RESOURCES

If you've decided to get involved in philanthropy at any level, you're likely considering various options. While major organizations like the American Red Cross or Doctors Without Borders do incredible work, you might feel that your contributions could have a more significant impact locally. So, how do you go about finding reputable charities in San Luis Obispo County that align with your values and goals? Here are some steps to help you in your search.

There is no perfect strategy that works all the time, in every environment. Rather, there are various approaches that generally earn a little extra return or reduce risk on average over full market cycles.

It’s been said that diversification is the only free lunch on Wall Street.Everyone, from investment professionals to lay people, knows that diversification is prudent and is investment best-practice. On the other hand, there are some people who have ignored the principle of diversification and done extremely well. There are some advantages to concentration instead of diversification.

The most up to date national home value information I found goes through April, and shows a long steep rise in home prices, followed by an inflection even steeper. This is consistent with the bubble paradigm where investment bubbles have steady increases in value culminating in a “blow off top” where greed and fear of missing out takes over to push values to unreasonable levels. I do not know whether houses are in a bubble, but the evidence, including this chart, point to that conclusion.

Stock market valuations have clearly been rising since early 1982. In fact, investors now pay over five times as much as in 1982 for a dollar of cyclically adjusted earnings, and 11% more than in 1929, when economist Irving Fisher declared, “stock prices have reached ‘what looks like a permanently high plateau.’” Indeed. Nearly a century later, have we finally entered a “permanently high plateau”? Are fat pills and algorithms able to do what online commerce and cat videos couldn’t? Readers must make up their own minds. The data hasn’t supported this yet, but investing is all about looking forward. As you do, I hope you look forward to my next article on what current valuations mean for future returns.

I’ve coined the term Investing 3.0 for an approach to investing that is newer than the other two, and which I believe solves the problems inherent in both Investing 1.0 and Investing 2.0. Investing 3.0 is quantitative investing. It is also called rules-based investing, factor-based investing and evidence-based investing. Some have coined factor-based investing “smart beta” because it gives exposure to something other than the full market. It acknowledges the difficulty of using skill to find stocks that will outperform and instead relies on a basket of stocks to average out the performance of each. It reduces the cost and emotional pitfalls associated with using human research and management teams to select stocks. It also seeks to not only avoid the excesses of popular beliefs, but to systematically capitalize on these excesses. Investing 3.0 focuses on systems rather than opinions. It learns from behavioral finance theory where opportunities should exist and then analyzes data to test rules for capturing those opportunities. These rules are then followed mechanically, with the understanding that sometimes the crowd is right, but on average, the rules win. The cost of rules-based funds generally falls somewhere between those of index funds and actively managed funds.