AWM Insights Financial and Investment News

Easy answer: Stay in your seat! If you are contemplating making a change, your financial plan is severely lacking. Now is not the time to adjust your plan. Any solid philosophy already has the game plan in place and is positioned for this adversity. Preparing for times like this is the most important part of your disciplined strategy to win the game. 

Stock and bond markets can and do go down together. This is normal and uncertainty in risk assets is a constant. It is the price we must pay for higher expected returns. If there was no chance to lose money, you would not be compensated for taking the risk. 

In this week’s episode, Brandon and Justin discuss the unsettling headlines in mainstream financial media, why they shouldn’t make you nervous, and how to set your financial plan to weather turbulent markets.

Have questions for an upcoming episode? Want to get free resources, book giveaways, and AWM gear? Want to hear about when we release new episodes? Text “insights” or the lightbulb emoji (💡) to Brandon at (602) 704-5574 to join our new AWM Insights Network.

EPISODE HIGHLIGHTS

• (0:59) Negative returns across stocks and bonds for the first quarter of 2022. 
• (1:17) Unsettling headlines like “inflation hitting fastest clip since 1982” are scaring investors.   
• (2:00) Should you bail on your investments or change your portfolio? 
• (2:42) If you are reacting to this market adversity, then you weren’t doing it right, to begin with. A real financial plan addresses adversity before it happens.
• (3:44) Stay in your seat.
• (4:30) The uncertainty and volatility of the past three months are normal. If anyone is telling you differently, they are selling you something or are uninformed. 
• (5:25) There is a reward for investing in risky assets.
• (6:55) 1-year returns are positive 75% of the time, 5-year returns are positive about 85% of the time, and 10-year returns are positive about 95% of the time. 
• (7:40) Investors that stay the course are rewarded for their discipline.     
• (8:08) If you could perfectly move in and out of the market, what money could you make? Or, if you missed every move, how much would you have? 
• (9:11) Nobody has the crystal ball to be able to time the market. Tactical asset allocators claim to be able to do this. The data shows these managers cost their investors 2.7% per year over 10 years. Link
• (11:30) Unexpected inflation is what you need to worry about. Not expected inflation because that is priced into the market.     
• (12:48) Treasury Inflation-Protected Securities hedge against unexpected inflation.
• (13:50) Over long periods of time, equities outpace inflation. It is the best way to protect purchasing power for the long term.
• (14:41) Having a plan to deal with situations like right now is critical to a successful investing experience.   
• (15:15) A customized portfolio solves the problem of having too much or too little exposure to bonds. A standard 70/30 is probably not a fit for your priorities.
• (16:26) An advisor staying on top of your plan will have addressed your future liabilities immunized your bond portfolio from these types of losses. 
• (17:00) While this quarter wasn’t good for returns, smart investors know this is just noise for those with a competent advisor creating resilient financial plans. 

You have probably heard of the S&P 500, Dow Jones, or Nasdaq. These indexes are created to track the performance of a group of public companies. While you can’t invest in an index itself, you can invest in strategies that mirror the performance of an index.   

Warren Buffett, the greatest active investor of all time, is a fan of index funds. Warren understands how difficult it is to beat the market and has directed his estate to buy index funds when he is gone. 

There are also weaknesses with index funds – specifically with their strict mandate of tracking the index. In this week’s episode, Brandon and Justin discuss the strengths and weaknesses of index funds and the many small areas of improvement and efficiency that provide opportunities for long-term investors.

Have questions for an upcoming episode? Want to get free resources, book giveaways, and AWM gear? Want to hear about when we release new episodes? Text “insights” or the lightbulb emoji (💡) to Brandon at (602) 704-5574 to join our new AWM Insights Network. On an iPhone? Click HERE to join.

EPISODE HIGHLIGHTS:

• (1:10) What do we mean by indexing or “passive” investing?
• (1:55) An index is a rules-based classification that organizes companies (stocks) into a common basket and measures them daily.
• (2:35) The Nasdaq, the Dow Jones, and the S&P 500 are the most commonly quoted by the media.
• (3:02) The S&P 500 index is the 500 largest companies in the United States.
• (5:00) It isn’t possible to buy an index directly. It is only data and a representation of a basket of stocks.
• (5:57) You should select several indexes when building your portfolio to ensure global diversification.
• (6:20) You can buy an “index fund” in an ETF or mutual fund wrapper. Not all ETFs are passive index funds.
• (7:18) A significant advantage of index funds over active stock-picking is the lower expenses. These higher expenses and transaction costs decrease your returns.
• (7:55) Many active funds generate large tax bills that do not make sense for those with large amounts of assets in taxable accounts.
• (8:50) Warren Buffett has stated many times that his investments will go into passive index funds when he dies. He is the best active investor of all time, and he advocates buying index funds.
• (9:30) What are some of the downsides or negatives of only passive vehicles?
• (10:02) Indexes must be reconstituted periodically, allowing other investors to front-run this known event.
• (11:10) Tesla’s recent addition to the S&P 500 index is an example of an area of improvement.
• (12:10) Adding just 20 basis points of long-term compounding annually contributes substantially to the growth of wealth.
• (13:08) Can Indexes be improved if you systematically exclude underperforming companies to increase returns?
• (14:20) Flexibility and leverage when buying a car provide you with a better opportunity to get the best price. This holds true in the stock market.
• (15:15) As an investor, you want to have a philosophy that you can believe in and stick with. If you can't do that, you are set up for failure.
• (15:55) Takeaways: Check your portfolio for global diversification; just an S&P 500 index fund isn't good enough.

The most recent SPIVA Report for 2021 was just released and once again the same conclusion is reached. “Passive” has beat “Active” and only 15% of active managers that are paid to beat the market, did not. 

Passive investing, sometimes referred to as indexing, doesn’t engage active stock picking. Active management attempts to beat “the market” through the fund manager selecting the stocks. 

The great news for investors is that this competition between active managers creates efficient markets that are cheap and easy to buy through index funds. All you have to do is listen to the evidence. 

Have questions for an upcoming episode? Want to get free resources, book giveaways, and AWM gear? Want to hear about when we release new episodes? Text “insights” or the lightbulb emoji (💡) to Brandon at (602) 704-5574 to join our new AWM Insights Network. On an iPhone? Click HERE to join.

EPISODE HIGHLIGHTS:

• (0:32) Brandon and Justin discuss stock picking and marketing timing. Is active or passive investing winning?
• (1:44) Active investors are trying to beat a benchmark. The most common benchmark is the S&P 500 Index. 
• (2:06) An index is a defined collection of stocks. The Dow Jones Industrial Average has been around for over 100 years.   
• (3:20) Active Management is commonly compared to these indexes to determine if the cost of research and implementation is worth the return.
• (3:50) You can’t actually buy an index itself but you can buy funds that very closely track its return. Plus, they have cheap fees. 
• (5:20)Dispelling the myths of stock picking.
• (5:45) Active managers believe they can read the tea leaves and predict what’s going to happen. They also overweight or underweight sectors to “beat the market”.
• (6:25) The evidence every year shows it’s impossible to beat the market consistently.
• (7:09) SPIVA stands for Standard & Poor Index Versus Active report.
• (7:30) The report compares the many S&P benchmarks to the actively managed funds and identifies which ones outperformed and which underperformed. 
• (8:50) 85% of active managers underperformed the S&P 500 over the last year.
• (10:35) Can you find the small percentage of managers that do outperform?     
• (11:40) You can find better odds of winning than the 10 or 15% chance of picking the next outperforming active manager. You can get close to 50/50 in Vegas.
• (12:20) If for some reason you decided to try to identify which fund will outperform in the future, what are the characteristics to identify?   
• (13:28) Taxes are frictional costs that drag on investor returns, and do not show up in these numbers. These hurdles also hurt investors' gains.
• (14:22) The powerful takeaway: If you’re smart enough to take in the data. You can have a perspective change which will help you avoid the silly game of attempting to outperform the S&P 500.   
• (15:22) The amount of intelligent people with virtually unlimited resources is the reason the indexes are so hard to beat. This competition is what creates this efficient market which is a plus for investors that listen to the data. 
• (15:53) If stock-picking isn’t the right way to beat markets, should you just buy an index fund or is there another way to find outperformance?   

All advisors are willing to try to help. The problem is many do not have the right ability. Vetting an advisor for competence is a must for those wanting to create wealth. It also isn’t easy due to the incredible amount of designations or certifications that can be obtained with little effort involved. 

If you are serious about putting the right team around you, the minimum is to require a CFP®, CFA, CPA, and CPWA® on your team. This is the minimum an advisor can do to prove to you they are serious about having proper knowledge. An advisory firm that really cares about you and your money will require their advisors to have these before ever advising. It is lazy for any advisor in the industry to not obtain one of these, all they require is effort.

After that, it’s time to evaluate what their experience level is with people like you. Hiring someone that doesn’t specialize in people in your situation is a recipe for failure. If you are a professional athlete, you will leave a lot of money on the table by working with someone that doesn’t focus on pro athletes. There are too many nuances and insider knowledge that comes from years of working with professional athletes that can only be learned through experience. 

Trust your instincts and if they sound more like a salesman or sounds too good to be true, don’t settle. There are competent, knowledgeable advisors that are in it for the right reasons and have your best interest at heart.

Have questions for an upcoming episode? Want to get free resources, book giveaways, and AWM gear? Want to hear about when we release new episodes? Text “insights” or the lightbulb emoji (💡) to Brandon at (602) 704-5574 to join our new AWM Insights Network. On an iPhone? Click HERE to join.

EPISODE HIGHLIGHTS:

• (0:52) How do you look for competence in an advisor?
• (1:30) How do you sort through 130 financial designations? 
• (2:58) Cutting through the noise and requiring your advisors to have the best designations is a smart strategy.
• (4:14) CERTIFIED FINANCIAL PLANNER™ or CFP® should be the minimum that you require when it comes to general knowledge.
• (4:46) Certified Public Accountant or CPA specializes in taxes and is an integral part of tax planning. 
• (4:54) Chartered Financial Analyst or CFA specializes in investments. This is the gold standard for investment management. 
• (5:00) CPWA® or Certified Private Wealth Advisor® covers the most advanced strategies that are needed by the ultra wealth to manage taxes and implement proper estate planning. 
• (6:30) You can’t rely on designations alone but if they aren’t at least putting the work to pursue these then you must question why they should be your advisor.
• (7:33) Does their process work? Are they a salesman or do they really add value through comprehensive financial planning?
• (9:09) Integrated planning should maximize after tax return and net worth. 
• (10:00) If you only look at a statement’s rate of return you are missing out on the big picture of wealth creation.
• (11:15) It’s common acceptance that no one can predict the future except so many in the financial media claim to be able to do it every single day.
• (12:07) It is unproductive to try to predict the future. Planning for good outcomes and bad outcomes is where to focus your effort.   
• (13:03) A crisis wouldn’t be a crisis if everyone knew it was coming.
• (14:45) If you are a pro athlete, working with someone that doesn’t specialize in pro athletes will cost you money and wealth.   
• (15:23) Duty days, MLB, NFL, PGA retirement plans are all something many advisors have no clue on. 
• (15:41) If you need heart surgery, do you go to an orthopedist or psychiatrist. No, you got to the best heart surgeon out there.
• (16:19) Use your B.S. meter. Trust your gut feeling and if they sound more like a salesman or it sounds too good to be true, don’t settle. There are competent, knowledgeable advisors that you can find to grow a strong personal relationship for the long term.
• (17:45) Sum it up: find an advisor that avoids active trading and market timing. Find one that develops a solid financial structure, that focuses on tailoring investments to your priorities, and keeps taxes and expenses low. This systematic approach will increase your likelihood of financial success for the long term. 

Russia has invaded Ukraine and war is the talk of the global news and financial media. Financial warfare has also been waged by countries around the globe with punishing sanctions placed on Russia. What does this crisis mean for your investment strategy?

Brandon and Justin discuss what you should be thinking when it comes to unpredictable global events. 

Have questions for an upcoming episode? Want to get free resources, book giveaways, and AWM gear? Want to hear about when we release new episodes? Text “insights” or the lightbulb emoji (💡) to Brandon at (602) 704-5574 to join our new AWM Insights Network. On an iPhone? Click HERE to join.

EPISODE HIGHLIGHTS:

• (0:45) How does the invasion of Ukraine impact your portfolio and investment strategy?
• (2:00) Long term thinking and refocusing on fundamentals applies to money but also everything else in life. Fitness, business, sports, all benefit by reframing and focusing on the basics.
• (3:10) No one is immune to the pain of markets adjusting to new information. It is normal human nature to stress out when the unexpected happens.
• (4:04) If markets only went up and to the right, then there would be no risk and therefore no reward.
• (4:48) Risk and reward are always related. You should expect corrections and drawdowns as part of the cost of seeking higher returns.
• (5:50) If everyone knew something was going to happen you wouldn’t call it a crisis.
• (6:25) No two historical events are the same.
• (7:40) You can’t time the market. You have to be right too many times. Getting out, waiting, then getting back in. No one in market history has proven they can reliably repeat market timing success.   
• (9:00) Is it worth it to try to find the next Warren Buffett? No, there’s a better way than trying to get lucky.
• (9:30) Diversification is the only free lunch in investing.
• (10:15) Complacent thinking and not diversifying happens all the time when markets or assets are going up. 
• (11:40) In times of stress, like right now, the benefits of diversification prove why you need it. US Government bonds have done their job once again in this downturn in protecting capital. 
• (12:51) Diversification saves you, it allows you to stay invested and not panic. 
• (13:40) If you have invested money in the equity markets that you need in the next year, you should be nervous. Moments like today is why financial structure matters. 
• (14:45) Do I do this on my own or with an advisor? 
• (15:03) If you want someone to help remove the emotion and has developed a skill set and builds financial structure to weather these kinds of storms, then an advisor will be worth their weight in gold to you.

You are ready to hire a professional but with over 300,000 people calling themselves financial advisors, where do you start?

Multiple studies have proven that a good advisor can add 3% or more in value per year to their clients. Finding a good advisor with the right competence and without conflicts of interest is harder than it seems.

Brandon and Justin give you exactly what to look for once you’ve decided to start looking and detail the value the real ones can add.

Have questions for an upcoming episode? Want to get free resources, book giveaways, and AWM gear? Want to hear about when we release new episodes? Text “insights” or the lightbulb emoji (💡) to Brandon at (602) 704-5574 to join our new AWM Insights Network. On an iPhone? Click HERE to join.

EPISODE HIGHLIGHTS:

• (1:05) If I don’t want to do it alone, how do I assemble a competent team?
• (2:32) There is no regulatory body that regulates who can call themselves a financial advisor like in the medical or attorney field. This is a detriment to the public.
• (3:40) Unfortunately salesmen in the industry can take advantage of clients very easily in this industry. 
• (5:25) If you are looking at only investments and ignoring the big picture, you are leaving money on the table. 
• (6:25) Doing things in isolation wastes a lot of time and creates unnecessary work for investors.
• (8:02)Elite athletes understand coaching elevates their game and it’s the same with finances.
• (9:10) Most people in the advisor industry are salesmen and don’t have financial expertise.
• (10:15) Conflicts of interest between advisor and clients is something to be wary of.
• (11:00) Competence is not rewarded in this industry. Many people start in the industry and “dial for dollars”. 
• (12:30) Who owns the firm you are working with and what incentives are they driven by?
• (13:35) Law firms with strong professional standards are employee owned and that is not the case with most firms in the financial advisory world.
• (15:20) Designations and Certifications are the minimums for those committed to doing what's right for the client. 
• (15:50) Simple questions like “are you held to the fiduciary standard?” and “are you investing your own money the same way you invest mine?” These are powerful questions to ask your advisor.
• (17:00) The benefits of working with a competent advisor is massive and have powerful studies that show as much as 3% of value added per year.   
• (18:00) If the person you’re talking to is a broker then just move on. You want to find an investment adviser. 
• (18:30) Brokercheck.com is how you can find out if they are a broker or investment adviser.
• (19:00) Next evaluate the person and firm for conflicts and advanced designations.
• (19:10) Then find out if you need only investment advice or financial planning. Looking for comprehensive planning is what people should look for at a minimum. 
• (19:30) If you are seeking multi-generational wealth then you have to start looking at multi-family offices.
• (20:15) Credentials in the form of experience and expertise should be measured and demanded.
• (21:28) Fully integrated advice with one after-tax return and one net worth is true optimization. Independence from conflicts of interest is vitally important to align incentives. And individualized and customized advice designed specifically to your vision of success creates a better experience and outcomes for clients.

Are you a Do it Yourself Investor? Are you ready to handle it all yourself? 

Fear and greed drive many of the biases that hurt investor returns. Overconfidence bias and confirmation bias are two others that are proven to cost investors money. Big companies spend millions every year to influence and disrupt the focus of investors simply using human psychology. 

You don’t have to play Wall Street’s unfair game. There is another option to achieve your success. Taking compensated risks while controlling expenses and avoiding taxes makes for a better investing experience.

Have questions for an upcoming episode? Want to get free resources, book giveaways, and AWM gear? Want to hear about when we release new episodes? Text “insights” or the lightbulb emoji (💡) to Brandon at (602) 704-5574 to join our new AWM Insights Network. On an iPhone? Click HERE to join.

EPISODE HIGHLIGHTS:

• (1:16) What are the options to invest in the public markets?
• (2:45) Registered Investment Advisor Firms can give you holistic advice vs every other model.
• (4:15) Behavioral finance is the broad psychology of attitudes and biases interacting with decisions around money. 
• (4:50) We are prone to biases that can make investing even for trained professionals difficult. 
• (6:15) The most powerful of all biases being fear and it’s cousin, greed.
• (6:23) “Fear has a greater grasp on human action than does the impressive weight of historical evidence” - Jeremy Segal.
• (7:00) You can get an incredible investment experience with robust results without playing the Wall Street game.
• (7:40) Avoiding the hot stock talk or investor bubble turns out to lead to better outcomes.   
• (8:30) Focus is constantly being influenced by large companies spending thousands of dollars to bring you into their game.
• (9:08) The data for investors underperforming is constant, 1984-1995 the S&P 500 was up 15% a year while the average investor only earned 6.3% a year. Why?
• (9:37) Investors don’t want to stand by and do nothing. They want to take action and the overconfidence bias is well-established.
• (10:31) The overconfidence bias shows up in character studies and when it comes to over-trading their brokerage accounts. 
• (12:10) Confirmation bias is looking to verify the things we already believe. We ignore what contradicts that.
• (15:40) SPIVA active vs passive data is released twice a year. Every year active management is proven to underperform over the long term. 
• (17:30) Do the outperformers in one year continue to outperform. No, there is no persistence. 
• (18:30) There is a different game to play. Avoiding taxes, high expenses, and optimization of net worth can provide persistent results.
• (20:15) Your disciplined plan will keep you focused on the results that matter. Biases can be managed with the right focus.
• (22:00) Markets are extremely competitive. In public markets, information is known by everyone buying and selling the market. Where is the advantage? 
• (23:20) Many of the gains in crypto are short-term gains which will be wacked by taxes.
• (23:51) “The car is going to get to the destination, unless you personally drive it off the cliff” - Peter Mallouk.
• (24:30) Submit your questions or feedback by text to 602-704-5574 and join the community.

Do you know how to buy a stock? How do you open a brokerage account and which account type should you select? Have you made an investment in private equity before? 

In this week’s episode, Brandon Averill and Justin Dyer answer these questions in detail along with the expensive costs you may not know about, and what to watch out for to become a savvy investor. 

EPISODE HIGHLIGHTS:

• (2:14) How do you buy an investment in public markets?
• (3:12) To invest, you go and open a brokerage account. Just like opening a checking or savings account.
• (4:35) A brokerage account is the most convenient way to buy publicly traded securities. 
• (5:35) There are many different kinds of accounts and are mostly determined by the tax code.
• (7:03) Independent custodians hold the assets of independent RIAs and the separation is important.          
• (8:00) Robinhood or other discount brokers allow you to trade on your own.
• (8:52) How do you actually make an investment?
• (9:30) How you go into your account and place a trade to buy.   
• (10:38) Every stock, bond, ETF, and mutual fund you must know the symbol to be able to buy it. 
• (11:35) How to buy a stock or ETF. 
• (12:10) Bonds also have fluctuating market prices you will have to pay.
• (13:50) Trading costs in the form of a direct fee or the spread are transaction costs.
• (14:50) The bid ask spread is an overlooked cost to investors. 
• (16:47) The accessibility of public markets is a huge advantage to investors today.
• (17:40) How do you make a private investment?
• (19:10) Be wary of who is presenting the deal to you and why it made it’s way to you. 
• (19:40) Private markets consists of private equity, venture capital, hedge funds, and private real estate. 
• (20:57) Transparency and lack of legal structure can lead to fraud if not careful.
• (22:40) Investing into a pool of money with other investors makes you a limited partner.
• (23:15) Limited partners give over decision making to the general partners.
• (24:00) When money is committed the general partner will make a capital call to the limited partners.. 
• (24:30) Legal costs of creating these investment vehicles and the tax pain point.
• (25:30) Compared to an ETF, private investments and their structure are much more complicated.
• (26:45) Private investments have minimum net worth requirements or income requirements to qualify.
• (27:20) Access to the best private investments is extremely competitive. 
• (28:12) Hidden costs of being lower down the cap table aren’t always acknowledged. 
• (29:00) What are the advantages and disadvantages of being with different types of advisory firms. Which ones provide better access?

What is a Non-Fungible Token and should you be buying or creating them?

NFTs and Web 3.0 have the vision to return ownership and value back to creators and their communities, but can that vision turn into a reality? After seeing news headlines like one of Beeple’s NFTs selling for $69 million, there are a lot of questions floating around this relatively new technology. 

In this week’s episode, Brandon Averill and Justin Dyer are joined by Erik Averill to discuss how NFTs work, why they are not a get rich quick scheme, finding the true value in the technology, and where they might fit in an investment portfolio.

EPISODE HIGHLIGHTS:

• (1:01) What is an NFT? Should I create an NFT? Should I buy an NFT? 
• (2:26) Always understand what you’re investing in. This goes for NFTs, too. 
• (3:00) An NFT is a non-fungible token. A dollar bill is a fungible. They are all the same. Non-fungible would be if President Biden signed it specifically made out to you. This makes it one of a kind and unique to you. 
• (4:28) NFTs offer the promise of being the only one of its kind in existence.
• (5:52) Beeple’s NFT sold for 69 million dollars. But it’s more than just a digital image.      
• (7:10) You are buying more than a digital image when you buy an NFT.
• (8:05) This is not a cash grab or get rich quick scheme. If you approach NFTs that way you will not have a good investing experience.
• (9:11) Web 3.0 is the redistribution of ownership back to the community. Creators and the community want to cut out the middleman.   
• (10:10) Beeple’s digital art is directly comparable to the physical art world. Just like the Mona Lisa is valued highly by the art community. 
• (11:15) Signaling within the Web 3.0 community is driving a lot of these headline grabbing prices for NFTs. 
• (12:05) NFTs like other collectibles (art, wine) will not end with good results for most investors. 
• (12:55) Buying an NFT is buying into a community of people. This community can be where the real value is to NFTs.
• (15:00) There is extreme hype right now in NFTs and crypto. Top Shot is one example of that. 
• (17:05) There is a ton of innovation that will change the landscape and disrupt many current competitors in the NFT space.
• (19:00) Be aware of copyright protection. As a creator, you want to ensure the value you have created comes back to you.
• (21:15) The technology is incredibly young but the innovation within technology is tangible to so many.   
• (22:22) Applying the principles of other investments to NFTs is crucial. Investing in NFTs must be done in the same way as other assets. 
• (23:38) Gary V, one of the biggest crypto supporters, believes 98% of them will go to zero.
• (25:00) It’s an exciting space but any money put into NFTs should be coming out of your speculative/entertainment bucket.
• (27:13) Picks and shovels. Investing in the companies that stand to benefit from creating NFT communities is a great way to gain exposure.
• (27:25) Returns only come from the top decile in venture. With private investments and NFTs this will likely be happening here too. 
• (29:40) With NFTs, we would rather be good than lucky. What kind of value is being created? How do you create a community? Think of it like a business and how you can do the work to capitalize on the NFT business.

So now you are ready to invest and become an owner or lender, but what do you buy and how?

Stocks, bonds, mutual funds, ETFs, hedge funds, and private investments all make up the universe you have an opportunity to invest in. To keep it simple, buying stock is ownership and buying bonds is lending. Both mutual funds and ETFs can be very efficient vehicles to access public markets but understanding the details is an essential step.

Private investments like hedge funds, venture capital, and private equity can be a source of great returns but are also less transparent with much less information than the public markets.

EPISODE HIGHLIGHTS:

• (2:01) Stocks are ownership and bonds are lending.
• (2:30) Stocks are direct ownership. Think Apple, Microsoft, Tesla. 
• (3:34) Bonds are just loans. These loans can be to the US government, local government, or companies. 
• (3:55) Publicly traded companies (Apple, Microsoft) also issue bonds to then use that money to create more value or feed growth.
• (4:40) There is a hidden cost: the spread between the bid and the ask price.
• (5:25) Access to public markets is incredible and as simple as it has ever been for investors.
• (6:05) Mutual funds, why they exist and what they offer.
• (7:27) Single stock risk and why the diversified portfolio outperforms.   
• (8:30) Before diversified pooled investment vehicles, investors were overly concentrated in just a few stocks to the disaster of many during the Great Depression. 
• (9:01) Diversification and the closest thing to a free lunch in investing. 
• (9:08) Private markets have illiquidity issues and slower transaction time to complete a purchase or sale. 
• (9:46) Mutual funds are only priced once a day. At the end of the day they are traded or redeemed at their Net Asset Value or NAV.
• (10:30) Exchange Traded Funds or ETFs are traded similar to a stock throughout the day.
• (11:45) ETFs have gained in popularity but have been around for more than 30 years.
• (12:30) The misconception of mutual funds due to some fund companies charging high fees in the past. Not all mutual funds are the same. They are just a vehicle. 
• (13:20) There are expensive ETFs and inexpensive ETFs just like the mutual fund universe. 
• (14:50) Derivatives. How ETFs use these to juice returns and the drawbacks.
• (16:10) The movie to watch on derivatives is The Big Short. 
• (17:00) Hedge funds were originally started to hedge market downturns. 
• (18:05) Hedge funds have evolved into a bet on an active manager that they can beat the market. There are many strategies that now fall under hedge funds but very few do any hedging anymore.   
• (20:24) Private companies also sell ownership in stock or take money in the form of loans as bonds.
• (21:33) Buying stock of private companies or lending them money is called direct.
• (22:11) Buying into a private fund gives you the claim to ownership and the fund managers are responsible for finding worthy investments. 
• (24:55) NFTs and how you should think about these crypto and web 3.0 talk.
• (26:30) Crypto is speculative because it is not ownership of a business or lending of money. This isn’t a bad thing, it just means it is speculative and buyers hopefully understand that.
• (27:13) There is tremendous hype and it's hard to know what you actually own with NFTs. 
• (28:00) There is a disconnect between perception and where the NFT market is currently at.
• (28:55) NFTs will be covered in depth next week.