A late summer rant and a rave

1. Let's start with a new movie called, "Dumb Money".  After watching the trailer for Dumb Money and seeing a couple of ads, the experience raised a question in my mind....is it OK to criticize a film one has never seen?  Logic dictates that the answer is no.  Call me illogical.

What turned me off initially was the commercial touting how the film"...gives a riotous middle finger to the capitalist swine on Wall Street."  How deliciously Populist.  The film creators have obviously positioned Dumb Money as a paean to the little guy fighting against the evil asset managers, punctuated with an F-bomb per minute, until the digitally-wired counter culture decks the big money guys holding a large short position.  

In this case, people will make a lot of money by trashing Capitalism and its adherents.  Quite a paradox.

2. Let's end with a positive take on American Express's new method to redeem cardmember reward points.  In the old days, if you wanted to cover a portion of your card charges with points; you had to go through this ritual of scrolling through transactions and applying points individually by transaction, in order to obtain the credit against your balance of charges.  Not anymore!  

One click and the entire value of your points is credited against your next bill.  No more trolling and scrolling through your transactions and applying points by transaction to obtain the credit.  Stupendous.  

 (Image above by macrovector on Freepik)

And the debate winner is....

 

Although I was intrigued today by an article in the WSJ from Mike Edleson and Andy Puzder, I will not share my views about ESG investing.  Is it moral or amoral?  Sensible?  Profitable?  Suffice it to say, one can make a reasonable case for or against ESG investing depending upon measurement criteria, objectives and definitions.  

I will however express my views about another equally polarizing topic: foods and beverages!  I won't equivocate on that topic.  Here's a tasty sample of seven culinary flashpoints that are suitable for most socially-acceptable debates.

Pizza & Hot Dogs

Possibly America's favorite food, I must have thin crust pizza with cracker crisp qualities and zesty toppings (toppings is a whole topic for another post).  To my friends in Chicago; please forgive me, but what you call "Deep Dish Pizza" is actually a satisfying tomato casserole with too much dough.  However, Chicago can lay claim to the finest hot dogs (and I agree, no ketchup on a dog allowed).  For store bought beef frankfurters; I'm partial to Nathan's or Hebrew National brand.

Bacon

Make mine crisp.  This iconic cut of meat from the hog's belly should not be served limp, chewy, or with visible fat globules.

Coke vs. Pepsi

Talk about polarizing debates!  Cola devotees might not patronize both giant beverage makers, but I do.  Diet Pepsi is not only wildly superior to Diet Coke, but I find Diet Coke almost undrinkable.  Regarding Coke Zero vs Pepsi Zero -- I'll give Coke Zero the edge.

Gluten

Follow your own Doctor's or Nutritionist's advice.  Gluten doesn't affect me.  

Peanuts

When did this onslaught of Peanut allergies begin?  Why did it begin?  I love these little legumes and Virginia Peanuts are the best I've found.  Please do not serve me the un-salted type and consider serving Peanuts really cold.  That chill factor is something I learned from a dear friend with a serious taste for chocolate covered Peanuts.

Charcoal and Smokers vs. Gas Grilling

For purposes of taste comparison -- there is no comparison.  Charcoal is best.  I sometimes hear the argument about the speed of Gas Grilling, to which I normally respond, "What's your hurry?"  The same principle applies to smokers vs. gas grills -- smoking is well worth the wait.

Orange Juice

There are few things in this life I find as gratifying as a glass of freshly-squeezed orange juice.  Unfortunately, every substitute for the fresh variety I have found distasteful.  Take McDonald's, I've long believed that their orange juice is the worst-tasting item on the whole menu.

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(Image above from freepik)

Calling the market peak -- REVISITED

 Greetings!

Based upon feedback I received from one of my valued seven readers, what follows is a refinement of the views expressed in the previous post about market timing.  

Recall we're talking about predicting the direction of the equity market as a whole, or a large swath of it like the S&P 500 --- not individual stocks.

I didn't mean to imply that one cannot utilize deep experience and technical analysis to correctly predict a stock market peak (or trough) some of the time.  

There's an old saying that even a broken clock is right twice a day.  

However, who's consistently made these bold calls with enough accuracy to "beat" the market?  If you accept the proposition that the answer to that last question is nobody -- why would one ever wager more than they could afford to lose by trying?  

Vector created by pikisuperstar - www.freepik.com

Think you can call the market peak? Think again.

I know most of my limitations.  I learned a while ago, for example, that I'm not a stock picker.  I also learned that trying to predict the stock market's trajectory is an often futile and dangerous exercise.  

One financial adviser whom I've known for decades addressed the oft-asked question -- When-will-the-stock-market-crash? -- in his recent client newsletter.  A Minneapolis-based adviser with Focus Financial he wrote...   

"The chances of individuals guessing when the stock market is going to crash is approximately the same as my guessing when the sun is going to explode.  Since I can't reasonably hazard a guess, I prefer to go about my day without worrying about the sun exploding."

Animals vector by rawpixel.com - www.freepik.com

"Crowd lending" as an investment?

You've probably heard of crowd funding web sites like Kickstarter that function as online forums for investors to fund new business enterprises or community projects.  People fund these ventures because they believe a given solicitor's work has intellectual merit, serves some worthy ideal, or includes a compelling new technology.  Contributors do not receive any equity or financial return in exchange for their "investment".  

There are also online forums for "Debt Crowdfunding" which reward investors with a financial return on invested capital.  One leader in this space is Lending Club Corporation which was incorporated in 2007, trades on the NYSE under ticker LC and is registered with the SEC.  A competing company is called Prosper Funding LLC.  

Lending Club touts itself as "the world’s largest online marketplace connecting borrowers and investors" and it has made a palpable impact on the future of consumer lending by facilitating over $6.2B in loans since its platform launch, according to the company website.  If this business doesn't qualify as one with a "disruptive technology"; I don't know one that would.   

Individual or institutional investors that use Lending Club's exchange can invest in hundreds or even thousands of individual notes with consumer loan repayment periods of 36 months or 60 months -- or small business notes -- with loan repayment periods of 12 months to 60 months.  (The majority of consumer loans are issued for debt consolidation or to pay off credit card debt).  

Lending Club partners with WebBank who issues the loans and charges interest rates pegged to each borrower's credit profile.  Less creditworthy borrowers pay comparatively higher interest rates on loans and investors are compensated for the added risk of default, with comparatively higher ROI.  I don't make paid endorsements or investment recommendations, but to be transparent, I've invested in Lending Club notes.

The investor web site is impressively simple to navigate with powerful views, charts and calculations.  One can see individual consolidated returns and returns for Lending Club investors in the aggregate.  The site also gives investors an ability to see loan level detail (without personal identifiers of borrowers) and repayment performance on individual notes.  

As loans are paid back (some loans of course do not perform and get charged off with investors absorbing 100% of the loss) investor cash is credited less a 1% management fee to Lending Club.  

Investor cash -- which is the portion of one's Lending Club investment not committed to credit issuance -- is pooled in a trust account at Wells Fargo Bank.  Lending Club does not take custody of investor cash remitted to this account and investors can withdraw cash via ACH transfer to their own bank account at any time.  

Like any asset class, one ought not invest more than one is prepared to lose.  There's no guarantee on any of the notes or, the solvency of Lending Club.  All said, crowd lending is an intriguing alternative investment to explore.  

Renaud Laplanche photo from Lending Club.

Finally, a word about Lending Club's founder, Renaud Laplanche.  Mr. Laplanche is a former practicing attorney with an MBA from the London Business School who turned himself into a software entrepreneur.  Last year he won the Innovation Award in the consumer products category from the Economist periodical.