Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.
The idea of investing in people isn’t new. The last big celebrity offering was David Bowie in 1997. The Bowie Bonds were tied to his intellectual property. That song catalog of his still made money and you could own a piece of that revenue stream. It was an opportunity for Bowie to get access to some of that material’s value immediately while investors earned a decent interest over time. A side note, for Bowie it was perfect timing, right at the peak for music before Napster came along and killed the industry.
Well, it’s back again. A new company wants to open an exchange for pro athletes. It’s convinced Arian Foster (Houston Texans running back) to kick off the first IPO. You know somewhere there is a Texans fan that can’t wait for this to happen.
Yet, you can add this to the pile of questionable investments products that have been introduced lately (I’ve been bombarded with offers to promote dozens lately).
But this is the side effect of a great 5 year market run. People are flush with cash, start to think they can’t lose, and willing to invest in anything. At best, this is one of those outside the box investments that makes for a great bar discussion, but terrible for your money.
Signs of Exuberance
Notice I didn’t say irrational exuberance. Exuberance, none the less, is alive and well in the market. It’s hard not to be, after the past five years. The S&P 500 is up big and investors are still buying. Oh, and they’re borrowing to buy too.
It’s mostly stock funds these days, especially dividend stocks. People like that perceived safety. Perceived, because dividend stocks historically don’t trade at such a high P/E. Bonds are less popular than they were five years ago. The recent rate rise has turned bond funds into losers. Nobody likes a loser, so dividend stocks here we come.
Both are a case of investing based on recency bias. At some point something has to give. Eventually, someone will stop overpaying for dividend stocks and start the ball rolling. It won’t be pretty either. Bonds will be popular again. Maybe it will be houses or peer lending or some other ridiculous idea that can’t miss.
Until then, we have ways to go before irrational takes hold. Though, the media will start talking about it soon. Eventually, it will happen. It always does.
- The Counterintuitive Investing Trick That Could Make Or Break Your Retirement – it’s just a study but how we look at retirement investing might have to change.
- How Billionaires Hit It Big: The Path to $1B – great infographic on how five well known billionaires made their first billion.
- Common Investor Mistakes – three fixable mistakes that hurt your performance.
- Moving Some Target-Date Funds From Autopilot To Manual – something to be aware of if you own target date funds.
- The Biggest Economy Killer: Our Government – have to agree. The government, both local and federal, have done a great job preventing economic growth.