Tag: Finance

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TreasuryDirect is My Favorite Way to Buy Bonds

A color plate image of Christie's Auction House in London, from 1808.

I love TreasuryDirect! It’s a free site run by the US Government to allow all citizens to buy US Government debt securities. You can buy several types of savings bonds, and more importantly, you can directly participate in treasury bill, note, and bond auctions. This means that individual investors with as little as $100 can invest on perfectly equal footing with huge institutional investors. They all get exactly the same pricing. It’s amazing! I don’t think there’s any other situation in which an individual can buy a security for such a small amount and get exactly the same terms as CALPERS buying hundreds of millions of securities at the same time. It’s a true egalitarian marvel.

It’s actually slightly dumb for me to even write this article because the service is directly competitive with my core service offering as a fee based financial adviser. The more that my clients or potential clients invest with TreasuryDirect, the less they invest with me, and the less money I make. But I don’t care, it’s such a cool system that I want lots of people to know about it anyway. But before we dive into TreasuryDirect, let’s take a look at how US Treasury auctions work…

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Questions You Should Ask Your Financial Adviser

Working with a financial advisor can be one of the most important decisions you make for your financial future. A good advisor acts as a trusted guide, helping you navigate complex financial matters, plan for your goals, and make wise investment decisions with your hard-earned money. But not all financial advisors are created equal. With so many options out there, how can you find an advisor who is truly qualified, has your best interests at heart, and will be a good fit for your needs?

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Is the S&P500 Index Actually Diversified?

The S&P 500 index, a widely followed benchmark of the U.S. stock market, has long been considered a reliable indicator of the overall health of the economy. However, a closer look at the index reveals a surprising concentration in big tech stocks. This phenomenon is not only a reflection of the growing dominance of technology companies in the market, but also a result of the market-weighted structure of the index. Let’s explore the reasons behind this concentration and discuss the potential risks it poses to investors.

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Five Reasons to not Panic in a Bear Market

2022 has been an extremely bad year for almost every asset class! Stocks and bonds have suffered large losses. And inflation has been high, further eroding the value of investors’ savings. In a bear market, it is absolutely critical for long term investors to avoid panic selling at all costs.

I generated this text in part with OpenAI’s large-scale language-generation models. Upon generating draft language, I reviewed, edited, and revised the language to my own liking and I take ultimate responsibility for the content of this publication.

raccoon businessmen panicking in dusty city experiencing a bear market
A painting of raccoon stockbrokers panicking during a market crash – StableDiffusion v1-4
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Critical Flaws in Binance and Other Crypto Exchanges

For most of 2022, financial news has been filled with stories about big losses across all asset classes. But one of the biggest losers has been cryptocurrencies like Bitcoin and Ethereum. This has led to many investors reconsidering their allocations to cryptocurrency. I don’t recommend cryptocurrencies as an investment for any of my clients, but the topic does come up occasionally. But let’s set aside any recommendation I have about cryptocurrencies themselves. I’d like to bring up a recommendation I have about the various methods of cryptocurrency investing. In short, I strongly recommend against using an online exchange such as Binance to invest in cryptocurrencies.

an example of a mobile investing platform like Binance
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Direct Indexing in Luther Wealth’s Future

In the great divide between active and passive investing strategies, Luther Wealth is definitely in the passive camp. All of my clients are fully invested in low cost mutual funds and ETFs. I use a proprietary asset allocation algorithm, but the securities themselves are just vanilla index funds. But lately I have been considering altering this ETF strategy for certain clients. Not in favor of an active strategy, but rather in favor of a different passive style known as direct indexing.

direct indexing can be implemented in the interactive brokers platform
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Stock Buybacks Aren’t Evil

I have read several articles over the past year that include some harsh criticism of corporate stock buybacks. Most include a version of the argument: “President Trump’s tax cuts went primarily to wealthy Americans and corporations. Corporations squandered this windfall with stock buybacks to pump up their own stock price.” This sentiment is a little off-the-mark, but I understand the impulse. So I wanted to take a minute to work out the details on why stock buybacks are not so bad.

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