Uncertainty & Stock Options

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Startup employee option pools

Stock Option Tips for Startups

Venture Loop

Beating the Jones in the burbs

Diversification Simplification

After reading 100’s of articles and discussing with various brokers and investment bankers, I’m convinced that the perfect mix for an investment portfolio will be a never ending debate. After this many years of stocks, bonds, real estate, etc., one would think a universal equation would have been derived that would take into account one’s asset amount, age, risk tolerance and investment timeframe. In the absence of such an equation, I’ve decided to publish yet another proposed “magic formula” to simplify the thought process of diversified investing. While none of the individual rules are original, they do represent a mix of various opinions and suggestions on the topic.

Rule 1: Percentage invested in stocks: 100 minus current age.
Rule 2: Percentage invested in fixed income: everything else not invested in stocks.
Rule 3: Use future investments to keep the first two rules in check and avoid transferring money to and from investments as much as possible.
Rule 4: Point at which readjustment should be made: when the first two rules are off by 5% or greater.

London City Lights 2

Some FAQs for the equation:

  • An example for a 35 year old: 100-35=65% invested in stocks. 35% would be in bonds and/or other fixed income investments.
  • The equation does not account for investments one might have in their primary residence. A future post will discuss this matter.
  • The stock mix could (and most likely should) include mutual funds and individual stocks in a variety of sectors.
  • An additional method for keeping the first two rules in check is to use money from the fixed income and/or dividends to fund the lagging area.

Mobile Marketing

If you ever watched a NASCAR race, one question quickly comes to mind: Was this sport created by car enthusiasts or by brilliant marketers? This is the only sport (and I use the term loosely) where the souvenirs and even the sport itself represent the sponsors more than the people involved in the sport.

Pit row - 1

To my knowledge, this the only sport where people would actually purchase an orange $500 leather jacket covered with Home Depot logos, while the term “NASCAR” is hidden on the inside tag. The sponsors of this sport have an ulterior motive in selling this paraphernalia than say the average Fortune 500 company buying a sign out in center field. The NASCAR sponsors are literally “allowing” people to pay to become walking billboards. In fact, it’s no wonder the drivers are awarded points for being in first place the most laps. Guess which car, I mean logo, is shown on TV the most?!

Racing

Why haven’t companies pushed other professional sports onto this strategy and to this extent? While the target audience might seem restricted to some, it’s actually quite diverse. I can’t speak for all readers out there, but I can’t wait to start wearing my Southwest Airlines blazer to the next family dinner.