If you’re going to own individual stocks, own these three

A friend asked me about investments recently after moving jobs. My recommendation was to invest all her retirement assets into a target date fund and avoid individual stocks.

But she wanted to feel like she was playing in the market and passive investing through mutual funds didn’t satisfy that craving.

These are the three stocks I recommended to her:

  • Apple. Yes, it’s the world’s most valuable company. Yes, it’s huge. But it can come up with hit after hit. It has a loyal fan base. Even in light of low-priced competition from Android handsets, Apple has remained resilient for years. It has eco-system lock in. If you’ve bought one Apple product, you’re likely to buy more Apple products.
  • Facebook. The company has almost (see below) unparalleled lock in. International growth will continue. More importantly, the company stands to benefit from maturation of ad systems in international markets. The company also has largely untapped opportunities in payments and video.
  • Google. It’s the best advertising engine to date. Google has diversified into many product lines. Yes, the bulk of the money is in search. But it has a strong product position in other spaces.

All of these companies have the flexibility to think for the long term, instead of chasing earnings quarters. They have strong CEOs who aren’t going anywhere.

This doesn’t mean that you won’t lose money over the short term. There will be short term volatility, as is the case with all stocks in the age of the Internet and high-frequency trading.

But if you buy small chunks over time and focus on the long term, you should do well.

Again, this should only be done with play money for the feeling that you want to trade stocks. The bulk of your assets should be in diversified mutual funds or exchange-traded funds.

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Rakesh’s quick guide to investing for the lay person

A friend asked me to take a look at her IRA with Chase. I couldn’t believe how horrible the products she was sold were. Here is some quick info to help you make better investment decisions.

If your IRA is managed by Chase, MorganStanley, Merrill Lynch or similar, there is a 99% chance you are being hosed. Try Betterment or Wealthfront.

If you still think that you should keep your money where it is, here’s some more advice:

  • If your adviser tells you he’s going to trade individual stocks, RUN!!!
  • When investing in mutual funds, ask your adviser what the front end load is. If the answer is >0, RUN!!!
  • When investing in a specific fund, ask your adviser what the expense ratio is. If the answer is >1.5%, RUN!!!
  • Ask if there are any fee waivers in place. Often mutual funds will offer a promotional rate to lure in money. Your “regular” price can be much higher.
  • If investing in a S&P 500 Index fund, ask what the expense ratio is. If the answer is >0.10%, RUN!!!

Some funds also have a short-term redemption fee. Don’t worry about this; you shouldn’t be doing short-term trading.

The generic advice I give to most people is:

  • Don’t bother with individual stocks. They are too risky and require too much maintenance. If you think a certain sector is going to be hot (e.g. healthcare), buy a sector-specific fund instead of individual stocks.
  • For retirement, pick a target date retirement fund. These usually have a year in them, e.g. 2030, 2040, 2050. Pick the date that you expect to retire. Put ALL of your retirement money in that fund. Get one of these funds from Vanguard or Fidelity.
  • For non-retirement assets, invest in Betterment or Wealthfront. They give you a diversified portfolio at low management rates.

I was inspired to write this by my friend who was sold funds with a 4.5% front end load and expense ratio of 1.3% something. (Temporarily waived to .96%.)

For those of you who’ve followed me and think, “that’s not what you do.” “Didn’t you make a pile of money shorting Groupon and buying options?”: you’re right. But I have specific expertise in technology, accounting and tax. I read annual reports and listen to earnings calls.

You probably have a life and don’t have time to do such things.

Besides, I trade stocks and options with play money. Most of my assets follow the rules above.

(If we’re close friends and you want me to look at your IRA, shoot me a note.)

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Thoughts on service startups

As someone who lives in SF, I spend a lot of time trying various startups. Here’s a quick summary.

Highly recommended

Uber

Shyp

Others I’ve looked at

Swapbox

Caviar

Homejoy

Pending

wash.io

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My genius product/service list

Following up on my genius people list, here’s a quick list of products I love.

  • Evernote – The popular note taking tool serves as not only my repository of personal notes, but an intranet of sorts for redesign mobile.
  • Evernote ScanSnap document scanner – A modified version of the amazing ScanSnap ix500, it is optimized for Evernote junkies.
  • Trello – A great task management tool. It makes it easy for our geographically distributed team to stay connected.
  • Google Hangouts – Video conferencing.
  • Expensify – Yeah, we’re little. But we still have expenses. And the $5/month/user I pay for Expensify is well worth it.
  • Google Apps – If anyone is running a company email system w/o using Google Apps: Why? What’s wrong with you?
  • First Republic Bank – The bank of choice for redesign | mobile. I gave up on opening a Chase Private Client business account because they wanted too much paperwork. Ashley at First Republic took care of it with no hassle.
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My genius list

One of my favorite things about what I do is the opportunity to meet some brilliant people. It seems that every week I meet someone who I’d consider a genius. If you ever have the opportunity for a meeting with them, I highly recommend making the time.

These are all people I’ve met in person. In all but a couple of cases, I’ve met the many times.

I meet so many people that I’ve undoubtedly left some people off the list. My apologies if I left you off.

I recognize that women are underrepresented in this list. This is a function of:

  • Overall shortage of women in tech.
  • The fields I focus on — finance, VC, payments and media. These fields have even smaller percentages of women than tech overall.
  • Who will take meetings with me.

Emily White, COO of Snapchat, is incredible. One of the smartest people I’ve met. (And a dear friend to boot.)

Note that the only order here is alphabetical. These people are so talented that it would be hard to rank them.

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A few New Year’s changes to the @rakeshlobster twitter feed

As I’m ramping up redesign | mobile, I’ve been looking at how I use Twitter. I’m trying to find the optimal mix of providing interesting, engaging content while also devoting the attention that my company needs.

A few thoughts on my new approach:

  • Six or fewer original tweets a day.
  • More curation and retweeting from my favorite people on Twitter.
  • Fewer stream of consciousness tweets. I know some of my tweets really require expansion to be meaningful. As it is, people ask for more explanation. That takes too much time. Either I’ll write an expansive post or I’ll skip it.

I still struggle with the many diverse reasons people follow me on Twitter – UX, payments, finance, travel, SF, local, search, journalism, statistics, etc. I will continue to tweet about a diversity of topics. It’s too bad Twitter can’t just show the relevant tweets to the people who care about those topics.

I’m still going to engage with followers. But some of the best of my Twitter is actually found in exchanges with @rabois, @mdudas, @daveambrose and @rdoddala. If you aren’t following those four people, you are missing out on the best of rakeshlobster.

Thanks, as always, for following. Would love your feedback.

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Bought a smart watch in the past 90 days on an AmEx or Discover? Don’t want it? Get your money back

If for some reason you’re no longer happy with that smart watch you bought within the last 90 days and you want to get your money back, there’s a way. If you bought it on select credit cards.

Many cards come with a product called “Return Protection,” which lets you return items that you can’t return to the retailer. (Generally because they have a 14- or 30-day return policy.) You submit a claim, send the product to the credit card company’s return handler and get either a check or statement credit. 

AmEx, Citi, Chase and Discover offer some form of this. They aren’t universal across each issuer; some products have them, some don’t.

With AmEx, products that include return protection are Platinum, Mercedes Benz Platinum, Business Platinum, Costco Business Card, Starwood Business Card, Blue, Starwood and Blue Cash Preferred. AmEx has a limit of a $300 refund. You can start the claim process online. (That link also allows you to check if your card is eligible; my list may not be comprehensive.) 

Discover offers a $500 cap and the same 90 day period.

Citi’s Prestige card also offers a $500 cap.

 

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