It is going to be a quiet couple of weeks here on Begin To Invest…. Here is what I am reading this week and a few things to keep you busy while I’m on a break. Topics include: The world economic forum in Davos, Roth IRAs, physics, characteristics of the worst performing index funds and more.
DAVOS 2014:
The world economic forum is currently underway in Davos, Switzerland. Over 250 talks by some of the most famous names in finance, economics and business. Most talks can be viewed live online from the site here: http://www.weforum.org/events/world-economic-forum-annual-meeting-2014
Obviously not all of the talks will interest everyone, topics range from the economics of the art industry to investing in clean water. But there are a few talks that investors should enjoy. Here is one that caught my attention yesterday:
“New Digital Content”
This discussion featured the CEOs of Yahoo, Salesforce.com, AT&T and Cisco. Some extremely insightful comments on the future of tech.
http://www.weforum.org/sessions/summary/new-digital-context
“Europe will see a doubling in mobile bandwidth over next year.” -Randall L. Stephenson, AT&T CEO
“By the end of this year, we will have more mobile traffic than PC traffic.” – Marissa Mayer, Yahoo CEO
These are some huge market trends that mean billions or even trillions of dollars for tech companies in the next few years. Something investors should keep their eyes on.
A full list of programs at Davos can be found here: http://www.weforum.org/events/world-economic-forum-annual-meeting-2014/programme
Rise of the ROTH
http://www.reuters.com/article/2014/01/22/us-column-miller-roths-idUSBREA0L14A20140122
Reuters is out with some new numbers on the popularity of ROTH IRAs recently and specifically the conversion of Traditional IRAs to ROTH IRAs. The article does a great job running down the basics of each, and why investors would benefit from converting.
For those interested, we have information on the differences of ROTH IRAs, IRAs and 401ks on our website here: http://begintoinvest.com/investment-account-types/
I think this topic is so important for investors, that it has become the first (of hopefully many) YouTube videos at Begin To Invest. The video goes into a lot of detail on the differences, I’ll work on keeping future videos a little shorter!
Only Wall Street can turn this great investment bad:
http://www.usatoday.com/story/money/markets/2014/01/18/make-good-investments-bad/4496039/
The simple index fund has been a superior investment vehicle for the individual investor. Why do these basic index funds beat so many wall street pros? Mostly because of their low costs compared to actively managed funds. In this article, the USA today takes a look at how some turn the simple index fund into an expensive investment.
“The most expensive S&P 500 index fund: Rydex S&P 500 H shares, which charges 1.57% in annual fees. Not surprisingly, it is also the worst-performing S&P 500 index fund the past five years. While the average S&P 500 index fund turned $10,000 into $22,494 the past five years, Rydex S&P 500 H shares turned $10,000 into $21,137 — a $1,357 difference.”
What I am Reading (on paper):
For the next couple of weeks I plan on doing a lot of sitting back and relaxing, here’s what I am reading:
The Physics of Wall Street: A Brief History of Predicting the Unpredictable
I am most of the way through it,and so far it is a really neat story on the history of physicists on Wall Street. Generally any discussions associated with “quants” (a name given to Wall Street physicists) come in a very negative underlying manner, as many put the responsibility of the 2008/2009 financial crisis square on their shoulders. But this author argues that the blame may be undeserved. A great look at historical models and algorithms, their faults and why quants should, in fact, have a place on Wall Street.
As a physics major myself, I always love the stories of how other scientists are able to apply their knowledge in other fields. Wall Street has certainly been no exception. Physicists have been responsible for Nobel prizes and some of the best performing funds in history, even outperforming Warren Buffett! The book is certainly worth a look for any investor, as the author does a great job of describing all physics related matters. But I think those with a science background will especially enjoy this book.
