Portfolio Weightings and Construction

Pay Attention to the Weightings of Your Individual Holdings When Constructing a Portfolio

One of the things that worries me from a risk management perspective is investors who don’t know what they own or their actual, real portfolio weightings. Sometimes, I’ll hear new investors say, “I own stocks” or “I own mutual funds” but neither is an answer. Those aren’t the relevant details. The real question: “In which enterprises, on what terms, and at what price has the money been invested, laid out, and exchanged?”. Much of everything else is a smokescreen serving to obfuscate reality. It’s risk-adjusted reward we’re after; reward measured in after-tax, net-of-inflation real purchasing power.

How Joe Campbell Found Himself $106,445.56 In Debt to His Broker in a Matter of Minutes Because He Didn’t Understand the Risks of Shorting Stock

One of the major themes running through my body of work, both on this site and at Investing for Beginners, can be summed up in the statement, “Know your risks”. I hammer it home all the time; “risk-adjusted return”, talk about remote-probability events, explaining how much of wealth building is learning to “tilt probabilities in [your] favor”, admonishment to never invest in something you don’t fully understand and couldn’t explain to a Kindergartener in a couple of sentences. Consider this real-life tragedy a morality tale that can help you protect your own family.

Homemade Rum Raisin Ice Cream with Cinnamon and Vanilla

Homemade Rum Raisin Ice Cream

I’m not sure what it was but a few nights ago, I had an overwhelming urge to begin planning our meals for the next two months, a big part of which I wanted to feature older recipes that don’t get their due. This autumn and winter, we’re going to cook like it’s 1700 – 1950; Shepard’s pie, German Christmas cakes, Yorkshire pudding, perhaps an Apple Dowdy from Colonial America. I want to go back and make things that get most of their flavor profile extracted from a handful of key ingredients; fruits, nuts, meats, liqueurs, or spices. Rum raisin ice cream was on that list.

Gender and Age of Joshua Kennon Demographics

Blog Demographics 2015 Edition: If Life Were a Game, You Would Be Champions

It’s time for our annual review of the blog community demographics! Actually, I hadn’t realized it since we’re busy launching the global asset management firm but a few of you sent me messages asking where it was so I wanted to take some time out to get the latest numbers up for you. The short version: Continuing the usual trend of winning, it will likely surprise no one that, since last year, you’ve managed to grow a bit older, mostly richer, and better educated. When people talk about the top of the socioeconomic bell curve, they are speaking about many of you. This community is extraordinary.

Two Cash Flow Levers

Revisiting the Two Levers Philosophy of Cash Flow Management

One of the major lessons I’ve tried to teach is that building your net worth comes down to two levers: Cash in and cash out. That’s it. That is the entirety of the game when you peer past the distractions and gaze into the heart of the mathematical reality. From a financial perspective, every action you take for your career or business ultimately only matters in so much as it someday serves to exert force on one of those levers so that more cash is flowing in than is flowing out, leaving a surplus. It sounds so simple but when you see things through the focus of this particular lens, you can more quickly identify the actions that are likely to have an outsized effect, both for good or bad, on net worth.