of stocks and bonds, such as large or small stocks, domestic or international bonds, and so on.  Basically, when investing for retirement, the younger you are and the more tolerant you are of risk, the greater the percentage of your asset you want in stocks, and your stock investments should be evenly spread between small and large stocks.  Between US and international, the Bogleheads say you should have about 80% in US stocks and 20% in international stocks.  They then give sample portfolios.  For example, a young investor using Vanguard funds could have a portfolio consisting of 80% in Total Stock Market Index Fund and 20% in the Total Bond Market Fund.  An investor late in retirement might have 20% in the Total Stock Market Index, 40% in The Short-Term Total Bond Market, and 40% in Inflation-Protected Securities.  Simple.

Investing Regularly

  Chapter two talks about the importance of investing regularly.  This chapter shows what happen with compounding when you start really early, versus starting later.  If you have never seen the effect, I advise you to check out Chapter two for yourself.  Hopefully, you’re 20 and not 45 when you do so that you can start investing early.

Rebalancing

 Rebalancing is the act of periodically shifting money among your funds to keep your investments consistent with your asset allocation plan.  This can easily be done in most mutual fund accounts.  Many accounts have automatic tools for doing this.  The only issue is that if you are not investing within an IRA or other tax-advantaged accounts, you may need to pay some taxes after rebalancing.  If this is the case, you may wish instead to direct new investments to funds that have done poorly, such that you are underinvested in these funds, rather than selling portions of winning funds and shifting to losing funds.

If you haven’t done so already, be sure to buy a copy of The Bogleheads’ Guide to Investing and share your thoughts.

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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