Think You Can Pick A Mutual Fund That Can Beat the Market? Think Again And Buy An Index Fund Instead!

Based on this recently analysis, go ahead and buy an index fund. Over any recent time period (1, 3, 5, 10 and 15 years) you would have trounced actively managed funds. Of course, “past performance is no guarantee of future results,” however, when you see the persistence of index fund success over short, medium and long-term periods, and the primary reason for it (they carry lower fees), I would put my money (and do) on this trend continuing.

Chart from SPIVA U.S. Scorecard Report (only first four lines, full analysis available by clicking on link):

What I’ve Been Reading This Week (For Week Ending 4/8)

  • Tesla now worth more than Ford but their valuation depends on hitting aggressive sales targets for Model 3 (Economist)

But Tesla is going to have to crank production up by an awful lot more to make the 500,000 cars a year which Mr Musk wants to see pouring off the production line by 2018, let alone the 1m intended for just two years later. To reach those volumes, Tesla is counting on its forthcoming Model 3. Priced at around $35,000, the new car will cost around half that of the other two models. Due to begin production later this year, the Model 3 is supposed to take Tesla into the mass market, where it will face stiff competition from plug-in vehicles produced by existing mass manufacturers, including GM, Nissan and BMW.

Interactive: What Do Consumers Spend Their Money On?

If you are a data geek, you will love this interactive tool/data visualization from Flowing Data (be sure to click on the link to take advantage of the interactive nature of the tool):

Screen Shot 2017-04-04 at 4.26.15 PM

Let me provide some context for what you are looking at. Here are the data sources:

History Lesson: The Dow Jones Industrial Average Since 1896 In One Chart

Great infographic showing the price action for the Dow Jones Industrial Average over the past 130 years with historical milestones along the way (click on the graphic to enlarge it):

By |March 26th, 2017|Chart of the Week, Index Funds, Investing, Math, Research, Stocks|

The FED Raised Interest Rates At Their Last Meeting…How Much Will That Cost Credit Card Revolvers (in Billions)?

Answer (from MarketWatch based on NerdWallet analysis): $1.6 billion

From MarketWatch:

The Federal Reserve raised its target range for federal funds by a quarter percentage point to 0.75%-to-1% on Wednesday, and signaled two more rate increases in 2017. Put another way, this increases how much banks will be charged to borrow money from Federal Reserve banks. (The Fed raises and lowers interest rates in an attempt to control inflation.)

I know some of you are trying to figure out how that decision from the Federal Reserve translates into higher costs for credit card revolvers. Here is the transmission mechanism:

By |March 21st, 2017|Credit Cards, Current Events, Math, Question of the Day|

Spreadsheet Math: Two Investments Walk Into A Classroom…

Ok, not the best title but let’s run with it. Let’s start with a question:

You have a choice between two investments of $100,000:

  • Investment #1: Earns a consistent 8% return every year (put aside the fact that an investment like this doesn’t exist at the current time; it’s been a while since you could buy a 30 year Treasury Bond with that kind of return).
  • Investment #2: Has an average return of 8% per year but has “lumpier returns” aka it has more volatile returns but the returns each year are in the top 10% of fund returns. Some years it is up, some years it is down, but overall it averages the same 8% return as Investment #1.

Which investment has a higher balance at the end of the 20 year period?

Interactive: What’s the S&P500?

Here’s a great interactive for students who struggle with the concept of the S&P500 or of an index or mutual fund. For a math teacher, this interactive would be percentage heaven! I blogged about this in October 2014 when most of you were NOT reading this blog so definitely worthy of a repeat post. I have added better questions for your students to answer too. From comes this great visualization of the S&P500:

Here’s a description of what you are looking at:

Finance in My Life: What If That Savings Bond Was An Index Fund?

I was cleaning out an old drawer and thought this might be be a fun exercise for those who want to bring some math into their classroom and also compare the returns on stocks and bonds:


I received this savings bond in April, 1980 for winning an essay contest put on by the local Elks Club. The topic: Patriotism in America. This was the time of the Iranian Hostage crisis and I remember writing about how local communities were supporting the hostages and their families in so many ways. This discovery had me wondering about  a few things:

By |March 5th, 2017|Current Events, Index Funds, Investing, Math, Research, Stocks|