Want to succeed financially? Control what you can and ignore what you can’t.
HOW DO YOU COMPETE in an investment contest when you’re a firm believer that investors can’t consistently beat the market averages? That was my dilemma several years ago.
A school not far from where I taught was given money by an alumnus to endow the St. Louis Area Collegiate Investment Contest. All colleges and universities in the area are invited to participate in the competition, which is held regularly. Each is given a hypothetical $1 million and asked to select 20 value stocks. An outside investment firm oversees the contest. They “invest” $50,000 in each of the 20 stocks. Whoever’s portfolio is worth the most two years later wins $10,000—real dollars, that is.
How do we select the 20 stocks for our entry? When I explain the contest to students, I also discuss the evidence that most investors don’t outperform the market. I suggest we could tape the stock pages of The Wall Street Journal to the wall and literally throw darts at it. Several students like this option.
But instead, I distribute Value Line’s current list of 100 stocks most likely to outperform the stock market over the next year. To focus on value stocks, I take these 100 stocks deemed most likely to outperform, circle the 40 or so companies with the lowest price-earnings ratios and ask students to select stocks from this list.
Value Line Investment Survey, which is often available at larger libraries, evaluates approximately 1,700 stocks. Value Line gives each stock a timeliness rating from one to five, indicating its belief that the stock will outperform the market over the next year. My initial list for the students draws on those stocks rated one for timeliness.
Rating Number of Stocks Meaning
1 100 Most likely to outperform
2 300
3 900
4 300
5 100 Least likely to outperform
Value Line has a full-page analysis of each of these 1,700 stocks. Each stock gets a full review every 13 weeks, which means each week it updates this detailed analysis for about 130 stocks. But each week, all 1,700 stocks are evaluated for timeliness.
Some 30 or 40 years ago, there were a few academic studies indicating that Value Line could outperform the market averages. I have seen no recent independent studies of Value Line. My guess is that any advantage Value Line might have had decades ago no longer exists.
While I don’t believe Value Line will outperform the market, it’s one way to narrow down the list of potential stocks. It’s definitely safer than letting college students throw darts in a classroom.
Six schools entered the first contest. We won, receiving $10,000 and an oversized check. I took the check to our next faculty meeting and bragged about our business students. Most faculty assumed I had superior stock-picking skills, and I did not disabuse them of that view. But in my heart, I firmly believed it was just luck.
Six years later, we won again. If six schools enter each year, we ought to win about every six years. I didn’t point out that obvious fact when I went to the faculty meeting with that oversized check.
The very next year, we won again. Did that indicate we had a winning method? No. If six schools enter, and if the winner is completely random, the chance of this year’s winner winning again next year is one out of six. While my method of picking stocks might be superior, I believe two wins in a row is simply a random occurrence.
Recently, the contest was modified. Instead of starting just once a year, it now starts every semester. The payoff for winning was reduced from $10,000 once a year to $5,000 each semester. The number of participating schools has dropped to just four or five, increasing our odds of winning each contest.
Although I'm now retired, our school continues to follow the above method. Over the years, we have won $35,000. We call it our slush fund. Our department has used that money for additional faculty enrichment opportunities, student awards, end-of-the-year catered dinners for graduates and their families, and a host of other good causes. Perhaps most important, our finance students have learned some important lessons about how the stock market works.
Larry Sayler is the only person with a Wharton MBA who also graduated from Ringling Bros. and Barnum & Bailey’s Clown College. Earlier in his career, he served as CFO for three manufacturing and service organizations. For 16 years before his retirement, Larry taught accounting at a small Christian college in the Midwest. His brother Kenyon also writes for HumbleDollar. Check out Larry's earlier articles. [xyz-ihs snippet="Donate"]NO. 70: AS WE decide how much debt to take on and how much money to save, we should ask ourselves a key question: Will our future self be happy with the choices we make today?
NO. 67: MOST MUTUAL funds are sector bets. Funds often aim for style purity, sticking with just one stock or bond market niche. To gauge whether a fund is any good, compare it to others in the same category. But to build a diversified portfolio, buy just one or two funds from any given category—and diversify with funds from other categories.
NEGATIVE BONDS. When we buy bonds, we lend to others and receive interest in return. Borrowing can be seen as a negative bond: Others lend to us—and we pay them interest. Typically, the interest rate we pay on borrowed money is higher than the yield we can earn by buying bonds. The upshot: Paying down debt is often the smartest “bond” we can buy.
NO. 2: WE FOCUS on today—and shortchange tomorrow. Our nomadic ancestors didn’t worry about the long term. Instead, they focused on surviving today, which meant consuming as much as they could whenever they could. Those instincts live on within us, driving our spending, saving and investing behavior—and causing long-term financial damage.
NO. 70: AS WE decide how much debt to take on and how much money to save, we should ask ourselves a key question: Will our future self be happy with the choices we make today?
My mother received an email today from “Social Security Administration” warning of “Important Changes to Access Your Social Security Account!”
It states that “soon you will no longer be able to sign into your online Social Security account using your username and password.” It goes on to say in the future, only a Login.gov or ID.me.account, and ends with a big button that says “Sign In to Your Account.”
I suspect this is bogus. Has anyone else received a similar email?
I just read about an excellent script to use when one gets a call purporting to be from a financial institution that is, “every time a financial institution calls: “Where are you calling from? Thank you. I’m going to hang up and call back.”
Then go find the institution’s phone number (from a statement, the back of the credit card, or by typing in the URL of the website itself and finding it on the website;
MONEY MANAGERS Raj Rajaratnam and Joel Greenblatt share a number of similarities. They’re almost exactly the same age. Both received business degrees from the University of Pennsylvania, and both started well-known hedge funds. But the similarities end there.
During the 10 years that Greenblatt operated his fund, Gotham Capital, it delivered returns averaging 50% a year, versus 10% for the S&P 500. Thanks to his success, Greenblatt retired from full-time work in 1994 at age 37.
I KEEP SEEING THEM—overly complicated, overly expensive investment portfolios. The most recent belonged to a widow in her 70s, with modest earned income, Social Security benefits and about $5,000 in taxable fund distributions for 2023. She was someone I helped during the recent tax-filing season, when I was volunteering at an AARP TaxAide site in Monmouth County, New Jersey.
Her portfolio held about a dozen mutual funds, most of which I’d never heard of.
OUR COMMUNITY HAS a Facebook-like online forum called Nextdoor. I tend to ignore the posts, which usually involve things like items for sale and new restaurant openings. But a recent post caught my eye—because it was from the Montgomery County Recorder of Deeds.
The article said Pennsylvania’s Attorney General had initiated a lawsuit against a realty company for deceptive practices targeting elderly, low-income and minority homeowners. The realty company was offering a “Homeowner Benefit Program” that gives homeowners anywhere from $400 to $1,000 upfront to lock into a contract.
“YOUR CHECKING ACCOUNT balance is low.” It’s an alert none of us wants to receive, especially if we’ve just been paid. But that was the message that a friend—let’s call him Ron—got recently. A hacker had gained control of his account and started bleeding it dry.
Ron, it turns out, was lucky to have received that alert. Another friend—let’s call him Arthur—received no such alert when his account was also taken over by hackers this summer.
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Somebody Has to Win
ArticleLarry Sayler | Oct 31, 2023
HOW DO YOU COMPETE in an investment contest when you’re a firm believer that investors can’t consistently beat the market averages? That was my dilemma several years ago.
A school not far from where I taught was given money by an alumnus to endow the St. Louis Area Collegiate Investment Contest. All colleges and universities in the area are invited to participate in the competition, which is held regularly. Each is given a hypothetical $1 million and asked to select 20 value stocks. An outside investment firm oversees the contest. They “invest” $50,000 in each of the 20 stocks. Whoever’s portfolio is worth the most two years later wins $10,000—real dollars, that is.
How do we select the 20 stocks for our entry? When I explain the contest to students, I also discuss the evidence that most investors don’t outperform the market. I suggest we could tape the stock pages of The Wall Street Journal to the wall and literally throw darts at it. Several students like this option.
But instead, I distribute Value Line’s current list of 100 stocks most likely to outperform the stock market over the next year. To focus on value stocks, I take these 100 stocks deemed most likely to outperform, circle the 40 or so companies with the lowest price-earnings ratios and ask students to select stocks from this list.
Value Line Investment Survey, which is often available at larger libraries, evaluates approximately 1,700 stocks. Value Line gives each stock a timeliness rating from one to five, indicating its belief that the stock will outperform the market over the next year. My initial list for the students draws on those stocks rated one for timeliness.
Rating Number of Stocks Meaning
1 100 Most likely to outperform
2 300
3 900
4 300
5 100 Least likely to outperform
Value Line has a full-page analysis of each of these 1,700 stocks. Each stock gets a full review every 13 weeks, which means each week it updates this detailed analysis for about 130 stocks. But each week, all 1,700 stocks are evaluated for timeliness.
Some 30 or 40 years ago, there were a few academic studies indicating that Value Line could outperform the market averages. I have seen no recent independent studies of Value Line. My guess is that any advantage Value Line might have had decades ago no longer exists.
While I don’t believe Value Line will outperform the market, it’s one way to narrow down the list of potential stocks. It’s definitely safer than letting college students throw darts in a classroom.
Six schools entered the first contest. We won, receiving $10,000 and an oversized check. I took the check to our next faculty meeting and bragged about our business students. Most faculty assumed I had superior stock-picking skills, and I did not disabuse them of that view. But in my heart, I firmly believed it was just luck.
Six years later, we won again. If six schools enter each year, we ought to win about every six years. I didn’t point out that obvious fact when I went to the faculty meeting with that oversized check.
The very next year, we won again. Did that indicate we had a winning method? No. If six schools enter, and if the winner is completely random, the chance of this year’s winner winning again next year is one out of six. While my method of picking stocks might be superior, I believe two wins in a row is simply a random occurrence.
Recently, the contest was modified. Instead of starting just once a year, it now starts every semester. The payoff for winning was reduced from $10,000 once a year to $5,000 each semester. The number of participating schools has dropped to just four or five, increasing our odds of winning each contest.
Although I'm now retired, our school continues to follow the above method. Over the years, we have won $35,000. We call it our slush fund. Our department has used that money for additional faculty enrichment opportunities, student awards, end-of-the-year catered dinners for graduates and their families, and a host of other good causes. Perhaps most important, our finance students have learned some important lessons about how the stock market works.
Treasury Tax Reporting
ArticleBogdan Sheremeta | Mar 28, 2026
IF YOU HAVE a Money Market Fund (e.g. VUSXX, VMFXX), Treasury fund (e.g. SGOV), or any other Treasury ETF (e.g. VBIL), you need to know how to report it on your taxes correctly. If you don’t, you are overpaying on your state taxes unknowingly.
How and why?
These funds hold U.S. Treasury Bills. Treasuries are exempt from state and local taxes. Of course, this only matters if you hold these funds in a taxable brokerage account, which most people do.
The broker sends you a 1099-DIV form, but it’s your responsibility to figure out how to report it on your taxes correctly. By the way, bad tax preparers can miss this sometimes, or if you self-prepare, this may be something you aren't aware of (I hope most of you reading HumbleDollar are familiar with this!)
This is one of those areas where the reporting rules are technically simple, but the execution is where people mess up. The IRS gets their share regardless (since interest is fully taxable at the federal level), but if you don’t adjust properly, your state will too, even when it shouldn’t.
The 1099-DIV doesn’t break out how much of the dividend was allocated to Treasuries. The software also wouldn’t know how much based on the 1099-DIV. This means that you generally have to figure out how to report it (or ensure your CPA does it correctly).
Now, the 1099-DIV will have a breakdown of every single stock/ETF you have, but you have to find out the percentage of a fund that holds Treasuries.
This percentage is not on your brokerage statement. It comes directly from the fund provider (Vanguard, iShares, Schwab, etc), usually buried in their “tax center” or “year-end tax supplement” pages.
Let me give you an actual example.
Say, in 2025, you received $5,000 of dividends from two funds.
Then, if you scroll down, you will see a “Detail Information” of your dividends:
We can see that $2,456.78 came from Vanguard Federal Money Market fund.
The entire $2,456.78 will be taxed at the federal level, but how do we figure out what’s taxed at the state level?
This is where the extra step comes is.
During the end of the year, the fund manager (e.g Vanguard for VMFXX) will post a “US government source income information” on their Tax page.
This report tells you what portion of the fund’s income is derived from U.S. government obligations (Treasuries), which is the key to the state tax exemption.
We can see that 66.61% of VMFXX holdings for the 2025 tax year were income derived from the U.S. government and, therefore, are not taxable at the state level.
So, we would take $2,456.78 * 0.6661 = $1,636. Of the total, $1,636 is derived from U.S. obligations, and you would only pay state taxes on the remaining ~$819.
That $2,456.78 is still fully taxable federally. This is strictly a state adjustment.
It’s also important to note that some states say "if less than 50% of the fund is from the U.S. government (like Treasury Bills), you can treat it as 0%.”
For example, California, Connecticut, and New York are some of these states. So, if the fund has only 35% coming from the Treasury, you shouldn’t even calculate the exempt amount for these states.
Now, if you buy Treasuries directly from TreasuryDirect, they will send you a 1099-INT, and you can just enter that information directly into the tax software. No extra calculations are needed. That’s because the income is already clearly identified as U.S. government interest, no allocation required.
So, how do you report that dividend interest calculation?
In most tax softwares, after entering the 1099-DIV, it will ask: "Did a portion of dividends came from a U.S. Government interest?'
So, you would just check it off/select and enter the amount from Treasuries ($1,636 in our example).
Behind the scenes, this flows into your state return as a subtraction or adjustment, depending on the state.
Some software might ask for the percentage of dividends that are state tax exempt. However, this is a bit tricky because you might receive other dividends in your brokerage account.
In that case, calculate the amount from the Treasury, say $1,636, and divide it by your total dividend amount (e.g. $5,000)
If you have someone do your taxes and you have some of these Money Market Funds or other Treasury ETFs, double-check your state tax return and see the amounts reported. This will save you some money. It's also not too late to amend your tax return if this was missed.
Specifically, look for a “U.S. government interest subtraction” or similarly labeled line item on your state return. If it’s zero and you held these funds, that’s a red flag.
If you live in a no tax state, this would not apply to you, but still good to know in case you move!
I hope you found this one valuable.
The great COLA debate-maybe not the expected solution.
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Happy 50th!
Rick Connor | Apr 27, 2026