Tag Archives: Debt

Best Reads Of This Week: A Real Financial TV Show, US Lacking Literacy, & New Distressed Investing

Finally, An Idea For A Legitimate Show On Investing

Every day at my internship, the mounted televisions show a muted CNBC. While the channel sometimes does show decent programming (interviews with industry leaders are about all I’ll watch), a majority of it is just useless noise that investors shouldn’t bother with. The worst part about some of the programming is that people will make emotional-based trades (the worst kind) based off of what some “financial pundit” says on TV. It’s important to remember that the pundit making these recommendation has no idea about your background, education, financial standing, needs, or goals and top of that, they’re right about their picks about as often as you are. Most don’t realize this fact because the financial gurus on TV aren’t actually held accountable for their picks. When was the last time you heard one of them say “Oh, uh…yeah, last month I told you to buy XXX company and now it’s down XX%. I’m sorry about that.”? The answer is “Never.”

One of my favorite blogs to read consistently, A Wealth of Common Sense, recently featured on article on how to create a solid television show about investing. Here are Ben’s thoughts on his idea for a financial TV show that will cater to a long-term investor

– It would only be on once a week.

-Weekly guests would include the different ETF and mutual fund providers along with portfolio managers to explain their strategies and fund options.

-The audience could call/email/tweet their questions on the portfolio management process.

-There would also be a financial advisor segment to discuss how they run their client portfolios and any issues that seem to come up on a regular basis.

-Guests would get at least 15-20 minutes a piece instead of the 5 minute soundbites they get now so they could explain themselves and their positions in detail (other guests would include authors, bloggers, academic researchers and successful individual investors).

-Obviously, you would need many different voices to share their experiences and thoughts since there isn’t a single way of doing things.

-A focal point would be investor behavior and how human nature messes with our decision-making process. There is talk of the ‘dumb money’ from time to time on financial programs these days, but not much coverage gets paid to the long list of cognitive biases that seem to affect every investor, both professional and novice, in different ways.

Ben really hits the nail on the head with this article and it would be delightful to see a show on TV that actually educates its audience on the fundamentals and what’s really important. Now if this was made into a show, I would actually watch intently and encourage others to do the same. However, it’s not likely to ever happen as it wouldn’t feature men screaming at exchanges and other annoying eye-catching “entertainment” that the current programming is so fond of.


Lack Of Literacy

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According to a study by the Organization for Economic Cooperation and Development, American teens are lagging behind in financial literacy, especially when compared to top countries like China and Belgium. The executive director of the Foundation for Financial Planning, Jim Peniston had a quote that caught my eye:

“I don’t put it on the school system, I put it on our generation. What do kids learn? They learn from what they see at home.”

I agree and disagree with Jim on this quote. I do believe it is important for parents to teach their children the value of money, the importance of saving, and to educate them on the rest of the financial basics. However, I do believe that the lack of financial literacy is a failure of our education system. Financial literacy is one of the most important skills to be taught in schools, from elementary to university, as I wrote about here. I’d go as far as to argue that a student’s level of financial literacy is far more important than their GPA. Those that don’t understand it generally end up taking on more debt, accumulating less wealth, and being poorly prepared for retirement or personal emergencies. While I do believe that this should be taught by parents, I see no excuse as to why it has not been taught in schools. It gives kids a solid foundation for financial well-being and will prove useful throughout their entire lives, unlike, you know, an art class.


Golf Courses: The New Distressed Asset Investing

Private equity firms are heading into new assets, like troubled US golf courses. The last decade hasn’t been good for most of those in the golf business. The boom in new golfers with the emergence of Tiger Woods as a dominant player in the late 90’s and early 2000’s has faded away. That, paired with tough economic times has led to a decline in new golfers, rounds played, and overall profits of golf courses. Last year, only 14 new courses opened while 157 closed down as owners decided to shut their doors rather than continue to take losses with the extensive operating expenses that are required for basic course upkeep.

It will be interesting to see how these investments pay off. While I’m not sure that golf will ever return to the Tiger-mania days that had new golfers out to the courses in droves, I think it could make a rebound if younger golfers get hooked again. The PGA is rolling out its new “A Quick Nine” initiative to get golfers to play nine holes, versus the typical four hour 18 hole round. Perhaps a shorter time commitment could attract more people that aren’t willing to spend half their day playing golf. Regardless, it will be important for these private equity firms to find a way to create value for a new version of customers if they really want to turn the business around. I believe that this could come from expanding some of the services the golf club offers (spas, workout facilities, pools, etc.) and changing up the membership styles to be more customizable and attractive.


Battle For Bankers

Private equity firms are really starting to piss off investment banking programs with their recruiting tactics. What’s next? Going “full SEC football” and laying dibs on middle school students? Okay, maybe that was a little exaggerated, but the recruiting intensity is ramping up as we see a lot of young talent heading away from Wall Street for Silicon Valley.

Michael Lewis: Not A Fan Of Deeb Salem 

I’ve always been a big fan of Michael Lewis’s work from Liar’s Poker to Moneyball (Flash Boys is still on my reading list). The other day he made fun of Deeb Salem, the former Goldman Sachs trader who is disgruntled about not getting the millions that he was “promised”, in a fake letter to his mother and oh was it funny.

All-Time Investor Scoreboard

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From @HarrimanHouse


 

The Millennial Generation: Quick Facts On Financial Standing, Tech Trends & Consumer Behavior

ImageWho Are Millennials?

Millennials (Generation Y) are the youngest adult generation and are roughly defined as those born between 1980 and 2000 (Generation X: Born 1965-1980 and the Baby Boomers Generation: Born 1946-1964).  They’ve been given a lot of other names like ”Generation All About Me”, “The Complaining Generation”, “Generation Everyone Gets A Trophy”, but to describe them in one long line: 

They are America’s most racially and ethnically diverse generation ever and are classified as being political and social liberals, tech savvy, healthier, highly educated, less religious, slower to get married, and saddled with debt and lousy, underpaying jobs.


Why Is This Important?

The Millennial generation is huge; 7% larger than the baby-boomer generation and consists of 86 million people. The annual spending of this generation is going to be $2.45 trillion in 2015 and that number will grow to $3.39 trillion by 2018 so the trends and preferences of this generation are going to have a powerful effect on the businesses we see growing and created in the future.


Demographics:

86 Million is the size of the Millennial generation as of 2014, 7% larger than baby-boomer generation. (Barrons)

59.2% are white, 19.9% are Hispanic, 13.5% are black, 5.1% are Asian (Millennials Civic Health Index)

70% are affiliated with any type religion compared to 78% of Gen X and 83% of Boomers. (Pew Research)

50% classify themselves at politically independent, 27% Democratic, and 17% Republican (Pew Research)

60% voted for Barack Obama in 2012, 66% in 2008. (Pew Research)

 

Tech Trends:

90% used social networking sites in 2013, compared to 78% of Gen X, and 65% of Boomers (Pew Research)

1.8 hours spent per day on social media sites by the average Millennial (US Chamber Foundation)

55% have shared a “selfie” on a social networking site compared to 24% of Gen X and 9% of Boomers (Pew Research)

2.5x more likely than older generations to be an early adopter of technology (Barkley)

60% have uploaded content to the web vs. 29% of non-Millennials (Barkley)

27 times per nonworking hour that consumers in their 20s switch between communication platforms and devices (Advertising Age)

85% of those 18-29 use their phone to go online, compared to 73% for those aged 30-49, and 51% for ages 50-64. (Barkley)

65% of Millennials say losing their phone or computer would have a greater negative impact on their daily routine than losing their car. (Zipcar)

41% have only a cell phone and no landline, compared to 24% of Gen X, and 13% of Baby Boomers. (Pew Research)

75% of Millennials with TVs use it to watch “Over-The-Top” content (Netflix, Hulu, etc.) while 68% use their connected TV to watch programming from cable or satellite. (NPD Group)

 

Lifestyle:

36% of 18-31 year olds are living at home with their parents as of March 2012, up from 32% in 2007. (Pew Research)

20% of 27 year olds own or pay a mortgage. (The Atlantic)

21% of Millennials are married; 42% of Baby Boomers were married at this age. (Pew Research)

38% have 1-6 tattoos and 23% have a piercing in some place other than an earlobe. (US Chamber Foundation)

63% of Millennial workers have a Bachelor’s Degree (Millennial Branding)

45% of 18-24 year olds were currently enrolled in college in 2011 compared to 31% in 1990. (NY Times)

38% were bilingual as of 2013, up from 22% in 2003. (Nielsen)

32% believe America is the greatest country in the world compared to 48% of older generations. (Pew Research)

52% believe personal success is the most important thing in life compared to just 31% of older generations. (Barkley)

Austin, Texas is the city with the highest concentration of Millennials, followed by Salt Lake City, Seattle, Los Angeles, and Denver. (Nielsen)

33% regularly eat organic foods compared to 18% of older generations. (Barkley)

58% say that are willing to pay more for all natural and organic food products (Alix)

60% work out on a regular basis compared to 43% of non-Millennials. (Barkley)

81% of 20-24 year olds had a driver’s license in 2010, down from 92% in 1983. (CNW Marketing Research)

 

As Consumers:

$2.45 Trillion will be the annual spending of the Millennial generation in 2015. It will be 3.39 Trillion in 2018. (Oracle)

Google – Favoritebrand among Millennials in 2013 followed by YouTube , Amazon, Nintendo, and Oreo (Vision Research)

BMW – Top prestige brand for Millennial men. Chanel was the most prestigious for women. (L2 Prestige Brand Study 2010)

4 – Number of banks in the Top-10 brands hated most by Millennials (Scratch)

45% will go out of their way to shop at stores offering rewards programs. (Barkley)

47% of Millennial females and 38% of males reported shopping for clothes more than twice a month. (Boston Consulting Group)

38% are willing to leave brands they perceive to have bad ethics (Adroit Digital)

48% say word-of-mouth influences their product purchases more than TV ads. Only 17% said a TV ad prompted them to buy (Intrepid Study 2010)

77% participate in loyalty reward programs (Aimia)

41% have made a purchase using their smartphone (Edelman Digital)

51% use smartphones to research products and services when shopping compared to 22% of older generations (Barkley)

11% of US auto sales went to 18-34 year old buyers in 2012, down from 17% in 2007 (CNW Marketing Research)

 

Financial Standing:

$27,547 is the average outstanding balance for a borrower with student debt. One in eight has more than $50,000 in student debt. (USA Today)

538% – How much the cost of college has risen since 1985. (Labor Department)

94% would like cash in place of gifts for Christmas (Upromis)

38% have difficulty affording groceries compared to just 21% of those 55 and older (Information Resources, In.)

$39,700 is the median salary across Millennials (Pay Scale)

21% is the amount the average net worth of 29 year olds has fallen since 1983. (Urban Institute)

42% of Millennials when asked, “If you were given additional money, what would you do with it?” said “Pay off debt.” (UBS)

$2,241.20 is the average checking account balance of a Millennial compared to Gen X that maintained an average of $2,081.80. (TD Bank)

6% believe they’ll receive full benefits from Social Security. More than half believe they’ll receive no benefit. (Pew Research)

 

Investing:

52% of a Millennial’s overall asset allocation is held in cash and 28% is held in equities. Non-Millennials hold only 23% of their overall asset allocation in cash and have 48% of their assets in equities. (UBS)

43% describe themselves as “conservative investors” compared to 31% of Boomers. (Accenture)

28% believe long-term investing is a key to achieving success, compared to 52% of Non-Millennials that believe long-term investing is a key to achieving success. (Pew Research)

83% of Millennials who work for companies offering a 401(k) plan enroll in the program. (T. Rowe Price)

84% are seeking investing advice (Merrill Lynch)

61% would be interested in having video meetings with financial advisors. (WealthManagement.com)

 

In The Workforce:

75% of the US Workforce will be made up by Millennials in the US Workforce by 2030. (BPW)

16.3% of Millennials are classified as unemployed in the US (US Labor Dept)

48% of employed college graduates work in jobs that don’t require a four-year degree (The Center For College Affordability and Productivity

284,000 college graduates working minimum-wage jobs in 2012 (Wall Street Journal)

5.36x is how many times more likely a Millennial is to hold the position of a “Merchandise Displayer” compared to older US generations. Other notables include Clothing Sales Representative (4.63x) and Cell Phone Sales Representative (4.03x) (Nielsen)

27% are self-employed (US Chamber of Commerce) and 46% wanted to start a business in the next five years (Employers Insurance)

4% of employers reported parents attending their children’s job interviews. (College Employment Research Institute)

23% of companies reported having heavy contact with parents of Millennial employees. (College Employment Research Institute)

2 years is the average job tenure for Millennials, compared to 5 years for Gen X, 7 years for Baby Boomers, and 10 years for the Silent Generation. (Pay Scale)

47% work for companies smaller than 100 employees, 30% work for companies of size between 100-1500 employees, and 23% work for companies with 1,500+ employees. (Pay Scale)

69% believe office attendance in unnecessary on a regular basis. (Cisco)