When we watch the news, we hear how every day events are "drastically shaping" the market, and on a day-to-day scale, the market seems volatile. How does anyone invest for the long-term? Mike uses several big ideas to shape the way he puts his portfolios together. While not every investment is right for you, Mike thinks that arming yourself with knowledge and perspective can help you make the right choices.
We invite you to take a look at some of our blogs on Mile High Investing for some big ideas, long term investments, and a new perspective on creating a portfolio that is "ahead of the curve."
The common belief is US jobs are going overseas where labor is cheaper and restrictions are more lenient. Is this really the case? Based on Robert Lawrence and Martin Bailey’s study in 2006, only 10-percent of the jobs lost were exported. The other 90-percent were lost because of increased productivity and demand. What does this mean for US workers? It means education is even more important. As technology continues to increase machine driven production, more blue-collar jobs will continue to disappear. Their disappearance has caused the demand for continuing education to skyrocket. Just two generations ago, one out of every five people in the US went to college. Today 65 percent of high school students continue their education. To be a professional now demands exceptional technical skills and an increased wealth of industry specific knowledge. Even blue-collar jobs require more skill than they did just 10 years ago. How does someone keep up with the rigorous demands of today’s educationally driven economy? Professionals take continuing education classes to stay ahead of the curve. The increased demands on their time have led to revolutionary learning options, such as online classes and quick refresher courses sent to mobile devices. Examples of this are the classes provided by Shaun England’s LearnLive Technologies. For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more! I want to hear your opinions; please leave a comment below and let me know your thoughts.Read More
Disruptive technology shakes up the norm. It unexpectedly displaces an established technology and forces the standard man outside of his comfort zone. Often arising during financial crises, disruptive technology sprouts new inventions and increases efficiency. Often in the midst of this chaos wild predictions are made about the future. On March 22, 1876, the New York Times made this prediction: “Thus the telephone, by bringing music and ministers into every home, will empty the concert-halls and the churches.” For an investor, disruptive technology has the following important implications – big opportunities and accompanied with the need for intelligent deduction. The catch is, traditional Blue Chip companies usually make incremental changes rather than disruptive ones. This causes them to risk loosing market share to upstart companies. They become what I call “Black and Blue Companies.” For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more! I want to hear your opinions; please leave a comment below and let me know your thoughts.Read More
What sets businesses apart? Why do some succeed and some fail, especially during economic down turns? As an investor, these are extremely important questions. Understanding them is the key to making decisions about where and how to invest. To answer these questions, I’ve been doing a series on About Money. Each week I’ve been joined by a different CEO or President from a company which survived the Great Recession and is now flourishing. I believe all of these companies demonstrate qualities which distinguish them from their competitors: People – These companies recognize the value of their own staff and customers. Putting people first ensures consistently great service is provided. Inventive – These companies are not installing the newest technology. Rather, they create disruptive technology, ensuring their products and services are always on the cutting edge. For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more! I want to hear your opinions; please leave a comment below and let me know your thoughts.Read More
History doesn’t repeat itself, but it does rhyme. With each recession and depression one thing is certain, crisis breeds profound change. As an investor, this is important because change means opportunity. Are we about to dip into another recession? I don’t believe so. Disruptive technology is creating a new wave of economic growth. The Standard Charter Bank identified two economic Super Cycles [times during which the world’s Gross Domestic Product (GDP) grew faster than the average]. They said the first two were: 1870 – 1913 (driven by the United States’ industrialization) 1945 – 1970 (driven by the rebuilding of Europe) They have identified a third Super Cycle, and we are in the midst of it. It began in 2009 and is being driven by the growing economies of emerging nations. As the world’s middle class begins to expand and the standard of living rises across the globe, I believe we will see the United States’ exports increase. We’ve already seen an increased demand for healthcare services and supplies. For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more! I want to hear your opinions; please leave a comment below and let me know your thoughts.Read More
Have you ever gotten a particularly nasty infection? The kind of infection which won’t go away until your doctor prescribes antibiotics? I have. It’s magical what those little pills can do. Yet in 1918 when WWI was ending, there weren’t any magical cures for disease. The Spanish Flu took the lives of an estimated 50 to 100 million people. It often killed within 48 hours of its victim’s first cough, filling their lungs with fluid. The epidemic triggered years of unfruitful research. Scientists in small labs around Europe worked with samples of the Spanish Flu virus. However, it was in Scotland where Alexander Fleming had a break through. In 1928, Fleming took a vacation from his Petri dishes. Leaving the windows to his laboratory open, he came back to find a green mold growing on his samples. We know this mold as penicillin. Turning mold into medicine wasn’t easy. It was a temperamental process with an extremely low yield. The isolation and extraction process was very difficult. It took almost a decade and a half for penicillin to be mass-produced. For the next 50 years, drug discoveries happened in nearly the same trial-and-error method as Fleming’s. Real changes in drug discovery came when James Watson and Francis Crick identified the DNA-helix – the molecule that carries genetic information from one generation to another. When I first heard about the helix, I remember thinking, “So what?” How wrong I was! The helix led to biotechnology and revolutionized the drug industry. With biotechnology, drugs which were once stumbled upon are now engineered. For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more! I want to hear your opinions; please leave a comment below and let me know your thoughts.Read More
Disruptive technology. It’s one of those buzz terms thrown around constantly. If you have listened to my show, About Money, or read other posts on my blog, you’ve definitely heard the term. Get ready to hear more about it. Why? Because it’s important. Because as a smart investor you need to be aware of what disruptive technology is and how it affects business. Because disruptive technology means buying stocks and sticking them in a drawer is not a reliable investment option. Change is happening too fast. What is disruptive technology? It’s when a new product or service displaces the status quo and creates a new market and value network. “Innovative” is commonly thrown into the disruptive technology conversation. Nearly every company, from the big mega-corporations to the small one-stop shops, claims to be “innovative.” In my opinion, “innovative” is an over used term. But, it’s understandable. All companies want to be on the cutting edge. With the accelerated pace of technological evolution right now, if you have an idea and you don’t move fast, you’ll miss your opportunity. Recently, I was joined on About Money by Seaton Gras, founder of SURF, and Neil Bergquist, director of SURF. SURF stands for Start Up Really Fast. Typically, I bring heads of companies on About Money. SURF is a little different. It’s an incubator – a community of inspired individuals who feed and foster one another’s growth. Offering co-working space in downtown Seattle, SURF helps entrepreneurs develop their disruptive ideas into successful businesses. For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more! I want to hear your opinions; please leave a comment below and let me know your thoughts.Read More
Did the Great Recession make you weary of real estate investments? Or, were you among those who benefited from short sales and foreclosures? Nearly all of us were hit by the economic fallout. While this might make us shy away from investing, it’s important to remember every economic problem creates the potential for economic gain. Making smart decisions as we move forward requires a firm grasp on where we’ve been. Many historical factors can help intelligently influence our understanding of current and future markets. Here are a few things to understand about the housing market: Collateralized Mortgage Obligations In 1983, Gordon Taylor and Dexter Senft from Saloman Brothers developed the idea of bundling mortgage payments into $1000 increments which they sold to investors. These bundles became known as Collateralized Mortgage Obligations. How did this create a profit? For example, if a mortgage had a seven percent interest rate, they paid investors six percent. This was good for banks because they could get money from investors to make loans on which the banks would make a margin. They were also able to spin the risk off to the investors. If borrowers defaulted on their loan, it was the investors who mostly lost. This development was also good for homeowners because it created a pool of money from which they could borrow to buy a home. And, it was good for Wall Street because they profited from the fees this process created. Collateralized Debt Obligation Spring forward roughly 20 years. The principle of Collateralized Mortgage Obligation was expanded to more than just home mortgages. This became known as the Collateralized Debt Obligations. Loans (for anything from homes to cars, planes, vacations, and boats) were bundled into bonds called Tranches. Think of Tranches as building blocks, stacked one on top of another. The first money to come in paid off the top block and so on and so forth. Meaning, the bottom Tranches had the most risk. Lenders were able to get Tranches rated by rating agencies which used the historical default rate on mortgages to determine the bond’s worth. To cover the potential default from borrowers, a few additional mortgages were added to the bond beyond the bond’s determined worth. Thus, the bond appeared to be a foolproof investment. Unfortunately, if too many borrowers defaulted, bond holders took a cut. REPO In the 1930s, Congress and the President signed into law the Federal Deposit Insurance Corporation (FDIC). This insured individual accounts up to $100,000 should a bank fail. However, in the 1970s depositors began carrying much higher balances, in the $10 to $100 million range. These large depositors wanted insurance. To insure depositor’s money, banks created REPO (short for repossess). REPO normally consisted of Collateralized Mortgage Obligations and Collateralized Debt Obligations. Adjustable Mortgage Rates Adjustable Mortgage Rates were created out of the big push to sell more and more homes. Teaser rates offered low mortgage rates, such as 0.5, 1.0, and 1.5 percent, for a given period of time. This low rate was then adjusted to a much higher percentage, requiring homeowners to pay significantly increased sums. During this same time, No Income No Job No Asset Loans (NINJA Loans) were introduced. Borrowers needed no qualifications to buy a home. Lenders saw NINJA Loans as a win-win. If the borrower defaulted with an annual property value increase of 14 or 15 percent, they could sell the home and still turn a profit. Artificial Drops Part of the initial dip in the housing market was artificial. For example: Four homes are sold in one year, two for $500,000 and two for $100,000. The average home price would be $300,000. One year later, the people who bought their home $100,000 sold for $200,000 and the people who bought for $500,000 sold for $1 million. The profit would be a factor of two. But, suppose the new buyers for the $500,000 home (now priced at the inflated $1 million) didn’t get financed and the sale didn’t go through. It would appear home prices fell by 50 percent. In reality, they’d increased by 100 percent. This example is grossly exaggerated, but done so to illustrate what was happening – high-end homes were not selling. Lower priced homes were. Additionally, understanding what helped some companies succeed can help you identify those same characteristics in potential future investments. Each week on About Money, I interview a successful business owner whose company survived the Great Recession. For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more! I want to hear your opinions; please leave a comment below and let me know your thoughts.Read More
You load sixteen tons, what do you get Another day older and deeper in debt O’ Saint Peter don’t you call me yet I owe my soul to the company store – Sixteen Tons, by Ford Tennessee Ernie I remember when Tennessee Ernie Ford sang Sixteen Tons. It described working conditions 100 years ago and the control a company had over its employees. Men worked for the same company their entire life. The company provided housing. People bought everything from groceries to clothes on credit at the company store. On payday, the company took what it was owed straight from their paycheck. I imagine this kind of life was a lot less stressful. You didn’t worry as much about losing your job or your home. You knew you always had a place where you could get food. Your life had no uncertainty. A clear path was laid out for you. By the 1950’s when this song came out, this lifestyle was disappearing. People were becoming more mobile. They were buying their own homes and going to college. Supermarkets opened and purchases were made with cash rather than a line of company credit. Even one generation ago, men kept the same job for an average of 13 years. Now, the average tenure with a company is just eight. The Occupy Wall Street movement, with its “99% verses 1%” slogan, brought the nations wealth inequality to the forefront of people’s attention. The wealthier have gotten wealthier, while the 99 percent have essentially kept the same income. What it doesn’t illustrate is the standard of living seems to have improved for everyone. In 1960, the poverty rate was 22 percent. By 2000, it dropped to 11 percent. The standard of living since the 1960’s has drastically improved, even with the effects of the Great Recession. Take the TV for example. I remember when we didn’t have remotes. Many TVs were black and white. My parents spent an enormous sum for a large color TV. Today, you could spend that same amount for a screen two or three times the size, with better definition. The standard of living’s improvement has run parallel with the increase in workplace stress. In 2008, studies show a large majority of people worried about losing their job. But, what do these changes mean for investors? It means investors need to choose companies with the ability to adapt, gain productivity, and reduce costs. It means investing in companies which can save other companies or the government money.Read More
How relevant are you? In today’s market, technology and productivity are turning routine jobs into machine automated ones. When I graduated from high school, you could always work in a factory or as a ditch digger if you didn’t go to college. Now, many jobs with a reproducible input-output are being replaced by computers. You might expect only manual labor jobs to be eliminated by technology, but every industry faces the same push for productivity. For example, lawyers face the same “relevancy” test. In 1978, a case study examined six million documents. It required an army of lawyers and paralegals, which cost more than $2.2 million. In January of 2011, Blackstone Discovery of Palo Alto, Calif., helped analyze 1.5 million documents for less than $100,000. That’s a lot of jobs replaced by computers. What does this mean for job seekers? It means education will continue to be more and more vital in the job market. You’ll need more to earn a living than just the sweat off your back. Relevant technical skills will be a top priority for recruiters. In his recently released book, That Used To Be Us, Thomas L. Friedman said job seekers will need three qualities: Think Like an Immigrant – Work like the world doesn’t owe you anything. Think Like an Artisan – Look outside the box for new ways to accomplish tasks. Think Like a Waitress – Always go above and beyond your job description. For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more! I want to hear your opinions; please leave a comment below and let me know your thoughts.Read More
“All of our jobs are going to China.” “Everything is made in Taiwan.” “Nothing is manufactured in the United States anymore.” I hear those sayings a lot. Don’t you? I want to set the record straight. Since 1979, the United States has lost over 8 million manufacturing jobs. It may seem like those jobs are going overseas, but it doesn’t quite work that way. Yes, some manufacturing jobs are going overseas. But not as many as you would think. In 2007, just before the Great Recession, the United States produced more manufactured goods than ever before. We produced more goods than any other country. In fact, we produced just over one-fifth of the manufactured goods in the world. Then why does it seem we’ve lost manufacturing jobs? Because we have. Productivity has eliminated jobs. For every $1.00 of product a person produced in 1967 they are now producing $3.82. Job market shifts have occurred throughout history. Productivity consistently creates them. In 1850, there were 23-million people in the United States. Eleven million of them were employed on the farm. By 1900, the United States grew to 76 million people, but only 20 million of them were farmers. The introduction of tools like tractors, combines, and more efficient forms of transportation increased productivity and shrunk farm industry jobs by 33 percent in just 50 years. Less people were needed to produce more. By 2004, only 1.6 million people worked in the farming industry. Yet, they produced 600 times as much food as the United States did in 1850. In 2007, 29 million people were terminated by being laid off or retiring. But, 31 million people were also hired. Most of the 29 million jobs were eliminated and most of the 31 million jobs were completely new. For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more! I want to hear your opinions; please leave a comment below and let me know your thoughts.Read More