FINANCIaL
FIELd NOTES
Is Hyperinflation Coming?
A few weeks ago, on the heels of the highest inflation reading in 30 years (5.9%), Jack Dorsey, the founder of Twitter and Square, tweeted the following -
“Hyperinflation is going to change everything. It’s happening.”
It instantly sparked a lot of concern, and then debate. Exactly what is “hyperinflation” and are we heading toward it?
Why Average Returns Are Misleading
I often write about financial planning strategies that assume a rate of return. I try my best to use reasonable assumptions but even these assumptions can be misleading.
For example, the average return was 10% for the S&P 500 (or similar index) over the past 90+ years. Investing would be a whole lot easier if we could have the assurance that the 10% would come every year. Unfortunately, it doesn’t work that way…
Why Chasing Winners Rarely Works
Having a diversified portfolio can be an agonizing experience. On one hand, you will always have some exposure to the best-performing investments, but it will never be as much as you want it to be.
For the past decade, it has been difficult to own small-cap stocks, international stocks, and value stocks. US growth stocks and REITS have been some of the best investments. But even these investments have had some terrible years…
How We Can Interpret Data Better
My favorite read last year was Factfulness by Hans Rosling. It provides insight into how to approach data - particularly data related to hot button issues. A lot of the book can be boiled down to “ask the next question.“
For example, the other day I saw this headline - “Pasta may be good for your heart health.” I love pasta as much as the next person but I was skeptical…
Being Greedy When Others Are Fearful Is Hard
You have likely heard the saying “Be greedy when others are fearful, and fearful when others are greedy.” It sounds simple in theory – be a buyer when stocks are cheap and a seller when they are expensive.
But why is that so hard?
How to Pay 0% Capital Gains Tax
When you sell an investment for a gain outside of a retirement account, you typically pay “capital gains tax.” For example, if you bought an index fund for $10,000 and sold it for $15,000, you would have to report the $5,000 gain as income on your tax return.
There are only 3 main federal tax brackets for capital gains. You are either taxed at 20%, 15%, or even 0%…