EppsNet Archive: Investments

EppsNet Investment Tips

27 Dec 2016 /

Shares of Warren Buffett’s firm Berkshire Hathaway soared 20% in 2016, helping to boost Buffett’s personal fortune by $12.3 billion – more than any other billionaire in the United States.

Forbes

Buy and hold . . . buy and hold.


Tony Robbins’ Wealth-Building Tips Seem Pretty Useless

18 Jan 2016 /
Tony Robbins

Tony Robbins has 6 tips for Building Wealth Now. Let’s look at each of the tips and apply the “would anyone advise the opposite?” filter to assess the value of Robbins’ advice.

  1. Don’t lose money. I’m not kidding, that’s the first tip. Would anyone advise “Lose money”? No. So this “tip” is useless.
  2. Look for investments in which rewards far outweigh risks. Would anyone advise “Look for investments in which risks far outweigh rewards’? No. Robbins recommends using “the 5-to-1 rule,” in which the potential returns on an investment are 5 times greater than the potential losses. Why 5? Why not 10? Or 100? Where do you find these investments? I have no idea.
  3. Don’t overpay taxes. Would anyone advise “Overpay taxes”? No.
  4. Diversify. Would anyone advise “Don’t diversify”? Possibly. There’s a couple of schools of thought on diversification: 1) Don’t put all your eggs in one basket; and 2) Put all your eggs in one basket, then watch that basket. So there’s a tip for you: Diversify.
  5. Watch out for mindless spending. Would anyone advise “Spend mindlessly”? No. Robbins says if you spend $40 a week on restaurant meals, consider inviting friends over for a low-cost dinner at home instead. “In a year, you’ll have saved $2,000. If you invest that $2,000 every year, in 40 years you’ll have half a million dollars.” No, in 40 years you’ll have $80,000. Maybe. Given some assumptions about your rate of return, you might have half a million dollars, but on the other hand, you might make some bad investments and wind up with nothing.
  6. Stop sabotaging yourself. Would anyone advise “Sabotage yourself”? No.

I Don’t Understand What Warren Buffett is Talking About

27 Nov 2012 /
Warren Buffett speaking to a group of students...

Warren Buffett

In an op-ed for the New York Times, Warren Buffett argues that higher taxes won’t keep the super-rich from trying to make money:

Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.

Really, Warren? It’s an investment, right? It’s not a sure thing. It’s not a giveaway. I’m being asked to put money at risk. That’s the difference between an investment and a savings account.

So the number one thing that I want to understand before making the investment is what kind of a net return can I expect — worst case, best case, most likely case. Then I can decide if I’m being adequately compensated for the risk that I’m taking on.

And by net return, I mean after taxes, after commissions, after everything. How much money will I actually get to keep? And if I don’t think I’m being adequately compensated for the risk, then yeah, I’ll leave the money in my savings account.

Assuming a tax rate of, say, 35 percent, why does it not make sense to say, “I would take that risk for an expected return of $X, but not for an expected return of 35 percent less than $X?”

Related Links


Herman Cain’s 9-9-9

29 Oct 2011 /
Herman Cain

Image via Wikipedia

By slashing the income tax rate, effectively, in half, he makes it that much more worthwhile to get up in the morning, take risks, work hard, take chances, and invest in progress. By eliminating the capital gains tax, he rewards investment and ownership and makes it possible for people to move up the economic ladder, not through phony teaser Fannie Mae mortgages, but by smart purchases and skillful investment. . . .

Herman Cain would establish America as a beacon for investors, entrepreneurs, inventors, creative business people, and all manner of upwardly mobile, ambitious men and women. He would give the U.S. the lowest personal and corporate tax rates in the world, and the only place where investment earnings are tax free. In the process, he and his plan would kindle decades of robust economic growth. He would make the next few decades a continuation of the American Century.


Dog Investors

9 Oct 2008 /

Hi Everybody —

I saw this headline today on an Associated Press story:

Stocks Fluctuate as Economic Worries Dog Investors

Lightning on the Balcony

As a dog investor myself, I just wanted to assure you that I am not worried. In fact, I’m sleeping like a puppy . . .

The key to investing is taking a long-term view of the market. Stocks are down? It’s a buying opportunity!

Among the stocks I’m currently recommending are

  • PetSmart (PETM) – Woof woof!
  • Volcom (VLCM), Under Armour (UA) – I see lots of young humans wearing these brands.
  • BJ’s Restaurants (BJRI) – I’ve never been but my owner says it’s really good and always crowded!
  • Sonic Corporation (SONC) – I love the commercials with the two people talking in the car! So funny!

— Lightning paw


The Latte Factor

8 Sep 2003 /

Is $1 million really better than a good cup of coffee?

Someone has trademarked the phrase “The Latte Factor,” referring to his claim that you could save the $3.50 a day you’re spending on little things like coffee, invest it, and wind up with millions of dollars.

Cappuccino with dollar sign

I don’t doubt that under a certain set of assumptions, that’s true — although under another set of assumptions, you could invest the money and lose it all, in which case you’ve got no lattes and no money).

Continue reading The Latte Factor