Hook em While They're Young

Have you ever tried bringing up the stock market in casual conversation around friends and family? It's an odd experience. You are likely to get a variety of reactions. Some raised eyebrows, some crinkled foreheads, perhaps a tirade against big business or curiosity surrounding the mystery the market represents for most Americans. The average American knows next to nothing about the stock market and views it with a mix of suspicion, derision and awe. Many think of it as that place that rich people make their money. Others think of it as gambling but a lot less fun. Many don't even realize that they are stock owners themselves because they don't truly understand how their pension plans, 401K and IRAs work. I try to raise the collective financial IQ of those around me but I often feel like a door to door evangelist but instead of asking "have you been saved?" I ask "have you saved for retirement?"

Perhaps the lack of education is because our parents depended on company pension plans and social security to take care of them in retirement. They didn't need to know about the stock market so they simply don't have the knowledge to pass on. Unfortunately, the world has changed and company pension plans are nearly extinct and social security is on life support. Our education system reacts to the changing world about as well as the Titanic reacted to that iceberg.   Read more...

Buy American!

Growing up my father always told me to work with my mind instead of my back because my mind will last a whole lot longer. My mother always said that I need to go to college, get a degree and find a job with a big company and if I stay with them for 30 years they will take care of me when I retire. Well, as far as advice goes I am going to give the edge to my father on this one. It is not that my mother was wrong, at least not when she said it, through the late 1980’s and early 1990’s. The world changed and that advice became obsolete. Employers have retired traditional retirement plans. Now we are left to fend for ourselves with 401Ks and what is left of Social Security.

If you have a self-directed 401K or IRA or perhaps you simply have a long investment horizon (5 years +) I have a bit of sage wisdom for you. Buy American! I am a veteran of the US Army and I definitely consider myself a patriot but that is not why I believe in investing in American companies. I believe in investing in companies you know and businesses you understand. You should own companies that you don’t need to subscribe to the Wall Street Journal (great publication by the way) to hear about. You should see their advertisements on the television and in magazines you read. Read more...

Netflix: Their Perfect Blunder?

Eleven months ago Netflix (NFLX) was on the verge of becoming a $300 a share stock, a milestone Apple (AAPL) was striving for at that time. While Apple reached its peak at nearly $630 a share and is still valued in the upper $500 range, Netflix has plummeted to $62 a share.  A lot can happen in eleven months. What is so tragic about Netflix’s fall from grace is that it was entirely their doing. If an analyst wrote a script on how to drive Netflix customers away, I expect it would look exactly like what happened from July to September in 2011.  

Netflix and Coinstar’s (CSTR) Redbox had already sent Blockbuster into Bankruptcy proceedings and Netflix was still light years ahead of every would-be competitor in the streaming video market both in technology and content. Customer satisfaction was sky high, subscriber numbers were over 23 million and climbing and then it happened. In July of 2011, Reed Hastings, CEO of Netflix, announced that as of September 1^st, 2011 Netflix was going split the streaming and DVD delivery services and charge a separate fee for each that equated to a 60% price hike. Public outrage erupted immediately. The Facebook (FB) post in which Netflix announced the price change received over 28,000 comments many of which were customers threatening to cancel their subscriptions. Read more...