Mad Money Machine

MMM-057: Serendipity

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The Mad Money Machine is proud to be sponsored by Index Funds Advisors at ifa.com. I’m going to help you go through each of the 12 Steps for Active Investors with snippets of the author Mark Hebner’s own podcast.

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Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

Brian from Chicago wants to know more about how the show is made, how it has affected my life, and specifically now that it is weekly, if I still have my “day job” or is this a full-time gig? I begin a year-long answer on this show.

It’s just me in my home office with my computer and microphone, heavily editing the show until it is just right, then uploading it for your listening pleasure.

Can you find the link to read the book for free?

How and why did I get into investing? One of my early idols was Alex P. Keaton of Family Ties who read the Journal. Then when I got my first paycheck, I wanted to know how best to save it. Wall $treet Week to the rescue!

The “Ah Ha!” moment: After reading Phil Town’s Rule #1 and trying to manually figure out what stocks to buy, I realized that it is a game I cannot win because I don’t have the same access to powerful software that the pros use. There must be a better way. And there is.

Briar Rose from Colorado fell for the #4 ploy and called 206-734-4763 and misses the Guru segment. I complied and spun the wheel this week.

Next time “Are You Smarter Than a 5th Grader” comes on, instead of spending an hour with that, you gotta watch this instead. It explains everything. It is like taking the Red pill.

Also, I think I’ll buy a Tackamap!

Ah, the serendipity of finding great music on your own. On our way to Great Wolf Lodge, at a McDonalds I heard a song playing that I wanted to remember somehow. Thinking quickly, I took out my Treo and used a sound recording software program and held it up to the ceiling speaker. I replayed it recently, googled the lyrics, and behold… it’s KEANE! Nothing in my way.

IndexTown.com wonders why anyone who needs to pay taxes would e-file.

Jack Mackerel from Brooklyn wonders about the difference between Roth 401K and Roth IRA. And promises to get me some REAL Brooklyn style pizza when I come there.

Mark Lindsay wonders if the tide is changing in the stock market in the next few years as baby boomers retire and start taking money out. I think as Jeremy Siegel said in his book The Future For Investors, we will need a Global Solution where populations from other countries will buy our assets. But the best answer is, what is your risk capacity? If you fear a big market decline will impact your investments, then you should not be heavily invested in stocks. Also, it means that you must seek as much return as you can get for the level of risk you can accept. Tilting your portfolio more toward small cap and value stocks around the globe will help not only diversify but squeeze out some risk-appropriate returns.

I play the New Step 11. Thanks Anne Davis! Thanks Zach and Sara!

I read the abstract from the most popular academic paper from SSRN.com. It is Market Efficiency, Long-Term Returns, and Behavioral Finance by Eugene F. Fama.

I think the bottom line of the paper is this: If you find someone who says they have a technique for picking the next winning stock, unless it is one of the three factors of market, size, or value, Fama would say that they are wrong.

Something is happening here at the Mad Money Machine. There is a word that I did not say on show 57. If you know what it is, call me at 206-734-4763 and tell me how it makes you feel.

Why Paul DOUGLAS Boyer and not Paul Boyer? 1) PaulBoyer mushes together poorly 2) Its Google-rific!

Download the show directly MMM-057.mp3

Music from music.podshow.com

Alta Plaza – XRAY Dogs
Runaway Train – Under Feather
The Answer – Eric Vardeman