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Investing Fundamentals: A Simple Guide for Beginners

William Housley  |  Apr 24, 2026

"One thing to add, if you are doing well, offer to fund your kids 401K Roth when the first start working would be a good way to build and teach them about important of retirement fundings."
- Hung Nguyen
Read more »

The great COLA debate-maybe not the expected solution.

R Quinn  |  Apr 26, 2026

"Richard: good article! You wrote: "changing the COLA calculation accelerates the trust depletion", and a cap on the COLA might be part of slowing the depletion. Our state pension COLA's, effective in July each year, are capped at 2.5% and are based on CPI-W from the prior year. During the 10-year period my wife has received her pension, the average COLA was 1.89% with a low of .52 and high of 2.5. During my 5 years of receiving the pension, the average COLA has been 2.47% with a low of 2.34 and high of 2.5. Our pension plan is in great shape; the annual actuarial report notes: "The current funded status is 99.91%". So, a lower COLA cap works on a relatively small scale (Nebraska), but would seem to be worth considering on a larger scale. Not that I hope for lesser income, but a slight change now might help avert a larger change later. I believe a lower cap on the Social Security COLA should be considered as one tactic to slow the depletion."
- Dave Melick
Read more »

How much to provide a college student monthly?

Chris  |  Apr 25, 2026

"I might be the odd one here. Both of my kids finished state university in Texas, we opened a Texas tomorrow funds for both when the younger was born, so both can attend state university free of tuitions and fees. They have also been admitted to top private universities in Texas. We paid everything else, living expenses, car, insurance and give them a credit card to spend anything they deem not excessive. We paid for oversee summer schools. If I have to do it again, I will not change anything."
- Hung Nguyen
Read more »

Happy 50th!

Rick Connor  |  Apr 27, 2026

"In my employer 401(k) retirement plan the S&P 500 index fund at Vanguard was the lowest expense cost option and has often been the the only low expense cost option in many plans that I saw in tax clients plan options have over the years. After retirement I did a trustee to trustee direct rollover of my 401(k) balance to a traditional IRA to eliminate the quarterly administrative expense that the employer 401(k) plan charged in addition to the expense that the individual fund choices charged. My understanding is Mr. Bogle typically never praised the low expense index funds that included foreign equities but I have adopted the thinking of Jonathan Clements wrote about in How Much Abroad and I am now a happy owner of Vanguard Global index fund (VT) exchange traded class. Low cost index funds certainly have made my investing easier and more profitable. Now I just need to control myself and stay the course on my investing. Thanks for reminding me of the 50th."
- William Perry
Read more »

Live a little

greg_j_tomamichel  |  Apr 25, 2026

"The funny thing is: we had to smuggle it back out, neither one of us wanted any. My grandson and daughter scoffed the evidence yesterday.😂"
- Mark Crothers
Read more »

Around the Obstacles

ArticleDan Smith  |  Apr 25, 2026

I WAS 48 years old when the judgement was final and the papers were signed. My former wife and I split our net worth 50/50. There were no arguments over household items like furniture; I didn’t care about that stuff. Pam gladly accepted my proposal that she keep the house, and all its equity, in exchange for me keeping an offsetting amount of the IRAs and my 401(k), a very good move for my future self. By giving up the house, I also escaped the mortgage, which was the only loan obligation I had. Had there been consumer debt (there was none), I would have eliminated that as quickly as possible, beginning with the highest interest loans. I was ordered to pay spousal support to age 65, or my retirement if I worked beyond 65. I would be lying if I told you that I liked paying alimony. Still, it wasn’t unfair considering our age at divorce, Pam’s depression, and the fact that she mostly stayed at home to raise our kids.  Long before the divorce was ever final, I knew I’d have to make up for lost time if I ever wanted to retire in the manner to which I wanted to had become accustomed. The divorce wasn’t going to be the only obstacle I would have to overcome. Thirty years of delivering beverages resulted in osteoarthritis and plantar fasciitis; my days on the beer truck were rapidly coming to an end.  I needed a plan. Where Was I?  I had to understand exactly where I was, and what my options were. 
  1. My continued employment as a delivery driver would likely have left me on Social Security Disability (SSDI) by age 55.
  2. I was very interested in personal finance, and knew many people in that field who would help me get my foot in the door.
  3. I had acquired bookkeeping, payroll, and tax prep skills through my involvement with my local union, though I never pictured myself as the type to sit behind a desk, in a dimly lit office, crunching numbers beneath the glow of one of those green shade banker’s lamps.
  4. As a last resort, I could fall back on my truck driving skills, using my commercial drivers license to get a job hauling ‘no-touch’ freight of some sort.
  5. Last but not least, I needed a place to live. “Hello, mom and dad, I need my room back”. Sleeping on the twin mattress I gave up 25 years earlier, was not part of my plan.
  6. I was determined not to let my occupation as a beer truck driver dictate my future job prospects.
Where did I want to be? 
  1. Where to live? Living with the folks was never meant to be a long term thing. After three months of that, I signed my first ever apartment lease as a lessee, as opposed to a lessor. That lasted two years, until a very large increase in the rent caused me to buy a duplex, and become a lessor again.
  2. Where to work? I continued my work as a delivery driver for three more years. My position as the local union president, and my five paid weeks of vacation actually kept me off of the truck much of the time. That enabled me to tolerate the maladies that would eventually force me out of that job. Having absolutely no desire to spend the balance of my life languishing on SSDI and a minimal IRA balance, I set off on the path to becoming a financial services guy. That did not work out, and if you want more information on that, here’s a link.
  3. To make ends meet, I turned to my last resort; driving a truck. Piloting an 18-wheeler was not how I envisioned my remaining working days. And although the freight was ‘no touch’, driving 600 miles every day in a Kenworth tractor is still pretty hard on your vertebrae. But sometimes you have to do what you have to do to survive and to keep your eye on your finish line. My heart goes out to full time drivers, that job is no walk in the park.
  4. And what about love? My preference was to be in a relationship, but not any relationship. I wanted a good partner, I wanted to be a good partner as well. What qualities would I look for in a new partner? Independent, established, confident, and nice. Was I asking too much?
Making it All Work  Finally, preparation collided with opportunity. In other words, I got lucky. Remember when I told you I didn’t picture myself as ever being a bean-counter? Two established financial services guys set me up with free office space and began funneling tax prep clients to me. What began with me preparing taxes for about three dozen of my union brothers, instantly turned into over 100 clients. There I was, a bean counter of sorts.  I kept that truck driving job for several more years. And remember that duplex I bought after the rent spiked at my apartment? Well, there was this girl living next door. Enter Chrissy. We became best friends. She is no longer my neighbor. She is now my spouse. Of course, at the time we met, aside from being a nice guy, I wasn’t much of a catch. Man, she took a chance on me.  As my client count went up, my days driving the big-rig went down. When the client count got to about 400, I retired forever from driving. No more trips to Chicago, Des Moines, Snow Shoe PA, or Jersey City. Chrissy and I began pounding 40% of our gross pay into savings. It would take until I was 70, but working together, we got to a place each of us only dreamed we would be. By living within our means, and keeping lifestyle creep to a minimum, we surpassed our goals.  Chris retired at 64 and helped me during my final three years as a tax preparer. Lucky for me, Federal Wage and Hour never found out that I violated the minimum wage laws by never paying her in the first place. I sold the practice at age 70. I prepared 650 tax returns in my final year.  It’s important to note that during our journey, we did not starve ourselves of food nor fun. We counted 27 trips during our first ten years together. Chris was great at finding great deals to various destinations in the Caribbean, and we turned several of her business trips into mini vacations as well. It’s important to prepare for the future, but have some fun along the way as well.  I hope this piece inspires someone who is still on the road, dealing with similar obstacles, and wondering if there was a way around them. For 30 years, Dan Smith was a driver-salesman and local union representative, before building a successful income-tax practice in Toledo, Ohio. He retired in 2022. Dan has two beautiful daughters, two loving sons-in-law and seven grandchildren. He and Chris, the love of his life, have been together for two great decades and counting. Check out Dan's earlier articles.
Read more »

Hidden Surcharge

DAN SMITH  |  Apr 21, 2026

"Ormode, yes, a $900K RMD is certainly a first world problem."
- DAN SMITH
Read more »

A Life You Build

Jeff Peck  |  Apr 19, 2026

"Truly a great story. Thanks for sharing. I didn't benefit from the same things you did, but my grocery store manager father was Dave Ramsay before Dave Ramsay was Dave Ramsay. Would never get a credit card. Paid for cars by saving up for them. Paid off his house in 11 years. Bought utility stocks as they paid a dividend. I learned early on important all that was and though I have had credit cards I pay them off every month and until recently (70) I was always saving and investing."
- Pete Tittl
Read more »

Rethinking the “Right” Time for Social Security

Andrew Clements  |  Apr 23, 2026

"Another great HD contribution--thanks for this."
- Kristine Hayes
Read more »

Lonely Island (Correct Edit)

Mark Crothers  |  Apr 22, 2026

"Bob, what a great post!"
- DAN SMITH
Read more »

Why I use a Donor-Advised Fund

David S  |  Feb 21, 2026

"Great article. I also took SS at 67 (or maybe 68) - the "lost" dollars either way seemed to be insignificant and I didn't have to tap my investments the first few years (which then promptly grew tremendously with the market run-up.) I'm a big fan of blended solutions in lots of areas. I'm known in my family for that. For example, no 100% cotton or polyester shirts - I need a blended fabric of both. I've thought about a blend here, but I'm not yet sure it works. The article makes me reconsider. I'll noodle some more. Thanks."
- Martin McCue
Read more »

Tax Free Income Trap, Dealing With MAGI

DAN SMITH  |  Apr 21, 2026

"[Comment deleted because I thought better of it.... need more coffee before posting....]"
- urbie53ca4a2392
Read more »

Driving Prices

ArticleAdam M. Grossman  |  Apr 25, 2026

IN 2020, ELECTRIC car maker Lucid Motors brought in revenue of $4 million. Five years later, sales had risen impressively, to more than $1 billion. In 2025 alone, sales grew 68%. That sounds like a success story, and through that lens, it is. And yet, over that same period, the company’s stock dropped more than 89%. What happened? A better question is: What didn’t happen? Despite growing sales, the company has struggled to turn a profit. On sales of $1.3 billion last year, Lucid posted a loss of $3.8 billion. It’s experienced production problems and management turnover. It’s seen its competitors cut prices. As a result, it’s been forced to issue new shares, thus diluting the value of existing investors’ holdings, just to keep the lights on. In fairness to Lucid, the road to success is rarely a straight line. Arizona State University professor Hendrik Bessembinder studies the performance of public companies, and the results are sobering. In new research, he found that, over the past 100 years, the median return among stocks trading on U.S. exchanges was negative 6.9%. Only a minority of stocks, in other words, made any money at all. Why are these results so dismal? Four factors stand out. The first is emotion—specifically, investors’ emotions. After Lucid went public in late-2020, its stock began rising quickly, and in the early months of 2021, the shares gained nearly 500%. What was driving those gains? Since the company was just starting production, very little can be attributed to the company’s financial results. Instead, it was simply investor excitement around the electric vehicle market and the optimistic view that Lucid would become the next Tesla. But no sooner did the stock rise that it fell again. And in the years since, it’s been an overwhelmingly downward slide for investors. In the last interview he gave before he died in 1976, Benjamin Graham compared the stock market to a seesaw. “The present optimism is going to be overdone and the next pessimism will be overdone.” And that causes stocks to go to extremes. Fifty years later, Graham’s observation seems no less accurate. Indeed, investment manager Cliff Asness has argued that, because of the internet, the impact of emotions on the market is even worse today. Due to what he calls “the less-efficient market hypothesis,” inaccurate information can spread much more quickly today than it did in the past. You may recall the phenomenon in which a group of day traders, led by a YouTube personality who called himself Roaring Kitty, was able to drive up the stock of a nearly-bankrupt company for no rational reason. That couldn’t have happened in the years before social media. Another factor that can drive stock prices is government action, and this also explains part of Lucid’s slide. When the government ended tax credits on electric vehicles last year, that made electric cars much more expensive for consumers. And contrary to intuition, this year’s higher gas prices haven’t done much to entice buyers back to EVs. On the other hand, government action can sometimes be positive. In 2017, for example, Congress voted to cut the corporate tax rate from 35% to 21%, significantly boosting public company profits. Perhaps the most obvious factor that can drive stock prices is competition. This can take a few different forms. Coke and Pepsi, for example, have been battling for more than 100 years, but their relative positions don’t change very much. At this point, neither company is going to go out of business as a result of the other. In his book The Innovator’s Dilemma, the late Clayton Christensen described a much more disruptive form of competition—the sort that upends industries entirely, such as when 19-year-old Bill Gates outsmarted IBM. At the time, IBM was the most dominant company in the computer industry, but over time its position faded. It underestimated how important personal computers would become and didn’t take the market seriously. Years later, it ended up selling off its PC business entirely, and today makes very little hardware. The same sort of thing happened to BlackBerry, to Kodak and to Polaroid, among others. Like IBM, all of these companies had enormous resources. But, according to Christensen, it was their success that became their greatest weakness, because it caused them to underestimate threats and to downplay the likelihood that anything fundamental might ever change. Ken Olson, the founder of Digital Equipment Corporation, a leader in minicomputers in the 1960s and 1970s, famously asserted, “There is no reason anyone would want a computer in their home.” The tricky aspect of the innovator’s dilemma, though, is that it isn’t universal. Consider the early years of the auto industry. Before automobiles gained popularity in the early 1900s, it’s estimated that there were 4,000 companies in the horse-and-carriage business. The right move for any of these companies would have been to try to transition into automobile manufacturing. Carriage makers, especially, had relevant skills and were best positioned to make this leap. But they adopted a collective mindset that the automobile wasn’t going to succeed, dismissing cars as “devil wagons.” But one of these carriage makers, Studebaker, did correctly assess where things were going and successfully transitioned to making automobiles. The rest failed, faded away or switched into other businesses. Companies, in other words, can be very good at one thing but lose their footing in the face of change. That’s a key factor behind Bessembinder’s findings. A final factor that can cause companies to stumble: random events. Consider, for example, what occurred in Thailand in 2011. Heavy rainfall resulted in flooding that caused large industrial areas to become submerged. This included the factories of hard drive manufacturers Western Digital and Seagate, causing their stocks to drop 35% and 45%, respectively. Both recovered, but this is an example of how even good companies can run into bad luck. Years of research has shown how difficult it is to predict stock prices. Bessembinder’s new work, however, makes an additional important point, which is that, for all of the reasons discussed here, and likely others, stocks face many more roads to potential demise than to success. Thus, to succeed at stock-picking doesn’t just require research and hard work. It requires an almost prophetic ability to identify the tiny handful of stocks that will turn into homeruns. But since the odds are so steeply against success, that’s a key reason I see it as so important to stick with the simpler and less risky alternative of index funds.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

Investing Fundamentals: A Simple Guide for Beginners

William Housley  |  Apr 24, 2026

"One thing to add, if you are doing well, offer to fund your kids 401K Roth when the first start working would be a good way to build and teach them about important of retirement fundings."
- Hung Nguyen
Read more »

The great COLA debate-maybe not the expected solution.

R Quinn  |  Apr 26, 2026

"Richard: good article! You wrote: "changing the COLA calculation accelerates the trust depletion", and a cap on the COLA might be part of slowing the depletion. Our state pension COLA's, effective in July each year, are capped at 2.5% and are based on CPI-W from the prior year. During the 10-year period my wife has received her pension, the average COLA was 1.89% with a low of .52 and high of 2.5. During my 5 years of receiving the pension, the average COLA has been 2.47% with a low of 2.34 and high of 2.5. Our pension plan is in great shape; the annual actuarial report notes: "The current funded status is 99.91%". So, a lower COLA cap works on a relatively small scale (Nebraska), but would seem to be worth considering on a larger scale. Not that I hope for lesser income, but a slight change now might help avert a larger change later. I believe a lower cap on the Social Security COLA should be considered as one tactic to slow the depletion."
- Dave Melick
Read more »

How much to provide a college student monthly?

Chris  |  Apr 25, 2026

"I might be the odd one here. Both of my kids finished state university in Texas, we opened a Texas tomorrow funds for both when the younger was born, so both can attend state university free of tuitions and fees. They have also been admitted to top private universities in Texas. We paid everything else, living expenses, car, insurance and give them a credit card to spend anything they deem not excessive. We paid for oversee summer schools. If I have to do it again, I will not change anything."
- Hung Nguyen
Read more »

Happy 50th!

Rick Connor  |  Apr 27, 2026

"In my employer 401(k) retirement plan the S&P 500 index fund at Vanguard was the lowest expense cost option and has often been the the only low expense cost option in many plans that I saw in tax clients plan options have over the years. After retirement I did a trustee to trustee direct rollover of my 401(k) balance to a traditional IRA to eliminate the quarterly administrative expense that the employer 401(k) plan charged in addition to the expense that the individual fund choices charged. My understanding is Mr. Bogle typically never praised the low expense index funds that included foreign equities but I have adopted the thinking of Jonathan Clements wrote about in How Much Abroad and I am now a happy owner of Vanguard Global index fund (VT) exchange traded class. Low cost index funds certainly have made my investing easier and more profitable. Now I just need to control myself and stay the course on my investing. Thanks for reminding me of the 50th."
- William Perry
Read more »

Live a little

greg_j_tomamichel  |  Apr 25, 2026

"The funny thing is: we had to smuggle it back out, neither one of us wanted any. My grandson and daughter scoffed the evidence yesterday.😂"
- Mark Crothers
Read more »

Around the Obstacles

ArticleDan Smith  |  Apr 25, 2026

I WAS 48 years old when the judgement was final and the papers were signed. My former wife and I split our net worth 50/50. There were no arguments over household items like furniture; I didn’t care about that stuff. Pam gladly accepted my proposal that she keep the house, and all its equity, in exchange for me keeping an offsetting amount of the IRAs and my 401(k), a very good move for my future self. By giving up the house, I also escaped the mortgage, which was the only loan obligation I had. Had there been consumer debt (there was none), I would have eliminated that as quickly as possible, beginning with the highest interest loans. I was ordered to pay spousal support to age 65, or my retirement if I worked beyond 65. I would be lying if I told you that I liked paying alimony. Still, it wasn’t unfair considering our age at divorce, Pam’s depression, and the fact that she mostly stayed at home to raise our kids.  Long before the divorce was ever final, I knew I’d have to make up for lost time if I ever wanted to retire in the manner to which I wanted to had become accustomed. The divorce wasn’t going to be the only obstacle I would have to overcome. Thirty years of delivering beverages resulted in osteoarthritis and plantar fasciitis; my days on the beer truck were rapidly coming to an end.  I needed a plan. Where Was I?  I had to understand exactly where I was, and what my options were. 
  1. My continued employment as a delivery driver would likely have left me on Social Security Disability (SSDI) by age 55.
  2. I was very interested in personal finance, and knew many people in that field who would help me get my foot in the door.
  3. I had acquired bookkeeping, payroll, and tax prep skills through my involvement with my local union, though I never pictured myself as the type to sit behind a desk, in a dimly lit office, crunching numbers beneath the glow of one of those green shade banker’s lamps.
  4. As a last resort, I could fall back on my truck driving skills, using my commercial drivers license to get a job hauling ‘no-touch’ freight of some sort.
  5. Last but not least, I needed a place to live. “Hello, mom and dad, I need my room back”. Sleeping on the twin mattress I gave up 25 years earlier, was not part of my plan.
  6. I was determined not to let my occupation as a beer truck driver dictate my future job prospects.
Where did I want to be? 
  1. Where to live? Living with the folks was never meant to be a long term thing. After three months of that, I signed my first ever apartment lease as a lessee, as opposed to a lessor. That lasted two years, until a very large increase in the rent caused me to buy a duplex, and become a lessor again.
  2. Where to work? I continued my work as a delivery driver for three more years. My position as the local union president, and my five paid weeks of vacation actually kept me off of the truck much of the time. That enabled me to tolerate the maladies that would eventually force me out of that job. Having absolutely no desire to spend the balance of my life languishing on SSDI and a minimal IRA balance, I set off on the path to becoming a financial services guy. That did not work out, and if you want more information on that, here’s a link.
  3. To make ends meet, I turned to my last resort; driving a truck. Piloting an 18-wheeler was not how I envisioned my remaining working days. And although the freight was ‘no touch’, driving 600 miles every day in a Kenworth tractor is still pretty hard on your vertebrae. But sometimes you have to do what you have to do to survive and to keep your eye on your finish line. My heart goes out to full time drivers, that job is no walk in the park.
  4. And what about love? My preference was to be in a relationship, but not any relationship. I wanted a good partner, I wanted to be a good partner as well. What qualities would I look for in a new partner? Independent, established, confident, and nice. Was I asking too much?
Making it All Work  Finally, preparation collided with opportunity. In other words, I got lucky. Remember when I told you I didn’t picture myself as ever being a bean-counter? Two established financial services guys set me up with free office space and began funneling tax prep clients to me. What began with me preparing taxes for about three dozen of my union brothers, instantly turned into over 100 clients. There I was, a bean counter of sorts.  I kept that truck driving job for several more years. And remember that duplex I bought after the rent spiked at my apartment? Well, there was this girl living next door. Enter Chrissy. We became best friends. She is no longer my neighbor. She is now my spouse. Of course, at the time we met, aside from being a nice guy, I wasn’t much of a catch. Man, she took a chance on me.  As my client count went up, my days driving the big-rig went down. When the client count got to about 400, I retired forever from driving. No more trips to Chicago, Des Moines, Snow Shoe PA, or Jersey City. Chrissy and I began pounding 40% of our gross pay into savings. It would take until I was 70, but working together, we got to a place each of us only dreamed we would be. By living within our means, and keeping lifestyle creep to a minimum, we surpassed our goals.  Chris retired at 64 and helped me during my final three years as a tax preparer. Lucky for me, Federal Wage and Hour never found out that I violated the minimum wage laws by never paying her in the first place. I sold the practice at age 70. I prepared 650 tax returns in my final year.  It’s important to note that during our journey, we did not starve ourselves of food nor fun. We counted 27 trips during our first ten years together. Chris was great at finding great deals to various destinations in the Caribbean, and we turned several of her business trips into mini vacations as well. It’s important to prepare for the future, but have some fun along the way as well.  I hope this piece inspires someone who is still on the road, dealing with similar obstacles, and wondering if there was a way around them. For 30 years, Dan Smith was a driver-salesman and local union representative, before building a successful income-tax practice in Toledo, Ohio. He retired in 2022. Dan has two beautiful daughters, two loving sons-in-law and seven grandchildren. He and Chris, the love of his life, have been together for two great decades and counting. Check out Dan's earlier articles.
Read more »

Hidden Surcharge

DAN SMITH  |  Apr 21, 2026

"Ormode, yes, a $900K RMD is certainly a first world problem."
- DAN SMITH
Read more »

A Life You Build

Jeff Peck  |  Apr 19, 2026

"Truly a great story. Thanks for sharing. I didn't benefit from the same things you did, but my grocery store manager father was Dave Ramsay before Dave Ramsay was Dave Ramsay. Would never get a credit card. Paid for cars by saving up for them. Paid off his house in 11 years. Bought utility stocks as they paid a dividend. I learned early on important all that was and though I have had credit cards I pay them off every month and until recently (70) I was always saving and investing."
- Pete Tittl
Read more »

Rethinking the “Right” Time for Social Security

Andrew Clements  |  Apr 23, 2026

"Another great HD contribution--thanks for this."
- Kristine Hayes
Read more »

Driving Prices

ArticleAdam M. Grossman  |  Apr 25, 2026

IN 2020, ELECTRIC car maker Lucid Motors brought in revenue of $4 million. Five years later, sales had risen impressively, to more than $1 billion. In 2025 alone, sales grew 68%. That sounds like a success story, and through that lens, it is. And yet, over that same period, the company’s stock dropped more than 89%. What happened? A better question is: What didn’t happen? Despite growing sales, the company has struggled to turn a profit. On sales of $1.3 billion last year, Lucid posted a loss of $3.8 billion. It’s experienced production problems and management turnover. It’s seen its competitors cut prices. As a result, it’s been forced to issue new shares, thus diluting the value of existing investors’ holdings, just to keep the lights on. In fairness to Lucid, the road to success is rarely a straight line. Arizona State University professor Hendrik Bessembinder studies the performance of public companies, and the results are sobering. In new research, he found that, over the past 100 years, the median return among stocks trading on U.S. exchanges was negative 6.9%. Only a minority of stocks, in other words, made any money at all. Why are these results so dismal? Four factors stand out. The first is emotion—specifically, investors’ emotions. After Lucid went public in late-2020, its stock began rising quickly, and in the early months of 2021, the shares gained nearly 500%. What was driving those gains? Since the company was just starting production, very little can be attributed to the company’s financial results. Instead, it was simply investor excitement around the electric vehicle market and the optimistic view that Lucid would become the next Tesla. But no sooner did the stock rise that it fell again. And in the years since, it’s been an overwhelmingly downward slide for investors. In the last interview he gave before he died in 1976, Benjamin Graham compared the stock market to a seesaw. “The present optimism is going to be overdone and the next pessimism will be overdone.” And that causes stocks to go to extremes. Fifty years later, Graham’s observation seems no less accurate. Indeed, investment manager Cliff Asness has argued that, because of the internet, the impact of emotions on the market is even worse today. Due to what he calls “the less-efficient market hypothesis,” inaccurate information can spread much more quickly today than it did in the past. You may recall the phenomenon in which a group of day traders, led by a YouTube personality who called himself Roaring Kitty, was able to drive up the stock of a nearly-bankrupt company for no rational reason. That couldn’t have happened in the years before social media. Another factor that can drive stock prices is government action, and this also explains part of Lucid’s slide. When the government ended tax credits on electric vehicles last year, that made electric cars much more expensive for consumers. And contrary to intuition, this year’s higher gas prices haven’t done much to entice buyers back to EVs. On the other hand, government action can sometimes be positive. In 2017, for example, Congress voted to cut the corporate tax rate from 35% to 21%, significantly boosting public company profits. Perhaps the most obvious factor that can drive stock prices is competition. This can take a few different forms. Coke and Pepsi, for example, have been battling for more than 100 years, but their relative positions don’t change very much. At this point, neither company is going to go out of business as a result of the other. In his book The Innovator’s Dilemma, the late Clayton Christensen described a much more disruptive form of competition—the sort that upends industries entirely, such as when 19-year-old Bill Gates outsmarted IBM. At the time, IBM was the most dominant company in the computer industry, but over time its position faded. It underestimated how important personal computers would become and didn’t take the market seriously. Years later, it ended up selling off its PC business entirely, and today makes very little hardware. The same sort of thing happened to BlackBerry, to Kodak and to Polaroid, among others. Like IBM, all of these companies had enormous resources. But, according to Christensen, it was their success that became their greatest weakness, because it caused them to underestimate threats and to downplay the likelihood that anything fundamental might ever change. Ken Olson, the founder of Digital Equipment Corporation, a leader in minicomputers in the 1960s and 1970s, famously asserted, “There is no reason anyone would want a computer in their home.” The tricky aspect of the innovator’s dilemma, though, is that it isn’t universal. Consider the early years of the auto industry. Before automobiles gained popularity in the early 1900s, it’s estimated that there were 4,000 companies in the horse-and-carriage business. The right move for any of these companies would have been to try to transition into automobile manufacturing. Carriage makers, especially, had relevant skills and were best positioned to make this leap. But they adopted a collective mindset that the automobile wasn’t going to succeed, dismissing cars as “devil wagons.” But one of these carriage makers, Studebaker, did correctly assess where things were going and successfully transitioned to making automobiles. The rest failed, faded away or switched into other businesses. Companies, in other words, can be very good at one thing but lose their footing in the face of change. That’s a key factor behind Bessembinder’s findings. A final factor that can cause companies to stumble: random events. Consider, for example, what occurred in Thailand in 2011. Heavy rainfall resulted in flooding that caused large industrial areas to become submerged. This included the factories of hard drive manufacturers Western Digital and Seagate, causing their stocks to drop 35% and 45%, respectively. Both recovered, but this is an example of how even good companies can run into bad luck. Years of research has shown how difficult it is to predict stock prices. Bessembinder’s new work, however, makes an additional important point, which is that, for all of the reasons discussed here, and likely others, stocks face many more roads to potential demise than to success. Thus, to succeed at stock-picking doesn’t just require research and hard work. It requires an almost prophetic ability to identify the tiny handful of stocks that will turn into homeruns. But since the odds are so steeply against success, that’s a key reason I see it as so important to stick with the simpler and less risky alternative of index funds.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
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Manifesto

Apr 26, 2026

NO. 26: WE SHOULD strive to spend our days as we wish—by using our dollars to escape today’s chores that we dislike, while also saving for the ultimate prize: full financial freedom.

think

Apr 27, 2026

HUMAN CAPITAL. If we’re early in our career, our most valuable asset is usually our human capital—our ability to pull in a paycheck. That paycheck allows us to service debt, provides the savings needed for retirement and frees us up to invest in stocks. But as retirement approaches, we should aim to pay off all debt and shift maybe half our portfolio into bonds.

humans

Apr 26, 2026

NO. 32: WE REVISE our memories to make ourselves look better. Suppose we believe we’re smart at managing money, but then we panic during a market decline. The result can be the uneasy feeling known as “cognitive dissonance.” To escape our discomfort, we might revise our memory—and decide we stood our ground and perhaps even bought more.

think

Apr 25, 2026

TIME DIVERSIFICATION. Investors with long time horizons are encouraged to buy stocks. Yet such “time diversification” is controversial: While most of us assume the stock market is mean reverting—meaning good times follow bad—academics have argued that, if stock returns are random, healthy returns aren’t a sure thing, no matter how long we hang on.

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Manifesto

Apr 26, 2026

NO. 26: WE SHOULD strive to spend our days as we wish—by using our dollars to escape today’s chores that we dislike, while also saving for the ultimate prize: full financial freedom.

Spotlight: In Retirement

Value of Waiting

Dennis Friedman   |  Feb 7, 2026

I WAS THINKING ABOUT Jonathan the other day on my morning walk, which happens more often than you might think. It’s hard not to think about him when you have HumbleDollar coasters in your living room and a HumbleDollar shopping bag in your car that you use for groceries. My wife confiscated the HumbleDollar cup I had been using for my morning tea, and it now has a new home in our bathroom holding her toothbrush and toothpaste.

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100% Base Pay Replacement: What Does It Mean?

Rick Connor   |  Jul 21, 2025

Generating a reliable source of income is one of the most important, and often challenging, parts of a successful retirement. Those of us fortunate enough to have a decent defined benefit pension have a leg up on this. Combine this with an inflation protected social security benefit, and some savings, and a retiree has a chance at a modest, yet comfortable retirement.  I’ve seen this firsthand. My in-laws were a truck driver and a part-time registered nurse.

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In retirement a pension is a advantage. Are two family incomes during working years an advantage as well?

R Quinn   |  Aug 6, 2025

My past writing on HD and numerous comments have made it clear my retirement is unique in that I have a good pension that together with our combined Social Security exceeds my working base salary the day before I retired. It also has been noted that my pension has given us a financial advantage by not being solely dependent on investments income. It’s all true.
But I have noticed that many people on HD are from couples with working spouses,

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Free Social Security Taxability Calculator

Rick Connor   |  Aug 14, 2025

While researching an article on the impact of the recent One Big Beautiful Bill Act (OBBBA) I stumbled upon a very useful, free Social Security Taxability calculator. The calculator is a downloadable Excel spreadsheet. I found it while viewing a YouTube video presented by The Retirement Nerds. The video did a nice job of explaining some of the provisions of the tax bill, especially the new $6,000 bonus senior deduction. The presenter used the calculator to demonstrate the interaction between income,

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Die With Zero? Hell No

R Quinn   |  Jul 16, 2025

Bill Perkins offers a radical goal: use your money to create the richest life possible, and aim to die with zero dollars left unspent. I’m told it doesn’t literally mean hit zero, just maximize experiences. I hope the book’s readers don’t take the title as a goal.
“Die with Zero” also advocates for intentional gifting to children or charities while you are alive. I agree, but for those trying to cover life’s what ifs during retirement (like the risk of LTC or survivor income) with their life savings that also presents a risk. 

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Status of the Social Security and Medicare Programs

normr60189   |  Jun 18, 2025

Released:
A SUMMARY OF THE 2025 ANNUAL REPORTS
Social Security and Medicare Boards of Trustees
“Based on our best estimates, this year’s reports show that……
The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033, unchanged from last year’s report. At that time, the fund’s reserves will become depleted and continuing program income will be sufficient to pay 77 percent of total scheduled benefits……”
“As in prior years,

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Spotlight: Saha

Options in Disguise

Sanjib Saha   |  Jun 28, 2022

DO YOU INVEST IN options? Think twice before saying that you’d rather go to Vegas. My bold claim: Options investing has a lot in common with investing in stocks and corporate bonds. Intrigued? Let’s recap a European style call option. It’s a discretionary contract that allows someone to buy an underlying asset at a set strike price at a future date. Let’s say the buyer of the call, Bob, has an option on a stock with a strike price of $100. Bob will only exercise the contract if it’s profitable. If the stock price rises to $150 by the time the option expires, Bob can acquire the shares for $100 and immediately sell them for a $50 profit. On the other hand, if the stock price drops to $80, Bob has no obligation to exercise the option. His call option will simply expire worthless. Bob’s only chance at profit comes if the underlying asset clears the strike price. That brings us to the option seller, Shelly. She owns the underlying stock and is participating in a covered call, meaning she’s selling a call option on an asset she already owns. In return, Shelly receives a call premium from Bob. Selling covered calls is a popular strategy for generating extra income. In exchange for the income she receives from selling the covered call, Shelly risks having to sell the stock at the strike price. If the shares rise to $150, Shelly must still sell for $100. The covered call limits her payoff. If the asset doesn’t exceed the strike price, Shelly keeps her shares and pockets the income. What if the stock falls? Shelly still has her option premium, but that may be more than offset by the share price decline. Now, let’s consider the positions of stock and bond investors…
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Simply Works

Sanjib Saha   |  Oct 25, 2021

I THANK MURTHY, a friend at college, for teaching me guitar. Instead of theories, he taught me five easy chords. I could soon play a few songs and that fueled my motivation to learn more. The same strategy can help beginner investors. Novices often find the stock market intimidating and mysterious. Result? Inaction and opportunity cost. Solution? Simple steps. A former coworker comes to my mind. He was uninterested in stocks, including the company shares he received as part of his pay. He sold the shares immediately—often the smart thing to do—but he didn’t know what to do with the cash. For people like him, a simple solution is a fund like Vanguard Total World Stock ETF (symbol: VT). No need to research individual stocks. All my friend had to do was sell his company shares as he received them and then buy this fund. Over time, his interest in investing grew, and he’s no longer ignorant about the stock market. Another example: A friend’s daughter needed help with investing. She learned fast and decided to invest equal amounts in four commission-free index funds. She adopted a shortcut for rebalancing. Whenever she had money to invest, she’d buy the fund with the lowest balance. Was this the best strategy? Maybe not. But it works for her. My last example: A recent acquaintance had a large sum sitting in her bank account for years. She was too afraid to invest and too embarrassed to ask. After we chatted a few times, she realized that—while she was avoiding risk—she was also avoiding return. She decided to start investing in small installments, but invest less if stock prices were high. To keep things simple, she transfers just enough from her bank each month so her investment account reaches a fixed dollar target. If…
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Aging Well

Sanjib Saha   |  Jul 3, 2023

LIKE MANY IMMIGRANTS living in the U.S., I regularly return to my hometown to visit family and friends. My trips to Kolkata are usually short and jam-packed, seeing not just contemporaries, but also the older generation, including aunts and uncles, my parents’ friends and my friends’ parents. My two recent visits—one last fall and the other this spring—were no exception, but I had mixed feelings this time. Most of the older generation are now in their 70s and early 80s, and two of them had passed away since my last pre-pandemic visit. I was happy to be able to catch up with the rest. But I was also saddened and surprised to find that, since my last visit, a few didn’t seem to be doing well emotionally, as if they’re struggling to find meaning in life. On the surface, health problems and mobility issues are to blame, but that alone doesn’t explain such a change within a few short years. With most of their family members or adult children living elsewhere, these folks have no one to lean on for day-to-day support. They resist getting professional in-home senior care services or moving to retirement communities. This mental block is cultural and emotional, not financial. Meanwhile, the rest of my older acquaintances seem to be having a great time in their golden years. They, too, face health and mobility issues, but these don’t appear to affect their positive outlook on life. The best example is my maternal aunt—my mother’s younger sister—whom I call Mashi. Despite dealing with several family tragedies within the past year, including losing her husband of 50 years after a long period of ill-health, Mashi remains upbeat and full of energy. If you were to guess her age based on appearance and activities, you’d probably be off by…
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Cost of Living

Sanjib Saha   |  Aug 29, 2019

I TUTOR MY 10-year-old niece once a week in math and science. After the study sessions, we often talk about other things—mostly kid stuff. Recently, her treasured piggybank got a nice boost on her birthday and we discussed what she might do with the money. That’s when my niece asked, “How much money will I need when I grow up?” I guess she was trying to figure out if she did indeed have to study hard and get a job—or whether her current savings would be enough. I laughed and told her that she would definitely need to work, just like the rest of us, because she’d need much more money than her piggybank held. Still, in retrospect, I think her seemingly innocent question can be a good starting point for introducing teenagers and young adults to the topics of money and careers. As children grow, they generally develop a sense for why money is important—but there’s no easy way for them to gauge how much they need. A ballpark estimate can give them perspective and help them to double-check whether a career path will meet their financial needs. It can also force them to learn more about basics of smart money decisions. When I started my career, I knew I needed to work hard, earn a decent wage, avoid overspending and save regularly. But beyond those abstract notions, there was no concrete, holistic target in my mind. A rough roadmap—even one with a large margin of error—would’ve helped me to plan and organize my financial life better. It isn’t too hard to come up with a ballpark estimate. Let’s ignore inflation and instead think about everything in today’s dollars. Let’s also assume a hypothetical couple who start a household at age 30, work for 30 years, raise two kids,…
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Bonding With Bonds

Sanjib Saha   |  Dec 5, 2019

FOR MANY YEARS, I didn’t own bonds or anything similar, except some bank certificates of deposit. Frankly, I was clueless. My first dilemma: Should I invest in bonds if I have a mortgage? It didn’t make sense to me to borrow from the bank and, at the same time, lend out my money at a lower interest rate to a bond issuer. I felt I should pay off my mortgage first. A few friends and even a financial advisor recommended otherwise. Their objections notwithstanding, I followed my intuition. I was relieved to find out later that my view wasn’t so naïve after all. Fast forward a few years and I had the mortgage paid off. A magical side effect: My entire paycheck no longer disappeared. For the first time in my career, I realized I could take a long break from work if I had to. This feeling of freedom planted the idea of early retirement in my head. I probed my financial readiness and realized that bonds would now play a vital role. For the next few months, I researched bonds, including different kinds, the risks, credit ratings, taxation, liquidity and so on. Alas, I was left with more questions than answers. What percentage should I allocate to bonds? Individual bonds or bond funds? Is credit risk real? Should I worry about duration or convexity? What about inflation? Tax-exempt or taxable? Government or corporate? Overwhelmed and confused, I needed a simpler approach, so I started over, but this time with a basic question in mind: What are the big problems with my retirement finances and can bonds solve them? This gave me much needed clarity. My financial situation posed two challenges. First, my modest nest egg needed a high stock allocation to survive a longer-than-average retirement, and yet I also needed…
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Feelin’ Groovy

Sanjib Saha   |  Apr 30, 2020

I’VE BEEN WORKING from home for nearly two months. Many friends and coworkers are tired of the lockdown. I seem to be an oddball: I feel happier and less stressed. I’m not oblivious to the reality of today’s pandemic. As I write this, my uncle abroad is facing a hard time getting urgent medical care. Millions of others across the globe are also suffering. Against such a gloomy backdrop, I feel almost guilty in seeing a positive side to the lockdown. Examples? For me, the biggest benefit has been the time and energy saved by not commuting. I also like being able to weave small personal chores in between office work. I can plan my hours better and get more done in a day. I’ve also been better able to manage my health. My weight resembles the growth chart of an inflation-protected Treasury bond fund. Occasional short-term fluctuations in either direction are common, but things creep slowly upward over time. Stuck at home, I figured I could devote extra time to better eating and fitness habits. Though I try to eat a balanced diet, with lots of vegetables, fruits and fish, I wasn’t consistent in my good eating habits. Now that there’s more time to prepare healthier and tastier meals, I have no excuses. I’ve been cooking every other day. Meanwhile, there’s no morning rush to get ready to leave for work. When the weather gods smile, I start my day with a walk. There’s an abundance of blooming trees and songbirds in our area. My cousin, who lives next door, joins me in the evening, when I take a second walk to help me unwind. The good eating and the exercise seem to be working. I feel healthier and more energetic. I’ll miss that sense of wellbeing when things…
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