The Permanent Portfolio: How an entrepreneur invests — with Craig Rowland

permanent portfolio

As a successful entrepreneur, Craig Rowland knew how to take measured risks.

He does the same now when investing his portfolio. In his recent book The Permanent Portfolio: Harry Browne’s Long-Term Investment Strategy, Rowland describes Harry Browne’s famous Permanent Portfolio strategy and why it’s so effective at helping him succeed in the market.

Please join us for an interesting discussion about managing money, taking risks, and Harry Browne’s famous easy-to-implement no-brainer investment strategy.

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About Craig Rowland

Craig Rowland -- author of Permanent PortfolioCraig Rowland is a software entrepreneur with multiple successful start-ups who sold his previous company to Cisco Systems, Inc. His company produced a real-time network attack response and analysis system. He has also worked for the Chief of Naval Operations – U.S. Pentagon, with a start-up founded by members of the Air Force Information Warfare Squadron (also acquired by Cisco).

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Unleashing your inner investor – with Howard Reisman

Some of the best investing tools were born out of an individual’s personal needs.

StockRover is that type of tool. Created by Howard Reisman as a solution to his investing research, StockRover is a tool for motivated individual investors developed by individual investors.

If you like to delve deeper, run screens, and really research your investments, StockRover is an awesome tool.

Howard joins us today for this edition of Tradestreaming Radio.

Sponsors I mentioned

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Company Profile: Betterment

Name: Betterment


What it does: Betterment has one of the easiest-to-use, slickest interfaces to manage a balanced portfolio for long-term investors. Fund your account (you can automate this) and dial in your preferred risk mix and Betterment chooses a basket of exchange-traded funds (ETFs) for your portfolio in accordance to Modern Portfolio Theory. You don’t ever need to decide on what to buy if that’s not your thing.

Particular strengths: For investors who don’t want to be overwhelmed with investing decisions or jargon about individual securities, Betterment has done a really effective job removing the confusing part by getting investors to focus on what really matters: setting goals, focusing on time-frame, and risk.

How popular is it: As of November 2011, Betterment reported that it had 10,000 accounts and $36 million under management.

The Company

Management: Betterment was founded by Jonathan Stein, an experienced professional on the technology side of the financial industry.

Company Size: Betterment has 10 employees (Source)

Outside Investors: Bessemer Venture Partners led an investment round of $3 million at the end of 2010.

Competitors: As an online investment advisor, Betterment competes with Personal Capital and Wealthfront.

The biggest problem with investment strategies

We all know how poorly individual investors do in the markets. Just look at any Dalbar study and you’ll see just how most investors don’t come close to achieving market returns.

One reason (but not the real one) why investors perform so poorly

Market structures are part of the problem. For years, it wasn’t Wall Street with its capital source, individual investors. It was Wall Street versus individual investors.

Selling is Wall Street’s essence just as surely as buying is Main Street’s. Wall Street almost never tells you to sell   (The Indomitable Investor by Steve Sears)

It’s almost as if brokers and their clients were pitted against one another — brokers sold when their clients bought.

The real reason investors struggle

But, that’s not the main reason investors stink up the joint.

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List of winners of top fintech conference, Finovate

Finovate has really become the go-to tech conference for fintech startups to launch themselves and new products. There really isn’t another conference dedicated to financial startups that competes with Finovate.

The show has grown from 250 attendees to over 1200 this year. Many of today’s leading Finance 2.0 startups have presented at Finovate at some time or another. I haven’t seen a connection (yet) between presenters at the show and future success (growth, M&A, etc.) but it’s still early for this industry.

Thanks to Famzoo (who presented last year) for putting together Finovate’s winners throughout the years.

Check it out below.

How Michelle Obama added $5B in market cap to apparel stocks – with David Yermack

David Yermack, a professor at NYU’s Stern School of Business, studied the first lady’s impact on apparel stocks for companies associated with outfits she wore.

The results are impressive: she added over $5B in equity value to those firms in aggregate and stocks typically went up almost 2% in the week following her appearance.

What does this have to say about celebrity endorsement of stocks and companies? I ask David about this and more on this week’s episode of Tradestreaming Radio.

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What are the best market indicators?

I’ve had a couple of readers write in recently asking what I think the best market indicators are.

It’s a hard question — I don’t think of them in terms of best or worst. More, there are useful indicators at different junctions in the market and really, they’re all part of an investor toolbox.

But, I wanted to ask you: what do you think are the best market indicators? What do you use to help forecast which way the market is headed?

To get the conversation started, I’ve included a list of market indicators — feel free to vote on what you like, dislike, or better, add your own.

[listly id=”pR” theme=”light” layout=”full” numbered=”yes” image=”yes” items=”all”]

Why a stock’s ticker matters – with Vallapuzha Sandhya

future of financial services

How do investors discover what to buy? How do we find investment opportunities?

In Does Investor Attention Affect Stock Prices?, Researchers found that small cap stocks with ticker symbols similar to larger cap stocks went up in sympathy with their larger cap brothers. In fact, these attention portfolios saw 1-3% abnormal returns.

Pretty interesting, so I invited one of the authors of the study, Vallapuzha Sandhya onto Tradestreaming radio to discuss her findings with us.

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3 things investors can learn about risk from the U.S. Army

Major Hugh Jones is a professor of finance and economics at the United States Military Academy and has had two tours of duty in Iraq. He also has an MBA from Duke.

He spoke last year at the CARE conference (Center for Accounting Research and Education conference) about how the U.S. Army deals with high-stakes risk. The video below is his presentation at CARE (thanks to Professor Darren Roulstone for bubbling up  his speech!).

You can get slides of Major Jones’ presentation here [.pdf].

Here’s what investors can learn from how the U.S. Army deals with risk.

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6 easy ways to get more interested in investing

I live and breathe this investing stuff.

So, sometimes I take my insane fervor interest in investing for granted.

But a lot of people aren’t me (thankfully). Many are either too busy, too distracted, or uninterested in investing. That’s a shame — because outside of building your own wealth, there isn’t an easier way to protect your (small) fortune and grow it over time.

So, why are so many closed out of investing? Why do 40% of 18-30 year olds NEVER want to participate in the stock market??

That’s a post for another time. For now, I want to focus on how to get more interested in the stock market, assuming that’s a worthy goal (I think it is).

How do you create interest in something you aren’t quite interested in to begin with?

Here are 6 ways to get more interested in investing

1. Get seriously informed about the market: In 1921, Harry Kitson wrote a book he thought was destined to help college students improve their study habits. Nah, it’s really a book about the science (hey, it’s close to 100 years young) of learning. How to Use Your Mind addresses the hard question of finding inspiration in learning. For Kitson, people don’t generally start with inspiration about learning. It’s about perspiration — working hard to learn a bit about a subject. The passion soon follows. (Source: How to Use Your Mind)

2. Look deeper: So much of what we know about the stock market is through our perception and personal histories. Maybe our parents were involved or maybe they were disinterested. But to create true, motivated interest in a subject, it takes changing our mental image, looking at investing differently. My grandfather was a Buffett-like figure but the markets today would have completely confounded him. I know is sounds kind of Zen-y but, “If you’re really paying attention, you can always go deeper, continuously. If you do, new worlds open for you..”  (Source: Quora)

3. Think good thoughts about the market: Negativity totally breeds negativity. Sometimes that may be warranted but most of the time, it clouds our thinking. The best investors I’ve met are always objective about their investing approach. They don’t let bad decisions wrack them. They move on, learning from their mistakes. The market is a great teacher and it demands its participants visualize success. Learning with passion about the market requires:

  • OUR choice: we practice because we want to, not because we’re forced to
  • build success on success: find ways to have success, however small. The positive feedback loop is powerful.
  • purpose to practice: underscoring everything should be a strong feeling of personal purpose. Answer the question why investing matters to you, (Source: Steve Pavlina)

4. Find friends who like the market: Not only does this stimulate a desire to learn about and participate in the market, it may improve your results. All else equal, social households — those who interact with their neighbors, or who attend church — are more likely to invest in the stock market than non-social households. It even extends to where you live — people living in states where people are likely to invest are themselves more likely to invest. Mutual fund managers who live in the same state are also more likely to trade the same stocks. We’re social animals and we learn from our friends. Investing ideas and education spread epidemically. We’re influenced by others’ behavior. Want to learn more about investing? Surround yourself with people who do, too.  (Source: Social Interaction and Stock Market Participation)

5. Use resources at work to dive in to investing: Just like having neighbors you can shoot the sh*t with about stocks, the market, and investing, your work environment can impact your learning about the market. Sure enough, employers that offer seminars on investing find their employees more educated about investing and more likely to invest. (Source: The Effects of Financial Education in the Workplace)

6. Try some new tools: The finance industry is not your father’s finance industry. You don’t have to work with cigar-smoking old dudes who wear suspenders. Platforms like Betterment simplify investing and make it easier to focus on the important things. Others like Personal Capital make it easier to get professional investment advice online. SigFig, Jemstep, and FutureAdvisor help to find waste in your portfolios and optimize them for performance. There’s a renaissance of investing tools that can help.

Don’t feel bad if you’re not all that into the markets. That distance is actually a good thing — it can make you a smarter, more objective investor. But like everything worthwhile in life, investing is a lifelong process of learning: learning about your own behavior and others.

You can do it, Slugger.