Frisco Financial Planning LLC

Investment portfolio design with a Christian worldview 
Tags


Filed under

biblical finance

 
February 13, 2010

Fear and greed in the bible

"Do not fear" appears in every book of the bible.

Greed is mentioned more than a few times as well.

There's definitely an investing lesson here...

"So do not fear for I am with you.  Do not be afraid for I am your God.  I will strengthen you and help you.  I will uphold you with my righteous right hand."  -- Isaiah 41:10

"Do not worry about tomorrow for tomorrow will worry about itself.  Each day has enough trouble of its own." -- Matthew 6:34

"A greedy man brings trouble to his family, but he who hates bribes will live."  --Proverbs 15:27

"With their mouths they express devotion, but their hearts are greedy for unjust gain."  --Ezekiel 33:31

Loading mentions Retweet
Filed under  //   biblical finance   christian finance   investing  
January 25, 2010

The inmates are running the asylum: eight ideas to permanently break Social Security

When I saw this headline, 8 Possible Social Security Benefit Changes, I was naively hopeful that fiscal responsibilty had stealthily infiltrated its way into D.C.

Sadly, I couldn't have been more wrong.  The article gives eight possible "improvements" to the program including:
  • Guaranteeing a minimum benefit
  • Reducing work requirements for eligibility
  • Supplementing benefits for low-income single workers
  • Increasing survivor benefits and
  • Providing longevity insurance
Sorry to be such a wet blanket, but since it's common knowledge that Social Security is on a certain trajectory towards bankruptcy, shouldn't we be looking at how to make good on the existing promises rather than promising even more?

Related (courtesy of Wikipedia):

A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going...  Knowingly entering a Ponzi scheme, even at the last round of the scheme, can be rational economically if government bails out those participating in the Ponzi scheme. If governments use newly created currency to bail out the scheme victims, the newly printed currency will devalue the rest of the currency in circulation, meaning all holders of that currency will suffer inflation to the currency. However, Ponzi schemes cannot last forever.

"He deprives the leaders of the earth of their wisdom, he sends them wandering through a trackless waste.  They grope in darkness with no light.  He makes them stagger like drunkards."

-- Job 12:24-25

Loading mentions Retweet
Filed under  //   biblical finance   government shenanigans   social security  
January 18, 2010

Respect uncertainty

"It ain't what you don't know that gets you into trouble.  It's what you know for sure that just ain't so."
-- Mark Twain

As humans, we tend to have a very high opinion of ourselves, particularly when it comes to overestimating our skills and abilities.

This is abundantly apparent in our attempts to predict the future.  It's a particularly dangerous exercise when it comes to investing because not only are we woefully bad at predicting outcomes, but even when we get it right, it only "counts" if we were right and the market consensus was wrong (if we know something that everybody else knows, it's not terribly useful).

How much do you think you know about the future?
Cut it in half.  Ten times.  Now you may be close.

"Since no man knows the future, who can tell him what is to come?"
-- Ecclesiastes 8:7

"The race is not to the swift or the battle to the strong, nor does food come to the wise, or wealth to the brilliant, or favor to the learned, but time and chance happen to them all."
-- Ecclesiastes 9:11

"Cast but a glance at riches and they are gone, for they will surely sprout wings and fly off to the sky like an eagle."
-- Proverbs 23:5

Build an investment plan based on an unknowable future. 
Have a healthy respect for uncertainty.

Loading mentions Retweet
Filed under  //   biblical finance   investing  
January 4, 2010

Think you're a genius? Take this online test to find out but don't invest based on high IQ

Think you're a genius?  Find out with a short, psychometrically valid IQ test.  But don't invest based on a high IQ (yours or anyone else's).

 

MENSA, the organization whose membership is limited to those who test in the top 2% of IQ's, had (and may still have) an investment club with shockingly bad results.

 

From Eleanor Laise’s article “If We’re So Smart, Why Aren’t We Rich?, Dow Jones Newswire, May 15, 2001:

 

"The club's recent record has been nothing short of a fiasco, thanks to an overweighting in trendy tech stocks and pitifully bad timing… all told, the club saw the value of its assets fall by more than 40 percent over the past 12 months. One member said 'we can screw up faster than anyone else'; another, a member since the mid-1960s, describes its investing strategy as 'buy low, sell lower...'  From 1986-2001, the club’s investments returned an average of 2.5 percent a year (versus, for example, the S&P 500’s 15.3 percent)."

 

Ouch.

 

And let's not forget the Nobel Laureate rocket scientists who brought the entire U.S. financial system to the brink of collapse via the hedge fund, Long Term Capital Management.

 

"For the foolishness of God is wiser than man's wisdom, and the weakness of God is stronger than man's strength."

1 Corinthians 1:25

 

"May I never boast except in the cross of our Lord Jesus Christ, through which the world has been crucified to me, and I to the world"

Galatians 6:14

Loading mentions Retweet
Filed under  //   biblical finance   investing