Walter Mischel, psychologist and professor at Stanford University conducted an experiment in the 1960s about delayed gratification and published his findings in 1972. In the study, a researcher explained to a child they could either have one marshmallow immediately or two marshmallows if they waited 15 minutes.
True Confessions of a Financial Advisor
As of Friday, the 29th of July, except for the NASDAQ market, the US equity markets recovered somewhat from the bear market correction. A bear market is a loss of 20% from the previous high. In the first six months of 2022, the equity market had lost over 80% of what it gained in 2021 and entered a bear market correction.
What is a Recession?
Two weeks ago, the latest Consumer Price Index data (the index that measures inflation) had risen 1.3% in June, bringing headline inflation up to 9.1% and core inflation (excludes energy and food) up to 5.9% over the last 12 months. With increases this large, it’s not surprising to know this has been the most significant 12-month increase since November of 1981. With inflation on the rise, the war in Ukraine, and the stock market in bear territory (when stocks fall at least 20% off their highs), are we doomed for a recession?
Equity Compensation Concentration: When is enough, enough?
How to Get the Most Out of Your Equity Compensation
Growing up, my parents instilled two philosophies in me; to always live below my means and save for the future. Those simple words of wisdom resonated with me and unknowingly shaped my personal and professional life. Through my parents’ guidance, anytime I’d get a cash gift, I’d put some away in savings (i.e., my very secure piggy bank) and spend the rest on myself (i.e., probably on candy or something of the sort).
Understanding Your Compensation Package
Rising Interest Rates, The Economy, and Your Portfolio
For the first time since December 2018, the Federal Open Market Committee (FOMC) voted at its March meeting to raise the federal funds target rate range by ¼ percent to 0.25% - 0.50%. Following this initial increase, the median voting member expects seven more rate hikes in 2022 and an additional four hikes in 2023.
Should You Sell Your Stock Compensation When It Vests Below the Grant Price?
There has been no shortage of volatility with global equity markets on a rollercoaster ride this year. A steep drop in prices scares investors and heightens our senses to pay attention to avoid making mistakes. However, this fear can lead to indecision or taking no action.
Russian SWIFT Sanctions and Your Portfolio
War in Ukraine
Our prayers and thoughts are with the Ukrainian people who are suffering immeasurably at the hands of the Russian military today. To characterize this as "geopolitical risk" that will impact our portfolios seems insensitive. Millions of Ukrainian people woke up today with plans to go to school and work, meet up with friends, or start vacations, and instead have bombs falling on their cities as Russia commits to war on their land.
Crash Course on NQSOs and Taxes
As we head into the throes of tax season, investors will be getting a slew of tax documents to report on their tax returns. Tax filing can be complicated even further by adding equity compensation into the equation because there can be (1) multiple tax reporting forms for one transaction, (2) different tax treatments based on the type of compensation (3) specific rules for varying strategies.
Any equity in Incentive Stock Options (ISOS)?
An incentive stock option (ISO) is a form of equity compensation where the employee has the right to buy shares of the company at a discounted price with special tax treatment. An ISO is a long-term incentive that replaces cash compensation and encourages employees to contribute to the company’s growth and development, hoping the options grow in value over time.
The Decade of the Tech Stock?
Stock Options Explained Using Amazon as an Example
Trade is the Word
For the past 18 months, two hot button issues for investors have been the Fed and trade negotiations between the U.S. and China. These two issues were the catalysts for two market corrections in 2018, the latter of which nearly approached bear market territory. However, for the first five months of this year fears of a Fed misstep were alleviated and reported positive progress towards a trade deal between the U.S. and China spurred markets to new all-time highs.
How Can I Participate in a Initial Public Offering: Don’t Get IPO FOMO
On Friday, Uber went public in the what is the biggest initial public offering (IPO) so far this year. Earlier this month, Beyond Meat went public with less hype and saw its price skyrocket 163% in its first trading day, making it the best-performing first-day IPO in nearly two-decades. Beyond Meat is a producer of plant-based meat substitutes founded in 2009. The company’s Beyond Burger is sold at Whole Foods and restaurants chains around the country.
Dimensional Funds: Dimensions of Higher Expected Returns
At HIGHLAND, one of the cornerstones of our investment approach is that securities offering higher expected returns share particular attributes, which we refer to as the dimensions of higher expected returns (or dimensions for short). These dimensions are based on economic theory, backed by Nobel Prize winning academic research, and supported by decades of real-world historical data. Dimensional Fund Advisors is an investment management firm with a long history of applying academic research to practical investing and is one of our preferred investment managers. Dimensional Fund Advisors defines a dimension as a return difference between two assets or portfolios “that is sensible, empirically robust in the data, and cost-effective to capture in well-diversified portfolios.”
The Resulting Fallacy: Good Outcomes Aren't Always the Results of Good Decisions
When Tiger Woods won the 2019 Masters earlier this month, it capped off one of the greatest comebacks in golf history, if not one of the best comebacks in the history of all sports. Woods’s last Masters tournament victory came in 2005 and his last major tournament win was back in 2008. In this 11-year span between major wins, Woods faced a very public divorce, was arrested for driving under the influence, and battled a number of injuries. With his latest Masters win, Woods has 15 major tournament wins and is now three behind Jack Nicklaus for most of all time.
Stocks for the Long Run to Build Wealth
Over the past few weeks most of our posts have focused on putting the recent stock market volatility in perspective and subduing concerns about the strength of the U.S. economy.
One of the important points we have stressed is the importance of remaining disciplined to your investment strategy because capital markets have rewarded long-term investors. One of the graphics we often show to illustrate this point is the chart included below. This chart shows the growth of $1 from January 1, 1926 through December 31, 2018 had you invested in US small cap stocks, US large cap stocks, long term corporate bonds, long term government bonds, and cash.
Market and Economic Commentary
What a difference a year makes. This time last year we were highlighting a picture-perfect year for global stocks. In 2017, both the S&P 500 and the MSCI All Country World Index ex USA were positive for all twelve calendar months. This was the first time either index accomplished this feat and it happened with near-record low volatility while enduring geopolitical tensions, political dysfunction, massive natural disasters, and tighter monetary policy. 2017 was defined by synchronized global expansion whereby most global economies were getting stronger, with the United States leading the charge.