Ill-Advised Business Press Photo - Pt. 2

WE TOLD YOU

How Selling A Car Works

I later found out that the first pencil is arrived at by the dealership in a very unscientific way. For every $10,000 that is financed, the down payment they try to get is $3,000 and the monthly payment they try for is $250. In this way, a $20,000 family sedan would require about $6,000 down and a $500 a month payment. (These payments are based on very high interest rates calculated on five-year loans. These numbers are so inflated that a manager I later worked with laughingly called them, "stupid high numbers.")

Confessions Of A Car Salesman

Advice To A Friend Getting Started

As anyone in finance will tell you giving advice to friends and family is a double-edged sword. 

After the jump is an excerpt from a conversation I had with a friend in December. The advice is being posted here because the product explanations and basic portfolio allocation thoughts are relevant to almost anyone who is doing some investing for the first time. 

Some bullet points:

- ETF's are the way to go for the lion share of the novice investors portfolio. The concept can be difficult to grasp/explain for first-timers but is important. 

- "Buy low and sell high" is wrong. Companies making new highs present some of the best investment opportunities. 

- Invest in what you know. Your specialty, line of work, and personal experiences are an edge you bring to the market.


The indiviudal stock picks discussed since:

It's Got More To Do With Not Losing, Than Winning

Someone close to me had a windfall last year and correctly realized they need to do something to try and make it last. In my advice/allocation I gave a large weighting to Pimco Income Opportunity (PKO) and feel it's a good opportunity for almost all portfolios. Pimco is one of best active managers out there, having access to them with intraday liquity available is under publicized. I like the pretty broad exposure to higher return debt markets, the 9% yield that is paid out monthly, and it's price appreciation looks to be roughly half of the downside of equity market and equal on the upside

The title of this post is learned from the school of experience and is one the most important epiphanies to have success in the money game. To further paint this picture an example: counting linear to thirty (1..2...3... etc.) takes thirty turns whereas counting in an exponential fashion (2....4.....8....etc.) thirty turns you get to a billion. Shocking indeed. Now think of a modest loss on an investment, say 10% of $10,000, to return to your original amount you need earn 11%. No sweat am I rite? To contrast if the loss was 50%, a 100% return is needed to make it back to break-even. "The most powerful force in the universe is compound growth". You know who said that? Einsten, bro (emphasis mine).

Circling back to the PIMCO product. It's yeilding 9%. On a monthly basis. What is the effect of more payout periods? It increases the rate of compounding. In a down market (2008) it out-performed the stock market by 16%. In an up market it returned 41% well over the 28% return of the average. To reiterate for effect - What would Einsten do if he was a market wizard in his day? He would tell you it's got more to do with not losing, than winning.

In my niche of this industry that's upside and downside capture that can warm hearts and win minds. And fill wallets. (yours) Seriously a great product.

disclosure/legal: i own shares. if loss of money, blame the physics professor (pictured)

Still Love The Guy

Even with that Chile 'experiment' taken into account. This is pretty rich.

Market is selling off today. I could see another 4-6% of downside.

Previously mentioned picks NFLX and GMCR: